IMAGE EVALUATION TEST TARGET (MT-3) 1.0 £fiu m ■J fj^ ^^ III : '^ Ik I I* I i» u W^^B FhotographJc Scmces Carporation signifia "A SUIVRE", la aymbola y signifia "FIN". . '^^^ Laa cartaa. planchas. tablaaux, ate., pauvant *tra fiimte i daa taux da rMuction diffArants. Loraqua la document aat trap grand pour Atra raproduit an un saul clichA. il aat film* A partir da I'angia supAriaur gaucha. da gaucha i droita. at da haut an baa. an pranant la nombra d'imagas n*cassaira. Las diagrammas suivants iliustrant la m*thoda. i 8 ■ i- :■ 1 2 3 r 4 5 6 «* AN I N Q^ U I R Y INTO THE NATURE AND CAUSES OF THB » WEALTH OF NATIONS. BT ADAM SMITH, LL. D. AND F. R. S. OF LONDON AND EDINBURGH : 0MB OF THE COMMISSIONERS OF HIS MAJESTY'S CUSTOMS IN SCOTLAND; AND FORMERLY PROFESSOR OF MORAL PHILOSOPUT IN THB UNIVERSITY OF GLASGOW. V IN THREE VOLUMES. • t ^■.lv.:f. VOL, I. ^ -■^-rV- ;■'■■'"" THE SIXTH EDITION." \ ''%^ LONDON: Printed for A. Strahan; and T. Cadell» in the StrandL MDCCXCI. /if scv V.I ^ a £'•,'''17 u ■» ^ f : tvf J \ f. KAL k 1 K.J lJ.^;|-^„|-Jfik;4i " ( ■ >\\ iOTC'^i^ S r%zv f^Ji^-t 'in a .'■ : tiin' i'A n^- '0m { CJ '» i..*v.«*,v !^ f^V^afeSHlif***^?^- ■ •vJMMW^ t-»>«^ .r Irl / •^ # ADVERTISEMENT to TH • THIRD EDITION. THE firfl Edition of the following Work was printed in the end of the year 1775, and in the beginning of the year 1776. Through the greater part of the Book, therefore, whenever the prefent date of things is mentioned, it is to be underftood of the (late they were in, either about that time* or at fome earlier period, during the time I was employed in writing the Book. To the third Edition, however, I have made feveral additions, particularly to the chapter upon Drawbacks, and to that upon Bounties; likewlfe a new chapter entitled, TJbe Conclu- A3 /ton IV ADVERTISEMENT. Jion of the Mercantile Syjlem ; and a new article to the chapter upon the expences of the fovereign. In all thefe additions, the prefentJlaU of things means always the ftate in which they were during the year 1783 and the beginning of the year i784« u.."l',T ■! C: "I a y. \\ iii» D ! jr > mci|M ) m mm m ^ \ «««..^-t«^ 1 ■ ■■ , r • - -v I ' ■■■•■' '.*■■'• , —- f . i. . I < I ■ i ^ .■{ \ V-- ' •"' s. p."! ....;, -IK' vvi e'i^-u,«j ? ■i^i^f <" .,v.r'M V '. . 1 »-» I..1 .' \ , r f- I.- f- - I , •'i^. * *. ADVERTtSEMENT ■ t V'^» "^^ ., ''. TO T H B FOURTH EDITION, IN this fourth Edition I have made no al- terations of any kind. ' I now, however, find myfelf at liberty to acknowledge my very great obligations to Mr. Henry Hope of Am- ilerdam. To that Gentleman I owe the moft diftindt, as well as liberal information, con- cerning a very interefting and important fub- jedt, the Bank of Amfterdam ; )f which no printed account had ever appeared to me fa- tisfadtory, or even intelligible. The name of that Gentleman is fo well known in Europe, the information which comes from him muft do fo much honour to whoever has been fa- 12 voured ADVERTISEMENT, voured with it, and my vanity is fo much interefted in making this acknowledgment, that I can no longer refufe myfelf the plca- fiire of prefixing this Advertifement to this new Edition of my Book. ( ' , , ---V '••••'*'■-■- ^ -.v;>U I < , • ■ I * 1 f" * -Ji*' ' . ' ■ I. , ' ' t j>'» ■ - • , • ■ . . 1 . t *• * ' * i CONTENTS OF THB FIRST VOLUME. I 5 Ntroduction and Plan of the. Work Page I y\ BOOK L Of the Caufes of Improvement in the pro- ductive Powers of Labour, and of the I Order according to which its Produce \o is naturally diftributed among the dif- ; ferent Ranks of the People ^ % , $ Of the Dhifion of Labour -^ — ibid* Of the Principle which gives occafion to thf Divifiott of Labour m^^:^ m^ ' 19 CHAP, III. / fhat the Divifim of Labour is limited by tU ' Extent of the Mark^ -- ^w^^ il ■IT*". -. -^ % i^ ▼lU CONTENTS. CHAP. IV. Of thi Origin and Ufe of Money CHAP. V. Page 33 Of the real and nominal Price of Commodities, or of their Price in Labour, and their Price in Money — *• 43 ^ ""^C HAP. Vir^'' ' Of the component Parts of the Price of Com- , , mo({iftes — — — 70 CHAP. VII. 1 .' ) a '[ Of the natural and market Price of Commodities 8 2 diljf IP ' C ^?A P. VIII^ /i t»vii::Lib Of the fFages of Lahur -yubv. _ ^5 C H A P. IX. 'in'/i 5J t.- ^v^* Of the Prof ts of Stock / ' 'rr . — •bid? 133 C. H A P. X."-,-^ n^5t\iiTiG '^*>a'^0 0/ ^tfj^w ' ■>» V '- AN ;' f ^r r ■'. ;• Page 340 343 359 373 ft the 384 393 iV-A Employ- 407 ', »^ \ 4?Q hof 'the vC\ fital 423 ,;v,;r-,) A K 1 N Q. U I R Y I iN t O T it B ' NATURE AMD CAUSES o r, T H B WEALTH OF NATIONS. > AN INTRODUCTION AND PLAN OF THE WORK. > T^HE Annual labour of every nation is th6 introJud* ' fund which originally Supplies it with ^11 th& hecelTaries and conveniencies of life wiiich it annually confumeis, and which con- fift always either in the ininnediate produce of that labour, or in what is piirchaTed widi that pro- duce from other nations* According therefore, as this produce, or what: Is purchafed with it, bears a greater or fmaller proportion to the number of thofe who are to confume it, the hation will be better or worfe fupplied with all the necelTaries and conveni- encies for which it has occasion. But this proportion muft in every nation be regulated by two different circumftances ; firft, by the (kill, dexterity, and judgment with which Vol. L # * its THE NATURE AND CAUSES OF latftMiuA. its labour is generally applied; and, (econdly, by the proporrion between the number of thofe who are employed in ufeful labour, and that of thofe who are not fo employed. Whatever be the foil, clioiate, or extent of territory of any particular nation, the abundance or fcantinefy of its annual fupply mud, in that, particular fitua- tion, depend upon thofe two circumftances* The abundance or fcantinefs of this fupply too ieems to depend more .upon the former of thofe two circumftances than upon the latter. Among the favage nations of hunters and HiherSj every individual who is able to work, is more or lefs employed in ufeful labour, and endeavours to provide, as well as he can, the neceffaries and convenicncies of life, for himfelf, or fuch of his family or tribe as are either too old, or too young, or too infirm to go a hunting and fifhtng. Such nations, however, are fo miferably poor, that from mere want, they are frequendy reduced, or at leaft think thcmfelves reduced, to the nccef- fity fometimes of diredlly deftroying, and fome- times of abandoning their infants, their old peo- ple, and thofe afflidted with lingering diieafes, to perilh with hunger, or to be devoured by wild beads. Among civilized and thriving nations* on the contrary, though a great number of people do not labour at all, many of whom confume the produce of ten times, frequently of a hundred times more labour than the greater part of thofe ^ho work; yet the produce of the whole labour of the fociety is fo great, that all are often abun- dantly fupplied, and a workman, even of the If ' I lowed THE WRALTH OF NATIONS. f Ipweft and poorefl: order, if he is frugal and in- Xntnaua. duftrious, may enjoy a greater (hare of the nc- c ries and conveniencies of life dian it is pof- j^ it for any favage to acquire. . The caufes of this improvement, in the pro* du^ive powers of labour, and the ord^r, accord- ing to which its produce is naturally diftributed among the different ranks and conditions of men in the fociety, niake the fubjed of the Firft Book of this Inquiry. Whatever be the actual ftate of the ikill, dexterity, and judgment with which labour is applied in any nation, the abundance or fcanti- nefs of its annual fupply mud depend, during the continuance of that ftate, upon the proportion between the number of thofe who are annually employed in ufeful labour, and that of thofe who are not fo employed. The number of ufeful and productive labourers, it will hereafter appear, is every where in proportion to the quantity of ca- pital ftock which is employed in fetdng them to work, and to the particular way in which it is fo employed. The Second Book, therefore, treats of the nature of capital ftock, 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 fkill, dexterity, and judgment, in the application of labour, have followed very different plans in the general condud or diredion of it; and thofe plans have not all been equally favourable to the B 2 greatnefs THE NATURE AND CAUSES OP greacnefs of its produce* The policy of ibme nations has given extraordinary encouragement to the induftry of the country ; that of others to the induftry of towns. Scarce any nation has dealt equally and impartially with every fort of induftry. Since the downfal of the Roman em- pire> the policy of Europe has been more favour- able to arts, manufadlures, and commerce, the induftry of townk i than to agriculture, the in- duftry of the country. The circumftances which feem to have introduced and eftablifhed this po- licy are explained in the Third Book. Though thofe different plans were, perhaps, firft introduced by the private interefts and pre- judices of particular orders of men, without any regard to, or forefight of, their confequences upon the general welfare of the focietyj yet they have given occafion to • very different theories of political ceconomy ;■' of which fome magnify the importance 6f 'that 'induftry which is carried on in towns, others of that which is carried on in the country. Thofe theories have had a confi- derable influence, not only upon the opinions of men of learning, but upon the public condudl of princes and fovereign ftates. I have endeavour- ed in the Fourth Book, to explain, as fully and diftinflly as I can, thofe different theories, and the principal effeds which they have produced in different ages and nations. To explain in what has confifted the revenue of the great body of the people, or what has been the nature of thofe funds, which, in different ages •and nations, have fupplied their annual confump- ^ - lion. THE WEALTH OF NATIONS. f tionr is the objc«Sl of thcfe Four firft Books. The iiitro*i«. Fifth and laft Book treats of the revenue of the fovereign, or common wealth. In this book I have endeavoured to (how ; firft, what are the neccflPary expcnces of the fovereign, or common- wealth i which of thofe expences ought to be de- frayed by the general contribution of the whole fociety ; and which of them,* by that of fbme par- ticular part only, or of fome particular members of it : fccondly, what are the different methods in which the whole fociety may be made to con- tribute towards defraying the expences incum- bent on the whole fociety, and what are the principal advantages and inconveniencies of each of thofe methods : and, thirdly and laftiy, what are the reafons and caufes which have induced almoft all modern governhients to mortgage fome part of this revenue, or to contradl debts, and what have been the effbds of thofe debts upon the real wealth, the annual produce of the land and labour of the fociety, .. , %. ' ' \?u;<..;^,,ji*{»j-M\ ■>: , <* f I.. ■-»» rl ■-^• • <••> . ^t ■■ *^' : <*> 4 k« **i t - A ' t 'i-v .* .'.,■'»» A; ,4 v^,- . y Tit { .■i^^>J> M^l:-^. 'i: 'i;/,!'.!' » r ■-■ tjt^ 1 i » - .L'..4 'u^j ! „ .■i';/ B3 BOOK THE NATURE AND CAUSES OP BOOK I. Of the Caufes of Improvement in the Produc- tive Powers of Labour, and of the Order according to which its Produce is naturally diflributed among the different Ranks of the People. ..,...,. C H A P I. 0/ the Divifton of Labour » '^^<^}t^. BOOK rr^HE^greateft improvement in the produc- *' X tive powers of labour, and the greater part of the Ikill, dexterity, and judgment with which it is any wherie diredlcd, or applied, feem to have been the efiedls of the divifion of la- bour. Ths cffedts of the divifion of labour, in the general bufinefs of fociety, will be more eafily underftood by confidering in what manner it operates in fome particular manufadlures. It is commonly fuppofed to be carried furtheft in fbme very trifling ones; not perhaps that it really is carried further in them than in others of more importance : but in thofe trifling manufac- tures which are deftined to fupply the fmall wants of but a fmall number of people, the whole number of workmen muft neceflarily be fmall j and thofe employed in every different branch of the work can often be collected into the fame . „ , , workhoufe. THE WEALTH OF NATIONS. f workhoufe, and placed at once under the view of c h a p. the fpc£tator. In thofc great manufadures, on the contrary, which are deftined to fupply the greiit wants of the great body of the people, every difRrrent branch of the work employs fo great a number of workmen, that it is impoflible CO colleA them all into the fame workhoufe. We can feldom fee more, at one time, than thofe em- ployed in one (ingle branch. Though in fuch manufa^ures, therefore, the work may really be divided into a much greater number of parts, than in thofe of a more trifling nature, the divi- flon is not near fo obvious, and has accordingly been much lefs obferved. To take an example, therefore, from a very trifling manufadure ; but one in which the divi- fion of labour has been very often taken notice of, the trade of the pin- maker; a workman not educated to this bufmefs (which the divifion of labour has rendered a diftind trade), nor ac* quainted with the ufe of the machinery employed in it (to the invention of which the fame divi- fion of labour has probably given occafion), could fcarce, perhaps, with his utmofl: indufl:ry, make one pin in a day, and certainly could not make twenty. But in the way in which this bufinefs is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewife peculiar trades. One man draws out the wire, another ftraights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the hcadj to make the head requires B 4 two "V ik- I. IL TH£ NATURE ANQ QAVSE8 OF B Q Q K two or threp diftin^b operations } to put it on> if a peculiar bufinefs, to whiten the pins is another s- it is even a tradp by itfelf to put them into the paper; and the important bufinefs of making a pin is, in this manner, divided into about eigh- teen diftinA operations, which, in fome manu- faftories, are all performed by -diftindi: hands, though in others the fame man will fometimes perform two or three of them. I have feen a fmall manufactory of this kind where ten men only were employed, and where fome of them confequently performed two or three diftindt operations. But though they were very poor, and therefore but indifferendy accommodated with. the neccflary machinery, they could, when they exerted themfelves, make among them about twelve pounds of pins in a dav. There are in a pound upwards of four thoufand pins of a middling fize. Thofe ten perfons, therefore, could make among them upwards of forty-eight thoufand pins in a day. Each perfon, therefore, making a tenth part of forty-eight thoufand pins, might be confidered as making four thou- fand eight hundred pins in a day. But if they had all wrought feparately and independently, and without any of them having been educated to this peculiar bufinefs, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thou^ fand eight hundredth part of what they are at pref^nt capable of performing, in confequence of a propcy THE WEALTH OF NATIONS* f a proper dif ifion and combination of their diflSsN c u a ^^ cnt operations. In every other art and nnanufa£ture, the eSefb of the divifion of labour are fimilar to what tbejr are in this very trifling one ; though in many of them, the labour can neither be fo much fubdi- vided, nor reduced to fo great a fimplicicy of operation. The divifion of labour, however, fa far as it can be introduced, occafions, in every art, a proportionable increafe of the produdive powers of labour. The reparation of different trades and employments from one another, feem9 to have taken place, in confequence of this ad- vantage. This feparation too is generally carried furthell in thofe countries which enjoy the highef^ degree of induftry and improvement s what is the work of one man in a rude ftate of fociety, being generally that of feveral in an improved one. In every imi)roved Ibciety, the farmer is genc-r rally nothing but a farmer; the manufadlurer, nothing but a manufafturer. The labour too which is necefTary to produce any one complete manufa£ture, is almoit always divided among a great number of hands. How many different trades are employed in each branch of the linen and woollen manufactures, from the growers of the 6ax and the wool, to the bleachers and fmoothers of the linen, or to the dyers and drefT^ ers of the cloth ! The nature of agriculture, in^ deed, does not admit of fo many fubdivifions of labour, nor of fo complete a feparation of one bufinefs from another, as manufaAures. It i$ Jmpoffible tp fcparate fo entirely^ the bufinefs of thQ ta THE NATURE AND CAUSES OP .'i • o o K the grazier from that of the corn-farmcf, as the trade of the carpenter is commonly feparated from that of the fmith. The fpinner is almoft always a diltind perfon from the weaver { but the ploughman, the harrower, the fower of the feed, and the reaper of the corn, are often the fame. The occafions for thofe diflferent forts of labour returning with the different feafons of the year, it is impoflible that one man (hould be con- llantly employed in any one of them. This im- pofTibility of making Co complete and entire a fe- paration of all the different branches of labour employed in agriculture, is perhaps the reafon why the improvement of the produftive powers of la- bour in this art, does not always keep pace with their improvement in manufactures. The moft opulent nations, indeed, generally excel all their neighbours in agriculture as well as in manufac- tures; but they are commonly more diftin- guifhed by their fuperiority in the latter than in the former. Their lands are in general better cultivated, and having more labour and expence beftowed upon them, produce more in propor- tion to the extent and natural fertility of the ground. But this fuperiority of produce is fel« dom much n^re than in proportion to the fupe- riority of labour and expence. In agriculture, the labour of the rich country is not always much more productive than that of the poor ; or, at lead:, it is never fo much more productive, as it commonly is in manufactures. The corn of the rich country, therefore, will not always, in the fame degree of goodnefs, come cheaper to ". market .(( v'v/; A;;, turc, ways or, Wc, as rn of rs, in er to arket THE WEALTH OP NATIONS. It market cAan that of the poor. The corn of Po- c ha p. land, in the fame degree of goodnefs, is as cheap as that of France, notwithftanding the fuperior opulence and improvement of the latter country. The corn of France is, in the corn provinces* fully as good, and in moft years nearly about the fame price with the corn of England, though, in opulence and improvement, France is perhaps inferior to England, The corn- lands of Eng^^ land, however, are better cultivated than thofe of France, and the corn-lands of France are faid to be much better cultivated than thofe of Poland. But though the poor country, notwithftanding the inferiority of its cultivation, can, in fome meafure, rival the rich in the cheapnefs and goodnefs of its corn, it can pretend to no fuch competition in its manufa^ures j at leaft if thofe manufadures fuit the foil, climate, and fituation of the rich country. The filks of France are better and cheaper than thofe of England, be- caufe the filk manu&cture, at leaft under the prefent high duties upon the importation of raw (ilk, does not fo well fuit the climate of England as that of France. But the hard-ware and the coarfe woollens of England are beyond all com* parifon fuperior to thofe of France, and much cheaper too in the fame degree of goodnefs. In Poland there are fakl to be fcarce any matiufac- tures of any kind, a few of thofe coarfer houfehold manufactures excepted, without which no coun-* try can well fubfift. This great increafe in the quantity of work, Y?hkh^ in confequence of the diyifion of labour, the If THE NATURE AND CAUSES OP POOH the fame number of people are capabfe of per- forming, it owing to three different circumftances ; firft, to the increafe of dexterity in every par- .ticular workman » fecondly, to the faving of the time which it commonly loft in pafTing from one fpeciet of work to another } anc) lalUy, to the invention of a great number of machinet which facilitate and abridge labour, and enable one man to do the work of many. First, the improvement of the dexterity of the workman neceiTarily increafes the quantity of the work he can perform } and the divifion of labour, by reducing every man's bufiner^* to fome one fimple operation, and by making ilii^ upe«> ration the folc employment of his iife, neceiTa- rily increafes very much the dexterity of the workman. A common fmith, who, though ac- cuftomed to handle the hammer, has never been ufed to make nails, if upon fome particular oc- calion he is obliged to attempt it, will fcarce, I am alTure't be able to make above two or three hundreii naii^ in a day, and thofe too very bad ones. A fmith who has been accudomed to make nails, but whofe fole or principal buftnefs has not been that of a nailer, can feldom with his utmolt diligence make more, than eight hundred .pr a thoufand nails in a day. I have feen feve- ral boys under twenty yvs of age who had never exertifed any other t-.y^: h\^r thu o' . mak- ing pails, and who, whw.. laey exerted them- felves, could make, each of them, upwards of two thoufand three hundred nails in a day. The fpaking of 9, nail, however, is by no means one of s/'ity ■'.. t tHR WEALtH O^ NATloMS. fj of the fimpleft operations. The fame perion c ha r. blows the bellows, (lira or mends the fire as there is occafion, heats rhe iron, and forges every part 6f the nailt In forging the head too he is obliged to change It is tools. The different ope- rations into whicS the n.i' ing of a pin, or of t metal button, is fubdivided, are all of them much more fimple, and the dexterity of the per^ ion, of whofe life it has been the fole buHnefs to perform them, is ufually much greater. The ra- pidity with which fome of the operations of chofe manufadlures are performed, exceeds what the hu- man hand could, by thofe who had never ken them, be fuppofed capable of acquiring. Secondly, the advantage which is gained by faving the time commonly loft in paflln^ from one fort of work to another, is much greater than we fhould at firft view be apt to imagine ir.' . It is impofliblc to pafs very quickly frori one^ kind of work to another, that is carried on in 9 different place, and with quite different tools. A country weaver, who cultivates a fmall farm,' muft lofe a good deal of time in paffing from his k)om to the field, and from the field to his loom.-^ When the two trades can be carried on in the > lame workhoufe, the lofs of time is no doubcf. much lefs. It is even in this cafe, however, very conilderable. A man commonly faunters a little in turning his hand from one fort of employment/ to another. When he firft begins the npw work, he is feldom very keen and hearty } his mind, as . they fay, does not go to it, and for fome time he rather trifles than applies to good purpofe* The* habit t4 THE NATURE AND CAUSES OP BOOK habit of fauntering and of indolent qarelefs ap- '* plication, which is naturally, or rather necefTa- rily acquired by every country workman whc is obliged to change his work and his tools every half hour, and to apply his hand in twenty dif- ferent ways almoft every day of his life j renders him almoft always flothful and lazy, and inca- pable of any vigorous application even on the mod prelTing occafions. Independent, therefore, of his deficiency in point of dexterity, this caufe ak>ne muft always reduce confiderably the quan-* tity of work which he is capable of performing. Thirdly, and laftly, every body muft be fen- fible how much labour is facilitated and abridged by the application of proper machinery. It is unneceffary to give any example. I ihall only ob- ferve, therefore, that the invention of all thofe machines by which labour is fo much facilitated and abridged, feems to have been originally owing to the divifion of labour. Men are much more likely to difcover eafier and readier me- thods of attaining any objed, when the whole attention of their minds is directed towards that fingle object, than when it is diflipated among a great variety of things. But in confequcnce of the divifion of labour, the whole of every man*s attention comes naturally to be direded towards ibme one very fimple objefl. It is naturally to be expefted, therefore, that fome one or other of thofe who arc employed in each particular branch of labour (hould foon find out eafier and readier methods of performing their own particular work, wherever the nature of it admits of fuch improvement. THE WEALTH OF NATIONS. ij improvement. A great part of the machines c ha p. made ufe of in thole manufactures in which la- bour is moil fubdivided, were originally the in- ventions of common workmen, who, being each of them employed in feme very fimple operation^ naturally turned their thoughts towards finding out eafier and readier methods of performing it. Whoever has been much accuftomed to vifit fuch manufactures, muft frequently have been fhewn very pretty machines, which were the inventions of fuch workmen, in order to facilitate and quicken their own particular part of the work. In the Brit fire-engines, a boy was conftantly em- ployed to open and ihut alternately the commu- nication between the boiler and the cylinder, ac- cording as the pifton cither afcended or de- fcended. One of thofe boys, who loved to play with his companions, obferved that, by tying a firing from the handle of the valve which opened this communication to another part of the ma- chine, the valve would open and fhut without his afTiflance, and leave him at liberty to divert himielf with liis play- fellows. One of the greateit improvements that has been made upoQ this machine, fince it was firft invented, was la this manner the difcovery of a boy who wanted to fave his own labour. • « '* ; * ^^v^n-'^^'i All the improvements in machinery, how- ever, have by no means been the inventions of thofe who had occafion to ufe the machines. Many improvements have been made by the ingenuity of the makers of the machines, when t6 tHE NATURE Ato CAttsti^ 6P ^ ^ B o d Jc to make them became the buHnefs of a pccuKaf trade ; and fome by that of thofe who art called philoibphers or men of fpeculation, whoie tradtf it h not to do any thing, but to obferve every thing ; and who, upon that aCcoUnt, are often capable of combining together the powers of tht moft diftant and difTimilar pbjefls. In the pro- grefs of fociety, philofophy Or fpeculation be- comes, like every other employment, the prin- cipal or fble trade and occupation of a particUlaf clafs of 'ti^iens. Like every other employment too, it is fubdivided into a great number of different branches^ each of which affords occu-> pation to a peculiar tribe or clafs of philo- ibphers ; and this fubdiviflon of employment iil philofophy, as well as in every other bufinefsj improves dexterity, and faves time. Each indi- vidual becomes more expert in his own peculiar branch, more work is done upon the wholes and the quantity of fcience is confiderably in^ created bv it* ^i !7?'i^%y..v -uuru ■^. .♦»«»*,,' '■i It is th& great multiplication of the produc- tions of all the different arts> in coniequence of the divifion of labour, which occafions, in a well-governed fociety, that univerfal opulence which extends itfelf to the lowefl ranks of the people. Every workman has a great quantity of his own work to difpofe of beyond what he himfelf has occafion for j and every other work- man being exadly in the fame fituationi he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the fame thing, for the price of a great quan- tity THE WEALTH OF NATIONS. »7 tity of theirs. He fupplif s them abundantly with c h a i».-i what they have occafion for, and they accommo- date him as amply with what he has occafion for, and a general plenty difFufes itfelf through all the different ranks of the fociety. Observe the accommodation of the moft com- mon artificer or day-labourfer in a civilized and thriving country, and you will perceive that the number of people of whofe induftry a part, though but a fmall part, has been employed in procuring him this accommodation, exceeds all computation. The woollen coat, for example, which covers the day-labourer, as coarie and rough as it may appear, is the produce of the joint labour of a great multitude of workmen. The (hepherd, the forter of the wool, the woo^ comber or carder, the dyer, the fcribbler, the fpinner, the weaver, the fuller, the drefler, with many others, muft all join their diffcrents arts in order to complete even this homely produ6lion. H'^w many merchants and carriers, befides, muft have been employed in tranfporting the mate- rials from fome of thofe workmen to others who often live in a very diftant part of the country ! how much commerce and navigation in parti- cular, how many fhip-builders, failors, fail- makers, rope-makers, muft have been employed in order to bring together the different drugs made ufe of by the dyer, which often come from the remoteft corners of the world ! What a variety of labour too is neceffary in order to produce the tools of the meaneft of thofe work- men ! To fay nothing of fuch complicated ma- VoL. I. C chines |9 THE NATURE AND CAUSES OP BOOK chines as the (hip of the failor, the mill of the fuller, or even the loom of the weaver, let us confider only what a variety of labour is requi- fite in order to form that very fimple machine, the (hears with which the (hepherd clips the wool. The miner, the builder of the furnace for fmelting the ore^ the feller of the timber, the burner of the charcoal to be made ufe of in the fmelting- houfe, the brick- maker, the brick- layer, the workmen who attend the furnace, the mill-Wright, the forger, the fmith, muft all of them join their different arts in order to produce them. Were we to examine, in the fame man- ner, all the different parts of his drefs and houfehold furniture, the coarfe linen fhirt which he wears next his (kin, the Ihoes which cover his feet, the bed which he lies on, and all the dif- ferent parts which compofe it, the kitchen -grate at which he prepares his viftuals, the coals which he makes ufe of for that purpofe, dug from the bowels of the earth, and brought to him perhaps by a long fca and a long land carriage, all the other utenfils of his kitchen, all the furniture of his table, the knives and forks, the earthen or pewter plates upon which he ferves up and divides his viduals, the dif- ferent hands employed in preparing his bread and his beer, the glafs window which lets in the heat and the light, and keeps out the wind and the rain, with all the knowledge and art requi- fite for preparing that beautiful and happy in- vention, without which thefe northern parts of the world could fcarce have afforded a very comfortable THE WEALTH OF NATIONS. 19 comfortable habitation, together with the tools Chap. of all the different workmen employed in pro- <- J >f ducing thofc different conveniencies ; if we ex- amine, I fay, all thefe things, and confider what a variety of labour is employed about each of them, we Hiall be fenfible that without the affiHance and co-operation of many thoufands, the very meaneft perfon in a civilized country could not be provided, even according to, what we very falfely imagine, the eafy and fimple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommodation mufl no doubt appear extremely fimple and eafyj and yet it may be true, perhaps, that the accommo- dation of an European prince does not always fo much exceed that of an induftrious and frugal peafant, as the accommodapon of the latter exceeds that of many an African king, the ab- folute mader of the lives and liberties of ten thoufand naked lavages. v^? ^ «? - ., ji* %u CHAP. ir. •It fi Of the Principle which gives occajion to the Divijion of Labour, , - THIS divifion of labour, from which fo many advantages are derived, is not ori- ginally the effed of any human wifdom, which forefees and intends that general opulence to C 2 which 16 THE NATURE AND CAUSES OF * BOOK which ic gives occallon. It is the ncceiTary, ■ though very flow and gradual, confequence of a certain propenfity in hunnan nature which has in view no fuch extcnfive utility j the propenfity to truck, barter, and exchange one thing for another. Whether this propenfity be one of thofe original principles in human nature, of which no further account can be given j or whether, as feems more probable, it be the neceflary confequence of the faculties of reafon and fpeech, it belongs not to our prefent fubjedl to enquire. It is common to all men, and to be found in no other race of animals, which feem to know neither this nor any other fpecies of contrads. Two greyhounds, in running down the fame hare, have fometimes the appearance of ading in fome fort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towards himfelf. This, however, is not the efFedb of any contradt, but of the accidental concurrence of their paf- fions in the fame objefl at that particular time. Nobody ever faw a dog make a fair and delibe- rate exchange of one bone for another with another dog. Nobody ever faw one animal by its geiluies and natural cries fignify to another, this is mine, that yours j I am willing to give this for that. When an animal wants to obtain fomething either of a man or of another animal, it has no other means of perfuafion but to gain the favour of thofe whofe fervice it requires. A puppy fawns upon its dam, and a fpaniel endea- vours ) h THE WEALTH OF NATIONS. H vours by a thoufand actradtions to engage the c h a p. attention of its mafter who is at dinner, when it wants to be fed by him. Man foaietimes ufes the fame arts with his brethren, and when he has no other means of engaging them to a6l according to his inclinations, endeavours by every fervile and fawning attention to obtain their good will. He has not time, however, to do this upon every occaHon. In civilized fociety he (lands at all times in need of the ' co-operation and affiftance of great multi- tudes, while his whole life is fcarce fufficient to gain the friendfliip of a few perfons. In almoft every other race of animals, each in- dividual, when it is grown up to maturity, is intirely independent, and in its natural ftate has occafion for the affiftance of no other living creature. But man has almoft conftant occa- fion for the help of his brethren, and it is in vain for him to expeft it from their benevolence only. He will be more likely to prevail if he can intereft their felf-love in his favour, and Ihew them that it is for their own advantage to do for him what he requires of them. Who- ever offers to another a bargain of any kind, propofes to do this: Give me that which I want, and you fhall have this which you want, is the meaning of every fuch offer -, and it is in this manner that we obtain from one another the far greater part of thofe good offices which we ftand in need of. It is not from the benevo- lence of tlie butcher, the brewer, or the baker, that we expeft our dinner, but from their C 3 regard %i THE NATURE AND CAUSES OF BOOK regard to their own intereft. Wc addrefs our- '' fclves, not to their humanity but to their felf- love, and never talk to them of our own necelTities but of their advantages. Nobody but a beggar chufes to depend chiefly upon the benevolence of his Icllow-citizens. Even a beggar does not depend upon it entirely. The charity of weU-difpofed people, indeed, fupplies him with the whole fund of his fub- fiftencc. But though this principle ultimately provides him with all the neceiTaries of life which he has occafion for, it neither does nor can provide him with them as he has occafion for them. The greater part of his occafionaj wants are fupplied in the fame manner as thofe of other people, by treaty, by barter, and by purchafe. With the money which one man gives him he purchafes food. The old cloaths which another beftows upon him he exchanges for other old cloaths which fuit him better, or for lodging, or for food, or for money, with which he can buy either food, cloaths, or lodg- ing, as he has occafion. ^ *^ As it is by treaty, by barter, and by purchafe, that we obtain from one another the greater part of thofe mutual good offices which we ftand in need of, fo it is this fame trucking difpofition which originally gives occafion to the divifion of labour. In a tribe of hunters or (hepherds a particular perfon makes bows and arrows, for example, with more readinefs and dexterity than any other. He frequently exchanges them for cattle or for venifon with his companions j and he THE WEALTH OF NATIONS. «3 he finds at laft that he can in this manner get c h^a p. more cattle and vcniftn, than if he himfclf went to the Held to catch them. From a regard to his own intercft, therefore, the making ** bows and arrows grows to be his chief bufineis, and he becomes a fort of armourer. Another excels in making the frames and covers of their little huts or moveable houfes. He is accullomed to be of ufe in this way to his neighbours, who re- ward him in the fame manner with cattle and with venifon, till at laft he finds it his intereft to dedicate himfelf entirely to this employment, and to become a fort of houfe- carpenter. In the fame manner a third becomes a fmich or a brazier j a fourth a tanner or dreffer of hides or ikins, the principal part of the clothing of favages. And thus the certainty of being able to exchange all that furplus part of the produce of his own labour, which is over and above his own confumption, for fuch parts of the produce of other men's labour as he may have occafion for, encourages every man to apply himfelf to a particular occupation, and to cultivate and bring to perfedion whatever talent or genius he may poffefs for that particular Ipecies of bufi- nefs. The difference of natural talents in different men is, in reality, much lefs than we are aware of; and the very different genius which appears to diftinguilh men of different profeffions, when grown up to maturity, is not upon many occa- fions fo much the caufe, as the effed: of the divifion of labour. The difference between the C 4 moft •4 THE NATURE AND CAUSES OF mod diflimilar chara6lers, between a philofopher and a common ftrcet porter, for example, feems to aiife not (o much from nature, as from habit| cudom, and education. When they came into the world, and for the fir(^ fix or eight years of their exiftcnce, they were, perhaps, very much alike, and neither their parents nor playfellows could perceive any remarkable difference. About that age, or foon after, they come to be em- ployed in very different occupations. The dif- ference of talents comes then to be taken notice of, and widens by degrees, till at laft the vanity of the philofopher is willing to acknowledge fcarcc any refemblance. But without the difpofition to truck, barter, and exchange, tvery man muft have procured to himfelf every necelTary and conveniency of life which he wanted. All muft have had the fame duties to perform, and the fame work to do, and there could have been no fuch difference of employment as could alone give occafion to any g -fHt difference of talents. As it is this difpofition which forms that dif- ference of talents, fo remarkable among men of different profeffions, fo it is this fame difpofition which renders that difference ufeful. Many tribes of animals acknowledged to be all of the fame fpecies, derive from nature a much more remarkable diftindlion of genius, than what, antecedent to cuftom and education, appears to take place among men. By nature a philofopher is not in genius and difpofition half fo different from a ftreet porter, as a miftiff is from a grey- hound, or a greyhound from a fpaniel, or this laft THE WEALTH OP NATIONS. lad from a flicphcrd's dog. Thofe 'iffercnt tribes of animals, however, though all of the fame fpecies, are of fcarce any ufc to one an- nocher. The flrength of the maftifF is not ia the lead fupported either by the fwiftnefs of the greyhound, or by the fagacity of the (panic), or by the docility of the (hephcrd's dog. The efFeH'. h t.f.-f ■■i-".'. '( •Af;, .♦. •^--W^- itV'ir:-- .J:-i^ :'R- -£- ;■ ■'i'' • CHAP. THE NATURE AND CAUSES OP C H A P. III. Itbat the Divijion of Labour is limittd by the Extent of the Market. AS ic is the power of exchanging that gives occafion to the diviHon of labour, fo the extent of this divifion mud always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very fmall, no perfon can have any encourage- ment to dedicate hi mfelf entirely to one employ* ment, for want of the power to exchange all that furplus part of the produce of his own labour, which is over and above his own confumpcion, for fuch parts of the produce of other men's labour as he has occafion for. There are fome forts of induftry, even of the loweft kind, which can be carried on no where but in a great town. A porter, for example, can find employment and fubfiftence in no other place. A village is by much too narrow a fphere for him; even an ordinary market town is fcarce large enough to afford him conftant occupation. In the lone houfes and very fmall villages which are fcattered about in fo defert a country as the Highlands of Scotland, every farmer muft be butcher, baker and brewer for his own family. In fuch fituations we can fcarce cxpeft to find even a fmith, a carpenter, or a mafon, within lefs than twenty miles of another of the fame trade. ' The fcattered families that live THF WEAITH OP NATIONS. i^ live at eight or ten miles diftance from the c m a p. nearcft of them, muft learn to perform ihem- (elves a great number of little pieces of work, for which, in more populous countries, they would call in the aflldance of thafe workmen. Country workmen are almoft every where obliged to apply themfelves to all the different branches of induftry that have (o much affinity to one another as to be employed about the fame fort of materials. A country carpenter deals in every fort of work that is made of wood: a country fiTvith in every fort of work that is made of iron. The former is not only a carpenter, but a joiner, a cabinet maker, and even a carver in wood, as well as a wheelwright, a plough- wright, a cart and waggon maker. The employments of the latter are (till more various. It is impofliblc there fliould be fuch a trade as even that of a nailer in the remote and inland parts of the Highlands of Scotland. Such a workman at the rate of a thoufand nails a day, and three hundred working days in the year, will make three hundred thoufand nails in the year. But in fuch a fituation it would be impoffible to difpofe of one tiioufand, that is, of one day's work in the year. As by means of water-carriage a more exten- five market is opened to every fort of induftry than what land -carriage alone can afford it, fo it }S upon the fea coaft, and along the banks of na- vigable rivers, that induftry of every kind natu- rally begins to fubdivide and improve itfelf, and it is frequently not till a long time after that thofe s8 THE NATURE AND CAUSES OF BOOK thofc improvements extend themfclvcs to the in- land parts of the country. A broad- wheeled waggon, attended by two men, and drawn by eight horfes, in about fix weeks time carries and brings back between London and Edinburgh near four ton weight of goods. In about the fame time a (hip navigated by fix or eight men, and failing between the ports of London and Leith, frequently carries and brings back two hundred ton weight of goods. Six or eight men, therefore, by the help pf water-carriage, can carry and bring back in the fame time the fame quantity of goods between London and Edinburgh, as fifty broad-wheeled waggons, at- tended by a hundred men, and drawn by four hundred horfes. Upon two hundred tons of goods, therefore, carried by the cheapcft land- carriage from London to Edinburgh, there muft be charged the maintenance of a hundred men for three we*?ks, and both the maintenance, and, what is nearly equal to the maintenance, the wear and tear of four hundred horfes as well as of fifty great waggons. Whereas, upon the fame quantity of goods carried by water, there is to be charged only the maintenance of fix or eight men, and the wear and tear of a (hip of two hundred tons burthen, together with the value of the fuperior riflt, or the difi^erence of the infu- rance between land and water-carriage. Were there no other communication between thofe two places, therefore, but by land -carriage, as no goods could be tranfported from the one to the other, except fugh whofe price was very confi- derablc THE WEALTH OF NATIONS. §f dcrable in proportion to their weight, they could ^ ^^^^ **• carry on but a fmall part of that commerce which at prefent fubfifts between them, and con- fequently could give but a fmall part of that en- couragement which they at prefent mutually afford to each other's induftry. There could be little or no commerce of any kind between the diftant parts of the world. What goods could bear the expence of land- carriage between Lon- don and Calcutta ? Or if there were any fo pre- cious as to be able to fupport this expence, with what fafety could they be tranfported through the territories of fo many barbarous nations ? Thofe two cities, however, at prefent carry on a very confiderable commerce with each other, and by mutually affording a market, give a good deal of encouragement to each other's induilry. Since fuch, therefore, are the advantages of water-carriage, it is natural that the firft improve- ments of art and induftry fhould be made where this conveniency opens the whole world for a market to the produce of every fort of labour, and that they fhould always be much later in ex- tending themfelves into the inland parts of the country. The inland parts of the country can for a long time have no other market for the greater part of their goods, but the country which lies round about them, and feparates them from the fea-coaft, and the great navigable ri- vers. The extent of their market, therefore^ muft for a long time be in proportion to the riches and populoufnefs of that countrj', and con- fequently their improvement muft always be pof- terior 1^ THE NATURE AND CAUSES OP BOOK, terior to the improvement of that country. In our North American colonies the plantations have conftantly followed either the rea>coafl: or the banks of the navigable rivers, and have Icarce any where extended themfelves to any confiderable diftance from both. The nations that, according to the beft authenticated hiftory, appear to have been firft civilized, were thofc that dwelt round the coaft / of the Mediterranean fea. That fea, by far the greated inlet that is known in the workl, having no tides, nor confequently any waves except fuch as are caufed by the wind only, was, by the fmoothnefs of its furface, as well as by the mul- titude of its iflands, and the proximity of its neighbouring ihores, extremely favourable to the infant navigation of the world j when, from their ignorance of the compafs, men were afraid to quit the view of the coaft, and from the imper- fection of the art of fhip- building, to abandon themfelves to the boiftcrous waves of the ocean. To pafs beyond the pillars of Hercules, that is, to fail out of the Streights of Gibraltar, was, in the antient world, long confidered as a mod wonderful and dangerous exploit of navigation. It was late before even the Phenicians and Car- thaginians, the moft flcilful navigators and fhip- builders of thofe old times, attempted it, and they were for a long time the only nations that did attempt it. ..r ^.c,:" v • -■,■. Of all the countries on the coaft of the Medi- terranean fea, Egypt feems to have been the firft in which either agriculture or manufactures were 9 cultivated HI. THE WF\LTH OF NATIONS. jt cultivated and improved to any confiderablc chap. degree. Upper Egypt extends itfelf nowhere above a few miles from the Nile, and in Lower Egypt that great river breaks itfelf into many different canals, which, with the affiftance of a little art, feem to have afforded a communica- tion by water-carriage, not only between all the great towns, but between all the confiderablc villages, and even to many farm-houfes in the country; nearly in the fame manner as the Rhine and the Maefe do in Holland at prefent. The extent and eafinefs of this inland navigation was probably one of the principal caufes of the early improvement of Egypt. The improvements in agriculture and manU'> failures feem likewife to have been of very great antiquity in the provinces of Bengal in the Eaft Indies, and in fome of the eaftern provinces of China j though the great extent of this antiquity is not authenticated by any hiftories of whofc authority we, in this part of the world, are well affured. In Bengal the Ganges and feveral other great rivers form a great number of navigable canals in the fame manner as the Nile does in Egypt. In the Eaftern provinces of China too, feveral great rivers form, by their different branches, a multitude of canals, and by commu- nicating with one another afford an inland navi- gation much more extenfivc than that either of the Nile or the Ganges, or perhaps than both of them put together. It is remarkable that neither the antient Egyptians, nor the Indians, nor the Chinefe, encouraged foreign commerce, but ' feem I. |s THE NATURE AND CAUSES OF -'' BOOK fcem all to have derived their great opulence from this inland navigation. All the inland parts of Africa^ and all that part of Afia which lies any confiderablc way north of the Euxine and Cafpian feas, the antient Scythia, the modern Tartary and Siberia, feem in all ages of the world to have been in the fame barbarous and uncivilized ftate in which we find them at prcfent. The fea of Tartary is the fro- zen ocean which admits of no navigation, and though fome of the greatcft rivers in the world run through that country, they are at too great a diftance from one another to carry commerce and communication through the greater part of it. There are in Africa none of thofe great in- lets, fuch as the Baltic and Adriatic feas in Europe, the Mediterranean and Euxine feas in both Europe and Afia, and the gulphs of Arabia, Perfia, India, Bengal, and Siam, in Afia, to carry maritime commerce into the interior parts of that great continent : and the great rivers of Africa are at too great a didance from one ar.o- ther to give occafion to any confiderable inland navigation. The commerce befides which any nation can carry on by means of a river which does not break itfelf into any great number of branches or canals, and which runs into another territory before it reaches the fea, can never be very confiderable j becaufe it is always in the power of the nations who poflefs that other terri- tory to obftruft the communication between the upper country and the fea. The navigation of the Danube is of very little ufe to the diflferent ^^., : , . ftates ./, t n THE WEALTH OF NATIONS. dates of Bavaria, >Au{tria and Hungary, irt cotn- parifon of what it would be if any of them pof- feflTcd the whole of its courfc till it falls into the Black Sea. . . / 25 .■e ,\*.-*^. :''^*^i. • -'J-./ i.iv, CHAP. IV. (jf the Origin and JJJe of Money* 'I ' ' WHEN the divifion of labour has beefi once thoroughly eftablifhed, it is but a very fmall part of a man's wants Which the pro- duce of his own labour can fupply. He fupplies the fnr greater part of them by exchanging that furplus part of the produce of his own labour, which is over and above his own cohfumption, for fuch parts of the produce of other men's la- bour as he has occafion for. Every man thus lives by exchanging, or becomes in fome mea- fure a merchant, and the fociety itfelf grows to be what is properly a commercial fociety. But when the divifion of labour firft began to take place, this power of exchanging mufl fre- quently have been very much clogged and em- barrafled in its operations. One man, we (hall fuppofe, has more of a certain commodity than he himfelf has occafion for, while another has lefs. The former confequently would be glad to difpofe of, and the latter to purchafe, a part of this fuperfluity. But if this latter (hould chance to have nothing that the former ftands in need of) no exchange can be made between them. Vol. I. D-^ The 54 THE NATURE AND CAUSES OF BOOK The butcher has more meat in his (hop than he himfelf can confume, and the brewer and the baker would each of them be willing to purchafe a part of it. But they have nothing to offer in exchange, except the different produdtions of their refpetSlive trades, and the butcher is already provided with all the bread and beer which he has immediate occafion for. No exchange can, in this cafe, be made between them. He cannot be their merchant, nor they his cuftomers; and they arc all of them thus mutually lefs fervice- able to one another. In order to avoid the in- conveniency of fuch (ituations, every prudent man in every period of fociety, after the firft eftablifhment of the divifion of labour, mud na- turally have endeavoured to manage his affairs in fuch a manner, as to have at all times by him, befides the peculiar produce of his own induftry, a certain quantity of fbme one commodity or other, fuch as he imagined few people would be likely to refufe in exchange for the produce of their induftry. Manv different commodities, it is probable, were fucceffively both thought of and employed for this purpofe. In the rude ages of fociety, cattle are faid to have been the common inftru- ment of commerce j and, though they muft have been a moft inconvenient one, yet in old times we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, fays Homer, coft only nine oxen ; but that of Glaucus coft an hundred oxen. Salt is faid to ^ be * # .i:the wealth of nations. be the common inftrument of commerce and ex- c h a p. changes in Abyfllnia ; a fpecies of fhells in feme parts of the coaft of India ; dried cod at -New- foundland; tobacco in Virginia; fugar in fomc of our Weft India colonies; hides or dreflcd lea- ther in fome other countries j and there is at this day a village in Scotland where it is not uncom- mon, I am told, for a workman to carry nails in- (lead of money to the baker's (hop or the ale- houfe. In all countries, however, men feem at laft to have been determined by irrefiftible reafons to give the preference, for this employment, to me- tals above every other commodity. Metals can not only be kept with as little lofs as any other commodity, fcarce any thing being lefs perifli- able than they are, but they can likewife, with- out any lofs, be divided into any number of parts, as by fufion thofe parts can cafily be re- united again ; a quality which no other equally durable commodities poflefs, and which more than any other quality renders them fit to be the inftruments of commerce and circulation. The man who wanted to buy fait, for example, and had nothing but cattle to give in exchange for it, muft have been obliged to buy fait to the value of a whole ox, or a whole fheep, at a time. He could feldom buy lefs than this, becaufe what he was to give for it could feldom be di- vided without lofs; and if he had a mind to buy more, he mull, ibr the fame reafons, have been obliged to buy double or triple the quan- tity, the value, to wit, of two or three oxen, or D 2 of sf THE NATURE AND CAUSES OF of two or three fheep. If, on the contrary, in- ftead of flieep or oxen, he had metals to give in exchange for it, he could eafily proportion the quantity of the metal to the precife quantity of the commodity which he had immediate occa- fion for. Different metals have been made ufe of by different nations for this purpofe. Iron was the common inftrument of commerce among the an- tient Spartans J copper among the antient Ro- mans ; and gold and filver among all rich and commercial nations. Those metals feem originally to have been made ufe of for this purpofe in rude bars, without any ftamp or coinage. Thus we are told by Pliny*, upon the authority of Timasus, an an- tient hiftorian, that, till the time of Servius Tul- lius, the Romans had no coined money, but made ufe of undamped bars of copper, to pur- chafe whatever they had occafion for. Thefe rude bars, therefore, performed at this time the func- tion of money. '.-. h^v, 5.-' ir; ^ -..^^ . rr r^. .f T II E ufe of metals in this rude ftate was at- tended with two very confiderable inconvenien- cies ; firft, with the trouble of weighing j arid, fecondly, with that of affaying them. In the precious metals, where a fmall difference in the quantity makes a great difference in the value, even the bufinefs of weighing, with proper exadt- nefs, requires at leaft very accurate weights and fcales. The weighing of gold in particular is an * PUn. HiH. Nat. lib. 33. cap. 3. operation tJ THE WEALTH OF NATIONS. ^ operation of fome nicety. In the coarler metals, c n a v. indeed, where a fmall error would be of little confequence, Itfs accuracy would, no doubt, be neceflary. Yet ve Ihould find it excelTively tfoublefome, if every time a poor man had oc- cafion either to buy or fell a farthing's worth of goods, he was obliged to weigh the far- thing. The operation of aflaying is ftill more difficult, ftill more tedious, and, unlefs a pare of the metal is fairly melted in the crucible, with proper diflblvents, any conclufion that can be drawn from it, is extremely uncertain. Before the inftitution of coined money, how- ever, unlefs they went through this tedious and difficult operation, people mufl: always have been liable to the grofleft frauds and impofitions, and inftead of a pound weight of pure filver, or pure copper, might receive in ex- change for their goods, an adulterated compofi- tion of the coarfeft and cheapeft materials, which had, however, in their outward appearance, been made to refemble thofe metals. To prevent fuch abufes, to facilitate exchanges, and thereby to encourage all forts of induftry and commerce, it has been found neceflary, in all countries that have made any confiderable advances towards improvement, to affix a public ftamp upon cer- tain quantities of fuch particular metals, as were in thofe countries commonly made ufe of to pur- chafe goods. Hence the origin of coined mo- ney, and of thofe public offices called mints ; inftitutions exaftly of the fame nature with thofe gf the aulnagers and ftampmafters of woollen D 3 and 3« THE NATURK AND CAUSES OF BOOK, and linen cloth. All of them arc equally meant '' to afcertain, by means of a public (lamp, the quantity and uniform goodncfs of thofc different commodities when brought to market. The firft public ftamps of this kind that were affixed to the current metals, feem in many cafes to have been intended to afcertain, what it was both moft difficult and moft important to afcer- tain, the goodnefs or finenefs of the metal, and to have rcfembled the fterling mark which is at prefent affixed to plate and bars of filvcr, or the SpaniQi mark which is fometimes affixed to ingots of gold, and which being ftruck only upon one fide of the piece, and not covering the whole furface, afcertains the finenefs, but not the weight of the metal. Abraham weighs to Ephron the four hundred fhekels of filver which he had agreed to pay for the field of Machpelah. They arc faid however to be the current money of the merchant, and yet are received by weight and not by tale, in the fame manner as ingots of gold and bars of filver are at prefent. The re- venues of the antient Saxon kings of England are faid to have been paid, not in money but in kind, that is, in vidtuals and provifions of all forts. William the Conqueror introduced the cuf- tom of paying them in money. This money, however, was, for a long time, received at the exchequer, by weight and not by tale. The inconveniency and difficulty of weighing thofe metals with exadnefs gave occafion to the inflitution of coins, of which the {lamp, covering entirely both fides of the piece and fometimes the THE WEALTH OF NATIONS. • sf the edges coo, was fuppoicd to afcertain not only chap. the fineneis, but the weight of the metal. Such ' ' coins, therefore, were received by tale as at pre- lent, without the trouble of weighing. The denominations of thofe coins feem ori« ginally to have exprefled the weight or quantity of metal contained in them. In the time of Scrvius Tullius, who Brft coined money at Rome, the Roman As or Pondo contained a Roman pound of good copper. It was divided in the fame manner as our Troyes pound, into twelve ounces, each of which contained a real ounce of good copper. The Englifh pound llerling in the time of Edward I., contained a pound. Tower weight, of filver of a known fine- ncfs. The Tower pound feems to have been fomething more than the Roman pound, and fomething lefs than the Troyes pound. This lad was not introduced into the mint of England till the i8th of Henry VIII. The French livre contained in the time of Charlemagne a pound, Troyes weight, of filver of a known finenefs. The fair of Troyes in Champaign was at that time frequented by all the nations of Europe^ and the weights and meafures of fo famous a market were generally known and efteemed. The Scots money pound contained, from the time of Alexander the Firft to that of Robert Bruce, a pound of filver of the fame weight and finenefs with the Englifh pound llerling. Eng- lilh, French, and Scots pennies too, contained all of them originally a real pennyweight of filver, the tv^entieth pare of an oMncCi apd the two D 4 ' hundred- ^^ *.*■'■ 4« THE NATURE AND CAUSES OF hundred- arid-fortieth part of a pound. The (hil- ling too fecms originally to have been the deno- mination of a weight. When wheat is at twelve fljillings the quarter^ fays an antient ftatute of Henry III. then wajlel bread of a farthing fhall wei^h eleven Jhiltings and four pence. The pro- portion, however, between the (hilling and either ihe penny on the one hand, or the pound on the other, fecms not to have been fo conftant and uniform as that between the penny and the pound. During the firft race of the kings of France, the French fou or (hilling appears upon different occafions to have contained five, twelve, twenty, and forty pennies. Among the antient Saxons a fliilling appears at one time to have contained only five pennies, and it is not impro- bable that it may have been as variable among them as among their neighbours, the antient Franks. From the time of Charlemagne among the French, and from that of William the Con- queror among the Engiifli, the proportion be^ iween the pound, the (hilling, and the "penny, feems to have been uniformly the fame as at prer fent, though the value of each has been very dif- ferent. For in every country of the world, I believe, the avarice and injuftice of princes and fovereign ftates, abuTing the confidence of their lubje<5ts, have by degrees diminilhed the real quantity of metal, which had been originally contained in their coins. The Roman As, in the latter ages of the Republic, as reduced to the twenty- fourth part of its origiiial value, and, in- Aead of weighing a pound, came to weigh only " ■" - : ■ »' '- half THE WEALTH OF NATIONS. half an ounce. The Englifli pound and penny contain at prefcnt about a third only ; the Scots pound and penny about a thirty-fixth ; and the French pound and penny about a lixry-fixth part of their original value. By means of thole operations the princes and fovereign ftatcs which performed them were enabled, in appearance, to pay their debts and fulfil their engagements with a fmaller quantity of filver than would othcrwife have been rcquifite. It was indeed in appearance only ; for their creditors were really defrauded of a part of what was due to them. All other debtors in the Itatc were allowed the fame privilege, and might pay with the fame nominal fum of the new and debafed coin what- ever they had borrowed in the old. Such ope- rations, therefore, have always proved favourable to the debtor, and ruinous to the creditor, and have fometimcs produced a greater and more univerfal revolution in the fortunes of private per-r fons, than could )iave been occafioned by a very great public calamity. It is in this manner that money has become in all civilized nations the univerfal inftrument of commerce, by the intervention of which goods of all kinds are bought and fold, or exchanged for one another. ' " What are the rules which men naturally ob- ferve in exchanging them eitlier tor money or for one ariother, I lliall now proceed to examine. Thefe rules determine what may be called th^ relative or exchangeable value of goods. .7'- . • ' The' 4» THE NATURE AND CAUSES OP The word value, it is to be obfervcd, has two different meanings, and fometimes exprefles the utility of fo'me particular objeft, and fome- times the power of purchafing other goods which the poflcflTion of that objedk conveys. The one may be called " value in ufe j" the other, " value " in exchange." The things which have the greatefl: value in ufe have frequently little or no value in exchange; and on the contrary, thofe vhich have the greateft value 'in exchange have frequently little or no value in ule. Nothing is more ufeful than water: but it will purchafc fcarce any thing; fcarce any thing can be had in exchange for it. A diamond, on the con-> trary, has fcarce any value in ufe; but a very great quantity of other goods may frequently be had in exchange for it. In order to invefligate the principles which regulate the exchangeable value of commodities, I ihall endeavour to ihew. First, what is the real meafure of this ex- changeable value; or, wherein confifls the real price of all commodities. Secondly, what are the different parts of which ^his real price is compofcd or made up. And, laftly, what are the different circum- flances which fometimes raife fome or all of thcfe different parts of price above, and fome- times fink them below their natural or ordinary rate; or, what are the caufes which fometimes hinder tlie market price, that is, the aftual price of commodities, from coinciding exadly with what may be called their natural price. I SHALL THE WEALTH OF KATIONS. 4f I SHALL endeavour to explain, as fully and chap. diftinftly as I can, thofe three fubjefls in the three following chapters, for which f muft very carneftly entreat both the patience and attention of the reader: his patience in order to examine a detail which may perhaps in fome places ap- pear unncceflarily tedious; and his attention in order to underftand what may, perhaps, after the fullcft explication which I am capable of giving it, appear ftill in fome degree obfcure. I am always willing to run fome hazard of being tedious in order to be fure that I am perfpicuous; and after taking the utmoft pains that I can to be perfpicuous, fome obfcurity may ftill appear to remain upon a fubje<5t in its own nature ex- tremely abftraded. CHAP V. Of the real and nominal Price of CommoditieSy or of their Price in Labour, and their Price in Money, . EVERY man is rich or poor according to the degree in which he can afford to enjoy the neceflaries, conveniencies, and amufements of human life. But after the divifion of labour has once thoroughly taken place, it is but a very fmall part of thefe with which a man's own la- bour can fupply him. The far greater part of them he rnul^ derive from the labour of other people, 44 THE NATURE AND CAUSES OF / BOOK people, and he - muft be rich or poor according ** to the quantity of that labour which he can cominand, or which he can afford to purchafe. The value of any commodity, therefore, to the perfon who poffefles it, and who means not to life or confume it himfelf, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchafe or command. Labour, therefore, is the real mea- fure of the exchangeable value of all commodities. The real price of every thing, what every thing really cofts to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the m?n who has acquired it, and who wants to difpofe of it or exchange it for fomething elfe, is the toil and trouble which it can fave to himfelf, and which 'it can impofe upon other people. What js bought with money or with goods is purchafed by labour, as much as what we acquire by the toil of our own body. That money or thofe goods indeed fave us this toil. They contain the value of a certain quantity of labour which we exchange for what is fuppofed at the time to contain the value of an equal quantity. Labour was the firft price, the original purchafe- money that was paid for all things. It was not by gold or by filver, but by labour, that all the wealth of the world was originally purchafed; and its value^ to thofe who poffefs it, and who want to ex- change it for fome new productions, is precifely equal to the quantity of labour which it can enable them to purchafe or command. Wealth, I ,. THE WEALTH OF NATIONS. ' # Wealth, as Mr. Hobbes fays, is power. But chap. the perfon who cither acquires, or fucceeds to a great fortune, does not neceffarily acquire or fucceed to any political power, either civil or military. His fortune may, perhaps, afford him the means of acquiring both, but the mere pofleffion of that fortune does not neceffarily convey to him either. The power which that poffeffion immediately and directly conveys to him, is the power of purchafing ; a certain com- mand over all the labour, or over all the produce of labour which is then in the market. His for- tune is greater or lefs, precifely in proportion to the extent of this power j or to the quantity either of other men's labour, or, what is the ^^me thing, of the produce of other men's •our, which it enables him to purchafe or command. The exchangeable value of every thing liiuft always be precifely equal to the extent of this power which it conveys to its owner. *^t • But though labour be the real meafure of the exchangeable value of all commodities, it is not that by which their value is commonly ellimated. It is often difficult to afcertain the proportion between two different quantities of labour. The time fpent in two different forts of work will not always alone determine this proportion. The different degrees of hardlhip endured, and of ingenuity exercifed, muft likewife be taken into account. There may be more labour in an hour's hard work, than in two hour's eafy bufinefsj or in an hour's application to a trade which it coft ten years labour to learn, than in a . ..... month's 46 THE NATURE AND CAUSES OP BOOK, month's induflry, at an ordinary and obvious employment. But it is not eafy to find any ac- curate mcafure either of hardfhip or ingenuity. In exchanging indeed the difiicrent produflions of difTerent forts of labour for pne another, fomc allowance is comii^only made for both. It is adjufted, however, not by any accurate meafure, but by the higgling and bargaining of the mar- ket, according to that fort of rough equality which, though not exaft, is fufficicnt for carrying on the bufinefs of common life. Every commodity befides, is more frequently exchanged for, and thereby compared with, odier commodities than with labour. It is more natural therefore, to eftimate its exchangeable value by the quantity of fome other commodity than by that of the labour which it can piirchafe. I'he greater part of people too underftand better what is meant by a quantity of a particular com- modity, than by a quantity of labour. The one is a plain palpable object j the other an abftraft notion, which, though it can be made fufficiently intelligible, is not altogether fo natural and obvious. ^"^ But when barter ceafes, and money has become the common inftrument of commerce, every particular commodity is more frequently ex- changed for money tl i for any other commo- dity. The butcher feldom carries his beef or :his mutton to the baker, or the brewer, in order to exchange them for bread or for beer; but he carries them to the market, where he exchanges them for money, and afterwards exchanges that money THE WEALTH OF NATIONS. 47 money for bread and for beer. The quantity chap. of money which he gets for them regulates too the quantity of bread and beer which he can after- wards purchafe. It is more natural and obvious to him., therefore, to eftimate their value by the quantity of money, the commodity for which he immediately exchanges them, than by that of bread and beer, the commodities for which he can exchange them only by the intervention of another commodity; and rather to fay that his butcher's meat is worth threepence or fourpence a pound, than that it is worth three or four pounds of bread, or three or four quarts of fmall beer. Hence it comes to pafs, that the ex- changeable vakie of every commodity is more frequently eftimated by the quantity of money, than by the quantity either of labour or of any other commodity which can be had in ex- change for it. Gold and filver, however, like every other commodity, vary in their value, are fometimes cheaper and fometimes dearer, fometimes of eafier and fometimes of more difficult purchafe. The quantity of labour which any particular quantity of them can purchafe or command, or the quan- tity of other goods which it v/ill exchange for, depends always upon the fertility or barren nefs of the mines which happen to be known about the time when fuch exchanges are made. The difcovery of the abundant mines of America reduced, in the fixteenth century, the value of gold and filver in Europe to. about a third of what it had been before. As it coft lefs labour to 48 ' THE NATURE AND CAt)SES OP . . BOOK to bring thofe metals from the mine to the ^ ^' . market, fo when they were brought thither they could purchafe or command lefs bhour ; and ' this revolution in their value, though perhaps the grcateft, is by no means the only one of which hiftory gives fome account. But as a meafure of quantity, fuch as the natural foot^ fathom, or handful, which is continually varying in its own quantity, can never be an accur tc r meafure of the quantity of other things ; To a commodity which is itfclf continually varying in its own value, can never be an accurate meafurie of the value of other commodities. Equal quantities of labour, at all times and places, may be faid to be of equal value to the labourer. In his ordinary ftatc of health, ftrength and fpirits; in the ordinary degree of his (kill and dexterity, he muft always lay down the fame portion of his ea(e, his liberty, and his happi- nefs. The price which he pays muft always be the fame, whatever may be the quantity of goods which he receives in return for i^. Of thefe, indeed, it may fometimes purchafe a greater and fometimes a fmaller quantity; but it is their value which varies, not that of the labour which purchafes them. At all times and places that is dear which it is difficult to come at, or which it cofts much labour to acquire; and that cheap which is to be had eafily, or with very little labour. Labour alone, therefore, never varying in its own value, is alone the ultimate and real ftandard by which the value of all commodities can at all times and places be eftimated and I compared. THE WEALTH OF NATIONS; 0^ eortipared. It is tlicir real price -, money is their ^ h^a p. oominal price only. But though equal quantities of labour are al- ways of equal value to the labourer, . yet to th6 perlbn who employs him they appear fometimes to be of greater and fometimes of fmaller value. He purchafes them fometimes with a greater and fometimes with a fmaller quantity of goods, and to him the price of labour feems to vary like that of all other things. It appears to hini dear in the one cafe> and cheap in the other. In reality, however^ it is the goods which are cheap in the one cafcj and dear in the other. ? r r In this popular fenfe, therefore, labour, like commodities, may be faid to have a real and & nominal price. Its real price may be faid to eonfifl in the quantity of the necelTaries and con- veniences of life which are given for itj its no- minal price, in the quantity of money. The labourer is rich or poor, is well or ill rewarded, in proportion to the real, not to the nominal price of his labour* The diftindion between the real and the no- minal price of commodities and labour, is not a matter of mere fpeculation, but may fometimes be of confiderable ufe in pradlice. The fame real price is always of the fame value ^ but on account of the variations in the value of gold and filver, the fame nominal price is fometimes of very different values. When a landed eftate, therefore, is fold with a refervation of a perpe- tual rent, if it is intended that this rent ihould always be of the fame value, it is of importance Vol* h E to J* THE NATURE AND CAUSES OF BOOK to the family in whofc favour it is rcfcrvcd, that it fhould not confift in a particular fum of money. Its value would in this cafe be liable to varia- tions of two different kinds ; firft, to thofe which arife from the different quantities of gold and filver which are contained at different times in coin of the fame denomination; and, fecondly, to thofe which arife from the different values of equal quantities of gold and filver at different times. ^■ Princes and fbvereign ftates have frequently fancied that t'lcy had a temporary intereft to di- miniih the quantity of pure metal contained in their coins; but they feldom have fancied that they had any to augment it. The quantity of metal contained in the coins, I believe of all nations, has, accordingly, been almoft continu- ally diminifhing, and hardly ever augmenting. Such variations therefore tend almoft always to diminifli tl^ value of a money rent. »?♦/ • The difcovery of the mines of America dimi- nifhed the value of gold and filver in Europe* This diminution, it is commonly fuppofed, though I apprehend without any certain proof, is flill going on gradually, and is likely to continue to do fo for a long time. Upon this fuppofition, therefore, fuch variations are more likely to di- ininifh, than to augment the value of a money lent, even though it (hould beftipulated to be f :rid, not in fuch a quantity of coined money of luch a denomination (in lb many pounds fterling». for exuinpk'), but in (o many ounces cither of pure filver, or of filver of a certain ftandard. . •. • The TUB WEALTH OF NATIONS. i» The rents which have been rcferved in corn chap. have prcfcrved their value much better than thofc which have been referved in money, even where the denomination of the coin has not been altered. By the i8th of Elizabeth it was enafbed, 1 hat a third of the rent of ail college leafes ihould be referved in corn^ to be paid) either in kind^ or according to the current prices at the neareft public market. The money arifing from this corn rent) though originally but a third of the whole, is in the prefent times, according to Dodior Blackftonci commonly near double of what arifes from the other two-thirdsi The old money rents of colleges muft, according to tliis account, have funk almoft to a fourth part of their ancient value j or are worth little more than a fourth part of the corn which they were formerly worth. But fince the reign of Philip and Mary the denomination of the Engliih coin has undergone little or no alteration, and the lame number of pounds^ (hillings and pence have contained very nearly the fame quantity of pure (liver. This degradation, therefore^ in the value of the money rents of colleges^ has arifen alto- gether from the degradation in the value of filver. When the degradation in the value of filver is combined with the diminution of the quantity o( it contained in the coin of the fame denomi- nation, the lofs is frequently (till greater. In Scodand, Where the denomination of the coin has undergone much greater alterations than ill tver did in England, and in France, where it has- E a undcr« B 52 THE NATURE AND CAUSES OP o o K undergone ftill greater than it ever did in Scot- land, fome ancient rents, originally of confider- able value, have in this manner been reduced aimed to nothing. Equal quantities of labour will at diftant times be purchafed more nearly with equal quantities of corn, the fubfiftencc of the labourer, than with equal quantities of gold and (ilvcr, or per- haps of any other commodity. Equal quan- tities of corn, therefore, will, at diftant times, be more nearly of the fame real value, or enable the poiTeflbr to purchafe or command more nearly the fame quantity of the labour of other people. They will do this, I fay, more nearly than equal quantities of almoil any other com- modity j for even equal quantities of corn will not do it exaftly. The fubfillence of the la- bourer, or the real price of labour, as I (hall endeavour to Ihow hereafter, is very different upon different occafions; more liberal in a So- ciety advancing to opulence, than in one that is Handing ftill; and in one that is (landing ftill, than in one that is going backwards. Every other commodity, however, will at any particular time purchafe a greater or fmaller quantity of labour in proportion to the quantity of fubfift- encc which it can purchafe at that time. A rent therefore referved in corn is liable only to the variations in the quantity of labour which a certain quantity of corn can purchafe. But a rent referved in any other comnnodity is liable^ not only to the variations in the quantity of la- bour which any particular quantity of corn can ... .. .. purchafe. THE WEALTH OP NATIONS. ' , Jl purchafc, but to the variations in the quantity of c ii a !»• corn which can be purchafcd by any particular quantity of that commodity. Though the real value of a corn rent, it is to be obferved however, varies much lefs from cen- tury to century than that of a money rent, it varies much more from year to year. The money price of labour, as I (hall endeavour to (how hereafter, does not Bu6tuate from year to year with the money price of corn, but fccms tq be every where accommodated, not to the tem- porary or occafional, but to the average or ordi- nary price of that neccfTary of life. The average or ordinary price of corn again is regulated, as I (hall likewife endeavour to (how hereafter, by the value of filver, by the richnefs or barrennefs of the mines which fupply the market with that metal, or by the quantity of labour which muft be employed, and confequently of corn which muft be confumed, in order to bring any par- ticular quantity of filver from the mine to the market. But the value of filver, though it fome- times varies greatly from century tq cientury, feldom varies much from year to year, but fre- quently continues the fame, or very nearly the fame, for half a century or a century together. The ordinary or average money price of corn, therefore, may, during fo long a period, con- tinue the fame or very nearly the fame too, and along with it the money price of labour, pro- vided, at leaft, the fociety continues, in other refpefts, in the fame or nearly in the fame con- dition. In the mean time the temporary and ... I E J occa- X. 54 THE NATURE AND CAUSES OF BOOK occafional price of corn may frequently be dou* ble, one year, of what it had been the year be- fore, or fluftuatc, for example, from five and twenty to fifty (hUlings the quarter. But when corn is at the latter price, not only the nominal, but the real value of a corn rent will be double of what it is when at the former, or will com- mand double the quantity either of labour or of the greater part of other commodities ; the money price of labour, and along with it that of moft other things, continuing the fame during all thefe fluctuations. Labour, therefore, it appears evidently, is the only univerfal, as well as the only accurate meafure of value, or the only flandard by which we can compare the values of different commo- dities at all times and at all places. We cannot eftimate, it is allowed, the real value of different commodities from century to century by the quantities of filver which were given for them. We cannot eftimate it from year to year by tho quantities of corn. By the quantities of labour we can, with the greateft accuracy, eftimate it both from century to century and from year to year. From century to century, corn is better meafure than filver, bccaufe, from century to century, equal quantities of corn will command the fame quantity of labour more nearly than equal quantities of filver. From year to year, on the contrary, filver is a better meafure than corn, becaufe equal quantities of it will more nearly command the fame quantity of labour. "^"liiV . 'J ■ ■ But THE WEALTH OF NATIONS. f| But though in eftablifhing perpetual rents, chap. or even in letting very long leafcs, it may be of ufe to diftinguifh between real and nominal price i it is of none in buying and felling, the more common and ordinary tranfadions of hu- man life. At the fame time and place the real and the nominal price of all commodities are exaflly in proportion to one another. The more or lefs money you get for any commodity, in the Lon- don market, for example, the more or lefs la- bour it will at that time and place enable you to purchafe or command. At the fame time and place, therefore, money is the exae- mea^'ire of the real exchangeable value of all commodities. It is fo, however, at the fame time and place only. . , .. , , Though at diftant places, there is no regular proportion between the real and the money price of commodities, yet the merchant who carries goods from the one to the other has nothing to confider but the money price, or the difference between the quantity of filver for which he buys them, and that for which he is likely to fell them. Half an ounce of fiiver at Canton in China may command a greau <• quantity both of labour and of the neceflaries and conveniences of life, than an ounce at LorAdon. A commodity, therefore, which iells for half an ounce of filver at Canton may there be really dearer, o{ more real importance to the man who poflefles it there, than a commodity which fells for an oume at London is to the man who pofTcires it at Lon- E 4 don. 5<5 BOOK don. THE NATURE AND CAUSES OF If a London merchant, however, can buy at Canton for half an ounce of filver, a commo- dity which he can afterwards fell at London for an ounce, he gains a hundred per cent, by the bargain, juft as much as if an ounce of filver was at London exadly of the fame value as at Canton. It is of no importance to him that half an ounce of filver at Canton would have given him the command of mqre labour and of a greater quantity of the neceffaries and conve- niences of life than an ounce can do at London. An ounce at London will always give him the command of double the quantity of all thefe, which half an ounce could have done there, and this is precifely what he wants. " As it is the nominal or money price of goods, therefore, which finally determines the prudence or imprudence of all purchafes and fales, and thereby regulates almoft the whole bufinefs of common life in which price is concerned, we cannnot wonder that it fliould have been fo much more attended to than the real price. ■ **-'•> In fuch a work as this, however, it may fome- times be of ufe to compare the different real values of a particular commodity at different times and places, or the different degrees of power over the labour of other people which it may, upon different cccafions, have given to thoie who poffeffed it. We mufl in this cafe compare, not fo much the different quantities of filver for which it was commonly fold, as the different quantities of labour which thofe dif- ferent quantities of iilver could have purchafed. But THE WEALTH OF NATIONS. 57 But the current prices of labour at diftant times chap. and places can fcarce ever be known with any degree of examine fs. Thofc of corn, though they have in few places been regularly re- corded, are in general better known and have been more frequently taken notice of by hifto- rians and other writers. We mud generally, therefore, content ourfelves with them, not as being always exadly in the fame proportion as the current prices of labour, but as being the neareil approximation which can commonly be had to that proportion. I fhall hereafter have occafion to make feveral comparifons of this kind. -li.m'' ■• . ..^■ij.i;.,:.^,*.. ; In the progrefs of induftry, commercial na- tions have found it convenient to coin feveral different metals into money; gold for larger pay- ments, filver for purchafes of moderate value^ and copper, or fome other coarfe metal, for ^hofe of ftill fmaller confideration. They have always, however, confidcred one of thofe metals as more peculiarly the meafure of value than any of the other two ; and this preference feems generally to have been given to the metal which they happened firft to make ufe of as the in- ftrument of commerce. Having once begun to ufe it as their ftandard, which they muft have done when they ha4 no other money, they have generally continued to do fo even when the nc- ceflity was not the fame. The Rom'ans are faid to have had nothing but copper money till within five years before the firft 58 THE NATURE AND CAUSES OF [ BOOK firft Punic war*, when they firft began to coin filvcr. Copper, therefore, appears to have con* tinued always the meafure of value in that re- public. At Rome all accounts appear to have been kept, and the value of all eftates. to have been computed, either in AJfes or in Sejiertiu The As was always the denomination of a copper coin. The word Sejiertius fignifies two JJfes and a half. Though the Sejiertius, therefore, was originally a filver coin, its value was eftimated in copper. At Rome, one who owed a great deal of money, was faid to have a great deal of other people's copper. * . ^ v.. The northern nations who eftabliftied them* felves upon the ruins of the Roman empire, feem to have had filver money from the firft beginning of their fettlements, and not to have known cither gold or copper coins for fevcral ages there- after. There were filver coins in England in the time of the Saxons j b«"- there was little gold coined till the time of Et:'.^;*rd HI. nor any cop- per till that of James I. of Great Britain. In England, therefore, and for the fame reafon, I believe, in all other modern nations of Europe, all accounts are kept, and the value of all goods and of all eftates is generally computed in filver: and when we mean to exprefs the amount of a perfon*s fortune, we feyom mention the number of guineas, but the number of pounds fterling which we fuppofe would be given for it. Pliny, lib. xxxiii. c. 3. Ori- V. THE WEALTH OF NATIONS. || Originality, in all countries, I believe a Ic- c ha p. gal tender of payment could be made only in the coin of that metal, which was peculiarly con- fidcred as the ftandard or meafure of value. In England, gold was not confidered as a legal ten- der for a long time after it was coined into mo- ney. The proportion between the values of gold and filver money was not fixed by any poblic law or proclamation; but was left to be fettled by the market. If a debtor offered payment in gold, the creditor might either reje<5l fuch pay- ment altogether, or accept of it at fuch a valu- ation of the gold as he and his debtor could agree upon. Copper is not at prefent a legal tender, except in the change of the fmaller filver coins. In this fiate of things the diftinftion between the metal which was the (landard, and that which was not the ftandard, was fomething more than a nominal diftindtion. ' • ■ -^^vrf In procefs of time, and as people became gradually more familiar with the ufe of the dif- ferent metals in coin, and confequently better acquainted with the proportion between their re- fpedtive values, it has in moft countries, I be- lieve, been found convenient to afcertain thi$ proportion, and to declare by a public law that a guinea, for example, of fuch a weight and finenefs, (hould exchange for one- and- twenty fhillings, or be a legal tender for a debt of that amount. In this ftate of things, and during the continuance of any one regulated proportion of this kind, the diftindion between the metal which is the ftandard, and that which is not the 4 ftandard 6o THE NATURE AND CAUSES OF BOOK (landardj becomes little more than a nominal '• diftinftion. In confequcncc of any change, however, in this regulated proportion, this di(lin(!^ion be- oomes, or at lead feems to become, fomething more than nominal again. If the regulated value of a guinea, for example, was either re- duced 10 twenty, or raifed to two-and-twenty fhilhngs, all accounts being kept and almoft all obligations for debt being exprefled in filver money, the greater part of payments could in either cafe be made with the fame quantity of filver money as before; but would require very different quantities of gold money; a greater in the one calc, and a fmaller in the other. Silver would appear to be more invariable in its value than gold. Silver would appear to meafure the value of gold, and gold would not appear to meafure the value of filver. The value of gold would feem to depend upon the quantity of filver which it would exchange for; and the value of filver would not feem to depend upon the quan- tity of gold which it would exchange for. This difference, however, would be altogether owing to the cuftom of keeping .accounts, and of exprefiing the amount of all great and fmall fums rather in filver than in gold money. One of Mr. Drummond's notes for five- .ind- twenty or fifty guineas would, after an alteration of this kind, be ftill payable with five- and- twenty or fifty guineas in the fame manner as before. It would, after fuch an alteration, be payable with ;h^ fame quantity of gold as before, but with , very ',.-/.. Bta>, THE WEALTH OF NATIONS. m^ very different quantities of filver. In the paf- c H A p. ment of fuch a note, gold would appear to be more invariable in its value than filver. Gold would appear to meafure the value of filver, and filver would not appear to meafure the value of gold. If the cuftom of keepieg accounts, and of ^xpreflTing promiffory notes a(nd other obligations for money in this manner, Ihould evef become general, gold, and not filver, would be con- fidered as the metal which was peculiarly the ftandard or meafure of value. • In reality, during the continuance of any one regulated proportion between the refpeftive va- lues of the different metals in coin, the value of the moft precious metal regulates the value of die whole coin. Twelve copper pence con- tain half a pound, avoirdupois, of copper, of not the beft quality, which, before it is coined, is feldom worth feven -pence in filver. But as by the regulation twelve fuch pence are ordered to exchange for a (hilling, they are in the market confidered as worth a fhilling, and a Ihilling can ai any time be had for them. Even before the kte reformation of the gold coin of Great Bri- tain, the gold, that part of it at leaft which cir- culated in London and its neighbourhood, was in general lefs degraded below its ftandard weight than the greater part of the filver, One-and- twenty worn and defaced fiiillings, however, were confidered as equivalent to a guinea, which perhaps, indeed, was worn and defaced too, but feldom fo much fo. The late regulations have brought the gold coin as near perhaps to its ftandard weight as it is poITible to bring the cur- 5 rent 6« . , ttrE KATtJRfi ANb CAUSES 01^ 6 c o K ntic ecu a of any nation; and the order, to receivft no gold at the public offices but by weighty is likely to preferve it fo^ as long as that order is enforced. The filver coin ftill continues in the fame worn and degraded ftatfi m btfor^ th.c re formation of the gold coin. In th^ market, how- ever, oae-and-twenty fhillinga of rhis 'iegrr.rd filver coin ar^ J^ill conlidered as worth a guaiea of this excellent gold coin. Tbe refornnation of the gold coin has eviderstif raifcd the value of the filver coin which can be ex- changed for it* In the Englifh mint a pound w^Mght of gold is coined into forty-four guineas and a half, which, ac one-and-twenty (hillings the guinea, is equal to forty. fix pounds fourteen fhillings and fix- pence. An ounce of fuch gold coin, therefore, is worth 3 /. 17 /. 10.4-^. in filver. In England np duty or feignorage is paid upon the coinage, and he who carries a pound weight or an ounce weight of fl:andard gold bullion to the mint, gets back a pound weight or an ounce weight of gold in coin, without any deduction. Three pounds feventeen (hillings and ten-pence halfpenny an ounce, therefore, is faid to be the mint price of gold in England, Or the quantity of gold coin which the mint gives in return for ftandard gold bullion. Before the reformation of the 2;old coin, the price of (landard gold bullion in the market had for many years been upwards of 3 /. 1 8 i. fome- times 3/. 19 J. and very frequ >».iy 4/. an ounce j thft fumj it is probabk, in ti e worn and de- graded THE WEALTH OF NATIONS. ' ^f. graded gold coin, fddom containing more than chap. an ounce of ftandard gold. Since the reformation of the gold coin, the market price of ftandard gold bullion feldom exceeds 3/. 17 j. 7 ^/. an ounce. Before the reformation of the gold coin« thfc "^"rkct price was always more or lefs above the mint price. Since that reformation, the mar^ ket pi ice has been conftantly below the mint price. But that market price is the fame whe« ther it is paid in gold or in fllver coin. The late reformation of the gold coin> therefore, has raifed not only the value of the gold coin, but likewife that of the filver coin in proportion to gold bullion, and probably too in proportion to all other commodities ; though the price of thd greater part' of other commodities being influ-* enced by fo many other caufes, the rife in the value either of gold or filver coin in proportion to them, may not be fo diftinftand fenfible* In the Englifh mint a pound weight of ftafi'* dard filver bullion is coined into fixty-two fliil-* lings, containing, in the (amc manner, a pound weight of ftandard filver. Five fhillings and two-pence an ounce, therefore, is faid to be thes mmr price of filver in England, or the quantity of filver coin which the mint gives in return fot ftandard filver bullion. Before the reformation of the gold coin, the market price of ftandard filver bullion was, upon different occafions, five fhillings siiid fourpence, five fliillings and five- pence, tive fiiillings and fixpence, five ftiiliings and feven- pence, and very often five fiiillings and eight-pence an ounce. Five ftiiliings and fevca- 64 THE NATURE AND CAUSES OP BOOK pence, however, feems to have been the riiolk common price. Since the reformation of the gold coin, the market-price of ftandard filver bullion has fallen occafionally to five (hillings and three-pence, five (hillings and four-pence, and five (hillings and five-pence an ounce, which hft price it has fcarce ever exceeded. Though the market price of filver bullion has fallen con- (iderably fince the reformation of the gold coin^ it has not fallen fo low as the mint price. 71 ;j f In the proportion between the different metals in the Englifh coin, as copper is rated very much above its real value, fo (ilver is rated (bme- what below it. In the market of Europe, in the French c Vn u:.'4 in the Dutch coin, an ounce of fine golc^ e;diii«!it:s for about fourteen ounces of fine filver. I ft the Englifh coin, it exchanges for about fifteen ounces, that is, for more filver than it is worth according to the common eflimation of Europe. But as the price of copper in bars is not, even in England, raifed by the high price of copper in Englifh coin, fo the price of filver in bullion is not funk by the low rate of filver in Englifh coin. Silver in bullion dill preferves itst proper proportion to gold ; for the fame reafan that copper in bars preferves its proper propor- tion to filver. ■ -.s.^vlh.^l 't.v:ynf , >,^.,j; „^A.;v f Upon the reformation of the filver coin in the reign of William III. the price of filver bullion dill continued to be fomewhat above the mint^ price. Mr.. Locke imputed this high price to the permiffion of exporting filver bullion, and to the prohibition of exportin^^ filver coin This perm*^:;n '^'^THE WEALTH OF NATIONS. ^. this c.-^fe be cheated in confequence of the high valuari' :; of filler in coin j as no credi- tor can at prefent be cheated in confequence of the high valuation of copper. The bankers only would fufFcr by this regulation. When a run comes upon them they fometimes endeavour to gain time by paying in fixpences, and they would be precluded by this regulation from this difcre- ditable method of evading immediate payment* They would be obliged in confequence to keep at all times in their coffers a greater quantity of ealh than at prefent j and though this might v > doubt be a confiderable inconveniency to them> it would at the fame time be a confiderable fecu- rity to their creditors. Three pounds feventeen Ihillings and ten- pence halfpenny (the mint price of gold) cer- tainly does not contain, even in our prefent ex- cellent gold coin, more than an ounce of ftan- dard gold, a/ id it may be thought, therefore,, fliould not purcljaie more ftandard bullion. But gold in cr 'n is more convenient than gold in bullion, a . > though, in England, the coinage is free,, yet the goid which is carried in bullion to the mint» can feldom be returned in coin to the $ . . owner THE WEALTH OF NATTONS. «7 owner till after a dek) f fcvcral weeks. In the chap. prcfent hurry of the mint, it could not be re- turned till after a delay of fevcral months. This delay is equivalent to a fmall duty, and renders gold in coin fomewhat more valuable than an equal quantity of gold in bullion. If in the Englirti coin filver was rated according to its proper proportion to gold, the price of filver bullion would probably fall below the mint price even without any reformation of the filver coin j the value even of the prefent worn and defaced filver coin being regulated by the value of the excellent gold coin for which it can be changed. A SMALL feignorage or duty upon the coinage of both gold and filver would probably increafe ftill more the fuperiority of thofe metals in coin above an equal quantity of either of them in bul- lion. The coinage would in this cafe increafe the value of the metal coined in proportion to the extent of this fmall duty ; for the fame rea- fon that the fafhion increafes the value of plate in proportion to the price of that falhion. The fuperiority of coin above bullion would prevent the melting down ^of the coin, and would difcou- rage its exportation. If upon any public exi- gency it fliould become neceflary to export the coin, the greater part of it would foon return again of its own accord. Abroad it could fell only for its weight in bullion. At home it would buy more than that weight. There would be a profit, therefore, in bringing it home again. In France a feignorage of about eight per cent, is F 2 impofed « »*i&^i:» i- ^ •,- -> \ T^et 69 THE NATURE AND CAT^HRS OP BOOK impofed upon the coinage, and (W French coin, when exported, is faid to return home again of its own accord. The occafional fluctuations in the market price of gold and filver bullion arife from the fame caufcs as the like fluctuations in that of all other commodities. The frequent lofs of thofc metals from various accidents by fea and by land, the continual wade of them in gilding and plating, in lace and embroidery, in the wear and tear of coin, and in that of plate ; require, in all countries which poffefs no mines of their own, a continual importation, in order to repair this lofs and this wafte. The merchant irrsporters, like all other merchants, we may believe, endeavour, as well as they can, to fuit their occafional im- portations to what, they judge, is likely to be the immediate demand. With all their attention> however, they fometimes over- do the bufinefs, and fometimes under-do it. When they import more bullion than is wanted, rather than incur the rilk and trouble of exporting it again, they are fometimes willing to fell a part of it for fomething lefs than the ordinary or average price. When, on the other hand, they import lefs than is wanted, they get fomething more than this price. But when, under all thofe oc- cafional fluctuations, the market price either* of gold or filver bullion continues for feveral years together fteadily and conftantly, either more or lefs above, or more or lefs below the mint price : we may -be afiured that this fteady and conftant, cither fuperiority or inferiority of price, is the . i effect %:■ ' '>j THE WEALTH OF NATIONS. 69 cffcft of fomcthing in the ftate of the coin, c rr a p. which, at that time, renders a certain quantity of coin either of more value or of Icfs value than the precife quantity of bullion which it ought to contain. The conftancy and fteadincfs of the cfFcft, fuppofcs a proportionable conftancy and ileadinefs in the caufe. The money of any particular country is, at any particular time and place, more or lefs an accurate meafure of value according as the cur- rent coin is more or lefs exaftly agreeable to its ftandard, or contains more or lefs exaftly the precife quantity of pure gold or pure filver which it ought to contain. If in England, for exam- ple, forty- four guineas and a half contained ex- aflly a pound weight of ftandard gold* or eleven ounces of Bne gold and one ounce of alloy, the gold coin of England would be as accurate a meafure of the adtual value of goods at any par- ticular time and place as the nature of the thing would admit. But if, by rubbing and wearing, forty-four guineas and a half generally contain lefs than a pound weight of ftandard gold ; the idiminution, however, being greater in fon^e pieces than in others; the meafure of value comes to be liable to the fanie fort of uncertainty to which all other weights and meafyres are con^- monly expofed. As it rarely happens that thefe are exactly agreeable to their ftandard, the mer- chant adjufts the price of his goods, as well as he can, not to what thoie weights and meafures ought to be, but to what, upon an average, he finds by experience they actually are. In confe- F ^ quencc rfO THE NATURE AND CAUSES OF BOOK qucncc of a like diforder in the coin, the price of goods comes, in the fame manner, to be ad- jufted, not to the quantity of pure gold or filver which the coin ought to contain, but to that which, upon an average, it is found by expe- rience it actually does contain. By the money-price of goods, it is to be ob- ferved, I underftand always the quantity of pure gold or filver for which they are fold, without any regard to the denomination of the coin. Six ihillings and eight-pence, for example, in the time of Edward I., 1 confider as the fame mo- ney-price with a pound fterling in the prefent « times i becaufe it contained, as nearly as we caa judge, the fame quantity of pure filver. ;. > ■■ 'Jin, ,'■ :fy^i CHAP. VI, 0/ the component Parts of the Price of Commodities, IN that early and rude ftate of fociety which precedes both the accumulation of flock and the appropriation of land, the proportion be- tween the quantities of labour neceflaiy for ac- quiring different objefls feems to be the only circumflance which can afford any rule for ex- changing them for one another. If among a nation of hunters, for example, it ufually cofls twice the labour to kill a beaver which it does to kill a ^t^Yi one beaver fhould naturally ex- change ' THE WEALTH OF NATIONS. 71 change for or be worth two deer. It is hattirai chap. that what is ufually the produce of two days or two hours labour, fliould be worth double of what is ufually the produce of one day's or one hour's labour. If the one fpectes of labour fhould be more fevere than the other, fome allowance will natu- rally be made for this fuperior harclfhip ; and the produce of one hour's labour in the one way may frequently exchange for that of two hours labour in the other, i^^*- .^v^. to have an additional price fixed upon them. He muft then pay for the licence 1 1 gather them ; VI. •, THE WEALTH OF NATIONS. ^ them ; and muft give up to the landlord a portion chap. of what his labour either colleifls or produces. This portion, or, what comes to the fame thing, the price of this portion, conftitutes the rent of land, and in the price of the greater part of commodities makes a third component part. The real value of all the different component parts of price, it muft be obferved, is meafured by the quantity of labour which they can, each of them, purchafe or command. Labour meafures the value not only of that part of price wliich rc- folves icfelf into labour, but of that which refolves itfelf into rent, and of that which refolves itfelf into profit. In every fociety the price of every commodity finally refolves itfelf into fome one or other, or all of thofe three parts ; and in every in^proved fociety, all the three enter more or lefs, as com- ponent parts, into the pr"ce of the far greater part of commodities. In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and la- bouring cattle employed in producing it, and th€ third pays the profit of the farmer. Thele three parts feem either immediately or ulti- mately to make up the whole price of corn. A fourth part, it may perhaps be thought, ',s necef- fary for replacing the (lock of the farmer, or for compenfating the wear and tear of his labouring cattle, and other inftrumcnts of hufbandry. But it muft be confidered that the price of any in- ftrument 7« THE NATURE AND CAUSES OF ftrument of hufbandry, fuch as a labouring horfe, is itfclf riade up of the fame three parts ; the rent of the land upon which he is reared, the la- bour 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 y ' ^ price as well as the maintenance of t* ^rle, the whole price ftill refolves itfelf either *tiimcdiately or ultimately into the fame three parts of rent, labour, and profit. ^ In the price of flour or meal we muft add to the price of the corn, the profits of the miller, and the wages of his fervants;; in the price of bread, the profits of the baker, and the wages of his fervants j and in the price of both, the la- bour of tranfporting the corn from the houfe of the farmer to that of the miller, and from that of the miller to that of the baker, together with the profits of thofe who advance the wages of that labour. - ~ . * The price of flax refolves itfelf into the fame three parts as that of corn. In the price of linen we muft add to this price the wages of the flax- drefller, of the fpinner, of the weaver, of the bleacher, &c. together with the profits of tlieir relpeflive employers, As any particular commodity comes to be more manufadureu, that part of the price which refolves itfelf into wages and profit, comes to be greater in proportioi to that which refolves it- felf into rent. In the progrefs of the manufac- ture, ngt only the number of profits increafe, *' ' by? THE WEALTH OF NATIONS. If but every fubfequent profit is greater than the ^ ^^,^ **• foregoing; becaufe the capital from which it is derived muft always be greater. The capital which employs the weavers, for example, muft be greater than that which employs the fjpin- ncrsi becaufe it not only replaces that capital with its profits, but pays, befides, the wages of the weavers j and the profits muft always bear fome proportion to the capital. In the moft improved focieties, however, there are always a few commodities of which the price refolves itfelf into two parts only, the wages of labour, and the profits of ftock; and a ftill foialler number, in which it confifts altogether in the wages of labour. In the price of fea-fifh, for example, one part pays the labour of the filhermen, and the other the profits of the capital employed in the fifhery. Rent very feldom makes any part of it, though it does fometimes, as I fliall ftiew hereafter. It is othcrwile, at leaft through the greater part of Europe, in river fiflieries. A falmon filhery pays a rent, and rent, though it cannot well be called the rent of land, makes a part of the price of a fal- mon as well as wages and profit. In fome parts of Scotland a few poor people make a trade of gathering, along the fea-lhore, thofe little va- riegated ftones commonly known by the name of Scotch Pebbles. The price which is paid to them by the ftone- cutter is altogether the wages of their labour ; neither rent nor profit make any part of it. , , But THE NATURE AND CAUSES OP But the whole price of any commodity muft ftill finally refolve itfelf into fonac one or other, ©r all of thofe three parts; as whatever, part of it remains after paying the rent of the land, and the price of the whole labour employed in raifmg, ma- nufafturing, and bringing it to market, muft ne- ceffarily be profit to fomebody. As the price or exchangeable value of every particular commodity, taken feparately, refolves itfelf into fome one or other, or all of thofe three parts; fo that of all the commodities which com- pofe the whole annual produce of the laoour of every country, taken complexly, muft refolve itfelf into the fame three parts, and be parcelled out among different inhabitants of the country, cither as the wages of their labour, the profits of their ftock, or the rent of their land. The whole of what is annually either colledled or produced by the labour of every fociety, or what comes to the fame thing, the whole price of it, is in this manner originally diftributed among fome of its different members. Wages, profit, and rent, are the three original fources of all revenue as well as of all exchangeable value. All other revenue is ultimately derived from fome one or other of thefe. Whoever derives his revenue from a fund which is his own, muft draw it either from his labour, from his ftock, or from his land. The revenue derived from labour is called wages. That derived from ftock, by the perfon who manages or employs it, is called profit. That derived from it by the perfon who does nor em- ploy THE WEALTH OF NATIONS. 79 ploy it himfelf, but lends it to another, is called chap. the intereft or the ufe of money. It is the com- penfation which the borrower pays to the lender, for the piofit which he has an opportunity of making by ii»? life of the n;oncy. Part of that profit naturally 'v'ongs to the borrower, who runs the riik and takes the trouble of employing it i and part to the lender, who affords him the op- portunity of making this profit. The intereft of money is always a derivativ; revenue, which, if it is not paid from the profit which is made by the ufe of the money, muft be paid from fome onhti fource of revenue, unlefs perhaps the bor- V. 'wer is a fpendihrift, wliO contradls a fecond debt in order to pay the intereft of the firft. The revenue which proceeds altogether from land, is called rent, and belong^ to the landlord. The revenue of the farmer is derived partly from his labour, and prrtly from his ftock. To him> land is only the inftrument which enables him to earn the wages of this labour, find to make the profits of this ftock. All tayjs, and all the re- venue which is founded upon them, all falaries, penfions, and annuities Oi every kind, are ulti- mately derived from fome one or other of thofe three original fources of re/enue, and are paid either immediately or mediritely from the wages of labour, the profits of f:ock, or the rent of land. When thofe three different forts of revenue belong to different perPjns. they arc readily dif- tinguifhed j but when they belong to the fame they So THE NATURE AND CAUSES OF ,..^rr, they arc fomcimcs confounded with one an: at lead in common language. A GENTLEMAN who furms a part of his own cftate, after paying the exp^nce of cultivation, Ihould gain both the rent 1 the landlord and the profit of the farmer. He is apt to denomi- nate, however, his whole gain, profit, and thus confounds rent with profit, at leaft in common language. The greater part of our North Ame- rican and Weft Indian planters are in this fitua- tion. Ihey farm, the greater part of them, their own eftates, and accordingly we feldom hear of the rent of a plantation, but frequently of its profit. . Common farmers feldom employ any overfeer to direft the general operations of the farm. They generally too work a good deal with their own hands, as ploughmen, harrowers, i^c. What remains of the crop after paying the rent, there- fore, (hould not, only replace to them their ftock employed in cultivatiorf, together with its ordi- nary profits, but pay them the wages which arc due to them, both as labourers and overfeers. Whatever remains, however, after paying the rent and keeping up the ftock, is called profit. But wages evidently make a part of it. The farmer, by faving thefe wages, muft neceflarily gain them. Wages, therefore, are in this cafe confounded with profit. ■ An independent manufafturer, who has ftock enough both to purchafc materials, and to main- tain himfelf till he can carry his work to market, 13 ftiould THE WEALTH OF NATIONS. i5 tl mould gain both the wagcj of a jogrricyman who c MX p. works under a mafter, and the profit whicji that maftcr makes by the fale of the journeyman's work, rtis whole gains, however, arc com- monly called profit, and wages are, in this cafe too, confounded with profit. ^v ■. A GARDENER who cultivat^i his own garden with his own hands, unites n his own perfon the three different charadler mdlord, fartner, and labourer. His pn cfore^ (hould pay him the. rent of the profit of the fecond/and the wages of the third. The whole, however, is commonly confldered as the earnings of his labour. Both rent and profit are, in this' cafe, confounded with wages. -r** >^r^r- ' As in a civilized country there are but few commodities of which the exchangeable value arifes from labour only, rent and profit contri- buting largely ta that of -the far greater part of them^ {o the annual prodtice of its labour will always be fufHcient to purchafe or command a . much greater quantity of labour than what was , employed in railing, preparing, and bringing that produce to market* If the fociety were an- ' nually to employ all the labour which it can annually purchafe, as the quantity of labour , would enqreafe greatly every year, fo the produce of every fucceedirig year would be of vaflly greater value than that of the foregoing. But there is no country in which the whole annual produce is employed in maintaining the induftrioiis. The idle every where confumc a great part of it i and according to the different proportions in which Vol. I. G ie IMAGE EVALUATION TEST TARGET (MT-3) Z/. {./ .^Jk ^ % i^ 4^ ^ 1.0 I.I ■" Hi 12.2 1125 HI 1.4 6" 0> #5^ A? /, '> W /I ^"^ ■^ Photographic Sciences Corporation 23 WEST MAIN STREET WEBSTER, N.Y. MSSO (716) •72-4903 ^ V iV 4 <> St THE NATURE AND CAUSES QF BOOK it is annuallv divided between thofe^cwo^diQItiieii^ ifmft cMier ' innaalljr 1ii(^r(^ CCM6hait theifaiticrfiiDmline yc^r to anoao'l ^ ' !vjl,fi ' ^'>><.'»'m 'l '< uUHJj4t; ' i ii li»i!li i .i ! l.jri).|lt » iiiiU i ii | i' ir nv':-:j^! :tf^ ^ 'tod mt^-iii i >' n ^c1 'ij^.ila^iv. 4^> fTDJHipif^fi i« Jw «i«iry fm^ ^t neighlwr-i J. ■ h(K>di^n ordinafy cpr «veiigc rs^e jbpth of waget ai^d pro^ in evciry, idifoent ^mpVlyitieiit . of labour and ftock. Tlii^ rate is nattiraDy re* gulated, :as J. fiiatt (ki^^^^ IkKttXtitx^^:^^ general ^mif?^ances o|f, th^,.fi)cict]r» ^hfii nches or jppy#rtkjliar niuurc pardy by the general circutnftanpe^ of th^ /ocfiety or tieighibiou^^hood in which the land i^ fitqated^ and partly by the nati^ral. or improved fertility, of These <^dinary or average rates may be called the^ natural Y^tes of wa^s, profit,, and reftt^ ^ . th16y^ ing^his'lbitltr in (bme other way he migKt hzH mddeiftat "()lt)fit/ ' His profit, befides, is his re» y^etM, ^ t>rbj$(ir itina i^ ^iftence. As, while he is preparing and bringing the goods to mirkd^ he advances to his workmen their wages^.. or their Cubdftence $ fo he advances to jhimfeJC in ttie. ik'mc manhef,' his o^n fubfiftenc^ which is g^he^ir'f^^^^ the proAt wMch & tiixf rcal&nablf . THE WEALtH OP NATIONS. '*. 31 ?•»*")■ .' . ,» I5 ot tne competicibh. Among convpetitors of equal chap. wealth an(i luxury the fame deficiency wUl gene^- rally occafion a more.or lefs eag^ conapetition» according as the acqpiiltion of the coinmodity happens to be of more.or lefs importance to them. Hence the exorbitant price of the ne- cef&rite of life during the blockade of a town or in 2^ tan)ine^ mf .r'»b \vMiy'\. Whbk the quantt^ brought to market exceed^ the efFe^ual demand^ it .cannot be all fold to thole who are willing to pay the whole value of the rentif.wagesj.and^prbm^ which mpft be pai4 in order tO bring it f hi<]ier. Some, part muft be ibid to thole' who are V^ng to pay lefsj and the lowjpnce wliich they give for it muft reduce the price of the whole. The market pfice will fink more or lefs below tliie natural price, according as the Igreatnefs of the excefs increaies more or lefs the conipetition of the fellers, or according as it hkppens to be more or leis iniportant to them to get immediately rid of the commo- dity. l*he fame ekc^fs in the importation of perifiiabla, will occafion a much greater com- petition than in that of durable commodities; in the importation of oranges, for example, than in that of old iron. When 'the quantity brought to market is juft fufficieht b fupply the effedtuai demand and no more, the market price naturally comes to be either exadtly, or as nearly as can be judged of, the fame with the natural price. The w)iole quantity upon hand can be difpofed of for this price, and cannot be difpofed of for more. The G 3 compe- BOOK I ' Hi. II > competition of the difierenjt dealers pbli«t .tl|e^ til to actepit of tfiis pricir^ \>\it doe| jiot c^W tKemtotecept^flefi. "^ > The quantity of every commodity Wo^Kc t^ market naturally fuits icfelf tq the cte&pfyi de*^ mand. It ii thf intet^ of all thofe who employ their land, labour, or dock. In briqgviff any commodity to market, fhat the quantity iiever ihould exceed the efieftual demand i and \tU the jntcreft of all other people tW ic i^ever ihQt44 All ftort of that demand. ^ If at'aqy ^Im^ It exceeds the efic^^'^'^'!^^'^ fonrie of the component parts of itt mte.mii£ be ^ paid b^lpw their natilm rate. If ft |s rept^ the iflterefl: of the lati^ibrds wilt inimedia^y prompt diiecni to withdraw a part of dk^ir, ii^djii and if it is wages or profit^ ^<^ i^tfir^.bf ItHe labourers in the one cafi:, and of their emjployers f n the otheri will prpnnpt them to wi^|iqfa)iv ^ part of their labour or ftock iroin di^s <^q^p)oyi» riicnt. The quantity ' brpught to marlf|^ wilj foon l^ie no more than (ullicieot to fupply the effeflual demand. All the dlfitrent parts 0|f^ i^ price wiJi rife to their natural f4tej|ai|(i j^e.^liple price to it? natural pricp,, ...., , • '"*I: ,J;k.*^...*/f^:.c.;f: S^, If, on the cot^trary, the quantity broMghCniso iparket (^0}]\^ at apy time fall ihort of the eifeo- tpal demand, fome of the confipon^nt paft^ ^f:^ |)rice (nuft rife above their natural ratCv, if it is rent, the intereft of al) ot{ier lao(}lor4^v|^l. na- turally prompt thcni tp Pffpwe n)Qr5 }afid fbr the Hifing of ^his comnnociityi Jf it js.^agjBs or piofir, the intereft of all other Ubpurers and dealers ^<: t-' THft WBALTfl OP NATIONS. t; dddert wUI ibon prompt thm to employ more c hap. labour and ftbck in' preparing u^ bringing it to market. The quantity brought thither win feon be fiittrieiit to fupply the em^at demi^ All th^ difl^reitt parts of Its price will toon link to tfi^r ^'n'atuial rate, and ue wlioie' price , to ita natiind jpttct. The naturn pnce. therqore, is, as it were, the central jpride, to which the prices of all comr Dribdities are continually gravicadng.' pifferen^^ accident^ may fometimes keep them (urpended ia gbbd deal above it, aiid ibnietimes forc^e thena down ev^il fomewhat below it. But wpatever may be the obftacles which, hinder uiem f^onoi i^ii^^ In this center of repoie and continuance^ they Wffohftuitiy tending towards 1^ THE whofe quantity of induftry annually dna-; plowed in order to bring any connmodity to market, naturally fuits itfelf in this manner to the effectual demand. It naturally aim^ at brib- ing always that precife quantity thither which may b^ !^fi)Cient to ilipply, and no more thaO fopply, ttiafdemaihd. But In fome cmpfoymcnts the fame quantity of induftry will in different years produce vtrj differettt ^^uancities of commodities s while in otTicrili^wi^l produce always the lame, or very nearly tfie*^ fam^. Ithc iimc number of labourers in hiifbandrf will, in different ye^urs, produce very dtffcnirit qdaititics of comi^ 'wine, oil, hops, 8tc. ' Sut the fanrie number of fbinnfcrs and weavers will eycry^^ear produce the fame oi* very nearlyjtheiame quantity of linen and woollen G 4 cloth. f ». > THE NATURE AI^ CA,U.9H9i , OF cloth. It is only the average produce of the 0119 fpecies (^ ittdufby which can bie fqit^ in any. ]^)ei£b to the effisfkqal demaind; and /i^ its.a&u4 ^rdc^ce Is frec^uently much greater and fre(j\ient|^ inu;h left than Its average prodtice^ rjt^e ^^ti^^ of the commodities brought to marl^t wiif i^c^- v'rmcfs exceed a good deal, and fometinies fall iliort a good deal of the effeftual demand. ' Even though that demand therefore (hould continue al- ways the fame, their market price will be liable tq great fluduationS:^ will fometimes fall a good dea( below, and foitietimes riie a good deal above, their rlatural price. In the dther ij)ecies of induftry;;, the produce of equal quantities of labour being always the fame, or vtty nearly the fame, it can be mbre exafbly fuited to the effectual demand. While that demand continues the fame, therefore, the tti^ket pticii' bf the commodities is likely to do fa toa, and to be eidier al^^thcr^i or as nearly as can be judged of, the fanie with die natural prioth the value and the rate either of wages or of profit, according, as the market happens to be either over-ftocked or under-ftocked with commodities or with la- bour } with work done, or with work to be done. A public mourning raifes the price of black cloth (with which the market is almolt always under-ftocked upon fuch occafions), and aug- ments the profits of the merchants who pofleis any confiderable quantity of it. It * it no efFeCb upon the Wages of the weavers. The market is under-ftocked with commodities, not with labour; with work done, not with work to be done. It raiftS" the Wages of journeymen taylors. The markd: is here under-ftocked with labour. There is^an eflteCtulaldemand for more labour, for more work to be done than can be had. It finks the price of coloured filks and cloths, and there- THB NATURB ANP CAUSES OP ^ rtducet the proAcs of the ' merchanti who have any oonfiderible quantiey of them upoh hand. It finki too the wages of the workmdi employed in preparing fuch commodities, for which all demand Is flopped for fix moncht, perhaps for a twelvemonth. /The itiarkec is he^ over-ftockcd both with commodities and with la- bour. 1 But though the market pride 6f eirfry paftf^^' cular commodity is in this mamler continually gravitating, if one^ntay fay fo, towards the na-r tural price, yet fometimes particolar accidents^ fonnedmes natural caufes, and fometimes parti- cular reguladons of police, may, in many com- modities, keep up the market price, for a tong dme together, a good deal above the natural price, ^ H, ryv;;ri^' 'i-v> '^- Whin by an incrsafe in the eiflflrdut) demaiid^ the nurke( price of Jbrtie pardcular commodity happens to rife a good deal above the natural price, thofe who employ their ftocks in fupp)y<< ing that market are generally careful to conceal this change. If it was commonly known, their great profit wouki tempt fo many new rivals -to employ their ftocks in the fame way» ^hat, the efic£tual demand being fully fupplied, the^ market price would foon be reduced to the natyral price> and perhaps for fome tinne even below it. If the market is at a great diftance from the refidence ^ of thofo who fupply it, thry msy fometimes be J able to keep the fecret for feveral years together^ k and msy fo loi^ enjoy their extraordinary profits # without any new rivals. Secrets of this kind>f however:! ▼II. ^THB WBALTH OF HATIONIb - ft lioff ver» it nnift bt uknomMgedf can leldomcHAr. he Ipng Mpti and tlic excmordintry profit can **' laft y^x !*^ lopg^ tMn they ut kepf. SicJ^iTS in nvmufiM^uret ar^ capable of bdng loii0;r kept than feqreu in trade* A dyer w1m» has found the means of producing a particular cokiur with materials which coft only half the price of thole commonly made ufe of, may, with good management, enjoy the a4viantago of his (}i(£Overy 1^ long as hi lives, and even leave it as a legacy to his pofterity. His extraordinary gains arife from the higa price which is paid Ar his private labour. They properly confift in the high wages of that labour. But u they are re« peated upon every part of his ftock, and as their whole amount bears, upon that account,.. a regu- lar proportion to it, they are commonly confix deredas extraordinary profita of ftock. '- SviCH enhancements of the market. price are evidendy the eflfe^s of particular accidents, of which^ however, the operation may fometimca laft for many years together. m SoMB natural prpdu^ions require fuch a Angu- larity of foil and ^tuation, that all the land in « great country, -which is fie for producing them, may .not .be fufiicient to fupply the effectual dep^and^vT lit. whole quantity brought to roar-: ket} ^erefpre, may be difpofed of to thofe who CQ give more than what is fuffident are to pa^' the rei;it of ^he (and which produced them^ together with (he wages of the labour, and the profits of the (lock which were , employed ^ pre- paring an^ bringing them to marl^et, according ■>^;s :*»;■ f« THB NAT0Rfe AND CAUSBI OF fe 6 o K to tkeir natural ratei. Such odmitKxIinct VMf '' comimit for whole oeilturies cdgether to be fold ar this high price I and that part of it which reiblvev Mf into the rent of land it In this cafe the part which is generally paid above its natural rate. The rent of the land which aflfbrds futh (ingu- lar and efteemed produftions^ Hke the renf of Ibmc vineyards in France of a peculiarly hap^ py foil and (kuation, bears n6 regular propot- tion to the rent c^ other equally fertile and equally wclUcultivated land' in its neighbbtii'-' hood. The wages" of the labour and the pr6> fits of the ftock employed in bringing fuch com- modities to market) on the contrary, are (eldom out of their natural proportion *to thofe of the other employments of labour and ftock in their neighbourhood* Such enhancements of the market price are' evtdenHy the effect of natural caufes which may hinder the eflfcAual demand fit>ih ever being' folly fupplied, and which may continue, there- fore, to operate for ever. - A MONOPOLY granted either to an individual, or to a trading company has the (kme effedt as a^ facret in trade or manufactures. The monbpo*^ lifts, by keeping the market conftantly under-^ ftockcd, by never fully fupplying the effe^ual demand, fell their commodities much abovjb the natural price, and raife their emoluments, v^e-^ ther they cOnRft in wages or profit, gready above^ theirnatural rate. "The price of monopoly is upon every occafiont* the higheft which can be got. The natural priceV or VII. s3^ W»^t'TH or NilTU)N* or thepiioje of frje^conop^Stfipib 'oi^ the coninit» cm a ocqilioA in^ki^ M fiK Aify c6iifidfif»bk tinife togi^r* '^^i ^^^^ >• upoit CJMiy oQsuflpit ;ibe/ hig^ft which can, ^ iqMcezed out oC dw'lMiytni or which, it is fuppofed, they will conrent tbl g^fe; Tlje pfher-ii^ thfh lowoft: wMchfjtlle /ellrrs ca^ corninoi^f^afiM to take, and) Ittr the fiuoe tkifie,c^onue their bufV^rv r.rr ^ , ntji^t . Tl^,eIcl^filfeoP^vikge%oC corporttioQSti ftAr tptes of aBpffi^^Oiipbr JMid «U. thpfe lawilRrl^ifihi reftfaUi, in paf^ciilK empl ga ii?to thcnnui Iw^e the fame-Din^eQqyktilhoMgh \nj^ It^ d^ff^ . Theyri^rc f^fyr% ofdffilar^i nttQn9pqlif;f„|inf|;^fp«r ftcq^fBrtyii %//^g«Hto<^, ther^sand.in .wfipl^ clai^.pt.jjwloyirijBiitfjr kw^ up the market, price of jpmmkr comt^^i^i a^ve the n^!ifra( pric^, -^^.pj^taia .bo|h/tt|<;r) w^es of the ^b^ui; ai)4 the porofitjs of tl^ ^ftodk^ employed al^^t^^^^m/c^m^jjat^^alwve. their, na. tural rate. , .. _„.:.,.,.:;..-,: -..v:'*^- -. SucH.enhff^lcymcnts. of the market price may laft.^s l9ng,M,fhfj^rjfgviJati9ns. pf p9lice which g^ve . occallon to tnetP*^ The tnsLT^fit gpjic of any particular commo- | diiy>: tl;Mi"g^r»{: %yi/^P"^»"M«7^flS *^0Vf, c^ ) fcilom^ cqntTi^^'e t^g . , bc|ovr,f . its natural prices , V^hitevcr pa^t ptitwa? pai^^b^o^^, tb^ natuf^ rate,. ^Jie pcnpns whofe in^^rfft it, afFcfted would,-. i:minediftely,%V.thelo(s, ^ndysjould. imnfiediatcly.;^ w'^t^idravv eithfl^f: fo /much J^hd^j.sor. fo much la^^i baur, or Co much ilock, from being employed about I 94- TH^ NATt^RB AND CAUSED OP B o b k about it, tfitc the q^tamity b^^t^ghr to murkef / would foon be no more than fufficienc to fupply the efi^uil demand; Its market prici^, therefore, would (bon rife cor the natut^l p^ce. This at leaft would Be ^e e>le Whem thtre Wai perfe^b liberty. '•'»•'» »M »»»^*-'-<-*^»--#*''^ ^'S^*^^**-*^^'^^***-*''''^^ ■• • TtiB ;6me ftae^tte of api3renti(ie(k!{; iihd'dtKer coffkiration laws indeed, which, \^en a itiahU- fadture is in profperity, ertsible '^he Workman id raife his ¥^ages a good deal above their natural rate, (bmetimes oblige him, when it decays, i6 let them down a gd&d deal belcNr i^. As th the one' cafe they extlude iriany ptJbiHe fh>m his etfi- ployment, (b in the other they ekclode Hirh frooi many employments* The efft6t of fiich reguTa- tions> howevd*, » not near fb durable in (inking the workman's wages below, as 'in rainhg theni above, their natural rate. Their operation in the ohe way may endure for many centuries, biit ih the othci^ it con laft no longer than the lives of feme of the workmen who were bred to the bufi- nefs in the time of its profperity. AVhcn they are gone, the number of thofe who are after- wards educated to the trade will naturally fuit itfelf to the effeftual demand. The police mu^ be as violent as that of Indbftaii or antient Egypt (where every man was bound by a principle of religion to follow the occupation of his father^^ and was fuppofed to commit the moA horrid fac^ilege if he changed it for another), which can . in any particular employment, and for feveral generations together, fink either the wages of ^ C 'i.^i:^-'" ■• --v-'t ,....-" >^>-v.,., . labour" 'Ai THE Wpy^LTtt OF NATIONS. || Ubovr Or .the, profits of ftojdk belcm ^ir natiiFal c h a p4 . This is all that I think vneceflary to be ob* ferye^ ^^ prefeiic concerning the. devi^tioRS, whe*,< ther^jQCcafipnal .or pcripancpt, .-of the Bi^ket price of commodities from the natural price, ^< »?fit jClfE patur^l price itfelf varies "^ith the na-; tural rate of leach jof its conopoi^nt paFCs» of w^ges> . profit, and repti and ia every fociety, this r^te varies according to their clrci^nft^ncess according to their riches or poverty, their ad-; vancing, ftatiopary, or declining^ ponditioiu - 1 ; ihallj in the fouf following chapters, endeavour to explain, as fully and diftvid^- as I can, tjie caufes of thofc diff^^K^nt variations,;,„^- ..ff^^^ f^ i^t 'Pl^ST,^ I IhMl ^nd^ayour to qxplain yfhsit are the circumftances which naturally determine the rate of wages, and in what manner thoie cir- cumftances are afFedled by the riches or poverty, by the advancing, ftationary, or declining ftate ofthefociety. ^ ,, Secondly, I (halt endeavour to fhow what are the circumftances which naturally determine the rate of profit^ and in what manner too thofe cir- cumftances are affefled by the like variations in the ftate of the (bcicty.''^^' "^^ ^^^^^'^ ^**^ '^' ^ ' Though pecuniary wages and profit are very different in the different employments of labour and ftockj yet a Certain proportion feems com- ' monly to take phee between both the pecuniary wages in all the different cmployttients of labour, and the pecuniary profits in all the different em- ployments of ftock. This proportion, it will appear * .THE KATtJRS AN& CAtJSE^ Oi^ B ooK ipptix herdtft^BT/ itptnii ph\f upon the na^ra ^ df the difierent employments, and.prtly ii^n the difFcrent laws ^zA piliCy' txf tlie focicty in which they are carried ori. Bii^ though in many refj^effcs dependent upon the lim and policy, this proportion feems^ to be little affefted by the ridhes or Jjoi^rty of ' that focicty' j by its adyan- dug/ ftadonary^, 6f declinitl^ cdtiditidn; but to rfefriain the fdktie or very nearly the fame in all thbfe different ftates. ^ I IhaH^ in the third place eiWcaVour t}fmK/U'-> tJrlj ST^ Siiil^ w^ CHAP. Vlfl. -lii) l^ Q^ ^^^ Wages of Labour. ,'.■.' ^t- THE produce of labour conftitutes the ni^ tural recompence or wages of labour. ^^^ In that original date of things, which pre- cedes both the appropriation of land and the accumulation of flock, the whole produce of labour belongs to the labourer. He has neither ,, landlord nor mafter to ihare with him. ^i^f< Had this ftate continued, the wages of labour q would have augmented with all thofe improve- II ments ♦the wealth of nations. 9f fticnts in its produftivc powers, to which the c r a p. uivifion of labour gives occafion. All things woull adually have become cheaper. They Would .lave been produced by ^ fmaller quan- tity of labour; and as the commodities pro- duced by ^qual quantities of labour would natu- rally in this ftate of things be exchanged for one another, they would have been purchafed likewife with the produce of a fmaller quan- tity. But though all things would have become cheaper in cealityj in appearance liiany things might have become dearer than before, or have been exchanged for a greater quantity of other goods. Let us fuppofe, for example, that in the greater part of employments the producbivd powers of labour had been improved to tenfold* or that a day's labour could produce ten times the quantity of work which it had done origi- nally ; but that in a particular employment they had been improved only to double, or that a day's labour could produce only twice the quan- tity of work which it had done before. In ex- changing the produce of a day's labour in the greater part of employt|jpnts, for that of a day's labour in this particular one, ten times the ori- ginal quantity of work in them would purchafe only twice the. original quantity in it. Any particular quantity in it, therefore, a pound weight, for example, would appear to be five times dearer than before. In reality, however, it would be twice as cheap. Though it re- quired five times the quantity of other goods to Vol. I. H purchafe .9t THE NATURE AND CAUSES OP BOOK purchafe ic, ic would require only half the quan» tity of labour eicher to purchafe or to produce it. The acquifition, therefore, would be twict as eafy as before. But this original (late of things, in which the labourer tnjoyed the whole produce of his own labour, could not laft beyond the firft introduc- tion of the appropriation of land and the accu- inulation of ftock. It was at an end, therefore, long before the mod confiderable improvements were made in the produdtive powers of labour, and it would be to no purpofe to trace further what might have been its effects upon the recom* pence or wages of labour. As foon as land becomes private property, the landlord demands a (hare of almoft all the pro- duce which the labourer can either raife, or col- led from it. His rent makes the firft deduc- tion from the produce of the labour which is employed upon land. It feldom happens that the perfon who tills the ground has wherewithal to mainuin himfelf till he reaps the harveft. His maintenance is generally advanced to him from the ftock of a mafter, the farmer who employs him, and who would have no intereft td employ him, unlefs he was to (hare in the produce of his labour, or un- lefs his ftock was to be replaced td him with a profit. This profit makes a fecond dcdudtion from the produce of the labour which is em- ployed upon land. ■^- The produce of almoft all other labour is liable to the like dcdu^ion of profit. In all aru ;v; «.j "5" ' ' ' " ■ " "":f'^'''''^' '">-'n and 1/ •^ THE WEALTH OF NAllONS. 9V tnd manufaftures the greater part of the work- c h a h. men ftand in need of a mafter to advance thern ^'" the materials of their work, and their wages and maintenance till it be completed. He fhares in the produce of their labour, or in the value which it adds to the materials upon which it is beftowed; and in this (hare confifts his profit. It fometimes happens, indeed, that a (ingle independent workman has (lock fufficient both to purchafe the materials of his work, and to maintain himfelf till it be completed. He is both mailer and workman, and enjoys the whole produce of his own labour, or the whole value which it adds to. the materials upon which it is beftowed. It includes what are ufually two di(lin(5l revenues, belonging to two diftindt per- fons, the profits of dock, and the wages of la- bour. -. Such cafes, however, are not very frequent, and in every part of Europe, twenty workmen ferve under a mailer for one that is independent ; and the wages of labour are every where underi ftood to be, what they ufually are, when the labourer is one perfon, and the owner of the (lock which employs him another. . What are the common wages of labour, de- pends every where upon the contrafl ufually made between thofe two parties, whofe interefts are by no means the fame. The workmen defire to get as much, the mailers to give as little as poiTible. The former are difpofed to combine in order to raife, the latter in order to lower the wages of labour. "^'H H 2 It too ■f.* THE NATURE AND CAOSES OP It is not, however, difficult to forefce which of the two parties muft, upon all ordinary occa- fions, have the advantage in the difpute, and force the other into a compliance with their terms. The ma(lers> being fewer in number> can combine much more eafily; and the law, befides, authorifes, or at lead does not prohibit their combinations, while it prohibits thofe of the workmen.' We have no aAs of parliament againft combining ta lower the price of work; but m^ny againft combining to raife it. In all fuch difputcs the mafters can hold out much longer. A landlord, a farmer, a mafter manu- fafturcr, or merchant, though they did not em- ploy a fingle workman, could generally live a year or two upon the ftocks which they have already acquired. Many workmen could not lubfid a week, few could fubfift a month, and fcarce any a year without employment. In the long-run the workman may be as necefTary to his mafter as his mailer is to him ; but the he- celTity is not (b immediate. We rarely hear, it has been faid, of the com- binations of mafters j though frequently of thofe of workmen. But whoever imagines, upon this account, that mafters rarely combine, is as igno- rant of the world as of the fwbjeft. Mafters are always and every where in a fort of tacit, but conftr.nt and uniform, combination, not to raife the wages of labour above their aflual rate. To violate this combination is every where a moft unpopular adion, and a fort of reproach to a mafter among his neighbours and equals. We t* " I r (eWoray THE WEALTH OP NATIONS. - lOK fcldom, indeed, hear of this combination, be- c h a p. caufc- it is the ufual, and one may fay, the natu- ^"^* la ftate of things which nobody evtr hears of, Mafters too fometimes enter into particular com- binations to fink the wages of labour even below this rate. Thefe are always condud^ed with the utmoft filence and fecrecy, till the moment of execution, and when the workmen yield, as they fometimes do, without refiftance, though fe- verely felt by them, they are never heard of by other people. Such combinations, however, are frequently refilled by a contrary defenfive com- bination of the workmen; who fometimes too, without any provocation of this kind, combine of their own accord to raife the price of their labour. Their ufual pretences are, fometimes the high price of provifions j fomecimes the great profit which their mafters make by their work^ But whether their combinations be offenfive or defenfive, they are always abundantly heard of. In order to bring the point to a fpeedy decifion, they have always recourfe to the loudeft cla- mour, and fometimes to the moft (hocking vio- lence and outrage. They arc defperate, and aft with the folly and extravagance of defperate men, who muft cither itarve, or frighten their mafters into an immediate compliance with their demands. The mafters upon thefe occafions are juft as cla- morous upon the other fide, and never ceafe to call aloyd for the afliftance of the civil magi- ftrate, and the rigorous execution of thofe laws which have been enadled with fo much fe verity ggainft the combinations of fcrvants, labourers, H 3 and w'# fbi THE NATURE AND CAUSES OP K and journeymen. The workmen, accordingly, very fcldonn derive any advantage from the vio- lence of thofc tumulcuous combinations, which, partly from the interpofition of the civil magi- ftrate, partly from the fuperior fteadinefs of the mailers, partly from the neceflity which the greater part of the workmen arc under of fubmit- ting for the fake of prefent fubfiftence, generally end in nothing, but the punidiment or ruin of the ringleaders. But though in difputes, with their workmen, mailers mull generally have the advantage, there is however a certain rate, below which it feems impoflible to reduce, for any confiderable time, th^ ordinary wages even of the lowcft fpecies of labour. A MAN mull always li^^e by his work, and his wages mull at lealt be fufficient to maintain him. They mull even upon moll occafions be fomewhat morej otherwife it would be impolTible for him to bring up a family, and the race of fuch" workmen could not laft beyond the firft generation. Mr. Cantillon feems, upon this ac- count, to fuppofe that the loweft fpecies of com- mon labourers mull every where earn at leaft double their own maintenance, in order that one with another they may be enabled to bring up two children ; the labour of the wife, on account of her neceflary attendance on the children, be- ing fuppofed no more than fufficient to provide for herfelf. But one- half the children born, it is computed, die before the age of man- hood, The poorcft labourers, therefore, ac- • I. i ^ cording THE WEALTH OF NATIONS. 10) cording to this account, muft, one with another, chap. attempt to rear at lead four children, in order that two may have an equal chance of living to that age. But the neceflary maintenance of four children, it is fuppofed, may be nearly equal to that of one man. The labour of an able- bodied flave, the fame author adds, is computed to be worth double his maintenance; and that of the meaneft labourer, he thinks, cannot be worth lefs than that of an able-bodied flave. Thus far at Icaft feems certain, that, in order to bring up a family, the labour of the hufband and wife together muft, even in the loweft (pc- cies of common labour, be able to earn fome- ' thing more than what is precifely neceflary for their own maintenance} but in what proportion whether in that above mentioned, or in any other, I fliall not take upon me to determine. There are certain circumftances, however, which fometimes give the labourers an advan- tage, and enable them to raife their wages con- fiderably above this ratej evidently the loweft which is confiftent with common humanity. When in any country the demand for thofe who live by wages; labourers, journeymen, Icr- vants of every kind, is continually incrcafingj when every year furniflies employment for a greater number than had been employed the year before, the workmen have no occafion to combine in order to raife their wages. The fcarcity of hands occafions a competition among mafters, who bid againft one another, in order to get workmen, and thus voluntarily break H 4 through THE NATURE AND CAUSES OF through the natural combination of mailers not tQ raiie wages. The demand for thofe who live by wages, it ia evident, cannot increafe but in proportion to the increafe of the funds which are deftined for the payment of wages. Thefe funds are of twq kinds: firfl, the revenue which is over and above what is neceffary for the n(iaintenance ^ and, fecondly, the (lock which is over and above what is neceflfary for the employment of theii;' mailers. When the landlord, annuitant, or monied man^ has a greater revenue than what he judges fulH- cient to maintain his own family, he employs cither the whole or a part of the lurplus in main- taining one or more menial fervants, Increafe this furplus, and he will naturally increaf? the number of thofe fervants. When an independent workman, fuch as a, weaver or Ihoemaker, has got more (lock thai^ vrhat is fulBcient to purchafe the materials of his own work, and to maintain himfelf till he can difpole of it, he naturally employs one or more journeymen with the furplus, in order to make a profit by their work. Increafe this furplus, and he will naturally inpf^af? the number of his jour- neymen. The demand for thofe who live by wages, therefore, necelTarily increafes with the increafe of the revenue and llock of every country, and <:annot poflibly increafe without it. The increafe of revenue and Hock is the increafe of national wealth. The demand for thofe who live by ... ... wages. THE WBALtH OF NATIONS. ••f wages, therefore, naturally incrcafes with the chap. Incrcafe of national wealth, and cannot pofllbly s '* increafe without it. It is not the actual greatnefs of national wealth, but its continual* increafe, which occa- fions a rife in the wages of labour. It is not« accordingly, in the richcft countries, but in the mod thriving, or in thofe which are growing rich the fafteft, that the wages of labour are higheft. England is certainly, in the prefent times, a much richer country than any part of- North America. The wages of labour, how-* ever, are much higher in North America than in any part of England, In the province of New York, common labourers earn* three (hillings and fixpence currency, equal to two (hillings (ler- )ing, a day; (hip carpenters, ten (hillings and fixpence currency, with a pint of rum worth fix- pence (lerling, equal in all to fix (hillings and fixpence fterling; houfe carpenters and brick- layers eight (hillings currency, equal to four (hillings and fixpence (lerling; journeymen tay- lors, five (hillings currency, equal to about two (hillings and ten pence (lerling. Thefe prices are all above the London price; and wages are faid to be as high in the other colonies as in New York. The price of provifions is every where in North America much lower than in England. A dearth has never been known there. In the worft fcafons, they have always had a fu(Hciency ;•>/ • This was written in 1773* before the commencement of the late difturbances. r • for ro6 THE NATURE AND CAUSES OP * . BOOK for themfclves, though lefs for exportation. If the money price of labour, therefore, be higher than it is any where in the mother country, its real price, the real command of the neceifaries and conveniencies of life which it conveys to the labourer, mud be higher in a ftili greater pro- portion. : But though North America is not yet (b rich as- England, it is much more thriving, and ad- vancing with much greater rapidity to the further acquifition of riches. The mod decifive rr . -c " ^ «- x ^c Thirdly, as the price of provifions varies more from year to year than the wages of labouri fo, on the other hand, the wages of labour vary more from place to place than the price of pro- vifions. The prices of bread and butcher's meat arc generally the fame, or very nearly the fame* 8 through THE WEALTH OP NATIONS; ' l/| through thf greater part of the united kingdom, chap, Thcfe and moft other things which are fold by ^* retail, the way in which the labouring poor buy all things, are generally fully as cheap or cheaper in great towns than in the remoter parts of the country, for reafons which I fliall have occafion to explain hereafter. But the wages of labour in a great town and its neighbourhood are fre* quently a fourth or a fifth part, twenty or five- and- twenty per cent, higher than at a few miles dif- tance. Eighteen pence a day may be reckoned the common price of labour in London and its neighbourhood. At a few miles diftance it falls to fourteen and fifteen pence. Ten pence may be reckoned its price in Edinburgh and its neigh- bourhood. At a few miles diftance it falls to eight pence, the ufual price of common labour through the greater part of the low country of Scodand, where it varies a good deal lefs than in England. Such a difference of prices, which it feems is not always fufficient to traniport a man from one parifh to another, would necefia- rily occafion fo great a tranfportation of the moft bulky commodities, not only from one parifh to another, but from one end of the kingdom, al- irnoft from one end of the world to the other, as would foon reduce them more nearly to a. level. After all that has been faid of the levity and in- conftancy of human nature, it appears evidently from experience that a man is of all forts of lug- gage the mod difficult to be tranfported. If the labouring poor, therefore, can maintain their families in thofc parts of the kingdom, where the Vol. I. I price ••♦ THE NATURE AND CAUSES OF BOOK price of labour is lowe(t> they muft be in affluence '* where it is highcft. Fourthly, the variations in the price of la- bour not only do not correfpond either in place or time with thofe in the price of provifions, but they are frequently quite oppofite. Grain, the food of the common people, is dearer in Scotland than in England, whence Scodand receives almoft every year very large fupplies. But Englifh corti muft be fold dearer in Scotland, the country to which it is brought, than in England, the country from which it comes i and in proportion to its quality it can- not be fold dearer in Scotland than the Scotch corn that comes to the fame market in compe- tition with it. The quality of grain depends chiefly upon the quantity of flour or meal which it yields at the mill, and in this refped Englidi grain is fo much fuperior to the Scotch, that, though often dearer in appearance, or in propor- tion to the meafure of its bulk, it is generally cheaper in reality, or in proportion to its quality, or even to the meafure of its weight. The price of labour, on the contrary, is dearer in England than in Scotland. If the labouring poor, there- fore. Can maintain their families in the one part of the united kingdom, they muft be in affluence in the other. Oatmeal indeed fupplies the common people in Scotland with the greateft and the beft part of their food, which is in general much inferior to that of their neighbours of the fame rank in England. This difl^erence, however, in the mode of their fubfiftence is not the caufe, ' • 4 but TttE WEALTH OF NATIONS* ^ it|; but the cffcft, of the difference in their wages j c h^a p. though, by a ftrangc mifapprchenfion, I have frequently heard it reprefented as the caufe. It is. not becaufe one man keeps a coach while his neighbour walks a foot, that, the one is rich and the other poorj but becaufe the one is rich he keeps a coach, and becaufe the other is poor he walks a- foot. During the courfe of the laft century, taking one year with another, grain was dearer in both parts of the united kingdom than during that of the prefent. This is a matter of fa6l which can-^ not now admit of any reafonable doubt ; and the proof of it is, if poflible, ftill more decifive with regard to Scotland than with regard to England. It is in Scodand fupported by the evidence of the public Bars, annual valuations made upon oath^ according to the adual (late of the mar- kets> of all the different forts of grain in every different county of Scotland. If fuch dired proof could require any collateral evidence to confirm it, I would obferve that this has likewife been the cafe in France, and probably in moft other parts, of Europe. With regard to France there is the cleareft proof. But though it is certain that in both parts of the united kingdom grain was fomewhat dearer in the lafl century than in the prefent, it is equally certain that labour was' much cheaper. If the labouring poor, there- fore, could bring up their families then, they muft be much more at their eafe now. In the lafl century, the moft ufual day- wages of com- mon labour through the greater part of Scotland ' I 2 were Ii6 THE NATURE AND CAUSES OF B o o K were fix- pence in fummer and five-pence in win- «.,J«^ tcr. Three (hillings a week, the fame price very nearly, (till continues to be paid in fome parts of the Highlands and Wcftcrn Iflands. Through ^ the greater part of the low country the moft ufual wages of common labour are now eight- pence a day; ten-pence, fometimes a (hilling about Edinburgh, in the counties which border upon England, probably on account of ..hat neighbourhood, and in a few other places where there has lately been a con(iderable rife in the demand for labour, about Glafgow, Carron, Ayr- (hire, &c. In England the improvements of agriculture, manufaftures and commerce be- gan much earlier than in Scotland. The de- mand for labour, and confequetitly its price, muft nece(rarily have increafed with thofe im- provements. In the lafl: century, accordingly, as well as in the prefent, the wages of labour were higher in England than in Scotland. They have rifen too con(iderably fince that time» though, on account of the greater variety of wages paid there in different places, it is more difficult to afcertain how much. In 1614, the pay of a foot foldier was the fame as in the pre- fent times, eight-pence a day. When it was firft eilablifhed it would naturally be regulated by the "ufual wages of common labourers, the rank of people from which foot foldiers are commonly drawn. Lord Chief Jufticc Hales, who wrote in the time of Charles II. computes the neceffary ■'-'* cxpence of a labourer's family, confifting of fix perfons^ the father and mother, two children able -: ../ ■ . ' ■ ^ to THE WEALTH OF NATIONS. \if to do fbmething, and two not able, at ten (hil- chap. lings a week, or twenty-fix pounds a year. If ^'"* they cannot earn this by their labour, they muft make it up, he fuppofes, either by begj ^ or ftealing. He appears to have enquired very carefully into this fubjed*. In 1688, Mr. Gre- gory King, whofe (kill in political arithmetic is fo much extolled by Doflor Davenant, computed the ordinary income of labourers and out-fervants to be fifteen pounds a year to a family, which he fuppofed to confift, one with another, of three and a half perfons. His calculation, therefore, though different in appearance, correfponds very nearly at bottom with that of judge Hales. Both fuppofe the weekly expence of fuch families to be about twenty pence a head. Both the pecu- niary income and expence of fuch families have . increafed confiderably fince that time througli the greater part of the kingdom; in fome places more, and in fome lefs; though perhaps fcarce any where fo much as fome exaggerated accounts of the prefent wages of labour have lately rcprefented them to the public. The price of labour, it muft be obferved, cannot be afcer- tained very accurately any where, different prices being often paid at the fame place and for the fame fort of labour, not only according to the different abilities of the workmen, but according to the eafinefs or hardnefs of the mailers. Where wages are not regulated by law, all that we can * See his fcheme for the maintenance of the Poor, in Barn's Hiftory of the Poor-laws, 13 pretend llB THE NATURE ANDT CAUSES OP I. V o o ic pretend to determine is what arc the mod ufual i and experience fecms to (how that law can never regulate them properly, though it has often pre- tended to do fo. The real recompence of labour, the real quan- tity of the ncccflaries and conveniertcies of life which it can procure to the labourer, has, during the courfc of the prcfent century, incrcafcd per- haps in a dill greater proportion than its money price. Not only grain has become fomewhat cheaper, but .nany other things, from which the induftrious poor derive an agreeable and whole- fome variety of food, have become a great deal cheaper. Potatoes, for example, do not at pre- fent, through the greater part o( the kingdom, coft half the price which they ufed to do thirty or forty years ago. The fame thing may be faid of turnips, carrots, cabbages i things which were formerly never raifed but by the fpade, but which are now commonly raifed by the plough. All fort of garden ftuff too has become cheaper. The greater part of the apples and even of the onions confumed in Great Britain were in the laft century imported from Flanders. The great im- provements in the coarfer manufaftures of both ]inen and woollen cloth furnifh the labourers with cheaper and better cloathing; and thofe in the ma- nufaflures of the coarfer metals, with cheaper and JDetter inftruments of trade, as well as with many agreeable and convenient pieces of houfhold fur- niture. Soap, fait, candles, leather, and fer- mented liquors, have, indeed, become a good deal dearer; chiefly from the taxes which have been THE WEALTH OF NAT ONi. been laid upon them. The quantity r t ic(e, however, which the labouring poor arc -r any neceflity of confuming, is (o very fmal), that the increafc in their price does not compcnfatc the diminution in that of fo many other things. The common complaint that luxury extends itfclf even to the lowed ranks of the people, and that the labouring poor will not now be contented with the fame food, cloathing and lodging which fatisfied them in former times, may convince us that it is not the money price of labour only, but its real recompence, which has aug- mented. ■:' '•'-^ •'•^r--:^'-;. v^' ; *.; i>,- Is this improvement in the circumftances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the io- ciety ? The anfwer feems at firft fight abundantly plain. Servants, labourers and workmen of dif- ferent kinds, make up the far greater part of every great political fociety. But what improves the circumftances of the greater part can never be regarded as an inconveniency to the whole. No fociety can furely be flourifhing and happy, of which the far greater part of the members are poor and miferable. It is but equity, bc- fides, that they who feed, cloath and lodge the whole body of the people, fhould have fuch a ihare of the produce of their own labour as to be themfelves tolerably well fed, cloathed and lodged. Poverty, though it no doubt difcoyrages, does not always prevent marriage. It feems even to be favourable to generation. A half-ftarved I 4 Highland , 119 HAP. VIII. !!• THB NATURE AND CAUSES OP BOOK Highland woman frequently bear* more than twenty children, while a pampered fine lady is often incapable of bearing any, and is generally exhaufted by two or three. Barrennefs, fo fre- quent among women of fafhion, is very rare among thofe of inferior flation. Luxury in the fair fex, while it inflames perhaps the paflion for enjoyment, feems always to weaken, and fre- quently to deftroy altogether, the powers of ge- neration. But poverty, though it does not prevent the generation, is extremely unfavourable to the rear- ing of children. The tender plant is produced, but in fo cold a foil, and fo fevere a climate, foon withers and dies. It is not uncommon, I have been frequently told, in the Highlands of Scot- land for a mother who has borne twenty children not to have two alive. Several officers of great experience have aflured me, that fo far from re- cruiting their regiment, they have never been able to fupply it with drums and fifes from all the foldiers children that were born in it. A greater number of fine children, however, is feldom feen any where than about a barrack of foldiers. Very few of them, it feems, arrive at the age of thirteen or fourteen. In fome places one half the children born die before they are four years of agej in many places before they are fevenj and in almoft all places before they are nine or ten. This great mortality, however, will every where be found chiefly among the children of the common people, who cannot afibrd to tend them with the fame care as thole of THE WEALTH OP NATIONS. * lit of better ftation. Though their marriages are c h^ a p. generally more fruitful than thofe of people of fkfhion, a fmaller proportion of their children arrive at maturity. In foundling hofpitals, and among the children brought up by parifh cha- rities, the mortality is dill greater than among thofe of the common people. Every fpecies o*"' animals naturally multiplies in proportion to the means of their fubfiftence, and no fpecies can ever multiply beyond it. But in civilized fociety it is only among the inferior ranks of people that the fcantinefs of fubfiftence can fet limits to the further multiplication of the human fpecies; and it can do fo in no other way than by deftroying a great part of the children which their fruitful marriages produce. The liberal reward of labour, by enabling them to provide better for their children, and confequently to bring up a greater number, na- turally tends to widen and extend thofe limits* It deferves to be remarked too, that it necefTarily does this as nearly as poflTible in the proportion which the demand for labour requires. If this demand is continually increafing, the reward of labour muft neceflarily encourage in fuch a manner the marriage and multiplication of la- bourers, as may enable them to fupply that con- tinually increafing demand by a continually in- creafing population. If the reward fliould at any time be lefs than what was requifite for this pur- pofe, the deficiency of hands would foon raife it; and if it Ihould at any time be more, their cxceflive multiplication would foon lower it to 9 this Itt THE NATURE AND CAUSES OF this necelTary rate. The market would be fo much under-ftocked with labour in the one cafe, and fo much over-ftocked in the other, as would foon force back its price to that proper rate which the circumftances of the fociety required. It is in this manner that the demand for men, like that for any other commodity, neceflarily regulates the produflion of men j quickens it when it goes on too flowly, and ftops it when it advances too fall. It is this demand which regulates and deter- mines the ftate of propagation in all the different countries of the world, in North America, in Europe, and in China; which renders it rapidly progreflive in the firft, flow and gradual in the fecond, and altogether ftationary in the laft. The wear and tear of a flave, it has been faid, is at the expence of his mailer j but that of a free fervant is at his own expence. The wear and tear of the latter, however, is, in reality, as much at the expence of his mafter as that of the former. The wages paid to journeymen and fervants of every kind muft be fuch as may enable them, one with another, to continue the race of journeymen and fervants, according as the increafing, diminifliing, or ftationary demand of the fociety may happen to require. But though the wear and tear of a free fervant be equally at the expence of his mafter, it generally cofts him much lefs than that of a flave. The fund deftined for replacing or repairing, if I may fay fo, the wear/ and tear of the flave, is com- monly managed by a negligent mafter or carelefs overfeer. That deftined for performing the fame THE WEALTH OF NATIONS, 4<| fame office with regard to the free man, is ma- c ha p. naged by the free man himfelf. The diforders which generally prevail in the oeconomy of the rich, naturally introduce themfelves into the management of the former : The ftrift frugality and parfmnonious attention of the poor as natu- rally eftablilh themfelves in that of the latter. Under fuch different management, the fame pur- pofe muft require very different degrees of ex- pence to execute it. It appears, accordingly, from the experience of all ages and nations, I be- lieve, that the work done by freemen comes cheaper in the end than that performed by flaves. It is found to do fo even at Bofton, New York, and Philadelphia, where the wages of common labour are fo very high. "^* The liberal reward of labour, therefore, as it is the effedt of increafing wealth, fo it is the caufc of increafing population. To complain of it, is to lament over the neceffary effeft and caufe of the greateft public profperity. It deferves to be remarked, perhaps, that it is in the progreffive (late, while the fociety is ad- vancing to the further acquifition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, feems to be the happieft and the moft comfortable. It is hard in the flation^ry, and miferable in the declining ftate. The progreffive ftate is in reality the cheer- ful and the hearty ftate to all the different orders of the fociety. The ftationary is dullj the de- clining melancholy. The i»4 THE NATURE AND CAUSES OF The liberal reward of labour, as ic encourages the propagation, fb it increafes the induftry of the common people. The wages of labour are the encouragement of induftry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentiful fub- iiftence increafes the bodily (Irength of the la- bourer, and the comfortable hope of bettering his conditions and of ending his days perhaps in eafe and plenty, animates him to exert that Itrength to the utmoft. Where wages are high, accordingly, we (hall .always find the workmen more adlive, diligent, and expeditious, than where they are lowj in England, for example, than in Scotland ; in the neighbourhood of great towns, than in remote country places. Some workmen, indeed, when they can earn in four days what will maintain them through the week^ will be idle the other three. This, however, is by no means the cafe with the greater part. Workmen, on the contrary, when they are libe- rally paid by the piece, are very apt to over- work themfelves, and to ruin their health and con- ftitution in a few years. A carpenter in Lon- don, and in fome other places, is not fuppofed to laft in his utmoft vigour above eight years. Something of the fame kind happens in many other trades, in which the workmen are paid by the piece; as they generally are in manu-^ faftures, and even in country labour, where- ever wages are higher than ordinary. Almoft every clafs of artificers is fubjedt to fome pecu- liar infirmity occafioned by exceflive application to THE WEALTH OF NATIONS. US to their peculiar fpccics of work. Ramuzzinl, c ha p. an eminent Itahan phyfician, has written a par- \, ticular book concerning fuch difeafes. We do not reckon our foldiers the moft induftrious fee of people annong us. Yet when foldiers have been employed in fome particular forts of work, and liberally paid by the piece, their oMcers have frequently been obliged to flipulate with the undertaker, that they (hould not be allowed to earn above a certain fum every day, according to the rate at which they were paid. Till this fti- pulation was made, mutual emulation and the defire of greater gain, frequently prompted them to overwork themfelves, and to hurt their health by excefTive labour. Excellive application dur- ing four days of the week, ia frequently the real ' caufe of the idlenefs of the other three, fa much and fo loudly complained of. Great la- bour either of mind or body, continued for feveral days together, is in mod men naturally followed by a great defire of relaxation, which, if not reftrained by force or by fome ftrong ne- celTity, is almoft irrefiftible. It is the call of na- ture, which requires to be relieved by fome in- dulgence, fometimes of eafe only, bui: fometimes too of dilTipation and diverfion* If it is not complied with, the confequences are often dan- gerous, and fometimes fatal, and fuch as almoft always, fooner or later, bring on the peculiar infirmity of the trade. If mailers would always liften to the didbates of reafon and humanity* they have frequently occafion rather to mode- rate, than to animate the application of many of their iz6 THE NATURE AND CAUSES OF BOOK their workmen. It will be found, I believe, ill every fort of trade, that the man who works fo moderately, as to be able to work conftantly, not only preferves his health the longed, but, in the courfe of the year, executes the greatefl quantity of work. In cheap years, it is pretended, workmen are generally more idle^ and in dear ones more in- duftrious than ordinary. A plentiful fubfift- ence therefore, it has been concluded, relaxes, and a fcanty one quickens their induftry. That a little more plenty than ordinary may render fome wcrkmen idle, cannot well be doubted j but that it ihould have this effed upon the greater part, or that men in general (hould work better when they are ill fed than when they are well fed, when they are diflieartened than when they are in good fpirits, when they arc frequently fick than when they are generally in good health, feems not very probable. Years of dearth, it is to be obferved, are generally among the common people years of ficknefs and mortality, which cannot fail to diminifh the produce of theii in- duftry. -■'■^ *ft,h..-i.- * In years of plenty, fervants frequently leave their mailers, and truft their fubfiftence to what they can make by their own induftry. But the fame cheapnefs of provifions, by increafing the fund which is dcftined for the maintenance of fervants, encourages matters, farmers cfpecially, to employ a greater number. Farmers upon fuch occalions expedt more profit from their corn by maintaining a few more labouring fervants,. than by THE WEALTH OF NATIONS. tti by felling it at a low price in the market. The c ha p. demand for fervants increafcs, while the number of thofe who offer to fuppljr that demand di- miniflies. The price of labour, therefore, fre- quently riles in cheap years. In years of fcarcity, the difficulty and uncer- tainty of fubfiftence make all fuch people eager to return to fervice. But the high price of pro- vifions, by diminilhing the funds deftined for the maintenance of fervants, difpofes mafters rather to diminifh than to increafe the number of thofe they have. In dear years too, poor independ- ent workmen frequently confume the little (locks with which they had ufed to fupply themfelves with the materials of their work, and are ob- liged to become journeymen for fubfiftence. More people want employment than can eafily get it J many are willing to take it upon lower terms than ordinary, and the wages of both fer- vants and journeymen frequently fink in dear years. .;. .-,. -Masters of all forts, therefore, frequently make better bargains with their fervants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, commend the former as more favourable to induftry. Landlords and farmers, befides, two of the largeft clafles of mafters, have another reafon for being pleafed with dear years. The rents of the one and the profits of the other depend very much upon the price of provifions. Nothing can be more ab- furd, however, than to imagine that men in ge- neral 128 THE NATURE AND CAUSES OP B o^o K ncral fhould work Icfs when they work for them- felves, than when they work for other people. A poor independent workman will generally be more induftrious than even a journeyman who works by the piece. The one enjoys the whole produce of his own indufl-ry j the other (hares it with his mailer. The one, in his feparate inde- pendent (late, is lefs liable to the temptations of bad company, which in large manufadtories fo frequently ruin the morals of the other. The fuperiority of the independent workman over thofe fervants who are hired by the month or by the year, and whofe wages and maintenance are the fame whether they do much or do little, is likely to be flill greater. Cheap years tend to increafe the proportion of independent workmen to journeymen and fervants of all kinds, and dear years to diminifh it. 1 A French author of great knowledge and in- genuity, Mr. MefTance, receiver of the taillies in the eledtiora of St. Etienne, endeavours to fhow that the poor do more, work in cheap than in dear years, by comparing the quantity and value of the goods made upon thofe different occafions in three different manufactures ; one of coarfe woollens carried on at Elbeuf i one of linen, and another of filk, both which extend through the whole generality of Rouen. It ap- pears from his account, which is copied from the regifters of the public offices, that the quan- tity and value of the goods made in all thofe three manufactures has generally been greater in cheap than in dear years 5 and that it has always been " *tUE WEALTH OP NATIONS. tig been grcateft in the chcapeft, and leaft in the c ha p. dcarcft years. All the three fecm to be ftation- ary maniifaftures, or which, though their pro- duce may vary fomcwhat from year to year, are upon the v^holc neither going backwards nor forwards* •The mariufaflure of linen in Scotknd, and that of coarfe woollens in the weft riding of Yorkfllh-c, arc growing rtianufafturesj of which the produce is generally, though with fome va- riationSj ihcreadng both in quantity and value» Upon examining, however, the accounts which have been ptiblifhed of their annual produce, t have not been able to obferve that its variations have had any fenfiblc conrteftion with the dear- nefs or cheapnefs of the feafons. In 1740, a year of great fcarciiy, both manufaftures, indeed, ap- pear to have declined very confiderably* But in lyS^i another year of great fcarcity, the Scotch manufadture niade more than ordinary advances. The Yorkfhire manufacTcure, indeed, declined, and its produce did not rife to what it had been in 1755 till 1766, after the repeal of the Ameri- can ftamfi ad. In that and the following year it greatly exceeded what it had ever been before, and it has continued to advance ever fince. The produce of all great manufadures for dif- tant fale muft neceflarily depend, not fo much upon the dearncfs or cheapnefs of the feafons in the countries where they are carried on, as upon the circumftances which afFedt the demand in th^ countries where they are confumed j upon peacef or war, upon the profperity or declenfion of VoL» I. . K other I JO THE NATURE AND CAUSES OP BOOK other rival manufaftures, and upon the good or bad humour of their principal cuftomers. A great part of the extraordinary work, belides, which is probably done in cheap years, never enters the public regifters of manufaftures. The men fervants who leave their mafters be- come independent labourers. The women re- zurn to their parents, and commonly fpin in or- der to make cloaths for themfelves and their fa- milies. Even the independent workmen do not always work for public fale, but are employed by feme of their neighbours in manufactures for family ufe. The produce of their labour, there- fore, frequently makes no figure in thofe public regifters, of which the records are fometimes publifhed with fo much parade, and from which our merchants and manufacturers would often vainly pretend to announce the profpericy or de« clenfion of the greateft empires. • , Though the variations in the price of labour, not only do not always correfpond with thofe in the price of provlfions, but are frequently quite oppofite, we mufl: not, upon this account, ima-* gine that the price of provifions has no influence upon that of labour. The money price of la- bour is neceffarily regulated by two circum- ftances ; the demand for labour, and the price of the neceflaries and convcniencies of life. The demand for labour, according as it happens to be increafing, ftationary, or declining, or to re- quire an increafing, ftationary, or declining po- pulation, determines the quantity of the neceffa- 'ries and convcniencies of life which mult be -i;; :,"•,• .■ ■ «; given THE WEALTH OP NATIONS. »3« given CO the labourer ; and the money price of ^ J^^^^ **• labour is determined by what is requifite for \> ■»■■ -^ purchafing this quantity. Though the money price of labour, therefore, is fometimes high where the price of provifions is low, it would be flill higher, the *mand continuing the fame, if the price of provifions was high. / It is becaufe the demand for labour increafes * in years of fudden and extraordinary plenty, and diminifhes in thofe of fudden and extraordinary fcarcity, that the money price of labour fome- times rifes in the one, and Hnks in the other. In a year of fudden and extraordinary plenty^ there are funds in the hands of many of the em- ployers of induftry, fufficient to maintain and employ a greater number of indullrious people than had been employed the year before; and this extraordinary number cannot always be had. Thofe matters, therefore, who want more work- men, bid againft one another, in order to get them, which fometimes raifes both the real and the money price of their labour. svmt^v ..The contrary of this happens in a year of fud- den and extraordinary fcarcity. The funds def- tined for employing induftry are lefs than they had been the year before. A confiderable num- ber of people are thrown out of employment, who bid one againft another, in order to get it, which fometimes lowers both the real and the money price of labour. In 1740, a year of ex- traordinary fcarcity, many people were willing to work for bare fubliftence. In the fucceeding Ka years *J« THE NATURE AND CAUSES OF BOOK years of plenty, it was more difficult to get la« bourers and fervants. The fcarcity of a dear year, by diminifhing the demand for labour, tends to lower its price, as the high price of provtfion tends to raiie it. The plenty of a cheap year, on the contrary, by increafmg the demand, tends to ratfe the price of labour, as the cheapnefs of provifions tends to lower it. In the ordinary variations of the price cf provifions, thofe two oppoHte caufes feem to counterbalance one another; which is probably !n part the reafon why the wages of labour are every- where fo much more fteady and permanent than the price of provifions. 1 The increafe in the wages of labour neceflarily increafes the pricr of many commodities, by in- creafmg that part of it which refolves itfelf into wages, and fo far tends to diminifii their con« fumption both at home and abroad. The fame eaufe, however, which raifes the wages of laboury the increafe of ftock, tends to increafe its pro* dudtive. powers, and to make a fmaller quantity of labour produce a greater quantity of work. The owner of the ftock which employs a great number of labourers, neceflarily endeavours^ foe his own advantage, to make fuch a proper dhrii- fion and diftributfon of employment, that thef may be enabled to produce the greateft quantity of work poffible. For the fame reafon, he en- deavours to fupply them with the beft machineryi which either he or they can think ^, What takes place among t&c labourers in a partioilar , ., . workhoufe. \.::,'j- ^•THE WEALTH OP NATIONS. .\-'j As THE WEALTH OF NATIONS. ' >Nt As the colony increafes, the profits of ftock gnu chap. dually diminilh. Whtn the itioft fertile and beft «_ ^' r fituatcd lands have been all occupied, lefs profit can be made by the cultivation of what is infe* rlor both in foil and (ituationf, and lefs intereft cin be afforded for the (lock which is fo em** ployed. In the greater part of our colonies, ac- cordingly, both the legal and the market rate of intcreft have been confiderably reduced during the courfe of the prefent century. As riches, im- provement, and population have increafcd, irt- tereft has declined. The wages of labour do not fink with the profits of ftock. The demand for labour increafes with the increafe of ftock what- ever be its profits; and after thcfe are dimi- niftied, ftock may not only continue to' increafe, but to increafe much fafter than before. It ia with induftrioua nations, who are advancing iil the acquifkiort of riches, as with induftrioos individuals. A great ftock, though with fmall profits, generally increafes fafter than a fmal! ftock with great profits. Money, fays the pro- verbj makes- money. When you have got a little, it is often eafy to get more. The great difficulty is to get that little. The connedlion between the increafe of ftock and thalf of in- dpftry, or of the demand for ufeful labour, has partly been explained already, but will be ex- plained more fully hereafter in treating of the ac- cumulation of ftock. The acquifition of new territory, or of new branches of trade, may fometimes raife the pro- fits of ftock, and with them the intereft of money, even 14* ' ^ . THE NATURE AND CAUSES OF BOOK even In a country which is fafl: advancing in the acquifition of riches. The (lock of the country not being fufficient for the whole accellion of bufinefs, which fuch acquifitions prefent to the different people among whom it is divided, is applied to thofe particular branches only which afford the greatefl profit. Part of what had be- fore been employed in other trades, is neceflarily withdrawn from them, and turned into fome of the new and more profitable ones. In all thofe old trades, therefore, the competition comes to be lefs than before. The market comes to be lefs fully fupplied with many different forts of goods. Their price neceffarily rifes more or lefs, and yields a greater profit to thofe who deal in them, who can, therefore, afford to borrow at a higher interf ft. For fome time after the con- clufion of the late war, not only private people of the belt credit, but fome of the greateft com- panies in London, commonly borrowed at five per cent, who before that had not been ufed to pay more than four, and four and a half per cent. T'.e great acceffion both of territory and trade, by our acquifitions in North America and the Wefl Indies, will fufficiently account for this, without fuppofing any diminution in the capita] ftock of the fociety. So great an acceffion of new bufinefs to be carried on by the old ftock> muft neceffarily have diminifhed the quantity employed in a great number of particular branches, in which the competition being lefs, the profits muft have been greater. I (hall here- after have occafion to mention the reafons which I difpofe a. « THE WEALTH OF NATIONS. Hi difpofe me to believe that the capital (lock of c h a p. Great Britain was not dinninifhed even by the enormous expence of the late war. The diminution of the capital ftock of the (o- ciety, or of the funds deftined for the main- tenance of induftry, however, as it lowers the wages of labour, fo it raifes the profits of dock, and confequently the intereft of money. By the wages of labour being lowered, the owners of what ftock remains in the fociety can bring their goods at lefs expence to market than before, and lefs ftock being employed in fup- plying the market than before, they can fell them dearer. Their goods coft them lefs, and they get more for them. Their profits, therefore, being augmented at both ends, can well afford a large intereft. The great fortunes fo fuddenly and fo eafily acquired in Bengal and the other Britifh lettlements in the Eaft Indies, may fatisfy us that, as the wages of labour are very low, fo the profits of ftock are very high in thofe ruined countries. The intereft of money is proportion- ably fo. In Bengal, money is frequently lent to the farmers at forty, fifty, and fixty per cent, and the fucceeding crop is mortgaged for the pay- ment. As the profits which can afford fuch an intereft muft eat up almoft the whole rent of the landlord, fo fuch enormous ufury muft in its turn eat up the greater part of thofe profits. Before the fall of the Roman republic, a ufury of the fame kind feems to have been common in the provinces, under the ruinous admihiftration of their proconfuls. The virtuous Brutus lent < money ■jix t44 TM NATURft AND CAtJstS 0*^ BOOK mortey in Cyprus at eight- and-forty per cent. d| we learn from the letters of Cicero. In a country which had acquired that full complement of riches which the nature of its foil and climate, and its' ficuation with rcfpcdi. to other countries, allowed it to acquire; which could, therefore, advance no further, and which was not going backwards, both the wages of la- bour and the profits of (lock would probably be very low. In a country fully peopled in propor- tion to what either its territory could maintain or its ftock employ, the competition for cmptey- ment would neceflarily be fo great as to reduce the wages of labour to what was barely fu/Ticient to keep up the number of labourers, and, the country being already fully peopled, that num- ber could never be augmented. In a country fully (locl^ed in proportion to all the bufmefs it had to tranfaf'c, as great a quantity of ftock would be employed in every particular branch as the nature and extent of the trade would admit. The competition, therefore, would every- where be as great, and confequently the ordinary profit as low as poflTible. . j,? ,;.■ Bux perhaps no country has ever yet arrived at this degree of opulence. China (eems to have been long ftationary, and had probably long ago acquired that full complement of riches which is confident with the nature of its laws and infli-^ tutions. But this complement may be much inferior to what, with other laws and inftitu* tions, the nature of its foil, climate, and fitua«» tion might ^ admit of. A country which negledts v-'„v..r„i ■■ ■ - : ' ■■ or, THE WEALtH OF NAtlONS."' I45 or dcfpifes foreign commcrcr, and which admits c h a p. the vcflcis 6( foreign nations into one or two of its ports only, cannot tranfaft the fame quantity of bufinefs which it might do with different laws and inftitutions. In a country too, where, though the rich or the owners of large capitals enjoy a good deal of fecurity, the poor or the owners of fmall capitals enjoy fcarce any, but are liable, under the pretence of juftice, to be pillaged and pi»indered at any time by the inferior manda- rincs> the quantity of (lock employed in all the different branches of bufinefs tranfa6ted within it, can never be equal to what the nature and extent of that bufinefs might admit. In every different branchi the opprefTion of the poor muft eflablilh the monopoly of the rich, who, by en- grofling the whole trade to themfclves, will be able to make very large profits. Twelve per cent, accordingly is faid to be the common in* tereft of money in China, and the ordinary pro- fits of ftock muft be fufiicient to afford this large intereft. A DEFECT In the law may fometimes raifc the rate of intceft confiderably above what the con- dition of the country, as to wealth or poverty, would require. When the law does not enforce the performance of contracts, it puts all bor- rowers nearly upon the fame footing with bank- rupts or people of doubtful credit in better regu- lated countries* The uncertainty of recovering his money makes the lender exadt the fame ufu^ rious intereft which is ufually required front bankrupts. Among the barbarous nations who Vol. I. over* 1. i^ tHE NATURE ANl> CAUSBS OF B K over-run the weftern provinces of the Roman empire, the performance of con«ra£ts was left for many ages to the faith of the contradting parties. The courts of jullice of their kings fejdom intermeddled in it. The high rate of intereft which took place in thofe ancient times may perhaps be partly accounted for from this caufe. When the law prohibits intereft altogether, it does not prevent it. Many people muft bor- row, and nobody will lend without fuch a con- f^ieration for the ufe of their money as is fuit- able, not only to what can be made by the ule of it, but to the difficulty and danger of evading the law. The high rate of intereft among all Mahometan nations is accounted for by Mr. Montefquieu, not from their poverty, but partly from this, and partly from the difficulty of re- covering the money. i,^?* The loweft ordinary rate of profit muft always be fomething more than what is fufficient to compenfate the occafional lofles to which every employment of ftock is expofed. It is this fur- plus only which is neat or clear profit. What is called grofs profit comprehends frequently, not only this furplus, but what is retained for com- penfating fuch extraordinary lofles. The intereft which the borrower can afford to pay is in pro- portion to the clear profit only. • The loweft ordinary rate of intereft muft, in the fame manner, be fomething more than fuffi- cient to compenfate the occafional lofles to which lending, even with tolerable prudence, is ex- •1' .1 pofed. a- '" - 3 ■ r f I V >i tHE WEALTH OF NATIONS. pofcd. Were it not more, charity or fricndfhip could be the only motives for lending. In a country which had acquired its full com- plement of riches, where in every particular branch of bufinefs there was the greateft quantity of (lock that could be employed in it, as the ordinary rate of clear profit would be very fniall, fo the ufual market rate of intereft which could be afforded out of it, would be fo low as to ren- der it impoflTible for any but the very wealthieft people to live upon the intcreft of their money. All people of fmall or middling fortunes would be obliged to fuperintend themfelves the em- ployment of their own flocks. It would be ne- celTary that almoft every man fliould be a man of bufinefs, or engage in fome fort of trade. The province of Holland fecms to be approaching near to this (late. It is there unfaihionable not to be a man of bufinefs. Neceffity makes it ufual for a] mod every man to be fo, and cufiom every where regulates falhion. As it is ridicu- lous not to drefs, fo is it, in fome meafure, not to be employed, like other people. As a man of a civil profefiion feems awkward in a camp or a garrifon, and is even in fome danger of being defpifed there, fo does an idle man among men of bufinefs. The higheft ordinary rate of profit may be fuch as, in the price of the greater part of com- modities, eats up the whole of what fhould go to the rent of the land, and leaves only what is fuf- ficient to pay the labour of preparing and bring- •.V La, ing «47 I4> THE NATURE AND CAUSES OF *^ ing them to market, according to the loweft rate at which labour can any-where be paid, the bare fubfiftence of the labourer. The workman muft always have been fed in fome way or other while he was about the work; but the landlord may not always have been paid. The profits of the trade which the fervants of the Eaft India com- pany carry on in Bengal may not perhaps be very far from this rate. The proportion which the ufual market rate of intereft ought to bear to the ordinary rate "of clear profit, neceffarily varies as profit rifes or falls. Double interefl: is in Great Britain reckoned, what the merchants call, a good, mo- derate, rcafonable profit j terms which I ap- prehend mean no more than a common and ufual profit. In a country where the ordinary rate of clear profit is eight or ten per cent, it may be reafbnable that one half of it fhould go to inter e^, wherever bufinefs is carried on with borrowed money. The flock is at the rilk of the borrower, who, as it were, infures it to the lender J and four or five per cent, may, in the greater part of trades, be both a fufHcient pro- fit upon the rifk of this infurance, and a fuf- ficient recompence for the trouble of employ- ing the ftock. But the proportion between in- tereft and clear profit might not be the fame in countries where the ordinary rate of profit was either a good deal lower, or a good deal higher. If it were a good deal lower, one half of it perhaps could not be aflforded for intereft j and 4 more p. THE WEALTH OP NATIONS. 149 more might be afforded if it were a good deal c ha higher. In countries whicli are faft advancing to riches, the low rate of profit may, in the price of many commodities, compenfatc the high wages of la- bour, and enable thofe countries to fell as cheap as their lefs thriving neighbours, among whom the wages of labour may be lower. In reality high profits tend much more to raife the price of work than high wages. If in the linen manufaflure, for example, the wages of the different working people, the flax-dre^ers, the fpinners, the weavers, &c. fhould, all of them, be advanced twopence a day, it wc; ild be le- ceffary to heighten the price of a piece of ..en only by a number of two pences equal tQ the number of people that had been emplo /ed about it, multiplied by the number of days during which they had been fo employed. That part of the price of the commodity which refolvcd itfelf into wages would, through all tiie different ftages of the manufadlure, rife only in arithme- tical proportion to this rife of wages. But if the profits of all the different employers of thofe working people fhould t: raifed five per cent, that part of the price ot me commodity which refolved itfelf into profit, would, through all the different flages of the manufadure, rife in geometrical proportion to this rife of profit. The employer of the flax-dreffers would, in felling his » flax, require an additional five per cent, upon the whole value of the materials and wages which he advanced to his workmen. The employer of L3 the ISO THE NATURE AND CAUSES OF BOOK the fpinners would require an additional five per cent, both upon the advanced price of the flax and upon the wages of the fpinners. And the employer of the weavers would require a like five per cent, both upon the advanced price of the linen yarn and upon the wages of the weavers. In raifing the price of commodities, the rife of wages operates in the fame manner as fimple intereft does in the accumulation of debt. The rife of profit operates like compound intereil. Our merchants and niafter-manufafturcrs com- plain much of the bad eflTedts of high wages in raifing the price, and thereby lelTening the fale of their goods both at home and abroad. They fay nothing concerning the bad effeds of high profits. They are filent with regard to the per-? nicious effefts of their own gains. They com- plain only of thofe of other people. 1 ''1'' ■<\> ■ M.. THE WEALTH OF NAtiONS. «5« m ;» ■<•» <- CHAP. X. Of Wages and 'Profit in the different Employments of Labour and Stock, • TH E whole of the advantages and difad- chap. vantages of the different employments of labour and ftock muft, in ihe fame neighbour- hood, be either perfeftly equal, or continually tending to equality^ If in the fame neighbour- hood, there was any employment evidently either more or lefs advantageous than the reft, fo many people would crowd into it in the one cafe, and fo many would defert it in the other, that its ad- vantages would foon return to the level of other employments. This at leaft would be the cafe in a fociety where things were left to follow their natural courfe, where there was perfect liberty, and where every man was perfectly free both to chufe what occupation he thought proper, and to change it as often as he thought proper. Every man's intereft would prompt him to fee)c the advantageous, and to ihun the difadvantageous employment. ^ - ^ ,; Pecuniary wages and profit, indeed, are every-where in Europe extremely different, ac- cording to the different employments of labour and ftock. But this difference arifes partly fronn certain circumftances in the employments them- felves, which, either really, or at leaft in the imaginations of men, make up for a fmall pecu- L 4 niary ,5J THE NATURE AND CAUSES OF BOOK niary gain in fome, and counter- balance a great one in others j and partly from the policy of Europe, which no-vyhcre leaves things at perfeft liberty. The particular confideration of thofe circum- ftances and of that policy will divide this chapter into two parts. l^' PART I, V Jne^ualities artfing from the Nature of the Employ^ fnents themjelves, THE five following are the principal circutn- ftances which, fo far as I have been able to obferve, make up fo!* a fmall pecuniary gain in fome employments, and counter- balance a great one in others : firft, the agreeablenefs or difagrec- ablenefs of the employments themfelves} fecondly, the eafinefs and cheapnefs, or the difficulty and expence of learning them j thirdly, the conftancy or inconftancy of emck.vment in them j fourthly, the fmall or great truft which muft be repofed in thofe who exercife themj and fifthly, the proba- bility or improbability of fuccefs in them. First, The wages of labour vary with the cafe or hardlhip, the cleanlinefs or dirtinefs, the honourablencfs or diflionourablenefs of the em- ployment. Thus in mofl places, take the year round, a journeyman taylor earns lefs than a journeyman weaver. His work is much eafier. A journeyman weaver earns lefs than a journey- man fmith. His work is not always eafier, but it is much cleanlier, A journeyman blackfmith, ^ though THE WEALTH OF NATIONS. «5S though an artificer, feldom earns fo much in c h a p. twelve hours, as a collier, who is only a labourer, ^ does in eight. His work is not quite fo dirty, is lefs dangerous, and is carried on in day-light, and above ground. Honour makes a great part of the reward of all honourable profefTions. In point of pecuniary gain, all things confidered, they are generally undcr-recompenfed, as I Ihall endeavour to (hew by and by. Difgrace has the contrary effed. The trade of a butcher is a brutal and an odious bufinefsj but it is in moft places more profitable than the greater part of common trades. The moft deteftable of al em- ployments, that of public executioner, is, in pro- portion to the quantity of work done, better paid than any common trade whatever. Hunting and filhing, the moft important employments of mankind in the rude ftate of fociety, become in its advanced ftate their moft agreeable amufements, and they purfue for plea- fure what they once followed from neceflity. In the advanced ftate of fociety, therefore, they are^ all very poor people who follow as a trade, what , other people purfue as a paftime. Fifhermen have been fo fince the time of * Theocritus. A poacher is every-where a very poor man in Great Britain. In countries where the rigour of the law fuffers no poachers, the licenfed hunter is not a much better condition. The natural tafte in for thofe employments makes more people fol- low them than can live comfortably by them, and the produce of their labour, in proportion See Idylllum xxl. to «54 THE NATURE AND CAUSES OF to its quantity, comes always too cheap to market to afford any thing but the moft fcanty fubfiftencc to the labourers. DisAGREEABLBNESs and difgracc affeft the profits of ftock in the fame manner as the wages of labour. The keeper of an inn or tavern, who lb never mafter of his own houfe, and who is ex- pofed to the brutality of evCiy drunkard, ex- t-rcifes neither a very agreeable nor a very cre- ditable bufinefs. But there is fcarce any com- mon trade in which a fmall ftock yields fo great a profit, V Secondly, The wages of labour vary with the cafinefs and cheapnefs, or the difficulty and ex- pence of learning the bufinefs. When any expenfive machine is erefted, the extraordinary work to be performed by it before it is worn out, it muft be expedted, will replace the capital laid out upon it, with at lead the or- dinary profits. A man educated at the cxpencc of much labour and time to any of thofe em- ployments, which require extraordinary dexterity and fkill, may be compared to one of thofe ex- penfive machines. The work which he learns to perform, it muft be expedled, over and above the ufual wages of common labour, will replace to him the whole expcnce of his education, with at leaft the ordinary profits of an equally valuable capital. It muft do this too in a reafonable time, regard being had to the very »%icertain duration of human life, in the fame manner as to the more certain duration of the machine. The •■■■ ,');•''■ the THE WEALTH OP NATIONS. 151 The difference between the wages of (killed chap. labour and thofe of common labour, is founded ^' upon this principle. The policy of Europe confiders the labour of all mechanics, artificers, and manufadlurers, as (killed labour; and that of all country labourers as common labour. It feems to fuppofe that of the former to be of a more nice and delicate nature than (hat of the latter. It is fo perhaps in fome cafes ; but in the greater part it is quite otherwife, as I (hall endeavour to (hew by and by. The laws and cuftoms of Europe, there- fore, in Older to qualify any perfon for exerr- cifing the one fpecies of labour, impofe the necef- fity of an apprentice(hip, though with different degrees of rigour in different places. They leave the other free and open to every body. During the continuance of the apprenticethip, the whole labour of the apprentice belongs to his mafter. In the mean time he muff, in many cafes, be maintained by his parents or relations, and in almoft all cafes muft be cloathed by them. Some money too is commonly given to the mafter for teaching him his trade. They who cannot give money, give time, or become bound for more than the ufual number of years ; a con- fideratioK which, though it is not always advan- tageous to the mafter, on account of the ufual idlenefs of apprentices, is always difadvantageous to the apprentice. In country labour, on the contrary, the labourer, while he is employed about the eafier, learns the more difficult parts of his bufinefs, and his own labour maintains him through \> U6 THE NATURE AND CAUSES OF ji o o 3v though all the different ftages of his employ- ' m ;nt. It is reafonable, therefore, that in Eu- rope the wages of mechanics, artificers, and manufafturers, fhould be fomewhat higher than thofe of common labourers. They J^rc fo ac- ccj'-dingly, and their fupdric.r gains make them in moft places be confidered as a fupiii ^r rank of people. This fuper.o;ity> howt/erj li. gene- rally very frnaii j the daily or weekly earnings of journeymen in the more common forts of manu- fa(5lures, fuch as thofe of plain liners ^nd woollen cloth, computtd at an average, are, in moft places, very little more thans the day wages of common labourers. Their employment, indeed, 13 more fteady and uniform, and the fuperiority of their earnings, taking the whole year toge- ther, may be fomewhat greater. It feems evi- dently, however, to be no greater than what is fufHcient to comperifate the fuperior expence of their education. Education in the ingenious arts and in the liberal profefTions, is ftill more tedious and ex- penfive. The pecuniary recompence, therefore, of painters and fculptors, of lawyers and phy- (icians, ought to be much more liberal : and it is fo accordingly. The. profits of ftock feem to be veiy iittle af- fefted by the eafinefs or difficulty of learning the trade in which it is employed. All the different ways in which ftock is commonly employed in great towns feem, in reality, to be almoft equally cafy and equally difficulc >'^ learn. One branch ■■'''" ' .:.. ■■:[ i- *f , ^tc^ either cither o be a mu Thii occupati of empl Empi trades t nufaflui employ I is able the cor in foul times ( cuftom( frequen fore, w tain hi compel momen fituatio compu fafture with tl of ma one hi comm week, feven latter formal tei c( fpecie eafy t .-« THE WEALTH OF NATIONS. T |^ cither of foreign or domeftic trade, cannot well chap*. be a much more intricate bufinefs than another. Thirdly, The wages of labour in different occupations vary with the conftancy or inconftancy of employment. Employment is much more conftant in fome. trades than in others. In the greater part of ma- nufadtures, a journeyman may be pretty furc of employment almoft every day in the year that he is able to work. A mafon or bricklayer, on the contrary, can work neither in hard froft nor. in foul weather, and his employment at all othef" times depends upon the occafional calls of his cuftomers. He is liable, in confequence, to be frequently without any. What he earns, there- fore, while he is employed, muft not only main-' tain him while he is idle, but make him fome compenfation for thofe anxious and defponding moments which the thought of fo precarious a fituation muft fometimes occafion. Where the computed earnings of the greater part of manu- faflurers, accordingly, are nearly upon a level with the day wages of common labourers, thofe of mafons and bricklayers are generally from one half more to double thofe wages. Where common labourers earn four and five ihillings a week, mafons and bricklayers frequently earn feven and eight; where the former earn fix, the latter often earn nine and ten, and where the former earn nine and ten, as in London, the lat- ter coiiimonly earn fifteen and eighteen. No fpecies of (killed labour, however, fcems more eafy to learn than that of mafons and bricklayers. Chairmen l$8 THfi NATURE AND CAUSES OF BOOK Chairmen in London, during the fummer fcafon, are faid fonnecimes to be employed as brick- layers. The high wages of thofe workmcHj therefore, are not fo much the recompence of their (kill, as the compenfation for the incon- ftancy of their employment. A HOUSE carpenter feems to exercife rather a nicer and a more ingenious trade than a mafon. In moft places, however, for it is not univerfally fo, his day-wage^ are fomewhat lower. His em- ployment, though it depends much, does not depend fo entirely upon the occafional calls of his cuftomersi and it is not liable to be interrupted by the weather. V,^ '^N the trades which generally afford con- ftar e iip^of Tient, happen in a particular place not to do fo the wages of the workmen always rife a good deal above their ordinary proportion to thofe of common labour. In London almoft all journeymen artificers are liable to be called upon and difmilTed by their mafters from day to day, and from week to week, in the fame man- ner as day-labourers in other places. The lowefl order of artificers, journeymen taylors, accord- ingly, earn there half a crown a day, though eighteen pence may be reckoned the wages of common labour. In fmall towns and country villages, the wages of journeymen taylors fre- quently fcarce equal thofe of common labours but in London they are often many weeks with- out employment, particularly during the fum- mer. When THE WEALTH OF NATIONS. I When the inconftancy of employment is com- c ha bined with the hardlhip, difagreeablcncfs, and i dirtinefs of the work, it fometimes raifes the wages of the moft common labour above thofe of the moft (kilful artificers. A collier working by the piece is fuppoied, at Newcaftle, to earn commonly about double, and in many parts of Scotland about three times the wages of com- mon labour. His high wages arife altogether from the hardfhip, difagreeablenefs, and dirti- nefs of his work. His employment may, upon moft occafions, be as conftant as he plcafes. The coal-heavers in London ex^rcife a trade which in hardfhip, dirtinefs, and difagreeablenefs, almoft equals that of colliers ; and from the unavoidable irregularity in the arrivals of coal- fhips, the employment of the greater part of them is neceflarily very inconftant. If colliers, therefore, commonly earn double and fiple the wages of common labour, it ought not to feem unreafonable that coal-heavers fhould fometii'K' earn four and five times thofe wages. In t'le enquiry made into their condition a few y£ars ago, it was found that at tlie rate at which they were then paid, they could earn from fix to ten Ihillings a day. Six (hillings are about four times the wages of common labour in London, and in every particular trade, the lo\^eft com- mon earnings may always be confidered as thofe of the fiir greater number. How extravagant fdever thofe earnings may appear, if they were more than liiRcient to compenfate all the dif- agrecablc circurriftances of the bufinefs, there 5 would 59 p. ^^*t-^ i6o THE NATURE AND CAUSES OF BOOK would foon be fo great a number of competit6rs as, in a trade which has no excluHve privilege, would quickly reduce them to a lower rate. The conftancy or inconflancy of employment ca^ not afFeft the ordinary profits of (lock in any particular trade. Whether the ftock is or is not conftantly employed depends, not upon the trade, but the trader. { FouRTHT.v The wages of labour vary ac- cording to the finali or great truft which mud be f epofcd in the workmen. ^>^ The wages of goldfmiths and jewellers are every-where fuperior to thofe of many other workmen, not only of equal, but of much fupe- perior ingenuity j on account of the precious ma- terials with which they are intrufted. We truft our health to the phyfician ; our for- tune, and fometimes our life "nd reputation, to the lawyer and attorney. Such confidence coul ' not fafely be repofed in people of a very meai; or low condition. Their reward muft be fuch, therefore, as may give them that rank in the fo- cit.y which fo important a truft requires. The long time and the great expence which muft be laid out in their education, when combined with this circumftancc, neceflarily enhance ftill further the price ^ f their labour. ' ^ When a. r<";fon employs only his own ftock in trade, -'^eie is no truft j and the credit which he may ^ : from other people depends, not upon the nature of 1iis tr^de, but upon»their opinion of his fortune, probity, and prudence. The dif- ferent THE WEALTti OF NATIONS, / i6f fefcnt rates of v ofit, therefore, in the different chap. branches of trade, jannot arife from the different degrees of trult repofed irt the traders. Fifthly, Tlic wages of labour in different employments vary according to the probability or improbability of fuccefs in them. The probability that any partic^ular perfon fliall ever be qualified for the employment to which he is educated, Is very different in different occu- pations. In the greater part of mechanic trades, fuccefs is almoft certain; but very uncertain in the liberal profeffions. Put your fon apprentice to a (hoeinakcr, there is little doubt of his learn- ing to make a pair of (hoes : but fend him to (ludy the law, it is at lead twenty ♦^o one if evef he makes fuch proficiency as will enable him to live by the bufinefs. In a perfedlly fair lottery, ihofe who draw the prizes ought to gain all thaC is loft by thofe who draw the blanks. In a pro- feffion where twenty fail for one that fucceeds, that one ought to gain all that fliould have been gained by the unfuccefsful twenty. The coun- fellor at law who, perhaps, at near forty years of age, begins to make fomething by his pro- feffion, ought to receive the retribution, not only of his own fo tedious and expenfive edu- cation, but of that of more than twenty others wha are never likely to make any thing by it. How extravagant foever the fees of coun- fellors at law may fometimes appear, their real [■etribution is never equal to this. Compute in any particular place what is likely to be an- nually gained, and what is likely to be an- Vol, I. M nually i6a B O THE NATURE AND CAUSES OP o K niially fpcnt, by all the difFcciit workmen in any common trade, fudi as ti ..r o; Oiocmakrrs or weavers, and you will find that the former fum will generally exceed the latter. Kiit make the fume computation with regard to all the counfel- lors and Oudents of law, in all the differenc inns of court, and you will tind that their annual gains bear but a very fmall proportion to their an- nual expence, even though you rate the former as high, and the latter as low, as can well be done. The lottery of the law, therefore, is very far from being a perfc6lly f^ir lottery ; and that, as well as many other liberal and honourable pro- fcflions, is, in point of pecuniary gain, evidently under- recompenfed. 1'hose profeflions keep their level, however, with other occupations, and, notwithftanding thefe difcouragements, all the moft generous and liberal fpirits are eager to crowd into them. Two dif- ferent caufes contribute to recommend them. Firft, the defire of the reputation which attends upon fuperior excellence in any of them j and, fecondly, the natural confidence which every man has more or lefs, not only in his own abilities^ but in his own good fortune. To excel in any profefllon, in which but few arrive at mediocrity, is the moft decifive mark of what is called genius or fuperior talents. The public admiration which attends upon fuch dif- tinguifhed abilities, makes always a part of their reward; a greater or fmaller in proportion as it is higher or lower in degree. It makes a con- fiderabk part of that reward in the profeflion of phyfici V'-:r:.. • TilE WEALTH OP NATIONS. T idj phyfic; a Hill greater, perhaps, in that of lawi c H >v p. in poetry and philolbphy it makes almoft the whole. Thkre arc fome very agreeable and beautiful talents, of which the poflefllon commands a cer- tain fort of admiration j but of which the exer- cife for the fake of gain is confidercd, whether from reafon or prejudice, as a fort of public prof- titution. The pecuniary recompence, there- fore, of thofe who exercife them in this manner, muft be fufficicnt, not only to pay for the time, labour, and cxpence of acquiring the talents, but for the difcredit which attends the employ- ment of them as the means of fubfiftencc. The exorbitant rewards of players, opera- fingers, opera- dancers, &c. are founded upon thofe two principles j the rarity and beauty of the talents, and the difcredit of employing them in this manner. It feems abfurd at firft fight that we fhould defpife their perfons, and yet reward their talents with the molt profufe liberality. While we do the one, however, we muft of neceflity do the other. Should the public opinion or pre- judice ever alter with regard to fuch occupa- tions, their pecuniary recompence would quickly diminifh. More people would apply to them, and the competition would ^quickly reduce the price of their labour. Such talents, though far from being common, are by no means fo rare as is imagined. Many people poffefs them in great perfedion, who difdain to make this ufe of them J and many more are capable of acquiring M 2 them. •64 THJ NATURE AND CAOSES OP B 0^0 K them, if any thing could be made honourably Kmm*^- ■-» by them. The over weaning conceit which the greater part of men Lave of their own abilities, is an ancient evil remarked by the philofophers and moralifts of all ages. Their abfurd prefumption in their own good fortune, has been lefs taken notice of. It is, however, if pofTible, (till more univerfal. There is no man living, who, when in tolerable health and fpirits, has not fome fhare of it. The chance of gain is by every man more or lefs over- valued, and the chance of lofs is by moft men under-valued, and by fcarce any man, who is in tolerable health and fpirits, va- lued more than it is worth. That the chance of gain is naturally over- valued, we may learn from the univerfal fuccefa of lotteries. The world neither ever faw, nor ever will fee, a perfcdly fair lottery; or one in which the whole gain compenfated the whole lofsi bfccaufe the undertaker could make nothing by it. In the ftate lotteries the tickets are really not worth the price which is paid by the original fubfcribers, and yet commonly fell in the market for twenty, thirty, and fometimes forty per cent, advance. The vain hope of gaining fome of the great prizes is the fole caufe of this demand. The fobereft people fcarce look upon it as a folly to pay a fmall fum for the chance of gaining ten or twenty thoufand pounds ; though they know that even that fmall fum is perhaps twenty or thirty per cent, more than the chance is worth. In a lottery in yfhkh no prize exceeded twenty who THE WEALTH OF NATIONS. - i6j twenty pounds, though in other refpefts it ap- c h^a p. proached much nearer to a perfedlly fair one than the common ftate lotteries, there would not be the fame demand for tickets. In order to have a better chance for fome of the great prizes, fOiTie people purchafe feveral tickets, and others, fmall (hares in a ftill greater number. Therr is not, however, a more certain proportion in ma- thematics, than that the more tickets you ad- venture upon, the more likely you are to be a lofer. Adventure upon all the tickets in the lottery, and you lofe for certain ; and the greater the number of your tickets, the nearer you ap- proach to this certainty. t . . Thav the chance of lofs is frequently under- valued, and fcarce ever valued more than it is worth, we may learn from the very moderate profit of infurers. In order to make infurance, either from fire or fea-rifk, a trade at all, the common premium mull be fufficient toxompen- fate the common lofies, to pay the expence of management, and to afford fuch a profit as might have been drawn from an equal capital employed in any common trade. The perfon v;ho pays no more than this, evidently pays no more than the real value of the riik, or the lowed price at which he can reafonably expeft to infure it. But though many people have made a little money by infurance, very few have made a great fortune; and from this confideration alone, it fecms evident enough, that the ordinary balance of profit and lofs ^s not more advanta- geous in this, than in other common trades by M 3 which |66 THE NATURE AND CAUSES OF BOOK which (o many people make fortunes. Moderate, however, as the premium of infurance commonly is, many people defpife the rifle too much to care to pay ir. Taking the whole kingdom at an average, nineteen hojfes in twenty, or rather, perhaps, ninety-nine in a hundred, are not in^ fured from fire. Sea rifle is more alarming to the greater part of people, and the proportion of fliips infured to thofe not infured iis much greater. Many fail, however, at all fcafons, and even in time of war, without any infurance. This may fometimes perhaps be done without any imprudence. When a great company, or even a great merchant, has twenty or thirty fliips at fea, they may, as it were, infure one another. The premium faved upon them all, may more than compenfate fuch lofles as they are likely to meet with in the common courfe of chances. The negled of infurance upon fliipping, however, in the fame manner as upon houfes, is, in moft cafes, the effeft of no fuch nice calculation, but of mere thoughtlefs raflinefs and prefumptuous contempt of the rifle. - . The contempt of rifle and the prefumptuous hope of fuccefs, are in no period of life more a6live than at the age at which young people chufe their profeflions. How little the fear of misfortune is then capable of balancing the hope of good luck, appears ft:ill more evidently in the readinefs of the common people to enlift as foldicrs, or to go to fea, than in the eagernefs of thofe of better fafliion to enter into what are called the liberal profeflions. . , ' r , What ;-^ ' THE WEALTH OF NATIONS. 167 ' What a common foldier may lofe is obvious c ha p. enough. "Without regarding the danger, how- ever, young volunteers never enlift fo readily as at the beginning of a new war ; and though they have fcarce any chance of preferment, they figure to themfelves, in their youthful fancies, a thou- fand occafions of acquiring honour and diftinc- tion which never occur. Thefe romantic hopes make the whole price of their blood. Their pay is lefs than that of common labourers, and in a(5tual fervice their fatigues are much greater. The lottery of the lea is not altogether fo dif- advantageous as that of the army. The fon of a creditable labourer or ?irtificer may frequently go to fea with his father's confentj but if he enlifts as a foldier, it is always without it. Other people fee fome chance of his making fomething by the one trade: nobody but himfelf fees any of his making any thing by the other. The great admiral is lefs the objed of public admiration than the great general j and the higheft fuccefs in the fea fervice promifes a lefs brilliant for- tune and reputation tha ^ equal fuccefs in the land. The fame difference runs through all the inferior degrees of preferment in both. By the rules of precedency a captain in the navy ranks with a colonel in the army : but he does not rank with him in the common eftimation. As the great prizes in the lottery are lefs, the fmaller ones muft be more numerous. Common failors, therefore, more frequently get fome fortune and preferment than common fbldiersj and the hope of thofe prizes is what principally recopnmends M 4 the '*->- ■ y*.= . 163 THE NATURE AND CAUSES OF BOOK the trade. Though their CtilW and dexterity are ^* much fijperior to that of almoft any artificers, and though \ their whole life is one continual fcene of harddiip and danger, yet for all this dexterity and fi^ill, for all thofe hardfliips and dangers, while they remain in the condition of common Tailors, they receive fcarce any other recompence but the pleafure of exercifing the one and of furmounting the other. Their wages are not greater than thofe of common labourers ..t 1.1 <- jjo. t which regulates the rate of feamen's wages. As they are continually going from port to port, the m' nthly pay of thofe who fail from all the different ports of Great Britain, is more nearly upon r. level than that of ^ny other workmen in thofe different places ; and the rate of the port to and from which the greateft num- ber faii, that is, the port of London, regulates that of all the reft. At London the wages of the greater part of the different claffts of work- men aie about double thofe of the fame claffes at Edinburgh. But the failors who fail from the port of London feklom earn above three or four ihillings a month more than thofe who fail from the port of Le th, and the difference is fre- quently not fo great. In time of peace, and in the merchant fcrvice, the London price is from a guinea to about fcven and twenty (hillings the cakfidar month. A common labourer in Lon- don, at the race of nine or ten fhillings a week, may earn in the calendar mor.th from forty to five-and forty fliillings. The failor, indeed, over and abovi* his pay, is fupplied with provir ■ "" ' fions. of ad> people, to thei ranks o fchool ihips i failors tant pr< to extr not di( wages < wife w be of r very ui remarl^ of difa of labi head. In ordina the ce are ir the f reign THE WEALTH OF NATIONS. 169 fioivs. Their value, however, may not perhaps chap. always exceed the difference between his pay and that of the connmon labourer; and though it fometimes (hould, the excefs will not be clear gain to the Tailor, becaufe he cannot (hare it with his wife and family, whom he muft maintain out of his wages at home. -.. - ?. i >^ » The dangers and hair-breadth efcapes of a life of adventures, inftead of dilhearteiiing young people, feem frequently to recommend a trade to them. A tender mother, among the inferior ranks of people, is often afraid to fend her fon to fchool at a fca-port town, left the fight of the iTiips and the converfation and adventures of the failors ihould entice him to go to fea. The dif- tant profpefl of hazards, from which we can hope to extricate ourfelves by courage and addrefs, is not difagreeable to us, and does not raife the wages of labour in any employm.ent. It is other- wile with thofe in which courage and addrefs can be of no avail. In trades which are known to be very unwholefomc, the wages of labour are always remarkably high. Unwholefomenefs is a fpecies of difagreeablenefs, and its effects upon the wages of labour are to be ranked under that general head. In all the different employments of ftock, the ordinary rate of profit varies more or lefs with the certainty or uncertainty of the returns. Thefc are in general lefs uncertain in the inland than in the foreign trade, and in fome branches of fo- reign trade than in others ; in the trade to North America, for example, than in that to Jamaica. The tjo THE NATURE AND CAUSES OF BOOK The ordinary rate of profit always rifes more or '■ leis with the rifk. It does not, however, fcem to rife in proportion to it, or fo as to compenfate it conrjpletcly. Bankruptcies are moft frequent in the moft hazardous trades. The moft hazardous of all trades, that of a fmuggler, though when the adventure fucceeJs it is i'V-'^w^fe the moft profitable, is the infallible ro:»o cr. jankruptcy. The prefumptuous hope of fu. ij feems to acl here as upon all other occafions, and to entice fo many adventurers into thofe hazardous trades, that their competition reduces their profit below what is fuflicient to compenfate the rilk. To compenlate it completely,, the common returns ought, over and above the ordinary profits of flock, not only to make up for all occafional lolTes, but to afford a furplus profit to the adventurers of the fame nature with the profit of infurers. But if the common returns were fufficient for all this, bankruptcies would not be more frequent in thefe than in other trades. Of the five circumftances, therefore, which vary the wages of labour, two only affedt the profits of ftock; the agr?.eablenefs or difagree- ablenefs of the bufinefs, and the rilk or fecurity with which it is attended. In point of agree- ablenefs or difagreeublenefs, there is little or no difference in the far greater part *of the different employments of ftock ; but a great deal in thofe of labours and the ordinary profit of ftock, though it riles with the rifle, does not always feem to rife in proportion to it. It fhould fol- low from all this, that, in the fame fociety oi- :, .; neigh- X. TIIE WEALTH OF NATIONS. " 4||| neighbourhood, the average and ordinary rates c h^a p. of profit in the different employments of ftock fhould be more nearly upon a level than the pecuniary wages of the different forts of labour. They are fo accordingly. The difference be- tween the earnings of a common labourer and thofe of a well employed lawyer or phyfician, is evidently much greater than that between the ordinary profits in any two different branches of trade. T|je apparent difference, befides, in the profits of different trades, is generally a deception arifing from our not always didinguiHiing what ought to be confidered as wages, from what ought to be confidered as profit. Apothecaries profit is become a bye-word, denoting fomething uncommonly extravagant. This great apparent profit, however, is fre- quently no more than the reafonable wages of labour. The (kill of an apothecary is a much nicer and more delicate matter than that of any artificer whatever; and the truff which is repofed in him is of much greater importance. He is the phyfician of the poor in all cafes, and of the rich when the dillrefs or danger is not very great. His reward, therefore, ought to be fuicable to his fkill and his truft, and it arifes generally from the price at which he fells his drugs. But the whole drugs which the peft employed apothe- cary, in a large market town, wili fell in a year, may not perhaps coll him above thirty or forty pounds. Tho'.igh he fhould fell them, therefore, for three or four hundred, or at a thoufand per fent, profit, this may frequently be no I7t THE NATURE A^ID CAUSES OF no morc; than the reafonablc wages of his labour charged, in the only way in which he can charge them, upon the price of his drugs. The gveater part of the apparent profit is real wages difguifed in the garb of profit. • In a fmall fea-port town, a little grocer will make forty or fifty per cent, upon a Hock of a fingle hundred pounds, while a confiderable wholefale merchant in the fame place will fcarce make eight or ten per cent, upon a ftock of ten thoufand. The trade of the grocer may be ne- ceffary for the conveniency of the inhabitants, and die narrow nefs of the market may not admit the employment of a larger capital in the bufi- nefs. The man, however, mull not only live by his trade, but live by it fuitably to the quali- fications which it requires. Befides pofTeffing a little capital, he mufl be able to read, write, and account, and muft be a tolerable judge too of, perhaps, fifty or fixty different forts of goods, their prices, qualities, and the markets where they are to be had cheapefl. He muft have all the knowledge, in fhort, that is necefTary for a great merchant, which nothing hinders him from becoming but rhe want of a fufficient capital. Thirty or forty pounds a year cannot be con- (idered as too great a recompence for the labour of a perfon fo accomplifhed. Dedu6t this from the fcemingly great profits of his capital, and little more will remain, perhaps, than the ordinary profits of flock. The greater part of the ap» parent profit is^ in this cafe too^ real wages. THE WEALTH OF NATIONS. «rr The difFerfince between the apparent profit of c h a p. the retail and tiiat of the wholefale trade, is nnuch lefs in the capital titsn in fmall towns and coun- try villages. Where ten thoufand pounds can be crnploved in the grocery trade, the wages of the gror.r's labour ini it be a very trifling addi- tion to th. real profits of fo great a (lock. The apparent profits of the wealthy retailer, there- fore, are there more nearly upon a level with thofe of the wholefale merchant. It is upon this account that goods fc'u by ' retail are generally as cheap and frequently much cheaper in the capital than in fm^ll towns and country villages. Grocery goods, for example, are generally much cheaper; bread and butcher's meat frequently as cheap. It cofts no more to bring grocery goods to the great town than to the country village; but it cofts a great deal more to bring corn and cattle, as the greater part of them muft be brought from a much greater diftance. The prime coft of grocery goods, therefore, be- ing the fame in both pl.ices, they are cheapeft where the leaft pro^t is charged upon them. The prime coft of L-ead and butcher's meat is greater in the great town than in the country village ; and though the profit is lefs, therefore they are not alv;ays cheaper there, but often equally cheap. In Pjch articles as bread and butcher's meat, the fame caufe, which dimi- nifties apparent profit, increafes prime coft. The extent of the market, by giving employment to greater ftocks, dimin»l}ies apparent profit; buC by requiring fupplies from a greater diftance, it 1 2 increafes 174 THE NATURE increafcs prime cod. AND CAUSES OP This diminution of the >'il calcs, one and iiKieafe of the other fecni, in nearly to counter- balance one another, which is probably the reafon that, though the prices of corn and cattle are cor lonly very different in different parts of the ki.igdom, thofe of bread and butcher's meat are generally very nearly the lame through the greater part of it. ; Though the profits of ftock both in the wholefale and retail trade are generally lefs in the capital than in fmall towns and country vil- lages, yet great fortunes are frequently acquired from fmall beginnings in the former, and Icarce ever in the latter. In fmall towns and country villages, on account of the narrownefs of the market, trade cannot always be extended as (lock extends. In fuch places, therefore, though the rate of a particular perfon's profits may be very high, the fum or amount of them can never be very great, nor confequently that of his annual accum.ulation. In great towns, on the contrary, trade can be extended as ftock increafcs, and the credit of a frugal and thriving man increafcs much fafter than his rtock. His trade is extended in proportion to the amount of both, and the fum or amount of his profits is in proportion to the extent of his trade, and his annual accumulation in pro- portion to the amount of his profits. It feldom happens, however, that great fortunes are made even in great towns by any one regular, efta- blirhed, and well-known branch of bufinefs, but in confequence of a long life of induftry, frugality, and attention. Sudden fortunes, indeed, are fome- tiir.es gular 'THE WEALTH OF NATION'S.' I^f tunes made in inch places bv what is called the c h a f; traJe of fpecnlation. The fpcciilativc mcrcl-.;\r.t cxcrcifes no one regular, cfta'oliflied, or well- known branch of burincls. lie is a corn mercliant fiiis year, and a wine merchant the next, and a fiigar, tobacco, or tea mercliant the year after. He enters into every trade, when he forcfees that it is likely to be more than commonly profitable, and he quits it when h^ forcfees that its profits are likely to return j he level of other trades. His profits and iol ^'forc, can bear no re- gular proportion to u any one crtabliilied and well-known branc^i ui ufinefs. A bold ad- venturer may fometimes acquire a confiderable fortune by two or three fuccefsful fpeculations ; but is juft as likely to lofe one by two or three unfuccefsful ones. This trade can be carried on no where but in great towns. It is only in places of the mod extenfive commerce and cor- refpondence that the intelligence requifite for ic can be had. . i • : ^ ; The five circumftances above mentioned, though they occafion confiderable inequalities in the wages of labour and profits of flock, occafion none in the whole of the advantages and difad- vantages, real or imaginary, of the different em* ployments of either. The nature of thofe cir* cumflances is fuch, that they make up for a fmall pecuniary gain in fome, and counter-balance a great one in others. In order, however, that this quality may take place in the whole of their advantages or difadvantages, three things are requifite even 7 where ^ ^ IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I l!il.25 teitZl 12.5 U' liii 12.2 - 1 2.0 III lU u U |L6 Hiotographic Sdences Corporation 23 WEST MAIN STREET WEBSTER, N.Y. 14SS0 (716)872-4503 M THE NATlJRE AND CAUSES OP where there is the moft pcrfeft freedom. Fir(t, the employments mud be well known and long cftablilhed in the neighbourhood j fecondly, they muft be in their ordinary, or what may be called their natural ftare; and, thirdly, they muft be the fole or principal employments of thofe who oc- cupy them. First, this quality can take place only in thole employments which are well known, and have been long eftabliOied in the neighbou9« hood. Where all other circiimftances are equals wages are generally higher in new than in old trades. When a projector attempts to eftablilh a new manufadlure, he muft at firft entice his workmen*" from other employments by higher wages than they can cither earn in their own trades, or than the nature of his work would otherwife require, and a confiderable time muft pals away before he can venture to reduce them to the common level. ManufaAures for which the demand arifes altogether from fafhion and fancy, are continually changing, and feldom laft long enough to be confidered as old eftablifhed manufaflures. Thofe, on the contrary, for which the demand arifbs chieBy from ufe or ne- cefCty, are lefs liable to change, and the fame form or fabric may continue in demand for whole centuries together. The wages of labour, therefore, are likely to be higher in manufaftufcs of the former, than in thofe of the latter kind. Birmingham deals chiefly in manufadurcs of the former kind, Sheffield in thofe of the latter ^ and ^nd places, the na Th of any pradtic from ordina THE WEALTH OF NATIONS; m. ind the wages of labour in thofc two different c h a p. ^ places, are faid to be fuitable to this difference in the nature of their manu^dlures. The eftablifhrncnt of an)r new manufacture, of any new branch of commerce, or of tny new practice in agriculture, is always a fpeculation> from which the projector promifes himfelf extra- ordinary proBts. Thefe profits fometimes are very greats and fometimes, more frequently^ perhaps, they are quite otherwifej but in general they bear no regular proportion to thofe of other old trades in the neighbourhood. If the projefb fucceeds, they are commonly at firft very high. When the trade or pradlice becomes thoroughly eftablilhed and well known, the competition re- duces them to the level of other trades. Secondly, This equality in the whole of the advantages and difadvantages of the different em- ployments of labour and flock, can take place only in the ordinary, or what may be called the natural date of thofe employments. The demand for almofl every diiferent fpecies of labour is fometimes greater and fometimes lefs than ufual. In the one cafe the advantages of the employment rife above, in the other they fall below the common level. The demand fpr country labour is greater at hay-time and harvel!:, than during the greater part of the year; and wages rife with the demand; In time of war, when forty or fifty thoufand failors are forced from the merchant fervice into that of the king, the demand for failors to merchant (hips necef- (arily rifes with their fcarcity^ and their wages Vol. h N upon X. I7» THE NATURE AND CAl/SES OF upon I'uch occafions commonly rife from a guinea and feven-and- twenty fhilling?, to forty Shillings and three pounds a month. In a decaying ma- nufafture, on the contrary, many workmen, ra- ther than quit their old trade, are contented with fmaller wages than would otherwife be fuiuble to the nature of their employment. The profits of ftock vary with the price of the commodities in which it is employed. As the price of any commodity rifes above the ordi^ nary or average rate, the profits of at leaft fome part of the ftock that is employed in bringing it to market, rife above their proper level, and as It falls they fink below it. All commodities are more or lefs liable to variations of price, but fome are much more fo than others. In all commodities which are produced by human in- duftry, the quantity of induftry annually cm- ployed is neceffarily regulated by the annual de- mand, in fuch a manner that the average annual produce may, as nearly as polTible, be equal to the average annual confumption. Tn fome em- ployments, jt has already been erved, the fame quantity of induftry will always produce the fame, or very nearly the fame quantity of commodities. In the linen or woollen manu^ fafbures, for example, the fame number of hands •will annually work up very nearly the fame quantity of linen and woollen cloth. The varia- tions in the market price of fuch commodities, therefore, can arife onVy from fome accidental variation in the demand. A public mourn*ng raifes the price of black cloth. But as the demand for THE WEALTH OF NATIONS. •7^ for moft forts of plain linen and woollen cloth is c h a p; pretty uniform, fo is likewife the price. But there :ire other employments in which the fame quantity of indudry will not always produce the fame quantity of commodities. The fame quantity of induftry, for example, will, in dif- ferent years, produce very different quantities of corn, wine, hops, fugar, tobacco, &c. The price of fuch commodities, therefore, varies not only with the variations of demand, but with the much greater and more frequent variations of quantity* and is confequently extremely flu6tuating. But the profit of fome of the dealers muft neceflarily flufbuate with the price of the commodities. The operations of the fpeculative merchant are prin- cipally employed about fuch commodities. He endeavours to buy them up when he forefees that their price is likely to rife, and to fell them when it is likely to fall. Thirdly, This equality in the whole of the ad- vantages and difadvantages of the different em- ployments of labour and flock, can take place only in fuch as are the fole or principal employ- ments of thofe who occupy them. When a perfon derives his fubfiflence from one employment, which does not occupy the greater part of his time j in the intervals of his leifure he is often willing to work at another for lefs wages than would otherwife fuit the nature of the employment. There flill fubfifls in many parts of Scotland a fct of people called Cotters or Cottagers, though they were more frequent fome years ago N 2 than tfo tHE NATURE AND CAUSES OP than they are now. They are a fort of out- fervants of the landlords and farmers. The ufual reward which they receive from their mallei's is a houfe, a fmall garden for pot herbs, as much grafs as will feed a cow, and, perhaps, an acre or two of bad arable land. When their mafter has occafion for their labour, he gives them, befides, two pecks of oatmeal a week, worth about fixteen pence fterling. During a great part of the year he has little or no occafion for their labour, and the cultivation of their own little poiieflion is not fufficient to occupy the time which is left at their own difpofal. When fuch occupiers were more numerous than they are at prefent, they are faid to have been willing to give their fpare time for a very fmall recom- pence to any body, and to have wrought for lefs wages than other labourers. Ih ancient times they feem to have been common all over Eu* rope. In countries ill cultivated and worfe in- habited, the greater part of landlords and farm- ers could not otherwife provide themfelves with the extraordinary number of hands, which coun- try labour requires at certain feafons. The daily or weekly recompence which fuch labourers oc- cafionally received from their mailers, was evi- dently not the whole price of their labour. Their fmall tenement made a confiderable part of it. This daily or weekly recompence, however, feems to have been confidercd as the whole of it, by many writers who have coUeded the prices of labour and provifions in ancient times, and who have taken pleafurc in reprcfcnting both as wonderfully low* .t: f >- THE WEALTH OP NATIONS. iff The produce of fuch labour comes frequently chap. cheaper to market than would otherwife be fuic- able to its nature. Stockings in many parts of Scotland are knit much cheaper than they can any-where be wrought upon the loom. They are the work of fervants and labourers^ who derive the principal part of their fubfiftence from fome other employment. More than a thoufand pair of Shetland ftockings are annually imported into Lejth, of which the price is from five pence to feven pence a pair. At Learwick, the fmall ca- pital of the Shetland iflands, ten pence a day^ I have been alTured, is a common price of com- mon labour. In the fame iflands they knit worfted (lockings to the value of a guinea a pair and upwards. '"The fpinning of linen yarn is carried on in Scotland nearly in the fame way as the knitting of (lockings, by (ervants who are chieBy hired for other purpo(es. They earn but a very fcanty fubfiftence, who endeavour to get their whole livelihood by either of thofe trades. In moft parts of Scotland (he is a good fpinner who can earn twenty pence a week. In opulent countries the market is generally fo extenfive, that any one trade is fufiicient to employ the whole labour and (lock of thofe who occupy it. Indances of people's living by one employment, and at the fame time deriving fome little advantage from another. Occur chiefly in poor countries. The following inilance, how- ever, of fomething of the fame kind is to be found in the capital of a very rich one. There N 3 ia Its THE NATURE AND CAUSES OP BOOK Is no city in Europe, I believe, in which houfe. rent is dearer than in London, and yet I know no capital in which a furniOied apartment can be hired fo cheap. Lodging is not only much cheaper in Londqn than in Paris; it is much cheaper than in Edinburgh of the fame degree of goodnefsj and what may feem extraordinary^ the dearnefs of houfe-rent is the caufe of the cheapnefs of lodging. The dearnefs of houfe- rent in London arifes, not only from thofe caufes which render it dear in all great capitals, the dearnefs of labour, the dearnefs of all the ma- terials of building, which muft generally be brought from a great diftance, and above all the dearnefs of ground-rtfnt, every landlord afting the part of a monopolift, and frequently exa but the whole expence of the family. P A R T ir. Inequalities occaftoned by the Policy of Europe, C U C H are the inequalities in the whole of the advantages and difad vantages of the dif- ferent employments of labour and (lock, which the defed: of any of the three requifites above- mentioned mud occafion, even where there is the mod perfect liberty. But the policy of Eu- rope, by not leaving things at perfefl liberty, occafions other inequalities of much greater im- portance. It does this chiefly in the three following ways. Firft, by reftraining the competition in fome employments to a fmaller number than would otherwife be difpofed to enter into them; fecondly, by increafing it in others beyond vhat it naturally would be ; and, thirdly, by obftra ic- ing the free circulation of labour and (lock, both from employment to employment, and from place to place. :. -^:.,. -i^i, ;^-« '-. .'-' •?v.,,v First, The policy of Europe occafions a very important inequality in the whole of the advan- tages and difadvantages of the different employ- ments of labour and flock, by reflraining the N 4 competition lt4 THE NATURE AND CAUSES OP BOOK competition in fome empluyments to a fmallfr number than might otherwifc be difpofed to enter into them. The exclufive privileges of corporations arc the principal means it makes ufc of for this purpofe. The exclufive privilege of an incorporated trade neceflfarily rellr^ins the competition, in the town where it is eftablifhed, to thofc who are free of the trade. To have ferved an appren- ticcfliip in the town, under a mailer properly qualified, is commonly the neceflfary requifite for obtaining this freedom. The bye-laws of the corporation regulate fometimes the number of apprentices which any mafter is allowed to have, and almoft always the number of years which each apprentice is obliged to ferve. The inten- tion of both regulations is to reftrain the compe- tition to a much fmaller number than might otherwife be difpofed to enter into the trade. The limitation of the number of apprentices re- ftrains it direAly. A long term of apprenticefliip reftrains it more indiredlly, but as efFcdtually, by increafing the expence of education. In Sheffield no mafter cutler can have more than one apprentice at a time, by a bye-law of the corporation. In Norfolk and Norwich no mader weaver can have more than two appren- tices, under pain of forfeiting five pounds a month to the king. No mafter hatter can have more than two apprentices any-where in Eng- land, or in the Engli/h plantations, under pain of forfeiting five pounds a months half to the THE WEALTH OP NATIONS. 1^5 king, and half to him who (hall fuc in any court c h^a p. of record. Both thefe regulations, though they have been confirmed by a public law of the kingdom, are evidently didlated by the fame corporation fpirit which enabled the bye-law of Sheffield. The filk weavers in London had fcarce been incorporated a year when they cn- afted a bye- law, reftraining any mailer from having more than two apprentices at a timp. It required a particular a£b of parliament to refcind this bye-law. Seven years feem anciently to have been, all over Europe, the ufual term eftablifhed for the duration of apprenticclhips in the greater part of incorporated trades. All fuch incorporations were anciently called univerfities; which indeed is the proper Latin name for any incorporation whatever. The univerfity of fmiths, the uni- verfity of taylors, &c. are exprelTions which we commonly meet with in the old charters of an- cient towns. When thofe particular incorpora- tions which are now peculiarly called univer- fities were firft eftablifhed, the term of years which it was neceiTary to ftudy, in order to ob^ tain the degree of mafter of arts, appears evi- dently to have been copied from the term of apprenticelhip in cotnnion trades, of which the incorporations were much more ancient. As to have wrought fcven years under a mafter pro- perly qualified, was necefTary, in order to entitle any perfon to become a mafter, and to have him- felf apprentices in a common trade; fo to have ftudied fevcn years under a mafter properly qua- . lified. i86 THE NATURE AND CAUSES OP BOOK lified, was necefliiry to encide him to become a mafter, teacher, or doctor (words anciently fyno- nimous) in the liberal arts, and to have fcholars or apprentices (words likewife originally fyno- nimous) to ftudy under him. By the 5th of Elizabeth, commonly called the Statute of Apprenticefliip, it was enaftcd, that no perfon (hould for the future exercife any trade, crafty or myftery at that time exercifed in Eng. land, unlefs he had previoufly ferved to it an apprenticelhip of feven years at leaft ; and what before had been the bye-law of many particular corporations, became in England the general and public law of all trades carried on in mar- ket towns. For though the words of the llatute are very general, and feem plainly to include the whole kingdom, by interpretation its operation has been limited to market towns, it having been held that in country villages a perfon may exercife feveral different trades, though he has not ferved a feven years apprenticelhip to each, they being neceflary for the conveniency of the inhabitants, and the number of people frequently not being fufficient to fupply each with a par- ticular fet of hands. »* By a (Iridt interpretation of the words too the operation of this llatute has been limited to thofe trades which were eftablifhed in England before the 5th of Elizabeth, and has never been ex- tended to fuch as have been introduced fince that time. This limitation has given occafion to feveral diftindiions which, confidered as rules of police, appear as fooliih as can well be ima- gined. •{ THE WEALTH OF NATIONS. t«7 gined. It has been adjudged, for example, that chap. a coach-maker can neither himfelf make nor ^' employ journeymen to make his coach - wheels ; but mud buy them of a mailer wheel-wright s this latter trade having been exercifcd in Eng- land before the 5th of Elizabeth. But a wheel- wright, though he has never ferved an appren- ticeihip to a coach- maker, may either himfelf make or employ journeymen to make coaches; the trade of a coach-maker not being within the (latute, becaufe not exercifed in England at the time when it was made. The manufactures of Manchefter, Birmingham, and Wolverhampton, are many of them, upon this account, not within the ftatute ; not having been exercifed in England before the 5th of Elizabeth. In France, the duration of apprenticefliips is different in different towns and in different trades. In Paris, five years is the term required in a great number j but before any perfon can be qualified to exercife the trade as a mailer, he mull, in many of them, fervc five years more as a journeyman. During this latter term he is called the companion of his mailer, and the term . itfelf is called his companionlhip. In Scotland there is no general law which re- gulates univerfally the duration of apprentice- Slips. The tern, is different in different corpo- rations. Where it is long, a part of it may generally be redeemed by paying a fmall fine. In moll towns too a vf»/ fmall fine is fufficient to purchafe the freedom of any corporation. The weavers of linen and hempen cloth, the principal raanu- Its THB NATURE AND CAUSES OF BOOK manufadurcs of the country, as well as all other '' artificers fubfervient to them, wheel- makers, reel- makers, &c. may exercife their trades in any town corporate without paying any fine. In all towns corporate all perfons are free to fell butcher's meat upon any lawful day of the week. Three years is in Scotland a common term of appren- ticefhip, even in fomc very nice trades; and in general I know of no country in Europe in which corporation laws are (o little oppreilive. '-. < The property which every man has in his own labour, as it is the original foundation of all other property, fo it is the moft facred and in- violable. The patrimony of a poor man lies in the (Irength and dexterity of his hands; and to hinder him from employing this ftrength and dexterity in what manner he thinks proper with- out injury to his neighbour, is a plain violation of this mod facred property. It is a manifeft encroachment upon the juft liberty both of the workman, and of thufe who might be difpofed to employ him. As it hinders the one from working at what he thinks proper, fo it hinders the others from employing whom they think proper. To judge whether he is fit to be em- ployed, may furely be trufted to the difcretion of the employers whofe intcreft i; fo much concerns. The affeded anxiety of the law-giver, left th^y Ihould employ an improper perfon, is evidently as impertinent as it is opprefiive. The inftitution of long apprenticefhips can give no fecurity that infufficient workmanfhip fhall not frec^uently be expofcd to pvblic fale. When this i< X. ITHE WEALTH OF NATIONS. ' tig is done it is generally the cffcft of fraud, and c h a p- not of inability i and the longed: apprenticefliip w can give no fecurity againft fraud. Quite dif- ferent regulations arc neceffary to prevent this abufe. The fterling mark upon plate, and the ftamps upon linen and woollen cloth, give the purchafer much greater fecurity than any Ilatute of apprenticefhip. He generally looks at thefe, but never thinks it worth while to enquire whe- ther the workmen had ferved a feven years ap- prenticefhip. The inftitution of long apprenticefhips has no tendency to form young people to induftry. A journeyman who works by the piece is likely to be induftrious, becaufe he derives a benefit from every exertion of hi'i induftry. An ap- prentice is likely to be idle^ and almoft always is fb, becaufe he has no immediate intereft to be otherwife. In the inferior employments, the fweets of labour confift altogether in the recom- pence of labour. They who are fooneft in a condition to enjoy the fweets of it, are likely fooneft to conceive a relifh for it, and to acquire ' the early habit of induftry. A young man na- turally conceives an averfion to labour, when for a long time he receives no benefit from it- The boys who are put out apprentices from public charities are generally bound for more than the ufual number of years, and they generally turn out very idle and worthlefs. - Apprenticeships were altogether unknown to the ancients. The reciprocal duties of mafter and apprentice make a confiderable article ia ^ every t9e» THE NAIURE AND CAUSES OP BOOK every modern code. The Roman law is per- ' fcftly filent with regard to them. I know no Greek or Latin word (I might venture, I be- lieve, to affert that there is none) which ex- prefles the idea we now annex to the word Ap- prentice, a fervant bound to work at a particular trade for the benefit of a mafter, during a term of years, upon condition that the mafter ihall teach him that trade. ^*^'^^ Long apprenticeihips are altogether unne- ceflary. The arts, which are much fuperior to common trades, fuch as thofe of making clocks and watches, contain no fuch myftery as to re- quire a long courfe of inftrudtion. The firft invention of fuch beautiful machines, indeed^ and even that of fome of the inftruments em- ployed in making them, muft, no doubt, have been the work of deep thought and long time, and may juftly be confidered as among the hap- pieft efforts of human ingenuity. But when both have been fairly invented and are well un- derftood, to explain to any young man, in the completed manner, how to apply the inftru- ments and how to conftrudt the machines, can- not well require more than the leflbns of a few weeks : perhaps thofe of a few days might be iufficient. In the common mechanic trades, thofe of a few days might certainly be fufficient. The dexterity of hand, indeed, even in common trades, cannot be acquired without much prac- ^ce and experience. But a young man would pradife with much more diligence and attention, if from the beginning he wrought as a journey- man. THE WEALTH OF NATIONS. I#^ man, being paid in proportion to the little work c ha p, which he could execute, and paying in his turn for the mate: i which he might fometimes fpoil through awk'^i^dnefs and inexperience. His education would generally in this way be more effeftual, and always lefs tedious and expenfive* The, mafter, indeed, would be a lofer. He would lofe all the wages of the apprentice, which he now faves, for fcven years together. In the end, perhaps, the apprentice himfelf would be a lofer. In a trade fo eafily learnt he would have more competitors, and his wages, when he came to be a complete workman, would be much lefs than at prefent. The fame increafe of competi- tion would reduce the profits of the mailers as well as the wages of workmen. The trades, the crafts, the . myfteries, would all be lofers. But the public would be a gainer, the work of all artificers coming in this way much cheaper to market. ■'<■:. -f -■■; - *./-,v,fc, ;;.;,/ ^ ._••, :,^-v^ It is to prevent this redudlion of price, and confequently of wages and profit, by reftraining that free competition which would moft certainly occafion it, that all corporations, and the greater part of corporation laws, have been eftablifhed. In order to ereft a corporation, no other autho- rity in ancient times was requifite in many parts of Europe, but that of the town corporate in which it was edablifhed. In England, indeed, a charter from the king was likewife necelTary. But this prerogative of the crown feems to have been referved rather for extorting money from the fubjedl, than for the defence of the common ^ liberty 1. I9< THB NATURE AND CAUSES OP BOOK liberty againft fuch opprefllve monopolies. Upod paying a fine Co the king, the charter feems ge to prevent the market from being over-ftocked, as they commonly exprefs it, with their Qwn particular ipecies of induflry ; which is in reality to keep it always under-ftocked. Each clafs was eager to eflablifh regulations proper for this purpofe, and, provided it was al- lowed to do fo, was willing to confent that every other clafs fhould do the fame. In confequence of fuch regulations, indeed, each clafs was obliged to buy the goods they had occafion for * See Madox Firmar Surgi« p, 26, Sec, *'J ■:«. fr6m THE WEALTtt OF NATIONS. ^j from every other within the town, fomewhat c h^a f. dearer than they otherwife might have done. But in recompence, they were enabled to fell their own juft as much dearer { fo that fo far it was as broad as long, as they fay j and in the dealings of the diflFerent clalfes within the town with one another, none of them were lofers by thefe regulations. But in their dealings with the country they were all great gainers ; and in thele latter dealings confifts the whole trade which fup- ports and enriches every town. Every town draws its whole fubfiftence, and all the materials of its induftry, from the country. It pays for thefe chiefly in two ways: firft, by fending back to the country a part of thofe ma- terials wrought up and manufactured j in which cafe their price is augmented by the wages of the workmen, and the profits of their mafters or immediate employers: fecondly, by fending to it a part both of the rude and manufactured pro- duce, either of other countries, or of diftant parts of the fame country, imported into the town; in which cafe too the original price of thofe goods is augmented by the wages of the carriers or failors, and by the profits of the mer- chants who employ them» In what is gained upon the firft of thofe two branches of com- merce, confifts the advantage which the town makes by its manufactures; in what is gained upon the fecond, the advantage of its inland and foreign trade. The wages of the workmen, and the profits of their different employers, make up the whole of what is gained upon both. Whac- VoL. I. O cvei> 1^ THE NATURE AND CAUSES OP BOOK ever regulations, therefore, tend to increafe theft wages and profits beyond what they otherwife would be, tend to enable the town to prrchafe, with a fmaller quantity of its labour, the produce of a greater quantity of the labour of the country. They give the traders and artificers in the town an advanuge over the landlords, farmers, and labourers in the country, and break down that natural equality which would otherwife take place in the commerce which is carried on between them. The whole annual produce of the la- bour of the fociety is annually divided between thofe two different fcts of people. By means of thofe regulations a greater fhare of it is given to the inhabitants of the town than would other- wife fall to them J and a lefs to thofe of the country. The price which the town really pays for the provifions and materials annually imported into it, is the quantity of manufadbures and other goods annually exported from it. The dearer the latter are fnld, the cheaper the former are bought. The induftry of the town becomes more, and that of the country lefs advanta- geous. > ... r ^^ That the induftry which is carried on in town is, every- where in Europe, more advan- tageous than that which is carried on in the country, without entering into any very nice computations, we may fatisfy ourfelves by one very fimple and obvious obfervation. In every country of Europe we find, at leafl, a hundred people who have acquired great fortunes from vv ii sy > ' > fhiall I THE WEALTH OF NATIONS. >9S Crnall beginnings by trade and manufadures, the c h a p. induflry which properly belongs to towns, for one who has done (o by that which properly be- longs to the country, the raifing of rude pro- duce by the improvement and cultivation of land, Induftry, therefore> mu{t be better rewarded, the, wages of labour and the profits of (lock muft evidently be greater in the one fituation than in the other. But flock and labour naturally feek the mod advantageous employment. They na- ' turally, therefore, refort as much as they can to the town, and defert the country. y» .f^^*if f^-. f The inhabitants of a town, being collefted into one place, can eafily combine together. The moft infignificant trades carried on in towns have accordingly, in feme place or other, been incorporated i and even where they have never been incorporated, yet the corporation fpirit, the jealoufy of ftrangers, the averfion to take appren- tices, or to communicate the fecret of their trades generally prevail in them, and often teach theni, by voluntary alTociations and agreements, to prevent that free competition which they cannot prohibit, by bye-laws. The trades which employ but a fmall number of hands, run mod eafily into fuch combinations. Half a dozen wool- combers, perhaps, are necefTary to keep a thoufand fpinners and weavers at work. By combining not to take apprentices, they can not only engrofs the employment, but reduce the whole manu- fadure into a fort of flavery to themfelves, and raife the price of their labour much above what is due to the nature of their work. . , O 2 Th£ 19^ rut NATURE AND CAUSES OF T^E inhabitants of the country, difperfed in dillant places, cannot eafily combine together. They have not only never been incorporated, but the corporation fpiric never has prevailed among them. No apprenticefhip has ever been thought neceflTary to qualify for husbandry, the great trade of the country. After what are called the fine arts, and the liberal profeflTions, how- ever, there is perhaps no trade which requires fo great a variety of knowledge and experience. The innumerable volumes which have been writ- ten upon it in all languages, may fatisfy us, that among the wifeft and moft learned nations, it has never been regarded as a matter very eafily vnderftood. And from all thofe volumes we ihall in vain attempt to coUedt that knowledge of its various and complicated operations, which IS commonly pofielTed even by the common far- mer; how contemptuoufly Ibever the very con- temptible authors of fome of them may fome- times aflPcdt to fpeak of him. There is fcarce any common mechanic trade, on the contrary, of which all the operations may not be as com- pletely and diftindtly explained in a pamphlet of a very few pages, as it is poflible for words il- luftrated by figures to explain them. In the hiftory of the arts, now publiHiing by the French academy of fciences, feveral of them arc ac- tually explained in this manner. The direc- tion of operations, befides, which mufl be va- ried with every change of the weather, as well as with many other accidents, requires much more judgoient and difcretion, than that of thofe «(V. ^_, ac- iircc- va- wcfl luch It of Ithofe THE WEALTH OP NATIONS. . ^ „ ofc which arc always the fame, or very nearly chap* the fame. ^' Not only the art of the farmer, the gene^al direftion of the operations of hufbandry, but many inferior branches of country labour, require much more (kill and experience than the greater part of mechanic trades. The man who works upon brafs and iron, works with inftruments and upon materials of which the temper is always the fame, or very nearly the fame. But the man whq ploughs the ground with a team of horfes or oxen* works with inftruments of which the health, ftrength, and temper, are very different upon dif- ferent occalions. The condition of the materials which he works upon too is as variable as that of the inftruments which he works with, and both require to be managed with much judgment and difcretion. The common ploughman, though generally regarded as the pattern of ftupidity and ignorance, is feldom defective in this judg- ment and difcretion. He is lefs accuftomedj indeed, to focial intercourfe than the mechanic who lives in a town. His voice and language are more uncouth and more difficult to be un.> derftood by thofe who are not ufed to them. His underftanding, however, being accuftomed to confider a greater variety of objedls, is generally much fuperior to that of the other, whofe whole attention from morning till night is commonly occupied in performing one or two very Ample operations. How much the lower ranks of people in the country are really fuperior to thofe of the town, is well known to every man whom either O ^ bufinefs I9t THE NATURE AND CAUSES OP bufinefs or curiofity has led to converie much with both. In China and Indoftan accordingly both the rank and the wages of country labourers trc faid to be fuperior to thofe of the greater part of artificers and manufaflurcrs. They would probably be fo every- where, if corporation laws and the corporation fpirit did not prevent it. The fuperiority which the induftry of the towns has every- where in Europe over that of the country, is not altogether owing to corporations and corporation laws. It is fupported by many other regulations. The high duties upon foreign manufactures and upon all goods imported by alien merchants, all tend to the fame purpofe. Corporation laws enable the inhabitants of towns to raife their prices, without fearing to be under- fold by the competition of their own country- men. Thofe other regulations fccurc them equally againft that of foreigneis. The en^ hancement of price occafioncd by both is every- where finally paid by the landlords, farmers, and labourers of the country, who have feldom op- pofed the eftablifliment of fuch monopolies. They have commonly neither inclination nor fitnefs to enter into combinations ; and the clamour and fophiftry of merchants and manufacturers eafily perfuade them that the private intereft of a parr, and of a fubordinate part of the fociety, is the general intereft of the whole. ; In Great Britain the fuperiority of the Induftry of the towns over that of the country, feems to have been greater formerly than in the prefent times. The wages of country labour approach -. -r- * ^ nearer nc X. by THE WEALTH OF NATtONS, .T . * l»9 f Dearer to thofe of manufadluring labour, and the c h^a p. proBcs of (lock employed in agriculture to thofe of trading and manufadluring (lock, than they are faid to have done in the lad century, or in the beginning of the prefent. This change may be regarded as the ncccfTary, though very late confequence of the extraordinary encouragement given to the induftry of the towns. The ftock accumulated in them comes in time to be {o great, that it can no longer be employed with the ancient profit in that fpecies of induftry which is peculiar to them. That induftry has its limits like every other i and the increafe of ftock, by increafing the competition, necefla- rily reduces the profit. The lowering of profit in the town forces out ftock ^o the country, where, by creating a new demand for country labour, it neceftarily raifes ks wages. It then ipreads itfelf, if I may fay fo, over the face of the land, and by being employed in agriculture is in part reftored to the country, at the expence of which, in a great meafure, it had originally been accumulated in the town. That every- where in Europe the greateft improvements of the country have been owing to fuch overflow- ings of the ftock originally accwnulated in th^ towns, I fliall endeavour to ftiew hereafter j aqd at the fame time to demonftrate, that though Ibme countries have by this courfe attained to a confiderable degree of opulence, it is in itfelf neceflarily flow, uncertain, liable to be difturbcd and interrupted by innumerable accidents, and in every refpe(5k contrary to the order of nature .. r . 4 . and Md ■V ft THS NATURE AND CAUSES Of and of reafon. The imerefti, prejudices, liWB* and cuftoms which have given occafioo to it, I (hall endeavour to explain as fully and diftin^ly as J can in the third and fourth books of this inquiry. People of the fame trade feldonn meet toge- ther, even for merriment and diverfion, bur the converfation ends in a confpiracy againll the public, or in fome contrivance to raife prices. It is impoflTible indeed to prevent fuch meetings, by any law which either could be executed, or would be confident with liberty and juftice. But though the law cannot hinder people of the fame trade from fometimes afTembling together, it ought to do nothing to facilitate fuch aflTemblieSi much lefs to render them neccffary. A REGULATION which obligcs all thofc of the fame trade in a particular town to enter their names and places of abode in a public regifter, facilitates fuch aifemblies. It conne^s individuals who might never otherwife be known to one ano- ther, and gives every man of the trade a dircftion where to find every other man of it. A REGULATION which enables thofe of the fame trade to tax themfelves in order to provide for their poor, thcil* fick, their widows and orphans, by giving them a common intercft to manage, renders fuch aflemblies necelTary. •' i' An incorporation not only renr!rs them ne- cefiary, but makes the ad of the r iori/ bind- ing upon the whole. In a free trade an eflfcdtual combination cannot be eftablilhed but by the unanimous confenc of every fingle trader, and it 8 cannot set THE WFALTH OF NATIONS. • Cifinoc lait longer than every Tingle trader conti- c ha f nues of the fame mind. The majority of a cor- poration can enadl ^ bye- law with proper pe- nalties, which will limit the competition more effectually and more Jnrably than any voluntary combination whatever. Thi pretence ihac corporations ju-c nccctTary for the better government of the trade, i& ^vith-. out any foundation. The real and efi'e^ual diC- c\Dline which is exercifcd over u woikman, is no', that of his corporation, but that of hu cultomers. It is the fear of lofing their em- ployment which retrains his frauds and corrcds his negligence. An exclufive corporation ne« celTarily weakens the force of this difcipline. A particular fet of workmen mud then be em- ployed, let them behave well or ill. It is i pon this account, that in many large incorporated towns no tolerable workmen are to be four.d, even in fomc of the moft neceflary trades. If you would have your work tolerably executed, it muft be done in the fuburbs, where the 'vorkmen, having no exclufive privilege, have .lOthing but their character to depend upon, and you muft then fmuggle it into the town as well as you can. It is in this manner that the policy of Europe, by reftraining the competition in fome employ- ments to a fmaller number than would otherwife be difpofed to enter into them, occafions a very important inequality in the whole of the advan- tages and difadvantages of the different employ- ments of labour aqd ftock. Secondly^ ■: 201 THE NATURE AND CAUSES OF - ' ' Secondly, The policy of Europe, by incrcafing the competition in fome employments beyond what it naturally would be, occafions another inequality of an oppofite kind In the whole of the advantages and difadvantages of the different employments of labour and (lock. *i It has been confidered as of Co much import^ ame that a proper number of young people Ihould be educated for certain profeffions, that, fometimes the public, and fometimes the piety of private founders have eftablilhed many pen- fions, fcholarfhips, exhibitions, burfaries, &c. for this purpofe, which draw many more people into thofe trades than could otherwife pretend to follow them. In all chriftian countries, I be- lieve, the education of the greater part of church- men is paid for in this manner. Very few of them are educated altogether at their own ex- pence. The long, tedious, and expenfivc educa- tion, therefore, of thofe who are, will not always procure them a fuitable reward, the church being crowded with people who, in order to get em- ployment, are willing to accept of a much fmaller recompence than what fuch an education would otherwife have entitled them toj and in this manner the competition of the poor takes away the reward of the rich. It would be indecent, no doubt, to compare either a curate or a chaplain with a journeyman in any common trade. The pay of a curate or chaplain, however, may very jDroperly be confidered as of the fame nature with the wages of a journeyman. They are, all three, paid for their work according to the con- " I , - tradt creafing nd what equality '3n Cages icnts of mporu pcopJe } thar^ piety ' pen- &c. people retend I be- urch- :w of I ex- duca- Iways ^eing em- lalier ould this iway ent, •lain The cry ure ail an- a6l i < THE WEALTH OF NATIONS. soj traft which they may happen to make with their c r? a p. refpcftive fuperiors. Till after the middle of the fourteenth century, five merks, containing about as much filver as ten pounds of our pre- Tent money, was in England the ufual pay of a curate or a (lipendiary pariih pried, as we find it regulated by the decrees of feveral different na- tional councils. Ac the fame period four pence a day, containing the fame quantity of filver as a (hilling of our prefent money, was declared to be the pay of a m after mafon, and three pence a day, equal to nine pence of our prefent money, that of a journeyman mafon *. The wages of both thefe labourers, therefore, fuppofing them to have been conftantly employed, were much fu- perior to thofe of the curate. The wages of the mafter malbn, fuppofing him to have been with- out employment one third of the year, would have fully equalled them. By the 12th of Queen Anne, c. 12, it is declared, ** That whereas for ** want of fufficient maintenance and encourage- '* ment to curates, the cures have in feveral " places been meanly fupplied, the bilhop is, '* therefore, empowered to appoint by writing " under his hand and leal a fufficient certain ** ftipend or allowance, not exceeding fifty and " not lefs than twenty pounds a year." Forty pounds a year is reckoned at prefent very good pay for a curate, and notwithftanding this a6t of parliament, there are many cura- cies under twenty pounds a year. There arc • See th* Sia;u;e of Jiahourers, 25 Ed. IIJ. journeymen %o^ .^ THE NATURE AND CAUSES OF ; BOOK journeymen flioe- makers in London who cam forty pounds a year, and there is fcarce an in- duftrious workman of any kind in that metro, polis who does not earn more than twenty. This laft fum indeed does not exceed what is fre- quently earned by common labourers in many country pari flies. Whenever the law has at- tempted to regulate the wages of workmen, it has always been rather to lower them than to raile them. But the law has upon many occa- fions attempted to raife the wages of curates, and for the dignity of the church, to oblige the rcftors of parifhes to give them more than the wretched maintenance which they themfelve* might be willing to accept of. And in both cafes the law feems to have been equally inef- feftual, and has never either been able to raife \ the wages of curates, or to fink thofe of la* bourers to the degree that was intended j becaufe it has never been able to hinder either the one from being willing to accept of lefs than the legal allowance, on account of the indigence of their fituation and the multitude of their com* petitors; or the other from receiving more, on account of the contrary competition of thofe who cxpefted to derive cither profit or pleafure from employing them. The great benefices and other ecclefiaftical dignities fupport the honour of the church, not- withftanding the mean circumftances of fome of its inferior members. The refpeA paid to thp profeflion too makes fome compenfation even to them for the meannefs of their pecuniary recom- v"- pence. " THE WEALTH OF NATIONS. iof pence. In England, and in all Roman Catholic chap. countries, the lottery of the church is in reality much more advantageous than is neccflary. The example of the churches of Scotland, of Geneva, and of feveral other Proteftant churches, may fatisfy us, that in lb creditable a profefllon, in which education is fo eafily procuffcd, the hopes of much more moderate benefices will draw a fufficient number of learned, decent, and refpeft- able men into holy orders, ' ; " " "- ' In profeiilons in which there are no benefices, fuch as law and phyfic, if an equal proportion of people were educated at the public expcnce, the competition would foon be fo great, as to fink very much their pecuniary reward. It might then not be worth any man's while to educate his fon to either of thofe profcffions at his own expence. They would be entirely aban- doned to fuch as had been educated by thofe public charities, whole numbers and necefiities would oblige them in general to content them- felves with a very miferable recompence, to the entire degradation of the now refpedablc pro- feflions of law and phyfic. That unprofperous race of men, commonly called men of letters, are pretty much in the fituation which lawyers and phyficians probably would be in upon the foregoing fuppofition. In every part of Europe the greater part of them have been educated for the church, but have been hindered by different reafons from entering into holy orders. They have generally, there- fore, been educated at the public expcnce, anti their 1. ,o6 THE NATURE AND CAUSES OP BOOK their numbers arc cvcry-whcrc (o great as com- monly to reduce the price of their labour to a very paltry rccompence. Before the invention of the art of printing, the only employment by which a man of letters could make any thing by his talents, was that of a public or private teacher, or by communicating to other people the curious and ufeful know- ledge which he had acquired himfelf: and this is llill furely a more honourable, a more ufeful, and in general even a more profitable employ- ment than that other of writing for a bookfcllcr, to which the art of printing has given occafion. The time and ftudy, the genius, knowledge, and application requifite to qualify an eminent teacher of the Iciences, are at leaft equal to what is neceflary for the greatcft pradlitioners in law and phyfic. But the ufual reward of the emi- nent teacher bears no proportion to that of the lawyer or phyficianj becaufe the trade of the one is crowded with indigent people who have been brought up to it at the public expence; whereas thofe of the other two are incumbered with very few who have not been educated at their own. The ufual recompence, however, of public and private teachers, fmall as it may appear, would undoubtedly be lefs than it is, if the competition of thafe yet more indigent men of letters who write for bread was not taken out of the market. Before the invention of the art of printing, a fcholar and a beggar fcem to have been terms very nearly fynonymous. The dif- ferent governors of the univerfitics before that time 35 com- )ur to a printing, >f Jcttcis that of inicating know- md this ufeful, employ- )kfelJer, -cafion. ic, and minent what in law ' emi- of the )f the have encej bered ed at ■r, of may is, if men 1 out i art lave dif. that ime ^^ THE WEALTH OF NATIONS. 207 time appear to have often granted licences to their chap. fcholars to beg. In ancient times, before any charities of this kind had been eftablilhed for the education of indigent (}eople to the learned profefTions, the rewards of eminent teachers appear to have been much more confiderable. Ifocrates, in what is called his difcourfe againd the fophifts, re- proaches the teachers of his own times with in- confiftency. " They make the moft magnifi- cent promifes to their fcholars," fays he, " and un- dertake to teach them to ^e wife, to be happy, and to be jud, and in return for fo important a fervice, they ftipulate the paltry reward of four or five minse. They who teach wifdom,*' con- tinues he, " ought certainly to be wife themfclves; but if any man were to fell fuch a bargain for fuch a price, he would be convifled of the moft evident folly.'* He certainly decs not mean here to exaggerate the reward, and we may be aflured that it was not lefs than he reprefents it. Four minae were equal to thirteen pounds fix fhillings and eight- pence: five minae to fixteen pounds thirteen Ihillings and four penre. Some- thing not lefs than the largeft of thofe two fums, therefore, muft at that time have been ufually paid to the moft eminent teachers at Athens. Ifocrates himfclf demanded ten minae, or thirty- three pounds fix Ihillings and eight pence, from each fcholar. "When he taught at Athens, he is faid to have had an hundred fcholars. I under- ftand this to be the number whom he taught at on« time, or who attended what "we would call on-c 2o8 THE NATURE AND CAUSES OP BOOK One courfe of ledurcs, a number which will not appear extraordinary fronn lb great a city to fo famuus a teacher, who taught too what was at that time the mod fafhionable of all fciences, rhetoric. He muft have made, therefore, by each courle of leftures, a thoufand minas, or 3*333^' ^^' ^'^' A thoufand minx, accord- ingly, is faid by Plutarch in another place, to have been his Didadron, or ufual price of teach- ing. Many other eminent teachers in thofe times appear to have acquired great fortunes. Gorgias made a prefent to the temple of Delphi of his own llatue in folid gold. We muft not, I prefume, fuppofe that it was as large as the life. His way of living, as well as that of Hippias and Protagoras, two other eminent teachers of thofe times, is reprefented by Plato as fplendid even to oftentation. Plato himfelf is faid to have lived with a good deal of magnificence. Ariftotle, after having been tutor to Alexander, and moft, munificently rewarded, as it is univer- fally agreed, both by him and his father Philip, •thought it worth while, notwichftanding, to re- turn to Athens, in order to refume the teaching of his fchool. Teachers of the fciences were probably in thofe times lefs common than they came to be in an age 6r two afterwards, when the competition had probably fomewhat reduced both the price of their labour and the admiration ■for their perfons. The moft eminent of them, however, appear always to have enjoyed a degree of corifideration much fuperior to any of the like profcflion in the prefent times. The Athenians " fent tHE WB\LTM OF NATIONS. 909 fertt Carneiidcs the academic, and DiogeAes the c h a i*. ftoic, upon a folcmn embaily to Romej and though tbtir city had then declined from its former grandeur, it was ftill an independent an^ conHderablc republic. Carneades too was a Babylonian by birch, and as there never was a people more jealous of admitting foreigners to public offices than the Athenians, their con^ fideration fbr him muft have been very great, m 'Tnis inequality is upon the whole^ perhaps^ rather advantageous than hurtful to the public^ It may fomewhat degrade the profefllon of a public teacher] but the cheapnefs of litersiry education is furely an adviintage which greatly over^baknces this trifling inconveniency. The public too might derive ftill greater beneBc from it, if" the conftitution of thofe Ichools and colleges, in which education is carried on, was more realbnable than it is at prefent through thi; greater part of Europe. -'-^^ '^t yi-^?;?.--* i\i^m Thirdly, The policy of Europe, by obftru^i:* ing the free circulatbn of labour and ilock both from employment to employment, and from place to place, occafions in fome cafes a very in-^ convenient inequality in .the ^hdle of the advan* tages and difadvantiges of their different or to work as common labourers, for which, by their habits, they are much worfc qualified than for any fort of manufacture that bears any re* femblance to their own. They generally, there- fore, chufc to come upon the parilh.. ' 7* • ■ Whatever' obftruCts the free circulation o? labour from one employment to another, 6b> ftruCts that of' (lock likewife; the quantity of ftock which can be employed in any branch of bufmcfs depending very much upon that of the labour which can be employed in it. Corpora'^ tion laws, however, give IcTs obftruCtion to the free circulation of (lock frotn one place to an- other, than to that of labour. It is every- where much eafier for a wealthy merchant to. obtain the privilege of trading; in a town corporate, than for a poor artificer to , obtain that of workinjg in It. . The obdruftion whith corporation laws give to the free circulation of labour is common, I believe, to every part of Europe. That which is given to it by the poor laws is, (b far as I know, peculiar to England. It confills in the difficulty which a popr man finds in obtaining a fettlement, or even in being allowed to exercifo his induftry in any parilh but that to which he belongs. It is the labour of artificers and ma- nufacturers only of which the free circulation is obftruCted by corporation laws. The difficulty^ .Pa of 4t« lO OK 1. of obtaining; (e^ckmemi obftru^ even that of common labour. }x may be worth while to giv^ ibme account of the rHe, progrefs, ^od prcfbn; ftate of this .difprdei;, the gieateft perhaps pf aay ^ the police of Ei^nd. ' r « . .; When by the deftru^ion of monaftertes the popr had been deprived of ;he charity of thofe religlputjhpufes, after forne other incf&^u#l at- tempts tor their relief, it wfis enaded by the 4jd of JBUzabeth, c. a. that every parilh ihould be boi^nd to provide, for its own poor; and that oyerieer.^ Q^ the poor fhould be annually ^p« ppinted* ^iWhOf with the church wardens, (hould |-aife, bjr a jpgri^. raijC, competent fum? for this purppfe.. :'.;•' Bt, this ftatute the neceflTiCy of provimng for their own poor ,w^ indifpenfably impoied upon every pariih. Who were to be confidered as the ppor of each, pariih, became, therefpre, ^ quef- tion of fome importance. This queition, after fome variation, . was at lad determined by the tjth and 14th of Charles II. when it was en- a6led, that forty days undifturbed refidence Ihotild gain any i^erfon ^ fettlemen^ in any pa- rilh; but t|i3t withifi thai time it ihould be law- ful for (wo jui^ices of th^ peace, upon complaint made by' the churchwardens or overfeers of the poor^' to remove any new inhabitant to the pariih where he was lail legally fettled ; un^efs he either rented a tenement of ten pounds a year, or could give fuch f^curi,ty for the difcharge of the pariih where he was then living, as (hofe juiiices £bould judge iuiSpent. ;;' ^,^%,;.,.„ ,A f:,ri^i^, ■ Some that of • to giv|> prclonc ^ of any ries the 3f chofc M^ at* ihc 4jd >ulci be id char ly ap- (hould or thU ng for i upoQ as the qucf- t after y the s en- dence pa- law- plaint f the )arilh ither :ouId arifh ould 0M£ "THB WEALTH OF KATIONS." i*| Sbffi frauds, it is faid, were committ 't in ^ ^ ^ '• coniequence of this ftacute ; parifb officcrft lome- cimcs bribing their own poor to go clandcftinely CO another parilh, and by keeping themfelves concealed for forty days to gain a fettlement there, to the difcharge of that to which they properly belonged. It was enadted, therefore, by the I ft of Jannes II. that the forty days undif- turbed refidence of any perfon neceiTary to gain a iettlement, ihould be accounted only fronn the time of his delivering notice in writing, of the place of his abode and the number of his family^ to one of the churchwardens or overiibeis of. the parifh where he came to dweU. ffH^^-^ **f^ i>f«t-u . •> . ( . , £.;;:'? ■ i No THB WEALTH OP NATIONS. *iS of no- ari(h CO « fuch, «liy rc- notice fetcle. o con- m, CO fettle- itancy. Jtoge- n ever lothcr, fettle- c de- \ being ic fe- parifli d, by the for a jring fthc fthc con* JIO- • by him No No tnarried man can well gain any fettlemenc * ^^^ *"• in either of the two lait ways. An apprentice is w. y V j fcarce ever married ; and it is exprefsly cnadted, that no nurried fervant (hall gain any fettlemenc by being hired for a year. The principal effect of introducing fettlement by fervice, has been to put out in a great meafure the old faihion of hiring for a year, which before had been fo cuftomary in England, that even at this day, if no particular term is agreed upon, the law in- tends that every fervant is hired for a year. But mafters are not always willing to give their fer- vants a fettlement by hiring them in this manner ; and fervants are not always willing to be fo hired, becaufe, as every la(t fettlement difcharges all the foregoing, they might thereby lofe their original fettlement in the places of their nativity, the ha- bitation of their parents and relations. ^^, , ^ . \ No independent workman, it is evident, whe- ther labourer or artificer, is likely to gain any new fettlement cither by apprenticefhip or by fervice. When fuch a perfon, therefore, carried his induftry to a new parilh, he was liable to be removed, how healthy and induftrious foever, at the caprice of any churchwarden or overfecr, unlefs he either rented a tenement of ten pounds a year, a thing impofTible for one who has no- thing but his labour to live by; or could give fuch fecurity for the difcharge of the pariih as two juftices of the peace ihould judge fufficient. What fecurity they (hall require, indeed, is left altogether to their difcretion; but they cannot well require lefs than thirty pounds^ it having P 4 been iiS THE NATURE AND CAUSES OF BOOK been enabled, that the purchafe even of a free- hold eitate of lefs than thirty pounds value^ (hall not gain any perlbn a fettleaient, as not being fulHcient for the difcharge of the parifh. But this is a fecurity which fcarce any man who lives by labouir can give ; and much greater fe* curity is frequently demanded. In order to reftore in fome meafure that free circulation of labour which thofe diifferent fta- tutes had almoft entirely taken away, the invention of certificates was fallen upon. By the 8 eh and 9th of William III. it was enacted, that if any pcrfon fhould bring a certificate from the parifli where he was laft legally fettled, fubfcribed by the churchwardens and overfeers of the poor, and allowed by two juftices of the peace, that every other parilh (hould be obliged to receive him i that he ihould not be removeable merely upon account of his being likely to become chargeable, but only upon his becoming actually chargeable, and that then the parifli which granted the certificate (hould be obliged to pa}^ the expence both of his maintenance and of his removal. And in order to give the moft perfect fecurity to the parifh where fuch certificated man (hould come to refide, it was further enadted by the fame ftatute, that he (hould gain no fettle- ment there by any meahs whatever, except either by renting a tenement of ten pounds a year, or by ferving upon his own account in an annual parilh office for one whole yearj and conlfe- quently neither by notice, nor by fervicc, nor by , apprenticelhip, nor \?y paying parilh rates. By the \ THE WEALTH OF NATIONS. ai7 the 12th of Queen Anne too, ftat. i. c. i8. it chap. was further enadted, that neither the fcrvants nor *' apprentices of fuch certificated man fhould g.iin any fettlement in the pariih where he refided ander fuch certificate. ' How far this invention has reftored that free circulation of labour which the preceding ftatutes' had almoft entirely taken away, we may learn from the following very judicious obfervation of Doctor Burn. ** It is obvious," fays he, " that " there are divers good reafons for requiring <* certificates with perfbns coming to fetde in << any place; namely, that perfons refiding un- ^* der them' can gain no fetdement, neither by «* apprenticefhip, nor by fcrvice, nor by giving *^ notice, nor by paying pariih rates; that they « can fettle neither apprentices nor fervants; « that if they become chargeable, it is cer- <* tainly known whither^ to remove them, and. " the parifh fhall be paid for the removal,* <' and for their maintenance in the mean time^ ** and that if they fall fick, and cannot be re- " moved, the parifh which gave the certificate '( muft maintain them : none of all which caa ^' be without a certificate. Which reafons m\\ « hold proportionably for parilhes not grandng^ <' certificates in ordinary ca(bs ; for it is far *< more than an equal chance, but that they will « have the certificated perfons again, and in a « worfe condition.** The moral of this obferva> tion feems to be, that certificates ought always to be required by the pariih where any poor man comes to refide, and, that they ought very fcldom st^ THE NATURE AND CAUSES OF C( in his Hiftory of the Poor Laws, " by ** putting it in the power rf a parifh officer, to " imprifon a man as it were for lifej however *' inconvenient it may be for him to continue at *' that place where he has had the misfortune to acquire what is called a fettlement, or what- ever advantage he may propofe to himfclf by " living elfewhere." Though a certificate carries along with it no teftimonial of good behaviour, and certifies no* thing but that the perfon belongs to the parifh to which he really does belong, it is altogether difcretionary in the parifh officers either to grants or to refufe it. A mandamus was cnce moved for, fays Do6lor Burn, to compel the churchwardens and overfeers to fign a certificate ; but the court of King's Bench rejefted the motion as a very ftrange attempt. The very unequal price of labour which we frequently find in England in places at no great diflance from one another, is probably owing to the obftruftion which the law of fcttlements gives to a poor man who would carry his induflry from one parifh to another without a certificate. A fingle man, indeed, who is healthy and induf- trious, may fometimes refide by fufFerance with- out one ; but a man with a wife and family who ihould attempt to do fo, would in mofV parifhes be fure of being removed, and if the fingle maiv Ihould afterwards marry, he would generally be *:T removed THE WEALTH OF NATIONS. S19 reifioted Ukcwifc. 1 le fcarcity of hands in On* c h a p« parifli, therefore, cannot alwap be relieved by their fuper- abundance in another, as it is con- ftandy in Scodand, and, I believe, in all other countries where there is no difficulty of fettle- nnent. In fuch countries, though wages may fometimes rife a litde in the neighbourhood of a great town, or wherever elfe there is an extra- ordinary demand for labour, and fink gradually as the diftance from fuch places increafes, till they fall back to the common rate of the coun-* try; yet we never meet with thoie fudden and unaccountable differences in the wages of neigh- bouring places which we fometimes find in Eng- land, where it is often more difficult for a poor man to pafs the artificial boundary of a pariih, than an arm of the fea or a ridge of high moun- tains, natural boundaries which fometimes iepa* rate very diftintlly difierent rates of wages in other countries. '^■*-^' '^^^^^--^ *:.*rr-^:^Y" ^ i ^'^.z;^ :'\ To remove a man who has committed no mif- demeanour from the parifh where he chufes to refide, is an evident violation . of natural liberty and juftice. The common people of England, however, fo jealous of their liberty, but like the common people of mod: other countries never righdy underftanding wherein it confifts, have now for more than a century together fufiTered themfelves to be expofed to this oppreffion with- out a remedy. Though men of reflection too have fometimes complained of the law of fettle- ments as a public grievance; yet it has never been the objedt of any general popular clamour^ fuch Sf THE NATURE AND CAUSES OF :^ D^o Kr Kicli as that againll general warrants, an abufive pradlice undoubtedly, but fuch a one as was not likely to occafton any general oppreflfion. There is icarce a poor man in England of ibrty years of age^ I will venture to fay, who has not in fbme part of his life felt hinofelf moft cruelly oppreiTed by this ill-contrived law of fettlemcnts. I SHALL conclude this long chapter ii^th ob- ierving, that though anciently it was ufual to rate wages, firft by general laws extending over the whole kingdom, and afterwards by particular orders of the juflfices of peace in every particular county, both t:heie practices have now gone en^ tirely into difule. " By the experience of above « four hundred years," fays Doftor Burn, *< it *< feems time to lay afide all endeavours to bring *' under ftri^ regulations, what in its own na4 <•' ture feems incapable of minute limitation:: M for if all perfons in the fame kind of work *« were to receive equal wages, there would be ** no emulation, and no room left for induftry <* or ingenuity." : ^x. Particular afks of parliament, however, flill attempt fometimes to regulate wages in parti- cular trades and in particular places. Thus the 8th of George III. prohibits, under heavy penal- ties, all mailer taylors in London, and five miles round it, from giving, and their workmen from accepting, more than two (hillings and feven- pence halfpenny a day, except in the cafe of a general mourning. Whenever the legiflature attempts ■ to regulate the differences between mafters and their workmen, its counfellors are rt *. always n abtifive i was not ► i Thcro ''years of in ibme ^ppreffcd (rich ob* ufual to ing over articular articular ;onc en- »f above rn, «< it :o bring Nti na4 itation.5 ►f work »uld be nduftry ;r, ftiU parti- US the penal- miles I from [even- of a lature tween s are ilways ^ THE WEALTH OF NATIDM8. «si always the m^CllcilSit When the regulation, .them*- ctrnw, fore/ is in faypur pf che workfrten, it is alwayis juH: and eqw^^i^i biut it is fomettmes othe)> wi^ wb^n J9i>4#vpur of the maiiiers. Thus the ia\y which pbljge& the mailers in feveral difiereac trades tQ paKJ^^ir workmen ijn money anid Adt iin gop4s»; is ^(^l^^ Juft and equitable. It inou- pof^ f^Q r^s^l )iarf}iH[p upon the ntiaders. It ^tnhf obliges tbem to p^y tha( value in money, whidi ^y pretenj^etl .$p ^y, bMt did flOl always itally pay, in goq^lf. , This law is.ii^favQoc of the wodb- me9» but the Sdb of George IIL Isin &yout of tjie mafter^. When niafters combing together ih order to reduce the wages of their i/vQrkmen^,thc|r comnionly enter, into a private bond or agreement* not to give ttvxt than a certain wage under « certain penaltyv Were the worknnen to ehtcr into a contrary combination of.the fasne kind, not to accept of a, certain Wage under a certain penalty, the law would puiiilh them veiy f€>- verely; an(j[ if it dieak impartially, it.M'oiuld trfesA: the |i(iailers in the fame itaanner. But the 8th ctf* Geor,ge III. enforces by kw diat ycry regulation whicf^ n^afters ibnueitlmes attempt to eftablifh b^ fuch combinations^ ; The complaint. of the worki- meni that it puts the abled: and 19^ iinduftrious upo^ the fame footing with an Ordinary workman* ^ecms perfe^ly well foundec). x^^^^tsr' : ^:' > '.j 1 /j [In ancie;nt tiroes too it ivas iifnal to attempt to regulate die profits 6f ijierthants. and , other dealers, by rating the price both of provifions and other goods. The afilze of bread is, fo far as 1 know, the only remnant of this ancient $ ufage. THB NATURE AND CAUSES OF BOOK ufage. Where there is an exclufive corporation^ '* it may perhaps be proper to regulate the price of the firft neceflary of life. But where there is none, the competition will regulate it much better than any aflize. The method of fixing the alTize of bread eftablifhed by the 31ft of George II. could iiot be put in practice in Scotland, on account of a defeat in the lawj its execution depending upon the office of clerk of the market, which does not txiOt there. This defedt was not remedied till the 3d of George III. The want of an aflfize oc- xafioned no feniible inconveniency, and the efta- .bliihment of one in the few places where it has yet taken place, has produced no fcnfible advantage. Jn the greater part of the cowns of Scotland, how- .ever, there is an iifcorporation of bakers who claim cx•. c The proportion between the different rates both of wages and profit in the difixirent employments of labour and ilock, feems not to be much afl^edted, as bas already been obferved, by the riches or poverty, the advancing, ftationary, or declining ftate of the fociety. Such revolutions in the public welfiire, though they afied the general rates both of wages and profit, muft in the end aflPedb them equally in all different employments. The proportion be- tween them, therefore, mufl; remain the fame, and cannot well be altered, at leaft for any cohfiderabie time, by any fuch revolutions. - W \ /i; ,% V (rn^^'^H <: .4 ♦^ :j; THE WEALTH OF NATIONS. ««1 "* -^^ CHAP. XI. ?v RENT, confidered as the price paid for the c h a p. ufe of land, is naturally the highcH: which the tenant can afford to pay in the adtual cir- cumftances of the land. In adjusting the terms of the leafc, the landlord endeavours to leave him no greater (hare, of the produce than what is fufHcient to keep up the (lock from which he furnilhes the feed, pays the labour, and purchafes and nuintains the cattle, and other inflrumencs of hufbandry, together with the ordinary profits of farming flock in the neighbourhood. This is evidently ^he fmalleft fhare with which the tenant can content himfelf without being a lofer, and xhe landlord feldom means to leave him any .more. Whatever part of the produce, or>.what is the fame thing, whatever part of its priecj ]$ over and above this fhare, he naturally endes- vours to referve to himfelf as the rent of his laQjd, v/hiqh is evidently the higheft the tenanc can afford to pay in the actual circumfbances of ^he land. Spmetimes, indeed^ the liberality, more frequently t;he ignorance, of the Igndlorcl, .makes him accept of fomewhat lefs than thk portion ; and fometimes too, thpugh more rarelj^, the ignorance of the tenant makes him undertake to pay fomewhat more, or to content himfeif with fomewhat lefs, than the ordinary profits of farming ftock in the neighbourhood. This portiooj :, however. »«4 THE NATURE AND CAUSES OF however, may (till be confidered as the natural rent of land, or the rent for which it ^ naturally meant that land (hould for this mod part be let. >^ The rent of land, it may be thought, is fre- quently no more than a reafonable proBt or intereft for the ftock laid out by the landlord upon its im- provement. This, no doubt, miy be partly the cafe upon fome occafionsj for it can fcarce evet be more than partly the cafe. The landlord de- mands a rent even for unimproved land, and tht fuppofed intereft or profit upoh' the expeoce of improvement is generally an additibn to this ori- •gind rent. Thofe improvements, befides, are not tilways made by the ftock of the landlord, but Sometimes by that of the tenant. When the leafe •comes to be renewed, however, the landlord com- inanly demands the fame augmentation of rent, ^s If they had-becn all made by his bwni'*'^^^ ^ ' ' -^ He fometimes dentands renc for what is ako^ gether incapable :of Human iinprovement. Kelp is a fpctics of fea-weedi which,'w1iert bivnt, yiel^ an alkaline fait, ufeful for -making gh(s, foap, ftnd for feveral other purpofes. It grows in leveral |>arts of Great Britain, particularly in Scoikuid, 'upoh fuch rocks only as lie within the high water ^mark, which are twice every day covered with the iea, and of which the produce, therefore^ was 4icVer augmented by human induftryl The land- however, whofe eftate is bounded by a kelp (bore of this kind, demands a rent for it as much as for his corn fields. * The fea in the neighbourhood of the idands .•» .* ». PART I. 0/ /i'^ Produce of Land which atwAys affords Rent, AS men, like all other animals, naturally mul- chap. tiply in proportion to the means of their fub- fiftencc, food is always, more or lefs, in demand. It can always purchafe or command a greater or fmaller quantity of labour, and fomebody caa always be found who is willing to do fomething in order to obtain it. The quantity of labour, indeed, which ic can purchafe, is not always equal to what it could maintain, if managed in the mod oeconomical manner, on account of the high wages which are fometimes given to labour. But it can always purchafe fuch a quantity of labour as it can maintain, according to the rate at which that fort of labour is commonly maintained in the neighbourhood. But land, in almofl: any fituation, produces a greater quantity of food than what is fufficient to maintain all the labour neceflary for bringing it to market, in the mod liberal way in which that labour is ever maintained. The furplus too is always more than fufficient to replace the dock which employed that laoour, together with its profits. Something, therefore, always remains for a rent to the landlord. < , , The mod defart moors in Norway and Scot- land produce fome fort of padure for cattle, of which the milk and the increafe are always more - .» Qjl than Mf THE NATURE AND CAUfBS <}f 1 K than fufficienr, not only to maintain all the labour neceiTaiy for tending them, and to pay the ordi- nary profit to the farmer or owner of the herd or flock i but to afford fome fmall rent to the landlord. The rent increafes rn proportion to the goodnefs of the pafture. The fame extent of ground not only maintains a greater number of cattle, but as they are brought within a fmaller compafs, lefs labour becomes requifite to tend them, and to collect their produce. The landlord gains both ways { by the increafe of the produce, and by the diminution of the labour which muft be maintained out of it. The rent of land not only varies with its fer- tility, whatever be its produce, but with its fitu- ation, whatever be its fertility. Land in the neighbourhood of a town gives a greater rent than land equally fertile in a diftant part of the country. Though it may coft no more labour to cultivate the one than the other, it muft al- ways cod more to bring the produce of the dif- tant land to market. A greater quantity of la- bour, therefore, muft be maintained out of it; and the furplus, frbm which are drawn both the profit of the farmer and the rent of the landlord, muft be diminifhed. But in remote parts of the country the rate of profits, as has already been (hown, is generally higher than in the neighbour- hood of a large town. A fmaller proportion of this diminifhed furplus, therefore, muft belong to the landlord. Good roads, canals, and n igable rivers, by diminiftiing the expence of car* lage, put the re- mote r THK WEALTH OF NATIONS. as9 iDOCe pares of the country more nearly upon a c h a p level with thofe in the neighbourhood of the town. They are upon that account the greateft of all improvements. They encourage the cul- tivation of the remote, which muft always be the moft excenfive circle of the country. They are advantageous to the town, by breaking, down the monopoly of the country in its neighbourhood. They are advantageous even to that part of the country. Though they introduce fome rival commodities into the old market, they open many new markets to its produce. Monopoly, befides, is a great enemy to good management, which can never be univerfally ellablifhed but in confequence of that free and univerfal compe- tition whiph forces every body to have recourf^ to it for the fake of felf-defence. It is not more than fifty years ago, that fome of the counties in th9 neighbourhood of London petitioned the; parliament againft the extenfion of the turnpike roads into the remoter counties. Thofe rennoter counties, they pretended, from the cheapnefs of labour, wok ta be able tp fell their grafs and corn cheaper in the London market than them- felves, and would thereby reduce their rents, and ruin their cultivation. Their rents, hovyevcr, have rifen, and their cultivation has been im« proved fince that time. A CORN field of moderate fertility produce! a much greater quantity of food for man, than the beft paflure of equal extent. Though its culti* vation requires much more labour, yet the fur- plus which remains after replacing the feed and •^ Q^ maintaining r JJO THE NATURE AND CAUSES OF maintaining all that labour, is likewi(e mu(ih greater. If a pound of butcher's meat, there-* fore, was never fuppofed to- be worth more than a pound of bread, this greater furplus would everywhere be of greater value, and conftitute a greater fund both for the proHt of the farmer and the rent of the landlord. It feems to have done Co univerfally in the rude beginnings of agriculture. But the relative values of thofe two different ipecies of food, bread, and butcher's meat, are very different in the different periods of agricul- ture. In its rude beginnings, the unimproved wilds, which then occupy the far greater part of the country, arc all abandoned to ' cattle. There is more butcher's meat than bread, and bread, therefore, is the food for which' there ijl the greatcft competition, and which confequtntly brings the greatcft price. At Buehbis Ayrfe^, we arc told by Uiloa, four reals, one- and- twenty pence halfpenny fterling, was, forty, or fifty years ago, the ordinary price of an ox^ chofen ' from a herd of two or three hundred. He f^ys nothing of the price of bread, probably becaufe he 'found nothing remarkable about it. An ox there, he fays, cofts little more than the labour of catching him. But corn can no- where be railfcd without a great deaf of labour, and in a country which lies upon the riyer Plate, at that time the direft road from Europe to the filver mines of Potofi, the money price of labour could not be very cheap. It is otherwife when cultivation is ex- tended over the greater part of tHc cduntry. There « »*M«*MN'»*' ••i> » • or ife mueh 1^9 therc- itJTc than as would conftitute le farmer ' to have nings of different neat, are agricul- mproved ter part ) cattle. ?aci, and there ii equtntly yrc^y we ^twentJr ty year§ from a nothing ' found ere, he atching without which : direft Potofi, 5 very IS ex- >untrj\ There THE WEALTH OF NATIONSilT sjr Tjicre. i»; tJjen more bread than butcher's meat, c «> *** The competition changes its diredlion, and the prifiQ . ofr>but€|her's meat becomes greater ^than the priceoof hnea^. , n j Byj . the . extenfion bdGdca : :of . ciiltiwitijqo* . die : unimproved wHds become ^niofficient vta jfupply: the demand for butcher's- meati Agreatparb of the : cultivated lands muft be empldyed- io/ rearing and fattening catde, of which tht >price»t thereforjc, muft- be fufficienc to pay/inotronlf' the labour neceilary for tending them, inii& the tent whichivthcj landlord and the proHcowhichi the farmer 'could have drfwa from fuch: land, em- ployed in tillage. ' The: catde bred upon the mo(^ uncultivated moors* ..wjien brought to the iame.inMrket, are, in proportion to tbeiri weight or goodnefs, fold at tbf^uT^me price! as thofe which i ikre-^ beared vupOi\ ihe . moft impr^oved , land. The propHetors of chofejsioprs profit by it, and ratfc the irenti of theif land in proportion, to the pricoibf^tl^eir cattle, r. It is not more thi parts of ^he. higbl^c^ of .Scotland^: butcher's tmeat was as .cheap oc c];ieaper;^.^han even bread ; made of oatmesd. The unionnopened the market of England t to the highland cattle. TJiftk ordinary, price i» at. pre- fent abgut three times greater than at/|hc(bki%in^ niBgtof:th«; century, ap^drJ^ rents of ma^^yihigh- land fft^s have been irjp led and qpadp^ipled in the fame t^rpe^ In aln^oft every ,p^rtvi9j[:,pr^ac Britain a pound of the bfQ^^butjcher's me^ is, in the prefent times, generally, v^orth more than two pounds of the beft. white bread i and in Qj4. plentiful 4 1 .,' *f» TH£ NATURE AND CAUSEft OP BOOK plentiful fCttrt it it fdmetimcs wortK chite or^ four pounds. It Is thus^thtt in the progrefs of improvement the rent and profit of unimproved pafture come to be ngulaced in fome meafurc by the rent and profit of. J what isr improved, and thel there&re,:>will produce a much fmaller quantity of the bnc^cies of food than of^the other, the inferiority of thq quantity muft be conipenfated by the fiipcrioHty of the price. If it was more than ' compbnfated, more corn land would be turned; into pafturc) and if it ttras ^ot compen- fated, part of whH iK^asi in paftui% would be brought back into cbrnJi J^J^ m! . n ' < : z>\^ •I 'This equality, however, : beiwteiV the «nc aad Jsirofit of gmfs and ehofe'bf torn ,• of^rhp 1:uid of which' the im^icdiate jproduce is food for ! cattle^ and of ch^fl of which' the immediate produce i| ibodifor men^ i^uft be if^derftood to tai^ place Wily: through the greater part of thb improved tands of a :great country^ tri fom« parttculap Jocal ^tuatiohs it is^ quite othcrwife, «rtd the rent and pfo@t of graf& are much fuperibr td ii4iat can be tttad«'by eorn. 'p, ^ -f Tkifi in the nerghbourhood of a great town, %he d^ttland for milk and for forage to hoi'fcs, Itequcntly- cbntribute^' together 'w^ith the high price ^of 'botcher*s^meati to raife thfe valine of •grufs abovte ^hat may be called its natural pro- |iorti6« to that of Com. This, local advantage, •.■-■•■"'?^x,-:'»_--; ..;;,;- * ■ i, tV'- x% r- L..^-: Op t© or four imm '^' w^ovcmcnt we come i^enc and flgatn hf ui annual requires of Jand, quaniicjr ther, the ipenfated 'as more ould be lompcn- ould be «n€ aiid i^d of nieattlci duce i| W place jproved rticulap fie Tttit hat can tdiwrt, hohfcsi , high IJC of I pro* ntage^ ^ • THE WEALTH OF NATIONS. «§». il is evident, cannot be communicated to the land* c ha p^ at adiftance. PARTibVLAR circumftances have fometimet rendered (oUne c^ntries ib populous^ that th« whole territory, like the lands in the neighbour- hood of a great town, has not been fufficient to produce both the grafs and the corn necei&ry ^r the fubfiftence of their inhabitants, Tkeir lands, therefore, have been principally employed in the produdion of grafs, the more bulky conn modity, and which cannot be fo eafily brought from a great diftance ; and cori^ the food of the great body of the people, has been chiefly im» ported from foreign countries, Holland is at prefent in this fltuation, and a confiderable part of ancient Italy feems to have been fo during the profperity of the Romans. To feed well* v.-d Cato faid, as we are told by Cicero, was the iiiitiand mod profitable thing in the manage* ment of a private eftate: to feed tolerably well^ the fccondj and to feed ill, > the third; To pkiugh>; he ranked only in the fourth place of profit and advantage. Tillage, indeed, in that past of ancient Itaily which iay in! the neighbour- hood of Rome, muft have .bten very much diH- cmiraged by the diftributlions of corn which were frequently made to the people, dthcr gratui«» toufly, or at a very* low p^ioe;- This corn was brought from the conquered provinces, of whicti feveral, inllead of taxes, were dDJiged to fomilh a tenth part of their produce at a ftaced price, abput fixpcncc a pe(i, to the republic. The low price at wh;^h thi§ corn was dWik\i\ttd to <*iF'''^ '•■"■' ■ , ' the THE NATURE AND CAUSES. OP tiit people, muft neceflarily hftve funk the prkf ' of what could be brought to the Rornan m^ket, from Latrum> or the ancient territory of Rome, tad nnuft have difcouraged its cultivation in that country. .4i>nv/ mln an open country too, of which the prindpal •produc: is corn, a vcll-enclofed piece of grafs will frequently rent higher than any corn .field in its neighbourhood. It is convenient ibr the maintenance of the caule employed in the, cul- tivation of the corn, and irs high rent is, jn this cafe, not fo properly paid from the value of its own produce, as from that of the corn' lands whith are cultivated by means of it. It is likely to fall, if ever the neighbouring lands are cona- pletely enclofcd. The prefent high rent of en«» clofed land in Scotland feems owing to th$ fcarcity of enclofure, and will probably laft no longer than that fcarcity. The- advantage of cn- clofore is greater for pafture than for corn., .dt faires the labour of guarding the cattle, which feed l)eti:er too when they are not liable to be difl:urbe4 by their keeper or his dog. r. .q ^ t#uT where there is no k)cal advatitage of this kindi the rent' and profit of corn, or whatever elfc is the common vegetable food of the people, ■muft. naturally regulate, 'upon the : land which is fit for producing it, .thfi^sent and profit of pafture. -'^'> '>ii r-. --ci The ufe of the artifit^.al graflbs, of turnips, ,carrots, cabbages, and the other expedients which have been fallen upon to cpake an equal quantity of land feed a greater* number of cattle ^.w .. ■: -.,.- • tban f-. the pricfi n marked >f Rome, in tkati principal of grafs )rn ficid for the the, cul- it is, win value, of *Fn' lands is Jikdy e conj- of cn«» to tii$ laft no : of cnr )rn.. it ich feed ifturbed • ' i of nJiis hatever pcc^c, which ofit q£ arnips, ^dients equal cattle than 1:*HE WEALTH OF NATldN^. in tfian when in natural grafs, - (hbuld fonncwhit c va k reduce, it might be expcftcdi the fupcrtoHty which, in an improved country, the ^rice of butdher*s-meat hartirally has oVer that of btesd. It feems accordingly to have done (b; iftnd there i$ fome rcafon for believing thatj at leaft in the London^ market, the price of butcher's -meat, in proportion to the price of bread, is a good deal lower in the prefcnt tii^^ than it was in the beginning of the laft ccntiiry: ■ • •' ^-■■" -■ '-^ •'•' y • '.• * Iw the appendijt to the life' bf' Prince Htnry/ Boftor'Bircfir has givein us an account of* the! prices of butcher's- meat as comnrionly paid bjr ihat prince.* It is there faid^ that the four quar- ters of an ox Tveighing f?i^ Htmdrcd potindi ufually coft him nine piol/fids ten Ihiliings, or tti'^reabbxit^ ;' ' tliaif is, thirty-ohe IhiHlngs and eight pence per hundred pounds Weight. Prince Henry di^d Vn'the 6th of November i6il, in tlie nineteenth- y^r of hi^ age; ^ - ■"' ' * *> 1 1*" March iy64.y there v^as: ia - jjafliamen'tary inquiry into the caufes or th^ 'Mgh price of pro^ vlfidns at that time. It wA^'thtn, among other proof to the fame purpofe, glVeri in evidence by a Vii-ginia merchant, that in" Mircb 1 7^3, ht haid viflualled his (hips for twenty- four or twtnty-- ftvfe fhfllings the hundred wtight of beef, which he cpnfidered as the ordinary price; whereas, i^ that dear year, he had paid t^)ight- pence cheaper than the ordinary price paicf by prince •jd THE NATVRB AND CAUSES OF 9 o o K prince Henry ^ «uk1 ic is the beft beef only, it muft be obierved, which is fit to be CUted for thoie diftanc voyages. The price p^ by prince Henry amounts to 3t^* pci* pound weight of the whole carcafe, coarie and choice pieces t^ken together j and at ;bat rate t}ie choice pieces could not have been fold by re* tail ibr lefs thai^ 4|f/. or 5 d» the pound. In the parliamentary inquiry in 17649 the wit- nefTes dated the price of the choice pieces of the heft beef to be to the confumer 4^. and ^d* the pound; and the coarie pieces in general to be from feven farthings to 7^d^ znd %^\ znA X^\% they faid^as in general one halfpenny dearer than the f^me fort of pieces had ufually been fold ia |he iiponth of Mardu But even this high price is ilill a good de^ cheaper than what we can well fupn pofe the ordinary retail price to have been in tt^ liilf^jB; ^f prince, Henry. During the twelve iirft years of the laft cea- tury, the average pcice qf the bf(t wheat at th^ ^ipdrpr macket was, i/. i8j. 34^. the (quarter of Iiinfi; ^incbcfter bulhels. .. BpT \. the, twelve ye^rs preceding; 1764, inr jcliifling.that yca|-, thjt average price of the f^^nc pafjal^e of t(ic,ib^j|jwhe^t ai ih^f^ market lyas J- }iN; thp twielve firft years f)f the laft century^ ^herefoj-?, whcjat ^ppear^ tp hftve l^^n a good deal ijhcap^r, and butcjicr's-meat ^ good deal dearer, |^«an in the twelve y^ars preceding 1764, including j^tye^r, 'M. m i I • I = t 3->nnq k.A THE WEALTH OF NATWN^* «ir Itf all great coimcries the greater part of the c n a p. cultivated lands are etlnployed in producing either food for men or food for catde. The rent and profit of thefe regulate the rent and profit of all other cultivated land. If any particular produce afforded lefs^ the land would foon be turned into corn or pafture ; and if any afforded more, fome part of the lands in corn or pafture would foon be turned to that produce. Those produftions, indeed^ which require either a greater original expence of improvement, or a greater annual expence of cultivation, in order to fit the land for them, appear commonly to afford, the one a greater rent, the other a greater profit, than corn or pafture. This fuperiority, however, will feldom be found to amount to more than ^ reafonable intereft or compenfation for this fu- perior expence. , ^# In a hop garden, a, fruit garden, a kitchen garden, both the rent of the landlord, and the proBc of the farmer, are generally greater than in a com or grafs field. But to bring the ground into this condition requires more expence. Hence a greater rent becomes due to the land- lord. It requires too a more attentive and (kil- ful management. Hence a greater profit be- comes due to the farmer. The crop too, at Icaft in the hop and fruit garden, is more precarious. Its price, therefore, befides compenfating all oc- cafional lofTeSj muft afford fomething like the profit of infurance. The circumftances of gar- deners, generally mean, and always moderate, may fatisfy ujs that their great ingenuity is not .V.£.. , commonly XI. *3t THE NATURE AND CAUSES OF BOOR commonlf over- recompcnfed. Their delightful art is praftiled by fo many rich people fur amufe-^ menc, that little advantage is to be made by thofc who pradtife it for proBt; becaufe the perfons who (hould naturally be their bcft cuftomers, fupply themfelves with all their moft precious produdlions. The advantage which the landlord derives from fuch improvements feems at no time to h^ve been greater than what was fufficient to compenfate the original expence oT making them. In the ancient hufbandry, after the vine- yard, a well-watered kitchen garden f«ems to have been the part of the farm which was fup- pofed to yield the mod valuable produce. But Dcmocritus, who wrote upon hufbandry about two thoufand years ago, and who was regarded by the ancients as one of the fathers of the art, thought they did not adl wifely who enclofed a kitchen garden. The profit, he faid, would not compenfate the expence of a (lone wall; and bricks (he meant, I fuppofe, bricks baked in the •fun) mouldered with tlie rain, and the winter ilorm, and required continual repairs. Colu- mella, who reports this judgment of Dcmocritus, docs not controvert it, but propofes a very frugal method of enclofing with a hedge of brambles and briars, which, he fays, he had found by experience to be both a lading and an impenetrable fence; but which, it feems, was not commonly known in the time of Dcmo- critus. Palladius adopts the opinion of Colu- mella, which had before been recommended by .«^^^,,..|2 • '._,''.,', -.V:,. \- ■:) Varro. \v^' ' |0F delightful ■>r amuie-> ; by thofc e pcrfons uftomcrj, precious derives time to icicnt to making he vine- "oems to was flip. :e. But y about regarded the art, clofed a >uld not H ; and i in the ■ winter Colu- iocritu», a very dge of he had and an IS, was Demo- Colu- kd by Varro, THE WEALTH OF NATIONS. (ftf oMn oc- c^^kmtitA^ithh' nuiltipltcatloh of vihtyitrdfit corn ii na^hereri'iiii Fiiiiuie more carofully cultivacad than 'iit^ l^'^vto^ piri>virtt(ft^ where the land is He •for prodQoihgmr^ in Burgundy, Guknnei and the} itJpper lianguedoc. The Numerous hands ertploytd in tihe one fppcips. of ciiUivMronF necef- farily encourage the other, by affording ^a ready .nnarkcoforiics produce.' To- dihiin*^':the mum- ber^i>f7 tikofe who are capable .of paying for sc, is furely :a imoft uftpromifing expedient, for encou- iaging the cultivation of corn. 'It i$ like thfc policy' which ..would {jtfdmpte agriculture by dii^ .couraging^nianufadturesinfi ficrr:: > ^ 01 The rcBtr'ahd proiBt ,6( thofe prodd^ionsu therefore, which require either a greater original '^ expenc© of innprovcment in order !to> fit the lanH for them; or a greater annual expencej of ^ctfhi^ \ vation, though: often much fiiperior to thofe df f corn and pafture, yet when they do no nrtore th«ii ; compenfate fuch extraordinary cxpence, are' in reality regulated by the rent and profit of thdb common crops* , It fonaetimcs happens j indeed, that the quan- *'- tity of land which can be fitted for fonie paria- cular produce, is too fmall to fupply the effedual iJemand. The whole produce can be difpofcd Vol. I. ' g. of y^> > / Ht t :■ ■;-\ ."' '. */ THE NATURB AND CAUSES OP K of td thofe who are willing to gife fomewhat more chin whkt is^ fuflicient to pay thewholp rent; wagea and profit ncceflfary for raifing and bringing it. to marketj according to thair natural rates, of According to the rates at wKicK they are paid in the greater part of .other j^uliivated land. The furplMs part of the price which ^nnaias after •defraying the whole -.^Klience of >innprovemenc jmd culmatlon, may ^eofnnnonlyy in this cafe, and ^ in tMs Cafe only* befM: no regular. pr<>pof lion to ^the like furplus in cora or pafture^-rbutlmay ct- xeed ic in almod any degree; and the grater paVt of this cixeers naturally goes to the rdnt of the 'iandJord; : . , •.. .' ,;.;;: j-^ -.lj -j^l h > '■;■ .;.TiiE ufual and hattltal proportion; for ^example, between the rent and proHc of Wine andtliofeof com' and pafture, mull be underftood .to cake |}lace only with regard to thofe vineyards w3)ich produce nothing but. good common. wine, fuch as can be raifed almoft anyy where, uponimy light, gravelly, or Tandy (bil, and which has nothing to irccomtanend it^but jts ftrength and wholefomcncfs. ^.ilt. is ii^tb fuch vineyards only that the common land^of the country can be brought into compe- \tition ;' for with thofe of a peculiar quality it is •evident that it cannot. The vine is more aflTedled by the difference of ioils than any other fruit- tree. From fomc ic derives a flavour which no culture or manage^ •ment can eqiial, it is fuppofed, upon any other. This flavour, real or imaginary, is fbmetimes peculiar to the produce of a few vineyards; ibmeumcs it extends through the greater part of ^ ' > -I afinall THE WEALTH OF NATIONS. iT* j • fmaU diftri^) and fometimes through a con- c m a fiderabl'* part of a large province. The whole ^^' quantity of fuch wines that is brought to market falls (hort of the effe^ual demand, or the de- mand of thofe who would be willing to pay the whole rent, profit and wages neccfiary for pre- paring and bringing them thither, according to the ordinary sate, or according to the rate at which they are paid in common vineyards. The whole quantity, therefore, can be difpofcd of to thofe who are willing to pay more, which necef* farily raifcs the price above that of common wine. The difirrence is greater or Icfs, accordinf^ as the fafhionablcnefs and fcarcity of the vine ren- der the competition of the buyers iiiore lefs eager. Whatever it be, the greater part of it goes to the rent of the landlord. For thougii fuch vineyards are in general more carefi li) cul- tivated than mod others, the high pi ice of the wine feenns to be, not fo much the tiYc^t, as the caufe of this careful cul:ivation. In fo valuable a produce the lofs occafioned by negligcixe is fo great as to force even the nioft carclefs to atten- tion. A fmall part of this high price, therefore, is fufficient to pay the wages of the trxtraordinary labour beftowed upon their cultivation, and the profits of the extraprdinary Hock vvhich puts that labour into motion. ^ The fugar colonies pofltfied by the European nations in the Weft Indies, may be compared to thofe precious vineyards. Their whole produce falls (hort of the efFeiftual demand of Europe, and can be difppfed of to thofe who are willing to >. :. R a give p. »44 .■s^- THE NATURE AND CAUSES OF give more than what is fufficient td pAy thf whole rent; profit and wages necefTary for pne« paring and bringing it to market, according to the rate at which they are commonly paid, by any other produce. In Cochin-china the Bnefl: white fugar generally iclls for three piaftres the quincal, about thirteen (hillings and fixpence of our money, as we are told by Mr. Poivre,*^ a very careful obferver of the agriculture of that country. What is there called the quintal weighs from a hundred and fifty to two hundred Paris pounds, or a hundred and fcventy-fivc Paris pence of his cultivation, and that his fugar ihould be all clear profit. If this be true, for I pretend not to afHrm it, it is as if a corn farmer expedted to defray the expence of his cultivation with the chaff and the llraw, and that the grain ihould be all clear profit. We fee frequently fooieties of merchants in London and other trading towns, purchafe wafte lands in our fugar colonics, which they expe(5t to improve and cul- tivate wjth profit by means of fadlors and agents; notwithftanding the great didance and the un- certain returns, from the defedlive adminiftration * of juftice in thofe councries. Nobody will at- tempt to improve and cultivate in the fame manner the moft fertile lands of Scotland, Ire- land, or the corn provinces of North America, though from the more exaft adminiftration of juftice in thcfe countries, more regular returns might be expefted. J^i>^ In Virginia and Maryland the cultivation of tobacco is preferred, as moft profitable, to that of corn. Tobacco might be cultivated with advantage through the greater part of Europe j but in almoft every part of Europe it has become a principal fubjeft of taxation, and to colleft a tax from every different farm in the country where this plant might happen to be cultivated, would be more difficult, it has been fuppofed, than to levy one upon its importation at the cuftom-houfc. The cultivation of tobacco has upon this account been moft abfurdly prohibited , i R J through 146 THfi NATURE AND CAUSES OF ^' BOOK through the greater part of Europe, which nccef- > ^' . drily gives a fort of monopoly to the countries where it is allowed ; and as Virginia and Mary- land produce the greatcft quantity of it, they fliare largely, though with fomc competitors, in : ,v the advantage of this monopoly. The cultiva- tion of tobacco, however, feems not to be fo ad- vantageous as that of fugar. I have never even heard of any tobacco plantation that was im- i. proved and cultivated by the capital of merchants who refided in Great Britain, and our tobacco colonies fend us home no fuch wealthy planters , as we fee frequently arrive from our fugar iflands. Though from the preference given in thofe co- , Ionics to the cultivation of tobacco above that of corn, it would appear that the effeflual demand of Europe for tobacco is not completely fup- plied, it probably is more nearly fo than tliat for • fugar : and though the prefent price of tobacco is probably more than fufficient to pay the whole rent, wages and profit neceflary for preparing and bringing it to market, j^ccording to the rate at which they are commonly paid in corn land; it muft not be fo much more as the prefent price of fligar. Our tobacco planters, accordingly, . - have fhewn the fame fear of the fuper-abundance of tobacco, which the proprietors of the old vineyards in France have of the fuper-abundance of wine. By ad of aflembly they have reftrained its cultivation to fix thoufand plants, fuppofed > CO yield a thoufand weight of tobacco, for every negro between fixtcen and fixty years of age. Such a negro, over and above this quantity of i 1 . >. . • 1^ u tobacco, :h ncccf- countries I Mary- it, they titers, in cultiva- >e fo ad- i'cr even was im- lerchants tobacco planters ■ iflands, hofe co- I that of demand 'ly fup- tiiat for tobacco le whole reparing the rate 1 land; It price rdingly, Jndance he old indance trained ppofed every f age. tity of 3acco, xt. ''THE WEALTH OF NATIONS. ■ fkf tobacco, can manage, they reckon, foui* &irc^ of ciCa pi Indian corn. To prevent th* market YrOm bdng ovcrftocked too, they have fomctimesi in 'plentiful ycar^, we are told by Dr. Douglas*, (I fufpcft he has been ill informed) burnt a Certain quantity of tobacco for every negro, in the feme matirter as the Dutch are fai*! to do of fpiccs. If fuch violent methods are neceffary to keep up the prefent p^ricc of tobacco, the fuperior advantage of its culture over that of corn, if it ftill has any, will not pro- bably be of long continuance. V It is in this manner that the rent of the culti- vated land, of which the produce is human food, regulates the rent of the greater part of other cultivated land. No particular produce can long afford lefs ; becaufe the land would imme> diately be turned to another ufe : and if any particular produce commonly affords more, it is becaufe the quantity of land which can be fitted for it is too fmall to fupply the effectual de-^ mand. '^^^^'^''' '• ^"^^ • , '^^^^^ ^ ' In Europe corn is the principal produce of land which ferves immediately for human food. Except in particular fituations, therefore, the rent of corn land regulates in Europe that of all other cultivated land. Britain need envy neither the vineyards of France nor the olive plantations of Italy. Except in particular fituations, the value of thefe is regulated by that of corn, in which the fertility of Britain is not much inferior to that of cither of thofe two countries. i . , - . , ^ • Douglas's Summary, ^ol. ii. p. 372, 373. Q^^ ^^ ^^'y^nh-^ R4 If #4« THE NATURE AND ' CAIJ^Ea^lt)P I^ in apjj^ cQunify: tJi^s c^mojon . and-^ f*v or ihe; ilirplu;$ quantity of food which would femait) tQ hi m» after paying the labour and replacing the ftock of the farmer together wfith its ordi- paryr pfQnt$j. would iiecefcily l?e routeh greater* Whatever was the rate at which. labour*, was; com-, niobly • Ajaintained in that country, this greater fihrplus could always maintain a» greater quantity of ity and cohfequently enablej the landlord ta ' purchafe or command a greater quantity of it, The real value of his rent, his real power and authority^ his command of the neceffarieS;4nd con^ vcnieacies of life «with which the labour of other people could fupply him, would ncccflrarily be much greater. ; t; ^...u-^oi^i li^; A RICE field produces a much greater quan» tity of food . than the moft fertile_ corn field. Two crops in the year from thirty tQ/finty bufliels each, are (aid to be the ordinary producie of an acre, Though its cultivation, therefore, re- quires more labour, a much greater fufplus re- mains after maintaining all that labour, }n thofe rice countries, therefore, where rice is the common afld favourite vegetable food of the pieo^c,- an4 where the cultivators are chiefly maintained with it, a greater Ihare of . this greater, furplus fhould belong to the landlord than in corn countries. In Carolina, . whefe the -I ; ^„ planters. '^'HE WEALTH OF NATIONS. "" ^ |>lanwr8j as in other Biiciih. colonies, ar* gene- c h a p«i rally both farmers and landlords, and where rent confequently is confounded with profit, the cul- tivation of rice is found to be more profitable than that of corn, though their fields productf only one crop in the year, and though, from thd prevalence of the cuftoms of Europe, rice is not there the common and favourite vegetable food of the peopIe.^i'*;5-a^i^'*''-.P'!r.-r.Ti \:n\.fa.m\i : A GOOD rice field is a bog at all feafbns, and , at one feafon a bog covered with water. It is unfit either for corn, or pafture, or vineyard, or, indeed, for any other vegetable produce that is very ufeful to nnen ; and the lands which are fit for thofe purpofes, are not fit for i'ice. Even in the rice countries, therefore, „ the rent of rice;; lands cannot regulate the rent of the other culti-< vated land which can never be turned to th^t^, produce., '^vr .„' ? > ^' T The food produced by a field of potatoes is not inferior in quantity to that produced by a. field of rice, and much fuperior to what is pro- duced by a field of wheat. Twelve thoufand. weight of 'potatoes from an acre of land is not 2l, greater produce than two thoufand weight of- wheat,_ The food or fplid nourilhment, indeed,: which can be drawn from each of thofe two> plaKt.,> is not Itogether in proportion to their, weight, on account of the watery nature of po-' tatoes. Allowing, however, half the weight of this root to go to water, a very large allowance, fuch an acre of potatoes will fiill produce fix, thoufand weight of folid nourilhment, threq\ ...^ times »j» THE NATURE ANP CAU5E3 OF ' BOOK, tunes the quantity prodi|ced by the acre of '* .^ wheal. An acre, of potatoes is cultivated with Icfi CK^jence than an acre of wheat ; the fallow, which generally preccides the fpwing of wheat, more than compenfaCfing the , hoeing and other cxtraordinprfy cui'ure. which is aUvsys given to potato s. Should this root ever becorisie in any part, ot Europe, like rice in fomc /ice cou t in.s, tl^.e conninon and f^voui ite V( getabk- food of .nc people, i'o as to occupy the fia^ie proportion of the lands in tilla:(.c which wheat .and other forts of grain ibr human food do at prefent^ lYjt fa)ne quantity of cultivated land would mainfain a much greater number of peopK% ah-i the la- bourers being generally kd with potatoes, a gti-iter furplus would remain after replacing all *re ftock and maintaining all the labour cm- pioycd in cultivation. A greater (hare of this furplus too would belong to the landlord. Po- puLttion would increafe, and rents would rife much beyond what they are at prefent. ,-* • ^» - The land which is tit for potatoes, is fit for almoft every other ufcful vegetable. If they occupied the fame proportion of cultivated land Vrhich corn does at pr^fcnt, they would regulate, in the fame manner, the rent of the greater part of other cultivated land. Vr^ In fome parts of Lanciafhire, it is pre«^<*hdcd, I have been told, that bread of oatmeal is a heartier food for labouring people t!(an wheaten bread, and I have frequently heard the fame do6lrine held in Scotland. I am, however, fomewhat doubtful of the truth <.r it. The corn- s'; ' i I mon ^ rt o n THE WEALTH OF NATIONS. rT sfi mon people in Scotland, who are fed with oatmeal, chap. are in general neither fo ftroQg nor fo handfome as the fame rank' of people in England, who are fed with wheatcn bread. They neither work fi>^ well, nor look fo well; and as there is not the fame difference between the people of fafhion in the two countries, experience would feertt to^ fhow, that the food of the common people in Scotlaijd is not fo fuitable to the human conftitution ^ that of their neighbours of the fame rank in > England. But it feems to be otherwife with., potatoes. The chairmen, porters, and coal- heavers in London, and thofc unfortunate women^^ who live by proftitntion, the ftrongeft men and the moft beautiful wom^n perhaps in the Britifh: dominions, are faid to be, the greater part of them* from the lowed rank of people in Ireland, who are generally fed with this root. No food can afford a more decilive proof of its nourifhing quality, or of its being peculiarly fuitable to the health of the human conftitution. * It is difficult to preferve potatoes through the year, and impoITible to ftorc thenti like corn, for two or three years together. The fear of not being able to fell them before they rot, difcourages their cultivation, and is, perhaps, the chief ob- ftacle to their ever becoming in any great country, like bread, the principal vegetable food of all the different ranks of the people. . t'l^ ■ ■ ^ , • nr^frtili .^i^'i^^i; /.^'i;«v^,4.^^v:^'■ ii<^^r.fi;f j)i;:-^mub "yi-'r^^-i^M Jlf« THE NATURE AND CAUSES OF q nnfT ■» Cf t^e Produce of Land which fomettmes does, and " Jometimes does not, afford Rent, '^-' ooK fJUMAN food feems to be the only produce J* •'t* of land which always and ncceffarily affords fonde rent to the landlord. Other forts of pro- duce Ibmetioies may and fometimes may not, according to different circumftances. ifAPTER food, cloathing and lodging are the two great wants of mankind. ; Lasd in its original rude (late can afford the materials of cloathing and lodging to a much greater nt r .be- of people than it can feed. In its improT \i fis- f^ ': can fometimes feed a greater number of r? o>p!c than it can fupply with thofc materials ; at k-all: in the way in which they re- q'^irc them, and are willing to pay for them. In the one ftate, therefore, there is always a fuper-abundance of thofe materials, which ire frequently, upon that account, of little or no' value. In the other there is often a fcarcity, which neceffarily augments their value. In the one ftate a great part of them is thrown away as ufelefs, and the price of what is ufed is con- lidiered as equal only to the labour and expencc of fitting it for ufe, and can, : therefore, afford no rent to the landlord. In the other they are all made ufe of, and there is frequently a demand for more than can be had. Somebody is always willing to give more for every part of them than what ^THE WEALTH OF NATIONS. • ^^j \tfhat is fufficicnt to pay the cxpencc of brmgihg ^ \^ ^* them to market. Their price, therefore, can al'* ways aflford fome rent to the landlord. . to a The fkins of the larger animals were the oru glnal materials of cloathing. Among nations of hunters and fhepherds, therefore, whofe food confifts chiefly in the flf.fh of thofe animals^ every man, by providing himfclf with food, pr©-» vides himfelf with the materials of more cU»(hy ing than he can wear. If them was no foreign commerce^ the greater part of them would be thrown awsy as things of no ovaliic. Thifi ^was probably the cafe among the hunting natiohs ^ Nlorth America, before their jcoiinttry was dilbo- vcred by the Europeans, with whom they nov? exchange theit- furplus peltry, for blarikctisi fire-arms> and brandy, which gives it fome valin^ In the prefent commercial ftate of . the knon^n world, the n^:6t :. barbarous nations^ I believe^ among whom . land property iis eftablilhed, haYC foiT)e foreign commerce of this kind^ and ilnd among their wealthier neiglibdurs fuch a demand for :all the macecialrvof cloathin^^ which their landi produces, and which :' ■.^^:%*Rr^/r,:jt s$4 THE NATURE AND CAUSES 6? BOOK of the highland eftaces. The wool of England^ which in old times could neither be conlumcd nor wrought up at home, found a market in the then wealthier and more indudrious country of Flanders, and its price afforded ibmething to the tent of the laqd which produced it. In counuiea ;iot ixtU"! cultivated than England was then, or tiKin the highlands of Scotland are now, and which had no foreign commerce, the materials of cloathing would evidently be To fuper- abundant, that a great p&Tt nC ihem would be thrown away M ^ufelefs, and no part could afford any rent to the landlord. .ir.vA'i^i'-i yjomfi t»U> 2>ilt vlriwicia ''^t The materials of lodging cannot always be tranfp^orted to fo great a diflance as thofe of cloathing, and do not fo readily become an ob- }t€t of foreign commerce. When they are fuper- abundant in the:;cDuntry which produces them, it -frequently happen*, even in the prefcnt com- tnercial date of the world, that tiiey are of no .value to the landlord. A good ftone quarry m the neighbourhood of Londbn would afford a confiderable renU In many patts of Scotland •and Wales iti affords none. Barren timber for building is .of great value in a populous and well-cultivated country, and the land which pro- duces it affords a confiderable rent. But in many parts of North America the landlord would be much obliged to. any body who would .carry away the grearer part of, his large trees. Jn fome pr .j of the highlands of Scotland the bark is the only part of the wood which, for want of roads and water-carriage, can be fent to market. ij • THE WEALTH OP KATIONS. ' >^ market. The 'timber is left to rot upon the ^ " ^^ '• ground. When the ^atcriilt of lodging arc fo faper-abundant, tlic part made ufc of is worth only the labour and cxpcncc of fitting it for that life. It affords no rent to the landlord, who ge- nerally grants the ule of it to whoever takes the trouble of aOcing it. The demand of wealthier nations, hoiwevef, fometimes enables him to get .a rent for iii The paving of the ftrects of London has enabled the owners of fome barren rocks on the coaft of Scotland to draw a rent from whit never afforded any before. The woods of Nop- "i^ay and of the courts of the Baltic, find a mark^ft • ih many parts of Great Britahi which they could not; find at -home, and thereby afford fbme rent to their proprieilors. -j ... ' i. ■J Countries :a« poputow,' n6t In proportion ^to tlie number oT people whom their produce can cloath and lodge, but in proportion to that of thofe whom it can fcc<\. When food is pro- vided, it is eafy to find the ncceffary cloathing and lodging. But though thefe are at hand, it may often be difiicult to find food. In fome parts of the Britidi dominions what is called A Houfe, may be built by one day's labour of one man. The fimplcft fpecies of cloathing, the fkins of animals, require fomewhat mote labour to drcfs and prepare them for ufc. They do not, however, require a great deal. Among fa- ■vage or barbarous nations a hundredth or little more than the hundredth part of the labour of the whole year, will be fufficient to provide them with fuch cloathing and lodging as fatisfy the i'j'- ^ greater ^t|6 THE NATURE AND CAUSES OP t o o K gfrcatcr part of thc.]x«opIc. AJI the orlicr nhttfh nine parts are frequent}/ no fr'^>T than enough cp provide them with fop<). wl ji But when by the improycin^ne and cultivii. -tion of land the labour of one. family can pro- vide food for tuo, are always willing to exchange the furplus, or, what is the fame thing, the price of it, for gratifications of IHE WEALTH OF NATIONS. this Other kind. What is over and above fatif- fying the limited dcfirc, is given for the amufe- ment of thofc defires which cannot be fatisficd, but fcem to be altogether endlcfs. The poor, in order to obtain food, exert thcmfelves to gra- tify thofc fancies of the rich, and to obtain ic more certainly, they vie with one another in the cheapnefs and perfedion of their work. The number of workmen increafes with the increafing quantity of food, or with the growing improve- ment and cultivation of the lands j and as the nature of their bufmefs admits of the utmoft fub- divifions of labour, the quantity of materials which they can work up, increafes in a mucli greater proportion than their numbers. Hence arifcs a demand for every fort of material which human invention can employ, either ufefully or orna- mentally, in building, drefs, equipage, or houfehold furniture i for the foflils and minerals contained in the bowels of the earth, the precious metals, and the precious ftones. , -- , - ; Food is in this manner, not only the original fource of rent, but every other part of the pro- duce of land which afterwards affords rent, de- rives that part of its value from the improve- ment of the powers of labour in producing food by means of the improvement and cultivation of land. Those other parts of the produce of land, however, which afterwards afford rent, do not afford it always. Even in improved and culti- vated countries the demand for them is not al- ways fuch as to afford a greater price than what Vol. I. S is *;7 253 THE NATURE AND CAUSES OF BOOK is fufficient to pay the labour, and replacje, to- gether with its ordinary profits, the (lock which mufl be employed in bringing them to market. Whether it is or is not fuch, depends upon dif- ferent circumftances. '- -■ ^-''^ '/.'fj '.• ^;'.;..jc -o ■ Whether a coal-mine, for cj^ample, can afford any rent, depends partly upon its fertility, and partly upon its fituation. v' -^ •% ^v^i^E^ ^iyi^it'iu ' A MINE of any kirkl may be faid to be either fertile or barren, according as the quantity of mineral which can be brought from it by a cer- tain quantity of labour, is greater or lefs than what can be brought by an equal quantity from the greater part of other mines of the fame kind. '^n^''!ipKu.\,:--;^c^\,:r^ri-:f/-^---^0''ii:^ :xn^t' • • Some coal- mines, advantageoufly fituated, cannot be wrought on account of their barrennefs. The produce does not pay the expence. They can afford' neither profit nor rent. ^^'V^/Wi^^Jvin'/Vh. * There are fome of which the produce is barely fufficient to pay the labour, and replace, together with its ordinary profits, the flock em- ployed in working them. They afibrd fome profit to the undertaker of the work, but no rent to the landlord. They can be wrought ad- vantageoully by nobody but the landlord, who being himfelf undertaker of the work, gets the ordinary profit of the capital which he employs in it. Many coal-mines in Scotland are wrought in this itiaiihcr, and can be wrought in no other. The landlord will allow nobodv elfe to work them without paying fome rent, and nobody can afford to pay aiiy. - ... .. ,. • * Other '0^ 255 -THE WEALTH OF NATIONS* vO^heR coal-mines in the fame country, fuf- ^ \^ ^' ficicntly fertile^ cannot be wrought on account of their fituation. A quantity of mineral, fuf- ficient to defray the expence of working, could be brought from the mine by the ordinary, or even lefs than the ordinary quantity of labour : but in an inland country, thinly inhabited, and without either good roads or water-carriage, this quantity could not be fold. f4>^.t < - • . #«#♦-. 'i^ ■: Coals are a lefs agreeable fewel than ]ivood: they are faid too to be lefs wholefome. The ex- pence of coals, therefore, at the place where they are confumed, mull generally be fomewhat lefs than that of wood. u* 34.v; *- . .Ji. j '•' The price of wood again varies with the (late of agriculture, nearly in the fame manner, and exaflly for the fame reafon, as the price of cattle. In its rude beginnings the greater part of every country is covered with wood, which is then a mere incumbrance of no value to the landlord, who would gladly give it to any body for the cutting. As agriculture advances, rhe woods are partly cleared by the progrefs of till-' age, and partly go to decay in confcquence of the increafed number of cattle. I'hcfc, thoush they do not increafe in the fame proportion as corn, which is altogether the acquifuJ.on of hu- man indudry, yet mult'^^ly under the care and protection of men ; who ilore up in the fcafon of plenty what may maintain them in that of fear- city, who through the whole year furnifli them with a greater quantity of food than unculti- vated n.itLire provides lor themj and vv!io by de* S 2 iiroying t6o THE NATURE AND CAtTSES CP ftroying and extirpating their enemies^ fecure thenn in the free enjoyment of all that fhe pro- vides. Numerous herds of cattle, when allowed CO wander through the woods, though they do not deftroy the old trees, hinder any young ones from coming up, fo that in the courle of a cen- tury or two the whole foreft goes to ruin. The fcarcity of wood then raifes its price. U affords a good rent, and the landlord fometimes finds that h6 can fcarce employ his beft lands more advantageoufly than in growing barren timber, of which the greatnefs of the profit often com- penfates the latenefs of the returns. This feems in the prefent times to be nearly the ftate of things in feveral parts of Great Britain, where the profit of planting is found to be equal to that of either corn or pafture. The advantage which the landlord derives from planting, can no- where exceed, at leaft for any conliderable time, the lent which thcfe could afford him; and in an inland country which is highly culti- vated, it will frequendy not fall much Ihort of this rent. Upon the fea-coaft of a well-im- proved country, indeed, if coals can conveniently be had for fewel, it may fometimes be cheaper to bring barren timber for building from lefs culti- vated foreign countries, than to raife it at home. In the new town of Edinburgh, built within thefe few years, there is not, perhaps, a fingje ftick of Scotch timber. Whatever may be the price of wood, if that of coals is fuch that the expence of a coal-fire is nearly equal to that of a wood one, vye may be affured, THE WEALTH OF NATIONS. afltired, that at that place, and in thefe circum- ilances, the price of coals is as high as it can be. It feems to be fo in fonne of the inland parts of England, particularly in Oxfordfliire, where it is ufual, even in the fires of the common people, to mix coals and wood together, and where the dif- ference in the expence of thofe two forts of fewel cannot, therefore, be very great. Coals, in the coal- countries, are every-whcrc much below this higheft price. If they were not, they could not bear the expence of a diftanc carriage, either by land or by water. A fmall quantity only could be fold, and the coal maf- ters and coal proprietors find it more for their intereft to fell a great quantity at a price fomc- what above the loweft, than a fmall quantity at the higheft. The moft fertile coal-mine too, re- gulates the price of coals at all the other mines in its neighbourhood. Both the proprietor and the undertaker of the work find, the one that he can get a greater rent, the other that he can get a greater profit, by fomewhat underfelling all their neighbours. Their neighbours are foon obliged to fell at the fame pru , though they cannot fo well afford it, and though it always di- minifhes, and fometimes takes away altogether both their rent and their profit. Some works are abandoned altogether; others can afford no rent, and can be wrought only by the pro- prietor. The loweft price at which coals can be fold for any confiderable time, is, like that of all other commodities, the price which is barely fufficient S3 to 261 ■zfii THE NATURE AND CAUSES OF BOOK to replace, together with its ordinary profits, the Itock which miift be employed in bringing them to market. At a coal-mine for which the land- lord can get no rent, but which he mnft either work himfclf or let it alone altogether, the price of coals mull generally be nearly about this price. Rent, even where coals afford one, has gene- rally a fmaller fliare in their price than in that of moft other parts of the rude produce of land. TKc ,"' •" ot an eftate above ground, commonly amounts to what is fuppofcd to be a third of the grofs produce , and it is generally a rent certain and independent of the occafional variations in the crop. In coal-mines a fifch of the grofs pro- duce is a very great rent ; a tenth the common rent, and it is feldom a rent certain, but depends upon the occafional variations in the produce. Thefe are fo great, that in a country whe-e thirty years purchafe is confidcrcd as a moderate price for the property of a landed eftate, ten yean; purchafe is regarded as a good price for that of a coal-mine. The value of a coal-mine to the proprietor frequently depends as much upon its fituatioii as \\[yoi-\ its fertility. That of a metallic mine depends more upon its fertility, and lefs upon its fituation. Tlve coarfe, and liill more the precious metals, when feparated from the ore, are fo valuable that they can generally bear tiie expence of a very long land, and of the mod dillant fea carrir.ge. Tl' 'ir market is not con- fined to t!ie couiitries in the neielvbourhood of THE WEALTH OF NATIONS. 263 the mine, but extends to the whole world. The chap. copper of Japan makes an article of commerce in Europe i the iron of Spain in that of Chili and Peru. The filver of Peru finds its way, not only to Europe, but from Europe to China, The price of coals in Weftmorland or Shrop- Ihire can have little cffed on their price at New- caftle i and tlicir price in the Lionnois can have none at all. The produdlions of ilich dillant coal-mines can never be brought into competi- tion with one another. But the prociuflions of the molt diftant metallic mines frequently may, and in fafl commonly are. The price, there- fore, of the coarfe, and ftill more tiiat of the precious metals, at the moll fertile mines in the world, mufl: neceflarily more or lefs afTVd their price at every other in it. Tlie price of copper in Japan mufl have fome influence up-^n its price at the copper mines in Europe. The price of filver in Peru, or the quantity either of labour or of other goods which it will purchafe there, mufl have fome influence on its price, not only art the filver mines of Europe, but at thofe of China. After the difcovcry of the mines of Peru, the fiiver mines of Europe were, the greater part of them, abandoned. The value of filver was fo much reduced, that their produce could no longer pay the expence of vorkiug them, or replace, with a profit, the food, cloaths, lodging, and other ncceflaries which were con- fuir.cd in that operation. This was tlie cafe too with the mines of Cuba and Sr. Do:iiingo, and ;, . , . ^ •'^ even 264 THE NATURE AND CAUSES OP even with the ancient nnines of Peru, after the difcovery of thofe of Potofi. The price of every metal at every mine, there- fore, being regulated in fome meafure by its price at the moft fertile nrjinc in the world that is aftually wrought, it can at the greater part of mines do very little more than pay the expence of working, and can feldom afford """ high rent to the landlord. Rent, accoru;' ' ;, feems at the greater part of mines to have ■ Jt a fmall (hare in the price of the coarfe, and a dill fmaller in that of the precious metals. Labour and profit make up the greater part of both. A SIXTH part of the grofs produce may be reckoned the average rent of the tin mines of Cornwall, the moft fertile that are known in the world, as we are told hy the Rev. Mr. Boi- lace, vice-warden of the ftannaries. Some, he fays, afford more, and fome do not afford fo much. A fixth part of the grofs produce is the rent too of feveral very fertile lead mines in Scotland. In the filver mines of Peru, we arc told by Frezier and Ulloa, the proprietor frequently ex- adls no other acknowledgment from the under-^ taker of the mine, but that he will grind the ore at his mill, paying him the ordinary multure or price of grinding. Till 17.36, ind'^ed, the tax of the king of Spain amounted to one fifth of the ftandard filver, which till then might be confidercd as the real rent of the greater part of the filver mines of Peru, the richeft which have been known in the world. If there had been no THE WEALTH OF NATIONi. . ' 263 no tax, this fifth would naturally have belongecJ chap. to the landlord, and many mines might have been wrought which could not then be "wrought, becaufe they could not afford this tax. The tax of the duke of Cornv/all upon tin is fuppofed to amount to more than five per cent, or one- twentieth part of the value ; and whatever may be his proportion, it would naturally too belong to the proprietor of the mine, if tin was duty free. But if you add one- twentieth to one-fixth, you will find that the whole average rent of the tin mines of Cornwall, was to the whole average rent of the fiiver mines of Peru, as thirteen to twelve. But the filver mines of Peru are not now able to pay even this low rent, and the tax upon filver was, in 1736, reduced from one-fifth to one-tenth. Even this tax upon filver too gives more temptation to fmuggling than the tax of one-twentieth upon tin; and fmuggling mud be much eafier in the precious than in the bulky commodity. The tax of the king of Spain ac- cordingly is fiid to be very ill paid, and that of the duke of Cornwall very well. Rent, therefore, it is probable, makes a greater part of the price of tin at the moft fertile tin mines, than it does of filver at the moft fertile filver mines in the world. After replacing the ftock employed in working thofe different mines, together with its ordinary profits, the refidue which remains to the proprietor, is greater it feems in the coarlc, than ip the precious metal. Neither are the profits of the undertakers of filver mines commonly very great in Peru. The fame z66 THE NATURE AND CAlT^ES OF fame moft refpeflable and well m\ formed authors acquaint us, that when any perfon undertakes to work a new mine in Peru, he is univerfally looked upon as a man deitined to bankruptcy iind ruin, arid is upon that account lliunned and avoided by every body. Mining, it fcems, is confidered there in the lame light as here, as a lottery, in which the prizes do not compenfate the blanks, though the greatnefs of fome tempts many advcnturer'J to dirow away dicir fortunes in fuch unprolj^erous projects. .i^^^, - nic^ ytf ■■tct^'-ijvi . As the fovereign, however, derives a coniider- able part of his revenue from the produce of filver mines, the law in Peru gives every poflible encouragement to the difcovery and working of new ones. Whoever difcovers a new mine, is entitled to nieafure off two hundred and forty- fix feet in length, according to what he fup- pofes to be the direction of the vein> and half as much in breadth. He becomes proprietor of this portion of the mine, and can work it with- out paying any acknowledgment to the landlord. The interell of the duke of Cornwall has given occafion to a regulation nearly of the fame kind in that ancient dutchy. In wade and uninclofed lands any perfon who difcovers a tin mine, may jnark out its limits to a certain extent, which is called bounding a mine. The bounder becomes the real proprit^tor of the mine, and may either work it hinifelf, or give it in k^alc to another, wirhout the cijnfent of the owner of the land, to wheal, however, a very fmull acknowledgment muf: be paid u])on working ir. In both r.eguia- , tions THE WEALTH Oi' NATIONS. 167 tions the facred rights of private property arc c h a p. ficrificed to the fuppofcd intcrcfts of public rcv^enue. ; . ' -^'-r**- The fame encouragement is given in Peru to the difcovrry and working of new gold mines ; and in gold uie king's tax amounts only to a twentieth part v/the ftandard metal. It was once a fiftl J and afterwards a tenth, as in filver j but it was found that the work could not bear even the lowed of thefe two taxes. If it is rare, how- ever, fay the fame authors, Frezier and UUoa, to find a perfon who has made his fortune by a filver, it is (till much rarer to find one who has done fo by a gold miric. This twentieth part ', jms to be the whole re:.t which is paid by the greater part of the gold mines of Chili and Peru. (}old too is much more liable to be fmuggled than even filver ; not only on account of the fuperior value of the metal in proportion to its bulk, but on account of the peculiar way in which nature produces it. Silver is very fcldom found virgin, but, like mcft other metals, is generally mineralized with fbme other body, from which it is impofllble to feparate it in fuch quantities as will pay for he expence, but by a very laborious and tedious operation, which cannot v^ell be carried or. but in workhoufcs ereded for the purpofe, and therefore expol'ed ro the infpeclion of the king's officers. Gold, on the contrary, is almoft always found virgin. Ir is fomctimes found in pieces of fame bulk j and even when mixed in fvall ai^d aimofl infen- fjble panicles v;ith fand, earth, and other extra- neous 369 THE NATURE AN:> CAUSES OP ncous bodies, it can be feparated fiom them by a very ihort an 1 fimplc operation, whicli c:c, '.« carried on in any private houfe by any body .vno i< poflfefled of a fmall quantity of mercury. If the king's tax, therefore, is f^rit ill paid upon filver, it is likely to be mr.cjii worfe paid upon gold J and rent muft make a much fmaller part of the price of gold, than even of that of filver. The lowed price at which the precious metals can be fold, or the fmalleft quantity of other goods for which they can be exchanged during any confiderable time, is regulated by the fame principles which fix the loweft ordinary price of all other goods. The flock which mufi: com- monly be employed, the food, cloaths and lodging which mufl: commonly be confumed in bringing them from the mine to tne market, determine it. It muft at leaft be fufficient to replace that ftock, with the ordinary profits. Their higheft price, however, feems not to be neceflarily determined by any thing but the s,6lual fcarcity or plenty of thofe metah them- i'elves. It is not determined by that of any other commodity, in the fame manner as the price of coals is by that of wood, beyond which no fcarcity can ever raife it. Increafe the fcarcity of gold to a certain degree, and the fmalleft bit of it may become more precious than a diamond, and exchange for a greater quantity of other goods. The demand for thofe metals arifes partly from their utility, and partly from their beauty. If you except iron, they are more ufcful than, perhaps, any other metal. As they are lefs liable IHE WEALTH OK NATIONS. 269 ni by »vho lyr. If upon upon art of liable to ruft and impurity, tliey can more eafily chat. be kept clean ; and the utenfils either of the table or the kitchen are often upon that account more agreeable when made of them. A filver boiler is more cleanly than a lead, copper, or tin one; and the fame quality would render a gold boiler ftill better than a filver one. Their principal merit, however, arifes from their beauty, which renders thcin peculiarly fit for the ornaments of drefs a^d furnituie. No painc or dye can give (o fpl colour as gilding. The merjt of their b( reatly enhanced by their fcarcity. With atcr part of ric!i people, the chief enjoyment 01 riches confifts in the parade of riches, which in their eye is never fo complete as when they appear to polVerii thofe decifive marks of opulence which nobody can poflefs but themfelves. In their eyes the merit of an objeft which is in any degree either ufeful or beautiful, is greatly enhanced by its fcarcity, or by the great labour which it requires to coi- led any confiderable quantity of it, a labour which nobody can afford to pay but themfelves. Such objedls they are willing to purchafe at a higher price than things much more beautiful and ufeful, but more common. Thefe qualities of utility, beauty, and fcarcity, are the original foundation of the high price of thofe metals, or of the great quantity of other goods for which they can every-where be exchanged. This value was antecedent to and independent of their being employed as coin, and was the quality wh'ch fitted them for that employment. I'hat 5 employment^ r ^-^^> IMAGE EVALUATION TEST TARGET (MT-3) k^ %* 1.0 I.I u& Iii2 12.2 I!! ufi 12.0 til U& 1 '-^^ lll-'-'^ lllll'-^ ^ 6" ► Photographic Sciences Corporation 23 WeST MAIN STRHT wnsTiR.N.Y. Msao (716) •72-4S03 2- B o THE NATURE AND CAOSES OP o o K employment, however, by occa(ioning a new de-* '* mand, and by diminifhing the quantity which could be employed in any other way, may have afterwards contributed to keep up or increafe their value. • r The demand for the precious ftones arifes aK together from their beauty. They arc of nouie, but as ornaments } and the merit of their beauty is greatly enhanced by their fcarcity, or by the difficulty and expence of getting them from^ the mine. Wages and profit acoffi^ingly make up, upon mod occafions, almod the whole of their high price. Rent confies in but for a very fmall fhare; frequently for no (hare; and the mod fertile mines only afford any confiderable rdnt. When Tavernier, a jeweller, vifitcd the dii^- mond mines of Golconda and Vifiapour, he w^^ informed that the fovereign of the country, for whofe benefit they were wrought, had ordered all of them to be fhut up, except thofe which yield the largeft and fincft ftones. The others, it fcems, were to the proprietor not worth the working. ' As the price both of the precious metals and of the precious ftones is regulated all over the world by their price at the moft fertile mine m it, the rent which a mine of cither can afford to its proprietor is in proportion, not to its abfolute, but to what may be called its relative fertility, or to its fupcriority over other mines of the fame kind. If new mines were difcovered as much foperior to thofe of Potofi as they were fuperior to tliolc of Europe, the value of filvcr might be fo J ' r- t THE WEALTH OF NATIONS. sji {o much degraded as to render even the minei"of chap. Pocofi not worth the working. Before the dif- .. -^„' ji covcry of the Spanifh Weft Indies, the moft fer- tile mines in Europe may have afibrded as great a rent to their proprietor as the richeft mines in Peru do at prcfent. Though the quantity ■ of filver was much lefs, it might have ejcchanged for an equal* quantity of other goods, and the proprietor's ihare might have enabled him to purchafe or commahd an equrf quantity either of labour or' of commodities* The value both of the produce and of the rent, the real revenue which they afforded both to the public and Co the proprietor, might have been the fame. ->^^4^ The moft abundant mines either of the pre- cious metals or of the precious ftones could add little to the wealth of the world. A produce of which the value is principally derived frdmit^ fcarcity, is neccffarily degraded by its abU|idiin<;4r; A fervice of plate, and the other frivolous Jttfc v namcnts of drefs and furniture. Could be purchased for a fmaller qiiaritity of labour, or for a fmalle^ quantity of commodities ; and in this would con- ./ fift the fole advantage which the world could dc- v rive from that abundance, . ' It is otherwife in eftates above ground. The ; value both of their produce iand of their rent is in proportion to their abfblute, and not to their relative fertility. The land Which produces a ■> certain quantity of food, cloaths, and lodging, can always feed, cloath, and lodge a certain number of people; and vvhatever may be the proportion of the landlord, it will always give ■ 6 hina /■■?• ■ «»►:,<<**«,-* ^^a THE HATURB ANt) CAUSES OP B o o K fij{Q a proportionable command of ;he Ubqitf of thofe people, and of the ccJmmodicies with which tiiac labour can fupply him. The value of the xnoft .barren lands is not diminiihed by the neighbourhood of the mod fertile. On the con^ t^ary, it is generally increafed by it. The great number of people maintained by the fertile lands afford a market to many parts of the produce of the barren, which they could never have found among thofe whom their own produce cpj^}^ maintain. Whatever incrcafes the fertility pf land in producing food, increafes not only the value of the lands upon which the improvement is be- ftpwed, but contributes likewife to increafe that of many other lands, by creating a new demand fol" their produce. That abundance of food, of which, in confcquence of the improvement of land, many people have the difpofal beyond what they themfelves can confume, is the great caufe pf the demand both for th^ precious metals and the precious ftones, as well a^ for every, other cpnveniency and orname'^ 'f .d.w(5> lodging, houf T values 174 THE NATURE AND CAUSES Of BOOK vafuirs of thofe two different (brti of prodiMA. The value of chat fort which fometimcs does and fometimes does not afford rent, (hotfld eonfttint)jr rife in proportion to that which always afibrdi fbtne rent. 4s ^rt and induftry advance, the materials of cloathing and lodging, the uleful foflils and minerals of the earth, the precious metals and the precious (tones fhould gradually come to be more and more in demand, fhould gradually exchange for a greater and a greater quantity of food, or in other words, (bould gra- dually become dearer and dearer. This accord- ingly has been the cafe with moft of chefe things ' tipon moft occafions, and would have been the cafe with all of them upon all occafions, if parti- cular accidents had not upon fome occafions in- treafed the fupply of fome of them in a ftill greater proportion than the demand. The value of a free-ftone quarry, for ex- ; ample, will nccefTarily increafe with the increafing improvement and population of the country round about itj efpecially if it fhould be the only one in the neighbourhood. But the value of a filver mine, even though there fhould not be ■: another within a thoufand miles of it, will not i nccefTarily increafe with the improvement of the * country in which it is fituated. The market for K the produce ©f a fl-ee-flone quarry can feldom ex- 1 tend more than a few miles round about it, and ^ the demand mufl generally be in proportion to the improvement and population of that fmall ;» diftrii^. But the market for the produce of i ■;r' ,_' ■■ •*■ ..^., ' /■ , f ;-'filver 'piiill(' J. . ' » y» XfTHB WEALTH O^ NATIONS. p^f til¥tf mnt fxiay extend over the whole known ^ ^,^ '• world. U^lefs the world in general, therefore^ be advancing in improvement and populaciooi the den[)and.,for filver might not be at all ia« creafed by the improvement even of ^ large counfryv'^ the neighbourhood of the mjnel Even thp^gh the world in general were im^ pi;ovipg> yet, if, in the qourife of its improvement* nciW injnq ,ihould be difcovered, much more fer* lilje , than , ;^9y which had been known befoit. though „^|ie pemapd for filver would neceflarily increafe, yet the fupply might increase in fo much a, .g^cfiter proportion, that the real price of that mOfU' might gradually fall; that is, any given qujinj^^, a pound weight of it, for ex- ample,,, i^ight. gradually , purchafe or command a fmaller '^nd a fmaller (quantity of ta()our, or exchange for, a fmatler and a fmaller quantity of corn, ^he prin|c|p^\ |»rt of the fubfiAence of the labourer. : ,^ i , The gr^at market for filver is the commercial and civilized part of the world. If by the general progrefs of improvement the demand of this market (hould increafe, while at the fame time the fupply did not increafe in the fame proportion, the value of filver would gra- dually rife in proportion to that of corn. Any given quantity of filver would exchange for a greater and a greater quantity of corn j or, in other words, the average money price of corn would gradually beconie cheaper and cheaper. If, pn the contrary, the fupply by fome acci- dent, (hould increafe for many years together in a T 2 greater i-^t li tjB t'^' THE NATURE AND CAUSES OP greitdr jf^fbportion th^h the demmd, thif xneial would gridujilly become cheaper and chdiper;' ^, in other words, the average money price of 'com W6uld; iti fpite of all improvenientsi gradually beeobic dearer and dearer. .' But if, on the other hand, the fupply- of the rh^tal (h(/uld increafe nearly in the fante propor- tion as the demiind, it would continue la 'par- chafe or exchange for nearly the ^me qui^ntity of corn, and the average money price df corii would, in fpite of all imprdvements, continue very jneai-ly the fame. Thxse three feem to exhauft all the poflible tombinatiohs of events which can happen in the ,progrefs of improvement i and during the courle of the four centuries preceding the prefent^ if we may judge by whatf^has happened both in France I and Great Britain, each of thofe three different '^combinations feem to have taken place in the j European market, and nearly in the iame order too in which I have here fet them down^io ***>^^*' iDigreffion conarning the Variations in the Value » , of Silver during the Cour/e of the Four lafi V Centuries* '„ V- ^x^%;vl»l9,'-'.- . 1 ■ 1 . FiR-ST Period. »rt' .t^ t'TN 1350, and for fomc time befoi-e, the* average t'^ price of the quarter " of wheat in England ^^leem$ not to have been eftimated lower than four !:otmces of filver, Towti*- weight, equal ta about ytWcnty fliilli igs oif our prcfcnt motieyi' Frohi ^■^■■- .•" • , '":■' ' this THB WEALTH OF NATIONS,, »77. this price it icemi to have fallen gradually to c h a p* two ounces of filver, equal to about ten ihiUing^ ^^' ofourprefent nnoney, the price at wbi^h we Bnd it efttmated in the beginning of the fixtcenth cen- tury, and at which ic feems to have continued to 'be eftinuited till about 1570. In 1350^ being the 25th of Edward III. was enaf^ed what is called* The Statute of Labourers. In the preannl^le it complains much qf the info* lence of fervants, who endeavo^red, to, raifa th^ir wages; upon, their mafters., It thereforf; ordains, that all fervants and labourers ihouldfor the fur ture be contented with the lame wages and live* ries (liveries in thole times fignif^ed, not only doaths^ but provifions) which they had been of:- cuftoraed to receive in the 20th year of the king, and the four preceding years j that upon this ac- count- their livery- wheat (hould no-where be eftimated higher than ten-pence a buihelj and that it fhould always be in the option of the maiVer to deliver them either the wheat or the money. Ten-pence a bufhel, therefore, had, in the 25th of Edward III. been reckoned a very moderate price of wheat, Hnce it required a par^ ticular ftatute to oblige fervants to accept of ii in exchange for their ufual livery of proviHons $ and it had been reckoned a reafonable price ten years before that, or in the i6th year of the king, the term to which the ftatute refers. But in the i6th yej^r of Edward III. ten-pence contained about half an ounce of filver, Towcrrweight, a^d wa& nearly equal to half a crow(i of our ptefent money. Four ounces of filver. Tower- weight, T 3 therefore. ■A\ t'r^.i »7« / I THE NATURE AND CAUSES Of K therefore, equal to fix ihilHngs and eight- {)eii^ of the money of thofe times, and to ni^ar twenty ihilUngs of that of the prefcnt, mud haVe been reckoned a moderate price for the quarter of eight bufhels. This ftatute is furely a better evidehce of what was reckoned in thofe times a moderate price of grain, than the prices of fome particuli^ years which have generally been recorded by hif- torians and other writers on account of their extraordinary dearnefs or cheapnefs, arid from which, therefore, it is drfficult to form any judg- ment concerning what may have been the ordi* nary price. There are, befldes, other reafbns for believing that in the beginning of the fourteenth century, and for fome tirne before, the common price of wheat was net lefs than four ounces of filver the quarter, and that of othier grain in proportion. In 1309, Ralph de Born, prior of St. Auguf. tine's, Canterbury, gave a feaft upon his inflalla- tion-day, of, which William Thorn has prcferved, not only the bill of fare, but the prices of many particulars. In that feaft were con fumed, I ft. Fifty-three quarters of wheat, which coft nineteen pounds, or feven ihillings and' two- pence a quafrter, equal to about one-and-twenty fhillings and fixpcnce of our prefent itioneyi sdly. Fifty-eight qjartcrs of malt, which coft feventecn pounds' ten (hillings, or fix (hillings a quarter, equal to about eighteen fhillings of our prefcnt money: jdly. Twenty quarters of oats^ which coft four pounds, or four ihillings a qiiar* ■'^' .■fc'^T*-^ ter. '-^:. ■■- THE WEALTH OP NATIONS. »79 tlpr» equal to about twelve (hillings of our prefent chap. money. The prices of male and oats feem here *' to bf} higher than their ordinary proportion to the price of wheat. These prices are not recorded on account of their extraordinary dearnefs or cheapnefs, but are mentioned accidentally, as the prices adtually paid for large quantities of grain confumed at a feaft which was famous for its magnificence. In 1262, being the 51ft of Henry III. was re- vived an ancient flatu(e called. The yljjize of Bread and Ale, which, the king fays in the pre- amble, had been made in the times of his pro* genitors, fometime kings of England. It is pro** bably, therefore^ as old at leaft as the time of his grandfather Henry II, and may have been as old as the conqueft. It regulates the price of bread according as the prices of wheat may happen to be, from one fhilling to twenty (hillings the quarter of the money of thoie times. But (la> tutes of this kind are generally prefumed to pro- vide with equal care for all deviations from the middle price, for thole below it as well as for thofe above it, Ten (hillings, therefore, con- taining fix ounces of (ilver. Tower-weight, and equal to about thirty (hillings of our prefent money, muft, upon this f^ippofition, have been reckoned the middle price of the quarter of wheat when this flatute was firft enadted, and muft have continued to be fo in the 51(1 of Henry III. We cannot therefore be very wrong in fuppofing that the middle price was i)ot lefs thap one-Uiird of the higheft price ^c which this .; ^^ T 4 ftatutc tU THS NilTURE AND CAUSES OF BOOK (UtMte rtguUtci the price oC brcad> or timi ftv (hilUogi and eight-pence of the money of thole timcti containing, four ounces of rilver» Toiv^r* weight. From thefe diBerent fa£b, chcrefore* we feem to have fomc reafon to conclude, that about the middle of the fourteenth centutyi and for a confix derable time before, the average or ordii^y price of the quarter of wheat was not fuppofed to be left than four ounces of filver, Tower«>weight. From about the middle of the fourteenth to the beginning of the fixteenth century, what was reckoned the reafonable and moderate, that is the ordinary or average price of wheat, feems to have funk gradually to about one-half of this price i fo as at lad to have fallen to about two ounces .of Alver, Tower-weight, equal to about ten fhtlllngs of our prefent money. It continu^ to be eltimated at i;his price till about 1 570. . In the houlhold book of Henry, the fifth earl of Northumberland, drawn up in 1512, there are two different edimations of wheat. In one of them it is computed at fix (hillings and eight- pence the quarter, in the other at five (hillings and eight-pence only. In 15 12, fix (hillings and eight-pente contained only two ounces of filver. Tower-weight, and were equal to about ten (hiU lings of our prefent money. i, F^OM the 25th of Edward III, to the be- ginning of the reign of Elizabeth, during the fpace of more than two hundred years, fix (hillings and eight-pence, it appears from feveral different ibtu|ps, had continued to be confidered as what [■ THB WSAITH OP NATION!. n iMi iir called thtf moderate and reafonable, that is thie c h a ordinary or ateragc price of wheat. The quanthy of filfer, however, contained in that nominal Turn was, during the courfe of this period, continually dimtnilhing, in coniequence of fome alterations which were made in the coin. But the increafe of the value of filver had, it feems, fo far com-* penfated the diminution of the quantity of it coiw tained in the fame nominal fum, that the legi* flature did not think it worth while to attend to this circumftance. Thus in 1436 it was enabled, that wheat might be exported without a licence when the price was lb low as (ix (hillings, and eight-pence: and in 1463 it was enai5led, that no wheat fhould be im- ported if the price was nqf above fix (hillings and eight- pence the quarter. The Icgiflature had imagined, that when the price was fo low, there could be no inconVeniency in exportation, but that when it rofe higher, it became prudent to allow of importation. Six (hillings and eight- pence, therefore, containing about the fame quantity of filver as thirteen (hillings and four- pence of our prefcnt money (one third part lefs than the fame nominal fum contained in the time of Edward ill.) had in thofe times been con- fidered a^ what is called the moderate and rea- fonable price of wheat. * In 1554, by the ift and 2d of Philip and Mary; and in 1558, by the ift of Elizabeth, the exportation of wheat was in the fame manner prohibited, whenever the price of the quarter JQioyld exceed fix (hillings and eight-pence, which K -■'^; THB NATURE AND CAUSES OF a OK, which did not then contain two penny worth more fUvcr than the fame nominal Turn docs at pr^nt^ But it had foon been found that to redrain the , exportation of wheat till the price was fo very low> was, in reality, to prohibit it alcogether. Iii 1562, therefore, by the .5th of Elizabeth, the exportation of wheat was allowed from certain ports whenever the price of the quarter (hould not exceed ten (hillings, containing nearly the dune quantity of filver as the like nominal fum does at prefent. This price had at this tiqne, therefore, been confidered as what is called the moderate and reafonable price of wheat. It agrees iiearly with the eflimation of the Northumberland; book in 1 c 1 2. That in France the average price of gruin was^ in the fame manner, much lower in the end of the fifteenth and beginning of the fixteenth century, than in the two centuries preceding, has beeq q^- fervcd both by Mr. Duprc de St. Miur, and Ijy the elegant author of the Eflfay on the police, of grain. Its price, during the fame period, had probably funk in the fame manner through the greater part of Europe. ^ ^ This rife in the value of filver, in proportion to that of corn, may either have been owing al- together to the increafe of the demand for that metal, in confcquence of inereafing improve- ment and cultivation, the fupply in the mean time continuing the fame as before : Or, the de- mand continuing the fame as before, it may have been owing altogether to the gradual diminutioo ^ the iupply; the greater parL gf the minei to.)* 'o ■ . ■ • ""^''^ ~' ^ ■■W: c r . * 'YHB WEALTH OP NATIONS. ' Sl^ ^lidh were then known in the , work), being c ha r^ much exhaufted, and confequently the expence of working them much increafed : or ic may have been owing partly to the one and piardy to the other of thofe two circumftances. In the end of the fifteenth and beginnuig of the fix- teenth centuries, the greater part of Europe wat approaching towards a nhore fettled form of go* vernment than it had enjoyed for feveral ages before. The increale of fccurity would naturally increafe induftry and improvement; and the de- mand for the precious metals, as well as for every other luxury and ornament, would naturally^ irtcrcafe with the increafe of riches^ . A greater annual produce would require a greater quantity of coin to circulate itj and a greater numbct' of rich people would require a greater quantity 6f plate and other ornaments of (ilver. It is natural to fuppofe too, that the greater part of the mines which then fupplied the European market with filver, might be a good deal exhaufled, and have become more expenfive in the working. They had been wrought many of them from the time of the Romans. It has been the opinion, however, of the greater part of thofe who have written upon the prices of commodities in s^ncient times, that^ from the Conqueft, perhaps from the invafion of Julius Csfar, till the difcovery of the mines of America, the value of (ilver was continually diminifhing. This opinion they feem to have been led into, partly by the obiervations which they had occafion to make upon the prices both : . --'■■• .--■.--. ,.-,-- ■ of I m THE NATURB AN© CAUSES OF » » o R of torn and of ibme other parts of the toisle. itra; ^^•-^ dnce of land ; and partly by the popular notico» that as the quantity of filver naturally increaiea in every country with the increafe of weakh> fb ita value dimini(hc$ as its quantity increales* ' ; In their obfervations upon the prices of corn^ three different circumftances feem frequently to have miOed them. ; r EiRST, In ancient times alnnoft al|, rents were I paid in kindj in a certain quantity of corn> cattle, poultry, &c. It fometimes happened, however, that the landlord would ftipulate, that he ihould be at liberty to demand* of the tenaiic, I* either the annual payment in kind, or a certain V |iwm of money inftead of it. The price at which - " -the payment in kind was in this manner e|(» changed for a certain fum of money, is ia Spt^tt land called the converfion prioe. As the qpt^M) is always in the landlord to take cither .the A^ '^ . .ftance or the price, it is necelTary for the fa/i^^y of the tenant, that the converfion price ihould rather be .below than above the average market price. In many places, accordingly, it is not much above one-half of this price. Through the greater part of Scotland this cuCkom: 'ilill continues with regard to poultry, and in-fiime .places with regard to catde. It rhight probably , have continued to take place too with regard>tp corn, had not the inftitution of the public 6ars put an end to it. Thefe are annual valuations, 'liccording to the judgment of an afTiz^, of the -l^erage price of all the diflPerent forts, of graio, 'find of . a]l the different qualities of each/foc- . * cording ) . rVOi WEALTH OP IJ ATIONS, T Oft coording to tHt a£hia) inarlcce price in i every flt£> c h^ p>> ierent county. This inftitution rendered it :fiji* fkiently fafe for th; nant, and ntnch more aon<* venient for the ku> ;urd, to convert^ as they call ie, 'the comrtnt, rather at what fliould happes to^be the priee of the fiark of each year, than at any certain fixed price. • But the writers 'ytiiiBi hic9t Golle^ed the prices of corn in ancient: times^* feem frequently to have miflaken what is called m^ Scotland the converfion price for the adkual niarkec price. Fleetwood acknowledges, u|>oii One o<{cafion, that he had made this miftakei As he wrote his book, however, for a particuiat piirpofe, he does not think proper to make thh aekno^ledgmeht till after trailfcribing this con* verfion ' price fifteen times^. The price . is eight fiiillings the quarter of wheat. This fam ift 1413, the year at which he begins > with ir, cOM^ned the fame' quantity of filver as fifteen ihillings of bur prefent money. But in 1562^, the year at which he ends with it, it contained no nnore than i3ajt fame nominal fum does at prefent. • '■'•^^.^■^•- ■ v'-'^^<-^ ■'■■ Secondly^ They have been miQed by the flo»- venly mtinner in which fdme ancient ftatutes of aflize had been fometimes tranfcribed by lazy copiers; and fometimes, perhaps, aftually cortv- poied by the legiflature. > 3 1.0; t; ; <^ji4 The ancient ftatutes of ^RflTizeieem to have -be- gutl always with determining what ought to be the price of bread and sile when the price of wheat and barley- were at the lowed, and to haVe proceeded gradually to determin& what, it .ought •fwianots • ^^ ^. to M THB NATURB AND CAtJSBS OP . CO be, according as the prices of cho(e two «iorti^ of! grain fliould gradually riie above this loweft price. But the tranfcribers of thofe llatutes leein lircquently to have thought it fuffi<:ient to copy the regulation^ as far as the three or four firft aiyi loweft prices; faving in this manner their VM^ labour, and judging, I fuppofe, that this was enough to (how what proportion ought to be ob- ierved in all higher prices. .< ^«.: .. Thus in the aflize of bread and ale, of the 51A ef Henry III, the price of bread wa9 regulated according to the different prices. of wheat, from one (hilling to twenty fhUlings the quarter, of the money of thoie times. But in the m^ini^'* icripts from which all the different editions of the ftatntes, preceding that of Mr. Ruffh^i^ were printed, the copiers had n^er. tranfcribied ^is regulation beyond the price of twelve (hilling^. Several writiers, therefore, being miflcd Jby ^MS faulty tranfcription, very naturally concluded f hat the middle price, or fix (hillings the quarter^ equal to about eighteen (hillings of our prefejtit money, was the ordinary or average price of wheat I^C that tiaie. \- In the (latute of Tumbrel and Pillory, enaded nearly abouc the fame> time, the price of ale js regulated according to every fixpencc rife in the price of barley, from two (hillings to four (hillings the quarter. That. four (hillings, however, was not cotifidered as the highcft price to which barley plight frequently rife in thofe times, and that thefe prices were only given as an example of .the proportion which ought to be obferved in i^v all {,> , , » . ' » * \ • THB WBALTH OP NATIONS. l9f all other prtces, whether higher or lower, we may c ha f» Inier from the laft words of the ftatute : and that towards the end of the fixteenth century it begins to rife again. The prices^' indeed, which Fleetwood has been able to coK le6t, fccm to have been thofc chiefly which were Vol. I. U. remark- «9» THE NATURE AND CAUSES OF Vrii B 0*0 K remarkable for extraordinary deamefi or cheap- ^»j nefs i and I do not pretend that any very certain cpnclufion can be drawn from them. So far, however, as they prove any thing at all, they con^rm the account which I have been endea« vouring to give. Fleetwood himfelf, however, leems, with mod other writers, to have believed, that during ail this period the value of filver, in confequence of its increaling abundance, was continually diminiihing. The prices of corn, . which he himfelf has colledted, certainly do not agree with this opinion. They agree perfcftly ' with that of Mr. Dupr^ de St. Maur, and with that which I have been endeavouring to explain. Biihop Fleetwood and Mr. Duprc de St. Maur are the two authors who feem to have colledjcd, with the greated diligence and Bdeliti/, the prices of things in ancient times. It is fomewhat cu- rious that, 'though their opinions are fo very dif- ferent, their fafts, fo far as they relate to the price of corn at leaft, (hould coincide fo very exactly. It is not, however, fo much from the low price of corn, as from that of fome other parts of the rude produce of land, that the moft judi- cious writers have inferred the great value of filver in thofe very ancient times. Corn, it has :" been faid, being a fort of manufa6ture, was, in ^ thofe rude ages, much dearer in proportion than the greater part of other commodities j it is meant, I fuppofe, than the greater part of un- • ' manufadured commodities; luch as cattle, poul* ^ try, game of all kinds, &c. That in thofe times I of poverty and barbarilm thele were proporjionr THE WEALTH OP NATIONS. tgt ably n i h cheaper than corn, is undoubtedly ^ ^^ **• true. But this cheapnefs was not the eflfcA of the high value of filvcr, but of the low value of thofe commodities. It was not becaufe filvcr would in fuch times purchafe or reprefent a greater quantity of labour, but becaufe fuch commodities would purchafe or reprefent a much fmaller quantity than in times of more opulence and improvement. Silver muft certainly be cheaper in Spanilh America than in Europe; in the country where it is produced, than in the country to which it is brought, at the expence of a long carriage both by land and by fea, of a freight and an infurance. One-and- twenty pence halfpenny fterling, however, we are told by Ulloa, was, not many years ago, at Buenos Ay res, the price of an ox chbfen from a herd of three or four hundred. Sixteen ihillings fterling, we are told by Mr. Byron, was the price of a good horfe in the capital of Chili. In a country naturally fertile, but of which the far greater part is altogether uncultivated, cattle, poultry, game of all kinds, &c. as they can be acquired with a very fmall quantity of labour, fo they will purchafe or command but a very fmall quan« tity. The low money price for which they may be fold, is no proof that the real value of filvcr is there very high, but that the real value of thofe commodities is very low. - JLabour, it muft always be remembered, and not any particular commodity, or fet of commo- dities, is the real meafure of the vdlue b6th of filver and of all other comoiodicies. U a But *9« THE NATURE AND CAUSES OP B 0^0 K But in countries almoft waftc, or but thinly inhabited, cattle, poultry, game of all kinds, &c. as they are the fpontaneous productions 6f nature, fo Ihe frequently produces chenn in much greater quantities than the confumption of the inhabitants requires. In fuch a (late of things the fupply commonly exceeds the demand. In different ftates of focicty, in different (lages of improvement, therefore, fuch commodities will reprcfent, or be equivalent to, very different quantities of labour. I N every ftate of fociety, in every ftagc of im- provement, corn is the production of human in- duflry. But the average produce of every fort of indudry is always fuited, more or lefs exaftly, to the average confumption; the average fupply to the average demand. In every different ftage of improvement, befides, the raifing of equal quantities of corn in the fame foil and climate, will, at an average, require nearly equal quan- tities of labour ; or, what comes to the fame thing, the price of nearly equal quantities; the continual increafe of the produdlive powers of labour in an improved ftate of cultivation, being more or lefs counterbalanced by the con- tinual increafing price of cattle, the principal inftruments of agriculture. Upon all thefe ac- counts, therefore, we may reft afTurcd, that equal quantities of corn will, in every ftate of fociety, in every ftage of improvement, more nearly re- prefent, or be equivalent to, equal quantities of labou>, than equal quantities of any other part of the rude produce of land. Corn, accordingly. i #■' IC t . XI. THE WEALTH OF NATIONS. 395 it has already been obfervcd, is, in all the dif- c ha p. ferent (Yages of wealth and improvement, a more accurate meafure of value than any other com- modity or fet of commodities. In all thofc dif- ferent (lages, therefore, we can judge better of the real value of filver, by comparing it with corn* than by comparing it with any other commodity, or fet of commodities. Corn, befidcs, or whatever elfe is the com- mon and favourite vegetable food of the people, conftitutes, in every civilized country, the prin- cipal part of the fubfiftcnce of the labourer. In confequence of the extenfion of agriculture, the land of every country produces a much greater quantity of vegetable than of animal food, and the labourer cvery-where lives chiefly upon the wholelbme food that is cheaped and mod abun- dant. Butcher's- meat, except in the mod thriving countries, or where labour is mod highly re- warded, makes but an indgniBcant part of his fubfiftence ; poultry makes a ftill fmaller part of it, and game no part of it. In F;-ancc, and even in Scotland, where labour is fomewhat better re- warded than in France, the labouring poor feldom eat butcher's- meat, except upon holidays, and other extraordinary occafions. The money price of labour, therefore, depends much more upon the average money price of corn, the fub-, fiftence of the labourer, than upon that of buc- cher's-meat, or of any other part of the rude produce of land. The real value of gold and filver, therefore, the real quantity of labour which they can purchafe or command, dep tain their inhabitants. They arc rich in the in- duftry and (kill of their artificers and manufac- turers i in every fort of machinery which can facilitate and abridge labour; in (hipping, and in all the other inftruments and means of car- riage and commerce : but they are poor in corn, which, as it niaft be brought to them from dif-« tant countries, mud, by an addition to its price, pay for the carriage from thofc countries. It does not cod lefs labour to bring filver to Am- ■fterdam than to Dantzick i but it cofts a great deal more to bring corn. The real coft of filver muft be nearly the fame in both places; but that of corn muft be very different. Diminifh the real opulence either ot Holland or of the ter- ritory of Genoa, while the number of their inha- bitants remains the fame : diminilh their power of fupplying thcmfelves from diftant countries; and the price of corn, inftead of finking with that diminution in the quantity of their filver, which muft neceffarily accompany this declenfion cither as its caufe or as its effe6t, will rife to the price of a famine. When we are in want of neceffaries, we muft part with all fuperfluities, of which the value, as it rifes in times of opulence and profperity, fo it finks in times of poverty and diftrefs. It is otherwife with neceflTarics. Their rcfal price, the quantity of labour which they can purchafe or command, rifes in times of poverty and >«*,.! Lk-, THE WEALTH OF NATIONS. ^ and diftrefs, and finks in times of opulence and c h a profperity, which are always times of great abun- dance i for they could noc otherwile be times of opulence and profperity. Corn is a nccelTary, filver is only a fuperfluity. Whatever, therefore, may have been the in- crcafe in the quantity of the precious metals, which, duting the period between the middle of the fourteenth and that of the fixtcenth century, arofe from the incrcafe of wealth and improve- ment, it could have no tendency to diminilh their value either in Great Britain, or in any other part of Europe. If thofc who have col- lected the prices of things in ancient times, therefore, had, during this period, no reafon to infer the diminution of the value of filver, from any obfervations which they had made upon the prices cither of corn or of other commodities, they had ft ill lefs reafon to infer it from any fup- pofed increafe of wealth and improvement. P. -i',U * ^« , 'I' Second Period. ■ Ki i "DUT how various foever may have been the opinions of the learned concerning the pro- grefs of the value of filver during the firll pe- riod, they are unanimous concerning it during the fecond. .., From about 1570 to about 1640, during a period of about feventy years, the variation in the proportion between the value of filver and that of corn, held a quite oppoflce courfe. Silver funk- ■ ,( • t - -.'^-'^»>r. • i^aJL ^■*t; JCO /+ THE NATURE AND CAUSES OF funk in ic^ real value, or would exchange for a fnnaller quantity of labour than before; and corn rofe in its nominal price, and inltead of being comnnonly fold for about two ounces of Jilvcr the quarter, or about ten (hillings of our prefent money, came to be fold for fix and eight ounces of filvcr the quarter, or about thirty and forty fiiillings of our prefent money. The difcovery of the abundant mines of Ame- rica, feems to have been the fole caufe of. this diminution in the value of filver in proportion to that of corn. It is accounted for accordingly in the fame manner by every body j and there ne- ver has been any difpute either about the fa£t, or about the caufe of it. The greater part of Europe was, during this period, advancing in induftry and improvement, and the demand for iilver mud confcquently have been increafing. But the increafe of the fupply had, it feems, fo far exceeded that of the demand, that the value of that metal funk confiderably. The difcovery of the mines of America, it is to be obferved, does not feem to have had. any very fenfible efFeft upon the prices of things in England till after 1570; though even the mines of Potofi had been difcovercd more than twenty years before, ■ '.-.--..h - -■■ 4-> .v,-.,.r =.. ..... From 1595 to 1620, both inclufive, the ave- rage price of the quarter of nine bufhels of the bell wheat at Windfor market, appears from the accounts of Eton College, to have been 2/» I J. 6d, ^^^. From which fum, neglecling the fradion, and tjedu(5ling a ninth, or 4.S. 7 d. -^ • • the t , THE WEALTH OF NATIONS. the price of the quarcer of eight buflicls comes out to have been i/. i6j. lod. ^. And from this fum, neglefling llkewife the fradlion, and dedu(5ling a ninth, or 4.S. id. ^-i for the dif- ference between the price of the bed wheat and that of the middle wheat, the price of the middle wheat comes out to have been about i/. 12/. %d. i, or about fix ounces and one-third of an ounce of filver. From 1621 to 1636, both inclufive, the ave- rage price of the fame meafure of the beft wheat at the fame market, appears, from the fame ac- counts, to have been il. loj. j from which, making the like dedudions as in the foregoing cafe, the average price of the quarter of eight bulhels of middle wheat comes out to have been 1 1, 1 9/. 6d. or about feven ounces and two- thirds of an ounce of filver. 501 Third Period. T5ETWEEN 1630 and 1640, or about 1636, the efFe6t of the difcovery of the mincj of America in reducing the value of filver, appears to have been completed, and the value of that metal feems never to have funk lower in proportion to that of corn than it was about that time. It feems to have rifen fomewhat in the courfe of the prefent century, and it had probably begun to do fo even fome time before the end of the laft. ; From 1637 to 1700, both inclufive, being the fixty-four lail years of the laft century, the ave- rage sot THE NATURE AND CAUSES OF BOOK rage price of the quarter of nine buihels of the '* bcft wheat at Windfor market, appears, from the fame accounts, to have been 2/. 11/. c -i -y-fl' ?';"■:'.:•:• The tint of thcfe events was the civil war, which, by dlfcouraging tillage and interrupting commerce, muft have raifcd the price of corn much above what the courfe of the feafons would otherwife have occafioned. It muft have had this effed more or lefs at all the different markets in the kingdom, but particulnly at thofe in the neighbourhood of London, which require to be fupplied from the great^cll diftance. In 164B, accordingly, the price of the beft wheat at Windfor market, appears, from the fame ac- counts, to have been 4/. 5J. and in 1649 to have been 4/. the quarter of nine buihels. The ej;- cefs of thofe two years above 2/. loj. (the ave- rage price of the fixteen years preceding 1637) is 3/. 5J. } which, divided among the fixty-four laft years- of the laft century, will alone very nearly account for thai fmall enhancement of price which feems to have taken place in them. Thefe, however, though the higheft, are by no ' • . means THE WEALTH OF NATIONS. '' |fj means the only high prices which feem to have c h \ p. been occaiioned by the civil wars. The fecond event w:is the bounty upon the exportation of corn, granted in i638. The bounty, it has been thought by many people, by encouraging tillage, may, in a long courfe of years, have occafioned a greater abundance, and confequently a greater cheapnefs of corn in the home-market, than what would otherwife have takerr place there. How far the bounty could produce this effeft at any time, 1 fliall examine hereafter; I fhall only obferve at prefenc, that between 1688 and 1700, it had not time to pro- duce any fuch effedt. During this fliort period its only efFe6t muft have been, by encouraging the exportation of the furplus produce of every year, and thereby hindering the abundance of one year from compenfating the fcarcity of an- other, to raife the price in the home- market. The fcarcity which prevailed in England from 1693 to 1699, both inclufive, though no doubt principally owing to the badnefs of the feafons, and, therefore, extending through a confiderable part of Europe, muft have been fomewhat en- hanced by the bounty. In 1699, accordingly, the further exportation of corn was prohibited for nine months. There was a third event which occurred in the courfe of the fame peiiod, and which, though it could not occafion any fcarcity of corn, nor, perhaps, any augmentation in the real quantity of filver which was ufually piid for it, muft ne- ccifarily have occafioned fome augmentation in .: the 304 ' THE NATURE AND CAUSES OF ' " BOOK the nominal fum. This event was the great de- bafcment of the filveiv coin, by clipping and wearing. This evil had begun in the reign of Charles II. and had gone on continually in* creafing till 1695 ; at which time, as we may learn from Mr. Lowndes, the current filver coin was, at an average, near five-and twenty per cent, below its ftandard value. But the nominal fum which confticutes the market-price of every com- modity is neceflarily regulated, not fo much by the quantity of filver, which, according to the ftandard, ought to be contained in it, as by that which, it is found by experience, aftually is con- tained in it. This nominal fum, therefore, is neccflarily higher when the coin is much debafed by clipping and wearing, than when near to its ftandard value. - - i .^^i^ In the courfe of the prefent century, the filver coin* has not at any time been more below its ftandard weight than it is at prefent. But though very much defaced, its value has been kept up by that of the gold coin for which it is exchanged, Ji*or though before the late re- coinage, th« gold coin was a good deal defaced too, it was lefs fo than the filver. In 1695, on the contrary, the value of the filver coin was not kept up by the gold coin J a guinea then commonly exchanging for thirty (hillings of the worn and dipt filver. Before the late re-coinage of the gold, the price of filver bullion was feldom higher than five {hillings and feven- pence an ounce, which is but five-pm'-e above the mint price. But in 1695, the coriiiiion price of filver bullion was fix fhil- II lings THE WEALTH OF NATIONS. So$ lings tnd five- pence an ounce*, which is fifteen- chap. pence above the mint ^rice. Even before the ^^' late re-coinage of the gold, therefore, the coin, gold and filver together, when compared with filver bullion, was not fuppofed to be more than eight per cent, below its ftandard value. In 1695, on the contrary, it had been fuppofed to be near five« and- twenty per cent, below that value. But in the beginning of the prefent cen- tury, that is, immediately afccr (he great re- coinage in King William's time, the greater part of the current filver coin muft have been dill nearer to its (landard weight than it is at prefent. In the courfe of the prefent century too there has been no great public calamity, fuch as the civil war, which could either difcourage tillage, or in- terrupt the interior commerce of the country. And though the bounty which has taken place through the greater part of this century, mult always raife the price of corn fomewhat higher than it otherwife would be in the actual (late of tillage; yet as> in the courfe of this century, the bounty |ias had full time to produce all the good eFeds commonly imputed to it, to encourage tillage, and thereby to increafe the quantity of corn in the home market, it may, upon the prin- ciples of a fyfteip which I (hall explain and ex- amine hereafter, be fuppofed to have done fome- ihing to lower the price of that commodity the one way, as well as to raife it the other. It is by many people fuppofed to have done more. * Lowades'B Eflay on the Silver Coin, p. 68. Vol. L X In ^^ THE NATL^RE AND CAV9E8 OP B o o K In the fixty-four years of the prefent centmy, '* accordingly, the average price of the quarter of nine btifhels of the bed wheat at Windfor market, appears, by the accounts of Eton Col- lege, to have been 2/. o/. 6*^ '^ •** '^^ ' The value of filver, therefore, ieems to have rifen fomewhat in proportion to that of corn during the cdurfe of the ptefcnt century, and it had probat^y begun to do fo even fome time before the end of the ia(t. ' In 1-687, ^^c price of the quarter of nine bu(hels of the bed wheat ait Windfor market was i/. 5 J. 2d^ the loweft prite at which it had ever been from i f^$* In 1688, Mr. Gregory King, a man famous for his knowledge in matters of this kind, efti- mated the average price of wheat in years of i ^^ -- moderate THE WEALTH OP NATIONS. moderate plenty to be to the grower 3 j. 6d, the c bufhel, or eight-and twenty fhillings the quar- ter. The grower's price I undcrftand to be the fame with what is fometimes called the contradb price, or the price at which a farmer contracts for a certain number of years to deliver a certain quantity of corn to a dealer. As a contraft of this kind faves the farmer the expence and trouble of marketing, the contraft price is gene- rally lower than what is fuppofed to be the ave- rage market price* Mr. King had judged eight- and- twenty (hillings the quarter to be at that time the ordinary contradt price in years of moderate plenty. Before the fcarcity occafioned by the late extraordinary courfe of bad leafpns, it was, I have been afliired, the ordinary contract price in all common years. . . In 1688 was granted the parliamentary bounty upon the exportation of corn. The country gentlemen, who then comppfed a ftill greater proportion of the legiflature than they do at prc- fcnt, had felt that the money price of corn was falling. The bounty was an expedient to raife it artificially to the high price at which it had frequently been fold in the times of Charles I. and II. It was to take place, therefore, till wheat was fo high as forty- eight fhillings the quater; that is, tv/cnty {hillings, or -fths dearer than Mr. King had in that very year eftimatcd the grower's price to be in times of moderate plenty. If his calculations deferve any part of the reputation which tltey have obtained very univcrfally, eight- and -forty (hillings the quarter X 2 was J^f A P. XI. !•• THE NATURB AND CAUSES OF WIS a price which, without fome fuch expedicQjt at the bounty, . could not at that time be ex- pe^ed, except in years of extraordinary fcarcity. But the government of King William was not then fully fettled. It was in no condition to re- fute any thing to the country gentlemen, from whom it was at that very time foliciting the firft eftabliflunent of the annual land-tax* Thx value of filver, therefore, in proportion to that of corn, had probably rifen (bmewhat be- fore thr. end of the laft century ; and it feems to have continued to do fo during the courfe of the greater part of the prefent i though the neceffary operation of the bounty muft have hindered that rife from being fo fenfible as it otherwifc would have been in the adtual ftate of tillage. In plentiful years the bounty, by occafioning an extraordinary exportatipn, neceflarily raifes the price of corn above what it otlierwife would be in thofe years. To encourage tillage, by keeping up the price of corn even in the moft plentiful yearSj was the avowed end of the in- ftitution. In years of great fcarcity, indeed, the bounty has generally been fufpended. It muft, however, have had fome efFedb upon the prices of many of thofe years. By the extraordinary exportatioo which it occafions in years of plenty, it muft frequently hinder the plenty of one year from com- penfating the fcarcity of another. Both in years of plenty and in years of fcar- city, therefore, the bounty raifes the price of corn above what it naturally would be in the THE WEALTH OP NATIONS. ?«9 t6h]al ftate of tillage. If, during the fixty-four chap. firft years of the prefent century, therefore, the average price has been lower than during the fixty-four laft years of the laft century, it muft, in the fame ftate of tillagf, have been much more fo, had it not been for this operation of the bounty. But without the bounty, it may be faid, the ftate of tillage would not have been the fame. What may have been the effe(fks of this inftitu- tion upon the agriculture of the country, I ftiall endeavour to explain hereafter, when I come to treat particularly of bounties. I ftiall only ob- fervc at prefent, that this rife in the value of filver, in proportion to that of corn, has not been peculiar to England. It has been obferved to have taken place in France during ^he fame period, and nearly in the fame proportion too, by three very faithful, diligent, and laborious collcftors of the prices of corn, Mr. Duprc de St. Maur, Mr. Melfance, and the author of the Effay on the police of grain. But in France, till 1764, the exportation of grain was by law prohibited ; and it is fomewhat difHcuit to fup- pofe, that nearly the fame diminution of price which took place in one country, notwithftand- ing this prohibition, ftiould in another be owing to the extraordinary encouragement given to exportation. It would be more proper, perhaps, to confider this variation in the average money price of corn as the effedt rather of fome gradual rife in the real value of filver in the European market, X 3 *^ thao- 1^-'-, v 3IO THE NATURE AND CAUSES OF BOOK than of any fall in the real average value of corn. Corn, it has already been obfervedi is at diftant periods of tinne a more accurate meafure of value than either filvcr, or perhaps any other commo- dity. When, after the difcovery of the abundant mines of America, corn rofe to three and four times its former money price, this change was uiiiverfally afcribed, not to any rife in the real value of corn, but to a fall in the real value of filver. If during the fixty-four fir (t years of the prefent century, therefore, the average money price of corn has fallen fomewhat below what it had been during the greater part of the laft cen- tury, we fhould in the fame manner impute this change, not to any fall in the real value of cqrn, but to fome rife in the real value of filver in the European market. IV* The high price of corn during thele ten or twelve years pad:, indeed, has occafioned a fufpicion that the real value of filver ftill continues to fall in the European market. This high price of corn, however, feems evidently to have been the effeft of the extraordinary unfavourablenefs of the feafons, and ought therefore to be regarded, not as a permanent, but as a tranfitory and oc- cafional event. The feafons for thefe ten or twelve years paft have been unfavourable through the greater part of Europe j and the diforders of Poland have very much increafed the fcarcity in all thofe countries, which, in dear years, ufed to be fupplied from that market. So long a courfe of bad feafons, though not a very common <;vent^ is by no means a Angular one ; and whoever *..;.i »a ^ .^ has i V > THE WEALTH OP NATIONS. ' • has enquired much into the hiftory of the prices c of corn in former times, will be at no lofs to re- collect feveral other examples of the fame kind. Ten years of extraordinary fcarcity, befidcs, are not more wonderful than ten years of extraordi- nary plenty. The low price of corn from 1741 to 1750, both incliifive, may very well be fet in oppolition to ii6 high price during thefe lad eight or ten years; Frorn 1741 to 1750, the average price of the quarter of nine bufhels of the beft wheat at Wind for market, it appears from the accounts of Eton College, was only 1/. 13J. 9jas been aug- menting in a ftill greater proportion. During the fixtcenth century, the Portugucfe were the only European nation who carried on any regu- lar trade to the £a(l Indies, in the laft years of that century the Dutch began to encroach upon this monopoly, and in a few years expelled them from their principal fettlements in India. During the greater part of the laft century, thofe two na- tions divided the moft confiderable part of the Eaft India trade between themj the trade of the Dutch continually augmenting in a ftill greater proportion than that of the Portuguefe declined. The Englifti and French carried on forae tJ-ade "twy/^r^^-- with /X> » '%i;fl- JXO THE NATURE AND CAUSES OF BOOK with India in the ]aft century* but it has beta '* greatly augmented in the oourie of the pre- fcnt. I'he £a(t India trade of the Swedes and Danes began in the courie of the prefent cen- tury. Even the Mufcovites qow trade regularly lyith China by a fort of caravans which go over land through Siberia and Tartary to Pekin. The Eaft India trade of all thefe nations, if we except that of the French, which the laft war had well nigh annihilated, has been almod; continually augmenting. The increafing confumption of Eaft India goods in Europe, is, it feems, fo great, as to afibrd a gradual increafe of employment to them all. Tea, for example, was a drug very little ufed in Europe before the middle of the lafl: century. At prefent the va? ^e of the tea an- nually imported by the Englifh Eaft India Com- pany, for the ufe of their own countrymem amounts to more than a million and a half a year s and even this is not enough ; a great deal more being conftantly fmuggled into the coun- try from the ports of Holland, from Gotten- burg in Sweden, and from the coafl of France too, as long as the French Eaft India Company was in profperlty. The confumption of the porcelain of China, of the fpiceries of the Mo- luccas, of the piece goods of Bengal, and of innu- merable other articles, has increafed very nearly in a like proportion. The tonnage accordingly of all the European (hipping employed in the Eaft India trade, at any one time during the lafl: century, was not, perhaps, much greater than that • 44*^ .■' ■•M-:" ■ t ■ 'J THE WEALTH OF NATIONS. '' ^* thtt of" ^he 'l:r>glifti tEuft }}fiAh Cottpihy \i^ft c n^A K the Uce rciduiStion of the\p (hlpp'xrig. ' ' But in 'the fiad (hll§', ivhen the Europeans flifflb^n to trade to tbof^ countries, was much higher than in Curojpe'; and it ftill eonttmoes td b<* To. In Htd eoltntries, which generally yield twoj ifometimes th^^ crops in the year, each of them more plentiful thiin any common crop of corn/ the abdhdance df fdod mud be rnoch greater 'than in Any corn«feountiY of equal extent. Siidh~ countries are accord- ingly much more populduis.' In them too the rich, having a^ greater fuper-abundarfcc of food to difpofe )0f ibeyond what they themfelves can confume^ have the means thp one ,cou9Cry;l^an in the Dther. But ;he xf^] pnp;?, qf' labour,, the i rijal quaintity of the peqf%•ief^f|fflife.,wi^iqh.>is^givcn to die labourer, i^ .ha&valr^eadyj beei^ ojsf^rvcdii is Jower both in China, ^nd lndc^a%,j5hc: two great markets of India, than, it is :thr|ftighj;thet greater tparc .of if;luFopc. ; ^; he y^igi^s f>t ,ihc labourer . will , !there purchaft; Y^; fp^j^ller, qpintjty qf'food; and as the fnoncy price qf fpodltw m}»ch lower in India than in EuropCi ithc Ttion.ey pride of labour is; there lower upon a dQuij^lciaciiounCi upon account both of the . fmall quantity; of food which; it. will purchaic, and of the low price of that food. But in countries of equal art and indudryi' the nnoney , price of the greater part of manufac^utes will be . in.propqrtjon to the money price of labour j and • in manufaduring art and induftry,. China and Indoilan, though inferior, fee m not to be much inferior to any part of Europe. The money price of the greater part of manufadures, there- fore, will naturally be much lower in hofe great cmpircsjjian it is any-wherc i,n Europe Jhrough •* II Tya.i.m .A the rl THE WEALTH OF NATIONS. 3»J the greater part of Europe too the cxpcncc of c ir a p. land- carriage increafcs very much both the real and nonninal price of mod nianufadlures It cofts more labour, and therefore more money, to bring firft the materials, and afterwards the com- plete manufa<5turc to market. In China and In- doftan the extent and variety of inland naviga- tions favc the greater part of this labour, and confequcntly of this money, and thereby reduce ftill lower both the real and the nominal price of the greater part of their manufaftures. Upon all thefe accounts, the precious metals are a com- modity which it always has been, and ftill con- tinues to be, extremely advantageous to Carry from Europe to India. There is fcarce any commodity which brings a better price there ; or which, in proportion to the quantity of la- bour and commodities which it cofts in Europe, will purchafe or command a greater quantity of labour and commodities in India. It is mor^ advantageous too to carry filver thither than goldj becaufe in Chin^ anJ the greater part of the other markets of India, the proportion be- tween fine filver and tine gold is but as ten, or' at moft as twelve to ore j 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 moft twelve, ounces of filver, will purchafe an ounce of gold: in Europe it requires from four- teen to fifteen ounces. In the cargoes, therefore, of the greater part of European fliips which fail to India, filver has generally been one of the mofl valuable articles. It is the moft valuable article in y 2 the 3X4 THE NATURE AND CAUSES OF B o o K- the Acapulco fhips which fail to Manilla. The filvcr of the new continent feems in this HDanner to be one of the principal comnnodities by which the commerce between the two extremities of the old one is carried on, and it is by means of it, in a great meafurc, that thofc diftant parts of the world are conne£ted with one another. In order to fupply fo very widely c?ttended a market, the quantity of filver annually brought from the mines muft not only be fu0icient to fupport that continual increafe both of coin and of plate which is required in all thriving coun- tries i but to repair that continual wafte and con- fumption of filver which takes place in ajl coun* tries where that metal is ufed. The continual confumption of the precious metals in coin by wearing, and in plate both by wearing and cleaning, is very fenfiblcj and in commodities of which the ufe is fo very widely extended, \yould alone require a very great an- nual fupply. The confumption of thofe metals in fome particular manufactures, though it may not perhaps be greater upon the whole than this gradual confumption, is, however, much more fenfible, as it is much more rapid. In the ma- nufactures of Birmingham alone, the quantity of gold and filver annually employed in gilding and plating, and thereby difqualified from ever after- wards appearing in the (hape of thofe metals, is faid to amount to more than fifty thoufand pounds fterling. We may from thence form fome notion how great muft be the annual con- fumption in all the different parts of the world, 9 either THE WEALTH OP NATIONS. jt5* either in manufactures of the fame kind with! c h a r. thole of Birmingham, or in laces, embroideries, gold and (itver ftuffs, the gilding of books, fur- niture, &c. A confiderable quantity too rtiufH be annually lofl; in tranfporting thofe metals from on6 place to another both by (ea and by land. - In the greater part of the governments of Afia, befides, the almod univerial cuftom of concealing treafurts in the bowels of the earth, of which' the knowledge frequently dies with the perfoni >vho makes the concealment, mud occafion the lofs of a ftill greater quantity. The quantity of gold and filver imported ac both Cadiz and Lifbon (including not only what comes under regifter, but what may be fuppofed to be fmuggled) amounts, according to the bed ac- counts, to about (Ix millions (lerling a year. According to Mr. Meggcns * the annual im-' portation of the precious metals into Spain, at an average of fix years; viz. from 1748 to 1753, both incIulTve; and into Portugal, at an average' of feven years; vv^.. from 1747 to 1753, both inclufive; amounted in' filver to 1,101,107 pounds weight; and in gold to 49)940 pounds weight. . The filver, at fixty-two fliillings the' pound Troy, amounts to 3,413,431/. 10s. fter- . ling. The gold, at forty- four guineas and a * Poftfcript ' to the Univerial Merchant, p. 15 and 16. This Poftfcrilpt was not printed till 1756, three years after the ' publication of the book, which has nev^r had a fecond edi- tion. The Poftfcript is, therefore, to be found in few co- pies ; it corre^ feveral erion in the book. :i:P''^''' '' ■ Y 3' ' '^'■''" hair 326. B O THE NATURE AND CAUSES OP o K half the pound Troy, amounts to 2,333,44^/. 14 J. fterling. Both together amount to 5,746,878/. 41. fterling. The account of what was imported, under regifter, he aflfures us is exa£t. He gives us the detail of the particular places from which the gold and filver were brought, and of the par- ticular quantity of each metal, which, according to the regifter, each of them afforded. He makes an allowance too for the quantity of each metal which he fuppofes may have been fmug- gled. The great experience of this judicious merchant renders his opinion of confiderable weight. According to the eloquent and, fometimes, well-informed Author of the Philofophical and Political Hiftory of the Eftablifhment of the Europeans in the two Indies, the annual irp- portation of regiftercd gold and filver into Spain, at an average of eleven years 5 viz. from 1754 to 1764, both inclufivej amounted to 13,984,185-5- piaftres of, ten reals. On account of what may have been fmuggled, however, the whole annual importation, he fuppofes, may have a- mounted to feventeen millions of piaftres j which, at 4s, 6d, the piaftre, is equal to 3,825,000/. fterling. He gives the detail too of the par- ticular places (torn which the gold and filver were brought, and of the particular quantities of each metal which, according to the regifter, each of them afforded. He informs us too, that if we were to judge of the quantity of gold annually imported from the Brazils into Lift)on by the amount of the tax paid to the "Ali.ii ' ' ^^ i , king THE WEALTH. OF NATIONS. T SK. king of Portugal,; which, it ^ftemsis pne^^rfih ioP,c;HrA f* the flandard metal, we might value it at ei^teen ^.m^^ jj. milUonsi of cpuzadoes, or forty-iive i^iillions of French livresj equal , co; jibio^ic c^nv uniHions ftcrt. . Ijngp » .On account oC;,wl\at .may have been fmug- . glf(ji howey^, :,we may. faf V. p^ THE NATXJRE ANO > CAtJSfES^ OT pb^>tt'-ahd tAftkStu. But the eohibmptiori t)^ Bifming- bxnV a^mdy' ae thie r^te dP Bfty thoufi^nd pounds a year> ii- tqual to thfc himdred-and'twentiech pan of thi&^nanfiuad importation^ at the rate of (ijc mil- lions a^ y«ari I'he. whok annual cohfumption of gdd and (liver,! cher«^ore« in all = t^ di'fferent ccuntrin of the worlds wh^re thofe metals a*-e ui^ ; may perhaps: be nearly equal to the whole annual, prociucew The remainder may be no more than fufHcient' to fupply the increafing de- mand: of all thriving countries* It may^even have fallen fo far ihort of this: demand as fotpewhat to raifc^ the price of thofe metals in the European market. .: .T:H£j ; quantity, of brafs and iron annually broogbt from the mine to the market is out of all proportion greater than that of gold and ilil- vcr*^ We* do not, however, upon this account, imagine that tholi coarfe metals are likely to mulcipJy beyond the demand, or to become gradiiali/ cheaper arid cheapen V7hy (hould we iiinagine^ that the precious metals are llkdy to do fo? The coarfe metab, indetd> thougji harder, are put to much harder ufes, and, as thiey are of Icfi: valuci Icfsicare is- empbyed in their prefer- vutior\^ The precious metals, however, are not ncceffarily imrnortal any more than they, but are Itablei too to be loft, wafted, and confumed in a great variety of ways. Ths price of all metals^ though liable to flow and graduai variations, varies lefs from year to year than that of almoft any other part of the rude produce of li»nd j and the price of the pre- 4^ V. . - cious THB WEALTH OF NATIONS. 3«9 clous metals is even lefs liable to fudden van- chap. Xli ations than that of the coarfe ones. The durable- nefs of metals is the foundation of this extraordinary fleadinefs of price. The corn which was brought to market laft year, will be all or almoft all eon« fumed long before the end of this year. But fome part of the iron which was brought ffom the mine two or three hundred years ago, may be dill in ufe, and perhaps fome part of the gold which was brought from it two or three thoufand years ago. The different mafles of corn which in different years muft fupply the confumption of the world, will always be nearly in proportion to the refpeftive' produce of thofc different years. But the propor- tion between the different malfcs of iron which' may be in ufe in two different years, will be very little affeded by any accidental difference in the produce of the iron mines of thofe two years ; and' the proportion between the mafles of gold will be ftill lefs aflfefted by any fuch difference in the pro- duce of the gold mines. Though the produce of the greater part of metallic mines, therefore, varies, perhaps, ftill more from year to year than that of the greater part of corn-fields, thofe variations' have not the fame effefl upon the price of the one' fpecies of commodities, as upon that of the other. \- iri • Variations 350 THE NATURE AND CAUSES OF ii^ii n •? ■ / '•' ''(■'". VitrUHons in the Proportion ietibeen the refpeSfive Values of Gold and Silver, "tj E F O R'E the difcovery of the mines of America, the value of fine gold to fine filver was regulated in the difl'erent mints of Europe, between the proportions of one to ten and one to twelve; that is, an ounce of fine gold was fup- poled to be worth from ten to twelve ounces of fine filver. About the middle of the laft century it came to be regulated, between the proportions of one to fourteen and one to fifteen j that is, an ounce of fine gold came to be fuppofed worth between fourteen and fifteen ounces of fine filver. Gold rofe in its nominal value, or in the quan- tity of filver which was given for it. Both nlc- tals funk in their real value, or in the quantity of labour which they could purchafe i but filver funk more than gold. Though both the gold and filver mines of America exceeded in fertility all thofe which had ever been known before, the fertility of the filver mines had, it feems, been proportionably itill greater than that of the gold ones. • .ikf^r'-i-^s'-- ■-,«*4>^ The great quantities of filver carried annually from Europe to India, have, in fome of the Engli(h fettlements, gradually reduced the value of that metal in proportion to gold. In the mint cf Calcutta, an ounce of fine gold is fuppofed to be worth fifteen ounces of fine filver, in the fame manner as in Europe. It is in the nnint, perhaps, rated too high fcr the value which it bears in the ;Vww-''"*' ^* market a' THE WEALTH OF NATIONS. - market of Bengal. In China, the proportion of c gold to filver flill continues as one to ten, or one to twelve. In Japan, it is faid to be as one to eight. The proportion between the quantities of gold , and filver annually imported into Europe, ac- cording to Mr. Meggens's account, is as one to tyventy-two nearly; that is, for one ounce of gold, there are innportcd a little more than twenty two ounces of filver. The great quantity of filver. fcnt annually to the Eaft Indies, reduces, he fup- pofes, the quantities of thofe metals which re- main in Europe to the proportion of one to four- teen or fifteen, the proportion of their values. The ^prqportion between their values, he feems,* to think, nAuft neceflarily b^ the fame as that be- tween their quantities, and would therefore be as one to twenty-two, were it not for this greater.' exportation of filver. , «,.|, y. --^^'*-^ But the ordinary proportion between the re- . fpedlive values of two commodities is not nccef- farily the fame as that between the quantities of them which are commonly in the market. The, price of an ox, reckoned at ten guineas, is about^ threefcore times the price of a lamb, reckoned at^ ^s. 6d. It would be abfurd, however, to infers from thence, that there, are commonly in the mar-. ket threefcore lambs for one ox : and it would be juft as abfurd to infer, becaufe an ounce of gold,^ will commonly purchafe from fourteen to fifteen j ounces of filver, that there are commonly in the. market only . fourteen pr fifteen pmiqes of .filv.ei:„ for one ounce, of gQld. ,^ .....gj ^j, x, ,. ' \ ill - rr* _ The 3it jftm ^ THE NATURE AND CAUSES OF The quantity of filvcr commonly in the nsar- ket, it is probable, is much greater in propor- tion to that of gold, than the value o^ a cer- tain quantity of gold is to that of an equal quantity of filver. The whole quantity of a cheap commodity brough*- to market, is com- ifionly not only greater, but of greater value, than the whole quantity of a dear one. The whole quantity of bread annually brought to niarket, is not only greater, but of greater value than the whole quantity of butcher's- meat; the whole quantity of butcher*s-meat, than the Whole quantity of poultry ; and the whole quantity* of pbultry, than the whole quantity of w^ild fowl. There are fo many more purchafers for'the cheap than for the dear commodity, that, not only a gi'eater quantity of it, but a greater value, dan cbmmonly be difpofed of. The whole quantity, therefore, of the cheap commodity muft cbm- monly be greater in proportion to the whole quantity of the dear one, than the value of a cer- tain quantity of the dear one, is to the value of an equal quantity of the cheap one. When we compare the precious metals with' one another, filver is a cheap, and gold a dear commodity. We ought naturally to expecl, therefore, that there fhould always be in the market, not only a greater quantity, but a greater value of filver than of gold. Let any man, who has a little of bbth, compare his own filver with his gold plate, and he will probably find, that, not only the quantity, but the value of the foitncr greatly ex- ceeds that of the latter. Many people, befides, :- A'. - have THE WEALTH OF NATIONS. JM have a good deal of filvcr who have no goW ^ " j^ '• plate, which, even with thofc who have it, is ge- nerally qonfined to watch-cafes, fnufT-boxes, and fuch like trinkets, of which the whole amount is feldom of great value. In the Britifh coiii» indeed, the value of the gold preponderates greatly, but it is not fo in that of all countrie«^. In the coin of fome countries the value of the two metals is nearly equal. In the Scotch coin> before the union with England, the gold prepon- derated very little, though it did fomewhat*, as it appears by the accounts of the mint. In the coin of many countries the filver preponderates. Jn France, the largeft fums are commonly paid in that metal* and it is there difficult to get more gold than what is neceffary to carry about in your pockjCt. The fuperior value, however, of the filver plate above that of the gold, which takes place in all countries, will much more than compenfate the preponderancy of the gold coin above the filver, which takes place only in fome countries. Though, in one fcnfc of the word, filver always has been, and probably always will be, much cheaper than gold i yet, in another fenfe, gold n^ay, perhaps, in the prefent ftate of the Spanifti market, be faid to be fomewhat cheaper than filver. A commmodity may be faid to be dear or cheap, not only according to the abfo- lute greatnefs and fmallnefs of its ufual price, but •v., • See Ruddiman's Preface to Andcrfon*s Diplomata, &c. m w;;7t.:.: ' according I. 334 THE NATURE AND CAUSES OF B o o ic according as that price is more or lefs above the lowcft for which it is pofTiblr to bring it to mar- ket for any confidcrable time together. This loweft price is that which barely replaces, with .a moderate profit, the (lock which muft be em- ployed in bringing the commodity thither. It is the price which affords nothing to the land- lord, of which rent makes not any component part, but which refolves itielf altogether into wages and profit. But, in the prefent fkate of the Spanifh market, gold is certainly fomewhat nicarer to this lowcft price than filver. The tax of the king of Spain upon gold is only one- twentieth part of the ftandard metal, or five per cent; ; whereas his tax upon filver amounts to one-tenth part of it, or to ten per cent. In thcfe taxes too, it has already been obferved, confifts the whole rent of the greater part of the gold and filver mines of Spanifh America ; and that upon gold is fiiill worfe paid than that upon filver. The profits of the undertakers of gold mines too, as they more rarely make a for^ tvne, muft, in general, be ftill more moderate than thofe of the undertakers of filver mines. The price of Spanifli gold, therefore, as it af- fords both lefs rent and lefs profit, muft, in the Spaniih market, be fomewhat nearer to the loweft price for which it is pofllble to bring it thither, than the price of Spanifh filver. When all expences are computed, the whole quantity of the one metal, it would feem, cannot, in the Spanifh market, be difpofed of fo advantageoufly as the whole quantity of the other. The tax, , / indeed. THE WEALTH OF NATIONS. indeed, of the kinj^ of Portugal upon the gold of the Brazils, is the Umc with the ancirnt tax of the king of Spain upon the filvcr of Mexico and Peru; or one fifth part of the ftandard metal. It may, therefore, be uncertain whether to the general nnarkct of Europe the whole mafs of Ame- rican gold comes at a price nearer to the lowed for which it is poflible to bring it thither, than the whole qiafs of American filver. Thei price of diamonds and other precious ^ones may, perhaps, i be flill nearer to the lowed price at which it is pofTible to bring them to market, than even the price of gold. Though it is not very probable, that any part of a tax which is not only impofcd upon one of the moft proper fubje^ts of taxation, a mere lux*- ury and fuperfluity, but which affords fo very important a revenue, as the tax upon filver, will ever be given up as long as it is poflible to pay it} yet the fame impoflibility of paying it, which in 1736. made it neceflary to reduce it from one- fifth to one-tenth, may in time make it neceflary tQ reduce it ftill further; in the fame manner as' it made it ncceflTary to reduce the tax upon gold to one-twentieth. That the filver mines of Spanifli America, like all other mines, become gradually more expenfive in the working, on ac- count of the greater depths at which it is neceflliry to carry on the works, and of the greater expence of drawing out the water, and of fupplying them with frefli air at thofe depths, is acknowledged by every body who has enquired into the ftate of thoie mines. •*.. ' ' These J35 \: THB NATURE AND CAUSES OF Thbse cauic8» which are equivalent to a grow- ing fcarcity of (ilvcr (for a commodity may be iaid to grow fcarcer when it becomes more diffi- cult and expenlive to coUedt' a certain quantity of it)> mud, in time, produce one or other of the ihrce following events. The increafc of the ex> •pence muft either, 6rft, be compenfated alto^ ^ther by a proportionable increafe in the price of the metal ; or, fccondly, it muft be compeniated Altogether by a proportionable diminution of the tax upon niverj or, thirdly, it muft be com- :penfated partly by the one, and partly by the other of thofe two expedients. This third event 4s very poflible. As gold roie in its price in proportion to Hlver, notwithftanding a great di- piinution of the tax upon gold; fo filver might life in its price in proportion to labour and cotn- modities, notwithdanding an equal diminution of the tax upon filver. , Such fuccelTive redudtions of the tax, how- .evcr, though they may not prevent altogether, muft certainly retard, more or lefs, the rife of the value of filver in the European nurket. In con- fequ^nce of fuch reductions, many mines may be v/rought which could not be wrought before, becauie they could not afford to pay the old tax ; . and the quantity of filver annually brought to market muft always be fomewhat greater, and, therefore, the value of any given quantity fome* what lefs, than it otherwife would have been. In confequencc of the reduction in 1736, the value of filver in the European market, though it may not at this day be lower than before that - ' reduction, THE WEALTH OF NATIONS. f* reduflioHj is, probably, at Icaft ten per cent, lower c ha p. than it would have been, had the Court of Spain continued to cxadl the old tax. That, notwithftanding this redudion, the value of filver has, during the courle of the prc- fcnt century, begun to rife fomcwhat in the Eu- ropean market, the CiAs and arguments whicb have been alleged above, difpofc me to believe, or more properly to fufpcd and conjedure j for the bed opinion which I can form upon this fub- je6l fcarcc, perhaps, deferves the name of belief. The rife, indeed, luppofing there has been ny, has hitherto been fo very fmall, that after all that has been faid, it may, perhaps, appear to many people uncertain, not only whether this event has aftually taken place ; but whether the contrary may not have taken place, or whether the value of filver may not ftill continue to fall in the Eu- ropean market* '*' ■* ' • ' • It muft be obferved^ however, that whatever may be the fuppofed annual importation of gold and filver, there muft be a certain period, at which the annual confumption of thofe metals will be equal to that annual importation. Their confumption muft increafe as their mafs in- creafes, or rather in a much greater proj. -r*"'on« As their mafs increafes, their value dima.iihes. They are more ufed, and lefs cared for, and their confumption confequently increales in a greater proportion than their mafs. After a certain period, therefore, the annual confumption of thofe metals muft, in this maaner, become equal to their annual importation, provided that importatioa Vol. I. Z ii 338 THE NATURE AND CAUSES OF is not continually increadng; which, in the prefcnt times, is not fuppofed to be the cafe. If, when the annual confumption has become equal to the annual importation, the annual im- portation (hould gradually diminifb, the annual confumption may, for fome time, exceed the annual importation. The mafs of thofe metals may gradually and infenlibly diminifb, and their value gradually and infenfibly rife, till the annual importation becoming again (lationary, the an- nual confumption will gradually and infenfibly ac- commodate itfelf to what that annual importation can maintain, ' ....,, ?*•*■ Grounds of the Sufpicion that the Value of Silver ... ., Jlill continues to deer ea/e, . . .\ _ ^T^ H E incrcafe of the wealth of Europe, and the popular notion that, as the quantity of the precious metals naturally increafes with the increafe of wealth, fo tlieir value diminifhes as their quantity increafes, may, perhaps, difpofe many people to believe that their value ftill con- tinues to fall in the European market; and the ftill gradually increafing price of many parts of the rude produce of land may confirm them flill further in this opinion. ■„/■■ ^>.^Ui ^^ , ' . . That that incre.ife in the quantity of the pre- cious metals, which arifes in any country from the increafe of wealth; has no tendency to di- minifb their value, .1 have endeavoured to (how already. Gold . and»:filver naturally refort to a ' "r.»»-'^'^ i rich . tHE WEALTH OF NATIONS. 339 rich country, for the fame reafon that all forts of c h a p. luxuries and curiofities refort to itj not becaufe they are cheaper there than in poorer countries^ but becaufe they arc dearer, or becaufe a better price is given for them. It is the fuperiority of price which attradls them, and as foon as that fuperiority Ceafes, they neceflarily ceafe to go thither. If you except corn and fuch other vegetables as are raifed altogether by human induftry, that all other forts of rude produce, cattle, poultry, game of all kinds, the ufeful foHlls and minerals of the earth, &c. naturally grow dearer as the fociety advances in wealth and improvement, I have en- deavoured to Ihow already. Though fuch com- modities, therefore, come to exchange for a greater quantity of filver than before, it will not from thence follow that filver has become really cheaper, or will purchafe lefs labour than before, but that fuch commodities have become really dearer, or will purchafe more labour than before. It is not their nominal price only, but their real price which rifes in the progrefs of improvement. The rife of their nominal price is the efFed, not of any degradation of the value of filver, but of the rife in their real price. . , /^ ■ :.Ui;iiiC / im'^ Different Effects of the Vrogrejs of Imprcvement . <• • ^$^^ ^^^^^ different Sorts of rude Produce, hpHESE different forts of rude produce may be divided into three clafles. The firft comprehends thpfe which it is fcarce in the ■« i, •» 1 >*tt '» , t ji j> • «; Za '.«- k c. power ■I. ^:. • 'V- 340 THE NATURE AND CAUSES OF BOOK power of human induftry to multiply at all. The '' fecond, thofc which it can multiply in propor- tion to the demand. The third, thofe in which the efficacy of induftry is either limited or un- certain. In the progrefs of wealth and improve- ment, the real price of the firft may rife to any degree of extravagance, and feems not to be li- mited by any certain boundary. That of the fecond, though it may rife greatly, has, how- ever, a certain boundary beyond which it cannot well pafs for any confiderable time together. That of the third, , though its natural tendency is to rife in the progrefs of improvement, yet in the fame degree of improvement it may fome- times happen even to fall, fomctimes to continue the fame, and fometimcs to rife more or lefs, ac- cording as different accidents render the efforts of human induftry, in multiplying this fort of rude produce, more or lefs fuccefsfuU ' ' "' S '"" . / 'i-'-.f-^:^^- Firji Sort,'"' ^^ --^^VT'^^^^^^^' The firft fort of rude product of which the price riles in the progrefs of improvement, is . that which it is fearce in the power of human induftry to multiply at all. It confifts in thofe things which nature produces only in certain ^ quantities, and which being of a very perilhablc nature, it is impofllble to accumulate together the produce of many different feafons. Siich are . the greater part of rare and fingular birds and .fifties, many different forts of game, almoft all , wild-fowl, all birds of paftTage in particular, as well as many other things. When wealth and the THE WEALTH OF NATIONS. ,141 the luxury which accompanies it increafe, the c h a p. demand for thefe is likely to increafe with them, and no effort of human induftry may be able to increafe the fupply much beyond what it was before this increafe of the demand. The quan- tity of fuch commodities, therefore, remaining the fame, or nearly the fame, while the competi- tion to purchafe them is continually increafing, their price may rife to any degree of extrava- gance, and feems not to be limited by any cer- tain boundary. If woodcocks fliould become fo fafliionable as to fell for twenty guineas a- piece, no effort of human induftry could increafe the number of thofe brought to market, much be- yond what it is at prefent. The high price paid by the Romans, in the time of their greateft grandeur, for rare birds and fifhes, may in this manner eafily be accounted for. Thefe prices were not the effcfls of the low value of filver in thofe times, but of the high value of fuch rarities and curiofities as human induftry could not mul- tiply at pleafure. The real value of filver was higher at Rome, for fome time before and after the fall of the republic, than it is through the greater part of Europe at prefent. Three kf- tertii, equal to about fixpence fterling, was the price which the republic paid for the modius or peck of the tithe wheat X)f Sicily. This price, however, was probably below the average market price, the obligation to deliver their wheat at this rate being confidered as a tax upon the Si- cilian faraiers. When the Romans, therefore, had occafion to order more corn than the tithe of Z 3 wheat 34* B O THE NATURE AND CAUSES OP ^o K yflicit amounted to, they were bound by capi- tulation to pay for the furplus at the rate of four feftertii, or eight-pence fterling the pcckj and this had probably been reckoned the moderate and realbnable, that is, the ordinary or average contract pfice of thofe times j it is equal to about one-and- twenty (hillings the quarter. Eight- and-twenty fhi'lings the quarter was, before the late years of f:arcity, the ordinary contra<5l price of Englilh wheat, which in quality is inferior to the Sicilian, and generally fells for a lower price in the European market. The value of filver, therefore, in thofe ancient times, muft have been to its value in the prefent> as three to four in- verfeiy ; that is, three ounces of filver would then have purchafed the fame quantity of labpur and commodities which four ounces will do at prcfent. When we read in Pliny, therefore, that Seius * bought a white nightingale, as a prefent for the emprefs Agrippina, at the price of fix thoufand feftertii, equal to about fifty pounds of our prefent money i and that Afinius Celerf purchafed a furmullet at the price of eight thou- fand feftertii, equal to about fixty-fix pounds thirteen ftiillings and four- pence of our prefent money; the extravagance of thofe prices, how much foever it may furprife us, is apt, not- withftanding, to appear to us about one-third lefs than it really was. Their real pric-, the quantity of labour and fubfiftence which was given away for them, was about one third more than their nominal price is apt to exprefs to us * Lib. X. c. 29. w\ f Lib. ix. c. 17. \^ THE WEALTH OF NATIONS. 343 in the prcfent times. Scius gave for the nightin- c hap. gale the command of a quantity of labour and lubfift'nce equal to what 66/, ijj. 4^/. would purchafe in the prefent times; and Afinius Celcr gave for a furmullet the command of a quantity equal to what 88/. 17J. 9^. y, would purchafe, "What occafioned the extravagance of thofe high prices was, not fo much the abundance of filver, as the abundance of labour and fubtiftence, of which thofe Romans had the difpofal, beyond what was ncceflary for their own ufe. The quantity of filver, of which they had the difpofal, was a good deal lefs than what the command of the fame quan- tity of labour and fubfiften^e would have procured to them in the prefent times. - ,: ■'■■'-■'■''■■■• '' ■ • ',' ■'• ' 1' v^ ; Second Sort. , ' >,., The fecond fort of rude produce of which the price rifes in the progrefs of improvement, is that which human indudry can multiply in proportion to the demand. It connfts in thofe ufeful plants and animals, which, in unculti- vated countries, nature produces with fuch pro- fufe abundance, tfaa'. they are of little or no value, and which, as cultivation advances, are therefore forced to give place to fome more pro- fitable produce. During a long period in th^ progrefs of ii;sprovem^r :, the quantity of thefe is continually diminishing, while at the fame time the demand for them is continually i.i- creafing. Their real value, therefore, the real quantity of labo.ir which they will purchafe or command, gradually rifes, till at laft it gets fo Z 4 high 344 THE NATURE AND CAUSES OP Jr BOCK high as to rcndrr them as profitable a produce as any thing v;l{c which human ind'^llry can raife upon the mod fertile and beft cultivated land. "When it has got (o high it cannot well go higher. If it did, more land and more induftry would foon be employed to increafc the r quantity. When the p;";ce of cr.ttle, for example, riles fo high thac it is as profitable to cultivate iand in order to raife food for them, as in order to raife food for man, it cannot wtil go higher. If it did, more corn land w^uld foon be turned into pafture. The extcnfion of tillage, by diml- nifhing the quantity of wild pa(l«]re. diminifhcs the quantity of butcher's-meat which the country natu.aUy produces without labour or cultiva- tion, aiui by increafing the number of thofe who ha/c either corn, or, what comes to the fame thing, the price of corn, to give in ex- change for it, increafes the demand. The price of butcher's-meat, therefore, and confequently of cattle, muft gradually rife till it gets fo high, that it becomes as profitable to employ the mod fertile and beft cultivated lands in raifing food for them as in raifing corn. But it muft always be late in the progrefs of improvement before tillage can be fo far extended as to raife the price of cattle to this height j and till it has got to this height, if the country is advancing at all, their price muft be continually rifing. There are, perhaps, feme parts of Europe in vhich the price of cattle has not yet got to this height. It had not got to this height in any part tf Scot- land before the union. Had the Sc,;v' h cattle • ' -^ ■ " been THE WEALTH OF NATIONS. - 34f been always confined to the market of Scotland, chap. xr in a country in which the quantity of land, which can be applied to no other purpofe but the feeding of cattle, is fo great in proportion to what can be applied to other purpofes, it is fcarcc poflible, perhaps, that their price could ever have rifen fo high as to render it profitable to cultivate l^nd for the fake of feeding them. In England, the price of cattle, it ha§ already been obferved, feems, in the neighbourhood of. I^ondon, to have got to this height about the be- ginning of the laft century j but it was much later probably before it got through the greater part of the remoter counties j in fome of which, perhaps, it may fcarce yet have got to it. Of all the different fubftances, however, which compofe this fecond fort of rude produce, cattle is, perhaps, that of which the price, in the progrefs of im- provement, firft rifes to this height. Till the price of cattle, indeed, has got to this height, it feems fcarce poflible that the greater part, even of thofe lands which are ca- pable of the higheft cultivation, can be com- pletely cultivated. In all farms too diftant from any town to carry manure from it, that is, in the hr greate* part of thofe of every extenfive country, the quantity of well-cultivated land muft be in proportion to the quantity of manure which the farm itfelf produces j and this again muft be in proportion to the ftock of cattle which are maiiifained upon it. The land is manured either by pafturing the cattle upon it, or by feeding them in the liable, and from thence 3-0 THE NATURE AND CAUSES OP BOOK thence carrying out their dung to it. But unlefs the price of the cattle be fufficicnt to pay both the rent and profit of cultivated land, the farnner cannot afford to pafture them upon it ; and he can ilill lefs afford to feed them in the liable. It is with the produce of improved and culti- vated land only, that cattle can be fed in the ftable ; becaufe to collc6b the fcanty and fcattered produce of wafte and unimproved lands would require too much labour and be too expcnfive. If the price of the cattle, therefore, is not fuffi- cicnt to pay for the produce of improved and cultivated land, when they are allowed to pafture it, that price will be ftill lefs fufficient 'to pay for that produce y/h^jx it muft be colledled with a good deal of aiauonii! labour, and brougfit into the (table to ih< in. In thefc circumftances, therefore, no more Laids can, with profit, be fed in the (lable than what are necefTary for til- lage. Buc thefe can never afford manure enough for keeping conftantly in good condition, all the lands which they are capable of cultivating.. "What they afford being infufficient for the whole farm, will naturally be referved for the knds to which it can be mofl advantageoufly or conve- niently applied; the mofl fertile, or thofe, per- haps, in the neighbourhood of ' the farm-yard. Thefe, therefore, will be kept conftantly in good condition and fit for tillage. The reft will, the greater part of them, be allowed to lie waflc, producing fcarce any thing but fome miferable pafture, juft fufEcient to keep alive a few ftrag- ^ling, half-flarved cattle i the f^rni, though much THE WEALTH OF NATIONS. 34T XI. undcrftockcd in proportion to what would be c h^a p. ncccflary for its complete cultivation, being very frequently ovcrftocked in proportion to its ac- tual produce. A portion of this waftc land, however, after having been pallured in this wretched manner for fix or feven years together, may be ploughed up, when it will yield, perhaps, a poor crop or two of bad oats, or of fome other coarfc grain, and then, being entirely ex- haufted, it muft be refted and paftured again as before, and another portion ploughed ' up to be in the fame manner exhaufted and reded again in its turn. Such accordingly was the general fyftem of management all over the low country of Scotland before the union. The lands which were kept conftantly well -nanured and in good condition, feldom exceeded a third or a fourth part of the whole farm, and fome- times did not amount to a fifth or a fixth part of it. The reft were never manured, but a certain por- tion of them was in its turn, novithllanding, regularly cultivated and exhaufted. Under this fyftem of management, it is evident, even that part of the lands of Scotland wiiich is capable of good cultivation, could produce but Mttlc in Gomparifon of what it may be capable of pro- ducing. But how difadvantageous foever this fyftem may appear, yet before the union the low price of cattle feems to have rendered it almoft unavoidable. If, notwirhftanding a great rife in their price, it ftill continues to prevail through a confiderable part of the country, it is owing, in fTii^ny placv*^ no doubt, tc ignorance and attach- , / ^ ment S4» THE NATURE AND CAUSES OP ment to old cuftoms, but in mod; places to the unavoidable obdrudlions which the natural courfe of things oppofes to the immediate or fpeedy cftablifliment of a better fyftem ; firft, to the po- verty of the tenants, to their not having yet had time to acquire a (lock of cattle fufficient to cul- tivate theii* laiids more completely, the fame rife of prire which would render it advantageous for them to maintain a greater flock, rendering it moic difficult for them to acquire it j and, fe- cofivlly, to their not havinsj yjt h?'^ time to put their lands in condition to maintain this greater Hock properly, fuppofing they were capable of acquiring it. The increale of ftock and the im- provement of land are two events which mud go hand in hand, and of which the one can no-where much out- run the other. Without fome incrcafe of ftock, there can be fcarce any improvement of lan(3, but there can be no confiderable increafe of ftock but in confequence of a confiderable improvement of land j becaufe otherwife the land could not maintain it. Thefe natural ob- ftru6lions to the eftablifhment of a better fyftem, cannot be remover' but by a long courfe of fru- gality and induftry ; and half a century or a cen- tury more, perhaps, mult pafs away before the old fyftem, which is wearing out gradually, can be completely aboliftied through all the different parts of the country. Of aU the commercial advantages, however, 'vhich Scotland has derived from the union with E '>land, this rife in the price of cattle is, perhaps, tUc grt iteft. It has not only r^ifed the value of all highland fftates, but it has, ^fivTi - perhaps, THE WEALTH OP NATIONS. 349 perhaps, been the principal caufc of the improve- ^ " ^ **• mcnt of the low country. In all new colonics the grea. quantity of wafte land, which can for many years be applied to no other purpofc but the feeding of cattle, Toon renders them extremely abundant, and in every thing great cheapnefs is the neceflary confc- quence of great abundance. Though all the cattle of the European colonies in America were originally carried from Europe, they loon mul- tiplied fo much there, and became of fo little value, that even horfes were allowed to run wild in the woods without any owner thinking it worth while to claim them. It mud be a long time after the firft cftablilhment of fuch colonies, be- fore it can become profitable to feed cattle upon the produce of cultivated land. The fame caufes, therefore, the want of manure, and the difproportion between the (lock employed in cul- tivation, and the land which it is defined to ijultivate, are likely to introduce there a fyfteth of hufbai^dry not unlike that which (till conttnlre» to take place in fo many parts of Scotland. Mr. Kalm, the Swedilh traveller, when he gives an • account of the hufbandry of fome off the Englilh cojonies in North America, as he fouhd it in 1749, obferves, accordingly, that he can with difficulty difcover there the charafter of the Englilh nation, fo well (killed in ^11 the difffcrent branches of agriculture. I'hey make fcafceany manure for their corn fields, he fays; but when one piece of ground has been exhaufted by con- tinual cropping, they clear and cultivate another piece 35* THE NATURE AND CAUSES OP BOOK piece of frcfh land -, and when that is cxhai.'ftecl, proceed to a third. Their cattle are allow vJ to wander through the woods and other iM-?jlti. vated grounds, where they arc half-darvedt having long ago extirpated almoft all the an- nual gralTes by cropping them too early in the fpring, before they had tinne to form their flowers, or to flied their feeds*, 'i'ht annual graflcs were, it feems, the bcft natural graffcs in that part of North America ; and when the Eu- ropeans firft fettled there, they ufed to grow very thick, and to rife three or four feet high. A piece of ground which, when he wrote, could not maintain one cow, would in former times, he was afTured, have maintained four, each of which would have given four times the quantity of milk which that one was capable of giving. The poornefs of the pafture had, in his opinion, .occafioned the degradation of their cattle, which (degenerated fenfibly from one generation to an- other. They were probably not unlike that Hunted breed which was common all over Scot- land thirty or forty years ago, and which is now fo much mended through the greater part of the low country, not fo much by a change of the .breed, though that expedient has been employed ^^n^ibme places, as by a more plentiful method of ^feeding them. .,,,. Though it is late, therefore, in the progrefs of -.improvement before cattle can bring fuch a price *' aSi CO Tender it profitable to cultivate land for the ',f.. f iK»lm*s Travels, vol. i. p. 343, 344. ;^"i ^•ii■ ■■tfyf up' 14 A -^ Me ) • THE WEALTH OF NATIONS. 35« fake of feeding them j yet of all the diflfcrcnt parts c ha p, urhich compofe this fecond fort of rude produce* they arc perhaps the firft which bring this price j becaufe till they bring it, it fcems impofTiblc that improvement can be brought .icar even to that degree of perfedion to which it has arrived in many parts of Europe. ^ As cattle arc among the firft, fo perhaps venTw • fon is among the lad parts of this fort uf rude produce which bring this price. The price of venifon in Great Britain, how extravagant focver it may appear, is not near fufficient to compen- fate the expence of a deer park, as is well known to all thofe who have had any experience in the feeding of deer. If it was otherwifc, the feed- ing of deer would foon become an article of common farming -, in the fame manner as the feeding of thofe fmall birds called Turdi was among the ancient Romans. Varro and Colu- mella aflure us, that it was a, moft profitable ar- ticle. The fattening of ortolans,' birjils of paflagc which arrive lean in the country, , is ; faid to be fo in fome parts of France. If venifon continues in fafliion, and the wealth and luxury of Great Britain increafe as they have done for fome time paft, its price may very probably rife ftill higher than it is at prefent. - -vu. *%ih Between that period in the progrefs o^ ITh- provement which brings to its heiglit the price of fo neceflary an article as cattle, and that which brings to it the price of fuch a luperflpity as venifon, there is a very long interval, in th.e' courfe of which many other forts of rude produce gradually >.*.. ^l t. w» ..i, -ft.j>< ' 35* THE NATURE AND CAUSES OI' BOOK gradually arrive at their higheft price, fome fooncf and fome later, according to different circum- ftances. Thus in every farm the offals of the barn and ftables will maintain a certain number of poul- try. Thefe, as they are fed with what would otherwife be loft, are a mere fave-allj and as they coft the farmer fcarce any thing, fo he can afford to fell them for very little. Almoft all that he gets is pure gain, and their price can fcarce be fo low as to difcourage him from feed- ing this number. But in countries ill culti- vated, and, therefore, but thinly inhabited, the poultry, which are thus raifed without expence, are often fully fufficient to fupply the whole de- mand. In this ftate of things, therefore, they are often as cheap as butcher's- meat, or arty other fort of animal food. But the whole quan- tity of poultry, which the farm in this manner produces without expence, muft always be much fmaller than the whole quantity of butcher's- meat which is reared upon itj and in times of -wealth and luxury what is rare, with only nearly equal merit, is always preferred to what is com- mon. As wealth and luxury increafe, therefore, in confequence of improvement and cultivation, the price of poultry gradually rifes above that of butcher's-meat, till at laft it gets fo high that it becomes profitable to cultivate land for the fake of feeding them. When it has got to this height, it cannot well go higher. If it did, more land would foon be turned to this purpofe. In feve- ■ral provinces of France, the feeding of poultry is ^, confidered THE WEALTH OP NATIONS. 353 confidered as a Very irliportanc article in rural c ha p. obconomy, and fufEciently profitable to encou- rage the farmer to raife a confiderable quantity of Indian corn and buck- wheat ^or this purpofe'' A hiiddling farmer will there fometimes h&ve four hundred fowls in his yardi The feeding of poultry feems fcarce yet to be generally con- fidered as a matter of fo much importance in England* They arc certainly, however, dearer in England than in France, as England receives confiderable fupplies from France. In the pro- grefs of improvement, the period at which every particular Ibrt of animal food is deareft, mud naturally be that which immediately precedes the general practice of cultivating land for the fake of railing it. For fome time before this pra6tice becomes general, the fcarcity mud neceflarily raife the price. After it has become general^ new methods of feeding are commonly fallen upon, which enable the farmer to raife upon nhc fame quantity of ground a nuch greater quan- tity of that particular fort of animal food. The plenty not only obliges him to fell cheaper, but in confequence of thefe improvements he can afford to fell cheaper ; for if he could not afford it, the plenty would not be of long con- tinuance. It has been probably in this manner that the introduction of clover, turnips, carrots, cabbages, &c. has contributed to (ink the com- mon price of butcher's -meat in the London market fomewhat below what it was about the beginning of the lafl century. .;,....«.. ,. ,..«. Vol. I. Ai* * The 3S4 THE NATURE AND CAUSES OF The hog, chat Bnds his food among ordure^ and greedily devours many things rejefted by every other ufeful animal, is, like poultry, origi- nally kept as a fave-all. As long as the number of fuch animals, which can thus be reared at little or no expence, is fully fufficient to fupply the demand, this fort of butcher*s-meat comes to market at a much lower price than any other. But when the demand rifes beyond what this quantity can fupply, when it becomes neceflary to raife food on purpofe for feeding and fat- tening hogs, in the fame manner as for feeding and fattening other cattle, the price neceffarily rifes, and becomes proportionably either higher or lower than that of other butcher's- meat, ac- cording as the nature of the country, and the ftate of its agriculture, happen to render the feeding, of hogs more or lefs expcnfive than that of other catde. In France, according to Mr. BuflFon, the price of pork is nearly equal to that of beef. In moft parts of Great Britain it is at preient fome- what higher. - V •*»^!^ 3. ^-. poorcfl; THE WEALTH OP NATIONS. " fff pooreft family can often maintain a cat or a dog, ^ *^ ^? without any expence, fo the pooreft occupiers of land can commonly maintain a few poultry, or a fow and a few pigs, at very Utile. The little offals of their own table, their whey, fkimmed ' milk and butter-milk, fUpply thofe animals with a part of their food, and tiny find the reft in th« neighbouring fiekis without doing any fenfibld damage to> any body. By diminiihing the nuni** ber of thofe fmall occupiers, therefore, the quan-< tity of this fort of provifions which is thus pro-* duced at little or no expence, muft certainly have been a good deal dimini(hed^ and their price muft confequendy have been raifcd both fboner and fafter than it would otherwife have rifcn^ Soonev or later, however, in the progrefs of improve-* ment, it muft at any rate have rifen to the utmc^ft height of which it is capable of rifmgt or^tathe price which pays the labour and expence of culti* vating the land ivhich furnifties them with food as well as thefe are paid upon the greater,jpartiofx)thef cultivated land. j, r: ■ ■ icTt:-) ->:•;? The bufinefs of the dairy, like ihe fe(sdinp: of hogs and poukry, is originally calried on v a favc-all. The cattle neceffarily kept Upon the farm, produce more milk than cithidr shis wreaFing of their own young, .cd* tbe cohfumptiiL»ii of the farmer's family reqi^res ; and theyiproduqe moft at one particular leafon. But of all) the produc.^ tions of land, milk i« perhaps the mod; pcriflu able. In the warm feafonj when it is moil abundant* it will fcarcc keep four^ajid-twcnty hours. The farmer, by making it into tircfh i. ;:;;:; I Aa 2 butter. «« THE NATURE AND CAUSES 6f BOOK butter, ftofcs a fmiH part' of it (br i week: by making it into fait butter, for a year: and by making it into chccfc, he (lores a much greater part of it for feveral years. Part of all thcfe ist referved for the ufe of his own family. The reft goes to market, in order to find the bcft price which \i to be had, and which can fcarcc be fo low as to difcourage him from fending thither whatever is over and above the ufe of his own family. If it is very low, indeeH, he will be likely to ma •-a;-'/' bis dairy in a very flovcnly and dirty ffl^fi.iCi, and will fcarce perhaps think it worth while to have a particirlar room or building on purpofd for it, but will fufFer the bufinefs to be carried on amidft the fmok^*, filth, and naftinefs of his own ; kitchen ; as was the cafe of almoft all the farmers dairies in Scotland thirty or forty years ago, and as is the cafe of many of thenv ftill. The fame caufcs which gradually raifc the price of butcher's- meat, the increafe of the demand, and, in confequence of the im provement of the country, the diminution of the (^u'.ntity whkh can be fed at little or no expence, raife, in the; fame manner, that of the produce of the dairy j of which the price naturally con- pedks wich that of butcher's- meat, or with the expewce of feeding cattle. The increafe of price ipays for more labour, care, and cleanli- nefs. The dairy becomes itjore worthy of the fahiier's .attention, and the quality of its pro- duce gradually improves. The price at laft gets fo high that it becomes worth while to employ f0mt of the nvoft fertile ana beft cultivated ^•!i)?:u'j g : i. >^ ■ lands fTHE WEALTH OF NATIONS. » Tit lands in feeding cattle merely for the purpofe of c h a p^ the dairy j and when it has got to this height, it cannot well go higher. If it did, more land would foon be turned to this purpofe. It feems to have got to this Leight through the greater part of England, where much good land is com- monly employed in this manner. If you except the neighbouroood of a few confiderable towns, it feems not yet to have got to this height any- where in Scotland, where common farmers feldorn employ much good land in raifing food for cattle merely for the purpofe of the dairy. The price of the produce, though it has rifen very confi- derably within thefe few year«, is probably dill roo low to admit of it. The inieriority of the qualicy, indeed, compared with tha^ of the pro- duce of Englidi dairie;s, is fiilly equal to that of the price. But this inferiority of qual'ty is, per- haps, rather the effe<5b of this lownefs of price than the caufe of it. Though the quality was much better, the greajter part of what i > brought 10 market could not, I apprehend, in the pref^nt circumftances of the country, be difpofcd of at a much better price; and the prefent price, it is probable^ would not pay th^ expence of the land and labour necelfary for producing a much better quality. Through the greater part of England, notwithftanding the fuperiority of price, the dairy is not reckoned a more profitable employment of land thdH the railing of corn, or the fattening of cattle, the two great objedls of agriculture. Through the greater part of Scotland, thcrefiarc, it cannot j^et be ^veo fo profitable,. .; . ' i A a 3 The ffi rut NATURE AND CAUSES OP . ' The lands of no country, it is evident, can ever be completely cultivated and improved, till once the price of every produce, which human induftry is obliged to raife upon them, has got fo high as to pay for the expence of complete improvement and cultivation. In order to do this, the price of each particular produce muft be fufHcient, fir ft, to pay the rent of good cc i land, as it is that which regulates the rent o.' *' creater part of other cultivated land j and ic- condiy, to pay the labour and expence of the farmer as well as they are commonly paid upon good corn-land; or, in other words, to replace •with the ordinary profits the ftock which he em- ploys about it. This rife in the price of each particular produce, muft evidently be previous to the improvement and cultivation of the lahd \7hich is deftined for railing it. Gain is the end of all improvement, and nothing could deferve that name of which lofs was to be the neceflary confequence. But lofs muft be the neceflary confequcnce of improving land for the fake of a produce of which the price could never, bring back the expence. If the complete improvement and cultivation of the country be, as it moft cer- tainly is, the greateft of all public advantages, this rife in the price of all thofe different forts of rude produce, inftead of being confidered as a public calamity, ought to be regarded as the neceflary forerunner and attendant of the greateft ofall public advantages. ' ^^^ pr-- -» •: This rife too in the nominal or money-price of all thofe different forts of rude produce has ' ■ ■ "■ been The wealth of nations. 359 been the cffeft, not of any degradation in tht c h a p. value of filver, but of a rife in their real price. ■ ,' ' They have become worth, not only a greater quantity of filver, but a greater quantity of la- bour and fubfiftence than before. As it cofts a greater quantity of labour and fubfiftence to bring them to market, fo when they are brought thither, they reprefcnt or are equivalent to a greater quantity. i-.^ Third Sort, The third and laft fort of rude produce, of which the price naturally rifes in the progrefs of improvement, is that in which the efficacy of human induftry, in augmenting the quantity, is either limited or uncertain. Though the real price of this fort of rude produce, therefore, na- turally tends to rife in the progrefs of improve- ment, yet, according as differeit accidents hap- pen to render the efforts of human induftry more or lefs fuccefsful in augmenting the quantity, ic may happen fomedmes even to fall, fometimes to continue the fame in very different periods of improvement, and fometimes to rife more or lefs in the fame period. There are fome forts of rude produce which nature has rendered a kind of appendages to other forts; fo that the quantity of the one which any country can afford, is neceffarily li- mited by that of the other. The quantity of wool or of raw hides, for example, which any A a 4 country 360 BOOK counti I. THE NATURE AND CAUSES t)P ^i iflford, is necefTarily lioiiced by th6 numbci . great and fmall catde that are kept in it. The (late of its improvement, and the nature of its agriculture^ again neceflarily deter- mine this number. The fame caules, which, in the progref^ qf improvement, gradually raife the price of but- cher's- meaf, Ihould have the fame efFeft, it may be thought, upon thf prices of wool and raw hides, and raife them too nearly in the fame pro- portion. It probably would be fo, if in the rude beginnings of improvement the market for the latter copmodifjes ytas confined \yithin as n?irrow bounds a^ that for the former. But the Q^tent of their refpedive markets is commonly ej^tremely different. The market for butcher's-meat is almoft every^- where confined to the country which produces it, Ireland, and fome part of Britifh America in- deed, carry on a confiderable trade in fait pro- yifions j but they are, I believe, the only countries in the commercial world which do fo, or which export to other countries any confiderable part of their butcher's- meat. TpfB market for wool and raw hides, on the contrary, is in the rude beginnings of improve- ment very feldom confined to the country which produces thpm. They c^n eafily be tranfported ^o diftant countries, wool without any prepara- tion, and raw hides with very little : arid as they are the materials of many manufactures, the in- duftry of other countries may occafion a demand •.:•.■'"'.. n for •n'HE WEALTH OF NAirON^. S6i for them, though that of the country which pfo- c h a Pi duces them might not occafior. any. In countries ill cultivated, and therefore but thinly inhabited, the price of the wool and the hide bears always a much greater proportion tQ that of the whole beaft, than in countres where, improvement and popul£j^>?n being further ad» vanced, there '.* more demand for butcher's- meat. Mr. Hume obferves, that in the Saxon times, the fleece was eftimated at two- fifths of the value of the whole fheep, and tha* flis was much above the proportion of its prefent eftima^ tion. In fome provinces of Spair I have been aflured, the (hcvp is frequently killed merely for the fake of he fleece and the tallow. The car^ cafe is often left to rot upon the ground, or to be devoured by beafl:s and birds of prey. If this fometimes happens even in Spain, it happens almofl: conflantly in Chili, at Buenos Ayres,, and in many other parts of Spanifli America, where the horned cattle are almofl: conft:antly killed merely for the fake of the hide and the tallow. This too ufed to happen almofl: cp'^ftcntly in Hifpaniola, while it was infefted by fhe Buc-r cancers, a'ld before the fettlement, irrprovement, and populoufnefs of the French plantations (which now extend round the coaft of almofl the whole weftern half of the ifland) had given fome value to the cattle of the Spaniards, who fl*^) continue to poflefs, not only the eaftern part of the coaft, but the whole inland and mountainous part of the country. , . , Though |6s THE NATURE AND CAU3E« OF Though in the progrcfs of improvement and population, the price of he whole bcaft ncccfla- rily fifes, yet the price of the carcafe is likely to be much r ore alfe^led by this rife than that of the wool and the hide. The market for the car- cafe, being in the rude ftate of fociety ^ anfincd always to the country which produces it, muft ncceflarily be extended in proportion to the im- provement and population of that country. But the market for the wool and the hides even 6{ a barbarous country often extending to the whole commercial world, ft can very feldom be en- larged in the fame proportion. The ftate of the whole commercial world can feldom be much afFefted by the improvement of any particular country; and the market for fich commodities may remain the fame, or very nearly the fame, after fuch improvements, as before. It fhould, however, in the natural courfe of things rather upon ihe whole be fomewhat extended in confe- quence of them. If the manufaftures, efpecially, of wblch thofe commodities are the materials, ihould ever come to flourilh in the country, the market, though it might not be much enlarged, vould at leaft be brought much nearer to the place of growth than before; and the price of thofe materials might at leaft be increafed by what had ufually been the expence of tranfporting them to diftant countries. Though it might not rife therefore in the fame proportion as that of but- cher's- meat, it ought naturally to rife fomewhat, and it ought certainly wot to fall, * t " ij' ' '' ' .. ' ' / I^? XI. THE WEALTH OF NATIONS. 363 Im England, however, notwithftanding the c ha p. f^ourifliing ftatc of its woollen manuMurc, the price of Englifli wool has fallen very con fider ably fincc the time of Edward III. There are many authentic records which demonftrate that during the reign of that prince (towards the middle of the fourteenth century, or about 1339) what was reckoned the moderate and reafonable price of the tod or twenty-eight pounds of Fn^'ifh wool was not lefs than ten (hillings of t^ ^ney of thofe times*, containing, at tnc r? venty- perce the ounce, fix ounces of ver- weight, equal to about thirty (hih. ^ our prefent money. In the prefent times, onc-and-^ twenty (hillings the tod may be reckoned a good price for very good Engli(h wool. The money- price of wool, therefore, in the time of Ed- ward III, was to its money-price in the prefent times as ten to feven. The fuperiority of its real price was ftill greater. At the rate of fix (hillings and eight- pence the quarter, ten {hil- lings was in thofe ancient times the price of twelve bulhels of wheat. At the rate of twenty- eight (hillings the quarter, one-and- twenty (hil- lings is in the prefent times the price of fix bu(hels only. The proportion between the real prices of ancient and modern times, therefore, is as twelve to fix, or as two to one. In thofe ancient times a tod of wool would have pur- chafed twice the quantity of fubfiftence which it will purchafe at prefent; and confequently twice ♦ See Smith's Memoirs of Wool, vol. }. c. 5, 6, and 7; al{b,vol.ii. Q. 17C. ^^ :-. w.fro: - . . . . ,, the ^ ^ ^ ^^^^Q. IMAGE EVALUATION TEST TARGET (MT-3) A O ^ .5^. ^.f .V* i^ f^^^^ A ^^ 4^ 4^ 1.0 I.I 11.25 IttlM |Z5 m ^^ mi •al4i |22 Kf 1^ 12.0 lUiSi Photographic Sciences Corporation 23 WEST MAIN STREET WEBSTER, N.Y. I45S0 (716)872-4503 ^ ^\^ ^ ^ --\ <> <^V v\ I 3^4 '^^^ NATURE AND CAUSES OF » o^o K the quantity of labour, if the real recompence of labour had been the fame in both periods. /^ This degradation both in the real and nomi* nal value of wool, could never have happened in confequence of the natural courfe of things. It has accordingly been the effed of violence and «rtifice:. Firft, of the abfolute prohibition of exporting wool from England : Secondly, of the permifllion of importing it from Spain duty fVee : Thirdly, of the prohibition of exporting it fronn Ireland to any other country but England. In confequence of thefe regulations, the market for Englilh wool, inftead of being fomewhat extended in confequence of the improvement of England, has been confined to the home market, where the wool of feveral other countries is allowed to come into competition with it, and where^ jthat of Ireland is forced into competition with it. As the woollen qianufadtures too of Ireland are fully as much difcouraged as is confiftent with juftice and fair dealing, the Irifh can work up but a fmall part of their own wool at home, and are, therefore^ obliged to fend a greater pro- portion of it to Great Britain^ the only market they are allowed. I HAVE not been able to find any fuch authentic records concerning the price of raw -hides in an- cient times. Wool was commonly paid as a fubfidy to the king, and its valuation in that fub- fidy aicertains, at leaft in fome degree, what was its ordinary price. But this feems not to have been the Cafe with raw hides. Fleetwood, how- ever, from an account in 1425, between the prior of ^THt WEALTH OP NATIONS, r i«f of Burceder Oxford and one of his canonSi givei c h a A «is their price, at kaft as it was ftated^ u(k>n ^' that patttcular occafion; viz. five ox hides at twelve fliilKrigs $ five cow hides at (even (hilling^ and three-p^n^C; thirty-fix flieep fkms of two years old at nine (hiHingS) fixteen calf (kins at two (hilUngi. In 1425, twelve fliillingscon« tained about- the fame quantity of filver as four^ and-twency killings of our preient money. An ox hide, therefore, was in this account valued ac the fame quantity of filver as 4J. 4ths of our prefent mooiey. .Its nominal price: was a good deal lower than at prefent. But at the rate of fix (hillings ind eight- pence the quarter, twelve ihUlings wovild' in. tho^ times have purchased (burteen fa(u(liBb land, four-fifths of: a isoihel of wheat, which, at thcee and fix-pence the bufiieV would in the prefent times cofi: 5 1 ;f. 4^. Atl ox liide, therefore,, would in thofe times have purt chafed as muchccnrn as ten (hillings and thre^ pence would purciilfe^ prefent. . Its real value was equal to . ten .(hairings and three-pence of quf prefent jnoneyv In . thole ancient times, when the cattle were half (hrvedduriiJg. the greater part of the winter, we cannot fu{^fe that they. were of a very large flzc. An ox hide whicli • weighs four (tone of fixteen poujtids of averdupois, is^not \a tht -ptiefencr times reckoned a bad one} and: in thofef ancient times. VKOuId probably have been reckoned' a! very good one. But at half a crown the: ftone^ which at this moment (Fc^ -bruary 1773-)! I iunderftand.to be the common pric^ fucbii hide would at preient coft only tea .A (hillings. S66 TH& NAtURB AND CAUSES 01^ 9 o o K ihillings. Though its nominal prkt, therefoi^, '* is higher in the prefent than it was in tiiofe ancient times, its real price, the real quantity of Aib* fiftence which it will purchafe or command, is rather fomewhat lower. The price of cow hides, «s ftated in the ab9ve account, is nearly in the common proportion to that of ox bides. That of iheep ikins is a good deal above it. They had probably been fold with the wooL That of calves ikins, on the contrary, is greatly below it. In countries where the price of cattle is very k>w, the calves, which are iK>t intended to be reared in prder to keep up the dock, are generally killed tery youngs as was the cafe in Scotland twenty or thirty years ago. It laves the mUk, which iheit price would not pay for. Their ikins, therefore, are commonly good for fitde, , } The price of raw hides is s good deal lower at prefent than it was a few years ago; owing probi^ly to the uking off tbe duty upon fcal (kins, and to the allowing, for a limited time^ the importation of raw hides from Ireland and from the plantations duty free, which i done in 1769. Take the whole of the prefeni century at an average, their real price has probably been fomewhat higher than it w^ in thofe an* cient times. The nature of the commodity readers it not quite fo proper for beings tranf* ported to diftant markets as wool. It fufiers more by keeping. A ialted hide is reckoned inferior to a freih one, and fellst for a lower price. This circumftance muft neceflarily have ibmc tendency to fink the price of raw hklos produced in *^THE WEALTH OF NATIONS. s«r In a country which does not manufaffcure them, ^ ^.^ **• but is obliged to export them; and compara- tively to raife that of thofe produced in a coun- try which does manufadhire them. It muft have Tome tendency to fink their price in a bar* barouS} and to raife it in an improved and manu- fafturing country. It mud have had fome ten- dency therefore to fmk it in ancient, and to raife it in modern times. Our tanners beHdes have not been quite fb fuccefsful as our clothiers, in convincing the wifdom of the nation, that the fafety of the commonwealth depends upon the profperity of their particular manufidure. They have accordingly been much lefs favoured. The exportatioii of raw hides has, indeed, been pro-^ hibited, and declared a nuifance: but their im- portation from foreign countries has been fub- jeAed to a duty ; and though this duty has been taken off from thofe of Ireland -and the planta- tions (for the limited time of five years only), yet Ireland has not been confined to the market of Great Britain for the fale of its furplus hides, or of thofe which are not nrianufadlured at home. The hides of common cattle have but within thefe few years been put among the enumerated com- modities which the plantations can fend no-where but to the mother country ; neither has the com- merce of Ireland been in this cafe opprcfTed hitherto, in order to fupporc the manufactures of Great Britain. Whatever regulations tend to fink the price either of wool or of raw hides below what it naturally would be, muft^ in an improved and liz^'. . cultivated )6f THE NATURE AND CAtTSfiS OF BOOK cultivated country, have fotrie tendency to n\fi the price of butcher's meat* The price both of the great and fnnall cattle, which are fed on im- proved and cultivated land, muft be fuflicient to pay the rent which the landlord, and the proBt which the farmer has reafon to expcd from im* proved and cultivated land. If it is not, they will fuon ceafe to feed them. Whatever part of this price, therefore, is not paid by the wool |U)d the hide, mud be paid by the carcafe. The lefs there is paid for the one, the more mud be paid for the other. In what manner this priqe is to be divided upon the different parts of the bead, is indifferent to the landlords and farmers, provided it is all paid to them. In an improved and cultivated country, therefore, their intereft as landlords and farmers cannot be much affe6bed by fuch regulatipns, though their intereft as confumcrs jmay, by the rife in the price of pro- vifions. It would be quite ptherwife, however, in an unimproved and uncultivated country, V^here the greater part of the lands could be applied to no other purpoie but the feeding of cacde, and where the wool and the hide made the principal part of the valuer of thofe cattle; Their intereft as laqfilords and farmers would in this cafe be very deeply affeiSled by fuch regula- tions, and their intercft as confumiers very litde. The fall in the price of the wool and the hide, would not in this cafe raifc the price of the car* cafe ; bccaufe the greater part of the lands of the country being applicable to no other purpofe but the feeding of cattle, tl^e faipe number would \— - ., Hill iii?i THE WEALTH OP NATIONS. ftill continue to be fed. The fame quantity of ^ butcherVmeat would ftill come to market. The demand for it would be no greater than before. Its price, therefore, would be the fame as be- fore. The whole price of cattle would fall, and along with it both the rent and the profit of all thofe lands of which cattle was the principal produce, that is, of the greater part of the lands of the country. The perpetual prohibition of the eikportation of wool, which is commonly, but very 'falfcly afcribed to Edward III, would, in the then circumftances of the country, have been the moft dcftru6live regulation which could well have been thought of. It would not only have reduced the aftual value of the greater part of the lands of the kingdom, but by reducing the pricie of the moft important fpecies of fmall cattle, it would have retarded very much its fubfequent improvement. The wool of Scotland fell very' confiderably in its price in confequencc of the union with England, by which it was excluded from the great market of Europe, and confined to the narrow one of Great Britain. The value of the greater part of the lands in the fouthern counties of Scotland, which are chiefly a fheep country, would have been very deeply affedbed by this event, had not the rife in the price of butcher's- meat fully compenfated the fall in the price of wool. • As the efficacy of human induftry, in in- creafing' the quantity either of wool or of raw hides, is limited, fo far as it depends upon the Vol. I. B b produce S69 \^ » : J70 BOO 4. rm NATURE AND CAUSES OF produce of the country where it is exerted i (o ic is uncertain fb far as it depends upon the prq- duce of other countries. It fo far depen<^^ not (9 much upon the quantity which they produ(;c|« as upon that which they do not manufadture ; j^nd upon the reilraints which they may or may not think proper to impofe upon the exportation of this fort pf rudv produce. Thefe circum-^ ftanceS) as they ^ are altogether independent of domeftic indu(by, fo they necefT^rily render the q whar ,i'Ji.:4,iJ\J-h-.T TkB WEALTH OF NATIONS. tn what had been requifice for fupplying the narrow chap. and confined one. A market which, frbm re- quiring only one thoufand, comes to require annually ten rhoufand ton of fi(h, can fcldom be fupplied without employing more than ten times the quantity of labour which had before been fufficient to fupply it. The filh muft generally be fought for at a greater diftance, larger vcITels muft be empbyed, and nx>re extenfive ma* chinery of every kind made ufe of. The real price of this commodity, therefore, naturally rife;! in the progrels of improvement. It has ac* cordingly done fo, I believe, more or lefs in every country. Though the fuccefs of a particular day's 6(hing may be a very uncertain matter, yet, the local fituation of the country being fuppofed, the ge* neral efficacy of indudry in bringing a certain quantity of fifli to market, taking the courfe of a year, or of feveral years together, it may perhaps be thought, is certain enough; and it, no doubt, is fo. As it depends more, how- ever, upon the local fituation of the country, than upon the ftate of its wealth and induftry; as upon this account it may in difierent countries be the fame in very different periods of improve- ment, and very different in the fame period ; its connection with the fiate of improvement is un- certain, and it is of this fort of uncertainty that I am here fpeaking. In increafing the quantity of the different mi- nerals and metals which are drawn from the bowels of the earth, that of the more precious ' B b 2 V / jncs ff THB NATURE AND CAUSI8 OP BOOK onet particularly, the efficacy of human induftry '* feemt not to be Hmiced, but to be altogether unceruin. The quantity of the precious metals which is to be found in any country is not limited by any thing in its local fituation, fuch u the fertility or barrennefs of its own mines. Thofe meuls frequently abound in countries which poflefs no mines. Their quantity in every particular coun- try feems to depend upon two different circum- dances j firft, upon its power of purchafing, upon the (late of its indudry, upon the annual produce of its land and labour, in <;onfequence of which it can afford to employ a greater or a fmaller quan- tity of labour and fubfiftence in bringing or pur- chaHng fuch fuperfluities as gold and iilvcr, either from its own mines or from thofe of other coun- tries { and, fecondly, upon the fertility or bar- rennefs of the mines which may happen at any particular time to fupply the commerchU world with thofe metals. The quantity of thoie metals in the. countries moft remote from the mines, muft be more or lefs affected by this fertility or barrennefs, on account of the eafy and cheap tranfportation of thofe metals, of their fmall bulk and great value. Their quantity in China and Indoftan muft have been more or lefs afieded by the abundance of the mines of America. So far as their quantity in any particular coun- try depends upon the former of thofe two cir- cumftanccs {the power of purchafing), their real price, like that of all other luxuries and ftipcr- fluities, is likely to rife with the wealth and itn- provement THB WEALTH OF NATIONS. S7| proremtnt of the counciy, and to fall with its chap. poverty and depreflion. Countries which |iare a great quantity of labour and fubfiftence to fpare, can afK>rd to purchafe any particular quantity of thofe metals at the expence of a greater quantity of labour and fubfiftencCt than countries which have lefs to fpare. So far as their quantity in any particular coun- try depends upon the latter of thofe two circum- ftances (the fertility or barrennefs of the mines which happen to fupply the commercial world) their real price, the real quantity of labour and fubfiftence which they will purchafe or exchange for, will, no doubt, Cir^k more or lefs in propor- tion to the fertility, and rife in proportion to the barrennefs, of thofe mines. The fertility or barrennefs of the mines, how- ever, which may happen at any particular time to fupply the commercial world, is a circum- ftance which, it is evident, may have no fort of connection with the ftate of induftry in a parti- cular country. It Teems even to have no very neceflary connexion with that of the world in general. As arts and commerce, indeed, gra- dually fpread themfelves over a greater and a greater part of the earth, th^ fearch for new mines, being extended oyer a wider furface, may have fomewhat a better chance for being fuccefsful, than when confined within narrower bounds. The difcovery of new mines, however, as the old ones come to be gradually exhaufted, is a matter of the greateft uncertainty, and fuch as no human (kill or induflry can enfuro. All B b 3 indi- y4 THE NATURE AND CAUSES OF B o o K indicationi, it it acknowledged, are doubtful, and the actual difcovery and ruccefsful working of a new mine can alone afceruin the reality of its value, or even of i(s exigence. In this fearch there fcem to be no certain limits either to the poflTtble fuccefs, or to the poflible difappoint- mcnt of human induftry. In the courfe of ^ century or two, it is poflfible that new mines may he difcovercd more fertile than any that have ever yet been known ; and it is juft equally pof- lible that the moft fertile mine then known may be more barren than any that was wrought before the difcovery of the mines of America. Whether the one or the other of thofe two events may happen to take place, is of very little im- portance to the real wealth and profperity of ti|e world, to the real value of the annual produce of the land and labour of mankind. Its no- minal value» the quantity of gold and (ilver by which this annual produce copld be exprefled or reprefented, would, no doubt, be very different $ but its real value, the real quantity of labour which it could purchafe or CQoimand, would be precifely the fame. A fhitling might in the one cafe reprefent no mor^ labour than a penny does at prefencj and a penny in the other niight re- prefent as much as a fhilling does now. But in the one cafe he who had a (hilling in his pocket, would be no richer than he who has a penny at ' prefent; and in the other he who had a penny would be juft as rich as he who has a {hilling now. The cheapncfs and abundance of gold and filver platCj would be the fole advantage which THB WEALTH OP NATIONS. S7$ which the world could derive from tlie one evem, c ii a *. ifld the dearnefs and fcarcity of thofc trifling fu- perfluities the only inconveniency it could fuflfer from the other* Cofulufitn ef the Tyt^reJIion concerning the VarUtioMS in the Value of Silver. Tab greater part of the writers who have col- ledled the money prices of things in ancient time^, feem to have confidered the low money price of coin, and of goods in general, or, in Other words, the high value of gold and filvrr, as a proof, not only of the fcarcity of chofe metals, but of the poverty and barbarifm of the country at the time when it took place. This notion is tonnefted with the fyftem of political oeconomy which reprefents national wealth as confiding in the abundance, and national poverty in the fcarcky, of gold and filver } a fyftem which I (hall endeavour to explain and examine at great length in the fourth book of this enquiry. I (hall only obferve at prefent, that the high value of the precious metals can be no proof of the poverty or barbarifm of any particular country at thd time when it took place. It is a proof only of (he barrennefs of the mines which happened ai that time to fupply the commercial workl. A f>o6r country, as it cannot afford to buy more, fo it can as little afford to pay dearer for gold and (liver than a rich one j and the value of tho(e metals, therefore, is not likely to be higher in the former th«a in the latter. In China, t coun- B b 4 Iff /■,.>■ 376 BOO I. THE NATURE AND CAUSES QP K try much richer than any part of Europe* the value of the precious metals is much higher than in any part of Europe. As the wealth of £Mrope> indeed, has increafed greatly fince the difcovery of the mines of America, fo the value of gold and niver has gradually diminifhed. This di> minution of their value, however, has not been owing to the increafe of the real wealth of Eu- rope, of the annual produce of its land and la- bour, but to the accidental difcovery of more abundant mines than any that were known be- fore. The increafe of the quantity of gold and filver in Europe, and the increafe of its manu- fadbures and agriculture, are two events which, though they have happened nearly about the fame time, yet have *arifen from very different caufes, and have fcarce any natural conne6tiin with one another. The one has arifen from a mere accident, in which neither prudence nor policy either had or could have any (hare: the other from the fall of the feudal fyftem, and from the ellablifhment of a government which afforded to induftry the only encouragement which it requires, fome tolerable fecurity that it (hall enjoy the fruits of its own labour. Poland, where the feudal fyftem ftill continues to take place, is at this day as beggarly a country as it was before the difcovery of America. The money price of corn, however, has rifen; the real value of the precious metals has fallen in Poland, in the fame manner as in other parts of Europe. Their quantity, therefore, muft have increafed th^r^ as in oth^r placesj .and nearly in the THE WEALTH OF NATIONS. 377 the fame proportion to the annual produce of its c h a p. land and labour. This increafe of the quantity of thofe metals, however, has not, it fecms, in- creafcd that annual produce, has neither im- proved the manufadbures and agriculture of the country, nor mended the circumftances of its inhabitants. Spain and Portugal, the countries which polTefs the mines, are, after Poland, per- haps, the two moft beggarly countries in Europe, The value of the precious metals, however, muft be lo>yer in Spain and Portugal than in any other part of Europe -, as they come from thofe coun^ tries to all other parts of Europe, loaded, not only with a freight and an infurance, but with the expcnce of fmuggling, their exportation being cither prohibited, or fubjefted to a duty. In proportion to the annual produce of the land and labour, therefore, their quantity muft be greater in thofe countries than in any other part of Europe j thofe countries, however, are poorer than the greater part of Europe. Though the feudal fyftem has been abolifhed in Spain and Portugal, it has not been fucceeded by a much better. As the low value of gold and filver, therefore, is no proof of the wealth and flourifhing ftate of the country where it takes place; fo neither is their high value, or the low money price either of goods in general, or of corn in particular, any proof of its poverty and barbarifm. ^.... ' But though the low money price either of goods in general, or of corn in particular, be no proof of the poverty or barbarifm of the times, .V -:uri the 378 THE NATURE AND CAUSES OF * ®^° ^ thie low money price of fomc particular forts of goods, fuch as cattle, poultry, game of all kinds, Sec, in proportion to that of corn, is a moft de-' cifive one. It clearly demonftrates, firft, their great abundance in proportion to that of corn, and confequently the great extent of the land Dvhich they occupied in proportion to what was occupied by corni and, fecondly, the low valu^ of this land in proportion to that of corn land, and confequently the uncultivated and unim- proved ftate of the far greater part of the lands of the country. It clearly demonftratcs that the flock and population of the country did not bear the fame proportion to the extent of its territory, which they commonly do in civilized countries, and that fociety was at that time, and in that Country, but in its infancy. From the high or low money price cither of goods in general, or of Corn in particular, we can infer only that the mines which at that time happened to fupply the commercial world with gold and filver, were fer- tile or barren, not that the country was rich or poor. But from the high or low money price of fome forts of goods in proportion to that of others, we can inf<;r, with a degree of probability that ap- proaches almoft to certainty, that it was rich or poor, that the greater part of its lands were im- proved or unimproved, and that it was either in a mors or lefs barbarous ftate, or in a more Or Icfs civilized one. J«.iv' Any rife in the money price of godds which proceeded altogether from the degradation of the value o£ filver, wpuld affc6t aH forts of goods ^nfj ^ equally. THE WEALTH OP NATIONS. J79 equally, an4 raife their price univerfally a third, chap. qr a fourth, or a fifth lart higher, according as ^^' fjlver happened to lod chird, or a fourth, or a fifth part of its former value. But the rife in the price of provifions, which has been the fubjcd of {o much reafoning and converfation, does not affe£t all forts of provifions equally. Taking the courfe of the prelent century ac an average, the price of corn, it is acknowledged, even by thofe who account for this rife by the degradation of the value of (ilver, has rifen much lefs than that of fome other forts of provifions. The rife in the price of t-hofe other forts of provifions» therefore, cannot be owing altogether to the de- gradation of the value of (ilver. Some other caufes muft be taken into the account, and thofe which have been above afligned, -will, perhapsy without having recourfe to the fuppofed degra>- ^ation of the value of filver, fufficiently explain this rife in thofe particular forts of provifions of which the price has actually rifen in proportion to that of corn. As to the price of corn itfelf, it has, during the fixty-four firft years of the prefent century, and before the late extraordinary courfe of bad feafons, been fomewhat lower than it was during the fixty-four laft years of the preceding century. This fa6t is attefted, not only by the accounts of Windibr market, but by the public fiars of all the different counties of Scotland, and by the accounts of feveral different markets in France, which have been collefted with great diligence and fidelity by Mr. Mcflance and by Mr. Duprd v..^^.' ■ ■ de 3«o rae NATURE AND CAUSES OF • ^J* ^ dc St. Maur. The evidence is more complete than could well have been dkpedted in a matter which is naturally fo very difficult to be afcer- tained. ' As to the high price of corn during thelc laft . ♦■ien or twelve years, it can be fufficiently ac- . ' 'cdunted for from the badnefs of the feafons, /'"without fuppofing any degradation in the value Of niver. The opinion, therefore, that filver is con- tinually finking in its value, feems not to be founded upon any good obfervations, either upon the prices of corn^ or upon thofe of other provilions. The fame quantity of filver, it may, perhaps, be faid, will in the prefent times, even according to the account which has been here given, pur- chafe a much fmallcr quantity of feveral forts of provifions than it would have done during ibme part of the laft century ; and to afcertain whether this change be owing to a rife in the value of thofe goods, or to a fall in the value of Giver, is only to eftablifh a vain and ulelefs dif- linftion, which can be of no fort of fervice to the man who has only a certain quantity of filver to go to market with, or a certain fixed revenue in money. I certainly do not pretend that the knowledge of this diftindlion will enable him to buy cheaper. It may not, however, upon that account be altogether ufelefs. ' It may be of fomc ufe to the public by af- fording an eafy proof t)f the profperous condition of the country. If the rife in the price of fome ^^ 2 • Ibrts THE WEALTH OF NATIONS. 381 (brts of provifions be owing akogccher to a fall c h a p. in the value of filver^ it is owing to a circum- ^' ftance from which nothing can be inferred but the fertility of the American nunes. The real wealth of the country, the annual produce of its land and labour, may, notwithftanding tliis cir- cumftance, be either gradually declining, as in Portugal and Poland ; or gradually advancing, as in mod: other parts of Europe. But if this rife in the price of fome forts of proviiions be owing to a rife in the real value of the land which pro* duces them, to its increafed fertility; or, ijf\ confequence of more extended improvement anc) good cultivation, to its having been rendered fie for producing corn ; it is owing to a circum^ Itance which indicates in the cleared: manner the profperous and advancing (late of the country. The land conftitiites by far the greatcft, the moft important, and the moft durable part of the wealth of every cxtenfive country. It may furely be of fome ufe, or, at lead, it ijnay give fome (a- tisfaffcion to the public, to. have fo decifive a proof of the iricrcafing value of by far the greatcft, the moft important, and the moft durable part of its wealth. It may too be of fome ufe to the public in regulating the pecuniary reward of fome of its inferior fervants. If this rife in the price of fome forts of provifions be owing to a fall in the value of filver, their pecuniary »"eward, provided it was not too large before, ought certainly to be augmented in proportion to the extent of this fall. If it is not augmented, their real re-* compence f^ THE NATURE AND CAUSES OP A, BOOK ebmpence will evidently be (o much dimlnilhed. Buc if this rife of price is owing to the increafed value, in confequcnce of the improved fertility of the knd which produces fuch provifions, ic becomes a much nicer matter to judge either in what proportion any pecuniary reward- ought to be augmented, of whether it ought to be aug. mented at all. The extenlion of improvement and cultivation, as it neceflfarily raifes more or lefs, in proportion to the price of corn, that of every fort of animal food, fo it as neceflarily lowers that of, I believe, every fort of vegetable food. It raifes the price of animal food; be- c^ufe a great part of the land which produces it, being rendered fit for producing corn, muft af- ford to the landlord and farmer the rent and profit of cortv land. It lowers the price of vege- table fobd ; becaufe, by increafing the fertility of the land, it increafes its abundance. The im- provements of agriculture too introduce many forts of vegetable food, whidi, requiring lefs land and not more labour than corn, come much cheaper to market. Such are potatoes and maize, or what is called Indian corn-, the two moft im« portant improvements which the agriculture of Europe, perhaps, which Europe itielf, has received from the great extenfion of its commerce and na- vigation. Many forts of vegetable food, befides, which in the rude ftate of agriculture are con- fined to the kitchen-garden, and raifed only by the fpade, come in its improved ftate to be in- troduced into common fields, and to be raifed by the plough: fuch as turnips, carrots, cab- '■ J . bages, ^ .1 Jilts'! 4 l-^'lH beer. - /, THE W&ALTH OF NATIONS. %9^ bages, &c. If in the progrefs of improve- chap. ment, therefore, the real price of one fpecies of (bod neceflarily rifes, that of another as necefla- rily falls, and it becomes a matter of more nicety to judge how far the rife in the one may be compenfated 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 fort» except;, perhaps^ that of hogs fle(h, it feems to h^ve done through a great part of England morp than a century ago)> any rife which can skfr terward? happen in tha^ of any other fort of ani- mal food, cannot mudjiafiTeiSt the circumftances of the inferior rank^ of people. The circum- ilances of the poor through a great part of £ng- knd cannot furely be fo much diftrefTed by any^ rife in the price of poultry, 60), wild-fowl, or yeqifon, as they muft be relieved by the fall in that of potatoes. aAi In the prefent feafon of fcarcity the high price of corn no doubt dillre0es the poor. But in times of moderate plenty, when corn is at its or-> dinary. pr average price, the natural rife in th9 price of any other fort of rude produce cannot much aiFca them* They fuffcr more, perhapsj, by the artificial rife which has been occafioned by taxes in the price of fome manufactured comnjp- dities J as of fait, foap» leather, candles, male* beer, and ale, &c* ._ :^. , ^ ^^:^^m5n ^ -Z^ '^ ./AWlG^-lKJwi^ai.>-lin'' ' S84 THB NATURE AND CAUSES OP EffeSfs of the Progrefs of Improvement upon the real Price of Manuf azures, T T is the natural effect of improvement, hbw- ■ ever, to diminilh gradually the real price iof almoft all manufactures. That of the manufac- turing workman(hip diminilhes, perhaps, in all of them without exception. In confequence of better machinery, of greater dexterity, and of a more proper divifion and diftribution of work, all of which arc the natural eflfcfts of improve- ment, a much fmaller quantity of labour be- comes requifite for executing any particular piece of work; and though, in confequence of cjie flourifhing circumftances of the fociety, the real price of labour Ihould rife very confiderRbljr, yet the great diminution of the quantity will gene- rally much more than compenfate the grcatcft rife which can happen in the pried. ^ ' *' There are, indeed, a few manufaftures, in which the neceflary rife in the real price of the rude materials will more than compenfate all the advantages which improvement can introduce into the execution of the work. In carpenters and joiners work, and in the coarfer fort of Cabinet work, the neceflary rife in the real price of barren timber, in confequence of the improvement of land, will more than compenfate all the advan- tages which can be derived from the beft nrtachinery, the greateft dexterity, and the moft proper divifion and diftribution of work. ., =. . But THB WEALTH OF NATIONS, 385 'But in ... cafes in which the real price of the c ha p. rude materials either does not rife at all, or does not rife very much, that of the manufadhired com- modity finks very confiderably. This diminution of price has, in the courfe of the prefent and preceding century, been moft re- markable in thole manufafkures of which the materials are the coarfer metals. A better move- ment of a watch, than about the middle of the laft century could have been bought for twenty pounds, may now. perhips be had for twenty ihillings. In. the work of cutlers and lockfmiths, in all the toys which are made of the coarfer metals, and in all thofe goods which are com- monly known by the name of Birmingham and Sheffield ware, there has been, during the fame period, a very great reduftion of price, though not altogether fo great as in watch-work, h has, however, been fufficient to aflonifh the workmen of every other part of Europe, who in many cafes acknowledge that they can produce no work of equal goodnefs for double, or even for triple the price. There are perhaps no ma- nufaftures in which the divilion of labour can be carried further, or in which the machinery em- ployed adihits of a greater variety of improve- ments, than thofe of which the materials are the coarfer metals. In the clothing manufadfcure there has, during the fame period, been no fuch fenfible redudion of price. The price of fuperfine cloth, I have been alfured, .on the contrary, has, within thefe five-and-twenty or thirty years, rifcn fomcwhat Vol. I, , Cc , % / )86 I THE NATURE AND CAUSES OP BOOK in proportion to ia quality i owing, it was faid, to a confickrabk rife in the price of the mate- rial, which confifts altogether of Spaniih wool. That of the York(hire cloth, which is made al- together of Englifli woo), is faid indeed, during the courfe of the preient century, to have fallen a good deal in proportion to its quality. Qua- lity, however, is fo very difputable a matter, / that I look upon all ioformation of this kind as fomewhat uncertain. In the clothing manu- facture, the divifion of labour is nearly the fame now as it was a century ago, and the machinery employed is not very different. There may, however, have been fome fmall improvements in both, which may have occafioned fome redudtion of price. , But the redudion will appear much more fen- Able and undeniable, if we compare the price of this manufacture in the prefent times with what it was in a much remoter period, towards the end of the fifteenth century, when' the labour was probably much lefs fubdivided, and the ma- chinery employed much more imperfedb, than it h at prefent. In 1487, being the 4th of Henry VII. it was enacted, that " whofoevcr (hall fell by retail a *• broad yard of the fincft fcarlet grained, or of *' other grained cloth of the fincft making, *« above fixtcen fhillings, ihall forfeit forty fliil- ** lings for every yard fo fold." Sixteen fhil- lings, therefore, containing about the fame quantity of filvcr as four- and- twenty fhillings of our prefent money, was, at that time> reckoned **.i II A .«. not THE WEALTH OF NATIONS. ^7 not tn unreafonablc price for a yard of the fined chap. cloth) and as this is a fumptuary law, fiich ^^' cloth, h is probable, had ufually been fold fomewhat dearer. A guinea may be reckoned the liigheft price in the prefent tiaies. Even though the quality of the cloths, therefore, ihould be fuppofed equal, and that of the prefent times is moft probably npuch fuperior, yet, even upon this fuppofition, the money price of the fineft cloth appears to have been confiderably re- duced fince the end of the fifteenth century. But its real price has been much more reduced. Six ihillings and eight-pence was then, and long afterwards, reckoned the average price of a quar- ter of wheat. Sixteen ihillings, therefore, was the price of two quarters and more than three bulhels of wheat. Valuing a quarter of wheat in the prefent times at eight- and- twenty (hillings, the real price of a yard of fine cloth muft, in thofe times, have been equal to at leaft three pounds fix (hillings and (ixpence of our prefent money. The man who bought it muft have parted with the command of a quantity of labour and fubfiftence equal to what that fum would pur- chafe in the prefent times. The reduftion in the real price of the coarfe manufacture, though confiderable, has not been fo great as in that of the fine. In 1463, being the 3d of Edward IV. it was enafled, that « no fervant in husbandry, nor <' common labourer, nor fervant to any artificer " inhabiting out of a city or burgh, fhall ufe or " wear in their clothing any cloth above two .. ia^ . C c a " ihillings 'vii^ THE NATURE AND CAUSES OP BOOK " (hillings the broad yard." In the 3d of '* Edward IV. two fhillings contained very nearly the fame quantity of filver as four of our pre- fent money. But the Yorkfhire clcch, which is now fold at four (hillings the yard, is probably much fuperior to any that wa:*. theri made for the wearing of the very pooreft order of common fervants. Even the money price of their clothing, therefore, may, in proportion ro the quality, be fomewhat cheaper in the prefent than it was in thofe ancient times. The real price is certainly a good deal cheaper. Ten-pence was then reckoned what is called the moderate and rea- fonable price of a bufhel of wheat. Two (hil- lings, therefore, was the price of two bu(hels and near two pecks of wheat, which in the pre- fent times, at three (hillings and fixpence the bu(hel, would be worth eight (hillings and nine- pence. For a yard of this cloth the poor fer« vant muft have parted with the power of pur- chaHng a quantity of lubfiftence equal to what eight (hillings and nine- pence would purcha(e^in the prefent times. This is a fumptuary law too, reftraining the luxury and extravagance of the poor. Their clothing, therefore, had commonly been much more expenfive. The fame order of people are, by the fame law, prohibited from wearing hofe, of ^\Wirh the price (hould exceed fourtcen-pencc ; c , i, equal to auout cight-and- twenty pence of our prefent money. But fourteen- pence was in thofe th-*ie3 thf price of a bufhel and near two pecks of wh: ;i vhich, '-i the prefent times, at three and \i i. ' .. " ^^' fixpence ■ Y THE WEALTH O" NATIONS^* SS9 fixpcnce the bulhd, would cod five (hillings c ^^^ p. and three-pence. We (hould in the prefent times confider this as a very tilgh price for a pair of (lockings to a fervant of the pooreft and lowe(t order. He mu(l> howevc, in thole limes have paid what was really equi\ alent to J is price for them. In the time of Edward IV. the art of knitting (lockings was probably not known in any part of Europe. Tiicir hofc were made of common cloth, which M>'j hrre been one of the caufes of their d^a/iiefs. Tl'C fird pcrfon that wore (lockings in Tnglano is faid to have been Queen Elizabeth. :.he received them as a prefent from the Spanifh ambaifador. Both in the coarfe and in the fine woollen manufacture, the machinery employed was much more imperfedl in thofe ancient, than it is in the prefent times. It has fincc received three very capital improvements, bcfides, probably, many fmaller ones of which it may be difficult to afcertain either the number or the importance. The three capital improvements are: rirft, The exchange of the rock and fpindle for the fpin- ning-wheel, which, with the <*ime quantity of labour, will perform more than double the quan- tity of work. Secondly, the ufc of feveral very ingenious machines which facilitate and nbridgc in a dill greater proportion the winding of the worded and woollen yarn, or the proper arrangement of the warp and woof before they are put into the loom j an operation which, prc- t^m^'' . ' ' Cc3 . vious ■f;;^.i. . I. 55i> THE NATURE AND CAUSES OP BOOK vious to the invention of thole machines, muft have been extremely tedious and tfoublcfome. Thirdly, the employment of the fulMng mill for thickening die cloth, inftcad of treading it in water. Neither wind nor water mills of any kind were known in England fo early as the beginning of the fixtecnth century, nor, fo far as I know, in any other part of Europe north of the Alps. They had been introduced into Italy fome time before, • The confideration of thcfe circumftances may, perhaps, in fome meafure explain to us why the real price both of the coarfc and of the fine ma- nufadture, was fo much higher in thofe ancient, than it is in die prefent times. It cofl: a greater quantity of labour to bring the goods to mark,et. "When they were brought thither, therefore, they muft have purchafed or exchanged for the price of a greater quantity. The coarfe manufafture probably was, in thofe ancient dmes, carried on in England, in the fame manner as it always has been in coun- tries where arts and manufadtures are in their in- fancy. It was probably a houfliold manufadure, in which every different part of the work was occafionally performed by all the different mem- bers of almoft every private family; but fo as to be their work only when they had nothing elfe to do, and, net to be the principal bufinefs from which any of them derived the greater part of their fubfiftence. The work which is performed in this manner, it has already been obfcrved, ■■■'-■'-'■ -i. ^' comes XI. THE WEALTH OF NATIONS, v 391 comes always much cheaper to market than that c h^a p. which is the principal or fole fund of the work- man*3 fubfiftencc. The fine manufafture, on the other hand, was not in thole times carried on in England, but in the rich and commercial country of Flanders ; and it was probably con- duced then, in the fame manner as now, by people who derived the whole, or the principal part of their fubfiftencc from it. It was befides a foreign manofadure, and nauft have paid fome duty, the ancient cuftoml of tonnage and poundage at leaft, to the king. This, duty, indeed, would not probably be very great. It was not then the policy of Europe to rcftrain, by high duties, the importation of foreign manufafturcs, but rather to encourage it, in order that merchants might be enabled to fupply, at as eafy a rate as pofiible, the great men with the conveniencies and luxuries which they wanted, and which th^ induftry of their own country could not afford them. The confideration of thefc circumftances may perhaps in fome meafure explain to us why, in thofe ancient times, the real price of the coarfe manufafture was, in proportion to that of the fine, fo much lower than in the prefent times* . iOl^l ".; >'>'t>'»^'ro- duce, natur^y divides itfelf, it has already been obierved, into three parts ; the rent of land, the wages of labour, and the profits of ftocks and conftitutes a revenue to three different orders of people ; to thofe who live by rent, to thofe who live by wages, and to thofe who live by profit. Thefe are the three great, original and confti* tucnt orders of every civilized focicty, from whofe revenue, th^t of every other order is ultinnately •derived. -.v^-,^^-''^>-^-<^-'-' , 1 , The intereft of the fiifl of thofe three great orders, it appears from what has been juft now /aid, is fir idly and infeparably conneded with the general interefl of the fociety. Whatever cither promotes or obftru<5ts the one, necefTarily promotes or obfl;ru*«« *#b•-^Ab^ - «wki> -::■':- J , Average Price, i 18 8 i i y *, I. THB NATURB AND CAUSBS OF Ycai* XII. PrfceoftheQaarttrof A««V of the 4ir. todit Price* of the tm€ Year. Thtamai. frfM.tf e«li Y«r lit U«.y o# the pftfent Time*. . £■ J. ii. £• -f- ^. £. J. ^. IJ39 — 9 — •■-^ i— — « 7 — U49 — 2 — — — '— • — 5 2 IJ59 I 6 8 — — — 322 1361 — 2 — — — - — — 4 8 1 363 m I 15 — ^3h {; 4 —5 I 2 — * 294 1379 — 4 — — — — , — 9 4 1387 — 2 — — — .— — 4 8 f- >3 4/ • ^ . 1390 j- "^"~f — 14 5 I 13 7 i^ 16 —J • • .V?T 140 1 16 — -— — . — I 17 4 1407 4 4t1 3 4 i — 3 10 — 8 12 1416 -M 16 — . ^— «— •— > I 12 — Total, 15 94 Average Price, i 5 9t 1423 1425 1434 1440 1444 1445 1447 1448 1449 145' I 6 8 — ^ J- I 4 — ' !=:4 — 4 6 — 8 — — 6 8 3 4 — 42 — 16 — — 8 — 2 13 4 — 10 8 268 2 8 — — 8 4 — 9 — — 16 — — 13 4 — 10 — — 16 — \''/' Total, 12 15 4 Average Price, i x jl THE WEALTH OP NATIONS. d. 2 2 8 8 4 Ytan XII. '453 H55 H57 1459 1460 1463 1464 i486 1491 1494 1495 1497 Pt(m of ibc Qjnitv of WbMt each Year. — 5 4 — I 2 — 7 8 {= ; 11 — 6 8 I 4 — — 14 8 — 3 4 Aterjft of the 4if ftrcnt Prkn of chi fame Year. j£. i. C- J- — 27 Total, 8 9 — PricCj ^"" 14 I d. /:• J. r' ■ ■ ' 17 8| — - 8 — 8 — . .__ _— ' 8 — Vol. L Average Dd Total, Price, 24- — 10 -rS riif:, 40B THE NATURE AND CAUSES OP ■ K Ymti Price of the Quarter of /. XII. Wheat CMh year. • i- '■ ■', r. :••»■> -' *■-*?.•. , #»^» , '^^ ' .. ■ -f- - A' _; ^***» **s..» f'^.'p^ ,^V - - "*'■' >^*"#- ^, ., t^'.ijMr' ..- ,', '■'■■■ .- ^ . :, ;■''''" f; ., ■ • . '■■ I - < " -'' \ '■■ ■- ' _ . ' 1; •■ '..JV?/: ',■*--►. ^y -.,- ;. . . * ■ ■ ■* ■ ■ •^i' "^^ " . '■V ,1 ■ .i :.y--' -'''": ^•*^5.v> *^ ■ » / ■*«•* "V i ' ■> »'*" ji":?;.', f i^^: V' '. ,;•-, ,. THE WEALTH OP NATIONS. 4c. J. d. — 2 — 2 8 — 3 — 2 9 16 6 8 — I — I '9 17 2 8 — I 14 10 — I 9 4 — I — I «5 10 4 8 — I 15 10 — I 13 16 8 — 2 16 8 — 2 10 — I 15 10 — I 18 8 — 2 — 2 2 8 4 8 — 2 I 18 84- 8 — 2 8 4 8 — 2 6 8 — I >5 4 — I 10 4 26)54" 6^ 2 I 6tV Years, if- '- d. 1621, — I 10 4 1622, — 2 18 8 1623, — 2 12 1624, — 2 8 1625, — 1 12 1626, 2 9 4 1627, — * I 16 1628, — I 8 1629, — 2 2 Q 1630, — 2 15 8 1631, — 3 8 1632, 2 13 4 ^633* — 2 18 1634, — . 2 16 1635* — 2 16 1636, 16) 2 16 8 ' '■''•» ^, 40 . 2 10 9 ;- r L ^ : •* _ v^^t 1 • -- , ■ A -•» 4 • ■ -* .■% - "f**.; *,■:.•; Tff^ Ji-' ♦•4 THE NATURE AND CAUSES OF ' BOOK Wheat per Quarter. ) Wheat per Quarter.' ^ '•. Years. iC- J. d. Years. £* s. — 2 4 ICJI 1673, — 268 1640, — 2 4 8 1674, — 388 1641, — 2 8 1675, — 348 1642,- Hkl 1676, — I 18 1643, ^0 1677, — 220 1644, \VA io 1678, — 2 19 1645,- lilllo 1679, — 300 1646, — 2 8 1680, — 250 1647, — 3 13 8 1681, — . 268 1648, — 4 5 1682, — 240 1649, — 4 1683, — 200 1650, . — 3 16 8 1684, — 240 1651, — 3 13 4 1685, — 268 1652, — 2 9 6 1686, — I 14 1653, — I 15 6 1687, — I 5 2 1654, — 1 6 1688, — 260 ^655, — I 13 4 1689, "— I 10 1656, — a- 3 1690, — I 14 8 1657, — 2 6 8 1691, — I 14 1658, — 3 5 1692, — 2 6 8 1659, ,. — 3 6 ^hZy — 3 7 8 1660, — 2 16 6 1694, — 340 1661, ■— 3 10 1695, — 2 13 1662, — 3 14 1^96, — 3 II 1663, ^— 2 17 1697, — 300 1664, . — 2 6 1698, — 384 1665, — 2 9 4 1699, — 340 1666, 1667, 1668, — • I 16 1 16 2 1700, — 200 ^. '66) iS3 I 8 1^69, — 2 4 4 i-. — 1670, ^ over, 2 I 8 »-, . < : 2 II o| Carr 4 79 H 10 '■ ^ ' f' it: . . ■ > t- 7 ■* tM. THE WEALTH OF NATIONS. 405 I^artft. H * Wheat per Quarter. Wheat per Quarter. CHAP. d» ■ Years. >c. s. d. Years. ;£. J. if, XI. I 1701, I 17 8 Brought ovei ,69 8 8 *— >^ — ^ ■ 1702, — I 9 6 »734, — I 18 10 [ 1 i703> I 16 >735> -- 2 3 1 1704, — 2 6 6 1736, — 2 4 ...;'.. 8 I 1705* — I 10 »737» — I 18 ^ 4. 8 1 1706, — 1 6 1738, — I IS 6 80 I 1707, ». I 8 6 i739» — I 18 6 20 I 1708, — 2 1 6 1740, — 2 10 8 90 1 1709, 3 18 6 1741, — . 2 6 8 00 ■ 1710, 3 18 1742, ^ I 14 5 ^ 1 17 II, 2 14 i743» — I 4 10 6 8 H 1712, — 2 6 4 I744> — I 4 10 ■.-■-■■■.-: V 40 ■ »7i3. — 2 II I745» — I 7 6 00 H 1 7 14, — 2 10 4 1746, — I 19 40 H 17 1 5, — 2 3 I747> — I 14 10 6 8 ■ 1716, — - 2 8 1748, — I 17 14 I 1717, -— 2 5 8 i749» — I 17 1718, — 18 10 1750, — I 12 6 60 ■ i7i9> — 15 1751. — I 18 6 10 I 1720, -~ 17 1752, — 2 I 10 14 8 1 17^1, — 17 6 i7S3> — 2 4 8 14 ■ 1722, — 16 1754, — I 14 8 6 8 ■ 1723, — - 14 8 1755. — I 13 xo - ,- 78 ■ 1724, — 17 1756, — 2 5 3 40 1 1725, 2 8 6 1757. — 3 , 13 ^ 1 1726, 2 6 1758, — 2 10 II ■ 1727, 2 2 i759> — I 19 10 ' ^^H 1728, — i 2 14 6 1760, — I 16 6 1729, 2 6 10 1761, — I 10 3- 4^1 '730, — . I 16 6 1762, — I 19 00 1 1731, I 12 10 1763* — 2 9 ^1 1732, 1733, I T 6 8 8 1764, — 2 6 ^^ I 8 1 9 ""• I 4 ^H ; 64) 129 13 6 ^1 ^^i^m ^^■MB II oj ■ Carry over, 69 8 8 t 2 6^.2. m^i^ ^^ "T» 1 Ddj A 4P^r THE NATURE AND CAUSES OP \ :; BOOK I. /■ •* Wheat per Quarter. | Years. £■ S. d. i73i» — 1 12 10 1732. — I 6 8 I733> I 8 4 1734, I 18 10 ' •i735> •»— 2 3 1736, 2 4 i737» — I 18 1738. 1 15 6 i739» "— I 18 6 1740, -^ 2 10 8 -.- ♦ -.1^ 18 12 8 y: i'-^-i'. -f* )^* I 17 3t Wheat per Quarter. Years. j£. j. d, 1741, — 268 1742, — I 14 o i743» — I 4 10 1744, — I 4 10 1745, — I 7 6 1746, — I 19 o I747> — I 14 10 1748, — I 17 o 1749, — 1 17 o 1750, . — I 12 6 10)16 18 1 t I 13 9^ . '*• >'■■■■■ -J, * ■ ' •* ■ J; '■ ■ ' . .... . V — * -■ 6 ^ -*S.; 4; '^ f' ' .,,f.-KvtV!^' ■''bl':Tr' I-..- *, -^^?^ ^m-..'?^ 1 ,fl-f""'-»- ■1 -. ' ■ -C V f?: ■^'' ': ■*muiif--ii ■■ . '^1/ / .1, i *\V'. v**^:-; . . p ' ^' ■V ■.,>,/ i I..-:. ^;>' «r r 1 -- ■ .^v,--^!?; ■d -1I.-V u^V. ; ,1, . . v. '' \ . '. . . ■ '\--\ : ■ nta' \# THE WEALTH OF NATIONS. IL BOOK II. Of the Nature, Accumulation, and Employ- ment of Stock. INTRODUCTION. IN that rude date of fociety in which there is introdua. no divilion of labour, in which exchanges are feldom made, and in which every man provides / every thing for himfelf, it is not neceffary that any / ftock (hould be accumulated or ftored up before- hand, in order to carry on the bufinefs of the fo- ciety. Every man endeavours to fupply by his own induftry his own occafional wants as they occur. When he is hungry, he goes to the forcft to hunt; when his coat is worn out, he clothes himfelf with the Ikin of the firll large animal he kills ; and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearell it. But when the divifion of labour has once 'httn thoroughly introduced, the produce of a man's own labour can fupply but a very fmall part of his occafional wants. The far greater part of them are fupplied by the produce of other men's labour, which he purchafes with the pro- duce, or, what is the fame thing, with the price of the produce of his own. But this purchafe . D d 4 cannot 4o« THE NATURE AND CAUSES OF BOOK cannot be made till fuch time as the produce of » I -/■ ^ his own labour has not only been completed, but fold. A ftock of goods of different kinds, therefore, muft be ftored up fomewhere fufficicnt to maintain him, and to fupply him with the materials and tools of his work, till fuch time, at leaft, as both thefe events can be brought about. A weaver cannot apply himfelf entirely to his pe- /' culiar bufinefs, unlefs there is beforehand ftored up fomewhere, either in his own poflcffion or in that of fome other perfon, a ftock fuffiCient to maintain him, and to fuaply him with the mate- rials and tools of his work, till he has not only completed, but fold his web. This accumula- tion muft, evidently, be previous to his applying his induftry for fo long a time to fuch a peculiar bufinefs. ,':>^ ",-••■ , , •,-■■■:/■■: •■■'T.-'. ■;'r,*^:/^'i-^ As the accumulation of ftock muft, in the na- ture of things, be previous to the divifion of la- bour, fo labour can be more and more fubdi- vided in proportion only as ftock is previoufly more and more accumulated. The quantity of materials which the fame number of people can work up, increafes in a great proportion as labour comes to be more and more fubdivided j and as the operations of each workman are gradually re- duced to a greater degree of fimplicity, a variety of new machines come to be invented for facili- tating and abridging thofe operations. As the divifion of labour advances, therefore, in order to give conftant employment to an equal number of workmen, an equal ftock of provifions, and a greater ftock of materials and tools than what uj.w! would ^THE WEALTH OF NATIONS. 409 would have been necelTary in a ruder ftate of things, inrroduA." muft be accumulated before- hand. But the nuoi- ber of workmen in ^vcry branch of bufinefs ge- nerally increafes with the divifion of labour in that branch, or rather it is the incrcafe of their number which enables them to clafs and fubdivide themfclves in this manner. As the accumulation, of (lock is previoufly ncceflary for carrying on this great improve- ment in the produftive powers of labour, fo that accumulation naturally leads to this improvement. The perfon who employs his (lock in maintaining labour, necefTarily wifties to employ it in fuch a manner as to produce as great a quantity of work as poflible. He endeavours, therefore, both to make among his workmen the moft proper dif- tribution of employment, and to furnilh them with the bed machines which he can either in- vent or afford to purchafe. His abilities in both thefe refpefts are generally in proportion to the extent of his ftock, or to the number of people whom it can employ. The quantity of induftry, therefore, not only increafes in every country with the increafe of the ftock which employs it, but, in confequence of that increafe, the fame quantity of induftry produces a much greater quantity of work. Such are in general the efFefts of the increafe of ftock upon induftry and its productive powers. In the following book I have endeavoured to explain the nature of ftock, the effeds of its accumulation into capitals of different kinds, and the cffefts of the different employments of thofe 11. 4IO THE NATURE AND CAUSES OF BOOK, thofe capitals. This book is divided into five chapters. In the firft chapter, I have endeavoured to (how what are the different parts or branches into which the ftock, either of an individual, or of a great fociety, naturally divides itfelf. In the fecond, I have endeavoured to explain the nature and operation of money confidered as a particular branch of the general flock of the fociety. The flock which is accumulated into a capital, may either be employed by the perfon to whom it belongs, or it may be lent to fbme other perfon. In the" third and fourth chapters, I have endeavoured to examine the manner in which it operates in both thefe fituations. The fifth and lafl chapter treats of the different ef- fedls which the different employments of capital immediately produce upon the quantity both of national indudry, and of the annual produce of land and labour. ^? ' j^i*f ■?': '^'^Mi-^^t ' I', .::'%- -Vi^-i^* '■^' -' V - CHAP. I. , Of the Bivifton of Stock, WHEN the flock which a man pofSjffes is no more than fufficient to maintain him for a few days or a few weeks, he fcldom thinks of deriving any revenue from it. He confumes it as fparingly as he can, and endeavours by his labour to acquire fomething which may fupply its place before it b? confumed altogether. His W ' '" ■ revenue *■<*■■. t If--. <' 4 THE WEALTH OF NATIONS. revenue is, in this cafe, derived from his labour only. This is the (late of the greater part of the labouring poor in all countries. But when he pofTelTes (lock fuflicient to main- tain him for months or years, he naturally endea- vours to derive a revenue from the greater part of it ; referving only fo much for his immediate confumption as may maintain him till this reve- nue begins to come in. His whole ftock, there- fore, is diftinguifhed into two parts. That part which, he expefbs, is to afford him this revenue, is called his capital. The other is that which fupplies his immediate confumption ; and which confiils either, firft, in that portion of his whole (lock which was originally referved for this pur- pofej or, fecondly, in his revenue, from what- ever fource derived, as it gradually comes in j or, thirdly, in fuch things as had been purchafed by either of thefc in former years, and which arc not yet entirely confumed j fuch as a flock of clothes, houfehold furniture, and the like. In one, or other, or all of thcfe three articles, con- fifts the flock which men commonly referve for their own immediate confumption. There are two different ways in which a ca- pital may be employed fo as to yield a revenue or profit to its employer. • > First, it may be employed in raifing, manu- fafturing, or purchafing goods, and felling them agiin with a profit. The capital employed in this manner yields no revenue or profit to its employer, while it either remains in his pofTeffion, gr continues in the fame (hape. The goods of the merchant 4»t 411 THE NATURE AND CAUSES OK BOOK merchant yield him no revenue or profit till he fells them for money, and the money yields him as little till k is again exchanged for goods. His capital is continually going from him in one (hape, and returning to him in another, and it is only by means of fuch circulation, or fucceflivc ex- changes, that it can yield him any profit. Such capitals, therefore, may very properly be called circulating capitals. Secondly, it may be employed in the im- provement of land, in the purchafe of ufeful machines and inftruments of trade, or in fuch- like things as yield a revenue or profit without changing mailers, or circulating any further. Such capitals, therefore, may very properly be called fixed capitals. «^^^ ^ i DiffereMt occupations require very different proportions between the fixed and circulating ca> pitals employed in them. The capital of a merchant, for example, is alto- gether a circulating capital. He has occafion for no machines or inftruments of trade, unlcfs his ihop or warehoufe be confidered as fuch. Some part of the capital of every mafter arti- ficer or manufacturer muft be fixed in the inftru- ments of his trade. This part, however, is very fmall in fome, and very great in others. A mafter taylor requires no other inftruments of trade but a parcel of needles. Thofe of the mafter ftioemaker are a little, though but a very little, more expenfive. Thofe of the weaver rife a good deal above thofe of the ftioemaker. The far greater part of the capital of all fuch mafter ...,.,> artificers! '^ THE WEALTH OF NATIONS. 419 irtificcrs, however, is circulated, either in the c h a p. wages of their workmen, or in the price of their '* materials, and repaid with a profit by the price of the work. In other works a much greater '"xed capital is required. In a great iron- work, for exampkr, the furnace for meking the ore, the forge, the flit- mill, are inllruments of trade which cannot be crefted without a very great expence. In coal-works, and mines of every kind, the ma- chinery neceflary both for drawing out the water and for other purpofcs, is frequently ftill more expenfivc. That part of the capital of the farmer which is employed in the inllruments of agriculture is a fixed, that which is employed in the wages and maintenance of his labouring lervants, is a circulating capital. He makes a profit of the one by keeping it in his own polTefllon, and of the other by parting with it. The price or value of his labouring cattle is a fixed capital in the fame manner as that of the inftruments of huf- bandry: their maintenance is a circulating ca- pital in the fame manner as that of the labouring fervants. The farmer makes his profit by keeping the labouring cattle, and by parting with their maintenance. Both the price and the main- tenance of the cattle which are bought in and fattened, not for labour, but for fale, are a cir- culating capital. The farmer makes his profit by parting with them. A flock of Iheep or a herd of cattle that, in a breeding country, is bought in, neither for labour, nor for fale, but $ ia 4»4 THE NATURE AND CAUSES OP ' in order to make a profit by their wool, by their milk, and by their increafe, is a fixed capital. The profit is made by keeping them. Their maintenance is a circulating capital. The profit is made by parting with it ; and it comes back with both its own profit, and the profit upon the whole price of the cattle, in the price of the wool, the milk, and the increafe. The whole value of the feed too is properly a fixed capital. Though it goes backwards and forwards between the ground and the granary, it never changes mafters, and there- fore does not properly circulate. The farmer makes his profit, not by its fale, but by its increafe. ?i* The general (lock of any country or fociety is the fame with that of all its inhabitants or members, and therefore naturally divides itklf into the fame three portions^ each of which has a diftind fundion or office. The firft is that portion which is rcferved for immediate confumption, and of which the charadteriftic is, that it affords no revenue or profit. It confifts in the (lock of food, clothes, houfehold furniture, &c. which have been pur- chafed by their proper confumers, but which are not yet entirely confumed. The whole flock of mere dwelling-houfes too fubfifting at any one time in the country, make a part of this firft por- tion. The flock that is laid out in a houfe, if it is to be the dwelling-houfe of the proprietor, ceafes from that moment to ferve in the fundtion of a capital, or to afford any revenue to its owner. A dwelling-houfe, as fuch, contributes nothing to the revenue of its inhabitant i and though it is. THE WEALTH OF NATIONS. 41J is> no doubt, extremely ufcful to him, it is as his chap. clothes and houfehold furniture are ufcful to him, '* which, however, make a part of his cxpcnce, and not of his rievenue. If it is to be let to a tenant ^or rent, as the houfe itfclf can produce nothing, the tenant mud always pay the rent out of fome other reventie which he derives cither from la- bour, or ftock, or land. Though a houfe, there- fore, may yield a revenue to its proprietor, and thereby ferve in the fundlion of a capital to him, it cannot yield any to the public, nor ferve in the fun6tion of a capital to it, and the revenue of the whole body of the people can never be in the fmalleft degree incrcafed by it. Clothes, and houfehold furniture, in the fame manner, fometimes yield a revenue, and thereby ferve in the fun6tion of a capital to particular perfons. In countries where mafquerades are common, it is a trade to let out mafquerade drcfles for a night. Upholfterers frequently let furniture by the month or by the year. Under- takers let the furniture of funerals by the day and by the week. Many people lee furnilhed houfes, and get a rent, not only for the ufe of the houfe, but for that of the furniture. The revenue, however, which is derived from fuch things, muft always be ultimately drawn from fome other fource of revenue. Of all parts of the ftock, either of an individual, or of a fociety, referved for immediate confumption, what is laid out in houfes is moft flowly confumed. A ftock of clothes may laft feveral years : a ftock of furniture half a century or a century : but a ftock - ' ■!■ 4i6 THE NATURE AND CAUSES OP (h)ck of houfcs, well built and properly taken care of, may laft many centuries. Though the period of their total confumption, however, is more dif- tant, they are ftill as really a ftock rcfcrved for im- mediate confumption as either clothes or houfchuld furniture. The fecond of the three portions into which the general ftock of the fociety divides itfclf, is the fixed capital j of which the charadleriftic is> that it affords a revenue or profit without circulating or changing mailers. It confifts chiefly of the four following articles : ^ ^^ ., ^^.^ .^. First, of all ufeful machines and inftruments of trade which facilitate and abridge labour : Secondly, of all thofe profitable buildings which are the means of procuring a revenue, not only to their proprietor who lets them for a reint, but to the pcrfon who polteflTes them and pays that rent for them j fuch as (hops, warehoufes, work- houfes, farmhoufes, with all their neceflary build- ings ; ftables, granaries, &c. Thefe arc very dif- ferent from mere dwelling-houfes. They are a fort of inftruments of trade, and may be confidered in the fame light : ,• , - Thirdly, of the improvements of land, of what has been profitably laid out in clearing, draining, cnclofing, manuring, and reducing it irito the condition moft proper for tillage and culture. An improved farm may very juftly be regarded in the fame light as thofe ufeful ma- chines which facilitate and abridge labour, and by means of which, an equal circulat g capital can afford a much greater revenue to its em- ployer. land, of clearing, ucing it age and juftly be eful ma- >our, and y capital its em- ployer. THE WEALTH OP NATIONS. p16ycr. An improved farm is " equally advan- cagcous and more durable than any of thofe ma- chines, ffe£)uently requiring no other repairs than the moft profitable application of the farmer's capital erhployed in cultivating it : i^ovRTHLY, of the acquired and ufeful abilities of all the inhabitants or members of the fociety. The acquificion of fuch talents, by the main* tenance ' of the acquirer during his education, ftudy, or apprcnticelliip, always cofts a real ex- pence, which U a capita) Bxed and realized, as it were, In his: perfon. Thofe talents, as they make a part Of his fortlirtCj fo do they likcwifc of that of the fociety to whicli he belongs. The improved dexterity of k workman may be con- fidered in the fame light a3 a machine or inftrii- menc of trade which facilitates and abridges la- bour, a;hd which, though it cods a certain ex- pence, nopays chat exj^hee with a profit. : ' ' The third dhd lift of thte fhrefc portiorts into which the general ftdck of the ibciety naturally divides itfelf,fisthfc Circulating capital; of which the charadteriftic is,, thalt it affords a revenue only by circulating or Changing mafter^. It is com** pofed likfc^ife of four parts :• ' "f ': FiR^, of the money by means of which all the 6*«r thrfee' ar^ circudirted arid diftrlbuted to their proper confumers : SMobiwt*;: of ttie'ftbck'bf prbvifions which arfc m iAe^(Rffi6n"of'^h6*blitchcr, the grazier, the bricl^. inakers,&c. Fourthly, and lallly, of the worlc which is made, upr and completed) but . which is ftill in the; hands of the rnerchanc and mani]fa6i;urer> and not yet difpofed of or diftributed to the proper '^onfumersi fuch ,33 the, finifhed work which we frequently find ready-made in the fhops of the fmi^h, the cabinet- o^akefs the goWdiith, the jeweller, the chinaTinerchant,; &c. The ciifcu- lating capital coi>Jfts ;in', this manner, of *ihe provifions^ materialsj and linifhed^ wdrk. of all kinds th^t are in the hands .of their rrefpedive xiealers, and of the money that h neceflary for circulating and diftrtbuting them to thofe Who are finely to tjfe or to consume th^m,! ::: Orthefe; four parts, ihriee,, pri>yi(lon9j mate- rials, ^n^i fii>i(lKid,.iWork> arg, eithetl annually, or in a longer or fhor^^r rPcrjiod)^ reg^ltilly with- dravvn rfjfom it^a,nd .placed .either in the fixed capital,. Of in the ^fl^k^fefcrved. .far- ifnooediate conlumption. : ;:^* ^i uf >^ : v'o • /., Every fixe^. capital k; botfi prl^naUj derived frona^pagdjroqiuirfisjtQilje .CQntjnaaU^ iji^pported by a cTrculxting^capitaL All useful machines and inflmm^ts-c^ trade, are originally derived from a circulating capital, which furniflies the materiak THE WEALTH OF NATIONS. ' 419 of which they are made, and the maintenance ^ ",-* •** of the workmen who make them. They require too a capital of the fame kind to keep them in conftant repair. No fixed capital can yield any revenue but by means of a circulatirig capital. The moft ufeful machines and inftruments of trade will produce, nothing without the circulating capital which af- fords the materials they are employed upon, and the maintenance of the workmen who employ them. Land, however improved, will yield no revenue without a circulating capital, which maintains the labourers who cultivate and colledl; its produce. ■■ To maintain and augment the dock which may be referved for immediate cohfumption, is the fole end aid purpofe both of the fixed and circulating capitals. It is this (lock which feeds, clothes, and lodges the people. Their riches or poverty depends upon the abundant or fparimg fupplies which thofe two capitals can afford to the ftock referved for immediate con- (umption. • , -■:■-. :i* , So great a part of the circulating capital being continually withdrawn from it, in order to be placed in the other two branches of the general ftock of the fociety j it muft in its turn require continual fupplies, without which it would foon ceafe to exift. Thefe fupplies arc principally drawn from three fources, the pro* duce of land, of mines, and of filheries. Thefe afford continual fupplies of provifions and ma- terijils^ of which pare is afterwards wrought up ..j^niOls' E e 2 " ■ ^^^ II. (I0i THE NATtJRE AND CAUSES OP B o 6 K into finilhcd work, and by which iire replaced^ the provifions, materials, and Bnifhed work con* cinually withdrawn from the circulating capita]. From mines too is drawn what is neccffary for maintaining and augmenting that part of it which confifts in money. For though, in the ordi- nary courfe of bufine^, this part is not, like the other three, neceffarily withdrawn from it, in / , prder to.be placed in the other two l?ranches of the general ftock of -the foqicty, it muft^ how- . ever, like all other things, be wafted and. worn put at l^ft, and fon>etimes . too be either loft OF fent abroadj and ! muft, thereifore, require ' conrinual, though, no doubt, much fmaller fupplies. .-.iz.haL t^^I^ui Land, mines, and fisheries, require, all both a ^xed and a circulating capital to cultivate thein : and their produce replaces with a proftF,: not \ only thofe capitals, but all the other* in the (bciety. Xhus the farmer annually replaces to fhe manufadturer the provifions which he had confumed and the materials which he had wrought up the year before ; and the manufadtufer re- places to the farmer the finillied work which he had wafted and worn out in the fame time. •This is the real exchange that is annually made - between thofe two orders of people, thojugh it fcldom happens that the rude produce of the one and the manufactured produce of the other are dircdly bartered, for one another; becaufe it ieldom happens that the farmer fells .his corn and his cattle, his flax and his wool, to the very famcipecfoii of whom he chufes to purchafe the *.. •: . , 1 \' 4 clothes, ,. : -|. A?. , ^aK/.v-^r^^. . '^ THE WEALTH OF NATIONS. 4^ clothes, farnhurc, and ihftruments of trade which chap. he wants, ' He fells, therefore, his rude produce for mbney, with which he can purchafe, where- ever it is to be had^ the manufactured produce he has occafion for. Land even repilaces, in part at leail, the capitals with 1'^hich Hfheries and mines are cultivated. It is the produce of land which draws the filh from thi^ Waters; and it is the pro- duce of the furface of thc'carth* which cxtrads the minerals from its bowels. « The produce of land, mines, and fidieries, when their ha|:ur.al fertility is equal, is in proportion to the extent and proper application of the capitals employed iibout them. When the capitals are equal, and equally well applied, it is in proportion totheii* fiatur'^ ^'•rtility. ' In alt co» 1! trie s where there is tolerable fecu- rity, eyery man of common underftanding will endeiavoiir to emplo" wnatever ftock he can com- marid'i'ijn prbcuripg'eithec prefent enjoyment or. fotiire "profit. If it .Is employed in procuring prefenf enjoyment,, it is a ' ftock refer'ved for im- mediate cbnil>mpti6n.'"If.it is employecl in pro- curing futufq firojSt, if muft procure this profit ejlher t)y' ftlaying with liim, or by going 'froni Him. In the one cafe it i^ a fixed, in the other it is a circulating capital. A man miift be per- fe^y Crazf who, where there is tolerable fecu- rity, does not employ all the ftock whlidh he commands, whether it be his own, or borrowed of other people, in fome one or other of thofe three ways. ,^ ,^ E e 3 Im .4^olc «xji>tncc of maintaining the fixed eapitaH muft evidently be exdiided from the neat r^vcnufe of thel'lbciety. Neither the materials necefliipy forrutSJxJrting their uffeful nriachtnes arid inftrwiieliW ^'' trade,- their profitable bmMtngs, &^. «oi'^^hiJ')«-od«ce of the labour neceffary;for feflii'^rfirig-'lhdfe'^Waterials intb the proper form, cdh eVier inike kny part of it. The price of that labour may Indeed make a part of it i as the >^rknrten fo employed -nay plade^ the whole viiliie d'f their wages in- their ftock refcrved for imme^ dtee eohltifnptibnV-'But in other forts of labotir,^ b'oth the- price ^d the prodiifef ^ to this ffock;' thr^icc'td that^ of the woi-krrien, the producib^ to thai of other^ people, whofe ftibfiftence, cdni^e- nrencies, khd amufements, aref aiigmented by the labour of thofe'^Wdrkm^n. '^ .. 'The ihtentiott' 'of the 'fiked capita^ is. td' lb- creafe thei -pfrddu6i:ive powet^ of ; labour; '6f^ to enable the TameJ number of 'labourers to peifoVtifi' a much greater tjtiantity of \(rork. In a' farm; where all the iSWfcflary buildings, fences, drains^' CommonicdtiOns',^ &€. are in the rhoft pfcrfedt good order, the fame number of labourers and ibourihg cattle -will raife a mbch greater pro? duce, thite in one of equal- extent and equafl/ good groiindj feut ttot furnilhed-witK equal^ con- veniencies,' . In^mlaftufadl^ur'es the fame number' of hands, jaflifted with the '-beft machinery^ will' work up afiiifiuch -greater quandty of goods thaiV with more; impei/edt inftruonems of trade. The CxpcncQ ')fU{lJ 41^ TH£ NATURS AND CAUSES OF BOOK ezpenoe which is properly Jaid out tipon a fixed' ^ f ^ . capital of any kind, is always repaid with great proiit, and increafes the annual produce by a nnuch greater value thafi t|iat of the fupport which fuch - improyementi rebpthiiOf which /^.' might have been immediately, ennployed to. aug- ment; the food, cloti>ing, and lodg^g, the*fub- fiftence and coaveniencies of -the ibciety, are thuf, diverted to another empbymeBt, highly, advantageous indee^^ . but, (till, didferent ; from this. one* It is .up0!i .this account, that all fuch, improvements in mechanics, as enable the fame number of worl^men to perform an equal quan-> t|ty of work with cheaper and fimpler machinery thap. had b(;en, u.^ual before>..,arc s^ways re«, ^ garded as advantageous to eyery fociety, ^ ceittajn quantity of mateHals, aqd the labour of m certain number of workmen,, yrhich had be^ ^re been employed ;in fupporting a^ more coni,- ^lex and expenfiye machinery, can afterwards b^ applied to augment the qp^tity of wo^'k vhich ,that or any qther machinery . is^ ufefu) only for performing. The undertaker . qf fome great nianufaftory who employs a tboufand a-year ini the maintenance of his machinery, if he cai>.re-> duce this expence to five hundred; will > naturally employ the other five hundred in purchafing an additional quantity of materials to be wrought Up by. an additionaJ number of workmen. The quantity pf that work, therefore, whick his ma- :^ , ,::^ chincry THE WEALTH OF NATIONS. 4«7 dilnery wa» i^fefuV. ,only for pcHbrming, will c ha p. naturally be qiiUgiDenfied, ^nd wiih ic all the ad- vantage and xonvcniency which the. roqjkty can derive from that ,^ork. , . 'i . The escpencct of maintaining the fixed capital in a great country, may very properly be compared to^ thaf^ of repairs ]n a prjvate eftate. The ejtpence of repairs, may frccjqi^ntly be neceflary for fuppbrting ^bcpfQ v h BwT though the ivhole expenccpf maintaining thtti fixed capital is. thus neceifarily excluded from the* neat revenue of the fociety, it is not the fame cafe) with that of jnaintaining the circi^eing capical. Of the four parts of which this lacter capital is com-> poied, nioney, provifions> materials, and finished: work, the three laft, it has already been oblerved^. aroTegularly withdrawn from it^iand placed either iniithe fixed capital of the fociety^ or in their Aoekl rfljfbrved for immediate cbnfuvnpsion. Whatever' portion of thofe conlumable goods is not employe^] in maintaining the former, goe^^all to the latter, and makes a part of the flcat revenue of the fo- ' ciety. The maintenance of thofe three parts of- the circulating capital, therefore, withdraws no ' portion of the annual produce from the neat re- > venue- of the fociety, befides what is' neceffary for ' maintaining the fixed capital. * *'-^'' ju;.-;:- .u;;3 \tt THE NATURE AND CAUSES OP BOOK The circulating capital of a fbciety is in this ^ "•_— . r' -> ,: t^'liov-- TiV.ke. Mtd ■ dapt^l,' ahdrthat/r^c i nf the cireu^-. lattng: capital : whi^kcondfts hv mimey, {6 ifatl'jdMi they taffc^ the rcvqnuc' of . the : fckiatjti ^ bear a> va!jp ; great feefemblanct to one ahother.'-) wlo.\, ip fiCji^ioc; ^F^WT, as tbbtf^ ra^qhinejoiandjir^fHmeiJtti.of: trade, $cc.. requir«,.at:ertaifi cxpence,^ firil^Or.ercft - ttiertji and aftervvar^? to fupport them, both wbich eitpences, fhougl> -t^;circulat(es in any covintry muft require a c^rtMn .^pcnce, 6r!ft. t<^ cpllc6\; it, and aftcrwarcls to fupport it, both '•^ , . 1 " which THE WEALTH OP NATIONS. which expenccs» though they make a part of c the grofs, are, in the fame manner, deduclions from the neat revenue of the fuciety. A certain quantity of very valuable materials, gold and filver, and of very curious labour, inftead of augmenting the (lock referved for immediate confumption, the fubfiftence, conveniencies, and amufements of individuals, is employed in fup* porting that great but expenfive inftrument of comnierce, by means of which every individual in the fociety has his fubfiftence, conveniencies, and amufemcnts, regularly diflributed to him in their proper proportion. Secondly, as the machines and inftrunnents of trade, &c. which compofe the fixed capital cither of an individual or of a fociety, make no part either of the grofs or of the neat revenue of cither i fo money, by means of which the whole revenue of the fociety is regularly diftributcd among all its different members, makes itfelf no part of that revenue. ' The great wheel of cir^ culation is altogether different from the goods which arc circulated by means of it. The re- venue of the fociety confifts altogether in thofc goods, and not in the wheel which circulates them; In computing either the grofs or the neat revenue of any fociety, we mufi, always, from their whole annual circulation of money and goods, dedu6t the whole value of the money, of which not a fingle farthing can ever make any part of either, ^j^* It is the ambiguity of language only which can make this propofition appear either doubtful i.«T / t .or 4*9 *!• THE NATURB AND CACSES OF or piradoxical. When properly explained and onderftood, it is aimed fclf-evident. When we calk of any particular Aim of money, we fometimes mean nothing but the metal pieces of which it is compofed i and fometimes we include in our meaning fomc obfcure reference to the goods which can be had in exchange for it> or to the power of purchafing which the pofleflTion of it conveys. Thus when we fay, that the circulating money of England has been computed at eighteen millions, we mean only to exprefs the amount of the metal pieces, which fomc writers have computed, or rather have fuppofed to circulate in that country. But when we Jay, that a man is worth fifty or a hundred pounds a-year, we mean commonly to ex- prefs not only the amount of the metal pieces which are annually paid to him, but the value of the goods which he can annually purchafe or confume. We mean commonly to afcertain what is or ought to be his way of living, or the quantity and quality of the necelTaries and conveniencies of life in which he can with propriety indulge himfelf. When, by any particular fum of money, we mean not only to, exprefs the amount of the metal pieces of which it is compofed, but to include in its fignification fome obfcure reference to the goods which can be had in exchange for them, the wealth or revenue which it in this cafe denotes, is equal only to one of the two values which arc thus intimated fomewhat ^mbiguoudy by the fame wordy and. to the latter more properly than rn the former, to the money's worth more properly than 1X)> the money» ..^., ;^* ». •; , - 5 Thus I'j 9 THE WEALTH OF NATIONS. Thus if « guinea be the weekly penfion of a particular perfon, he cat* in the courfe of the week purchafe with it a certain quantity of fub- flftence, conveniencies, and amu(i:mencs. In prO'> portk>n aa thia quantity is great or fmall, fo are his real riches, his real weekly revenue. His weekly revenue is certainly not equal both to the guinea, and to what can be purchafed with it, but only to one or other of thofe two equal values'; and to the latter more properly than to the fornier j to the guinea's worth rather than to the guinea. If the penfion of fuch a perfon was paid to him^ not in gokl, but in a weekly bill for a guinea, his revenue furely would not io properly confift in the piece of^paper, as in what he could get for it. A guinea nnay be confidered as a bill for a certain quantity of necelTaries and conve- niencies upon all the tradefnnen in the neigh^ bourhood. 'tht revenue of the perfon to whom it is paid, does not fo properly confift in the piece of gold, as in what he can get for it, or in what he can exchange it lor. If it could be ex- changed fpr nothing, it wpuld, like a bill upon a bankrupt, be of no mpre value than the moft nfelefs piece of paper. ■'^- • Though the weekly or yearly revenue of si* the differ^flt inhjkbitants of any country, in the fame nianncr:' :^ia-/ be, and in reality frequently is paid to «hem iri^'money, their real riches, how- ^ver,^the'real weekly or yearly revenue of all of them takett together, muft always be great or fniaU> in proportion to the quantity of coniumable sd goods 4n ^ /' *m. 4ia TH^.lfATURE AND CAUSER OP • ^J^ ^ gool^ *f'>»ch they <;an.aU of ifc^oi pju^hafc with ' '^ ** /0l^^ ffioncy. The wjjole fcy^Mf!,i5ijfci»ll.oC th?in t^l^n tpgethcr is cyideotly ?]^i; !^.u4l:.ti> bpthill^e 'liuMiey/and the confumable g99<;}9j t)pc Qo)y;t0 one or other of ,cho(e tytrp values^.aiiUtQ.Jth^. latter ino;e prppcrly thao tp, the former. , , «, , » .. ^ T^yoH we freqMent]y,itHerffpfc,ie*prefs^ p(cr* Ton's revenue by the inc^al plcq^ v^id^^rc mofi^ ally paid to himi it Is becaufe|hej#(pou^t of thp($ pieces.regulates^thp extent^ of his power of pqr* chafing^ or the value of the got^s wl^iich he can annually afford to confume. We flill conlider his fevenue as confiftii^g in this ipowe^r o'f pu/chafii^ or confuniing, and not ip t;he pieces, which (Convey it^. .•; « Buy if if iis (iill more f0 wkh regard . to a , fpcif t^. , .^Xhc 9m0unt of the , metal pieces which are^ annually pjud tp> ^, individual j is often prepifely- equal, to his revenue, and-: is upon th^t^ account ,t}\e, ihorteit. and beft expref- fion of hs value. Qut the amount of the metal pieces which circulate in a fociety, 'can never be equal to the revenue, of >|1 its rtiembers. As the fanne guinea which pays the weekly .|ienfion of one. man to-day, may pay that: of another to« morrow, and that of a third. the; day thereafter^ jt^e , ^mouni; of ^ijhi^j^etal pieces which anotully circulate in ; anyrii?oUjQtry, , nm^ft taJways, be v^ ipyfihj .left value )^h^ the ^.holc.Tinpniey ..pcnfioM SDrinally- fp^id; ^jth; i^ern. IJuii: thfcdpavaec of •^ufciiafipg,; ^r, the gopdf , wtiith ,-,c^02-il«5tel5.v«ly i^ fe9Vg^k?^W'» j?h? ,wfiple,pf tMi? ffiotny rpen^ be .oj^ . !'..■ 'Sa» ^c TrtE WEALtH OP KATIO^I be prccifcly of the fame value with thole pert (ions; as mud likewifc be the revenue of the different perfons' to whom they are paid. That revenue, therefore, cannot confift in thofe metal pieces, of which the amount is fo much inferior to its value, but in the power of purchafing, in the goods which can fucceffively be bought with them as they circulate froni hand to hand. Money, therefore, the great wheel of circula- tion, the great inllrument of commerce, like all other inftruments of trade, though it makes a part and a very valuable part of the capital, makes no part of the revenue of the fociety to which it belongs; and though the metal pieces of which it is compofcd, in the courfe of their annual circulation, diftribute to every man the revenue which properly belongs to him, they make themfelves no part of that revenue. -^^ Thirdly, and laftly, the machines and inftru- ments of trade, &c. which compofe the fixed capital, bear this further refemblance to that part of the circulating capital which confifts in money; that as every faving in the expence of ereding and fupporting thofe machines, which docs not diminifh the produ^ive powers of labour, is an improvement of the neat revenue of the fociety; fo every faving in the expence of collefling and fupporting that part of the circulating capital which confifts in money, is an imprjovement of exaftly the fame kind. It is fufficiently obvious, and it has partly too been explained already, in what manner every faving in the expence of fupporting the fixed Vol. I. ^ . Ff capital i u i> 4lJ •> ■'t 43+ THE NATURE AND CAUSES OF BOOK capital is an improvement of the neat revenue V^ y' ,> of the focicty. The whole capital of the under- taker of every work is neceflarily divided be- tween his fixed and his circulating capital. While his whole capital remains the fame, the fmaller the one parr, the greater muft neceflariiy be the othe-. It is the circulating capital which furniflies the materials and wages of labour, and /■\ puts induftry into motion. Every faving, there- / fore, in the expence of maintaining the fixed ca- pital, which does not diminifti the produdlive powers of labour, muft increafe the fund which puts induftry into motion, and confequently the annual produce of land and labour, the real re- venue of every fociety. - The fubftitution of paper in the room of gold and fiiver money, replaces a very expenfive in- ftrument of commerce with one much lefs coftly, " and fometimes equally convenient. Circvlation comes to be carried on by a i;>cw wheel, which it cofts lefs both to ereft and to maintain .! -An the old one. But in what manner this opeiaton is performed, and in what manner it tends to in- creafe either the grofs or the neat revenue of the fociety, is not altogether fo obvious, and may therefore require fome further explication. There are feveral different forts of paper money j but the circulating notes of banks and . ' bankers are the fpecies which is beft known, and which feems beft adapted for this purpofe. When the people of any particular country * have fuch confidence in the fortune, probity, and prudence of a particular banker, as to believe , . . ... that ^ ■ ■ ■ ' ' . THE WEALTH OF NATIONS. 43S that he is always ready to pay upon demand fuch chap. of his promifTory notes as are likely to be at any <— -^■■^ time prefented to him j thofc notes come to have the fame currency as gold and filver money, from ' the confidence that fuch money can at any time be had for them. A Particular banker lends among his cuf- tomers his own promifTory notes, to the extent, wc (hall fuppofe, of a hundred thoufand pounds. As thofe notes ferve all the purpofes of money, liis debtors pay him the fame intereft as if he had lent them fo much money. This intereft is the fource of his gain. Though fome of thofe notes are continually coming back upon him for pay- ment, part of them continue to circulate for months and years together. Though he has ge- nerally in circulation, therefore, notes to the extent of a hundred thoufand pounds, twenty thoufand pounds in gold and filver may> fre- quently, be a fufficient provifion for anfwering occafional demands. By this operation, there- fore, twenty thoufand pounds in gold and filver perform all the funftions which a hundred thou- fand could otherwife have performed. The fame exchanges may be made, the fame quantity of confumable goods may be circulated and diftri- buted to their proper confumcrs, by means of his promifTory notes, to the value of a hundred thoufand pounds, as by an equal value of gold and filver money. Eighty thoufand pounds of gold and Giver, therefore, can, in this manner, be fpared from the circulation of the country; m and if different operations of the fame kind Ff 2 ihould^ 4 H 436 THE NATURE AND CAUSES OF BOOK fhould, at the fame ttmr^ be carried on by mvtf different banks and bankers, the whole circula- tion may thus be conducted with a fifth part onljr of the gold and filver which would otherwife have been requifite. ^ Let us fuppole, for example, that the who?c circulating money of fome particular country amounted, at a particular time, to one million (lerling, that fum bcjn*;; then fufHcient for cir- culating the whole annual produce of their land and labour. Let us fuppofe too, that fome time thereafter, different banks and bankers i filled promiffory notes, payable to the bearer, to the extent of one million, refcrving in their different coffers two hundred thoufand pounds for anfwering occafional demands. There would remain, therefore, in circulation, eight hun- dred thoufand pounds in gold and filvef, and a million of bank notes, or eighteen hundred thoufand pounds of paper and rhoney together. But the annual produce of the land and labour of the country had before required only one million to circulate and diftribute it to its pro- per confumers, and that annual produce cannot be immediately augmented by thofe operations of banking. One million, therefore, will be fufficient to circulate it after them. • The goods to be bought and fold being precifely the fame as before, the fame quantity of money will be fufficient for buying and felling them. The channel of circulation, if I may be allowed fuch an exprefllon, will remain precifely the fame as before. One million wc have fuppofed fufficient 45 to > -iVV V THE WEALTH OF NATIONS. 437* to fill that channel. Whatever, therefore, poured into it beyond this lum, cannot run in it, but inuft O' erflow. One million eight hundred thoufand pounds are poured into it. Eight hun- dred thoufand pounds, therefore, mulV over- flow, that fum being over and above what can be employed in the circulation of the country. But though this fum cannot be employed at home, it is too valuable to be allowed to lie idle. It will, therefore, be lent abroad, in order to feek that profitable employment which it can- not find at home. But the paper cannot go a- broad ; becaufe at a diftance from the banks which iflTue it, and from the country in which payment of it can be exafted by law, it will rot be received jn common payments. Gold and filver, there- fore, to the amounc of eight hundred thoufand pounds, will be fent abroad, and the channel of home circulation will remain filled with a million of paper, inftead of a million of thofc metals which filled it before. But though fo great a quantity of gold and niver is thus fent abroad, we mull not imagine that it is fent abroad for nothing, or that its pro- prietors make -^ prelent of it to foreign na- tions. They will exchange it for foreign goods of fome kind or another, in order to fupply the confumption either of fome otht; foreign country, or of their own. If they employ it in purchafing goo^s in one foreign country in order to fupply the confump- tion of another, or in what is called the carrying trade, whatever profit they make will be an ad- F f 3 dition IS C H A p. II. •V" .-'i^- 4jt ■' THE MATURE Ats^D CAUSES OF BOOK ditlon to the rrat re ei;- c of their own country. "' It is like a new fund, created for carrying on a new trade} domcftic bulincfs being now tranf- aflcd by paper, and the gold and filver being converted into a fund for this new trade. If they employ it in purchafing foreign goods for home confumption, they may either, firil, purchafe fuch goods as are likcl}^ to be confumcd by idle people who produce nothing, fuch as fo reign wines, foreign filks. &c, j cr, fecondly, they may purchafe an additional (lock of matf^- rials, tools, and provifions, in order to maintairs and employ arr addiiional number of indufirious people, whc re- produce, witfi a profit, the value of their annual coiilv3mpr.ion. " ' So fiir as it ic '"nployed in the firfl: way, it pro- motes prodigality, increafcs expence and con- fumpcion without increafing proiluflion, or ^fta- blilhing any permanent fund for fupporting that expence, and is in every rcfped hurtful to the fociety. So far as it is employed in the fecond way, It promotes induftry j and though it increafes the confumption of the fociety, it provides a perma- nent fe:nd for fupporting that confumption, the people who confume re- producing, with a profit, the whole value of their annual confumption. The grofs revenue of the fociety, the annual produce of their land and labour, is increafed by rhe whole value which the labour of thofe work- men adds to the materials upon wliich they arc employed; and their neac revenue by what >"e- Uiains of this valu?j after deducing wha: i*: r^.- .*. 6 ceiiiiry THE WEALTH OF NATIONS. 4S9 ccflary for fupporting the tools and inftriiments of c h a p. their trade. That the greater part of the gold and filver which, being forced abroad by thofc operations of banking, is employed in purchafing foreign ooo^s for home confumpcion, is and muft be em- ployed in purchafing thofe of this fecond kind, fe<";v..i not only probable but almoft unavoidable. • Though fome particular men may fometimes increale their expcnce very confiderably, though their revenue does not increafe at all, we may be aifurcd that no clafs or order of men ever does fo J becaufe, though the principles of common prudence do not always govern the conduct of every individual, they always influence that of the majority of every clafs or order. But the revenue of idle people, confidered as a clafs or order, cannot, in the fmalleft degree, be in- creafed by thofe operations of banking. Their expence in general, therefore, cannot be much increafed by them, though that of a few indi- viduals among them may, and in reality fbme- ' times is. The demand of idle people, therefore, for foreign goods, being the fame, or very nearly the fame, as before, a very fmall part of the money, which being forced abroad by thofe ope- rations of banking, is employed in purchafing, foieign goods for home confumption, is likely to be employed in purchafing thofe for their ufe. The greater part of it will naturally be deftincd for the employment of induf^ry, and not for the maintenance of idleneis. , ;/; ' F f 4 ^ When 440 BOOK li. .■'«T THE NATURE AND CAUSES OP When wc compute the quantity of induftry whicii the circulating capital of any focicty can employ, we miift always have regard to thofc parts of it only, which confift in provifions, materials, and Bnifhed work: the other, which coafifts in money, and which ferves only to cir- culate thofc three, mud always be deduced. ' In order to put induftry into motion, three things are requifitcj materials to work upon, tools to work with, and the wages or recom- pence for the fake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all qther men, confifts, not in the rnorcv, but in the money's worth; not in the mciA pieces, but in what can be got for them, .-.. ^' The quantity of induftry which any capital can employ, mult, evidently, be equal to the number of workmen whom it can fupply with materials, tools, and, a maintenance fuitable to the nature of the work. Money may be requifite for ' purchafing the materials and tools of the work, as well as the maintenance of the work- men. But the quantity of indyftry which the whole capital can employ, is certainly not equal both to the money which purchafes, and to the materials, tools, and maintenance, which are pur- chafed with it ; but only to one or other of thofe two values, and to. the latter more properly than ;q t>5 former, ■'^'".- ..\.\r. .'.,.'/., '...', 1,, i When* ■^ THE WEALTH OF NATIONS. 44» li. When paper is fubftitutcd in the room of gold c ha r, and Clvcr monty, the quantity of the materials, tools, and maintenance, wliioli the whole circu- lating capital can fupply, iDay be inereaied by the whole value of gold ami filvcr which ufcd to be employed in purchafing them. The 'vhole value of the great wheel of circulation and dif- tribution, is added to the goods wiiich are circulated and diftributcd by means of ir. The operation, in fome meafurc, refembles that of the undertaker of fomc great work, who, in confequencc of fome improvement in mech.inics, takes down his oM machinery, and adds the difference between its price and that of the new to his circulating capital, to the fund from which he furnilhes materials and wages to his workmen. What is the proportion which the circulating money of any country bears to the whole value of the annual produce circulated by means of it, it is, perhaps, impoHible to determine. It has been computed by different authors at a fifth, at a tenth, at a twentieth, and at a thirtieth part of that value. But how fmall foever the proporcion which the circulating money may bear to the whole value of the annual prpduce, as but a part, and frequently but a fmall part, of that produce, is ever deltined for the maintenance of induftry, it muft always bear a very confiderable proportion to that part. When, therefore, by the fubftitu- tion of paper, the gold and fily»tr neccflary for circulation is reduced to, perhaps, a fifth part of the former quantity, if the value of only the greater par; of the o:hj: four- fifths a^t •'.ddcd to the ^ . ^^M.y^ 44« / / THE NATURE AND CAUSES OF the funds which are dcftined for the maintenance of induftry, it muft make a very confidcrablc ad- dition to the quantity of that induftry, and, con- fequently, to the value of the annual produce of land and labour. An operation of *h's ':ind has, within thcfc five- and- twenty or thirty years, been performed in Scotland, by the eredtion of new banking companies in almoft every confiderable town, and even in foin'j country villages, Ti.c efFeds of it have been precifely thufe above dclcribed. TI.c bufinefs of the country is almoft entirely carried on by m^ans of the paper of thofe different banking comp.Dlcs, with which purchafes and payments of al'. kinds are commonly made. Silver very feldom appears except in the change of a twenty ihil^ings bank note, and gold ftill feldomer. But though the condudl of all thofe different companies has not been unexceptionable, and has accordingly required an a6l of parliament to regulate it j the country, notwithilanding, has evidently derived great benefit from their trade. I have heard it allerted, that the trade of the city of Glafgow doublec' in about fifteen years after the firft eredion of the banks there j and that the trade of Scotland ha^ more than qua- drupled fince the firft erection of the two public banks at Edinburgh, of which the oncj called The Bank of Scotland, was eftabiiflied by ad of parliament in 1695; ^^^ other, called The Royal Bank, by royal charter -n i j 27. Whether the trade, cither of Scotland ii general, or of the city of Glafgow in particular, has really in- creafed THE WEALTH OP NATIONS. 44S creaffcd in (o great a proportion, durinr fo fhort chap. a period, I do not pretend to know. " either of them has increafcd in this proportion, it fcems to be an effcft too great to be accounted for by the fole operation of this caufe. That the trade and induftry of Scotland, however, have increafed very confiderably during this period, and that the banks have contributed a good deal to this increafe, cannot be doubted. The value of the filver money which circu- lated in Scotland before the Union, in 1707, and which, immediately after it^ was brought into the bank of Scotland, in order to be re-coined, amounted to 411,117/. 10 j. 9^. fterling. No account has been got of the gold coin j but it appears from the ancient accounts of the mint of Scotland, that the value of the gold annually coined fomewhat exceeded that of the filver*. There were a good many people too upon this occafion, -vho, fro n a diffidence of repayment, did not bring their filver into the bank of Scot- land: and there wis, befides, fome Englifh coin, which was not called in. The whole value of the gold and filver, therefore, which circulated in Scotland before the Union, cannot be eftimated at lefs than a million fterling. It feems to have conftituted almoft: the whole circulation of that country; for though the circulation of the bank of Scotland, which had then no rival, was con- fiderable, it feems to have made but a very fmall part of the whole. In the prefent times the * See Ruddiman's Preface to Anderfon's Diplomata, Sec. Scot!«. whole 4H THE NATURE AND CAUSES O. whole circulation of Scotland cannot be elVimaffd at lefs than two millions, of which that pari which confilh in gold and filvcr, moiX probably, does not amount to half a nniliion. Hut though the circulating gold and filve/ of Scotland have fuffcred fo great a diminution during this period, its real riches and profpcrity ilo not appear to have fuftered any. Its agriculture, nunufaifkurcs, and trade, on the contrary, the annual produce of of its land and labour, have evidently been aug- mented. It is chiefly by dtfcounting bills of exchange, that is, by advancing money upon them before they are due, that the greater part of banks and bankers iflue their promiflbry notes. They de- duct always, upon whatever fum they advance, the legal intercft till the bill (hall become due. The payment of the bill, when it becomes due, replaces to the bank the value of what had been advanced, together with a clear profit of the in- tereft. The banker who advances to the mer- chant whofe bill he difcounts, not gold and filver, but his own promiflbry notes, has the advantage o( being able to difcount to a greater amount by the whole value of his promiflTory notes, which be finds, by experience, are commonly in circu- lation. He is thereby enabled to make his clear gain of intereft on fo much a larger fum. The commerce of Scotland, which at prefent t" rot very great, was fl:ill more inconfiderable when the two firfl: banking companies were cfta- bliflied J and thofe companies would have had but little trade, had they confined their bufmefs Vioi- tQ TllP, WEALTH OF NATIONS* 44f to the di/counting of bills of exchange. Thqr chap, invffired, ihtrcfoic, another method of iflTuing thfir promilfoiy notfs ; by granting, what they called cafli accounts, that is, by giving credit to the extent of a certain linn (two or three thou- fand pounds for example), to any individual who could procure two perfons of undoubted credit and good landed eltate to become furety for him, that whatever money fhould be ad- vanced to him, within the fum for which the credit had been given, fhould be repaid upon de- mand, together with the legal intercft. Credits of this kind are, I believe, commonly granted by banks and bankers in all difTcrent parts of the world. But the eafy terms upon which the Scotch banking companies accept of repayment are, fo far as 1 know, peculiar to them, and have, perhaps, been the principal caufe, both of the great trade of thofe companies, and of the benefk which the country has received from it. Whoever has a credit of this kind with orifc of thofe companies, and borrows a thoufand pounds upon it, for example, may repay this liim piece-meal, by twenty and thirty pounds at a time, the company difcounting a proportion- able part of the intereft of the great fum from the day on which each of thofe fmall fums is paid in, till the whole be in this manner repaid. All merchants, therefore, and almoft aM men of bufinefs, find it convenient to keep fuch cafh accounts with them, and are thereby intereflcd to promote the trade of thofe companies, by readily receiving their notes in all payments, ' * • and A^ THE NATURE AND CAUSES OF BOOK and by encouraging all thofe with whom they "' have any influence to do the fame. The banks, when their cuftomcrs apply to them for money, generally advance it to them in their own pro- miflfory notes. Thefe the merchants pay away to the manufafturers for goods, the manufac- turers to the farmers for materials and provi- fions, the farmers fo their landlords for rent, the landlords repay them to the merchants for the conveniencies and luxuries with which they fupply them, and the merchants again return them to the banks in order to balance their calh accounts, or to replace what they may have borrowed of them; and thus almoft the whole money "bufinefs of the country is tranfadted by means of them. Hence the great trade of thofe .companies. , ^ I'A':^; r ,, „..•,.-. ■'^.•,/. . .^^ -• • By means of thofe cafh accounts every mer- chant can, without imprudence, carry on a greater trade than he otherwife could do. If there are two merchants, one in London, and the other in Edinburgh, who employ equal flocks in the fame branch of trade, the Edinburgh merchant can, without imprudence, carry on a greater trade, and give employment to a greater number of people than the London merchant. The London merchant muft always keep by him a confiderable fum of moncy> either in his own coffers, or in thofe of his banker, who gives him no intereft for it, in order to anfwer the demands continually coming upon him for payment of the goods which he purchafes upon credit. Let .the ordinary amount of this fum be fuppofed five hundred THE WEALTH OF NATIONS. 447 hundred pounds. The value of the goods in c h a p. his warehoufe muft always be lefs by five hun- dred pounds than it would have been, had he not been obliged to keep fuch a fum unemployed. Let us fuppofe that he generally difpofcs of his whole (tock upon hand, or of goods to the value of his whole dock upon hand, once in the year. By being obliged to keep fo gr^at a fum unennployed, he fnuft fell in a year five hundred pounds worth lefs goods than he might otherwife have done. His annual profits muft be lefs by all that he could have made by the fale of five hundred pounds worth more goods ; and the number of people employed in preparing his goods for market, muft be lefs by all thoic that five hundred pounds more ftock could have employed. The merchant in Edinburgh, on the other hand, keeps no money unemployed for antSvering fuch occafional demands. When they adtnally come upon him, he fatisfies them from his cafh account with the bank, and gradually replaces the fum borrowed with the money or paper which comes in from the occafional fales of his goods. With the fame ftock, therefore, he can, without imprudence, have at all times in his vt^arehoufe a larger quantity of goods than the London merchant; and can thereby both make a greater profit himfelf, and give conftant em- ployment to a greater number of induftrious people who prepare thofe goods for the market. Hence the great benefit which the country has derived from this trade. V..' The 44« THB NATURE AKD CAUSES OP The facility of difcounting bills of exchange, it may be thought, indeed, gives the Englifh mcr- ch}»nts a conveniency equivalent to the cafh ac- counts of the Scotch merchants. But the Scotch merchants, it mufl: be remembered, can difcount their bills of exchan^ge as eafily as the Englifh mer^ants j and have, befides, the additional con- veniency of their cafh accounts. The whole paper money of every kind which can eafily circulate in any country never can exceed the value of the gold and filver, of which it lupplies the place, or which (the commerce being fuppofed the fame) would circulate there, if there was no paper money. If twenty Ihilling notes, for example, are the lowell paper money current in Scotland, the whole of that currency which can eafily circulate there cannot exceed ' the fum of gold and filver which would be ne- ceffary for tranfadling the annual exchanges of twenty fhillings value and upwards ufually tranf- aded within that country. Should tlie circus- lacing paper at any time exceed that fum, as the cxcefs could neither be fent abroad nor be em- ployed in the circulation of the country, it mufl: immediately return upon the banks to be ex- changed for gold and filver. Many people would immediately perceive that they had more of this paper than was neceflfary for tranfafting their bufinefs at home, and as they could not fend it abfoad, they would immediately demand pay- ment of it from the banks. When this fupcr- fluous paper was converted into gold and filver, they could tafily find a ufc fgr it by fending it abroad j THE WEALTH OP NATIONS.*^ 449 abroad j but they could find none irhUc it re- c ha p mained in the (hape of paper. There would im* mediately) therefore, be a run upon the banks to the whole extent of this fuperfluous paper, and,^' if they fhewed any difficulty or backwardnefs id' payment, to a much greater extent; the alantiyt^ which this would occafion, neceffarily increafing the run. Over and above the expences which are com- mon to every branch of trade; fuch as the ex- pence of houfe-rent, the wages of fervants, clerks, accountants, &c. ; the expences peculiar to a bank confift chiefly in two articles: Firft, in the expence of keeping at all times in its coflTers, for ^nfwering the occafional demands of the holders of its notes, a large fum of money, of which it lofes the intereft j and, fecondly, in the expence of replenifhing thofe cofl^ers as fall: as they are emptied by anfNvering fuch occasional demands. . . 'HfftifJF*' >.i-f''x*i A BANKING company, which iffues more paper than can be employed in the circulation of the country, and of which the excefs is continually returning upon them for payment, ought to in- creafe the quantity of gold and filver, which they keep at all times in their cofFerSj not only ii proportion to this exceffive increafe of their cir- culation, but in a much greater proportion; their notes returning upon them much faftcr than in proportion to the excefs of their quan- tity. Such a company, therefore, ought to in- creafe tho.-firft article of their expence, not only' Vol. I, Gg -' • ii) •ir 4S^ THE NATURE AND CAUSES OP BOOK in proportion to this forced incrcafe of ihtir b»- fmefs, b'Jt in a much greater proportion. The coffers of fuch a contipany too, though they ought to be filled much fuUcr, yet muft empty themfelvea much fafter than if their bufi- nels was confined within more reafonablc bounds> and muft require^ not only a more violent^ but a more conftant and uninterrupted exertion of ex- pence in order to replenifh the.n. The coin too, which is thus continually drawn in fuch large quantities from tbtir ...Ters, cannot be employed \n the circula 'win of the country. It comes in place of a paper whicli is over and above what can be employed in that circulation, and is, Iherefoie, over and above what Ga^i be employed in it too. But as that coin will not be allowed to lie idle, it muft, in one ftiape or another, be tent abroach, in order to find that profitable em- ployment which it cannot find at home ; and this continual exportation of gold and filver, by en- hancing the difficulty, muft necefTarily enhance ftill further the expence of the bank, in finding new gold and filver in order to replenifh thole coffers, which empty themfelves fo very rapidly. Such a company, therefore, muft, in proportion to this forced increafe of their 'bufinefs, incrcafe the fecond article of their expence ftill more than the firft. - « . Let us fuppofe that all the paper of a parti- cular bank, which the circulation of the country can eafily abforb and employ, amounts exactly to forty thoufand pounds 5 and that for anfwering occafional «THE WEALTH OF NATIONS. 451 occafional demands, this bank is obliged to keep ^ "„f **: at all times in its coffers ten thoufand pounds in gold and filver. Should this bank attempt to circulate forty-four thoufand pounds, the four thoufand pounds which are .over and above what the circulation can eafily abforb and employ^ will return upon it almoil as fall as they are iffued. For anfwering occafional demands, there- fore, this bank ought to keep at all tiirles in its coffers, not eleven thoufand pounds only, but fourteen thoufand pounds. It will thus gain no- thing by the intereft of the four thoufand pounds exceffive circulation j and it will lofe the whole expence of continually coUefting four thoufand pounds in gold and filver, which will be conti- nually going out of its coffers as fall as they are brought into them. Had every particular banking company alwa/i underftood and attended to its own particular intereft, the circulation never could h?ve been overftocked with paper money. But every par- ticular banking company has not always under- ftood or attended to its own particullr intereft, and the circulation has frequently been overftocked with paper money. ' •' - - . - By iffuing too great a quantity of paper, of wltich the excefs was continually returning, in order to be exchanged for gold and filver, the bank of England was for many years together obliged to coin gold to the extent of between eight hundred thoufand pounds and a million a year; or, at an average, about eight hundred and fifty thoufand pounds. For this great G g 2 • coinage iti THfe NATURE AN1) CAUSES OF BOOK coinage the bank (in confcquence of the worn and • ^' ■ degraded ftatf into which the gold coin had fallen a few years ago) was frequently obliged ^ to purchafe gold bullion at the high price of four pounds an ounce, which it foon after iflbed in coin at 3/. ifs, io{-^. an ounce, lofing in this manner between two and a half and three per cent, upon the coinage of fo very large a fum. y- Though the bank therefore paid no feignoragc, though the government was properly at the ex- p'^nce of the coinage, this liberality of govern- ment did not prevent altogether the expence of the bank. ' The Scotch banks, in confcquence of an ex- cefs of the fame kind, were all obliged to em- ; . )y conftantly agents at London to colledl money for them, at an expence which was fel- ^ dom below one and a half or two per cent. This money was fent down by the waggon, and in- fured by the carriers at an additional expence of three quarters per cent, or fifteen fliillings on the hundred pounds. Thofe agents were not always able to replenifh the coffers of their em- ployers fo fall as they were emptied. In this cafe the refource of the banks was, to draw upon their correfpondents in London bills of exchange to the extent of the fum which they wanted. When thofe correfpondents afterwards drew upon chcm for the payment of this fum, together with the intereft and a commiflTion, fome of thofe banks, from the diftrcfs into which their excci- five circulation had thrown them, had fometimes no other means of fatisfying this draught but by • '. drawing '..■0 THE WEALTH OF NATIONS. 4fl an ex- em- colleft ras fel- 1 This ,nd in- ence of ngs on ;re not ;ir em- n this upon ;change anted. Iw upon r with If thofe excef- etimes but by rawing dmwing a fecond fct of bills either upon the ^ "j^^ '* fame, or upon fome other correfpondents in London ; and the fame fum, or rather bills tor the fame fum, would in this manner make fome- times more than two or three journies: die debtor bank, Paying always the intereft and commiffion upon the whole accumulated fum. f n ^ tI>ofe Scotch banks which never diftin- juiftied thcmfclves by their extreme imprudence, were fometi^mes obliged to employ this riiino^s. refource. "' \ ' .The gold coin which was paid out cither by. the bank of England, or by the Scotch banks, in exchange for that part of their paper which Ivas over and above what could be employed in the' circulation of the country, being likewifc over and above what could be employed in that circulation, was fometimes fent abroad in the ihape of coin, fometimes melted down aid fenC abroad in the Ihape of bullion, and fometimes melted down and fold to the bank of England at the high price of four pounds an ounce. It was the ncweft, the heavicft, and the bcft pieces only which were carefully picked out of the whole coin, and either fent abroad or melted down. At hom'», and while they remain in the Ihape of coin, thofe heavy pieces were of no more value than the light : but they were of more value abroad, or when melted down into bullion, at homcf. The bank of England, notwithftanding their gn^at annual coinage, found, to their afto- niftiment, that there was every year the fame fcarcity of 'c6in as there had been the year be- G g 3 fore j .».-^. %ify THfi NATURE AOT CAUSES OF BOOK fore ; and that notwithftanding the great quan« ^ ^' tity of good and new coin which was every year iflued from the b&ak, the (late of the coin, in- ftead of growing better and better, became every year worfc and worfe. Every year they found thcnmfelves under the neccflicy of coining nearly the fahhe quantity of gold as they had coineci the year before, and from the continual rife in the price of gold bullion^ iu confequence of the continual ' wearing and clipping of the coin, the expence of this great annual coinage became tfvfery year greater and greater. The bank of England, it is to be' obferved, by fupplying its own coffers with coin, is indireftly obliged to fupply the ^vhole kingdom, into which coin is continually flowing from thofe coffers in a great variety' df ways. Whatever coin, therefore, was wanted to'Tupport this txccffive cifculatlon botii of 'Scotch and Englifh paper mohey, whatever ▼acuiticfs this exceffive circulation dccafioned in tflie nc^tfTary ct>in of the kingdom, the bank of England -was obliged to fi^p^ly th^jm, TJie Scotch bfiriks^ no doubt, paicf all of them verj^ dearly for their 'own imprudence and inattention.. But the bahk of England paid very dearly, not only for Sts 6^n imprudence, but for the mucfi greater ini- prudenctf of almoft all the ScotCli bapks. .^ , ,_ -^ The bver- trading of fome bold projeftors in both parts of the united kingdom, was tKe pri- ginalcaufc of this exceffive crrculatioq ipf paper T^^ti^V' , '• "-.^ ,-,n ., ''' ■ ^ What a bank can .with propriety a^Jvance to . . .« . , I .> y At "' ' 'i ) .'J 4 merchant or undertaker of any kind, is not j-iul . . ^-^ ~ cither i'>' i«] THE WEALTH OF NATIONS. «f» dealings are confined to fuch cuftomers, refer-\- ble a water pon(i, from which, though a ftrcam is continually running out, yet another is coa tinually running in, fully equal to that whirh runs out J fo that, without any further c'ire or attention, the pond keeps always equally, or very near equally full. Little or no cxpenre cm ever be neccffary for repleniniing the roffers of fuch a bank. - - ' • G g 4 A MER- HS« THE NATURA AND CAUSRS OP A MERCHANT, withouc ovcr-trading, may fre- quently have occafion for a lum of ready money, even when he has no bills to difcount. When a bank, befidcs difcc mting his bills, advances him likewife upon fuch occafions, fuch fums upon h:. caih account, and accepts. of a piece-meal rep^^)- ment as the money comes in from the occafional fale of his goods, upon the eafy terms of the banking companies of Scotland ; it difpenfes him entirely from the neceflity of keeping any part of his (lock by him unemployed and in ready money for anfwering occafional demands. When fuch demands adually come upon him, he can anfwer them fufHciently from his calh account. The bank, however, in dealing with fuch cuftomers, ought to obferve with great at- tention, whether in the courfc of fome Ihort period (of four, five, fix, or eight months, for example) the fum of the repayments which it commonly rec^-jves from them, is, or is not, fully equal to ihit of the advances which it com- monly inakcs to ihem. If, within the courfe of fuch fiiort periods, the fum of the repayments from certain cuftomers is, upon moft occafions, fully equal to that of the advances, it may fafely continue to deal with fuch cuftomers. Though the ftream which is in this cafe continualjy run- ning out from its coffers may be very large, that which is continually running into them muft be at leaft equally large ; fo that without any further care or attention thofe coffers are likely to be always equally or very near equally full; and '■ i.::''''h '-"^^ --^• -K 'V' ■'^ .-* ■'■'■ fcarce THE WEALTH OF NA TICNS. . 4Sf fcarce ever to require any extraordinary expence to rq.'in.ni(h them. If, on the contrary, the fum of tiic repayments from certain o:hcr cuftomcrs falls commonly very much ftiort of the ad- vances which it makes to them, it cannot with any fafety continue to deal with fuch cudomers, at lead if chey continue to deal ii^ith it in this manner. The dream whjcii is in this cafe continually running out from its coders is ne-* cclFarily much larger than that whiqh is tinually rjnning in j (o that, unlcfs they plenidied by fume great and continual ch expence, thofc coders mud foon be exhauiicd altogether. ;V: ^ .„.,ri,.. ..^ The banking companies of Scotland, accord* ingly, were for a long time very careful to re- quire frequent and regular repayments from all their cudomers, and did not care to deal with any perfon, whatever might be his fortune or credit, who did not make, what they called, fre- quent and regular operations with them. Se- this attention, befides fiiving almod entirely the extraordinary expence of replenidiing their cof^ fers, they gained two other, very confiderable advantages. •: First, by this attention they were enabled tq make fome tolerable judgment concerning the thriving or declining circumdances of their debtors, without being obliged to look out for any other evidence befides what their own books afforded them j men being for the mod part cither regular or irregular in their repayments, according as their circumdances a^e either thriving or ^ ^ ^ ^.^^' IMAGE EVALUATION TEST TARGET (MT-3) 4^ ^ 1.0 ^1^ tt£ I.I 11.25 l>^l^ U il.6 1^1 ^:^* ^ Hiotographic Sciences Corporation 23 WIST MAIN STREET WEBSTER, N.Y. M5S0 (716) 172-4503 Hi ^0 THB ^AtURB AND CAUSES 6r n0J} K dr dedkiihg. A private ivm wKb Tends 6ut Mi ttmef to perhaps hidf a dozen br k doabto bf MiUltii may, either by himfelf or ' hit agend; obferve and ^nqiiire both coAftMndy ahd carei iidly into the conduffc and lituaebn of each of thein; But a fclAnkiM^ compatty^ which lendl mtoey to perhi^five hundrttf ' difiereht pcbplbi AMd' of i«^hieh the actitttttioh h cohtinually occti^ fltod by Objeai <»f ai tei^ dtflTefeht ktnd> cafri hive nb itgiilar information coricerninf^ the condtift and dicufnilitoces of ^ greater part of its debtor^ tieydnid what it^6wn 'books afl^rd it In requirm^ Ire^itKHic aild regdar^ repayib^ii^s ^lii aQ fliei^ cuftomers, the banking companies of Scotland had pkSb^ diis advanl^ in vie#; ^^^ ■ "'^Site'otibtv, by this attention thejf'^cured them- fitve# from the p6l]ib11i^ of ifl^ng -hiore piape^ «Mcf than what th^ cirdiliton 6f the country itiuM ealily abforb aild eriip^.' When they obferved, that within moderate' pei^iods of tiiii^ ^ repayments- of a particular cullomer ^tt^ ^l^n moft occUfibhs fully eqiii* ^c t^ advances t^hrth' they hid made to him; they mijght b^ afliired that the papier money wh^h they had advanced to him, had not at any time etcecded Ihe ^tianticy of gold and' filver' which he i/fMi, Ottierwife have becri obliged to teep hf him fbi^ iM^kntig oceafional demaaids; arid that, conic* ^tkfcntly, the j^p^r nrtorieyv wliich they hadcif-^ culated by his means, had hot at any time t!i^ deeded the quantity of gold and filver which wOtdd have cirCuflated in the couhtry, had thidrid becrt ^0 paper money* The frequency, rcgu^ ao . larity, T> X^ and kiifyM c^Kiii^m^ts wouk) 1^ % nk k iqfei&l dci^^ tilic tmbuht of their i^a;. "• " ▼an^'had^ 'no'ono* occebde^ ijiat pai4 dfll^ Capital' ifhiA "K6 wbuM ' oth^hvife have ' tl^ (Obliged to keep bf liim liiwrnptofed aiici ia i^^ ni&^Y fbr anf^^Hng occ/lfio^al demands ) '^tiMf is.^fdr the piirpoie 6f kj^pinef ttie reft of h&fi»« pital in cbr^aht' employ niientl It,' is this part cnT P n'\-. I Jus capital only which, within moderate pencKfil dttime, IS connnually returning to every deafen in t|i^ ihap< of money, whether paper or coin. ana continually eomg from him j^i the Jun^ Aia{}e. If t(ie aoyahcei x>f ttie bank had coiidr ipont^ exceeded this par^ b^ his ^icapitalv jt^^ ojr* Binary aiiripunt ; of his rcpajrmcnts cbiifd jn(0^ wimin mbdeni^ periods of tinne. have eQual|Bd ^e ordinary, amoui^t of its f^qvaijp^, Jhc ftream ally running into the coffers of the bank, could BOt Ji^e i>een .equal to the; ttream which, br means of the v»me dealiii^,; ^as CQnunusyUr hihnirig o& ' Th^ aclvanccs of'fhe bank paper, w exceeding the quantity of gold apd mftt 4wiiKh» ha4. thcii^; bc^n no juch advances« jNi^ ^pfwcring ^c^ fo^n ^eofiic m' exceed -tjlew^ 9^-^^^ ^^ ^^^ ,i^j)^i|ch (tfif ' commerce being. . fuppofed th apd j^rppwy i a^d ttc «ccfs of 8iis**papcr money wduld imniediately have ti V. •' ^ rm H^TpRJ^ AND j:AyS^^..|QF B p o K h^yt returned iippo.ch^ ^nls, ip,, order to be €»* changed (ot gold and Ifil ver. , T^jiif^iecond adviui-' tag^, though equafly real, was n9t perhaps fp well undeiftood by all the different Ranking com* Danies of Scotland as the firft, \ ^ ^^ When, partly by the conveniencjr of dilcoundng ^Us,^ and partly by that of caj^ accpviits, the xredltable tracers of any country Can be dlC* penled from the necefllty of keeping any part ot their ilock by tlienfi unemployed and in ready money for anfwering occafional demands^ ihej ^an. reafonably expe£t no farther afliflance fipm banks ^nd bankers^ who, when they have soi^ thus far>.canhot,CQnuilently'wit]^ their own in- t^reft and fafety, cd^ farther. 'A 'bank cannotl tonfiftcntly with its own ihtereft, advance to a l^rttdiir the whole or even; the greafer part of the Cir however, were of a dif-* ferent opinion, and upon their refufing to exten^ their credits, fome of thofe traders had recourib to an expedient which, for a time, ferVed their purpofe, though at a much greater expence> yet as efTedtually as the utmoft extenfion of bank credits could have done. This expedient was no other than the well-known (Hift of drawing and redrawing; the fhift to which unfortunate traders have fometimes recourie when they are upon the brink of bankruptcy. The prafbice of raifing money in this manner had been long known in England, and during the courfe of ths late war, when the high profks of trade afforded a great temptatbn to over- trading, is faid to have been carried on to a very great extents From England it was brought into Scodand^ where, in proportion to the very limited com* merce, and to the very moderate capital of th« country, it was foon carried on to a much greater extent than it had ever been in England. Th» 4^4 THB NAflTRE AND CAU8BJI OP The pra^ice of drawing and re-drawing is §6 well known to All men of bufinefi, chat it may perhaps be thought unneceflary eo give an ac- count of it. But as this book may come into the hands of many people who are not men of bufinefs, and as the cfiedts of this pradice upon the banking trade are not perhaps generally un- derftood even by men o£ bufinefs themfelves, I Ihall endeavour tO' explain it as diftindily as I can. ' The cuftoms of merchants, which were efta- bliihed when the barbarmis laws of Europe did not enforce the performance of their cohcradts, and which, during the courfe of the two laft cen- turies, have been adopted into the laws of all European nations, have given fuch extraordinary privileges to bills of exchange, that money is more readily advanced upon them, than upon any other ipecies of obligation ; > efpecially when they are made payable within fo (hort a period as two or three months after their date. If, when the bill becomes due, the acceptor does hot pay it as foon aa it is prefented, he becomes from that moment a bankrupt. The bill is protefted, and returns upon the drawer, who, if he does not immediately pay it, becomes likewife a bank- rupt. If, before it came to the pcrfon who pre- fepts it to the acceptor for payment, it had paiTed through the hands of feveral other perfbns, who had fucceiTively advanced to one another the contents of it either in money or goods, and who to exprefs that each of them had in his turn IX received ^''THE WEALTH OP NATIONS. )toeiv«d thole contend, had aH of them in their Older endorfed, that is, written their names upon the^back of the billi each endorfer becomes in his turn liable to the owner of the bill for thofe contents, and, if he fails to pay, he becomes too from that moment a bankrupt. Though the drawer, acceptor, and endorfers of the bill (hould, all of them, be perfons of doubtful credit; yet ftill the ihortnefs of the date gives fome fecurity to the owner of the bill. Though all of them may be very likely to become bankrupts s it is a chance if they all become fo in fo ihort a time. The houfe is crazy, fays a weary traveller to him- ielf, and will not ftand very long; but it is a chance if, it falls to-night, and I will venture, therefore, to fleep in it to-night. The trader A in Edinburgh, we (hall (Ifppoie, draws a bill upon B in London, payable two months after date. In reality B in London owes nothing to A in Edinburgh ; but he agrees to accept of A's bill, upon condition that befdre the term of payment he fhall redraw upon A in Edinburgh for the fame fum, together with the ihterefb and a commiflion, another bill, payable! like'Wife two months after date.. B accordingly, before the expiration of the firft two months, re- draws thia bill upon A in Edinburgh; who again^ before the expiration of the fecond two months^ draws a fecond bill upon B in London, payable likewtfe two months after date; and before the expiration of the third two months, B in London re-draws upon A' ifv Edinburgh another bill, payable alfo two motiths after date. Th is prac* Vol. L Hh ticc 466 THE NATURE AND CAUSES OF BOOK tice has fomctimes gone on, not only for feveral months, buc for fcvcral years together, the bill always returning upon A in Edinburgh, wich the accumulated intereft and commilfion of all the former bills. I'he intereft was five per cent, in the year, and the commiflion was never lefs than one half per cent, on each draught. This commilCon being repeated more than fix times in the year, whatever nrK>ney A might raife by this expedient muft neceflarily have cod him fomething more than eight per cent, in the year, and fomecimes a great deal morei when either the price of the commiflion happened to rife, or when he was obliged to pay compound intereft upon the intereft and commiflion of former bills. This ptz6ticc was called raifmg money by cir-> culation. \> i < i 4n a country where the ordinary proHti of ftoc(^ in the greater part of mercantile proje^s are fuppofed to run between fix and ten per cent, it ,mpft have been a very fortunate (pecu- lation of which the reCurns could ^not only repay the. enormous expence a| which the mioney was thus borfowed for carrying it on ; but afford, befides, a good furpl us profit to the projeAor. Many vaft jand extcnfive projefts, however, were unjdertakenj ^d , ^ ' feveral years carried on wijohoUt i any ! other fund titr fupport them befides Y'hat was rfaiied at this eiormous expence. The proje^or5»; rfo.doubt, had jn their golden dreams tb? moft diftin6l vifion . ^/ this great, profit. Vl*" ilheir .*^^44king,^:lkQWQVlcr,/dtbcr at the end oi t^'if. ISfojc/a^,^ or whcrt; .lifaey were tto ionger 4il U ■ able •r'l^*.* THE WEALTH OF NATfONSJ*, 46^ able to carry them on, they very feklomj I believe, chap. had the good fortune to find lt\ , "* Thi bills which A ih Edinburgh' cfte# upon B in liOndon, he regularly dircounted tm> months before they were due with fome bank or banker in Edinburgh s and the bills which B* in London re^drew upon A in Edinburgh, he aS' regularly difcofinted cither with the bank of England, or with fome other bankers in London. Whatever was advanced upon fuch circulating bills> was, in £dinbui*gh| advanced in the paper of the Scotch banks, • Snd in London, when they were dif- counted at the bank of England, in the paper o^ that bank. Though the bills upon which this paper had been advanced, were all of them re« . ' paid ^ * The method dercribsd in the tekt was hy no means athcr the moft common or the moft expenfive one in which thoTe idventorers fomctimes raifed money by drculation. It fre- qoently happened that A in Edinburgh would enable B in London to pay the firft bill of exchange by drawing, a few days before it became due, a fecond bill at three mbnths dattf upon the fj^ne B in London. This bilU being payable to his bwi| prjiiieri^A fold in Edinburgh at par ; and with its contents piirchaffjd.^ills tipon London payable at fight to the order of B, to wKom he fent them by*the poft. Towards the end of the late war, the /.exchange betweeit Edinburgh and London was frequently, three per cent, agaipft Edinburgh, Snd thofe bills at fight; .mnft frequently have cpft A that premium. This tranf- a^on .therefore being repeated ^ leaft four times in the year, and bemg. loaded with a commiffion of at leaft one half per cent, upon each repetition, muft at that period have coft A at leaft fourteetl per cent. In the year. At other times A would enable B to difcharge the firft bijU of exchange by drawing, a few days before it became due', a fecond bill at two months date } not upon B, but upon fome third perfon, Ct for H h a example. 461 THE NATURE AfiX> CAUSES OP II. » o o K paid in their cum as foon as they became due i yec the value which had been really advanced upon the firft bill» was never really returned to the bank« ; which advanced it ) bccauie, before each bx^i, became due^ another bill was always drawn to fomewhat a greater amount than the hill which was ibon to be paid ; and the dif. counting of this other bill was eflentially necef* fary towards the payment of that which was foon CO be due. This paymeht« thereforCi..wtl alto* gether fidlitious. The ftrean)9 which, by: iMans of thofe circulating bills of exchange, had .Once been made to run out from' the CQfFfirs:.of the banks, ivas never replaced by any ftr^nm Mrhich really run into them. example* in London. This other bill was made payable to the order of B» who, upon its being accepted by C, diicoumed it with fome banker in London ; and A enabled C to dif- charge it by drawing, a few days b^ore it became due» a third bill, KlcewUe at two months date, fometimes upon his firft correfpondent B, and fometimes upon fome fourth or fifth perfon, D or E, for example. This third bill was made pay- able to the order of C ; who, as foon as it was accepted, dif. counted it in the fame manner with fome banker in London. Such operations being repeated at leaft fix times in, th« year, and being loaded with a comnufilon of at leaft otte-half per cent, upon each repetition, together with the legal itftet-eft of five per cent, this method of raifing money, in the fame man- ner as that dtfcribed in the text, muft have colt A femething more than eight per cent. By faving, however^ the* exchang*; between Edinburgh and London, it was lefs expenfive than that mentioned in the foregoSng part of this note ; but then it required an eftabliihed credit with more honlles than one in London, anadvanuge which many of thefe adventurers could not always find it eafy to procure. , ■ '*->»y>i| The The •* THE WEALTH OP NATIONS. ' Thb paper which was iifued upon thofe cir- culating bills of exchange, amounted, upon many occanons, to the whole fund defined for car- rying on fome vaft and extenHve project of agri- culture, commerce, or manufactures; and not merely to that part of it which, had there been no paper money, the projector would have been obliged to keep by him, unemployed and in ready money for anfwering occafional demands. The greater part of this paper was, confequently, over and above the value of the gold and filvcr which would have circulated in the country, had there been no paper money. Ic was dver and above, therefore, what the circulation of the! country could eafily abforb and employ, and upon that account immediately returned upon the banks in order to be exchanged for gold and filver, ;Which they were to find as they could. It was a cslpical which thofe projectors had very artfully contrived to draw from thofe banks> not only without their knowledge or deliberate confent, but for fome time, perhaps, without their having the mod diftant fufpicion that they had really advanced it. When two people, who are continually drawing and re-drawing upon one another, difcount their bills always with the fame banker, he mud im- mediately difcover what they are about, and fee clearly that they are trading, not with any capital of their own, but with the capital which he advances to them. But this difcovery is not altogether To eafy when they difcount their bills fomctimes with one banker, and fometimes with H h 3 another. -4Z« THE NATURE AND CAUSES OP K another, and when the fame twoperfons do not conftancly draw and re-draw upon one another, but occafionally run the round of a greai: circle of projectors, who find it ibr their intereft to adift one another in this nnethod of raifing money, and to render it, upon th^c account, as difficult as pofllble to diftinguilh between a real and a fiftitious bill of exchange; between a bill drawn by a real creditor upon a real debtor, and a bill for which there was properly no real creditor but the bank which difcountcd it; nor any real debtor but the projedtor who made ufe of the money. H. When a banker had, even made this difcovery, he might fometimes make it too late, and might- find that he had already discounted the. bills of thofe projectors to fo great an extend that, by refufing to difcount any more, he. would necefiarily make them all bankrupts, and thus, $y ruining them, might perhaps ruin himCelf. For his own intereft and fafety, therefore, he might find it neceflary, in this very perilous fitu- ation to go on for fome time, "endeavouring, however, to withdraw gradually, and uppn that account making every day greater and greater difficulties. about difcounting, in order to force ihofe projectors by degrees to have recourfe, either to other bankers, op to other methods of raifing money; fo as that he himfelf might, as foon as pofllble, get out of the circle. The dif- ficulties, accordingly, wliich the bank 0^ Eng- land, which the principal bankers in Londori, ahd whicti even the more prudent Scotch banks bcgan^ after a certain time, and when all of them r ■'•*: THE WEALTH OP NATIONS. 47» had already gone too far, to make about dif- c ha counting, not only alarmed, but enraged in the higheft degree thofe projedors. Their own dif- trefs, of which this prudent and necefTary referve of the banks was, no doubt, the immediate oc- cafion, they called the diftrefs of the couhtry; and this didrefs of the country, they faid, was altogether owing to the ignorance, pufillanimity, and bad conduct of the banks, which did not give a fufficiently liberal aid to the fpirtted un- dertakings of thofe who exerted themfclves in order to beautify, improve, and vnrich the coun- try. It was the duty of the banks, they feemcd, to think, to lend for as long a time, and to as great an extent as they might wifii rb' borrow. The banks, however, by refufing in this manner to give more credit to thofe, to whom they had already given a great deal too much, took the only method by which it was now ^ffible to fave either their own credit, or the public credit of the country. In the midfl: of this clamour and diflrefs, i new bank was cftablifhed in Scotland for the cxprcfs purpofe of relieving the diftrefs of the ^ country. The defign was generous ; but the execution was imprudent, and the nature and caufes of the diftrefs which it meant to relieve, were not, perhaps, well underftood. This bank was more liberal than any other had ever been, both in granting caih accounts, and in difcounting bills of exchange. With regard to the latter, ^^ it feems to have made fcarcc any diftiqdlion be- tween real and circulating bills, but to have dif- H h4 counted \ ^mt': 47* THE NATURE AND CAUSES OF "*. o o ^ counted all equally. It was the avowed principle of this bank to advance, upon any reafonablc fecurity, the whole capital which was to be cm- ployed in thofe innprovenients of- which the re- turns are the moit (low and diftant, fuch as the improveoients of land. To promote , fu^h im- provements was even faid to be the chief of ^e public fpirited purpofcs for which it was in- ilituted* By its liberality in granting calh ac- counts, and in difcounting bills of exchange, it, 1)0 doubt, iifued great quantities of its bank notes. But thofe bank notes being, the greater part of them, over and above what the circula- tion of the country could eafily abforb and em- ploy, returned upon it, in order to be exchanged for gold and filver, as fait as they were ilTued. Its coffers were never well filled. The capital which had been fubfcribed to this bank at two different fubfcriptions, amounted to one hundr^ and fixty thoufand pounds, of which eighty per cent« only was paid up. This fum ought to have been paid ifi at feveral different inflalments. A great part of the proprietors, when they paid in their firil ififlalment, opened a cafh account with the bank > and the . direftors, thinking themfelves obliged to treat their own proprietors with the fame liberality with which ehey treated all other men, allowed many of them to borrow upon this cafh account wnat they paid in upon all their fubfe- quent inflalments. Such payments, therefore, only put into one cqS«;r, what had the moment before been taken out of another* But had ti)e coffers of this bank been filled ever fo well, its THE WEALTH OP NATIONS. 47J men, cafh ubfc- :forc, men( had well, its its exceflive circulacion mud have emptied them ^ "j^^ '• faftcr than they could Y -'^ been replenifhcd by any other expedient b> the ruinous one of drawing upon London, and when the bill became due, paying it, together with interefb and com- miffion, by another draught upon the fame place. )ts coffers having been filled Co very ill, it is laid to have been driven to this refource within a very few months after it b^gan to do bufinefs. The eftates of the proprietors of this bank were worth f^veral millions, and by their fubfcription to the original bond or contrafk of the bank, were really pledged for anfwering all its engage- ments. By means of the great credit which Co great a pledge neceffarily gave it, it was, not- withftanding its too liberal conduct, enabled to carry on bufinefs for more than two years. When it was obliged to ftop, it had in the cir- culation about two hundred thoufand pounds in bank notes. In order to fupport the circulation of thofe notes, which were continually returning upon it as fsA as they were ifTued, it had been conilantly in the practice of drawing bills of ex- change upon London, of which the number and value were continually increaHng, and, when it ftopt, amounted to upwards of (ix hundred thoufand pounds. This bank, therefore, had^ in little more than the courfe of two years, ad- vanced to different people upwards of eight hundred thoufand pounds at five per cent. Upon the two hundred thoufand pounds which it circulated in bank notes, this five per cent, might, perhaps, be confidered as clear gain,* without 4r4 THE NATURE AND CAUSES OP BOOK without any other deduction befidcs the expence "' of management. But upon upwards of (ix hun- dred thoufand pounds, for which it was conti- nually drawing bills of exchange upon London, it was paying> in the way of intereft and com- miflion, upwards of eight per cent, and was confeqUendy lofing more than three per cent, upon more than three- fourths of all its deal- ings. Thx operations of this bank feem to have pro« duced cffcfts quite oppofice to thofe which were intended by the particular perfons who planned and direded it. They feem to have intended to fupport the fpirired undertakings, for as fuch they confidered them, which were at that time carrying on in different parts of the country; and at the fame time, by drawing the whole banking bufinefs to themfelves, to fupplant all the other Scotch banks; particularly thofe ella- blilhed at Edinburgh, whole backwardnefs in difcounting bills of exchange had given fome offence. This bank, no doubt, gave fome tem- porary relief to thofe proje6t6rs, and enabled them to carry on their projects for about two years longer than they could otherwife have done. But it thereby only enabled them to get fo much deeper into debt, fo that when ruin came, it fell fo much the heavier both upon them and upon their creditors. The operations of this bank, therefore, inftead of relieving, in reality aggra- vated in the long run the diftrefs which thofs projeAors had brought both upon themfelves and upon their country. It would have been u^ ' : r much ''fl ,THE WEALTH OF NATIONS. 47$ much better for themlelves, their creditors and chap. II* their country, had the greater part of them been obliged to ftop two years fooner than ihey a^uaiiy did. The temporary relief, however, which this bank afforded to thofe projedlors, proved a real and permanent relief to the other Scotch banks. AH the dealers in circulating bills of exchange, which thofe other banks had become fb backward in difcounting, had recourfe to this new bank, where they were received with open arms. Thofe other banks, therefore, were enabled to get very eafily out of that fatal circle, from which they could not otherwife have dif- engaged themfelves without incurring a confider- able lofs, and perhaps too even fome degree of difCredit. In the long-run, therefore, the operations of this bank increafed the real diftrefs of the coun- try which it meant to relieve ; and effeAually re^ lieved from a very great diftrefs thofe rivals whom it meant to fupplant. ^ 'At the firft fetting out of this bank, it was the opit^ioa of fbme people, that how faft foever its coffers might be emptied, it might eafily re- pleniih them by raifing money upon the fecuri- tles of thoie to whom it had advanced its paper. Experience, I believe, fbon convinced them that this method of railing money was by much too (low to anfwer their purpole; and that coffers which originally wer^ fo ill 611ed, and which emptied themfelves fo very faft, could be re- plenifhed by no other expedient but the ruinous one of drawing bills upon London, and when TuJi, '■ ■. -v'- ■,,•-..■:;-:■■ ^--v they 47« THE NATURE AND CAUSES OF B 6 o K they became dae, paying them by other drauglfts "' ijpon the fame place with accumulated intereft )kti& commiflion. But though they had been able by this method to raiie money as faft as they wanted it j yet, inftead of making a profit, they muft have fufFered a lofs by every fiich ope- ration; fb that in the longrrun they muft have ruined themfelvcs as a mercantile company, thoiigh, perhaps, not (6 foon as by the more expenfive pradtice of drawing and re-drawing. They could ftill have made nothing by the in- tereft of the paper, which, being over and above what the circulation of the country could abforb and employ, returned upon them, in order to be exchanged for gold and filver, as fad as they ifllied it; and for the payment of which they were themfelves continually obliged to borrow money. On the contrary, the whole expence of this borrowing, of employing agents to look out for people who had money to lend, of negociating mth thole people, and ,of drawing the proper ^nd or aflignment, muft have fallen upon them, SHid have been fo much clear lofs upon the ba- lartce of their actounts. The projeft of replenifh- mg their coffers in this manner may be com- pared to that of a man who had a water-pond fk)m which ^ ftream was continually running 6utpitnd into which no ftream was continually runnmg, but who propofed to keep it always e<|Ual}y fuH by employing a number of people to' go continually with buckets to a well at IMie miles diftanee in order to bring water to lepieniiii it* ^^iv^-^--'-*^. ^.^-^n^ 9,,tk\i ;_'••" ■•«-' ,./- »**»•* THE WEALTH OF NATIONS. 477 ' But though' this operation hid proved, not chap. only praflicable, but profiubje to the bank as a ^** ffhercantile company i yet the country could have derived no bendit from itj' but, on the con** tr«7, muft have fufiered a very confiderable loft by it. This operation could not augment in the fmalleft degree the quantity of money to be lent. Iciibould only have'ere^ed this bank into a fort df ' general loan: ' office ■ for . the. whole country; Thofe who wanted to borrow, muft have applied to this b?^nk,t inftttiid of applying to the private p^fons who had lent it cl^eir money. But a bank which lends money, perhaps, to five hundred different people, tl^e greater part of whom fit» directors can! know very little ^boiut, is not likely to be more judicious in the choice of its debtors^,' than' a private perfon who lends out his money among a few people whom he 'knows, and in whofe ibber and frugal condudt he thinks he ktk good realbn to confide. The debtors of fuch; a bank) as that whole conduct .1 Jbave been giving fome account jof, were likely,: the greater part^ them, to be chimerical projectors) the dvawers^ and re-drawers of circulating lulls of excha(ige^^ who would empby the money > ill extravagant! undertakings, which, with all the afliftance t^ could be giveii them, they wou]d probably, Aeven be able to complete, and which, if they fhpuld be completed, would never repay the expence which they had really coft, would never afford a fund capable of maintaining a quantity of labour equal to that which had been employed about them. The ibber and frugal debtors of , prirf But JO vate > . 47* ^ TrtB NATURE AND CAUSES 6P vace pierfoht* on the cottttarj, would be rfjbre likely to employ the money borrowed in fybtt undertakings which were proportioned ro their capitals* and which, though they might havis led of the grand and the m^irvelbus, woukl hsvtt more of the foHd and> the profitable, which would repay with a large profit whatever had been laid out upon them,: ami ^^irhich would thus afibrd a fund capable of maintaining a n^uch greater quantity of labour than that which had been employed about them, ^he fuccefs of thds operation, therefore, without increaiing in the fmalleft degree th J." ^ au^ioibwr r>*'i{n sd t// yt'lj^HAT theinduAry of Scotland ]angui(htd.;fi)r want of QQoncyitoriemploy it, was the. opinion;. o^ the^fiilnous Mn; iJUaiw. By:cftablifiiiag a baolc:6^ si> piEWticulair kidd^ which he.feems to have ima%, gioed jmfgivt -iifiib I paper to tSivi amount of :ch^ ^dlesy^kie^of sill' tiw hihds in th)e country, hel profKofi^ ^to rem4»iy(.'^his (w&niii:af j money i Tiie patitifAent of ^Sd>tiand, when 'he firft propofed Kis»|)FOJed, did^ not think properuto adopt it. Ir itfttk' a^erwards-^^>iid6|>ccd, with fome vaitiationS)- hy» the* duke -iifi-iDrfeans, at th€i(:^ dmc regeiit of Friartce. The idtei-df the poitibility of multi* plying paper it«8iff9y M almoft ' *any^ extent, was ^ef t^'i^ foundaiibif Mof what is-xaliled the Mifi- RORppi fcheme, ';the moft esctravagant project bott^ of banking and Hock-johbing that, perHapti the world evcfv faw. The diflfcrenc: operations ^'" ■ . ',' of Mif* hap&i icions of THE WEALTH OP NATIOKSJ* of this fchemt &re explained fo fully, (b clearly, and witli fo much order and diftindtnefs, by Mr. Du Verney, in his Examination of the Political Refl^dion»- upon Goirirrierce and Fi^ tiailc^ft of Mk Dd Tot, that I fliaU not givt inf ttccouhc of tUcth: The principles upon which \i wis founded are explained by Mr. Law hirhfelfj in a difcourfe concerning money and tra^ which he pdbKflidl in Scotland when he i^rft propofed 4iis jMftjedt; The fplendidj but vifioti^ ary ideas whlcflr -are fet forth ih that and hmt other works upbh' the (anhe prthCrfAe^, ftill tolfi^ tifiue 'to 'makeah irript'flioit'^jpoh' many people^ ah4 have, perhaps,' in [Jart, coHtributed to that ex^ ceiit^^of bankings Whibl^ha^ of late been complained of both in Scotlartdiihd in other places. ^ >o*iti ^^The bank of j^tigland is the j^cateft bank df circulation in Europe.. It Wa§ incorporated,' "^iii purfliaflce of an a6l! of parliament, by- k xiharter ttftld^ -the ^iit Teal, dated the 'l-^th rfjuly^ iNS^ It at th^ time adVaiicftif to goVcfhnnfen^' ^ 'fum of otie MFiiori twio hundred thbulanH^ pouhds, for afi^anmiity of otie htirfdted thdufahd^ pounds'^ or fbr ^6j,6o&i: a year ihtereft, at the* rate of eight per cent., and 4^606/* a year fotAtSi^ 6)tpe«ice:6f mfthagelfWeht. T48* port of public credit. In 1 696^ calliea h^ beert ac Icircy, and fifty, aank notes at twenty per cent,* During the great recoinage of the filver, which .was going on ac this tiioe, the bank had though? proper to dUbontinue the payment of its notes, vfhich neceOarily oc- cafioned their difpredit. -roo -^>i^u^~ ; s :: ii.lif purfusm,ank ainq\inted tq Atmh3^3^k ^.k hf4 advancff^: to , goy.ernn;!^ .^^^^^ fugo .i^oC ■3»-3i75>027 /. J7^J.._a^^r;r ...intj-jV-; ?r'< '*•' V.* -1 > v;ftvj.%qall-of.jif5flC|i per c(qQt?ij ,111,1799, there; 1^ psud in and made, (lock 6^6,1204^1 i/. 9^*s aftd. .J^yr another of , ten f^ qff^t,^ u^ 4 7 1 Oj 501,448/. 12 f, lid* In CQf^qpei^ce of thpfe t>«p. calls, there^^,.4|(q,b^H ^jyjj^^ip^untod'^o I ■• Janiei PoiU«thwauc>; Hiftpry of i^ Public ? Rtyeni^; pa««30i. . C w 1 .Vn iv'ivrffi:--Gi;.-a!;:a *ii'. I«r THE WEALTH OP NATIONS. • Iw purfuance of the 3d George I. c. 8. the bank delivered up two millions of exchequer bills to be cancelled. It had at this time, therefore, advanced to government 5,375,027/. lyj. io its capital (lock was increafed by 3,400,000/. At this time, therefore, the bank had advanced to the public 9,375.0*27/. 17 j. loi^/.j and its capi- tal (lock amounted only to 8,959,995/. 14^. 8^. It was upon this occafion that the fum which the bank had advanced to the public, and for which it received intered, began firft to exceed its capital (lock, or the fum for which it paid a dividend to the proprietors of bank (lock ; or, in other words, that the bank began to have an un- divided capital, over and above its divided one. It has continued to have an undivided capital of the fame kind ever (ince. In 1746, the bank had, upon different occafions, advanced to the public 11,686,800/. and its divided capital had been raifed by different calls and fubfcriptiorts to 10,780,000/. The (late of thofe two fums has con- tinued to be the fame ever (ince. In purfuance of the 4th of George III. c. 25. the bank agreed to pay to government for the renewal of its char- ter 110,000/. without intered or ""repayment. This fum, therefore, did not incrpafe either of thofe two other fums. 4»f A ' » ^ f Vol. I. li The THE NAtURE AND CAUSES OP Thi dividend of the bank hat varied accord- ing CO the variations in the race of the interei^ which it has, at different times, received for the money it had advanced to the publica a well as according to other circumftances. This rate of intereft has gradually been reduced from eight to three per cent. For fome year^ paft the bank dividend has been at five and a half per cent. The (lability of the bank of England is equal to that of the Britifli governmenc. All chat it has advanced to the public mud *be loft before its creditors can fuftain any lofs. No other bank- ing company in England can be eftablifhed by a£t of parliament, or can confift of more than fix members. It a£ls« not only as an ordinary bank, but as a great engine of ftace. Ic receives and pays che greater part of the annuities which aro due to the creditors of che public, it circulates exchequer bills, and it ad^Oiiccs to government the annual amount of the land and malt taxes, which are frequently not paid up till fome years thereafter. In thofe different operations, its duty to the public may fometimes have obliged it, vrithout any fault of its direftors, to overftock the circulation with paper money. Ic like wife dif. counts merchants bills, and has, upon feveral dif- ferent occafions, fupported the credit of the yi i.? . cipal houfes, not only of England, but o. il ;ru' burgh and Holland. Upon one occafion, in 1763, it is faid Co have advanced for this purpofe, in one ^ v*'^, about i, 600,000 /.j a great part of it gold a rd- the i at :of ight the pec (qual t has e iu )ank- !d by an fix bank, ;s and :h are 'ulatea nmenc taxes, years s duty ed it, >ck the fe dif. ral dif- r»- 1763* )re, in rt of it in THE WEALTH OP NATIONS. 4!^ in bullion. 1 do not, however, pretend to war- ® "j,^ '• rant either the greatnefs of the lum, or the (hort- nefs of the time. Upon other occafions, this great company has been reduced to the neceiTity of paying in fixpences. It is not by augmenting the capital of the country, but by rendering a greater pat c of that capital a£tive and produdlive than would other- wife be fo, tl:it the mod judicious operations of banking, ^ - ; ir "cafc the induftry of the country* Thar pa.i ot his capital which a deakr is oLligeu iv> keep by him unemployed, and in f. ty money for anfwcring occafional demands, is fo uiV'Ch dead ftock, which, fo long as it remains in this fituation, produces nothing either to him or to his country. The judicious opera- tions of banking enable him to convert this dead flock into adtive and produdive (lock; into ma- terials to work upon, into tools to work with, and into provifions and fubfiftence to work fort into dock which produces fomething both to himfelf and to his country. The gold and filver money which circulates in any country, and by means of which the produce of its land and labour is annually circulated and diflributed to the proper confumers, is, in the fame manner as the ready money of the dealer, all dead (Vocl^. I- '" a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations o( banking, by fubfli- tuting paper in the room of a great part of this gold and filvcr, enable the country to convert a I i 2 great Jfi4 THE NATURE AND CAUSES OF great part of this dead ftock into aflive and pro- dudlive dock} into (lock which produces fome- thing to the country. The gold and filver mo- ney which circulates in any country may very properly be conr>pared to a highway, which, while it circulates and carries to market all the grafs and corn of the country, produces itfelf not a fingle pile of cither. The judicious operations of banking, by providing, if I may be allowed lb violent a metaphor, a fort of waggon-way through the air; enable the country to convert, as it were, a great part of its highways into good pafturcs and cornfields, and thereby to increafe very confiderably the annual produce of its land and labour. The commerce and induftry of the eountry, however, it muft be acknowledged, though they may be fomewhat augmented, can- not be altogetJ>er fo fecure, when they are thus, as it were, fufpendcd upon the Daedalian wings of papjcr money, as when they travel about upon the folid ground of gold and filver. Over and above the accidents to which they are expofed from the unfkilfulnefs of the conduAors of this paper money, they are liable to feveral others, from which no prudence or (kill of thofe con- ductors can guard them. *- v .,.- • , An unfucccfsful war, for example, in which the enemy got pofleflion of the capital, and con- / fequently of that treafure which fupported the credit of the paper money, would occafion a ^ much greater confufion in a country where the whole circulation was carried on by paper, than oth( fam ney valu ent circ •i- I i m - THE WEALTH OF NATIONS. - 4»f^ IB one where the greater part of it was carried on ® * ,^ **• by gold and filver. The ufual inftrumeot of commerce having loft its value, no exchanges could be made but cither by barter or upon cre- dit. All uxes having been ufually paid in paper mpney, the prince would not have where«. withal either to pay his troops, or to furniih his magazines; and the ftate of the country would be much more irretrievable than if the greater part of its circulation had conGfted in gold and filver. A prince, anxious to maintain his domi- nions at all times in the ftate in which he can moft eafily defend them, ought, upon this ac- count, to guard) not only againft that excefllve multiplication of paper money which ruins the very banks which ifTue it; but even againlt that multiplication of it, which enables them to fill the greater part of the circulation of the country iwith it. The circulation of every country may be con^ fidered as. divided into two different branches; the circulation of the dealers with one another^ and the circulation between the dealers and the confumers. Though the fame pieces of money, whether paper or metal, may be employed fome- times in the one circulation and fomctimes in the other i yet as both are conltantly going on at the ^ame time, each requires a certain ftock of mo- ney of one kind or another, to carry it pn. The value of the goods circulated between the differ- ent dealers, never can exceed the value of thofe circulated between the dealers and the confum- • ■ ^'f ' en; < ^ .. , • • i ■ • " i * ^ THE NATURE AND CAUSES OF crs; whatever is bought by the dealers, being ultimately deftined to be fold to the confumers. The circulation between the dealers, as it is car- ried on by wholefale, requires generally a pretty large Aim for every particular tranfadtion. . That between the dealers and the confumers, on the contrary, as it is generally carried on by retail, frequently requires but very fmall ones, a (hiU / ling, or even a halfpenny, being often fuHicient. But fmall fums circulate much fafter than large ones. A . (hilling changes mafters more fre- quently than a guinea, and a halfpenny more frequently than a (hilling; Though the annual purchafes of all the confumers, therefore, are at leaft equal in value to thofe of all the dealers, they can generally be tranfafled with a much fmaller quantity of money ; the fame pieces, by a more rapid circulation, ferving as the inltru- ment of many more purchafes of the one kind than of the other. Paper .money may be fo regulated, as either to confine itfelf very much to the circulation be- tween the different dealers, or to extend itfelf likewife to a great part of that between the deal- ers and the confumers. Where no bank notes are circulated under ten pounds value, as in London, paper money confines itfelf very much to the circulation between the dealers. When a ;ten pound bank note comes into the hands of a confumer, he is generally obliged to change it at the firft (hop where he has occafion to purchase five (hillings worth of goods ; fo that it often re- 3 '■^:: 1 '■.. turn« Ni , ' . -: ,•;■/ ■ THE WEALTH OP NATIONS. 4«7 tarns into the hands of a dealer, before the con. ^ "j,^ '• fumer hath fpent the fortieth part of the money. Where bank notes are iflfued for fo fmall fums as twenty (hillings, as in Scotland, paper money extends itfelf to a confiderable part of the circu- lation between dealers and confumers. Before the a£b of parliament which put a flop to the circulation of ten and five Ihilling notes, it filled a ftill greater part of that circulation. In the currencies of North America, paper was com- monly iifued for fo fmall a fum as a (hilling, and filled almoft the whole of that circulation. In (bme paper currencies of Yorkfhire, it was i(rued even for fo fmall a fum as a fixpence. Wheue the ilTuing of bank notes for fuch very fmall fums is allowed and commonly praftifed, many mean people are both enabled and encou* raged to become bankers. A perfon whofe pro- miflTory note for five pounds, or even for twenty (hillings, would b^ rejefted by every body, will get it to be received without fcruplc when it is ilTued for fo fmall a fum as a fixpence. But the frequent bankruptcies to which fuch beggarly bankers muft be liable, may occalion a very con- fiderable inconvcniency, and fometimes even a very great calamity, to many poor people who had received their notes in payment. ^'■ It were better, perhaps, that no bank notes were ifTued in any part of the kingdom for a fmaller fum than five pounds. Paper money would then, probably, confine itfelf, in every part of the kingdom, to the circulation between i i 4 the ,\- ■'■ ^t THE NATURE AND CAUSES OF • **jjp ^ the different dealers, as much as it docs at prc- fent in London, where no bank notes art ifTued under ten pounds value ; five pounds being, in moil parts of the kingdom, a fum which, though it Will purchafe, perhaps, little more than half the quantity of goods, is as much confidered, and is as feldom fpent all at once, as . ten pounds are amidd the profule expence of Lon- / don. Where paper money, it is to be obferved, is i pretty much confined to the circulation between dealers and dealers, as at London, there is always ^ plenty of gold and filver. Where it extends itfclf to a confiderable part of the circulation between dealers and confumers, as in Scotland, -and dill • more in North America, it banidies gold and ' (liver almoft entirely from the country; almoft all the ordinary tranfaftions of its interior com- ' mercc being thus carried on by paper. The fuppreffion of ten and five (hilling banlc notes, fomewhat relieved the fcarcity of gold and filver ' in Scotland j and the fuppreflion of twenty (hil- ling notes^ will probably relieve it dill more. Thofe metals are faid to have become more abundant in America, fince the fcpprelfion of fome of their paper currencies. They are faid, likewife, to have been more abundant before the inftitution of thofe currencies. .|.r Though paper money (hould be pretty much confined to the circulation between dealers and . dealers, yet banks and bankers might ftill be able to give nearly the fame afTiftancc to the in- -r ♦THE 'WEALTH OP KATTONS; * 4% duftry and commerce of the country, as they had chap. done when paper money filled almoft the whole circulation. The ready money which a dealer is obliged to keep by him, for anfwering occafiotial demands, is defined altogether for the circula- tion between himfelf and other dealers, of whom he buys goods. He has no occafion to ikeep i^ny by him for the circulation between himfetf and the confumers, who are his cuftomers, and who bring ready money to him, inftead of tak- ing any from him. Though no paper money, therefore, was allowed to be iflued, but hr tock fums as would confine it pretty much to the culation between dealers and dealers; yet, partly by difcounting real bills of exchange, and partly by lending upon cafh accounts, banks and bankers might ftill be able to relieve the. greater part of thofe dealers from the neceffity of keep^ Ing any condderable part of - their flock by them, unemployed and in ready money, for anfwermg occafional demands. They might ilill be able to give the utmoft afliftance which banks and bankers can, with propriety, give to traders ^f every kind. * —n V ■ ^*»*^i To reftrain private people, it may be fald, from receiving in payment the promiflbry notes of a banker, for any fam whether great or fmall, when they themfelves are willing to receive them J or, to reftrain a banker from iflbing fuch notes, when all his neighbours are willing to accept of them, is a manifeft violation of that natural liberty which it is the proper bulinefs of , ,, .^ law> 45» THB NATURE AND CAUSES OP BOOK law, not to infringe, but to fupport. Such rew gulations may, no doubt, be confidered as in fome refpefb a violation of natural liberty. But thofe exertions of the natural liberty of a few in- dividuals, which might endanger the fecurity of the whole fociety, are, and ought to be, re- ftrained by the laws of all governments; of the moft free, as well as of the moft defpoticaU The obligation of building party walls, in order to prevent the communication of fire, is a viok^ tion of natural liberty, exactly of the fame kind with the regMlations of the banking trade which are here propofed. ■\- A PAP£R money confiding in bank notes, ifTued by people of undoubted credit, payable upon demand without any condition, and in hd: al- ways readily paid as foon as prefented, is, iq every refpedb, equal in value to gold and filver pnoney; fince gold and filver money can at any time be had for it. Whatever is either bought or fold for fuch paper, mufl ncceffarily be bought or fold as cheap as it pould hav^ been for gold und filver. The increale of paper money, it has been faidj by augmenting the quantity, and confequently diminifhing the value of the whole currency, jiCcefTarily augments the money price of com- modities. But as the quantity of gold and filver* which is taken from the currency, is always equal to the quantity of paper which is added tq it, paper money does not necefTarily increafe the quantity of the whole currency. From the be- ginning jng fcvy »- • r THE WEALTH OP NATIONS. 491 faid, lently •ency, com- Ifilver* ilways led tQ Ife the b?- Inning ginning of the laft century to the prcfent time, c ha f. provifions never were cheaper in Scotland than in 1759) though, from the circulation of ten and five (hilling bank notes, there- was tjien more paper money in the country than at prc- fent. The proportion between the price of pro- viHons in Scotland and that in England., is the fame now as before the great multiplication of banking companies in Scotland. Corn is, upon moft occafions, fully as cheap in England as in France; though there is a great deal of paper money in England, and fcarce any in France. In 175 1 and in 1752, when Mr. Hume publifhed his Political Difcourfes, and foon after the great multiplication of paper money in Scot- land, there was a very fenfible rife in the price of proviHons, owing, probably, to the badneis of the (eafons, and not to the multiplication of paper money. It would be otherwilc, indeed, with a paper money confifting in promifTory notes, of which the immediate payment depended, in any rc- fpeft, either upon the good will of thofe who iflfued them ; or upon a condition which the holder of the notes might not always have it in his power to fulfil ; or of which the payment was not exigible till after a certain number of years, and which in the mean time bore no intereflr. Such a paper money would, no doubt, fall more or lefs below the value of gold and filver, ac- cording as the difficulty or uncertainty of obtain- ing imn^ediate payment was fuppofed to be greater 49« BOOK U. ^ ■>,■—» THE NATURE AND CAUSES OP greater or lefs; or according to the greater or lefs diftance of time at which payment was exi- gible. Some years ago the different banking com- panies of Scodand were in the practice of infert- ing into their bank notes, what they called an Optional Claufe, by which they promifed pay- ment to the bearer, either as foon as the note ihould be prefented, or, in the option of the directors, fix months after fuch piefentment, to- gether with the legal interefi: for the faid fix months. The directors of fome of thofe banks fomecimes took advantage of this optional claufe, -and fometimes threatened thofe who demanded gold and filver in exchange for a confiderable number of their notes, that they would take ad- vantage of it, unlefs fuch demanders would content jtbemfclves with a ipart of what they demanded. The promiflfory notes of thofe banking com- panies conftitvAed at that time the far greater part of the currency of Scotland, which this un« certainty of payment neceflfarily degraded below the value of gold and filver money. During the continuance of this abufe (which prevailed chiefly in 1762, 1763, and 1764), while the ex- change between London and CarliQe was at par, that between. London and Dumfries would fome- times be four per cent, againft Dumfries, though this town is not thirty miles diftant from CarliQe. But at Carlifle, bills were paid in gold and fliv- ver ; whereas .;t Dumfries they were paid in Scotch bank notes, and the uncertainty of get- THE WEALTH OP NATIONS. m ting ting thofc bank notes exchanged for gold and chap. filver coin had thus degraded them four per cent, below the value of that coin. The fame aft of parliament which fuppreffed ten and five (hilling bank notes, fuppreflfed like wife this optional claufe, and thereby reftored the exchange be- tween England and Scotland to its natural rate, or to what the courfe of trade and remittances might happen to make it. ' Im the paper currencies of Yorkfhire, the payment of fo fmall a fum as a (ixpence fome- times depended upon the condition that the holder of the note fhould bring the change of a guinea to the perfon who iflfued it ; a condition, which the holders of fuch notes might frequently find it very difficult to fulfil, and which muft have degraded this currency below the value of gold and filver money. An affc of parliament, accordingly, declared all fuch clauies unlawful, and fupprefTed, in the fame manner as in Scot- land, all promififory notes, payable to the bearer, under twenty (hillings value. The paper currencies of North America con- fided, not in bank notes payable to the bearer on demand, but in a government paper, of which the payment was not exigible till feveral years after it was iiTued: And though the colony go- vernments paid no intereft to the^liolders of this paper, they declared jt to be, and in fadl ren- dered it, a legal tender of payment for the full value for which it was iffued. But allowing the colony fecuricy to be perfcdly good, a hundred ; 'j:-v/\ ' ,, .<». V pounds 494 THE NATURE AND CAUSES OF ■ o ^ ^ pounds payable fifteen years hencci for extmplei ti i-yil-^ in a country where intereft is at fix per cent, is worth little nnore than forty pounds ready money. To oblige a creditor, therefore, to accept of this as full payment for a debt of a hundred pounds actually paid down in ready money, was an z6t of fuch violent injudice, as has fcarce, perhaps* been attempted by the government of any other country which pretended to be free. It bears the evident marks of having originally been, what the honed and downright Doftor Douglas afiTures us ic was, a fcheme of fraudulent debtors to cheat their creditors. The government of Penfylvania, indeed, pretended, upon their firfi: emiflion of paper money, in 1722, to render their paper of equal value with gold and filver, by enabling penalties againd all thofe who made any difference in the price of their goods when they fold them for a colony paper, and when they fold them for gold and filver ; a regc^.ation equally tyrannical, but much lefs effeduai thaa that which it was meant to fupport. A pofitive law may render a (hilling a legal tender for a guinea j becaufe it may direct the courts of juf* tice to difcharge the debtor who has made that tender. But no pofitive law can oblige a perfon who feQs goods, and who is at liberty to fell or not to fell, as he pleafes, to accept of a fliilling as equivalent to a guinea in the price of them. Kotwithdanding any regulation of this kind, ic appeared by the courfe of exchange with Great Britain* that a hundred pounds ftcrling was oc- ;■; ' cafionally THE WEALTH OF NATIONS. ^< hat on or ng m. ic cat cafionaliy confKiercd as equivalent, in fotne 6f c ha i\ the colonies, to a hundred and thirty pounds, and in others to fo great a fum as eleven hun- dred pounds currency i this difference in the value arifing from the difference in the quantity of paper emitted in the different colonies, and in the didance and probability of the term of its final difchargc and redemption. No law, therefore, could be more equitable than the a£t of parliament, fo unjudly com- plained of in the colonies, which declared that no paper currency to be emitted there in time coming, (hould be a legal tender of pay- ment. • Pensylvania was always more moderate in its emiffions of paper money than any other of our colonies. Its paper currency accordingly is faid never to have funk below the value of the gold and filver which was current in the colony before the firft emiffion of its paper money. Before that emiffion, the colony had raifed the denomination of its coin, and had, by aft of affembly, ordered five (hillings fterling to pafs in the colony for fix and three-pence, and afterwards for fix and eight- pence. A pound colony currency, there- fore, even when that currency was gold and filver, was more than thirty per cent, below the value of a pound fterl'ng, and when that cur- rency was turned into paper, it was feldoni much more than thirty per cent, below that va- lue. The pretence for raifing the denomina- tion of the coin, was to prevent the exportation :...... ,... of 49« THE NATURE AND CAUSES OP *oo>^ of gold and filver, by making equal quantities of thofe mecaU pafs for greater fumk in the co* lony than they did in the mother country. It was found, however, that the price of all goods from the mother country rofe exaftly in propor- tion as they raifed the denomination of their coin, fo that their gold and filver were exported as fad as ever. The paper of each colony being received in the payment of the provincial taxes, for the full value for which it had been iflfued, it neceflfarily derived from this ufe fome additional value, over and above what it would have had, from the real or fuppofed diftance of the term of its final difcharge and redemption. This additional value was greater or lefs according as the quan- tity of paper iflfued was more or lefs above what could be employed in the payment of the taxes of the particular colony which iflued it. It was in all the colonies very much above what could be employed in this manner. A PRINCE, who (hould ena£b that a certain proportion of his taxes ihould be paid in a paper money of a certain kind, might thereby give a certain value to this paper money; even though the term of its Bnal difcharge and redemption ihould depend altogether upon the will of the prince. If the bank which iffued this paper was careful to keep the quantity of it always fomewhat below what could eafijy be employed in this manner, the demand for it might be fuch as to make it even bear a premium, or fell for 6 . fomewhat THE WEALTH OF NATIONS. ^ 4^ ' fomcwhac more in thf mtrket than the qiiati- c rt a K ♦ tity of gold or filvcr currency for which it Was iflued. Some people account in this manner for what is called the Agio of the bank of Am- (lerdam> or for the fupcriorlty of bank mohey over current money t though this bank money, at they pretend, ciinnot be taken out of the bank ac the will of the owner. The greater part of foreign bills of exchange muft be paid in bank money, that is, by a transfer in the books of the bankj and the directors of the bank, they al- lege, are careful to keep the whole quantity of bank money always below what this ufe occafions a demand for. It is upon this ac- count, they fay, that bank money fells for a premium, or bears an agio of four 01 five per cent, above the fame nominal fum of the gold and filver currency of the country. This ac- count of the batik of Amfterdam, however, it will appear hereafcerj is in a great meafure chimerical. A PAPER currency which falls below the value of gold and filvcr coin, does not thereby fink the value of thofe metals, or occafion equal quantities of them to exchange for a fmaller quantity of goods of any other kind. The pro- portion between the value of gold and filver and that of goods of any other kind, depends in all cafes, not upon the nature or quantity of any particular paper money, which may be current; in any particular country, but upon the richnefs or poverty of the mines, which happen at any Vol. I. K k particular 4^ THS NATtJRE AND CAUSES OF BOOK particular time to fupply the great market of the ^' commercial world with thefe metals; It de- pends upon the proportion between %he quantity of labour which is necfleary in order to bring a ceruin quantity of gold and filver to market, and that which is neceffary in order to bring thither a certain quantity of any other fort of goods. If bankers are reftrained from ifluing any cir- 6ulating bank notes> or notes payable to tho bearer, for lefs than a certain fum ; and if they are fubjefted to the obligation of an immediate and unconditional payment of fuch bank notes as foon as prefenced, their trade may, with fafety to the public, be rendered in all other refpedts perfectly free. The late multiplication of bank- ing companies in both parts of the united kingdom, an event by which many people have been much alarmed, inftead of diminilhing, in- creafes the fecurity of the public. It obliges all of them to be more circumfpe6b in their condu6b, and, by not extending their currency beyond its due proportion to their cafh, to guard themfelves againft thofe malicious runs, which the rivallhip of fo many competitors is always ready to bring upon them. It rcftrains the cir- culation of each particular company within .a narrower circle, and reduces their circulating notes to a fmaller number. By dividing the whole circulation into a greater number of parts, the failure of any one company, an accident which, ill the cjurfe of things, mu(t fometimes happen, \: . 9 becomes V> mn a notes whole the ix^hicb, ppen, comes ;s THE WEALTH OP NATIONS. becomes of lefs confequence to the public. This ii-ee competition too obliges all bankers to be more liberal in their dealings with their cuf- tomers, left their rivals Ihould carry them away^ In general, if any branch of trade, or any divifion of labour, be advantageous to the public, the freer and more general the competition, it will always be the more fo. 499 END or THE fIRST VOLUME.