liiiil- lUfe II;-- :5'^ University of California • Berkeley Gift of Mrs. Prudence Bentley Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/completeanalysisOOsmitrich . , A COMPLETE ANALYSIS, ABRIDGMENT, OP DR. ADAM SMITH'S maUIRY INTO THE Katttte anti ^tmt$ OF THE WEALTH OF NATIONS. BY JEREMIAH JOYCE. Juvat exhaustos iterare labores. THE SECOND EDITION. LONDON: Printed by Weed and Rider, Little Britain, FOR LAW AND WHITTAXER, No. 13, AVE-MARIA LANB, LUDGATE STREET. * 1818. JIO • • * n .* • • • • • :(iOQyi(K j?i«A.i AiaAir.-a/A jer.ovi ^aaiTATri^yv ai^A v/aj ao-f T-;!- .,-*v ;.?x^- '*-''TTr j . .8181 ro PHILtP HENRY riSCOVmMAHON, THIS ANALYSIS IS AFFECTIONATELY INSCRIBED £Y THE EDITOR. 66r-'^^-'' k «.! if 1 ■■-, . ■«.•;■ - >■-' ADVERTISEMENT. THE Editor conceives that it is unnecessary to offer any apology for laying before the pkblic an Analysis or Abridgment of a work so universally and justly celebra^ ted as '' The Inquiry into the nature and causes of the " Wealth of Nations." Without attempting to justify every principle contain- ed in the " Inquiry," it certainly merits the follow- ing eulogium passed upon it by one of Dr. Adam Smith's biographers: — ^^ The variety, importance and *' novelty of the information zohich it contains ; the skill '^ a?id comprehensiveness of mind displayed in the ar- ^' rangement ; the admirable illustrations with which " it aboimds ; together zoith the plainness and perspi- " cuity zvhich make it intelligible to all — render it un* ^^ questionably the most perfect zoork which has yet ap* *^ peared on the general principles of any branch of legis-* " lation" To those, then, zvho are engaged in the pursuit of po-^ titical science , this compendium, if properly executed, cannot fail of being highly useful. It will also be found convenient as a text book in those institutions of liberal education^ in which the " Wealth of Nations" make$ an essential branch of their lectures, Chevening, June 20^ 1797. INTRODUCTION AND PLAN OF THE WORK X HE labour of every nation isjlie fund which ori- Ai^^^ ginally supplies it with all the necessaries and conveni- encies which it consumes ; and which consist either in the immediate produce of that labour, or in whatjspur- cha'sedwitfuTiat produce from other nations. P. 1. The nation will be supplied with its necessaries, ac- cording to the proportion which this produce bears to the number of its inhabitants ; which proportion is re- gulated ; (1.) By the skill and judgment with which its * ''0/ labour is applied. (2.) By the proportion between the ^, ^/ number of those who are employed in useful labour^ and of those who are no^ so employed. P. 2. Upon ihe former of these, the abundance, or scanti- ness of this supply seems principally to depend. For among savage nations of hunters and fishers, where fl/Z labour, there is the greatest want ; whereas in civili- sed states, though multitudes do not labour, all are often abundantly supplied. The cause of this improvement in the productive powers of labour, and the order according to which its A CO produce is distributee!, make the subject of the first book of this inquiry ; and it will appear that the number of useful labourers, is, every where in proportion to the quantity of capital stock employed in setting them to work, and to the manner in which it is so employed. The second book treats of the nature of capital stock ; of the manner in which it is accumulated ; and of the quantity of labour which it puts into motion. Different nations have followed different plans in the direction of labour, of which all have not been equally" favourable to the greatness of its produce. P. 3. Some have encouraged the industry of the count ri/ ;— others that of tozcns. The policy of Europe has leaned to commerce and manufactures, more than to agriculture. The circum- stances which seem to have introduced, and established this policy, are explained in the third book. This policy has given occasion to very different thecwies of political oeconomy, which, with their effects^ will be explained in the fourth book. Fromtheseybwr books it will appear, in what has con- sisted the revenue of the great body of the people. The ffth will treat of the revenue of the sovereign or com- monwealth. In which will be seen; (1.) What are the necessary expences of the sovereign, and how they ought to be defrayed. (2.) The methods by which the whole society may be made to defray them : and, (3.) The reason and causes which have induced all modem governments to contract debts. P. 4. INQUIRY INTO THE NATURE and CAUSES OF THE WEAI-TH OF NATIONS. BOOK. I, Of the causes of improvement in the prodpctite powers of labour, and of the order according to which its pro- duce is naturally distributi^d among the different ranks of the people, CHAP. I. Of the division of labour. T, HE greatest improvement in the productive powers oflabour^andthe greater part of the skill with which it is any where directed, or applied, seem to have been the effects of the division of labour ; which effects, in the business of society, will be better understood by con- sidering how it operates in some particular manufac- tures. P. 5» It is commonly supposed that the division of labour ^Js cux'i^d^farthest in some trifling manufactures, which ( 8 ) IS probably an error founded upon this circumstance ; tiiatlhe number^f warkmeii, in everj branch of ll)£5e manufactures, being sHiaH, may be collected in the sam,ewpirk-lJoiTs,e', aji3 pja^€4 af once under the view of the spectator ; whereas in those manufactures destined to supply the great wants of the people, we can seldom see at [once, more than those employed in one single branch. Therefore the division may be greater^ and yet notsoobvioOa. jlf.jS. • s* ) '^\ ,J; Example. A person unacquainted with the busi- ness of pin-making, .«Attl4^j3fiik<;ofily make a single pin a day ; but by dividing the business into various branches, which are now distinct trades, each per- son may be considered as malting 4800 pins in a day. In every other manufacture the ejects of the division of labour ave similar to what they are in this, though they may not be reducible to so great simplicity : hence the increase of the productive powers of labour ; the advantages of which, have caused the separation of different employments. THiSy? separation is carried farthest in countries most improved ; what is the work of one man in ^rude state of society, being, generally, that of sereraZ in an improved one. Hence thedifr ferent trades in the woollen and linen manufactures, fmm the growers of the wool|G!ir, Am* to the dressers of thecloth. P. 9. - ; i . ,1/ ",- ;' Agriculture doesnot admitorso many^ubjdiv^^ labo ur as ma ji u fact u res ; the different sorts of labour, in the former returning with the seasons, no man can be constantly employed in any one of them ; hence its unimproved state, in all countries, compared with jnanufactures. In agriculture, the labour of the U^ u^^^Ur ^Hji- fhd ^-^ ^^aU. i^^Ty w>^ 4^-2^ i^>A;^ ^Vfj^cuU- ♦^'^ ^:i} t^*^^ ^ »^Ay v^fc t^r^A ^ ^'^^i i.v.^^ e**/frl'A fjch cputttj-y, IS* not always n^cb more produxjtiye, tha;i;itb?itpf thejpoor. The cora of Polajid is gene- Tjttlly as gopd, aud as cheap, as that of England, not- ^jthstatiding the improved state of the latter. But i^ ipanufaeturesj, Poland can pretend to no such compe-r J;ition, JP,. IK The incjrease in the quantity of work, which, in con- ^quenceof the division of labour, the same number of people are capable of performing, is owing to three ilifterent circumstances. (1.) To the increase of dexterity in every particular workman ; by reducing every man's business to one simple operation, and by nxaking this operation the sol^ employment of his life. Acommonsnjith, unaccustom- ed to making of nails, cannot make Inore than two Qir three hundred nails a day; whereas lads, under twenty jjears of age, who never exercised any other trade but that of making nails, can make £300 nails in aday^ Neither is this one of the simplest operations, and of course not one where the dexterity of the workman is the greatest. P. 12. (2.) To the saving of the time which is commonly lost in passing from one species of work to anpther. It is impossible to pass veri/ quickly ^rom one kind of worJk; ^J*. to another. A country weaver, who cultivates a small farm, must lose a deal of time in passing from the loom to the field. A man commonly saunters a little ia turning his hand from one employnient to another ; and when he ^rs? begins the new work, it is seldom with spirit ; hence the habit of indolent careless appli- jcation acquired by every country workman, who is obliged to cliange his tools^ and work every half hour» P. 13. ( 10 ) (3.) Labour is much abridged by the application of proper machinery. The invention of those machines, by which labour is so much facilitated, and abridged, seems to have been owing to the division of labour : for men are likely to discover the readier methods of attaining any object, when their whole attention is ^directed towards that single object. It is natural also, that out of ni any workmen employed in each branch of labour, some one or other should find the readiest method of performing their own particular \york. It is a fact, that ja great part of the machines, used ii| those manufactures, in which labour is most sub^ divided, were the inventions of common workmen. In steam engines, one of the greatest improvements was discovered by a boy who wanted to save his la- bour. P. 14. Many improvements in machinery have been made by the ingenuity of the makers of machitjes ; and not^ few by philosophers, or mep of speculation ; whose trade is /iqt to do any thing, but to observe evert/ thing. Philosophy, like other employments, is not only a trade, but is subdivided into several classes, which, as ia every other business, improves dexterity, and saveg time. P. 15. It is the great multiplication of the productions of the different arts, in consequence of the division of labour, which occasions, in a well regulated society, that uni- versal opulence which extends itself to the lowest ranks of the people. P. l6. Observe the accommodation of the artificer, or day labourer in a civilized and thriving state, and you will perceive that the number of people employed in pro- curing him accommodation, exceeds all computa- ( n ) iron. What a variefy of labour is necessary to pro- duce the tools of the meanest workmen, the shears, for instance, with which the shepherd clips the wool ! We might examine also his dress ; or furniture ; reflect on the different hands employed in preparing his bread, and his beer, the glass, the window which lets in the light, and keeps out the wind and the rain ; and it will appear, that without the assistance of many thousands, the very meanest person in a civi- lized country^ could not be accommodated, in what isy^Zse^ called an easy and simple manner. P. 17 — 19. y( CHAP. II. Of the principle which gives occasion to the division of labour. THIS division of labour from which so many advan- tages are derived is not the effect of human zvisdoni, but of a propensity in human nature to truck, barter, aiid exchange one^thin^ for another. It is common to all men^ and to be found in no other race of animals. When an animal wants to obtain any thing of man, it is by means of engaging his attention. Man some-' times uses the same arts, but he has not time to do this on every occasion. In civilized society, he stands in need of the assistance of multitudes, at all times, while his whole life is scarce sufficient to gain the friend- ship of a few persons. Among other animals, each in- dividual is independent; and, in d^ natural state, has occasion for the assistance of no other living creature. ( 12 ) But man llaj^ constant occasion for the help of his bre- thren, and it is in vain to expect it from their benevo- lence; he must interest their self love. The case of a common beggar, is not altogether an exception to this rule. P. 19—22. This trucking disposition gives occasion to the divi- sion of labour. Among hunters, one person can make bows and arrows with more dexterity than others, which from interest, he exchanges for cattle or venison. Hence he becomes a sort of armourer. Another excels in making huts, for which he is rewarded by his neigh- bours, and he finds it worth his while to dedicate his whole time to this employment. In like manner a third becomes a smith ; and a fourth a tanner. The certain- I ty of being able to exchange the produce of his labour, I encourages every man to apply himself to a particular- ; occupation. P. 22. The difference of natural talents in different men, is less than we suppose, and is not so much the cause, as the effect of the division of labour ; it seems to arise not so much from nature, as from habit, and education. Without this disposition to barter, a// must have had the same duties to perform, and there would have been no room for the exertion of different talents. This dis- position forms the difference of talents, and renders the difference useful. P. 23. Many tribes of animals, of the same species, derive from nature, a much more remarkable distinction of genius, than what takes place among men, and yet they are of no use to one another, for want of this disposition to barter or exchange. Among men the most dissimilar geniuses are of use to one another j the different produce of their respective talents, by ex- ( 13 ) change, being brought into common stock, where every man may purchase whatever part of the pro- duce of other men's talents for which he has occasi- on. P. 2o. CHAP. III. That the division of labour is limited hy the extent of the market. IT is the pozver of exchanging that gives occasion to the division of labour ; t herefor e the extent of this di- vision must always be limited by the extent of the mar- ( ket. P. 26. Some sorts of industry Van be carried on no where but in large towns. A porter for example. In small villages every farmer must be his own butcher, baker, and brewer. In such situations country workmen must apply themselves to many different branches of industry ; a carpenter deals in every sort of work made of wood ; a smith, in whatever is made of iron. P. 27. Water carriage is more favourable to industry than land carriage ; the difference is very great in the dis- tance between London and Edinburgh. But without the convenience of water carriage, it would be next to impossible to carry on any trade between very distant parts, as London and Calcutta. P. 28. Hence then the first improvements in industry would be made where this conveniency opens the whole world B ( 14 ) for a market. The inland parts of a country can fof d- long time have no other market than the country that lies round them ; the extent of their market therefore must be in proportion to the riches and populousness of that country. In North America the plantations have constantly followed the sea coast, or the banks of navi- gable rivers. Tlie nations first civilized were those round the Mediterranean sea, which is remarkable for the smoothness of its surface, and the number of its islands* It was long before the navigators attempted to pass the straits of Gibraltar. Of these nations Egypt seems to have been the first place cultivated and improved to a considerable degree, owing to the advantages of the Nile. P. 29—31. Improvements in Bengal and China are of great an* tiquity ; in the former are the Ganges, and several other great rivers, and in the Eastern provinces of China there are a vast number of canals communicating with each other. Neither the Egyptians, Indians, nor Chi- nese encourage foreign commerce; their opulence was derived from inland navigation. P. 31. All the ini-and parts of Africa, the antient Scythia, and the modern Siberia have always been in a barbae rous state, probably for want of navigation. Commerce cannot be carried on to any great extent by means of a river which runs into another territory before it Teaches the sea; hence the small importance of the Danube to the states of Bavaria, Austria, and Hungary. P. 32. \ ( 15 ) CHAP. IV. Of the origin of moneys THE division of labour being established, only a small part of a man's wants can be supplied by himself; the greater part are supplied by exchanging the surplus part of the produce of his own labour, for the produce of other men's labour ; thus every man becomes a mer- chant. At first this power of exchanging must have been clogged in its operations, for want of a proper me- dium of exchange. P. S3. Many different commodities have been employed for the purpose, as oxen among the Greeks ; salt in Abys- sinia ; shells in India ; dried cod in Newfoundland ; tobacco in Virginia ; sugar m some of our West India colonies ; and in d village in Scotland nails are made; use of. P. 34. Metals have at length been preferred almost every where ; they are less perishable than other commodi- ties ; and can be divided into a number of parts, and re- united again without loss. P. 35. Iron was the common instrument of commerce among the Spartans ; copper among the Romans ; gold and silver among all rich ar^d commercial nations. At first they were used in bars without any stamp, or coinage ; hence the trouble of weighing and assaying, which in gold are operation? of great nicety. To facihtate exchanges, and to prevent abuses, unproved countries have affixed a stamp upon certain quantities of particular metals ; hence the origin of coined money, and of public mints. P. 36. The first public stamps were to ascertain the fineness of the metal, as the i^resent sterling marks, P. 38. ( 16 ) In England, the Saxon kings wj ker price of commodities. P. 42. CHAP. y. Of the real and nominalprice of commodities, or ofthtip price in labour, and their price in money, EVERY man is rich or poor according to the degree in which he can afford to enjoy the necessaries of life \ only a small part of which can be supplied by a man's own labour; the greater part must be derived from the labour of other people, and which he must purchase, P. 43. The real price of every thing, is the toil and troublt of acquiring it. What is bought with money, is pur- chased by labour, as much as what we acquire by the toil of our own body. The money saves us the toil, and contains the value of a certain quantity of labour. Labour was the frst price, the original purchase money, that was paid for all things : by it all the wealth of the world was purchased, and its value is equal to the quantity of labour which it can command. P. 44. Wealth is power, i. e. it may afford a man the means of acquiring power; by giving him the command of other ( 18 > men's labour; and his fortune is greater or less accord-? ing to the quantity of other men's labour, which it en- fibles him to command. P. 45. Though labour be the real measure of the exchange* able value of all commodities, it is not that by which this value is estimated; owing to the difficulty of ascer- taining the propprtion between different quantities of labour, both as to the time spent, the hardship enduredj^ find the ingenuity exercised. P. 45. Every commodity therefore is compared and estimated with other commodities, rather than by labour ; being Vetter suited to the comprehension of the people ; th^ one being a plain object, the other an abstract notion. But when barter ceases, and money becomes an instiu- ment of copamerce, commodities are more frequently exchanged for money, than for other commodities. P.46. Gold and silver, however, vary in their value, accor- ding to the fertility or barrenness of the mines which are known at the time. The discovery of the mines of America, reduced, in the l6th century, the value of gold and silver in Europe, l-3d of what it had been be- fore, as it cost less labour to bring them to market ; but as gold is itself continually varying in its value, it can- not be an accurate measure of the value of other com- :^odities. E qual quatititia ofla bovr, at all t}}ll^±r_§nd±n all places, 7nai/ he said to be of equal value to. the lahom:er. As he must always lay down the same portion of his ease, his liberty and happiness. The price he pays, must therefore be the same, whatever commodities he receiver in return. Of these, his labour may sometimes purchase a greater, and sometimes a smaller quantity, but it is their value which varies, not that of the labour which purchases them. At all times and places, that is (Jear ( 19 ) w^iich is difficult to come at,or which it costs much la- bour to acquire, and that cheap which is to be had easily, or with very little labour. Labour therefore never varying in its vailue, is alone the ultimate and real standard by which the value of all commodities can, at all timesj and places, be estimated. It is their real price; money is their nominal price oily .P. 47. 48. To the eniployer labour seems to vary like other things, but in reality it is the goods which are dear or cheap, and not the labour. In this popular sense, therefore, labour may be said to have a real and a nominal price, ihe former consisting in the quantity of the necessaries andconvenienciesof life which are given for it, and the latier in the quantity of moneys The labourer is rich, or poor, in proportion to the real, not to the riominal'^nce of his labx)ur. This distinction is of much importance. The same r^a/ price is always of the &ame value; hut the same nominal price is sometimes of very d^erent 'Values, When an estate is sold, subject to a perpetual Tent of the same value, it must 120^ consist in a particular sum of money, which will vary ; 1st. As the quantity of metal varies in coins of the same denomination ; and, Sdly. According to the different values of equal quanti- ties of gold and silver at different times. The quantity of pure metal in coins, has, among all nations, been continually diminishing, which tends to diminish the value of money coin. The discovery of the coins in Ame- rica, also diminished the value of gold and silver ia Europe. Therefore money -rent is likely to diminish in. value, though it be paid in bullion of a certain standard. Rents reserved in corn have preserved their value bet- ter. Since the 18th of Elizabeth, money-rents have almost sunk to a fourth of their value ; though since die reign of Philip and Mary, the denomination of English coinhas undergone little or no alteration. P.51. ( 20 ) fiqual quantities of labour will^ ^t distant times, be 1j)urchased more nearly w^itb equal quantities of corn, than of gold and silvei ., or any other commodity; there- fore at distant times corn will be more nearly of the same real value, but not exactly so. The real price of labour is* more liberal in a society advancing to op«- knee, than in ohe^ standing stilly and in one that is standing still, than in one going backwards. Rent re- served in corn is liable only to the variations in the quantity of labour which a certain quantity of corn can ^purchase ; but a rent reserved in any other commodity, 'is liable not only to the variations in the quantity of labour which any particular quantity of corn can pur- fcbaise, but to the variations in the quantity of eorti %hich ^ah be purchased by any particular quantity of -that commodity. P. 52. Though the real value of corn rent varies much less from century to century, than that of a money rent, it varies much liiore from year to year. The money price of labour seems accommodated to the average price of corn, which is regulated by the value of silver ; and which seldom varies much from year to year. Labour then appears to be the only universal standard by which we can compare the values of different commodities at all times and in all places. P. 53. At distant places, there is no regular proportion be- tween the real, and the money price of commodities ; }*et the mercliant con.siders nothing but the money piice, or the difference of the quantity of silver for which he buys, and for which he is likely to sell again. At Canton, in China, half ah ounce of silver may com- inand a greater quantity of the necessaries of life, than an ounce in London; a commodity therefore which sells for half an ounce of silver in Canton, may be < ^1 ) dearer thaii a commodity which sells for an ounce m London. If a London merchant can buy at Canton for half an ounce of silver, a commodity which he can sell in London for an ounce, he gains one hundred per cent, by the bargain ; and this is what he wants. P. 55. As it is the nominal, or money price of goods which regulates almost the whole business of common life - where price is concerned, we cannot wonder that it should have been more attended to than the real price. In comparing the different real lvalues of a particular commodity, at different times and places, we must con- sider, not the quantities of silver for which it was sold, but ihe labour which those quantities of silver could have purchased. The current prices of labour at dis- tant times can scarcely ever be known; we must content ourselves with those of corn, which are more noticed by historians. P. 56. Commercial nations have found it convenient to coin metals into money, as gold, silver, and copper, one of which is considered as the peculiar measure of value ; and this preference has been generally given to the metal first in use. The Romans had nothing but copper money till within five years of the first Punic war ; copper therefore appears to have been always the mea- sure of value in that republic. P. 57. The Northern nations seem to have had silver from the beginning of their settlements. In England there were silver coins in the time of the Saxons ; but little gold coined till the time of Edward III. nor any copper till that of James I. Hence our accounts are kept in pounds sterling (silver) not in guineas. P. 58. Originally, in all countries, a legal tender could be made only in the coin of that me^«/ which was consi- C ( 22 ) ^ dered as tlie measure of value. In England, gold was not considered as a legal tender for a long time after it was coined into money, and the proportion between the values of gold and silver money, was left to be settled hy the market ; and copper at present is not a legal ten- der, except in the change for the smaller stiver coins. P. 59. The proportion between their respective values, as for example, between a guinea and 21 shillings is .now settled by law ; hence the distinction between the me* tal which is standard, and that which is not the stan-* dard, becomes little more than a nominal distinction. In consequence of any change in this regulated pro- portion, this distinction becomes something more than nominal* If the value of a guinea were reduced to £0 shilhngs, or raised to 22 shillings, payments might still be made for debts, in silver as before, but would re- quire different quantities of gold. Silver would appear to measure the value of gold, but gold would not appear to measure the value of silver. This difference would be owing to the custom of keeping accounts, and of ex- pressing the amount of all great and small sums rather in silver, than in gold money. A note for 50 guinea$ would be payable with 50 guineas ; and if the custom of keeping accounts, and of expressing promissory notes in this manner, should become general, gold, and not silver, would be the metal peculiarly the measure of value. P. 60* In realiti/ the value of the most precious metal regu- lates the value of the whole coin. Twelve copper pence, which, before it is coined, is worth but seven-pence in silver, will in the market fetch one shilling ; and 21 defaced shillings are equivalent to a guinea. P* 61, In the English mint a pound weight of gold is coined ( 23 ) into 44| guineas. An ounce of such gold is therefore worth 31. 17s. lO^d. Before the reformation of the gold coin, the price of standard gold bullion had been from 31. 18s. to 4l. an ounce ; since that time the mar^ icet price seldom exceeds 3l. 17s. 7d. an ounce. The late reformation of the gold coin has therefore raised the value of gold and silver coin. In the JEnglisb mint a pound weight of standard sil- ver is coined into 62 shillings. Five shillings and two- pence an ounce is the mint price of silver. Before the reformation of the gqld coin, the market price for stan- dard silver was from 5s. 4d. to 5s. 8d. per ounce ; but since it has been from 5s. 3d. to 5s. 5d. an ounce, silver bullion has not fallen so low as the mint price. P. 6a. 3. In English coins, copper is rated very much above its real value, and silver is rated somewhat below it. In |he market of Europe, in the French and Dutch coin, an ounce of fine gold exchanges for about 14 ounces 6f ^ne silver. Jn the English coin it exchanges for about 15 ounces, that is for more silver than it is wojth, ac- cording to the comnapn estimation of Europe, But as the price of copper in bars, even in England, is not raised by the high price of copper coin, so the price of silver in buUioq is pot sunk by the low rate of silver \vi English coin, P. 64. Upon the reformation of the silver coin in the reign of William III. the price of silver bullion continued to be somewhat above the mint price,(occasioned, as Mr. Locke thought, by the permission granted of exporting silver bullion, but not coin), which would probab'y be the case now, were silver coin brought as near its i&tandard weight as gold. In which case there would C 2 i ^4 ) fee a profit in melting it down; an inconvenience tvhich would require some remedy. P. 64. 5. The inconveniency would be less, if silver ,were rated in the coin as much above its proper proportion to gold, as it is at present below it; provided that silv ver should not be a legal tender for more than the change of a guinea. No creditor would in that case be cheated in conssquence of the high valuation of silver in coin. Bankers onlt/ would suffer by this regu* lation, and to their creditors it would be a considerable {security. It may be thought that 3l. 17s, lO^d. con- taining only an ounce, should not purchase more than one ounce of bullion. But coin is more convenient than bullion ; and the time it takes in coining is equi- valent to a small duty, which renders coin more valu- able than bulHon. P. QQ, A small duty upon coinage might increase the supe^ riority of the metals in coinage, above an equal quan- tity of them in bullion, which would prevent the melt- ing down the coin, and would discourage its exporta- tion ; and what was exported would return of its own accord. This is the case in France, where 8 percent. is charged On coinage. P. 67. The occasional fluctuations in the market price of gold and silver bullion arise from the same causes as the like fluctuations in that of all other commodities. From the loss of these metals by land and sea ; — from the continual waste of them— and from the wear and tear of the coin, a continual importation is required, which merchant importers will endeavour to make a good ac- count of. P. 68. Money is more or less an accurate measure of value, according as the current coin is more or less exactly agreeable to its standard. In England 44f guineas are < 25 ) contained in 'a pound of standard gold, that Is in 11- (bunceg of pure gold, and one of alloy. But if by wear they contain less than a 3b. weight of standard gold, )thfe meamrt of value becomes liable to the same sort of luncertainty to which other weights, and measures are e:?cposed. The merchant will therefore atlju«it the priiqeof his goods, not to wbgX those weights and mea- sures ought to be, but to what, he finds by experience they actually are. By the money price of goods, is to be understood the quantity of pure gold or silver for whicii th^y are sold without regard to the denomination of coin. In the |;inie of Edward 1. 6s. 8d. was con- sidered as the same money prince with a pound sterling *t present, because it contained the same quantity of ;pure silver. V.^^, CHAP.VL Of the component parts of the price of commodities,. IN the early state of society, the propo rtion b etweea j;he quantities of labour, n ecessary for acquiring diffe- rent objects, seems to be the ^Ij ^circumstance which can affo rd any rulejbrexchangi^n^ tl^em for qne ano- ther. Among hunters, if it requires twice the labour to kill a beaver, which it does to kill a deer, one beaver should be worth ttoo deer* What is tl^e produce of two days labour will be worth double the produce of one (day's labour. But allowance must be made for that species of labour which is more severe than another ; ^or for that which requires an uncommon degree of ( 26 ) _ dexterity and ingenuity, because the talents necessar/ to the performance of the latter, cannot be acquired without great apphcation. P. 70. In this state of things, the whole produce of la-.- bour, belongs to the labourer, and the quantity of labour employed in acquiring afiy commodity must re- gulate the quantity of labour which it ought to pur- phase. P. 71. When stock has acc3mulated in the hands of parti- cular persons, some will naturally employ it in setting 10 work industrious people, in order to make a profit by their work. In exchanging the complete mamtfac^ ture, over and above the price of the materials, and the wages of the workmen, there must be the profits to the undertaker of the work, who hazards his stock in this adventure. The value added by the workmen to the materials, is, first, the zvases, and seco ndly, the profits of the employ ei'j which must be in proportion to the extent pfhi§ stock. P. 72. The profits of stock cannot be resolved into the wages of the labour j of inspection and direction ; since this labour may be nearly equal in a manufactory whose annual stock does not amount to lOOOl. per annum, as in another where 70001. is employed ; the profit of the former at lOl. percent being lOOl. and that of the other 700l. In great works, the labour of inspection is committed to some principal clerk ; bis wfiges, ex- press the value of this labour, although regard is commonly had to the trust repose^ in him, as well as to his labour and §kiil : but this never bears any propor- tion to the capital, of which he has the management ; and the owner though discharged of all the labour, ex- pects that his profits should bear a regular proportion to ( 27 ) hrt capital* In the price of commodities,, therefbre^thft profits of stock constitute u component part, different from the wages of labour, and regulated by different principles. P. 73. Iii this state of things thef Mole produce of labour does not belong to the labourer ; he must share it with the owner of the stock which employs him; As soon as the land in any country becomes private property^ the landlords demand a price for its natural produce; consequently^ what formerly cost the labourer only the trouble of gatherings has a price fixed on it^ and he must give his landlord a portion of what his la- bour collects or produces, which constitutes the rent of land, and is a third component part. P. 74. The real value of all the different compo nent parts of price, is measured by the quantity of labour which they can command. Labour measures the value, not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit. The price of every commodity finally resolves itself into some OY all oi those three parts. In the price of corn, one part pays the wages and maintenance of labourers and cattle, another pays the rent to the landlord, and a third pays the profit of the farmer. A fourth part, it may be thought^ perhaps, is necessary for replacing the stock : but this is made up of the same tiiree parts : as the price of a horse for instance, consists in the rent of the land upon which he is reared, the la- bour of rearing him, and the profits upon the rent, and Jabour. P. 75. In the price of flour, there must be added to the price ef corn, the profits of the miller^ and the wages of his ( ^8 ) Uertants ; ih that of ttre baker, his profits and the wageal of his servants ; and in the price of both, ihe labour of carriage from the farmer to the miller, and from him to the baker; P. 76. The price of A'dX resolves itself into the same three parts as that of corn; in the price of linenj We must add the wages' of the flax-dresser, spinner, weaver^ &c. with the profits of their employers : consequently iri the progress of the manufactures, that part of price which resolves itself into zvltges and prqfifs comes to be greater in proportion, to that which resolves itself into rent. Not only the number of profits in- crease, but every subsequent profit is greater than the former, because the capital employed must be grea- ter. P. 76. The price of some commodities resolves itself into two parts, as that of sea-fish ; one part pays the labour of the fisherman, and the other the profits of the capi- tal. Rent seldom makes a part, but in salmon fishery it does. Some persons make atrade in gathering Scotch pebbles, the price of which is altogether the zmges of their labour. P. 77. As the price of every particular commodity, taken separately, resolves itself into some, or all of those three parts, so does that of all ihe commodities which com- pose the annual labour of every country. Wages, 1 profit, and rent are the three original sources of all ^ revenue, as well as of all exchangeable value. Who- ever derives a revenue from a fund which is his own, must draw it from his labour, from bis stock, or from his land. That derived from labour is called wages; I that derived from stock h ctiWed profit, if he employs it himself; if ient to another it is called interest, iuthis d 29 ;) Case part of the profit must go to the ho f rower, who takes the risk and labour, and part to the lender, who affords him the opportunity of making this profit. The revenue which proceeds from land is called rent. All taxes, salaries, and pensions, are derived from some of these three original sources of revenue. P. 78. 9. When these three sources of revenue belong to one man, they are sometimes confounded. A gentleman farmer, should, after paying the expences of cultiva- tion, gain the rent of the landlord, and the profit of the farmer ; he is apt to denominate the whole, gain. Most of the West Indian planters are in this situation. P. 80. Common farmers seldom employ any overseer ; and even do much of the labour themselves : besides then the common profits, they should receive wages as labourers, and overseers ; in this case, zoages are often confounded with profit. The same may be said of an independent manufacturer, and of a gardener, who cul- tivates his own garden with his own hands. P. 80. As in every civilized country, the value of few com- modities arises from labour only, rent and profit con- tribute largely to most of them, so the annual produce of its labour will be always sufiicient to purchase a greater quantity of labour than what was employed in bringing that produce to market. If the society was to employ all the labour which it can annually purchase, the produce of every succeeding year would be of vastly greater value than that of the foregoing. But no coun- try en^ploy sal I its annual produce in maintaining the industrious. The idle every where consunae a great D v( so ) (part of it, and according to the proportion in which it is divided between those two orders, its average value must increase, or diminish, or continue the same from one year to another. P. 8 1 . CHAP. VII. Of the natural, and market price of commodities. THERE is in every society an average rate of wages, and profi t in every different employment of labour and stock; which is regulated by the circumstances of the society ; viz. their advancing, stationary/ or declining state ;— or by the nature of the employment. There is also an average rate of rent, regulated by the cir- cumstances of the society, or by the fertility of the land. These may be called t he natural rates of w ases^ profit, and rent. When the price of a commodity is neither more nor less than what is sufficient to pay the rent of the land, the xvages of labour, and the profits of stock, it may be called the natural price ; it is then sold for precisely its worth, or what it really cost the person who brings it to market. If he sells it at a price which does not allow him the average rate of profit iu his neighbour- hood, he is a loser by the trade ; since by employing his stock some other way he might have made that profit. His profit besides, is his revenue ; unless there- fore his goods yield him this profit, they do not repay bimwhat they cost him. Though the price which leaves this profit is not always the lowest for which he ( 31 ) could sell, yet it is the lowest at which he is likely to sell . for any considerable time. P. 82. 3. The ac^^g/pr/ce of any c^niixiodit ^ is called its mar ^ ket price, and may be above or below its natural price . The market price of a commodity is regulated by the quantitt/ actually brought to market and the demand of those who are willing to pay the natural price , which. demand may be called the effectual demand, and is different from the absolute demand. When the quan- tity falls short of the effectual demand, a competition must take place, which will be more, or less eager, ac- cording as the commodity is of more or less impor- tance. When the quantity exceeds the effectual de- mand, it cannot all be sold to those willing to pay the natural price ; which must reduce the price of the , whole, in proportion to the excess of the commodity, or as it is n^ore or less important to get immediately rid of it. But when the quantity is just sufficient to supply • the effectual demand, then the market price is the same j ^s the natural price. P^34. 5. The quantity of ^very commodity suits itself to the rffectual demand. It is the interest of the sellers, that it should not exceed this ; and of the people at large, that it should never fall short of that demand. And if at any time it exceeds, or fall short of the effectual demand, by the exertions of landlords, labourers, or those wbp employ them, it will soon he brought to its natural price, which may be termed its central price, to which the prices of all commodities are grs^vitating, P. 86. The whole quantity of industry annually employed, aims at supplying the effectual demand. Put in some D 3 \\ ( 3^ ) employments, the same quantity of industry will in dif- ferent years produce different quant?l'tie9 of commodi- ties, as in the case of cor?i, wine, hop%, &c. But the same number of spinners and weavers will produce equal quantities of cloth. In th-e one species of in- dustry, the average produce must be suited to the ef- i fectual demand^ consequently the market price will be subject to great fluctuations. In the other species of industry the prodiice can always be suited tq the effec- tual demand ; the price of this species of commodity vJlries only with the variations of the demand ; but that of the other, with the variations of the demand and the quantity brought to market. Temporary flue-' tuations in the market price fall chiefly upon those parti of price which resolve themselves into wages and profit, not that part which resolves itself into rent; because that is generally adjusted according to the average price of the produce. Such fluctuations affect the value either of wages or profit, according as the market is over or under stocked with commodities or labour. A public mourning raises the price of black cloth, but not the wages of the weavers^ It raises the wages of journeymen tayJors, but sinks the price of coloured cloths, and the wages ofthe people employed in prepar- ing them. P. 87—9. When by an increase in the effectual demand, the market price is a good deal above the natural price, those interested in this change are careful to conceal it, to prevent new rivals employing their stocks in the same way. Secrets of this kind can seldom be long kept, nor the extraordinary profits be long retained after the igecret is known. gecrets in manufactures may be longer kept than ( S3 > those in trade. A dyer may find materials to produce ja particular colour at half the price of those commonly pade use of ; with care he may keep it as long as he lives, and leave it to his posterity. His extraordinary gains arise from the high price of his labour ; and may be called extraordinary profiU, P. 90. Some natural productions require a particular soil, so, that all the land in the country may. not produce su(!i-r. cient to supply the effectual demandy consequently it will be sold above its natural "^va^e, and that part pf it which resolves itself into rent will be paid above its natural rate; such are some of the vineyards in France. Enhancements of the market price depend-4 ing upon natural causes, may operate for ever^ P. 91. A MONOPOLY has the same effect as a secret in trade. The monopolists by never supplying the ef- fectual demand, sell their commodities above the natu- ral price, and raise their emoluments both in wages and profit above their natural rate. The price of mono'poly is the highest which can be got ; the natura l \ price is the lowest which, on an averao:fex.aiLii eJLaken. The exclusive privileges of corporations, statutes of apprenticeship, and all those laws which restrain, in particular employments, the competition to a smaller number than might, otherwise, go into them, have the same tendency. They are a sort of monopoly, which may for ages, keep up the market price of com- modities, above the natural price. Though the mar^ ket price of any commodity may continue long above; it cannot continue long helozo its natural price ; as the iosing party would immediately withdraw either so much land, labour, or stock, from being employed about ( 34 ) it, that the quantity brought to market should be only sufficient to supply the efFectual demand. The statutes of apprenticeship, and corporation laws, enable the workman sometimes to raise his wages above their natural rate ; at other times oblige him to let them down below it. As they exclude many peo- ple from his employment, they also exclude him from many other employments. The effect in raising the wages may endure for centuries ; but that of lowering them can only last the lives of some of the workmen bred to the business during its prosperity ; when they are gone, the number, if there be no restraint^ will suit itself to the efFectual demand. P. 93. 4. The natural price of a commodity, varies with the natural rate o^ its component parts ; which varies ac- according to the riches or poverty of the society. The causes of these variations will be explained in the fouif following chapters. P, ^5, CHAP. VIII. Of the wa^es of labour. ^ The produce of labour, constitutes hs jiatural wsiges. In the original state of things, the whole produce be- longs to the labourer. He has neither landlord, nor master. Had this state continued, the wages would have increased, with all the improvements to which the division of labour gives occasion, and all things would have become cheaper, in proportion as they were pro* duced by smaller quantities of labour. P. ^)6, Though all things would have become cheaper in re- aliti/, in appearance m3iny things might have becoma ( 35 ) (learer that! before^ or have been exchanged for a grea- ter quantity of goods. If, for example, in the greater part of employments, the productive powers of labour had been improved ten-fold, and in some other only two-fold, it is evident that ten times the quantity of work in the former, must be given for only double the original quantity in the latter ; which would make it appear five times dearer than before, though in reality it w^ould be twice as cheap. P. 97* The state of things in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first appropriation of land, and the accumulation of stock. When land becomes private property^ the landlord demands his share of the produce, as rent. The maintenance of the labourer is also advanced out of the stock of the farmer, whose profit makes a se- cond deduction from the produce of the labourer which is employed upon land. The produce of almost all other labour is liable to like deductions of profit. In manufactures, workmen stand in need of a mas- ter to advance them materials, and wages, who shares in the produce of their labour. It sometimes happens that a workman is so far independent as to purchase materials, and maintain himself till it is completed ; he then enjoys the whole produce of his labour, in- cluding the profits of stock, and wages of labour. P. 98. The common wages of labour, depend upon the agreement made between the parties, whose interests are nOt the same. The workmen desire to get as much as possible ; the masters to give as little as possible ; the former are disposed to combine in order to raise ; the latter in order to lower, the wages of labour. P. 99« o 6 ) The masters being fewer in number> more easily combine ; the law does not forbid their combinations while it prohibits those of the workmen. Besides, the masters can hold out the longest ; though the workman may be as necessary to the master, as his master is to him, the necessity is not so immediate. P. 100. The combinations of masters though rarely heard of, are not less frequent than those of workmen. There is almost every where a tacit combination among themi not to raise the wages of labour, arid because it is usual nobody hears of it. And sometimes they combine to sink the wages of labour, which is done with the utmost secrecy; and when the workmen yield without resist- ance, it is not known to other people. The combina- tions of workmen whether under the pretence of the high price of provisions, or of the great profits made by their masters, are attended with clamour and violence; against which, the assistance of the magistrate is de- manded. The workmen accordingly seldom derive any advantage from those combinations ; being ob- liged, either from the power of the magistrate, — the steadiness of the masters,— or their own indigence, to submit. P. 101. There is a ratehowever, below which, it seems impossible to reduce the ordinary wages of labour. y^ A man must live by his labour. His wages must do more ; they must enable hitn to bring np tv^o children. But as half the children born, die before the age of man- hood, the wages of the labourer must be sufficient to enable him to attempt to rear four children, the main- tenance of which may be equal to that of one man. P. 102. Circumstances, sometimes, enable the labourer to ( 87 ) raise his wages above this rate, which is the lorvest eon- Bistent with humanity. When the demand For thos^ who Hve by wages is increasing, there will be a compe- tition among the masters to get workmen. This de- ntand will be in proportion to the fund s destined for the r I . Wh w »!"".> » "— Ill " " I "J IIII' K I . J » ■' ■ ■ ») ■ » ■ ' ■" ■ II ' """ payment of wa^j^ which are of two kinds. (I.) The reve nue which is more than necessary for the mainte - nance ; and, (2.) The stock, which is more than nec es* IKiryfbr the ^mployiifeent of their maste rs. A man who has niore revenue than sufficient to maintain his i family, employs the surplus in maintaining one or more j menial servants. Thus also an independent workman ■ will with his surplus stock, employ journeymen, in I order to make a profit by their work. The demand ; therefore for those who live by wages, increases with j the increase of the revenue and stock of every country, j or with the increase of national wealth. P. 103. 4. It is not in the richest countries, but in the most ^ri ving, that the wages of labour are hi ghes t. Eng- land is richer than America, but the wages of labour are higher in the latter than in the former. The price of provisions is much lower in America than in England.* A dearth has never been known there. The money price being higher there than here, the real price, must be higher in a still greater proportion. Though Engw land therefore be the richer, America is the most thri- Vincr. P. 105. The most decisive mark of the prosperity of any coun* try is the increase of the number of its inhabitants. In Europe they are not doubled in 500 years, but in America they double in 25 years : and this increase ♦ This was written in 1773. E ( 53 ) is found to be principally owing to the great multi« plication of the species. A numerous family is a source of opulence to the parents ; the labour of each child is computed to be worth a hundred pounds clear gain to them. A young widow with four or five children is frequently courted as a sort of fortune. This value of children is the greatest of all encouragements to early marriage; the increase occasioned by such early mar* riages is not sufficient to supply the continual increasing demand for labourers. P. 106* When the wealth of a country has been long stati(m->' ari/, the wages of labour will not be high. The reve-* nue and stock may be of the greatest extent; but if they have been long so, an increase of labourers would not be wanted ; the number would even multiply beyond their employment, and the wages be reduced to the lowest rate which is consistent with humanity^ China, the richest country in the world, is perhaps the worst for a labourer to bring up a family in. He is contented with a small quantity of rice for the labour of a whole day. The artificer there, runs through the streets beg* ging employment ; and many thousand families live in little fishing boats, whose subsistence is the refuse thrown from the European ships. Marriage in China is encouraged not by the value of children, but by the liberty of destroying them. Yet China does not seem to go backwards either in its number of inhabitants, or in the cultivation of its lands ; consequently the an- nual labour, and the funds destined to maintain it, must be nearly the same. P. 107. But in a country where the funds destined for the maintenanceof labour were sensibly decaying, the de- mand for servants and labourers would be less every year, ^any in the superior classes^ would be glad of ( 39 ) employment in tlielowest,which mustreduce thewagea of labour to tlie most miserable subsistence of the la- bourer, and multitudes must either starve, or gain a subsistence by begging, or by the perpetration of en- ormities. Famine and mortality would eventually re- duce the inhabitants to that number wliich could be maintained by the revenue and stock left, and which had escaped the tyranny or calamity which had de- stroy the rest. Such is the present state of Bengal, and other English settlement^ in the East Indies, P. 109. The liberal reward of labour is the effect, and also the natural symptom of increasing national wealth. The scanty maintenance of the labouring poor is the natural symptom that things are at a stand ; and their starving condition, that they are going backwards. p. Ul. In Great Britain the wages of labour seem to be more than what is precisely necessary to enable the labourer to bring up a family. For, (1.) There is^ distinction between summ er and wint er wages. Summer wagea being highest ; but the expences of a family are grea- test in winter. Wages, therefore, seem to be regulated by the quantity of work done, and not by the necessities of the workmen. (2.) J^'lj^^JJI^^ges of labour do not fluc- tuate with the price of provisions, which must be the case if they were no more than necessary to the main- tenance of the labourer. (3.) As the price of provi- sions varies more from year to year than the wages of labour, ^othe^ wages of labour vary more from place to place than the price of provision. Things sold by re- tail are as cheap in towns,as the country, but the wages of labour aie l-4th or l-5th higher in a great town than E 12 ( 46 ) at a few miles distance. Tbi&difference of prices is not sufficient lo transport a man from one place to another, tjiough it, would the most bulky commodiiiesj from one Cp(} ot t\xe kingdom to the other, so as to reduce tliem to a level. (4.) The variations in the price of labour pot only d,o not correspond either in place or time with those m ihe price of provi>ionSj but they are frequently quite opposite. Grain, the food of the common peo- ple, is deiarer in Sicotland than in England ; but thf priie of labour. is dearer in England than in Scotland. If then I be labouring poor can maintain their families ' in one part of the kingdom, they must live in affluence in the other. During the last century, grain was dear- er both in Great Britain and France than during the present ; but labour was much cheaper, owing to the greater demand for labourers, occasioned by the im- provements in agriculture and manufactures. Lord Hales, in the reign of Charles II. computes the neces^ sary expences of a labouring family of six persons at 261. s^ year, which, if they cannot earn, they must make up by begging or stealing : and Mr. King, in l688,pgrees very nearly with Lord Hales : since which, both the income and expences of such families have consider- ably increased ; but to what amount it is not easy to de- termine, unless where wages are regulated by laws ; and experience shews that the lawnever regulates them pro- perly. P. Ill— 117. The real recompence of labour has during the pre- sent century, increased in a greater proportion than its money price. For not only grain is become somewhat cheaper, but potatoes do not cost half the price they did sixty years ago; the same may be said of garden stuff in general. Formerly apples and onions were imported from Flanders. Clothing and furniture are « 41 ) ^Iso dieaper. Sdap, salt, candles, leather, and Kquors are much dearer, owing to the taxes laid upon them j but the increase of price in these does not conipensate for the diminution of the price in other articles. The luxury also which extends itself to the lower ranks,may convince us that the re?il recompence for labour has augmented. P. 118. This improvement in the circumstances of the lower ranks of the people is certainly an advantage to the whole; since they make up the greater part of every society ; and no society can be happy, of which thq greater part of the members are poor and miserable. Besides, equity requires, that they who maintain tb(? whole body of the people, should be themselves tolera- bly well maintained. P. II9. Poverty discourages n^arriage, but seems favourable jko generation. Barrenness is veiy rare among those of inferior station. Luxury inffanaes the passions, whil^ it weakens the powers of generation. Poverty is ex- tremely unfavourable to the rearing of children. In the Highlands of Scotland, mothers of twenty children frequently have not two alive. Among the poor in gome places, one half the children born,die before they ?ire four years of age, and in almost all places, before they are nine or ten ; and in parish charities the mortal- Ttty is still greater. P. 1 19. 20. Evejy species of animals naturally multiplies in pro- portion to the means of subsistence. The scantiness of •ubsistence among the inferior ranks of people, sets li- mits to the multiplication of the human species, by de- stroying part of their children. The liberal reward of labour extends those limits in the proportion which the Remand for labour requires. If this demand be conti^ dually increasing^ marriage is encouraged. Thus does ( 42 ) the demand for men regulate the production of men ; in America it renders it rapidly progressive ; in Europe it is slow and gradual, and in China it is altogether sta- tionary, p. J2l. The wear and tear of a servant, being at the master's expence, the wages paid to journeymen must be such as may enable them to continue the race, according as the circumstances of the society require. The wear and tear of a free servant is less expence to the master, than that of a slave. The fund destined for replacing the latter is man^jged by pn overseer ; who is likely to fall in with the luxury of the rich ; that destined fqr the office with regard to the ffee man, is managed by the free maii himself, who \yill use it with strict frugality. Experience also teaches, that the yrork performed by freemen comes cheaper than that performed by slaves. The liberal reward of labour, therefore;, is the effect of increasmg wealth, and the cau^e pf increasing po- pulation. The con4ition of the labouring poor seem^ the happiest in the j^^'ogressive state ; it is hard in the stationari/, and miserable in the declining Sstate, P. 122. 3. The liberal reward of labour increases industry. A plentiful subsistence increases bodily strength, and the hope of bettering his condition animates the labourer to exert that strength tq the utmost. Where wages are high, the workmen are more diligent than where they are low ; in some cases they are apt to over-work themselves. Soldiers (by no means the most industri- ous set of people) when liberally paid for their labour often hurt their health by expessive work. Exces- sive application is frequently the cause of idleness. Relaxation from great labour is the call of nature, which^ if not complied with, is attended with dangerous ( 43 ) coil sequences. Masters, therefore, have frequently o'c- casiou rather to moderate, than to anunate the appli- cation of their men ; perhaps also the man who works moderately, but constantly, executes the greatest quan- tity. P. 124. 5i In cheap years, it is pretended, that Workmen are more idle; in dear ones more industrious, than ordinary. This is not generally the case ; besides years of dearth^ are to, the common people, years of sickness and morta- lity. In years of plenty, servants frequently trust to their industly for subsistence. Masters are also encou- raged by the increase of their funds to employ a grea- ter number of workmen, which raises the price of la- bour in cheap years. In years of scarcity people are Imager to return to service ; but the high price of provi- sions disposes masters rather to diminish, than increase the number of their servants. In such times, poor in- dependent workmen frequently are obliged to become journeymen for subsistence ; hence wages sink in dear years. Masters, therefore, make better bargains with their servants, and find them more humble and depen- dent in times of scarcity than of plenty ; hence they commend the former as more favourable to industry : moreover the profits of masters are greater in dear, than in cheap years. P. 127. A French Author of great knowledge has shewnj^ that, in the Woollen, Silk, and Linen manufactures, more work is done in cheap than in dear years. It does not appear that there is any sensible difference in these respects in the Scotch Linen, or Yorkshire Woollen manufactures. The produce of all manufactures de* pends upon the demand in the countries where they are consumed ;— upon peace and war; — and upon rival manufactures. A great patt of the extraordinary work i u 1 6f cJieap years never enters the public registers. The men who leave their masters become independent work- men. The women return to their parents and spin and make cloaths for themselves and families ; and the produce of their labour makes no figure in the ptfblic registers. P. 129. The mone y price of labouf i^ feg nlated^ by the de- jEnand for Idbour ;>»^ffn d by the price of the necessarie s and conveniencies of life. The demand for labour de- termines the quantity of the necessaries of life which must be given to the labourer ; and the money price is determined by what is requisite for purchasing this quantity. Though the money price of labour is some- times high where the price of provisions is low, it Would be still higher if the price of proTisions was higbi P. 130. The increase in the wages of labour, increases the price of many commodities, by increasing that part of it which resolves itself into wages, and thus tends to diminish their consumption both at home and abroad. The same Cause which raises the wages? of labour, tends to increase its productive powers. The owner of stock endeavours to make such a division of employment as shall produce the greatest quantity of work. For the same reason he supplies his workmen with machinery : and what takes place in a particular work-shop, takes place in society. The greater the number of labourers, the more they divide themselves into different classes of employment. Hence commodities aru produced by so much less labour, that the increase of its price is more than compensated by the diminution of its quan* tity. P. 132. ( .45 ) CHAP. IS. Of the Profits of Stoch The rise and fall in the profits of stock depend likd* wise «pon the increasing or declining state of wealth of the society. An increase of stock raises wages, but tends to lower profit. The stocks of several persons being turned into the same trade, produce competitioo wbich tend^ to sink the profit f the same holds in society at large. P. 133. Projit is so fluctuating, and depends upon so many -cii'ciimstances as to make it very diffidolt, almost im»» po9sible>io ascertain its rate even for a single year. The best notion of the profits of st ocks may be formed^rom the in terestofmoj]Mgy .----Where much can be made by money, much will be given for the use of it. P. 134. In the reigns of Henry VHI. and Elizabeth, 10. per cent, was legal interest. By the 21 of James I. it was re- stricted to 8 per cent. After the restoration it was re- duced to 6 per cent ; and by the 12 of Anne to 5 per cent. These regulationsybZ/oayec? the market rate of in- terest. Since which, interest has been 3f, 4, and 4{, per cent From the time of Henry VHI. the wealth of the country has been advancing, the wages of labour increasing, and the profits of stock diminishing.P. 135. Tra3e in a large town requires more stock, than in a irillage ; but owing to the number of competitors, the profits are less, and wages of labour higher. P. 136. ^ In Scotland, though the legal rate of interest is the same as in England, the market fate is higher. Trade can be carried on with smaller stock, and the wages of ( 4G ) labour are lower ; the rate of profit therefore must fee' greater. The country is not^onlypoorer, but is not ad^ vancing so fast to a better condition. P. 137. The market rate of interest h higher in France thani in England ; the profits of trade aregreater there, than here, the wages of laBour lower, and the condition of the lower people much worse. P. 139. Holland in proportion to its extent is a richer coun* try than England; the rate of interest is much loweo the wages of labour higher, and they trade upon lower profits than any people in Europe. The dimia3Jli25^^ |)rofits is the naturaljeffec tcfprospe ritjr, or af a greater st ock l ^eiff^j^mployed. The great propeity^^wTiich the Dutch possess in the French and English Funds, the sums they lend to private people in countries where in- terest is higlier, denote that their stock has increased feeyond what they can profitably employ in trade. P. 139- V In America the wages of labour, th^ interest of mo- ney, and the profits of stock £Ere higher than in En- gland. High wagesy and great profits seldom go loge- ■ther, except in new'"colonies. In a new colony thefels more land"than stock. The most fertile on^y is cultiva*- ted, and that is often purchased at a price below the va- lue of its natural produce; stock thus employed wiM yield a large profit, afford to pay i large interest, and enable the planter to reward his labourers liberally, P. 14a. As the colony increases, the profits diminish. Infe- jrior parts come under cultivation, which yield less pro- -fit; but the demand for labour, consequently the wages increase, wirh the increase of stock. A great stock with small profits, increases faster than the small stock with great profits. Money makes money. P. 141. ( 47 ) The acquisition of new territory, or of new branches of trade, may raise the profits of stock, and with them the interest of money, evgnin a country fast advancing to riches. The accession of territory and trade to this country caused the rale of interest to be raised nearly 1 per cent, the old stock not being sufticient to carry on the new business. P. 142. The diminution of the capital stock of the society, low^s the wages pf labour, but raises the profits, and interest of money. In the East Indies the wages of la- bour are low, while the profits are immense; 40, 50, and even 60 per cent, is frequently given for money there. Such was the case in the provinces belonging to Rome, before the fall of the republic. Brutus is said to have re- ceived 48 per cent, interest in Cypius. P. 143. In a country which had acquired its full complement of riches, wages and profits would be low. For being fully peopled, there would be no competition for labour- ers : antl being stocked in full proportion to the busi- ness, the competition would be as great, consequently the profits as low as possible, China seems to have been long stationary, owing more to its peculiar laws, than to the nature of its cli- mate and situation. There the rich only enjoy protec- tion, while the poor have no security. Hence the rich have a monopoly of trade, make large profits, and are said to give 1^ per cent, interest. P. 144. A defect in the law may sometinies raise the rate of interest. As when the law does not inforce the perfor- mance of contracts, the lender will require interest pro^ portional to the risque of losing the principal : or when the law prohibits interest',its rate must be suitable to the ( 4a ) danger of evading the law. Hence the high rate of in? terest among the Mahometants. P. 145. The lowest rate of profit, must be more than stifficient to compensate the losses to which the eniployment of stock is exposed. The lowest rate of interest must more' than compensate the occasional losses to which lending is exposed. P. 146. In a country wher^ there was accumulated the great- est quantity of stock that could be employed, interest must be so low, that none but very rich persons conic} live on it. Hence almost every man mmy engage in business. Holland is approaching to this §ti^te. P. 147. The highest ordinary rate of profit, may he only suf-^ ficient to pay the labour of preparing and bringing to inarket; for the workman must be supported while he i$ about his work, but the landlord may not always be paid^ such may be the state of things in Bengal. P. 147. The market rate of interest ought to vary, as profit varies. In Great Britain double interest i? reckoned good profit among merchants. Where the usual cleajr profit is 8 or 10 per cent, one half may go for interest of jnoney ; but if it was much lower, one half could not be afforded; and if the profits were much higher, moro might be allowed for interest. P. 148. I In countries advancing to riches, the low rate of pro- Ik may compensate the high wages of labour. High profits tend more to raise the price of work, than high wages. In the former case the price is advanced in geoit jnetrical proportion^ but in tjie latter pnly in arithme«5 ^ CHAP. X. Qfthi wages and profit in the different employments of Labour and Stock* THE advantages and disadvantage^ pf different em- ployments, in the same peighbourhood, must be equal, or tepding to equality ; for if there were any employe pient more or less advantageous than the rest, so many people would proud into jt in the one case, and so many ivou Id desert it in the other, a^ wopld soon bring it to ^he level of other employment?. This must be the case in a society where things are left to follow their natural course. Pecmiarif wage^ and profits are, in Europe, different in different employments ; wfiicb arises partly from cer-r tain circumstances in the employments ; — and partly from the pplicy of Europe, which no where ieave^ ^ings at perfect liberty. P. 16 U PART I. Inequalities arising from the nafufe of the employmenti themselves. I. The wages of labour vary with the agreeablenesi or di sagreeable ness of the employments themselves. A journeymantaylor earns less then a collier. His work is not so dirty, is less dangerous, is carried on in day* Hght and above ground. Honour makes a great part of the reward of all honourable professions : Disgrace ha^ the contrary effect. In the advanced state of society^ (50 ) none but very poor people follow, as a trade, what others pursue as a pastime. This may be illustrated in the case of fishermen^ and poachers; and where nopoa-* chers exist, the licensed hunter is not in a much better condition. The natural taste for those employments makes more people follow them than can live comfort- ably by them. The s^me jif jpjiipaAt^ces^^fl^ thej^ro- j^ts of stock : Inn-keeping is neither agreeable, nor very creditable ; but fevy common trades are so profitable. P. 152. II. The wages of labour vary with the ease, or diffi- c ulty of learnin g the business. — The work which a man learns to perform must, besides the wages of labour, re- place the expences of his education ; and this too in a reasonable time. Hence the difference in the wages of mechanics, and country labourers : — the labour of the former is supposed to be of a more delicate nature than that of the latter. The exercise of the one must be through an expensive apprenticeship ; the other is open to every body, and the labourer besides is able to main- tain himself through all the stages of his employment. Perhaps however the superiority of the mechanic is not greater than what will compensate the superiorexpence of his education. In the arts, and liberal professions, education is still more expensive; the recompence ought therefore to be more liberal. I n_th i s case t he profits of stock are very little afi^ed, because all the different ways of employing stock seexn equally casji tq learn, }\ J54. III. The wages of labour vary with the c onstancy or inconstancy of employment. -> In rnanufactures, a journeyman may generally de* pend on constant employment. The bricklayer is fre- quently without any, and liable to interruptions by ba# ( 51 ) weather. He must Ort that account earti sufficient to maintain him while he is idle, as well as when he works. Accordingly in most places his wages are better than those of manufacturers ; yet no labour seems more easy to learn* When inconstancy of employment is combined with hardship, disagreeableness, and dirtiness of work> it raises the wages of common labour above those of the most skilful artificers.-^A collier at Newcastle will earn double or three times the wages of common labour> though his employment may be constant. But the bu^ siness of a coal heaver being necessarily inconstant , he will earn much more. The constancy of employment does not affect the profits of stock. The employment of stock depends not upon the trade but the trader. P. 157—9. • IV. The wages of labour vary according to the trust rejgosed,^ the workmen. The wages of goldsmiths and jewellers, are superior to those of 01 her trades requiring more ingenuity. Con- fidence cannot be reposed in people of very mean con- dition. Their reward must therefore be in proportion to the rank they hold in society. When a person em- ploys his own stock in trade there is no trust, conse- quently the rates of profit do not arise from the degree of trust reposed in the trader. P. l60. V. The wages of labour vary according to the proba- bilityof success. The degrees of probability of success, are different, in different employments. In mechanic trades> success is almost certain ; but very uncertain in the liberal pro- fessions. In the study of the lazv, it is twenty to one if a youth succeeds so as to live by his business. The one which does succeed^ ought therefore to gain all that the ( 52 ) iinsuccessrul twenty should have gained. Counsellor^ fees never equal this. Compute in any place the an- nual gainings and spendings of a common trade, the for- mer will be found to exceed the Jatter ; but make the same computation with regard to cotmsellors and students of the law, md you will find, tiiat the gains bear but a small proportion to the expences. These pro- fessions keep their hve\, from (1) the desire 6f reputa- laoii which attends upon superior excellence : and (2) from the confidenee whieh men have in their own iibilities, a«d good fortune. To thojse who excel in any profession, public admiration makes a part of their re- ward ;— in the profession of physic it makes a part ; — a greater in that of law.;--iand almost the whole, in poetry mid philosophy. P. l6l. 2- ' The exercise of some agreeable talents, Itfr gain, ki reckoned discreditable ; tlie recompence in this case must be in proportion to the discredit which attaches ta' the employment. Hence, the rewards of players, opera singers, &c. Should the public opinion alter, with re- gard to the occupations, the recompence would dimi- nish, as numbers would apply to them, and the compe- tition would reduce the price of their labour. P. l63. The conceit w^hich men have of their own abilities, is not greater than their presumption in their own good fortune. To this may be ascribed the universal success 4>f lotteries. A small sum is paid in hopes ot gaining a great prize; though that small sum is perhaps thirty or forty per cent, more than the chance is worth. In all lotteries, the more tickets you adventure upon, the more likely you are to be a loser* P. l64. That the chance of /ass is under-valued, may be learnt from the small profits of insurers, either from fire, or sea-risk, few of whom have made great fortunes. Mo- ( 53 > iterate as tlie premium of insurance is, few peopl€?> in comparison, care to pay it. P. 1 65. This presumption in good fortune, is atrpftgest m young persons; hence the readiness of the common peo- ple to enlist for the army and navy. Romantic hope$ make the price of their blood, their pay being less than that of fconimon labourers, and their fatigues, in ac- tual service, much greater. The lottery of the sea is reallj/ more advantageous, than that of the army ; but less so in common estimation. Where the great prizes are less, the smaller ones must be more numerous. Sail- ors accordingly have better chances of some fortune and preferment than soldiers. Their gains, notwith- standing the hardships and dangers to which they are exposed, are, all things considered, but little more than equal to the wages of common labour* Danger, instead of disheartening, frequently recommends the trade to young people. Hazard, from which we may extricate ourselves by courage, does not raise the wages of labour. It is otherwise in unwholesome trades, in which cou- rage and address can be of no avail. P. IGO— 9. The rate^of j)rafits on stock yji^jesacc^^^^ the certainty of the returns. These are more certain in inlgjfid than in/o'*£Jg2Jjade. The rate of profit must vary with the risk, though seldom in proportion to it. Bankruptcies are most frequent, in hazardous trades; which would not be the case, if the profit were pro- portional to the hazard. P. IC9. Of the five circumstances which vary the wages elf labour, only the first and last affect the profits of stock. Hence^ the average rate of profit is more nearly on a level, than the pecuniary wa^es of labour* The appa- rentamerence, in the profits ofdiMerent trades is ge- G ( 54 ) berally a deception, for want of distinguishing between wages and profit.— The extravagant profit (as it is call- ed) of an apothecary is frequently no more than the reasonable wages of his labour. His reward must be proportional to his skill and his trust ; though it arises from the sale of his drugs. P. 170. 1. A little grocer may make fifty per cent, on a small stock, while a considerable merchant in the same town, cannot make ten per cent. The trade of the former is necessary for the place, and he must live by his trade, and suitably to the qualifications it requires, which, in fact, are little inferior to those necessary for the mer- chant ; his profits, therefore, are really wages of labour, aud not unreasonable. P. 172. ^" The difference between the profit of retail and whole- sale trade, is less in large towns than in villages. Hence, goods sold by retail are as cheap, or cheaper in the capital, than in villages ; for when the prime cost is the same, goods will be cheapest, where the least profit is charged on them. Though the profits of stock arc less in the capital than in the country, yet large for- tunes are often acquired in the former, and very seldom in the latter. In villages, trade cannot be extended' as stock extends; but this can always be done in the capi- tal ; and the credit of a frugal, thriving man, extends faster than his stock. Great fortunes are the result of a long life of industry. Sudden fortunes are sometimes made by speculation, a trade which can be carried on only in large towns. P. 173 — 5. In order that the five circumstances above mentioned, may not occasion any inequalities in the whole advan- tages, or disadvantages of different employments, three things are requisite. (, ^5 ) I. The employments must have been long established: for wages are higher in new than in old trades to in.- duce worknien to leave their original employments. The former depends more upon fashion and fancy, than the latter, and therefore the wages are likely to be higher.— New manufactures are speculations^which are as likely to fail, as to succeed ; therefore where they are successful, the profits are at first high ; but when thoroughly established they come to the level of other trades. P. 175-r7. ^ II. This equality can take place only in the natural state of employments. The demand for labour, is sometimes greater and some- times lessth^n usual. In the one case, the advantages rise above, and in the otljer they fall belpw,the common level : as in the time of war, merchants pay double for their sailors than in time of peace. On the contrary, in a decaying manufacture, workmen are contented with smaller wages than usual. The profits of stock vary with the price of the commodities in which it is en^- ployed. The quantity of industry employed in produ-» cing commodities is regulated by the demand. In some employments, the same quantity of industry will pro- duce the same quantity of commodities ; as in the linen ^nd woollen manufactories. In them the variation of price must be accidental. In other emploj^ments, as the culture of corn, hops, &c. the same industry will, in different years, produce different quantities of com- modities; the price must, in such commodities, vary with the demand, and also with the crop produced. 175—9, III. This equality' can take place only, in such as iare the principal employments of those who occupy them. G a > ( «6 ) A person subsisting by one elrttploj^hient, may be \yll- ling to dedicate his leisure to another^ for less than is suitable to the nature of the employment. The cott^x- gcrs in Scotland, ^re out serVknts to their landlords ; lor whom they occasionally labour at very low wages. The produce of such labour comes to market cheapa? thfin is suitable to its nature. Thus stockings are knit, and linen spun, by labourers "whose prmeipal subsis- tence depends on some othei* employment. Instancefe of this sort are to be found chiefly in poor countries* An exception, perhaps, is the letting of re^y furnished lodgings in London, where a tradesman is <)bliged t<^ hire a whole hou^e, and endeavours to pay part of the rent by letting the two middle stories, expecting tji| maintain his family by his trade. P. 179—83. PAH Til. Jn'e^uttli tics occasioned hy the policy of Europe* I. THE policy of Europe, renders the advantages oF ^different enjployments unequal, by restrjiining compe- tition. This is effected by the privileges of corpora- tions, which confine the trade to those who are free of them. The bye laws of a corporation, regulate the term of apprenticeship, and the number of apprentices any master is allowed tp have at one time. Tlie lat- ter restrains the competition directly, the former ?*«- directly, by increasing the expence of education, p. 183— 4. Seven years seem to have been the usual term of ap- prenticeship all over Europe. Incorporations and Vmr ( 57 ) jfwsities were synonimous terms. The term of y^rSo phich it was necessary to study to obtain a degre^ of Master of Arts, appears to have been copied from, the term of apprenticeship in common trades. Seveqi years were necessary to become a master pr teachef in both. By the 5th of Elizabeth no person can exercise ^ trade, unless he has previously served seven years ap- prenticeship to it. This restriction has been construed fiot to extend to villages. This statute affects onl/ those tr^es which were established in England before the 5th of Elizabeth. The business of a coach -makei;,, and the manufactures of Manchester^ Birmingham^ and Wolverhampton^ are not \yithin this statute. J>. 184-^6. I^ Paris, a man inust serve five years as an appren- tice, and five years as a journeyman to be qualified to exercise a trade. In Scotland the term is very different, indifferent corporations; three ye^rs is a common teria even in nice trades ; but in Scotland, the corporatioa laws are less oppressive than ifi ^py part of Europe, P. 187. Every roan's labour is his property ; and this is the most sacred of all property. To hinder a man from ivorking at what he thinks proper, or others from em-r ploying hini, is a manifest encroachment on liberty^ The aflfected anxiety of the lawgiver is as impertinent a^ it is oppressive. Long apprenticeships cannot pre- vent bad work from being offered to sale. The ster- ling mark on plate is a much better security . P. 188. Long apprenticeships are inin^ical to industry. Th« fweets of labour consist in the recompence of labour^ ji^ut this the apprentice does not enjoy. P. 1^9. ( 58 V Apprenticeships were unknown to the ancients;there }s no Greek or Latin word that will convey the idea which we annex to the term. P. I90. Long apprenticeships are unnecessary. The arts of ft trade do not require a long course of instruction ; the lessons of a few weeks, in most cases, may be suffi- cient. Dexterity must be acquired by practice ; but a youth would be more attentive if he were paid for his labour, and were required to pay for the materials which be spoiled. By this method, whether the master or ap- prentice were in the end gainers, the public certainly would reap the benefit. Corporations have prevented that free competition which is so necessary to the le-^ duction of the profits of traders. P. 190. 1. The government of towns corporate was in the hands of traders, whose interest kept the market utiderstocked, which was of great advantage to them in their dealings with the country. Every town draws its subsistence, and the materials of its industry from the country, which it pays for : I. By sending back part of the materials manufac- tured : II. By sending it part of the produce of other coun- tries. In the gain on the first, consists the advantage of its manufactures. In that of the second, the advan- tage of its foreign trade. Wages and profits make up the gain upon both : whatever regulations therefore tend to increase these, give a manifest superiority to the town over the country. P. 192 — 4. That the industry of towns is more advantageous,than that of the country, is evident from the many fortunes acquired in towns, to one in the country. The inhabi- tants of a town can easily combine, and prevent a free competition even where there is no corporation. Trades ( 59 ) which employ but k small number of hands, can do thii most easily. The inhabitants of the country are dis- persed ; — and an apprenticeship is not necessary to qua- lify for husbandry, though few trades require more ex- perience and knowledge; hence the many volumes writ- ten on agriculture,-^whereas a mechanic trade may be fully explained in a few pages. The instruments of the mechanic are always thesame> while those of the farmer, such as horses, oxen, and soil are different on different . occasions. Agriculture seems to require a greater variety of knowledge which in general, renders the^lfower ranks in the country su- perior to those of towns. P. jg4 — 7. The high duties on foreign manufactures are also an advantage to the industry of towns, where the inhabi-* tants can raise the price of their goods without dread of competition. The enhancement of price in both, is fi- nally paid by landlords, farmers and labourers, who have seldom either opposed monopolies, or entered into combinations themselves. P. 198< In Great Britain the superiority of the industry of Towns over that of the country was greater formerly than now ; owing to the accumulation of more stock in Towns than can be employed with advantage^ The surplus stock being brought intothe country has created a new demand for labour, and c(msequently raised its wages. Improvements in agriculture have been owing to the overflowings of stock accumulated in Towna. P. 199. People of the same trade seldom meet together, even for diversion, without contriving to raise prices.Though the law cannot prevent such meetings, it ought not to facilitate them. Public registers have this effect : so also have regulations which enable the same trade to tax ( 60 ) ftemselves in order to provide for the poor, sick, &c^ An incorporation makes the act of the majority bind- ing on the whole ; whereas, in a frtt trade, an effec- tual combinatian requires the consent of every trader* P. 200. Corporations are not necesaary to the good govern- inent of a trade. They often have a contrary effect; hence irf many incorporated towns good workmen are not to be found. II. The policy of Europe/ fenders the advantages •f different trades unequal, by increasing the competi- tion in some employments beyond what it would na- turally be. ^ In christian countries the greater part of the clergy are educated by public funds 5 hence the church is crowded with people, who, to get ertiploymentj ac- C€fpt of a smaller recompence than is suitable to theii education. The pay of a curate is of the same nature as the wages of a journeyman. In the fourteenth cen- tury lOl. was the usual pay of a parish priest. But the pay of a master mason was much ^superior, being a shilling a day, and that of a journeyman ninepence. Foity pounds a year, is reckoned at present good pay for a curate ; many have less than 201. There are fevf industrious workmen who do not earn more. The law has often attempted to lower the wages of workmen ; and to rais€ those of curates, but without effect. P. 202—4. Great benefices, and dignities ; — and the yesipect paid to the profession, make compensation for the mean- ness of their pecuniary recompence. In professions in ipvhich there are no benefices, such as law and physic, if an equal proportion of people were educated at the public expence, the competition w^ould be so great, as ( 6i ) to make it worth no man's while to educate his son to either of those professions at his own expence, since practitioners must be contented with a miserable recom- pence. Such is tlie situation of that race of men called men of letters. P. 205. ni/i. , Before the art of printing, a mati of letters could only benefit, by his talents, as a pubhcor private teach- er. The qualifications necessary for a teacher of the sciences, are, at least, equal to those requisite for a law- yer or physician, but his reward bears no proportion to theirs. Before the invention of printing, licences were granted to scholars to beg. In antient times be- fore any charities had been established for the educa- tion of indigent people, the rewards of teachers were much more considerable. Isocrates appears to have had upwards of 30001. for each course of lectures. Gorgias, Plato, Aristotle and others, acquired great wealth, by public and private teaching. This inequa- lity may degrade the profession of a public teacher,but the cheapness of literary education must be of advan- tage to the public. P. 206 — q. III. The policy of Europe occasions inequalities ia ^liiFerent trades by obstructing the free circulation of labour and stock, both from employment to employ-, ment, and from place to place. These are affected by the statute of apprenticeship, and by the privileges of corporations. Whatever obstructs the free ciiculation of labour from one em- ployment to another, obstructs that of stock likewise. Corporation laws are less injurious to the free circulation of stock, than to that of labouj. P. 209 1 1 . The obstructions occasioned by corporation laws are common to all Europe. Those occasioned by the poor H ( m ) kws are peculiar to England — ^They consist in tht jdifiiculty which a poor man finds in being allowed "to exercise his industry in any parish but his own. P. 211. By the destruction of monasteries, every parish be- came bound by the 43d of Elizabeth, to provide for its own poor. Hence a question arose who were to be considered as the poor of each parish ; this was deter- mined by the 14th of Chiwles II. when it was enacted that 40 days undisturbed remdence should gain a per- son a settlement in any parish ; during which time he was liable to be removed by the magistrate. By the 1st of James 11. this forty days was only accounted from the time such person should deliver notice in wri- ting of the place of his abode, and the number of his fa- mily to a parish officer : and by the 3d of William IIL this notice was to be published at church after divine service. The design of these acts was evidently topre^ vent persons gaming settlements by the forty days no^ tice. P. ei2. 13. There are four other methods of gaining a settlements (1.) By paying parish rates ;•— C^-) ^y serving in a pa- rish office for a year ; — \^3.) By apprenticeship in the parish ; — and (4.) By being hired for, and serving du- ring a whole year in the parish. The consept of the parish is necessary to obtain a settlement by the two first ways ; and no married man can well gain one by the two last. An apprentice is seldom married ; and by law an hired married servant gains no settlement. A workman carrying his industry to a new parish, la liable to be removed, unless he rents a tenement to the value of iOl. per annum; or can give a security i m ) of not less than SOl, for the discharge of the parish, p. 214. 15. • By the 9th of Willliam III. Certificates were fallen upon: by these a person is not reinoveable only upon bis actually becoming chargeable ; and then the parish granting the certificate must pay the expences of main- tenance and removal. Hence it should seem that parishes will not grant certificates in ordinary cases ; find a poor man may, however inconvenient to him. Be compelled to remain all his life in the parish where he' has got a settlement, P. 216—18. The unequal price of labour in places at no grea]t (distance from each other is probably owing to this law of settlements. For the scarcity of hands in one parish cannot be relieved by the super-abundance in another, as it is in other countries where there is no difficulty of settlement. P. 218. To remove a man, who has committed no misdemea- nor, from the parish where he chuses to live, is a viola- _tion of natural liberty and justice. Nevertheless this grievance has never been the object of popular clamour, though there are few poor people of 40 years of age who have not suifered by it. P. 219. Antiently, wages were rated by general laws, or by particularordersof the Justices of peace : these prac- tices, with good reason, are now laid aside. Particular ^cts of parliament still regulate the wages of some traded as the taylors. Wlienever the legislature attempts to regulate the differences between masters and their work- men, its counsellors are the masters. When the regu- lation is in favour of the workman it is always just ; but sometimes otherwise when in favour of the masters. The law which obliges masters to pay their workmen in H 2 { 64 ) money, and not in goods is just. This is in favour qf the workmen. Masters can combine to lower the rate pf wages ; but Vere workmen to enter into a contrary combination of the same kind, the law would punish them severely,and if it dealt impartially it would treat the masters in the same manner. P. £20. 1. In ancient times, the price of p^-ovision? and other goods was rated. The assize of bread is the last remnant of this usage. Except in exclusive corporations, com- petition will regulate this article better than any assii5e.. The want of an assize occasioned no inconveniency in Scotland. And the establishment of one has produced no advantage. P. 223. >* CHAP. XI. Of th^ rent of land » K RENT, is naturally the highest ^hich the tenant ca,ii aitqrd to pay. Sometimes the liberality, or ignorance of the landlord makes him accept less ; and sometimes the ignorance of the tenant makes him undertake to pay more ; or to content himself with les$ than the oiv. dinary profits of farming stock in the neighbourhood. P. 225. The rent of land is frequently no more than a reason- able p rofit for the stock, laid out by the landlord upon its improvement. Improvements are often made by the tenant, and, at the renewal of a lease, the landlord de- mands the same augmentation of rent, as if they ha^ ( 6S ) been all his own. Rent, is sometimes demanded fop what is incapable of improvement ; of this kind are es- tates bounded by kelp shores : and others in the Shet- land islands, where part of the rent is paid in sea-fish. The rent of land, is therefore, proportioned to what the farmer can afford to give. P. 224. The produpeof landto be brought to market, must be sufficient to replace the stock, together with its pro- fits. If the price be more than this, the surplus will go to the rent of the land ; but if it is no* more, it can afford no rent ; this depends on the demand. P. 225. High and low wages, are the causes of the high and low price of commodities, but rent is the effect of iu P. 226 PART T. Of the produce of land which alwai/s affords Renf^ A S men multiply in proportion to the means of their subsistence, foo^ is aJ^^aj^SLiix^^ipand, and can always purchase such a quantity of labour, as it can maintain at a certam rate ; but land, in general, pro- duces more food than is sufficient to maintain all the la- bour to bring it to market; and to replace the stock with its profits. Something therefore remains for rent. Such are even the desart moors in Scotland. The rent in- creases with the goodness of the pasture, as the same extent will feed a greater number of cattle, and requires less labour to tend them. P. 227. 8. The rent of land varies^ynjyi JXlfectiii^^^^ and also wkli its situation : that near a srreat town pays more than th^t In a distant country; owing to theexpence of car- riage, and the greater rate of profits in the country^ Good roads and canals, bring the remote parts of the country more nearly to a level \vith those of the neigh- bourhood of a town. P. Q28. A corn field produces more food for man, than the best pasture. Its cultivation requires more labour, but not in proportion to its produce. The relative values of iread and meat, vary in the different periods of agri- culture. In the early periods, unimproved lands are all abandoned to cattle; tliere, meat is cheaper than bread: the former cost little more than the labour of catch- ing; but corn cannot be raised without much labour. In cultivated countries, butchers' meat is dearei* than bread. In this state of society, cattle are bred upon cultivated pastures, which raise not only the price of those cattle, but of others bred upon uncultivated moors, which in proportion to their weight are equally good. Thus the rent and profit of unimproved pasture, is regu- lated in some measure by the rent and profit of what is improved, and this by the rent and profit upon corn. Corn is an annual crop ; butchers* mes^t the growth of vhere there is no local advantage, the rent and profit of corn, the common vegetable food of the peo* :< 67 ) pie, iliust regulate the rent and profit of pastnrfe* The use of turnips, &c. in feeding of cattle> seems to have reduced the price of butchers' meat in proportion to the price of bread, since the beginning of the last cen- tury. In 1612 it appears, that the choice pieces of beef were sold at 4^ or 5d. per lb. But in 1764 there was a parliamentary enquiry into the reasons of the high piiceofmeat, when itwas given in evidence that the best pieces of beef were 4d. and 4|d. per lb. being one halfpenny dearer than had been the usual price. Now in the twelve first years of the last century, wheat was ll. 18s. 3|d. the quarter ; and in the twelve years preceding, 1764, it was 2l. ls.9id.the quarter. P. 235. 6. The greater part of cultivated lands is employed in producing food for men or cattle. The rent and profit of these, regulate the rent and profit of other cultivated land. In gardens of hops or fruit, the rent and profits are greater than in a grass or corn field ; but they re- quire more expence and skill to bring them into condi- tion. The crop in the hop or fruit garden, is more pre- carious; the price therefore must afford the profit of in- surance. In antient husbandry, the vineyard was rec- koned the most profitable, and next to that, a well wa- tered kitchen garden. Democritus, thought the latter would not pay the expence of a wall ; and Columella, on that account, recommends a hedge of briars. In northern countries, a wall is indispensably necessary for the finer fruits. Their price must be sufficient to pay the expences of the wall. P. 237 — 9. Writers on agriculture now, as well as the antients, -consider the vineyard as the most profitable part of a farm. The disputes on the subject prove, that the su- periority is not very great. In 1731, the planting of new vineyards was prohibited in France, under the pre- ( 68 ) tence of a scarcity of corn, and the superabundance of wine. If the superabundance had been real, a reduc- tion on the profits would have made the prohibition use- less. That vineyards have not occasioned any scarcity of corn, is certain, from the care with whi6h com is cultivated in the wine provinces. P. 239 — 41, Sometimes the quantity of land fitted for some parti-- cular produce, is too small to supply the effectual de- mand. In this case, the profits will bear no proportion to those of corn, the excess of which naturally goes to rent. The vine is more affected by the difference of soil, than any other fruit tree ; from some it derives a flavour which no Culture can equal upon any othen This flavour is sometimes peculiar to a few vineyards, and sometimes to a whole district. The quantity of such wine falls short of the effectual demand, and com- petition for it raises the price above common wines,^ P. 242.3. ^ The produce of the sugar colonies in the West Indies falls short of the effectual demand of Europe. In Co- chin-china the finest white sugar is sold for about eight shillings the Cwt. There the greater part of the land is employed in producing corn, and rice, the food of the people ; consequently the prices of corn, rice, and su- gar, are in the natural proportion : but in our sugar colonies, the price of sugar bears no such proportion to that of the produce of a corn field in Europe. The su- gar planter ii is said expects the rum and molasses to delVay the expence of cultivation, and that the sugar should be clear profit. P. 244. In Virginia and Maryland the cultivation of tobacco is preferred to that of corn. The cultivation of tobacco being absurdly prohibited in Europe, a sort of mono- poly is given to the countries where it is allowed. ( 69 5 ThougK ttie cultivation of tobacco does not seem so act- vantageous as that of sugar, yet from tlie preference given to the cultivation of tobacco, to that of corn, the efftctual demand of Europe does not seem to be com- pletely supplied. From the restrictions laid upon the planters, and from other methods taken to keep up the price, the superior advantage of its culture over that . of corn will not probably be of long continuance. P. 245. 6. Thus the rent of the cultivated land, the produce of ^ which is human food, regulates the rent of the other cultivated land. The rent of corn land regulates in Eu- rope that of all other cultivated land. P. 247. If in any country the common vegetable food of the people should be drawn from a plant, of which common land with the same culture, would produce a greater quantity than the most fertile does of corn, the real rent of the landlord would be greater. A rice field produces more food than a corn field, so that even in Carolina, where rice is not the commoa vegetable food of the people, and where their fields produce but one crop in a year, it is reckoned more pro- fitable than corn. A good rice field is a bog, unfit for other vegetable produce useful to men ; therefore the rent of rice lands cannot regulate the rent of the other cultivated land. P. 248. The food produced by a field of potatoes, is not infe- rior in quantity to that produced by a fiejd of rice, and much superior to what is produced by a field of wheat ; for after allowing for the watery nature, of potatoes, the produce of potatoes will be three times that of wheat. They are cultivated with less expence. Should they «ver becoiQe the common vegetable food of the people, I ( 70 ) the same quantity of cultivated land would maintaiti a greater number of people, and a great share of the sur- plus profit would go to the landlord. Land fit for pota- toes, is fit for other useful vegetables ; if they occupied the same proportion of land which corn does, they would regulate the rent of the rest. — No food seems more nourishing than potatoes. — ^The difficulty of preserving ihem discourages their cultivation. P* 249—5 1 . PART II. 0/ the produce of land which sometimisdoes, and some* times does not, afford rent. HUMAN food is the only produce of land which al- tirays aflfords some rent to the landlord. After food, clothing and lodging are the two great wants of man- kind. Land in its rude state can afford the materialsof clothing and lodging to a much greater number of peo- ple than it can feed. In its improved state, the case is ofter reversed. P. 252. The skins of animals were the original materials of clothing ; consequently among shepherds and hunters every man provided himself clothing by providing food. Withoutybmgw commerce the greater part of the skins would be thrown away. Every nation, among whom land property is estabhshed, has some foreign commerce of this kind, which aifords some rent to the landlord. This is the case of the highland estates. In old times the surplus wooFof England found a market in Flanders. P. S53. ( n ) The materials of lodging cannot always be transport* ed to so great a distance as those of clothing, hence it frequentljr happens that they are of no use to the land* lord, A^one quarry near London would afford consU (durable rent^ Jn many parts of Scotland and Wales i^ affords none. Timber in a populous well cijltivated country affords considerable rent: in some parts of North America the landlord would be obliged to any body who would carry away the greater p?irt of his large trees : and in several parts of Scotland, the bark only (Can be sent to market for want of roads and water car- riage. In such cases the land affords not rent to tbe landlord ; unless by the demand of wealthier nations. Paving the streets of London enables the owners of some barren rocks of Scotland to draw a rent from wbat afforded none before. The woods of Norway find a market in Great Britain. P. 254. Countries are populous only in proportion to tbe ^ number of people whom their produce can feed. When food is provided it is easy to find <:lothing and lodgingt A house maybe built in one day by one man. Clo- thing requires but little more, But when by ciiltivatioa of land, the labour of one family can provide food for two, the labour of half the society becomes sufficient to provide food for the whole. The rest may be employ- ed in providing clothing, lodging, furniture, and equi- page. The difference of the food of a rich man and his poor neighbour, consists in tb? quality, not in the quantity. But the difference between their clothing, lodging, and furniture is as great in quantity, £^ it is iq quality. The desire of food is limited by the capacity of the stomach ; but the desires of building, dress, equi^ page, 4c. have uo limit The poor, to obtain food^ l« < n ) t^xert themselves to gratify the fancies of the rich. Th« number of workmen increases with the increasing quan^ tity of food ; and the quantity of materials which they can work up increases in a greater proportion. Hence firises the demand for every sort of material which hu^ man invention can employ ;-«-for fossils, minerals, prcr cious metals, and precious stones. P. 2d3T— 7. . Food is, in this manner, the original source of rent. There are other: parts of the produce of land which sometimes afford rent, but not always. Whether a coalr thine, can afford rent, depends upon its fertility, and tipon lis situation. Some, well situated, cannot be wrought, on account of their barrenness. They afford neither profit nor rent. Others would afford profit to the underr taker, but no rent; these can be wrought only by the landlord. Some sufficiently fertile cannot be wrought for want of roads, or water carriage. P. 257 — 8. 9' 'The expence of coals, must be somewhat less than that of wood. The price of wood, like that of cattle; varies with the state of agriculture. In the rude begin- nings, wood is a mere incumbrance. As agriculture advances, woods are partly cleared by tillage ; and partr ly destroyed by cattle. The scarcity of wood affords to the landlord, a rent, in some case?, equal to what can be derived from corn or pasture. Upon the sea-coast, where coals are easily obtained, it is sometimes cheaper to bring timber from a foreign country than to raise it. Wherever the expence of a coal fire is nearly equal to that of a wood one, there the price of coals is as high as it can be. Coals, in the coal countries, a^e much below this, or they would not bear the expence of car- riage. The most fertile coal-mine, regulates the price of coals, at all other mines in the neighbourhooc^. ( 73 ) ■Rent, lias generally a smaller share in the price of coals, than in that of most other parts of the rude pro^ duce of land. The rent of an estate above ground, is generally a third of its produce 5 in coal mines, iiffth is great rent. Thirty years purchase is a moderate price ofa landed estate ; but ten years purchase is regarded /as a good price of a coal-mine. The value of a coal- mine depends as much on its situation, as upon its fertir lity. Th^of a metallic mine depends more upon its fertility, and less upon its situation ; metals separated from the ore can bear the expence of long carriage, Their market extends to the whole world. P. 262. The productions of distant coal-mines, cannot be brought m competition with one another ; but the pro- ductions of the most distant metallic mines may ; conse- quently the price of metals at the most fertile mines in the world affect their price at every other. After the discovery of the mines of Peru, the silver mines^ of Eu- rope would not pay the expence of working. This was the case of the mines of Peru, after the discovery of those of Potosi. Hence, the greater part of mines can afford little rent to the landlord. P. 263. A sixth part of the produce, is the average rent of the tin mines of CornwaU, and of the lead mines of Scotland. In the silver mines of Peru, the proprietor exacts only, that the undertaker shall grind the ore at his mill, paying the price of grinding. Till 1736, the tax of the King of Spain amounted to one fifth which might be considered as the rent ; many mines could not afford this tax. The tax upon cornish-tin is l-20th ; this would be rent if tin was duty free. When l-20th is added to l-6th, it will be found that the rent of the tin mines to that of silver, was as thirteen to' twelve. In 1736^ the tax on silver was reduced tq ( 74 ) l-lOth; even this encourages smuggling, and the tax is |1| paid, while th^t on tin being l-20th only,is well paid* pent, it seems is greater in the coarse, than in the pre# cious metal. P. a64. 5. The profit of the undertaker of the silver mines in Feru, is very precarious. Mining is a lottery in which the prizes do not compensate the blanks. By law, every encouragement is given to the discovery and working of new mines. To the supposed interests of public revenue, the sacred rights of private property are sacrificed. P. 266. Similar encouragement U given to the discovery and working of gold mines ; few persons are enriched by the business. One twentieth is the whole rent paid by the gold mines of Chili and Peru. Gold is more easily smuggled than silver, both on account of its value, an4 en account of the way in which nature produces it« P. 267. The lowest price at which the precious metals con be «old, must at least be sufficient tore-place the stock with the ordinary profits. Their highest price, is determined by the scarcity or plenty of those metals themselves, and not by that of any other commodity; as the price of coals, is by that of wood, P. 268. The demand for those metals arises partly from their vtility, and partly from their beauty. Excepting iron, they are more useful than any other metal. They are the most cleanly of all metals. They are fit for orna- ments of dress and furniture. Their beauty is enhanced by their scarcity, especially by the rich, whose chief enjoyment of riches consists in the parade of riches. These qualities oi utility, beauty y and scarcity, are the original foundation of the high price of metals. This value was antecedent to their being employed as coin> ( 75 ) and fitted them for that employment ; which employ- ment has contributed to keep up and increase their value* P. 269. The demand for precious stones arises altogether from their beauty, which is greatly enhanced by their scarcity. Wages and profit make up, almost the whole of their high price * only the most fertile mines afford rent. Since the price of precious metals and stones is regulated by their price at the most fertile mine, the rent of a mine is in proportion to its relative fertility,or to its superiority over other mines. The discovery of new mines might make those of Potosi not worth work- ing. The most abundant mines of precious metals could add little wealth to the world ; their value, being derived from their scarcity, is degraded by abundance* It is otherwise in estates above ground. The value of their produce and rent, is in proportion to their abso' lute fertility. The value of barren land is generally increased by being in the neighbourhood of the most fertile, as the great number of people maintained by the fertile lands afford a market to the produce of the barren. Whatever increases the fertility of land in producing food, increases not only its own value, but that of other lands, by creating a new demand for their produce. That abundance of food in consequence of the improve- ment of land, is the great cause of the demand of pre- cious metals 8cc. Food constitutes the principal part of the riches of the world, and gives §1 value to many other sorts of riches. P. 270—3. ( 76 > PART HL Oftfie variations in the proportion between the values of that sort of produce which alzvays affords Kent, and of that 7i)hich sometimes does, and sometimes does7iof afford Rent, The increasing abundance of food,in consequence of Cultivation, increases the demand for the produce of land which is not food. It might therefore be expec- ted, that there should be only one variation in the com- parative values of those two- different sorts of produce; The vaTiie' of that sort which sometimes does, and some- times does not afford retit, should rise in proportion to that which always affords rertt ; and this h^s generally been the case. P. ^1f3. ^ The value of a free-Uone tluafry increases, with the improvelneflt dnd population of the neigbourhood. This is not necessarily the case with a silver mine. The market for the one, can extend but a few miles ; — that of the other extends over the whole known world. The world in ge'neral must be advancing in improvement and population to raise the value of silver ; and even in that case a discovery of new niines may make the 5wp- ply greater than the demand, and consequently the Value of the metal must fall. P. 274. The great market for silver is the commercial and ci- vilized worfd. (1.) If the demand should increase fas- ter than the supply, the value of silver must rise in pro- portion to that of corn. (2.) But if the supply of silver be greater than the deaiand, the money price of corn must become dearer. (3.) When the supply and de- mand increases in the same proportion, the money price- ( 77 ) 6f corn must cdtitinud nearly the same. These three exhaust aU combinations of events which can happen in the progress of improvement ; and during the four centuries preceding the present, each has taken place in the European market. P. 275* Digression concerning the Variations in the value of silver^ during the course of the four last centuries, FIRST PERIOD. ABOUT the year 1350, the average price of a quar- ter of wheat was four ounces of silver, equal to about twenty shillings of our money. By a statute of Edward III. it appears, that the moderate price of a bushel of wheat was half an ounce of silver. In 1309> it appears, from an account given of a feast at Canterbury, that wheat was twenty-one shillings and six-pence per quar- ter. In 1262, a statute was revived, called the assize of bread and ale, from which it should seem that wheat was about the same price of twenty shillings per quar- ter. P. 276-^80. From the middle of the 14th century to the begin- ning of the 16th, the price of wheat gradually sunk to about 2 oz of silver or 10s. of our money ; for though the nominal price continued, during this period, nearly the same, yet the quantity of silver was continually di- minishing. P. 280. It was enacted in 1436 that wheat might be exported when the price was as low as 63. 8d. and ia 1463 it wa» K A ( ?S ) enacted that it sliotild not be imported if the price tr?is aot above 6s. 8d. the quarter, equal to about 13s. 4d. of our money. By tiie 5th of Ehzabeth the exportation of wheat was allowed only when wheat was higher than 10s. per Quarter. This, therefore, was probably the moderate price of wheat in the beginning of Elizabeth's reign. In France also, and probably in the greater part of Europe, the average price of grain was less in the beginning of the iGthCentury than in the two pre- 'fceding eenluries. P; 181. This rise of silver^ in proportion to that of corn> wa» owing either to the increasing demand of the metal ;— * or to the diniinutidii bf the Supply. P. 282/ Some writers have supposed, thatihe value of silver was con ti mi ally diminishing fi'om the coiiquest until the discovery of the mines of America. In their ob- isfervations upon the prices of corn, three circumstances seem to have tnisled them. (1.) In antient times rent was paid in kindf though at the option of the landlord %b receive it in kind, or money. The payment in kini^ n^kchahged for j>20wey was called the conversion piiae, which the safety of the tenant required to be much be-^ low the market priee.(2.)They have been misled by the tlovenly manner in which antient statutes of assize had been composed or transcribed; and (3.) By the very loir price at which ^heat was occasionally sold in antient times, supposing that if its lowest price was much lower than in later times, its ordinary price must like- wise have been Ibw^i* : though it appears that in \Q,10 the quarter of wheat was sold for 19l.4s. of our money. No price in the 15th and beginningof the l6th century fcanbe found approaching to this* P. 284 — 8. Fleetwood collected the prices of wheat from 1202 to 1597, and reduced them to themoney of the present ( 79 ) tjiues. He was able to collect the prices of 80 y^art only.* From these it appears that the average piice • The average, prices of wheat inferted by Df. ^mith ^tt,}\<^endot the chapter will b« introduced here. P. 398 — 406. The average price of the ^ I zoz. 1205. 1123.^ quarter of vi^heat, in money J 1237. 1243. i244.r L. s. d. of the prefeiit times for the ^1246. 1247. 1257. r a 19 i^ years. (1*58. 1270. 1286.) (1287. 1288. 1289. "J for .h. year. >«- \^:--_ ;3°-| . .8 « {.nn- 1336. 1538.) ri339- 1349- »359-) (1401. 14051. 14,16.) (1423. 1425. 1434.) ■for th9 years ^1435- i439. H4o.r » , 3J ■ ' 51444. 1445- 1447.C "*' C1448. 1449- HS'-J. fo, the year, \%X.\%X\i .4. (1494. I49S. 1497.) ^1498. 1504, 1521.^ for .he years >^^- ^^^ ^^^A .0 cf (1558. 1559. 1560.) (^1561. 1562. 1574. "^1 for the vears ^'^^J* '59'^' '^^i'V a. » c4 lor me jears ^1596. 1597. 1598, r *• *• 5t (1599. 1600. i6oi.j| Average prices of the. quarter of 9 bushels of the best wheat at Windsor marliet from 1595 tQ 1764. Av«r4g« Fried From-26year5Lfromi59S toi^o> 2^69-1^ For 16 years from 1621 to i6.S^6 • . . z ip c^ For 60 years from 1637 to 1700, ^ ^ (the account of the years 1642- > , , 4 il o| 3-4-5 being omitted.) \ For 64 years from 1 701 to 1764 % o 6 19-3^ For 10 years from n-3»^i74Q < ^7 3 »-5 For40.yearsfroi;ii^;;t^i to.i;?5cy • * »3 9 4^5 K3 ( so ) of each 12 years, from the beginning of the 13th till the middle of the l6th century,grows lower and lower; and that towards the end of the l6th century it begins to rise again. P. 289- Writers have not inferred the great value of silver so much from the cheapness of corn, as of cattle, poultry, game, &c. Thi? cheapness was not the effect of the high value of silver, but qf the low value of those com- modities. Silver is cheaper in Spanish America than in Europe ; yet but a few years since, choice oxen were gold there for 21 pence each, and good horses for about l6s. sterling. P. 290. 1. Labour, it must be remembered is the real mea&ure of the value of silver, and of all other commodities. In countries thinly inhabited^ the supply of cattle is great- er than the demand. In different states qf society such commodities will be equivalent to very different qu?intities of labour ; but corn, the produce of human industry, is always suited to the consumption. Equal quantities of gorn, vv:ill re- quire equal labour to produce them. Corn, thereforCj, will more nearly represent equal quantities of labour than cattle ; and consequently will be a better measure of the value of silver. Farther, since corn is the chief sustenance of the labourer, it must be a better measure of the value of labour, consequently of silver, than cat- tle or butcher's meat. P. 292. 3. Writers seem also to have been misled, by the popur lar, but groundless notion, that silver increases with the increase of wealth, and that its value diniinishes as its quantity increases. The quantity of precious metals may increase : (1.) From the increased abun- dance of the mines. (2.) Fjx)m the increased wealth of the people, owing to the increased produce of their an- ( «1 ) final labour. The first cause is certainly connected with the diminution of their value. But not so in the pther case, since a greater quai^tity qfcoin becpmes ne- cessary XQ carry on trade j and mor^ plate is generally required tbrppgh mere ostentatipn. The price pf gold and silver is higher in a rich, than in a poor country, jmd like every thing else it will seek the best market; that is, where it js best paid forj which will always be in proportion to thp sustenance of the labourer. China is richer than Europe, and sustenance much cheaper ; but the difference of the r^oney price of labour is still greater, because the real recompence of labour is high- er in Europe than in China. The money price of la- bour is lower in Scotland than in England, for the same reason ;; hence, the emigrations froni Scotland, p. 294—7. Gold and silver are of little value in poor countries. Among savages they are of scarce any value. In great towns, corn is dearer than in reniote parts of the country, not because silver is cheaper, but because corn is dearer, from the expence of carriage : this happens to some rich comn^ercial cpuntries, as Holr land arid Genoa 5 — diminish the opulence of those countries ;-—diminish their power pf supplying themr selves from distanj; countries ; while the nuniber of in- habitants continues the same, and cprn wijl be still dear, though silver should sink in its value. The want pf necessaries, makes people part with their superfluities. The increase of the quantities pf the precious metals, for the middle of the 14th, to the middle of the l6th pen ury, arose from the increase of wealth and improver ment, and had no tendency to diminish their value io Ipurope, P. 297—^. SECOND PERIOD, IT is certain that from 1570, to 1640, silver sunk in its real value, and corn rose in its nominal 'price, being sold for six and eight ounces of silver the quarter^, ii^-«. stead of t>YO ounces. The sole cause of this diminution pf value, seems to have been the discovery of the mines of America, the effect of \yhich was not perceived till ^fter 1570, though the mines of Potosi had beeja dis- covered twenty years before. P. 299—301. THIRD PpRIOD. THE value of silver seems never to have sunk lowey in proportion to that of corn, than it was about the year 1636. It has been somewhat higher in the pre- sent century, and perhaps for some time before th^ end of the last. From 1637, to 1700, the average pric^ of nine bushels of corn was 2l. lis. Ofd. only one shil- ling dearer than during the sixteen years before. This small rise may be easily accounted for, (without sup- posing any reduction in the value of silver,) either (1.) By the civil war, or (2.) By the boynty granted in 1688, upon the exportation of corn. A third event must have increased the nominal price of corn, viz. the debasement of the silyer coin. This ^vil liad begun in the reign of Charles H. and had gone -cini increasing till 1695, at which time, the current silv^^ coin was twenty-five per cent, below its standard value. At present, the silver coin is very much defaced, yet its value is kept up by the gold coin ; but in 1695^ agui- ftea exchanged for thirty shillings (rf the worn feilven P. 301—5. In the sixty-four years of the present century, th^ average pride of nine bushels of wheat, was two pounds and six-penee, about twenty-five per cent, cheaper than it had been during the last sixty-four years of thd last century* H^nce, the value of silver seems to have risen in proportion to that of corn during the pre- eent century. In l68S, the average price of Wheat to the grower was estimated, by Mr. Gregory King, to be three shillings and six-pence the bushel. The growers' price, is the same with what is called the contract price, jnade by a farmer with a dealer, for a certain number of years, which, as it saves trouble and expence^ must be somewhat lower than the market price^ In this same year, the bounty on exportation was granted, the atowed object of which was^ the encouragement of til- lage, though in reality it was ail expedient of the coun- try gentlemen in parliament, to raise corn to the high price which it had frequently been sold at in the times of Charles I. and II. This bounty was to take place, ^tili wheat was so high as forty-eightshillings the quarter, that is, twenty shillings dearer than what w^as then ac- counted the average growers' price. In years of great scarcity^ the bounty Las generally been suspended ; it must however have hindered the plenty of dne year, from compensating the scarcity of another. , Perhaps without the bounty, the state of til- lage would not have been the same. This rise in the value of silver, to thai of ctorn, has taken place in France, during the same period. But in France, the exportation of grain was prohibited till 1764. P. 306—9. This variation ia the average money price of corn. ( ^4 ) is perhapSi thfe effect of some gradual rise in ih€ real value of silver in the European market. The high price of corn during these teii Or twelve years past, haa occasioned a suspicion j that the real value of silver con- tinues to fall. It ought rather to be iiriputed to unfa-* Vourable seasons, and the disorders of Poland which have increased the scarcity in those countries, which Used to be supplied from that market. The low price of corn from 1741, to 1750, may be set in opposition to the high price during these last ten years.* The ope- ration of the bounty which amounted in this period, to 1,514,9^21. 17s. 4df. must have hindered the price of coi*n from faking solowas it naturally would have done. P. 309-il2. The money price of labour, in Great Britain, has risen during the course of the present century ; but this is the effect of the increasing demand for labour, arid not of any diminution of the value of silver. P. 313. For some time after iHe discovery of America, silver would continue to sell at its former price, and the pro- fits would be very great* But it would soon be found that the annual importation could not be disposed of at this rate, consequently its price would gradually sink to Its natural price. The profits of the mines of Peru,are now as low as they well cah be, (forjsistently with carry- ing oi? the works. The tax was originally |, then l-3d, afterwards it fell to l-5th, and at last to 1 10th : it was reduced to l-5th> forty one years before 1545, the date of the discovery of the mines of Potosi. In ninety^ ♦ The reader is I'eferred to P. 71.— where the account of thefe ten years is separated from the resl. He will find also, that the average of the ten preceding years is Se/aw the geuersU average of the sixty-four first years of the century. ( 85 ) years, or before 1736, these mines liad produced their full effect, in reducing the value of silver in Europe, as low as it could fall. This price mighthave fallen lowers and it might have been necessary to reduce the tax to l-20th, or to give up working the greater part of the mines. But since the discovery of America, the mar- ket for silver has been growing more extensive. P. 314. (I.) The market of Europe has become more exten- sive. The whole of Europe, except Spain and Portu- gal, has advanced considerably in agriculture and ma- nufactures ; the increasing produce of which, must have required an increase in the quantity of silver coin; and the increasing number of wealthy individuals must have required the like increase in the quantity of their plate. P. 316. (2.) America is itself a new market for the produce of its own silver mines ; and as its ad- vances in agriculture, industry, and population, are extremely rapid ; its demand for silver must also in- crease rapidly. The United States of North America, the English, Spanish, and Portuguese colonies, are al- together new markets. Even Mexico and Peru, though not new markets,are much more extensive than they ever were before. P. 316—18. (3.) The East Indies is another, and an increasing market for the pro- duce of the silver mines of America. During the l6th century, the Portuguese were the only European na- tion, who traded to the East Indies. In the last cen- tury, the trade was principally divided between that nation, and the Dutch. The English and French carried on some trade with India in the last century, but it has been greatly augmented in the course of the present ; and now the Swedes, Danes, and even Mus- covites, trade thither. In the East Indies, the value of L ,4 86 ) tli^ precious metals, was, and still is, higher than in Eu* rope. The abundance of food is much greater in India, than in Europe ; and accordingly much more popu- lous. Their superabundance of food enables them to .give a greater quantity of it, for the precious metals, and precious stones. The mines which supplied the Indian market with the former, have been less abun- dant, and those which supplied it with the latter more so, than the mines which supplied the European. The precious metals, therefore, would exchange for a grea- ter quantity of the precious stones, and a much greater quantity of food than in Europe. Both the real, and the money price of labour, are lower in India than in Europe. But the money price of manufactures, will be in proportion to the money price of labour ; there- fore manufactures will be lower in India than inEurope. The extent of the inland navigation in India, tends far- ther to reduce the price of their manufactures. Hence, it appears^ that the precious metals are extremely ad- vantageous, to carry from Europe to India. Silver is more advantageous than gold ; since the proportion between them in India, is only as ten or twelve to one 5 whereas in Europe, it is as fourteen or fifteen to one* E. 319— 23. I: The silver brought from the mines, must not only be sufficient to support the increase of coin and of plate ; but to repair the waste and consumption which takes place in all countries where that metal is used. The consumption in coin by wearing, and in plate by wear- ing and cleaning, is very sensible. In some manufac- tures, it is also considerable ; in those of Birmingham, the quantity of gold and silver, used in plating and gilding, is said to amount to 50,0001. annually. A great deal must be lost, in transporting those metals from one place to another ; and in arbitrary govern- ( 87 ) ments/ much is lost by concealing it in the earth. P. 324. The quantity of gold and silver imported into Spain and Portugal, is about six millions sterling a year ; but this is not equal to the whole annual produce of the mines of America ; some part is sent to Manilla, and some part is employed in a contraband trade. The greater part of their produce is annually imported into Cadiz and Lisbon ; the consumption of Birmingham alone is equal to l-120th part of this annual importa- tion. Perhaps, therefore^, the whole annual consump- tion in all the countries of the world, may be nearly eqoal to the whole annual produce. The remainder may be no more, or even less than sufficient to supply the increasing demand of thriving countries; which may have occasioned a small rise in the price of these metals in the European market. P. 325—8. The price of all metals varies less from year to year, than any other part of the rude produce of land, and this is owing to their durableness. Corn is soon con- sumed, but iron may last two or three hundred years, and silver or gold as many thousands. Different masses of corn will be in proportion to the produce of different years ; but the proportion between the masses of gold iu two different years, will not be much affected by any diffevence in the produce of the gold mines. P. 3^8, Q. Variations in the proportions between the respective values of gold and silver, BEFORE the discovery of the mines of America, the value of gold to silver, was about one to ten or twelve. ( 88 > About the middle of the last centtir}^ the proportiong were one to fourteen, or fifteen. Gold rose in its nomU nal value, and both metals sunk in their real value. The proportion between the quantities of gold and sil-» ver, annually imported into Europe, is as. one, to twen-» tj-two nearly. The exportation of silver to the East Indies, reduces the quantities which remain, to the pro- portion of one to fourteen or fifteen, the proportion of their values. Mr. Meggens supposes that the proportion between their values^ must be the same as between their quantities. This is not necessarily the case with respect to other commodities. The whole quantity of a cheap commodity brought to market, ia not only greater, but of greater value than the whole quantity of a dear one, This is the c?ise with brtad, compared with butchers* meat ; or butchen' meat, compared with j^oultry. In comparing the precious metals, silver is a cheap, and gold a dear commodity; therefore the whole quantity of silver in the market, should be of greater value than the whole quantity of gold. A person possessing a little of both, will find the value of his silver plate exceed that of his gold ; and in most countries, except Great Britain, the value of the silver coin exceeds that of the gold. P. 330— 3. In one sense, perhaps gold is the cheaper metal, as it seems nearer than silver to its lowest price, for which it can be brought to market. The tax of the former, is only l-20th, and that of the latter is 1-lOth ; in these taxes consist the rent. The profits on gold mines, are less than those upon silver mines. Gold, therefore, af- fording less profit, and less rent, is probably nearer to its lowest price than silver. The price of diamonds, and other precious stones; may be still nearer to the lozcest ^ke, P. 333—5. ( 89 ) The working of silver mines becomes gradually more expensive,on account of the depths at which the works ure carried on, the accumulated expence of drawing out the water, and of supplying them with air. These causes must, in time, (l.)Increase the price of the me-p tal ; or^2.)The tax upon silver must be diminished ;— . or (3.)The increased expence must be compensated,partT lyiby the one,and partly by the other of these expedients. Such reductions of the tax retard the rise of the value of silver, since many mines may be wrought, which could not be wrought before,and consequently the market will be better supplied. Not^yithstanding this reduction, the value of silver seems to have risen a little in the course of the present century j though some persons think the con- trary. There must, however, be a period when the an- nual consumptioq of those metals will be equal to the annual importation. If then the importation gradually diminish, the consumption may exceed \Ue importation, an4 their value rises. P. 335—8. Grounds of the suspicion that the value of silver still continues to decrease, (1.) The notion, that as the quantity of the precious metals increases, with the increase of wealth, so their value diminishes, may dispose many people to suppose their value continues to fall in the European market. And (2.)The increasing price of many parts of the rude produce of land, confirms them in this opinion : but gold and silver, like other luxuries, resort to the rich country, not because they are cheaper theve than in poor ( 90 ) countries, but because they are deartr. The same may Ibe said of cattle, game, poultry, &c. They naturally grow dearer, as the society advances in wealth and im- provement. It is not their nominal price only, but their real price which rises in the progress of improvement. P. 338— 9. Different effects of the progress of improvement j upon three different sorts of rude produce, FIRST SORT. THE first sort of rude produce of which the price rises in the progress of improvement, is that which it is scarcely in the power of human industry to multiply at all. It consists in things which nature produces in cer- tain quantities; which are perishable; and which it is impossible to accumulate for many seasons. Such are rare birds, and fishes ; most sorts of game, wild fowl, and many other things. An increase of wealth and luxury may, by increasing the demand, raise the price of these things to any extent, but no human power can increase the supply. Hence, the price paid by the Romans in their greatest grandeur, for rare birds and fishes.This was not the effect of the cheapness of silver, hut of the dearness of the rarities. P. 339 — 42. SECOND SORT. THE second sort of the rude produce, of which the price rises in the progress of improvement^ is that which ( 91 ) human industry can multiply in proportion to tlie de- mand. It consists in those useful animals and plants which, in uncultivated countries, nature produces in abundance. In the progress of improvement the i^uan- tily diminishes, while the demand for them increases. The real value gradually rises, till it gets so high as to render them as profitable a produce as any thing elsei raised by human industry. It cannot go higher. The price of butchers* meat, consequently of cattle, must rise till it is at this height, which happened in the neigh- bourhood of London> about the beginning of the last century. P. 343—6* Land cannot be completely cultivated before cattle arrive at this price. In faims too distant from any town, to carry manurp from it, the quantity of well cultivated land must be in proportion to the quantity of manuref, which will be in proportion to the stock of cattle main- tained on iti Unless therefore the price of cattle be sufficient to pay rent, and profit, of well cultivated land, the farmer cannot afford to pasture them upon it, much less can he afford to feed them in the stable. In Such circumstances he can feed no more cattle than what are necessary for tillage ; but these will not afford ma- nure sufficient for all the land they are capable of culti-^ vating ; consequently a great part of the land must lie almost waste. Such was the state of Scotland till the union, in consequence of the low price of their cattle; and in many parts of that country it now continues to be so : owing (l.)To the poverty of the tenants,and their not having had time to acquire stock : and (2.) To their having not had time to put their lands in condition fit to maintain a greater stock. Hence, the increase of stock and the improvement of land^ must go hand ia hand. P. 346— 8, ( 92 > In all new colon les^ the great quantities of waste land ;ipplied to feeding cattle, soon renders them abundant and cheap. But it must (for want of manure) be very long before cattle can be fed on the produce of cultiva- ted land. P. 349—50. , Of all the parts of this second sort of rude produce catlle are ihcjlrst, which bring such a price as to render it profitable to i'eed them on cultivated land ; for till |hey bring it, land cannot be perfectly cultivated. Ven- ison perhaps is the last, otherwise feeding of deer would become an article of farming. Between that pe- riod in the progress of improvement, which brings to its height the price of cattle, and that which brings to it the price of venison> there is a long interval, in the course of which, many other sorts of rude produce will arrive at their highest price : as pow/^ry, which, at pre- sent, are kept on the offals of the barn, and consequently often as cheap as butchers' meat. As luxury increases^ the price of poultry rises above that of butchers' meat> till it becomes profitable to cultivate land for the sake pf feeding them. P. 351—3. The hog, like poultry^ is kept as a save-all. The rise in the high price of hogs and poultry, has been im- puted, and perhaps with justice, to the diminution of the number of cottages ; an event, which has been the forerunner of improvement and better cultiyation.P.354* The business of the dairy was also originally carried on as a save-all. The cattle produce more milk than can be consumed by their young, and by the farmer's family. This is the most perishable of all the produc- tions of land ; part of it is made into butter, which may be stored for a year ; and part into cheese, which may be kept for several years. Part of these the farmer re- serves for his own family 5 the rest is sent to market. If [ 93 ) the mjirket price be very low, the business of the dairy is performed in a slovenly manner. The same causes which raise the price of butchers' meat, raise that of the produce of the dairy ^ this increase of price will pay for more labour and more cleanliness. At last, the price gets so high, that it becomes worth while to employ the best cultivated lands for the purposes of the dairy. To this height it has got, in most parts of England^ and in some few parts of Scotland; P. 355—7. Lands cannot be completely improved, till the price of everi/ produce raised upon them, has got so high as to pay for the expence of complete cultivation : that is, (1 .) To pay the rent of good corn land : and (20 To re- place the stock imployed, with the ordinary profits. This rise in the price of each produce, must be previ- ous to the improvement of the land destined for raising thefci. Gain is the end of improvement. If therefore the improvement of a country be of public advantage, the rise in the price of the different sorts of rude pro- duce, must be a national benefit, instead of a public calamity. This rise too, in the money price of those different sorts of rude produce, has not been the effect of any degradation in the value of silver, but of a rise io their real price. P. 358. THIRD SORT. ' The third and last sort of rude produce, of which the price nalutally rises in the progress of improvement, is that in which the efficacy of human industry in aug- M ( 94 ) meriting tlie quantity, is either limited or tincertain. There are some sorts of rude produce, which nature has rendered a kind of appendages to other sorts, as wool and raw hides. The quantity of these is limited t)y the number of great and small cattle ; these again are determined by the state and nature of agriculture, Tbe»ame causes which raise the price of butchers* meat, would also raise the price of wool and hides, if in the rude beginnings of improvement, the market for the latter wa& confined within as narrow bounds as the former. In most cases, the market for butchera' meat is confined to the country which produces^it. This ia not the case with wool and raw hides. They can easily be transported to a country which may have a demand for them. In countries ill cultivated, the price of the Wool and the hide, bears a great proportion to that of the whole beast. In Spanish America, horned cattle are almost constantly killed for the sake of than in proportion to what had been requisite for supa plying the confined one. The real price of this common dity, rises in the progress of improvement. Its uncer^ tainty depends also on the local situation of the coun-r try. P. 370. 1. In increasing the quantity of minerals and metals, which are drawn from the bowels of the earth, the effi-r cacy of hum^n industry seems not to be limited, but to be altogether uncertain. The quantity of precious me-f tals in ^y particular country, depends (1) upon the power of purchasing ; q,nd (,2) upon the fertilit}' of the mines, which at that time supply the commercial world with those metals. So far as their quantity depends on the former, their real price is likely to rise with the wealth and jmprpvement of tjie country, and to fall with its poverty and oppression. So far as their quantity depends on the latter, their re^il price will §ink in pro- portion to the fertility, or rise in proportion to the bar- renness of those mines. The state of the mines have no connection with the industry of a country. No skill or industry can insure the discovery of new mines. In the search, there are no certain limits either to the success, ex to the disappointment of human industry # It is of no importance tq the real wealth of the world, whether new and fertile mines be discovered or not: the only difference will be in the wow/waZ value; the real value of the annual produce of the land and labour, will be the g&me, P. 372—5. ( 97 ) Conclusion of the digression concerning the variations irt the value of silver* WRITERS have considered the low money price of corn, or, in other words, the high value of gold and silver in a country, as a proof of its poverty and barba-?- rism. It is, however, only a proof of the barrenness of the mines which happened at that time to supply the world. A poor country cannot afford to pay dearer for gold and silver than a rich one. In China, the value of the precious metals is higher than in Europe ; yet China is the richer country The increase of gold and silver in Europe, an(? the increase of its manufactures and agriculture,happened about the same time; theybr- pier from the accidental discovery of new mines ; the latter from the fall of the feudal system. Poland, where the feudal system still continues, is as poor as it was be- fore the discovery of America. The real value of the precious metals has fallen in Poland, as in the richest parts of Europe. Spain and Portugal, the countries which possess the mines, and where these metals must be the cheapest, are, after Poland, the two most beg- garly countries in Europe. P. 375—7. As the low value of gold and silver is no proof of the wealth of a country ; so neither is their high value any proof of its poverty. Though the low money price of corn be no proof of the poverty of the times, the low money price of poultry, game, 8cc. in proportion to that of corn, is a most decisive one. Itsliews: (1.) Their great abundance in proportion to that of corn : and (2.) The uncultivated state of the greater part of the lands of the country. P. 377. 8. ( 08 ) V Apy rise in the money price of goods, wbich pro* ceeded from the degradation of the value of silver,woul4 jiffect all sorts of goods equally, But the rise in the price of provisions^does not affectall sorts of provisions, therefore it cannot be altogether owing to the degrada- tion of the value of silver. The price of corn during; %he sixty-four first years of this century, has been lower than it was during the sixty-- Jour last years of the pre- ceding century. P. 379' The rise in the price of sbm^ sorts of provision s,may be owing, not to any degradation in the value of silver, but to a rise in the real value of the land which pro-e- duces them, to its increased fertility, or in consequence of extended cultivation, which inijicat^s the advancing State of the country, P. 381— 3. ^J^ects of the progress of improvemenip upon the real price of manufactures, IMPROVEMENT diminishes the real price of $il. most all manufactures. That of the workmanship di- minishes in all of them, in consequence of better ma- chinery, of greater dexterity, ai)d of a more proper division of work ; all of which are the effects of improve- ment. In some new manufactures, the rise in the real price of the rude materials, will more than compensate all the advantages which improvement can introduce into the execution of the work. The dimmution of price in those manufactures, of which, the materials are the coarse^ metals, has been remarkable. A move- ment of a waich can be now had for twenty shiihngs, tvtiich in the middle of the last century cottld not have been bought for twenty pounds. The same may be said of the Sheffield and Birmingham ware. P. 384. 5. Fine woollen cloth is three or four times as cheap as it was towards the end of the 15th century: and the coarse is more than twice as cheap. The same will hold true in the prices of stockings^ The wogllen ma- nufacture has received three capital improvements : (1.) The spinning wheeL (2.) Machines for the wind- ing of worsted and woollen yarn. (3.) The fulling mill for thickening cloth. Neither wind nor water mills were known in England so early as the beginning of the l6th century; in Italy they had been justintrodu* ced. P. 386—90. CONCLUSION OF THE CHAPTEK. EVERY improvement in the circumstances of the societ}' tends either directly^ or indirectly to raise the real rent of land. The extension of improvement and cultivation^ and the rise in the price of the rude pro- duce of land, tend to raise it directly. All those im- provements in the productive powers of labour, which reduce the real price of manufactures, and every in- crease in the real wealth of the society, tend indirectly to raise the real rent of land. P. 392. Neglect of improvement ; the fall in the real price of any part of the rude produce of land ; the rise in the price of manufactures ; and the declension of the real wealth of the society, tend to lower the real rent of land. P. 393. ( 100 ) The whole annual produce of the land and laboirf o€ every country^ naturally divides itself into ; — ^therent of land ; — the wages of labour ; — and the profits of stock. The interest of the first of these orders ig inseparably connected with the general interest of the society. If they have any tolerable knowledge of their own inter- est, they will never attempt to mislead the public when it deliberates upon any regulation of commerce or police. The security of their situation renders them too often Ignorant and incapable of application. The interest of the second oxder, is also strictly connected with that of the society. The wages of the labourer never rise so high> as when the demand for labour is continually increasing. His employers constitute the third order, that of those who live by profit. But the rate of profit does not necessarily rise with the prospe- rity, and fall with thiesdeclensiort of the society. The interest of the third order has not, therefore, the same connection with the general interest of the society, as that of the other two ; it is sometimes different from, and even opposite to that of the public. The proposal of any new law or regulation of commerce, which comes from this order, ought not hastily to be adopted, P. 304—8. ( 101 ) . BQoK n: ■ \' Of the nature y accumulation, and employment of stock, INTRODUCTION. t IN the rude state of society, it is not necessary that iiny stock should be accumulated in order to carry on the business of the society. Every man supplies, by his industry, his wants as they occur But when the division of labour has been thoroughly introduced, the .produce of a man's own labour, can supply but a small part of his wants. The greater part niust be supplied by the produce of other men's labour, which he must purchase with the price of the produce of his own* But this purchase can not ^be m ade, till such time as the pro- duce of his owji labour has been completed and sold ; during which, a stock of goods of different kinds must be stored somewhere, sufficient to maintain hitn, and ^Iso to Supply him with the materials, and tools of his work. The accumulation of stock must be previously to the division of labour ; and the subdivisions of la- bour will increase in proportion only to the increasing accumulation of stock. As the division of labour ad- vances^ the same number of people can work up a grea- ter quantity of materials; consequently,, an equal quan- tity of provisions, and a greater stock of materials and tools, than would have been necessary in a ruder state of things, must be accumulated before hand. As the uccumulation of stock is previously necessary for carry- ing on this great improvement in the productive powers of labour, so that accumulation leads to this improve- N < 102 ) went. :Tht quantiiy of, industry not only increases W4tkt^i^ii(iGi?t\seof ^tajcli^i but in consequence of that indreas^, the sistme quantity of industry produces a grea- ter quantity of work. P. 407— 9« CHAP. I. Of the division of stock, THE poor man derives no revenue from his stocky his revenue is derived from his labour. P. 410. When a man possesses much stock, he reserves only i/)* a part of it for immediate consumption, from the re- / J I mainder he endeavours to derive a revenue. His stock ^ is therefore distinguished into that which is to afford him thi s revenue, which is called his capita l ; and into that which s upplies bis immediate consumptio n ; and which consists (1.) In what was originally reserved for this purpose : or (2.) In his revenue, as it comes in : or (3.) In things purchased before, such as a stock of clothes, household-furniture, 8tc. P. 411. A capital may yield a re venue, -—First, by beingem- ployed in raising, manufacturing, or purchasing goods, and selling them again with a profit. The capi- tal employed in this manner, affords no revenue till the goods are sold, and others purchased with the money; it is only by circulation that it can yield a profit ; it may therefore be called a circulating capitah P. 411. r-i^,..^™™.. Secondly, it may be employed in the improv ement of land, and in purchasing instruments of trade,wiiich yield profit without changing masters. Such capitals ( 103 ^ may be calle d fixed capitals. Different o ccupatlon ft require different proportions, between the circulating ^nd fixed capitals employed in them. The capital of ;a nierchant is altogether circulating, unless his ware- house be considered as a fixed capital. Every mas^ ter, artificer, or manufacturer must have some fixed capital. A ^^ylor or a shoemaker needs but a small fixed capital 5 in iron works and coal mines a large one is necessary. The instruments of agriculture are, to the farmer, his fixed capital ; the wages and mainte- nance of his servants, his circulating capital. He makes a profit of the fprn^er by keeping them ; and of the latter by parting with them. The price of labour- ing cattle is a filled, their maintenance a circulating, capital. But both the price, and maintenance of cattle bought for sale, are circulating capitals. So also is the value of the seed ; the farmer makes a profit novby its gale, but by its increase. P. 411 — 13. Th e frer^eral stock of a co unt rif is divided into the same three portions, each of which has a distinct office. The first is that portion which is reserved for immediate con- . yumption, and wh ic h affo rds n o reYgpug' It consists in a stock of food, clothes, household furniture, and mere dwelling houses. These may in particular instanr pes yield a revenue to the proprietor, but they can afr ford none to the public. P. 414. The second portion into which the stock of a society divides itself, is the fixed capital which affords a revenue 9 without c hanging masters. It chiefly consists (1.) In cill useful^ machines and instruments of trade, which abridge labour. (2.) In buildings which are the means of procuring a revenue; as shops,farm houses,granaries, Stc. (3.) Ii; the improvements of land, And (4.) la t . ( 104 ) tlie acquired and use ful abilitie g„of all the members of ' the society. P. 4 1 6. The third-pOYt\or\ into Vvhich the general stock of the society is divided, is the ci rculating capital vvhich. f affords a revenue by changi ng mastersT TIiis is com- posed, (i.) Oi' the monev by means of which tl^ejest are distributed to the consumers. (2.) Of the stock of ' provisions which are in the possesision of the batcher, farrher, &c. (3.) Of unmanu factured material s. And (4.) Of w ork made upland com^leated, but which i^ still in the hands of tiie merchant or manufacturer. !Of these four parts^ provisions, materials, an d finishe d ^rbrk are either annually, or in a longer, or sh ortet period withdrawn from it, and placed either in the iB^xed capital," or Tn^ie stoclTTeserved for immediate consumption. P.417. ' '^ Every fixed capital is derived from, and requires iot ^ ^^PPf?!!^g4 -li^y ^circulating capital, and without which; it can yield no revenue. To maintain and in- I crease the stock reserved for immediate consumption, is I the sole end and purpose both of the fixed and circnla- I ting capitals. Iris this stock which feeds, clothes, and lodges the people. Tlicir riches or poverty depend on the abundant or sparing supplies, which these two capitals can afford to the stock forimmediate consump- tion. These supplies are principally drawn from the produce of Jand, the mines, and fisheries ; which af-r ford provisionsand materials, of which part inwrought into finished work, and by which are replaced the pro- visions, miKei ials, and finished work continually with- drawn from the circulating capital : from mines too is drawn what is necessary for maintaining and aug- menting that part of it, which consists ia money. ( 105 ) and which must in time be wasted and worn out, p. 418—9. Lands, mines, and fisheries, require a fixed and a circulating capital to cultivate them, and their produce replaces with a profit, not only those capitals, but all others in the society. The farmer annually replaces to the manufacturer the provisions consumed, and ma# terials wrought up the year before ; and the manufac- turer replaces to the farmer the finished work, which he had worn out in the same time. The produce of land draws the fish from the waters, and extracts minerals from the bowels of the earth . P. 420. The prpduce of land, mines, and fisheries, is in the compound proportion to their fertility, and the capi- tals employed about them. In all countries where there is tolerable security, every man will endeavour to employ his stock in procuring present enjoyment, ot future profit : ir> the former case, it is a stock reserved for immediate consumption ; in the latter it is em- ployed in procuring profit as a fixed or circulating ca^ pit^l. P. 421. CHAP. II. Of money considered as a particular branch of the gene- ral stock of the society, or of the expence of main," taining the national capital, IT has been shewn that the price of every particular commodity resolves itsejf into some one, or other, or all of three parts : viz. The wages of labour; — the profits pf stock ;— and the rent of land. The same is true with. < K>6 ) Tfigard to all the commodities which compose the whole annual produce of the land and labour of every •country. The value of this whole annual produce constitutes a revenue to the inhabitants of every coun- try. As in a private estate we distinguish between the gross, and l^hew£«^ rent, so we may likewise in the revenue pf all the inhabitants of a great CQuntry.P.423s The gross rent of a private estate comprehends what is paid by the fafnier ; the neat rent, is what remains af- ter deducting theexpence of managen^ent, repairs, &c. 4Dr what he can afford to place in his ^tqck reserved for immediate consumption. His yq^\ wealth is in propor-r tion to his neat rent. p. 4^4. The gross revenue of all the inhabitants of a great country comprehends tlGe wEoIe annual produce of their land and labour ; the neat revenue what remains free after cjednctiqg the expence of maintaining ; (1.) Their fixed capital : ^nd (2.) Their circulating capi- tal, or what, without incroaching on their capital, they can place in their stock reserved for inamediate con- sumption. Their real wealth too is in proportion tQ their neat revenue. — ^That the expence of maintaining the fixed capital must be excluded from the neat reve- nue of the society is evident, since the materials neces- sary for machines, instruments of trade,profitable build- ings &c. can make no part of it. fhe intention of the fixed capital is to increase the pro ductive powers ofla- bou r^. The expence properly laid out in the fixed capi- tal is always repaid with great profit, and may be com- pared to that of repairs in a private estate. When by a proper direction the expence is diminished, the gross rent will be the same as before, and the ne^t rent is ncr cessarily augmented. P, 425. 6, Of the font parts which compose the circulating CEh pital, money, provisiom, materials, and finished work ; the three last are regularly withdrawn from it, and placed either in the fixed capital of the society^ or ia their stock reserved for immediate consumption . What - ever part goes to the latter makes a part of the neat rc- renue oTthe soSety . P. 427. The circulating capital of an individual is totally ex- cluded from making any part of his neat revenue^which must consist altogether in his profits. But the circula- ting capital of a society is not excluded from making a part of their neat revenue. The whole goods in a mer- chant's shop cannot be placed in his stock reserved for immediate consumption, but they may in that of other people, who may replace their value to him without di- minishing his capital or theirs. P. 428. Money, t herefore is the only part of the circulatin g capital of a society the maintenance of which can oc - casion any d imi nutio n in thei r nea t revenue . As it af- 'ii |J' i . » m -W ill I II i A Miimmmmmm»\ nmi t »mm m\mm^atamamBKmmmmmmmmammmm>mmfmm^Km fects the revenue of the society it bears a near resem* blance to the fixed capital. For I. As machines and instruments of trade, so also mo- ney requires certain expences first to make, and after- wards to suppo rt, which expence make a part of the gross revenue, but are deductions from the neat reve* nue of the society. il!fowey,instead of augmenting the stock resesved for immediate consumption, is employed in supporting the expensive instrument of commerce, by means of which every individual has his subsistence distributed to him. P. 428. II. As instruments of trade make no part either of the gross or neat revenue , so money, by meansof which the whole revenue of the society is distiibuted among itUits members, makes no part of that revenue. The Vl^v. yZ^vt^ i^^ H4 k^-t± ^ n£Hc*. deduct the whole value oTthe money. The fonowuig considerations will make this evident.r^When we speak of any particular sum of money, we either mean the number of metal pieces of which it is composed, or the quantity of goods which it will purchase. Now the wealth which it denotes is equal only to one of these values, and to the latter more properly than the former. Thus a weekly pen- sion of a guinea will purchase for any person, a certain quantity of subsistence. In proportion as this quantity is great or small, so is his real revenue. It do es not con- sistjn the piece of gold, but i n what he can exchange it for. Th ough the revenue of all the inhabitants of any country may be paid them in monej^, their real riches must be in proportion to the quantity of con- sumable goods which they can purchase with this mo-^ iiey. The whole revenue of all of them cannot be equal to both the money, and the goods^ but only to one of those val^ es, and to the latter more properly than to the former. The amount of the metal pieces annually paid to an individual may be precisely equalto his revenue ; but the amount of metal pieces which circulate in a society can never be equal to the revenue of all its members, ^oney, therefore, the great wheel of circu- lation,like all otherinstrumentsof tra3e,tliough it make* ft part oi'tlic capital^ makes uu part of the revenue of the society to whicli it belongs. P. 429 — S3. III. As every saving in the expence of the instru- ments of trade^_ which compose the fi^ed capital, is aa, irnpf ovetnent in the neat revenue of the society, so 19 every saving in the expence of collecting and support^ ing that part of the circulating capital which consists ia money. — ^The whol^ capital of every man must he either fixed, or circulating ; the smaller the one, th« greater must be the other. Every saving in the ex- pence of maintaining the fixed capital, must increase ihe fund which puts industry into motion, and con- sequently must increase the real revenue of the society* P. 433. The substitution of paper in the room of gold and sil- ver money, replaces a very expensive instrument of commerce with one less costly. In what manner it tends to increase the revenue of the society requires some explication. There are several sorts of paper money ; the notes of banks and bankers are best known^ When the people have such confidence in any banker as to believe that he is always ready to pay upon de- mand such of his notes as are presented to him, these notes come to have the same cmrency asgold and silver money. P. 434. A particular banker lends notes, we shall suppose, to the extent of 100,0001. As those notes serve all the purposes of money, his debtors pay him interest for them, which is the source of his gain. Though he has notes to the extent of 100,0001. in circulation ; 20,0001. in gold and silver may frequently be sufficient for answering occasional demands. Thus 80,0001. of gold and silver can, in this manner, be sptiredfrom the circulation of the country ; and the whole circula- tion may be conducted with a fifth part only of the gold and silver which would otherwise have been re^ui* site. P. 435. o Suppose the circulating moneyof a country to amount to one million sterling, that sum being sufficient for circulating the whole annual produce of their land and labour : — If then bankers issued notes to the extent of one million, reserving 200,0001. in their coffers to an- swer occasional demands, there would remain in circu- lation 1,800,0001. of paper and money together : but, one million sterling, is sufficient to circulate the annual produce of the land and labour. The other 800,0001. bemg the sum over and above what can be employed in the circulation of the country, will seek profitable employment abroad : but the paper cannot go abroad. Gold and silver therefore to the amount of 800,0001. will be sent abroad, and the channel of home circula- tion wiil remain filled with a million of paper, instead 9^* metal which filled it before. The quantity of money sent abroad will be exchanged for foreign goods, to supply the consumption either of some other foreign country or their own. In tlie former case, whatever pro£t is made, will be an add ition to the neat revenue of their own country. If they employ it in purchasing foreign goods forborne consumption, they may either (1.) Purchase such goods as will be consumed by idle people who produce no- thing; as foreign wines, silks &c. or (2.) They may purchase materials, provisions &c. to employ and maintain an additional number of industrious people. So far as it is employed in the first way, it is injurious to the society. So far as it is employed in the second way, it promotes industry, and increases the revenue of the society. The greater part of the gold and silver employed in purchasing foreign goods forborne consumption, must be employed in purchasing those uf the second kind. Since the demand of idle people ( 111 ) for foreign goods, being the same, or nearly the same as before, a very small part of the money forced abroad by the operations of banking is likely to be em- ployed in purchasing foreign goods fpr their u§e. In computing the quantity of industry which a circu- lating capital can employ, regard must be had only to those parts which coimht, in provisions, materials, and finished work. Money, which serves to circuliJte these, ;nust be deducted. Industry is put into motion by ma- terials to vyork on ; — tools to work with ; — and wages. Though the workman is commonly paid with money, his real revenue consists not in the money, but in the inohey's worth. The quantity of industry which a ca- pital can employ must be equal to the number of work- men whom it can supply with materials, tools,and mai^- teriance. Mpney may be necessaVy to purchase these, but the quantity of industry cannot be equal to the money, and also to the things purchased ; but only to one qf those two values, and to the latter more properly than the former. P. 440. When paper is substituted in the room of gold and jsilver, th^ quantity of materials, tools, and mainte- nance, which a circulating capital can supply may be increase4 by the whole value of gold and silver, which used to be employed in purchasing them. The v alue of the wheel of circulation is j^dded to the goods circulated. The proportiop which the circulating money bears to the annual produce of ^ny country has been computed at a fiftb,tenth,an(} even at a thirtieth ; but whateveritbe, Jtmust bear a considerable proportion to that part desti- p^d for the maintenance of industry, When t^erefojf^ < 112 ) paper supersedes, suppose four fifths of the circulatifig ^6ld and silver, and the greater part 6f that four fifths be applied to the maintenance of industry, it must make A considerable addition to the quantity of industry, con* sequently to the annual produce of land atid labour, P. 441. An operation of this kind took place sotrte years ago in Scotland, by the erection Of new banking companies, by means of which, it has been said, that the trade of Glasgolw hast)een doubled, and that of Scotland more than quadrupled. P. 442. The value of the gold and silver money which circu* lated in Scotland in 1709, was al3out a million sterling : Chis \vasthe n^kole circulation of that country. It can-' iiOt now he less than two mi'llions, of which the amount of gold and silver does not amount to half a million^ The real riches of Scotland have not suffered, by thi^ diminution of the circulating gold and silver. The ati- itiual produce of theirland and labour has evidently beeii augmented. P. 445. 3. The profit of banks, and bankers, principally (fonsi^tj} in advancing their own notes, in discounting bills of ex- change, deducting legal interest 'till the bills become due. They have also another method of issuing their dwn notes; by granting ccfs^ accounts to the extent of a certain "Slim, to any individual, who can give sufficient security for the repay mept when demanded, Jn Scot-? land the sum so borrowed, may be paid by any installr- jnents, however small. All men of business there?* fore, find it convenient to keep such cash accounts, alnd are thereby interested to promote the trade, and support the credit of those banking cbhipanies. By- means of these cash accounts, the merchant can carry ou a greater trad^ than he otherwise could ; as he is ( 113 ) tfb^e to employ all his own capital in trade, without reserving any part of it in his coffers, for occasional de^- mands. V P. 444—7. The whole paper money of every kind, which caii circulate in any country, can never exceed the valu$ iof the gold and silver, of which it supplies the place. If Ht any time it should exceed that sum, the excess will jalmost immediately return upon the bankers, to be exic changed for gold and silver, which may be rendered useful abroad, though paper could not. There will therefore be a run upon the banks, to the whole extent of this superfluous paper, and if any difficulty were shewn in payment, the alajrm would increase the run^ p. 448. Over and above common expences, those of a bank consist : (1.) In keeping a large sum of money in their coffers to answer occasional demands, from which they, receive no interest; and (2.) In replenishing those coffers as fast as they are emptied. A bank issuing more paper than can be employed in the circulation of the country, ought to increase its quantity of gold and silver, not only in proportion to this excessive increase of their circulation, but in a much greater proportion; which increases the first article of expence. Their poffers too, though they ought to be filled much fuller, yet must empty themselves faster than if their business was confined within more reasonable bounds. The coin drawn from them will not lie idle, but be sent abroad, which will enhance the second article of expence, P. 449. ^0. By issuing too great a quantity of paper, the Bank of England was, for many years, obliged to coin gold to the extent of 850,0001. a year, at a loss of more tha« ?1 per cent, giving 4l. per ounce for the bullion, and ( 114 ) Issuing it in guineas at 3l. 17s. lOJd the ounce. The JBcotcb banks by a similar excess have been, frequently at the expence oi collecting money at two per cent.and paying^ per ceqt. for c^irriage ; besides being put to other very considerable inconveniences. ITie gold coin was paid by the bank in exchange for that part of tijeip paper, which was over and above what could be employed in the circulation of the country; and being above what could be employed in that circulation, it was melted down or sent abroad, and sold again to the liftnk at 4l.an ounce. Hence, the necessity of the great annual coinage to supply the bank of England. The overtrading of some bold projectors, was the original cause of this excessive circulation of paper money, P. 451t-4. ^ bank can advance, with propriety, to a merchant, that part of his capital, which he would otherwise be obliged to keep by hini unemployed, and in ready money for answering occasional demands. If the pa- per money never exceed? this value, it can never ex- ceed the quantity which the circulation of the coun» try can easily employ. When a bank discounts bills of exchange, drawn by real creditors, upon real debtors, and which are paid when due, little or no ex- pence can be necessary for the replenishing its coffers. P. 155. A merchant, without over-trading, may frequently have occasion for a sum of ready money, even when he has wo bills to discount. When a bank advances hira Buch sums upon the easy terms of the banking compa- nies of Scotland, it dispenses him entirely from the necessity of keeping any part of his stock unemployed. The bank, however, should carefully observe, whether in short periods, the repayments of such customers l^e ( 11^ I'^guiai', and equal to the advances- made to theni. tt they are, it may safely continue to deal with them, but not otherwise. The banking companies of Scotland, Were for a long time careful to require frequent and re- gular repayments fronl all their Customers. By this attention, they not only saved much extraordinary ex- pence of replenishing their Coffers, but gained two other advantages. (1.) By this attention, they were enabled to form a tolerable judgment concerning the thriving or declining circumstances of their debtors * and (2.) They secured themselves from the possibility of issuing more paper money, than what the circula- tion of the country could easily employ. P. 456 — 9* When, by the conveniency of discounting bills, and of cash accounts, creditable traders can be dispensed from the necessity of keeping any part of their stock unemployed, they can reasonably expect no farther assistance froni banks and bankers. A bank cannot, consistently with its own interest, advance to a trader the whole or even a great part of the circulating capital with which he trades, since the returns would be too slow to suit the conveniency of a bank : still less could it afford to advance him any considerable part of his fixed capital, for in this, the returns are still slower. Traders may with propriety/, carry on a considerable part of their projects with borrowed money, provided their own capital be sufficient to ensure that of their creditors, should the success of their projects fall short of expectation. Even with this precaution, the money should not be borrowed of a bank, but of private peo- ple who propose to live upon the interest of their mo- ney, without any trouble of employing the capital. P. 460. 1. ( 116 ) When tlie banking companies of Scotland had givetl ti]] the assistance to traders which they ought to give^ or even somewhat more, the traders were not satis- fied : they thought the baitks bound to supply their own deficiencies, and to provide whatever capital they wanted to trade with. This the banks refused, and the traders had recourse to the expedient of drawing and, re-drawing ; this practice shall be explained. P.462. 3* Money is more readily advanced upon bills of ex- change, than upon any other species of obligation, ow- ing to the privileges attaching to them. If, when a bill becomes due, the acceptor does not pay it, he be- comes from that moment a bankrupt. The same hap- pens to the drawer, and even to all those who have e«- dorsed it, if they fail in payment : this renders bills of exchange the best paper security* A trader— A in Edinburgh, we shall suppose, draws a bill upon B in London,payable two months after date.InrealityBowes nothing to A, but accepts A*s bill upon condition, that before the term of payment, he shall re-draw upon A for the same sum together with interest and commission. This practice has sometimes gone on for years, the biU always returning upon A in Edinburgh, with the accu- mulated interest and commission. The interest was five per cent, for the year, and the commission never less- than I per cent, on each draught. The commission repeated six times in the year, whatever money A might raise by this expedient, must have cost him at least eight per cent. This practice was called raising money by circulation. The ordinary profits of stock, in the greater partof the mercantile projects, could not sup- port this interest. The bills which A drew upon B, he discounted two months before they became due, with lw)me bank in Edinburgh ; and the bills which B re-. ( 117 > drew upon A, he discounted with the b^^nk at Lon- don. Whatever was advanced upon these bills was ad- Vfinced in paper. Though the bills upon which this paper had been advanced, were all re-paid when due, yet the value upon the Jirst bill was never reallj/ re- turned ; because before each bill was due^ another was drawn to a greater amount. This payment was there- fore fictitious. P. 464 8. The paper which was issued upon those circulating bills of exchange, amounted often, to th-e whole fund destined for carrying on some vast project. The greater partof thej9«per was, consequently, over andabove the value of the gold and silver, which would have been circulated in the country, had there been no paper mo- ney, and upon that account it immediately returned upon the banks, in order to be exchanged for gold. P. 469. When two people who are continually drawing and re-drawing, discount their bills with the same banker, he must immediately discover, that they are trading with his capital, not with their own : but when they discount their bills, with different bankers, the discovery is not so easy, more especially when the same two per- sons fun the round of a great circle of projectors. When a banker had even made this discovery^ it might be top late; he might find that by refusing to discount more bills of the projectors, he would make them bankrupts, ^nd perhaps ruin himself. He must therefore gradually ^ make the difficulties of discounting greater, in order tp get out of the circle, and to force the projectors to have recourse to other bankers. The difficulties which the bai^k of England, the bankers of I^ondon, and the more ( n^ ) prudeftt bankers of Scotland began, wben all had g6h€ too far, to make about discounting bills, enraged the projectors in the" highest degree, for whose relief a nez^ batik was expressly established. It was the avowed prin- ciple of this bank, to advance upon reasonable security the whole capital, which was to be employed in those improvements, of which the returns are most slow. By this means it issued great quantities of its notes, which, beirtg for the most part over and above what the circu- lation of the country could employ, returned to be ex- changed for gold and silver as fast as they were issued. By this method they were, in a few months, driven to the ruinous expedient of drawing upon London, and when the bill came due, paying it together with interest and commission, by atiothe'r draiught upon the same place : and in about two years they stopt payment,when they had in circulation '200,0001. in notes, and bills of exchange, to the value of 600,000l. This bank had thus advanced in two years, 800,0001. at five per cent, interest ; for 600,000l. of which they paid upwards of eight per cent, consequently losing three per cent, upoii three fourths of all their dealings. P. 469. — 74. By means of this bank, projectors had a temporary relief afforded to them ; and the other banks easily got out of the circle. But in the long ruti, the distress', which this bank meant to relieve, was greatly increas- ed. Had this operation proved practicable, and evert profitable to the bank as a mercantile company, the country could have derived no benefit from it. The money to be lent could not have been augmented. P. 475—7. That the industry of Scotland, languished for want of mo nej^ to employ it, was the opinion of the famous Mr. Law. By establishing a bank of a particular kind. ( 119 ) he imagined paper might be issued to the amount of the whole value of all the lands in the country. Scot- land did not adopt his project. With some variations it was adopted in France. The idea of the possibility of multiplying paper money to almost any extent, was the foundation of the Mississippi scheme, the most ex- travagant project both of banking and stock-jobbing, the world ever saw. P. 478, The Bank of England, is the greatest bank of cir-- culation in Europe; it was established by Act of Parlia- ment, in 1694. At tbat time it advanced to govern-^ ment, l,200,00Ql. at eight per cent, interest, and 40001. a year for the expences of management. In 1697, it was allowed to incresise its capital to 2,201,1711' 10s. for the support of public credit: bank-notes having been, in the preceding year, at twenty per cent, dis- count, and during the great re-coinage qf silver, which was going on at the same time, the bank had stopt the payment of its notes. In pursuance of the 7th of Anne, the bank p^id into the Exchequer, 400,0001. making id all l,600,00Ql. for which it continued to receive only the 96,0001. interest, and 40001. for management. By the sameAct, the bank cancelled Exchequer bills, to the amount: of 1,775,0271. 17s. ld|d. at six per cent, interest, and was allowed to double its capital. In I7O8, therefore the capital of the bank amounted to 4,402,3431. and it had advanced to government, 3,375,0271. 17s. 10|d. and in 171O, the bank capital amounted to 5,559,9951. 14s. 8d. By the 3d, George I. the bank delivered up two miUions of Exchequer » hills to be cancelled. It had therefore advanced to go- yernment, 5.375,0271. 17s. lO^d. In 1722, the banl^ purchased stock of the south-sea corDpatiy, to thfe amount of 4,000,0001. and increased its capital by 3,400,0001. At this time the bank had advanced to the public, 9;,375,027l. 17s. lOid. for which it received interest ; and its capital stock, upon whiph lipaid di- vidends, amounted to 8,959,9951. 14s. 8d. In 1746, the tooney advance.d to the public was 11,686,8001. and its capital was 10,7 80,000) .And by the 4th of George III. the bank paid 1 10,000l. for the ^enejval of its charier. The dividend of the bank has varied at different times^ The stabihty of the l^ank of England, is equal to that of the British government. All that it has advanced to the public must be lost, before it^ creditor^ can sus? tain any loss. It acts as a great state engine. It receives and pays a great part of the annuities, which are due to the creditors of the public. It circulates exchequer bills, and it advances to government the annual amount of the land and malt taxes. In these qperations it has frequently over-stocked the circulation with paper mo- ney. It discounts bills, and has on many occasions supported the credit of the principal houses of England, Hamburgh, and Holland. Upon other occasions, this great company has l^een reduced to the necessity of paying their notes in six-pences. P. 479 — 82. It is not by augmenting the capital of the country, but by rendering a greater part of that capital produc- Ibive, than would otherwise be^ that the most judicious operations of banking can increase the industry of the country. The gold and silver money which circulates in a country, is, like the ready money of a dealer, all dead stock. It is a valuable part of the capital of a countr}'^, which produces nothing to the country. It may be compared to a highway, which carries grass and cpri^ to market, but itself prpduces ueii,her ; and the ju- ( 121 ) dicious operations of banking, by providing a waggo^ way through the air, enable the country to convert ^ great part of these high-ways into good corn and pdsr ture lands, and therefore to increase the annual produce pf its land anxi labour. The commerce and industry of Sl country may be thus augmented, but they are not Altogether so secure, as on the solid ground of gold and silver. Besides, they are more liable to several acci- dents, which no prudence can prevent. A successful invasion would occasion much greater confusion in a country^ where the circulation was carried on chiefly by paper, than in one where the greater part of it was canied on by means of gold and silver. P. 483 — 5. The circulation of every country maybe considered as divided into two branches ; the circulation of dealers with one another, and that between dealers and their customers. Each requires a pertain stock of money. The whole of the goods circulated between the dealers, can never exceed the whole of those circulated beiweeii dealer^ and consupners. The former requires large sums fpr each transaction ; the latter frequently re- quires only small sups : but the small ones circulate inuch faster than the large onts. Therefore the annual pirculation of the consumers may require a smaller (quantity of money, p, 485. 6. Where there are no bank notes under lOl. paper money will confine itself chiefly among the dealers : but where bank notes are issued for 20s. and under, pa- per money extends itself to a considerable part of the circulation between dealers, and consumers. Where paper money is chiefly confined to dealers, there is plenty of gold and silver : but where it makes a consi- jderaye part of the circulation .between dealers and, ( 1?2 ) ffonsnmers, it banishes gold and silver out of tl)e cQun» , try. P. 487. 8. Though paper money should be principally confined tb the circulation between dealers, yet banks might give nearly the same assistance to the industry of a country, by discounting real bills^ and by lending on cash accounts. P. 489. Paper money consisting of notes,, issued by people of undoubted credit, and payable on demand, is equal to gold and silver money : nordoes it necessarily increase the money price of commodities ; for the quantity of gold and silver taken from the currency, is always equal to the quantity of paper added to it. It would be other- wise with paper money, consisting of promissory notes, the immediate payment of which was made, in anyTe- spect, conditional. When it was optional with the bankers of Scotland to pay their notes immediately on demand, or six months after presentment, with legal interest, they were at a discount. P. 492. In Yorkshire, the paper currencies were degraded telow the value pf gold and silver ; for some tiiixe^ the payment even of si x-pepce, depended upon the condi- tion that the holder of the note, should bring change for a guinea. P. 493. The paper currencies of North America^, consisted formerly in government paper, which \yas not exigible till sever£^l years after it was issued. But lOOl. payable fifteen years hence at six per cent, is equal only to ^bout 40l. ready money. To oblige a creditor to ac- cept qf this for IQQl. was downright fraud. HencC;, the equity of the law which declared that no paper cur- rency should be deemed a legal tender of payment. The paper money of Pensj^lvania, never sunk below the value of gold and silver. This colony however, rais- ( 321 ) «d the denomination of its coin, ordering five shillings sterling to pass for six shillings and three-pence, under pretence of preventing the exportation of coin. It was found however, that the price of goods in^ported, rose exactly in proportion as tli^ denomination 6f coin was raised, which was exported as fast as ever. P. 493—5. If a certain proportion of the taxes must be paid in paper, and the bank were careful to keep the quantity of paper somewhat below what could be employed in this manner, the demand for it might be siich as to make it bear a premium. P. 496; A paper currency which falls below the value of gold and silver coin, does not sink the value of those metals. The proportion between the value of the precious me- tals and that of goods, depends on the richness or po- verty of the mines which happen at any particular time to supply ttie great market of the commercial world ; and also on the labour necessary to bring the metals> and the goods to market. P. 497. The multiplication of bankers, who are restrained from issuing notes under a certain sum, and who arei also subjected to the obligation of the immediate and unconditional payment of those notes, increases the se- curity of the public. The competition obliges a// to be more circumspect in their conduct ; and the circulation being divided into a greater number of parts, the failure of any one company becomes of less consecjuence to the public. P. 498. 9. End of the First VotuME, VOLUME IL BOOK it CHAP. III. Of the accumulation of Capital, or of productive and unproductive Labour, TrODUCTIVE labour as that of % manufacturer, adds to tlie value of the subject on which it is bestow- ed. Unproductive labour as thaTgft ho me mal servant, - Has no such effect. ' 'Pfll?, UWHW f ac tu^ r " isHn 6 expen ce to his master, his wages being restored with a profit. The maintenance of a menial servant never is restored. The labour of the latter, however, has its value. — The labour of the manufacturer realizes itself in some vendi- ble commodity which' lasts after the labour is past: — tliat of the menial* servant perishes in the very instant of performance. P. 1. % The labour of some of the most riespectatle orders iij society is Mke that of menial servants. The sovereign, and all the officers of justice and war, are unproductive labourers. They are servants of the public, and main- tained by the industry of the people. Their service produces nothing for which an equal quantity of service can afterwards be procured. In the same class must be mwl^tfy dfur'^Tytt^etr, lawyers^, pllysiddrts, ^6n of let- fers ; playei^s, btfffbbrts, opefa singers, &c. P. 3. Pf^ew'tive, and unprocftrCtive J^boirfers, ahd those WlVo* d6^ nfOf labour At &\\,atte all iWairttaim;d by the an* fttJa* p^odn^^ of the eoontry. 'Phis ptoduce h«i9 Us lU Iftitsy and^ k the effect of pToductive Motir. The anfin* &} i>i*odiice of iihe Isitidl, afiid la!botif, of evfery country ^•vid^es it^el-f iiMky tf^O piarts : one of which is destined ^ ki^ Renewing the pt&tmoiiSy materidk', an^ finished ^j^/ytn^ work, which had been withdra^V-n from the capital ; th6 ©ther for c'6t\stitutttigsL revenue either as profit of stocky o* asrent of Jartd. Theibrttoer is employed to main* latn prodii'ctiive h-atid^ only, 'f he latter In^y maintain *ifher prodHiclive or unprodiictive hands. ^• Prtprod^ctitt labodyers, and'those who d^ iiiof li^tif ac all, are all maintaiti^d by reyenrue ;^itto (1.) bj' tkiatpart of the annual produce originally destined for ^on^ituting' a revenue to particular persons, as rent of fend, or pi^ofits of stock ; or (2). by that which though iiri^i'nttlly diestined fot replacing acapitial, and for mairi- tift^tiittg productive l^lbourers only, yet when it comes kitb their hands, whatever part is above their necessary mibsistence, may be emp^byed in maintaining either pro- ductive or unproductive hands. Thus the landlord, merchant, and even Workmen, may maintain a menial 8erVaiit> or gty Ho a y^ltty, and so contribute tovVard* maintaining one set of unproductive labourers ; or hd may pay taxes, and thus help to maintain another set equally unproductive. The rent of land, and the pro- \ ^^ of stock are therefore the principal sources fi-Om which' unproductive hands derive their subsistence. ?. 4— a: ( H6 ) The proportion between the productive, and unpro- ductive hands, depends upon the proportion between that part of the annual produce which is destined for replacing a capital, and that which is destined for con- stituting a revenue. This proportion is very different in rich, and poor countries. — At present in the opulent countries of Europe, a very large portion of the pro- duce of the land is destined for replacing the capital of the farmer ; the other for paying his profits, and the rent of the landlord. But antiently, under the feudal government, a very small portion of the produce was sufficient to replace the capital employed in cultivation; it consisted only »in a few wretched cattle, which also generally belonged to the landlord. In the present state of Europe the share of the Landlord seldom exceeds a third, sometimes not a fourth part of the whole pro- duce of the land. P. 7 — 8. Manufactures, now, require great capitals ; formerly very small capitals were sufficient ; but their profits must have been great, as the rate of interest was no where less than 10 per cent. At present the rate of iri- terest is no where greater than 6 per cent, and in some parts it is as low as 2 per cent. The profit of stock is greater in a rich tban in a poor country, because the stock is much greater; — in proportion to the stock, the profits are generally less-. That part of the annual pro- duce destined for replacing a capital, is greater in rich than in poor countries, and bears a greater proportion to that which is immediately destined for constituting a revenue either as rent or profit. The proportion be- tween the funds destined for the maintenance of pro- ductive labour, and those which are employed in sup- porting unproductive labour,determines,inevery coun- try, the character of the inhabitants, as to industry or < 127 ) idleness. We are more industrious than our forefathers, because the funds destined for the maintenance of in- jdustry, are much greater in proportion to those likely to be employed in the maintenance of idleness^ than they were two or three hundred years ago. In manu- facturing towns the inferior people are in general in- (dustrious ; — in towns principally supported by the re- sidence of a courts they are generally idle. In a city where a great revenue is spent, it is difficult to employ a capital with advantage, for any other purpose than supplying the consumption of that city. The idleness of the greater part of the people corrupts the indus- try of those who ought to be maintained by the em- ployment of capital. The proportion between the ca- pital, and revenue, therefore, seems every where to regulate the proportion between industry and idleness. P. 9—11. Capitals are increased by parsimony, and dimini- shed by prodigality. Parsimony, and not industry, is the immediate cause of the increase of capital. Parsi- mony, by increasing the fun4 destined for the mainten- ance of productive hands, tends to encrease the num- ber of those hands whose labour adds to the value of the* subject on which it is bestowed. This gives an additi- onal value to the annual produce. P. 13. What is annually saved is as regularly consumed as irhat is annually spent, but by a different set of people. What a rich man spends is consumed by idle guests,and menial servants. What he saves, being employed as a capital, is consumed by labourers, manufacturers, &c. who produce with a profit, the value of their annual con sumption. P. 14. (^ Q S < ife ); By wb^ » frugal w^n annually ?ftvp8, he eCori^^ m^-intenance to ^a adck of goods* worth sometbiirg^. As one mode of expen^ce fs more favourable thair the other to the opnlence of an Individual, so it is likewise to a nation. The houses', the furniture, the cibthing of the rich, in a- little time, become useful' to the' inferior rani^sr of ti\e people. P. 28—9' The expence too which is laid out itt durable com- modities, is favourable to frugality as well a& accumti- lation. ff a person- should atanjr time' exeeedin it; he caff easily reform without exposing himself tiD eeri- sure. P. 30. The expence, besides, that is laid out irt' durable commodities, gives: maintenance, commonly, to a gieater number of people, than* that whichis employ^ ed in the most profn'se hospitality. Pn the one way, this expence maintain? productive, in the othei' unpro- dtrctive hands. In tbe^oneway, therefore, itinereases^ in the other, it does not increase, the excHangenble*' Talhe of the prod\iceof theiandWdlabouY ol^thecroun- try. F. 31. < 133 ) CHAP. IV. Of stock lent at interest. THE stcK'k whicb is lent at interest is considered ag a capital by the lender. The borrower may use it either as a capital, or as a stock reserved for immediate conw» ^umption. If he uses it as a capital, he employs it in the maintenance of productive labourers ; and can re* store the capital and pay the interest without encroach*- ing upon any other source of revenue, which he cannot do if he uses it as a stock reserved for immediate con- sumption. P. 33. Stock lent at interest is occasionally employed in both these ways, but in the former more frequently ihan in the latter. A man of common prudence will lend a part of his stock only to those who will employ it profitably. Even among borrowers, the number of the frugal and industrious surpass that of the prodigal and idle. Stock is sometimes lent to country gen* tlemen upon mortgage. What they borrow is com* monly spent before they borrow it. P. 33. 4. Loans at interest are made in money, either of paper^ or of gold and silver. But what the borrower wants, and what the lender supplies, is not the money, but the goods which it can purchase; the lender assigns to the borrower his right to a certain portion of the produce of the country to be employed as the borrower pleases. The quantity of stock, or, as it is usually expressed, of poney which can be lent at interest ia any country^ i» R { 134 ) tiot regulated by the value of the money^ but by the value of that part of the annual produce, which is des- tined not only for replacing a capital, but such a capital as the owner does not care to be at the trouble of em* ploying himself. Such capitals constitute what is called the monied interest. It is distinct from the landed, and also from the trading interests, as in these last the owners themselves employ their own capitals. Even in the monied interest, the money is but the deed of as- signment which conveys from one hand to another, those capitals which the owners do not care to employ themselves. Those capitals may be greater in almost £very proportion, than the amount of the money which serves as the instrument of their conveyance ; the same pieces of money successively serving for many diffe- rent loans, as well as for many different porehases r. 35—6. .. In proportion as that share of the annual produce which is destined for replacing a capital increases in any country, the monied interest increases with it^ Ai stock increases, the quantity of stock to be lent at in- terest grows gradually greater. As the quantity of stock to be lent at interest increases, the interest diminishes. For as capitals increase in any country, the profits di- minish, and it becomes more difiicult to find a profit- able method of employing any new capital. Hence the competition between different capitals, which sinks the profits of stock. The demand also for productive labour increases, by the increase of the funds destined for maintaining it. This raises the wages of labour. But when the profits of a capital aie thus diminished, the rate of interest must be diminished with them. P. 37—8. Mr. Locke, and other writers suppose, that the in- crease of gold and silver, by th(^ discovery of tiie Spanish ( 135 ) inines^ vras the cause of the lowering the rate of interest throughout Europe. Before the discovery ot the Spanish West Indies, 10 per cent, was the common rate of in- terest. It has since that time sunk to 6, 5, 4, and 3 per cent. Suppose the value of silver has sunk precisely in the same proportion as the rate of interest, and that ia countries where interest has been reduced from 10 to 5 per cent, the same quantity of silver can now purchase half the quantity of goods which it could have pur* chased before : even upon this supposition, it is impos- sible that the lowering the value of silver could have the smallst tendency to lower the rate of interest, i : Whatever causes lowered the value of the capital must have lowered that of interest, and in the same proportion. The proportion between the value of the capital, and that of the interest must have remained the same, though the rate had never been altered. By altering the rate, the proportion between the two va- lues is necessarily altered, If 100 pounds now are worth no more than 50 were then 5 5\. can be worth no more than 2l. 10s. By reducing the rate o£ interest from 10 to 5 per cent, we give for the use of a capital equal to ha/f its former value^* and interest equal to one fourth only of the value of the former Interest.. Any increase in the quantity of silver, cauld have no other effect than to diminish the value of that metal.. The nominal value of goods would be greater, but their real value would be precisely the same as before. The: capital of the country would he the same, though a. greater number of pieces might be requisite for convey- ing any equal portion of it from one hand to another. Xhe funds for maintaining productive labour being the^ R e < 136 ) fltoe: wages, therefore, though nominally greateiE^ Would really be the same. The profits of stock, whicH are not computed by the number of pieces of silver with which they are paid, but by the proportion which those pieces bear to the whole capital employed, would be tiie same both nominally and really. So also would the common interest of money. P. 39—41. t.ur/ ? Any increase in the quantity of commodities annually circulated, while the money remained the samCj would produce other effects besides that of raising the value of money. The capital of the country would be aug- mented. The quantity of productive labour which it could maintain would be increased. Wages ^yould rise, the profits of stock would be diminished, as would thq interest of money which always keeps pace with the profits of stock. P. 42. In some countries the interest of money is prohibited by law. This regulation, instead of preventing, has increased thejBvil of usury ; the debtor being obliged to pay for the use of money, and for the rk}^ which his creditor runs by accepting a compensation for that use. In other countries the law fixes the highest rate which can be taken without incurring a penalty. This rate ought always to be somewhat above the lowest market price. If this legal rate be fixed below the lowest mar- ket rate, it will be the same as a prohibition of interest. The legal rate ought not to be much above the lowest market rate. If the legal rate of interest in Great Bri- tain was fixed at 8 or 10 per cent, the greater part of the money lent, would be lent to prodigals and projec- tors, who alone would be willing to give this high inte- rest. No law can reduce the common rate of interest below the lowest ordinary market rate at the time when the law is made. P. 43—5. < 157 ) The ordinary market price of land, depends npon the jerdinary nlarket rate of interest. The superior security ©f land, disposes a man to be content ^yith a smaller re^ ^nue from land, than what he might have by lending out his money at interest. When interest was at 10 pe» cent, land was commonly sold for 10 or 12 years pur- chase. As interest sunk to 6 and 4 per cent, the pric4^ of land rose to 20 and 30 years purchase. P. 46. CHAP. V, Of the different er^ploymefit of Capitals, A CAPITAL may be employed four different wayi^ ; (1.) In procuring the rude produce annually required for the use and consumption of the society : or (2.) In freparing that rude produce for consumption : or (3.) n transporting rude or manufactured produce fioni places where they abound, to those wjiere they are wanted : or (4.) In dividing particular portions of either into such small parcels as suit the demands of those who want them* — Each ot these four methods of em- ploying a capital, is necessary to the existence or ex- tension of the other three, or to the general conveni- ence of the society." — ^The capital emploj^d in furnish- ing rude produce is necessary to trade and manufac- turers :*— that employed in manufacturing the rude pro- duce is necessary to supply the demand.— Unless a ca- pital was employed in transporting either rude or manu- factiired produce from one place to another, no moro ( 138 ) uould be produced than was necessary for the consurap-» tion of the neigbourhood.r-Unless a capital was em^ ployed in dividing certain portions of the produce into igmall parcels, every man would he obliged to purchase a greater quantity of goods than he wanted. P. 46 — 9. The persons whose capitals are employed in any of these four ways are productive labourers. Their labour reahzes itself in the vendible commodity on which it is bestowed, and adds to its price the value, at least, of their owi\ maintenance and consumption. Equal capi- tals employed in each of those four different ways, will put in motion different quantities of productive labour. The capital of the retailer replaces, with its profits, that of the merchant. The capital of the merchant replaces, with their profits, the capitals of the farmers and manu- facturers. His capital too employs sailqrs ?ipd carriers. Part of the capital of the master manufacturer is em- ployed as a fixed capital in the instruments of his trade, and replaces with its profits^ that of the artificer who makes them : — ^part of his circulating capital purchases materials of the farmer ; — but the greater part is distri- buted among workmen. P. 50-^1, No equal capital puts inta motion a greater quantity of pioductive labour than that of the Farmer, His cat- tle and servants are productive labourers ; nature also labours along with man, at no expence, but its produce ]ias its value. The operations of agriculture seem in- tended to direct, rather than increase the fertihty of na- ture. Over and above the capital of the farmer and its profits, there is the reproduction of the rent to the landlord, which sometimes is a third of the whole pro- duce. No equal quantity of productive labour employed in manufactures, can occasion so great a reproduction. Hence a capital employed in agriculture, is most ad- vantageous to society. P. 52^3. The capitals employed in agriculture and the retail trade must reside within the society ;— that of the mer- chant has no fixed residence. The capital of the manu-* facturer must reside where the manufacture is carried on, but this may be at a great distance from the place where the materials grow, or the manufactures are con* «timed. Part of the wool of Spain is manufactured in Great Britain, and the cloth sent back to Spaiii* Whe- ther the merchant whose capital exports the surplus produce of any society, be a native or foreigner, is of no other importance, than the difference of the value of the annual produce of that one matt. It is of more consequence that the capital of the manufacturer should reside within the country, as it puts a greater quantity of productive labour into motion. P. 54 — 5. A country, like an individual, may frequently not have sufficient capital to cultivate its lands, and manu- facture its rude produce ; and to transport t;he surplus part either of the rude or manufactured produce to dis- tant markets. In this situation of things agriculture is to l)e prefered, and then manufactures. P. 56. The country which has not capital sufficient for all those three purposes, has not arrived to that degree of opulence for which it seems naturally destined. To at- tempt, however, with an insufficient capital, to do all three is not the shortest way to acquire a sufficient one, — ^The capital of all the individuals of a nation, is in- creased by adding to it what they save out of their re- venue : it will increase the fastest when it is employed in the way which affords the greatest revenue, which is in proportion to the annual produce of their land and labour. P. ^7» ( 146 > JBy agrieulture> America has made rapid progress to* wards wealth and greatness. The course of human pros** perity seems scarce ever to have been of so long conti- nuance as to enable any great country to acquire capi* tal sufficient for all three purposes. — ^Thus the capital of any country will put into motion a quantity of produc- tive labour in proportion as it is employed in agriculturei manufactures and wholesale trade.-^The diiFerence is also very great according to the different sort of whole- sale trade in which any part of it is employed. P.58-— 9. All wholesale trade m^y be reduced to' (1.) The kome ttnde which is employed in purchasing in one part of the same country, and selHng in another (2.) The foreign trade of consumption, which is employed in purchasing foreign goods for home consumption., (^.) The carrying trade which is employed in transac* ting the commerce of foreign countries. Th^ capital emplaj^ed in ihe first generally replaces two distinct capitals employed in supporting productive labqur. The capital which sends Scotch manufactured to London, brings back English corn and English manu* lactures. The capitals employed in the second, likewise re* place two capitals, but one only of them is employed in supporting domestic industry : consequently the ca-* pital employed in it, can give, at most, but one half the encouragement to the industry of the country, as that employed in home trade. Foreign goods for home consumption may be purchased with other foreiga goods ; these last, howev^er, must have been purchased with the produce of domestic industry; the effects, therefore, of a capital employed in such a round about foreiga trade, are the saa^e as those of one employed ( 141 ) in the most direct trade, except that thie final returns are more distant. Whatever be the foreign commodity with which the foi'eign goods for home consumption me purchased^ it can occasion no essential difference either in the nature of the trade, or in the support it can give to the productive labour of the country from which it is carried on. If they are purchased with gold and silver, these must have been first purchased with the produce of the industry of the country. Ow- ing to the small bulk, and great value of the precious metals, they may have the advantage over other com* modities, in a round about foreign trade, P. 60 — 4. That part of the capital which is employed in the carrying trade of any country, is withdrawn from sup- porting the productive labour of that country, to sup- port that of foreign countries. Though it may replace by every operation two distinct capitals, yet neither belongs to that particular country. If this trade is car-* ried on by ships and sailors of that particular country, part of the capital puts in motion a certain number of productive labourers of that country : this is generally the case, but not necessarily so. The carrying trade is supposed to be highly advantageous to Great Britain; though the same capital might be employed in the fo- reign trade of consumption, or even in the coasting trade. The number of sailors and ships do not depend on the nature of the trade, the trade from Newcastle to London, employs more shipping than all the carry-' ing trade of England. The capital, therefore, employed in the home trade gives greater emcouragement to domestic industry, thaa ( 142 ) that employed iii the foreign trade of consumptioJi ; hrii the capital employed in this latter trade, has a still greater advantage over an equal capital employed in the carrying trade Each, however, is not only ad- vantageous but necessary. Without exportation, a part of the productive labour of the country must cease^ and the value of its annual produce diminish* In Great Britain more corn, woollens, and hard ware, are pro* duced than the demand requires. The surplus part must be sent abroad and exchanged for something for which there is a demand at home. If the foreign goods thus purchased, exceed the demand of the home market^ the surplus must be sent abroad again/ and exchanged for something more in demand at home. Thus the fo- reign round about trade may be as necessary as the most direct. P. 65— 8. When the capital stock of any coniltry is increased to such a degree, that it cannot be all employed in sup- plying the consumption, and supporting the productive labour of that country, the surplus part disgorges itself into the carrying trade. ^The carryiiig trade is the effect of national wealth, and not the natural cause of it. Holland the richest country in Europe, has the greatest share of the carrying trade. P. 69. The extent of the home trade, and of the capital em- ployed in it, is limited by the value of the smplus pro- duce of all those distant places within the country which exchange their respective productions with one ano- ther. That oHhe foreign trade of consumption, by the value of the surplus produce of the whole country, and of what can be purchased with it r^^that of the carrying trade, by the value of the surplus produce of all the dif- ferent countries in the world. Private profits, and not ( 143 ) public good determines the owner of a capital to em- ploy it either in agriculture, or in manufactures. Therefore where agriculture is the most profitable of employments, the capitals of individuals will be em- ployed in the manner most advantageous to society. p. 70-^. Se < 144 ) a 'iy am .o "'JPOOK III. orr: Of the differbnt PRociaEss of opulence in bif«^ FERENT NATIONS. CHAP. I. Of the natural Progress of Opulence. THE great commerce of every civilized society, in that carried pn between the inhabitants of thie town, and those of the country. The town in which there is nq reproduction of substances, gains its whole wealth froni. the country : but the country is no loser, the^ainsare reciprocal, and the division of labour is advantageous to all the persons employed. The inhabitants of the country purchase of the town a greater quantity of manufactured goods, with the produce of a smaller quantity of labour, than they must have employed had they prepared them themselves. The ^oz£;w affords ^ market for the surplus produce of the country. The greater the number and revenue of the inhabitants of the town, the more extensive is the market which it af- fords to those of the country ; the more extensive the market, the more advantageous is it to a great number. The cultivation of the lands in the neighbourhood of ^ great town shews how n^uch the country is benefited by the commerce of the town. P. 73 — 4-. As subsistence is prior to iuj^ury, so the industry which procures the former, must be prior to that which ministers to th^ latter. Therefore the cuUivation of the f 145 ) country must be prior to the increase of the town. Towns may derive their subsistence, in part, from dis* tant countries, which occasions considerable variations in the progress of opulence. If human institutions had iiot thwarted the natural inclinations, the to^yns could )io where have increased beyond what the cultivation pf the territory ip which they were si|;uated could sup- port. Upop equal profits, r^iost men would chuse to em- ploy their capitals rather in the cultivation of land, than either in manufactures, or in foreign trade. The capital employed in land is more under the command of its owner, ^nd is less liable to accidents, than thaf; pf the trader. ' Without the assistance of artificers, land cannot be cultivated .These need the assistance of each other, end not being tied down tp a precise spot, they form lamong themselves a small town or village. The inhar •bitants of the town, and those of the country are mutu- ally the servants of one another. The town is a conti- nual market, where rud^ produce \s exchanged for that which is manufactured. This commerce supplies the in? habitants of the town, with the inaterials of work, and the means of their subsistence. The quantity of finished work which they sell to the inhabitants of the country^ jregulates the quantity of the materials and provisions which they buy. Their employment and subsistence pan augment only in proportion tp the demand from the country for finished work ; which demand will be ii; proportion to the extension of cultivation. Jn America where land is cheap, manufactures for distant sale have %ever yet been established in their towns. But in coun? Itries where l^nd is dear, every artificer^ who has ac- :,fluired more stock than can be employed in the neigh-* ( 146 ) bourhood, endeavours to prepare work for more distani ttr KUtfiiA For the same reason, where profits are nearly equal, / inanufactures are prefered, for the employment of a capital, to foreign commerce. In every period of so- ciety, the surplus part of the produce must be sent abroad in order to be exchanged for something fpr which there is a demand at home. If the society has not sufficient capital to cuftivate all its lands, and to manufacture all its rude produce, there is an advantage that it should be exported by a foreign capital ; that the whole stock may he ^mplpy^d in inoye useftil purposes. P. 79. According to the «fif/:Mr«/ order of things, the greater part of the capital of every growing society isi, first, dir rect^d to agriculture, then to manufactures, and last of I all to foreign commerce. , This natural order of thing* has been inverted in the modern states of Europe. !P.8Q. CHAP. IL Of the discouragement of Jgrimltiire in the antient $tat§s pf Europe after the fall of the Roman Empire, ^, .^ WHEN the Qerniap and Scythiaii nations over-ran the western provinces of the Roipaii Empire,con fusions were introduced wliich lasted several centuries, during which the principal leaders of those nations acquired the greater part of the lands of those countries. This original engrossing of the lands introduced the laws of ( 147 ) fnmogeniturej im^ prevented them front being divided by succession, or alienation. When land^ like moveables, is considered as the mean* only of sub- sistence and enjoyment, it is divided among all the chil- dren of the family. Such was the law of succefeioii among the Romans* But when it was considered as the means of power and protection, as in those times \Vhen fcvery great landlord was a prince, and his tenants were his subjects, it descended undivided to one. Among the children of the same family there can be no indisputable difference> butthat of sea?, and that of age. The male isprefered to the female; arid the elder takes place of the younger. Hence the origin of the right of primoge- niture. Iti the present state of Europe, the proprietor of ISL single acre of land is as secure of his possession as the proprietor of a hundred thousand, nevertheless the right df primogeniture continues to be respected, though no- thing can be more contrary to the real interest of a nu- merous family. Entails are the natural consequence ofthe law of primogeniture. They were unknown td the Romans; and in the present state of Eufope nothing, can be more absurd. They ai*e founded on the supposi-^ tion that every successive generation of men have not an equal right to the earth, and all that it possesses* P. 81—5. Great tracts of uncultivated land were thus engrossed by particular families without a possibility of their be- ing divided. It seldom happened that a great proprietor^ Was a great improver. In the disorderly limes he was sufficiently employed in defending his own territories. When the establishment of law affords him leisure, he often wants inclination, and almost always abilities. To improve land with profit requires an exact atten- tion to small saving^), of which a man born to a largo ( H8 ) fortune is seldom capable. His situation disposes him I to attend to ornament rather than profit ;— his revenue I is not sufficient to improve his whole estate in this man- I Her, consequently a great part will go unimproved* J iThe present condition of large estates will shew how ■ tery unfavourable extensivei property is to improve* \ inent. P. 85—6. If little improvement was to be expected from great ^, proprietors, still less was to be hoped for from the oc- ^ cupiers, who were tenants at will. They were a species of slaves, who were supposed to belong to the land who could not marry but with the consent of their masters ; and who were incapable of acquiring property. The improvement of the land was at the expence of the proprietor. The seed, the cattle, the instruments of hus- bandry were all his. This species of slavery still sub- sists in Poland, and many parts of Germany. Improve- ments are least of all to be expected when slaves are employed as workmen, who not being able to acquire property, can have no interest but to eat as much, and labour as little as possible. Experience demonstrates that the work done by slaves is the dearest of any. Sugar and tobacco can afford the expence of slave cultivation; the raising of corn cannot, P. 87 — 9» To the slave cultivatorsofantient times succeeded a species of farmers who were furnished with the whole stock by the proprietor, and with him divided equally the produce. It could not be the interest of these culti- vators to lay out any of their own little stock in the im- provement of land, because the lord who laid out no- thing was to get one half of whatever it produced. The tithe is even found to be a great hindrance to improve- ment. This species of tenants still subsists in Scotland, called steel-bow tenants. P. 90—2. ( r49 > To this species of tenants succeeded fermers^ properly so called, who cultivated land with their own stocky paying a cei'tain rent to the landlord. When such far- mers have a lease for a long term of years, it may be their interest to lay out a part of their capit^al ifi im- provement. The possession of such farmers was, and still is very precarious in many parts of Europe, they not having sufficient security against the landlord. By the law of England the security of the tenant is equal to that of the proprietor. In England also most of tbe yeomanry possess freeholds, which render the whole order respectable on account of the political considera- tion which these give them. The laws and customs fa- vourable to the yeomanry have contributed more to the present grandeur of England than all the boasted regu- lations of commerce taken together. P. 93 — 4. The law which secures the longest leases against suc- \Gessors of every kind is peculiar to Great Britain. Its beneficial influence has been obstructed by entails. The proprietors of land were antiently the legislators of every part of Europe. The laws relating to land, tiiere- fore, were all calculated for the supposed interest of the proprietor. The farmers too, besides paying the • lent, were antiently bound to perform a number of 3. services to the landlord, which subjected them to many vexations: such as making and repairing high roads; -—and providing horses, provisions, and carriages for the king's troops when they passed through the count- try. The public taxes to which they were subject, were y ' as oppressive as the services. The atitient lords easily al- lowed the sovereign to tallage their tenants, without foreseeing how it would affect their owa reveaue. The ( 150 ) taille in France may serve as an example 6t antient tal- lages. It is a tax upon the supposed profits of the far- mer, which they estimate by the stock that he has upon the farm. This tax hinders the accumulation of stock, and is besides looked upon as dishonourable to the persons subject to it. The antient tenths and fif- teenths in England, seem to have been taxes of the same nature of the taiUe. P. 94 — 0. Under all these diacouragements little improvement could be expected from the occupiers of land, who, with all the security which law can give, must always im- prove under great disadvantages. The farmer is as a merchant who trades with borrowed money, the pro-«. prietor one who trades with his own. The station of the former is inferior to that of thb proprietor ; and in the greater pait of Europe the yeomanry are regarded as inferior even to tradesmen and mechanics. In such astateof things, little stock is likely to go from any other professions to the improvement of land in the way of farming. The antient policy of Europe was farther unfavourable to the improvement of land. (1.) By the prohibition of the exportation of^brrt : and, (2.) By the restraints laid upon inland cdmmerceby the absurd laws against engrossei's, regraters, and forestallera, and by the privileges of fairs and market?, P. 97—9. f m ) CHAP. III. Of the rise and progress of cities and towns, after the fall of the Roman Empire, THE inhabitants of cities and towns were after the fall of the Itoman Empire, not more favoured than those of the country. The proprietors of land gene- rally lived in fortified castles on their own estates, and in the midst of their dependants. The towns were in- habited by tradesmen and mechanics of servile condi* lion, as is evident from the privileges granted to many of them by charter. They seem to have been a poor set of people, resembling the pedlars and hawkers of the present times, subject to certain taxes, known by 4he names of passage, po/itage, last age, and stallage. Sometimes the king, sometimes a great lord granted to particular persons a general exemption from these taxes these were called/ree traders. They in return paid an annual poll tax. P. 99—101, IThe inhabitants of towns arrived at independency earlier than the occupiers of land in the country. Poll taxes used commonly to be let in iai*m, sometimes to the sheriff, and sometimes lo the burghers theniselves, ^ho being answerable for the whole rent, were allowed til'^ to collect it their awn way. At first the farm of a town ^ . was let for a term of years : afterwards it was granted to them i^f££p that is for ever, reserving a rent certain 1 never to be augmented. The payment becoming per- J>etual, the exemptions became perpetual too ; the town th^ere fore was called a free-burgh. At the same time they were generally erected jjitq a corporation, ^ • T2 with the privileges of having magi^rates^ and a town- ' council of their own^ and of making bye laws for their pwn government, of building walls for their own de- fence, and of reducing the inhabitants under a sort of military discipline. In England they were exempted from suit Jo county courts, and other services. It must appear extraordinary, that sovereigns should thus have erected a sort of independent repi^blic in the heart of their own dominioqs. But they were noj: able them- selves to protect all their weaker subjects from the op- pressions of the great lords. Those who could nqt pro- tect themselves sought protection from some great lord arjd to pbtkin it became his vs+^sals. The inhabitants of cities and burghs, by entering into a league of mu- tual defence, were capable of making resistance. The lords despised the burghers, and envied their wealth, of which ihey plundered them on every occasion. The burghers hated and feared the lords: the king hated and feared them too. Mutual interest, tiierefore, disposed them to support the king, p,nd the king to support them against the lords, hence he granted them those privileges whic)i rendered them secure and independent. The princes vi'ho lived upon the worst terms with their barons, ^vere the most Ijberal in grants to their burghs. Such was John of England. Phillip ihe First of France consiilted liis bishops, concerning the most proper way of restraining the violence of his Jords, who advised, (1.) To establish magistrates and ^ town-council in every considerable town of his demesnes: (2.) To form a new militia of the inhabitants of thos^ towns. P. 102-77. The mihtia of the cities was not inferior to that qf towns, and as they could be more readily assembled, they frequently had the advantage of the lord». In ( 153 1 $trong countries, situated at a distance from the seat of government, the sovereign came to lose all his autho- rity, the cities became independent republics, and obliged the nobility to pull down their castles, in the country, and live, like other peaceable inhabitants, in the city. Such is the history of Berne, &c. In Switzerland, and of most of the Italian republics. In France and England, the authority of the sovereign was never entirely destroyed. Though the cities could not attain to independence, yet the sovereign could not impose any tax upon them without their consent.They, therefore, seni deputies to the general assembly of the states of the kingdom, that they might join with the clergy and barons, in granting extraordinary aid to the king. Hence the origin of the representation of bjirghs in the states general of all the monarchies in Europe. P. 107—8. Thus were the liberty and securit}'^ of individuaU established in xrities when the occupiers of land in the country were exposed to every sort of violence. In the defenceless state, men content themselves with bare subsistence, because to acquire more, might tempt the injustice of their oppressors. The law at that time was 6o mdulgent to the inhabitants of towns, and so desi* rous of diminishing the authority of the lords over those of the country, that if a person running away from th$ country, could conceal himself from his lord in a town, for a year, he was free for ever. Whatever stock accu- mulated in the hands of the industrious inhabitants of the country, took refuge in cities, for the sake of secu^ rity. P. 109. The inhabitants of a city must ultimately derive their jjubsistence from the country. But if the city be on ( 154 ) ^he sea coast, they may draw it from the remote cor- ners of the world, by exchanging the manufaptured ; produce of their own industry ; or by performing the office of carriers between distant countries. Iq this manner a city might attain to splendor and vyealth, while the neighbouring country w^s in poverty and .wretchedness. The cities of Italy were the first in . Europe raised by commerce to opulence. Italy lay in ; the centre of the civilized world. The cru^des were favourable to tjie progress of some Italian cities, by employing their shipping, and encouraging their trade. p. 110. The commerce of a great part of Europe, in those times, consisted chiefly in the exchange of their own yude, for the manufactured produce of more civilized nations. The wool of England used to be exchanged for the wines of France, the fine cloths of Flanders,&c. Thus a taste for the finer manufactures was inti'oduced by foreign commerce, into countries where no such works were carried on. And when the taste became general, manufactures of the ^ame kind were established in their own country. No lai:ge country can sub4$t without manufactures .^ even in poor countries the clothing and household furniture .ai«e the produce of their own industry. P. 111. Manufactures fit for distant sale seem to have been introduced two ways. (1.) tliey are sometimes the offspring of foreign commerce. Such were the silks and velvets of Lucca, banished from thence by the ty- ranny of Castracani, and established in 1310, with many privileges, at Venice. Such also Me thesilk ma- nufactures of Spital-fields. Manufactures thus intro- duced are generally employed upon foreign materials. ( 155 ) being irtfkatrohs of foreign tiianofactures. (2.> Ma- nufactures for distant countries sometimes grow up na- ttiralFy, by the gradual refinement of the coarser ma-* nufactures : these are generally employed upon mate- rials which the country produces ; and have been first improved in inland countries. Fertile inland countries produce abundance of provisions^ which encourages workmen to settle in the neighbourhood. They give a new value to the surplus part of the rude produce. The cultivators get a better price for their surplus produce^ which encourages them to en crease that surplus by tho better cultivation of the land. The manufacturers first supply the neighbourhood, and as their work improves more distant markets : for thotrgh coarse manufactures Would not support the expence of a considerable land carriage, the refined may. In this manner havQ grown up the manufaciui*es of Leeds, Birmingham, Sheffield, &c. they are the offspring of agriculture. F. 112—1^, CHAP. IV. Hqzv the commerce of the iozvns contributed to thd improvement of the country, THE encrease artd riches of towns contributed to the improvement of countries, (1.) By affording a jffiitdy market for the rude produce of the country. ;2.) The wealth acquired in cities was often employed in purcliasingjands. Merchants becoming country gen- ( J^ ) tkifien, are frequently the best improvefs. And, (3.) ebinmerce and manufactures gradually introduced or- der and good government, and with them the liberty and security of individuals. P. 117 — 19. In a country which has neither foreign coramercey nor finer manufactures, a great proprietor consumes the greater part of the produce of his lands in rustic hospi- tality. He is surrounded with a multitude of depend- ants, who must obey hrm as soldiers obey the prince who pays them. Before the extension of commerce in Europe, the hospitality of the rich and great ex- ceeded every thing which we can imagine. Westmin- ster-hall was the dining room of William Rufus ; and the great Earl of Warwick is said to have entertained every day at his different manors 30,000 people. The occupiers of land were entirely dependent upon the great proprietor ; such as were tenants at will paid a rent in no respect equivalent to the subsistence which the land afforded them ; a sheep, or a lamb was, some years ago, in the Highlands of Scotland, a common rent for lands which mairitairfed a family. Upon the authority which the proprietors had, in such a state of things, over their tenants and retainers, was founded the power of the antient barons. They became judges in peace, and leaders in war. They could maintain order and execute law* The king was Httle more than tile greatest proprietor in hi^ dominionsy to whom, the others paid certatn respects. He was therefore obliged to abandon the administration of justice, through the greater part of ihe country, to those who were Capable of administering it ; and, for the same reason, to leave the command of the country militia to those whom that militia would obey. The highest jurisdictions both civil and criminal ;— the povrer of icvying troops j— - . ( 157 ) of coining money ; — of making laws for the govern- ment of their own people, were all rights possessed by the great proprietors, long before feudal law was known in Europe^ The authority of the Saxon lords was as great before the conquest as that of any Nor- inati lords after it. But the feudal law was not the cotiimon law of England till after the conquest: P. 119—23. The introduction of the feudal Iftw may be regarded as an attempt to moderate the authority of the great • lillodial lords. It estabhshed a regular subordination from the king to the smallest proprietor. During the minority of the prdprietor; the rent, and management of his lands, fell into the hands of his immediate supe- rior ; and those of all great proprietors, into the hands of the king, who was charged with the maintenance and education of the pupil, and who had a right of disposing of him in marriage. This institution tended to strengthen the authority of the king, yet he was still incapable of restraining the violence of the great lords. They continued to make War upon each other, and often upon him. Fof-eign commerce and manufactures brought about what feudal institutions could never have effected. These furnished the great proprietors with something which they could consume themselves, without sharing it with their tenants. '^ All for our^ selves/' has been the vile maxim of the masters of the worFd. As soon, therefore, as they could find a method of consuming the value of their rents themselves, they had no disposition to share them with other persons. Tor _the gratification of vanities thej bartered their whole power and authority. P. 124 — 5. " . U :%s f^ttjed fpr the seat of foreign commerce. Fi'oi» the beginning of the reign of Elixan belh, the legislature has been peculiarly attentive to the interest of its commerce and manufactures. Comn^erce and manufactures have accordingly beer> advancing during all this period, so h^ve the cultivation, ^pdiujii^ provementof the country also, though nqt so rapidly^ The greater part of tl^e cpujit^'y was cultivated before^ the time of Elizabeth ; and a gre^ part still remain^ un- oultivated, and the cultivatipn qf ithe greater part ii» in^;'. fprior to what it might be, The jaw of_g5igl|nd fan vours agriculture, by encouraging the exportation of cprn; — by prohibiting the in^portation of cattle ;- — and by jendering the yeomanry secure and indepentjenjti P 133—4. ^ 7/oIe dd!i 3tm| France had a considerable ^hare of fpreign cotnmel'Ce near a century before England. The cultivation of France is inferior to that of England. Ttje fpreigii, commerce pf Spain and Portugal is considerably ; but it has never introduced any considerable manufaptures for distant sale into either of those countries, ^ndth^ greater part of both still remains uncultivated. Italy has been improved in every part, by means of foreigr^ coipmerce and manufactures for distant sale.It was wel) cultivated before the invasion of Charles VIILl?.! 35—6, The capital acquired to any cpvmtry by commerce ^nd manufactures is an uncertain possession till a part pf it has been realized in the improvement of lands. A merchant is not the citizen pf any country ; a trifling disgust will make him remove his capital from on^ ( 16} ) country to anotlier. No vestige remaitts j^f the ^ealjth of the Hans towns j it is, uncertain where ^orne of them were situated. The civil wars of Flanders^ and the Spanish government, chased away comnierce froo^ Antwerp, Ghent, and Bruges; Buc Flapper? con- tinues to be Que of jthe richest apd best cultivated pro- vinces of Europe. Ordinaiy revolutions dry up the sources of wealth which arise from commerce only. Tl?at which f^rise^ ft^n^ agripult^rejs jnqre^Mi'^Mf^, *^mif^ i m ) BOOK IV, Of sptem of political acof^omy, I N T R O D V C T I p N. POLITICAL oeconomy proposes ^ro'disti net objects; Xl.) To provide subsistence for the people ; and, (2) To wpply |;he $tate with i^ reyequ^ ^uflRcient for public service?. The different progress tp qpulenpe in diffe- rent ages, has given occasion to two sys^fpa^ pf politi- cal cpconomy, with regard to enriching the pepple.Xhe pne a sy^tena of commerce ^^^& othef that of a^ricult^rc9 P. isa. CHAP. I. Of the principle of the con^erciql or merc^niik ^sfeju^ THAT wealth consists of gold ^nd silver is a popular notion arising from the Rouble functipn of money, as the instrument ofcoTqmerQe, and as theme^sur^ ofrfiilM^* As the instrument of commerce, with money ^e can ol^t^in what >Ye have occasio^x iotX- As the measure of value, we estimate that of all other commodities, by the quantity qfn^qney which they will exchange for.P.139. A rich cqqntry is swpposed to be z^ country abound- ing i^ money, f^e firs^ enquiry pf the Spaniards, ( 166 ) wliett they arrived upon any unkndwn coast^Hsed to be, if there were gold and silver in the neighbourhood* The object of the Tartslrs was the same as that of the Spaniards^ but their enquires were, if there were plenty ojf sheep and oxen in France* They wanted to know if the country was worth conquering. Mr. Locke con- sidered gold and silver as the most substantial part of the moveable wealth of a nation. Others admit that if a nation could be separated from all the world, it would be of no consequence how much^ or how httle money circulated in it ; but that it is different with countries which have connections with foreign nations. In con- •equence of these opinions, all the nations of Europe have endeavoured to accumulate money, and have, at different periods, prohibited the exportatipapf the pre- cious metals. The mercEants found this prohibition inconvenient, and remonstrated against it (1.) As tending to diminish, rather than increase the quantity of those metals in the kingdom : (2.) Because the pro- hibition could not prevent the exportation ; but only make it more difficult and expensive : And (3*) That an attention to the balance of trade was the only way to prevent the exportation of gold and silver : for that the exchange was turned against the country which owed the balance. The two first arguments were solid, but the last was sophistical. They carried however conviction to the persons, to whom they were addres- aed, and who knew nothing about the matter : and the prohibition of exporting gold and silver was, inFrance and England, confined to the coin of those respec- tive countries: and, in Holland, and some other places, this liberty extended even to the coin of the country. Thus the attention of government was turned away from guarding against the exportation of gold ( i^i ) «rtidsilvei*, to watch over the balance of trade. Front One fruitless care, it was turned away to another care Aiore intricate, more embarrassing, and equally fruit- kss. P. 140-7. ' A country that bars no mines of its own iirtist draW its gold and silver from foreign countries in the same man- lier as one that has no Vineyards must draw its wines; liike other commodities they are to be bought. All Other comrmothties are the price of those metals. The quantity 6f every commodity suits itself to the effectual demand, but no commodity regulates itself more easily according to' this demand than gold and silver, on ac-* Oount of their small bulk. When the quantity of gold and silver imported into any country exceeds the effec- tual demandy no vigilance can prevent their exporta- ^011. It is partly owing to the easy transportation of gold and silver that their price does not fluctuate like that of other commodities. P. 14^—50. There are more expedients for supplying tlie place of gold ahd silver than that Of almost any other commo- dity. If materials are wanted, industry must stop. If provisions are wanted the peoj^le must starve. But if money is wanted, bartefmU supply its place. To watch over the preservation of the quantity of money in a Country is therefore, unnecessary in Government. No complaint is more common than the scarcity of moneys Over-trading is the cause of the complaint ; which is a general error when the profits of trade are greater than ordinary ; not that dealers send more money abroad th'an usual, but they buy, upon credit, an unusual quan- tity of goods, and the demand for payment comes be- fore th e retut n s . P . 1 5 } — 8 . It is not because wealth eonsists more in money than In goods, that the merchant finds it easier to buy goods i lfl5 ) mt\k flfiqiBey, than to bjuy mopey with goods, fcul l?jecj^vs.e pipne^ i^ th,^ ^^t^l|sbed iqs^rmnei\t ot /. cowwnerce. Besides, tKe greater pajit pf gqpds ar0 piQj-^ perishable than njoney, ^pd he may sustain 9 s {q^I by keeping th^ijt^ ; Ij^is profit arises from selling c^nd , Pjc^ from 1?uying ; tJher.^fore he is an^^ipu? ratJiiFtQ fsxr riitnge his goods for- piopey, than his money for gPOjds. Though an individuals with al^u^jd^nc^ of goofll^ ^n his warehouse, piay be ruined, a nfitjo^i i^ p^ Ijfibj^^to the sa,^ie accident : it may suffer spme in^ftr |tepiency, but the anijujal pro|duce of its land an4l;^- bour will be nearly the sanie, bec^iuse the ^an^e cp%- sumable capital would be employed in maiji^tai^ji^g ij. . jL^ is pretended thajt nothing can be njore disady^^r ^ JPjgepys to a country ph^n the trade which consists in t^^ g^pY^^g^ of such lasting eommoditi^^^s gold and si}* jTCf, for others which are perishah( (2). Some of its manufactures : — or, (3.) Some 1 1 part of its rude produce. The gold and silver accumu* lated is distinguished into, (1.) The circulating moneys —(2.) The plate of private families j — and, (3.) The money laid up in the treasury of the prince : these are but insignificant resources for carrying on a war. The funds which maintained the foreign wars of the present century have had little dependency upon the exporta» tion either of circulating money; or of the plate of private families ; Or of the treasure of the prince ; but upon that of British commodities of some kind or other. 'P. 157—61. Besides the three sorts of gold and silver ahove men^ tioned, there is in all countries, a good deal of bullioa imported and exported for the purposes of foreign trade. This bullion may be considered as the money of the great mercantile republic, partof which may have been 'employed in carrying on our wars ; but this musthavfr l)een purchased with British commodities, which are the ultimate resources of war. The commodities most proper for this purpose seem to be the finer manufac- tures, which can be exported at little expence. The fiTanufacturers, during a war, will have a double de- mand upon them, (1.) To work up goods to be sent 'abroad for paying bills drawn upon foreign countries for the pay and provisions of the army ; and, (2.) To work up such as are necessary for purchasing the common returns that had been usually consumed ii^ the country. Manufactures may flourish, theriefore, amidst the ruin of their country. No foreign war of great expence could be carried on by the exportation ofthe rude produce of the soil. The expence of car- riage would be too great ; besides the rude produce of c 1^7 y few countries is much more than sufficient for the sub- sistence of their own inhabitants. Hence the inability of the antitnt kings of England to carry on a foreign war of long duration ; which did not arise from the want of money, but of the finer manufactures. Among nations to whom commerce and manufactures are but little known, the sovereign can seldom draw any con- siderable aid from his subjects;he therefore accumulates a treasure as a resource against emergencies. The paxon kings accumulated treasures,and the first exploit ofevery new reign, was commonly to seize the treasure pf the preceding king, as the most essential measure of securing the succession. P. l62 — 6. The importatio n of gold and silyjr i S not th e pri n c i- j i / pal benefit vy hip h a nation derives from its foreign i j fra4e.^.^.It carries ou^; th^t s urplus part of the produce of /, iheir land an(J labour, fpr which there is no demand at home, anc} brings bacl^ something else for which there is a demand. By thus opening a more^e^^tensivem ^^^ ketfqr the surplus produce of their labour, it encoura- ges them Lo improve its productive powers, and there- by to increase the res^l revenue and wealth of the (society. Itisnotby the hiiportation of gold and silver, that thejhssQvei-yof Amenc has enriched Suiope, By the abundance of the mines, those metals have become vheaper, and have been brought to the level of a much greater number of purchasers. But the ch^a^ess ren- ders those metals r%tier.lgss/it for the purposes o,f ino- ijey than they were before. The discovery of America j ; however, by opening anew n^a rket for Eui^pp^aja. com^ U l^odities, gave occasion to new divisions of labour, and vl ^ ( i8S ) And wealth of all the different countries iti Eardpe. P. 167--9. The discover of a p>sskge tb the ElaSt Indtiefe by th« Cape of Gropd Hope, opens a still ilidrie extierisive range to ifo'reign cbmmerce than e^en jthat of America. The inhabitants of America were savages ; those of the East Indies were rich, ahd advanced in arts and manufac- tures. Europe has derived les$ advantage from it$ com- merce with the latter, than from that with the former^ bwing to the restraints and ihbnopolies tvith which the East India commence is beset. By the expoita- tion of silver to the East Indies, plate is somewhat dearer in Europe than it might otherwise have been, and coined silver probably purchases a larger quantity both of labour and commoditieg. The former i^ a small l6ss, the latter a small advantage. P. 170—2. The two principals being established, viz. thatwealth y ^ I Consisted in gold and silver ; iand,that those metals could be brought into a country oVily by the balance of traded —it became the object of political oeconomy to diriii- jiish the importation of foreign goods, and to increase the exportation of domestic industry. The restraints ttppn impor tation were, (i .) Restraints upon the im- pottation 6f such foreign goods, for home consump* tion, as could be produced at home. (2.)Restraints upon the importation of goods of almost all kinds from those particular countries With which the balance of trade inras supposed to be disadvantageous. Those restraints A^onsisted sometimes in high duties, and sometimes id absolute prohibition». I *• ( 169 ) IRipjff|4^*> Was encouraged by draw-bacjks ;— b/ bounties; — ^by advantageous treaties of cominqree ;— » -•4d by the establlslimient of colonies. P. 173—5. CHAB, II. Of r€sf mints upon the importation from foreign coim^ ^ ^^i^a^ /^ tries of such goods as can be produced at home, fit-c^^M J » ♦ BY restraining the importation of such goods froitf foreign countries as can be produced at home, the mo* nopoly of the hoine m.arket is secured to domestic in* dustrjtj Thus the prohibition of importing live cattle, or salt provisions secures to the graziers of Great Bri- tain the monopoly of the home market for butchers* meat. This monopoly gives encouragement to partici|* lar sgecies of industry, but it is not certain whether it | tends to increase the general industry of the society^ J ^hich can never exceed vi^hat the capital of the society I can employ. P. 176. 7. Every individual exerts himself to find out the most idvantageous employment for whatever his capital can command. The study of his own advantage neces- sarily leads him to prefer what is most advantageous \o m, ^ ^ • the society. -^^ ^W ife I. Every individual endeavours to employ his capitaT^U^- J trSli iis near home as he can, and consequently as much as / xl .Jh ' be can m the support of domestic industry In the ntk/ASl*/ y home trade the capital of a merchant is never so Jong il^fpyir-t^f^fjt out of his sight as in the foreign trade of consumption; u^)^i^tL / ( 170 ) bealsoknows better his customers^ and the laws pf the country from which he must seek redress. P. 178. 9. II. Every individual who employs his capital in the support of domestic industry, endeavours so to direct ^hat industry, that the produce may be of the greatest possible value. — The produce of industry, is what adds to the materials upon which it is employed. In propor- tion to its valne, will be the profits, for the sake of which a m^ij e?Tiploys a capital in support of industryt The annual revenue of every society is equal to the ex- changeable value of the whole annual produce of its industry ; every individual, therefore, by employing his capital in the support of that industry, the produce of II which i$ of the greatest possible valye, labours to rentier the anqual revenue of the society ?is great as he can. P. 180, Ir — f . TJie best manner of employing his capital must be ^f JL1\ ^ left tq the discretion of each individual. Statesmen K^ 1^-4 <*«^ ^^Yi^ senates are uneque?^! to direct private people how to employ their capitals. But to give the monopoly of the hpoie-market to the produce of domestic industry, in any ^rt o^ manufacture, is to direct private people in ^hat manner they ought to employ their capitals, ancl must be a useless or a hurtful regulation. If the produce pf domestic, c^n he brought there as cheap as that of foreign industry, the regulation is useless ; if it cannot it is hurtful. The taylor does not makp his own shoes, nor the shoemaker his own clothes. If a foreign coun- try can supply us with a commodity cheaper than we can make it, belter buy it with some part of the produce of our own industry employed in a way in which we liave some advantage ; otherwise the industry of the rcountry is turned away from a more to a less advanta* gcous employment, and the value of the annual pro-* < 171 ) duce must be diminished by every ^tich regtilatioh. P. 182.3. By means of snch regulations, a particular rnanu^^ ^ fafcture may be acquired; but it does not follow, that the industry or revenue of the society will be augmen* ted. The industry of a society augments Only in pro- portion as its capital augments, and its capital can aug- ment only in proportion to what can be gradually saved j out of its revenue; btit the immediate effect of e^M^ 1 such regulation is to diminish the revenue. P. 184. The natural advantages of some countries are so great that it would be in vain to struggle with them. Scot- land at thirti/ times the expence,might make good win^^ but it would be absurd, on that account, to prohibit the importation of foreign wines. P. 185* Merchants and manufactures derive the greatest ad- Vantage from the monopoly of the home-market. IVf a- nufactures are more easily transported than corn or cattle. In manufactures a small advantage will enable foreigners to undersell our own workmen. If the free importation of foreign manufactures were permitted, several of the home manufactures would go to ruin. But the freest importation of the rude produce of the soil could have no such effect upon the agriculture of the country. The grazing trade of Great Britain would not be much affected by the free importation of foreign cattle, or salt provisions. Even the free importation of corn could very little affect the interest of the farmer. Country gentlemen and farmers are less subject to the spiritof monopoly than manufacturers; they seemhow- ever, to have forgotten themselves when they demand- ed the exclusive privilege of supplying their country- men with corn and butchers' meat. To prohibit by a |f perpetual law the importatiqn of foreign corn and cat* ' | ( IM J If iAe, ia tci enact that the population and indujtry of th« i I coantry shall at no tiifte exceed what the ru^e producp it fifitsov^ri ^bil can mamtain. P. 186— -9 J* It may in two instance? be ^dvantageoaa to lay some luirden uponfareign, for the encouragement: of domestic r industry. Fii:at> when some particular sort of industry I is necessary for the defence of the coun-Uy. The de- fence of G re^t Bntam "13e pe nos upon its sailors and ^hipping. The act of navigatiQn, therefore, properly endeavours to give the sailors and shipping the mono- poly of the trade ofthHr own country. P. 192—4. The second case is when some tax is imposed at hip^ n g «pon the produce of domestic industry. In this case it eeemTieasonable, that an equal tax should he imposed upon the product of foreign ijudustry. This would leave the /Competition., after the tax, on the ^ame foot- ing as it was before it. But according to some people, when die necessaries of ii^ have been tajc^d^itibecome^ necessary to tax all sorts of foreign goods which can, come into competition with any part of the produce of -domestic industry. Since cDcry commodity which is the j>roduce of domestic industry becomes dearer, though not immediately taxed itself, in consequence of such •taxes, because the labour which produces M becomes so. Admitting this, yet the general enhancement of th(B price of aW commodities, in consequence of that of i»- ^our, is a case which differs in two respQC;ts from that of a particular commodity. (1.) It may be known, how far the price of such a commodity could be CAhanced by such a tax : but how far it might affect the price Qf labour could never be known* (5.) Taxes on the neces- saries of life have the same effect upon the circumstan- ces of the people as a poor soil and had climate. Such taxes, at a certain height, are a cucsc equftl to tb^ h^t* ( 175 ) rennessofthe earth. Only rich countries could bear them. P. 195—8. As there are two cases in which it may be advanta- geous to burden foreign, for the encouragement of do- mestic industry, so there are two in which it may be ^ ^ "The first is, how far it is proper to continue the free importation of certain foreign goods, when some foreign nation restrains the importation af our manufactures f into their country. Nations seldom fail to retaliate. France has been forward in thus favouring their own manufactures. But the opinion of the most intelligent people there, is, that it has been of no advantage to the country. Retaliations may be good policy, if they tend to procure a repeal of the prohibitions complained of. To judge whether they are likely to produce this effect, does not belong so much to the legislator, as to the crafty statesman. When there is no probability of procuring a repeal, it is a bad method of compensa- ting the injury done to some classes of the people, to do another to almost all the other classes of them. P. 199-^01. The second case is, how far, and in what manner, it is proper to restore the/ree importation of foreign goods, after it has been interrupted. When any manufactures, by means of prohibitions upon foreign goods, have beea so far extended as to employ a multitude of hands, hu- ^ manity may require, that the freedom of trade should ^ ' be restored with great circumspection; otherwise it might occasion great disorder ; though less, perhaps, than is commonly imagined, for fayo reasons : (1.) All those manufactures of which any part is commonly ex- ported toother European countries, without a bounty, y ( 174 ) could be very little affected by tbe freest importation of foreign goods. Such are the woollen manufactures, tanned leather, and hardware. (2.) Though by resto- ring the freedom of trade, a great number of people would be thrown out of their ordinary employment, it does not follow that they would be deprived of subsis- tence. At the end of a war 100,000 soldiers and seamen are sometime disbanded, without even diminishing the price of labour, except in that of seamen in the mer- chant service. But the habits of manufactures do not tend to disqualify them from exercising a new trade, so much as those of soldiers. Soldiers and seamen are at liberty to exercise any trade within any town or place. Grant the same liberty to all people ; that is, breakdown the privileges of corporations ; repeal the statute of apprenticeship, and that of settlements, and neither the public nor individuals would suffer more from disbanding some particular classes of manufac- turers, than from that of soldiers. P. !202 — 5. Perfect freedom of trade is not to be expected in Great Britain ; public prejudices, and private interests oppose it. Hence the member of parliament who sup- ports monopolies acquires reputation and popularity ; but he who opposes and thwarts them, is liable to in- sults, and danger, from which the greatest public ser- Tices cannot always protect him. A regard to the inte- rest of manufacturers requires that home markets be not suddenly laid open to the competition of foreigners, since they would find it difficult to dispose of that part of their capital, without considerable loss, which con- sists in fixed work-houses, and in the instruments of trade. Hence the legislature should be very careful not to establish new monopolies, nor, to extend those al- ^ready established. P. 206—$^ ( 175 ) CHAP. 111. i < Of the extraordinary restraints upon the importation of goods, from those countries with which the balance is ' $uppo^e(f disadvantageous, PART I. Of the unreasonableness of those restraints even upon the principles of the commercial system, ^ ^ TO lay extraordinary restraints on the importation of goods, from those countries with which the balance of trade is supposed disadvantageous, is the second ex- pedient to increase the quantity of gold and silver. Thus higher duties are imposed o^ French goods, than on those of other nations. France has treated our manufactures in the same way, These principles take their origin from national prejudices, and are highly unreasonable, even according to the commercial sys- tem. For, I. Though in the free trade betwixt Great Britain and France, the beClance were in favour of France, it would ♦ not necessarily follow^ that the trade was disadvantage^ Otis to England, For the goods of France might be cheaper than those of any other foreign country. il. A great part of them niight be re-exported with a profit. Though a great part of the goods were bought witlT^gold and silver;, the re-exportatiou of a part of Y2 ( m' ) them might bring hack more gold and silver than the prime cost of the whole amounted to. III. There is no certain criterion by which we can determine on wnich side the balance between any two countries lies. Custom-house books, and the course of exchange h ave been appealed to. ^he former is an un- certain criterion, on account of the inaccuracy of the valuation of the goods rated in them. The latter^ per- haps, is almost equally so. For though the ordinary course of exchange of any two places be a sufficient in- dication of the ordinary state of debt and credit; yet the ordinary state of credit and debt is often regulated by the dealings of either of them, with many other places. Besides, the real course of exchange is often different from the computed one. F, 209 — 14. When for a sum of money paid in England, contain- ing, according to the standard of the English mint, a certain number of ounces of pure silver, you receive a bill for a sum of money to be paid in France, contain- ing according to the French standard, an equal number of ounces of pure silver, exchange is said to be at par between England and France. When you pay more, exchange is said to be against England. When less, ex- change is against France. But, (1.) We cannot always judge of the value of the current money of different countries, which must be in proportion to the quantity of pure silver which it actually does contain. (2.) In England the expence of coining is defrayed by the go- vernment ; in France 8 per cent, is charged for coin- age. French money must, therefore, be more valuable than the same quantity of English money; consequent- ly the rec/^xchange might be in favour of England, while the computed mm in favour of France. (3.) In some places^ as Amsterdam, Hamburgh, 6cc. foreign ( >77 y bills of exchange are paid in what they eatll hank mo^ ney, while in others, as London, Lisbon, &c. they are paid in the currency/ of the country. Bank money is of more value than currency, and the difference is called the agio of tjie bank. In two countries, one paying bills of exchange i» currency, the other in bank mo^ ney, it is evident that the computed exchange may be ia favour of that which pays in bank money, though the rdfif/ exchange should be in favour of that which pays: ineunency. P. 215'— 18. Digression concerning Banks of Deposit, particularly concerning that of Amsterdam, THE currency of a great state, such as England, ge- nerally consists almost entirely of its own coin. Should this currency be, at any time, degraded below its stan- dard value, the state can, by a reformation of its coin, re-establish its currency. But the currency of a small state, such as Hamburgh, seldom consists altogetheir in^its own coin, but is made up of the coins of all the neighbouring states. Such a state, by reforming its coin, will not always reform its currency. If foreign* bills of exchange are paid in this currency, the uncer-^ tain value of any sum must render the exchange always very much against such a state. In order to remedy this inconvenience, such small states have enacted that fo- reign bills of certain value, should be paid by a trans- fer in the books of a certain bank, which is obliged to pay in good and true standard money. The banks of ( 178 ) Hamburgh^ Amsterdam, &c. were established with this view. The money of such banks, being better than the currency, bore an agio. The agio of Hamburgh ia about 14 per cent. P. 219- 20. Before 1609, the currency of Amsterdam was 9 per cent below fresh money from the mint. The merchants could not always find a sufficient quantity of good mo- ney to pay their bills of exchange, and the value of those bills became uncertain. To remedy this, a bank was established under the guarantee of the city. This bank received all sorts of coin at its intrinsic value, de- ducting the expence of coinage, and of management, and gave a credit for ft, in its books. This credit was called bank money, which was always of the saipe real value, and worth more than the currency. It was en-» acted that all bills of exchange drawn upon, or negoci- ated at Amsterdam, of the value of 600 guilders and upwards, should be paid in bank money. Consequent- ly every merchant was obliged to keep an account with the bank in order to pay his bills of exchange, which occasioned a certain demand for bank money. P. 221. Bank money has other advantages ; it is secure from accidents, and can be paid away by simple transfer., In consequence of these advantages, it has always borne an agio. The money deposited in the banks is believed to remain there, nobody earing to demand payment of the bank of a debt which be could sell for a premiuip. Besides, by being brought from the bank it lost all the advantages of bank money, nor could it be brought from its coffers without paying for the keeping. Those depo- sits of coin constituted the original capital of the bank. It now gives credit upon deposits of gold and silver bul- lion, at about 5 per cent, below the mint price. It grants a receipt entitling the bearer to take out the bul- ( 179 ) lion wirliln six months^ upon transferring to the bunk a quantity of bank money equal to tliatibr which credit had been given, and upon paying | per cent for keep- ing, if the deposit was in silver, and ^ per cent, if it was in gold ; but in default of such payment^ and upon the expiration of this t^rm, the deposit should belong to the bank at the price at which it had been received. P. 222.3. Deposits of bullion are commonly made when the price is lower than ordinary ; and they are taken out when it happens to rise. A person can generally sell his receipt for the difference between the mint price of bullion, and the market price. A receipt for bullion is generally worth something, and it seldom happens, tlierefore, that any body suffers his receipt to expire, or allows his bullion^ to fall to the bank, at the price at .which it had been received. P. 224. 5. The person who by making a deposit of bullion ob- tains both' a bank credit and a receipt, pays his bills of exchange with his bank credit, and either sells or keeps his receipt, according as he judges that the price of bul- . lion is likely to rise or fall. The owners of bank credit, and the holders of receipts, constitute two different sorts of creditors against the bank. The holder of a receipt cannot draw out bullion without re-assigning to the bank,asum of bankmoney equal to the price at which tho bullion had been received. If he has no bank money, he must purchase it. The owner of bank money cannot draw out bullion without a bank receipt for the quantity he wants. The price of the receipts, and the price of the bank money, make up between them the full value of the bullion. P. 226. The bank grants receipts and bank credits, upon de- posits of the current coin, but these receipts oxa fre . ( IBO ) quently of no value. The sum of bank money, for which the receipts are expired must be considerable. It must comprehend the whole original capital of the bank. But the proportion which it bears to the whole mass of bank money, is supposed to be very small. No demand can be made on the bank but by means of a re- ceipt. The bank money, for which receipts are expired, is mixed with that for which they are still in force ; so that, though there may be a considerable sum of bank money for which there are no receipts, there is no spe- cific sum, which may not be demanded by one. The owner of bank moneycannot demand payment with- out a receipt. In ordinarj^ times he can find no difficulty in getting one to buy at the market price. It might be otherwise during a public calamity, as that of an inva- sion. In such an emergency the bank might, perhaps, pay the owners of bank money who could get no re- ceipts, the value of what they were credited for in their books ; paying 2 or 3 per cent, to such holders of re- ceipts as had no bank money. P. ^27 — 9. In ordinary times it is the interest of the holders of receipts to depress the ' agio, in order to buy bank mo- ney cheaper, or to sell their receipts dearer. It is the interest of the owners of bank money to raise the agio^ in-order to sell their bank money dearer, or to buy a re- ceipt cheaper. To prevent stock-jobbing, agio now is never more than 5 nor less than 4 per cent. P. 230. The bank of Amsterdam professes to lend out no part of what is deposited in it ; and no point of faith is bet- ter established than that of every guilder circulated as bank money, there is a corresponding guilder in gold or silver in the treasure of the bank. In 1672, when the French king waKS at Utrecht, the bank of Amsterdam ( 181 ) paid so rapidly as left no doubt of the fidelity with which it had observed its engagements. P. 231. 2. The amount of the treasure of the bank cannot he known, but three millions sterling is probably the ut- most extent, which is quite sufficient to carry on a very extensive circulation. The city of Amsterdam derives considerable revenue from the bank. Beside what may he called warehouse rent, there are fees upon opening every new account, and also for every transfer ; like- wise forfeits from every person who neglects to balance his accounts twice in theyear^ The bank is supposed to make a profit by the sale of foreign coin or bullion, which sometimes falls to it by expiring receipts* It makes a profit by selling bank money at 5, and buying it at 4> per cent. Public utility however, and not reve- nue, was the original object of this institution. ThQ exchange generally appears to be in favour of the coun- tries which pay in bank money, and against those which pay in currency : for the former pay in a species of* money of which the intrinsic value is always the same; the latter is a species of money of which the intrinsic value is always varying and generally below the stan- dard. P. 233. 4. PART. ir. Of the Unreasonableness of those extraordinary restraints upon other principles, NOTHING can be more absurd than the whole doc- trine of the balance of trade. When two places tradfi Z ( 18^ ) ^ wFtb one atnother this doctrine suppose9> that if the ha* A ' lance be equal, neither oftheiQ gains or loses; but that if it leans to one side, one of them loses and the %,.. othergajas. Both suppositions are ifaJse. A trade which is forced, % means of bounties and monopolies, is commonly disadvantageous to the country in whose fa- vour it is meant to be established. But a trade, which without constraint, is carried on between any two places, is always advantageous, though not equally so, to both- By ad vantage is understood, not an increase of gold aiKl silver, but that of the ex change aWe ya^^^ «niuial produce of the land and labour of the country* if the balance be equal, and the trade consist in the ex- change of their native commodities, they will, on most occasions, gain equally ; each will afford a market for '4 part of the surplus produce of the other. P. 235^ 6. If the one export nothing but native commodities, and the returns of the other consisted altogether in fo- reign goods, the balance would be supposed equal, com- modities J)eing paid for with commodities. The inhabi- tants of that country which exported nothing but native commodities would gain most ; since the whole capital annually employed, would be distributed among the people : but in the other, only that part of the capital which was employed in producing commodities, with which the foreign goods were purchased, would be an- nually distributed among the people. The one would carry on a direct foreign trade, the other a round about trade. All countries exchange with one another, partly native, and partly foreign goods: that country will be the principal gainer in whose cargoes there is the great- est proportion of native goods. P. 237. 8. I If England paid for the commodities imported from I France, with gold and silver^ and not with tobacco and ( J^ ) India goods^ the balance would be supposed agains us; The trade would give revenue to both countries, but more to France. If the tobacco whicli, in England, is worth only 100,0001. when sCnt to France,will purchase w^ine, which is in England worth 110,0001. the ex- change will augment the capital of England by 10,000l. The same may be said of a like sum of English gold. It would be more advantageous for England that it could purchase the wines of France with its own hard*- ware, than with the tobacco of Virginia^ or the gold and silver of Peru. A country which has no mines, is not more likely to be exhausted of gold and silver, bj the exportation of those metals, than one which does not grow tobacco, by the exportation of that plant, P. 2Sg. 40. That is thought a losing trade which a workman carries on with the alehouse, and the trade which a maw ttufafrturing nation wquld naturally carry on with a wine country, may be considered of the sante nature. The trade with the alehouse is as advantageous and ne- cessary to the workman as any other, though more liv- able to be abused. Individuals may ruin their fortunes by an excessive consumption of fermented liquors ; but there seems to be no risk that a nation should do so; The cheapness of wine is the cause, not of drunkenness', but of sobriety. The restraints upon the wine trade are not calculated to keep people from the alehouse; but to prevent them from going where ttiey can buy the best and cheapest liquor. They favour the wine of Por- tugal, and discourage that of France, because the Por- tuguese, it is said, are better customers for our manu- factures than ttie French. The arts Qf underling trades^ < 18.4 ) men are thus erected into political maxims for the contr ductof a great empire. By such maxims, nations have been taught that their interest consisted in beggaring •all their neighbours. Commerce has become the source of animosity. The ambition of King^ and ministers ha^ not been more fatal to the repose of Europe, than the jealousy of merchants and manufacturers. J^. 241 — 3. It was the spiritof monopoly which invented this doc- trine. It is the interest of the people to buy of those who sell the cheapest. This proposition has been callr ed in question only by merchants and manufacturers^ whose interest js opposite to that of the great body of the people. Hence, the duty on goods imported by alien merchants; the duties and prohibitions on foreign manufactures ; and the restraints upon the importation of goods from cop n tries, wijth whi^ch the balance of -trade is supposed disadvantageous \ that js, from those countries against whom national animogity Jiappeas to .bemost violently inflamed. P. 244. . The weajth pf^a^j^e^^ though dan- gerous in c:?ar, is advantageous in trade, A rich man is likely to be. a better custiomer to the people in his jieighbourhpod, than a poor man; so is likewise a rich jiation. The ma;nufacturers of a fich nation, may be dangerous rivals to those of their neighbours; but the competition is advantageous to the great body of th^ people. Private people \yho want to piake a fortune, resort to the Ciipital ; where much wealth circulates, some share of it may fall to them. The s^me maxims should make a whole nation regard the richqs of its neighbours, as an occasion for itself to acquire riches. The modern maxims of foreign commerce, by aiming at the impoverishment of all our neighbours, tend to render that very commerce contemptible. Hence^ the| ( m ) restraints on the commerce between France and Engr land. If the real interest of both countries were conr sidered, a reciprocal commerce miglit be most advaa- tageous to each. France is ^\}^ nearest neighbour tp Great Britain ; the returns might be made four, five, or six times in the year, consequently the same capital would keep in motion four, fivje, or six times the quan- tity of industry, which an equal capital could do ia most other branches of foreign trade. Between the parts of France and Great Britain, the most remote from one another, the returns might be expected once a year; this would make the trade with France three times more advantageous than the trade with North America. France, besides, contains twenty-four mil- lions of Inhabitants ; America, but three. France is also tjie much richer country. Such is the difference between that trade, which the wisdom of both nation^ bas thought proper to discourage, and that which it ha? favoured the most. P. 245 — 8. The same circun^st^nces, whicl^ wguld have render- ed an open and free commerce between, the two coun- tries so advautagepns to both, hj^ye occasioned the principal obstructions to that commerce. Every town and country, in proportion as they have opened their por.ts to all nations, have been enriched by the free trade^ P. 249- There is another balance^ which according as it hap- pens to ))e favouFaEleor unfavourable, occasions the prosperity or decajr of every nation. This is the balance of the annual produce and consumption^ whichr^Iseii^ tirely different from the balance of trade. It may take place iha nation which has no foreign trade. It may take place in the whole earth, of which the wealth and population may be either increasing or decaying. The ( 186 ) balance of produce and consumption may be in favour of a nation, though the balance of trade be againsi; k, p. 250. 1. CHAP, IV. • , Of Drawbacks, MERCHANTS and manufacturers, iiot contented with the monopoly of the home market, have sought certain encouragements to ex£oitatigjj: of these, draw* hficks seem to be the most reasonable. To allow the merchant to draw back the whole, or a part of whatever excise or inland duty is imposed upon domestic indus- try, can never occasion the exportation of more goods, than what would have been exported had no duty been imposed. Such encouragements do not tend to turn towards any particular employment, a greater share of the capital of the country than what would go to that employment of its own accord, but qiilr t^Jjiiider,^^^ duty from drivinsr away any part of that share tg other (Employments. TTBey tend to preserve the Natural divi- sion and distribution of labour in the society. Th^ same thing may be said of the drawbacks upon the re- exportation of foreign goods imported. Formerly the merchant was allowed to drawback half the duty upon exportation, provided the exportation by the English merchant took place within twelve months; by the Alien within nine months: this was afterwards extended tp three years. Upon the exportation of tobacco, of which we had the monopoly, the whole duties were drawn back. Sugars came nearlyunder the same rule. ( 187 ) Soitie goods are entirely proliibited to be imported for^ home consumption. If imported for exportation, no part of the duties is drawn back ; such are French cam- brics, printed caUicoes> &c. P. 252 — 4. Upon all French commodities,less of the duties were allowed to be drawn back than upon those of other countries. P. 255 — ?• Drawbacks were, perhaps, granted for the encou* ragement of the carrjfzwo;^jtradg, which, as the freight of the ships is frequently paid by foreigners, was pecu- liarly fitted for bringing gold and silver into the coun- try. The motive of theinstitution was foolish, though the institution itself was reasonable. Such drawbacks? cannot force into this trade a greater share of the capi- tal of the country, than what would have gone into it of its own accord, had there been no duties on impor- tation. The carri/ing trade is a resource to those ca^ pitals which cannot find employment in the agriculture, or the manufactures of the country. The revenue profits by that part of the duty which is retained. If the whole duties had been retained, the foreign goods could seldom have been exported, nor consequently im- ported, for want of a market. These reasons will justify drawbacks. P. 258—60. 1 CHAP. V. Of Bounties^ COUNTIES upon exportation are sometimes gran- ted to the produce of particular branches of domestic I ( 18S 5 industi^y. By means of them our merchants, li is pre- tended, will be enabled to sell their goods as cheap, or cheaper, than their rivals in the foreign market. A greater quantity will thus be exported, and the balance of (rude turned more in favour of our own country. Bounties ought to be given to those branches of trade pnly, which cannot be carried on without thetti, or in which the merchant is obliged to sell hrs goods for less than they really cost him to send to market. The bounty is given to make up his loss. The trades Carried on b}'^ means of botrnties, are the only ones which can be carried on between two nations, for any considerable liure, in such a manner as that one shall regularly lose, or sell its goods for less than it costs lo send them to market. But if the bounty did not repay to the mer- chant what he would lose upon his goods, he would soon employ his stock in another way. The effect of bounties can only be to force the trade of a country into a^clmnnel, less advantageous than that in which it would run of its own accord. P. 26!. 2. Since the bounty upon the exportation of corn was first established, the price of the corn exported, has ex- ceeded that of the corn imported, by a much greater sum than the amount of the whole bounties which have been paid during that period. This has been thought a proof that the' forced corn trade is beneficial to the na- tion,without considering that the bounty is the smallest cxpence to the society. The capital of the farmer em- ployed in raising it must be taken into the account. I'nless the price of corn in the foreign market will pay the bounty, this capital, and the profits of stock,the so- ciety is a loser. The bounty supposes the price to be iiisafhcienl to do this. P. 2()3, The avetag6 ptice of corn hvis fallen jiincfe tb6 estat- lishm^nt of the bounty. Tin's must have happened in spite of the bounty, and is probably owing to the gra- dual rise in the real Value of silver, in years of plentif the bounty keeps up the price of corn. In y6ars of scdtcitj/, though the bounty is frequently suspended, yet the great exportation in years of plenty, must hin- der the plenty of one year from relieving the scarcity of another. Ik has been thought that it encourages til- lage, (1.) By opening a foreign market to the farmer^ and, (2.) By securing to him a better price, ^ut iti^ answered, that the extension of the foreign market by the bounty, mtistbeatthe expenceof the home mar* ket. The corn bounty imposes two different taxes upon the people ; (1.) The tax in order to pay the bounty ; and, (2.) That which arises from the advan- ced price of the commodity in the home market. The second is the heavier tax ; and it must either reduce the subsistence of the labouring poor, or occasion some airgmentation in their pecuniary wages. In the one case it must tend to restrain the population of the coun- try ; in the other, it must tend to restrain the industry of the country. The final tendency of the bounty, therefore, is to diminish, rather than to augment the market and consumption of corn. This enhancement of the money price of corn, it has been thought, must encourage its production. But it is not the real, but the nomi/ia/ price of corn, which is affected by the bounty. The effect of the bounty is not so much to raise the real value 6f corn, as to degrade the real value ^f silver. For the money price of corn regulates the. moliey price of labour ; and also of all tlie other pans A a , ( 190 ) of the rude produce of land^ consequently that of the materials of almost all manufactures. By regulating the money price of labour, it regulates that of manufac- turing art and industry, and consequently that of the complete manufacture. P. 264 — 8. That degradation in the value of silver which is the effect of the fertility of the mines, as it operates equally every where, is a matter of little consequence to any particular country. But that degradation in the value of silver, which, being the effect of the political in- stitutions of a particular country, takes place only in that country, and is a matter of very great consequence, and tends to mai^e every body poorer. P. 269. 70. Spain and Portugal are the distributors of gold and silver to all Europe ; they should be somewhat cheaper in those countries than in any other part of Europe, Spain by taxing, and Portugal by prohibiting the ex- portation of gold and silver, load the exportation with the expence of smuggling ; they cannot detain a grea- ter quantity of gold and silver than what they can af- ford to employ in coin, plate, &c. The higher the tax, the higher the penalties with which the prohibi- tion is guarded, the greater must be the difference in the proportion of gold and silver to the annual produce of the land and labour of Spain and Portugal, and to that of other countries. The cheapness of gold and silver discourages the agriculture and manufactures of Spain and Portugal, and enables foreign nations to supply them with many sorts of rude produce, and with almost all sorts of manufactures, for a smaller quan- tity of gold and silver than what they can either raise, or make them for at home. The tax and prohibition operate in two ways: (1.) They lower the value of the precioiis metals in Spain and Portugal ; and, (2.) J < 191 ) They keep up the price in other countries above what it would otherwise be, and thereby give those countries a double advantage in their commerce with Spain and Portugal. Remove the tax and prohibition, and the value of those metals will soon cOme to a level in all countries. The loss which Spain and Portugal could sustain would be nominal and imaginary. The nomi- nal value of their goods would fall, but their real value would be the same. The gold and silver which would go abroad would bring back an equal valueof goods, the greater part of which would afford employment and maintenance for industrious people ; a part of their dead stock would thus be turned into active stock, and the produce of their land and labour must increase. P. eri— 4. The bounty upon the exportation of corn neces- sarily operates in the same way as this absurd policy of Spain and Portugal. It renders our corn dearer in the home market, and cheaper in the foreign ; and the average price of corn regulates that of all other com- modities ; it lowers the value of silver in the one, and tends to raise it in the other. The bounty as it raises in the home market, not so much the real, as the 720- minal price of corn, it discourages our manufactures, without rendering real service to our farmers. P. 275* The corn merchants are the only persons who essen- tially profit by this bounty ; as in years of plenty it oc-» casions a greater exportation ; and by hindering tlie plenty of one year from relievmg the scarcity of ano- ther, it occasions, in years of scarcity, a greater impor- tation than there would otherwise be, which they can sell with a greater profit. In imposing the high duties A a 2 < ^92 ) qn the importation of foreign cqin, and in establishing^ jibe bpunty,oiircountry gentlemen imitated tlie conduct of our m^nnfapturers. They did not attend to the es-? sentia] difference which nature has estabUshed betvyeea corn, and almost every other sort of goods. When, by monopoly, or bounty, woollen or lineo manufacturers are enabled to sell their goods for a bet-? ter price than they could otherwise get for theui, it i$ the real price which is raised, and they are enabled to live better themselves, and to employ a grej^ter quantity ©f labour. Bntwben, by like instructions, the money price of corn i§ raised, the real value is not raised. Jfature has stHmped a value upon corn, which cannot fe altered by J^ltf3ring the money price. That valpe U, in every place, equal to the quantity of labour which it can maintain, as labour is coinmonly maintained in that place. Woollen or lineq cloth t^re not the only regulating commodities by which die real value of all other commodities must be determined ; corn i^t P. 276—8. Bounties upon the ei^portation of any home rnacl^ commodity are liable, (1.) To the objection of forcing Spine part of the indqstry pf the connpy into, a channel les^ advantageous than that in which it would run of its own accord : and, (2.) To the objection of forcing it into achs^nnel that is actually disadvantageous. The hounty upon the exportation qf corn, is liable to thi^ ■farther pbj^ction, that it cannot promote the raising of th^t <}pmmodity of which it was meant to encourage thq pjf^duction. P. ^78. 9. To eftCQumge the production of any commodity, a b^ovrnty upon production would have a more direct ope- lation, than one upon exportation. It would impose ©nly one tax on the people. It would tend to lower I 103 ) the pnceof the commodity ia the home market, which would, in part, contribute to repay the ta^, Some-» thing hke a bounty upon production, has been granted ppon some occasions. Bach are the tonnage bounties given U} the white^herring and whale fisheries. They tend to render the goods cheaper in the home market, ithan they would otherwise be. In other respects their isffeets are the same as those of bounties upon exporta-* (ion. The tonnage bounties are thought to contribute to the defence of the country, by augmenting the num* ber of its sailors and shipping. This is said to be done cheaper by these bounties, than by keeping a standing navy. Notwithstanding these favourable allegations, it is not improbable that the legislature has been imposed on in granting, at least, one of these bounties. For, (1.) The herring buss bounty seems too large: every barrel of which costs government nearly Igs. but the price is only about a guinea at an average. (2.) The bounty to the white herring fishery is in proportion to the burden of the ship, not to her success in th^ fishery. Many vessels have probably been fitted out to catch, not the fish, but the bounty. (3.) The mode of fishing for which this tonnage bounty has been given, is not so well adapted for Scotland, as the boat fishery^ which has nearly gone to decay since the estab-. lishment of the buss bounty. (4.) In many parts of Scotland, herrings make a great part of the food of the common people. The herring buss bounty has con- tributed rather to raise than lower their price in the home market. Notwithstanding the liberal bounties bestowed on the undertakers of fisheries, they do wo^ seem to have been great gainers in the business. The effect of such boun- ties is to encourage rash undertakers to adventure in a ( 194 ) business they do not understand, and what they lose by their own ignorance, more than compensates the Hbe- rahty of government. P. 280 — 7. If any manufacture was necessari/ for the defence of the society, and could 9iot be otherwise supported at home, it might not be unreasonable that all other branches of industry should be taxed to support it. The bounties upon the exportation of British made sail cloth, and gunpowder, may, perhaps be vindicated on this principle. What is called a bounty, is sometimes no more than a drawback, and consequently is not liable to the same objections as what is properly called a bounty. Such are the bounties upon raw sugar, and upon wrought silk. The bounty also upon gunpowder is a drawback of the duties imposed upon brimstone and saltpetre imported. Premiums given by the public to artists are not liable to the same objections as boun-* ties. Their tendency is not to overturn the natural ba- lance of employment, but to render the work done more perfect. The expence of premiums is small, that on bounties very great. The bounty on corn has sometimes cost the public, in one year more than three hundred thousand pounds. P. — 288. 90. Digression concerning the Corn Trade and Corn Lazv&. THE praises bestowed upon 'the corn laws of this country are altogether unmerited. The trade of the corn merchant is composed of four diiferent br^nche^. ( 195 ) These are (1.) The trade of the inland dealer ; (2.) That of the importer ; (3.) That of the exporter ; and (4.) That of the carrier, I. The interest of the inland dealer, and that of the great body of the people, are, even in years of scarcity, the same. It is his interest to raise the price of corn as high as the real scarcity of the season requires, and no higher. By raising the price he discourages the con- sumption, and makes people ceconomical. But by rais- ing it too high he is liable to great loss, by not being able to sell all his corn. And by not raising it high enough, he loses part of his profit and exposes the peo- ple to famine. It is the interest of the people that their consumption should be proportioned to the supply of the season. This also is the interest of the inland dealer in corn. If one great company of merchants could pos- sess themselves of the whole crop of an extensive coun- try, they might destroy a part, to keep up the price of the rest. But this is scarcely possible with regard to corn : wherever the law leaves the trade free, it isof ali commodities the least liable to be monopolized by a few large capitals. Its value exceeds the capitals of a few private men ; and it is necessarily divided among a greater number of owners, who are scattered through the country. P. 2g0— 4. Dearths have never arisen from the combinations of the dealers in corn, but from real scarcity, occasioned by the waste of war, or by the fault of the seasons ; and famines have always been caused by the violence of go- vernment, attempting by improper means, to rernedy the inconveniences of dearths. In an extensive corn country, in which there is a free commerce, the scar- city occasioned'by the worst seasons can never produce A famine. The season^ most anfuvourable to a crop, ar^ ( i90 J those of exceggitc cffotrght, or excessive rain. But as corn grows equally on high, and low lands> the season that is Imrtful to one part of the conutry is favourable to another. Ih fice countries, wheie the c^op requires much water, the effects of a drought a¥e more dismal, yet seldom so universal as to occasion a famine if the go\ernment would allow a free trade* P. 295. 6. When a government, to remedy the imionvenienees of a dearth, orders all dealei*& to sell their corn at what k supposes a reasonable price, it either hinders them from bringing theii* corn to market> or it enables the people to Consume rt too fast. The tmlimited freedom of the cbrn trade rs the only effectual preventive of a fa* mine, and the best palliative of the inconveniences of a dearth. In years of scarci-ty, the inferior ranks of the people impute tlieir distresses to the averace of the corn merchant ; though on such occasions be is often the greatest sufferer. It is evident that the profit of the corn merchant is no more than sufficient to piu his trade on a level with other trades, since great fortunes are not move frequent in this than in other trades. P. 297. 8. The ancient policy of Europe encouraged the popu- lar odium against this trade. By a statute of Edward VI. ft wa^made a punishable offence to bay totn with an intent to sell it again. Our ancestors endeavoured to hinder any middle man from coming in between ilie grower and consumer. Hence the restraints on the ear- ner of corn. Agriculture was, in this manner, reguk*- ted, by motives quite different from those established with regard to manufactures. The farmer was obliged to become a corn merchant; while the manufacturer was, in many cases, forbiddm to sell his goods by re* fail. The one law was intended to make corn cheap ; the other was intended to encouraore the business of shopkeepers. The manufacturer cannot undersell the common shopkeeper, for the capital placed in his shop, must be withdrawn from his man u factury ; therefore he must have the profits of the manufacturer on part of his capital, and those of the shopkeeper on the other part. The farmer also, for the same reason, could not afford to sell his corn cheaper than any other corn mer- chant would have been obliged to do in the case of a free competition. P. 299—301. The dealer who employs his whole stock in one branch of business has an advantage similar to the workman whose labour is employed in a single opera- tion. The law which prohibited the manufacturer from exercising the trade of a shopkeeper, endeavoured tp force this division in the employment of stock to go o^ faster than it might otherwise have done. The law which obliged the farmer to exercise the trade of a corn merchant, endeavoured to hinder it from going on so fast. Both were uijjust, but the latter was the most pernicious. It obstructed the improvement and culti- vation of land, by forcing the farmei* to divide his ca- pital into two parts, only one ,of which could be em- ployed in the cultivation of land; it must consequently have tended to raise the price of corn. P. 302. 3. After the business of the farmer, that of the corn merchant, properly protected, will contribute most to the raising of corn. It will support the trade of the farmer, in the same manner as the trade of the whole- sale dealer supports that of the manufacturer. It will enable the farmers to keep their whole capitals con- stantly employed in cultivation, and render them inde- pendent qf the landlord. The statute of Edward VI^ B b V ( 198 ) therefore endeavoured to annihilate a trade, of which the free exercise is the best preventive of a dearth, as contributing more than any trade except that of the farmer, to the growing of corn. P. 304. 5. The rigotlr of this law was afterwards softened, and by a statute of Charles II. the buying of corn, in order to sell it again is declared lawful, as long as the price of wheat does not exceed 48s. the quarter, to persons not being forestallers, that is, not selling it again in the same market within three months. This statute autho- rises two absurd popular prejudices : (1.) It supposes that when wheat is 48s. the quarter it is likely to be 86 engrosedasto hurt the people. (2.) It supposes that there is a certain price at which corn is likely to be forestalled so as to injure the pubHc. But if the mer- chant buys corn either going to a market, or at the market, in order to seell it again soon in the same mar- ket, it must be because he judges that the market can- not be so liberally supplied through the whole season, as on that occasion, and that the price must soon rise. If he judges wrong he must be the loser. If he judges light, he renders the people a service : by making them feel the inconveniences of a dearth somewhat earlier, he prevents them from feeling it so severely as they would otherwise do. P. 306 — 8. The popular fear of engrossing and forestalling may be compared to the popular terrors of witchcraft. The law which should restore entire freedom to the inland trade of corn would probably put an end to the fears of engrossing. The statute of Charles II. with all its im- perfections has contributed much to the increase of til- lage, which is more promoted by the inland than by the ii^jportatioii or exportation trade. P. 309* 10* ( -199 ) il. The trade of the merchant importer of foreigli iorn for home consumption contributes to the imme- diate supply of the home market, and must be bene- ficial to the people. It tends, indeed, to lower the average money price of corn, but not to diminish its real value. When wheat did not exceed 53s. 4d. the quarter, it might be imported subject to a duty of l6s, a quarter ; and to a duty of 8s. whenever the price did not e^^ceed 4l. The distress which in years of scarcity these laws might have brought upon the people, occa- sioned in general temporary statutes which permitted the importation of foreign corn. P. 311 — 13. III. The trade of the merchant exporter of corn for foreign consumption, certainly does not contribute di- rectly to the plentiful supply of the home market. It does so, however^ indirectly, The supply of the home market can never be plen- tiful unless the surplus, can, in all ordinary cases be exported. The prohibition of exportation limits the improvement and cultivation of the country, to what the supply of its own inhabitants requires. The free- dom of exportation enables it to extend cultivation for the supply of foreign nations. By the 12th of Charles 1 1, the exportation of corn was permitted ; and by the 1st of William and Mary a bounti/ was granted on ex- portation. By this last statute, corn could be engrossed at any price for exportation, but not for inland trade, except when the price was less than 48s. the quarter. The interest of the inland dealer can never be opposite to that of the great body of the people ; that of the ex- iporter may. The direct object of these statutes wa? un- Bb ^ ( 200 )' der the pretence of encouraging agriculture, to raise the money price of corn as high as possible. P. 314. 15. Were all nations to admit a free exportation and importation^ the different states of a great continent would reseilible the different provinces of a great em- pire, which would at all times be best supplied by a per- fectly free trade. But the freedom of the corn trade has been almost every where restrained, which restraints have been the occasion of many dangei^ and misfor- tunes. The bad policy of one countiy, may render the establishment of the best, imprudent or dangerous in another. In large states it will be less dangerous. In some of the Italian states it may, sometimes, be neces- sary to restrain the exportation of corlr; but in such tountries as France and England, it scarcely ever, can; The laws concerning corn, may be compared to those concerning religion ; government, to preserve public tranquility, yields to popular prejudices, and on that account, we seldom find a rational system established. P. 316. 47. IV.* The trade of the merchant carrier, or of the im-» porter of foreign corn for exportation, contributes to the plentiful supply of the home market ; for he can sell his corn for less money than he might expect in a foreign market. The country which becomes the store- house for the supply of other countries, can seldom be in want itself. The carrying trade has been prohibited in Great Britain. That system of laws connected with the establishment of the bounty deserves no praise.The prosperity of Great Britain depends on the security of property ; and upon the effort of exery man to better his condition. P. 3 J 8. IQ. Though the system of laws connected with the boun-» ty, has tJie same tendency with the police of Spaia (( 201 ) and Portugal, to lower the value of the precious me- lals, yet Great Britain is one of the richest countries in Europe^ while Spain and Portugal are aino_ng the most beggarly ; which may be thus accounted for : (1.) The tax in Spain^ and the prohibition in Portugal^ of exporting gold and silver, must operate more forci^ bly in reducing the value of those metals,than the corn laws of England. (2.) In Spain and ^Portugal, indusr- try is neither free, nor secure, and the governments are such as would alone be sufficient to perpetuate tlieir present state of poverty. The 13th of Geo. III. c. 43. has established a new system with regard to the corn laws, in many respects better than the antient one, but in others not so good. CJIAP. VI, Of Treaties of Commerce, WHEN a nation binds itself by treaty, either to per- mit the entry of certain goods from one foreign coun- try, which it prohibits from ail others ; or to exempt the goods of one country from duties to which it sub- jects those of all others, that foreign country must de- rive advantage from the treaty. Such treaties are dis- advantageous to the merchants of the favouring coun- try, and a monopoly is granted against^ them, to a fo- reign nation. They must frequently buy their foreign gooHs dearer than if a free competition was adnntted, ( S02 ) The exchangeable value of their annual produce is likely to be diminished by every such treaty. Thisdi' minution, however, can scarcely amount to a positive loss, consequently the favouring country will gain by the treaty. Some countries have granted treaties of commerce against themselves, because they expected that in the whole commerce between them, an annual balance of gold and silver would be returned to them. Such was the treaty of commerce betweeen Eng- land and Portugal concluded in 1703, by Mr. Methuen. By this treaty Portugal agreed to admit the woollen manufactures of the British, on condition that Great Britain should admit her wines, upon paying only two-thirds of the duty which is paid for those of France. This treaty, though evidently in favour of Portugal, has been celebrated as the master-piece of tlie commercial policy of England, as bringing to her a large share of the precious metals. It has been esti^ mated, that the Lisbon packet brings 50,0001. in gold and silver every week into England. But if this were true, it does not follow that the trade is more advantar geous than any other, in which, for the same value sent out, we receive an equal value of consumable goods in return. It is but a small part of this importation which can be employed as an annual addition to the plate, or com of the kingdom. The rest must be sent abroad and exchanged for consumable goods. But if these consumable goods were purchased directly with the produce of English industry, it would be of more advan- tage to England; a direct foreign trade being more advantageous than a round about one. Though Great Britain were excluded froni the Portugal trade, it xvould find no difficulty in purchasing its annual sup- plies 8f gold and silver \ for the annual supplies of gold ( 20S ) in Portugal mtist be sent abroad, where Great Britaitt might buy it at httle more expence than she Could at first hand in Portugal. Almost all our gold and silver is said to come from Portugal : with other nations the balance of trade is either against us, or not much in our favour. But the more gold we import from one coun- try, the less we must necessarily import from others. The effectual demand for gold, is limited to a certain quantity. The more gold annually imported from some particular Countries, over and above what is requisite for plate and coin, the more must be exported to other countries, and the more the balance of trade will ap-/ pear to be in our favour with some countries, and thj^ more against us with others. It was upon the silly no- tion that England could not subsist without the trade of Portugal, that France and Spain once combined to exclude British ships from the ports of Portugal. The loss of this trade would have embarrassed our mer- chants for a year or two ; but we should have beea freed from the burden of supporting a very weak ally ; and in this would have consisted all the incon- veniency which England would have suffered from this notable piece of commercial policy. P. 323 — 3 1 . The great annual importation of gold and silver, is neither for the purpose of plate nor of coin, but of fo- reign trade, which can be carried on better by means of these metals, than of almost any other goods. They are the universal instruments of commerce, and are easily conveyed from place to place. In facilitating the round-about foreign trades of consumption which are carried on in Great Britain, consists the principal advantages of thePortugal trade. The new plate made by goldsmiths, is, for the most part, made from other old plate meltied dovva, so that tiie addition made to the. ( 204 ). whole plate of the kingdom cannot be very great. It is the same case with the coin. While there is an evi- dent profit in melting new guineas, the operations of the mint will be like the web of Penelope, the work that is done in the day will be undone in the night. But were the people who carry their gold and silver to the mint to pay for the coinage, it would add to the va- lue of the metals. Coined gold would be more valu- able than uncoined. The seignorage, if it was not ex- orbiftmt, would add to the bullion, the whole value of the duty. But if the duty was exorbitant, it would en- courage false coining. A seignorage will diminish the. profit of melting down new coin, which always arises from the difi'erence between the quantity of bullion which the common currency ought to contain, and that which it does really contain. A seignorage is, therefore, the most effectual way to prevent the mel- ting or exporting of coin. The law for the encourage- ment of the coinage, by rendering it duty free, for a limited time, was enacted during the reign of Charles 11. In 1769, it was rendered perpetual in com{)Iai- sance to the Bank of England, who supposed it their interest, that tlie coinage should be at the expence of government, rather than at their own ; this may per- haps be found to be a mistake. If there was a reason- able seignorage, while at tlie same time the coin con- tained its full standard weight, whatever the bank might lose in seignorage, they would gain upon the price of bullion, and vice versa. P. S3Q. — 9. When the tax upon a commodity is so moderate as not to encourage smuggling, the merchant who deals in it, though he advances, does not properly pay the tax. The tax is finally paid by the consumer. But money is a commodity with regard to v.hich every man *is^ irierclianl. Ndbody buys it biit in btddr td Sell itgain, and in thisthefe is/properly,no large qonsumer. When the tax upon cbihrfge, therefore, is so moderate '6s not to encdurage false eoining, though every body 'advances the tax, nobody finstlly pays it, because every body gets it bacik in t!he advanced value of coin. A moderate seignoratge, therefore, would ndt augnient the expence of the bank, and the want of it does not dimi- nish it. The gdveriiment, when it defi*ays the expence of coinage, incui-'s expence, and loses revenue, and no- Ibody is benefited by this useless piece of public genero-^ Utt)^;' P. 339—43. CHAP. VII; Of Colonie^i PART I. " ' • %fih Vaseo de Gama sailed from Lisbon, and ia eleven months arrived upon the coast of Indostan. Some years l^efore this, Columbus, a Genoese pilot, formed the daring project of saihng to the East .Indies by the West ; and after a voyage of two or three months, he discovered the Bahama Islands, and the Island of St. Domingo. This C 207 ) Jie, at first, mistook for China. In consequence of thi* mistake of Columbus, the name of Indies has stuck to those countries ever since. These countries were re- presented to the court of Spain as of great conse- quence, though in the animal and vegetable produc- tions of the soil, there was, at that time, nothing which could justify such a representation of themi. Columbus turned his view towards their minerals, and he supposed that he had found a full compensation for the insignificancy of those of the other two. He ac- cordingly proposed, that the half of the gold and silver that should be found there, should belong to the crown. But when the natives were stript of their ornaments, and it became necessary to dig for these metals in the mines, there was no/possibility of paying this tax, and it was at length reduced to a twentieth part of the gross produce of the gold mines. All the oth^r enterprises of the Spaniards, in the new world, seem to have been prompted by the love of gold. P. 347—53. No projects are mare ruinous than the search after new gold and silver mines. They ought not, there- fore, to meet with any extraordinary encouragements from the prudent lawgiver, who desires to increase the capital of his nation : he should not turn towards them a greater share of that capital than what would goto them of its own accord. Though the judgment of sober reason and experience concerning such projects has been always unfavourable, that of hume^n avidity has been quite otherwise. P. 354. 5. A project of commerce to the East Indies gave oc- casion to the first discovery of the West. A project of C c (2 ( soft ) conqdest gave occasion to all the establisbmeats of the Spaniards in those newly discovered' countries. The motive was the gold and silver mines, and a course of accidents rendered the project successful. The firs|> adyenturers of all the oth^r nations of Europe, wei», animated with the same views bpt were not equally $up- p^ssiful. P. 3^6. 7. PART. II. Caii$€s of th Prosperity/ of new Colonies. THE colonj of a civilized natipn advances more i rapidly to wealth and greatness than any other bumanv society. The colonists carry out with them a knowr liedge of agriculture, and of other useful arts, superior to what can grow up of its own accord, in the course of many centuries among savage nations. They carry out with them too the habit of subordination ;— some notion of the government and laws of their own coun- try. Every colonist gets more land th^n he can cultir vate. He has no rent and few taxes to pay. The exr jtensiveness of his land makes him endeavour to collect labourers, and to reward them with the most liberal waffes. These labourers soon become landlords. The liberal reward of labour encourages marriage. Chi Idren^, during infanc3% are well taken caie of, and when they grow up the value of their labour greatly overpays their, maintenance. P. 358^ Q. In other countries, rent and profit eat up wages^ and the two superior orders of the people 6ppress theinfe-. rior one. But in new colonies the inferior order is treated with humanity, if it is pot in a state of slavery. c^' / %* ft m \ ^ 1^ Waste lands of the greatest fertility are to be had for a ti^ifle. The profit of the proprietor is very great, buU this cannot be made without employing the labour o§ other people. This he is willing to do at any price. Jligh wages encourage population. The plenty o£ g!^^Tan3 encourages improvement. What encourafr ges the progress of population and improvement^ en^ courages that of real wealth and greatness. The progress of many of the Greek coJonies towardt wealthy seems accordingly to have been very rapid. In* a century or two they rivalled their mpther cities. ThpL history of the Roman colonies is by no means so bril- liant, on account of the wapt of land, and liberty to manage their own affairs in the way they judged be&tv In the plenty of good land, the European colonies established in Amerix?a,r^semble thoseof antientGreecCp In their dependency upon the mother states, they re- semble those of antient Rome. But owing to their si* tnation, they were left a good deal to pursue their own* interest, in, their own way; and their progress in wealth, population, and. improvement, has been very great. Jf. 359—62. The crown of Spain, by its share of the' gold and silver, derived some revenue from its colonies, from their first establishment. Tbey accordingly attracted the notice of their mother country, whilst those of the other Europisan nations were for a longtime neglected* The former did not, perhaps, thrive the bettej for this attention, nor the latter the worse in consequence of this neglect. The Spanish colonies are considered as less populous and thriving, than tbose of almost any other European nation ; nevertheless their progress in improvement, has certainly been very rapid. Before the conquest there were no beasts of burden, either in ( 210 ) Mexico or Peru. The use of iron was not known. They had no coined money, nor any established instrumeut of commerce. P. 362 — 4. After the settlements of the Spaniards, that of the Portuguese in Brazil, is the oldest of any European na- tion in America. But ^ for a long time after the first discovery, neither gold nor silver mines were found in it, and as it afforded but little revenue to the crown, it was in a great measure neglected, during which, it grew up to be a powerful colony : no one in America is supposed to contain a greater number of people of Eur ropean extraction. P. 364. 5. About the end of the 15th, and during the most of tlie l6th century, Spain and Portugal were the tWQ great naval powers. The Spaniards claimed all Ame- rica as their own, though they could not hinder the Portuguese from settling in Brazil. Tlie French who attempted to settle in Florida were all murdered by the Spaniards. By the destruction of the invincible Armada they became unable to obstruct the settlements of othey European nations. In the course of the 17th century, therefore, the English, French, Dutch, Danes, and Swedes attempted to make settleuieuts ii| the new The Swedes established themselves in New Jersey ; but they were soon swallowed up by the Dutch colony of New York, which again fell under the dominion of the English. The Danes possessed only the small islands of St. Thomas, and Santa Cruz. These settlements were un- der the government of an exclusive company, which is, perhaps, the worst of all governments ; they neverthe- less made some progress in improvement, and since the ( 211 ) Company Was dissolved, the prosperity of these coloniea lias been very great. The Dutch settlements were originally put nnder the government of an exclusive company. Their progresa has been slow, in comparison with that of the greater part of new colonies. The French colony of Canada was, during the greater part of the last century, and some part of the present, under the government of an exclusive com- pany. Its progress was necessarily slow^but it became lapid when the company was dissolved. The colony of St. Domingo was established by pirates, who, for a long time, neither required protection, nor acknow- ledged the authority of France ; and when that race of banditti became so far citizens as to acknowledge this authority, it was, for a long time, necessary to exer- cise it with great gentleness. During this period the population and improvement of the colony increased very fast. P. 365—9. But there are no colonies of which the progress has been more rapid than those of the Engfish in North America. Plenty of good land, and the liberty of ma- naging their own affairs in their own way, were the ^'- two gi-eat causes of their prosperity. Besides the poli- tical institutions of the English colonies have been more favourable Lo the iniproveiuent of this land,than those of any of the other three nations. I. The eng;rossing of uncultivated land has, been more res^raiinedin the En^ than in any other. II. In Pennsylvania there is^noji^ht of primogeni- ture. In three of tlie provinces of New England, the oldest has only a double share. In the others, the right of primogeniture takes place. But the tenure af , lands is such as faciUtatcs aiienution. ' Ttlt/'fh« tax^s.of the Bnglrsh co1dni€fs ar6 riiare iEt(y-» derate, than those of any other European Inations. ' ^ W. The English colotiies have been allowed a more ^^xteiasiye market than those of o^^e^^^ Every European nation has endeavoured more or less to mo- nopolize to itself the commerce of its cctlonies.But thiT inanner in which this monopoly ha^ been ^c^ercised irt -difFerent nations has been very different. Some nations have given up the whole commerce of their colonies to an exclusive conipany, of whom th^ colonies were obliged to buy all such European good^ %s they Wanted, and to whom they ^'ere obliged to seH ^he whole of their own surplus produee. This has beea the policy of Holland. OthernatioTis have confined the whole commerce oF •dielr colonies to a particular port of thre mother couti- try. The trade which was carried on in this manner^ would T^eessarily be conducted very nearly upon the same principles as that of an exChistve bompaiiy. ' ' '^ Other nations leave tl;re trade of their colonies free to all their subjects, who may carry it on from all the dif^ ferent ports of the mother country. Under this policy the colonies are enabled both to sell their own produce, and to buy the goods of Europe at a reasonable price, ^is has been the policy of England. P. S70 — 7. In the exportation of their own suplus produce too, it is only with regard to certain commodities that lh6 colonies of Great Britain are confined to the market of the mother country. These commodities having been, enumerated in the act of navigation, are called enume- rated commodities. The rest are called non-enumerated^ and may be exported directly to other countries, pro- vided it is in British or Plantation ships. Among these last are some of the most important productions of ( 213 ) America and the West Indies ; grain of all sorts, lum^ her, salt provisions, Jish, sugar, and rum. If the wh die surplus produce of America in grain, salt provisions, and in Jish had been put into enumeration, and thereby forced into the market of Great Britain, it would have interfered too much with the produce of the industry of our own people. The non-enumerated commodities could originally be exported to all parts of the world. Lumber and rice were afterwards confined, as to the piuropean market, to the countries that lie soulh of Cape Finisterre; and by the 6th of Geo. III. c. 52. all non-enumerated commodities were subjected to the like restriction. P. 378—81. The enumerated commodities are of two sorts : (1.) Such as are either the peculiar produce of AajL^jica, or as are not produced in the mother country : (2.) Such as are not the peculiar produce of America, but whicJh are, and may be^produced in the mother eountry^ though not in quantities sufficient, to supply the de- mand. The largest importation of goods of the first kind could not discourage the growth, or interfere with the sale of any part of the produce of the mother cotm- try. The importation of commodities of the second kind might be so managed, it was supposed, as to interfere not with the sale of those of the same kind which were produced at home, but with that of those which were imported from foreign countries. The most perfect freedom of trade is permitted between the British colo- nies, and the West Indies, both in the enumerated, and in the non-enumerated commodities. The liberality of England, however, towards the trade of her colonies^ has been confined chiefly to what concerns the market D d ( 214 ) for their produce, either in its rude state, or in the very first stage of manufacture* P. 382— 7* Great Britain too^ as she confines to her own market some of the most important productions of the colo- nies, so in compensation she gives to some of them an advantage in that market, sometimes by imposing higher duties upon the like productions when imported from other countries, and sometimes by giving bounties upon their importation from the colonies. With regard to the importation of goods from Eu- rope, England has likewise dealt more libearlly with her colonies than any other nations : they are, how- ever, by no means independent foreign countries. P. 388— -9. Of the greater part of the regulations concerning the colony trade, the merchants who carry it on, have been the principal advisers. We must not wonder, therefore, if, in the greater pait of them, their interest has been more considered than either that of the colo- nies, or that of the mother country. Though the 'poli- cy of Great Britain has been dictated by the same wer- cantilc spirit as that of other nations, it has been less oppressive than that of any of them. In everj*^ thing, except their foreign trade,the liberty of the English co- lonists to manage their own affairs their own way, is complete. P. 390—2 The absolute governments of Spain, Portugal, and France, take place in their colonies. It is in the^ro- gress of the North American colonies, however, that the superiority of the English policy chiefly appears. The progress of the sugar colonies of France has been, perhaps superior to those of England, owing to the li- berty they have of refining their own sugar, and also to tie better management of their slaves. That the con- ( 215 ) dition of the slaves is better under an arbitrary,tban un- der a free government, is supported by the history of all ages and nations. The prosperity of the English sugar colonies has been, in a great measure, owing to ^he great riches of England, of which a part has over- flowed on those colonies. But the prosperity of the sugar colonies of France has been entirely owing to the good conduct of the colonists, wbich must have ;b ad some superiority over that of theEnglisb, and in nothing so much as in the good management of their slaves. P. 396—7. The policy of Enrope, therefore, seems to have little to boast of, either in the original establishment, or so far as concerns their internal government, in the sub- sequent prosperity of the colonies of America. Folly and injustice seem to have been the principles which directed the first project of establishing those colonies. The adventurers who formed some of the later establish- ments, joined to the chimerical project of finding gold and silver mines, other motives, more reasonable, and more laudable, but even these motives, do very little honour to the policy of Europe. The English Puritans fled for freedom to America, and established the four governments of New Eng- land. The English Catholics, treated with still greater injustice, established that of Maryland. The Quakers that of Pennsylvania. The Portuguese Jews were banished to Brazil. In effectuating some of the most important of these establishments, the governments of Europe had as little merit, as in projecting them. When these establishments were effectuated, and had become so considerable as to attract the attention of the motber ^country, the first regulations she made was^ to confine Dd 2 < 216 ) their market, and to enlarge her own at their expence, In one way only has Europe contributed either to the first establishment, or to the present grandeur of the colonies of America. It bred and formed the men who were capable of atchieving such great actions, 0.nd of laying the foundation of so greg.t an empire. PART. III. Of the advantages which Europe has derived from th$ discovery of America, and froni that of a passage tg the East Indies by the Cape of Good Hope, THE advantages which Europe has derived from the discovery and colonization of America maybe divided : I. Into the g It has forced part of the capital from the trade vvitfe Europe, and the countries which lie round the Medi* terranean sea, to that with America and the West Indies. But the returns in the lattei* trade, are three or four times more distant, than those of the former, and though the profit of the merchant may be as great in one as the other, yet the advantage to the country never can. P. 188—19. Secondly* The monopoly of the colony trade, has,iii many cases, forced some part of the capital of Great Britain, from a direct foreign trade of con- sumption, into a round-about one. Among the enumerated commodities, there are seve- ral of which, the quantity exceeds the consumption of Great Britain^ and of which a part must be exported ta other countries. But this cannot be done without for- cing a part of the capital of GreatBritain into the round- about foreign trade. If in the direct tradewith America the whole capital employed does not come back in less than three or four years ; in the round-about trade it is not likely to come back in less than four or five. If the one can keep in constant employment but a third or a fourth part of the domestic industry, which could be maintained by a capital returned once a year, the other can only keep in constant employ, a fourth^ora fifth part, of that industry. P. 420—2. The monopoly of the colony trade too, has forced some part of the capital of Great Britain from all fo- reign trade of consumption, into the carrying trade,and consequently, from supporting the industry of Great Britain, to be employed altogether in supporting partly that of the colonies, and partly that of some other coun- tries : — it seems also to have broken altogether,that na- tural balance, which would otherwise have taken place ( 221 ) among all the different branches of British industry, which instead of being accommodated to a great num- ber of small markets, has been principally suited to one great market. P. 422—8. We must carefully distinguish between the effects ot the colony trade, and tliose of the monopoly of that trade. The former are always beneficial ; the latter are always hurtful. The former are so beneficial, that the colony trade> notwithstanding the effects of mono- poly, is still greatly beneficial on the whole* The ef- fect of the colony trade, in its free state, is to open a great, though distant market for such parts of the pro- duce of British industry as may exceed the demand of the markets nearer home. It tends to increase the quantity of productive labour '.in Great Britain, with- out altering in any respect the direction of that which had been employed there before. In the free state of* the colony trade, the competition of all other nations will hinder the rate of profit from arising above the common level, either in the new^ market or in the new employment. — The monopoly of the colony trade on the contrary, raises the rate of profit, in the new mar- ket and in the new employment, and draws produce from the old market, and capital from the old employ- ment. P.429--31. The colony trade opens a new market for the manu- factured produce of Europe. The colonies abound in rude produce, and have a large surplus to export. That the monopoly of the trade of populous and thriving colonies is not sufficient to establish or main- tain manufactures in any country is evident from thd experience of Spain and Portugal, in which countries E« ( 222 ) the bad effects of the monopoly aggravated by the ir- regular and partial administration of justice, have nearly overbalanced the good effects of the colony trade. P. 4^2—3. In England the natural good effects of the colony trade assisted by the general liberty of trade, and the equal administration of justice, have in a great mea- sure conquered the bad effects of monopoly. The mo- nopoly of the colony trade like all other mean expedi- ents of the mercantile system, depresses the industry of all other countries, but chiefly that of the colonies, without increasing that of the country in whose favour it is established. It hinders the capital of the country from maintaining so great a quantity 'of productive la- bour as it would otherwise maintain ; and from afford- ing so great a revenue as it would afford. By raising the rate of mercantile profit, the monopoly discourage* the improvement of land, which retards the natural in- crease of another original source of revenue, the rent of land. By raising the rate of profit, the market rate of interest is kept higher ; but the price of land, in pro- portion to the rent, falls as the rate of interest rises. The monopoly, therefore, hurts the interest of the land- lord by retarding the increase of rent ; and of the price which he would get for his land in proportion to the rent which it affords. P. 434 — 6. The monopoly augments the gain of the merchants, but it renders less abundant the wages of labour ; the rent of land, and the profits of stock. It is bj'' raising the rate of profit that monopoly proves advantageous to any particular order of men. But the high rate of pro- fit seems every where to destroy that parsimony natural tothecharacterof the merchant, and to intoduce ha- bits of luxury and disorder into every class of the peo- (223 ) pie. Thus the single advantage, which the monopoly procures to a single order of men, is in many different ways hurtful to the general interest of the country. P. 437—9. The maintenance of this monopoly is perhaps the sole end of the dominion which Great Britain assumes over her colonies. The monopoly is the principal badge, and the sole fruit of their dependance. What- ever e^^penee therefore has been laid out in maintain- ing this dependency, has really been laid out to sup- port this monopoly. Under the present system of ma- nagement. Great Britain derives nothing but loss from the dominion which she assumes over her colonies. P. 441—3.* The discovery of America, and that of a passage to the East-Indies by the Cape of Good Hope, are the two greatest events recorded in the history of mankind. Their consequences have already been great, but the whole extent, of them cannot have been known. By uniting the most distant parts of the world ; by ena- bling them to relieve one another's wants ; and to en- crease one another's enjoyments, their tendency would seem beneficial. To the natives, however, of both the West and East-Indies, all commercial benefits have been lost in the dreadful misfortunes which they have occasioned ; which misfortunes, seem to have arisen ra- ther from accident than from any thing in the nature of those events themselves. One of the principal effects t The next 15 pages of the original work are devoted to con» jeilures on the probable iflue of the difpute with the Aracrican colonies. They are, therefore, for obYiQU& reafons, omitted in this Analyfis.— Ed. E. e 3. I tJ ( 224 ) of those discoveries hasbeen,to rai^e the mercantile sys- ttem to a degree of splendour, which it could never otherwise have attained to. By these discoveries, the commercial towns of Europe, instead of being the ma- nufacturers and carriers for a part of Europe only,have become manufacturers and carriers for the cultivators of America, and for the different nations of Asia and Africa. P. 458—9. The countries which possess the colonies of America, and which trade directly to the East Indies, enjoy the whole splendour of this commerce. Other countries frequently enjoy the greater share of the real benefitt* Even the j^egulations by which each nation endeavours to secure to itself the exclusive trade of its own colonies, fire frequently more hurtful to the countries in favour of which they are established, than to those against which they are established. After all the unjust attempts therefore, of every country to engross the whole advan- tage of the trade of its own colonies, no country has been able to engross to itself any thing but the expence of supporting in time of peace,and of defending in time of war, the oppressive authority which it assumes over them. P. 460—2. The monopoly of the great commerce of America, seems an acquisition of the highest value. The great- ness of the commerce is the quality, which renders the monopoly hurtful, or which makes one employment absorb a greater proportion of the capital of the country than what would otherwise have gone to it. The mer- cantile stock of every Country seeks the employment most advantageous to that country ; it naturally courts the near, and shuns the distant employment. But if in any distant employments, the profit should happen to rise higher than what is sufficient to balance the na- tural preference which is given to nearer employments, this superiority of profit will draw stock from those nearer employments, till the profits return to their pro- per level. This superiority of profit is a proof, that the stock of the society is not distributed in the properest manner among all the different employments carried on in it. It is a proof that something is either bought cheaper, or sold dearer than it ought to be. A distant employment may be as necessary for a society as a near one, the goods which a distant employment deals in, being necessary for carrying on many nearer employ- * ments. But if the profits of those who deal in such goods are above their proper level, those goods will be sold dearer than they ought to be. The interest, there- fore, of those engaged in the nearer employments, re- quires, that some stock should be withdrawn from the nearer employments, and turned towards the distant one. The public interest requires the same. Without ismy intervention of law, therefore, the private interests of men lead them to distribute the stock of every society, in the manner most agreeable to the interests of that society. P. 463 — 6. All the different regulations of the mercantile sys* tem, derange the natural distributions of stock. Those which concern the trade to America and the East Indies derange it more than any other. Monopoly is the engine of the mercantile system. In the trade to America every nation endeavours to engross the whole market of its own colonies, which is a monopoly of one kind. The Portuguese endeavoured, formerly, to ma- nage the trade to the East Indies in the same manner. The trade to the East Indies, since the fall of power of Portugal, has in every European country been subject- ed to an exclusive company, which is a monopoly of ( 226 ) ftnotber kind. Monopolies of this kind are, properly, established against the very nation which erects them. Both kind of monopolies derange the natural distribu- tion of the stock of the society, but they do not always derange it in the same way. The^rs^ kind always at- tracts to a particular trade, a greater proportion of the stock of the society, than would go to that trade of its own accord. The second kind, may, sometimes at- tract towards a particular trade, a greater proportion of the stock of the society than what would naturally go to that trade, according as the society is richer pooF. P. 466—9. Every derangement of the natural distribution of stock is necessarily hurtful to the society in which it takes place. Exclusive companies are not necessary to carry on the East India trade. The Portuguese en- joyed it for more than a century without an exclusive company. P. 470 — 2. The Europeans have not yet established in Africa, or in the East Indies such numerous and thriving colo- nies as those in the islf^nds and continent of America. Africa and the East Indies are nevertheless inhabite4 hy barbarous 'nations ; hot they were not so weak and defenceless as the Americans, and were much more populous. The genius of exclusive companies, be- sides, is unfavourable to the growth of new colonies. The Dutch settlements at the Cape of Good Hope and at Batavia, are the most considerable colonies which the Europeans have established either in the East Indies, or in Africa ; and both of these are peculiarly fortunate in their situation, the advantages of which, have enabled those two colonies, to surmount all the obstacles, occasioned by aa exclusive company. P. 473—5. ( 227 y The English and Dutch companies have made con- siderable conquests in the East In^es ; but in the manner in which they govern their new subjects, the natural genius of an exclusive company has shewn itself most distinctly. Nothing, however, can be more contrary to the real interest of those companies as sovereigns, than the destructive plan which they have pursued. The revenue of the sovereign is drawn from that of the people. The greater the revenue of the people, the more they can afford to the sovereign ; it is his interest, therefore, to increase as much as possible , that revenue ; — consequently to open the most exten-» eive market for the produce of his country, and to abo- lish all monopolies, and all restraints upon free trade. But a company of merchants are incapable of consi- dering themselves as sovereigns, even after they have become such. Trade they consider as their principal business. Their mercantile habits draw them to pre- fer the transitory profit of the monopolist, to the per- manent revenue of the sovereign. As sovereigns their interest is the same with that of the country they govern. As merchants it is directly opposite. P. 476-9. If the genius of such a government^ even as to what concerns its direction in Europe, is, in this manner es- sentially faulty, that of its administration in India is still more so. That administration is composed of a council of merchants, who can command obedience onlyby military force. Their proper business is that of merchants. The genius of the administration tends tlierefore, to make government subservient to the in- terest of monopoly. All the members of the admini- stration, besides, trade more or less upon their own ac« count, and it is in vaii) to prohibit thejn from so doing* ( 228 yv They will endeavour to establish the same monopoTy ia favour of their own private trade, as of the public trade of the company ; but the private trade will ex- tend to the greater variety of articles. They will be more disposed to support with rigorous severity their own interest against that of the country which they go- vern, than their masters can be to support theirs. The country belongs to their masters, who must have some regard for the interest of what belongs to them ; but it does not belong to the servants. The real interest of the masters is the same with that of the country, and it is from ignorance that they oppress it. The regulations accordingly which have been sent out from Europe, though frequently weak,have upon mostoccasions^been well meant. P. 480 — 4. CHAP. VIIL Conclusion of the mercantile System, THOUGH the encouragement of exportation^ and the discouragement of importation, are the two great engines by which the mercantilesystem proposes to en- rich every country, yet with regard to some commo- dities it discourages exportation and encourages impor- tation. Its ultimate object is always the same, to en- rich the country, by an advantageous balance of trade. It discourages the exportation of the materials of ma- nufacture 5 and of the instruments of traJe/to'^give our workmen an advantage. It encourages the importa- tion of the materials of manufacture, that our workmen may be enabled to work theai up more cheaply. To ( 229 ) ^Acourag^ the importation of the instruments of trade would interfere too much with the interest of our ma- nufactures. Such importation has therefore frequen- tly been prohibited. P. 485. 6. The importation of the materials of manufacture has sometimes been encouraged by an exemption from duties to which other goods are subject ; and some- times by bounties.— The importation of sheep's wool ; r—cotton wool ;— undressed flax, and hides ;-^dying drugs ;— and iron has been encouraged by an exemp- tion from all duties. These exemptions have sonietimea been extended beyond what can be justly called the jrude materials of work. P. 487. 8. The encouragement given to the importation of the inaterials of manufacture by bounties, has been princi- pally confined to such as were imported from onr Ame- rican plantations. The first boxmties of this kind were granted about the beginning of the present century. The same commodities upon which we gave bounf ties, when imponed from America, were subjected to^ eonsiderable duties when imported from any other coun- try. P. 488— 93. The exportation of the materials of manufacture h sometimes discouraged by absolute prohibitions, and " sometimes by high duties. Our woollen manufactur-^ ers have obtained monopoly against the consumers by a prohibition of importing woollen cloths ; and also another monopoly by a prohibition of the exportation of live sheep and wooh vBy a statute of Elizabeth, the exporter of sheep,- wa», fOr the first offence, to forfeit^ all his goods; — to suffer a years i.mprisonment';r~an![i ^hen to have hi» I'efthand cutoff ;\ and. for th^secontl ; i>ilj io \cV\ft.i>\- ^ Df 1 J hyjh ixrx ihism . > ^ »iU ;i>irtii«jow'*io ^«iwo»2 e ' •( 230 ^> oHfence to suffer death. Bj a statute of Charles 11. the exportation of wool was made felony. The^fs^ of these statutes was virtualli/ repealed by the 12th of Charles II. which imposes a penalty of 20s. for every sheep exported : and the second was expressly repealed by the 8th of William III. c. 28. The penalties are still sufficiently severe* Besides the forfeiture of the goods, the exporter incurs the penalty of 3s. for every pound of wool exported or attempted to be exported. A person convicted of this offence is disabled from re- iquiring any debt belonging to him : and if he is not able to pay those heavy penalties he is to be transported for seven years. P. 494 — 6. In order to prevent exportation^ the whole inland commerce of wool is laid under very oppressive restric- tions. But the restrictions in the counties of Kent and Sussex are more troublesome than those in the rest of the kingdom. Tlie coas^mg trade is also subject to many Irestrictions. P. 497. 8- ^'Our woollen mahufacturei'ersj to justify their de- niand of sueh regulations, asserted that English wool was superior to that of any other country ; and that if the expm-tation of it could be totally prevented^ Eng- land could monopolfze the whole woollen trade of the world. This is so false, that English Wool is entirely- unfit for makiii^Jine cloth, which is made altogetherof Spanish wool. P. 499. It has been shewn that the effect of these regulations- has been to depress the price of English wool even be- low what it was in the time of Edward III. The price of Scots wool since the union, is said to have fallen about one ha^lf. This reduction of price has not proba- bly, much reduced the quantity/ of the annual produce, since the growing of woolis not the chief purpose f£>r ( 231 ) which the sheep farmer employs his industry and stock. Neither does this reduction of price seem to have had any effect upon the ^Mfl/Z/'y of wool. The quality of the fleece depends upon the health, growth, and bulk ©f the animal ; the same attention which is necessary for the improvement of the carcase, is, in some re- spects, sufficient for the fleece. The violence of these regulations, therefore, seems to have affected neither the quantity, nor the quality of the annual produce of wool, so much as it might have been expected to do. p. 500— -3. These considerations, however, will not justify the prohibition of the exportation of wool : but they will fully justify the imposition of a considerable ^«ji' upon that exportation. The prohibition injures one order of citizens, for the benefit of another, which is unjust. A tax would hurt the interest of the growers of wool, less than the prohibition ; — and would aflbrd sufficient ad- vantage to the manufacturer. The prohibition does not prevent the exportation, which is advantageous to no- body but the smuggler. A legal exportation, subject to a tax, might prove advantageous to all the subjects of the state. The exportation of fuller's earth and to- b;?icco-pipe clay has been laid under the same prohibi- tions and penalties. Even the horns of cattle are pro- hibited to be exported. P. 504 — 6. There are restraints \x^or\ the exportation of divers goods, which are partially, but not completely manufac- tured : such as wpollen yarn and worsted ; — white cloths (for the benefit of the dyers ;) — watch cases, dial plates, §ic. By some old statutes the exportation of metals was prohibited. Lead and tin were alone ex- F f 2 ( 232 ) cepted^ probably on account of the great abunidance of those metals. For the encouragement of the mining trade, a statute of William and Mary exempted from this prohibition, iron, copper, and mundic metal made from British ore. Brass manufactures may be expor- M duty free. P. 507. The exportation of the materials of manufacture, where it is not altogether prohibited, is in many cases subjected to considerable duties. P. 508—1 1 • Coals may be considered both as a material of manu- facture, and an instrument of trade. Heavy duties ac- cordingly, have been imposed upon their exportation. The exportation, however, of the instruments of trade,, properly so called, is commonly restrained by absolute prohibitions. When heavy penalties were imposed tipon the exportation of the dead instruments of trade, it could not be expected that the artificer should go free. Accordingly the person convicted of enticing any artificer to go to foreign parts, in order to prp,ctice or teach his trade, is liable to very heavy penalties. So aliso is the artificer himself, if having gone beyond the seas, he does not return upon notice being given him "by his Majesty's secretary of state. Thus is the liberty of the subject sacrificed to the futile interests of our merchants and manufacturers. P. 512 — 14» The motive of all these regulations is to extend our own manufactures, by depressing those of our neigh- bours. Consumption is the sole end of all production \ and the interest of the producer o^ght to be attended to, only so far a§ it may be necessar}^ for promoting that of the consumer. But in the mercantile system,the in- terest o^ the consumer is almost constantly sacrificed io that of the producer, li is for the benefit of the prpdujcef, that i-estraint|5 are laid upon the importatio|i, ( 233 ) of all foreign commodities : — that bounties are granted upon the exportation of some of his productions : — and that the consumer, by the treaty with Portugal, is pre- vented, by high duties, from purchasing of a neigh- bouring country, a commodity which our own climate does not produce. But in our colony trade the interest of the consumer has been more particularly sacrificed tp that of the producer. The contrivers of this ^ys- J;em have been the producers, and not the consumers^ f. ^15—18, JInbof the seconx> Volume* VOLUME III. BOOK THE FOURTH. ' CHAP. IX. Of the Agricultural systems, or of those systems of pO" litical Economy , which represent the produce of land as either the sole or the principal source of the revenue and tcealth of every country, X. HAT system which represents the produce of land as the sole source of the wealth of every coun- try, has never been adopted by any nation. It exists in the speculations of some men of learning in France. The following are the outlines of this ingenious system. M. Colbert, the minister of Lewis XIV. embraced all the prejudices of the mercantile system. The in- dustry and commerce of a great country, he endea- voured to regulate upon the same model as the depart- ments of a public office: he bestowed, upon certain, branches of industry, extraordinary privileges, while he laid others under extraordinary restraints. To support the industrj^ of towns, he was willing to depress that. ( iS5 ) of the coufitry. The French philosophers, by reptei-» senting agriculture as the sole "soS^W the revenue tnd wealth of every country, seem to have undervalued the industry of towns, as M. Colbert certainly over-* valued it. Thei/ divide the people who have been sup- posed to contribute towards the annual produce of th^ land and labour of the country into three classes. Th6 first is the class of the proprietors of land. The second is the class of cultivators, called the productive class. The third is the class of artificers, whom they term th6 unproductive class. P. 1—4. The class o|_prp^j:ie tors contributes to the annual produce by the expence which they lay out upon thd improvement of land> upon buildings, &c. by means of which, the cultivators are enabled with the same capital to raise a greater produce, and consequently to pay a greater rent. Such expences are called ground ex* pences. P. 4. . The cultivators contribute to the annual produtj^by what are, in this system, called the original, and annual expences which they lay out upon the cultivation bf land. The o/igiwoj^ expences consist in the instru- ments of husbandry; in the stock of cattle ; in th^ seed; and in the at^intenance of the farmer's family,servants> and cattle, till he can receive some return from th^ land. The annual expences consist in the seed ; in the wear and tear of the instruments of husbandry; and in the annual maintenance of the farmer's servants and cattle. That part of the produce of the land, which remains to him after paying tlie rent, ought to be suf- ficient to replace to him, in a reasonable term, his ori- ginal, and annual expences, together with the ordi- nary profits of slock, or he cannot carry on hisemw ployment upon a level with Qtber employments. The ( 236 ) rent whidh belongs to the landlord, is no more than the neat produce which remains after paying all the necessary expences, which must be laid out in order to raise the whole produce* It is because the labour of the cultivators affords a n^at produce of this kind^ that this class of people SLve caWed the productive clasB, The original apd annual expences are called produce tive expences : these, together with the ground expeu" ces of the landlord, are the only three sorts of expen- ces which, in this system, are considered as productive. P. 5^7. ; Artificers and manufacturers are^ in this system, re^ presented as a class of people altogether unproductive. Their labour, it is said, replaces onlythest€^!rrfhtt»li employs them^ together with its ordinary profits. Mer- cantile stock is equally unproductive. It only continue*, the existence of its own value, without producing any new value. P. 7. 8. The labour of artificers and manufacturers, never adds any thing to the value of the whole annual amount of the rude produce of the land. It adds, indeed, to the value of some particular parts of it. But the con- sumption, which in the mean time,it occasions of other parts, is precisely equal to the value which it adds to those parts. P* 9» Artificers, riianpfijcturers, and merchants, can aug-^ jment the revenue and wealth of their society bj' parsi- mony only ; or by depriving themselves of apart of the funds destined for their own subsistence. They annually re-produce nothing but those funds. Far- mers and country labourers may enjoy the whole funds destined for their subsistence, and yet augment the wealth of their society. Nations, therefore/ whiehj ( Q3i y ^ iike France or England, consist in a great measure, of proprietors and cultivators, can be enriched by indus- try and enjoyment. Natrons, on the contrary, which like Holland and Hamburgh, are Composed of mer- chants, can grow rich only by parsimony. As the interest of nations is different, so is likewise the cha»- racter of the common people. Those of the former kind are distinguished for liberality and frankness. Those of the latter for narrowness and selfish disposi- tions. P. 10. ll. . The unproductive elates is maintained atnd emploved at the expence of the two other classes. They fur- nish it with materials of its work, and with the fund of its subsistence. The unproductive class, .however, is greatly useful to the other two classes. By their means, the proprietors and cultivators can purchase foreign goods, and the manufactured produce of their own country. With the produce of less labour than what they must employ to import the one, or to make the other. — By their means, the cultivators are delt-^ vered from maity cares which would otherwise dis- tract their attention from the cultivation of land. Thus the industry of merchants, manufacturers, &c. though in its own nature unproductive, contriby.J^es indire^tl^ to increase the produce of the land. P. 1 1.12. It can never be the interest of the propi'ietors and cultivatbrs, to restrain the industry of merchants aird manufacturers. The greater the liberty whicli thei tnproduciive class enjoys, the cheaper will the other classes be supplied with foreign goods, and with the manufactured produce of their own country. Not Gg . ( 258 ) can it be the interest of the unproductive class to op* press the other two. The establishment of perfect justice^ liberty, and equality, is the secret which se- cures the highest degree of prosperity to all three classes. The same reasonings will apply to mercan^ tile and what are called landed nations. According to this liberal system, the most advantageous method in which a landed nation can raise up artificers, manu- facturers, and merchants of its own, is to grant the most perfect freedom of trade to the artificers, manu- facturers, and merchants of other nations. P. 13 — 16- When a landed nation, on the contrary, oppressea the trade of foreijrn nations, it necessarily hurts its owninterestip-<:wo different ways. (1.) By raising the price of foreign goods and manufactures, it sinks the real value of the surplus produce of its own land^ with which it purchases those goods and manufac- tures. (2.) By giving a sort of monopoly of the home market^ it raises the rate of mercantile profit in pro- portion to that of agricultural profit, and consequently either draws from agriculture a part of the capital which had been employed in it, or hinders from going to it a part of what would otherwise have gone to it. This policy discourages agricijlture. (1.) By sinking the real •vahiebf its produce, aiid thereby lowering the rate of its profit : and, (2.) By raising the rate of profit in all other employments, agriculture is ren- dered less advantageous, and trade and manufacturer more advantageous than they would otherwise be j and everj' man is tempted to turn his capital and indus- try from the former to the latter employments. Though by this oppressive policy a landed nation ghould be able to raise up artificers, Svc. sooner than by ( 2S9 ) the freedom of trade, yet it would raise tbem prematu- rely. It would depress productive labour, by encour- aging too hastily that labour which is unproductive. P. 17—20. The capital error of this system, however, seems to lie in its representing the class of artificers, manufac- turers, and merchants, as altogether barren and unpro- ductive. For, I. This class re-produces annuallv jhe^^ 9SSi!£iBH^£?J?sumption."^VFshould not call a mar- riage barren, though it produced only a son and a daughter. P. 21. II. It seems improper to corisider -axtiftcexs,,.,!^. in the same^li^ht as m,^^^^^^ servants.^ ^ The lahour of menial servants does not continue the existence of the fund which maintains and employs them ; it perishes in the very instarjt of performance. The labour of ar- tificers, &c. does realize^tself in jgme vendible comrao- III. It seems improper to say, that the labour of arti- ficers, -&c. does not increase the real revenue of the society. Admitting that the consumption of this class was exactly equal to their production, it would not fol- low, that its labour added nothing to the real value of the annual produce of the land and labour of the so- ciety. P. 23. 4. IV. Farmers and country lab9g](;|rs can no more augment, without parsimony, the real revenue, the an- nual produce of the land and labour of their society, than artificers, maixufacturersj, &c. The annual pro- duce of the land and labour of any society can be aug- Gga X 240 ) Rented only ; (I .) % some improvement in the prOr ductive powers of useful labour ; or, (2.) By some XW' creaseTH'IKB q uanti ^ tv. of that labour. The improve- ment in the productive powers of useful labour depend^ jirsty upon the iniprovement in the ability of the work- man: secondly, uppn that of the machinery with which ^^jtOlJig^ In these respects the class of culuvatofs'^an have no sort of advantage over that of artificers and ma- nufacturers. The increase in the quantity of useful labour employed within any society, must depend upoa the increase of the capital which employed it; and that is equal to the amount of the savings from the revenue. If merchants, Sec. are more inclined to parsimony than cultivators, they are more likely to augnient the quan- tity of useful labour isu^ployed within their society. P. 2o. V. Though the revenue of the inhabitants of every country was supposed to consist in the quantity of sub- sistence which their industry could procure them, yet ^he revenue of a trading and manufacturing country, piust, other things being equals alw.a}^ be much grea- ter than thacjg^fjme without^ra^dj^oj^jmaiui^^ By means of trade and m?jnufacture$, a greater quan- tity of subsistence can be annually imported into a particular country, than what its own lands could af- ford. A small quantity of manufactuied produce pur- |3]iasje^. agreat qmmtity of rude produce. A manufacr turing country, therefore, purchases with a small part pf its manufactured produce, a great part of the rude produce of other countries ; \vhile a country without manufactures is obliged to purchase, attheexpence of a great part of its rude produce, a very small part pf the maiiufacturecl produce pf other countries. Th,e ( 241 ) inhabitants of the former will enjoy a greater quan^ tity of subsistence ):han what their own lands could ^brd "; — those of J:he latter must enjo}' a smaller quan^ tity. p. 26. 7. This system, .with all its imperfections, is, perhaps, the nearest approximation to the truth that has yet been published upon the subject of political cecononiy. Though in representing the labour which is employed upon land, as the onli/ productive labour, the notions \yhich it' inculcates are too narrow ;-^yet in represen- ting the wealth of nations as cmisjstijjg^jjCLthecan^u- mable goods ann|^*jjly re:ipX9duced by the lal^ou^* of tjl*^ sod^^^ and in representing pcrfeg|J^jty as the only effectual expedient for rendering this annual re-pro- duction, the greatest possible, its doctrine seems to be jas just, as it is generous. The followers of this sys- tem are numerous, and are distinguished in prance by the name of— T/ie Economists. The admiration of the whole sect for their master, M. Quesnai, is not inferior to that of any of the antient philosophers, fpr the founders of their respective systems. The Mar- quis de Mirabeau reckons upon three greett inventiops, which have principally given stability to political society. (J.) The invention of ^vriting : 12.) The in- vention of money: (3.) The economical table, wliaph completes the other two, by perfecting their object. p. 28. 9. As the political economy of modern Europe has been more favourable to manufactures and iQjeign trade than to agriculture, so that of other natioHt^j has teen morcf favourable to agriculture than to manufac- tures. The policy of China favours agriculture more .J;han other employments J tJi^ere the condition of the ( ^42 ) labourer Is superior to that of the artificer. Except with Japan, the Chinese carry on httle foreign trade, P. 30. Manufactures are, in almost all countries, the sup- port of foreign trade. The perfection of manufacturing industry depends upon the division of labour, which i^ regulated by the extent of the market. The great ex- tent of China, its vast population,its variety of climate, and its water carriage, render the home market suffici- ent to support very great manufactures. An extensive foreign trade would, however, much increase them^ and improve the productive powers of manufacturing industry. P. 31. 2, The policy of antient Egypt, and of Indostanhave favoured agriculture more than other employments : the whole body of the people were divided into different casts, each of which was confined, from father to spn^tp different employments. The cast of the priests held the highest rank ; that of the soldiers the next ; and the cast of the farmer and labourer was superior to that of merchants and manufacturers. The government of /both countries was particularly attentive to the interest of agriculture. P. 33. The antient Egyptians were, by a superstitious aver- sion to the sea, prohibited from all distant voyages* They depended on. the navigation of other nations for the exportation of their surplus produce ; this de- pendence must have discouraged the increase of this surplus produce. Manufactures require a more e in- tensive market than the most important parts of the rude produce of land. A shoemaker, for instance, can supply fifty families with the produce of his own labour; but a person employed in agriculture cannpfe ( .94S ) lupply more than four. In Egypt and Indostan the confinement of the market, was, in some measure. Compensated by the convenience of inland navigations. P. 34. 5 . The sovereigns of China, Egypt, and Indostan, have derived the most considerable part of their re- venue from some sort of land tax, which consisted in a certain proportion of the produce of the land. It was natural, therefore, that the sovereigns should be atten- tive to the interests of agriculture. The policy of the antient republics of Greece, and that of Rome, seems rather to have encouraged manufactures, than to have given any direct encouragement to agriculture. Th»_ employments of artificers and manufacturers were con- sidered as hurtful to the strength and agiUty of the hu- man body, and such as were fit only for slaves, who, consequently, were the only persons employed in them. Slaves are seldom inventive. Improvements in me- chanics have been the discoveries of freemen. In ma- nufactures carried on by slaves, more labour must be employed, than in those carried on by freemen. The Ivork of the former must therefore be dearer than that, of the latter. The Hungarian mines wrought by free^ men, are more profitable than those of Turkey, in the same neighbourhood, wrought by slaves. The finer sorts of manufactures in the times of the Greeks and Romans were at a very high price. Silk sold for its weight in gold. Some cloths^, dyed in a particular manner, cost 331. Gs. 8d. the pound weight. This high price was probably owing to the dye. The cloths, however, must have been much dearer than at present, or so expensive a dye would not have been bestowed, •n them. P, 3G— Q. < ^44 ) IThe greatest and most important branch of tli^ commerce of every nation is that carried on between the inhabitants of the town, anfd those of the coun- try : the former draw from the country rude produce, and pay for this rude pfoduCe a part of it that is ma- nufactured. The dearer the latter, the cheaper the former ; and whatever tends to raise the price of ma- nufactured produce, tends to lower that of the rude produce of the land, and thereby to discourage agricul* ture. P. 40. Those systems, therefore, which, in order to pro- mote agriculture, impose restraints on manufactures and foreign trade, indirectly . discourage that very species of industry which they mean to^promote. It is thus that ewery system which endeavours, by extra- ordinary encouragements or restraints, to change the direction of the capital of a society, is, in reality, subversive of the great purpose which it means to pro- mote. P. 41. Ail systems of preference or restraint being taken away, the obvious and simple system of natural liberty estabjishesitself of itsown accord. Every man is left at liberty to pursue his own interest in his own way. The sovereign is completely discharged from a duty, to which he cannot be equal, the duty of superintend- ing the industry of private people. According to this system of natural liberty, the sovereign has only three duties to attend to. (1.) The duty of protecting the society from the violence of other mdependent socie- ties : (2.) The duty of protecting every member of the society from the oppression of every other member of it : and, (3.) The duty of erecting and maintaining certain public Works and institutions^ which it cannot ( 245 y be tlie interest of individuals to erect and maintain. These duties Suppose a certain expencejand this ex- pence requires a certain revenue to support it. In the following book will be explained : (1.) What are the necessary expences of the sovereign, or common- wealth : (2.) What are the different methods in which the whole society maiy be made to contribute towards those expences : and, (3.) Whait are the reasons and causes whieh have induced governments to contraet debts, P. 49.3* Bb ( 246 ) BOOK V, Of the Revenue of the Sovereign^ or Commonwealth, CHAP. I. Of the Expences of the Sovereign, or Commomvealth PART. L Of the Expence of Defence. THE first duty of the sovereign^ that of protecting the society from the violence of independent societies, can be performed only by military force, the expence of which is different in the different states of society. Among nations of hunters, every man is a warrior as well as a hunter. His society is at no expence to pre- pare him for the field, or to maintain him while he is in it. P. 44. Among nations of shepherds, the way of life i* ijearly the same, whether they march as an army, ot move about as a company of herdsmen. In war they are maintained by their own herds and flocks as in the time of peace. The sovereign is at no expence. A a army of hunters can seldom exceed two or three hun* dred men. An army of shepherds may amount to two or three hundred thousand. The former csLa never be formidable to a civilized nation. The latter may. Eu- rope and Asia could not resist the Scythians united* P. 45—7. In a more advanced state of society, among thosena- Jligns of husban.djn^n who hay^ Jittje foj:eigQ woniin^ee^ ( 247 ) and no other manufactures than those coarse oneft which every family prepares for its own use,eveiy mau becomes a warrior. Those who Hve by agriculture are prepared, by their usual occupations, for the labours of war, to some of which they bear a strict analogy. Their pastimes are, in the same manner, the images of war. Tt seldom costs the sovereign any expence to pre* pare them for the field. Agriculture supposes a settlement. The whole peo- ple cannot take the field togther. All men of military age may take the field, which amount to about the fourth part of the whole body of the people. If the campaign should begin after seed time, and end be-* fore the harvest, both the husbandman and his labour- ers can be spared from the farm without loss. He is, therefore, willing to serve without pay ; and it fre- quently costs the sovereign as little to prepare him for the campaign. P. 48. 9. In a more advanced state of society tzoo causes con- tribute to render it altogether impossible that they who take the field, should maintain themselves at their own expence. (1.) The progress of manufactures, (2.) The improvement in the art of war. When an artificer takes the field, he must be maintained by the public. When war becomes a science, and each contest lasts for seve- ral years, those who serve the public in war, must be maintained by the public. The number of those who can go to war is necessarily smaller in a civilized, than in a rude state of society. Not more than a hundredth part of the inhabitants of any country can be employ* ^d a^ soldiers, without ruin to the country. P. 5(X 1. H h 2 ( 248 ) The expence of preparing an army for the field wag ^ot considerable, till after that the maintaining it in the field, devolved entirely on the sovereign, or com- monwealth. In Greece, military exercises were a ^lecessary part of education imposed by the state on every free citizen. In Rome the exercises of the cam-' ptis martitis answed the s^me purpose. Theje were in-i stitutions of the same nature under the feudal govern- ments. In those times the trade of the soldier was not a separate and distinct trade. The art of war in the progress of improvement he^ comes one of the most complicated arts ; and, like Other mecl? an ical arts, requires that it should become the principal occupation of a particular class of citizens; and the division of labour is as necessary for the im? provement of this as of every other art. In other arts^ the divisipn of labour is introduced by the prudence of individuals ; but it is the wisdom of the state only which c^n render the trade of a soldier distinct from all others. P. 52—4. A shepherd h^s a great deal of leisure ; a husbandr man, in the rude state of society, has some ; an arti- ficer has none at all. The first may, without loss, em- ploy a great deal of his time in martial exercises; the second may employ some part of it ; but the last can- not employ sj, single hour jn them without loss, and his own interest leads him tp neglect them. Improvements in husbandry leave the l^usbandmar^ fis little leisure as the artificer. Pence military e^erci^es come to be neglected altogether. Jn these circumstances, there are but two methods by which the state can proyide for the public defence. (1.) By obliging citizens tP join, to their commoQ profession, tb^t of a soldier; or, (2.) By maintaining a certairi number of citizens in the ( ^49 > constant practice of military exercises. In tlie first case the military force is said to consist in a militia ; in the second/it is said to consist in a standing army , la a militia, the character of a labourer, artificer, &c, predominates over that of the soldier : in a standing army, that of the soldier predominates over every other character: in this distinction consists the essential dif- ference between those two different species of military force. P. 54 — 6. Before the invention of fire arms, that army was sut perior, in which the soldiers had the greatest skill in the use of their arms. This skill could only be acquired as fencing is at present; each man practising under a master, or with his companion. Since the invention of fire arms, strength and agility of body, or even ex- traordinary dexterity in the use of arms are of less con- sequence. Regularity, order, and prompt obedience to command are qualities which, in modern ai-mies^ are of the greatest importance. The noise of fire arms, the smoke, and the invisible death to which every man is exposed, render it difficult to maintain any consider- able degree of regularity Sec. Habits of regularity, or- der, and prompt obedience to command, can be ac- quired only by troops which are exercised in large bo- dies. P. 57.8. A Militia must be inferior to a well disciplined stan- ding army. The soldiers who are exercised only once a week, or once a month, can never be so expert in the use of arms as those exercised every day. Those who are bound to obey their officers only once a week, can never have the same disposition to ready obedi- ence, with those whose fife and conduct are directed ( 250 > by him. A militia which has served for several cam«» paigns becomes in every respect a standing army. P. 59.60. One of the first standing armies of which we havc^ nny distinct account, is that of Philip of Macedon* When he was at peace he was careful not to disband his army. It vanquished the militias of Greece and Persia. The fall of the Greek republics, and of the Persian empire, was the effect of the superiority which a standing army has over militias. It is the^rs^ great revolution in the affairs of mankind of which we have any account. The fall of Carthage, and the elevation of Rome is the second. All the varieties in the fortune of those two famous republics may be accounted for from the same cause. P. 6l^4» Many different causes contributed to relax the disci* pline of the Roman armies. Its extreme severity was perhaps one of those causes. In the days of their grandeur, when no enemy could oppose them, their heavy armour was laid aside, and their exercises neg- lected. The civil came to predominate over the mili- tary character ; and the standing armies of Rome de* generated into an undisciplined militia, incapable of resisting the attacks of the German and Scythian mili- 4ias which invaded the western empire. The fall of the western empire is the third great revolution in the af- fairs of mankind of which antient history has preserved any distinct account. It was brought about by the su- periority \vhich the militia of a nation of shepherds has over that of a nation of husbandmen, artificers, and manufacturers. The military force of the German and Scythian nations, who established themselves upon the ruins of the western empire, continued for some < 2^1 ) time to be of the sanfie kind in their new settlements, ai it had been in their original country. As arts and in* dustry advanced^ the discipline of the militia went to ruin, and standing armies were introduced to supply the place of it. When the expedient of a standing army had been once adopted by one civilized nation^ it became necessary that all its neighbours should follow the example. P. 65. 6* The soldiers of a standing army, thofiigh they may never have seen an enemy, yet have frequently ap- peared to possess all the courage of veteran troops. In a long peace, the generals may forget their skill ; but, where a well regulated standing army has been kept up, the soldiers seem never to forget their valour. When a civilized nation depends for its defence upon a militia, it is at all times exposed to be conquered by any barba- rous nation which happens to be in its neighbourhood. As it is only by means of a well regulated standing army that a civilized country can be defended ; so it is only by means of it that a barbarous country can be civilized. The improvements of Peter the Great resolve them- selves into the establishment of a well regulated staa* ding army. P* 67.8. A standing army may be dangerous to liberty^^ wherever the interest of the general, and that of the principal officers are not connected with the support of the constitution of the state. But where the military force is placed under the command of those who have the greatest interest in the support of the civil govern- ment, a standing army can never be dangerous to li- berty, lasome^asesitjna^be {aY9viraWQ to lihert/, P. 69. The ^rst duty of the sovereign, therefore, gtows more expensive as the society advances in civilization. The great change introduced into the art of war, by the invention of fire arms, has enhanced the expence. In modern war, the great expence of fire arms gives an evident advantage to the nation which can best afford the expence. The invention of fire arms is favourable both to the permanency and to the extension of civi- lization. P. 70. Iv PART IL Of the Expence of Justice. THE second duty of the sovereign, that of protec-* ting as far as possible, every member of the society from the injustice of every other member of it, require* two very different degrees of expence in the different periods of society. Among nations of hunters, as there is scarce any property, so there is seldom any regular administration of justice. Men who have no property can injure one another only in their persons or reputa- tions. But they have no great temptation to this, since the grati'fication is not attended with any permanent advantage. But avarice and ambirion in the rich ; in tlie poor, the love of present enjoyment, are passions which prompt to invade property, and are more uni- Yersai in their influence. Where there is great proper- ty, there is great inequality. It is only under the she!- ler of the civil magistrate that the rich can sleep in safe- ty. The acquisition of property requires the esta* blishment of eivil government. J*. 72. 3, ( 253 ) Civil government supposes a o^rtaift iuhordinatioH tvhich grows up with the growth of property. The causes which introduce suhordi nation seem to be four* (1.) The superiority o^ personal qualifications; but these must be supported by those of the mind. (9.) Sn-' periority of age / which is a palpable quality and ad- mits of no dispute!. (3.) Superiority of /br/M»e. This, is greatest in the rudest ages of society which admit of* any considerable inequality of fortune. The first period of society, that of hunters, admits of none. That of shepherds admits of very great inequalities of fortune, and there is no period in which the superiority of for-* tune gives so great authority to those who possess itr <4.) The superiority of birth. This supposes an antient superiority of fortune in the family of the person who claims it. All families are equally antient. Antiquity of family means antiquity of wealth, or of that great- ness which is accompanied with wealth. This distinc- tion of birth can have no place in nations of hunters j but it always does take place among nations of shep- herds. P. 74—8. Sirtli and fortune are the two circumstances which principally set one man above another, and are there-* fore the principal causes which establish subordination among men. Among nations of shepherds both these causes operate with their full force. The rich shepherd can command the united force of a great number of people- His military power is great. The weak look to him for protection ; hence his judicial authority. It is in the age of shepherds, in the second period of so-* ciety, that the inequality of fortune first begins to take I 4 place, and introduces a degree of subordination, and authority which partkulai* companies of merchants b^ve peif-*^ suad^d thelegislatme the entrust to them the performance of this duty as it respected some particular*branches of trade. P. 107—9* These companies have proved universally either bur- densome or useless. When these companies do not tiadeupon a joint stock, but are obhged to admit any. person properly qualified, they are called regulated companies. When they trade upon a joint stock they are calledjom^ stock companies. Such companies some- times have^and sometimes havenot exclusive privileges* Regulated companies resemble the corportation of trades, and are enlarged monopolies of the same kind. Tibeyare theHamburgh company ; theRussia company; the East4and company ; the Turkey company^ and th« African company. P. HO. 11. Th« terms of admission in the^ Hamburgh company are 7iow said to be quite easy. The fine fot* admissioflf into the Russian company was reduced to 5l. and thati for admission into theEast-land company to 40s.while> ^t the game time> ali the countries on the north side of the Baltic were exempted from this exclusive charter^ Though such companies may not be very ofppressive/ they are certainly useless, which,perhap$ is the highest eulogy which dan ever be justly bestowed on a Well re-* gulated company. The terms of admission into? thd Tdfkey company aie less easy; and the tmde, i though, in some measure^ laid open by parliament, issiillcoii- sidercd as far from free. This company contributes io maintain an ambassador, and two or three conattUy ( 26i 5 who otight to be maintained by the state, and the tfadc» laid open to all his majesty's subjects. P. 112 — 15. iJ^^wtoe^ companies, it was observed by Sir Josiah Child, have never maintained any forts or garrisons in the countries to which they traded ; but joint-stock companies have. The former are in reality much more unfit for this service than the latter. (1.) The direc- tors of a regulated company, have no particular interest in the prosperity of the general trade of the company, for the sake of which such forts and garrisons are kept up. The decay of the general trade may contribute to the advantage of their own private trade : but the directorsof a joint stock trade have no private trade of their own* (2.) The directors of a joint stock com- pany have always the management of a large capital, a part of which may be employed in building, repairing and maintaining forts and garrisons : but the direc- tors of a regulated company have no fund toemplo/ in this way. P. 116. 17. Long after the time of Sir Josiah Child^ the African Company was established, which was charged, at first, with themaintainance of all the British forts and garri- jjons, that lie between Cape Blanc and the Cape of Good Hope, and afterwards with that of those only which lie between Cape Rouge and the Cape of Good Hope. The act which establishes this Company, had two distinct objects in view: (1.) To restrain the monopolizing spirit which is natural to the directors of these companies ; and (2.) To force them to give an attention, which is not natural to them> towards main- taining forts and garrisons. P, 118 — 21. . jQijit ^Qnk (jQmpaBLe^ differ in several respects, not ( t63 )) ©nly from regulated companies, but from private ca» partneries. I. In a private co-partnery, no partner, without the consent of the company, can transfer his share to ano* ther person, or introduce a new member into the com- pany. Each member, however, may, upon proper warning, withdraw from the co-partnery, and demand payment from them of his share of the common stock. In a joint stock company, on the contrary, no member can demand payment of his share from the company ; but each member can, without their consent, transfer his share to another person, IE. In a private co-partnery, each partner is bound for the debts contracted by the company to the whole Extent of his fortune. In a joint stock company,on the contrary, each partner is bound only to the extent of his share. P. 122, The trade of a joint stock company is always mana- ged by a court of directors. The proprietors give themselves no trouble about it, but contentedly receive their dividend. This exemption from trouble, and from risk beyond a limited sum, encourages many people to become adventurers in the joint stock com^ panics, who would not hazard their fortunes in any private co-partnery. Sjlch companies, therefore, draw to themselves very great stocks : that of thQ South Sea Company at one time amounted to upwards of 33,000,0001. The divided capital of the Bank amounts to 10,780,0001. Joint stock companies for foreign trade have seldom been able to maintain the competition a^gainst private adventurers. They have seldom sue-t K k 2 ( 264 ) ) needed without an ei^clusive privilege, ^nd frecjuentljlf have not succeeded with one. P. 123. 4. The Royal African company had an exclusive ch»i> ter^, which not being confirmed by act of parliament, the trade was laid open. Such also was the situaiion of the Hudson's-Bay company. The South Sea comi-» pany, as long as they continued a trading compaiiy,had, »n exclusive privilege,, as the East India company has at present. The Royal African company, with all it9 ;»dvantages^couid not n^aintain tiie competition against private adventurers. No private adventurers ever at^ tempted to trade in competirion with theHudson*SrBav* company. P. I24r— 7. The stockjobbing projects of the South 3ea company. ftre well known ; their mercantile projects were nol; conducted much better. The first trade in which theyt engaged, was that pf supplying the Spanish Wesilndie^ with negroes; in this trade they were losers. They un- dertook, in 1724, the whale fishery ; after eight voyage^ they found their whole loss amounted to upwards of ©37,0001. In 1748, this company ceased to be a tra- iling company. P. ; 28^-3 1, The old East India company was established in l660; for the first twelve years they traded as a regulated company. In l6l2, they united into a joint stock, Their charter w^s exclusive^ but qqt confirmed by act of parliament. |n process of time, therefore, interior pars multiplied on them, which reduced them to great distress. In 1698, two millions were offered to goverai? tnent at 8 per cent, interest, provided the subscribers were erected into a new East India company, with ex-^ elusive privileges. The old East India company offered 70P,000l. M 4 P^i* pent, ipterestpn the sapie conditions. ( 265 > Tlic former proposals were accepted, and the new Eas| India company was erected. The old East India coni^ pany had, however, the right to continue their trade till 17OJ. The competition of the two companies had nearly ruined both. In 1708, the two companies were (Consolidated into one. The capital of the company was augmented in 17 1 1, to 3,200,0(X>L and in 1743,they lent to government another million. From 1711, this company being delivered from all competitors, carried pn a successful trade, and made n^derate annual divi- dends to the proprietors. During the French war of 1741,the spirit of war and conquest seems to have taken possession of their servant* in India, and never since has left them. In the French war which began in 1755, they acquired the revenues of ^ rich and extensive territory, said to amount to three ©lillions a year. In IjdJ, administration laid claim to tl^ieir territorial acquisitions, and the revenue arising therefrom. The company, in compensation for these claims, agreed to pay government 400,0001 a year Pefore this they had augmented their dividend froojt 6 to 10 per cent, and were attempting to raise it to 1^ per cent, but were prevented by parliament, in order that they might he able, more speedily, to pay their debts. They were allowed, in 1769, gradually to in- Ci-ease their dividend to 12i per cent. In 1768, it was proved, that the nett revenue of their territorial acquisitions was ^,048,7481- besides another revenue of 439,0001. arising from lands and established customs 'y and the profits of their trade amounted, at least, to 400,0001. Notwithstanding, in 1773, this com- pany was reduced to the greatest distress, and was pbliged to reduce their dividend to 6 per cent, to get a ( ^66 y *felease from the payment of the annual stipulated 400^0001. and to borrow of government 1,400,0001. It appears tbat the great increase of their fortune, served to furnish their servants with a pretext of greater pro- fusions, and to cover for a greater malversation than in proportion even to the increase of their fortune. India affairs became now the subjects of parliamentry inqui^ ry \ in consequence of which, several important alteca- tions'were made in the constitution of their government, both at home and abroad. In consequence of these alterations, the courts of proprietors, and directors,were expected to act with more dignity than they had done before ; but these courts are utterly unfit to govern a great empire, because they have too little interest in its prosperity. A man purchases a thousand pound share of India stock to become a proprietor, for the sake of the influence which his vote may give him. It gives him a share, though not in the plunder, yet in the ap-? pointment of the plunderers of India. Provided he can enjoy this influence for a few years, he frequently cares little about the dividend ; and about the prosperity , of the great empire, in the government of which that vote gives him a share, he cares not at all. The regulations of 1773,accordingly did not put an end to the disorders of the company*s government in India : and in 1784, they were once more reduced to the necessity of suppli- cating the assistance of government, to prevent an im- mediate bankruptcy. Different plans were proposed by different parties in parliament forthe better manage- ment of their affairs. All these plans agreed in sup- posing the company unfit to govern its territorial pos-t Q^ssions. ( 267 ) With the right of possessing forts atid garrisons iiK distant and barbarous countries, is connected the right of making peace and war in those countries ; how un- justly and cruellyjoint stock companies have commonly exercised this right^ is too well known by experience P. 132—42. When a company of merchants^ at their own risk, undertake to establish a new trade with some remote and barbarous nation, it may not be unreasonable to ^rant them a monopoly of the trade for a certain num- ber of years. But on the expiration of that term, the monopoly ought to determine, and the tiade to be laid open to all the subjects of the state. By a perpetual monopoly, all the other subjects are taxed two ways ; (1.) By the high price of goods ^ (2.) By their total exclusion from a branch of business which might be profitable for them to carry on. Without a monopoly, however, a joint stock company cannot long carry oa any branch of foreign trade. Fifty-five such com- panies have failed since the year l600^ owing to mis- management. P. 143 — 5* The only trades which joint stock companies^ eaa carry on successfully, without exclusive privileges, are those of which all the operation are capable of being reduced to such an uniformity of iDethod as admits of little variation. Of this kind is^ (1.) The banking, trade. (2.) The trade of insurance from fire, from sea risk, and capture in time of war. (3.) The trade of making and maintaining navigable canals. And, (4.) The similar trade of bringing water for the supply of a great city. To render the establishment of a joint company per- ifi^ctly reasonable^ with the. cii&um&tance of being re-*' ( 2^ )) ducible to strict method, two other circumstance* dfight to concur. (1.) It ought to appear that the un-- dertaking is of more general utility than the greatei* part of common trades. (2.) That it requires a greatei^ capital than can be collected into a private co-partnery^ In the four trades above-mentioned, both these cir- cumstances concur : but except these, perhaps, there are no other in which all the circumstances concur^ id render the establishment of joint stock companies rea* sonable. P. 146^9. , i] Article II. Of the Expence of Institutions for the Education of Youths ' THE instittititm^ for' the education of yotitb,irtlLy,ifO the same mannei*, furnish revenue sufficient for defray-* ing their own expenoes. ' The fee which the scholai*; pays to the master, naturally constitutes a revenue of! this kind. Through the greater part of Europe, ther endowment of schools and colleges makes a consider- able part of their revenue. Have those public endow- ments contributed, in general, to promote the end of their institution ? Have they contributed to encourage the diligence and iipprove the abilities of the teachers.^ Have they directed the course of education towardt dbjectB more useful than those to which it Would natu«ti iially have gone of its own accord ? In every possession necessitif is the great motive tc exertion ; which is the greatest with those whose sub- sistence depends upon the emoluments of their pro- fession. Great objects, which are to be acquired by success, may animate the exertions of men of ambi- tion $, b\it they are Hot necessary, and if they aceuJH^. < m ) supported b}^ tlie necessity of application, seldom oc- casion considerable exertion. Uivalship renders ex- cellency, even in mean professions, an object of ant** bition. The endowments of colleges have diminished the necessity of applidation in teachers. In some uni-* versitiesj however, the salary makes but a small part Df the emolument of the teacher ; the rest depends on the fees of his pupils. In this case, the necessity of epplication is not entirely taken away. In others, the teacher is prohibited from receiving any fee from his pupils, and his salary constitutes the whole of his Revenue. His interest is thus set in opposition to his duty. P. 150^4. Whatever forces a certain number of students to any college, independent of the merit of the teacher, tends to diminish the necessity of that merit. The privileges of graduates which are obtained by mere residence; — and charitable foundations for scholarships, have this tendency. The discipline of colleges is, in general, Contrived not for the benefit of the students, but for the ease of the master. Its object is to maintain the authority of the master. It presumes perfect virtue and wisdom in the master, and the greatest weakness and folly in the scholar. Where masters, - however, really perform their duty, there is, perhaps, no instance in which the greater part of the students neglect theirs. Discipline is not necessary to force attendance on lectures which are worth attending. Those parts of education, for the teaching of which there are no public institutions^ ure generally best taught. Of these are the three mosi Li ( 270 ) essential parts of a literary education, readlng,writiftg4 and aritiimetic. In England the public schools are less corrupted than the universities. The rewaidof the schoolmaster depends on the fees of his scholars^ Sctiools,, besides^ have no exclusive privileges. P. 155—9. ft may be said, that imperfect as tlie education of the universities is, yet it has been beneficial to individuals, and tl}e public. The present universities were origi- nally ecclesi-^stical corporations, instituted for the edu- cation of (churchmen, founded and protected by the Pope,, the members of wjiich were amenable only ta ecclesiastical tribunals. What wa? taught in them was theology, or preparatory to theology. When Christia- nity was established by law, a corrupted latin became the common language of the western parts of Europe. The service Of the church was performed in latin, long after the body of the people was ignorant of that laix- guage. Hence two languages were established, the J^e^nguage of ti)e priests, and that of the people ; the sacred, and the profane. The study of the latin lan- guage became an essential part of university education. The greek and hebrew languages did not, for a long time, make any part of the common course of univer- sity education. The first reformers found the greek text of the new, and the hebrew of the old testament; more favourable to their opinions than thevulgate translation. Hence the introduction of those two lanr guages into the universities. P. l60^— 2. The antient greek philosophy was divided into phifz. ^ics, or natural philosophy ; c^/iics^ or moral philosophy ^ and logic » ( 271 ) The first philosophers were natural philosophers^ who attempted to explain the great phaenomena of nature, which naturally called forth the curiosity of mankind to inquire into their causes. Moral philoso- phy is the science which pretends to iuvestigate and explain ihe principles which connect the miximsof human life. Different authors gave diffei'ent systems both of natural and moral philosophy. The patrons of each endeavoured to expose the weakness of the ar- guments adduced to support the systems which were opposed to their own. Hence the science of logic, which, though iji its origin, it was posterior both to physics and ethics, is commonly taught previously to either. P. l63~-5. This antient division of philosophy into three part3 was changed for another into five. Metaphysics or pneumatics were set in opposition to physics, and con- sidered as the more useful science of the two, for the purposes of a particular profession. When these two sciences had been set in opposition to one another, the comparisbn gave birth to a third, which was called, ontology. In the antient moral philosophy the duties of human life were treated of as subservient to the happiness and perfection of human life. But when moral as well as natural philosophy came to be taught on-y as subservi- ent to theology, the duties of human life were treated of as subservient to the happiness of a life to come. In the. antient philosophy the perfection of virtue was re- presented as productive of the most perfect happiness of this life. In the modern philosophy it was repre-^ < 272 ) gented as inconsistent with any degree of happiness in this life. The common course of education was there-? fore, (l.)I^ogic ; (2.) Ontology : (3.) Pneumatology, pomprehending the doctrine of the human soul, and the Deity; (4.) A debased system of moral philoso* phy : and, (5.) A superficial course of physics. These ^-Iterations were meant for the education ofecclesiastics. This course of philosophy continues to be t£^ught in the greater part of the universities of Europe. It is not ii^ universities that improvements are first made, or hastily adopted. P. 166-— 9- In process of time the universities, originally inten-? ded for the education of churchmen only, drew to themselves the education of almost all men of fortune, though whg-t was taught in them does not seem the best preparation for the business of the world. In Eng- land, it becomes the custom to send young people to travel in foreign countries immediately upon leaving school. This absurd practice is, probably, owing tq the discre4it which the universities have fallen into. p. 170. 1. Different plans of education seem to have beea p-dopted in other ages and nations. In Greece every free citizen was instructed, under the direction of the public magistrate, in gymnastic exercises and in music. The one was intended to prepare the body for war ; the other to humanize the naind, and to dispose it for the social and mor£^l duties of life. In antient Rom^, the exercises of the campus m(irti\is answered the same purpose as those of the gymnasium in Greece : but there was nothing which answered to the musical edu-t cation of the Greeks : yet the morals of the Romans W^re superior to tl^ose pf the Qreeks. The masters wha /C 273 > instructed the young people either in music, or in mU litary exercises, do not seem to have been paid, or eveii appointed by the state ; it only found a public place forthctn to exercise in. In the early ages of the Greek ^nd Uoij^an republics, the other parts of education seem to have consisted in learning to read, write, and ac- count, according to the arithmetic of the times. These, )iowever, were left to the care of parents. The state never assumed any direction of them. By the law of Solon, indeed, children were acquitted from maintain- ing those parents, in old age, who had neglected to ia-r struct them in some profitable trade. P. 172—4. In the progress of refinement, the better sort of peo- ple sent their children to the schools of philosophers, to be taught rhetoric and philosophy. But these schools were not supported by the public. The demand for this sort of knowledge was, for a long time, so small, that the teachers travelled about from place to place, i^ order to find constant employment. Afterwards, wheii schools were established, the state did no more than assign them particular places to teach in. To Plato the ptate assigned the academy ; the Lycaeum to Aristotle ; ^,nd the portico to Zeno. P. 17<$- 6. At Rome, the study of the civil law made part of the education of some particular families, but there was no public school to go to. Ii is worth notice,that in Greece where law never seems to have been a science, the con- stitution of the courts of justice were very inferior to that of Rome, where law was very early considered as ^ science. P. 17G. 7. The abilities of the Greeks and Romans will be rea- dily allowed to have been equal to those of any modern potion. Yet the state was at no pains to fojrm thosg ( ^74 ) j&billties. Masters were found for instructing the peo* pie in every necessary art and science. The demand fbr instruction always produces the talentfor giving it ; and emulation appears to have brought that talent to perfection. The antient philosophers seem to hav^ been superior to modern teachers. In modern times the diligence of public teachers is corrupted by the cir- cumstances which render them independent of their l^uccess and reputation in their profession. Their sala- ries too put it out of the power of private teachers to come in competition with them. Thus the endowments of colleges^ have not only corrupted the diligence of public teachers^ but have rendered it almost impossible to have any private ones. P. 178. 9« Were there no public institutions for education, no science would be taught for which there was not some demand. A private teacher could not find his account in teaching either au exploded or antiquated system of science. Such systems can subsist no where but in those incorporated societies for education, "whose pros- perity and revenue are in a great measure independent of their reputation and industry. There are no public institutions for the education of women, and they are taught nothing but what their parents judge itnecesv sary or useful for them to learn. In every part of life a woman feels some advantage from every part of her education. It seldom happens that a man, in any part of his life, derives any advantage from some of the mo^t laborious parts of his education, P. 180. Ought the public, therefore, to give no attention to the education of the people ? In some cases it is not necessary, in othersit may be. Jn the progress of the division of labour, the employment of the great body pf ( 275 ) the people comes to be confined to a very few simple, operations. The mind is formed by its employment. The man whose life is spent in performing a few simple operations, has no occasion to exert his understanding, or to exercise' his invention. His dexterity at his own trade seems to be acquired at theexpenceof hisinteilec- j^ual, social^ and martial virtues. This is the state of ibe poor in every improved society, unless government take pains to prevent it. It is otherwise in barbarous societies, as they are called, of hunters, &c. In thescy invention is kept alive : every man is a warrior, and, in some measure, a statesmen too. In such a society, indeed, no man can acquire that improved understand- ing, which a few men sometimes possess in a more civi- lized state. Though in a rude society, there is a good deal of variety in the occupations of i?idividuals, there is not a great deal in those of the whole society. In a civilized state, though there is little variety in the occu- pation of individuals, there is an almost infinite variety in those of the whole society. P. 181 — 4. The education of common people requires, in a civi- lized and commercial society, the attention of the pub- lic more than that of people of some rank and fortune, who have time and opportunity of acquiring every ne-* cessary accomplishment ; whose employments are such as exercise the head more than the hands ; and who have leisure to improve their minds. The common people ought to be taught to read, write, and account ; to which might be added, the elementary parts of geo- metry and mechanics. There is scarce a common tradq which does not afford some opportunities of applying the principles of geometry and mechanics. The public should facilitate this sort of instruction,by giving small ( ^76 > pr^miiinls to the children who excel in it^ and hy somci kind of public examinations. In this manner military and gymnastic exercises wefe acquired by the Greeks and Romans. P. 185—8. A martial spirit ought also to be infused into the great body of the people^upon which the security of the: society depends. Where every citizen had the spirit of a soldier, a smaller standing army would be requisite: that spirit would, besides, diminish the dangers appre- hended from a standing army. The antieni institutions of Greece and Rome appear to have been more effectual fbr maintaining the martial spirit of the people, than the establishment of modern militias. Tliey were more simple. Their influence was more universal. A man incapable of defending, or of revenging himself, wants one of the most essential parts of the character of a man. Even though the martial spirit of the people were of no use towards the defence of the society, yet to prevent that sort of mental deformity from spreading among the people, it would deserve the attention of go- vernment. The same thing may be said of gross igno- rance, which, in a civilized society, seems to benumb the understanding of the inferior ranks of the people^ P. 189—92. Article III. Of the Expence of Institutions for tks Jntsruction of People of ail Ages, THESE institutions are chiefly those for religious instruction. The teachers of the doctrine which con- tains this instruction, may either depend wholly for subsistence ypon the voluntary contributions of their hearers j or they may derive it from some other fund to ( 277 ) i^bich the law may entitle them; such'as landeci estate§> tythe^ or an established salary. Their exertions afe likely to be greater in the former situation than in the latter. In this respect, thef teachers of n^w religions have had the advantage in attacking the antient and established systems of which the clergy, reposing thenl- selves upon theif benefices, were becora6 incapable of any vigorous exertion, in defence even of their own establishment. Upon such an emergency, the clergy have no other resource than to call upon the civil ma- gistrate to persecute their adversaries. Thus the roman catholic clergy, called upon the civil magistrate to per- secute the protestants ; and the church of England, to persecute the dissenters ; and, in general, every sect when it has enjoyed for a century or two the security of legal establishment, has found itself incapable of vi* gorous defence against any new sect which cho^e to at-^ tack its doctrine or discipline. P. 192 — 4. In the church of Rome, the industry of the inferiot clergy, is kept more alive by self-interest, than perhaps any established protestant church. The great dignita- ries of the church are careful to maintain the necessary discipline over their inferiors, but seldom give them-^ selves any trouble about the instruction of the people* P.] 95— 7. The independent provision bestow^ed on the elergy, has seldom been given, but with a view of gaining thejn to serve some political party. If politics had nevei? been called to the aid of religion ; nor the tenets oi one sect, been adopted in preference to another^ there would probably have been a great multitttde of religious M i:^ < ^7S ) s^ts> but the influence of each must have been small. The active zeal of religious teachers, can be dangerous only where there is but one sect tolerated, or where the whole of a large society is divided into two or three great sects. That zeal must be innocent where the so- ciety is divided into two or three hundred, or as many Ithousand small sects. The teachers of each sect would foe obliged to learn moderation, and to respect those of €veiy other sect ; and the concessions which they would mutually find it convenient to make to one ano- ther, might, in time, reduce the greater part of them to that pure rational religion, free from absurdity, im- posture, and fanaticism, such as wise men would wish $o see established ; but such as never has, nor will be, established by positive law. This .; as the aim of the independents in England, towards the end of the civil war. P. 198—201. In every civihzed society, there have been always^ iwo differeut schemes of morality current at the same time 5 the one strict or austere, the other liberal or loose. ThejTorwer is admired by the common people; the latter is adopted by what are called people of fa-* shion. The degree of disapprobation with which we ought to mark the vices of IcTif^, seems to constitute the principal distinction between those two opposite systems. The vices of levity are always ruinous to the common people : hence the hatred of the wiser sort of that class of such excesses. They aie tolerated by peo- ple of rank, because to them they are not necessarily attended with ruin. P. 202. 3. i\lmost all religious sects have begun among the? common people, from whom they draw their earliest, 4ind most numerous proselytes, The austere system of ( 279 > Ittoi'ality has generally been adopted by those sects ; and the more austere their system the better has it suc4 ceeded, A man of fortune is, by his station, the distinguished inember of a great society, and he is obhged to conform to that system of morals, which the general consent of the society prescribes to persons of his rank. A man of low condition in a great city, is observed by nobody, and is therefore likely to neglect and ruin himself. He never emerges so effectually from this obscurity, as by his becoming the member of a small religious sect, Fjrpm that moment he acquires a degiee of considera- tion which he never had before. In little religious sects, accordingly, the morals of the common people have teen remarkably regular, sometimes disagreeably ri* gorous and unsocial. This rigour might be easily cor- rected, (1.) By rendering the study of science and phi- losophy almost universal among the people of middling, GT more than middling rank and fortune, which the state might do by instituting som^ sort of probation in the sciences, to be undergone by every person. (2.) By- encouraging the frequency and gaiety of public diver-» Bions. P. 204 — 6. In a country where the law favoured the teachers of BO one religion more than those of another, none of them would have any dependency on the executive power. It would have no concern with them, but to keep peace among them. But where there is an esta- blished religion, the sovereign caamot be secure unless he has the means of influencing the greater part of the teachers of that religion. The clergy of every esta- M m 2 ( 280 > blished religion constitute a great corporation. Thelf interest as an incorporated body is never the same with that of the sovereign, and is sometimes directly oppo-. • site to it. Articles of faith are not in the proper depart- ment of a temporal Sovereign, who, though quahfied iox protecting y is not so for instrifiCtingihe people. His authority, therefore, can seldom counterbalance the united authority of the clergy of the established church. But as the public tranquiUity, and his own security, of- ten depend upon the doctrines which they propagate; and as he can seldom oppose their decision, it is neces- sary that he should be able to influence it. P. 207 — 9- In all christian churches the benefices of the clergy jire a sort of freeholds. If they held them by a more precarious tenure, they could not maintain their autho- rity with the people. But should the sovereign attempt irregularly, and by violence to deprive any number of clergymen of their freeholds, perhaps, on account of their zeal in propagating some doctrine, he would, by persecution, render them and their doctrine ten times more popular, and therefore ten times more dangerous than they had been before. Fear is, in almost all cases, a wretched instrument of government, and ought never to ]>€ employed against any order of men, who have '^ny pretensions to independency. The French govern- ment usually employed violence to oblige their parlia- ments to enregister any unpopular edict, but it seldom succeeded. The princes of the house of Stuart, em- ployed like means to influence some members of the parliament of England, and they were found in tractable. The parliament of England is now managed in ano«» jUi,^ manner, P. SlOt 11. f §81 ) • Formerly, the bishop of each diocese was elected by the joint votes of the clergy, and of the people of the episcopal city. The people did not long retain their right of election. All church preferments were, in this manner, in the disposal of the church. Each clergy- man was led to pay his court to his own order, rather than to the sovereign. Through the greater part of Europe, the Pope gradually gained the disposal of al- most all church preferment. By this arrangement, the condition of the sovereign was worse than before. The clergy was thus formed into a kind of spiritual army, dispersed in different quarters, but directed by one head, and conducted bj' one plan. Their ^rms were the most formidable that can well be imagined. Before the establishment of arts and manufactures, the wealth of the clergy gav^ them the same sort of influence over the common people, which that of the barons gave them over their tenants, and retainers, but often to a much greater degree. In this state of things, if the sovereign found it difficult to resist the confederacy of 9ifezo of the great nobility, he found it more so to resist the united force of the clergy of his own dominions, supported by that of the clergy of all the neighbouring states. The privileges of the clergy ; their total exr emption from the secular jurisdiction, for example, what in England was called the benefit of the clergif, were the natural consequences pf this state of things,. P. 212—17. i\ From the ninth to the fourteenth centuries, the con- stitution of the church of Rome was the most formi- dable combination, that was ever formed against the authority and security of civil government, as well as against the liberty, reason; and happiness of mankind-. Had this constitution been attacked by no other etie- mies^ but the efforts of human reason, it must have lasted for ever. For though reason might have un- veiled the delusions of superstition, it could not have dissolved the ties of private interest. The same power \rhich destroyed the power of the great barons, de- stroyed the temporal power of the clergy ; and in the fourteenth century, the sovereigns in the different states of Europe, endeavoured to recover the influence which they once had in the disposal of the great bene- fices of the church. But the power of the Pope was no where so effectually restrained as in France and Eng-» land. P. 217— 21. The authority of the church of Rome was declining- i;^hen the disputes which gave birth to the reformation, l>egan in Germany, and which soon spread themselves through every part of Europe, The new doctrines werfe Teceived every where with popular favour. Reason re \ Commended them to some, novelty/ to many ; — hatred to the established clergt/ to a still greater number ; — but* ithe zeal with which they were inculcated, recommend* ed them to by far the greatest number. The success of the new doctrines was almost every where so great, that* |he princes who happened to be on bad terms with the jcourt of Rome, were enabled, in their own dominions^ easilv to overturn the church. Hence the doctrines of the reformation were established by the princes of the northern states of Germany ; — in Sweden by Gustavus Vasa : in Denmark by Frederick of Holstein :— and ii^ Berne and Zurich by the magistrates. In this situation- the Pope cultivated the friendship of the sovereigns of France and Spain, of whom the latter was, at that time. Emperor of Germany; with whose assistance (( 'S83 d :$he progress of the reformation was suppressed in their jdominions. In Enghmd, however, it was begun by- Henry VIII. and completed in the reign of his son Ed- ward VI. In Scotland the reformation was strong enough to overturn the church, and the state too, for attempting to support the church. P. 222 — 4. Among the followers of the reformation, there was fio genera] tribunal to settle disputes; the most import tant of which related to the government of the church, and the right of conferring ecxilesiastical benefices* These gave birth to the Lutheran and Calvinistic sects; the only sects among them of which the doctrine and discipline have ever been established by latcm any part of Europe. The former preserved episcopal govern-^ ment, and gave the sovereign, as head of the church, the disposal of bishopricks and consistorial benefices^ without depriving the bishop of the right of collating- to the smaller benefices : this system was always fa- vourable to peace and good order, and to submission to the civil sovereign. The latter bestowed upon the peo- ple of each parish tlie right of electing their own pas- tor ; and established the most perfect equality among the clergy. The former part of this institution, while it remained in vigour, seems to have been productive of disorder and confusion. The latter part seems never to have had anyeffects but what were perfectly agreeable. P. 225-^30. In countries where church benefices are, the greater part of them, very moderate^ a chair in a university isT generally a better establisbment than a church bene- fice. The universities have^ .in this case, the chusing of their members from all the churchmen of the coun- try. Wher£ church benefices, on the ^gntrary^j are. < 284 > niahy of them considerable, the church naturally draWs from the universities the greater part of their eminent men of letters. In the former situation, the universi- ties are filled with the most eminent men of letters in the country. In the latter, few> eminent men are likely to be found among them. In Greece and Rome, the far greater part of eminent men of letters, if we ex- cept poets, orators, and a few historians,appear to have been erther public or private teachers. P. 231— -3. . The revenue of every established church, is a branch of the general revenue of the state, which is diverted td a purpose very different from the defence of the state. The tifthe is a realland tax, which puts it out of the power of the proprietors of land> to contribute so large- ly towards the defence of the state as they might other- wise be able to do. The rent of land is the principal fund, from which the exigencies of the state must be ultimately supplied. The more of this fund that is given to the church, the less can be spared to the state. Other things being supposed equal, the richer the church, the less able must the state be to defend itself. In several protestant countries, the tythes and church lands have been found nearly sufficient to afford competent sala- ries to the established clergy, and also to defray the other expences of the statcw The whole expence of the church of Scotland cannotexceed 85,0001. ayear,which affords a decent subsistence to 944 ministers, besides paying the expences of building and repairing of churches ; yet no church is better conducted, if those of Switzerland are excepted^ w hich, however, are not better endowed. The proper performance of every ser-* vice requires, that its recom pence should be propor- tioned to the nature of the service. If any service is ( 28^ ) Under-paid, it is apt to suffer by the inca;pacity of those employed in it. If it i^ oyer paid, it will suffer by their negligence and idleness. P. 234—7* PART IV. Of {he Expence of supporting the Dignity of the Sovereign, ABOVE the expences tiecessary for enabling the so- vereign to perform his several duties, a certain expence is requisite for the support of his dignity. This expence varies both with the different periods of improvement, and witjb the different forms of government. Conclusion. The expence of defending the society^ and that of supporting the dignity of the chief magis- trate, are both laid out for the general benefit of the so- ciety. It is reasonable, therefqre, that they should be defrayed by the whole society, all the members contri- buting in proportion to their respective abilities. The expence of the administration of justice, may be de- frayed by the general contributions of the wholp socie- ty ; or by the persons immediately concerned, by the fees of court. Lopal expences ought to be d^f^^-J^^d by a local revenue. The expence of good roads is best defrayed by turnpike tqljs which lay it upon those who travel or carry goods f|'om oije place to anothpr, and upon those who consunie them. The expence of the lustitutiqns for education ar>cl religious instructicfii yn^y, with E^dvantage, b? defrayed by those wl^o bene- fit from theip,or by voluntary contributions. P.^37-r40, K n ( 286 ) CHAP. IL Of the Sources of the general or public Revenue of the Societi/, THE revenue which must defray all the expences of government, may be drawn either, (1.) From some fund which belongs to the sovereign^or common wealth : or^i (2.) From the revenue o£the j[)eople. PART. I. Of thcFunds or Sources of Revenue which maypeculiarly belong to the Sovereign, or Commonwealth, THESE funds must consist either in stock, or in land. His revenue is, in the one case, profit, in the otiier interest. It is only in the rudest state of civil go- vernment tiiat profit has made the principal part of the public revenue of a monarchical state. Small republics have sometimes derived a considerable revenue from the profit of mercantile projects. Hamburgh is said to do so by a wine cellar, and an apothecary's shop. I'he profit of a public bank has been a source of revenue to more considerable states, such as Venice and Amster- dam. The post-ofhce is properly a mercantile project, and is, perhaps, the only one which has been success- fully managed by everj^ sort of government. Princes, however, have frequently engaged in many mercantile projects, but seldom with success. The profusion witk ( 287 ) which their affairs are managed, renders it almost im- possible that they should. No two characters seem more inconsistent than those of trader and sovereign, p. 241— 4. A state may derive some part of its public revenue from the interest of money. The canton of Berne de- rives a considerable revenue by lending part of its trea- sure to foreign states. The security of this Tevenue must depend, (1.) Upon the security of the funds in which it is placed : and, (2.) Upon the probabiUty of the continuance of peace with the debtor nation. The city of Hamburgh has established a sort of public pawn- shop, which lends money to the subjects of the state at 6 per cent, by which, it is pretended, that the state gains 33,7501. sterling a year. The perishable nature of stock and credit, render them unfit to be trusted to, ;as the principal funds of that revenue which can give security to government. P. 345 — 7. Land is a fund of a more stable and permanent na- ture, and has been the principal source of public reve- nue of many a great nation ; — of the antient republics of Greece and Italy. The rent of the crown lands con- stituted, for a long time, the greater part of the reve- nue of the antient sovereigns of Europe. JVar, and the preparation for war, occasion the greater part of the necessary expence of all great states. In antient Greece and Italy, every citizen was a soldier'at his own expence : and in the antient monarchies of Europe, the body of the people took the field at the expence of their lords, without bringing any new charge upon the sovereign. The other expences of government were N n Z- ( 288 ) liioderatc^ which the rent of a great landed estate iliight defray. In the present state of Europe, the rent of all the lands in the country, managed as they probably would be if they all belonged to one proprie^ tor, would scarce amount to the ordinary revenue laid upon the people even in peaceable times. The ordi- nary revenue of Great Britain amounts to upwards of ten millions a year.* But the land tax at four shilling! in the pound fiills short of two millions. ]P. 248—51. The revenue which the great body of the people de- lives from land, is in proportibn not to the rent, but to the produce of the land. The whole produce, except what is reserved for seed, js either annually consumed, by the people, or exchanged for something that is con- isumed by them. Whatever keeps down the produce of the land belo)v what itWould otherwise rise to,keeps ^own the revenue of the great body of the people, still more than it does that bf the proprietors of land, since the rent of land is§eldom more than the third part pf the produce. Though there is no civilized state in Europe, which derives the greater part of its public revenue from the rent of lands which are the property of the state, yet in all the great monarchies, there are still large tracts of land which belong to the crown. These are, in gene- ral, mere waste and loss of country, the sale of which would, however, produce a large sum of mo- ney, which might be applied to the payment of the public debts. * Since the above was written, the nation has been engaged in a war, which has doubled its debts and taxes. After a twelve-month's peace, vi^ar is renewed. A considerable part of the fupplies being raifed within the year, the amount of the taxes for the prefentyear(i805j ig Upwardsof FORTY MILLIONS 1 ! 1 < ^^9 ) iTIie crdwn might immediately enjoy the revei«i« ?ivhich this price would redeem from mortgage. In a few years it would eiijoy another revenue, arising from the cultivations of these latids. It would, in all case^, be for the interest of the society,to re-place the re venule which the crown enjoys from its lands hy some other revenue, and to divide those lands, by public sale, 'among the people. Pleasure grounds seem to be the only lands which, in a civilized inonarchy, ought to be^ long to the crown. P. 252 — 4. PART II. Of Taxes. EVJJRY tax t^ust be finally paid from the private j'evenue of individuals, which arises ultimately froiii rent ; profit ; and wages. It is necessary to premise the four following maxims. (1) . Tlie subjects of every state ought to contribute to the support of government, in proportion to their respective abiiitiesjthat is,in pi'O- jiortion to the revenue which they respectively enjoy under the protection of the state. (2.) The tax which each individual is bound to pay, ought to^bjg^ certain and not arbitrary. (3.) Every tax ought to be levied at the time, or in the manner,^^nips| ccni^^ for the coritiibutor to pay it. (4.) Every tax ought to be so jcontrived as both to take out, and to keep out, of the pockets of the people as little as possible, over and abbve what it brings in to the public treasury of the ptate. A tax may either take out, or keep out of the ( 290 ) jieckets of the people a great deal more than it bring* r into the public treasury, in four ways. 1. By the num" ter of officers who levy it. 2. By obstructing the indus- try of the people. 3. By penalties incurred in attempt- ing to evade the tax. 4. By subjecting the people to the frequent visits and examinations of tax gatherers. The evident justice and utility of the foregoing maxims liave recommended them more or le^s to the attenti oa of all nations. P. 255 — 9. 'Article I. Taxes upon Rent, Taxes upon the Rent qf Landr A tax upon rhe rent of land may either be imposed according to a certain canon not to be altered;or it may be imposed so as to vary with every variation in the real rent of land. A land tax which, like that of Great Britain, is assessed upon each district according to a certain invariable canon, though equal at the time of establishment, becomes unequal in process of time, ac- cording to the unequal degrees of improvement of the different part§ of the country. In England the land tax was unequal at its first establishment. It offends, ^therefore, against the j?7;s| maxim. It is agreeable to the other three. The advantage which the landlord has derived from the invariable constancy by which the lands are rated to the land tax, has been principally owing to circum- stan(;;es extraneous to the tax.— It has been owing in part to the prosperity of almost every part of the coun- tr}^, the rents every where continually rising. The landlords, therefore,have gainedjhe^difference between tjie jax w hich they would have paid according to th^ ( 291 ) present rent^of their estales^and thiat w^^^ they actual* l^ay. Had rents been gradually falling, the land- lords would have lost this difference. As this ta^^ is- payable in money, so the valuation of the land is ex- pressed in money. Since the establishment of this va- luation, the vaulation of silver has been pretty uniform, and there has been no alteration in the standard of coin. Had silver risen, it would have proved very oppressive to the landlord. Had it fallen, it would have reduced the revenue of the sovereign. Had any considerable alteration been made in the standard of the money, it would have hurt the revenue of the proprie* tor^ or that of the sovereign. P. 259 — ^62. A tax upon the rent of land which varies with everjr variation of jhe ren^^^ recommended by the economist of France as the mostjequitable of all taxes, since all taxes as tliei/ say, must ultimately fall upon the rent of land, and therefore ought to be imposed equally Upon the fund which mustJlnaUi/ pay them. It will ap- pear, from the following review, what are the taxes- which fall finally upon the rent of land, and what are those which fall finally upon some other fund. In the Venetian territory, arable lands, given in lease,are taxed at 10 per cent, but if the proprietor cultivates his own lands he pays only 8 per cent, of the supposed rent. This is more equal than the land tax of England, and might under a proper administration, and by a public register of leases, be easily carried into effect. Some landlords, instead of raising the rent, take a fine for the renewal of the lease. This is, in most cases, injurious to the landlord ; frequently hurtful to the tenant ; and always hurtful to the community. Some leases pre- BCfibe to-the tenant ja ceitaiu inod^ of Q.yltivatioa.This ( m ) CQudhion ought tq be CQn§idered £fs an addition gij rent,; Some landlords require a rent ii; kind^ ajito»die building rent ; though the difficulty does not seem very great, P. 286— 8v > t ; lallolland, every house tenanted or untenanted, if t^p^edatS^ percent, of its value. The contrivers of t|(^]^ tfiJKes i^]po>5ed upon houses, in Engltmd, at different timesj seem to have imagined thtit there was some great; diffiiculty in ascertaining thp real rent pf eveity house, yence, the tax of two shillings upon every heatthr ^bis was abolished soon after tb^ revolution. The next ta^f of this kind, was upon every dwellingvhopse inhav bited,according to the number of windovVs it contained, f his tax was repeale/ly and in its stead was established t|h^ window t£LX. Tb^! p/incipal objection tt** -aJ-J/suclp tax^s is their iftequahty, as tbeiy mUst frequently fall much, heat ier uppn the pobr tha*!! upon the rich* A J|OU!se of lOl. rent in the country, may h'ave more wi'n^ (Jpws than abOiuseofoOOi. rent iii London. Such taxes ntn, th^mk)ft,:^m\trdYy to the first of the fobr maxfiHS §bove-mentioned. P. 289— -Ql* .u ,!tiiu . i ( ^97 ) ^..:f^ ^RTicLE^H. Taxes upon Frx^it, or upon the, MevenuCf .ouIjuv !j:ijj0j5 arising ftoru Stock, \ The revenue aristifig from stock divides itself iiito t#o pavts :(h) That which pays interest: and(^.)Th»fc which w over* and above what is necessary fol* paying tire initerest.The lutter part of profi't is a subject not tax* able directly, it is a compensation, for the risk and iTouble of employing the stock. The employer must have' this cqmpensa^ion, oth^rwis^ hei c^ffnot continue the emj^ioynVent. If lie wa!s taxed dircctPy in proporW tion to the zohole prolit, he nlilist either raise tlfe rate of profit/ or pay less iAterest^ In the former case, tbe tax would be fiiialTy pa(id by the I and lord, or by the con> sumer accordmg to the way in which he employed his stock. In the iutteih case, thte tdrs vvo\tld fall upon the interest of money. P. 292. 3. ^« 'The iotensst of money seems, at fii*st sight/ a subject 3s fit to be taxeci* directfy>! as the rent of land. Tvi'dr pi'rcmnsta'nces; howeveiv render it less proper. {V.y Tiie quaritity and value of the land which any man prts-i Besses, cat! never be a secret : but the whole amounf? of his capital' cannot be exactly ascertainted . Jt h V^ bie, bBsicVes^ tx> continual variations. (2;) Lawd i«4? sabjeck whicli cannot be removed j whereas s'tobk easily may. A tax, therefore, which tended to di'iveaway^ stock from- any country, woiild tend to* dry np ^v^ry s6mrce of revenue. The profits of stock ; th^e rent of? land ; and the wagei of labour would be diiininished by the i-enioval. Hence, the loose manner in whiclii stock is Estimated by those nations, who have attempt* tecj to tax the revenue arising from it. If the lands ( 298 ) of England are nol rated to the land-tax at half their ^-alue^ the stock of England (assessed upon houses) is scarce rated at the fiftieth part of its actual value^ P. 294—7. In all countries a severe inquisition into the circum- stances of private persons, has been carefully avoided. At Hamburgh, every inhabitant pays to the state one fourth per cent, of all he possesses : this is a tax upoa^ stock. Every man assesses himself upon oath before a magistrate. This tax is paid with great fidelity. Nor is it peculiar to Hamburgh. Similar instances are tO: "be found at Undervvald, in Switzerland ; Zurich ; and Bazil. And once a tax of the fiftieth penny was impo- sed upon every cilizen in Holland, assessed in the same manner ^s at Hamburgh, P. ^98—300, •J Taxes upon the profit of particular employrdents^ : '^ 1 IN some countries taxes are imposed on the profits of stock ; sometimes when employed in particular bran- ches of trade; and sometimes when employed in agri-- culture. Of the former kind are, in England, the lax ^pon hawkers and pedlars; that upon hackney coaches &c. A Tax upon the profits of stock must always finally^ fall upon the cotisumers,and if it is proportioned to th^ trade of the dealer occasions no oppression to him^ p. 301— 3. . , . What in France is called the personal taille is, per* haps, the most important tax upon the profits of stock pmployed in agriculture, that is levied in any part of Europe. During the feudal government in Europe,the sovereign was obliged to content himself with taxing ( 299 ) those who were too weak to refuse to pay taxes, TI>e great lords constantly refused to subject themselves to any constant tax. But they were willing that the sove- reign should tax the other occupiers of land, held by ignoble tenure* Sometimes the tax was laid upon the supposed profits of those who held in farm or lease lands belonging to other people ; and in this case the taille was said to be personal. It was the occasion of much oppression and injustice P. 304— 6. When a tax is imposed upon the profits of stock in a particular branch of trade, the traders are careful that the tax should fall upon the consumer. But when a tax is imposed upon the profits of stock employed in agriculture, it must fall finally upon the landlord. la countries where the personal taille takes place, the farmer is commonly assessed in proportion to the stock which he appears to employ in cultivation. He there- fore wishes to appear scarce able to pay any thing, for fear of being obliged to pay too much. Hence the cul- tivation is degraded, by which, the public, the f^irmer, and the landlord all suffer. P. 307- 8. What are called poll taxes in America, annual taxes of so much ahead upon every negroe, are properly taxes upon the profits of a species of stock employed in agri- pulture. The "tax falls upon the planter as landlord. Taxes of so much a head upon the bondmen employed in cultivation seem antiently to have been common all over Europe. Hence poll-taxes of all kinds are repre- sented as badges of slavery. Every tax is, to the per- son who pays it, a badge of liberty. It denotes that he has some property, and therefore cannot himself be the property of a master. A poll tax on slaves is altogether different from a pollrtax upon freemen. The taxea^ ( aao J ttpan servants mt fiot taxes upon siacfc, but upon e!i>^ pence. Taxes upjon the profit of stock in ^ar^tcuZar* employments^ never affect the Interest oi money. No- body will lencf his money for less interest to those wha exercise thetaxed^than those who exercise the untaxed employment- - Taxes upon the reventie arising frorn stock, in ali Employments will sometimes fall upon the Interest of money. P. 309,. 10. / ' iVHVte *io HtiT hagoqffi' Appeni]^1x to Articles I: and II. Taxes upon the ca^l ' ' ':' pital vahit of Land, Homes, and Stock, •fi: !)•■ ' • ' • While property remains in the possession of tlie same' person, the permanent taxes imposed upon it havef never been intended to diminisli its capital value, but only part of the revenue arising from it. Bot when property changes hands, snch taxes have frequently been imposed upon it as necessarily take away some part of its capital value. The transference of all sorts of property from the dead to the living, and that of immoveable property from the living to the living, are transactions which cannot be concealed. Such trans- actions may be traced directly. The transference of moveable property from the hving to the living may bef faxed indirectly : (1.) By requiring that the deed^con- taining, the obligation to repay, should be written upon! paper, or parchment which has paid a stamp duty i (2.) That it should be recorded in some public or pri* vate register, and by imposing duties on registration. 'the Vicesima Hereditatum imposed by Augustus uport the Romans was a tax upon the transference of pro-^ perty from the d^'ad to the living. ^^di?^ thd; Sained ind < 301 ) IS the Dutch and Enghsh tax upon successions. P. sw—vs. The casualties of the feudal law, were taxes upon the transference of land, both from the dead to the livings and from the living to the living. The heir of every linmediate vassal of the crown paid a certain duty, ge- nerally a year's reint, upon receiving the investiture of the estate. By the feudal law, the vassal could not alienate without the consent of his superior^ who ex- torted a fine for granting it. Taxes upon the sale of lands, or of lands held by certain tenures, take place in many countries, and make a branch of the revenue of the sovereign. Such transactions may be taxed indi- rectly by means of stamp duties, or of duties upon re- gistration 5 and those duties may, or may not be propor- tioned to the value of the subject transferred. Those modes of taxation are of very modern invention. In about a century, however, stamp duties have in Europe become almost universal, and duties upon registration extremely common. There is no art which one go- vernment sooner learns of another, than that of drain- ing money from the pockets of the people. Taxes upon the transference of property from the dead to the livings fall upon the person to whom the property is transferred* Taxes upon the sale of land fall altogether upon the seller; the seller being almost always obli- ged to sell ; but the buyer is scarce ever under the ne*^ cesslty of buying. Taxes upon the sale of new built houses, where the building is sold without the ground, fall generally upon the buyer. Taxes upon the sale of old houses, and p ( 302 ) ground rents, fall upon the seller. Stamp-duties fof borrowed money fall upon the borrovv€r. All taxes upon the transference of property, so far as they diminish the capital value of property, tend to diminish the funds destined for the maintenanceof pro- ductive labour. Such taxes are always unequal ; the frequency of transference not being equal, in property of equal value. The registration of mortgages is advantageous to the public. Deeds of other kinds are inconvenient to in- dividuals, without any advantage to the public. Stamp duties on cards, dice, news-papers, &c. are taxes upon consumption,andare paid by the consumer. P. 314—21. Article III. Taxes upon the Wages of Labour, Tlie wages of the inferior classes of workmen, are iregulated by the demand for labour ; — and by the aver- age price of provisions. These remaining the same, a direct t9.% upon the wages of labour, must raise them somewhat higher than the tax. If the lax was one fifth, the price of labour must rise one fourth. A direct tax, therefore, upon the wages of labour, would be ad- vanced by the employer ; but it would finally be paid, together with the additional profit, by the consumer. The rise which such a tax might occasion in the wages of country labour, woiild fall upon the landlord. If direct taxes upon the wages of labour have not always occasioned a proportionable rise in those wages, it h because they have generally occasioned a considerable fall in the demand for labour. The declension of in- dustry, the decr^ase.,i)i employment fgr the poor, and ( 303 > the diminution of the annual produce of the land and , labour of the country, have been the effects of such taxes.. Absurd and destructive as such taxes are, how- ever, they take place in many countries. In Bohemia^ ajrtilicers are divided into four classes ; the highest pay about 9I. 7s. 6d. a year; the second 61. 10s. the third 41. 13s. 9d. and the fourth 2l. 7s. a year. A tax upon the recompence of artists, and men of liberal profes- sions, must raise that recompence higher than in pro- portion to the tax. The emoluments of offices are not regulated by the free competition of the market;and be- ing in general higher than the nature of the employ- ment requires, can well bear to be taxed. P. 321 — 6. Article IV. Taxes z&hich, it is ititended, should fall indifferently upon every different Species of Mevenue, These are capitation taxes, and taxes upon consu- mable commodities, which must be paid indifferently from whatever revenue the contributors may possess. Capitation Taxes, if proportioned to the revenue o£ the contributor, become arbitrary. The state of a man's fortune varies from day to day ; the assessment must, therefore, depend upon the humour of the asses* sors. If they are proportioned to the rank of the con- tributor, they become unequal : the degrees of fortune being frequently unequal in the same degree of rank. Such were the poll-taxes in England, during the reign of William HI. and those in France from the beginning pf the present century. The poll-taxes ia England . P P 2 ( 304 ) never produced the sum expected . Those in France did. Capitation taxes, so Far as they are levied upon the lower ranks of the people, are direct taj^es upon the wages of labour ; — they are Jeviied at little expence,and where they are rigorously exacted, afford a sure reye-- nue to the state. P. 327—30. Taxes ifpon consumable Commodities ; which 2^re either necessaries, or luxuries. By the former must be understood, whatever the custom of the country renders it indecent for creditable people to be without. Such, in England, are a linen shirt, and leather shoes, which cannot be strictly called necessary for the support of Jife. Ale, wine, 8lc. are luxuries \^diich a man may ab- stain from without any reproach, A tax upon the ne- cessaries of life pperates exactly in the same man neras a direct tax upon the wages of lq,bour. It is otherwise with taxes upon luxuries. They will not necessarily occasion any rise in the wages of labour. The high price of luxuries, such as to*bacco, tea, sugar, spiri- tuous liquors, SvC. do not diminish the ability of thd inferior ranks of people to bring up their families, Upon the industrious poor, taxes upon such commo-r dities act as sumptuari/ laws, and thus freqinently in-y grease their ability to bring up their f^vmilies, P.33r — 5. Any rise in the average price of necessaries, unless it is compensated by a proportional rise in the wages of labour^ xnust diminish the ability of the poor to bring up numerpus families, ai)d cqnsequently to supply the demand for viseful labour. Taxes upon luxuries have no tendency to raise the price of any other commodities,except the commodities |axed. Taxes upon necessaries, by raising the price of labour, raise the price of all iiianufactures,and diminish '< 305 i their consumption. Taxes upon luxqries are paid by the consumers of the commodities taxed : those upon hecessaries are partly paid by the landlord, and partly by the consumers, in the advanced price of manufac- tured goods. They fall heaviest upon the Jandlords. P. 3S6. 7. In Great Britain, the principal taxes upon the neces- saries of life are those upon salt, leather, soap, and can^ dies ; all of which are very heavily taxed. Fuel is, du- ring the winter, a necessary of life ; coals are the cheapest of all fuel, and absolutely necessary to the mar hufactures; if a bounty could be iri any case reasonable, it might be so upon the transportation of coals ; but in- stead of a bounty, the legislature has imposed a tax of 3s. 3d. upon each ton carried coastways. Where they are cheap, they are consumed duty free; where they ^re dear,tliey arc loaded with a heavy duty. Such taxe^ afford a considerable revenue to government, which it might npt be easy to find in any othpr way, p. 338.9. Taxes upon the necessaries of life are much highet in many countries than in Gre^^t Britain. Duties upon 'flour and bread take place in some countries. Taxes upon butcher's meat are still more common than thpse Upon bread. It may be doubted whether butcher's jneat is a necessary of life. P. 340. 1. Consumable commodities may be taxed in two vyays, '(1.) The consumer may either pay an annual sum on account of his using or consuming goods of a certain kind : or, (2.) The goods rhay be taxed while the^^ re- main in the hands of the dealer. Consumable goods which last a considerable time, are most properly taxed in one way : those for immediate or speedy consump,. ( 306 ) . tion in the other. The coach tax and plate tax are ex* mnples o{ the former method : the duties of excise and customs of the latter. Sir Matthew Decker proposed, that all comraodiiies should be taxed, by the consumer paying a certain ^um for the hcence to consume certain goods. His scheme was to promote the foreign, and carrying trade. It seems Hable to the four following objections : (L) The tax would be more unequal than one upon consumption : (^.) It would diminish one of at least, as that revenue depends upon the duties of cus- toms. In consequence of that system, the importation of several sorts of goods has been prohibited altogther. The high duties imposed upon the importation of some foreign goods have encouraged smuggling. Bounties upon the re-exportation of foreign goods, have given occasion to many frauds upon the revenue. Heavy duties being imposed upon almost all goods imported, the importers make entry of as little as they can r the exporters make entry of more than they export. Hence, the exports appear upon the custom-hou6e books, greatly to overbalance the imports. P. 349 — 5 1 . In order that the greater part of the members of any society, should contribute to the public revenue in pro- portion to their respective expence, it is 7iot necessary that every single article of that expence should be tax- ed. The duties of excise are imposed upon a few arti- cles only of the most general use. Those of customs might likewise, without loss to the revenue be confined to a few articles only. The foreign articles of the most general use in Great Britain seem to consist in wines, brandies, sugar, rum, tobacco, cocoa-nuts, tea, coffee, china, piece-goods, and spiceries of all kinds. These afford the greater part of the revenue which is drawn from the duties of customs. The taxes upon other fo- xeign manufactures, have been imposed more for the purpose of monopoly than revenue. High taxes by di- miuishing the'consumptiQn;^ or by encouraging smug- ( S()8 ) gling, frequently afford a smaller revenue to govern* ment, than what might be drawn fronj more moderate taxes. The excise laws are found to embarrass the Smuggler more than those of the customs. By introdu-^ cing into the customs a system similar to that of the ex-* cise, the difficulty of smuggling would be very much iocreased. If smugglings to any considerable extent could be prevented, and taxation was always employed as an instrument of revenue, and never of fnonopoly, it is probable that a revenue, equal to the present neat re venue, of the customs, might be drawn from duties upon the importation of only Sifew sorts of goods of the most general consumption. If by such a change of sys- tem the public revenue suffered no loss, the trade and manufactures of the country would certainly gain a very considerable advantage. The trade in the com- modities not taxed would be perfectly free, and might be carried on with all parts of the world with the great- est advantage. Even the trade in the commodities taxed would be carried on with much more advantage than at present. It was the object of Sir Robert Wal- pole^s excise scheme to establish a system not very un- like this. P. 352V8. The duties upon foreign luxuries, imported for home consumption, fall principally upon people of middling, or more than middling fortune : those upon the cheaper luxuries of home produce, destined for horne consump- tion, fall prett}' equally upon people of all ranks in proportion to their respective expence. The K'Ao/e expence of the inferior, is much greater than that of the superior ranks : for (1.) Almost the whole Capital of every country, is annually distributed amongst the inferior ranks of people, ae wages of pro- ( 309 ) ^UGtiv€ labour : <2.) A grej^t part of the revenue arising irom the rent of land, is annually distributed among that duties upon con- sumable goods were taxed upon the profits of merchants, those duties, in some countries, have been repeated upon every successive sale of the goods. The alcavala ©f Spain was at first a tax of 10 per cent, afterwards of ^4 per cent, and is at present of only 6 percent, upon. ( SIS )t jll^'6-sale of property, v^^hether moveable or immoveabfis, i&tid it is repeated coeriftime the property is sold, [n ithe kingtlom of Naples, there is a similar tax of three per cent. P. 381. 21 The taxation which takes place in Gi^at Britaia leaves the interior commer^ce of the country, the in- fetnd and- coagtirig trades, almost entirely free. Good$ /carried coast-wise, and coals are exceptions. To this fcedom of interior commerce, perhaps, the prosperity ©f the country is chiefly owing. If the same freedom ifould be extended toPreland, and the plantations, the prosperity would probably be still greater. In France too, the provinces most famous for wines, are those in which the trade in that article is subject to the fewest restraints,arising frorn the complicated system of French revenue laws^. Complicated revenue laws are not pe^ culiar to France ; they exist in Milan and Parma t6 iuch a degree, that nothing but the great fertility of the soil, and the happiness of the climate coiild pre- serve such countries frona reiiapsing into llie lowest state of poverty. P. 383—5. Taxes upon consumable commodities may be either Jevied by government itself, or the}^ may be let in farm for a certain rent, the farmer being allowed to appoint his own officers to levy the tax. The best and most frugal way of levying a tax, can never be by farm ; gince the farmer must always draw from the produce of the tax, besides the stipulated rent, and expence oj^ad- ministration, a profit proportioned to ihe advance which he makes ; — to the risk which he runs ; — to the trouble which he is ^t ; — and to the knowledge and skill which it requires to manage so complicated a concern. To farm any considerable branch of the revenue, requires ( 314 ) either a great capital, or great credit, circumstances which of themselves restrain the competition to a very small number of people, who often combine together to offer no rent, but vi^hat is below the real value. Hence farmers of the public revenue are generally very rich. They have no compassion for the contributors, but demand greater severity in the revenue laws, which are alwa3^s most sanguinary in countries where the greater part of the public revenue is in farm. P. 386. 7. A tax is sometimes farmed, and the farmer has, be- sides, the monopoly of the commodity taxed. In such cases the farmer instead of one, levies two exorbitant profits upon the people. In France the duties upon to- bacco and salt are levied in this manner. The tempta- tion of smuggling these articles is, to many people, ir- resistible ; and smuggling them, sends every year, se- veral hundred people to the galHes, besides a consider- able number whom it sends to the gibbet. Those who consider the blood of the people as nothing, in compa- rison of the revenue of the prince, may perhaps approve of this method of laying taxes.* P. 386— r8. CHAP.IIL Of public Debts, It has been shewn in the third book of this inquirv, tbatin the rude state of society,the person who possesses a large revenue, can enjoy that revenue in no other * The remaining fix pages of this chapter, refer entirely to tjie par- ticular modes of taxation in France and Holland ; which, by the revolu- tions in thofe countries, have been superseded by others, in some mea- §ure, lefs oppreflive. It is not neceflary to take any notice_of themi in this place. Ed. ( 315 ) way, than by maintaining nearly as many people as it can maintain. A hospitality in which there is no lux* nry, and a liberality in which there is no ostentation, occasion the principal expences of the rich and great: but these are expences by which people are not apt to ruin themselves* Some of their wool and raw hides, our feudal ancestors were able to sell for money, some part of which they spent in objects of vanity, and some part they seem to have hoarded. In those times of vio- lence, it was convenient to have a hoard of money at hand ; and it was equally convenient to conceal that hoard. The frequency of treasure trove demonstrates the frequency, in those times, both of hoarding and of concealing the hoard. P. 394 — 6. The same disposition to save and to hoard prevailed in the sovereign, as well as in the subjects. Among nations, to whom commerce and manufactures are little known, the sovereign,it has been o^erved in the fourth, book, is in a situation which naturally disposes him to the parsimony requisite for accumulation. All the an- tient sovereigns of Europe, accordingly, had treasures. In a commercial country,the sovereign naturally spends a great part of his revenue in purchasing luxuries. His ordinary expence becomes equal to his ordinary reve- nue, and it is well if it does not frequently exceed it. When extraordinary exigencies require extraordinary expences, he must call upon his subjects for an extraor- dinary aid. The want of parsimony in time of peace^ imposes the necessity of contracting debt in the time of war. The same commercial state of society which brings government, in this manner, into the necessity of borrowing, produces in the subjects both an ability and aninchnation tolend. J^. 397— 40.0. fcoiriiiierce and manufactures? r&n seldom flourbfe long in any state, which does not enjoy a regular admi- nistration of justice ; and in which the people have not a certain degtee erf confidence in the justiceof govern- «lent. The same coji fide nee which disposes merchants^. Upon, ordinary occasions, to trust their property to the pratection .of a particular government, di imposes -them iipon extraordinai'y occasions to trust that governinenji with the w»€ of tlieir property. The merchant makes mopey by lending money >to government. The go- iFernment of such a state is apt to depend on its subjects for money on extraordinary occasions, and therefor6^ dispenses itself from the dnty of saving. In the rud^ state of society few people would be able, and nobody would be willing, to lend their money to government on extraordinary exigencies. P. 401. €. The progress of the enormous debts which oppress, and which will probably ruin, all the great nations of Europe, has been pretty uniform. Nations, like pri- vate men, hav^e generally begun to borrow upon perso- nal credit,without assigning any fund for the payment of the debt ; and when this resource has failed them, they have gone on to borrow upon assignments of par- ticular fnnds. What is called the unfunded debt of Great Britain, is contracted in the former of these two ways. It consists partly in a debt which bears no in- terest, and partly in a debt which bears interest. The debts due for extraordinary services ; part of the extra- ordinaries of the army, navy, ordnance, &C. usually con- stitute a debt of the Jirst kind. Navy and Exchequer bills constitute a debt of the second kind. The Bank of England, by agreeing to circulate Exchequer bills, that is to receive them at par, paying the interest due ( 317 ) upon them, keeps up their value, and thereby enables government to contract a large debt of this kind.When this resource is exhausted, and it becomes necessary to assign some branch of the revenue for the payment of the debt, government has, upon different occasions, done thisintwo different ways. Sometimes it has made this assignment for a short period ou]y 5 and sometimes for perpetuity* When money was raised in the one way, it was said to be raised by anticipation ; when in the other, by funding. In Great Britain the annual land and malt taxes are regularly anticipated every year. P. 402—4. In the reign of King William, and during a great part of that of Queen Anne, most of the new taxes were imposed but for a short period> and a great part of the grants of every year, consisted in loans upon anti- cipation of the produce of those taxes. The produce being frequently insufficient for paying within the limi- ted term, the principal and interest of the money bor- rowed, deficiencies arose, to make good which, it be- came necessary to ^ro/owg the term. The next step was to make them perpetual, P. 405 — 7. In 17 lo, the different taxes which had been mortga- ged for paying the bank annuity, with several others^ which were rendered perpetual, were accumulated, into one common fund, called the aggregate fund, la 17 17i several other taxes were rendered perpetual, and accumulated into another fund^ called the general fund. Hence, the greater part of the taxes were rendered perpetual^ as a fund for paying the interest only of the money borrowed by different anticipations. During Rr ( 318 ) the feign of Queen Anne, five per cent, was declared to be the highest rate which could lawfully be taken for money borrowed upon private security. Soon after the greater part of the temporary taxes had been rendered perpetual, the creditors of the public were induced to accept of five per cent, for the interest of their money ; which occasioned a saving of one sixth of the greater part of the annuities, which were paid out of the funds above-mentioned. This saving left a considerable sur- plus and laid the foundation of what has since been called the sinking fund. In 1717, it amounted to up- wards of 323,0001. In 1727, the interest of the greater part of the public debts, was still farther reduced to four percent, and in 1753, and 1757, to three and an balf^ and three percent, which reductions still farther augmented the sinking fund. A sinking fund, though sustituted for the payment of old, facilitates very much the contracting of fiezo debts. P. 407 — 10. Besides these two methods of borrowing, there are two others; that of borrowing upon annuities for terms of years ; and that of borrowing upon annuities for lives. During the reigns of William and Anne, large sums were frequently borrowed upon annuities for terms of ^^ears, which were sometimes longer and some- ^ times shorter ; but all were on terms very advantageour to the lender. During the two wars which began in 1739, and in 1755, little money was borrowed either upon annuities for terms of years,or upon those for lives* P. 411. 12. Annuities for lives have occasionally been granted in two different ways; either upon separate lives, or upon lots of lives, which, are called tontines, from the name of their inventor. When annuities, aie. granted upon ( 319 ) separate lives, the death of every individual annuitant disburthens the public revenue. When annuities are granted upon tontines, the liberation of the public re- venue does not commence till the death of all the an* nuitants comprehended in one lot,the last survivor suc- ceeding to the annuities of the whole lot. Upon the same revenue more money can always be raised by ton- tines, than by annuities for separate lives. In France a much greater proportion of the public debts consists in annuities for lives, than in England. This arises al- together from the different views and interests of the lenders. P.413— 16. The ordinary expence of the greater part of modern governments, in time of peace, being equal, or nearly equal to their ordmary revenue, when war comes, they are both unwilling and unable to increase their revenue in proportion to the increase of their expence. By means of borrowing, they are enabled, with a moderate increase of taxes, to raise money sufficient to carry oa the war ; and by the practice of perpetual funding, they areenabled,withthe smallest possible increase of taxes, to raise annually the largest possible sum of money. The return of peace seldom relieves the people from the greater part of the taxes imposed during the war. If, over and above paying the interest of the debt, and defraying the ordinary expence of government, the old revenue, together with the new taxes, produce »ome surplus revenue, it may, perhaps, be convened into a miking fund for paying off the debt. But, (1.) fhis sinking fund is generally inadequate for paying,iii Ijeace^the whole debt contracted during the war : and^ ( 320 ) (Q,,) This fund is almost always applied to other pur^ poses. During the most profound peace^various events occur^ which require extraordinary expence^ and go- vernment finds it always more convenient to defray thi^ expence by misapplying the sinking fund, than by im- posing anew tax. P. 417 — ]9* In Great Britain, from the time that we had first re- course to the ruinous expedient of perpetual funding, the reduction of the public debt in time of peace, ha$ never borne any proportion to its accumulation in tinie of war. The foundation of the present debt was laid ia the war which began in 1688, At the end of l697jthe debt amounted to 21,515,7421. 13s. 8|d. By four years peace, it was reduced to l6,394,70lL Is. 7|d. In 1722, it amounted to 55,282,9781. Is. 3d. and the reductioa went on till 1739, when the capital of the public debt amounted to 47 millions nearly. The war of 1739^ in- creased it to more than 78 millions. Before the break- ing out of the wa.r in 1755, it was reduced to little more than 72| millions. But at the conclusion of the peace in 1763, the funded debt amounted to more than 12'2{ Inillions ; and in 1764, the whole debt was 1391 mil- lions. In 1775, the debt was reduced to about 129 rniN lions ; and by the American war,it was increased to up- wards of 230 millions.^ P. 420—4. The public furids of England have been represented ^s the accumulation of h great capital superadded to- the other capital of the country, by means of which it$ trade and manufactures ht^ve been^extended, nauch be- yond what they could have been by means of thai other capital only. But the capital advanced to go- t Jhe late war dovbled the national debt and taxes. ( 321 ) vernment was a certain portion of the annual produce, turned away from serving in the function of a capital, to serve in that of revenue ; from maintaining produc- tive labourers, to maintain unproductive ones, and to be wasted without the hope of reproduction. Tn return for the capital advanced, an annuity was obtained, for which a new capital might be replaced ; but this new capital must have existed in the country before, and must have been employed, as all capitals are, in main- taining productive labour. When for defraying the expence of government, a revenue is raised within the year, from the produce of free, or unmortgaged taxes, a certain portion of the revenue of private people is only turned away from maintaining one species of unproductive labour, to- wards maintaining another. Public expence defrayed in this manner, hinders the accumulation of new capi^ tal ; but it does not necessarily^ occasion the destruc- tion of any actually existing capital, which is always the case when the pubUc expence is defrayed by fun^ ding. If the method of funding destroys more old ca- pital, it at the same time hinders less the accumulation of nezi) capital, than that of defraying the e:?cpence by a revenue raised within the year. This advantage can only exist during the continuance of a war. Were the expences of a war, to be defrayed by a revenue raised within the year, the taxes from which that extraordi- nary revenue was drawn would last no longer than the war. The ability of people to accumulate, though less during the war would have been greater during the peace, than under the system of funding, W~ars would be more speedily concluded^ and less wantonly under- taken. When funding, besides, has made a certain, ( 322 ) progress, the multiplication of taxes impairs as much the ability of private persons to accumulate in time of peace, as the other system does in time of war. In the payment of the interest of the public debt, it has been $aid, it is the right hand which pays the left. This apo- logy is founded on the sophistry of the mercantile sys- tem : — it supposes, besides, that the whole debt is owing to the inhabitants of the country, which is not true ; but if it were, it would not, on that account, be less pernicious. P. 424 — ^9. Land and capital stock are the two original sources of all revenue, both private and public. Capital stock pays the wages of productive labour, whether employ- ed in agriculture, manufactures, or commerce. The management of those sources of revenue belongs to two different sets of people, the proprietors of land, and the Employers of capital stock. The proprietor of land is interested, for the sake of bis own revenue, to keep his estate by buildings, drains, inclosures, &c. in as geod condition as he can. But by different land-taxes, his revenue may be so diminished, and by different duties upon the necessaries and conveniencies of life, that di- minished revenue may be rendered of so little real va- lue, that he may find it impossible to maintain those e^xpensive improvements, As the distress of the land- lord increases, the agriculture of the country must de- <«line. When, by taxes upon the necessaries and con- leniencies of life, the owners of capital stock find, that H'hatever revenue they derive from it will not, in a par- ticular country, purchase the same quantity of those Cecessaries and conveniencies, which an equal revenue would in almost any other, they will be disposed to re- move to some other ; and when, in order to raise these < 325 % *• taxes, the greater psrt of merchants and manufacturer* are exposed to the vexatious visits of tax-gatherers,this disposition to remove, will soon be changed into an ac- tual removal. The industry of the country will fall with the removal of ahe capital that supported it, and the ruin of trade and manufactures will follow the de- clension of agriculture. To transfer from the owner* of those two great sources of revenue, to the public creditors, the greater part of the revenue arising from either, must occasion in the long run, the neglect of the land, and the waste or removal of capital stock. The practice of funding has gradually enfeebled everi/ state which has adopted it; — the Italian republics, Spain, France, and the United provinces, all bear wit- ness to this truth. Is it likely that in Great Britain alone, a practice which has brought desolation into every other country, should prove altogether innocent J P. 429—33. When national debts have once been accumulated to ft certain degree, there is scarce an instance of their having been fairly and compleatly paid. The libera- tion of the public revenue has always been brought about by a bankruptcy; sometimes by an avowed one, but always a real one, though frequently by a preten- ded payment. The raising of the denomination of the toin has been the most usual expedient by which a real public bankruptcy has been disguised under the appearance of a pretended payment. When it becomes necessary for a state to declare itself bankrupt, a fair, open, and avowed bankruptcy is always least disho- honourable to the debtor, and least hurtful to the cre- ditor. Almost all states, when reduced to this necessity, have played this juggling trick. The Romans, at the ( 324 ) end of the first Punic war, raised the denomination of their coin from tzi^o to , twelve . In this manner they were enabled to pay their debts with the sixth part of what they owed ; and it does not appear to have occa- sioned a very violent clamour, in the course of the second Punic war, the denomination of the coin was raised so high, that they were enabled to pay their debts with one twenty-fourth part of their real value. In this way indeed 400 millions might be paid with somewhat more than 16-J millions. By means of such expedients, the coin of all nations has been gradually reduced more and more below its original value,and the same nominal sum has been gradually brought to con- tain a smaller and smaller quantity of silver. P. 434—8. Nations have sometimes, for the same purpose, adulterated the standard of their coin; this has the same eifect with what the Frencli call an augmentation, or a direct raising of the denomination of the coin. An augmentation is always an open and avowed operation ; but the adulteration of the standard has generally been a concealed operation. Both are unjust, but the latter, when discovered, has always excited much greater in- dignation than the former P. 438. 9. * In the concluding part of this work, the Author fuggefts fome hints for difcharging the national debt ; depending much on increafed taxation in America and Ireland. The revolution in the former, and the unfettled ftate of the latter, render his arguments inapplicable. The abridgment therefore ot the remainder ot the work is unneceflary. F I ^ I s. {Printed hi) B, Flower^ Cambridge.] !*) f