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

By Adam Smith

INTRODUCTION AND PLAN OF THE WORK. 

The annual labour of every nation is the fund which originally suppliesit with all the necessaries and conveniencies of life which it annuallyconsumes, and which consist always either in the immediate produceof that labour, or in what is purchased with that produce from othernations. 

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

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

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

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

Whatever be the actual state of the skill, dexterity, and judgment, withwhich labour is applied in any nation, the abundance or scantiness ofits annual supply must depend, during the continuance of that state, upon the proportion between the number of those who are annuallyemployed in useful labour, and that of those who are not so employed. The number of useful and productive labourers, it will hereafter appear, is everywhere in proportion to the quantity of capital stock which isemployed in setting them to work, and to the particular way in whichit is so employed. 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, and judgment, in the application of labour, have followed very different plans in thegeneral conduct or direction of it; and those plans have not all beenequally favourable to the greatness of its produce. The policy of somenations has given extraordinary encouragement to the industry of thecountry; that of others to the industry of towns. Scarce any nation hasdealt equally and impartially with every sort of industry. Since thedown-fall of the Roman empire, the policy of Europe has been morefavourable to arts, manufactures, and commerce, the industry of towns, than to agriculture, the Industry of the country. The circumstanceswhich seem to have introduced and established this policy are explainedin the third book. 

Though those different plans were, perhaps, first introduced by theprivate interests and prejudices of particular orders of men, withoutany regard to, or foresight of, their consequences upon the generalwelfare of the society; yet they have given occasion to very differenttheories of political economy; of which some magnify the importanceof that industry which is carried on in towns, others of that whichis carried on in the country. Those theories have had a considerableinfluence, not only upon the opinions of men of learning, but upon thepublic conduct of princes and sovereign states. I have endeavoured, in the fourth book, to explain as fully and distinctly as I can thosedifferent theories, and the principal effects which they have producedin different ages and nations. 

To explain in what has consisted the revenue of the great body of thepeople, or what has been the nature of those funds, which, in differentages and nations, have supplied their annual consumption, is the objectof these four first books. The fifth and last book treats of the revenueof the sovereign, or commonwealth. In this book I have endeavouredto shew, first, what are the necessary expenses of the sovereign, or commonwealth; which of those expenses ought to be defrayed by thegeneral contribution of the whole society, and which of them, by thatof some particular part only, or of some particular members of it:secondly, what are the different methods in which the whole society maybe made to contribute towards defraying the expenses incumbent on thewhole society, and what are the principal advantages and inconvenienciesof each of those methods; and, thirdly and lastly, what are the reasonsand causes which have induced almost all modern governments to mortgagesome part of this revenue, or to contract debts; and what have been theeffects of those debts upon the real wealth, the annual produce of theland and labour of the society. 

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

CHAPTER I. OF THE DIVISION OF LABOUR. 

The greatest improvements in the productive powers of labour, and thegreater part of the skill, dexterity, and judgment, with which it isanywhere directed, or applied, seem to have been the effects of thedivision of labour. The effects of the division of labour, in thegeneral business of society, will be more easily understood, byconsidering in what manner it operates in some particular manufactures. It is commonly 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 manufactures which aredestined to supply the small wants of but a small number of people, thewhole number of workmen must necessarily be small; and those employed inevery different branch of the work can often be collected into the sameworkhouse, and placed at once under the view of the spectator. 

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

To take an example, therefore, from a very trifling manufacture, but onein which the division of labour has been very often taken notice of, thetrade of a pin-maker: a workman not educated to this business (which thedivision of labour has rendered a distinct trade), nor acquainted withthe use of the machinery employed in it (to the invention of which thesame division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainlycould not make twenty. But in the way in which this business is nowcarried on, not only the whole work is a peculiar trade, but it isdivided into a number of branches, of which the greater part arelikewise peculiar trades. One man draws out the wire; another straightsit; a third cuts it; a fourth points it; a fifth grinds it at the topfor receiving the head; to make the head requires two or three distinctoperations; to put it on is a peculiar business; to whiten the pins isanother; it is even a trade by itself to put them into the paper; andthe important business of making a pin is, in this manner, divided intoabout eighteen distinct operations, which, in some manufactories, areall performed by distinct hands, though in others the same man willsometimes perform two or three of them. I have seen a small manufactoryof this kind, where ten men only were employed, and where some of themconsequently performed two or three distinct operations. But though theywere very poor, and therefore but indifferently accommodated with thenecessary machinery, they could, when they exerted themselves, makeamong them about twelve pounds of pins in a day. There are in a poundupwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pinsin a day. Each person, therefore, making a tenth part of forty-eightthousand pins, might be considered as making four thousand eight hundredpins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps notone pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth, part of what they are atpresent capable of performing, in consequence of a proper division andcombination of their different 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 much subdivided, norreduced to so great a simplicity of operation. The division of labour, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour. Theseparation of different trades and employments from one another, seemsto have taken place in consequence of this advantage. This separation, too, is generally carried furthest in those countries which enjoy thehighest degree of industry and improvement; what is the work of oneman, in a rude state of society, being generally that of several in animproved one. In every improved society, the farmer is generally nothingbut a farmer; the manufacturer, nothing but a manufacturer. The labour, too, which is necessary to produce any one complete manufacture, isalmost always divided among a great number of hands. How manydifferent trades are employed in each branch of the linen and woollenmanufactures, from the growers of the flax and the wool, to thebleachers and smoothers of the linen, or to the dyers and dressers ofthe cloth! The nature of agriculture, indeed, does not admit of so manysubdivisions of labour, nor of so complete a separation of one businessfrom another, as manufactures. It is impossible to separate so entirelythe business of the grazier from that of the corn-farmer, as the tradeof the carpenter is commonly separated from that of the smith. Thespinner is almost always a distinct person from the weaver; but theploughman, the harrower, the sower of the seed, and the reaper of thecorn, are often the same. The occasions for those different sortsof labour returning with the different seasons of the year, it isimpossible that one man should be constantly employed in any one ofthem. This impossibility of making so complete and entire a separationof all the different branches of labour employed in agriculture, isperhaps the reason why the improvement of the productive powers oflabour, in this art, does not always keep pace with their improvementin manufactures. The most opulent nations, indeed, generally excel alltheir neighbours in agriculture as well as in manufactures; but they arecommonly more distinguished by their superiority in the latter than inthe former. Their lands are in general better cultivated, and havingmore labour and expense bestowed upon them, produce more in proportionto the extent and natural fertility of the ground. But this superiorityof produce is seldom much more than in proportion to the superiority oflabour and expense. In agriculture, the labour of the rich country isnot always much more productive than that of the poor; or, at least, itis never so much more productive, as it commonly is in manufactures. Thecorn of the rich country, therefore, will not always, in the same degreeof goodness, come cheaper to market than that of the poor. The corn ofPoland, in the same degree of goodness, is as cheap as that of France, notwithstanding the superior opulence and improvement of the lattercountry. The corn of France is, in the corn-provinces, fully as good, and in most years nearly about the same price with the corn of England, though, in opulence and improvement, France is perhaps inferior toEngland. The corn-lands of England, however, are better cultivated thanthose of France, and the corn-lands of France are said to be muchbetter cultivated than those of Poland. But though the poor country, notwithstanding the inferiority of its cultivation, can, in somemeasure, rival the rich in the cheapness and goodness of its corn, itcan pretend to no such competition in its manufactures, at least ifthose manufactures suit the soil, climate, and situation, of the richcountry. The silks of France are better and cheaper than those ofEngland, because the silk manufacture, at least under the present highduties upon the importation of raw silk, does not so well suit theclimate of England as that of France. But the hardware and the coarsewoollens of England are beyond all comparison superior to those ofFrance, and much cheaper, too, in the same degree of goodness. In Polandthere are said to be scarce any manufactures of any kind, a few of thosecoarser household manufactures excepted, without which no country canwell subsist. 

This great increase in the quantity of work, which, in consequenceof the division of labour, the same number of people are capable ofperforming, is owing to three different circumstances; first, to theincrease of dexterity in every particular workman; secondly, to thesaving of the time which is commonly lost in passing from one speciesof work to another; and, lastly, to the invention of a great number ofmachines which facilitate and abridge labour, and enable one man to dothe work of many. 

First, the improvement of the dexterity of the workmen, necessarilyincreases the quantity of the work he can perform; and the division oflabour, by reducing every man's business to some one simple operation, and by making this operation the sole employment of his life, necessarily increases very much the dexterity of the workman. A commonsmith, who, though accustomed to handle the hammer, has never beenused to make nails, if, upon some particular occasion, he is obligedto attempt it, will scarce, I am assured, be able to make above two orthree hundred nails in a day, and those, too, very bad ones. A smith whohas been accustomed to make nails, but whose sole or principal businesshas not been that of a nailer, can seldom, with his utmost diligence, make more than eight hundred or a thousand nails in a day. I have seenseveral boys, under twenty years of age, who had never exercisedany other trade but that of making nails, and who, when they exertedthemselves, could make, each of them, upwards of two thousand threehundred nails in a day. The making of a nail, however, is by no meansone of the simplest operations. The same person blows the bellows, stirsor mends the fire as there is occasion, heats the iron, and forges everypart of the nail: in forging the head, too, he is obliged to change histools. The different operations into which the making of a pin, or of ametal button, is subdivided, are all of them much more simple, and thedexterity of the person, of whose life it has been the sole business toperform them, is usually much greater. The rapidity with which some ofthe operations of those manufactures are performed, exceeds what thehuman hand could, by those who had never seen them, he supposed capableof acquiring. 

Secondly, The advantage which is gained by saving the time commonly lostin passing from one sort of work to another, is much greater than weshould at first view be apt to imagine it. It is impossible to passvery quickly from one kind of work to another, that is carried on in adifferent place, and with quite different tools. A country weaver, whocultivates a small farm, must loose a good deal of time in passing fromhis loom to the field, and from the field to his loom. When the twotrades can be carried on in the same workhouse, the loss of time is, nodoubt, much less. It is, even in this case, however, very considerable. A man commonly saunters a little in turning his hand from one sort ofemployment to another. When he first begins the new work, he is seldomvery keen and hearty; his mind, as they say, does not go to it, and forsome time he rather trifles than applies to good purpose. The habit ofsauntering, and of indolent careless application, which is naturally, orrather necessarily, acquired by every country workman who is obliged tochange his work and his tools every half hour, and to apply his hand intwenty different ways almost every day of his life, renders him almostalways slothful and lazy, and incapable of any vigorous application, even on the most pressing occasions. Independent, therefore, of hisdeficiency in point of dexterity, this cause alone must always reduceconsiderably the quantity of work which he is capable of performing. 

Thirdly, and lastly, everybody must be sensible how much labour isfacilitated and abridged by the application of proper machinery. It isunnecessary to give any example. I shall only observe, therefore, that the invention of all those machines by which labour is so muchfacilitated and abridged, seems to have been originally owing to thedivision of labour. Men are much more likely to discover easier andreadier methods of attaining any object, when the whole attention oftheir minds is directed towards that single object, than when it isdissipated among a great variety of things. But, in consequence of thedivision of labour, the whole of every man's attention comes naturallyto be directed towards some one very simple object. It is naturally tobe expected, therefore, that some one or other of those who are employedin each particular branch of labour should soon find out easier andreadier methods of performing their own particular work, whenever thenature of it admits of such improvement. A great part of the machinesmade use of in those manufactures in which labour is most subdivided, were originally the invention of common workmen, who, being each of thememployed in some very simple operation, naturally turned their thoughtstowards finding out easier and readier methods of performing it. Whoeverhas been much accustomed to visit such manufactures, must frequentlyhave been shewn very pretty machines, which were the inventions of suchworkmen, in order to facilitate and quicken their own particular partof the work. In the first fire engines {this was the current designationfor steam engines}, a boy was constantly employed to open and shutalternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a stringfrom the handle of the valve which opened this communication toanother part of the machine, the valve would open and shut withouthis assistance, and leave him at liberty to divert himself with hisplay-fellows. One of the greatest improvements that has been madeupon this machine, since it was first invented, was in this manner thediscovery of a boy who wanted to save his own labour. 

All the improvements in machinery, however, have by no means beenthe inventions of those who had occasion to use the machines. Manyimprovements have been made by the ingenuity of the makers of themachines, when to make them became the business of a peculiar trade;and some by that of those who are called philosophers, or men ofspeculation, whose trade it is not to do any thing, but to observeevery thing, and who, upon that account, are often capable of combiningtogether the powers of the most distant and dissimilar objects in theprogress of society, philosophy or speculation becomes, like every otheremployment, the principal or sole trade and occupation of a particularclass of citizens. Like every other employment, too, it is subdividedinto a great 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, improve dexterity, and saves time. Each individual becomesmore expert in his own peculiar branch, more work is done upon thewhole, and the quantity of science is considerably increased by it. 

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

Observe the accommodation of the most common artificer or daylabourer ina civilized and thriving country, and you will perceive that the numberof people, of whose industry a part, though but a small part, has beenemployed in procuring him this accommodation, exceeds all computation. The woollen coat, for example, which covers the day-labourer, as coarseand rough as it may appear, is the produce of the joint labour of agreat multitude of workmen. The shepherd, the sorter of the wool, thewool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their differentarts in order to complete even this homely production. How manymerchants and carriers, besides, must have been employed in transportingthe materials from some of those workmen to others who often live in avery distant part of the country? How much commerce and navigation inparticular, how many ship-builders, sailors, sail-makers, rope-makers, must have been employed in order to bring together the different drugsmade use of by the dyer, which often come from the remotest cornersof the world? What a variety of labour, too, is necessary in order toproduce the tools of the meanest of those workmen! To say nothing ofsuch complicated machines as the ship of the sailor, the mill of thefuller, or even the loom of the weaver, let us consider only whata variety of labour is requisite in order to form that very simplemachine, the shears with which the shepherd clips the wool. The miner, the builder of the furnace for smelting the ore the feller ofthe timber, the burner of the charcoal to be made use of in thesmelting-house, the brickmaker, the bricklayer, the workmen who attendthe furnace, the millwright, the forger, the smith, must all of themjoin their different arts in order to produce them. Were we to examine, in the same manner, all the different parts of his dress and householdfurniture, the coarse linen shirt which he wears next his skin, theshoes which cover his feet, the bed which he lies on, and all thedifferent parts which compose it, the kitchen-grate at which he prepareshis victuals, the coals which he makes use of for that purpose, dug fromthe bowels of the earth, and brought to him, perhaps, by a long sea anda long land-carriage, all the other utensils of his kitchen, all thefurniture of his table, the knives and forks, the earthen or pewterplates upon which he serves up and divides his victuals, the differenthands employed in preparing his bread and his beer, the glass windowwhich lets in the heat and the light, and keeps out the wind and therain, with all the knowledge and art requisite for preparing thatbeautiful and happy invention, without which these northern parts of theworld could scarce have afforded a very comfortable habitation, togetherwith the tools of all the different workmen employed in producing thosedifferent conveniencies; if we examine, I say, all these things, andconsider what a variety of labour is employed about each of them, weshall be sensible that, without the assistance and co-operation of manythousands, the very meanest person in a civilized country could not beprovided, even according to, what we very falsely imagine, the easy andsimple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommodation must nodoubt appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of an European prince does not always so muchexceed that of an industrious and frugal peasant, as the accommodationof the latter exceeds that of many an African king, the absolute mastersof the lives and liberties of ten thousand naked savages. 

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

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

Whether this propensity be one of those original principles in humannature, of which no further account can be given, or whether, as seemsmore probable, it be the necessary consequence of the faculties ofreason and speech, it belongs not to our present subject to inquire. Itis common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts. Twogreyhounds, in running down the same hare, have sometimes the appearanceof acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towardshimself. 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 ever saw oneanimal, by its gestures and natural cries signify to another, this ismine, that yours; I am willing to give this for that. When an animalwants to obtain something either of a man, or of another animal, ithas no other means of persuasion, but to gain the favour of thosewhose service it requires. A puppy fawns upon its dam, and a spanielendeavours, by a thousand attractions, to engage the attention of itsmaster who is at dinner, when it wants to be fed by him. Man sometimesuses the same arts with his brethren, and when he has no other means ofengaging them to act according to his inclinations, endeavours by everyservile and fawning attention to obtain their good will. He has nottime, however, to do this upon every occasion. In civilized society hestands at all times in need of the co-operation and assistance ofgreat multitudes, while his whole life is scarce sufficient to gain thefriendship of a few persons. In almost every other race of animals, eachindividual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no otherliving creature. But man has almost constant occasion for the helpof his brethren, and it is in vain for him to expect it from theirbenevolence only. He will be more likely to prevail if he can interesttheir self-love in his favour, and shew them that it is for their ownadvantage to do for him what he requires of them. Whoever offers toanother a bargain of any kind, proposes to do this. Give me that whichI want, and you shall have this which you want, is the meaning of everysuch offer; and it is in this manner that we obtain from one another thefar greater part of those good offices which we stand in need of. It isnot from the benevolence of the butcher the brewer, or the baker thatwe expect our dinner, but from their regard to their own interest. Weaddress ourselves, not to their humanity, but to their self-love, andnever talk to them of our own necessities, but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence ofhis fellow-citizens. Even a beggar does not depend upon it entirely. The charity of well-disposed people, indeed, supplies him with the wholefund of his subsistence. But though this principle ultimately provideshim with all the necessaries of life which he has occasion for, itneither does nor can provide him with them as he has occasion for them. The greater part of his occasional wants are supplied in the same manneras those of other people, by treaty, by barter, and by purchase. Withthe money which one man gives him he purchases food. The old clotheswhich another bestows upon him he exchanges for other clothes which suithim better, or for lodging, or for food, or for money, with which he canbuy either food, clothes, or lodging, as he has occasion. 

As it is by treaty, by barter, and by purchase, that we obtain from oneanother the greater part of those mutual good offices which we stand inneed of, so it is this same trucking disposition which originally givesoccasion to the division of labour. In a tribe of hunters or shepherds, a particular person makes bows and arrows, for example, with morereadiness and dexterity than any other. He frequently exchanges them forcattle or for venison, with his companions; and he finds at last thathe can, in this manner, get more cattle and venison, than if he himselfwent to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business, and he becomes a sort of armourer. Another excels in making the framesand covers of their little huts or moveable 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 hisinterest to dedicate himself entirely to this employment, and to becomea sort of house-carpenter. In the same manner a third becomes a smithor a brazier; a fourth, a tanner or dresser of hides or skins, theprincipal part of the clothing of savages. And thus the certainty ofbeing able to exchange all that surplus part of the produce of his ownlabour, which is over and above his own consumption, for such partsof the produce of other men's labour as he may have occasion for, encourages every man to apply himself to a particular occupation, andto cultivate and bring to perfection whatever talent of genius he maypossess for that particular species of business. 

The difference of natural talents in different men, is, in reality, muchless than we are aware of; and the very different genius which appearsto distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect ofthe division of labour. The difference between the most dissimilarcharacters, between a philosopher and a common street porter, forexample, seems to arise not so much from nature, as from habit, custom, and education. When they came in to the world, and for the first six oreight years of their existence, they were, perhaps, very much alike, and neither their parents nor play-fellows could perceive any remarkabledifference. About that age, or soon after, they come to be employed invery different occupations. The difference of talents comes then to betaken notice of, and widens by degrees, till at last the vanity ofthe philosopher is willing to acknowledge scarce any resemblance. Butwithout the disposition to truck, barter, and exchange, every man musthave procured to himself every necessary and conveniency of life whichhe wanted. All must have had the same duties to perform, and the samework to do, and there could have been no such difference of employmentas could alone give occasion to any great difference of talents. 

As it is this disposition which forms that difference of talents, so remarkable among men of different professions, so it is this samedisposition which renders that difference useful. Many tribes ofanimals, acknowledged to be all of the same species, derive from naturea much more remarkable distinction of genius, than what, antecedentto custom and education, appears to take place among men. By nature aphilosopher is not in genius and disposition half so different from astreet porter, as a mastiff is from a grey-hound, or a grey-hound froma spaniel, or this last from a shepherd's dog. Those different tribes ofanimals, however, though all of the same species are of scarce anyuse to one another. The strength of the mastiff is not in the leastsupported either by the swiftness of the greyhound, or by the sagacityof the spaniel, or by the docility of the shepherd's dog. The effectsof those different geniuses and talents, for want of the power ordisposition to barter and exchange, cannot be brought into a commonstock, and do not in the least contribute to the better accommodationand conveniency of the species. Each animal is still obliged to supportand defend itself, separately and independently, and derives no sortof advantage 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 different produces oftheir respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, whereevery man may purchase whatever part of the produce of other men'stalents he has occasion for. 

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

As it is the power of exchanging that gives occasion to the divisionof labour, so the extent of this division must always be limited by theextent 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 todedicate himself entirely to one employment, for want of the power toexchange all that surplus part of the produce of his own labour, whichis over and 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, which can becarried on nowhere but in a great town. A porter, for example, can findemployment and subsistence in no other place. A village is by much toonarrow a sphere for him; even an ordinary market-town is scarce largeenough to afford him constant occupation. In the lone houses and verysmall villages which are scattered about in so desert a country as thehighlands of Scotland, every farmer must be butcher, baker, and brewer, for his own family. In such situations we can scarce expect to findeven a smith, a carpenter, or a mason, within less than twenty miles ofanother of the same trade. The scattered families that live at eightor ten miles distance from the nearest of them, must learn to performthemselves a great number of little pieces of work, for which, in morepopulous countries, they would call in the assistance of those workmen. Country workmen are almost everywhere obliged to apply themselves toall the different branches of industry that have so much affinity to oneanother as to be employed about the same sort of materials. A countrycarpenter deals in every sort of work that is made of wood; a countrysmith in every sort of work that is made of iron. The former is not onlya carpenter, but a joiner, a cabinet-maker, and even a carver in wood, as well as a wheel-wright, a plough-wright, a cart and waggon-maker. Theemployments of the latter are still more various. It is impossible thereshould be such a trade as even that of a nailer in the remote and inlandparts of the highlands of Scotland. Such a workman at the rate of athousand nails a-day, and three hundred working days in the year, willmake three hundred thousand nails in the year. But in such a situationit would be impossible to dispose of one thousand, that is, of one day'swork in the year. As by means of water-carriage, a more extensive marketis opened to every sort of industry than what land-carriage alone canafford it, so it is upon the sea-coast, and along the banks of navigablerivers, that industry of every kind naturally begins to subdivide andimprove itself, and it is frequently not till a long time after thatthose improvements extend themselves to the inland parts of the country. A broad-wheeled waggon, attended by two men, and drawn by eight horses, in about six weeks time, carries and brings back between London andEdinburgh near four ton weight of goods. In about the same time a shipnavigated by six or eight men, and sailing between the ports of Londonand Leith, frequently carries and brings back two hundred ton weight ofgoods. Six or eight men, therefore, by the help of water-carriage, can carry and bring back, in the same time, the same quantity of goodsbetween London and Edinburgh as fifty broad-wheeled waggons, attended bya hundred men, and drawn by four hundred horses. Upon two hundred tonsof goods, therefore, carried by the cheapest land-carriage from Londonto Edinburgh, there must be charged the maintenance of a hundred menfor three weeks, and both the maintenance and what is nearly equal tomaintenance the wear and tear of four hundred horses, as well as offifty great waggons. Whereas, upon the same quantity of goods carried bywater, there is to be charged only the maintenance of six or eight men, and the wear and tear of a ship of two hundred tons burthen, togetherwith the value of the superior risk, or the difference of the insurancebetween land and water-carriage. Were there no other communicationbetween those two places, therefore, but by land-carriage, as no goodscould be transported from the one to the other, except such whose pricewas very considerable in proportion to their weight, they could carryon but a small part of that commerce which at present subsists betweenthem, and consequently could give but a small part of that encouragementwhich they at present mutually afford to each other's industry. Therecould be little or no commerce of any kind between the distant parts ofthe world. What goods could bear the expense of land-carriage betweenLondon and Calcutta? Or if there were any so precious as to be able tosupport this expense, with what safety could they be transported throughthe territories of so many barbarous nations? Those two cities, however, at present carry on a very considerable commerce with each other, and bymutually affording a market, give a good deal of encouragement to eachother's industry. 

Since such, therefore, are the advantages of water-carriage, it isnatural that the first improvements of art and industry should be madewhere this conveniency opens the whole world for a market to the produceof every sort of labour, and that they should always be much later inextending themselves into the inland parts of the country. The inlandparts of the country can for a long time have no other market for thegreater part of their goods, but the country which lies round aboutthem, and separates them from the sea-coast, and the great navigablerivers. The extent of the market, therefore, must for a long time bein proportion to the riches and populousness of that country, andconsequently their improvement must always be posterior to theimprovement of that country. In our North American colonies, theplantations have constantly followed either the sea-coast or the banksof the navigable rivers, and have scarce anywhere extended themselves toany considerable distance from both. 

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

Of all the countries on the coast of the Mediterranean sea, Egypt seemsto have been the first in which either agriculture or manufactures werecultivated and improved to any considerable degree. Upper Egypt extendsitself nowhere above a few miles from the Nile; and in Lower Egypt, thatgreat river breaks itself into many different canals, which, with theassistance of a little art, seem to have afforded a communication bywater-carriage, not only between all the great towns, but between allthe considerable villages, and even to many farm-houses in the country, nearly in the same manner as the Rhine and the Maese do in Holland atpresent. The extent and easiness of this inland navigation was probablyone of the principal causes of the early improvement of Egypt. 

The improvements in agriculture and manufactures seem likewise to havebeen of very great antiquity in the provinces of Bengal, in the EastIndies, and in some of the eastern provinces of China, though the greatextent of this antiquity is not authenticated by any histories of whoseauthority we, in this part of the world, are well assured. In Bengal, the Ganges, and several other great rivers, form a great number ofnavigable canals, in the same manner as the Nile does in Egypt. In theeastern provinces of China, too, several great rivers form, by theirdifferent branches, a multitude of canals, and, by communicating withone another, afford an inland navigation much more extensive than thateither of the Nile or the Ganges, or, perhaps, than both of them puttogether. It is remarkable, that neither the ancient Egyptians, nor theIndians, nor the Chinese, encouraged foreign commerce, but seem all tohave derived their great opulence from this inland navigation. 

All the inland parts of Africa, and all that part of Asia which liesany considerable way north of the Euxine and Caspian seas, the ancientScythia, the modern Tartary and Siberia, seem, in all ages of the world, to have been in the same barbarous and uncivilized state in which wefind them at present. The sea of Tartary is the frozen ocean, whichadmits of no navigation; and though some of the greatest rivers in theworld run through that country, they are at too great a distance fromone another to carry commerce and communication through the greaterpart of it. There are in Africa none of those great inlets, such as theBaltic and Adriatic seas in Europe, the Mediterranean and Euxine seasin both Europe and Asia, and the gulfs of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry maritime commerce into the interior parts ofthat great continent; and the great rivers of Africa are at too greata distance from one another to give occasion to any considerable inlandnavigation. The commerce, besides, which any nation can carry on bymeans of a river which does not break itself into any great number ofbranches or canals, and which runs into another territory before itreaches the sea, can never be very considerable, because it is alwaysin the power of the nations who possess that other territory to obstructthe communication between the upper country and the sea. The navigationof the Danube is of very little use to the different states of Bavaria, Austria, and Hungary, in comparison of what it would be, if any of thempossessed the whole of its course, till it falls into the Black sea. 

CHAPTER IV. OF THE ORIGIN AND USE OF MONEY. 

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

But when the division of labour first began to take place, this power ofexchanging must frequently have been very much clogged and embarrassedin its operations. One man, we shall suppose, has more of a certaincommodity than he himself has occasion for, while another has less. Theformer, consequently, would be glad to dispose of; and the latter topurchase, a part of this superfluity. But if this latter should chanceto have nothing that the former stands in need of, no exchange can bemade between them. The butcher has more meat in his shop than he himselfcan consume, and the brewer and the baker would each of them be willingto purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and thebutcher is already provided with all the bread and beer which he hasimmediate occasion for. No exchange can, in this case, be made betweenthem. He cannot be their merchant, nor they his customers; and they areall of them thus mutually less serviceable to one another. In order toavoid the inconveniency 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 in such amanner, as to have at all times by him, besides the peculiar produceof his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchangefor the produce of their industry. Many different commodities, itis probable, were successively both thought of and employed for thispurpose. In the rude ages of society, cattle are said to have been thecommon instrument of commerce; and, though they must have been a mostinconvenient one, yet, in old times, we find things were frequentlyvalued according to the number of cattle which had been given inexchange for them. The armour of Diomede, says Homer, cost only nineoxen; but that of Glaucus cost a hundred oxen. Salt is said to be thecommon instrument of commerce and exchanges in Abyssinia; a species ofshells in some parts of the coast of India; dried cod at Newfoundland;tobacco in Virginia; sugar in some of our West India colonies; hidesor dressed leather in some other countries; and there is at this day avillage In Scotland, where it is not uncommon, I am told, for a workmanto carry nails instead of money to the baker's shop or the ale-house. 

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

Different metals have been made use of by different nations for thispurpose. Iron was the common instrument of commerce among the ancientSpartans, copper among the ancient Romans, and gold and silver among allrich and commercial nations. 

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

The use of metals in this rude state was attended with two veryconsiderable inconveniences; first, with the trouble of weighing, andsecondly, with that of assaying them. In the precious metals, where asmall difference in the quantity makes a great difference in the value, even the business of weighing, with proper exactness, requires at leastvery accurate weights and scales. The weighing of gold, in particular, is an operation of some nicety In the coarser metals, indeed, wherea small error would be of little consequence, less accuracy would, nodoubt, be necessary. Yet we should find it excessively troublesome ifevery time a poor man had occasion either to buy or sell a farthing'sworth of goods, he was obliged to weigh the farthing. The operation ofassaying is still more difficult, still more tedious; and, unless a partof the metal is fairly melted in the crucible, with proper dissolvents, any conclusion that can be drawn from it is extremely uncertain. Beforethe institution of coined money, however, unless they went through thistedious and difficult operation, people must always have been liable tothe grossest frauds and impositions; and instead of a pound weight ofpure silver, or pure copper, might receive, in exchange for their goods, an adulterated composition of the coarsest and cheapest materials, whichhad, however, in their outward appearance, been made to resemble thosemetals. To prevent such abuses, to facilitate exchanges, and therebyto encourage all sorts of industry and commerce, it has been foundnecessary, in all countries that have made any considerable advancestowards improvement, to affix a public stamp upon certain quantities ofsuch particular metals, as were in those countries commonly made use ofto purchase goods. Hence the origin of coined money, and of those publicoffices called mints; institutions exactly of the same nature with thoseof the aulnagers and stamp-masters of woollen and linen cloth. All ofthem are equally meant to ascertain, by means of a public stamp, thequantity and uniform goodness of those different commodities whenbrought to market. 

The first public stamps of this kind that were affixed to the currentmetals, seem in many cases to have been intended to ascertain, what itwas both most difficult and most important to ascertain, the goodness orfineness of the metal, and to have resembled the sterling mark whichis at present affixed to plate and bars of silver, or the Spanish markwhich is sometimes affixed to ingots of gold, and which, being struckonly upon one side of the piece, and not covering the whole surface, ascertains the fineness, but not the weight of the metal. Abraham weighsto Ephron the four hundred shekels of silver which he had agreed to payfor the field of Machpelah. They are said, however, to be the currentmoney of the merchant, and yet are received by weight, and not by tale, in the same manner as ingots of gold and bars of silver are at present. The revenues of the ancient Saxon kings of England are said to have beenpaid, not in money, but in kind, that is, in victuals and provisions ofall sorts. William the Conqueror introduced the custom of paying themin money. This money, however, was for a long time, received at theexchequer, 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, as atpresent, without the trouble of weighing. 

The denominations of those coins seem originally to have expressed theweight or quantity of metal contained in them. In the time of ServiusTullius, who first coined money at Rome, the Roman as or pondo containeda Roman pound of good copper. It was divided, in the same manner as ourTroyes pound, into twelve ounces, each of which contained a real ounceof good copper. The English pound sterling, in the time of Edward I. Contained a pound, Tower weight, of silver of a known fineness. TheTower pound seems to have been something more than the Roman pound, andsomething less than the Troyes pound. This last was not introduced intothe mint of England till the 18th of Henry the VIII. The French livrecontained, in the time of Charlemagne, a pound, Troyes weight, of silverof a known fineness. The fair of Troyes in Champaign was at that timefrequented by all the nations of Europe, and the weights and measuresof so famous a market were generally known and esteemed. The Scots moneypound contained, 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 penny-weight of silver, thetwentieth part of an ounce, and the two hundred-and-fortieth part of apound. The shilling, too, seems originally to have been the denominationof a weight. "When wheat is at twelve shillings the quarter, " says anancient statute of Henry III. "then wastel bread of a farthing shallweigh eleven shillings and fourpence". The proportion, however, betweenthe shilling, and either the penny on the one hand, or the pound on theother, seems not to have been so constant and uniform as that betweenthe penny and the pound. During the first race of the kings of France, the French sou or shilling appears upon different occasions to havecontained five, twelve, twenty, and forty pennies. Among the ancientSaxons, a shilling appears at one time to have contained only fivepennies, and it is not improbable that it may have been as variableamong them as among their neighbours, the ancient Franks. From the timeof Charlemagne among the French, and from that of William the Conqueroramong the English, the proportion between the pound, the shilling, andthe penny, seems to have been uniformly the same as at present, thoughthe value of each has been very different; for in every country of theworld, I believe, the avarice and injustice of princes and sovereignstates, 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 original value, and, instead of weighing a pound, came to weigh only half an ounce. TheEnglish pound and penny contain at present about a third only; the Scotspound and penny about a thirty-sixth; and the French pound and pennyabout a sixty-sixth part of their original value. By means of thoseoperations, the princes and sovereign states which performed them wereenabled, in appearance, to pay their debts and fulfil their engagementswith a smaller quantity of silver than would otherwise have beenrequisite. It was indeed in appearance only; for their creditors werereally defrauded of a part of what was due to them. All other debtors inthe state were allowed the same privilege, and might pay with the samenominal sum of the new and debased coin whatever they had borrowed inthe old. Such operations, therefore, have always proved favourable tothe debtor, and ruinous to the creditor, and have sometimes produceda greater and more universal revolution in the fortunes of privatepersons, than could have been occasioned by a very great publiccalamity. 

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

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

The word VALUE, it is to be observed, has two different meanings, andsometimes expresses the utility of some particular object, and sometimesthe power of purchasing other goods which the possession of that objectconveys. The one may be called 'value in use;' the other, 'valuein exchange. ' The things which have the greatest value in use havefrequently little or no value in exchange; and, on the contrary, thosewhich have the greatest value in exchange have frequently little or novalue in use. Nothing is more useful than water; but it will purchasescarce any thing; scarce any thing can be had in exchange for it. Adiamond, on the contrary, has scarce any value in use; but a very greatquantity of other goods may frequently be had in exchange for it. 

In order to investigate the principles which regulate the exchangeablevalue of commodities, I shall endeavour to shew, First, what is the real measure of this exchangeable value; or whereinconsists the real price of all commodities. 

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

And, lastly, what are the different circumstances which sometimes raisesome or all of these different parts of price above, and sometimes sinkthem below, their natural or ordinary rate; or, what are the causeswhich sometimes hinder the market price, that is, the actual priceof commodities, from coinciding exactly with what may be called theirnatural price. 

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

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

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

The real price of every thing, what every thing really costs to the manwho wants to acquire it, is the toil and trouble of acquiring it. Whatevery thing is really worth to the man who has acquired it and who wantsto dispose of it, or exchange it for something else, is the toil andtrouble which it can save to himself, and which it can impose uponother people. What is bought with money, or with goods, is purchasedby labour, as much as what we acquire by the toil of our own body. Thatmoney, or those goods, indeed, save us this toil. They contain the valueof a certain quantity of labour, which we exchange for what is supposedat the time to contain the value of an equal quantity. Labour was thefirst price, the original purchase money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth ofthe world was originally purchased; and its value, to those who possessit, and who want to exchange it for some new productions, is preciselyequal to the quantity of' labour which it can enable them to purchase orcommand. 

Wealth, as Mr Hobbes says, is power. But the person who either acquires, or succeeds to a great fortune, does not necessarily acquire or succeedto any political power, either civil or military. His fortune may, perhaps, afford him the means of acquiring both; but the mere possessionof that fortune does not necessarily convey to him either. The powerwhich that possession immediately and directly conveys to him, is thepower of purchasing a certain command over all the labour, or overall the produce 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 the samething, of the produce of other men's labour, which it enables him topurchase or command. The exchangeable value of every thing must alwaysbe precisely equal to the extent of this power which it conveys to itsowner. 

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

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

But when barter ceases, and money has become the common instrument ofcommerce, every particular commodity is more frequently exchanged formoney than for any other commodity. The butcher seldom carries his beefor his mutton to the baker or the brewer, in order to exchange them forbread or for beer; but he carries them to the market, where he exchangesthem for money, and afterwards exchanges that money for bread and forbeer. The quantity of money which he gets for them regulates, too, thequantity of bread and beer which he can afterwards purchase. It is morenatural and obvious to him, therefore, to estimate their value by thequantity of money, the commodity for which he immediately exchangesthem, than by that of bread and beer, the commodities for which he canexchange them only by the intervention of another commodity; andrather to say that his butcher's meat is worth three-pence or fourpencea-pound, than that it is worth three or four pounds of bread, orthree or four quarts of small beer. Hence it comes to pass, that theexchangeable value of every commodity is more frequently estimated bythe quantity 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 in theirvalue; are sometimes cheaper and sometimes dearer, sometimes of easierand sometimes of more difficult purchase. The quantity of labour whichany particular quantity of them can purchase or command, or the quantityof other goods which it will exchange for, depends always upon thefertility or barrenness of the mines which happen to be known about thetime when such exchanges are made. The discovery of the abundant minesof America, reduced, in the sixteenth century, the value of gold andsilver in Europe to about a third of what it had been before. As it costless labour to bring those metals from the mine to the market, so, whenthey were brought thither, they could purchase or command less labour;and this revolution in their value, though perhaps the greatest, isby no means the only one of which history gives some account. But as ameasure of quantity, such as the natural foot, fathom, or handful, whichis continually varying in its own quantity, can never be an accuratemeasure of the quantity of other things; so a commodity which is itselfcontinually varying in its own value, can never be an accurate measureof the value of other commodities. Equal quantities of labour, at alltimes and places, may be said to be of equal value to the labourer. Inhis ordinary state of health, strength, and spirits; in the ordinarydegree of his skill and dexterity, he must always lay down the sameportion of his ease, his liberty, and his happiness. The price whichhe pays must always be the same, whatever may be the quantity of goodswhich he receives in return for it. Of these, indeed, it may sometimespurchase a greater and sometimes a smaller quantity; but it is theirvalue which varies, not that of the labour which purchases them. Atall times and places, that is dear which it is difficult to come at, orwhich it costs much labour to acquire; and that cheap which is to behad easily, or with very little labour. Labour alone, therefore, nevervarying in its own value, is alone the ultimate and real standardby which the value of all commodities can at all times and places beestimated and compared. It is their real price; money is their nominalprice only. 

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

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

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

Princes and sovereign states have frequently fancied that they had atemporary interest to diminish the quantity of pure metal contained intheir coins; but they seldom have fancied that they had any to augmentit. The quantity of metal contained in the coins, I believe of allnations, has accordingly been almost continually diminishing, and hardlyever augmenting. Such variations, therefore, tend almost always todiminish the value of a money rent. 

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

The rents which have been reserved in corn, have preserved their valuemuch better than those which have been reserved in money, even where thedenomination of the coin has not been altered. By the 18th of Elizabeth, it was enacted, that a third of the rent of all college leases should bereserved in corn, to be paid either in kind, or according to the currentprices at the nearest public market. The money arising from this cornrent, though originally but a third of the whole, is, in the presenttimes, according to Dr. Blackstone, commonly near double of whatarises from the other two-thirds. The old money rents of colleges must, according to this account, have sunk almost to a fourth part of theirancient value, or are worth little more than a fourth part of the cornwhich they were formerly worth. But since the reign of Philip andMary, the denomination of the English coin has undergone little or noalteration, and the same number of pounds, shillings, and pence, have contained very nearly the same quantity of pure silver. Thisdegradation, therefore, in the value of the money rents of colleges, hasarisen altogether from the degradation in the price of silver. 

When the degradation in the value of silver is combined with thediminution of the quantity of it contained in the coin of the samedenomination, the loss is frequently still greater. In Scotland, wherethe denomination of the coin has undergone much greater alterationsthan it ever did in England, and in France, where it has undergone stillgreater than it ever did in Scotland, some ancient rents, originallyof considerable value, have, in this manner, been reduced almost tonothing. 

Equal quantities of labour will, at distant times, be purchased morenearly with equal quantities of corn, the subsistence of the labourer, than with equal quantities of gold and silver, or, perhaps, of any othercommodity. Equal quantities of corn, therefore, will, at distant times, be more nearly of the same real value, or enable the possessor topurchase or command more nearly the same quantity of the labour of otherpeople. They will do this, I say, more nearly than equal quantities ofalmost any other commodity; for even equal quantities of corn will notdo it exactly. The subsistence of the labourer, or the real price oflabour, as I shall endeavour to shew hereafter, is very different upondifferent occasions; more liberal in a society advancing to opulence, than in one that is standing still, and in one that is standing still, than in one that is going backwards. Every other commodity, however, will, at any particular time, purchase a greater or smaller 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 by anyparticular quantity of that commodity. 

Though the real value of a corn rent, it is to be observed, however, varies much less from century to century than that of a money rent, it varies much more from year to year. The money price of labour, as Ishall endeavour to shew hereafter, does not fluctuate from year to yearwith the money price of corn, but seems to be everywhere accommodated, not to the temporary or occasional, but to the average or ordinary priceof that necessary of life. The average or ordinary price of corn, againis regulated, as I shall likewise endeavour to shew hereafter, by thevalue of silver, by the richness or barrenness of the mines which supplythe market with that metal, or by the quantity of labour which must beemployed, and consequently of corn which must be consumed, in order tobring any particular quantity of silver from the mine to the market. Butthe value of silver, though it sometimes varies greatly from century tocentury, seldom varies much from year to year, but frequently continuesthe same, or very nearly the same, for half a century or a centurytogether. The ordinary or average money price of corn, therefore, may, during so long a period, continue the same, or very nearly the same, too, and along with it the money price of labour, provided, at least, the society continues, in other respects, in the same, or nearly in thesame, condition. In the mean time, the temporary and occasional priceof corn may frequently be double one year of what it had been theyear before, 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 of whatit is when at the former, or will command double the quantity either oflabour, or of the greater part of other commodities; the money price oflabour, and along with it that of most other things, continuing the sameduring all these fluctuations. 

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

But though, in establishing perpetual rents, or even in letting verylong leases, it may be of use to distinguish between real and nominalprice; it is of none in buying and selling, the more common and ordinarytransactions 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 more or lessmoney you get for any commodity, in the London market, for example, the more or less labour it will at that time and place enable you topurchase or command. At the same time and place, therefore, money is theexact measure of the real exchangeable value of all commodities. It isso, however, at the same time and place only. 

Though at distant places there is no regular proportion between the realand the money price of commodities, yet the merchant who carries goodsfrom the one to the other, has nothing to consider but the money price, or the difference between the quantity of silver for which he buys them, and that for which he is likely to sell them. Half an ounce of silver atCanton in China may command a greater quantity both of labour and ofthe necessaries and conveniencies of life, than an ounce at London. Acommodity, therefore, which sells for half an ounce of silver at Canton, may there be really dearer, of more real importance to the man whopossesses it there, than a commodity which sells for an ounce at Londonis to the man who possesses it at London. If a London merchant, however, can buy at Canton, for half an ounce of silver, a commodity which he canafterwards sell at London for an ounce, he gains a hundred per cent. Bythe bargain, just as much as if an ounce of silver was at London exactlyof the same value as at Canton. It is of no importance to him that halfan ounce of silver at Canton would have given him the command of morelabour, and of a greater quantity of the necessaries and convenienciesof life than an ounce can do at London. An ounce at London will alwaysgive him 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, which finallydetermines the prudence or imprudence of all purchases and sales, andthereby regulates almost the whole business of common life in whichprice is concerned, we cannot wonder that it should have been so muchmore attended to than the real price. 

In such a work as this, however, it may sometimes be of use to comparethe different real values of a particular commodity at different timesand places, or the different degrees of power over the labour of otherpeople which it may, upon different occasions, have given to those whopossessed it. We must in this case compare, not so much the differentquantities of silver for which it was commonly sold, as the differentquantities or labour which those different quantities of silver couldhave purchased. But the current prices of labour, at distant times andplaces, can scarce ever be known with any degree of exactness. Thoseof corn, though they have in few places been regularly recorded, are ingeneral better known, and have been more frequently taken notice ofby historians and other writers. We must generally, therefore, contentourselves with them, not as being always exactly in the same proportionas the current prices of labour, but as being the nearest approximationwhich can commonly be had to that proportion. I shall hereafter haveoccasion to make several comparisons of this kind. 

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

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

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

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

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

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

In consequence of any change, however, in this regulated proportion, this distinction becomes, or at least seems to become, something morethan nominal again. If the regulated value of a guinea, for example, was either reduced to twenty, or raised to two-and-twenty shillings, all accounts being kept, and almost all obligations for debt beingexpressed, in silver money, the greater part of payments could in eithercase be made with the same quantity of silver money as before; but wouldrequire very different quantities of gold money; a greater in theone case, and a smaller in the other. Silver would appear to be moreinvariable in its value than gold. Silver would appear to measure thevalue of gold, and gold would not appear to measure the value of silver. The value of gold would seem to depend upon the quantity of silver whichit would exchange for, and the value of silver would not seem to dependupon the quantity of gold which it would exchange for. This difference, however, would be altogether owing to the custom of keeping accounts, and of expressing the amount of all great and small sums ratherin silver than in gold money. One of Mr Drummond's notes forfive-and-twenty or fifty guineas would, after an alteration of thiskind, be still payable with five-and-twenty or fifty guineas, in thesame manner as before. It would, after such an alteration, be payablewith the same quantity of gold as before, but with very differentquantities of silver. In the payment of such a note, gold would appearto be more invariable in its value than silver. Gold would appear tomeasure the value of silver, and silver would not appear to measurethe value of gold. If the custom of keeping accounts, and of expressingpromissory-notes and other obligations for money, in this manner shouldever become 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 regulated proportionbetween the respective values of the different metals in coin, the valueof the most precious metal regulates the value of the whole coin. Twelvecopper pence contain half a pound avoirdupois of copper, of not thebest quality, which, before it is coined, is seldom worth seven-pencein silver. But as, by the regulation, twelve such pence are ordered toexchange for a shilling, they are in the market considered as worth ashilling, and a shilling can at any time be had for them. Even beforethe late reformation of the gold coin of Great Britain, the gold, thatpart of it at least which circulated in London and its neighbourhood, was in general less degraded below its standard weight than the greaterpart of the silver. One-and-twenty worn and defaced shillings, however, were considered as equivalent to a guinea, which, perhaps, indeed, wasworn and defaced too, but seldom so much so. The late regulations havebrought the gold coin as near, perhaps, to its standard weight as itis possible to bring the current coin of any nation; and the orderto receive no gold at the public offices but by weight, is likely topreserve it so, as long as that order is enforced. The silver coin stillcontinues in the same worn and degraded state as before the reformationof the cold coin. In the market, however, one-and-twenty shillings ofthis degraded silver coin are still considered as worth a guinea of thisexcellent gold coin. 

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

In the English mint, a pound weight of gold is coined into forty-fourguineas and a half, which at one-and-twenty shillings the guinea, isequal to forty-six pounds fourteen shillings and sixpence. An ounce ofsuch gold coin, therefore, is worth £ 3:17:10½ in silver. In England, noduty or seignorage is paid upon the coinage, and he who carries a poundweight or an ounce weight of standard gold bullion to the mint, getsback a pound weight or an ounce weight of gold in coin, without anydeduction. Three pounds seventeen shillings and tenpence halfpenny anounce, therefore, is said to be the mint price of gold in England, orthe quantity of gold coin which the mint gives in return for standardgold bullion. 

Before the reformation of the gold coin, the price of standard goldbullion in the market had, for many years, been upwards of £3:18s. Sometimes £ 3:19s, and very frequently £4 an ounce; that sum, it isprobable, in the worn and degraded gold coin, seldom containing morethan an ounce of standard gold. Since the reformation of the gold coin, the market price of standard gold bullion seldom exceeds £ 3:17:7 anounce. Before the reformation of the gold coin, the market price wasalways more or less above the mint price. Since that reformation, themarket price has been constantly below the mint price. But that marketprice is the same whether it is paid in gold or in silver coin. The latereformation of the gold coin, therefore, has raised not only the valueof the gold coin, but likewise that of the silver coin in proportion togold bullion, and probably, too, in proportion to all other commodities;though the price of the greater part of other commodities beinginfluenced by so many other causes, the rise in the value of eithergold or silver coin in proportion to them may not be so distinct andsensible. 

In the English mint, a pound weight of standard silver bullion is coinedinto sixty-two shillings, containing, in the same manner, a pound weightof standard silver. Five shillings and twopence an ounce, therefore, is said to be the mint price of silver in England, or the quantity ofsilver coin which the mint gives in return for standard silver bullion. Before the reformation of the gold coin, the market price of standardsilver bullion was, upon different occasions, five shillings andfourpence, five shillings and fivepence, five shillings and sixpence, five shillings and sevenpence, and very often five shillings andeightpence an ounce. Five shillings and sevenpence, however, seems tohave been the most common price. Since the reformation of the gold coin, the market 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 not fallenso low as the mint price. 

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

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

Were the silver coin brought back as near to its standard weight asthe gold, a guinea, it is probable, would, according to the presentproportion, exchange for more silver in coin than it would purchasein bullion. The silver coin containing its full standard weight, therewould in this case, be a profit in melting it down, in order, first tosell the bullion for gold coin, and afterwards to exchange this goldcoin for silver coin, to be melted down in the same manner. Somealteration in the present proportion seems to be the only method ofpreventing this inconveniency. 

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

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

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

The occasional fluctuations in the market price of gold and silverbullion arise from the same causes as the like fluctuations in that ofall other commodities. The frequent loss of those metals from variousaccidents by sea and by land, the continual waste of them in gilding andplating, in lace and embroidery, in the wear and tear of coin, and inthat of plate, require, in all countries which possess no mines of theirown, a continual importation, in order to repair this loss and thiswaste. The merchant importers, like all other merchants, we may believe, endeavour, as well as they can, to suit their occasional importationsto what they judge is likely to be the immediate demand. With all theirattention, however, they sometimes overdo the business, and sometimesunderdo it. When they import more bullion than is wanted, rather thanincur the risk and trouble of exporting it again, they are sometimeswilling to sell a part of it for something less than the ordinary oraverage price. When, on the other hand, they import less than is wanted, they get something more than this price. But when, under all thoseoccasional fluctuations, the market price either of gold or silverbullion continues for several years together steadily and constantly, either more or less above, or more or less below the mint price, wemay be assured that this steady and constant, either superiority orinferiority of price, is the effect of something in the state of thecoin, which, at that time, renders a certain quantity of coin either ofmore value or of less value than the precise quantity of bullion whichit ought to contain. The constancy and steadiness of the effect supposesa proportionable constancy and steadiness in the cause. 

The money of any particular country is, at any particular time andplace, more or less an accurate measure or value, according as thecurrent coin is more or less exactly agreeable to its standard, orcontains more or less exactly the precise quantity of pure gold or puresilver which it ought to contain. If in England, for example, forty-fourguineas and a half contained exactly a pound weight of standard gold, or eleven ounces of fine gold, and one ounce of alloy, the gold coin ofEngland would be as accurate a measure of the actual value of goods atany particular time and place as the nature of the thing would admit. But if, by rubbing and wearing, forty-four guineas and a half generallycontain less than a pound weight of standard gold, the diminution, however, being greater in some pieces than in others, the measure ofvalue comes to be liable to the same sort of uncertainty to which allother weights and measures are commonly exposed. As it rarely happensthat these 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, byexperience, they actually are. In consequence of a like disorder in thecoin, the price of goods comes, in the same manner, to be adjusted, notto the quantity of pure gold or silver which the coin ought to contain, but to that which, upon an average, it is found, by experience, itactually does contain. 

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

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

In that early and rude state of society which precedes both theaccumulation of stock and the appropriation of land, the proportionbetween the quantities of labour necessary for acquiring differentobjects, seems to be the only circumstance which can afford any rulefor exchanging them for one another. If among a nation of hunters, forexample, it usually costs twice the labour to kill a beaver which itdoes to kill a deer, one beaver should naturally exchange for or beworth two deer. It is natural that what is usually the produce of twodays or two hours labour, should be worth double of what is usually theproduce of one day's or one hour's labour. 

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

Or if the one species of labour requires an uncommon degree of dexterityand ingenuity, the esteem which men have for such talents, willnaturally give a value to their produce, superior to what would be dueto the time employed about it. Such talents can seldom be acquired butin consequence of long application, and the superior value of theirproduce may frequently be no more than a reasonable compensation for thetime and labour which must be spent in acquiring them. In the advancedstate of society, allowances of this kind, for superior hardship andsuperior skill, are commonly made in the wages of labour; and somethingof the same kind must probably have taken place in its earliest andrudest period. 

In this state of things, the whole produce of labour belongs to thelabourer; and the quantity of labour commonly employed in acquiring orproducing any commodity, is the only circumstance which can regulatethe quantity of labour which it ought commonly to purchase, command, orexchange for. 

As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industriouspeople, whom they will supply with materials and subsistence, in orderto make a profit by the sale of their work, or by what their labour addsto the value of the materials. In exchanging the complete manufactureeither for money, for labour, or for other goods, over and above whatmay be sufficient to pay the price of the materials, and the wages ofthe workmen, something must be given for the profits of the undertakerof the work, who hazards his stock in this adventure. The value whichthe workmen add to the materials, therefore, resolves itself in thiscase into two parts, of which the one pays their wages, the other theprofits of their employer upon the whole stock of materials and wageswhich he advanced. He could have no interest to employ them, unlesshe expected from the sale of their work something more than what wassufficient to replace his stock to him; and he could have no interest toemploy a great stock rather than a small one, unless his profits were tobear some proportion to the extent of his stock. 

The profits of stock, it may perhaps be thought, are only a differentname for the wages of a particular sort of labour, the labour ofinspection and direction. They are, however, altogether different, areregulated by quite different principles, and bear no proportion to thequantity, the hardship, or the ingenuity of this supposed labour ofinspection and direction. They are regulated altogether by the valueof the stock employed, and are greater or smaller in proportion tothe extent of this stock. Let us suppose, for example, that in someparticular place, where the common annual profits of manufacturing stockare ten per cent. There are two different manufactures, in each of whichtwenty workmen are employed, at the rate of fifteen pounds a year each, or at the expense of three hundred a-year in each manufactory. Let ussuppose, too, that the coarse materials annually wrought up in the onecost only seven hundred pounds, while the finer materials in the othercost seven thousand. The capital annually employed in the one will, inthis case, amount only to one thousand pounds; whereas that employedin the other will amount to seven thousand three hundred pounds. At therate of ten per cent. Therefore, the undertaker of the one will expect ayearly profit of about one hundred pounds only; while that of the otherwill expect about seven hundred and thirty pounds. But though theirprofits are so very different, their labour of inspection and directionmay be either altogether or very nearly the same. In many great works, almost the whole labour of this kind is committed to some principalclerk. His wages properly express the value of this labour of inspectionand direction. Though in settling them some regard is had commonly, notonly to his labour and skill, but to the trust which is reposed in him, yet they never bear any regular proportion to the capital of which heoversees the management; and the owner of this capital, though he isthus discharged of almost all labour, still expects that his profitshould bear a regular proportion to his capital. In the price ofcommodities, therefore, the profits of stock constitute a component partaltogether different from the wages of labour, and regulated by quitedifferent principles. 

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

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

The real value of all the different component parts of price, it must beobserved, is measured by the quantity of labour which they can, each ofthem, purchase or command. Labour measures the value, not only of thatpart of price which resolves itself into labour, but of that whichresolves itself into rent, and of that which resolves itself intoprofit. 

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

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

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

The price of flax resolves itself into the same three parts as that ofcorn. 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 partof the price which resolves itself into wages and profit, comes to begreater in proportion to that which resolves itself into rent. In theprogress of the manufacture, not only the number of profits increase, but every subsequent profit is greater than the foregoing; because thecapital from which it is derived must always be greater. The capitalwhich employs the weavers, for example, must be greater than that whichemploys the spinners; because it not only replaces that capital with itsprofits, but pays, besides, the wages of the weavers: and the profitsmust always bear 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 thewages of labour, and the profits of stock; and a still smaller number, in which it consists altogether in the wages of labour. In the price ofsea-fish, for example, one part pays the labour of the fisherman, andthe other the profits of the capital employed in the fishery. Rent veryseldom makes any part of it, though it does sometimes, as I shall shewhereafter. It is otherwise, at least through the greater part of Europe, in river fisheries. A salmon fishery pays a rent; and rent, though itcannot well be called the rent of land, makes a part of the price of asalmon, as well as wares and profit. In some parts of Scotland, a fewpoor people make a trade of gathering, along the sea-shore, those littlevariegated stones commonly known by the name of Scotch pebbles. Theprice which is paid to them by the stone-cutter, is altogether the wagesof their labour; neither rent nor profit makes an part of it. 

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

As the price or exchangeable value of every particular commodity, takenseparately, resolves itself into some one or other, or all of thosethree parts; so that of all the commodities which compose the wholeannual produce of the labour of every country, taken complexly, mustresolve itself into the same three parts, and be parcelled out amongdifferent inhabitants of the country, either as the wages of theirlabour, the profits of their stock, or the rent of their land. The wholeof what is annually either collected or produced by the labour of everysociety, or, what comes to the same thing, the whole price of it, is inthis manner originally distributed among some of its different members. Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value. All other revenue is ultimatelyderived from some one or other of these. 

Whoever derives his revenue from a fund which is his own, must draw iteither from his labour, from his stock, or from his land. The revenuederived from labour is called wages; that derived from stock, by theperson who manages or employs it, is called profit; that derived from itby the person who does not employ it himself, but lends it to another, is called the interest or the use of money. It is the compensationwhich the borrower pays to the lender, for the profit which he hasan opportunity of making by the use of the money. Part of that profitnaturally belongs to the borrower, who runs the risk and takes thetrouble of employing it, and part to the lender, who affords him theopportunity of making this profit. The interest of money is always aderivative revenue, which, if it is not paid from the profit which ismade by the use of the money, must be paid from some other source ofrevenue, 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 to thelandlord. The revenue of the farmer is derived partly from his labour, and partly from his stock. To him, land is only the instrument whichenables him to earn the wages of this labour, and to make the profits ofthis stock. All taxes, and all the revenue which is founded upon them, all salaries, pensions, and annuities of every kind, are ultimatelyderived from some one or other of those three original sources ofrevenue, and are paid either immediately or mediately from the wages oflabour, the profits of stock, or the rent of land. 

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

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

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

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

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

As in a civilized country there are but few commodities of which theexchangeable value arises from labour only, rent and profit contributinglargely to that of the far greater part of them, so the annual produceof its labour will always be sufficient to purchase or command a muchgreater quantity of labour than what was employed in raising, preparing, and bringing that produce to market. If the society were annually toemploy all the labour which it can annually purchase, as the quantityof labour would increase greatly every year, so the produce of everysucceeding year would be of vastly greater value than that of theforegoing. But there is no country in which the whole annual produce isemployed in maintaining the industrious. The idle everywhere consume agreat part of it; and, according to the different proportions in whichit is annually divided between those two different orders of people, itsordinary or average value must either annually increase or diminish, orcontinue the same from one year to another. 

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

There is in every society or neighbourhood an ordinary or average rate, both of wages and profit, in every different employment of labour andstock. This rate is naturally regulated, as I shall shew hereafter, partly by the general circumstances of the society, their riches orpoverty, their advancing, stationary, or declining condition, and partlyby the particular 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 shewhereafter, partly by the general circumstances of the society orneighbourhood in which the land is situated, and partly by the naturalor improved fertility of the land. 

These ordinary or average rates may be called the natural rates ofwages, profit and rent, at the time and place in which they commonlyprevail. 

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

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

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

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

The market price of every particular commodity is regulated by theproportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of thecommodity, or the whole value of the rent, labour, and profit, whichmust be paid in order to bring it thither. Such people may be calledthe effectual demanders, and their demand the effectual demand; since itmaybe sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said, in some sense, to have a demand for a coach and six; he might like tohave it; but his demand is not an effectual demand, as the commodity cannever be brought to market in order to satisfy it. 

When the quantity of any commodity which is brought to market fallsshort of the effectual demand, all those who are willing to pay thewhole value of the rent, wages, and profit, which must be paid in orderto bring it thither, cannot be supplied with the quantity which theywant. Rather than want it altogether, some of them will be willing togive more. A competition will immediately begin among them, and themarket price will rise more or less above the natural price, accordingas either the greatness of the deficiency, or the wealth and wantonluxury of the competitors, happen to animate more or less the eagernessof the competition. Among competitors of equal wealth and luxury, the same deficiency will generally occasion a more or less eagercompetition, according as the acquisition of the commodity happens tobe of more or less importance to them. Hence the exorbitant price of thenecessaries of life during the blockade of a town, or in a famine. 

When the quantity brought to market exceeds the effectual demand, itcannot be all sold to those who are willing to pay the whole value ofthe rent, wages, and profit, which must be paid in order to bring itthither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of thewhole. The market price will sink more or less below the natural price, according as the greatness of the excess increases more or less thecompetition of the sellers, or according as it happens to be more orless important to them to get immediately rid of the commodity. The sameexcess in the importation of perishable, will occasion a much greatercompetition than in that of durable commodities; in the importation oforanges, for example, than in that of old iron. 

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

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

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

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

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

The whole quantity of industry annually employed in order to bringany commodity to market, naturally suits itself in this manner to theeffectual demand. It naturally aims at bringing always that precisequantity thither which may be sufficient to supply, and no more thansupply, 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, in differentyears, produce very different quantities of corn, wine, oil, hops, etc. But the same number of spinners or weavers will every year produce thesame, or very nearly the same, quantity of linen and woollen cloth. Itis only the average produce of the one species of industry which canbe suited, in any respect, to the effectual demand; and as its actualproduce is frequently much greater, and frequently much less, than itsaverage produce, the quantity of the commodities brought to market willsometimes exceed a good deal, and sometimes fall short a good deal, of the effectual demand. Even though that demand, therefore, shouldcontinue always 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 always thesame, or very nearly the same, it can be more exactly suited to theeffectual demand. While that demand continues the same, therefore, themarket price of the commodities is likely to do so too, and to be eitheraltogether, or as nearly as can be judged of, the same with the naturalprice. That the price of linen and woollen cloth is liable neither tosuch frequent, nor to such great variations, as the price of corn, every man's experience will inform him. The price of the one species ofcommodities varies only with the variations in the demand; that of theother varies not only with the variations in the demand, but with themuch greater, and more frequent, variations in the quantity of what isbrought to market, in order to supply that demand. 

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

Such fluctuations affect both the value and the rate, either of wages orof profit, according as the market happens to be either overstocked orunderstocked with commodities or with labour, with work done, or withwork to be done. A public mourning raises the price of black cloth( with which the market is almost always understocked upon suchoccasions), and augments the profits of the merchants who possess anyconsiderable quantity of it. It has no effect upon the wages of theweavers. The market is understocked with commodities, not with labour, with work done, not with work to be done. It raises the wages ofjourneymen tailors. The market is here understocked with labour. Thereis an effectual demand for more labour, for more work to be done, thancan be had. It sinks the price of coloured silks and cloths, and therebyreduces the profits of the merchants who have any considerable quantityof them upon hand. It sinks, too, the wages of the workmen employedin preparing such commodities, for which all demand is stopped for sixmonths, perhaps for a twelvemonth. The market is here overstocked bothwith commodities and with labour. 

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

When, by an increase in the effectual demand, the market price of someparticular commodity happens to rise a good deal above the naturalprice, those who employ their stocks in supplying that market, aregenerally careful to conceal this change. If it was commonly known, their great profit would tempt so many new rivals to employ their stocksin the same way, that, the effectual demand being fully supplied, themarket price would soon be reduced to the natural price, and, perhaps, for some time even below it. If the market is at a great distance fromthe residence of those who supply it, they may sometimes be able tokeep the secret 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; and theextraordinary profit can last very little longer than they are kept. 

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

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

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 effectual demand. The whole quantity brought to market, therefore, may be disposed of tothose who are willing to give more than what is sufficient to pay therent of the land which produced them, together with the wages of thelabour and the profits of the stock which were employed in preparingand bringing them to market, according to their natural rates. Suchcommodities may continue for whole centuries together to be sold at thishigh price; and that part of it which resolves itself into the rent ofland, is in this case the part which is generally paid above its naturalrate. The rent of the land which affords such singular and esteemedproductions, like the rent of some vineyards in France of a peculiarlyhappy soil and situation, bears no regular proportion to the rentof other equally fertile and equally well cultivated land in itsneighbourhood. The wages of the labour, and the profits of the stockemployed in bringing such commodities to market, on the contrary, areseldom out of their natural proportion to those of the other employmentsof labour and stock in their neighbourhood. 

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

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

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

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

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

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

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

This is all that I think necessary to be observed at present concerningthe deviations, whether occasional or permanent, of the market price ofcommodities 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 society thisrate varies according to their circumstances, according to their richesor poverty, their advancing, stationary, or declining condition. Ishall, in the four following chapters, endeavour to explain, as fullyand distinctly as I can, the causes of those different variations. 

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

Secondly, I shall endeavour to shew what are the circumstances whichnaturally determine the rate of profit; and in what manner, too, thosecircumstances are affected by the like variations in the state of thesociety. 

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

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

CHAPTER VIII. OF THE WAGES OF LABOUR. 

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

In that original state of things which precedes both the appropriationof land and the accumulation of stock, the whole produce of labourbelongs to the labourer. He has neither landlord nor master to sharewith him. 

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

But though all things would have become cheaper in reality, inappearance many things might have become dearer, than before, or havebeen exchanged for a greater quantity of other goods. Let us suppose, for example, that in the greater part of employments the productivepowers of labour had been improved to tenfold, or that a day'slabour could produce ten times the quantity of work which it had doneoriginally; but that in a particular employment they had been improvedonly to double, or that a day's labour could produce only twice thequantity of work which it had done before. In exchanging the produce ofa day's labour in the greater part of employments for that of a day'slabour in this particular one, ten times the original quantity of workin them would purchase only twice the original quantity in it. Anyparticular quantity 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 the quantity ofother goods to purchase it, it would require only half the quantity oflabour either to purchase or to produce it. The acquisition, therefore, would be twice as easy as before. 

But this original state of things, in which the labourer enjoyedthe whole produce of his own labour, could not last beyond the firstintroduction of the appropriation of land and the accumulation ofstock. It was at an end, therefore, long before the most considerableimprovements were made in the productive powers of labour; and it wouldbe to no purpose to trace further what might have been its effects uponthe recompence or wages of labour. 

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

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

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

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

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

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

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, andforce the other into a compliance with their terms. The masters, beingfewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while itprohibits those of the workmen. We have no acts of parliament againstcombining to lower the price of work, but many against combining toraise it. In all such disputes, the masters can hold out much longer. Alandlord, a farmer, a master manufacturer, or merchant, though they didnot employ a single workman, could generally live a year or two upon thestocks, which they have already acquired. Many workmen could not subsista week, few could subsist a month, and scarce any a year, withoutemployment. In the long run, the workman may be as necessary to hismaster as his master is to him; but the necessity is not so immediate. 

We rarely hear, it has been said, of the combinations of masters, thoughfrequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of thesubject. Masters are always and everywhere in a sort of tacit, butconstant and uniform, combination, not to raise the wages of labourabove their actual rate. To violate this combination is everywhere amost unpopular action, and a sort of reproach to a master among hisneighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and, one may say, the natural state ofthings, which nobody ever hears of. Masters, too, sometimes enter intoparticular combinations to sink the wages of labour even below thisrate. These are always conducted with the utmost silence and secrecytill the moment of execution; and when the workmen yield, as theysometimes do without resistance, though severely felt by them, theyare never heard of by other people. Such combinations, however, arefrequently resisted by a contrary defensive combination of the workmen, who sometimes, too, without any provocation of this kind, combine, of their own accord, to raise the price of their labour. Their usualpretences are, sometimes the high price of provisions, sometimes thegreat profit which their masters make by their work. But whether theircombinations be offensive or defensive, they are always abundantly heardof. In order to bring the point to a speedy decision, they have alwaysrecourse to the loudest clamour, and sometimes to the most shockingviolence and outrage. They are desperate, and act with the folly andextravagance of desperate men, who must either starve, or frighten theirmasters into an immediate compliance with their demands. The masters, upon these occasions, are just as clamorous upon the other side, andnever cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted withso much severity against the combination of servants, labourers, andjourneymen. The workmen, accordingly, very seldom derive any advantagefrom the violence of those tumultuous combinations, which, partly fromthe interposition of the civil magistrate, partly from the superiorsteadiness of the masters, partly from the necessity which the greaterpart of the workmen are under of submitting for the sake of presentsubsistence, generally end in nothing but the punishment or ruin of theringleaders. 

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

A man must always live by his work, and his wages must at least besufficient to maintain him. They must even upon most occasions besomewhat more, otherwise it would be impossible for him to bring up afamily, and the race of such workmen could not last beyond the firstgeneration. Mr Cantillon seems, upon this account, to suppose that thelowest species of common labourers must everywhere earn at least doubletheir own maintenance, in order that, one with another, they may beenabled to bring up two children; the labour of the wife, on account ofher necessary attendance 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 poorest labourers, therefore, according to this account, must, one with another, attempt torear at least four children, in order that two may have an equal chanceof living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of anable-bodied slave, the same author adds, is computed to be worth doublehis maintenance; and that of the meanest labourer, he thinks, cannot beworth less than that of an able-bodied slave. Thus far at least seemscertain, that, in order to bring up a family, the labour of the husbandand wife together 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 many other, I shall not take upon me to determine. 

There are certain circumstances, however, which sometimes givethe labourers an advantage, and enable them to raise their wagesconsiderably above this rate, evidently the lowest which is consistentwith common humanity. 

When in any country the demand for those who live by wages, labourers, journeymen, servants of every kind, is continually increasing; whenevery year furnishes employment for a greater number than had beenemployed the year before, the workmen have no occasion to combinein order to raise their wages. The scarcity of hands occasions acompetition among masters, who bid against one another in order to getworkmen, and thus voluntarily break through the natural combination ofmasters not to raise wages. The demand for those who live by wages, itis evident, cannot increase but in proportion to the increase of thefunds which are destined to the payment of wages. These funds are of twokinds, first, the revenue which is over and above what is necessary forthe maintenance; and, secondly, the stock which is over and above whatis necessary for the employment of their masters. 

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

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

The demand for those who live by wages, therefore, necessarily increaseswith the increase of the revenue and stock of every country, and cannotpossibly increase without it. The increase of revenue and stock is theincrease of national wealth. The demand for those who live by wages, therefore, naturally increases with the increase of national wealth, andcannot possibly increase without it. 

It is not the actual greatness of national wealth, but its continualincrease, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or inthose which are growing rich the fastest, that the wages of labourare highest. England is certainly, in the present times, a much richercountry than any part of North America. The wages of labour, however, are much higher in North America than in any part of England. In theprovince of New York, common labourers earned in 1773, before thecommencement of the late disturbances, three shillings and sixpencecurrency, equal to two shillings sterling, a-day; ship-carpenters, tenshillings and sixpence currency, with a pint of rum, worth sixpencesterling, equal in all to six shillings and sixpence sterling;house-carpenters and bricklayers, eight shillings currency, equal tofour shillings and sixpence sterling; journeymen tailors, five shillingscurrency, equal to about two shillings and tenpence sterling. Theseprices are all above the London price; and wages are said to be ashigh in the other colonies as in New York. The price of provisions iseverywhere in North America much lower than in England. A dearth hasnever been known there. In the worst seasons they have always had asufficiency for themselves, though less for exportation. If the moneyprice of labour, therefore, be higher than it is anywhere in themother-country, its real price, the real command of the necessaries andconveniencies of life which it conveys to the labourer, must be higherin a still greater proportion. 

But though North America is not yet so rich as England, it is muchmore thriving, and advancing with much greater rapidity to the furtheracquisition of riches. The most decisive mark of the prosperity ofany country is the increase of the number of its inhabitants. In GreatBritain, and most other European countries, they are not supposed todouble in less than five hundred years. In the British colonies in NorthAmerica, it has been found that they double in twenty or five-and-twentyyears. Nor in the present times is this increase principally owingto the continual importation of new inhabitants, but to the greatmultiplication of the species. Those who live to old age, it is said, frequently see there from fifty to a hundred, and sometimes many more, descendants from their own body. Labour is there so well rewarded, thata numerous family of children, instead of being a burden, is a source ofopulence and prosperity to the parents. The labour of each child, beforeit can leave their house, is computed to be worth a hundred pounds cleargain to them. A young widow with four or five young children, who, amongthe middling or inferior ranks of people in Europe, would have so littlechance for a second husband, is there frequently courted as a sort offortune. The value of children is the greatest of all encouragements tomarriage. We cannot, therefore, wonder that the people in North Americashould generally marry very young. Notwithstanding the great increaseoccasioned by such early marriages, there is a continual complaint ofthe scarcity of hands in North America. The demand for labourers, thefunds destined for maintaining them increase, it seems, still fasterthan they can find labourers to employ. 

Though the wealth of a country should be very great, yet if it has beenlong stationary, we must not expect to find the wages of labour veryhigh in it. The funds destined for the payment of wages, the revenueand stock of its inhabitants, may be of the greatest extent; but if theyhave continued for several centuries of the same, or very nearly of thesame extent, the number of labourers employed every year could easilysupply, and even more than supply, the number wanted the following year. There could seldom be any scarcity of hands, nor could the masters beobliged to bid against one another in order to get them. The hands, on the contrary, would, in this case, naturally multiply beyond theiremployment. There would be a constant scarcity of employment, and thelabourers would be obliged to bid against one another in order to getit. If in such a country the wages off labour had ever been more thansufficient to maintain the labourer, and to enable him to bring up afamily, the competition of the labourers and the interest of the masterswould soon reduce them to the lowest rate which is consistent withcommon humanity. China has been long one of the richest, that is, one ofthe most fertile, best cultivated, most industrious, and most populous, countries in the world. It seems, however, to have been long stationary. Marco Polo, who visited it more than five hundred years ago, describesits cultivation, industry, and populousness, almost in the same termsin which they are described by travellers in the present times. It had, perhaps, even long before his time, acquired that full complement ofriches which the nature of its laws and institutions permits it toacquire. The accounts of all travellers, inconsistent in many otherrespects, agree in the low wages of labour, and in the difficulty whicha labourer finds in bringing up a family in China. If by digging theground a whole day he can get what will purchase a small quantity ofrice in the evening, he is contented. The condition of artificers is, if possible, still worse. Instead of waiting indolently in theirwork-houses for the calls of their customers, as in Europe, they arecontinually running about the streets with the tools of their respectivetrades, offering their services, and, as it were, begging employment. The poverty of the lower ranks of people in China far surpasses thatof the most beggarly nations in Europe. In the neighbourhood of Canton, many hundred, it is commonly said, many thousand families have nohabitation on the land, but live constantly in little fishing-boatsupon the rivers and canals. The subsistence which they find there isso scanty, that they are eager to fish up the nastiest garbage thrownoverboard from any European ship. Any carrion, the carcase of a dead dogor cat, for example, though half putrid and stinking, is as welcometo them as the most wholesome food to the people of other countries. Marriage is encouraged in China, not by the profitableness of children, but by the liberty of destroying them. In all great towns, several areevery night exposed in the street, or drowned like puppies in the water. The performance of this horrid office is even said to be the avowedbusiness by which some people earn their subsistence. 

China, however, though it may, perhaps, stand still, does not seem togo backwards. Its towns are nowhere deserted by their inhabitants. Thelands which had once been cultivated, are nowhere neglected. The same, or very nearly the same, annual labour, must, therefore, continue tobe performed, and the funds destined for maintaining it must not, consequently, be sensibly diminished. The lowest class of labourers, therefore, notwithstanding their scanty subsistence, must some way 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 funds destined for themaintenance of labour were sensibly decaying. Every year the demandfor servants and labourers would, in all the different classes ofemployments, be less than it had been the year before. Many who had beenbred in the superior classes, not being able to find employment in theirown business, would be glad to seek it in the lowest. The lowestclass being not only overstocked with its own workmen, but with theoverflowings of all the other classes, the competition for employmentwould be so great in it, as to reduce the wages of labour to the mostmiserable and scanty subsistence of the labourer. Many would not be ableto find employment even upon these hard terms, but would either starve, or be driven to seek a subsistence, either by begging, or by theperpetration perhaps, of the greatest enormities. Want, famine, andmortality, would immediately prevail in that class, and from thenceextend themselves to all the superior classes, till the numberof inhabitants in the country was reduced to what could easily bemaintained by the revenue and stock which remained in it, and which hadescaped either the tyranny or calamity which had destroyed the rest. This, perhaps, is nearly the present state of Bengal, and of some otherof the English settlements in the East Indies. In a fertile country, which had before been much depopulated, where subsistence, consequently, should not be very difficult, and where, notwithstanding, three or fourhundred thousand people die of hunger in one year, we maybe assured thatthe funds destined for the maintenance of the labouring poor are fastdecaying. The difference between the genius of the British constitution, which protects and governs North America, and that of the mercantilecompany which oppresses and domineers in the East Indies, cannot, perhaps, be better illustrated than by the different state of thosecountries. 

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

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

First, in almost every part of Great Britain there is a distinction, even in the lowest species of labour, between summer and winter wages. Summer wages are always highest. But, on account of the extraordinaryexpense of fuel, the maintenance of a family is most expensive inwinter. Wages, therefore, being highest when this expense is lowest, itseems evident that they are not regulated by what is necessary for thisexpense, but by the quantity and supposed value of the work. A labourer, it may be said, indeed, ought to save part of his summer wages, in orderto defray his winter expense; and that, through the whole year, they donot exceed what is necessary to maintain his family through the wholeyear. A slave, however, or one absolutely dependent on us for immediatesubsistence, would not be treated in this manner. His daily subsistencewould 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 to year, frequently from month to month. But in many places, the money priceof labour remains uniformly the same, sometimes for half a centurytogether. If, in these places, therefore, the labouring poor canmaintain their families in dear years, they must be at their ease intimes of moderate plenty, and in affluence in those of extraordinarycheapness. The high price of provisions during these ten years past, hasnot, in many parts of the kingdom, been accompanied with any sensiblerise in the money price of labour. It has, indeed, in some; owing, probably, more to the increase of the demand for labour, than to that ofthe price of provisions. 

Thirdly, as the price of provisions varies more from year to year thanthe wages of labour, so, on the other hand, the wages of labour varymore from place to place than the price of provisions. The prices ofbread and butchers' meat are generally the same, or very nearly thesame, through the greater part of the united kingdom. These, and mostother things which are sold by retail, the way in which the labouringpoor buy all things, are generally fully as cheap, or cheaper, in greattowns than in the remoter parts of the country, for reasons which Ishall have occasion to explain hereafter. But the wages of labour ina great town and its neighbourhood, are frequently a fourth or a fifthpart, twenty or five-and--twenty per cent. Higher than at a few milesdistance. Eighteen pence a day may be reckoned the common price oflabour in London and its neighbourhood. At a few miles distance, itfalls to fourteen and fifteen pence. Tenpence may be reckoned its pricein Edinburgh and its neighbourhood. At a few miles distance, it falls toeightpence, the usual price of common labour through the greater partof the low country of Scotland, where it varies a good deal less thanin England. Such a difference of prices, which, it seems, is notalways sufficient to transport a man from one parish to another, would necessarily occasion so great a transportation of the most bulkycommodities, not only from one parish to another, but from one end ofthe kingdom, almost from one end of the world to the other, as wouldsoon reduce them more nearly to a level. After all that has been saidof the levity and inconstancy of human nature, it appears evidently fromexperience, that man is, of all sorts of luggage, the most difficultto be transported. If the labouring poor, therefore, can maintain theirfamilies in those parts of the kingdom where the price of labour islowest, they must be 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 Scotland than inEngland, whence Scotland receives almost every year very large supplies. But English corn must be sold dearer in Scotland, the country to whichit is brought, than in England, the country from which it comes; and inproportion to its quality it cannot be sold dearer in Scotland than theScotch corn that comes to the same market in competition with it. Thequality of grain depends chiefly upon the quantity of flour or mealwhich it yields at the mill; and, in this respect, English grain is somuch superior to the Scotch, that though often dearer in appearance, or in proportion to the measure of its bulk, it is generally cheaper inreality, or in proportion to its quality, or even to the measure of itsweight. The price of labour, on the contrary, is dearer in Englandthan in Scotland. If the labouring poor, therefore, can maintaintheir families in the one part of the united kingdom, they must be inaffluence in the other. Oatmeal, indeed, supplies the common people inScotland with the greatest and the best part of their food, which is, ingeneral, much inferior to that of their neighbours of the same rank inEngland. This difference, however, in the mode of their subsistence, isnot the cause, but the effect, of the difference in their wages; though, by a strange misapprehension, I have frequently heard it represented asthe cause. It is not because one man keeps a coach, while his neighbourwalks a-foot, that the one is rich, and the other poor; but because theone is rich, he keeps a coach, and because the other is poor, he walksa-foot. 

During the course of the last century, taking one year with another, grain was dearer in both parts of the united kingdom than during thatof the present. This is a matter of fact which cannot now admit ofany reasonable doubt; and the proof of it is, if possible, still moredecisive with regard to Scotland than with regard to England. It isin Scotland supported by the evidence of the public fiars, annualvaluations made upon oath, according to the actual state of the markets, of all the different sorts of grain in every different county ofScotland. If such direct proof could require any collateral evidenceto confirm it, I would observe, that this has likewise been the casein France, and probably in most other parts of Europe. With regard toFrance, there is the clearest proof. But though it is certain, that inboth parts of the united kingdom grain was somewhat dearer in the lastcentury than in the present, it is equally certain that labour was muchcheaper. If the labouring poor, therefore, could bring up their familiesthen, they must be much more at their ease now. In the last century, the most usual day-wages of common labour through the greater partof Scotland were sixpence in summer, and fivepence in winter. Threeshillings a-week, the same price, very nearly still continues to be paidin some parts of the Highlands and Western islands. Through the greaterpart of the Low country, the most usual wages of common labour are noweight pence a-day; tenpence, sometimes a shilling, about Edinburgh, in the counties which border upon England, probably on account of thatneighbourhood, and in a few other places where there has lately beena considerable rise in the demand for labour, about Glasgow, Carron, Ayrshire, etc. In England, the improvements of agriculture, manufactures, and commerce, began much earlier than in Scotland. Thedemand for labour, and consequently its price, must necessarily haveincreased with those improvements. In the last century, accordingly, aswell as in the present, the wages of labour were higher in England thanin Scotland. They have risen, too, considerably since that time, though, on account of the greater variety of wages paid there in differentplaces, it is more difficult to ascertain how much. In 1614, the pay ofa foot soldier was the same as in the present times, eightpence a-day. When it was first established, it would naturally be regulated by theusual wages of common labourers, the rank of people from which footsoldiers are commonly drawn. Lord-chief-justice Hales, who wrote inthe time of Charles II. Computes the necessary expense of a labourer'sfamily, consisting of six persons, the father and mother, two childrenable to do something, and two not able, at ten shillings a-week, ortwenty-six pounds a-year. If they cannot earn this by their labour, theymust make it up, he supposes, either by begging or stealing. He appearsto have enquired very carefully into this subject {See his scheme forthe maintenance of the poor, in Burn's History of the Poor Laws. }. In1688, Mr Gregory King, whose skill in political arithmetic is so muchextolled by Dr Davenant, computed the ordinary income of labourers andout-servants to be fifteen pounds a-year to a family, which hesupposed to consist, one with another, of three and a half persons. Hiscalculation, therefore, though different in appearance, correspondsvery nearly at bottom with that of Judge Hales. Both suppose the weeklyexpense of such families to be about twenty-pence a-head. Boththe pecuniary income and expense of such families have increasedconsiderably since that time through the greater part of the kingdom, in some places more, and in some less, though perhaps scarce anywhereso much as 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, differentprices being often paid at the same place and for the same sort oflabour, not only according to the different abilities of the workman, but according to the easiness or hardness of the masters. Where wagesare not regulated by law, all that we can pretend to determine is, whatare the most usual; and experience seems to shew that law can neverregulate them properly, though it has often pretended to do so. 

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

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

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

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

Every species of animals naturally multiplies in proportion to the meansof their subsistence, and no species can ever multiply be yond it. Butin civilized society, it is only among the inferior ranks of peoplethat the scantiness of subsistence can set limits to the furthermultiplication of the human species; and it can do so in no other waythan by destroying a great part of the children which their fruitfulmarriages produce. 

The liberal reward of labour, by enabling them to provide better fortheir children, and consequently to bring up a greater number, naturallytends to widen and extend those limits. It deserves to be remarked, too, that it necessarily does this as nearly as possible in the proportionwhich the demand for labour requires. If this demand is continuallyincreasing, the reward of labour must necessarily encourage in such amanner the marriage and multiplication of labourers, as may enable themto supply that continually 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 excessive multiplicationwould soon lower it to this necessary rate. The market would be so muchunderstocked with labour in the one case, and so much overstocked in theother, as would soon force back its price to that proper rate which thecircumstances of the society required. It is in this manner that thedemand for men, like that for any other commodity, necessarily regulatesthe production of men, quickens it when it goes on too slowly, and stopsit when it advances 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; which renders itrapidly progressive in the first, slow and gradual in the second, andaltogether stationary in the last. 

The wear and tear of a slave, it has been said, is at the expense of hismaster; but that of a free servant is at his own expense. The wear andtear of the latter, however, is, in reality, as much at the expenseof his master as that of the former. The wages paid to journeymen andservants of every kind must be such as may enable them, one with anotherto continue the race of journeymen and servants, according as theincreasing, diminishing, or stationary demand of the society, may happento require. But though the wear and tear of a free servant be equally atthe expense of his master, it generally costs him much less than that ofa slave. The fund destined for replacing or repairing, if I may sayso, the wear and tear of the slave, is commonly managed by a negligentmaster or careless overseer. That destined for performing the sameoffice with regard to the freeman is managed by the freeman himself. Thedisorders which generally prevail in the economy of the rich, naturallyintroduce themselves into the management of the former; the strictfrugality and parsimonious attention of the poor as naturally establishthemselves in that of the latter. Under such different management, thesame purpose must require very different degrees of expense to executeit. It appears, accordingly, from the experience of all ages andnations, I believe, that the work done by freemen comes cheaper in theend than that performed by slaves. It is found to do so even at Boston, New-York, and Philadelphia, where the wages of common labour are so veryhigh. 

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 cause and effect of thegreatest 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 thecondition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in thestationary, and miserable in the declining state. The progressive stateis, in reality, the cheerful and the hearty state to all the differentorders of the society; the stationary is dull; the declining melancholy. 

The liberal reward of labour, as it encourages the propagation, so itincreases the industry of the common people. The wages of labour arethe encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentifulsubsistence increases the bodily strength of the labourer, and thecomfortable hope of bettering his condition, and of ending his days, perhaps, in ease and plenty, animates him to exert that strength tothe utmost. Where wages are high, accordingly, we shall always find theworkmen more active, diligent, and expeditious, than where they are low;in England, for example, than in Scotland; in the neighbourhood of greattowns, than in remote country places. Some workmen, indeed, when theycan earn in four days what will maintain them through the week, will beidle the other three. This, however, is by no means the case with thegreater part. Workmen, on the contrary, when they are liberally paid bythe piece, are very apt to overwork themselves, and to ruin their healthand constitution in a few years. A carpenter in London, and in someother places, is not supposed to last in his utmost vigour above eightyears. Something of the same kind happens in many other trades, inwhich the workmen are paid by the piece; as they generally are inmanufactures, and even in country labour, wherever wages are higher thanordinary. 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 our soldiersthe most industrious set of people among us; yet when soldiers have beenemployed in some particular sorts of work, and liberally paid by thepiece, their officers have frequently been obliged to stipulate with theundertaker, that they should not be allowed to earn above a certainsum every day, according to the rate at which they were paid. Till thisstipulation was made, mutual emulation, and the desire of greater gain, frequently prompted them to overwork themselves, and to hurt theirhealth by excessive labour. Excessive application, during four daysof the week, is frequently the real cause of the idleness of the otherthree, so much and so loudly complained of. Great labour, either of mindor body, continued for several days together is, in most men, naturallyfollowed by a great desire of relaxation, which, if not restrained byforce, or by some strong necessity, is almost irresistible. It isthe call of nature, which requires to be relieved by some indulgence, sometimes of ease only, but sometimes too of dissipation and diversion. If it is not complied with, the consequences are often dangerous andsometimes fatal, and such as almost always, sooner or later, bring onthe peculiar infirmity of the trade. If masters would always listento the dictates of reason and humanity, they have frequently occasionrather to moderate, 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 more idle, andin dear times more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded, relaxes, and a scanty one quickenstheir industry. That a little more plenty than ordinary may rendersome workmen idle, cannot be well doubted; but that it should have thiseffect upon the greater part, or that men in general should work betterwhen they are ill fed, than when they are well fed, when they aredisheartened than when they are in good spirits, when they arefrequently sick than when they are generally in good health, seems notvery probable. Years of dearth, it is to be observed, are generallyamong the common people years of sickness and mortality, which cannotfail to diminish the produce of their industry. 

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

In years of scarcity, the difficulty and uncertainty of subsistencemake all such people eager to return to service. But the high price ofprovisions, by diminishing the funds destined for the maintenance ofservants, disposes masters rather to diminish than to increase thenumber of those they have. In dear years, too, poor independent workmenfrequently consume the little stock with which they had used to supplythemselves with the materials of their work, and are obliged to becomejourneymen for subsistence. More people want employment than easily getit; many are willing to take it upon lower terms than ordinary; and thewages of both servants and journeymen frequently sink in dear years. 

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

A French author of great knowledge and ingenuity, Mr Messance, receiverof the taillies in the election of St Etienne, endeavours to shew thatthe poor do more work in cheap than in dear years, by comparing thequantity and value of the goods made upon those different occasionsin three different manufactures; one of coarse woollens, carried on atElbeuf; one of linen, and another of silk, both which extend through thewhole generality 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 manufactories has generally beengreater in cheap than in dear years, and that it has always been;greatest in the cheapest, and least in the dearest years. All the threeseem to be stationary manufactures, or which, though their produce mayvary somewhat from year to year, are, upon the whole, neither goingbackwards nor forwards. 

The manufacture of linen in Scotland, and that of coarse woollens in theWest Riding of Yorkshire, are growing manufactures, of which the produceis generally, though with some variations, increasing both in quantityand value. Upon examining, however, the accounts which have beenpublished of their annual produce, I have not been able to observe thatits variations have had any sensible connection with the dearnessor cheapness of the seasons. In 1740, a year of great scarcity, bothmanufactures, indeed, appear to have declined very considerably. But in1756, another year or great scarcity, the Scotch manufactures made morethan ordinary advances. The Yorkshire manufacture, indeed, declined, andits produce did not rise to what it had been in 1755, till 1766, afterthe repeal of the American stamp act. In that and the following year, itgreatly exceeded what it had ever been before, and it has continued toadvance ever since. 

The produce of all great manufactures for distant sale must necessarilydepend, not so much upon the dearness or cheapness of the seasons inthe countries where they are carried on, as upon the circumstances whichaffect the demand in the countries where they are consumed; upon peaceor war, upon the prosperity or declension of other rival manufacturesand upon the good or bad humour of their principal customers. A greatpart of the extraordinary work, besides, which is probably done incheap years, never enters the public registers of manufactures. Themen-servants, who leave their masters, become independent labourers. The women return to their parents, and commonly spin, in order to makeclothes for themselves and their families. Even the independent workmendo not always, work for public sale, but are employed by some of theirneighbours in manufactures for family use. The produce of their labour, therefore, frequently makes no figure in those public registers, ofwhich the records are sometimes published with so much parade, and fromwhich our merchants and manufacturers would often vainly pretend toannounce the prosperity or declension of the greatest empires. 

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

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

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

The contrary of this happens in a year of sudden and extraordinaryscarcity. The funds destined for employing industry are less than theyhad been the year before. A considerable number of people are thrown outof employment, who bid one against another, in order to get it, whichsometimes lowers both the real and the money price of labour. In 1740, a year of extraordinary scarcity, many people were willing to workfor bare subsistence. In the succeeding years of plenty, it was moredifficult to get labourers and servants. The scarcity of a dear year, bydiminishing the demand for labour, tends to lower its price, as the highprice of provisions tends to raise it. The plenty of a cheap year, onthe contrary, by increasing the demand, tends to raise the priceof labour, as the cheapness of provisions tends to lower it. In theordinary variations of the prices of provisions, those two oppositecauses seem to counterbalance one another, which is probably, in part, the reason why the wages of labour are everywhere so much more steadyand permanent than the price of provisions. 

The increase in the wages of labour necessarily increases the price ofmany commodities, by increasing that part of it which resolves itselfinto wages, and so far tends to diminish their consumption, both at homeand abroad. The same cause, however, which raises the wages of labour, the increase of stock, tends to increase its productive powers, and tomake a smaller quantity of labour produce a greater quantity of work. The owner of the stock which employs a great number of labourersnecessarily endeavours, for his own advantage, to make such a properdivision and distribution of employment, that they may be enabled toproduce the greatest quantity of work possible. For the same reason, he endeavours to supply them with the best machinery which either he orthey can think of. What takes place among the labourers in a particularworkhouse, takes place, for the same reason, among those of a greatsociety. The greater their number, the more they naturally dividethemselves into different classes and subdivisions of employments. Moreheads are occupied in inventing the most proper machinery for executingthe work of each, and it is, therefore, more likely to be invented. There me many commodities, therefore, which, in consequence of theseimprovements, come to be produced by so much less labour than before, that the increase of its price is more than compensated by thediminution of its quantity. 

CHAPTER IX. OF THE PROFITS OF STOCK. 

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

The increase of stock, which raises wages, tends to lower profit. Whenthe stocks of many rich merchants are turned into the same trade, theirmutual competition naturally tends to lower its profit; and when thereis a like increase of stock in all the different trades carried on inthe same society, the same competition must produce the same effect inthem all. 

It is not easy, it has already been observed, to ascertain what are theaverage wages of labour, even in a particular place, and at a particulartime. We can, even in this case, seldom determine more than what are themost usual wages. But even this can seldom be done with regard to theprofits of stock. Profit is so very fluctuating, that the person whocarries on a particular trade, cannot always tell you himself what isthe average of his annual profit. It is affected, not only by everyvariation of price in the commodities which he deals in, but by thegood or bad fortune both of his rivals and of his customers, and by athousand other accidents, to which goods, when carried either by seaor by land, or even when stored in a warehouse, are liable. It varies, therefore, not only from year to year, but from day to day, and almostfrom hour to hour. To ascertain what is the average profit of allthe different trades carried on in a great kingdom, must be much moredifficult; and to judge of what it may have been formerly, or in remoteperiods of time, with any degree of precision, must be altogetherimpossible. 

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

By the 37th of Henry VIII. All interest above ten per cent. Was declaredunlawful. More, it seems, had sometimes been taken before that. Inthe reign of Edward VI. Religious zeal prohibited all interest. Thisprohibition, however, like all others of the same kind, is said to haveproduced no effect, and probably rather increased than diminished theevil of usury. The statute of Henry VIII. Was revived by the 13th ofElizabeth, cap. 8. And ten per cent. Continued to be the legal rate ofinterest till the 21st of James I. When it was restricted to eight percent. It was reduced to six per cent. Soon after the Restoration, and bythe 12th of Queen Anne, to five per cent. All these different statutoryregulations seem to have been made with great propriety. They seem tohave followed, and not to have gone before, the market rate of interest, or the rate at which people of good credit usually borrowed. Since thetime of Queen Anne, five per cent. Seems to have been rather above thanbelow the market rate. Before the late war, the government borrowed atthree per cent. ; and people of good credit in the capital, and in manyother parts of the kingdom, at three and a-half, four, and four anda-half per cent. 

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

It generally requires a greater stock to carry on any sort of trade in agreat town than in a country village. The great stocks employed in everybranch of trade, and the number of rich competitors, generally reducethe rate of profit in the former below what it is in the latter. But thewages of labour are generally higher in a great town than in a countryvillage. In a thriving town, the people who have great stocks to employ, frequently cannot get the number of workmen they want, and therefore bidagainst one another, in order to get as many as they can, which raisesthe wages of labour, and lowers the profits of stock. In the remoteparts of the country, there is frequently not stock sufficient to employall the people, who therefore bid against one another, in order to getemployment, which lowers the wages of labour, and raises the profits ofstock. 

In Scotland, though the legal rate of interest is the same as inEngland, 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, of whichpayment, either in whole or in part may be demanded at pleasure. Privatebankers in London give no interest for the money which is deposited withthem. There are few trades which cannot be carried on with a smallerstock in Scotland than in England. The common rate of profit, therefore, must be somewhat greater. The wages of labour, it has already beenobserved, are lower in Scotland than in England. The country, too, isnot only much poorer, but the steps by which it advances to a bettercondition, for it is evidently advancing, seem to be much slower andmore tardy. The legal rate of interest in France has not during thecourse of the present century, been always regulated by the market rate{See Denisart, Article Taux des Interests, tom. Iii, p. 13}. In 1720, interest was reduced from the twentieth to the fiftieth penny, or fromfive to two per cent. In 1724, it was raised to the thirtieth penny, or to three and a third per cent. In 1725, it was again raised to thetwentieth penny, or to five per cent. In 1766, during the administrationof Mr Laverdy, it was reduced to the twenty-fifth penny, or to four percent. The Abbé Terray raised it afterwards to the old rate of fiveper cent. The supposed purpose of many of those violent reductions ofinterest was to prepare the way for reducing that of the public debts;a purpose which has sometimes been executed. France is, perhaps, in thepresent times, not so rich a country as England; and though the legalrate of interest has in France frequently been lower than in England, the market rate has generally been higher; for there, as in othercountries, they have several very safe and easy methods of evading thelaw. The profits of trade, I have been assured by British merchants whohad traded in both countries, are higher in France than in England;and it is no doubt upon this account, that many British subjects chuserather to employ their capitals in a country where trade is in disgrace, than in one where it is highly respected. The wages of labour are lowerin France than in England. When you go from Scotland to England, thedifference which you may remark between the dress and countenance ofthe common people in the one country and in the other, sufficientlyindicates the difference in their condition. The contrast is stillgreater when you return from France. France, though no doubt a richercountry than Scotland, seems not to be going forward so fast. It isa common and even a popular opinion in the country, that it is goingbackwards; an opinion which I apprehend, is ill-founded, even withregard to France, but which nobody can possibly entertain with regardto Scotland, who sees the country now, and who saw it twenty or thirtyyears ago. 

The province of Holland, on the other hand, in proportion to the extentof its territory and the number of its people, is a richer country thanEngland. The government there borrow at two per cent. And private peopleof good credit at three. The wages of labour are said to be higher inHolland than in England, and the Dutch, it is well known, trade uponlower profits than any people in Europe. The trade of Holland, it hasbeen pretended by some people, is decaying, and it may perhaps be truethat some particular branches of it are so; but these symptoms seemto indicate sufficiently that there is no general decay. When profitdiminishes, merchants are very apt to complain that trade decays, thoughthe diminution of profit is the natural effect of its prosperity, or ofa greater stock being employed in it than before. During the late war, the Dutch gained the whole carrying trade of France, of which they stillretain a very large share. The great property which they possess both inFrench and English funds, about forty millions, it is said in the latter(in which, I suspect, however, there is a considerable exaggeration ), the great sums which they lend to private people, in countries where therate of interest is higher than in their own, are circumstances whichno doubt demonstrate the redundancy of their stock, or that it hasincreased beyond what they can employ with tolerable profit in theproper business of their own country; but they do not demonstrate thatthat business has decreased. As the capital of a private man, thoughacquired by a particular trade, may increase beyond what he can employin it, and yet that trade continue to increase too, so may likewise thecapital of a great nation. 

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

The acquisition of new territory, or of new branches of trade, maysometimes raise the profits of stock, and with them the interest ofmoney, even in a country which is fast advancing in the acquisition ofriches. The stock of the country, not being sufficient for the wholeaccession of business which such acquisitions present to the differentpeople among whom it is divided, is applied to those particular branchesonly which afford the greatest profit. Part of what had before beenemployed in other trades, is necessarily withdrawn from them, and turnedinto some of the new and more profitable ones. In all those old trades, therefore, the competition comes to be Jess than before. The marketcomes to be less fully supplied with many different sorts of goods. Their price necessarily rises more or less, and yields a greater profitto those who deal in them, who can, therefore, afford to borrow at ahigher interest. For some time after the conclusion of the late war, not only private people of the best credit, but some of the greatestcompanies in London, commonly borrowed at five per cent. Who, beforethat, had not been used to pay more than four, and four and a halfper cent. The great accession both of territory and trade by ouracquisitions in North America and the West Indies, will sufficientlyaccount for this, without supposing any diminution in the capital stockof the society. So great an accession of new business to be carried onby the old stock, must necessarily have diminished the quantity employedin a great number of particular branches, in which the competitionbeing less, the profits must have been greater. I shall hereafter haveoccasion to mention the reasons which dispose me to believe that thecapital stock of Great Britain was not diminished, even by the enormousexpense of the late war. 

The diminution of the capital stock of the society, or of the fundsdestined for the maintenance of industry, however, as it lowers thewages of labour, so it raises the profits of stock, and consequently theinterest of money. By the wages of labour being lowered, the owners ofwhat stock remains in the society can bring their goods at less expenseto market than before; and less stock being employed in supplying themarket than before, they can sell them dearer. Their goods cost themless, and they get more for them. Their profits, therefore, beingaugmented at both ends, can well afford a large interest. The greatfortunes so suddenly and so easily acquired in Bengal and the otherBritish settlements in the East Indies, may satisfy us, that as thewages of labour are very low, so the profits of stock are very high inthose ruined countries. The interest of money is proportionably so. InBengal, money is frequently lent to the farmers at forty, fifty, andsixty per cent. And the succeeding crop is mortgaged for the payment. As the profits which can afford such an interest must eat up almost thewhole rent of the landlord, so such enormous usury must in its turneat up the greater part of those profits. Before the fall of the Romanrepublic, a usury of the same kind seems to have been common in theprovinces, under the ruinous administration of their proconsuls. Thevirtuous Brutus lent money in Cyprus at eight-and-forty per cent. As welearn from the letters of Cicero. 

In a country which had acquired that full complement of riches which thenature of its soil and climate, and its situation with respect to othercountries, allowed it to acquire, which could, therefore, advance nofurther, and which was not going backwards, both the wages of labourand the profits of stock would probably be very low. In a country fullypeopled in proportion to what either its territory could maintain, orits stock employ, the competition for employment would necessarily be sogreat as to reduce the wages of labour to what was barely sufficientto keep up the number of labourers, and the country being alreadyfully peopled, that number could never be augmented. In a country fullystocked in proportion to all the business it had to transact, as greata quantity of stock would be employed in every particular branch as thenature and extent of the trade would admit. The competition, therefore, would everywhere be as great, and, consequently, the ordinary profit aslow as possible. 

But, perhaps, no country has ever yet arrived at this degree ofopulence. China seems to have been long stationary, and had, probably, long ago acquired that full complement of riches which is consistentwith the nature of its laws and institutions. But this complement may bemuch inferior to what, with other laws and institutions, the natureof its soil, climate, and situation, might admit of. A country whichneglects or despises foreign commerce, and which admits the vessel offoreign nations into one or two of its ports only, cannot transact thesame quantity of business which it might do with different laws andinstitutions. In a country, too, where, though the rich, or the ownersof large capitals, enjoy a good deal of security, the poor, or theowners of small capitals, enjoy scarce any, but are liable, under thepretence of justice, to be pillaged and plundered at any time by theinferior mandarins, the quantity of stock employed in all the differentbranches of business transacted within it, can never be equal to whatthe nature and extent of that business might admit. In every differentbranch, the oppression of the poor must establish the monopoly of therich, who, by engrossing the whole trade to themselves, will be able tomake very large profits. Twelve per cent. Accordingly, is said to bethe common interest of money in China, and the ordinary profits of stockmust 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 wealth orpoverty, would require. When the law does not enforce the performanceof contracts, it puts all borrowers nearly upon the same footing withbankrupts, or people of doubtful credit, in better regulated countries. The uncertainty of recovering his money makes the lender exact the sameusurious interest which is usually required from bankrupts. Among thebarbarous nations who overran the western provinces of the Roman empire, the performance of contracts was left for many ages to the faith ofthe contracting parties. The courts of justice of their kings seldomintermeddled in it. The high rate of interest which took place in thoseancient times, may, perhaps, be partly accounted for from this cause. 

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

The lowest ordinary rate of profit must always be something more thanwhat is sufficient to compensate the occasional losses to which everyemployment of stock is exposed. It is this surplus only which is neator clear profit. What is called gross profit, comprehends frequentlynot only this surplus, but what is retained for compensating suchextraordinary losses. The interest which the borrower can afford to payis in proportion to the clear profit only. The lowest ordinary rate ofinterest must, in the same manner, be something more than sufficient tocompensate the occasional losses to which lending, even with tolerableprudence, is exposed. Were it not, mere charity or friendship could bethe only motives for lending. 

In a country which had acquired its full complement of riches, where, inevery particular branch of business, there was the greatest quantity ofstock that could be employed in it, as the ordinary rate of clear profitwould be very small, so the usual market rate of interest which couldbe afforded out of it would be so low as to render it impossible for anybut the very wealthiest people to live upon the interest of their money. All people of small or middling fortunes would be obliged to superintendthemselves the employment of their own stocks. It would be necessarythat almost every man should be a man of business, or engage in somesort of trade. The province of Holland seems to be approaching nearto this state. It is there unfashionable not to be a man of business. Necessity makes it usual for almost every man to be so, and customeverywhere regulates fashion. As it is ridiculous not to dress, so isit, in some measure, not to be employed like other people. As a man ofa civil profession seems awkward in a camp or a garrison, and is evenin some danger of being despised there, so does an idle man among men ofbusiness. 

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

The proportion which the usual market rate of interest ought to bear tothe ordinary rate of clear profit, necessarily varies as profit rises orfalls. Double interest is in Great Britain reckoned what the merchantscall a good, moderate, reasonable profit; terms which, I apprehend, meanno more than a common and usual profit. In a country where the ordinaryrate of clear profit is eight or ten per cent. It may be reasonable thatone half of it should go to interest, wherever business is carried onwith borrowed money. The stock is at the risk of the borrower, who, asit were, insures it to the lender; and four or five per cent. May, inthe greater part of trades, be both a sufficient profit upon the risk ofthis insurance, and a sufficient recompence for the trouble of employingthe stock. But the proportion between interest and clear profit mightnot be the same in countries where the ordinary rate of profit waseither a good deal lower, or a good deal higher. If it were a good deallower, one half of it, perhaps, could not be afforded for interest; andmore might be afforded if it were a good deal higher. 

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

In reality, high profits tend much more to raise the price of work thanhigh wages. If, in the linen manufacture, for example, the wages of thedifferent working people, the flax-dressers, the spinners, the weavers, etc. Should all of them be advanced twopence a-day, it would benecessary to heighten the price of a piece of linen only by a number oftwopences equal to the number of people that had been employed about it, multiplied by the number of days during which they had been so employed. That part of the price of the commodity which resolved itself into thewages, would, through all the different stages of the manufacture, rise only in arithmetical proportion to this rise of wages. But if theprofits of all the different employers of those working people shouldbe raised five per cent. That part of the price of the commodity whichresolved itself into profit would, through all the different stages ofthe manufacture, rise in geometrical proportion to this rise of profit. The employer of the flax dressers would, in selling his flax, requirean additional five per cent. Upon the whole value of the materials andwages which he advanced to his workmen. The employer of the spinnerswould require an additional five per cent. Both upon the advanced priceof the flax, and upon the wages of the spinners. And the employer of theweavers would require alike five per cent. Both upon the advanced priceof the linen-yarn, and upon the wages of the weavers. In raising theprice of commodities, 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 manufacturerscomplain much of the bad effects of high wages in raising the price, andthereby lessening the sale of their goods, both at home and abroad. Theysay nothing concerning the bad effects of high profits; they are silentwith regard to the pernicious effects of their own gains; they complainonly of those of other people. 

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

The whole of the advantages and disadvantages of the differentemployments of labour and stock, must, in the same neighbourhood, beeither perfectly equal, or continually tending to equality. If, in thesame neighbourhood, there was any employment evidently either more orless advantageous than the rest, so many people would crowd into itin the one case, and so many would desert it in the other, that itsadvantages would soon return to the level of other employments. This, atleast, would be the case in a society where things were left to followtheir natural course, where there was perfect liberty, and where everyman was perfectly free both to choose what occupation he thought proper, and to change it as often as he thought proper. Every man'sinterest would prompt him to seek the advantageous, and to shun thedisadvantageous employment. 

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

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

PART I. Inequalities arising from the nature of the employmentsthemselves. 

The five following are the principal circumstances which, so far as Ihave been able to observe, make up for a small pecuniary gain in someemployments, and counterbalance a great one in others. First, theagreeableness or disagreeableness of the employments themselves;secondly, the easiness and cheapness, or the difficulty and expense oflearning them; thirdly, the constancy or inconstancy of employment inthem; fourthly, the small or great trust which must be reposed in thosewho exercise them; and, fifthly, the probability or improbability ofsuccess in them. 

First, the wages of labour vary with the ease or hardship, thecleanliness or dirtiness, the honourableness or dishonourableness, ofthe employment. Thus in most places, take the year round, a journeymantailor earns less than a journeyman weaver. His work is much easier. Ajourneyman weaver earns less than a journeyman smith. His work is notalways easier, but it is much cleanlier. A journeyman blacksmith, thoughan artificer, seldom earns so much in twelve hours, as a collier, who isonly a labourer, does in eight. His work is not quite so dirty, is lessdangerous, and is carried on in day-light, and above ground. Honourmakes a great part of the reward of all honourable professions. Inpoint of pecuniary gain, all things considered, they are generallyunder-recompensed, as I shall endeavour to shew by and by. Disgrace hasthe contrary effect. The trade of a butcher is a brutal and an odiousbusiness; but it is in most places more profitable than the greater partof common trades. The most detestable of all employments, that of publicexecutioner, is, in proportion to the quantity of work done, better paidthan any common trade whatever. 

Hunting and fishing, the most important employments of mankind inthe rude state of society, become, in its advanced state, their mostagreeable amusements, and they pursue for pleasure what they oncefollowed from necessity. In the advanced state of society, therefore, they are all very poor people who follow as a trade, what otherpeople pursue as a pastime. Fishermen have been so since the time ofTheocritus. {See Idyllium xxi. }. A poacher is everywhere a very poor manin Great Britain. In countries where the rigour of the law suffers nopoachers, the licensed hunter is not in a much better condition. Thenatural taste for those employments makes more people follow them, than can live comfortably by them; and the produce of their labour, inproportion to its quantity, comes always too cheap to market, to affordany thing but the most scanty subsistence to the labourers. 

Disagreeableness and disgrace affect the profits of stock in the samemanner as the wages of labour. The keeper of an inn or tavern, who isnever master of his own house, and who is exposed to the brutality ofevery drunkard, exercises neither a very agreeable nor a very creditablebusiness. But there is scarce any common trade in which a small stockyields so great a profit. 

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

When any expensive machine is erected, the extraordinary work to beperformed by it before it is worn out, it must be expected, will replacethe capital laid out upon it, with at least the ordinary profits. Aman educated at the expense of much labour and time to any of thoseemployments which require extraordinary dexterity and skill, may becompared to one of those expensive machines. The work which he learns toperform, it must be expected, over and above the usual wages of commonlabour, 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 very uncertainduration of human life, in the same manner as to the more certainduration of the machine. 

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

The policy of Europe considers the labour of all mechanics, artificers, and manufacturers, as skilled labour; and that of all country labourersus common labour. It seems to suppose that of the former to be of a morenice and delicate nature than that of the latter. It is so perhaps insome cases; but in the greater part it is quite otherwise, as I shallendeavour to shew by and by. The laws and customs of Europe, therefore, in order to qualify any person for exercising the one species of labour, impose the necessity of an apprenticeship, though with different degreesof rigour in different places. They leave the other free and open toevery body. During the continuance of the apprenticeship, the wholelabour of the apprentice belongs to his master. In the meantime he must, in many cases, be maintained by his parents or relations, and, in almostall cases, must be clothed by them. Some money, too, is commonly givento the master for teaching him his trade. They who cannot give money, give time, or become bound for more than the usual number of years; aconsideration which, though it is not always advantageous to themaster, on account of the usual idleness of apprentices, is alwaysdisadvantageous to the apprentice. In country labour, on the contrary, the labourer, while he is employed about the easier, learns the moredifficult parts of his business, and his own labour maintains himthrough all the different stages of his employment. It is reasonable, therefore, that in Europe the wages of mechanics, artificers, andmanufacturers, should be somewhat higher than those of common labourers. They are 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 or weekly earnings ofjourneymen in the more common sorts of manufactures, such as those ofplain linen and woollen cloth, computed at an average, are, in mostplaces, very little more than the day-wages of common labourers. Theiremployment, indeed, is more steady and uniform, and the superiority oftheir earnings, taking the whole year together, may be somewhat greater. It seems evidently, however, to be no greater than what is sufficientto compensate the superior expense of their education. Education in theingenious arts, and in the liberal professions, is still more tediousand expensive. The pecuniary recompence, therefore, of painters andsculptors, of lawyers and physicians, ought to be much more liberal; andit is so accordingly. 

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

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

Employment is much more constant in some trades than in others. Inthe greater part of manufactures, a journeyman maybe pretty sure ofemployment almost every day in the year that he is able to work. A masonor bricklayer, on the contrary, can work neither in hard frost nor infoul weather, and his employment at all other times depends upon theoccasional calls of his customers. He is liable, in consequence, to befrequently without any. What he earns, therefore, while he is employed, must not only maintain him while he is idle, but make him somecompensation for those anxious and desponding moments which the thoughtof so precarious a situation must sometimes occasion. Where the computedearnings of the greater part of manufacturers, accordingly, are nearlyupon a level with the day-wages of common labourers, those of masonsand bricklayers are generally from one-half more to double those wages. Where common labourers earn four or five shillings a-week, masons andbricklayers frequently earn seven and eight; where the former earn six, the latter often earn nine and ten; and where the former earn nine andten, as in London, the latter commonly earn fifteen and eighteen. Nospecies of skilled labour, however, seems more easy to learn than thatof masons and bricklayers. Chairmen in London, during the summer season, are said sometimes to be employed as bricklayers. The high wages ofthose workmen, therefore, are not so much the recompence of their skill, as the compensation for the inconstancy of their employment. 

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

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

When the inconstancy of employment is combined with the hardship, disagreeableness, and dirtiness of the work, it sometimes raisesthe wages of the most common labour above those of the most skilfulartificers. A collier working by the piece is supposed, at Newcastle, toearn commonly about double, and, in many parts of Scotland, about threetimes, the wages of common labour. His high wages arise altogetherfrom the hardship, disagreeableness, and dirtiness of his work. Hisemployment may, upon most occasions, be as constant as he pleases. Thecoal-heavers in London exercise a trade which, in hardship, dirtiness, and disagreeableness, almost equals that of colliers; and, from theunavoidable irregularity in the arrivals of coal-ships, the employmentof the greater part of them is necessarily very inconstant. If colliers, therefore, commonly earn double and triple the wages of common labour, it ought not to seem unreasonable that coal-heavers should sometimesearn four and five times those wages. In the inquiry made into theircondition a few years ago, it was found that, at the rate at which theywere then paid, they could earn from six to ten shillings a-day. Sixshillings are about four times the wages of common labour in London;and, in every particular trade, the lowest common earnings may alwaysbe considered as those of the far greater number. How extravagantsoever those earnings may appear, if they were more than sufficient tocompensate all the disagreeable circumstances of the business, therewould soon be so great a number of competitors, as, in a trade which hasno exclusive privilege, would quickly reduce them to a lower rate. 

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

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

The wages of goldsmiths and jewellers are everywhere superior tothose of many other workmen, not only of equal, but of much superioringenuity, on account of the precious materials with which they areentrusted. We trust our health to the physician, our fortune, andsometimes our life and reputation, to the lawyer and attorney. Suchconfidence could not safely be reposed in people of a very mean or lowcondition. Their reward must be such, therefore, as may give them thatrank in the society which so important a trust requires. The long timeand the great expense which must be laid out in their education, whencombined with this circumstance, necessarily enhance still further theprice of their labour. 

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

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

The probability that any particular person shall ever be qualified forthe employments to which he is educated, is very different in differentoccupations. In the greatest part of mechanic trades success is almostcertain; but very uncertain in the liberal professions. Put your sonapprentice to a shoemaker, there is little doubt of his learning to makea pair of shoes; but send him to study the law, it as at least twenty toone if he ever makes such proficiency as will enable him to live by thebusiness. In a perfectly fair lottery, those who draw the prizes oughtto gain all that is lost by those who draw the blanks. In a profession, where twenty fail for one that succeeds, that one ought to gain all thatshould have been gained by the unsuccessful twenty. The counsellor atlaw, 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 of that of more than twentyothers, who are never likely to make any thing by it. How extravagantsoever the fees of counsellors at law may sometimes appear, their realretribution is never equal to this. Compute, in any particular place, what is likely to be annually gained, and what is likely to be annuallyspent, by all the different workmen in any common trade, such as thatof shoemakers or weavers, and you will find that the former sum willgenerally exceed the latter. But make the same computation with regardto all the counsellors and students of law, in all the different Inns ofCourt, and you will find that their annual gains bear but a very smallproportion to their annual expense, even though you rate the former ashigh, and the latter as low, as can well be done. The lottery of thelaw, therefore, is very far from being a perfectly fair lottery; andthat as well as many other liberal and honourable professions, is, inpoint of pecuniary gain, evidently under-recompensed. 

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

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

There are some very agreeable and beautiful talents, of which thepossession commands a certain sort of admiration, but of which theexercise, for the sake of gain, is considered, whether from reason orprejudice, as a sort of public prostitution. The pecuniary recompence, therefore, of those who exercise them in this manner, must besufficient, not only to pay for the time, labour, and expense ofacquiring the talents, but for the discredit which attends theemployment of them as the means of subsistence. The exorbitant rewardsof players, opera-singers, opera-dancers, etc. Are founded upon thosetwo principles; the rarity and beauty of the talents, and the discreditof employing them in this manner. It seems absurd at first sight, thatwe should despise their persons, and yet reward their talents withthe most profuse liberality. While we do the one, however, we must ofnecessity do the other, Should the public opinion or prejudice everalter with regard to such occupations, their pecuniary recompence wouldquickly diminish. More people would apply to them, and the competitionwould quickly reduce the price of their labour. Such talents, thoughfar from being common, are by no means so rare as imagined. Many peoplepossess them in great perfection, who disdain to make this use of them;and many more are capable of acquiring them, if any thing could be madehonourably by them. 

The over-weening conceit which the greater part of men have of their ownabilities, is an ancient evil remarked by the philosophers and moralistsof all ages. Their absurd presumption in their own good fortune has beenless taken notice of. It is, however, if possible, still more universal. There is no man living, who, when in tolerable health and spirits, hasnot some share of it. The chance of gain is by every man more or lessover-valued, and the chance of loss is by most men under-valued, and byscarce any man, who is in tolerable health and spirits, valued more thanit is worth. 

That the chance of gain is naturally overvalued, we may learn from theuniversal success of lotteries. The world neither ever saw, nor everwill see, a perfectly fair lottery, or one in which the whole gaincompensated the whole loss; because the undertaker could make nothing byit. In the state lotteries, the tickets are really not worth the pricewhich is paid by the original subscribers, and yet commonly sell in themarket for twenty, thirty, and sometimes forty per cent. Advance. Thevain hopes of gaining some of the great prizes is the sole cause ofthis demand. The soberest people scarce look upon it as a folly to paya small sum for the chance of gaining ten or twenty thousand pounds, though they know that even that small sum is perhaps twenty or thirtyper cent. More than the chance is worth. In a lottery in which no prizeexceeded twenty pounds, though in other respects it approached muchnearer to a perfectly fair one than the common state lotteries, therewould not be the same demand for tickets. In order to have a betterchance for some of the great prizes, some people purchase severaltickets; and others, small shares in a still greater number. There isnot, however, a more certain proposition in mathematics, than that themore tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain;and the greater the number of your tickets, the nearer you approach tothis certainty. 

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

The contempt of risk, and the presumptuous hope of success, are in noperiod of life more active than at the age at which young people choosetheir professions. How little the fear of misfortune is then capableof balancing the hope of good luck, appears still more evidently in thereadiness of the common people to enlist as soldiers, or to go to sea, than in the eagerness of those of better fashion to enter into what arecalled the liberal professions. 

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

The lottery of the sea is not altogether so disadvantageous as that ofthe army. The son of a creditable labourer or artificer may frequentlygo to sea with his father's consent; but if he enlists as a soldier, it is always without it. Other people see some chance of his makingsomething by the one trade; nobody but himself sees any of his makingany thing by the other. The great admiral is less the object of publicadmiration than the great general; and the highest success in the seaservice promises a less brilliant fortune and reputation than equalsuccess in the land. The same difference runs through all the inferiordegrees of preferment in both. By the rules of precedency, a captain inthe navy ranks with a colonel in the army; but he does not rank with himin the common estimation. As the great prizes in the lottery are less, the smaller ones must be more numerous. Common sailors, therefore, morefrequently get some fortune and preferment than common soldiers; and thehope of those prizes is what principally recommends the trade. Thoughtheir skill and dexterity are much superior to that of almost anyartificers; and though their whole life is one continual scene ofhardship and danger; yet for all this dexterity and skill, for all thosehardships and dangers, while they remain in the condition of commonsailors, they receive scarce any other recompence but the pleasure ofexercising the one and of surmounting the other. Their wages are notgreater than those of common labourers at the port which regulates therate of seamen's wages. As they are continually going from port to port, the monthly pay of those who sail from all the different ports of GreatBritain, is more nearly upon a level than that of any other workmen inthose different places; and the rate of the port to and from which thegreatest number sail, that is, the port of London, regulates that ofall the rest. At London, the wages of the greater part of the differentclasses of workmen are about double those of the same classes atEdinburgh. But the sailors who sail from the port of London, seldom earnabove three or four shillings a month more than those who sail from theport of Leith, and the difference is frequently not so great. In time ofpeace, and in the merchant-service, the London price is from a guinea toabout seven-and-twenty shillings the calendar month. A common labourerin London, at the rate of nine or ten shillings a week, may earn inthe calendar month from forty to five-and-forty shillings. The sailor, indeed, over and above his pay, is supplied with provisions. Theirvalue, however, may not perhaps always exceed the difference between hispay and that of the common labourer; and though it sometimes should, theexcess will not be clear gain to the sailor, because he cannot shareit with his wife and family, whom he must maintain out of his wages athome. 

The dangers and hair-breadth escapes of a life of adventures, insteadof disheartening young people, seem frequently to recommend a tradeto them. A tender mother, among the inferior ranks of people, is oftenafraid to send her son to school at a sea-port town, lest the sight ofthe ships, and the conversation and adventures of the sailors, shouldentice him to go to sea. The distant prospect of hazards, from whichwe can hope to extricate ourselves by courage and address, is notdisagreeable to us, and does not raise the wages of labour in anyemployment. It is otherwise with those in which courage and address canbe of no avail. In trades which are known to be very unwholesome, thewages of labour are always remarkably high. Unwholesomeness is a speciesof disagreeableness, and its effects upon the wages of labour are to beranked under that general head. 

In all the different employments of stock, the ordinary rate of profitvaries more or less with the certainty or uncertainty of the returns. These are, in general, less uncertain in the inland than in the foreigntrade, and in some branches of foreign trade than in others; in thetrade to North America, for example, than in that to Jamaica. Theordinary rate of profit always rises more or less with the risk. It doesnot, however, seem to rise in proportion to it, or so as to compensateit completely. Bankruptcies are most frequent in the most hazardoustrades. The most hazardous of all trades, that of a smuggler, though, when the adventure succeeds, it is likewise the most profitable, is theinfallible road to bankruptcy. The presumptuous hope of success seems toact here as upon all other occasions, and to entice so many adventurersinto those hazardous trades, that their competition reduces the profitbelow what is sufficient to compensate the risk. To compensate itcompletely, the common returns ought, over and above the ordinaryprofits of stock, not only to make up for all occasional losses, but toafford a surplus profit to the adventurers, of the same nature with theprofit of insurers. But if the common returns were sufficient for allthis, 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 with whichit is attended. In point of agreeableness or disagreeableness, thereis little or no difference in the far greater part of the differentemployments of stock, but a great deal in those of labour; and theordinary profit of stock, though it rises with the risk, does not alwaysseem to rise in proportion to it. It should follow from all this, that, in the same society or neighbourhood, the average and ordinary rates ofprofit in 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 a commonlabourer and those of a well employed lawyer or physician, is evidentlymuch greater than that between the ordinary profits in any two differentbranches of trade. The apparent difference, besides, in the profits ofdifferent trades, is generally a deception arising from our not alwaysdistinguishing what ought to be considered as wages, from what ought tobe considered as profit. 

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

In a small sea-port town, a little grocer will make forty or fifty percent. Upon a stock of a single hundred pounds, while a considerablewholesale merchant in the same place will scarce make eight or tenper cent. Upon a stock of ten thousand. The trade of the grocer may benecessary for the conveniency of the inhabitants, and the narrownessof the market may not admit the employment of a larger capital in thebusiness. The man, however, must not only live by his trade, but live byit suitably to the qualifications which it requires. Besides possessinga little capital, he must be able to read, write, and account and mustbe a tolerable judge, too, of perhaps fifty or sixty different sorts ofgoods, their prices, qualities, and the markets where they are to be hadcheapest. He must have all the knowledge, in short, that is necessaryfor a great merchant, which nothing hinders him from becoming but thewant of a sufficient capital. Thirty or forty pounds a year cannotbe considered as too great a recompence for the labour of a personso accomplished. Deduct this from the seemingly great profits of hiscapital, and little more will remain, perhaps, than the ordinary profitsof stock. The greater part of the apparent profit is, in this case too, real wages. 

The difference between the apparent profit of the retail and that ofthe wholesale trade, is much less in the capital than in small townsand country villages. Where ten thousand pounds can be employed in thegrocery trade, the wages of the grocer's labour must be a very triflingaddition to the real profits of so great a stock. The apparent profitsof the wealthy retailer, therefore, are there more nearly upon a levelwith those of the wholesale merchant. It is upon this account that goodssold by retail are generally as cheap, and frequently much cheaper, inthe capital than in small towns and country villages. Grocery goods, forexample, are generally much cheaper; bread and butchers' meat frequentlyas cheap. It costs no more to bring grocery goods to the great town thanto the country village; but it costs a great deal more to bring corn andcattle, as the greater part of them must be brought from a much greaterdistance. The prime cost of grocery goods, therefore, being the same inboth places, they are cheapest where the least profit is charged uponthem. The prime cost of bread and butchers' meat is greater in thegreat town than in the country village; and though the profit is less, therefore they are not always cheaper there, but often equally cheap. In such articles as bread and butchers' meat, the same cause whichdiminishes apparent profit, increases prime cost. The extent of themarket, by giving employment to greater stocks, diminishes apparentprofit; but by requiring supplies from a greater distance, it increasesprime cost. This diminution of the one and increase of the other, seem, in most cases, nearly to counterbalance one another; which is probablythe reason that, though the prices of corn and cattle are commonlyvery different in different parts of the kingdom, those of bread andbutchers' meat are generally very nearly the same through the greaterpart of it. 

Though the profits of stock, both in the wholesale and retail trade, aregenerally less in the capital than in small towns and country villages, yet great fortunes are frequently acquired from small beginnings inthe former, and scarce ever in the latter. In small towns and countryvillages, on account of the narrowness of the market, trade cannotalways be extended as stock extends. In such places, therefore, thoughthe rate of a particular person's profits may be very high, the sum oramount of them can never be very great, nor consequently that of hisannual accumulation. In great towns, on the contrary, trade can beextended as stock increases, and the credit of a frugal and thrivingman increases much faster than his stock. His trade is extended inproportion to the amount of both; and the sum or amount of his profitsis in proportion to the extent of his trade, and his annual accumulationin proportion to the amount of his profits. It seldom happens, however, that great fortunes are made, even in great towns, by any one regular, established, and well-known branch of business, but in consequence ofa long life of industry, frugality, and attention. Sudden fortunes, indeed, are sometimes made in such places, by what is called the tradeof speculation. The speculative merchant exercises no one regular, established, or well-known branch of business. He is a corn merchantthis year, and a wine merchant the next, and a sugar, tobacco, or teamerchant the year after. He enters into every trade, when he foreseesthat it is likely to lie more than commonly profitable, and he quits itwhen he foresees that its profits are likely to return to the level ofother trades. His profits and losses, therefore, can bear no regularproportion to those of any one established and well-known branch ofbusiness. A bold adventurer may sometimes acquire a considerable fortuneby two or three successful speculations, but is just as likely to loseone by two or three unsuccessful ones. This trade can be carried onnowhere but in great towns. It is only in places of the most extensivecommerce and correspondence that the intelligence requisite for it canbe had. 

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

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

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

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

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

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

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

The profits of stock vary with the price of the commodities in which itis employed. As the price of any commodity rises above the ordinary oraverage rate, the profits of at least some part of the stock that isemployed in bringing it to market, rise above their proper level, and asit falls they sink below it. All commodities are more or less liableto variations of price, but some are much more so than others. Inall commodities which are produced by human industry, the quantityof industry annually employed is necessarily regulated by the annualdemand, in such a manner that the average annual produce may, asnearly as possible, be equal to the average annual consumption. In someemployments, it has already been observed, the same quantity of industrywill always produce the same, or very nearly the same quantity ofcommodities. In the linen or woollen manufactures, for example, the samenumber of hands will annually work up very nearly the same quantityof linen and woollen cloth. The variations in the market price of suchcommodities, therefore, can arise only from some accidental variationin the demand. A public mourning raises the price of black cloth. Butas the demand for most sorts of plain linen and woollen cloth is prettyuniform, so is likewise the price. But there are other employments inwhich the same quantity of industry will not always produce the samequantity of commodities. The same quantity of industry, for example, will, in different years, produce very different quantities ofcorn, wine, hops, sugar tobacco, etc. The price of such commodities, therefore, varies not only with the variations of demand, but withthe much greater and more frequent variations of quantity, and isconsequently extremely fluctuating; but the profit of some of thedealers must necessarily fluctuate with the price of the commodities. The operations of the speculative merchant are principally employedabout such commodities. He endeavours to buy them up when he foreseesthat their price is likely to rise, and to sell them when it is likelyto fall. 

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

When a person derives his subsistence from one employment, which doesnot occupy the greater part of his time, in the intervals of hisleisure he is often willing to work at another for less wages than wouldotherwise suit the nature of the employment. 

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

The produce of such labour comes frequently cheaper to market thanwould otherwise be suitable to its nature. Stockings, in many parts ofScotland, are knit much cheaper than they can anywhere be wrought uponthe loom. They are the work of servants and labourers who derive theprincipal part of their subsistence from some other employment. Morethan a thousand pair of Shetland stockings are annually imported intoLeith, of which the price is from fivepence to seven-pence 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 the sameislands, they knit worsted stockings to the value of a guinea a pair andupwards. 

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

In opulent countries, the market is generally so extensive, that any onetrade is sufficient to employ the whole labour and stock of those whooccupy it. Instances of people living by one employment, and, at thesame time, deriving some little advantage from another, occur chieflyin pour countries. The following instance, however, of something of thesame kind, is to be found in the capital of a very rich one. There is nocity in Europe, I believe, in which house-rent is dearer than in London, and yet I know no capital in which a furnished apartment can be hired socheap. 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 is the cause ofthe cheapness of lodging. The dearness of house-rent in London arises, not only from those causes which render it dear in all great capitals, the dearness of labour, the dearness of all the materials of building, which must generally be brought from a great distance, and, aboveall, the dearness of ground-rent, every landlord acting the part of amonopolist, and frequently exacting a higher rent for a single acre ofbad land in a town, than can be had for a hundred of the best in thecountry; but it arises in part from the peculiar manners and customs ofthe people, which oblige every master of a family to hire a whole housefrom top to bottom. A dwelling-house in England means every thing thatis contained under the same roof. In France, Scotland, and many otherparts of Europe, it frequently means no more than a single storey. Atradesman in London is obliged to hire a whole house in that part of thetown where his customers live. His shop is upon the ground floor, and heand his family sleep in the garret; and he endeavours to pay a part ofhis house-rent by letting the two middle storeys to lodgers. He expectsto maintain his family by his trade, and not by his lodgers. Whereasat Paris and Edinburgh, people who let lodgings have commonly no othermeans of subsistence; and the price of the lodging must pay, not onlythe rent of the house, but the whole expense of the family. 

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

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

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

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

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

The exclusive privilege of an incorporated trade necessarily restrainsthe competition, in the town where it is established, to those who arefree of the trade. To have served an apprenticeship in the town, undera master properly qualified, is commonly the necessary requisitefor obtaining this freedom. The bye-laws of the corporation regulatesometimes the number of apprentices which any master is allowed to have, and almost always the number of years which each apprentice isobliged to serve. The intention of both regulations is to restrain thecompetition to a much smaller number than might otherwise be disposedto enter into the trade. The limitation of the number of apprenticesrestrains it directly. A long term of apprenticeship restrains it moreindirectly, but as effectually, by increasing the expense of education. 

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

Seven years seem anciently to have been, all over Europe, the usual termestablished for the duration of apprenticeships in the greater partof incorporated trades. All such incorporations were ancientlycalled universities, which, indeed, is the proper Latin name for anyincorporation whatever. The university of smiths, the university oftailors, etc. Are expressions which we commonly meet with in the oldcharters of ancient towns. When those particular incorporations, whichare now peculiarly called universities, were first established, the termof years which it was necessary to study, in order to obtain the degreeof master of arts, appears evidently to have been copied from the termof apprenticeship in common trades, of which the incorporations weremuch more ancient. As to have wrought seven years under a masterproperly qualified, was necessary, in order to entitle my person tobecome a master, and to have himself apprentices in a common trade;so to have studied seven years under a master properly qualified, wasnecessary to entitle him to become a master, teacher, or doctor (wordsanciently synonymous), in the liberal arts, and to have scholars orapprentices (words likewise originally synonymous) to study under him. 

By the 5th of Elizabeth, commonly called the Statute of Apprenticeship, it was enacted, that no person should, for the future, exercise anytrade, craft, or mystery, at that time exercised in England, unless hehad previously served to it an apprenticeship of seven years at least;and what before had been the bye-law of many particular corporations, became in England the general and public law of all trades carried on inmarket towns. For though the words of the statute are very general, and seem plainly to include the whole kingdom, by interpretation itsoperation has been limited to market towns; it having been held that, incountry villages, a person may exercise several different trades, thoughhe has not served a seven years apprenticeship to each, they beingnecessary for the conveniency of the inhabitants, and the number ofpeople frequently not being sufficient to supply each with a particularset of hands. By a strict interpretation of the words, too, theoperation of this statute has been limited to those trades which wereestablished in England before the 5th of Elizabeth, and has neverbeen extended to such as have been introduced since that time. Thislimitation has given occasion to several distinctions, which, consideredas rules of police, appear as foolish as can well be imagined. It hasbeen adjudged, for example, that a coach-maker can neither himself makenor employ journeymen to make his coach-wheels, but must buy them of amaster wheel-wright; this latter trade having been exercised in Englandbefore the 5th of Elizabeth. But a wheel-wright, though he has neverserved an apprenticeship to a coachmaker, may either himself make oremploy journeymen to make coaches; the trade of a coachmaker not beingwithin the statute, because not exercised in England at the time when itwas made. The manufactures of Manchester, Birmingham, and Wolverhampton, are many of them, upon this account, not within the statute, not havingbeen exercised in England before the 5th of Elizabeth. 

In France, the duration of apprenticeships is different in differenttowns and in different trades. In Paris, five years is the term requiredin a great number; but, before any person can be qualified to exercisethe trade as a master, he must, in many of them, serve five years moreas a journeyman. During this latter term, he is called the companion ofhis master, and the term itself is 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 be redeemedby paying a small fine. In most towns, too, a very small fine issufficient to purchase the freedom of any corporation. The weavers oflinen and hempen cloth, the principal manufactures of the country, as well as all other artificers subservient to them, wheel-makers, reel-makers, etc. May exercise their trades in any town-corporatewithout paying any fine. In all towns-corporate, all persons are free tosell butchers' meat upon any lawful day of the week. Three years is, in Scotland, a common term of apprenticeship, even in some very nicetrades; and, in general, I know of no country in Europe, in whichcorporation laws are so little oppressive. 

The property which every man has in his own labour, as it is theoriginal foundation of all other property, so it is the most sacredand inviolable. The patrimony of a poor man lies in the strength anddexterity of his hands; and to hinder him from employing this strengthand dexterity in what manner he thinks proper, without injury to hisneighbour, is a plain violation of this most sacred property. It is amanifest encroachment upon the just liberty, both of the workman, andof those who might be disposed to employ him. As it hinders the onefrom working at what he thinks proper, so it hinders the others fromemploying whom they think proper. To judge whether he is fit to beemployed, may surely be trusted to the discretion of the employers, whose interest it so much concerns. The affected anxiety of thelawgiver, lest they should employ an improper person, is evidently asimpertinent 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 againstfraud. Quite different regulations are necessary to prevent this abuse. The sterling mark upon plate, and the stamps upon linen and woollencloth, give the purchaser much greater security than any statute ofapprenticeship. He generally looks at these, but never thinks itworth while to enquire whether the workman had served a seven yearsapprenticeship. 

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

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

Long apprenticeships are altogether unnecessary. The arts, which aremuch superior to common trades, such as those of making clocks andwatches, contain no such mystery as to require a long course ofinstruction. The first invention of such beautiful machines, indeed, andeven that of some of the instruments employed in making them, must nodoubt have been the work of deep thought and long time, and may justlybe considered as among the happiest efforts of human ingenuity. But whenboth have been fairly invented, and are well understood, to explain toany young man, in the completest manner, how to apply the instruments, and how to construct the machines, cannot well require more than thelessons of a few weeks; perhaps those of a few days might be sufficient. In the common mechanic trades, those of a few days might certainly besufficient. The dexterity of hand, indeed, even in common trades, cannotbe acquired without much practice and experience. But a young man wouldpractice with much more diligence and attention, if from the beginninghe wrought as a journeyman, being paid in proportion to the little workwhich he could execute, and paying in his turn for the materials whichhe might sometimes spoil through awkwardness and inexperience. Hiseducation would generally in this way be more effectual, and always lesstedious and expensive. The master, indeed, would be a loser. He wouldlose all the wages of the apprentice, which he now saves, for sevenyears together. In the end, perhaps, the apprentice himself would be aloser. In a trade so easily learnt he would have more competitors, andhis wages, when he came to be a complete workman, would be much lessthan at present. The same increase of competition would reduce theprofits of the masters, as well as the wages of workmen. The trades, thecrafts, the mysteries, would all be losers. But the public would be againer, the work of all artificers coming in this way much cheaper tomarket. 

It is to prevent his reduction of price, and consequently of wages andprofit, by restraining that free competition which would most certainlyoccasion it, that all corporations, and the greater part of corporationlaws have been established. In order to erect a corporation, no otherauthority in ancient times was requisite, in many parts of Europe, butthat of the town-corporate in which it was established. In England, indeed, a charter from the king was likewise necessary. But thisprerogative of the crown seems to have been reserved rather forextorting money from the subject, than for the defence of the commonliberty against such oppressive monopolies. Upon paying a fine to theking, the charter seems generally to have been readily granted; and whenany particular class of artificers or traders thought proper to act asa corporation, without a charter, such adulterine guilds, as they werecalled, were not always disfranchised upon that account, but obligedto fine annually to the king, for permission to exercise their usurpedprivileges {See Madox Firma Burgi p. 26 etc. }. The immediate inspectionof all corporations, and of the bye-laws which they might think properto enact for their own government, belonged to the town-corporate inwhich they were established; and whatever discipline was exercisedover them, proceeded commonly, not from the king, but from that greaterincorporation of which those subordinate ones were only parts ormembers. 

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

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

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

That the industry which is carried on in towns is, everywhere in Europe, more advantageous than that which is carried on in the country, withoutentering into any very nice computations, we may satisfy ourselves byone very simple and obvious observation. In every country of Europe, wefind at least a hundred people who have acquired great fortunes, fromsmall beginnings, by trade and manufactures, the industry which properlybelongs to towns, for one who has done so by that which properly belongsto the country, the raising of rude produce by the improvement andcultivation of land. Industry, therefore, must be better rewarded, thewages of labour and the profits of stock must evidently be greater, inthe one situation than in the other. But stock and labour naturally seekthe most advantageous employment. They naturally, therefore, resort asmuch as they can to the town, and desert the country. 

The inhabitants of a town being collected into one place, can easilycombine together. The most insignificant trades carried on in townshave, accordingly, in some place or other, been incorporated; and evenwhere they have never been incorporated, yet the corporation-spirit, the jealousy of strangers, the aversion to take apprentices, or tocommunicate the secret of their trade, generally prevail in them, andoften teach them, by voluntary associations and agreements, to preventthat free competition which they cannot prohibit by bye-laws. The tradeswhich employ but a small number of hands, run most easily into suchcombinations. Half-a-dozen wool-combers, perhaps, are necessary tokeep a thousand spinners and weavers at work. By combining not to takeapprentices, they can not only engross the employment, but reduce thewhole manufacture into a sort of slavery to themselves, and raise theprice of their labour much above what is due to the nature of theirwork. 

The inhabitants of the country, dispersed in distant places, cannoteasily combine together. They have not only never been incorporated, but the incorporation spirit never has prevailed among them. Noapprenticeship has ever been thought necessary to qualify for husbandry, the great trade of the country. After what are called the fine arts, and the liberal professions, however, there is perhaps no trade whichrequires so great a variety of knowledge and experience. The innumerablevolumes which have been written upon it in all languages, may satisfyus, that among the wisest and most learned nations, it has never beenregarded as a matter very easily understood. And from all those volumeswe shall in vain attempt to collect that knowledge of its various andcomplicated operations which is commonly possessed even by the commonfarmer; how contemptuously soever the very contemptible authors of someof them may sometimes affect to speak of him. There is scarce any commonmechanic trade, on the contrary, of which all the operations may notbe as completely and distinctly explained in a pamphlet of a very fewpages, as it is possible for words illustrated by figures to explainthem. In the history of the arts, now publishing by the French Academyof Sciences, several of them are actually explained in this manner. Thedirection of operations, besides, which must be varied with every changeof the weather, as well as with many other accidents, requires much morejudgment and discretion, than that of those which are always the same, or very nearly the same. 

Not only the art of the farmer, the general direction of the operationsof husbandry, but many inferior branches of country labour require muchmore skill and experience than the greater part of mechanic trades. The man who works upon brass and iron, works with instruments, and uponmaterials of which the temper is always the same, or very nearly thesame. But the man who ploughs the ground with a team of horses or oxen, works with instruments of which the health, strength, and temper, arevery different upon different occasions. The condition of the materialswhich he works upon, too, is as variable as that of the instrumentswhich he works with, and both require to be managed with much judgmentand discretion. The common ploughman, though generally regarded as thepattern of stupidity and ignorance, is seldom defective in this judgmentand discretion. He is less accustomed, indeed, to social intercourse, than the mechanic who lives in a town. His voice and language are moreuncouth, and more difficult to be understood by those who are not usedto 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. How much thelower ranks of people in the country are really superior to those of thetown, is well known to every man whom either business or curiosity hasled to converse much with both. In China and Indostan, accordingly, boththe rank and the wages of country labourers are said to be superior tothose of the greater part of artificers and manufacturers. They wouldprobably be so everywhere, if corporation laws and the corporationspirit did not prevent it. 

The superiority which the industry of the towns has everywhere in Europeover that of the country, is not altogether owing to corporations andcorporation laws. It is supported by many other regulations. The highduties upon foreign manufactures, and upon all goods imported by alienmerchants, all tend to the same purpose. Corporation laws enable theinhabitants of towns to raise their prices, without fearing to beundersold by the free competition of their own countrymen. Thoseother regulations secure them equally against that of foreigners. Theenhancement of price occasioned by both is everywhere finally paid bythe landlords, farmers, and labourers, of the country, who have seldomopposed the establishment of such monopolies. They have commonly neitherinclination nor fitness to enter into combinations; and the clamour andsophistry of merchants and manufacturers easily persuade them, that theprivate interest of a part, and of a subordinate part, of the society, is the general interest of the whole. 

In Great Britain, the superiority of the industry of the towns over thatof the country seems to have been greater formerly than in thepresent times. The wages of country labour approach nearer to those ofmanufacturing labour, and the profits of stock employed in agricultureto those of trading and manufacturing stock, than they are said tohave none in the last century, or in the beginning of the present. Thischange may be regarded as the necessary, though very late consequence ofthe extraordinary encouragement given to the industry of the towns. Thestocks accumulated in them come in time to be so great, that it can nolonger be employed with the ancient profit in that species of industrywhich is peculiar to them. That industry has its limits like everyother; and the increase of stock, by increasing the competition, necessarily reduces the profit. The lowering of profit in the townforces out stock to the country, where, by creating a new demand forcountry labour, it necessarily raises its wages. It then spreads itself, if I my say so, over the face of the land, and, by being employed inagriculture, is in part restored to the country, at the expense ofwhich, in a great measure, it had originally been accumulated in thetown. That everywhere in Europe the greatest improvements of thecountry have been owing to such over flowings of the stock originallyaccumulated in the towns, I shall endeavour to shew hereafter, and atthe same time to demonstrate, that though some countries have, by thiscourse, attained to a considerable degree of opulence, it is in itselfnecessarily slow, uncertain, liable to be disturbed and interrupted byinnumerable accidents, and, in every respect, contrary to the order ofnature and of reason The interests, prejudices, laws, and customs, whichhave given occasion to it, I shall endeavour to explain as fully anddistinctly as I can in the third and fourth books of this Inquiry. 

People of the same trade seldom meet together, even for merriment anddiversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible, indeed, toprevent such meetings, by any law which either could be executed, orwould be consistent with liberty and justice. But though the law cannothinder people of the same trade from sometimes assembling together, itought to do nothing to facilitate such assemblies, much less to renderthem necessary. 

A regulation which obliges all those of the same trade in a particulartown to enter their names and places of abode in a public register, facilitates such assemblies. It connects individuals who might neverotherwise be known to one another, and gives every man of the trade adirection where to find every other man of it. 

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

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

The pretence that corporations are necessary for the better governmentof the trade, is without any foundation. The real and effectualdiscipline which is exercised over a workman, is not that of hiscorporation, but that of his customers. It is the fear of losing theiremployment which restrains his frauds and corrects his negligence. Anexclusive corporation necessarily weakens the force of this discipline. A particular set of workmen must then be employed, let them behave wellor ill. It is upon this account that, in many large incorporated towns, no tolerable workmen are to be found, even in some of the most necessarytrades. If you would have your work tolerably executed, it must be donein the suburbs, where the workmen, having no exclusive privilege, havenothing but 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 than would otherwisebe disposed to enter into them, occasions a very important inequalityin the whole of the advantages and disadvantages of the differentemployments of labour and stock. 

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

It has been considered as of so much importance that a proper number ofyoung people should be educated for certain professions, thatsometimes the public, and sometimes the piety of private founders, haveestablished many pensions, scholarships, exhibitions, bursaries, etc. For this purpose, which draw many more people into those trades thancould otherwise pretend to follow them. In all Christian countries, Ibelieve, the education of the greater part of churchmen is paid forin this manner. Very few of them are educated altogether at their ownexpense. The long, tedious, and expensive education, therefore, of thosewho are, will not always procure them a suitable reward, the churchbeing crowded with people, who, in order to get employment, are willingto accept of a much smaller recompence than what such an education wouldotherwise have entitled them to; and in this manner the competition ofthe poor takes away the reward of the rich. It would be indecent, nodoubt, to compare either a curate or a chaplain with a journeyman inany common trade. The pay of a curate or chaplain, however, may veryproperly be considered as of the same nature with the wages of ajourneyman. They are all three paid for their work according to thecontract which they may happen to make with their respective superiors. Till after the middle of the fourteenth century, five merks, containingabout as much silver as ten pounds of our present money, was in Englandthe usual pay of a curate or a stipendiary parish priest, as we find itregulated by the decrees of several different national councils. At thesame period, fourpence a-day, containing the same quantity of silver asa shilling of our present money, was declared to be the pay of a mastermason; and threepence a-day, equal to ninepence of our present money, that of a journeyman mason. {See the Statute of Labourers, 25, Ed. III. }The wages of both these labourer's, therefore, supposing them to havebeen constantly employed, were much superior to those of the curate. Thewages of the master mason, supposing him to have been without employmentone-third of the year, would have fully equalled them. By the 12th ofQueen Anne, c. 12. It is declared, "That whereas, for want of sufficientmaintenance and encouragement to curates, the cures have, in severalplaces, been meanly supplied, the bishop is, therefore, empoweredto appoint, by writing under his hand and seal, a sufficient certainstipend or allowance, not exceeding fifty, and not less than twentypounds a-year". Forty pounds a-year is reckoned at present very goodpay for a curate; and, notwithstanding this act of parliament, thereare many curacies under twenty pounds a-year. There are journeymenshoemakers in London who earn forty pounds a-year, and there is scarcean industrious workman of any kind in that metropolis who does not earnmore than twenty. This last sum, indeed, does not exceed what frequentlyearned by common labourers in many country parishes. Whenever the lawhas attempted to regulate the wages of workmen, it has always beenrather to lower them than to raise them. But the law has, upon manyoccasions, attempted to raise the wages of curates, and, for the dignityof the church, to oblige the rectors of parishes to give them morethan the wretched maintenance which they themselves might be willingto accept of. And, in both cases, the law seems to have been equallyineffectual, and has never either been able to raise the wages ofcurates, or to sink those of labourers to the degree that was intended;because it has never been able to hinder either the one from beingwilling to accept of less than the legal allowance, on account of theindigence of their situation and the multitude of their competitors, orthe other from receiving more, on account of the contrary competitionof those who expected to derive either profit or pleasure from employingthem. 

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

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

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

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

In ancient times, before any charities of this kind had been establishedfor the education of indigent people to the learned professions, therewards of eminent teachers appear to have been much more considerable. Isocrates, in what is called his discourse against the sophists, reproaches the teachers of his own times with inconsistency. "Theymake the most magnificent promises to their scholars, " says he, "andundertake to teach them to be wise, to be happy, and to be just; and, inreturn for so important a service, they stipulate the paltry rewardof four or five minae. " "They who teach wisdom, " continues he, "oughtcertainly to be wise themselves; but if any man were to sell such abargain for such a price, he would be convicted of the most evidentfolly. " He certainly does not mean here to exaggerate the reward, andwe may be assured that it was not less than he represents it. Four minaewere equal to thirteen pounds six shillings and eightpence; five minaeto sixteen pounds thirteen shillings and fourpence. Something not lessthan the largest of those two sums, therefore, must at that time havebeen usually paid to the most eminent teachers at Athens. Isocrateshimself demanded ten minae, or £ 33:6:8 from each scholar. Whenhe taught at Athens, he is said to have had a hundred scholars. Iunderstand this to be the number whom he taught at one time, or whoattended what we would call one course of lectures; a number which willnot appear extraordinary from so great a city to so famous a teacher, who taught, too, what was at that time the most fashionable of allsciences, rhetoric. He must have made, therefore, by each courseof lectures, a thousand minae, or £ 3335:6:8. A thousand minae, accordingly, is said by Plutarch, in another place, to have been hisdidactron, or usual price of teaching. Many other eminent teachers inthose times appear to have acquired great fortunes. Georgias made apresent to the temple of Delphi of his own statue in solid gold. We mustnot, I presume, suppose that it was as large as the life. His way ofliving, as well as that of Hippias and Protagoras, two other eminentteachers of those times, is represented by Plato as splendid, even toostentation. Plato himself is said to have lived with a good deal ofmagnificence. Aristotle, after having been tutor to Alexander, and mostmunificently rewarded, as it is universally agreed, both by him and hisfather, Philip, thought it worth while, notwithstanding, to return toAthens, in order to resume the teaching of his school. Teachers of thesciences were probably in those times less common than they came to bein an age or two afterwards, when the competition had probably somewhatreduced both the price of their labour and the admiration for theirpersons. The most eminent of them, however, appear always to haveenjoyed a degree of consideration much superior to any of the likeprofession in the present times. The Athenians sent Carneades theacademic, and Diogenes the stoic, upon a solemn embassy to Rome; andthough their city had then declined from its former grandeur, it wasstill an independent and considerable republic. 

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

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

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

The statute of apprenticeship obstructs the free circulation of labourfrom one employment to another, even in the same place. The exclusiveprivileges of corporations obstruct it from one place to another, evenin the same employment. 

It frequently happens, that while high wages are given to the workmen inone manufacture, those in another are obliged to content themselves withbare subsistence. The one is in an advancing state, and has therefore acontinual demand for new hands; the other is in a declining state, and the superabundance of hands is continually increasing. Those twomanufactures may sometimes be in the same town, and sometimes in thesame neighbourhood, without being able to lend the least assistanceto one another. The statute of apprenticeship may oppose it in the onecase, and both that and an exclusive corporation in the other. In manydifferent manufactures, however, the operations are so much alike, thatthe workmen could easily change trades with one another, if those absurdlaws did not hinder them. The arts of weaving plain linen and plainsilk, for example, are almost entirely the same. That of weaving plainwoollen is somewhat different; but the difference is so insignificant, that either a linen or a silk weaver might become a tolerable workman ina very few days. If any of those three capital manufactures, therefore, were decaying, the workmen might find a resource in one of the other twowhich was in a more prosperous condition; and their wages wouldneither rise too high in the thriving, nor sink too low in the decayingmanufacture. The linen manufacture, indeed, is in England, by aparticular statute, open to every body; but as it is not much cultivatedthrough the greater part of the country, it can afford no generalresource to the work men of other decaying manufactures, who, whereverthe statute of apprenticeship takes place, have no other choice, butdither to come upon the parish, or to work as common labourers; forwhich, by their habits, they are much worse qualified than for any sortof manufacture that bears any resemblance to their own. They generally, therefore, chuse to come upon the parish. 

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

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

When, by the destruction of monasteries, the poor had been deprivedof the charity of those religious houses, after some other ineffectualattempts for their relief, it was enacted, by the 43d of Elizabeth, c. 2. That every parish should be bound to provide for its own poor, andthat overseers of the poor should be annually appointed, who, with thechurch-wardens, should raise, by a parish rate, competent sums for thispurpose. 

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

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

But parish officers, it seems, were not always more honest with regardto their own than they had been with regard to other parishes, andsometimes connived at such intrusions, receiving the notice, and takingno proper steps in consequence of it. As every person in a parish, therefore, was supposed to have an interest to prevent as much aspossible their being burdened by such intruders, it was further enactedby the 3rd of William III. That the forty days residence should beaccounted only from the publication of such notice in writing on Sundayin the church, immediately after divine service. 

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

This statute, therefore, rendered it almost impracticable for a poor manto gain a new settlement in the old way, by forty days inhabitancy. Butthat it might not appear to preclude altogether the common people ofone' parish from ever establishing themselves with security in another, it appointed four other ways by which a settlement might be gainedwithout any notice delivered or published. The first was, by being taxedto parish rates and paying them; the second, by being elected into anannual parish office, and serving in it a year; the third, by servingan apprenticeship in the parish; the fourth, by being hired into servicethere for a year, and continuing in the same service during the whole ofit. Nobody can gain a settlement by either of the two first ways, butby the public deed of the whole parish, who are too well aware of theconsequences to adopt any new-comer, who has nothing but his labour tosupport him, either by taxing him to parish rates, or by electing himinto a parish office. 

No married man can well gain any settlement in either of the two lastways. An apprentice is scarce ever married; and it is expressly enacted, that no married servant shall gain any settlement by being hired fora year. The principal effect of introducing settlement by service, hasbeen to put out in a great measure the old fashion of hiring for a year;which before had been so customary in England, that even at this day, ifno 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 servants arenot always willing to be so hired, because, as every last settlementdischarges all the foregoing, they might thereby lose their originalsettlement in the places of their nativity, the habitation of theirparents and relations. 

No independent workman, it is evident, whether labourer or artificer, is likely to gain any new settlement, either by apprenticeship or byservice. When such a person, therefore, carried his industry to a newparish, he was liable to be removed, how healthy and industrious soever, at the caprice of any churchwarden or overseer, unless he either renteda tenement of ten pounds a-year, a thing impossible for one who hasnothing but his labour to live by, or could give such security forthe discharge of the parish as two justices of the peace should judgesufficient. 

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 of lessthan thirty pounds value, shall not gain any person a settlement, as notbeing sufficient for the discharge of the parish. But this is a securitywhich scarce any man who lives by labour can give; and much greatersecurity is frequently demanded. 

In order to restore, in some measure, that free circulation of labourwhich those different statutes had almost entirely taken away, theinvention of certificates was fallen upon. By the 8th and 9th of WilliamIII. It was enacted that if any person should bring a certificatefrom the parish where he was last legally settled, subscribed by thechurch-wardens and overseers of the poor, and allowed by two justicesof the peace, that every other parish should be obliged to receive him;that he should not be removable merely upon account of his being likelyto become chargeable, but only upon his becoming actually chargeable;and that then the parish which granted the certificate should be obligedto pay the expense both of his maintenance and of his removal. Andin order to give the most perfect security to the parish where suchcertificated man should come to reside, it was further enacted by thesame statute, that he should gain no settlement there by any meanswhatever, except either by renting a tenement of ten pounds a-year, orby serving upon his own account in an annual parish office for onewhole year; and consequently neither by notice nor by service, nor byapprenticeship, nor by paying parish rates. By the 12th of Queen Anne, too, stat. 1, c. 18, it was further enacted, that neither the servantsnor apprentices of such certificated man should gain any settlement inthe parish where he resided under such certificate. 

How far this invention has restored that free circulation of labour, which the preceding statutes had almost entirely taken away, we maylearn from the following very judicious observation of Doctor Burn. "Itis obvious, " says he, "that there are divers good reasons for requiringcertificates with persons coming to settle in any place; namely, that persons residing under them can gain no settlement, neither byapprenticeship, nor by service, nor by giving notice, nor by payingparish rates; that they can settle neither apprentices nor servants;that if they become chargeable, it is certainly known whither to removethem, and the parish shall be paid for the removal, and for theirmaintenance in the mean time; and that, if they fall sick, and cannot beremoved, the parish which gave the certificate must maintain them;none of all which can be without a certificate. Which reasons will holdproportionably for parishes not granting certificates in ordinary cases;for it is far more than an equal chance, but that they will have thecertificated persons again, and in a worse condition. " The moral of thisobservation seems to be, that certificates ought always to be requiredby the parish where any poor man comes to reside, and that they oughtvery seldom to be granted by that which he purposes to leave. "There issomewhat of hardship in this matter of certificates, " says the same veryintelligent author, in his History of the Poor Laws, "by putting it inthe power of a parish officer to imprison a man as it were for life, however inconvenient it may be for him to continue at that place wherehe has had the misfortune to acquire what is called a settlement, orwhatever advantage he may propose 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 discretionary inthe parish officers either to grant or to refuse it. A mandamus was oncemoved for, says Doctor Burn, to compel the church-wardens and overseersto sign a certificate; but the Court of King's Bench rejected the motionas a very strange attempt. 

The very unequal price of labour which we frequently find in England, inplaces at no great distance from one another, is probably owing to theobstruction which the law of settlements gives to a poor man who wouldcarry his industry from one parish to another without a certificate. Asingle man, indeed who is healthy and industrious, may sometimes resideby sufferance without one; but a man with a wife and family who shouldattempt to do so, would, in most parishes, be sure of being removed;and, if the 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, as it isconstantly in Scotland, and I believe, in all other countries wherethere is no difficulty of settlement. In such countries, though wagesmay sometimes rise a little in the neighbourhood of a great town, orwherever else there is an extraordinary demand for labour, and sinkgradually as the distance from such places increases, till they fallback to the common rate of the country; yet we never meet with thosesudden and unaccountable differences in the wages of neighbouring placeswhich we sometimes find in England, where it is often more difficult fora poor man to pass the artificial boundary of a parish, than an armof the sea, or a ridge of high mountains, natural boundaries whichsometimes separate very distinctly different rates of wages in othercountries. 

To remove a man who has committed no misdemeanour, from the parish wherehe chooses to reside, is an evident violation of natural liberty andjustice. The common people of England, however, so jealous of theirliberty, but like the common people of most other countries, neverrightly understanding wherein it consists, have now, for more than acentury together, suffered themselves to be exposed to this oppressionwithout a remedy. Though men of reflection, too, have some timescomplained of the law of settlements as a public grievance; yet ithas never been the object of any general popular clamour, such as thatagainst general warrants, an abusive practice undoubtedly, but sucha one as was not likely to occasion any general oppression. There isscarce a poor man in England, of forty years of age, I will venture tosay, 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 though ancientlyit was usual to rate wages, first by general laws extending over thewhole kingdom, and afterwards by particular orders of the justices ofpeace in every particular county, both these practices have now goneentirely into disuse. "By the experience of above four hundred years, "says Doctor Burn, "it seems time to lay aside all endeavours to bringunder strict regulations, what in its own nature seems incapable ofminute limitation; for if all persons in the same kind of work were toreceive equal wages, there would be no emulation, and no room left forindustry or ingenuity. "

Particular acts of parliament, however, still attempt sometimes toregulate wages in particular trades, and in particular places. Thus the8th of George III. Prohibits, under heavy penalties, all master tailorsin London, and five miles round it, from giving, and their workmenfrom accepting, more than two shillings and sevenpence halfpenny a-day, except in the case of a general mourning. Whenever the legislatureattempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it issometimes otherwise when in favour of the masters. Thus the law whichobliges the masters in several different trades to pay their workmen inmoney, and not in goods, is quite just and equitable. It imposes no realhardship upon the masters. It only obliges them to pay that value inmoney, which they pretended to pay, but did not always really pay, ingoods. This law is in favour of the workmen; but the 8th of George III. Is in favour of the masters. When masters combine together, in order toreduce the wages of their workmen, they commonly enter into a privatebond or agreement, not to give more than a certain wage, under a certainpenalty. Were the workmen to enter into a contrary combination of thesame kind, not to accept of a certain wage, under a certain penalty, thelaw would punish them very severely; and, if it dealt impartially, itwould treat the masters in the same manner. But the 8th of George III. Enforces by law that very regulation which masters sometimes attempt toestablish by such combinations. The complaint of the workmen, thatit puts the ablest and most industrious upon the same footing with anordinary workman, seems perfectly well founded. 

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

CHAPTER XI. OF THE RENT OF LAND. 

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

The rent of land, it may be thought, is frequently no more than areasonable profit or interest for the stock laid out by the landlordupon its improvement. This, no doubt, may be partly the case upon someoccasions; for it can scarce ever be more than partly the case. Thelandlord demands a rent even for unimproved land, and the supposedinterest or profit upon the expense of improvement is generally anaddition to this original rent. Those improvements, besides, are notalways made by the stock of the landlord, but sometimes by that ofthe tenant. When the lease comes to be renewed, however, the landlordcommonly demands the same augmentation of rent as if they had been allmade by his own. 

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

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

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

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

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

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

The particular consideration, first, of those parts of the produce ofland which always afford some rent; secondly, of those which sometimesmay and sometimes may not afford rent; and, thirdly, of the variationswhich, in the different periods of improvement, naturally take place inthe relative value of those two different sorts of rude produce, whencompared both with one another and with manufactured commodities, willdivide this chapter into three parts. 

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

As men, like all other animals, naturally multiply in proportion to themeans of their subsistence, food is always more or less in demand. Itcan always purchase or command a greater or smaller quantity of labour, and somebody can always be found who is willing to do something in orderto obtain it. The quantity of labour, indeed, which it can purchase, is not always equal to what it could maintain, if managed in the mosteconomical manner, on account of the high wages which are sometimesgiven to labour; but it can always purchase such a quantity of labour asit can maintain, according to the rate at which that 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 labour isever maintained. The surplus, too, is always more than sufficient toreplace the stock which employed that labour, together with its profits. Something, therefore, always remains for a rent to the landlord. 

The most desert moors in Norway and Scotland produce some sort ofpasture for cattle, of which the milk and the increase are always morethan sufficient, not only to maintain all the labour necessary fortending them, and to pay the ordinary profit to the farmer or the ownerof the herd or flock, but to afford some small rent to the landlord. Therent increases in proportion to the goodness of the pasture. The sameextent of ground not only maintains a greater number of cattle, but asthey we brought within a smaller compass, less labour becomes requisiteto tend them, and to collect their produce. The landlord gains bothways; by the increase of the produce, and by the diminution of thelabour which must 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 in theneighbourhood of a town gives a greater rent than land equally fertilein a distant part of the country. Though it may cost no more labour tocultivate the one than the other, it must always cost more to bring theproduce of the distant land to market. A greater quantity of labour, therefore, must be maintained out of it; and the surplus, from which aredrawn both the profit of the farmer and the rent of the landlord, mustbe diminished. But in remote parts of the country, the rate of profit, as has already been shewn, is generally higher than in the neighbourhoodof a large town. A smaller proportion of this diminished surplus, therefore, must belong to the landlord. 

Good roads, canals, and navigable rivers, by diminishing the expense ofcarriage, put the remote parts of the country more nearly upon a levelwith those in the neighbourhood of the town. They are upon that accountthe greatest of all improvements. They encourage the cultivation of theremote, which must always be the most extensive circle of the country. They are advantageous to the town by breaking down the monopoly of thecountry in its neighbourhood. They are advantageous even to that part ofthe country. Though they introduce some rival commodities into the oldmarket, they open many new markets to its produce. Monopoly, besides, is a great enemy to good management, which can never be universallyestablished, but in consequence of that free and universal competitionwhich forces every body to have recourse to it for the sake of selfdefence. It is not more than fifty years ago, that some of the countiesin the neighbourhood of London petitioned the parliament against theextension of the turnpike roads into the remoter counties. Those remotercounties, they pretended, from the cheapness of labour, would be able tosell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation. Theirrents, however, have risen, and their cultivation has been improvedsince that time. 

A corn field of moderate fertility produces a much greater quantityof food for man, than the best pasture of equal extent. Though itscultivation requires much more labour, yet the surplus which remainsafter replacing the seed and maintaining all that labour, is likewisemuch greater. If a pound of butcher's meat, therefore, was neversupposed to be worth more than a pound of bread, this greater surpluswould everywhere be of greater value and constitute a greater fund, bothfor the profit of the farmer and the rent of the landlord. It seems tohave done so universally in the rude beginnings of agriculture. 

But the relative values of those two different species of food, breadand butcher's meat, are very different in the different periods ofagriculture. In its rude beginnings, the unimproved wilds, which thenoccupy the far greater part of the country, are all abandoned to cattle. There is more butcher's meat than bread; and bread, therefore, is thefood for which there is the greatest competition, and which consequentlybrings the greatest price. At Buenos Ayres, we are told by Ulloa, fourreals, one-and-twenty pence halfpenny sterling, was, forty or fiftyyears ago, the ordinary price of an ox, chosen from a herd of two orthree hundred. He says nothing of the price of bread, probably becausehe found nothing remarkable about it. An ox there, he says, costs littlemore than the labour of catching him. But corn can nowhere be raisedwithout a great deal of labour; and in a country which lies upon theriver Plate, at that time the direct road from Europe to the silvermines of Potosi, the money-price of labour could be very cheap. It isotherwise when cultivation is extended over the greater part of thecountry. There is then more bread than butcher's meat. The competitionchanges its direction, and the price of butcher's meat becomes greaterthan the price of bread. 

By the extension, besides, of cultivation, the unimproved wilds becomeinsufficient to supply the demand for butcher's meat. A great part ofthe cultivated lands must be employed in rearing and fattening cattle;of which the price, therefore, must be sufficient to pay, not only thelabour necessary for tending them, but the rent which the landlord, andthe profit which the farmer, could have drawn from such land employed intillage. The cattle bred upon the most uncultivated moors, when broughtto the same market, are, in proportion to their weight or goodness, soldat the same price as those which are reared upon the most improved land. The proprietors of those moors profit by it, and raise the rent of 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'smeat was as cheap or cheaper than even bread made of oatmeal The Unionopened the market of England to the Highland cattle. Their ordinaryprice, at present, is about three times greater than at the beginningof the century, and the rents of many Highland estates have been tripledand quadrupled in the same time. In almost every part of Great Britain, a pound of the best butcher's meat is, in the present times, generallyworth more than two pounds of the best white bread; and in plentifulyears it is sometimes worth three or four pounds. 

It is thus that, in the progress of improvement, the rent and profit ofunimproved pasture come to be regulated in some measure by the rent andprofit of what is improved, and these again by the rent and profit ofcorn. Corn is an annual crop; butcher's meat, a crop which requires fouror five years to grow. As an acre of land, therefore, will produce amuch smaller quantity of the one species of food than of the other, theinferiority of the quantity must be compensated by the superiority ofthe price. If it was more than compensated, more corn-land would beturned into pasture; 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 and thoseof corn; of the land of which the immediate produce is food for cattle, and of that of which the immediate produce is food for men, must beunderstood to take place only through the greater part of the improvedlands of a great country. In some particular local situations it isquite otherwise, and the rent and profit of grass are much superior towhat can be made by corn. 

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

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

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

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

The use of the artificial grasses, of turnips, carrots, cabbages, and the other expedients which have been fallen upon to make an equalquantity of land feed a greater number of cattle than when in naturalgrass, should somewhat reduce, it might be expected, the superioritywhich, in an improved country, the price of butcher's meat naturally hasover that of bread. It seems accordingly to have done so; and there issome reason for believing that, at least in the London market, the priceof butcher'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 has givenus an account of the prices of butcher's meat as commonly paid by thatprince. It is there said, that the four quarters of an ox, weighingsix hundred pounds, usually cost him nine pounds ten shillings, orthereabouts; that is thirty-one shillings and eight-pence per hundredpounds weight. Prince Henry died on the 6th of November 1612, in thenineteenth year of his age. 

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

The price paid by Prince Henry amounts to 3d. 4/5ths per pound weight ofthe whole carcase, coarse and choice pieces taken together; and at thatrate the choice pieces could not have been sold by retail for less than4½d. Or 5d. The pound. 

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

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

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

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

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

Those productions, indeed, which require either a greater originalexpense of improvement, or a greater annual expense of cultivation inorder to fit the land for them, appear commonly to afford, the one agreater rent, the other a greater profit, than corn or pasture. Thissuperiority, however, will seldom be found to amount to more than areasonable interest or compensation for this superior expense. 

In a hop garden, a fruit garden, a kitchen garden, both the rent of thelandlord, and the profit of the farmer, are generally greater thanin acorn or grass field. But to bring the ground into this conditionrequires more expense. Hence a greater rent becomes due to the landlord. It requires, too, a more attentive and skilful management. Hence agreater profit becomes due to the farmer. The crop, too, at least in thehop and fruit garden, is more precarious. Its price, therefore, besidescompensating all occasional losses, must afford something like theprofit of insurance. The circumstances of gardeners, generally mean, and always moderate, may satisfy us that their great ingenuity is notcommonly over-recompensed. Their delightful art is practised by so manyrich people for amusement, that little advantage is to be made by thosewho practise it for profit; because the persons who should naturallybe their best customers, supply themselves with all their most preciousproductions. 

The advantage which the landlord derives from such improvements, seemsat no time to have been greater than what was sufficient to compensatethe original expense of making them. In the ancient husbandry, after thevineyard, a well-watered kitchen garden seems to have been the partof the farm which was supposed to yield the most valuable produce. ButDemocritus, who wrote upon husbandry about two thousand years ago, and who was regarded by the ancients as one of the fathers of the art, thought they did not act wisely who inclosed a kitchen garden. Theprofit, he said, would not compensate the expense of a stone-wall: andbricks (he meant, I suppose, bricks baked in the sun) mouldered with therain and the winter-storm, and required continual repairs. Columella, who reports this judgment of Democritus, does not controvert it, butproposes a very frugal method of inclosing with a hedge of brambles andbriars, which he says he had found by experience to be both a lastingand an impenetrable fence; but which, it seems, was not commonly knownin the time of Democritus. Palladius adopts the opinion of Columella, which had before been recommended by Varro. In the judgment of thoseancient improvers, the produce of a kitchen garden had, it seems, beenlittle more than sufficient to pay the extraordinary culture and theexpense of watering; for in countries so near the sun, it was thoughtproper, in those times as in the present, to have the command of astream of water, which could be conducted to every bed in the garden. Through the greater part of Europe, a kitchen garden is not atpresent supposed to deserve a better inclosure than mat recommendedby Columella. In Great Britain, and some other northern countries, thefiner fruits cannot Be brought to perfection but by the assistance of awall. Their price, therefore, in such countries, must be sufficientto pay the expense of building and maintaining what they cannot be hadwithout. The fruit-wall frequently surrounds the kitchen garden, whichthus enjoys the benefit of an inclosure which its own produce couldseldom pay for. 

That the vineyard, when properly planted and brought to perfection, was the most valuable part of the farm, seems to have been an undoubtedmaxim in the ancient agriculture, as it is in the modern, through allthe wine countries. But whether it was advantageous to plant a newvineyard, was a matter of dispute among the ancient Italian husbandmen, as we learn from Columella. He decides, like a true lover of all curiouscultivation, in favour of the vineyard; and endeavours to shew, by acomparison of the profit and expense, that it was a most advantageousimprovement. Such comparisons, however, between the profit and expenseof new projects are commonly very fallacious; and in nothing more sothan in agriculture. Had the gain actually made by such plantations beencommonly as great as he imagined it might have been, there could havebeen no dispute about it. The same point is frequently at this daya matter of controversy in the wine countries. Their writers onagriculture, indeed, the lovers and promoters of high cultivation, seemgenerally disposed to decide with Columella in favour of the vineyard. In France, the anxiety of the proprietors of the old vineyards toprevent the planting of any new ones, seems to favour their opinion, andto indicate a consciousness in those who must have the experience, that this species of cultivation is at present in that country moreprofitable than any other. It seems, at the same time, however, toindicate another opinion, that this superior profit can last no longerthan the laws which at present restrain the free cultivation of thevine. In 1731, they obtained an order of council, prohibiting both theplanting of new vineyards, and the renewal of these old ones, of whichthe cultivation had been interrupted for two years, without a particularpermission from the king, to be granted only in consequence of aninformation from the intendant of the province, certifying that he hadexamined the land, and that it was incapable of any other culture. Thepretence of this order was the scarcity of corn and pasture, and thesuperabundance of wine. But had this superabundance been real, it would, without any order of council, have effectually prevented the plantationof new vineyards, by reducing the profits of this species of cultivationbelow their natural proportion to those of corn and pasture. With regardto the supposed scarcity of corn occasioned by the multiplication ofvineyards, corn is nowhere in France more carefully cultivated thanin the wine provinces, where the land is fit for producing it: as inBurgundy, Guienne, and the Upper Languedoc. The numerous hands employedin the one species of cultivation necessarily encourage the other, byaffording a ready market for its produce. To diminish the numberof those who are capable of paying it, is surely a most unpromisingexpedient for encouraging the cultivation of corn. It is like the policywhich would promote agriculture, by discouraging manufactures. 

The rent and profit of those productions, therefore, which requireeither a greater original expense of improvement in order to fit theland for them, or a greater annual expense of cultivation, though oftenmuch superior to those of corn and pasture, yet when they do no morethan compensate such extraordinary expense, are in reality regulated bythe rent and profit of those common crops. 

It sometimes happens, indeed, that the quantity of land which can befitted for some particular produce, is too small to supply the effectualdemand. The whole produce can be disposed of to those who are willing togive somewhat more than what is sufficient to pay the whole rent, wages, and profit, necessary for raising and bringing it to market, accordingto their natural rates, or according to the rates at which they are paidin the greater part of other cultivated land. The surplus part of theprice which remains after defraying the whole expense of improvement andcultivation, may commonly, in this case, and in this case only, bearno regular proportion to the like surplus in corn or pasture, but mayexceed it in almost any degree; and the greater part of this excessnaturally goes to the rent of the landlord. 

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

The vine is more affected by the difference of soils than any otherfruit-tree. From some it derives a flavour which no culture ormanagement can equal, it is supposed, upon any other. This flavour, realor imaginary, is sometimes peculiar to the produce of a few vineyards;sometimes it extends through the greater part of a small district, andsometimes through a considerable part of a large province. The wholequantity of such wines that is brought to market falls short of theeffectual demand, or the demand of those who would be willing to pay thewhole rent, profit, and wages, necessary for preparing and bringing themthither, according to the ordinary rate, or according to the rate atwhich they are paid in common vineyards. The whole quantity, therefore, can be disposed of to those who are willing to pay more, whichnecessarily raises their price above that of common wine. The differenceis greater or less, according as the fashionableness and scarcity of thewine render the competition of the buyers more or less eager. Whateverit be, the greater part of it goes to the rent of the landlord. Forthough such vineyards are in general more carefully cultivated than mostothers, the high price of the wine seems to be, not so much the effect, as the cause of this careful cultivation. In so valuable a produce, theloss occasioned by negligence is so great, as to force even the mostcareless to attention. A small part of this high price, therefore, issufficient to pay the wages of the extraordinary labour bestowed upontheir cultivation, and the profits of the extraordinary stock which putsthat labour into motion. 

The sugar colonies possessed by the European nations in the West Indiesmay be compared to those precious vineyards. Their whole produce fallsshort of the effectual demand of Europe, and can be disposed of to thosewho are willing to give more than what is sufficient to pay the wholerent, profit, and wages, necessary for preparing and bringing it tomarket, according to the rate at which they are commonly paid by anyother produce. In Cochin China, the finest white sugar generally sellsfor three piastres the quintal, about thirteen shillings and sixpenceof our money, as we are told by Mr Poivre {Voyages d'un Philosophe. }, avery careful observer of the agriculture of that country. What is therecalled the quintal, weighs from a hundred and fifty to two hundred Parispounds, or a hundred and seventy-five Paris pounds at a medium, whichreduces the price of the hundred weight English to about eight shillingssterling; not a fourth part of what is commonly paid for the brown ormuscovada sugars imported from our colonies, and not a sixth partof what is paid for the finest white sugar. The greater part of thecultivated lands in Cochin China are employed in producing corn andrice, the food of the great body of the people. The respective prices ofcorn, 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 the landlord andfarmer, as nearly as can be computed, according to what is usually theoriginal expense of improvement, and the annual expense of cultivation. But in our sugar colonies, the price of sugar bears no such proportionto that of the produce of a rice or corn field either in Europe orAmerica. It is commonly said that a sugar planter expects that the rumand the molasses should defray the whole expense of his cultivation, and that his sugar should be all clear profit. If this be true, for Ipretend not to affirm it, it is as if a corn farmer expected to defraythe expense of his cultivation with the chaff and the straw, and thatthe grain should be all clear profit. We see frequently societies ofmerchants in London, and other trading towns, purchase waste lands inour sugar colonies, which they expect to improve and cultivate withprofit, by means of factors and agents, notwithstanding the greatdistance and the uncertain returns, from the defective administration ofjustice in those countries. Nobody will attempt to improve and cultivatein the same manner the most fertile lands of Scotland, Ireland, orthe corn provinces of North America, though, from the more exactadministration of justice in these countries, more regular returns mightbe expected. 

In Virginia and Maryland, the cultivation of tobacco is preferred, as most profitable, to that of corn. Tobacco might be cultivated withadvantage through the greater part of Europe; but, in almost every partof Europe, it has become a principal subject of taxation; and to collecta tax from every different farm in the country where this plant mighthappen to be cultivated, would be more difficult, it has been supposed, than to levy one upon its importation at the custom-house. Thecultivation of tobacco has, upon this account, been most absurdlyprohibited through the greater part of Europe, which necessarily givesa sort of monopoly to the countries where it is allowed; and as Virginiaand Maryland produce the greatest quantity of it, they share largely, though with some competitors, in the advantage of this monopoly. Thecultivation of tobacco, however, seems not to be so advantageous as thatof sugar. I have never even heard of any tobacco plantation that wasimproved and cultivated by the capital of merchants who resided in GreatBritain; and our tobacco colonies send us home no such wealthy plantersas we see frequently arrive from our sugar islands. Though, from thepreference given in those colonies to the cultivation of tobacco abovethat of corn, it would appear that the effectual demand of Europe fortobacco is not completely supplied, it probably is more nearly so thanthat for sugar; and though the present price of tobacco is probably morethan sufficient to pay the whole rent, wages, and profit, necessary forpreparing and bringing it to market, according to the rate at whichthey are commonly paid in corn land, it must not be so much more as thepresent price of sugar. Our tobacco planters, accordingly, have shewnthe same fear of the superabundance of tobacco, which the proprietors ofthe old vineyards in France have of the superabundance of wine. Byact of assembly, they have restrained its cultivation to six thousandplants, supposed to yield a thousand weight of tobacco, for every negrobetween sixteen and sixty years of age. Such a negro, over and abovethis quantity of tobacco, can manage, they reckon, four acres of Indiancorn. To prevent the market from being overstocked, too, they havesometimes, in plentiful years, we are told by Dr Douglas {Douglas'sSummary, vol. Ii. P. 379, 373. } (I suspect he has been ill informed), burnt a certain quantity of tobacco for every negro, in the same manneras the Dutch are said to do of spices. If such violent methods arenecessary to keep up the present price of tobacco, the superioradvantage of its culture over that of corn, if it still has any, willnot probably be of long continuance. 

It is in this manner that the rent of the cultivated land, of which theproduce is human food, regulates the rent of the greater part of othercultivated land. No particular produce can long afford less, because theland would immediately be turned to another use; and if any particularproduce commonly affords more, it is because the quantity of land whichcan be fitted for it is too small to 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 all other cultivatedland. Britain need envy neither the vineyards of France, nor the oliveplantations of Italy. Except in particular situations, the value ofthese is regulated by that of corn, in which the fertility of Britain isnot much inferior to that of either of those two countries. 

If, in any country, the common and favourite vegetable food of thepeople should be drawn from a plant of which the most common land, withthe same, or nearly the same culture, produced a much greater quantitythan the most fertile does of corn; the rent of the landlord, or thesurplus quantity of food which would remain to him, after payingthe labour, and replacing the stock of the farmer, together with itsordinary profits, would necessarily be much greater. Whatever was therate at which labour was commonly maintained in that country, thisgreater surplus could always maintain a greater quantity of it, and, consequently, enable the landlord to purchase or command a greaterquantity of it. The real value of his rent, his real power andauthority, his command of the necessaries and conveniencies of life withwhich the labour of other people could supply him, would necessarily bemuch greater. 

A rice field produces a much greater quantity of food than the mostfertile corn field. Two crops in the year, from thirty to sixty bushelseach, are said to be the ordinary produce of an acre. Though itscultivation, therefore, requires more labour, a much greater surplusremains after maintaining all that labour. In those rice countries, therefore, where rice is the common and favourite vegetable food ofthe people, and where the cultivators are chiefly maintained with it, agreater share of this greater surplus should belong to the landlord thanin corn countries. In Carolina, where the planters, as in other Britishcolonies, are generally both farmers and landlords, and where rent, consequently, is confounded with profit, the cultivation of rice isfound to be more profitable than that of corn, though their fieldsproduce only one crop in the year, and though, from the prevalenceof the customs of Europe, rice is not there the common and favouritevegetable food 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 notfit for rice. Even in the rice countries, therefore, the rent of ricelands cannot regulate the rent of the other cuitivated land which cannever be turned to that produce. 

The food produced by a field of potatoes is not inferior in quantity tothat produced by a field of rice, and much superior to what is producedby a field of wheat. Twelve thousand weight of potatoes from an acreof land is not a greater produce than two thousand weight of wheat. Thefood or solid nourishment, indeed, which can be drawn from each of thosetwo plants, is not altogether in proportion to their weight, on accountof the watery nature of potatoes. Allowing, however, half the weightof this root to go to water, a very large allowance, such an acre ofpotatoes will still produce six thousand weight of solid nourishment, three times the quantity produced by the acre of wheat. An acre ofpotatoes is cultivated 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 is alwaysgiven to potatoes. Should this root ever become in any part of Europe, like rice in some rice countries, the common and favourite vegetablefood of the people, so as to occupy the same proportion of the landsin tillage, which wheat and other sorts of grain for human food do atpresent, the same quantity of cultivated land would maintain a muchgreater number of people; and the labourers being generally fed withpotatoes, a greater surplus would remain after replacing all the stock, and maintaining all the labour employed in cultivation. A greater shareof this surplus, too, would belong to the landlord. Population wouldincrease, and rents would rise much beyond what they are at present. 

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

In some parts of Lancashire, it is pretended, I have been told, thatbread of oatmeal is a heartier food for labouring people than wheatenbread, and I have frequently heard the same doctrine held in Scotland. Iam, however, somewhat doubtful of the truth of it. The common people inScotland, who are fed with oatmeal, are in general neither so strongnor so handsome as the same rank of people in England, who are fed withwheaten bread. They neither work so well, nor look so well; and as thereis not the same difference between the people of fashion in the twocountries, experience would seem to shew, that the food of the commonpeople in Scotland is not so suitable to the human constitution as thatof their neighbours of the same rank in England. But it seems to beotherwise with potatoes. The chairmen, porters, and coal-heavers inLondon, and those unfortunate women who live by prostitution, thestrongest men and the most beautiful women perhaps in the Britishdominions, are said to be, the greater part of them, from the lowestrank of people in Ireland, who are generally fed with this root. No foodcan afford a more decisive proof of its nourishing quality, or of itsbeing peculiarly suitable to the health of the human constitution. 

It is difficult to preserve potatoes through the year, and impossible tostore them like corn, for two or three years together. The fear of notbeing able to sell them before they rot, discourages their cultivation, and is, perhaps, the chief obstacle to their ever becoming in any greatcountry, like bread, the principal vegetable food of all the differentranks of the people. 

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

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

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

Land, in its original rude state, can afford the materials of clothingand lodging to a much greater number of people than it can feed. In itsimproved state, it can sometimes feed a greater number of people thanit can supply with those materials; at least in the way in whichthey require them, and are willing to pay for them. In the one state, therefore, there is always a superabundance of these materials, whichare frequently, upon that account, of little or no value. In the other, there is often a scarcity, which necessarily augments their value. Inthe one state, a great part of them is thrown away as useless and theprice of what is used is considered as equal only to the labour andexpense of fitting it for use, and can, therefore, afford no rent tothe landlord. In the other, they are all made use of, and there isfrequently a demand for more than can be had. Somebody is always willingto give more for every part of them, than what is sufficient to pay theexpense of bringing them to market. Their price, therefore, can alwaysafford 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 consistschiefly in the flesh of those animals, everyman, by providing himselfwith food, provides himself with the materials of more clothing thanhe can wear. If there was no foreign commerce, the greater part of themwould be thrown away as things of no value. This was probably the caseamong the hunting nations of North America, before their country wasdiscovered by the Europeans, with whom they now exchange their surpluspeltry, for blankets, fire-arms, and brandy, which gives it some value. In the present commercial state of the known world, the most barbarousnations, I believe, among whom land property is established, have someforeign commerce of this kind, and find among their wealthier neighbourssuch a demand for all the materials of clothing, which their landproduces, and which can neither be wrought up nor consumed at home, asraises their price above what it costs to send them to those wealthierneighbours. It affords, therefore, some rent to the landlord. When thegreater part of the Highland cattle were consumed on their own hills, the exportation of their hides made the most considerable article of thecommerce of that country, and what they were exchanged for afforded someaddition to the rent of the Highland estates. The wool of England, whichin old times, could neither be consumed nor wrought up at home, found amarket in the then wealthier and more industrious country of Flanders, and its price afforded something to the rent of the land which producedit. In countries not better cultivated than England was then, or thanthe Highlands of Scotland are now, and which had no foreign commerce, the materials of clothing would evidently be so superabundant, that agreat part of them would be thrown away as useless, and no part couldafford any rent to the landlord. 

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

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

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

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

Those other parts of the produce of land, however, which afterwardsafford rent, do not afford it always. Even in improved and cultivatedcountries, the demand for them is not always such as to afford a greaterprice than what is sufficient to pay the labour, and replace, togetherwith its ordinary profits, the stock which must be employed in bringingthem to market. Whether it is or is not such, depends upon differentcircumstances. 

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

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

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

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

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

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

The price of wood, again, varies with the state of agriculture, nearlyin the same manner, and exactly for the same reason, as the price ofcattle. In its rude beginnings, the greater part of every country iscovered with wood, which is then a mere incumbrance, of no value tothe landlord, who would gladly give it to any body for the cutting. Asagriculture advances, the woods are partly cleared by the progress oftillage, and partly go to decay in consequence of the increased numberof cattle. These, though they do not increase in the same proportionas corn, which is altogether the acquisition of human industry, yetmultiply under the care and protection of men, who store up in theseason of plenty what may maintain them in that of scarcity; who, through the whole year, furnish them with a greater quantity of foodthan uncultivated nature provides for them; and who, by destroying andextirpating their enemies, secure them in the free enjoyment of all thatshe provides. Numerous herds of cattle, when allowed to wander throughthe woods, 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 its price. It affords a good rent; and the landlord sometimes finds that he canscarce employ his best lands more advantageously than in growing barrentimber, of which the greatness of the profit often compensates thelateness of the returns. This seems, in the present times, to be nearlythe state of things in several parts of Great Britain, where the profitof planting is found to be equal to that of either corn or pasture. Theadvantage which the landlord derives from planting can nowhere exceed, at least for any considerable time, the rent which these could affordhim; and in an inland country, which is highly cuitivated, it willfrequently not fall much short of this rent. Upon the sea-coast of awell-improved country, indeed, if coals can conveniently be had forfuel, it may sometimes be cheaper to bring barren timber for buildingfrom less cultivated foreign countries than to raise it at home. Inthe new town of Edinburgh, built within these few years, there is not, perhaps, a single stick of Scotch timber. 

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

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

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

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

The price of coals in Westmoreland or Shropshire can have little effecton their price at Newcastle; and their price in the Lionnois can havenone at all. The productions of such distant coal mines can never bebrought into competition with one another. But the productions of themost distant metallic mines frequently may, and in fact commonly are. 

The price, therefore, of the coarse, and still more that of the preciousmetals, at the most fertile mines in the world, must necessarily moreor less affect their price at every other in it. The price of copperin Japan must have some influence upon its price at the copper mines inEurope. The price of silver in Peru, or the quantity either of labour orof other goods which it will purchase there, must have some influenceon its price, not only at the silver mines of Europe, but at those ofChina. After the discovery of the mines of Peru, the silver mines ofEurope were, the greater part of them, abandoned. The value of silverwas so much reduced, that their produce could no longer pay the expenseof working them, or replace, with a profit, the food, clothes, lodging, and other necessaries which were consumed in that operation. This wasthe case, too, with the mines of Cuba and St. Domingo, and even with theancient mines of Peru, after the discovery of those of Potosi. Theprice of every metal, at every mine, therefore, being regulated insome measure by its price at the most fertile mine in the world that isactually wrought, it can, at the greater part of mines, do very littlemore than pay the expense of working, and can seldom afford a very highrent to the landlord. Rent accordingly, seems at the greater part ofmines to have but a small share in the price of the coarse, and a stillsmaller in that of the precious metals. Labour and profit make up thegreater part of both. 

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

In the silver mines of Peru, we are told by Frezier and Ulloa, theproprietor frequently exacts no other acknowledgment from the undertakerof the mine, but that he will grind the ore at his mill, paying him theordinary multure or price of grinding. Till 1736, indeed, the tax of theking of Spain amounted to one fifth of the standard silver, which tillthen might be considered as the real rent of the greater part of thesilver mines of Peru, the richest which have been known in the world. Ifthere had been no tax, this fifth would naturally have belonged to thelandlord, and many mines might have been wrought which could not then bewrought, because they could not afford this tax. The tax of the duke ofCornwall upon tin is supposed to amount to more than five per cent. Orone twentieth part of the value; and whatever may be his proportion, itwould naturally, too, belong to the proprietor of the mine, if tin wasduty free. But if you add one twentieth to one sixth, you will find thatthe whole average rent of the tin mines of Cornwall, was to the wholeaverage rent of the silver mines of Peru, as thirteen to twelve. But thesilver mines of Peru are not now able to pay even this low rent; and thetax upon silver was, in 1736, reduced from one fifth to one tenth. Eventhis tax upon silver, too, gives more temptation to smuggling than thetax of one twentieth upon tin; and smuggling must be much easier inthe precious than in the bulky commodity. The tax of the king of Spain, accordingly, is said to be very ill paid, and that of the duke ofCornwall very well. Rent, therefore, it is probable, makes a greaterpart of the price of tin at the most fertile tin mines than it does ofsilver at the most fertile silver mines in the world. After replacingthe stock employed in working those different mines, together withits ordinary 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 mines commonlyvery great in Peru. The same most respectable and well-informed authorsacquaint us, that when any person undertakes to work a new mine in Peru, he is universally looked upon as a man destined to bankruptcy and ruin, and is upon that account shunned and avoided by every body. Mining, itseems, is considered there in the same light as here, as a lottery, inwhich the prizes do not compensate the blanks, though the greatnessof some tempts many adventurers to throw away their fortunes in suchunprosperous projects. 

As the sovereign, however, derives a considerable part of his revenuefrom the produce of silver mines, the law in Peru gives every possibleencouragement to the discovery and working of new ones. Whoeverdiscovers a new mine, is entitled to measure off two hundred andforty-six feet in length, according to what he supposes to be thedirection of the vein, and half as much in breadth. He becomesproprietor of this portion of the mine, and can work it without pavingany acknowledgment to the landlord. The interest of the duke of Cornwallhas given occasion to a regulation nearly of the same kind in thatancient dutchy. In waste and uninclosed lands, any person who discoversa tin mine may mark out its limits to a certain extent, which is calledbounding a mine. The bounder becomes the real proprietor of the mine, and may either work it himself, or give it in lease to another, withoutthe consent of the owner of the land, to whom, however, a very smallacknowledgment must be paid upon working it. In both regulations, the sacred rights of private property are sacrificed to the supposedinterests of public revenue. 

The same encouragement is given in Peru to the discovery and working ofnew gold mines; and in gold the king's tax amounts only to a twentiethpart of the standard rental. It was once a fifth, and afterwards atenth, as in silver; but it was found that the work could not bear eventhe lowest of these two taxes. If it is rare, however, say the sameauthors, Frezier and Ulloa, to find a person who has made his fortune bya silver, it is still much rarer to find one who has done so by a goldmine. This twentieth part seems to be the whole rent which is paid bythe greater part of the gold mines of Chili and Peru. Gold, too, is muchmore liable to be smuggled than even silver; not only on account of thesuperior value of the metal in proportion to its bulk, but on accountof the peculiar way in which nature produces it. Silver is very seldomfound virgin, but, like most other metals, is generally mineralizedwith some other body, from which it is impossible to separate it insuch quantities as will pay for the expense, but by a very laborious andtedious operation, which cannot well be carried on but in work-houseserected for the purpose, and, therefore, exposed to the inspectionof the king's officers. Gold, on the contrary, is almost always foundvirgin. It is sometimes found in pieces of some bulk; and, even whenmixed, in small and almost insensible particles, with sand, earth, andother extraneous bodies, it can be separated from them by a very shortand simple operation, which can be carried on in any private house byany body who is possessed of a small quantity of mercury. If the king'stax, therefore, is but ill paid upon silver, it is likely to be muchworse paid upon gold; and rent must make a much smaller part of theprice of gold than that of silver. 

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

Their highest price, however, seems not to be necessarily determined byany thing but the actual scarcity or plenty of these metals themselves. It is not determined by that of any other commodity, in the same manneras the price of coals is by that of wood, beyond which no scarcity canever raise it. Increase the scarcity of gold to a certain degree, andthe smallest bit of it may become more precious than a diamond, andexchange for a greater 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 useful than, perhaps, any other metal. As they are less liable to rust and impurity, they can more easily be kept clean; and the utensils, either of thetable or the kitchen, are often, upon that account, more agreeable whenmade of them. A silver boiler is more cleanly than a lead, copper, ortin one; and the same quality would render a gold boiler still betterthan a silver one. Their principal merit, however, arises from theirbeauty, which renders them peculiarly fit for the ornaments of dress andfurniture. No paint or dye can give so splendid a colour as gilding. Themerit of their beauty is greatly enhanced by their scarcity. With thegreater part of rich people, the chief enjoyment of riches consists inthe parade of riches; which, in their eye, is never so complete as whenthey appear to possess those decisive marks of opulence which nobody canpossess but themselves. In their eyes, the merit of an object, whichis in any degree either useful or beautiful, is greatly enhanced byits scarcity, or by the great labour which it requires to collect anyconsiderable quantity of it; a labour which nobody can afford to pay butthemselves. Such objects they are willing to purchase at a higher pricethan things much more beautiful and useful, but more common. Thesequalities of utility, beauty, and scarcity, are the original foundationof the high price of those metals, or of the great quantity of othergoods for which they can everywhere be exchanged. This value wasantecedent to, and independent of their being employed as coin, andwas the quality which fitted them for that employment. That employment, however, by occasioning a new demand, and by diminishing the quantitywhich could be employed in any other way, may have afterwardscontributed to keep up or increase their value. 

The demand for the precious stones arises altogether from their beauty. They are of no use but as ornaments; and the merit of their beauty isgreatly enhanced by their scarcity, or by the difficulty and expense ofgetting them from the mine. Wages and profit accordingly make up, uponmost occasions, almost the whole of the high price. Rent comes in butfor a very small share, frequently for no share; and the most fertilemines only afford any considerable rent. When Tavernier, a jeweller, visited the diamond mines of Golconda and Visiapour, he was informedthat the sovereign of the country, for whose benefit they were wrought, had ordered all of them to be shut up except those which yielded thelargest and finest stones. The other, it seems, were to the proprietornot worth the working. 

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

The value, both of the produce and of the rent, the real revenue whichthey afforded, both to the public and to the proprietor, might have beenthe same. 

The most abundant mines, either of the precious metals, or of theprecious stones, could add little to the wealth of the world. Aproduce, of which the value is principally derived from its scarcity, isnecessarily degraded by its abundance. A service of plate, and the otherfrivolous ornaments of dress and furniture, could be purchased for asmaller quantity 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, and notto their relative fertility. The land which produces a certain quantityof food, clothes, and lodging, can always feed, clothe, and lodge, acertain number of people; and whatever may be the proportion of thelandlord, it will always give him a proportionable command of the labourof those people, and of the commodities with which that labour cansupply him. The value of the most barren land is not diminished by theneighbourhood of the most fertile. On the contrary, it is generallyincreased by it. The great number of people maintained by the fertilelands afford a market to many parts of the produce of the barren, whichthey could never have found among those whom their own produce couldmaintain. 

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

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

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

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

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

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

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

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

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

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

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

In 1350, being the 25th of Edward III. Was enacted what is calledthe Statute of Labourers. In the preamble, it complains much of theinsolence of servants, who endeavoured to raise their wages upon theirmasters. It therefore ordains, that all servants and labourers should, for the future, be contented with the same wages and liveries (liveriesin those times signified not only clothes, but provisions) which theyhad been accustomed to receive in the 20th year of the king, and thefour preceding years; that, upon this account, their livery-wheat shouldnowhere be estimated higher than tenpence a-bushel, and that it shouldalways be in the option of the master to deliver them either the wheator the money. Tenpence: a-bushel, therefore, had, in the 25th of EdwardIII. Been reckoned 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 a reasonableprice ten years before that, or in the 16th year of the king, theterm to which the statute refers. But in the 16th year of Edward III. Tenpence contained about half an ounce of silver, Tower weight, andwas nearly equal to half-a-crown of our present money. Four ounces ofsilver, Tower weight, therefore, equal to six shillings and eightpenceof the money of those times, and to near twenty shillings of that ofthe present, must have been reckoned a moderate price for the quarter ofeight bushels. 

This statute is surely a better evidence of what was reckoned, in thosetimes, a moderate price of grain, than the prices of some particularyears, which have generally been recorded by historians and otherwriters, on account of their extraordinary dearness or cheapness, andfrom which, therefore, it is difficult to form any judgment concerningwhat may have been the ordinary price. There are, besides, other reasonsfor believing that, in the beginning of the fourteenth century, andfor some time before, the common price of wheat was not less than fourounces of silver the quarter, and that of other grain in proportion. 

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

These prices are not recorded, on account of their extraordinarydearness or cheapness, but are mentioned accidentally, as the pricesactually paid for large quantities of grain consumed at a feast, whichwas famous for its magnificence. 

In 1262, being the 51st of Henry III. Was revived an ancient statute, called the assize of bread and ale, which, the king says in thepreamble, had been made in the times of his progenitors, some time kingsof England. It is probably, therefore, as old at least as the time ofhis grandfather, Henry II. And may have been as old as the Conquest. Itregulates the price of bread according as the prices of wheat may happento be, from one shilling to twenty shillings the quarter of the money ofthose times. But statutes of this kind are generally presumed to providewith equal care for all deviations from the middle price, for thosebelow it, as well as for those above it. Ten shillings, therefore, containing six ounces of silver, Tower weight, and equal to about thirtyshillings of our present money, must, upon this supposition, have beenreckoned the middle price of the quarter of wheat when this statute wasfirst enacted, and must have continued to be so in the 51st of HenryIII. We cannot, therefore, be very wrong in supposing that the middleprice was not less than one-third of the highest price at whichthis statute regulates the price of bread, or than six shillings andeightpence of the money of those times, containing four ounces ofsilver, Tower weight. 

From these different facts, therefore, we seem to have some reason toconclude that, about the middle of the fourteenth century, and for aconsiderable time before, the average or ordinary price of the quarterof wheat was not supposed to be less than four ounces of silver, Towerweight. 

From about the middle of the fourteenth to the beginning of thesixteenth century, what was reckoned the reasonable and moderate, thatis, the ordinary or average price of wheat, seems to have sunk graduallyto about one half of this price; so as at last to have fallen to abouttwo ounces of silver, Tower weight, equal to about ten shillings of ourpresent money. It continued to be estimated at this price till about1570. 

In the household book of Henry, the fifth earl of Northumberland, drawnup in 1512 there are two different estimations of wheat. In one of themit is computed at six shilling and eightpence the quarter, in theother at five shillings and eightpence only. In 1512, six shillings andeightpence contained only two ounces of silver, Tower weight, and wereequal to about ten shillings of our present money. 

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

Thus, in 1436, it was enacted, that wheat might be exported without alicence when the price was so low as six shillings and eightpence: andin 1463, it was enacted, that no wheat should be imported if the pricewas not above six shillings and eightpence the quarter: The legislaturehad imagined, that when the price was so low, there could be noinconveniency in exportation, but that when it rose higher, itbecame prudent to allow of importation. Six shillings and eightpence, therefore, containing about the same quantity of silver as thirteenshillings and fourpence of our present money (one-third part less thanthe same nominal sum contained in the time of Edward III), had, in thosetimes, been considered as what is called the moderate and reasonableprice of wheat. 

In 1554, by the 1st and 2nd of Philip and Mary, and in 1558, by the1st of Elizabeth, the exportation of wheat was in the same mannerprohibited, whenever the price of the quarter should exceed sixshillings and eightpence, which did not then contain two penny worthmore silver than the same nominal sum does at present. But it had soonbeen found, that to restrain the exportation of wheat till the pricewas so very low, was, in reality, to prohibit it altogether. In 1562, therefore, by the 5th of Elizabeth, the exportation of wheat was allowedfrom certain ports, whenever the price of the quarter should not exceedten shillings, containing nearly the same quantity of silver as the likenominal sum does at present. This price had at this time, therefore, been considered as what is called the moderate and reasonable price ofwheat. It agrees nearly with the estimation of the Northumberland bookin 1512. 

That in France the average price of grain was, in the same manner, much lower in the end of the fifteenth and beginning of the sixteenthcentury, than in the two centuries preceding, has been observed bothby Mr Dupré de St Maur, and by the elegant author of the Essay on thePolicy of Grain. Its price, during the same period, had probably sunk inthe same manner through the greater 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 demand for thatmetal, in consequence of increasing improvement and cultivation, thesupply, in the mean time, continuing the same as before; or, the demandcontinuing the same as before, it may have been owing altogether to thegradual diminution of the supply: the greater part of the mines whichwere then known in the world being much exhausted, and, consequently, the expense of working them much increased; or it may have been owingpartly to the one, and partly to the other of those two circumstances. In the end of the fifteenth and beginning of the sixteenth centuries, the greater part of Europe was approaching towards a more settled fromof government than it had enjoyed for several ages before. The increaseof security would 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 of riches. A greater annual produce would require a greater quantity of cointo circulate it; and a greater number of rich people would require agreater quantity of plate and other ornaments of silver. It is naturalto suppose, too, that the greater part of the mines which then suppliedthe European market with silver might be a good deal exhausted, and havebecome more expensive in the working. They had been wrought, many ofthem, from the time of the Romans. 

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

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 sometimes happened, however, that the landlord would stipulate, that he should be at libertyto demand of the tenant, either the annual payment in kind or a certainsum of money instead of it. The price at which the payment in kind wasin this manner exchanged for a certain sum of money, is in Scotlandcalled the conversion price. As the option is always in the landlord totake either the substance or the price, it is necessary, for the safetyof the tenant, that the conversion price should rather be below thanabove the average market price. In many places, accordingly, it is notmuch above one half of this price. Through the greater part of Scotlandthis custom still continues with regard to poultry, and in some placeswith regard to cattle. It might probably have continued to take place, too, with regard to corn, had not the institution of the public fiarsput an end to it. These are annual valuations, according to the judgmentof an assize, of the average price of all the different sorts of grain, and of all the different qualities of each, according to the actualmarket price in every different county. This institution rendered itsufficiently safe for the tenant, and much more convenient for thelandlord, to convert, as they call it, the corn rent, rather at whatshould happen to be the price of the fiars of each year, than at anycertain fixed price. But the writers who have collected the prices ofcorn in ancient times seem frequently to have mistaken what is calledin Scotland the conversion price for the actual market price. Fleetwoodacknowledges, upon one occasion, that he had made this mistake. As hewrote his book, however, for a particular purpose, he does not thinkproper to make this acknowledgment till after transcribing thisconversion price fifteen times. The price is eight shillings thequarter of wheat. This sum in 1423, the year at which he begins withit, contained the same quantity of silver as sixteen shillings ofour present money. But in 1562, the year at which he ends with it, itcontained no more than the same nominal sum does at present. 

Secondly, they have been misled by the slovenly manner in which someancient statutes of assize had been sometimes transcribed by lazycopiers, and sometimes, perhaps, actually composed 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 the priceof wheat and barley were at the lowest; and to have proceeded graduallyto determine what it ought to be, according as the prices of those twosorts of grain should gradually rise above this lowest price. Butthe transcribers of those statutes seem frequently to have thought itsufficient to copy the regulation as far as the three or four first andlowest prices; saving in this manner their own labour, and judging, I suppose, that this was enough to show what proportion ought to beobserved in all higher prices. 

Thus, in the assize of bread and ale, of the 51st of Henry III. Theprice of bread was regulated according to the different prices of wheat, from one shilling to twenty shillings the quarter of the money of thosetimes. But in the manuscripts from which all the different editions ofthe statutes, preceding that of Mr Ruffhead, were printed, the copiershad never transcribed this regulation beyond the price of twelveshillings. Several writers, therefore, being misled by this faultytranscription, very naturally conclude that the middle price, or sixshillings the quarter, equal to about eighteen shillings of our presentmoney, was the ordinary or average price of wheat at that time. 

In the statute of Tumbrel and Pillory, enacted nearly about the sametime, the price of ale is regulated according to every sixpence rise inthe price of barley, from two shillings, to four shillings the quarter. That four shillings, however, was not considered as the highest price towhich barley might frequently rise in those times, and that theseprices were only given as an example of the proportion which ought to beobserved in all other prices, whether higher or lower, we may infer fromthe last words of the statute: "Et sic deinceps crescetur vel diminueturper sex denarios. " The expression is very slovenly, but the meaning isplain enough, "that the price of ale is in this manner to be increasedor diminished according to every sixpence rise or fall in the priceof barley. " In the composition of this statute, the legislature itselfseems to have been as negligent as the copiers were in the transcriptionof the other. 

In an ancient manuscript of the Regiam Majestatem, an old Scotch lawbook, there is a statute of assize, in which the price of bread isregulated according to all the different prices of wheat, from tenpenceto three shillings the Scotch boll, equal to about half an Englishquarter. Three shillings Scotch, at the time when this assize issupposed to have been enacted, were equal to about nine shillingssterling of our present money Mr Ruddiman seems {See his Prefaceto Anderson's Diplomata Scotiae. } to conclude from this, that threeshillings was the highest price to which wheat ever rose in thosetimes, and that tenpence, a shilling, or at most two shillings, werethe ordinary prices. Upon consulting the manuscript, however, it appearsevidently, that all these prices are only set down as examples of theproportion which ought to be observed between the respective prices ofwheat and bread. The last words of the statute are "reliqua judicabissecundum praescripta, habendo respectum ad pretium bladi. "--"You shalljudge of the remaining cases, according to what is above written, havingrespect to the price of corn. "

Thirdly, they seem to have been misled too, by the very low priceat which wheat was sometimes sold in very ancient times; and to haveimagined, that as its lowest price was then much lower than in latertimes its ordinary price must likewise have been much lower. They mighthave found, however, that in those ancient times its highest price wasfully as much above, as its lowest price was below any thing that hadever been known in later times. Thus, in 1270, Fleetwood gives us twoprices of the quarter of wheat. The one is four pounds sixteen shillingsof the money of those times, equal to fourteen pounds eight shillings ofthat 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 price ofcorn, 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 of the countryfrom relieving the scarcity of another. In the disorderly state ofEngland under the Plantagenets, who governed it from about the middle ofthe twelfth till towards the end of the fifteenth century, one districtmight be in plenty, while another, at no great distance, by havingits crop destroyed, either by some accident of the seasons, or by theincursion of some neighbouring baron, might be suffering all the horrorsof a famine; and yet if the lands of some hostile lord were interposedbetween them, the one might not be able to give the least assistance tothe other. Under the vigorous administration of the Tudors, who governedEngland during the latter part of the fifteenth, and through the wholeof the sixteenth 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, bothinclusive, reduced to the money of the present times, and digested, according to the order of time, into seven divisions of twelve yearseach. At the end of each division, too, he will find the average priceof the twelve years of which it consists. In that long period of time, Fleetwood has been able to collect the prices of no more than eightyyears; so that four years are wanting to make out the last twelve years. I have added, therefore, from the accounts of Eton college, the pricesof 1598, 1599, 1600, and 1601. It is the only addition which I havemade. The reader will see, that from the beginning of the thirteenthtill after the middle of the sixteenth century, the average price ofeach twelve years grows gradually lower and lower; and that towardsthe end of the sixteenth century it begins to rise again. The prices, indeed, which Fleetwood has been able to collect, seem to have beenthose chiefly which were remarkable for extraordinary dearness orcheapness; and I do not pretend that any very certain conclusion can bedrawn from them. So far, however, as they prove any thing at all, theyconfirm the account which I have been endeavouring to give. Fleetwoodhimself, however, seems, with most other writers, to have believed, that, 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 with thisopinion. They agree perfectly with that of Mr Dupré de St Maur, and withthat which I have been endeavouring to explain. Bishop Fleetwood and MrDupré de St Maur are the two authors who seem to have collected, withthe greatest diligence and fidelity, the prices of things in ancienttimes. It is some what curious that, though their opinions are so verydifferent, their facts, so far as they relate to the price of corn atleast, should coincide so very exactly. 

It is not, however, so much from the low price of corn, as from that ofsome other parts of the rude produce of land, that the most judiciouswriters have inferred the great value of silver in those very ancienttimes. Corn, it has been said, being a sort of manufacture, was, inthose rude ages, much dearer in proportion than the greater part ofother commodities; it is meant, I suppose, than the greater part ofunmanufactured commodities, such as cattle, poultry, game of allkinds, etc. That in those times of poverty and barbarism these wereproportionably much cheaper than corn, is undoubtedly true. But thischeapness was not the effect of the high value of silver, but of thelow value of those commodities. It was not because silver would in suchtimes purchase or represent a greater quantity of labour, but becausesuch commodities would purchase or represent a much smaller quantitythan in times of more opulence and improvement. Silver must certainlybe cheaper in Spanish America than in Europe; in the country where it isproduced, than in the country to which it is brought, at the expense ofa long carriage both by land and by sea, of a freight, and an insurance. One-and-twenty pence halfpenny sterling, however, we are told by Ulloa, was, not many years ago, at Buenos Ayres, the price of an ox chosen froma herd of three or four hundred. Sixteen shillings sterling, we are toldby Mr Byron, was the price of a good horse in the capital of Chili. Ina country naturally fertile, but of which the far greater part isaltogether uncultivated, cattle, poultry, game of all kinds, etc. Asthey can be acquired with a very small quantity of labour, so they willpurchase or command but a very small quantity. The low money price forwhich they may be sold, is no proof that the real value of silver isthere very high, but that the real value of those commodities is verylow. 

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

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

In every state of society, in every stage of improvement, corn is theproduction of human industry. But the average produce of every sortof industry is always suited, more or less exactly, to the averageconsumption; the average supply to the average demand. In everydifferent stage of improvement, besides, the raising of equal quantitiesof corn in the same soil and climate, will, at an average, requirenearly equal quantities of labour; or, what comes to the same thing, the price of nearly equal quantities; the continual increase of theproductive powers of labour, in an improved state of cultivation, being more or less counterbalanced by the continual increasing priceof cattle, the principal instruments of agriculture. Upon all theseaccounts, therefore, we may rest assured, that equal quantities of cornwill, in every state of society, in every stage of improvement, morenearly represent, or be equivalent to, equal quantities of labour, thanequal quantities of any other part of the rude produce of land. Corn, accordingly, it has already been observed, is, in all the differentstages of wealth and improvement, a more accurate measure of valuethan any other commodity or set of commodities. In all those differentstages, therefore, we can judge better of the real value of silver, bycomparing it with corn, than by comparing it with any other commodity orset of commodities. 

Corn, besides, or whatever else is the common and favourite vegetablefood of the people, constitutes, in every civilized country, theprincipal part of the subsistence of the labourer. In consequence ofthe extension of agriculture, the land of every country produces a muchgreater quantity of vegetable than of animal food, and the labourereverywhere lives chiefly upon the wholesome food that is cheapest andmost abundant. Butcher's meat, except in the most thriving countries, orwhere labour is most highly rewarded, makes but an insignificant part ofhis subsistence; poultry makes a still smaller part of it, and game nopart of it. In France, and even in Scotland, where labour is somewhatbetter rewarded than in France, the labouring poor seldom eat butcher'smeat, except upon holidays, and other extraordinary occasions. The moneyprice of labour, therefore, depends much more upon the average moneyprice of corn, the subsistence of the labourer, than upon that ofbutcher's meat, or of any other part of the rude produce of land. Thereal value of gold and silver, therefore, the real quantity of labourwhich they can purchase or command, depends much more upon the quantityof corn which they can purchase or command, than upon that of butcher'smeat, or any other part of the rude produce of land. 

Such slight observations, however, upon the prices either of corn or ofother commodities, would not probably have misled so many intelligentauthors, had they not been influenced at the same time by the popularnotion, that as the quantity of silver naturally increases in everycountry with the increase of wealth, so its value diminishes as itsquantity increases. This notion, however, seems to be altogethergroundless. 

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

When more abundant mines are discovered, a greater quantity ofthe precious metals is brought to market; and the quantity of thenecessaries and conveniencies of life for which they must be exchangedbeing the same as before, equal quantities of the metals must beexchanged for smaller quantities of commodities. So far, therefore, as the increase of the quantity of the precious metals in any countryarises from the increased abundance of the mines, it is necessarilyconnected with some diminution of their value. 

When, on the contrary, the wealth of any country increases, when theannual produce of its labour becomes gradually greater and greater, a greater quantity of coin becomes necessary in order to circulate agreater quantity of commodities: and the people, as they can afford it, as they have more commodities to give for it, will naturally purchase agreater and a greater quantity of plate. The quantity of their coin willincrease from necessity; the quantity of their plate from vanity andostentation, or from the same reason that the quantity of fine statues, pictures, and of every other luxury and curiosity, is likely to increaseamong them. But as statuaries and painters are not likely to be worserewarded in 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 of moreabundant mines does not keep it down, as it naturally rises with thewealth of every country; so, whatever be the state of the mines, it isat all times naturally higher in a rich than in a poor country. Gold andsilver, like all other commodities, naturally seek the market where thebest price is given for them, and the best price is commonly given forevery thing in the country which can best afford it. Labour, it must beremembered, is the ultimate price which is paid for every thing; andin countries where labour is equally well rewarded, the money price oflabour will be in proportion to that of the subsistence of the labourer. But gold and silver will naturally exchange for a greater quantity ofsubsistence in a rich than in a poor country; in a country which aboundswith subsistence, than in one which is but indifferently supplied withit. If the two countries are at a great distance, the difference may bevery great; because, though the metals naturally fly from the worse tothe better market, yet it may be difficult to transport them in suchquantities as to bring their price nearly to a level in both. If thecountries are near, the difference will be smaller, and may sometimesbe scarce perceptible; because in this case the transportation will beeasy. China is a much richer country than any part of Europe, and thedifference between the price of subsistence in China and in Europe isvery great. Rice in China is much cheaper than wheat is any wherein Europe. England is a much richer country than Scotland, but thedifference between the money price of corn in those two countries ismuch smaller, and is but just perceptible. In proportion to the quantityor measure, Scotch corn generally appears to be a good deal cheaper thanEnglish; but, in proportion to its quality, it is certainly somewhatdearer. Scotland receives almost every year very large supplies fromEngland, and every commodity must commonly be somewhat dearer in thecountry to which it is brought than in that from which it comes. Englishcorn, therefore, must be dearer in Scotland than in England; and yet inproportion to its quality, or to the quantity and goodness of the flouror meal which can be made from it, it cannot commonly be sold higherthere than the Scotch corn which comes to market in competition with it. 

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

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

In some very rich and commercial countries, such as Holland and theterritory of Genoa, corn is dear for the same reason that it is dear ingreat towns. They do not produce enough to maintain their inhabitants. They are rich in the industry and skill of their artificers andmanufacturers, in every sort of machinery which can facilitate andabridge labour; in shipping, and in all the other instruments and meansof carriage and commerce: but they are poor in corn, which, as it mustbe brought to them from distant countries, must, by an addition to itsprice, pay for the carriage from those countries. It does not cost lesslabour to bring silver to Amsterdam than to Dantzic; but it costs agreat deal more to bring corn. The real cost of silver must be nearlythe same in both places; but that of corn must be very different. Diminish the real opulence either of Holland or of the territory ofGenoa, while the number of their inhabitants remains the same; diminishtheir power of supplying themselves from distant countries; and theprice of corn, instead of sinking with that diminution in the quantityof their silver, which must necessarily accompany this declension, either as its cause or as its effect, will rise to the price of afamine. When we are in want of necessaries, we must part with allsuperfluities, 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 poverty anddistress, and sinks in times of opulence and prosperity, which arealways times of great abundance; for they could not otherwise be timesof opulence and prosperity. Corn is a necessary, silver is only asuperfluity. 

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

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

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

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

From 1595 to 1620, both inclusive, the average price of the quarter ofnine bushels of the best wheat, at Windsor market, appears, from theaccounts of Eton college, to have been £ 2:1:6 9/13. From which sum, neglecting the fraction, and deducting a ninth, or 4s. 7 1/3d. , theprice of the quarter of eight bushels comes out to have been £ 1:16:102/3. And from this sum, neglecting likewise the fraction, and deductinga ninth, or 4s. 1 1/9d. , for the difference between the price of thebest wheat and that of the middle wheat, the price of the middle wheatcomes out to have been about £ 1:12:8 8/9, or about six ounces andone-third of an ounce of silver. 

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

Third Period. --Between 1630 and 1640, or about 1636, the effect of thediscovery of the mines of America, in reducing the value of silver, appears to have been completed, and the value of that metal seems neverto have sunk lower in proportion to that of corn than it was aboutthat time. It seems to have risen somewhat in the course of the presentcentury, and it had probably begun to do so, even some time before theend of the last. 

From 1637 to 1700, both inclusive, being the sixty-four last years ofthe last century the average price of the quarter of nine bushels of thebest wheat, at Windsor market, appears, from the same accounts, to havebeen £ 2:11:0 1/3, which is only 1s. 0 1/3d. Dearer than it had beenduring the sixteen years before. But, in the course of these sixty-fouryears, there happened two events, which must have produced a muchgreater scarcity of corn than what the course of the season is wouldotherwise have occasioned, and which, therefore, without supposing anyfurther reduction in the value of silver, will much more than accountfor this very small enhancement of price. 

The first of these events was the civil war, which, by discouragingtillage and interrupting commerce, must have raised the price ofcorn much above what the course of the seasons would otherwise haveoccasioned. It must have had this effect, more or less, at all thedifferent markets in the kingdom, but particularly at those in theneighbourhood of London, which require to be supplied from the greatestdistance. In 1648, accordingly, the price of the best wheat, at Windsormarket, appears, from the same accounts, to have been £ 4:5s. , and, in1649, to have been £ 4, the quarter of nine bushels. The excess ofthose two years above £ 2:10s. (the average price of the sixteen yearspreceding 1637 is £ 3:5s. , which, divided among the sixty four lastyears of the last century, will alone very nearly account for that smallenhancement of 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 corn, grantedin 1688. The bounty, it has been thought by many people, by encouragingtillage, may, in a long course of years, have occasioned a greaterabundance, and, consequently, a greater cheapness of corn in the homemarket, than what would otherwise have taken place there. How far thebounty could produce this effect at any time I shall examine hereafter:I shall only observe at present, that between 1688 and 1700, it hadnot time to produce any such effect. During this short period, its onlyeffect must have been, by encouraging the exportation of the surplusproduce of every year, and thereby hindering the abundance of one yearfrom compensating the scarcity of another, to raise the price in thehome market. The scarcity which prevailed in England, from 1693 to 1699, both inclusive, though no doubt principally owing to the badness ofthe seasons, and, therefore, extending through a considerable partof Europe, must have been somewhat enhanced by the bounty. In 1699, accordingly, the further exportation of corn was prohibited for ninemonths. 

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

In the course of the present century, the silver coin has not at anytime been more below its standard weight than it is at present. Butthough very much defaced, its value has been kept up by that of the goldcoin, for which it is exchanged. For though, before the late recoinage, the gold coin was a good deal defaced too, it was less so than thesilver. In 1695, on the contrary, the value of the silver coin was notkept up by the gold coin; a guinea then commonly exchanging for thirtyshillings of the worn and clipt silver. Before the late recoinage of thegold, the price of silver bullion was seldom higher than five shillingsand sevenpence an ounce, which is but fivepence above the mint price. But in 1695, the common price of silver bullion was six shillings andfivepence an ounce, {Lowndes's Essay on the Silver Coin, 68. } which isfifteen pence above the mint price. Even before the late recoinage ofthe gold, therefore, the coin, gold and silver together, when comparedwith silver bullion, was not supposed to be more than eight per cent. Below its standard value, In 1695, on the contrary, it had been supposedto be near five-and-twenty per cent. Below that value. But in thebeginning of the present century, that is, immediately after the greatrecoinage in King William's time, the greater part of the current silvercoin must have been still nearer to its standard weight than it is atpresent. In the course of the present century, too, there has beenno great public calamity, such as a civil war, which could eitherdiscourage tillage, or interrupt the interior commerce of the country. And though the bounty which has taken place through the greater part ofthis century, must always raise the price of corn somewhat higher thanit otherwise would be in the actual state of tillage; yet, as in thecourse of this century, the bounty has had full time to produce all thegood effects commonly imputed to it to encourage tillage, and therebyto increase the quantity of corn in the home market, it may, upon theprinciples of a system which I shall explain and examine hereafter, besupposed to have done something to lower the price of that commodity theone way, as well as to raise it the other. It is by many people supposedto have done more. In the sixty-four years of the present century, accordingly, the average price of the quarter of nine bushels of thebest wheat, at Windsor market, appears, by the accounts of Eton college, to have been £ 2:0:6 10/32, which is about ten shillings and sixpence, or more than five-and-twenty percent. Cheaper than it had been duringthe sixty-four last years of the last century; and about nine shillingsand sixpence cheaper than it had been during the sixteen years preceding1636, when the discovery of the abundant mines of America may besupposed to have produced its full effect; and about one shillingcheaper than it had been in the twenty-six years preceding 1620, beforethat discovery can well be supposed to have produced its full effect. According to this account, the average price of middle wheat, duringthese sixty-four first years of the present century, comes out to havebeen about thirty-two shillings 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 present century, and it had probably begun to do so even some time before the end of thelast. 

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

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

In 1688 was granted the parliamentary bounty upon the exportationof corn. The country gentlemen, who then composed a still greaterproportion of the legislature than they do at present, had felt that themoney price of corn was falling. The bounty was an expedient to raise itartificially to the high price at which it had frequently been sold inthe times of Charles I. And II. It was to take place, therefore, tillwheat was so high as fortyeight shillings the quarter; that is, twentyshillings, or 5-7ths dearer than Mr King had, in that very year, estimated the grower's price to be in times of moderate plenty. If hiscalculations deserve any part of the reputation which they have obtainedvery universally, eight-and-forty shillings the quarter was a pricewhich, without some such expedient as the bounty, could not at thattime be expected, except in years of extraordinary scarcity. But thegovernment of King William was not then fully settled. It was in nocondition to refuse anything to the country gentlemen, from whom itwas, at that very time, soliciting the first establishment of the annualland-tax. 

The value of silver, therefore, in proportion to that of corn, hadprobably risen somewhat before the end of the last century; and it seemsto have continued to do so during the course of the greater part of thepresent, though the necessary operation of the bounty must have hinderedthat rise from being so sensible as it otherwise would have been in theactual 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, by keeping upthe price of corn, even in the most plentiful years, was the avowed endof the institution. 

In years of great scarcity, indeed, the bounty has generally beensuspended. It must, however, have had some effect upon the prices ofmany of those years. By the extraordinary exportation which it occasionsin years of plenty, it must frequently hinder the plenty of one yearfrom compensating the scarcity of another. 

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

But, without the bounty, it may be said the state of tillage would nothave been the same. What may have been the effects of this institutionupon the agriculture of the country, I shall endeavour to explainhereafter, when I come to treat particularly of bounties. I shall onlyobserve at present, that this rise in the value of silver, in proportionto that of corn, has not been peculiar to England. It has been observedto have taken place in France during the same period, and nearly in thesame proportion, too, by three very faithful, diligent, and laboriouscollectors of the prices of corn, Mr Dupré de St Maur, Mr Messance, and the author of the Essay on the Police of Grain. But in France, till1764, the exportation of grain was by law prohibited; and it is somewhatdifficult to suppose, that nearly the same diminution of price whichtook place in one country, notwithstanding this prohibition, should, in another, be owing to the extraordinary encouragement given toexportation. 

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

The high price of corn during these ten or twelve years past, indeed, has occasioned a suspicion that the real value of silver still continuesto fall in the European market. This high price of corn, however, seemsevidently to have been the effect of the extraordinary unfavourablenessof the seasons, and ought, therefore, to be regarded, not as apermanent, but as a transitory and occasional event. The seasons, forthese ten or twelve years past, have been unfavourable through thegreater part of Europe; and the disorders of Poland have very muchincreased the scarcity in all those countries, which, in dear years, used to be supplied from that market. So long a course of bad seasons, though not a very common event, is by no means a singular one; andwhoever has inquired much into the history of the prices of corn informer times, will be at no loss to recollect several other examplesof the same kind. Ten years of extraordinary scarcity, besides, are notmore wonderful than ten years of extraordinary plenty. The low priceof corn, from 1741 to 1750, both inclusive, may very well be set inopposition to its high price during these last eight or ten years. From1741 to 1750, the average price of the quarter of nine bushels of thebest wheat, at Windsor market, it appears from the accounts of Etoncollege, was only £ 1:13:9 4/5, which is nearly 6s. 3d. Below the averageprice of the sixty-four first years of the present century. The averageprice of the quarter of eight bushels of middle wheat comes out, according to this account, to have been, during these ten years, only £1:6:8. 

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

At the end of the accounts annexed to this chapter the reader will findthe particular account of those ten years separated from the rest. Hewill find there, too, the particular account of the preceding ten years, of which the average is likewise below, though not so much below, thegeneral average of the sixty-four first years of the century. The year1740, however, was a year of extraordinary scarcity. These twentyyears preceding 1750 may very well be set in opposition to the twentypreceding 1770. As the former were a good deal below the general averageof the century, notwithstanding the intervention of one or two dearyears; so the latter have been a good deal above it, notwithstandingthe intervention of one or two cheap ones, of 1759, for example. If theformer have not been as much below the general average as the latterhave been above it, we ought probably to impute it to the bounty. Thechange has evidently been too sudden to be ascribed to any change in thevalue of silver, which is always slow and gradual. The suddenness of theeffect can be accounted for only by a cause which can operate suddenly, the accidental variations of the seasons. 

The money price of labour in Great Britain has, indeed, risen during thecourse of the present century. This, however, seems to be the effect, not so much of any diminution in the value of silver in the Europeanmarket, as of an increase in the demand for labour in Great Britain, arising from the great, and almost universal prosperity of the country. In France, a country not altogether so prosperous, the money price oflabour has, since the middle of the last century, been observed to sinkgradually with the average money price of corn. Both in the last centuryand in the present, the day wages of common labour are there said tohave been pretty uniformly about the twentieth part of the average priceof the septier of wheat; a measure which contains a little more thanfour Winchester bushels. In Great Britain, the real recompenceof labour, it has already been shewn, the real quantities of thenecessaries and conveniencies of life which are given to the labourer, has increased considerably during the course of the present century. The rise in its money price seems to have been the effect, not of anydiminution of the value of silver in the general market of Europe, butof a rise in the real price of labour, in the particular market of GreatBritain, owing to the peculiarly 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, and much abovetheir natural rate. Those who imported that metal into Europe, however, would soon find that the whole annual importation could not be disposedof at this high price. Silver would gradually exchange for a smaller anda smaller quantity of goods. Its price would sink gradually lower andlower, till it fell to its natural price; or to what was just sufficientto pay, according to their natural rates, the wages of the labour, theprofits of the stock, and the rent of the land, which must be paid inorder to bring it from the mine to the market. In the greater part ofthe silver mines of Peru, the tax of the king of Spain, amounting to atenth of the gross produce, eats up, it has already been observed, the whole rent of the land. This tax was originally a half; it soonafterwards fell to a third, then to a fifth, and at last to a tenth, atwhich late it still continues. In the greater part of the silver minesof Peru, this, it seems, is all that remains, after replacing the stockof the undertaker of the work, together with its ordinary profits; andit seems to be universally acknowledged that these profits, which wereonce very high, are now as low as they can well be, consistently withcarrying on the works. 

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

The price of silver in the European market might, perhaps, have fallenstill lower, and it might have become necessary either to reduce the taxupon it, not only to one-tenth, as in 1736, but to one twentieth, in thesame manner as that upon gold, or to give up working the greater partof the American mines which are now wrought. The gradual increase ofthe demand for silver, or the gradual enlargement of the market for theproduce of the silver mines of America, is probably the cause which hasprevented this from happening, and which has not only kept up thevalue of silver in the European market, but has perhaps even raised itsomewhat higher than it was about the middle of the last century. 

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

First, the market of Europe has become gradually more and moreextensive. Since the discovery of America, the greater part of Europehas been much improved. England, Holland, France, and Germany; evenSweden, Denmark, and Russia, have all advanced considerably, both inagriculture and in manufactures. Italy seems not to have gone backwards. The fall of Italy preceded the conquest of Peru. Since that time itseems rather to have recovered a little. Spain and Portugal, indeed, aresupposed to have gone backwards. Portugal, however, is but a very smallpart of Europe, and the declension of Spain is not, perhaps, so great asis commonly imagined. In the beginning of the sixteenth century, Spainwas a very poor country, even in comparison with France, which has beenso much improved since that time. It was the well known remark ofthe emperor Charles V. Who had travelled so frequently through bothcountries, that every thing abounded in France, but that every thingwas wanting in Spain. The increasing produce of the agriculture andmanufactures of Europe must necessarily have required a gradual increasein the quantity of silver coin to circulate it; and the increasingnumber of wealthy individuals must have required the like increase inthe quantity 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, and population, are much more rapid than those of the most thrivingcountries in Europe, its demand must increase much more rapidly. TheEnglish colonies are altogether a new market, which, partly for coin, and partly for plate, requires a continual augmenting supply of silverthrough a great continent where there never was any demand before. The greater part, too, of the Spanish and Portuguese colonies, arealtogether new markets. New Granada, the Yucatan, Paraguay, and theBrazils, were, before discovered by the Europeans, inhabited by savagenations, who had neither arts nor agriculture. A considerable degreeof both has now been introduced into all of them. Even Mexico andPeru, though they cannot be considered as altogether new markets, arecertainly much more extensive ones than they ever were before. After allthe wonderful tales which have been published concerning the splendidstate of those countries in ancient times, whoever reads, with anydegree of sober judgment, the history of their first discovery andconquest, will evidently discern that, in arts, agriculture, andcommerce, their inhabitants were much more ignorant than the Tartarsof the Ukraine are at present. Even the Peruvians, the more civilizednation of the two, though they made use of gold and silver as ornaments, had no coined money of any kind. Their whole commerce was carried on bybarter, and there was accordingly scarce any division of labour amongthem. Those who cultivated the ground, were obliged to build their ownhouses, to make their own household furniture, their own clothes, shoes, and instruments of agriculture. The few artificers among them aresaid to have been all maintained by the sovereign, the nobles, and thepriests, and were probably their servants or slaves. All the ancientarts of Mexico and Peru have never furnished one single manufactureto Europe. The Spanish armies, though they scarce ever exceeded fivehundred men, and frequently did not amount to half that number, foundalmost everywhere great difficulty in procuring subsistence. The famineswhich they are said to have occasioned almost wherever they went, incountries, too, which at the same time are represented as very populousand well cultivated, sufficiently demonstrate that the story of thispopulousness and high cultivation is in a great measure fabulous. TheSpanish colonies are under a government in many respects less favourableto agriculture, improvement, and population, than that of the Englishcolonies. They seem, however, to be advancing in all those much morerapidly than any country in Europe. In a fertile soil and happy climate, the great abundance and cheapness of land, a circumstance common to allnew colonies, is, it seems, so great an advantage, as to compensatemany defects in civil government. Frezier, who visited Peru in 1713, represents Lima as containing between twenty-five and twenty-eightthousand inhabitants. Ulloa, who resided in the same country between1740 and 1746, represents it as containing more than fifty thousand. The difference in their accounts of the populousness of several otherprincipal towns of Chili and Peru is nearly the same; and as there seemsto be no reason to doubt of the good information of either, it marksan increase which is scarce inferior to that of the English colonies. America, therefore, is a new market for the produce of its own silvermines, of which the demand must increase much more rapidly than that ofthe most thriving country in Europe. 

Thirdly, the East Indies is another market for the produce of thesilver mines of America, and a market which, from the time of the firstdiscovery of those mines, has been continually taking off a greater anda greater quantity of silver. Since that time, the direct trade betweenAmerica and the East Indies, which is carried on by means of theAcapulco ships, has been continually augmenting, and the indirectintercourse by the way of Europe has been augmenting in a still greaterproportion. During the sixteenth century, the Portuguese were the onlyEuropean nation who carried on any regular trade to the East Indies. Inthe last years of that century, the Dutch began to encroach uponthis monopoly, and in a few years expelled them from their principalsettlements in India. During the greater part of the last century, thosetwo nations divided the most considerable part of the East India tradebetween them; the trade of the Dutch continually augmenting in a stillgreater proportion than that of the Portuguese declined. The English andFrench carried on some trade with India in the last century, but ithas been greatly augmented in the course of the present. The EastIndia trade of the Swedes and Danes began in the course of the presentcentury. Even the Muscovites now trade regularly with China, by a sortof caravans which go over land through Siberia and Tartary to Pekin. TheEast India trade of all these nations, if we except that of theFrench, which the last war had well nigh annihilated, has been almostcontinually augmenting. The increasing consumptions of East India goodsin Europe is, it seems, so great, as to afford a gradual increase ofemployment to them all. Tea, for example, was a drug very little used inEurope, before the middle of the last century. At present, the value ofthe tea annually imported by the English East India company, for theuse of their own countrymen, amounts to more than a million and a halfa year; and even this is not enough; a great deal more being constantlysmuggled into the country from the ports of Holland, from Gottenburghin Sweden, and from the coast of France, too, as long as the French EastIndia company was in prosperity. The consumption of the porcelain ofChina, of the spiceries of the Moluccas, of the piece goods of Bengal, and of innumerable other articles, has increased very nearly in a likeproportion. 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 English EastIndia company before the late reduction of their shipping. 

But in the East Indies, particularly in China and Indostan, the valueof the precious metals, when the Europeans first began to trade to thosecountries, was much higher than in Europe; and it still continues to beso. In rice countries, which generally yield two, sometimes three cropsin the year, each of them more plentiful than any common crop of corn, the abundance of food must be much greater than in any corn countryof equal extent. Such countries are accordingly much more populous. Inthem, too, the rich, having a greater superabundance of food to disposeof beyond what they themselves can consume, have the means of purchasinga much greater quantity of the labour of other people. The retinue of agrandee in China or Indostan accordingly is, by all accounts, much morenumerous and splendid than that of the richest subjects in Europe. Thesame superabundance of food, of which they have the disposal, enablesthem to give a greater quantity of it for all those singular and rareproductions which nature furnishes but in very small quantities; suchas the precious metals and the precious stones, the great objects of thecompetition of the rich. Though the mines, therefore, which suppliedthe Indian market, had been as abundant as those which supplied theEuropean, such commodities would naturally exchange for a greaterquantity of food in India than in Europe. But the mines which suppliedthe Indian market with the precious metals seem to have been a good dealless abundant, and those which supplied it with the precious stonesa good deal more so, than the mines which supplied the European. Theprecious metals, therefore, would naturally exchange in India for asomewhat 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 twogreat markets of India, than it is through the greater part of Europe. The wages of the labourer will there purchase a smaller quantity offood: and as the money price of food is much lower in India than inEurope, the money price of labour is there lower upon a double account;upon account both of the small quantity of food which it will purchase, and of the low price of that food. But in countries of equal art andindustry, the money price of the greater part of manufactures will bein proportion to the money price of labour; and in manufacturing artand industry, China and Indostan, though inferior, seem not to be muchinferior to any part of Europe. The money price of the greater part ofmanufactures, therefore, will naturally be much lower in those greatempires than it is anywhere in Europe. Through the greater part ofEurope, too, the expense of land-carriage increases very much both thereal and nominal price of most manufactures. It costs more labour, andtherefore more money, to bring first the materials, and afterwards thecomplete manufacture to market. In China and Indostan, the extent andvariety of inland navigations save the greater part of this labour, andconsequently of this money, and thereby reduce still lower both the realand the nominal price of the greater part of their manufactures. Uponall these accounts, the precious metals are a commodity which it alwayshas been, and still continues to be, extremely advantageous to carryfrom Europe to India. There is scarce any commodity which brings abetter price there; or which, in proportion to the quantity of labourand commodities which it costs in Europe, will purchase or commanda greater quantity of labour and commodities in India. It is moreadvantageous, too, to carry silver thither than gold; because in China, and the greater part of the other markets of India, the proportionbetween fine silver and fine gold is but as ten, or at most as twelveto one; whereas in Europe it is as fourteen or fifteen to one. In China, and the greater part of the other markets of India, ten, or at mosttwelve ounces of silver, will purchase an ounce of gold; in Europe, itrequires from fourteen to fifteen ounces. In the cargoes, therefore, of the greater part of European ships which sail to India, silverhas generally been one of the most valuable articles. It is the mostvaluable article in the Acapulco ships which sail to Manilla. The silverof the new continent seems, in this manner, to be one of the principalcommodities by which the commerce between the two extremities of the oldone is carried on; and it is by means of it, in a great measure, thatthose distant parts of the world are connected with one another. 

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

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

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

According to Mr Meggens {Postscript to the Universal Merchant p. 15 and16. This postscript was not printed till 1756, three years after thepublication of the book, which has never had a second edition. Thepostscript is, therefore, to be found in few copies; it corrects severalerrors in the book. }, the annual importation of the precious metalsinto Spain, at an average of six years, viz. From 1748 to 1753, bothinclusive, and into Portugal, at an average of seven years, viz. From1747 to 1753, both inclusive, amounted in silver to 1, 101, 107 poundsweight, and in gold to 49, 940 pounds weight. The silver, at sixty twoshillings the pound troy, amounts to £ 3, 413, 431:10s. Sterling. Thegold, at forty-four guineas and a half the pound troy, amounts to£ 2, 333, 446:14s. Sterling. Both together amount to £ 5, 746, 878:4s. Sterling. The account of what was imported under register, he assuresus, is exact. He gives us the detail of the particular places from whichthe gold and silver were brought, and of the particular quantity of eachmetal, which, according to the register, each of them afforded. He makesan allowance, too, for the quantity of each metal which, he supposes, may have been smuggled. The great experience of this judicious merchantrenders his opinion of considerable weight. 

According to the eloquent, and sometimes well-informed, author ofthe Philosophical and Political History of the Establishment of theEuropeans in the two Indies, the annual importation of registered goldand silver into Spain, at an average of eleven years, viz. From 1754 to1764, both inclusive, amounted to 13, 984, 185 3/5 piastres of ten reals. On account of what may have been smuggled, however, the whole annualimportation, he supposes, may have amounted to seventeen millionsof piastres, which, at 4s. 6d. The piastre, is equal to £ 3, 825, 000sterling. He gives the detail, too, of the particular places from whichthe gold and silver were brought, and of the particular quantities ofeach metal, which according to the register, each of them afforded. He informs us, too, that if we were to judge of the quantity of goldannually imported from the Brazils to Lisbon, by the amount of thetax paid to the king of Portugal, which it seems, is one-fifth of thestandard metal, we might value it at eighteen millions of cruzadoes, or forty-five millions of French livres, equal to about twenty millionssterling. On account of what may have been smuggled, however, we maysafely, he says, add to this sum an eighth more, or £ 250, 000 sterling, so that the whole will amount to £ 2, 250, 000 sterling. According to thisaccount, therefore, the whole annual importation of the precious metalsinto both Spain and Portugal, mounts to about £ 6, 075, 000 sterling. 

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

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

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

The price of all metals, though liable to slow and gradual variations, varies less from year to year than that of almost any other part of therude produce of land: and the price of the precious metals is evenless liable to sudden variations than that of the coarse ones. Thedurableness of metals is the foundation of this extraordinary steadinessof price. The corn which was brought to market last year will be all, oralmost all, consumed, long before the end of this year. But some partof the iron which was brought from: the mine two or three hundred yearsago, may be still in use, and, perhaps, some part of the gold which wasbrought from it two or three thousand years ago. The different massesof corn, which, in different years, must supply the consumption of theworld, will always be nearly in proportion to the respective produce ofthose different years. But the proportion between the different massesof iron which may be in use in two different years, will be very littleaffected by any accidental difference in the produce of the iron minesof those two years; and the proportion between the masses of gold willbe still less affected by any such difference in the produce of thegold 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 upon that ofthe other. 

Variations in the Proportion between the respective Values of Gold andSilver. 

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

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

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

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

The quantity of silver commonly in the market, it is probable, is muchgreater in proportion to that of gold, than the value of a certainquantity of gold is to that of an equal quantity of silver. The wholequantity of a cheap commodity brought to market is commonly not onlygreater, but of greater value, than the whole quantity of a dear one. The whole quantity of bread annually brought to market, is not onlygreater, but of greater value, than the whole quantity of butcher'smeat; the whole quantity of butcher's meat, than the whole quantity ofpoultry; and the whole quantity of poultry, than the whole quantity ofwild fowl. There are so many more purchasers for the cheap than for thedear commodity, that, not only a greater quantity of it, but a greatervalue can commonly be disposed of. The whole quantity, therefore, ofthe cheap commodity, must commonly be greater in proportion to the wholequantity of the dear one, than the value of a certain quantity of thedear one, is to the value of an equal quantity of the cheap one. Whenwe compare the precious metals with one another, silver is a cheap, andgold a dear commodity. We ought naturally to expect, therefore, thatthere should always be in the market, not only a greater quantity, buta greater value of silver than of gold. Let any man, who has a little ofboth, compare his own silver with his gold plate, and he will probablyfind, that not only the quantity, but the value of the former, greatlyexceeds that of the latter. Many people, besides, have a good deal ofsilver who have no gold plate, which, even with those who have it, isgenerally confined to watch-cases, snuff-boxes, and such like trinkets, of which the whole amount is seldom of great value. In the British coin, indeed, the value of the gold preponderates greatly, but it is not so inthat of all countries. In the coin of some countries, the value of thetwo metals is nearly equal. In the Scotch coin, before the union withEngland, the gold preponderated very little, though it did somewhat{See Ruddiman's Preface to Anderson's Diplomata, etc. Scotiae. }, as itappears by the accounts of the mint. In the coin of many countries thesilver preponderates. In France, the largest sums are commonly paidin that metal, and it is there difficult to get more gold than what isnecessary to carry about in your pocket. The superior value, however, of the silver plate above that of the gold, which takes place in allcountries, will much more than compensate the preponderancy of the goldcoin above the silver, which takes place only in some countries. 

Though, in one sense of the word, silver always has been, and probablyalways will be, much cheaper than gold; yet, in another sense, goldmay perhaps, in the present state of the Spanish market, be said tobe somewhat cheaper than silver. A commodity may be said to be dear orcheap not only according to the absolute greatness or smallness ofits usual price, but according as that price is more or less abovethe lowest for which it is possible to bring it to market for anyconsiderable time together. This lowest price is that which barelyreplaces, with a moderate profit, the stock which must be employed inbringing the commodity thither. It is the price which affords nothingto the landlord, of which rent makes not any component part, but whichresolves itself altogether into wages and profit. But, in the presentstate of the Spanish market, gold is certainly somewhat nearer to thislowest price than silver. The tax of the king of Spain upon gold is onlyone-twentieth part of the standard metal, or five per cent. ; whereas histax upon silver amounts to one-tenth part of it, or to ten per cent. Inthese taxes, too, it has already been observed, consists the whole rentof the greater part of the gold and silver mines of Spanish America; andthat upon gold is still worse paid than that upon silver. The profits ofthe undertakers of gold mines, too, as they more rarely make a fortune, must, in general, be still more moderate than those of the undertakersof silver mines. The price of Spanish gold, therefore, as it affordsboth less rent and less profit, must, in the Spanish market, be somewhatnearer to the lowest price for which it is possible to bring it thither, than the price of Spanish silver. When all expenses are computed, thewhole quantity of the one metal, it would seem, cannot, in the Spanishmarket, be disposed of so advantageously as the whole quantity of theother. The tax, indeed, of the king of Portugal upon the gold of theBrazils, is the same with the ancient tax of the king of Spain upon thesilver of Mexico and Peru; or one-fifth part of the standard metal. Itmay therefore be uncertain, whether, to the general market of Europe, the whole mass of American gold comes at a price nearer to the lowestfor which it is possible to bring it thither, than the whole mass ofAmerican silver. 

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

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

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

Such successive reductions of the tax, however, though they may notprevent altogether, must certainly retard, more or less, the rise ofthe value of silver in the European market. In consequence of suchreductions, many mines may be wrought which could not be wrought before, because they could not afford to pay the old tax; and the quantity ofsilver annually brought to market, must always be somewhat greater, and, therefore, the value of any given quantity somewhat less, than itotherwise would have been. In consequence of the reduction in 1736, thevalue of silver in the European market, though it may not at this day belower than before that reduction, is, probably, at least ten per cent. Lower than it would have been, had the court of Spain continued to exactthe old tax. That, notwithstanding this reduction, the value of silverhas, 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 suspect andconjecture; for the best opinion which I can form upon this subject, scarce, perhaps, deserves the name of belief. The rise, indeed, supposing there has been any, has hitherto been so very small, thatafter all that has been said, it may, perhaps, appear to many peopleuncertain, not only whether this event has actually taken place, butwhether the contrary may not have taken place, or whether the value ofsilver may not still continue to fall in the European market. 

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

If, when the annual consumption has become equal to the annualimportation, the annual importation should gradually diminish, theannual consumption may, for some time, exceed the annual importation. The mass of those metals may gradually and insensibly diminish, andtheir value gradually and insensibly rise, till the annual importationbecoming again stationary, the annual consumption will gradually andinsensibly accommodate itself to what that annual importation canmaintain. 

Grounds of the suspicion that the Value of Silver still continues todecrease. 

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

That that increase in the quantity of the precious metals, which arisesin any country from the increase of wealth, has no tendency to diminishtheir value, I have endeavoured to shew already. Gold and silvernaturally resort to a rich country, for the same reason that all sortsof luxuries and curiosities resort to it; not because they are cheaperthere than in poorer countries, but because they are dearer, or becausea better price is given for them. It is the superiority of price whichattracts them; and as soon as that superiority ceases, they necessarilycease to go thither. 

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

Different Effects of the Progress of Improvement upon three differentsorts of rude Produce. 

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

First Sort. --The first sort of rude produce, of which the price rises inthe progress of improvement, is that which it is scarce in the powerof human industry to multiply at all. It consists in those things whichnature produces only in certain quantities, and which being of a veryperishable nature, it is impossible to accumulate together the produceof many different seasons. Such are the greater part of rare andsingular birds and fishes, many different sorts of game, almost allwild-fowl, all birds of passage in particular, as well as many otherthings. When wealth, and the luxury which accompanies it, increase, thedemand for these is likely to increase with them, and no effort of humanindustry may be able to increase the supply much beyond what it wasbefore this increase of the demand. The quantity of such commodities, therefore, remaining the same, or nearly the same, while the competitionto purchase them is continually increasing, their price may rise toany degree of extravagance, and seems not to be limited by any certainboundary. If woodcocks should become so fashionable as to sell fortwenty guineas a-piece, no effort of human industry could increase thenumber of those brought to market, much beyond what it is at present. The high price paid by the Romans, in the time of their greatestgrandeur, for rare birds and fishes, may in this manner easily beaccounted for. These prices were not the effects of the low valueof silver in those times, but of the high value of such rarities andcuriosities as human industry could not multiply at pleasure. The realvalue of silver was higher at Rome, for sometime before, and after thefall of the republic, than it is through the greater part of Europe atpresent. Three sestertii equal to about sixpence sterling, was the pricewhich the republic paid for the modius or peck of the tithe wheat ofSicily. This price, however, was probably below the average marketprice, the obligation to deliver their wheat at this rate beingconsidered as a tax upon the Sicilian farmers. When the Romans, therefore, had occasion to order more corn than the tithe of wheatamounted to, they were bound by capitulation to pay for the surplus atthe rate of four sestertii, or eightpence sterling the peck; and thishad probably been reckoned the moderate and reasonable, that is, theordinary or average contract price of those times; it is equal to aboutone-and-twenty shillings the quarter. Eight-and-twenty shillings thequarter was, before the late years of scarcity, the ordinary contractprice of English wheat, which in quality is inferior to the Sicilian, and generally sells for a lower price in the European market. The valueof silver, therefore, in those ancient times, must have been to itsvalue in the present, as three to four inversely; that is, three ouncesof silver would then have purchased the same quantity of labour andcommodities which four ounces will do at present. When we read in Pliny, therefore, that Seius {Lib. X, c. 29. } bought a white nightingale, asa present for the empress Agrippina, at the price of six thousandsestertii, equal to about fifty pounds of our present money; and thatAsinius Celer {Lib. IX, c. 17. } purchased a surmullet at the priceof eight thousand sestertii, equal to about sixty-six pounds thirteenshillings and fourpence of our present money; the extravagance of thoseprices, how much soever it may surprise us, is apt, notwithstanding, toappear to us about one third less than it really was. Their real price, the quantity of labour and subsistence which was given away for them, was about one-third more than their nominal price is apt to express tous in the present times. Seius gave for the nightingale the command ofa quantity of labour and subsistence, equal to what £ 66:13: 4d. Wouldpurchase in the present times; and Asinius Celer gave for a surmulletthe command of a quantity equal to what £ 88:17: 9d. Would purchase. What occasioned the extravagance of those high prices was, not so muchthe abundance of silver, as the abundance of labour and subsistence, ofwhich those Romans had the disposal, beyond what was necessary for theirown use. The quantity of silver, of which they had the disposal, was agood deal less than what the command of the same quantity of labour andsubsistence would have procured to them in the present times. 

Second sort. --The second sort of rude produce, of which the pricerises in the progress of improvement, is that which human industry canmultiply in proportion to the demand. It consists in those useful plantsand animals, which, in uncultivated countries, nature produces with suchprofuse abundance, that they are of little or no value, and which, ascultivation advances, are therefore forced to give place to some moreprofitable produce. During a long period in the progress of improvement, the quantity of these is continually diminishing, while, at the sametime, the demand for them is continually increasing. Their real value, therefore, the real quantity of labour which they will purchase orcommand, gradually rises, till at last it gets so high as to render themas profitable a produce as any thing else which human industry can raiseupon the most fertile and best cultivated land. When it has got so high, it cannot well go higher. If it did, more land and more industry wouldsoon 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 in orderto raise food for man, it cannot well go higher. If it did, more cornland would soon be turned into pasture. The extension of tillage, bydiminishing the quantity of wild pasture, diminishes the quantity ofbutcher's meat, which the country naturally produces without labouror cultivation; and, by increasing the number of those who have eithercorn, or, what comes to the same thing, the price of corn, to give inexchange for it, increases the demand. The price of butcher's meat, therefore, and, consequently, of cattle, must gradually rise, till itgets so high, that it becomes as profitable to employ the most fertileand best cultivated lands in raising food for them as in raising corn. But it must always be late in the progress of improvement before tillagecan be so far extended as to raise the price of cattle to this height;and, till it has got to this height, if the country is advancing at all, their price must be continually rising. There are, perhaps, some partsof Europe in which the price of cattle has not yet got to this height. It had not got to this height in any part of Scotland before the Union. Had the Scotch cattle been always confined to the market of Scotland, in a country in which the quantity of land, which can be applied to 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 render itprofitable to cultivate land for the sake of feeding them. In England, the price of cattle, it has already been observed, seems, in theneighbourhood of London, to have got to this height about the beginningof the last century; but it was much later, probably, before it gotthrough the greater part of the remoter counties, in some of which, perhaps, it may scarce yet have got to it. Of all the differentsubstances, however, which compose this second sort of rude produce, cattle is, perhaps, that of which the price, in the progress ofimprovement, rises first 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 arecapable of the highest cultivation, can be completely cultivated. In allfarms too distant from any town to carry manure from it, that is, in thefar greater part of those of every extensive country, the quantity ofwell cultivated land must be in proportion to the quantity of manurewhich the farm itself produces; and this, again, must be in proportionto the stock of cattle which are maintained upon it. The land ismanured, either by pasturing the cattle upon it, or by feeding them inthe stable, and from thence carrying out their dung to it. But unlessthe price of the cattle be sufficient to pay both the rent and profit ofcultivated land, the farmer cannot afford to pasture them upon it; andhe can still less afford to feed them in the stable. It is with theproduce of improved and cultivated land only that cattle can be fedin the stable; because, to collect the scanty and scattered produce ofwaste and unimproved lands, would require too much labour, and be tooexpensive. It the price of the cattle, therefore, is not sufficientto pay for the produce of improved and cuitivated land, when they areallowed to pasture it, that price will be still less sufficient topay for that produce, when it must be collected with a good dealof additional labour, and brought into the stable to them. In thesecircumstances, therefore, no more cattle can with profit be fed in thestable than what are necessary for tillage. But these can never affordmanure enough for keeping constantly in good condition all thelands which they are capable of cultivating. What they afford, beinginsufficient for the whole farm, will naturally be reserved for thelands to which it can be most advantageously or conveniently applied;the most fertile, or those, perhaps, in the neighbourhood of thefarm-yard. These, therefore, will be kept constantly in good condition, and fit for tillage. The rest will, the greater part of them, be allowedto lie waste, producing scarce any thing but some miserable pasture, just sufficient to keep alive a few straggling, half-starved cattle; thefarm, though much overstocked in proportion to what would be necessaryfor its complete cultivation, being very frequently overstocked inproportion to its actual produce. A portion of this waste land, however, after having been pastured in this wretched manner for six or sevenyears together, may be ploughed up, when it will yield, perhaps, a poorcrop or two of bad oats, or of some other coarse grain; and then, beingentirely exhausted, it must be rested and pastured again as before, and another portion ploughed up, to be in the same manner exhausted andrested again in its turn. Such, accordingly, was the general system ofmanagement all over the low country of Scotland before the Union. Thelands which were kept constantly well manured and in good conditionseldom exceeded a third or fourth part of the whole farm, and sometimesdid not amount to a fifth or a sixth part of it. The rest were nevermanured, but a certain portion of them was in its turn, notwithstanding, regularly cultivated and exhausted. Under this system of management, itis evident, even that part of the lands of Scotland which is capable ofgood cultivation, could produce but little in comparison of what it maybe capable of producing. But how disadvantageous soever this system mayappear, yet, before the Union, the low price of cattle seems to haverendered it almost unavoidable. If, notwithstanding a great rise in theprice, it still continues to prevail through a considerable part ofthe country, it is owing in many places, no doubt, to ignorance andattachment to old customs, but, in most places, to the unavoidableobstructions which the natural course of things opposes to the immediateor speedy establishment of a better system: first, to the poverty of thetenants, 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 they werecapable of acquiring it. The increase of stock and the improvement ofland are two events which must go hand in hand, and of which the one cannowhere much outrun the other. Without some increase of stock, therecan be scarce any improvement of land, but there can be no considerableincrease of stock, but in consequence of a considerable improvement ofland; because otherwise the land could not maintain it. These naturalobstructions to the establishment of a better system, cannot be removedbut by a long course of frugality and industry; and half a century ora century more, perhaps, must pass away before the old system, whichis wearing out gradually, can be completely abolished through allthe different parts of the country. Of all the commercial advantages, however, which Scotland has derived from the Union with England, thisrise in the price of cattle is, perhaps, the greatest. It has not onlyraised the value of all highland estates, but it has, perhaps, been theprincipal cause of the improvement of the low country. 

In all new colonies, the great quantity of waste land, which can formany years be applied to no other purpose but the feeding of cattle, soon renders them extremely abundant; and in every thing great cheapnessis the necessary consequence of great abundance. Though all the cattleof the European colonies in America were originally carried from Europe, they soon multiplied so much there, and became of so little value, thateven horses were allowed to run wild in the woods, without any ownerthinking it worth while to claim them. It must be a long time after thefirst establishment of such colonies, before it can become profitableto feed cattle upon the produce of cultivated land. The same causes, therefore, the want of manure, and the disproportion between the stockemployed in cultivation and the land which it is destined to cultivate, are likely to introduce there a system of husbandry, not unlike thatwhich still continues to take place in so many parts of Scotland. MrKalm, the Swedish traveller, when he gives an account of the husbandryof some of the English colonies in North America, as he found it in1749, observes, accordingly, that he can with difficulty discoverthere the character of the English nation, so well skilled in all thedifferent branches of agriculture. They make scarce any manure for theircorn fields, he says; but when one piece of ground has been exhaustedby continual cropping, they clear and cultivate another piece of freshland; and when that is exhausted, proceed to a third. Their cattle areallowed to wander through the woods and other uncultivated grounds, where they are half-starved; having long ago extirpated almost all theannual grasses, by cropping them too early in the spring, before theyhad time to form their flowers, or to shed their seeds. {Kalm's Travels, vol 1, pp. 343, 344. } The annual grasses were, it seems, the bestnatural grasses in that part of North America; and when the Europeansfirst settled there, they used to grow very thick, and to rise threeor four feet high. A piece of ground which, when he wrote, could notmaintain one cow, would in former times, he was assured, have maintainedfour, each of which would have given four times the quantity of milkwhich that one was capable of giving. The poorness of the pasturehad, in his opinion, occasioned the degradation of their cattle, whichdegenerated sensibly from me generation to another. They were probablynot unlike that stunted breed which was common all over Scotland thirtyor forty years ago, and which is now so much mended through the greaterpart of the low country, not so much by a change of the breed, thoughthat expedient has been employed in some places, as by a more plentifulmethod of feeding them. 

Though it is late, therefore, in the progress of improvement, beforecattle can bring such a price as to render it profitable to cultivateland for the sake of feeding them; yet of all the different parts whichcompose this second sort of rude produce, they are perhaps the firstwhich bring this price; because, till they bring it, it seems impossiblethat improvement can be brought near even to that degree of perfectionto which it has arrived in many parts of Europe. 

As cattle are among the first, so perhaps venison is among the lastparts of this sort of rude produce which bring this price. The price ofvenison in Great Britain, how extravagant soever it may appear, is notnear sufficient to compensate the expense of a deer park, as is wellknown to all those who have had any experience in the feeding of deer. If it was otherwise, the feeding of deer would soon become an article ofcommon farming, in the same manner as the feeding of those small birds, called turdi, was among the ancient Romans. Varro and Columella assureus, that it was a most profitable article. The fattening of ortolans, birds of passage which arrive lean in the country, is said to be so insome parts of France. If venison continues in fashion, and the wealthand luxury of Great Britain increase as they have done for some timepast, its price may very probably rise still higher than it is atpresent. 

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

Thus, in every farm, the offals of the barn and stable will maintaina certain number of poultry. These, as they are fed with what wouldotherwise be lost, are a mere save-all; and as they cost the farmerscarce any thing, so he can afford to sell them for very little. Almostall that he gets is pure gain, and their price can scarce be so lowas to discourage him from feeding this number. But in countries illcultivated, and therefore but thinly inhabited, the poultry, which arethus raised without expense, are often fully sufficient to supply thewhole demand. In this state of things, therefore, they are often ascheap as butcher's meat, or any other sort of animal food. But thewhole quantity of poultry which the farm in this manner produceswithout expense, must always be much smaller than the whole quantityof butcher's meat which is reared upon it; and in times of wealth andluxury, what is rare, with only nearly equal merit, is always preferredto what is common. 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 getsso high, that it becomes profitable to cultivate land for the sake offeeding them. When it has got to this height, it cannot well go higher. If it did, more land would soon be turned to this purpose. In severalprovinces of France, the feeding of poultry is considered as a veryimportant article in rural economy, and sufficiently profitable toencourage the farmer to raise a considerable quantity of Indian corn andbuckwheat for this purpose. A middling farmer will there sometimes havefour hundred fowls in his yard. The feeding of poultry seems scarce yetto be generally considered as a matter of so much importance in England. They are certainly, however, dearer in England than in France, asEngland receives considerable supplies from France. In the progress ofimprovements, the period at which every particular sort of animalfood is dearest, must naturally be that which immediately precedes thegeneral practice of cultivating land for the sake of raising it. Forsome time before this practice becomes general, the scarcity mustnecessarily raise the price. After it has become general, new methods offeeding are commonly fallen upon, which enable the farmer to raise uponthe same quantity of ground a much greater quantity of that particularsort of animal food. The plenty not only obliges him to sell cheaper, but, in consequence of these improvements, he can afford to sellcheaper; for if he could not afford it, the plenty would not be of longcontinuance. It has been probably in this manner that the introductionof clover, turnips, carrots, cabbages, etc. Has contributed to sink thecommon price of butcher's meat in the London market, somewhat below whatit was about the beginning of 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 animals, which can thus be reared at little or no expense, is fully sufficient tosupply the demand, this sort of butcher's meat comes to market at a muchlower price than any other. But when the demand rises beyond what thisquantity can supply, when it becomes necessary to raise food on purposefor feeding and fattening hogs, in the same manner as for feedingand fattening other cattle, the price necessarily rises, and becomesproportionably either higher or lower than that of other butcher'smeat, according as the nature of the country, and the state of itsagriculture, happen to render the feeding of hogs more or less expensivethan that of other cattle. In France, according to Mr Buffon, the priceof pork is nearly equal to that of beef. In most parts of Great Britainit is at present somewhat higher. 

The great rise in the price both of hogs and poultry, has, in GreatBritain, been frequently imputed to the diminution of the number ofcottagers and other small occupiers of land; an event which has in everypart of Europe been the immediate forerunner of improvement and bettercultivation, but which at the same time may have contributed to raisethe price of those articles, both somewhat sooner and somewhat fasterthan it would otherwise have risen. As the poorest family can oftenmaintain a cat or a dog without any expense, so the poorest occupiersof land can commonly maintain a few poultry, or a sow and a few pigs, atvery little. The little offals of their own table, their whey, skimmedmilk, and butter milk, supply those animals with a part of their food, and they find the rest in the neighbouring fields, without doing anysensible damage to any body. By diminishing the number of those smalloccupiers, therefore, the quantity of this sort of provisions, which isthus produced at little or no expense, must certainly have been a gooddeal diminished, and their price must consequently have been raised bothsooner and faster than it would otherwise have risen. Sooner or later, however, in the progress of improvement, it must at any rate have risento the utmost height to which it is capable of rising; or to theprice which pays the labour and expense of cultivating the land whichfurnishes them with food, as well as these are paid upon the greaterpart of other cultivated land. 

The business of the dairy, like the feeding of hogs and poultry, isoriginally carried on as a save-all. The cattle necessarily kept uponthe farm produce more milk than either the rearing of their own young, or the consumption of the farmer's family requires; and they producemost at one particular season. But of all the productions of land, milkis perhaps the most perishable. In the warm season, when it is mostabundant, it will scarce keep four-and-twenty hours. The farmer, bymaking it into fresh butter, stores a small part of it for a week; bymaking it into salt butter, for a year; and by making it into cheese, hestores a much greater part of it for several years. Part of all theseis reserved for the use of his own family; the rest goes to market, inorder to find the best price which is to be had, and which can scarcebe so low is to discourage him from sending thither whatever is over andabove the use of his own family. If it is very low indeed, he will belikely to manage his dairy in a very slovenly and dirty manner, andwill scarce, perhaps, think it worth while to have a particular room orbuilding on purpose for it, but will suffer the business to be carriedon amidst the smoke, filth, and nastiness of his own kitchen, as wasthe case of almost all the farmers' dairies in Scotland thirty or fortyyears 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 the country, thediminution of the quantity which can be fed at little or no expense, raise, in the same manner, that of the produce of the dairy, of whichthe price naturally connects with that of butcher's meat, or with theexpense of feeding cattle. The increase of price pays for more labour, care, and cleanliness. The dairy becomes more worthy of the farmer'sattention, and the quality of its produce gradually improves. The priceat last gets so high, that it becomes worth while to employ some of themost fertile and best cultivated lands in feeding cattle merely for thepurpose of the dairy; and when it has got to this height, it cannot wellgo higher. If it did, more land would soon be turned to this purpose. It seems to have got to this height through the greater part of England, where much good land is commonly employed in this manner. If you exceptthe neighbourhood of a few considerable towns, it seems not yet to havegot to this height anywhere in Scotland, where common farmers seldomemploy much good land in raising food for cattle, merely for thepurpose of the dairy. The price of the produce, though it has risen veryconsiderably within these few years, is probably still too low to admitof it. The inferiority of the quality, indeed, compared with that ofthe produce of English dairies, is fully equal to that of the price. But this 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, be disposed ofat a much better price; and the present price, it is probable, would notpay the expense of the land and labour necessary for producing a muchbetter quality. Through the greater part of England, notwithstandingthe superiority of price, the dairy is not reckoned a more profitableemployment of land than the raising of corn, or the fattening of cattle, the two great objects of agriculture. Through the greater part ofScotland, therefore, it cannot 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, whichhuman industry is obliged to raise upon them, has got so high as to payfor the expense of complete improvement and cultivation. In order to dothis, the price of each particular produce must be sufficient, first, topay the rent of good corn land, as it is that which regulates the rentof the greater part of other cultivated land; and, secondly, to pay thelabour and expense of the farmer, as well as they are commonly paid upongood corn land; or, in other words, to replace with the ordinary profitsthe stock which he employs about it. This rise in the price of eachparticular produce; must evidently be previous to the improvement andcultivation of the land which is destined for raising it. Gain is theend of all improvement; and nothing could deserve that name, of whichloss was to be the necessary consequence. But loss must be the necessaryconsequence of improving land for the sake of a produce of which theprice could never bring back the expense. If the complete improvementand cultivation of the country be, as it most certainly is, the greatestof all public advantages, this rise in the price of all those differentsorts of rude produce, instead of being considered as a public calamity, ought to be regarded as the necessary forerunner and attendant of thegreatest of all public advantages. 

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

Third Sort. --The 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 to renderthe efforts of human industry more or less successful in augmenting thequantity, it may happen sometimes even to fall, sometimes to continuethe same, in very different periods of improvement, and sometimes torise more or less in the same period. 

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

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

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

The market for wool and raw hides, on the contrary, is, in the rudebeginnings of improvement, very seldom confined to the country whichproduces them. They can easily be transported to distant countries; woolwithout any preparation, and raw hides with very little; and as they arethe materials of many manufactures, the industry of other countries mayoccasion a demand for them, though that of the country which producesthem might not occasion any. 

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

Though, in the progress of improvement and population, the price of thewhole beast necessarily rises, yet the price of the carcase is likely tobe much more affected by this rise than that of the wool and the hide. The market for the carcase being in the rude state of society confinedalways to the country which produces it, must necessarily be extendedin proportion to the improvement and population of that country. But themarket for the wool and the hides, even of a barbarous country, oftenextending to the whole commercial world, it can very seldom be enlargedin the same proportion. The state of the whole commercial world canseldom be much affected by the improvement of any particular country;and the market for such commodities may remain the same, or very nearlythe same, after such improvements, as before. It should, however, in thenatural course of things, rather, upon the whole, be somewhat extendedin consequence of them. If the manufactures, especially, of which thosecommodities are the materials, should ever come to flourish in thecountry, the market, though it might not be much enlarged, would atleast be brought much nearer to the place of growth than before; and theprice of those materials might at least be increased by what had usuallybeen the expense of transporting them to distant countries. Though itmight not rise, therefore, in the same proportion as that of butcher'smeat, it ought naturally to rise somewhat, and it ought certainly not tofall. 

In England, however, notwithstanding the flourishing state of itswoollen manufacture, the price of English wool has fallen veryconsiderably since the time of Edward III. There are many authenticrecords which demonstrate that, during the reign of that prince (towardsthe middle of the fourteenth century, or about 1339), what was reckonedthe moderate and reasonable price of the tod, or twenty-eight poundsof English wool, was not less than ten shillings of the money of thosetimes {See Smith's Memoirs of Wool, vol. I c. 5, 6, 7. Also vol. Ii. }, containing, at the rate of twenty-pence the ounce, six ounces of silver, Tower weight, equal to about thirty shillings of our present money. Inthe present times, one-and-twenty shillings the tod may be reckoneda good price for very good English wool. The money price of wool, therefore, in the time of Edward III. Was to its money price in thepresent times as ten to seven. The superiority of its real price wasstill greater. At the rate of six shillings and eightpence the quarter, ten shillings was in those ancient times the price of twelve bushels ofwheat. At the rate of twenty-eight shillings the quarter, one-and-twentyshillings is in the present times the price of six bushels only. The proportion between the real price of ancient and modern times, therefore, is as twelve to six, or as two to one. In those ancienttimes, a tod of wool would have purchased twice the quantity ofsubsistence which it will purchase at present, and consequently twicethe quantity of labour, if the real recompence of labour had been thesame in both periods. 

This degradation, both in the real and nominal value of wool, couldnever have happened in consequence of the natural course of things. Ithas accordingly been the effect of violence and artifice. First, of theabsolute prohibition of exporting wool from England: secondly, ofthe permission of importing it from Spain, duty free: thirdly, of theprohibition of exporting it from Ireland to another country but England. In consequence of these regulations, the market for English wool, instead of being somewhat extended, in consequence of the improvement ofEngland, has been confined to the home market, where the wool of severalother countries is allowed to come into competition with it, and wherethat of Ireland is forced into competition with it. As the woollenmanufactures, too, of Ireland, are fully as much discouraged as isconsistent with justice and fair dealing, the Irish can work up but asmaller part of their own wool at home, and are therefore obliged tosend a greater proportion of it to Great Britain, the only market theyare allowed. 

I have not been able to find any such authentic records concerning theprice of raw hides in ancient times. Wool was commonly paid as a subsidyto the king, and its valuation in that subsidy ascertains, at least insome degree, what was its ordinary price. But this seems not to havebeen the case with raw hides. Fleetwood, however, from an account in1425, between the prior of Burcester Oxford and one of his canons, givesus their price, at least as it was stated upon that particular occasion, viz. Five ox hides at twelve shillings; five cow hides at sevenshillings and threepence; thirtysix sheep skins of two years old atnine shillings; sixteen calf skins at two shillings. In 1425, twelveshillings contained about the same quantity of silver as four-and-twentyshillings of our present money. An ox hide, therefore, was in thisaccount valued at the same quantity of silver as 4s. 4/5ths of ourpresent money. Its nominal price was a good deal lower than at present. But at the rate of six shillings and eightpence the quarter, twelveshillings would in those times have purchased fourteen bushels andfour-fifths of a bushel of wheat, which, at three and sixpence thebushel, would in the present times cost 51s. 4d. An ox hide, therefore, would in those times have purchased as much corn as ten shillings andthreepence would purchase at present. Its real value was equal to tenshillings and threepence of our present money. In those ancient times, when the cattle were half starved during the greater part of the winter, we cannot suppose that they were of a very large size. An ox hidewhich weighs four stone of sixteen pounds of avoirdupois, is not inthe present times reckoned a bad one; and in those ancient times wouldprobably have been reckoned a very good one. But at half-a-crown thestone, which at this moment (February 1773) I understand to be thecommon price, such a hide would at present cost only ten shillings. Through its nominal price, therefore, is higher in the present thanit was in those ancient times, its real price, the real quantity ofsubsistence which it will purchase or command, is rather somewhat lower. The price of cow hides, as stated in the above account, is nearly inthe common proportion to that of ox hides. That of sheep skins is a gooddeal above it. They had probably been sold with the wool. That of calvesskins, on the contrary, is greatly below it. In countries where theprice of cattle is very low, the calves, which are not intended to bereared in order to keep up the stock, are generally killed very young, as was the case in Scotland twenty or thirty years ago. It saves themilk, which their price would not pay for. Their skins, therefore, arecommonly good for little. 

The price of raw hides is a good deal lower at present than it was a fewyears ago; owing probably to the taking off the duty upon seal skins, and to the allowing, for a limited time, the importation of raw hidesfrom Ireland, and from the plantations, duty free, which was done in1769. Take the whole of the present century at an average, their realprice has probably been somewhat higher than it was in those ancienttimes. The nature of the commodity renders it not quite so properfor being transported to distant markets as wool. It suffers more bykeeping. A salted hide is reckoned inferior to a fresh one, and sellsfor a lower price. This circumstance must necessarily have some tendencyto sink the price of raw hides produced in a country which does notmanufacture them, but is obliged to export them, and comparatively toraise that of those produced in a country which does manufacture them. It must have some tendency to sink their price in a barbarous, and toraise it in an improved and manufacturing country. It must have had sometendency, therefore, to sink it in ancient, and to raise it in moderntimes. Our tanners, besides, have not been quite so successful as ourclothiers, in convincing the wisdom of the nation, that the safetyof the commonwealth depends upon the prosperity of their particularmanufacture. They have accordingly been much less favoured. Theexportation of raw hides has, indeed, been prohibited, and declareda nuisance; but their importation from foreign countries has beensubjected to a duty; and though this duty has been taken off from thoseof Ireland and the plantations (for the limited time of five yearsonly), yet Ireland has not been confined to the market of GreatBritain for the sale of its surplus hides, or of those which are notmanufactured at home. The hides of common cattle have, but withinthese few years, been put among the enumerated commodities which theplantations can send nowhere but to the mother country; neither has thecommerce of Ireland been in this case oppressed hitherto, in order tosupport the manufactures of Great Britain. 

Whatever regulations tend to sink the price, either of wool or ofraw hides, below what it naturally would he, must, in an improved andcultivated country, have some tendency to raise the price of butcher'smeat. The price both of the great and small cattle, which are fed onimproved and cultivated land, must be sufficient to pay the rent whichthe landlord, and the profit which the farmer, has reason to expect fromimproved and cultivated land. If it is not, they will soon cease to feedthem. Whatever part of this price, therefore, is not paid by the wooland the hide, must be paid by the carcase. The less there is paid forthe one, the more must be paid for the other. In what manner this priceis to be divided upon the different parts of the beast, is indifferentto the landlords and farmers, provided it is all paid to them. In animproved and cultivated country, therefore, their interest as landlordsand farmers 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 and uncultivatedcountry, where the greater part of the lands could be applied to noother purpose but the feeding of cattle, and where the wool and the hidemade the principal part of the value of those cattle. Their interest aslandlords and farmers would in this case be very deeply affected by suchregulations, and their interest as consumers very little. The fall inthe price of the wool and the hide would not in this case raise theprice of the carcase; because the greater part of the lands of thecountry being applicable to no other purpose but the feeding of cattle, the same number would still continue to be fed. The same quantity ofbutcher's meat would still come to market. The demand for it would be nogreater than before. Its price, therefore, would be the same as before. The whole price of cattle would fall, and along with it both the rentand the 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 is commonly, butvery falsely, ascribed to Edward III. , would, in the then circumstancesof the country, have been the most destructive regulation which couldwell have been thought of. It would not only have reduced the actualvalue of the greater part of the lands in the kingdom, but by reducingthe price of the most important species of small cattle, it would haveretarded very much its subsequent improvement. 

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

As the efficacy of human industry, in increasing the quantity either ofwool or of raw hides, is limited, so far as it depends upon the produceof the country where it is exerted; so it is uncertain so far as itdepends upon the produce of other countries. It so far depends not somuch upon the quantity which they produce, as upon that which they donot manufacture; and upon the restraints which they may or may not thinkproper to impose upon the exportation of this sort of rude produce. These circumstances, as they are altogether independent of domesticindustry, so they necessarily render the efficacy of its efforts more orless uncertain. In multiplying this sort of rude produce, therefore, theefficacy of human industry is not only limited, but uncertain. 

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

Though the success of a particular day's fishing maybe a very uncertainmatter, yet the local situation of the country being supposed, thegeneral efficacy of industry in bringing a certain quantity of fish tomarket, taking the course of a year, or of several years together, itmay, perhaps, be thought is certain enough; and it, no doubt, is so. Asit depends more, however, upon the local situation of the country, thanupon the state of its wealth and industry; as upon this account itmay in different countries be the same in very different periods ofimprovement, and very different in the same period; its connectionwith the state of improvement is uncertain; and it is of this sort ofuncertainty that I am here speaking. 

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

The quantity of the precious metals which is to be found in anycountry, is not limited by any thing in its local situation, such as thefertility or barrenness of its own mines. Those metals frequently aboundin countries which possess no mines. Their quantity, in every particularcountry, seems to depend upon two different circumstances; first, uponits power of purchasing, upon the state of its industry, upon the annualproduce of its land and labour, in consequence of which it can affordto employ a greater or a smaller quantity of labour and subsistence, in bringing or purchasing such superfluities as gold and silver, eitherfrom its own mines, or from those of other countries; and, secondly, upon the fertility or barrenness of the mines which may happen at anyparticular time to supply the commercial world with those metals. Thequantity of those metals in the countries most remote from the mines, must be more or less affected by this fertility or barrenness, onaccount of the easy and cheap transportation of those metals, of theirsmall bulk and great value. Their quantity in China and Indostanmust have been more or less affected by the abundance of the mines ofAmerica. 

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

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

The fertility or barrenness of the mines, however, which may happen atany particular time to supply the commercial world, is a circumstancewhich, it is evident, may have no sort of connection with the stateof industry in a particular country. It seems even to have no verynecessary connection with that of the world in general. As arts andcommerce, indeed, gradually spread themselves over a greater and agreater part of the earth, the search for new mines, being extended overa wider surface, may have somewhat a better chance for being successfulthan when confined within narrower bounds. The discovery of new mines, however, as the old ones come to be gradually exhausted, is a matterof the greatest uncertainty, and such as no human skill or industrycan insure. All indications, it is acknowledged, are doubtful; andthe actual discovery and successful working of a new mine can aloneascertain the reality of its value, or even of its existence. In thissearch there seem to be no certain limits, either to the possiblesuccess, or to the possible disappointment of human industry. Inthe course of a century or two, it is possible that new mines may bediscovered, more fertile than any that have ever yet been known; and itis just equally possible, that the most fertile mine then known may bemore barren than any that was wrought before the discovery of the minesof America. Whether the one or the other of those two events may happento take place, is of very little importance to the real wealth andprosperity of the world, to the real value of the annual produce of theland and labour of mankind. Its nominal value, the quantity of gold andsilver by which 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 no morelabour than a penny does at present; and a penny, in the other, mightrepresent as much as a shilling does now. But in the one case, he whohad a shilling in his pocket would be no richer than he who has a pennyat present; and in the other, he who had a penny would be just as richas he who has a shilling now. The cheapness and abundance of gold andsilver plate would be the sole advantage which the world could derivefrom the one event; and the dearness and scarcity of those triflingsuperfluities, the only inconveniency it could suffer from the other. 

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

The greater part of the writers who have collected the money price ofthings in ancient times, seem to have considered the low money priceof corn, and of goods in general, or, in other words, the high value ofgold and silver, as a proof, not only of the scarcity of those metals, but of the poverty and barbarism of the country at the time when it tookplace. This notion is connected with the system of political economy, which represents national wealth as consisting in the abundance andnational poverty in the scarcity, of gold and silver; a system whichI shall endeavour to explain and examine at great length in the fourthbook of this Inquiry. I shall only observe at present, that the highvalue of the precious metals can be no proof of the poverty or barbarismof any particular country at the time when it took place. It is a proofonly of the barrenness of the mines which happened at that time tosupply the 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 country muchricher than any part of Europe, the value of the precious metals is muchhigher than in any part of Europe. As the wealth of Europe, indeed, hasincreased greatly since the discovery of the mines of America, so thevalue of gold and silver has gradually diminished. This diminution oftheir value, however, has not been owing to the increase of the realwealth of Europe, of the annual produce of its land and labour, but tothe accidental discovery of more abundant mines than any that were knownbefore. The increase of the quantity of gold and silver in Europe, andthe increase of its manufactures and agriculture, are two events which, though they have happened nearly about the same time, yet have arisenfrom very different causes, and have scarce any natural connection withone another. The one has arisen from a mere accident, in which neitherprudence nor policy either had or could have any share; the other, from the fall of the feudal system, and from the establishment of agovernment which afforded to industry the only encouragement which itrequires, some tolerable security that it shall enjoy the fruits ofits own labour. Poland, where the feudal system still continues totake place, is at this day as beggarly a country as it was before thediscovery of America. The money price of corn, however, has risen; thereal value of the precious metals has fallen in Poland, in the samemanner as in other parts of Europe. Their quantity, therefore, must haveincreased there as in other places, and nearly in the same proportion tothe annual produce of its land and labour. This increase of the quantityof those metals, however, has not, it seems, increased that annualproduce, has neither improved the manufactures and agriculture of thecountry, nor mended the circumstances of its inhabitants. Spain andPortugal, the countries which possess the mines, are, after Poland, perhaps the two most beggarly countries in Europe. The value of theprecious metals, however, must be lower in Spain and Portugal than inany other part of Europe, as they come from those countries to all otherparts of Europe, loaded, not only with a freight and an insurance, butwith the expense of smuggling, their exportation being either prohibitedor subjected to a duty. In proportion to the annual produce of the landand labour, therefore, their quantity must be greater in those countriesthan in any other part of Europe; those countries, however, are poorerthan the greater part of Europe. Though the feudal system has beenabolished in Spain and Portugal, it has not been succeeded by a muchbetter. 

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 of cornin particular, be no proof of the poverty or barbarism of the times, the low money price of some particular sorts of goods, such as cattle, poultry, game of all kinds, etc. In proportion to that of corn, is amost decisive one. It clearly demonstrates, first, their great abundancein proportion to that of corn, and, consequently, the great extent ofthe land which they occupied in proportion to what was occupied by corn;and, secondly, the low value of this land in proportion to that of cornland, and, consequently, the uncultivated and unimproved state of thefar greater part of the lands of the country. It clearly demonstrates, that the stock and population of the country did not bear the sameproportion to the extent of its territory, which they commonly do incivilized countries; and that society was at that time, and in thatcountry, but in its infancy. From the high or low money price, either ofgoods in general, or of corn in particular, we can infer only, that themines, which at that time happened to supply the commercial world withgold and silver, were fertile or barren, not that the country was richor 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 of probabilitythat approaches almost to certainty, that it was rich or poor, that thegreater part of its lands were improved or unimproved, and that it waseither in a more or less barbarous state, or in a more or less civilizedone. 

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

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

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

The opinion, therefore, that silver is continually sinking in its value, seems not to be founded upon any good observations, either upon theprices 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 given, purchase a much smaller quantity of several sorts of provisions than itwould have done during some part of the last century; and to ascertainwhether this change be owing to a rise in the value of those goods, or to a fall in the value of silver, is only to establish a vain anduseless distinction, which can be of no sort of service to the man whohas only a certain quantity of silver to go to market with, or a certainfixed revenue in money. I certainly do not pretend that the knowledgeof this distinction will enable him to buy cheaper. It may not, however, upon that account be altogether useless. 

It may be of some use to the public, by affording an easy proof of theprosperous condition of the country. If the rise in the price of somesorts of provisions be owing altogether to a fall in the value ofsilver, it is owing to a circumstance, from which nothing can beinferred but the fertility of the American mines. The real wealth of thecountry, the annual produce of its land and labour, may, notwithstandingthis circumstance, be either gradually declining, as in Portugal andPoland; or gradually advancing, as in most other parts of Europe. But ifthis rise in the price of some sorts of provisions be owing to a risein the real value of the land which produces them, to its increasedfertility, or, in consequence of more extended improvement and goodcultivation, to its having been rendered fit for producing corn; it isowing to a circumstance which indicates, in the clearest manner, theprosperous and advancing state of the country. The land constitutes byfar the greatest, the most important, and the most durable part of thewealth of every extensive country. It may surely be of some use, or, atleast, it may give some satisfaction to the public, to have so decisivea proof of the increasing value of by far the greatest, the mostimportant, and the most durable part of its wealth. 

It may, too, be of some use to the public, in regulating the pecuniaryreward of some of its inferior servants. If this rise in the price ofsome sorts of provisions be owing to a fall in the value of silver, their pecuniary reward, provided it was not too large before, oughtcertainly to be augmented in proportion to the extent of this fall. Ifit is not augmented, their real recompence will evidently be so muchdiminished. But if this rise of price is owing to the increased value, in consequence of the improved fertility of the land which producessuch provisions, it becomes a much nicer matter to judge, either in whatproportion any pecuniary reward ought to be augmented, or whetherit ought to be augmented at all. The extension of improvement andcultivation, as it necessarily raises more or less, in proportion to theprice of corn, that of every sort of animal food, so it as necessarilylowers that of, I believe, every sort of vegetable food. It raises theprice of animal food; because a great part of the land which producesit, being rendered fit for producing corn, must afford to the landlordanti farmer the rent and profit of corn land. It lowers the price ofvegetable food; because, by increasing the fertility of the land, itincreases its abundance. The improvements of agriculture, too, introducemany sorts of vegetable food, which requiring less land, and not morelabour than corn, come much cheaper to market. Such are potatoesand maize, or what is called Indian corn, the two most importantimprovements which the agriculture of Europe, perhaps, which Europeitself, has received from the great extension of its commerce andnavigation. Many sorts of vegetable food, besides, which in the rudestate of agriculture are confined to the kitchen-garden, and raised onlyby the spade, come, in its improved state, to be introduced into commonfields, and to be raised by the plough; such as turnips, carrots, cabbages, etc. If, in the progress of improvement, therefore, the realprice of one species of food necessarily rises, that of another asnecessarily falls; and it becomes a matter of more nicety to judge howfar the rise in the one may be compensated by the fall in the other. When the real price of butcher's meat has once got to its height (which, with regard to every sort, except perhaps that of hogs flesh, it seemsto have done through a great part of England more than a century ago), any rise which can afterwards happen in that of any other sort of animalfood, cannot much affect the circumstances of the inferior ranks ofpeople. The circumstances of the poor, through a great part of England, cannot surely be so much distressed by any rise in the price of poultry, fish, wild-fowl, or venison, as they must be relieved by the fall inthat 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 is atits ordinary or average price, the natural rise in the price of anyother sort of rude produce cannot much affect them. They suffer more, perhaps, by the artificial rise which has been occasioned by taxes inthe price of some manufactured commodities, as of salt, soap, leather, candles, malt, beer, ale, etc. 

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

It is the natural effect of improvement, however, to diminish graduallythe real price of almost all manufactures. That of the manufacturingworkmanship diminishes, perhaps, in all of them without exception. Inconsequence of better machinery, of greater dexterity, and of a moreproper division and distribution of work, all of which are the naturaleffects of improvement, a much smaller quantity of labour becomesrequisite for executing any particular piece of work; and though, inconsequence of the flourishing circumstances of the society, the realprice of labour should rise very considerably, yet the great diminutionof the quantity will generally much more than compensate the greatestrise which can happen in the price. 

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

But in all cases in which the real price of the rude materialeither 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 and precedingcentury, been most remarkable in those manufactures of which thematerials are the coarser metals. A better movement of a watch, thanabout the middle of the last century could have been bought for twentypounds, may now perhaps be had for twenty shillings. In the work ofcutlers and locksmiths, in all the toys which are made of the coarsermetals, and in all those goods which are commonly known by the name ofBirmingham and Sheffield ware, there has been, during the same period, a very great reduction of price, though not altogether so great as inwatch-work. It has, however, been sufficient to astonish the workmen ofevery other part of Europe, who in many cases acknowledge that theycan produce no work of equal goodness for double or even for triplethe price. There are perhaps no manufactures, in which the division oflabour can be carried further, or in which the machinery employed admitsof' a greater variety of improvements, than those of which the materialsare the coarser metals. 

In the clothing manufacture there has, during the same period, been nosuch sensible reduction of price. The price of superfine cloth, I havebeen assured, on the contrary, has, within these five-and-twenty orthirty years, risen somewhat in proportion to its quality, owing, itwas said, to a considerable rise in the price of the material, whichconsists altogether of Spanish wool. That of the Yorkshire cloth, whichis made altogether of English wool, is said, indeed, during the courseof the present century, to have fallen a good deal in proportion to itsquality. Quality, however, is so very disputable a matter, that I lookupon all information of this kind as somewhat uncertain. In the clothingmanufacture, the division of labour is nearly the same now as it wasa century ago, and the machinery employed is not very different. Theremay, however, have been some small improvements in both, which may haveoccasioned some reduction of price. 

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

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

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

In 1463, being the 3rd of Edward IV. It was enacted, that "no servant inhusbandry nor common labourer, nor servant to any artificer inhabitingout of a city or burgh, shall use or wear in their clothing any clothabove two shillings the broad yard. " In the 3rd of Edward IV. , twoshillings contained very nearly the same quantity of silver as four ofour present money. But the Yorkshire cloth which is now sold at fourshillings the yard, is probably much superior to any that was then madefor the wearing of the very poorest order of common servants. Even themoney price of their clothing, therefore, may, in proportion to thequality, be somewhat cheaper in the present than it was in those ancienttimes. The real price is certainly a good deal cheaper. Tenpence wasthen reckoned what is called the moderate and reasonable price of abushel of wheat. Two shillings, therefore, was the price of two bushelsand near two pecks of wheat, which in the present times, at threeshillings and sixpence the bushel, would be worth eight shillings andninepence. For a yard of this cloth the poor servant must have partedwith the power of purchasing a quantity of subsistence equal to whateight shillings and ninepence would purchase in the present times. Thisis a sumptuary law, too, restraining the luxury and extravagance of thepoor. Their clothing, therefore, had commonly been much more expensive. 

The same order of people are, by the same law, prohibited from wearinghose, of which the price should exceed fourteen-pence the pair, equalto about eight-and-twenty pence of our present money. But fourteen-pencewas in those times the price of a bushel and near two pecks of wheat;which in the present times, at three and sixpence the bushel, would costfive shillings and threepence. We should in the present times considerthis as a very high price for a pair of stockings to a servant of thepoorest and lowest order. He must however, in those times, have paidwhat was really equivalent to this price for them. 

In the time of Edward IV. The art of knitting stockings was probably notknown in any part of Europe. Their hose were made of common cloth, whichmay have been one of the causes of their dearness. The first personthat wore stockings in England is said to have been Queen Elizabeth. Shereceived them as a present from the Spanish ambassador. 

Both in the coarse and in the fine woollen manufacture, the machineryemployed was much more imperfect in those ancient, than it is in thepresent times. It has since received three very capital improvements, besides, probably, many smaller ones, of which it may be difficultto ascertain either the number or the importance. The three capitalimprovements are, first, the exchange of the rock and spindle for thespinning-wheel, which, with the same quantity of labour, will performmore than double the quantity of work. Secondly, the use of several veryingenious machines, which facilitate and abridge, in a still greaterproportion, the winding of the worsted and woollen yarn, or the properarrangement of the warp and woof before they are put into the loom; anoperation which, previous to the invention of those machines, must havebeen extremely tedious and troublesome. Thirdly, the employment of thefulling-mill for thickening the cloth, instead of treading it in water. Neither wind nor water mills of any kind were known in England so earlyas the beginning of the sixteenth century, nor, so far as I know, in anyother part of Europe north of the Alps. They had been introduced intoItaly some time before. 

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

The coarse manufacture probably was, in those ancient times, carried onin England in the same manner as it always has been in countries wherearts and manufactures are in their infancy. It was probably a householdmanufacture, in which every different part of the work was occasionallyperformed by all the different members of almost every private family, but so as to be their work only when they had nothing else to do, andnot to be the principal business from which any of them derived thegreater part of their subsistence. The work which is performed in thismanner, it has already been observed, comes always much cheaper tomarket than that which is the principal or sole fund of the workman'ssubsistence. The fine manufacture, on the other hand, was not, in thosetimes, carried on in England, but in the rich and commercial country ofFlanders; and it was probably conducted then, in the same manner asnow, by people who derived the whole, or the principal part of theirsubsistence from it. It was, besides, a foreign manufacture, and musthave paid some duty, the ancient custom of tonnage and poundage atleast, to the king. This duty, indeed, would not probably be very great. It was not then the policy of Europe to restrain, by high duties, theimportation of foreign manufactures, but rather to encourage it, inorder that merchants might be enabled to supply, at as easy a rate aspossible, the great men with the conveniencies and luxuries which theywanted, and which the industry of their own country could not affordthem. 

The consideration of these circumstances may, perhaps, in some measureexplain to us why, in those ancient times, the real price of the coarsemanufacture was, in proportion to that of the fine, so much lower thanin the present times. 

Conclusion of the Chapter. 

I shall conclude this very long chapter with observing, that everyimprovement in the circumstances of the society tends, either directlyor indirectly, to raise the real rent of land to increase the realwealth of the landlord, his power of purchasing the labour, or theproduce of the labour of other people. 

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

That rise in the real price of those parts of the rude produce of land, which is first the effect of the extended improvement and cultivation, and afterwards the cause of their being still further extended, the risein the price of cattle, for example, tends, too, to raise the rent ofland directly, and in a still greater proportion. The real value of thelandlord's share, his real command of the labour of other people, notonly rises with the real value of the produce, but the proportion of hisshare to the whole produce rises with it. 

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

All those improvements in the productive powers of labour, which tenddirectly to reduce the rent price of manufactures, tend indirectly toraise the real rent of land. The landlord exchanges that part of hisrude produce, which is over and above his own consumption, or, whatcomes to the same thing, the price of that part of it, for manufacturedproduce. Whatever reduces the real price of the latter, raises that ofthe former. An equal quantity of the former becomes thereby equivalentto a greater quantity of the latter; and the landlord is enabled topurchase a greater quantity of the conveniencies, ornaments, or luxurieswhich he has occasion for. 

Every increase in the real wealth of the society, every increase in thequantity of useful labour employed within it, tends indirectly to raisethe real rent of land. A certain proportion of this labour naturallygoes to the land. A greater number of men and cattle are employed in itscultivation, the produce increases with the increase of the stock whichis thus employed in raising it, and the rent increases with the produce. 

The contrary circumstances, the neglect of cultivation and improvement, the fall in the real price of any part of the rude produce of land, therise in the real price of manufactures from the decay of manufacturingart and industry, the declension of the real wealth of the society, alltend, on the other hand, to lower the real rent of land, to reduce thereal wealth of the landlord, to diminish his power of purchasing eitherthe labour, or the produce of the labour, of other people. 

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

The interest of the first of those three great orders, it appears fromwhat has been just now said, is strictly and inseparably connectedwith the general interest of the society. Whatever either promotes orobstructs the one, necessarily promotes or obstructs the other. When thepublic deliberates concerning any regulation of commerce or police, theproprietors of land never can mislead it, with a view to promote theinterest of their own particular order; at least, if they have anytolerable knowledge of that interest. They are, indeed, too oftendefective in this tolerable knowledge. They are the only one of thethree orders whose revenue costs them neither labour nor care, but comesto them, as it were, of its own accord, and independent of any plan orproject of their own. That indolence which is the natural effect of theease and security of their situation, renders them too often, not onlyignorant, but incapable of that application of mind, which is necessaryin order to foresee and understand the consequence of any publicregulation. 

The interest of the second order, that of those who live by wages, isas strictly connected with the interest of the society as that of thefirst. The wages of the labourer, it has already been shewn, are neverso high as when the demand for labour is continually rising, or when thequantity employed is every year increasing considerably. When this realwealth of the society becomes stationary, his wages are soon reduced towhat is barely enough to enable him to bring up a family, or to continuethe race of labourers. When the society declines, they fall even belowthis. The order of proprietors may perhaps gain more by the prosperityof the society than that of labourers; but there is no order thatsuffers so cruelly from its decline. But though the interest of thelabourer is strictly connected with that of the society, he is incapableeither of comprehending that interest, or of understanding its connexionwith his own. His condition leaves him no time to receive the necessaryinformation, and his education and habits are commonly such as to renderhim unfit to judge, even though he was fully informed. In the publicdeliberations, therefore, his voice is little heard, and less regarded;except upon particular occasions, when his clamour is animated, set on, and supported by his employers, not for his, but their own particularpurposes. 

His employers constitute the third order, that of those who live byprofit. It is the stock that is employed for the sake of profit, whichputs into motion the greater part of the useful labour of every society. The plans and projects of the employers of stock regulate and direct allthe most important operation of labour, and profit is the end proposedby all those plans and projects. But the rate of profit does not, likerent and wages, rise with the prosperity, and fall with the declensionof the society. On the contrary, it is naturally low in rich, and highin poor countries, and it is always highest in the countries which aregoing fastest to ruin. The interest of this third order, therefore, hasnot the same connexion with the general interest of the society, as thatof the other two. Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, andwho by their wealth draw to themselves the greatest share of the publicconsideration. As during their whole lives they are engaged in plans andprojects, they have frequently more acuteness of understanding thanthe greater part of country gentlemen. As their thoughts, however, arecommonly exercised rather about the interest of their own particularbranch of business. Than about that of the society, their judgment, evenwhen given with the greatest candour (which it has not been upon everyoccasion), is much more to be depended upon with regard to the formerof those two objects, than with regard to the latter. Their superiorityover the country gentleman is, not so much in their knowledge of thepublic interest, as in their having a better knowledge of their owninterest than he has of his. It is by this superior knowledge of theirown interest that they have frequently imposed upon his generosity, andpersuaded him to give up both his own interest and that of the public, from a very simple but honest conviction, that their interest, andnot his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always insome respects different from, and even opposite to, that of the public. To widen the market, and to narrow the competition, is always theinterest of the dealers. To widen the market may frequently be agreeableenough to the interest of the public; but to narrow the competitionmust always be against it, and can only serve to enable the dealers, byraising their profits above what they naturally would be, to levy, fortheir own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes fromthis order, ought always to be listened to with great precaution, andought never to be adopted till after having been long and carefullyexamined, not only with the most scrupulous, but with the mostsuspicious attention. It comes from an order of men, whose interest isnever exactly the same with that of the public, who have generally aninterest to deceive and even to oppress the public, and who accordinglyhave, upon many occasions, both deceived and oppressed it. 

# PRICES OF WHEAT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

INTRODUCTION. 

In that rude state of society, in which there is no division of labour, in which exchanges are seldom made, and in which every man providesevery thing for himself, it is not necessary that any stock should beaccumulated, or stored up before-hand, in order to carry on the businessof the society. Every man endeavours to supply, by his own industry, hisown occasional wants, as they occur. When he is hungry, he goes to theforest to hunt; when his coat is worn out, he clothes himself with theskin of the first large animal he kills: and when his hut begins to goto ruin, 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 thoroughly introduced, theproduce of a man's own labour can supply but a very small part of hisoccasional wants. The far greater part of them are supplied by theproduce of other men's labour, which he purchases with the produce, or, what is the same thing, with the price of the produce, of his own. Butthis purchase cannot be made till such time as the produce of hisown labour has not only been completed, but sold. A stock of goods ofdifferent kinds, therefore, must be stored up somewhere, sufficientto maintain him, and to supply him with the materials and tools of hiswork, till such time at least as both these events can be brought about. A weaver cannot apply himself entirely to his peculiar business, unlessthere is before-hand stored up somewhere, either in his own possession, or in that of some other person, a stock sufficient to maintain him, andto supply him with the materials and tools of his work, till he has notonly completed, but sold his web. This accumulation must evidentlybe previous to his applying his industry for so long a time to such apeculiar business. 

As the accumulation of stock must, in the nature of things, be previousto the division of labour, so labour can be more and more subdivided inproportion only as stock is previously more and more accumulated. Thequantity of materials which the same number of people can work up, increases in a great proportion as labour comes to be more and moresubdivided; and as the operations of each workman are gradually reducedto a greater degree of simplicity, a variety of new machines come tobe invented 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 of provisions, and a greater stock of materials and tools than what would have beennecessary in a ruder state of things, must be accumulated before-hand. But the number of workmen in every branch of business generallyincreases with the division of labour in that branch; or rather it isthe increase of their number which enables them to class and subdividethemselves in this manner. 

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

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

In the following book, I have endeavoured to explain the nature ofstock, the effects of its accumulation into capital of different kinds, and the effects of the different employments of those capitals. Thisbook is divided into five chapters. In the first chapter, I haveendeavoured to shew what are the different parts or branches into whichthe stock, either of an individual, or of a great society, naturallydivides itself. In the second, I have endeavoured to explain the natureand operation of money, considered as a particular branch of the generalstock of the society. The stock which is accumulated into a capital, mayeither be employed by the person to whom it belongs, or it may belent to some other person. In the third and fourth chapters, I haveendeavoured to examine the manner in which it operates in both thesesituations. The fifth and last chapter treats of the different effectswhich the different employments of capital immediately produce upon thequantity, both of national industry, and of the annual produce of landand labour. 

CHAPTER I. OF THE DIVISION OF STOCK. 

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

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

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

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

Secondly, it may be employed in the improvement of land, in the purchaseof useful machines and instruments of trade, or in such like things asyield a revenue or profit without changing masters, or circulating anyfurther. Such capitals, therefore, may very properly be called fixedcapitals. 

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

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

Some part of the capital of every master artificer or manufacturer mustbe fixed in the instruments of his trade. This part, however, is verysmall in some, and very great in others, A master tailor requires noother instruments of trade but a parcel of needles. Those of the mastershoemaker are a little, though but a very little, more expensive. Thoseof the weaver rise a good deal above those of the shoemaker. The fargreater part of the capital of all such master artificers, however, is circulated either in the wages of their workmen, or in the price oftheir materials, and repaid, with a profit, by the price of the work. 

In other works a much greater fixed capital is required. In a greatiron-work, for example, the furnace for melting the ore, the forge, theslit-mill, are instruments of trade which cannot be erected withouta very great expense. In coal works, and mines of every kind, themachinery necessary, both for drawing out the water, and for otherpurposes, 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 inthe wages 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 value ofhis labouring cattle is a fixed capital, in the same manner as thatof the instruments of husbandry; their maintenance is a circulatingcapital, in the same manner as that of the labouring servants. Thefarmer makes his profit by keeping the labouring cattle, and by partingwith their maintenance. Both the price and the maintenance of the cattlewhich are bought in and fattened, not for labour, but for sale, are acirculating capital. The farmer makes his profit by parting with them. A flock of sheep or a herd of cattle, that, in a breeding country, is brought in neither for labour nor for sale, but in order to make aprofit by their wool, by their milk, and by their increase, is a fixedcapital. The profit is made by keeping them. Their maintenance is acirculating capital. The profit is made by parting with it; and it comesback with both its own profit and the profit upon the whole price of thecattle, in the price of the wool, the milk, and the increase. The wholevalue of the seed, too, is properly a fixed capital. Though it goesbackwards and forwards between the ground and the granary, it neverchanges masters, and therefore does not properly circulate. The farmermakes his profit, not by its sale, but by its increase. 

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

The first is that portion which is reserved for immediate consumption, and of which the characteristic is, that it affords no revenue orprofit. It consists in the stock of food, clothes, household furniture, etc. Which have been purchased by their proper consumers, but which arenot yet entirely consumed. The whole stock of mere dwelling-houses, too, subsisting at anyone time in the country, make a part of thisfirst portion. The stock that is laid out in a house, if it is to be thedwelling-house of the proprietor, ceases from that moment to serve inthe function of a capital, or to afford any revenue to its owner. Adwelling-house, as such, contributes nothing to the revenue of itsinhabitant; and though it is, no doubt, extremely useful to him, itis as his clothes and household furniture are useful to him, which, however, make a part of his expense, and not of his revenue. If it isto be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue, whichhe derives, either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby serve inthe function of a capital to him, it cannot yield any to the public, norserve in the function of a capital to it, and the revenue of the wholebody of the people can never be in the smallest degree increased by it. Clothes and household furniture, in the same manner, sometimes yield arevenue, and thereby serve in the function of a capital to particularpersons. In countries where masquerades are common, it is a trade tolet out masquerade dresses for a night. Upholsterers frequently letfurniture by the month or by the year. Undertakers let the furniture offunerals by the day and by the week. Many people let furnished houses, and get a rent, not only for the use of the house, but for that of thefurniture. The revenue, however, which is derived from such things, mustalways be ultimately drawn from some other source of revenue. Of allparts of the stock, either of an individual or of a society, reservedfor immediate consumption, what is laid out in houses is most slowlyconsumed. A stock of clothes may last several years; a stock offurniture half a century or a century; but a stock of houses, well builtand properly taken care of, may last many centuries. Though the periodof their total consumption, however, is more distant, they are still asreally a stock reserved for immediate consumption as either clothes orhousehold furniture. 

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, which facilitateand abridge labour. 

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

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

Fourthly, of the acquired and useful abilities of all the inhabitantsand members of the society. The acquisition of such talents, bythe maintenance of the acquirer during his education, study, orapprenticeship, always costs a real expense, which is a capital fixedand realized, as it were, in his person. Those talents, as they make apart of his fortune, so do they likewise that of the society to whichhe belongs. The improved dexterity of a workman may be considered inthe same light as a machine or instrument of trade which facilitates andabridges labour, and which, though it costs a certain expense, repaysthat expense with a profit. 

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

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

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

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

Fourthly, and lastly, of the work which is made up and completed, butwhich is still in the hands of the merchant and manufacturer, and notyet disposed of or distributed to the proper consumers; such as thefinished work which we frequently find ready made in the shops ofthe smith, the cabinet-maker, the goldsmith, the jeweller, thechina-merchant, etc. The circulating capital consists, in this manner, of the provisions, materials, and finished work of all kinds that arein the hands of their respective dealers, and of the money that isnecessary for circulating and distributing them to those who are finallyto use or to consume them. 

Of these four parts, three--provisions, materials, and finishedwork, are either annually or in a longer or shorter period, regularlywithdrawn from it, and placed either in the fixed capital, or in thestock reserved for immediate consumption. 

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

No fixed capital can yield any revenue but by means of a circulatingcapital The most useful machines and instruments of trade will producenothing, without the circulating capital, which affords the materialsthey are employed upon, and the maintenance of the workmen whoemploy them. Land, however improved, will yield no revenue without acirculating capital, which maintains the labourers who cultivate andcollect its produce. 

To maintain and augment the stock which maybe reserved for immediateconsumption, is the sole end and purpose both of the fixed andcirculating capitals. It is this stock which feeds, clothes, and lodgesthe people. Their riches or poverty depend upon the abundant or sparingsupplies which those two capitals can afford to the stock reserved forimmediate consumption. 

So great a part of the circulating capital being continually withdrawnfrom it, in order to be placed in the other two branches of the generalstock of the society, it must in its turn require continual supplieswithout which it would soon cease to exist. These supplies areprincipally drawn from three sources; the produce of land, of mines, and of fisheries. These afford continual supplies of provisions andmaterials, of which part is afterwards wrought up into finished workand by which are replaced the provisions, materials, and finished work, continually withdrawn from the circulating capital. From mines, too, isdrawn what is necessary for maintaining and augmenting that part of itwhich consists in money. For though, in the ordinary course of business, this part is not, like the other three, necessarily withdrawn from it, in order to be placed in the other two branches of the general stock ofthe society, it must, however, like all other things, be wasted andworn out at last, and sometimes, too, be either lost or sent abroad, and must, therefore, require continual, though no doubt much smallersupplies. 

Lands, mines, and fisheries, require all both a fixed and circulatingcapital to cultivate them; and their produce replaces, with a profit notonly those capitals, but all the others in the society. Thus the farmerannually replaces to the manufacturer the provisions which he hadconsumed, and the materials which he had wrought up the year before; andthe manufacturer replaces to the farmer the finished work which he hadwasted and worn out in the same time. This is the real exchange thatis annually made between those two orders of people, though it seldomhappens that the rude produce of the one, and the manufactured produceof the other, are directly bartered for one another; because it seldomhappens that the farmer sells his corn and his cattle, his flax and hiswool, to the very same person of whom he chuses to purchase theclothes, furniture, and instruments of trade, which he wants. He sells, therefore, his rude produce for money, with which he can purchase, wherever it is to be had, the manufactured produce he has occasion for. Land even replaces, in part at least, the capitals with which fisheriesand mines are cultivated. It is the produce of land which draws the fishfrom the waters; and it is the produce of the surface of the earth whichextracts the minerals from its bowels. 

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

In all countries where there is a tolerable security, every man ofcommon understanding will endeavour to employ whatever stock he cancommand, in procuring either present enjoyment or future profit. If itis employed in procuring present enjoyment, it is a stock reserved forimmediate consumption. If it is employed in procuring future profit, itmust procure this profit either by staying with him, or by going fromhim. In the one case it is a fixed, in the other it is a circulatingcapital. A man must be perfectly crazy, who, where there is a tolerablesecurity, does not employ all the stock which he commands, whether itbe his own, or borrowed of other people, in some one or other of thosethree ways. 

In those unfortunate countries, indeed, where men are continually afraidof the violence of their superiors, they frequently bury or conceal agreat part of their stock, in order to have it always at hand to carrywith them to some place of safety, in case of their being threatenedwith any of those disasters to which they consider themselves at alltimes exposed. This is said to be a common practice in Turkey, inIndostan, and, I believe, in most other governments of Asia. It seems tohave been a common practice among our ancestors during the violence ofthe feudal government. Treasure-trove was, in these times, consideredas no contemptible part of the revenue of the greatest sovereigns inEurope. It consisted in such treasure as was found concealed in theearth, and to which no particular person could prove any right. This wasregarded, in those times, as so important an object, that it was alwaysconsidered as belonging to the sovereign, and neither to the finder norto the proprietor of the land, unless the right to it had been conveyedto the latter by an express clause in his charter. It was put upon thesame footing with gold and silver mines, which, without a special clausein the charter, were never supposed to be comprehended in the generalgrant of the lands, though mines of lead, copper, tin, and coal were, asthings of smaller consequence. 

CHAPTER II. OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF THE GENERALSTOCK OF THE SOCIETY, OR OF THE EXPENSE OF MAINTAINING THE NATIONALCAPITAL. 

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

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

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

The gross rent of a private estate comprehends whatever is paid bythe farmer; the neat rent, what remains free to the landlord, afterdeducting the expense of management, of repairs, and all other necessarycharges; or what, without hurting his estate, he can afford to placein his stock reserved for immediate consumption, or to spend upon histable, equipage, the ornaments of his house and furniture, his privateenjoyments and amusements. His real wealth is in proportion, not to hisgross, but to his neat rent. 

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

The whole expense of maintaining the fixed capital must evidently beexcluded from the neat revenue of the society. Neither the materialsnecessary for supporting their useful machines and instruments of trade, their profitable buildings, etc. Nor the produce of the labour necessaryfor fashioning those materials into the proper form, can ever make anypart of it. The price of that labour may indeed make a part of it; asthe workmen so employed may place the whole value of their wages intheir stock reserved for immediate consumption. But in other sorts oflabour, both the price and the produce go to this stock; the priceto that of the workmen, the produce to that of other people, whosesubsistence, conveniencies, and amusements, are augmented by the labourof those workmen. 

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

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

But though the whole expense of maintaining the fixed capital is thusnecessarily excluded from the neat revenue of the society, it is not thesame case with that of maintaining the circulating capital. Of thefour parts of which this latter capital is composed, money, provisions, materials, and finished work, the three last, it has already beenobserved, are regularly withdrawn from it, and placed either in thefixed capital of the society, or in their stock reserved for immediateconsumption. Whatever portion of those consumable goods is not employedin maintaining the former, goes all to the latter, and makes a part ofthe neat revenue of the society. The maintenance of those three parts ofthe circulating capital, therefore, withdraws no portion of the annualproduce from the neat revenue of the society, besides what is necessaryfor maintaining the fixed capital. 

The circulating capital of a society is in this respect different fromthat of an individual. That of an individual is totally excluded frommaking any part of his neat revenue, which must consist altogether inhis profits. But though the circulating capital of every individualmakes a part of that of the society to which he belongs, it is not uponthat account totally excluded from making a part likewise of their neatrevenue. Though the whole goods in a merchant's shop must by no means beplaced in his own stock reserved for immediate consumption, they may inthat of other people, who, from a revenue derived from other funds, mayregularly replace their value to him, together with its profits, withoutoccasioning any diminution either of his capital or of theirs. 

Money, therefore, is the only part of the circulating capital of asociety, of which the maintenance can occasion any diminution in theirneat 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 acertain expense, first to erect them, and afterwards to supportthem, both which expenses, though they make a part of the gross, aredeductions from the neat revenue of the society; so the stock of moneywhich circulates in any country must require a certain expense, firstto collect it, and afterwards to support it; both which expenses, thoughthey make a part of the gross, are, in the same manner, deductions fromthe neat revenue of the society. A certain quantity of very valuablematerials, gold and silver, and of very curious labour, insteadof augmenting the stock reserved for immediate consumption, thesubsistence, conveniencies, and amusements of individuals, is employedin supporting that great but expensive instrument of commerce, bymeans of which every individual in the society has his subsistence, conveniencies, and amusements, regularly distributed to him in theirproper proportions. 

Secondly, as the machines and instruments of trade, etc. Which composethe fixed capital either of an individual or of a society, make no parteither of the gross or of the neat revenue of either; so money, by meansof which the whole revenue of the society is regularly distributed amongall its different members, makes itself no part of that revenue. Thegreat wheel of circulation is altogether different from the goods whichare circulated by means of it. The revenue of the society consistsaltogether in those goods, and not in the wheel which circulates them. In computing either the gross or the neat revenue of any society, wemust always, from the whole annual circulation of money and goods, deduct the 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 propositionappear either doubtful or paradoxical. When properly explained andunderstood, it is almost self-evident. 

When we talk of any particular sum of money, we sometimes mean nothingbut the metal pieces of which it is composed, and sometimes we includein our meaning some obscure reference to the goods which can be had inexchange for it, or to the power of purchasing which the possession ofit conveys. Thus, when we say that the circulating money of England hasbeen computed at eighteen millions, we mean only to express the amountof the metal pieces, which some writers have computed, or rather havesupposed, to circulate in that country. But when we say that a man isworth fifty or a hundred pounds a-year, we mean commonly to express, notonly the amount of the metal pieces which are annually paid to him, butthe value of the goods which he can annually purchase or consume; wemean commonly to ascertain what is or ought to be his way of living, orthe quantity and quality of the necessaries and conveniencies of life inwhich he can with propriety indulge himself. 

When, by any particular sum of money, we mean not only to express theamount of the metal pieces of which it is composed, but to include inits signification some obscure reference to the goods which can behad in exchange for them, the wealth or revenue which it in this casedenotes, is equal only to one of the two values which are thus intimatedsomewhat ambiguously by the same word, and to the latter more properlythan to the former, to the money's worth more properly than to themoney. 

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

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

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

Though we frequently, therefore, express a person's revenue by the metalpieces which are annually paid to him, it is because the amount of thosepieces regulates the extent of his power of purchasing, or the value ofthe goods which he can annually afford to consume. We still consider hisrevenue as consisting in this power of purchasing or consuming, and notin the pieces which convey it. 

But if this is sufficiently evident, even with regard to an individual, it is still more so with regard to a society. The amount of the metalpieces which are annually paid to an individual, is often preciselyequal to his revenue, and is upon that account the shortest and bestexpression of its value. But the amount of the metal pieces whichcirculate in a society, can never be equal to the revenue of all itsmembers. As the same guinea which pays the weekly pension of one manto-day, may pay that of another to-morrow, and that of a third the daythereafter, the amount of the metal pieces which annually circulatein any country, must always be of much less value than the whole moneypensions annually paid with them. But the power of purchasing, or thegoods which can successively be bought with the whole of those moneypensions, as they are successively paid, must always be precisely of thesame value with those pensions; as must likewise be the revenue of thedifferent persons to whom they are paid. That revenue, therefore, cannotconsist in those metal pieces, of which the amount is so much inferiorto its value, but in the power of purchasing, in the goods which cansuccessively be bought with them as they circulate from hand to hand. 

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

Thirdly, and lastly, the machines and instruments of trade, etc. Whichcompose the fixed capital, bear this further resemblance to that part ofthe circulating capital which consists in money; that as every savingin the expense of erecting and supporting those machines, which doesnot diminish the introductive powers of labour, is an improvement ofthe neat revenue of the society; so every saving in the expense ofcollecting and supporting that part of the circulating capital whichconsists in money is an improvement 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 supporting thefixed capital is an improvement of the neat revenue of the society. Thewhole capital of the undertaker of every work is necessarily dividedbetween his fixed and his circulating capital. While his whole capitalremains the same, the smaller the one part, the greater must necessarilybe the other. It is the circulating capital which furnishes thematerials and wages of labour, and puts industry into motion. Everysaving, therefore, in the expense of maintaining the fixed capital, which does not diminish the productive powers of labour, must increasethe fund which puts industry into motion, and consequently the annualproduce of land and labour, the real revenue of every society. 

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

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

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

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

Let us suppose, for example, that the whole circulating money of someparticular country amounted, at a particular time, to one millionsterling, that sum being then sufficient for circulating the wholeannual produce of their land and labour; let us suppose, too, that sometime thereafter, different banks and bankers issued promissory notespayable to the bearer, to the extent of one million, reserving in theirdifferent coffers two hundred thousand pounds for answering occasionaldemands; there would remain, therefore, in circulation, eight hundredthousand pounds in gold and silver, and a million of bank notes, oreighteen hundred thousand pounds of paper and money together. But theannual produce of the land and labour of the country had before requiredonly one million to circulate and distribute it to its proper consumers, and that annual produce cannot be immediately augmented by thoseoperations of banking. One million, therefore, will be sufficient tocirculate it after them. The goods to be bought and sold being preciselythe same as before, the same quantity of money will be sufficient forbuying and selling them. The channel of circulation, if I may be allowedsuch an expression, will remain precisely the same as before. Onemillion we have supposed sufficient to fill that channel. Whatever, therefore, is poured into it beyond this sum, cannot run into it, butmust overflow. One million eight hundred thousand pounds are poured intoit. Eight hundred thousand pounds, therefore, must overflow, that sumbeing over and above what can be employed in the circulation of thecountry. But though this sum cannot be employed at home, it is toovaluable to be allowed to lie idle. It will, therefore, be sent abroad, in order to seek that profitable employment which it cannot find athome. But the paper cannot go abroad; because at a distance from thebanks which issue it, and from the country in which payment of it canbe exacted by law, it will not be received in common payments. Gold andsilver, therefore, to the amount of eight hundred thousand pounds, willbe sent abroad, and the channel of home circulation will remain filledwith a million of paper instead of a million of those metals whichfilled it before. 

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

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

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

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

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

That the greater part of the gold and silver which being forced abroadby those operations of banking, is employed in purchasing foreign goodsfor home consumption, is, and must be, employed in purchasing thoseof this second kind, seems not only probable, but almost unavoidable. Though some particular men may sometimes increase their expense veryconsiderably, though their revenue does not increase at all, we maybeassured that no class or order of men ever does so; because, though theprinciples of common prudence do not always govern the conduct of everyindividual, they always influence that of the majority of every class ororder. 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 much increasedby them, though that of a few individuals among them may, and in realitysometimes is. The demand of idle people, therefore, for foreign goods, being the same, or very nearly the same as before, a very small part ofthe money which, being forced abroad by those operations of banking, isemployed in purchasing foreign goods for home consumption, is likely tobe employed in purchasing those for their use. The greater part of itwill naturally be destined for the employment of industry, and not forthe maintenance of idleness. 

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

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

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

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

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

The value of the silver money which circulated in Scotland before theUnion in 1707, and which, immediately after it, was brought into theBank of Scotland, in order to be recoined, amounted to £411, 117: 10: 9sterling. No account has been got of the gold coin; but it appears fromthe ancient accounts of the mint of Scotland, that the value of the goldannually coined somewhat exceeded that of the silver. There were agood many people, too, upon this occasion, who, from a diffidence ofrepayment, did not bring their silver into the Bank of Scotland; andthere was, besides, some English coin, which was not called in. Thewhole value of the gold and silver, therefore, which circulated inScotland before the Union, cannot be estimated at less than a millionsterling. It seems to have constituted almost the whole circulation ofthat country; for though the circulation of the Bank of Scotland, whichhad then no rival, was considerable, it seems to have made but a verysmall part of the whole. In the present times, the whole circulation ofScotland cannot be estimated at less than two millions, of which thatpart which consists in gold and silver, most probably, does not amountto half a million. But though the circulating gold and silver ofScotland have suffered so great a diminution during this period, itsreal riches and prosperity do not appear to have suffered any. Itsagriculture, manufactures, and trade, on the contrary, the annualproduce of its land and labour, have evidently been augmented. 

It is chiefly by discounting bills of exchange, that is, by advancingmoney upon them before they are due, that the greater part of banks andbankers issue their promissory notes. They deduct always, upon whateversum they advance, the legal interest till the bill shall become due. Thepayment of the bill, when it becomes due, replaces to the bank the valueof what had been advanced, together with a clear profit of the interest. The banker, who advances to the merchant whose bill he discounts, notgold and 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 commonly incirculation. He is thereby enabled to make his clear gain of interest onso much a larger sum. 

The commerce of Scotland, which at present is not very great, wasstill more inconsiderable when the two first banking companies wereestablished; and those companies would have had but little trade, hadthey confined their business to the discounting of bills of exchange. They invented, therefore, another method of issuing their promissorynotes; by granting what they call cash accounts, that is, by givingcredit, to the extent of a certain sum (two or three thousand pounds forexample), to any individual who could procure two persons of undoubtedcredit and good landed estate to become surety for him, that whatevermoney should be advanced to him, within the sum for which the credithad been given, should be repaid upon demand, together with the legalinterest. Credits of this kind are, I believe, commonly granted by banksand bankers in all different parts of the world. But the easy terms uponwhich the Scotch banking companies accept of repayment are, so far as Iknow, peculiar to them, and have perhaps been the principal cause, both of the great trade of those companies, and of the benefit which thecountry has received from it. 

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

By means of those cash accounts, every merchant can, without imprudence, carry on a greater trade than he otherwise could do. If there are twomerchants, one in London and the other in Edinburgh, who employ equalstocks in the same branch of trade, the Edinburgh merchant can, withoutimprudence, carry on a greater trade, and give employment to a greaternumber of people, than the London merchant. The London merchant mustalways keep by him a considerable sum of money, either in his owncoffers, or in those of his banker, who gives him no interest for it, inorder to answer the demands continually coming upon him for payment ofthe goods which he purchases upon credit. Let the ordinary amount ofthis sum be supposed five hundred pounds; the value of the goods in hiswarehouse must always be less, by five hundred pounds, than it wouldhave been, had he not been obliged to keep such a sum unemployed. Let ussuppose that he generally disposes of his whole stock upon hand, or ofgoods to the value of his whole stock upon hand, once in the year. Bybeing obliged to keep so great a sum unemployed, he must sell in a yearfive hundred pounds worth less goods than he might otherwise have done. His annual profits must be less by all that he could have made by thesale of five hundred pounds worth more goods; and the number of peopleemployed in preparing his goods for the market must be less by all thosethat five hundred pounds more stock could have employed. The merchantin Edinburgh, on the other hand, keeps no money unemployed for answeringsuch occasional demands. When they actually come upon him, he satisfiesthem from his cash account with the bank, and gradually replaces thesum borrowed with the money or paper which comes in from the occasionalsales of his goods. With the same stock, therefore, he can, withoutimprudence, have at all times in his warehouse a larger quantity ofgoods than the London merchant; and can thereby both make a greaterprofit himself, and give constant employment to a greater number ofindustrious people who prepare those goods for the market. Hence thegreat benefit which the country has derived from this trade. 

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

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

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

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

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

Let us suppose that all the paper of a particular bank, which thecirculation of the country can easily absorb and employ, amounts exactlyto forty thousand pounds, and that, for answering occasional demands, this bank is obliged to keep at all times in its coffers ten thousandpounds in gold and silver. Should this bank attempt to circulateforty-four thousand pounds, the four thousand pounds which are over andabove what the circulation can easily absorb and employ, will returnupon it almost as fast as they are issued. For answering occasionaldemands, therefore, this bank ought to keep at all times in its coffers, not eleven thousand pounds only, but fourteen thousand pounds. It willthus gain nothing 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 becontinually going out of its coffers as fast as they are brought intothem. 

Had every particular banking company always understood and attendedto its own particular interest, the circulation never could have beenoverstocked with paper money. But every particular banking company hasnot always understood or attended to its own particular interest, andthe circulation has frequently been overstocked with paper money. 

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

The Scotch banks, in consequence of an excess of the same kind, were allobliged to employ constantly agents at London to collect money for them, at an expense which was seldom below one and a half or two per cent. This money was sent down by the waggon, and insured by the carriers atan additional expense of three quarters per cent. Or fifteen shillingson the hundred pounds. Those agents were not always able to replenishthe coffers of their employers so fast as they were emptied. In thiscase, the resource of the banks was, to draw upon their correspondentsin London bills of exchange, to the extent of the sum which they wanted. When those correspondents afterwards drew upon them for the paymentof this sum, together with the interest and commission, some of thosebanks, from the distress into which their excessive circulation hadthrown them, had sometimes no other means of satisfying this draught, but by drawing a second set of bills, either upon the same, or upon someother correspondents in London; and the same sum, or rather bills forthe same sum, would in this manner make sometimes more than two or threejourneys; the debtor bank paying always the interest and commissionupon the whole accumulated sum. Even those Scotch banks which neverdistinguished themselves by their extreme imprudence, were sometimesobliged to employ this ruinous resource. 

The gold coin which was paid out, either by the Bank of England or bythe Scotch banks, in exchange for that part of their paper which wasover and above what could be employed in the circulation of thecountry, being likewise over and above what could be employed in thatcirculation, was sometimes sent abroad in the shape of coin, sometimesmelted down and sent abroad in the shape of bullion, and sometimesmelted down and sold to the Bank of England at the high price of fourpounds an ounce. It was the newest, the heaviest, and the best piecesonly, which were carefully picked out of the whole coin, and either sentabroad or melted down. At home, and while they remained in the shape ofcoin, those heavy pieces were of no more value than the light; but theywere of more value abroad, or when melted down into bullion at home. TheBank of England, notwithstanding their great annual coinage, found, totheir astonishment, that there was every year the same scarcity of coinas there had been the year before; and that, notwithstanding the greatquantity of good and new coin which was every year issued from the bank, the state of the coin, instead of growing better and better, becameevery year worse 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 of goldbullion, in consequence of the continual wearing and clipping of thecoin, the expense of this great annual coinage became, every year, greater and greater. The Bank of England, it is to be observed, bysupplying its own coffers with coin, is indirectly obliged to supply thewhole kingdom, into which coin is continually flowing from those coffersin a great variety of ways. Whatever coin, therefore, was wanted tosupport this excessive circulation both of Scotch and English papermoney, whatever vacuities this excessive circulation occasioned in thenecessary coin 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 England paidvery dearly, not only for its own imprudence, but for the much greaterimprudence of almost all the Scotch banks. 

The over-trading of some bold projectors in both parts of the unitedkingdom, was the original cause of this excessive circulation of papermoney. 

What a bank can with propriety advance to a merchant or undertaker ofany kind, is not either the whole capital with which he trades, or evenany considerable part of that capital; but that part of it only which hewould otherwise be obliged to keep by him unemployed and in ready money, for answering occasional demands. If the paper money which the bankadvances never exceeds this value, it can never exceed the value ofthe gold and silver which would necessarily circulate in the countryif there was no 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 exchange, drawn by areal creditor upon a real debtor, and which, as soon as it becomes due, is really paid by that debtor; it only advances to him a part of thevalue which he would otherwise be obliged to keep by him unemployed andin ready money, for answering occasional demands. The payment of thebill, when it becomes due, replaces to the bank the value of what it hadadvanced, together with the interest. The coffers of the bank, so far asits dealings are confined to such customers, resemble a water-pond, from which, though a stream is continually running out, yet another iscontinually running in, fully equal to that which runs out; so that, without any further care or attention, the pond keeps always equally, orvery near equally full. Little or no expense can ever be necessary forreplenishing the coffers of such a bank. 

A merchant, without over-trading, may frequently have occasion for asum of ready money, even when he has no bills to discount. When abank, besides discounting his bills, advances him likewise, upon suchoccasions, such sums upon his cash account, and accepts of a piece-mealrepayment, as the money comes in from the occasional sale of his goods, upon the easy terms of the banking companies of Scotland; it dispenseshim entirely from the necessity of keeping any part of his stock by himunemployed and in ready money for answering occasional demands. Whensuch demands 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 the courseof some short period (of four, five, six, or eight months, for example), the sum of the repayments which it commonly receives from them, is, oris not, fully equal to that of the advances which it commonly makesto them. If, within the course of such short periods, the sum of therepayments from certain customers is, upon most occasions, fully equalto that of the advances, it may safely continue to deal with suchcustomers. Though the stream which is in this case continually runningout from its coffers may be very large, that which is continuallyrunning into them must be at least equally large, so that, without anyfurther care or attention, those coffers are likely to be always equallyor very near equally full, and scarce ever to require any extraordinaryexpense to replenish them. If, on the contrary, the sum of therepayments from certain other customers, falls commonly very muchshort of the advances which it makes to them, it cannot with any safetycontinue to deal with such customers, at least if they continue to dealwith it in this manner. The stream which is in this case continuallyrunning out from its coffers, is necessarily much larger than that whichis continually running in; so that, unless they are replenished bysome great and continual effort of expense, those coffers must soon beexhausted altogether. 

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

First, by this attention they were enabled to make some tolerablejudgment concerning the thriving or declining circumstances of theirdebtors, without being obliged to look out for any other evidencebesides what their own books afforded them; men being, for the mostpart, either regular or irregular in their repayments, according astheir circumstances are either thriving or declining. A private man wholends out his money to perhaps half a dozen or a dozen of debtors, may, either by himself or his agents, observe and inquire both constantly andcarefully into the conduct and situation of each of them. But a bankingcompany, which lends money to perhaps five hundred different people, and of which the attention is continually occupied by objects of a verydifferent kind, can have no regular information concerning the conductand circumstances of the greater part of its debtors, beyond what itsown books afford it. In requiring frequent and regular repayments fromall their customers, the banking companies of Scotland had probably thisadvantage in view. 

Secondly, by this attention they secured themselves from the possibilityof issuing more paper money than what the circulation of the countrycould easily absorb and employ. When they observed, that within moderateperiods of time, the repayments of a particular customer were, upon mostoccasions, fully equal to the advances which they had made to him, theymight be assured that the paper money which they had advanced to himhad not, at any time, exceeded the quantity of gold and silver whichhe would otherwise have been obliged to keep by him for answeringoccasional demands; and that, consequently, the paper money, which theyhad circulated by his means, had not at any time exceeded the quantityof gold and silver which would have circulated in the country, hadthere been no paper money. The frequency, regularity, and amount ofhis repayments, would sufficiently demonstrate that the amount of theiradvances had at no time exceeded that part of his capital which he wouldotherwise have been obliged to keep by him unemployed, and in readymoney, for answering occasional demands; that is, for the purpose ofkeeping 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, whetherpaper or coin, and continually going from him in the same shape. If theadvances of the bank had commonly exceeded this part of his capital, theordinary amount of his repayments could not, within moderate periodsof time, have equalled the ordinary amount of its advances. The streamwhich, by means of his dealings, was continually running into thecoffers of the bank, could not have been equal to the stream which, bymeans of the same dealings was continually running out. The advances ofthe bank paper, by exceeding the quantity of gold and silver which, hadthere been no such advances, he would have been obliged to keep by himfor answering occasional demands, might soon come to exceed the wholequantity of gold and silver which ( the commerce being supposed the same) would have circulated in the country, had there been no paper money;and, consequently, to exceed the quantity which the circulation of thecountry could easily absorb and employ; and the excess of this papermoney would immediately have returned upon the bank, in order to beexchanged for gold and silver. This second advantage, though equallyreal, was not, perhaps, so well understood by all the different bankingcompanies in Scotland as the first. 

When, partly by the conveniency of discounting bills, and partly by thatof cash accounts, the creditable traders of any country can bedispensed from the necessity of keeping any part of their stock by themunemployed, and in ready money, for answering occasional demands, theycan reasonably expect no farther assistance from hanks and bankers, who, when they have gone thus far, cannot, consistently with their owninterest and safety, go farther. A bank cannot, consistently with itsown interest, advance to a trader the whole, or even the greater partof the circulating capital with which he trades; because, though thatcapital is continually returning to him in the shape of money, and goingfrom him in the same shape, yet the whole of the returns is too distantfrom the whole of the outgoings, and the sum of his repayments could notequal the sum of his advances within such moderate periods of timeas suit the conveniency of a bank. Still less could a bank afford toadvance him any considerable part of his fixed capital; of the capitalwhich the undertaker of an iron forge, for example, employs in erectinghis forge and smelting-houses, his work-houses, and warehouses, the dwelling-houses of his workmen, etc. ; of the capital which theundertaker of a mine employs in sinking his shafts, in erecting enginesfor drawing out the water, in making roads and waggon-ways, etc. ; ofthe capital which the person who undertakes to improve land employsin clearing, draining, inclosing, manuring, and ploughing waste anduncultivated fields; in building farmhouses, with all their necessaryappendages of stables, granaries, etc. The returns of the fixed capitalare, in almost all cases, much slower than those of the circulatingcapital: and such expenses, even when laid out with the greatestprudence and judgment, very seldom return to the undertaker till aftera period of many years, a period by far too distant to suit theconveniency of a bank. Traders and other undertakers may, no doubt withgreat propriety, carry on a very considerable part of their projectswith borrowed money. In justice to their creditors, however, their owncapital ought in this case to be sufficient to insure, if I may say so, the capital of those creditors; or to render it extremely improbablethat those creditors should incur any loss, even though the successof the project should fall very much short of the expectation of theprojectors. Even with this precaution, too, the money which is borrowed, and which it is meant should not be repaid till after a period ofseveral years, ought not to be borrowed of a bank, but ought to beborrowed upon bond or mortgage, of such private people as proposeto live upon the interest of their money, without taking the troublethemselves to employ the capital, and who are, upon that account, willing to lend that capital to such people of good credit as are likelyto keep it for several years. A bank, indeed, which lends its moneywithout the expense of stamped paper, or of attorneys' fees for drawingbonds and mortgages, and which accepts of repayment upon the easyterms of the banking companies of Scotland, would, no doubt, be a veryconvenient creditor to such traders and undertakers. But such tradersand undertakers would surely be most inconvenient debtors to such abank. 

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

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

The customs of merchants, which were established when the barbarous lawsof Europe did not enforce the performance of their contracts, and which, during the course of the two last centuries, have been adopted into thelaws of all European nations, have given such extraordinary privilegesto bills of exchange, that money is more readily advanced upon themthan upon any other species of obligation; especially when they aremade payable within so short a period as two or three months after theirdate. If, when the bill becomes due, the acceptor does not pay it assoon as it is presented, he becomes from that moment a bankrupt. Thebill is protested, and returns upon the drawer, who, if he does notimmediately pay it, becomes likewise a bankrupt. If, before it came tothe person who presents it to the acceptor for payment, it had passedthrough the hands of several other persons, who had successivelyadvanced to one another the contents of it, either in money or goods, and who, to express that each of them had in his turn received thosecontents, had all of them in their order indorsed, that is, writtentheir names upon the back of the bill; each indorser becomes in his turnliable to the owner of the bill for those contents, and, if he fails topay, he becomes too, from that moment, a bankrupt. Though the drawer, acceptor, and indorsers of the bill, should all of them be personsof doubtful credit; yet, still the shortness of the date gives somesecurity to the owner of the bill. Though all of them may be very likelyto become bankrupts, it is a chance if they all become so in so shorta time. The house is crazy, says a weary traveller to himself, and willnot stand very long; but it is a chance if it falls to-night, and I willventure, therefore, to sleep in it to-night. 

The trader A in Edinburgh, we shall suppose, draws a bill upon B inLondon, payable two months after date. In reality B in London owesnothing to A in Edinburgh; but he agrees to accept of A 's bill, uponcondition, that before the term of payment he shall redraw upon A inEdinburgh for the same sum, together with the interest and a commission, another bill, payable likewise two months after date. B accordingly, before the expiration of the first two months, redraws this bill upon Ain Edinburgh; who, again before the expiration of the second two months, draws a second bill upon B in London, payable likewise two months afterdate; and before the expiration of the third two months, B in Londonredraws upon A in Edinburgh another bill payable also two months afterdate. This practice has sometimes gone on, not only for several months, but for several years together, the bill always returning upon A inEdinburgh with the accumulated interest and commission of all the formerbills. The interest was five per cent. In the year, and the commissionwas never less than one half per cent. On each draught. This commissionbeing repeated more than six times in the year, whatever money A mightraise by this expedient might necessarily have cost him something morethan eight per cent. In the year and sometimes a great deal more, wheneither the price of the commission happened to rise, or when he wasobliged to pay compound interest upon the interest and commission offormer bills. This practice was called raising money by circulation. 

In a country where the ordinary profits of stock, in the greater part ofmercantile projects, are supposed to run between six and ten per cent. It must have been a very fortunate speculation, of which the returnscould not only repay the enormous expense at which the money was thusborrowed for carrying it on, but afford, besides, a good surplus profitto the projector. Many vast and extensive projects, however, wereundertaken, and for several years carried on, without any other fundto support them besides what was raised at this enormous expense. Theprojectors, no doubt, had in their golden dreams the most distinctvision of this great profit. Upon their awakening, however, either atthe end of their projects, or when they were no longer able to carrythem on, they very seldom, I believe, had the good fortune to find it. 

{The method described in the text was by no means either the most commonor the most expensive one in which those adventurers sometimes raisedmoney by circulation. It frequently happened, that A in Edinburgh wouldenable B in London to pay the first bill of exchange, by drawing, a fewdays before it became due, a second bill at three months date upon thesame B in London. This bill, being payable to his own order, A sold inEdinburgh at par; and with its contents purchased bills upon London, payable at sight to the order of B, to whom he sent them by the post. Towards the end of the late war, the exchange between Edinburgh andLondon was frequently three per cent. Against Edinburgh, and those billsat sight must frequently have cost A that premium. This transaction, therefore, being repeated at least four times in the year, and beingloaded with a commission of at least one half per cent. Upon eachrepetition, must at that period have cost A, at least, fourteen percent. In the year. At other times A would enable to discharge the firstbill of exchange, by drawing, a few days before it became due, a secondbill at two months date, not upon B, but upon some third person, C, forexample, in London. This other bill was made payable to the order ofB, who, upon its being accepted by C, discounted it with some banker inLondon; and A enabled C to discharge it, by drawing, a few day's beforeit became due, a third bill likewise at two months date, sometimesupon his first correspondent B, and sometimes upon some fourth or fifthperson, D or E, for example. This third bill was made payable to theorder of C, who, as soon as it was accepted, discounted it in the samemanner with some banker in London. Such operations being repeated atleast six times in the year, and being loaded with a commission of atleast one half per cent. Upon each repetition, together with the legalinterest of five per cent. This method of raising money, in the samemanner as that described in the text, must have cost A something morethan eight per cent. By saving, however, the exchange between Edinburghand London, it was less expensive than that mentioned in the foregoingpart of this note; but then it required an established credit with morehouses than one in London, an advantage which many of these adventurerscould not always find it easy to procure. }

The bills which A in Edinburgh drew upon B in London, he regularlydiscounted two months before they were due, with some bank or banker inEdinburgh; and the bills which B in London redrew upon A in Edinburgh, he as regularly discounted, either with the Bank of England, or withsome other banker in London. Whatever was advanced upon such circulatingbills was in Edinburgh advanced in the paper of the Scotch banks; and inLondon, when they were discounted at the Bank of England in the paper ofthat bank. Though the bills upon which this paper had been advanced wereall of them repaid in their turn as soon as they became due, yet thevalue which had been really advanced upon the first bill was neverreally returned to the banks which advanced it; because, before eachbill became due, another bill was always drawn to somewhat a greateramount than the bill which was soon to be paid: and the discounting ofthis other bill was essentially necessary towards the payment of thatwhich was soon to be due. This payment, therefore, was altogetherfictitious. The stream which, by means of those circulating bills ofexchange, had once been made to run out from the coffers of the banks, was never replaced by any stream which really ran into them. 

The paper which was issued upon those circulating bills of exchangeamounted, upon many occasions, to the whole fund destined for carryingon some vast and extensive project of agriculture, commerce, ormanufactures; and not merely to that part of it which, had there beenno paper money, the projector would have been obliged to keep by himunemployed, and in ready money, for answering occasional demands. Thegreater part of this paper was, consequently, over and above the valueof the gold and silver which would have circulated in the country, hadthere been no paper money. It was over and above, therefore, what thecirculation of the country could easily absorb and employ, and upon thataccount, immediately returned upon the banks, in order to be exchangedfor gold and silver, which they were to find as they could. It was acapital which those projectors had very artfully contrived to draw fromthose banks, not only without their knowledge or deliberate consent, butfor some time, perhaps, without their having the most distant suspicionthat they had really advanced it. 

When two people, who are continually drawing and redrawing upon oneanother, discount their bills always with the same banker, he mustimmediately discover what they are about, and see clearly that they aretrading, not with any capital of their own, but with the capital whichhe advances to them. But this discovery is not altogether so easy whenthey discount their bills sometimes with one banker, and sometimes withanother, and when the two same persons do not constantly draw and redrawupon one another, but occasionally run the round of a great circle ofprojectors, who find it for their interest to assist one another inthis method of raising money and to render it, upon that account, asdifficult as possible to distinguish between a real and a fictitiousbill of exchange, between a bill drawn by a real creditor upon a realdebtor, and a bill for which there was properly no real creditor but thebank which discounted it, nor any real debtor but the projector who madeuse of the money. When a banker had even made this discovery, hemight sometimes make it too late, and might find that he had alreadydiscounted the bills of those projectors to so great an extent, that, by refusing to discount any more, he would necessarily make them allbankrupts; and thus by ruining them, might perhaps ruin himself. For hisown interest and safety, therefore, he might find it necessary, in thisvery perilous situation, to go on for some time, endeavouring, however, to withdraw gradually, and, upon that account, making every day greaterand greater difficulties about discounting, in order to force theseprojectors by degrees to have recourse, either to other bankers, or toother methods of raising money: so as that he himself might, as soon aspossible, get out of the circle. The difficulties, accordingly, whichthe Bank of England, which the principal bankers in London, and whicheven the more prudent Scotch banks began, after a certain time, and whenall of them 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 of thebanks was, no doubt, the immediate occasion, they called the distress ofthe country; and this distress of the country, they said, was altogetherowing to the ignorance, pusillanimity, and bad conduct of thebanks, which did not give a sufficiently liberal aid to the spiritedundertakings of those who exerted themselves in order to beautify, improve, and enrich the country. It was the duty of the banks, theyseemed to think, to lend for as long a time, and to as great an extent, as they might wish to borrow. The banks, however, by refusing in thismanner to give more credit to those to whom they had already given agreat deal too much, took the only method by which it was now possibleto save either their own credit, or the public credit of the country. 

In the midst of this clamour and distress, a new bank was establishedin Scotland, for the express purpose of relieving the distress of thecountry. The design was generous; but the execution was imprudent, andthe nature and causes of the distress which it meant to relieve, werenot, perhaps, well understood. This bank was more liberal than any otherhad ever been, both in granting cash-accounts, and in discounting billsof exchange. With regard to the latter, it seems to have made scarce anydistinction between real and circulating bills, but to have discountedall equally. It was the avowed principle of this bank to advance uponany reasonable security, the whole capital which was to be employed inthose improvements of which the returns are the most slow and distant, such as the improvements of land. To promote such improvements was evensaid to be the chief of the public-spirited purposes for which itwas instituted. By its liberality in granting cash-accounts, and indiscounting bills of exchange, it, no doubt, issued great quantities ofits bank notes. But those bank notes being, the greater part of them, over and above what the circulation of the country could easily absorband employ, 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 two differentsubscriptions, amounted to one hundred and sixty thousand pounds, ofwhich eighty per cent. Only was paid up. This sum ought to havebeen paid in at several different instalments. A great part of theproprietors, when they paid in their first instalment, opened acash-account with the bank; and the directors, thinking themselvesobliged to treat their own proprietors with the same liberality withwhich they treated all other men, allowed many of them to borrowupon this cash-account what they paid in upon all their subsequentinstalments. Such payments, therefore, only put into one coffer what hadthe moment before been taken out of another. But had the coffers ofthis bank been filled ever so well, its excessive circulation must haveemptied them faster than they could have been replenished by any otherexpedient but the ruinous one of drawing upon London; and when the billbecame due, paying it, together with interest and commission, by anotherdraught upon the same place. Its coffers having been filled so very ill, it is said to have been driven to this resource within a very few monthsafter it began to do business. The estates of the proprietors of thisbank were worth several millions, and, by their subscription to theoriginal bond or contract of the bank, were really pledged for answeringall its engagements. By means of the great credit which so great apledge necessarily gave it, it was, notwithstanding its too liberalconduct, enabled to carry on business for more than two years. Whenit was obliged to stop, it had in the circulation about two hundredthousand pounds in bank notes. In order to support the circulation ofthose notes, which were continually returning upon it as fast as theywere issued, it had been constantly in the practice of drawing billsof exchange upon London, of which the number and value were continuallyincreasing, and, when it stopt, amounted to upwards of six hundredthousand pounds. This bank, therefore, had, in little more than thecourse of two years, advanced to different people upwards of eighthundred thousand pounds at five per cent. Upon the two hundred thousandpounds which it circulated in bank notes, this five per cent. Mightperhaps be considered as a clear gain, without any other deductionbesides the expense of management. But upon upwards of six hundredthousand pounds, for which it was continually drawing bills of exchangeupon London, it was paying, in the way of interest and commission, upwards of eight per cent. And was consequently losing more than threeper cent. Upon more than three fourths of all its dealings. 

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

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

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 of those towhom it had advanced its paper. Experience, I believe, soon convincedthem that this method of raising money was by much too slow to answertheir purpose; and that coffers which originally were so ill filled, andwhich emptied themselves so very fast, could be replenished by no otherexpedient but the ruinous one of drawing bills upon London, and whenthey became due, paying them by other draughts on the same place, withaccumulated interest and commission. But though they had been able bythis method to raise money as fast as they wanted it, yet, instead ofmaking a profit, they must have suffered a loss of every such operation;so that in the long-run they must have ruined themselves as a mercantilecompany, though perhaps not so soon as by the more expensive practiceof drawing and redrawing. They could still have made nothing by theinterest of the paper, which, being over and above what the circulationof the country could absorb and employ, returned upon them in order tobe exchanged for gold and silver, as fast as they issued it; and forthe payment of which they were themselves continually obliged toborrow money. On the contrary, the whole expense of this borrowing, of employing agents to look out for people who had money to lend, of negotiating with those people, and of drawing the proper bond orassignment, must have fallen upon them, and have been so much clear lossupon the balance of their accounts. The project of replenishing theircoffers in this manner may be compared to that of a man who had awater-pond from which a stream was continually running out, and intowhich no stream was continually running, but who proposed to keep italways equally full, by employing a number of people to go continuallywith buckets to a well at some miles distance, in order to bring waterto replenish it. 

But though this operation had proved not only practicable, butprofitable to the bank, as a mercantile company; yet the country couldhave derived no benefit front it, but, on the contrary, must havesuffered a very considerable loss by it. This operation could notaugment, in the smallest degree, the quantity of money to be lent. Itcould only have erected this bank into a sort of general loan office forthe whole country. Those who wanted to borrow must have applied to thisbank, instead of applying to the private persons who had lent it theirmoney. But a bank which lends money, perhaps to five hundred differentpeople, the greater part of whom its directors can know very littleabout, is not likely to be more judicious in the choice of its debtorsthan a private person who lends out his money among a few people whomhe knows, and in whose sober and frugal conduct he thinks he has goodreason to confide. The debtors of such a bank as that whose conduct Ihave been giving some account of were likely, the greater part of them, to be chimerical projectors, the drawers and redrawers of circulatingbills of exchange, who would employ the money in extravagantundertakings, which, with all the assistance that could be given them, they would probably never be able to complete, and which, if they shouldbe completed, would never repay the expense which they had really cost, would never afford a fund capable of maintaining a quantity of labourequal to that which had been employed about them. The sober and frugaldebtors of private persons, on the contrary, would be more likely toemploy the money borrowed in sober undertakings which were proportionedto their capitals, and which, though they might have less of the grandand the marvellous, would have more of the solid and the profitable;which would repay with a large profit whatever had been laid out uponthem, and which would thus afford a fund capable of maintaining a muchgreater quantity of labour than that which had been employed about them. The success of this operation, therefore, without increasing in thesmallest degree the capital of the country, would only have transferreda great part of it from prudent and profitable to imprudent andunprofitable undertakings. 

That the industry of Scotland languished for want of money to employit, was the opinion of the famous Mr Law. By establishing a bank of aparticular kind, which he seems to have imagined might issue paperto the amount of the whole value of all the lands in the country, heproposed to remedy this want of money. The parliament of Scotland, whenhe first proposed his project, did not think proper to adopt it. It wasafterwards adopted, with some variations, by the Duke of Orleans, atthat time regent of France. The idea of the possibility of multiplyingpaper money to almost any extent was the real foundation of what iscalled the Mississippi scheme, the most extravagant project, bothof banking and stock-jobbing, that perhaps the world ever saw. Thedifferent operations of this scheme are explained so fully, so clearly, and with so much order and distinctness, by Mr Du Verney, in hisExamination of the Political Reflections upon commerce and finances ofMr Du Tot, that I shall not give any account of them. The principlesupon which it was founded are explained by Mr Law himself, in adiscourse concerning money and trade, which he published in Scotlandwhen he first proposed his project. The splendid but visionaryideas which are set forth in that and some other works upon the sameprinciples, still continue to make an impression upon many people, andhave, perhaps, in part, contributed to that excess of banking, which hasof late been complained of, both in Scotland and in other places. 

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

In 1697, the bank was allowed to enlarge its capital stock, by aningraftment of £1, 001, 171:10s. Its whole capital stock, therefore, amounted at this time to £2, 201, 171: 10s. This ingraftment 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. {James Postlethwaite's History of the Public Revenue, p. 301. } During the great re-coinage of the silver, which was going on atthis time, the bank had thought proper to discontinue the payment of itsnotes, which necessarily occasioned their discredit. 

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

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

In pursuance of the 3rd George I. C. 8, the bank delivered up twomillions of exchequer Bills to be cancelled. It had at this time, therefore, advanced to government £5, 375, 027:17 10d. In pursuance of the8th George I. C. 21, the bank purchased of the South-sea company, stock to the amount of £4, 000, 000: and in 1722, in consequence ofthe subscriptions which it had taken in for enabling it to make thispurchase, its capital stock was increased by £ 3, 400, 000. At this time, therefore, the bank had advanced to the public £ 9, 375, 027 17s. 10½d. ;and its capital stock amounted only to £ 8, 959, 995:14:8d. It was uponthis occasion that the sum which the bank had advanced to the public, and for which it received interest, began first to exceed its capitalstock, or the sum for which it paid a dividend to the proprietors ofbank stock; or, in other words, that the bank began to have an undividedcapital, over and above its divided one. It has continued to have anundivided capital of the same kind ever since. In 1746, the bank had, upon different occasions, advanced to the public £11, 686, 800, and itsdivided capital had been raised by different calls and subscriptions to£ 10, 780, 000. The state of those two sums has continued to be the sameever since. In pursuance of the 4th of George III. C. 25, the bank agreedto pay to government for the renewal of its charter £110, 000, withoutinterest or re-payment. This sum, therefore did not increase either ofthose two other sums. 

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

The stability of the bank of England is equal to that of the Britishgovernment. All that it has advanced to the public must be lost beforeits creditors can sustain any loss. No other banking company in Englandcan be established by act of parliament, or can consist of more than sixmembers. It acts, not only as an ordinary bank, but as a great engine ofstate. It receives and pays the greater part of the annuities which aredue to the creditors of the public; it circulates exchequer bills; andit advances to government the annual amount of the land and malt taxes, which are frequently not paid up till some years thereafter. In thesedifferent operations, its duty to the public may sometimes have obligedit, without any fault of its directors, to overstock the circulationwith paper money. It likewise discounts merchants' bills, and has, upon several different occasions, supported the credit of the principalhouses, not only of England, but of Hamburgh and Holland. Upon oneoccasion, in 1763, it is said to have advanced for this purpose, inone week, about £1, 600, 000, a great part of it in bullion. I do not, however, pretend to warrant either the greatness of the sum, or theshortness of the time. Upon other occasions, this great company has beenreduced to the necessity of paying in sixpences. 

It is not by augmenting the capital of the country, but by rendering agreater part of that capital active and productive than would otherwisebe so, that the most judicious operations of banking can increase theindustry of the country. That part of his capital which a dealer isobliged to keep by him unemployed and in ready money, for answeringoccasional demands, is so much dead stock, which, so long as it remainsin this situation, produces nothing, either to him or to his country. The judicious operations of banking enable him to convert this deadstock into active and productive stock; into materials to work upon;into tools to work with; and into provisions and subsistence to workfor; into stock which produces something both to himself and to hiscountry. The gold and silver money which circulates in any country, and by means 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 a veryvaluable part of the capital of the country, which produces nothing tothe country. The judicious operations of banking, by substituting paperin the room of a great part of this gold and silver, enable the countryto convert a great part of this dead stock into active and productivestock; into stock which produces something to the country. The goldand silver money which circulates in any country may very properly becompared to a highway, which, while it circulates and carries to marketall the grass and corn of the country, produces itself not a single pileof either. The judicious operations of banking, by providing, if I maybe allowed so violent a metaphor, a sort of waggon-way through the air, enable the country to convert, as it were, a great part of its highwaysinto good pastures, and corn fields, and thereby to increase, veryconsiderably, the annual produce of its land and labour. The commerceand industry of the country, however, it must be acknowledged, thoughthey may be somewhat augmented, cannot be altogether so secure, whenthey are thus, as it were, suspended upon the Daedalian wings of papermoney, as when they travel about upon the solid ground of gold andsilver. Over and above the accidents to which they are exposed from theunskilfulness of the conductors of this paper money, they are liable toseveral others, from which no prudence or skill of those conductors canguard them. 

An unsuccessful war, for example, in which the enemy got possessionof the capital, and consequently of that treasure which supported thecredit of the paper money, would occasion a much greater confusion in acountry where the whole circulation was carried on by paper, than inone where the greater part of it was carried on by gold and silver. Theusual instrument of commerce having lost its value, no exchanges couldbe made but either by barter or upon credit. All taxes having beenusually paid in paper money, the prince would not have wherewithaleither to pay his troops, or to furnish his magazines; and the state ofthe country would be much more irretrievable than if the greater part ofits circulation had consisted in gold and silver. A prince, anxious tomaintain his dominions at all times in the state in which he can mosteasily defend them, ought upon this account to guard not only againstthat excessive multiplication of paper money which ruins the very bankswhich issue it, but even against that multiplication of it which enablesthem to fill the greater part of the circulation of the country with it. 

The circulation of every country may be considered as divided into twodifferent branches; the circulation of the dealers with one another, andthe circulation between the dealers and the consumers. Though the samepieces of money, whether paper or metal, may be employed sometimesin the one circulation and sometimes in the other; yet as both areconstantly going on at the same time, each requires a certain stock ofmoney, of one kind or another, to carry it on. The value of the goodscirculated between the different dealers never can exceed the valueof those circulated between the dealers and the consumers; whateveris bought by the dealers being ultimately destined to be sold to theconsumers. The circulation between the dealers, as it is carried on bywholesale, 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 a halfpennymore frequently than a shilling. Though the annual purchases of all theconsumers, therefore, are at least equal in value to those of all thedealers, they can generally be transacted with a much smaller quantityof money; the same pieces, by a more rapid circulation, serving as theinstrument of many more purchases of the one kind than of the other. 

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

Where the issuing of bank notes for such very small sums is allowed, andcommonly practised, many mean people are both enabled and encouraged tobecome bankers. A person whose promissory note for £5, or even for 20s. Would be rejected by every body, 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 be liable, mayoccasion a very considerable inconveniency, and sometimes even a verygreat calamity, to many poor people who had received their notes inpayment. 

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

Where paper money, it is to be observed, is pretty much confined to thecirculation between dealers and dealers, as at London, there is alwaysplenty of gold and silver. Where it extends itself to a considerablepart of the circulation between dealers and consumers, as in Scotland, and still more in North America, it banishes gold and silver almostentirely from the country; almost all the ordinary transactions of itsinterior commerce being thus carried on by paper. The suppression of tenand five shilling bank notes, somewhat relieved the scarcity of gold andsilver in Scotland; and the suppression of twenty shilling notes willprobably relieve it still more. Those metals are said to have becomemore abundant in America, since the suppression of some of their papercurrencies. They are said, likewise, to have been more abundant beforethe institution of those currencies. 

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

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

A paper money, consisting in bank notes, issued by people of undoubtedcredit, payable upon demand, without any condition, and, in fact, alwaysreadily paid as soon as presented, is, in every respect, equal in valueto gold and silver money, since gold and silver money can at anytimebe had for it. Whatever is either bought or sold for such paper, mustnecessarily be bought or sold as cheap as it could have been for goldand silver. 

The increase of paper money, it has been said, by augmenting thequantity, and consequently diminishing the value, of the whole currency, necessarily augments the money price of commodities. But as the quantityof gold and silver, which is taken from the currency, is always equalto the quantity of paper which is added to it, paper money does notnecessarily increase the quantity of the whole currency. From thebeginning of the last century to the present time, provisions never werecheaper in Scotland than in 1759, though, from the circulation of tenand five shilling bank notes, there was then more paper money in thecountry than at present. The proportion between the price of provisionsin Scotland and that in England is the same now as before the greatmultiplication of banking companies in Scotland. Corn is, upon mostoccasions, fully as cheap in England as in France, though there is agreat deal of paper money in England, and scarce any in France. In 1751and 1752, when Mr Hume published his Political Discourses, and soonafter the great multiplication of paper money in Scotland, there was avery sensible rise in the price of provisions, owing, probably, to thebadness of the seasons, and not to the multiplication of paper money. 

It would be otherwise, indeed, with a paper money, consisting inpromissory notes, of which the immediate payment depended, in anyrespect, either upon the good will of those who issued them, or upon acondition which the holder of the notes might not always have it in hispower to fulfil, or of which the payment was not exigible till after acertain number of years, and which, in the mean time, bore no interest. Such a paper money would, no doubt, fall more or less below the value ofgold and silver, according as the difficulty or uncertainty of obtainingimmediate payment was supposed to be greater or less, or according tothe greater or less distance of time at which payment was exigible. 

Some years ago the different banking companies of Scotland were inthe practice of inserting into their bank notes, what they called anoptional clause; by which they promised payment to the bearer, eitheras soon as the note should be presented, or, in the option of thedirectors, six months after such presentment, together with the legalinterest for the said six months. The directors of some of thosebanks sometimes took advantage of this optional clause, and sometimesthreatened those who demanded gold and silver in exchange for aconsiderable number of their notes, that they would take advantage ofit, unless such demanders would content themselves with a part ofwhat they demanded. The promissory notes of those banking companiesconstituted, at that time, the far greater part of the currency ofScotland, which this uncertainty of payment necessarily degraded belowvalue of gold and silver money. During the continuance of this abuse(which prevailed chiefly in 1762, 1763, and 1764), while the exchangebetween London and Carlisle was at par, that between London and Dumfrieswould sometimes be four per cent. Against Dumfries, though this town isnot thirty miles distant from Carlisle. But at Carlisle, bills were paidin gold and silver; whereas at Dumfries they were paid in Scotch banknotes; and the uncertainty of getting these bank notes exchanged forgold and silver coin, had thus degraded them four per cent. Below thevalue of that coin. The same act of parliament which suppressed ten andfive shilling bank notes, suppressed likewise this optional clause, and thereby restored the exchange between England and Scotland to itsnatural rate, or to what the course of trade and remittances mighthappen to make it. 

In the paper currencies of Yorkshire, the payment of so small a sum as6d. Sometimes depended upon the condition, that the holder of the noteshould bring the change of a guinea to the person who issued it; acondition which the holders of such notes might frequently find it verydifficult to fulfil, and which must have degraded this currency belowthe value of gold and silver money. An act of parliament, accordingly, declared all such clauses unlawful, and suppressed, in the same manneras in Scotland, all promissory notes, payable to the bearer, under 20s. Value. 

The paper currencies of North America consisted, not in bank notespayable to the bearer on demand, but in a government paper, of whichthe payment was not exigible till several years after it was issued; andthough the colony governments paid no interest to the holders of thispaper, they declared it to be, and in fact rendered it, a legal tenderof payment for the full value for which it was issued. But allowing thecolony security to be perfectly good, £100, payable fifteen years hence, for example, in a country where interest is at six per cent. , is worthlittle more than £40 ready money. To oblige a creditor, therefore, toaccept of this as full payment for a debt of £100, actually paid downin ready money, was an act of such violent injustice, as has scarce, perhaps, been attempted by the government of any other country whichpretended to be free. It bears the evident marks of having originallybeen, what the honest and downright Doctor Douglas assures us it was, ascheme of fraudulent debtors to cheat their creditors. The governmentof Pennsylvania, indeed, pretended, upon their first emission of papermoney, in 1722, to render their paper of equal value with gold andsilver, by enacting penalties against all those who made any differencein the price of their goods when they sold them for a colony paper, and when they sold them for gold and silver, a regulation equallytyrannical, but much less, effectual, than that which it was meantto support. A positive law may render a shilling a legal tender for aguinea, because it may direct the courts of justice to discharge thedebtor who 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 the priceof them. Notwithstanding any regulation of this kind, it appeared, by the course of exchange with Great Britain, that £100 sterling wasoccasionally considered as equivalent, in some of the colonies, to £130, and in others to so great a sum as £1100 currency; this difference inthe value 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 of parliament, so unjustly complained of in the colonies, which declared, that no papercurrency to be emitted there in time coming, should be a legal tender ofpayment. 

Pennsylvania was always more moderate in its emissions of paper moneythan any other of our colonies. Its paper currency, accordingly, issaid never to have sunk below the value of the gold and silver whichwas current in the colony before the first emission of its paper money. Before that emission, the colony had raised the denomination of itscoin, and had, by act of assembly, ordered 5s. Sterling to pass in thecolonies for 6s:3d. , and afterwards for 6s:8d. A pound, colony currency, therefore, even when that currency was gold and silver, was more thanthirty per cent. Below the value of £1 sterling; and when that currencywas turned into paper, it was seldom much more than thirty per cent. Below that value. The pretence for raising the denomination of thecoin was to prevent the exportation of gold and silver, by making equalquantities of those metals pass for greater sums in the colony than theydid in the mother country. It was found, however, that the price of allgoods from the mother country rose exactly in proportion as they raisedthe denomination of their coin, so that their gold and silver wereexported as fast as ever. 

The paper of each colony being received in the payment of the provincialtaxes, for the full value for which it had been issued, it necessarilyderived from this use some additional value, over and above what itwould have had, from the real or supposed distance of the term of itsfinal discharge and redemption. This additional value was greater orless, according as the quantity of paper issued was more or less abovewhat could be employed in the payment of the taxes of the particularcolony which issued it. It was in all the colonies very much above whatcould be employed in this manner. 

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

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

If bankers are restrained from issuing any circulating bank notes, ornotes payable to the bearer, for less than a certain sum; and if theyare subjected to the obligation of an immediate and unconditionalpayment of such bank notes as soon as presented, their trade may, withsafety to the public, be rendered in all other respects perfectly free. The late multiplication of banking companies in both parts of the unitedkingdom, an event by which many people have been much alarmed, insteadof diminishing, increases the security of the public. It obliges allof them to be more circumspect in their conduct, and, by not extendingtheir currency beyond its due proportion to their cash, to guardthemselves against those malicious runs, which the rivalship of somany competitors is always ready to bring upon them. It restrains thecirculation of each particular company within a narrower circle, andreduces their circulating notes to a smaller number. By dividing thewhole circulation into a greater number of parts, the failure of anyone company, an accident which, in the course of things, mustsometimes happen, becomes of less consequence to the public. Thisfree competition, too, obliges all bankers to be more liberal in theirdealings with their customers, lest their rivals should carry themaway. In general, if any branch of trade, or any division of labour, beadvantageous to the public, the freer and more general the competition, it will always be the more so. 

CHAPTER III. OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE ANDUNPRODUCTIVE LABOUR. 

There is one sort of labour which adds to the value of the subject uponwhich it is bestowed; there is another which has no such effect. Theformer as it produces a value, may be called productive, the latter, unproductive labour. {Some French authors of great learning andingenuity have used those words in a different sense. In the lastchapter of the fourth book, I shall endeavour to shew that their senseis an improper one. } Thus the labour of a manufacturer adds generallyto the value of the materials which he works upon, that of his ownmaintenance, and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing. Though the manufacturerhas his wages advanced to him by his master, he in reality costs himno expense, the value of those wages being generally restored, togetherwith a profit, in the improved value of the subject upon which hislabour is bestowed. But the maintenance of a menial servant never isrestored. A man grows rich by employing a multitude of manufacturers; hegrows poor by maintaining a multitude or 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, whichlasts for some time at least after that labour is past. It is, asit were, a certain quantity of labour stocked and stored up, to beemployed, if necessary, upon some other occasion. That subject, or, what 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 thecontrary, does not fix or realize itself in any particular subject orvendible commodity. His services generally perish in the very instant oftheir performance, and seldom leave any trace of value behind them, forwhich an equal quantity of service could afterwards be procured. 

The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of any value, and does notfix or realize itself in any permanent subject, or vendible commodity, which endures after that labour is past, and for which an equal quantityof labour could afterwards be procured. The sovereign, for example, withall the officers both of justice and war who serve under him, the wholearmy and navy, are unproductive labourers. They are the servants ofthe public, and are maintained by a part of the annual produce of theindustry of other people. Their service, how honourable, how useful, orhow necessary soever, produces nothing for which an equal quantityof service can afterwards be procured. The protection, security, anddefence, of the commonwealth, the effect of their labour this year, will not purchase its protection, security, and defence, for the yearto 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 meanestof these has a certain value, regulated by the very same principleswhich regulate that of every other sort of labour; and that of thenoblest and most useful, produces nothing which could afterwardspurchase or procure an equal quantity of labour. Like the declamation ofthe actor, the harangue of the orator, or the tune of the musician, thework of all of them perishes in the very instant of its production. 

Both productive and unproductive labourers, and those who do not labourat all, are all equally maintained by the annual produce of the landand labour of the country. This produce, how great soever, can neverbe infinite, but must have certain limits. According, therefore, asa smaller or greater proportion of it is in any one year employed inmaintaining unproductive hands, the more in the one case, and theless in the other, will remain for the productive, and the next year'sproduce will be greater or smaller accordingly; the whole annualproduce, if we except the spontaneous productions of the earth, beingthe effect of productive labour. 

Though the whole annual produce of the land and labour of every countryis no doubt ultimately destined for supplying the consumption of itsinhabitants, and for procuring a revenue to them; yet when it firstcomes either from the ground, or from the hands of the productivelabourers, it naturally divides itself into two parts. One of them, andfrequently the largest, is, in the first place, destined for replacinga capital, or for renewing the provisions, materials, and finished work, which had been withdrawn from a capital; the other for constituting arevenue either to the owner of this capital, as the profit of his stock, or to some other person, as the rent of his land. Thus, of the produceof land, one part replaces the capital of the farmer; the other pays hisprofit and the rent of the landlord; and thus constitutes a revenue bothto 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 a greatmanufactory, in the same manner, one part, and that always the largest, replaces the capital of the undertaker of the work; the other pays hisprofit, and thus constitutes a revenue to the owner of this capital. 

That part of the annual produce of the land and labour of any countrywhich replaces a capital, never is immediately employed to maintain anybut productive hands. It pays the wages of productive labour only. Thatwhich is immediately destined for constituting a revenue, either asprofit or as rent, may maintain indifferently either productive orunproductive hands. 

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

Unproductive labourers, and those who do not labour at all, are allmaintained by revenue; either, first, by that part of the annualproduce which is originally destined for constituting a revenue to someparticular persons, either as the rent of land, or as the profits ofstock; or, secondly, by that part which, though originally destined forreplacing a capital, and for maintaining productive labourers only, yetwhen it comes into their hands, whatever part of it is over andabove their necessary subsistence, may be employed in maintainingindifferently either productive or unproductive hands. Thus, not onlythe great landlord or the rich merchant, but even the common workman, if his wages are considerable, may maintain a menial servant; or he maysometimes go to a play or a puppet-show, and so contribute his sharetowards maintaining one set of unproductive labourers; or he may paysome taxes, and thus help to maintain another set, more honourable anduseful, indeed, but equally unproductive. No part of the annual produce, however, which had been originally destined to replace a capital, isever directed towards maintaining unproductive hands, till after it hasput into motion its full complement of productive labour, or all that itcould put into motion in the way in which it was employed. The workmanmust have earned his wages by work done, before he can employ any partof them in this manner. That part, too, is generally but a small one. Itis his spare revenue only, of which productive labourers have seldoma great deal. They generally have some, however; and in the payment oftaxes, the greatness of their number may compensate, in some measure, the smallness of their contribution. The rent of land and the profitsof stock are everywhere, therefore, the principal sources from whichunproductive hands derive their subsistence. These are the two sortsof revenue of which the owners have generally most to spare. They mightboth maintain indifferently, either productive or unproductive hands. They seem, however, to have some predilection for the latter. Theexpense of a great lord feeds generally more idle than industriouspeople The rich merchant, though with his capital he maintainsindustrious people only, yet by his expense, that is, by the employmentof his revenue, he feeds commonly the very same sort as the great lord. 

The proportion, therefore, between the productive and unproductivehands, depends very much in every country upon the proportion betweenthat part of the annual produce, which, as soon as it comes either fromthe ground, or from the hands of the productive labourers, is destinedfor replacing a capital, and that which is destined for constituting arevenue, either as rent or as profit. This proportion is very differentin rich from what it is in poor countries. 

Thus, at present, in the opulent countries of Europe, a very large, frequently the largest, portion of the produce of the land, is destinedfor replacing the capital of the rich and independent farmer; the otherfor paying his profits, and the rent of the landlord. But anciently, during the prevalency of the feudal government, a very small portionof the produce was sufficient to replace the capital employed incultivation. It consisted commonly in a few wretched cattle, maintainedaltogether by the spontaneous produce of uncultivated land, and whichmight, therefore, be considered as a part of that spontaneous produce. It generally, too, belonged to the landlord, and was by him advanced tothe occupiers of the land. All the rest of the produce properly belongedto him too, either as rent for his land, or as profit upon this paltrycapital. The occupiers of land were generally bond-men, whose personsand effects were equally his property. Those who were not bond-men weretenants at will; and though the rent which they paid was often nominallylittle more than a quit-rent, it really amounted to the whole produceof the land. Their lord could at all times command their labour inpeace and their service in war. Though they lived at a distance from hishouse, they were equally dependent upon him as his retainers who livedin it. But the whole produce of the land undoubtedly belongs to him, whocan dispose of the labour and service of all those whom it maintains. Inthe present state of Europe, the share of the landlord seldom exceeds athird, sometimes not a fourth part of the whole produce of the land. The rent of land, however, in all the improved parts of the country, hasbeen tripled and quadrupled since those ancient times; and this thirdor fourth part of the annual produce is, it seems, three or four timesgreater than the whole 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 coarse manufactures thatwere carried on, required but very small capitals. These, however, musthave yielded very large profits. The rate of interest was nowhere lessthan ten per cent. And their profits must have been sufficient to affordthis great interest. At present, the rate of interest, in the improvedparts of Europe, is nowhere higher than six per cent. ; and in some ofthe most improved, it is so low as four, three, and two per cent. Thoughthat part of the revenue of the inhabitants which is derived from theprofits of stock, is always much greater in rich than in poor countries, it is because the stock is much greater; in proportion to the stock, theprofits are generally much less. 

That part of the annual produce, therefore, which, as soon as it comeseither from the ground, or from the hands of the productive labourers, is destined for replacing a capital, is not only much greater in richthan in poor countries, but bears a much greater proportion to thatwhich is immediately destined for constituting a revenue either asrent or as profit. The funds destined for the maintenance of productivelabour are not only much greater in the former than in the latter, but bear a much greater proportion to those which, though they maybe employed to maintain either productive or unproductive hands, havegenerally a predilection for the latter. 

The proportion between those different funds necessarily determines inevery country the general character of the inhabitants as to industry oridleness. We are more industrious than our forefathers, because, in thepresent times, the funds destined for the maintenance of industry aremuch greater in proportion to those which are likely to be employed inthe maintenance of idleness, than they were two or three centuriesago. Our ancestors were idle for want of a sufficient encouragement toindustry. It is better, says the proverb, to play for nothing, thanto work for nothing. In mercantile and manufacturing towns, where theinferior ranks of people are chiefly maintained by the employment ofcapital, they are in general industrious, sober, and thriving; asin many English, and in most Dutch towns. In those towns which areprincipally supported by the constant or occasional residence of acourt, and in which the inferior ranks of people are chiefly maintainedby the spending of revenue, they are in general idle, dissolute, andpoor; as at Rome, Versailles, Compeigne, and Fontainbleau. If you exceptRouen and Bourdeaux, there is little trade or industry in any of theparliament towns of France; and the inferior ranks of people, beingchiefly maintained by the expense of the members of the courts ofjustice, and of those who come to plead before them, are in general idleand poor. The great trade of Rouen and Bourdeaux seems to be altogetherthe effect of their situation. Rouen is necessarily the entrepot ofalmost all the goods which are brought either from foreign countries, orfrom the maritime provinces of France, for the consumption of the greatcity of Paris. Bourdeaux is, in the same manner, the entrepot of thewines which grow upon the banks of the Garronne, and of the rivers whichrun into 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 situations necessarilyattract a great capital by the great employment which they afford it;and the employment of this capital is the cause of the industry of thosetwo cities. In the other parliament towns of France, very little morecapital seems to be employed than what is necessary for supplying theirown consumption; that is, little more than the smallest capital whichcan be employed in them. The same thing may be said of Paris, Madrid, and Vienna. Of those three cities, Paris is by far the most industrious, but Paris itself is the principal market of all the manufacturesestablished at Paris, and its own consumption is the principal object ofall the trade which it carries on. London, Lisbon, and Copenhagen, are, perhaps, the only three cities in Europe, which are both the constantresidence of a court, and can at the same time be considered as tradingcities, or as cities which trade not only for their own consumption, butfor that of other cities and countries. The situation of all the threeis extremely advantageous, and naturally fits them to be the entrepotsof a great part of the goods destined for the consumption of distantplaces. In a city where a great revenue is spent, to employ withadvantage a capital for any other purpose than for supplying theconsumption of that city, is probably more difficult than in one inwhich the inferior ranks of people have no other maintenance but whatthey derive from the employment of such a capital. The idleness of thegreater part of the people who are maintained by the expense ofrevenue, corrupts, it is probable, the industry of those who ought tobe maintained by the employment of capital, and renders it lessadvantageous to employ a capital there than in other places. There waslittle trade or industry in Edinburgh before the Union. When the Scotchparliament was no longer to be assembled in it, when it ceased to be thenecessary residence 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 in Scotland, of the boards of customs and excise, etc. A considerable revenue, therefore, still continues to be spent in it. In trade and industry, it is much inferior to Glasgow, of which the inhabitants are chieflymaintained by the employment of capital. The inhabitants of a largevillage, it has sometimes been observed, after having made considerableprogress in manufactures, have become idle and poor, in consequence of agreat lord's having taken up his residence in their neighbourhood. 

The proportion between capital and revenue, therefore, seems everywhereto regulate the proportion between industry and idleness Wherevercapital predominates, industry prevails; wherever revenue, idleness. Every increase or diminution of capital, therefore, naturally tendsto increase or diminish the real quantity of industry, the number ofproductive hands, and consequently the exchangeable value of the annualproduce of the land and labour of the country, the real wealth andrevenue of all its inhabitants. 

Capitals are increased by parsimony, and diminished by prodigality andmisconduct. 

Whatever a person saves from his revenue he adds to his capital, and either employs it himself in maintaining an additional number ofproductive hands, or enables some other person to do so, by lendingit to him for an interest, that is, for a share of the profits. As thecapital of an individual can be increased only by what he saves from hisannual revenue or his annual gains, so the capital of a society, whichis the same with that of all the individuals who compose it, can beincreased only in the same manner. 

Parsimony, and not industry, is the immediate cause of the increaseof capital. Industry, indeed, provides the subject which parsimonyaccumulates; but whatever industry might acquire, if parsimony did notsave and store up, the capital would never be the greater. 

Parsimony, by increasing the fund which is destined for the maintenanceof productive hands, tends to increase the number of those hands whoselabour adds to the value of the subject upon winch it is bestowed. It tends, therefore, to increase the exchangeable value of the annualproduce of the land and labour of the country. It puts into motion anadditional quantity of industry, which gives an additional value to theannual produce. 

What is annually saved, is as regularly consumed as what is annuallyspent, and nearly in the same time too: but it is consumed by adifferent set of people. That portion of his revenue which a rich manannually spends, is, in most cases, consumed by idle guests and menialservants, who leave nothing behind them in return for their consumption. That portion which he annually saves, as, for the sake of the profit, it is immediately employed as a capital, is consumed in the same manner, and nearly in the same time too, but by a different set of people: bylabourers, manufacturers, and artificers, who reproduce, with a profit, the value of their annual consumption. His revenue, we shall suppose, is paid him in money. Had he spent the whole, the food, clothing, and lodging, which the whole could have purchased, would have beendistributed among the former set of people. By saving a part of it, as that part is, for the sake of the profit, immediately employed as acapital, either by himself or by some other person, the food, clothing, and lodging, 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 affords maintenance toan additional number of productive hands, for that of the ensuing year, but like the founder of a public work-house he establishes, as it were, a perpetual fund for the maintenance of an equal number in all times tocome. The perpetual allotment and destination of this fund, indeed, isnot always guarded by any positive law, by any trust-right or deed ofmortmain. It is always guarded, however, by a very powerful principle, the plain and evident interest of every individual to whom any share ofit shall ever belong. No part of it can ever afterwards be employed tomaintain any but productive hands, without an evident loss to the personwho thus perverts it from its proper destination. 

The prodigal perverts it in this manner: By not confining his expensewithin his income, he encroaches upon his capital. Like him who pervertsthe revenues of some pious foundation to profane purposes, he paysthe wages of idleness with those funds which the frugality of hisforefathers had, as it were, consecrated to the maintenance of industry. By diminishing the funds destined for the employment of productivelabour, he necessarily diminishes, so far as it depends upon him, thequantity of that labour which adds a value to the subject upon which itis bestowed, and, consequently, the value of the annual produce of theland and labour of the whole country, the real wealth and revenue ofits inhabitants. If the prodigality of some were not compensated by thefrugality of others, the conduct of every prodigal, by feeding theidle with the bread of the industrious, would tend not only to beggarhimself, but to impoverish his country. 

Though the expense of the prodigal should be altogether in home made, and no part of it in foreign commodities, its effect upon the productivefunds of the society would still be the same. Every year there wouldstill be a certain quantity of food and clothing, which ought to havemaintained productive, employed in maintaining unproductive hands. Everyyear, therefore, there would still be some diminution in what wouldotherwise have been the value of the annual produce of the land andlabour of the country. 

This expense, it may be said, indeed, not being in foreign goods, andnot occasioning any exportation of gold and silver, the same quantity ofmoney would remain in the country as before. But if the quantity offood and clothing which were thus consumed by unproductive, had beendistributed among productive hands, they would have reproduced, togetherwith a profit, the full value of their consumption. The same quantityof money would, in this case, equally have remained in the country, and there would, besides, have been a reproduction of an equal value ofconsumable goods. There would have been two values instead of one. 

The same quantity of money, besides, can not long remain in any countryin which the value of the annual produce diminishes. The sole use ofmoney is to circulate consumable goods. By means of it, provisions, materials, and finished work, are bought and sold, and distributed totheir proper consumers. The quantity of money, therefore, which can beannually employed in any country, must be determined by the value ofthe consumable goods annually circulated within it. These must consist, either in the immediate produce of the land and labour of the countryitself, or in something 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 money which canbe employed in circulating them. But the money which, by this annualdiminution of produce, is annually thrown out of domestic circulation, will not be allowed to lie idle. The interest of whoever possesses itrequires that it should be employed; but having no employment at home, it will, in spite of all laws and prohibitions, be sent abroad, andemployed in purchasing consumable goods, which may be of some use athome. Its annual exportation will, in this manner, continue for sometime to add something to the annual consumption of the country beyondthe value of its own annual produce. What in the days of its prosperityhad been saved from that annual produce, and employed in purchasinggold and silver, will contribute, for some little time, to support itsconsumption in adversity. The exportation of gold and silver is, in thiscase, not the cause, but the effect of its declension, and may even, forsome little time, alleviate the misery of that declension. 

The quantity of money, on the contrary, must in every country naturallyincrease as the value of the annual produce increases. The value of theconsumable goods annually circulated within the society being greater, will require a greater quantity of money to circulate them. A partof the increased produce, therefore, will naturally be employed inpurchasing, wherever it is to be had, the additional quantity of goldand silver necessary for circulating the rest. The increase of thosemetals will, in this case, be the effect, not the cause, of the publicprosperity. Gold and silver are purchased everywhere in the same manner. The food, clothing, and lodging, the revenue and maintenance, of allthose whose labour or stock is employed in bringing them from the mineto the market, is the price paid for them in Peru as well as in England. The country which has this price to pay, will never belong without thequantity of those metals which it has occasion for; and no country willever long retain a quantity which it has no occasion for. 

Whatever, therefore, we may imagine the real wealth and revenue of acountry to consist in, whether in the value of the annual produce of itsland and labour, as plain reason seems to dictate, or in the quantityof the precious metals which circulate within it, as vulgar prejudicessuppose; in either view of the matter, every prodigal appears to be apublic enemy, and every frugal man a public benefactor. 

The effects of misconduct are often the same as those of prodigality. Every injudicious and unsuccessful project in agriculture, mines, fisheries, trade, or manufactures, tends in the same manner to diminishthe funds destined for the maintenance of productive labour. In everysuch project, though the capital is consumed by productive hands only, yet as, by the injudicious manner in which they are employed, they donot reproduce the full value of their consumption, there must always besome diminution in what would otherwise have been the productive fundsof the society. 

It can seldom happen, indeed, that the circumstances of a greatnation can be much affected either by the prodigality or misconduct ofindividuals; the profusion or imprudence of some being always more thancompensated by the frugality and good conduct of others. 

With regard to profusion, the principle which prompts to expense is thepassion for present enjoyment; which, though sometimes violent and verydifficult to be restrained, is in general only momentary and occasional. But the principle which prompts to save, is the desire of betteringour condition; a desire which, though generally calm and dispassionate, comes with us from the womb, and never leaves us till we go into thegrave. In the whole interval which separates those two moments, there isscarce, perhaps, a single instance, 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 of fortune is themeans by which the greater part of men propose and wish to better theircondition. It is the means the most vulgar and the most obvious; and themost likely way of augmenting their fortune, is to save and accumulatesome part of what they acquire, either regularly and annually, or uponsome extraordinary occasion. Though the principle of expense, therefore, prevails in almost all men upon some occasions, and in some men uponalmost all occasions; yet in the greater part of men, taking the wholecourse of their life at an average, the principle of frugality seems notonly to predominate, but to predominate very greatly. 

With regard to misconduct, the number of prudent and successfulundertakings is everywhere much greater than that of injudiciousand unsuccessful ones. After all our complaints of the frequency ofbankruptcies, the unhappy men who fall into this misfortune, make buta very small part of the whole number engaged in trade, and all othersorts of business; not much more, perhaps, than one in a thousand. Bankruptcy is, perhaps, the greatest and most humiliating calamitywhich can befal an innocent man. The greater part of men, therefore, aresufficiently careful to avoid it. Some, indeed, do not avoid it; as somedo not avoid the gallows. 

Great nations are never impoverished by private, though they sometimesare by public prodigality and misconduct. The whole, or almost thewhole public revenue is, in most countries, employed in maintainingunproductive hands. Such are the people who compose a numerous andsplendid court, a great ecclesiastical establishment, great fleets andarmies, who in time of peace produce nothing, and in time of war acquirenothing which can compensate the expense of maintaining them, even whilethe war lasts. Such people, as they themselves produce nothing, areall maintained by the produce of other men's labour. When multiplied, therefore, to an unnecessary number, they may in a particular yearconsume so great a share of this produce, as not to leave a sufficiencyfor maintaining the productive labourers, who should reproduce it nextyear. The next year's produce, therefore, will be less than that of theforegoing; and if the same disorder should continue, that of the thirdyear will be still less than that of the second. Those unproductivehands who should be maintained by a part only of the spare revenue ofthe people, may consume so great a share of their whole revenue, andthereby oblige so great a number to encroach upon their capitals, uponthe funds destined for the maintenance of productive labour, thatall the frugality and good conduct of individuals may not be able tocompensate the waste and degradation of produce occasioned by thisviolent and forced encroachment. 

This frugality and good conduct, however, is, upon most occasions, itappears from experience, sufficient to compensate, not only the privateprodigality and misconduct of individuals, but the public extravaganceof government. The uniform, constant, and uninterrupted effort ofevery man to better his condition, the principle from which publicand national, as well as private opulence is originally derived, isfrequently powerful enough to maintain the natural progress of thingstowards improvement, in spite both of the extravagance of government, and of the greatest errors of administration. Like the unknown principleof animal life, it frequently restores health and vigour to theconstitution, in spite not only of the disease, but of the absurdprescriptions of the doctor. 

The annual produce of the land and labour of any nation can be increasedin its value by no other means, but by increasing either the number ofits productive labourers, or the productive powers of those labourerswho had before been employed. The number of its productive labourers, it is evident, can never be much increased, but in consequence of anincrease of capital, or of the funds destined for maintaining them. Theproductive powers of the same number of labourers cannot be increased, but in consequence either of some addition and improvement to thosemachines and instruments which facilitate and abridge labour, or ofmore proper division and distribution of employment. In either case, an additional capital is almost always required. It is by means of anadditional capital only, that the undertaker of any work can eitherprovide his workmen with better machinery, or make a more properdistribution of employment among them. When the work to be done consistsof a number of parts, to keep every man constantly employed in one way, requires a much greater capital than where every man is occasionallyemployed in every different part of the work. When we compare, therefore, the state of a nation at two different periods, and find thatthe annual produce of its land and labour is evidently greater at thelatter than at the former, that its lands are better cultivated, itsmanufactures more numerous and more flourishing, and its trade moreextensive; we may be assured that its capital must have increased duringthe interval between those two periods, and that more must have beenadded to it by the good conduct of some, than had been taken fromit either by the private misconduct of others, or by the publicextravagance of government. But we shall find this to have been the caseof almost all nations, in all tolerably quiet and peaceable times, even of those who have not enjoyed the most prudent and parsimoniousgovernments. To form a right judgment of it, indeed, we must compare thestate of the country at periods somewhat distant from one another. The progress is frequently so gradual, that, at near periods, theimprovement is not only not sensible, but, from the declension eitherof certain branches of industry, or of certain districts of the country, things which sometimes happen, though the country in general is in greatprosperity, there frequently arises a suspicion, that the riches andindustry of the whole are decaying. 

The annual produce of the land and labour of England, for example, iscertainly much greater than it was a little more than a century ago, atthe restoration of Charles II. Though at present few people, I believe, doubt of this, yet during this period five years have seldom passedaway, in which some book or pamphlet has not been published, written, too, with such abilities as to gain some authority with the public, and pretending to demonstrate that the wealth of the nation was fastdeclining; that the country was depopulated, agriculture neglected, manufactures decaying, and trade undone. Nor have these publicationsbeen all party pamphlets, the wretched offspring of falsehood andvenality. Many of them have been written by very candid and veryintelligent people, 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, wascertainly much greater at the Restoration than we can suppose it to havebeen about a hundred years before, at the accession of Elizabeth. Atthis period, too, we have all reason to believe, the country was muchmore advanced in improvement, than it had been about a century before, towards the close of the dissensions between the houses of York andLancaster. Even then it was, probably, in a better condition than it hadbeen at the Norman conquest: and at the Norman conquest, than duringthe confusion of the Saxon heptarchy. Even at this early period, it wascertainly a more improved country than at the invasion of Julius Caesar, when its inhabitants were nearly in the same state with the savages inNorth America. 

In each of those periods, however, there was not only much private andpublic profusion, many expensive and unnecessary wars, great perversionof the annual produce from maintaining productive to maintainunproductive hands; but sometimes, in the confusion of civil discord, such absolute waste and destruction of stock, as might be supposed, notonly to retard, as it certainly did, the natural accumulation of riches, but to have left the country, at the end of the period, poorer than atthe beginning. Thus, in the happiest and most fortunate period of themall, that which has passed since the Restoration, how many disordersand misfortunes have occurred, which, could they have been foreseen, notonly the impoverishment, but the total ruin of the country would havebeen expected from them? The fire and the plague of London, the twoDutch wars, the disorders of the revolution, the war in Ireland, thefour expensive French wars of 1688, 1701, 1742, and 1756, together withthe two rebellions of 1715 and 1745. In the course of the four Frenchwars, the nation has contracted more than £145, 000, 000 of debt, over andabove all the other extraordinary annual expense which they occasioned;so that the whole cannot be computed at less than £200, 000, 000. So greata share of the annual produce of the land and labour of the country, has, since the Revolution, been employed upon different occasions, inmaintaining an extraordinary number of unproductive hands. But had notthose wars given this particular direction to so large a capital, thegreater part of it would naturally have been employed in maintainingproductive hands, whose labour would have replaced, with a profit, thewhole value of their consumption. The value of the annual produce of theland and labour of the country would have been considerably increased byit every year, and every years increase would have augmented still morethat of the following year. More houses would have been built, morelands would have been improved, and those which had been improved beforewould have been better cultivated; more manufactures would have beenestablished, and those which had been established before would have beenmore extended; and to what height the real wealth and revenue of thecountry might by this time have been raised, it is not perhaps very easyeven to imagine. 

But though the profusion of government must undoubtedly have retardedthe natural progress of England towards wealth and improvement, it hasnot been able to stop it. The annual produce of its land and labouris undoubtedly much greater at present than it was either at theRestoration or at the Revolution. The capital, therefore, annuallyemployed in cultivating this land, and in maintaining this labour, must likewise be much greater. In the midst of all the exactions ofgovernment, this capital has been silently and gradually accumulatedby the private frugality and good conduct of individuals, by theiruniversal, continual, and uninterrupted effort to better their owncondition. It is this effort, protected by law, and allowed by libertyto exert itself in the manner that is most advantageous, which hasmaintained the progress of England towards opulence and improvement inalmost all former times, and which, it is to be hoped, will do so in allfuture times. England, however, as it has never been blessed with avery parsimonious government, so parsimony has at no time been thecharacteristic virtue of its inhabitants. It is the highest impertinenceand presumption, therefore, in kings and ministers to pretend to watchover the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreignluxuries. They are themselves always, and without any exception, thegreatest spendthrifts in the society. Let them look well after their ownexpense, and they may safely trust private people with theirs. If theirown extravagance does not ruin the state, that of the subject neverwill. 

As frugality increases, and prodigality diminishes, the public capital, so the conduct of those whose expense just equals their revenue, withouteither accumulating or encroaching, neither increases nor diminishes it. Some modes of expense, however, seem to contribute more to the growth ofpublic opulence than others. 

The revenue of an individual may be spent, either in things whichare consumed immediately, and in which one day's expense can neitheralleviate nor support that of another; or it may be spent in things meredurable, which can therefore be accumulated, and in which every day'sexpense may, as he chooses, either alleviate, or support and heighten, the effect of that of the following day. A man of fortune, for example, may either spend his revenue in a profuse and sumptuous table, and 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 his houseor his country villa, in useful or ornamental buildings, in useful orornamental furniture, in collecting books, statues, pictures; or inthings more frivolous, jewels, baubles, ingenious trinkets of differentkinds; or, what is most trifling of all, in amassing a great wardrobe offine clothes, like the favourite and minister of a great prince who dieda few years ago. Were two men of equal fortune to spend their revenue, the one chiefly in the one way, the other in the other, the magnificenceof the person whose expense had been chiefly in durable commodities, would be continually increasing, every day's expense contributingsomething to support and heighten the effect of that of the followingday; that of the other, on the contrary, would be no greater at the endof the period than at the beginning. The former too would, at the end ofthe period, be the richer man of the two. He would have a stock of goodsof some kind or other, which, though it might not be worth all thatit cost, would always be worth something. No trace or vestige of theexpense of the latter would remain, and the effects of ten or twentyyears' profusion would be as completely annihilated as if they had neverexisted. 

As the one mode of expense is more favourable than the other to theopulence of an individual, so is it likewise to that of a nation. Thehouses, the furniture, the clothing of the rich, in a little time, become useful to the inferior and middling ranks of people. They areable to purchase them when their superiors grow weary of them; and thegeneral accommodation of the whole people is thus gradually improved, when this mode of expense becomes universal among men of fortune. In countries which have long been rich, you will frequently find theinferior ranks of people in possession both of houses and furnitureperfectly good and entire, but of which neither the one could have beenbuilt, nor the other have been made for their use. What was formerlya seat of the family of Seymour, is now an inn upon the Bath road. Themarriage-bed of James I. Of Great Britain, which his queen broughtwith her from Denmark, as a present fit for a sovereign to make toa sovereign, was, a few years ago, the ornament of an alehouse atDunfermline. In some ancient cities, which either have been longstationary, or have gone somewhat to decay, you will sometimes scarcefind a single house which could have been built for its presentinhabitants. If you go into those houses, too, you will frequently findmany excellent, though antiquated pieces of furniture, which are stillvery fit for use, and which could as little have been made for them. Noble palaces, magnificent villas, great collections of books, statues, pictures, and other curiosities, are frequently both an ornament and anhonour, not only to the neighbourhood, but to the whole country to whichthey belong. Versailles is an ornament and an honour to France, Stoweand Wilton to England. Italy still continues to command some sort ofveneration, by the number of monuments of this kind which it possesses, though the wealth which produced them has decayed, and though the geniuswhich planned them seems to be extinguished, perhaps from not having thesame 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 without exposinghimself to the censure of the public. To reduce very much the numberof his servants, to reform his table from great profusion to greatfrugality, to lay down his equipage after he has once set it up, arechanges which cannot escape the observation of his neighbours, and whichare supposed to imply some acknowledgment of preceding bad conduct. Few, therefore, of those who have once been so unfortunate as to launchout too far into this sort of expense, have afterwards the courage toreform, till ruin and bankruptcy oblige them. But if a person has, atany time, been at too great an expense in building, in furniture, inbooks, or pictures, no imprudence can be inferred from his changinghis conduct. These are things in which further expense is frequentlyrendered unnecessary by former expense; and when a person stops short, he appears to do so, not because he has exceeded his fortune, butbecause he has satisfied his fancy. 

The expense, besides, that is laid out in durable commodities, givesmaintenance, commonly, to a greater number of people than that which isemployed in the most profuse hospitality. Of two or three hundred weightof provisions, which may sometimes be served up at a great festival, onehalf, perhaps, is thrown to the dunghill, and there is always a greatdeal wasted and abused. But if the expense of this entertainment hadbeen employed in setting to work masons, carpenters, upholsterers, mechanics, etc. A quantity of provisions of equal value would havebeen distributed among a still greater number of people, who wouldhave bought them in pennyworths and pound weights, and not have lostor thrown away a single ounce of them. In the one way, besides, thisexpense maintains productive, in the other unproductive hands. In theone way, therefore, it increases, in the other it does not increase theexchangeable value of the annual produce of the land and labour of thecountry. 

I would not, however, by all this, be understood to mean, that the onespecies of expense always betokens a more liberal or generous spiritthan the other. When a man of fortune spends his revenue chiefly inhospitality, he shares the greater part of it with his friendsand companions; but when he employs it in purchasing such durablecommodities, he often spends the whole upon his own person, and givesnothing to any body without an equivalent. The latter species ofexpense, therefore, especially when directed towards frivolous objects, the little ornaments of dress and furniture, jewels, trinkets, gew-gaws, frequently indicates, not only a trifling, but a base and selfishdisposition. All that I mean is, that the one sort of expense, as italways occasions some accumulation of valuable commodities, as it ismore favourable to private frugality, and, consequently, to the increaseof the public capital, and as it maintains productive rather thanunproductive hands, conduces more than the other to the growth of publicopulence. 

CHAPTER IV. OF STOCK LENT AT INTEREST. 

The stock which is lent at interest is always considered as a capital bythe lender. He expects that in due time it is to be restored to him, andthat, in the mean time, the borrower is to pay him a certain annual rentfor the use of it. The borrower may use it either as a capital, or as astock reserved for immediate consumption. If he uses it as a capital, heemploys it in the maintenance of productive labourers, who reproduce thevalue, with a profit. He can, in this case, both restore the capital, and pay the interest, without alienating or encroaching upon any othersource of revenue. 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 nor paythe interest, without either alienating or encroaching upon some othersource of revenue, such as the property or the rent of land. 

The stock which is lent at interest is, no doubt, occasionally employedin both these ways, but in the former much more frequently than in thelatter. The man who borrows in order to spend will soon be ruined, andhe who lends to him will generally have occasion to repent of his folly. To borrow or to lend for such a purpose, therefore, is, in all cases, where gross usury is out of the question, contrary to the interest ofboth parties; and though it no doubt happens sometimes, that people doboth the one and the other, yet, from the regard that all men have fortheir own interest, we may be assured, that it cannot happen so veryfrequently as we are sometimes apt to imagine. Ask any rich man ofcommon prudence, to which of the two sorts of people he has lentthe greater 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 thepeople in the world most famous for frugality, the number of the frugaland industrious surpasses considerably that of the prodigal and idle. 

The only people to whom stock is commonly lent, without their beingexpected to make any very profitable use of it, are country gentlemen, who borrow upon mortgage. Even they scarce ever borrow merely to spend. What they borrow, one may say, is commonly spent before they borrow it. They have generally consumed so great a quantity of goods, advancedto them upon credit by shop-keepers and tradesmen, that they find itnecessary to borrow at interest, in order to pay the debt. The capitalborrowed replaces the capitals of those shop-keepers and tradesmen whichthe country gentlemen could not have replaced from the rents of theirestates. It is not properly borrowed in order to be spent, but in orderto replace a capital which had been spent before. 

Almost all loans at interest are made in money, either of paper, or ofgold and silver; but what the borrower really wants, and what the lenderreadily supplies him with, is not the money, but the money's worth, orthe goods which it can purchase. If he wants it as a stock for immediateconsumption, it is those goods only which he can place in that stock. Ifhe wants it as a capital for employing industry, it is from those goodsonly that the industrious can be furnished with the tools, materials, and maintenance necessary for carrying on their work. By means of theloan, the lender, as it were, assigns to the borrower his right to acertain portion of the annual produce of the land and labour of thecountry, to be employed as the borrower pleases. 

The quantity of stock, therefore, or, as it is commonly expressed, ofmoney, which can be lent at interest in any country, is not regulatedby the value of the money, whether paper or coin, which serves as theinstrument of the different loans made in that country, but by the valueof that part of the annual produce, which, as soon as it comes eitherfrom the ground, or from the hands of the productive labourers, isdestined, not only for replacing a capital, but such a capital as theowner does not care to be at the trouble of employing himself. As suchcapitals are commonly lent out and paid back in money, they constitutewhat is called the monied interest. It is distinct, not only from thelanded, but from the trading and manufacturing interests, as in theselast the owners themselves employ their own capitals. Even in the moniedinterest, however, the money is, as it were, but the deed of assignment, which conveys from one hand to another those capitals which the ownersdo not care to employ themselves. Those capitals may be greater, inalmost any proportion, than the amount of the money which serves as theinstrument of their conveyance; the same pieces of money successivelyserving for many different loans, as well as for many differentpurchases. A, for example, lends to W £1000, with which W immediatelypurchases of B £1000 worth of goods. B having no occasion for the moneyhimself, lends the identical pieces to X, with which X immediatelypurchases of C another £1000 worth of goods. C, in the same manner, andfor the same reason, lends them to Y, who again purchases goods withthem of D. In this manner, the same pieces, either of coin or of paper, may, in the course of a few days, serve as the Instrument of threedifferent loans, and of three different purchases, each of which is, invalue, equal to the whole amount of those pieces. What the three moniedmen, A, B, and C, assigned to the three borrowers, W, X, and Y, is thepower of making those purchases. In this power consist both the valueand the use of the loans. The stock lent by the three monied men isequal to the value of the goods which can be purchased with it, and isthree times greater than that of the money with which the purchases aremade. Those loans, however, may be all perfectly well secured, the goodspurchased by the different debtors being so employed as, in due time, to bring back, with a profit, an equal value either of coin or of paper. And as the same pieces of money can thus serve as the instrument ofdifferent loans to three, or, for the same reason, to thirty times theirvalue, so they may likewise successively serve as the instrument ofrepayment. 

A capital lent at interest may, in this manner, be considered as anassignment, from the lender to the borrower, of a certain considerableportion of the annual produce, upon condition that the burrower inreturn shall, during the continuance of the loan, annually assign to thelender a small portion, called the interest; and, at the end of it, a portion equally considerable with that which had originally beenassigned to him, called the repayment. Though money, either coin orpaper, serves generally as the deed of assignment, both to the smallerand to the more considerable portion, it is itself altogether differentfrom what is assigned by it. 

In proportion as that share of the annual produce which, as soon asit comes either from the ground, or from the hands of the productivelabourers, is destined for replacing a capital, increases in anycountry, what is called the monied interest naturally increases with it. The increase of those particular capitals from which the owners wishto derive a revenue, without being at the trouble of employing themthemselves, naturally accompanies the general increase of capitals; or, in other words, as stock increases, the quantity of stock to be lent atinterest grows gradually greater and greater. 

As the quantity of stock to be lent at interest increases, the interest, or the price which must be paid for the use of that stock, necessarilydiminishes, not only from those general causes which make the marketprice of things commonly diminish as their quantity increases, but fromother causes which are peculiar to this particular case. As capitalsincrease in any country, the profits which can be made by employing themnecessarily diminish. It becomes gradually more and more difficultto find within the country a profitable method of employing any newcapital. There arises, in consequence, a competition between differentcapitals, the owner of one endeavouring to get possession of thatemployment which is occupied by another; but, upon most occasions, hecan hope to justle that other out of this employment by no other meansbut by dealing upon more reasonable terms. He must not only sell whathe deals in somewhat cheaper, but, in order to get it to sell, he mustsometimes, too, buy it dearer. The demand for productive labour, by theincrease of the funds which are destined for maintaining it, growsevery day greater and greater. Labourers easily find employment; but theowners of capitals find it difficult to get labourers to employ. Theircompetition raises the wages of labour, and sinks the profits of stock. But when the profits which can be made by the use of a capital are inthis manner diminished, as it were, at both ends, the price which can bepaid for the use of it, that is, the rate of interest, must necessarilybe diminished with them. 

Mr Locke, Mr Lawe, and Mr Montesquieu, as well as many other writers, seem to have imagined that the increase of the quantity of gold andsilver, in consequence of the discovery of the Spanish West Indies, was the real cause of the lowering of the rate of interest through thegreater part of Europe. Those metals, they say, having become of lessvalue themselves, the use of any particular portion of them necessarilybecame of less value too, and, consequently, the price which could bepaid for it. This notion, which at first sight seems so plausible, hasbeen so fully exposed by Mr Hume, that it is, perhaps, unnecessaryto say any thing more about it. The following very short and plainargument, however, may serve to explain more distinctly the fallacywhich seems to have misled those gentlemen. 

Before the discovery of the Spanish West Indies, ten per cent. Seemsto have been the common rate of interest through the greater part ofEurope. It has since that time, in different countries, sunk to six, five, four, and three per cent. Let us suppose, that in every particularcountry the value of silver has sunk precisely in the same proportionas the rate of interest; and that in those countries, for example, whereinterest has been reduced from ten to five per cent. The same quantityof silver can now purchase just half the quantity of goods which itcould have purchased before. This supposition will not, I believe, befound anywhere agreeable to the truth; but it is the most favourableto the opinion which we are going to examine; and, even upon thissupposition, it is utterly impossible that the lowering of the value ofsilver could have the smallest tendency to lower the rate of interest. If £100 are in those countries now of no more value than £50 were then, £10 must now be of no more value than £5 were then. Whatever were thecauses which lowered the value of the capital, the same must necessarilyhave lowered that of the interest, and exactly in the same proportion. The proportion between the value of the capital and that of the interestmust have remained the same, though the rate had never been altered. By altering the rate, on the contrary, the proportion between those twovalues is necessarily altered. If £100 now are worth no more than£50 were then, £5 now can be worth no more than £2:10s. Were then. Byreducing the rate of interest, therefore, from ten to five per cent. Wegive for the use of a capital, which is supposed to be equal to one halfof its former value, an interest which is equal to one fourth only ofthe value of the former interest. 

An increase in the quantity of silver, while that of the commoditiescirculated by means of it remained the same, could have no other effectthan to diminish the value of that metal. The nominal value of all sortsof goods would be greater, but their real value would be precisely thesame as before. They would be exchanged for a greater number of piecesof silver; but the quantity of labour which they could command, thenumber of people whom they could maintain and employ, would be preciselythe same. The capital of the country would be the same, though a greaternumber of pieces might be requisite for conveying any equal portionof it from one hand to another. The deeds of assignment, like theconveyances of a verbose attorney, would be more cumbersome; but thething assigned would be precisely the same as before, and could produceonly the same effects. The funds for maintaining productive labourbeing the same, the demand for it would be the same. Its price or wages, therefore, though nominally greater, would really be the same. Theywould be paid in a greater number of pieces of silver, but they wouldpurchase only the same quantity of goods. The profits of stock would bethe same, both nominally and really. The wages of labour are commonlycomputed by the quantity of silver which is paid to the labourer. Whenthat is increased, therefore, his wages appear to be increased, thoughthey may sometimes be no greater than before. But the profits of stockare not computed by the number of pieces of silver with which they arepaid, but by the proportion which those pieces bear to the whole capitalemployed. Thus, in a particular country, 5s. A-week are said to be thecommon wages of labour, and ten per cent. The common profits of stock;but the whole capital of the country being the same as before, thecompetition between the different capitals of individuals into which itwas divided would likewise be the same. They would all trade with thesame advantages and disadvantages. The common proportion between capitaland profit, therefore, would be the same, and consequently the commoninterest of money; what can commonly be given for the use of money beingnecessarily regulated by what can commonly be made by the use of it. 

Any increase in the quantity of commodities annually circulated withinthe country, while that of the money which circulated them remainedthe same, would, on the contrary, produce many other important effects, besides that of raising the value of the money. The capital of thecountry, though it might nominally be the same, would really beaugmented. It might continue to be expressed by the same quantity ofmoney, but it would command a greater quantity of labour. The quantityof productive labour which it could maintain and employ would beincreased, and consequently the demand for that labour. Its wages wouldnaturally rise with the demand, and yet might appear to sink. They mightbe paid with a smaller quantity of money, but that smaller quantitymight purchase a greater quantity of goods than a greater had donebefore. The profits of stock would be diminished, both really andin appearance. The whole capital of the country being augmented, thecompetition between the different capitals of which it was composedwould naturally be augmented along with it. The owners of thoseparticular capitals would be obliged to content themselves with asmaller proportion of the produce of that labour which their respectivecapitals employed. The interest of money, keeping pace always with theprofits of stock, might, in this manner, be greatly diminished, thoughthe value of money, or the quantity of goods which any particular sumcould purchase, was greatly augmented. 

In some countries the interest of money has been prohibited by law. Butas something can everywhere be made by the use of money, something oughteverywhere to be paid for the use of it. This regulation, instead ofpreventing, has been found from experience to increase the evil ofusury. The debtor being obliged to pay, not only for the use ofthe money, but for the risk which his creditor runs by accepting acompensation for that use, he is obliged, if one may say so, to insurehis creditor from the penalties of usury. 

In countries where interest is permitted, the law in order to preventthe extortion of usury, generally fixes the highest rate which can betaken without incurring a penalty. This rate ought always to be somewhatabove the lowest market price, or the price which is commonly paid forthe use of money by those who can give the most undoubted security. If this legal rate should be fixed below the lowest market rate, theeffects of this fixation must be nearly the same as those of a totalprohibition of interest. The creditor will not lend his money for lessthan the use of it is worth, and the debtor must pay him for the riskwhich he runs by accepting the full value of that use. If it is fixedprecisely at the lowest market price, it ruins, with honest people whorespect the laws of their country, the credit of all those who cannotgive the very best security, and obliges them to have recourse toexorbitant usurers. In a country such as Great Britain, where money islent to government at three per cent. And to private people, upon 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 be somewhatabove, ought not to be much above the lowest market rate. If the legalrate of interest in Great Britain, for example, was fixed so high aseight or ten per cent. The greater part of the money which was to belent, would be lent to prodigals and projectors, who alone would bewilling to give this high interest. Sober people, who will give for theuse of money no more than a part of what they are likely to make by theuse of it, would not venture into the competition. A great part of thecapital of the country would thus be kept out of the hands which weremost likely to make a profitable and advantageous use of it, and throwninto those 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 universally preferred, asborrowers, to prodigals and projectors. The person who lends money getsnearly as much interest from the former as he dares to take from thelatter, and his money is much safer in the hands of the one set ofpeople than in those of the other. A great part of the capital of thecountry is thus thrown into the hands in which it is most likely to beemployed with advantage. 

No law can reduce the common rate of interest below the lowest ordinarymarket rate at the time when that law is made. Notwithstanding theedict of 1766, by which the French king attempted to reduce the rateof interest from five to four per cent. Money continued to be lent inFrance at five per cent. The law being 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 person who hasa capital from which he wishes to derive a revenue, without taking thetrouble to employ it himself, deliberates whether he should buy landwith it, or lend it out at interest. The superior security of land, together with some other advantages which almost everywhere attend uponthis species of property, will generally dispose him to content himselfwith a smaller revenue from land, than what he might have by lending outhis money at interest. These advantages are sufficient to compensatea certain difference of revenue; but they will compensate a certaindifference only; and if the rent of land should fall short of theinterest of money by a greater difference, nobody would buy land, whichwould soon reduce its ordinary price. On the contrary, if the advantagesshould much more than compensate the difference, everybody would buyland, which again would soon raise its ordinary price. When interestwas at ten per cent. Land was commonly sold for ten or twelve yearspurchase. As interest sunk to six, five, and four per cent. The priceof land rose to twenty, five-and-twenty, and thirty years purchase. Themarket rate of interest is higher in France than in England, and thecommon price of land is lower. In England it commonly sells at thirty, in France at twenty years purchase. 

CHAPTER V. OF THE DIFFERENT EMPLOYMENTS OF CAPITALS. 

Though all capitals are destined for the maintenance of productivelabour only, yet the quantity of that labour which equal capitalsare capable of putting into motion, varies extremely according to thediversity of their employment; as does likewise the value which thatemployment adds to the annual produce of the land and labour of thecountry. 

A capital may be employed in four different ways; either, first, inprocuring the rude produce annually required for the use and consumptionof the society; or, secondly, in manufacturing and preparing that rudeproduce for immediate use and consumption; or, thirdly in transportingeither the rude or manufactured produce from the places where theyabound to those where they are wanted; or, lastly, in dividingparticular portions of either into such small parcels as suit theoccasional demands of those who want them. In the first way are employedthe capitals of all those who undertake improvement or cultivationof lands, mines, or fisheries; in the second, those of all mastermanufacturers; in the third, those of all wholesale merchants; and inthe fourth, those of all retailers. It is difficult to conceive thata capital should be employed in any way which may not be classed undersome one or other of those four. 

Each of those 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. 

Unless a capital was employed in furnishing rude produce to a certaindegree of abundance, neither manufactures nor trade of any kind couldexist. 

Unless a capital was employed in manufacturing that part of the rudeproduce which requires a good deal of preparation before it can be fitfor use and consumption, it either would never be produced, becausethere could be no demand for it; or if it was produced spontaneously, itwould be of no value in exchange, and could add nothing to the wealth ofthe society. 

Unless a capital was employed in transporting either the rude ormanufactured produce from the places where it abounds to those where itis wanted, no more of either could be produced than was necessaryfor the consumption of the neighbourhood. The capital of the merchantexchanges the surplus produce of one place for that of another, and thusencourages the industry, and increases the enjoyments of both. 

Unless a capital was employed in breaking and dividing certain portionseither of the rude or manufactured produce into such small parcels assuit the occasional demands of those who want them, every man would beobliged to purchase a greater quantity of the goods he wanted than hisimmediate occasions required. If there was no such trade as a butcher, for example, every man would be obliged to purchase a whole ox or awhole sheep at a time. This would generally be inconvenient to the rich, and much more so to the poor. If a poor workman was obliged to purchasea month's or six months' provisions at a time, a great part of the stockwhich he employs as a capital in the instruments of his trade, or inthe furniture of his shop, and which yields him a revenue, he wouldbe forced to place in that part of his stock which is reserved forimmediate consumption, and which yields him no revenue. Nothing canbe more convenient for such a person than to be able to purchase hissubsistence from day to day, or even from hour to hour, as he wants it. He is thereby enabled to employ almost his whole stock as a capital. Heis thus enabled to furnish work to a greater value; and the profit whichhe makes by it in this way much more than compensates the additionalprice which the profit of the retailer imposes upon the goods. Theprejudices of some political writers against shopkeepers and tradesmenare altogether without foundation. So far is it from being necessaryeither to tax them, or to restrict their numbers, that they can never bemultiplied so as to hurt the public, though they may so as to hurt oneanother. The quantity of grocery goods, for example, which can be soldin a particular town, is limited by the demand of that town and itsneighbourhood. The capital, therefore, which can be employed in thegrocery trade, cannot exceed what is sufficient to purchase thatquantity. If this capital is divided between two different grocers, their competition will tend to make both of them sell cheaper than ifit were in the hands of one only; and if it were divided among twenty, their competition would be just so much the greater, and the chance oftheir combining together, in order to raise the price, just so much theless. Their competition might, perhaps, ruin some of themselves; but totake care of this, is the business of the parties concerned, and itmay safely be trusted to their discretion. It can never hurt eitherthe consumer or the producer; on the contrary, it must tend to make theretailers both sell cheaper and buy dearer, than if the whole trade wasmonopolized by one or two persons. Some of them, perhaps, may sometimesdecoy a weak customer to buy what he has no occasion for. This evil, however, is of too little importance to deserve the public attention, nor would it necessarily be prevented by restricting their numbers. Itis not the multitude of alehouses, to give the must suspicious example, that occasions a general disposition to drunkenness among the commonpeople; but that disposition, arising from other causes, necessarilygives employment to a multitude of alehouses. 

The persons whose capitals are employed in any of those four ways, arethemselves productive labourers. Their labour, when properly directed, fixes and realizes itself in the subject or vendible commodity uponwhich it is bestowed, and generally adds to its price the value at leastof their own maintenance and consumption. The profits of the farmer, ofthe manufacturer, of the merchant, and retailer, are all drawn from theprice of the goods which the two first produce, and the two last buy andsell. 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 proportions, thevalue of the annual produce of the land and labour of the society towhich they belong. 

The capital of the retailer replaces, together with its profits, thatof the merchant of whom he purchases goods, and thereby enables himto continue his business. The retailer himself is the only productivelabourer whom it immediately employs. In his profit consists the wholevalue which its employment adds to the annual produce of the land andlabour of the society. 

The capital of the wholesale merchant replaces, together with theirprofits, the capital's of the farmers and manufacturers of whom hepurchases the rude and manufactured produce which he deals in, andthereby enables them to continue their respective trades. It is by thisservice chiefly that he contributes indirectly to support the productivelabour of the society, and to increase the value of its annual produce. His capital employs, too, the sailors and carriers who transport hisgoods from one place to another; and it augments the price of thosegoods by the value, not only of his profits, but of their wages. This isall the productive labour which it immediately puts into motion, and allthe value which it immediately adds to the annual produce. Its operationin both these respects is a good deal superior to that of the capital ofthe retailer. 

Part of the capital of the master manufacturer is employed as a fixedcapital in the instruments of his trade, and replaces, together with itsprofits, that of some other artificer of whom he purchases them. Partof his circulating capital is employed in purchasing materials, andreplaces, with their profits, the capitals of the farmers and minersof whom he purchases them. But a great part of it is always, eitherannually, or in a much shorter period, distributed among the differentworkmen whom he employs. It augments the value of those materials bytheir wages, and by their masters' profits upon the whole stock ofwages, materials, and instruments of trade employed in the business. It puts immediately into motion, therefore, a much greater quantity ofproductive labour, and adds a much greater value to the annual produceof the land and labour of the society, than an equal capital in thehands of any wholesale merchant. 

No equal capital puts into motion a greater quantity of productivelabour than that of the farmer. Not only his labouring servants, but hislabouring cattle, are productive labourers. In agriculture, too, Naturelabours along with man; and though her labour costs no expense, itsproduce has its value, as well as that of the most expensive workmen. The most important operations of agriculture seem intended, not so muchto increase, though they do that too, as to direct the fertility ofNature towards the production of the plants most profitable to man. A field overgrown with briars and brambles, may frequently produce asgreat a quantity of vegetables as the best cultivated vineyard or cornfield. Planting and tillage frequently regulate more than they animatethe active fertility of Nature; and after all their labour, a greatpart of the work always remains to be done by her. The labourers andlabouring cattle, therefore, employed in agriculture, not only occasion, like the workmen in manufactures, the reproduction of a value equal totheir own consumption, or to the capital which employs them, togetherwith its owner's profits, but of a much greater value. Over and abovethe capital of the farmer, and all its profits, they regularlyoccasion the reproduction of the rent of the landlord. This rent may beconsidered as the produce of those powers of Nature, the use of whichthe landlord lends to the farmer. It is greater or smaller, accordingto the supposed extent of those powers, or, in other words, according tothe supposed natural or improved fertility of the land. It is the workof Nature which remains, after deducting or compensating every thingwhich can be regarded as the work of man. It is seldom less than afourth, and frequently more than a third, of the whole produce. Noequal quantity of productive labour employed in manufactures, can everoccasion so great reproduction. In them Nature does nothing; man doesall; and the reproduction must always be in proportion to the strengthof the agents that occasion it. The capital employed in agriculture, therefore, not only puts into motion a greater quantity of productivelabour than any equal capital employed in manufactures; but inproportion, too, to the quantity of productive labour which it employs, it adds a much greater value to the annual produce of the landand labour of the country, to the real wealth and revenue of itsinhabitants. Of all the ways in which a capital can be employed, it isby far the most advantageous to society. 

The capitals employed in the agriculture and in the retail trade of anysociety, must always reside within that society. Their employment isconfined almost to a precise spot, to the farm, and to the shop of theretailer. They must generally, too, though there are some exceptions tothis, belong to resident members of the society. 

The capital of a wholesale merchant, on the contrary, seems to have nofixed or necessary residence anywhere, but may wander about from placeto place, according as it can either buy cheap or sell dear. 

The capital of the manufacturer must, no doubt, reside where themanufacture is carried on; but where this shall be, is not alwaysnecessarily determined. It may frequently be at a great distance, both from the place where the materials grow, and from that where thecomplete manufacture is consumed. Lyons is very distant, both from theplaces which afford the materials of its manufactures, and from thosewhich consume them. The people of fashion in Sicily are clothed in silksmade in other countries, from the materials which their own produces. Part of the wool of Spain is manufactured in Great Britain, and somepart of that cloth is afterwards sent back to Spain. 

Whether the merchant whose capital exports the surplus produce of anysociety, be a native or a foreigner, is of very little importance. If heis a foreigner, the number of their productive labourers is necessarilyless than if he had been a native, by one man only; and the value oftheir annual produce, by the profits of that one man. The sailors orcarriers whom he employs, may still belong indifferently either to hiscountry, or to their country, or to some third country, in the samemanner as if he had been a native. The capital of a foreigner givesa value to their surplus produce equally with that of a native, byexchanging it for something for which there is a demand at home. Itas effectually replaces the capital of the person who produces thatsurplus, and as effectually enables him to continue his business, theservice by which the capital of a wholesale merchant chiefly contributesto support the productive 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 manufacturer shouldreside within the country. It necessarily puts into motion a greaterquantity of productive labour, and adds a greater value to the annualproduce of the land and labour of the society. It may, however, bevery useful to the country, though it should not reside within it. Thecapitals of the British manufacturers who work up the flax and hempannually imported from the coasts of the Baltic, are surely very usefulto the countries which produce them. Those materials are a part ofthe surplus produce of those countries, which, unless it was annuallyexchanged for something which is in demand here, would be of no value, and would soon cease to be produced. The merchants who export it, replace the capitals of the people who produce it, and thereby encouragethem to continue the production; and the British manufacturers replacethe capitals of those merchants. 

A particular country, in the same manner as a particular person, mayfrequently not have capital sufficient both to improve and cultivateall its lands, to manufacture and prepare their whole rude produce forimmediate use and consumption, and to transport the surplus part eitherof the rude or manufactured produce to those distant markets, where itcan be exchanged for something for which there is a demand at home. Theinhabitants of many different parts of Great Britain have not capitalsufficient to improve and cultivate all their lands. The wool of thesouthern counties of Scotland is, a great part of it, after a long landcarriage through very bad roads, manufactured in Yorkshire, for want ofa capital to manufacture it at home. There are many little manufacturingtowns in Great Britain, of which the inhabitants have not capitalsufficient to transport the produce of their own industry to thosedistant markets where there is demand and consumption for it. If thereare any merchants among them, they are, properly, only the agents ofwealthier merchants who reside in some of the great commercial cities. 

When the capital of any country is not sufficient for all thosethree purposes, in proportion as a greater share of it is employed inagriculture, the greater will be the quantity of productive labour whichit puts into motion within the country; as will likewise be the valuewhich its employment adds to the annual produce of the land and labourof the society. After agriculture, the capital employed in manufacturesputs into motion the greatest quantity of productive labour, and addsthe greatest value to the annual produce. That which is employed in thetrade of exportation has the least effect of any of the three. 

The country, indeed, which has not capital sufficient for all thosethree purposes, has not arrived at that degree of opulence for which itseems naturally destined. To attempt, however, prematurely, and with aninsufficient capital, to do all the three, is certainly not the shortestway for a society, no more than it would be for an individual, toacquire a sufficient one. The capital of all the individuals of a nationhas its limits, in the same manner as that of a single individual, andis capable of executing only certain purposes. The capital of all theindividuals of a nation is increased in the same manner as that of asingle individual, by their continually accumulating and adding to itwhatever they save out of their revenue. It is likely to increase thefastest, therefore, when it is employed in the way that affords thegreatest revenue to all the inhabitants or the country, as they willthus be enabled to make the greatest savings. But the revenue of all theinhabitants of the country is necessarily in proportion to the value ofthe annual produce of their land and labour. 

It has been the principal cause of the rapid progress of our Americancolonies towards wealth and greatness, that almost their whole capitalshave hitherto been employed in agriculture. They have no manufactures, those household and coarser manufactures excepted, which necessarilyaccompany the progress of agriculture, and which are the work of thewomen and children in every private family. The greater part, both ofthe exportation and coasting trade of America, is carried on by thecapitals of merchants who reside in Great Britain. Even the stores andwarehouses from which goods are retailed in some provinces, particularlyin Virginia and Maryland, belong many of them to merchants who residein the mother country, and afford one of the few instances of the retailtrade of a society being carried on by the capitals of those who are notresident members of it. Were the Americans, either by combination, orby any other sort of violence, to stop the importation of Europeanmanufactures, and, by thus giving a monopoly to such of their owncountrymen as could manufacture the like goods, divert any considerablepart of their capital into this employment, they would retard, insteadof accelerating, the further increase in the value of their annualproduce, and would obstruct, instead of promoting, the progress of theircountry towards real wealth and greatness. This would be still morethe case, were they to attempt, in the same manner, to monopolize tothemselves their whole exportation trade. 

The course of human prosperity, indeed, seems scarce ever to have beenof so long continuance as to unable any great country to acquire capitalsufficient for all those three purposes; unless, perhaps, we give creditto the wonderful accounts of the wealth and cultivation of China, ofthose of ancient Egypt, and of the ancient state of Indostan. Even thosethree countries, the wealthiest, according to all accounts, thatever were in the world, are chiefly renowned for their superiority inagriculture and manufactures. They do not appear to have been eminentfor foreign trade. The ancient Egyptians had a superstitious antipathyto the sea; a superstition nearly of the same kind prevails among theIndians; and the Chinese have never excelled in foreign commerce. Thegreater part of the surplus produce of all those three countries seemsto have been always exported by foreigners, who gave in exchange for itsomething else, for which they found a demand there, frequently gold andsilver. 

It is thus that the same capital will in any country put into motion agreater or smaller quantity of productive labour, and add a greater orsmaller value to the annual produce of its land and labour, accordingto the different proportions in which it is employed in agriculture, manufactures, and wholesale trade. The difference, too, is very great, according to the different sorts of wholesale trade in which any part ofit is employed. 

All wholesale trade, all buying in order to sell again by wholesale, maybe reduced to three different sorts: the home trade, the foreigntrade of consumption, and the carrying trade. The home trade is employedin purchasing in one part of the same country, and selling in another, the produce of the industry of that country. It comprehends both theinland and the coasting trade. The foreign trade of consumption isemployed in purchasing foreign goods for home consumption. The carryingtrade is employed in transacting the commerce of foreign countries, orin carrying the surplus produce of one to another. 

The capital which is employed in purchasing in one part of the country, in order to sell in another, the produce of the industry of thatcountry, generally replaces, by every such operation, two distinctcapitals, that had both been employed in the agriculture or manufacturesof that country, and thereby enables them to continue that employment. When it sends out from the residence of the merchant a certain value ofcommodities, it generally brings hack in return at least an equal valueof other commodities. When both are the produce of domestic industry, it necessarily replaces, by every such operation, two distinct capitals, which had both been employed in Supporting productive labour, andthereby enables them to continue that support. The capital whichsends Scotch manufactures to London, and brings back English cornand manufactures to Edinburgh, necessarily replaces, by every suchoperation, two British capitals, which had both been employed in theagriculture or manufactures of Great Britain. 

The capital employed in purchasing foreign goods for home consumption, when this purchase is made with the produce of domestic industry, replaces, too, by every such operation, two distinct capitals; but oneof them only is employed in supporting domestic industry. The capitalwhich sends British goods to Portugal, and brings back Portuguese goodsto Great Britain, replaces, by every such operation, only one Britishcapital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption, should be as quick as those of thehome trade, the capital employed in it will give but one half of theencouragement to the industry or productive labour of the country. 

But the returns of the foreign trade of consumption are very seldomso quick as those of the home trade. The returns of the home tradegenerally come in before the end of the year, and sometimes three orfour times in the year. The returns of the foreign trade of consumptionseldom come in before the end of the year, and sometimes not till aftertwo or three years. A capital, therefore, employed in the home trade, will sometimes make twelve operations, or be sent out and returnedtwelve times, before a capital employed in the foreign trade ofconsumption has made one. If the capitals are equal, therefore, the onewill give four-and-twenty times more encouragement and support to theindustry of the country than the other. 

The foreign goods for home consumption may sometimes be purchased, notwith the produce of domestic industry but with some other foreign goods. These last, however, must have been purchased, either immediately withthe produce of domestic industry, or with something else that had beenpurchased with it; for, the case of war and conquest excepted, foreigngoods can never be acquired, but in exchange for something that had beenproduced at home, either immediately, or after two or more differentexchanges. The effects, therefore, of a capital employed in such around-about foreign trade of consumption, are, in every respect, thesame as those of one employed in the most direct trade of the same kind, except that the final returns are likely to be still more distant, as they must depend upon the returns of two or three distinct foreigntrades. If the hemp and flax of Riga are purchased with the tobaccoof Virginia, which had been purchased with British manufactures, themerchant must wait for the returns of two distinct foreign trades, before he can employ the same capital in repurchasing a like quantity ofBritish manufactures. If the tobacco of Virginia had been purchased, notwith British manufactures, but with the sugar and rum of Jamaica, whichhad been purchased with those manufactures, he must wait for the returnsof three. If those two or three distinct foreign trades should happento be carried on by two or three distinct merchants, of whom the secondbuys the goods imported by the first, and the third buys those importedby the second, in order to export them again, each merchant, indeed, will, in this case, receive the returns of his own capital more quickly;but the final returns of the whole capital employed in the trade will bejust as slow as ever. Whether the whole capital employed in such a roundabout trade belong to one merchant or to three, can make no differencewith regard to the country, though it may with regard to the particularmerchants. Three times a greater capital must in both cases be employed, in order to exchange a certain value of British manufactures for acertain quantity of flax and hemp, than would have been necessary, hadthe manufactures and the flax and hemp been directly exchanged for oneanother. The whole capital employed, therefore, in such a round-aboutforeign trade of consumption, will generally give less encouragement andsupport to the productive labour of the country, than an equal capitalemployed in a more direct trade of the same kind. 

Whatever be the foreign commodity with which the foreign goods for homeconsumption are purchased, it can occasion no essential difference, either in the nature of the trade, or in the encouragement and supportwhich it can give to the productive labour of the country from whichit is carried on. If they are purchased with the gold of Brazil, forexample, or with the silver of Peru, this gold and silver, like thetobacco of Virginia, must have been purchased with something thateither was the produce of the industry of the country, or that had beenpurchased with something else that was so. So far, therefore, as theproductive labour of the country is concerned, the foreign trade ofconsumption, which is carried on by means of gold and silver, hasall the advantages and all the inconveniencies of any other equallyround-about foreign trade of consumption; and will replace, just asfast, or just as slow, the capital which is immediately employed insupporting that productive labour. It seems even to have one advantageover any other equally round-about foreign trade. The transportation ofthose metals from one place to another, on account of their small bulkand great value, is less expensive than that of almost any other foreigngoods of equal value. Their freight is much less, and their insurancenot greater; and no goods, besides, are less liable to suffer by thecarriage. An equal quantity of foreign goods, therefore, may frequentlybe purchased with a smaller quantity of the produce of domesticindustry, by the intervention of gold and silver, than by that of anyother foreign goods. The demand of the country may frequently, in thismanner, be supplied more completely, and at a smaller expense, thanin any other. Whether, by the continual exportation of those metals, atrade of this kind is likely to impoverish the country from which it iscarried on in any other way, I shall have occasion to examine at greatlength hereafter. 

That part of the capital of any country which is employed in thecarrying trade, is altogether withdrawn from supporting the productivelabour of that particular country, to support that of some foreigncountries. Though it may replace, by every operation, two distinctcapitals, yet neither of them belongs to that particular country. Thecapital of the Dutch merchant, which carries the corn of Poland toPortugal, and brings back the fruits and wines of Portugal to Poland, replaces by every such operation two capitals, neither of which had beenemployed in supporting the productive labour of Holland; but one ofthem in supporting that of Poland, and the other that of Portugal. The profits only return regularly to Holland, and constitute the wholeaddition which this trade necessarily makes to the annual produce of theland and labour of that country. When, indeed, the carrying trade ofany particular country is carried on with the ships and sailors of thatcountry, that part of the capital employed in it which pays thefreight is distributed among, and puts into motion, a certain number ofproductive labourers of that country. Almost all nations that have hadany considerable share of the carrying trade have, in fact, carried iton in this manner. The trade itself has probably derived its name fromit, the people of such countries being the carriers to other countries. It does not, however, seem essential to the nature of the trade that itshould be so. A Dutch merchant may, for example, employ his capital intransacting the commerce of Poland and Portugal, by carrying part of thesurplus produce of the one to the other, not in Dutch, but in Britishbottoms. It maybe presumed, that he actually does so upon someparticular occasions. It is upon this account, however, that thecarrying trade has been supposed peculiarly advantageous to such acountry as Great Britain, of which the defence and security depend uponthe number 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 by coastingvessels, as it could in the carrying trade. The number of sailors andshipping which any particular capital can employ, does not depend uponthe nature of the trade, but partly upon the bulk of the goods, inproportion to their value, and partly upon the distance of the portsbetween which they are to be carried; chiefly upon the former of thosetwo circumstances. The coal trade from Newcastle to London, for example, employs more shipping than all the carrying trade of England, though theports are at no great distance. To force, therefore, by extraordinaryencouragements, a larger share of the capital of any country into thecarrying trade, than what would naturally go to it, will not alwaysnecessarily increase the shipping of that country. 

The capital, therefore, employed in the home trade of any country, will generally give encouragement and support to a greater quantity ofproductive labour in that country, and increase the value of its annualproduce, more than an equal capital employed in the foreign trade ofconsumption; and the capital employed in this latter trade has, in boththese respects, a still greater advantage over an equal capital employedin the carrying trade. The riches, and so far as power depends uponriches, the power of every country must always be in proportion tothe value of 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. Itought, therefore, to give no preference nor superior encouragementto the foreign trade of consumption above the home trade, nor to thecarrying trade above either of the other two. It ought neither to forcenor to allure into either of those two channels a greater share of thecapital of the country, than what would naturally flow into them of itsown accord. 

Each of those different branches of trade, however, is not onlyadvantageous, but necessary and unavoidable, when the course of things, without any constraint or violence, naturally introduces it. 

When the produce of any particular branch of industry exceeds what thedemand of the country requires, the surplus must be sent abroad, andexchanged for something for which there is a demand at home. Withoutsuch exportation, a part of the productive labour of the country mustcease, and the value of its annual produce diminish. The land and labourof Great Britain produce generally more corn, woollens, and hardware, than the demand of the home market requires. The surplus part of them, therefore, must be sent abroad, and exchanged for something for whichthere is a demand at home. It is only by means of such exportation, thatthis surplus can acquired value sufficient to compensate the labour andexpense of producing it. The neighbourhood of the sea-coast, and thebanks of all navigable rivers, are advantageous situations for industry, only because they facilitate the exportation and exchange of suchsurplus produce for something else which is more in demand there. 

When the foreign goods which are thus purchased with the surplus produceof domestic industry exceed the demand of the home market, the surpluspart of them must be sent abroad again, and exchanged for somethingmore in demand at home. About 96, 000 hogsheads of tobacco are annuallypurchased in Virginia and Maryland with a part of the surplus produceof British industry. But the demand of Great Britain does not require, perhaps, more than 14, 000. If the remaining 82, 000, therefore, could notbe sent abroad, and exchanged for something more in demand at home, theimportation of them must cease immediately, and with it the productivelabour of all those inhabitants of Great Britain who are at presentemployed in preparing the goods with which these 82, 000 hogsheads areannually purchased. Those goods, which are part of the produce of theland and labour of Great Britain, having no market at home, and beingdeprived of that which they had abroad, must cease to be produced. Themost round-about foreign trade of consumption, therefore, may, upon someoccasions, be as necessary for supporting the productive labour of thecountry, and the value of its annual produce, as the most direct. 

When the capital stock of any country is increased to such a degree thatit cannot be all employed in supplying the consumption, and supportingthe productive labour of that particular country, the surplus part of itnaturally disgorges itself into the carrying trade, and is employed inperforming the same offices to other countries. The carrying trade isthe natural effect and symptom of great national wealth; but it doesnot seem to be the natural cause of it. Those statesmen who have beendisposed to favour it with particular encouragement, seem to havemistaken the effect and symptom for the cause. Holland, in proportionto the extent of the land and the number of it's inhabitants, by farthe richest country in Europe, has accordingly the greatest share of thecarrying trade of Europe. England, perhaps the second richest country ofEurope, is likewise supposed to have a considerable share in it; thoughwhat commonly passes for the carrying trade of England will frequently, perhaps, be found to be no more than a round-about foreign trade ofconsumption. Such are, in a great measure, the trades which carrythe goods of the East and West Indies and of America to the differentEuropean markets. Those goods are generally purchased, eitherimmediately with the produce of British industry, or with something elsewhich had been purchased with that produce, and the final returns ofthose trades are generally used or consumed in Great Britain. The tradewhich is carried on in British bottoms between the different ports ofthe Mediterranean, and some trade of the same kind carried on by Britishmerchants between the different ports of India, make, perhaps, theprincipal branches of what is properly the carrying trade of GreatBritain. 

The extent of the home trade, and of the capital which can be employedin it, is necessarily limited by the value of the surplus produce of allthose distant places within the country which have occasion to exchangetheir respective productions with one another; that of the foreigntrade of consumption, by the value of the surplus produce of the wholecountry, and of what can be purchased with it; that of the carryingtrade, by the value of the surplus produce of all the differentcountries in the world. Its possible extent, therefore, is in a mannerinfinite in comparison of that of the other two, and is capable ofabsorbing the greatest capitals. 

The consideration of his own private profit is the sole motive whichdetermines the owner of any capital to employ it either in agriculture, in manufactures, or in some particular branch of the wholesale or retailtrade. The different quantities of productive labour which it may putinto motion, and the different values which it may add to the annualproduce of the land and labour of the society, according as it isemployed in one or other of those different ways, never enter intohis thoughts. In countries, therefore, where agriculture is the mostprofitable of all employments, and farming and improving the most directroads to a splendid fortune, the capitals of individuals will naturallybe employed in the manner most advantageous to the whole society. Theprofits of agriculture, however, seem to have no superiority over thoseof other employments in any part of Europe. Projectors, indeed, in everycorner of it, have, within these few years, amused the public with mostmagnificent accounts of the profits to be made by the cultivation andimprovement of land. Without entering into any particular discussion oftheir calculations, a very simple observation may satisfy us that theresult of them must be false. We see, every day, the most splendidfortunes, that have been acquired in the course of a single life, bytrade and manufactures, frequently from a very small capital, sometimesfrom no capital. A single instance of such a fortune, acquired byagriculture in the same time, and from such a capital, has not, perhaps, occurred in Europe, during the course of the present century. In allthe great countries 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 much greatercapital than has ever yet been employed in it. What circumstances in thepolicy of Europe have given the trades which are carried on in towns sogreat an advantage over that which is carried on in the country, thatprivate persons frequently find it more for their advantage to employtheir capitals in the most distant carrying trades of Asia and Americathan in the improvement and cultivation of the most fertile fields intheir own neighbourhood, I shall endeavour to explain at full length inthe two following books. 

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

CHAPTER I. OF THE NATURAL PROGRESS OF OPULENCE. 

The great commerce of every civilized society is that carried on betweenthe inhabitants of the town and those of the country. It consists in theexchange of rude for manufactured produce, either immediately, or by theintervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and thematerials of manufacture. The town repays this supply, by sending back apart of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction ofsubstances, may very properly be said to gain its whole wealth andsubsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gainsof both are mutual and reciprocal, and the division of labour is inthis, as in all other cases, advantageous to all the different personsemployed in the various occupations into which it is subdivided. Theinhabitants of the country purchase of the town a greater quantity ofmanufactured goods with the produce of a much smaller quantity of theirown labour, than they must have employed had they attempted to preparethem themselves. The town affords a market for the surplus produceof the country, or what is over and above the maintenance of thecultivators; and it is there that the inhabitants of the countryexchange it for something else which is in demand among them. Thegreater the number and revenue of the inhabitants of the town, the moreextensive is the market which it affords to those of the country; andthe more extensive that market, it is always the more advantageous toa great number. The corn which grows within a mile of the town, sellsthere for the same price with that which comes from twenty milesdistance. But the price of the latter must, generally, not only pay theexpense of raising it and bringing it to market, but afford, too, theordinary profits of agriculture to the farmer. The proprietors andcultivators of the country, therefore, which lies in the neighbourhoodof the town, over and above the ordinary profits of agriculture, gain, in the price of what they sell, the whole value of the carriage of thelike produce that is brought from more distant parts; and they save, besides, the whole value of this carriage in the price of what theybuy. Compare the cultivation of the lands in the neighbourhood of anyconsiderable town, with that of those which lie at some distancefrom it, and you will easily satisfy yourself bow much the country isbenefited by the commerce of the town. Among all the absurd speculationsthat have been propagated concerning the balance of trade, it has neverbeen pretended 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 conveniency andluxury, so the industry which procures the former, must necessarilybe prior to that which ministers to the latter. The cultivation andimprovement of the country, therefore, which affords subsistence, must, necessarily, be prior to the increase of the town, which furnishes onlythe means of conveniency and luxury. It is the surplus produce ofthe country only, or what is over and above the maintenance of thecultivators, that constitutes the subsistence of the town, which cantherefore increase only with the increase of the surplus produce. Thetown, indeed, may not always derive its whole subsistence from thecountry in its neighbourhood, or even from the territory to which itbelongs, but from very distant countries; and this, though it forms noexception from the general rule, has occasioned considerable variationsin the progress of opulence in different ages and nations. 

That order of things which necessity imposes, in general, though not inevery particular country, is in every particular country promoted by thenatural inclinations of man. If human institutions had never thwartedthose natural inclinations, the towns could nowhere have increasedbeyond what the improvement and cultivation of the territory in whichthey were situated could support; till such time, at least, as the wholeof that territory was completely cultivated and improved. Upon equal, or nearly equal profits, most men will choose to employ their capitals, rather in the improvement and cultivation of land, than either inmanufactures or in foreign trade. The man who employs his capital inland, has it more under his view and command; and his fortune ismuch less liable to accidents than that of the trader, who is obligedfrequently to commit it, not only to the winds and the waves, but to themore uncertain elements of human folly and injustice, by giving greatcredits, in distant countries, to men with whose character and situationhe can seldom be thoroughly acquainted. The capital of the landlord, onthe contrary, which is fixed in the improvement of his land, seems to beas well secured as the nature of human affairs can admit of. Thebeauty of the country, besides, the pleasure of a country life, thetranquillity of mind which it promises, and, wherever the injusticeof human laws does not disturb it, the independency which it reallyaffords, have charms that, more or less, attract everybody; and as tocultivate the ground was the original destination of man, so, in everystage of his existence, he seems to retain a predilection for thisprimitive employment. 

Without the assistance of some artificers, indeed, the cultivation ofland cannot be carried on, but with great inconveniency and continualinterruption. Smiths, carpenters, wheelwrights and ploughwrights, masonsand bricklayers, tanners, shoemakers, and tailors, are people whoseservice the farmer has frequent occasion for. Such artificers, too, stand occasionally in need of the assistance of one another; and astheir residence is not, like that of the farmer, necessarily tied downto a precise spot, they naturally settle in the neighbourhood of oneanother, and thus form a small town or village. The butcher, the brewer, and the baker, soon join them, together with many other artificers andretailers, necessary or useful for supplying their occasional wants, andwho contribute still further to augment the town. The inhabitants ofthe town, and those of the country, are mutually the servants ofone another. The town is a continual fair or market, to which theinhabitants of the country resort, in order to exchange their rude formanufactured produce. It is this commerce which supplies the inhabitantsof the town, both with the materials of their work, and the means oftheir subsistence. 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 their employmentnor subsistence, therefore, can augment, but in proportion to theaugmentation of the demand from the country for finished work; and thisdemand can augment only in proportion to the extension of improvementand cultivation. Had human institutions, therefore, never disturbed thenatural course of things, the progressive wealth and increase of thetowns would, in every political society, be consequential, and inproportion to the improvement and cultivation of the territory ofcountry. 

In our North American colonies, where uncultivated land is still to behad upon easy terms, no manufactures for distant sale have ever yetbeen established in any of their towns. When an artificer has acquired alittle more stock than is necessary for carrying on his own businessin supplying the neighbouring country, he does not, in North America, attempt to establish with it a manufacture for more distant sale, butemploys it in the purchase and improvement of uncultivated land. Fromartificer he becomes 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, and deriveshis necessary subsistence from the labour of his own family, is really amaster, and independent of all the world. 

In countries, on the contrary, where there is either no uncultivatedland, or none that can be had upon easy terms, every artificer who hasacquired more stock than he can employ in the occasional jobs of theneighbourhood, endeavours to prepare work for more distant sale. Thesmith erects some sort of iron, the weaver some sort of linen or woollenmanufactory. Those different manufactures come, in process of time, tobe gradually subdivided, and thereby improved and refined in a greatvariety of ways, which may easily be conceived, and which it istherefore unnecessary to explain any farther. 

In seeking for employment to a capital, manufactures are, upon equal ornearly equal profits, naturally preferred to foreign commerce, for thesame reason that agriculture is naturally preferred to manufactures. Asthe capital of the landlord or farmer is more secure than that of themanufacturer, so the capital of the manufacturer, being at all timesmore within his view and command, is more secure than that of theforeign merchant. In every period, indeed, of every society, the surpluspart both of the rude and manufactured produce, or that for which thereis no demand at home, must be sent abroad, in order to be exchangedfor something for which there is some demand at home. But whether thecapital which carries this surplus produce abroad be a foreign or adomestic one, is of very little importance. If the society has notacquired sufficient capital, both to cultivate all its lands, and tomanufacture in the completest manner the whole of its rude produce, there is even a considerable advantage that the rude produce shouldbe exported by a foreign capital, in order that the whole stock of thesociety may be employed in more useful purposes. The wealth of ancientEgypt, that of China and Indostan, sufficiently demonstrate that anation may attain a very high degree of opulence, though the greaterpart of its exportation trade be carried on by foreigners. The progressof our North American and West Indian colonies, would have been muchless rapid, had no capital but what belonged to themselves been employedin exporting their surplus produce. 

According to the natural course of things, therefore, the greaterpart of the capital of every growing society is, first, directed toagriculture, afterwards to manufactures, and, last of all, to foreigncommerce. This order of things is so very natural, that in every societythat had any territory, it has always, I believe, been in some degreeobserved. Some of their lands must have been cultivated before anyconsiderable towns could be established, and some sort of coarseindustry of the manufacturing kind must have been carried on in thosetowns, before they could well think of employing themselves in foreigncommerce. 

But though this natural order of things must have taken place in somedegree in every such society, it has, in all the modern states ofEurope, been in many respects entirely inverted. The foreign commerceof some of their cities has introduced all their finer manufactures, orsuch as were fit for distant sale; and manufactures and foreign commercetogether have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original governmentintroduced, and which remained after that government was greatlyaltered, necessarily forced them into this unnatural and retrogradeorder. 

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

When the German and Scythian nations overran the western provinces ofthe Roman empire, the confusions which followed so great a revolutionlasted for several centuries. The rapine and violence which thebarbarians exercised against the ancient inhabitants, interrupted thecommerce between the towns and the country. The towns were deserted, andthe country was left uncultivated; and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Romanempire, sunk into the lowest state of poverty and barbarism. During thecontinuance of those confusions, the chiefs and principal leaders ofthose nations acquired, or usurped to themselves, the greater part ofthe lands of those countries. A great part of them was uncultivated; butno part of them, whether cultivated or uncultivated, was left withouta proprietor. All of them were engrossed, and the greater part by a fewgreat proprietors. 

This original engrossing of uncultivated lands, though a great, mighthave been but a transitory evil. They might soon have been dividedagain, and broke into small parcels, either by succession or byalienation. The law of primogeniture hindered them from being divided bysuccession; the introduction of entails prevented their being broke intosmall parcels by alienation. 

When land, like moveables, is considered as the means only ofsubsistence and enjoyment, the natural law of succession divides it, like them, among all the children of the family; of all of whom thesubsistence and enjoyment may be supposed equally dear to the father. This natural law of succession, accordingly, took place among the Romanswho made no more distinction between elder and younger, between male andfemale, in the inheritance of lands, than we do in the distribution ofmoveables. But when land was considered as the means, not of subsistencemerely, but of power and protection, it was thought better that itshould descend undivided to one. In those disorderly times, every greatlandlord was a sort of petty prince. His tenants were his subjects. He was their judge, and in some respects their legislator in peaceand their leader in war. He made war according to his own discretion, frequently against his neighbours, and sometimes against his sovereign. The security of a landed estate, therefore, the protection whichits owner could afford to those who dwelt on it, depended upon itsgreatness. To divide it was to ruin it, and to expose every part of itto be oppressed and swallowed up by the incursions of its neighbours. The law of primogeniture, therefore, came to take place, not immediatelyindeed, but in process of time, in the succession of landed estates, forthe same reason that it has generally taken place in that of monarchies, though not always at their first institution. That the power, andconsequently the security of the monarchy, may not be weakened bydivision, it must descend entire to one of the children. To which ofthem so important a preference shall be given, must be determinedby some general rule, founded not upon the doubtful distinctions ofpersonal merit, but upon some plain and evident difference which canadmit of no dispute. Among the children of the same family there can beno indisputable difference but that of sex, and that of age. The malesex is universally preferred to the female; and when all other thingsare equal, the elder everywhere takes place of the younger. Hence theorigin of the right of primogeniture, and of what is called linealsuccession. 

Laws frequently continue in force long after the circumstanceswhich first gave occasion to them, and which could alone render themreasonable, are no more. In the present state of Europe, the proprietorof a single acre of land is as perfectly secure in his possession asthe proprietor of 100, 000. The right of primogeniture, however, stillcontinues to be respected; and as of all institutions it is the fittestto support the pride of family distinctions, it is still likely toendure for many centuries. In every other respect, nothing can be morecontrary to the real interest of a numerous family, than a right which, in order to enrich one, beggars all the rest of the children. 

Entails are the natural consequences of the law of primogeniture. Theywere introduced to preserve a certain lineal succession, of which thelaw of primogeniture first gave the idea, and to hinder any part of theoriginal estate from being carried out of the proposed line, eitherby gift, or device, or alienation; either by the folly, or by themisfortune of any of its successive owners. They were altogether unknownto the Romans. Neither their substitutions, nor fidei commisses, bearany resemblance to entails, though some French lawyers have thoughtproper to dress the modern institution in the language and garb of thoseancient ones. 

When great landed estates were a sort of principalities, entails mightnot be unreasonable. Like what are called the fundamental laws of somemonarchies, they might frequently hinder the security of thousands frombeing endangered by the caprice or extravagance of one man. But in thepresent state of Europe, when small as well as great estates derivetheir security from the laws of their country, nothing can be morecompletely absurd. They are founded upon the most absurd of allsuppositions, the supposition that every successive generation of menhave not an equal right to the earth, and to all that it possesses; butthat the property of the present generation should be restrained andregulated according to the fancy of those who died, perhaps five hundredyears ago. Entails, however, are still respected, through the greaterpart of Europe; In those countries, particularly, in which noble birthis a necessary qualification for the enjoyment either of civil ormilitary honours. Entails are thought necessary for maintaining thisexclusive privilege of the nobility to the great offices and honours oftheir country; and that order having usurped one unjust advantage overthe rest of their fellow-citizens, lest their poverty should render itridiculous, it is thought reasonable that they should have another. Thecommon law of England, indeed, is said to abhor perpetuities, andthey are accordingly more restricted there than in any other Europeanmonarchy; though even England is not altogether without them. InScotland, more than one fifth, perhaps more than one third part of thewhole lands in the country, are at present supposed to be under strictentail. 

Great tracts of uncultivated land were in this manner not only engrossedby particular families, but the possibility of their being divided againwas as much as possible precluded for ever. It seldom happens, however, that a great proprietor is a great improver. In the disorderly timeswhich gave birth to those barbarous institutions, the great proprietorwas sufficiently employed in defending his own territories, or inextending his jurisdiction and authority over those of his neighbours. He had no leisure to attend to the cultivation and improvement of land. When the establishment of law and order afforded him this leisure, heoften wanted the inclination, and almost always the requisite abilities. If the expense of his house and person either equalled or exceeded hisrevenue, as it did very frequently, he had no stock to employ in thismanner. If he was an economist, he generally found it more profitableto employ his annual savings in new purchases than in the improvement ofhis old estate. To improve land with profit, like all other commercialprojects, requires an exact attention to small savings and small gains, of which a man born to a great fortune, even though naturally frugal, isvery seldom capable. The situation of such a person naturally disposeshim to attend rather to ornament, which pleases his fancy, than toprofit, for which he has so little occasion. The elegance of his dress, of his equipage, of his house and household furniture, are objectswhich, from his infancy, he has been accustomed to have some anxietyabout. The turn of mind which this habit naturally forms, follows himwhen he comes to think of the improvement of land. He embellishes, perhaps, four or five hundred acres in the neighbourhood of hishouse, at ten times the expense which the land is worth after all hisimprovements; and finds, that if he was to improve his whole estate inthe same manner, and he has little taste for any other, he would bea bankrupt before he had finished the tenth part of it. There stillremain, in both parts of the united kingdom, some great estates whichhave continued, without interruption, in the hands of the same familysince the times of feudal anarchy. Compare the present condition ofthose estates with the possessions of the small proprietors in theirneighbourhood, and you will require no other argument to convince youhow unfavourable such extensive property is to improvement. 

If little improvement was to be expected from such great proprietors, still less was to be hoped for from those who occupied the land underthem. In the ancient state of Europe, the occupiers of land were alltenants at will. They were all, or almost all, slaves, but their slaverywas of a milder kind than that known among the ancient Greeks andRomans, or even in our West Indian colonies. They were supposed tobelong more directly to the land than to their master. They could, therefore, be sold with it, but not separately. They could marry, provided it was with the consent of their master; and he could notafterwards dissolve the marriage by selling the man and wife todifferent persons. If he maimed or murdered any of them, he was liableto some penalty, though generally but to a small one. They were not, however, capable of acquiring property. Whatever they acquired wasacquired to their master, and he could take it from them at pleasure. Whatever cultivation and improvement could be carried on by means ofsuch slaves, was properly carried on by their master. It was at hisexpense. The seed, the cattle, and the instruments of husbandry, wereall his. It was for his benefit. Such slaves could acquire nothingbut their daily maintenance. It was properly the proprietor himself, therefore, that in this case occupied his own lands, and cultivated themby his own bondmen. This species of slavery still subsists in Russia, Poland, Hungary, Bohemia, Moravia, and other parts of Germany. It isonly in the western and south-western provinces of Europe that it hasgradually been abolished altogether. 

But if great improvements are seldom to be expected from greatproprietors, they are least of all to be expected when they employslaves for their workmen. The experience of all ages and nations, Ibelieve, demonstrates that the work done by slaves, though it appears tocost only their maintenance, is in the end the dearest of any. A personwho can acquire no property can have no other interest but to eat asmuch and to labour as little as possible. Whatever work he does beyondwhat is sufficient to purchase his own maintenance, can be squeezed outof him by violence only, and not by any interest of his own. In ancientItaly, how much the cultivation of corn degenerated, how unprofitableit became to the master, when it fell under the management of slaves, isremarked both by Pliny and Columella. In the time of Aristotle, it hadnot been much better in ancient Greece. Speaking of the ideal republicdescribed in the laws of Plato, to maintain 5000 idle men (the number ofwarriors supposed necessary for its defence), together with their womenand servants, would require, he says, a territory of boundless extentand fertility, like the plains of Babylon. 

The pride of man makes him love to domineer, and nothing mortifieshim so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that offreemen. The planting of sugar and tobacco can afford the expense ofslave cultivation. The raising of corn, it seems, in the present times, cannot. In the English colonies, of which the principal produce is corn, the far greater part of the work is done by freemen. The late resolutionof the Quakers in Pennsylvania, to set at liberty all their negroslaves, may satisfy us that their number cannot be very great. Had theymade any considerable part of their property, such a resolution couldnever have been agreed to. In our sugar colonies. , on the contrary, thewhole work is done by slaves, and in our tobacco colonies a very greatpart of it. The profits of a sugar plantation in any of our West Indiancolonies, are generally much greater than those of any other cultivationthat is known either in Europe or America; and the profits of a tobaccoplantation, though inferior to those of sugar, are superior to those ofcorn, as has already been observed. Both can afford the expense ofslave cultivation but sugar can afford it still better than tobacco. Thenumber of negroes, accordingly, is much greater, in proportion to thatof whites, in our sugar than in our tobacco colonies. 

To the slave cultivators of ancient times gradually succeeded a speciesof farmers, known at present in France by the name of metayers. They arecalled in Latin Coloni Partiarii. They have been so long in disuse inEngland, that at present I know no English name for them. The proprietorfurnished them with the seed, cattle, and instruments of husbandry, thewhole stock, in short, necessary for cultivating the farm. The producewas divided equally between the proprietor and the farmer, after settingaside what was judged necessary for keeping up the stock, which wasrestored to the proprietor, when the farmer either quitted or was turnedout of the farm. 

Land occupied by such tenants is properly cultivated at the expense ofthe proprietors, as much as that occupied by slaves. There is, however, one very essential difference between them. Such tenants, being freemen, are capable of acquiring property; and having a certain proportionof the produce of the land, they have a plain interest that thewhole produce should be as great as possible, in order that their ownproportion may be so. A slave, on the contrary, who can acquire nothingbut his maintenance, consults his own ease, by making the land produceas little as possible over and above that maintenance. It is probablethat it was partly upon account of this advantage, and partly uponaccount of the encroachments which the sovereigns, always jealous ofthe great lords, gradually encouraged their villains to make upon theirauthority, and which seem, at least, to have been such as rendered thisspecies of servitude altogether inconvenient, that tenure in villanagegradually wore out through the greater part of Europe. The time andmanner, however, in which so important a revolution was brought about, is one of the most obscure points in modern history. The church ofRome claims great merit in it; and it is certain, that so early asthe twelfth century, Alexander III. Published a bull for the generalemancipation of slaves. It seems, however, to have been rather a piousexhortation, than a law to which exact obedience was required from thefaithful. Slavery continued to take place almost universally for severalcenturies afterwards, till it was gradually abolished by the jointoperation of the two interests above mentioned; that of the proprietoron the one hand, and that of the sovereign on the other. A villain, enfranchised, and at the same time allowed to continue in possession ofthe land, having no stock of his own, could cultivate it only by meansof what the landlord advanced to him, and must therefore have been whatthe French call a metayer. 

It could never, however, be the interest even of this last species ofcultivators, to lay out, in the further improvement of the land, anypart of the little stock which they might save from their own share ofthe produce; because the landlord, who laid out nothing, was to get onehalf of whatever it produced. The tithe, which is but a tenth of theproduce, is found to be a very great hindrance to improvement. A tax, therefore, which amounted to one half, must have been an effectual barto it. It might be the interest of a metayer to make the land produceas much as could be brought out of it by means of the stock furnishedby the proprietor; but it could never be his interest to mix any partof his own with it. In France, where five parts out of six of the wholekingdom are said to be still occupied by this species of cultivators, the proprietors complain, that their metayers take every opportunity ofemploying their master's cattle rather in carriage than in cultivation;because, in the one case, they get the whole profits to themselves, inthe other they share them with their landlord. This species of tenantsstill subsists in some parts of Scotland. They are called steel-bowtenants. Those ancient English tenants, who are said by Chief-BaronGilbert and Dr Blackstone to have been rather bailiffs of the landlordthan farmers, properly so called, were probably of the same kind. 

To this species of tenantry succeeded, though by very slow degrees, farmers, properly so called, who cultivated the land with their ownstock, paying a rent certain to the landlord. When such farmers have alease for a term of years, they may sometimes find it for their interestto lay out part of their capital in the further improvement of the farm;because they may sometimes expect to recover it, with a large profit, before the expiration of the lease. The possession, even of suchfarmers, however, was long extremely precarious, and still is so in manyparts of Europe. They could, before the expiration of their term, belegally ousted of their leases by a new purchaser; in England, even, by the fictitious action of a common recovery. If they were turned outillegally by the violence of their master, the action by which theyobtained redress was extremely imperfect. It did not always reinstatethem in the possession of the land, but gave them damages, which neveramounted to a real loss. Even in England, the country, perhaps ofEurope, where the yeomanry has always been most respected, it was nottill about the 14th of Henry VII. That the action of ejectmentwas invented, by which the tenant recovers, not damages only, butpossession, and in which his claim is not necessarily concluded by theuncertain decision of a single assize. This action has been found soeffectual a remedy, that, in the modern practice, when the landlord hasoccasion to sue for the possession of the land, he seldom makes useof the actions which properly belong to him as a landlord, the writ ofright or the writ of entry, but sues in the name of his tenant, by thewrit of ejectment. In England, therefore the security of the tenant isequal to that of the proprietor. In England, besides, a lease for lifeof forty shillings a-year value is a freehold, and entitles the lesseeto a vote for a member of parliament; and as a great part of theyeomanry have freeholds of this kind, the whole order becomesrespectable to their landlords, on account of the politicalconsideration which this gives them. There is, I believe, nowhere inEurope, except in England, any instance of the tenant building uponthe land of which he had no lease, and trusting that the honour of hislandlord would take no advantage of so important an improvement. Those laws and customs, so favourable to the yeomanry, have perhapscontributed more to the present grandeur of England, than all theirboasted regulations of commerce taken together. 

The law which secures the longest leases against successors of everykind, is, so far as I know, peculiar to Great Britain. It was introducedinto Scotland so early as 1449, by a law of James II. Its beneficialinfluence, however, has been much obstructed by entails; the heirs ofentail being generally restrained from letting leases for any long termof years, frequently for more than one year. A late act of parliamenthas, in this respect, somewhat slackened their fetters, though they arestill by much too strait. In Scotland, besides, as no leasehold gives avote for a member of parliament, the yeomanry are upon this account lessrespectable to their landlords than in England. 

In other parts of Europe, after it was found convenient to securetenants both against heirs and purchasers, the term of their securitywas still limited to a very short period; in France, for example, tonine years from the commencement of the lease. It has in that country, indeed, been lately extended to twentyseven, a period still too shortto encourage the tenant to make the most important improvements. Theproprietors of land were anciently the legislators of every part ofEurope. The laws relating to land, therefore, were all calculatedfor what they supposed the interest of the proprietor. It was forhis interest, they had imagined, that no lease granted by any of hispredecessors should hinder him from enjoying, during a long term ofyears, the full value of his land. Avarice and injustice are alwaysshort-sighted, and they did not foresee how much this regulation mustobstruct improvement, and thereby hurt, in the long-run, the realinterest of the landlord. 

The farmers, too, besides paying the rent, were anciently, it wassupposed, bound to perform a great number of services to the landlord, which were seldom either specified in the lease, or regulated by anyprecise rule, but by the use and wont of the manor or barony. Theseservices, therefore, being almost entirely arbitrary, subjected thetenant to many vexations. In Scotland the abolition of all services notprecisely stipulated in the lease, has, in the course of a few years, very much altered for the better the condition of the yeomanry of thatcountry. 

The public services to which the yeomanry were bound, were not lessarbitrary than the private ones. To make and maintain the high roads, a servitude which still subsists, I believe, everywhere, though withdifferent degrees of oppression in different countries, was not the onlyone. When the king's troops, when his household, or his officers of anykind, passed through any part of the country, the yeomanry were boundto provide them with horses, carriages, and provisions, at a priceregulated by the purveyor. Great Britain is, I believe, the onlymonarchy in Europe where the oppression of purveyance has been entirelyabolished. It still subsists in France and Germany. 

The public taxes, to which they were subject, were as irregular andoppressive as the services The ancient lords, though extremely unwillingto grant, themselves, any pecuniary aid to their sovereign, easilyallowed him to tallage, as they called it, their tenants, and had notknowledge enough to foresee how much this must, in the end, affect theirown revenue. The taille, as it still subsists in France may serve as anexample of those ancient tallages. It is a tax upon the supposed profitsof the farmer, which they estimate by the stock that he has upon thefarm. It is his interest, therefore, to appear to have as little aspossible, and consequently to employ as little as possible in itscultivation, and none in its improvement. Should any stock happen toaccumulate in the hands of a French farmer, the taille is almost equalto a prohibition of its ever being employed upon the land. This tax, besides, is supposed to dishonour whoever is subject to it, and todegrade him below, not only the rank of a gentleman, but that of aburgher; and whoever rents 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 its improvement, butdrives away all other stock from it. The ancient tenths and fifteenths, so usual in England in former times, seem, so far as they affected theland, to have been taxes of the same nature with the taille. 

Under all these discouragements, little improvement could be expectedfrom the occupiers of land. That order of people, with all the libertyand security which law can give, must always improve under greatdisadvantage. The farmer, compared with the proprietor, is as a merchantwho trades with burrowed money, compared with one who trades with hisown. The stock of both may improve; but that of the one, with only equalgood conduct, must always improve more slowly than that of the other, on account of the large share of the profits which is consumed by theinterest of the loan. The lands cultivated by the farmer must, in thesame manner, with only equal good conduct, be improved more slowly thanthose cultivated by the proprietor, on account of the large share of theproduce which is consumed in the rent, and which, had the farmer beenproprietor, he might have employed in the further improvement of theland. The station of a farmer, besides, is, from the nature of things, inferior to that of a proprietor. Through the greater part of Europe, the yeomanry are regarded as an inferior rank of people, even to thebetter sort of tradesmen and mechanics, and in all parts of Europe tothe great merchants 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 in thepresent state of Europe, therefore, little stock is likely to go fromany other profession to the improvement of land in the way of farming. More does, perhaps, in Great Britain than in any other country, thougheven there the great stocks which are in some places employed infarming, have generally been acquired by fanning, the trade, perhaps, in which, of all others, stock is commonly acquired most slowly. Aftersmall proprietors, however, rich and great farmers are in every countrythe principal improvers. There are more such, perhaps, in Englandthan in any other European monarchy. In the republican governments ofHolland, and of Berne in Switzerland, the farmers are said to be notinferior to those of England. 

The ancient policy of Europe was, over and above all this, unfavourableto the improvement and cultivation of land, whether carried on by theproprietor or by the farmer; first, by the general prohibition of theexportation of corn, without a special licence, which seems to have beena very universal regulation; and, secondly, by the restraints which werelaid upon the inland commerce, not only of corn, but of almost everyother part of the produce of the farm, by the absurd laws againstengrossers, regraters, and forestallers, and by the privileges of fairsand markets. It has already been observed in what manner the prohibitionof the exportation of corn, together with some encouragement given tothe importation of foreign corn, obstructed the cultivation of ancientItaly, naturally the most fertile country in Europe, and at that timethe seat of the greatest empire in the world. To what degree suchrestraints upon the inland commerce of this commodity, joined tothe general prohibition of exportation, must have discouragedthe cultivation of countries less fertile, and less favourablycircumstanced, it is not, perhaps, very easy to imagine. 

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

The inhabitants of cities and towns were, after the fall of the Romanempire, not more favoured than those of the country. They consisted, indeed, of a very different order of people from the first inhabitantsof the ancient republics of Greece and Italy. These last were composedchiefly of the proprietors of lands, among whom the public territory wasoriginally divided, and who found it convenient to build their houses inthe neighbourhood of one another, and to surround them with a wall, forthe sake of common defence. After the fall of the Roman empire, onthe contrary, 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 by tradesmenand mechanics, who seem, in those days, to have been of servile, or verynearly of servile condition. The privileges which we find granted byancient charters to the inhabitants of some of the principal towns inEurope, sufficiently show what they were before those grants. The peopleto whom it is granted as a privilege, that they might give away theirown daughters in marriage without the consent of their lord, that upontheir death their own children, and not their lord, should succeed totheir goods, and that they might dispose of their own effects by will, must, before those grants, have been either altogether, or very nearly, in the same state of villanage with the occupiers of land in thecountry. 

They seem, indeed, to have been a very poor, mean set of people, whoseemed to travel about with their goods from place to place, and fromfair to fair, like the hawkers and pedlars of the present times. In allthe different countries of Europe then, in the same manner as in severalof the Tartar governments of Asia at present, taxes used to be leviedupon the persons and goods of travellers, when they passed throughcertain manors, when they went over certain bridges, when they carriedabout their goods from place to place in a fair, when they erected init a booth or stall to sell them in. These different taxes were knownin England by the names of passage, pontage, lastage, and stallage. Sometimes the king, sometimes a great lord, who had, it seems, upon someoccasions, authority to do this, would grant to particular traders, tosuch particularly as lived in their own demesnes, a general exemptionfrom such taxes. Such traders, though in other respects of servile, orvery nearly of servile condition, were upon this account called freetraders. They, in return, usually paid to their protector a sort ofannual poll-tax. In those days protection was seldom granted withouta valuable consideration, and this tax might perhaps be considered ascompensation for what their patrons might lose by their exemption fromother taxes. At first, both those poll-taxes and those exemptions seemto have been altogether personal, and to have affected only particularindividuals, during either their lives, or the pleasure of theirprotectors. In the very imperfect accounts which have been publishedfrom Doomsday-book, of several of the towns of England, mention isfrequently made, sometimes of the tax which particular burghers paid, each of them, either to the king, or to some other great lord, for thissort of protection, and sometimes of the general amount only of allthose taxes. {see Brady's Historical Treatise of Cities and Boroughs, p. 3. Etc. }

But how servile soever may have been originally the condition of theinhabitants of the towns, it appears evidently, that they arrived atliberty and independency much earlier than the occupiers of land inthe country. That part of the king's revenue which arose from suchpoll-taxes in any particular town, used commonly to be let in farm, during a term of years, for a rent certain, sometimes to the sheriffof the county, and sometimes to other persons. The burghers themselvesfrequently got credit enough to be admitted to farm the revenues ofthis sort winch arose out of their own town, they becoming jointly andseverally answerable for the whole rent. {See Madox, Firma Burgi, p. 18; also History of the Exchequer, chap. 10, sect. V, p. 223, firstedition. } To let a farm in this manner, was quite agreeable to the usualeconomy of, I believe, the sovereigns of all the different countries ofEurope, who used frequently to let whole manors to all the tenants ofthose manors, they becoming jointly and severally answerable for thewhole rent; but in return being allowed to collect it in their ownway, and to pay it into the king's exchequer by the hands of theirown bailiff, and being thus altogether freed from the insolence ofthe king's officers; a circumstance in those days regarded as of thegreatest importance. 

At first, the farm of the town was probably let to the burghers, in thesame manner as it had been to other farmers, for a term of yearsonly. In process of time, however, it seems to have become the generalpractice to grant it to them in fee, that is for ever, reserving arent certain, never afterwards to be augmented. The payment having thusbecome perpetual, the exemptions, in return, for which it was made, naturally became perpetual too. Those exemptions, therefore, ceasedto be personal, and could not afterwards be considered as belongingto individuals, as individuals, but as burghers of a particular burgh, which, upon this account, was called a free burgh, for the same reasonthat they had been called free burghers or free traders. 

Along with this grant, the important privileges, above mentioned, that they might give away their own daughters in marriage, that theirchildren should succeed to them, and that they might dispose of theirown effects by will, were generally bestowed upon the burghers of thetown to whom it was given. Whether such privileges had before beenusually granted, along with the freedom of trade, to particularburghers, as individuals, I know not. I reckon it not improbable thatthey were, though I cannot produce any direct evidence of it. Buthowever this may have been, the principal attributes of villanage andslavery being thus taken away from them, they now at least became reallyfree, in our present sense of the word freedom. 

Nor was this all. They were generally at the same time erected into acommonalty or corporation, with the privilege of having magistratesand a town-council of their own, of making bye-laws for their owngovernment, of building walls for their own defence, and of reducing alltheir inhabitants under a sort of military discipline, by obliging themto watch and ward; that is, as anciently understood, to guard and defendthose walls against all attacks and surprises, by night as well as byday. In England they were generally exempted from suit to the hundredand county courts: and all such pleas as should arise among them, thepleas of the crown excepted, were left to the decision of their ownmagistrates. In other countries, much greater and more extensivejurisdictions were frequently granted to them. {See Madox, Firma Burgi. See also Pfeffel in the Remarkable events under Frederick II. And hisSuccessors of the House of Suabia. }

It might, probably, be necessary to grant to such towns as were admittedto farm their own revenues, some sort of compulsive jurisdiction tooblige their own citizens to make payment. In those disorderly times, it might have been extremely inconvenient to have left them to seek thissort of justice from any other tribunal. But it must seem extraordinary, that the sovereigns of all the different countries of Europe should haveexchanged in this manner for a rent certain, never more to be augmented, that branch of their revenue, which was, perhaps, of all others, themost likely 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 of independent republicsin the heart of their own dominions. 

In order to understand this, it must be remembered, that, in thosedays, the sovereign of perhaps no country in Europe was able to protect, through the whole extent of his dominions, the weaker part of hissubjects from the oppression of the great lords. Those whom the lawcould not protect, and who were not strong enough to defend themselves, were obliged either to have recourse to the protection of some greatlord, and in order to obtain it, to become either his slaves or vassals;or to enter into a league of mutual defence for the common protection ofone another. The inhabitants of cities and burghs, considered as singleindividuals, had no power to defend themselves; but by entering intoa league of mutual defence with their neighbours, they were capable ofmaking no contemptible resistance. The lords despised the burghers, whom they considered not only as a different order, but as a parcel ofemancipated slaves, almost of a different species from themselves. The wealth of the burghers never failed to provoke their envy andindignation, and they plundered them upon every occasion without mercyor remorse. The burghers naturally hated and feared the lords. The kinghated and feared them too; but though, perhaps, he might despise, hehad no reason either to hate or fear the burghers. Mutual interest, therefore, disposed them to support the king, and the king to supportthem against the lords. They were the enemies of his enemies, and it washis interest to render them as secure and independent of those enemiesas he could. By granting them magistrates of their own, the privilegeof making bye-laws for their own government, that of building walls fortheir own defence, and that of reducing all their inhabitants under asort of military discipline, he gave them all the means of security andindependency of the barons which it was in his power to bestow. Withoutthe establishment of some regular government of this kind, without someauthority to compel their inhabitants to act according to some certainplan or system, no voluntary league of mutual defence could either haveafforded them any permanent security, or have enabled them to give theking any considerable support. By granting them the farm of their owntown in fee, he took away from those whom he wished to have for hisfriends, and, if one may say so, for his allies, all ground of jealousyand suspicion, that he was ever afterwards to oppress them, either byraising the farm-rent of their town, or by granting it to some otherfarmer. 

The princes who lived upon the worst terms with their barons, seemaccordingly to have been the most liberal in grants of this kind totheir burghs. King John of England, for example, appears to have beena most munificent benefactor to his towns. {See Madox. } Philip I. OfFrance lost all authority over his barons. Towards the end of his reign, his son Lewis, known afterwards by the name of Lewis the Fat, consulted, according to Father Daniel, with the bishops of the royal demesnes, concerning the most proper means of restraining the violence of thegreat lords. Their advice consisted of two different proposals. One wasto erect a new order of jurisdiction, by establishing magistrates and atown-council in every considerable town of his demesnes. The other wasto form a new militia, by making the inhabitants of those towns, underthe command of their own magistrates, march out upon proper occasionsto the assistance of the king. It is from this period, according tothe French antiquarians, that we are to date the institution ofthe magistrates and councils of cities in France. It was during theunprosperous reigns of the princes of the house of Suabia, that thegreater part of the free towns of Germany received the first grantsof their privileges, and that the famous Hanseatic league first becameformidable. {See Pfeffel. }

The militia of the cities seems, in those times, not to have beeninferior to that of the country; and as they could be more readilyassembled upon any sudden occasion, they frequently had the advantage intheir disputes with the neighbouring lords. In countries such as Italyor Switzerland, in which, on account either of their distance from theprincipal seat of government, of the natural strength of the countryitself, or of some other reason, the sovereign came to lose the wholeof his authority; the cities generally became independent republics, andconquered all the nobility in their neighbourhood; obliging them to pulldown their castles in the country, and to live, like other peaceableinhabitants, in the city. This is the short history of the republic ofBerne, as well as of several other cities in Switzerland. If you exceptVenice, for of that city the history is somewhat different, it is thehistory of all the considerable Italian republics, of which so greata number arose and perished between the end of the twelfth and thebeginning of the sixteenth century. 

In countries such as France and England, where the authority of thesovereign, though frequently very low, never was destroyed altogether, the cities had no opportunity of becoming entirely independent. Theybecame, however, so considerable, that the sovereign could impose no taxupon them, besides the stated farm-rent of the town, without theirown consent. They were, therefore, called upon to send deputies to thegeneral assembly of the states of the kingdom, where they might joinwith the clergy and the barons in granting, upon urgent occasions, someextraordinary aid to the king. Being generally, too, more favourable tohis power, their deputies seem sometimes to have been employed by himas a counterbalance in those assemblies to the authority of thegreat lords. Hence the origin of the representation of burghs in thestates-general of all great monarchies in Europe. 

Order and good government, and along with them the liberty and securityof individuals, were in this manner established in cities, at a timewhen the occupiers of land in the country, were exposed to every sort ofviolence. But men in this defenceless state naturally content themselveswith their necessary subsistence; because, to acquire more, might onlytempt the injustice of their oppressors. On the contrary, when they aresecure of enjoying the fruits of their industry, they naturally exert itto better their condition, and to acquire not only the necessaries, but the conveniencies and elegancies of life. That industry, therefore, which aims at something more than necessary subsistence, was establishedin cities long before it was commonly practised by the occupiers of landin the country. If, in the hands of a poor cultivator, oppressed withthe servitude of villanage, some little stock should accumulate, hewould naturally conceal it with great care from his master, to whom itwould otherwise have belonged, and take the first opportunity of runningaway to a town. The law was at that time so indulgent to the inhabitantsof towns, and so desirous of diminishing the authority of the lords overthose of the country, that if he could conceal himself there from thepursuit of his 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 the onlysanctuaries in which it could be secure to the person that acquired it. 

The inhabitants of a city, it is true, must always ultimately derivetheir subsistence, and the whole materials and means of their industry, from the country. But those of a city, situated near either thesea-coast or the banks of a navigable river, are not necessarilyconfined to derive them from the country in their neighbourhood. Theyhave a much wider range, and may draw them from the most remote cornersof the world, either in exchange for the manufactured produce of theirown industry, or by performing the office of carriers between distantcountries, and exchanging the produce of one for that of another. A citymight, in this manner, grow up to great wealth and splendour, while notonly the country in its neighbourhood, but all those to which it traded, were in poverty and wretchedness. Each of those countries, perhaps, taken singly, could afford it but a small part, either of itssubsistence or of its employment; but all of them taken together, couldafford it both a great subsistence and a great employment. There were, however, within the narrow circle of the commerce of those times, somecountries that were opulent and industrious. Such was the Greek empireas long as it subsisted, and that of the Saracens during the reigns ofthe Abassides. Such, too, was Egypt till it was conquered by the Turks, some part of the coast of Barbary, and all those provinces of Spainwhich were under the government of the Moors. 

The cities of Italy seem to have been the first in Europe which wereraised by commerce to any considerable degree of opulence. Italy lay inthe centre of what was at that time the improved and civilized part ofthe world. The crusades, too, though, by the great waste of stock anddestruction of inhabitants which they occasioned, they must necessarilyhave retarded the progress of the greater part of Europe, were extremelyfavourable to that of some Italian cities. The great armies whichmarched from all parts to the conquest of the Holy Land, gaveextraordinary encouragement to the shipping of Venice, Genoa, and Pisa, sometimes in transporting them thither, and always in supplying themwith provisions. They were the commissaries, if one may say so, of thosearmies; and the most destructive frenzy that ever befel the Europeannations, was a source of opulence to those republics. 

The inhabitants of trading cities, by importing the improvedmanufactures and expensive luxuries of richer countries, afforded somefood to the vanity of the great proprietors, who eagerly purchasedthem with great quantities of the rude produce of their own lands. The commerce of a great part of Europe in those times, accordingly, consisted chiefly in the exchange of their own rude, for themanufactured produce of more civilized nations. Thus the wool of Englandused to be exchanged for the wines of France, and the fine cloths ofFlanders, in the same manner as the corn in Poland is at this day, exchanged for the wines and brandies of France, and for the silks andvelvets of France and Italy. 

A taste for the finer and more improved manufactures was, in thismanner, introduced by foreign commerce into countries where no suchworks were carried on. But when this taste became so general as tooccasion a considerable demand, the merchants, in order to savethe expense of carriage, naturally endeavoured to establish somemanufactures of the same kind in their own country. Hence the originof the first manufactures for distant sale, that seem to have beenestablished in the western provinces of Europe, after the fall of theRoman empire. 

No large country, it must be observed, ever did or could subsist withoutsome sort of manufactures being carried on in it; and when it is saidof any such country that it has no manufactures, it must always beunderstood of the finer and more improved, or of such as are fit fordistant sale. In every large country both the clothing and householdfurniture or the far greater part of the people, are the produce oftheir own industry. This is even more universally the case in those poorcountries which are commonly said to have no manufactures, than inthose rich ones that are said to abound in them. In the latter youwill generally find, both in the clothes and household furniture of thelowest rank of people, a much greater proportion of foreign productionsthan in the former. 

Those manufactures which are fit for distant sale, seem to have beenintroduced into different countries in two different ways. 

Sometimes they have been introduced in the manner above mentioned, bythe violent operation, if one may say so, of the stocks of particularmerchants and undertakers, who established them in imitation of someforeign manufactures of the same kind. Such manufactures, therefore, are the offspring of foreign commerce; and such seem to have been theancient manufactures of silks, velvets, and brocades, which flourishedin Lucca during the thirteenth century. They were banished from thenceby the tyranny of one of Machiavel's heroes, Castruccio Castracani. In1310, nine hundred families were driven out of Lucca, of whom thirty-oneretired to Venice, and offered to introduce there the silk manufacture. {See Sandi Istoria civile de Vinezia, part 2 vol. I, page 247 and 256. }Their offer was accepted, many privileges were conferred upon them, andthey began the manufacture with three hundred workmen. Such, too, seemto have been the manufactures of fine cloths that anciently flourishedin Flanders, and which were introduced into England in the beginning ofthe reign of Elizabeth, and such are the present silk manufacturesof Lyons and Spitalfields. Manufactures introduced in this manner aregenerally employed upon foreign materials, being imitations of foreignmanufactures. When the Venetian manufacture was first established, thematerials were all brought from Sicily and the Levant. The more ancientmanufacture of Lucca was likewise carried on with foreign materials. Thecultivation of mulberry trees, and the breeding of silk-worms, seem notto have been common in the northern parts of Italy before the sixteenthcentury. Those arts were not introduced into France till the reign ofCharles IX. The manufactures of Flanders were carried on chiefly withSpanish and English wool. Spanish wool was the material, not of thefirst woollen manufacture of England, but of the first that was fit fordistant sale. More than one half the materials of the Lyons manufactureis at this day foreign silk; when it was first established, the whole, or very nearly the whole, was so. No part of the materials of theSpitalfields manufacture is ever likely to be the produce of England. The seat of such manufactures, as they are generally introduced by thescheme and project of a few individuals, is sometimes established ina maritime city, and sometimes in an inland town, according as theirinterest, judgment, or caprice, happen to determine. 

At other times, manufactures for distant sale grow up naturally, andas it were of their own accord, by the gradual refinement of thosehousehold and coarser manufactures which must at all times be carriedon even in the poorest and rudest countries. Such manufactures aregenerally employed upon the materials which the country produces, andthey seem frequently to have been first refined and improved Insuch inland countries as were not, indeed, at a very great, but at aconsiderable distance from the sea-coast, and sometimes even fromall water carriage. An inland country, naturally fertile and easilycultivated, produces a great surplus of provisions beyond what isnecessary for maintaining the cultivators; and on account of theexpense of land carriage, and inconveniency of river navigation, itmay frequently be 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 their industrycan there procure them more of the necessaries and conveniencies of lifethan in other places. They work up the materials of manufacture whichthe land produces, and exchange their finished work, or, what is thesame thing, the price of it, for more materials and provisions. Theygive a new value to the surplus part of the rude produce, by saving theexpense of carrying it to the water-side, or to some distant market; andthey furnish the cultivators with something in exchange for it that iseither useful or agreeable to them, upon easier terms than they couldhave obtained it before. The cultivators get a better price for theirsurplus produce, and can purchase cheaper other conveniencies which theyhave occasion for. They are thus both encouraged and enabled to increasethis surplus produce by a further improvement and better cultivationof the land; and as the fertility of she land had given birth to themanufacture, so the progress of the manufacture reacts upon the land, and increases still further it's fertility. The manufacturers firstsupply the neighbourhood, and afterwards, as their work improves andrefines, more distant markets. For though neither the rude produce, noreven the coarse manufacture, could, without the greatest difficulty, support the expense of a considerable land-carriage, the refined andimproved manufacture easily may. In a small bulk it frequently containsthe price of a great quantity of rude produce. A piece of fine cloth, for example which weighs only eighty pounds, contains in it the price, not only of eighty pounds weight of wool, but sometimes of severalthousand weight of corn, the maintenance of the different workingpeople, and of their immediate employers. The corn which could withdifficulty have been carried abroad in its own shape, is in this mannervirtually exported in that of the complete manufacture, and may easilybe sent to the remotest corners of the world. In this manner have grownup naturally, and, as it were, of their own accord, the manufacturesof Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Suchmanufactures are the offspring of agriculture. In the modern history ofEurope, their extension and improvement have generally been posteriorto those which were the offspring of foreign commerce. England was notedfor the manufacture of fine cloths made of Spanish wool, more thana century before any of those which now flourish in the places abovementioned were fit for foreign sale. The extension and improvement ofthese last could not take place but in consequence of the extensionand improvement of agriculture, the last and greatest effect of foreigncommerce, and of the manufactures immediately introduced by it, andwhich I shall now proceed to explain. 

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

The increase and riches of commercial and manufacturing townscontributed to the improvement and cultivation of the countries to whichthey belonged, in three different ways:

First, by affording a great and ready market for the rude produce ofthe country, they gave encouragement to its cultivation and furtherimprovement. This benefit was not even confined to the countries inwhich they were situated, but extended more or less to all those withwhich they had any dealings. To all of them they afforded a marketfor some part either of their rude or manufactured produce, and, consequently, gave some encouragement to the industry and improvementof all. Their own country, however, on account of its neighbourhood, necessarily derived the greatest benefit from this market. Its rudeproduce being 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, ofwhich a great part would frequently be uncultivated. Merchants arecommonly ambitious of becoming country gentlemen, and, when they do, they are generally the best of all improvers. A merchant is accustomedto employ his money chiefly in profitable projects; whereas a merecountry gentleman is accustomed to employ it chiefly in expense. The oneoften sees his money go from him, and return to him again with a profit;the other, when once he parts with it, very seldom expects to see anymore of it. Those different habits naturally affect their temper anddisposition in every sort of business. The merchant is commonly a bold, a country gentleman a timid undertaker. The one is not afraid to lay outat once a large capital upon the improvement of his land, when he hasa probable prospect of raising the value of it in proportion to theexpense; the other, if he has any capital, which is not always the case, seldom ventures to employ it in this manner. If he improves at all, itis commonly not with a capital, but with what he can save out or hisannual revenue. Whoever has had the fortune to live in a mercantiletown, situated in an unimproved country, must have frequently observedhow much more spirited the operations of merchants were in this way, than those of mere country gentlemen. The habits, besides, of order, economy, and attention, to which mercantile business naturally forms amerchant, render him much fitter to execute, with profit and success, any project of improvement. 

Thirdly, and lastly, commerce and manufactures gradually introducedorder and good government, and with them the liberty and security ofindividuals, among the inhabitants of the country, who had before livedalmost in a continual state of war with their neighbours, and of serviledependency upon their superiors. This, though it has been the leastobserved, is by far the most important of all their effects. Mr Hume isthe only writer who, so far as I know, has hitherto taken notice of it. 

In a country which has neither foreign commerce nor any of the finermanufactures, a great proprietor, having nothing for which he canexchange the greater part of the produce of his lands which is over andabove the maintenance of the cultivators, consumes the whole in rustichospitality at home. If this surplus produce is sufficient to maintain ahundred or a thousand men, he can make use of it in no other way than bymaintaining a hundred or a thousand men. He is at all times, therefore, surrounded with a multitude of retainers and dependants, who, havingno equivalent to give in return for their maintenance, but being fedentirely by his bounty, must obey him, for the same reason that soldiersmust obey the prince who pays them. Before the extension of commerce andmanufactures in Europe, the hospitality of the rich and the great, fromthe sovereign down to the smallest baron, exceeded every thing which, inthe present times, we can easily form a notion of Westminster-hall wasthe dining-room of William Rufus, and might frequently, perhaps, not betoo large for his company. It was reckoned a piece of magnificence inThomas Becket, that he strewed the floor of his hall with clean hay orrushes in the season, in order that the knights and squires, who couldnot get seats, might not spoil their fine clothes when they sat down onthe floor to eat their dinner. The great Earl of Warwick is said tohave entertained every day, at his different manors, 30, 000 people; andthough the number here may have been exaggerated, it must, however, havebeen very great to admit of such exaggeration. A hospitality nearly ofthe same kind was exercised not many years ago in many different partsof the Highlands of Scotland. It seems to be common in all nationsto whom commerce and manufactures are little known. I have seen, saysDoctor Pocock, an Arabian chief dine in the streets of a town wherehe 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 upon the greatproprietor as his retainers. Even such of them as were not in a stateof villanage, were tenants at will, who paid a rent in no respectequivalent to the subsistence which the land afforded them. A crown, half a crown, a sheep, a lamb, was some years ago, in the Highlands ofScotland, a common rent for lands which maintained a family. In someplaces it is so at this day; nor will money at present purchase agreater quantity of commodities there than in other places. In a countrywhere the surplus produce of a large estate must be consumed upon theestate itself, it will frequently be more convenient for the proprietor, that part of it be consumed at a distance from his own house, providedthey who consume it are as dependent upon him as either his retainersor his menial servants. He is thereby saved from the embarrassment ofeither too large a company, or too large a family. A tenant at will, whopossesses land sufficient to maintain his family for little more thana quit-rent, is as dependent upon the proprietor as any servant orretainer whatever, and must obey him with as little reserve. Such aproprietor, as he feeds his servants and retainers at his own house, sohe feeds his tenants at their houses. The subsistence of both is derivedfrom his bounty, and its continuance depends upon his good pleasure. 

Upon the authority which the great proprietors necessarily had, in sucha state of things, over their tenants and retainers, was founded thepower of the ancient barons. They necessarily became the judges inpeace, and the leaders in war, of all who dwelt upon their estates. They could maintain order, and execute the law, within their respectivedemesnes, because each of them could there turn the whole force of allthe inhabitants against the injustice of anyone. No other person hadsufficient authority to do this. The king, in particular, had not. Inthose ancient times, he was little more than the greatest proprietorin his dominions, to whom, for the sake of common defence against theircommon enemies, the other great proprietors paid certain respects. To have enforced payment of a small debt within the lands of a greatproprietor, where all the inhabitants were armed, and accustomed tostand by one another, would have cost the king, had he attempted it byhis own authority, almost the same effort as to extinguish a civil war. He was, therefore, obliged to abandon the administration of justice, through the greater part of the country, to those who were capable ofadministering it; and, for the same reason, to leave the command of thecountry militia to those whom that militia would obey. 

It is a mistake to imagine that those territorial jurisdictions tooktheir origin from the feudal law. Not only the highest jurisdictions, both civil and criminal, but the power of levying troops, of coiningmoney, and even that of making bye-laws for the government of their ownpeople, were all rights possessed allodially by the great proprietors ofland, several centuries before even the name of the feudal law was knownin Europe. The authority and jurisdiction of the Saxon lords in Englandappear to have been as great before the Conquest as that of any of theNorman lords after it. But the feudal law is not supposed to havebecome the common law of England till after the Conquest. That the mostextensive authority and jurisdictions were possessed by the great lordsin France allodially, long before the feudal law was introducedinto that 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. Without remounting tothe remote antiquities of either the French or English monarchies, wemay find, in much later times, many proofs that such effects must alwaysflow from such causes. It is not thirty years ago since Mr Cameron ofLochiel, a gentleman of Lochaber in Scotland, without any legal warrantwhatever, not being what was then called a lord of regality, nor even atenant in chief, but a vassal of the Duke of Argyll, and with out beingso much as a justice of peace, used, notwithstanding, to exercise thehighest criminal jurisdictions over his own people. He is said to havedone so 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 this authority, in order to maintain the public peace. That gentleman, whose rent neverexceeded £500 a-year, carried, in 1745, 800 of his own people into therebellion with him. 

The introduction of the feudal law, so far from extending, may beregarded as an attempt to moderate, the authority of the great allodiallords. It established a regular subordination, accompanied with along train of services and duties, from the king down to the smallestproprietor. During the minority of the proprietor, the rent, togetherwith the management of his lands, fell into the hands of his immediatesuperior; and, consequently, those of all great proprietors into thehands of the king, who was charged with the maintenance and education ofthe pupil, and who, from his authority as guardian, was supposed to havea right of disposing of him in marriage, provided it was in a manner notunsuitable to his rank. But though this institution necessarily tendedto strengthen the authority of the king, and to weaken that of the greatproprietors, it could not do either sufficiently for establishing orderand good government among the inhabitants of the country; because itcould not alter sufficiently that state of property and manners fromwhich the disorders arose. The authority of government still continuedto be, as before, too weak in the head, and too strong in the inferiormembers; and the excessive strength of the inferior members was thecause of the weakness of the head. After the institution of feudalsubordination, the king was as incapable of restraining the violence ofthe great lords as before. They still continued to make war accordingto their own discretion, almost continually upon one another, and veryfrequently upon the king; and the open country still continued to be ascene of violence, rapine, and disorder. 

But what all the violence of the feudal institutions could never haveeffected, the silent and insensible operation of foreign commerce andmanufactures gradually brought about. These gradually furnished thegreat proprietors with something for which they could exchange the wholesurplus produce of their lands, and which they could consume themselves, without sharing it either with tenants or retainers. All for ourselves, and nothing for other people, seems, in every age of the world, to havebeen the vile maxim of the masters of mankind. As soon, therefore, asthey could find a method of consuming the whole value of their rentsthemselves, they had no disposition to share them with any otherpersons. For a pair of diamond buckles, perhaps, or for something asfrivolous and useless, they exchanged the maintenance, or, what is thesame thing, the price of the maintenance of 1000 men for a year, andwith it the whole weight and authority which it could give them. Thebuckles, however, were to be all their own, and no other human creaturewas to have any share of them; whereas, in the more ancient methodof expense, they must have shared with at least 1000 people. Withthe judges that were to determine the preference, this differencewas perfectly decisive; and thus, for the gratification of the mostchildish, the meanest, and the most sordid of all vanities theygradually bartered their whole power and authority. 

In a country where there is no foreign commerce, nor any of the finermanufactures, a man of £10, 000 a-year cannot well employ his revenue inany other way than in maintaining, perhaps, 1000 families, who are allof them necessarily at his command. In the present state of Europe, aman of £10, 000 a-year can spend his whole revenue, and he generally doesso, without directly 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 people, than he couldhave done by the ancient method of expense. For though the quantity ofprecious productions for which he exchanges his whole revenue be verysmall, the number of workmen employed in collecting and preparing itmust necessarily have been very great. Its great price generally arisesfrom the wages of their labour, and the profits of all their immediateemployers. By paying that price, he indirectly pays all those wages andprofits, and thus indirectly contributes to the maintenance of all theworkmen and their employers. He generally contributes, however, but avery small proportion to that of each; to a very few, perhaps, not atenth, to many not a hundredth, and to some not a thousandth, or evena ten thousandth part of their whole annual maintenance. Though hecontributes, therefore, to the maintenance of them all, they are allmore or less independent of him, because generally they can all bemaintained without him. 

When the great proprietors of land spend their rents in maintainingtheir tenants and retainers, each of them maintains entirely all hisown tenants and all his own retainers. But when they spend them inmaintaining tradesmen and artificers, they may, all of them takentogether, perhaps maintain as great, or, on account of the waste whichattends rustic hospitality, a greater number of people than before. Eachof them, however, taken singly, contributes often but a very smallshare to the maintenance of any individual of this greater number. Eachtradesman or artificer derives his subsistence from the employment, notof one, but of a hundred or a thousand different customers. Thoughin some measure obliged to them all, therefore, he is not absolutelydependent upon any one of them. 

The personal expense of the great proprietors having in this mannergradually increased, it was impossible that the number of theirretainers should not as gradually diminish, till they were at lastdismissed altogether. The same cause gradually led them to dismissthe unnecessary part of their tenants. Farms were enlarged, and theoccupiers of land, notwithstanding the complaints of depopulation, reduced to the number necessary for cultivating it, according to theimperfect state of cultivation and improvement in those times. By theremoval of the unnecessary mouths, and by exacting from the farmer thefull value of the farm, a greater surplus, or, what is the same thing, the price of a greater surplus, was obtained for the proprietor, whichthe merchants and manufacturers soon furnished him with a method ofspending upon his own person, in the same manner as he had done therest. The cause continuing to operate, he was desirous to raise hisrents above what his lands, in the actual state of their improvement, could afford. His tenants could agree to this upon one condition only, that they should be secured in their possession for such a term of yearsas might give them time to recover, with profit, whatever they shouldlay not in the further improvement of the land. The expensive vanity ofthe landlord made him willing to accept of this condition; and hence theorigin of long leases. 

Even a tenant at will, who pays the full value of the land, is notaltogether dependent upon the landlord. The pecuniary advantages whichthey receive from one another are mutual and equal, and such a tenantwill expose neither his life nor his fortune in the service of theproprietor. But if he has a lease for along term of years, he isaltogether independent; and his landlord must not expect from him eventhe most trifling service, beyond what is either expressly stipulatedin the lease, or imposed upon him by the common and known law of thecountry. 

The tenants having in this manner become independent, and the retainersbeing dismissed, the great proprietors were no longer capable ofinterrupting the regular execution of justice, or of disturbing thepeace of the country. Having sold their birth-right, not like Esau, for a mess of pottage in time of hunger and necessity, but, in thewantonness of plenty, for trinkets and baubles, fitter to be theplaythings of children than the serious pursuits of men, they becameas insignificant as any substantial burgher or tradesmen in a city. A regular government was established in the country as well as in thecity, nobody having sufficient power to disturb its operations in theone, 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 possessed someconsiderable estate from father to son for many successive generations, are very rare in commercial countries. In countries which have littlecommerce, on the contrary, such as Wales, or the Highlands of Scotland, they are very common. The Arabian histories seem to be all full ofgenealogies; and there is a history written by a Tartar Khan, whichhas been translated into several European languages, and which containsscarce any thing else; a proof that ancient families are very commonamong those nations. In countries where a rich man can spend his revenuein no other way than by maintaining as many people as it can maintain, he is apt to run out, and his benevolence, it seems, is seldom soviolent as to attempt to maintain more than he can afford. But where hecan spend the greatest revenue upon his own person, he frequently hasno bounds to his expense, because he frequently has no bounds to hisvanity, or to his affection for his own person. In commercial countries, therefore, riches, in spite of the most violent regulations of law toprevent their dissipation, very seldom remain long in the same family. Among simple nations, on the contrary, they frequently do, without anyregulations of law; for among nations of shepherds, such as the Tartarsand Arabs, the consumable nature of their property necessarily rendersall such regulations impossible. 

A revolution of the greatest importance to the public happiness, was inthis manner brought about by two different orders of people, who had notthe least intention to serve the public. To gratify the most childishvanity was the sole motive of the great proprietors. The merchants andartificers, much less ridiculous, acted merely from a view to theirown interest, and in pursuit of their own pedlar principle of turninga penny wherever a penny was to be got. Neither of them had eitherknowledge or foresight of that great revolution which the folly of theone, and the industry of the other, was gradually bringing about. 

It was thus, that, through the greater part of Europe, the commerce andmanufactures of cities, instead of being the effect, have been the causeand occasion of the improvement and cultivation of the country. 

This order, however, being contrary to the natural course of things, isnecessarily both slow and uncertain. Compare the slow progress of thoseEuropean countries of which the wealth depends very much upon theircommerce and manufactures, with the rapid advances of our North Americancolonies, of which the wealth is founded altogether in agriculture. Through the greater part of Europe, the number of inhabitants is notsupposed to double in less than five hundred years. In several ofour North American colonies, it is found to double in twenty orfive-and-twenty years. In Europe, the law of primogeniture, andperpetuities of different kinds, prevent the division of great estates, and thereby hinder the multiplication of small proprietors. A smallproprietor, however, who knows every part of his little territory, viewsit with all the affection which property, especially small property, naturally inspires, and who upon that account takes pleasure, not onlyin cultivating, but in adorning it, is generally of all improvers themost industrious, the most intelligent, and the most successful. Thesame regulations, besides, keep so much land out of the market, thatthere are always more capitals to buy than there is land to sell, sothat what is sold always sells at a monopoly price. The rent neverpays the interest of the purchase-money, and is, besides, burdened withrepairs and other occasional charges, to which the interest of moneyis not liable. To purchase land, is, everywhere in Europe, a mostunprofitable employment of a small capital. For the sake of the superiorsecurity, indeed, a man of moderate circumstances, when he retires frombusiness, will sometimes choose to lay out his little capital in land. A man of profession, too whose revenue is derived from another sourceoften loves to secure his savings in the same way. But a young man, who, instead of applying to trade or to some profession, should employ acapital of two or three thousand pounds in the purchase and cultivationof a small piece of land, might indeed expect to live very happily andvery independently, but must bid adieu for ever to all hope of eithergreat fortune or great illustration, which, by a different employmentof his stock, he might have had the same chance of acquiring withother people. Such a person, too, though he cannot aspire at being aproprietor, will often disdain to be a farmer. The small quantity ofland, therefore, which is brought to market, and the high price ofwhat is brought thither, prevents a great number of capitals from beingemployed in its cultivation and improvement, which would otherwise havetaken that direction. In North America, on the contrary, fifty or sixtypounds is often found a sufficient stock to begin a plantation with. The purchase and improvement of uncultivated land is there the mostprofitable employment of the smallest as well as of the greatestcapitals, and the most direct road to all the fortune and illustrationwhich can be required in that country. Such land, indeed, is in NorthAmerica to be had almost for nothing, or at a price much below the valueof the natural produce; a thing impossible in Europe, or indeed inany country where all lands have long been private property. If landedestates, however, were divided equally among all the children, upon thedeath of any proprietor who left a numerous family, the estate wouldgenerally be sold. So much land would come to market, that it could nolonger sell at a monopoly price. The free rent of the land would go nonearer to pay the interest of the purchase-money, and a small capitalmight be employed in purchasing land as profitable as in any other way. 

England, on account of the natural fertility of the soil, of the greatextent of the sea-coast in proportion to that of the whole country, and of the many navigable rivers which run through it, and afford theconveniency of water carriage to some of the most inland parts of it, is perhaps as well fitted by nature as any large country in Europe to bethe seat of foreign commerce, of manufactures for distant sale, and ofall the improvements which these can occasion. From the beginning ofthe reign of Elizabeth, too, the English legislature has been peculiarlyattentive to the interest of commerce and manufactures, and in realitythere is no country in Europe, Holland itself not excepted, of whichthe law is, upon the whole, more favourable to this sort of industry. Commerce and manufactures have accordingly been continually advancingduring all this period. The cultivation and improvement of the countryhas, no doubt, been gradually advancing too; but it seems to havefollowed slowly, and at a distance, the more rapid progress of commerceand manufactures. The greater part of the country must probably havebeen cultivated before the reign of Elizabeth; and a very great part ofit still remains uncultivated, and the cultivation of the far greaterpart much inferior to what it might be, The law of England, however, favours agriculture, not only indirectly, by the protection of commerce, but by several direct encouragements. Except in times of scarcity, theexportation of corn is not only free, but encouraged by a bounty. Intimes of moderate plenty, the importation of foreign corn is loaded withduties that amount to a prohibition. The importation of live cattle, except from Ireland, is prohibited at all times; and it is but oflate that it was permitted from thence. Those who cultivate the land, therefore, have a monopoly against their countrymen for the two greatestand most important articles of land produce, bread and butcher's meat. These encouragements, although 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, the yeomanry ofEngland are rendered as secure, as independent, and as respectable, as law can make them. No country, therefore, which the right ofprimogeniture takes place, which pays tithes, and where perpetuities, though contrary to the spirit of the law, are admitted in some cases, can give more encouragement to agriculture than England. Such, however, notwithstanding, is the state of its cultivation. What would it havebeen, had the law given no direct encouragement to agriculture besideswhat arises indirectly from the progress of commerce, and had left theyeomanry in the same condition as in most other countries of Europe? Itis now more than two hundred years since the beginning of the reign ofElizabeth, a period as long as the course of human prosperity usuallyendures. 

France seems to have had a considerable share of foreign commerce, neara century before England was distinguished as a commercial country. The marine of France was considerable, according to the notions of thetimes, before the expedition of Charles VIII. To Naples. The cultivationand improvement of France, however, is, upon the whole, inferior tothat of England. The law of the country has never given the same directencouragement to agriculture. 

The foreign commerce of Spain and Portual to the other parts of Europe, though chiefly carried on in foreign ships, is very considerable. Thatto their colonies is carried on in their own, and is much greater, onaccount of the great riches and extent of those colonies. But it hasnever introduced any considerable manufactures for distant sale intoeither of those countries, and the greater part of both still remainsuncultivated. The foreign commerce of Portugal is of older standing thanthat of any great country in Europe, except Italy. 

Italy is the only great country of Europe which seems to have beencultivated and improved in every part, by means of foreign commerce andmanufactures for distant sale. Before the invasion of Charles VIII. , Italy, according to Guicciardini, was cultivated not less in the mostmountainous and barren parts of the country, than in the plainest andmost fertile. The advantageous situation of the country, and thegreat number of independent status which at that time subsisted in it, probably contributed not a little to this general cultivation. It is notimpossible, too, notwithstanding this general expression of one of themost judicious and reserved of modern historians, that Italy was not atthat time better cultivated than England is at present. 

The capital, however, that is acquired to any country by commerce andmanufactures, is always a very precarious and uncertain possession, tillsome part of it has been secured and realized in the cultivation andimprovement of its lands. A merchant, it has been said very properly, isnot necessarily the citizen of any particular country. It is in a greatmeasure indifferent to him from what place he carries on his trade; anda very trifling disgust will make him remove his capital, and, togetherwith it, all the industry which it supports, from one country toanother. No part of it can be said to belong to any particular country, till it has been spread, as it were, over the face of that country, either in buildings, or in the lasting improvement of lands. No vestigenow remains of the great wealth said to have been possessed by thegreater part of the Hanse Towns, except in the obscure histories of thethirteenth and fourteenth centuries. It is even uncertain where some ofthem were situated, or to what towns in Europe the Latin names given tosome of them belong. But though the misfortunes of Italy, in the endof the fifteenth and beginning of the sixteenth centuries, greatlydiminished the commerce and manufactures of the cities of Lombardy andTuscany, those countries still continue to be among the most populousand best cultivated in Europe. The civil wars of Flanders, and theSpanish government which succeeded them, chased away the great commerceof Antwerp, Ghent, and Bruges. But Flanders still continues to be one ofthe richest, best cultivated, and most populous provinces of Europe. Theordinary revolutions of war and government easily dry up the sources ofthat wealth which arises from commerce only. That which arises from themore solid improvements of agriculture is much more durable, and cannotbe destroyed but by those more violent convulsions occasioned by thedepredations of hostile and barbarous nations continued for a century ortwo together; such as those that happened for some time before and afterthe fall of the Roman empire in the western provinces of Europe. 

BOOK IV. OF SYSTEMS OF POLITICAL ECONOMY. 

Political economy, considered as a branch of the science of a statesmanor legislator, proposes two distinct objects; first, to provide aplentiful revenue or subsistence for the people, or, more properly, toenable them to provide such a revenue or subsistence for themselves;and, secondly, to supply the state or commonwealth with a revenuesufficient for the public services. It proposes to enrich both thepeople and the sovereign. 

The different progress of opulence in different ages and nations, hasgiven occasion to two different systems of political economy, withregard to enriching the people. The one may be called the system ofcommerce, the other that of agriculture. I shall endeavour to explainboth as fully and distinctly as I can, and shall begin with the systemof commerce. It is the modern system, and is best understood in our owncountry and in our own times. 

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

That wealth consists in money, or in gold and silver, is a popularnotion which naturally arises from the double function of money, as theinstrument of commerce, and as the measure of value. In consequence ofits being the instrument of commerce, when we have money we can morereadily obtain whatever else we have occasion for, than by means of anyother commodity. The great affair, we always find, is to get money. When that is obtained, there is no difficulty in making any subsequentpurchase. In consequence of its being the measure of value, we estimatethat of all other commodities by the quantity of money which they willexchange for. We say of a rich man, that he is worth a great deal, andof a poor man, that he is worth very little money. A frugal man, or aman eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it. To grow rich isto get money; and wealth and money, in short, are, in common language, considered as in every respect synonymous. 

A rich country, in the same manner as a rich man, is supposed to bea country abounding in money; and to heap up gold and silver in anycountry is supposed to be the readiest way to enrich it. For some timeafter the discovery of America, the first inquiry of the Spaniards, whenthey arrived upon any unknown coast, used to be, if there was any goldor silver to be found in the neighbourhood? By the information whichthey received, they judged whether it was worth while to make asettlement there, or if the country was worth the conquering. PlanoCarpino, a monk sent ambassador from the king of France to one of thesons of the famous Gengis Khan, says, that the Tartars used frequentlyto ask him, if there was plenty of sheep and oxen in the kingdom ofFrance? Their inquiry had the same object with that of the Spaniards. They wanted to know if the country was rich enough to be worth theconquering. Among the Tartars, as among all other nations of shepherds, who are generally ignorant of the use of money, cattle are theinstruments of commerce and the measures of value. Wealth, therefore, according to them, consisted in cattle, as, according to the Spaniards, it consisted in gold and silver. Of the two, the Tartar notion, perhaps, was the nearest to the truth. 

Mr Locke remarks a distinction between money and other moveable goods. All other moveable goods, he says, are of so consumable a nature, thatthe wealth which consists in them cannot be much depended on; and anation which abounds in them one year may, without any exportation, butmerely by their own waste and extravagance, be in great want of them thenext. Money, on the contrary, is a steady friend, which, though it maytravel about from hand to hand, yet if it can be kept from going outof the country, is not very liable to be wasted and consumed. Gold andsilver, therefore, are, according to him, the must solid and substantialpart of the moveable wealth of a nation; and to multiply those metalsought, he thinks, upon that account, to be the great object of itspolitical economy. 

Others admit, that if a nation could be separated from all the world, it would be of no consequence how much or how little money circulated init. The consumable goods, which were circulated by means of this money, would only be exchanged for a greater or a smaller number of pieces;but the real wealth or poverty of the country, they allow, would dependaltogether upon the abundance or scarcity of those consumable goods. Butit is otherwise, they think, with countries which have connections withforeign nations, and which are obliged to carry on foreign wars, and tomaintain fleets and armies in distant countries. This, they say, cannotbe done, but by sending abroad money to pay them with; and a nationcannot send much money abroad, unless it has a good deal at home. Everysuch nation, therefore, must endeavour, in time of peace, to accumulategold and silver, that when occasion requires, it may have wherewithal tocarry on foreign wars. 

In consequence of those popular notions, all the different nations ofEurope have studied, though to little purpose, every possible means ofaccumulating gold and silver in their respective countries. Spain andPortugal, the proprietors of the principal mines which supply Europewith those metals, have either prohibited their exportation under theseverest penalties, or subjected it to a considerable duty. The likeprohibition seems anciently to have made a part of the policy of mostother European nations. It is even to be found, where we should leastof all expect to find it, in some old Scotch acts of Parliament, whichforbid, under heavy penalties, the carrying gold or silver forth ofthe kingdom. The like policy anciently took place both in France andEngland. 

When those countries became commercial, the merchants found thisprohibition, upon many occasions, extremely inconvenient. They couldfrequently buy more advantageously with gold and silver, than with anyother commodity, the foreign goods which they wanted, either toimport into their own, or to carry to some other foreign country. Theyremonstrated, therefore, against this prohibition as hurtful to trade. 

They represented, first, that the exportation of gold and silver, inorder to purchase foreign goods, did not always diminish the quantity ofthose metals in the kingdom; that, on the contrary, it might frequentlyincrease the quantity; because, if the consumption of foreign goods wasnot thereby increased in the country, those goods might be re-exportedto foreign countries, and being there sold for a large profit, mightbring back much more treasure than was originally sent out to purchasethem. Mr Mun compares this operation of foreign trade to the seed-timeand harvest of agriculture. "If we only behold, " says he, "the actionsof the husbandman in the seed time, when he casteth away much good corninto the ground, we shall account him rather a madman than a husbandman. But when we consider his labours in the harvest, which is the end ofhis endeavours, we shall find the worth and plentiful increase of hisactions. "

They represented, secondly, that this prohibition could not hinder theexportation of gold and silver, which, on account of the smallnessof their bulk in proportion to their value, could easily be smuggledabroad. That this exportation could only be prevented by a properattention to what they called the balance of trade. That when thecountry exported to a greater value than it imported, a balance becamedue to it from foreign nations, which was necessarily paid to it in goldand silver, and thereby increased the quantity of those metals in thekingdom. But that when it imported to a greater value than it exported, a contrary balance became due to foreign nations, which was necessarilypaid to them in the same manner, and thereby diminished that quantity:that in this case, to prohibit the exportation of those metals, couldnot prevent it, but only, by making it more dangerous, render it moreexpensive: that the exchange was thereby turned more against the countrywhich owed the balance, than it otherwise might have been; the merchantwho purchased a bill upon the foreign country being obliged to pay thebanker who sold it, not only for the natural risk, trouble, and expenseof sending the money thither, but for the extraordinary risk arisingfrom the prohibition; but that the more the exchange was against anycountry, the more the balance of trade became necessarily against it;the money of that country becoming necessarily of so much less value, incomparison with that of the country to which the balance was due. Thatif the exchange between England and Holland, for example, was five percent. Against England, it would require 105 ounces of silver in Englandto purchase a bill for 100 ounces of silver in Holland: that 105 ouncesof silver in England, therefore, would be worth only 100 ounces ofsilver in Holland, and would purchase only a proportionable quantity ofDutch goods; but that 100 ounces of silver in Holland, on thecontrary, would be worth 105 ounces in England, and would purchase aproportionable quantity of English goods; that the English goods whichwere sold to Holland would be sold so much cheaper, and the Dutch goodswhich were sold to England so much dearer, by the difference of theexchange: that the one would draw so much less Dutch money to England, and the other so much more English money to Holland, as this differenceamounted to: and that the balance of trade, therefore, would necessarilybe so much more against England, and would require a greater balance ofgold and silver to be exported to Holland. 

Those arguments were partly solid and partly sophistical. They weresolid, so far as they asserted that the exportation of gold and silverin trade might frequently be advantageous to the country. They weresolid, too, in asserting that no prohibition could prevent theirexportation, when private people found any advantage in exporting them. But they were sophistical, in supposing, that either to preserve orto augment the quantity of those metals required more the attention ofgovernment, than to preserve or to augment the quantity of any otheruseful commodities, which the freedom of trade, without any suchattention, never fails to supply in the proper quantity. They weresophistical, too, perhaps, in asserting that the high price of exchangenecessarily increased what they called the unfavourable balance oftrade, or occasioned the exportation of a greater quantity of gold andsilver. That high price, indeed, was extremely disadvantageous to themerchants who had any money to pay in foreign countries. They paid somuch dearer for the bills which their bankers granted them upon thosecountries. But though the risk arising from the prohibition mightoccasion some extraordinary expense to the bankers, it would notnecessarily carry any more money out of the country. This expense wouldgenerally be all laid out in the country, in smuggling the money outof it, and could seldom occasion the exportation of a single sixpencebeyond the precise sum drawn for. The high price of exchange, too, would naturally dispose the merchants to endeavour to make their exportsnearly balance their imports, in order that they might have this highexchange to pay upon as small a sum as possible. The high price ofexchange, besides, must necessarily have operated as a tax, in raisingthe price of foreign goods, and thereby diminishing their consumption. It would tend, therefore, not to increase, but to diminish, whatthey called the unfavourable balance of trade, and consequently theexportation of gold and silver. 

Such as they were, however, those arguments convinced the people to whomthey were addressed. They were addressed by merchants to parliamentsand to the councils of princes, to nobles, and to country gentlemen; bythose who were supposed to understand trade, to those who were consciousto them selves that they knew nothing about the matter. That foreigntrade enriched the country, experience demonstrated to the nobles andcountry gentlemen, as well as to the merchants; but how, or in whatmanner, none of them well knew. The merchants knew perfectly in whatmanner it enriched themselves, it was their business to know it. Butto know in what manner it enriched the country, was no part of theirbusiness. The subject never came into their consideration, but whenthey had occasion to apply to their country for some change in the lawsrelating to foreign trade. It then became necessary to say somethingabout the beneficial effects of foreign trade, and the manner in whichthose effects were obstructed by the laws as they then stood. To thejudges who were to decide the business, it appeared a most satisfactoryaccount of the matter, when they were told that foreign trade broughtmoney into the country, but that the laws in question hindered it frombringing so much as it otherwise would do. Those arguments, therefore, produced the wished-for effect. The prohibition of exporting goldand silver was, in France and England, confined to the coin of thoserespective countries. The exportation of foreign coin and of bullionwas made free. In Holland, and in some other places, this liberty wasextended even to the coin of the country. The attention of governmentwas turned away from guarding against the exportation of gold andsilver, to watch over the balance of trade, as the only cause whichcould occasion any augmentation or diminution of those metals. From onefruitless care, it was turned away to another care much more intricate, much more embarrassing, and just equally fruitless. The title of Mun'sbook, England's Treasure in Foreign Trade, became a fundamental maxim inthe political economy, not of England only, but of all other commercialcountries. The inland or home trade, the most important of all, thetrade in which an equal capital affords the greatest revenue, andcreates the greatest employment to the people of the country, wasconsidered as subsidiary only to foreign trade. It neither brought moneyinto the country, it was said, nor carried any out of it. The country, therefore, could never become either richer or poorer by means of it, except so far as its prosperity or decay might indirectly influence thestate of foreign trade. 

A country that has no mines of its own, must undoubtedly draw its goldand silver from foreign countries, in the same manner as one that hasno vineyards of its own must draw its wines. It does not seem necessary, however, that the attention of government should be more turned towardsthe one than towards the other object. A country that has wherewithalto buy wine, will always get the wine which it has occasion for; and acountry that has wherewithal to buy gold and silver, will never be inwant of those metals. They are to be bought for a certain price, like all other commodities; and as they are the price of all othercommodities, so all other commodities are the price of those metals. We trust, with perfect security, that the freedom of trade, without anyattention of government, will always supply us with the wine which wehave occasion for; and we may trust, with equal security, that it willalways supply us with all the gold and silver which we can afford topurchase or to employ, either in circulating our commodities or in otheruses. 

The quantity of every commodity which human industry can either purchaseor produce, naturally regulates itself in every country according to theeffectual demand, or according to the demand of those who are willing topay the whole rent, labour, and profits, which must be paid in order toprepare and bring it to market. But no commodities regulate themselvesmore easily or more exactly, according to this effectual demand, thangold and silver; because, on account of the small bulk and great valueof those metals, no commodities can be more easily transported from oneplace to another; from the places where they are cheap, to those wherethey are dear; from the places where they exceed, to those where theyfall short of this effectual demand. If there were in England, forexample, an effectual demand for an additional quantity of gold, apacket-boat could bring from Lisbon, or from wherever else it was tobe had, fifty tons of gold, which could be coined into more than fivemillions of guineas. But if there were an effectual demand for grainto the same value, to import it would require, at five guineas a-ton, a million of tons of shipping, or a thousand ships of a thousand tonseach. The navy of England would not be sufficient. 

When the quantity of gold and silver imported into any country exceedsthe effectual demand, no vigilance of government can prevent theirexportation. All the sanguinary laws of Spain and Portugal are not ableto keep their gold and silver at home. The continual importations fromPeru and Brazil exceed the effectual demand of those countries, andsink the price of those metals there below that in the neighbouringcountries. If, on the contrary, in any particular country, theirquantity fell short of the effectual demand, so as to raise their priceabove that of the neighbouring countries, the government would have nooccasion to take any pains to import them. If it were even to take painsto prevent their importation, it would not be able to effectuate it. Those metals, when the Spartans had got wherewithal to purchase them, broke through all the barriers which the laws of Lycurgus opposed totheir entrance into Lacedaemon. All the sanguinary laws of the customsare not able to prevent the importation of the teas of the Dutch andGottenburg East India companies; because somewhat cheaper than those ofthe British company. A pound of tea, however, is about a hundred timesthe bulk of one of the highest prices, sixteen shillings, that iscommonly paid for it in silver, and more than two thousand times thebulk of the same price in gold, and, consequently, just so many timesmore difficult to smuggle. 

It is partly owing to the easy transportation of gold and silver, fromthe places where they abound to those where they are wanted, that theprice of those metals does not fluctuate continually, like that of thegreater part of other commodities, which are hindered by their bulk fromshifting their situation, when the market happens to be either overor under-stocked with them. The price of those metals, indeed, is notaltogether exempted from variation; but the changes to which it isliable are generally slow, gradual, and uniform. In Europe, for example, it is supposed, without much foundation, perhaps, that during the courseof the present and preceding century, they have been constantly, but gradually, sinking in their value, on account of the continualimportations from the Spanish West Indies. But to make any suddenchange in the price of gold and silver, so as to raise or lower atonce, sensibly and remarkably, the money price of all other commodities, requires such a revolution in commerce as that occasioned by thediscovery of America. 

If, not withstanding all this, gold and silver should at any time fallshort in a country which has wherewithal to purchase them, there aremore expedients for supplying their place, than that of almost any othercommodity. If the materials of manufacture are wanted, industry muststop. If provisions are wanted, the people must starve. But if moneyis wanted, barter will supply its place, though with a good deal ofinconveniency. Buying and selling upon credit, and the different dealerscompensating their credits with one another, once a-month, or oncea-year, will supply it with less inconveniency. A well-regulatedpaper-money will supply it not only without any inconveniency, but, insome cases, with some advantages. Upon every account, therefore, theattention of government never was so unnecessarily employed, as whendirected to watch over the preservation or increase of the quantity ofmoney in any country. 

No complaint, however, is more common than that of a scarcity of money. Money, like wine, must always be scarce with those who have neitherwherewithal to buy it, nor credit to borrow it. Those who have either, will seldom be in want either of the money, or of the wine which theyhave occasion for. This complaint, however, of the scarcity of money, isnot always confined to improvident spendthrifts. It is sometimes generalthrough a whole mercantile town and the country in its neighbourhood. Over-trading is the common cause of it. Sober men, whose projects havebeen disproportioned to their capitals, are as likely to have neitherwherewithal to buy money, nor credit to borrow it, as prodigals, whoseexpense has been disproportioned to their revenue. Before their projectscan be brought to bear, their stock is gone, and their credit with it. They run about everywhere to borrow money, and everybody tells them thatthey have none to lend. Even such general complaints of the scarcityof money do not always prove that the usual number of gold and silverpieces are not circulating in the country, but that many people wantthose pieces who have nothing to give for them. When the profits oftrade happen to be greater than ordinary over-trading becomes a generalerror, both among great and small dealers. They do not always send moremoney abroad than usual, but they buy upon credit, both at home andabroad, an unusual quantity of goods, which they send to some distantmarket, in hopes that the returns will come in before the demand forpayment. The demand comes before the returns, and they have nothing athand with which they can either purchase money or give solid securityfor borrowing. It is not any scarcity of gold and silver, but thedifficulty which such people find in borrowing, and which their creditorfind in getting payment, that occasions the general complaint of thescarcity of money. 

It would be too ridiculous to go about seriously to prove, that wealthdoes not consist in money, or in gold and silver; but in what moneypurchases, and is valuable only for purchasing. Money, no doubt, makesalways a part of the national capital; but it has already beenshown that it generally makes but a small part, and always the mostunprofitable part of it. 

It is not because wealth consists more essentially in money than ingoods, that the merchant finds it generally more easy to buy goods withmoney, than to buy money with goods; but because money is the known andestablished instrument of commerce, for which every thing is readilygiven in exchange, but which is not always with equal readiness to begot in exchange for every thing. The greater part of goods, besides, aremore perishable than money, and he may frequently sustain a much greaterloss by keeping them. When his goods are upon hand, too, he is moreliable to such demands for money as he may not be able to answer, thanwhen he has got their price in his coffers. Over and above all this, hisprofit arises more directly from selling than from buying; and he is, upon all these accounts, generally much more anxious to exchange hisgoods for money than his money for goods. But though a particularmerchant, with abundance of goods in his warehouse, may sometimes beruined by not being able to sell them in time, a nation or countryis not liable to the same accident, The whole capital of a merchantfrequently consists in perishable goods destined for purchasing money. But it is but a very small part of the annual produce of the land andlabour of a country, which can ever be destined for purchasing gold andsilver from their neighbours. The far greater part is circulated andconsumed among themselves; and even of the surplus which is sent abroad, the greater part is generally destined for the purchase of other foreigngoods. Though gold and silver, therefore, could not be had in exchangefor the goods destined to purchase them, the nation would not be ruined. It might, indeed, suffer some loss and inconveniency, and be forced uponsome of those expedients which are necessary for supplying the place ofmoney. The annual produce of its land and labour, however, would be thesame, or very nearly the same as usual; because the same, or very nearlythe same consumable capital would be employed in maintaining it. Andthough goods do not always draw money so readily as money draws goods, in the long-run they draw it more necessarily than even it draws them. Goods can serve many other purposes besides purchasing money, but moneycan serve no other purpose besides purchasing goods. Money, therefore, necessarily runs after goods, but goods do not always or necessarily runafter money. The man who buys, does not always mean to sell again, butfrequently to use or to consume; whereas he who sells always means tobuy again. The one may frequently have done the whole, but the other cannever have done more than the one half of his business. It is not forits own sake that men desire money, but for the sake of what they canpurchase with it. 

Consumable commodities, it is said, are soon destroyed; whereas gold andsilver are of a more durable nature, and were it not for this continualexportation, might be accumulated for ages together, to the incredibleaugmentation of the real wealth of the country. Nothing, therefore, itis pretended, can be more disadvantageous to any country, than thetrade which consists in the exchange of such lasting for such perishablecommodities. We do not, however, reckon that trade disadvantageous, which consists in the exchange of the hardware of England for the winesof France, and yet hardware is a very durable commodity, and were itnot for this continual exportation, might too be accumulated for agestogether, to the incredible augmentation of the pots and pans of thecountry. But it readily occurs, that the number of such utensils is inevery country necessarily limited by the use which there is for them;that it would be absurd to have more pots and pans than were necessaryfor cooking the victuals usually consumed there; and that, if thequantity of victuals were to increase, the number of pots and pans wouldreadily increase along with it; a part of the increased quantityof victuals being employed in purchasing them, or in maintaining anadditional number 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; thattheir use consists in circulating commodities, as coin, and in affordinga species of household furniture, as plate; that the quantity of coin inevery country is regulated by the value of the commodities which are tobe circulated by it; increase that value, and immediately a part ofit will be sent abroad to purchase, wherever it is to be had, theadditional quantity of coin requisite for circulating them: that thequantity of plate is regulated by the number and wealth of those privatefamilies who choose to indulge themselves in that sort of magnificence;increase the number and wealth of such families, and a part of thisincreased wealth will most probably be employed in purchasing, whereverit is to be found, an additional quantity of plate; that to attemptto increase the wealth of any country, either by introducing or bydetaining in it an unnecessary quantity of gold and silver, is asabsurd as it would be to attempt to increase the good cheer of privatefamilies, by obliging them to keep an unnecessary number of kitchenutensils. As the expense of purchasing those unnecessary utensils woulddiminish, instead of increasing, either the quantity or goodness of thefamily provisions; so the expense of purchasing an unnecessary quantityof gold and silver must, in every country, as necessarily diminish thewealth which feeds, clothes, and lodges, which maintains and employs thepeople. Gold and silver, whether in the shape of coin or of plate, are utensils, it must be remembered, as much as the furniture of thekitchen. Increase the use of them, increase the consumable commoditieswhich are to be circulated, managed, and prepared by means of them, and you will infallibly increase the quantity; but if you attempt byextraordinary means to increase the quantity, you will as infalliblydiminish the use, and even the quantity too, which in those metalscan never be greater than what the use requires. Were they ever to beaccumulated beyond this quantity, their transportation is so easy, andthe loss which attends their lying idle and unemployed so great, that nolaw could prevent their being immediately sent out of the country. 

It is not always necessary to accumulate gold and silver, in order toenable a country to carry on foreign wars, and to maintain fleets andarmies in distant countries. Fleets and armies are maintained, not withgold and silver, but with consumable goods. The nation which, from theannual produce of its domestic industry, from the annual revenue arisingout of its lands, and labour, and consumable stock, has wherewithalto purchase those consumable goods in distant countries, can maintainforeign wars there. 

A nation may purchase the pay and provisions of an army in a distantcountry three different ways; by sending abroad either, first, somepart of its accumulated gold and silver; or, secondly, some part of theannual produce of its manufactures; or, last of all, some part of itsannual rude produce. 

The gold and silver which can properly be considered as accumulated, orstored up in any country, may be distinguished into three parts; first, the circulating money; secondly, the plate of private families; and, last of all, the money which may have been collected by many yearsparsimony, and laid up in the treasury of the prince. 

It can seldom happen that much can be spared from the circulating moneyof the country; because in that there can seldom be much redundancy. The value of goods annually bought and sold in any country requiresa certain quantity of money to circulate and distribute them to theirproper consumers, and can give employment to no more. The channel ofcirculation necessarily draws to itself a sum sufficient to fill it, andnever admits any more. Something, however, is generally withdrawn fromthis channel in the case of foreign war. By the great number of peoplewho are maintained abroad, fewer are maintained at home. Fewer goods arecirculated there, and less money becomes necessary to circulate them. Anextraordinary quantity of paper money of some sort or other, too, suchas exchequer notes, navy bills, and bank bills, in England, is generallyissued upon such occasions, and, by supplying the place of circulatinggold and silver, gives an opportunity of sending a greater quantityof it abroad. All this, however, could afford but a poor resource formaintaining a foreign war, of great expense, and several years duration. 

The melting down of the plate of private families has, upon everyoccasion, been found a still more insignificant one. The French, in thebeginning of the last war, did not derive so much advantage from thisexpedient as to compensate the loss of the fashion. 

The accumulated treasures of the prince have in former times affordeda much greater and more lasting resource. In the present times, if youexcept the king of Prussia, to accumulate treasure seems to be no partof the policy of European princes. 

The funds which maintained the foreign wars of the present century, themost expensive perhaps which history records, seem to have had littledependency upon the exportation either of the circulating money, or ofthe plate of private families, or of the treasure of the prince. Thelast French war cost Great Britain upwards of £90, 000, 000, including notonly the £75, 000, 000 of new debt that was contracted, but the additional2s. In the pound land-tax, and what was annually borrowed of the sinkingfund. More than two-thirds of this expense were laid out in distantcountries; in Germany, Portugal, America, in the ports of theMediterranean, in the East and West Indies. The kings of England had noaccumulated treasure. We never heard of any extraordinary quantity ofplate being melted down. The circulating gold and silver of the countryhad not been supposed to exceed £18, 000, 000. Since the late recoinage ofthe gold, however, it is believed to have been a good deal under-rated. Let us suppose, therefore, according to the most exaggerated computationwhich I remember to have either seen or heard of, that, gold and silvertogether, it amounted to £30, 000, 000. Had the war been carried onby means of our money, the whole of it must, even according to thiscomputation, have been sent out and returned again, at least twice in aperiod of between six and seven years. Should this be supposed, it wouldafford the most decisive argument, to demonstrate how unnecessary it isfor government to watch over the preservation of money, since, upon thissupposition, the whole money of the country must have gone from it, andreturned to it again, two different times in so short a period, withoutany body's knowing any thing of the matter. The channel of circulation, however, never appeared more empty than usual during any part of thisperiod. Few people wanted money who had wherewithal to pay for it. Theprofits of foreign trade, indeed, were greater than usual during thewhole war, but especially towards the end of it. This occasioned, whatit always occasions, a general over-trading in all the ports of GreatBritain; and this again occasioned the usual complaint of the scarcityof money, which always follows over-trading. Many people wanted it, whohad neither wherewithal to buy it, nor credit to borrow it; and becausethe debtors found it difficult to borrow, the creditors found itdifficult to get payment. Gold and silver, however, were generally to behad for their value, by those who had that value to give for them. 

The enormous expense of the late war, therefore, must have been chieflydefrayed, not by the exportation of gold and silver, but by that ofBritish commodities of some kind or other. When the government, or thosewho acted under them, contracted with a merchant for a remittance tosome foreign country, he would naturally endeavour to pay his foreigncorrespondent, upon whom he granted a bill, by sending abroad rathercommodities than gold and silver. If the commodities of Great Britainwere not in demand in that country, he would endeavour to send them tosome other country in which he could purchase a bill upon that country. The transportation of commodities, when properly suited to the market, is always attended with a considerable profit; whereas that of goldand silver is scarce ever attended with any. When those metals are sentabroad in order to purchase foreign commodities, the merchant's profitarises, not from the purchase, but from the sale of the returns. Butwhen they are sent abroad merely to pay a debt, he gets no returns, andconsequently no profit. He naturally, therefore, exerts his invention tofind out a way of paying his foreign debts, rather by the exportationof commodities, than by that of gold and silver. The great quantityof British goods, exported during the course of the late war, withoutbringing back any returns, is accordingly remarked by the author of thePresent State of the Nation. 

Besides the three sorts of gold and silver above mentioned, there isin all great commercial countries a good deal of bullion alternatelyimported and exported, for the purposes of foreign trade. This bullion, as it circulates among different commercial countries, in the samemanner as the national coin circulates in every country, may beconsidered as the money of the great mercantile republic. The nationalcoin receives its movement and direction from the commodities circulatedwithin the precincts of each particular country; the money in themercantile republic, from those circulated between different countries. Both are employed in facilitating exchanges, the one between differentindividuals of the same, the other between those of different nations. Part of this money of the great mercantile republic may have been, andprobably was, employed in carrying on the late war. In time of a generalwar, it is natural to suppose that a movement and direction should beimpressed upon it, different from what it usually follows in profoundpeace, that it should circulate more about the seat of the war, and bemore employed in purchasing there, and in the neighbouring countries, the pay and provisions of the different armies. But whatever part ofthis money of the mercantile republic Great Britain may have annuallyemployed in this manner, it must have been annually purchased, eitherwith British commodities, or with something else that had been purchasedwith them; which still brings us back to commodities, to the annualproduce of the land and labour of the country, as the ultimate resourceswhich enabled us to carry on the war. It is natural, indeed, to suppose, that so great an annual expense must have been defrayed from a greatannual produce. The expense of 1761, for example, amounted to more than£19, 000, 000. No accumulation could have supported so great an annualprofusion. There is no annual produce, even of gold and silver, whichcould have supported it. The whole gold and silver annually importedinto both Spain and Portugal, according to the best accounts, does notcommonly much exceed £6, 000, 000 sterling, which, in some years, wouldscarce have paid four months expense of the late war. 

The commodities most proper for being transported to distant countries, in order to purchase there either the pay and provisions of an army, or some part of the money of the mercantile republic to be employed inpurchasing them, seem to be the finer and more improved manufactures;such as contain a great value in a small bulk, and can therefore beexported to a great distance at little expense. A country whose industryproduces a great annual surplus of such manufactures, which are usuallyexported to foreign countries, may carry on for many years a veryexpensive foreign war, without either exporting any considerablequantity of gold and silver, or even having any such quantity to export. A considerable part of the annual surplus of its manufactures must, indeed, in this case, be exported without bringing back any returns tothe country, though it does to the merchant; the government purchasingof the merchant his bills upon foreign countries, in order to purchasethere the pay and provisions of an army. Some part of this surplus, however, may still continue to bring back a return. The manufacturersduring; the war will have a double demand upon them, and be called uponfirst to work up goods to be sent abroad, for paying the bills drawnupon foreign countries for the pay and provisions of the army: and, secondly, to work up such as are necessary for purchasing the commonreturns that had usually been consumed in the country. In the midstof the most destructive foreign war, therefore, the greater part ofmanufactures may frequently flourish greatly; and, on the contrary, theymay decline on the return of peace. They may flourish amidst the ruin oftheir country, and begin to decay upon the return of its prosperity. Thedifferent state of many different branches of the British manufacturesduring the late war, and for some time after the peace, may serve as anillustration of what has been just now said. 

No foreign war, of great expense or duration, could conveniently becarried on by the exportation of the rude produce of the soil. Theexpense of sending such a quantity of it into a foreign country asmight purchase the pay and provisions of an army would be too great. Fewcountries, too, produce much more rude produce than what is sufficientfor the subsistence of their own inhabitants. To send abroad anygreat quantity of it, therefore, would be to send abroad a part ofthe necessary subsistence of the people. It is otherwise with theexportation of manufactures. The maintenance of the people employedin them is kept at home, and only the surplus part of their work isexported. Mr Hume frequently takes notice of the inability of theancient kings of England to carry on, without interruption, any foreignwar of long duration. The English in those days had nothing wherewithalto purchase the pay and provisions of their armies in foreign countries, but either the rude produce of the soil, of which no considerable partcould be spared from the home consumption, or a few manufactures ofthe coarsest kind, of which, as well as of the rude produce, thetransportation was too expensive. This inability did not arise from thewant of money, but of the finer and more improved manufactures. Buyingand selling was transacted by means of money in England then as wellas now. The quantity of circulating money must have borne the sameproportion, to the number and value of purchases and sales usuallytransacted at that time, which it does to those transacted at present;or, rather, it must have borne a greater proportion, because there wasthen no paper, which now occupies a great part of the employment of goldand silver. Among nations to whom commerce and manufactures are littleknown, the sovereign, upon extraordinary occasions, can seldom draw anyconsiderable aid from his subjects, for reasons which shall be explainedhereafter. It is in such countries, therefore, that he generallyendeavours to accumulate a treasure, as the only resource against suchemergencies. Independent of this necessity, he is, in such a situation, naturally disposed to the parsimony requisite for accumulation. In thatsimple state, the expense even of a sovereign is not directed by thevanity which delights in the gaudy finery of a court, but is employed inbounty to his tenants, and hospitality to his retainers. But bountyand hospitality very seldom lead to extravagance; though vanity almostalways does. Every Tartar chief, accordingly, has a treasure. Thetreasures of Mazepa, chief of the Cossacks in the Ukraine, the famousally of Charles XII. , are said to have been very great. The Frenchkings of the Merovingian race had all treasures. When they divided theirkingdom among their different children, they divided their treasurestoo. The Saxon princes, and the first kings after the Conquest, seemlikewise to have accumulated treasures. The first exploit of every newreign was commonly to seize the treasure of the preceding king, as themost essential measure for securing the succession. The sovereigns ofimproved and commercial countries are not under the same necessityof accumulating treasures, because they can generally draw from theirsubjects extraordinary aids upon extraordinary occasions. They arelikewise less disposed to do so. They naturally, perhaps necessarily, follow the mode of the times; and their expense comes to be regulatedby the same extravagant vanity which directs that of all the other greatproprietors in their dominions. The insignificant pageantry of theircourt becomes every day more brilliant; and the expense of it not onlyprevents accumulation, but frequently encroaches upon the funds destinedfor more necessary expenses. What Dercyllidas said of the court ofPersia, may be applied to that of several European princes, that he sawthere much splendour, but little strength, and many servants, but fewsoldiers. 

The importation of gold and silver is not the principal, much less thesole benefit, which a nation derives from its foreign trade. Betweenwhatever places foreign trade is carried on, they all of them derivetwo distinct benefits from it. It carries out that surplus part of theproduce of their land and labour for which there is no demand amongthem, and brings back in return for it something else for which thereis a demand. It gives a value to their superfluities, by exchanging themfor something else, which may satisfy a part of their wants and increasetheir enjoyments. By means of it, the narrowness of the home market doesnot hinder the division of labour in any particular branch of art ormanufacture from being carried to the highest perfection. By opening amore extensive market for whatever part of the produce of their labourmay exceed the home consumption, it encourages them to improve itsproductive power, and to augment its annual produce to the utmost, andthereby to increase the real revenue and wealth of the society. Thesegreat and important services foreign trade is continually occupied inperforming to all the different countries between which it is carriedon. They all derive great benefit from it, though that in which themerchant resides generally derives the greatest, as he is generally moreemployed in supplying the wants, and carrying out the superfluities ofhis own, than of any other particular country. To import the gold andsilver which may be wanted into the countries which have no mines, is, no doubt a part of the business of foreign commerce. It is, however, amost insignificant part of it. A country which carried on foreign trademerely upon this account, could scarce have occasion to freight a shipin a century. 

It is not by the importation of gold and silver that the discovery ofAmerica has enriched Europe. By the abundance of the American mines, those metals have become cheaper. A service of plate can now bepurchased for about a third part of the corn, or a third part of thelabour, which it would have cost in the fifteenth century. With the sameannual expense of labour and commodities, Europe can annually purchaseabout three times the quantity of plate which it could have purchasedat that time. But when a commodity comes to be sold for a third part ofwhat bad been its usual price, not only those who purchased it beforecan purchase three times their former quantity, but it is brought downto the level of a much greater number of purchasers, perhaps to morethan ten, perhaps to more than twenty times the former number. So thatthere may be in Europe at present, not only more than three times, butmore than twenty or thirty times the quantity of plate which would havebeen in it, even in its present state of improvement, had the discoveryof the American mines never been made. So far Europe has, no doubt, gained a real conveniency, though surely a very trifling one. Thecheapness of gold and silver renders those metals rather less fit forthe purposes of money than they were before. In order to make the samepurchases, we must load ourselves with a greater quantity of them, andcarry about a shilling in our pocket, where a groat would havedone before. It is difficult to say which is most trifling, thisinconveniency, or the opposite conveniency. Neither the one nor theother could have made any very essential change in the state of Europe. The discovery of America, however, certainly made a most essential one. By opening a new and inexhaustible market to all the commodities ofEurope, it gave occasion to new divisions of labour and improvements ofart, which in the narrow circle of the ancient commerce could never havetaken place, for want of a market to take off the greater part of theirproduce. The productive powers of labour were improved, and its produceincreased in all the different countries of Europe, and together withit the real revenue and wealth of the inhabitants. The commodities ofEurope were almost all new to America, and many of those of America werenew to Europe. A new set of exchanges, therefore, began to take place, which had never been thought of before, and which should naturallyhave proved as advantageous to the new, as it certainly did to the oldcontinent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive toseveral of those unfortunate countries. 

The discovery of a passage to the East Indies by the Cape of Good Hope, which happened much about the same time, opened perhaps a stillmore extensive range to foreign commerce, than even that of America, notwithstanding the greater distance. There were but two nationsin America, in any respect, superior to the savages, and these weredestroyed almost as soon as discovered. The rest were mere savages. Butthe empires of China, Indostan, Japan, as well as several others in theEast Indies, without having richer mines of gold or silver, were, inevery other respect, much richer, better cultivated, and more advancedin all arts and manufactures, than either Mexico or Peru, even though weshould credit, what plainly deserves no credit, the exaggerated accountsof the Spanish writers concerning the ancient state of those empires. But rich and civilized nations can always exchange to a much greatervalue with one another, than with savages and barbarians. Europe, however, has hitherto derived much less advantage from its commerce withthe East Indies, than from that with America. The Portuguese monopolizedthe East India trade to themselves for about a century; and it was onlyindirectly, and through them, that the other nations of Europe couldeither send out or receive any goods from that country. When the Dutch, in the beginning of the last century, began to encroach upon them, theyvested their whole East India commerce in an exclusive company. TheEnglish, French, Swedes, and Danes, have all followed their example; sothat no great nation of Europe has ever yet had the benefit of a freecommerce to the East Indies. No other reason need be assigned why ithas never been so advantageous as the trade to America, which, betweenalmost every nation of Europe and its own colonies, is free to all itssubjects. The exclusive privileges of those East India companies, theirgreat riches, the great favour and protection which these have procuredthem from their respective governments, have excited much envy againstthem. This envy has frequently represented their trade as altogetherpernicious, on account of the great quantities of silver which it everyyear exports from the countries from which it is carried on. The partiesconcerned have replied, that their trade by this continual exportationof silver, might indeed tend to impoverish Europe in general, but notthe particular country from which it was carried on; because, by theexportation of a part of the returns to other European countries, itannually brought home a much greater quantity of that metal than itcarried out. Both the objection and the reply are founded in the popularnotion which I have been just now examining. It is therefore unnecessaryto say any thing further about either. By the annual exportation ofsilver to the East Indies, plate is probably somewhat dearer in Europethan it otherwise might have been; and coined silver probably purchasesa larger quantity both of labour and commodities. The former of thesetwo effects is a very small loss, the latter a very small advantage;both too insignificant to deserve any part of the public attention. The trade to the East Indies, by opening a market to the commodities ofEurope, or, what comes nearly to the same thing, to the gold and silverwhich is purchased with those commodities, must necessarily tend toincrease the annual production of European commodities, and consequentlythe real wealth and revenue of Europe. That it has hitherto increasedthem so little, is probably owing to the restraints which it everywherelabours under. 

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 I havealready observed, frequently signifies wealth; and this ambiguity ofexpression has rendered this popular notion so familiar to us, that eventhey who are convinced of its absurdity, are very apt to forget theirown principles, and, in the course of their reasonings, to take it forgranted as a certain and undeniable truth. Some of the best Englishwriters upon commerce set out with observing, that the wealth of acountry consists, not in its gold and silver only, but in its lands, houses, and consumable goods of all different kinds. In the course oftheir reasonings, however, the lands, houses, and consumable goods, seemto slip out of their memory; and the strain of their argument frequentlysupposes that all wealth consists in gold and silver, and that tomultiply those metals is the great object of national industry andcommerce. 

The two principles being established, however, that wealth consisted ingold and silver, and that those metals could be brought into a countrywhich had no mines, only by the balance of trade, or by exporting to agreater value than it imported; it necessarily became the great objectof political economy to diminish as much as possible the importation offoreign goods for home consumption, and to increase as much as possiblethe exportation of the produce of domestic industry. Its two greatengines for enriching the country, therefore, were restraints uponimportation, and encouragement to exportation. 

The restraints upon importation were of two kinds. 

First, restraints upon the importation of such foreign goods for homeconsumption as could be produced at home, from whatever country theywere imported. 

Secondly, restraints upon the importation of goods of almost all kinds, from those particular countries with which the balance of trade wassupposed to be disadvantageous. 

Those different restraints consisted sometimes in high duties, andsometimes in absolute prohibitions. 

Exportation was encouraged sometimes by drawbacks, sometimes bybounties, sometimes by advantageous treaties of commerce with foreignstates, and sometimes by the establishment of colonies in distantcountries. 

Drawbacks were given upon two different occasions. When the homemanufactures were subject to any duty or excise, either the whole or apart of it was frequently drawn back upon their exportation; and whenforeign goods liable to a duty were imported, in order to be exportedagain, either the whole or a part of this duty was sometimes given backupon such exportation. 

Bounties were given for the encouragement, either of some beginningmanufactures, or of such sorts of industry of other kinds as weresupposed to deserve particular favour. 

By advantageous treaties of commerce, particular privileges wereprocured in some foreign state for the goods and merchants of thecountry, beyond what were granted to those of other countries. 

By the establishment of colonies in distant countries, not onlyparticular privileges, but a monopoly was frequently procured for thegoods and merchants of the country which established them. 

The two sorts of restraints upon importation above mentioned, togetherwith these four encouragements to exportation, constitute the sixprincipal means by which the commercial system proposes to increase thequantity of gold and silver in any country, by turning the balanceof trade in its favour. I shall consider each of them in a particularchapter, and, without taking much farther notice of their supposedtendency to bring money into the country, I shall examine chiefly whatare likely to be the effects of each of them upon the annual produce ofits industry. According as they tend either to increase or diminishthe value of this annual produce, they must evidently tend either toincrease or diminish the real wealth and revenue of the country. 

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

By restraining, either by high duties, or by absolute prohibitions, theimportation of such goods from foreign countries as can be produced athome, the monopoly of the home market is more or less secured to thedomestic industry employed in producing them. Thus the prohibition ofimporting either live cattle or salt provisions from foreign countries, secures to 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 prohibition ofthe importation of foreign woollen is equally favourable to the woollenmanufacturers. The silk manufacture, though altogether employed uponforeign materials, has lately obtained the same advantage. The linenmanufacture has not yet obtained it, but is making great strides towardsit. Many other sorts of manufactures have, in the same manner obtainedin Great Britain, either altogether, or very nearly, a monopoly againsttheir countrymen. The variety of goods, of which the importationinto Great Britain is prohibited, either absolutely, or under certaincircumstances, greatly exceeds what can easily be suspected by those whoare not well acquainted with the laws of the customs. 

That this monopoly of the home market frequently gives greatencouragement to that particular species of industry which enjoys it, and frequently turns towards that employment a greater share of both thelabour and stock of the society than would otherwise have gone to it, cannot be doubted. But whether it tends either to increase the generalindustry of the society, or to give it the most advantageous direction, is not, perhaps, altogether so evident. 

The general industry of the society can never exceed what the capitalof the society can employ. As the number of workmen that can be kept inemployment by any particular person must bear a certain proportion tohis capital, so the number of those that can be continually employed byall the members of a great society must bear a certain proportion to thewhole capital of the society, and never can exceed that proportion. No regulation of commerce can increase the quantity of industry in anysociety beyond what its capital can maintain. It can only divert a partof it into a direction into which it might not otherwise have gone; andit is by no means certain that this artificial direction is likely tobe more advantageous to the society, than that into which it would havegone of its own accord. 

Every individual is continually exerting himself to find out the mostadvantageous employment for whatever capital he can command. It is hisown advantage, indeed, and not that of the society, which he hasin view. But the study of his own advantage naturally, or rathernecessarily, leads him to prefer that employment which is mostadvantageous to the society. 

First, every individual endeavours to employ his capital as near homeas he can, and consequently as much as he can in the support of domesticindustry, provided always that he can thereby obtain the ordinary, ornot a great deal less than the ordinary profits of stock. 

Thus, upon equal, or nearly equal profits, every wholesale merchantnaturally prefers the home trade to the foreign trade of consumption, and the foreign trade of consumption to the carrying trade. In the hometrade, his capital is never so long out of his sight as it frequentlyis in the foreign trade of consumption. He can know better the characterand situation of the persons whom he trusts; and if he should happen tobe deceived, he knows better the laws of the country from which he mustseek redress. In the carrying trade, the capital of the merchant is, as it were, divided between two foreign countries, and no part of it isever necessarily brought home, or placed under his own immediate viewand command. The capital which an Amsterdam merchant employs in carryingcorn from Koningsberg to Lisbon, and fruit and wine from Lisbon toKoningsberg, must generally be the one half of it at Koningsberg, andthe other half at Lisbon. No part of it need ever come to Amsterdam. Thenatural residence of such a merchant should either be at Koningsberg orLisbon; and it can only be some very particular circumstances which canmake him prefer the residence of Amsterdam. The uneasiness, however, which he feels at being separated so far from his capital, generallydetermines him to bring part both of the Koningsberg goods which hedestines for the market of Lisbon, and of the Lisbon goods whichhe destines for that of Koningsberg, to Amsterdam; and though thisnecessarily subjects him to a double charge of loading and unloading aswell as to the payment of some duties and customs, yet, for the sake ofhaving some part of his capital always under his own view and command, he willingly submits to this extraordinary charge; and it is in thismanner that every country which has any considerable share of thecarrying trade, becomes always the emporium, or general market, forthe goods of all the different countries whose trade it carries on. Themerchant, in order to save a second loading and unloading, endeavoursalways to sell in the home market, as much of the goods of all thosedifferent countries as he can; and thus, so far as he can, to converthis carrying trade into a foreign trade of consumption. A merchant, inthe same manner, who is engaged in the foreign trade of consumption, when he collects goods for foreign markets, will always be glad, uponequal or nearly equal profits, to sell as great a part of them at homeas he can. He saves himself the risk and trouble of exportation, when, so far as he can, he thus converts his foreign trade of consumption intoa home trade. Home is in this manner the centre, if I may say so, roundwhich the capitals of the inhabitants of every country are continuallycirculating, and towards which they are always tending, though, byparticular causes, they may sometimes be driven off and repelled fromit towards more distant employments. But a capital employed in the hometrade, it has already been shown, necessarily puts into motion a greaterquantity of domestic industry, and gives revenue and employment to agreater number of the inhabitants of the country, than an equal capitalemployed in the foreign trade of consumption; and one employed inthe foreign trade of consumption has the same advantage over an equalcapital employed 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 employment to thegreatest number of people of his own country. 

Secondly, every individual who employs his capital in the support ofdomestic industry, necessarily endeavours so to direct that industry, that its produce may be of the greatest possible value. 

The produce of industry is what it adds to the subject or materialsupon which it is employed. In proportion as the value of this produce isgreat or small, so will likewise be the profits of the employer. Butit is only for the sake of profit that any man employs a capital in thesupport of industry; and he will always, therefore, endeavour to employit in the support of that industry of which the produce is likely to beof the greatest value, or to exchange for the greatest quantity eitherof money or of other goods. 

But the annual revenue of every society is always precisely equal tothe exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can, both toemploy his capital in the support of domestic industry, and so todirect that industry that its produce maybe of the greatest value;every individual necessarily labours to render the annual revenue ofthe society as great as he can. He generally, indeed, neither intends topromote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, heintends only his own security; and by directing that industry in such amanner as its produce may be of the greatest value, he intends only hisown gain; 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 is italways the worse for the society that it was no part of it. By pursuinghis own interest, he frequently promotes that of the society moreeffectually than when he really intends to promote it. I have neverknown much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and veryfew words need be employed in dissuading them from it. 

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, everyindividual, it is evident, can in his local situation judge much betterthan any statesman or lawgiver can do for him. The statesman, who shouldattempt to direct private people in what manner they ought to employtheir capitals, would not only load himself with a most unnecessaryattention, but assume an authority which could safely be trusted, notonly to no single person, but to no council or senate whatever, andwhich would nowhere be so dangerous as in the hands of a man who hadfolly and presumption enough to fancy himself fit to exercise it. 

To give the monopoly of the home market to the produce of domesticindustry, in any particular art or manufacture, is in some measureto direct private people in what manner they ought to employ theircapitals, and must in almost all cases be either a useless or a hurtfulregulation. If the produce of domestic can be brought there as cheapas that of foreign industry, the regulation is evidently useless. If itcannot, it must generally be hurtful. It is the maxim of every prudentmaster of a family, never to attempt to make at home what it will costhim more to make than to buy. The tailor does not attempt to makehis own shoes, but buys them of the shoemaker. The shoemaker doesnot attempt to make his own clothes, but employs a tailor. The farmerattempts to make neither the one nor the other, but employs thosedifferent artificers. All of them find it for their interest to employtheir whole industry in a way in which they have some advantage overtheir neighbours, and to purchase with a part of its produce, or, whatis the same thing, with the price of a part of it, whatever else theyhave occasion for. 

What is prudence in the conduct of every private family, can scarce befolly In that of a great kingdom. If a foreign country can supply uswith a commodity cheaper than we ourselves can make it, better buy itof them with some part of the produce of our own industry, employed in away in which we have some advantage. The general industry of the countrybeing always in proportion to the capital which employs it, willnot thereby be diminished, no more than that of the abovementionedartificers; but only left to find out the way in which it can beemployed with the greatest advantage. It is certainly not employed tothe greatest advantage, when it is thus directed towards an object whichit can buy cheaper than it can make. The value of its annual produceis certainly more or less diminished, when it is thus turned away fromproducing commodities evidently of more value than the commodity whichit is directed to produce. According to the supposition, that commoditycould be purchased from foreign countries cheaper than it can be madeat home; it could therefore have been purchased with a part only of thecommodities, or, what is the same thing, with a part only of the priceof the commodities, which the industry employed by an equal capitalwould have produced at home, had it been left to follow its naturalcourse. The industry of the country, therefore, is thus turned away froma more to a less advantageous employment; and the exchangeable valueof its annual produce, instead of being increased, according to theintention of the lawgiver, must necessarily be diminished by every suchregulation. 

By means of such regulations, indeed, a particular manufacture maysometimes be acquired sooner than it could have been otherwise, andafter a certain time may be made at home as cheap, or cheaper, than inthe foreign country. But though the industry of the society may be thuscarried with advantage into a particular channel sooner than it couldhave been otherwise, it will by no means follow that the sum-total, either of its industry, or of its revenue, can ever be augmented byany such regulation. The industry of the society can augment only inproportion as its capital augments, and its capital can augment only inproportion to what can be gradually saved out of its revenue. But theimmediate effect of every such regulation is to diminish its revenue;and what diminishes its revenue is certainly not very likely to augmentits capital faster than it would have augmented of its own accord, had both capital and industry been left to find out their naturalemployments. 

Though, for want of such regulations, the society should never acquirethe proposed manufacture, it would not upon that account necessarilybe the poorer in anyone period of its duration. In every period of itsduration its whole capital and industry might still have been employed, though upon different objects, in the manner that was most advantageousat the time. In every period its revenue might have been the greatestwhich its capital 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 producingparticular commodities, are sometimes so great, that it is acknowledgedby all the world to be in vain to struggle with them. By means ofglasses, hot-beds, and hot-walls, very good grapes can be raised inScotland, and very good wine, too, can be made of them, at about thirtytimes the expense for which at least equally good can be broughtfrom foreign countries. Would it be a reasonable law to prohibit theimportation of all foreign wines, merely to encourage the making ofclaret and Burgundy in Scotland? But if there would be a manifestabsurdity in turning towards any employment thirty times more of thecapital and industry of the country than would be necessary to purchasefrom foreign 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 employment athirtieth, or even a three hundredth part more of either. Whether theadvantages which one country has over another be natural or acquired, isin this respect of no consequence. As long as the one country hasthose advantages, and the other wants them, it will always be moreadvantageous for the latter rather to buy of the former than to make. It is an acquired advantage only, which one artificer has over hisneighbour, who exercises another trade; and yet they both find it moreadvantageous to buy of one another, than to make what does not belong totheir particular trades. 

Merchants and manufacturers are the people who derive the greatestadvantage from this monopoly of the home market The prohibition of theimportation of foreign cattle and of salt provisions, together with thehigh duties upon foreign corn, which in times of moderate plenty amountto a prohibition, are not near so advantageous to the graziers andfarmers of Great Britain, as other regulations of the same kind are toits merchants and manufacturers. Manufactures, those of the finer kindespecially, are more easily transported from one country to anotherthan corn or cattle. It is in the fetching and carrying manufactures, accordingly, that foreign trade is chiefly employed. In manufactures, a very small advantage will enable foreigners to undersell our ownworkmen, even in the home market. It will require a very great oneto enable them to do so in the rude produce of the soil. If the freeimportation of foreign manufactures were permitted, several of the homemanufactures would probably suffer, and some of them perhaps go to ruinaltogether, and a considerable part of the stock and industry at presentemployed in them, would be forced to find out some other employment. But the freest 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 made ever sofree, so few could be imported, that the grazing trade of Great Britaincould be little affected by it. Live cattle are, perhaps, the onlycommodity of which the transportation is more expensive by sea thanby land. By land they carry themselves to market. By sea, not only thecattle, but their food and their water too, must be carried at no smallexpense and inconveniency. The short sea between Ireland and GreatBritain, indeed, renders the importation of Irish cattle more easy. Butthough the free importation of them, which was lately permitted only fora limited time, 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 grazingcountries. Irish cattle could never be imported for their use, but mustbe drove through those very extensive countries, at no small expenseand inconveniency, before they could arrive at their proper market. Fatcattle could not be drove so far. Lean cattle, therefore, could only beimported; and such importation could interfere not with the interest ofthe feeding or fattening countries, to which, by reducing the priceof lean cattle it would rather be advantageous, but with that of thebreeding countries only. The small number of Irish cattle imported sincetheir importation 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 much affectedby the free importation of Irish cattle. The common people of Ireland, indeed, are said to have sometimes opposed with violence the exportationof their cattle. But if the exporters had found any great advantage incontinuing the trade, they could easily, when the law was on their side, have conquered this mobbish opposition. 

Feeding and fattening countries, besides, must always be highlyimproved, whereas breeding countries are generally uncultivated. Thehigh price of lean cattle, by augmenting the value of uncultivated land, is like a bounty against improvement. To any country which was highlyimproved throughout, it would be more advantageous to import its leancattle than to breed them. The province of Holland, accordingly, is saidto follow this maxim at present. The mountains of Scotland, Wales, andNorthumberland, indeed, are countries not capable of much improvement, and seem destined by nature to be the breeding countries of GreatBritain. The freest importation of foreign cattle could have no othereffect than to hinder those breeding countries from taking advantage ofthe increasing population and improvement of the rest of the kingdom, from raising their price to an exorbitant height, and from laying a realtax upon all the more improved and cultivated parts of the country. 

The freest importation of salt provisions, in the same manner, couldhave as little effect upon the interest of the graziers of Great Britainas that of live cattle. Salt provisions are not only a very bulkycommodity, but when compared with fresh meat they are a commodity bothof worse quality, and, as they cost more labour and expense, of higherprice. They could never, therefore, come into competition with the freshmeat, though they might with the salt provisions of the country. Theymight be used for victualling ships for distant voyages, and such likeuses, but could never make any considerable part of the food of thepeople. The small quantity of salt provisions imported from Irelandsince their importation was rendered free, is an experimental proof thatour graziers have nothing to apprehend from it. It does not appear thatthe price of butcher's meat has ever been sensibly affected by it. 

Even the free importation of foreign corn could very little affect theinterest of the farmers of Great Britain. Corn is a much more bulkycommodity than butcher's meat. A pound of wheat at a penny is as dearas a pound of butcher's meat at fourpence. The small quantity of foreigncorn imported even in times of the greatest scarcity, may satisfy ourfarmers that they can have nothing to fear from the freest importation. The average quantity imported, one year with another, amounts only, according to the very well informed author of the Tracts upon the CornTrade, to 23, 728 quarters of all sorts of grain, and does not exceed thefive hundredth and seventy-one part of the annual consumption. But asthe bounty upon corn occasions a greater exportation in years of plenty, so it must, of consequence, occasion a greater importation in yearsof scarcity, than in the actual state of tillage would otherwise takeplace. By means of it, the plenty of one year does not compensate thescarcity of another; and as the average quantity exported is necessarilyaugmented by it, so must likewise, in the actual state of tillage, theaverage quantity imported. If there were no bounty, as less corn wouldbe exported, suit is probable that, one year with another, less would beimported than at present. The corn-merchants, the fetchers and carriersof corn between Great Britain and foreign countries, would havemuch less employment, and might suffer considerably; but thecountry gentlemen and farmers could suffer very little. It is in thecorn-merchants, accordingly, rather than the country gentlemen andfarmers, that I have observed the greatest anxiety for the renewal andcontinuation of the bounty. 

Country gentlemen and farmers are, to their great honour, of all people, the least subject to the wretched spirit of monopoly. The undertakerof a great manufactory is sometimes alarmed if another work of the samekind is established within twenty miles of him; the Dutch undertakerof the woollen manufacture at Abbeville, stipulated that no work ofthe same kind should be established within thirty leagues of that city. Farmers and country gentlemen, on the contrary, are generally disposedrather to promote, than to obstruct, the cultivation and improvement oftheir neighbours farms and estates. They have no secrets, such as thoseof the greater part of manufacturers, but are generally rather fond ofcommunicating to their neighbours, and of extending as far as possibleany new practice which they may have found to be advantageous. "Piusquaestus", says old Cato, "stabilissimusque, minimeque invidiosus;minimeque male cogitantes sunt, qui in eo studio occupati sunt. " Countrygentlemen and farmers, dispersed in different parts of the country, cannot so easily combine as merchants and manufacturers, who beingcollected into towns, and accustomed to that exclusive corporationspirit which prevails in them, naturally endeavour to obtain, againstall their countrymen, the same exclusive privilege which they generallypossess against the inhabitants of their respective towns. Theyaccordingly seem to have been the original inventors of those restraintsupon the importation of foreign goods, which secure to them the monopolyof the home market. It was probably in imitation of them, and to putthemselves upon a level with those who, they found, were disposed tooppress them, that the country gentlemen and farmers of Great Britainso far forgot the generosity which is natural to their station, as todemand the exclusive privilege of supplying their countrymen with cornand butcher's meat. They did not, perhaps, take time to consider howmuch less their interest could be affected by the freedom of trade, thanthat of the people whose example they followed. 

To prohibit, by a perpetual law, the importation of foreign corn andcattle, is in reality to enact, that the population and industry of thecountry shall, at no time, exceed what the rude produce of its own soilcan maintain. 

There seem, however, to be two cases, in which it will generally beadvantageous to lay some burden upon foreign, for the encouragement ofdomestic industry. 

The first is, when some particular sort of industry is necessary forthe defence of the country. The defence of Great Britain, for example, depends very much upon the number of its sailors and shipping. The actof navigation, therefore, very properly endeavours to give the sailorsand shipping of Great Britain the monopoly of the trade of their owncountry, in some cases, by absolute prohibitions, and in others, byheavy burdens upon the shipping of foreign countries. The following arethe principal dispositions of this act. 

First, All ships, of which the owners, masters, and three-fourths ofthe mariners, 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 of GreatBritain. 

Secondly, A great variety of the most bulky articles of importation canbe brought into Great Britain only, either in such ships as are abovedescribed, or in ships of the country where those goods are produced, and of which the owners, masters, and three-fourths of the mariners, are of that particular country; and when imported even in ships of thislatter kind, they are subject to double aliens duty. If imported inships of any other country, the penalty is forfeiture of ship and goods. When this act was made, the Dutch were, what they still are, the greatcarriers of Europe; and by this regulation they were entirely excludedfrom being the carriers to Great Britain, or from importing to us thegoods of any other European country. 

Thirdly, A great variety of the most bulky articles of importation areprohibited from being imported, even in British ships, from any countrybut that in which they are produced, under pain of forfeiting ship andcargo. This regulation, too, was probably intended against the Dutch. Holland was then, as now, the great emporium for all European goods; andby this regulation, British ships were hindered from loading in Hollandthe goods of any other European country. 

Fourthly, Salt fish of all kinds, whale fins, whalebone, oil, andblubber, not caught by and cured on board British vessels, when importedinto Great Britain, are subject to double aliens duty. The Dutch, asthey are still the principal, were then the only fishers in Europe thatattempted to supply foreign nations with fish. By this regulation, avery heavy burden was laid upon their supplying Great Britain. 

When the act of navigation was made, though England and Holland were notactually at war, the most violent animosity subsisted between the twonations. It had begun during the government of the long parliament, which first framed this act, and it broke out soon after in theDutch wars, during that of the Protector and of Charles II. It is notimpossible, therefore, that some of the regulations of this famous actmay have proceeded from national animosity. They are as wise, however, as if they had all been dictated by the most deliberate wisdom. Nationalanimosity, at that particular time, aimed at the very same object whichthe most deliberate wisdom would have recommended, the diminution of thenaval power of Holland, the only naval power which could endanger thesecurity of England. 

The act of navigation is not favourable to foreign commerce, or tothe growth of that opulence which can arise from it. The interest of anation, in its commercial relations to foreign nations, is, like thatof a merchant with regard to the different people with whom he deals, to buy as cheap, and to sell as dear as possible. But it will be mostlikely to buy cheap, when, by the most perfect freedom of trade, itencourages all nations to bring to it the goods which it has occasion topurchase; and, for the same reason, it will be most likely to sell dear, when its markets are thus filled with the greatest number of buyers. Theact of navigation, it is true, lays no burden upon foreign ships thatcome to export the produce of British industry. Even the ancientaliens duty, which used to be paid upon all goods, exported as wellas imported, has, by several subsequent acts, been taken off from thegreater part of the articles of exportation. But if foreigners, eitherby prohibitions or high duties, are hindered from coming to sell, theycannot always afford to come to buy; because, coming without a cargo, they must lose the freight from their own country to Great Britain. Bydiminishing the number of sellers, therefore, we necessarily diminishthat of buyers, and are thus likely not only to buy foreign goodsdearer, but to sell our own cheaper, than if there was a more perfectfreedom of trade. As defence, however, is of much more importance thanopulence, the act of navigation is, perhaps, the wisest of all thecommercial regulations of England. 

The second case, in which it will generally be advantageous to lay someburden upon foreign for the encouragement of domestic industry, is whensome tax is imposed at home upon the produce of the latter. In thiscase, it seems reasonable that an equal tax should be imposed upon thelike produce of the former. This would not give the monopoly of theborne market to domestic industry, nor turn towards a particularemployment a greater share of the stock and labour of the country, thanwhat would naturally go to it. It would only hinder any part of whatwould naturally go to it from being turned away by the tax into a lessnatural direction, and would leave the competition between foreign anddomestic industry, after the tax, as nearly as possible upon the samefooting as before it. In Great Britain, when any such tax is laid uponthe produce of domestic industry, it is usual, at the same time, in order to stop the clamorous complaints of our merchants andmanufacturers, that they will be undersold at home, to lay a muchheavier duty upon the importation of all foreign goods of the same kind. 

This second limitation of the freedom of trade, according to somepeople, should, upon most occasions, be extended much farther than tothe precise foreign commodities which could come into competition withthose which had been taxed at home. When the necessaries of life havebeen taxed in any country, it becomes proper, they pretend, to tax notonly the like necessaries of life imported from other countries, but allsorts of foreign goods which can come into competition with any thingthat is the produce of domestic industry. Subsistence, they say, becomesnecessarily dearer in consequence of such taxes; and the price of labourmust always rise with the price of the labourer's subsistence. Everycommodity, therefore, which is the produce of domestic industry, thoughnot immediately taxed itself, becomes dearer in consequence of suchtaxes, because the labour which produces it becomes so. Such taxes, therefore, are really equivalent, they say, to a tax upon everyparticular commodity produced at home. In order to put domestic uponthe same footing with foreign industry, therefore, it becomes necessary, they think, to lay some duty upon every foreign commodity, equal to thisenhancement of the price of the home commodities with which it can comeinto competition. 

Whether taxes upon the necessaries of life, such as those in GreatBritain upon soap, salt, leather, candles, etc. Necessarily raise theprice of labour, and consequently that of all other commodities, I shallconsider hereafter, when I come to treat of taxes. Supposing, however, in the mean time, that they have this effect, and they have itundoubtedly, this general enhancement of the price of all commodities, in consequence of that labour, is a case which differs in the twofollowing respects from that of a particular commodity, of which theprice was enhanced by a particular tax immediately imposed upon it. 

First, It might always be known with great exactness, how far the priceof such a commodity could be enhanced by such a tax; but how far thegeneral enhancement of the price of labour might affect that of everydifferent commodity about which labour was employed, could never beknown with any tolerable exactness. It would be impossible, therefore, to proportion, with any tolerable exactness, the tax of every foreign, to the enhancement of the price of every home commodity. 

Secondly, Taxes upon the necessaries of life have nearly the same effectupon the circumstances of the people as a poor soil and a bad climate. Provisions are thereby rendered dearer, in the same manner as if itrequired extraordinary labour and expense to raise them. As, in thenatural scarcity arising from soil and climate, it would be absurd todirect the people in what manner they ought to employ their capitals andindustry, so is it likewise in the artificial scarcity arising from suchtaxes. To be left to accommodate, as well as they could, their industryto their situation, and to find out those employments in which, notwithstanding their unfavourable circumstances, they might have someadvantage either in the home or in the foreign market, is what, in bothcases, would evidently be most for their advantage. To lay a new-taxupon them, because they are already overburdened with taxes, and becausethey already pay too dear for the necessaries of life, to make themlikewise pay too dear for the greater part of other commodities, iscertainly a most absurd way of making amends. 

Such taxes, when they have grown up to a certain height, are a curseequal to the barrenness of the earth, and the inclemency of the heavens, and yet it is in the richest and most industrious countries that theyhave been most generally imposed. No other countries could support sogreat a disorder. As the strongest bodies only can live and enjoy healthunder an unwholesome regimen, so the nations only, that in every sort ofindustry have the greatest natural and acquired advantages, can subsistand prosper under such taxes. Holland is the country in Europe in whichthey abound most, and which, from peculiar circumstances, continues toprosper, not by means of them, as has been most absurdly supposed, butin spite of them. 

As there are two cases in which it will generally be advantageous to laysome burden upon foreign for the encouragement of domestic industry, so there are two others in which it may sometimes be a matter ofdeliberation, in the one, how far it is proper to continue the freeimportation of certain foreign goods; and, in the other, how far, or inwhat manner, it may be proper to restore that free importation, after ithas been for some time interrupted. 

The case in which it may sometimes be a matter of deliberation how farit is proper to continue the free importation of certain foreign goods, is when some foreign nation restrains, by high duties or prohibitions, the importation of some of our manufactures into their country. Revenge, in this case, naturally dictates retaliation, and that we should imposethe like duties and prohibitions upon the importation of some or allof their manufactures into ours. Nations, accordingly, seldom fail toretaliate in this manner. The French have been particularly forward tofavour their own manufactures, by restraining the importation ofsuch foreign goods as could come into competition with them. In thisconsisted a great part of the policy of Mr Colbert, who, notwithstandinghis great abilities, seems in this case to have been imposed upon bythe sophistry of merchants and manufacturers, who are always demandinga monopoly against their countrymen. It is at present the opinion of themost intelligent men in France, that his operations of this kind havenot been beneficial to his country. That minister, by the tariffof 1667, imposed very high duties upon a great number of foreignmanufactures. Upon his refusing to moderate them in favour of the Dutch, they, in 1671, prohibited the importation of the wines, brandies, andmanufactures of France. The war of 1672 seems to have been in partoccasioned by this commercial dispute. The peace of Nimeguen put anend to it in 1678, by moderating some of those duties in favour of theDutch, who in consequence took off their prohibition. It was about thesame time that the French and English began mutually to oppress eachother's industry, by the like duties and prohibitions, of which theFrench, however, seem to have set the first example, The spirit ofhostility which has subsisted between the two nations ever since, hashitherto hindered them from being moderated on either side. In 1697, the Ehglish prohibited the importation of bone lace, 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 bone lace into Englandwas taken oft; upon condition that the importation of English woollensinto Flanders should be put on the same footing as before. 

There may be good policy in retaliations of this kind, when there isa probability that they will procure the repeal of the high duties orprohibitions complained of. The recovery of a great foreign market willgenerally more than compensate the transitory inconveniency of payingdearer during a short time for some sorts of goods. To judge whethersuch retaliations are likely to produce such an effect, does not, perhaps, belong so much to the science of a legislator, whosedeliberations ought to be governed by general principles, which arealways the same, as to the skill of that insidious and crafty animalvulgarly called a statesman or politician, whose councils are directedby the momentary fluctuations of affairs. When there is no probabilitythat any such repeal can be procured, it seems a bad method ofcompensating the injury done to certain classes of our people, to doanother injury ourselves, not only to those classes, but to almost allthe other classes of them. When our neighbours prohibit some manufactureof ours, we generally prohibit, not only the same, for that alone wouldseldom affect them considerably, but some other manufacture of theirs. This may, no doubt, give encouragement to some particular class ofworkmen among ourselves, and, by excluding some of their rivals, mayenable them to raise their price in the home market. Those workmenhowever, who suffered by our neighbours prohibition, will not bebenefited by ours. On the contrary, they, and almost all the otherclasses of our citizens, will thereby be obliged to pay dearer thanbefore for certain goods. Every such law, therefore, imposes a realtax upon the whole country, not in favour of that particular class ofworkmen who were injured by our neighbours prohibitions, but of someother class. 

The case in which it may sometimes be a matter of deliberation, howfar, or in what manner, it is proper to restore the free importationof foreign goods, after it has been for some time interrupted, is whenparticular manufactures, by means of high duties or prohibitions uponall foreign goods which can come into competition with them, have beenso far extended as to employ a great multitude of hands. Humanity may inthis case require that the freedom of trade should be restored only byslow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaperforeign goods of the same kind might be poured so fast into the homemarket, as to deprive all at once many thousands of our people of theirordinary employment and means of subsistence. The disorder which thiswould occasion might no doubt be very considerable. It would in allprobability, however, be much less than is commonly imagined, for thetwo following reasons. 

First, All those manufactures of which any part is commonly exported toother European countries without a bounty, could be very little affectedby the freest importation of foreign goods. Such manufactures must besold as cheap abroad as any other foreign goods of the same quality andkind, and consequently must be sold cheaper at home. They would still, therefore, keep possession of the home market; and though a capriciousman of fashion might sometimes prefer foreign wares, merely because theywere foreign, 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 different branchesof our woollen manufacture, of our tanned leather, and of our hardware, are annually exported to other European countries without any bounty, and these are the manufactures which employ the greatest number ofhands. The silk, perhaps, is the manufacture which would suffer the mostby this freedom of trade, and after it the linen, though the latter muchless than the former. 

Secondly, Though a great number of people should, by thus restoring thefreedom of trade, be thrown all at once out of their ordinary employmentand common method of subsistence, it would by no means follow that theywould thereby be deprived either of employment or subsistence. By thereduction of the army and navy at the end of the late war, more than100, 000 soldiers and seamen, a number equal to what is employed in thegreatest manufactures, were all at once thrown out of their ordinaryemployment: but though they no doubt suffered some inconveniency, theywere not thereby deprived of all employment and subsistence. The greaterpart of the seamen, it is probable, gradually betook themselves to themerchant service as they could find occasion, and in the mean time boththey and the soldiers were absorbed in the great mass of the people, and employed in a great variety of occupations. Not only no greatconvulsion, but no sensible disorder, arose from so great a change inthe situation of more than 100, 000 men, all accustomed to the use ofarms, and many of them to rapine and plunder. The number of vagrants wasscarce anywhere sensibly increased by it; even the wages of labourwere not reduced by it in any occupation, so far as I have been ableto learn, except in that of seamen in the merchant service. But ifwe compare together the habits of a soldier and of any sort ofmanufacturer, we shall find that those of the latter do not tend so muchto disqualify him from being employed in a new trade, as those of theformer from being employed in any. The manufacturer has always beenaccustomed to look for his subsistence from his labour only; the soldierto expect it from his pay. Application and industry have been familiarto the one; idleness and dissipation to the other. But it is surely mucheasier to change the direction of industry from one sort of labour toanother, than to turn idleness and dissipation to any. To the greaterpart of manufactures, besides, it has already been observed, there areother collateral manufactures of so similar a nature, that a workman caneasily transfer his industry from one of them to another. The greaterpart of such workmen, too, are occasionally employed in country labour. The stock which employed them in a particular manufacture before, willstill remain in the country, to employ an equal number of people in someother way. The capital of the country remaining the same, the demand forlabour will likewise be the same, or very nearly the same, though it maybe exerted in different places, and for different occupations. Soldiersand seamen, indeed, when discharged from the king's service, are atliberty to exercise any trade within any town or place of Great Britainor Ireland. Let the same natural liberty of exercising what species ofindustry they please, be restored to all his Majesty's subjects, in thesame manner as to soldiers and seamen; that is, break down the exclusiveprivileges of corporations, and repeal the statute of apprenticeship, both which are really encroachments upon natural Liberty, and add tothose the repeal of the law of settlements, so that a poor workman, whenthrown out of employment, either in one trade or in one place, may seekfor it in another trade or in another place, without the fear eitherof a prosecution or of a removal; and neither the public nor theindividuals will suffer much more from the occasional disbanding someparticular classes of manufacturers, than from that of the soldiers. Our manufacturers have no doubt great merit with their country, but theycannot have more than those who defend it with their blood, nor deserveto be treated with more delicacy. 

To expect, indeed, that the freedom of trade should ever be entirelyrestored in Great Britain, is as absurd as to expect that an Oceana orUtopia should ever be established in it. Not only the prejudices of thepublic, but, what is much more unconquerable, the private interests ofmany individuals, irresistibly oppose it. Were the officers of the armyto oppose, with the same zeal and unanimity, any reduction in the numberof forces, with which master manufacturers set themselves against everylaw that is likely to increase the number of their rivals in the homemarket; were the former to animate their soldiers. In the same manneras the latter inflame their workmen, to attack with violence and outragethe proposers of any such regulation; to attempt to reduce the armywould be as dangerous as it has now become to attempt to diminish, inany respect, the monopoly which our manufacturers have obtained againstus. This monopoly has so much increased the number of some particulartribes of them, that, like an overgrown standing army, they have becomeformidable to the government, and, upon many occasions, intimidate thelegislature. The member of parliament who supports every proposal forstrengthening this monopoly, is sure to acquire not only the reputationof understanding trade, but great popularity and influence with an orderof men whose numbers and wealth render them of great importance. Ifhe opposes them, on the contrary, and still more, if he has authorityenough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest public services, can protect himfrom the most infamous abuse and detraction, from personal insults, norsometimes from real danger, arising from the insolent outrage of furiousand disappointed monopolists. 

The undertaker of a great manufacture, who, by the home markets beingsuddenly laid open to the competition of foreigners, should be obligedto abandon his trade, would no doubt suffer very considerably. That partof his capital which had usually been employed in purchasing materials, and in paying his workmen, might, without much difficulty, perhaps, findanother employment; but that part of it which was fixed in workhouses, and in the instruments of trade, could scarce be disposed of withoutconsiderable loss. The equitable regard, therefore, to his interest, requires that changes of this kind should never be introduced suddenly, but slowly, gradually, and after a very long warning. The legislature, were it possible that its deliberations could be always directed, not bythe clamorous importunity of partial interests, but by an extensiveview of the general good, ought, upon this very account, perhaps, to beparticularly careful, neither to establish any new monopolies of thiskind, nor to extend further those which are already established. Every such regulation introduces some degree of real disorder into theconstitution of the state, which it will be difficult afterwards to curewithout occasioning another disorder. 

How far it may be proper to impose taxes upon the importation of foreigngoods, in order not to prevent their importation, but to raise a revenuefor government, I shall consider hereafter when I come to treat oftaxes. Taxes imposed with a view to prevent, or even to diminishimportation, are evidently as destructive of the revenue of the customsas of the freedom of trade. 

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

Part I--Of the Unreasonableness of those Restraints, even upon thePrinciples of the Commercial System. 

To lay extraordinary restraints upon the importation of goods of almostall kinds, from those particular countries with which the balance oftrade is supposed to be disadvantageous, is the second expedient bywhich the commercial system proposes to increase the quantity of goldand silver. Thus, in Great Britain, Silesia lawns may be imported forhome consumption, upon paying certain duties; but French cambrics andlawns are prohibited to be imported, except into the port of London, there to be warehoused for exportation. Higher duties are imposed uponthe wines of France than upon those of Portugal, or indeed of any othercountry. By what is called the impost 1692, a duty of five and-twentyper cent. Of the rate or value, was laid upon all French goods; whilethe goods of other nations were, the greater part of them, subjected tomuch lighter duties, seldom exceeding five per cent. The wine, brandy, salt, and vinegar of France, were indeed excepted; these commoditiesbeing subjected to other heavy duties, either by other laws, orby particular 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, except brandy;together with a new duty of five-and-twenty pounds upon the ton ofFrench wine, and another of fifteen pounds upon the ton of Frenchvinegar. French goods have never been omitted in any of those generalsubsidies or duties of five per cent. Which have been imposed upon all, or the greater part, of the goods enumerated in the book of rates. If wecount the one-third and two-third subsidies as making a complete subsidybetween them, there have been five of these general subsidies; so that, before the commencement of the present war, seventy-five per cent. Maybe considered as the lowest duty to which the greater part of the goodsof the growth, produce, or manufacture of France, were liable. But uponthe greater part of goods, those duties are equivalent to a prohibition. The French, in their turn, have, I believe, treated our goods andmanufactures just as hardly; though I am not so well acquainted withthe particular hardships which they have imposed upon them. Those mutualrestraints have put an end to almost all fair commerce between thetwo nations; and smugglers are now the principal importers, either ofBritish goods into France, or of French goods into Great Britain. Theprinciples which I have been examining, in the foregoing chapter, tooktheir origin from private interest and the spirit of monopoly; thosewhich I am going te examine in this, from national prejudice andanimosity. They are, accordingly, as might well be expected, still moreunreasonable. They are so, even upon the principles of the commercialsystem. 

First, Though it were certain that in the case of a free trade betweenFrance and England, for example, the balance would be in favourof France, it would by no means follow that such a trade would bedisadvantageous to England, or that the general balance of its wholetrade would thereby be turned more against it. If the wines of Franceare better and cheaper than those of Portugal, or its linens than thoseof Germany, it would be more advantageous for Great Britain to purchaseboth the wine and the foreign linen which it had occasion for ofFrance, than of Portugal and Germany. Though the value of the annualimportations from France would thereby be greatly augmented, the valueof the whole annual importations would be diminished, in proportionas the French goods of the same quality were cheaper than those of theother two countries. This would be the case, even upon the suppositionthat the whole French goods imported were to be consumed in GreatBritain. 

But, Secondly, A great part of them might be re-exported to othercountries, where, being sold with profit, they might bring back areturn, equal in value, perhaps, to the prime cost of the whole Frenchgoods imported. What has frequently been said of the East India trade, might possibly be true of the French; that though the greater part ofEast India goods were bought with gold and silver, the re-exportation ofa part of them to other countries brought back more gold and silverto that which carried on the trade, than the prime cost of the wholeamounted to. One of the most important branches of the Dutch trade atpresent, consists in the carriage of French goods to other Europeancountries. Some part even of the French wine drank in Great Britain, isclandestinely imported from Holland and Zealand. If there was eithera free trade between France and England, or if French goods could beimported upon paying only the same duties as those of other Europeannations, to be drawn back upon exportation, England might have someshare of a trade which is found 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 any twocountries lies, or which of them exports to the greatest value. Nationalprejudice and animosity, prompted always by the private interest ofparticular traders, are the principles which generally direct ourjudgment upon all questions concerning it. There are two criterions, however, which have frequently been appealed to upon such occasions, thecustom-house books and the course of exchange. The custom-house books, Ithink, it is now generally acknowledged, are a very uncertain criterion, on account of the inaccuracy of the valuation at which the greater partof goods are rated in them. The course of exchange is, perhaps, almostequally so. 

When the exchange between two places, such as London and Paris, is atpar, it is said to be a sign that the debts due from London to Paris arecompensated by those due from Paris to London. On the contrary, when apremium is paid at London for a bill upon Paris, it is said to be a signthat the debts due from London to Paris are not compensated by those duefrom Paris to London, but that a balance in money must be sent outfrom the latter place; for the risk, trouble, and expense, of exportingwhich, the premium is both demanded and given. But the ordinary state ofdebt and credit between those two cities must necessarily be regulated, it is said, by the ordinary course of their dealings with one another. When neither of them imports from from other to a greater amount than itexports to that other, the debts and credits of each may compensate oneanother. But when one of them imports from the other to a greater valuethan it exports to that other, the former necessarily becomes indebtedto the latter in a greater sum than the latter becomes indebted to it:the debts and credits of each do not compensate one another, and moneymust be sent out from that place of which the debts overbalance thecredits. The ordinary course of exchange, therefore, being an indicationof the ordinary state of debt and credit between two places, mustlikewise be an indication of the ordinary course of their exports andimports, as these necessarily regulate that state. 

But though the ordinary course of exchange shall be allowed to be asufficient indication of the ordinary state of debt and credit betweenany two places, it would not from thence follow, that the balance oftrade was in favour of that place which had the ordinary state of debtand credit in its favour. The ordinary state of debt and credit betweenany two places is not always entirely regulated by the ordinary courseof their dealings with one another, but is often influenced by thatof the dealings of either with many other places. If it is usual, forexample, for the merchants of England to pay for the goods which theybuy of Hamburg, Dantzic, Riga, etc. By bills upon Holland, the ordinarystate of debt and credit between England and Holland will not beregulated entirely by the ordinary course of the dealings of thosetwo countries with one another, but will be influenced by that of thedealings in England with those other places. England may be obliged tosend out every year money to Holland, though its annual exports tothat country may exceed very much the annual value of its imports fromthence, and though what is called the balance of trade may be very muchin favour of England. 

In the way, besides, in which the par of exchange has hitherto beencomputed, the ordinary course of exchange can afford no sufficientindication that the ordinary state of debt and credit is in favour ofthat country which seems to have, or which is supposed to have, theordinary course of exchange in its favour; or, in other words, thereal exchange may be, and in fact often is, so very different from thecomputed one, that, from the course of the latter, no certain conclusioncan, upon many occasions, be drawn concerning that of the former. 

When for a sum or money paid in England, containing, according to thestandard of the English mint, a certain number of ounces of pure silver, you receive a bill for a sum of money to be paid in France, containing, according to the standard of the French mint, an equal number of ouncesof pure silver, exchange is said to be at par between England andFrance. When you pay more, you are supposed to give a premium, andexchange is said to be against England, and in favour of France. Whenyou pay less, you are supposed to get a premium, and exchange is said tobe against France, and in favour of England. 

But, first, We cannot always judge of the value of the current money ofdifferent countries by the standard of their respective mints. In someit is more, in others it is less worn, clipt, and otherwise degeneratedfrom that standard. But the value of the current coin of every country, compared with that of any other country, is in proportion, not to thequantity of pure silver which it ought to contain, but to that which itactually does contain. Before the reformation of the silver coin in KingWilliam's time, exchange between England and Holland, computed in theusual manner, according to the standard of their respective mints, wasfive-and twenty per cent. Against England. But the value of the currentcoin of 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 in favour ofEngland, notwithstanding the computed exchange was so much against it;a smaller number or ounces of pure silver, actually paid in England, mayhave purchased a bill for a greater number of ounces of pure silver tobe paid in Holland, and the man who was supposed to give, may in realityhave got the premium. The French coin was, before the late reformationof the English gold coin, much less wore 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 three percent. Against England, the real exchange might have been in its favour. Since the reformation of the gold coin, the exchange has been constantlyin favour of England, and against France. 

Secondly, In some countries the expense of coinage is defrayed by thegovernment; in others, it is defrayed by the private people, who carrytheir bullion to the mint, and the government even derives some revenuefrom the coinage. In England it is defrayed by the government; and ifyou carry a pound weight of standard silver to the mint, you get backsixty-two shillings, containing a pound weight of the like standardsilver. In France a duty of eight per cent. Is deducted for the coinage, which not only defrays the expense of it, but affords a small revenueto the government. In England, as the coinage costs nothing, the currentcoin can never be much more valuable than the quantity of bullion whichit actually contains. In France, the workmanship, as you pay for it, adds to the value, in the same manner as to that of wrought plate. A sumof French money, therefore, containing an equal weight of pure silver, is more valuable than a sum of English money containing an equal weightof pure silver, and must require more bullion, or other commodities, topurchase it. Though the current coin of the two countries, therefore, were equally near the standards of their respective mints, a sum ofEnglish money could not well purchase a sum of French money containingan equal number of ounces of pure silver, nor, consequently, a bill uponFrance for such a sum. If, for such a bill, no more additional money waspaid than what was sufficient to compensate the expense of the Frenchcoinage, the real exchange might be at par between the two countries;their debts and credits might mutually compensate one another, whilethe computed exchange was considerably in favour of France. If less thanthis was paid, the real exchange might be in favour of England, whilethe computed was in favour of France. 

Thirdly, and lastly, In some places, as at Amsterdam, Hamburg, Venice, etc. Foreign bills of exchange are paid in what they call bank money;while in others, as at London, Lisbon, Antwerp, Leghorn, etc. They arepaid in the common currency of the country. What is called bank money, is always of more value than the same nominal sum of common currency. A thousand guilders in the bank of Amsterdam, for example, are of morevalue than a thousand guilders of Amsterdam currency. The differencebetween them is called the agio of the bank, which at Amsterdam isgenerally about five per cent. Supposing the current money of the twocountries equally near to the standard of their respective mints, andthat the one pays foreign bills in this common currency, while the otherpays them in bank money, it is evident that the computed exchange maybe in favour of that which pays in bank money, though the real exchangeshould be in favour of that which pays in current money; for the samereason that the computed exchange may be in favour of that which paysin better money, or in money nearer to its own standard, though the realexchange should be in favour of that which pays in worse. The computedexchange, before the late reformation of the gold coin, was generallyagainst London with Amsterdam, Hamburg, Venice, and, I believe, with allother places which pay in what is called bank money. It will by nomeans follow, however, that the real exchange was against it. Since thereformation of the gold coin, it has been in favour of London, evenwith those places. The computed exchange has generally been in favourof London with Lisbon, Antwerp, Leghorn, and, if you except France, Ibelieve with most other parts of Europe that pay in common currency; andit is not improbable that the real exchange was so too. 

Digression concerning Banks of Deposit, particularly concerning that ofAmsterdam. 

The currency of a great state, such as France or England, generallyconsists almost entirely of its own coin. Should this currency, therefore, be at any time worn, clipt, or otherwise degraded below itsstandard value, the state, by a reformation of its coin, can effectuallyre-establish its currency. But the currency of a small state, such asGenoa or Hamburg, can seldom consist altogether in its own coin, but must be made up, in a great measure, of the coins of all theneighbouring states with which its inhabitants have a continualintercourse. Such a state, therefore, by reforming its coin, will notalways be able to reform its currency. If foreign bills of exchange arepaid in this currency, the uncertain value of any sum, of what is inits own nature so uncertain, must render the exchange always verymuch against such a state, its currency being in all foreign statesnecessarily valued even below what it is worth. 

In order to remedy the inconvenience to which this disadvantageousexchange must have subjected their merchants, such small states, whenthey began to attend to the interest of trade, have frequently enactedthat foreign bills of exchange of a certain value should be paid, not incommon currency, but by an order upon, or by a transfer in the books ofa certain bank, established upon the credit, and under the protectionof the state, this bank being always obliged to pay, in good and truemoney, exactly according to the standard of the state. The banks ofVenice, Genoa, Amsterdam, Hamburg, and Nuremberg, seem to have beenall originally established with this view, though some of them may haveafterwards been made subservient to other purposes. The money of suchbanks, being better than the common currency of the country, necessarilybore an agio, which was greater or smaller, according as the currencywas supposed to be more or less degraded below the standard of thestate. The agio of the bank of Hamburg, for example, which is said to becommonly about fourteen per cent. Is the supposed difference between thegood standard money of the state, and the clipt, worn, and diminishedcurrency, poured into it from all the neighbouring states. 

Before 1609, the great quantity of clipt and worn foreign coin which theextensive trade of Amsterdam brought from all parts of Europe, reducedthe value of its currency about nine per cent. Below that of good moneyfresh from the mint. Such money no sooner appeared, than it was melteddown or carried away, as it always is in such circumstances. Themerchants, with plenty of currency, could not always find a sufficientquantity of good money to pay their bills of exchange; and the value ofthose bills, in spite of several regulations which were made to preventit, became in a great measure uncertain. 

In order to remedy these inconveniencies, a bank was established in1609, under the guarantee of the city. This bank received both foreigncoin, and the light and worn coin of the country, at its real intrinsicvalue in the good standard money of the country, deducting only so muchas was necessary for defraying the expense of coinage and the othernecessary expense of management. For the value which remained after thissmall deduction was made, it gave a credit in its books. This credit wascalled bank money, which, as it represented money exactly accordingto the standard of the mint, was always of the same real value, andintrinsically worth more than current money. It was at the same timeenacted, that all bills drawn upon or negotiated at Amsterdam, of thevalue of 600 guilders and upwards, should be paid in bank money, whichat once took away all uncertainty in the value of those bills. Everymerchant, in consequence of this regulation, was obliged to keep anaccount with the bank, in order to pay his foreign bills of exchange, which necessarily occasioned a certain demand for bank money. 

Bank money, over and above both its intrinsic superiority to currency, and the additional value which this demand necessarily gives it, haslikewise some other advantages, It is secure from fire, robbery, andother accidents; the city of Amsterdam is bound for it; it can be paidaway by a simple transfer, without the trouble of counting, or the riskof transporting it from one place to another. In consequence of thosedifferent advantages, it seems from the beginning to have borne an agio;and it is generally believed that all the money originally deposited inthe bank, was allowed to remain there, nobody caring to demand paymentof a debt which he could sell for a premium in the market. By demandingpayment of the bank, the owner of a bank credit would lose this premium. As a shilling fresh from the mint will buy no more goods in the marketthan one of our common worn shillings, so the good and true money whichmight be brought from the coffers of the bank into those of a privateperson, being mixed and confounded with the common currency of thecountry, would be of no more value than that currency, from which itcould no longer be readily distinguished. While it remained in thecoffers of the bank, its superiority was known and ascertained. When ithad come into those of a private person, its superiority could not wellbe ascertained without more trouble than perhaps the difference wasworth. By being brought from the coffers of the bank, besides, it lostall the other advantages of bank money; its security, its easy and safetransferability, its use in paying foreign bills of exchange. Over andabove all this, it could not be brought from those coffers, as willappear by and by, without previously paying for the keeping. 

Those deposits of coin, or those deposits which the bank was bound torestore in coin, constituted the original capital of the bank, or thewhole value of what was represented by what is called bank money. Atpresent they are supposed to constitute but a very small part of it. Inorder to facilitate the trade in bullion, the bank has been for thesemany years in the practice of giving credit in its books, upon depositsof gold and silver bullion. This credit is generally about five percent. Below the mint price of such bullion. The bank grants at the sametime what is called a recipice or receipt, entitling the person whomakes the deposit, or the bearer, to take out the bullion again at anytime within six months, upon transferring to the bank a quantity of bankmoney equal to that for which credit had been given in its books whenthe deposit was made, and upon paying one-fourth per cent. For thekeeping, if the deposit was in silver; and one-half per cent. If itwas in gold; but at the same time declaring, that in default of suchpayment, and upon the expiration of this term, the deposit should belongto the bank, at the price at which it had been received, or for whichcredit had been given in the transfer books. What is thus paid for thekeeping of the deposit may be considered as a sort of warehouse rent;and why this warehouse rent should be so much dearer for gold than forsilver, several different reasons have been assigned. The fineness ofgold, it has been said, is more difficult to be ascertained than that ofsilver. Frauds are more easily practised, and occasion a greater loss inthe most precious metal. Silver, besides, being the standard metal, thestate, it has been said, wishes to encourage more the making of depositsof silver than those of gold. 

Deposits of bullion are most commonly made when the price is somewhatlower than ordinary, and they are taken out again when it happens torise. In Holland the market price of bullion is generally above the mintprice, for the same reason that it was so in England before the latereformation of the gold coin. The difference is said to be commonly fromabout six to sixteen stivers upon the mark, or eight ounces of silver, of eleven parts of fine and one part alloy. The bank price, or thecredit which the bank gives for the deposits of such silver (when madein foreign coin, of which the fineness is well known and ascertained, such as Mexico dollars), is twenty-two guilders the mark: the mintprice is about twenty-three guilders, and the market price is fromtwenty-three guilders six, to twenty-three guilders sixteen stivers, orfrom two to three per cent. Above the mint price. 

The following are the prices at which the bank of Amsterdam at present{September 1775} receives bullion and coin of different kinds:

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

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

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

Bar or ingot gold is received in proportion to its fineness, comparedwith the above foreign gold coin. Upon fine bars the bank gives 340 permark. In general, however, something more is given upon coin of a knownfineness, than upon gold and silver bars, of which the fineness cannotbe ascertained but by a process of melting and assaying. 

The proportions between the bank price, the mint price, and the marketprice of gold bullion, are nearly the same. A person can generally sellhis receipt for the difference between the mint price of bullion and themarket price. A receipt for bullion is almost always worth something, and it very seldom happens, therefore, that anybody suffers his receiptsto expire, or allows his bullion to fall to the bank at the price atwhich it had been received, either by not taking it out before the endof the six months, or by neglecting to pay one fourth or one half percent. In order to obtain a new receipt for another six months. This, however, though it happens seldom, is said to happen sometimes, and morefrequently with regard to gold than with regard to silver, on accountof the higher warehouse rent which is paid for the keeping of the moreprecious metal. 

The person who, by making a deposit of bullion, obtains both a bankcredit and a receipt, pays his bills of exchange as they become due, with his bank credit; and either sells or keeps his receipt, accordingas he judges that the price of bullion is likely to rise or to fall. Thereceipt and the bank credit seldom keep long together, and there is nooccasion that they should. The person who has a receipt, and who wantsto take out bullion, finds always plenty of bank credits, or bank money, to buy at the ordinary price, and the person who has bank money, andwants to take out bullion, finds receipts always in equal abundance. 

The owners of bank credits, and the holders of receipts, constitute twodifferent sorts of creditors against the bank. The holder of areceipt cannot draw out the bullion for which it is granted, withoutre-assigning to the bank a sum of bank money equal to the price at whichthe bullion had been received. If he has no bank money of his own, hemust purchase it of those who have it. The owner of bank money cannotdraw out bullion, without producing to the bank receipts for thequantity which he wants. If he has none of his own, he must buy themof those who have them. The holder of a receipt, when he purchases bankmoney, purchases the power of taking out a quantity of bullion, of whichthe mint price is five per cent. Above the bank price. The agio of fiveper cent. Therefore, which he commonly pays for it, is paid, not foran imaginary, but for a real value. The owner of bank money, when hepurchases a receipt, purchases the power of taking out a quantity ofbullion, of which the market price is commonly from two to three percent. Above the mint price. The price which he pays for it, therefore, is paid likewise for a real value. The price of the receipt, and theprice of the bank money, compound or make up between them the full valueor price of the bullion. 

Upon deposits of the coin current in the country, the bank grantreceipts likewise, as well as bank credits; but those receipts arefrequently of no value and will bring no price in the market. Uponducatoons, for example, which in the currency pass for three guildersthree stivers each, the bank gives a credit of three guilders only, orfive per cent. Below their current value. It grants a receipt likewise, entitling the bearer to take out the number of ducatoons deposited atany time within six months, upon paying one fourth per cent. For thekeeping. This receipt will frequently bring no price in the market. Three guilders, bank money, generally sell in the market for threeguilders three stivers, the full value of the ducatoons, if they weretaken out of the bank; and before they can be taken out, one-fourthper cent. Must be paid for the keeping, which would be mere loss to theholder of the receipt. If the agio of the bank, however, should at anytime fall to three per cent. Such receipts might bring some price in themarket, and might sell for one and three-fourths per cent. But the agioof the bank 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 fall toit yet more frequently, because a higher warehouse rent, or one half percent. Must be paid for the keeping of them, before they can be taken outagain. The five per cent. Which the bank gains, when deposits eitherof coin or bullion are allowed to fall to it, maybe considered as thewarehouse rent for the perpetual keeping of such deposits. 

The sum of bank money, for which the receipts are expired, must be veryconsiderable. It must comprehend the whole original capital of the bank, which, it is generally supposed, has been allowed to remain there fromthe time it was first deposited, nobody caring either to renew hisreceipt, or to take out his deposit, as, for the reasons alreadyassigned, neither the one nor the other could be done without loss. Butwhatever may be the amount of this sum, the proportion which it bears tothe whole mass of bank money is supposed to be very small. The bank ofAmsterdam has, for these many years past, been the great warehouse ofEurope for bullion, for which the receipts are very seldom allowed toexpire, or, as they express it, to fall to the bank. The far greaterpart of the bank money, or of the credits upon the books of the bank, is supposed to have been created, for these many years past, by suchdeposits, which the dealers in bullion are continually both making andwithdrawing. 

No demand can be made upon the bank, but by means of a recipice orreceipt. The smaller mass of bank money, for which the receipts areexpired, is mixed and confounded with the much greater mass for whichthey are still in force; so that, though there may be a considerable sumof bank money, for which there are no receipts, there is no specific sumor portion of it which may not at any time be demanded by one. The bankcannot be debtor to two persons for the same thing; and the owner ofbank money who has no receipt, cannot demand payment of the bank tillhe buys one. In ordinary and quiet times, he can find no difficulty ingetting one to buy at the market price, which generally corresponds withthe price at which he can sell the coin or bullion it entitles him totake out 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 bank moneybeing then all eager to draw it out of the bank, in order to have it intheir own keeping, the demand for receipts might raise their price toan exorbitant height. The holders of them might form extravagantexpectations, and, instead of two or three per cent. Demand half thebank money for which credit had been given upon the deposits that thereceipts had respectively been granted for. The enemy, informed of theconstitution of the bank, might even buy them up, in order to preventthe carrying away of the treasure. In such emergencies, the bank, it issupposed, would break through its ordinary rule of making payment onlyto the holders of receipts. The holders of receipts, who had no bankmoney, must have received within two or three per cent. Of the value ofthe deposit 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 the ownersof bank money, who could get no receipts, were credited for in itsbooks; paying, at the same time, two or three per cent. To such holdersof receipts as had no bank money, that being the whole value which, inthis state of things, could justly be supposed due to them. 

Even in ordinary and quiet times, it is the interest of the holders ofreceipts to depress the agio, in order either to buy bank money (andconsequently the bullion which their receipts would then enable themto take out of the bank ) so much cheaper, or to sell their receiptsto those who have bank money, and who want to take out bullion, so muchdearer; the price of a receipt being generally equal to the differencebetween the market price of bank money and that of the coin or bullionfor which the receipt had been granted. It is the interest of the ownersof bank money, on the contrary, to raise the agio, in order eitherto sell their bank money so much dearer, or to buy a receipt so muchcheaper. To prevent the stock-jobbing tricks which those oppositeinterests might sometimes occasion, the bank has of late years come tothe resolution, to sell at all times bank money for currency at fiveper cent. Agio, and to buy it in again at four per cent. Agio. Inconsequence of this resolution, the agio can never either rise abovefive, or sink below four per cent. ; and the proportion between themarket price of bank and that of current money is kept at all timesvery near the proportion between their intrinsic values. Before thisresolution was taken, the market price of bank money used sometimes torise so high as nine per cent. Agio, and sometimes to sink so low aspar, according as opposite interests happened to influence the market. 

The bank of Amsterdam professes to lend out no part of what is depositedwith it, but for every guilder for which it gives credit in its books, to keep in its repositories the value of a guilder either in money orbullion. That it keeps in its repositories all the money or bullion forwhich there are receipts in force for which it is at all times liable tobe called upon, and which in reality is continually going from it, andreturning to it again, cannot well be doubted. But whether it does solikewise with regard to that part of its capital for which the receiptsare long ago expired, for which, in ordinary and quiet times, it cannotbe called upon, and which, in reality, is very likely to remain with itfor ever, or as long as the states of the United Provinces subsist, mayperhaps appear more uncertain. At Amsterdam, however, no point of faithis better established than that, for every guilder circulated as bankmoney, there is a correspondent guilder in gold or silver to be found inthe treasures 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 thetreasure, compares it with the books, receives it upon oath, anddelivers it over, with the same awful solemnity to the set whichsucceeds; and in that sober and religious country, oaths are not yetdisregarded. A rotation of this kind seems alone a sufficient securityagainst any practices which cannot be avowed. Amidst all the revolutionswhich faction has ever occasioned in the government of Amsterdam, theprevailing party has at no time accused their predecessors of infidelityin the administration of the bank. No accusation could have affectedmore deeply the reputation and fortune of the disgraced party; and ifsuch an accusation could have been supported, we may be assured that itwould have been brought. In 1672, when the French king was at Utrecht, the bank of Amsterdam paid so readily, as left no doubt of the fidelitywith which it had observed its engagements. Some of the pieces whichwere then brought from its repositories, appeared to have been scorchedwith the fire which happened in the town-house soon after the bank wasestablished. Those pieces, therefore, must have lain there from thattime. 

What may be the amount of the treasure in the bank, is a questionwhich has long employed the speculations of the curious. Nothing butconjecture can be offered concerning it. It is generally reckoned, that there are about 2000 people who keep accounts with the bank; andallowing them to have, one with another, the value of £1500 sterlinglying upon their respective accounts (a very large allowance), the wholequantity of bank money, and consequently of treasure in the bank, willamount to about £3, 000, 000 sterling, or, at eleven guilders the poundsterling, 33, 000, 000 of guilders; a great sum, and sufficient to carryon a very extensive circulation, but vastly below the extravagant ideaswhich some people have formed of this treasure. 

The city of Amsterdam derives a considerable revenue from the bank. Besides what may be called the warehouse rent above mentioned, eachperson, upon first opening an account with the bank, pays a fee of tenguilders; and for every new account, three guilder's three stivers; forevery transfer, two stivers; and if the transfer is for less than 300guilders, six stivers, in order to discourage the multiplicity of smalltransactions. The person who neglects to balance his account twicein the year, forfeits twenty-five guilders. The person who orders atransfer for more than is upon his account, is obliged to pay threeper cent. For the sum overdrawn, and his order is set aside into thebargain. 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 sold withadvantage. It makes a profit, likewise, by selling bank money at fiveper cent. Agio, and buying it in at four. These different emolumentsamount to a good deal more than what is necessary for paying thesalaries of officers, and defraying the expense of management. Whatis paid for the keeping of bullion upon receipts, is alone supposed toamount to a neat annual revenue of between 150, 000 and 200, 000 guilders. Public utility, however, and not revenue, was the original object ofthis institution. Its object was to relieve the merchants from theinconvenience of a disadvantageous exchange. The revenue which hasarisen from it was unforeseen, and may be considered as accidental. Butit is now time to return from this long digression, into which I havebeen insensibly led, in endeavouring to explain the reasons why theexchange between the countries which pay in what is called bank money, and those which pay in common currency, should generally appear to bein favour of the former, and against the latter. The former pay in aspecies of money, of which the intrinsic value is always the same, andexactly agreeable to the standard of their respective mints; the latteris a species of money, of which the intrinsic value is continuallyvarying, and is almost always more or less below that standard. 

PART II. --Of the Unreasonableness of those extraordinary Restraints, upon other Principles. 

In the foregoing part of this chapter, I have endeavoured to show, evenupon the principles of the commercial system, how unnecessary it is tolay extraordinary restraints upon the importation of goods fromthose countries with which the balance of trade is supposed to bedisadvantageous. 

Nothing, however, can be more absurd than this whole doctrine of thebalance of trade, upon which, not only these restraints, but almost allthe other regulations of commerce, are founded. When two places tradewith one another, this doctrine supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree toone side, that one of them loses, and the other gains, in proportion toits declension from the exact equilibrium. Both suppositions are false. A trade, which is forced by means of bounties and monopolies, may be, and commonly is, disadvantageous to the country in whose favour it ismeant to be established, as I shall endeavour to show hereafter. But that trade which, without force or constraint, is naturally andregularly carried on between any two places, is always advantageous, though not always equally so, to both. 

By advantage or gain, I understand, not the increase of the quantityof gold and silver, but that of the exchangeable value of the annualproduce of the land and labour of the country, or the increase of theannual revenue of its inhabitants. 

If the balance be even, and if the trade between the two places consistaltogether in the exchange of their native commodities, they will, uponmost occasions, not only both gain, but they will gain equally, or verynearly equally; each will, in this case, afford a market for a part ofthe surplus produce of the other; each will replace a capital which hadbeen employed in raising and preparing for the market this part of thesurplus produce of the other, and which had been distributed among, andgiven revenue and maintenance to, a certain number of its inhabitants. Some part of the inhabitants of each, therefore, will directly derivetheir revenue and maintenance from the other. As the commoditiesexchanged, too, are supposed to be of equal value, so the two capitalsemployed in the trade will, upon most occasions, be equal, or verynearly equal; and both being employed in raising the native commoditiesof the two countries, the revenue and maintenance which theirdistribution will afford to the inhabitants of each will be equal, orvery nearly equal. This revenue and maintenance, thus mutually afforded, will be greater or smaller, in proportion to the extent of theirdealings. If these should annually amount to £100, 000, for example, orto £1, 000, 000, on each side, each of them will afford an annual revenue, in the one case, of £100, 000, and, in the other, of £1, 000, 000, to theinhabitants of the other. 

If their trade should be of such a nature, that one of them exportedto the other nothing but native commodities, while the returns of thatother consisted altogether in foreign goods; the balance, in thiscase, would still be supposed even, commodities being paid for withcommodities. They would, in this case too, both gain, but they would notgain equally; and the inhabitants of the country which exported nothingbut native commodities, would derive the greatest revenue from thetrade. If England, for example, should import from France nothing butthe native commodities of that country, and not having such commoditiesof its 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 give somerevenue to the inhabitants of both countries, would give more to thoseof France than to those of England. The whole French capital annuallyemployed in it would annually be distributed among the people ofFrance; but that part of the English capital only, which was employedin producing the English commodities with which those foreign goods werepurchased, would be annually distributed among the people of England. The greater part of it would replace the capitals which had beenemployed in Virginia, Indostan, and China, and which had given revenueand maintenance to the inhabitants 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 people ofFrance, than that of the English capital would the revenue of the peopleof England. France would, in this case, carry on a direct foreigntrade of consumption with England; whereas England would carry on around-about trade of the same kind with France. The different effects ofa capital employed in the direct, and of one employed in the round-aboutforeign trade of consumption, have already been fully explained. 

There is not, probably, between any two countries, a trade whichconsists altogether in the exchange, either of native commodities onboth sides, or of native commodities on one side, and of foreign goodson the other. Almost all countries exchange with one another, partlynative and partly foreign goods That country, however, in whose cargoesthere is the greatest proportion of native, and the least of foreigngoods, will always be the principal gainer. 

If it was not with tobacco and East India goods, but with gold andsilver, that England paid for the commodities annually imported fromFrance, the balance, in this case, would be supposed uneven, commoditiesnot being paid for with commodities, but with gold and silver. Thetrade, however, would in this case, as in the foregoing, give somerevenue to the inhabitants of both countries, but more to those ofFrance than to those of England. It would give some revenue to those ofEngland. The capital which had been employed in producing the Englishgoods that purchased this gold and silver, the capital which had beendistributed among, and given revenue to, certain inhabitants of England, would thereby be replaced, and enabled to continue that employment. Thewhole capital of England would no more be diminished by this exportationof gold and silver, than by the exportation of an equal value of anyother goods. On the contrary, it would, in most cases, be augmented. Nogoods are sent abroad but those for which the demand is supposed to begreater abroad than at home, and of which the returns, consequently, it is expected, will be of more value at home than the commoditiesexported. If the tobacco which in England is worth only £100, 000, whensent to France, will purchase wine which is in England worth £110, 000, the exchange will augment the capital of England by £10, 000. If £100, 000of English gold, in the same manner, purchase French wine, which inEngland is worth £110, 000, this exchange will equally augment thecapital of England by £10, 000. As a merchant, who has £110, 000 worth ofwine in his cellar, is a richer man than he who has only £100, 000 worthof tobacco in his warehouse, so is he likewise a richer man than he whohas only £100, 000 worth of gold in his coffers. He can put into motiona greater 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 capital of allits different inhabitants; and the quantity of industry which can beannually maintained in it is equal to what all those different capitalscan maintain. Both the capital of the country, therefore, and thequantity of industry which can be annually maintained in it, mustgenerally be augmented by this exchange. It would, indeed, be moreadvantageous for England that it could purchase the wines of Francewith its own hardware and broad cloth, than with either the tobacco ofVirginia, or the gold and silver of Brazil and Peru. A direct foreigntrade of consumption is always more advantageous than a round-about one. But a round-about foreign trade of consumption, which is carried on withgold and silver, does not seem to be less advantageous than any otherequally round-about one. Neither is a country which has no mines, morelikely to be exhausted of gold and silver by this annual exportation ofthose metals, than one which does not grow tobacco by the like annualexportation of that plant. As a country which has wherewithal to buytobacco will never be long in want of it, so neither will one be long inwant of gold and silver which has wherewithal to purchase those metals. 

It is a losing trade, it is said, which a workman carries on with thealehouse; and the trade which a manufacturing nation would naturallycarry on with a wine country, may be considered as a trade of the samenature. I answer, that the trade with the alehouse is not necessarily alosing trade. In its own nature it is just as advantageous as any other, though, perhaps, somewhat more liable to be abused. The employment ofa brewer, and even that of a retailer of fermented liquors, are asnecessary division's of labour as any other. It will generally be moreadvantageous for a workman to buy of the brewer the quantity he hasoccasion for, than to brew it himself; and if he is a poor workman, it will generally be more advantageous for him to buy it by little andlittle of the retailer, than a large quantity of the brewer. He mayno doubt 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, ifhe affects to be a beau among his companions. It is advantageous to thegreat body of workmen, notwithstanding, that all these trades shouldbe free, though this freedom may be abused in all of them, and is morelikely to be so, perhaps, in some than in others. Though individuals, besides, may sometimes ruin their fortunes by an excessive consumptionof fermented liquors, there seems to be no risk that a nation should doso. Though in every country there are many people who spend upon suchliquors more than they can afford, there are always many more who spendless. It deserves to be remarked, too, that if we consult experience, the cheapness of wine seems to be a cause, not of drunkenness, butof sobriety. The inhabitants of the wine countries are in general thesoberest people of Europe; witness the Spaniards, the Italians, andthe inhabitants of the southern provinces of France. People are seldomguilty of excess in what is their daily fare. Nobody affects thecharacter of liberality and good fellowship, by being profuse ofa liquor which is as cheap as small beer. On the contrary, in thecountries which, either from excessive heat or cold, produce no grapes, and where wine consequently is dear and a rarity, drunkenness is acommon vice, as among the northern nations, and all those who livebetween the tropics, the negroes, for example on the coast of Guinea. When a French regiment comes from some of the northern provinces ofFrance, where wine is somewhat dear, to be quartered in the southern, where it is very cheap, the soldiers, I have frequently heard itobserved, are at first debauched by the cheapness and novelty of goodwine; but after a few months residence, the greater part of them becomeas sober as the rest of the inhabitants. Were the duties upon foreignwines, and the excises upon malt, beer, and ale, to be taken away all atonce, it might, in the same manner, occasion in Great Britain a prettygeneral and temporary drunkenness among the middling and inferior ranksof people, which would probably be soon followed by a permanent andalmost universal sobriety. At present, drunkenness is by no means thevice of people of fashion, or of those who can easily afford the mostexpensive liquors. A gentleman drunk with ale has scarce ever been seenamong us. The restraints upon the wine trade in Great Britain, besides, do not so much seem calculated to hinder the people from going, if I maysay so, to the alehouse, as from going where they can buy the best andcheapest liquor. They favour the wine trade of Portugal, and discouragethat of France. The Portuguese, it is said, indeed, are better customersfor our manufactures than the French, and should therefore be encouragedin preference to them. As they give us their custom, it is pretended weshould give them ours. The sneaking arts of underling tradesmen are thuserected into political maxims for the conduct of a great empire; forit is the most underling tradesmen only who make it a rule to employchiefly their own customers. A great trader purchases his goods alwayswhere they are cheapest and best, without regard to any little interestof this kind. 

By such maxims as these, however, nations have been taught that theirinterest consisted in beggaring all their neighbours. Each nation hasbeen made to look with an invidious eye upon the prosperity of all thenations with which it trades, and to consider their gain as its ownloss. Commerce, which ought naturally to be, among nations as amongindividuals, a bond of union and friendship, has become the most fertilesource of discord and animosity. The capricious ambition of kings andministers has not, during the present and the preceding century, beenmore fatal to the repose of Europe, than the impertinent jealousy ofmerchants and manufacturers. The violence and injustice of the rulers ofmankind is an ancient evil, for which, I am afraid, the nature ofhuman affairs can scarce admit of a remedy: but the mean rapacity, themonopolizing spirit, of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot, perhaps, becorrected, may very easily be prevented from disturbing the tranquillityof anybody but themselves. 

That it was the spirit of monopoly which originally both invented andpropagated this doctrine, cannot be doubted and they who first taughtit, were by no means such fools as they who believed it. In everycountry it always is, and must be, the interest of the great body ofthe people, to buy whatever they want of those who sell it cheapest. Theproposition is so very manifest, that it seems ridiculous to take anypains to prove it; nor could it ever have been called in question, hadnot the interested sophistry of merchants and manufacturers confoundedthe common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people. As it isthe interest of the freemen of a corporation to hinder the rest of theinhabitants from employing any workmen but themselves; so it is theinterest of the merchants and manufacturers of every country to secureto themselves the monopoly of the home market. Hence, in Great Britain, and in most other European countries, the extraordinary duties uponalmost all goods imported by alien merchants. Hence the high duties andprohibitions upon all those foreign manufactures which can come intocompetition with our own. Hence, too, the extraordinary restraints uponthe importation of almost all sorts of goods from those countries withwhich the balance of trade is supposed to be disadvantageous; that is, from those against whom national animosity happens ta be most violentlyinflamed. 

The wealth of neighbouring nations, however, though dangerous in war andpolitics, is certainly advantageous in trade. In a state of hostility, it may enable our enemies to maintain fleets and armies superior to ourown; but in a state of peace and commerce it must likewise enable themto exchange with us to a greater value, and to afford a better market, either for the immediate produce of our own industry, or for whateveris purchased with that produce. As a rich man is likely to be a bettercustomer to the industrious people in his neighbourhood, than a poor, so is likewise a rich nation. A rich man, indeed, who is himself amanufacturer, is a very dangerous neighbour to all those who deal inthe same way. All the rest of the neighbourhood, however, by far thegreatest number, profit by the good market which his expense affordsthem. They even profit by his underselling the poorer workmen who dealin the same way with him. The manufacturers of a rich nation, in thesame manner, may no doubt be very dangerous rivals to those of theirneighbours. This very competition, however, is advantageous to the greatbody of the people, who profit greatly, besides, by the good marketwhich the great expense of such a nation affords them in every otherway. Private people, who want to make a fortune, never think of retiringto the remote and poor provinces of the country, but resort either tothe capital, or to some of the great commercial towns. They know, thatwhere little wealth circulates, there is little to be got; but thatwhere a great deal is in motion, some share of it may fall to them. Thesame maxim which would in this manner direct the common sense of one, orten, or twenty individuals, should regulate the judgment of one, or ten, or twenty millions, and should make a whole nation regard the riches ofits neighbours, as a probable cause and occasion for itself to acquireriches. A nation that would enrich itself by foreign trade, is certainlymost likely to do so, when its neighbours are all rich, industrious andcommercial nations. A great nation, surrounded on all sides by wanderingsavages and poor barbarians, might, no doubt, acquire riches by thecultivation of its own lands, and by its own interior commerce, but notby foreign trade. It seems to have been in this manner that the ancientEgyptians and the modern Chinese acquired their great wealth. Theancient Egyptians, it is said, neglected foreign commerce, and themodern Chinese, it is known, hold it in the utmost contempt, and scarcedeign to afford it the decent protection of the laws. The modernmaxims of foreign commerce, by aiming at the impoverishment of allour neighbours, so far as they are capable of producing theirintended effect, tend to render that very commerce insignificant andcontemptible. 

It is in consequence of these maxims, that the commerce betweenFrance and England has, in both countries, been subjected to so manydiscouragements and restraints. If those two countries, however, wereto consider their real interest, without either mercantile jealousy ornational animosity, the commerce of France might be more advantageous toGreat Britain than that of any other country, and, for the same reason, that of Great Britain to France. France is the nearest neighbour toGreat Britain. In the trade between the southern coast of England andthe northern and north-western coast of France, the returns might beexpected, in the same manner as in the inland trade, four, five, or sixtimes in the year. The capital, therefore, employed in this trade could, in each of the two countries, keep in motion four, five, or six timesthe quantity of industry, and afford employment and subsistence to four, five, or six times the number of people, which all equal capital coulddo in the greater part of the other branches of foreign trade. Betweenthe parts of France and Great Britain most remote from one another, thereturns might be expected, at least, once in the year; and even thistrade would so far be at least equally advantageous, as the greater partof the other branches of our foreign European trade. It would be, atleast, three times more advantageous than the boasted trade with ourNorth American colonies, in which the returns were seldom made inless than three years, frequently not in less than four or five years. France, besides, is supposed to contain 24, 000, 000 of inhabitants. Our North American colonies were never supposed to contain more than3, 000, 000; and France is a much richer country than North America;though, on account of the more unequal distribution of riches, thereis much more poverty and beggary in the one country than in the other. France, therefore, could afford a market at least eight times moreextensive, and, on account of the superior frequency of the returns, four-and-twenty times more advantageous than that which our NorthAmerican colonies ever afforded. The trade of Great Britain wouldbe just as advantageous 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 her owncolonies. Such is the very great difference between that trade which thewisdom of both nations has thought proper to discourage, and that whichit has favoured the most. 

But the very same circumstances which would have rendered an open andfree commerce between the two countries so advantageous to both, have occasioned the principal obstructions to that commerce. Beingneighbours, they are necessarily enemies, and the wealth and power ofeach becomes, upon that account, more formidable to the other; and whatwould increase the advantage of national friendship, serves only toinflame the violence of national animosity. They are both rich andindustrious nations; and the merchants and manufacturers of eachdread the competition 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 confidence ofinterested falsehood, the certain ruin of each, in consequence ofthat unfavourable balance of trade, which, they pretend, would be theinfallible effect of an unrestrained commerce with the other. 

There is no commercial country in Europe, of which the approachingruin has not frequently been foretold by the pretended doctors of thissystem, from all unfavourably balance of trade. After all the anxiety, however, which they have excited about this, after all the vain attemptsof almost all trading nations to turn that balance in their own favour, and against their neighbours, it does not appear that any one nation inEurope has been, in any respect, impoverished by this cause. Every townand country, on the contrary, in proportion as they have opened theirports to all nations, instead of being ruined by this free trade, as theprinciples of the commercial system would lead us to expect, have beenenriched by it. Though there are in Europe indeed, a few towns which, insame respects, deserve the name of free ports, there is no country whichdoes so. Holland, perhaps, approaches the nearest to this character ofany, though still very remote from it; and Holland, it is acknowledged, not only derives its whole wealth, but a great part of its necessarysubsistence, from foreign trade. 

There is another balance, indeed, which has already been explained, verydifferent from the balance of trade, and which, according as it happensto be either favourable or unfavourable, necessarily occasions theprosperity or decay of every nation. This is the balance of the annualproduce and consumption. If the exchangeable value of the annualproduce, it has already been observed, exceeds that of the annualconsumption, the capital of the society must annually increase inproportion to this excess. The society in this case lives within itsrevenue; and what is annually saved out of its revenue, is naturallyadded to its capital, and employed so as to increase still further theannual produce. If the exchangeable value of the annual produce, onthe contrary, fall short of the annual consumption, the capital ofthe society must annually decay in proportion to this deficiency. The expense of the society, in this case, exceeds its revenue, andnecessarily encroaches upon its capital. Its capital, therefore, mustnecessarily decay, and, together with it, the exchangeable value of theannual produce of its industry. 

This balance of produce and consumption is entirely different from whatis called the balance of trade. It might take place in a nation whichhad no foreign trade, but which was entirely separated from all theworld. It may take place in the whole globe of the earth, of which thewealth, population, and improvement, may be either gradually increasingor gradually decaying. 

The balance of produce and consumption may be constantly in favour of anation, though what is called the balance of trade be generally againstit. A nation may import to a greater value than it exports for halfa century, perhaps, together; the gold and silver which comes intoit during all this time, may be all immediately sent out of it; itscirculating coin may gradually decay, different sorts of paper moneybeing substituted in its place, and even the debts, too, which itcontracts in the principal nations with whom it deals, may be graduallyincreasing; and yet its real wealth, the exchangeable value of theannual produce of its lands and labour, may, during the same period, have been increasing in a much greater proportion. The state of ourNorth American colonies, and of the trade which they carried on withGreat Britain, before the commencement of the present disturbances, {This paragraph was written in the year 1775. } may serve as a proof thatthis is by no means an impossible supposition. 

CHAPTER IV. OF DRAWBACKS. 

Merchants and manufacturers are not contented with the monopoly of thehome market, but desire likewise the most extensive foreign sale fortheir goods. Their country has no jurisdiction in foreign nations, andtherefore can seldom procure them any monopoly there. They are generallyobliged, therefore, to content themselves with petitioning for certainencouragements to exportation. 

Of these encouragements, what are called drawbacks seem to be the mostreasonable. To allow the merchant to draw back upon exportation, eitherthe whole, or a part of whatever excise or inland duty is imposed upondomestic industry, can never occasion the exportation of a greaterquantity of goods than what would have been exported had no duty beenimposed. Such encouragements do not tend to turn towards any particularemployment a greater share of the capital of the country, than whatwould go to that employment of its own accord, but only to hinder theduty from driving 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 it frombeing overturned by the duty. They tend not to destroy, but to preserve, what it is in most cases advantageous to preserve, the natural divisionand distribution of labour in the society. 

The same thing may be said of the drawbacks upon the re-exportation offoreign goods imported, which, in Great Britain, generally amount to bymuch the largest part of the duty upon importation. By the second ofthe rules, annexed to the act of parliament, which imposed what is nowcalled the old subsidy, every merchant, whether English or alien. Was allowed to draw back half that duty upon exportation; the Englishmerchant, provided the exportation took place within twelve months; thealien, provided it took place within nine months. Wines, currants, andwrought silks, were the only goods which did not fall within this rule, having other and more advantageous allowances. The duties imposed bythis act of parliament were, at that time, the only duties upon theimportation of foreign goods. The term within which this, and all otherdrawbacks could be claimed, was afterwards (by 7 Geo. I. Chap. 21. Sect. 10. ) extended to three years. 

The duties which have been imposed since the old subsidy, are, thegreater part of them, wholly drawn back upon exportation. This generalrule, however, is liable to a great number of exceptions; and thedoctrine of drawbacks has become a much less simple matter than it wasat their first institution. 

Upon the exportation of some foreign goods, of which it was expectedthat the importation would greatly exceed what was necessary for thehome consumption, the whole duties are drawn back, without retainingeven half the old subsidy. Before the revolt of our North Americancolonies, we had the monopoly of the tobacco of Maryland and Virginia. We imported about ninety-six thousand hogsheads, and the homeconsumption was not supposed to exceed fourteen thousand. To facilitatethe great exportation which was necessary, in order to rid us of therest, the whole duties were drawn back, provided the exportation tookplace within three years. 

We still have, though not altogether, yet very nearly, the monopoly ofthe sugars of our West Indian islands. If sugars are exported within ayear, therefore, all the duties upon importation are drawn back; andif exported within three years, all the duties, except half the oldsubsidy, which still continues to be retained upon the exportation ofthe greater part of goods. Though the importation of sugar exceeds agood deal what is necessary for the home consumption, the excess isinconsiderable, in comparison of what it used to be in tobacco. 

Some goods, the particular objects of the jealousy of our ownmanufacturers, are prohibited to be imported for home consumption. Theymay, however, upon paying certain duties, be imported and warehoused forexportation. But upon such exportation no part of these duties isdrawn back. Our manufacturers are unwilling, it seems, that even thisrestricted importation should be encouraged, and are afraid lest somepart of these 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, and chooserather to forego a profit to ourselves than to suffer those whom weconsider as our enemies to make any profit by our means. Not only halfthe old subsidy, but the second twenty-five per cent. Is retained uponthe exportation of all French goods. 

By the fourth of the rules annexed to the old subsidy, the drawbackallowed upon the exportation of all wines amounted to a great dealmore than half the duties which were at that time paid upon theirimportation; and it seems at that time to have been the object of thelegislature to give somewhat more than ordinary encouragement to thecarrying trade in wine. Several of the other duties, too which wereimposed either at the same time or subsequent to the old subsidy, what is called the additional duty, the new subsidy, the one-third andtwo-thirds subsidies, the impost 1692, the tonnage on wine, were allowedto be wholly drawn back upon exportation. All those duties, however, except the additional duty and impost 1692, being paid down in readymoney upon importation, the interest of so large a sum occasioned anexpense, which made it unreasonable to expect any profitable carryingtrade in this article. Only a part, therefore of the duty called theimpost on wine, and no part of the twenty-five pounds the ton uponFrench wines, or of the duties imposed in 1745, in 1763, and in 1778, were allowed to be drawn back upon exportation. The two imposts offive per cent. Imposed in 1779 and 1781, upon all the former duties ofcustoms, being allowed to be wholly drawn back upon the exportation ofall other goods, were likewise allowed to be drawn back upon that ofwine. The last duty that has been particularly imposed upon wine, thatof 1780, is allowed to be wholly drawn back; an indulgence which, whenso many heavy duties are retained, most probably could never occasionthe exportation of a single ton of wine. These rules took place withregard to all places of lawful exportation, except the British coloniesin America. 

The 15th Charles II, chap. 7, called an act for the encouragement oftrade, had given Great Britain the monopoly of supplying the colonieswith all the commodities of the growth or manufacture of Europe, andconsequently with wines. In a country of so extensive a coast as ourNorth American and West Indian colonies, where our authority was alwaysso very slender, and where the inhabitants were allowed to carry out intheir own ships their non-enumerated commodities, at first to allparts of Europe, and afterwards to all parts of Europe south of CapeFinisterre, it is not very probable that this monopoly could ever bemuch respected; and they probably at all times found means of bringingback some cargo from the countries to which they were allowed to carryout one. They seem, however, to have found some difficulty in importingEuropean wines from the places of their growth; and they could not wellimport them from Great Britain, where they were loaded with manyheavy duties, of which a considerable part was not drawn back uponexportation. Madeira wine, not being an European commodity, could beimported directly into America and the West Indies, countries which, inall their non-enumerated commodities, enjoyed a free trade to the islandof Madeira. These circumstances had probably introduced that generaltaste for Madeira wine, which our officers found established in all ourcolonies at the commencement of the war which began in 1755, and whichthey brought back with them to the mother country, where that wine hadnot been much in fashion before. Upon the conclusion of that war, in1763 (by the 4th Geo. III, chap. 15, sect. 12), all the duties except£3, 10s. Were allowed to be drawn back upon the exportation to thecolonies of all wines, except French wines, to the commerce andconsumption of which national prejudice would allow no sort ofencouragement. The period between the granting of this indulgence andthe revolt of our North American colonies, was probably too short toadmit of any considerable change in the customs of those countries. 

The same act which, in the drawbacks upon all wines, except Frenchwines, thus favoured the colonies so much more than other countries, in those upon the greater part of other commodities, favoured them muchless. Upon the exportation of the greater part of commodities to othercountries, half the old subsidy was drawn back. But this law enacted, that no part of that duty should be drawn back upon the exportation tothe colonies of any commodities of the growth or manufacture either ofEurope or the East Indies, except wines, white calicoes, and muslins. 

Drawbacks were, perhaps, originally granted for the encouragement of thecarrying trade, which, as the freight of the ship is frequently paid byforeigners in money, was supposed to be peculiarly fitted for bringinggold and silver into the country. But though the carrying tradecertainly deserves no peculiar encouragement, though the motive of theinstitution was, perhaps, abundantly foolish, the institution itselfseems reasonable enough. Such drawbacks cannot force into this trade agreater share of the capital of the country than what would have goneto it of its own accord, had there been no duties upon importation; theyonly prevent its being excluded altogether by those duties. The carryingtrade, though it deserves no preference, ought not to be precluded, butto be left free, like all other trades. It is a necessary resource tothose capitals which cannot find employment, either in the agricultureor in the manufactures of the country, either in its home trade, or inits foreign trade of consumption. 

The revenue of the customs, instead of suffering, profits from suchdrawbacks, by that part of the duty which is retained. If the wholeduties had been retained, the foreign goods upon which they are paidcould seldom have been exported, nor consequently imported, for wantof a market. The duties, therefore, of which a part is retained, wouldnever have been paid. 

These reasons seem sufficiently to justify drawbacks, and would justifythem, though the whole duties, whether upon the produce of domesticindustry or upon foreign goods, were always drawn back upon exportation. The revenue of excise would, in this case indeed, suffer a little, and that of the customs a good deal more; but the natural balance ofindustry, the natural division and distribution of labour, which isalways more or less disturbed by such duties, would be more nearlyre-established by such a regulation. 

These reasons, however, will justify drawbacks only upon exporting goodsto those countries which are altogether foreign and independent, notto those in which our merchants and manufacturers enjoy a monopoly. Adrawback, for example, upon the exportation of European goods to ourAmerican colonies, will not always occasion a greater exportation thanwhat would have taken place without it. By means of the monopoly whichour merchants and manufacturers enjoy there, the same quantity mightfrequently, perhaps, be sent thither, though the whole duties wereretained. The drawback, therefore, may frequently be pure loss to therevenue of excise and customs, without altering the state of the trade, or rendering it in any respect more extensive. How far such drawbackscan be justified as a proper encouragement to the industry of ourcolonies, or how far it is advantageous to the mother country that theyshould be exempted from taxes which are paid by all the rest oftheir fellow-subjects, will appear hereafter, when I come to treat ofcolonies. 

Drawbacks, however, it must always be understood, are useful only inthose cases in which the goods, for the exportation of which theyare given, are really exported to some foreign country, and notclandestinely re-imported into our own. That some drawbacks, particularly those upon tobacco, have frequently been abused in thismanner, and have given occasion to many frauds, equally hurtful both tothe revenue and to the fair trader, is well known. 

CHAPTER V. OF BOUNTIES. 

Bounties upon exportation are, in Great Britain, frequently petitionedfor, and sometimes granted, to the produce of particular branches ofdomestic industry. By means of them, our merchants and manufacturers, it is pretended, will be enabled to sell their goods as cheap or cheaperthan their rivals in the foreign market. A greater quantity, it is said, will thus be exported, and the balance of trade consequently turned morein favour of our own country. We cannot give our workmen a monopolyin the foreign, as we have done in the home market. We cannot forceforeigners to buy their goods, as we have done our own countrymen. Thenext best expedient, it has been thought, therefore, is to pay themfor buying. It is in this manner that the mercantile system proposesto enrich the whole country, and to put money into all our pockets, bymeans of the balance of trade. 

Bounties, it is allowed, ought to be given to those branches of tradeonly which cannot be carried on without them. But every branch of tradein which the merchant can sell his goods for a price which replaces tohim, with the ordinary profits of stock, the whole capital employedin preparing and sending them to market, can be carried on without abounty. Every such branch is evidently upon a level with all the otherbranches of trade which are carried on without bounties, and cannot, therefore, require one more than they. Those trades only requirebounties, in which the merchant is obliged to sell his goods for a pricewhich does not replace to him his capital, together with the ordinaryprofit, or in which he is obliged to sell them for less than it reallycost him to send them to market. The bounty is given in order to makeup this loss, and to encourage him to continue, or, perhaps, to begin atrade, of which the expense is supposed to be greater than the returns, of which every operation eats up a part of the capital employed in it, and which is of such a nature, that if all other trades resembled it, there would soon be no capital left in the country. 

The trades, it is to be observed, which are carried on by means ofbounties, are the only ones which can be carried on between two nationsfor any considerable time together, in such a manner as that one of themshall alway's and regularly lose, or sell its goods for less than itreally cost to send them to market. But if the bounty did not repay tothe merchant what he would otherwise lose upon the price of his goods, his own interest would soon oblige him to employ his stock in anotherway, or to find out a trade in which the price of the goods wouldreplace to him, with the ordinary profit, the capital employed insending them to market. The effect of bounties, like that of all theother expedients of the mercantile system, can only be to force thetrade of a country into a channel much less advantageous than that inwhich it would naturally run of its own accord. 

The ingenious and well-informed author of the Tracts upon the Corn Tradehas shown very clearly, that since the bounty upon the exportationof corn was first established, the price of the corn exported, valuedmoderately enough, has exceeded that of the corn imported, valued veryhigh, by a much greater sum than the amount of the whole bounties whichhave been paid during that period. This, he imagines, upon the trueprinciples of the mercantile system, is a clear proof that this forcedcorn trade is beneficial to the nation, the value of the exportationexceeding that of the importation by a much greater sum than the wholeextraordinary expense which the public has been at in order to get itexported. He does not consider that this extraordinary expense, or thebounty, is the smallest part of the expense which the exportation ofcorn really costs the society. The capital which the farmer employed inraising it must likewise be taken into the account. Unless the priceof the corn, when sold in the foreign markets, replaces not only thebounty, but this capital, together with the ordinary profits of stock, the society is a loser by the difference, or the national stock isso much diminished. But the very reason for which it has been thoughtnecessary to grant a bounty, is the supposed insufficiency of the priceto do this. 

The average price of corn, it has been said, has fallen considerablysince the establishment of the bounty. That the average price of cornbegan to fall somewhat towards the end of the last century, and hascontinued to do so during the course of the sixty-four first yearsof the present, I have already endeavoured to show. But this event, supposing it to be real, as I believe it to be, must have happened inspite of the bounty, and cannot possibly have happened in consequence ofit. It has happened in France, as well as in England, though in Francethere was not only no bounty, but, till 1764, the exportation of cornwas subjected 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 bookof this discourse, I have endeavoured to show, has taken place in thegeneral market of Europe during the course of the present century. Itseems to be altogether impossible that the bounty could ever contributeto lower the price of grain. 

In years of plenty, it has already been observed, the bounty, byoccasioning an extraordinary exportation, necessarily keeps up the priceof corn in the home market above what it would naturally fall to. Todo so was the avowed purpose of the institution. In years of scarcity, though the bounty is frequently suspended, yet the great exportationwhich it occasions in years of plenty, must frequently hinder, more orless, the plenty of one year from relieving the scarcity of another. Both in years of plenty and in years of scarcity, therefore, the bountynecessarily tends to raise the money price of corn somewhat higher thanit otherwise would be in the home market. 

That in the actual state of tillage the bounty must necessarily havethis tendency, will not, I apprehend, be disputed by any reasonableperson. But it has been thought by many people, that it tends toencourage tillage, and that in two different ways; first, by opening amore extensive foreign market to the corn of the farmer, it tends, theyimagine, to increase the demand for, and consequently the production of, that commodity; and, secondly by securing to him a better price than hecould otherwise expect in the actual state of tillage, it tends, theysuppose, to encourage tillage. This double encouragement must theyimagine, in a long period of years, occasion such an increase in theproduction of corn, as may lower its price in the home market, much morethan the bounty can raise it in the actual state which tillage may, atthe end of that period, happen to be in. 

I answer, that whatever extension of the foreign market can beoccasioned by the bounty must, in every particular year, be altogetherat the expense of the home market; as every bushel of corn, which isexported by means of the bounty, and which would not have been exportedwithout the bounty, would have remained in the home market to increasethe consumption, and to lower the price of that commodity. The cornbounty, it is to be observed, as well as every other bounty uponexportation, imposes two different taxes upon the people; first, the taxwhich they are obliged to contribute, in order to pay the bounty; and, secondly, the tax which arises from the advanced price of the commodityin the home market, and which, as the whole body of the people arepurchasers of corn, must, in this particular commodity, be paid by thewhole body of the people. In this particular commodity, therefore, thissecond tax is by much the heaviest of the two. Let us suppose that, taking one year with another, the bounty of 5s. Upon the exportationof the quarter of wheat raises the price of that commodity in the homemarket only 6d. The bushel, or 4s. The quarter higher than it otherwisewould have been in the actual state of the crop. Even upon this verymoderate supposition, the great body of the people, over and abovecontributing the tax which pays the bounty of 5s. Upon every quarter ofwheat exported, must pay another of 4s. Upon every quarter which theythemselves consume. But according to the very well informed authorof the Tracts upon the Corn Trade, the average proportion of the cornexported to that consumed at home, is not more than that of one tothirty-one. For every 5s. Therefore, which they contribute to thepayment of the first tax, they must contribute £6:4s. To the payment ofthe second. So very heavy a tax upon the first necessary of life-musteither reduce the subsistence of the labouring poor, or it must occasionsome augmentation in their pecuniary wages, proportionable to that inthe pecuniary price of their subsistence. So far as it operates in theone way, it must reduce the ability of the labouring poor to educateand bring up their children, and must, so far, tend to restrain thepopulation of the country. So far as it operate's in the other, it mustreduce the ability of the employers of the poor, to employ so great anumber as they otherwise might do, and must so far tend to restrainthe industry of the country. The extraordinary exportation of corn, therefore occasioned by the bounty, not only in every particular yeardiminishes the home, just as much as it extends the foreign market andconsumption, but, by restraining the population and industry of thecountry, its final tendency is to stint and restrain the gradualextension of the home market; and thereby, in the long-run, rather todiminish than to augment the whole market and consumption of corn. 

This enhancement of the money price of corn, however, it has beenthought, by rendering that commodity more profitable to the farmer, mustnecessarily encourage its production. 

I answer, that this might be the case, if the effect of the bounty wasto raise the real price of corn, or to enable the farmer, with an equalquantity of it, to maintain a greater number of labourers in the samemanner, whether liberal, moderate, or scanty, than other labourers arecommonly maintained in his neighbourhood. But neither the bounty, it isevident, nor any other human institution, can have any such effect. It is not the real, but the nominal price of corn, which can in anyconsiderable degree be affected by the bounty. And though the tax, whichthat institution imposes upon the whole body of the people, may be veryburdensome to those who pay it, it is of very little advantage to thosewho receive it. 

The real effect of the bounty is not so much to raise the real valueof corn, as to degrade the real value of silver; or to make an equalquantity of it exchange for a smaller quantity, not only of corn, but ofall other home made commodities; for the money price of corn regulatesthat of all other home made commodities. 

It regulates the money price of labour, which must always be such asto enable the labourer to purchase a quantity of corn sufficient tomaintain him and his family, either in the liberal, moderate, or scantymanner, in which the advancing, stationary, or declining, circumstancesof the society, oblige his employers to maintain him. 

It regulates the money price of all the other parts of the rude produceof land, which, in every period of improvement, must bear a certainproportion to that of corn, though this proportion is different indifferent periods. It regulates, for example, the money price of grassand hay, of butcher's meat, of horses, and the maintenance of horses, of land carriage consequently, or of the greater part of the inlandcommerce of the country. 

By regulating the money price of all the other parts of the rude produceof land, it regulates that of the materials of almost all manufactures;by regulating the money price of labour, it regulates that ofmanufacturing art and industry; and by regulating both, it regulatesthat of the complete manufacture. The money price of labour, andof every thing that is the produce, either of land or labour, mustnecessarily either rise or fall in proportion to the money price ofcorn. 

Though in consequence of the bounty, therefore, the farmer should beenabled to sell his corn for 4s. The bushel, instead of 3s:6d. And topay his landlord a money rent proportionable to this rise in the moneyprice of his produce; yet if, in consequence of this rise in the priceof corn, 4s. Will purchase no more home made goods of any other kindthan 3s. 6d. Would have done before, neither the circumstances of thefarmer, nor those of the landlord, will be much mended by this change. The farmer will not be able to cultivate much better; the landlord willnot be able to live much better. In the purchase of foreign commodities, this enhancement in the price of corn may give them some littleadvantage. In that of home made commodities, it can give them none atall. And almost the whole expense of the farmer, and the far greaterpart even of that 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 nearlyequally, through the greater part of the commercial world, is a matterof very little consequence to any particular country. The consequentrise of all money prices, though it does not make those who receivethem really richer, does not make them really poorer. A service of platebecomes really cheaper, and every thing else remains precisely of thesame real value as before. 

But that degradation in the value of silver, which, being the effecteither of the peculiar situation or of the political institutions ofa particular country, takes place only in that country, is a matter ofvery great consequence, which, far from tending to make anybody reallyricher, tends to make every body really poorer. The rise in the moneyprice of all commodities, which is in this case peculiar to thatcountry, tends to discourage more or less every sort of industry whichis carried on within it, and to enable foreign nations, by furnishingalmost all sorts of goods for a smaller quantity of silver than its ownworkmen can afford to do, to undersell them, not only in the foreign, but even in the home market. 

It is the peculiar situation of Spain and Portugal, as proprietors ofthe mines, to be the distributers 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 of Europe. The difference, however, should be no more than the amount of thefreight and insurance; and, on account of the great value and small bulkof those metals, their freight is no great matter, and their insuranceis the same as that of any other goods of equal value. Spain andPortugal, therefore, could suffer very little from their peculiarsituation, if they did not aggravate its disadvantages by theirpolitical institutions. 

Spain by taxing, and Portugal by prohibiting, the exportation of goldand silver, load that exportation with the expense of smuggling, andraise the value of those metals in other countries so much more abovewhat it is in their own, by the whole amount of this expense. When youdam up a stream of water, as soon as the dam is full, as much water mustrun over the dam-head as if there was no dam at all. The prohibition ofexportation cannot detain a greater quantity of gold and silver in Spainand Portugal, than what they can afford to employ, than what the annualproduce of their land and labour will allow them to employ, in coin, plate, gilding, and other ornaments of gold and silver. When they havegot this quantity, the dam is full, and the whole stream which flows inafterwards must run over. The annual exportation of gold and silver fromSpain and Portugal, accordingly, is, by all accounts, notwithstandingthese restraints, very near equal to the whole annual importation. As the water, 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 annual produceof their land and labour, be greater than what is to be found in othercountries. The higher and stronger the dam-head, the greater must be thedifference in the depth of water behind and before it. The higher thetax, the higher the penalties with which the prohibition is guarded, themore vigilant and severe the police which looks after the execution ofthe law, the greater must be the difference in the proportion of goldand silver to the annual produce of the land and labour of Spain andPortugal, and to that of other countries. It is said, accordingly, tobe very considerable, and that you frequently find there a profusionof plate in houses, where there is nothing else which would inother countries be thought suitable or correspondent to this sort ofmagnificence. The cheapness of gold and silver, or, what is the samething, the dearness of all commodities, which is the necessary effect ofthis redundancy of the precious metals, discourages both the agricultureand manufactures of Spain and Portugal, and enables foreign nationsto supply them with many sorts of rude, and with almost all sorts ofmanufactured produce, for a smaller quantity of gold and silver thanwhat they themselves can either raise or make them for at home. The taxand prohibition operate in two different ways. They not only lower verymuch the value of the precious metals in Spain and Portugal, but bydetaining there a certain quantity of those metals which would otherwiseflow over other countries, they keep up their value in those othercountries somewhat above what it otherwise would be, and thereby givethose countries a double advantage in their commerce with Spain andPortugal. Open the flood-gates, and there will presently be less waterabove, and more below the dam-head, and it will soon come to a level inboth places. Remove the tax and the prohibition, and as the quantity ofgold and silver will diminish considerably in Spain and Portugal, soit will increase somewhat in other countries; and the value of thosemetals, their proportion to the annual produce of land and labour, willsoon come to a level, or very near to a level, in all. The loss whichSpain and Portugal could sustain by this exportation of their gold andsilver, would be altogether nominal and imaginary. The nominal value oftheir goods, and of the annual produce of their land and labour, wouldfall, and would be expressed or represented by a smaller quantity ofsilver than before; but their real value would be the same as before, and would be sufficient to maintain, command, and employ the samequantity of labour. As the nominal value of their goods would fall, thereal value of what remained of their gold and silver would rise, and asmaller quantity of those metals would answer all the same purposes ofcommerce and circulation which had employed a greater quantity before. The gold and silver which would go abroad would not go abroad fornothing, but would bring back an equal value of goods of some kind orother. Those goods, too, would not be all matters of mere luxury andexpense, to be consumed by idle people, who produce nothing in returnfor their consumption. As the real wealth and revenue of idle peoplewould not be augmented by this extraordinary exportation of gold andsilver, so neither would their consumption be much augmented by it. Those goods would probably, the greater part of them, and certainlysome part of them, consist in materials, tools, and provisions, for theemployment and maintenance of industrious people, who would reproduce, with a profit, the full value of their consumption. A part of the deadstock of the society would thus be turned into active stock, and wouldput into motion a greater quantity of industry than had been employedbefore. The annual produce of their land and labour would immediatelybe augmented a little, and in a few years would probably be augmenteda great deal; their industry being thus relieved from one of the mostoppressive burdens which it at present labours under. 

The bounty upon the exportation of corn necessarily operates exactly inthe same way as this absurd policy of Spain and Portugal. Whatever bethe actual state of tillage, it renders our corn somewhat dearer inthe home market than it otherwise would be in that state, and somewhatcheaper in the foreign; and as the average money price of cornregulates, more or less, that of all other commodities, it lowers thevalue of silver considerably in the one, and tends to raise it a littlein the other. It enables foreigners, the Dutch in particular, not onlyto eat our corn cheaper than they otherwise could do, but sometimes toeat it cheaper than even our own people can do upon the same occasions;as we are assured by an excellent authority, that of Sir Matthew Decker. It hinders our own workmen from furnishing their goods for so small aquantity of silver as they otherwise might do, and enables the Dutchto furnish theirs for a smaller. It tends to render our manufacturessomewhat dearer in every market, and theirs somewhat cheaper, than theyotherwise would be, and consequently to give their industry a doubleadvantage over our own. 

The bounty, as it raises in the home market, not so much the real, as the nominal price of our corn; as it augments, not the quantity oflabour which a certain quantity of corn can maintain and employ, butonly the quantity of silver which it will exchange for; it discouragesour manufactures, without rendering any considerable service, either toour farmers or country gentlemen. It puts, indeed, a little more moneyinto the pockets of both, and it will perhaps be somewhat difficult topersuade the greater part of them that this is not rendering them avery considerable service. But if this money sinks in its value, inthe quantity of labour, provisions, and home-made commodities of alldifferent kinds which it is capable of purchasing, as much as it risesin its quantity, the service will be little more than nominal andimaginary. 

There is, perhaps, but one set of men in the whole commonwealth to whomthe bounty either was or could be essentially serviceable. These werethe corn merchants, the exporters and importers of corn. In years ofplenty, the bounty necessarily occasioned a greater exportation thanwould otherwise have taken place; and by hindering the plenty of the oneyear from relieving the scarcity of another, it occasioned in years ofscarcity a greater importation than would otherwise have been necessary. It increased the business of the corn merchant in both; and in the yearsof scarcity, it not only enabled him to import a greater quantity, butto sell it for a better price, and consequently with a greater profit, than he could otherwise have made, if the plenty of one year had notbeen more or less hindered from relieving the scarcity of another. It isin this set of men, accordingly, that I have observed the greatest zealfor the continuance or renewal of the bounty. 

Our country gentlemen, when they imposed the high duties upon theexportation of foreign corn, which in times of moderate plenty amountto a prohibition, and when they established the bounty, seem to haveimitated the conduct of our manufacturers. By the one institution, theysecured to themselves the monopoly of the home market, and by the otherthey endeavoured to prevent that market from ever being overstocked withtheir commodity. By both they endeavoured to raise its real value, inthe same manner as our manufacturers had, by the like institutions, raised the real value of many different sorts of manufactured goods. They did not, perhaps, attend to the great and essential differencewhich nature has established between corn and almost every other sort ofgoods. When, either by the monopoly of the home market, or by a bountyupon exportation, you enable our woollen or linen manufacturers to selltheir goods for somewhat a better price than they otherwise could getfor them, you raise, not only the nominal, but the real price of thosegoods; you render them equivalent to a greater quantity of labour andsubsistence; you increase not only the nominal, but the real profit, the real wealth and revenue of those manufacturers; and you enable them, either to live better themselves, or to employ a greater quantity oflabour in those particular manufactures. You really encourage thosemanufactures, and direct towards them a greater quantity of the industryof the country than what would properly go to them of its own accord. But when, by the like institutions, you raise the nominal or money priceof corn, you do not raise its real value; you do not increase the realwealth, the real revenue, either of our farmers or country gentlemen;you do not encourage the growth of corn, because you do not enablethem to maintain and employ more labourers in raising it. The nature ofthings has stamped upon corn a real value, which cannot be altered bymerely altering its money price. No bounty upon exportation, no monopolyof the home 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 particular placeit is equal to the quantity of labour which it can maintain in theway, whether liberal, moderate, or scanty, in which labour is commonlymaintained in that place. Woollen or linen cloth are not the regulatingcommodities by which the real value of all other commodities must befinally measured and determined; corn is. The real value of every othercommodity is finally measured and determined by the proportion which itsaverage money price bears to the average money price of corn. The realvalue of corn does not vary with those variations in its average moneyprice, which sometimes occur from one century to another; it is the realvalue of silver which varies with them. 

Bounties upon the exportation of any homemade commodity are liable, first, to that general objection which may be made to all the differentexpedients of the mercantile system; the objection of forcing some partof the industry of the country into a channel less advantageous thanthat in which it would run of its own accord; and, secondly, to theparticular objection of forcing it not only into a channel that is lessadvantageous, but into one that is actually disadvantageous; the tradewhich cannot be carried on but by means of a bounty being necessarily alosing trade. The bounty upon the exportation of corn is liable to thisfurther objection, that it can in no respect promote the raising of thatparticular commodity of which it was meant to encourage the production. When our country gentlemen, therefore, demanded the establishment ofthe bounty, though they acted in imitation of our merchants andmanufacturers, they did not act with that complete comprehension oftheir own interest, which commonly directs the conduct of those twoother orders of people. They loaded the public revenue with a veryconsiderable expense: they imposed a very heavy tax upon the whole bodyof the people; but they did not, in any sensible degree, increase thereal value of their own commodity; and by lowering somewhat the realvalue of silver, they discouraged, in some degree, the general industryof the country, and, instead of advancing, retarded more or less theimprovement of their own lands, which necessarily depend upon thegeneral industry of the country. 

To encourage the production of any commodity, a bounty upon production, one should imagine, would have a more direct operation than one uponexportation. It would, besides, impose only one tax upon the people, that which they must contribute in order to pay the bounty. Instead ofraising, it would tend to lower the price of the commodity in the homemarket; and thereby, instead of imposing a second tax upon the people, it might, at least in part, repay them for what they had contributedto the first. Bounties upon production, however, have been very rarelygranted. The prejudices established by the commercial system havetaught us to believe, that national wealth arises more immediatelyfrom exportation than from production. It has been more favoured, accordingly, as the more immediate means of bringing money into thecountry. Bounties upon production, it has been said too, have been foundby experience more liable to frauds than those upon exportation. Howfar this is true, I know not. That bounties upon exportation have beenabused, to many fraudulent purposes, is very well known. But it is notthe interest of merchants and manufacturers, the great inventors of allthese expedients, that the home market should be overstocked with theirgoods; an event which a bounty upon production might sometimes occasion. A bounty upon exportation, by enabling them to send abroad their surpluspart, and to keep up the price of what remains in the home market, effectually prevents this. Of all the expedients of the mercantilesystem, accordingly, it is the one of which they are the fondest. I haveknown the different undertakers of some particular works agree privatelyamong themselves to give a bounty out of their own pockets upon theexportation of a certain proportion of the goods which they dealt in. This expedient succeeded so well, that it more than doubled the priceof their goods in the home market, notwithstanding a very considerableincrease in the produce. The operation of the bounty upon corn must havebeen wonderfully different, if it has lowered the money price of thatcommodity. 

Something like a bounty upon production, however, has been grantedupon some particular occasions. The tonnage bounties given to the whiteherring and whale fisheries may, perhaps, be considered as somewhat ofthis nature. They tend directly, it may be supposed, to render thegoods cheaper in the home market than they otherwise would be. In otherrespects, their effects, it must be acknowledged, are the same as thoseof bounties upon exportation. By means of them, a part of the capital ofthe country is employed in bringing goods to market, of which the pricedoes not repay the cost, together with the ordinary profits of stock. 

But though the tonnage bounties to those fisheries do not contributeto the opulence of the nation, it may, perhaps, be thought that theycontribute to its defence, by augmenting the number of its sailors andshipping. This, it may be alleged, may sometimes be done by means ofsuch bounties, at a much smaller expense than by keeping up a greatstanding navy, if I may use such an expression, in the same way as astanding army. 

Notwithstanding these favourable allegations, however, the followingconsiderations dispose me to believe, that in granting at least one ofthese bounties, the legislature has been very grossly imposed upon:

First, The herring-buss bounty seems too large. 

From the commencement of the winter fishing 1771, to the end of thewinter fishing 1781, the tonnage bounty upon the herring-buss fisheryhas been at thirty shillings the ton. During these eleven years, thewhole number of barrels caught by the herring-buss fishery of Scotlandamounted to 378, 347. The herrings caught and cured at sea are calledsea-sticks. In order to render them what are called merchantableherrings, it is necessary to repack them with an additional quantity ofsalt; and in this case, it is reckoned, that three barrels of sea-sticksare usually repacked into two barrels of merchantable herrings. Thenumber of barrels of merchantable herrings, therefore, caught duringthese eleven years, will amount only, according to this account, to252, 231¼. During these eleven years, the tonnage bounties paid amountedto £155, 463:11s. Or 8s:2¼d. Upon every barrel of sea-sticks, and to12s:3¾d. Upon every barrel of merchantable herrings. 

The salt with which these herrings are cured is sometimes Scotch, andsometimes foreign salt; both which are delivered, free of all exciseduty, to the fish-curers. The excise duty upon Scotch salt is at present1s:6d. , that upon foreign salt 10s. The bushel. A barrel of herrings issupposed to require about one bushel and one-fourth of a bushel foreignsalt. Two bushels are the supposed average of Scotch salt. If theherrings are entered for exportation, no part of this duty is paid up;if entered for home consumption, whether the herrings were cured withforeign or with Scotch salt, only one shilling the barrel is paid up. Itwas the old Scotch duty upon a bushel of salt, the quantity which, ata low estimation, had been supposed necessary for curing a barrel ofherrings. In Scotland, foreign salt is very little used for any otherpurpose but the curing of fish. But from the 5th April 1771 to the 5thApril 1782, the quantity of foreign salt imported amounted to 936, 974bushels, at eighty-four pounds the bushel; the quantity of Scotch saltdelivered from the works to the fish-curers, to no more than 168, 226, atfifty-six pounds the bushel only. It would appear, therefore, that itis principally foreign salt that is used in the fisheries. Upon everybarrel of herrings exported, there is, besides, a bounty of 2s:8d. Andmore than two-thirds of the buss-caught herrings are exported. Putall these things together, and you will find that, during these elevenyears, every barrel of buss-caught herrings, cured with Scotch salt, when exported, has cost government 17s:11¾d. ; and, when entered for homeconsumption, 14s:3¾d. ; and that every barrel cured with foreign salt, when exported, has cost government £1:7:5¾d. ; and, when entered forhome consumption, £1:3:9¾d. The price of a barrel of good merchantableherrings runs from seventeen and eighteen to four and five-and-twentyshillings; about a guinea at an average. {See the accounts at the end ofthis Book. }

Secondly, The bounty to the white-herring fishery is a tonnage bounty, and is proportioned to the burden of the ship, not to her diligence orsuccess in the fishery; and it has, I am afraid, been too common for thevessels to fit out for the sole purpose of catching, not the fish butthe bounty. In the year 1759, when the bounty was at fifty shillings theton, the whole buss fishery of Scotland brought in only four barrels ofsea-sticks. In that year, each barrel of sea-sticks cost government, in bounties alone, £113:15s. ; each barrel of merchantable herrings£159:7:6. 

Thirdly, The mode of fishing, for which this tonnage bounty in the whiteherring fishery has been given (by busses or decked vessels from twentyto eighty tons burden ), seems not so well adapted to the situation ofScotland, as to that of Holland, from the practice of which country itappears to have been borrowed. Holland lies at a great distance fromthe seas to which herrings are known principally to resort, and can, therefore, carry on that fishery only in decked vessels, which can carrywater and provisions sufficient for a voyage to a distant sea; but theHebrides, or Western Islands, the islands of Shetland, and thenorthern and north-western coasts of Scotland, the countries in whoseneighbourhood the herring fishery is principally carried on, areeverywhere intersected by arms of the sea, which run up a considerableway into the land, and which, in the language of the country, are calledsea-lochs. It is to these sea-lochs that the herrings principally resortduring the seasons in which they visit these seas; for the visits ofthis, and, I am assured, of many other sorts of fish, are not quiteregular and constant. A boat-fishery, therefore, seems to be the mode offishing best adapted to the peculiar situation of Scotland, the fisherscarrying the herrings on shore as fast as they are taken, to be eithercured or consumed fresh. But the great encouragement which a bounty of30s. The ton gives to the buss-fishery, is necessarily a discouragementto the boat-fishery, which, having no such bounty, cannot bring itscured fish to market upon the same terms as the buss-fishery. Theboat-fishery; accordingly, which, before the establishment of thebuss-bounty, was very considerable, and is said to have employed anumber of seamen, not inferior to what the buss-fishery employs atpresent, is now gone almost entirely to decay. Of the former extent, however, of this now ruined and abandoned fishery, I must acknowledgethat I cannot pretend to speak with much precision. As no bountywas-paid upon the outfit of the boat-fishery, no account was taken of itby the officers of the customs or salt duties. 

Fourthly, In many parts of Scotland, during certain seasons of the year, herrings make no inconsiderable part of the food of the common people. A bounty which tended to lower their price in the home market, might contribute a good deal to the relief of a great number of ourfellow-subjects, whose circumstances are by no means affluent. But theherring-bus bounty contributes to no such good purpose. It has ruinedthe boat fishery, which is by far the best adapted for the supply ofthe home market; and the additional bounty of 2s:8d. The barrel uponexportation, carries the greater part, more than two-thirds, of theproduce of the buss-fishery abroad. Between thirty and forty years ago, before the establishment of the buss-bounty, 16s. The barrel, I havebeen assured, was the common price of white herrings. Between ten andfifteen years ago, before the boat-fishery was entirely ruined, theprice was said to have run from seventeen to twenty shillings thebarrel. For these last five years, it has, at an average, been attwenty-five shillings the barrel. This high price, however, may havebeen owing to the real scarcity of the herrings upon the coast ofScotland. I must observe, too, that the cask or barrel, which is usuallysold with the herrings, and of which the price is included in all theforegoing prices, has, since the commencement of the American war, risento about double its former price, or from about 3s. To about 6s. I mustlikewise observe, that the accounts I have received of the prices offormer times, have been by no means quite uniform and consistent, and anold man of great accuracy and experience has assured me, that, morethan fifty years ago, a guinea was the usual price of a barrel of goodmerchantable herrings; and this, I imagine, may still be looked upon asthe average price. All accounts, however, I think, agree that theprice has not been lowered in the home market in consequence of thebuss-bounty. 

When the undertakers of fisheries, after such liberal bounties have beenbestowed upon them, continue to sell their commodity at the same, oreven at a higher price than they were accustomed to do before, it mightbe expected that their profits should be very great; and it is notimprobable that those of some individuals may have been so. In general, however, I have every reason to believe they have been quite otherwise. The usual effect of such bounties is, to encourage rash undertakers toadventure in a business which they do not understand; and what they loseby their own negligence and ignorance, more than compensates all thatthey can gain by the utmost liberality of government. In 1750, bythe same act which first gave the bounty of 30s. The ton for theencouragement of the white herring fishery (the 23d Geo. II. Chap. 24), a joint stock company was erected, with a capital of £500, 000, to whichthe subscribers (over and above all other encouragements, the tonnagebounty just now mentioned, the exportation bounty of 2s:8d. The barrel, the delivery of both British and foreign salt duty free) were, duringthe space of fourteen years, for every hundred pounds which theysubscribed and paid into the stock of the society, entitled to threepounds a-year, to be paid by the receiver-general of the customs inequal half-yearly payments. Besides this great company, the residence ofwhose governor and directors was to be in London, it was declared lawfulto erect different fishing chambers in all the different out-ports ofthe kingdom, provided a sum not less than £10, 000 was subscribed intothe capital of each, to be managed at its own risk, and for its ownprofit and loss. The same annuity, and the same encouragements of allkinds, were given to the trade of those inferior chambers as to that ofthe great company. The subscription of the great company was soon filledup, and several different fishing chambers were erected in the differentout-ports of the kingdom. In spite of all these encouragements, almostall those different companies, both great and small, lost either thewhole or the greater part of their capitals; scarce a vestige nowremains of any of them, and the white-herring fishery is now entirely, or almost entirely, carried on by private adventurers. 

If any particular manufacture was necessary, indeed, for the defenceof the society, it might not always be prudent to depend upon ourneighbours for the supply; and if such manufacture could not otherwisebe supported at home, it might not be unreasonable that all the otherbranches of industry should be taxed in order to support it. Thebounties upon the exportation of British made sail-cloth, and Britishmade gunpowder, may, perhaps, both be vindicated upon this principle. 

But though it can very seldom be reasonable to tax the industry of thegreat body of the people, in order to support that of some particularclass of manufacturers; yet, in the wantonness of great prosperity, whenthe public enjoys a greater revenue than it knows well what to do with, to give such bounties to favourite manufactures, may, perhaps, be asnatural as to incur any other idle expense. In public, as well as inprivate expenses, great wealth, may, perhaps, frequently be admitted asan apology for great folly. But there must surely be something morethan ordinary absurdity in continuing such profusion in times of generaldifficulty and distress. 

What is called a bounty, is sometimes no more than a drawback, and, consequently, is not liable to the same objections as what is properlya bounty. The bounty, for example, upon refined sugar exported, maybe considered as a drawback of the duties upon the brown and Muscovadosugars, from which it is made; the bounty upon wrought silk exported, a drawback of the duties upon raw and thrown silk imported; the bountyupon gunpowder exported, a drawback of the duties upon brimstone andsaltpetre imported. In the language of the customs, those allowancesonly are called drawbacks which are given upon goods exported in thesame form in which they are imported. When that form has been so alteredby manufacture of any kind as to come under a new denomination, they arecalled bounties. 

Premiums given by the public to artists and manufacturers, who excel intheir particular occupations, are not liable to the same objections asbounties. By encouraging extraordinary dexterity and ingenuity, theyserve to keep up the emulation of the workmen actually employed in thoserespective occupations, and are not considerable enough to turn towardsany one of them a greater share of the capital of the country than whatwould go to it of its own accord. Their tendency is not to overturn thenatural balance of employments, but to render the work which is donein each as perfect 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, more than£300, 000. 

Bounties are sometimes called premiums, as drawbacks are sometimescalled bounties. But we must, in all cases, attend to the nature of thething, without paying any regard to the word. 

Digression concerning the Corn Trade and Corn Laws. 

I cannot conclude this chapter concerning bounties, without observing, that the praises which have been bestowed upon the law which establishesthe bounty upon the exportation of corn, and upon that system ofregulations which is connected with it, are altogether unmerited. Aparticular examination of the nature of the corn trade, and of theprincipal British laws which relate to it, will sufficiently demonstratethe truth of this assertion. The great importance of this subject mustjustify the length of the digression. 

The trade of the corn merchant is composed of four different branches, which, though they may sometimes be all carried on by the same person, are, in their own nature, four separate and distinct trades. Theseare, first, the trade of the inland dealer; secondly, that ofthe merchant-importer for home consumption; thirdly, that of themerchant-exporter of home produce for foreign consumption; and, fourthly, that of the merchant-carrier, or of the importer of corn, inorder to export it again. 

I. The interest of the inland dealer, and that of the great body of thepeople, how opposite soever they may at first appear, are, even in yearsof the greatest scarcity, exactly the same. It is his interest toraise the price of his corn as high as the real scarcity of the seasonrequires, and it can never be his interest to raise it higher. Byraising the price, he discourages the consumption, and puts every bodymore or less, but particularly the inferior ranks of people, upon thriftand good management If, by raising it too high, he discourages theconsumption so much that the supply of the season is likely to go beyondthe consumption of the season, and to last for some time after thenext crop begins to come in, he runs the hazard, not only of losing aconsiderable part of his corn by natural causes, but of being obliged tosell what remains of it for much less than what he might have had forit several months before. If, by not raising the price high enough, hediscourages the consumption so little, that the supply of the season islikely to fall short of the consumption of the season, he not only losesa part of the 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 theinterest of the people that their daily, weekly, and monthly consumptionshould be proportioned as exactly as possible to the supply of theseason. The interest of the inland corn dealer is the same. By supplyingthem, as nearly as he can judge, in this proportion, he is likely tosell all his corn for the highest price, and with the greatest profit;and his knowledge of the state of the crop, and of his daily, weekly, and monthly sales, enables him to judge, with more or less accuracy, how far they really are supplied in this manner. Without intending theinterest of the people, he is necessarily led, by a regard to his owninterest, to treat them, even in years of scarcity, pretty much in thesame manner as the prudent master of a vessel is sometimes obligedto treat his crew. When he foresees that provisions are likely to runshort, he puts them upon short allowance. Though from excess of cautionhe should sometimes do this without any real necessity, yet all theinconveniencies which his crew can thereby suffer are inconsiderable, in comparison of the danger, misery, and ruin, to which they mightsometimes be exposed by a less provident conduct. Though, from excess ofavarice, in the same manner, the inland corn merchant should sometimesraise the price of his corn somewhat higher than the scarcity of theseason requires, yet all the inconveniencies which the people can sufferfrom this conduct, which effectually secures them from a famine in theend of the season, are inconsiderable, in comparison of what they mighthave been 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 of thisindignation, from the quantity of corn which it necessarily leavesupon his hands in the end of the season, and which, if the next seasonhappens to prove favourable, he must always sell for a much lower pricethan he might otherwise have had. 

Were it possible, indeed, for one great company of merchants to possessthemselves of the whole crop of an extensive country, it might perhapsbe their interest to deal with it, as the Dutch are said to do with thespiceries of the Moluccas, to destroy or throw away a considerablepart of it, in order to keep up the price of the rest. But it is scarcepossible, even by the violence of law, to establish such an extensivemonopoly with regard to corn; and wherever the law leaves the tradefree, it is of all commodities the least liable to be engrossed ormonopolized by the forced a few large capitals, which buy up the greaterpart of it. Not only its value far exceeds what the capitals of a fewprivate men are capable of purchasing; but, supposing they were capableof purchasing it, the manner in which it is produced renders thispurchase altogether impracticable. As, in every civilized country, itis the commodity of which the annual consumption is the greatest; so agreater quantity of industry is annually employed in producing corn thanin producing any other commodity. When it first comes from the ground, too, it is necessarily divided among a greater number of owners than anyother commodity; and these owners can never be collected into oneplace, like a number of independent manufacturers, but are necessarilyscattered through all the different corners of the country. Thesefirst owners either immediately supply the consumers in their ownneighbourhood, or they supply other inland dealers, who supply thoseconsumers. The inland dealers in corn, therefore, including both thefarmer and the baker, are necessarily more numerous than the dealers inany other commodity; and their dispersed situation renders it altogetherimpossible for them to enter into any general combination. If, in a yearof scarcity, therefore, any of them should find that he had a good dealmore corn upon hand than, at the current price, he could hope to disposeof before the end of the season, he would never think of keeping upthis price to his own loss, and to the sole benefit of his rivals andcompetitors, but would immediately lower it, in order to get rid of hiscorn before the new crop began to come in. The same motives, the sameinterests, which would thus regulate the conduct of any one dealer, would regulate that of every other, and oblige them all in generalto sell their corn at the price which, according to the best of theirjudgment, was most suitable to the scarcity or plenty of the season. 

Whoever examines, with attention, the history of the dearths and famineswhich have afflicted any part of Europe during either the course of thepresent or that of the two preceding centuries, of several of which wehave pretty exact accounts, will find, I believe, that a dearth neverhas arisen from any combination among the inland dealers in corn, norfrom any other cause but a real scarcity, occasioned sometimes, perhaps, and in some particular places, by the waste of war, but in by far thegreatest number of cases by the fault of the seasons; and that a faminehas never arisen from any other cause but the violence of governmentattempting, by improper means, to remedy the inconveniencies of adearth. 

In an extensive corn country, between all the different parts of whichthere is a free commerce and communication, the scarcity occasionedby the most unfavourable seasons can never be so great as to produce afamine; and the scantiest crop, if managed with frugality and economy, will maintain, through the year, the same number of people that arecommonly fed in a more affluent manner by one of moderate plenty. Theseasons most unfavourable 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 that aredisposed to be too dry, either the drought or the rain, which is hurtfulto one part of the country, is favourable to another; and though, bothin the wet and in the dry season, the crop is a good deal less than inone more properly tempered; yet, in both, what is lost in one part ofthe country is in some measure compensated by what is gained in theother. In rice countries, where the crop not only requires a very moistsoil, but where, in a certain period of its growing, it must be laidunder water, the effects of a drought are much more dismal. Even in suchcountries, however, the drought is, perhaps, scarce ever so universal asnecessarily to occasion a famine, if the government would allow a freetrade. The drought in Bengal, a few years ago, might probably haveoccasioned a very great dearth. Some improper regulations, someinjudicious restraints, imposed by the servants of the East IndiaCompany upon the rice trade, contributed, perhaps, to turn that dearthinto a famine. 

When the government, in order to remedy the inconveniencies of adearth, orders all the dealers to sell their corn at what it supposesa reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of theseason; or, if they bring it thither, it enables the people, and therebyencourages them to consume it so fast as must necessarily produce afamine before the end of the season. The unlimited, unrestrainedfreedom of the corn trade, as it is the only effectual preventive ofthe miseries of a famine, so it is the best palliative of theinconveniencies of a dearth; for the inconveniencies of a real scarcitycannot be remedied; they can only be palliated. No trade deservesmore the full protection of the law, and no trade requires it so much;because no trade is so much exposed to popular odium. 

In years of scarcity, the inferior ranks of people impute their distressto the avarice of the corn merchant, who becomes the object of theirhatred and indignation. Instead of making profit upon such occasions, therefore, he is often in danger of being utterly ruined, and of havinghis magazines plundered and destroyed by their violence. It is in yearsof scarcity, however, when prices are high, that the corn merchantexpects to make his principal profit. He is generally in contract withsome farmers to furnish him, for a certain number of years, with acertain quantity of corn, at a certain price. This contract price issettled according to what is supposed to be the moderate and reasonable, that is, the ordinary or average price, which, before the late years ofscarcity, was commonly about 28s. For the quarter of wheat, and for thatof other grain in proportion. In years of scarcity, therefore, the cornmerchant buys a great part of his corn for the ordinary price, and sellsit for a much higher. That this extraordinary profit, however, is nomore than sufficient to put his trade upon a fair level with othertrades, and to compensate the many losses which he sustains upon otheroccasions, both from the perishable nature of the commodity itself, and from the frequent and unforeseen fluctuations of its price, seemsevident enough, from this single circumstance, that great fortunesare as seldom made in this as in any other trade. The popular odium, however, which attends it in years of scarcity, the only years in whichit can be very profitable, renders people of character and fortuneaverse to enter into it. It is abandoned to an inferior set of dealers;and millers, bakers, meal-men, and meal-factors, together with a numberof wretched hucksters, are almost the only middle people that, in thehome market, come between the grower and the consumer. 

The ancient policy of Europe, instead of discountenancing this popularodium against a trade so beneficial to the public, seems, on thecontrary, to have authorised and encouraged it. 

By the 5th and 6th of Edward VI cap. 14, it was enacted, that whoevershould buy any corn or grain, with intent to sell it again, should bereputed an unlawful engrosser, and should, for the first fault, suffertwo months imprisonment, and forfeit the value of the corn; for thesecond, suffer six months imprisonment, and forfeit double the value;and, for the third, be set in the pillory, suffer imprisonment duringthe king's pleasure, and forfeit all his goods and chattels. The ancientpolicy of most other parts of Europe was no better than that of England. 

Our ancestors seem to have imagined, that the people would buy theircorn cheaper of the farmer than of the corn merchant, who, they wereafraid, would require, over and above the price which he paid to thefarmer, an exorbitant profit to himself. They endeavoured, therefore, to annihilate his trade altogether. They even endeavoured to hinder, asmuch as possible, any middle man of any kind from coming in between thegrower and the consumer; and this was the meaning of the many restraintswhich they imposed upon the trade of those whom they called kidders, orcarriers of corn; a trade which nobody was allowed to exercise withouta licence, ascertaining his qualifications as a man of probity andfair dealing. The authority of three justices of the peace was, by thestatute of Edward VI. Necessary in order to grant this licence. But eventhis restraint was afterwards thought insufficient, and, by a statuteof Elizabeth, the privilege of granting it was confined to thequarter-sessions. 

The ancient policy of Europe endeavoured, in this manner, to regulateagriculture, the great trade of the country, by maxims quite differentfrom those which it established with regard to manufactures, the greattrade of the towns. By leaving a farmer no other customers but eitherthe consumers or their immediate factors, the kidders and carriers ofcorn, it endeavoured to force him to exercise the trade, not only of afarmer, but of a corn merchant, or corn retailer. On the contrary, it, in many cases, prohibited the manufacturer from exercising the trade ofa shopkeeper, or from selling his own goods by retail. It meant, by theone law, to promote the general interest of the country, or to rendercorn cheap, without, perhaps, its being well understood how this was tobe done. By the other, it meant to promote that of a particular orderof men, the shopkeepers, who would be so much undersold by themanufacturer, it was supposed, that their trade would be ruined, if hewas allowed to retail at all. 

The manufacturer, however, though he had been allowed to keep a shop, and to sell his own goods by retail, could not have undersold the commonshopkeeper. Whatever part of his capital he might have placed in hisshop, he must have withdrawn it from his manufacture. In order to carryon his business on a level with that of other people, as he must havehad the profit of a manufacturer on the one part, so he must have hadthat of a shopkeeper upon the other. Let us suppose, for example, thatin the particular town where he lived, ten per cent. Was the ordinaryprofit both of manufacturing and shopkeeping stock; he must in this casehave charged upon every piece of his own goods, which he sold inhis shop, a profit of twenty per cent. When he carried them from hisworkhouse to his shop, he must have valued them at the price for whichhe could have sold them to a dealer or shopkeeper, who would have boughtthem by wholesale. If he valued them lower, he lost a part of the profitof his manufacturing capital. When, again, he sold them from his shop, unless he got the same price at which a shopkeeper would have sold them, he lost a part of the profit of his shop-keeping capital. Though hemight appear, therefore, to make a double profit upon the same pieceof goods, yet, as these goods made successively a part of two distinctcapitals, he made but a single profit upon the whole capital employedabout them; and if he made less than his profit, he was a loser, and didnot employ his whole capital with the same advantage as the greater partof his neighbours. 

What the manufacturer was prohibited to do, the farmer was in somemeasure enjoined to do; to divide his capital between two differentemployments; to keep one part of it in his granaries and stack-yard, forsupplying the occasional demands of the market, and to employ the otherin the cultivation of his land. But as he could not afford to employ thelatter for less than the ordinary profits of farming stock, so he couldas little afford to employ the former for less than the ordinary profitsof mercantile stock. Whether the stock which really carried on thebusiness of a corn merchant belonged to the person who was called afarmer, or to the person who was called a corn merchant, an equalprofit was in both cases requisite, in order to indemnify its owner foremploying it in this manner, in order to put his business on a levelwith other 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 corn merchant, could notafford to sell his corn cheaper than any other corn merchant would havebeen obliged to do in the case of a free competition. 

The dealer who can employ his whole stock in one single branch ofbusiness, has an advantage of the same kind with the workman who canemploy his whole labour in one single operation. As the latter acquiresa dexterity which enables him, with the same two hands, to perform amuch greater quantity of work, so the former acquires so easy and readya method of transacting his business, of buying and disposing ofhis goods, that with the same capital he can transact a much greaterquantity of business. As the one can commonly afford his work a gooddeal cheaper, so the other can commonly afford his goods somewhatcheaper, than if his stock and attention were both employed about agreater variety of objects. The greater part of manufacturers couldnot afford to retail their own goods so cheap as a vigilant and activeshopkeeper, whose sole business it was to buy them by wholesale and toretail them again. The greater part of farmers could still less affordto retail their own corn, to supply the inhabitants of a town, atperhaps four or five miles distance from the greater part of them, socheap as a vigilant and active corn merchant, whose sole business it wasto purchase corn by wholesale, to collect it into a great magazine, andto retail it again. 

The law which prohibited the manufacturer from exercising the trade ofa shopkeeper, endeavoured to force this division in the employment ofstock to go on faster than it might otherwise have done. The law whichobliged the farmer to exercise the trade of a corn merchant, endeavouredto hinder it from going on so fast. Both laws were evident violationsof natural liberty, and therefore unjust; and they were both, too, asimpolitic as they were unjust. It is the interest of every society, thatthings of this kind should never either he forced or obstructed. The manwho employs either his labour or his stock in a greater variety of waysthan his situation renders necessary, can never hurt his neighbourby underselling 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, as intheir local situations they must generally be able to judge better of itthan the legislature can do. The law, however, which obliged the farmerto exercise the trade of a corn merchant was by far the most perniciousof the two. 

It obstructed not only that division in the employment of stock whichis so advantageous to every society, but it obstructed likewise theimprovement and cultivation of the land. By obliging the farmer to carryon two trades instead of one, it forced him to divide his capital intotwo parts, of which one only could be employed in cultivation. But if hehad been at liberty to sell his whole crop to a corn merchant as fastas he could thresh it out, his whole capital might have returnedimmediately to the land, and have been employed in buying more cattle, and hiring more servants, in order to improve and cultivate it better. But by being obliged to sell his corn by retail, he was obliged to keepa great part of his capital in his granaries and stack-yard through theyear, and could not therefore cultivate so well as with the samecapital he might otherwise have done. This law, therefore, necessarilyobstructed the improvement of the land, and, instead of tendingto render 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, wouldcontribute the most to the raising of corn. It would support the tradeof the farmer, in the same manner as the trade of the wholesale dealersupports that of the manufacturer. 

The wholesale dealer, by affording a ready market to the manufacturer, by taking his goods off his hand as fast as he can make them, and bysometimes even advancing their price to him before he has made them, enables him to keep his whole capital, and sometimes even more than hiswhole capital, constantly employed in manufacturing, and consequently tomanufacture a much greater quantity of goods than if he was obligedto dispose of them himself to the immediate consumers, or even to theretailers. As the capital of the wholesale merchant, too, is generallysufficient to replace that of many manufacturers, this intercoursebetween him and them interests the owner of a large capital to supportthe owners of a great number of small ones, and to assist them in thoselosses and misfortunes which might otherwise prove ruinous to them. 

An intercourse of the same kind universally established between thefarmers and the corn merchants, would be attended with effects equallybeneficial to the farmers. They would be enabled to keep their wholecapitals, and even more than their whole capitals constantly employed incultivation. In case of any of those accidents to which no trade ismore liable than theirs, they would find in their ordinary customer, the wealthy corn merchant, a person who had both an interest to supportthem, and the ability to do it; and they would not, as at present, beentirely dependent upon the forbearance of their landlord, or the mercyof his steward. Were it possible, as perhaps it is not, to establishthis intercourse universally, and all at once; were it possible toturn all at 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; andwere it possible, in order to support and assist, upon occasion, theoperations of this great stock, to provide all at once another stockalmost equally great; it is not, perhaps, very easy to imagine howgreat, how extensive, and how sudden, would be the improvement whichthis change of circumstances would alone produce upon the whole face ofthe country. 

The statute of Edward VI. Therefore, by prohibiting as much as possibleany middle man from coming in between the grower and the consumer, endeavoured to annihilate a trade, of which the free exercise is notonly the best palliative of the inconveniencies of a dearth, but thebest preventive of that calamity; after the trade of the farmer, notrade contributing so much to the growing of corn as that of the cornmerchant. 

The rigour of this law was afterwards softened by several subsequentstatutes, which successively permitted the engrossing of corn whenthe price of wheat should not exceed 20s. And 24s. 32s. And 40s. Thequarter. At last, by the 15th of Charles II. C. 7, the engrossing orbuying of corn, in order to sell it again, as long as the price of wheatdid not exceed 48s. The quarter, and that of other grain in proportion, was declared lawful to all persons not being forestallers, that is, notselling again in the same market within three months. All the freedomwhich the trade of the inland corn dealer has ever yet enjoyed wasbestowed upon it by this statute. The statute of the twelfth of thepresent king, which repeals almost all the other ancient laws againstengrossers and forestallers, does not repeal the restrictions of thisparticular statute, which therefore still continue in force. 

This statute, however, authorises in some measure two very absurdpopular prejudices. 

First, It supposes, that when the price of wheat has risen so high as48s. The quarter, and that of other grain in proportion, corn is likelyto be so engrossed as to hurt the people. But, from what has beenalready said, it seems evident enough, that corn can at no price beso engrossed by the inland dealers as to hurt the people; and 48s. Thequarter, besides, though it may be considered as a very high price, yet, in years of scarcity, it is a price which frequently takes placeimmediately after harvest, when scarce any part of the new crop can besold off, and when it is impossible even for ignorance to suppose thatany part of it can be so engrossed as to hurt the people. 

Secondly, It supposes that there is a certain price at which corn islikely to be forestalled, that is, bought up in order to be sold againsoon after in the same market, so as to hurt the people. But if amerchant ever buys up corn, either going to a particular market, or ina particular market, in order to sell it again soon after in the samemarket, it must be because he judges that the market cannot be soliberally supplied through the whole season as upon that particularoccasion, and that the price, therefore, must soon rise. If he judgeswrong in this, and if the price does not rise, he not only loses thewhole profit of the stock which he employs in this manner, but a part ofthe stock itself, by the expense and loss which necessarily attend thestoring and keeping of corn. He hurts himself, therefore, much moreessentially than he can hurt even the particular people whom he mayhinder from supplying themselves upon that particular market day, because they may afterwards supply themselves just as cheap upon anyother market day. If he judges right, instead of hurting the great bodyof the people, he renders them a most important service. By makingthem feel the inconveniencies of a dearth somewhat earlier than theyotherwise might do, he prevents their feeling them afterwards soseverely as they certainly would do, if the cheapness of priceencouraged them to consume faster than suited the real scarcity of theseason. When the scarcity is real, the best thing that can be done forthe people is, to divide the inconvenience of it as equally as possible, through all the different months and weeks and days of the year. Theinterest of the corn merchant makes him study to do this as exactly ashe can; and as no other person can have either the same interest, or thesame knowledge, or the same abilities, to do it so exactly as he, thismost important operation of commerce ought to be trusted entirely tohim; or, in other words, the corn trade, so far at least as concerns thesupply of the home market, ought to be left perfectly free. 

The popular fear of engrossing and forestalling may be compared to thepopular terrors and suspicions of witchcraft. The unfortunate wretchesaccused of this latter crime were not more innocent of the misfortunesimputed to them, than those who have been accused of the former. The lawwhich put an end to all prosecutions against witchcraft, which putit out of any man's power to gratify his own malice by accusing hisneighbour of that imaginary crime, seems effectually to have put anend to those fears and suspicions, by taking away the great causewhich encouraged and supported them. The law which would restore entirefreedom to the inland trade of corn, would probably prove as effectualto put an end to the popular fears of engrossing and forestalling. 

The 15th of Charles II. C. 7, however, with all its imperfections, has, perhaps, contributed more, both to the plentiful supply of the homemarket, and to the increase of tillage, than any other law in thestatute book. It is from this law that the inland corn trade has derivedall the liberty and protection which it has ever yet enjoyed; and boththe supply of the home market and the interest of tillage are much moreeffectually promoted by the inland, than either by the importation orexportation trade. 

The proportion of the average quantity of all sorts of grain importedinto Great Britain to that of all sorts of grain consumed, it has beencomputed by the author of the Tracts upon the Corn Trade, does notexceed that of one to five hundred and seventy. For supplying the homemarket, therefore, the importance of the inland trade must be to that ofthe importation trade as five hundred and seventy to one. 

The average quantity of all sorts of grain exported from Great Britaindoes not, according to the same author, exceed the one-and-thirtiethpart of the annual produce. For the encouragement of tillage, therefore, by providing a market for the home produce, the importance of the inlandtrade must be to that of the exportation trade as thirty to one. 

I have no great faith in political arithmetic, and I mean not to warrantthe exactness of either of these computations. I mention them only inorder to show of how much less consequence, in the opinion of the mostjudicious and experienced persons, the foreign trade of corn is thanthe home trade. The great cheapness of corn in the years immediatelypreceding the establishment of the bounty may, perhaps with reason, heascribed in some measure to the operation of this statute of CharlesII. Which had been enacted about five-and-twenty years before, and whichhad, therefore, full time 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 the homemarket, and must so far be immediately beneficial to the great body ofthe people. It tends, indeed, to lower somewhat the average money priceof corn, but not to diminish its real value, or the quantity of labourwhich it is capable of maintaining. If importation was at all timesfree, our farmers and country gentlemen would probably, one year withanother, get less money for their corn than they do at present, whenimportation is at most times in effect prohibited; but the money whichthey got would be of more value, would buy more goods of all otherkinds, and would employ more labour. Their real wealth, their realrevenue, therefore, would be the same as at present, though it mightbe expressed by a smaller quantity of silver, and they would neitherbe disabled nor discouraged from cultivating corn as much as they do atpresent. On the contrary, as the rise in the real value of silver, inconsequence of lowering the money price of corn, lowers somewhat themoney price of all other commodities, it gives the industry of thecountry where it takes place some advantage in all foreign markets andthereby tends to encourage and increase that industry. But the extent ofthe home market for corn must be in proportion to the general industryof the country where it grows, or to the number of those who producesomething else, and therefore, have something else, or, what comes tothe same thing, the price of something else, to give in exchange forcorn. But in every country, the home market, as it is the nearest andmost convenient, so is it likewise the greatest and most importantmarket for corn. That rise in the real value of silver, therefore, whichis the effect of lowering the average money price of corn, tends toenlarge the greatest and most important market for corn, and thereby toencourage, instead of discouraging its growth. 

By the 22d of Charles II. C. 13, the importation of wheat, wheneverthe price in the home market did not exceed 53s:4d. The quarter, wassubjected to a duty of 16s. The quarter; and to a duty of 8s. Wheneverthe price did not exceed £4. The former of these two prices has, formore than a century past, taken place only in times of very greatscarcity; and the latter has, so far as I know, not taken place atall. Yet, till wheat has risen above this latter price, it was, by thisstatute, subjected to a very high duty; and, till it had risen above theformer, to a duty which amounted to a prohibition. The importationof other sorts of grain was restrained at rates and by duties, inproportion to the value of the grain, almost equally high. Before the13th of the present king, the following were the duties payable upon theimportation of the different sorts of grain:

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

These different duties were imposed, partly by the 22d of Charles II. In place of the old subsidy, partly by the new subsidy, by the one-thirdand two-thirds subsidy, and by the subsidy 1747. Subsequent laws stillfurther increased those duties. 

The distress which, in years of scarcity, the strict execution of thoselaws might have brought upon the people, would probably have been verygreat; but, upon such occasions, its execution was generally suspendedby temporary statutes, which permitted, for a limited time, theimportation of foreign corn. The necessity of these temporary statutessufficiently demonstrates the impropriety of this general one. 

These restraints upon importation, though prior to the establishment ofthe bounty, were dictated by the same spirit, by the same principles, which afterwards enacted that regulation. How hurtful soever inthemselves, these, or some other restraints upon importation, becamenecessary in consequence of that regulation. If, when wheat was eitherbelow 48s. The quarter, or not much above it, foreign corn could havebeen imported, either duty free, or upon paying only a small duty, itmight have been exported again, with the benefit of the bounty, to thegreat loss of the public revenue, and to the entire perversion of theinstitution, of which the object was to extend the market for the homegrowth, not that for the growth of foreign countries. 

III. The trade of the merchant-exporter of corn for foreign consumption, certainly does not contribute directly to the plentiful supply of thehome market. It does so, however, indirectly. From whatever source thissupply maybe usually drawn, whether from home growth, or from foreignimportation, unless more corn is either usually grown, or usuallyimported into the country, than what is usually consumed in it, thesupply of the home market can never be very plentiful. But unless thesurplus can, in all ordinary cases, be exported, the growers will becareful never to grow more, and the importers never to import more, thanwhat the bare consumption of the home market requires. That market willvery seldom be overstocked; but it will generally be understocked; thepeople, whose business it is to supply it, being generally afraidlest their 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 require. The freedom ofexportation enables it to extend cultivation for the supply of foreignnations. 

By the 12th of Charles II. C. 4, the exportation of corn was permittedwhenever the price of wheat did not exceed 40s. The quarter, and that ofother grain in proportion. By the 15th of the same prince, this libertywas extended till the price of wheat exceeded 48s. The quarter; and bythe 22d, to all higher prices. A poundage, indeed, was to be paid to theking upon such exportation; but all grain was rated so low in the bookof rates, that this poundage amounted only, upon wheat to 1s. , uponoats to 4d. , and upon all other grain to 6d. The quarter. By the 1st ofWilliam and Mary, the act which established this bounty, this small dutywas virtually taken off whenever the price of wheat did not exceed 48s. The quarter; and by the 11th and 12th of William III. C. 20, it wasexpressly taken off at all higher prices. 

The trade of the merchant-exporter was, in this manner, not onlyencouraged by a bounty, but rendered much more free than that of theinland dealer. By the last of these statutes, corn could be engrossedat any price for exportation; but it could not be engrossed for inlandsale, except when the price did not exceed 48s. The quarter. Theinterest of the inland dealer, however, it has already been shown, cannever be opposite to that of the great body of the people. That ofthe merchant-exporter may, and in fact sometimes is. If, while hisown country labours under a dearth, a neighbouring country should beafflicted with a famine, it might be his interest to carry corn to thelatter country, in such quantities as might very much aggravate thecalamities of the dearth. The plentiful supply of the home market wasnot the direct object of those statutes; but, under the pretence ofencouraging agriculture, to raise the money price of corn as high aspossible, and thereby to occasion, as much as possible, a constantdearth in the home market. By the discouragement of importation, thesupply of that market; even in times of great scarcity, was confined tothe home growth; and by the encouragement of exportation, when the pricewas so high as 48s. The quarter, that market was not, even in times ofconsiderable scarcity, allowed to enjoy the whole of that growth. Thetemporary laws, prohibiting, for a limited time, the exportationof corn, and taking off, for a limited time, the duties upon itsimportation, expedients to which Great Britain has been obliged sofrequently to have recourse, sufficiently demonstrate the improprietyof her general system. Had that system been good, she would not sofrequently have been reduced to the necessity of departing from it. 

Were all nations to follow the liberal system of free exportation andfree importation, the different states into which a great continentwas divided, would so far resemble the different provinces of a greatempire. As among the different provinces of a great empire, the freedomof the inland trade appears, both from reason and experience, not onlythe best palliative of a dearth, but the most effectual preventive of afamine; so would the freedom of the exportation and importation trade beamong the different states into which a great continent was divided. The larger the continent, the easier the communication through all thedifferent parts 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 by theplenty of some other. But very few countries have entirely adopted thisliberal system. The freedom of the corn trade is almost everywhere moreor less restrained, and in many countries is confined by such absurdregulations, as frequently aggravate the unavoidable misfortune ofa dearth into the dreadful calamity of a famine. The demand of suchcountries for corn may frequently become so great and so urgent, that asmall state in their neighbourhood, which happened at the same time tobe labouring under some degree of dearth, could not venture to supplythem without exposing itself to the like dreadful calamity. The very badpolicy of one country may thus render it, in some measure, dangerousand imprudent to establish what would otherwise be the best policy inanother. The unlimited freedom of exportation, however, would be muchless dangerous in great states, in which the growth being much greater, the supply could seldom be much affected by any quantity or corn thatwas likely to be exported. In a Swiss canton, or in some of the littlestates in Italy, it may, perhaps, sometimes be necessary to restrain theexportation of corn. In such great countries as France or England, itscarce ever can. To hinder, besides, the farmer from sending his goodsat all times to the best market, is evidently to sacrifice the ordinarylaws of justice to an idea of public utility, to a sort of reasons ofstate; an act or legislative authority which ought to be exercised only, which can be pardoned only, in cases of the most urgent necessity. Theprice at which exportation of corn is prohibited, if it is ever to beprohibited, ought always to be a very high price. 

The laws concerning corn may everywhere be compared to the lawsconcerning religion. The people feel themselves so much interestedin what relates either to their subsistence in this life, or to theirhappiness in a life to come, that government must yield to theirprejudices, and, in order to preserve the public tranquillity, establishthat system which they approve of. It is upon this account, perhaps, that we so seldom find a reasonable system established with regard toeither of those two capital objects. 

IV. The trade of the merchant-carrier, or of the importer of foreigncorn, in order to export it again, contributes to the plentiful supplyof the home market. It is not, indeed, the direct purpose of his tradeto sell his corn there; but he will generally be willing to do so, and even for a good deal less money than he might expect in a foreignmarket; because he saves in this manner the expense of loading andunloading, of freight and insurance. The inhabitants of the countrywhich, by means of the carrying trade, becomes the magazine andstorehouse for the supply of other countries, can very seldom be in wantthemselves. Though the carrying trade must thus contribute to reducethe average money price of corn in the home market, it would not therebylower its real value; it would only raise somewhat the real value ofsilver. 

The carrying trade was in effect prohibited in Great Britain, upon allordinary occasions, by the high duties upon the importation of foreigncorn, of the greater part of which there was no drawback; and uponextraordinary occasions, when a scarcity made it necessary to suspendthose duties by temporary statutes, exportation was always prohibited. By this system of laws, therefore, the carrying trade was in effectprohibited. 

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 and prosperity of GreatBritain, which has been so often ascribed to those laws, may very easilybe accounted for by other causes. That security which the laws in GreatBritain give to every man, that he shall enjoy the fruits of hisown labour, is alone sufficient to make any country flourish, notwithstanding these and twenty other absurd regulations of commerce;and this security was perfected by the Revolution, much about thesame time that the bounty was established. The natural effort of everyindividual to better his own condition, when suffered to exert itselfwith freedom and security, is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the societyto wealth and prosperity, but of surmounting a hundred impertinentobstructions, with which the folly of human laws too often encumbers itsoperations: though the effect of those obstructions is always, more orless, either to encroach upon its freedom, or to diminish its security. In Great Britain industry is perfectly secure; and though it is far frombeing perfectly free, it is as free or freer than in any other part ofEurope. 

Though the period of the greatest prosperity and improvement of GreatBritain has been posterior to that system of laws which is connectedwith the bounty, we must not upon that account, impute it to those laws. It has been posterior likewise to the national debt; but the nationaldebt has most assuredly not been the cause of it. 

Though the system of laws which is connected with the bounty, hasexactly the same tendency with the practice of Spain and Portugal, tolower somewhat the value of the precious metals in the country where ittakes place; yet Great Britain is certainly one of the richest countriesin Europe, while Spain and Portugal are perhaps amongst the mostbeggarly. This difference of situation, however, may easily be accountedfor from two different causes. First, the tax in Spain, the prohibitionin Portugal of exporting gold and silver, and the vigilant policewhich watches over the execution of those laws, must, in two very poorcountries, which between them import annually upwards of six millionssterling, operate not only more directly, but much more forcibly, inreducing the value of those metals there, than the corn laws can do inGreat Britain. 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 as wouldalone be sufficient to perpetuate their present state of poverty, eventhough their regulations of commerce were as wise as the greatest partof them are absurd and foolish. 

The 13th of the present king, c. 43, seems to have established a newsystem with regard to the corn laws, in many respects better than theancient one, but in one or two respects perhaps not quite so good. 

By this statute, the high duties upon importation for home consumptionare taken off, so soon as the price of middling wheat rises to 48s. Thequarter; that of middling rye, pease, or beans, to 32s. ; that of barleyto 24s. ; and that of oats to 16s. ; and instead of them, a small dutyis imposed of only 6d upon the quarter of wheat, and upon that or othergrain in proportion. With regard to all those different sorts of grain, but particularly with regard to wheat, the home market is thus opened toforeign supplies, at prices considerably lower than before. 

By the same statute, the old bounty of 5s. Upon the exportation ofwheat, ceases so soon as the price rises to 44s. The quarter, insteadof 48s. The price at which it ceased before; that of 2s:6d. Upon theexportation of barley, ceases so soon as the price rises to 22s. Insteadof 24s. The price at which it ceased before; that of 2s:6d. Upon theexportation of oatmeal, ceases so soon as the price rises to 14s. Instead of 15s. The price at which it ceased before. The bounty upon ryeis reduced from 3s:6d. To 3s. And it ceases so soon as the price risesto 28s. Instead of 32s. The price at which it ceased before. If bountiesare as improper as I have endeavoured to prove them to be, the soonerthey cease, and the lower they are, so much the better. 

The same statute permits, at the lowest prices, the importation of cornin order to be exported again, duty free, provided it is in the meantime lodged in a warehouse under the joint locks of the king and theimporter. This liberty, indeed, extends to no more than twenty-five ofthe different ports of Great Britain. They are, however, the principalones; and there may not, perhaps, be warehouses proper for this purposein the greater part of the others. 

So far this law seems evidently an improvement upon the ancient system. 

But by the same law, a bounty of 2s. The quarter is given for theexportation of oats, whenever the price does not exceed fourteenshillings. No bounty had ever been given before for the exportation ofthis grain, no more than for that of pease or beans. 

By the same law, too, the exportation of wheat is prohibited so soon asthe price rises to forty-four shillings the quarter; that of rye sosoon as it rises to twenty-eight shillings; that of barley so soon as itrises to twenty-two shillings; and that of oats so soon as they rise tofourteen shillings. Those several prices seem all of them a good dealtoo low; and there seems to be an impropriety, besides, in prohibitingexportation altogether at those precise prices at which that bounty, which was given in order to force it, is withdrawn. The bounty oughtcertainly either to have been withdrawn at a much lower price, orexportation ought to have been allowed at a much higher. 

So far, therefore, this law seems to be inferior to the ancient system. With all its imperfections, however, we may perhaps say of it what wassaid of the laws of Solon, that though not the best in itself, it isthe best which the interest, prejudices, and temper of the times, wouldadmit of. It may perhaps in due time prepare the way for a better. 

CHAPTER VI. OF TREATIES OF COMMERCE. 

When a nation binds itself by treaty, either to permit the entry ofcertain goods from one foreign country which it prohibits from allothers, or to exempt the goods of one country from duties to which itsubjects those of all others, the country, or at least the merchantsand manufacturers of the country, whose commerce is so favoured, mustnecessarily derive great advantage from the treaty. Those merchantsand manufacturers enjoy a sort of monopoly in the country which is soindulgent to them. That country becomes a market, both more extensiveand more advantageous for their goods: more extensive, because the goodsof other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs; more advantageous, becausethe merchants of the favoured country, enjoying a sort of monopolythere, will often sell their goods for a better price than if exposed tothe free competition of all other nations. 

Such treaties, however, though they may be advantageous to the merchantsand manufacturers of the favoured, are necessarily disadvantageous tothose of the favouring country. A monopoly is thus granted against themto a foreign nation; and they must frequently buy the foreign goods theyhave occasion for, dearer than if the free competition of other nationswas admitted. That part of its own produce with which such a nationpurchases foreign goods, must consequently be sold cheaper; because, when two things are exchanged for one another, the cheapness of theone is a necessary consequence, or rather is the same thing, with thedearness of the other. The exchangeable value of its annual produce, therefore, is likely to be diminished by every such treaty. Thisdiminution, however, can scarce amount to any positive loss, but only toa lessening of the gain which it might otherwise make. Though it sellsits goods cheaper than it otherwise might do, it will not probably sellthem for less than they cost; nor, as in the case of bounties, for aprice which will not replace the capital employed in bringing them tomarket, together with the ordinary profits of stock. The trade could notgo on long if it did. Even the favouring country, therefore, may stillgain by the trade, though less than if there was a free competition. 

Some treaties of commerce, however, have been supposed advantageous, upon principles very different from these; and a commercial country hassometimes granted a monopoly of this kind, against itself, to certaingoods of a foreign nation, because it expected, that in the wholecommerce between them, it would annually sell more than it would buy, and that a balance in gold and silver would be annually returned to it. It is upon this principle that the treaty of commerce between Englandand Portugal, concluded in 1703 by Mr Methuen, has been so muchcommended. The following is a literal translation of that treaty, whichconsists of three articles only. 

ART. I. His sacred royal majesty of Portugal promises, both in hisown name and that of his successors, to admit for ever hereafter, intoPortugal, the woollen cloths, and the rest of the woollen manufacturesof the British, as was accustomed, till they were prohibited by the law;nevertheless upon this condition:

ART. II. That is to say, that her sacred royal majesty of Great Britainshall, in her own name, and that of her successors, be obliged, for everhereafter, to admit the wines of the growth of Portugal into Britain;so that at no time, whether there shall be peace or war between thekingdoms of Britain and France, any thing more shall be demanded forthese wines by the name of custom or duty, or by whatsoever othertitle, directly or indirectly, whether they shall be imported intoGreat Britain in pipes or hogsheads, or other casks, than what shall bedemanded for the like quantity or measure of French wine, deducting orabating a third part of the custom or duty. But if, at any time, thisdeduction or abatement of customs, which is to be made as aforesaid, shall in any manner be attempted and prejudiced, it shall be just andlawful for his sacred royal majesty of Portugal, again to prohibit thewoollen cloths, and the rest of the British woollen manufactures. 

ART. III. The most excellent lords the plenipotentiaries promise andtake upon themselves, that their above named masters shall ratify thistreaty; and within the space of two months the ratification shall beexchanged. 

By this treaty, the crown of Portugal becomes bound to admit the Englishwoollens upon the same footing as before the prohibition; that is, notto raise the duties which had been paid before that time. But it doesnot become bound to admit them upon any better terms than those of anyother nation, of France or Holland, for example. The crown of GreatBritain, on the contrary, becomes bound to admit the wines of Portugal, upon paying only two-thirds of the duty which is paid for those ofFrance, the wines most likely to come into competition with them. Sofar this treaty, therefore, is evidently advantageous to Portugal, anddisadvantageous to Great Britain. 

It has been celebrated, however, as a masterpiece of the commercialpolicy of England. Portugal receives annually from the Brazils a greaterquantity of gold than can be employed in its domestic commerce, whetherin the shape of coin or of plate. The surplus is too valuable to beallowed to lie idle and locked up in coffers; and as it can find noadvantageous market at home, it must, notwithstanding; any prohibition, be sent abroad, and exchanged for something for which there is a moreadvantageous market at home. A large share of it comes annually toEngland, in return either for English goods, or for those of otherEuropean nations that receive their returns through England. Mr Barrettiwas informed, that the weekly packet-boat from Lisbon brings, one weekwith another, more than £50, 000 in gold to England. The sum had probablybeen exaggerated. It would amount to more than £2, 600, 000 a year, whichis more than the Brazils are supposed to afford. 

Our merchants were, some years ago, out of humour with the crown ofPortugal. Some privileges which had been granted them, not by treaty, but by the free grace of that crown, at the solicitation, indeed, it isprobable, and in return for much greater favours, defence and protectionfrom the crown of Great Britain, had been either infringed or revoked. The people, therefore, usually most interested in celebrating thePortugal trade, were then rather disposed to represent it as lessadvantageous than it had commonly been imagined. The far greater part, almost the whole, they pretended, of this annual importation of gold, was not on account of Great Britain, but of other European nations; thefruits and 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 of Great Britain, and that it amounted to a still greater sum than Mr Barretti seems toimagine; this trade would not, upon that account, be more advantageousthan any other, in which, for the same value sent out, we received anequal value of consumable goods in return. 

It is but a very small part of this importation which, it can besupposed, is employed as an annual addition, either to the plate or tothe coin of the kingdom. The rest must all be sent abroad, and exchangedfor consumable goods of some kind or other. But if those consumablegoods were purchased directly with the produce of English industry, itwould be more for the advantage of England, than first to purchase withthat produce the gold of Portugal, and afterwards to purchase with thatgold those consumable goods. A direct foreign trade of consumption isalways more advantageous than a round-about one; and to bring thesame value of foreign goods to the home market requires a much smallercapital in the one way than in the ether. If a smaller share of itsindustry, therefore, had been employed in producing goods fit for thePortugal market, and a greater in producing those lit for the othermarkets, where those consumable goods for which there is a demand inGreat Britain are to be had, it would have been more for the advantageof England. To procure both the gold which it wants for its own use, andthe consumable goods, would, in this way, employ a much smaller capitalthan at present. There would be a spare capital, therefore, to beemployed for other purposes, in exciting an additional quantity ofindustry, and in raising a greater annual produce. 

Though Britain were entirely excluded from the Portugal trade, it couldfind very little difficulty in procuring all the annual supplies ofgold which it wants, either for the purposes of plate, or of coin, or offoreign trade. Gold, like every other commodity, is always somewhere oranother to be got for its value by those who have that value to give forit. The annual surplus of gold in Portugal, besides, would still be sentabroad, and though not carried away by Great Britain, would be carriedaway by some other nation, which would be glad to sell it again for itsprice, in the same manner as Great Britain does at present. In buyinggold of Portugal, indeed, we buy it at the first hand; whereas, inbuying it of any other nation, except Spain, we should buy it at thesecond, and might pay somewhat dearer. This difference, however, wouldsurely be too insignificant to deserve the public attention. 

Almost all our gold, it is said, comes from Portugal. With othernations, the balance of trade is either against as, or not much in ourfavour. But we should remember, that the more gold we import fromone country, the less we must necessarily import from all others. Theeffectual demand for gold, like that for every other commodity, is inevery country limited to a certain quantity. If nine-tenths of thisquantity are imported from one country, there remains a tenth only tobe imported from all others. The more gold, besides, that is annuallyimported from some particular countries, over and above what isrequisite for plate and for coin, the more must necessarily be exportedto some others: and the more that most insignificant object of modernpolicy, the balance of trade, appears to be in our favour with someparticular countries, the more it must necessarily appear to be againstus with many others. 

It was upon this silly notion, however, that England could not subsistwithout the Portugal trade, that, towards the end of the late war, France and Spain, without pretending either offence or provocation, required the king of Portugal to exclude all British ships from hisports, and, for the security of this exclusion, to receive into themFrench or Spanish garrisons. Had the king of Portugal submitted to thoseignominious terms which his brother-in-law the king of Spain proposedto him, Britain would have been freed from a much greater inconveniencythan the loss of the Portugal trade, the burden of supporting a veryweak ally, so unprovided of every thing for his own defence, that thewhole power of England, had it been directed to that single purpose, could scarce, perhaps, have defended him for another campaign. The lossof the Portugal trade would, no doubt, have occasioned a considerableembarrassment to the merchants at that time engaged in it, who mightnot, perhaps, have found out, for a year or two, any other equallyadvantageous method of employing their capitals; and in this wouldprobably have consisted all the inconveniency which England could havesuffered from this notable piece of commercial policy. 

The great annual importation of gold and silver is neither for thepurpose of plate nor of coin, but of foreign trade. A round-aboutforeign trade of consumption can be carried on more advantageously bymeans of these metals than of almost any other goods. As they are theuniversal instruments of commerce, they are more readily received inreturn for all commodities than any other goods; and, on account oftheir small bulk and great value, it costs less to transport thembackward and forward from one place to another than almost any othersort of merchandize, and they lose less of their value by being sotransported. Of all the commodities, therefore, which are bought in oneforeign country, for no other purpose but to be sold or exchanged againfor some other goods in another, there are none so convenient as goldand silver. In facilitating all the different round-about foreign tradesof consumption 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 madeeither to the plate or to the coin of the kingdom, could require but avery small annual importation of gold and silver, seems evident enough;and though we had no direct trade with Portugal, this small quantitycould always, somewhere or another, be very easily got. 

Though the goldsmiths trade be very considerable in Great Britain, thefar greater part of the new plate which they annually sell, is made fromother old plate melted down; so that the addition annually made to thewhole plate of the kingdom cannot be very great, and could require but avery small annual importation. 

It is the same case with the coin. Nobody imagines, I believe, thateven the greater part of the annual coinage, amounting, for ten yearstogether, before the late reformation of the gold coin, to upwards of£800, 000 a-year in gold, was an annual addition to the money beforecurrent in the kingdom. In a country where the expense of the coinage isdefrayed by the government, the value of the coin, even when it containsits full standard 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 delay, perhaps, of a few weeks, to procure for any quantity of uncoined gold and silveran equal quantity of those metals in coin; but in every country thegreater part of the current coin is almost always more or less worn, orotherwise degenerated from its standard. In Great Britain it was, beforethe late reformation, a good deal so, the gold being more than twoper cent. , and the silver more than eight per cent. Below its standardweight. But if forty-four guineas and a-half, containing their fullstandard weight, a pound weight of gold, could purchase very little morethan a pound weight of uncoined gold; forty-four guineas and a-half, wanting a part of their weight, could not purchase a pound weight, and something was to be added, in order to make up the deficiency. Thecurrent price of gold bullion at market, therefore, instead of beingthe same with the mint price, or £46:14:6, was then about £47:14s. , andsometimes about £48. When the greater part of the coin, however, was inthis degenerate condition, forty four guineas and a-half, fresh from themint, would purchase no more goods in the market than any other ordinaryguineas; because, when they came into the coffers of the merchant, beingconfounded with other money, they could not afterwards be distinguishedwithout more trouble than the difference was worth. Like other guineas, they were worth no more than £46:14:6. If thrown into the melting pot, however, they produced, without any sensible loss, a pound weight ofstandard gold, which could be sold at any time for between £47:14s. And£48, either in gold or silver, as fit for all the purposes of coin asthat which had been melted down. There was an evident profit, therefore, in melting down new-coined money; and it was done so instantaneously, that no precaution of government could prevent it. The operations ofthe mint were, upon this account, somewhat like the web of Penelope;the work that was done in the day was undone in the night. The mintwas employed, not so much in making daily additions to the coin, as inreplacing the very best part of it, which was daily melted down. 

Were the private people who carry their gold and silver to the mintto pay themselves for the coinage, it would add to the value of thosemetals, in the same manner as the fashion does to that of plate. Coinedgold and silver would be more valuable than uncoined. The seignorage, ifit was not exorbitant, would add to the bullion the whole value of theduty; because, the government having everywhere the exclusive privilegeof coining, no coin can come to market cheaper than they think proper toafford it. If the duty was exorbitant, indeed, that is, if it wasvery much above the real value of the labour and expense requisite forcoinage, false coiners, both at home and abroad, might be encouraged, bythe great difference between the value of bullion and that of coin, topour in so great a quantity of counterfeit money as might reduce thevalue of the government money. In France, however, though the seignorageis eight per cent. , no sensible inconveniency of this kind is foundto arise from it. The dangers to which a false coiner is everywhereexposed, if he lives in the country of which he counterfeits the coin, and to which his agents or correspondents are exposed, if he lives in aforeign country, are by far too great to be incurred for the sake of aprofit of six or seven per cent. 

The seignorage in France raises the value of the coin higher than inproportion to the quantity of pure gold which it contains. Thus, by theedict of January 1726, the mint price of fine gold of twenty-four caratswas fixed at seven hundred and forty livres nine sous and one denierone-eleventh the mark of eight Paris ounces. {See Dictionnaire desMonnoies, tom. Ii. Article Seigneurage, p. 439, par 81. Abbot deBazinghen, Conseiller-Commissaire en la Cour des Monnoies à Paris. } Thegold coin of France, making an allowance for the remedy of the mint, contains twenty-one carats and three-fourths of fine gold, and twocarats one-fourth of alloy. The mark of standard gold, therefore, isworth no more than about six hundred and seventy-one livres ten deniers. But in France this mark of standard gold is coined into thirty louisd'ors of twenty-four livres each, or into seven hundred and twentylivres. The coinage, therefore, increases the value of a mark ofstandard gold bullion, by the difference between six hundred andseventy-one livres ten deniers and seven hundred and twenty livres, orby forty-eight livres nineteen sous and two deniers. 

A seignorage will, in many cases, take away altogether, and will in allcases diminish, the profit of melting down the new coin. This profitalways arises from the difference between the quantity of bullion whichthe common currency ought to contain and that which it actually doescontain. If this difference is less than the seignorage, there will beloss instead of profit. If it is equal to the seignorage, there willbe neither profit nor loss. If it is greater than the seignorage, therewill, indeed, be some profit, but less than if there was no seignorage. If, before the late reformation of the gold coin, for example, there hadbeen a seignorage of five per cent. Upon the coinage, there would havebeen a loss of three per cent. Upon the melting down of the gold coin. If the seignorage had been two per cent. , there would have been neitherprofit nor loss. If the seignorage had been one per cent. , there wouldhave been a profit but of one per cent. Only, instead of two per cent. Wherever money is received by tale, therefore, and not by weight, aseignorage is the most effectual preventive of the melting down of thecoin, and, for the same reason, of its exportation. It is the bestand heaviest pieces that are commonly either melted down or exported, because it is upon such that the largest profits are made. 

The law for the encouragement of the coinage, by rendering it duty-free, was first enacted during the reign of Charles II. For a limited time, and afterwards continued, by different prolongations, till 1769, when itwas rendered perpetual. The bank of England, in order to replenish theircoffers with money, are frequently obliged to carry bullion to the mint;and it was more for their interest, they probably imagined, that thecoinage should be at the expense of the government than at their own. It was probably out of complaisance to this great company, that thegovernment agreed to render this law perpetual. Should the custom ofweighing gold, however, come to be disused, as it is very likely to beon account of its inconveniency; should the gold coin of England cometo be received by tale, as it was before the late recoinage this greatcompany may, perhaps, find that they have, upon this, as upon some otheroccasions, mistaken their own interest not a little. 

Before the late recoinage, when the gold currency of England was two percent. Below its standard weight, as there was no seignorage, it wastwo per cent. Below the value of that quantity of standard gold bullionwhich it ought to have contained. When this great company, therefore, bought gold bullion in order to have it coined, they were obliged to payfor it two per cent. More than it was worth after the coinage. Butif there had been a seignorage of two per cent. Upon the coinage, thecommon gold currency, though two per cent. Below its standard weight, would, notwithstanding, have been equal in value to the quantity ofstandard gold which it ought to have contained; the value of the fashioncompensating in this case the diminution of the weight. They would, indeed, have had the seignorage to pay, which being two per cent. , theirloss upon the whole transaction would have been two per cent. , exactlythe same, but no greater than it actually was. 

If the seignorage had been five per cent. And the gold currency only twoper cent. Below its standard weight, the bank would, in this case, havegained three per cent. Upon the price of the bullion; but as they wouldhave had a seignorage of five per cent. To pay upon the coinage, theirloss upon the whole transaction would, in the same manner, have beenexactly two per cent. 

If the seignorage had been only one per cent. , and the gold currency twoper cent. Below its standard weight, the bank would, in this case, havelost only one per cent. Upon the price of the bullion; but as they wouldlikewise have had a seignorage of one per cent. To pay, their loss uponthe whole transaction would have been exactly two per cent. , in the samemanner as in all other cases. 

If there was a reasonable seignorage, while at the same time the coincontained its full standard weight, as it has done very nearly sincethe late recoinage, whatever the bank might lose by the seignorage, theywould gain upon the price of the bullion; and whatever they might gainupon the price of the bullion, they would lose by the seignorage. Theywould neither lose nor gain, therefore, upon the whole transaction, andthey would in this, as in all the foregoing cases, be exactly in thesame situation as if there was no seignorage. 

When the tax upon a commodity is so moderate as not to encouragesmuggling, the merchant who deals in it, though he advances, does notproperly pay the tax, as he gets it back in the price of the commodity. The tax is finally paid by the last purchaser or consumer. But money isa commodity, with regard to which every man is a merchant. Nobody buysit but in order to sell it again; and with regard to it there is, in ordinary cases, no last purchaser or consumer. When the tax uponcoinage, therefore, is so moderate as not to encourage false coining, though every body advances the tax, nobody finally pays it; becauseevery body gets it back in the advanced value of the coin. 

A moderate seignorage, therefore, would not, in any case, augment theexpense of the bank, or of any other private persons who carry theirbullion to the mint in order to be coined; and the want of a moderateseignorage does not in any case diminish it. Whether there is or is nota seignorage, if the currency contains its full standard weight, thecoinage costs nothing to anybody; and if it is short of that weight, thecoinage must always cost the difference between the quantity of bullionwhich ought to be contained in it, and that which actually is containedin it. 

The government, therefore, when it defrays the expense of coinage, notonly incurs some small expense, but loses some small revenue which itmight get by a proper duty; and neither the bank, nor any other privatepersons, are in the smallest degree benefited by this useless piece ofpublic generosity. 

The directors of the bank, however, would probably be unwilling to agreeto the imposition of a seignorage upon the authority of a speculationwhich promises them no gain, but only pretends to insure them from anyloss. In the present state of the gold coin, and as long as it continuesto be received by weight, they certainly would gain nothing by such achange. But if the custom of weighing the gold coin should ever go intodisuse, as it is very likely to do, and if the gold coin should everfall into the same state of degradation in which it was before thelate recoinage, the gain, or more properly the savings, of the bank, inconsequence of the imposition of a seignorage, would probably be veryconsiderable. The bank of England is the only company which sends anyconsiderable quantity of bullion to the mint, and the burden of theannual coinage falls entirely, or almost entirely, upon it. If thisannual coinage had nothing to do but to repair the unavoidable lossesand necessary wear and tear of the coin, it could seldom exceed fiftythousand, or at most a hundred thousand pounds. But when the coin isdegraded below its standard weight, the annual coinage must, besidesthis, fill up the large vacuities which exportation and the melting potare continually making in the current coin. It was upon this account, that during the ten or twelve years immediately preceding the latereformation of the gold coin, the annual coinage amounted, at anaverage, to more than £850, 000. But if there had been a seignorage offour or five per cent. Upon the gold coin, it would probably, even inthe state in which things then were, have put an effectual stop to thebusiness both of exportation and of the melting pot. The bank, insteadof losing every year about two and a half per cent. Upon the bullionwhich was to be coined into more than eight hundred and fifty thousandpounds, or incurring an annual loss of more than £21, 250 pounds, wouldnot probably have incurred the tenth part of that loss. 

The revenue allotted by parliament for defraying the expense of thecoinage is but fourteen thousand pounds a-year; and the real expensewhich it costs the government, or the fees of the officers of the mint, do not, upon ordinary occasions, I am assured, exceed the half of thatsum. The saving of so very small a sum, or even the gaining of another, which could not well be much larger, are objects too inconsiderable, itmay be thought, to deserve the serious attention of government. But thesaving of eighteen or twenty thousand pounds a-year, in case of an eventwhich is not improbable, which has frequently happened before, and whichis very 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 might, perhaps, havebeen more properly placed in those chapters of the first book whichtreat of the origin and use of money, and of the difference betweenthe real and the nominal price of commodities. But as the law for theencouragement of coinage derives its origin from those vulgar prejudiceswhich have been introduced by the mercantile system, I judged it moreproper to reserve them for this chapter. Nothing could be more agreeableto the spirit of that system than a sort of bounty upon the productionof money, the very thing which, it supposes, constitutes the wealth ofevery nation. It is one of its many admirable expedients for enrichingthe country. 

CHAPTER VII. OF COLONIES. 

PART I. Of the Motives for Establishing New Colonies. 

The interest which occasioned the first settlement of the differentEuropean colonies in America and the West Indies, was not altogether soplain and distinct as that which directed the establishment of those ofancient Greece and Rome. 

All the different states of ancient Greece possessed, each of them, buta very small territory; and when the people in anyone of them multipliedbeyond what that territory could easily maintain, a part of them weresent in quest of a new habitation, in some remote and distant part ofthe world; the warlike neighbours who surrounded them on all sides, rendering it difficult for any of them to enlarge very much itsterritory at home. The colonies of the Dorians resorted chiefly to Italyand Sicily, which, in the times preceding the foundation of Rome, wereinhabited by barbarous and uncivilized nations; those of the Ionians andAeolians, the two other great tribes of the Greeks, to Asia Minor andthe islands of the Aegean sea, of which the inhabitants sewn at thattime to have been pretty much in the same state as those of Sicily andItaly. The mother city, though she considered the colony as a child, atall times entitled to great favour and assistance, and owing in returnmuch gratitude and respect, yet considered it as an emancipated child, over whom she pretended to claim no direct authority or jurisdiction. The colony settled its own form of government, enacted its own laws, elected its own magistrates, and made peace or war with its neighbours, as an independent state, which had no occasion to wait for theapprobation or consent of the mother city. Nothing can be more plain anddistinct than the interest which directed every such establishment. 

Rome, like most of the other ancient republics, was originally foundedupon an agrarian law, which divided the public territory, in a certainproportion, among the different citizens who composed the state. Thecourse of human affairs, by marriage, by succession, and by alienation, necessarily deranged this original division, and frequently threw thelands which had been allotted for the maintenance of many differentfamilies, into the possession of a single person. To remedy thisdisorder, for such it was supposed to be, a law was made, restrictingthe quantity of land which any citizen could possess to five hundredjugera; about 350 English acres. This law, however, though we read ofits having been executed upon one or two occasions, was eitherneglected or evaded, and the inequality of fortunes went on continuallyincreasing. The greater part of the citizens had no land; and withoutit the manners and customs of those times rendered it difficult for afreeman to maintain his independency. In the present times, though apoor man has no land of his own, if he has a little stock, he may eitherfarm the lands of another, or he may carry on some little retail trade;and if he has no stock, he may find employment either as a countrylabourer, or as an artificer. But among the ancient Romans, the lands ofthe rich were all cultivated by slaves, who wrought under an overseer, who was likewise a slave; so that a poor freeman had little chanceof being employed either as a farmer or as a labourer. All trades andmanufactures, too, even the retail trade, were carried on by the slavesof the rich for the benefit of their masters, whose wealth, authority, and protection, made it difficult for a poor freeman to maintain thecompetition against them. The citizens, therefore, who had no land, hadscarce any other means of subsistence but the bounties of the candidatesat the annual elections. The tribunes, when they had a mind to animatethe people against the rich and the great, put them in mind of theancient divisions of lands, and represented that law which restrictedthis sort of private property as the fundamental law of the republic. The people became clamorous to get land, and the rich and the great, we may believe, were perfectly determined not to give them any partof theirs. To satisfy them in some measure, therefore, they frequentlyproposed to send out a new colony. But conquering Rome was, even uponsuch occasions, under no necessity of turning out her citizens to seektheir fortune, if one may so, through the wide world, without knowingwhere they were to settle. She assigned them lands generally in theconquered provinces of Italy, where, being within the dominions of therepublic, they could never form any independent state, but were at bestbut a sort of corporation, which, though it had the power of enactingbye-laws for its own government, was at all times subject to thecorrection, jurisdiction, and legislative authority of the mother city. The sending out a colony of this kind not only gave some satisfactionto the people, but often established a sort of garrison, too, in a newlyconquered province, of which the obedience might otherwise have beendoubtful. A Roman colony, therefore, whether we consider the nature ofthe establishment itself, or the motives for making it, was altogetherdifferent from a Greek one. The words, accordingly, which in theoriginal languages denote those different establishments, have verydifferent meanings. The Latin word (colonia) signifies simply aplantation. The Greek word (apoixia), on the contrary, signifies aseparation of dwelling, a departure from home, a going out of the house. But though the Roman colonies were, in many respects, different from theGreek ones, the interest which prompted to establish them was equallyplain and distinct. Both institutions derived their origin, either fromirresistible necessity, or from clear and evident utility. 

The establishment of the European colonies in America and the WestIndies arose from no necessity; and though the utility which hasresulted from them has been very great, it is not altogether so clearand evident. It was not understood at their first establishment, andwas not the motive, either of that establishment, or of the discoverieswhich gave occasion to it; and the nature, extent, and limits of thatutility, are not, perhaps, well understood at this day. 

The Venetians, during the fourteenth and fifteenth centuries, carriedon a very advantageous commerce in spiceries and other East India goods, which they distributed among the other nations of Europe. They purchasedthem chiefly in Egypt, at that time under the dominion of the Mamelukes, the enemies of the Turks, of whom the Venetians were the enemies; andthis union of interest, assisted by the money of Venice, formed such aconnexion as gave the Venetians almost a monopoly of the trade. 

The great profits of the Venetians tempted the avidity of thePortuguese. They had been endeavouring, during the course of thefifteenth century, to find out by sea a way to the countries from whichthe Moors brought them ivory and gold dust across the desert. Theydiscovered the Madeiras, the Canaries, the Azores, the Cape de Verdislands, the coast of Guinea, that of Loango, Congo, Angola, andBenguela, and, finally, the Cape of Good Hope. They had long wishedto share in the profitable traffic of the Venetians, and this lastdiscovery opened to them a probable prospect of doing so. In 1497, Vascode Gamo sailed from the port of Lisbon with a fleet of four ships, and, after a navigation of eleven months, arrived upon the coast of Indostan;and thus completed a course of discoveries which had been pursued withgreat steadiness, and with very little interruption, for near a centurytogether. 

Some years before this, while the expectations of Europe were insuspense about the projects of the Portuguese, of which the successappeared yet to be doubtful, a Genoese pilot formed the yet more daringproject of sailing to the East Indies by the west. The situation ofthose countries was at that time very imperfectly known in Europe. Thefew European travellers who had been there, had magnified the distance, perhaps through simplicity and ignorance; what was really very great, appearing almost infinite to those who could not measure it; or, perhaps, in order to increase somewhat more the marvellous of theirown adventures in visiting regions so immensely remote from Europe. The longer the way was by the east, Columbus very justly concluded, theshorter it would be by the west. He proposed, therefore, to take thatway, as both the shortest and the surest, and he had the good fortuneto convince Isabella of Castile of the probability of his project. Hesailed from the port of Palos in August 1492, near five years before theexpedition of Vasco de Gamo set out from Portugal; and, after a voyageof between two and three months, discovered first some of the smallBahama or Lucyan islands, and afterwards the great island of St. Domingo. 

But the countries which Columbus discovered, either in this or in any ofhis subsequent voyages, had no resemblance to those which he had gone inquest of. Instead of the wealth, cultivation, and populousness of Chinaand Indostan, he found, in St. Domingo, and in all the other parts ofthe new world which he ever visited, nothing but a country quite coveredwith wood, uncultivated, and inhabited only by some tribes of naked andmiserable savages. He was not very willing, however, to believe thatthey were not the same with some of the countries described by MarcoPolo, the first European who had visited, or at least had left behindhim any description of China or the East Indies; and a very slightresemblance, such as that which he found between the name of Cibao, amountain in St. Domingo, and that of Cipange, mentioned by MarcoPolo, was frequently sufficient to make him return to this favouriteprepossession, though contrary to the clearest evidence. In hisletters to Ferdinand and Isabella, he called the countries which he haddiscovered the Indies. He entertained no doubt but that they were theextremity of those which had been described by Marco Polo, and that theywere not very distant from the Ganges, or from the countries which hadbeen conquered by Alexander. Even when at last convinced that they weredifferent, he still flattered himself that those rich countries wereat no great distance; and in a subsequent voyage, accordingly, went inquest of them along the coast of Terra Firma, and towards the Isthmus ofDarien. 

In consequence of this mistake of Columbus, the name of the Indies hasstuck to those unfortunate countries ever since; and when it was at lastclearly discovered that the new were altogether different from the oldIndies, the former were called the West, in contradistinction to thelatter, which were called the East Indies. 

It was of importance to Columbus, however, that the countries which hehad discovered, whatever they were, should be represented to the courtof Spain as of very great consequence; and, in what constitutes the realriches of every country, the animal and vegetable productions of thesoil, there was at that time nothing which could well justify such arepresentation of them. 

The cori, something between a rat and a rabbit, and supposed by MrBuffon to be the same with the aperea of Brazil, was the largestviviparous quadruped in St. Domingo. This species seems never to havebeen very numerous; and the dogs and cats of the Spaniards are saidto have long ago almost entirely extirpated it, as well as some othertribes of a still smaller size. These, however, together with a prettylarge lizard, called the ivana or iguana, constituted the principal partof the animal food which the land afforded. 

The vegetable food of the inhabitants, though, from their want ofindustry, not very abundant, was not altogether so scanty. It consistedin Indian corn, yams, potatoes, bananas, etc. , plants which were thenaltogether unknown in Europe, and which have never since been very muchesteemed in it, or supposed to yield a sustenance equal to what is drawnfrom the common sorts of grain and pulse, which have been cultivated inthis part of the world time out of mind. 

The cotton plant, indeed, afforded the material of a very importantmanufacture, and was at that time, to Europeans, undoubtedly the mostvaluable of all the vegetable productions of those islands. But though, in the end of the fifteenth century, the muslins and other cotton goodsof the East Indies were much esteemed in every part of Europe, thecotton manufacture itself was not cultivated in any part of it. Eventhis production, therefore, could not at that time appear in the eyes ofEuropeans to be of very great consequence. 

Finding nothing, either in the animals or vegetables of the newlydiscovered countries which could justify a very advantageousrepresentation of them, Columbus turned his view towards their minerals;and in the richness of their productions of this third kingdom, he flattered himself he had found a full compensation for theinsignificancy of those of the other two. The little bits of goldwith which the inhabitants ornamented their dress, and which, he wasinformed, they frequently found in the rivulets and torrents which fellfrom the mountains, were sufficient to satisfy him that those mountainsabounded with the richest gold mines. St. Domingo, therefore, wasrepresented as a country abounding with gold, and upon that account(according to the prejudices not only of the present times, but of thosetimes), an inexhaustible source of real wealth to the crown and kingdomof Spain. When Columbus, upon his return from his first voyage, wasintroduced with a sort of triumphal honours to the sovereigns of Castileand Arragon, the principal productions of the countries which he haddiscovered were carried in solemn procession before him. The onlyvaluable part of them consisted in some little fillets, bracelets, andother ornaments of gold, and in some bales of cotton. The rest were mereobjects of vulgar wonder and curiosity; some reeds of an extraordinarysize, some birds of a very beautiful plumage, and some stuffed skinsof the huge alligator and manati; all of which were preceded by sixor seven of the wretched natives, whose singular colour and appearanceadded greatly to the novelty of the show. 

In consequence of the representations of Columbus, the council ofCastile determined to take possession of the countries of which theinhabitants were plainly incapable of defending themselves. The piouspurpose of converting them to Christianity sanctified the injustice ofthe project. But the hope of finding treasures of gold there was thesole motive which prompted to undertake it; and to give this motive thegreater weight, it was proposed by Columbus, that the half of all thegold and silver that should be found there, should belong to the crown. This proposal was approved of by the council. 

As long as the whole, or the greater part of the gold which the firstadventurers imported into Europe was got by so very easy a method as theplundering of the defenceless natives, it was not perhaps very difficultto pay even this heavy tax; but when the natives were once fairlystript of all that they had, which, in St. Domingo, and in all the othercountries discovered by Columbus, was done completely in six or eightyears, and when, in order to find more, it had become necessary to digfor it in the mines, there was no longer any possibility of paying thistax. The rigorous exaction of it, accordingly, first occasioned, it issaid, the total abandoning of the mines of St. Domingo, which have neverbeen wrought since. It was soon reduced, therefore, to a third; then toa fifth; afterwards to a tenth; and at last to a twentieth part of thegross produce of the gold mines. The tax upon silver continued for along time to be a fifth of the gross produce. It was reduced to a tenthonly in the course of the present century. But the first adventurersdo not appear to have been much interested about silver. Nothing lessprecious than gold seemed worthy of their attention. 

All the other enterprizes of the Spaniards in the New World, subsequentto those of Columbus, seem to have been prompted by the same motive. Itwas the sacred thirst of gold that carried Ovieda, Nicuessa, and VascoNugnes de Balboa, to the Isthmus of Darien; that carried Cortes toMexico, Almagro and Pizarro to Chili and Peru. When those adventurersarrived upon any unknown coast, their first inquiry was always if therewas any gold to be found there; and according to the information whichthey received concerning this particular, they determined either to quitthe country or to settle in it. 

Of all those expensive and uncertain projects, however, which bringbankruptcy upon the greater part of the people who engage in them, there is none, perhaps, more perfectly ruinous than the search after newsilver and gold mines. It is, perhaps, the most disadvantageous lotteryin the world, or the one in which the gain of those who draw the prizesbears the least proportion to the loss of those who draw the blanks; forthough the prizes are few, and the blanks many, the common price ofa ticket is the whole fortune of a very rich man. Projects of mining, instead of replacing the capital employed in them, together with theordinary profits of stock, commonly absorb both capital and profit. They are the projects, therefore, to which, of all others, a prudentlawgiver, who desired to increase the capital of his nation, would leastchoose to give any extraordinary encouragement, or to turn towards thema greater share of that capital than what would go to them of its ownaccord. Such, in reality, is the absurd confidence which almost allmen have in their own good fortune, that wherever there is the leastprobability of success, too great a share of it is apt to go to them ofits own accord. 

But though the judgment of sober reason and experience concerning suchprojects has always been extremely unfavourable, that of human avidityhas commonly been quite otherwise. The same passion which has suggestedto so many people the absurd idea of the philosopher's stone, hassuggested to others the equally absurd one of immense rich mines of goldand silver. They did not consider that the value of those metals has, inall ages and nations, arisen chiefly from their scarcity, and that theirscarcity has arisen from the very small quantities of them which naturehas anywhere deposited in one place, from the hard and intractablesubstances with which she has almost everywhere surrounded those smallquantities, and consequently from the labour and expense which areeverywhere necessary in order to penetrate, and get at them. Theyflattered themselves that veins of those metals might in many placesbe found, as large and as abundant as those which are commonly foundof lead, or copper, or tin, or iron. The dream of Sir Waiter Raleigh, concerning the golden city and country of El Dorado, may satisfy us, that even wise men are not always exempt from such strange delusions. More than a hundred years after the death of that great man, the JesuitGumila was still convinced of the reality of that wonderful country, andexpressed, with great warmth, and, I dare say, with great sincerity, how happy he should be to carry the light of the gospel to a people whocould so well reward the pious labours of their missionary. 

In the countries first discovered by the Spaniards, no gold and silvermines are at present known which are supposed to be worth the working. The quantities of those metals which the first adventurers are said tohave found there, had probably been very much magnified, as well as thefertility of the mines which were wrought immediately after the firstdiscovery. What those adventurers were reported to have found, however, was sufficient to inflame the avidity of all their countrymen. EverySpaniard who sailed to America expected to find an El Dorado. Fortune, too, did upon this what she has done upon very few other occasions. Sherealized in some measure the extravagant hopes of her votaries; and inthe discovery and conquest of Mexico and Peru (of which the onehappened about thirty, and the other about forty, years after the firstexpedition of Columbus), she presented them with something not veryunlike that profusion of the precious metals which they sought for. 

A project of commerce to the East Indies, therefore, gave occasion tothe first discovery of the West. A project of conquest gave occasionto all the establishments of the Spaniards in those newly discoveredcountries. The motive which excited them to this conquest was a projectof gold and silver mines; and a course of accidents which no humanwisdom could foresee, rendered this project much more successful thanthe undertakers had any reasonable grounds for expecting. 

The first adventurers of all the other nations of Europe who attemptedto make settlements in America, were animated by the like chimericalviews; but they were not equally successful. It was more than a hundredyears after the first settlement of the Brazils, before any silver, gold, or diamond mines, were discovered there. In the English, French, Dutch, and Danish colonies, none have ever yet been discovered, at leastnone that are at present supposed to be worth the working. The firstEnglish settlers in North America, however, offered a fifth of all thegold and silver which should be found there to the king, as a motive forgranting them their patents. In the patents of Sir Waiter Raleigh, tothe London and Plymouth companies, to the council of Plymouth, etc. This fifth was accordingly reserved to the crown. To the expectation offinding gold and silver mines, those first settlers, too, joined that ofdiscovering a north-west passage to the East Indies. They have hithertobeen disappointed in both. 

PART II. Causes of the Prosperity of New Colonies. 

The colony of a civilized 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 wealth andgreatness than any other human society. 

The colonies carry out with them a knowledge of agriculture and of otheruseful arts, superior to what can grow up of its own accord, in thecourse of many centuries, among savage and barbarous nations. Theycarry out with them, too, the habit of subordination, some notion of theregular government which takes place in their own country, of the systemof laws which support it, and of a regular administration of justice;and they naturally establish something of the same kind in the newsettlement. But among savage and barbarous nations, the natural progressof law and government is still slower than the natural progress of arts, after law and government have been so far established as is necessaryfor their protection. 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 hisland is commonly so extensive, that, with all his own industry, andwith all the industry of other people whom he can get to employ, hecan seldom make it produce the tenth part of what it is capable ofproducing. He is eager, therefore, to collect labourers from allquarters, and to reward them with the most liberal wages. But thoseliberal wages, joined to the plenty and cheapness of land, soon makethose labourers leave him, in order to become landlords themselves, andto reward with equal liberality other labourers, who soon leave them forthe same reason that they left their first master. The liberal rewardof labour encourages marriage. The children, during the tender yearsof infancy, are well fed and properly taken care of; and when they aregrown up, the value of their labour greatly overpays their maintenance. When arrived at maturity, the high price of labour, and the low priceof land, enable them to establish themselves in the same manner as theirfathers did before them. 

In other countries, rent and profit eat up wages, and the two superiororders of people oppress the inferior one; but in new colonies, theinterest of the two superior orders obliges them to treat the inferiorone with more generosity and humanity, at least where that inferiorone is not in a state of slavery. Waste lands, of the greatest naturalfertility, are to be had for a trifle. The increase of revenue whichthe proprietor, who is always the undertaker, expects from theirimprovement, constitutes his profit, which, in these circumstances, is commonly very great; but this great profit cannot be made, withoutemploying the labour of other people in clearing and cultivating theland; and the disproportion between the great extent of the land and thesmall number of the people, which commonly takes place in new colonies, makes it difficult for him to get this labour. He does not, therefore, dispute about wages, but is willing to employ labour at any price. Thehigh wages of labour encourage population. The cheapness and plenty ofgood land encourage improvement, and enable the proprietor to pay thosehigh wages. In those wages consists almost the whole price of the land;and though they are high, considered as the wages of labour, theyare low, considered as the price of what is so very valuable. Whatencourages the progress of population and improvement, encourages thatof real wealth and greatness. 

The progress of many of the ancient Greek colonies towards wealth andgreatness seems accordingly to have been very rapid. In the course ofa century or two, several of them appear to have rivalled, and even tohave surpassed, their mother cities. Syracuse and Agrigentum in Sicily, Tarentum and Locri in Italy, Ephesus and Miletus in Lesser Asia, appear, by all accounts, to have been at least equal to any of the cities ofancient Greece. Though posterior in their establishment, yet all thearts of refinement, philosophy, poetry, and eloquence, seem to have beencultivated as early, and to have been improved as highly in them asin any part of the mother country The schools of the two oldest Greekphilosophers, those of Thales and Pythagoras, were established, it isremarkable, not in ancient Greece, but the one in an Asiatic, the otherin an Italian colony. All those colonies had established themselves incountries inhabited by savage and barbarous nations, who easily gaveplace to the new settlers. They had plenty of good land; and as theywere altogether independent of the mother city, they were at liberty tomanage their own affairs in the way that they judged was most suitableto their own interest. 

The history of the Roman colonies is by no means so brilliant. Some ofthem, indeed, such as Florence, have, in the course of many ages, andafter the fall of the mother city, grown up to be considerable states. But the progress of no one of them seems ever to have been very rapid. They were all established in conquered provinces, which in most caseshad been fully inhabited before. The quantity of land assigned toeach colonist was seldom very considerable, and, as the colony was notindependent, they were not always at liberty to manage their own affairsin the way that they judged was most suitable to their own interest. 

In the plenty of good land, the European colonies established in Americaand the West Indies resemble, and even greatly surpass, those of ancientGreece. In their dependency upon the mother state, they resemble thoseof ancient Rome; but their great distance from Europe has in all of themalleviated more or less the effects of this dependency. Their situationhas placed them less in the view, and less in the power of their mothercountry. In pursuing their interest their own way, their conduct hasupon many occasions been overlooked, either because not known ornot understood in Europe; and upon some occasions it has been fairlysuffered and submitted to, because their distance rendered it difficultto restrain it. Even the violent and arbitrary government of Spain has, upon many occasions, been obliged to recall or soften the orders whichhad been given for the government of her colonies, for fear of a generalinsurrection. The progress of all the European colonies in wealth, population, and improvement, has accordingly been very great. 

The crown of Spain, by its share of the gold and silver, derived somerevenue from its colonies from the moment of their first establishment. It was a revenue, too, of a nature to excite in human avidity the mostextravagant expectation of still greater riches. The Spanish colonies, therefore, from the moment of their first establishment, attracted verymuch the attention of their mother country; while those of the otherEuropean nations were for a long time in a great measure neglected. The former did not, perhaps, thrive the better in consequence of thisattention, nor the latter the worse in consequence of this neglect. In proportion to the extent of the country which they in some measurepossess, the Spanish colonies are considered as less populous andthriving than those of almost any other European nation. The progresseven of the Spanish colonies, however, in population and improvement, has certainly been very rapid and very great. The city of Lima, foundedsince the conquest, is represented by Ulloa as containing fifty thousandinhabitants near thirty years ago. Quito, which had been but a miserablehamlet of Indians, is represented by the same author as in his timeequally populous. Gemel i Carreri, a pretended traveller, it is said, indeed, but who seems everywhere to have written upon extreme goodinformation, represents the city of Mexico as containing a hundredthousand inhabitants; a number which, in spite of all the exaggerationsof the Spanish writers, is probably more than five times greater thanwhat it contained in the time of Montezuma. These numbers exceed greatlythose of Boston, New York, and Philadelphia, the three greatest citiesof the English colonies. Before the conquest of the Spaniards, therewere no cattle fit for draught, either in Mexico or Peru. The lama wastheir only beast of burden, and its strength seems to have been a gooddeal inferior to that of a common ass. The plough was unknown amongthem. They were ignorant of the use of iron. They had no coined money, nor any established instrument of commerce of any kind. Their commercewas carried on by barter. A sort of wooden spade was their principalinstrument of agriculture. Sharp stones served them for knives andhatchets to cut with; fish bones, and the hard sinews of certainanimals, served them with needles to sew with; and these seem to havebeen their principal instruments of trade. In this state of things, itseems impossible that either of those empires could have been so muchimproved or so well cultivated as at present, when they are plentifullyfurnished with all sorts of European cattle, and when the use of iron, of the plough, and of many of the arts of Europe, have been introducedamong them. But the populousness of every country must be in proportionto the degree of its improvement and cultivation. In spite of the crueldestruction of the natives which followed the conquest, these two greatempires are probably more populous now than they ever were before;and the people are surely very different; for we must acknowledge, Iapprehend, that the Spanish creoles are in many respects superior to theancient Indians. 

After the settlements of the Spaniards, that of the Portuguese in Brazilis the oldest of any European nation in America. But as for a long timeafter the first discovery neither gold nor silver mines were found init, and as it afforded upon that account little or no revenue to thecrown, it was for a long time in a great measure neglected; and duringthis state of neglect, it grew up to be a great and powerful colony. While Portugal was under the dominion of Spain, Brazil was attacked bythe Dutch, who got possession of seven of the fourteen provinces intowhich it is divided. They expected soon to conquer the other seven, whenPortugal recovered its independency by the elevation of the family ofBraganza to the throne. The Dutch, then, as enemies to the Spaniards, became friends to the Portuguese, who were likewise the enemies of theSpaniards. They agreed, therefore, to leave that part of Brazil whichthey had not conquered to the king of Portugal, who agreed to leave thatpart which they had conquered to them, as a matter not worth disputingabout, with such good allies. But the Dutch government soon began tooppress the Portuguese colonists, who, instead of amusing themselveswith complaints, took arms against their new masters, and by their ownvalour and resolution, with the connivance, indeed, but without anyavowed assistance from the mother country, drove them out of Brazil. TheDutch, therefore, finding it impossible to keep any part of the countryto themselves, were contented that it should be entirely restored tothe crown of Portugal. In this colony there are said to be more than sixhundred thousand people, either Portuguese or descended from Portuguese, creoles, mulattoes, and a mixed race between Portuguese and Brazilians. No one colony in America is supposed to contain so great a number ofpeople of European extraction. 

Towards the end of the fifteenth, and during the greater part of thesixteenth century, Spain and Portugal were the two great naval powersupon the ocean; for though the commerce of Venice extended to every partof Europe, its fleet had scarce ever sailed beyond the Mediterranean. The Spaniards, in virtue of the first discovery, claimed all America astheir own; and though they could not hinder so great a naval power asthat of Portugal from settling in Brazil, such was at that time theterror of their name, that the greater part of the other nations ofEurope were afraid to establish themselves in any other part of thatgreat continent. The French, who attempted to settle in Florida, wereall murdered by the Spaniards. But the declension of the naval power ofthis latter nation, in consequence of the defeat or miscarriage of whatthey called their invincible armada, which happened towards the end ofthe sixteenth century, put it out of their power to obstruct any longerthe settlements of the other European nations. In the course of theseventeenth century, therefore, the English, French, Dutch, Danes, and Swedes, all the great nations who had any ports upon the ocean, attempted to make some settlements in the new world. 

The Swedes established themselves in New Jersey; and the number ofSwedish families still to be found there sufficiently demonstrates, thatthis colony was very likely to prosper, had it been protected by themother country. But being neglected by Sweden, it was soon swallowed upby the Dutch colony of New York, which again, in 1674, fell under thedominion of the English. 

The small islands of St. Thomas and Santa Cruz, are the only countriesin the new world that have ever been possessed by the Danes. Theselittle settlements, too, were under the government of an exclusivecompany, which had the sole right, both of purchasing the surplusproduce of the colonies, and of supplying them with such goods of othercountries as they wanted, and which, therefore, both in its purchasesand sales, had not only the power of oppressing them, but the greatesttemptation to do so. The government of an exclusive company of merchantsis, perhaps, the worst of all governments for any country whatever. It was not, however, able to stop altogether the progress of thesecolonies, though it rendered it more slow and languid. The late king ofDenmark dissolved this company, and since that time the prosperity ofthese colonies has been very great. 

The Dutch settlements in the West, as well as those in the East Indies, were originally put under the government of an exclusive company. Theprogress of some of them, therefore, though it has been considerable incomparison with that of almost any country that has been long peopledand established, has been languid and slow in comparison with that ofthe greater part of new colonies. The colony of Surinam, though veryconsiderable, is still inferior to the greater part of the sugarcolonies of the other European nations. The colony of Nova Belgia, now divided into the two provinces of New York and New Jersey, wouldprobably have soon become considerable too, even though it had remainedunder the government of the Dutch. The plenty and cheapness of good landare such powerful causes of prosperity, that the very worst governmentis scarce capable of checking altogether the efficacy of theiroperation. The great distance, too, from the mother country, wouldenable the colonists to evade more or less, by smuggling, the monopolywhich the company enjoyed against them. At present, the company allowsall Dutch ships to trade to Surinam, upon paying two and a-half percent. Upon the value of their cargo for a license; and only reservesto itself exclusively, the direct trade from Africa to America, whichconsists almost entirely in the slave trade. This relaxation in theexclusive privileges of the company, is probably the principal cause ofthat degree of prosperity which that colony at present enjoys. Curacoaand Eustatia, the two principal islands belonging to the Dutch, are freeports, open to the ships of all nations; and this freedom, in the midstof better colonies, whose ports are open to those of one nation only, has been the great cause of the prosperity of those two barren islands. 

The French colony of Canada was, during the greater part of the lastcentury, and some part of the present, under the government of anexclusive company. Under so unfavourable an administration, itsprogress was necessarily very slow, in comparison with that of other newcolonies; but it became much more rapid when this company was dissolved, after the fall of what is called the Mississippi scheme. When theEnglish got possession of this country, they found in it near double thenumber of inhabitants which father Charlevoix had assigned to it betweentwenty and thirty years before. That jesuit had travelled over the wholecountry, and had no inclination to represent it as less inconsiderablethan it really was. 

The French colony of St. Domingo was established by pirates andfreebooters, who, for a long time, neither required the protection, noracknowledged the authority of France; and when that race of bandittibecame so far citizens as to acknowledge this authority, it was for along time necessary to exercise it with very great gentleness. Duringthis period, the population and improvement of this colony increasedvery fast. Even the oppression of the exclusive company, to which it wasfor some time subjected with all the other colonies of France, thoughit no doubt retarded, had not been able to stop its progress altogether. The course of its prosperity returned as soon as it was relieved fromthat oppression. It is now the most important of the sugar colonies ofthe West Indies, and its produce is said to be greater than that of allthe English 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 more rapid thanthat of the English in North America. 

Plenty of good land, and liberty to manage their own affairs theirown way, seem to be the two great causes of the prosperity of all newcolonies. 

In the plenty of good land, the English colonies of North America, though no doubt very abundantly provided, are, however, inferior tothose of the Spaniards and Portuguese, and not superior to some ofthose possessed by the French before the late war. But the politicalinstitutions of the English colonies have been more favourable to theimprovement and cultivation of this land, than those of the other threenations. 

First, The engrossing of uncultivated land, though it has by no meansbeen prevented altogether, has been more restrained in the Englishcolonies than in any other. The colony law, which imposes upon everyproprietor the obligation of improving and cultivating, within a limitedtime, a certain proportion of his lands, and which, in case of failure, declares those neglected lands grantable to any other person; thoughit has not perhaps been very strictly executed, has, however, had someeffect. 

Secondly, In Pennsylvania there is no right of primogeniture, andlands, like moveables, are divided equally among all the children of thefamily. In three of the provinces of New England, the oldest has onlya double share, as in the Mosaical law. Though in those provinces, therefore, too great a quantity of land should sometimes be engrossed bya particular individual, it is likely, in the course of a generation ortwo, to be sufficiently divided again. In the other English colonies, indeed, the right of primogeniture takes place, as in the law ofEngland: But in all the English colonies, the tenure of the lands, whichare all held by free soccage, facilitates alienation; and the granteeof an extensive tract of land generally finds it for his interest toalienate, as fast as he can, the greater part of it, reserving only asmall quit-rent. In the Spanish and Portuguese colonies, what is calledthe right of majorazzo takes place in the succession of all those greatestates to which any title of honour is annexed. Such estates go allto one person, and are in effect entailed and unalienable. The Frenchcolonies, indeed, are subject to the custom of Paris, which, in theinheritance of land, is much more favourable to the younger childrenthan the law of England. But, in the French colonies, if any part of anestate, held by the noble tenure of chivalry and homage, is alienated, it is, for a limited time, subject to the right of redemption, eitherby the heir of the superior, or by the heir of the family; and all thelargest estates of the country are held by such noble tenures, whichnecessarily embarrass alienation. But, in a new colony, a greatuncultivated estate is likely to be much more speedily divided byalienation than by succession. The plenty and cheapness of good land, it has already been observed, are the principal causes of the rapidprosperity of new colonies. The engrossing of land, in effect, destroysthis plenty and cheapness. The engrossing of uncultivated land, besides, is the greatest obstruction to its improvement; but the labour that isemployed in the improvement and cultivation of land affords the greatestand most valuable produce to the society. The produce of labour, inthis case, pays not only its own wages and the profit of the stock whichemploys it, but the rent of the land too upon which it is employed. Thelabour of the English colonies, therefore, being more employed in theimprovement and cultivation of land, is likely to afford a greaterand more valuable produce than that of any of the other three nations, which, by the engrossing of land, is more or less diverted towards otheremployments. 

Thirdly, The labour of the English colonists is not only likely toafford a greater and more valuable produce, but, in consequence of themoderation of their taxes, a greater proportion of this produce belongsto themselves, which they may store up and employ in putting into motiona still greater quantity of labour. The English colonists have neveryet contributed any thing towards the defence of the mother country, or towards the support of its civil government. They themselves, on thecontrary, have hitherto been defended almost entirely at the expense ofthe mother country; but the expense of fleets and armies is out of allproportion greater than the necessary expense of civil government. Theexpense of their own civil government has always been very moderate. Ithas generally been confined to what was necessary for paying competentsalaries to the governor, to the judges, and to some other officers ofpolice, and for maintaining a few of the most useful public works. Theexpense of the civil establishment of Massachusetts Bay, before thecommencement of the present disturbances, used to be but about £18;000a-year; that of New Hampshire and Rhode Island, £3500 each; that ofConnecticut, £4000; that of New York and Pennsylvania, £4500 each; thatof New Jersey, £1200; that of Virginia and South Carolina, £8000 each. The civil establishments of Nova Scotia and Georgia are partly supportedby an annual grant of parliament; but Nova Scotia pays, besides, about£7000 a-year towards the public expenses of the colony, and Georgiaabout £2500 a-year. All the different civil establishments in NorthAmerica, in short, exclusive of those of Maryland and North Carolina, ofwhich no exact account has been got, did not, before the commencement ofthe present disturbances, cost the inhabitants about £64, 700 a-year; anever memorable example, at how small an expense three millions of peoplemay not only be governed but well governed. The most important part ofthe expense of government, indeed, that of defence and protection, hasconstantly fallen upon the mother country. The ceremonial, too, of thecivil government in the colonies, upon the reception of a new governor, upon the opening of a new assembly, etc. Though sufficiently decent, isnot accompanied with any expensive pomp or parade. Their ecclesiasticalgovernment is conducted upon a plan equally frugal. Tithes are unknownamong them; and their clergy, who are far from being numerous, are maintained either by moderate stipends, or by the voluntarycontributions of the people. The power of Spain and Portugal, onthe contrary, derives some support from the taxes levied upon theircolonies. France, indeed, has never drawn any considerable revenue fromits colonies, the taxes which it levies upon them being generally spentamong them. But the colony government of all these three nations isconducted upon a much more extensive plan, and is accompanied with amuch more expensive ceremonial. The sums spent upon the reception of anew viceroy of Peru, for example, have frequently been enormous. Suchceremonials are not only real taxes paid by the rich colonists uponthose particular occasions, but they serve to introduce among them thehabit of vanity and expense upon all other occasions. They are notonly very 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, areoppressed with a numerous race of mendicant friars, whose beggary beingnot only licensed but consecrated by religion, is a most grievous taxupon the poor people, who are most carefully taught that it is a duty togive, and a very great sin to refuse them their charity. Over and aboveall this, the clergy are, in all of them, the greatest engrossers ofland. 

Fourthly, In the disposal of their surplus produce, or of what is overand above their own consumption, the English colonies have been morefavoured, and have been allowed a more extensive market, than those ofany other European nation. Every European nation has endeavoured, moreor less, to monopolize to itself the commerce of its colonies, and, uponthat account, has prohibited the ships of foreign nations from tradingto them, and has prohibited them from importing European goods from anyforeign nation. But the manner in which this monopoly has been exercisedin different nations, has been very different. 

Some nations have given up the whole commerce of their colonies to anexclusive company, of whom the colonists were obliged to buy all suchEuropean goods as they wanted, and to whom they were obliged to sellthe whole of their surplus produce. It was the interest of the company, therefore, not only to sell the former as dear, and to buy the latteras cheap as possible, but to buy no more of the latter, even at this lowprice, than what they could dispose of for a very high price in Europe. It was their interest not only to degrade in all cases the value of thesurplus produce 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 their company, inthe course of the present century, has given up in many respects theexertion of their exclusive privilege. This, too, was the policy ofDenmark, till the reign of the late king. It has occasionally been thepolicy of France; and of late, since 1755, after it had been abandonedby all other nations on account of its absurdity, it has become thepolicy of Portugal, with regard at least to two of the principalprovinces of Brazil, Pernambucco, and Marannon. 

Other nations, without establishing an exclusive company, have confinedthe whole commerce of their colonies to a particular port of the mothercountry, from whence no ship was allowed to sail, but either in afleet and at a particular season, or, if single, in consequence of aparticular license, which in most cases was very well paid for. Thispolicy opened, indeed, the trade of the colonies to all the natives ofthe mother country, provided they traded from the proper port, at theproper season, and in the proper vessels. But as all the differentmerchants, who joined their stocks in order to fit out those licensedvessels, would find it for their interest to act in concert, the tradewhich was carried on in this manner would necessarily be conducted verynearly upon the same principles as that of an exclusive company. The profit of those merchants would be almost equally exorbitant andoppressive. The colonies would be ill supplied, and would be obligedboth to buy very dear, and to sell very cheap. This, however, tillwithin these few years, had always been the policy of Spain; and theprice of 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 4s:6d. , and a pound of steel for about 6s:9d. Sterling. But it is chiefly in order to purchase European goods that thecolonies part with their own produce. The more, therefore, they pay forthe one, the less they really get for the other, and the dearness ofthe one is the same thing with the cheapness of the other. The policy ofPortugal is, in this respect, the same as the ancient policy of Spain, with regard to all its colonies, except Pernambucco and Marannon; andwith regard 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 the mothercountry, and who have occasion for no other license than the commondespatches of the custom-house. In this case the number and dispersedsituation of the different traders renders it impossible for them toenter into any general combination, and their competition is sufficientto hinder them from making very exorbitant profits. Under so liberal apolicy, the colonies are enabled both to sell their own produce, and tobuy the goods of Europe at a reasonable price; but since the dissolutionof the Plymouth company, when our colonies were but in their infancy, this has always been the policy of England. It has generally, too, beenthat of France, and has been uniformly so since the dissolution of whatin England is commonly called their Mississippi company. The profitsof the trade, therefore, which France and England carry on with theircolonies, though no doubt somewhat higher than if the competition werefree to all other nations, are, however, by no means exorbitant; and theprice of European goods, accordingly, is not extravagantly high in thegreater past of the colonies of either of those nations. 

In the exportation of their own surplus produce, too, it is only withregard to certain commodities that the colonies of Great Britain areconfined to the market of the mother country. These commodities havingbeen enumerated in the act of navigation, and in some other subsequentacts, have upon that account been called enumerated commodities. Therest are called non-enumerated, and may be exported directly to othercountries, provided it is in British or plantation ships, of which theowners and three fourths of the mariners are British subjects. 

Among the non-enumerated commodities are some of the most importantproductions of America and the West Indies, grain of all sorts, lumber, salt provisions, fish, sugar, and rum. 

Grain is naturally the first and principal object of the culture of allnew colonies. By allowing them a very extensive market for it, the lawencourages them to extend this culture much beyond the consumption ofa thinly inhabited country, and thus to provide beforehand an amplesubsistence for a continually increasing population. 

In a country quite covered with wood, where timber consequently is oflittle or no value, the expense of clearing the ground is the principalobstacle to improvement. By allowing the colonies a very extensivemarket for their lumber, the law endeavours to facilitate improvementby raising the price of a commodity which would otherwise be of littlevalue, and thereby enabling them to make some profit of what wouldotherwise be mere expense. 

In a country neither half peopled nor half cultivated, cattle naturallymultiply beyond the consumption of the inhabitants, and are often, uponthat account, of little or no value. But it is necessary, it has alreadybeen shown, that the price of cattle should bear a certain proportion tothat of corn, before the greater part of the lands of any country can beimproved. By allowing to American cattle, in all shapes, dead and alive, a very extensive market, the law endeavours to raise the value of acommodity, of which the high price is so very essential to improvement. The good effects of this liberty, however, must be somewhat diminishedby the 4th of Geo. III. C. 15, which puts hides and skins among theenumerated commodities, and thereby tends to reduce the value ofAmerican cattle. 

To increase the shipping and naval power of Great Britain by theextension of the fisheries of our colonies, is an object whichthe legislature seems to have had almost constantly in view. Thosefisheries, upon this account, have had all the encouragement whichfreedom can give them, and they have flourished accordingly. The NewEngland fishery, in particular, was, before the late disturbances, oneof the most important, perhaps, in the world. The whale fishery which, notwithstanding an extravagant bounty, is in Great Britain carried on toso little purpose, that in the opinion of many people ( which I do not, however, pretend to warrant), the whole produce does not much exceed thevalue of the bounties which are annually paid for it, is in New Englandcarried on, without any bounty, to a very great extent. Fish is one ofthe principal articles with which the North Americans trade to Spain, Portugal, and the Mediterranean. 

Sugar was originally an enumerated commodity, which could only beexported to Great Britain; but in 1751, upon a representation of thesugar-planters, its exportation was permitted to all parts of the world. The restrictions, however, with which this liberty was granted, joinedto the high price of sugar in Great Britain, have rendered it in a greatmeasure ineffectual. Great Britain and her colonies still continue tobe almost the sole market for all sugar produced in the Britishplantations. Their consumption increases so fast, that, though inconsequence of the increasing improvement of Jamaica, as well as ofthe ceded islands, the importation of sugar has increased very greatlywithin these twenty years, the exportation to foreign countries is saidto be not much greater than before. 

Rum is a very important article in the trade which the Americans carryon to the coast of Africa, from which they bring back negro slaves inreturn. 

If the whole surplus produce of America, in grain of all sorts, in saltprovisions, and in fish, had been put into the enumeration, and therebyforced into the market of Great Britain, it would have interfered toomuch with the produce of the industry of our own people. It was probablynot so much from any regard to the interest of America, as from ajealousy of this interference, that those important commodities havenot only been kept out of the enumeration, but that the importation intoGreat Britain of all grain, except rice, and of all salt provisions, has, in the ordinary state of the law, been prohibited. 

The non-enumerated commodities could originally be exported to all partsof the world. Lumber and rice having been once put into the enumeration, when they were afterwards taken out of it, were confined, as to theEuropean market, to the countries that lie south of Cape Finisterre. By the 6th of George III. C. 52, all non-enumerated commodities weresubjected to the like restriction. The parts of Europe which lie southof Cape Finisterre are not manufacturing countries, and we are lessjealous of the colony ships carrying home from them any manufactureswhich could interfere with our own. 

The enumerated commodities are of two sorts; first, such as are eitherthe peculiar produce of America, or as cannot be produced, or at leastare not produced in the mother country. Of this kind are molasses, coffee, cocoa-nuts, tobacco, pimento, ginger, whalefins, raw silk, cotton, wool, beaver, and other peltry of America, indigo, fustick, andother dyeing woods; secondly, such as are not the peculiar produceof America, but which are, and may be produced in the mother country, though not in such quantities as to supply the greater part of herdemand, which is principally supplied from foreign countries. Of thiskind are all naval stores, masts, yards, and bowsprits, tar, pitch, andturpentine, pig and bar iron, copper ore, hides and skins, pot and pearlashes. 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 home market, our merchants, it was expected, would not only be enabled to buy themcheaper in the plantations, and consequently to sell them with a betterprofit at home, but to establish between the plantations and foreigncountries an advantageous carrying trade, of which Great Britain wasnecessarily to be the centre or emporium, as the European country intowhich those commodities were first to be imported. The importation ofcommodities of the second kind might be so managed too, it was supposed, as to interfere, not with the sale of those of the same kind whichwere produced at home, but with that of those which were imported fromforeign countries; because, by means of proper duties, they might berendered always somewhat dearer than the former, and yet a good dealcheaper than the latter. By confining such commodities to the homemarket, therefore, it was proposed to discourage the produce, not ofGreat Britain, but of some foreign countries with which the balance oftrade was believed to be unfavourable to Great Britain. 

The prohibition of exporting from the colonies to any other country butGreat Britain, masts, yards, and bowsprits, tar, pitch, and turpentine, naturally tended to lower the price of timber in the colonies, andconsequently to increase the expense of clearing their lands, theprincipal obstacle to their improvement. But about the beginning ofthe present century, in 1703, the pitch and tar company of Swedenendeavoured to raise the price of their commodities to Great Britain, byprohibiting their exportation, except in their own ships, at theirown price, and in such quantities as they thought proper. In orderto counteract this notable piece of mercantile policy, and to renderherself as much as possible independent, not only of Sweden, but ofall the other northern 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 more than theconfinement to the home market could lower it; and as both regulationswere enacted at the same time, their joint effect was rather toencourage than to discourage the clearing of land in America. 

Though pig and bar iron, too, have been put among the enumeratedcommodities, yet as, when imported from America, they are exempted fromconsiderable duties to which they are subject when imported frontany other country, the one part of the regulation contributes moreto encourage the erection of furnaces in America than the other todiscourage it. There is no manufacture which occasions so great aconsumption of wood as a furnace, or which can contribute so much to theclearing of a country overgrown with it. 

The tendency of some of these regulations to raise the value of timberin America, and thereby to facilitate the clearing of the land, wasneither, perhaps, intended nor understood by the legislature. Thoughtheir beneficial effects, however, have been in this respect accidental, they have not upon that account been less real. 

The most perfect freedom of trade is permitted between the Britishcolonies of America and the West Indies, both in the enumerated and inthe non-enumerated commodities Those colonies are now become so populousand thriving, that each of them finds in some of the others a greatand extensive market for every part of its produce. All of them takentogether, they make a great internal market for the produce of oneanother. 

The liberality of England, however, towards the trade of her colonies, has been confined chiefly to what concerns the market for their produce, either in its rude state, or in what may be called the very first stageof manufacture. The more advanced or more refined manufactures, evenof the colony produce, the merchants and manufacturers of Great Britainchuse to reserve to themselves, and have prevailed upon the legislatureto prevent their establishment in the colonies, sometimes by highduties, and sometimes by absolute prohibitions. 

While, for example, Muscovado sugars from the British plantations pay, upon importation, only 6s:4d. The hundred weight, white sugars pay£1:1:1; and refined, either double or single, in loaves, £4:2:5 8/20ths. When those high duties were imposed, Great Britain was the sole, and shestill continues to be, the principal market, to which the sugars ofthe British colonies could be exported. They amounted, therefore, toa prohibition, at first of claying or refining sugar for any foreignmarket, and at present of claying or refining it for the market whichtakes off, perhaps, more than nine-tenths of the whole produce. Themanufacture of claying or refining sugar, accordingly, though ithas flourished in all the sugar colonies of France, has been littlecultivated in any of those of England, except for the market of thecolonies themselves. While Grenada was in the hands of the French, there was a refinery of sugar, by claying, at least upon almost everyplantation. Since it fell into those of the English, almost all works ofthis kind have been given up; and there are at present (October 1773), Iam assured, not above two or three remaining in the island. At present, however, by an indulgence of the custom-house, clayed or refined sugar, if reduced from loaves into powder, is commonly imported as Muscovado. 

While Great Britain encourages in America the manufacturing of pig andbar iron, by exempting them from duties to which the like commoditiesare subject when imported from any other country, she imposes anabsolute prohibition upon the erection of steel furnaces and slit-millsin any of her American plantations. She will not suffer her colonies towork in those more refined manufactures, even for their own consumption;but insists upon their purchasing of her merchants and manufacturers allgoods of this kind which they have occasion for. 

She prohibits the exportation from one province to another by water, and even the carriage by land upon horseback, or in a cart, of hats, ofwools, and woollen goods, of the produce of America; a regulationwhich effectually prevents the establishment of any manufacture of suchcommodities for distant sale, and confines the industry of her colonistsin this way to such coarse and household manufactures as a privatefamily commonly makes for its own use, or for that of some of itsneighbours in the same province. 

To prohibit a great people, however, from making all that they canof every part of their own produce, or from employing their stock andindustry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind. Unjust, however, as such prohibitions may be, they have not hitherto been veryhurtful to the colonies. Land is still so cheap, and, consequently, labour so dear among them, that they can import from the mother countryalmost all the more refined or more advanced manufactures cheaper thanthey could make them for themselves. Though they had not, therefore, been prohibited from establishing such manufactures, yet, in theirpresent state of improvement, a regard to their own interest wouldprobably have prevented them from doing so. In their present stateof improvement, those prohibitions, perhaps, without cramping theirindustry, or restraining it from any employment to which it would havegone of its own accord, are only impertinent badges of slavery imposedupon them, without any sufficient reason, by the groundless jealousyof the merchants 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 of the mostimportant productions of the colonies, so, in compensation, she gives tosome of them an advantage in that market, sometimes by imposing higherduties upon the like productions when imported from other countries, andsometimes by giving bounties upon their importation from the colonies. In the first way, she gives an advantage in the home market to thesugar, tobacco, and iron of her own colonies; and, in the second, totheir raw silk, to their hemp and flax, to their indigo, to their navalstores, and to their building timber. This second way of encouraging thecolony produce, by bounties upon importation, is, so far as I have beenable to learn, peculiar to Great Britain: the first is not. Portugaldoes not content herself with imposing higher duties upon theimportation of tobacco from any other country, but prohibits it underthe severest penalties. 

With regard to the importation of goods from Europe, England haslikewise dealt more liberally with her colonies than any other nation. 

Great Britain allows a part, almost always the half, generally a largerportion, and sometimes the whole, of the duty which is paid upon theimportation of foreign goods, to be drawn back upon their exportationto any foreign country. No independent foreign country, it was easy toforesee, would receive them, if they came to it loaded with theheavy duties to which almost all foreign goods are subjected on theirimportation into Great Britain. Unless, therefore, some part of thoseduties was drawn back upon exportation, there was an end of the carryingtrade; a trade so much favoured by the mercantile system. 

Our colonies, however, are by no means independent foreign countries;and Great Britain having assumed to herself the exclusive right ofsupplying them with all goods from Europe, might have forced them (inthe same manner as other countries have done their colonies) to receivesuch goods loaded with all the same duties which they paid in the mothercountry. But, on the contrary, till 1763, the same drawbacks werepaid upon the exportation of the greater part of foreign goods to ourcolonies, as to any independent foreign country. In 1763, indeed, by the4th of Geo. III. C. 15, this indulgence was a good deal abated, and itwas enacted, "That no part of the duty called the old subsidy should bedrawn back for any goods of the growth, production, or manufacture ofEurope or the East Indies, which should be exported from this kingdom toany British colony or plantation in America; wines, white calicoes, andmuslins, excepted. " Before this law, many different sorts of foreigngoods might have been bought cheaper in the plantations than in themother country, and some may still. 

Of the greater part of the regulations concerning the colony trade, themerchants who carry it on, it must be observed, have been the principaladvisers. We must not wonder, therefore, if, in a great part of them, their interest has been more considered than either that of the coloniesor that of the mother country. In their exclusive privilege of supplyingthe colonies with all the goods which they wanted from Europe, andof purchasing all such parts of their surplus produce as could notinterfere with any of the trades which they themselves carried on athome, the interest of the colonies was sacrificed to the interest ofthose merchants. In allowing the same drawbacks upon the re-exportationof the greater part of European and East India goods to the colonies, as upon 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 goods which theysent to the colonies, and, consequently, to get back as much as possibleof the duties which they advanced upon their importation into GreatBritain. They might thereby be enabled to sell in the colonies, eitherthe same quantity of goods with a greater profit, or a greater quantitywith the same profit, and, consequently, to gain something either in theone way or the other. It was likewise for the interest of the coloniesto get all such goods as cheap, and in as great abundance as possible. But this might not always be for the interest of the mother country. She might frequently suffer, both in her revenue, by giving back a greatpart of the duties which had been paid upon the importation of suchgoods; and in her manufactures, by being undersold in the colony market, in consequence of the easy terms upon which foreign manufactures couldbe carried thither by means of those drawbacks. The progress of thelinen manufacture of Great Britain, it is commonly said, has been a gooddeal retarded by the drawbacks upon the re-exportation of German linento the American colonies. 

But though the policy of Great Britain, with regard to the trade of hercolonies, has been dictated by the same mercantile spirit as that ofother nations, it has, however, upon the whole, been less illiberal andoppressive than that of any of them. 

In every thing except their foreign trade, the liberty of the Englishcolonists to manage their own affairs their own way, is complete. It isin every respect equal to that of their fellow-citizens at home, and issecured in the same manner, by an assembly of the representatives of thepeople, who claim the sole right of imposing taxes for the supportof the colony government. The authority of this assembly overawesthe executive power; and neither the meanest nor the most obnoxiouscolonist, as long as he obeys the law, has any thing to fear from theresentment, either of the governor, or of any other civil or militaryofficer in the province. The colony assemblies, though, like the houseof commons in England, they are not always a very equal representationof the people, yet they approach more nearly to that character; and asthe executive power either has not the means to corrupt them, or, onaccount of the support which it receives from the mother country, isnot under the necessity of doing so, they are, perhaps, in general moreinfluenced by the inclinations of their constituents. The councils, which, in the colony legislatures, correspond to the house of lords inGreat Britain, are not composed of a hereditary nobility. In some of thecolonies, as in three of the governments of New England, those councilsare not appointed by the king, but chosen by the representatives ofthe people. In none of the English colonies is there any hereditarynobility. In all of them, indeed, as in all other free countries, thedescendant of an old colony family is more respected than an upstart ofequal merit and fortune; but he is only more respected, and he has noprivileges by which he can be troublesome to his neighbours. Before thecommencement of the present disturbances, the colony assemblies had notonly the legislative, but a part of the executive power. In Connecticutand Rhode Island, they elected the governor. In the other colonies, theyappointed the revenue officers, who collected the taxes imposed bythose respective assemblies, to whom those officers were immediatelyresponsible. There is more equality, therefore, among the Englishcolonists than among the inhabitants of the mother country. Theirmanners are more re publican; and their governments, those of threeof the provinces of New England in particular, have hitherto been morerepublican too. 

The absolute governments of Spain, Portugal, and France, on thecontrary, take place in their colonies; and the discretionary powerswhich such governments commonly delegate to all their inferior officersare, on account of the great distance, naturally exercised there withmore than ordinary violence. Under all absolute governments, there ismore liberty in the capital than in any other part of the country. The sovereign himself can never have either interest or inclinationto pervert the order of justice, or to oppress the great body of thepeople. In the capital, his presence overawes, more or less, all hisinferior officers, who, in the remoter provinces, from whence thecomplaints of the people are less likely to reach him, can exercisetheir tyranny with much more safety. But the European colonies inAmerica are more remote than the most distant provinces of the greatestempires which had ever been known before. The government of the Englishcolonies is, perhaps, the only one which, since the world began, couldgive perfect security to the inhabitants of so very distant a province. The administration of the French colonies, however, has always beenconducted with much more gentleness and moderation than that of theSpanish and Portuguese. This superiority of conduct is suitable both tothe character of the French nation, and to what forms the character ofevery nation, the nature of their government, which, though arbitraryand violent in comparison with that of Great Britain, is legal and freein comparison with those of Spain and Portugal. 

It is in the progress of the North American colonies, however, that thesuperiority of the English policy chiefly appears. The progress of thesugar colonies of France has been at least equal, perhaps superior, tothat of the greater part of those of England; and yet the sugar coloniesof England enjoy a free government, nearly of the same kind with thatwhich takes place in her colonies of North America. But the sugarcolonies of France are not discouraged, like those of England, fromrefining their own sugar; and what is still of greater importance, thegenius of their government naturally introduces a better management oftheir negro slaves. 

In all European colonies, the culture of the sugar-cane is carried onby negro slaves. The constitution of those who have been born in thetemperate climate of Europe could not, it is supposed, support thelabour of digging the ground under the burning sun of the West Indies;and the culture of the sugar-cane, as it is managed at present, is allhand labour; though, in the opinion of many, the drill plough might beintroduced into it with great advantage. But, as the profit and successof the cultivation which is carried on by means of cattle, depend verymuch upon the good management of those cattle; so the profit and successof that which is carried on by slaves must depend equally upon the goodmanagement of those slaves; and in the good management of their slavesthe French planters, I think it is generally allowed, are superior tothe English. The law, so far as it gives some weak protection tothe slave 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 ever countrywhere the unfortunate law of slavery is established, the magistrate, when he protects the slave, intermeddles in some measure in themanagement of the private property of the master; and, in a freecountry, where the master is, perhaps, either a member of the colonyassembly, or an elector of such a member, he dares not do this but withthe greatest caution and circumspection. The respect which he is obligedto pay to the master, renders it more difficult for him to protectthe slave. But in a country where the government is in a great measurearbitrary, where it is usual for the magistrate to intermeddle even inthe management of the private property of individuals, and to send them, perhaps, a lettre de cachet, if they do not manage it according to hisliking, it is much easier for him to give some protection to the slave;and common humanity naturally disposes him to do so. The protection ofthe magistrate renders the slave less contemptible in the eyes of hismaster, who is thereby induced to consider him with more regard, and totreat him with more gentleness. Gentle usage renders the slave notonly more faithful, but more intelligent, and, therefore, upon a doubleaccount, more useful. He approaches more to the condition of a freeservant, and may possess some degree of integrity and attachment to hismaster's interest; virtues which frequently belong to free servants, butwhich never can belong to a slave, who is treated as slaves commonly arein countries where the master is perfectly free and secure. 

That the condition of a slave is better under an arbitrary than under afree government, is, I believe, supported by the history of all ages andnations. In the Roman history, the first time we read of the magistrateinterposing to protect the slave from the violence of his master, isunder the emperors. When Vidius Pollio, in the presence of Augustus, ordered one of his slaves, who had committed a slight fault, to be cutinto pieces and thrown into his fish-pond, in order to feed his fishes, the emperor commanded him, with indignation, to emancipate immediately, not only that slave, but all the others that belonged to him. Under therepublic no magistrate could have had authority enough to protect theslave, much less to punish the master. 

The stock, it is to be observed, which has improved the sugar coloniesof France, particularly the great colony of St Domingo, has been raisedalmost entirely from the gradual improvement and cultivation of thosecolonies. It has been almost altogether the produce of the soil and ofthe industry of the colonists, or, what comes to the same thing, theprice of that produce, gradually accumulated by good management, andemployed in raising a still greater produce. But the stock which hasimproved and cultivated the sugar colonies of England, has, a great partof it, been sent out from England, and has by no means been altogetherthe produce of the soil and industry of the colonists. The prosperityof the English sugar colonies has been in a great measure owing to thegreat riches of England, of which a part has overflowed, if one may sayso, upon these colonies. But the prosperity of the sugar colonies ofFrance has been entirely owing to the good conduct of the colonists, which must therefore have had some superiority over that of the English;and this superiority has been remarked in nothing so much as in the goodmanagement of their slaves. 

Such have been the general outlines of the policy of the differentEuropean 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 of America. 

Folly and injustice seem to have been the principles which presided overand directed the first project of establishing those colonies; the follyof hunting after gold and silver mines, and the injustice of covetingthe possession of a country whose harmless natives, far from having everinjured the people of Europe, had received the first adventurers withevery mark of kindness and hospitality. 

The adventurers, indeed, who formed some of the latter establishments, joined to the chimerical project of finding gold and silver mines, othermotives more reasonable and more laudable; but even these motives dovery little honour to the policy of Europe. 

The English puritans, restrained at home, fled for freedom to America, and established there the four governments of New England. The Englishcatholics, treated with much greater injustice, established that ofMaryland; the quakers, that of Pennsylvania. The Portuguese Jews, persecuted by the inquisition, stript of their fortunes, and banishedto Brazil, introduced, by their example, some sort of order and industryamong the transported felons and strumpets by whom that colony wasoriginally peopled, and taught them the culture of the sugar-cane. Uponall these different occasions, it was not the wisdom and policy, but thedisorder and injustice of the European governments, which peopled andcultivated America. 

In effectuation some of the most important of these establishments, thedifferent governments of Europe had as little merit as in projectingthem. The conquest of Mexico was the project, not of the council ofSpain, but of a governor of Cuba; and it was effectuated by the spiritof the bold adventurer to whom it was entrusted, in spite of every thingwhich that governor, who soon repented of having trusted such a person, could do to thwart it. The conquerors of Chili and Peru, and of almostall the other Spanish settlements upon the continent of America, carriedout with them no other public encouragement, but a general permission tomake settlements and conquests in the name of the king of Spain. Thoseadventures were all at the private risk and expense of the adventurers. The government of Spain contributed scarce any thing to any ofthem. That of England contributed as little towards effectuating theestablishment of some of its most important colonies in North America. 

When those establishments were effectuated, and had become soconsiderable as to attract the attention of the mother country, thefirst regulations which she made with regard to them, had always in viewto secure to herself the monopoly of their commerce; to confine theirmarket, and to enlarge her own at their expense, and, consequently, rather to damp and discourage, than to quicken and forward the course oftheir prosperity. In the different ways in which this monopoly has beenexercised, consists one of the most essential differences in the policyof the different European nations with regard to their colonies. Thebest of them all, that of England, is only somewhat less illiberal andoppressive than that of any of the rest. 

In what way, therefore, has the policy of Europe contributed either tothe first establishment, or to the present grandeur of the coloniesof America? In one way, and in one way only, it has contributed a gooddeal. Magna virum mater! It bred and formed the men who were capable ofachieving such great actions, and of laying the foundation of so greatan empire; and there is no other quarter of the world; of which thepolicy is capable of forming, or has ever actually, and in fact, formedsuch men. The colonies owe to the policy of Europe the education andgreat views of their active and enterprizing founders; and some of thegreatest and most important of them, so far as concerns their internalgovernment, owe to it scarce anything else. 

PART III. Of the Advantages which Europe has derived From the Discoveryof America, and from that of a Passage to the East Indies by the Cape ofGood Hope. 

Such are the advantages which the colonies of America have derived fromthe policy of Europe. 

What are those which Europe has derived from the discovery andcolonization of America?

Those advantages may be divided, first, into the general advantageswhich Europe, considered as one great country, has derived from thosegreat events; and, secondly, into the particular advantages which eachcolonizing country has derived from the colonies which particularlybelong to it, in consequence of the authority or dominion which itexercises over them. 

The general advantages which Europe, considered as one great country, has derived from the discovery and colonization of America, consist, first, in the increase of its enjoyments; and, secondly, in theaugmentation of its industry. 

The surplus produce of America imported into Europe, furnishes theinhabitants of this great continent with a variety of commodities whichthey could not otherwise have possessed; some for conveniency and use, some for pleasure, and some for ornament; and thereby contributes toincrease their enjoyments. 

The discovery and colonization of America, it will readily be allowed, have contributed to augment the industry, first, of all the countrieswhich trade to it directly, such as Spain, Portugal, France, andEngland; and, secondly, of all those which, without trading to itdirectly, send, through the medium of other countries, goods to it oftheir own produce, such as Austrian Flanders, and some provinces ofGermany, which, through the medium of the countries before mentioned, send to it a considerable quantity of linen and other goods. All suchcountries have evidently gained a more extensive market for theirsurplus produce, and must consequently have been encouraged to increaseits quantity. 

But that those great events should likewise have contributed toencourage the industry of countries such as Hungary and Poland, whichmay never, perhaps, have sent a single commodity of their own produce toAmerica, is not, perhaps, altogether so evident. That those events havedone so, however, cannot be doubted. Some part of the produce of Americais consumed in Hungary and Poland, and there is some demand there forthe sugar, chocolate, and tobacco, of that new quarter of the world. Butthose commodities must be purchased with something which is either theproduce of the industry of Hungary and Poland, or with something whichhad been purchased with some part of that produce. Those commoditiesof America are new values, new equivalents, introduced into Hungaryand Poland, to be exchanged there for the surplus produce of thesecountries. By being carried thither, they create a new and moreextensive market for that surplus produce. They raise its value, andthereby contribute to encourage its increase. Though no part of it mayever be carried to America, it may be carried to other countries, which purchase it with a part of their share of the surplus produce ofAmerica, and it may find a market by means of the circulation of thattrade which was originally put into motion by the surplus produce ofAmerica. 

Those great events may even have contributed to increase the enjoyments, and to augment the industry, of countries which not only never sentany commodities to America, but never received any from it. Even suchcountries may have received a greater abundance of other commoditiesfrom countries, of which the surplus produce had been augmented by meansof the American trade. This greater abundance, as it must necessarilyhave increased their enjoyments, so it must likewise have augmentedtheir industry. A greater number of new equivalents, of some kind orother, must have been presented to them to be exchanged for the surplusproduce of that industry. A more extensive market must have beencreated for that surplus produce, so as to raise its value, and therebyencourage its increase. The mass of commodities annually thrown intothe great circle of European commerce, and by its various revolutionsannually distributed among all the different nations comprehended withinit, must have 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 atleast to keep down below what they would otherwise rise to, both theenjoyments and industry of all those nations in general, and of theAmerican colonies in particular. It is a dead weight upon the actionof one of the great springs which puts into motion a great part of thebusiness of mankind. By rendering the colony produce dearer in all othercountries, it lessens its consumption, and thereby cramps the industryof the colonies, and both the enjoyments and the industry of all othercountries, which both enjoy less when they pay more for what they enjoy, and produce less when they get less for what they produce. By renderingthe produce of all other countries dearer in the colonies, it crampsin the same manner the industry of all other colonies, and both theenjoyments and the industry of the colonies. It is a clog which, for thesupposed benefit of some particular countries, embarrasses the pleasuresand encumbers the industry of all other countries, but of the coloniesmore than of any other. It not only excludes as much as possible allother countries from one particular market, but it confines as much aspossible the colonies to one particular market; and the difference isvery great between being excluded from one particular market when allothers are open, and being confined to one particular market when allothers are shut up. The surplus produce of the colonies, however, is theoriginal source of all that increase of enjoyments and industry whichEurope derives from the discovery and colonization of America, and theexclusive trade of the mother countries tends to render this source muchless abundant than it otherwise would be. 

The particular advantages which each colonizing country derives from thecolonies which particularly belong to it, are of two different kinds;first, those common advantages which every empire derives from theprovinces subject to its dominion; and, secondly, those peculiaradvantages which are supposed to result from provinces of so verypeculiar a nature as the European colonies of America. 

The common advantages which every empire derives from the provincessubject to its dominion consist, first, in the military force whichthey furnish for its defence; and, secondly, in the revenue which theyfurnish for the support of its civil government. The Roman coloniesfurnished occasionally both the one and the other. The Greek coloniessometimes furnished a military force, but seldom any revenue. Theyseldom acknowledged themselves subject to the dominion of the mothercity. They were generally her allies in war, but very seldom hersubjects in peace. 

The European colonies of America have never yet furnished any militaryforce for the defence of the mother country. The military force hasnever yet been sufficient for their own defence; and in the differentwars in which the mother countries have been engaged, the defence oftheir colonies has generally occasioned a very considerable distractionof the military force of those countries. In this respect, therefore, all the European colonies have, without exception, been a cause ratherof weakness than of strength to their respective mother countries. 

The colonies of Spain and Portugal only have contributed any revenuetowards the defence of the mother country, or the support of hercivil government. The taxes which have been levied upon those of otherEuropean nations, upon those of England in particular, have seldom beenequal to the expense laid out upon them in time of peace, and neversufficient to defray that which they occasioned in time of war. Suchcolonies, therefore, have been a source of expense, and not of revenue, to their respective mother countries. 

The advantages of such colonies to their respective mother countries, consist altogether in those peculiar advantages which are supposedto result from provinces of so very peculiar a nature as the Europeancolonies of America; and the exclusive trade, it is acknowledged, is thesole source of all those peculiar advantages. 

In consequence of this exclusive trade, all that part of the surplusproduce of the English colonies, for example, which consists in whatare called enumerated commodities, can be sent to no other countrybut England. Other countries must afterwards buy it of her. It must becheaper, therefore, in England than it can be in any other country, andmust contribute more to increase the enjoyments of England than thoseof any other country. It must likewise contribute more to encourage herindustry. For all those parts of her own surplus produce which Englandexchanges for those enumerated commodities, she must get a better pricethan any other countries can get for the like parts of theirs, when theyexchange them for the same commodities. The manufactures of England, forexample, will purchase a greater quantity of the sugar and tobaccoof her own colonies than the like manufactures of other countriescan purchase of that sugar and tobacco. So far, therefore, as themanufactures of England and those of other countries are both to beexchanged for the sugar and tobacco of the English colonies, thissuperiority of price gives an encouragement to the former beyond whatthe latter can, in these circumstances, enjoy. The exclusive trade ofthe colonies, therefore, as it diminishes, or at least keeps down belowwhat they would otherwise rise to, both the enjoyments and the industryof the countries which do not possess it, so it gives an evidentadvantage to the countries which do possess it over those othercountries. 

This advantage, however, will, perhaps, be found to be rather whatmay be called a relative than an absolute advantage, and to give asuperiority to the country which enjoys it, rather by depressing theindustry and produce of other countries, than by raising those of thatparticular country above what they would naturally rise to in the caseof a free trade. 

The tobacco of Maryland and Virginia, for example, by means of themonopoly which England enjoys of it, certainly comes cheaper to Englandthan it can do to France to whom England commonly sells a considerablepart of it. But had France and all other European countries been atall times allowed a free trade to Maryland and Virginia, the tobaccoof those colonies might by this time have come cheaper than it actuallydoes, not only to all those other countries, but likewise to England. The produce of tobacco, in consequence of a market so much moreextensive than any which it has hitherto enjoyed, might, and probablywould, by this time have been so much increased as to reduce the profitsof a tobacco plantation to their natural level with those of a cornplantation, which it is supposed they are still somewhat above. Theprice of tobacco might, and probably would, by this time have fallensomewhat lower than it is at present. An equal quantity of thecommodities, either of England or of those other countries, might havepurchased in Maryland and Virginia a greater quantity of tobacco than itcan do at present, and consequently have been sold there for so much abetter price. So far as that weed, therefore, can, by its cheapness andabundance, increase the enjoyments, or augment the industry, either ofEngland or of any other country, it would probably, in the case ofa free trade, have produced both these effects in somewhat a greaterdegree than it can do at present. England, indeed, would not, in thiscase, have had any advantage over other countries. She might have boughtthe tobacco of her colonies somewhat cheaper, and consequently have soldsome of her own commodities somewhat dearer, than she actually does;but she could neither have bought the one cheaper, nor sold the otherdearer, than any other country might have done. She might, perhaps, have gained an absolute, but she would certainly have lost a relativeadvantage. 

In order, however, to obtain this relative advantage in the colonytrade, in order to execute the invidious and malignant project ofexcluding, as much as possible, other nations from any share in it, England, there are very probable reasons for believing, has not onlysacrificed a part of the absolute advantage which she, as well as everyother nation, might have derived from that trade, but has subjectedherself both to an absolute and to a relative disadvantage in almostevery other branch of trade. 

When, by the act of navigation, England assumed to herself the monopolyof the colony trade, the foreign capitals which had before been employedin it, were necessarily withdrawn from it. The English capital, whichhad before carried on but a part of it, was now to carry on the whole. The capital which had before supplied the colonies with but a part ofthe goods which they wanted from Europe, was now all that was employedto supply them with the whole. But it could not supply them with thewhole; and the goods with which it did supply them were necessarily soldvery dear. The capital which had before bought but a part of the surplusproduce of the colonies, was now all that was employed to buy the whole. But it could not buy the whole at any thing near the old price; andtherefore, whatever it did buy, it necessarily bought very cheap. Butin an employment of capital, in which the merchant sold very dear, andbought very cheap, the profit must have been very great, and muchabove the ordinary level of profit in other branches of trade. Thissuperiority of profit in the colony trade could not fail to draw fromother branches of trade a part of the capital which had before beenemployed in them. But this revulsion of capital, as it must havegradually increased the competition of capitals in the colony trade, soit must have gradually diminished that competition in all those otherbranches of trade; as it must have gradually lowered the profits ofthe one, so it must have gradually raised those of the other, till theprofits of all came to a new level, different from, and somewhat higher, than that at which they had been before. 

This double effect of drawing capital from all other trades, and ofraising the rate of profit somewhat higher than it otherwise would havebeen in all trades, was not only produced by this monopoly upon itsfirst establishment, but has continued to be produced by it ever since. 

First, This monopoly has been continually drawing capital from all othertrades, to be employed in that of the colonies. 

Though the wealth of Great Britain has increased very much since theestablishment of the act of navigation, it certainly has not increasedin the same proportion as that or the colonies. But the foreign tradeof every country naturally increases in proportion to its wealth, itssurplus produce in proportion to its whole produce; and Great Britainhaving engrossed to herself almost the whole of what may be called theforeign trade of the colonies, and her capital not having increased inthe same proportion as the extent of that trade, she could not carryit on without continually withdrawing from other branches of trade somepart of the capital which had before been employed in them, as well aswithholding from them a great deal more which would otherwise have goneto them. Since the establishment of the act of navigation, accordingly, the colony trade has been continually increasing, while many otherbranches of foreign trade, particularly of that to other parts ofEurope, have been continually decaying. Our manufactures for foreignsale, instead of being suited, as before the act of navigation, tothe neighbouring market of Europe, or to the more distant one of thecountries which lie round the Mediterranean sea, have the greaterpart of them, been accommodated to the still more distant one of thecolonies; to the market in which they have the monopoly, rather than tothat in which they have many competitors. The causes of decay in otherbranches of foreign trade, which, by Sir Matthew Decker and otherwriters, have been sought for in the excess and improper mode oftaxation, in the high price of labour, in the increase of luxury, etc. May all be found in the overgrowth of the colony trade. The mercantilecapital of Great Britain, though very great, yet not being infinite, and though greatly increased since the act of navigation, yet not beingincreased in the same proportion as the colony trade, that trade couldnot possibly be carried on without withdrawing some part of that capitalfrom other branches of trade, nor consequently without some decay ofthose other 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 corn trade, but before that trade wasvery considerable. In the Dutch war, during the government of Cromwell, her navy was superior to that of Holland; and in that which broke outin the beginning of the reign of Charles II. , it was at least equal, perhaps superior to the united navies of France and Holland. Itssuperiority, perhaps, would scarce appear greater in the present times, at least if the Dutch navy were to bear the same proportion to the Dutchcommerce now which it did then. But this great naval power could not, in either of those wars, be owing to the act of navigation. Duringthe first of them, the plan of that act had been but just formed; andthough, before the breaking out of the second, it had been fully enactedby legal authority, yet no part of it could have had time to produce anyconsiderable effect, and least of all that part which established theexclusive trade to the colonies. Both the colonies and their trade wereinconsiderable then, in comparison of what they are how. The islandof Jamaica was an unwholesome desert, little inhabited, and lesscultivated. 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 Nova Scotia, were not planted. Virginia, Maryland, and New England were planted; andthough they were very thriving colonies, yet there was not perhaps atthat time, either in Europe or America, a single person who foresaw, oreven suspected, the rapid progress which they have since made in wealth, population, and improvement. The island of Barbadoes, in short, was theonly British 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 verystrictly executed till several years after it was enacted), could not atthat time be the cause of the great trade of England, nor of the greatnaval power which was supported by that trade. The trade which at thattime supported that great naval power was the trade of Europe, and ofthe countries which lie round the Mediterranean sea. But the share whichGreat Britain at present enjoys of that trade could not support any suchgreat naval power. Had the growing trade of the colonies been left freeto all nations, whatever share of it might have fallen to Great Britain, and a very considerable share would probably have fallen to her, musthave been all an addition to this great trade of which she was before inpossession. In consequence of the monopoly, the increase of the colonytrade has not so much occasioned an addition to the trade which GreatBritain had before, as a total change in its direction. 

Secondly, This monopoly has necessarily contributed to keep up the rateof profit, in all the different branches of British trade, higher thanit naturally would have been, had all nations been allowed a free tradeto the British colonies. 

The monopoly of the colony trade, as it necessarily drew towards thattrade a greater proportion of the capital of Great Britain than whatwould have gone to it of its own accord, so, by the expulsion of allforeign capitals, it necessarily reduced the whole quantity of capitalemployed in that trade below what it naturally would have been in thecase of a free trade. But, by lessening the competition of capitals inthat branch of trade, it necessarily raised the rate of profit in thatbranch. By lessening, too, the competition of British capitals in allother branches of trade, it necessarily raised the rate of Britishprofit in all those other branches. Whatever may have been, at anyparticular period since the establishment of the act of navigation, thestate or extent of the mercantile capital of Great Britain, the monopolyof the colony trade must, during the continuance of that state, haveraised the ordinary rate of British profit higher than it otherwisewould have been, both in that and in all the other branches of Britishtrade. If, since the establishment of the act of navigation, theordinary rate of British profit has fallen considerably, as it certainlyhas, it must have fallen still lower, had not the monopoly establishedby that act contributed to keep it up. 

But whatever raises, in any country, the ordinary rate of profit higherthan it otherwise would be, necessarily subjects that country both toan absolute, and to a relative disadvantage in every branch of trade ofwhich she has not the monopoly. 

It subjects her to an absolute disadvantage; because, in such branchesof trade, her merchants cannot get this greater profit without sellingdearer than they otherwise would do, both the goods of foreign countrieswhich they import into their own, and the goods of their own countrywhich they export to foreign countries. Their own country must both buydearer and sell dearer; must both buy less, and sell less; must bothenjoy less and produce less, than she otherwise would do. 

It subjects her to a relative disadvantage; because, in such branchesof trade, it sets other countries, which are not subject to the sameabsolute disadvantage, either more above her or less below her, thanthey otherwise would be. It enables them both to enjoy more and toproduce more, in proportion to what she enjoys and produces. It renderstheir superiority greater, or their inferiority less, than it otherwisewould be. By raising the price of her produce above what it otherwisewould be, it enables the merchants of other countries to undersell herin foreign markets, and thereby to justle her out of almost all thosebranches of trade, of which she has not the monopoly. 

Our merchants frequently complain of the high wages of British labour, as the cause of their manufactures being undersold in foreign markets;but they are silent about the high profits of stock. They complain ofthe extravagant gain of other people; but they say nothing of theirown. The high profits of British stock, however, may contribute towardsraising the price of British manufactures, in many cases, as much, andin some perhaps more, than the high wages of British labour. 

It is in this manner that the capital of Great Britain, one may justlysay, has partly been drawn and partly been driven from the greater partof the different branches of trade of which she has not the monopoly;from the trade of Europe, in particular, and from that of the countrieswhich lie round the Mediterranean sea. 

It has partly been drawn from those branches of trade, by the attractionof superior profit in the colony trade, in consequence of the continualincrease of that trade, and of the continual insufficiency of thecapital which had carried it on one year to carry it on the next. 

It has partly been driven from them, by the advantage which the highrate of profit established in Great Britain gives to other countries, inall the different branches of trade of which Great Britain has not themonopoly. 

As the monopoly of the colony trade has drawn from those other branchesa part of the British capital, which would otherwise have been employedin them, so it has forced into them many foreign capitals which wouldnever have gone to them, had they not been expelled from the colonytrade. In those other branches of trade, it has diminished thecompetition of British capitals, and thereby raised the rate of Britishprofit higher than it otherwise would have been. On the contrary, it hasincreased the competition of foreign capitals, and thereby sunk the rateof foreign profit lower than it otherwise would have been. Both in theone way and in the other, it must evidently have subjected Great Britainto a relative disadvantage in all those other branches of trade. 

The colony trade, however, it may perhaps be said, is more advantageousto Great Britain than any other; and the monopoly, by forcing into thattrade a greater proportion of the capital of Great Britain than whatwould otherwise have gone to it, has turned that capital into anemployment, more advantageous to the country than any other which itcould have found. 

The most advantageous employment of any capital to the country to whichit belongs, is that which maintains there the greatest quantity ofproductive labour, and increases the most the annual produce of the landand labour of that country. But the quantity of productive labour whichany capital employed in the foreign trade of consumption can maintain, is exactly in proportion, it has been shown in the second book, to thefrequency of its returns. A capital of a thousand pounds, for example, employed in a foreign trade of consumption, of which the returns aremade regularly once in the year, can keep in constant employment, in thecountry to which it belongs, a quantity of productive labour, equal towhat a thousand pounds can maintain there for a year. If the returns aremade twice or thrice in the year, it can keep in constant employmenta quantity of productive labour, equal to what two or three thousandpounds can maintain there for a year. A foreign trade of consumptioncarried on with a neighbouring, is, upon that account, in general, moreadvantageous than one carried on with a distant country; and, for thesame reason, a direct foreign trade of consumption, as it has likewisebeen shown in the second book, is in general more advantageous than around-about one. 

But the monopoly of the colony trade, so far as it has operated upon theemployment of the capital of Great Britain, has, in all cases, forcedsome part of it from a foreign trade of consumption carried on with aneighbouring, to one carried on with a more distant country, and in manycases from a direct foreign trade of consumption to a round-about one. 

First, The monopoly of the colony trade has, in all cases, forced somepart of the capital of Great Britain from a foreign trade of consumptioncarried on with a neighbouring, to one carried on with a more distantcountry. 

It has, in all cases, forced some part of that capital from the tradewith Europe, and with the countries which lie round the Mediterraneansea, to that with the more distant regions of America and the WestIndies; from which the returns are necessarily less frequent, not onlyon account of the greater distance, but on account of the peculiarcircumstances of those countries. New colonies, it has already beenobserved, are always understocked. Their capital is always much lessthan what they could employ with great profit and advantage in theimprovement and cultivation of their land. They have a constant demand, therefore, for more capital than they have of their own; and, in orderto supply the deficiency of their own, they endeavour to borrow as muchas they can of the mother country, to whom they are, therefore, alwaysin debt. The most common way in which the colonies contract this debt, is not by borrowing upon bond of the rich people of the mother country, though they sometimes do this too, but by running as much in arrear totheir correspondents, who supply them with goods from Europe, as thosecorrespondents will allow them. Their annual returns frequently do notamount to more than a third, and sometimes not to so great aproportion of what they owe. The whole capital, therefore, which theircorrespondents advance to them, is seldom returned to Britain in lessthan three, and sometimes not in less than four or five years. But aBritish capital of a thousand pounds, for example, which is returned toGreat Britain only once in five years, can keep in constant employmentonly one-fifth part of the British industry which it could maintain, ifthe whole was returned once in the year; and, instead of the quantity ofindustry which a thousand pounds could maintain for a year, can keepin constant employment the quantity only which two hundred pounds canmaintain for a year. The planter, no doubt, by the high price which hepays for the goods from Europe, by the interest upon the bills which hegrants at distant dates, and by the commission upon the renewal of thosewhich he grants at near dates, makes up, and probably more than makesup, all the loss which his correspondent can sustain by this delay. But, though he make up the loss of his correspondent, he cannot make up thatof Great Britain. In a trade of which the returns are very distant, theprofit of the merchant may be as great or greater than in one in whichthey are very frequent and near; but the advantage of the countryin which he resides, the quantity of productive labour constantlymaintained there, the annual produce of the land and labour, must alwaysbe much less. That the returns of the trade to America, and stillmore those of that to the West Indies, are, in general, not only moredistant, but more irregular and more uncertain, too, than those of thetrade to any part of Europe, or even of the countries which lie roundthe Mediterranean sea, will readily be allowed, I imagine, by everybodywho has any experience of those different branches of trade. 

Secondly, The monopoly of the colony trade, has, in many cases, forcedsome part of the capital of Great Britain from a direct foreign trade ofconsumption, into a round-about one. 

Among the enumerated commodities which can be sent to no other marketbut Great Britain, there are several of which the quantity exceeds verymuch the consumption of Great Britain, and of which, a part, therefore, must be exported to other countries. But this cannot be done withoutforcing some part of the capital of Great Britain into a round-aboutforeign trade of consumption. Maryland, and Virginia, for example, sendannually to Great Britain upwards of ninety-six thousand hogsheads oftobacco, and the consumption of Great Britain is said not to exceedfourteen thousand. Upwards of eighty-two thousand hogsheads, therefore, must be exported to other countries, to France, to Holland, and, to thecountries which lie round the Baltic and Mediterranean seas. But thatpart of the capital of Great Britain which brings those eighty-twothousand hogsheads to Great Britain, which re-exports them from thenceto those other countries, and which brings back from those othercountries to Great Britain either goods or money in return, is employedin a round-about foreign trade of consumption; and is necessarily forcedinto this employment, in order to dispose of this great surplus. If wewould compute in how many years the whole of this capital is likely tocome back to Great Britain, we must add to the distance of the Americanreturns that of the returns from those other countries. If, in thedirect foreign trade of consumption which we carry on with America, thewhole capital employed frequently does not come back in less than threeor four years, the whole capital employed in this round-about one is notlikely to come back in less than four or five. If the one can keepin constant employment but a third or a fourth part of the domesticindustry which could be maintained by a capital returned once in theyear, the other can keep in constant employment but a fourth or a fifthpart of that industry. At some of the outports a credit is commonlygiven to those foreign correspondents to whom they export them tobacco. At the port of London, indeed, it is commonly sold for ready money:the rule is Weigh and pay. At the port of London, therefore, the finalreturns of the whole round-about trade are more distant than the returnsfrom America, by the time only which the goods may lie unsold in thewarehouse; where, however, they may sometimes lie long enough. But, hadnot the colonies been confined to the market of Great Britain for thesale of their tobacco, very little more of it would probably have cometo us than what was necessary for the home consumption. The goods whichGreat Britain purchases at present for her own consumption with thegreat surplus of tobacco which she exports to other countries, shewould, in this case, probably have purchased with the immediate produceof her own industry, or with some part of her own manufactures. Thatproduce, those manufactures, instead of being almost entirely suited toone great market, as at present, would probably have been fitted toa great number of smaller markets. Instead of one great round-aboutforeign trade of consumption, Great Britain would probably have carriedon a great number of small direct foreign trades of the same kind. Onaccount of the frequency of the returns, a part, and probably but asmall part, perhaps not above a third or a fourth of the capital whichat present carries on this great round-about trade, might have beensufficient to carry on all those small direct ones; might have keptinconstant employment an equal quantity of British industry; and haveequally supported the annual produce of the land and labour of GreatBritain. All the purposes of this trade being, in this manner, answeredby a much smaller capital, there would have been a large spare capitalto apply to other purposes; to improve the lands, to increase themanufactures, and to extend the commerce of Great Britain; to come intocompetition at least with the other British capitals employed in allthose different ways, to reduce the rate of profit in them all, andthereby to give to Great Britain, in all of them, a superiority overother countries, still greater than what she at present enjoys. 

The monopoly of the colony trade, too, has forced some part of thecapital of Great Britain from all foreign trade of consumption to acarrying trade; and, consequently from supporting more or less theindustry of Great Britain, to be employed altogether in supportingpartly that of the colonies, and partly that of some other countries. 

The goods, for example, which are annually purchased with the greatsurplus of eighty-two thousand hogsheads of tobacco annually re-exportedfrom Great Britain, are not all consumed in Great Britain. Part of them, linen from Germany and Holland, for example, is returned to the coloniesfor their particular consumption. But that part of the capital of GreatBritain which buys the tobacco with which this linen is afterwardsbought, is necessarily 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 for thistobacco with the produce of their own industry. 

The monopoly of the colony trade, besides, by forcing towards it amuch greater proportion of the capital of Great Britain than what wouldnaturally have gone to it, seems to have broken altogether that naturalbalance which would otherwise have taken place among all the differentbranches of British industry. The industry of Great Britain, insteadof being accommodated to a great number of small markets, has beenprincipally suited to one great market. Her commerce, instead of runningin a great number of small channels, has been taught to run principallyin one great channel. But the whole system of her industry and commercehas thereby been rendered less secure; the whole state of her bodypolitic less healthful than it otherwise would have been. In her presentcondition, Great Britain resembles one of those unwholesome bodiesin which some of the vital parts are overgrown, and which, upon thataccount, are liable to many dangerous disorders, scarce incident tothose in which all the parts are more properly proportioned. A smallstop in that great blood-vessel, which has been artificially swelledbeyond its natural dimensions, and through which an unnatural proportionof the industry and commerce of the country has been forced tocirculate, is very likely to bring on the most dangerous disorders uponthe whole body politic. The expectation of a rupture with the colonies, accordingly, has struck the people of Great Britain with more terrorthan they ever felt for a Spanish armada, or a French invasion. It wasthis terror, whether well or ill grounded, which rendered the repeal ofthe stamp act, among the merchants at least, a popular measure. In thetotal exclusion from the colony market, was it to last only for a fewyears, the greater part of our merchants used to fancy that theyforesaw an entire stop to their trade; the greater part of our mastermanufacturers, the entire ruin of their business; and the greater partof our workmen, an end of their employment. A rupture with any of ourneighbours upon the continent, though likely, too, to occasion some stopor interruption in the employments of some of all these different ordersof people, is foreseen, however, without any such general emotion. Theblood, of which the circulation is stopt in some of the smaller vessels, easily disgorges itself into the greater, without occasioning anydangerous disorder; but, when it is stopt in any of the greater vessels, convulsions, apoplexy, or death, are the immediate and unavoidableconsequences. If but one of those overgrown manufactures, which, bymeans either of bounties or of the monopoly of the home and colonymarkets, have been artificially raised up to any unnatural height, finds some small stop or interruption in its employment, it frequentlyoccasions a mutiny and disorder alarming to government, and embarrassingeven to the deliberations of the legislature. How great, therefore, would be the disorder and confusion, it was thought, which mustnecessarily be occasioned by a sudden and entire stop in the employmentof so great a proportion of our principal manufacturers?

Some moderate and gradual relaxation of the laws which give to GreatBritain the exclusive trade to the colonies, till it is rendered in agreat measure free, seems to be the only expedient which can, in allfuture times, deliver her from this danger; which can enable her, oreven force her, to withdraw some part of her capital from this overgrownemployment, and to turn it, though with less profit, towards otheremployments; and which, by gradually diminishing one branch of herindustry, and gradually increasing all the rest, can, by degrees, restore all the different branches of it to that natural, healthful, andproper proportion, which perfect liberty necessarily establishes, andwhich perfect liberty can alone preserve. To open the colony tradeall at once to all nations, might not only occasion some transitoryinconveniency, but a great permanent loss, to the greater part of thosewhose industry or capital is at present engaged in it. The suddenloss of the employment, even of the ships which import the eighty-twothousand hogsheads of tobacco, which are over and above the consumptionof Great Britain, might alone be felt very sensibly. Such are theunfortunate effects of all the regulations of the mercantile system. They not only introduce very dangerous disorders into the state ofthe body politic, but disorders which it is often difficult to remedy, without occasioning, for a time at least, still greater disorders. Inwhat manner, therefore, the colony trade ought gradually to be opened;what are the restraints which ought first, and what are those whichought last, to be taken away; or in what manner the natural system ofperfect liberty and justice ought gradually to be restored, we mustleave to the wisdom of future statesmen and legislators to determine. 

Five different events, unforeseen and unthought of, have veryfortunately concurred to hinder Great Britain from feeling, so sensiblyas it was generally expected she would, the total exclusion which hasnow taken place for more than a year (from the first of December 1774)from a very important branch of the colony trade, that of the twelveassociated provinces of North America. First, those colonies, inpreparing themselves for their non-importation agreement, drained GreatBritain completely of all the commodities which were fit for theirmarket; secondly, the extra ordinary demand of the Spanish flota has, this year, drained Germany and the north of many commodities, linen inparticular, which used to come into competition, even in the Britishmarket, with the manufactures of Great Britain; thirdly, the peacebetween Russia and Turkey has occasioned an extraordinary demand fromthe Turkey market, which, during the distress of the country, and whilea Russian fleet was cruizing in the Archipelago, had been verypoorly supplied; fourthly, the demand of the north of Europe for themanufactures of Great Britain has been increasing from year to year, for some time past; and, fifthly, the late partition, and consequentialpacification of Poland, by opening the market of that great country, have, this year, added an extraordinary demand from thence to theincreasing demand of the north. These events are all, except the fourth, in their nature transitory and accidental; and the exclusion from soimportant a branch of the colony trade, if unfortunately it shouldcontinue much longer, may still occasion some degree of distress. Thisdistress, however, as it will come on gradually, will be felt much lessseverely than if it had come on all at once; and, in the mean time, the industry and capital of the country may find a new employmentand direction, so as to prevent this distress from ever rising to anyconsiderable height. 

The monopoly of the colony trade, therefore, so far as it has turnedtowards that trade a greater proportion of the capital of Great Britainthan what would otherwise have gone to it, has in all cases turned it, from a foreign trade of consumption with a neighbouring, into one witha more distant country; in many cases from a direct foreign trade ofconsumption into a round-about one; and, in some cases, from all foreigntrade of consumption into a carrying trade. It has, in all cases, therefore, turned it from a direction in which it would have maintaineda greater quantity of productive labour, into one in which it canmaintain a much smaller quantity. By suiting, besides, to one particularmarket only, so great a part of the industry and commerce of GreatBritain, it has rendered the whole state of that industry and commercemore precarious and less secure, than if their produce had beenaccommodated to a greater variety of markets. 

We must carefully distinguish between the effects of the colony tradeand those of the monopoly of that trade. The former are always andnecessarily beneficial; the latter always and necessarily hurtful. Butthe former are so beneficial, that the colony trade, though subject to amonopoly, and, notwithstanding the hurtful effects of that monopoly, isstill, upon the whole, beneficial, and greatly beneficial, though a gooddeal less so than it otherwise 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 produce ofBritish industry as may exceed the demand of the markets nearer home, ofthose of Europe, and of the countries which lie round the Mediterraneansea. In its natural and free state, the colony trade, without drawingfrom those markets any part of the produce which had ever been sent tothem, encourages Great Britain to increase the surplus continually, bycontinually presenting new equivalents to be exchanged for it. In itsnatural and free state, the colony trade tends to increase the quantityof productive labour in Great Britain, but without altering in anyrespect the direction of that which had been employed there before. Inthe natural and free state of the colony trade, the competition of allother nations would hinder the rate of profit from rising above thecommon level, either in the new market, or in the new employment. Thenew market, without drawing any thing from the old one, would create, ifone may say so, a new produce for its own supply; and that new producewould constitute a new capital for carrying on the new employment, which, in the same manner, would draw nothing from the old one. 

The monopoly of the colony trade, on the contrary, by excluding thecompetition of other nations, and thereby raising the rate of profit, both in the new market and in the new employment, draws produce from theold market, and capital from the old employment. To augment our shareof the colony trade beyond what it otherwise would be, is the avowedpurpose of the monopoly. If our share of that trade were to be nogreater with, than it would have been without the monopoly, there couldhave been no reason for establishing the monopoly. But whatever forcesinto a branch of trade, of which the returns are slower and more distantthan those of the greater part of other trades, a greater proportion ofthe capital of any country, than what of its own accord would go tothat branch, necessarily renders the whole quantity of productive labourannually maintained there, the whole annual produce of the land andlabour of that country, less than they otherwise would be. It keepsdown the revenue of the inhabitants of that country below what it wouldnaturally rise to, and thereby diminishes their power of accumulation. It not only hinders, at all times, their capital from maintaining sogreat a quantity of productive labour as it would otherwise maintain, but it hinders it from increasing so fast as it would otherwiseincrease, and, consequently, from maintaining a still greater quantityof productive labour. 

The natural good effects of the colony trade, however, more thancounterbalance to Great Britain the bad effects of the monopoly; sothat, monopoly and altogether, that trade, even as it is carried on atpresent, is not only advantageous, but greatly advantageous. The newmarket and the new employment which are opened by the colony trade, areof much greater extent than that portion of the old market and of theold employment which is lost by the monopoly. The new produce and thenew capital which has been created, if one may say so, by the colonytrade, maintain in Great Britain a greater quantity of productive labourthan what can have been thrown out of employment by the revulsion ofcapital from other trades of which the returns are more frequent. Ifthe colony trade, however, even as it is carried on at present, isadvantageous to Great Britain, it is not by means of the monopoly, butin spite of the monopoly. 

It is rather for the manufactured than for the rude produce of Europe, that the colony trade opens a new market. Agriculture is the properbusiness of all new colonies; a business which the cheapness of landrenders more advantageous than any other. They abound, therefore, in therude produce of land; and instead of importing it from other countries, they have generally a large surplus to export. In new colonies, agriculture either draws hands from all other employments, or keeps themfrom going to any other employment. There are few hands to spare for thenecessary, and none for the ornamental manufactures. The greater part ofthe manufactures of both kinds they find it cheaper to purchase of othercountries than to make for themselves. It is chiefly by encouraging themanufactures of Europe, that the colony trade indirectly encouragesits agriculture. The manufacturers of Europe, to whom that trade givesemployment, constitute a new market for the produce of the land, andthe most advantageous of all markets; the home market for the corn andcattle, for the bread and butcher's meat of Europe, is thus greatlyextended by means of the trade to America. 

But that the monopoly of the trade of populous and thriving colonies isnot alone sufficient to establish, or even to maintain, manufacturesin any country, the examples of Spain and Portugal sufficientlydemonstrate. Spain and Portugal were manufacturing countries beforethey had any considerable colonies. Since they had the richest and mostfertile in the world, they have both ceased to be so. 

In Spain and Portugal, the bad effects of the monopoly, aggravatedby other causes, have, perhaps, nearly overbalanced the natural goodeffects of the colony trade. These causes seem to be other monopolies ofdifferent kinds: the degradation of the value of gold and silver belowwhat it is in most other countries; the exclusion from foreign marketsby improper taxes upon exportation, and the narrowing of the homemarket, by still more improper taxes upon the transportation of goodsfrom one part of the country to another; but above all, that irregularand partial administration of justice which often protects the richand powerful debtor from the pursuit of his injured creditor, and whichmakes the industrious part of the nation afraid to prepare goods for theconsumption of those haughty and great men, to whom they dare not refuseto sell upon credit, and from whom they are altogether uncertain ofrepayment. 

In England, on the contrary, the natural good effects of the colonytrade, assisted by other causes, have in a great measure conqueredthe bad effects of the monopoly. These causes seem to be, the generalliberty of trade, which, notwithstanding some restraints, is at leastequal, perhaps superior, to what it is in any other country; the libertyof exporting, duty free, almost all sorts of goods which are the produceof domestic industry, to almost any foreign country; and what, perhaps, is of still greater importance, the unbounded liberty of transportingthem from one part of our own country to any other, without beingobliged to give any account to any public office, without being liableto question or examination of any kind; but, above all, that equal andimpartial administration of justice, which renders the rights of themeanest British subject respectable to the greatest, and which, bysecuring to every man the fruits of his own industry, gives the greatestand most effectual encouragement to every sort of industry. 

If the manufactures of Great Britain, however, have been advanced, asthey certainly have, by the colony trade, it has not been by means ofthe monopoly of that trade, but in spite of the monopoly. The effectof the monopoly has been, not to augment the quantity, but to alter thequality and shape of a part of the manufactures of Great Britain, andto accommodate to a market, from which the returns are slow and distant, what would otherwise have been accommodated to one from which thereturns are frequent and near. Its effect has consequently been, to turna part of the capital of Great Britain from an employment in which itwould have maintained a greater quantity of manufacturing industry, to one in which it maintains a much smaller, and thereby to diminish, instead of increasing, the whole quantity of manufacturing industrymaintained in Great Britain. 

The monopoly of the colony trade, therefore, like all the other mean andmalignant expedients of the mercantile system, depresses the industryof all other countries, but chiefly that of the colonies, without in theleast increasing, but on the contrary diminishing, that of the countryin whose favour it is established. 

The monopoly hinders the capital of that country, whatever may, at anyparticular time, be the extent of that capital, from maintaining sogreat a quantity of productive labour as it would otherwise maintain, and from affording so great a revenue to the industrious inhabitantsas it would otherwise afford. But as capital can be increased only bysavings from revenue, the monopoly, by hindering it from affording sogreat a revenue as it would otherwise afford, necessarily hinders itfrom increasing so fast as it would otherwise increase, and consequentlyfrom maintaining a still greater quantity of productive labour, andaffording a still greater revenue to the industrious inhabitants of thatcountry. One great original source of revenue, therefore, the wages oflabour, 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 discouragesthe improvement of land. The profit of improvement depends upon thedifference between what the land actually produces, and what, by theapplication of a certain capital, it can be made to produce. If thisdifference affords a greater profit than what can be drawn from an equalcapital in any mercantile employment, the improvement of land willdraw capital from all mercantile employments. If the profit is less, mercantile employments will draw capital from the improvement of land. Whatever, therefore, raises the rate of mercantile profit, eitherlessens the superiority, or increases the inferiority of the profitof improvement: and, in the one case, hinders capital from going toimprovement, and in the other draws capital from it; but by discouragingimprovement, the monopoly necessarily retards the natural increase ofanother great original source of revenue, the rent of land. By raisingthe rate of profit, too, the monopoly necessarily keeps up the marketrate of interest higher than it otherwise would be. But the price ofland, in proportion to the rent which it affords, the number of yearspurchase which is commonly paid for it, necessarily falls as the rate ofinterest rises, and rises as the rate of interest falls. The monopoly, therefore, hurts the interest of the landlord two different ways, byretarding the natural increase, first, of his rent, and, secondly, ofthe price which he would get for his land, in proportion to the rentwhich it affords. 

The monopoly, indeed, raises the rate of mercantile profit and therebyaugments somewhat the gain of our merchants. But as it obstructsthe natural increase of capital, it tends rather to diminish than toincrease the sum total of the revenue which the inhabitants of thecountry derive from the profits of stock; a small profit upon a greatcapital generally affording a greater revenue than a great profit upona small one. The monopoly raises the rate of profit, but it hinders thesum of profit from rising so high as it otherwise would do. 

All the original sources of revenue, the wages of labour, the rent ofland, and the profits of stock, the monopoly renders much less abundantthan they otherwise would be. To promote the little interest of onelittle order of men in one country, it hurts the interest of allother orders of men in that country, and of all the men in all othercountries. 

It is solely by raising the ordinary rate of profit, that the monopolyeither has proved, or could prove, advantageous to any one particularorder of men. But besides all the bad effects to the country in general, which have already been mentioned as necessarily resulting from a higherrate of profit, there is one more fatal, perhaps, than all these puttogether, but which, if we may judge from experience, is inseparablyconnected with it. The high rate of profit seems everywhere to destroythat parsimony which, in other circumstances, is natural to thecharacter of the merchant. When profits are high, that sober virtueseems to be superfluous, and expensive luxury to suit better theaffluence of his situation. But the owners of the great mercantilecapitals are necessarily the leaders and conductors of the wholeindustry of every nation; and their example has a much greater influenceupon the manners of the whole industrious part of it than that of anyother order of men. If his employer is attentive and parsimonious, theworkman is very likely to be so too; but if the master is dissolute anddisorderly, the servant, who shapes his work according to the patternwhich his master prescribes to him, will shape his life, too, accordingto the example which he sets him. Accumulation is thus prevented in thehands of all those who are naturally the most disposed to accumulate;and the funds destined for the maintenance of productive labour, receiveno augmentation from the revenue of those who ought naturally to augmentthem the most. The capital of the country, instead of increasing, gradually dwindles away, and the quantity of productive labourmaintained in it grows every day less and less. Have the exorbitantprofits of the merchants of Cadiz and Lisbon augmented the capital ofSpain and Portugal? Have they alleviated the poverty, have they promotedthe industry, of those two beggarly countries? Such has been the toneof mercantile expense in those two trading cities, that those exorbitantprofits, far from augmenting the general capital of the country, seemscarce to have been sufficient to keep up the capitals upon which theywere made. Foreign capitals are every day intruding themselves, if I maysay so, more and more into the trade of Cadiz and Lisbon. It is to expelthose foreign capitals from a trade which their own grows every day moreand more insufficient for carrying on, that the Spaniards and Portugueseendeavour every day to straiten more and more the galling bands of theirabsurd monopoly. Compare the mercantile manners of Cadiz and Lisbon withthose of Amsterdam, and you will be sensible how differently the conductand character of merchants are affected by the high and by the lowprofits of stock. The merchants of London, indeed, have not yetgenerally become such magnificent lords as those of Cadiz and Lisbon;but neither are they in general such attetitive and parsimoniousburghers as those of Amsterdam. They are supposed, however, many ofthem, to be a good deal richer than the greater part of the former, andnot quire so rich as many of the latter: but the rate of their profit iscommonly much lower than that of the former, and a good deal higherthan that of the latter. Light come, light go, says the proverb; and theordinary tone of expense seems everywhere to be regulated, not so muchaccording to the real ability of spending, as to the supposed facilityof getting money to spend. 

It is thus that the single advantage which the monopoly procures to asingle order of men, is in many different ways hurtful to the generalinterest of the country. 

To found a great empire for the sole purpose of raising up a people ofcustomers, may at first sight, appear a project fit only for a nation ofshopkeepers. It is, however, a project altogether unfit for a nationof shopkeepers, but extremely fit for a nation whose government isinfluenced by shopkeepers. Such statesmen, and such statesmen only, arecapable of fancying that they will find some advantage in employing theblood and treasure of their fellow-citizens, to found and maintain suchan empire. Say to a shopkeeper, Buy me a good estate, and I shall alwaysbuy my clothes at your shop, even though I should pay somewhat dearerthan what I can have them for at other shops; and you will not find himvery forward to embrace your proposal. But should any other personbuy you such an estate, the shopkeeper will be much obliged to yourbenefactor if he would enjoin you to buy all your clothes at his shop. England purchased for some of her subjects, who found themselves uneasyat home, a great estate in a distant country. The price, indeed, wasvery small, and instead of thirty years purchase, the ordinary price ofland in the present times, it amounted to little more than theexpense of the different equipments which made the first discovery, reconnoitered the coast, and took a fictitious possession of thecountry. The land was good, and of great extent; and the cultivatorshaving plenty of good ground to work upon, and being for some time atliberty to sell their produce where they pleased, became, in the courseof little more than thirty or forty years (between 1620 and 1660), sonumerous and thriving a people, that the shopkeepers and other tradersof England wished to secure to themselves the monopoly of their custom. Without pretending, therefore, that they had paid any part, eitherof the original purchase money, or of the subsequent expense ofimprovement, they petitioned the parliament, that the cultivators ofAmerica might for the future be confined to their shop; first, forbuying all the goods which they wanted from Europe; and, secondly, forselling all such parts of their own produce as those traders might findit convenient to buy. For they did not find it convenient to buyevery part of it. Some parts of it imported into England, might haveinterfered with some of the trades which they themselves carried on athome. Those particular parts of it, therefore, they were willing thatthe colonists should sell where they could; the farther off the better;and upon that account proposed that their market should be confined tothe countries 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 the principal, ormore properly, perhaps, the sole end and purpose of the dominion whichGreat Britain assumes over her colonies. In the exclusive trade, it issupposed, consists the great advantage of provinces, which have neveryet afforded either revenue or military force for the support of thecivil government, or the defence of the mother country. The monopoly isthe principal badge of their dependency, and it is the sole fruit whichhas hitherto been gathered from that dependency. Whatever expense GreatBritain has hitherto laid out in maintaining this dependency, has reallybeen laid out in order to support this monopoly. The expense of theordinary peace establishment of the colonies amounted, before thecommencement of the present disturbances to the pay of twenty regimentsof foot; to the expense of the artillery, stores, and extraordinaryprovisions, with which it was necessary to supply them; and to theexpense of a very considerable naval force, which was constantly keptup, in order to guard from the smuggling vessels of other nations, theimmense coast of North America, and that of our West Indian islands. Thewhole expense of this peace establishment was a charge upon the revenueof Great Britain, and was, at the same time, the smallest part of whatthe dominion of the colonies has cost the mother country. If we wouldknow the amount of the whole, we must add to the annual expense of thispeace establishment, the interest of the sums which, in consequence oftheir considering her colonies as provinces subject to her dominion, Great Britain has, upon different occasions, laid out upon theirdefence. We must add to it, in particular, the whole expense of the latewar, and a great part of that of the war which preceded it. The latewar was altogether a colony quarrel; and the whole expense of it, inwhatever part of the world it might have been laid out, whether inGermany or the East Indies, ought justly to be stated to the accountof the colonies. It amounted to more than ninety millions sterling, including not only the new debt which was contracted, but the twoshillings in the pound additional land tax, and the sums which wereevery year borrowed from the sinking fund. The Spanish war which beganin 1739 was principally a colony quarrel. Its principal object was toprevent the search of the colony ships, which carried on a contrabandtrade with the Spanish Main. This whole expense is, in reality, a bountywhich has been given in order to support a monopoly. The pretendedpurpose of it was to encourage the manufactures, and to increase thecommerce of Great Britain. But its real effect has been to raise therate of mercantile profit, and to enable our merchants to turn into abranch of trade, of which the returns are more slow and distant thanthose of the greater part of other trades, a greater proportion of theircapital than they otherwise would have done; two events which, if abounty could have prevented, it might perhaps have been very well worthwhile to give such a bounty. 

Under the present system of management, therefore, Great Britain derivesnothing but loss from the dominion which she assumes over her colonies. 

To propose that Great Britain should voluntarily give up all authorityover her colonies, and leave them to elect their own magistrates, toenact their own laws, and to make peace and war, as they might thinkproper, would be to propose such a measure as never was, and never willbe, adopted by any nation in the world. No nation ever voluntarily gaveup the dominion of any province, how troublesome soever it might be togovern it, and how small soever the revenue which it afforded mightbe in proportion to the expense which it occasioned. Such sacrifices, though they might frequently be agreeable to the interest, are alwaysmortifying to the pride of every nation; and, what is perhaps of stillgreater consequence, they are always contrary to the private interest ofthe governing part of it, who would thereby be deprived of the disposalof many places of trust and profit, of many opportunities of acquiringwealth and distinction, which the possession of the most turbulent, and, to the great body of the people, the most unprofitable province, seldomfails to afford. The most visionary enthusiasts would scarce be capableof proposing such a measure, with any serious hopes at least of its everbeing adopted. If it was adopted, however, Great Britain would notonly be immediately freed from the whole annual expense of the peaceestablishment of the colonies, but might settle with them such a treatyof commerce as would effectually secure to her a free trade, moreadvantageous to the great body of the people, though less so to themerchants, than the monopoly which she at present enjoys. By thusparting good friends, the natural affection of the colonies to themother country, which, perhaps, our late dissensions have well nighextinguished, would quickly revive. It might dispose them not only torespect, for whole centuries together, that treaty of commerce whichthey had concluded with us at parting, but to favour us in war as wellas in trade, and instead of turbulent and factious subjects, to becomeour most faithful, affectionate, and generous allies; and the same sortof parental affection on the one side, and filial respect on the other, might revive between Great Britain and her colonies, which used tosubsist between those of ancient Greece and the mother city from whichthey descended. 

In order to render any province advantageous to the empire to which itbelongs, it ought to afford, in time of peace, a revenue to the public, sufficient not only for defraying the whole expense of its own peaceestablishment, but for contributing its proportion to the support ofthe general government of the empire. Every province necessarilycontributes, more or less, to increase the expense of that generalgovernment. If any particular province, therefore, does not contributeits share towards defraying this expense, an unequal burden must bethrown upon some other part of the empire. The extraordinary revenue, too, which every province affords to the public in time of war, ought, from parity of reason, to bear the same proportion to the extraordinaryrevenue of the whole empire, which its ordinary revenue does in time ofpeace. That neither the ordinary nor extraordinary revenue which GreatBritain derives from her colonies, bears this proportion to the wholerevenue of the British empire, will readily be allowed. The monopoly, it has been supposed, indeed, by increasing the private revenue of thepeople of Great Britain, and thereby enabling them to pay greater taxes, compensates the deficiency of the public revenue of the colonies. Butthis monopoly, I have endeavoured to show, though a very grievoustax upon the colonies, and though it may increase the revenue ofa particular order of men in Great Britain, diminishes, instead ofincreasing, that of the great body of the people, and consequentlydiminishes, instead of increasing, the ability of the great body of thepeople to pay taxes. The men, too, whose revenue the monopoly increases, constitute a particular order, which it is both absolutely impossible totax beyond the proportion of other orders, and extremely impolitic evento attempt to tax beyond that proportion, as I shall endeavour to showin the following book. No particular resource, therefore, can be drawnfrom this particular order. 

The colonies may be taxed either by their own assemblies, or by theparliament of Great Britain. 

That the colony assemblies can never be so managed as to levy upon theirconstituents a public revenue, sufficient, not only to maintain atall times their own civil and military establishment, but to pay theirproper proportion of the expense of the general government of theBritish empire, seems not very probable. It was a long time before eventhe parliament of England, though placed immediately under the eye ofthe sovereign, could be brought under such a system of management, orcould be rendered sufficiently liberal in their grants for supportingthe civil and military establishments even of their own country. It wasonly by distributing 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 the parliament ofEngland. But the distance of the colony assemblies from the eye of thesovereign, their number, their dispersed situation, and their variousconstitutions, would render it very difficult to manage them in the samemanner, even though the sovereign had the same means of doing it; andthose means are wanting. It would be absolutely impossible to distributeamong all the leading members of all the colony assemblies such a share, either of the offices, or of the disposal of the offices, arising fromthe general government of the British empire, as to dispose them togive up their popularity at home, and to tax their constituents for thesupport of that general government, of which almost the whole emolumentswere to be divided among people who were strangers to them. Theunavoidable ignorance of administration, besides, concerning therelative importance of the different members of those differentassemblies, the offences which must frequently be given, the blunderswhich must constantly be committed, in attempting to manage them inthis manner, seems to render such a system of management altogetherimpracticable with regard to them. 

The colony assemblies, besides, cannot be supposed the proper judges ofwhat is necessary for the defence and support of the whole empire. Thecare of that defence and support is not entrusted to them. It is nottheir business, and they have no regular means of information concerningit. The assembly of a province, like the vestry of a parish, may judgevery properly concerning the affairs of its own particular district, but can have no proper means of judging concerning those of the wholeempire. It cannot even judge properly concerning the proportion whichits own province bears to the whole empire, or concerning the relativedegree of its wealth and importance, compared with the other provinces;because those other provinces are not under the inspection andsuperintendency of the assembly of a particular province. What isnecessary for the defence and support of the whole empire, and in whatproportion each part ought to contribute, can be judged of only bythat assembly which inspects and super-intends the affairs of the wholeempire. 

It has been proposed, accordingly, that the colonies should be taxed byrequisition, the parliament of Great Britain determining the sum whicheach colony ought to pay, and the provincial assembly assessingand levying it in the way that suited best the circumstances ofthe province. What concerned the whole empire would in this way bedetermined by the assembly which inspects and superintends the affairsof the whole empire; and the provincial affairs of each colony mightstill be regulated by its own assembly. Though the colonies should, inthis case, have no representatives in the British parliament, yet, if wemay judge by experience, there is no probability that the parliamentaryrequisition would be unreasonable. The parliament of England has not, upon any occasion, shewn the smallest disposition to overburden thoseparts of the empire which are not represented in parliament. The islandsof Guernsey and Jersey, without any means of resisting the authorityof parliament, are more lightly taxed than any part of Great Britain. Parliament, in attempting to exercise its supposed right, whether wellor ill grounded, of taxing the colonies, has never hitherto demandedof them anything which even approached to a just proportion to whatwas paid by their fellow subjects at home. If the contribution of thecolonies, besides, was to rise or fall in proportion to the rise or fallof the land-tax, parliament could not tax them without taxing, at thesame time, its own constituents, and the colonies might, in this case, be considered as virtually represented in parliament. 

Examples are not wanting of empires in which all the different provincesare not taxed, if I may be allowed the expression, in one mass; but inwhich the sovereign regulates the sum which each province ought to pay, and in some provinces assesses and levies it as he thinks proper; whilein others he leaves it to be assessed and levied as the respectivestates of each province shall determine. In some provinces of France, the king not only imposes what taxes he thinks proper, but assessesand levies them in the way he thinks proper. From others he demands acertain sum, but leaves it to the states of each province to assess andlevy that sum as they think proper. According to the scheme of taxing byrequisition, the parliament of Great Britain would stand nearly in thesame situation towards the colony assemblies, as the king of France doestowards the states of those provinces which still enjoy the privilege ofhaving states of their own, the provinces of France which are supposedto be the best governed. 

But though, according to this scheme, the colonies could have no justreason to fear that their share of the public burdens should ever exceedthe proper proportion to that of their fellow-citizens at home, GreatBritain might have just reason to fear that it never would amount tothat proper proportion. The parliament of Great Britain has not, forsome time past, had the same established authority in the colonies, which the French king has in those provinces of France which still enjoythe privilege of having states of their own. The colony assemblies, if they were not very favourably disposed (and unless more skilfullymanaged than they ever have been hitherto, they are not very likely tobe so), might still find many pretences for evading or rejecting themost reasonable requisitions of parliament. A French war breaks out, we shall suppose; ten millions must immediately be raised, in order todefend the seat of the empire. This sum must be borrowed upon the creditof some parliamentary fund mortgaged for paying the interest. Part ofthis fund parliament proposes to raise by a tax to be levied in GreatBritain; and part of it by a requisition to all the different colonyassemblies of America and the West Indies. Would people readily advancetheir money upon the credit of a fund which partly depended upon thegood humour of all those assemblies, far distant from the seat of thewar, and sometimes, perhaps, thinking themselves not much concernedin the event of it? Upon such a fund, no more money would probablybe advanced than what the tax to be levied in Great Britain might besupposed to answer for. The whole burden of the debt contracted onaccount of the war would in this manner fall, as it always has donehitherto, upon Great Britain; upon a part of the empire, and not uponthe whole empire. Great Britain is, perhaps, since the world began, theonly state which, as it has extended its empire, has only increasedits expense, without once augmenting its resources. Other states havegenerally disburdened themselves, upon their subject and subordinateprovinces, of the most considerable part of the expense of defending theempire. Great Britain has hitherto suffered her subject and subordinateprovinces to disburden themselves upon her of almost this whole expense. In order to put Great Britain upon a footing of equality with herown colonies, which the law has hitherto supposed to be subject andsubordinate, it seems necessary, upon the scheme of taxing them byparliamentary requisition, that parliament should have some means ofrendering its requisitions immediately effectual, in case the colonyassemblies should attempt to evade or reject them; and what those meansare, it is not very easy to conceive, and it has not yet been explained. 

Should the parliament of Great Britain, at the same time, be ever fullyestablished in the right of taxing the colonies, even independent ofthe consent of their own assemblies, the importance of those assemblieswould, from that moment, be at an end, and with it, that of all theleading men of British America. Men desire to have some share in themanagement of public affairs, chiefly on account of the importance whichit gives them. Upon the power which the greater part of the leadingmen, the natural aristocracy of every country, have of preservingor defending their respective importance, depends the stability andduration of every system of free government. In the attacks which thoseleading men are continually making upon the importance of one another, and in the defence of their own, consists the whole play of domesticfaction and ambition. The leading men of America, like those of allother countries, desire to preserve their own importance. They feel, or imagine, that if their assemblies, which they are fond of callingparliaments, and of considering as equal in authority to the parliamentof Great Britain, should be so far degraded as to become the humbleministers and executive officers of that parliament, the greater part oftheir own importance would be at an end. They have rejected, therefore, the proposal of being taxed by parliamentary requisition, and, likeother ambitious and high-spirited men, have rather chosen to draw thesword in defence of their own importance. 

Towards the declension of the Roman republic, the allies of Rome, whohad borne the principal burden of defending the state and extending theempire, demanded to be admitted to all the privileges of Roman citizens. Upon being refused, the social war broke out. During the course of thatwar, Rome granted those privileges to the greater part of them, oneby one, and in proportion as they detached themselves from the generalconfederacy. The parliament of Great Britain insists upon taxing thecolonies; and they refuse to be taxed by a parliament in which they arenot represented. If to each colony which should detach itself fromthe general confederacy, Great Britain should allow such a number ofrepresentatives as suited the proportion of what it contributed to thepublic revenue of the empire, in consequence of its being subjectedto the same taxes, and in compensation admitted to the same freedomof trade with its fellow-subjects at home; the number of itsrepresentatives to be augmented as the proportion of its contributionmight afterwards augment; a new method of acquiring importance, a newand more dazzling object of ambition, would be presented to the leadingmen of each colony. Instead of piddling for the little prizes which areto be found in what may be called the paltry raffle of colony faction, they might then hope, from the presumption which men naturally have intheir own ability and good fortune, to draw some of the great prizeswhich sometimes come from the wheel of the great state lottery ofBritish politics. Unless this or some other method is fallen upon, and there seems to be none more obvious than this, of preserving theimportance and of gratifying the ambition of the leading men of America, it is not very probable that they will ever voluntarily submit to us;and we ought to consider, that the blood which must be shed in forcingthem to do so, is, every drop of it, the blood either of those who are, or of those whom we wish to have for our fellow citizens. They are veryweak who flatter themselves that, in the state to which things havecome, our colonies will be easily conquered by force alone. The personswho now govern the resolutions of what they call their continentalcongress, feel in themselves at this moment a degree of importancewhich, perhaps, the greatest subjects in Europe scarce feel. Fromshopkeepers, trades men, and attorneys, they are become statesmen andlegislators, and are employed in contriving a new form of government foran extensive empire, which, they flatter themselves, will become, andwhich, indeed, seems very likely to become, one of the greatest and mostformidable that ever was in the world. Five hundred different people, perhaps, who, in different ways, act immediately under the continentalcongress, and five hundred thousand, perhaps, who act under those fivehundred, 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 ever expectedto fill; and unless some new object of ambition is presented either tohim or to his leaders, if he has the ordinary spirit of a man, he willdie in defence of that station. 

It is a remark of the President Heynaut, that we now read with pleasurethe account of many little transactions of the Ligue, which, when theyhappened, were not, perhaps, considered as very important pieces ofnews. But everyman then, says he, fancied himself of some importance;and the innumerable memoirs which have come down to us from those times, were the greater part of them written by people who took pleasure inrecording and magnifying events, in which they flattered themselves theyhad been considerable actors. How obstinately the city of Paris, uponthat occasion, defended itself, what a dreadful famine it supported, rather than submit to the best, and afterwards the most beloved of allthe French kings, is well known. The greater part of the citizens, orthose who governed the greater part of them, fought in defence of theirown importance, which, they foresaw, was to be at an end whenever theancient government should be re-established. Our colonies, unlessthey can be induced to consent to a union, are very likely to defendthemselves, against the best of all mother countries, as obstinately asthe city of Paris did against one of the best of kings. 

The idea of representation was unknown in ancient times. When the peopleof one state were admitted to the right of citizenship in another, theyhad no other means of exercising that right, but by coming in a body tovote and deliberate with the people of that other state. The admissionof the greater part of the inhabitants of Italy to the privileges ofRoman citizens, completely ruined the Roman republic. It was no longerpossible to distinguish between who was, and who was not, a Romancitizen. No tribe could know its own members. A rabble of any kind couldbe introduced into the assemblies of the people, could drive out thereal citizens, and decide upon the affairs of the republic, as if theythemselves had been such. But though America were to send fifty orsixty new representatives to parliament, the door-keeper of the houseof commons could not find any great difficulty in distinguishingbetween who was and who was not a member. Though the Roman constitution, therefore, was necessarily ruined by the union of Rome with the alliedstates of Italy, there is not the least probability that the Britishconstitution would be hurt by the union of Great Britain with hercolonies. That constitution, on the contrary, would be completed by it, and seems to be imperfect without it. The assembly which deliberates anddecides concerning the affairs of every part of the empire, in order tobe properly informed, ought certainly to have representatives from everypart of it. That this union, however, could be easily effectuated, or that difficulties, and great difficulties, might not occur in theexecution, I do not pretend. I have yet heard of none, however, whichappear insurmountable. The principal, perhaps, arise, not from thenature of things, but from the prejudices and opinions of the people, both on this and on the other side of the Atlantic. 

We on this side the water are afraid lest the multitude of Americanrepresentatives should overturn the balance of the constitution, andincrease too much either the influence of the crown on the one hand, orthe force of the democracy on the other. But if the number of Americanrepresentatives were to be in proportion to the produce of Americantaxation, the number of people to be managed would increase exactly inproportion to the means of managing them, and the means of managing tothe number of people to be managed. The monarchical and democraticalparts of the constitution would, after the union, stand exactly in thesame degree of relative force with regard to one another as they haddone before. 

The people on the other side of the water are afraid lest their distancefrom the seat of government might expose them to many oppressions; buttheir representatives in parliament, of which the number ought from thefirst to be considerable, would easily be able to protect them from alloppression. The distance could not much weaken the dependency of therepresentative upon the constituent, and the former would still feelthat he owed his seat in parliament, and all the consequence whichhe derived from it, to the good-will of the latter. It would be theinterest of the former, therefore, to cultivate that good-will, bycomplaining, with all the authority of a member of the legislature, ofevery outrage which any civil or military officer might be guilty of inthose remote parts of the empire. The distance of America from theseat of government, besides, the natives of that country might flatterthemselves, with some appearance of reason too, would not be of verylong continuance. Such has hitherto been the rapid progress of thatcountry in wealth, population, and improvement, that in the course oflittle more than a century, perhaps, the produce of the American mightexceed that of the British taxation. The seat of the empire would thennaturally remove itself to that part of the empire which contributedmost to the general defence and support of the whole. 

The discovery of America, and that of a passage to the East Indies bythe Cape of Good Hope, are the two greatest and most important eventsrecorded in the history of mankind. Their consequences have already beengreat; but, in the short period of between two and three centuries whichhas elapsed since these discoveries were made, it is impossible that thewhole extent of their consequences can have been seen. What benefitsor what misfortunes to mankind may hereafter result from those greatevents, no human wisdom can foresee. By uniting in some measure the mostdistant parts of the world, by enabling them to relieve one another'swants, to increase one another's enjoyments, and to encourage oneanother's industry, their general tendency would seem to be beneficial. To the natives, however, both of the East and West Indies, all thecommercial benefits which can have resulted from those events have beensunk and lost in the dreadful misfortunes which they have occasioned. These misfortunes, however, seem to have arisen rather from accidentthan from any thing in the nature of those events themselves. At theparticular time when these discoveries were made, the superiority offorce happened to be so great on the side of the Europeans, that theywere enabled to commit with impunity every sort of injustice in thoseremote countries. Hereafter, perhaps, the natives of those countries maygrow stronger, or those of Europe may grow weaker; and the inhabitantsof all the different quarters of the world may arrive at that equalityof courage and force which, by inspiring mutual fear, can alone overawethe injustice of independent nations into some sort of respect for therights of one another. But nothing seems more likely to establish thisequality of force, than that mutual communication of knowledge, andof all sorts of improvements, which an extensive commerce from allcountries to all countries naturally, or rather necessarily, carriesalong with it. 

In the mean time, one of the principal effects of those discoveries hasbeen, to raise the mercantile system to a degree of splendour and glorywhich it could never otherwise have attained to. It is the object ofthat system to enrich a great nation, rather by trade and manufacturesthan by the improvement and cultivation of land, rather by the industryof the towns than by that of the country. But in consequence of thosediscoveries, the commercial towns of Europe, instead of being themanufacturers and carriers for but a very small part of the world (thatpart of Europe which is washed by the Atlantic ocean, and the countrieswhich lie round the Baltic and Mediterranean seas), have now become themanufacturers for the numerous and thriving cultivators of America, andthe carriers, and in some respects the manufacturers too, for almost allthe different nations of Asia, Africa, and America. Two new worldshave been opened to their industry, each of them much greater and moreextensive than the old one, and the market of one of them growing stillgreater and greater every day. 

The countries which possess the colonies of America, and which tradedirectly to the East Indies, enjoy indeed the whole show and splendourof this great commerce. Other countries, however, notwithstandingall the invidious restraints by which it is meant to exclude them, frequently enjoy a greater share of the real benefit of it. The coloniesof Spain and Portugal, for example, give more real encouragement to theindustry of other countries than to that of Spain and Portugal. Inthe single article of linen alone, the consumption of those coloniesamounts, it is said (but I do not pretend to warrant the quantity ), tomore than three millions sterling a-year. But this great consumptionis almost entirely supplied by France, Flanders, Holland, and Germany. Spain and Portugal furnish but a small part of it. The capital whichsupplies the colonies with this great quantity of linen, is annuallydistributed among, and furnishes a revenue to, the inhabitants of thoseother countries. The profits of it only are spent in Spain and Portugal, where they help to support the sumptuous profusion of the merchants ofCadiz and Lisbon. 

Even the regulations by which each nation endeavours to secure to itselfthe exclusive trade of its own colonies, are frequently more hurtfulto the countries in favour of which they are established, than tothose against which they are established. The unjust oppression of theindustry of other countries falls back, if I may say so, upon the headsof the oppressors, and crushes their industry more than it does that ofthose other countries. By those regulations, for example, the merchantof Hamburg must send the linen which he destines for the American marketto London, and he must bring back from thence the tobacco which hedestines for the German market; because he can neither send the onedirectly to America, nor bring the other directly from thence. By thisrestraint he is probably obliged to sell the one somewhat cheaper, andto buy the other somewhat dearer, than he otherwise might have done;and his profits are probably somewhat abridged by means of it. In thistrade, however, between Hamburg and London, he certainly receives thereturns of his capital much more quickly than he could possibly havedone in the direct trade to America, even though we should suppose, whatis by no means the case, that the payments of America were as punctualas those of London. In the trade, therefore, to which those regulationsconfine the merchant of Hamburg, his capital can keep in constantemployment a much greater quantity of German industry than he possiblycould have done in the trade from which he is excluded. Though the oneemployment, therefore, may to him perhaps be less profitable thanthe other, it cannot be less advantageous to his country. It isquite otherwise with the employment into which the monopoly naturallyattracts, if I may say so, the capital of the London merchant. Thatemployment may, perhaps, be more profitable to him than the greater partof other employments; but on account of the slowness of the returns, itcannot be more advantageous to his country. 

After all the unjust attempts, therefore, of every country in Europe toengross to itself the whole advantage of the trade of its own colonies, no country has yet been able to engross to itself any thing but theexpense of supporting in time of peace, and of defending in time of war, the oppressive authority which it assumes over them. The inconvenienciesresulting from the possession of its colonies, every country hasengrossed to itself completely. The advantages resulting from theirtrade, it has been obliged to share with many other countries. 

At first sight, no doubt, the monopoly of the great commerce of Americanaturally seems to be an acquisition of the highest value. To theundiscerning eye of giddy ambition it naturally presents itself, amidstthe confused scramble of politics and war, as a very dazzling object tofight for. The dazzling splendour of the object, however, the immensegreatness of the commerce, is the very quality which renders themonopoly of it hurtful, or which makes one employment, in its own naturenecessarily less advantageous to the country than the greater part ofother employments, absorb a much greater proportion of the capital ofthe country than what would 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 employment mostadvantageous to that country. If it is employed in the carrying trade, the country to which it belongs becomes the emporium of the goods of allthe countries whose trade that stock carries on. But the owner of thatstock necessarily wishes to dispose of as great a part of those goods ashe can at home. He thereby saves himself the trouble, risk, and expenseof exportation; and he will upon that account be glad to sell them athome, not only for a much smaller price, but with somewhat a smallerprofit, than he might expect to make by sending them abroad. Henaturally, therefore, endeavours as much as he can to turn his carryingtrade into a foreign trade of consumption, If his stock, again, isemployed in a foreign trade of consumption, he will, for the samereason, be glad to dispose of, at home, as great a part as he can of thehome goods which he collects in order to export to some foreign market, and he will thus endeavour, as much as he can, to turn his foreign tradeof consumption into a home trade. The mercantile stock of everycountry naturally courts in this manner the near, and shuns the distantemployment: naturally courts the employment in which the returns arefrequent, and shuns that in which they are distant and slow; naturallycourts the employment in which it can maintain the greatest quantity ofproductive labour in the country to which it belongs, or in whichits owner resides, and shuns that in which it can maintain there thesmallest quantity. It naturally courts the employment which in ordinarycases is most advantageous, and shuns that which in ordinary cases isleast advantageous to that country. 

But if, in any one of those distant employments, which in ordinary casesare less advantageous to the country, the profit should happen torise somewhat higher than what is sufficient to balance the naturalpreference which is given to nearer employments, this superiority ofprofit will draw stock from those nearer employments, till the profitsof all return to their proper level. This superiority of profit, however, is a proof that, in the actual circumstances of the society, those distant employments are somewhat understocked in proportion toother employments, and that the stock of the society is not distributedin the properest manner among all the different employments carried onin it. It is a proof that something is either bought cheaper or solddearer than it ought to be, and that some particular class of citizensis more or less oppressed, either by paying more, or by getting lessthan what is suitable to that equality which ought to take place, andwhich naturally does take place, among all the different classes ofthem. Though the same capital never will maintain the same quantity ofproductive labour in a distant as in a near employment, yet a distantemployment maybe as necessary for the welfare of the society as a nearone; the goods which the distant employment deals in being necessary, perhaps, for carrying on many of the nearer employments. But if theprofits of those who deal in such goods are above their proper level, those goods will be sold dearer than they ought to be, or somewhat abovetheir natural price, and all those engaged in the nearer employmentswill be more or less oppressed by this high price. Their interest, therefore, in this case, requires, that some stock should be withdrawnfrom those nearer employments, and turned towards that distant one, inorder to reduce its profits to their proper level, and the price of thegoods which it deals in to their natural price. In this extraordinarycase, the public interest requires that some stock should be withdrawnfrom those employments which, in ordinary cases, are more advantageous, and turned towards one which, in ordinary cases, is less advantageous tothe public; and, in this extraordinary case, the natural interests andinclinations of men coincide as exactly with the public interests as inall other ordinary cases, and lead them to withdraw stock from the near, and to turn it towards the distant employments. 

It is thus that the private interests and passions of individualsnaturally dispose them to turn their stock towards the employments whichin ordinary cases, are most advantageous to the society. But if fromthis natural preference they should turn too much of it towards thoseemployments, the fall of profit in them, and the rise of it in allothers, immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests andpassions of men naturally lead them to divide and distribute the stockof every society among all the different employments carried on in it;as nearly as possible in the proportion which is most agreeable to theinterest of the whole society. 

All the different regulations of the mercantile system necessarilyderange more or less this natural and most advantageous distribution ofstock. But those which concern the trade to America and the East Indiesderange it, perhaps, more than any other; because the trade to those twogreat continents absorbs a greater quantity of stock than any two otherbranches of trade. The regulations, however, by which this derangementis effected 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, seems to bethe sole engine of the mercantile system. 

In the trade to America, every nation endeavours to engross as much aspossible the whole market of its own colonies, by fairly excluding allother nations from any direct trade to them. During the greater part ofthe sixteenth century, the Portuguese endeavoured to manage the tradeto the East Indies in the same manner, by claiming the sole right ofsailing in the Indian seas, on account of the merit of having firstfound out the road to them. The Dutch still continue to exclude allother European nations from any direct trade to their spice islands. Monopolies of this kind are evidently established against all otherEuropean nations, who are thereby not only excluded from a trade towhich it might be convenient for them to turn some part of their stock, but are obliged to buy the goods which that trade deals in, somewhatdearer than if they could import them themselves directly from thecountries which produced them. 

But since the fall of the power of Portugal, no European nation hasclaimed the exclusive right of sailing in the Indian seas, of whichthe principal ports are now open to the ships of all European nations. Except in Portugal, however, and within these few years in France, thetrade to the East Indies has, in every European country, beensubjected to an exclusive company. Monopolies of this kind are properlyestablished against the very nation which erects them. The greater partof that nation are thereby not only excluded from a trade to which itmight be convenient for them to turn some part of their stock, but areobliged to buy the goods which that trade deals in somewhat dearer thanif it was open and free to all their countrymen. Since the establishmentof the English East India company, for example, the other inhabitants ofEngland, over and above being excluded from the trade, must have paid, in the price of the East India goods which they have consumed, not onlyfor all the extraordinary profits which the company may have madeupon those goods in consequence of their monopoly, but for all theextraordinary waste which the fraud and abuse inseparable from themanagement of the affairs of so great a company must necessarily haveoccasioned. The absurdity of this second kind of monopoly, therefore, ismuch more manifest than that of the first. 

Both these kinds of monopolies derange more or less the naturaldistribution of the stock of the society; but they do not always derangeit in the same way. 

Monopolies of the first kind always attract to the particular tradein which they are established a greater proportion of the stock of thesociety than what would go to that trade of its own accord. 

Monopolies of the second kind may sometimes attract stock towards theparticular trade in which they are established, and sometimes repelit from that trade, according to different circumstances. In poorcountries, they naturally attract towards that trade more stock thanwould otherwise go to it. In rich countries, they naturally repel fromit a good deal of stock which would otherwise go to it. 

Such poor countries as Sweden and Denmark, for example, would probablyhave never sent a single ship to the East Indies, had not the trade beensubjected to an exclusive company. The establishment of such a companynecessarily encourages adventurers. Their monopoly secures them againstall competitors in the home market, and they have the same chance forforeign markets 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 great quantity. Without such extraordinary encouragement, the poor traders of such poorcountries would probably never have thought of hazarding their smallcapitals in so very distant and uncertain an adventure as the trade tothe East Indies must naturally have appeared to them. 

Such a rich country as Holland, on the contrary, would probably, in thecase of a free trade, send many more ships to the East Indies thanit actually does. The limited stock of the Dutch East India companyprobably repels from that trade many great mercantile capitals whichwould otherwise go to it. The mercantile capital of Holland is so great, that it is, as it were, continually overflowing, sometimes into thepublic funds of foreign countries, sometimes into loans to privatetraders and adventurers of foreign countries, sometimes into the mostround-about foreign trades of consumption, and sometimes into thecarrying trade. All near employments being completely filled up, allthe capital which can be placed in them with any tolerable profit beingalready placed in them, the capital of Holland necessarily flows towardsthe most distant employments. The trade to the East Indies, if itwere altogether free, would probably absorb the greater part ofthis redundant capital. The East Indies offer a market both for themanufactures of Europe, and for the gold and silver, as well as for theseveral other productions of America, greater and more extensive thanboth Europe and America put together. 

Every derangement of the natural distribution of stock is necessarilyhurtful to the society in which it takes place; whether it be byrepelling from a particular trade the stock which would otherwise goto it, or by attracting towards a particular trade that which would nototherwise come to it. If, without any exclusive company, the trade ofHolland to the East Indies would be greater than it actually is, thatcountry must suffer a considerable loss, by part of its capital beingexcluded from the employment most convenient for that port. And, in thesame manner, if, without an exclusive company, the trade of Sweden andDenmark to the East Indies would be less than it actually is, or, whatperhaps is more probable, would not exist at all, those two countriesmust likewise suffer a considerable loss, by part of their capital beingdrawn into an employment which must be more or less unsuitable totheir present circumstances. Better for them, perhaps, in the presentcircumstances, to buy East India goods of other nations, even thoughthey should pay somewhat dearer, than to turn so great a part of theirsmall capital to so very distant a trade, in which the returns are sovery slow, in which that capital can maintain so small a quantity ofproductive labour at home, where productive labour is so much wanted, where so little is done, and where so much is to do. 

Though without an exclusive company, therefore, a particular countryshould not be able to carry on any direct trade to the East Indies, itwill not from thence follow, that such a company ought to be establishedthere, but only that such a country ought not, in these circumstances, to trade directly to the East Indies. That such companies are not ingeneral necessary for carrying on the East India trade, is sufficientlydemonstrated by the experience of the Portuguese, who enjoyed almostthe whole of it for more than a century together, without any exclusivecompany. 

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 he mightoccasionally send thither; and yet, unless he was able to do this, thedifficulty of finding a cargo might frequently make his ships lose theseason for returning; and the expense of so long a delay would not onlyeat up the whole profit of the adventure, but frequently occasion a veryconsiderable loss. This argument, however, if it proved any thing atall, would prove that no one great branch of trade could be carried onwithout an exclusive company, which is contrary to the experience of allnations. There is no great branch of trade, in which the capital of anyone private merchant is sufficient for carrying on all the subordinatebranches which must be carried on, in order to carry on the principalone. But when a nation is ripe for any great branch of trade, somemerchants naturally turn their capitals towards the principal, and sometowards the subordinate branches of it; and though all the differentbranches of it are in this manner carried on, yet it very seldom happensthat they are all carried on by the capital of one private merchant. Ifa nation, therefore, is ripe for the East India trade, a certain portionof its capital will naturally divide itself among all the differentbranches of that trade. Some of its merchants will find it for theirinterest to reside in the East Indies, and to employ their capitalsthere in providing goods for the ships which are to be sent out by othermerchants who reside in Europe. The settlements which different Europeannations have obtained in the East Indies, if they were taken from theexclusive companies to which they at present belong, and put under theimmediate protection of the sovereign, would render this residence bothsafe and easy, at least to the merchants of the particular nations towhom those settlements belong. If, at any particular time, that part ofthe capital of any country which of its own accord tended and inclined, if I may say so, towards the East India trade, was not sufficient forcarrying on all those different branches of it, it would be a proofthat, at that particular time, that country was not ripe for that trade, and that it would do better to buy for some time, even at a higherprice, from other European nations, the East India goods it had occasionfor, than to import them itself directly from the East Indies. What itmight lose by the high price of those goods, could seldom be equal tothe loss which it would sustain by the distraction of a large portionof its capital from other employments more necessary, or more useful, ormore suitable to its circumstances and situation, than a direct trade tothe East Indies. 

Though the Europeans possess many considerable settlements both upon thecoast of Africa and in the East Indies, they have not yet established, in either of those countries, such numerous and thriving colonies asthose in the islands and continent of America. Africa, however, as wellas several of the countries comprehended under the general name of theEast Indies, is inhabited by barbarous nations. But those nationswere by no means so weak and defenceless as the miserable and helplessAmericans; and in proportion to the natural fertility of the countrieswhich they inhabited, they were, besides, much more populous. Themost barbarous nations either of Africa or of the East Indies, wereshepherds; even the Hottentots were so. But the natives of every part ofAmerica, except Mexico and Peru, were only hunters and the difference isvery great between the number of shepherds and that of hunters whom thesame extent of equally fertile territory can maintain. In Africa and theEast Indies, therefore, it was more difficult to displace the natives, and to extend the European plantations over the greater part of thelands of the original inhabitants. The genius of exclusive companies, besides, is unfavourable, it has already been observed, to the growthof new colonies, and has probably been the principal cause of the littleprogress which they have made in the East Indies. The Portuguese carriedon the trade both to Africa and the East Indies, without any exclusivecompanies; and their settlements at Congo, Angola, and Benguela, on thecoast of Africa, and at Goa in the East Indies though much depressed bysuperstition and every sort of bad government, yet bear some resemblanceto the colonies of America, and are partly inhabited by Portuguesewho have been established there for several generations. The Dutchsettlements at the Cape of Good Hope and at Batavia, are at present themost considerable colonies which the Europeans have established, either in Africa or in the East Indies; and both those settlementsan peculiarly fortunate in their situation. The Cape of Good Hopewas inhabited by a race of people almost as barbarous, and quite asincapable of defending themselves, as the natives of America. It is, besides, the half-way house, if one may say so, between Europe and theEast Indies, at which almost every European ship makes some stay, bothin going and returning. The supplying of those ships with every sort offresh provisions, with fruit, and sometimes with wine, affords alone avery extensive market for the surplus produce of the colonies. What theCape of Good Hope is between Europe and every part of the East Indies, Batavia is between the principal countries of the East Indies. It liesupon the most frequented road from Indostan to China and Japan, and isnearly about mid-way upon that road. Almost all the ships too, that sailbetween Europe and China, touch at Batavia; and it is, over and aboveall this, the centre and principal mart of what is called the countrytrade of the East Indies; not only of that part of it which is carriedon by Europeans, but of that which is carried on by the native Indians;and vessels navigated by the inhabitants of China and Japan, of Tonquin, Malacca, Cochin-China, and the island of Celebes, are frequently to beseen in its port. Such advantageous situations have enabled those twocolonies to surmount all the obstacles which the oppressive genius ofan exclusive company may have occasionally opposed to their growth. Theyhave enabled Batavia to surmount the additional disadvantage of perhapsthe most unwholesome climate in the world. 

The English and Dutch companies, though they have established noconsiderable colonies, except the two above mentioned, have both madeconsiderable conquests in the East Indies. But in the manner in whichthey both govern their new subjects, the natural genius of an exclusivecompany has shewn itself most distinctly. In the spice islands, the Dutch are said to burn all the spiceries which a fertile seasonproduces, beyond what they expect to dispose of in Europe with sucha profit as they think sufficient. In the islands where they have nosettlements, they give a premium to those who collect the young blossomsand green leaves of the clove and nutmeg trees, which naturallygrow there, but which this savage policy has now, it is said, almostcompletely extirpated. Even in the islands where they have settlements, they have very much reduced, it is said, the number of those trees. Ifthe produce even of their own islands was much greater than what suitedtheir market, the natives, they suspect, might find means to convey somepart of it to other nations; and the best way, they imagine, to securetheir own monopoly, is to take care that no more shall grow than whatthey themselves carry to market. By different arts of oppression, theyhave reduced the population of several of the Moluccas nearly to thenumber which is sufficient to supply with fresh provisions, and othernecessaries of life, their own insignificant garrisons, and such oftheir ships as occasionally come there for a cargo of spices. Under thegovernment even of the Portuguese, however, those islands are said tohave been tolerably well inhabited. The English company have not yet hadtime to establish in Bengal so perfectly destructive a system. The planof their government, however, has had exactly the same tendency. It hasnot been uncommon, I am well assured, for the chief, that is, the firstclerk or a factory, to order a peasant to plough up a rich field ofpoppies, and sow it with rice, or some other grain. The pretence was, toprevent a scarcity of provisions; but the real reason, to give the chiefan opportunity of selling at a better price a large quantity of opiumwhich he happened then to have upon hand. Upon other occasions, theorder has been reversed; and a rich field of rice or other grain hasbeen ploughed up, in order to make room for a plantation of poppies, when the chief foresaw that extraordinary profit was likely to be madeby opium. The servants of the company have, upon several occasions, attempted to establish in their own favour the monopoly of some of themost important branches, not only of the foreign, but of the inlandtrade of the country. Had they been allowed to go on, it is impossiblethat they should not, at some time or another, have attempted torestrain the production of the particular articles of which theyhad thus usurped the monopoly, not only to the quantity which theythemselves could purchase, but to that which they could expect to sellwith such a profit as they might think sufficient. In the course of acentury or two, the policy of the English company would, in this manner, have probably proved as completely destructive as that of the Dutch. 

Nothing, however, can be more directly contrary to the real interestof those companies, considered as the sovereigns of the countrieswhich they have conquered, than this destructive plan. In almost allcountries, the revenue of the sovereign is drawn from that of thepeople. The greater the revenue of the people, therefore, the greaterthe annual produce of their land and labour, the more they can affordto the sovereign. It is his interest, therefore, to increase as muchas possible that annual produce. But if this is the interest of everysovereign, it is peculiarly so of one whose revenue, like that of thesovereign of Bengal, arises chiefly from a land-rent. That rent mustnecessarily be in proportion to the quantity and value of the produce;and both the one and the other must depend upon the extent of themarket. The quantity will always be suited, with more or less exactness, to the consumption of those who can afford to pay for it; and the pricewhich they will pay will always be in proportion to the eagerness oftheir competition. It is the interest of such a sovereign, therefore, toopen the most extensive market for the produce of his country, to allowthe most perfect freedom of commerce, in order to increase as much aspossible the number and competition of buyers; and upon this accountto abolish, not only all monopolies, but all restraints upon thetransportation of the home produce from one part of the countryto mother, upon its exportation to foreign countries, or upon theimportation of goods of' any kind for which it can be exchanged. He isin this manner most likely to increase both the quantity and value ofthat produce, and consequently of his own share of it, or of his ownrevenue. 

But a company of merchants, are, it seems, incapable of consideringthemselves as sovereigns, even after they have become such. Trade, orbuying in order to sell again, they still consider as their principalbusiness, and by a strange absurdity, regard the character of thesovereign as but an appendix to that of the merchant; as something whichought to be made subservient to it, or by means of which they may beenabled to buy cheaper in India, and thereby to sell with a betterprofit in Europe. They endeavour, for this purpose, to keep out as muchas possible all competitors from the market of the countries which aresubject to their government, and consequently to reduce, at least, some part of the surplus produce of those countries to what is barelysufficient for supplying their own demand, or to what they can expect tosell in Europe, with such a profit as they may think reasonable. Theirmercantile habits draw them in this manner, almost necessarily, thoughperhaps insensibly, to prefer, upon all ordinary occasions, the littleand transitory profit of the monopolist to the great and permanentrevenue of the sovereign; and would gradually lead them to treat thecountries subject to their government nearly as the Dutch treat theMoluccas. It is the interest of the East India company, considered assovereigns, that the European goods which are carried to their Indiandominions should be sold there as cheap as possible; and that the Indiangoods which are brought from thence should bring there as good a price, or should be sold there as dear as possible. But the reverse of this istheir interest as merchants. As sovereigns, their interest is exactlythe same with that of the country which they govern. As merchants, theirinterest is directly opposite to that interest. 

But if the genius of such a government, even as to what concernsits direction in Europe, is in this manner essentially, and perhapsincurably faulty, that of its administration in India is still more so. That administration is necessarily composed of a council of merchants, a profession no doubt extremely respectable, but which in no country inthe world carries along with it that sort of authority which naturallyoverawes the people, and without force commands their willing obedience. Such a council can command obedience only by the military forcewith which they are accompanied; and their government is, therefore, necessarily military and despotical. Their proper business, however, is that of merchants. It is to sell, upon their master's account, theEuropean goods consigned to them, and to buy, in return, Indian goodsfor the European market. It is to sell the one as dear, and to buy theother as cheap as possible, and consequently to exclude, as much aspossible, all rivals from the particular market where they keep theirshop. The genius of the administration, therefore, so far as concernsthe trade of the company, is the same as that of the direction. Ittends to make government subservient to the interest of monopoly, andconsequently to stunt the natural growth of some parts, at least, ofthe surplus produce of the country, to what is barely sufficient foranswering the demand of the company. 

All the members of the administration besides, trade more or less upontheir own account; and it is in vain to prohibit them from doing so. Nothing can be more completely foolish than to expect that the clerk ofa great counting-house, at ten thousand miles distance, and consequentlyalmost quite out of sight, should, upon a simple order from theirmaster, give up at once doing any sort of business upon their ownaccount abandon for ever all hopes of making a fortune, of which theyhave the means in their hands; and content themselves with the moderatesalaries which those masters allow them, and which, moderate as theyare, can seldom be augmented, being commonly as large as the realprofits of the company trade can afford. In such circumstances, toprohibit the servants of the company from trading upon their ownaccount, can have scarce any other effect than to enable its superiorservants, under pretence of executing their master's order, to oppresssuch of the inferior ones as have had the misfortune to fall under theirdispleasure. The servants naturally endeavour to establish the samemonopoly in favour of their own private trade as of the public trade ofthe company. If they are suffered to act as they could wish, they willestablish this monopoly openly and directly, by fairly prohibiting allother people from trading in the articles in which they choose to deal;and this, perhaps, is the best and least oppressive way of establishingit. But if, by an order from Europe, they are prohibited from doingthis, they will, notwithstanding, endeavour to establish a monopolyof the same kind secretly and indirectly, in a way that is much moredestructive to the country. They will employ the whole authority ofgovernment, and pervert the administration of Justice, in order toharass and ruin those who interfere with them in any branch of commerce, which by means of agents, either concealed, or at least not publiclyavowed, they may choose to carry on. But the private trade of theservants will naturally extend to a much greater variety of articlesthan the public trade of the company. The public trade of the companyextends no further than the trade with Europe, and comprehends a partonly of the foreign trade of the country. But the private trade of theservants may extend to all the different branches both of its inland andforeign trade. The monopoly of the company can tend only to stunt thenatural growth of that part of the surplus produce which, in the case ofa free trade, would be exported to Europe. That of the servants tendsto stunt the natural growth of every part of the produce in which theychoose to deal; of what is destined for home consumption, as well asof what is destined for exportation; and consequently to degrade thecultivation of the whole country, and to reduce the number of itsinhabitants. It tends to reduce the quantity of every sort of produce, even that of the necessaries of life, whenever the servants of thecountry choose to deal in them, to what those servants can both affordto buy and expect to sell with such a profit as pleases them. 

From the nature of their situation, too, the servants must be moredisposed to support with rigourous severity their own interest, againstthat of the country which they govern, than their masters can be tosupport theirs. The country belongs to their masters, who cannot avoidhaving some regard for the interest of what belongs to them; but it doesnot belong to the servants. The real interest of their masters, if theywere capable of understanding it, is the same with that of the country;{The interest of every proprietor of India stock, however, is by nomeans the same with that of the country in the government of which hisvote gives him some influence. --See book v, chap. 1, part ii. }and it isfrom ignorance chiefly, and the meanness of mercantile prejudice, thatthey ever oppress it. But the real interest of the servants is byno means the same with that of the country, and the most perfectinformation would not necessarily put an end to their oppressions. Theregulations, accordingly, which have been sent out from Europe, thoughthey have been frequently weak, have upon most occasions been wellmeaning. More intelligence, and perhaps less good meaning, has sometimesappeared in those established by the servants in India. It is a verysingular government in which every member of the administration wishesto get out of the country, and consequently to have done with thegovernment, as soon as he can, and to whose interest, the day after hehas left it, and carried his whole fortune with him, it is perfectlyindifferent though the whole country was swallowed up by an earthquake. 

I mean not, however, by any thing which I have here said, to throw anyodious imputation upon the general character of the servants of the EastIndia company, and touch less upon that of any particular persons. It isthe system of government, the situation in which they are placed, thatI mean to censure, not the character of those who have acted in it. Theyacted as their situation naturally directed, and they who haveclamoured the loudest against them would probably not have acted betterthemselves. In war and negotiation, the councils of Madras and Calcutta, have upon several occasions, conducted themselves with a resolution anddecisive wisdom, which would have done honour to the senate of Rome inthe best days of that republic. The members of those councils, however, had been bred to professions very different from war and politics. Buttheir situation alone, without education, experience, or even example, seems to have formed in them all at once the great qualities which itrequired, and to have inspired them both with abilities and virtueswhich they themselves could not well know that they possessed. Ifupon some occasions, therefore, it has animated them to actions ofmagnanimity which could not well have been expected from them, we shouldnot wonder if, upon others, it has prompted them to exploits of somewhata different nature. 

Such exclusive companies, therefore, are nuisances in every respect;always more or less inconvenient to the countries in which they areestablished, and destructive to those which have the misfortune to fallunder their government. 

CHAPTER VIII. CONCLUSION OF THE MERCANTILE SYSTEM. 

Though the encouragement of exportation, and the discouragement ofimportation, are the two great engines by which the mercantile systemproposes to enrich every country, yet, with regard to some particularcommodities, it seems to follow an opposite plan: to discourageexportation, and to encourage importation. Its ultimate object, however, it pretends, is always the same, to enrich the country by anadvantageous balance of trade. It discourages the exportation of thematerials of manufacture, and of the instruments of trade, in order togive our own workmen an advantage, and to enable them to undersell thoseof other nations in all foreign markets; and by restraining, in thismanner, the exportation of a few commodities, of no great price, itproposes to occasion a much greater and more valuable exportation ofothers. It encourages the importation of the materials of manufacture, in order that our own people may be enabled to work them up morecheaply, and thereby prevent a greater and more valuable importation ofthe manufactured commodities. I do not observe, at least in our statutebook, any encouragement given to the importation of the instruments oftrade. When manufactures have advanced to a certain pitch of greatness, the fabrication of the instruments of trade becomes itself the objectof a great number of very important manufactures. To give any particularencouragement to the importation of such instruments, would interferetoo much with the interest of those manufactures. Such importation, therefore, instead of being encouraged, has frequently been prohibited. Thus the importation of wool cards, except from Ireland, or when broughtin as wreck or prize goods, was prohibited by the 3rd of Edward IV. ;which prohibition was renewed by the 39th of Elizabeth, and has beencontinued and rendered perpetual by subsequent laws. 

The importation of the materials of manufacture has sometimes beenencouraged by an exemption from the duties to which other goods aresubject, and sometimes by bounties. 

The importation of sheep's wool from several different countries, ofcotton wool from all countries, of undressed flax, of the greater partof dyeing drugs, of the greater part of undressed hides from Ireland, orthe British colonies, of seal skins from the British Greenland fishery, of pig and bar iron from the British colonies, as well as of severalother materials of manufacture, has been encouraged by an exemptionfrom all duties, if properly entered at the custom-house. The privateinterest of our merchants and manufacturers may, perhaps, have extortedfrom the legislature these exemptions, as well as the greater part ofour other commercial regulations. They are, however, perfectly just andreasonable; and if, consistently with the necessities of the state, theycould be extended to all the other materials of manufacture, the publicwould certainly be a gainer. 

The avidity of our great manufacturers, however, has in some casesextended these exemptions a good deal beyond what can justly beconsidered as the rude materials of their work. By the 24th Geo. II. Chap. 46, a small duty of only 1d. The pound was imposed upon theimportation of foreign brown linen yarn, instead of much higher duties, to which it had been subjected before, viz. Of 6d. The pound upon sailyarn, of 1s. The pound upon all French and Dutch yarn, and of £2:13:4upon the hundred weight of all spruce or Muscovia yarn. But ourmanufacturers were not long satisfied with this reduction: by the 29thof the same king, chap. 15, the same law which gave a bounty upon theexportation of British and Irish linen, of which the price did notexceed 18d. The yard, even this small duty upon the importation of brownlinen yarn 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 of preparinglinen cloth from linen yarn. To say nothing of the industry of theflax-growers and flaxdressers, three or four spinners at least arenecessary in order to keep one weaver in constant employment; and morethan four-fifths of the whole quantity of labour necessary for thepreparation of linen cloth, is employed in that of linen yarn; butour spinners are poor people; women commonly scattered about in alldifferent parts of the country, without support or protection. It isnot by the sale of their work, but by that of the complete work of theweavers, that our great master manufacturers make their profits. As itis their interest to sell the complete manufacture as dear, so it isto buy the materials as cheap as possible. By extorting from thelegislature bounties upon the exportation of their own linen, high duties upon the importation of all foreign linen, and a totalprohibition of the home consumption of some sorts of French linen, theyendeavour to sell their own goods as dear as possible. By encouragingthe importation of foreign linen yarn, and thereby bringing it intocompetition with that which is made by our own people, they endeavourto buy the work of the poor spinners as cheap as possible. They are asintent to keep down the wages of their own weavers, as the earnings ofthe poor spinners; and it is by no means for the benefit of the workmenthat they endeavour either to raise the price of the complete work, orto lower that of the rude materials. It is the industry which is carriedon for the benefit of the rich and the powerful, that is principallyencouraged by our mercantile system. That which is carried on for thebenefit of the poor and the indigent is too often either neglected oroppressed. 

Both the bounty upon the exportation of linen, and the exemption fromthe duty upon the importation of foreign yarn, which were granted onlyfor fifteen years, but continued by two different prolongations, expirewith the end of the session of parliament which shall immediately followthe 24th of June 1786. 

The encouragement given to the importation of the materials ofmanufacture by bounties, has been principally confined to such as wereimported from our American plantations. 

The first bounties of this kind were those granted about the beginningof the present century, upon the importation of naval stores fromAmerica. Under this denomination were comprehended timber fit for masts, yards, and bowsprits; hemp, tar, pitch, and turpentine. The bounty, however, of £1 the ton upon masting-timber, and that of £6 the ton uponhemp, were extended to such as should be imported into England fromScotland. Both these bounties continued, without any variation, at thesame rate, till they were severally allowed to expire; that upon hemp onthe 1st of January 1741, and that upon masting-timber at the end of thesession of parliament immediately following the 24th June 1781. 

The bounties upon the importation of tar, pitch, and turpentine, underwent, during their continuance, several alterations. Originally, that upon tar was £4 the ton; that upon pitch the same; and that uponturpentine £3 the ton. The bounty of £4 the ton upon tar was afterwardsconfined to such as had been prepared in a particular manner; that uponother good, clean, and merchantable tar was reduced to £2:4s. Theton. The bounty upon pitch was likewise reduced to £1, and that uponturpentine to £1:10s. The ton. 

The second bounty upon the importation of any of the materials ofmanufacture, according to the order of time, was that granted by the21st Geo. II. Chap. 30, upon the importation of indigo from the Britishplantations. When the plantation indigo was worth three-fourths of theprice of the best French indigo, it was, by this act, entitled to abounty of 6d. The pound. This bounty, which, like most others, wasgranted only for a limited time, was continued by several prolongations, but was reduced to 4d. The pound. It was allowed to expire with the endof the session of parliament which followed the 25th March 1781. 

The third bounty of this kind was that granted (much about the time thatwe were beginning sometimes to court, and sometimes to quarrel with ourAmerican colonies), by the 4th. Geo. III. Chap. 26, upon the importationof hemp, or undressed flax, from the British plantations. This bountywas granted for twenty-one years, from the 24th June 1764 to the 24thJune 1785. For the first seven years, it was to be at the rate of £8 theton; for the second at £6; and for the third at £4. It was not extendedto Scotland, of which the climate (although hemp is sometimes raisedthere in small quantities, and of an inferior quality) is not very fitfor that produce. Such a bounty upon the importation of Scotch flax inEngland would have been too great a discouragement to the native produceof the southern part of the united kingdom. 

The fourth bounty of this kind was that granted by the 5th Geo. III. Chap. 45, upon the importation of wood from America. It was granted fornine years from the 1st January 1766 to the 1st January 1775. During thefirst three years, it was to be for every hundred-and-twenty good deals, at the rate of £1, and for every load containing fifty cubic feet ofother square timber, at the rate of 12s. For the second three years, itwas for deals, to be at the rate of 15s. , and for other squared timberat the rate of 8s. ; and for the third three years, it was for deals, tobe at the rate of 10s. ; and for every other squared timber at the rateof 5s. 

The fifth bounty of this kind was that granted by the 9th Geo. III. Chap. 38, upon the importation of raw silk from the British plantations. It was granted for twenty-one years, from the 1st January 1770, to the1st January 1791. For the first seven years, it was to be at the rate of£25 for every hundred pounds value; for the second, at £20; and for thethird, at £15. The management of the silk-worm, and the preparationof silk, requires so much hand-labour, and labour is so very dear inAmerica, that even this great bounty, I have been informed, was notlikely to produce any considerable effect. 

The sixth Bounty of this kind was that granted by 11th Geo. III. Chap. 50, for the importation of pipe, hogshead, and barrelstaves and leadingfrom the British plantations. It was granted for nine years, from 1stJanuary 1772 to the 1st January 1781. For the first three years, it was, for a certain quantity of each, to be at the rate of £6; for the secondthree years at £4; and for the third three years at £2. 

The seventh and last bounty of this kind was that granted by the 19thGeo. III chap. 37, upon the importation of hemp from Ireland. It wasgranted in the same manner as that for the importation of hemp andundressed flax from America, for twenty-one years, from the 24th June1779 to the 24th June 1800. The term is divided likewise into threeperiods, of seven years each; and in each of those periods, the rateof the Irish bounty is the same with that of the American. It doesnot, however, like the American bounty, extend to the importation ofundressed flax. It would have been too great a discouragement to thecultivation of that plant in Great Britain. When this last bounty wasgranted, the British and Irish legislatures were not in much betterhumour with one another, than the British and American had been before. But this boon to Ireland, it is to be hoped, has been granted under morefortunate auspices than all those to America. The same commodities, uponwhich we thus gave bounties, when imported from America, were subjectedto considerable duties when imported from any other country. Theinterest of our American colonies was regarded as the same with that ofthe mother country. Their wealth was considered as our wealth. Whatevermoney was sent out to them, it was said, came all back to us by thebalance of trade, and we could never become a farthing the poorer byany expense which we could lay out upon them. They were our own in everyrespect, and it was an expense laid out upon the improvement of our ownproperty, and for the profitable employment of our own people. It isunnecessary, I apprehend, at present to say anything further, inorder to expose the folly of a system which fatal experience has nowsufficiently exposed. Had our American colonies really been a part ofGreat Britain, those bounties might have been considered as bountiesupon production, and would still have been liable to all the objectionsto which such bounties are liable, but to no other. 

The exportation of the materials of manufacture is sometimes discouragedby absolute prohibitions, and sometimes by high duties. 

Our woollen manufacturers have been more successful than any other classof workmen, in persuading the legislature that the prosperity of thenation depended upon the success and extension of their particularbusiness. They have not only obtained a monopoly against the consumers, by an absolute prohibition of importing woollen cloths from any foreigncountry; but they have likewise obtained another monopoly against thesheep farmers and growers of wool, by a similar prohibition of theexportation of live sheep and wool. The severity of many of the lawswhich have been enacted for the security of the revenue is veryjustly complained of, as imposing heavy penalties upon actions which, antecedent to the statutes that declared them to be crimes, had alwaysbeen understood to be innocent. But the cruellest of our revenue laws, I will venture to affirm, are mild and gentle, in comparison to some ofthose which the clamour of our merchants and manufacturers has extortedfrom the legislature, for the support of their own absurd and oppressivemonopolies. Like the laws of Draco, these laws may be said to be allwritten in blood. 

By the 8th of Elizabeth, chap. 3, the exporter of sheep, lambs, or rams, was for the first offence, to forfeit all his goods for ever, to suffera year's imprisonment, and then to have his left hand cut off in amarket town, upon a market day, to be there nailed up; and for thesecond offence, to be adjudged a felon, and to suffer death accordingly. To prevent the breed of our sheep from being propagated in foreigncountries, seems to have been the object of this law. By the 13th and14th of Charles II. Chap. 18, the exportation of wool was made felony, and the exporter subjected to the same penalties and forfeitures as afelon. 

For the honour of the national humanity, it is to be hoped that neitherof these statutes was ever executed. The first of them, however, so faras I know, has never been directly repealed, and serjeant Hawkins seemsto consider it as still in force. It may, however, perhaps be consideredas virtually repealed by the 12th of Charles II. Chap. 32, sect. 3, which, without expressly taking away the penalties imposed by formerstatutes, imposes a new penalty, viz. That of 20s. For every sheepexported, or attempted to be exported, together with the forfeiture ofthe sheep, and of the owner's share of the sheep. The second of them wasexpressly repealed by the 7th and 8th of William III. Chap. 28, sect. 4, by which it is declared that "Whereas the statute of the 13th and 14thof king Charles II. Made against the exportation of wool, among otherthings in the said act mentioned, doth enact the same to be deemedfelony, by the severity of which penalty the prosecution of offendershath not been so effectually put in execution; be it therefore enacted, by the authority aforesaid, that so much of the said act, which relatesto the making the said offence felony, be repealed and made void. "

The penalties, however, which are either imposed by this milder statute, or which, though imposed by former statutes, are not repealed by thisone, are still sufficiently severe. Besides the forfeiture of the goods, the exporter incurs the penalty of 3s. For every pound weight of wool, either exported or attempted to be exported, that is, about four orfive times the value. Any merchant, or other person convicted of thisoffence, is disabled from requiring any debt or account belonging tohim from any factor or other person. Let his fortune be what it will, whether he is or is not able to pay those heavy penalties, the law meansto ruin him completely. But, as the morals of the great body of thepeople are not yet so corrupt as those of the contrivers of thisstatute, I have 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 be transportedfor seven years; and if he returns before the expiration of that term, he is liable to the pains of felony, without benefit of clergy. Theowner of the ship, knowing this offence, forfeits all his interest inthe ship and furniture. The master and mariners, knowing thisoffence, forfeit all their goods and chattels, and suffer three monthsimprisonment. By a subsequent statute, the master suffers six monthsimprisonment. 

In order to prevent exportation, the whole inland commerce of wool islaid under very burdensome and oppressive restrictions. It cannot bepacked in any box, barrel, cask, case, chest, or any other package, butonly in packs of leather or pack-cloth, on which must be marked on theoutside the words WOOL or YARN, in large letters, not less than threeinches long, on pain of forfeiting the same and the package, and 8s. For every pound weight, to be paid by the owner or packer. It cannot beloaden on any horse or cart, or carried by land within five miles of thecoast, but between sun-rising, and sun-setting, on pain of forfeitingthe same, the horses and carriages. The hundred next adjoining to thesea coast, out of, or through which the wool is carried or exported, forfeits £20, if the wool is under the value of £10; and if of greatervalue, then treble that value, together with treble costs, to besued for within the year. The execution to be against any two of theinhabitants, whom the sessions must reimburse, by an assessment onthe other inhabitants, as in the cases of robbery. And if any personcompounds with the hundred for less than this penalty, he is to beimprisoned for five years; and any other person may prosecute. Theseregulations take place through the whole kingdom. 

But in the particular counties of Kent and Sussex, the restrictions arestill more troublesome. Every owner of wool within ten miles of the seacoast must give an account in writing, three days after shearing, to thenext officer of the customs, of the number of his fleeces, and of theplaces where they are lodged. And before he removes any part of them, hemust give the like notice of the number and weight of the fleeces, andof the name and abode of the person to whom they are sold, and of theplace to which it is intended they should be carried. No person withinfifteen miles of the sea, in the said counties, can buy any wool, beforehe enters into bond to the king, that no part of the wool which he shallso buy shall be sold by him to any other person within fifteen miles ofthe sea. If any wool is found carrying towards the sea side in the saidcounties, unless it has been entered and security given as aforesaid, itis forfeited, and the offender also forfeits 3s. For every pound weight, if any person lay any wool, not entered as aforesaid, within fifteenmiles of the sea, it must be seized and forfeited; and if, after suchseizure, any person shall 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, the coastingtrade, we may believe, cannot be left very free. Every owner of wool, who carrieth, or causeth to be carried, any wool to any port or placeon the sea coast, in order to be from thence transported by sea to anyother place or port on the coast, must first cause an entry thereofto be made at the port from whence it is intended to be conveyed, containing the weight, marks, and number, of the packages, before hebrings the same within five miles of that port, on pain of forfeitingthe same, and also the horses, carts, and other carriages; and alsoof suffering and forfeiting, as by the other laws in force against theexportation of wool. This law, however (1st of William III. Chap. 32), is so very indulgent as to declare, that this shall not hinder anyperson from carrying his wool home from the place of shearing, thoughit be within five miles of the sea, provided that in ten days aftershearing, and before he remove the wool, he do under his hand certify tothe next officer of the customs the true number of fleeces, and whereit is housed; and do not remove the same, without certifying to suchofficer, under his hand, his intention so to do, three days before. Bondmust be given that the wool to be carried coast-ways is to be landed atthe particular port for which it is entered outwards; and if my part ofit is landed without the presence of an officer, not only the forfeitureof the wool is incurred, as in other goods, but the usual additionalpenalty of 3s. For every pound weight is likewise incurred. 

Our woollen manufacturers, in order to justify their demand of suchextraordinary restrictions and regulations, confidently asserted, thatEnglish wool was of a peculiar quality, superior to that of any othercountry; that the wool of other countries could not, without somemixture of it, be wrought up into any tolerable manufacture; that finecloth could not be made without it; that England, therefore, if theexportation of it could be totally prevented, could monopolize toherself almost the whole woollen trade of the world; and thus, havingno rivals, could sell at what price she pleased, and in a short timeacquire the most incredible degree of wealth by the most advantageousbalance of trade. This doctrine, like most other doctrines which areconfidently asserted by any considerable number of people, was, andstill continues to be, most implicitly believed by a much greaternumber: by almost all those who are either unacquainted with the woollentrade, or who have not made particular inquiries. It is, however, soperfectly false, that English wool is in any respect necessary for themaking of fine cloth, that it is altogether unfit for it. Fine cloth ismade altogether of Spanish wool. English wool, cannot be even so mixedwith Spanish wool, as to enter into the composition without spoiling anddegrading, in some degree, the fabric of the cloth. 

It has been shown in the foregoing part of this work, that the effectof these regulations has been to depress the price of English wool, notonly below what it naturally would be in the present times, but verymuch below what it actually was in the time of Edward III. The price ofScotch wool, when, in consequence of the Union, it became subject to thesame regulations, is said to have fallen about one half. It is observedby the very accurate and intelligent author of the Memoirs of Wool, the Reverend Mr. John Smith, that the price of the best English woolin England, is generally below what wool of a very inferior qualitycommonly sells for in the market of Amsterdam. To depress the price ofthis commodity below what may be called its natural and proper price, was the avowed purpose of those regulations; and there seems to be nodoubt of their having produced the effect that was expected from them. 

This reduction of price, it may perhaps be thought, by discouraging thegrowing of wool, must have reduced very much the annual produce of thatcommodity, though not below what it formerly was, yet below what, inthe present state of things, it would probably have been, had it, inconsequence of an open and free market, been allowed to rise to thenatural and proper price. I am, however, disposed to believe, that thequantity of the annual produce cannot have been much, though it may, perhaps, have been a little affected by these regulations. The growingof wool is not the chief purpose for which the sheep farmer employs hisindustry and stock. He expects his profit, not so much from the priceof the fleece, as from that of the carcase; and the average or ordinaryprice of the latter must even, in many cases, make up to him whateverdeficiency there may be in the average or ordinary price of the former. It has been observed, in the foregoing part of this work, that 'whateverregulations tend to sink the price, either of wool or of raw hides, below what it naturally would be, must, in an improved and cultivatedcountry, have some tendency to raise the price of butcher's meat. Theprice, both of the great and small cattle which are fed on improved andcultivated land, must be sufficient to pay the rent which the landlord, and the profit which the farmer, has reason to expect from improvedand 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 thehide, must be paid by the carcase. The less there is paid for the one, the more must be paid for the other. In what manner this price is tobe divided upon the different parts of the beast, is indifferent to thelandlords and farmers, provided it is all paid to them. In an improvedand 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. 'According to this reasoning, therefore, this degradation in the price ofwool is not likely, in an improved and cultivated country, to occasionany diminution in the annual produce of that commodity; except so faras, by raising the price of mutton, it may somewhat diminish the demandfor, and consequently 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 produce may nothave been very considerable, its effect upon the quality, it may perhapsbe thought, must necessarily have been very great. The degradation inthe quality of English wool, if not below what it was in former times, yet below what it naturally would have been in the present state ofimprovement and cultivation, must have been, it may perhaps be supposed, very nearly in proportion to the degradation of price. As the qualitydepends upon the breed, upon the pasture, and upon the management andcleanliness of the sheep, during the whole progress of the growth of thefleece, the attention to these circumstances, it may naturally enoughbe imagined, can never be greater than in proportion to the recompencewhich the price of the fleece is likely to make for the labour andexpense which that attention requires. It happens, however, that thegoodness of the fleece depends, in a great measure, upon the health, growth, and bulk of the animal: the same attention which is necessaryfor the improvement of the carcase is, in some respect, sufficient forthat of the fleece. Notwithstanding the degradation of price, Englishwool is said to have been improved considerably during the course evenof the present century. The improvement, might, perhaps, have beengreater if the price had been better; but the lowness of price, thoughit may have obstructed, yet certainly it has not altogether preventedthat improvement. 

The violence of these regulations, therefore, seems to have affectedneither the quantity nor the quality of the annual produce of wool, somuch as it might have been expected to do (though I think it probablethat it may have affected the latter a good deal more than the former);and the interest of the growers of wool, though it must have been hurtin some degree, seems upon the whole, to have been much less hurt thancould well have been imagined. 

These considerations, however, will not justify the absolute prohibitionof the exportation of wool; but they will fully justify the impositionof 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 evidentlycontrary to that justice and equality of treatment which the sovereignowes to all the different orders of his subjects. But the prohibitioncertainly hurts, in some degree, the interest of the growers of wool, for no other purpose but to promote that of the manufacturers. 

Every different order of citizens is bound to contribute to thesupport of the sovereign or commonwealth. A tax of five, or even of tenshillings, upon the exportation of every tod of wool, would produce avery considerable revenue to the sovereign. It would hurt the interestof the growers somewhat less than the prohibition, because it wouldnot probably lower the price of wool quite so much. It would afford asufficient advantage to the manufacturer, because, though he might notbuy his wool altogether so cheap as under the prohibition, he wouldstill buy it at least five or ten shillings cheaper than any foreignmanufacturer could buy it, besides saving the freight and insurancewhich the other would be obliged to pay. It is scarce possible to devisea tax which could produce any considerable revenue to the sovereign, andat the same time occasion so little inconveniency to anybody. 

The prohibition, notwithstanding all the penalties which guard it, doesnot prevent the exportation of wool. It is exported, it is well known, in great quantities. The great difference between the price in the homeand that in the foreign market, presents such a temptation to smuggling, that all the rigour of the law cannot prevent it. This illegalexportation is advantageous to nobody but the smuggler. A legalexportation, subject to a tax, by affording a revenue to the sovereign, and thereby saving the imposition of some other, perhaps more burdensomeand inconvenient taxes, might prove advantageous to all the differentsubjects of the state. 

The exportation of fuller's earth, or fuller's clay, supposed to benecessary for preparing and cleansing the woollen manufactures, has beensubjected to nearly the same penalties as the exportation of wool. Eventobacco-pipe clay, though acknowledged to be different from fuller'sclay, yet, on account of their resemblance, and because fuller's claymight sometimes be exported as tobacco-pipe clay, has been laid underthe same prohibitions and penalties. 

By the 13th and 14th of Charles II. Chap, 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 to ourboot-makers and shoe-makers, not only against our graziers, but againstour tanners. By subsequent statutes, our tanners have got themselvesexempted from this monopoly, upon paying a small tax of only oneshilling on the hundred weight of tanned leather, weighing onehundred and twelve pounds. They have obtained likewise the drawback oftwo-thirds of the excise duties imposed upon their commodity, even whenexported without further manufacture. All manufactures of leather may beexported duty free; and the exporter is besides entitled to the drawbackof the whole duties of excise. Our graziers still continue subject tothe old monopoly. Graziers, separated from one another, and dispersedthrough all the different corners of the country, cannot, withoutgreat difficulty, combine together for the purpose either of imposingmonopolies upon their fellow-citizens, or of exempting themselves fromsuch as may have been imposed upon them by other people. Manufacturersof all kinds, collected together in numerous bodies in all great cities, easily can. Even the horns of cattle are prohibited to be exported; andthe two insignificant trades of the horner and comb-maker enjoy, in thisrespect, a monopoly against the graziers. 

Restraints, either by prohibitions, or by taxes, upon the exportationof goods which are partially, but not completely manufactured, are notpeculiar to the manufacture of leather. As long as anything remainsto be done, in order to fit any commodity for immediate use andconsumption, our manufacturers think that they themselves ought to havethe doing of it. Woollen yarn and worsted are prohibited to be exported, under the same penalties as wool even white cloths we subject to a dutyupon exportation; and our dyers have so far obtained a monopoly againstour clothiers. 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-makers are, itseems, unwilling that the price of this sort of workmanship should beraised upon them by the competition of foreigners. 

By some old statutes of Edward III, Henry VIII. And Edward VI. Theexportation of all metals was prohibited. Lead and tin were aloneexcepted, probably on account of the great abundance of those metals; inthe exportation of which a considerable part of the trade of the kingdomin those days consisted. For the encouragement of the mining trade, the5th of William and Mary, chap. 17, exempted from this prohibition iron, copper, and mundic metal made from British ore. The exportation ofall sorts of copper bars, foreign as well as British, was afterwardspermitted by the 9th and 10th of William III. Chap 26. The exportationof unmanufactured brass, of what is called gun-metal, bell-metal, andshroff metal, still continues to be prohibited. Brass manufactures ofall 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 Geo. I. Chap. 15, the exportation of all goods, the produce ofmanufacture of Great Britain, upon which any duties had been imposed byformer statutes, was rendered duty free. The following goods, however, were excepted: alum, lead, lead-ore, tin, tanned leather, copperas, coals, wool, cards, white woollen cloths, lapis calaminaris, skins ofall sorts, glue, coney hair or wool, hares wool, hair of all sorts, horses, and litharge of lead. If you except horses, all these are eithermaterials of manufacture, or incomplete manufactures (which may beconsidered as materials for still further manufacture), or instrumentsof trade. This statute leaves them subject to all the old duties whichhad ever been imposed upon them, the old subsidy, and one per cent. Outwards. 

By the same statute, a great number of foreign drugs for dyers use areexempted from all duties upon importation. Each of them, however, isafterwards subjected to a certain duty, not indeed a very heavy one, upon exportation. Our dyers, it seems, while they thought it for theirinterest to encourage the importation of those drugs, by an exemptionfrom all duties, thought it likewise for their own interest to throwsome small discouragement upon their exportation. The avidity, however, which suggested this notable piece of mercantile ingenuity, mostprobably disappointed itself of its object. It necessarily taught theimporters to be more careful than they might otherwise have been, thattheir importation should not exceed what was necessary for the supplyof the home market. The home market was at all times likely to bemore scantily supplied; the commodities were at all times likely to besomewhat dearer there than they would have been, had the exportationbeen rendered as free as the importation. 

By the above-mentioned statute, gum senega, or gum arabic, being amongthe enumerated dyeing drugs, might be imported duty free. Theywere subjected, indeed, to a small poundage duty, amounting only tothreepence in the hundred weight, upon their re-exportation. Franceenjoyed, at that time, an exclusive trade to the country most productiveof those drugs, that which lies in the neighbourhood of the Senegal;and the British market could not be easily supplied by the immediateimportation of them from the place of growth. By the 25th Geo. II. Therefore, gum senega was allowed to be imported (contrary to thegeneral dispositions of the act of navigation) from any part of Europe. As the law, however, did not mean to encourage this species of trade, socontrary to the general principles of the mercantile policy of England, it imposed a duty of ten shillings the hundred weight upon suchimportation, and no part of this duty was to be afterwards drawn backupon its exportation. The successful war which began in 1755 gave GreatBritain the same exclusive trade to those countries which Francehad enjoyed before. Our manufactures, as soon as the peace was made, endeavoured to avail themselves of this advantage, and to establish amonopoly in their own favour both against the growers and against theimporters of this commodity. By the 5th of Geo. III. Therefore, chap. 37, the exportation of gum senega, from his majesty's dominions inAfrica, was confined to Great Britain, and was subjected to all the samerestrictions, regulations, forfeitures, and penalties, as that of theenumerated commodities of the British colonies in America and theWest Indies. Its importation, indeed, was subjected to a small duty ofsixpence the hundred weight; but its re-exportation was subjected to theenormous duty of one pound ten shillings the hundred weight. It wasthe intention of our manufacturers, that the whole produce of thosecountries should be imported into Great Britain; and in order that theythemselves might be enabled to buy it at their own price, that nopart of it should be exported again, but at such an expense as wouldsufficiently discourage that exportation. Their avidity, however, uponthis, as well as upon many other occasions, disappointed itself of itsobject. This enormous duty presented such a temptation to smuggling, that great quantities of this commodity were clandestinely exported, probably to all the manufacturing countries of Europe, but particularlyto Holland, not only from Great Britain, but from Africa. Upon thisaccount, by the 14th Geo. III. Chap. 10, this duty upon exportation wasreduced to five shillings the hundred weight. 

In the book of rates, according to which the old subsidy was levied, beaver skins were estimated at six shillings and eight pence a piece;and the different subsidies and imposts which, before the year 1722, had been laid upon their importation, amounted to one-fifth part of therate, or to sixteen pence upon each skin; all of which, except halfthe old subsidy, amounting only to twopence, was drawn back uponexportation. This duty, upon the importation of so important a materialof manufacture, had been thought too high; and, in the year 1722, therate was reduced to two shillings and sixpence, which reduced the dutyupon importation to sixpence, and of this only one-half was to be drawnback upon exportation. The same successful war put the country mostproductive of beaver under the dominion of Great Britain; and beaverskins being among the enumerated commodities, the exportation fromAmerica was consequently confined to the market of Great Britain. Ourmanufacturers soon bethought themselves of the advantage which theymight make of this circumstance; and in the year 1764, the duty upon theimportation of beaver skin was reduced to one penny, but the duty uponexportation was raised to sevenpence each skin, without any drawback ofthe duty upon importation. By the same law, a duty of eighteen pence thepound was imposed upon the exportation of beaver wool or woumbs, without making any alteration in the duty upon the importation of thatcommodity, which, when imported by British, and in British shipping, amounted at that time to between fourpence and fivepence the piece. 

Coals may be considered both as a material of manufacture, and as aninstrument of trade. Heavy duties, accordingly, have been imposedupon their exportation, amounting at present (1783) to more thanfive shillings the ton, or more than fifteen shillings the chaldron, Newcastle measure; which is, in most cases, more than the originalvalue of the commodity at the coal-pit, or even at the shipping port forexportation. 

The exportation, however, of the instruments of trade, properly socalled, is commonly restrained, not by high duties, but by absoluteprohibitions. Thus, by the 7th and 8th of William III chap. 20, sect. 8, the exportation of frames or engines for knitting gloves or stockings, is prohibited, under the penalty, not only of the forfeiture of suchframes or engines, so exported, or attempted to be exported, but offorty pounds, one half to the king, the other to the person who shallinform or sue for the same. In the same manner, by the 14th Geo. III. Chap. 71, the exportation to foreign parts, of any utensils made useof in the cotton, linen, woollen, and silk manufactures, is prohibitedunder the penalty, not only of the forfeiture of such utensils, but oftwo hundred pounds, to be paid by the person who shall offend in thismanner; and likewise of two hundred pounds, to be paid by the master ofthe ship, who shall knowingly suffer such utensils to be loaded on boardhis ship. 

When such heavy penalties were imposed upon the exportation of the deadinstruments of trade, it could not well be expected that the livinginstrument, the artificer, should be allowed to go free. Accordingly, bythe 5th Geo. I. Chap. 27, the person who shall be convicted of enticingany artificer, of or in any of the manufactures of Great Britain, togo into any foreign parts, in order to practise or teach his trade, isliable, for the first offence, to be fined in any sum not exceeding onehundred pounds, and to three months imprisonment, and until the fineshall be paid; and for the second offence, to be fined in any sum, atthe discretion of the court, and to imprisonment for twelve months, anduntil the fine shall be paid. By the 23d Geo. II. Chap. 13, this penaltyis increased, for the first offence, to five hundred pounds for everyartificer so enticed, and to twelve months imprisonment, and until thefine shall be paid; and for the second offence, to one thousand pounds, and to two years imprisonment, and until the fine shall be paid. 

By the former of these two statutes, upon proof that any person has beenenticing any artificer, or that any artificer has promised or contractedto go into foreign parts, for the purposes aforesaid, such artificermay be obliged to give security, at the discretion of the court, thathe shall not go beyond the seas, and may be committed to prison until hegive such security. 

If any artificer has gone beyond the seas, and is exercising or teachinghis trade in any foreign country, upon warning being given to him by anyof his majesty's ministers or consuls abroad, or by one of his majesty'ssecretaries of state, for the time being, if he does not, within sixmonths after such warning, return into this realm, and from henceforthabide and inhabit continually within the same, he is from thenceforthdeclared incapable of taking any legacy devised to him within thiskingdom, or of being executor or administrator to any person, or oftaking any lands within this kingdom, by descent, devise, or purchase. He likewise forfeits to the king all his lands, goods, and chattels;is declared an alien in every respect; and is put out of the king'sprotection. 

It is unnecessary, I imagine, to observe how contrary such regulationsare to the boasted liberty of the subject, of which we affect to be sovery jealous; but which, in this case, is so plainly sacrificed to thefutile interests of our merchants and manufacturers. 

The laudable motive of all these regulations, is to extend our ownmanufactures, not by their own improvement, but by the depression ofthose of all our neighbours, and by putting an end, as much as possible, to the troublesome competition of such odious and disagreeable rivals. Our master manufacturers think it reasonable that they themselves shouldhave the monopoly of the ingenuity of all their countrymen. Though byrestraining, in some trades, the number of apprentices which canbe employed at one time, and by imposing the necessity of a longapprenticeship in all trades, they endeavour, all of them, to confinethe knowledge of their respective employments to as small a numberas possible; they are unwilling, however, that any part of this smallnumber should go abroad to instruct foreigners. 

Consumption is the sole end and purpose of all production; and theinterest of the producer ought to be attended to, only so far as it maybe necessary for promoting that of the consumer. 

The maxim is so perfectly self-evident, that it would be absurd toattempt to prove it. But in the mercantile system, the interest of theconsumer is almost constantly sacrificed to that of the producer; and itseems to consider production, and not consumption, as the ultimate endand object of all industry and commerce. 

In the restraints upon the importation of all foreign commodities whichcan come into competition with those of our own growth or manufacture, the interest of the home consumer is evidently sacrificed to that ofthe producer. It is altogether for the benefit of the latter, that theformer is obliged to pay that enhancement of price which this monopolyalmost always occasions. 

It is altogether for the benefit of the producer, that bounties aregranted upon the exportation of some of his productions. The homeconsumer is obliged to pay, first the tax which is necessary for payingthe bounty; and, secondly, the still greater tax which necessarilyarises from the enhancement of the price of the commodity in the homemarket. 

By the famous treaty of commerce with Portugal, the consumer isprevented by duties from purchasing of a neighbouring country, acommodity which our own climate does not produce; but is obliged topurchase it of a distant country, though it is acknowledged, that thecommodity of the distant country is of a worse quality than that of thenear one. The home consumer is obliged to submit to this inconvenience, in order that the producer may import into the distant country some ofhis productions, upon more advantageous terms than he otherwise wouldhave been allowed to do. The consumer, too, is obliged to pay whateverenhancement in the price of those very productions this forcedexportation may occasion in the home market. 

But in the system of laws which has been established for the managementof our American and West Indian colonies, the interest of the homeconsumer has been sacrificed to that of the producer, with a moreextravagant profusion than in all our other commercial regulations. Agreat empire has been established for the sole purpose of raising up anation of customers, who should be obliged to buy, from the shops of ourdifferent producers, all the goods with which these could supply them. For the sake of that little enhancement of price which this monopolymight afford our producers, the home consumers have been burdened withthe whole expense of maintaining and defending that empire. For thispurpose, and for this purpose only, in the two last wars, more than twohundred millions have been spent, and a new debt of more than a hundredand seventy millions has been contracted, over and above all that hadbeen expended for the same purpose in former wars. The interest ofthis debt alone is not only greater than the whole extraordinary profitwhich, it never could be pretended, was made by the monopoly of thecolony trade, but than the whole value of that trade, or than the wholevalue of the goods which, at an average, have been annually exported tothe colonies. 

It cannot be very difficult to determine who have been the contrivers ofthis whole mercantile system; not the consumers, we may believe, whoseinterest has been entirely neglected; but the producers, whose interesthas been so carefully attended to; and among this latter class, ourmerchants and manufacturers have been by far the principal architects. In the mercantile regulations which have been taken notice of in thischapter, the interest of our manufacturers has been most peculiarlyattended to; and the interest, not so much of the consumers, as that ofsome other sets of producers, has been sacrificed to it. 

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

The agricultural systems of political economy will not require so longan explanation as that which I have thought it necessary to bestow uponthe mercantile or commercial system. 

That system which represents the produce of land as the sole source ofthe revenue and wealth of every country, has so far as I know, neverbeen adopted by any nation, and it at present exists only in thespeculations of a few men of great learning and ingenuity in France. Itwould not, surely, be worth while to examine at great length the errorsof a system which never has done, and probably never will do, any harmin any part of the world. I shall endeavour to explain, however, asdistinctly as I can, the great outlines of this very ingenious system. 

Mr. Colbert, the famous minister of Lewis XIV. Was a man of probity, of great industry, and knowledge of detail; of great experience andacuteness in the examination of public accounts; and of abilities, inshort, every way fitted for introducing method and good order into thecollection and expenditure of the public revenue. That minister hadunfortunately embraced all the prejudices of the mercantile system, inits nature and essence a system of restraint and regulation, and suchas could scarce fail to be agreeable to a laborious and plodding man ofbusiness, who had been accustomed to regulate the different departmentsof public offices, and to establish the necessary checks and controlsfor confining each to its proper sphere. The industry and commerce ofa great country, he endeavoured to regulate upon the same model as thedepartments of a public office; and instead of allowing every man topursue his own interest his own way, upon the liberal plan of equality, liberty, and justice, he bestowed upon certain branches of industryextraordinary privileges, while he laid others under as extraordinaryrestraints. He was not only disposed, like other European ministers, toencourage more the industry of the towns than that of the country; but, in order to support the industry of the towns, he was willing even todepress and 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 the countryfrom every foreign market, for by far the most important part of theproduce of their industry. This prohibition, joined to the restraintsimposed by the ancient provincial laws of France upon the transportationof corn from one province to another, and to the arbitrary and degradingtaxes which are levied upon the cultivators in almost all the provinces, discouraged and kept down the agriculture of that country very muchbelow the state to which it would naturally have risen in sovery fertile a soil, and so very happy a climate. This state ofdiscouragement and depression was felt more or less in every differentpart of the country, and many different inquiries were set on footconcerning the causes of it. One of those causes appeared to be thepreference given, by the institutions of Mr. Colbert, to the industry ofthe towns above that of the country. 

If the rod be bent too much one way, says the proverb, in order tomake it straight, you must bend it as much the other. The Frenchphilosophers, who have proposed the system which represents agricultureas the sole source of the revenue and wealth of every country, seem tohave adopted this proverbial maxim; and, as in the plan of Mr. Colbert, the industry of the towns was certainly overvalued in comparison withthat of the country, so in their system it seems to be as certainlyunder-valued. 

The different orders of people, who have ever been supposed tocontribute in any respect towards the annual produce of the land andlabour of the country, they divide into three classes. The first isthe class of the proprietors of land. The second is the class of thecultivators, of farmers and country labourers, whom they honour with thepeculiar appellation of the productive class. The third is the class ofartificers, manufacturers, and merchants, whom they endeavour to degradeby the humiliating appellation of the barren or unproductive class. 

The class of proprietors contributes to the annual produce, by theexpense which they may occasionally lay out upon the improvement of theland, upon the buildings, drains, inclosures, and other ameliorations, which they may either make or maintain upon it, and by means of whichthe cultivators are enabled, with the same capital, to raise a greaterproduce, and consequently to pay a greater rent. This advanced rent maybe considered as the interest or profit due to the proprietor, upon theexpense or capital which he thus employs in the improvement of hisland. Such expenses are in this system called ground expenses (depensesfoncieres). 

The cultivators or farmers contribute to the annual produce, by whatare in this system called the original and annual expenses (depensesprimitives, et depenses annuelles), which they lay out upon thecultivation 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, during atleast a great part of the first year of his occupancy, or till he canreceive some return from the land. The annual expenses consist in theseed, in the wear and tear of instruments of husbandry, and in theannual maintenance of the farmer's servants and cattle, and of hisfamily too, so far as any part of them can be considered as servantsemployed in cultivation. That part of the produce of the land whichremains to him after paying the rent, ought to be sufficient, first, toreplace to him, within a reasonable time, at least during the term ofhis occupancy, the whole of his original expenses, together with theordinary profits of stock; and, secondly, to replace to him annuallythe whole of his annual expenses, together likewise with the ordinaryprofits of stock. Those two sorts of expenses are two capitals which thefarmer employs in cultivation; and unless they are regularly restoredto him, together with a reasonable profit, he cannot carry on hisemployment upon a level with other employments; but, from a regard tohis own interest, must desert it as soon as possible, and seek someother. That part of the produce of the land which is thus necessary forenabling the farmer to continue his business, ought to be consideredas a fund sacred to cultivation, which, if the landlord violates, henecessarily reduces the produce of his own land, and, in a few years, not only disables the farmer from paying this racked rent, but frompaying the reasonable rent which he might otherwise have got for hisland. The rent which properly belongs to the landlord, is no more thanthe neat produce which remains after paying, in the completest manner, all the necessary expenses which must be previously laid out, in orderto raise the gross or the whole produce. It is because the labour ofthe cultivators, over and above paying completely all those necessaryexpenses, affords a neat produce of this kind, that this class ofpeople are in this system peculiarly distinguished by the honourableappellation of the productive class. Their original and annual expensesare for the same reason called, In this system, productive expenses, because, over and above replacing their own value, they occasion theannual reproduction of this neat produce. 

The ground expenses, as they are called, or what the landlord lays outupon the improvement of his land, are, in this system, too, honouredwith the appellation of productive expenses. Till the whole of thoseexpenses, together with the ordinary profits of stock, have beencompletely repaid to him by the advanced rent which he gets from hisland, that advanced rent ought to be regarded as sacred and inviolable, both by the church and by the king; ought to be subject neither to tithenor to taxation. If it is otherwise, by discouraging the improvement ofland, the church discourages the future increase of her own tithes, and the king the future increase of his own taxes. As in a well orderedstate of things, therefore, those ground expenses, over and abovereproducing in the completest manner their own value, occasion likewise, after a certain time, a reproduction of a neat produce, they are in thissystem considered as productive expenses. 

The ground expenses of the landlord, however, together with the originaland the annual expenses of the farmer, are the only three sorts ofexpenses which in this system are considered as productive. All otherexpenses, and all other orders of people, even those who, in the commonapprehensions of men, are regarded as the most productive, are, in thisaccount of things, represented as altogether barren and unproductive. 

Artificers and manufacturers, in particular, whose industry, in thecommon apprehensions of men, increases so much the value of the rudeproduce of land, are in this system represented as a class of peoplealtogether barren and unproductive. Their labour, it is said, replacesonly the stock which employs them, together with its ordinary profits. That stock consists in the materials, tools, and wages, advanced to themby their employer; and is the fund destined for their employment andmaintenance. Its profits are the fund destined for the maintenance oftheir employer. Their employer, as he advances to them the stock ofmaterials, tools, and wages, necessary for their employment, so headvances to himself what is necessary for his own maintenance; and thismaintenance he generally proportions to the profit which he expectsto make by the price of their work. Unless its price repays to him themaintenance which he advances to himself, as well as the materials, tools, and wages, which he advances to his workmen, it evidently doesnot repay to him the whole expense which he lays out upon it. Theprofits of manufacturing stock, therefore, are not, like the rent ofland, a neat produce which remains after completely repaying the wholeexpense which must be laid out in order to obtain them. The stock of thefarmer yields him a profit, as well as that of the master manufacturer;and it yields a rent likewise to another person, which that of themaster manufacturer does not. The expense, therefore, laid out inemploying and maintaining artificers and manufacturers, does no morethan continue, if one may say so, the existence of its own value, anddoes not produce any new value. It is, therefore, altogether a barrenand unproductive expense. The expense, on the contrary, laid out inemploying farmers and country labourers, over and above continuingthe existence of its own value, produces a new value the rent of thelandlord. It is, therefore, a productive expense. 

Mercantile stock is equally barren and unproductive with manufacturingstock. It only continues the existence of its own value, withoutproducing any new value. Its profits are only the repayment of themaintenance which its employer advances to himself during the time thathe employs it, or till he receives the returns of it. They are only therepayment of a part of the expense which must be laid out in employingit. 

The labour of artificers and manufacturers never adds any thing to thevalue of the whole annual amount of the rude produce of the land. Itadds, indeed, greatly to the value of some particular parts of it. Butthe consumption which, in the mean time, it occasions of other parts, isprecisely equal to the value which it adds to those parts; so that thevalue of the whole amount is not, at any one moment of time, in theleast augmented by it. The person who works the lace of a pair of fineruffles for example, will sometimes raise the value of, perhaps, apennyworth of flax to £30 sterling. But though, at first sight, heappears thereby to multiply the value of a part of the rude produceabout seven thousand and two hundred times, he in reality adds nothingto the value of the whole annual amount of the rude produce. The workingof that lace costs him, perhaps, two years labour. The £30 which hegets for it when it is finished, is no more than the repayment of thesubsistence which he advances to himself during the two years that he isemployed about it. The value which, by every day's, month's, or year'slabour, he adds to the flax, does no more than replace the value of hisown consumption during that day, month, or year. At no moment of time, therefore, does he add any thing to the value of the whole annual amountof the rude produce of the land: the portion of that produce which heis continually consuming, being always equal to the value which he iscontinually producing. The extreme poverty of the greater part of thepersons employed in this expensive, though trifling manufacture, maysatisfy us that the price of their work does not, in ordinary cases, exceed the value of their subsistence. It is otherwise with the workof farmers and country labourers. The rent of the landlord is a valuewhich, in ordinary cases, it is continually producing over and abovereplacing, in the most complete manner, the whole consumption, the wholeexpense laid out upon the employment and maintenance both of the workmenand of their employer. 

Artificers, manufacturers, and merchants, can augment the revenue andwealth of their society by parsimony only; or, as it is expressed inthis system, by privation, that is, by depriving themselves of a partof the funds destined for their own subsistence. They annually reproducenothing but those funds. Unless, therefore, they annually save some partof them, unless they annually deprive themselves of the enjoyment ofsome part of them, the revenue and wealth of their society can never be, in the smallest degree, augmented by means of their industry. Farmersand country labourers, on the contrary, may enjoy completely the wholefunds destined for their own subsistence, and yet augment, at the sametime, the revenue and wealth of their society. Over and above what isdestined for their own subsistence, their industry annually affords aneat produce, of which the augmentation necessarily augments the revenueand wealth of their society. Nations, therefore, which, like France orEngland, consist in a great measure, of proprietors and cultivators, canbe enriched by industry and enjoyment. Nations, on the contrary, which, like Holland and Hamburgh, are composed chiefly of merchants, artificers, and manufacturers, can grow rich only through parsimony andprivation. As the interest of nations so differently circumstanced isvery different, so is likewise the common character of the people. Inthose of the former kind, liberality, frankness, and good fellowship, naturally make a part of their common character; in the latter, narrowness, meanness, and a selfish disposition, averse to all socialpleasure and enjoyment. 

The unproductive class, that of merchants, artificers, andmanufacturers, is maintained and employed altogether at the expenseof the two other classes, of that of proprietors, and of that ofcultivators. They furnish it both with the materials of its work, andwith the fund of its subsistence, with the corn and cattle which itconsumes while it is employed about that work. The proprietors andcultivators finally pay both the wages of all the workmen of theunproductive class, and the profits of all their employers. Thoseworkmen and their employers are properly the servants of the proprietorsand cultivators. They are only servants who work without doors, asmenial servants work within. Both the one and the other, however, areequally maintained at the expense of the same masters. The labour ofboth is equally unproductive. It adds nothing to the value of the sumtotal of the rude produce of the land. Instead of increasing the valueof that sum total, it is a charge and expense which must be paid out ofit. 

The unproductive class, however, is not only useful, but greatlyuseful, to the other two classes. By means of the industry of merchants, artificers, and manufacturers, the proprietors and cultivators canpurchase both the foreign goods and the manufactured produce of theirown country, which they have occasion for, with the produce of a muchsmaller quantity of their own labour, than what they would be obligedto employ, if they were to attempt, in an awkward and unskilful manner, either to import the one, or to make the other, for their own use. Bymeans of the unproductive class, the cultivators are delivered frommany cares, which would otherwise distract their attention from thecultivation of land. The superiority of produce, which in consequence ofthis undivided attention, they are enabled to raise, is fully sufficientto pay the whole expense which the maintenance and employment of theunproductive class costs either the proprietors or themselves. Theindustry of merchants, artificers, and manufacturers, though in itsown nature altogether unproductive, yet contributes in this mannerindirectly to increase the produce of the land. It increases theproductive powers of productive labour, by leaving it at liberty toconfine itself to its proper employment, the cultivation of land; andthe plough goes frequently the easier and the better, by means of thelabour of the man 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 thisunproductive class enjoys, the greater will be the competition in allthe different trades which compose it, and the cheaper will theother two classes be supplied, both with foreign goods and with themanufactured 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 must likewisebe the maintenance and employment of that class. The establishment ofperfect justice, of perfect liberty, and of perfect equality, is thevery simple secret which most effectually secures the highest degree ofprosperity to all the three classes. 

The merchants, artificers, and manufacturers of those mercantile states, which, like Holland and Hamburgh, consist chiefly of this unproductiveclass, are in the same manner maintained and employed altogether at theexpense of the proprietors and cultivators of land. The only differenceis, that those proprietors and cultivators are, the greater partof them, placed at a most inconvenient distance from the merchants, artificers, and manufacturers, whom they supply with the materials oftheir work and the fund of their subsistence; are the inhabitants ofother countries, and the subjects of other governments. 

Such mercantile states, however, are not only useful, but greatlyuseful, to the inhabitants of those other countries. They fill up, in some measure, a very important void; and supply the place of themerchants, artificers, and manufacturers, whom the inhabitants of thosecountries ought to find at home, but whom, from some defect in theirpolicy, they do not find at home. 

It can never be the interest of those landed nations, if I may call themso, to discourage or distress the industry of such mercantile states, by imposing high duties upon their trade, or upon the commodities whichthey furnish. Such duties, by rendering those commodities dearer, couldserve only to sink the real value of the surplus produce of their ownland, with which, or, what comes to the same thing, with the price ofwhich those commodities are purchased. Such duties could only serve todiscourage the increase of that surplus produce, and consequentlythe improvement and cultivation of their own land. The most effectualexpedient, on the contrary, for raising the value of that surplusproduce, for encouraging its increase, and consequently the improvementand cultivation 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 effectual expedientfor supplying them, in due time, with all the artificers, manufacturers, and merchants, whom they wanted at home; and for filling up, in theproperest and most advantageous manner, that very important void whichthey felt there. 

The continual increase of the surplus produce of their land would, indue time, create a greater capital than what would be employed with theordinary rate of profit in the improvement and cultivation of land; andthe surplus part of it would naturally turn itself to the employmentof artificers and manufacturers, at home. But these artificers andmanufacturers, finding at home both the materials of their work and thefund of their subsistence, might immediately, even with much lessart and skill be able to work as cheap as the little artificers andmanufacturers of such mercantile states, who had both to bring from agreater distance. Even though, from want of art and skill, they mightnot for some time be able to work as cheap, yet, finding a market athome, they might be able to sell their work there as cheap as that ofthe artificers and manufacturers of such mercantile states, which couldnot be brought to that market but from so great a distance; and as theirart and skill improved, they would soon be able to sell it cheaper. Theartificers and manufacturers of such mercantile states, therefore, wouldimmediately be rivalled in the market of those landed nations, and soonafter undersold and justled out of it altogether. The cheapness of themanufactures of those landed nations, in consequence of the gradualimprovements of art and skill, would, in due time, extend their salebeyond the home market, and carry them to many foreign markets, fromwhich they would, in the same manner, gradually justle out many of themanufacturers of such mercantile nations. 

This continual increase, both of the rude and manufactured produce ofthose landed nations, would, in due time, create a greater capitalthan could, with the ordinary rate of profit, be employed either inagriculture or in manufactures. The surplus of this capital wouldnaturally turn itself to foreign trade and be employed in exporting, toforeign countries, such parts of the rude and manufactured produceof its own country, as exceeded the demand of the home market. In theexportation of the produce of their own country, the merchants of alanded nation would have an advantage of the same kind over those ofmercantile nations, which its artificers and manufacturers had over theartificers and manufacturers of such nations; the advantage of findingat home that cargo, and those stores and provisions, which the otherswere obliged to seek for at a distance. With inferior art and skill innavigation, therefore, they would be able to sell that cargo as cheapin foreign markets as the merchants of such mercantile nations; and withequal art and skill they would be able to sell it cheaper. They wouldsoon, therefore, rival those mercantile nations in this branch offoreign trade, and, in due time, would justle them out of it altogether. 

According to this liberal and generous system, therefore, the mostadvantageous method in which a landed nation can raise up artificers, manufacturers, and merchants of its own, is to grant the most perfectfreedom of trade to the artificers, manufacturers, and merchants of allother nations. It thereby raises the value of the surplus produce of itsown land, of which the continual increase gradually establishes afund, which, in due time, necessarily raises up all the artificers, manufacturers, and merchants, whom it has occasion for. 

When a landed nation on the contrary, oppresses, either by high dutiesor by prohibitions, the trade of foreign nations, it necessarily hurtsits own interest in two different ways. First, by raising the priceof all foreign goods, and of all sorts of manufactures, it necessarilysinks the real value of the surplus produce of its own land, with which, or, what comes to the same thing, with the price of which, it purchasesthose foreign goods and manufactures. Secondly, by giving a sort ofmonopoly of the home market to its own merchants, artificers, andmanufacturers, it raises the rate of mercantile and manufacturingprofit, in proportion to that of agricultural profit; and, consequently, either draws from agriculture a part of the capital which had beforebeen employed in it, or hinders from going to it a part of whatwould otherwise have gone to it. This policy, therefore, discouragesagriculture in two different ways; first, by sinking the real valueof its produce, and thereby lowering the rate of its profits; and, secondly, by raising the rate of profit in all other employments. Agriculture is rendered less advantageous, and trade and manufacturesmore advantageous, than they otherwise would be; and every man istempted by his own interest to turn, as much as he can, both his capitaland his industry from the former to the latter employments. 

Though, by this oppressive policy, a landed nation should be able toraise up artificers, manufacturers, and merchants of its own, somewhatsooner than it could do by the freedom of trade; a matter, however, which is not a little doubtful; yet it would raise them up, if onemay say so, prematurely, and before it was perfectly ripe for them. Byraising up too hastily one species of industry, it would depress anothermore valuable species of industry. By raising up too hastily a speciesof industry which duly replaces the stock which employs it, togetherwith the ordinary profit, it would depress a species of industry which, over and above replacing that stock, with its profit, affords likewisea neat produce, 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 the annualproduce of the land is distributed among the three classes abovementioned, and in what manner the labour of the unproductive classdoes no more than replace the value of its own consumption, withoutincreasing in any respect the value of that sum total, is representedby Mr Quesnai, the very ingenious and profound author of this system, insome arithmetical formularies. The first of these formularies, which, by way of eminence, he peculiarly distinguishes by the name of theEconomical Table, represents the manner in which he supposes thisdistribution takes place, in a state of the most perfect liberty, and, therefore, of the highest prosperity; in a state where the annualproduce is such as to afford the greatest possible neat produce, andwhere each class enjoys its proper share of the whole annual produce. Some subsequent formularies represent the manner in which he supposesthis distribution is made in different states of restraint andregulation; in which, either the class of proprietors, or the barren andunproductive class, is more favoured than the class of cultivators; andin which either the one or the other encroaches, more or less, upon theshare which ought properly to belong to this productive class. Everysuch encroachment, every violation of that natural distribution, whichthe most perfect liberty would establish, must, according to thissystem, necessarily degrade, more or less, from one year to another, thevalue and sum total of the annual produce, and must necessarily occasiona gradual declension in the real wealth and revenue of the society; adeclension, of which the progress must be quicker or slower, accordingto the degree of this encroachment, according as that naturaldistribution, which the most perfect liberty would establish, is moreor less violated. Those subsequent formularies represent the differentdegrees of declension which, according to this system, correspond tothe different degrees in which this natural distribution of things isviolated. 

Some speculative physicians seem to have imagined that the health of thehuman body could be preserved only by a certain precise regimen ofdiet and exercise, of which every, the smallest violation, necessarilyoccasioned some degree of disease or disorder proportionate to thedegree of the violation. Experience, however, would seem to shew, thatthe human body frequently preserves, to all appearance at least, themost perfect state of health under a vast variety of different regimens;even under some which are generally believed to be very far from beingperfectly wholesome. But the healthful state of the human body, it wouldseem, contains in itself some unknown principle of preservation, capableeither of preventing or of correcting, in many respects, the bad effectseven of a very faulty regimen. Mr Quesnai, who was himself a physician, and a very speculative physician, seems to have entertained a notion ofthe same kind concerning the political body, and to have imagined thatit would thrive and prosper only under a certain precise regimen, theexact regimen of perfect liberty and perfect justice. He seems not tohave considered, 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, in manyrespects, the bad effects of a political economy, in some degree bothpartial and oppressive. Such a political economy, though it no doubtretards more or less, is not always capable of stopping altogether, thenatural progress of a nation towards wealth and prosperity, and stillless of making it go backwards. If a nation could not prosper withoutthe enjoyment of perfect liberty and perfect justice, there is not inthe world a nation which could ever have prospered. In the politicalbody, however, the wisdom of nature has fortunately made ample provisionfor remedying many of the bad effects of the folly and injustice of man;it the same manner as it has done in the natural body, for remedyingthose of his sloth and intemperance. 

The capital error of this system, however, seems to lie in itsrepresenting the class of artificers, manufacturers, and merchants, asaltogether barren and unproductive. The following observations may serveto shew the impropriety of this representation:--

First, this class, it is acknowledged, reproduces annually the value ofits own annual consmnption, and continues, at least, the existence ofthe stock or capital which maintains and employs it. But, upon thisaccount alone, the denomination of barren or unproductive should seem tobe very improperly applied to it. We should not call a marriage barrenor unproductive, though it produced only a son and a daughter, toreplace the father and mother, and though it did not increase the numberof the human species, but only continued it as it was before. Farmersand country labourers, indeed, over and above the stock which maintainsand employs them, reproduce annually a neat produce, a free rent to thelandlord. As a marriage which affords three children is certainly moreproductive than one which affords only two, so the labour of farmers andcountry labourers is certainly more productive than that of merchants, artificers, and manufacturers. The superior produce of the one class, however, does not, render the other barren or unproductive. 

Secondly, it seems, on this account, altogether improper to considerartificers, manufacturers, and merchants, in the same light as menialservants. The labour of menial servants does not continue the existenceof the fund which maintains and employs them. Their maintenance andemployment is altogether at the expense of their masters, and the workwhich they perform is not of a nature to repay that expense. That workconsists in services which perish generally in the very instant oftheir performance, and does not fix or realize itself in any vendiblecommodity, which can replace the value of their wages and maintenance. The labour, on the contrary, of artificers, manufacturers, andmerchants, naturally 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 classed artificers, manufacturers, and merchants among the productive labourers, and menialservants among the barren or unproductive. 

Thirdly, it seems, upon every supposition, improper to say, that thelabour of artificers, manufacturers, and merchants, does not increasethe real revenue of the society. Though we should suppose, for example, as it seems to be supposed in this system, that the value of the daily, monthly, and yearly consumption of this class was exactly equal to thatof its daily, monthly, and yearly production; yet it would not fromthence follow, that its labour added nothing to the real revenue, to thereal value of the annual produce of the land and labour of the society. An artificer, for example, who, in the first six months after harvest, executes ten pounds worth of work, though he should, in the same time, consume ten pounds worth of corn and other necessaries, yet really addsthe value of ten pounds to the annual produce of the land and labour ofthe society. While he has been consuming a half-yearly revenue of tenpounds worth of corn and other necessaries, he has produced an equalvalue of work, capable of purchasing, either to himself, or to someother person, an equal half-yearly revenue. The value, therefore, ofwhat has been consumed and produced during these six months, is equal, not to ten, but to twenty pounds. It is possible, indeed, that no morethan ten pounds worth of this value may ever have existed at anyone moment of time. But if the ten pounds worth of corn and othernecessaries which were consumed by the artificer, had been consumed bya soldier, or by a menial servant, the value of that part of the annualproduce which existed at the end of the six months, would have beenten pounds less than it actually is in consequence of the labour of theartificer. Though the value of what the artificer produces, therefore, should not, at any one moment of time, be supposed greater than thevalue he consumes, yet, at every moment of time, the actually existingvalue of goods in the market is, in consequence of what he produces, greater than it otherwise would be. 

When the patrons of this system assert, that the consumption ofartificers, manufacturer's, and merchants, is equal to the value of whatthey produce, they probably mean no more than that their revenue, orthe fund destined for their consumption, is equal to it. But if theyhad expressed themselves more accurately, and only asserted, that therevenue of this class was equal to the value of what they produced, itmight readily have occurred to the reader, that what would naturally besaved out of this revenue, must necessarily increase more or less thereal wealth of the society. In order, therefore, to make out somethinglike an argument, it was necessary that they should express themselvesas they have done; and this argument, even supposing things actuallywere as it seems to presume them to be, turns out to be a veryinconclusive one. 

Fourthly, farmers and country labourers can no more augment, withoutparsimony, the real revenue, the annual produce of the land and labourof their society, than artificers, manufacturers, and merchants. Theannual produce of the land and labour of any society can be augmentedonly in two ways; either, first, by some improvement in the productivepowers of the useful labour actually maintained within it; or, secondly, by some increase in the quantity of that labour. 

The improvement in the productive powers of useful labour depends, first, upon the improvement in the ability of the workman; and, secondly, upon that of the machinery with which he works. But thelabour of artificers and manufacturers, as it is capable of beingmore subdivided, and the labour of each workman reduced to a greatersimplicity of operation, than that of farmers and country labourers;so it is likewise capable of both these sorts of improvement in a muchhigher degree {See book i chap. 1. } In this respect, therefore, the class of cultivators can have no sort of advantage over that ofartificers and manufacturers. 

The increase in the quantity of useful labour actually employed withinany society must depend altogether upon the increase of the capitalwhich employs it; and the increase of that capital, again, must beexactly equal to the amount of the savings from the revenue, eitherof the particular persons who manage and direct the employment of thatcapital, or of some other persons, who lend it to them. If merchants, artificers, and manufacturers are, as this system seems to suppose, naturally more inclined to parsimony and saving than proprietors andcultivators, they are, so far, more likely to augment the quantityof useful labour employed within their society, and consequently toincrease its real revenue, the annual produce of its land and labour. 

Fifthly and lastly, though the revenue of the inhabitants of everycountry was supposed to consist altogether, as this system seems tosuppose, in the quantity of subsistence which their industry couldprocure to them; yet, even upon this supposition, the revenue of atrading and manufacturing country must, other things being equal, alwaysbe much greater than that of one without trade or manufactures. By meansof trade and manufactures, a greater quantity of subsistence can beannually imported into a particular country, than what its own lands, inthe actual state of their cultivation, could afford. The inhabitants ofa town, though they frequently possess no lands of their own, yet drawto themselves, by their industry, such a quantity of the rude produce ofthe lands of other people, as supplies them, not only with the materialsof their work, but with the fund of their subsistence. What a townalways is with regard to the country in its neighbourhood, oneindependent state or country may frequently be with regard to otherindependent states or countries. It is thus that Holland draws a greatpart of its subsistence from other countries; live cattle from Holsteinand Jutland, and corn from almost all the different countries of Europe. A small quantity of manufactured produce, purchases a great quantity ofrude produce. A trading and manufacturing country, therefore, naturallypurchases, with a small part of its manufactured produce, a greatpart of the rude produce of other countries; while, on the contrary, acountry without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small partof the manufactured produce of other countries. The one exports what cansubsist and accommodate but a very few, and imports the subsistence andaccommodation of a great number. The other exports the accommodation andsubsistence of a great number, and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantityof subsistence than what their own lands, in the actual state of theircultivation, could afford. The inhabitants of the other must alwaysenjoy a much smaller quantity. 

This system, however, with all its imperfections, is perhaps the nearestapproximation to the truth that has yet been published upon thesubject of political economy; and is upon that account, well worth theconsideration of every man who wishes to examine with attention theprinciples of that very important science. Though in representing thelabour which is employed upon land as the only productive labour, thenotions which it inculcates are, perhaps, too narrow and confined;yet in representing the wealth of nations as consisting, not in theunconsumable riches of money, but in the consumable goods annuallyreproduced by the labour of the society, and in representing perfectliberty as the only effectual expedient for rendering this annualreproduction the greatest possible, its doctrine seems to be in everyrespect as just as it is generous and liberal. Its followers arevery numerous; and as men are fond of paradoxes, and of appearing tounderstand what surpasses the comprehensions of ordinary people, theparadox which it maintains, concerning the unproductive nature ofmanufacturing labour, has not, perhaps, contributed a little to increasethe number of its admirers. They have for some years past made a prettyconsiderable sect, distinguished in the French republic of letters bythe name of the Economists. Their works have certainly been of someservice to their country; not only by bringing into general discussion, many subjects which had never been well examined before, but byinfluencing, in some measure, the public administration in favourof agriculture. It has been in consequence of their representations, accordingly, that the agriculture of France has been delivered fromseveral of the oppressions which it before laboured under. The term, during which such a lease can be granted, as will be valid against everyfuture purchaser or proprietor of the land, has been prolonged fromnine to twenty-seven years. The ancient provincial restraints upon thetransportation of corn from one province of the kingdom to another, havebeen entirely taken away; and the liberty of exporting it to all foreigncountries, has been established as the common law of the kingdom in allordinary cases. This sect, in their works, which are very numerous, andwhich treat not only of what is properly called Political Economy, orof the nature and causes or 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. Qttesnai. There is, upon this account, little variety in the greater part of their works. The most distinct and best connected account of this doctrine is to befound in a little book written by Mr. Mercier de la Riviere, some timeintendant of Martinico, entitled, The natural and essential Order ofPolitical Societies. The admiration of this whole sect for their master, who was himself a man of the greatest modesty and simplicity, is notinferior to that of any of the ancient philosophers for the founders oftheir respective systems. 'There have been since the world began, ' saysa very diligent and respectable author, the Marquis de Mirabeau, 'threegreat inventions which have principally given stability to politicalsocieties, independent of many other inventions which have enriched andadorned them. The first is the invention of writing, which alone giveshuman nature the power of transmitting, without alteration, its laws, its contracts, its annals, and its discoveries. The second is theinvention of money, which binds together all the relations betweencivilized societies. The third is the economical table, the result ofthe other two, which completes them both by perfecting their object;the great discovery of our age, but of which our posterity will reap thebenefit. '

As the political economy of the nations of modern Europe has been morefavourable to manufactures and foreign trade, the industry of the towns, than to agriculture, the industry of the country; so that of othernations has followed a different plan, and has been more favourable toagriculture than to manufactures and foreign trade. 

The policy of China favours agriculture more than all other employments. In China, the condition of a labourer is said to be as much superior tothat of an artificer, as in most parts of Europe that of an artificer isto that of a labourer. In China, the great ambition of every man is toget possession of a little bit of land, either in property or in lease;and leases are there said to be granted upon very moderate terms, and tobe sufficiently secured to the lessees. The Chinese have little respectfor foreign trade. Your beggarly commerce! was the language in whichthe mandarins of Pekin used to talk to Mr. De Lange, the Russian envoy, concerning it {See the Journal of Mr. De Lange, in Bell's Travels, vol. Ii. P. 258, 276, 293. }. Except with Japan, the Chinese carry on, themselves, and in their own bottoms, little or no foreign trade; and itis only into one or two ports of their kingdom that they even admit theships of foreign nations. Foreign trade, therefore, is, in China, everyway confined within a much narrower circle than that to which it wouldnaturally extend itself, if more freedom was allowed to it, either intheir own ships, or in those of foreign nations. 

Manufactures, as in a small bulk they frequently contain a great value, and can upon that account be transported at less expense from onecountry to another than most parts of rude produce, are, in almostall countries, the principal support of foreign trade. In countries, besides, less extensive, and less favourably circumstanced for inferiorcommerce than China, they generally require the support of foreigntrade. Without an extensive foreign market, they could not wellflourish, either in countries so moderately extensive as to afford but anarrow home market, or in countries where the communication between oneprovince and another was so difficult, as to render it impossible forthe goods of any particular place to enjoy the whole of that homemarket which the country could afford. The perfection of manufacturingindustry, it must be remembered, depends altogether upon the division oflabour; and the degree to which the division of labour can be introducedinto any manufacture, is necessarily regulated, it has already beenshewn, by the extent of the market. But the great extent of the empireof China, the vast multitude of its inhabitants, the variety of climate, and consequently of productions in its different provinces, and the easycommunication by means of water-carriage between the greater part ofthem, render the home market of that country of so great extent, as tobe alone sufficient to support very great manufactures, and to admit ofvery considerable subdivisions of labour. The home market of China is, perhaps, in extent, not much inferior to the market of all the differentcountries of Europe put together. A more extensive foreign trade, however, which to this great home market added the foreign market of allthe rest of the world, especially if any considerable part of this tradewas carried on in Chinese ships, could scarce fail to increase verymuch the manufactures of China, and to improve very much the productivepowers of its manufacturing industry. By a more extensive navigation, the Chinese would naturally learn the art of using and constructing, themselves, all the different machines made use of in other countries, as well as the other improvements of art and industry which arepractised in all the different parts of the world. Upon their presentplan, they have little opportunity of improving themselves by theexample of any other nation, except that of the Japanese. 

The policy of ancient Egypt, too, and that of the Gentoo governmentof Indostan, seem to have favoured agriculture more than all otheremployments. 

Both in ancient Egypt and Indostan, the whole body of the people wasdivided into different casts or tribes each of which was confined, fromfather to son, to a particular employment, or class of employments. The son of a priest was necessarily a priest; the son of a soldier, a soldier; the son of a labourer, a labourer; the son of a weaver, aweaver; the son of a tailor, a tailor, etc. In both countries, the castof the priests holds the highest rank, and that of the soldiers thenext; and in both countries the cast of the farmers and labourers wassuperior to the casts of merchants and manufacturers. 

The government of both countries was particularly attentive to theinterest of agriculture. The works constructed by the ancient sovereignsof Egypt, for the proper distribution of the waters of the Nile, werefamous in antiquity, and the ruined remains of some of them arestill the admiration of travellers. Those of the same kind which wereconstructed by the ancient sovereigns of Indostan, for the properdistribution of the waters of the Ganges, as well as of many otherrivers, though they have been less celebrated, seem to have been equallygreat. Both countries, accordingly, though subject occasionally todearths, have been famous for their great fertility. Though both wereextremely populous, yet, in years of moderate plenty, they were bothable to export great quantities of grain to their neighbours. 

The ancient Egyptians had a superstitious aversion to the sea; and asthe Gentoo religion does not permit its followers to light a fire, nor consequently to dress any victuals, upon the water, it, in effect, prohibits them from all distant sea voyages. Both the Egyptians andIndians must have depended almost altogether upon the navigation ofother nations for the exportation of their surplus produce; and thisdependency, as it must have confined the market, so it must havediscouraged the increase of this surplus produce. It must havediscouraged, too, the increase of the manufactured produce, more thanthat of the rude produce. Manufactures require a much more extensivemarket than the most important parts of the rude produce of the land. Asingle shoemaker will make more than 300 pairs of shoes in the year; andhis own family will not, perhaps, wear out six pairs. Unless, therefore, he has the custom of, at least, 50 such families as his own, he cannotdispose of the whole product of his own labour. The most numerous classof artificers will seldom, in a large country, make more than one in 50, or one in a 100, of the whole number of families contained in it. Butin such large countries, as France and England, the number of peopleemployed in agriculture has, by some authors been computed at a half, byothers at a third and by no author that I know of, at less that a fifthof the whole inhabitants of the country. But as the produce of theagriculture of both France and England is, the far greater part of it, consumed at home, each person employed in it must, according to thesecomputations, require little more than the custom of one, two, or, atmost, of four such families as his own, in order to dispose of the wholeproduce of his own labour. Agriculture, therefore, can supportitself under the discouragement of a confined market much betterthan manufactures. In both ancient Egypt and Indostan, indeed, theconfinement of the foreign market was in some measure compensated bythe conveniency of many inland navigations, which opened, in the mostadvantageous manner, the whole extent of the home market to every partof the produce of every different district of those countries. The greatextent of Indostan, too, rendered the home market of that country verygreat, and sufficient to support a great variety of manufactures. Butthe small extent of ancient Egypt, which was never equal to England, must at all times, have rendered the home market of that countrytoo narrow for supporting any great variety of manufactures. Bengalaccordingly, the province of Indostan which commonly exports thegreatest quantity of rice, has always been more remarkable for theexportation 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. It waslong the granary of the Roman empire. 

The sovereigns of China, of ancient Egypt, and of the different kingdomsinto which Indostan has, at different times, been divided, have alwaysderived the whole, or by far the most considerable part, of theirrevenue, from some sort of land tax or land rent. This land tax, or landrent, like the tithe in Europe, consisted in a certain proportion, a fifth, it is said, of the produce of the land, which was eitherdelivered in kind, or paid in money, according to a certain valuation, and which, therefore, varied from year to year, according to allthe variations of the produce. It was natural, therefore, that thesovereigns of those countries should be particularly attentive to theinterests of agriculture, upon the prosperity or declension of whichimmediately depended the yearly increase or diminution of their ownrevenue. 

The policy of the ancient republics of Greece, and that of Rome, thoughit honoured agriculture more than manufactures or foreign trade, yetseems rather to have discouraged the latter employments, than to havegiven any direct or intentional encouragement to the former. Inseveral of the ancient states of Greece, foreign trade was prohibitedaltogether; and in several others, the employments of artificers andmanufacturers were considered as hurtful to the strength and agility ofthe human body, as rendering it incapable of those habits which theirmilitary and gymnastic exercises endeavoured to form in it, and asthereby disqualifying it, more or less, for undergoing the fatigues andencountering the dangers of war. Such occupations were considered asfit only for slaves, and the free citizens of the states were prohibitedfrom exercising them. Even in those states where no such prohibitiontook place, as in Rome and Athens, the great body of the people were ineffect excluded from all the trades which are now commonly exercised bythe lower sort of the inhabitants of towns. Such trades were, at Athensand Rome, all occupied by the slaves of the rich, who exercised them forthe benefit of their masters, whose wealth, power, and protection, madeit almost impossible for a poor freeman to find a market for his work, when it came into competition with that of the slaves of the rich. Slaves, however, are very seldom inventive; and all the mostimportant improvements, either in machinery, or in the arrangement anddistribution of work, which facilitate and abridge labour have been thediscoveries of freemen. Should a slave propose any improvement of thiskind, his master would be very apt to consider the proposal as thesuggestion of laziness, and of a desire to save his own labour at themaster's expense. The poor slave, instead of reward would probablymeet with much abuse, perhaps with some punishment. In the manufacturescarried on by slaves, therefore, more labour must generally have beenemployed to execute the same quantity of work, than in those carried onby freemen. The work of the farmer must, upon that account, generallyhave been dearer than that of the latter. The Hungarian mines, it isremarked by Mr. Montesquieu, though not richer, have always been wroughtwith less expense, and therefore with more profit, than the Turkishmines in their neighbourhood. The Turkish mines are wrought by slaves;and the arms of those slaves are the only machines which the Turks haveever thought of employing. The Hungarian mines are wrought by freemen, who employ a great deal of machinery, by which they facilitate andabridge their own labour. From the very little that is known about theprice of manufactures in the times of the Greeks and Romans, it wouldappear that those of the finer sort were excessively dear. Silk soldfor its weight in gold. It was not, indeed, in those times an Europeanmanufacture; and as it was all brought from the East Indies, thedistance of the carriage may in some measure account for the greatnessof the price. The price, however, which a lady, it is said, wouldsometimes pay for a piece of very fine linen, seems to have been equallyextravagant; and as linen was always either an European, or at farthest, an Egyptian manufacture, this high price can be accounted for only bythe great expense of the labour which must have been employed about It, and the expense of this labour again could arise from nothing but theawkwardness of the machinery which is made use of. The price of finewoollens, too, though not quite so extravagant, seems, however, to havebeen much above that of the present times. Some cloths, we are told byPliny {Plin. 1. Ix. C. 39. }, dyed in a particular manner, cost a hundreddenarii, or £3:6s:8d. The pound weight. Others, dyed in another manner, cost a thousand denarii the pound weight, or £33:6s:8d. The Roman pound, it must be remembered, contained only twelve of our avoirdupois ounces. This high price, indeed, seems to have been principally owing to thedye. But had not the cloths themselves been much dearer than anywhich are made in the present times, so very expensive a dye would notprobably have been bestowed upon them. The disproportion would have beentoo great between the value of the accessory and that of the principal. The price mentioned by the same author {Plin. 1. Viii. C. 48. }, of 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 £30, 000, others more than £300, 000. This high price, too, is not said to havearisen from the dye. In the dress of the people of fashion of bothsexes, there seems to have been much less variety, it is observed by Dr. Arbuthnot, in ancient than in modern times; and the very little varietywhich we find in that of the ancient statues, confirms his observation. He infers from this, that their dress must, upon the whole, have beencheaper than ours; but the conclusion does not seem to follow. When theexpense of fashionable dress is very great, the variety must be verysmall. But when, by the improvements in the productive powers ofmanufacturing art and industry, the expense of any one dress comes to bevery moderate, the variety will naturally be very great. The rich, notbeing able to distinguish themselves by the expense of any one dress, will naturally endeavour to do so by the multitude and variety of theirdresses. 

The greatest and most important branch of the commerce of every nation, it has already been observed, is that which is carried on between theinhabitants of the town and those of the country. The inhabitants of thetown draw from the country the rude produce, which constitutes both thematerials of their work and the fund of their subsistence; and they payfor this rude produce, by sending back to the country a certain portionof it manufactured and prepared for immediate use. The trade whichis carried on between these two different sets of people, consistsultimately in a certain quantity of rude produce exchanged for a certainquantity of manufactured produce. The dearer the latter, therefore, thecheaper the former; and whatever tends in any country to raise the priceof manufactured produce, tends to lower that of the rude produce of theland, and thereby to discourage agriculture. The smaller the quantity ofmanufactured produce, which any given quantity of rude produce, or, whatcomes to the same thing, which the price of any given quantity of rudeproduce, is capable of purchasing, the smaller the exchangeable value ofthat given quantity 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 to diminishin any country the number of artificers and manufacturers, tends todiminish the home market, the most important of all markets, for therude produce of the land, and thereby still further to discourageagriculture. 

Those systems, therefore, which preferring agriculture to all otheremployments, in order to promote it, impose restraints upon manufacturesand foreign trade, act contrary to the very end which they propose, andindirectly discourage that very species of industry which they meanto promote. They are so far, perhaps, more inconsistent than even themercantile system. That system, by encouraging manufactures and foreigntrade more than agriculture, turns a certain portion of the capitalof the society, from supporting a more advantageous, to support a lessadvantageous species of industry. But still it really, and in the end, encourages that species of industry which it means to promote. Those agricultural systems, on the contrary, really, and in the end, discourage their own favourite species of industry. 

It is thus that every system which endeavours, either, by extraordinaryencouragements to draw towards a particular species of industry agreater share of the capital of the society than what would naturallygo to it, or, by extraordinary restraints, to force from a particularspecies of industry some share of the capital which would otherwise beemployed in it, is, in reality, subversive of the great purpose whichit means to promote. It retards, instead of accelerating the progress ofthe society towards real wealth and greatness; and diminishes, insteadof increasing, the real value of the annual produce of its land andlabour. 

All systems, either of preference or of restraint, therefore, being thuscompletely taken away, the obvious and simple system of natural libertyestablishes itself of its own accord. Every man, as long as he does notviolate the laws of justice, is left perfectly free to pursue his owninterest his own way, and to bring both his industry and capital intocompetition with those of any other man, or order of men. The sovereignis completely discharged from a duty, in the attempting to perform whichhe must always be exposed to innumerable delusions, and for the properperformance of which, no human wisdom or knowledge could ever besufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to theinterests of the society. According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of greatimportance, indeed, but plain and intelligible to common understandings:first, the duty of protecting the society from the violence and invasionof other independent societies; secondly, the duty of protecting, asfar as possible, every member of the society from the injustice oroppression of every other member of it, or the duty of establishing anexact administration of justice; and, thirdly, the duty of erecting andmaintaining certain public works, and certain public institutions, whichit can never be for the interest of any individual, or small number ofindividuals to erect and maintain; because the profit could never repaythe expense to any individual, or small number of individuals, though itmay 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 the followingbook, therefore, I shall endeavour to explain, first, what are thenecessary expenses of the sovereign or commonwealth; and which of thoseexpenses ought to be defrayed by the general contribution of the wholesociety; and which of them, by that of some particular part only, or ofsome particular members of the society: secondly, what are the differentmethods in which the whole society may be made to contribute towardsdefraying the expenses incumbent on the whole society; and what are theprincipal advantages and inconveniencies of each of those methods: andthirdly, what are the reasons and causes which have induced almost allmodern governments to mortgage some part of this revenue, or to contractdebts; and what have been the effects of those debts upon the realwealth, the annual produce of the land and labour of the society. The following book, therefore, will naturally be divided into threechapters. 

APPENDIX TO BOOK IV

The two following accounts are subjoined, in order to illustrate andconfirm what is said in the fifth chapter of the fourth book, concerningthe Tonnage Bounty to the Whit-herring Fishery. The reader, I believe, may depend upon the accuracy of both accounts. 

An account of Busses fitted out in Scotland for eleven Years, withthe Number of empty Barrels carried out, and the Number of Barrelsof Herrings caught; also the Bounty, at a Medium, on each Barrel ofSea-sricks, and on each Barrel when fully packed. 

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

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

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

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

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

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

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

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

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

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

Though the loss of duties upon herrings exported cannot, perhaps, properly be considered as bounty, that upon herrings entered for homeconsumption certainly may. 

An account of the Quantity of Foreign Salt imported into Scotland, and of Scotch Salt delivered Duty-free from the Works there, for theFishery, from the 5th. Of April 1771 to the 5th. Of April 1782 with theMedium of both for one Year. 

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

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

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

BOOK V. 

OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH

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

PART I. Of the Expense of Defence. 

The first duty of the sovereign, that of protecting the society from theviolence and invasion of other independent societies, can be performedonly by means of a military force. But the expense both of preparingthis military force in time of peace, and of employing it in timeof war, is very different in the different states of society, in thedifferent periods of improvement. 

Among nations of hunters, the lowest and rudest state of society, suchas we find it among the native tribes of North America, every man is awarrior, as well as a hunter. When he goes to war, either to defend hissociety, or to revenge the injuries which have been done to it by othersocieties, he maintains himself by his own labour, in the same manner aswhen he lives at home. His society (for in this state of things there isproperly neither sovereign nor commonwealth) is at no sort of expense, either to prepare him for the field, or to maintain him while he is init. 

Among nations of shepherds, a more advanced state of society, such as wefind it among the Tartars and Arabs, every man is, in the same manner, awarrior. Such nations have commonly no fixed habitation, but live eitherin tents, or in a sort of covered waggons, which are easily transportedfrom place to place. The whole tribe, or nation, changes its situationaccording to the different seasons of the year, as well as according toother accidents. When its herds and flocks have consumed the forageof one 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; inthe wet season, it retires to the upper country. When such a nation goesto war, the warriors will not trust their herds and flocks to the feebledefence of their old men, their women and children; and their old men, their women and children, will not be left behind without defence, andwithout subsistence. The whole nation, besides, being accustomed to awandering life, even in time of peace, easily takes the field in timeof war. Whether it marches as an army, or moves about as a company ofherdsmen, the way of life is nearly the same, though the object proposedby it be very different. They all go to war together, therefore, andeveryone does as well as he can. Among the Tartars, even the women havebeen frequently known to engage in battle. If they conquer, whateverbelongs to the hostile tribe is the recompence of the victory; but ifthey are vanquished, all is lost; and not only their herds and flocks, but their women and children become the booty of the conqueror. Even thegreater part of those who survive the action are obliged to submitto him for the sake of immediate subsistence. The rest are commonlydissipated and dispersed in the desert. 

The ordinary life, the ordinary exercise of a Tartar or Arab, prepareshim sufficiently for war. Running, wrestling, cudgel-playing, throwingthe javelin, drawing the bow, etc. Are the common pastimes of thosewho live in the open air, and are all of them the images of war. When aTartar or Arab actually goes to war, he is maintained by his own herdsand flocks, which he carries with him, in the same manner as in peace. His chief or sovereign (for those nations have all chiefs or sovereigns)is at no sort of expense in preparing him for the field; and when he isin it, the chance of plunder is the only pay which he either expects orrequires. 

An army of hunters can seldom exceed two or three hundred men. Theprecarious subsistence which the chace affords, could seldom allow agreater number to keep together for any considerable time. An army ofshepherds, on the contrary, may sometimes amount to two or three hundredthousand. As long as nothing stops their progress, as long as they cango on from one district, of which they have consumed the forage, toanother, which is yet entire; there seems to be scarce any limit tothe number who can march on together. A nation of hunters can never beformidable to the civilized nations in their neighbourhood; a nation ofshepherds may. Nothing can be more contemptible than an Indian war inNorth America; nothing, on the contrary, can be more dreadful than aTartar invasion has frequently been in Asia. The judgment of Thucydides, that both Europe and Asia could not resist the Scythians united, hasbeen verified by the experience of all ages. The inhabitants of theextensive, but defenceless plains of Scythia or Tartary, have beenfrequently united under the dominion of the chief of some conqueringhorde or clan; and the havock and devastation of Asia have alwayssignalized their union. The inhabitants of the inhospitable deserts ofArabia, the other great nation of shepherds, have never been united butonce, under Mahomet and his immediate successors. Their union, which wasmore the effect of religious enthusiasm than of conquest, was signalizedin the same manner. If the hunting nations of America should ever becomeshepherds, their neighbourhood would be much more dangerous to theEuropean colonies than it is at present. 

In a yet more advanced state of society, among those nations ofhusbandmen who have little foreign commerce, and no other manufacturesbut those coarse and household ones, which almost every private familyprepares for its own use, every man, in the same manner, either is awarrior, or easily becomes such. Those who live by agriculture generallypass the whole day in the open air, exposed to all the inclemencies ofthe seasons. The hardiness of their ordinary life prepares them for thefatigues of war, to some of which their necessary occupations bear agreat analogy. The necessary occupation of a ditcher prepares him towork in the trenches, and to fortify a camp, as well as to inclose afield. The ordinary pastimes of such husbandmen are the same as thoseof shepherds, and are in the same manner the images of war. But ashusbandmen have less leisure than shepherds, they are not so frequentlyemployed in those pastimes. They are soldiers but soldiers not quiteso much masters of their exercise. Such as they are, however, it seldomcosts the sovereign or commonwealth any expense to prepare them for thefield. 

Agriculture, even in its rudest and lowest state, supposes a settlement, some sort of fixed habitation, which cannot be abandoned without greatloss. When a nation of mere husbandmen, therefore, goes to war, thewhole people cannot take the field together. The old men, the women andchildren, at least, must remain at home, to take care of the habitation. All the men of the military age, however, may take the field, and insmall nations of this kind, have frequently done so. In every nation, the men of the military age are supposed to amount to about a fourthor a fifth part of the whole body of the people. If the campaign, too, should begin after seedtime, and end before harvest, both the husbandmanand his principal labourers can be spared from the farm without muchloss. He trusts that the work which must be done in the mean time, canbe well enough executed by the old men, the women, and the children. He is not unwilling, therefore, to serve without pay during a shortcampaign; and it frequently costs the sovereign or commonwealth aslittle to maintain him in the field as to prepare him for it. Thecitizens of all the different states of ancient Greece seem to haveserved in this manner till after the second Persian war; and the peopleof Peloponnesus till after the Peloponnesian war. The Peloponnesians, Thucydides observes, generally left the field in the summer, andreturned home to reap the harvest. The Roman people, under their kings, and during the first ages of the republic, served in the same manner. It was not till the seige of Veii, that they who staid at home began tocontribute something towards maintaining those who went to war. In theEuropean monarchies, 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 all theirimmediate dependents, used to serve the crown at their own expense. Inthe field, in the same manner as at home, they maintained themselvesby their own revenue, and not by any stipend or pay which they receivedfrom the king upon that particular occasion. 

In a more advanced state of society, two different causes contributeto render it altogether impossible that they who take the field shouldmaintain themselves at their own expense. Those two causes are, theprogress of manufactures, and the improvement in the art of war. 

Though a husbandman should be employed in an expedition, provided itbegins after seedtime, and ends before harvest, the interruption of hisbusiness will not always occasion any considerable diminution of hisrevenue. Without the intervention of his labour, Nature does herself thegreater part of the work which remains to be done. But the moment thatan artificer, a smith, a carpenter, or a weaver, for example, quits hisworkhouse, the sole source of his revenue is completely dried up. Naturedoes nothing for him; he does all for himself. When he takes the field, therefore, in defence of the public, as he has no revenue to maintainhimself, he must necessarily be maintained by the public. But in acountry, of which a great part of the inhabitants are artificers andmanufacturers, a great part of the people who go to war must be drawnfrom those classes, and must, therefore, be maintained by the public aslong as they are employed in its service. 

When the art of war, too, has gradually grown up to be a very intricateand complicated science; when the event of war ceases to be determined, as in the first ages of society, by a single irregular skirmish orbattle; but when the contest is generally spun out through severaldifferent campaigns, each of which lasts during the greater part of theyear; it becomes universally necessary that the public should maintainthose who serve the public in war, at least while they are employedin that service. Whatever, in time of peace, might be the ordinaryoccupation of those who go to war, so very tedious and expensive aservice would otherwise be by far too heavy a burden upon them. Afterthe second Persian war, accordingly, the armies of Athens seem to havebeen generally composed of mercenary troops, consisting, indeed, partlyof citizens, but partly, too, of foreigners; and all of them equallyhired and paid at the expense of the state. From the time of the siegeof Veii, the armies of Rome received pay for their service during thetime which they remained in the field. Under the feudal governments, the military service, both of the great lords, and of their immediatedependents, was, after a certain period, universally exchanged for apayment in money, which was employed to maintain those who served intheir stead. 

The number of those who can go to war, in proportion to the whole numberof the people, is necessarily much smaller in a civilized than in a rudestate of society. In a civilized society, as the soldiers are maintainedaltogether by the labour of those who are not soldiers, the number ofthe former can never exceed what the latter can maintain, over and abovemaintaining, in a manner suitable to their respective stations, boththemselves and the other officers of government and law, whom they areobliged to maintain. In the little agrarian states of ancient Greece, a fourth or a fifth part of the whole body of the people considered thethemselves as soldiers, and would sometimes, it is said, take the field. Among the civilized nations of modern Europe, it is commonly computed, that not more than the one hundredth part of the inhabitants of anycountry can be employed as soldiers, without ruin to the country whichpays the expense of their service. 

The expense of preparing the army for the field seems not to have becomeconsiderable in any nation, till long after that of maintaining it inthe field had devolved entirely upon the sovereign or commonwealth. Inall the different republics of ancient Greece, to learn his militaryexercises, was a necessary part of education imposed by the state uponevery free citizen. In every city there seems to have been a publicfield, in which, under the protection of the public magistrate, theyoung people were taught their different exercises by different masters. In this very simple institution consisted the whole expense which anyGrecian state seems ever to have been at, in preparing its citizens forwar. In ancient Rome, the exercises of the Campus Martius answered thesame purpose with those of the Gymnasium in ancient Greece. Under thefeudal governments, the many public ordinances, that the citizensof every district should practise archery, as well as several othermilitary exercises, were intended for promoting the same purpose, butdo not seem to have promoted it so well. Either from want of interest inthe officers entrusted with the execution of those ordinances, or fromsome other cause, they appear to have been universally neglected; and inthe progress of all those governments, military exercises seem to havegone gradually into disuse among the great body of the people. 

In the republics of ancient Greece and Rome, during the whole period oftheir existence, and under the feudal governments, for a considerabletime after their first establishment, the trade of a soldier was nota separate, distinct trade, which constituted the sole or principaloccupation of a particular class of citizens; every subject of thestate, whatever might be the ordinary trade or occupation by which hegained his livelihood, considered himself, upon all ordinary occasions, as fit likewise to exercise the trade of a soldier, and, upon manyextraordinary occasions, as bound to exercise it. 

The art of war, however, as it is certainly the noblest of all arts, so, in the progress of improvement, it necessarily becomes one of the mostcomplicated among them. The state of the mechanical, as well as someother arts, with which it is necessarily connected, determines thedegree of perfection to which it is capable of being carried at anyparticular time. But in order to carry it to this degree of perfection, it is necessary that it should become the sole or principal occupationof a particular class of citizens; and the division of labour is asnecessary for the improvement of this, as of every other art. Into otherarts, the division of labour is naturally introduced by the prudence ofindividuals, who find that they promote their private interest better byconfining themselves to a particular trade, than by exercising a greatnumber. But it is the wisdom of the state only, which can render thetrade of a soldier a particular trade, separate and distinct from allothers. A private citizen, who, in time of profound peace, and withoutany particular encouragement from the public, should spend the greaterpart of his time in military exercises, might, no doubt, both improvehimself very much in them, and amuse himself very well; but he certainlywould not promote his own interest. It is the wisdom of the state only, which can render it for his interest to give up the greater part of histime to this peculiar occupation; and states have not always hadthis wisdom, even when their circumstances had become such, that thepreservation of their existence required that they should have it. 

A shepherd has a great deal of leisure; a husbandman, in the rude stateof husbandry, has some; an artificer or manufacturer has none at all. The first may, without any loss, employ a great deal of his time inmartial exercises; the second may employ some part of it; but the lastcannot employ a single hour in them without some loss, and his attentionto his own interest naturally leads him to neglect them altogether. Those improvements in husbandry, too, which the progress of arts andmanufactures necessarily introduces, leave the husbandman as littleleisure as the artificer. Military exercises come to be as muchneglected by the inhabitants of the country as by those of the town, andthe great body of the people becomes altogether unwarlike. That wealth, at the same time, which always follows the improvements of agricultureand manufactures, and which, in reality, is no more than the accumulatedproduce of those improvements, provokes the invasion of all theirneighbours. An industrious, and, upon that account, a wealthy nation, is of all nations the most likely to be attacked; and unless the statetakes some new measure for the public defence, the natural habits of thepeople render them altogether incapable of defending themselves. 

In these circumstances, there seem to be but two methods by which thestate can make any tolerable provision for the public defence. 

It may either, first, by means of a very rigorous police, and in spiteof the whole bent of the interest, genius, and inclinations of thepeople, enforce the practice of military exercises, and oblige eitherall the citizens of the military age, or a certain number of them, tojoin in some measure the trade of a soldier to whatever other trade orprofession they may happen to carry on. 

Or, secondly, by maintaining and employing a certain number of citizensin the constant practice of military exercises, it may render the tradeof a soldier a particular trade, separate and distinct from all others. 

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 military exercisesis the sole or principal occupation of the soldiers of a standing army, and the maintenance or pay which the state affords them is the principaland ordinary fund of their subsistence. The practice of militaryexercises is only the occasional occupation of the soldiers of amilitia, and they derive the principal and ordinary fund of theirsubsistence from some other occupation. In a militia, the character ofthe labourer, artificer, or tradesman, predominates over that of thesoldier; in a standing army, that of the soldier predominates over everyother character; 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 countries, thecitizens destined for defending the state seem to have been exercisedonly, without being, if I may say so, regimented; that is, withoutbeing divided into separate and distinct bodies of troops, each of whichperformed its exercises under its own proper and permanent officers. Inthe republics of ancient Greece and Rome, each citizen, as long ashe remained at home, seems to have practised his exercises, eitherseparately and independently, or with such of his equals as he likedbest; and not to have been attached to any particular body of troops, till he was actually called upon to take the field. In other countries, the militia has not only been exercised, but regimented. In England, inSwitzerland, and, I believe, in every other country of modern Europe, where any imperfect military force of this kind has been established, every militiaman is, even in time of peace, attached to a particularbody of troops, which performs its exercises under its own proper andpermanent officers. 

Before the invention of fire-arms, that army was superior in which thesoldiers had, each individually, the greatest skill and dexterity inthe use of their arms. Strength and agility of body were of the highestconsequence, and commonly determined the fate of battles. But this skilland dexterity in the use of their arms could be acquired only, inthe same manner as fencing is at present, by practising, not in greatbodies, but each man separately, in a particular school, under aparticular master, or with his own particular equals and companions. Since the invention of fire-arms, strength and agility of body, or evenextraordinary dexterity and skill in the use of arms, though they arefar from being of no consequence, are, however, of less consequence. The nature of the weapon, though it by no means puts the awkward upon alevel with the skilful, puts him more nearly so than he ever was before. All the dexterity and skill, it is supposed, which are necessary forusing it, can be well enough acquired by practising in great bodies. 

Regularity, order, and prompt obedience to command, are qualities which, in modern armies, are of more importance towards determining the fateof battles, than the dexterity and skill of the soldiers in the use oftheir arms. But the noise of fire-arms, the smoke, and the invisibledeath to which every man feels himself every moment exposed, as soonas he comes within cannon-shot, and frequently a long time before thebattle can be well said to be engaged, must render it very difficult tomaintain any considerable degree of this regularity, order, and promptobedience, even in the beginning of a modern battle. In an ancientbattle, there was no noise but what arose from the human voice; therewas no smoke, there was no invisible cause of wounds or death. Everyman, till some mortal weapon actually did approach him, saw clearly thatno such weapon was near him. In these circumstances, and among troopswho had some confidence in their own skill and dexterity in the use oftheir arms, it must have been a good deal less difficult to preservesome degree of regularity and order, not only in the beginning, butthrough the whole progress of an ancient battle, and till one of thetwo armies was fairly defeated. But the habits of regularity, order, andprompt obedience to command, can be acquired only by troops which areexercised in great bodies. 

A militia, however, in whatever manner it may be either disciplined orexercised, must always be much inferior to a well disciplined and wellexercised standing army. 

The soldiers who are exercised only once a week, or once a-month, cannever be so expert in the use of their arms, as those who are exercisedevery day, or every other day; and though this circumstance may not beof so much consequence in modern, as it was in ancient times, yet theacknowledged superiority of the Prussian troops, owing, it is said, verymuch to their superior expertness in their exercise, may satisfy us thatit is, even at this day, of very considerable consequence. 

The soldiers, who are bound to obey their officer only once a-week, oronce a-month, and who are at all other times at liberty to manage theirown affairs their own way, without being, in any respect, accountable tohim, can never be under the same awe in his presence, can never havethe same disposition to ready obedience, with those whose whole life andconduct are every day directed by him, and who every day even riseand go to bed, or at least retire to their quarters, according tohis orders. In what is called discipline, or in the habit of readyobedience, a militia must always be still more inferior to a standingarmy, than it may sometimes be in what is called the manual exercise, orin the management and use of its arms. But, in modern war, the habitof ready and instant obedience is of much greater consequence than aconsiderable superiority in the management of arms. 

Those militias which, like the Tartar or Arab militia, go to war underthe same chieftains whom they are accustomed to obey in peace, areby far the best. In respect for their officers, in the habit of readyobedience, they approach nearest to standing armies The Highlandmilitia, when it served under its own chieftains, had some advantageof the same kind. As the Highlanders, however, were not wandering, butstationary shepherds, as they had all a fixed habitation, and were not, in peaceable times, accustomed to follow their chieftain from place toplace; so, in time of war, they were less willing to follow him to anyconsiderable distance, or to continue for any long time in the field. When they had acquired any booty, they were eager to return home, and his authority was seldom sufficient to detain them. In point ofobedience, they were always much inferior to what is reported of theTartars and Arabs. As the Highlanders, too, from their stationarylife, spend less of their time in the open air, they were always lessaccustomed to military exercises, and were less expert in the use oftheir arms than the Tartars and Arabs are said to be. 

A militia of any kind, it must be observed, however, which has servedfor several successive campaigns in the field, becomes in every respecta standing army. The soldiers are every day exercised in the use oftheir arms, and, being constantly under the command of their officers, are habituated to the same prompt obedience which takes place instanding armies. What they were before they took the field, is of littleimportance. They necessarily become in every respect a standing army, after they have passed a few campaigns in it. Should the war in Americadrag out through another campaign, the American militia may become, in every respect, a match for that standing army, of which the valourappeared, in the last war at least, not inferior to that of the hardiestveterans of France and Spain. 

This distinction being well understood, the history of all ages, it willbe found, hears testimony to the irresistible superiority which a wellregulated standing army has over a militia. 

One of the first standing armies, of which we have any distinct accountin any well authenticated history, is that of Philip of Macedon. Hisfrequent wars with the Thracians, Illyrians, Thessalians, and some ofthe Greek cities in the neighbourhood of Macedon, gradually formedhis troops, which in the beginning were probably militia, to the exactdiscipline of a standing army. When he was at peace, which he was veryseldom, and never for any long time together, he was careful not todisband that army. It vanquished and subdued, after a long and violentstruggle, indeed, the gallant and well exercised militias of theprincipal republics of ancient Greece; and afterwards, with very littlestruggle, the effeminate and ill exercised militia of the great Persianempire. The fall of the Greek republics, and of the Persian empire wasthe effect of the irresistible superiority which a standing arm has overevery other sort of militia. It is the first great revolution in theaffairs of mankind of which history has preserved any distinct andcircumstantial account. 

The fall of Carthage, and the consequent elevation of Rome, is thesecond. All the varieties in the fortune of those two famous republicsmay very well be accounted for from the same cause. 

From the end of the first to the beginning of the second Carthaginianwar, the armies of Carthage were continually in the field, and employedunder three great generals, who succeeded one another in the command;Amilcar, his son-in-law Asdrubal, and his son Annibal: first inchastising their own rebellious slaves, afterwards in subduing therevolted nations of Africa; and lastly, in conquering the greatkingdom of Spain. The army which Annibal led from Spain into Italy mustnecessarily, in those different wars, have been gradually formed to theexact discipline of a standing army. The Romans, in the meantime, thoughthey had not been altogether at peace, yet they had not, during thisperiod, been engaged in any war of very great consequence; and theirmilitary discipline, it is generally said, was a good deal relaxed. The Roman armies which Annibal encountered at Trebi, Thrasymenus, andCannae, were militia opposed to a standing army. This circumstance, itis probable, contributed more than any other to determine the fate ofthose battles. 

The standing army which Annibal left behind him in Spain had the likesuperiority over the militia which the Romans sent to oppose it; and, in a few years, under the command of his brother, the younger Asdrubal, expelled them almost entirely from that country. 

Annibal was ill supplied from home. The Roman militia, being continuallyin the field, became, in the progress of the war, a well disciplined andwell exercised standing army; and the superiority of Annibal grew everyday less and less. Asdrubal judged it necessary to lead the whole, oralmost the whole, of the standing army which he commanded in Spain, tothe assistance of his brother in Italy. In this march, he is said tohave been misled by his guides; and in a country which he did not know, was surprised and attacked, by another standing army, in every respectequal or superior to his own, and was entirely defeated. 

When Asdrubal had left Spain, the great Scipio found nothing to opposehim but a militia inferior to his own. He conquered and subdued thatmilitia, and, in the course of the war, his own militia necessarilybecame a well disciplined and well exercised standing army. Thatstanding army was afterwards carried to Africa, where it found nothingbut a militia to oppose it. In order to defend Carthage, it becamenecessary to recal the standing army of Annibal. The disheartened andfrequently defeated African militia joined it, and, at the battle ofZama, composed the greater part of the troops of Annibal. The event ofthat day determined the fate of the two rival republics. 

From the end of the second Carthaginian war till the fall of the Romanrepublic, the armies of Rome were in every respect standing armies. The standing army of Macedon made some resistance to their arms. In theheight of their grandeur, it cost them two great wars, and three greatbattles, to subdue that little kingdom, of which the conquest wouldprobably have been still more difficult, had it not been for thecowardice of its last king. The militias of all the civilized nations ofthe ancient world, of Greece, of Syria, and of Egypt, made but afeeble resistance to the standing armies of Rome. The militias of somebarbarous nations defended themselves much better. The Scythian orTartar militia, which Mithridates drew from the countries north ofthe Euxine and Caspian seas, were the most formidable enemies whom theRomans had to encounter after the second Carthaginian war. The Parthianand German militias, too, were always respectable, and upon severaloccasions, gained very considerable advantages over the Roman armies. In general, however, and when the Roman armies were well commanded, theyappear to have been very much superior; and if the Romans did not pursuethe final conquest either of Parthia or Germany, it was probably becausethey judged that it was not worth while to add those two barbarouscountries to an empire which was already too large. The ancientParthians appear to have been a nation of Scythian or Tartar extraction, and to have always retained a good deal of the manners of theirancestors. The ancient Germans were, like the Scythians or Tartars, anation of wandering shepherds, who went to war under the same chiefswhom they were accustomed to follow in peace. 'Their militia was exactlyof the same kind with that of the Scythians or Tartars, from whom, too, they were probably descended. 

Many different causes contributed to relax the discipline of the Romanarmies. Its extreme severity was, perhaps, one of those causes. In thedays of their grandeur, when no enemy appeared capable of opposing them, their heavy armour was laid aside as unnecessarily burdensome, theirlaborious exercises were neglected, as unnecessarily toilsome. Under theRoman emperors, besides, the standing armies of Rome, those particularlywhich guarded the German and Pannonian frontiers, became dangerous totheir masters, against whom they used frequently to set up their owngenerals. In order to render them less formidable, according to someauthors, Dioclesian, according to others, Constantine, first withdrewthem from the frontier, where they had always before been encamped ingreat bodies, generally of two or three legions each, and dispersed themin small bodies through the different provincial towns, from whencethey were scarce ever removed, but when it became necessary to repelan invasion. Small bodies of soldiers, quartered in trading andmanufacturing towns, and seldom removed from those quarters, becamethemselves trades men, artificers, and manufacturers. The civil came topredominate over the military character; and the standing armies ofRome gradually degenerated into a corrupt, neglected, and undisciplinedmilitia, incapable of resisting the attack of the German and Scythianmilitias, which soon afterwards invaded the western empire. It was onlyby hiring the militia of some of those nations to oppose to that ofothers, that the emperors were for some time able to defend themselves. The fall of the western empire is the third great revolution in theaffairs of mankind, of which ancient history has preserved any distinctor circumstantial account. It was brought about by the irresistiblesuperiority which the militia of a barbarous has over that of acivilized nation; which the militia of a nation of shepherds has overthat of a nation of husbandmen, artificers, and manufacturers. Thevictories which have been gained by militias have generally been, not over standing armies, but over other militias, in exercise anddiscipline inferior to themselves. Such were the victories which theGreek militia gained over that of the Persian empire; and such, too, were those which, in later times, the Swiss militia gained over that ofthe Austrians and Burgundians. 

The military force of the German and Scythian nations, who establishedthemselves upon ruins of the western empire, continued for some time tobe of the same kind in their new settlements, as it had been in theiroriginal country. It was a militia of shepherds and husbandmen, which, in time of war, took the field under the command of the same chieftainswhom it was accustomed to obey in peace. It was, therefore, tolerablywell exercised, and tolerably well disciplined. As arts and industryadvanced, however, the authority of the chieftains gradually decayed, and the great body of the people had less time to spare for militaryexercises. Both the discipline and the exercise of the feudal militia, therefore, went gradually to ruin, and standing armies were graduallyintroduced to supply the place of it. When the expedient of a standingarmy, besides, had once been adopted by one civilized nation, it becamenecessary that all its neighbours should follow the example. They soonfound that their safety depended upon their doing so, and that theirown militia was altogether incapable of resisting the attack of such anarmy. 

The soldiers of a standing army, though they may never have seen anenemy, yet have frequently appeared to possess all the courage ofveteran troops, and, the very moment that they took the field, to havebeen fit to face the hardiest and most experienced veterans. In 1756, when the Russian army marched into Poland, the valour of the Russiansoldiers did not appear inferior to that of the Prussians, at that timesupposed to be the hardiest and most experienced veterans in Europe. TheRussian empire, however, had enjoyed a profound peace for near twentyyears before, and could at that time have very few soldiers who hadever seen an enemy. When the Spanish war broke out in 1739, England hadenjoyed a profound peace for about eight-and-twenty years. The valour ofher soldiers, however, far from being corrupted by that long peace, wasnever more distinguished than in the attempt upon Carthagena, thefirst unfortunate exploit of that unfortunate war. In a long peace, thegenerals, perhaps, may sometimes forget their skill; but where a wellregulated standing army has been kept up, the soldiers seem never toforget their valour. 

When a civilized nation depends for its defence upon a militia, it is atall times exposed to be conquered by any barbarous nation which happensto be in its neighbourhood. The frequent conquests of all the civilizedcountries in Asia by the Tartars, sufficiently demonstrates thenatural superiority which the militia of a barbarous has over that ofa civilized nation. A well regulated standing army is superior to everymilitia. Such an army, as it can best be maintained by an opulent andcivilized nation, so it can alone defend such a nation against theinvasion of a poor and barbarous neighbour. It is only by means of astanding army, therefore, that the civilization of any country can beperpetuated, or even preserved, for any considerable time. 

As it is only by means of a well regulated standing army, that acivilized country can be defended, so it is only by means of it that abarbarous country can be suddenly and tolerably civilized. A standingarmy establishes, with an irresistible force, the law of the sovereignthrough the remotest provinces of the empire, and maintains some degreeof regular government in countries which could not otherwise admit ofany. Whoever examines with attention, the improvements which Peter theGreat introduced into the Russian empire, will find that they almost allresolve themselves into the establishment of a well regulated standingarmy. It is the instrument which executes and maintains all his otherregulations. That degree of order and internal peace, which that empirehas ever since enjoyed, is altogether owing to the influence of thatarmy. 

Men of republican principles have been jealous of a standing army, asdangerous to liberty. It certainly is so, wherever the interest ofthe general, and that of the principal officers, are not necessarilyconnected with the support of the constitution of the state. Thestanding army of Caesar destroyed the Roman republic. The standingarmy of Cromwell turned the long parliament out of doors. But where thesovereign is himself the general, and the principal nobility and gentryof the country the chief officers of the army; where the military forceis placed under the command of those who have the greatest interest inthe support of the civil authority, because they have themselves thegreatest share of that authority, a standing army can never be dangerousto liberty. On the contrary, it may, in some cases, be favourableto liberty. The security which it gives to the sovereign rendersunnecessary that troublesome jealousy, which, in some modern republics, seems to watch over the minutest actions, and to be at all timesready to disturb the peace of every citizen. Where the security of themagistrate, though supported by the principal people of the country, isendangered by every popular discontent; where a small tumult is capableof bringing about in a few hours a great revolution, the whole authorityof government must be employed to suppress and punish every murmur andcomplaint against it. To a sovereign, on the contrary, who feels himselfsupported, not only by the natural aristocracy of the country, but by awell regulated standing army, the rudest, the most groundless, andthe most licentious remonstrances, can give little disturbance. Hecan safely 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 in countrieswhere the sovereign is secured by a well regulated standing army. It isin such countries only, that the public safety does not require thatthe sovereign should be trusted with any discretionary power, forsuppressing even the impertinent wantonness of this licentious liberty. 

The first duty of the sovereign, therefore, that of defending thesociety from the violence and injustice of other independent societies, grows gradually more and more expensive, as the society advances incivilization. The military force of the society, which originally costthe sovereign no expense, either in time of peace, or in time of war, must, in the progress of improvement, first be maintained by him in timeof war, and afterwards even in time of peace. 

The great change introduced into the art of war by the invention offire-arms, has enhanced still further both the expense of exercisingand disciplining any particular number of soldiers in time of peace, and that of employing them in time of war. Both their arms and theirammunition are become more expensive. A musket is a more expensivemachine than a javelin or a bow and arrows; a cannon or a mortar, than abalista or a catapulta. The powder which is spent in a modern reviewis lost irrecoverably, and occasions a very considerable expense. Thejavelins and arrows which were thrown or shot in an ancient one, couldeasily be picked up again, and were, besides, of very little value. The cannon and the mortar are not only much dearer, but much heaviermachines than the balista or catapulta; and require a greater expense, not only to prepare them for the field, but to carry them to it. As thesuperiority of the modern artillery, too, over that of the ancients, is very great; it has become much more difficult, and consequentlymuch more expensive, to fortify a town, so as to resist, even for afew weeks, the attack of that superior artillery. In modern times, manydifferent causes contribute to render the defence of the societymore expensive. The unavoidable effects of the natural progress ofimprovement have, in this respect, been a good deal enhanced by a greatrevolution in the 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 evident advantageto the nation which can best afford that expense; and, consequently, toan opulent and civilized, over a poor and barbarous nation. In ancienttimes, the opulent and civilized found it difficult to defend themselvesagainst the poor and barbarous nations. In modern times, the poor andbarbarous find it difficult to defend themselves against the opulent andcivilized. The invention of fire-arms, an invention which at firstsight appears to be so pernicious, is certainly favourable, both to thepermanency and to the extension of civilization. 

PART II. 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 or oppressionof every other member of it, or the duty of establishing an exactadministration of justice, requires two very different degrees ofexpense in the different periods of society. 

Among nations of hunters, as there is scarce any property, or at leastnone that exceeds the value of two or three days labour; so there isseldom any established magistrate, or any regular administration ofjustice. Men who have no property, can injure one another only intheir persons or reputations. But when one man kills, wounds, beats, ordefames another, though he to whom the injury is done suffers, hewho does it receives no benefit. It is otherwise with the injuries toproperty. The benefit of the person who does the injury is often equalto the loss of him who suffers it. Envy, malice, or resentment, are theonly passions which can prompt one man to injure another in his personor reputation. But the greater part of men are not very frequently underthe influence of those passions; and the very worst men are so onlyoccasionally. As their gratification, too, how agreeable soever it maybe to certain characters, is not attended with any real or permanentadvantage, it is, in the greater part of men, commonly restrained byprudential considerations. Men may live together in society with sometolerable degree of security, though there is no civil magistrate toprotect them from the injustice of those passions. But avarice andambition in the rich, in the poor the hatred of labour and the loveof present ease and enjoyment, are the passions which prompt to invadeproperty; passions much more steady in their operation, and much moreuniversal in their influence. Wherever there is a great property, thereis great inequality. For one very rich man, there must be at least fivehundred poor, and the affluence of the few supposes the indigence of themany. The affluence of the rich excites the indignation of the poor, who are often 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 the labourof many years, or perhaps of many successive generations, can sleepa single night in security. He is at all times surrounded by unknownenemies, whom, though he never provoked, he can never appease, and fromwhose injustice he can be protected only by the powerful arm of thecivil magistrate, continually held up to chastise it. The acquisitionof valuable and extensive property, therefore, necessarily requires theestablishment of civil government. Where there is no property, or atleast none that exceeds the value of two or three days labour, civilgovernment is not so necessary. 

Civil government supposes a certain subordination. But as the necessityof civil government gradually grows up with the acquisition ofvaluable property; so the principal causes, which naturally introducesubordination, gradually grow up with the growth of that valuableproperty. 

The causes or circumstances which naturally introduce subordination, orwhich naturally and antecedent to any civil institution, give some mensome superiority over the greater part of their brethren, seem to befour in number. 

The first of those causes or circumstances, is the superiority ofpersonal qualifications, of strength, beauty, and agility of body; ofwisdom and virtue; of prudence, justice, fortitude, and moderation ofmind. The qualifications of the body, unless supported by those of themind, can give little authority in any period of society. He is a verystrong man, who, by mere strength of body, can force two weak onesto obey him. The qualifications of the mind can alone give very greatauthority They are however, invisible qualities; always disputable, andgenerally disputed. No society, whether barbarous or civilized, hasever found it convenient to settle the rules of precedency of rank andsubordination, according to those invisible qualities; but according tosomething that is more plain and palpable. 

The second of those causes or circumstances, is the superiority of age. An old man, provided his age is not so far advanced as to give suspicionof dotage, is everywhere more respected than a young man of equal rank, fortune, and abilities. Among nations of hunters, such as the nativetribes of North America, age is the sole foundation of rank andprecedency. Among them, father is the appellation of a superior;brother, of an equal; and son, of an inferior. In the most opulent andcivilized nations, age regulates rank among those who are in everyother respect equal; and among whom, therefore, there is nothing else toregulate it. Among brothers and among sisters, the eldest always takesplace; and in the succession of the paternal estate, every thing 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. 

The third of those causes or circumstances, is the superiority offortune. The authority of riches, however, though great in every ageof society, is, perhaps, greatest in the rudest ages of society, whichadmits of any considerable inequality of fortune. A Tartar chief, theincrease of whose flocks and herds is sufficient to maintain athousand men, cannot well employ that increase in any other way thanin maintaining a thousand men. The rude state of his society does notafford him any manufactured produce any trinkets or baubles of any kind, for which he can exchange that part of his rude produce which is overand above his own consumption. 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 his chieftainshipis the necessary effect of the superiority of his fortune. In an opulentand civilized society, a man may possess a much greater fortune, andyet not be able to command a dozen of people. Though the produce ofhis estate may be sufficient to maintain, and may, perhaps, actuallymaintain, more than a thousand people, yet, as those people pay forevery thing which they get from him, as he gives scarce any thing toany body but in exchange for an equivalent, there is scarce anybodywho considers himself as entirely dependent upon him, and his authorityextends only over a few menial servants. The authority of fortune, however, is very great, even in an opulent and civilized society. Thatit is much greater than that either of age or of personal qualities, hasbeen the constant complaint of every period of society which admittedof any considerable inequality of fortune. The first period of society, that of hunters, admits of no such inequality. Universal povertyestablishes their universal equality; and the superiority, either of ageor of personal qualities, are the feeble, but the sole foundations ofauthority and subordination. There is, therefore, little or no authorityor subordination in this period of society. The second period ofsociety, that of shepherds, admits of very great inequalities offortune, and there is no period in which the superiority of fortunegives so great authority to those who possess it. There is no period, accordingly, in which authority and subordination are more perfectlyestablished. The authority of an Arabian scherif is very great; that ofa Tartar khan altogether despotical. 

The fourth of those causes or circumstances, is the superiority ofbirth. Superiority of birth supposes an ancient superiority of fortunein the family of the person who claims it. All families are equallyancient; and the ancestors of the prince, though they may be betterknown, cannot well be more numerous than those of the beggar. Antiquityof family means everywhere the antiquity either of wealth, or of thatgreatness which is commonly either founded upon wealth, or accompaniedwith it. Upstart greatness is everywhere less respected than ancientgreatness. The hatred of usurpers, the love of the family of an ancientmonarch, are in a great measure founded upon the contempt which mennaturally have for the former, and upon their veneration for the latter. As a military officer submits, without reluctance, to the authority of asuperior by whom he has always been commanded, but cannot bear that hisinferior should be set over his head; so men easily submit to a familyto whom they and their ancestors have always submitted; but arefired with indignation when another family, in whom they had neveracknowledged any such superiority, assumes a dominion over them. 

The distinction of birth, being subsequent to the inequality of fortune, can have no place in nations of hunters, among whom all men, being equalin fortune, must likewise be very nearly equal in birth. The son ofa wise and brave man may, indeed, even among them, be somewhat morerespected than a man of equal merit, who has the misfortune to be theson of a fool or a coward. The difference, however will not be verygreat; and there never was, I believe, a great family in the world, whose illustration was entirely derived from the inheritance of wisdomand virtue. 

The distinction of birth not only may, but always does, take place amongnations of shepherds. Such nations are always strangers to every sortof luxury, and great wealth can scarce ever be dissipated among themby improvident profusion. There are no nations, accordingly, who aboundmore in families revered and honoured on account of their descent froma long race of great and illustrious ancestors; because there are nonations among whom wealth is likely to continue longer in the samefamilies. 

Birth and fortune are evidently the two circumstances which principallyset one man above another. They are the two great sources of personaldistinction, and are, therefore, the principal causes which naturallyestablish authority and subordination among men. Among nations ofshepherds, both those causes operate with their full force. The greatshepherd or herdsman, respected on account of his great wealth, andof the great number of those who depend upon him for subsistence, andrevered on account of the nobleness of his birth, and of the immemorialantiquity or his illustrious family, has a natural authority over allthe inferior shepherds or herdsmen of his horde or clan. He can commandthe united force of a greater number of people than any of them. Hismilitary power is greater than that of any of them. In time of war, they are all of them naturally disposed to muster themselves under hisbanner, rather than under that of any other person; and his birth andfortune thus naturally procure to him some sort of executive power. Bycommanding, too, the united force of a greater number of people than anyof them, he is best able to compel any one of them, who may have injuredanother, to compensate the wrong. He is the person, therefore, to whomall those 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 interposition, insuch cases, is more easily submitted to, even by the person complainedof, than that of any other person would be. His birth and fortune thusnaturally procure him some sort of judicial authority. 

It is in the age of shepherds, in the second period of society, that theinequality of fortune first begins to take place, and introduces amongmen a degree of authority and subordination, which could not possiblyexist before. It thereby introduces some degree of that civil governmentwhich is indispensably necessary for its own preservation; and it seemsto do this naturally, and even independent of the consideration ofthat necessity. The consideration of that necessity comes, no doubt, afterwards, to contribute very much to maintain and secure thatauthority and subordination. The rich, in particular, are necessarilyinterested to support that order of things, which can alone securethem in the possession of their own advantages. Men of inferior wealthcombine to defend those of superior wealth in the possession of theirproperty, in order that men of superior wealth may combine to defendthem in the possession of theirs. All the inferior shepherds andherdsmen feel, that the security of their own herds and flocks dependsupon the security of those of the great shepherd or herdsman; that themaintenance of their lesser authority depends upon that of his greaterauthority; and that upon their subordination to him depends his power ofkeeping their inferiors in subordination to them. They constitute asort of little nobility, who feel themselves interested to defend theproperty, and to support the authority, of their own little sovereign, in order that he may be able to defend their property, and to supporttheir authority. Civil government, so far as it is instituted for thesecurity of property, is, in reality, instituted for the defence of therich against the poor, or of those who have some property against thosewho have none at all. 

The judicial authority of such a sovereign, however, far from being acause of expense, was, for a long time, a source of revenue to him. Thepersons who applied to him for justice were always willing to payfor it, and a present never failed to accompany a petition. After theauthority of the sovereign, too, was thoroughly established, the personfound guilty, over and above the satisfaction which he was obliged tomake to the party, was like-wise forced to pay an amercement to thesovereign. He had given trouble, he had disturbed, he had broke thepeace of his lord the king, and for those offences an amercement wasthought due. In the Tartar governments of Asia, in the governmentsof Europe which were founded by the German and Scythian nations whooverturned 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 and theinferior chiefs used to exercise this jurisdiction in their own persons. Afterwards, they universally found it convenient to delegate it tosome substitute, bailiff, or judge. This substitute, however, was stillobliged to account to his principal or constituent for the profits ofthe jurisdiction. Whoever reads the instructions (They are to be foundin Tyrol's History of England) which were given to the judges of thecircuit in the time of Henry II will see clearly that those judges werea sort of itinerant factors, sent round the country for the purposeof levying certain branches of the king's revenue. In those days, theadministration of justice not only afforded a certain revenue to thesovereign, but, to procure this revenue, seems to have been one of theprincipal advantages which he proposed to obtain by the administrationof justice. 

This scheme of making the administration of justice subservient to thepurposes of revenue, could scarce fail to be productive of several verygross abuses. The person who applied for justice with a large presentin his hand, was likely to get something more than justice; while hewho applied for it with a small one was likely to get something less. Justice, too, might frequently be delayed, in order that this presentmight be repeated. The amercement, besides, of the person complainedof, might frequently suggest a very strong reason for finding him in thewrong, even when he had not really been so. That such abuses were farfrom being uncommon, the ancient history of every country in Europebears witness. 

When the sovereign or chief exercises his judicial authority in hisown person, how much soever he might abuse it, it must have been scarcepossible to get any redress; because there could seldom be any bodypowerful enough to call him to account. When he exercised it by abailiff, indeed, redress might sometimes be had. If it was for his ownbenefit only, that the bailiff had been guilty of an act of injustice, the sovereign himself might not always be unwilling to punish him, orto oblige him to repair the wrong. But if it was for the benefit of hissovereign; if it was in order to make court to the person who appointedhim, and who might prefer him, that he had committed any act ofoppression; redress would, upon most occasions, be as impossible as ifthe sovereign 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 Roman empire, theadministration of justice appears for a long time to have been extremelycorrupt; far from being quite equal and impartial, even under the bestmonarchs, and altogether profligate under the worst. 

Among nations of shepherds, where the sovereign or chief is only thegreatest shepherd or herdsman of the horde or clan, he is maintained inthe same manner as any of his vassals or subjects, by the increase ofhis own herds or flocks. Among those nations of husbandmen, who arebut just come out of the shepherd state, and who are not much advancedbeyond that state, such as the Greek tribes appear to have been aboutthe time of the Trojan war, and our German and Scythian ancestors, whenthey first settled upon the ruins of the western empire; the sovereignor chief is, in the same manner, only the greatest landlord of thecountry, and is maintained in the same manner as any other landlord, bya revenue derived from his own private estate, or from what, in modernEurope, was called the demesne of the crown. His subjects, upon ordinaryoccasions, contribute nothing to his support, except when, in order toprotect them from the oppression of some of their fellow-subjects, theystand in need of his authority. The presents which they make him uponsuch occasions constitute the whole ordinary revenue, the whole ofthe emoluments which, except, perhaps, upon some very extraordinaryemergencies, he derives from his dominion over them. When Agamemnon, inHomer, offers to Achilles, for his friendship, the sovereignty of sevenGreek cities, the sole advantage which he mentions as likely to bederived from it was, that the people would honour him with presents. Aslong as such presents, as long as the emoluments of justice, or whatmay be called the fees of court, constituted, in this manner, the wholeordinary revenue which the sovereign derived from his sovereignty, itcould not well be expected, it could not even decently be proposed, that he should give them up altogether. It might, and it frequently wasproposed, that he should regulate and ascertain them. But after theyhad been so regulated and ascertained, how to hinder a person who wasall-powerful from extending them beyond those regulations, was stillvery difficult, not to say impossible. During the continuance ofthis state of things, therefore, the corruption of justice, naturallyresulting from the arbitrary and uncertain nature of those presents, scarce admitted of any effectual remedy. 

But when, from different causes, chiefly from the continually increasingexpense of defending the nation against the invasion of other nations, the private estate of the sovereign had become altogether insufficientfor defraying the expense of the sovereignty; and when it had becomenecessary that the people should, for their own security, contributetowards this expense by taxes of different kinds; it seems to have beenvery commonly stipulated, that no present for the administration ofjustice should, under any pretence, be accepted either by the sovereign, or by his bailiffs and substitutes, the judges. Those presents, it seemsto have been supposed, could more easily be abolished altogether, thaneffectually regulated and ascertained. Fixed salaries were appointedto the judges, which were supposed to compensate to them the lossof whatever might have been their share of the ancient emoluments ofjustice; as the taxes more than compensated to the sovereign the loss ofhis. Justice was then said to be administered gratis. 

Justice, however, never was in reality administered gratis in anycountry. Lawyers and attorneys, at least, must always be paid by theparties; and if they were not, they would perform their duty still worsethan they actually perform it. The fees annually paid to lawyers andattorneys, amount, in every court, to a much greater sum than thesalaries of the judges. The circumstance of those salaries being paidby the crown, can nowhere much diminish the necessary expense of alaw-suit. But it was not so much to diminish the expense, as toprevent the corruption of justice, that the judges were prohibited fromreceiving my present or fee from the parties. 

The office of judge is in itself so very honourable, that men arewilling to accept of it, though accompanied with very small emoluments. The inferior office of justice of peace, though attended with a gooddeal of trouble, and in most cases with no emoluments at all, is anobject of ambition to the greater part of our country gentlemen. Thesalaries of all the different judges, high and low, together with thewhole expense of the administration and execution of justice, evenwhere it is not managed with very good economy, makes, in any civilizedcountry, but a very inconsiderable part of the whole expense ofgovernment. 

The whole expense of justice, too, might easily be defrayed by the feesof court; and, without exposing the administration of justice to anyreal hazard of corruption, the public revenue might thus be entirelydischarged from a certain, though perhaps but a small incumbrance. It isdifficult to regulate the fees of court effectually, where a personso powerful as the sovereign is to share in them and to derive anyconsiderable part of his revenue from them. It is very easy, where thejudge is the principal person who can reap any benefit from them. Thelaw can very easily oblige the judge to respect the regulation thoughit might not always be able to make the sovereign respect it. Where thefees of court are precisely regulated and ascertained where they arepaid all at once, at a certain period of every process, into the handsof a cashier or receiver, to be by him distributed in certain knownproportions among the different judges after the process is decided andnot till it is decided; there seems to be no more danger of corruptionthan when such fees are prohibited altogether. Those fees, withoutoccasioning any considerable increase in the expense of a law-suit, might be rendered fully sufficient for defraying the whole expenseof justice. But 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 each judgeto the number of hours and days which he had employed in examining theprocess, either in the court, or in a committee, by order of the court, those fees might give some encouragement to the diligence of eachparticular judge. Public services are never better performed, than whentheir reward comes only in consequence of their being performed, andis proportioned to the diligence employed in performing them. In thedifferent parliaments of France, the fees of court (called epices andvacations) constitute the far greater part of the emoluments of thejudges. After all deductions are made, the neat salary paid by the crownto a counsellor or judge in the parliament of Thoulouse, in rank anddignity the second parliament of the kingdom, amounts only to 150livres, about £6:11s. Sterling a-year. About seven years ago, that sumwas in the same place the ordinary yearly wages of a common footman. Thedistribution of these epices, 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. Thoseparliaments are, perhaps, in many respects, not very convenient courtsof justice; but they have never been accused; they seem never even tohave been suspected of corruption. 

The fees of court seem originally to have been the principal support ofthe different courts of justice in England. Each court endeavoured todraw to itself as much business as it could, and was, upon that account, willing to take cognizance of many suits which were not originallyintended to fall under its jurisdiction. The court of king's bench, instituted for the trial of criminal causes only, took cognizance ofcivil suits; the plaintiff pretending that the defendant, in not doinghim justice, had been guilty of some trespass or misdemeanour. The courtof exchequer, instituted for the levying of the king's revenue, and forenforcing the payment of such debts only as were due to the king, tookcognizance of all other contract debts; the planitiff alleging thathe could 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 choose to havetheir cause tried, and each court endeavoured, by superior dispatch andimpartiality, to draw to itself as many causes as it could. The presentadmirable constitution of the courts of justice in England was, perhaps, originally, in a great measure, formed by this emulation, which anciently took place between their respective judges: each judgeendeavouring to give, in his own court, the speediest and mosteffectual remedy which the law would admit, for every sort of injustice. Originally, the courts of law gave damages only for breach of contract. The court of chancery, as a court of conscience, first took upon itto enforce the specific performance of agreements. When the breach ofcontract consisted in the non-payment of money, the damage sustainedcould be compensated in no other way than by ordering payment, which wasequivalent to a specific performance of the agreement. In such cases, therefore, the remedy of the courts of law was sufficient. It was not soin others. When the tenant sued his lord for having unjustly outed himof his lease, the damages which he recovered were by no means equivalentto the possession of the land. Such causes, therefore, for some time, went all to the court of chancery, to the no small loss of the courts oflaw. It was to draw back such causes to themselves, that the courtsof law are said to have invented the artificial and fictitious writof ejectment, the most effectual remedy for an unjust outer ordispossession of land. 

A stamp-duty upon the law proceedings of each particular court, to belevied by that court, and applied towards the maintenance of the judges, and other officers belonging to it, might in the same manner, afford arevenue sufficient for defraying the expense of the administration ofjustice, without bringing any burden upon the general revenue of thesociety. The judges, indeed, might in this case, be under the temptationof multiplying unnecessarily the proceedings upon every cause, in orderto increase, as much as possible, the produce of such a stamp-duty. Ithas been the custom in modern Europe to regulate, upon most occasions, the payment of the attorneys and clerks of court according to the numberof pages which they had occasion to write; the court, however, requiringthat each page should contain so many lines, and each line so manywords. In order to increase their payment, the attorneys and clerks havecontrived to multiply words beyond all necessity, to the corruption ofthe law language of, I believe, every court of justice in Europe. A liketemptation might, perhaps, occasion a like corruption in the form of lawproceedings. 

But whether the administration of justice be so contrived as to defrayits own expense, or whether the judges be maintained by fixed salariespaid to them from some other fund, it does not seen necessary that theperson or persons entrusted with the executive power should be chargedwith the management of that fund, or with the payment of those salaries. That fund might arise from the rent of landed estates, the managementof each estate being entrusted to the particular court which was to bemaintained by it. That fund might arise even from the interest of asum of money, the lending out of which might, in the same manner, beentrusted to 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. Thenecessary instability of such a fund seems, however, to render it animproper one for the maintenance of an institution which ought to lastfor ever. 

The separation of the judicial from the executive power, seemsoriginally to have arisen from the increasing business of the society, in consequence of its increasing improvement. The administration ofjustice became so laborious and so complicated a duty, as to require theundivided attention of the person to whom it was entrusted. The personentrusted with the executive power, not having leisure to attend to thedecision of private causes himself, a deputy was appointed to decidethem in his stead. In the progress of the Roman greatness, the consulwas too much occupied with the political affairs of the state, to attendto the administration of justice. A praetor, therefore, was appointed toadminister it in his stead. In the progress of the European monarchies, which were founded upon the ruins of the Roman empire, the sovereignsand the great lords came universally to consider the administrationof justice as an office both too laborious and too ignoble for them toexecute in their own persons. They universally, therefore, dischargedthemselves of it, by appointing a deputy, bailiff or judge. 

When the judicial is united to the executive power, it is scarcepossible that justice should not frequently be sacrificed to what isvulgarly called politics. The persons entrusted with the great interestsof the state may even without any corrupt views, sometimes imagine itnecessary to sacrifice to those interests the rights of a private man. But upon the impartial administration of justice depends the liberty ofevery individual, the sense which he has of his own security. In orderto make every individual feel himself perfectly secure in the possessionof every right which belongs to him, it is not only necessary thatthe judicial should be separated from the executive power, but that itshould be rendered as much as possible independent of that power. Thejudge should not be liable to be removed from his office according tothe caprice of that power. The regular payment of his salary should notdepend upon the good will, or even upon the good economy of that power. 

PART III. Of the Expense of public Works and public Institutions. 

The third and last duty of the sovereign or commonwealth, is that oferecting and maintaining those public institutions and those publicworks, which though they may be in the highest degree advantageous toa great society, are, however, of such a nature, that the profitcould never repay the expense to any individual, or small number ofindividuals; and which it, therefore, cannot be expected that anyindividual, or small number of individuals, should erect or maintain. The performance of this duty requires, too, very different degrees ofexpense in the different periods of society. 

After the public institutions and public works necessary for the defenceof the society, and for the administration of justice, both of whichhave already been mentioned, the other works and institutions of thiskind are chiefly for facilitating the commerce of the society, andthose for promoting the instruction of the people. The institutions forinstruction are of two kinds: those for the education of the youth, andthose for the instruction of people of all ages. The consideration ofthe manner in which the expense of those different sorts of public worksand institutions may be most properly defrayed will divide this thirdpart of the present chapter into three different articles. 

ARTICLE I. --Of the public Works and Institutions for facilitating theCommerce of the Society. 

And, first, of those which are necessary for facilitating Commerce ingeneral. 

That the erection and maintenance of the public works which facilitatethe commerce of any country, such as good roads, bridges, navigablecanals, harbours, etc. Must require very different degrees of expensein the different periods of society, is evident without any proof. Theexpense of making and maintaining the public roads of any country mustevidently increase with the annual produce of the land and labour ofthat country, or with the quantity and weight of the goods which itbecomes necessary to fetch and carry upon those roads. The strength ofa bridge must be suited to the number and weight of the carriages whichare likely to pass over it. The depth and the supply of water for anavigable canal must be proportioned to the number and tonnage ofthe lighters which are likely to carry goods upon it; the extent of aharbour, to the number of the shipping which are likely to take shelterin it. 

It does not seem necessary that the expense of those public works shouldbe defrayed from that public revenue, as it is commonly called, of whichthe collection and application are in most countries, assigned to theexecutive power. The greater part of such public works may easily beso managed, as to afford a particular revenue, sufficient for defrayingtheir own expense without bringing any burden upon the general revenueof the society. 

A highway, a bridge, a navigable canal, for example, may, in most cases, be both made add maintained by a small toll upon the carriages whichmake use of them; a harbour, by a moderate port-duty upon the tonnageof the shipping which load or unload in it. The coinage, anotherinstitution for facilitating commerce, in many countries, not onlydefrays its own expense, but affords a small revenue or a seignorageto the sovereign. The post-office, another institution for the samepurpose, over and above defraying its own expense, affords, in almostall countries, a very considerable revenue to the sovereign. 

When the carriages which pass over a highway or a bridge, and thelighters which sail upon a navigable canal, pay toll in proportion totheir weight or their tonnage, they pay for the maintenance of thosepublic works exactly in proportion to the wear and tear which theyoccasion of them. It seems scarce possible to invent a more equitableway of maintaining such works. This tax or toll, too, though it isadvanced by the carrier, is finally paid by the consumer, to whom itmust always be charged in the price of the goods. As the expense ofcarriage, however, is very much reduced by means of such public works, the goods, notwithstanding the toll, come cheaper to the consumer thanthey could otherwise have done, their price not being so much raised bythe toll, as it is lowered by the cheapness of the carriage. The personwho finally pays this tax, therefore, gains by the application more thanhe loses by the payment of it. His payment is exactly in proportion tohis gain. It is, in reality, no more than a part of that gain which heis obliged to give up, in order to get the rest. It seems impossibleto imagine a more equitable method of raising a tax. When the toll uponcarriages of luxury, upon coaches, post-chaises, etc. Is made somewhathigher in proportion to their weight, than upon carriages of necessaryuse, such as carts, waggons, etc. The indolence and vanity of the richis made to contribute, in a very easy manner, to the relief of thepoor, by rendering cheaper the transportation of heavy goods to all thedifferent parts of the country. 

When high-roads, bridges, canals, etc. Are in this manner made andsupported by the commerce which is carried on by means of them, they canbe made only where that commerce requires them, and, consequently, where it is proper to make them. Their expense, too, their grandeur andmagnificence, must be suited to what that commerce can afford topay. They must be made, consequently, as it is proper to make them. Amagnificent high-road cannot be made through a desert country, wherethere is little or no commerce, or merely because it happens to lead tothe country villa of the intendant of the province, or to that of somegreat lord, to whom the intendant finds it convenient to make his court. A great bridge cannot be thrown over a river at a place wherenobody passes, or merely to embellish the view from the windows of aneighbouring palace; things which sometimes happen in countries, whereworks of this kind are carried on by any other revenue than that whichthey themselves are capable of affording. 

In several different parts of Europe, the toll or lock-duty upon a canalis the property of private persons, whose private interest obligesthem to keep up the canal. If it is not kept in tolerable order, thenavigation necessarily ceases altogether, and, along with it, the wholeprofit which they can make by the tolls. If those tolls were put underthe management of commissioners, who had themselves no interest inthem, they might be less attentive to the maintenance of the works whichproduced them. The canal of Languedoc cost the king of France and theprovince upwards of thirteen millions of livres, which (at twenty-eightlivres the mark of silver, the value of French money in the end ofthe last century) amounted to upwards of nine hundred thousand poundssterling. When that great work was finished, the most likely method, itwas found, of keeping it in constant repair, was to make a present ofthe tolls 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, a greatinterest to keep the work in constant repair. But had those tolls beenput under the management of commissioners, who had no such interest, they might perhaps, have been dissipated in ornamental and unnecessaryexpenses, while the most essential parts of the works were allowed to goto ruin. 

The tolls for the maintenance of a highroad cannot, with any safety, be made the property of private persons. A high-road, though entirelyneglected, does not become altogether impassable, though a canal does. The proprietors of the tolls upon a high-road, therefore, might neglectaltogether the repair of the road, and yet continue to levy verynearly the same tolls. It is proper, therefore, that the tolls forthe maintenance of such a work should be put under the management ofcommissioners or trustees. 

In Great Britain, the abuses which the trustees have committed inthe management of those tolls, have, in many cases, been very justlycomplained of. At many turnpikes, it has been said, the money levied ismore than double of what is necessary for executing, in the completestmanner, the work, which is often executed in a very slovenly manner, andsometimes not executed at all. The system of repairing the high-roads bytolls of this kind, it must be observed, is not of very long standing. We should not wonder, therefore, if it has not yet been brought to thatdegree of perfection 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 for controllingtheir conduct, and for reducing the tolls to what is barely sufficientfor executing the work to be done by them; the recency of theinstitution both accounts and apologizes for those defects, of which, by the wisdom of parliament, the greater part may, in due time, begradually remedied. 

The money levied at the different turnpikes in Great Britain, issupposed to exceed so much what is necessary for repairing the roads, that the savings which, with proper economy, might be made from it, havebeen considered, even by some ministers, as a very great resource, whichmight, at some time or another, be applied to the exigencies of thestate. Government, it has been said, by taking the management of theturnpikes into its own hands, and by employing the soldiers, who wouldwork for a very small addition to their pay, could keep the roads ingood order, at a much less expense than it can be done by trustees, who have no other workmen to employ, but such as derive their wholesubsistence from their wages. A great revenue, half a million, perhaps{Since publishing the two first editions of this book, I have got goodreasons to believe that all the turnpike tolls levied in Great Britaindo not produce a neat revenue that amounts to half a million; a sumwhich, under the management of government, would not be sufficient tokeep, in repair five of the principal roads in the kingdom}, it has beenpretended, might in this manner be gained, without laying any new burdenupon the people; and the turnpike roads might be made to contribute tothe general expense of the state, in the same manner as the post-officedoes at present. 

That a considerable revenue might be gained in this manner, I have nodoubt, though probably not near so much as the projectors of this planhave supposed. The plan itself, however, seems liable to several veryimportant objections. 

First, If the tolls which are levied at the turnpikes should ever beconsidered as one of the resources for supplying the exigencies ofthe state, they would certainly be augmented as those exigencieswere supposed to require. According to the policy of Great Britain, therefore, they would probably he augmented very fast. The facility withwhich a great revenue could be drawn from them, would probably encourageadministration to recur very frequently te this resource. Though itmay, perhaps, be more than doubtful whether half a million could by anyeconomy be saved out of the present tolls, it can scarcely be doubted, but that a million might be saved out of them, if they were doubled; andperhaps two millions, if they were tripled {I have now good reason tobelieve that all these conjectural sums are by much too large. }. Thisgreat revenue, too, might be levied without the appointment of a singlenew officer to collect and receive it. But the turnpike tolls, beingcontinually augmented in this manner, instead of facilitating the inlandcommerce of the country, as at present, would soon become a very greatincumbrance upon it. The expense of transporting all heavy goods fromone part of the country to another, would soon be so much increased, themarket for all such goods, consequently, would soon be so much narrowed, that their production would be in a great measure discouraged, andthe most important branches of the domestic industry of the countryannihilated altogether. 

Secondly, A tax upon carriages, in proportion to their weight, though avery equal tax when applied to the sole purpose of repairing the roads, is a very unequal one when applied to any other purpose, or to supplythe common exigencies of the state. When it is applied to the solepurpose above mentioned, each carriage is supposed to pay exactly forthe wear and tear which that carriage occasions of the roads. But whenit is applied to any other purpose, each carriage is supposed to payfor more than that wear and tear, and contributes to the supply of someother exigency of the state. But as the turnpike toll raises the priceof goods in proportion to their weight and not to their value, it ischiefly paid by the consumers of coarse and bulky, not by thoseof precious and light commodities. Whatever exigency of the state, therefore, this tax might be intended to supply, that exigency wouldbe chiefly supplied at the expense of the poor, not of the rich; at theexpense of those who are least able to supply it, not of those who aremost able. 

Thirdly, If government should at any time neglect the reparation of thehigh-roads, it would be still more difficult, than it is at present, tocompel the proper application of any part of the turnpike tolls. A largerevenue might thus be levied upon the people, without any part of itbeing applied to the only purpose to which a revenue levied in thismanner ought ever to be applied. If the meanness and poverty of thetrustees of turnpike roads render it sometimes difficult, at present, to oblige them to repair their wrong; their wealth and greatness wouldrender it ten times more so in the case which is here supposed. 

In France, the funds destined for the reparation of the high-roadsare under the immediate direction of the executive power. Those fundsconsist, partly in a certain number of days labour, which the countrypeople are in most parts of Europe obliged to give to the reparation ofthe highways; and partly in such a portion of the general revenue of thestate as the king chooses to spare from his other expenses. 

By the ancient law of France, as well as by that of most other parts ofEurope, the labour of the country people was under the direction of alocal or provincial magistracy, which had no immediate dependency uponthe king's council. But, by the present practice, both the labour of thecountry people, and whatever other fund the king may choose to assignfor the reparation of the high-roads in any particular province orgenerality, are entirely under the management of the intendant; anofficer who is appointed and removed by the king's council who receiveshis orders from it, and is in constant correspondence with it. In theprogress of despotism, the authority of the executive power graduallyabsorbs that of every other power in the state, and assumes to itselfthe management of every branch of revenue which is destined for anypublic purpose. In France, however, the great post-roads, the roadswhich make the communication between the principal towns of the kingdom, are in general kept in good order; and, in some provinces, are even agood deal superior to the greater part of the turnpike roads of England. But what we call the cross roads, that is, the far greater part of theroads in the country, are entirely neglected, and are in many placesabsolutely impassable for any heavy carriage. In some places it is evendangerous to travel on horseback, and mules are the only conveyancewhich can safely be trusted. The proud minister of an ostentatiouscourt, may frequently take pleasure in executing a work of splendour andmagnificence, such as a great highway, which is frequently seen by theprincipal nobility, whose applauses not only flatter his vanity, buteven contribute to support his interest at court. But to execute a greatnumber of little works, in which nothing that can be done can make anygreat appearance, or excite the smallest degree of admiration in anytraveller, and which, in short, have nothing to recommend them but theirextreme utility, is a business which appears, in every respect, too meanand paltry to merit the attention of so great a magistrate. Under suchan administration therefore, such works are almost always entirelyneglected. 

In China, and in several other governments of Asia, the executive powercharges itself both with the reparation of the high-roads, and with themaintenance of the navigable canals. In the instructions which aregiven to the governor of each province, those objects, it is said, areconstantly recommended to him, and the judgment which the court forms ofhis conduct is very much regulated by the attention which he appearsto have paid to this part of his instructions. This branch of publicpolice, accordingly, is said to be very much attended to in all thosecountries, but particularly in China, where the high-roads, and stillmore the navigable canals, it is pretended, exceed very much every thingof the same kind which is known in Europe. The accounts of those works, however, which have been transmitted to Europe, have generally beendrawn up by weak and wondering travellers; frequently by stupid andlying missionaries. If they had been examined by more intelligenteyes, and if the accounts of them had been reported by more faithfulwitnesses, they would not, perhaps, appear to be so wonderful. Theaccount which Bernier gives of some works of this kind in Indostan, falls very short of what had been reported of them by other travellers, more disposed to the marvellous than he was. It may too, perhaps, be inthose countries, as it is in France, where the great roads, the greatcommunications, which are likely to be the subjects of conversationat the court and in the capital, are attended to, and all the restneglected. In China, besides, in Indostan, and in several othergovernments of Asia, the revenue of the sovereign arises almostaltogether from a land tax or land rent, which rises or falls with therise and fall of the annual produce of the land. The great interest ofthe sovereign, therefore, his revenue, is in such countries necessarilyand immediately connected with the cultivation of the land, with thegreatness of its produce, and with the value of its produce. But inorder to render that produce both as great and as valuable as possible, it is necessary to procure to it as extensive a market as possible, and consequently to establish the freest, the easiest, and the leastexpensive communication between all the different parts of the country;which can be done only by means of the best roads and the best navigablecanals. But the revenue of the sovereign does not, in any part ofEurope, arise chiefly from a land tax or land rent. In all the greatkingdoms of Europe, perhaps, the greater part of it may ultimatelydepend upon the produce of the land: but that dependency is neither soimmediate nor so evident. In Europe, therefore, the sovereign does notfeel himself so directly called upon to promote the increase, both inquantity and value of the produce of the land, or, by maintaining goodroads and canals, to provide the most extensive market for that produce. Though it should be true, therefore, what I apprehend is not a littledoubtful, that in some parts of Asia this department of the publicpolice is very 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 they cannotafford any revenue for maintaining themselves, but of which theconveniency is nearly confined to some particular place or district, are always better maintained by a local or provincial revenue, under themanagement of a local and provincial administration, than by the generalrevenue of the state, of which the executive power must always have themanagement. Were the streets of London to be lighted and paved at theexpense of the treasury, is there any probability that they would be sowell lighted and paved as they are at present, or even at so small anexpense? The expense, besides, instead of being raised by a local taxupon the inhabitants of each particular street, parish, or district inLondon, would, in this case, be defrayed out of the general revenueof the state, and would consequently be raised by a tax upon all theinhabitants of the kingdom, of whom the greater part derive no sort ofbenefit from the lighting and paving of the streets of London. 

The abuses which sometimes creep into the local and provincialadministration of a local and provincial revenue, how enormous soeverthey may appear, are in reality, however, almost always very trifling incomparison of those which commonly take place in the administration andexpenditure of the revenue of a great empire. They are, besides, muchmore easily corrected. Under the local or provincial administration ofthe justices of the peace in Great Britain, the six days labourwhich the country people are obliged to give to the reparation of thehighways, is not always, perhaps, very judiciously applied, but it isscarce ever exacted with any circumstance of cruelty or oppression. InFrance, under the administration of the intendants, the application isnot always more judicious, and the exaction is frequently the mostcruel and oppressive. Such corvees, as they are called, make one of theprincipal instruments of tyranny by which those officers chastise anyparish or communeaute, which has had the misfortune to fall under theirdispleasure. 

Of the public Works and Institution which are necessary for facilitatingparticular 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, whichagain require a particular and extraordinary expense. 

Some particular branches of commerce which are carried on with barbarousand uncivilized nations, require extraordinary protection. An ordinarystore or counting-house could give little security to the goods of themerchants who trade to the western coast of Africa. To defend them fromthe barbarous natives, it is necessary that the place where they aredeposited should be in some measure fortified. The disorders in thegovernment of Indostan have been supposed to render a like precautionnecessary, even among that mild and gentle people; and it was underpretence of securing their persons and property from violence, that boththe English and French East India companies were allowed to erect thefirst forts 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 to maintainsome ambassador, minister, or consul, who may both decide, accordingto their own customs, the differences arising among his own countrymen, and, in their disputes with the natives, may by means of his publiccharacter, interfere with more authority and afford them a more powerfulprotection than they could expect from any private man. The interestsof commerce have frequently made it necessary to maintain ministers inforeign countries, where the purposes either of war or alliancewould not have required any. The commerce of the Turkey companyfirst occasioned the establishment of an ordinary ambassador atConstantinople. The first English embassies to Russia arose altogetherfrom commercial interests. The constant interference with thoseinterests, necessarily occasioned between the subjects of the differentstates of Europe, has probably introduced the custom of keeping, in allneighbouring countries, ambassadors or ministers constantly resident, even in the time of peace. This custom, unknown to ancient times, seemsnot to be older than the end of the fifteenth, or beginning of thesixteenth century; that is, than the time when commerce first began toextend itself to the greater part of the nations of Europe, and whenthey first began to attend to its interests. 

It seems not unreasonable, that the extraordinary expense which theprotection of any particular branch of commerce may occasion, should bedefrayed by a moderate tax upon that particular branch; by a moderatefine, for example, to be paid by the traders when they first enter intoit; or, what is more equal, by a particular duty of so much per cent. Upon the goods which they either import into, or export out of, theparticular countries with which it is carried on. The protection oftrade, in general, from pirates and freebooters, is said to have givenoccasion to the first institution of the duties of customs. But, ifit was thought reasonable to lay a general tax upon trade, in orderto defray the expense of protecting trade in general, it should seemequally reasonable to lay a particular tax upon a particular branch oftrade, in order to defray the extraordinary expense of protecting thatbranch. 

The protection of trade, in general, has always been considered asessential to the defence of the commonwealth, and, upon that account, a necessary part of the duty of the executive power. The collection andapplication of the general duties of customs, therefore, have alwaysbeen left to that power. But the protection of any particular branch oftrade is a part of the general protection of trade; a part, therefore, of the duty of that power; and if nations always acted consistently, theparticular duties levied for the purposes of such particular protection, should always have been left equally to its disposal. But in thisrespect, as well as in many others, nations have not always actedconsistently; and in the greater part of the commercial states ofEurope, particular companies of merchants have had the address topersuade the legislature to entrust to them the performance of this partof the duty of the sovereign, together with all the powers which arenecessarily connected with it. 

These companies, though they may, perhaps, have been useful for thefirst introduction of some branches of commerce, by making, at theirown expense, an experiment which the state might not think it prudentto make, have in the long-run proved, universally, either burdensome oruseless, and have either mismanaged or confined the trade. 

When those companies do not trade upon a joint stock, but are obligedto admit any person, properly qualified, upon paying a certain fine, and agreeing to submit to the regulations of the company, each membertrading upon his own stock, and at his own risk, they are calledregulated companies. When they trade upon a joint stock, each membersharing in the common profit or loss, in proportion to his share in thisstock, they are called joint-stock companies. Such companies, whetherregulated or joint-stock, sometimes have, and sometimes have not, exclusive privileges. 

Regulated companies resemble, in every respect, the corporation oftrades, so common in the cities and towns of all the different countriesof Europe; and are a sort of enlarged monopolies of the same kind. As noinhabitant of a town can exercise an incorporated trade, without firstobtaining his freedom in the incorporation, so, in most cases, nosubject of the state can lawfully carry on any branch of foreign trade, for which a regulated company is established, without first becoming amember of that company. The monopoly is more or less strict, accordingas the terms of admission are more or less difficult, and according asthe directors of the company have more or less authority, or have itmore or less in their power to manage in such a manner as to confine thegreater part of the trade to themselves and their particular friends. Inthe most ancient regulated companies, the privileges of apprenticeshipwere the same as in other corporations, and entitled the person who hadserved his time to a member of the company, to become himself a member, either without paying any fine, or upon paying a much smaller one thanwhat was exacted of other people. The usual corporation spirit, whereverthe law does not restrain it, prevails in all regulated companies. Whenthey have been allowed to act according to their natural genius, theyhave always, in order to confine the competition to as small a number ofpersons as possible, endeavoured to subject the trade to many burdensomeregulations. When the law has restrained them from doing this, they havebecome altogether useless and insignificant. 

The regulated companies for foreign commerce which at present subsistin Great Britain, are the ancient merchant-adventurers company, nowcommonly called the Hamburgh company, the Russia company, the Eastlandcompany, the Turkey company, and the African company. 

The terms of admission into the Hamburgh company are now said to bequite easy; and the directors either have it not in their power tosubject the trade to any troublesome restraint or regulations, or, atleast, have not of late exercised that power. It has not always been so. About the middle of the last century, the fine for admission was fifty, and at one time one hundred pounds, and the conduct of the company wassaid to be extremely oppressive. In 1643, in 1645, and in 1661, theclothiers and free traders of the west of England complained of them toparliament, as of monopolists, who confined the trade, and oppressed themanufactures of the country. Though those complaints produced no actof parliament, they had probably intimidated the company so far, as tooblige them to reform their conduct. Since that time, at least, therehave been no complaints against them. By the 10th and 11th of WilliamIII. C. 6, the fine for admission into the Russia company was reduced tofive pounds; and by the 25th of Charles II. C. 7, that for admissioninto the Eastland company to forty shillings; while, at the same time, Sweden, Denmark, and Norway, all the countries on the north side of theBaltic, were exempted from their exclusive charter. The conduct of thosecompanies had probably given occasion to those two acts of parliament. Before that time, Sir Josiah Child had represented both these and theHamburgh company as extremely oppressive, and imputed to their badmanagement the low state of the trade, which we at that time carriedon to the countries comprehended within their respective charters. Butthough such companies may not, in the present times, be very oppressive, they are certainly altogether useless. To be merely useless, indeed, is perhaps, the highest eulogy which can ever justly be bestowed upon aregulated company; and all the three companies above mentioned seem, intheir present state, to deserve this eulogy. 

The fine for admission into the Turkey company was formerly twenty-fivepounds for all persons under twenty-six years of age, and fifty poundsfor all persons above that age. Nobody but mere merchants could beadmitted; a restriction which excluded all shop-keepers and retailers. By a bye-law, no British manufactures could be exported to Turkey but inthe general ships of the company; and as those ships sailed alwaysfrom the port of London, this restriction confined the trade to thatexpensive port, and the traders to those who lived in London and in itsneighbourhood. By another bye-law, no person living within twenty milesof London, and not free of the city, could be admitted a member; anotherrestriction which, joined to the foregoing, necessarily excluded all butthe freemen of London. As the time for the loading and sailing of thosegeneral ships depended altogether upon the directors, they could easilyfill them with their own goods, and those of their particular friends, to the exclusion of others, who, they might pretend, had made theirproposals too late. In this state of things, therefore, this companywas, in every respect, a strict and oppressive monopoly. Those abusesgave occasion to the act of the 26th of George II. C. 18, reducingthe fine for admission to twenty pounds for all persons, without anydistinction of ages, or any restriction, either to mere merchants, or tothe freemen of London; and granting to all such persons the liberty ofexporting, from all the ports of Great Britain, to any port in Turkey, all British goods, of which the exportation was not prohibited, uponpaying both the general duties of customs, and the particular dutiesassessed for defraying the necessary expenses of the company; andsubmitting, at the same time, to the lawful authority of the Britishambassador and consuls resident in Turkey, and to the bye-laws of thecompany duly enacted. To prevent any oppression by those bye-laws, itwas by the same act ordained, that if any seven members of the companyconceived themselves aggrieved by any bye-law which should be enactedafter the passing of this act, they might appeal to the board of tradeand plantations (to the authority of which a committee of the privycouncil has now succeeded), provided such appeal was brought withintwelve months after the bye-law was enacted; and that, if any sevenmembers conceived themselves aggrieved by any bye-law which had beenenacted before the passing of this act, they might bring a like appeal, provided it was within twelve months after the day on which this act wasto take place. The experience of one year, however, may not alwaysbe sufficient 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 all regulated companies, as wellas of all other corporations, is not so much to oppress those who arealready members, as to discourage others from becoming so; which maybe done, not only by a high fine, but by many other contrivances. Theconstant view of such companies is always to raise the rate of their ownprofit as high as they can; to keep the market, both for the goods whichthey export, and for those which they import, as much understocked asthey can; which can be done only by restraining the competition, or bydiscouraging new adventurers from entering into the trade. A fine, evenof twenty pounds, besides, though it may not, perhaps, be sufficientto discourage any man from entering into the Turkey trade, with anintention to continue in it, may be enough to discourage a speculativemerchant from hazarding a single adventure in it. In all trades, theregular established traders, even though not incorporated, naturallycombine to raise profits, which are noway so likely to be kept, at alltimes, down to their proper level, as by the occasional competition ofspeculative adventurers. The Turkey trade, though in some measure laidopen by this act of parliament, is still considered by many people asvery far from being altogether free. The Turkey company contribute tomaintain an ambassador and two or three consuls, who, like other publicministers, ought to be maintained altogether by the state, and the tradelaid open to all his majesty's subjects. The different taxes levied bythe company, for this and other corporation purposes, might afford arevenue much more than sufficient to enable a state to maintain suchministers. 

Regulated companies, it was observed by Sir Josiah Child, though theyhad frequently supported public ministers, had never maintained anyforts or garrisons in the countries to which they traded; whereasjoint-stock companies frequently had. And, in reality, the former seemto be much more unfit for this sort of service than the latter. First, the directors of a regulated company have no particular interest in theprosperity of the general trade of the company, for the sake of whichsuch forts and garrisons are maintained. The decay of that general trademay even frequently contribute to the advantage of their own privatetrade; as, by diminishing the number of their competitors, it mayenable them both to buy cheaper, and to sell dearer. The directors ofa joint-stock company, on the contrary, having only their share inthe profits which are made upon the common stock committed to theirmanagement, have no private trade of their own, of which the interestcan be separated from that of the general trade of the company. Theirprivate interest is connected with the prosperity of the general tradeof the company, and with the maintenance of the forts and garrisonswhich are necessary for its defence. They are more likely, therefore, to have that continual and careful attention which that maintenancenecessarily requires. Secondly, The directors of a joint-stock companyhave always the management of a large capital, the joint stock of thecompany, a part of which they may frequently employ, with propriety, inbuilding, repairing, and maintaining such necessary forts and garrisons. But the directors of a regulated company, having the management of nocommon capital, have no other fund to employ in this way, but the casualrevenue arising from the admission fines, and from the corporationduties imposed upon the trade of the company. Though they had the sameinterest, therefore, to attend to the maintenance of such fortsand garrisons, they can seldom have the same ability to render thatattention effectual. The maintenance of a public minister, requiringscarce any attention, and but a moderate and limited expense, is abusiness much more suitable both to the temper and abilities of aregulated company. 

Long after the time of Sir Josiah Child, however, in 1750, a regulatedcompany was established, the present company of merchants trading toAfrica; which was expressly charged at first with the maintenance of allthe British forts and garrisons that lie between Cape Blanc and the Capeof Good Hope, and afterwards with that of those only which lie betweenCape Rouge and the Cape of Good Hope. The act which establishes thiscompany (the 23rd of George II. C. 51 ), seems to have had two distinctobjects in view; first, to restrain effectually the oppressive andmonopolizing spirit which is natural to the directors of a regulatedcompany; and, secondly, to force them, as much as possible, to givean attention, which is not natural to them, towards the maintenance offorts and garrisons. 

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 money uponcommon seal, or from laying any restraints upon the trade, which maybe carried on freely from all places, and by all persons being Britishsubjects, and paying the fine. The government is in a committee of ninepersons, who meet at London, but who are chosen annually by the freemenof the company at London, Bristol, and Liverpool; three from each place. No committeeman can be continued in office for more than three yearstogether. Any committee-man might be removed by the board of trade andplantations, now by a committee of council, after being heard in his owndefence. The committee are forbid to export negroes from Africa, or toimport any African goods into Great Britain. But as they are chargedwith the maintenance of forts and garrisons, they may, for that purposeexport from Great Britain to Africa goods and stores of different kinds. Out of the moneys which they shall receive from the company, they areallowed a sum, not exceeding eight hundred pounds, for the salariesof their clerks and agents at London, Bristol, and Liverpool, thehouse-rent of their offices at London, and all other expenses ofmanagement, commission, and agency, in England. What remains of thissum, after defraying these different expenses, they may divide amongthemselves, as compensation for their trouble, in what manner they thinkproper. By this constitution, it might have been expected, that thespirit of monopoly would have been effectually restrained, and the firstof these purposes sufficiently answered. It would seem, however, thatit had not. Though by the 4th of George III. C. 20, the fort of Senegal, with all its dependencies, had been invested in the company of merchantstrading to Africa, yet, in the year following (by the 5th of George III. C. 44), not only Senegal and its dependencies, but the whole coast, fromthe port of Sallee, in South Barbary, to Cape Rouge, was exempted fromthe jurisdiction of that company, was vested in the crown, and the tradeto it declared 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, underthe regulations of the 23d George II. They could do so. In the printeddebates of the house of commons, not always the most authentic recordsof truth, I observe, however, that they have been accused of this. Themembers of the committee of nine being all merchants, and the governorsand factors in their different forts and settlements being all dependentupon them, it is not unlikely that the latter might have given peculiarattention to the consignments and commissions of the former, which wouldestablish a real monopoly. 

For the second of these purposes, the maintenance of the forts andgarrisons, an annual sum has been allotted to them by parliament, generally about £13, 000. For the proper application of this sum, thecommittee is obliged to account annually to the cursitor baron ofexchequer; which account is afterwards to be laid before parliament. But parliament, which gives so little attention to the application ofmillions, is not likely to give much to that of £13, 000 a-year; and thecursitor baron of exchequer, from his profession and education, isnot likely to be profoundly skilled in the proper expense of forts andgarrisons. The captains of his majesty's navy, indeed, or any othercommissioned officers, appointed by the board of admiralty, mayinquire into the condition of the forts and garrisons, and report theirobservations to that board. But that board seems to have no directjurisdiction over the committee, nor any authority to correct thosewhose conduct it may thus inquire into; and the captains of hismajesty's navy, besides, are not supposed to be always deeply learnedin the science of fortification. Removal from an office, which canbe enjoyed only for the term of three years, and of which the lawfulemoluments, even during that term, are so very small, seems to be theutmost punishment to which any committee-man is liable, for any fault, except direct malversation, or embezzlement, either of the public money, or of that of the company; and the fear of the punishment can never bea motive of sufficient weight to force a continual and careful attentionto a business to which he has no other interest to attend. The committeeare accused of having sent out bricks and stones from England for thereparation of Cape Coast Castle, on the coast of Guinea; a businessfor which parliament had several times granted an extraordinary sum ofmoney. These bricks and stones, too, which had thus been sent upon solong a voyage, were said to have been of so bad a quality, that it wasnecessary to rebuild, from the foundation, the walls which had beenrepaired with them. The forts and garrisons which lie north of CapeRouge, are not only maintained at the expense of the state, but areunder the immediate government of the executive power; and why thosewhich lie south of that cape, and which, too, are, in part at least, maintained at the expense of the state, should be under a differentgovernment, it seems not very easy even to imagine a good reason. The protection of the Mediterranean trade was the original purpose orpretence of the garrisons of Gibraltar and Minorca; and the maintenanceand government of those garrisons have always been, very properly, committed, not to the Turkey company, but to the executive power. Inthe extent of its dominion consists, in a great measure, the pride anddignity of that power; and it is not very likely to fail in attentionto what is necessary for the defence of that dominion. The garrisons atGibraltar and Minorca, accordingly, have never been neglected. ThoughMinorca has been twice taken, and is now probably lost for ever, thatdisaster has never been imputed to any neglect in the executive power. I would not, however, be understood to insinuate, that either of thoseexpensive garrisons was ever, even in the smallest degree, necessary forthe purpose for which they were originally dismembered from the Spanishmonarchy. That dismemberment, perhaps, never served any other realpurpose than to alienate from England her natural ally the king ofSpain, and to unite the two principal branches of the house of Bourbonin a much stricter and more permanent alliance than the ties of bloodcould ever have united them. 

Joint-stock companies, established either by royal charter, or by act ofparliament, are different in several respects, not only from regulatedcompanies, but from private copartneries. 

First, In a private copartnery, no partner without the consent of thecompany, can transfer his share to another person, or introduce a newmember into the company. Each member, however, may, upon proper warning, withdraw from the copartnery, and demand payment from them of his shareof the common stock. In a joint-stock company, on the contrary, nomember can demand payment of his share from the company; but each membercan, without their consent, transfer his share to another person, andthereby introduce a new member. The value of a share in a joint stockis always the price which it will bring in the market; and this may beeither greater or less in any proportion, than the sum which its ownerstands credited for in the stock of the company. 

Secondly, In a private copartnery, each partner is bound for the debtscontracted by the company, to the whole extent of his fortune. In ajoint-stock company, on the contrary, each partner is bound only to theextent of his share. 

The trade of a joint-stock company is always managed by a court ofdirectors. This court, indeed, is frequently subject, in many respects, to the control of a general court of proprietors. But the greater partof these proprietors seldom pretend to understand any thing of thebusiness of the company; and when the spirit of faction happens not toprevail among them, give themselves no trouble about it, but receivecontentedly such halfyearly or yearly dividend as the directors thinkproper to make to them. This total exemption front trouble and frontrisk, beyond a limited sum, encourages many people to become adventurersin joint-stock companies, who would, upon no account, hazard theirfortunes in any private copartnery. Such companies, therefore, commonlydraw to themselves much greater stocks, than any private copartnerycan boast of. The trading stock of the South Sea company at one timeamounted to upwards of thirty-three millions eight hundred thousandpounds. The divided capital of the Bank of England amounts, at present, to ten millions seven hundred and eighty thousand pounds. The directorsof such companies, however, being the managers rather of other people'smoney than of their own, it cannot well be expected that they shouldwatch over it with the same anxious vigilance with which the partners ina private copartnery frequently watch over their own. Like the stewardsof a rich man, they are apt to consider attention to small mattersas not for their master's honour, and very easily give themselves adispensation from having it. Negligence and profusion, therefore, mustalways prevail, more or less, in the management of the affairs of such acompany. It is upon this account, that joint-stock companies for foreigntrade have seldom been able to maintain the competition against privateadventurers. They have, accordingly, very seldom succeeded without anexclusive privilege; and frequently have not succeeded with one. Withoutan exclusive privilege, they have commonly mismanaged the trade. With anexclusive privilege, they have both mismanaged and confined it. 

The Royal African company, the predecessors of the present Africancompany, had an exclusive privilege by charter; but as that charter hadnot been confirmed by act of parliament, the trade, in consequence ofthe declaration of rights, was, soon after the Revolution, laid open toall his majesty's subjects. The Hudson's Bay company are, as to theirlegal rights, in the same situation as the Royal African company. Theirexclusive charter has not been confirmed by act of parliament. The SouthSea company, as long as they continued to be a trading company, had anexclusive privilege confirmed by act of parliament; as have likewise thepresent united company of merchants trading to the East Indies. 

The Royal African company soon found that they could not maintain thecompetition against private adventurers, whom, notwithstanding thedeclaration of rights, they continued for some time to call interlopers, and to persecute as such. In 1698, however, the private adventurerswere subjected to a duty of ten per cent. Upon almost all thedifferent branches of their trade, to be employed by the company inthe maintenance of their forts and garrisons. But, notwithstanding thisheavy tax, the company were still unable to maintain the competition. Their stock and credit gradually declined. In 1712, their debts hadbecome so great, that a particular act of parliament was thoughtnecessary, both for their security and for that of their creditors. Itwas enacted, that the resolution of two-thirds of these creditors innumber and value should bind the rust, both with regard to the timewhich should be allowed to the company for the payment of their debts, and with regard to any other agreement which it might be thought properto make with them concerning those debts. In 1730, their affairs werein so great disorder, that they were altogether incapable of maintainingtheir forts and garrisons, the sole purpose and pretext of theirinstitution. From that year till their final dissolution, the parliamentjudged it necessary to allow the annual sum of £10, 000 for that purpose. In 1732, after having been for many years losers by the trade ofcarrying negroes to the West Indies, they at last resolved to give it upaltogether; to sell to the private traders to America the negroes whichthey purchased upon the coast; awl to employ their servants in a tradeto the inland parts of Africa for gold dust, elephants teeth, dyeingdrugs, etc. But their success in this more confined trade was notgreater than in their former extensive one. Their affairs continued togo gradually to decline, till at last, being in every respect a bankruptcompany, they were dissolved by act of parliament, and their forts andgarrisons vested in the present regulated company of merchants tradingto 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, thoughnot confirmed by act of parliament, were in those days supposed toconvey a real exclusive privilege. 

The Hudson's Bay company, before their misfortunes in the late war, hadbeen much more fortunate than the Royal African company. Their necessaryexpense is much smaller. The whole number of people whom they maintainin their different settlements and habitations, which they have honouredwith the name of forts, is said not to exceed a hundred and twentypersons. 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 eight weeks inthose seas. This advantage of having a cargo ready prepared, could not, for several years, be acquired by private adventurers; and withoutit there seems to be no possibility of trading to Hudson's Bay. Themoderate capital of the company, which, it is said, does not exceed onehundred and ten thousand pounds, may, besides, be sufficient to enablethem to engross the whole, or almost the whole trade and surplusproduce, of the miserable though extensive country comprehended withintheir charter. 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, though theymay have no right to it in law. Over and above all this, the moderatecapital of this company is said to be divided among a very small numberof proprietors. But a joint-stock company, consisting of a small numberof proprietors, with a moderate capital, approaches very nearly to thenature of a private copartnery, and may be capable of nearly thesame degree of vigilance and attention. It is not to be wonderedat, therefore, if, in consequence of these different advantages, theHudson's Bay company had, before the late war, been able to carry ontheir trade with a considerable degree of success. It does not seemprobable, however, that their profits ever approached to what the lateMr Dobbs imagined them. A much more sober and judicious writer, MrAnderson, author of the Historical and Chronological Deduction ofCommerce, very justly observes, that upon examining the accounts whichMr Dobbs himself has given for several years together, of their exportsand imports, and upon making proper allowances for their extraordinaryrisk and expense, it does not appear that their profits deserve to beenvied, or that they can much, if at all, exceed the ordinary profits oftrade. 

The South Sea company never had any forts or garrisons to maintain, andtherefore were entirely exempted from one great expense, to which otherjoint-stock companies for foreign trade are subject; but they had animmense capital divided among an immense number of proprietors. Itwas naturally to be expected, therefore, that folly, negligence, andprofusion, should prevail in the whole management of their affairs. The knavery and extravagance of their stock-jobbing projects aresufficiently known, and the explication of them would be foreign tothe present subject. Their mercantile projects were not much betterconducted. The first trade which they engaged in, was that of supplyingthe Spanish West Indies with negroes, of which (in consequence of whatwas called the Assiento Contract granted them by the treaty of Utrecht)they had the exclusive privilege. But as it was not expected that muchprofit could be made by this trade, both the Portuguese and Frenchcompanies, who had enjoyed it upon the same terms before them, havingbeen ruined by it, they were allowed, as compensation, to send annuallya ship of a certain burden, to trade directly to the Spanish WestIndies. Of the ten voyages which this annual ship was allowed to make, they are said to have gained considerably by one, that of the RoyalCaroline, in 1731; and to have been losers, more or less, by almost allthe rest. Their ill success was imputed, by their factors and agents, to the extortion and oppression of the Spanish government; but was, perhaps, principally owing to the profusion and depredations of thosevery factors and agents; some of whom are said to have acquired greatfortunes, even in one year. In 1734, the company petitioned the king, that they might be allowed to dispose of the trade and tonnage of theirannual ship, on account of the little profit which they made by it, and to accept of such equivalent as they could obtain from the king ofSpain. 

In 1724, this company had undertaken the whale fishery. Of this, indeed, they had no monopoly; but as long as they carried it on, no otherBritish subjects appear to have engaged in it. Of the eight voyageswhich their ships made to Greenland, they were gainers by one, andlosers by all the rest. After their eighth and last voyage, when theyhad sold their ships, stores, and utensils, they found that theirwhole loss upon this branch, capital and interest included, amounted toupwards of £237, 000. 

In 1722, this company petitioned the parliament to be allowed to dividetheir immense capital of more than thirty-three millions eight hundredthousand pounds, the whole of which had been lent to government, intotwo equal parts; the one half, or upwards of £16, 900, 000, to be put uponthe same footing with other government annuities, and not to be subjectto the debts contracted, or losses incurred, by the directors of thecompany, in the prosecution of their mercantile projects; the other halfto remain as before, a trading stock, and to be subject to those debtsand losses. The petition was too reasonable not to be granted. In1733, they again petitioned the parliament, that three-fourths of theirtrading stock might be turned into annuity stock, and only one-fourthremain as trading stock, or exposed to the hazards arising from the badmanagement of their directors. Both their annuity and trading stockshad, by this time, been reduced more than two millions each, by severaldifferent payments from government; so that this fourth amounted only to£3, 662, 784:8:6. In 1748, all the demands of the company upon the king ofSpain, in consequence of the assiento contract, were, by the treaty ofAix-la-Chapelle, given up for what was supposed an equivalent. An endwas put to their trade with the Spanish West Indies; the remainder oftheir trading stock was turned into an annuity stock; and the companyceased, in every respect, to be a trading company. 

It ought to be observed, that in the trade which the South Sea companycarried on by means of their annual ship, the only trade by which itever was expected that they could make any considerable profit, theywere not without competitors, either in the foreign or in the homemarket. At Carthagena, Porto Bello, and La Vera Cruz, they had toencounter the competition of the Spanish merchants, who brought fromCadiz to those markets European goods, of the same kind with the outwardcargo of their ship; and in England they had to encounter that of theEnglish merchants, who imported from Cadiz goods of the Spanish WestIndies, of the same kind with the inward cargo. The goods, both of theSpanish and English merchants, indeed, were, perhaps, subject to higherduties. But the loss occasioned by the negligence, profusion, andmalversation of the servants of the company, had probably been a taxmuch heavier than all those duties. That a joint-stock company should beable to carry on successfully any branch of foreign trade, when privateadventurers can come into any sort of open and fair competition withthem, seems contrary to all experience. 

The old English East India company was established in 1600, by a charterfrom Queen Elizabeth. In the first twelve voyages which they fittedout for India, they appear to have traded as a regulated company, withseparate stocks, though only in the general ships of the company. In1612, they united into a joint stock. Their charter was exclusive, and, though not confirmed by act of parliament, was in those days supposed toconvey a real exclusive privilege. For many years, therefore, they werenot much disturbed by interlopers. Their capital, which never exceeded£744, 000, and of which £50 was a share, was not so exorbitant, northeir dealings so extensive, as to afford either a pretext forgross negligence and profusion, or a cover to gross malversation. Notwithstanding some extraordinary losses, occasioned partly by themalice of the Dutch East India company, and partly by other accidents, they carried on for many years a successful trade. But in process oftime, when the principles of liberty were better understood, it becameevery day more and more doubtful, how far a royal charter, not confirmedby act of parliament, could convey an exclusive privilege. Upon thisquestion the decisions of the courts of justice were not uniform, butvaried with the authority of government, and the humours of the times. Interlopers multiplied upon them; and towards the end of the reign ofCharles II. , through the whole of that of James II. , and during a partof that of William III. , reduced them to great distress. In 1698, a proposal was made to parliament, of advancing two millions togovernment, at eight per cent. Provided the subscribers were erectedinto a new East India company, with exclusive privileges. The old EastIndia company offered seven hundred thousand pounds, nearly the amountof their capital, at four per cent. Upon the same conditions. But suchwas at that time the state of public credit, that it was more convenientfor government to borrow two millions at eight per cent. Than sevenhundred thousand pounds at four. The proposal of the new subscribers wasaccepted, and a new East India company established in consequence. Theold East India company, however, had a right to continue their tradetill 1701. They had, at the same time, in the name of their treasurer, subscribed very artfully three hundred and fifteen thousand pounds intothe stock of the new. By a negligence in the expression of the act ofparliament, which vested the East India trade in the subscribers tothis loan of two millions, it did not appear evident that they wereall obliged to unite into a joint stock. A few private traders, whosesubscriptions amounted only to seven thousand two hundred pounds, insisted upon the privilege of trading separately upon their own stocks, and at their own risks. The old East India company had a right to aseparate trade upon their own stock till 1701; and they had likewise, both before and after that period, a right, like that or otherprivate traders, to a separate trade upon the £315, 000, which they hadsubscribed into the stock of the new company. The competition of thetwo companies with the private traders, and with one another, is said tohave well nigh ruined both. Upon a subsequent occasion, in 1750, whena proposal was made to parliament for putting the trade under themanagement of a regulated company, and thereby laying it in somemeasure open, the East India company, in opposition to this proposal, represented, in very strong terms, what had been, at this time, themiserable effects, as they thought them, of this competition. In India, they said, it raised the price of goods so high, that they were notworth the buying; and in England, by overstocking the market, it sunktheir price so low, that no profit could be made by them. That by a moreplentiful supply, to the great advantage and conveniency of the public, it must have reduced very much the price of India goods in the Englishmarket, cannot well be doubted; but that it should have raised very muchtheir price in the Indian market, seems not very probable, as all theextraordinary demand which that competition could occasion must havebeen but as a drop of water in the immense ocean of Indian commerce. Theincrease of demand, besides, though in the beginning it may sometimesraise the price of goods, never fails to lower it in the long-run. Itencourages production, and thereby increases the competition of theproducers, who, in order to undersell one another, have recourse tonew divisions or labour and new improvements of art, which might neverotherwise have been thought of. The miserable effects of whichthe company complained, were the cheapness of consumption, and theencouragement given to production; precisely the two effects which itis the great business of political economy to promote. The competition, however, of which they gave this doleful account, had not been allowedto be of long continuance. In 1702, the two companies were, in somemeasure, united by an indenture tripartite, to which the queen was thethird party; and in 1708, they were by act of parliament, perfectlyconsolidated into one company, by their present name of the UnitedCompany of Merchants trading to the East Indies. Into this act it wasthought worth while to insert a clause, allowing the separate tradersto continue their trade till Michaelmas 1711; but at the same timeempowering the directors, upon three years notice, to redeem theirlittle capital of seven thousand two hundred pounds, and thereby toconvert the whole stock of the company into a joint stock. By thesame act, the capital of the company, in consequence of a new loanto government, was augmented from two millions to three millions twohundred thousand pounds. In 1743, the company advanced another millionto government. But this million being raised, not by a call upon theproprietors, but by selling annuities and contracting bond-debts, it didnot augment the stock upon which the proprietors could claim a dividend. It augmented, however, their trading stock, it being equally liablewith the other three millions two hundred thousand pounds, to the lossessustained, and debts contracted by the company in prosecution of theirmercantile projects. From 1708, or at least from 1711, this company, being delivered from all competitors, and fully established in themonopoly of the English commerce to the East Indies, carried on asuccessful trade, and from their profits, made annually a moderatedividend to their proprietors. During the French war, which began in1741, the ambition 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 signal losses, they at last lost Madras, at that time their principal settlement inIndia. It was restored to them by the treaty of Aix-la-Chapelle; and, about this time the spirit of war and conquest seems to have takenpossession of their servants in India, and never since to have leftthem. During the French war, which began in 1755, their arms partookof the general good fortune of those of Great Britain. They defendedMadras, took Pondicherry, recovered Calcutta, and acquired the revenuesof a rich and extensive territory, amounting, it was then said, toupwards of three millions a-year. They remained for several years inquiet possession 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, in compensationfor this claim, agreed to pay to government £400, 000 a-year. They had, before this, gradually augmented their dividend from about six to tenper cent. ; that is, upon their capital of three millions two hundredthousand pounds, they had increased it by £128, 000, or had raised itfrom one hundred and ninety-two thousand to three hundred and twentythousand pounds a-year. They were attempting about this time to raiseit still further, to twelve and a-half per cent. , which would have madetheir annual payments to their proprietors equal to what they had agreedto pay annually to government, or to £400, 000 a-year. But during the twoyears in which their agreement with government was to take place, theywere restrained from any further increase of dividend by two successiveacts of parliament, of which the object was to enable them to make aspeedier progress 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 years more, and stipulated, that during the course of that period, they should beallowed gradually to increase their dividend to twelve and a-half percent; never increasing it, however, more than one per cent. In one year. This increase of dividend, therefore, when it had risen to its utmostheight, could augment their annual payments, to their proprietors andgovernment together, but by £680, 000, beyond what they had been beforetheir late territorial acquisitions. What the gross revenue of thoseterritorial acquisitions was supposed to amount to, has already beenmentioned; and by an account brought by the Cruttenden East Indiaman in1769, the neat revenue, clear of all deductions and military charges, was stated at two millions forty-eight thousand seven hundred andforty-seven pounds. They were said, at the same time, to possessanother revenue, arising partly from lands, but chiefly from the customsestablished at their different settlements, amounting to £439, 000. Theprofits of their trade, too, according to the evidence of their chairmanbefore the house of commons, amounted, at this time, to at least£400, 000 a-year; according to that of their accountant, to at least£500, 000; according to the lowest account, at least equal to the highestdividend that was to be paid to their proprietors. So great a revenuemight certainly have afforded an augmentation of £680, 000 in theirannual payments; and, at the same time, have left a large sinking fund, sufficient for the speedy reduction of their debt. In 1773, however, their debts, instead of being reduced, were augmented by an arrear tothe treasury in the payment of the four hundred thousand pounds; byanother to the custom-house for duties unpaid; by a large debt to thebank, for money borrowed; and by a fourth, for bills drawn upon themfrom India, and wantonly accepted, to the amount of upwards of twelvehundred thousand pounds. The distress which these accumulated claimsbrought upon them, obliged them not only to reduce all at once theirdividend to six per cent. But to throw themselves upon the mercy ofgovermnent, and to supplicate, first, a release from the further paymentof the stipulated £400, 000 a-year; and, secondly, a loan of fourteenhundred thousand, to save them from immediate bankruptcy. The greatincrease of their fortune had, it seems, only served to furnish theirservants with a pretext for greater profusion, and a cover for greatermalversation, than in proportion even to that increase of fortune. The conduct of their servants in India, and the general state oftheir affairs both in India and in Europe, became the subject of aparliamentary inquiry: in consequence of which, several very importantalterations were made in the constitution of their government, bothat home and abroad. In India, their principal settlements or Madras, Bombay, and Calcutta, which had before been altogether independent ofone another, were subjected to a governor-general, assisted by a councilof four assessors, parliament assuming to itself the first nominationof this governor and council, who were to reside at Calcutta; that cityhaving now become, what Madras was before, the most important of theEnglish settlements in India. The court of the Mayor of Calcutta, originally instituted for the trial of mercantile causes, which arose inthe city and neighbourhood, had gradually extended its jurisdictionwith the extension of the empire. It was now reduced and confined to theoriginal purpose of its institution. Instead of it, a new supreme courtof judicature was established, consisting of a chief justice and threejudges, to be appointed by the crown. In Europe, the qualificationnecessary to entitle a proprietor to vote at their general courts wasraised, from five hundred pounds, the original price of a share in thestock of the 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 by inheritance, for at least one year, instead of six months, the term requisite before. The court of twenty-four directors had before been chosen annually; butit was now enacted, that each director should, for the future, be chosenfor four years; six of them, however, to go out of office by rotationevery year, and not be capable of being re-chosen at the election ofthe six new directors for the ensuing year. In consequence of thesealterations, the courts, both of the proprietors and directors, it wasexpected, would be likely to act with more dignity and steadinessthan they had usually done before. But it seems impossible, by anyalterations, to render those courts, in any respect, fit to govern, oreven to share in the government of a great empire; because the greaterpart of their members must always have too little interest in theprosperity of that empire, to give any serious attention to what maypromote it. Frequently a man of great, sometimes even a man of smallfortune, is willing to purchase a thousand pounds share in India stock, merely for the influence which he expects to aquire by a vote in thecourt of proprietors. It gives him a share, though not in the plunder, yet in the appointment of the plunderers of India; the court ofdirectors, though they make that appointment, being necessarily more orless under the influence of the proprietors, who not only elect thosedirectors, but sometimes over-rule the appointments of their servants inIndia. Provided he can enjoy this influence for a few years, and therebyprovide for a certain number of his friends, he frequently cares littleabout the dividend, or even about the value of the stock upon whichhis vote is founded. About the prosperity of the great empire, in thegovernment of which that vote gives him a share, he seldom cares at all. No other sovereigns ever were, or, from the nature of things, ever couldbe, so perfectly indifferent about the happiness or misery of theirsubjects, the improvement or waste of their dominions, the glory ordisgrace of their administration, as, from irresistible moral causes, the greater part of the proprietors of such a mercantile company are, and necessarily must be. This indifference, too, was more likely to beincreased than diminished by some of the new regulations which weremade in consequence of the parliamentary inquiry. By a resolution of thehouse of commons, for example, it was declared, that when the £1, 400, 000lent to the company by government, should be paid, and their bond-debtsbe reduced to £1, 500, 000, they might then, and not till then, divideeight per cent. Upon their capital; and that whatever remained of theirrevenues and neat profits at home should be divided into four parts;three of them to be paid into the exchequer for the use of the public, and the fourth to be reserved as a fund, either for the furtherreduction of their bond-debts, or for the discharge of other contingentexigencies which the company might labour under. But if the company werebad stewards and bad sovereigns, when the whole of their neat revenueand profits belonged to themselves, and were at their own disposal, theywere surely not likely to be better when three-fourths of them were tobelong to other people, and the other fourth, though to be laid out forthe benefit 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 own servants anddependants should have either the pleasure of wasting, or the profitof embezzling, whatever surplus might remain, after paying the proposeddividend of eight per cent. Than that it should come into the hands of aset of people with whom those resolutions could scarce fail to setthem in some measure at variance. The interest of those servants anddependants might so far predominate in the court of proprietors, assometimes to dispose it to support the authors of depredations whichhad been committed in direct violation of its own authority. With themajority of proprietors, the support even of the authority of their owncourt might sometimes be a matter of less consequence than the supportof those who had set that authority at defiance. 

The regulations of 1773, accordingly, did not put an end to the disorderof the company's government in India. Notwithstanding that, during amomentary fit of good conduct, they had at one time collected into thetreasury of Calcutta more than £3, 000, 000 sterling; notwithstanding thatthey had afterwards extended either their dominion or their depredationsover a vast accession of some of the richest and most fertile countriesin India, all was wasted 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) in greaterdistress than ever; and, in order to prevent immediate bankruptcy, isonce more reduced to supplicate the assistance of government. Differentplans have been proposed by the different parties in parliament for thebetter management of its affairs; and all those plans seem to agreein supposing, what was indeed always abundantly evident, that it isaltogether unfit to govern its territorial possessions. Even the companyitself seems to be convinced of its own incapacity so far, and seems, upon that account willing to give them up to government. 

With the right of possessing forts and garrisons in distant andbarbarous countries is necessarily connected the right of making peaceand war in those countries. The joint-stock companies, which have hadthe one right, have constantly exercised the other, and have frequentlyhad it expressly conferred upon them. How unjustly, how capriciously, how cruelly, they have commonly exercised it, is too well known fromrecent experience. 

When a company of merchants undertake, at their own risk and expense, toestablish a new trade with some remote and barbarous nation, it may notbe unreasonable to incorporate them into a joint-stock company, andto grant them, in case of their success, a monopoly of the trade for acertain number of years. It is the easiest and most natural way in whichthe state can recompense them for hazarding a dangerous and expensiveexperiment, of which the public is afterwards to reap the benefit. A temporary monopoly of this kind may be vindicated, upon the sameprinciples upon which a like monopoly of a new machine is granted to itsinventor, and that of a new book to its author. But upon the expirationof the term, the monopoly ought certainly to determine; the forts andgarrisons, if it was found necessary to establish any, to be taken intothe hands of government, their value to be paid to the company, and thetrade to be laid open to all the subjects of the state. By a perpetualmonopoly, all the other subjects of the state are taxed very absurdlyin two different ways: first, by the high price of goods, which, in thecase of a free trade, they could buy much cheaper; and, secondly, bytheir total exclusion from a branch of business which it might be bothconvenient and profitable for many of them to carry on. It is for themost worthless of all purposes, too, that they are taxed in this manner. It is merely to enable the company to support the negligence, profusion, and malversation of their own servants, whose disorderly conduct seldomallows the dividend of the company to exceed the ordinary rate of profitin trades which are altogether free, and very frequently makes a falleven a good deal short of that rate. Without a monopoly, however, ajoint-stock company, it would appear from experience, cannot long carryon any branch of foreign trade. To buy in one market, in order to sellwith profit in another, when there are many competitors in both; towatch over, not only the occasional variations in the demand, but themuch greater and more frequent variations in the competition, or in thesupply which that demand is likely to get from other people; and tosuit with dexterity and judgment both the quantity and quality of eachassortment of goods to all these circumstances, is a species of warfare, of which the operations are continually changing, and which can scarceever be conducted successfully, without such an unremitting exertion ofvigilance and attention as cannot long be expected from the directorsof a joint-stock company. The East India company, upon the redemptionof their funds, and the expiration of their exclusive privilege, havea right, by act of parliament, to continue a corporation with a jointstock, and to trade in their corporate capacity to the East Indies, incommon with the rest of their fellow subjects. But in this situation, the superior vigilance and attention of a private adventurer would, inall probability, soon make them weary of the trade. 

An eminent French author, of great knowledge in matters of politicaleconomy, the Abbe Morellet, gives a list of fifty-five joint-stockcompanies for foreign trade, which have been established in differentparts of Europe since the year 1600, and which, according to him, have all failed from mismanagement, notwithstanding they had exclusiveprivileges. He has been misinformed with regard to the history of two orthree of them, which were not joint-stock companies and have not failed. But, in compensation, there have been several joint-stock companieswhich have failed, and which he has omitted. 

The only trades which it seems possible for a joint-stock company tocarry on successfully, without an exclusive privilege, are those, ofwhich all the operations are capable of being reduced to what is calleda routine, or to such a uniformity of method as admits of little orno variation. Of this kind is, first, the banking trade; secondly, thetrade of insurance from fire and from sea risk, and capture in time ofwar; thirdly, the trade of making and maintaining a navigable cut orcanal; and, fourthly, the similar trade of bringing water for the supplyof a great city. 

Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To departupon any occasion from those rules, in consequence of some flatteringspeculation of extraordinary gain, is almost always extremely dangerousand frequently fatal to the banking company which attempts it. But theconstitution of joint-stock companies renders them in general, moretenacious of established rules than any private copartnery. Suchcompanies, therefore, seem extremely well fitted for this trade. Theprincipal banking companies in Europe, accordingly, are joint-stockcompanies, many of which manage their trade very successfully withoutany exclusive privilege. The bank of England has no other exclusiveprivilege, except that no other banking company in England shall consistof more than six persons. The two banks of Edinburgh are joint-stockcompanies, without any exclusive privilege. 

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 some degree, reducible to strict rule and method. The trade of insurance, therefore, may be carried on successfully by a joint-stock company, withoutany exclusive privilege. Neither the London Assurance, nor the RoyalExchange Assurance companies have any such privilege. 

When a navigable cut or canal has been once made, the management of itbecomes quite simple and easy, and it is reducible to strict rule andmethod. Even the making of it is so, as it may be contracted for withundertakers, at so much a mile, and so much a lock. The same thing maybe said of a canal, an aqueduct, or a great pipe for bringing waterto supply a great city. Such under-takings, therefore, may be, andaccordingly frequently are, very successfully managed by joint-stockcompanies, without any exclusive privilege. 

To establish a joint-stock company, however, for any undertaking, merelybecause such a company might be capable of managing it successfully;or, to exempt a particular set of dealers from some of the general lawswhich take place with regard to all their neighbours, merely becausethey might be capable of thriving, if they had such an exemption, wouldcertainly not be reasonable. To render such an establishment perfectlyreasonable, with the circumstance of being reducible to strict ruleand method, two other circumstances ought to concur. First, it ought toappear with the clearest evidence, that the undertaking is of greaterand more general utility than the greater part of common trades;and, secondly, that it requires a greater capital than can easilybe collected 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, inthis case, the demand for what it was to produce, would readily andeasily be supplied by private adventurers. In the four trades abovementioned, both those circumstances concur. 

The great and general utility of the banking trade, when prudentlymanaged, has been fully explained in the second book of this Inquiry. But a public bank, which is to support public credit, and, uponparticular emergencies, to advance to government the whole produce of atax, to the amount, perhaps, of several millions, a year or two beforeit comes in, requires a greater capital than can easily be collectedinto any private copartnery. 

The trade of insurance gives great security to the fortunes of privatepeople, and, by dividing among a great many that loss which would ruinan individual, makes it fall light and easy upon the whole society. Inorder to give this security, however, it is necessary that the insurersshould have a very large capital. Before the establishment of the twojoint-stock companies for insurance in London, a list, it is said, was laid before the attorney-general, of one hundred and fifty privateusurers, who had failed in the course of a few years. 

That navigable cuts and canals, and the works which are sometimesnecessary for supplying a great city with water, are of great andgeneral utility, while, at the same time, they frequently requirea greater expense than suits the fortunes of private people, issufficiently obvious. 

Except the four trades above mentioned, I have not been able torecollect any other, in which all the three circumstances requisite forrendering reasonable the establishment of a joint-stock company concur. The English copper company of London, the lead-smelting company, theglass-grinding company, have not even the pretext of any great orsingular utility in the object which they pursue; nor does the pursuitof that object seem to require any expense unsuitable to the fortunes ofmany private men. Whether the trade which those companies carry on, isreducible to such strict rule and method as to render it fit for themanagement of a joint-stock company, or whether they have any reasonto boast of their extraordinary profits, I do not pretend to know. Themine-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 than it did some years ago. Thejoint-stock companies, which are established for the public-spiritedpurpose of promoting some particular manufacture, over and abovemanaging their own affairs ill, to the diminution of the general stockof the society, can, in other respects, scarce ever fail to do more harmthan good. Notwithstanding the most upright intentions, the unavoidablepartiality of their directors to particular branches of the manufacture, of which the undertakers mislead and impose upon them, is a realdiscouragement to the rest, and necessarily breaks, more or less, that natural proportion which would otherwise establish itself betweenjudicious industry and profit, and which, to the general industry of thecountry, is of all encouragements the greatest and the most effectual. 

ART. II. --Of the Expense of the Institution for the Education of Youth. 

The institutions for the education of the youth may, in the same manner, furnish a revenue sufficient for defraying their own expense. The fee orhonorary, which the scholar pays to the master, naturally constitutes arevenue of this kind. 

Even where the reward of the master does not arise altogether from thisnatural revenue, it still is not necessary that it should be derivedfrom that general revenue of the society, of which the collection andapplication are, in most countries, assigned to the executive power. Through the greater part of Europe, accordingly, the endowment ofschools and colleges makes either no charge upon that general revenue, or but a very small one. It everywhere arises chiefly from some localor provincial revenue, from the rent of some landed estate, or from theinterest of some sum of money, allotted and put under the managementof trustees for this particular purpose, sometimes by the sovereignhimself, and sometimes by some private donor. 

Have those public endowments contributed in general, to promote the endof their institution? Have they contributed to encourage the diligence, and to improve the abilities, of the teachers? Have they directed thecourse of education towards objects more useful, both to the individualand to the public, than those to which it would naturally have gone ofits own accord? It should not seem very difficult to give at least aprobable answer to each of those questions. 

In every profession, the exertion of the greater part of those whoexercise it, is always in proportion to the necessity they are under ofmaking that exertion. This necessity is greatest with those to whomthe emoluments of their profession are the only source from which theyexpect their fortune, or even their ordinary revenue and subsistence. In order to acquire this fortune, or even to get this subsistence, theymust, in the course of a year, execute a certain quantity of work ofa known value; and, where the competition is free, the rivalship ofcompetitors, who are all endeavouring to justle one another out ofemployment, obliges every man to endeavour to execute his work with acertain degree of exactness. The greatness of the objects which are tobe acquired by success in some particular professions may, no doubt, sometimes animate the exertions of a few men of extraordinary spirit andambition. Great objects, however, are evidently not necessary, in orderto occasion the greatest exertions. Rivalship and emulation renderexcellency, even in mean professions, an object of ambition, andfrequently occasion the very greatest exertions. Great objects, on thecontrary, alone and unsupported by the necessity of application, have seldom been sufficient to occasion any considerable exertion. InEngland, success in the profession of the law leads to some very greatobjects of ambition; and yet how few men, born to easy fortunes, haveever in this country been eminent in that profession?

The endowments of schools and colleges have necessarily diminished, more or less, the necessity of application in the teachers. Theirsubsistence, so far as it arises from their salaries, is evidentlyderived from a fund, altogether independent of their success andreputation in their particular professions. 

In some universities, the salary makes but a part, and frequently but asmall part, of the emoluments of the teacher, of which the greaterpart arises from the honoraries or fees of his pupils. The necessityof application, though always more or less diminished, is not, in thiscase, entirely taken away. Reputation in his profession is still of someimportance to him, and he still has some dependency upon the affection, gratitude, and favourable report of those who have attended upon hisinstructions; and these favourable sentiments he is likely to gain inno way so well as by deserving them, that is, by the abilities anddiligence with which he discharges every part of his duty. 

In other universities, the teacher is prohibited from receiving anyhonorary or fee from his pupils, and his salary constitutes the whole ofthe revenue which he derives from his office. His interest is, in thiscase, set as directly in opposition to his duty as it is possible to setit. It is the interest of every man to live as much at his ease as hecan; and if his emoluments are to be precisely the same, whether hedoes or does not perform some very laborious duty, it is certainly hisinterest, at least as interest is vulgarly understood, either to neglectit altogether, or, if he is subject to some authority which will notsuffer him to do this, to perform it in as careless and slovenly amanner as that authority will permit. If he is naturally active and alover of labour, it is his interest to employ that activity in any wayfrom which he can derive some advantage, rather than in the performanceof his duty, from which he can derive none. 

If the authority to which he is subject resides in the body corporate, the college, or university, of which he himself is a member, and inwhich the greater part of the other members are, like himself, personswho either are, or ought to be teachers, they are likely to make acommon cause, to be all very indulgent to one another, and every man toconsent that his neighbour may neglect his duty, provided he himselfis allowed to neglect his own. In the university of Oxford, the greaterpart of the public professors have, for these many years, given upaltogether even the pretence of teaching. 

If the authority to which he is subject resides, not so much in the bodycorporate, of which he is a member, as in some other extraneous persons, in the bishop of the diocese, for example, in the governor of theprovince, or, perhaps, in some minister of state, it is not, indeed, in this case, very likely that he will be suffered to neglect his dutyaltogether. All that such superiors, however, can force him to do, isto attend upon his pupils a certain number of hours, that is, to givea certain number of lectures in the week, or in the year. What thoselectures shall be, must still depend upon the diligence of the teacher;and that diligence is likely to be proportioned to the motives which hehas for exerting it. An extraneous jurisdiction of this kind, besides, is liable to be exercised both ignorantly and capriciously. In itsnature, it is arbitrary and discretionary; and the persons who exerciseit, neither attending upon the lectures of the teacher themselves, norperhaps understanding the sciences which it is his business to teach, are seldom capable of exercising it with judgment. From the insolence ofoffice, too, they are frequently indifferent how they exercise it, and are very apt to censure or deprive him of his office wantonly andwithout any just cause. The person subject to such jurisdiction isnecessarily degraded by it, and, instead of being one of the mostrespectable, is rendered one of the meanest and most contemptiblepersons in the society. It is by powerful protection only, that he caneffectually guard himself against the bad usage to which he is at alltimes exposed; and this protection he is most likely to gain, not byability or diligence in his profession, but by obsequiousness to thewill of his superiors, and by being ready, at all times, to sacrificeto that will the rights, the interest, and the honour of the bodycorporate, of which he is a member. Whoever has attended for anyconsiderable time to the administration of a French university, musthave had occasion to remark the effects which naturally result from anarbitrary and extraneous jurisdiction 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 of years incertain universities, necessarily force a certain number of studentsto such universities, independent of the merit or reputation ofthe teachers. The privileges of graduates are a sort of statutes ofapprenticeship, which have contributed to the improvement of educationjust as the other statutes of apprenticeship have to that of arts andmanufactures. 

The charitable foundations of scholarships, exhibitions, bursaries, etc. Necessarily attach a certain number of students to certain colleges, independent altogether of the merit of those particular colleges. Werethe students upon such charitable foundations left free to choose whatcollege they liked best, such liberty might perhaps contribute to excitesome emulation among different colleges. A regulation, on the contrary, which prohibited even the independent members of every particularcollege from leaving it, and going to any other, without leave firstasked and obtained 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 chosen bythe student, but appointed by the head of the college; and if, in caseof neglect, inability, or bad usage, the student should not be allowedto change him for another, without leave first asked and obtained; sucha regulation would not only tend very much to extinguish all emulationamong the different tutors of the same college, but to diminish verymuch, in all of them, the necessity of diligence and of attention totheir respective pupils. Such teachers, though very well paid by theirstudents, might be as much disposed to neglect them, as those whoare not paid by them at all or who have no other recompense but theirsalary. 

If the teacher happens to be a man of sense, it must be an unpleasantthing to him to be conscious, while he is lecturing to his students, that he is either speaking or reading nonsense, or what is very littlebetter than nonsense. It must, too, be unpleasant to him to observe, that the greater part of his students desert his lectures; or perhaps, attend upon them with plain enough marks of neglect, contempt, andderision. If he is obliged, therefore, to give a certain number oflectures, these motives alone, without any other interest, might disposehim to take some pains to give tolerably good ones. Several differentexpedients, however, may be fallen upon, which will effectually bluntthe edge of all those incitements to diligence. The teacher, insteadof explaining to his pupils himself the science in which he proposes toinstruct them, may read some book upon it; and if this book is writtenin a foreign and dead language, by interpreting it to them intotheir own, or, what would give him still less trouble, by making theminterpret it to him, and by now and then making an occasional remarkupon it, he may flatter himself that he is giving a lecture. Theslightest degree of knowledge and application will enable him to dothis, without exposing himself to contempt or derision, by saying anything that is really foolish, absurd, or ridiculous. The discipline ofthe college, at the same time, may enable him to force all his pupils tothe most regular attendance upon his sham lecture, and to maintainthe most decent and respectful behaviour during the whole time of theperformance. 

The discipline of colleges and universities is in general contrived, notfor the benefit of the students, but for the interest, or, more properlyspeaking, for the ease of the masters. Its object is, in all cases, to maintain the authority of the master, and, whether he neglects orperforms his duty, to oblige the students in all cases to behave to himas if he performed it with the greatest diligence and ability. It seemsto presume perfect wisdom and virtue in the one order, and the greatestweakness and folly in the other. Where the masters, however, reallyperform their duty, there are no examples, I believe, that the greaterpart of the students ever neglect theirs. No discipline is everrequisite to force attendance upon lectures which are really worth theattending, as is well known wherever any such lectures are given. Forceand restraint may, no doubt, be in some degree requisite, in orderto oblige 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 scarce ever benecessary to carry on any part of education. Such is the generosityof the greater part of young men, that so far from being disposed toneglect or despise the instructions of their master, provided he shewssome serious intention of being of use to them, they are generallyinclined to pardon a great deal of incorrectness in the performance ofhis duty, and sometimes even to conceal from the public a good deal ofgross negligence. 

Those parts of education, it is to be observed, for the teaching ofwhich there are no public institutions, are generally the best taught. When a young man goes to a fencing or a dancing school, he does not, indeed, always learn to fence or to dance very well; but he seldom failsof learning to fence or to dance. The good effects of the riding schoolare not commonly so evident. The expense of a riding school is so great, that in most places it is a public institution. The three most essentialparts of literary education, to read, write, and account, it stillcontinues to be more common to acquire in private than in publicschools; and it very seldom happens, that anybody fails of acquiringthem to the degree in which it is necessary 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 betaught, 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 business ofthose incorporated bodies to teach. The reward of the schoolmaster, inmost cases, depends principally, in some cases almost entirely, uponthe fees or honoraries of his scholars. Schools have no exclusiveprivileges. In order to obtain the honours of graduation, it is notnecessary that a person should bring a certificate of his having studieda certain number of years at a public school. If, upon examination, heappears to understand what is taught there, no questions are asked aboutthe place where he learnt it. 

The parts of education which are commonly taught in universities, it mayperhaps be said, are not very well taught. But had it not been for thoseinstitutions, they would not have been commonly taught at all; and boththe individual and the public would have suffered a good deal from thewant of those important parts of education. 

The present universities of Europe were originally, the greater partof them, ecclesiastical corporations, instituted for the education ofchurchmen. They were founded by the authority of the pope; and were soentirely under his immediate protection, that their members, whethermasters or students, had all of them what was then called the benefitof clergy, that is, were exempted from the civil jurisdiction of thecountries in which their respective universities were situated, and wereamenable only to the ecclesiastical tribunals. What was taught in thegreater part of those universities was suitable to the end of theirinstitution, either theology, or something that was merely preparatoryto theology. 

When Christianity was first established by law, a corrupted Latin hadbecome the common language of all the western parts of Europe. Theservice of the church, accordingly, and the translation of the Biblewhich were read in churches, were both in that corrupted Latin; thatis, in the common language of the country, After the irruption of thebarbarous nations who overturned the Roman empire, Latin graduallyceased to be the language of any part of Europe. But the reverence ofthe people naturally preserves the established forms and ceremoniesof religion long after the circumstances which first introduced andrendered them reasonable, are no more. Though Latin, therefore, was nolonger understood anywhere by the great body of the people, the wholeservice of the church still continued to be performed in that language. Two different languages were thus established in Europe, in the samemanner as in ancient Egypt: a language of the priests, and a language ofthe people; a sacred and a profane, a learned and an unlearned language. But it was necessary that the priests should understand something ofthat sacred and learned language in which they were to officiate; andthe study of the Latin language therefore made, from the beginning, anessential part of university education. 

It was not so with that either of the Greek or of the Hebrew language. The infallible decrees of the church had pronounced the Latintranslation of the Bible, commonly called the Latin Vulgate, to havebeen equally dictated by divine inspiration, and therefore of equalauthority with the Greek and Hebrew originals. The knowledge of thosetwo languages, therefore, not being indispensably requisite to achurchman, the study of them did not for along time make a necessarypart of the common course of university education. There are someSpanish universities, I am assured, in which the study of the Greeklanguage has never yet made any part of that course. The first reformersfound the Greek text of the New Testament, and even the Hebrew text ofthe Old, more favourable to their opinions than the vulgate translation, which, as might naturally be supposed, had been gradually accommodatedto support 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 of defending orexplaining. But this could not well be done without some knowledgeof the original languages, of which the study was therefore graduallyintroduced into the greater part of universities; both of those whichembraced, and of those which rejected, the doctrines of the reformation. The Greek language was connected with every part of that classicallearning, which, though at first principally cultivated by catholics andItalians, happened to come into fashion much about the same time thatthe doctrines 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 some progressin the Latin. The Hebrew language having no connection with classicallearning, and, except the Holy Scriptures, being the language of not asingle book in any esteem the study of it did not commonly commencetill after that of philosophy, and when the student had entered upon thestudy of theology. 

Originally, the first rudiments, both of the Greek and Latin languages, were taught in universities; and in some universities they stillcontinue to be so. In others, it is expected that the student shouldhave previously acquired, at least, the rudiments of one or both ofthose languages, of which the study continues to make everywhere a veryconsiderable part of university education. 

The ancient Greek philosophy was divided into three great branches;physics, or natural philosophy; ethics, or moral philosophy; and logic. This general division seems perfectly agreeable to the nature of things. 

The great phenomena of nature, the revolutions of the heavenly bodies, eclipses, comets; thunder and lightning, and other extraordinarymeteors; the generation, the life, growth, and dissolution of plants andanimals; are objects which, as they necessarily excite the wonder, sothey naturally call forth the curiosity of mankind to inquire intotheir causes. Superstition first attempted to satisfy this curiosity, byreferring all those wonderful appearances to the immediate agency of thegods. Philosophy afterwards endeavoured to account for them from morefamiliar causes, or from such as mankind were better acquainted with, than the agency of the gods. As those great phenomena are the firstobjects of human curiosity, so the science which pretends to explainthem must naturally have been the first branch of philosophy that wascuitivated. The first philosophers, accordingly, of whom history haspreserved any account, appear to have been natural philosophers. 

In every age and country of the world, men must have attended to thecharacters, designs, and actions of one another; and many reputablerules and maxims for the conduct of human life must have been laid downand approved of by common consent. As soon as writing came intofashion, wise men, or those who fancied themselves such, would naturallyendeavour to increase the number of those established and respectedmaxims, and to express their own sense of what was either proper orimproper conduct, sometimes in the more artificial form of apologues, like what are called the fables of Aesop; and sometimes in the moresimple one of apophthegms or wise sayings, like the proverbs of Solomon, the verses of Theognis and Phocyllides, and some part of the works ofHesiod. They might continue in this manner, for a long time, merely tomultiply the number of those maxims of prudence and morality, withouteven attempting to arrange them in any very distinct or methodicalorder, much less to connect them together by one or more generalprinciples, from which they were all deducible, like effects from theirnatural causes. The beauty of a systematical arrangement of differentobservations, connected by a few common principles, was first seenin the rude essays 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 some methodicalorder, and connected together by a few common principles, in the samemanner as they had attempted to arrange and connect the phenomena ofnature. The science which pretends to investigate and explain thoseconnecting principles, is what is properly called Moral Philosophy. 

Different authors gave different systems, both of natural and moralphilosophy. But the arguments by which they supported those differentsystems, far from being always demonstrations, were frequently at bestbut very slender probabilities, and sometimes mere sophisms, which hadno other foundation but the inaccuracy and ambiguity of common language. Speculative systems, have, in all ages of the world, been adopted forreasons too frivolous to have determined the judgment of any man ofcommon sense, 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 in theseit has frequently had the greatest. The patrons of each system ofnatural and moral philosophy, naturally endeavoured to expose theweakness of the arguments adduced to support the systems whichwere opposite to their own. In examining those arguments, they werenecessarily led to consider the difference between a probable and ademonstrative argument, between a fallacious and a conclusive one;and logic, or the science of the general principles of good and badreasoning, necessarily arose out of the observations which a scrutinyof this kind gave occasion to; though, in its origin, posterior both tophysics and to ethics, it was commonly taught, not indeed in all, butin the greater part of the ancient schools of philosophy, previously toeither of those sciences. The student, it seems to have been thought, ought to understand well the difference between good and bad reasoning, before he was led to reason upon subjects of so great importance. 

This ancient division of philosophy into three parts was, in the greaterpart of the universities of Europe, changed for another into five. 

In the ancient philosophy, whatever was taught concerning the natureeither of the human mind or of the Deity, made a part of the system ofphysics. Those beings, in whatever their essence might be supposed toconsist, were parts of the great system of the universe, and parts, too, productive of the most important effects. Whatever human reason couldeither conclude or conjecture concerning them, made, as it were, twochapters, though no doubt two very important ones, of the science whichpretended to give an account of the origin and revolutions of thegreat system of the universe. But in the universities of Europe, wherephilosophy was taught only as subservient to theology, it was natural todwell longer upon these two chapters than upon any other of the science. They were gradually more and more extended, and were divided into manyinferior chapters; till at last the doctrine of spirits, of which solittle can be known, came to take up as much room in the system ofphilosophy as the doctrine of bodies, of which so much can be known. Thedoctrines concerning those two subjects were considered as making twodistinct sciences. What are called metaphysics, or pneumatics, wereset in opposition to physics, and were cultivated not only as the moresublime, but, for the purposes of a particular profession, as themore useful science of the two. The proper subject of experiment andobservation, a subject in which a careful attention is capable of makingso many useful discoveries, was almost entirely neglected. The subjectin which, after a very few simple and almost obvious truths, the mostcareful attention can discover nothing but obscurity and uncertainty, and can consequently produce nothing but subtleties and sophisms, wasgreatly cultivated. 

When those two sciences had thus been set in opposition to one another, the comparison between them naturally gave birth to a third, to whatwas called ontology, or the science which treated of the qualitiesand attributes which were common to both the subjects of the other twosciences. But if subtleties and sophisms composed the greater part ofthe metaphysics or pneumatics of the schools, they composed the wholeof this cobweb science of ontology, which was likewise sometimes calledmetaphysics. 

Wherein consisted the happiness and perfection of a man, considered notonly as an individual, but as the member of a family, of a state, andof the great society of mankind, was the object which the ancient moralphilosophy proposed to investigate. In that philosophy, the dutiesof human life were treated of as subservient to the happiness andperfection of human life, But when moral, as well as natural philosophy, came to be taught only as subservient to theology, the duties of humanlife were treated of as chiefly subservient to the happiness of alife to come. In the ancient philosophy, the perfection of virtue wasrepresented as necessarily productive, to the person who possessed it, of the most perfect happiness in this life. In the modern philosophy, it was frequently represented as generally, or rather as almost always, inconsistent with any degree of happiness in this life; and heaven wasto be earned only by penance and mortification, by the austerities andabasement of a monk, not by the liberal, generous, and spirited conductof a man. Casuistry, and an ascetic morality, made up, in most cases, the greater part of the moral philosophy of the schools. By far the mostimportant of all the different branches of philosophy became in thismanner by far the most corrupted. 

Such, therefore, was the common course of philosophical education inthe greater part of the universities in Europe. Logic was taught first;ontology came in the second place; pneumatology, comprehending thedoctrine concerning the nature of the human soul and of the Deity, inthe third; in the fourth followed a debased system of moral philosophy, which was considered as immediately connected with the doctrines ofpneumatology, with the immortality of the human soul, and with therewards and punishments which, from the justice of the Deity, were tobe expected in a life to come: a short and superficial system of physicsusually concluded the course. 

The alterations which the universities of Europe thus introduced intothe ancient course of philosophy were all meant for the education ofecclesiastics, and to render it a more proper introduction to the studyof theology But the additional quantity of subtlety and sophistry, thecasuistry and ascetic morality which those alterations introduced intoit, certainly did not render it more for the education of gentlemen ormen of the world, or more likely either to improve the understanding orto mend the heart. 

This course of philosophy is what still continues to be taught in thegreater part of the universities of Europe, with more or less diligence, according as the constitution of each particular university happens torender diligence more or less necessary to the teachers. In some of therichest and best endowed universities, the tutors content themselveswith teaching a few unconnected shreds and parcels of this corruptedcourse; and even these they commonly teach very negligently andsuperficially. 

The improvements which, in modern times have been made in severaldifferent branches of philosophy, have not, the greater part of them, been made in universities, though some, no doubt, have. The greaterpart of universities have not even been very forward to adopt thoseimprovements after they were made; and several of those learnedsocieties have chosen to remain, for a long time, the sanctuariesin which exploded systems and obsolete prejudices found shelter andprotection, after they had been hunted out of every other corner of theworld. In general, the richest and best endowed universities have beenslowest in adopting those improvements, and the most averse to permitany considerable change in the established plan of education. Thoseimprovements were more easily introduced into some of the pooreruniversities, in which the teachers, depending upon their reputationfor the greater 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 were originallyintended only for the education of a particular profession, that ofchurchmen; and though they were not always very diligent in instructingtheir pupils, even in the sciences which were supposed necessary forthat profession; yet they gradually drew to themselves the education ofalmost all other people, particularly of almost all gentlemen and men offortune. No better method, it seems, could be fallen upon, of spending, with any advantage, the long interval between infancy and that period oflife at which men begin to apply in good earnest to the real business ofthe world, the business which is to employ them during the remainderof their days. The greater part of what is taught in schools anduniversities, however, does not seem to be the most proper preparationfor that business. 

In England, it becomes every day more and more the custom to send youngpeople to travel in foreign countries immediately upon their leavingschool, and without sending them to any university. Our young people, itis said, generally return home much improved by their travels. A youngman, who goes abroad at seventeen or eighteen, and returns home atone-and-twenty, returns three or four years older than he was when hewent abroad; 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; a knowledge, however, which is seldom sufficient to enable him either to speak orwrite them with propriety. In other respects, he commonly returns homemore conceited, more unprincipled, more dissipated, and more incapableof my serious application, either to study or to business, than he couldwell have become in so short a time had he lived at home. By travellingso very young, by spending in the most frivolous dissipation the mostprevious years of his life, at a distance from the inspection andcontrol of his parents and relations, every useful habit, which theearlier parts of his education might have had some tendency to formin him, instead of being riveted and confirmed, is almost necessarilyeither weakened or effaced. Nothing but the discredit into which theuniversities are allowing themselves to fall, could ever have broughtinto repute so very absurd a practice as that of travelling at thisearly period of life. By sending his son abroad, a father delivershimself, at least for some time, from so disagreeable an object as thatof a son unemployed, neglected, and going to ruin before his eyes. 

Such have been the effects of some of the modern institutions foreducation. 

Different plans and different institutions for education seem to havetaken place in other ages and nations. 

In the republics of ancient Greece, every free citizen was instructed, under the direction of the public magistrate, in gymnastic exercises andin music. By gymnastic exercises, it was intended to harden his body, tosharpen his courage, and to prepare him for the fatigues and dangers ofwar; and as the Greek militia was, by all accounts, one of the best thatever was in the world, this part of their public education must haveanswered completely the purpose for which it was intended. By theother part, music, it was proposed, at least by the philosophers andhistorians, who have given us an account of those institutions, to humanize the mind, to soften the temper, and to dispose it forperforming all the social and moral duties of public and private life. 

In ancient Rome, the exercises of the Campus Martius answered the samepurpose as those of the Gymnasium in ancient Greece, and they seem tohave answered it equally well. But among the Romans there was nothingwhich corresponded to the musical education of the Greeks. The morals ofthe Romans, however, both in private and public life, seem to have been, not only equal, but, upon the whole, a good deal superior to those ofthe Greeks. That they were superior in private life, we have the expresstestimony of Polybius, and of Dionysius of Halicarnassus, two authorswell acquainted with both nations; and the whole tenor of the Greek andRoman history bears witness to the superiority of the public morals ofthe Romans. The good temper and moderation of contending factions seemto be the most essential circumstances in the public morals of a freepeople. But the factions of the Greeks were almost always violent andsanguinary; whereas, till the time of the Gracchi, no blood had everbeen shed in any Roman faction; and from the time of the Gracchi, the Roman republic may be considered as in reality dissolved. Notwithstanding, therefore, the very respectable authority of Plato, Aristotle, and Polybius, and notwithstanding the very ingenious reasonsby which Mr. Montesquieu endeavours to support that authority, it seemsprobable that the musical education of the Greeks had no great effectin mending their morals, since, without any such education, those ofthe Romans were, upon the whole, superior. The respect of those ancientsages for the institutions of their ancestors had probably disposed themto find much political wisdom in what was, perhaps, merely an ancientcustom, continued, without interruption, from the earliest periodof those societies, to the times in which they had arrived at aconsiderable degree of refinement. Music and dancing are thegreat amusements of almost all barbarous nations, and the greataccomplishments which are supposed to fit any man for entertaining hissociety. It is so at this day among the negroes on the coast of Africa. It was so among the ancient Celtes, among the ancient Scandinavians, and, as we may learn from Homer, among the ancient Greeks, in the timespreceding the Trojan war. When the Greek tribes had formed themselvesinto little republics, it was natural that the study of thoseaccomplishments should for a long time make a part of the public andcommon education of the people. 

The masters who instructed the young people, either in music or inmilitary exercises, do not seem to have been paid, or even appointed bythe state, either in Rome or even at Athens, the Greek republic of whoselaws and customs we are the best informed. The state required that everyfree citizen should fit himself for defending it in war, and should uponthat account, learn his military exercises. But it left him to learnthem of such masters as he could find; and it seems to have advancednothing for this purpose, but a public field or place of exercise, inwhich he should practise and perform them. 

In the early ages, both of the Greek and Roman republics, the otherparts of education seem to have consisted in learning to read, write, and account, according to the arithmetic of the times. Theseaccomplishments the richer citizens seem frequently to have acquired athome, by the assistance of some domestic pedagogue, who was, generally, either a slave or a freedman; and the poorer citizens in the schoolsof such masters as made a trade of teaching for hire. Such parts ofeducation, however, were abandoned altogether to the care of the parentsor guardians of each individual. It does not appear that the state everassumed any inspection or direction of them. By a law of Solon, indeed, the children were acquitted from maintaining those parents who hadneglected to instruct them in some profitable trade or business. 

In the progress of refinement, when philosophy and rhetoric came intofashion, the better sort of people used to send their children to theschools of philosophers and rhetoricians, in order to be instructed inthese fashionable sciences. But those schools were not supported by thepublic. They were, for a long time, barely tolerated by it. The demandfor philosophy and rhetoric was, for a long time, so small, that thefirst professed teachers of either could not find constant employment inany one city, but were obliged to travel about from place to place. Inthis manner lived Zeno of Elea, Protagoras, Gorgias, Hippias, and manyothers. As the demand increased, the school, both of philosophy andrhetoric, became stationary, first in Athens, and afterwards in severalother cities. The state, however, seems never to have encouraged themfurther, than by assigning to some of them a particular place to teachin, which was sometimes done, too, by private donors. The state seemsto have assigned the Academy to Plato, the Lyceum to Aristotle, andthe Portico to Zeno of Citta, the founder of the Stoics. But Epicurusbequeathed his gardens to his own school. Till about the time of MarcusAntoninus, however, no teacher appears to have had any salary from thepublic, or to have had any other emoluments, but what arose from thehonorarius or fees of his scholars. The bounty which that philosophicalemperor, as we learn from Lucian, bestowed upon one of the teachersof philosophy, probably lasted no longer than his own life. There wasnothing equivalent to the privileges of graduation; and to have attendedany of those schools was not necessary, in order to be permitted topractise any particular trade or profession. If the opinion of their ownutility could not draw scholars to them, the law neither forced anybodyto go to them, nor rewarded anybody for having gone to them. Theteachers had no jurisdiction over their pupils, nor any other authoritybesides that natural authority which superior virtue and abilities neverfail to procure from young people towards those who are entrusted withany part of their education. 

At Rome, the study of the civil law made a part of the education, not ofthe greater part of the citizens, but of some particular families. Theyoung people, however, who wished to acquire knowledge in the law, hadno public school to go to, and had no other method of studying it, thanby frequenting the company of such of their relations and friends aswere supposed to understand it. It is, perhaps, worth while to remark, that though the laws of the twelve tables were many of them copied fromthose of some ancient Greek republics, yet law never seems to have grownup to be 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. In therepublics of ancient Greece, particularly in Athens, the ordinary courtsof justice consisted of numerous, and therefore disorderly, bodies ofpeople, who frequently decided almost at random, or as clamour, faction, and party-spirit, happened to determine. The ignominy of an unjustdecision, when it was to be divided among five hundred, a thousand, orfifteen hundred people (for some of their courts were so very numerous), could not fall very heavy upon any individual. At Rome, on the contrary, the principal courts of justice consisted either of a single judge, or of a small number of judges, whose characters, especially as theydeliberated always in public, could not fail to be very much affected byany rash or unjust decision. In doubtful cases such courts, from theiranxiety to avoid blame, would naturally endeavour to shelter themselvesunder the example or precedent of the judges who had sat before them, either in the same or in some other court. This attention to practiceand precedent, necessarily formed the Roman law into that regular andorderly system in which it has been delivered down to us; and the likeattention has had the like effects upon the laws of every other countrywhere such attention has taken place. The superiority of character inthe Romans over that of the Greeks, so much remarked by Polybius andDionysius of Halicarnassus, was probably more owing to the betterconstitution of their courts of justice, than to any of thecircumstances to which those authors ascribe it. The Romans are said tohave been particularly distinguished for their superior respect to anoath. But the people who were accustomed to make oath only before somediligent and well informed court of justice, would naturally be muchmore attentive to what they swore, than they who were accustomed to dothe same thing before mobbish and disorderly assemblies. 

The abilities, both civil and military, of the Greeks and Romans, willreadily be allowed to have been at least equal to those of any modernnation. Our prejudice is perhaps rather to overrate them. But except inwhat related to military exercises, the state seems to have been at nopains to form those great abilities; for I cannot be induced to believethat the musical education of the Greeks could be of much consequencein forming them. Masters, however, had been found, it seems, forinstructing the better sort of people among those nations, in everyart and science in which the circumstances of their society rendered itnecessary or convenient for them to be instructed. The demand for suchinstruction produced, what it always produces, the talent for givingit; and the emulation which an unrestrained competition never fails toexcite, appears to have brought that talent to a very high degree ofperfection. In the attention which the ancient philosophers excited, inthe empire which they acquired over the opinions and principles of theirauditors, in the faculty which they possessed of giving a certain toneand character to the conduct and conversation of those auditors, theyappear to have been much superior to any modern teachers. In moderntimes, the diligence of public teachers is more or less corrupted bythe circumstances which render them more or less independent of theirsuccess and reputation in their particular professions. Their salaries, too, put the private teacher, who would pretend to come into competitionwith them, in the same state with a merchant who attempts totrade without a bounty, in competition with those who trade with aconsiderable one. If he sells his goods at nearly the same price, hecannot have the same profit; and poverty and beggary at least, if notbankruptcy and ruin, will infallibly be his lot. If he attempts tosell them much dearer, he is likely to have so few customers, that hiscircumstances will not be much mended. The privileges of graduation, besides, are in many countries necessary, or at least extremelyconvenient, to most men of learned professions, that is, to the fargreater part of those who have occasion for a learned education. Butthose privileges can be obtained only by attending the lectures ofthe public teachers. The most careful attendance upon the ablestinstructions of any private teacher cannot always give any title todemand them. It is from these different causes that the private teacherof any of the sciences, which are commonly taught in universities, is, in modern times, generally considered as in the very lowest order ofmen of letters. A man of real abilities can scarce find out a morehumiliating or a more unprofitable employment to turn them to. Theendowments of schools and colleges have in this manner not onlycorrupted the diligence of public teachers, but have rendered it almostimpossible to have any good private ones. 

Were there no public institutions for education, no system, no science, would be taught, for which there was not some demand, or which thecircumstances of the times did not render it either necessary orconvenient, or at least fashionable to learn. A private teacher couldnever find his account in teaching either an exploded and antiquatedsystem of a science acknowledged to be useful, or a science universallybelieved to be a mere useless and pedantic heap of sophistry andnonsense. Such systems, such sciences, can subsist nowhere but in thoseincorporated societies for education, whose prosperity and revenue arein a great measure independent of their industry. Were there no publicinstitutions for education, a gentleman, after going through, withapplication and abilities, the most complete course of education whichthe circumstances of the times were supposed to afford, could not comeinto the world completely ignorant of everything which is the commonsubject of conversation among gentlemen and men of the world. 

There are no public institutions for the education of women, and thereis accordingly nothing useless, absurd, or fantastical, in the commoncourse of their education. They are taught what their parents orguardians judge it necessary or useful for them to learn, and they aretaught nothing else. Every part of their education tends evidently tosome useful purpose; either to improve the natural attractions of theirperson, or to form their mind to reserve, to modesty, to chastity, andto economy; to render them both likely to became the mistresses of afamily, and to behave properly when they have become such. In every partof her life, a woman feels some conveniency or advantage from every partof her education. It seldom happens that a man, in any part of his life, derives any conveniency or advantage from some of the most laborious andtroublesome parts of his education. 

Ought the public, therefore, to give no attention, it may be asked, tothe education of the people? Or, if it ought to give any, what arethe different parts of education which it ought to attend to in thedifferent orders of the people? and in what manner ought it to attend tothem?

In some cases, the state of society necessarily places the greater partof individuals in such situations as naturally form in them, without anyattention of government, almost all the abilities and virtues which thatstate requires, or perhaps can admit of. In other cases, the stateof the society does not place the greater part of individuals in suchsituations; and some attention of government is necessary, in order toprevent the almost entire corruption and degeneracy of the great body ofthe people. 

In the progress of the division of labour, the employment of the fargreater part of those who live by labour, that is, of the great bodyof the people, comes to be confined to a few very simple operations;frequently to one or two. But the understandings of the greater part ofmen are necessarily formed by their ordinary employments. The man whosewhole life is spent in performing a few simple operations, of which theeffects, too, are perhaps always the same, or very nearly the same, hasno occasion to exert his understanding, or to exercise his invention, infinding out expedients 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 human creatureto become. The torpor of his mind renders him not only incapableof relishing or bearing a part in any rational conversation, but ofconceiving any generous, noble, or tender sentiment, and consequently offorming any just judgment concerning many even of the ordinary duties ofprivate life. Of the great and extensive interests of his country he isaltogether incapable of judging; and unless very particular pains havebeen taken to render him otherwise, he is equally incapable of defendinghis country in war. The uniformity of his stationary life naturallycorrupts the courage of his mind, and makes him regard, with abhorrence, the irregular, uncertain, and adventurous life of a soldier. It corruptseven the activity of his body, and renders him incapable of exerting hisstrength with vigour and perseverance in any other employment, than thatto which he has been bred. His dexterity at his own particulartrade seems, in this manner, to be acquired at the expense of hisintellectual, social, and martial virtues. But in every improved andcivilized society, this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unlessgovernment takes some pains to prevent it. 

It is otherwise in the barbarous societies, as they are commonly called, of hunters, of shepherds, and even of husbandmen in that rude stateof husbandry which precedes the improvement of manufactures, and theextension of foreign commerce. In such societies, the varied occupationsof every man oblige every man to exert his capacity, and to inventexpedients for removing difficulties which are continually occurring. Invention is kept alive, and the mind is not suffered to fall into thatdrowsy stupidity, which, in a civilized society, seems to benumb theunderstanding of almost all the inferior ranks of people. In thosebarbarous societies, as they are called, every man, it has already beenobserved, is a warrior. Every man, too, is in some measure a statesman, and can form a tolerable judgment concerning the interest of thesociety, and the conduct of those who govern it. How far their chiefsare good judges in peace, or good leaders in war, is obvious to theobservation of almost every single man among them. In such a society, indeed, no man can well acquire that improved and refined understandingwhich a few men sometimes possess in a more civilized state. Though in arude society there is a good deal of variety in the occupations of everyindividual, there is not a great deal in those of the whole society. Every man does, or is capable of doing, almost every thing which anyother man does, or is capable of being. Every man has a considerabledegree of knowledge, ingenuity, and invention but scarce any man hasa great degree. The degree, however, which is commonly possessed, isgenerally sufficient for conducting the whole simple business of thesociety. In a civilized state, on the contrary, though there is littlevariety in the occupations of the greater part of individuals, there isan almost infinite variety in those of the whole society These variedoccupations present an almost infinite variety of objects to thecontemplation of those few, who, being attached to no particularoccupation themselves, have leisure and inclination to examine theoccupations of other people. The contemplation of so great a varietyof objects necessarily exercises their minds in endless comparisonsand combinations, and renders their understandings, in an extraordinarydegree, both acute anti comprehensive. Unless those few, however, happento be placed in some very particular situations, their great abilities, though honourable to themselves, may contribute very little to the goodgovernment or happiness of their society. Notwithstanding the greatabilities of those few, all the nobler parts of the human character maybe, in a great measure, obliterated and extinguished in the great bodyof the people. 

The education of the common people requires, perhaps, in a civilizedand commercial society, the attention of the public, more than that ofpeople of some rank and fortune. People of some rank and fortune aregenerally eighteen or nineteen years of age before they enter upon thatparticular business, profession, or trade, by which they propose todistinguish themselves in the world. They have, before that, full timeto acquire, or at least to fit themselves for afterwards acquiring, every accomplishment which can recommend them to the public esteem, or render them worthy of it. Their parents or guardians are generallysufficiently anxious that they should be so accomplished, and are inmost cases, willing enough to lay out the expense which is necessaryfor that purpose. If they are not always properly educated, it is seldomfrom the want of expense laid out upon their education, but from theimproper application of that expense. It is seldom from the want ofmasters, but from the negligence and incapacity of the masters who areto be had, and from the difficulty, or rather from the impossibility, which there is, in the present state of things, of finding any better. The employments, too, in which people of some rank or fortune spend thegreater part of their lives, are not, like those of the common people, simple and uniform. They are almost all of them extremely complicated, and such as exercise the head more than the hands. The understandingsof those who are engaged in such employments, can seldom grow torpid forwant of exercise. The employments of people of some rank and fortune, besides, are seldom such as harass them from morning to night. Theygenerally have a good deal of leisure, during which they may perfectthemselves in every branch, either of useful or ornamental knowledge, of which they may have laid the foundation, or for which they may haveacquired some taste in the earlier part of life. 

It is otherwise with the common people. They have little time to sparefor education. Their parents can scarce afford to maintain them, evenin infancy. As soon as they are able to work, they must apply to sometrade, by which they can earn their subsistence. That trade, too, isgenerally so simple and uniform, as to give little exercise to theunderstanding; while, at the same time, their labour is both so constantand so severe, that it leaves them little leisure and less inclinationto apply to, or even to think of any thing else. 

But though the common people cannot, in any civilized society, be sowell instructed as people of some rank and fortune; the most essentialparts of education, however, to read, write, and account, can beacquired at so early a period of life, that the greater part, even ofthose who are to be bred to the lowest occupations, have time to acquirethem before they can be employed in those occupations. For a very smallexpense, the public can facilitate, can encourage and can even imposeupon almost the whole body of the people, the necessity of acquiringthose most essential parts of education. 

The public can facilitate this acquisition, by establishing in everyparish or district a little school, where children maybe taught fora reward so moderate, that even a common labourer may afford it; themaster being partly, but not wholly, paid by the public; because, ifhe was wholly, or even principally, paid by it, he would soon learnto neglect his business. In Scotland, the establishment of such parishschools has taught almost the whole common people to read, and avery great proportion of them to write and account. In England, theestablishment of charity schools has had an effect of the samekind, though not so universally, because the establishment is not souniversal. If, in those little schools, the books by which the childrenare taught to read, were a little more instructive than they commonlyare; and if, instead of a little smattering in Latin, which the childrenof the common people are sometimes taught there, and which can scarceever be of any use to them, they were instructed in the elementary partsof geometry and mechanics; the literary education of this rank of peoplewould, perhaps, be as complete as can be. There is scarce a commontrade, which does not afford some opportunities of applying to it theprinciples of geometry and mechanics, and which would not, therefore, gradually exercise and improve the common people in those principles, the necessary introduction to the most sublime, as well as to the mostuseful sciences. 

The public can encourage the acquisition of those most essentialparts of education, by giving small premiums, and little badges ofdistinction, to the children of the common people who excel in them. 

The public can impose upon almost the whole body of the people thenecessity of acquiring the most essential parts of education, byobliging every man to undergo an examination or probation in them, before he can obtain the freedom in any corporation, or be allowed toset up any trade, either in a village or town corporate. 

It was in this manner, by facilitating the acquisition of their militaryand gymnastic exercises, by encouraging it, and even by imposing uponthe whole body of the people the necessity of learning those exercises, that the Greek and Roman republics maintained the martial spirit oftheir respective citizens. They facilitated the acquisition of thoseexercises, by appointing a certain place for learning and practisingthem, and by granting to certain masters the privilege of teaching inthat place. Those masters do not appear to have had either salaries orexclusive privileges of any kind. Their reward consisted altogether inwhat they got from their scholars; and a citizen, who had learnt hisexercises in the public gymnasia, had no sort of legal advantage overone who had learnt them privately, provided the latter had learnedthem equally well. Those republics encouraged the acquisition of thoseexercises, by bestowing little premiums and badges of distinction uponthose who excelled in them. To have gained a prize in the Olympic, Isthmian, or Nemaean games, gave illustration, not only to the personwho gained it, but to his whole family and kindred. The obligation whichevery citizen was under, to serve a certain number of years, if calledupon, in the armies of the republic, sufficiently imposed the necessityof learning those exercises, without which he could not be fit for thatservice. 

That in the progress of improvement, the practice of military exercises, unless government takes proper pains to support it, goes gradually todecay, and, together with it, the martial spirit of the great body ofthe people, the example of modern Europe sufficiently demonstrates. Butthe security of every society must always depend, more or less, upon themartial spirit of the great body of the people. In the present times, indeed, that martial spirit alone, and unsupported by a well-disciplinedstanding army, would not, perhaps, be sufficient for the defence andsecurity of any society. But where every citizen had the spirit of asoldier, a smaller standing army would surely be requisite. That spirit, besides, would necessarily diminish very much the dangers to liberty, whether real or imaginary, which are commonly apprehended from astanding army. As it would very much facilitate the operations of thatarmy against a foreign invader; so it would obstruct them as much, ifunfortunately they should ever be directed against the constitution ofthe state. 

The ancient institutions of Greece and Rome seem to have been much moreeffectual for maintaining the martial spirit of the great body of thepeople, than the establishment of what are called the militias of moderntimes. They were much more simple. When they were once established, they executed themselves, and it required little or no attention fromgovernment to maintain them in the most perfect vigour. Whereas tomaintain, even in tolerable execution, the complex regulations ofany modern militia, requires the continual and painful attention ofgovernment, without which they are constantly falling into total neglectand disuse. The influence, besides, of the ancient institutions, wasmuch more universal. By means of them, the whole body of the people wascompletely instructed in the use of arms; whereas it is but a very smallpart of them who can ever be so instructed by the regulations of anymodern militia, except, perhaps, that of Switzerland. But a coward, aman incapable either of defending or of revenging himself, evidentlywants one of the most essential parts of the character of a man. He isas much mutilated and deformed in his mind as another is in his body, who is either deprived of some of its most essential members, or haslost the use of them. He is evidently the more wretched and miserableof the two; because happiness and misery, which reside altogether in themind, must necessarily depend more upon the healthful or unhealthful, the mutilated or entire state of the mind, than upon that of the body. Even though the martial spirit of the people were of no use towards thedefence of the society, yet, to prevent that sort of mental mutilation, deformity, and wretchedness, which cowardice necessarily involves in it, from spreading themselves through the great body of the people, 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, though neithermortal nor dangerous, from spreading itself among them; though, perhaps, no other public good might result from such attention, besides theprevention of so great a public evil. 

The same thing may be said of the gross ignorance and stupidity which, in a civilized society, seem so frequently to benumb the understandingsof all the inferior ranks of people. A man without the proper use of theintellectual faculties of a man, is, if possible, more contemptible thaneven a coward, and seems to be mutilated and deformed in a still moreessential part of the character of human nature. Though the state wasto derive no advantage from the instruction of the inferior ranks ofpeople, it would still deserve its attention that they should not bealtogether uninstructed. The state, however, derives no inconsiderableadvantage from their instruction. The more they are instructed, the lessliable they are to the delusions of enthusiasm and superstition, which, among ignorant nations frequently occasion the most dreadful disorders. An instructed and intelligent people, besides, are always more decentand orderly than an ignorant and stupid one. They feel themselves, eachindividually, more respectable, and more likely to obtain the respectof their lawful superiors, and they are, therefore, more disposed torespect those superiors. They are more disposed to examine, and morecapable of seeing through, the interested complaints of faction andsedition; and they are, upon that account, less apt to be misled intoany wanton or unnecessary opposition to the measures of government. Infree countries, where the safety of government depends very much uponthe favourable judgment which the people may form of its conduct, it must surely be of the highest importance, that they should not bedisposed to judge rashly or capriciously concerning it. 

Art. III. --Of the Expense of the Institutions for the Instruction ofPeople of 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 citizens inthis world, as to prepare them for another and a better world inthe life to come. The teachers of the doctrine which contains thisinstruction, in the same manner as other teachers, may either dependaltogether for their subsistence upon the voluntary contributions oftheir hearers; or they may derive it from some other fund, to which thelaw of their country may entitle them; such as a landed estate, a tytheor land tax, an established salary or stipend. Their exertion, theirzeal and industry, are likely to be much greater in the former situationthan in the latter. In this respect, the teachers of a new religionhave always had a considerable advantage in attacking those ancient andestablished systems, of which the clergy, reposing themselves upon theirbenefices, had neglected to keep up the fervour of faith and devotionin the great body of the people; and having given themselves up toindolence, were become altogether incapable of making any vigorousexertion in defence even of their own establishment. The clergy of anestablished and well endowed religion frequently become men of learningand elegance, who possess all the virtues of gentlemen, or which canrecommend them to the esteem of gentlemen; but they are apt graduallyto lose the qualities, both good and bad, which gave them authority andinfluence with the inferior ranks of people, and which had perhaps beenthe original causes of the success and establishment of their religion. Such a clergy, when attacked by a set of popular and bold, thoughperhaps stupid and ignorant enthusiasts, feel themselves as perfectlydefenceless as the indolent, effeminate, and full fed nations of thesouthern parts of Asia, when they were invaded by the active, hardy, andhungry Tartars of the north. Such a clergy, upon such an emergency, havecommonly no other resource than to call upon the civil magistrate topersecute, destroy, or drive out their adversaries, as disturbers of thepublic peace. It was thus that the Roman catholic clergy called upon thecivil magistrate to persecute the protestants, and the church of Englandto persecute the dissenters; and that in general every religious sect, when it has once enjoyed, for a century or two, the security of a legalestablishment, has found itself incapable of making any vigorous defenceagainst any new sect which chose to attack its doctrine or discipline. Upon such occasions, the advantage, in point of learning and goodwriting, may sometimes be on the side of the established church. But thearts of popularity, all the arts of gaining proselytes, are constantlyon the side of its adversaries. In England, those arts have been longneglected by the well endowed clergy of the established church, and areat present chiefly cultivated by the dissenters and by the methodists. The independent provisions, however, which in many places have been madefor dissenting teachers, by means of voluntary subscriptions, of trustrights, and other evasions of the law, seem very much to have abated thezeal and activity of those teachers. They have many of them become verylearned, ingenious, and respectable men; but they have in general ceasedto be very popular preachers. The methodists, without half the learningof the dissenters, are much more in vogue. 

In the church of Rome the industry and zeal of the inferior clergy arekept more alive by the powerful motive of self-interest, than perhaps inany established protestant church. The parochial clergy derive many ofthem, a very considerable part of their subsistence from the voluntaryoblations of the people; a source of revenue, which confession givesthem many opportunities of improving. The mendicant orders derive theirwhole subsistence from such oblations. It is with them as with thehussars and light infantry of some armies; no plunder, no pay. Theparochial clergy are like those teachers whose reward depends partlyupon their salary, and partly upon the fees or honoraries which theyget from their pupils; and these must always depend, more or less, upon their industry and reputation. The mendicant orders are like thoseteachers whose subsistence depends altogether upon their industry. Theyare obliged, therefore, to use every art which can animate the devotionof the common people. The establishment of the two great mendicantorders of St Dominic and St. Francis, it is observed by Machiavel, revived, in the thirteenth and fourteenth centuries, the languishingfaith and devotion of the catholic church. In Roman catholic countries, the spirit of devotion is supported altogether by the monks, and by thepoorer parochial clergy. The great dignitaries of the church, with allthe accomplishments of gentlemen and men of the world, and sometimeswith those of men of learning, are careful to maintain the necessarydiscipline over their inferiors, but seldom give themselves any troubleabout the instruction of the people. 

"Most of the arts and professions in a state, " says by far the mostillustrious philosopher and historian of the present age, "are of such anature, that, while they promote the interests of the society, they arealso useful or agreeable to some individuals; and, in that case, the constant rule of the magistrate, except, perhaps, on the firstintroduction of any art, is, to leave the profession to itself, andtrust its encouragement to the individuals who reap the benefit ofit. The artizans, finding their profits to rise by the favour of theircustomers, increase, as much as possible, their skill and industry; andas matters are not disturbed by any injudicious tampering, the commodityis always sure to be at all times nearly proportioned to the demand. 

"But there are also some callings which, though useful and evennecessary in a state, bring no advantage or pleasure to any individual;and the supreme power is obliged to alter its conduct with regard to theretainers of those professions. It must give them public encouragementin order to their subsistence; and it must provide against thatnegligence to which they will naturally be subject, either by annexingparticular honours to profession, by establishing a long subordinationof ranks, and a strict dependence, or by some other expedient. Thepersons employed in the finances, fleets, and magistracy, are instancesof this order of men. 

"It may naturally be thought, at first sight, that the ecclesiasticsbelong to the first class, and that their encouragement, as well as thatof lawyers and physicians, may safely be entrusted to the liberality ofindividuals, who are attached to their doctrines, and who find benefitor consolation from their spiritual ministry and assistance. Theirindustry and vigilance will, no doubt, be whetted by such an additionalmotive; and their skill in the profession, as well as their address ingoverning the minds of the people, must receive daily increase, fromtheir increasing practice, study, and attention. 

"But if we consider the matter more closely, we shall find that thisinterested diligence of the clergy is what every wise legislator willstudy to prevent; because, in every religion except the true, it ishighly pernicious, and it has even a natural tendency to pervert thetruth, by infusing into it a strong mixture of superstition, folly, anddelusion. Each ghostly practitioner, in order to render himself moreprecious and sacred in the eyes of his retainers, will inspire themwith the most violent abhorrence of all other sects, and continuallyendeavour, by some novelty, to excite the languid devotion of hisaudience. No regard will be paid to truth, morals, or decency, in thedoctrines inculcated. Every tenet will be adopted that best suits thedisorderly affections of the human frame. Customers will be drawn toeach conventicle by new industry and address, in practising on thepassions and credulity of the populace. And, in the end, the civilmagistrate will find that he has dearly paid for his intended frugality, in saving a fixed establishment for the priests; and that, in reality, the most decent and advantageous composition, which he can make withthe spiritual guides, is to bribe their indolence, by assigning statedsalaries to their profession, and rendering it superfluous for them tobe farther active, than merely to prevent their flock from straying inquest of new pastors. And in this manner ecclesiastical establishments, though commonly they arose at first from religious views, prove in theend advantageous to the political interests of society. "

But whatever may have been the good or bad effects of the independentprovision of the clergy, it has, perhaps, been very seldom bestowedupon them from any view to those effects. Times of violent religiouscontroversy have generally been times of equally violent politicalfaction. Upon such occasions, each political party has either foundit, or imagined it, for his interest, to league itself with some one orother of the contending religious sects. But this could be done only byadopting, or, at least, by favouring the tenets of that particular sect. The sect which had the good fortune to be leagued with the conqueringparty necessarily shared in the victory of its ally, by whose favour andprotection it was soon enabled, in some degree, to silence and subdueall its adversaries. Those adversaries had generally leagued themselveswith the enemies of the conquering party, and were, therefore theenemies of that party. The clergy of this particular sect having thusbecome complete masters of the field, and their influence and authoritywith the great body of the people being in its highest vigour, they werepowerful enough to overawe the chiefs and leaders of their own party, and to oblige the civil magistrate to respect their opinions andinclinations. Their first demand was generally that he should silenceand subdue all their adversaries; and their second, that he shouldbestow an independent provision on themselves. As they had generallycontributed a good deal to the victory, it seemed not unreasonable thatthey should have some share in the spoil. They were weary, besides, of humouring the people, and of depending upon their caprice for asubsistence. In making this demand, therefore, they consulted their ownease and comfort, without troubling themselves about the effect which itmight have, in future times, upon the influence and authority of theirorder. The civil magistrate, who could comply with their demand only bygiving them something which he would have chosen much rather to take, or to keep to himself, was seldom very forward to grant it. Necessity, however, always forced him to submit at last, though frequently not tillafter many delays, evasions, and affected excuses. 

But if politics had never called in the aid of religion, had theconquering party never adopted the tenets of one sect more than thoseof another, when it had gained the victory, it would probably have dealtequally and impartially with all the different sects, and have allowedevery man to choose his own priest, and his own religion, as he thoughtproper. There would, and, in this case, no doubt, have been, a greatmultitude of religious sects. Almost every different congregation mightprobably have had a little sect by itself, or have entertained somepeculiar tenets of its own. Each teacher, would, no doubt, have felthimself under the necessity of making the utmost exertion, and of usingevery art, both to preserve and to increase the number of his disciples. But as every other teacher would have felt himself under the samenecessity, the success of no one teacher, or sect of teachers, couldhave been very great. The interested and active zeal of religiousteachers can be dangerous and troublesome only where there is either butone sect tolerated in the society, or where the whole of a large societyis divided into two or three great sects; the teachers of each acting byconcert, and under a regular discipline and subordination. But that zealmust be altogether innocent, where the society is divided into two orthree hundred, or, perhaps, into as many thousand small sects, of whichno one could be considerable enough to disturb the public tranquillity. The teachers of each sect, seeing themselves surrounded on all sideswith more adversaries than friends, would be obliged to learn thatcandour and moderation which are so seldom to be found among theteachers of those great sects, whose tenets, being supported by thecivil magistrate, are held in veneration by almost all the inhabitantsof extensive kingdoms and empires, and who, therefore, see nothing roundthem but followers, disciples, and humble admirers. The teachers ofeach little sect, finding themselves almost alone, would be obliged torespect those of almost every other sect; and the concessions whichthey would mutually find in both convenient and agreeable to make one toanother, might in time, probably reduce the doctrine of the greater partof them to that pure and rational religion, free from every mixture ofabsurdity, imposture, or fanaticism, such as wise men have, in all agesof the world, wished to see established; but such as positive law has, perhaps, never yet established, and probably never will establish in anycountry; because, with regard to religion, positive law always hasbeen, and probably always will be, more or less influenced by popularsuperstition and enthusiasm. This plan of ecclesiastical government, or, more properly, of no ecclesiastical government, was what the sect calledIndependents (a sect, no doubt, of very wild enthusiasts), proposed toestablish in England towards the end of the civil war. If it had beenestablished, though of a very unphilosophical origin, it would probably, by this time, have been productive of the most philosophical good temperand moderation with regard to every sort of religious principle. It hasbeen established in Pennsylvania, where, though the quakers happen tobe the most numerous, the law, in reality, favours no one sect morethan another; and it is there said to have been productive of thisphilosophical good temper and moderation. 

But though this equality of treatment should not be productive of thisgood temper and moderation in all, or even in the greater part of thereligious sects of a particular country; yet, provided those sectswere sufficiently numerous, and each of them consequently too smallto disturb the public tranquillity, the excessive zeal of each forits particular tenets could not well be productive of any very hurtfuleffects, but, on the contrary, of several good ones; and if thegovernment was perfectly decided, both to let them all alone, and tooblige them all to let alone one another, there is little danger thatthey would not of their own accord, subdivide themselves fast enough, soas soon to become sufficiently numerous. 

In every civilized society, in every society where the distinction ofranks has once been completely established, there have been always twodifferent schemes or systems of morality current at the same time;of which the one may be called the strict or austere; the other theliberal, or, if you will, the loose system. The former is generallyadmired and revered by the common people; the latter is commonly moreesteemed and adopted by what are called the people of fashion. Thedegree of disapprobation with which we ought to mark the vices oflevity, the vices which are apt to arise from great prosperity, and fromthe excess of gaiety and good humour, seems to constitute the principaldistinction between those two opposite schemes or systems. In theliberal or loose system, luxury, wanton, and even disorderly mirth, the pursuit of pleasure to some degree of intemperance, the breach ofchastity, at least in one of the two sexes, etc. Provided they arenot accompanied with gross indecency, and do not lead to falsehood andinjustice, are generally treated with a good deal of indulgence, and areeasily either excused or pardoned altogether. In the austere system, onthe contrary, those excesses are regarded with the utmost abhorrenceand detestation. The vices of levity are always ruinous to the commonpeople, and a single week's thoughtlessness and dissipation is oftensufficient to undo a poor workman for ever, and to drive him, throughdespair, upon committing the most enormous crimes. The wiser and bettersort of the common people, therefore, have always the utmost abhorrenceand detestation of such excesses, which their experience tells themare so immediately fatal to people of their condition. The disorder andextravagance of several years, on the contrary, will not always ruina man of fashion; and people of that rank are very apt to consider thepower of indulging in some degree of excess, as one of the advantages oftheir fortune; and the liberty of doing so without censure or reproach, as one of the privileges which belong to their station. In people oftheir own station, therefore, they regard such excesses with but a smalldegree of disapprobation, and censure them either very slightly or notat all. 

Almost all religious sects have begun among the common people, from whomthey have generally drawn their earliest, as well as their most numerousproselytes. The austere system of morality has, accordingly, beenadopted by those sects almost constantly, or with very few exceptions;for there have been some. It was the system by which they could bestrecommend themselves to that order of people, to whom they firstproposed their plan of reformation upon what had been beforeestablished. Many of them, perhaps the greater part of them, have evenendeavoured to gain credit by refining upon this austere system, and bycarrying it to some degree of folly and extravagance; and this excessiverigour has frequently recommended them, more than any thing else, to therespect and veneration of the common people. 

A man of rank and fortune is, by his station, the distinguished memberof a great society, who attend to every part of his conduct, and whothereby oblige him to attend to every part of it himself. His authorityand consideration depend very much upon the respect which this societybears to him. He dares not do anything which would disgrace or discredithim in it; and he is obliged to a very strict observation of thatspecies of morals, whether liberal or austere, which the general consentof this society prescribes to persons of his rank and fortune. A man oflow condition, on the contrary, is far from being a distinguished memberof any great society. While he remains in a country village, his conductmay be attended to, and he may be obliged to attend to it himself. Inthis situation, 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 is sunkin obscurity and darkness. His conduct is observed and attended to bynobody; and he is, therefore, very likely to neglect it himself, andto abandon himself to every sort of low profligacy and vice. He neveremerges so effectually from this obscurity, his conduct never excitesso much the attention of any respectable society, as by his becoming themember of a small religious sect. He from that moment acquires a degreeof consideration which he never had before. All his brother sectariesare, for the credit of the sect, interested to observe his conduct; and, if he gives occasion to any scandal, if he deviates very much fromthose austere morals which they almost always require of one another, to punish him by what is always a very severe punishment, even where noevil effects 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 muchmore so than in the established church. The morals of those littlesects, indeed, have frequently been rather disagreeably rigorous andunsocial. 

There are two very easy and effectual remedies, however, by whosejoint operation the state might, without violence, correct whatever wasunsocial or disagreeably rigorous in the morals of all the little sectsinto which the country was divided. 

The first of those remedies is the study of science and philosophy, which the state might render almost universal among all people ofmiddling or more than middling rank and fortune; not by giving salariesto teachers in order to make them negligent and idle, but by institutingsome sort of probation, even in the higher and more difficult sciences, to be undergone by every person before he was permitted to exercise anyliberal profession, or before he could be received as a candidate forany honourable office, of trust or profit. If the state imposed uponthis order of men the necessity of learning, it would have no occasionto give itself any trouble about providing them with proper teachers. They would soon find better teachers for themselves, than any whomthe state could provide for them. Science is the great antidote to thepoison of enthusiasm and superstition; and where all the superior ranksof people were secured from it, the inferior ranks could not be muchexposed to it. 

The second of those remedies is the frequency and gaiety of publicdiversions. The state, by encouraging, that is, by giving entire libertyto all those who, from their own interest, would attempt, withoutscandal or indecency, to amuse and divert the people by painting, poetry, music, dancing; by all sorts of dramatic representations andexhibitions; would easily dissipate, in the greater part of them, thatmelancholy and gloomy humour which is almost always the nurse of popularsuperstition and enthusiasm. Public diversions have always been theobjects of dread and hatred to all the fanatical promoters of thosepopular frenzies. The gaiety and good humour which those diversionsinspire, were altogether inconsistent with that temper of mind which wasfittest for their purpose, or which they could best work upon. Dramaticrepresentations, besides, frequently exposing their artifices to publicridicule, and sometimes even to public execration, were, upon thataccount, more than all other diversions, the objects of their peculiarabhorrence. 

In a country where the law favoured the teachers of no one religion morethan those of another, it would not be necessary that any of themshould have any particular or immediate dependency upon the sovereignor executive power; or that he should have anything to do eitherin appointing or in dismissing them from their offices. In such asituation, he would have no occasion to give himself any concern aboutthem, further than to keep the peace among them, in the same manneras among the rest of his subjects, that is, to hinder them frompersecuting, abusing, or oppressing one another. But it is quiteotherwise in countries where there is an established or governingreligion. The sovereign can in this case never be secure, unless he hasthe means of influencing in a considerable degree the greater part ofthe teachers of that religion. 

The clergy of every established church constitute a great incorporation. They can act in concert, and pursue their interest upon one plan, andwith one spirit as much as if they were under the direction of one man;and they are frequently, too, under such direction. Their interest as anincorporated body is never the same with that of the sovereign, and issometimes directly opposite to it. Their great interest is to maintaintheir authority with the people, and this authority depends upon thesupposed certainty and importance of the whole doctrine which theyinculcate, and upon the supposed necessity of adopting every part of itwith the most implicit faith, in order to avoid eternal misery. Shouldthe sovereign have the imprudence to appear either to deride, or doubthimself of the most trifling part of their doctrine, or from humanity, attempt to protect those who did either the one or the other, thepunctilious honour of a clergy, who have no sort of dependency upon him, is immediately provoked to proscribe him as a profane person, and toemploy all the terrors of religion, in order to oblige the people totransfer their allegiance to some more orthodox and obedient prince. Should he oppose any of their pretensions or usurpations, the dangeris equally great. The princes who have dared in this manner to rebelagainst the church, over and above this crime of rebellion, havegenerally been charged, too, with the additional crime of heresy, notwithstanding their solemn protestations of their faith, and humblesubmission to every tenet which she thought proper to prescribe to them. But the authority of religion is superior to every other authority. Thefears which it suggests conquer all other fears. When the authorizedteachers of religion propagate through the great body of the people, doctrines subversive of the authority of the sovereign, it is byviolence only, or by the force of a standing army, that he can maintainhis authority. Even a standing army cannot in this case give him anylasting security; because if the soldiers are not foreigners, which canseldom be the case, but drawn from the great body of the people, whichmust almost always be the case, they are likely to be soon corrupted bythose very doctrines. The revolutions which the turbulence of the Greekclergy was continually occasioning at Constantinople, as long as theeastern empire subsisted; the convulsions which, during the course ofseveral centuries, the turbulence of the Roman clergy was continuallyoccasioning in every part of Europe, sufficiently demonstrate howprecarious and insecure must always be the situation of the sovereign, who has no proper means of influencing the clergy of the established andgoverning religion of his country. 

Articles of faith, as well as all other spiritual matters, it is evidentenough, are not within the proper department of a temporal sovereign, who, though he may be very well qualified for protecting, is seldomsupposed to be so for instructing the people. With regard to suchmatters, therefore, his authority can seldom be sufficient tocounterbalance the united authority of the clergy of the establishedchurch. The public tranquillity, however, and his own security, mayfrequently depend upon the doctrines which they may think proper topropagate concerning such matters. As he can seldom directly opposetheir decision, therefore, with proper weight and authority, it isnecessary that he should be able to influence it; and he can influenceit only by the fears and expectations which he may excite in the greaterpart of the individuals of the order. Those fears and expectationsmay consist in 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 wereliable to be turned out upon every slight disobligation either of thesovereign or of his ministers, it would perhaps be impossible for themto maintain their authority with the people, who would then considerthem as mercenary dependents upon the court, in the sincerity of whoseinstructions they could no longer have any confidence. But should thesovereign attempt irregularly, and by violence, to deprive any numberof clergymen of their freeholds, on account, perhaps, of their havingpropagated, with more than ordinary zeal, some factious or seditiousdoctrine, he would only render, by such persecution, both them andtheir doctrine ten times more popular, and therefore ten times moretroublesome and dangerous, than they had been before. Fear is in almostall cases a wretched instrument of govermnent, and ought in particularnever to be employed against any order of men who have the smallestpretensions to independency. To attempt to terrify them, serves only toirritate their bad humour, and to confirm them in an opposition, whichmore gentle usage, perhaps, might easily induce them either to soften, or to lay aside altogether. The violence which the French governmentusually employed in order to oblige all their parliaments, or sovereigncourts of justice, to enregister any unpopular edict, very seldomsucceeded. The means commonly employed, however, the imprisonment ofall the refractory members, one would think, were forcible enough. Theprinces of the house of Stuart sometimes employed the like means inorder to influence some of the members of the parliament of England, andthey generally found them equally intractable. The parliament of Englandis now managed in another manner; and a very small experiment, which theduke of Choiseul 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. Thatexperiment was not pursued. For though management and persuasion arealways the easiest and safest instruments of government as force andviolence are the worst and the most dangerous; yet such, it seems, isthe natural insolence of man, that he almost always disdains to use thegood instrument, except when he cannot or dare not use the bad one. TheFrench government could and durst use force, and therefore disdained touse management and persuasion. But there is no order of men, it appearsI believe, from the experience of all ages, upon whom it is so dangerousor rather so perfectly ruinous, to employ force and violence, asupon the respected clergy of an established church. The rights, theprivileges, the personal liberty of every individual ecclesiastic, whois upon good terms with his own order, are, even in the most despoticgovernments, more respected than those of any other person of nearlyequal rank and fortune. It is so in every gradation of despotism, fromthat of the gentle and mild government of Paris, to that of the violentand furious government of Constantinople. But though this order of mencan scarce ever be forced, they may be managed as easily as any other;and the security of the sovereign, as well as the public tranquillity, seems to depend very much upon the means which he has of managing them;and those means seem to consist altogether in the preferment which hehas to bestow upon them. 

In the ancient constitution of the Christian church, the bishop of eachdiocese was elected by the joint votes of the clergy and of the peopleof the episcopal city. The people did not long retain their right ofelection; and while they did retain it, they almost always acted underthe influence of the clergy, who, in such spiritual matters, appearedto be their natural guides. The clergy, however, soon grew weary of thetrouble of managing them, and found it easier to elect their own bishopsthemselves. The abbot, in the same manner, was elected by the monksof the monastery, at least in the greater part of abbacies. All theinferior ecclesiastical benefices comprehended within the diocese werecollated by the bishop, who bestowed them upon such ecclesiastics ashe thought proper. All church preferments were in this manner inthe disposal of the church. The sovereign, though he might have someindirect influence in those elections, and though it was sometimes usualto ask both his consent to elect, and his approbation of the election, yet had no direct or sufficient means of managing the clergy. Theambition of every clergyman naturally led him to pay court, not so muchto his sovereign as to his own order, from which only he could expectpreferment. 

Through the greater part of Europe, the pope gradually drew to himself, first the collation of almost all bishoprics and abbacies, or ofwhat were called consistorial benefices, and afterwards, by variousmachinations and pretences, of the greater part of inferior beneficescomprehended within each diocese, little more being left to the bishopthan what was barely necessary to give him a decent authority with hisown clergy. By this arrangement the condition of the sovereign was stillworse than it had been before. The clergy of all the different countriesof Europe were thus formed into a sort of spiritual army, dispersed indifferent quarters indeed, but of which all the movements and operationscould now be directed by one head, and conducted upon one uniformplan. The clergy of each particular country might be considered as aparticular detachment of that army, of which the operations could easilybe supported and seconded by all the other detachments quartered inthe different countries round about. Each detachment was not onlyindependent of the sovereign of the country in which it was quartered, and by which it was maintained, but dependent upon a foreign sovereign, who could at any time turn its arms against the sovereign of thatparticular country, and support them by the arms of all the otherdetachments. 

Those arms were the most formidable that can well be imagined. Inthe ancient state of Europe, before the establishment of arts andmanufactures, the wealth of the clergy gave them the same sort ofinfluence over the common people which that of the great barons gavethem over their respective vassals, tenants, and retainers. In the greatlanded estates, which the mistaken piety both of princes and privatepersons had bestowed upon the church, jurisdictions were established, ofthe same kind with those of the great barons, and for the same reason. In those great landed estates, the clergy, or their bailiffs, couldeasily keep the peace, without the support or assistance either of theking or of any other person; and neither the king nor any other personcould keep the peace there without the support and assistance of theclergy. The jurisdictions of the clergy, therefore, in their particularbaronies or manors, were equally independent, and equally exclusiveof the authority of the king's courts, as those of the great temporallords. 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 to engagethem. Over and above the rents of those estates, the clergy possessed inthe tithes a very large portion of the rents of all the other estates inevery kingdom of Europe. The revenues arising from both those speciesof rents were, the greater part of them, paid in kind, in corn, wine, cattle, poultry, etc. The quantity exceeded greatly what the clergycould themselves consume; and there were neither arts nor manufactures, for the produce of which they could exchange the surplus. The clergycould derive advantage from this immense surplus in no other way thanby employing it, as the great barons employed the like surplus of theirrevenues, in the most profuse hospitality, and in the most extensivecharity. Both the hospitality and the charity of the ancient clergy, accordingly, are said to have been very great. They not only maintainedalmost the whole poor of every kingdom, but many knights and gentlemenhad frequently no other means of subsistence than by travelling aboutfrom monastery to monastery, under pretence of devotion, but in realityto enjoy the hospitality of the clergy. The retainers of some particularprelates were often as numerous as those of the greatest lay-lords;and the retainers of all the clergy taken together were, perhaps, morenumerous than those of all the lay-lords. There was always much moreunion among the clergy than among the lay-lords. The former were under aregular discipline and subordination to the papal authority. The latterwere under no regular discipline or subordination, but almost alwaysequally jealous of one another, and of the king. Though the tenants andretainers of the clergy, therefore, had both together been less numerousthan those of the great lay-lords, and their tenants were probably muchless numerous, yet their union would have rendered them more formidable. The hospitality and charity of the clergy, too, not only gave them thecommand of a great temporal force, but increased very much the weight oftheir spiritual weapons. Those virtues procured them the highest respectand veneration among all the inferior ranks of people, of whom manywere constantly, and almost all occasionally, fed by them. Everythingbelonging or related to so popular an order, its possessions, itsprivileges, its doctrines, necessarily appeared sacred in the eyesof the common people; and every violation of them, whether real orpretended, the highest act of sacrilegious wickedness and profaneness. In this state of things, if the sovereign frequently found it difficultto resist the confederacy of a few of the great nobility, we cannotwonder that he should find it still more so to resist the united forceof the clergy of his own dominions, supported by that of the clergy ofall the neighbouring dominions. In such circumstances, the wonder is, not that he was sometimes obliged to yield, but that he ever was able toresist. 

The privileges of the clergy in those ancient times (which to us, who live in the present times, appear the most absurd), their totalexemption from the secular jurisdiction, for example, or what in Englandwas called the benefit of clergy, were the natural, or rather thenecessary, consequences of this state of things. How dangerous must ithave been for the sovereign to attempt to punish a clergyman for anycrime whatever, if his order were disposed to protect him, and torepresent either the proof as insufficient for convicting so holy a man, or the punishment as too severe to be inflicted upon one whose personhad been rendered sacred by religion? The sovereign could, insuch circumstances, do no better than leave him to be tried by theecclesiastical courts, who, for the honour of their own order, wereinterested to restrain, as much as possible, every member of it fromcommitting enormous 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 of Europe, during the tenth, eleventh, twelfth, and thirteenth centuries, and forsome time both before and after that period, the constitution of thechurch of Rome may be considered as the most formidable combination thatever was formed against the authority and security of civil government, as well as against the liberty, reason, and happiness of mankind, whichcan flourish only where civil government is able to protect them. Inthat constitution, 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 human reason;because, though human reason might, perhaps, have been able to unveil, even to the eyes of the common people, some of the delusions ofsuperstition, it could never have dissolved the ties of privateinterest. Had this constitution been attacked by no other enemies butthe feeble efforts of human reason, it must have endured for ever. Butthat immense and well-built fabric, which all the wisdom and virtueof man could never have shaken, much less have overturned, was, bythe natural course of things, first weakened, and afterwards in partdestroyed; and is now likely, in the course of a few centuries more, perhaps, to crumble into ruins altogether. 

The gradual improvements of arts, manufactures, and commerce, the samecauses which destroyed the power of the great barons, destroyed, inthe same manner, through the greater part of Europe, the whole temporalmanufactures, and commerce, the clergy, like the great barons, foundsomething for which they could exchange their rude produce, and therebydiscovered the means of spending their whole revenues upon their ownpersons, without giving any considerable share of them to other people. Their charity became gradually less extensive, their hospitality lessliberal, or less profuse. Their retainers became consequently lessnumerous, and, by degrees, dwindled away altogether. The clergy, too, like the great barons, wished to get a better rent from theirlanded estates, in order to spend it, in the same manner, upon thegratification of their own private vanity and folly. But this increaseof rent could be got only by granting leases to their tenants, whothereby became, in a great measure, independent of them. The ties ofinterest, which bound the inferior ranks of people to the clergy, werein this manner gradually broken and dissolved. They were even broken anddissolved sooner than those which bound the same ranks of people to thegreat barons; because the benefices of the church being, the greaterpart of them, much smaller than the estates of the great barons, thepossessor of each benefice was much sooner able to spend the wholeof its revenue upon his own person. During the greater part of thefourteenth and fifteenth centuries, the power of the great barons was, through the greater part of Europe, in full vigour. But the temporalpower of the clergy, the absolute command which they had once had overthe great body of the people was very much decayed. The power of thechurch was, by that time, very nearly reduced, through the greater partof Europe, to what arose from their spiritual authority; and even thatspiritual authority was much weakened, when it ceased to be supported bythe charity and hospitality of the clergy. The inferior ranks ofpeople no longer looked upon that order as they had done before; as thecomforters of their distress, and the relievers of their indigence. Onthe contrary, they were provoked and disgusted by the vanity, luxury, and expense of the richer clergy, who appeared to spend upon their ownpleasures what had always before been regarded as the patrimony of thepoor. 

In this situation of things, the sovereigns in the different states ofEurope endeavoured to recover the influence which they had once had inthe disposal of the great benefices of the church; by procuring to thedeans and chapters of each diocese the restoration of their ancientright of electing the bishop; and to the monks of each abbacy thatof electing the abbot. The re-establishing this ancient order was theobject of several statutes enacted in England during the course ofthe fourteenth century, particularly of what is called the statute ofprovisors; and of the pragmatic sanction, established in France inthe fifteenth century. In order to render the election valid, it wasnecessary that the sovereign should both consent to it before hand, andafterwards approve of the person elected; and though the election wasstill supposed 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 so universallyrestrained as in France and England. The concordat afterwards, in thesixteenth century, gave to the kings of France the absolute rightof presenting to all the great, or what are called the consistorial, benefices of the Gallican church. 

Since the establishment of the pragmatic sanction and of the concordat, the clergy of France have in general shewn less respect to the decreesof the papal court, than the clergy of any other catholic country. Inall the disputes which their sovereign has had with the pope, they havealmost constantly taken part with the former. This independency of theclergy of France upon the court of Rome seems to be principally foundedupon the pragmatic sanction and the concordat. In the earlier periods ofthe monarchy, the clergy of France appear to have been as much devotedto the pope as those of any other country. When Robert, the secondprince of the Capetian race, was most unjustly excommunicated by thecourt of Rome, his own servants, it is said, threw the victualswhich came from his table to the dogs, and refused to taste any thingthemselves which had been polluted by the contact of a person in hissituation. They were taught to do so, it may very safely be presumed, bythe clergy of his own dominions. 

The claim of collating to the great benefices of the church, a claim indefence of which the court of Rome had frequently shaken, andsometimes overturned, the thrones of some of the greatest sovereigns inChristendom, was in this manner either restrained or modified, or givenup altogether, in many different parts of Europe, even before thetime of the reformation. As the clergy had now less influence over thepeople, so the state had more influence over the clergy. The clergy, therefore, had both less power, and less inclination, to disturb thestate. 

The authority of the church of Rome was in this state of declension, when the disputes which gave birth to the reformation began in Germany, and soon spread themselves through every part of Europe. The newdoctrines were everywhere received with a high degree of popular favour. They were propagated with all that enthusiastic zeal which commonlyanimates the spirit of party, when it attacks established authority. Theteachers of those doctrines, though perhaps, in other respects, not morelearned than many of the divines who defended the established church, seem in general to have been better acquainted with ecclesiasticalhistory, and with the origin and progress of that system of opinionsupon which the authority of the church was established; and they hadthereby the advantage in almost every dispute. The austerity of theirmanners gave them authority with the common people, who contrasted thestrict regularity of their conduct with the disorderly lives of thegreater part of their own clergy. They possessed, too, in a much higherdegree than their adversaries, all the arts of popularity and of gainingproselytes; arts which the lofty and dignified sons of the church hadlong neglected, as being to them in a great measure useless. The reasonof the new doctrines recommended them to some, their novelty to many;the hatred and contempt of the established clergy to a still greaternumber: but the zealous, passionate, and fanatical, though frequentlycoarse and rustic eloquence, with which they were almost everywhereinculcated, recommended them to by far the greatest number. 

The success of the new doctrines was almost everywhere so great, thatthe princes, who at that time happened to be on bad terms with the courtof Rome, were, by means of them, easily enabled, in their own dominions, to overturn the church, which having lost the respect and venerationof the inferior ranks of people, could make scarce any resistance. Thecourt of Rome had disobliged some of the smaller princes in the northernparts of Germany, whom it had probably considered as too insignificantto be worth the managing. They universally, therefore, established thereformation in their own dominions. The tyranny of Christiern II. , andof Troll archbishop of Upsal, enabled Gustavus Vasa to expel themboth from Sweden. The pope favoured the tyrant and the archbishop, andGustavus Vasa found no difficulty in establishing the reformationin Sweden. Christiern II. Was afterwards deposed from the throne ofDenmark, where his conduct had rendered him as odious as in Sweden. The pope, however, was still disposed to favour him; and Frederic ofHolstein, who had mounted the throne in his stead, revenged himself, by following the example of Gustavus Vasa. The magistrates of Berne andZurich, who had no particular quarrel with the pope, established withgreat ease the reformation in their respective cantons, where justbefore some of the clergy had, by an imposture somewhat grosser thanordinary, rendered the whole order both odious and contemptible. 

In this critical situation of its affairs the papal court was atsufficient pains to cultivate the friendship of the powerful sovereignsof France and Spain, of whom the latter was at that time emperor ofGermany. With their assistance, it was enabled, though not without greatdifficulty, and much bloodshed, either to suppress altogether, or toobstruct very much, the progress of the reformation in their dominions. It was well enough inclined, too, to be complaisant to the king ofEngland. But from the circumstances of the times, it could not be sowithout giving offence to a still greater sovereign, Charles V. , kingof Spain and emperor of Germany. Henry VIII. , accordingly, though hedid not embrace himself the greater part of the doctrines of thereformation, was yet enabled, by their general prevalence, to suppressall the monasteries, and to abolish the authority of the church of Romein his dominions. That he should go so far, though he went no further, gave some satisfaction to the patrons of the reformation, who, havinggot possession of the government in the reign of his son and successorcompleted, without any difficulty, the work which Henry VIII. Had begun. 

In some countries, as in Scotland, where the government was weak, unpopular, and not very firmly established, the reformation was strongenough to overturn, not only the church, but the state likewise, forattempting to support the church. 

Among the followers of the reformation, dispersed in all the differentcountries of Europe, there was no general tribunal, which, like that ofthe court of Rome, or an oecumenical council, could settle all disputesamong them, and, with irresistible authority, prescribe to all of themthe precise limits of orthodoxy. When the followers of the reformationin one country, therefore, happened to differ from their brethren inanother, as they had no common judge to appeal to, the dispute couldnever be decided; and many such disputes arose among them. Thoseconcerning the government of the church, and the right of conferringecclesiastical benefices, were perhaps the most interesting to the peaceand welfare of civil society. They gave birth, accordingly, to the twoprincipal parties or sects among the followers of the reformation, theLutheran and Calvinistic sects, the only sects among them, of which thedoctrine and discipline have ever yet been established by law in anypart of Europe. 

The followers of Luther, together with what is called the church ofEngland, preserved more or less of the episcopal government, establishedsubordination among the clergy, gave the sovereign the disposal of allthe bishoprics, and other consistorial benefices within his dominions, and thereby rendered him the real head of the church; and withoutdepriving the bishop of the right of collating to the smaller beneficeswithin his diocese, they, even to those benefices, not only admitted, but favoured the right of presentation, both in the sovereign and inall other lay patrons. This system of church government was, from thebeginning, favourable to peace and good order, and to submission to thecivil sovereign. It has never, accordingly, been the occasion of anytumult or civil commotion in any country in which it has once beenestablished. The church of England, in particular, has always valuedherself, with great reason, upon the unexceptionable loyalty of herprinciples. Under such a government, the clergy naturally endeavour torecommend themselves to the sovereign, to the court, and to the nobilityand gentry of the country, by whose influence they chiefly expect toobtain preferment. They pay court to those patrons, sometimes, nodoubt, by the vilest flattery and assentation; but frequently, too, bycultivating all those arts which best deserve, and which are thereforemost likely to gain them, the esteem of people of rank and fortune; bytheir knowledge in all the different branches of useful and ornamentallearning, by the decent liberality of their manners, by the social goodhumour of their conversation, and by their avowed contempt of thoseabsurd and hypocritical austerities which fanatics inculcate and pretendto practise, in order to draw upon themselves the veneration, and uponthe greater part of men of rank and fortune, who avow that they donot practise them, the abhorrence of the common people. Such a clergy, however, while they pay their court in this manner to the higher ranksof life, are very apt to neglect altogether the means of maintainingtheir influence and authority with the lower. They are listened to, esteemed, and respected by their superiors; but before their inferiorsthey are frequently incapable of defending, effectually, and to theconviction of such hearers, their own sober and moderate doctrines, against the most ignorant enthusiast who chooses to attack them. 

The followers of Zuinglius, or more properly those of Calvin, on thecontrary, bestowed upon the people of each parish, whenever the churchbecame vacant, the right of electing their own pastor; and established, at the same time, the most perfect equality among the clergy. The formerpart of this institution, as long as it remained in vigour, seems tohave been productive of nothing but disorder and confusion, and tohave tended equally to corrupt the morals both of the clergy and of thepeople. The latter part seems never to have had any effects but whatwere perfectly agreeable. 

As long as the people of each parish preserved the right of electingtheir own pastors, they acted almost always under the influence of theclergy, and generally of the most factious and fanatical of the order. The clergy, in order to preserve their influence in those popularelections, became, or affected to become, many of them, fanaticsthemselves, encouraged fanaticism among the people, and gave thepreference almost always to the most fanatical candidate. So small amatter as the appointment of a parish priest, occasioned almost alwaysa violent contest, not only in one parish, but in all the neighbouringparishes who seldom failed to take part in the quarrel. When the parishhappened to be situated in a great city, it divided all the inhabitantsinto two parties; and when that city happened, either to constituteitself a little republic, or to be the head and capital of a littlerepublic, as in the case with many of the considerable cities inSwitzerland and Holland, every paltry dispute of this kind, over andabove exasperating the animosity of all their other factions, threatenedto leave behind it, both a new schism in the church, and a new factionin the state. In those small republics, therefore, the magistrate verysoon found it necessary, for the sake of preserving the public peace, to assume to himself the right of presenting to all vacant benefices. InScotland, the most extensive country in which this presbyterian formof church government has ever been established, the rights of patronagewere in effect abolished by the act which established presbytery in thebeginning of the reign of William III. That act, at least, put in thepower of certain classes of people in each parish to purchase, fora very small price, the right of electing their own pastor. Theconstitution which this act established, was allowed to subsist forabout two-and-twenty years, but was abolished by the 10th of queenAnne, ch. 12, on account of the confusions and disorders which thismore popular mode of election had almost everywhere occasioned. In soextensive a country as Scotland, however, a tumult in a remote parishwas not so likely to give disturbance to government as in a smallerstate. The 10th of queen Anne restored the rights of patronage. Butthough, in Scotland, the law gives the benefice, without any exceptionto the person presented by the patron; yet the church requires sometimes(for she has not in this respect been very uniform in her decisions)a certain concurrence of the people, before she will confer upon thepresentee what is called the cure of souls, or the ecclesiasticaljurisdiction in the parish. She sometimes, at least, from an affectedconcern for the peace of the parish, delays the settlement till thisconcurrence can be procured. The private tampering of some of theneighbouring clergy, sometimes to procure, but more frequently toprevent this concurrence, and the popular arts which they cultivate, inorder to enable them upon such occasions to tamper more effectually, areperhaps the causes which principally keep up whatever remains of the oldfanatical spirit, either in the clergy or in the people of Scotland. 

The equality which the presbyterian form of church governmentestablishes among the clergy, consists, first, in the equality ofauthority or ecclesiastical jurisdiction; and, secondly, in the equalityof benefice. In all presbyterian churches, the equality of authority isperfect; that of benefice is not so. The difference, however, betweenone benefice and another, is seldom so considerable, as commonly totempt the possessor even of the small one to pay court to his patron, bythe vile arts of flattery and assentation, in order to get a better. In all the presbyterian churches, where the rights of patronage arethoroughly established, it is by nobler and better arts, that theestablished clergy in general endeavour to gain the favour of theirsuperiors; by their learning, by the irreproachable regularity of theirlife, and by the faithful and diligent discharge of their duty. Theirpatrons even frequently complain of the independency of their spirit, which they are apt to construe into ingratitude for past favours, butwhich, at worse, perhaps, is seldom anymore than that indifference whichnaturally arises from the consciousness that no further favours of thekind are ever to be expected. There is scarce, perhaps, to be foundanywhere in Europe, a more learned, decent, independent, and respectableset of men, than the greater part of the presbyterian clergy of Holland, Geneva, Switzerland, and Scotland. 

Where the church benefices are all nearly equal, none of them can bevery great; and this mediocrity of benefice, though it may be, no doubt, carried too far, has, however, some very agreeable effects. Nothing butexemplary morals can give dignity to a man of small fortune. Thevices of levity and vanity necessarily render him ridiculous, and are, besides, almost as ruinous to him as they are to the common people. In his own conduct, therefore, he is obliged to follow that system ofmorals which the common people respect the most. He gains their esteemand affection, by that plan of life which his own interest and situationwould lead him to follow. The common people look upon him with thatkindness with which we naturally regard one who approaches somewhat toour own condition, but who, we think, ought to be in a higher. Theirkindness naturally provokes his kindness. He becomes careful to instructthem, and attentive to assist and relieve them. He does not even despisethe prejudices of people who are disposed to be so favourable to him, and never treats them with those contemptuous and arrogant airs, whichwe so often meet with in the proud dignitaries of opulent and wellendowed churches. The presbyterian clergy, accordingly, have moreinfluence over the minds of the common people, than perhaps the clergyof any other established church. It is, accordingly, in presbyteriancountries only, that we ever find the common people converted, withoutpersecution completely, and almost to a man, to the established church. 

In countries where church benefices are, the greater part of them, verymoderate, a chair in a university is generally a better establishmentthan a church benefice. The universities have, in this case, the pickingand chusing of their members from all the churchmen of the country, who, in every country, constitute by far the most numerous class of men ofletters. Where church benefices, on the contrary, are many of themvery considerable, the church naturally draws from the universities thegreater part of their eminent men of letters; who generally find somepatron, who does himself honour by procuring them church preferment. Inthe former situation, we are likely to find the universities filled withthe most eminent men of letters that are to be found in the country. Inthe latter, we are likely to find few eminent men among them, and thosefew among the youngest members of the society, who are likely, too, tobe drained away from it, before they can have acquired experience andknowledge enough to be of much use to it. It is observed by Mr. DeVoltaire, that father Porée, a jesuit of no great eminence in therepublic of letters, was the only professor they had ever had in France, whose works were worth the reading. In a country which has producedso many eminent men of letters, it must appear somewhat singular, thatscarce one of them should have been a professor in a university. Thefamous Cassendi was, in the beginning of his life, a professor inthe university of Aix. Upon the first dawning of his genius, it wasrepresented to him, that by going into the church he could easily finda much more quiet and comfortable subsistence, as well as a bettersituation for pursuing his studies; and he immediately followed theadvice. The observation of Mr. De Voltaire may be applied, I believe, not only to France, but to all other Roman Catholic countries. We veryrarely find in any of them an eminent man of letters, who is a professorin a university, except, perhaps, in the professions of law and physic;professions from which the church is not so likely to draw them. Afterthe church of Rome, that of England is by far the richest and bestendowed church in Christendom. In England, accordingly, the churchis continually draining the universities of all their best and ablestmembers; and an old college tutor who is known and distinguished inEurope as an eminent man of letters, is as rarely to be found thereas in any Roman catholic country, In Geneva, on the contrary, in theprotestant cantons of Switzerland, in the protestant countries ofGermany, in Holland, in Scotland, in Sweden, and Denmark, the mosteminent men of letters whom those countries have produced, have, notall indeed, but the far greater part of them, been professors inuniversities. In those countries, the universities are continuallydraining the church of all its most eminent men of letters. 

It may, perhaps, be worth while to remark, that, if we except the poets, a few orators, and a few historians, the far greater part of the othereminent men of letters, both of Greece and Rome, appear to have beeneither public or private teachers; generally either of philosophy orof rhetoric. This remark will be found to hold true, from the days ofLysias and Isocrates, of Plato and Aristotle, down to those of Plutarchand Epictetus, Suetonius, and Quintilian. To impose upon any man thenecessity of teaching, year after year, in any particular branch ofscience seems in reality to be the most effectual method for renderinghim completely master of it himself. By being obliged to go everyyear over the same ground, if he is good for any thing, he necessarilybecomes, in a few years, well acquainted with every part of it, and if, upon any particular point, he should form too hasty an opinion one year, when he comes, in the course of his lectures to reconsider the samesubject the year thereafter, he is very likely to correct it. As to be ateacher of science is certainly the natural employment of a mere man ofletters; so is it likewise, perhaps, the education which is most likelyto render him a man of solid learning and knowledge. The mediocrityof church benefices naturally tends to draw the greater part of men ofletters in the country where it takes place, to the employment in whichthey can be the most useful to the public, and at the same time to givethem the best education, perhaps, they are capable of receiving. Ittends to render their learning both as solid as possible, and as usefulas possible. 

The revenue of every established church, such parts of it excepted asmay arise from particular lands or manors, is a branch, it ought to beobserved, of the general revenue of the state, which is thus diverted toa purpose very different from the defence of the state. The tithe, for example, is a real land tax, which puts it out of the power of theproprietors of land to contribute so largely towards the defence of thestate as they otherwise might be able to do. The rent of land, however, is, according to some, the sole fund; and, according to others, theprincipal fund, from which, in all great monarchies, the exigencies ofthe state must be ultimately supplied. The more of this fund that isgiven to the church, the less, it is evident, can be spared to thestate. It may be laid down as a certain maxim, that all other thingsbeing supposed equal, the richer the church, the poorer must necessarilybe, either the sovereign on the one hand, or the people on the other;and, in all cases, the less able must the state be to defend itself. Inseveral protestant countries, particularly in all the protestant cantonsof Switzerland, the revenue which anciently belonged to the Romancatholic church, the tithes and church lands, has been found a fundsufficient, not only to afford competent salaries to the establishedclergy, but to defray, with little or no addition, all the otherexpenses of the state. The magistrates of the powerful canton of Berne, in particular, have accumulated, out of the savings from this fund, avery large sum, supposed to amount to several millions; part or which isdeposited in a public treasure, and part is placed at interest in whatare called the public funds of the different indebted nations of Europe;chiefly in those of France and Great Britain. What may be the amountof the whole expense which the church, either of Berne, or of any otherprotestant canton, costs the state, I do not pretend to know. By a veryexact account it appears, that, in 1755, the whole revenue of the clergyof the church of Scotland, including their glebe or church lands, andthe rent of their manses or dwelling-houses, estimated according toa reasonable valuation, amounted only to £68, 514:1:5 1/12d. This verymoderate revenue affords a decent subsistence to nine hundred andforty-four ministers. The whole expense of the church, including what isoccasionally laid out for the building and reparation of churches, andof the manses of ministers, cannot well be supposed to exceed eightyor eighty-five thousand pounds a-year. The most opulent church inChristendom does not maintain better the uniformity of faith, thefervour of devotion, the spirit of order, regularity, and austeremorals, in the great body of the people, than this very poorly endowedchurch of Scotland. All the good effects, both civil and religious, which an established church can be supposed to produce, are producedby it as completely as by any other. The greater part of the protestantchurches of Switzerland, which, in general, are not better endowed thanthe church of Scotland, produce those effects in a still higher degree. In the greater part of the protestant cantons, there is not asingle person to be found, who does not profess himself to be of theestablished church. If he professes himself to be of any other, indeed, the law obliges him to leave the canton. But so severe, or, rather, indeed, so oppressive a law, could never have been executed in such freecountries, had not the diligence of the clergy beforehand converted tothe established church the whole body of the people, with the exceptionof, perhaps, a few individuals only. In some parts of Switzerland, accordingly, where, from the accidental union of a protestant andRoman catholic country, the conversion has not been so complete, bothreligions are not only tolerated, but established by law. 

The proper performance of every service seems to require, that its payor recompence should be, as exactly as possible, proportioned to thenature of the service. If any service is very much underpaid, it isvery apt to suffer by the meanness and incapacity of the greater part ofthose who are employed in it. If it is very much overpaid, it is apt tosuffer, perhaps still more, by their negligence and idleness. A man ofa large revenue, whatever may be his profession, thinks he ought to livelike other men of large revenues; and to spend a great part of his timein festivity, in vanity, and in dissipation. But in a clergyman, thistrain of life not only consumes the time which ought to be employedin the duties of his function, but in the eyes of the common people, destroys almost entirely that sanctity of character, which can aloneenable him to perform those duties with proper weight and authority. 

PART IV. Of the Expense of supporting the Dignity of the Sovereign. 

Over and above the expenses necessary for enabling the sovereign toperform 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 of government. 

In an opulent and improved society, where all the different orders ofpeople are growing every day more expensive in their houses, in theirfurniture, in their tables, in their dress, and in their equipage; itcannot well be expected that the sovereign should alone hold out againstthe fashion. He naturally, therefore, or rather necessarily, becomesmore expensive in all those different articles too. His dignity evenseems to require that he should become so. 

As, in point of dignity, a monarch is more raised above his subjectsthan the chief magistrate of any republic is ever supposed to be abovehis fellow-citizens; so a greater expense is necessary for supportingthat higher dignity. We naturally expect more splendour in the court ofa king, than in the mansion-house of a doge or burgo-master. 

CONCLUSION. 

The expense of defending the society, and that of supporting the dignityof the chief magistrate, are both laid out for the general benefit ofthe whole society. It is reasonable, therefore, that they should bedefrayed by the general contribution of the whole society; all thedifferent members contributing, as nearly as possible, in proportion totheir respective abilities. 

The expense of the administration of justice, too, may no doubt beconsidered as laid out for the benefit of the whole society. There isno impropriety, therefore, in its being defrayed by the generalcontribution of the whole society. The persons, however, who giveoccasion to this expense, are those who, by their injustice in one wayor another, make it necessary to seek redress or protection from thecourts of justice. The persons, again, most immediately benefited bythis expense, are those whom the courts of justice either restoreto their rights, or maintain in their rights. The expense of theadministration of justice, therefore, may very properly be defrayedby the particular contribution of one or other, or both, of those twodifferent sets of persons, according as different occasions may require, that is, by the fees of court. It cannot be necessary to have recourseto the general contribution of the whole society, except for theconviction of those criminals who have not themselves any estate or fundsufficient for paying those fees. 

Those local or provincial expenses, of which the benefit is localor provincial (what is laid out, for example, upon the police ofa particular town or district), ought to be defrayed by a local orprovincial revenue, and ought to be no burden upon the general revenueof the society. It is unjust that the whole society should contributetowards an expense, of which the benefit is confined to a part of thesociety. 

The expense of maintaining good roads and communications is, no doubt, beneficial to the whole society, and may, therefore, without anyinjustice, be defrayed by the general contributions of the wholesociety. This expense, however, is most immediately and directlybeneficial to those who travel or carry goods from one place to another, and to those who consume such goods. The turnpike tolls in England, and the duties called peages in other countries, lay it altogether uponthose two different sets of people, and thereby discharge the generalrevenue of the society from a very considerable burden. 

The expense of the institutions for education and religious instruction, is likewise, no doubt, beneficial to the whole society, and may, therefore, without injustice, be defrayed by the general contributionof the whole society. This expense, however, might, perhaps, with equalpropriety, and even with some advantage, be defrayed altogether by thosewho receive the immediate benefit of such education and instruction, orby the voluntary contribution of those who think they have occasion foreither the one or the other. 

When the institutions, or public works, which are beneficial to thewhole society, either cannot be maintained altogether, or are notmaintained altogether, by the contribution of such particular membersof the society as are most immediately benefited by them; the deficiencymust, in most cases, be made up by the general contribution of the wholesociety. The general revenue of the society, over and above defrayingthe expense of defending the society, and of supporting the dignity ofthe chief magistrate, must make up for the deficiency of many particularbranches of revenue. The sources of this general or public revenue, Ishall endeavour to explain in the following chapter. 

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

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

PART I. Of the Funds, or Sources, of Revenue, which may peculiarlybelong to the Sovereign or Commonwealth. 

The funds, or sources, of revenue, which may peculiarly belong to thesovereign or commonwealth, must consist, either in stock, or in land. 

The sovereign, like, any other owner of stock, may derive a revenue fromit, either by employing it himself, or by lending it. His revenue is, inthe one case, profit, in the other interest. 

The revenue of a Tartar or Arabian chief consists in profit. It arisesprincipally from the milk and increase of his own herds and flocks, of which he himself superintends the management, and is the principalshepherd or herdsman of his own horde or tribe. It is, however, in thisearliest and rudest state of civil government only, that profit has evermade the principal part of the public revenue of a monarchical state. 

Small republics have sometimes derived a considerable revenue from theprofit of mercantile projects. The republic of Hamburgh is said to doso from the profits of a public wine-cellar and apothecary's shop. {SeeMemoires concernant les Droits et Impositions en Europe, tome i. Page73. This work was compiled by the order of the court, for the use of acommission employed for some years past in considering the proper meansfor reforming the finances of France. The account of the French taxes, which takes up three volumes in quarto, may be regarded as perfectlyauthentic. That of those of other European nations was compiled fromsuch information as the French ministers at the different courts couldprocure. It is much shorter, and probably not quite so exact as thatof the French taxes. } That state cannot be very great, of which thesovereign has leisure to carry on the trade of a wine-merchant or anapothecary. The profit of a public bank has been a source of revenue tomore considerable states. It has been so, not only to Hamburgh, but toVenice and Amsterdam. A revenue of this kind has even by some peoplebeen thought not below the attention of so great an empire as that ofGreat Britain. Reckoning the ordinary dividend of the bank of England atfive and a-half per cent. , and its capital at ten millions seven hundredand eighty thousand pounds, the neat annual profit, after paying theexpense of management, must amount, it is said, to five hundred andninety-two thousand nine hundred pounds. Government, it is pretended, could borrow this capital at three per cent. Interest, and, by takingthe management of the bank into its own hands, might make a clear profitof two hundred and sixty-nine thousand five hundred pounds a-year. Theorderly, vigilant, and parsimonious administration of such aristocraciesas those of Venice and Amsterdam, is extremely proper, it appears fromexperience, for the management of a mercantile project of this kind. Butwhether such a government us that of England, which, whatever may beits virtues, has never been famous for good economy; which, in time ofpeace, has generally conducted itself with the slothful and negligentprofusion that is, perhaps, natural to monarchies; and, in time ofwar, has constantly acted with all the thoughtless extravagance thatdemocracies are apt to fall into, could be safely trusted with themanagement of such a project, must at least be a good deal moredoubtful. 

The post-office is properly a mercantile project. The governmentadvances the expense of establishing the different offices, and ofbuying or hiring the necessary horses or carriages, and is repaid, witha large profit, by the duties upon what is carried. It is, perhaps, the only mercantile project which has been successfully managed by, Ibelieve, every sort of government. The capital to be advanced is notvery considerable. There is no mystery in the business. The returns arenot only certain but immediate. 

Princes, however, have frequently engaged in many other mercantileprojects, and have been willing, like private persons, to mend theirfortunes, by becoming adventurers in the common branches of trade. Theyhave scarce ever succeeded. The profusion with which the affairs ofprinces are always managed, renders it almost impossible that theyshould. The agents of a prince regard the wealth of their master asinexhaustible; are careless at what price they buy, are careless at whatprice they sell, are careless at what expense they transport hisgoods from one 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 the fortunesof princes. It was thus, as we are told by Machiavel, that the agentsof Lorenzo of Medicis, not a prince of mean abilities, carried on histrade. The republic of Florence was several times obliged to paythe debt into which their extravagance had involved him. He foundit convenient, accordingly to give up the business of merchant, thebusiness to which his family had originally owed their fortune, and, in the latter part of his life, to employ both what remained of thatfortune, and the revenue of the state, of which he had the disposal, inprojects and expenses more suitable to his station. 

No two characters seem more inconsistent than those of trader andsovereign. If the trading spirit of the English East India companyrenders them very bad sovereigns, the spirit of sovereignty seems tohave rendered them equally bad traders. While they were traders only, they managed their trade successfully, and were able to pay from theirprofits a moderate dividend to the proprietors of their stock. Sincethey became sovereigns, with a revenue which, it is said, was originallymore than three millions sterling, they have been obliged to begthe ordinary assistance of government, in order to avoid immediatebankruptcy. In their former situation, their servants in Indiaconsidered themselves as the clerks of merchants; in their presentsituation, those servants consider themselves as the ministers ofsovereigns. 

A state may sometimes derive some part of its public revenue from theinterest of money, as well as from the profits of stock. If it hasamassed a treasure, it may lend a part of that treasure, either toforeign states, or to its own subjects. 

The canton of Berne derives a considerable revenue by lending a partof its treasure to foreign states, that is, by placing it in the publicfunds of the different indebted nations of Europe, chiefly in those ofFrance and England. The security of this revenue must depend, first, upon the security of the funds in which it is placed, or upon the goodfaith of the government which has the management of them; and, secondly, upon the certainty or probability of the continuance of peace with thedebtor nation. In the case of a war, the very first act of hostility onthe part of the debtor nation might be the forfeiture of the funds ofits credit. This policy of lending money to foreign states is, so faras I know peculiar to the canton of Berne. 

The city of Hamburgh {See Memoire concernant les Droites et Impositionsen Europe tome i p. 73. }has established a sort of public pawn-shop, which lends money to the subjects of the state, upon pledges, at six percent. Interest. This pawn-shop, or lombard, as it is called, affords arevenue, it is pretended, to the state, of a hundred and fifty thousandcrowns, which, at four and sixpence the crown, amounts to £33, 750sterling. 

The government of Pennsylvania, without amassing any treasure, inventeda method of lending, not money, indeed, but what is equivalent to money, to its subjects. By advancing to private people, at interest, and uponland security to double the value, paper bills of credit, to be redeemedfifteen years after their date; and, in the mean time, made transferablefrom hand to hand, like banknotes, and declared by act of assembly tobe a legal tender in all payments from one inhabitant of the provinceto another, it raised a moderate revenue, which went a considerable waytowards defraying an annual expense of about £4, 500, the whole ordinaryexpense of that frugal and orderly government. The success of anexpedient of this kind must have depended upon three differentcircumstances: first, upon the demand for some other instrument ofcommerce, besides gold and silver money, or upon the demand for such aquantity of consumable stock as could not be had without sending abroadthe greater part of their gold and silver money, in order to purchaseit; secondly, upon the good credit of the government which made useof this expedient; 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 been necessary forcarrying on their circulation, had there been no paper bills of credit. The same expedient was, upon different occasions, adopted by severalother American colonies; but, from want of this moderation, it produced, in the greater part of them, much more disorder than conveniency. 

The unstable and perishable nature of stock and credit, however, rendersthem unfit to be trusted to as the principal funds of that sure, steady, and permanent revenue, which can alone give security and dignity togovernment. The government of no great nation, that was advanced beyondthe shepherd state, seems ever to have derived the greater part of itspublic revenue from such sources. 

Land is a fund of more stable and permanent nature; and the rent ofpublic lands, accordingly, has been the principal source of the publicrevenue of many a great nation that was much advanced beyond theshepherd state. From the produce or rent of the public lands, theancient republics of Greece and Italy derived for a long the the greaterpart of that revenue which defrayed the necessary expenses of thecommonwealth. The rent of the crown lands constituted for a long timethe greater part of the revenue of the ancient sovereigns of Europe. 

War, and the preparation for war, are the two circumstances which, inmodern times, occasion the greater part of the necessary expense or allgreat states. But in the ancient republics of Greece and Italy, everycitizen was a soldier, and both served, and prepared himself forservice, at his own expense. Neither of those two circumstances, therefore, could occasion any very considerable expense to the state. The rent of a very moderate landed estate might be fully sufficient fordefraying all the other necessary expenses of government. 

In the ancient monarchies of Europe, the manners and customs of the timesufficiently prepared the great body of the people for war; and whenthey took the field, they were, by the condition of their feudaltenures, to be maintained either at their own expense, or at thatof their immediate lords, without bringing any new charge upon thesovereign. The other expenses of government were, the greater part ofthem, very moderate. The administration of justice, it has been shewn, instead of being a cause of expense was a source of revenue. The labourof the country people, for three days before, and for three days after, harvest, was thought a fund sufficient for making and maintaining allthe bridges, highways, and other public works, which the commerce of thecountry was supposed to require. In those days the principal expenseof the sovereign seems to have consisted in the maintenance of his ownfamily and household. The officers of his household, accordingly, werethen the great officers of state. The lord treasurer received his rents. The lord steward and lord chamberlain looked after the expense of hisfamily. The care of his stables was committed to the lord constable andthe lord marshal. His houses were all built in the form of castles, and seem to have been the principal fortresses which he possessed. Thekeepers of those houses or castles might be considered as a sort ofmilitary governors. They seem to have been the only militaryofficers whom it was necessary to maintain in time of peace. In thesecircumstances, the rent of a great landed estate might, upon ordinaryoccasions, very well defray all the necessary expenses of government. 

In the present state of the greater part of the civilized monarchiesof Europe, the rent of all the lands in the country, managed as theyprobably would be, if they all belonged to one proprietor, would scarce, perhaps, amount to the ordinary revenue which they levy upon the peopleeven in peaceable times. The ordinary revenue of Great Britain, forexample, including not only what is necessary for defraying the currentexpense of the year, but for paying the interest of the public debts, and for sinking a part of the capital of those debts, amounts to upwardsof ten millions a-year. But the land tax, at four shillings in thepound, falls short of two millions a-year. This land tax, as it iscalled however, is supposed to be one-fifth, not only of the rent of allthe land, but of that of all the houses, and of the interest of all thecapital stock of Great Britain, that part of it only excepted whichis either lent to the public, or employed as farming stock in thecultivation of land. A very considerable part of the produce of this taxarises from the rent of houses and the interest of capital stock. Theland tax of the city of London, for example, at four shillings in thepound, amounts to £123, 399: 6: 7; that of the city of Westminster to£63, 092: 1: 5; that of the palaces of Whitehall and St. James's, to£30, 754: 6: 3. A certain proportion of the land tax is, in the samemanner, assessed upon all the other cities and towns corporate in thekingdom; and arises almost altogether, either from the rent of houses, or from what is supposed to be the interest of trading and capitalstock. According to the estimation, therefore, by which Great Britain israted to the land tax, the whole mass of revenue arising from the rentof all the lands, from that of all the houses, and from the interestof all the capital stock, that part of it only excepted which is eitherlent to the public, or employed in the cultivation of land, doesnot exceed ten millions sterling a-year, the ordinary revenue whichgovernment levies upon the people, even in peaceable times. Theestimation by which Great Britain is rated to the land tax is, no doubt, taking the whole kingdom at an average, very much below the real value;though in several particular counties and districts it is said to benearly equal to that value. The rent of the lands alone, exclusive ofthat of houses and of the interest of stock, has by many people beenestimated at twenty millions; an estimation made in a great measure atrandom, and which, I apprehend, is as likely to be above as below thetruth. But if the lands of Great Britain, in the present state of theircultivation, do not afford a rent of more than twenty millions a-year, they could not well afford the half, most probably not the fourth partof that rent, if they all belonged to a single proprietor, and were putunder the negligent, expensive, and oppressive management of his factorsand agents. The crown lands of Great Britain do not at present affordthe fourth part of the rent which could probably be drawn from them ifthey were the property of private persons. If the crown lands were moreextensive, it is probable, they would be still worse managed. 

The revenue which the great body of the people derives from land is, inproportion, not to the rent, but to the produce of the land. The wholeannual produce of the land of every country, if we except what isreserved for seed, is either annually consumed by the great body ofthe people, or exchanged for something else that is consumed bythem. Whatever keeps down the produce of the land below what it wouldotherwise rise to, keeps down the revenue of the great body of thepeople, still more than it does that of the proprietors of land. The rent of land, that portion of the produce which belongs to theproprietors, is scarce anywhere in Great Britain supposed to be morethan a third part of the whole produce. If the land which, in one stateof cultivation, affords a revenue of ten millions sterling a-year, wouldin another afford a rent of twenty millions; the rent being, inboth cases, supposed a third part of the produce, the revenue of theproprietors would be less than it otherwise might be, by ten millionsa-year only; but the revenue of the great hotly of the people would beless than it otherwise might be, by thirty millions a-year, deductingonly what would be necessary for seed. The population of the countrywould be less by the number of people which thirty millions a-year, deducting always the seed, could maintain, according to the particularmode of living, and expense which might take place in the differentranks of men, among whom the remainder was distributed. 

Though there is not at present in Europe, any civilized state of anykind which derives the greater part of its public revenue from the rentof lands which are the property of the state; yet, in all the greatmonarchies of Europe, there are still many large tracts of land whichbelong to the crown. They are generally forest, and sometimes forestswhere, after travelling several miles, you will scarce find a singletree; a mere waste and loss of country, in respect both of produce andpopulation. In every great monarchy of Europe, the sale of the crownlands would produce a very large sum of money, which, if applied to thepayment of the public debts, would deliver from mortgage a much greaterrevenue than any which those lands have even afforded to the crown. In countries where lands, improved and cultivated very highly, andyielding, at the time of sale, as great a rent as can easily be gotfrom them, commonly sell at thirty years purchase; the unimproved, uncultivated, and low-rented crown lands, might well be expected to sellat forty, fifty, or sixty years purchase. The crown might immediatelyenjoy the revenue which this great price would redeem from mortgage. Inthe course of a few years, it would probably enjoy another revenue. Whenthe crown lands had become private property, they would, in the courseof a few years, become well improved and well cultivated. The increaseof their produce would increase the population of the country, byaugmenting the revenue and consumption of the people. But the revenuewhich the crown derives from the duties or custom and excise, wouldnecessarily increase with the revenue and consumption of the people. 

The revenue which, in any civilized monarchy, the crown derives fromthe crown lands, though it appears to cost nothing to individuals, inreality costs more to the society than perhaps any other equal revenuewhich the crown enjoys. It would, in all cases, be for the interest ofthe society, to replace this revenue to the crown by some other equalrevenue, and to divide the lands among the people, which could not wellbe done better, perhaps, than by exposing them to public sale. 

Lands, for the purposes of pleasure and magnificence, parks, gardens, public walks, etc. Possessions which are everywhere considered as causesof expense, not as sources of revenue, seem to be the only lands which, in a great and civilized monarchy, ought to belong to the crown. 

Public stock and public lands, therefore, the two sources of revenuewhich may peculiarly belong to the sovereign or commonwealth, being bothimproper and insufficient funds for defraying the necessary expense ofany great and civilized state; it remains that this expense must, thegreater part of it, be defrayed by taxes of one kind or another; thepeople contributing a part of their own private revenue, in order tomake up a public revenue to the sovereign or commonwealth. 

PART II. Of Taxes. 

The private revenue of individuals, it has been shown in the first bookof this Inquiry, arises, ultimately from three different sources; rent, profit, and wages. Every tax must finally be paid from some one orother of those three different sources of revenue, or from all of themindifferently. I shall endeavour to give the best account I can, first, of those taxes which, it is intended should fall upon rent; secondly, ofthose which, it is intended should fall upon profit; thirdly, of thosewhich, it is intended should fall upon wages; and fourthly, of thosewhich, it is intended should fall indifferently upon all those threedifferent sources of private revenue. The particular consideration ofeach of these four different sorts of taxes will divide the second partof the present chapter into four articles, three of which will requireseveral other subdivisions. Many of these taxes, it will appear fromthe following review, are not finally paid from the fund, or source ofrevenue, upon which it is intended they should fall. 

Before I enter upon the examination of particular taxes, it is necessaryto premise the four following maximis with regard to taxes in general. 

1. The subjects of every state ought to contribute towards the supportof the government, as nearly as possible, in proportion to theirrespective abilities; that is, in proportion to the revenue which theyrespectively enjoy under the protection of the state. The expense ofgovernment to the individuals of a great nation, is like the expense ofmanagement to the joint tenants of a great estate, who are all obligedto contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim, consists what is called theequality or inequality of taxation. Every tax, it must be observed oncefor all, which falls finally upon one only of the three sorts of revenueabove mentioned, is necessarily unequal, in so far as it does not affectthe other two. In the following examination of different taxes, I shallseldom take much farther notice of this sort of inequality; but shall, in most cases, confine my observations to that inequality which isoccasioned by a particular tax falling unequally upon that particularsort of private revenue which is affected by it. 

2. The tax which each individual is bound to pay, ought to be certainand not arbitrary. The time of payment, the manner of payment, thequantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subjectto the tax is put more or less in the power of the tax-gatherer, who caneither aggravate the tax upon any obnoxious contributor, or extort, bythe terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence, and favours thecorruption, of an order of men who are naturally unpopular, even wherethey are neither insolent nor corrupt. The certainty of what eachindividual ought to pay is, in taxation, a matter of so greatimportance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great anevil as a very small degree of uncertainty. 

3. Every tax ought to be levied at the time, or in the manner, in whichit is most likely to be convenient for the contributor to pay it. A taxupon the rent of land or of houses, payable at the same term at whichsuch rents are usually paid, is levied at the time when it is mostlikely to be convenient for the contributor to pay; or when he is mostlikely to have wherewithall to pay. Taxes upon such consumable goodsas are articles of luxury, are all finally paid by the consumer, andgenerally in a manner that is very convenient for him. He pays themby little and little, as he has occasion to buy the goods. As he is atliberty too, either to buy or not to buy, as he pleases, it must be hisown fault if he ever suffers any considerable inconveniency from suchtaxes. 

4. Every tax ought to be so contrived, as both to take out and to keepout of the pockets of the people as little as possible, over and abovewhat it brings into the public treasury of the state. A tax may eithertake out or keep out of the pockets of the people a great deal more thanit brings into the public treasury, in the four following ways. First, the levying of it may require a great number of officers, whose salariesmay eat up the greater part of the produce of the tax, and whoseperquisites may impose another additional tax upon the people. Secondly, it may obstruct the industry of the people, and discourage them fromapplying to certain branches of business which might give maintenanceand employment to great multitudes. While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which mightenable them more easily to do so. Thirdly, by the forfeitures andother penalties which those unfortunate individuals incur, who attemptunsuccessfully to evade the tax, it may frequently ruin them, andthereby put an end to the benefit which the community might havereceived from the employment of their capitals. An injudicious taxoffers a great temptation to smuggling. But the penalties of smugglingmust arise in proportion to the temptation. The law, contrary to all theordinary principles of justice, first creates the temptation, and thenpunishes those who yield to it; and it commonly enhances the punishment, too, in proportion to the very circumstance which ought certainly toalleviate it, the temptation to commit the crime. {See Sketches of theHistory of Man page 474, and Seq. } Fourthly, by subjecting the people tothe frequent visits and the odious examination of the tax-gatherers, itmay expose them to much unnecessary trouble, vexation, and oppression;and though vexation is not, strictly speaking, expense, it is certainlyequivalent to the expense at which every man would be willing to redeemhimself from it. It is in some one or other of these four differentways, that taxes are frequently so much more burdensome to the peoplethan they are beneficial to the sovereign. 

The evident justice and utility of the foregoing maxims have recommendedthem, more or less, to the attention of all nations. All nations haveendeavoured, to the best of their judgment, to render their taxesas equal as they could contrive; as certain, as convenient to thecontributor, both the time and the mode of payment, and in proportionto the revenue which they brought to the prince, as little burdensometo the people. The following short review of some of the principal taxeswhich have taken place in different ages and countries, will show, thatthe endeavours of all nations have not in this respect been equallysuccessful. 

ARTICLE I. --Taxes upon Rent--Taxes upon the Rent of Land. 

A tax upon the rent of land may either be imposed according to a certaincanon, every district being valued at a curtain rent, which valuation isnot afterwards to be altered; or it may be imposed in such a manner, asto vary with every variation in the real rent of the land, and to riseor fall with the improvement or declension of its cultivation. 

A land tax which, like that of Great Britain, is assessed upon eachdistrict according to a certain invariable canon, though it shouldbe equal at the time of its first establishment, necessarily becomesunequal in process of time, according to the unequal degrees ofimprovement or neglect in the cultivation of the different parts of thecountry. In England, the valuation, according to which the differentcounties and parishes were assessed to the land tax by the 4th ofWilliam and Mary, was very unequal even at its first establishment. This tax, therefore, so far offends against the first of the four maximsabove mentioned. It is perfectly agreeable to the other three. It isperfectly certain. The time of payment for the tax, being the same asthat for the rent, is as convenient as it can be to the contributor. Though the landlord is, in all cases, the real contributor, the taxis commonly advanced by the tenant, to whom the landlord is obligedto allow it in the payment of the rent. This tax is levied by a muchsmaller number of officers than any other which affords nearly the samerevenue. As the tax upon each district does not rise with the rise ofthe rent, the sovereign does not share in the profits of the landlord'simprovements. Those improvements sometimes contribute, indeed, to thedischarge of the other landlords of the district. But the aggravation ofthe tax, which this may sometimes occasion upon a particular estate, isalways so very small, that it never can discourage those improvements, nor keep down the produce of the land below what it would otherwise riseto. As it has no tendency to diminish the quantity, it can have none toraise the price of that produce. It does not obstruct the industry ofthe people; it subjects the landlord to no other inconveniency besidesthe unavoidable one of paying the tax. The advantage, however, which theland-lord has derived from the invariable constancy of the valuation, bywhich all the lands of Great Britain are rated to the land-tax, has beenprincipally owing to some circumstances altogether extraneous to thenature of the tax. 

It has been owing in part, to the great prosperity of almost every partof the country, the rents of almost all the estates of Great Britainhaving, since the time when this valuation was first established, beencontinually rising, and scarce any of them having fallen. The landlords, therefore, have almost all gained the difference between the tax whichthey would have paid, according to the present rent of their estates, and that which they actually pay according to the ancient valuation. Had the state of the country been different, had rents been graduallyfalling in consequence of the declension of cultivation, the landlordswould almost all have lost this difference. In the state of things whichhas happened to take place since the revolution, the constancy of thevaluation has been advantageous to the landlord and hurtful tothe sovereign. In a different state of things it might have beenadvantageous to the sovereign and hurtful to the landlord. 

As the tax is made payable in money, so the valuation of the land isexpressed in money. Since the establishment of this valuation, the valueof silver has been pretty uniform, and there has been no alteration inthe standard of the coin, either as to weight or fineness. Had silverrisen considerably in its value, as it seems to have done in the courseof the two centuries which preceded the discovery of the minesof America, the constancy of the valuation might have proved veryoppressive to the landlord. Had silver fallen considerably in its value, as it certainly did for about a century at least after the discoveryof those mines, the same constancy of valuation would have reduced verymuch this branch of the revenue of the sovereign. Had any considerablealteration been made in the standard of the money, either by sinking thesame quantity of silver to a lower denomination, or by raising it toa higher; had an ounce of silver, for example, instead of being coinedinto five shillings and two pence, been coined either into pieces whichbore so low a denomination as two shillings and seven pence, or intopieces which bore so high a one as ten shillings and four pence, itwould, in the one case, have hurt the revenue of the proprietor, in theother that of the sovereign. 

In circumstances, therefore, somewhat different from those which haveactually taken place, this constancy of valuation might have been a verygreat inconveniency, either to the contributors or to the commonwealth. In the course of ages, such circumstances, however, must at some time orother happen. But though empires, like all the other works of men, haveall hitherto proved mortal, yet every empire aims at immortality. Everyconstitution, therefore, which it is meant should be as permanent asthe empire itself, ought to be convenient, not in certain circumstancesonly, but in all circumstances; or ought to be suited, not to thosecircumstances which are transitory, occasional, or accidental, but tothose which are necessary, and therefore always the same. 

A tax upon the rent of land, which varies with every variation of therent, or which rises and falls according to the improvement or neglectof cultivation, is recommended by that sect of men of letters in France, who call themselves the economists, as the most equitable of all taxes. All taxes, they pretend, fall ultimately upon the rent of land, andought, therefore, to be imposed equally upon the fund which must finallypay them. That all taxes ought to fall as equally as possible uponthe fund which must finally pay them, is certainly true. But withoutentering into the disagreeable discussion of the metaphysical argumentsby which they support their very ingenious theory, it will sufficientlyappear, from the following review, what are the taxes which fall finallyupon the rent of the land, and what are those which fall finally uponsome other fund. 

In the Venetian territory, all the arable lands which are given in leaseto farmers are taxed at a tenth of the rent. {Memoires concernant lesDroits, p. 240, 241. } The leases are recorded in a public register, which is kept by the officers of revenue in each province or district. When the proprietor cultivates his own lands, they are valued accordingto an equitable estimation, and he is allowed a deduction of one-fifthof the tax; so that for such land he pays only eight instead of ten percent. Of the supposed rent. 

A land-tax of this kind is certainly more equal than the land-taxof England. It might not, perhaps, be altogether so certain, and theassessment of the tax might frequently occasion a good deal more troubleto the landlord. It might, too, be a good deal more expensive in thelevying. 

Such a system of administration, however, might, perhaps, be contrived, as would in a great measure both prevent this uncertainty, and moderatethis expense. 

The landlord and tenant, for example, might jointly be obliged to recordtheir lease in a public register. Proper penalties might be enactedagainst concealing or misrepresenting any of the conditions; and ifpart of those penalties were to be paid to either of the two partieswho informed against and convicted the other of such concealment ormisrepresentation, it would effectually deter them from combiningtogether in order to defraud the public revenue. All the conditions ofthe lease might be sufficiently known from such a record. 

Some landlords, instead of raising the rent, take a fine for the renewalof the lease. This practice is, in most cases, the expedient of aspendthrift, who, for a sum of ready money sells a future revenue ofmuch greater value. It is, in most cases, therefore, hurtful to thelandlord; it is frequently hurtful to the tenant; and it is alwayshurtful to the community. It frequently takes from the tenant so greata part of his capital, and thereby diminishes so much his ability tocultivate the land, that he finds it more difficult to pay a smallrent than it would otherwise have been to pay a great one. Whateverdiminishes his ability to cultivate, necessarily keeps down, below whatit would otherwise have been, the most important part of the revenue ofthe community. By rendering the tax upon such fines a good deal heavierthan upon the ordinary rent, this hurtful practice might be discouraged, to the no small advantage of all the different parties concerned, of thelandlord, of the tenant, of the sovereign, and of the whole community. 

Some leases prescribe to the tenant a certain mode of cultivation, and acertain succession of crops, during the whole continuance of the lease. This condition, which is generally the effect of the landlord'sconceit of his own superior knowledge (a conceit in most cases veryill-founded), ought always to be considered as an additional rent, as arent in service, instead of a rent in money. In order to discourage thepractice, which is generally a foolish one, this species of rent mightbe valued rather high, and consequently taxed somewhat higher thancommon money-rents. 

Some landlords, instead of a rent in money, require a rent in kind, incorn, cattle, poultry, wine, oil, etc. ; others, again, require a rentin service. Such rents are always more hurtful to the tenant thanbeneficial to the landlord. They either take more, or keep more outof the pocket of the former, than they put into that of the latter. Inevery country where they take place, the tenants are poor and beggarly, pretty much according to the degree in which they take place. Byvaluing, in the same manner, such rents rather high, and consequentlytaxing them somewhat higher than common money-rents, a practice whichis hurtful to the whole community, might, perhaps, be sufficientlydiscouraged. 

When the landlord chose to occupy himself a part of his own lands, the rent might be valued according to an equitable arbitration of thefarmers and landlords in the neighbourhood, and a moderate abatement ofthe tax might be granted to him, in the same manner as in the Venetianterritory, provided the rent of the lands which he occupied did notexceed a certain sum. It is of importance that the landlord should beencouraged to cultivate a part of his own land. His capital is generallygreater than that of the tenant, and, with less skill, he can frequentlyraise a greater produce. The landlord can afford to try experiments, andis generally disposed to do so. His unsuccessful experiments occasiononly a moderate loss to himself. His successful ones contribute to theimprovement and better cultivation of the whole country. It might be ofimportance, however, that the abatement of the tax should encouragehim to cultivate to a certain extent only. If the landlords should, thegreater part of them, be tempted to farm the whole of their own lands, the country (instead of sober and industrious tenants, who are bound bytheir own interest to cultivate as well as their capital and skill willallow them) would be filled with idle and profligate bailiffs, whoseabusive management would soon degrade the cultivation, and reduce theannual produce of the land, to the diminution, not only of the revenueof their masters, but of the most important part of that of the wholesociety. 

Such a system of administration might, perhaps, free a tax of this kindfrom any degree of uncertainty, which could occasion either oppressionor inconveniency to the contributor; and might, at the same time, serveto introduce into the common management of land such a plan of policyas might contribute a good deal to the general improvement and goodcultivation of the country. 

The expense of levying a land-tax, which varied with every variation ofthe rent, would, no doubt, be somewhat greater than that of levying onewhich was always rated according to a fixed valuation. Some additionalexpense would necessarily be incurred, both by the differentregister-offices which it would be proper to establish in the differentdistricts of the country, and by the different valuations which mightoccasionally be made of the lands which the proprietor chose to occupyhimself. The expense of all this, however, might be very moderate, andmuch below what is incurred in the levying of many other taxes, whichafford a very inconsiderable revenue in comparison of what might easilybe drawn from a tax of this kind. 

The discouragement which a variable land-tax of this kind might give tothe improvement of land, seems to be the most important objection whichcan be made to it. The landlord would certainly be less disposed toimprove, when the sovereign, who contributed nothing to the expense, wasto share in the profit of the improvement. Even this objection might, perhaps, be obviated, by allowing the landlord, before he began hisimprovement, to ascertain, in conjunction with the officers of revenue, the actual value of his lands, according to the equitable arbitration ofa certain number of landlords and farmers in the neighbourhood, equallychosen by both parties: and by rating him, according to this valuation, for such a number of years as might be fully sufficient for his completeindemnification. To draw the attention of the sovereign towards theimprovement of the land, from a regard to the increase of his ownrevenue, is one or the principal advantages proposed by this species ofland-tax. The term, therefore, allowed, for the indemnification of thelandlord, ought not to be a great deal longer than what was necessaryfor that purpose, lest the remoteness of the interest should discouragetoo much this attention. It had better, however, be somewhat too long, than in any respect too short. No incitement to the attention of thesovereign can ever counterbalance the smallest discouragement to that ofthe landlord. The attention of the sovereign can be, at best, but a verygeneral and vague consideration of what is likely to contribute to thebetter cultivation of the greater part of his dominions. The attentionof the landlord is a particular and minute consideration of what islikely to be the most advantageous application of every inch of groundupon his estate. The principal attention of the sovereign ought to be, to encourage, by every means in his power, the attention both ofthe landlord and of the farmer, by allowing both to pursue their owninterest in their own way, and according to their own judgment; bygiving to both the most perfect security that they shall enjoy the fullrecompence of their own industry; and by procuring to both the mostextensive market for every part of their produce, in consequence ofestablishing the easiest and safest communications, both by land andby water, through every part of his own dominions, as well as the mostunbounded freedom of exportation to the dominions of all other princes. 

If, by such a system of administration, a tax of this kind could be somanaged as to give, not only no discouragement, but, on the contrary, some encouragement to the improvement or land, it does not appear likelyto occasion any other inconveniency to the landlord, except always theunavoidable one of being obliged to pay the tax. In all the variationsof the state of the society, in the improvement and in the declensionof agriculture; in all the variations in the value of silver, and in allthose in the standard of the coin, a tax of this kind would, of its ownaccord, and without any attention of government, readily suit itself tothe actual situation of things, and would be equally just and equitablein all those different changes. It would, therefore, be much more properto be established as a perpetual and unalterable regulation, or as whatis called a fundamental law of the commonwealth, than any tax which wasalways to be levied according to a certain valuation. 

Some states, instead of the simple and obvious expedient of a registerof leases, have had recourse to the laborious and expensive one of anactual survey and valuation of all the lands in the country. They havesuspected, probably, that the lessor and lessee, in order to defraud thepublic revenue, might combine to conceal the real terms of the lease. Doomsday-book seems to have been the result of a very accurate survey ofthis kind. 

In the ancient dominions of the king of Prussia, the land-tax isassessed according to an actual survey and valuation, which is reviewedand altered from time to time. {Memoires concurent les Droits, etc. Tom, i. P. 114, 115, 116, etc. } According to that valuation, the layproprietors pay from twenty to twenty-five per cent. Of their revenue;ecclesiastics from forty to forty-five per cent. The survey andvaluation of Silesia was made by order of the present king, it is said, with great accuracy. According to that valuation, the lands belonging tothe bishop of Breslaw are taxed at twenty-five per cent. Of their rent. The other revenues of the ecclesiastics of both religions at fifty percent. The commanderies of the Teutonic order, and of that of Malta, at forty per cent. Lands held by a noble tenure, at thirty-eight andone-third per cent. Lands held by a base tenure, at thirty-five andone-third per cent. 

The survey and valuation of Bohemia is said to have been the work ofmore than a hundred years. It was not perfected till after the peace of1748, by the orders of the present empress queen. {Id. Tom i. P. 85, 84. }The survey of the duchy of Milan, which was begun in the time of CharlesVI. , was not perfected till after 1760 It is esteemed one of the mostaccurate that has ever been made. The survey of Savoy and Piedmont wasexecuted under the orders of the late king of Sardinia. {Id. P. 280, etc. ; also p, 287. Etc. To 316. }

In the dominions of the king of Prussia, the revenue of the churchis taxed much higher than that of lay proprietors. The revenue of thechurch is, the greater part of it, a burden upon the rent of land. Itseldom happens that any part of it is applied towards the improvementof land; or is so employed as to contribute, in any respect, towardsincreasing the revenue of the great body of the people. His Prussianmajesty had probably, upon that account, thought it reasonable that itshould contribute a good deal more towards relieving the exigencies ofthe state. In some countries, the lands of the church are exempted fromall taxes. In others, they are taxed more lightly than other lands. Inthe duchy of Milan, the lands which the church possessed before 1575, are rated to the tax at a third only or their value. 

In Silesia, lands held by a noble tenure are taxed three per cent. Higher than those held by a base tenure. The honours and privileges ofdifferent kinds annexed to the former, his Prussian majesty had probablyimagined, would sufficiently compensate to the proprietor a smallaggravation of the tax; while, at the same time, the humiliatinginferiority of the latter would be in some measure alleviated, by beingtaxed somewhat more lightly. In other countries, the system of taxation, instead of alleviating, aggravates this inequality. In the dominions ofthe king of Sardinia, and in those provinces of France which are subjectto what is called the real or predial taille, the tax falls altogetherupon the lands held by a base tenure. Those held by a noble one areexempted. 

A land tax assessed according to a general survey and valuation, howequal soever it may be at first, must, in the course of a very moderateperiod of time, become unequal. To prevent its becoming so would requirethe continual and painful attention of government to all the variationsin the state and produce of every different farm in the country. Thegovernments of Prussia, of Bohemia, of Sardinia, and of the duchyof Milan, actually exert an attention of this kind; an attention sounsuitable to the nature of government, that it is not likely to be oflong continuance, and which, if it is continued, will probably, in thelong-run, occasion much more trouble and vexation than it can possiblybring relief to the contributors. 

In 1666, the generality of Montauban was assessed to the real or predialtaille, according, it is said, to a very exact survey and valuation. {Memoires concernant les Droits, etc. Tom. Ii p. 139, etc. } By 1727, this assessment had become altogether unequal. In order to remedy thisinconveniency, government has found no better expedient, than to imposeupon the whole generality an additional tax of a hundred and twentythousand livres. This additional tax is rated upon all the differentdistricts subject to the taille according to the old assessment. But itis levied only upon those which, in the actual state of things, are bythat assessment under-taxed; and it is applied to the relief of thosewhich, by the same assessment, are over-taxed. Two districts, forexample, one of which ought, in the actual state of things, to be taxedat nine hundred, the other at eleven hundred livres, are, by the oldassessment, both taxed at a thousand livres. Both these districts are, by the additional tax, rated at eleven hundred livres each. But thisadditional tax is levied only upon the district under-charged, and it isapplied altogether to the relief of that overcharged, which consequentlypays only nine hundred livres. The government neither gains nor losesby the additional tax, which is applied altogether to remedy theinequalities arising from the old assessment. The application is prettymuch regulated according to the discretion of the intendant of thegenerality, and must, therefore, be in a great measure arbitrary. 

Taxes which are proportioned, not in the Rent, but to the Produce ofLand. 

Taxes upon the produce of land are, In reality, taxes upon the rent; andthough they may be originally advanced by the farmer, are finally paidby the landlord. When a certain portion of the produce is to be paidaway for a tax, the farmer computes as well as he can, what the valueof this portion is, one year with another, likely to amount to, and hemakes a proportionable abatement in the rent which he agrees to pay tothe landlord. There is no farmer who does not compute beforehand whatthe church tythe, which is a land tax of this kind, is, one year withanother, likely to amount to. 

The tythe, and every other land tax of this kind, under the appearanceof perfect equality, are very unequal taxes; a certain portion of theproduce being in differrent situations, equivalent to a very differentportion of the rent. In some very rich lands, the produce is so great, that the one half of it is fully sufficient to replace to the farmer hiscapital employed in cultivation, together with the ordinary profits offarming stock in the neighbourhood. The other half, or, what comes tothe same thing, the value of the other half, he could afford to payas rent to the landlord, if there was no tythe. But if a tenth ofthe produce is taken from him in the way of tythe, he must require anabatement of the fifth part of his rent, otherwise he cannot get backhis capital with the ordinary profit. In this case, the rent of thelandlord, instead of amounting to a half, or five-tenths of the wholeproduce, will amount only to four-tenths of it. In poorer lands, onthe contrary, the produce is sometimes so small, and the expense ofcultivation so great, that it requires four-fifths of the whole produce, to replace to the farmer his capital with the ordinary profit. In thiscase, though there was no tythe, the rent of the landlord could amountto no more than one-fifth or two-tenths of the whole produce. But ifthe farmer pays one-tenth of the produce in the way of tythe, he mustrequire an equal abatement of the rent of the landlord, which will thusbe reduced to one-tenth only of the whole produce. Upon the rent of richlands the tythe may sometimes be a tax of no more than one-fifth part, or four shillings in the pound; whereas upon that of poorer lands, itmay sometimes be a tax of one half, or of ten shillings in the pound. 

The tythe, as it is frequently a very unequal tax upon the rent, soit is always a great discouragement, both to the improvements of thelandlord, and to the cultivation of the farmer. The one cannot ventureto make the most important, which are generally the most expensiveimprovements; nor the other to raise the most valuable, which aregenerally, too, the most expensive crops; when the church, which laysout no part of the expense, is to share so very largely in the profit. The cultivation of madder was, for a long time, confined by the tythe tothe United Provinces, which, being presbyterian countries, and upon thataccount exempted from this destructive tax, enjoyed a sort of monopolyof that useful dyeing drug against the rest of Europe. The late attemptsto introduce the culture of this plant into England, have been made onlyin consequence of the statute, which enacted that five shillings an acreshould be received in lieu of all manner of tythe upon madder. 

As through the greater part of Europe, the church, so in many differentcountries of Asia, the state, is principally supported by a land tax, proportioned not to the rent, but to the produce of the land. In China, the principal revenue of the sovereign consists in a tenth part of theproduce of all the lands of the empire. This tenth part, however, isestimated so very moderately, that, in many provinces, it is said notto exceed a thirtieth part of the ordinary produce. The land tax or landrent which used to be paid to the Mahometan government of Bengal, beforethat country fell into the hands of the English East India company, issaid to have amounted to about a fifth part of the produce. The land taxof ancient Egypt is said likewise to have amounted to a fifth part. 

In Asia, this sort of land tax is said to interest the sovereign in theimprovement and cultivation of land. The sovereigns of China, those ofBengal while under the Mahometan govermnent, and those of ancient Egypt, are said, accordingly, to have been extremely attentive to the makingand maintaining of good roads and navigable canals, in order toincrease, as much as possible, both the quantity and value of every partof the produce of the land, by procuring to every part of it the mostextensive market which their own dominions could afford. The tytheof the church is divided into such small portions that no one of itsproprietors can have any interest of this kind. The parson of a parishcould never find his account, in making a road or canal to a distantpart of the country, in order to extend the market for the produce ofhis own particular parish. Such taxes, when destined for the maintenanceof the state, have some advantages, which may serve in some measure tobalance their inconveniency. When destined for the maintenance of thechurch, they are attended with nothing but inconveniency. 

Taxes upon the produce of land may be levied, either in kind, or, according to a certain valuation in money. 

The parson of a parish, or a gentleman of small fortune who lives uponhis estate, may sometimes, perhaps find some advantage in receiving, the one his tythe, and the other his rent, in kind. The quantity to becollected, and the district within which it is to be collected, are sosmall, that they both can oversee, with their own eyes, the collectionand disposal of every part of what is due to them. A gentleman of greatfortune, who lived in the capital, would be in danger of suffering muchby the neglect, and more by the fraud, of his factors and agents, if therents of an estate in a distant province were to be paid to him in thismanner. The loss of the sovereign, from the abuse and depredation of histax-gatherers, would necessarily be much greater. The servants of themost careless private person are, perhaps, more under the eye of theirmaster than those of the most careful prince; and a public revenue, which was paid in kind, would suffer so much from the mismanagementof the collectors, that a very small part of what was levied upon thepeople would ever arrive at the treasury of the prince. Some part of thepublic revenue of China, however, is said to be paid in this manner. Themandarins and other tax-gatherers will, no doubt, find their advantagein continuing the practice of a payment, which is so much more liable toabuse than any payment in money. 

A tax upon the produce of land, which is levied in money, may be levied, either according to a valuation, which varies with all the variations ofthe market price; or according to a fixed valuation, a bushel of wheat, for example, being always valued at one and the same money price, whatever may be the state of the market. The produce of a tax levied inthe former way will vary only according to the variations in thereal produce of the land, according to the improvement or neglect ofcultivation. The produce of a tax levied in the latter way will vary, not only according to the variations in the produce of the land, butaccording both to those in the value of the precious metals, and thosein the quantity of those metals which is at different times containedin coin of the same denomination. The produce of the former will alwaysbear the same proportion to the value of the real produce of the land. The produce of the latter may, at different times, bear very differentproportions to that value. 

When, instead either of a certain portion of the produce of land, or ofthe price of a certain portion, a certain sum of money is to be paid infull compensation for all tax or tythe; the tax becomes, in this case, exactly of the same nature with the land tax of England. It neitherrises nor falls with the rent of the land. It neither encourages nordiscourages improvement. The tythe in the greater part of those parisheswhich pay what is called a modus, in lieu of all other tythe is a taxof this kind. During the Mahometan government of Bengal, instead of thepayment in kind of the fifth part of the produce, a modus, and, it issaid, a very moderate one, was established in the greater part of thedistricts or zemindaries of the country. Some of the servants of theEast India company, under pretence of restoring the public revenue toits proper value, have, in some provinces, exchanged this modus for apayment in kind. Under their management, this change is likely both todiscourage cultivation, and to give new opportunities for abuse in thecollection of the public revenue, which has fallen very much below whatit was said to have been when it first fell under the management of thecompany. The servants of the company may, perhaps, have profited by thechange, but at the expense, it is probable, both of their masters and ofthe country. 

Taxes upon the Rent of Houses. 

The rent of a house may be distinguished into two parts, of which theone may very properly be called the building-rent; the other is commonlycalled the ground-rent. 

The building-rent is the interest or profit of the capital expended inbuilding the house. In order to put the trade of a builder upon a levelwith other trades, it is necessary that this rent should be sufficient, first, to pay him the same interest which he would have got for hiscapital, if he had lent it upon good security; and, secondly, to keepthe house in constant repair, or, what comes to the same thing, toreplace, within a certain term of years, the capital which had beenemployed in building it. The building-rent, or the ordinary profit ofbuilding, is, therefore, everywhere regulated by the ordinary interestof money. Where the market rate of interest is four per cent. The rentof a house, which, over and above paying the ground-rent, affords sixor six and a-half per cent. Upon the whole expense of building, may, perhaps, afford a sufficient profit to the builder. Where the marketrate of interest is five per cent. It may perhaps require seven or sevenand a half per cent. If, in proportion to the interest of money, thetrade of the builders affords at any time much greater profit than this, it will soon draw so much capital from other trades as will reduce theprofit to its proper level. If it affords at any time much less thanthis, other trades will soon draw so much capital from it as will againraise that profit. 

Whatever part of the whole rent of a house is over and above what issufficient for affording this reasonable profit, naturally goes to theground-rent; and, where the owner of the ground and the owner of thebuilding are two different persons, is, in most cases, completely paidto the former. This surplus rent is the price which the inhabitant ofthe house pays for some real or supposed advantage of the situation. Incountry houses, at a distance from any great town, where there is plentyof ground to chuse upon, the ground-rent is scarce anything, or no morethan what the ground which the house stands upon would pay, if employedin agriculture. In country villas, in the neighbourhood of some greattown, it is sometimes a good deal higher; and the peculiar conveniencyor beauty of situation is there frequently very well paid for. Ground-rents are generally highest in the capital, and in thoseparticular parts of it where there happens to be the greatest demandfor houses, whatever be the reason of that demand, whether for trade andbusiness, for pleasure and society, or for mere vanity and fashion. 

A tax upon house-rent, payable by the tenant, and proportioned to thewhole rent of each house, could not, for any considerable time at least, affect the building-rent. If the builder did not get his reasonableprofit, he would be obliged to quit the trade; which, by raising thedemand for building, would, in a short time, bring back his profit toits proper level with that of other trades. Neither would such a taxfall altogether upon the ground-rent; but it would divide itself in sucha manner, as to fall partly upon the inhabitant of the house, and partlyupon the owner of the ground. 

Let us suppose, for example, that a particular person judges that hecan afford for house-rent all expense of sixty pounds a-year; and letus suppose, too, that a tax of four shillings in the pound, or ofone-fifth, payable by the inhabitant, is laid upon house-rent. A houseof sixty pounds rent will, in that case, cost him seventy-two poundsa-year, which is twelve pounds more than he thinks he can afford. Hewill, therefore, content himself with a worse house, or a house of fiftypounds rent, which, with the additional ten pounds that he must pay forthe tax, will make up the sum of sixty pounds a-year, the expense whichhe judges he can afford, and, in order to pay the tax, he will give up apart of the additional conveniency which he might have had from a houseof ten pounds a-year more rent. He will give up, I say, a part of thisadditional conveniency; for he will seldom be obliged to give up thewhole, but will, in consequence of the tax, get a better house for fiftypounds a-year, than he could have got if there had been no tax for asa tax of this kind, by taking away this particular competitor, mustdiminish the competition for houses of sixty pounds rent, so it mustlikewise diminish it for those of fifty pounds rent, and in the samemanner for those of all other rents, except the lowest rent, for whichit would for some time increase the competition. But the rents ofevery class of houses for which the competition was diminished, wouldnecessarily be more or less reduced. As no part of this reduction, however, could for any considerable time at least, affect thebuilding-rent, the whole of it must, in the long-run, necessarily fallupon the ground-rent. The final payment of this tax, therefore, wouldfall partly upon the inhabitant of the house, who, in order to pay hisshare, would be obliged to give up a part of his conveniency; and partlyupon the owner of the ground, who, in order to pay his share, would beobliged to give up a part of his revenue. In what proportion this finalpayment would be divided between them, it is not, perhaps, very easy toascertain. The division would probably be very different in differentcircumstances, and a tax of this kind might, according to thosedifferent circumstances, affect very unequally, both the inhabitant ofthe house and the owner of the ground. 

The inequality with which a tax of this kind might fall upon the ownersof different ground-rents, would arise altogether from the accidentalinequality of this division. But the inequality with which it might fallupon the inhabitants of different houses, would arise, not onlyfrom this, but from another cause. The proportion of the expense ofhouse-rent to the whole expense of living, is different in the differentdegrees of fortune. It is, perhaps, highest in the highest degree, andit diminishes gradually through the inferior degrees, so as in generalto be lowest in the lowest degree. The necessaries of life occasion thegreat expense of the poor. They find it difficult to get food, andthe greater part of their little revenue is spent in getting it. Theluxuries and vanities of life occasion the principal expense of therich; and a magnificent house embellishes and sets off to the bestadvantage all the other luxuries and vanities which they possess. A taxupon house-rents, therefore, would in general fall heaviest upon therich; and in this sort of inequality there would not, perhaps, be anything very unreasonable It is not very unreasonable that the richshould contribute to the public expense, not only in proportion to theirrevenue, but something more than in that proportion. 

The rent of houses, though it in some respects resembles the rent ofland, is in one respect essentially different from it. The rent of landis paid for the use of a productive subject. The land which pays itproduces it. The rent of houses is paid for the use of an unproductivesubject. Neither the house, nor the ground which it stands upon, produceanything. The person who pays the rent, therefore, must draw it fromsome other source of revenue, distinct from and independent of thissubject. A tax upon the rent of houses, so far as it falls upon theinhabitants, must be drawn from the same source as the rent itself, and must be paid from their revenue, whether derived from the wages oflabour, the profits of stock, or the rent of land. So far as it fallsupon the inhabitants, it is one of those taxes which fall, not upon oneonly, but indifferently upon all the three different sources of revenue;and is, in every respect, of the same nature as a tax upon any othersort of consumable commodities. In general, there is not perhaps, any one article of expense or consumption by which the liberality ornarrowness of a man's whole expense can be better judged of than by hishouse-rent. A proportional tax upon this particular article of expensemight, perhaps, produce a more considerable revenue than any which hashitherto been drawn from it in any part of Europe. If the tax, indeed, was very high, the greater part of people would endeavour to evade it asmuch as they could, by contenting themselves with smaller houses, and byturning the greater part of their expense into some other channel. 

The rent of houses might easily be ascertained with sufficient accuracy, by a policy of the same kind with that which would be necessary forascertaining the ordinary rent of land. Houses not inhabited ought topay no tax. A tax upon them would fall altogether upon the proprietor, who would thus be taxed for a subject which afforded him neitherconveniency nor revenue. Houses inhabited by the proprietor ought tobe rated, not according to the expense which they might have cost inbuilding, but according to the rent which an equitable arbitration mightjudge them likely to bring if leased to a tenant. If rated according tothe expense which they might have cost in building, a tax of three orfour shillings in the pound, joined with other taxes, would ruin almostall the rich and great families of this, and, I believe, of every othercivilized country. Whoever will examine with attention the differenttown and country houses of some of the richest and greatest familiesin this country, will find that, at the rate of only six and a-half, orseven per cent. Upon the original expense of building, their house-rentis nearly equal to the whole neat rent of their estates. It is theaccumulated expense of several successive generations, laid out uponobjects of great beauty and magnificence, indeed, but, in proportionto what they cost, of very small exchangeable value. {Since thefirst publication of this book, a tax nearly upon the above-mentionedprinciples has been imposed. }

Ground-rents are a still more proper subject of taxation than the rentof houses. A tax upon ground-rents would not raise the rent of houses;it would fall altogether upon the owner of the ground-rent, who actsalways as a monopolist, and exacts the greatest rent which can be gotfor the use of his ground. More or less can be got for it, according asthe competitors happen to be richer or poorer, or can afford to gratifytheir fancy for a particular spot of ground at a greater or smallerexpense. In every country, the greatest number of rich competitors is inthe capital, and it is there accordingly that the highest ground-rentsare always to be found. As the wealth of those competitors would in norespect be increased by a tax upon ground-rents, they would not probablybe disposed to pay more for the use of the ground. Whether the tax wasto be advanced by the inhabitant or by the owner of the ground, would beof little importance. The more the inhabitant was obliged to pay for thetax, the less he would incline to pay for the ground; so that thefinal payment of the tax would fall altogether upon the owner of theground-rent. The ground-rents of uninhabited houses ought to pay notax. Both ground-rents, and the ordinary rent of land, are a speciesof revenue which the owner, in many cases, enjoys without any care orattention of his own. Though a part of this revenue should be taken fromhim in order to defray the expenses of the state, no discouragement willthereby be given to any sort of industry. The annual produce of the landand labour of the society, the real wealth and revenue of the greatbody of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land, are therefore, perhaps, thespecies of revenue which can best bear to have a peculiar tax imposedupon them. 

Ground-rents seem, in this respect, a more proper subject of peculiartaxation, than even the ordinary rent of land. The ordinary rent of landis, in many cases, owing partly, at least, to the attention and goodmanagement of the landlord. A very heavy tax might discourage, too much, this attention and good management. Ground-rents, so far as they exceedthe ordinary rent of land, are altogether owing to the good governmentof the sovereign, which, by protecting the industry either of the wholepeople or of the inhabitants of some particular place, enables them topay so much more than its real value for the ground which theybuild their houses upon; or to make to its owner so much more thancompensation for the loss which he might sustain by this use of it. Nothing can be more reasonable, than that a fund, which owes itsexistence to the good government of the state, should be taxedpeculiarly, or should contribute something more than the greater part ofother funds, towards the support of that government. 

Though, in many different countries of Europe, taxes have been imposedupon the rent of houses, I do not know of any in which ground-rents havebeen considered as a separate subject of taxation. The contrivers oftaxes have, probably, found some difficulty in ascertaining what part ofthe rent ought to be considered as ground-rent, and what part oughtto be considered as building-rent. It should not, however, seem verydifficult to distinguish those two parts of the rent from one another. 

In Great Britain the rent of houses is supposed to be taxed in the sameproportion as the rent of land, by what is called the annual land tax. The valuation, according to which each different parish and district isassessed to this tax, is always the same. It was originally extremelyunequal, and it still continues to be so. Through the greater part ofthe kingdom this tax falls still more lightly upon the rent ofhouses than upon that of land. In some few districts only, which wereoriginally rated high, and in which the rents of houses have fallenconsiderably, the land tax of three or four shillings in the poundis said to amount to an equal proportion of the real rent of houses. Untenanted houses, though by law subject to the tax, are, in mostdistricts, exempted from it by the favour of the assessors; and thisexemption sometimes occasions some little variation in the rate ofparticular houses, though that of the district is always the same. Improvements of rent, by new buildings, repairs, etc. Go to thedischarge of the district, which occasions still further variations inthe rate of particular houses. 

In the province of Holland, {Memoires concernant les Droits, etc. P. 223. } every house is taxed at two and a-half per cent. Of its value, without any regard, either to the rent which it actually pays, or to thecircumstance of its being tenanted or untenanted. There seems to bea hardship in obliging the proprietor to pay a tax for an untenantedhouse, from which he can derive no revenue, especially so very heavy atax. In Holland, where the market rate of interest does not exceed threeper cent. , two and a-half per cent. Upon the whole value of the housemust, in most cases, amount to more than a third of the building-rent, perhaps of the whole rent. The valuation, indeed, according to which thehouses are rated, though very unequal, is said to be always below thereal value. When a house is rebuilt, improved, or enlarged, there is anew valuation, and the tax is rated accordingly. 

The contrivers of the several taxes which in England have, at differenttimes, been imposed upon houses, seem to have imagined that there wassome great difficulty in ascertaining, with tolerable exactness, whatwas the real rent of every house. They have regulated their taxes, therefore, according to some more obvious circumstance, such as theyhad probably imagined would, in most cases, bear some proportion to therent. 

The first tax of this kind was hearth-money; or a tax of two shillingsupon every hearth. In order to ascertain how many hearths were in thehouse, it was necessary that the tax-gatherer should enter every roomin it. This odious visit rendered the tax odious. Soon after theRevolution, therefore, it was abolished as a badge of slavery. 

The next tax of this kind was a tax of two shillings upon everydwelling-house inhabited. A house with ten windows to pay four shillingsmore. A house with twenty windows and upwards to pay eight shillings. This tax was afterwards so far altered, that houses with twenty windows, and with less than thirty, were ordered to pay ten shillings, and thosewith thirty windows and upwards to pay twenty shillings. The number ofwindows can, in most cases, be counted from the outside, and, in allcases, without entering every room in the house. The visit of thetax-gatherer, therefore, was less offensive in this tax than in thehearth-money. 

This tax was afterwards repealed, and in the room of it was establishedthe window-tax, which has undergone two several alterations andaugmentations. The window tax, as it stands at present (January 1775), over and above the duty of three shillings upon every house in England, and of one shilling upon every house in Scotland, lays a duty upon everywindow, which in England augments gradually from twopence, the lowestrate upon houses with not more than seven windows, to two shillings, thehighest rate upon houses with twenty-five windows and upwards. 

The principal objection to all such taxes is their inequality; aninequality of the worst kind, as they must frequently fall much heavierupon the poor than upon the rich. A house of ten pounds rent in acountry town, may sometimes have more windows than a house of fivehundred pounds rent in London; and though the inhabitant of the formeris likely to be a much poorer man than that of the latter, yet, so faras his contribution is regulated by the window tax, he must contributemore to the support of the state. Such taxes are, therefore, directlycontrary to the first of the four maxims above mentioned. They do notseem to offend much against any of the other three. 

The natural tendency of the window tax, and of all other taxes uponhouses, is to lower rents. The more a man pays for the tax, the less, itis evident, he can afford to pay for the rent. Since the imposition ofthe window tax, however, the rents of houses have, upon the whole, risenmore or less, in almost every town and village of Great Britain, withwhich I am acquainted. Such has been, almost everywhere, the increase ofthe demand for houses, that it has raised the rents more than the windowtax could sink them; one of the many proofs of the great prosperity ofthe country, and of the increasing revenue of its inhabitants. Had itnot been for the tax, rents would probably have risen still higher. 

ARTICLE II. --Taxes upon Profit, or upon the Revenue arising from Stock. 

The revenue or profit arising from stock naturally divides itself intotwo parts; that which pays the interest, and which belongs to the ownerof the stock; and that surplus part which is over and above what isnecessary for paying the interest. 

This latter part of profit is evidently a subject not taxable directly. It is the compensation, and, in most cases, it is no more than a verymoderate compensation for the risk and trouble of employing thestock. The employer must have this compensation, otherwise he cannot, consistently with his own interest, continue the employment. If he wastaxed directly, therefore, in proportion to the whole profit, he wouldbe obliged either to raise the rate of his profit, or to charge the taxupon the interest of money; that is, to pay less interest. If he raisedthe rate of his profit in proportion to the tax, the whole tax, thoughit might be advanced by him, would be finally paid by one or other oftwo different sets of people, according to the different ways in whichhe might employ the stock of which he had the management. If he employedit as a farming stock, in the cultivation of land, he could raise therate of his profit only by retaining a greater portion, or, what comesto the same thing, the price of a greater portion, of the produce of theland; and as this could be done only by a reduction of rent, the finalpayment of the tax would fall upon the landlord. If he employed it as amercantile or manufacturing stock, he could raise the rate of his profitonly by raising the price of his goods; in which case, the final paymentof the tax would fall altogether upon the consumers of those goods. Ifhe did not raise the rate of his profit, he would be obliged to chargethe whole tax upon that part of it which was allotted for the interestof money. He could afford less interest for whatever stock he borrowed, and the whole weight of the tax would, in this case, fall ultimatelyupon the interest of money. So far as he could not relieve himself fromthe tax in the one way, he would be obliged to relieve himself in theother. 

The interest of money seems, at first sight, a subject equally capableof being taxed directly as the rent of land. Like the rent of land, it is a neat produce, which remains, after completely compensating thewhole risk and trouble of employing the stock. As a tax upon the rent ofland cannot raise rents, because the neat produce which remains, afterreplacing the stock of the farmer, together with his reasonable profit, cannot be greater after the tax than before it, so, for the same reason, a tax upon the interest of money could not raise the rate of interest;the quantity of stock or money in the country, like the quantity ofland, being supposed to remain the same after the tax as before it. The ordinary rate of profit, it has been shewn, in the first book, is everywhere regulated by the quantity of stock to be employed, inproportion to the quantity of the employment, or of the business whichmust be done by it. But the quantity of the employment, or of thebusiness to be done by stock, could neither be increased nor diminishedby any tax upon the interest of money. If the quantity of the stock tobe employed, therefore, was neither increased nor diminished by it, the ordinary rate of profit would necessarily remain the same. But theportion of this profit, necessary for compensating the risk and troubleof the employer, would likewise remain the same; that risk and troublebeing in no respect altered. The residue, therefore, that portion whichbelongs to the owner of the stock, and which pays the interest of money, would necessarily remain the same too. At first sight, therefore, theinterest of money seems to be a subject as fit to be taxed directly asthe rent of land. 

There are, however, two different circumstances, which render theinterest of money a much less proper subject of direct taxation than therent of land. 

First, the quantity and value of the land which any man possesses, cannever be a secret, and can always be ascertained with great exactness. But the whole amount of the capital stock which he possesses is almostalways a secret, and can scarce ever be ascertained with tolerableexactness. It is liable, besides, to almost continual variations. A yearseldom passes away, frequently not a month, sometimes scarce a singleday, in which it does not rise or fall more or less. An inquisition intoevery man's private circumstances, and an inquisition which, in orderto accommodate the tax to them, watched over all the fluctuations of hisfortune, would be a source of such continual and endless vexation as noperson could support. 

Secondly, land is a subject which cannot be removed; whereas stockeasily may. The proprietor of land is necessarily a citizen of theparticular country in which his estate lies. The proprietor of stock isproperly a citizen of the world, and is not necessarily attached to anyparticular country. He would be apt to abandon the country in which hewas exposed to a vexatious inquisition, in order to be assessed to aburdensome tax; and would remove his stock to some other country, wherehe could either carry on his business, or enjoy his fortune more at hisease. By removing his stock, he would put an end to all the industrywhich it had maintained in the country which he left. Stock cultivatesland; stock employs labour. A tax which tended to drive away stock fromany particular country, would so far tend to dry up every source ofrevenue, both to the sovereign and to the society. Not only theprofits of stock, but the rent of land, and the wages of labour, wouldnecessarily be more or less diminished by its removal. 

The nations, accordingly, who have attempted to tax the revenue arisingfrom stock, instead of any severe inquisition of this kind, have beenobliged to content themselves with some very loose, and, therefore, moreor less arbitrary estimation. The extreme inequality and uncertainty ofa tax assessed in this manner, can be compensated only by its extrememoderation; in consequence of which, every man finds himself ratedso very much below his real revenue, that he gives himself littledisturbance though his neighbour should be rated somewhat lower. 

By what is called the land tax in England, it was intended that thestock should be taxed in the same proportion as land. When the tax uponland was at four shillings in the pound, or at one-fifth of the supposedrent, it was intended that stock should be taxed at one-fifth of thesupposed interest. When the present annual land tax was first imposed, the legal rate of interest was six per cent. Every hundred pounds stock, accordingly, was supposed to be taxed at twenty-four shillings, thefifth part of six pounds. Since the legal rate of interest has beenreduced to five per cent. Every hundred pounds stock is supposed to betaxed at twenty shillings only. The sum to be raised, by what is calledthe land tax, was divided between the country and the principal towns. The greater part of it was laid upon the country; and of what was laidupon the towns, the greater part was assessed upon the houses. Whatremained to be assessed upon the stock or trade of the towns (for thestock upon the land was not meant to be taxed) was very much below thereal value of that stock or trade. Whatever inequalities, therefore, there might be in the original assessment, gave little disturbance. Every parish and district still continues to be rated for its land, itshouses, and its stock, according to the original assessment; and thealmost universal prosperity of the country, which, in most places, hasraised very much the value of all these, has rendered those inequalitiesof still less importance now. The rate, too, upon each district, continuing always the same, the uncertainty of this tax, so far as itmight he assessed upon the stock of any individual, has been very muchdiminished, as well as rendered of much less consequence. If the greaterpart of the lands of England are not rated to the land tax at half theiractual value, the greater part of the stock of England is, perhaps, scarce rated at the fiftieth part of its actual value. In some towns, the whole land tax is assessed upon houses; as in Westminster, wherestock and trade are free. It is otherwise in London. 

In all countries, a severe inquisition into the circumstances of privatepersons has been carefully avoided. 

At Hamburg, {Memoires concernant les Droits, tom. I, p. 74} everyinhabitant is obliged to pay to the state one fourth per cent. Of allthat he possesses; and as the wealth of the people of Hamburg consistsprincipally in stock, this tax maybe considered as a tax upon stock. Every man assesses himself, and, in the presence of the magistrate, puts annually into the public coffer a certain sum of money, which hedeclares upon oath, to be one fourth per cent. Of all that he possesses, but without declaring what it amounts to, or being liable to anyexamination upon that subject. This tax is generally supposed to be paidwith great fidelity. In a small republic, where the people have entireconfidence in their magistrates, are convinced of the necessity of thetax for the support of the state, and believe that it will be faithfullyapplied to that purpose, such conscientious and voluntary payment maysometimes be expected. It is not peculiar to the people of Hamburg. 

The canton of Underwald, in Switzerland, is frequently ravaged by stormsand inundations, and it is thereby exposed to extraordinary expenses. Upon such occasions the people assemble, and every one is said todeclare with the greatest frankness what he is worth, in order tobe taxed accordingly. At Zurich, the law orders, that in cases ofnecessity, every one should be taxed in proportion to his revenue;the amount of which he is obliged to declare upon oath. They have nosuspicion, it is said, that any of their fellow citizens will deceivethem. At Basil, the principal revenue of the state arises from a smallcustom upon goods exported. All the citizens make oath, that they willpay every three months all the taxes imposed by law. All merchants, andeven all inn-keepers, are trusted with keeping themselves the accountof the goods which they sell, either within or without the territory. Atthe end of every three months, they send this account to the treasurer, with the amount of the tax computed at the bottom of it. It is notsuspected that the revenue suffers by this confidence. {Memoiresconcernant les Droits, tom. I p. 163, 167, 171. }

To oblige every citizen to declare publicly upon oath, the amount ofhis fortune, must not, it seems, in those Swiss cantons, be reckoneda hardship. At Hamburg it would be reckoned the greatest. Merchantsengaged in the hazardous projects of trade, all tremble at the thoughtsof being obliged, at all times, to expose the real state of theircircumstances. The ruin of their credit, and the miscarriage of theirprojects, they foresee, would too often be the consequence. A sober andparsimonious people, who are strangers to all such projects, do not feelthat they have occasion for any such concealment. 

In Holland, soon after the exaltation of the late prince of Orange tothe stadtholdership, a tax of two per cent. Or the fiftieth penny, as itwas called, was imposed upon the whole substance of every citizen. Everycitizen assesed himself, and paid his tax, in the same manner as atHamburg, and it was in general supposed to have been paid with greatfidelity. The people had at that time the greatest affection fortheir new government, which they had just established by a generalinsurrection. The tax was to be paid but once, in order to relievethe state in a particular exigency. It was, indeed, too heavy to bepermanent. In a country where the market rate of interest seldom exceedsthree per cent. , a tax of two per cent. Amounts to thirteen shillingsand four pence in the pound, upon the highest neat revenue which iscommonly drawn from stock. It is a tax which very few people could pay, without encroaching more or less upon their capitals. In a particularexigency, the people may, from great public zeal, make a great effort, and give up even a part of their capital, in order to relieve thestate. But it is impossible that they should continue to do so for anyconsiderable time; and if they did, the tax would soon ruin them socompletely, as to render them altogether incapable of supporting thestate. 

The tax upon stock, imposed by the land tax bill in England, though itis proportioned to the capital, is not intended to diminish or, takeaway any part of that capital. It is meant only to be a tax upon theinterest of money, proportioned to that upon the rent of land; so thatwhen the latter is at four shillings in the pound, the former may be atfour shillings in the pound too. The tax at Hamburg, and the still moremoderate taxes of Underwald and Zurich, are meant, in the same manner, to be taxes, not upon the capital, but upon the interest or neat revenueof stock. That of Holland was meant to be a tax upon the capital. 

Taxes upon the Profit of particular Employments. 

In some countries, extraordinary taxes are imposed upon the profitsof stock; sometimes when employed in particular branches of trade, andsometimes when employed in agriculture. 

Of the former kind, are in England, the tax upon hawkers and pedlars, that upon hackney-coaches and chairs, and that which the keepers ofale-houses pay for a licence to retail ale and spiritous liquors. Duringthe late war, another tax of the same kind was proposed upon shops. Thewar having been undertaken, it was said, in defence of the trade of thecountry, the merchants, who were to profit by it, ought to contributetowards the support of it. 

A tax, however, upon the profits of stock employed in any particularbranch of trade, can never fall finally upon the dealers (who mustin all ordinary cases have their reasonable profit, and, where thecompetition is free, can seldom have more than that profit), but alwaysupon the consumers, who must be obliged to pay in the price of the goodsthe tax which the dealer advances; and generally with some overcharge. 

A tax of this kind, when it is proportioned to the trade of the dealer, is finally paid by the consumer, and occasions no oppression to thedealer. When it is not so proportioned, but is the same upon alldealers, though in this case, too, it is finally paid by the consumer, yet it favours the great, and occasions some oppression to the smalldealer. The tax of five shillings a-week upon every hackney coach, andthat of ten shillings a-year upon every hackney chair, so far as it isadvanced by the different keepers of such coaches and chairs, is exactlyenough proportioned to the extent of their respective dealings. Itneither favours the great, nor oppresses the smaller dealer. The tax oftwenty shillings a-year for a licence to sell ale; of forty shillingsfor a licence to sell spiritous liquors; and of forty shillings morefor a licence to sell wine, being the same upon all retailers, mustnecessarily give some advantage to the great, and occasion someoppression to the small dealers. The former must find it more easyto get back the tax in the price of their goods than the latter. The moderation of the tax, however, renders this inequality of lessimportance; and it may to many people appear not improper to give somediscouragement to the multiplication of little ale-houses. The tax uponshops, it was intended, should be the same upon all shops. It could notwell have been otherwise. It would have been impossible to proportion, with tolerable exactness, the tax upon a shop to the extent of thetrade carried on in it, without such an inquisition as would havebeen altogether insupportable in a free country. If the tax had beenconsiderable, it would have oppressed the small, and forced almost thewhole retail trade into the hands of the great dealers. The competitionof the former being taken away, the latter would have enjoyed a monopolyof the trade; and, like all other monopolists, would soon have combinedto raise their profits much beyond what was necessary for the paymentof the tax. The final payment, instead of falling upon the shop-keeper, would have fallen upon the consumer, with a considerable overcharge tothe profit of the shop-keeper. For these reasons, the project of a taxupon shops was laid aside, and in the room of it was substituted thesubsidy, 1759. 

What in France is called the personal taille, is perhaps, the mostimportant tax upon the profits of stock employed in agriculture, that islevied in any part of Europe. 

In the disorderly state of Europe, during the prevalence of the feudalgovernment, the sovereign was obliged to content himself with taxingthose who were too weak to refuse to pay taxes. The great lords, thoughwilling to assist him upon particular emergencies, refused to subjectthemselves to any constant tax, and he was not strong enough to forcethem. The occupiers of land all over Europe were, the greater part ofthem, originally bond-men. Through the greater part of Europe, theywere gradually emancipated. Some of them acquired the property of landedestates, which they held by some base or ignoble tenure, sometimes underthe king, and sometimes under some other great lord, like the ancientcopy-holders of England. Others, without acquiring the property, obtained leases for terms of years, of the lands which they occupiedunder their lord, and thus became less dependent upon him. The greatlords seem to have beheld the degree of prosperity and independency, which this inferior order of men had thus come to enjoy, with amalignant and contemptuous indignation, and willingly consented that thesovereign should tax them. In some countries, this tax was confined tothe lands which were held in property by an ignoble tenure; and, in thiscase, the taille was said to be real. The land tax established by thelate king of Sardinia, and the taille in the provinces of Languedoc, Provence, Dauphine, and Britanny; in the generality of Montauban, and inthe elections of Agen and Condom, as well as in some other districts ofFrance; are taxes upon lands held in property by an ignoble tenure. Inother countries, the tax was laid upon the supposed profits of all thosewho held, in farm or lease, lands belonging to other people, whatevermight be the tenure by which the proprietor held them; and in thiscase, the taille was said to be personal. In the greater part of thoseprovinces of France, which are called the countries of elections, thetaille is of this kind. The real taille, as it is imposed only upon apart of the lands of the country, is necessarily an unequal, but it isnot always an arbitrary tax, though it is so upon some occasions. Thepersonal taille, as it is intended to be proportioned to the profits ofa certain class of people, which can only be guessed at, is necessarilyboth arbitrary and unequal. 

In France, the personal taille at present (1775) annually imposed uponthe twenty generalities, called the countries of elections, amounts to40, 107, 239 livres, 16 sous. {Memoires concernant les Droits, etc tom. Ii, p. 17. } the proportion in which this sum is assessed upon thosedifferent provinces, varies from year to year, according to the reportswhich are made to the king's council concerning the goodness or badnessof the crops, as well as other circumstances, which may either increaseor diminish their respective abilities to pay. Each generality isdivided into a certain number of elections; and the proportion inwhich the sum imposed upon the whole generality is divided among thosedifferent elections, varies likewise from year to year, according to thereports made to the council concerning their respective abilities. Itseems impossible, that the council, with the best intentions, can everproportion, with tolerable exactness, either of these two assessmentsto the real abilities of the province or district upon which they arerespectively laid. Ignorance and misinformation must always, more orless, mislead the most upright council. The proportion which each parishought to support of what is assessed upon the whole election, and thatwhich each individual ought to support of what is assessed upon hisparticular parish, are both in the same manner varied from year to year, according as circumstances are supposed to require. These circumstancesare judged of, in the one case, by the officers of the election, in theother, by those of the parish; and both the one and the other are, moreor less, under the direction and influence of the intendant. Not onlyignorance and misinformation, but friendship, party animosity, andprivate resentment, are said frequently to mislead such assessors. Noman subject to such a tax, it is evident, can ever be certain, before heis assessed, of what he is to pay. He cannot even be certain after he isassessed. If any person has been taxed who ought to have been exempted, or if any person has been taxed beyond his proportion, though bothmust pay in the mean time, yet if they complain, and make good theircomplaints, the whole parish is reimposed next year, in order toreimburse them. If any of the contributors become bankrupt or insolvent, the collector is obliged to advance his tax; and the whole parishis reimposed next year, in order to reimburse the collector. If thecollector himself should become bankrupt, the parish which elects himmust answer for his conduct to the receiver-general of the election. But, as it might be troublesome for the receiver to prosecute the wholeparish, he takes at his choice five or six of the richest contributors, and obliges them to make good what had been lost by the insolvency ofthe collector. The parish is afterwards reimposed, in order to reimbursethose five or six. Such reimpositions are always over and above thetaille of the particular year in which they are laid on. 

When a tax is imposed upon the profits of stock in a particular branchof trade, the traders are all careful to bring no more goods to marketthan what they can sell at a price sufficient to reimburse them fromadvancing the tax. Some of them withdraw a part of their stocks from thetrade, and the market is more sparingly supplied than before. The priceof the goods rises, and the final payment of the tax falls upon theconsumer. But when a tax is imposed upon the profits of stock employedin agriculture, it is not the interest of the farmers to withdraw anypart of their stock from that employment. Each farmer occupies a certainquantity of land, for which he pays rent. For the proper cultivation ofthis land, a certain quantity of stock is necessary; and by withdrawingany part of this necessary quantity, the farmer is not likely to be moreable to pay either the rent or the tax. In order to pay the tax, itcan never be his interest to diminish the quantity of his produce, norconsequently to supply the market more sparingly than before. The tax, therefore, will never enable him to raise the price of his produce, so as to reimburse himself, by throwing the final payment upon theconsumer. The farmer, however, must have his reasonable profit as wellas every other dealer, otherwise he must give up the trade. After theimposition of a tax of this kind, he can get this reasonable profit onlyby paying less rent to the landlord. The more he is obliged to pay inthe way of tax, the less he can afford to pay in the way of rent. A taxof this kind, imposed during the currency of a lease, may, no doubt, distress or ruin the farmer. Upon the renewal of the lease, it mustalways fall upon the landlord. 

In the countries where the personal taille takes place, the farmer iscommonly assessed in proportion to the stock which he appears to employin cultivation. He is, upon this account, frequently afraid to havea good team of horses or oxen, but endeavours to cultivate with themeanest and most wretched instruments of husbandry that he can. Suchis his distrust in the justice of his assessors, that he counterfeitspoverty, and wishes to appear scarce able to pay anything, for fear ofbeing obliged to pay too much. By this miserable policy, he does not, perhaps, always consult his own interest in the most effectual manner;and he probably loses more by the diminution of his produce, thanhe saves by that of his tax. Though, in consequence of this wretchedcultivation, the market is, no doubt, somewhat worse supplied; yet thesmall rise of price which this may occasion, as it is not likely even toindemnify the farmer for the diminution of his produce, it is still lesslikely to enable him to pay more rent to the landlord. The public, the farmer, the landlord, all suffer more or less by this degradedcultivation. That the personal taille tends, in many different ways, todiscourage cultivation, and consequently to dry up the principal sourceof the wealth of every great country, I have already had occasion toobserve in the third book of this Inquiry. 

What are called poll-taxes in the southern provinces of North America, and the West India islands, annual taxes of so much a-head upon everynegro, are properly taxes upon the profits of a certain species of stockemployed in agriculture. As the planters, are the greater part of them, both farmers and landlords, the final payment of the tax falls upon themin their quality of landlords, without any retribution. 

Taxes of so much a head upon the bondmen employed in cultivation, seemanciently to have been common all over Europe. There subsists at presenta tax of this kind in the empire of Russia. It is probably upon thisaccount that poll-taxes of all kinds have often been represented asbadges of slavery. Every tax, however, is, to the person who pays it, abadge, not of slavery, but of liberty. It denotes that he is subject togovernment, indeed; but that, as he has some property, he cannot himselfbe the property of a master. A poll tax upon slaves is altogetherdifferent from a poll-tax upon freemen. The latter is paid by thepersons upon whom it is imposed; the former, by a different set ofpersons. The latter is either altogether arbitrary, or altogetherunequal, and, in most cases, is both the one and the other; the former, though in some respects unequal, different slaves being of differentvalues, is in no respect arbitrary. Every master, who knows the numberof his own slaves, knows exactly what he has to pay. Those differenttaxes, however, being called by the same name, have been considered asof the same nature. 

The taxes which in Holland are imposed upon men and maid servants, aretaxes, not upon stock, but upon expense; and so far resemble the taxesupon consumable commodities. The tax of a guinea a-head for everyman-servant, which has lately been imposed in Great Britain, is ofthe same kind. It falls heaviest upon the middling rank. A man of twohundred a-year may keep a single man-servant. A man of ten thousanda-year will not keep fifty. It does not affect the poor. 

Taxes upon the profits of stock, in particular employments, can neveraffect the interest of money. Nobody will lend his money for lessinterest to those who exercise the taxed, than to those who exercise theuntaxed employments. Taxes upon the revenue arising from stock in allemployments, where the government attempts to levy them with any degreeof exactness, will, in many cases, fall upon the interest of money. Thevingtieme, or twentieth penny, in France, is a tax of the same kind withwhat is called the land tax in England, and is assessed, in the samemanner, upon the revenue arising upon land, houses, and stock. So far asit affects stock, it is assessed, though not with great rigour, yet withmuch more exactness than that part of the land tax in England which isimposed upon the same fund. It, in many cases, falls altogether uponthe interest of money. Money is frequently sunk in France, upon whatare called contracts for the constitution of a rent; that is, perpetualannuities, redeemable at any time by the debtor, upon payment of the sumoriginally advanced, but of which this redemption is not exigible bythe creditor except in particular cases. The vingtieme seems not to haveraised the rate of those annuities, though it is exactly levied uponthem all. 

APPENDIX TO ARTICLES I. AND II. --Taxes upon the Capital Value of Lands, Houses, and Stock. 

While property remains in the possession of the same person, whateverpermanent taxes may have been imposed upon it, they have never beenintended to diminish or take away any part of its capital value, butonly some part of the revenue arising from it. But when property changeshands, when it is transmitted either from the dead to the living, orfrom the living to the living, such taxes have frequently been imposedupon it as necessarily take away some part of its capital value. 

The transference of all sorts of property from the dead to the living, and that of immoveable property of land and houses from the living tothe living, are transactions which are in their nature either publicand notorious, or such as cannot be long concealed. Such transactions, therefore, may be taxed directly. The transference of stock or moveableproperty, from the living to the living, by the lending of money, isfrequently a secret transaction, and may always be made so. It cannoteasily, therefore, be taxed directly. It has been taxed indirectly intwo different ways; first, by requiring that the deed, containing theobligation to repay, should be written upon paper or parchment whichhad paid a certain stamp duty, otherwise not to be valid; secondly, by requiring, under the like penalty of invalidity, that it should berecorded either in a public or secret register, and by imposing certainduties upon such registration. Stamp duties, and duties of registration, have frequently been imposed likewise upon the deeds transferringproperty of all kinds from the dead to the living, and upon thosetransferring immoveable property from the living to the living;transactions which might easily have been taxed directly. 

The vicesima hereditatum, or the twentieth penny of inheritances, imposed by Augustus upon the ancient Romans, was a tax upon thetransference of property from the dead to the living. Dion Cassius, { Lib. 55. See also Burman. De Vectigalibus Pop. Rom. Cap. Xi. AndBouchaud de l'impot du vingtieme sur les successions. } the author whowrites concerning it the least indistinctly, says, that it was imposedupon all successions, legacies and donations, in case of death, exceptupon those to the nearest relations, and to the poor. 

Of the same kind is the Dutch tax upon successions. {See Memoiresconcernant les Droits, etc. Tom i, p. 225. } Collateral successions aretaxed according to the degree of relation, from five to thirty percent. Upon the whole value of the succession. Testamentary donations, or legacies to collaterals, are subject to the like duties. Those fromhusband to wife, or from wife to husband, to the fiftieth penny. The luctuosa hereditas, the mournful succession of ascendants todescendants, to the twentieth penny only. Direct successions, or thoseof descendants to ascendants, pay no tax. The death of a father, to suchof his children as live in the same house with him, is seldom attendedwith any increase, and frequently with a considerable diminutionof revenue; by the loss of his industry, of his office, or of somelife-rent estate, of which he may have been in possession. That taxwould be cruel and oppressive, which aggravated their loss, by takingfrom them any part of his succession. It may, however, sometimes beotherwise with those children, who, in the language of the Romanlaw, are said to be emancipated; in that of the Scotch law, to beforis-familiated; that is, who have received their portion, havegot families of their own, and are supported by funds separate andindependent of those of their father. Whatever part of his successionmight come to such children, would be a real addition to their fortune, and might, therefore, perhaps, without more inconveniency than whatattends all duties of this kind, be liable to some tax. The casualtiesof the feudal law were taxes upon the transference of land, both fromthe dead to the living, and from the living to the living. In ancienttimes, they constituted, in every part of Europe, one of the principalbranches of the revenue of the crown. 

The heir of every immediate vassal of the crown paid a certain duty, generally a year's rent, upon receiving the investiture of the estate. If the heir was a minor, the whole rents of the estate, during thecontinuance of the minority, devolved to the superior, without any othercharge besides the maintenance of the minor, and the payment of thewidow's dower, when there happened to be a dowager upon the land. Whenthe minor came to de of age, another tax, called relief, was still dueto the superior, which generally amounted likewise to a year's rent. Along minority, which, in the present times, so frequently disburdens agreat estate of all its incumbrances, and restores the family to theirancient splendour, could in those times have no such effect. The waste, and not the disincumbrance of the estate, was the common effect of along minority. 

By a feudal law, the vassal could not alienate without the consent ofhis superior, who generally extorted a fine or composition on grantingit. This fine, which was at first arbitrary, came, in many countries, to be regulated at a certain portion of the price of the land. In somecountries, where the greater part of the other feudal customs have goneinto disuse, this tax upon the alienation of land still continues tomake a very considerable branch of the revenue of the sovereign. In thecanton of Berne it is so high as a sixth part of the price of allnoble fiefs, and a tenth part of that of all ignoble ones. {Memoiresconcernant les Droits, etc, tom. I p. 154} In the canton of Lucern, thetax upon the sale of land is not universal, and takes place only incertain districts. But if any person sells his land in order to removeout of the territory, he pays ten per cent. Upon the whole price of thesale. {id. P. 157. } Taxes of the same kind, upon the sale either of alllands, or of lands held by certain tenures, take place in many othercountries, and make a more or less considerable branch of the revenue ofthe sovereign. 

Such transactions may be taxed indirectly, by means either of stampduties, or of duties upon registration; and those duties either may, or may not, be proportioned to the value of the subject which istransferred. 

In Great Britain, the stamp duties are higher or lower, not so muchaccording to the value of the property transferred (an eighteen-pennyor half-crown stamp being sufficient upon a bond for the largest sumof money), as according to the nature of the deed. The highest do notexceed six pounds upon every sheet of paper, or skin of parchment; andthese high duties fall chiefly upon grants from the crown, and uponcertain law proceedings, without any regard to the value of the subject. There are, in Great Britain, no duties on the registration of deeds orwritings, except the fees of the officers who keep the register; andthese are seldom more than a reasonable recompence for their labour. Thecrown derives no revenue from them. 

In Holland {Memoires concernant les Droits, etc. Tom. I. P 223, 224, 225. } there are both stamp duties and duties upon registration; whichin some cases are, and in some are not, proportioned to the value of theproperty transferred. All testaments must be written upon stamped paper, of which the price is proportioned to the property disposed of; so thatthere are stamps which cost from three pence or three stivers a-sheet, to three hundred florins, equal to about twenty-seven pounds tenshillings of our money. If the stamp is of an inferior price to what thetestator ought to have made use of, his succession is confiscated. Thisis over and above all their other taxes on succession. Except bills ofexchange, and some other mercantile bills, all other deeds, bonds, andcontracts, are subject to a stamp duty. This duty, however, does notrise in proportion to the value of the subject. All sales of land andof houses, and all mortgages upon either, must be registered, and, uponregistration, pay a duty to the state of two and a-half per cent. Uponthe amount of the price or of the mortgage. This duty is extended tothe sale of all ships and vessels of more than two tons burden, whetherdecked or undecked. These, it seems, are considered as a sort of housesupon the water. The sale of moveables, when it is ordered by a court ofjustice, is subject to the like duty of two and a-half per cent. 

In France, there are both stamp duties and duties upon registration. The former are considered as a branch of the aids of excise, and, inthe provinces where those duties take place, are levied by the exciseofficers. The latter are considered as a branch of the domain of thecrown and are levied by a different set of officers. 

Those modes of taxation by stamp duties and by duties upon registration, are of very modern invention. In the course of little more than acentury, however, stamp duties have, in Europe, become almost universal, and duties upon registration extremely common. There is no art which onegovernment sooner learns of another, than that of draining money fromthe pockets of the people. 

Taxes upon the transference of property from the dead to the living, fall finally, as well as immediately, upon the persons to whom theproperty is transferred. Taxes upon the sale of land fall altogetherupon the seller. The seller is almost always under the necessity ofselling, and must, therefore, take such a price as he can get. The buyeris scarce ever under the necessity of buying, and will, therefore, onlygive such a price as he likes. He considers what the land will cost him, in tax and price together. The more he is obliged to pay in the wayof tax, the less he will be disposed to give in the way of price. Suchtaxes, therefore, fall almost always upon a necessitous person, andmust, therefore, be frequently very cruel and oppressive. Taxes upon thesale of new-built houses, where the building is sold without the ground, fall generally upon the buyer, because the builder must generally havehis profit; otherwise he must give up the trade. If he advances the tax, therefore, the buyer must generally repay it to him. Taxes upon the saleof old houses, for the same reason as those upon the sale of land, fallgenerally upon the seller; whom, in most cases, either conveniencyor necessity obliges to sell. The number of new-built houses that areannually brought to market, is more or less regulated by the demand. Unless the demand is such as to afford the builder his profit, afterpaying all expenses, he will build no more houses. The number of oldhouses which happen at any time to come to market, is regulated byaccidents, of which the greater part have no relation to the demand. Twoor three great bankruptcies in a mercantile town, will bring many housesto sale, which must be sold for what can be got for them. Taxes uponthe sale of ground-rents fall altogether upon the seller, for the samereason as those upon the sale of lands. Stamp duties, and dutiesupon the registration of bonds and contracts for borrowed money, fallaltogether upon the borrower, and, in fact, are always paid by him. Duties of the same kind upon law proceedings fall upon the suitors. Theyreduce to both the capital value of the subject in dispute. The moreit costs to acquire any property, the less must be the neat value of itwhen acquired. 

All taxes upon the transference of property of every kind, so far asthey diminish the capital value of that property, tend to diminish thefunds destined for the maintenance of productive labour. They are allmore or less unthrifty taxes that increase the revenue of the sovereign, which seldom maintains any but unproductive labourers, at the expense ofthe capital of the people, which maintains none but productive. 

Such taxes, even when they are proportioned to the value of the propertytransferred, are still unequal; the frequency of transference not beingalways equal in property of equal value. When they are not proportionedto this value, which is the case with the greater part of the stampduties and duties of registration, they are still more so. They are inno respect arbitrary, but are, or may be, in all cases, perfectly clearand certain. Though they sometimes fall upon the person who is notvery able to pay, the time of payment is, in most cases, sufficientlyconvenient for him. When the payment becomes due, he must, in mostcases, have the more to pay. They are levied at very little expense, andin general subject the contributors to no other inconveniency, besidesalways the unavoidable one of paying the tax. In France, the stampduties are not much complained of. Those of registration, which theycall the Controle, are. They give occasion, it is pretended, to muchextortion in the officers of the farmers-general who collect the tax, which is in a great measure arbitrary and uncertain. In the greaterpart of the libels which have been written against the present system offinances in France, the abuses of the controle make a principal article. Uncertainty, however, does not seem to be necessarily inherent in thenature of such taxes. If the popular complaints are well founded, theabuse must arise, not so much from the nature of the tax as from thewant of precision and distinctness in the words of the edicts or lawswhich impose it. 

The registration of mortgages, and in general of all rights uponimmoveable property, as it gives great security both to creditors andpurchasers, is extremely advantageous to the public. That of the greaterpart of deeds of other kinds, is frequently inconvenient and evendangerous to individuals, without any advantage to the public. Allregisters which, it is acknowledged, ought to be kept secret, oughtcertainly never to exist. The credit of individuals ought certainlynever to depend upon so very slender a security, as the probity andreligion of the inferior officers of revenue. But where the fees ofregistration have been made a source of revenue to the sovereign, register-offices have commonly been multiplied without end, both for thedeeds which ought to be registered, and for those which ought not. In France there are several different sorts of secret registers. Thisabuse, though not perhaps a necessary, it must be acknowledged, is avery natural effect of such taxes. 

Such stamp duties as those in England upon cards and dice, uponnewspapers and periodical pamphlets, etc. Are properly taxes uponconsumption; the final payment falls upon the persons who use or consumesuch commodities. Such stamp duties as those upon licences to retailale, wine, and spiritous liquors, though intended, perhaps, to fall uponthe profits of the retailers, are likewise finally paid by the consumersof those liquors. Such taxes, though called by the same name, and leviedby the same officers, and in the same manner with the stamp duties abovementioned upon the transference of property, are, however, of a quitedifferent nature, and fall upon quite different funds. 

ARTICLE III. --Taxes upon the Wages of Labour. 

The wages of the inferior classes of work men, I have endeavoured toshow in the first book are everywhere necessarily regulated by twodifferent circumstances; the demand for labour, and the ordinary oraverage price of provisions. The demand for labour, according as ithappens to be either increasing stationary or declining; or to requirean increasing, stationary, or declining population, regulates thesubsistence of the labourer, and determines in what degree it shallbe either liberal, moderate, or scanty. The ordinary average price ofprovisions determines the quantity of money which must be paid to theworkman, in order to enable him, one year with another, to purchasethis liberal, moderate, or scanty subsistence. While the demand for thelabour and the price of provisions, therefore, remain the same, a directtax upon the wages of labour can have no other effect, than to raisethem somewhat higher than the tax. Let us suppose, for example, that, in a particular place, the demand for labour and the price of provisionswere such as to render ten shillings a-week the ordinary wages oflabour; and that a tax of one-fifth, or four shillings in the pound, wasimposed upon wages. If the demand for labour and the price of provisionsremained the same, it would still be necessary that the labourer should, in that place, earn such a subsistence as could be bought only for tenshillings a-week; so that, after paying the tax, he should have tenshillings a-week free wages. But, in order to leave him such free wages, after paying such a tax, the price of labour must, in that place, soonrise, not to twelve shillings a week only, but to twelve and sixpence;that is, in order to enable him to pay a tax of one-fifth, his wagesmust necessarily soon rise, not one-fifth part only, but one-fourth. Whatever was the proportion of the tax, the wages of labour must, in allcases rise, not only in that proportion, but in a higher proportion. Ifthe tax for example, was one-tenth, the wages of labour must necessarilysoon rise, not one-tenth part only, but one-eighth. 

A direct tax upon the wages of labour, therefore, though the labourermight, perhaps, pay it out of his hand, could not properly be said to beeven advanced by him; at least if the demand for labour and the averageprice of provisions remained the same after the tax as before it. In allsuch cases, not only the tax, but something more than the tax, wouldin reality be advanced by the person who immediately employed him. Thefinal payment would, in different cases, fall upon different persons. The rise which such a tax might occasion in the wages of manufacturinglabour would be advanced by the master manufacturer, who would both beentitled and obliged to charge it, with a profit, upon the price of hisgoods. The final payment of this rise of wages, therefore, together withthe additional profit of the master manufacturer would fall upon theconsumer. The rise which such a tax might occasion in the wages ofcountry labour would be advanced by the farmer, who, in order tomaintain the same number of labourers as before, would be obliged toemploy a greater capital. In order to get back this greater capital, together with the ordinary profits of stock, it would be necessary thathe should retain a larger portion, or, what comes to the same thing, the price of a larger portion, of the produce of the land, and, consequently, that he should pay less rent to the landlord. The finalpayment of this rise of wages, therefore, would, in this case, fall uponthe landlord, together with the additional profit of the farmer who hadadvanced it. In all cases, a direct tax upon the wages of labour must, in the long-run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods than would havefollowed from the proper assessment of a sum equal to the produce ofthe tax, partly upon the rent of land, and partly upon consumablecommodities. 

If direct taxes upon the wages of labour have not always occasioned aproportionable rise in those wages, it is because they have generallyoccasioned a considerable fall in the demand of labour. The declensionof industry, the decrease of employment for the poor, the diminution ofthe annual produce of the land and labour of the country, have generallybeen the effects of such taxes. In consequence of them, however, theprice of labour must always be higher than it otherwise would havebeen in the actual state of the demand; and this enhancement of price, together with the profit of those who advance it, must always be finallypaid by the landlords and consumers. 

A tax upon the wages of country labour does not raise the price of therude produce of land in proportion to the tax; for the same reasonthat a tax upon the farmer's profit does not raise that price in thatproportion. 

Absurd and destructive as such taxes are, however, they take place inmany countries. In France, that part of the taille which is chargedupon the industry of workmen and day-labourers in country villages, isproperly a tax of this kind. Their wages are computed according to thecommon rate of the district in which they reside; and, that they may beas little liable as possible to any overcharge, their yearly gainsare estimated at no more than two hundred working days in the year. {Memoires concernant les Droits, etc. Tom. Ii. P. 108. } The tax ofeach individual is varied from year to year, according to differentcircumstances, of which the collector or the commissary, whom intendantappoints to assist him, are the judges. In Bohemia, in consequence ofthe alteration in the system of finances which was begun in 1748, a veryheavy tax is imposed upon the industry of artificers. They are dividedinto four classes. The highest class pay a hundred florins a year, which, at two-and-twenty pence half penny a-florin, amounts to £9:7:6. The second class are taxed at seventy; the third at fifty; and thefourth, comprehending artificers in villages, and the lowest class ofthose in towns, at twenty-five florins. {Memoires concemant les Droits, etc. Tom. Iii. P. 87. }

The recompence of ingenious artists, and of men of liberal professions, I have endeavoured to show in the first book, necessarily keeps acertain proportion to the emoluments of inferior trades. A tax uponthis recompence, therefore, could have no other effect than to raiseit somewhat higher than in proportion to the tax. If it did not rise inthis manner, the ingenious arts and the liberal professions, being; nolonger upon a level with other trades, would be so much deserted, thatthey would soon return to that level. 

The emoluments of offices are not, like those of trades and professions, regulated by the free competition of the market, and do not, therefore, always bear a just proportion to what the nature of the employmentrequires. They are, perhaps, in most countries, higher than it requires;the persons who have the administration of government being generallydisposed to regard both themselves and their immediate dependents, rather more than enough. The emoluments of offices, therefore, can, inmost cases, very well bear to be taxed. The persons, besides, who enjoypublic offices, especially the more lucrative, are, in all countries, the objects of general envy; and a tax upon their emoluments, eventhough it should be somewhat higher than upon any other sort of revenue, is always a very popular tax. In England, for example, when, by theland-tax, every other sort of revenue was supposed to be assessed atfour shillings in the pound, it was very popular to lay a real tax offive shillings and sixpence in the pound upon the salaries of officeswhich exceeded a hundred pounds a-year; the pensions of the youngerbranches of the royal family, the pay of the officers of the army andnavy, and a few others less obnoxious to envy, excepted. There are inEngland no other direct taxes upon the wages of labour. 

ARTICLE IV. --Taxes which it is intended should fall indifferently uponevery different Species of Revenue. 

The taxes which it is intended should fall indifferently upon everydifferent species of revenue, are capitation taxes, and taxes uponconsumable commodities. Those must be paid indifferently, from whateverrevenue the contributors may possess; from the rent of their land, fromthe profits of their stock, or from the wages of their labour. 

Capitation Taxes. 

Capitation taxes, if it is attempted to proportion them to the fortuneor revenue of each contributor, become altogether arbitrary. The stateof a man's fortune varies from day to day; and, without an inquisition, more intolerable than any tax, and renewed at least once every year, can only be guessed at. His assessment, therefore, must, in mostcases, depend upon the good or bad humour of his assessors, and must, therefore, be altogether arbitrary and uncertain. 

Capitation taxes, if they are proportioned, not to the supposed fortune, but to the rank of each contributor, become altogether unequal; thedegrees of fortune being frequently unequal in the same degree of rank. 

Such taxes, therefore, if it is attempted to render them equal, becomealtogether arbitrary and uncertain; and if it is attempted to renderthem certain and not arbitrary, become altogether unequal. Let the taxbe light or heavy, uncertainty is always a great grievance. In a lighttax, a considerable degree of inequality may be supported; in a heavyone, it is altogether intolerable. 

In the different poll-taxes which took place in England during thereign of William III. The contributors were, the greater part of them, assessed according to the degree of their rank; as dukes, marquises, earls, viscounts, barons, esquires, gentlemen, the eldest and youngestsons of peers, etc. All shop-keepers and tradesmen worth more than threehundred pounds, that is, the better sort of them, were subject to thesame assessment, how great soever might be the difference in theirfortunes. Their rank was more considered than their fortune. Several ofthose who, in the first poll-tax, were rated according to their supposedfortune were afterwards rated according to their rank. Serjeants, attorneys, and proctors at law, who, in the first poll-tax, wereassessed at three shillings in the pound of their supposed income, wereafterwards assessed as gentlemen. In the assessment of a tax which wasnot very heavy, a considerable degree of inequality had been found lessinsupportable than any degree of uncertainty. 

In the capitation which has been levied in France, without-anyinterruption, since the beginning of the present century, the highestorders of people are rated according to their rank, by an invariabletariff; the lower orders of people, according to what is supposed tobe their fortune, by an assessment which varies from year to year. Theofficers of the king's court, the judges, and other officers in thesuperior courts of justice, the officers of the troops, etc are assessedin the first manner. The inferior ranks of people in the provincesare assessed in the second. In France, the great easily submit to aconsiderable degree of inequality in a tax which, so far as it affectsthem, is not a very heavy one; but could not brook the arbitraryassessment of an intendant. 

The inferior ranks of people must, in that country, suffer patiently theusage which their superiors think proper to give them. 

In England, the different poll-taxes never produced the sum whichhad been expected from them, or which it was supposed they might haveproduced, had they been exactly levied. In France, the capitation alwaysproduces the sum expected from it. The mild government of England, whenit assessed the different ranks of people to the poll-tax, contenteditself with what that assessment happened to produce, and required nocompensation for the loss which the state might sustain, either by thosewho could not pay, or by those who would not pay (for there were manysuch), and who, by the indulgent execution of the law, were notforced to pay. The more severe government of France assesses upon eachgenerality a certain sum, which the intendant must find as he can. If any province complains of being assessed too high, it may, inthe assessment of next year, obtain an abatement proportioned to theovercharge of the year before; but it must pay in the mean time. Theintendant, in order to be sure of finding the sum assessed upon hisgenerality, was empowered to assess it in a larger sum, that the failureor inability of some of the contributors might be compensated by theovercharge of the rest; and till 1765, the fixation of this surplusassessment was left altogether to his discretion. In that year, indeed, the council assumed this power to itself. In the capitation of theprovinces, it is observed by the perfectly well informed author of theMemoirs upon the Impositions in France, the proportion which fallsupon the nobility, and upon those whose privileges exempt them from thetaille, is the least considerable. The largest falls upon those subjectto the taille, who are assessed to the capitation at so much a-pound ofwhat they pay to that other tax. Capitation taxes, so far as they arelevied upon the lower ranks of people, are direct taxes upon the wagesof labour, and are attended with all the inconveniencies of such taxes. 

Capitation taxes are levied at little expense; and, where they arerigorously exacted, afford a very sure revenue to the state. It is uponthis account that, in countries where the case, comfort, and securityof the inferior ranks of people are little attended to, capitation taxesare very common. It is in general, however, but a small part of thepublic revenue, which, in a great empire, has ever been drawn from suchtaxes; and the greatest sum which they have ever afforded, might alwayshave been found in some other way much more convenient to the people. 

Taxes upon Consumable Commodities. 

The impossibility of taxing the people, in proportion to their revenue, by any capitation, seems to have given occasion to the invention oftaxes upon consumable commodities. The state not knowing how to tax, directly and proportionably, the revenue of its subjects, endeavours totax it indirectly by taxing their expense, which, it is supposed, will, in most cases, be nearly in proportion to their revenue. Their expenseis taxed, by taxing the consumable commodities upon which it is laidout. 

Consumable commodities are either necessaries or luxuries. 

By necessaries I understand, not only the commodities which areindispensibly necessary for the support of life, but whatever the customof the country renders it indecent for creditable people, even of thelowest order, to be without. A linen shirt, for example, is, strictlyspeaking, not a necessary of life. The Greeks and Romans lived, Isuppose, very comfortably, though they had no linen. But in the presenttimes, through the greater part of Europe, a creditable day-labourerwould be ashamed to appear in public without a linen shirt, the want ofwhich would be supposed to denote that disgraceful degree of poverty, which, it is presumed, nobody can well fall into without extreme badconduct. Custom, in the same manner, has rendered leather shoes anecessary of life in England. The poorest creditable person, of eithersex, would be ashamed to appear in public without them. In Scotland, custom has rendered them a necessary of life to the lowest order of men;but not to the same order of women, who may, without any discredit, walkabout barefooted. In France, they are necessaries neither to men nor towomen; the lowest rank of both sexes appearing there publicly, withoutany discredit, sometimes in wooden shoes, and sometimes barefooted. Under necessaries, therefore, I comprehend, not only those things whichnature, but those things which the established rules of decency haverendered necessary to the lowest rank of people. All other things I callluxuries, without meaning, by this appellation, to throw the smallestdegree of reproach upon the temperate use of them. Beer and ale, forexample, in Great Britain, and wine, even in the wine countries, I callluxuries. A man of any rank may, without any reproach, abstain totallyfrom tasting such liquors. Nature does not render them necessary for thesupport of life; and custom nowhere renders it indecent to live withoutthem. 

As the wages of labour are everywhere regulated, partly by the demandfor it, and partly by the average price of the necessary articles ofsubsistence; whatever raises this average price must necessarily raisethose wages; so that the labourer may still be able to purchase thatquantity of those necessary articles which the state of the demand forlabour, whether increasing, stationary, or declining, requires that heshould have. {See book i. Chap. 8} A tax upon those articles necessarilyraises their price somewhat higher than the amount of the tax, becausethe dealer, who advances the tax, must generally get it back, with aprofit. Such a tax must, therefore, occasion a rise in the wages oflabour, proportionable to this rise of price. 

It is thus that a tax upon the necessaries of life operates exactly inthe same manner as a direct tax upon the wages of labour. The labourer, though he may pay it out of his hand, cannot, for any considerable timeat least, be properly said even to advance it. It must always, in thelong-run, be advanced to him by his immediate employer, in the advancedstate of wages. His employer, if he is a manufacturer, will charge uponthe price of his goods the rise of wages, together with a profit, sothat the final payment of the tax, together with this overcharge, willfall upon the consumer. If his employer is a farmer, the final payment, together with a like overcharge, will fall upon the rent of thelandlord. 

It is otherwise with taxes upon what I call luxuries, even upon thoseof the poor. The rise in the price of the taxed commodities, willnot necessarily occasion any rise in the wages of labour. A tax upontobacco, for example, though a luxury of the poor, as well as of therich, will not raise wages. Though it is taxed in England at threetimes, and in France at fifteen times its original price, those highduties seem to have no effect upon the wages of labour. The same thingmaybe said of the taxes upon tea and sugar, which, in England andHolland, have become luxuries of the lowest ranks of people; and ofthose upon chocolate, which, in Spain, is said to have become so. 

The different taxes which, in Great Britain, have, in the course of thepresent century, been imposed upon spiritous liquors, are not supposedto have had any effect upon the wages of labour. The rise in the priceof porter, occasioned by an additional tax of three shillings upon thebarrel of strong beer, has not raised the wages of common labour inLondon. These were about eighteen pence or twenty pence a-day before thetax, and they are not more now. 

The high price of such commodities does not necessarily diminish theability of the inferior ranks of people to bring up families. Upon thesober and industrious poor, taxes upon such commodities act as sumptuarylaws, and dispose them either to moderate, or to refrain altogether fromthe use of superfluities which they can no longer easily afford. Theirability to bring up families, in consequence of this forced frugality, instead of being diminished, is frequently, perhaps, increased by thetax. It is the sober and industrious poor who generally bring up themost numerous families, and who principally supply the demand for usefullabour. All the poor, indeed, are not sober and industrious; and thedissolute and disorderly might continue to indulge themselves in theuse of such commodities, after this rise of price, in the same manner asbefore, without regarding the distress which this indulgence might bringupon their families. Such disorderly persons, however, seldom rear upnumerous families, their children generally perishing from neglect, mismanagement, and the scantiness or unwholesomeness of their food. Ifby the strength of their constitution, they survive the hardships towhich the bad conduct of their parents exposes them, yet the exampleof that bad conduct commonly corrupts their morals; so that, instead ofbeing useful to society by their industry, they become public nuisancesby their vices and disorders. Through the advanced price of the luxuriesof the poor, therefore, might increase somewhat the distress of suchdisorderly families, and thereby diminish somewhat their ability tobring up children, it would not probably diminish much the usefulpopulation of the country. 

Any rise in the average price of necessaries, unless it be compensatedby a proportionable rise in the wages of labour, must necessarilydiminish, more or less, the ability of the poor to bring up numerousfamilies, and, consequently, to supply the demand for useful labour;whatever may be the state of that demand, whether increasing, stationary, or declining; or such as requires an increasing, stationary, or declining population. 

Taxes upon luxuries have no tendency to raise the price of anyother commodities, except that of the commodities taxed. Taxes uponnecessaries, by raising the wages of labour, necessarily tend to raisethe price of all manufactures, and consequently to diminish the extentof their sale and consumption. Taxes upon luxuries are finally paid bythe consumers of the commodities taxed, without any retribution. Theyfall indifferently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land. Taxes upon necessaries, so far as they affect the labouring poor, are finally paid, partly bylandlords, in the diminished rent of their lands, and partly by richconsumers, whether landlords or others, in the advanced price ofmanufactured goods; and always with a considerable overcharge. Theadvanced price of such manufactures as are real necessaries of life, andare destined for the consumption of the poor, of coarse woollens, forexample, must be compensated to the poor by a farther advancementof their wages. The middling and superior ranks of people, if theyunderstood their own interest, ought always to oppose all taxes upon thenecessaries of life, as well as all taxes upon the wages of labour. The final payment of both the one and the other falls altogetherupon themselves, and always with a considerable overcharge. They fallheaviest upon the landlords, who always pay in a double capacity; inthat of landlords, by the reduction, of their rent; and in that of richconsumers, by the increase of their expense. The observation of SirMatthew Decker, that certain taxes are, in the price of certain goods, sometimes repeated and accumulated four or five times, is perfectlyjust with regard to taxes upon the necessaries of life. In the price ofleather, for example, you must pay not only for the tax upon the leatherof your own shoes, but for a part of that upon those of the shoemakerand the tanner. You must pay, too, for the tax upon the salt, upon thesoap, and upon the candles which those workmen consume while employed inyour service; and for the tax upon the leather, which the saltmaker, the soap-maker, and the candle-maker consume, while employed in theirservice. 

In Great Britain, the principal taxes upon the necessaries of life, arethose upon the four commodities just now mentioned, salt, leather, soap, and candles. 

Salt is a very ancient and a very universal subject of taxation. It wastaxed among the Romans, and it is so at present in, I believe, everypart of Europe. The quantity annually consumed by any individual is sosmall, and may be purchased so gradually, that nobody, it seems to havebeen thought, could feel very sensibly even a pretty heavy tax upon it. It is in England taxed at three shillings and fourpence a bushel;about three times the original price of the commodity. In some othercountries, the tax is still higher. Leather is a real necessary of life. The use of linen renders soap such. In countries where the winter nightsare long, candles are a necessary instrument of trade. Leather and soapare in Great Britain taxed at three halfpence a-pound; candles at apenny; taxes which, upon the original price of leather, may amount toabout eight or ten per cent. ; upon that of soap, to about twenty orfive-and-twenty per cent. ; and upon that of candles to about fourteen orfifteen per cent. ; taxes which, though lighter than that upon salt, arestill very heavy. As all those four commodities are real necessaries oflife, such heavy taxes upon them must increase somewhat the expense ofthe sober and industrious poor, and must consequently raise more or lessthe wages of their labour. 

In a country where the winters are so cold as in Great Britain, fuel is, during that season, in the strictest sense of the word, a necessaryof life, not only for the purpose of dressing victuals, but for thecomfortable subsistence of many different sorts of workmen who workwithin doors; and coals are the cheapest of all fuel. The price of fuelhas so important an influence upon that of labour, that all over GreatBritain, manufactures have confined themselves principally to the coalcounties; other parts of the country, on account of the high priceof this necessary article, not being able to work so cheap. In somemanufactures, besides, coal is a necessary instrument of trade; as inthose of glass, iron, and all other metals. If a bounty could in anycase be reasonable, it might perhaps be so upon the transportation ofcoals from those parts of the country in which they abound, to thosein which they are wanted. But the legislature, instead of a bounty, hasimposed a tax of three shillings and threepence a-ton upon coals carriedcoastways; which, upon most sorts of coal, is more than sixty per cent. Of the original price at the coal pit. Coals carried, either by land orby inland navigation, pay no duty. Where they are naturally cheap, theyare consumed duty free; where they are naturally dear, they are loadedwith a heavy duty. 

Such taxes, though they raise the price of subsistence, and consequentlythe wages of labour, yet they afford a considerable revenue togovernment, which it might not be easy to find in any other way. Theremay, therefore, be good reasons for continuing them. The bounty upon theexportation of corn, so far us it tends, in the actual state of tillage, to raise the price of that necessary article, produces all the like badeffects; and instead of affording any revenue, frequently occasions avery great expense to government. The high duties upon the importationof foreign corn, which, in years of moderate plenty, amount to aprohibition; and the absolute prohibition of the importation, either oflive cattle, or of salt provisions, which takes place in the ordinarystate of the law, and which, on account of the scarcity, is at presentsuspended for a limited time with regard to Ireland and the Britishplantations, have all had the bad effects of taxes upon the necessariesof life, and produce no revenue to government. Nothing seems necessaryfor the repeal of such regulations, but to convince the public ofthe futility of that system in consequence of which they have beenestablished. 

Taxes upon the necessaries of life are much higher in many othercountries than in Great Britain. Duties upon flour and meal when groundat the mill, and upon bread when baked at the oven, take place in manycountries. In Holland the money-price of the: bread consumed in townsis supposed to be doubled by means of such taxes. In lieu of a part ofthem, the people who live in the country, pay every year so much a-head, according to the sort of bread they are supposed to consume. Those whoconsume wheaten bread pay three guilders fifteen stivers; about sixshillings and ninepence halfpenny. Those, and some other taxes of thesame kind, by raising the price of labour, are said to have ruined thegreater part of the manufactures of Holland {Memoires concernant lesDroits, etc. P. 210, 211. }. Similar taxes, though not quite so heavy, take place in the Milanese, in the states of Genoa, in the duchy ofModena, in the duchies of Parma, Placentia, and Guastalla, and theEcclesiastical state. A French author {Le Reformateur} of some note, hasproposed to reform the finances of his country, by substituting in theroom of the greater part of other taxes, this most ruinous of all taxes. There is nothing so absurd, says Cicero, which has not sometimes beenasserted by some philosophers. 

Taxes upon butcher's meat are still more common than those uponbread. It may indeed be doubted, whether butcher's meat is any where anecessary of life. Grain and other vegetables, with the help of milk, cheese, and butter, or oil, where butter is not to be had, it is knownfrom experience, can, without any butcher's meat, afford the mostplentiful, the most wholesome, the most nourishing, and the mostinvigorating diet. Decency nowhere requires that any man should eatbutcher's meat, as it in most places requires that he should wear alinen shirt or a pair of leather shoes. 

Consumable commodities, whether necessaries or luxuries, may be taxed intwo different ways. The consumer may either pay an annual sum on accountof his using or consuming goods of a certain kind; or the goods may betaxed while they remain in the hands of the dealer, and before theyare delivered to the consumer. The consumable goods which last aconsiderable time before they are consumed altogether, are most properlytaxed in the one way; those of which the consumption is either immediateor more speedy, in the other. The coach-tax and plate tax are examplesof the former method of imposing; the greater part of the other dutiesof excise and customs, of the latter. 

A coach may, with good management, last ten or twelve years. It mightbe taxed, once for all, before it comes out of the hands of thecoach-maker. But it is certainly more convenient for the buyer to payfour pounds a-year for the privilege of keeping a coach, than to pay allat once forty or forty-eight pounds additional price to the coach-maker;or a sum equivalent to what the tax is likely to cost him during thetime he uses the same coach. A service of plate in the same manner, maylast more than a century. It is certainly-easier for the consumer to payfive shillings a-year for every hundred ounces of plate, near one percent. Of the value, than to redeem this long annuity at five-and-twentyor thirty years purchase, which would enhance the price at leastfive-and-twenty or thirty per cent. The different taxes which affecthouses, are certainly more conveniently paid by moderate annualpayments, than by a heavy tax of equal value upon the first building orsale of the house. 

It was the well-known proposal of Sir Matthew Decker, that allcommodities, even those of which the consumption is either immediate orspeedy, should be taxed in this manner; the dealer advancing nothing, but the consumer paying a certain annual sum for the licence to consumecertain goods. The object of his scheme was to promote all the differentbranches of foreign trade, particularly the carrying trade, by takingaway all duties upon importation and exportation, and thereby enablingthe merchant to employ his whole capital and credit in the purchase ofgoods and the freight of ships, no part of either being diverted towardsthe advancing of taxes, The project, however, of taxing, in this manner, goods of immediate or speedy consumption, seems liable to the fourfollowing very important objections. First, the tax would be moreunequal, or not so well proportioned to the expense and consumptionof the different contributors, as in the way in which it is commonlyimposed. The taxes upon ale, wine, and spiritous liquors, which areadvanced by the dealers, are finally paid by the different consumers, exactly in proportion to their respective consumption. But if the taxwere to be paid by purchasing a licence to drink those liquors, thesober would, in proportion to his consumption, be taxed much moreheavily than the drunken consumer. A family which exercised greathospitality, would be taxed much more lightly than one who entertainedfewer guests. Secondly, this mode of taxation, by paying for an annual, half-yearly, or quarterly licence to consume certain goods, woulddiminish very much one of the principal conveniences of taxes upongoods of speedy consumption; the piece-meal payment. In the price ofthreepence halfpenny, which is at present paid for a pot of porter, the different taxes upon malt, hops, and beer, together with theextraordinary profit which the brewer charges for having advancedthan, may perhaps amount to about three halfpence. If a workman canconveniently spare those three halfpence, he buys a pot of porter. Ifhe cannot, he contents himself with a pint; and, as a penny saved is apenny got, he thus gains a farthing by his temperance. He pays the taxpiece-meal, as he can afford to pay it, and when he can afford to payit, and every act of payment is perfectly voluntary, and what he canavoid if he chuses to do so. Thirdly, such taxes would operate lessas sumptuary laws. When the licence was once purchased, whether thepurchaser drunk much or drunk little, his tax would be the same. Fourthly, if a workman were to pay all at once, by yearly, half-yearly, or quarterly payments, a tax equal to what he at present pays, withlittle or no inconveniency, upon all the different pots and pintsof porter which he drinks in any such period of time, the sum mightfrequently distress him very much. This mode of taxation, therefore, it seems evident, could never, without the most grievous oppression, produce a revenue nearly equal to what is derived from the present modewithout any oppression. In several countries, however, commodities ofan immediate or very speedy consumption are taxed in this manner. InHolland, people pay so much a-head for a licence to drink tea. I havealready mentioned a tax upon bread, which, so far as it is consumed infarm houses and country villages, is there levied in the same manner. 

The duties of excise are imposed chiefly upon goods of home produce, destined for home consumption. They are imposed only upon a few sortsof goods of the most general use. There can never be any doubt, eitherconcerning the goods which are subject to those duties, or concerningthe particular duty which each species of goods is subject to. They fallalmost altogether upon what I call luxuries, excepting always the fourduties above mentioned, upon salt, soap, leather, candles, and perhapsthat upon green glass. 

The duties of customs are much more ancient than those of excise. Theyseem to have been called customs, as denoting customary payments, whichhad been in use for time immemorial. They appear to have been originallyconsidered as taxes upon the profits of merchants. During the barbaroustimes of feudal anarchy, merchants, like all the other inhabitants ofburghs, were considered as little better than emancipated bondmen, whosepersons were despised, and whose gains were envied. The great nobility, who had consented that the king should tallage the profits of their owntenants, were not unwilling that he should tallage likewise those of anorder of men whom it was much less their interest to protect. In thoseignorant times, it was not understood, that the profits of merchants area subject not taxable directly; or that the final payment of all suchtaxes must fall, with a considerable overcharge, upon the consumers. 

The gains of alien merchants were looked upon more unfavourably thanthose of English merchants. It was natural, therefore, that those ofthe former should be taxed more heavily than those of the latter. This distinction between the duties upon aliens and those upon Englishmerchants, which was begun from ignorance, has been continued front thespirit of monopoly, or in order to give our own merchants an advantage, both in the home and in the foreign market. 

With this distinction, the ancient duties of customs were imposedequally upon all sorts of goods, necessaries as well its luxuries, goodsexported as well as goods imported. Why should the dealers in one sortof goods, it seems to have been thought, be more favoured than those inanother? or why should the merchant exporter be more favoured than themerchant importer?

The ancient customs were divided into three branches. The first, and, perhaps, the most ancient of all those duties, was that upon wool andleather. It seems to have been chiefly or altogether an exportationduty. When the woollen manufacture came to be established in England, lest the king should lose any part of his customs upon wool by theexportation of woollen cloths, a like duty was imposed upon them. Theother two branches were, first, a duty upon wine, which being imposedat so much a-ton, was called a tonnage; and, secondly, a duty upon allother goods, which being imposed at so much a-pound of their supposedvalue, was called a poundage. In the forty-seventh year of Edward III. , a duty of sixpence in the pound was imposed upon all goods exportedand imported, except wools, wool-felts, leather, and wines which weresubject to particular duties. In the fourteenth of Richard II. , this duty was raised to one shilling in the pound; but, three yearsafterwards, it was again reduced to sixpence. It was raised toeightpence in the second year of Henry IV. ; and, in the fourth ofthe same prince, to one shilling. From this time to the ninth year ofWilliam III. , this duty continued at one shilling in the pound. Theduties of tonnage and poundage were generally granted to the king by oneand the same act of parliament, and were called the subsidy of tonnageand poundage. The subsidy of poundage having continued for so long atime at one shilling in the pound, or at five per cent. , a subsidy came, in the language of the customs, to denote a general duty of this kind offive per cent. This subsidy, which is now called the old subsidy, stillcontinues to be levied, according to the book of rates established bythe twelfth of Charles II. The method of ascertaining, by a book ofrates, the value of goods subject to this duty, is said to be older thanthe time of James I. The new subsidy, imposed by the ninth and tenth ofWilliam III. , was an additional five per cent. Upon the greater partof goods. The one-third and the two-third subsidy made up between themanother five per cent. Of which they were proportionable parts. Thesubsidy of 1747 made a fourth five per cent. Upon the greater part ofgoods; and that of 1759, a fifth upon some particular sorts of goods. Besides those five subsidies, a great variety of other duties haveoccasionally been imposed upon particular sorts of goods, in ordersometimes to relieve the exigencie's of the state, and sometimes toregulate the trade of the country, according to the principles of themercantile system. 

That system has come gradually more and more into fashion. Theold subsidy was imposed indifferently upon exportation, as well asimportation. The four subsequent subsidies, as well as the other dutieswhich have since been occasionally imposed upon particular sortsof goods, have, with a few exceptions, been laid altogether uponimportation. The greater part of the ancient duties which hadbeen imposed upon the exportation of the goods of home produce andmanufacture, have either been lightened or taken away altogether. Inmost cases, they have been taken away. Bounties have even been givenupon the exportation of some of them. Drawbacks, too, sometimes of thewhole, and, in most cases, of a part of the duties which are paidupon the importation of foreign goods, have been granted upon theirexportation. Only half the duties imposed by the old subsidy uponimportation, are drawn back upon exportation; but the whole of thoseimposed by the latter subsidies and other imposts are, upon the greaterparts of the goods, drawn back in the same manner. This growing favourof exportation, and discouragement of importation, have suffered onlya few exceptions, which chiefly concern the materials of somemanufactures. These our merchants and manufacturers are willing shouldcome as cheap as possible to themselves, and as dear as possible totheir rivals and competitors in other countries. Foreign materials are, upon this account, sometimes allowed to be imported duty-free; spanishwool, for example, flax, and raw linen yarn. The exportation of thematerials of home produce, and of those which are the particular produceof our colonies, has sometimes been prohibited, and sometimes subjectedto higher duties. The exportation of English wool has been prohibited. That of beaver skins, of beaver wool, and of gum-senega, has beensubjected to higher duties; Great Britain, by the conquests of Canadaand Senegal, having got almost the monopoly of those commodities. 

That the mercantile system has not been very favourable to the revenueof the great body of the people, to the annual produce of the land andlabour of the country, I have endeavoured to show in the fourth book ofthis Inquiry. It seems not to have been more favourable to the revenueof the sovereign; so far, at least, as that revenue depends upon theduties of customs. 

In consequence of that system, the importation of several sorts of goodshas been prohibited altogether. This prohibition has, in some cases, entirely prevented, and in others has very much diminished, theimportation of those commodities, by reducing the importers to thenecessity of smuggling. It has entirely prevented the importation offoreign wollens; and it has very much diminished that of foreign silksand velvets, In both cases, it has entirely annihilated the revenue ofcustoms which might have been levied upon such importation. 

The high duties which have been imposed upon the importation ofmany different sorts of foreign goods in order to discourage theirconsumption in Great Britain, have, in many cases, served only toencourage smuggling, and, in all cases, have reduced the revenues of thecustoms below what more moderate duties would have afforded. The sayingof Dr. Swift, that in the arithmetic of the customs, two and two, instead of making four, make sometimes only one, holds perfectly truewith regard to such heavy duties, which never could have been imposed, had not the mercantile system taught us, in many cases, to employtaxation as an instrument, not of revenue, but of monopoly. 

The bounties which are sometimes given upon the exportation of homeproduce and manufactures, and the drawbacks which are paid upon there-exportation of the greater part of foreign goods, have given occasionto many frauds, and to a species of smuggling, more destructive ofthe public revenue than any other. In order to obtain the bounty ordrawback, the goods, it is well known, are sometimes shipped, and sentto sea, but soon afterwards clandestinely re-landed in some other partof the country. The defalcation of the revenue of customs occasioned bybounties and drawbacks, of which a great part are obtained fraudulently, is very great. The gross produce of the customs, in the year which endedon the 5th of January 1755, amounted to £5, 068, 000. The bounties whichwere paid out of this revenue, though in that year there was no bountyupon corn, amounted to £167, 806. The drawbacks which were paid upondebentures and certificates, to £2, 156, 800. Bounties and drawbackstogether amounted to £2, 324, 600. In consequence of these deductions, therevenue of the customs amounted only to £2, 743, 400; from which deducting£287, 900 for the expense of management, in salaries and otherincidents, the neat revenue of the customs for that year comes out tobe £2, 455, 500. The expense of management, amounts, in this manner, tobetween five and six per cent. Upon the gross revenue of the customs;and to something more than ten per cent. Upon what remains of thatrevenue, after deducting what is paid away in bounties and drawbacks. 

Heavy duties being imposed upon almost all goods imported, our merchantimporters smuggle as much, and make entry of as little as they can. Our merchant exporters, on the contrary, make entry of more than theyexport; sometimes out of vanity, and to pass for great dealers in goodswhich pay no duty gain a bounty back. Our exports, in consequence ofthese different frauds, appear upon the custom-house books greatlyto overbalance our imports, to the unspeakable comfort of thosepoliticians, who measure the national prosperity by what they call thebalance of trade. 

All goods imported, unless particularly exempted, and such exemptionsare not very numerous, are liable to some duties of customs. If anygoods are imported, not mentioned in the book of rates, they are taxedat 4s:9¾d. For every twenty shillings value, according to the oathof the importer, that is, nearly at five subsidies, or five poundageduties. The book of rates is extremely comprehensive, and enumerates agreat variety of articles, many of them little used, and, therefore, notwell known. It is, upon this account, frequently uncertain underwhat article a particular sort of goods ought to be classed, and, consequently what duty they ought to pay. Mistakes with regard to thissometimes ruin the custom-house officer, and frequently occasion muchtrouble, expense, and vexation to the importer. In point of perspicuity, precision, and distinctness, therefore, the duties of customs are muchinferior to those of excise. 

In order that the greater part of the members of any society shouldcontribute to the public revenue, in proportion to their respectiveexpense, it does not seem necessary that every single article of thatexpense should be taxed. The revenue which is levied by the duties ofexcise is supposed to fall as equally upon the contributors as thatwhich is levied by the duties of customs; and the duties of exciseare imposed upon a few articles only of the most general used andconsumption. It has been the opinion of many people, that, by propermanagement, the duties of customs might likewise, without any lossto the public revenue, and with great advantage to foreign trade, beconfined to a few articles only. 

The foreign articles, of the most general use and consumption inGreat Britain, seem at present to consist chiefly in foreign wines andbrandies; in some of the productions of America and the West Indies, sugar, rum, tobacco, cocoa-nuts, etc. And in some of those of the EastIndies, tea, coffee, china-ware, spiceries of all kinds, several sortsof piece-goods, etc. These different articles afford, the greater partof the perhaps, at present, revenue which is drawn from the duties ofcustoms. The taxes which at present subsist upon foreign manufactures, if you except those upon the few contained in the foregoing enumeration, have, the greater part of them, been imposed for the purpose, not ofrevenue, but of monopoly, or to give our own merchants an advantage inthe home market. By removing all prohibitions, and by subjecting allforeign manufactures to such moderate taxes, as it was found fromexperience, afforded upon each article the greatest revenue to thepublic, our own workmen might still have a considerable advantage inthe home market; and many articles, some of which at present affordno revenue to government, and others a very inconsiderable one, mightafford a very great one. 

High taxes, sometimes by diminishing the consumption of the taxedcommodities, and sometimes by encouraging smuggling frequently afforda smaller revenue to government than what might be drawn from moremoderate taxes. 

When the diminution of revenue is the effect of the diminution ofconsumption, there can be but one remedy, and that is the loweringof the tax. When the diminution of revenue is the effect of theencouragement given to smuggling, it may, perhaps, be remedied in twoways; either by diminishing the temptation to smuggle, or by increasingthe difficulty of smuggling. The temptation to smuggle can be diminishedonly by the lowering of the tax; and the difficulty of smuggling can beincreased only by establishing that system of administration which ismost proper for preventing it. 

The excise laws, it appears, I believe, from experience, obstruct andembarrass the operations of the smuggler much more effectually thanthose of the customs. By introducing into the customs a system ofadministration as similar to that of the excise as the nature of thedifferent duties will admit, the difficulty of smuggling might be verymuch increased. This alteration, it has been supposed by many people, might very easily be brought about. 

The importer of commodities liable to any duties of customs, it has beensaid, might, at his option, be allowed either to carry them to his ownprivate warehouse; or to lodge them in a warehouse, provided eitherat his own expense or at that of the public, but under the key of thecustom-house officer, and never to be opened but in his presence. Ifthe merchant carried them to his own private warehouse, the duties tobe immediately paid, and never afterwards to be drawn back; and thatwarehouse to be at all times subject to the visit and examination ofthe custom-house officer, in order to ascertain how far the quantitycontained in it corresponded with that for which the duty had been paid. If he carried them to the public warehouse, no duty to be paid till theywere taken out for home consumption. If taken out for exportation, tobe duty-free; proper security being always given that they should beso exported. The dealers in those particular commodities, eitherby wholesale or retail, to be at all times subject to the visit andexamination of the custom-house officer; and to be obliged to justify, by proper certificates, the payment of the duty upon the whole quantitycontained in their shops or warehouses. What are called the exciseduties upon rum imported, are at present levied in this manner; and thesame system of administration might, perhaps, be extended to all dutiesupon goods imported; provided always that those duties were, like theduties of excise, confined to a few sorts of goods of the most generaluse and consumption. If they were extended to almost all sorts of goods, as at present, public warehouses of sufficient extent could not easilybe provided; and goods of a very delicate nature, or of which thepreservation required much care and attention, could not safely betrusted by the merchant in any warehouse but his own. 

If, by such a system of administration, smuggling to any considerableextent could be prevented, even under pretty high duties; and if everyduty was occasionally either heightened or lowered according as it wasmost likely, either the one way or the other, to afford the greatestrevenue to the state; taxation being always employed as an instrument ofrevenue, and never of monopoly; it seems not improbable that a revenue, at least equal to the present neat revenue of the customs, might bedrawn from duties upon the importation of only a few sorts of goods ofthe most general use and consumption; and that the duties of customsmight thus be brought to the same degree of simplicity, certainty, andprecision, as those of excise. What the revenue at present loses bydrawbacks upon the re-exportation of foreign goods, which are afterwardsre-landed and consumed at home, would, under this system, be savedaltogether. If to this saving, which would alone be very considerable, were added the abolition of all bounties upon the exportation of homeproduce; in all cases in which those bounties were not in realitydrawbacks of some duties of excise which had before been advanced; itcannot well be doubted, but that the neat revenue of customs might, after an alteration of this kind, be fully equal to what it had everbeen before. 

If, by such a change of system, the public revenue suffered no loss, the trade and manufactures of the country would certainly gain a veryconsiderable advantage. The trade in the commodities not taxed, by farthe greatest number would be perfectly free, and might be carried onto and from all parts of the world with every possible advantage. Amongthose commodities would be comprehended all the necessaries of life, andall the materials of manufacture. So far as the free importation ofthe necessaries of life reduced their average money price in the homemarket, it would reduce the money price of labour, but without reducingin any respect its real recompence. The value of money is in proportionto the quantity of the necessaries of life which it will purchase. Thatof the necessaries of life is altogether independent of the quantityof money which can be had for them. The reduction in the money price oflabour would necessarily be attended with a proportionable one in thatof all home manufactures, which would thereby gain some advantage in allforeign markets. The price of some manufactures would be reduced, in astill greater proportion, by the free importation of the raw materials. If raw silk could be imported from China and Indostan, duty-free, thesilk manufacturers in England could greatly undersell those of bothFrance and Italy. There would be no occasion to prohibit the importationof foreign silks and velvets. The cheapness of their goods would secureto our own workmen, not only the possession of a home, but a very greatcommand of the foreign market. Even the trade in the commodities taxed, would be carried on with much more advantage than at present. If thosecommodities were delivered out of the public warehouse for foreignexportation, being in this case exempted from all taxes, the trade inthem would be perfectly free. The carrying trade, in all sorts of goods, would, under this system, enjoy every possible advantage. If thesecommodities were delivered out for home consumption, the importer notbeing obliged to advance the tax till he had an opportunity of sellinghis goods, either to some dealer, or to some consumer, he could alwaysafford to sell them cheaper than if he had been obliged to advance itat the moment of importation. Under the same taxes, the foreign tradeof consumption, even in the taxed commodities, might in this manner becarried on with much more advantage than it is at present. 

It was the object of the famous excise scheme of Sir Robert Walpole, to establish, with regard to wine and tobacco, a system not very unlikethat which is here proposed. But though the bill which was then broughtinto Parliament, comprehended those two commodities only, it wasgenerally supposed to be meant as an introduction to a more extensivescheme of the same kind. Faction, combined with the interest ofsmuggling merchants, raised so violent, though so unjust a clamour, against that bill, that the minister thought proper to drop it; and, from a dread of exciting a clamour of the same kind, none of hissuccessors have dared to resume the project. 

The duties upon foreign luxuries, imported for home consumption, thoughthey sometimes fall upon the poor, fall principally upon people ofmiddling or more than middling fortune. Such are, for example, theduties upon foreign wines, upon coffee, chocolate, tea, sugar, etc. 

The duties upon the cheaper luxuries of home produce, destined for homeconsumption, fall pretty equally upon people of all ranks, in proportionto their respective expense. The poor pay the duties upon malt, hops, beer, and ale, upon their own consumption; the rich, upon both their ownconsumption and that of their servants. 

The whole consumption of the inferior ranks of people, or of thosebelow the middling rank, it must be observed, is, in every country, muchgreater, not only in quantity, but in value, than that of the middling, and of those above the middling rank. The whole expense of the inferioris much greater titan that of the superior ranks. In the first place, almost the whole capital of every country is annually distributedamong the inferior ranks of people, as the wages of productive labour. Secondly, a great part of the revenue, arising from both the rent ofland and the profits of stock, is annually distributed among thesame rank, in the wages and maintenance of menial servants, and otherunproductive labourers. Thirdly, some part of the profits of stockbelongs to the same rank, as a revenue arising from the employment oftheir small capitals. The amount of the profits annually made by smallshopkeepers, tradesmen, and retailers of all kinds, is everywherevery considerable, and makes a very considerable portion of the annualproduce. Fourthly and lastly, some part even of the rent of land belongsto the same rank; a considerable part to those who are somewhat belowthe middling rank, and a small part even to the lowest rank; commonlabourers sometimes possessing in property an acre or two of land. Though the expense of those inferior ranks of people, therefore, takingthem individually, is very small, yet the whole mass of it, taking themcollectively, amounts always to by much the largest portion of the wholeexpense of the society; what remains of the annual produce of the landand labour of the country, for the consumption of the superior ranks, being always much less, not only in quantity, but in value. The taxesupon expense, therefore, which fall chiefly upon that of the superiorranks of people, upon the smaller portion of the annual produce, are likely to be much less productive than either those which fallindifferently upon the expense of all ranks, or even those which fallchiefly upon that of the inferior ranks, than either those which fallindifferently upon the whole annual produce, or those which fallchiefly upon the larger portion of it. The excise upon the materialsand manufacture of home-made fermented and spirituous liquors, is, accordingly, of all the different taxes upon expense, by far the mostproductive; and this branch of the excise falls very much, perhapsprincipally, upon the expense of the common people. In the year whichended on the 5th of July 1775, the gross produce of this branch of theexcise amounted to £3, 341, 837:9:9. 

It must always be remembered, however, that it is the luxuries, and notthe necessary expense of the inferior ranks of people, that ought everto be taxed. The final payment of any tax upon their necessary expense, would fall altogether upon the superior ranks of people; upon thesmaller portion of the annual produce, and not upon the greater. Such atax must, in all cases, either raise the wages of labour, or lessen thedemand for it. It could not raise the wages of labour, without throwingthe final payment of the tax upon the superior ranks of people. It couldnot lessen the demand for labour, without lessening the annual produceof the land and labour of the country, the fund upon which all taxesmust be finally paid. Whatever might be the state to which a tax of thiskind reduced the demand for labour, it must always raise wages higherthan they otherwise would be in that state; and the final payment ofthis enhancement of wages must, in all cases, fall upon the superiorranks of people. 

Fermented liquors brewed, and spiritous liquors distilled, not for sale, but for private use, are not in Great Britain liable to any duties ofexcise. This exemption, of which the object is to save private familiesfrom the odious visit and examination of the tax-gatherer, occasionsthe burden of those duties to fall frequently much lighter upon the richthan upon the poor. It is not, indeed, very common to distil for privateuse, though it is done sometimes. But in the country, many middling andalmost all rich and great families, brew their own beer. Their strongbeer, therefore, costs them eight shillings a-barrel less than it coststhe common brewer, who must have his profit upon the tax, as well asupon all the other expense which he advances. Such families, therefore, must drink their beer at least nine or ten shillings a-barrel cheaperthan any liquor of the same quality can be drank by the common people, to whom it is everywhere more convenient to buy their beer, by littleand little, from the brewery or the ale-house. Malt, in the same manner, that is made for the use of a private family, is not liable to the visitor examination of the tax-gatherer but, in this case the family mustcompound at seven shillings and sixpence a-head for the tax. Sevenshillings and sixpence are equal to the excise upon ten bushels of malt;a quantity fully equal to what all the different members of any soberfamily, men, women, and children, are, at an average, likely to consume. But in rich and great families, where country hospitality is muchpractised, the malt liquors consumed by the members of the family makebut a small part of the consmnption of the house. Either on accountof this composition, however, or for other reasons, it is not near socommon to malt as to brew for private use. It is difficult to imagineany equitable reason, why those who either brew or distil for privateuse should not be subject to a composition of the same kind. 

A greater revenue than what is at present drawn from all the heavy taxesupon malt, beer, and ale, might be raised, it has frequently been said, by a much lighter tax upon malt; the opportunities of defrauding therevenue being much greater in a brewery than in a malt-house; and thosewho brew for private use being exempted from all duties or compositionfor duties, which is not the case with those who malt for private use. 

In the porter brewery of London, a quarter of malt is commonly brewedinto more than two barrels and a-half, sometimes into three barrels ofporter. The different taxes upon malt amount to six shillings a-quarter;those upon strong ale and beer to eight shillings a-barrel. In theporter brewery, therefore, the different taxes upon malt, beer, and ale, amount to between twenty-six and thirty shillings upon the produce ofa quarter of malt. In the country brewery for common country sale, aquarter of malt is seldom brewed into less than two barrels of strong, and one barrel of small beer; frequently into two barrels and a-half ofstrong beer. The different taxes upon small beer amount to one shillingand fourpence a-barrel. In the country brewery, therefore, the differenttaxes upon malt, beer, and ale, seldom amount to less than twenty-threeshillings and fourpence, frequently to twenty-six shillings, upon theproduce of a quarter of malt. Taking the whole kingdom at an average, therefore, the whole amount of the duties upon malt, beer, and ale, cannot be estimated at less than twenty-four or twenty-five shillingsupon the produce of a quarter of malt. But by taking off all thedifferent duties upon beer and ale, and by trebling the malt tax, or byraising it from six to eighteen shilling's upon the quarter of malt, agreater revenue, it is said, might be raised by this single tax, thanwhat is at present drawn from all those heavier taxes. 

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

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

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

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

Under the old malt tax, indeed, is comprehended a tax of four shillingsupon the hogshead of cyder, and another of ten shillings upon thebarrel of mum. In 1774, the tax upon cyder produced only £3, 083:6:8. It probably fell somewhat short of its usual amount; all the differenttaxes upon cyder, having, that year, produced less than ordinary. Thetax upon mum, though much heavier, is still less productive, on accountof the smaller consumption of that liquor. But to balance whatever maybe the ordinary amount of those two taxes, there is comprehendedunder what is called the country excise, first, the old excise of sixshillings and eightpence upon the hogshead of cyder; secondly, a liketax of six shillings and eightpence upon the hogshead of verjuice;thirdly, another of eight shillings and ninepence upon the hogshead ofvinegar; and, lastly, a fourth tax of elevenpence upon the gallon ofmead or metheglin. The produce of those different taxes will probablymuch more than counterbalance that of the duties imposed, by what iscalled the annual malt tax, upon cyder and mum. 

Malt is consumed, not only in the brewery of beer and ale, but in themanufacture of low wines and spirits. If the malt tax were to be raisedto eighteen shillings upon the quarter, it might be necessary to makesome abatement in the different excises which are imposed upon thoseparticular sorts of low wines and spirits, of which malt makes any partof the materials. In what are called malt spirits, it makes commonlybut a third part of the materials; the other two-thirds being either rawbarley, or one-third barley and one-third wheat. In the distillery ofmalt spirits, both the opportunity and the temptation to smuggleare much greater than either in a brewery or in a malt-house; theopportunity, on account of the smaller bulk and greater value of thecommodity, and the temptation, on account of the superior height ofthe duties, which amounted to 3s. 10 2/3d. Upon the gallon of spirits. {Though the duties directly imposed upon proof spirits amount only to2s. 6d per gallon, these, added to the duties upon the low wines, fromwhich they are distilled, amount to 3s 10 2/3d. Both low wines and proofspirits are, to prevent frauds, now rated according to what they gaugein the wash. }

By increasing the duties upon malt, and reducing those upon thedistillery, both the opportunities and the temptation to smuggle wouldbe diminished, which might occasion a still further augmentation ofrevenue. 

It has for some time past been the policy of Great Britain to discouragethe consumption of spiritous liquors, on account of their supposedtendency to ruin the health and to corrupt the morals of the commonpeople. According to this policy, the abatement of the taxes upon thedistillery ought not to be so great as to reduce, in any respect, theprice of those liquors. Spiritous liquors might remain as dear as ever;while, at the same time, the wholesome and invigorating liquors of beerand ale might be considerably reduced in their price. The people mightthus be in part relieved from one of the burdens of which they atpresent complain the most; while, at the same time, the revenue might beconsiderably augmented. 

The objections of Dr. Davenant to this alteration in the present systemof excise duties, seem to be without foundation. Those objections are, that the tax, instead of dividing itself, as at present, pretty equallyupon the profit of the maltster, upon that of the brewer and upon thatof the retailer, would so far as it affected profit, fall altogetherupon that of the maltster; that the maltster could not so easily getback the amount of the tax in the advanced price of his malt, as thebrewer and retailer in the advanced price of their liquor; and that soheavy a tax upon malt might reduce the rent and profit of barley land. 

No tax can ever reduce, for any considerable time, the rate of profit inany particular trade, which must always keep its level with other tradesin the neighbourhood. The present duties upon malt, beer, and ale, donot affect the profits of the dealers in those commodities, who all getback the tax with an additional profit, in the enhanced price of theirgoods. A tax, indeed, may render the goods upon which it is imposed sodear, as to diminish the consumption of them. But the consumptionof malt is in malt liquors; and a tax of eighteen shillings upon thequarter of malt could not well render those liquors dearer than thedifferent taxes, amounting to twenty-four or twenty-five shillings, do at present. Those liquors, on the contrary, would probably becomecheaper, and the consumption of them would be more likely to increasethan to diminish. 

It is not very easy to understand why it should be more difficult forthe maltster to get back eighteen shillings in the advanced price of hismalt, than it is at present for the brewer to get back twenty-four ortwenty-five, sometimes thirty shillings, in that of his liquor. Themaltster, indeed, instead of a tax of six shillings, would be obligedto advance one of eighteen shilling upon every quarter of malt. Butthe brewer is at present obliged to advance a tax of twenty-four ortwenty-five, sometimes thirty shillings, upon every quarter of malt whichhe brews. It could not be more inconvenient for the maltster to advancea lighter tax, than it is at present for the brewer to advance a heavierone. The maltster does not always keep in his granaries a stock of malt, which it will require a longer time to dispose of than the stock of beerand ale which the brewer frequently keeps in his cellars. The former, therefore, may frequently get the returns of his money as soon as thelatter. But whatever inconveniency might arise to the maltster frombeing obliged to advance a heavier tax, it could easily be remedied, by granting him a few months longer credit than is at present commonlygiven to the brewer. 

Nothing could reduce the rent and profit of barley land, which did notreduce the demand for barley. But a change of system, which reduced theduties upon a quarter of malt brewed into beer and ale, from twentyfourand twenty-five shillings to eighteen shillings, would be more likely toincrease than diminish that demand. The rent and profit of barley land, besides, must always be nearly equal to those of other equally fertileand equally well cultivated land. If they were less, some part of thebarley land would soon be turned to some other purpose; and if they weregreater, more land would soon be turned to the raising of barley. Whenthe ordinary price of any particular produce of land is at what may becalled a monopoly price, a tax upon it necessarily reduces the rentand profit of the land which grows it. A tax upon the produce ofthose precious vineyards, of which the wine falls so much short of theeffectual demand, that its price is always above the natural proportionto that of the produce of other equally fertile and equally wellcultivated land, would necessarily reduce the rent and profit of thosevineyards. The price of the wines being already the highest that couldbe got for the quantity commonly sent to market, it could not be raisedhigher without diminishing that quantity; and the quantity could not bediminished without still greater loss, because the lands could not beturned to any other equally valuable produce. The whole weight of thetax, therefore, would fall upon the rent and profit; properly upon therent of the vineyard. When it has been proposed to lay any new tax uponsugar, our sugar planters have frequently complained that the wholeweight of such taxes fell not upon the consumer, but upon the producer;they never having been able to raise the price of their sugar after thetax higher than it was before. The price had, it seems, before the tax, been a monopoly price; and the arguments adduced to show that sugarwas an improper subject of taxation, demonstrated perhaps that it wasa proper one; the gains of monopolists, whenever they can be come at, being certainly of all subjects the most proper. But the ordinary priceof barley has never been a monopoly price; and the rent and profit ofbarley land have never been above their natural proportion to those ofother equally fertile and equally well cultivated land. The differenttaxes which have been imposed upon malt, beer, and ale, have neverlowered the price of barley; have never reduced the rent and profit ofbarley land. The price of malt to the brewer has constantly risen inproportion to the taxes imposed upon it; and those taxes, together withthe different duties upon beer and ale, have constantly either raisedthe price, or, what comes to the same thing, reduced the quality ofthose commodities to the consumer. The final payment of those taxes hasfallen constantly upon the consumer, and not upon the producer. 

The only people likely to suffer by the change of system here proposed, are those who brew for their own private use. But the exemption, whichthis superior rank of people at present enjoy, from very heavy taxeswhich are paid by the poor labourer and artificer, is surely most unjustand unequal, and ought to be taken away, even though this change wasnever to take place. It has probably been the interest of this superiororder of people, however, which has hitherto prevented a change ofsystem that could not well fail both to increase the revenue and torelieve the people. 

Besides such duties as those of custom and excise above mentioned, thereare several others which affect the price of goods more unequally andmore indirectly. Of this kind are the duties, which, in French, arecalled peages, which in old Saxon times were called the duties ofpassage, and which seem to have been originally established for thesame purpose as our turnpike tolls, or the tolls upon our canals andnavigable rivers, for the maintenance of the road or of the navigation. Those duties, when applied to such purposes, are most properly imposedaccording to the bulk or weight of the goods. As they were originallylocal and provincial duties, applicable to local and provincialpurposes, the administration of them was, in most cases, entrusted tothe particular town, parish, or lordship, in which they were levied;such communities being, in some way or other, supposed to be accountablefor the application. The sovereign, who is altogether unaccountable, hasin many countries assumed to himself the administration of those duties;and though he has in most cases enhanced very much the duty, he has inmany entirely neglected the application. If the turnpike tolls of GreatBritain should ever become one of the resources of government, we maylearn, by the example of many other nations, what would probably be theconsequence. Such tolls, no doubt, are finally paid by the consumer; butthe consumer is not taxed in proportion to his expense, when he pays, not according to the value, but according to the bulk or weight of whathe consumes. When such duties are imposed, not according to the bulk orweight, but according to the supposed value of the goods, they becomeproperly a sort of inland customs or excise, which obstruct very muchthe most important of all branches of commerce, the interior commerce ofthe country. 

In some small states, duties similar to those passage duties are imposedupon goods carried across the territory, either by land or by water, from one foreign country to another. These are in some countries calledtransit-duties. Some of the little Italian states which are situatedupon the Po, and the rivers which run into it, derive some revenue fromduties of this kind, which are paid altogether by foreigners, and which, perhaps, are the only duties that one state can impose upon the subjectsof another, without obstruction in any respect, the industry or commerceof its own. The most important transit-duty in the world, is that leviedby the king of Denmark upon all merchant ships which pass through theSound. 

Such taxes upon luxuries, as the greater part of the duties of customsand excise, though they all fall indifferently upon every differentspecies of revenue, and are paid finally, or without any retribution, bywhoever consumes the commodities upon which they are imposed; yet theydo not always fall equally or proportionally upon the revenue ofevery individual. As every man's humour regulates the degree of hisconsumption, every man contributes rather according to his humour, thanproportion to his revenue: the profuse contribute more, the parsimoniousless, than their proper proportion. During the minority of a man ofgreat fortune, he contributes commonly very little, by his consumption, towards the support of that state from whose protection he derives agreat revenue. Those who live in another country, contribute nothing bytheir consumption towards the support of the government of that country, in which is situated the source of their revenue. If in this lattercountry there should be no land tax, nor any considerable duty upon thetransference either of moveable or immoveable property, as is thecase in Ireland, such absentees may derive a great revenue fromthe protection of a government, to the support of which they do notcontribute a single shilling. This inequality is likely to be greatestin a country of which the government is, in some respects, subordinateand dependant upon that of some other. The people who possess the mostextensive property in the dependant, will, in this case, generallychuse to live in the governing country. Ireland is precisely in thissituation; and we cannot therefore wonder, that the proposal of a taxupon absentees should be so very popular in that country. It might, perhaps, be a little difficult to ascertain either what sort, or whatdegree of absence, would subject a man to be taxed as an absentee, orat what precise time the tax should either begin or end. If youexcept, however, this very peculiar situation, any inequality in thecontribution of individuals which can arise from such taxes, is muchmore than compensated by the very circumstance which occasions thatinequality; the circumstance that every man's contribution is altogethervoluntary; it being altogether in his power, either to consume, ornot to consume, the commodity taxed. Where such taxes, therefore, areproperly assessed, and upon proper commodities, they are paid with lessgrumbling than any other. When they are advanced by the merchantor manufacturer, the consumer, who finally pays them, soon comes toconfound them with the price of the commodities, and almost forgets thathe pays any tax. Such taxes are, or may be, perfectly certain; or maybe assessed, so as to leave no doubt concerning either what ought to bepaid, or when it ought to be paid; concerning either the quantity or thetime of payment. What ever uncertainty there may sometimes be, either inthe duties of customs in Great Britain, or in other duties of thesame kind in other countries, it cannot arise from the nature of thoseduties, but from the inaccurate or unskilful manner in which the lawthat imposes them is expressed. 

Taxes upon luxuries generally are, and always may be, paid piece-meal, or in proportion as the contributors have occasion to purchase the goodsupon which they are imposed. In the time and mode of payment, they are, or may be, of all taxes the most convenient. Upon the whole, such taxes, therefore, are perhaps as agreeable to the three first of the fourgeneral maxims concerning taxation, as any other. They offend in everyrespect against the fourth. 

Such taxes, in proportion to what they bring into the public treasury ofthe state, always take out, or keep out, of the pockets of the people, more than almost any other taxes. They seem to do this in all the fourdifferent ways in which it is possible to do it. 

First, the levying of such taxes, even when imposed in the mostjudicious manner, requires a great number of custom-house and exciseofficers, whose salaries and perquisites are a real tax upon the people, which brings nothing into the treasury of the state. This expense, however, it must be acknowledged, is more moderate in Great Britain thanin most other countries. In the year which ended on the 5th of July, 1775, the gross produce of the different duties, under the managementof the commissioners of excise in England, amounted to £5, 507, 308:18:8¼, which was levied at an expense of little more than five and a-half percent. From this gross produce, however, there must be deducted what waspaid away in bounties and drawbacks upon the exportation of exciseablegoods, which will reduce the neat produce below five millions. {Theneat produce of that year, after deducting all expenses and allowances, amounted to £4, 975, 652:19:6. } The levying of the salt duty, and exciseduty, but under a different management, is much more expensive. The neatrevenue of the customs does not amount to two millions and a-half, whichis levied at an expense of more than ten per cent. , in the salariesof officers and other incidents. But the perquisites of custom-houseofficers are everywhere much greater than their salaries; at some portsmore than double or triple those salaries. If the salaries of officers, and other incidents, therefore, amount to more than ten per cent. Uponthe neat revenue of the customs, the whole expense of levying thatrevenue may amount, in salaries and perquisites together, to more thantwenty or thirty per cent. The officers of excise receive few or noperquisites; and the administration of that branch of the revenue beingof more recent establishment, is in general less corrupted than thatof the customs, into which length of time has introduced and authorisedmany abuses. By charging upon malt the whole revenue which is at presentlevied by the different duties upon malt and malt liquors, a saving, itis supposed, of more than £50, 000, might be made in the annual expenseof the excise. By confining the duties of customs to a few sorts ofgoods, and by levying those duties according to the excise laws, amuch greater saving might probably be made in the annual expense of thecustoms. 

Secondly, such taxes necessarily occasion some obstruction ordiscouragement to certain branches of industry. As they always raise theprice of the commodity taxed, they so far discourage its consumption, and consequently its production. If it is a commodity of home growth ormanufacture, less labour comes to be employed in raising and producingit. If it is a foreign commodity of which the tax increases in thismanner the price, the commodities of the same kind which are made athome may thereby, indeed, gain some advantage in the home market, anda greater quantity of domestic industry may thereby be turned towardpreparing them. But though this rise of price in a foreign commodity, may encourage domestic industry in one particular branch, it necessarilydiscourages that industry in almost every other. The dearer theBirmingham manufacturer buys his foreign wine, the cheaper henecessarily sells that part of his hardware with which, or, what comesto the same thing, with the price of which, he buys it. That part ofhis hardware, therefore, becomes of less value to him, and he has lessencouragement to work at it. The dearer the consumers in one country payfor the surplus produce of another, the cheaper they necessarily sellthat part of their own surplus produce with which, or, what comes to thesame thing, with the price of which, they buy it. That part of theirown surplus produce becomes of less value to them, and they have lessencouragement to increase its quantity. All taxes upon consumablecommodities, therefore, tend to reduce the quantity of productive labourbelow what it otherwise would be, either in preparing the commoditiestaxed, if they are home commodities, or in preparing those with whichthey are purchased, if they are foreign commodities. Such taxes, too, always alter, more or less, the natural direction of national industry, and turn it into a channel always different from, and generally lessadvantageous, than that in which it would have run of its own accord. 

Thirdly, the hope of evading such taxes by smuggling, gives frequentoccasion to forfeitures and other penalties, which entirely ruin thesmuggler; a person who, though no doubt highly blameable for violatingthe laws of his country, is frequently incapable of violating those ofnatural justice, and would have been, in every respect, an excellentcitizen, had not the laws of his country made that a crime which naturenever meant to be so. In those corrupted governments, where there isat least a general suspicion of much unnecessary expense, and greatmisapplication of the public revenue, the laws which guard it are littlerespected. Not many people are scrupulous about smuggling, when, withoutperjury, they can find an easy and safe opportunity of doing so. Topretend to have any scruple about buying smuggled goods, though amanifest encouragement to the violation of the revenue laws, and to theperjury which almost always attends it, would, in most countries, beregarded as one of those pedantic pieces of hypocrisy which, instead ofgaining credit with anybody, serve only to expose the person who affectsto practise them to the suspicion of being a greater knave than most ofhis neighbours. By this indulgence of the public, the smuggler is oftenencouraged to continue a trade, which he is thus taught to consider asin some measure innocent; and when the severity of the revenue lawsis ready to fall upon him, he is frequently disposed to defend withviolence, what he has been accustomed to regard as his just property. From being at first, perhaps, rather imprudent than criminal, he at lasttoo often becomes one of the hardiest and most determined violators ofthe laws of society. By the ruin of the smuggler, his capital, whichhad before been employed in maintaining productive labour, is absorbedeither in the revenue of the state, or in that of the revenue officer;and is employed in maintaining unproductive, to the diminution of thegeneral capital of the society, and of the useful industry which itmight otherwise have maintained. 

Fourthly, such taxes, by subjecting at least the dealers in the taxedcommodities, to the frequent visits and odious examination of thetax-gatherers, expose them sometimes, no doubt, to some degree ofoppression, and always to much trouble and vexation; and thoughvexation, as has already been said, is not strictly speaking expense, it is certainly equivalent to the expense at which every man wouldbe willing to redeem himself from it. The laws of excise, though moreeffectual for the purpose for which they were instituted, are, in thisrespect, more vexatious than those of the customs. When a merchant hasimported goods subject to certain duties of customs; when he has paidthose duties, and lodged the goods in his warehouse; he is not, in mostcases, liable to any further trouble or vexation from the custom-houseofficer. It is otherwise with goods subject to duties of excise. Thedealers have no respite from the continual visits and examination ofthe excise officers. The duties of excise are, upon this account, moreunpopular than those of the customs; and so are the officers who levythem. Those officers, it is pretended, though in general, perhaps, theydo their duty fully as well as those of the customs; yet, as thatduty obliges them to be frequently very troublesome to some of theirneighbours, commonly contract a certain hardness of character, which theothers frequently have not. This observation, however, may very probablybe the mere suggestion of fraudulent dealers, whose smuggling is eitherprevented or detected by their diligence. 

The inconveniencies, however, which are, perhaps, in some degreeinseparable from taxes upon consumable communities, fall as light uponthe people of Great Britain as upon those of any other country of whichthe government is nearly as expensive. Our state is not perfect, andmight be mended; but it is as good, or better, than that of most of ourneighbours. 

In consequence of the notion, that duties upon consumable goodswere taxes upon the profits of merchants, those duties have, in somecountries, been repeated upon every successive sale of the goods. If theprofits of the merchant-importer or merchant-manufacturer were taxed, equality seemed to require that those of all the middle buyers, whointervened between either of them and the consumer, should likewise betaxed. The famous alcavala of Spain seems to have been established uponthis principle. It was at first a tax of ten per cent. Afterwards offourteen per cent. And it is at present only six per cent. Upon thesale of every sort of property whether moveable or immoveable; and itis repeated every time the property is sold. {Memoires concernant lesDroits, etc. Tom. I, p. 15} The levying of this tax requires a multitudeof revenue officers, sufficient to guard the transportation of goods, not only from one province to another, but from one shop to another. Itsubjects, not only the dealers in some sorts of goods, but those in allsorts, every farmer, every manufacturer, every merchant and shopkeeper, to the continual visit and examination of the tax-gatherers. Through thegreater part of the country in which a tax of this kind is established, nothing can be produced for distant sale. The produce of every partof the country must be proportioned to the consumption of theneighbourhood. It is to the alcavala, accordingly, that Ustaritz imputesthe ruin of the manufactures of Spain. He might have imputed to it, likewise, the declension of agriculture, it being imposed not only uponmanufactures, but upon the rude produce of the land. 

In the kingdom of Naples, there is a similar tax of three per cent. Uponthe value of all contracts, and consequently upon that of all contractsof sale. It is both lighter than the Spanish tax, and the greater partof towns and parishes are allowed to pay a composition in lieu of it. They levy this composition in what manner they please, generally in away that gives no interruption to the interior commerce of the place. The Neapolitan tax, therefore, is not near so ruinous as the Spanishone. 

The uniform system of taxation, which, with a few exception of nogreat consequence, takes place in all the different parts of the unitedkingdom of Great Britain, leaves the interior commerce of the country, the inland and coasting trade, almost entirely free. The inland trade isalmost perfectly free; and the greater part of goods may be carried fromone end of the kingdom to the other, without requiring any permit orlet-pass, without being subject to question, visit or examination, fromthe revenue officers. There are a few exceptions, but they are such ascan give no interruption to any important branch of inland commerce ofthe country. Goods carried coastwise, indeed, require certificates orcoast-cockets. If you except coals, however, the rest are almostall duty-free. This freedom of interior commerce, the effect of theuniformity of the system of taxation, is perhaps one of the principalcauses of the prosperity of Great Britain; every great country beingnecessarily the best and most extensive market for the greater part ofthe productions of its own industry. If the same freedom in consequenceof the same uniformity, could be extended to Ireland and theplantations, both the grandeur of the state, and the prosperity of everypart of the empire, would probably be still greater than at present. 

In France, the different revenue laws which take place in the differentprovinces, require a multitude of revenue officers to surround, notonly the frontiers of the kingdom, but those of almost each particularprovince, in order either to prevent the importation of certain goods, or to subject it to the payment of certain duties, to the no smallinterruption of the interior commerce of the country. Some provinces areallowed to compound for the gabelle, or salt tax; others are exemptedfrom it altogether. Some provinces are exempted from the exclusive saleof tobacco, which the farmers-general enjoy through the greater part ofthe kingdom. The aides, which correspond to the excise in England, arevery different in different provinces. Some provinces are exempted fromthem, and pay a composition or equivalent. In those in which they takeplace, and are in farm, there are many local duties which do not extendbeyond a particular town or district. The traites, which correspondto our customs, divide the kingdom into three great parts; first, theprovinces subject to the tariff of 1664, which are called the provincesof the five great farms, and under which are comprehended Picardy, Normandy, and the greater part of the interior provinces of the kingdom;secondly, the provinces subject to the tariff of 1667, which are calledthe provinces reckoned foreign, and under which are comprehended thegreater part of the frontier provinces; and, thirdly, those provinceswhich are said to be treated as foreign, or which, because they areallowed a free commerce with foreign countries, are, in their commercewith the other provinces of France, subjected to the same duties asother foreign countries. These are Alsace, the three bishoprics ofMentz, Toul, and Verdun, and the three cities of Dunkirk, Bayonne, andMarseilles. Both in the provinces of the five great farms (called so onaccount of an ancient division of the duties of customs into five greatbranches, each of which was originally the subject of a particular farm, though they are now all united into one), and in those which are saidto be reckoned foreign, there are many local duties which do not extendbeyond a particular town or district. There are some such even in theprovinces which are said to be treated as foreign, particularly inthe city of Marseilles. It is unnecessary to observe how much both therestraints upon the interior commerce of the country, and the numberof the revenue officers, must be multiplied, in order to guard thefrontiers of those different provinces and districts which are subjectto such different systems of taxation. 

Over and above the general restraints arising from this complicatedsystem of revenue laws, the commerce of wine (after corn, perhaps, themost important production of France) is, in the greater part of theprovinces, subject to particular restraints arising from the favourwhich has been shown to the vineyards of particular provinces anddistricts above those of others. The provinces most famous for theirwines, it will be found, I believe, are those in which the trade in thatarticle is subject to the fewest restraints of this kind. The extensivemarket which such provinces enjoy, encourages good management both inthe cultivation of their vineyards, and in the subsequent preparation oftheir wines. 

Such various and complicated revenue laws are not peculiar to France. The little duchy of Milan is divided into six provinces, in each ofwhich there is a different system of taxation, with regard to severaldifferent sorts of consumable goods. The still smaller territories ofthe duke of Parma are divided into three or four, each of which has, in the same manner, a system of its own. Under such absurd management, nothing but the great fertility of the soil, and happiness of theclimate, could preserve such countries from soon relapsing into thelowest state of poverty and barbarism. 

Taxes upon consumable commodities may either he levied by anadministration, of which the officers are appointed by govermnent, andare immediately accountable to government, of which the revenue must, in this case, vary from year to year, according to the occasionalvariations in the produce of the tax; or they may be let in farm for arent certain, the farmer being allowed to appoint his own officers, who, though obliged to levy the tax in the manner directed by the law, areunder his immediate inspection, and are immediately accountable to him. The best and most frugal way of levying a tax can never be by farm. Overand above what is necessary for paying the stipulated rent, the salariesof the officers, and the whole expense of administration, the farmermust always draw from the produce of the tax a certain profit, proportioned at least to the advance which he makes, to the risk whichhe runs, to the trouble which he is at, and to the knowledge and skillwhich it requires to manage so very complicated a concern. Government, by establishing an administration under their own immediate inspection, of the same kind with that which the farmer establishes, might atleast save this profit, which is almost always exorbitant. To farmany considerable branch of the public revenue requires either a greatcapital, or a great credit; circumstances which would alone restrain thecompetition for such an undertaking to a very small number of people. Ofthe few who have this capital or credit, a still smaller number have thenecessary knowledge or experience; another circumstance which restrainsthe competition still further. The very few who are in condition tobecome competitors, find it more for their interest to combine together;to become copartners, instead of competitors; and, when the farm is setup to auction, to offer no rent but what is much below the real value. In countries where the public revenues are in farm, the farmers aregenerally the most opulent people. Their wealth would alone excite thepublic indignation; and the vanity which almost always accompaniessuch upstart fortunes, the foolish ostentation with which they commonlydisplay that wealth, excite that indignation still more. 

The farmers of the public revenue never find the laws too severe, whichpunish any attempt to evade the payment of a tax. They have no bowelsfor the contributors, who are not their subjects, and whose universalbankruptcy, if it should happen the day after the farm is expired, wouldnot much affect their interest. In the greatest exigencies of the state, when the anxiety of the sovereign for the exact payment of his revenueis necessarily the greatest, they seldom fail to complain, that withoutlaws more rigorous than those which actually took place, it will beimpossible for them to pay even the usual rent. In those moments ofpublic distress, their commands cannot be disputed. The revenue laws, therefore, become gradually more and more severe. The most sanguinaryare always to be found in countries where the greater part of the publicrevenue is in farm; the mildest, in countries where it is levied underthe immediate inspection of the sovereign. Even a bad sovereign feelsmore compassion for his people than can ever be expected from thefarmers of his revenue. He knows that the permanent grandeur of hisfamily depends upon the prosperity of his people, and he will neverknowingly ruin that prosperity for the sake of any momentary interest ofhis own. It is otherwise with the farmers of his revenue, whose grandeurmay frequently be the effect of the ruin, and not of the prosperity, ofhis people. 

A tax is sometimes not only farmed for a certain rent, but the farmerhas, besides, the monopoly of the commodity taxed. In France, the dutiesupon tobacco and salt are levied in this manner. In such cases, thefarmer, instead of one, levies two exorbitant profits upon the people;the profit of the farmer, and the still more exorbitant one of themonopolist. Tobacco being a luxury, every man is allowed to buy or notto buy as he chuses; but salt being a necessary, every man is obliged tobuy of the farmer a certain quantity of it; because, if he did not buythis quantity of the farmer, he would, it is presumed, buy it of somesmuggler. The taxes upon both commodities are exorbitant. The temptationto smuggle, consequently, is to many people irresistible; while, atthe same time, the rigour of the law, and the vigilance of the farmer'sofficers, render the yielding to the temptation almost certainlyruinous. The smuggling of salt and tobacco sends every year severalhundred people to the galleys, besides a very considerable number whomit sends to the gibbet. Those taxes, levied in this manner, yield a veryconsiderable revenue to government. In 1767, the farm of tobacco was letfor twenty-two millions five hundred and forty-one thousand two hundredand seventy-eight livres a-year; that of salt for thirty-six millionsfour hundred and ninety-two thousand four hundred and four livres. Thefarm, in both cases, was to commence in 1768, and to last for six years. Those who consider the blood of the people as nothing, in comparisonwith the revenue of the prince, may, perhaps, approve of this methodof levying taxes. Similar taxes and monopolies of salt and tobacco havebeen established in many other countries, particularly in the Austrianand Prussian dominions, and in the greater part of the states of Italy. 

In France, the greater part of the actual revenue of the crown isderived from eight different sources; the taille, the capitation, thetwo vingtiemes, the gabelles, the aides, the traites, the domaine, and the farm of tobacco. The live last are, in the greater part ofthe provinces, under farm. The three first are everywhere levied byan administration, under the immediate inspection and direction ofgovernment; and it is universally acknowledged, that in proportion towhat they take out of the pockets of the people, they bring moreinto the treasury of the prince than the other five, of which theadministration is much more wasteful and expensive. 

The finances of France seem, in their present state, to admit of threevery obvious reformations. First, by abolishing the taille and thecapitation, and by increasing the number of the vingtiemes, so as toproduce an additional revenue equal to the amount of those other taxes, the revenue of the crown might be preserved; the expense of collectionmight be much diminished; the vexation of the inferior ranks of people, which the taille and capitation occasion, might be entirely prevented;and the superior ranks might not be more burdened than the greater partof them are at present. The vingtieme, I have already observed, is atax very nearly of the same kind with what is called the land tax ofEngland. The burden of the taille, it is acknowledged, falls finallyupon the proprietors of land; and as the greater part of the capitationis assessed upon those who are subject to the taille, at so much a-poundof that other tax, the final payment of the greater part of it mustlikewise fall upon the same order of people. Though the number of thevingtiemes, therefore, was increased, so as to produce an additionalrevenue equal to the amount of both those taxes, the superior ranksof people might not be more burdened than they are at present; manyindividuals, no doubt, would, on account of the great inequalities withwhich the taille is commonly assessed upon the estates and tenants ofdifferent individuals. The interest and opposition of such favouredsubjects, are the obstacles most likely to prevent this, or any otherreformation of the same kind. Secondly, by rendering the gabelle, theaides, the traites, the taxes upon tobacco, all the different customsand excises, uniform in all the different parts of the kingdom, thosetaxes might be levied at much less expense, and the interior commerce ofthe kingdom might be rendered as free as that of England. Thirdly, andlastly, by subjecting all those taxes to an administration under theimmediate inspection and direction or government, the exorbitant profitsof the farmers-general might be added to the revenue of the state. Theopposition arising from the private interest of individuals, is likelyto be as effectual for preventing the two last as the first-mentionedscheme of reformation. 

The French system of taxation seems, in every respect, inferior to theBritish. In Great Britain, ten millions sterling are annually leviedupon less than eight millions of people, without its being possible tosay that any particular order is oppressed. From the Collections of theAbbé Expilly, and the observations of the author of the Essay uponthe Legislation and Commerce of Corn, it appears probable that France, including the provinces of Lorraine and Bar, contains about twenty-threeor twenty-four millions of people; three times the number, perhaps, contained in Great Britain. The soil and climate of France are betterthan those of Great Britain. The country has been much longer in astate of improvement and cultivation, and is, upon that account, betterstocked with all those things which it requires a long time to raiseup and accumulate; such as great towns, and convenient and well-builthouses, both in town and country. With these advantages, it might beexpected, that in France a revenue of thirty millions might be leviedfor the support of the state, with as little inconvenience as a revenueof ten millions is in Great Britain. In 1765 and 1766, the whole revenuepaid into the treasury of France, according to the best, though, Iacknowledge, very imperfect accounts which I could get of it, usuallyrun between 308 and 325 millions of livres; that is, it did not amountto fifteen millions sterling; not the half of what might have beenexpected, had the people contributed in the same proportion to theirnumbers as the people of Great Britain. The people of France, however, it is generally acknowledged, are much more oppressed by taxes than thepeople of Great Britain. France, however, is certainly the great empirein Europe, which, after that of Great Britain, enjoys the mildest andmost indulgent government. 

In Holland, the heavy taxes upon the necessaries of life have ruined, it is said, their principal manufacturers, and are likely to discourage, gradually, even their fisheries and their trade in ship-building. Thetaxes upon the necessaries of life are inconsiderable in Great Britain, and no manufacture has hitherto been ruined by them. The British taxeswhich bear hardest on manufactures, are some duties upon the importationof raw materials, particularly upon that of raw silk. The revenue of theStates-General and of the different cities, however, is said to amountto more than five millions two hundred and fifty thousand poundssterling; and as the inhabitants of the United Provinces cannot well besupposed to amount to more than a third part of those of Great Britain, they must, in proportion to their number, be much more heavily taxed. 

After all the proper subjects of taxation have been exhausted, if theexigencies of the state still continue to require new taxes, they mustbe imposed upon improper ones. The taxes upon the necessaries of life, therefore, may be no impeachment of the wisdom of that republic, which, in order to acquire and to maintain its independency, has, in spite ofits meat frugality, been involved in such expensive wars as have obligedit to contract great debts. The singular countries of Holland andZealand, besides, require a considerable expense even to preserve theirexistence, or to prevent their being swallowed up by the sea, which musthave contributed to increase considerably the load of taxes in those twoprovinces. The republican form of government seems to be the principalsupport of the present grandeur of Holland. The owners of greatcapitals, the great mercantile families, have generally either somedirect share, or some indirect influence, in the administration of thatgovernment. For the sake of the respect and authority which they derivefrom this situation, they are willing to live in a country where theircapital, if they employ it themselves, will bring them less profit, andif they lend it to another, less interest; and where the verymoderate revenue which they can draw from it will purchase less of thenecessaries and conveniencies of life than in any other part of Europe. The residence of such wealthy people necessarily keeps alive, in spiteof all disadvantages, a certain degree of industry in the country. Anypublic calamity which should destroy the republican form of government, which should throw the whole administration into the hands of nobles andof soldiers, which should annihilate altogether the importance of thosewealthy merchants, would soon render it disagreeable to them to live ina country where they were no longer likely to be much respected. Theywould remove both their residence and their capital to some othercountry, and the industry and commerce of Holland would soon follow thecapitals which supported them. 

CHAPTER III. OF PUBLIC DEBTS. 

In that rude state of society which precedes the extension of commerceand the improvement of manufactures; when those expensive luxuries, which commerce and manufactures can alone introduce, are altogetherunknown; the person who possesses a large revenue, I have endeavoured toshow in the third book of this Inquiry, can spend or enjoy that revenuein no other way than by maintaining nearly as many people as it canmaintain. A large revenue may at all times be said to consist in thecommand of a large quantity of the necessaries of life. In that rudestate of things, it is commonly paid in a large quantity of thosenecessaries, in the materials of plain food and coarse clothing, incorn and cattle, in wool and raw hides. When neither commerce normanufactures furnish any thing for which the owner can exchange thegreater part of those materials which are over and above his ownconsumption, he can do nothing with the surplus, but feed and clothenearly as many people as it will feed and clothe. A hospitality in whichthere is no luxury, and a liberality in which there is no ostentation, occasion, in this situation of things, the principal expenses of therich and the great. But these I have likewise endeavoured to show, inthe same book, are expenses by which people are not very apt to ruinthemselves. There is not, perhaps, any selfish pleasure so frivolous, ofwhich the pursuit has not sometimes ruined even sensible men. A passionfor cock-fighting has ruined many. But the instances, I believe, arenot very numerous, of people who have been ruined by a hospitalityor liberality of this kind; though the hospitality of luxury, and theliberality of ostentation have ruined many. Among our feudal ancestors, the long time during which estates used to continue in the same family, sufficiently demonstrates the general disposition of people to livewithin their income. Though the rustic hospitality, constantly exercisedby the great landholders, may not, to us in the present times, seemconsistent with that order which we are apt to consider as inseparablyconnected with good economy; yet we must certainly allow them to havebeen at least so far frugal, as not commonly to have spent their wholeincome. A part of their wool and raw hides, they had generally anopportunity of selling for money. Some part of this money, perhaps, theyspent in purchasing the few objects of vanity and luxury, with which thecircumstances of the times could furnish them; but some part of it theyseem commonly to have hoarded. They could not well, indeed, do any thingelse but hoard whatever money they saved. To trade, was disgraceful toa gentleman; and to lend money at interest, which at that time wasconsidered as usury, and prohibited bylaw, would have been still moreso. In those times of violence and disorder, besides, it was convenientto have a hoard of money at hand, that in case they should be drivenfrom their own home, they might have something of known value to carrywith them to some place of safety. The same violence which made itconvenient to hoard, made it equally convenient to conceal the hoard. The frequency of treasure-trove, or of treasure found, of which no ownerwas known, sufficiently demonstrates the frequency, in those times, both of hoarding and of concealing the hoard. Treasure-trove was thenconsidered as an important branch of the revenue of the sovereign. Allthe treasure-trove of the kingdom would scarce, perhaps, in the presenttimes, make an important branch of the revenue of a private gentleman ofa good estate. 

The same disposition, to save and to hoard, prevailed in the sovereign, as well as in the subjects. Among nations, to whom commerce andmanufacture are little known, the sovereign, it has already beenobserved in the Fourth book, is in a situation which naturally disposeshim to the parsimony requisite for accumulation. In that situation, theexpense, even of a sovereign, cannot be directed by that vanity whichdelights in the gaudy finery of a court. The ignorance of the timesaffords but few of the trinkets in which that finery consists. Standingarmies are not then necessary; so that the expense, even of a sovereign, like that of any other great lord can be employed in scarce any thingbut bounty to his tenants, and hospitality to his retainers. But bountyand hospitality very seldom lead to extravagance; though vanity almostalways does. All the ancient sovereigns of Europe, accordingly, it hasalready been observed, had treasures. Every Tartar chief, in the presenttimes, is said to have one. 

In a commercial country, abounding with every sort of expensive luxury, the sovereign, in the same manner as almost all the great proprietorsin his dominions, naturally spends a great part of his revenue inpurchasing those luxuries. His own and the neighbouring countries supplyhim abundantly with all the costly trinkets which compose the splendid, but insignificant, pageantry of a court. For the sake of an inferiorpageantry of the same kind, his nobles dismiss their retainers, make their tenants independent, and become gradually themselves asinsignificant as the greater part of the wealthy burghers in hisdominions. The same frivolous passions, which influence their conduct, influence his. How can it be supposed that he should be the only richman in his dominions who is insensible to pleasures of this kind? If hedoes not, what he is very likely to do, spend upon those pleasures sogreat a part of his revenue as to debilitate very much the defensivepower of the state, it cannot well be expected that he should not spendupon them all that part of it which is over and above what is necessaryfor supporting that defensive power. His ordinary expense becomes equalto his ordinary revenue, and it is well if it does not frequentlyexceed it. The amassing of treasure can no longer be expected; andwhen extraordinary exigencies require extraordinary expenses, he mustnecessarily call upon his subjects for an extraordinary aid. The presentand the late king of Prussia are the only great princes of Europe, who, since the death of Henry IV. Of France, in 1610, are supposed tohave amassed any considerable treasure. The parsimony which leads toaccumulation has become almost as rare in republican as in monarchicalgovernments. The Italian republics, the United Provinces of theNetherlands, are all in debt. The canton of Berne is the single republicin Europe which has amassed any considerable treasure. The other Swissrepublics have not. The taste for some sort of pageantry, for splendidbuildings, at least, and other public ornaments, frequently prevails asmuch in the apparently sober senate-house of a little republic, as inthe dissipated court of the greatest king. 

The want of parsimony, in time of peace, imposes the necessity ofcontracting debt in time of war. When war comes, there is no money inthe treasury, but what is necessary for carrying on the ordinary expenseof the peace establishment. In war, an establishment of three or fourtimes that expense becomes necessary for the defence of the state;and consequently, a revenue three or four times greater than the peacerevenue. Supposing that the sovereign should have, what he scarce everhas, the immediate means of augmenting his revenue in proportion to theaugmentation of his expense; yet still the produce of the taxes, fromwhich this increase of revenue must be drawn, will not begin to comeinto the treasury, till perhaps ten or twelve months after they areimposed. But the moment in which war begins, or rather the moment inwhich it appears likely to begin, the army must be augmented, the fleetmust be fitted out, the garrisoned towns must be put into a postureof defence; that army, that fleet, those garrisoned towns, must befurnished with arms, ammunition, and provisions. An immediate and greatexpense must be incurred in that moment of immediate danger, which willnot wait for the gradual and slow returns of the new taxes. In thisexigency, government can have no other resource but in borrowing. 

The same commercial state of society which, by the operation ofmoral causes, brings government in this manner into the necessity ofborrowing, produces in the subjects both an ability and an inclinationto lend. If it commonly brings along with it the necessity of borrowing, it likewise brings with it the facility of doing so. 

A country abounding with merchants and manufacturers, necessarilyabounds with a set of people through whose hands, not only their owncapitals, but the capitals of all those who either lend them money, ortrust them with goods, pass as frequently, or more frequently, than therevenue of a private man, who, without trade or business, lives uponhis income, passes through his hands. The revenue of such a man canregularly pass through his hands only once in a year. But the wholeamount of the capital and credit of a merchant, who deals in a trade ofwhich the returns are very quick, may sometimes pass through his handstwo, three, or four times in a year. A country abounding with merchantsand manufacturers, therefore, necessarily abounds with a set of people, who have it at all times in their power to advance, if they chuse to doso, a very large sum of money to government. Hence the ability in thesubjects of a commercial state to lend. 

Commerce and manufactures can seldom flourish long in any state whichdoes not enjoy a regular administration of justice; in which the peopledo not feel themselves secure in the possession of their property; inwhich the faith of contracts is not supported by law; and in whichthe authority of the state is not supposed to be regularly employedin enforcing the payment of debts from all those who are able to pay. Commerce and manufactures, in short, can seldom flourish in any state, in which there is not a certain degree of confidence in the justiceof government. The same confidence which disposes great merchants andmanufacturers upon ordinary occasions, to trust their property to theprotection of a particular government, disposes them, upon extraordinaryoccasions, to trust that government with the use of their property. By lending money to government, they do not even for a moment diminishtheir ability to carry on their trade and manufactures; on thecontrary, they commonly augment it. The necessities of the state rendergovernment, upon most occasions willing to borrow upon terms extremelyadvantageous to the lender. The security which it grants to the originalcreditor, is made transferable to any other creditor; and from theuniversal confidence in the justice of the state, generally sells in themarket for more than was originally paid for it. The merchant ormonied man makes money by lending money to government, and instead ofdiminishing, increases his trading capital. He generally considers itas a favour, therefore, when the administration admits him to a sharein the first subscription for a new loan. Hence the inclination orwillingness in the subjects of a commercial state to lend. 

The government of such a state is very apt to repose itself upon thisability and willingness of its subjects to lend it their money onextraordinary occasions. It foresees the facility of borrowing, andtherefore dispenses itself from the duty of saving. 

In a rude state of society, there are no great mercantile ormanufacturing capitals. The individuals, who hoard whatever money theycan save, and who conceal their hoard, do so from a distrust of thejustice of government; from a fear, that if it was known that they hada hoard, and where that hoard was to be found, they would quickly beplundered. In such a state of things, few people would be able, and nobody would be willing to lend their money to government onextraordinary exigencies. The sovereign feels that he must providefor such exigencies by saving, because he foresees the absoluteimpossibility of borrowing. This foresight increases still further hisnatural disposition to save. 

The progress of the enormous debts which at present oppress, and willin the long-run probably ruin, all the great nations of Europe, hasbeen pretty uniform. Nations, like private men, have generally begunto borrow upon what may be called personal credit, without assigningor mortgaging any particular fund for the payment of the debt; andwhen this resource has failed them, they have gone on to borrow uponassignments or mortgages of particular funds. 

What is called the unfunded debt of Great Britain, is contracted in theformer of those two ways. It consists partly in a debt which bears, oris supposed to bear, no interest, and which resembles the debts thata private man contracts upon account; and partly in a debt which bearsinterest, and which resembles what a private man contracts upon his billor promissory-note. The debts which are due, either for extraordinaryservices, or for services either not provided for, or not paid at thetime when they are performed; part of the extraordinaries of the army, navy, and ordnance, the arrears of subsidies to foreign princes, thoseof seamen's wages, etc. Usually constitute a debt of the first kind. Navy and exchequer bills, which are issued sometimes in payment of apart of such debts, and sometimes for other purposes, constitute a debtof the second kind; exchequer bills bearing interest from the day onwhich they are issued, and navy bills six months after they are issued. The bank of England, either by voluntarily discounting those billsat their current value, or by agreeing with government for certainconsiderations to circulate exchequer bills, that is, to receive themat par, paying the interest which happens to be due upon them, keeps uptheir value, and facilitates their circulation, and thereby frequentlyenables government to contract a very large debt of this kind. InFrance, where there is no bank, the state bills (billets d'etat {SeeExamen des Reflections Politiques sur les Finances. }) have sometimessold at sixty and seventy per cent. Discount. During the great recoinagein king William's time, when the bank of England thought proper to put astop to its usual transactions, exchequer bills and tallies are said tohave sold from twenty-five to sixty per cent. Discount; owing partly, nodoubt, to the supposed instability of the new government established bythe Revolution, but partly, too, to the want of the support of the bankof England. 

When this resource is exhausted, and it becomes necessary, in order toraise money, to assign or mortgage some particular branch of the publicrevenue for the payment of the debt, government has, upon differentoccasions, done this in two different ways. Sometimes it has made thisassignment or mortgage for a short period of time only, a year, or a fewyears, for example; and sometimes for perpetuity. In the one case, the fund was supposed sufficient to pay, within the limited time, bothprincipal and interest of the money borrowed. In the other, it wassupposed sufficient to pay the interest only, or a perpetual annuityequivalent to the interest, government being at liberty to redeem, atany time, this annuity, upon paying back the principal sum borrowed. When money was raised in the one way, it was said to be raised byanticipation; when in the other, by perpetual funding, or, more shortly, by funding. 

In Great Britain, the annual land and malt taxes are regularlyanticipated every year, by virtue of a borrowing clause constantlyinserted into the acts which impose them. The bank of England generallyadvances at an interest, which, since the Revolution, has varied fromeight to three per cent. , the sums of which those taxes are granted, and receives payment as their produce gradually comes in. If there is adeficiency, which there always is, it is provided for in the suppliesof the ensuing year. The only considerable branch of the public revenuewhich yet remains unmortgaged, is thus regularly spent before it comesin. Like an improvident spendthrift, whose pressing occasions will notallow him to wait for the regular payment of his revenue, the state isin the constant practice of borrowing of its own factors and agents, andof paying interest for the use of its own money. 

In the reign of king William, and during a great part of that of queenAnne, before we had become so familiar as we are now with the practiceof perpetual funding, the greater part of the new taxes were imposed butfor a short period of time (for four, five, six, or seven years only), and a great part of the grants of every year consisted in loansupon anticipations of the produce of those taxes. The produce beingfrequently insufficient for paying, within the limited term, theprincipal and interest of the money borrowed, deficiencies arose; tomake good which, it became necessary to prolong the term. 

In 1697, by the 8th of William III. , c. 20, the deficiencies of severaltaxes were charged upon what was then called the first general mortgageor fund, consisting of a prolongation to the first of August 1706, ofseveral different taxes, which would have expired within a shorter term, and of which the produce was accumulated into one general fund. Thedeficiencies charged upon this prolonged term amounted to £5, 160, 459:14: 9½. 

In 1701, those duties, with some others, were still further prolonged, for the like purposes, till the first of August 1710, and were calledthe second general mortgage or fund. The deficiencies charged upon itamounted to £2, 055, 999: 7: 11½. 

In 1707, those duties were still further prolonged, as a fund for newloans, to the first of August 1712, and were called the third generalmortgage or fund. The sum borrowed upon it was £983, 254:11:9¼. 

In 1708, those duties were all (except the old subsidy of tonnage andpoundage, of which one moiety only was made a part of this fund, and aduty upon the importation of Scotch linen, which had been taken off bythe articles of union) still further continued, as a fund for new loans, to the first of August 1714, and were called the fourth general mortgageor fund. The sum borrowed upon it was £925, 176:9:2¼. 

In 1709, those duties were all ( except the old subsidy of tonnage andpoundage, which was now left out of this fund altogether ) still furthercontinued, for the same purpose, to the first of August 1716, and werecalled the fifth general mortgage or fund. The sum borrowed upon it was£922, 029:6s. 

In 1710, those duties were again prolonged to the first of August 1720, and were called the sixth general mortgage or fund. The sum borrowedupon it was £1, 296, 552:9:11¾. 

In 1711, the same duties (which at this time were thus subject to fourdifferent anticipations), together with several others, were continuedfor ever, and made a fund for paying the interest of the capital ofthe South-sea company, which had that year advanced to government, forpaying debts, and making good deficiencies, the sum of £9, 177, 967:15:4d, the greatest loan which at that time had ever been made. 

Before this period, the principal, so far as I have been able toobserve, the only taxes, which, in order to pay the interest of a debt, had been imposed for perpetuity, were those for paying the interestof the money which had been advanced to government by the bank andEast-India company, and of what it was expected would be advanced, butwhich was never advanced, by a projected land bank. The bank fund atthis time amounted to £3, 375, 027:17:10½, for which was paid anannuity or interest of £206, 501:15:5d. The East-India fund amounted to£3, 200, 000, for which was paid an annuity or interest of £160, 000; thebank fund being at six per cent. , the East-India fund at five per cent. Interest. 

In 1715, by the first of George I. , c. 12, the different taxes whichhad been mortgaged for paying the bank annuity, together with severalothers, which, by this act, were likewise rendered perpetual, wereaccumulated into one common fund, called the aggregate fund, which wascharged not only with the payment of the bank annuity, but with severalother annuities and burdens of different kinds. This fund was afterwardsaugmented by the third of George I. , c. 8. , and by the fifth of GeorgeI. , c. 3, and the different duties which were then added to it werelikewise rendered perpetual. 

In 1717, by the third of George I. , c. 7, several other taxes wererendered perpetual, and accumulated into another common fund, calledthe general fund, for the payment of certain annuities, amounting in thewhole to £724, 849:6:10½. 

In consequence of those different acts, the greater part of the taxes, which before had been anticipated only for a short term of years wererendered perpetual, as a fund for paying, not the capital, but theinterest only, of the money which had been borrowed upon them bydifferent successive anticipations. 

Had money never been raised but by anticipation, the course of afew years would have liberated the public revenue, without any otherattention of government besides that of not overloading the fund, bycharging it with more debt than it could pay within the limited term, and not of anticipating a second time before the expiration of the firstanticipation. But the greater part of European governments have beenincapable of those attentions. They have frequently overloaded the fund, even upon the first anticipation; and when this happened not to be thecase, they have generally taken care to overload it, by anticipatinga second and a third time, before the expiration of the firstanticipation. The fund becoming in this manner altogether insufficientfor paying both principal and interest of the money borrowed upon it, it became necessary to charge it with the interest only, or a perpetualannuity equal to the interest; and such improvident anticipationsnecessarily gave birth to the more ruinous practice of perpetualfunding. But though this practice necessarily puts off the liberation ofthe public revenue from a fixed period, to one so indefinite that it isnot very likely ever to arrive; yet, as a greater sum can, in all cases, be raised by this new practice than by the old one of anticipation, theformer, when men have once become familiar with it, has, in the greatexigencies of the state, been universally preferred to the latter. Torelieve the present exigency, is always the object which principallyinterests those immediately concerned in the administration of publicaffairs. The future liberation of the public revenue they leave to thecare of posterity. 

During the reign of queen Anne, the market rate of interest had fallenfrom six to five per cent. ; and, in the twelfth year of her reign, fiveper cent. Was declared to be the highest rate which could lawfully betaken for money borrowed upon private security. Soon after thegreater part of the temporary taxes of Great Britain had been renderedperpetual, and distributed into the aggregate, South-sea, and generalfunds, the creditors of the public, like those of private persons, wereinduced to accept of five per cent. For the interest of their money, which occasioned a saving of one per cent. Upon the capital of thegreater part or the debts which had been thus funded for perpetuity, orof one-sixth of the greater part of the annuities which were paid out ofthe three great funds above mentioned. This saving left a considerablesurplus in the produce of the different taxes which had been accumulatedinto those funds, over and above what was necessary for paying theannuities which were now charged upon them, and laid the foundation ofwhat has since been called the sinking fund. In 1717, it amounted to£523, 454:7:7½. In 1727, the interest of the greater part of the publicdebts was still further reduced to four per cent. ; and, in 1753 and1757, to three and a-half, and three per cent. , which reductions stillfurther augmented the sinking fund. 

A sinking fund, though instituted for the payment of old, facilitatesvery much the contracting of new debts. It is a subsidiary fund, alwaysat hand, to be mortgaged in aid of any other doubtful fund, upon whichmoney is proposed to be raised in any exigency of the state. Whether thesinking fund of Great Britain has been more frequently applied to theone or to other of those two purposes, will sufficiently appear by andby. 

Besides those two methods of borrowing, by anticipations and by aperpetual funding, there are two other methods, which hold a sort ofmiddle place between them; these are, that of borrowing upon annuitiesfor terms of years, and that of borrowing upon annuities for lives. 

During the reigns of king William and queen Anne, large sums werefrequently borrowed upon annuities for terms of years, which weresometimes longer and sometimes shorter. In 1695, an act was passed forborrowing one million upon an annuity of fourteen per cent. , or £140, 000a-year, for sixteen years. In 1691, an act was passed for borrowinga million upon annuities for lives, upon terms which, in the presenttimes, would appear very advantageous; but the subscription was notfilled up. In the following year, the deficiency was made good, byborrowing upon annuities for lives, at fourteen per cent. Or a littlemore than seven years purchase. In 1695, the persons who had purchasedthose annuities were allowed to exchange them for others of ninety-sixyears, upon paying into the exchequer sixty-three pounds in the hundred;that is, the difference between fourteen per cent. For life, andfourteen per cent. For ninety-six years, was sold for sixty-threepounds, or for four and a-half years purchase. Such was the supposedinstability of government, that even these terms procured fewpurchasers. In the reign of queen Anne, money was, upon differentoccasions, borrowed both upon annuities for lives, and upon annuitiesfor terms of thirty-two, of eighty-nine, of ninety-eight, and ofninety-nine years. In 1719, the proprietors of the annuities forthirty-two years were induced to accept, in lieu of them, South-seastock to the amount of eleven and a-half years purchase of theannuities, together with an additional quantity of stock, equal to thearrears which happened then to be due upon them. In 1720, the greaterpart of the other annuities for terms of years, both long and short, were subscribed into the same fund. The long annuities, at that time, amounted to £666, 821: 8:3½ a-year. On the 5th of January 1775, theremainder of them, or what was not subscribed at that time, amountedonly to £136, 453:12:8d. 

During the two wars which began in 1739 and in 1755, little money wasborrowed, either upon annuities for terms of years, or upon those forlives. An annuity for ninety-eight or ninety-nine years, however, isworth nearly as much as a perpetuity, and should therefore, one mightthink, be a fund for borrowing nearly as much. But those who, in orderto make family settlements, and to provide for remote futurity, buyinto the public stocks, would not care to purchase into one of whichthe value was continually diminishing; and such people make a veryconsiderable proportion, both of the proprietors and purchasers ofstock. An annuity for a long term of years, therefore, though itsintrinsic value may be very nearly the same with that of a perpetualannuity, will not find nearly the same number of purchasers. Thesubscribers to a new loan, who mean generally to sell their subscriptionas soon as possible, prefer greatly a perpetual annuity, redeemable byparliament, to an irredeemable annuity, for a long term of years, ofonly equal amount. The value of the former may be supposed alwaysthe same, or very nearly the same; and it makes, therefore, a moreconvenient transferable stock than the latter. 

During the two last-mentioned wars, annuities, either for terms of yearsor for lives, were seldom granted, but as premiums to the subscribers ofa new loan, over and above the redeemable annuity or interest, upon thecredit of which the loan was supposed to be made. They were granted, not as the proper fund upon which the money was borrowed, but as anadditional encouragement to the lender. 

Annuities for lives have occasionally been granted in two differentways; either upon separate lives, or upon lots of lives, which, inFrench, are called tontines, from the name of their inventor. Whenannuities are granted upon separate lives, the death of every individualannuitant disburdens the public revenue, so far as it was affected byhis annuity. When annuities are granted upon tontines, the liberationof the public revenue does not commence till the death of all theannuitants comprehended in one lot, which may sometimes consist oftwenty or thirty persons, of whom the survivors succeed to the annuitiesof all those who die before them; the last survivor succeeding to theannuities of the whole lot. Upon the same revenue, more money can alwaysbe raised by tontines than by annuities for separate lives. An annuity, with a right of survivorship, is really worth more than an equal annuityfor a separate life; and, from the confidence which every man naturallyhas in his own good fortune, the principle upon which is founded thesuccess of all lotteries, such an annuity generally sells for somethingmore than it is worth. In countries where it is usual for governmentto raise money by granting annuities, tontines are, upon this account, generally preferred to annuities for separate lives. The expedientwhich will raise most money, is almost always preferred to that whichis likely to bring about, in the speediest manner, the liberation of thepublic revenue. 

In France, a much greater proportion of the public debts consists inannuities for lives than in England. According to a memoir presented bythe parliament of Bourdeaux to the king, in 1764, the whole public debtof France is estimated at twenty-four hundred millions of livres; ofwhich the capital, for which annuities for lives had been granted, issupposed to amount to three hundred millions, the eighth part of thewhole public debt. The annuities themselves are computed to amountto thirty millions a-year, the fourth part of one hundred and twentymillions, the supposed interest of that whole debt. These estimations, I know very well, are not exact; but having been presented by sovery respectable a body as approximations to the truth, they may, Iapprehend, be considered as such. It is not the different degrees ofanxiety in the two governments of France and England for the liberationof the public revenue, which occasions this difference in theirrespective modes of borrowing; it arises altogether from the differentviews and interests of the lenders. 

In England, the seat of government being in the greatest mercantile cityin the world, the merchants are generally the people who advance moneyto government. By advancing it, they do not mean to diminish, but, onthe contrary, to increase their mercantile capitals; and unless theyexpected to sell, with some profit, their share in the subscriptionfor a new loan, they never would subscribe. But if, by advancing theirmoney, they were to purchase, instead of perpetual annuities, annuitiesfor lives only, whether their own or those of other people, they wouldnot always be so likely to sell them with a profit. Annuities upon theirown lives they would always sell with loss; because no man will give foran annuity upon the life of another, whose age and state of health arenearly the same with his own, the same price which he would give for oneupon his own. An annuity upon the life of a third person, indeed, is, no doubt, of equal value to the buyer and the seller; but its real valuebegins to diminish from the moment it is granted, and continues to doso, more and more, as long as it subsists. It can never, therefore, makeso convenient a transferable stock as a perpetual annuity, of which thereal value may be supposed always the same, or very nearly the same. 

In France, the seat of government not being in a great mercantile city, merchants do not make so great a proportion of the people who advancemoney to government. The people concerned in the finances, thefarmers-general, the receivers of the taxes which are not in farm, thecourt-bankers, etc. Make the greater part of those who advance theirmoney in all public exigencies. Such people are commonly men of meanbirth, but of great wealth, and frequently of great pride. They are tooproud to marry their equals, and women of quality disdain to marrythem. They frequently resolve, therefore, to live bachelors; and havingneither any families of their own, nor much regard for those of theirrelations, whom they are not always very fond of acknowledging, theydesire only to live in splendour during their own time, and are notunwilling that their fortune should end with themselves. The number ofrich people, besides, who are either averse to marry, or whose conditionof life renders it either improper or inconvenient for them to do so, ismuch greater in France than in England. To such people, who havelittle or no care for posterity, nothing can be more convenient than toexchange their capital for a revenue, which is to last just as long, andno longer, than they wish it to do. 

The ordinary expense of the greater part of modern governments, in timeof peace, being equal, or nearly equal, to their ordinary revenue, whenwar comes, they are both unwilling and unable to increase their revenuein proportion to the increase of their expense. They are unwilling, forfear of offending the people, who, by so great and so sudden an increaseof taxes, would soon be disgusted with the war; and they are unable, from not well knowing what taxes would be sufficient to produce therevenue wanted. The facility of borrowing delivers them from theembarrassment which this fear and inability would otherwise occasion. Bymeans of borrowing, they are enabled, with a very moderate increase oftaxes, to raise, from year to year, money sufficient for carrying on thewar; and by the practice of perpetual funding, they are enabled, withthe smallest possible increase of taxes, to raise annually the largestpossible sum of money. In great empires, the people who live in thecapital, and in the provinces remote from the scene of action, feel, many of them, scarce any inconveniency from the war, but enjoy, at theirease, the amusement of reading in the newspapers the exploits of theirown fleets and armies. To them this amusement compensates the smalldifference between the taxes which they pay on account of the war, andthose which they had been accustomed to pay in time of peace. They arecommonly dissatisfied with the return of peace, which puts an end totheir amusement, and to a thousand visionary hopes of conquest andnational glory, from a longer continuance of the war. 

The return of peace, indeed, seldom relieves them from the greaterpart of the taxes imposed during the war. These are mortgaged for theinterest of the debt contracted, in order to carry it on. If, overand above paying the interest of this debt, and defraying the ordinaryexpense of government, the old revenue, together with the new taxes, produce some surplus revenue, it may, perhaps, be converted into asinking fund for paying off the debt. But, in the first place, thissinking fund, even supposing it should be applied to no other purpose, is generally altogether inadequate for paying, in the course of anyperiod during which it can reasonably be expected that peace shouldcontinue, the whole debt contracted during the war; and, in the secondplace, this fund is almost always applied to other purposes. 

The new taxes were imposed for the sole purpose of paying the interestof the money borrowed upon them. If they produce more, it is generallysomething which was neither intended nor expected, and is, therefore, seldom very considerable. Sinking funds have generally arisen, not somuch from any surplus of the taxes which was over and above what wasnecessary for paying the interest or annuity originally charged uponthem, as from a subsequent reduction of that interest; that of Hollandin 1655, and that of the ecclesiastical state in 1685, were both formedin this manner. Hence the usual insufficiency of such funds. 

During the most profound peace, various events occur, which require anextraordinary expense; and government finds it always more convenient todefray this expense by misapplying the sinking fund, than by imposing anew tax. Every new tax is immediately felt more or less by the people. It occasions always some murmur, and meets with some opposition. Themore taxes may have been multiplied, the higher they may have beenraised upon every different subject of taxation; the more loudly thepeople complain of every new tax, the more difficult it becomes, too, either to find out new subjects of taxation, or to raise much higherthe taxes already imposed upon the old. A momentary suspension of thepayment of debt is not immediately felt by the people, and occasionsneither murmur nor complaint. To borrow of the sinking fund is alwaysan obvious and easy expedient for getting out of the present difficulty. The more the public debts may have been accumulated, the more necessaryit may have become to study to reduce them; the more dangerous, the moreruinous it may be to misapply any part of the sinking fund; the lesslikely is the public debt to be reduced to any considerable degree, themore likely, the more certainly, is the sinking fund to be misappliedtowards defraying all the extraordinary expenses which occur in time ofpeace. When a nation is already overburdened with taxes, nothing but thenecessities of a new war, nothing but either the animosity of nationalvengeance, or the anxiety for national security, can induce the peopleto submit, with tolerable patience, to a new tax. Hence the usualmisapplication of the sinking fund. 

In Great Britain, from the time that we had first recourse to theruinous expedient of perpetual funding, the reduction of the publicdebt, in time of peace, has never borne any proportion to itsaccumulation in time of war. It was in the war which began in 1668, andwas concluded by the treaty of Ryswick, in 1697, that the foundation ofthe present enormous debt of Great Britain was first laid. 

On the 31st of December 1697, the public debts of Great Britain, fundedand unfunded, amounted to £21, 515, 742:13:8½. A great part of thosedebts had been contracted upon short anticipations, and some part uponannuities for lives; so that, before the 31st of December 1701, in lessthan four years, there had partly been paid off; and partly revertedto the public, the sum of £5, 121, 041:12:0¾d; a greater reduction of thepublic debt than has ever since been brought about in so short aperiod of time. The remaining debt, therefore, amounted only to£16, 394, 701:1:7¼d. 

In the war which began in 1702, and which was concluded by the treatyof Utrecht, the public debts were still more accumulated. On the 31st ofDecember 1714, they amounted to £53, 681, 076:5:6½. The subscriptioninto the South-sea fund, of the short and long annuities, increased thecapital of the public debt; so that, on the 31st of December 1722, itamounted to £55, 282, 978:1:3 5/6. The reduction of the debt began in1723, and went on so slowly, that, on the 31st of December 1739, duringseventeen years-of profound peace, the whole sum paid off was no morethan £8, 328, 554:17:11 3/12, the capital of the public debt, at thattime, amounting to £46, 954, 623:3:4 7/12. 

The Spanish war, which began in 1739, and the French war which soonfollowed it, occasioned a further increase of the debt, which, on the31st of December 1748, after the war had been concluded by the treaty ofAix-la-Chapelle, amounted to £78, 293, 313:1:10¾. The most profound peace, of 17 years continuance, had taken no more than £8, 328, 354, 17:11¼ fromit. A war, of less than nine years continuance, added £31, 338, 689:18: 61/6 to it. {See James Postlethwaite's History of the Public Revenue. }

During the administration of Mr. Pelham, the interest of the public debtwas reduced, or at least measures were taken for reducing it, from fourto three per cent. ; the sinking fund was increased, and some part of thepublic debt was paid off. In 1755, before the breaking out of the latewar, the funded debt of Great Britain amounted to £72, 289, 675. On the5th of January 1763, at the conclusion of the peace, the funded debtamounted debt to £122, 603, 336:8:2¼. The unfunded debt has been stated at£13, 927, 589:2:2. But the expense occasioned by the war did not end withthe conclusion of the peace; so that, though on the 5th of January1764, the funded debt was increased (partly by a new loan, and partly byfunding a part of the unfunded debt) to £129, 586, 789:10:1¾, there stillremained (according to the very well informed author of Considerationson the Trade and Finances of Great Britain) an unfunded debt, which wasbrought to account in that and the following year, of £9, 975, 017: 12:215/44d. In 1764, therefore, the public debt of Great Britain, fundedand unfunded together, amounted, according to this author, to£139, 561, 807:2:4. The annuities for lives, too, which had been grantedas premiums to the subscribers to the new loans in 1757, estimated atfourteen years purchase, were valued at £472, 500; and the annuities forlong terms of years, granted as premiums likewise, in 1761 and 1762, estimated at twenty-seven and a-half years purchase, were valued at£6, 826, 875. During a peace of about seven years continuance, the prudentand truly patriotic administration of Mr. Pelham was not able to payoff an old debt of six millions. During a war of nearly the samecontinuance, a new debt of more than seventy-five millions wascontracted. 

On the 5th of January 1775, the funded debt of Great Britain amounted to£124, 996, 086, 1:6¼d. The unfunded, exclusive of a large civil-list debt, to £4, 150, 236:3:11 7/8. Both together, to £129, 146, 322:5:6. According tothis account, the whole debt paid off, during eleven years of profoundpeace, amounted only to £10, 415, 476:16:9 7/8. Even this small reductionof debt, however, has not been all made from the savings out of theordinary revenue of the state. Several extraneous sums, altogetherindependent of that ordinary revenue, have contributed towards it. Amongst these we may reckon an additional shilling in the pound landtax, for three years; the two millions received from the East-Indiacompany, as indemnification for their territorial acquisitions; andthe one hundred and ten thousand pounds received from the bank for therenewal of their charter. To these must be added several other sums, which, as they arose out of the late war, ought perhaps to be consideredas deductions from the expenses of it. The principal are, The produce of French prizes.............. £690, 449: 18: 9 Composition for French prisoners......... 670, 000: 0: 0

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

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

If we add to this sum the balance of the earl of Chatham's and Mr. Calcraft's accounts, and other army savings of the same kind, togetherwith what has been received from the bank, the East-India company, andthe additional shilling in the pound land tax, the whole must be a gooddeal more than five millions. The debt, therefore, which, since thepeace, has been paid out of the savings from the ordinary revenue ofthe state, has not, one year with another, amounted to half a milliona-year. The sinking fund has, no doubt, been considerably augmentedsince the peace, by the debt which had been paid off, by the reductionof the redeemable four per cents to three per cents, and by theannuities for lives which have fallen in; and, if peace were tocontinue, a million, perhaps, might now be annually spared out of ittowards the discharge of the debt. Another million, accordingly, was paid in the course of last year; but at the same time, a largecivil-list debt was left unpaid, and we are now involved in a new war, which, in its progress, may prove as expensive as any of our formerwars. {It has proved more expensive than any one of our former wars, andhas involved us in an additional debt of more than one hundred millions. During a profound peace of eleven years, little more than ten millionsof debt was paid; during a war of seven years, more than one hundredmillions was contracted. } The new debt which will probably be contractedbefore the end of the next campaign, may, perhaps, be nearly equal toall the old debt which has been paid off from the savings out of theordinary revenue of the state. It would be altogether chimerical, therefore, to expect that the public debt should ever be completelydischarged, by any savings which are likely to be made from thatordinary revenue as it stands at present. 

The public funds of the different indebted nations of Europe, particularly those of England, have, by one author, been represented asthe accumulation of a great capital, superadded to the other capital ofthe country, by means of which its trade is extended, its manufacturesare multiplied, and its lands cultivated and improved, much beyond whatthey could have been by means of that other capital only. He doesnot consider that the capital which the first creditors of the publicadvanced to government, was, from the moment in which he advanced it, acertain portion of the annual produce, turned away from serving in thefunction of a capital, to serve in that of a revenue; from maintainingproductive labourers, to maintain unproductive ones, and to be spent andwasted, generally in the course of the year, without even the hope ofany future reproduction. In return for the capital which they advanced, they obtained, indeed, an annuity of the public funds, in most cases, of more than equal value. This annuity, no doubt, replaced to them theircapital, and enabled them to carry on their trade and business to thesame, or, perhaps, to a greater extent than before; that is, they wereenabled, either to borrow of other people a new capital, upon thecredit of this annuity or, by selling it, to get from other people anew capital of their own, equal, or superior, to that which they hadadvanced to government. This new capital, however, which they in thismanner either bought or borrowed of other people, must have existed inthe country before, and must have been employed, as all capitals are, inmaintaining productive labour. When it came into the hands of those whohad advanced their money to government, though it was, in some respects, a new capital to them, it was not so to the country, but was onlya capital withdrawn from certain employments, in order to be turnedtowards others. Though it replaced to them what they had advanced togovernment, it did not replace it to the country. Had they not advancedthis capital to government, there would have been in the country twocapitals, two portions of the annual produce, instead of one, employedin maintaining productive labour. 

When, for defraying the expense of government, a revenue is raisedwithin the year, from the produce of free or unmortgaged taxes, acertain portion of the revenue of private people is only turned awayfrom maintaining one species of unproductive labour, towards maintaininganother. Some part of what they pay in those taxes, might, no doubt, have been accumulated into capital, and consequently employed inmaintaining productive labour; but the greater part would probablyhave been spent, and consequently employed in maintaining unproductivelabour. The public expense, however, when defrayed in this manner, nodoubt hinders, more or less, the further accumulation of newcapital; but it does not necessarily occasion the destruction of anyactually-existing capital. 

When the public expense is defrayed by funding, it is defrayed by theannual destruction of some capital which had before existed in thecountry; by the perversion of some portion of the annual produce whichhad before been destined for the maintenance of productive labour, towards that of unproductive labour. As in this case, however, the taxesare lighter than they would have been, had a revenue sufficient fordefraying the same expense been raised within the year; the privaterevenue of individuals is necessarily less burdened, and consequentlytheir ability to save and accumulate some part of that revenue intocapital, is a good deal less impaired. If the method of funding destroysmore old capital, it, at the same time, hinders less the accumulation oracquisition of new capital, than that of defraying the public expenseby a revenue raised within the year. Under the system of funding, thefrugality and industry of private people can more easily repair thebreaches which the waste and extravagance of government may occasionallymake in the general capital of the society. 

It is only during the continuance of war, however, that the system offunding has this advantage over the other system. Were the expense ofwar to be defrayed always by a revenue raised within the year, the taxesfrom which that extraordinary revenue was drawn would last no longerthan the war. The ability of private people to accumulate, though lessduring the war, would have been greater during the peace, than underthe system of funding. War would not necessarily have occasioned thedestruction of any old capitals, and peace would have occasioned theaccumulation of many more new. Wars would, in general, be more speedilyconcluded, and less wantonly undertaken. The people feeling, duringcontinuance of war, the complete burden of it, would soon grow wearyof it; and government, in order to humour them, would not be under thenecessity of carrying it on longer than it was necessary to do so. Theforesight of the heavy and unavoidable burdens of war would hinder thepeople from wantonly calling for it when there was no real or solidinterest to fight for. The seasons during which the ability of privatepeople to accumulate was somewhat impaired, would occur more rarely, and be of shorter continuance. Those, on the contrary, during which thatability was in the highest vigour would be of much longer duration thanthey can well be under the system of funding. 

When funding, besides, has made a certain progress, the multiplicationof taxes which it brings along with it, sometimes impairs as much theability of private people to accumulate, even in time of peace, as theother system would in time of war. The peace revenue of Great Britainamounts at present to more than ten millions a-year. If free andunmortgaged, it might be sufficient, with proper management, and withoutcontracting a shilling of new debt, to carry on the most vigorous war. The private revenue of the inhabitants of Great Britain is at present asmuch incumbered in time of peace, their ability to accumulate is as muchimpaired, as it would have been in the time of the most expensive war, had the pernicious system of funding never been adopted. 

In the payment of the interest of the public debt, it has been said, itis the right hand which pays the left. The money does not go out of thecountry. It is only a part of the revenue of one set of the inhabitantswhich is transferred to another; and the nation is not a farthing thepoorer. This apology is founded altogether in the sophistry of themercantile system; and, after the long examination which I have alreadybestowed upon that system, it may, perhaps, be unnecessary to sayanything further about it. It supposes, besides, that the whole publicdebt is owing to the inhabitants of the country, which happens not to betrue; the Dutch, as well as several other foreign nations, having a veryconsiderable share in our public funds. But though the whole debtwere owing to the inhabitants of the country, it would not, upon thataccount, be less pernicious. 

Land and capital stock are the two original sources of all revenue, bothprivate and public. Capital stock pays the wages of productive labour, whether employed in agriculture, manufactures, or commerce. Themanagement of those two original sources of revenue belongs to twodifferent sets of people; the proprietors of land, and the owners oremployers of capital stock. 

The proprietor of land is interested, for the sake of his own revenue, to keep his estate in as good condition as he can, by building andrepairing his tenants houses, by making and maintaining the necessarydrains and inclosures, and all those other expensive improvementswhich it properly belongs to the landlord to make and maintain. But, by different land taxes, the revenue of the landlord may be somuch diminished, and, by different duties upon the necessaries andconveniencies of life, that diminished revenue may be rendered of solittle real value, that he may find himself altogether unable to makeor maintain those expensive improvements. When the landlord, however, ceases to do his part, it is altogether impossible that the tenantshould continue to do his. As the distress of the landlord increases, the agriculture of the country must necessarily decline. 

When, by different taxes upon the necessaries and conveniencies of life, the owners and employers of capital stock find, that whatever revenuethey derive from it, will not, in a particular country, purchase thesame quantity of those necessaries and conveniencies which an equalrevenue would in almost any other, they will be disposed to remove tosome other. And when, in order to raise those taxes, all or the greaterpart of merchants and manufacturers, that is, all or the greater part ofthe employers of great capitals, come to be continually exposed to themortifying and vexatious visits of the tax-gatherers, this dispositionto remove will soon be changed into an actual removing. The industry ofthe country will necessarily fall with the removal of the capital whichsupported it, and the ruin of trade and manufactures will follow thedeclension of agriculture. 

To transfer from the owners of those two great sources of revenue, land, and capital stock, from the persons immediately interested in thegood condition of every particular portion of land, and in the goodmanagement of every particular portion of capital stock, to another setof persons (the creditors of the public, who have no such particularinterest ), the greater part of the revenue arising from either, must, in the long-run, occasion both the neglect of land, and the waste orremoval of capital stock. A creditor of the public has, no doubt, ageneral interest in the prosperity of the agriculture, manufactures, andcommerce of the country; and consequently in the good condition of itsland, and in the good management of its capital stock. Should there beany general failure or declension in any of these things, the produce ofthe different taxes might no longer be sufficient to pay him theannuity or interest which is due to him. But a creditor of the public, considered merely as such, has no interest in the good condition of anyparticular portion of land, or in the good management of any particularportion of capital stock. As a creditor of the public, he has noknowledge of any such particular portion. He has no inspection of it. Hecan have no care about it. Its ruin may in some cases be unknown to him, and cannot directly affect him. 

The practice of funding has gradually enfeebled every state which hasadopted it. The Italian republics seem to have begun it. Genoa andVenice, the only two remaining which can pretend to an independentexistence, have both been enfeebled by it. Spain seems to have learnedthe practice from the Italian republics, and (its taxes being probablyless judicious than theirs) it has, in proportion to its naturalstrength, been-still more enfeebled. The debts of Spain are of very oldstanding. It was deeply in debt before the end of the sixteenthcentury, about a hundred years before England owed a shilling. France, notwithstanding all its natural resources, languishes under anoppressive load of the same kind. The republic of the United Provincesis as much enfeebled by its debts as either Genoa or Venice. Is itlikely that, in Great Britain alone, a practice, which has broughteither weakness or dissolution into every other country, should provealtogether innocent?

The system of taxation established in those different countries, itmay be said, is inferior to that of England. I believe it is so. But itought to be remembered, that when the wisest government has exhaustedall the proper subjects of taxation, it must, in cases of urgentnecessity, have recourse to improper ones. The wise republic of Hollandhas, upon some occasions, been obliged to have recourse to taxes asinconvenient as the greater part of those of Spain. Another war, begunbefore any considerable liberation of the public revenue had beenbrought about, and growing in its progress as expensive as the last war, may, from irresistible necessity, render the British system of taxationas oppressive as that of Holland, or even as that of Spain. To thehonour of our present system of taxation, indeed, it has hitherto givenso little embarrassment to industry, that, during the course even of themost expensive wars, the frugality and good conduct of individualsseem to have been able, by saving and accumulation, to repair all thebreaches which the waste and extravagance of government had made in thegeneral capital of the society. At the conclusion of the late war, themost expensive that Great Britain ever waged, her agriculture was asflourishing, her manufacturers as numerous and as fully employed, andher commerce as extensive, as they had ever been before. The capital, therefore, which supported all those different branches of industry, must have been equal to what it had ever been before. Since the peace, agriculture has been still further improved; the rents of houseshave risen in every town and village of the country, a proof of theincreasing wealth and revenue of the people; and the annual amount ofthe greater part of the old taxes, of the principal branches of theexcise and customs, in particular, has been continually increasing, anequally clear proof of an increasing consumption, and consequently ofan increasing produce, which could alone support that consumption. GreatBritain seems to support with ease, a burden which, half a century ago, nobody believed her capable of supporting, Let us not, however, uponthis account, rashly conclude that she is capable of supporting anyburden; nor even be too confident that she could support, without greatdistress, a burden a little greater than what has already been laid uponher. 

When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having beenfairly and completely paid. The liberation of the public revenue, if ithas ever been brought about at all, has always been brought about by abankruptcy; sometimes by an avowed one, though frequently by a pretendedpayment. 

The raising of the denomination of the coin has been the most usualexpedient by which a real public bankruptcy has been disguised under theappearance of a pretended payment. If a sixpence, for example, should, either by act of parliament or royal proclamation, be raised to thedenomination of a shilling, and twenty sixpences to that of a poundsterling; the person who, under the old denomination, had borrowedtwenty shillings, or near four ounces of silver, would, under the new, pay with twenty sixpences, or with something less than two ounces. Anational debt of about a hundred and twenty-eight millions, near thecapital of the funded and unfunded debt of Great Britain, might, in thismanner, be paid with about sixty-four millions of our present money. It would, indeed, be a pretended payment only, and the creditors of thepublic would really be defrauded of ten shillings in the pound of whatwas due to them. The calamity, too, would extend much further than tothe creditors of the public, and those of every private person wouldsuffer a proportionable loss; and this without any advantage, but inmost cases with a great additional loss, to the creditors of the public. If the creditors of the public, indeed, were generally much in debt toother people, they might in some measure compensate their loss by payingtheir creditors in the same coin in which the public had paid them. Butin most countries, the creditors of the public are, the greater part ofthem, wealthy people, who stand more in the relation of creditorsthan in that of debtors, towards the rest of their fellow citizens. A pretended payment of this kind, therefore, instead of alleviating, aggravates, in most cases, the loss of the creditors of the public; and, without any advantage to the public, extends the calamity to a greatnumber of other innocent people. It occasions a general and mostpernicious subversion of the fortunes of private people; enriching, in most cases, the idle and profuse debtor, at the expense of theindustrious and frugal creditor; and transporting a great part ofthe national capital from the hands which were likely to increase andimprove it, to those who are likely to dissipate and destroy it. Whenit becomes necessary for a state to declare itself bankrupt, in the samemanner as when it becomes necessary for an individual to do so, a fair, open, and avowed bankruptcy, is always the measure which is both leastdishonourable to the debtor, and least hurtful to the creditor. Thehonour of a state is surely very poorly provided for, when, in order tocover the disgrace of a real bankruptcy, it has recourse to a jugglingtrick of this kind, so easily seen through, and at the same time soextremely pernicious. 

Almost all states, however, ancient as well as modern, when reduced tothis necessity, have, upon some occasions, played this very jugglingtrick. The Romans, at the end of the first Punic war, reduced the As, the coin or denomination by which they computed the value of all theirother coins, from containing twelve ounces of copper, to contain onlytwo ounces; that is, they raised two ounces of copper to a denominationwhich had always before expressed the value of twelve ounces. Therepublic was, in this manner, enabled to pay the great debts which ithad contracted with the sixth part of what it really owed. So sudden andso great a bankruptcy, we should in the present times be apt to imagine, must have occasioned a very violent popular clamour. It does not appearto have occasioned any. The law which enacted it was, like all otherlaws relating to the coin, introduced and carried through the assemblyof the people by a tribune, and was probably a very popular law. InRome, as in all other ancient republics, the poor people were constantlyin debt to the rich and the great, who, in order to secure their votesat the annual elections, used to lend them money at exorbitant interest, which, being never paid, soon accumulated into a sum too great eitherfor the debtor to pay, or for any body else to pay for him. The debtor, for fear of a very severe execution, was obliged, without any furthergratuity, to vote for the candidate whom the creditor recommended. Inspite of all the laws against bribery and corruption, the bounty of thecandidates, together with the occasional distributions of coin whichwere ordered by the senate, were the principal funds from which, duringthe latter times of the Roman republic, the poorer citizens derivedtheir subsistence. To deliver themselves from this subjection to theircreditors, the poorer citizens were continually calling out, either foran entire abolition of debts, or for what they called new tables; thatis, for a law which should entitle them to a complete acquittance, uponpaying only a certain proportion of their accumulated debts. The lawwhich reduced the coin of all denominations to a sixth part of itsformer value, as it enabled them to pay their debts with a sixth partof what they really owed, was equivalent to the most advantageous newtables. In order to satisfy the people, the rich and the great were, upon several different occasions, obliged to consent to laws, both forabolishing debts, and for introducing new tables; and they probably wereinduced to consent to this law, partly for the same reason, and partlythat, by liberating the public revenue, they might restore vigour tothat government, of which they themselves had the principal direction. An operation of this kind would at once reduce a debt of £128, 000, 000 to£21, 333, 333:6:8. In the course of the second Punic war, the As was stillfurther reduced, first, from two ounces of copper to one ounce, and afterwards from one ounce to half an ounce; that is, to thetwenty-fourth part of its original value. By combining the three Romanoperations into one, a debt of a hundred and twenty-eight millions ofour present money, might in this manner be reduced all at once to a debtof £5, 333, 333:6:8. Even the enormous debt of Great Britain might in thismanner soon be paid. 

By means of such expedients, the coin of, I believe, all nations, hasbeen gradually reduced more and more below its original value, and thesame nominal sum has been gradually brought to contain a smaller and asmaller quantity of silver. 

Nations have sometimes, for the same purpose, adulterated the standardof their coin; that is, have mixed a greater quantity of alloy in it. Ifin the pound weight of our silver coin, for example, instead of eighteenpenny-weight, according to the present standard, there were mixed eightounces of alloy; a pound sterling, or twenty shillings of such coin, would be worth little more than six shillings and eightpence of ourpresent money. The quantity of silver contained in six shillings andeightpence of our present money, would thus be raised very nearly to thedenomination of a pound sterling. The adulteration of the standard hasexactly the same effect with what the French call an augmentation, or adirect raising of the denomination of the coin. 

An augmentation, or a direct raising of the denomination of the coin, always is, and from its nature must be, an open and avowed operation. Bymeans of it, pieces of a smaller weight and bulk are called by the samename, which had before been given to pieces of a greater weight andbulk. The adulteration of the standard, on the contrary, has generallybeen a concealed operation. By means of it, pieces are issued from themint, of the same denomination, and, as nearly as could be contrived, of the same weight, bulk, and appearance, with pieces which had beencurrent before of much greater value. When king John of France, {See DuCange Glossary, voce Moneta; the Benedictine Edition. } in order to payhis debts, adulterated his coin, all the officers of his mint were swornto secrecy. Both operations are unjust. But a simple augmentation is aninjustice of open violence; whereas an adulteration is an injustice oftreacherous fraud. This latter operation, therefore, as soon as it hasbeen discovered, and it could never be concealed very long, has alwaysexcited much greater indignation than the former. The coin, after anyconsiderable augmentation, has very seldom been brought back to itsformer weight; but after the greatest adulterations, it has almostalways been brought back to its former fineness. It has scarce everhappened, that the fury and indignation of the people could otherwise beappeased. 

In the end of the reign of Henry VIII. , and in the beginning of that ofEdward VI. , the English coin was not only raised in its denomination, but adulterated in its standard. The like frauds were practised inScotland during the minority of James VI. They have occasionally beenpractised in most other countries. 

That the public revenue of Great Britain can never be completelyliberated, or even that any considerable progress can ever be madetowards that liberation, while the surplus of that revenue, or what isover and above defraying the annual expense of the peace establishment, is so very small, it seems altogether in vain to expect. Thatliberation, it is evident, can never be brought about, without eithersome very considerable augmentation of the public revenue, or someequally considerable reduction of the public expense. 

A more equal land tax, a more equal tax upon the rent of houses, andsuch alterations in the present system of customs and excise as thosewhich have been mentioned in the foregoing chapter, might, perhaps, without increasing the burden of the greater part of the people, butonly distributing the weight of it more equally upon the whole, producea considerable augmentation of revenue. The most sanguine projector, however, could scarce flatter himself, that any augmentation of thiskind would be such as could give any reasonable hopes, either ofliberating the public revenue altogether, or even of making suchprogress towards that liberation in time of peace, as either to preventor to compensate the further accumulation of the public debt in the nextwar. 

By extending the British system of taxation to all the differentprovinces of the empire, inhabited by people either of British orEuropean extraction, a much greater augmentation of revenue might beexpected. This, however, could scarce, perhaps, be done, consistentlywith the principles of the British constitution, without admitting intothe British parliament, or, if you will, into the states-general of theBritish empire, a fair and equal representation of all those differentprovinces; that of each province bearing the same proportion to theproduce of its taxes, as the representation of Great Britain mightbear to the produce of the taxes levied upon Great Britain. The privateinterest of many powerful individuals, the confirmed prejudices of greatbodies of people, seem, indeed, at present, to oppose to so great achange, such obstacles as it may be very difficult, perhaps altogetherimpossible, to surmount. Without, however, pretending to determinewhether such a union be practicable or impracticable, it may not, perhaps, be improper, in a speculative work of this kind, to considerhow far the British system of taxation might be applicable to all thedifferent provinces of the empire; what revenue might be expected fromit, if so applied; and in what manner a general union of this kindmight be likely to affect the happiness and prosperity of the differrentprovinces comprehended within it. Such a speculation, can, at worst, be regarded but as a new Utopia, less amusing, certainly, but no moreuseless and chimerical than the old one. 

The land-tax, the stamp duties, and the different duties of customs andexcise, constitute the four principal branches of the British taxes. 

Ireland is certainly as able, and our American and West Indiaplantations more able, to pay a land tax, than Great Britain. Where thelandlord is subject neither to tythe nor poor's rate, he must certainlybe more able to pay such a tax, than where he is subject to both thoseother burdens. The tythe, where there is no modus, and where it islevied in kind, diminishes more what would otherwise be the rent of thelandlord, than a land tax which really amounted to five shillings in thepound. Such a tythe will be found, in most cases, to amount to more thana fourth part of the real rent of the land, or of what remains afterreplacing completely the capital of the farmer, together with hisreasonable profit. If all moduses and all impropriations were takenaway, the complete church tythe of Great Britain and Ireland could notwell be estimated at less than six or seven millions. If there was notythe either in Great Britain or Ireland, the landlords could affordto pay six or seven millions additional land tax, without being moreburdened than a very great part of them are at present. America paysno tythe, and could, therefore, very well afford to pay a land tax. The lands in America and the West Indies, indeed, are, in general, not tenanted nor leased out to farmers. They could not, therefore, beassessed according to any rent roll. But neither were the lands of GreatBritain, in the 4th of William and Mary, assessed according to any rentroll, but according to a very loose and inaccurate estimation. The landsin America might be assessed either in the same manner, or according toan equitable valuation, in consequence of an accurate survey, like thatwhich was lately made in the Milanese, and in the dominions of Austria, Prussia, and Sardinia. 

Stamp duties, it is evident, might be levied without any variation, inall countries where the forms of law process, and the deeds by whichproperty, both real and personal, is transferred, are the same, ornearly the same. 

The extension of the custom-house laws of Great Britain to Ireland andthe plantations, provided it was accompanied, as in justice it ought tobe, with an extension of the freedom of trade, would be in the highestdegree advantageous to both. All the invidious restraints which atpresent oppress the trade of Ireland, the distinction between theenumerated and non-enumerated commodities of America, would be entirelyat an end. The countries north of Cape Finisterre would be as open toevery part of the produce of America, as those south of that cape areto some parts of that produce at present. The trade between all thedifferent parts of the British empire would, in consequence of thisuniformity in the custom-house laws, be as free as the coasting tradeof Great Britain is at present. The British empire would thus afford, within itself, an immense internal market for every part of the produceof all its different provinces. So great an extension of market wouldsoon compensate, both to Ireland and the plantations, all that theycould suffer from the increase of the duties of customs. 

The excise is the only part of the British system of taxation, whichwould require to be varied in any respect, according as it was appliedto the different provinces of the empire. It might be applied to Irelandwithout any variation; the produce and consumption of that kingdombeing exactly of the same nature with those of Great Britain. In itsapplication to America and the West Indies, of which the produce andconsumption are so very different from those of Great Britain, some modification might be necessary, in the same manner as in itsapplication to the cyder and beer counties of England. 

A fermented liquor, for example, which is called beer, but which, as itis made of molasses, bears very little resemblance to our beer, makesa considerable part of the common drink of the people in America. Thisliquor, as it can be kept only for a few days, cannot, like our beer, be prepared and stored up for sale in great breweries; but every privatefamily must brew it for their own use, in the same manner as they cooktheir victuals. But to subject every private family to the odious visitsand examination of the tax-gatherers, in the same manner as we subjectthe keepers of ale-houses and the brewers for public sale, would bealtogether inconsistent with liberty. If, for the sake of equality, itwas thought necessary to lay a tax upon this liquor, it might be taxedby taxing the material of which it is made, either at the place ofmanufacture, or, if the circumstances of the trade rendered such anexcise improper, by laying a duty upon its importation into the colonyin which it was to be consumed. Besides the duty of one penny a-gallonimposed by the British parliament upon the importation of molasses intoAmerica, there is a provincial tax of this kind upon their importationinto Massachusetts Bay, in ships belonging to any other colony, ofeight-pence the hogshead; and another upon their importation from thenorthern colonies into South Carolina, of five-pence the gallon. Or, if neither of these methods was found convenient, each family mightcompound for its consumption of this liquor, either according to thenumber of persons of which it consisted, in the same manner as privatefamilies compound for the malt tax in England; or according to thedifferent ages and sexes of those persons, in the same manner as severaldifferent taxes are levied in Holland; or, nearly as Sir Matthew Deckerproposes, that all taxes upon consumable commodities should be leviedin England. This mode of taxation, it has already been observed, whenapplied to objects of a speedy consumption, is not a very convenientone. It might be adopted, however, in cases where no better could bedone. 

Sugar, rum, and tobacco, are commodities which are nowhere necessariesof life, which are become objects of almost universal consumption, andwhich are, therefore, extremely proper subjects of taxation. If a unionwith the colonies were to take place, those commodities might be taxed, either before they go out of the hands of the manufacturer or grower;or, if this mode of taxation did not suit the circumstances of thosepersons, they might be deposited in public warehouses, both at the placeof manufacture, and at all the different ports of the empire, to whichthey might afterwards be transported, to remain there, under the jointcustody of the owner and the revenue officer, till such time asthey should be delivered out, either to the consumer, to themerchant-retailer for home consumption, or to the merchant-exporter;the tax not to be advanced till such delivery. When delivered out forexportation, to go duty-free, upon proper security being given, thatthey should really be exported out of the empire. These are, perhaps, the principal commodities, with regard to which the union with thecolonies might require some considerable change in the present system ofBritish taxation. 

What might be the amount of the revenue which this system of taxation, extended to all the different provinces of the empire, might produce, it must, no doubt, be altogether impossible to ascertain with tolerableexactness. By means of this system, there is annually levied in GreatBritain, upon less than eight millions of people, more than ten millionsof revenue. Ireland contains more than two millions of people, and, according to the accounts laid before the congress, the twelveassociated provinces of America contain more than three. Those accounts, however, may have been exaggerated, in order, perhaps, either toencourage their own people, or to intimidate those of this country; andwe shall suppose, therefore, that our North American and West Indiancolonies, taken together, contain no more than three millions; or thatthe whole British empire, in Europe and America, contains no more thanthirteen millions of inhabitants. If, upon less than eight millions ofinhabitants, this system of taxation raises a revenue of more than tenmillions sterling; it ought, upon thirteen millions of inhabitants, to raise a revenue of more than sixteen millions two hundred and fiftythousand pounds sterling. From this revenue, supposing that this systemcould produce it, must be deducted the revenue usually raised in Irelandand the plantations, for defraying the expense of the respective civilgovernments. The expense of the civil and military establishment ofIreland, together with the interest of the public debt, amounts, at amedium of the two years which ended March 1775, to something less thanseven hundred and fifty thousand pounds a year. By a very exact accountof the revenue of the principal colonies of America and the West Indies, it amounted, before the commencement of the present disturbances, to ahundred and forty-one thousand eight hundred pounds. In this account, however, the revenue of Maryland, of North Carolina, and of all our lateacquisitions, both upon the continent, and in the islands, is omitted;which may, perhaps, make a difference of thirty or forty thousandpounds. For the sake of even numbers, therefore, let us suppose that therevenue necessary for supporting the civil government of Ireland and theplantations may amount to a million. There would remain, consequently, arevenue of fifteen millions two hundred and fifty thousand pounds, to beapplied towards defraying the general expense of the empire, and towardspaying the public debt. But if, from the present revenue of GreatBritain, a million could, in peaceable times, be spared towards thepayment of that debt, six millions two hundred and fifty thousand poundscould very well be spared from this improved revenue. This great sinkingfund, too, might be augmented every year by the interest of the debtwhich had been discharged the year before; and might, in this manner, increase so very rapidly, as to be sufficient in a few years todischarge the whole debt, and thus to restore completely the at-presentdebilitated and languishing vigour of the empire. In the meantime, thepeople might be relieved from some of the most burdensome taxes; fromthose which are imposed either upon the necessaries of life, or upon thematerials of manufacture. The labouring poor would thus be enabled tolive better, to work cheaper, and to send their goods cheaper to market. The cheapness of their goods would increase the demand for them, andconsequently for the labour of those who produced them. This increase inthe demand for labour would both increase the numbers, and improve thecircumstances of the labouring poor. Their consumption would increase, and, together with it, the revenue arising from all those articles oftheir consumption upon which the taxes might be allowed to remain. 

The revenue arising from this system of taxation, however, might notimmediately increase in proportion to the number of people who weresubjected to it. Great indulgence would for some time be due to thoseprovinces of the empire which were thus subjected to burdens to whichthey had not before been accustomed; and even when the same taxescame to be levied everywhere as exactly as possible, they would noteverywhere produce a revenue proportioned to the numbers of the people. In a poor country, the consumption of the principal commodities subjectto the duties of customs and excise, is very small; and in a thinlyinhabited country, the opportunities of smuggling are very great. The consumption of malt liquors among the inferior ranks of peoplein Scotland is very small; and the excise upon malt, beer, and ale, produces less there than in England, in proportion to the numbers ofthe people and the rate of the duties, which upon malt is different, on account of a supposed difference of quality. In these particularbranches of the excise, there is not, I apprehend, much more smugglingin the one country than in the other. The duties upon the distillery, and the greater part of the duties of customs, in proportion to thenumbers of people in the respective countries, produce less in Scotlandthan in England, not only on account of the smaller consumption of thetaxed commodities, but of the much greater facility of smuggling. InIreland, the inferior ranks of people are still poorer than in Scotland, and many parts of the country are almost as thinly inhabited. InIreland, therefore, the consumption of the taxed commodities might, inproportion to the number of the people, be still less than in Scotland, and the facility of smuggling nearly the same. In America and the WestIndies, the white people, even of the lowest rank, are in much bettercircumstances than those of the same rank in England; and theirconsumption of all the luxuries in which they usually indulgethemselves, is probably much greater. The blacks, indeed, who make thegreater part of the inhabitants, both of the southern colonies uponthe continent and of the West India islands, as they are in a state ofslavery, are, no doubt, in a worse condition than the poorest peopleeither in Scotland or Ireland. We must not, however, upon that account, imagine that they are worse fed, or that their consumption of articleswhich might be subjected to moderate duties, is less than that even ofthe lower ranks of people in England. In order that they may work well, it is the interest of their master that they should be fed well, andkept in good heart, in the same manner as it is his interest thathis working cattle should be so. The blacks, accordingly, have almosteverywhere their allowance of rum, and of molasses or spruce-beer, inthe same manner as the white servants; and this allowance would notprobably be withdrawn, though those articles should be subjected tomoderate duties. The consumption of the taxed commodities, therefore, inproportion to the number of inhabitants, would probably be as great inAmerica and the West Indies as in any part of the British empire. Theopportunities of smuggling, indeed, would be much greater; America, in proportion to the extent of the country, being much more thinlyinhabited than either Scotland or Ireland. If the revenue, however, which is at present raised by the different duties upon malt and maltliquors, were to be levied by a single duty upon malt, the opportunityof smuggling in the most important branch of the excise would be almostentirely taken away; and if the duties of customs, instead of beingimposed upon almost all the different articles of importation, wereconfined to a few of the most general use and consumption, and ifthe levying of those duties were subjected to the excise laws, theopportunity of smuggling, though not so entirely taken away, would bevery much diminished. In consequence of those two apparently very simpleand easy alterations, the duties of customs and excise might probablyproduce a revenue as great, in proportion to the consumption of the mostthinly inhabited province, as they do at present, in proportion to thatof the most populous. 

The Americans, it has been said, indeed, have no gold or silver money, the interior commerce of the country being carried on by a papercurrency; and the gold and silver, which occasionally come among them, being all sent to Great Britain, in return for the commodities whichthey receive from us. But without gold and silver, it is added, there isno possibility of paying taxes. We already get all the gold and silverwhich they have. How is it possible to draw from them what they havenot?

The present scarcity of gold and silver money in America, is not theeffect of the poverty of that country, or of the inability of the peoplethere to purchase those metals. In a country where the wages of labourare so much higher, and the price of provisions so much lower than inEngland, the greater part of the people must surely have wherewithal topurchase a greater quantity, if it were either necessary or convenientfor them to do so. The scarcity of those metals, therefore, must be theeffect of choice, and not of necessity. 

It is for transacting either domestic or foreign business, that gold orsilver money is either necessary or convenient. 

The domestic business of every country, it has been shewn in the secondbook of this Inquiry, may, at least in peaceable times, be transacted bymeans of a paper currency, with nearly the same degree of conveniency asby gold and silver money. It is convenient for the Americans, who couldalways employ with profit, in the improvement of their lands, a greaterstock than they can easily get, to save as much as possible the expenseof so costly an instrument of commerce as gold and silver; and rather toemploy that part of their surplus produce which would be necessary forpurchasing those metals, in purchasing the instruments of trade, thematerials of clothing, several parts of household furniture, and theiron work necessary for building and extending their settlements andplantations; in purchasing not dead stock, but active and productivestock. The colony governments find it for their interest to supply thepeople with such a quantity of paper money as is fully sufficient, andgenerally more than sufficient, for transacting their domestic business. Some of those governments, that of Pennsylvania, particularly, derive arevenue from lending this paper money to their subjects, at an interestof so much per cent. Others, like that of Massachusetts Bay, advance, upon extraordinary emergencies, a paper money of this kind for defrayingthe public expense; and afterwards, when it suits the conveniency of thecolony, redeem it at the depreciated value to which it gradually falls. In 1747, {See Hutchinson's History of Massachusetts Bay vol. Ii. Page436 et seq. } that colony paid in this manner the greater part of itspublic debts, with the tenth part of the money for which its bills hadbeen granted. It suits the conveniency of the planters, to savethe expense of employing gold and silver money in their domestictransactions; and it suits the conveniency of the colony governments, to supply them with a medium, which, though attended with some veryconsiderable disadvantages, enables them to save that expense. Theredundancy of paper money necessarily banishes gold and silver from thedomestic transactions of the colonies, for the same reason that it hasbanished those metals from the greater part of the domestic transactionsin Scotland; and in both countries, it is not the poverty, but theenterprizing and projecting spirit of the people, their desire ofemploying all the stock which they can get, as active and productivestock, which has occasioned this redundancy of paper money. 

In the exterior commerce which the different colonies carry on withGreat Britain, gold and silver are more or less employed, exactly inproportion as they are more or less necessary. Where those metals arenot necessary, they seldom appear. Where they are necessary, they aregenerally found. 

In the commerce between Great Britain and the tobacco colonies, theBritish goods are generally advanced to the colonists at a pretty longcredit, and are afterwards paid for in tobacco, rated at a certainprice. It is more convenient for the colonists to pay in tobacco than ingold and silver. It would be more convenient for any merchant to pay forthe goods which his correspondents had sold to him, in some othersort of goods which he might happen to deal in, than in money. Such amerchant would have no occasion to keep any part of his stock by himunemployed, and in ready money, for answering occasional demands. Hecould have, at all times, a larger quantity of goods in his shop orwarehouse, and he could deal to a greater extent. But it seldom happensto be convenient for all the correspondents of a merchant to receivepayment for the goods which they sell to him, in goods of some otherkind which he happens to deal in. The British merchants who trade toVirginia and Maryland, happen to be a particular set of correspondents, to whom it is more convenient to receive payment for the goods whichthey sell to those colonies in tobacco, than in gold and silver. Theyexpect to make a profit by the sale of the tobacco; they could make noneby that of the gold and silver. Gold and silver, therefore, very seldomappear in the commerce between Great Britain and the tobacco colonies. Maryland and Virginia have as little occasion for those metals in theirforeign, as in their domestic commerce. They are said, accordingly, tohave less gold and silver money than any other colonies in America. Theyare reckoned, however, as thriving, and consequently as rich, as any oftheir neighbours. 

In the northern colonies, Pennsylvania, New York, New Jersey, the fourgovernments of New England, etc. The value of their own produce whichthey export to Great Britain is not equal to that of the manufactureswhich they import for their own use, and for that of some of the othercolonies, to which they are the carriers. A balance, therefore, mustbe paid to the mother-country in gold and silver and this balance theygenerally find. 

In the sugar colonies, the value of the produce annually exported toGreat Britain is much greater than that of all the goods imported fromthence. If the sugar and rum annually sent to the mother-country werepaid for in those colonies, Great Britain would be obliged to send out, every year, a very large balance in money; and the trade to the WestIndies would, by a certain species of politicians, be considered asextremely disadvantageous. But it so happens, that many of the principalproprietors of the sugar plantations reside in Great Britain. Theirrents are remitted to them in sugar and rum, the produce of theirestates. The sugar and rum which the West India merchants purchase inthose colonies upon their own account, are not equal in value tothe goods which they annually sell there. A balance, therefore, mustnecessarily be paid to them in gold and silver, and this balance, too, is generally found. 

The difficulty and irregularity of payment from the different coloniesto Great Britain, have not been at all in proportion to the greatnessor smallness of the balances which were respectively due from them. Payments have, in general, been more regular from the northern than fromthe tobacco colonies, though the former have generally paid a prettylarge balance in money, while the latter have either paid no balance, ora much smaller one. The difficulty of getting payment from our differentsugar colonies has been greater or less in proportion, not so muchto the extent of the balances respectively due from them, as to thequantity of uncultivated land which they contained; that is, to thegreater or smaller temptation which the planters have been under ofover-trading, or of undertaking the settlement and plantation of greaterquantities of waste land than suited the extent of their capitals. Thereturns from the great island of Jamaica, where there is still muchuncultivated land, have, upon this account, been, in general, moreirregular and uncertain than those from the smaller islands ofBarbadoes, Antigua, and St. Christopher's, which have, for these manyyears, been completely cultivated, and have, upon that account, affordedless field for the speculations of the planter. The new acquisitions ofGrenada, Tobago, St. Vincent's, and Dominica, have opened a new fieldfor speculations of this kind; and the returns front those islands haveof late been as irregular and uncertain as those from the great islandof Jamaica. 

It is not, therefore, the poverty of the colonies which occasions, inthe greater part of them, the present scarcity of gold and silver money. Their great demand for active and productive stock makes it convenientfor them to have as little dead stock as possible, and disposes them, upon that account, to content themselves with a cheaper, though lesscommodious instrument of commerce, than gold and silver. They arethereby enabled to convert the value of that gold and silver into theinstruments of trade, into the materials of clothing, into householdfurniture, and into the iron work necessary for building and extendingtheir settlements and plantations. In those branches of business whichcannot be transacted without gold and silver money, it appears, thatthey can always find the necessary quantity of those metals; and if theyfrequently do not find it, their failure is generally the effect, notof their necessary poverty, but of their unnecessary and excessiveenterprise. It is not because they are poor that their payments areirregular and uncertain, but because they are too eager to becomeexcessively rich. Though all that part of the produce of the colonytaxes, which was over and above what was necessary for defraying theexpense of their own civil and military establishments, were tobe remitted to Great Britain in gold and silver, the colonies haveabundantly wherewithal to purchase the requisite quantity of thosemetals. They would in this case be obliged, indeed, to exchange apart of their surplus produce, with which they now purchase activeand productive stock, for dead stock. In transacting their domesticbusiness, they would be obliged to employ a costly, instead of a cheapinstrument of commerce; and the expense of purchasing this costlyinstrument might damp somewhat the vivacity and ardour of theirexcessive enterprise in the improvement of land. It might not, however, be necessary to remit any part of the American revenue in gold andsilver. It might be remitted in bills drawn upon, and accepted by, particular merchants or companies in Great Britain, to whom a part ofthe surplus produce of America had been consigned, who would pay intothe treasury the American revenue in money, after having themselvesreceived the value of it in goods; and the whole business mightfrequently be transacted without exporting a single ounce of gold orsilver from America. 

It is not contrary to justice, that both Ireland and America shouldcontribute towards the discharge of the public debt of Great Britain. That debt has been contracted in support of the government establishedby the Revolution; a government to which the protestants of Ireland owe, not only the whole authority which they at present enjoy in their owncountry, but every security which they possess for their liberty, theirproperty, and their religion; a government to which several of thecolonies of America owe their present charters, and consequently theirpresent constitution; and to which all the colonies of America owe theliberty, security, and property, which they have ever since enjoyed. That public debt has been contracted in the defence, not of GreatBritain alone, but of all the different provinces of the empire. Theimmense debt contracted in the late war in particular, and a great partof that contracted in the war before, were both properly contracted indefence of America. 

By a union with Great Britain, Ireland would gain, besides the freedomof trade, other advantages much more important, and which would muchmore than compensate any increase of taxes that might accompany thatunion. By the union with England, the middling and inferior ranks ofpeople in Scotland gained a complete deliverance from the power of anaristocracy, which had always before oppressed them. By a union withGreat Britain, the greater part of people of all ranks in Irelandwould gain an equally complete deliverance from a much more oppressivearistocracy; an aristocracy not founded, like that of Scotland, in thenatural and respectable distinctions of birth and fortune, but inthe most odious of all distinctions, those of religious and politicalprejudices; distinctions which, more than any other, animate both theinsolence of the oppressors, and the hatred and indignation of theoppressed, and which commonly render the inhabitants of the same countrymore hostile to one another than those of different countries ever are. Without a union with Great Britain, the inhabitants of Ireland are notlikely, for many ages, to consider themselves as one people. 

No oppressive aristocracy has ever prevailed in the colonies. Eventhey, however, would, in point of happiness and tranquillity, gainconsiderably by a union with Great Britain. It would, at least, deliverthem from those rancourous and virulent factions which are inseparablefrom small democracies, and which have so frequently divided theaffections of their people, and disturbed the tranquillity of theirgovernments, in their form so nearly democratical. In the case of atotal separation from Great Britain, which, unless prevented by a unionof this kind, seems very likely to take place, those factions wouldbe ten times more virulent than ever. Before the commencement of thepresent disturbances, the coercive power of the mother-country hadalways been able to restrain those factions from breaking out into anything worse than gross brutality and insult. If that coercive powerwere entirely taken away, they would probably soon break out into openviolence and bloodshed. In all great countries which are united underone uniform government, the spirit of party commonly prevails less inthe remote provinces than in the centre of the empire. The distance ofthose provinces from the capital, from the principal seat of the greatscramble of faction and ambition, makes them enter less into the viewsof any of the contending parties, and renders them more indifferent andimpartial spectators of the conduct of all. The spirit of party prevailsless in Scotland than in England. In the case of a union, it wouldprobably prevail less in Ireland than in Scotland; and the colonieswould probably soon enjoy a degree of concord and unanimity, atpresent unknown in any part of the British empire. Both Ireland and thecolonies, indeed, would be subjected to heavier taxes than any whichthey at present pay. In consequence, however, of a diligent and faithfulapplication of the public revenue towards the discharge of the nationaldebt, the greater part of those taxes might not be of long continuance, and the public revenue of Great Britain might soon be reduced to whatwas necessary for maintaining a moderate peace-establishment. 

The territorial acquisitions of the East India Company, the undoubtedright of the Crown, that is, of the state and people of Great Britain, might be rendered another source of revenue, more abundant, perhaps, than all those already mentioned. Those countries are represented asmore fertile, more extensive, and, in proportion to their extent, muchricher and more populous than Great Britain. In order to draw a greatrevenue from them, it would not probably be necessary to introduce anynew system of taxation into countries which are already sufficiently, and more than sufficiently, taxed. It might, perhaps, be more proper tolighten than to aggravate the burden of those unfortunate countries, andto endeavour to draw a revenue from them, not by imposing new taxes, butby preventing the embezzlement and misapplication of the greater part ofthose which they already pay. 

If it should be found impracticable for Great Britain to draw anyconsiderable augmentation of revenue from any of the resources abovementioned, the only resource which can remain to her, is a diminutionof her expense. In the mode of collecting and in that of expending thepublic revenue, though in both there may be still room for improvement, Great Britain seems to be at least as economical as any of herneighbours. The military establishment which she maintains for her owndefence in time of peace, is more moderate than that of any Europeanstate, which can pretend to rival her either in wealth or in power. None of these articles, therefore, seem to admit of any considerablereduction of expense. The expense of the peace-establishment of thecolonies was, before the commencement of the present disturbances, veryconsiderable, and is an expense which may, and, if no revenue can bedrawn from them, ought certainly to be saved altogether. This constantexpense in time of peace, though very great, is insignificant incomparison with what the defence of the colonies has cost us in timeof war. The last war, which was undertaken altogether on account of thecolonies, cost Great Britain, it has already been observed, upwards ofninety millions. The Spanish war of 1739 was principally undertaken ontheir account; in which, and in the French war that was the consequenceof it, Great Britain, spent upwards of forty millions; a great part ofwhich ought justly to be charged to the colonies. In those two wars, the colonies cost Great Britain much more than double the sum which thenational debt amounted to before the commencement of the first of them. Had it not been for those wars, that debt might, and probably wouldby this time, have been completely paid; and had it not been for thecolonies, the former of those wars might not, and the latter certainlywould not, have been undertaken. It was because the colonies weresupposed to be provinces of the British Empire, that this expense waslaid out upon them. But countries which contribute neither revenue normilitary force towards the support of the empire, cannot be consideredas provinces. They may, perhaps, be considered as appendages, as a sortof splendid and shewy equipage of the empire. But if the empire canno longer support the expense of keeping up this equipage, it oughtcertainly to lay it down; and if it cannot raise its revenue inproportion to its expense, it ought at least to accommodate its expenseto its revenue. If the colonies, notwithstanding their refusal to submitto British taxes, are still to be considered as provinces of the Britishempire, their defence, in some future war, may cost Great Britain asgreat an expense as it ever has done in any former war. The rulers ofGreat Britain have, for more than a century past, amused the people withthe imagination that they possessed a great empire on the west side ofthe Atlantic. This empire, however, has hitherto existed in imaginationonly. It has hitherto been, not an empire, but the project of an empire;not a gold mine, but the project of a gold mine; a project which hascost, which continues to cost, and which, if pursued in the same way asit has been hitherto, is likely to cost, immense expense, without beinglikely to bring any profit; for the effects of the monopoly of thecolony trade, it has been shewn, are to the great body of the people, mere loss instead of profit. It is surely now time that our rulersshould either realize this golden dream, in which they have beenindulging themselves, perhaps, as well as the people; or that theyshould awake from it themselves, and endeavour to awaken the people. Ifthe project cannot be completed, it ought to be given up. If any of theprovinces of the British empire cannot be made to contribute towards thesupport of the whole empire, it is surely time that Great Britain shouldfree herself from the expense of defending those provinces in time ofwar, and of supporting any part of their civil or military establishmentin time of peace; and endeavour to accommodate her future views anddesigns to the real mediocrity of her circumstances.