ADAM SMITH 
 
 THE WEALTH OF NATIONS 
 
 : /L 
 
 X 
 
 VOL. II.
 
 Honfcon 
 
 HENEY FROWDE 
 
 OXPOBD UNIVERSITY PRESS WAREHOUSE 
 7 PATERNOSTER ROW
 
 AN INQUIRY 
 
 INTO THE 
 
 NATURE AND CAUSES 
 
 OF THE 
 
 WEALTH OF NATIONS 
 
 BY 
 
 ADAM SMITH, LL.D. 
 
 EDITED BY 
 
 JAMES E. THOROLD ROGERS 
 
 M.P, FOB SOUTHWARK 
 
 VOL. II 
 
 SECOND EDITION 
 
 AT THE CLARENDON PRESS 
 
 1880 
 
 [All rights reserved]
 
 SRLF 
 URL 
 
 ffB 
 
 CONTENTS OF VOL. II. 
 BOOK IV. 
 
 Of Systems of Political Economy. 
 
 PAGE 
 
 INTRODUCTION . i 
 
 CHAPTEK I. 
 Of the Principle of the Commercial or Mercantile System . . i 
 
 CHAPTER II. 
 
 \ 
 
 Of Restraints upon the Importation from Foreign Countries of such 
 
 Goods as can be produced at Home . . . . -25 
 
 CHAPTER III. 
 
 Of the extraordinary Restraints upon the Importation of Goods of 
 almost all kinds, from those Countries with which the Balance 
 is supposed to be disadvantageous . . . . .46 
 
 PART I. Of the Unreasonableness of those Restraints, even 
 
 upon the Principles of the Commercial System . . 46 
 Digression concerning Banks of Deposit, particularly con- 
 cerning that of Amsterdam . ' . . . -53 
 
 PART II. Of the Unreasonableness of those extraordinary 
 
 Restraints upon other Principles . . . .62
 
 vi CONTENTS. 
 
 PAGE 
 
 CHAPTER IV. 
 Of Drawbacks . -73 
 
 CHAPTER V. 
 
 Of Bounties . 79 
 
 Digression concerning the Corn Trade and Corn Laws ... 99 
 
 CHAPTER VI. 
 Of Treaties of Commerce . . . . . . . .122 
 
 CHAPTER VH. 
 
 Of Colonies . . . . . . . . . 134 
 
 PAET I. Of the Motives for establishing new Colonies . 134 
 
 PART II. Causes of the Prosperity of new Colonies . .144 
 
 PART III. Of the Advantages which Europe has derived 
 from the Discovery of America, and from that of a 
 Passage to the East Indies by the Cape of Good Hope 171 
 
 CHAPTER VIII. 
 Conclusion of the Mercantile System . . . . . .226 
 
 CHAPTER IX. 
 
 Of the Agricultural Systems, or of those Systems of Political 
 Economy which represent the Produce of Land as either the 
 sole or the principal Source of the Revenue and "Wealth of 
 every Country ......... 246
 
 CONTENTS. vii 
 
 BOOK V. 
 
 Of the Revenue of the Sovereign or Commonwealth. 
 
 PAGE 
 
 CHAPTEE I. 
 
 Of the Expenses of the Sovereign or Commonwealth . , .274 
 
 PAKT I. Of the Expense of Defence . . . .274 
 
 PABT II. Of the Expense of Justice . . . .292 
 
 PART III. Of the Expense of Public Works and Public 
 
 Institutions . . . . . . . . 305 
 
 ARTICLE I. Of the Public Works and Institutions for 
 facilitating the Commerce of Society. First, For 
 facilitating the general Commerce of the Society. 
 Secondly, For facilitating particular Branches of 
 Commerce . - . . . . . . . 306 
 
 ARTICLE II. Of the Expense of the Institutions for the 
 
 Education of Youth . . . . . -344 
 
 ARTICLE III. Of the Expense of the Institutions for 
 
 the Instruction of People of all Ages . . .372 
 
 PART IV. Of the Expense of supporting the Dignity of 
 
 the Sovereign . . . . . . . .401 
 
 Conclusion of the Chapter . . . . . . 401 
 
 CHAPTER II. 
 
 Of the Sources of the General or Public Revenue of the Society . 404 
 
 PART I. Of the Funds or Sources of Revenue which may 
 
 peculiarly belong to the Sovereign or Commonwealth . 404 
 
 PART II. Of Taxes , 413
 
 viii CONTENTS. 
 
 PAGE 
 
 ARTICLE I. Taxes upon Rents ; Taxes upon the Rent of 
 
 Land . . . . . . . ..417 
 
 Taxes which are proportioned, not to the Rent, but to 
 
 the Produce of Land . . . . . -427 
 
 Taxes upon the Rent of Houses . *. . .432 
 
 ARTICLE II. Taxes upon Profit, or upon the Revenue 
 
 arising from Stock . . . . . . 440 
 
 Taxes upon the Profit of particular Employments . 446 
 
 APPENDIX TO ARTICLES I and II. Taxes upon the 
 
 Capital Value of Lands, Houses, and Stock ; . 453 
 
 ARTICLE III. Taxes upon the Wages of Labour . . 460 
 
 ARTICLE IV. Taxes which it is intended should fall in- 
 differently upon every different Species of Revenue . 463 
 Capitation Taxes . . . . . .463 
 
 Taxes upon Consumable Commodities . . .466 
 i 
 
 CHAPTER III. 
 
 Of Public Debts . . , . 506 
 
 INDEX 551
 
 BOOK IV. 
 
 OF SYSTEMS OF POLITICAL ECONOMY. 
 
 INTRODUCTION. 
 
 POLITICAL ECONOMY, considered as a branch of the science 
 of a statesman or legislator, proposes two distinct objects : , 
 first, to provide a plentiful revenue or subsistence for the people, 
 or more properly to enable them to provide such a revenue or 
 subsistence for themselves ; and secondly, to supply the state or 
 commonwealth with a revenue sufficient for the public services. 
 It proposes to enrich both the people and the sovereign. 1 
 
 The different progress of opulence in different ages and nations, 
 has given occasion to two different systems of political economy, 
 with regard to enriching the people. The one may be called the 
 system of commerce, the other that of agriculture. I shall en- 
 deavour "to explain both as fully and distinctly as I can, and shall 
 begin with the system of commerce. It is the modern system, 
 and is best understood in our own country and in our own times. 
 
 CHAPTER I. 
 
 OF THE PRINCIPLE OF THE COMMERCIAL OR MERCANTILE SYSTEM. 
 
 THAT wealth consists in money, or in gold and silver, is a 
 popular notion which naturally arises from the double function 
 of money, as the instrument of commerce, and as the measure of 
 
 1 The meaning which Adam Smith extensive with the modern theory of 
 
 assigned to Political Economy has passed politics, from the Benthamite point of 
 
 away. The terms are now understood to view, which seeks to establish the greatest 
 
 mean the science which discovers the possible good for the greatest possible 
 
 laws which determine the pi'oduction, number. Such a theory of political 
 
 consumption, and distribution of wealth. economy tends to make the science co- 
 
 Unfortunately, nearly all these words extensive with that of morals, by ac- 
 
 are ambiguous. It has been suggested counting for all the causes which affect 
 
 that a better definition is found in the the well-being of a community, while 
 
 following : The science of those forces modern economists limit their inquiries 
 
 which set labour in motion, in so far as to the causes which increase or waste 
 
 that labour is employed on objects which wealth. The distinction was seen by 
 
 thereby acquire a value in exchange. Aristotle, Nicom. Eth. Book vi. caps. 
 
 Adam Smith's definition is nearly co- 6-8. 
 
 VOL. II. B 
 
 '
 
 2 THE NATURE AND CAUSES OF BOOK rv. 
 
 value. In consequence of its being the instrument of commerce, 
 when we have money we can more readily obtain whatever else we 
 have occasion for, than by means of any other commodity. The 
 great affair, we always find, is to get money. When that is ob- 
 ^ tained, there is no difficulty in making any subsequent purchase. 
 In consequence of its being the measure of value, we estimate that 
 of all other commodities by the quantity of money which they will 
 exchange for. We say of a rich man that he is worth a great deal, 
 ~and of a poor man that he is worth very little money. A frugal 
 man, or a man eager to be rich, is said to love money; and a care- 
 less, a generous, or a profuse man, is said to be indifferent about it. 
 To grow rich is to get money ; and wealth and money, in short, are 
 in common language considered as in every respect synonymous. 
 
 A rich country, in the same manner as a rich man, is supposed 
 to be a country abounding in money; and to heap up gold and 
 silver in any country is supposed to be the readiest way to enrich 
 it. For some time after the discovery of America, the first inquiry 
 of the Spaniards, when they arrived upon any unknown coast, used 
 to be, if there was any gold or silver to be found in the neigh- 
 bourhood ? By the information which they received, they judged 
 whether it was worth while to make a settlement there, or if the 
 country was worth the conquering. Piano Carpino, 1 a monk sent 
 ambassador from the king of France to one of the sons of the 
 famous Gengis Khan, says that the Tartars used frequently to 
 ask him if there were plenty of sheep and oxen in the kingdom 
 of France? Their inquiry had the same object with that of the 
 Spaniards. They wanted to know if the country was rich enough 
 to be worth the conquering. Among the Tartars, as among all 
 other nations of shepherds, who are generally ignorant of the use 
 of money, cattle are the instruments of commerce and the measures 
 of value. Wealth, therefore, according to them, consisted in cattle, 
 as according to the Spaniards it consisted in gold and silver. Of 
 the two, the Tartar notion perhaps was nearest to the truth. 
 
 Mr. Locke 2 remarks a distinction between money and other 
 moveable goods. All other moveable goods, he says, are of so 
 consumable a nature that the wealth which consists in them cannot 
 
 1 The story is told by Rubruquis, whose 2 This appears to be a general refer- 
 
 journey to Tartary is contained in the ence to Locke's three essays on Money and 
 
 name volume with that of Carpino. See Interest. I can find no passage in them 
 
 Voyage de Rubruquis en Tartarie, p. 142. which contains the words of the text.
 
 CHAP. i. THE WEALTH OF NATIONS. 3 
 
 be much depended on, and a nation which abounds in them one 
 year may, without any exportation, but merely by their own waste 
 and extravagance, be in great want of them the next. Money, on 
 the contrary, is a steady friend, which, though it may travel about 
 from hand to hand, yet if it can be kept from going out of the 
 country, is not very liable to be wasted and consumed. Gold 
 and silver, therefore, are, according to him, the most solid and 
 substantial part of the moveable wealth of a nation, and to multiply 
 those metals ought, he thinks, upon that account, to be the great 
 object of its political economy. 
 
 Others admit that if a nation could be separated from all the 
 world, it would be of no consequence how much or how little 
 money circulated in it. The consumable goods which were circu- 
 lated by means of this money, would only be exchanged for a 
 greater or a smaller number of pieces ; but the real wealth or 
 poverty of the country, they allow, would depend altogether upon 
 the abundance or scarcity of those consumable goods. But it 
 is otherwise, they think, with countries which have connections 
 with foreign nations, and which are obliged to carry on foreign 
 wars, and to maintain fleets and armies in distant countries. This, 
 they say, cannot be done but by sending abroad money to pay 
 them with ; and a nation cannot send much money abroad, unless 
 it has a good deal at home. Every such nation, therefore, must en- 
 deavour in time of peace to accumulate gold and silver, that, when 
 occasion requires, it may have wherewithal to carry on foreign wars. 
 
 In consequence of these popular notions, all the different nations 
 of Europe have studied, though to little purpose, every possible 
 means of accumulating gold and silver in their respective countries. 
 Spain and Portugal, the proprietors of the principal mines which 
 supply Europe with those metals, have either prohibited their 
 exportation under the severest penalties, or subjected it to a con- 
 siderable duty. The like prohibition seems anciently to have made 
 a part of the policy of most other European nations. It is even to 
 be found, where we should least of all expect to find it, in some 
 old Scotch Acts of Parliament, which forbid under heavy penalties 
 the carrying gold or silver forth of the kingdom. The like policy 
 anciently took place both in France and England. 1 
 
 1 The officer charged with this duty was the Earl of Holland, in the reign of 
 was known by the name of the King's Charles I. 
 Exchanger, and the last person appointed 
 
 B 2
 
 4 THE NATURE AND CAUSES OF BOOK iv. 
 
 When those countries became commercial, the merchants found 
 this prohibition, upon many occasions, extremely inconvenient. 
 They could frequently buy more advantageously with gold and 
 silver than with any other commodity, the foreign goods which 
 they wanted, either to import into their own, or to carry to some 
 other foreign country. They remonstrated, therefore, against this 
 prohibition as hurtful to trade. 
 
 They represented, first, that the exportation of gold and silver 
 in order to purchase foreign goods, did not always diminish the 
 quantity of those metals in the kingdom. That, on the contrary, 
 it might frequently increase that quantity; because, if the con- 
 sumption of foreign goods was not thereby increased in the country, 
 those goods might be re-exported to foreign countries, and being 
 there sold for a large profit, might bring back much more treasure 
 than was originally sent out to purchase them. Mr. Mun compares 
 this operation of foreign trade to the seed-time and harvest of agri- 
 culture. l If we only behold,' says he, ' the actions of the husband- 
 man in the seed-time, when he casteth away much good corn into 
 the ground, we shall account him rather a madman than a husband- 
 man. But when we consider his labours in the harvest, which is 
 the end of his endeavours, we shall find the worth and plentiful 
 increase of his actions.' l 
 
 They represented, secondly, that this prohibition could not hinder 
 the exportation of gold and silver, which, on account of the small- 
 ness of their bulk in proportion to their value, could easily be 
 smuggled abroad. That this exportation could only be prevented 
 by a proper attention to what they called the balance of trade. 
 That when the country exported to a greater value than it imported, 
 a balance became due to it from foreign nations, which was neces- 
 sarily paid to it in gold and silver, and thereby increased the quan- 
 tity of those metals in the kingdom. But that when it imported 
 to a greater value than it exported, a contrary balance became due 
 to foreign nations, which was necessarily paid to them in the same 
 manner, and thereby diminished that quantity. That in this case 
 to prohibit the exportation of those metals could not prevent it, but 
 only, by making it more dangerous, render it more expensive. That 
 the exchange was thereby turned more against the country which 
 owed the balance than it otherwise might have been ; the merchant 
 
 1 Treasure b} Foreign Trade, p. 50.
 
 CHAP. i. THE WEALTH OF NATIONS. 5 
 
 who purchased a bill upon the foreign country being obliged to pay 
 the banker who sold it, not only for the natural risk, trouble, and 
 expense of sending the money thither, but for the extraordinary risk 
 arising from the prohibition. But that the more the exchange was 
 against any country, the more the balance of trade became neces- 
 sarily against it ; the money of that country becoming necessarily of 
 so much less value, in comparison with that of the country to which 
 the balance was due. That if the exchange between England and 
 Holland, for example, was five per cent, against England, it would 
 require a hundred and five ounces of silver in England to purchase 
 a bill for a hundred ounces of silver in Holland : that a hundred 
 and five ounces of silver in England, therefore, would be worth only 
 a hundred ounces of silver in Holland, and would purchase only a 
 proportionable quantity of Dutch goods : but that a hundred ounces 
 of silver in Holland, on the contrary, would be worth a hundred 
 and five ounces in England, and would purchase a proportionable 
 quantity of English goods : that the English goods which were sold 
 to Holland would be sold so much cheaper ; and the Dutch goods 
 which were sold to England, so much dearer, by the difference of 
 the exchange; that the one would draw so much less Dutch money 
 to England, and the other so much more English money to Holland, 
 as this difference amounted to : and that the balance of trade, there- 
 fore, would necessarily be so much more against England, and 
 would require a greater balance of gold and silver to be exported 
 to Holland. 
 
 Those arguments were partly solid and partly sophistical. They 
 were solid so far as they asserted that the exportation of gold and 
 silver in trade might frequently be advantageous to the country. 
 They were solid too in asserting that no prohibition could prevent 
 their exportation, when private people found any advantage in 
 exporting them. But they were sophistical in supposing, that 
 either to preserve or to augment the quantity of those metals 
 required more the attention of Government, than to preserve or 
 to augment the quantity of any other useful commodities, which 
 the freedom of trade, without any such attention, never fails to 
 supply in the proper quantity. They were sophistical too, perhaps, 
 in asserting that the high price of exchange necessarily increased 
 what they called the unfavourable balance of trade, or occasioned 
 the exportation of a greater quantity of gold and silver. That
 
 6 THE NATURE AND CAUSES OF BOOK iv. 
 
 high price, indeed, was extremely disadvantageous to the mer- 
 chants who had any money to pay in foreign countries. They 
 paid so much dearer for the bills which their bankers granted 
 them upon those countries. But though the risk arising from 
 the prohibition might occasion some extraordinary expense to the 
 bankers, it would not necessarily carry any more money out of 
 the country. This expense would generally be all laid out in 
 the country, in smuggling the money out of it, and could seldom 
 occasion the exportation of a single sixpence beyond the precise 
 sum drawn for. The high price of exchange too would naturally 
 dispose the merchants to endeavour to make their exports nearly 
 balance their imports, in order that they might have this high 
 exchange to pay upon as small a sum as possible. The high 
 price of exchange, besides, must necessarily have operated as a 
 tax, in raising the price of foreign goods, and thereby diminishing 
 their consumption. It would tend, therefore, not to increase but 
 to diminish what they called the unfavourable balance of trade, and 
 consequently the exportation of gold and silver. 
 
 Such as they were, however, those arguments convinced the 
 people to whom they were addressed. They were addressed by 
 merchants to parliaments, and to the councils of princes, to nobles 
 and to country gentlemen ; by those who were supposed to under- 
 stand trade, to those who were conscious to themselves that they 
 knew nothing about the matter. That foreign trade enriched 
 the country, experience demonstrated to the nobles and country 
 gentlemen, as well as to the merchants ; but how, or in what 
 manner, none of them well knew. The merchants knew perfectly 
 in what manner it enriched themselves. It was their business 
 to know it. But to know in what manner it enriched the country, 
 was no part of their business. This subject never came into their 
 consideration but when they had occasion to apply to their country 
 fur some change in the laws relating to foreign trade. It then 
 became necessary to say something about the beneficial effects of 
 foreign trade, and the manner in which those effects were obstructed 
 by the laws as they then stood. To the judges who were to decide 
 the business, it appeared a most satisfactory account of the matter, 
 when they were told that foreign trade brought money into the 
 country, but that the laws in question hindered it from bringing 
 so much as it otherwise would 'do. Those arguments therefore
 
 CHAP. i. THE WEALTH OF NA TIONS. 7 
 
 produced the wished-for effect. The prohibition of exporting gold 
 and silver was in France and England confined to the coin of 
 those respective countries. The exportation of foreign coin and 
 of bullion was made free. In Holland, and in some other places, 
 this liberty was extended even to the coin of the country. The 
 attention of Government was turned away from guarding against 
 the exportation of gold and silver, to watch over the balance of 
 trade, as the only cause which could occasion any augmentation 
 or diminution of those metals. From one fruitless care it was 
 turned away to another care much more intricate, much more 
 embarrassing, and just equally fruitless. The title of Mun's book, 
 England's Treasure in Foreign Trade, became a fundamental maxim 
 in the political economy, not of England only, but of all other com- 
 mercial countries. The inland or home trade, the most important 
 of all, the trade in which an equal capital affords the greatest 
 revenue, and creates the greatest employment to the people of the 
 country, 1 was considered as subsidiary only to foreign trade. It 
 neither brought money into the country, it was said, nor carried 
 any out of it. The country, therefore, could never become either 
 richer or poorer by means of it, except so far as its prosperity or 
 decay might indirectly influence the state of foreign trade. 
 
 A country that has no mines of its own must undoubtedly draw 
 its gold and silver from foreign countries, in the same manner 
 as one that has no vineyards of its own must draw its wines. 
 It does not seem necessary, however, that the attention of Govern- 
 ment should be more turned towards the one than towards the 
 other object. A country that has wherewithal to buy wine, will 
 always get the wine which it has occasion for; and a country 
 that has wherewithal to buy gold and silver, will never be in want 
 of those metals. They are to be bought for a certain price like 
 all other commodities, and as they are the price of all other com- 
 modities, so all other commodities are the price of those metals. 
 We trust with perfect security that the freedom of trade, without 
 any attention of Government, will always supply us with the wine 
 which we have occasion for ; and we may trust with equal security 
 that it will always supply us with all the gold and silver which 
 
 1 This contrast of home and foreign dustry affords the greatest revenue and 
 
 trade to the advantage of the former is the greatest employment wliich suits a 
 
 suggested by the economists from whom community best. 
 Smith learnt his principles. That in-
 
 8 THE NATURE AND CAUSES OF BOOK iv. 
 
 we can afford to purchase or to employ, either in circulating our 
 commodities, or in other uses. 
 
 The quantity of every commodity which human industry can either 
 purchase or produce, naturally regulates itself in every country accord- 
 ing to the effectual demand, or according to the demand of those who 
 are willing to pay the whole rent, labour, and profits which must 
 be paid in order to prepare and bring it to market. But no com- 
 modities regulate themselves more easily or more exactly according 
 to this effectual demand than gold and silver ; because, on account 
 of the small bulk and great value of those metals, no commodities 
 can be more easily transported from one place to another, from the 
 places where they are cheap to those where they are dear, from 
 the places where they exceed, to those where they fall short of this 
 effectual demand. If there was in England, for example, an effectual 
 demand for an additional quantity of gold, a packet-boat could bring 
 from Lisbon, or from wherever else it was to be had, fifty tons of 
 gold, which could be coined into more than five millions of guineas. 
 But if there was an effectual demand for grain to the same value, 
 to import it would require, at five guineas a ton, a million of tons 
 of shipping, or a thousand ships of a thousand tons each. The navy 
 of England would not be sufficient. 1 
 
 When the quantity of gold and silver imported into any country 
 exceeds the effectual demand, no vigilance of Government can pre- 
 vent their exportation. All the sanguinary laws of Spain and 
 Portugal are not able to keep their gold and silver at home. The 
 continual importations from Peru and Brazil exceed the effectual 
 demand of those countries, and sink the price of those metals there 
 below that in the neighbouring countries. If, on the contrary, in 
 any particular country their quantity fell short of the effectual de- 
 mand, so as to raise their price above that of the neighbouring 
 countries, the Government would have no occasion to take any pains 
 to import them. If it was even to take pains to prevent their im- 
 portation, it would not be able to effectuate it. Those metals, when 
 the Spartans had the wherewithal to purchase them, broke through 
 all the barriers which the laws of Lycurgus opposed to their entrance 
 in Lacedemon. All the sanguinary laws of the customs are not able 
 to prevent the importation of the teas of the Dutch and Gottenburg 
 
 1 At present (1880) the tonnage of the mercantile marine of England is about 
 seven millions.
 
 CHAP. i. THE WEALTH OF NATIONS. 9 
 
 East India Companies, because somewhat cheaper than those of the 
 British Company. A pound of tea, however, is about a hundred 
 times the bulk of one of the highest prices, sixteen shillings, that is 
 commonly paid for it in silver, and more than two thousand times 
 the bulk of the same price in gold, and consequently just so many 
 times more difficult to smuggle. 
 
 It is partly owing to the easy transportation of gold and silver 
 from the places where they abound to those where they are wanted, 
 that the price of those metals does not fluctuate continually like that 
 of the greater part of other commodities, which are hindered by their 
 bulk from shifting their situation, when the market happens to be 
 either over or understocked with them. The price of those metals, 
 indeed, is not altogether exempted from variation, but the changes 
 to which it is liable are generally slow, gradual, and uniform. In 
 Europe, for example, it is supposed, without much foundation, per- 
 haps, that, during the course of the present and preceding century, 
 they have been constantly, but gradually, sinking in their value, on 
 account of the continual importations from the Spanish West Indies. 
 But to make any sudden change in the price of gold and silver, so 
 as to raise or lower at once, sensibly and remarkably, the money 
 price of all other commodities, requires such a revolution in commerce 
 as that occasioned by the discovery of America. 
 
 If, notwithstanding all this, gold or silver should at any time fall 
 short in a country which has wherewithal to purchase them, there 
 are more expedients for supplying their place than that of almost 
 any other commodity. If the materials of manufacture are wanted, 
 industry must stop. If provisions are wanted, the people must 
 starve. But if money is wanted, barter will supply its place, though 
 with a good deal of inconveniency. Buying and selling upon credit, 
 and the different dealers compensating their credits with one another, 
 once a month or once a year, will supply it with less inconveniency. 
 A well-regulated paper money will supply it, not only without in- 
 conveniency, but, in some cases, with some advantages. Upon every 
 account, therefore, the attention of Government never was so un- 
 necessarily employed as when directed to watch over the preserva- 
 tion or increase of the quantity of money in any country. 
 
 No complaint, however, is more common than that of a scarcity 
 of money. Money, like wine, must always be scarce with those who 
 have neither wherewithal to buy it, nor credit to borrow it. Those
 
 10 THE NATURE AND CAUSES OF BOOK rv. 
 
 who have either, will seldom be in want either of the money or of 
 the wine which they have occasion for. This complaint, however, 
 of the scarcity of money, is not always confined to improvident 
 spendthrifts. It is sometimes general through a whole town, and 
 the country in its neighbourhood. Overtrading is the common 
 cause of it. Sober men, whose projects have been disproportioned 
 to their capitals, are as likely to have neither wherewithal to buy 
 money, nor credit to borrow it, as prodigals whose expense has been 
 disproportioned to their revenue. Before their projects can be 
 brought to bear, their stock is gone, and their credit with it. They 
 run about everywhere to borrow money, and everybody tells them 
 that they have none to lend. Even such general complaints of the 
 scarcity of money do not always prove that the usual number of 
 gold and silver pieces are not circulating in the country, but that 
 many people want those pieces who have nothing to give for them. 
 When the profits of trade happen to be greater than ordinary, over- 
 trading becomes a general error both among great and small dealers. 
 They do not always send more money abroad than usual, but they 
 buy upon credit both at home and abroad, an unusual quantity of 
 goods, which they send to some distant market, in hopes that the 
 returns will come in before the demand for payment. The demand 
 comes before the returns, and they have nothing at hand with 
 which they can either purchase money, or give solid security for 
 borrowing. It is not any scarcity of gold and silver, but the diffi- 
 culty which such people find in borrowing, and which their creditors 
 find in getting payment, that occasions the general complaint of the 
 scarcity of money. l 
 
 It would be too ridiculous to go about seriously to prove that 
 wealth does not consist in money, or in gold and silver, but in what 
 money purchases, and is valuable only for purchasing. Money, no 
 doubt, makes always a part of the national capital; but it has already 
 been shown that it generally makes but a small part, and always 
 the most unprofitable part of it. 
 
 It is not because wealth consists more essentially in money than 
 in goods, that the merchant finds it generally more easy to buy 
 goods with money than to buy money with goods ; but because 
 money is the known and established instrument of commerce, for 
 
 1 The confusion between private and public losses is a constant source of fallacies 
 in political economy.
 
 CHAP. i. THE WEALTH OF NATIONS. 11 
 
 which everything- is readily given in exchange, but which is not 
 always with equal readiness to be got in exchange for everything-. 
 The greater part of goods besides are more perishable than money, 
 and he may frequently sustain a much greater loss by keeping them. 
 When his goods are upon hand too, he is more liable to such de- 
 mands for money as he may not be able to answer, than when he 
 has got their price in his coffers. Over and above all this, his profit 
 arises more directly from selling than from buying, and he is upon 
 all these accounts generally much more anxious to exchange his 
 goods for money than his money for goods. But though a particular 
 merchant, with abundance of goods in his warehouse, may some- 
 times be ruined by not being able to sell them in time, a nation or 
 country is not liable to the same accident. The whole capital of a 
 merchant frequently consists in perishable goods destined for purchas- 
 ing money. But it is but a very small part of the annual produce 
 of the land and labour of a country which can ever be destined for 
 purchasing gold and silver from their neighbours. The far greater 
 part is circulated and consumed among themselves ; and even of 
 the surplus which is sent abroad, the greater part is generally des- 
 tined for the purchase of other foreign goods. Though gold and 
 silver, therefore, could not be had in exchange for the goods destined 
 to purchase them, the nation would not be ruined. It might, indeed, 
 suffer some loss and inconveniency, and be forced upon some of 
 those expedients which are necessary for supplying the place of 
 money. The annual produce of its land and labour, however, would 
 be the same, or very nearly the same, as usual, because the same, or 
 very nearly the same consumable capital would be employed in 
 maintaining it. And though goods do not always draw money so 
 readily as money draws goods, in the long-run they draw it more 
 necessarily than even it draws them. Goods can serve many other 
 purposes besides purchasing money, but money can serve no other 
 purpose besides purchasing goods. Money, therefore, necessarily 
 runs after goods, but goods do not always or necessarily run after 
 money. The man who buys, does not always mean to sell again, 
 but frequently to use or to consume ; whereas he who sells always 
 means to buy again. The one may frequently have done the whole, 
 but the other can never have done more than the one-half of his 
 business. It is not for its own sake that men desire money, but for 
 the sake of what they can purchase with it.
 
 12 THE NATURE AND CAUSES OF BOOK iv. 
 
 Consumable commodities, it is said, are soon destroyed ; whereas 
 gold and silver are of a more durable nature, and, were it not for 
 this continual exportation, mig-ht be accumulated for ages together, 
 to the incredible augmentation of the real wealth of the country. 
 Nothing, therefore, it is pretended, can be more disadvantageous to 
 any country than the trade which consists in the exchange of such 
 lasting for such perishable commodities. We do not, however, 
 reckon that trade disadvantageous which consists in the exchange 
 of the hardware of England for the wines of France ; and yet 
 hardware is a very durable commodity, and was it not for this 
 continual exportation, might too be accumulated for ages together, 
 to the incredible augmentation of the pots and pans of the country. 
 But it readily occurs that the number of such utensils is in every 
 country necessarily limited by the use which there is for them ; 
 that it would be absurd to have more pots and pans than were 
 necessary for cooking the victuals usually consumed there; and 
 that if the quantity of victuals were to increase, the number of 
 pots and pans would readily increase along with it, a part of the 
 increased quantity of victuals being employed in purchasing them, 
 or in maintaining an additional number of workmen whose business 
 it was to make them. It should as readily occur that the quantity 
 of gold and silver is in every country limited by the use which 
 there is for those metals ; that their use consists in circulating 
 commodities as coin, and in affording a species of household 
 furniture as plate ; that the quantity of coin in every country is 
 regulated by the value of the commodities which are to be circu- 
 lated by it : increase that value, and immediately a part of it will 
 be sent abroad to purchase, wherever it is to be had, the additional 
 quantity of coin requisite for circulating them : that the quantity 
 of plate is regulated by the number and wealth of those private 
 families who choose to indulge themselves in that sort of magni- 
 ficence : increase the number and wealth of such families, and a 
 part of this increased wealth will most probably be employed in 
 purchasing, wherever it is to be found, an additional quantity of 
 plate: that to attempt to increase the wealth of any country, either 
 by introducing or by detaining in it an unnecessary quantity of 
 gold and silver, is as absurd as it would be to attempt to increase the 
 good cheer of private families, by obliging them to keep an un- 
 necessary number of kitchen utensils. As the expense of purchas-
 
 CHAP. i. THE WEALTH OF NATIONS. 13 
 
 ing- those unnecessary utensils would diminish instead of increasing 
 either the quantity or goodness of the family provisions, so the 
 expense of purchasing- an unnecessary quantity of gold and silver 
 must, in every country, as necessarily diminish the wealth which 
 feeds, clothes, and lodges, which maintains and employs the people. 
 Gold and silver, whether in the shape of coin or of plate, are utensils, 
 it must be remembered, as much as the furniture of the kitchen. 
 Increase the use for them, increase the consumable commodities 
 which are to be circulated, managed, and prepared by means of 
 them, and you will infallibly increase the quantity ; but if you 
 attempt, by extraordinary means, to increase the quantity, you will 
 as infallibly diminish the use and even the quantity too, which in 
 those metals can never be greater than what the use requires. 
 Were they ever to be accumulated beyond this quantity, their 
 transportation is so easy, and the loss which attends their lying 
 idle and unemployed so great, that no law could prevent their being 
 immediately sent out of the country. 
 
 It is not always necessary to accumulate gold and silver in order 
 to enable a country to carry on foreign wars, and to maintain fleets 
 and armies in distant countries. Fleets and armies are maintained, 
 not with gold and silver, but with consumable goods. The nation 
 which, from the annual produce of its domestic industry, from the 
 annual revenue arising out of its lands, labour, and consumable 
 stock, has wherewithal to purchase those consumable goods in 
 distant countries, can maintain foreign wars there. 
 
 A nation may purchase the pay and provisions of an army in 
 a distant country three different ways : by sending abroad either, 
 first, some part of its accumulated gold and silver ; or, secondly, 
 some part of the annual produce of its manufactures ; or, last of all, 
 some part of its annual rude produce. 
 
 The gold and silver which can properly be considered as accumu- 
 lated or stored up in any country, may be distinguished into three 
 parts : first, the circulating money ; secondly, the plate of private 
 families ; and, last of all, the money which may have been collected 
 by many years' parsimony, and laid up in the treasury of the prince. 
 
 It can seldom happen that such can be spared from the circu- 
 lating money of the country ; because in that there can seldom be 
 much redundancy. The value of goods annually bought and sold 
 in any country requires a certain quantity of money to circulate
 
 14 ' THE NATURE AND CAUSES OF BOOK iv. 
 
 and distribute them to their proper consumers, and can give 
 employment to no more. The channel of circulation necessarily 
 draws to itself a sum sufficient to fill it, and never admits any 
 more. Something, however, is generally withdrawn from this 
 channel in the case of foreign war. By the great number of 
 people who are maintained abroad, few are maintained at home. 
 Fewer goods are circulated there, and less money becomes necessary 
 to circulate them. An extraordinary quantity of paper money, of 
 some sort or other too, such as Exchequer notes, navy bills, and 
 bank bills in England, is generally issued upon such occasions, 
 and, by supplying the place of circulating gold and silver, gives an 
 opportunity of sending a greater quantity of it abroad. All this, 
 however, could afford but a poor resource for maintaining a foreign 
 war, of great expense and several years' duration. 
 
 The melting down the plate of private families has upon every 
 occasion been found a still more insignificant one. The French, in 
 the beginning of the last war, did not derive so much advantage 
 from this expedient as to compensate the loss of the fashion. 
 
 The accumulated treasures of the prince have, in former times, 
 afforded a much greater and more lasting resource. In the present 
 times, if you except the King of Prussia, to accumulate treasure 
 seems to be no part of the policy of European princes. 
 
 The funds which maintained the foreign wars of the present 
 century, the most expensive perhaps which history records, seem 
 to have had little dependency upon the exportation either of the 
 circulating money, or of the plate of private families, or of the 
 treasure of the prince. The last French war cost Great Britain 
 upwards of ninety millions, including not only the seventy-five 
 millions l of new debt that was contracted, but the additional two 
 shillings in the pound land-tax, and what was annually borrowed of 
 the sinking fund. More than two-thirds of this expense was laid 
 out in foreign countries ; in Germany, Portugal, America, in the 
 ports of the Mediterranean, in the East and West Indies. The 
 kings of England had no accumulated treasure. We never hear 
 of any extraordinary quantity of plate being melted down. The 
 circulating gold and silver of the country had not been supposed 
 to exceed eighteen millions. Since the late re-coinage of the gold, 
 
 1 The actual addition, according to Grellier's History of the National Debt, p. 261, 
 was 63,020,716.
 
 CHAP. i. THE WEALTH OF NATIONS. 15 
 
 however, it is believed to have been a good deal underrated. Let 
 us suppose, therefore, according to the most exaggerated computa- 
 tion which I remember to have either seen or heard of, that, gold and 
 silver together, it amounted to thirty millions. 1 Had the war been 
 carried on by means of our money, the whole of it must, even accord- 
 ing to this computation, have been sent out and returned again at 
 least twice, in a period of between six and seven years. Should 
 this be supposed, it would afford the most decisive argument to de- 
 monstrate how unnecessary it is for Government to watch over the 
 preservation of money, since upon this supposition the whole money 
 of the country must have gone from it and returned to it again, 
 two different times in so short a period, without anybody's know- 
 ing anything of the matter. The channel of circulation, however, 
 never appeared more empty than usual during any part of this 
 period. Few people wanted money who had wherewithal to pay 
 for it. The profits of foreign trade, indeed, were greater than usual 
 during the whole war, but especially towards the end of it. This 
 occasioned, what it always occasions, a general overtrading in all 
 the ports of Great Britain ; and this again occasioned the usual 
 complaint of the scarcity of money, which always follows over- 
 trading. Many people wanted it, who had neither wherewithal to 
 buy it, nor credit to borrow it ; and because the debtors found it 
 difficult to borrow, the creditors found it difficult to get payment. 
 Gold and silver, however, were generally to be had for their value, 
 by those who had that value to give for them. 
 
 The enormous expense of the late war, therefore, must have been 
 chiefly defrayed, not by the exportation of gold and silver, but by 
 that of British commodities of some kind or other. When the 
 Government, or those who acted under them, contracted with a 
 merchant for a remittance to some foreign country, he would 
 naturally endeavour to pay his foreign correspondent, upon whom 
 he had granted a bill, by sending abroad rather commodities than 
 gold and silver. If the commodities of Great Britain were not in 
 demand in that country, he would endeavour to send them to some 
 other country, in which he could purchase a bill upon that country. 
 The transportation of commodities, when properly suited to the 
 market, is always attended with a considerable profit ; whereas that 
 
 1 In 1856 Mr. Newmarch, Hist, of Prices, vi. 703, estimated the gold currency of the 
 United Kingdom at seventy-five millions.
 
 16 THE NATURE AND CAUSES OF BOOK iv. 
 
 of gold and silver is scarce ever attended with any. When those 
 metals are sent abroad in order to purchase foreign commodities, 
 the merchant's profit arises, not from the purchase, but from the 
 sale of the returns. But when they are sent abroad merely to pay 
 a debt, he gets no returns, and consequently no profit. He 
 naturally, therefore, exerts his invention to find out a way of paying 
 his foreign debts, rather by the exportation of commodities than 
 by that of gold and silver. The great quantity of British goods 
 exported during the course of the late war, without bringing back 
 any returns, is accordingly remarked by the author of The Present 
 State of the Nation. 1 
 
 Besides the three sorts of gold and silver above mentioned, there 
 is in all great commercial countries a good deal of bullion alternately 
 imported and exported for the purposes of foreign trade. This 
 bullion, as it circulates among different commercial countries in the 
 same manner as the national coin circulates in every particular 
 country, may be considered as the money of the great mercantile 
 republic. The national coin receives its movement and direction 
 from the commodities circulated within the precincts of each par- 
 ticular country : the money of the mercantile republic, from those 
 circulated between different countries. Both are employed in 
 facilitating exchanges, the one between different individuals of the 
 same, the other between those of different nations. Part of this 
 money of the great mercantile republic may have been, and prob- 
 ably was, employed in carrying on the late war. In time of a 
 general war, it is natural to suppose that a movement and direction 
 should be impressed upon it different from what it usually follows in 
 profound peace ; that it should circulate more about the seat of the 
 war, and be more employed in purchasing there, and in the neigh- 
 bouring countries, the pay and provisions of the different armies. 
 But whatever part of this money of the mercantile republic, Great 
 Britain may have annually employed in this manner, it must have 
 been annually purchased, either with British commodities, or with 
 something else that had been purchased with them ; which still 
 brings us back to commodities, to the annual produce of the land 
 and labour of the country, as the ultimate resources which enabled 
 us to carry on the war. It is natural indeed to suppose that so 
 great an annual expense must have been defrayed from a great 
 1 The author of this tract is said to have been Erasmus Philips.
 
 CHAP. r. THE WEALTH OF NATIONS. 17 
 
 annual produce. The expense of 1761, for example, amounted to 
 more than nineteen millions. No accumulation could have sup- 
 ported so great an annual profusion. There is no annual produce 
 even of gold and silver which could have supported it. The whole 
 gold and silver annually imported into both Spain and Portugal, 
 according to the best accounts, does not commonly much exceed six 
 millions sterling, which, in some years, would scarce have paid four 
 months' expense of the late war. 
 
 The commodities most proper for being transported to distant 
 countries, in order to purchase there, either the pay and provisions 
 of an army, or some part of the money of the mercantile republic 
 to be employed in purchasing them, seem to be the finer and more 
 improved manufactures ; such as contain a great value in a small 
 bulk, and can, therefore, be exported to a great distance at little 
 expense. A country whose industry produces a great annual sur- 
 plus of such manufactures, which are usually exported to foreign 
 countries, may carry on for many years a very expensive foreign 
 war, without either exporting any considerable quantity of gold and 
 silver, or even having any such quantity to export. A considerable 
 part of the annual surplus of its manufactures must, indeed, in this 
 case be exported, without bringing back any returns to the country, 
 though it does to the merchant ; the government purchasing of the 
 merchant his bills upon foreign countries, in order to purchase 
 there the pay and provisions of an army. Some part of this sur- 
 plus, however, may still continue to bring back a return. The 
 manufacturers, during the war, will have a double demand upon 
 them, and be called upon, first, to work up goods to be sent abroad, 
 for paying the bills drawn upon foreign countries for the pay and 
 provisions of the army; and, secondly, to work up such as are 
 necessary for purchasing the common returns that had usually been 
 consumed in the country. In the midst of the most destructive 
 foreign war, therefore, the greater part of manufactures may fre- 
 quently flourish greatly; and, on the contrary, they may decline 
 on the return of the peace. They may flourish amidst the ruin of 
 their country, and begin to decay upon the return of its prosperity. 
 The different state of many different branches of the British manu- 
 factures during the late war, and for some time after the peace, 
 may serve as an illustration of what has been just now said l . 
 
 1 Nothing is more frequently commented on, during the continuance of 
 VOL. II. C
 
 18 THE NATURE AND CAUSES OF BOOK iv. 
 
 No foreign war of great expense or duration could conveniently 
 be carried on by the exportation of the rude produce of the soil. 
 The expense of sending such a quantity of it to a foreign countiy 
 as might purchase the pay and provisions of an army, would be too 
 great \ Few countries too produce much more rude produce than 
 what is sufficient for the subsistence of their own inhabitants. 
 To send abroad any great quantity of it, therefore, would be to send 
 abroad a part of the necessary subsistence of the people. It is other- 
 wise with the exportation of manufactures. The maintenance of 
 the people employed in them is kept at home, and only the surplus 
 part of their work is exported. Mr. Hume frequently takes notice 
 of the inability of the ancient kings of England to carry on, without 
 interruption, any foreign war of long duration. The English, in 
 those days, had nothing wherewithal to purchase the pay and pro- 
 visions of their armies in foreign countries, but either the rude 
 produce of the soil, of which no considerable part could be spared 
 from the home consumption, or a few manufactures of the coarsest 
 kind, of which, as well as of the rude produce, the transportation 
 was too expensive. This inability did not arise from the want of 
 money, but of the finer and more improved manufactures. Buying 
 and selling was transacted by means of money in England then, 
 as well as now. The quantity of circulating money must have 
 borne the same proportion to the number and value of purchases 
 and sales usually transacted at that time, which it does to those 
 transacted at present ; or rather it must have borne a greater pro- 
 portion, because there was then no paper, which now occupies a 
 
 great war, than the apparent prosperity error of believing that a season of war 
 of certain manufactures, and the general could ever be a season of prosperity, 
 activity of industry. During the Ameri- * This depends on the character of the 
 can civil war, there were people who rude produce. It would be possible, did 
 believed that the country was richer for the country in question supply a large 
 its waste. The fact is, there is great amount of precious or valuable metals 
 activity in production, for armies must from its mines. It would be possible, if 
 be maintained under circumstances in the rude produce were of great value and 
 which profusion is inevitable, and conse- in great demand. Thus, for example, the 
 quently there is a great demand for the wool of England was a rude produce 
 production of commodities. The charge in the middle ages, which undoubtedly 
 incurred is generally met in modern gave a monarch like Edward the Third 
 times by loans, the raising of which do great facilities for carrying on his cam- 
 not require any immediate sacrifice. But paigns. So the cotton of the United 
 when the demand ceases, a reaction States was, and would still be, as im- 
 ensues, and the manufacturer has to portant an article of export for the pur- 
 contend against a failing market and in- pose of meeting bills drawn on foreign 
 creased taxation. Were it not for the countries by those who negotiate loans, 
 practice of carrying on war by incurring as the manufactures of many other 
 debt, no country would ever fall into the countries would be.
 
 CHAP. i. TUE WEALTH OF NATIONS. 19 
 
 great part of the employment of gold and silver. Among nations 
 to whom commerce and manufactures are little known, the sove- 
 reign, upon extraordinary occasions, can seldom draw any consider- 
 able aid from his subjects, for reasons which shall be explained 
 hereafter. It is in such countries, therefore, that he generally 
 endeavours to accumulate a treasure, as the only resource against 
 such emergencies. Independent of this necessity, he is in such a 
 situation naturally disposed to the parsimony requisite for accu- 
 mulation. In that simple state, the expense even of a sovereign 
 is not directed by the vanity which delights in the gaudy finery of 
 a court, but is employed in bounty to his tenants and hospitality to 
 his retainers. But bounty and hospitality very seldom lead to ex- 
 travagance, though vanity almost always does. Every Tartar chief, 
 accordingly, has a treasure. The treasures of Mazeppa, chief of the 
 Cossacks in the Ukraine, the famous ally of Charles XII, are said to 
 have been very great. The French kings of the Merovingian race 
 had all treasures. When they divided their kingdom among their 
 different children, they divided their treasure too. The Saxon princes, 
 and the first kings after the Conquest, seem likewise to have accu- 
 mulated treasures. The first exploit of every new reign was com- 
 monly to seize the treasure of the preceding king, as the most 
 essential measure for securing the succession. The sovereigns of 
 improved and commercial countries are not under the same necessity 
 of accumulating treasures, because they can generally draw from 
 their subjects extraordinary aids upon extraordinary occasions. 
 They are likewise less disposed to do so. They naturally, perhaps 
 necessarily, follow the mode of the times, and their expense comes 
 to be regulated by the same extravagant vanity which directs that 
 of all the other great proprietors in their dominions. The insig- 
 nificant pageantry of their court becomes every day more brilliant, 
 and the expense of it not only prevents accumulation, but frequently 
 encroaches upon the funds destined for more necessary expenses. 
 What Dercyllidas said of the court of Persia may be applied to that 
 of several European princes, that he saw there much splendour but 
 little strength, and many servants but few soldiers. 
 
 The importation of gold and silver is not the principal, much 
 less the sole benefit which a nation derives from its foreign trade. 
 Between whatever places foreign trade is carried on, they all of 
 them derive two distinct benefits from it. It carries out that
 
 20 THE NATURE AND CAUSES OF BOOK IT. 
 
 surplus part of the produce of their land and labour for which there 
 is no demand among them, and brings back in return for it some- 
 thing else for which there is a demand. It gives a value to their 
 superfluities, by exchanging them for something else, which may 
 satisfy a part -of their wants, and increase their enjoyments. By 
 means of it, the narrowness of the home market does not hinder 
 the division of labour in any particular branch of art or manufacture 
 from being carried to the highest perfection. By opening a more 
 extensive market for whatever part of the produce of their labour 
 may exceed the home consumption, it encourages them to improve 
 its productive powers, and to augment its annual produce to the 
 utmost, and thereby to increase the real revenue and wealth of the 
 society. These great and important services foreign trade is con- 
 tinually occupied in performing, to all the different countries 
 between which it is carried on. They all derive great benefit from 
 it, though that in which the merchant resides generally derives the 
 greatest, as he is generally more employed in supplying the wants 
 and carrying out the superfluities of his own, than of any other 
 particular country. To import the gold and silver which may be 
 wanted, into the countries which have no mines, is, no doubt, a part 
 of the business of foreign commerce. It is, however, a most in- 
 significant part of it. A country which carried on foreign trade 
 merely upon this account, could scarce have occasion to freight a 
 ship in a century. 
 
 It is not by the importation of gold and silver that the disco veiy 
 of America has enriched Europe. By the abundance of the American 
 mines, those metals have become cheaper. A service of plate can 
 now be purchased for about a third part of the corn, or a third part 
 of the labour, which it would have cost in the fifteenth century. 
 With the same annual expense of labour and commodities, Europe 
 can annually purchase about three times the quantity of plate 
 which it could have purchased at that time. But when a com- 
 modity comes to be sold for a third part of what had been its usual 
 price, not only those who purchased it before can purchase three 
 times their former quantity, but it is brought down to the level of 
 a much greater number of purchasers ; perhaps to more than ten, 
 perhaps to more than twenty times the former number. So that 
 there may be in Europe at present not only more than three times, 
 but more than twenty or thirty times the quantity of plate which
 
 CHAP. i. THE WEALTH OF NATIONS. 21 
 
 would have been in it, even in its present state of improvement, 
 had the discovery of the American mines never been made. So far 
 Europe has, no doubt, gained a real conveniency, though surely a 
 very trifling one. The cheapness of gold and silver renders those 
 metals rather less fit for the purposes of money than they were 
 before. In order to make the same purchases, we must load our- 
 selves with a greater quantity of them, and carry about a shilling 
 in our pocket where a groat would have done before. It is difficult 
 to say which is most trifling this inconveniency, or the opposite 
 conveniency. Neither the one non the other could have made any 
 very essential change in the state of Europe. The discovery of 
 America, however, certainly made a most essential one. By opening 
 a new and inexhaustible market to all the commodities of Europe, 
 it gave occasion to new divisions of labour and improvements of art, 
 which, in the narrow circle of the ancient commerce, could never 
 have taken place for want of a market to take off the greater part 
 of their produce. The productive powers of labour were improved, 
 and its produce increased in all the different countries of Europe, 
 and together with it the real revenue and wealth of the inhabitants. 
 The commodities of Europe were almost all new to America, and 
 many of those of America were new to Europe. A new set of 
 exchanges, therefore, began to take place which had never been 
 thought of before, and which should naturally have proved as 
 advantageous to the new, as it certainly did to the old continent. 
 The savage injustice of the Europeans rendered an event, which 
 ought to have been beneficial to all, ruinous and destructive to 
 several of those unfortunate countries. 
 
 The discovery of a passage to the East Indies, by the Cape of 
 Good Hope, which happened much about the same time, opened, 
 perhaps, a still more extensive range to foreign commerce than even 
 that of America, notwithstanding the greater distance. There were 
 but two nations in America, in any respect superior to savages, and 
 these were destroyed almost as soon as discovered. The rest were 
 mere savages. But the empires of China, Hindostan, Japan, as well 
 as several others in the East Indies, without having richer mines of 
 gold or silver, were in every other respect much richer, better cul- 
 tivated, and more advanced in all arts and manufactures than either 
 Mexico or Peru, even though we should credit, what plainly deserve? 
 no credit, the exaggerated accounts of the Spanish writers concerning
 
 22 THE NATURE AND CAUSES OF BOOK iv. 
 
 the ancient state of those empires. But rich and civilised nations 
 can always exchange to a much greater value with one another 
 than with savages and barbarians. Europe, however, has hitherto 
 derived much less advantage from its commerce with the East 
 Indies than from that with America. The Portuguese monopo- 
 lised the East Indian trade to themselves for about a century, and 
 it was only indirectly and through them that the other nations of 
 Europe could either send out or receive any goods from that 
 country. When the Dutch, in the beginning of the last century, 
 began to encroach upon them, they vested their whole East India 
 commerce in an exclusive company. The English, French, Swedes, 
 and Danes have all followed their example, so that no great nation 
 in Europe has ever yet had the benefit of a free commerce to the 
 East Indies. No other reason need be assigned why it has never 
 been so advantageous as the trade to America, which, between 
 almost every nation of Europe and its own colonies, is free to all its 
 subjects. The exclusive privileges of those East India companies, 
 their great riches, the great favour and protection which these have 
 procured them from their respective governments, have excited 
 much envy against them. This envy has frequently represented 
 their trade as altogether pernicious, on account of the great quanti- 
 ties of silver which it every year exports from the countries from 
 which it is carried on. The parties concerned have replied, that 
 their trade, by this continual exportation of silver, might, indeed, 
 tend to impoverish Europe in general, but not the particular country 
 from which it was carried on ; because, by the exportation of a part 
 of the returns to other European countries, it annually brought 
 home a much greater quantity of that metal than it carried out. 
 Both the objection and the reply are founded in the popular notion 
 which I have been just now examining. It is, therefore, unneces- 
 sary to say anything further about either. By the annual exporta- 
 tion of silver to the East Indies, plate is probably somewhat dearer 
 in Europe than it otherwise might have been, and coined silver 
 probably purchases a larger quantity both of labour and commodi- 
 ties. The former of these two effects is a very small loss, the latter 
 a very small advantage ; both too insignificant to deserve any part 
 of the public attention. The trade to the East Indies, by opening a 
 market to the commodities of Europe, or, what comes nearly to the 
 same thing, to the gold and silver which is purchased with those
 
 CHAP. r. THE WEALTH OF NATIONS. 23 
 
 commodities, must necessarily tend to increase the annual production 
 of European commodities, and consequently the real wealth and 
 revenue of Europe. That it has hitherto increased them so little, is 
 probably owing to the restraints which it everywhere labours under. 
 
 I thought it necessary, though at the hazard of being tedious, to 
 examine at full length this popular notion, that wealth consists in 
 money, or in gold and silver. Money in common language, as I 
 have already observed, frequently signifies wealth ; and this ambi- 
 guity of expression has rendered this popular notion so familiar to 
 us, that even they who are convinced of its absurdity are very apt 
 to forget their own principles, and in the course of their reasonings 
 to take it for granted as a certain and undeniable truth. Some of the 
 best English writers upon commerce set out with observing, that 
 the wealth of a country consists, not in its gold and silver only, but 
 in its lands, houses, and consumable goods of all different kinds. In 
 the course of their reasonings, however, the lands, houses, and con- 
 sumable goods seem to slip out of their memory, and the strain of 
 their argument frequently supposes that all wealth consists in gold 
 and silver, and that to multiply those metals is the great object of 
 national industry and commerce. 
 
 The two principles being established, however, that wealth con- 
 sisted in gold and silver, and that those metals could be brought 
 into a country which had no mines only by the balance of trade, or 
 by exporting to a greater value than it imported, it necessarily 
 became the great object of political economy to diminish as much as 
 possible the importation of foreign goods for home consumption, 
 and to increase as much as possible the exportation of the produce 
 of domestic industry. Its two great engines for enriching the 
 country, therefore, were restraints upon importation, and encourage- 
 ments to exportation. 
 
 The restraints upon importation were of two kinds. 
 
 First, restraints upon the importation of such foreign goods for 
 home consumption as could be produced at home, from whatever 
 country they were imported. 
 
 Secondly, restraints upon the importation of goods of almost all 
 kinds from those particular countries with which the balance of trade 
 was supposed to be disadvantageous. 
 
 Those different restraints consisted sometimes in high duties, and 
 sometimes in absolute prohibitions.
 
 24 THE NATURE AND CAUSES OF BOOK iv. 
 
 Exportation was encouraged sometimes by drawbacks, sometimes 
 by bounties, sometimes by advantageous treaties of commerce with 
 sovereign states, and sometimes by the establishment of colonies in 
 distant countries. 
 
 Drawbacks were given upon two different occasions. When the 
 home manufactures were subject to any duty or excise, either the 
 whole or a part of it was frequently drawn back upon their ex- 
 portation ; and when foreign goods liable to a duty were imported 
 in order to be exported again, either the whole or a part of this 
 duty was sometimes given back upon such exportations. 
 
 Bounties were given for the encouragement either of some begin- 
 ning manufactures, or of such sorts of industry of other kinds as 
 were supposed to deserve particular favour. 
 
 By advantageous treaties of commerce, particular privileges were 
 procured in some foreign state for the goods and merchants of the 
 country, beyond what were granted to those of other countries. 
 
 By the establishment of colonies in distant countries, not only 
 particular privileges but a monopoly was frequently procured for 
 the goods and merchants of the country which established them. 
 
 The two sorts of restraints upon importation above mentioned, 
 together with these four encouragements to exportation, constitute 
 the six principal means by which the commercial system proposes 
 to increase the quantity of gold and silver in any country by turning 
 the balance of trade in its favour. I shall consider each of them in 
 a particular chapter, and, without taking much further notice of 
 their supposed tendency to bring money into the country, I shall 
 examine chiefly what are likely to be the effects of each of them 
 upon the annual produce of its industry. According as they tend 
 either to increase or diminish the value of this annual produce, they 
 must evidently tend either to increase or diminish the real wealth 
 and revenue of the country.
 
 CHAP. n. THE WEALTH OF NATIONS. 25 
 
 CHAPTER II. 
 
 OF RESTRAINTS UPON THE IMPORTATION FROM FOREIGN COUNTRIES 
 OF SUCH GOODS AS CAN BE PRODUCED AT HOME. 
 
 BY restraining, either by high duties, or by absolute prohibitions, 
 the importation of such goods from foreign countries as can 
 be produced at home, the monopoly of the home market is more or 
 less secured to the domestic industry employed in producing them. 
 Thus the prohibition of importing either live cattle or salt provisions 
 from foreign countries secures to the graziers of Great Britain the 
 monopoly of the home market for butcher's-meat. The high duties 
 upon the importation of corn, which in times of moderate plenty 
 amount to a prohibition, give a like advantage to the growers of 
 that commodity. The prohibition of the importation of foreign 
 woollens is equally favourable to the woollen manufactures. The 
 silk manufacture, though altogether employed upon foreign ma- 
 terials, has lately obtained the same advantage. The linen manu- 
 facture has not yet obtained it, but is making great strides towards 
 it. Many other sorts of manufacturers have, in the same manner, 
 obtained in Great Britain, either altogether, or very nearly a 
 monopoly against their countrymen. The variety of goods of which 
 the importation into Great Britain is prohibited, either absolutely, 
 or under certain circumstances, greatly exceeds what can easily be 
 suspected by those who are not well acquainted with the laws of 
 the customs. 
 
 That this monopoly of the home market frequently gives great 
 encouragement to that particular species of industry which enjoys 
 it, and frequently turns towards that employment a greater share of 
 both the labour and stock of the society than would otherwise have 
 gone to it, cannot be doubted. But whether it tends either to 
 increase the general industry of the society, or to give it the most 
 advantageous direction, is not, perhaps, altogether so evident. 
 
 The general industry of the society never can exceed what the 
 capital of the society can employ. As the number of workmen that 
 can be kept in employment by any particular person must bear
 
 26 THE NATURE AND CAUSES OF BOOK iv. 
 
 a certain proportion to his capital, so the number of those that can 
 be continually employed by all the members of a great society, 
 must bear a certain proportion to the whole capital of that society, 
 and never can exceed that proportion. No regulation of commerce 
 can increase the quantity of industry in any society beyond what 
 its capital can maintain. It can only divert a part of it into a 
 direction into which it might not otherwise have gone ; and it is by 
 no means certain that this artificial direction is likely to 'be more 
 advantageous to the society than that into which it would have 
 gone of its own accord. 
 
 Every individual is continually exerting himself to find out the 
 most advantageous employment for whatever capital he can de- 
 mand. It is his own advantage, indeed, and not that of the society, 
 which he has in view. But the study of his own advantage 
 naturally or rather necessarily, leads him to prefer that employment 
 which is most advantageous to the society. 
 
 First, every individual endeavours to employ his capital as near 
 home as he can, and consequently as much as he can in the support 
 of domestic industry ; provided always that he can thereby obtain 
 the ordinary, or not a great deal less than the ordinary, profits 
 of stock. 
 
 Thus, upon equal or nearly equal profits, every wholesale merchant 
 naturally prefers the home trade to the foreign trade of consump- 
 tion, and the foreign trade of consumption to the carrying trade. 1 
 In the home trade his capital is never so long out of his sight as it 
 frequently is in the foreign trade of consumption. He can know 
 better the character and situation of the persons whom he trusts, 
 and, if he should happen to be deceived, he knows better the laws 
 of the country from which he must seek redress. In the carrying 
 trade, the capital of the merchant is, as it were, divided between 
 two foreign countries, and no part of it is ever necessarily brought 
 home, or placed under his own immediate view and command. 
 The capital which an Amsterdam merchant employs in carrying 
 corn from Konigsberg to Lisbon, and fruit and wine from Lisbon 
 to Konigsberg, must generally be the one half of it at Konigs-; 
 berg and the other half at Lisbon. No part of it need ever come 
 
 1 'Dans un grand e"tat, le commerce des productions nationales.' Turgot, 
 ext^rieure forme un objet trea-modique Commerce des Grains, p. 187. 
 en coinparaison du commerce inturieure
 
 CHAP. ii. THE WEALTH OF NATIONS. 27 
 
 to Amsterdam. The natural residence of such a merchant should 
 either be at Konigsberg or Lisbon, and it can only be some very 
 particular circumstance which can make him prefer the residence of 
 Amsterdam. The uneasiness, however, which he feels at being- 
 separated so far from his capital, generally determines him to bring 
 part both of the Konigsberg goods which he destines for the 
 market of Lisbon, and of the Lisbon goods which he destines for 
 that of Konigsberg, to Amsterdam; and though this necessarily 
 subjects him to a double charge of loading and unloading, as well as 
 to the payment of some duties and customs, yet for the sake of 
 having some part of his capital always under his own view and 
 command, he willingly submits to this extraordinary charge ; and 
 it is in this manner that every country which has any considerable 
 share of the carrying trade, becomes always the emporium, or 
 general market, for the goods of all the different countries whose 
 trade it carries on. The merchant, in order to save a second 
 loading and unloading, endeavours always to sell in the home 
 market as much of the goods of all those different countries as 
 he can, and thus, so far as he can, to convert his carrying trade 
 into a foreign trade of consumption. A merchant, in the same 
 manner, who is engaged in the foreign trade of consumption, when 
 he collects goods for foreign markets, will always be glad, upon 
 equal or nearly equal profits, to sell as great a part of them at home 
 as he can. He saves himself the risk and trouble of exportation, 
 when, so far as he can, he thus converts his foreign trade of 
 consumption into a home trade. Home is in this manner the 
 centre, if I may say so, round which the capitals of the inhabitants 
 of every country are continually circulating, and towards which 
 they are always tending, though by particular causes they may 
 sometimes be driven off and repelled from it towards more distant 
 employments. But a capital employed in the home trade, it has 
 already been shown, necessarily puts into motion a greater quan- 
 tity of domestic industry, and gives revenue and employment to a 
 greater number of the inhabitants of the country, than an equal 
 capital employed in the foreign trade of consumption ; and one 
 employed in the foreign trade of consumption has the same ad- 
 vantage over an equal capital employed in the carrying trade. 
 Upon equal, or only nearly equal profits, therefore, every individual 
 naturally inclines to employ his capital in the manner in which
 
 &8 THE NATURE AND CAUSES OF BOOK iv. 
 
 it is likely to afford the greatest support to domestic industry, and 
 to give revenue and employment to the greatest number of people 
 of his own country. 
 
 Secondly, every individual who employs his capital in the support 
 of domestic industry, necessarily endeavours so to direct that 
 industry, that its produce may be of the greatest possible value. 
 
 The produce of industry is what it adds to the subject or ma- 
 terials upon which it is employed. In proportion as the value of 
 this produce is great or small, so will likewise be the profits of the 
 employer. But it is only for the sake of profit that any man 
 employs a capital in the support of industry ; and he will always, 
 therefore, endeavour to employ it in the support of that industry of 
 which the produce is likely to be of the greatest value, or to 
 exchange for the greatest quantity either of money or of other 
 goods. 
 
 But the annual revenue of every society is always precisely equal 
 to the exchangeable value of the whole annual produce of its 
 industry, or rather is precisely the same thing with that exchange- 
 able value. As every individual, therefore, endeavours as much 
 as he can both to employ his capital in the support of domestic 
 industry, and so to direct that industry that its produce may be of 
 the greatest value, every individual necessarily labours to render 
 the annual revenue of the society as great as he can. He gene- 
 v rally, indeed, neither intends to promote the public interest, nor 
 knows how much he is promoting it. By preferring the support of 
 domestic to that of foreign industry, he intends only his own 
 Security ; and by directing that industry in such a manner as its 
 produce may be of the greatest value, he intends only his own gain, 
 and he is in this, as in many other cases, led by an invisible hand 
 to promote an end which was no part of his intention. Nor is it 
 always the worse for the society that it was no part of it. By 
 pursuing his own interest he frequently promotes that of the 
 society more effectually than when he really intends to promote it. 
 I have never known much good done by those who affected to 
 trade for the public good. It is an affectation, indeed, not very 
 common among merchants, and very few words need be employed 
 in dissuading them from it. 
 
 What is the species of domestic industry which his capital can 
 employ, and of which the produce is likely to be of the greatest
 
 CfHAP. ii. THE WEALTH OF NATIONS. 29. 
 
 value, every individual, it is evident, can, in his local situation, 
 judge much better than any statesman or lawgiver can do for him. 
 The statesman, who should attempt to direct private people in what 
 manner they ought to employ their capitals, would not only load 
 himself with a most unnecessary attention, but assume an authority 
 which could safely be trusted, not only to no single person, but to 
 no council or senate whatever, and which would nowhere be so 
 dangerous as in the hands of a man who had folly and presumption 
 enough to fancy himself fit to exercise it. 
 
 To give the monopoly of the home market to the produce of domestic 
 industry, in any particular art or manufacture, is in some measure 
 to direct private people in what manner they ought to employ their 
 capitals, and must, in almost all cases, be either a useless or a 
 hurtful regulation. If the produce of domestic can be brought 
 there as cheap as that of foreign industry, the regulation is evidently 
 useless. If it cannot, it must generally be hurtful. It is the maxim 
 of every prudent master of a family, never to attempt to make at 
 home what it will cost him more to make than to buy. The tailor 
 does not attempt to make his own shoes, but buys them of the 
 shoemaker. The shoemaker does not attempt to make his own 
 clothes, but employs a tailor. The farmer attempts to make 
 neither the one nor the other, but employs those different artificers. 
 All of them find it for their interest to employ their whole industry 
 in a way in which they have some advantage over their neighbours, 
 and to purchase with a part of its produce, or, what is the same 
 thing, with the price of a part of it, whatever else they have occa- 
 sion for. 
 
 What is prudence in the conduct of every private family, can 
 scarce be folly in that of a great kingdom. If a foreign country 
 can supply us with a commodity cheaper than we ourselves can 
 make it, better buy it of them with some part of the produce of our 
 own industry, employed in a way in which we have some advantage. 
 The general industry of the country, being always in proportion to 
 the capital which employs it, will not thereby be diminished, no 
 more than that of the above-mentioned artificers, but only left 
 to find out the way in which it can be employed with the greatest 
 advantage. It is certainly not employed to the greatest advantage, 
 when it is thus directed towards an object which it can buy cheaper 
 than it can make. The value of its animal produce is certainly
 
 30 THE NATURE AND CAUSES OF BOOK iv. 
 
 more or less diminished, when it is thus turned away from producing 
 commodities evidently of more value than the commodity which it 
 is directed to produce. According to the supposition, that com- 
 '^modity could be purchased from foreign countries cheaper than 
 it can be made at home. It could, therefore, have been purchased 
 with a part only of the commodities, or, what is the same thing, 
 with a part only of the price of the commodities, which the industry 
 employed by an equal capital would have produced at home, had it 
 been left to follow its natural course. The industry of the country, 
 therefore, is thus turned away from a more to a less advan- 
 tageous employment, and the exchangeable value of its annual 
 produce, instead of being increased, according to the intention of 
 the lawgiver, must necessarily be diminished by every such regu- 
 lation. 
 
 By means of such regulations, indeed, a particular manufacture 
 may sometimes be acquired sooner than it could have been otherwise, 
 and after a certain time may be made at home as cheap or cheaper 
 than in the foreign country. But though the industry of the 
 society may be thus carried with advantage into a particular 
 channel sooner than it could have been otherwise, it will by no 
 means follow that the sum total, either of its industry or of its 
 revenue, can ever be augmented by any such regulation. The 
 industry of the society can augment only in proportion as its 
 capital augments, and its capital can augment only in proportion to 
 what can be gradually saved out of its revenue. But the immediate 
 effect of every such regulation is to diminish its revenue, and what 
 diminishes its revenue is certainly not very likely to augment its 
 capital faster than it would have augmented of its own accord, 
 had both capital and industry been left to find out their natural 
 employments. 
 
 Though for want of such regulations the society should never 
 acquire the proposed manufacture, it would not, upon that account, 
 necessarily be the poorer in any one period of its duration. In 
 every period of its duration its whole capital and industry might 
 still have been employed, though upon different objects, in the 
 manner that was most advantageous at the time. In every period 
 its revenue might have been the greatest which its capital could 
 afford, and both capital and revenue might have been augmented 
 with the greatest possible rapidity.
 
 CHAP. ii. THE WEALTH OF NATIONS. 31 
 
 The natural advantages which one country has over another in 
 producing particular commodities are sometimes so great, that it is 
 acknowledged by all the world to be in vain to struggle with them. 
 By means of glasses, hot-beds, and hot-walls, very good grapes can 
 be raised in Scotland, and very good wine too can be made of them, 
 at about thirty times the expense for which at least equally good 
 can be brought from foreign countries. Would it be a reasonable 
 law to prohibit the importation of all foreign wines, merely to 
 encourage the making of claret and burgundy in Scotland? But if 
 there would be a manifest absurdity in turning towards any employ- 
 ment thirty times more of the capital and industry of the country 
 than would be necessary to purchase from foreign countries an 
 equal quantity of the commodities wanted, there must be an ab- 
 surdity, though not altogether so glaring, yet exactly of the same 
 kind, in turning towards any such employment a thirtieth or even 
 a three-hundredth part more of either. Whether the advantages 
 which one country has over another be natural or acquired, is in this 
 respect of no consequence. As long as the one country has those 
 advantages and the other wants them, it will always be more 
 advantageous for the latter rather to buy of the former than to 
 make. It is an acquired advantage only which one artificer has 
 over his neighbour who exercises another trade ; and yet they both 
 find it more advantageous to buy of one another than to make what 
 does not belong to their particular trades. 
 
 Merchants and manufacturers are the people who derive the 
 greatest advantage from this monopoly of the home market. 1 The 
 prohibition of the importation of foreign cattle and of salt pro- 
 visions, together with the high duties upon foreign corn, which in 
 times of moderate plenty amount to a prohibition, are not near so 
 advantageous to the graziers and farmers of Great Britain as other 
 regulations of the same kind are to its merchants and manufac- 
 
 1 A merchant or manufacturer will get but his aggregate profit will be no higher 
 
 no special advantage from the monopoly than that in unprotected trades, if indeed 
 
 alluded to, unless the trade or production they be not reduced below it, owing to 
 
 is limited to a fixed number of persons. the over-estimate people ordinarily make 
 
 If the trade is aided by the monopoly, about the advantages of a protected 
 
 and competition within the trade is free, trade. It was because the monopoly of 
 
 the increased rate of profit will attract Protection was found to be no advantage 
 
 other traders to the occupation, and re- to the manufacturers, that these persona 
 
 duce the actual profit to the ordinary early moved against it. The case was 
 
 level. Upon each transaction the trader different with the landowners, 
 may procure an advanced rate of profit,
 
 32 THE NATURE AND CAUSES OF BOOK iv. 
 
 turers. Manufactures, those of the finer kind especially, are more 
 easily transported from one country to another than corn or cattle. 
 It is in the fetching and carrying- manufactures, accordingly, that 
 foreign trade is chiefly employed. In manufactures, a very small 
 advantage will enable foreigners to undersell our own workmen, 
 even in the home market. It will require a very great one to 
 enable them to do so in the rude produce of the soil. If the free 
 importation of foreign manufactures was permitted, several of the 
 home manufactures would probably suffer, and some of them 
 perhaps go to ruin altogether, and a considerable part of the stock 
 and industry at present employed in them would be forced to find 
 out some other employment. But the freest importation of the 
 rude produce of the soil could have no such effect upon the agri- 
 culture of the country. 
 
 If the importation of foreign cattle, for example, was made ever 
 so free, so few could be imported that the grazing trade of Great 
 Britain could be little affected by it. Live cattle are, perhaps, the 
 only commodity of which the transportation is more expensive by 
 sea than by land. By land, they carry themselves to market. By 
 sea, not only the cattle but their food and their water too must be 
 carried at no small expense and inconveniency. The short sea 
 between Ireland and Great Britain, indeed, renders the importation 
 of Irish cattle more easy. But though the free importation of them, 
 which was lately permitted only for a limited time, were rendered 
 perpetual, it could have no considerable effect upon the interest of 
 the graziers of Great Britain. Those parts of Great Britain which 
 border upon the Irish Sea are all grazing countries. Irish cattle 
 could never be imported for their use, but must be drove through 
 those very extensive countries, at no small expense and inconveni- 
 ency, before they could arrive at their proper market. Fat cattle 
 could not be drove so far. Lean cattle therefore only could be 
 imported, and such importation could interfere, not with the 
 interest of the feeding or fattening countries, to which, by reducing 
 the price of lean cattle, it would rather be advantageous, but with 
 that of the breeding countries only. The small number of Irish 
 cattle imported since their importation was permitted, together 
 with the good price at which lean cattle continue to .sell, seem to 
 demonstrate that even the breeding countries of Great Britain are 
 never likely to be much affected by the free importation of Irish
 
 CHAP. ii. THE WEALTH OF NATIONS. 33 
 
 cattle. The common people of Ireland, indeed, are said to have 
 sometimes opposed with violence the exportation of their cattle. 
 But if the exporters had found any great advantage in continuing 
 the trade, they could easily, when the law was on their side, have 
 conquered this mobbish opposition. 
 
 Feeding and fattening countries, besides, must always be highly 
 improved, whereas breeding countries are generally uncultivated. 
 The high price of lean cattle, by augmenting the value of unculti- 
 vated land, is like a bounty against improvement. To any country 
 which was highly improved throughout, it would be more advan- 
 tageous to import its lean cattle than to breed them. The province 
 of Holland, accordingly, is said to follow this maxim at present. 
 The mountains of Scotland, Wales, and Northumberland, indeed, 
 are countries not capable of much improvement, and seem destined 
 by nature to be the breeding countries of Great Britain. The 
 freest importation of foreign cattle could have no other effect than 
 to hinder those breeding countries from taking advantage of the 
 increasing population and improvement of the rest of the kingdom, 
 from raising their price to an exorbitant height, and from laying 
 a real tax upon all the more improved and cultivated parts of the 
 country. 
 
 The freest importation of salt provisions, in the same manner, 
 could have as little effect upon the interest of the graziers of Great 
 Britain as that of live cattle. Salt provisions are not only a very 
 bulky commodity, but when compared with fresh meat they are a 
 commodity both of worse quality, and as they cost more labour and 
 expense, of higher price. They could never, therefore, come into 
 competition with the fresh meat, though they might with the salt 
 provisions of the country. They might be used for victualling 
 ships for distant voyages, and such like uses, but could never make 
 any considerable part of the food of the people. The small quantity 
 of salt provisions imported from Ireland since their importation 
 was rendered free, is an experimental proof that our graziers have 
 nothing to apprehend from it. It does not appear that the price of 
 butcher's-meat has ever been sensibly affected by it. 
 
 Even the free importation of foreign corn could very little affect 
 the interest of the farmers of Great Britain. Corn is a much more 
 bulky commodity than butcher's-meat. A pound of wheat at a 
 penny is as dear as a pound of butcher's-meat at fourpence. The 
 
 VOL. II. D
 
 34 TEE NATURE AND CAUSES OF BOOK iv. 
 
 small quantity of foreign corn imported even in times of the 
 greatest scarcity, may satisfy our farmers that they can have 
 nothing to fear from the freest importation. The average quantity 
 imported, one year with another, amounts only, according to the 
 very well-informed author of the tracts upon the corn-trade, to 
 twenty-three thousand seven hundred and twenty-eight quarters of 
 all sorts of grain, and does not exceed the five hundred and seventy- 
 first part of the annual consumption. 1 But as the bounty upon 
 corn occasions a greater exportation in years of plenty, so it must of 
 consequence occasion a greater importation in years of scarcity, than 
 in the actual state of tillage would otherwise take place. By means 
 of it, the plenty of one year does not compensate the scarcity of 
 another, and as the average quantity exported is necessarily aug- 
 mented by it, so must likewise, in the actual state of tillage, the 
 average quantity imported. If there was no bounty, as less corn 
 would be exported, so it is probable that, one year with another, 
 less would be imported than at present. The corn-merchants, the 
 fetchers and carriers of corn between Great Britain and foreign 
 countries, would have much less employment, and might suffer 
 considerably; but the country gentlemen and farmers could suffer 
 very little. It is in the corn-merchants, accordingly, rather than 
 in the country gentlemen and farmers, that I have observed the 
 greatest anxiety for the renewal and continuation of the bounty. 2 
 
 Country gentlemen and farmers are, to their great honour, of 
 all people the least subject to the wretched spirit of monopoly. 
 The undertaker of a great manufactory is sometimes alarmed if 
 another work of the same kind is established within twenty miles 
 
 1 The change which has taken place time, imported corn is probably about 
 
 in our time, when as much as 26,000,000 one-half to one-third of that produced at 
 
 quarters of corn have been imported in home. 
 
 one year, is due partly to the demand of 2 The continuance of protection to 
 an increased population, much more to home agriculture during the crisis and 
 the cheapening of freights. This cheapen- after the conclusion of the great conti- 
 ing, again, is partly due to the substi- nental war, must, if Smith's estimate of 
 tution of canals for rivers, and railways what the country gentlemen and farmers 
 for land transport, partly to improve- were in his time be true, have greatly 
 ments in the building and navigation of modified the feelings they previously en- 
 ships, partly to the practical information tertained. It is certain that at and after 
 which is possessed by mariners in our the agitation which brought about the 
 time in hydrography and the physical repeal of the Corn Laws the classes re- 
 characters of the sea. The economies ferred to were violent beyond expression 
 which have been induced by the latter in their advocacy of protection, when the 
 cause are well described in Captain mercantile classes had thoroughly repu- 
 Maury's excellent work on the Physical diated it. 
 Geography of the Sea. At the present
 
 CHAP. ii. THE WEALTH OF NATIONS, 35 
 
 of him. The Dutch undertaker of the woollen manufacture at 
 Abbeville stipulated that no work of the same kind should be 
 established within thirty leagues of that city. Farmers and country 
 gentlemen, on the contrary, are generally disposed rather to pro- 
 mote than to obstruct the cultivation and improvement of their 
 neighbours' farms and estates. They have no secrets, such as those 
 of the greater part of manufacturers, but are generally rather fond 
 of communicating to their neighbours, and of extending as far as 
 possible, any new practice which they have found to be advan- 
 tageous. Pius Questus, says old Cato, 1 stabilissimusque, minimeque 
 invidiosus ; minimeque male cogitantes stmt, qui in eo studio occupati 
 sunt. Country gentlemen and farmers, dispersed in different parts 
 of the country, cannot so easily combine as merchants and manu- 
 facturers, who, being collected into towns and accustomed to that 
 exclusive corporation spirit which prevails in them, naturally en- 
 deavour to obtain against all their countrymen the same exclusive 
 privilege which they generally possess against the inhabitants of 
 their respective towns. They accordingly seem to have been the 
 original inventors of those restraints upon the importation of foreign 
 goods which secure to them the monopoly of the home market. It 
 was probably in imitation of them, and to put themselves upon a 
 level with those who they found were disposed to oppress them, that 
 the country gentlemen and farmers of Great Britain so far forgot 
 the generosity which is natural to their station as to demand the 
 exclusive privilege of supplying their countrymen with corn and 
 butcher's-meat. They did not perhaps take time to consider how 
 much less their interest could be affected by the freedom of trade s 
 than that of the people whose example they followed. 
 
 To prohibit by a perpetual law the importation of foreign corn 
 and cattle is, in reality, to enact that the population and industry of 
 the country shall at no time exceed what the rude produce of its 
 own soil can maintain. 
 
 There seem, however, to be two cases in which it will generally 
 be advantageous to lay some burden upon foreign for the encourage- 
 ment of domestic industry. 
 
 The first is, when some particular sort of industry is necessary 
 for the defence of the country. The defence of Great Britain, for 
 example, depends very much upon the number of its sailors and 
 
 1 De Re Rustica. Prceraium. 
 D 2,
 
 36 THE NATURE AND UAUSJSS OF BOOK iv. 
 
 shipping. The Act of Navigation, therefore, very properly en- 
 deavours to give the sailors and the shipping of Great Britain the 
 monopoly of the trade of their own country, in some cases by abso- 
 lute prohibitions, and in others by heavy burdens upon the shipping 
 of foreign countries. The following are the principal dispositions 
 of this Act. 
 
 First, all ships, of which the owners, masters, and three-fourths 
 of the mariners are not British subjects, are prohibited, upon pain 
 of forfeiting ship and cargo, from trading to the British settlements 
 and plantations, or from being employed in the coasting trade of 
 Great Britain. 
 
 Secondly, a great variety of the most bulky articles of importation 
 can be brought into Great Britain only, either in such ships as are 
 above described, or in ships of the country where those" goods are 
 produced, and of which the owners, masters, and three-fourths of 
 the mariners are of that particular country; and when imported 
 even in ships of this latter kind, they are subject to double aliens- 
 duty. If imported in ships of any other country, the penalty is 
 forfeiture of ship and goods. When this Act was made, the Dutch 
 were, what they still are, the great carriers of Europe, and by this 
 regulation they were entirely excluded from being the carriers to 
 Great Britain, or from importing to us the goods of any other 
 European country. 
 
 Thirdly, a great variety of the most bulky articles of importation 
 are prohibited from being imported, even in British ships, from 
 any country but that in which they are produced, under pain of 
 forfeiting ship and cargo. This regulation too was probably in- 
 tended against the Dutch. Holland was then, as now, the great 
 emporium for all European goods, and by this regulation, British 
 ships were hindered from loading in Holland the goods of any other 
 European country. 
 
 Fourthly, salt fish of all kinds, whale-fins, whale-bone, oil, and 
 blubber, not caught by and cured on board British vessels, when 
 imported into Great Britain, are subjected to double aliens-duty. 
 The Dutch, as they are still the principal, were then the only 
 fishers in Europe that attempted to supply foreign nations with 
 fish. By this regulation a very heavy burden was laid upon their 
 supplying Great Britain. 
 
 When the Act of Navigation was made, though England and
 
 CHAP. ii. THE WEALTH OF NATIONS, 37 
 
 Holland were not actually at war, the most violent animosity 
 subsisted between the two nations. It had begun during the 
 government of the Long Parliament, which first framed this Act, 
 and it broke out soon after in the Dutch wars during that of the 
 Protector and of Charles the Second. It is not impossible, there- 
 fore, that some of the regulations of this famous Act may have 
 proceeded from national animosity. They are as wise, however, 
 as if they had all been dictated by the most deliberate wisdom. 
 National animosity at that particular time aimed at the very same 
 object which the most deliberate wisdom would have recommended, 
 the diminution of the naval power of Holland, the only naval power 
 which could endanger the security of England. 1 
 
 The Act of Navigation is not favourable to foreign commerce, 
 or to the growth of that opulence which can arise from it. The 
 interest of a nation in its commercial relations to foreign nations 
 is, like that of a merchant with regard to the different people with 
 whom he deals, to buy as cheap and to sell as dear as possible. 
 But it will be most likely to buy cheap, when by the most perfect 
 freedom of trade it encourages all nations to bring to it the goods 
 which it has occasion to purchase ; and, for the same reason, it will 
 be most likely to sell dear, when its markets are thus filled with 
 the greatest number of buyers. The Act of Navigation, it is true, 
 lays no burden upon foreign ships that come to export the produce 
 of British industry. Even the ancient aliens-duty, which used to 
 be paid upon all goods exported as well as imported, has, by several 
 subsequent Acts, been taken off from the greater part of the 
 articles of exportation. But if foreigners, either by prohibitions or 
 high duties, are hindered from coming to sell, they cannot always 
 afford to come to buy; because, coming without a cargo, they must 
 lose the freight from their own country to Great Britain. By 
 diminishing the number of sellers, therefore, we necessarily diminish 
 that of buyers, and are thus likely not only to buy foreign goods 
 
 1 It is singular that Smith should have coasting trade, has neither checked the 
 deferred so much to municipal prejudice development of the mercantile marine, 
 as to have lauded the navigation laws. nor lessened the supply of sailors available 
 On his own principles, the adoption of for purposes of national defence. One of the 
 the carrying trade will be determined greatest hindrances to the development 
 by the ordinary rules of profit and loss, of the former was a system which prevail- 
 and need not be stimulated by positive ed during the time in which Smith wrote, 
 enactments. The abandonment of these and, for" a long time afterwards, the press- 
 laws in 1 849, as far as foreign trade was gang. The navigation laws certainly did 
 concerned, and in 1854, as regards the not diminish the naval power of Holland.
 
 38 THE NATURE AND CAUSES OF BOOK iv. 
 
 dearer, but to sell our own cheaper, than if there was a more 
 perfect freedom of trade. As defence, however, is of much more 
 importance than opulence, the Act of Navigation is, perhaps, the 
 wisest of all commercial regulations of England. 
 
 The second case, in which it will generally be advantageous to 
 lay some burden upon foreign for the encouragement of domestic 
 industry, is, when some tax is imposed at home upon the produce 
 of the latter. In this case, it seems reasonable that an equal tax 
 should be imposed upon the like produce of the former. This would 
 not give the monopoly of the home market to domestic industry, 
 nor turn towards a particular employment a greater share of the 
 stock and labour of the country than what would naturally go 
 to it. It would only hinder any part of what would naturally 
 go to it from being turned away by the tax into a less natural 
 direction, and would leave the competition between foreign and 
 domestic industry, after the tax, as nearly as possible upon the 
 same footing as before it. In Great Britain, when any such tax 
 is laid upon the produce of domestic industry, it is usual at the 
 tame time, in order to stop the clamorous complaints of our 
 merchants and manufacturers, that they will be undersold at home, 
 to lay a much heavier duty upon the importation of all foreign 
 goods of the same kind. 
 
 This second limitation of the freedom of trade, according to some 
 people, should, upon some occasions, be extended much further than 
 to the precise foreign commodities which could come into com- 
 petition with those which had been taxed at home. When the 
 necessaries of life have been taxed in any country, it becomes 
 proper, they pretend, to tax not only the like necessaries of life 
 imported from other countries, but all sorts of foreign goods which 
 can come into competition with anything that is the produce of 
 domestic industry. Subsistence, they say, becomes necessarily 
 dearer in consequence of such taxes ; and the price of labour must 
 always rise with the price of the labourer's subsistence. Every 
 commodity, therefore, which is the produce of domestic industry, 
 though not immediately taxed itself, becomes dearer in consequence 
 of such taxes, because the labour which produces it becomes so. 
 Such taxes, therefore, are really equivalent, they say, to a tax upon 
 every particular commodity produced at home. In order to put 
 domestic upon the same footing with foreign industry, therefore,
 
 CHAP. ii. THE WEALTH OF NATIONS. 39 
 
 it becomes necessary, they think, to lay some duty upon every 
 foreign commodity, equal to this enhancement of the price of the 
 home commodities with which it can come into competition. 
 
 Whether taxes upon the necessaries of life, such as those in 
 Great Britain upon soap, salt, leather, candles, &c. necessarily raise 
 the price of labour, and consequently that of all other commodities, 
 I shall consider hereafter, when I come to treat of taxes. Sup- 
 posing-, however, in the meantime, that they have this effect, and 
 they have it undoubtedly, this general enhancement of the price 
 of all commodities, in consequence of that of labour, is a case which 
 differs in the two following respects from that of a particular 
 commodity, of which the price was enhanced by a particular tax 
 immediately imposed upon it. 
 
 First, it might always be known with great exactness how far 
 the price of such a commodity could be enhanced by such a tax ; 
 but how far the general enhancement of the price of labour might 
 affect that of every different commodity, about which labour was 
 employed, could never be known with any tolerable exactness. It 
 would be impossible, therefore, to proportion with any tolerable 
 exactness the tax upon every foreign, to this enhancement of the 
 price of every home commodity. 
 
 Secondly, taxes upon the necessaries of life have nearly the same 
 effect upon the circumstances of the people as a poor soil and a 
 bad climate. Provisions are thereby rendered dearer in the same 
 manner as if it required extraordinary labour and expense to raise 
 them. As in the natural scarcity arising from soil and climate, 
 it would be absurd to direct the people in what manner they ought 
 to employ their capitals and industry, so is it likewise in the 
 artificial scarcity arising from such taxes. To be left to accom- 
 modate, as well as they could, their industry to their situation, and 
 to find out those employments in which, notwithstanding their 
 unfavourable circumstances, they might have some advantage either 
 in the home or in the foreign market, is what in both cases would 
 evidently be most for their advantage. To lay a new tax upon 
 them, because they are already overburdened with taxes, and because 
 they already pay too dear for the necessaries of life, to make them 
 likewise pay too dear for the greater part of other commodities, is 
 certainly a most absurd way of making amends. 
 
 Such taxes, when they have grown up to a certain height, are a
 
 40 THE MATURE AMD CA USffS OF BOOK iv. 
 
 curse equal to the barrenness of the earth and the inclemency of the 
 heavens; and yet it is in the richest and most industrious countries 
 that they have been most generally imposed. No other countries 
 could support so great a disorder. As the strongest bodies only 
 can live and enjoy health under an unwholesome regimen, so the 
 nations only, that in every sort of industry have the greatest natural 
 and acquired advantages, can subsist and prosper under such taxes. 
 Holland is the country in Europe in which they abound most, and 
 which from peculiar circumstances continues to prosper, not by means 
 of them, as has been most absurdly supposed, but in spite of them. 
 
 As there are two cases in which it will generally be advantageous 
 to lay some burden upon foreign, for the encouragement of domestic 
 industry, so there are two others in which it may sometimes be a 
 matter of deliberation : in the one, how far it is proper to continue 
 the free importation of certain foreign goods ; and in the other, 
 how far or in what manner it may be proper to restore that free 
 importation after it has been for some time interrupted. 
 
 The case in which it may sometimes be a matter of deliberation 
 how far it is proper to continue the free importation of certain 
 foreign goods, is, when some foreign nation restrains by high duties, 
 or prohibitions the importation of some of our manufactures into 
 their country. Revenge in this case naturally dictates retaliation, 
 and that we should impose the like duties and prohibitions upon 
 the importation of some or all of their manufactures into ours. 
 Nations, accordingly, seldom fail to retaliate in this manner. The 
 French have been particularly forward to favour their own manu- 
 factures by restraining the importation of such foreign goods as 
 could come into competition with them. In this consisted a great 
 part of the policy of M. Colbert, who, notwithstanding his great 
 abilities, seems in this case to have been imposed upon by the 
 sophistry of merchants and manufacturers, who are always de- 
 manding a monopoly against their countrymen. It is at present 
 the opinion of the most intelligent men in France that his operations 
 of this kind have not been beneficial to his country. That minister, 
 by the tariff of 1667, imposed very high duties upon a great number 
 of foreign manufactures. Upon his refusing to moderate them in 
 favour of the Dutch, they in 1671 prohibited the importation of 
 the wines, brandies, and manufactures of France. The war of 1672 
 seems to have been in part occasioned by this commercial dispute.
 
 CHAP. ii. THE WEALTH OF NATIONS. 41 
 
 The peace of Nimeguen put an end to it in 1678, by moderating 
 some of those duties in favour of the Dutch, who in consequence 
 took off their prohibition. It was about the same time that the 
 French and English began mutually to oppress each other's industry, 
 by the like duties and prohibitions, of which the French, however, 
 seem to have set the first example. The spirit of hostility which 
 has subsisted between the two nations ever since, has hitherto 
 hindered them from being moderated on either side. In 1697 the 
 English prohibited the importation of bone-lace, the manufacture of 
 Flanders. The Government of that country, at that time under the 
 dominion of Spain, prohibited in return the importation of English 
 woollens. In 1 700, the prohibition of importing bone-lace into Eng- 
 land was taken off, upon condition that the importation of English 
 woollens into Flanders should be put on the same footing as before. 
 There may be good policy in retaliations of this kind, when there 
 is a probability that they will procure the repeal of the high duties 
 or prohibitions complained of. The recovery of a great foreign 
 market will generally more than compensate the transitory incon- 
 veniency of paying dearer during a short time for some sorts of 
 goods. To judge whether such retaliations are likely to produce 
 such an effect, does not, perhaps, belong so much to the science of 
 a legislator, whose deliberations ought to be governed by general 
 principles which are always the same, as to the skill of that in- 
 sidious and crafty animal, vulgarly called a statesman or politician, 
 whose councils are directed by the momentary fluctuations of affairs. 
 When there is no probability that any such repeal can be procured, 
 it seems a bad method of compensating the injury done to certain 
 classes of our people, to do another injury ourselves, not only to 
 those classes, but to almost all the other classes of them. When 
 our neighbours prohibit some manufacture of ours, we generally 
 prohibit, not only the same, for that alone would seldom affect them 
 considerably, but some other manufacture of theirs. This may no 
 doubt give encouragement to some particular class of workmen 
 among ourselves, and by excluding some of their rivals, may enable 
 them to raise their price in the home market. Those workmen, 
 however, who suffered by our neighbours' prohibition will not be 
 benefited by ours. On the contrary, they and almost all the other 
 classes of our citizens will thereby be obliged to pay dearer than 
 before for certain goods. Every such law, therefore, imposes a real
 
 42 THE NATURE AND CAUSES OF BOOK iv. 
 
 tax upon the whole country, not in favour of that particular class 
 of workmen who were injured by our neighbours' prohibition, but 
 of some other class. 
 
 The case in which it may sometimes be a matter of deliberation, 
 how far or in what manner it is proper to restore the free import- 
 ation of foreign goods, after it has been for some time interrupted, 
 is, when particular manufactures, by means of high duties or pro- 
 hibitions upon all foreign goods which can come into competition 
 with them, have been so far extended as to employ a great multi- 
 tude of hands. Humanity may in this case require that the free- 
 dom of trade should be restored only by slow gradations, and with 
 a good deal of reserve and circumspection. Were those high duties 
 and prohibitions taken away all at once, cheaper foreign goods of 
 the same kind might be poured so fast into the home market, as to 
 deprive all at once many thousands of our people of their ordinary 
 employment and means of subsistence. The disorder which this 
 would occasion might no doubt be very considerable. It would in 
 all probability, however, be much less than is commonly imagined, 
 for the two following reasons : 
 
 First, all those manufactures, of which any part is commonly ex- 
 ported to other European countries without a bounty, could be very 
 little affected by the freest importation of foreign goods. Such 
 manufactures must be sold as cheap abroad as any other foreign goods 
 of the same quality and kind, and consequently must be sold 
 cheaper at home. They would still, therefore, keep possession of the 
 home market, and though a capricious man of fashion might some- 
 times prefer foreign wares, merely because they were foreign, to 
 cheaper and better goods of the same kind that were made at home, 
 this folly could, from the nature of things, extend to so few, that it 
 could make no sensible impression upon the general employment of 
 the people. But a great part of all the different Branches of our 
 woollen manufacture, of our tanned leather, and of our hardware, are 
 annually exported to other European countries without any bounty, 
 and these are the manufactures which employ the greatest number 
 of hands. The silk, perhaps, is the manufacture which would suffer 
 the most by this freedom of trade, and after it the linen, although 
 the latter much less than the former. 1 
 
 1 Adam Smith has hit on the precise the contingency to which he refers. Up 
 instance which has, in part, illustrated to the negotiation of the French treaty of
 
 CHAP. IT. THE WEALTH OF NATIONS. 43 
 
 Secondly, though a great number of people should, by thus re- 
 storing the freedom of trade, be thrown all at once out of their 
 ordinary employment and common method of subsistence, it would 
 by no means follow that they would thereby be deprived either of 
 employment or subsistence. By the reduction of the army and 
 navy at the end of the late war, more than a hundred thousand 
 soldiers and seamen, a number equal to what is employed in the 
 greatest manufactures, were all at once thrown out of their ordinary 
 employment ; but, though they no doubt suffered some inconve- 
 niency, they were not thereby deprived of all employment and sub- 
 sistence. The greater part of the seamen, it is probable, gradually 
 betook themselves to the merchant-service as they could find occa- 
 sion, and in the meantime both they and the soldiers were absorbed 
 in the great mass of the people, and employed in a great variety 
 of occupations. Not only no great convulsion, but no sensible dis- 
 order aro^e from so great a change in the situation of more than 
 a hundred thousand men, all accustomed to the use of arms, and 
 many of them to rapine and plunder. The number of vagrants was 
 scarce anywhere sensibly increased by it, even the wages of labour 
 were not reduced by it in any occupation, so far as I have been able 
 to learn, except in that of seamen in the merchant-service. But if we 
 compare together the habits of a soldier and of any sort of manu- 
 facturer, we shall find that those of the latter do not tend so much 
 to disqualify him from being employed in a new trade, as those of 
 the former from being employed in any. The manufacturer has 
 always been accustomed to look for his subsistence from his labour 
 only ; the soldier to expect it from his pay. Application and in- 
 dustry have been familiar to the one ; idleness and dissipation to 
 the other. But it is surely much easier to change the direction of 
 industry from one sort of labour to another, than to turn idleness 
 and dissipation to any. To the greater part of manufactures be- 
 sides, it has already been observed, there are other collateral manu- 
 factures of so similar a nature, that a workman can easily transfer 
 his industry from one of them to another. The greater part of such 
 
 1 86 1, foreign silks were loaded with an that of France is, and, besides, there is 
 
 ad valorem duty of fifteen per cent., and no. occupation in which trade disputes 
 
 it is said that the home trade has been have been more destructive than in this, 
 
 seriously injured by the competition. It is certain too that the English silk 
 
 But the English silk trade was never manufacture was on the decline long be- 
 
 healthy. The climate of this country is fore the treaty in question was negotiated, 
 
 not so suitable for this manufacture as or the duty on foreign goods omitted.
 
 44 THE NATURE AND CAUSES OF BOOK iv. 
 
 workmen too are occasionally employed in country labour. The 
 stock which employed them in a particular manufacture before, will 
 still remain in the country to employ an equal number of people in 
 some other way. The capital of the country remaining- the same, 
 the demand for labour will likewise be the same, or very nearly the 
 same, though it may be exerted in different places and for different 
 occupations. Soldiers and seamen, indeed, when discharged from 
 the king's service, are at liberty to exercise any trade, within any 
 town or place in Great Britain and Ireland. Let the same natural 
 liberty of exercising what species of industry they please be re- 
 stored to all his Majesty's subjects, in the same manner as to 
 soldiers and seamen ; that is, break down the exclusive privilege of 
 corporations, and repeal the statute of apprenticeship, both which 
 are real encroachments upon natural liberty, and add to these the 
 repeal of the law of settlements, 1 so that a poor workman, when 
 thrown out of employment, either in one trade or in one place, may 
 seek for it in another trade or in another place, without the fear 
 either of a prosecution or of a removal, and neither the public nor 
 the individuals will suffer much more from the occasional disband- 
 ing some particular class of manufacturers, than from that of sol- 
 diers. Our manufacturers have no doubt great merit with their 
 country, but they cannot have more than those who defend it with 
 their blood, nor deserve to be treated with more delicacy. 
 
 To expect, indeed, that the freedom of trade should ever be en- 
 tirely restored in Great Britain, is as absurd as to expect that an 
 Oceana or Utopia should ever be established in it. 2 Not only the 
 prejudices of the public, but what is much more unconquerable, the 
 private interests of many individuals, irresistibly oppose it. Were 
 the officers of the army to oppose with the same zeal and unanimity 
 any redaction in the number of forces, with which master manufac- 
 turers set themselves against every law that is likely to increase the 
 number of their rivals in the home market ; were the former to 
 
 1 All these restrictions are now abro- public good. v 
 
 gated, except in so far as the regulations 2 This prophecy has been nullified, 
 of trades-unions forbid or discourage the Since 1820, when Vansittart's last vicious 
 employment of artisans who have not budget was promulgated, the country has 
 served an apprenticeship. The right of made rapid strides in the policy of free 
 carrying on certain professions is also trade, and since 1846 has adopted it on 
 put under the condition of incorporation principle. No person, perhaps, has con- 
 in some society. But this restriction is tributed so largely to this result as the 
 always justified under the plea of the author of the Wealth of Nations.
 
 CHAP. ii. THE WEALTH OF NATIONS. 45 
 
 animate their soldiers, in the same manner as the latter inflame 
 their workmen, to attack with violence and outrage the proposers 
 of any such regulation ; to attempt to reduce the army would be as 
 dangerous as it has now become to attempt to diminish in any re- 
 spect the monopoly which our manufacturers have obtained against 
 us. This monopoly has so much increased the number of some 
 particular tribes of them, that, like an overgrown standing army, 
 they have become formidable to the Government, and upon many 
 occasions intimidate the Legislature. The member of Parliament 
 who supports every proposal for strengthening this monopoly, is 
 sure to acquire not only the reputation of understanding trade, but 
 great popularity and influence with an order of men whose numbers 
 and wealth render them of great importance. If he opposes them, 
 on the contrary, and still more if he has authority enough to be 
 able to thwart them, neither the most acknowledged probity, nor 
 the highest rank, nor the greatest public services can protect him 
 from the most infamous abuse and detraction, from personal insults, 
 nor sometimes from real danger, arising from the insolent outrage 
 of furious and disappointed monopolists. 
 
 The undertaker of a great manufacture who, by the home markets 
 being suddenly laid open to the competition of foreigners, should be 
 obliged to abandon his trade, would no doubt suffer very con- 
 siderably. That part of his capital which had usually been em- 
 ployed in purchasing materials and in paying his workmen might, 
 without much difficulty, perhaps, find another employment. But 
 that part of it which was fixed in workhouses, 1 and in the instru- 
 ments of trade, could scarce be disposed of without considerable 
 loss. The equitable regard, therefore, to his interest requires that 
 changes of this kind should never be introduced suddenly, but 
 slowly, gradually, and after a very long warning. The Legislature, 
 were it possible that its deliberations could be always directed, not 
 by the clamorous importunity of partial interests, but by an exten- 
 sive view of the general good, ought upon this very account, perhaps, 
 to be particularly careful neither to establish any new monopolies of 
 this kind, nor to extend further those which are already established. 
 Every such regulation introduces some degree of real disorder into 
 the constitution of the State, which it will be difficult hereafter to 
 cure without occasioning another disorder. 
 
 1 This use of the word, like that of ' undertaker,' is obsolete.
 
 46 THE NATURE AND CAUSES OF BOOK iv. 
 
 How far it may be proper to impose taxes upon the importation 
 of foreign goods, in order, not to prevent their importation, but to 
 raise a revenue for Government, I shall consider hereafter when I 
 come to treat of taxes. Taxes imposed with a view to prevent, or 
 even to diminish importation, are evidently as destructive of the 
 revenue of the customs as of the freedom of trade. 
 
 CHAPTER III. 
 
 OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF 
 GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH 
 WHICH THE BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS. 
 
 PART I. 
 
 Of the Unreasonableness of those Restraints, even upon the Principles 
 of the Commercial System. 
 
 TO lay extraordinary restraints upon the importation of goods 
 of almost all kinds, from those particular countries with 
 which the balance of trade is supposed to be disadvantageous, is 
 the second expedient by which the commercial system proposes to 
 increase the quantity of gold and silver. Thus in Great Britain, 
 Silesia lawns may be imported for home consumption, upon paying 
 certain duties. But French cambrics and lawns are prohibited to 
 be imported, except into the port of London, there to be ware- 
 housed for exportation. Higher duties are imposed upon the wines 
 of France than upon those of Portugal, or indeed of any other 
 country. By what is called the impost 1692, a duty of five-and- 
 twenty per cent., of the rate or value, was laid upon all French 
 goods ; while the goods of other nations were, the greater part of 
 them, subjected to much lighter duties, seldom exceeding five per 
 cent. The wine, brandy, salt and vinegar of France were indeed 
 excepted ; these commodities being subjected to other heavy duties,
 
 CHAP. m. THE WEALTH OF NATIONS. 47 
 
 either by other laws, or by particular clauses of the same law. In 
 ^1696, a second duty of twenty-five per cent., the first not having 
 been thought a sufficient discouragement, was imposed upon all 
 French goods, except brandy ; together with a new duty of five- 
 and-twenty pounds upon the tun of French wine, and another of 
 fifteen pounds upon the tun of French vinegar. French goods 
 have never been omitted in any of those general subsidies, or duties 
 of five per cent., which have been imposed upon all, or the greater 
 part of the goods enumerated in the book of rates. If we count 
 the one-third and two-third subsidies as making a complete subsidy 
 between them, there have been five of these general subsidies ; so 
 that before the commencement of the present war seventy-five per 
 cent, may be considered as the lowest duty, to which the greater 
 part of the goods of the growth, produce, or manufacture of France 
 were liable. But upon the greater part of goods, those duties are 
 equivalent to a prohibition. The French in their turn have, I 
 believe, treated our goods and manufactures just as hardly ; though 
 I am not so well acquainted with the particular hardships which 
 they have imposed upon them. Those mutual restraints have put 
 an end to almost all fair commerce between the two nations, and 
 smugglers are now the principal importers, either of British goods 
 into France, or of French goods into Great Britain. The prin- 
 ciples which I have been examining in the foregoing chapter took 
 their origin from private interest and the spirit of monopoly ; those 
 which I am going to examine in this, from national prejudice and 
 animosity. They are, accordingly, as might well be expected, still 
 more unreasonable. They are so, even upon the principles of the 
 commercial system. 
 
 First, though' it were certain that in the case of a free trade 
 between France and England, for example, the balance would be 
 in favour of France, it would by no means follow that such a trade 
 would be disadvantageous to England, or that the general balance 
 of its whole trade would thereby be turned more against it. If 
 the wines of France are better and cheaper than those of Portugal, 
 or its linens tlian those of Germany, it would be more advantageous 
 for Great Britain to purchase both the wine and the foreign linen 
 which it had occasion for of France, than of Portugal and Germany. 
 Though the value of the annual importations from France would 
 thereby be greatly augmented, the value of the whole annual
 
 48 THE NATURE AND CAUSES OF BOOK iv. 
 
 importations would be diminished, in proportion as the French 
 goods of the same quality were cheaper than those of the other 
 two countries. 1 This would be the case, even upon the supposition 
 that the whole French goods imported were to be consumed in 
 Great Britain. 
 
 But, secondly, a great part of them might be re-exported to 
 other countries, where, being sold with profit, they might bring 
 back a return equal in value, perhaps, to the prime cost of the 
 whole French goods imported. What has frequently been said 
 of the East India trade might possibly be true of the French ; 
 that though the greater part of East India goods were bought with 
 gold and silver, the re-exportation of a part of them to other 
 countries, brought back more gold and silver to that which carried 
 on the trade than the prime cost of the whole amounted to. One 
 of the most important branches of the Dutch trade, at present, 
 consists in the carriage of French goods to other European coun- 
 tries. Some. part even of the French wine drank in Great Britain 
 is clandestinely imported from Holland and Zealand. If there was 
 either a free trade between France and England, or if French goods 
 could be imported upon paying only the same duties as those of 
 other European nations, to be drawn back upon exportation, 
 England might have some share of a trade which is found so 
 advantageous to Holland. 
 
 Thirdly, and lastly, there is no certain criterion by which we can 
 determine on which side what is called the balance between any 
 two countries lies, or which of them exports to the greatest value. 
 National prejudice and animosity, prompted always by the private 
 interest of particular traders, are the principles which generally 
 direct our judgment upon all questions concerning it. There are 
 two criterions, however, which have frequently been appealed to 
 upon such occasions, the Custom-house books and the course of 
 exchange. The Custom-house books, I think, it is now generally 
 
 1 The author is here distinguishing be- hibition of such a trade. The latter may 
 
 tween what is called an adverse balance be and is, apart from the operation of any 
 
 between one country and any other, and system, an indication that a country is 
 
 an adverse balance between one country spending more than it earns or has the 
 
 and all others. The former may and in- means to pay for, except by incurring 
 
 deed does indicate that the trade carried debts, or, as is the case when a country 
 
 on with that individual country is ad- has a balance of consumption against it, 
 
 vantageous, and even on the principles of by exporting securities in order to square 
 
 the mercantile system occasions a less ex- the balance, 
 portation of gold and silver than the pro-
 
 CHAP. fa. THE WEALTH OF NATIONS. 49 
 
 acknowledged, are a very uncertain criterion, on account of the inac- 
 curacy of the valuation at which the greater part of goods are rated 
 in them. The course of exchange is, perhaps, almost equally so. 
 
 When the exchange between two places, such as London and 
 Paris, is at par, it is said to be a sign that the debts due from 
 London to Paris are compensated by those due from Paris to 
 London. On the contrary, when a premium is paid at London 
 for a bill upon Paris, it is said to be a sign that the debts due 
 from London to Paris are not compensated by those due from 
 Paris to London, but that a balance in money must be sent out 
 from the latter place ; for the risk, trouble, and expense of ex- 
 porting which, the premium is both demanded and given. But 
 the ordinary state of debt and credit between those two cities must 
 necessarily be regulated, it is said, by the ordinary course of their 
 dealings with one another. When neither of them imports from 
 the other to a greater amount than it exports to that other, the 
 debts and credits of each may compensate one another. But when 
 one of them imports from the other to a greater value than it exports 
 to that other, the former necessarily becomes indebted to the latter 
 in a greater sum than the latter becomes indebted to it : the debts 
 and credits of each do not compensate one another, and money must 
 be sent out from that place of which the debts overbalance the 
 credits. The ordinary course of exchange, therefore, being an indi- 
 cation of the ordinary state of debt and credit between two places, 
 must likewise be an indication of the ordinary course of their 
 exports and imports, as these necessarily regulate that state. 
 
 But though the ordinary course of exchange should be allowed to 
 be a sufficient indication of the ordinary state of debt and credit 
 between any two places, it would not from thence follow that the 
 balance of trade was in favour of that place which had the ordinary 
 state of debt and credit in its favour. The ordinary state of debt 
 and credit between any two places is not always entirely regulated 
 by the ordinary course of their dealings with one another, but is 
 often influenced by that of the dealings of either with many other 
 places. If it is usual, for example, for the merchants of England 
 to pay for the goods which they buy of Hamburg, Dantzic, Riga, 
 &c. by bills upon Holland, the ordinary state of debt and credit 
 between England and Holland will not be regulated entirely by 
 the ordinary course of the dealings of those two countries with one 
 
 VOL. n. E
 
 50 THE NATURE AND CAUSES OF BOOK iv. 
 
 another, but will be influenced by that of the dealings of England 
 with those other places. England may be obliged to send out 
 every year money to Holland, though its annual exports to that 
 country may exceed very much the annual value of its imports 
 from thence, and though what is called the balance of trade may 
 be very much in favour of England. 
 
 In the way besides in which the par of exchange has hitherto 
 been computed, the ordinary course of exchange can afford no suffi- 
 cient indication that the ordinary state of debt and credit is in 
 favour of that country which seems to have, or which is supposed 
 to have, the ordinary course of exchange in its favour ; or, in other 
 words, the real exchange may be, and, in fact, often is so very 
 different from the computed one, that from the course of the latter 
 no certain conclusion can, upon many occasions, be drawn con- 
 cerning that of the former. 
 
 When for a sum of money paid in England, containing, according 
 to the standard of the English mint, a certain number of ounces of 
 pure silver, you receive a bill for a sum of money to be paid in 
 France, containing, according to the standard of the French mint, 
 an equal number of ounces of pure silver, exchange is said to be 
 at par between England and France. When you pay more, you 
 are supposed to give a premium, and exchange is said to be against 
 England, and in favour of France. W T hen you pay less, you are 
 supposed to get a premium, and exchange is said to be against 
 France, and in favour of England. 
 
 But, first, we cannot always judge of the value of the current 
 money of different countries by the standard of their respective 
 mints. In some it is more, in others it is less worn, clipt, and 
 otherwise degenerated from that standard. But the value of the 
 current coin of every country, compared with that of any other 
 country, is in proportion not to the quantity of pure silver which 
 it ought to contain, but to that which it actually does contain. 
 Before the reformation of the silver coin in King William's time, 
 exchange between England and Holland, computed, in the usual 
 manner, according to the standard of their respective mints, was 
 five-and-twenty per cent, against England. 1 But the value of the 
 
 1 A similarly permanent state of the States. In mercantile and bill transac- 
 
 exchange between country and country, tions, says Mr. Tait, the dollar is valued 
 
 seemingly adverse to one, is that be- at the fixed par of 43. 6d., 444 dollars 44 
 
 tween Great Britain and the United cents being equal to 100. But in the
 
 CHAP. in. THE WEALTH OF NATIONS. 51 
 
 current coin of England, as we learn from Mr. Lowndes, 1 was at 
 that time rather more than five-and-twenty per cent, below its 
 standard value. The real exchange, therefore, may even at that 
 time have been in favour of England, notwithstanding the com- 
 puted exchange was so much against it ; a smaller number of 
 ounces of pure silver, actually paid in England, may have pur- 
 chased a bill for a greater number of ounces of pure silver to be 
 paid in Holland, and the man who was supposed to give, may 
 in reality have got the premium. The French coin was, before the 
 late reformation of the English gold coin, much less worn than the 
 English, and was, perhaps, two or three per cent, nearer its 
 standard. If the computed exchange with France, therefore, was 
 not more than two or three per cent, against England, the real 
 exchange might have been in its favour. Since the reformation 
 of the gold coin, the exchange has been constantly in favour of 
 England, and against France. 
 
 Secondly, in some countries the expense of coinage is defrayed 
 by the Government ; in others, it is defrayed by the private people 
 who carry their bullion to the mint, and the Government even 
 derives some revenue from the coinage. In England, it is de- 
 frayed by the Government, and if you carry a pound weight of 
 standard silver to the mint, you get back sixty-two shillings, con- 
 taining a pound weight of the like standard silver. 2 In France, a 
 duty of eight per cent, is deducted for the coinage, which not only 
 defrays the expense of it, but affords a small revenue to the Go- 
 vernment. In England, as the coinage costs nothing, the current 
 coin can never be much more valuable than the quantity of bullion 
 which it actually contains. In France, the workmanship as you 
 pay for it, adds to the value, in the same manner as to that of 
 wrought plate. A sum of French money, therefore, containing a 
 certain weight of pure silver, is more valuable than a sum of 
 
 Custom-house valuations the pound ster- has been coined into 66 shillings, so that, 
 
 ling is valued at 4 dollars 80 cents, and at five shillings the ounce, the silver coin 
 
 the dollar at 48. 2d., which gives the ap- of this country pays a seignorage of 10 
 
 pearance of a permanent premium in per cent. But silver is not a legal tender 
 
 favour of England of 8| per cent. In to a greater amount than forty shillings, 
 
 reality, of course, this obscurity is merely Gold still pays no seignorage. In France, 
 
 superficial. the seignorage on gold and silver coin 
 
 1 Essay for the Amendment of the is much less than in Smith's time. The 
 Silver Coins. The author wished to make charge for coinage called Retenue is 6 
 the crown pass at 6s. e,d. His arguments francs per kilogramme for gold, and 2 
 were answered by Locke. francs per kilogramme for silver. Tait's 
 
 2 A pound weight of silver since 1816 Modern Cambist. 
 
 2
 
 52 TEE NATURE AND CA USES OF BOOK iv. 
 
 English money containing an equal weight of pure silver, and 
 must require more bullion, or other commodities to purchase it. 
 Though the current coin of the two countries, therefore, were 
 equally near the standards of their respective mints, a sum of 
 English money could not well purchase a sum of French money 
 containing an equal numher of ounces of pure silver, nor con- 
 sequently a bill upon France for such a sum. If for such a bill 
 no more additional money was paid than what was sufficient to 
 compensate the expense of the French coinage, the real exchange 
 might be at par between the two countries, their debts and credits 
 might mutually compensate one another, while the computed ex- 
 change was considerably in favour of France. If less than this 
 was paid, the real exchange might be in favour of England, while 
 the computed was in favour of France. 
 
 Thirdly, and lastly, in some places, as at Amsterdam, Hamburg, 
 Venice, &c., foreign bills of exchange are paid in what they call 
 Bank Money ; while in others, as at London, Lisbon, Antwerp, 
 Leghorn, &c., they are paid in the common currency of the country. 
 What is called bank money is always of more value than the same 
 nominal sum of common currency. A thousand guilders in the 
 bank of Amsterdam, for example, are of more value than a thousand 
 guilders of Amsterdam currency. The difference between them is 
 called the agio of the bank, which, at Amsterdam, is generally 
 about five per cent. Supposing the current money of the two 
 countries equally near to the standard of their respective mints, and 
 that the one pays foreign bills in this common currency, while the 
 other pays them in bank money, it is evident that the computed 
 exchange may be in favour of that which pays in bank money, 
 though the real exchange should be in favour of that which pays 
 in current money ; for the same reason that the computed exchange 
 may be in favour of that which pays in better money, or in money 
 nearer to its own standard, though the real exchange should be in 
 favour of that which pays in worse. The computed exchange, 
 before the late reformation of the gold coin, was generally against 
 London with Amsterdam, Hamburg, Venice, and, I believe, with 
 all other places which pay in what is called bank money. 1 It will 
 
 1 The bank money of these institutions mark is I'J^d., the Currency mark i^\d. 
 has perished with them. The distinction, sterling. The agio is always fluctuating, 
 however, between Banco and Currency because the market price of silver con- 
 still holds at Hamburg, where the Banco stantly varies ; at these terms, however,
 
 CHAP. in. THE WEALTH OF NATIONS. 53 
 
 by no means follow, however, that the real exchange was against it. 
 Since the reformation of the gold coin, it has been in favour of 
 London, even with those places. The computed exchange has 
 generally been in favour of London with Lisbon, Antwerp, Leg- 
 horn, and, if you except France, I believe, with most other parts of 
 Europe that pay in common currency ; and it is not improbable 
 that the real exchange was so too. 
 
 Digression concerning Banks of Deposit, particularly concerning that 
 
 of Amsterdam. 
 
 THE currency of a great state, such as France or England, 
 generally consists almost entirely of its own coin. Should this 
 currency, therefore, be at any time worn, dipt, or otherwise de- 
 graded below its standard value, the state by a reformation of its 
 coin can effectually re-establish its currency. But the currency of 
 a small state, such as Genoa or Hamburg, can seldom consist alto- 
 gether in its own coin, but must be made up, in a great measure, of 
 the coins of all the neighbouring states with which its inhabitants 
 have a continual intercourse. Such a state, therefore, by reforming 
 its coin, will not always be able to reform its currency. If foreign 
 bills of exchange are paid in this currency, the uncertain value of any 
 sum, of what is in its own nature so uncertain, must render the ex- 
 change always very much against such a state, its currency being, in 
 all foreign states, necessarily valued even below what it is worth. 
 
 In order to remedy the inconvenience to which this disadvan- 
 tageous exchange must have subjected their merchants, such small 
 states, when they began to attend to the interest of trade, have 
 frequently enacted that foreign bills of exchange of a certain value 
 should be paid, not in common currency, but by an order upon or 
 by a transfer in the books of a certain bank, established upon the 
 credit and under the protection of the state ; this bank being 
 always obliged to pay, in good and true money, exactly according 
 to the standard of the state. The banks of Venice, Genoa, Amster- 
 dam, Hamburg, and Nuremberg, seem to have been all originally 
 established with this view, though some of them may have after- 
 wards been made subservient to other purposes. The money of 
 
 it amounts to nearly 22 \ per cent. It who is not a burgher can have an account 
 may be observed here, that the Bank of opened with it. At present ( 1 880) Ham- 
 Hamburg is not a bank of issue, but of burg is under the monetary system of the 
 deposit and transfer, and that no person German empire.
 
 54 TEE NATURE AND CAUSES OF BOOK iv. 
 
 such banks being better than the common currency of the country, 
 necessarily bore an agio, which was greater or smaller, according as 
 the currency was supposed to be more or less degraded below the 
 standard of the state. The agio of the bank of Hamburg, for 
 example, which is said to be commonly about fourteen 1 per cent., 
 is the supposed difference between the good standard money of the 
 state and the dipt, worn, and diminished currency poured into it 
 from all the neighbouring states. 
 
 Before 1609 the great quantity of dipt and worn foreign coin, 
 which the extensive trade of Amsterdam brought from all parts of 
 Europe, reduced the value of its currency about nine per cent, 
 below that of good money fresh from the mint. Such money no 
 sooner appeared than it was melted down or carried away, as it 
 always is in such circumstances. The merchants, with plenty of 
 currency, could not always find a sufficient quantity of good money 
 to pay their bills of exchange ; and the value of those bills, in spite 
 of several regulations which were made to prevent it, became in a 
 great measure uncertain. 
 
 In order to remedy these inconveniences, a bank was established 
 in 1609 under the guarantee of the city. This bank received both 
 foreign coin and the light and worn coin of the country at its real 
 intrinsic value in the good standard money of the country, deducting 
 only so much as was necessary for defraying the expense of coinage, 
 and the other necessary expense of management. For the value 
 which remained, after this small deduction was made, it gave a 
 credit in its books. This credit was called bank money, which, as 
 it represented money exactly according to the standard of the mint, 
 was always of the same real value, and intrinsically worth more 
 than current money. It was at the same time enacted, that all 
 bills drawn upon or negotiated at Amsterdam of the value of six 
 hundred guilders and upwards should be paid in bank money, which 
 at once took away all uncertainty in the value of those bills. Every 
 merchant, in consequence of this regulation, was obliged to keep an 
 account with the bank in order to pay his foreign bills of exchange, 
 which necessarily occasioned a certain demand for bank money. 
 
 Bank money, over and above both its intrinsic superiority to 
 currency, and the additional value which this demand necessarily 
 gives it, has likewise some other advantages. It is secure from 
 1 See above, note to p. 52.
 
 CHAP. in. THE WEALTH OF NATIONS. 55 
 
 fire, robbery, and other accidents; the city of Amsterdam is bound 
 for it ; it can be paid away by a simple transfer, without the trouble 
 of counting, or the risk of transporting it from one place to another. 
 In consequence of those different advantages, it seems from the 
 beginning to have borne an agio, and it is generally believed that 
 all the money originally deposited in the bank was allowed to 
 remain there, nobody caring to demand payment of a debt which he 
 could sell for a premium in the market. By demanding payment 
 of the bank, the owner of a bank credit would lose this premium. 
 As a shilling fresh from the mint will buy no more goods in the 
 market than one of our common worn shillings, so the good and 
 true money which might be brought from the coffers of the bank 
 into those of a private person, being mixed and confounded with 
 the common currency of the country, would be of no more value 
 than that currency, from which it could no longer be readily dis- 
 tinguished. While it remained in the coffers of the bank, its 
 superiority was known and ascertained; when it had come into 
 those of a private person, its superiority could not well be ascer- 
 tained without more trouble than perhaps the difference was worth. 
 By being brought from the coffers of the bank, besides, it lost all 
 the other advantages of bank money ; its security, its easy and safe 
 transferribility, its use in paying foreign bills of exchange. Over 
 and above all this, it could not be brought from those coffers, as it 
 will appear by-and-by, without previously paying for the keeping. 
 
 Those deposits of coin, or those deposits which the bank was 
 bound to restore in coin, constituted the original capital of the bank, 
 or the whole value of what was represented by what is called bank 
 money. At present they are supposed to constitute but a very 
 small part of it. In order to facilitate the trade in bullion, the 
 bank has been for these many years in the practice of giving credit 
 in its books upon deposits of gold and silver bullion. This credit is 
 generally about five per cent, below the mint price of such bullion. 
 The bank grants at the same time what is called a recipice or receipt, 
 entitling the person who makes the deposit, or the bearer, to take 
 out the bullion again at any time within six months, upon re-trans- 
 ferring to the bank a quantity of bank money equal to that for 
 which credit had been given in its books when the deposit was 
 made, and upon paying one-fourth per cent, for the keeping, if the 
 deposit was in silver, and one-half per cent, if it was in gold ; but
 
 56 THE NATURE AND CAUSES OF BOOK iv. 
 
 at the same time declaring, that in default of such payment, and 
 upon the expiration of this term, the deposit should belong- to the 
 bank at the price at which it had been received, or for which credit 
 had been given in the transfer books. What is thus paid for the 
 keeping of the deposit may be considered as a sort of warehouse 
 rent ; and why this warehouse rent should be so much dearer for 
 gold than for silver, several different reasons have been assigned. 
 The fineness of gold, it has been said, is more difficult to be ascer- 
 tained than that of silver. Frauds are more easily practised, and 
 occasion a greater loss in the more precious metal. Silver, besides, 
 being the standard metal, the state, it has been said, wishes to 
 encourage more the making of deposits of silver than of those of gold. 
 Deposits of bullion are most commonly made when the price is 
 somewhat lower than ordinary ; and they are taken out again when 
 it happens to rise. In Holland, the market price of bullion is 
 generally above the mint price, for the same reason that it was so 
 in England before the late reformation of the gold coin. The 
 difference is said to be commonly from about six to sixteen stivers 
 upon the mark, or eight ounces of silver of eleven parts fine and 
 one part alloy. The bank price, or the credit which the bank gives 
 for deposits of such silver (when made in foreign coin, of which the 
 fineness is well known and ascertained, such as Mexico dollars), is 
 twenty-two guilders the mark ; the mint price is about twenty- 
 three guilders, and the market price is from twenty-three guilders 
 six, to twenty-three guilders sixteen stivers, or from two to three 
 per cent, above the mint price.* The proportions between the bank 
 price, the mint price, and the market price of gold bullion, are 
 
 * The following are the prices at which the bank of Amsterdam at present (Sep- 
 tember, 1775) receives bullion and coin of different kinds : 
 
 SILVER. 
 Mexico dollars \ p .,-, Mexico dollars new coin -21 10 p. mrk- 
 
 French crowns > T> Ducatoons - - - - - 3 o 
 
 f i- t. -i -I B 22 per mark. -r>. , ,, 
 
 English silver com ) Kix dollars 28 
 
 Bar silver containing 11 fine silver 21 per mark, and in this proportion down to 
 fine, on which 5 guilders are given. 
 
 Fine bars, 23 per mark. 
 
 GOLD. 
 
 Portugal coin \ Ditto old- - - - 300 per mark. 
 
 Guineas > B 310 per mark. New ducats- - - 4 19 8 per ducat. 
 
 Louis d'ors new ) 
 
 Bar or ingot gold is received in proportion to its fineness compared with the above 
 foreign gold coin. Upon fine bars the bank gives 340 per mark. In general, however, 
 something more is given upon coin of a known fineness than upon gold and silver bars, 
 of which the fineness cannot be ascertained but by a process of melting and assaying.
 
 CHAP. in. THE WEALTH OF NATIONS. 57 
 
 nearly the same. A person can generally sell his receipt for the 
 difference between the mint price of bullion and the market price. 
 A receipt for bullion is almost always worth something, and it very 
 seldom happens, therefore, that anybody suffers his receipt to expire, 
 or allows his bullion to fall to the bank at the price at which it had 
 been received, either by not taking it out before the end of the six 
 months, or by neglecting to pay the one-fourth or one-half per cent, 
 in order to obtain a new receipt for another six months. This, 
 however, though it happens seldom, is said to happen sometimes, 
 and more frequently with regard to gold than with regard to silver, 
 on account of the higher warehouse-rent which is paid for the keep- 
 ing of the more precious metal. 
 
 The person who by making a deposit of bullion obtains both a 
 bank credit and a receipt, pays his bills of exchange as they become 
 due with his bank credit, and either sells or keeps his receipt 
 according as he judges that the price of bullion is likely to rise or 
 to fall. The receipt and the bank credit seldom keep long together, 
 and there is no occasion that they should. The person who has 
 a receipt, and who wants to take out bullion, finds always plenty of 
 bank credits, or bank money to buy at the ordinary price ; and the 
 person who has bank money, and wants to take out bullion, finds 
 receipts always in equal abundance. 
 
 The owners of bank credits, and the holders of receipts, constitute 
 two different sorts of creditors against the bank. The holder of a 
 receipt cannot draw out the bullion for which it is granted, without 
 re-assigning to the bank a sum of bank money equal to the price 
 at which the bullion had been received. If he has no bank money 
 of his own, he must purchase it of those who have it. The owner 
 of bank money cannot draw out bullion without producing to the 
 bank receipts for the quantity which he wants. If he has none of 
 his own, he must buy them of those who have them. The holder 
 of a receipt, when he purchases bank money, purchases the power 
 of taking out a quantity of bullion, of which the mint price is five 
 per cent, above the bank price. The agio of five per cent, therefore, 
 which he commonly pays for it, is paid, not for an imaginary but 
 for a real value. The owner of bank money, when he purchases a 
 receipt, purchases the power of taking out a quantity of bullion of 
 which the market price is commonly from two to three per cent, 
 above the mint price. The price which he pays for it, therefore,
 
 58 THE NATURE AND CAUSES OF BOOK iv. 
 
 is paid likewise for a real value. The price of the receipt, and the 
 price of the bank money, compound or make up between them the 
 full value or price of the bullion. 
 
 Upon deposits of the coin current in the country, the bank grants 
 receipts likewise as well as bank credits ; but those receipts are 
 frequently of no value, and will bring no price in the market. 
 Upon ducatoons, for example, which in the currency pass for three 
 guilders three stivers each, the bank gives a credit of three guilders 
 only, or five per cent, below their current value. It grants a receipt 
 likewise entitling the bearer to take out the number of ducatoons 
 deposited at any time within six months, upon paying one-fourth 
 per cent, for the keeping. This receipt will frequently bring no 
 price in the market. Three guilders bank money generally sell in 
 the market for three guilders three stivers, the full value of the 
 ducatoons, if they were taken out of the bank ; and before they can 
 be taken out, one-fourth per cent, must be paid for the keeping, 
 which would be mere loss to the holder of the receipt. If the agio 
 of the bank, however, should at any time fall to three per cent., such 
 receipts might bring some price in the market, and might sell for 
 one and three-fourths per cent. But the agio of the bank being 
 now generally about five per cent., such receipts are frequently 
 allowed to expire, or, as they express it, to fall to the bank. The 
 receipts which are given for deposits of gold ducats fall to it yet 
 more frequently, because a higher warehouse-rent, or one-half per 
 cent., must be paid for the keeping of them before they can be taken 
 out again. The five per cent, which the bank gains, when deposits 
 either of coin or bullion are allowed to fall to it, may be considered 
 as the warehouse-rent for the perpetual keeping of such deposits. 
 
 The sum of bank money for which the receipts are expired must 
 be very considerable. It must comprehend the whole original 
 capital of the bank, which, it is generally supposed, has been 
 allowed to remain there from the time it was first deposited, nobody 
 caring either to renew his receipt or to take out his deposit, as, for 
 the reasons already assigned, neither the one nor the other could be 
 done without loss. But whatever may be the amount of this sum, 
 the proportion which it bears to the whole mass of bank money is 
 supposed to be very small. The bank of Amsterdam has for these 
 many years past been the great warehouse of Europe for bullion, 
 for which the receipts are very seldom allowed to expire, or, as they
 
 CHAP. in. THE WEALTH OF NATIONS. 59 
 
 express it, to fall to the bank. The far greater part of the bank 
 money, or of the credits upon the books of the bank, is supposed to 
 have been created, for these many years past, by such deposits which 
 the dealers in bullion are continually both making- and withdrawing-. 
 
 No demand can be made upon the bank but by means of a 
 recipice or receipt. The smaller mass of bank money, for which the 
 receipts are expired, is mixed and confounded with the much greater 
 mass for which they are still in force ; so that, though there may 
 be a considerable sum of bank money, for which there are no 
 receipts, there is no specific sum or portion of it which may not at 
 any time be demanded by one. The bank cannot be debtor to two 
 persons for the same thing ; and the owner of bank money who has 
 EO receipt, cannot demand payment of the bank till he buys one. 
 In ordinary and quiet times, he can find no difficulty in getting 
 one to buy at the market price, which generally coi'responds with 
 the price at which he can sell the coin or bullion it entitles him to 
 take out of the bank. 
 
 It might be otherwise during a public calamity ; an invasion, for 
 example, such as that of the French in 1672. The owners of bank 
 money being then all eager to draw it out of the bank, in order to 
 have it in their own keeping, the demand for receipts might raise 
 their price to an exorbitant height. The holders of them might 
 form extravagant expectations, and, instead of two or three per 
 cent., demand half the bank money for which credit had been given 
 upon the deposits that the receipts had respectively been granted 
 for. The enemy, informed of the constitution of the bank, might 
 even buy them up in order to prevent the carrying away of the 
 treasure. In such emergencies, the bank, it is supposed, would 
 break through its ordinary rule of making payment only to the 
 holders of receipts. The holders of receipts, who had no bank 
 money, must have received within two or three per cent, of the 
 value of the deposit for which their respective receipts had been 
 granted. The bank, therefore, it is said, would in this case make 
 no scruple of paying, either with money or bullion, the full value 
 of what the owners of bank money who could get no receipts were 
 credited for in its books ; paying at the same time two or three 
 per cent, to such holders of receipts as had no bank money, that 
 being the whole value which in this state of things could justly be 
 supposed due to them.
 
 60 THE NATURE AND CAUSES OF BOOK ir. 
 
 Even in ordinary and quiet times, it is the interest of the holders 
 of receipts to depress the agio, in order either to buy bank money 
 (and consequently the bullion, which their receipts would then enable 
 them to take out of the bank) so much cheaper, or to sell their 
 receipts to those who have bank money, and who want to take out 
 bullion, so much dearer ; the price of a receipt being generally 
 equal to the difference between the market price of bank money 
 and that of the coin or bullion for which the receipt had been 
 granted. It is the interest of the owners of bank money, on the 
 contrary, to raise the agio, in order either to sell their bank money 
 so much dearer, or to buy a receipt so much cheaper. To prevent 
 the stock-jobbing tricks which those opposite interests might some- 
 times occasion, the bank has of late years come to the resolution to 
 sell at all times bank money for currency, at five per cent, agio, 
 and to buy it in again at four per cent. agio. In consequence of 
 this resolution, the agio can never either rise above five, or sink 
 below four per cent., and the proportion between the market price 
 of bank and that of current money is kept at all times very near to 
 the proportion between their intrinsic values. Before this resolution 
 was taken, the market price of bank money used sometimes to rise 
 so high as nine per cent, agio, and sometimes to sink so low as par, 
 according as opposite interests happened to influence the market. 
 
 The bank of Amsterdam professes to lend out no part of what is 
 deposited with it, but, for every guilder for which it gives credit in, 
 its books, to keep in its repositories the value of a guilder either in 
 money or bullion. That it keeps in its repositories all the money 
 or bullion for which there are receipts in force, for which it is at all 
 times liable to be called upon, and which, in reality, is continually 
 going from it and returning to it again, cannot well be doubted. 
 But whether it does so likewise with regard to that part of its 
 capital, for which the receipts are long ago expired, for which in 
 ordinary and quiet times it cannot be called upon, and which in 
 reality is very likely to remain with it for ever, or as long as the 
 States of the United Provinces subsist, may perhaps appear more 
 uncertain. At Amsterdam, however, no point of faith is better 
 established than that for every guilder circulated as bank money 
 there is a correspondent guilder in gold or silver to be found in the 
 treasure of the bank. The city is guarantee that it should be so. 
 The bank is under the direction of the four reigning burgomasters,
 
 CHAP. m. THE WEALTH OF NATIONS. 61 
 
 who are changed every year. Each new set of burgomasters visits 
 the treasure, compares it with the books, receives it upon oath, and 
 delivers it over, with the same awful solemnity, to the set which 
 succeeds ; and in that sober and religious country oaths are not yet 
 disregarded. 1 A rotation of this kind seems alone a sufficient 
 security against any practices which cannot be avowed. Amidst all 
 the revolutions which faction has ever occasioned in the government 
 of Amsterdam, the prevailing party has at no time accused their 
 predecessors of infidelity in the administration of the bank. No 
 accusation could have affected more deeply the reputation and 
 fortune of the disgraced party, and if such an accusation could have 
 been supported, we may be assured that it would have been brought. 
 In 1672, when the French king was at Utrecht, the bank of 
 Amsterdam paid so readily as left no doubt of the fidelity with 
 which it had observed its engagements. Some of the pieces which 
 were then brought from its repositories appeared to have been 
 scorched with the fire which happened in the town-house soon after 
 the bank was established. Those pieces, therefore, must have lain 
 there from that time. 
 
 What may be the amount of the treasure in the bank is a question 
 which has long employed the' speculations of the curious. Nothing 
 but conjecture can be offered concerning it. It is generally reckoned 
 that there are about two thousand people who keep accounts with 
 the bank, and allowing them to have, one with another, the value 
 of fifteen hundred pounds sterling lying upon their respective 
 accounts (a very large allowance), the whole quantity of bank 
 money, and consequently of treasure in the bank, will amount to 
 about three millions sterling, or, at eleven guilders the pound 
 sterling, thirty-three millions of guilders ; a great sum, and suf- 
 ficient to carry on a very extensive circulation ; but vastly below the 
 extravagant ideas which some people have formed of this treasure. 
 
 The city of Amsterdam derives a considerable revenue from the 
 bank. Besides what may be called the warehouse-rent above 
 mentioned, each person, upon first opening an account with the 
 bank, pays a fee of ten guilders ; and for every new account three 
 
 1 They were, however ; for when the to the Dutch East India Company. In 
 
 armies of the Revolution overrun the point of fact, the secrecy which formed 
 
 Low Countries, it was found, as had been the characteristic, and, as some people 
 
 suspected, that the bank was utterly in- thought, the security of the bank, became, 
 
 solvent. It is supposed that the losses as is generally the case with such secrecy, 
 
 of the bank were due to advances made a cloak for fraud.
 
 62 THE NATURE AND CAUSES OF BOOK iv. 
 
 guilders three stivers ; for every transfer two stivers ; and if the 
 transfer is for less than three hundred guilders, six stivers, in order 
 to discourage the multiplicity of small transactions. The person 
 who neglects to balance his account twice in the year forfeits 
 twenty-five guilders. The person who orders a transfer for more 
 than is upon his account, is obliged to pay three per cent, for the 
 sum overdrawn, and his order is set aside into the bargain. The 
 bank is supposed too to make a considerable profit by the sale 
 of the foreign coin or bullion which sometimes falls to it by the 
 expiring of receipts, and which is always kept till it can be sold 
 with advantage. It makes a profit likewise by selling bank money 
 at five per cent, agio, and buying it in at four. These different 
 emoluments amount to a good deal more than what is necessary 
 for paying the salaries of officers and defraying the expense of 
 management. What is paid for the keeping of bullion upon 
 receipts is alone supposed to amount to a neat annual revenue of 
 between one hundred and fifty thousand and two hundred thousand 
 guilders. Public utility, however, and not revenue, was the original 
 object of this institution. Its object was to relieve the merchants 
 from the inconvenience of a disadvantageous exchange. The revenue 
 which has arisen from it was unforeseen, and may be considered as 
 accidental. But it is now time to return from this long digres- 
 sion, into which I have been insensibly led in endeavouring to 
 explain the reasons why the exchange between the countries which 
 pay in what is called bank money, and those which pay in common 
 currency, should generally appear to be in favour of the former, and 
 against the latter. The former pay in a species of money of which 
 the intrinsic value is always the same, and exactly agreeable to the 
 standard of their respective mints ; the latter in a species of money 
 of which the intrinsic value is continually varying, and is almost 
 always more or less below that standard. 
 
 PART II. 
 
 Of the Unreasonableness of those extraordinary Restraints upon other 
 
 Principles. 
 
 IN the foregoing Part of this Chapter I have endeavoured to 
 show, even upon the principles of the commercial system, how un- 
 necessary it is to lay extraordinary restraints upon the importation
 
 CHAP. m. THE WEALTH OF NATIONS. 63 
 
 of goods from those countries with which the balance of trade is 
 supposed to be disadvantageous. 
 
 Nothing-, however, can be more absurd than this whole doctrine 
 of the balance of trade, upon which not only these restraints, but 
 almost all the other regulations of commerce are founded. "When 
 two places trade with one another, this doctrine supposes that, 
 if the balance be even, neither of them either loses or gains ; but 
 if it leans in any degree to one side, that one of them loses and 
 the other gains in proportion to its declension from the exact equi- 
 librium. Both suppositions are false. A trade which is forced by 
 means of bounties and monopolies, may be and commonly is dis- 
 advantageous to the country in whose favour it is meant to be 
 established, as I shall endeavour to show hereafter. But that trade 
 which, without force or constraint, is naturally and regularly carried 
 on between any two places, is always advantageous, though not 
 always equally so, to both. 1 
 
 By advantage or gain, I understand not the increase of the 
 quantity of gold and silver, but that of the exchangeable value 
 of the annual produce of the land and labour of the country, or the 
 increase of the annual revenue of its inhabitants. 
 
 If the balance be even, and if the trade between the two places 
 consist altogether in the exchange of their native commodities, they 
 wiH, upon most occasions, not only both gain, but they will gain 
 equally, or very near equally: each will in this case afford a market 
 for a part of the surplus produce of the other : each will replace a 
 capital which had been employed in raising and preparing for the 
 market this part of the surplus produce of the other, and which had 
 been distributed among, and given revenue and maintenance to a 
 certain number of its inhabitants. Some part of the inhabitants 
 of each, therefore, will indirectly derive their revenue and main- 
 tenance from the other. As the commodities exchanged too are 
 supposed to be of equal value, so the two capitals employed in the 
 
 1 There is generally a basis of truth in equation of all employments. But gross 
 
 every fallacy. But it is difficult to find as the fallacy was, it possessed the mind 
 
 any truth at all in the doctrine which of such a man as Bacon, and when Smith 
 
 Smith combats, that in voluntary trade wrote, it was all but universally received, 
 
 one man's gain is another's loss. It is If there be any foundation for the theory, 
 
 plain that the division of occupations and it is to be found in those 'sneaking arts 
 
 employments was originated in order to of underling tradesmen,' to which Smith 
 
 give greater efficiency to each person in refers lower down, 
 his own calling, and that trade is the
 
 64 THE NATURE AND CAUSES OF BOOK vr. 
 
 trade will, upon most occasions, be equal, or very nearly equal ; 
 and both being employed in raising the native commodities of the 
 two countries, the revenue and maintenance which their distribution 
 will afford to the inhabitants of each will be equal, or very nearly 
 equal. This revenue and maintenance, thus mutually afforded, will 
 be greater or smaller in proportion to the extent of their dealings. 
 If these should annually amount to a hundred thousand pounds, 
 for example, or to a million on each side, each of them would afford 
 an annual revenue, in the one case, of a hundred thousand pounds, 
 in the other, of a million, to the inhabitants of the other. 
 
 If their trade should be of such a nature that one of them ex- 
 ported to the other nothing but native commodities, while the 
 returns of that other consisted altogether in foreign goods, the 
 balance in this case would still be supposed even, commodities being 
 paid for with commodities. They would, in this ca^-e too, both 
 gain, but they would not gain equally; and the inhabitants of the 
 country which exported nothing but native commodities would 
 derive the greatest revenue from the trade. If England, for 
 example, should import from France nothing but the native com- 
 modities of that country, and, not having such commodities of its 
 own as were in demand there, should annually repay them by 
 sending thither a large quantity of foreign goods, tobacco, we shall 
 suppose, and East India goods ; this trade, though it would give 
 some revenue to the inhabitants of both countries, would give more 
 to those of France than to those of England. The whole French 
 capital annually employed in it would annually be distributed 
 among the people of France. But that part of the English capital 
 only which was employed in producing the English commodities 
 with which those foreign goods were purchased, would be annually 
 distributed among the people of England. The greater part of it 
 would replace the capitals which had been employed in Virginia, 
 Hindostan, and China, and which had given revenue and maintenance 
 to the inhabitants of those distant countries. If the capitals were 
 equal, or nearly equal, therefore, this employment of the French 
 capital would augment much more the revenue of the people of 
 France than that of the English capital would the revenue of the 
 people of England. France would in this case carry on a direct 
 foreign trade of consumption with England ; whereas England 
 would carry on a round-about trade of the same kind with France.
 
 CHAP. in. THE WEALTH OF NATIONS. 65 
 
 The different effects of a capital employed in the direct, and of one 
 employed in the round-about foreign trade of consumption, have 
 already been fully explained. 
 
 There is not, probably, between any two countries, a trade which 
 consists altogether in the exchange either of native commodities 
 on both sides, or of native commodities on one side and of foreign 
 goods on the other. Almost all countries exchange with one 
 another partly native and partly foi'eign goods. That country, 
 however, in whose cargoes there is the greatest proportion of na- 
 tive, and the least of foreign goods, will always be the principal 
 gainer. 
 
 If it was not with tobacco and East India goods, but with gold 
 and silver, that England paid for the commodities annually imported 
 from France, the balance in this case would be supposed uneven, 
 commodities not being paid for with commodities, but with gold 
 and silver. The trade, however, would in this case, as in the fore- 
 going, give some revenue to the inhabitants of both countries, but 
 more to those of France than to those of England. It would give 
 some revenue to those of England. The capital which had been 
 employed in producing the English goods that purchased this gold 
 and silver, the capital which had been distributed among, and given 
 revenue to certain inhabitants of England, would thereby be re- 
 placed, and enabled to continue that employment. The whole 
 capital of England would no more be diminished by this exportation 
 of gold and silver than by the exportation of an equal value of 
 any other goods. On the contrary, it would in most cases be 
 augmented. No goods are sent abroad but those for which the 
 demand is supposed to be greater abroad than at home, and of 
 which the returns consequently, it is expected, will be of more 
 value at home than the commodities exported. If the tobacco 
 which in England is worth only a hundred thousand pounds, when 
 sent to France will purchase wine which is in England worth a 
 hundred and ten thousand pounds, the exchange will augment the 
 capital of England by ten thousand pounds. If a hundred thousand 
 pounds of English gold, in the same manner, purchase French wine, 
 which in England is worth a hundred and ten thousand, this ex- 
 change will equally augment the capital of England by ten thousand 
 pounds. As a merchant who has a hundred and ten thousand 
 pounds' worth of wine in his cellar is a richer man than he who 
 
 VOL. II. P
 
 66 THE NATURE AND CAUSES OF BOOK iv. 
 
 has only a hundred thousand pounds' worth of tobacco in his ware- 
 house, so is he likewise a richer man than he who has only a 
 hundred thousand pounds' worth of gold in his coffers. He can 
 put into motion a greater quantity of industry, and give revenue, 
 maintenance, and employment to a greater number of people than 
 either of the other two. But the capital of the country is equal 
 to the capitals of all its different inhabitants, and the quantity of 
 industry which can be annually maintained in it, is equal to what 
 all those different capitals can maintain. Both the capital of the 
 country, therefore, and the quantity of industry which can be 
 annually maintained in it, must generally be augmented by this 
 exchange. It would, indeed, be more advantageous for England 
 that it could purchase the wines of France with its own hardware 
 and broadcloth, than with either the tobacco of Virginia, or the 
 gold and silver of Brazil and Peru. A direct foreign trade of 
 consumption is always more advantageous than a round-about 
 one. But a round-about foreign trade of consumption, which is 
 carried on with gold and silver, does not seem to be less ad- 
 vantageous than any other equally round-about one. Neither is 
 a country which has no mines more likely to be exhausted of gold 
 and silver by this annual exportation of those metals, than one 
 which does not grow tobacco by the like annual exportation of 
 that plant. As a country which has wherewithal to buy tobacco 
 will never be long in want of it, so neither will one be long in 
 want of gold and silver which has wherewithal to purchase those 
 metals. 
 
 It is a losing trade, it is said, which a workman carries on with 
 the alehouse ; and the trade which a manufacturing nation would 
 naturally carry on with a wine country, may be considered as a 
 trade of the same nature. I answer, that the trade with the ale- 
 house is not necessarily a losing trade. In its own nature it is just 
 as advantageous as any other, though, perhaps, somewhat more 
 liable to be abused. The employment of a brewer, and even that of 
 a retailer of fermented liquors, are as necessary divisions of labour 
 as any other. It will generally be more advantageous for a work- 
 man to buy of the brewer the quantity he has occasion for, than to 
 brew it himself, and, if he is a poor workman, it will generally be 
 more advantageous for him to buy it, by little and little of the 
 retailer, than a large quantity of the brewer. He may no doubt
 
 CHAP. in. THE WEALTH OF NATIONS. 67 
 
 buy too much of either, as he may of any other dealers in his neigh- 
 bourhood ; of the butcher, if he is a glutton, or of the draper, if he 
 affects to be a beau among his companions. It is advantageous to 
 the great body of workmen, notwithstanding, that all these trades 
 should be free, though this freedom may be abused in all of them, 
 and is more likely to be so, perhaps, in some than in others. Though 
 individuals, besides, may sometimes ruin their fortunes by an 
 excessive consumption of fermented liquors, there seems to be no 
 risk that a nation should do so. Though in every country there 
 are many people who spend upon such liquors more than they can 
 afford, there are always many more who spend less. It deserves to 
 be remarked too that, if we. consult experience, the cheapness of 
 wine seems to be a cause, not of drunkenness, but of sobriety. The 
 inhabitants of the wine countries are in general the soberest people 
 in Europe ; witness the Spaniards, the Italians, and the inhabitants 
 of the southern provinces of France. People are seldom guilty of 
 excess in what is their daily fare. Nobody affects the character of 
 liberality and good fellowship, by being profuse of a liquor which is 
 as cheap as small beer. On the contrary, in the countries which, 
 either from excessive heat or cold, produce no grapes, and where 
 wine consequently is dear and a rarity, drunkenness is a common 
 vice, as among the northern nations, and all those who live between 
 the tropics, the negroes, for example, on the coast of Guinea. When 
 a French regiment comes from some of the northern provinces of 
 France, where wine is somewhat dear, to be quartered in the 
 southern, where it is very cheap, the soldiers, I have frequently 
 heard it observed, are at first debauched by the cheapness and 
 novelty of good wine ; but after a few months' residence, the greater 
 part of them become as sober as the rest of the inhabitants. Were 
 the duties upon foreign wines, and the excises upon malt, beer, and 
 ale, to be taken away all at once, it might, in the same manner, 
 occasion in Great Britain a pretty general and temporary drunken- 
 ness among the middling and inferior ranks of people, which would 
 probably be soon followed by a permanent and almost universal 
 sobriety. At present, drunkenness is by no means the vice of people 
 of fashion, or of those who can easily afford the most expensive 
 liquors. A gentleman drunk with ale has scarce ever been seen 
 among us. The restraints upon the wine trade in Great Britain, 
 besides, do not so much seem calculated to hinder the people from 
 
 F z
 
 68 THE NATURE AND CAUSES OF BOOK IT. 
 
 going, if I may say so, to the alehouse, as from going where they 
 can buy the best and cheapest liquor. They favour the wine trade 
 of Portugal, and discourage that of France. The Portuguese, it is 
 said, indeed, are better customers for our manufactures than the 
 French, and should therefore be encouraged in preference to them. 
 As they give us their custom, it is pretended, we should give them 
 ours. The sneaking arts of underling tradesmen are thus erected 
 into political maxims for the conduct of a great empire ; for it is 
 the most underling tradesmen only who make it a rule to employ 
 chiefly their own customers. A great trader purchases his goods 
 always where they are cheapest and best, without regard to any 
 little interest of this kind. 
 
 By such maxims as these, however, nations have been taught 
 that their interest consisted in beggaring all their neighbours. 
 Each nation has been made to look with an invidious eye upon the 
 prosperity of all the nations with which it trades, and to consider 
 their gain as its own loss. Commerce, which ought naturally to 
 be, among nations, as among individuals, a bond of union and 
 friendship, -has become the most fertile source of discord and ani- 
 mosity. The capricious ambition of kings and ministers has not, 
 during the present and the preceding century, been more fatal to 
 the repose of Europe than the impertinent jealousy of merchants 
 and manufacturers. The violence and injustice of the rulers of 
 mankind is an ancient evil, for which, I am afraid, the nature of 
 human affairs can scarce admit of a remedy. But the mean rapacity, 
 the monopolizing spirit of merchants and manufacturers, who neither 
 are nor ought to be the rulers of mankind, though it cannot perhaps 
 be corrected, may very easily be prevented from disturbing the 
 tranquillity of anybody but themselves. 
 
 That it was the spirit of monopoly which originally both invented 
 and propagated this doctrine, cannot be doubted ; and they who 
 first taught it were by no means such fools as they who believed it. 
 In every country it always is and must be the interest of the great 
 body of the people to buy whatever they want of those who sell it 
 cheapest. The proposition is so very manifest, that it seems 
 ridiculous to take any pains to prove it ; nor could it ever have 
 been called in question, had not the interested sophistry of mer- 
 chants and manufacturers confounded the common sense of mankind. 
 Their interest is, in this respect, directly opposite to that of the
 
 CHAP. in. THE WEALTH OF NATIONS. 69 
 
 great body of the people. As it is the interest of the freemen of a 
 corporation to hinder the rest of the inhabitants from employing 1 
 any workmen but themselves, so it is the interest of the merchants 
 and manufacturers of every country to secure to themselves the 
 monopoly of the home market. Hence in Great Britain, and in 
 most other European countries, the extraordinary duties upon almost 
 all goods imported by alien merchants. Hence the high duties and 
 prohibitions upon all those foreign manufactures which can come 
 into competition with our own. Hence too the extraordinary re- 
 straints upon the importation of almost all sorts of goods from those 
 countries with which the balance of trade is supposed to be dis- 
 advantageous ; that is, from those against whom national animosity 
 happens to be most violently inflamed. 
 
 The wealth of a neighbouring nation, however, though dangerous 
 in war and politics, is certainly advantageous in trade. In a state 
 of hostility, it may enable our enemies to maintain fleets and armies 
 superior to our own ; but in a state of peace and commerce, it must 
 likewise enable them to exchange with us to a greater value, and to 
 afford a better market, either for the immediate produce of our own 
 industry, or for whatever is purchased with that produce. As a 
 rich man is likely to be a better customer to the industrious people 
 in his neighbourhood than a poor, so is likewise a rich nation. A 
 rich man, indeed, who is himself a manufacturer, is a very dangerous 
 neighbour to all those who deal in the same way. All the rest of 
 the neighbourhood, however, by far the greatest number, profit by 
 the good market which his expense affords them. They even profit 
 by his underselling the poorer workmen who deal in the same way 
 with him. The manufacturers of a rich nation, in the same manner, 
 may no doubt be very dangerous rivals to those of their neighbours. 
 This very competition, however, is advantageous to the great body 
 of the people, who profit greatly besides by the good market which 
 the great expense of such a nation affords them in every other way. 
 Private people who want to make a fortune, never think of retiring 
 to the remote and poor provinces of the country, but resort either 
 to the capital or to some of the great commercial towns. They 
 know that, where little wealth circulates, there is little to be got, 
 but that where a great deal is in motion, some share of it may fall 
 to them. The same maxims which would in this manner direct the 
 common sense of one, or ten, or twenty individuals, should regulate
 
 70 THE NATURE AND CAUSES OF BOOK iv. 
 
 the judgment of one, or ten, or twenty millions, and should make a 
 whole nation regard the riches of its neighbours as a probable cause 
 and occasion for itself to acquire riches. A nation that would en- 
 rich itself by foreign trade is certainly most likely to do so when its 
 neighbours are all rich, industrious, and commercial nations. A 
 great nation surrounded on all sides by wandering savages and poor 
 barbarians might, no doubt, acquire riches by the cultivation of its 
 own lands, and by its own interior commerce, but not by foreign 
 trade. It seems to have been in this manner that the ancient 
 Egyptians and the modern Chinese acquired their great wealth. 
 The ancient Egyptians, it is said, neglected foreign commerce, and 
 the modern Chinese, it is known, hold it in the utmost contempt, 
 and scarce deign to afford it the decent protection of the laws. The 
 modern maxims of foreign commerce, by aiming at the impoverish- 
 ment of all our neighbours, so far as they are capable of producing 
 their intended effect, tend to render that very commerce insignificant 
 and contemptible. 
 
 It is in consequence of these maxims that the commerce between 
 France and England has in both countries been subjected to so 
 many discouragements and restraints. If those two countries, how- 
 ever, were to consider their real interest, without- either mercantile 
 jealousy or national animosity, the commerce of France might be 
 more advantageous to Great Britain than that of any other country, 
 and for the same reason that of Great Britain to France. France 
 is the nearest neighbour to Great Britain. In the trade between 
 the southern coast of England and the northern and north-western 
 coasts of France, the returns might be expected, in the same manner 
 as in the inland trade, four, five, or six times in the year. The 
 capital, therefore, employed in this trade, could in each of the two 
 countries keep in motion four, five, or six times the quantity of in- 
 dustry, and afford employment and subsistence to four, five, or six 
 times the number of people, which an equal capital could do in the 
 greater part of the other branches of foreign trade. Between the 
 parts of France and Great Britain most remote from one another, 
 the returns might be expected, at least, once in the year, and even 
 this trade would so far be at least equally advantageous as the 
 greater part of the other branches of our foreign European trade. 
 It would be, at least, three times more advantageous than the 
 boasted trade with our North American colonies, in which the
 
 CHAP. m. THE WEALTH OF NATIONS. 71 
 
 returns were seldom made in less than three years, frequently not in 
 less than four or five years. France, besides, is supposed to con- 
 tain twenty-four millions of inhabitants. Our North American 
 colonies were never supposed to contain more than three millions : 
 and France is a much richer country than North America ; though, 
 on account of the more unequal distribution of riches, there is much 
 more poverty and beggary in the one country than in the other. 
 France, therefore, could afford a market at least eight times more 
 extensive, and, on account of the superior frequency of the returns, 
 four-and-twenty times more advantageous, than that which our 
 North American colonies ever afforded. The trade of Great Britain 
 would be just as advantageous to France, and, in proportion to the 
 wealth, population, and proximity of the respective countries, would 
 have the same superiority over that which France carries on with 
 her own colonies. Such is the very great difference between that 
 trade which the wisdom of both nations has thought proper to dis- 
 courage, and that which it has favoured the most. 
 
 But the very same circumstances which would have rendered an 
 open and free commerce between the two countries so advantageous 
 to both, have occasioned the principal obstructions to that com- 
 merce. Being neighbours, they are necessarily enemies, and the 
 wealth and power of each becomes, upon that account, more for- 
 midable to the other ; and what would increase the advantage of 
 national friendship, serves only to inflame the violence of national 
 animosity. They are both rich and industrious nations ; and the 
 merchants and manufacturers of each dread the competition of the 
 skill and activity of those of the other. Mercantile jealousy is ex- 
 cited, and both inflames, and is itself inflamed, by the violence of 
 national animosity : and the traders of both countries have an- 
 nounced, with all the passionate confidence of interested falsehood, 
 the certain ruin of each, in consequence of that unfavourable balance 
 of trade, which, they pretend, would be the infallible effect of an 
 unrestrained commerce with the other. 
 
 There is no commercial country in Europe of which the approach- 
 ing ruin has not frequently been foretold by the pretended doctors 
 of this system, from an unfavourable balance of trade. After all 
 the anxiety, however, which they have excited about this, after all 
 the vain attempts of almost all trading nations to turn that balance 
 in their own favour, and against their neighbours, it does not
 
 72 THE NATURE AND CAUSES OF BOOK iv. 
 
 appear that any one nation in Europe has been in any respect im- 
 poverished by this cause. Every town and country, on the con- 
 trary, in proportion as they have opened their ports to all nations ; 
 instead of being ruined by this free trade, as the principles of the 
 commercial system would lead us to expect, have been enriched by 
 it. Though there are in Europe, indeed, a few towns which in some 
 respects deserve the name of free ports, there is no country which 
 does so. Holland, perhaps, approaches the nearest to this character 
 of any, though still very remote from it ; and Holland, it is acknow- 
 ledged, not only derives its whole wealth, but a great part of its 
 necessary subsistence, from foreign trade. 
 
 There is another balance, indeed, which has already 1 been ex- 
 plained, very different from the balance of trade, and which, accord- 
 ing as it happens to be either favourable or unfavourable, necessarily 
 occasions the prosperity or decay of every nation. This is the 
 balance of the annual produce and consumption. If the exchange- 
 able value of the annual produce, it has already been observed, 
 exceeds that of the annual consumption, the capital of the society 
 must annually increase in proportion to this excess. The society 
 in this case lives within its revenue, and what is annually saved out 
 of its revenue is naturally added to its capital, and employed so as 
 to increase still further the annual produce. If the exchangeable 
 value of the annual produce, on the contrary, fall short of the annual 
 consumption, the capital of the society must annually decay in pro- 
 portion to this deficiency. The expense of the society in this case 
 exceeds its revenue, and necessarily encroaches upon its capital. 
 Its capital, therefore, must necessarily decay, and, together with it, 
 the exchangeable value of the annual produce of its industry. 
 
 This balance of produce and consumption is entirely different 
 from what is called the balance of trade. It might take place in a 
 nation which had no foreign trade, but which was entirely separated 
 from all the world. It may take place in the whole globe of the 
 earth, of which the wealth, population, and improvement may be 
 either gradually increasing or gradually decaying. 
 
 The balance of produce and consumption may be constantly in 
 
 favour of a nation, though what is called the balance of trade be 
 
 generally against it. A nation may import to a greater value than 
 
 it exports for half a century, perhaps, together ; the gold and silver 
 
 1 See Book II. chap. iii.
 
 CHAP. iv. THE WEALTH OF NATIONS. 73 
 
 which comes into it during- all this time may be all immediately 
 sent out of it; its circulating coin may gradually decay, different 
 sorts of paper money being substituted in its place, and even the 
 debts too which it contracts in the principal nations with whom it 
 deals, may be gradually increasing ; and yet its real wealth, the 
 exchangeable value of the annual produce of its lands and labour, 
 may, during the same period, have been increasing in a much 
 greater proportion. The state of our North American colonies, and 
 of the trade which they carried on with Great Britain, before the 
 commencement of the present disturbances,* may serve as a proof 
 that this is by no means an impossible supposition. 
 
 CHAPTER IV. 
 
 OF DRAWBACKS. 1 
 
 MERCHANTS and manufacturers are not contented with the 
 monopoly of the home market, but desire likewise the most 
 extensive foreign sale for their goods. Their country has no juris- 
 diction in foreign nations, and therefore can seldom procure them 
 any monopoly there. They are generally obliged, therefore, to 
 content themselves with petitioning for certain encouragements 
 to exportation. 
 
 Of these encouragements, what are called drawbacks seem to be 
 the most reasonable. To allow the merchant to draw back upon 
 exportation, either the whole or a part of whatever excise or inland 
 duty is imposed upon domestic industry, can never occasion the ex- 
 portation of a greater quantity of goods than what would have been 
 exported had no duty been imposed. Such encouragements do not 
 tend to turn towards any particular employment a greater share of 
 
 * This paragraph was written in the such warehouses, in which goods are 
 
 year 17 75- stowed, prior to consumption, is an ad- 
 
 1 The greater part of the machinery vantage to the tax -payer, and can be no 
 
 employed to aid this process for encou- loss to the revenue. But when the plan 
 
 raging foreign trade has been rendered was first proposed by Walpole, the Lon- 
 
 obsolete by the establishment of bonded don merchants resisted it successfully, 
 
 warehouses for duty -paying and ex- and it was finally established by the 
 
 ciseable articles. The employment of younger Pitt.
 
 74 THE NATURE AND CAUSES OF BOOK iv. 
 
 the capital of the country than what would go to that employment 
 of its own accord, but only to hinder the duty from driving- away 
 any part of that share to other employments. They tend not to 
 overturn that balance which naturally establishes itself among all 
 the various employments of the society, but to hinder it from being 
 overturned by the duty. They tend not to destroy, but to preserve, 
 what it is in most cases advantageous to preserve, the natural di- 
 vision and distribution of labour in the society. 
 
 The same thing may be said of the drawbacks upon the re- 
 exportation of foreign goods imported ; which in Great Britain 
 generally amount to by much the largest part of the duty upon 
 importation. By the second of the rules, annexed to the Act of 
 Parliament, which imposed what is now called the old subsidy, 
 every merchant, whether English or alien, was allowed to draw back 
 half that duty upon exportation : the English merchant, provided 
 the exportation took place within twelve months ; the alien, pro- 
 vided it took place within nine months. Wines, currants, and 
 wrought silks were the only goods which did not fall within this 
 rule, having other and more advantageous allowances. The duties 
 imposed by this Act of Parliament were, at that time, the only 
 duties upon the importation of foreign goods. The term within 
 which this and all other drawbacks could be claimed, was after- 
 wards (by 7 Geo. I, chap. 21, sect. 10) extended to three years. 
 
 The duties which have been imposed since the old subsidy, are, 
 the greater part of them, wholly drawn back upon exportation. 
 This general rule, however, is liable to a great number of exceptions, 
 and the doctrine of drawbacks has become a much less simple 
 matter than it was at their first institution. 
 
 Upon the exportation of some foreign goods, of which it was 
 expected that the importation would greatly exceed what was neces- 
 sary for the home consumption, the whole duties are drawn back, 
 without retaining even half the old subsidy. Before the revolt of 
 our North American colonies, we had the monopoly of the tobacco 
 of Maryland and Virginia. We imported about ninety-six thousand 
 hogsheads, and the home consumption was not supposed to exceed 
 fourteen thousand. To facilitate the great exportation which was 
 necessary, in order to rid us of the rest, the whole duties were 
 drawn back, provided the exportation took place within three years. 
 
 We still have, though not altogether, yet very nearly, the
 
 CHAP. iv. THE WEALTH OF NATIONS. 75 
 
 * 
 
 monopoly of the sugars of our West Indian Islands. If sugars are 
 exported within a year, therefore, all the duties upon importation 
 are drawn back, and if exported within three years, all the duties, 
 except half the old subsidy, which still continues to be retained 
 upon the exportation of the greater part of goods. Though the 
 importation of sugar exceeds, a good deal, what is necessary for the 
 home consumption, the excess is inconsiderable, in comparison of 
 what it used to be in tobacco. 
 
 Some goods, the particular objects of the jealousy of our own 
 manufacturers, are prohibited to be imported for home consumption. 
 They may, however, upon paying certain duties, be imported and 
 warehoused for exportation. But upon such exportation, no part of 
 these duties are drawn back. Our manufacturers are unwilling, it 
 seems, that even this restricted importation should be encouraged, 
 and are afraid lest some part of these goods should be stolen out of 
 the warehouse, and thus come into competition with their own. It 
 is under these regulations only that we can import wrought silks, 
 French cambrics and lawns, calicoes painted, printed, stained, or 
 dyed, &c. 
 
 We are unwilling even to be the carriers of French goods, and 
 choose rather to forego a profit to ourselves than to suffer those 
 whom we consider as our enemies to make any profit by our means. 
 Not only half the old subsidy, but the second twenty-five per cent., 
 is retained upon the exportation of all French goods. 
 
 By the fourth of the rules annexed to the old subsidy, the draw- 
 back allowed upon the exportation of all wines amounted to a great 
 deal more than half the duties which were, at that time, paid upon 
 their importation ; and it seems, at that time, to have been the 
 object of the Legislature to give somewhat more than ordinary en- 
 couragement to the carrying trade in wine. Several of the other 
 duties too, which were imposed, either at the same time, or subse- 
 quent to the old subsidy; what is called the additional duty, the 
 new subsidy, the one- third and two-thirds subsidies, the impost 
 1692, the coinage on wine, were allowed to be wholly drawn back 
 upon exportation. All those duties, however, except the additional 
 duty and impost 1692, being paid down in ready money, upon im- 
 portation, the interest of so large a sum occasioned an expense, 
 which made it unreasonable to expect any profitable carrying trade 
 in this article. Only a part, therefore, of the duty called the
 
 76 THE NATURE AND CAUSES OF BOOK iv. 
 
 impost on wine, and no part of the twenty-five pounds the tun 
 upon French wines, or of the duties imposed in 1745, in 1763, and 
 in 1778, were allowed to be drawn back upon exportation. The 
 two imposts of five per cent., imposed in 1779 and 1781, upon all 
 the former duties of customs, being allowed to be wholly drawn 
 back upon the exportation of all other goods, were likewise allowed 
 to be drawn back upon that of wine. The last duty that has been 
 particularly imposed upon wine, that of 1780, is allowed to be 
 wholly drawn back an indulgence which, when so many heavy 
 duties are retained, most probably could never occasion the exporta- 
 tion of a single tun of wine. These rules take place with regard 
 to all places of lawful exportation, except the British colonies in 
 America. 
 
 The 1 5th Charles II, chap. 7, called an Act for the Encouragement 
 of Trade, had given Great Britain the monopoly of supplying the 
 colonies with all the commodities of the growth or manufacture of 
 Europe ; and consequently with wines. In a country of so extensive 
 a coast as our North American and West Indian colonies, where 
 our authority was always so very slender, and where the inhabitants 
 were allowed to carry out, in their own ships, their non-enumerated 
 commodities, at first, to all parts of Europe, and afterwards, to all 
 parts of Europe south of Cape Finisterre, it is not very probable 
 that this monopoly could ever be much respected ; and they pro- 
 bably, at all times, found means of bringing back some cargo from 
 the countries to which they were allowed to carry out one. They 
 seem, however, to have found some difficulty in importing European 
 wines from the places of their growth, and they could not well im- 
 port them from Great Britain, where they were loaded with many 
 heavy duties, of which a considerable part was not drawn back upon 
 exportation. Madeira wine, not being a European commodity, 
 could be imported directly into America and the West Indies 
 countries which, in all their non-enumerated commodities, enjoyed 
 a free trade to the island of Madeira. These circumstances had 
 probably introduced that general taste for Madeira wine, which our 
 officers found established in all our colonies at the commencement 
 of the war, which began in 1755, and which they brought back 
 with them to the mother country, where that wine had not been 
 much in fashion before. Upon the conclusion of that war, in 1763 
 (by the 4th Geo. Ill, chap. 15, sect. 12), all the duties, except
 
 CHAP. iv. THE WEALTH OF NATIONS. 77 
 
 10*., were allowed to be drawn back, upon the exportation to 
 the colonies of all wines, except French wines, to the commerce and 
 consumption of which, national prejudice would allow no sort of 
 encouragement. The period between the granting of this in- 
 dulgence and the revolt of our North American colonies was pro- 
 bably too short to admit of any considerable change in the customs 
 of those countries. 
 
 The same Act, which, in the drawback upon all wines, except 
 French wines, thus favoured the colonies so much more than other 
 countries ; in those, upon the greater part of other commodities, 
 favoured them much less. Upon the exportation of the greater 
 part of commodities to other countries, half the old subsidy was 
 drawn back. But this law enacted, that no part of that duty 
 should be drawn back upon the exportation to the colonies of any 
 commodities, of the growth or manufacture either of Europe or the 
 East Indies, except wines, white calicoes, and muslins. 
 
 Drawbacks were, perhaps, originally granted for the encourage- 
 ment of the carrying trade, which, as the freight of the ships 
 is frequently paid by foreigners in money, was supposed to be 
 peculiarly fitted for bringing gold and silver into the country. But 
 though the carrying trade certainly deserves no peculiar encourage- 
 ments, though the motive of the institution was perhaps abundantly 
 foolish, the institution itself seems reasonable enough. Such draw- 
 backs cannot force into this trade a greater share of the capital of 
 the country than what would have gone to it of its own accord, had 
 there been no duties upon importation. They only prevent its 
 being excluded altogether by those duties. The carrying trade, 
 though it deserves no preference, ought not to be precluded, but to 
 be left free like all other trades. It is a necessary resource for 
 those capitals which cannot find employment either in the agricul- 
 ture or in the manufactures of the country, either in its home trade 
 or in its foi'eign trade of consumption. 
 
 The revenue of the customs, instead of suffering, profits from 
 such drawbacks, by that part of the duty which is retained. If the 
 whole duties had been retained, the foreign goods upon which they 
 are paid could seldom have been exported, nor consequently im- 
 ported, for want of a market. The duties, therefore, of which 
 a part is retained, would never have been paid. 
 
 These reasons seem sufficiently to justify drawbacks, and would
 
 78 THE NATURE AND CAUSES OF BOOK iv. 
 
 justify them, though the whole duties, whether upon the produce 
 of domestic industry, or upon foreign goods, were always drawn 
 back upon exportation. The revenue of excise would in this case, 
 indeed, suffer a little, and that of the customs a good deal more ; 
 but the natural balance of industry, the natural division and dis- 
 tribution of labour, which is always more or less disturbed by such 
 duties, would be more nearly re-established by such a regulation. 1 
 
 These reasons, however, will justify drawbacks only upon ex- 
 porting goods to those countries which are altogether foreign and 
 independent, not to those in which our merchants and manufac- 
 turers enjoy a monopoly. A drawback, for example, upon the 
 exportation of European goods to our American Colonies, will 
 not always occasion a greater exportation than what would have 
 taken place without it. 2 By means of the monopoly which our 
 merchants and manufacturers enjoy there, the same quantity might 
 frequently, perhaps, be sent thither, though the whole duties were 
 retained. The drawback, therefore, may frequently be pure loss to 
 the revenue of excise or customs, without altering the state of 
 the trade, or rendering it in any respect more extensive. How far 
 such drawbacks can be justified, as a proper encouragement to the 
 industry of our colonies, or how far it is advantageous to the 
 mother country that they should be exempted from taxes which 
 are paid by all the rest of their fellow-subjects, will appear hereafter 
 when I come to treat of colonies. 
 
 Drawbacks, however, it must always be understood, are useful 
 only in those cases in which the goods for the exportation of which 
 they are given, are really exported to some foreign country, and not 
 clandestinely re-imported into our own. That some drawbacks, 
 particularly those upon tobacco, have frequently been abused in this 
 manner, and have given occasion to many frauds equally hurtful 
 both to the revenue and to the fair trader, is well known. 
 
 1 Indirectly, too, the whole revenue rent in densely-peopled countries) is sure 
 would be benefited in so far as all earnings to be nugatory, because it reduces the 
 come under the review of public finance, fertility of labour and diminishes the re- 
 and are made to contribute to a fiscal sources of the public, 
 system. All liberty means additional 2 The corrective of course was smug- 
 force, adjusted rather than controlled by gling, which, as Adam Smith admits 
 other forces ; and it is upon the earnings above (p. 76), under the euphemism that 
 of free labour that a government is best ' it is not very probable that this mono- 
 able to levy its revenue. Hence it is poly could ever be much respected,' was 
 that all attempts to benefit a particular more than a counterpoise to the draw- 
 class by exceptional legislation (unless it back, and would have been absolutely 
 be that which relieves the receivers of dominant in the absence of it.
 
 CHAP. v. THE WEALTH OF NATIONS. 79 
 
 CHAPTER V. 
 
 OF BOUNTIES. 
 
 BOUNTIES upon exportation are, in Great Britain, frequently 
 petitioned for, and sometimes granted to the produce of 
 particular branches of domestic industry. By means of them our 
 merchants and manufacturers, it is pretended, will be enabled to sell 
 their goods as cheap, or cheaper, than their rivals in the foreign 
 market. A greater quantity, it is said, will thus be exported, and 
 the balance of trade consequently turned more in favour of our own 
 country. We cannot give our workmen a monopoly in the foreign, 
 as we have done in the home market. We cannot force foreigners 
 to buy their goods, as we have done our own countrymen. The 
 next best expedient, it has been thought, therefore, is to pay them 
 for buying. It is in this manner that the mercantile system 
 proposes to enrich the whole country, and to put money into all 
 our pockets by means of the balance of trade. 
 
 Bounties, it is allowed, ought to be given to those branches of 
 trade only which cannot be carried on without them. But every 
 branch of trade in which the merchant can sell his goods for a price 
 which replaces to him, with the ordinary profits of stock, the whole 
 capital employed in preparing and sending them to market, can be 
 carried on without a bounty. Every such branch is evidently upon 
 a level with all the other branches of trade which are carried 
 on without bounties, and cannot therefore require one more than 
 they. Those trades only require bounties in which the merchant 
 is obliged to sell his goods for a price which does not replace to 
 him his capital, together with the ordinary profit ; or in which 
 he is obliged to sell them for less than it really costs him to send 
 them to market. The bounty is given in order to make up this 
 loss, and to encourage him to continue, or perhaps to begin, a trade 
 of which the expense is supposed to be greater than the returns, of 
 which every operation eats up a part of the capital employed in it, 
 and which is of such a nature, that, if all other trades resembled it, 
 there would soon be no capital left in the country. 
 
 The trades, it is to be observed, which are carried on by means of 
 bounties, are the only ones which can be carried on between two
 
 80 THE NATURE AND CAUSES OF BOOK iv. 
 
 nations for any considerable time together, in such a manner as 
 that one of them shall always and regularly lose, or sell its goods 
 for less than it really costs to send them to market. But if the 
 hounty did not repay to the merchant what he would otherwise 
 lose upon the price of his goods, his own interest would soon oblige 
 him to employ his stock in another way, or to find out a trade in 
 which the price of the goods would replace to him, with the ordi- 
 nary profit, the capital employed in sending them to market. The 
 effect of bounties, like that of all the other expedients of the 
 mercantile system, can only be to force the trade of a country 
 into a channel much less advantageous than that in which it would 
 naturally run of its own accord. 
 
 The ingenious and well-informed author of the tracts upon the 
 corn trade 1 has shewn very clearly, that since the bounty upon 
 the exportation of corn was first established, the price of the corn 
 exported, valued moderately enough, has exceeded that of the corn 
 imported, valued very high, by a much greater sum than the 
 amount of the whole bounties which have been paid during that 
 period. This, he imagines, upon the true principles of the mercan- 
 tile system, is a clear proof that this forced corn trade is beneficial 
 to the nation ; the value of the exportation exceeding that of the 
 importation by a much greater sum than the whole extraordinary 
 expense which the public has been at in order to get it exported. 
 He does not consider that this extraordinary expense, or the bounty, 
 is the smallest part of the expense which the exportation of corn 
 really costs the society. The capital which the farmer employed in 
 raisin* it must likewise be taken into the account. 2 Unless the 
 
 O 
 
 price of the corn when sold in the foreign markets replaces, not 
 
 1 The author of these tracts, whom not create a new market, since prices on 
 Smith lauds so highly, was Charles Smith, an emergency, and on the theory that 
 a miller in an extensive way of business the corn was exchanged for the precious 
 in Barking. See Chalmers' edition, 1804. metals, increase the stock of these articles. 
 
 2 On the principles of the mercantile But the real significance of this expedient 
 system, and in accordance with the theory, is, that it was intended to bolster up the 
 that the only trade worth encourage- rents of the landlords by mulcting the 
 ment is that which assists the accumu- general public, who were made to pay, 
 lation of gold and silver in countries first, for the machinery by which their 
 which do not naturally possess them; and home-grown stock of provisions was di- 
 on the assumption that the exported corn minished; next, for the unnatural in- 
 sold at a higher price, independent of the crease in the price of that which they 
 bounty, than it would have sold for if no consumed. The gain of the bounty, too, 
 such stimulus had been applied to trade, for obvious reasons, was appropriated 
 it is difficult to argue that the bounty did solely by the landowners.
 
 CHAP. v. THE WEALTH OF NATIONS. 1 
 
 only the bounty, but this capital, tog-ether with the ordinary profits 
 of stock, the society is a loser by the difference, or the national 
 stock is so much diminished. But the very reason for which it has 
 been thought necessary to grant a bounty, is the supposed insuf- 
 ficiency of the price to do this. 
 
 The average price of corn, it has been said, has fallen considerably 
 since the establishment of the bounty. That the average price of 
 corn began to fall somewhat towards the end of the last century, 
 and has continued to do so during the course of the sixty-four first 
 years of the present, I have already endeavoured to show. But 
 this event, supposing it to be as real as I believe it to be, must have 
 happened in spite of the bounty, and cannot possibly have hap- 
 pened in consequence of it. It has happened in France, as well 
 as in England, though in France there was not only no bounty, 
 but, till 1764, the exportation of corn was subjected to a general 
 prohibition. This gradual fall in the average price of grain, it 
 is probable, therefore, is ultimately owing neither to the one regu- 
 lation nor to the other, but to that gradual and insensible rise 
 in the real value of silver, which, in the first book of this discourse, 
 I have endeavoured to show has taken place in the general market 
 of Europe during the course of the present century. 1 It seems 
 to be altogether impossible that the bounty could ever contribute 
 to lower the price of grain. 
 
 1 It does not seem that Adam Smith invited to their value and novelty. These 
 had any other reason on which to ex- improvements were assisted by a suc- 
 plain this low price of corn during the cession of exceedingly favourable seasons, 
 period referred to, except the fact itself. That such was the fact is plain, partly 
 There does not appear, however, to be from the rapid increase of population 
 any evidence that the supply of silver de- in England and Wales ; for it is calcu- 
 clined below the wants of the European lateJ on very substantial grounds, that 
 market at this time, still less that it was the inhabitants of the southern king- 
 insufficient to fill up the void created by dom were not much more than 5,000,000 
 wear. On the contrary, the silver cur- at the close of the seventeenth, and 
 rency seems to have been considerably reached nearly 10,000,000 at the middle 
 supplemented by the use of gold. of the eighteenth century. During this 
 
 The true explanation of the fact com- period too, notwithstanding the low price 
 
 mented on is, that towards the end of of corn, rents rose considerably, and the 
 
 the seventeenth century the art of agri- landed gentry became much more opu- 
 
 culture was rapidly developed. It was lent than before. Now the facts of a 
 
 at this time that the employment of low price of corn, an increased rate of 
 
 winter roots became general, and that wages, a rapidly increasing population, 
 
 artificial grasses were discovered, and and a great enlargement of rent, cannot 
 
 adapted to English agriculture. The be the result of an enhanced price of 
 
 newspapers of the time contain numer- silver, but must have been caused by a 
 
 ous advertisements of the seeds of these great and regular development in the art 
 
 roots and grasses, in which attention is of agriculture. 
 
 VOL. II. G
 
 82 THE NATURE AND CAUSES OF BOOK rv. 
 
 In years of plenty, it has already been observed, the bounty, 
 by occasioning an extraordinary exportation, necessarily keeps up 
 the price of corn in the home market above what it would naturally 
 fall to. To do so was the avowed purpose of the institution. In 
 years of scarcity, though the bounty is frequently suspended, yet 
 the great exportation which it occasions in years of plenty must 
 frequently hinder more or less the plenty of one year from relieving 
 the scarcity of another. Both in years of plenty and in years 
 of scarcity, therefore, the bounty necessarily tends to raise the 
 money price of corn somewhat higher than it otherwise would be in 
 the home market. 
 
 That, in the actual state of tillage, the bounty must necessarily 
 have this tendency, will not, I apprehend, be disputed by any 
 reasonable person. But it has been thought by many people that 
 it tends to encourage tillage, and that in two different ways: first, 
 by opening a more extensive foreign market to the corn of the 
 farmer, it tends, they imagine, to increase the demand for, and 
 consequently the production of that commodity ; and secondly, by 
 securing to him a better price than he could otherwise expect in the 
 actual state of tillage, it tends, they suppose, to encourage tillage. 
 This double encouragement must, they imagine, in a long period of 
 years, occasion such an increase in the production of corn as may 
 lower its price in the home market, much more than the bounty 
 can raise it, in the actual state which tillage may, at the end of that 
 period, happen to be in. 
 
 I answer, that whatever extension of the foreign market can be 
 occasioned by the bounty, must, in every particular year, be alto- 
 gether at the expense of the home market ; as every bushel of 
 corn which is exported by means of the bounty, and which would 
 not have been exported without the bounty, would have remained 
 in the home market to increase the consumption and to lower the 
 price of that commodity. The corn bounty, it is to be observed, as 
 well as every other bounty upon exportation, imposes two different 
 taxes upon the people : first, the tax which they are obliged to con- 
 tribute, in order to pay the bounty ; and secondly, the tax which 
 arises from the advanced price of the commodity in the home 
 market, and which, as the whole body of the people are purchasers 
 of corn, must, in this particular commodity, be paid by the whole 
 body of the people. In this particular commodity, therefore, this
 
 CHAP. v. THE WEALTH OF NATIONS. 83 
 
 second tax is by much the heaviest of the two. Let us suppose 
 that, taking one year with another, the bounty of five shillings 
 upon the exportation of the quarter of wheat, raises the price of 
 that commodity in the home market only sixpence the bushel, or 
 four shillings the quarter, higher than it otherways would have 
 been in the actual state of the crop. Even upon this very mode- 
 rate supposition, the great body of the people, over and above 
 contributing the tax which pays the bounty of five shillings upon 
 every quarter of wheat exported, must pay another of four shillings 
 upon every quarter which they themselves consume. But, accord- 
 ing to the very well-informed author of the tracts upon the corn- 
 trade, the average proportion of the corn exported to that consumed 
 at home, is not more than that of one to thirty-one. For every 
 five shillings, therefore, which they contribute to the payment of 
 the first tax, they must contribute six pounds four shillings to the 
 payment of the second. So very heavy a tax upon the first neces- 
 sary of life, must either reduce the subsistence of the labouring poor, 
 or it must occasion some augmentation in their pecuniary wages, 
 proportionable to that in the pecuniary price of their subsistence. 
 So far as it operates in the one way, it must reduce the ability of 
 the labouring poor to educate and bring up their children, and 
 must, so far, tend to restrain the population of the country. So far 
 as it operates in the other, it must reduce the ability of the em- 
 ployers of the poor to employ so great a number as they otherwise 
 might do, and must, so far, tend to restrain the industry of the 
 country. The extraordinary exportation of corn, therefore, occa- 
 sioned by the bounty, not only, in every particular year, diminishes 
 the home, just as much as it extends the foreign market and con- 
 sumption, but, by restraining the population and industry of the 
 country, its final tendency is to stunt and restrain the gradual 
 extension of the home market; and thereby, in the long run, rather 
 to diminish than to augment the whole market and consumption 
 of corn. 
 
 This enhancement of the money price of corn however, it has 
 been thought, by rendering that commodity more profitable to the 
 farmer, must necessarily encourage its production. 
 
 I answer, that this might be the case if the effect of the bounty 
 was to raise the real price of corn, or to enable the farmer, with an 
 equal quantity of it, to maintain a greater number of labourers in 
 
 G 2
 
 84 THE NATURE AND CAUSES OF BOOK iv. 
 
 the same manner, whether liberal, moderate, or scanty, that other 
 labourers are commonly maintained in his neighbourhood. But 
 neither the bounty, it is evident, nor any other human institution, 
 can have any such effect. It is not the real but the nominal price 
 of corn, which can in any considerable degree be affected by the 
 bounty. And though the tax which that institution imposes 
 upon the whole body of the people, may be very burdensome 
 to those who pay it, it is of very little advantage to those who 
 receive it. 
 
 The real effect of the bounty is not so much to raise the real 
 value of corn, as to degrade the real value of silver ; or to make an 
 equal quantity of it exchange for a smaller quantity, not only of 
 corn, but of all other home-made commodities : for the money price 
 of corn regulates that of all other home-made commodities. 
 
 It regulates the money price of labour, which must always be 
 such as to enable the labourer to purchase a quantity of corn suffi- 
 cient to maintain him and his family either in the liberal, moderate, 
 or scanty manner in which the advancing, stationary, or declining 
 circumstances of the society oblige his employers to maintain him. 
 
 It regulates the money price of all the other parts of the rude 
 produce of land, which, in every period of improvement, must bear 
 a certain proportion to that of corn, though this proportion is 
 different in different periods. It regulates, for example, the money 
 price of grass and hay, of butcher's-meat, of horses, and the main- 
 tenance of horses, of land carriage consequently, or of the greater 
 part of the inland commerce of the country. 1 
 
 By regulating the money price of all the other parts of the rude 
 produce of land, it regulates that of the materials of almost all 
 manufactures. By regulating the money price of labour, it regu- 
 lates that of manufacturing art and industry. And by regulating 
 both, it regulates that of the complete manufacture. The money 
 pi-ice of labour, and of everything that is the produce either of 
 
 1 If the bounty on corn heightened producer. If therefore it regulated other 
 
 its price, the tendency of the bounty prices, it did so adversely. It artificially 
 
 would be to diminish the price of other lowered the value of silver in one direc- 
 
 agricultural produce, by narrowing the tion, to artificially heighten it in other 
 
 art a of consumption. When bread is directions. The effect of this unnatural 
 
 dear, meat is generally cheap. It is pro- disturbance of prices was all the more 
 
 bable therefore that, as far as the bounty iniquitous, as the enhancement was of 
 
 operated, it was a heavy tax on the con- the necessaries of life, the depreciation of 
 
 sumer, and no great boon, if it were not, its luxuries. 
 on the contrary, a real injury to the
 
 CHAP. v. THE WEALTH OF NATIONS. 85 
 
 land or labour, must necessarily either rise or fall in proportion to 
 the money price of corn. 
 
 Though in consequence of the bounty, therefore, the farmer 
 should be enabled to sell his corn for four shillings the bushel 
 instead of three and sixpence, and to pay his landlord a money rent 
 proportionable to this rise in the money price of his produce ; yet 
 if, in consequence of this rise in the price of corn, four shillings 
 will purchase no more home-made goods of any other kind than 
 three and sixpence would have done before, neither the circum- 
 stances of the farmer, nor those of the landlord, will be much 
 mended by this change. The farmer will not be able to cultivate 
 much better: the landlord will not be able to live much better. In 
 the purchase of foreign commodities this enhancement in the price 
 of corn may give them some little advantage. In that of home- 
 made commodities it can give them none at all. And almost the 
 whole expense of the farmer, and the far greater part, even of that 
 of the landlord, is in home-made commodities. 
 
 That degradation in the value of silver which is the effect of the 
 fertility of the mines, and which operates equally, or very near 
 equally, through the greater part of the commercial world, is a 
 matter of very little consequence to any particular country. The 
 consequent rise of all money prices, though it does not make those 
 who receive them really richer, does not make them really poorer. 
 A service of plate becomes really cheaper, and everything else 
 remains precisely of the same real value as before. 
 
 But that degradation in the value of silver which, being the 
 effect either of the peculiar situation, or of the political institutions 
 of a particular country, takes place only in that country, is a matter 
 of very great consequence, which, far from tending to make any- 
 body really richer, tends to make everybody really poorer. The 
 rise in the money price of all commodities, which is in this case 
 peculiar to that country, tends to discourage more or less every sort 
 of industry which is carried on within it, and to enable foreign 
 nations, by furnishing almost all sorts of goods for a smaller quan- 
 tity of silver than its own workmen can afford to do, to undersell 
 them, not only in the foreign, but even in the home market. 1 
 
 1 The value of silver in relation to all rest of the world. No regulation can 
 
 commodities cannot be degraded by any enhance the price of all articles. But it 
 
 legislative process short of that which is possible for regulations to make all 
 
 effects a complete insulation from the kinds of labour less effective, and there
 
 86 THE NATURE AND CAUSES OF BOOK iv. 
 
 It is the peculiar situation of Spain and Portugal as proprietors 
 of the mines, to be the distributors of gold and silver to all the 
 other countries of Europe. Those metals ought naturally, therefore, 
 to be somewhat cheaper in Spain and Portugal than in any other 
 part of Europe. The difference, however, should be no more than 
 the amount of the freight and insurance ; and, on account of the 
 great value and small bulk of those metals, their freight is no great 
 matter, and their insurance is the same as that of any other goods 
 of equal value. Spain and Portugal, therefore, could suffer very 
 little from their peculiar situation, if they did not aggravate its 
 disadvantages by their political institutions. 
 
 Spain by taxing, and Portugal by prohibiting the exportation of 
 gold and silver, load that exportation with the expense of smug- 
 gling, and raise the value of those metals in other countries so much 
 more above what it is in their own, by the whole amount of this 
 expense. When you dam up a stream of water, as soon as the dam 
 is full, as much water must run over the dam-head as if there was 
 no dam at all. The prohibition of exportation cannot detain a 
 greater quantity of gold and silver in Spain and Portugal than 
 what they can afford to employ, than what the annual produce of 
 their land and labour will allow them to employ, in coin, plate, 
 gilding, and other ornaments of gold and silver. When they have 
 got this quantity the dam is full, and the whole stream which flows 
 in afterwards must run over. The annual exportation of gold and 
 silver from Spain and Portugal accordingly is, by all accounts, not- 
 withstanding these restraints, very near equal to the whole annual 
 importation. As the water, however, must always be deeper behind 
 the dam-head than before it, so the quantity of gold and silver 
 which these restraints detain in Spain and Portugal must, in propor- 
 tion to the annual produce of their land and labour, be greater than 
 what is to be found in other countries. The higher and stronger 
 the dam-head, the greater must be the difference in the depth of 
 water behind and before it. The higher the tax, the higher the 
 penalties with which the prohibition is guarded ; the more vigilant 
 and severe the police which looks after the execution of the law, the 
 
 fore to bring about a general decline in money price of corn, I repeat, does not 
 
 the productive power of a country. It determine or regulate the money price of 
 
 was not then in the general degradation anything else except it be labour, and 
 
 of the value of silver, that the folly and then only when the labourers' wages 
 
 injustice of the bounty consisted, but in satisfy only the barest necessaries of 
 
 the practical effects of the measure. The life.
 
 CHAP. v. THE WEALTH OF NATIONS. 87 
 
 greater must be the difference in the proportion of gold and silver 
 to the annual produce of the land and labour of Spain and Por- 
 tugal, and to that of other countries. It is said accordingly to be 
 very considerable, and that you frequently find there a profusion 
 of plate in houses, where there is nothing else which would, in 
 other countries, be thought suitable or correspondent to this sort 
 of magnificence. The cheapness of gold and silver, or, what is the 
 same thing, the dearness of all commodities, which is the neces- 
 sary effect of this redundancy of the precious metals, discourages 
 both the agriculture and manufactures of Spain and Portugal, and 
 enables foreign nations to supply them with many sorts of rude, 
 and with almost all sorts of manufactured produce, for a smaller 
 quantity of gold and silver than what they themselves can either 
 raise or make them for at home. 1 The tax and prohibition operate in 
 two different ways. They not only lower very much the value of the 
 precious metals in Spain and Portugal, but by detaining there a 
 certain quantity of those metals which would otherwise flow over 
 other countries, they keep up their value in those other countries 
 somewhat above what it otherwise would be, and thereby give those 
 countries a double advantage in their commerce with Spain and 
 Portugal. Open the flood-gates, and there will presently be less 
 water above, and more below, the dam-head, and it will soon come 
 to a level in both places. Remove the tax and the prohibition, and 
 as the quantity of gold and silver will diminish considerably in 
 Spain and Portugal, so it will increase somewhat in other countries, 
 and the value of those metals, their proportion to the annual pro- 
 duce of land and labour, will soon come to a level, or very near to a 
 level, in all. The loss which Spain and Portugal could sustain by 
 this exportation of their gold and silver would be altogether nominal 
 and imaginary. The nominal value of their goods, and of the 
 annual produce of their land and labour, would fall, and would be 
 expressed or represented by a smaller quantity of silver than before ; 
 
 1 Absurd as these prohibitions were, appropriation of the precious metals, to 
 this effort in Spain and Portugal could the omission of other industries, partly 
 have been only very partial. Smith bears to the grinding despotism of the govern- 
 testimony to the fact that no prohibition ment in each country, most of all to 
 can prevent smuggling, and that nothing the debasement which religious in- 
 is smuggled more easily than gold and tolerance and savage persecution in- 
 silver. The two countries alluded to duced in the national mind. As liberty 
 suffered a decline, partly because the and toleration have been granted and 
 energies of the people were wasted in adopted, these countries have made pro- 
 the wild race after the discovery and gress.
 
 88 THE NATURE AND CAUSES OF BOOK iv. 
 
 but their real value would be the same as before, and would be suffi- 
 cient to maintain, command, and employ the same quantity of 
 labour. As the nominal value of their goods would fall, the real 
 value of what remained of their gold and silver would rise, and a 
 smaller quantity of those metals would answer all the same purposes 
 of commerce and circulation which had employed a greater quantity 
 before. The gold and silver which would go abroad would not go 
 abroad for nothing, but would bring back an equal value of goods 
 of some kind or another. Those goods too would not be all matters 
 of mere luxury and expense, to be consumed by idle people, who 
 produce nothing in return for their consumption. As the real 
 wealth and revenue of idle people would not be augmented by this 
 extraordinary exportation of gold and silver, so neither would their 
 consumption be much augmented by it. Those goods would, pro- 
 bably, the greater part of them, and certainly some part of them, 
 consist in materials, tools, and provisions, for the employment and 
 maintenance of industrious people, who would reproduce, with a 
 profit, the full value of their consumption. A part of the dead 
 stock of the society would thus be turned into active stock, and 
 would put into motion a greater quantity of industry than had been 
 employed before. The annual produce of their land and labour 
 would immediately be augmented a little, and in a few years would, 
 probably, be augmented a great deal ; their industry being thus 
 relieved from one of the most oppressive burdens which it at pre- 
 sent labours under. 
 
 The bounty upon the exportation of corn necessarily operates 
 exactly in the same way as this absurd policy of Spain and 
 Portugal. Whatever be the actual state of tillage, it renders our 
 corn somewhat dearer in the home market than it otherwise would 
 be in that state, and somewhat cheaper in the foreign ; and as the 
 average money price of corn regulates more or less that of all 
 other commodities, it lowers the value of silver considerably in 
 the one, and tends to raise it a little in the other. It enables 
 foreigners, the Dutch in particular, not only to eat our corn cheaper 
 than they otherwise could do, but sometimes to eat it cheaper than 
 even our own people can do upon the same occasions ; as we are 
 assured by an excellent authority, that of Sir Matthew Decker. 1 
 
 1 Decker is reputed to have written Foreign Trade. See Macculloch's Lite- 
 an Essay on the Causes of the Decline of rature of Political Economy, p. 328.
 
 CHAP. v. THE WEALTH OF NATIONS. 89 
 
 It hinders our own workmen from furnishing- their goods for so 
 small a quantity of silver as they otherwise might do ; and enables 
 the Dutch to furnish theirs for a smaller. It tends to render our 
 manufactures somewhat dearer in every market, and theirs some- 
 what cheaper than they otherwise would be, and consequently to 
 give their industry a double advantage over our own. 
 
 The bounty, as it raises in the home market, not so much the 
 real as the nominal price of our corn, as it augments, not the 
 quantity of labour which a certain quantity of corn can maintain 
 and employ, but only the quantity of silver which it will exchange 
 for, it discourages our manufactures, without rendering any con- 
 siderable service either to our farmers or country gentlemen. It 
 puts, indeed, a little more money into the pockets of both, and 
 it will perhaps be somewhat difficult to persuade the greater part 
 of them that this is not rendering them a very considerable service. 
 But if this money sinks in its value, in the quantity of labour, 
 provisions, and home-made commodities of all different kinds which 
 it is capable of purchasing, as much as it rises in its quantity, the 
 service will be little more than nominal and imaginary. 
 
 There is, perhaps, but one set of men in the whole common- 
 wealth to whom the bounty either was or could be essentially 
 serviceable. These were the corn merchants, the exporters and 
 importers of corn. In years of plenty, the bounty necessarily oc- 
 casioned a greater exportation than would otherwise have taken 
 place ; and by hindering the plenty of one year from relieving the 
 scarcity of another, it occasioned in years of scarcity a greater 
 importation than would otherwise have been necessary. It in- 
 creased the business of the corn merchant in both ; and in years 
 of scarcity, it not only enabled him to import a greater quantity, 
 but to sell it for a better price, and consequently with a greater 
 profit than he could otherwise have made, if the plenty of one 
 year had not been more or less hindered from relieving the scarcity 
 of another. It is in this set of men, accordingly, that I have 
 observed the greatest zeal for the continuance or renewal of the 
 bounty. 1 
 
 1 No doubt. Adam Smith is stating fact, that his interposition is a service to 
 
 that of which he had personal experience. producer and consumer, this profit being 
 
 But the interest of corn merchants was reduced to the minimum by the compe- 
 
 not furthered by the bounty. The profit tition of other corn merchants. Besides 
 
 of a corn merchant is derived from the this, he gets an insurance against the
 
 90 THE NATURE AND CAUSES OF BOOK iv. 
 
 Our country gentlemen, when they imposed the high duties upon 
 the importation of foreign corn, which in times of moderate plenty 
 amount to a prohibition, and when they established the bounty, 
 seem to have imitated the conduct of our manufacturers. By the 
 one institution, they secured to themselves the monopoly of the 
 home market, and by the other they endeavoured to prevent that 
 market from ever being overstocked with their commodity. 1 By 
 both they endeavoured to raise its real value, in the same manner 
 as our manufacturers had, by the like institutions, raised the real 
 value of many different sorts of manufactured goods. They did not 
 perhaps attend to the great and essential difference which nature 
 has established between corn and almost every other sort of goods. 
 When either by the monopoly of the home market, or by a bounty 
 upon exportation, you enable our woollen or linen manufacturers to 
 sell their goods for somewhat a better price than they otherwise 
 could get for them, you raise not only the nominal but the real 
 price of those goods. You render them equivalent to a greater 
 quantity of labour and subsistence, you increase not only the 
 nominal but the real profit, the real wealth and revenue of those 
 manufacturers, and you enable them either to live better themselves, 
 or to employ a greater quantity of labour in those particular manu- 
 factures. You really encourage those manufactures, and direct 
 towards them a greater quantity of the industry of the country, 
 than what would probably go to them of its own accord. But 
 when by the like institutions you raise the nominal or money-price 
 of corn, you do not raise its real value. You do not increase the 
 real wealth, the real revenue either of our farmers or country 
 
 ordinary risks of his calling. The more l But with this difference, that the 
 
 the risk, the greater the insurance. But use of manufactured commodities is 
 
 his gains as a speculator are not ob- more or less optional, always in degree, 
 
 tained at the expense of the public, but generally in the article altogether, 
 
 at the expense of other speculators, just Hence the monopoly of the manufac- 
 
 in the same way as a man who wins turer is corrected by the will of the cou- 
 
 wagers at horse races wins them not sumer. But the case of food is wholly 
 
 from the general public, but from other different ; the use is not optional at 
 
 persons who lose wagers. Nothing can all, and the quantity used hardly so. 
 
 be more unfair than the prejudice against The injury then inflicted by a prohibi- 
 
 corn-dealers and similar speculators, when tion of foreign corn, is incomparably 
 
 they enter into bona-fide transactions. greater than that of a prohibition of 
 
 In effect they do a service to society, foreign manufactures, and the iinme- 
 
 apart from that which they render the diate advantage which the landlord 
 
 producer and consumer, in shortening the gets by the prohibition is far greater 
 
 extremes of high and low prices. See than that which the manufacturer can 
 
 below, p. 99. get.
 
 CHAP. v. THE WEALTH OF NATIONS. 91 
 
 V 
 
 gentlemen. You do not encourage the growth of corn, because 
 you do not enable them to maintain and employ more labourers 
 in raising it. The nature of things has stamped upon corn a real 
 value which cannot be altered by merely altering its money price. 
 No bounty upon exportation, no monopoly of the home market, 
 can raise that value. The freest competition cannot lower it. 
 Through the world in general that value is equal to the quantity 
 of labour which it can maintain, and in every particular place it is 
 equal to the quantity of labour which it can maintain in the way, 
 whether liberal, moderate, or scanty, in which labour is commonly 
 maintained in that place. Woollen or linen cloth are not the regu- 
 lating commodities by which the real value of all other commodities 
 must be finally measured and determined. Corn is. The real value 
 of every other commodity is finally measured and determined by 
 the proportion which its average money price bears to the average 
 money price of corn. The real value of corn does not vary with 
 those variations in its average money price, which sometimes occur 
 from one century to another. It is the real value of silver which 
 varies with them. 1 
 
 Bounties upon the exportation of any home-made commodity are 
 liable, first, to that general objection which may be made to all 
 the different expedients of the mercantile system the objection of 
 forcing some part of the industry of the country into a channel 
 less advantageous than that in which it would run of its own 
 accord ; and, secondly, to the particular objection of forcing it, not 
 only into a channel that is less advantageous, but into one that 
 is actually disadvantageous ; the trade which cannot be carried on 
 but by means of a bounty being necessarily a losing trade. The 
 bounty upon the exportation of corn is liable to this further 
 
 1 The price of corn depends on the of labour depend on the price of food, 
 
 proportion which the efficiency of agri- though the former cannot fall perma- 
 
 cultural industry bears to the demand nently below the power of purchasing 
 
 for its produce. Increase the efficiency, sufficient food. But this being satisfied, 
 
 and keep the population at the same and the wages of the lowest-priced 
 
 amount, and the price falls, though it labour are almost always a good deal 
 
 does not follow by the way, as Mr. Mill above the necessary food of the labourer 
 
 argues, that rent will fall with improve- the rate of wages depends on the ratio 
 
 ment. The relation of corn prices to subsisting between population and capi- 
 
 labour and rent in the first half of the tal. The real value of corn has risen 
 
 eighteenth century is conclusive on this materially, with variation sin other money 
 
 point. At this time the value of corn prices, not only from year to year, as 
 
 was low, owing to causes referred to in every one admits, but on an average of 
 
 a preceding note. Nor does the price considerable duration.
 
 92 THE NATURE AND CAUSES OF BOOK iv. 
 
 objection, that it can in no respect promote the raising of that 
 particular commodity of which it was meant to encourage the 
 production. When our country gentlemen, therefore, demanded 
 the establishment of the bounty, though they acted in imitation 
 of our merchants and manufacturers, they did not act with that 
 complete comprehension of their own interest which commonly 
 directs the conduct of those two other orders of people. They 
 loaded the public revenue with a very considerable expense ; they 
 imposed a very heavy tax upon the whole body of the people ; but 
 they did not, in any sensible degree, increase the real value of their 
 own commodity; and by lowering somewhat the real value of 
 silver, they discouraged, in some degree, the general industry of 
 the country, and, instead of advancing, retarded more or less the 
 improvement of their own lands, which necessarily depends upon 
 the general industry of the country. 1 
 
 To encourage the production of any commodity, a bounty upon 
 production, one should imagine, would have a more direct operation 
 than one upon exportation. It would, besides, impose only one tax 
 upon the people, that which they must contribute in order to pay 
 the bounty. Instead of raising, it would tend to lower the price 
 of the commodity in the home market ; and thereby, instead of 
 imposing a second tax upon the people, it might, at least in part, 
 repay them for what they had contributed to the first. Bounties 
 upon production, however, have been very rarely granted. 2 The 
 prejudices established by the commercial system have taught us to 
 believe, that national wealth arises more immediately from exporta- 
 tion than from production. It has been more favoured accordingly, 
 as the more immediate means of bringing money into the country. 
 Bounties upon production, it has been said too, have been found by 
 experience more liable to frauds than those upon exportation. How 
 far this is true, I know not. That bounties upon exportation have 
 been abused to many fraudulent purposes, is very well known. But 
 it is not the interest of merchants and manufacturers, the great 
 inventors of all these expedients, that the home market should be 
 
 1 It is more correct to say that the 2 They have, from time to time, on 
 country gentlemen in striving to get, and flax culture. Smith alludes to that on 
 in really getting, an increased price for herrings. There was a similar bounty 
 their wheat, gained a loss on other ag i- on the whale fishery. It is almost super- 
 cultural produce, the use of which was fluous to "add that all have been aban- 
 more or less voluntary. doned.
 
 CHAP. v. THE WEALTH OF NATIONS. 93 
 
 overstocked with their goods, an event which a bounty upon pro- 
 duction might sometimes occasion. A bounty upon exportation, 
 by enabling them to send abroad the surplus part, and to keep up 
 the price of what remains in the home market, effectually prevents 
 this. Of all the expedients of the mercantile system, accordingly, 
 it is the one of which they are the fondest. 1 have known the 
 different undertakers of some particular works agree privately 
 among themselves to give a bounty out of their own pockets upon 
 the exportation of a certain proportion of the goods which they 
 dealt in. This expedient succeeded so well, that it more than 
 doubled the price of their goods in the home market, notwith- 
 standing a very considerable increase in the produce. The opera- 
 tion of the bounty upon corn must have been wonderfully different, 
 if it has lowered the money price of that commodity. 
 
 Something like a bounty upon production, however, has been 
 granted upon some particular occasions. The tonnage bounties given 
 to the white-herring and whale fisheries may, perhaps, be considered 
 as somewhat of this nature. They tend directly, it may be supposed, 
 to render the goods cheaper in the home market than they otherwise 
 would be. In other respects their effects, it must be acknowledged, 
 are the same as those of bounties upon exportation. By means of 
 them a part of the capital of the country is employed in bringing 
 goods to market, of which the price does not repay the cost, together 
 with the ordinary profits of stock. 
 
 But though the tonnage bounties to those fisheries do not con- 
 tribute to the opulence of the nation, it may perhaps be thought 
 that they contribute to its defence, by augmenting the number of 
 its sailors and shipping. This, it may be alleged, may sometimes 
 be done by means of such bounties at a much smaller expense, than 
 by keeping up a great standing navy, if I may use such an expres- 
 sion, in the same way as a standing army. 
 
 Notwithstanding these favourable allegations, however, the fol- 
 lowing considerations dispose me to believe, that in granting at 
 least one of these bounties, the Legislature has been very grossly 
 imposed upon. 
 
 First, The herring buss bounty seems too large. 
 
 From the commencement of the winter fishing 1771 to the end of 
 the winter fishing 1781, the tonnage bounty upon the herring buss 
 fishery has been at thirty shillings the ton. During these eleven
 
 94 THE NATURE AND CAUSES OF BOOK iv. 
 
 years the whole number of barrels caught by the herring buss 
 fishery of Scotland amounted to 378,347. The herrings caught and 
 cured at sea, are called sea sticks. In order to render them what 
 are called merchantable herrings, it is necessary to repack them 
 with an additional quantity of salt ; and in this case, it is reckoned 
 that three barrels of sea sticks are usually repacked into two barrels 
 of merchantable herrings. The number of barrels of merchantable 
 herrings, therefore, caught during these eleven years, will amount 
 only, according to this account, to 252,23 1. During these eleven 
 years the tonnage bounties paid amounted to ^155,463 u-?., or to 
 8*. 2\d. upon every barrel of sea sticks, and to 12*. <$%d. upon every 
 barrel of merchantable herrings. 
 
 The salt with which these herrings are cured is sometimes Scotch, 
 and sometimes foreign salt ; both which are delivered free of all 
 excise duty to the fish-curers. The excise duty upon Scotch salt is 
 at present is. 6d., that upon foreign salt los. the bushel. A barrel 
 of herrings is supposed to require about one bushel and one-fourth 
 of a bushel foreign salt. Two bushels are the supposed average of 
 Scotch salt. If the herrings are entered for exportation, no part of 
 this duty is paid up ; if entered for home consumption, whether the 
 herrings were cured with foreign or with Scotch salt, only one 
 shilling the barrel is paid up. It was the old Scotch duty upon 
 a bushel of salt, the quantity which, at a low estimation, had been 
 supposed necessary for curing a barrel of herrings. In Scotland, 
 foreign salt is very little used for any other purpose but the curing 
 of fish. But from the 5th April 1771, to the 5th April 1782, the 
 quantity of foreign salt imported amounted to 936,974 bushels, at 
 eighty-four pounds the bushel : the quantity of Scotch salt, delivered 
 from the works to the fish-curers, to no more than 168,226, at 
 fifty-six pounds the bushel only. It would appear, therefore, that 
 it is principally foreign salt that is used in the fisheries. Upon 
 every barrel of herrings exported there is, besides, a bounty of 2s. 8(L, 
 and more than two-thirds of the buss-caught herrings are exported. 
 Put all these things together, and you will find that, during these 
 eleven years, every barrel of buss-caught herrings, cured with Scotch 
 salt when exported, has cost Government 17*. uff/. ; and when 
 entered for home consumption 14*. 3!^.; and that every barrel 
 cured with foreign salt, when exported, has cost Government 
 ^ Jj 7 s ' 5%d-> an( i when entered for home consumption, i 3*. ^\d.
 
 CHAP. v. THE WEALTH OF NATIONS. 95 
 
 The price of a barrel of good merchantable herrings runs from 
 seventeen and eighteen to four and five and twenty shillings ; about 
 a guinea at an average. 1 
 
 Secondly, The bounty to the white-herring fishery is a tonnage 
 bounty, and is proportioned to the burden of the ship, not to her 
 diligence or success in the fishery ; and it has, I am afraid, been too 
 common for vessels to fit out for the sole purpose of catching, not 
 the fish, but the bounty. In the year 1759, when the bounty was 
 at fifty shillings the ton, the whole buss fishery of Scotland brought 
 in only four barrels of sea sticks. In that year each barrel of sea 
 sticks cost Government in bounties alone ^113 15*-; each barrel 
 of merchantable herrings j'i59 7$. 6d. 
 
 Thirdly, The mode of fishing for which this tonnage bounty in 
 the white-herring fishery has been given (by busses or decked vessels 
 from twenty to eighty tons burden), seems not so well adapted to 
 the situation of Scotland as to that of Holland, from the practice of 
 which country it appears to have been borrowed. Holland lies at 
 a great distance from the seas to which herrings are known prin- 
 cipally to resort ; and can, therefore, carry on that fishery only in 
 decked vessels, which can carry water and provisions sufficient for 
 a voyage to a distant sea. But the Hebrides or western islands, the 
 islands of Shetland, and the northern and north-western coasts of 
 Scotland, the countries in whose neighbourhood the herring fishery 
 is principally carried on, are everywhere intersected by arms of the 
 sea which run up a considerable way into the land, and which, in the 
 language of the country, are called sea-lochs. It is to these sea- 
 lochs that the herrings principally resort during the seasons in 
 which they visit those seas ; for the visits of this, and, I am assured, 
 of many other sorts of fish, are not quite regular and constant. A 
 boat fishery, therefore, seems to be the mode of fishing best adapted 
 to the peculiar situation of Scotland ; the fishers carrying the her- 
 rings on shore, as fast as they are taken, to be either cured or con- 
 sumed fresh. But the great encouragement, which a bounty of 
 thirty shillings a ton gives to the buss fishery, is necessarily a dis- 
 couragement to the boat fishery ; which, having no such bounty, 
 cannot bring its cured fish to market upon the same terms as the 
 buss fishery. The boat fishery, accordingly, which, before the estab- 
 lishment of the buss bounty, was very considerable, and is said to 
 1 See the accounts at the end of the chapter.
 
 96 THE NATURE AND CAUSES OF BOOK iv. 
 
 have employed a number of seamen, not inferior to what the buss 
 fishery employs at present, is now gone almost entirely to decay. 
 Of the former extent, however, of this now ruined and abandoned 
 fishery, I must acknowledge that I cannot pretend to speak with 
 much precision. As no bounty was paid upon the outfit of the boat 
 fishery, no account was taken of it by the officers of the customs or 
 salt duties. 
 
 Fourthly, In many parts of Scotland, during certain seasons of 
 the year, herrings make no inconsiderable part of the food of the 
 common people. A bounty, which tended to lower their price in the 
 home market, might contribute a good deal to the relief of a great 
 number of our fellow-subjects, whose circumstances are by no means 
 affluent. But the herring buss bounty contributes to no such good 
 purpose. It has ruined the boat fishery, which is by far the best 
 adapted for the supply of the home market, and the additional 
 bounty of 2s. 8d. the barrel upon exportation, carries the greater 
 part, more than two-thirds, of the produce of the buss fishery abroad. 
 Between thirty and forty years ago, before the establishment of the 
 buss bounty, sixteen shillings the barrel, I have been assured, was the 
 common price of white herrings. Between ten and fifteen years ago, 
 before the boat fishery was entirely ruined, the price is said to have 
 run from seventeen to twenty shillings the barrel. For these last 
 five years, it has, at an average, been at twenty-five shillings the 
 barrel. This high price, however, may have been owing to the real 
 scarcity of the herrings upon the coast of Scotland. I must observe 
 too, that the cask or barrel, which is usually sold with the herrings, 
 and of which the price is included in all the foregoing prices, has, 
 since the commencement of the American war, risen to about double 
 its former price, or from about three shillings to about six shillings. 
 I must likewise observe, that the accounts I have received of the 
 prices of former times have been by no means quite uniform and 
 consistent ; and an old man of great accuracy and experience has 
 assured me, that more than fifty years ago, a guinea was the usual 
 price of a barrel of good merchantable herrings; and this, I imagine, 
 may still be looked upon as the average price. All accounts how- 
 ever, I think, agree that the price has not been lowered in the home 
 market, in consequence of the buss bounty. 1 
 
 1 Smith was a Scotch Commisuontr of authority on the facts. His inferences 
 Customs, and could therefore speak with are confirmed by the lircunutance that
 
 CHAP. y. THE WEALTH OF NATIONS. 97 
 
 When the undertakers of fisheries, after such liberal bounties have 
 been bestowed upon them, continue tosell their commodity at the same, 
 or even at a higher price than they were accustomed to do before, it 
 might be expected that their profits should be very great ; and it is 
 not improbable that those of some individuals may have been so. 
 In general, however, I have every reason to believe, they have been 
 quite otherwise. The usual effect of such bounties is to encourage 
 rash undertakers to adventure in a business which they do not 
 understand, and what they lose by their own negligence and igno- 
 rance, more than compensates all that they can gain by the utmost 
 liberality of Government. In 1750, by the same Act which first 
 gave the bounty of thirty shilling the ton for the encouragement 
 of the white-herring fishery (the 23 Geo. II, chap. 24), a joint-stock 
 company was erected, with a capital of five hundred thousand 
 pounds, to which the subscribers (over and above all other encourage- 
 ments, the tonnage bounty just now mentioned, the exportation 
 bounty of two shillings and eightpence the barrel, the delivery of 
 both British and foreign salt duty free) were, during the space of 
 fourteen years, for every hundred pounds which they subscribed and 
 paid in to the stock of the society, entitled to three pounds a year, to be 
 paid by the receiver-general of the customs in equal half-yearly pay- 
 ments. Besides this great company, the residence of whose governor 
 and directors was to be in London, it was declared lawful to erect 
 fishing-chambers in all the different outports of the kingdom, pro- 
 vided a sum not less than ten thousand pounds was subscribed into 
 the capital of each, to be managed at its own risk, and for its own 
 profit and loss. The same annuity, and the same encouragement of 
 all kinds, were given to the trade of those inferior chambers, as to 
 that of the great company. The subscription of the great company 
 was soon filled up ; and several different fishing-chambers were 
 erected in the different outports of the kingdom. In spite of all 
 these encouragements, almost all those different companies, both 
 great and small, lost either the whole or the greater part of their 
 capitals; scarce a vestige now remains of any of them, and the 
 white-herring fishery is now entirely, or almost entirely, carried on 
 by private adventurers. 
 
 the Scotch customs constantly produced allowances, during great part of the 
 nothing to the Exchequer, but were com- eighteenth century. See Macpherson'a 
 pletely swallowed up by bounties and fourth volume, passim. 
 
 VOL. II. H
 
 98 TEE NATURE AND CAUSES OF BOOK iv. 
 
 If any particular manufacture was necessary, indeed, for the 
 defence of the society, it might not always be prudent to depend 
 upon our neighbours for the supply ; and if such manufacture could 
 not otherways be supported at home, it might not be unreasonable 
 that all the other branches of industry should be taxed in order to 
 support it. The bounties upon the exportation of British-made 
 sail-cloth and British-made gunpowder may, perhaps, both be 
 vindicated upon this principle. 
 
 But though it can very seldom be reasonable to tax the industry 
 of the great body of the people, in order to support that of some 
 particular class of manufacturers ; yet in the wantonness of great 
 prosperity, when the public enjoys a greater revenue than it knows 
 well what to do with, to give such bounties to favourite manufac- 
 tures may, perhaps, be as natural as to incur any other idle expense. 
 In public, as well as in private expenses, great wealth may, perhaps, 
 frequently be admitted as an apology for great folly. But there must 
 surely be something more than ordinary absurdity in continuing 
 such profusion in times of general difficulty and distress. 
 
 What is called a bounty is sometimes no more than a drawback, 
 and consequently is not liable to the same objections as what is 
 properly a bounty. The bounty, for example, upon refined sugar 
 exported, may be considered as a drawback of the duties upon the 
 brown and muscovado sugars, from which it is made ; the bounty 
 upon wrought silk exported, a drawback of the duties upon raw and 
 thrown silk imported ; the bounty upon gunpowder exported, 
 a drawback of the duties upon brimstone and saltpetre imported. 
 In the language of the customs, those allowances only are called 
 drawbacks which are given upon goods exported in the same form 
 in which they are imported. When that form has been so altered 
 by manufacture of any kind, as to come under a new denomination, 
 they are called bounties. 
 
 Premiums given by the public to artists and manufacturers who 
 excel in their particular occupations, are not liable to the same 
 objections as bounties. By encouraging extraordinary dexterity 
 and ingenuity, they serve to keep up the emulation of the work- 
 men actually employed in those respective occupations, and are not 
 considerable enough to turn towards any one of them a greater 
 share of the capital of the country than what would go to it of its 
 own accord. Their tendency is not to overturn the natural balance
 
 CHAP. v. THE WEALTH OF NATIONS. 99 
 
 of employments, but to render the work which is done in each as 
 perfect and complete as possible. 1 The expense of premiums, 
 besides, is very trifling ; that of bounties very great. The bounty 
 upon corn alone has sometimes cost the public, in one year, more 
 than three hundred thousand pounds. 
 
 Bounties are sometimes called premiums, as drawbacks are some- 
 times called bounties. But we must in all cases attend to the 
 nature of the thing, without paying any regard to the word. 
 
 Digression concerning the Corn Trade and Corn Laws. 
 
 I CANNOT conclude this chapter concerning bounties without 
 observing that the praises which have been bestowed upon the 
 law which establishes the bounty upon the exportation of corn, and 
 upon that system of regulations which is connected with it, are 
 altogether unmerited. A particular examination of the nature of 
 the corn trade, and of the principal British laws which relate to 
 it, will sufficiently demonstrate the truth of this assertion. The 
 great importance of this subject must justify the length of the 
 digression. 
 
 The trade of the corn merchant is composed of four different 
 branches, which, though they may sometimes be all carried on by the 
 same person, are in their own nature four separate and distinct trades. 
 These are, first, the trade of the inland dealer; secondly, that of 
 the merchant importer for home consumption ; thirdly, that of the 
 merchant exporter of home produce for foreign consumption ; and, 
 fourthly, that of the merchant carrier, or of the importer of corn in 
 order to export it again. 
 
 I. The interest of the inland dealer, and that of the great body 
 of the people, how opposite soever they may at first sight appear, 
 are, even in years of the greatest scarcity, exactly the same. It is 
 his interest to raise the price of his corn as high as the real scarcity 
 of the season requires, and it can never be his interest to raise it 
 higher. By raising the price he discourages the consumption, and 
 puts everybody more or less, but particularly the inferior ranks of 
 
 1 No question is perhaps more vexed contrast, to be excusable. We shall have 
 
 than that of the value of such encourage- occasion, however, to comment on these in- 
 
 ments to invention as those for which stances and circumstances in dealing with 
 
 Smith apologises, and admits, at least by the subjects treated of in the Fifth Book. 
 
 H 3
 
 100 THE NATURE AND CAUSES OF BOOK iv. 
 
 people, upon thrift and good management. If, by raising it too 
 high, he discourages the consumption so much that the supply of 
 the season is likely to go beyond the consumption of the season, 
 and to last for some time after the next crop begins to come in, he 
 runs the hazard, not only of losing a considerable part of his corn 
 by natural causes, but of being obliged to sell what remains of it 
 for much less than what he might have had for it several months 
 before. If by not raising the price high enough he discourages the 
 consumption so little, that the supply of the season is likely to fall 
 short of the consumption of the season, he not only loses a part of 
 the profit which he might otherwise have made, but he exposes the 
 people to suffer before the end of the season, instead of the hardships 
 of a dearth, the dreadful horrors of a famine. It is the interest 
 of the people that their daily, weekly, and monthly consumption 
 should be proportioned as exactly as possible to the supply of 
 the season. The interest of the inland corn dealer is the same. 
 By supplying them, as nearly as he can judge, in this proportion, 
 he is likely to sell all his corn for the highest price, and with the 
 greatest profit ; and his knowledge of the state of the crop, and of 
 his daily, weekly, and monthly sales, enable him to judge, with 
 more or less accuracy, how far they really are supplied in this 
 manner. Without intending the interest of the people, he is 
 necessarily led, by a regard to his own interest, to treat them, 
 even in years of scarcity, pretty much in the same manner as the 
 prudent master of a vessel is sometimes obliged to treat his crew. 
 When he foresees that provisions are likely to run short, he puts 
 them upon short allowance. Though from excess of caution he 
 should sometimes do this without any real necessity, yet all the 
 inconveniences which his crew can thereby suffer are inconsiderable 
 in comparison of the danger, misery, and ruin to which they might 
 sometimes be exposed by a less provident conduct. Though from 
 excess of avarice, in the same manner, the inland corn merchant 
 should sometimes raise the price of his corn somewhat higher than 
 the scarcity of the season requires, yet all the ^conveniences which 
 the people can suffer from this conduct, which effectually secures 
 them from a famine in the end of the season, are inconsiderable in 
 comparison of what they might have been exposed to by a more 
 liberal way of dealing in the beginning of it. The corn merchant 
 himself is likely to suffer the most by this excess of avarice ; not
 
 CHAP. v. THE WEALTH OF NATIONS. 101 
 
 only from the indignation which it generally excites against him, 
 but, though he should escape the effects of this indignation, from 
 the quantity of corn which it necessarily leaves upon his hands in 
 the end of the season, and which, if the next season happens to 
 prove favourable, he must always sell for a much lower price than 
 he might otherwise have had. 1 
 
 Were it possible, indeed, for one great company of merchants to 
 possess themselves of the whole crop of an extensive country, it 
 might, perhaps, be their interest to deal with it as the Dutch are 
 said to do with the spiceries of the Moluccas to destroy or throw 
 away a considerable part of it, in order to keep up the price of the 
 rest. But it is scarce possible, even by the violence of law, to 
 establish such an extensive monopoly with regard to corn ; and, 
 wherever the law leaves the trade free, it is of all commodities the 
 least liable to be engrossed or monopolised by the force of a few 
 large capitals, which buy up the greater part of it. Not only 
 its value far exceeds what the capitals of a few private men 
 are capable of purchasing, but, supposing they were capable of 
 purchasing it, the manner in which it is produced renders this 
 purchase altogether impracticable. As in every civilised country 
 it is the commodity of which the annual consumption is the 
 greatest, so a greater quantity of industry is annually employed 
 in producing corn than in producing any other commodity. When 
 it first comes from the ground too, it is necessarily divided among 
 a greater number of owners than any other commodity ; and these 
 owners can never be collected into one place like a number of 
 independent manufacturers, but are necessarily scattered through 
 all the different corners of the country. These first owners either 
 immediately supply the consumers in their own neighbourhood, or 
 they supply other inland dealers who supply those consumers. The 
 inland dealers in corn, therefore, including both the farmer and the 
 baker, are necessarily more numerous than the dealers in any other 
 commodity, and their dispersed situation renders it altogether 
 
 1 The real difficulty before the corn- is this public loss a benefit to the pro- 
 dealer is to interpret the amount of ducer, for it is absorbed, as I said above, 
 supply, and so to eliminate the risk of in the insurance or risk paid to the 
 misconceiving it. Of course the public inland dealer. The reason, no doubt, 
 must insure him against this risk, by an why the information is withheld, or 
 extra price. It is therefore folly on the grudgingly conceded, is that, under pre- 
 part of the home producer, and a loss carious tenures, landlord and tenant are 
 to the public, when information as to perpetually playing at a game of hide- 
 agricultural statistics is withheld. Nor aud-seek.
 
 102 THE NATURE AND CAUSES OF BOOK iv. 
 
 impossible for them to enter into any general combination. If, 
 in a year of scarcity therefore, any of them should find that he 
 had a good deal more corn upon hand than, at the current price, he 
 could hope to dispose of before the end of the season, he would 
 never think of keeping up this price to his own loss, and to the sole 
 benefit of his rivals and competitors, but would immediately lower 
 it, in order to get rid of his corn before the new crop began to come 
 in. The same motives, the same interests, which would thus 
 regulate the conduct of any one dealer, would regulate that of 
 every other, and oblige them all in general to sell their corn at 
 the price which, according to the best of their judgment, was most 
 suitable to the scarcity or plenty of the season. 
 
 Whoever examines, with attention, the history of the dearths and 
 famines which have afflicted any part of Europe, during either the 
 course of the present or that of the two preceding centuries (of 
 several of which we have pretty exact accounts), will find, I believe, 
 that a dearth never has arisen from any combination among the 
 inland dealers in corn, nor from any other cause but a real scarcity, 
 occasioned sometimes perhaps, and in some particular places, by the 
 waste of war, but in by far the greatest number of cases, by the 
 fault of the seasons ; and that a famine has never arisen from any 
 other cause but the violence of Government attempting, by improper 
 means, to remedy the inconveniences of a dearth. 1 
 
 In an extensive corn country, between all the different parts of 
 which there is a free commerce and communication, the scarcity 
 occasioned by the most unfavourable seasons can never be so great 
 as to produre a famine ; and the scantiest crop, if managed with 
 frugality and economy, will maintain, through the year, the same 
 number of people that are commonly fed in a more affluent manner 
 by one of moderate plenty. 2 The seasons most unfavourable to the 
 
 1 Famine in this country has been very of wheat from the year 1259 to ^ e present 
 rare. The policy of Government in pro- time, and be able to draw liis own in- 
 hibiting or restraining the dealers' trade, ferences from these prices. The chief risk 
 and in a less degree by confining markets of famine consists in the fact that a corn- 
 to particular places, may have induced munity is content to live on a low de- 
 local famines. The greatest famine in scription of food. 
 
 England was that of the years 1315, 2 This is a little overstated. It is a 
 
 1316, when wheat, to interpret the highest law in prices, that when the supply of 
 
 prices of the time in modern money at any article of prime necessity falls short, 
 
 the rate of 9% times, sold for 1 2 1 33. ^d. the actual supply sells for a far higher 
 
 the quarter in one or two places. The price than the whole average amount 
 
 reader will find at the conclusion of would sell at. In other words, the 
 
 Chapter IX (Book I) a table of the prices difference between abundance and scar-
 
 CHAP. v. THE WEALTH OF NATION'S. 103 
 
 crop are those of excessive drought or excessive rain. But, as corn 
 grows equally upon high and low lands upon grounds that are 
 disposed to be too wet, and upon those that are disposed to 
 be too dry either the drought or the rain which is hurtful to one 
 part of the country is favourable to another ; and though both in 
 the wet and in the dry season the crop is a good deal less than 
 in one more properly tempered, yet in both what is lost in one part 
 of the country is in some measure compensated by what is gained 
 in the other. In rice countries, where the crop not only requires a 
 very moist soil, but where in a certain period of its growing it must 
 be laid under water, the effects of a drought are much more dismal. 
 Even in such countries, however, the drought is, perhaps, scarce 
 ever so universal as necessarily to occasion a famine, if the Govern- 
 ment would allow a free trade. The drought in Bengal, a few years 
 ago, might probably have occasioned a very great dearth. Some 
 improper regulations, some injudicious restraints imposed by the 
 servants of the East India Company upon the rice trade, contri- 
 buted, perhaps, to turn that dearth into a famine. 1 
 
 When the Government, in order to remedy the inconveniences of 
 a dearth, orders all the dealers to sell their corn at what it supposes 
 a reasonable price, it either hinders them from bringing^it to market, 
 which may sometimes produce a famine even in the beginning of 
 the season ; or, if they bring it thither, it enables the people, and 
 thereby encourages them to consume it so fast, as must necessarily 
 produce a famine before the end of the season. The unlimited, 
 unrestrained freedom of the corn trade, as it is the only effectual 
 preventative of the miseries of a famine, so it is the best palliative 
 of the inconveniences of a dearth ; for the inconveniences of a real 
 scarcity cannot be remedied ; they can only be palliated. No trade 
 deserves more the full protection of the law, and no trade requires 
 it so much; because no trade is so much exposed to popular odium. 
 
 In years of scarcity, the inferior ranks of people impute their 
 
 city is far greater than that between needs exercise, the charge may still be 
 scarcity and bare subsistence. This law, made, the modern lack of judgment 
 first noticed by Gregory King (Davenant's consisting in total indifference to pro- 
 works), has been dwelt on by Mr. Tooke, viding adequate means of communication 
 History of Prices, vol. i. between region and region. At the same 
 1 The incompetence of the East India time, it must not be forgotten, that the 
 Company was a prominent fact at the mass of the inhabitants in Hindostan feed 
 time in which Smith wrote. As far as on rice, a kind of grain which, being the 
 regards that supervision, which, in a cheapest, allows no adoption of a lower 
 country like India, a Government must article of food in periods of scarcity.
 
 104 THE NATURE AND CAUSES OF BOOK iv. 
 
 distress to the avarice of the corn merchant, who becomes the object 
 of their hatred and indignation. Instead of making profit upon 
 such occasions, therefore, he is often in danger of being utterly 
 ruined, and of having his magazines plundered and destroyed by 
 their violence. It is in years of scarcity, however, when prices are 
 high, that the corn merchant expects to make his principal profit. 
 He is generally in contract with some farmers to furnish him for 
 a certain number of years with a certain quantity of corn at a 
 certain price. This contract price is settled according to what is 
 supposed to be the moderate and reasonable, that is, the ordinary 
 or average price, which, before the late years of scarcity, was 
 commonly about eight-and-tvventy shillings for the quarter of wheat, 
 and for that of other grain in proportion. In years of scarcity, 
 therefore, the corn merchant buys a great part of his corn for the 
 ordinary price, and sells it for a much higher. That this extra- 
 ordinary profit, however, is no more than sufficient to put his trade 
 upon a fair level with other trades, and to compensate the many 
 losses which he sustains upon other occasions, both from the perish- 
 able nature of the commodity itself, and from the frequent and 
 unforeseen fluctuations of its price, seems evident enough, from 
 this single circumstance, that great fortunes are as seldom made 
 in this as in any other trade. The popular odium, however, which 
 attends it in years of scarcity, the only years in which it can be 
 very profitable, renders people of character and fortune averse to 
 enter into it. It is abandoned to an inferior set of dealers ; and 
 millers, bakers, mealmen, and meal factors, together with a number 
 of wretched hucksters, are almost the only middle people that, in 
 the home market, come between the grower and the consumer. 
 
 The ancient policy of Europe, instead of discountenancing this 
 popular odium against a trade so beneficial to the public, seems, on 
 the contrary, to have authorised and encouraged it. 
 
 By the 5th and 6th l of Edward VI, chap. 14, it was enacted, 
 That whoever should buy any corn or grain with intent to sell it 
 again, should be reputed an unlawful engrosser, and should, for the 
 first fault, suffer two months' imprisonment, and forfeit the value 
 of the corn ; for the second, suffer six months' imprisonment, and 
 forfeit double the value; and for the third, be set in the pillory, 
 
 1 The 5th and 6th Ed. VI (1551-2) was a year of scarcity, though prices were little 
 more than half thosa of 1556-7.
 
 CHAP. v. THE WEALTH OF NATIONS. 105 
 
 suffer imprisonment during the king's pleasure, and forfeit all his 
 goods and chattels. The ancient policy of most other parts of 
 Europe was no better than that of England. 
 
 Our ancestors seem to have imagined that the people would buy 
 their corn cheaper of the farmer than of the corn merchant, who, they 
 were afraid, would require, over and above the price which he paid to 
 the farmer, an exorbitant profit to himself. They endeavoured, 
 therefore, to annihilate his trade altogether. They even endeavoured 
 to hinder as much as possible any middle man of any kind from 
 coming in between the grower and the consumer ; and this was the 
 meaning of the many restraints which they imposed upon the trade 
 of those whom they called kidders or carriers of corn, a trade which 
 nobody was allowed to exercise without a licence ascertaining his 
 qualifications as a man of probity and fair dealing. The authority of 
 three justices of the peace was, by the statute of Edward VI, neces- 
 sary, in order to grant this licence. But even this restraint was 
 afterwards thought insufficient, and by a statute of Elizabeth, 1 the 
 privilege of granting it was confined to the quarter-sessions. 
 
 The ancient policy of Europe endeavoured in this manner to 
 regulate agriculture, the great trade of the country, by maxims 
 quite different from those which it established with regard to 
 manufactures, the great trade of the towns. By leaving the farmer 
 no other customers but either the consumers or their immediate 
 factors, the kidders and carriers of corn, it endeavoured to force 
 him to exercise the trade, not only of a farmer, but of a corn 
 merchant or corn retailer. On the contrary, it in many cases pro- 
 hibited the manufacturer from exercising the trade of a shopkeeper, 
 or from selling his own goods by retail. It meant by the one law 
 to promote the general interest of the country, or to render corn 
 cheap, without, perhaps, its being well understood how this was 
 to be done. By the other it meant to promote that of a particular 
 order of men, the shopkeepers, who would be so much undersold 
 by the manufacturer, it was supposed, that their trade would be 
 ruined if he was allowed to retail at all. 
 
 The manufacturer, however, though he had been allowed to keep 
 a shop, and to sell his own goods by retail, could not have undersold 
 the common shopkeeper. Whatever part of his capital he might 
 have placed in his shop, he must have withdrawn it from his 
 
 1 5 Eliz. cap. xit
 
 106 THE NATURE AND CAUSES OF BOOK rr. 
 
 manufacture. In order to carry on his business on a level with 
 that of other people, as he must have had the profit of a manufac- 
 turer on the one part, so he must have had that of a shopkeeper 
 upon the other. Let us suppose, for example, that in the particular 
 town where he lived, ten per cent, was the ordinary profit both of 
 manufacturing and shopkeeping stock ; he must in this case have 
 charged, upon every piece of his own goods which he sold in his 
 shop, a profit of twenty per cent. When he carried them from his 
 workhouse to his shop, he must have valued them at the price for 
 which he could have sold them to a dealer or shopkeeper, who 
 would have bought them by wholesale. If he valued them lower, 
 he lost a part of the profit of his manufacturing capital. When 
 again he sold them from his shop, unless he got the same price at 
 which a shopkeeper would have sold them, he lost a part of the 
 profit of his shopkeeping capital. Though he might appear, there- 
 fore, to make a double profit upon the same piece of goods, yet as 
 these goods made successively a part of two distinct capitals, he 
 made but a single profit upon the whole capital employed about 
 them ; and if he made less than this profit, he was a loser, or did 
 not employ his whole capital with the same advantage as the greater 
 part of his neighbours. 
 
 What the manufacturer was prohibited to do, the farmer was in 
 some measure enjoined to do : to divide his capital between two 
 different employments ; to keep one part of it in his granaries and 
 stack-yard, for supplying the occasional demands of the market ; 
 and to employ the other in the cultivation of his land. But as he 
 could not afford to employ the latter for less than the ordinary 
 profits of farming stock, so he could as little afford to employ the 
 former for less than the ordinary profits of mercantile stock. 
 Whether the stock which really carried on the business of the corn 
 merchant belonged to the person who was called a farmer, or to the 
 person who was called a corn merchant, an equal profit was in both 
 cases requisite, in order to indemnify its owner for employing it in 
 this manner ; in order to put his business upon a level with other 
 trades, and in order to hinder him from having an interest to 
 change it as soon *as possible for some other. The farmer, therefore, 
 who was thus forced to exercise the trade of a corn merchant, could not 
 afford to sell his corn cheaper than any other corn merchant would 
 have been obliged to do in the case of a free competition.
 
 CHAP. v. THE WEALTH OF NATIONS. 107 
 
 The dealer who can employ his whole stock in one single branch 
 of business, has an advantage of the same kind with the workman 
 who can employ his whole labour in one single operation. As the 
 latter acquires a dexterity which enables him, with the same two 
 hands, to perform a much greater quantity of work, so the former 
 acquires so easy and ready a method of transacting his business, of 
 buying and disposing of his goods, that with the same capital he 
 can transact a much greater quantity of business. As the one can 
 commonly afford his work a good deal cheaper, so the other can 
 commonly afford his goods somewhat cheaper than if his stock and 
 attention were both employed about a greater variety of objects. 
 The greater part of manufacturers could not afford to retail their 
 own goods so cheap as a vigilant and active shopkeeper, whose sole 
 business it was to buy them by wholesale, and to retail them again. 
 The greater part of farmers could still less afford to retail their own 
 corn, or to supply the inhabitants of a town, at perhaps four or five 
 miles distance from the greater part of them, so cheap as a vigilant 
 and active corn merchant, whose sole business it was to purchase 
 corn by wholesale, to collect it into a great magazine, and to retail 
 it again. 
 
 The law which prohibited the manufacturer from exercising the 
 trade of a shopkeeper, endeavoured to force this division in the 
 employment of stock to go on faster than it might otherwise have 
 done. The law which obliged the farmer to exercise the trade of a 
 corn merchant, endeavoured to hinder it from going on so fast. 
 Both laws were evident violations of natural liberty, and therefore 
 unjust ; and they were both too as impolitic as they were unjust. 
 It is the interest of every society, that things of this kind should 
 never either be forced or obstructed. The man who employs either 
 his labour or his stock in a greater variety of ways than his situation 
 renders necessary, can never hurt his neighbour by underselling 
 him. He may hurt himself, and he generally does so. Jack of all 
 trades will never be rich, says the proverb. But the law ought 
 always to trust people with the care of their own interest, as in their 
 local situations they must generally be able to judge better of it 
 than the legislator can do. The law, however, which obliged the 
 farmer to exercise the trade of a corn merchant, was by far the most 
 pernicious of the two. 
 
 It obstructed, not only that division in the employment of stock
 
 108 THE NATURE AND CAUSES OF BOOK iv. 
 
 which is so advantageous to every society, but it obstructed likewise 
 the improvement and cultivation of the land. By obliging the 
 farmer to carry on two trades instead of one, it forced him to divide 
 his capital into two parts, of which one only could be employed in 
 cultivation. But if he had been at liberty to sell his whole crop 
 to a corn merchant as fast as he could thresh it out, his whole 
 capital might have returned immediately to the land, and have been 
 employed in buying more cattle, and hiring more servants, in order 
 to improve and cultivate it better. But by being obliged to sell 
 his corn by retail, he was obliged to keep a great part of his capital 
 in his granaries and stack-yard through the year, and could not, 
 therefore, cultivate so well as with the same capital he might other- 
 wise have done. This law, therefore, necessarily obstructed the 
 improvement of the land, and, instead of tending to render corn 
 cheaper, must have tended to render it scarcer, and therefore dearer, 
 than it would otherwise have been. 
 
 After the business of the farmer, that of the corn merchant is in 
 reality the trade which, if properly protected and encouraged, would 
 contribute the most to the raising of corn. It would support the 
 trade of the farmer in the same manner as the trade of the wholesale 
 dealer supports that of the manufacturer. 
 
 The wholesale dealer, by affording a ready market to the manu- 
 facturer, by taking his goods off his hand as fast as he can make 
 them, and by sometimes even advancing their price to him before 
 he has made them, enables him to keep his whole capital, and 
 sometimes even more than his whole capital, constantly employed 
 in manufacturing, and consequently to manufacture a much greater 
 quantity of goods than if he was obliged to dispose of them himself to 
 the immediate consumers, or even to the retailers. As the capital 
 of the wholesale merchant too is generally sufficient to replace that 
 of many manufacturers, this intercourse between him and them 
 interests the owner of a large capital to support the owners of a 
 great number of small ones, and to assist them in those losses and 
 misfortunes which might otherwise prove ruinous to them. 
 
 An intercourse of the same kind universally established between 
 the farmers and the corn merchants would be attended with effects 
 equally beneficial to the farmers. They would be enabled to keep 
 their whole capitals, and even more than their whole capitals, 
 constantly employed in cultivation. In case of any of those
 
 CHAP. v. THE WEALTH OF NATIONS. 109 
 
 accidents, to which no trade is more liable than theirs, they would 
 find in their ordinary customer, the wealthy corn merchant, a person 
 who had both an interest to support them and the ability to do it, 
 and they would not, as at present, be entirely dependent upon the 
 forbearance of their landlord, or the mercy of his steward. Were 
 it possible, as perhaps it is not, to establish this intercourse uni- 
 versally, and all at once, were it possible to turn all at once the 
 whole farming stock of the kingdom to its proper business, the 
 cultivation of land, withdrawing it from every other employment 
 into which any part of it may be at present diverted, and were it 
 possible, in order to support and assist upon occasion the operations 
 of this great stock, to provide all at once another stock almost 
 equally great, it is not perhaps very easy to imagine how great, 
 how extensive, and how sudden would be the improvement which 
 this change of circumstances would alone produce upon the whole 
 face of the country. 
 
 The statute of Edward VI, therefore, by prohibiting as much as 
 possible any middle man from coming in between the grower and 
 the consumer, endeavoured to annihilate a trade, of which the free 
 exercise is not only the best palliative of the inconveniences of a 
 dearth, but the best preventative of that calamity: after the trade 
 of the farmer, no trade contributing so much to the growing of corn 
 as that of the corn merchant. 
 
 The rigour of this law was afterwards softened by several sub- 
 sequent statutes, which successively permitted the engrossing of corn 
 when the price of wheat should not exceed twenty, twenty-four, 
 thirty-two, and forty shillings the quarter. At last, by the i5th of 
 Charles II, c. 7, the engrossing or buying of corn in order to sell 
 it again, as long as the price of wheat did not exceed forty-eight 
 shillings the quarter, and that of other grain in proportion, was 
 declared lawful to all persons not being forestallers, that is, not 
 selling again in the same market within three months. All the 
 freedom which the trade of the inland corn dealer has ever yet en- 
 joyed, was bestowed upon it by this statute. The statute of the I2th 
 of the present king, which repeals almost all the other ancient laws 
 against engrossers and forestallers, does not repeal the restrictions 
 of this particular statute, which therefore still continue in force. 
 
 This statute, however, authorises in some measure two very absurd 
 popular prejudices.
 
 110 THE NATURE AND CAUSES OF BOOK iv. 
 
 First, it supposes that when the price of wheat has risen so 
 high as forty-eight shillings the quarter, and that of other grain 
 in proportion, corn is likely to be so engrossed as to hurt the 
 people. But from what has been already said, it seems evident 
 enough that corn can at no price be so engrossed by the inland 
 dealers as to hurt the people ; and forty-eight shillings the quarter 
 besides, though it may be considered as a very high price, yet in 
 years of scarcity it is a price which frequently takes place imme- 
 diately after harvest, when scarce any part of the new crop can be 
 sold off, and when it is impossible even for ignorance to suppose 
 that any part of it can be so engrossed as to hurt the people. 
 
 Secondly, it supposes that there is a certain price at which corn 
 is likely to be forestalled, that is, brought up in order to be sold 
 again soon after in the same market, so as to hurt the people. 
 But if a merchant ever buys up corn, either going to a particular 
 market or in a particular market, in order to sell it again soon 
 after in the same market, it must be because he judges that the 
 market cannot be so liberally supplied through the whole season 
 as upon that particular occasion, and that the price, therefore, must 
 soon rise. If he judges wrong in this, and if the price does not 
 rise, he not only loses the whole profit of the stock which he 
 employs in this manner, but a part of the stock itself, by the 
 expense and loss which necessarily attend the storing and keeping 
 of corn. He hurts himself, therefore, much more essentially than 
 he can hurt even the particular people whom he may hinder from 
 supplying themselves upon that particular market day, because they 
 may afterwards supply themselves just as cheap upon any other 
 market day. If he judges right, instead of hurting the great 
 body of the people, he renders them a most important service. 
 By making them feel the inconveniences of a dearth somewhat 
 earlier than they otherwise might do, he prevents their feeling 
 them afterwards so severely as they certainly would do, if the 
 cheapness of price encouraged them to consume faster than suited 
 the real scarcity of the season. When the scarcity is real, the 
 best thing that can be done for the people is to divide the incon- 
 veniences of it as equally as possible through all the different 
 months and weeks, and days of the year. The interest of the corn 
 merchant makes him study to do this as exactly as he can ; and 
 as no other person can have either the same interest, or the same
 
 CHAP, v, THE WEALTH OF NATIONS, 111 
 
 knowledge, or the same abilities to do it so exactly as he, this most 
 important operation of commerce ought to be trusted entirely to 
 him ; or, in other words, the corn trade, so far at least as concerns 
 the supply of the home market, ought to be left perfectly free. 
 
 The popular fear of engrossing or forestalling may be compared 
 to the -popular terrors and suspicions of witchcraft. The unfor- 
 tunate wretches accused of this latter crime were not more innocent 
 of the misfortunes imputed to them, than those who have been 
 accused of the former. The law which put an end to all prosecu- 
 tions against witchcraft, which put it out of any man's power to 
 gratify his own malice by accusing his neighbour of that imaginary 
 crime, seems effectually to have put an end to those fears and 
 suspicions, by taking away the great cause which encouraged and 
 supported them. The law which should restore entire freedom to 
 the inland trade of corn, would probably prove as effectual to put 
 an end to the popular fears of engrossing and forestalling. 
 
 The i5^h of Charles II, c. 7, however, with all its imperfections, 
 has perhaps contributed more both to the plentiful supply of the 
 home market, and to the increase of tillage, than any other law 
 in the statute-book. It is from this law that the inland corn trade 
 has derived all the liberty and protection which it has ever yet 
 enjoyed; and both the supply of the home market and the interest 
 of tillage are much more effectually promoted by the inland than 
 either by the importation or exportation trade. 
 
 The proportion of the average quantity of all sorts of grain 
 imported into Great Britain to that of all sorts of grain consumed, 
 it has been computed by the author of the tracts upon the corn 
 trade, does not exceed that of one to five hundred and seventy. 
 For supplying the home market, therefore, the importance of the 
 inland trade must be to that of the importation trade as five 
 hundred and seventy to one. 
 
 The average quantity of all sorts of grain exported from Great 
 Britain does not, according to the same author, exceed the one- 
 and-thirtieth part of the annual produce. For the encouragement 
 of tillage, therefore, by providing a market for the home produce, 
 the importance of the inland trade must be to that of the exportation 
 trade as thirty to one. 
 
 I have no great faith in political arithmetic, and I mean not to 
 warrant the exactness of either of these computations. I mention.
 
 112 THE NATURE AND CAUSES OF BOOK iv. 
 
 them only in order to show of how much less consequence, in the 
 opinion of the most judicious and experienced persons, the foreign 
 trade of corn is than the home trade. The great cheapness of corn 
 in the years immediately preceding- the establishment of the bounty 
 may, perhaps with reason, be ascribed in some measure to the 
 operation of this statute of Charles II, which had been enacted 
 about five-and-twenty years before, and which had therefore full 
 time to produce its effect. 
 
 A very few words will sufficiently explain all that I have to say 
 concerning' the other three branches of the corn trade. 
 
 II. The trade of the merchant importer of foreign corn for home 
 consumption evidently contributes to the immediate supply of the 
 home market, and must so far be immediately beneficial to the 
 great body of the people. It tends, indeed, to lower somewhat 
 the average money price of corn, but not to diminish its real value, 
 or the quantity of labour which it is capable of maintaining. If 
 importation was at all times free, our farmers and country gentlemen 
 would probably, one year with another, get less money for their 
 corn than they do at present, when importation is at most times 
 in effect prohibited ; but the money which they got would be of 
 more value, would buy more goods of all other kinds, and would 
 employ more labour. Their real wealth, their real revenue, there- 
 fore, would be the same as at present, though it might be expressed 
 by a smaller quantity of silver; and they would neither be disabled 
 nor discouraged from cultivating corn as much as they do at present. 
 On the contrary, as the rise in the real value of silver, in con- 
 sequence of lowering the money price of com, lowers somewhat 
 the money price of all other commodities, it gives the industry of 
 the country, where it takes place, some advantage in all foreign 
 markets, and thereby tends to encourage and increase that industry. 
 But the extent of the home market for corn must be in proportion 
 to the general industry of the country where it grows, or to the 
 number of those who produce something else, and therefore have 
 something else, or, what comes to the same thing, the price of some- 
 thing else, to give in exchange for corn. But in eveiy country 
 the home market, as it is the nearest and most convenient, so is 
 it likewise the greatest and most important market for corn. 
 That rise in the real value of silver, therefore, which is the effect 
 of lowering the average money price of corn, tends to enlarge the
 
 CHAP. v. THE WEALTH OF NATIONS. 113 
 
 greatest and most important market for corn, and thereby to en- 
 courage, instead of discouraging, its growth. 
 
 By the 22nd of Charles II, c. 13, the importation of wheat, 
 whenever the price in the home market did not exceed fifty-three 
 shillings and fourpenee the quarter, was subjected to a duty of 
 sixteen shillings the quarter ; and to a duty of eight shillings 
 whenever the price did not exceed four pounds. The former of 
 these two prices has, for more than a century past, taken place 
 only in times of very great scarcity; and the latter has, so far 
 as I know, not taken place at all. Yet, till wheat had risen above 
 this latter price, it was by this statute subjected to a very high 
 duty ; and, till it had risen above the former, to a duty which 
 amounted to a prohibition. The importation of other sorts of grain 
 was restrained at rates, and by duties, in proportion to the value 
 of the grain, almost equally high.* Subsequent laws still further 
 increased those duties. 
 
 The distress which, in years of scarcity, the strict execution of 
 those laws might have brought upon the people, would probably 
 have been very great. But, upon such occasions, its execution was 
 generally suspended by temporary statutes, which permitted, for a 
 limited time, the importation of foreign corn. The necessity of 
 these temporary statutes sufficiently demonstrates the impropriety 
 of this general one. 
 
 These restraints .upon importation, though prior to the establish- 
 ment of the bounty, were dictated by the same spirit, by the same 
 principles, which afterwards enacted that regulation. How hurtful 
 soever in themselves, these or some other restraints upon importation 
 became necessary in consequence of that regulation. If, when 
 
 * Before the I3th of the present king [George III], the following were the duties 
 payable upon the importation of the different sorts of grain : 
 
 Grain. Dutie*. Dutief. Duties. 
 
 Beans to 28*. per qr. 198. icxZ. after till 408. - i6s. Sd. then I2d. 
 Barleyto 288. 198. lod. 328. - i6s. od. lid. 
 
 Malt is prohibited by the annual Malt-tax Bill. 
 Oats to 1 6s. per qr. 58. lod. after 
 
 Pease 408. i6s. od. g 
 
 Rye ,,368. 198. i od. till 408. od. - i6s. Sd. then I2d. 
 
 Wheat,, 443. 2i. gd. 538. 4^. - 178. od. 8s. till \l. 
 
 and after that about is. 4<-l. 
 Buckwheat to 328. per qr. to pay i6s. 
 
 These different duties were imposed, partly by the 22nd of Charles II, in place 
 of the Old Subsidy, partly by the New Subsidy, by the One-third and Two-thirds 
 Subsidy, and by the Subsidy 1747- 
 
 VOL. II. I
 
 114 THE NATURE AND CAUSES OF BOOK iv. 
 
 wheat was either below forty-eight shillings the quarter, or not 
 much above it, foreign corn could have been imported either duty 
 free, or upon paying only a small duty, it might have been exported 
 again, with the benefit of the bounty, to the great loss of the public 
 revenue, and to the entire perversion of the institution, of which 
 the object was to extend the market for the home growth, not that 
 for the growth of foreign countries. 
 
 III. The trade of the merchant exporter of corn for foreign 
 consumption, certainly does not contribute directly to the plentiful 
 supply of the home market. It does so, however, indirectly. From 
 whatever source this supply may be usually drawn, whether from 
 home growth or from foreign importation, unless more corn is either 
 usually grown, or usually imported into the country, than what is 
 usually consumed in it, the supply of the home market can never 
 be very plentiful. But, unless the surplus can, in all ordinary cases, 
 be exported, the growers will be careful never to grow more, and 
 the importers never to import more, than what the bare consump- 
 tion of the home market requires. That market will very seldom 
 be overstocked ; but it will generally be understocked, the people, 
 whose business it is to supply it, being generally afraid lest their 
 goods should be left upon their hands. The prohibition of exporta- 
 tion limits the improvement and cultivation of the country to what 
 the supply of its own inhabitants requires. The freedom of ex- 
 portation enables it to extend cultivation for the supply of foreign 
 nations. 1 
 
 By the I2th of Charles II, c. 4, the exportation of corn was 
 permitted whenever the price of wheat did not exceed forty shillings 
 the quarter, and that of other grain in proportion. By the I5th 
 of the same prince, this liberty was extended till the price of wheat 
 exceeded forty-eight shillings the quarter; and by the 22nd, 
 to all higher prices. A poundage, indeed, was to be paid to the 
 king upon such exportation. But all grain was rated so low in 
 
 1 And also by implication, to render would be lessened by the fact that the 
 
 the home market more steady. If, as area from which the home growth is 
 
 is suggested i,i the text, freedom of ex- produced is wider. In our day, when 
 
 portation tend* to stimulate the produc- the exportation of home-grown corn has 
 
 tion of corn, and if also the home market altogether ceased, the abolition of any 
 
 is the best as well as the nearest, the tax on foreign corn operates just as the 
 
 exportation of corn would be stopped in removal of any hindrance on exportation 
 
 times of scarcity, and the scarcity itself did in Smith's time.
 
 CHAP. v. THE WEALTH OF NATIONS. 115 
 
 the book of rates, that this poundage amounted only upon wheat to 
 a shilling, upon oats to fourpence, and upon all other grain to six- 
 pence the quarter. By the ist of William and Mary, the Act 
 which established the bounty, this small duty was virtually taken 
 off whenever the price of wheat did not exceed forty-eight shillings 
 the quarter; and by the nth and I2th of William III, c. 20, it was 
 expressly taken off at all higher prices. 
 
 The trade of the merchant exporter was, in this manner, not only 
 encouraged by a bounty, but rendered much more free than that of 
 the inland dealer. By the last of these statutes, corn could be en- 
 grossed at any price for exportation ; but it could not be engrossed 
 for inland sale, except when the price did not exceed forty-eight 
 shillings the quarter. The interest of the inland dealer, however, 
 it has already been shown, can never be opposite to that of the 
 great body of the people. That of the merchant exporter may, and 
 in fact sometimes is. If, while his own country labours under a 
 dearth, a neighbouring country should be afflicted with a famine, it 
 might be his interest to carry corn to the latter country, in such 
 quantities as might very much aggravate the calamities of the 
 dearth. The plentiful supply of the home market was not the 
 direct object of those statutes ; but, under the pretence of encourag- 
 ing agriculture, to raise the money price of corn as high as possible, 
 and thereby to occasion, as much as possible, a constant dearth in 
 the home market. By the discouragement of importation, the 
 supply of that market, even in times of great scarcity, was confined 
 to the home growth ; and by the encouragement of exportation, 
 when the price was so high as forty-eight shillings the quarter, that 
 market was not, even in times of considerable scarcity, allowed to 
 enjoy the whole of that growth. The temporary laws, prohibiting 
 for a limited time the exportation of corn, and taking off for a 
 limited time the duties upon its importation expedients to which 
 Great Britain has been obliged so frequently to have recourse 
 sufficiently demonstrate the impropriety of her general system- 
 Had that system been good, she would not so frequently have been 
 reduced to the necessity of departing from it. 
 
 Were all nations to follow the liberal system of free exportation 
 and free importation, the different states into which a great conti- 
 nent was divided would so far resemble the different provinces of a 
 
 i 2
 
 116 THE NATURE AND CAUSES OF BOOK iv. 
 
 great empire. As among the different provinces of a great empire 
 the freedom of the inland trade appears, both from reason and 
 experience, not only the best palliative of a dearth, but the most 
 effectual preventative of a famine ; so would the freedom of the 
 exportation and importation trade be among the different states 
 into which a great continent was divided. The larger the continent, 
 the easier the communication through all the different parts of it, 
 both by land and by water, the less would any one particular part 
 of it ever be exposed to either of these calamities, the scarcity of any 
 one country being more likely to be relieved by the plenty of some 
 other. But very few countries have entirely adopted this liberal 
 system. The freedom of the corn trade is almost eveiy where more 
 or less restrained, and, in many countries, is confined by such absurd 
 regulations, as frequently aggravate the unavoidable misfortune of 
 a dearth into the dreadful calamity of a famine. The demand of 
 such countries for corn may frequently become so great and so 
 urgent, that a small state in their neighbourhood, which happened 
 at the same time to be labouring under some degree of dearth, 
 could not venture to supply them without exposing itself to the like 
 dreadful calamity. The very bad policy of one country may thus 
 render it in some measure dangerous and imprudent to establish 
 what would otherwise be the best policy in another. The unlimited 
 freedom of exportation, however, would be much less dangerous in 
 great states, in which the growth being much greater, the supply 
 could seldom be much affected by any quantity of corn that was 
 likely to be exported. In a Swiss canton, or in some -of the little 
 states of Italy, it may, perhaps, sometimes be necessary to restrain 
 the exportation of corn. In such great countries as France or 
 England, it scarce ever can. To hinder, besides, the farmer from 
 sending his goods at all times to the best market, is evidently to 
 sacrifice the ordinary laws of justice to an idea of public utility, to 
 a sort of reasons of state ; an act of legislative authority which 
 ought to be exercised only, which can be pardoned only in cases of 
 the most urgent necessity. The price at which the exportation of 
 corn is prohibited, if it is ever to be prohibited, ought always to be 
 a very high price. 
 
 The laws concerning corn may everywhere be compared to the 
 laws concerning religion. The people feel themselves so much
 
 CHAP. v. THE WEALTH OF NATIONS. 117 
 
 interested in what relates either to their subsistence in this life, or 
 to their happiness in a life to come, that Government must yield 
 to their prejudices, and, in order to preserve the public tranquillity, 
 establish that system which they approve of. It is upon this 
 account, perhaps, that we so seldom find a reasonable system estab- 
 lished with regard to either of those two capital objects. 
 
 IV. The trade of the merchant carrier, or of the importer of 
 foreign corn in order to export it again, contributes to the plentiful 
 supply of the home market. It is not indeed the direct purpose of 
 his trade to sell his corn there. But he will generally be willing to 
 do so, and even for a good deal less money than he might expect in 
 a foreign market ; because he saves in this manner the expense of 
 loading and unloading, of freight and insurance. The inhabitants 
 of the country which, by means of the carrying trade, becomes the 
 magazine and storehouse for the supply of other countries, can very 
 seldom be in want themselves. Though the carrying trade might 
 thus contribute to reduce the average money price of corn in the 
 home market, it would not thereby lower its real value : it would 
 only raise somewhat the real value of silver. 
 
 The carrying trade was in effect prohibited in Great Britain, 
 upon all ordinary occasions, by the high duties upon the importation 
 of foreign corn, of the greater part of which there was no drawback; 
 and upon extraordinary occasions, when a scarcity made it necessary 
 to suspend those duties by temporary statutes, exportation was 
 always prohibited. By this system of laws, therefore, the carrying 
 trade was in effect prohibited upon all occasions. 1 
 
 That system of laws, therefore, which is connected with the 
 establishment of the bounty, seems to deserve no part of the praise 
 which has been bestowed upon it. The improvement and pros- 
 perity of Great Britain, which has been so often ascribed to those 
 laws, may very easily be accounted for by other causes. That secu- 
 rity which the laws in Great Britain give to every man, that he 
 
 1 Even a small duty on corn, if it be exporting any notable amount of corn, 
 
 not drawn back on exportation, is suf- This duty was repealed in 1869, and 
 
 ficient to prevent a country from being since that period the imports of corn 
 
 the entrep6t of the corn trade. The have steadily increased. The quantity 
 
 shilling duty retained by Sir Robert Peel exported is generally small, but of high 
 
 on foreign corn, after the time that the quality, being it is said almost always 
 
 repeal of the corn laws was fully effected, seed com. 
 was sufficient to prevent this country from
 
 118 THE NATURE AND CAUSES OF BOOK iv. 
 
 shall enjoy the fruits of his own labour, is alone sufficient to make 
 any country flourish, notwithstanding these and twenty other absurd 
 regulations of commerce ; and this security was perfected by the 
 revolution, much about the same time that the bounty was estab- 
 lished. The natural effort of every individual to better his own 
 condition, when suffered to exert itself with freedom and security, 
 is so powerful a principle, that it is alone, and without any assist- 
 ance, not only capable of carrying- on the society to wealth and 
 prosperity, but of surmounting a hundred impertinent obstructions 
 with which the folly of human laws too often encumbers its opera- 
 tions ; though the effect of these obstructions is always more or less 
 either to encroach upon its freedom, or to diminish its security. In 
 Great Britain, industry is perfectly secure ; and though it is far 
 from being perfectly free, it is as free or freer than in any other 
 part of Europe. 
 
 Though the period of the greatest prosperity and improvement of 
 Great Britain has been posterior to that system of laws which is 
 connected with the bounty, we must not upon that account impute 
 it to those laws. It has been posterior likewise to the national 
 debt. But the national debt has most assuredly not been the 
 cause of it. 
 
 Though the system of laws which is connected with the bounty 
 has exactly the same tendency with the police of Spain and Por- 
 tugal, to lower somewhat the value of the precious metals in the 
 country where it takes place, yet Great Britain is certainly one of 
 the richest countries in Europe, while Spain and Portugal are per- 
 haps among the most beggarly. This difference of situation, how- 
 ever, may easily be accounted for from two different causes. First, 
 the tax in Spain, the prohibition in Portugal of exporting gold and 
 silver, and the vigilant police which watches over the execution of 
 those laws, must, in two very poor countries, which between them 
 import annually upwards of six millions sterling, operate, not only 
 more directly, but much more forcibly in reducing the value of 
 those metals there, than the corn laws can do in Great Britain. 
 And, secondly, this bad policy is not in those countries counter- 
 balanced by the general libert}' and security of the people. In- 
 dustry is there neither free nor secure, and the civil and ecclesiastical 
 Governments of both Spain and Portugal are such as would alone
 
 CHAP. v. THE WEALTH OF NATIONS. 119 
 
 he sufficient to perpetuate their present state of poverty, even though 
 their regulations of commerce were as wise as the greater part of 
 them are absurd and foolish. 
 
 The I3th of the present king [Geo. III.], c. 43, seems to have 
 established a new system with regard to the corn laws, in many 
 respects better than the ancient one, but in one or two respects 
 perhaps not quite so good. 
 
 By this statute the high duties upon importation for home con- 
 sumption are taken off so soon as the price of middling wheat rises 
 to forty-eight shillings the quarter ; that of middling rye, pease, or 
 beans, to thirty- two shillings ; that of barley to twenty-four shil- 
 lings, and that of oats to sixteen shillings ; and instead of them 
 a small duty is imposed of only sixpence upon the quarter of wheat, 
 and upon that of other grain in proportion. With regard to all 
 these different sorts of grain, but particularly with regard to wheat, 
 the home market is thus opened to foreign supplies at prices con- 
 siderably lower than before. 
 
 By the same statute the old bounty of five shillings upon the 
 exportation of wheat ceases so soon as the price rises to forty-four 
 shillings the quarter, instead of forty-eight, the price at which it 
 ceased before ; that of two shillings and sixpence upon the exporta- 
 tion of barley ceases so soon as the price rises to twenty-two shil- 
 lings, instead of twenty-four, the price at which it ceased before ; 
 that of two shillings and sixpence upon the exportation of oatmeal 
 ceases so soon as the price rises to fourteen shillings, instead of 
 fifteen, the price at which it ceased before. The bounty upon rye 
 is reduced from three shillings and sixpence to three shillings? 
 and it ceases so soon as the price rises to twenty-eight shillings, 
 instead of thirty-two, the price at which it ceased before. If 
 bounties are as improper as I have endeavoured to prove them 
 to be, the sooner they cease, and the lower they are, so much the 
 better. 
 
 The same statute permits, at the lowest prices, the importation 
 of corn, in order to be exported again, duty free, provided it is 
 in the meantime lodged in a warehouse under the joint locks 
 of the king and the importer. This liberty, indeed, extends to 
 no more than twenty-five of the different ports of Great Britain. 
 They are, however, the principal ones, and there may not, perhaps,
 
 120 THE NATURE AND CAUSES OF BOOK iv. 
 
 be warehouses proper for this purpose in the greater part of the 
 others. 
 
 So far, this law seems evidently an improvement upon the ancient 
 system. 
 
 But by the same law a bounty of two shillings the quarter is 
 given for the exportation of oats whenever the price does not 
 exceed fourteen shillings. No bounty had ever been given before 
 for the exportation of this grain, no more than for that of pease 
 or beans. 
 
 By the same law too, the exportation of wheat is prohibited so 
 soon as the price rises to forty-four shillings the quarter ; that of 
 rye so soon as it rises to twenty-eight shillings ; that of barley so 
 soon as it rises to twenty-two shillings ; and that of oats so soon 
 as they rise to fourteen shillings. These several prices seem all of 
 them a good deal too low, and there seems to be an impropriety, 
 besides, in prohibiting exportation altogether at those precise prices 
 at which that bounty, which was given in order to force it, is with- 
 drawn. The bounty ought certainly either to have been withdrawn 
 at a much lower price, or exportation ought to have been allowed 
 at a much higher. 
 
 So far, therefore, this law seems to be inferior to the ancient 
 system. With all its imperfections, however, we may perhaps say 
 of it what was said of the laws of Solon, that, though not the best 
 in itself, it is the best which the interests, prejudices, and temper of 
 the times would admit of. It may perhaps in due time prepare the 
 way for a better. 
 
 APPENDIX. 
 
 THE two following Accounts are subjoined in order to illustrate 
 and confirm what is said in the Fifth Chapter of the Fourth 
 Book, concerning the Tonnage Bounty to the White Herring 
 Fishery. The reader, I believe, may depend upon the accuracy of 
 both accounts.
 
 CHAP. V. 
 
 THE WEALTH OF NATIONS. 
 
 121 
 
 An Account of Busses fitted out in Scotland for Eleven Years, with the Number of 
 Empty Barrels carried out, and the Number of Barrels of Herrings caught ; also 
 the Bounty at a Medium on each Barrel of Seasteeks, and on each Barrel when 
 fully packed. 
 
 Years. 
 
 1771 
 1772 
 1773 
 1774 
 1775 
 1776 
 1777 
 1778 
 1779 
 1780 
 1781 
 
 Total 
 
 Number 
 of Busses. 
 
 29 
 1 68 
 190 
 248 
 
 275 
 294 
 240 
 220 
 206 
 181 
 135 
 
 2,186 
 
 Empty Barrels 
 carried out. 
 
 5.94 8 
 4.3i6 
 
 42,333 
 
 69,144 
 76,329 
 62,679 
 
 56,390 
 55,194 
 
 33,992 
 
 550,943 
 
 Barrels of Her- 
 rings caught. 
 
 2,832 
 33,237 
 4 2 >055 
 56,365 
 
 52,879 
 51,863 
 
 43,313 
 40,958 
 
 29,367 
 19,885 
 
 378,347 
 
 Bounty paid on 
 the Busses. 
 
 s. d. 
 
 2,085 o o 
 
 11.055 7 6 
 
 12,510 8 6 
 
 16,952 2 6 
 
 I9'3 X 5 15 o 
 
 21,290 7 6 
 
 17,592 2 6 
 
 16,316 2 6 
 
 15,287 o o 
 
 13,445 12 6 
 
 9,613 12 6 
 
 Seasteeks 
 
 378,347 
 
 One-third deducted 126,115! 
 
 Bounty at a medium for each barrel of sea- 
 stseks ' o 8 3 
 
 But a barrel of seasteeks being only reckoned 
 two-thirds of a barrel fully packed, one-third is de- 
 ducted, which brings the bounty to . o 12 3! 
 
 Barrels full packed 252,231^. 
 
 And if the herrings are exported, there is besides a premium of 
 
 So that the bounty paid by Government in money for each barrel is . o 14 ilf 
 But if to this, the duty of the salt usually taken credit for as expended 
 in curing each barrel, which at a medium is of foreign, one bushel and 
 one-fourth of a bushel, at I os. a bushel, be added, viz. . . . o 12 6 
 
 The bounty on each barrel would amount to i 7 5| 
 
 If the herrings are cured with British salt, it will stand thus, viz. : 
 
 Bounty as before o 14 n| 
 
 but if to this bounty the duty on two bushels of Scotch salt at is. 6d. 
 per bushel, supposed to be the quantity at a medium used in curing each 
 barrel, is added, to wit 030 
 
 The bounty on each barrel will amount to o 17 iif 
 
 And when buss herrings are entered for home consumption in Scotland, and pay 
 the shilling a barrel of duty, the bounty stands thus, to wit, as before .012 3! 
 From which the is. a barrel is to be deducted o i o 
 
 o ii 3| 
 
 But to that there is to be added again, the duty of the foreign salt used 
 in curing a barrel of herrings, viz 0126 
 
 So that the premium allowed for each barrel of herrings entered for 
 home consumption is 139!
 
 122 
 
 THE NATURE AND CAUSES OF 
 
 BOOK IV. 
 
 If the herrings are cured with British salt, it will stand as follows, viz. : 
 Bounty on each barrel brought in by the busses, as above . . . o 12 3| 
 From which deduct the is. a barrel paid at the time they are entered 
 for home consumption . . . . . . . . . .010 
 
 But if to the bounty the duty on two bushels of Scotch salt at is. 6d. 
 per bushel, supposed to be the quantity at a medium used in curing each 
 barrel, is added, to wit . . . . . . . . . .030 
 
 3l 
 
 The premium for each barrel entered for home consumption will be .014 3! 
 
 Though the loss of duties upon herrings exported cannot, per- 
 haps, properly be considered as bounty, that upon herrings entered 
 for home consumption certainly may. 
 
 An Account of the Quantity of Foreign Salt imported into Scotland, and of Scotch Salt 
 delivered duty free from the Works there for the Fishery, from the $tli of April, 
 1771, to the tjth of April, 1782, with a Medium of both for one year. 
 
 PERIOD. 
 
 Foreign Salt 
 imported. 
 
 Scotch Salt 
 delivered from 
 the Works. 
 
 From the 5th of April, 1771, to ) 
 the 5th of April, 1782 . . ) 
 
 Bushels. 
 936,974 
 
 Bushels. 
 168,226 
 
 Medium for one year 
 
 85,I79T 5 T 
 
 I593 A 
 
 It is to be observed that the bushel of foreign salt weighs 84 lb., that of British salt 
 56 lb. only. 
 
 CHAPTER VI. 
 
 OF TREATIES OF COMMERCE. 
 
 WHEN a nation binds itself by treaty either to permit the 
 entry of certain goods from one foreign country which it 
 prohibits from all others, or to exempt the goods of one country 
 from duties to which it subjects those of all others, the country, or at 
 least the merchants and manufacturers of the country, whose com- 
 merce is so favoured, must necessarily derive great advantage from 
 the treaty. Those merchants and manufacturers enjoy a sort of 
 monopoly in the country which is so indulgent to them. That 
 country becomes a market both more extensive and more advan-
 
 CHAP. vi. THE WEALTH OF NATIONS. 123 
 
 tageous for their goods : more extensive, because the goods of other 
 nations being either excluded or subjected to heavier duties, it takes 
 off a greater quantity of theirs : more advantageous, because the 
 merchants of the favoured country, enjoying a sort of monopoly 
 there, will often sell their goods for a better price than if exposed to 
 the free competition of all other nations. 1 
 
 Such treaties, however, though they may be advantageous to the 
 merchants and manufacturers of the favoured, are necessarily dis- 
 advantageous to those of the favouring country. A monopoly is thus 
 granted against them to a foreign nation ; and they must frequently 
 buy the foreign goods they have occasion for, dearer than if the 
 free competition of other nations was admitted. That part of its 
 own produce with which such a nation purchases foreign goods, 
 must consequently be sold cheaper, because when two things are 
 exchanged for one another, the cheapness of the one is a necessary 
 consequence, or rather is the same thing with the dearness of the 
 other. The exchangeable value of its annual produce, therefore, is 
 likely to be diminished by every such treaty. This diminution, 
 however, can scarce amount to any positive loss, but only to a 
 lessening of the gain which it might otherwise make. Though it 
 sells its goods cheaper than it otherwise might do, it will not pro- 
 bably sell them for less than they cost ; nor, as in the case of 
 bounties, for a price which will not replace the capital employed in 
 bringing them to market, together with the ordinary profits of 
 stock. The trade could not go on long if it did. Even the favour- 
 ing countiy, therefore, may still gain by the trade, though less than 
 if there was a free competition. 
 
 Some treaties of commerce, however, have been supposed advan- 
 tageous upon principles very different from these ; and a commercial 
 country has sometimes granted a monopoly of this kind against 
 itself to certain goods of a foreign nation, because it expected that in 
 the whole commerce between them, it would annually sell more than 
 it would buy, and that a balance in gold and silver would be 
 annually returned to it. It is upon this principle that the treaty of 
 commerce between England and Portugal, concluded in 1703 by Mr. 
 Methuen, has been so much commended. The following is a literal 
 translation of that treaty, which consists of three articles only: 
 
 " ART. I. His sacred royal majesty of Portugal promises, both in 
 1 See Ricardo's Political Economy, chap. xxv.
 
 124 THE NATURE AND CAUSES OF BOOK iv. 
 
 his own name and that of his successors, to admit, for ever here- 
 after, into Portugal, the woollen cloths, and the rest of the woollen 
 manufactures of the British, as was accustomed, till they were pro- 
 hibited by the law ; nevertheless upon this condition : 
 
 " ART. II. That is to say, that her sacred royal majesty of Great 
 Britain shall, in her own name and that of her successors, be obliged, 
 for ever hereafter, to admit the wines of the growth of Portugal into 
 Britain : so that at no time, whether there shall be peace or war 
 between the kingdoms of Britain and France, anything more shall 
 be demanded for these wines by the name of custom or duty, or by 
 whatsoever other title, directly or indirectly, whether they shall be 
 imported into Great Britain in pipes or hogsheads, or other casks, 
 than what shall be demanded for the like quantity or measure of 
 French wine, deducting or abating a third part of the custom or 
 duty. But if at any time this deduction or abatement of customs, 
 which is to be made as aforesaid, shall in any manner be attempted 
 or prejudiced, it shall be just and lawful for his sacred royal majesty 
 of Portugal again to prohibit the woollen cloths, and the rest of the 
 British woollen manufactures. 
 
 " ART. III. The most excellent lords the plenipotentiaries promise 
 and take upon themselves, that their above-named masters shall 
 ratify this treaty ; and within the space of two months the ratifica- 
 tions shall be exchanged." 
 
 By this treaty the Crown of Portugal becomes bound to admit the 
 English woollens upon the same footing as before the prohibition, 
 that is, not to raise the duties which had been paid before that time. 
 But it does not become bound to admit them upon any better terms 
 than those of any other nation, of France or Holland, for example. 
 The Crown of Great Britain, on the contrary, becomes bound to 
 admit the wines of Portugal, upon paying only two-thirds of the 
 duty which is paid for those of France, the wines most likely to 
 come into competition with them. So far this treaty, therefore, is 
 evidently advantageous to Portugal, and disadvantageous to Great 
 Britain. 
 
 It has been celebrated, however, as a masterpiece of the commer- 
 cial policy of England. Portugal receives annually from the Brazils 
 a greater quantity of gold than can be employed in its domestic 
 commerce, whether in the shape of coin or of plate. The surplus is 
 too valuable to be allowed to lie idle and locked up in coffers, and as
 
 CHAP. vi. TEE WEALTH OF NATIONS. 125 
 
 it can find no advantageous market at home, it must, notwith- 
 standing any prohibition, be sent abroad, and exchanged for some- 
 thing for which there is a more advantageous market at home. A 
 large share of it comes annually to England, in return either for 
 English goods, or for those of other European nations that receive 
 their returns through England. Mr. Baretti 1 was informed that 
 the weekly packet-boat from Lisbon brings, one week with another, 
 more than fifty thousand pounds in gold to England. The sum had 
 probably been exaggerated. It would amount to more than two 
 millions six hundred thousand pounds a year, which is more than 
 the Brazils are supposed to afford. 
 
 Our merchants were some years ago out of humour with the 
 Crown of Portugal. Some privileges which had been granted them, 
 not by treaty, but by the free grace of that Crown, at the solicitation, 
 indeed, it is probable, and in return for much greater favours, defence, 
 and protection from the Crown of Great Britain, had been either 
 infringed or revoked. The people, therefore, usually most interested 
 in celebrating the Portugal trade, were then rather disposed to 
 represent it as less advantageous than it had commonly been 
 imagined. The far greater part, almost the whole, they pretended, 
 of this annual importation of gold, was not on account of Great 
 Britain, but of other European nations ; the fruits and wines of 
 Portugal annually imported into Great Britain nearly compensating 
 the value of the British goods sent thither. 
 
 Let us suppose, however, that the whole was on account of Great 
 Britain, and that it amounted to a still greater sum than Mr. Baretti 
 seems to imagine : this trade would not, upon that account, be more 
 advantageous than any other in which, for the same value sent out, 
 we received an equal value of consumable goods in return. 
 
 It is but a very small part of this importation which, it can be 
 supposed, is employed as an annual addition either to the plate or 
 to the coin of the kingdom. The rest must all be sent abroad and 
 exchanged for consumable goods of some kind or other. But if 
 those consumable goods were purchased directly with the produce 
 of English industry, it would be more for the advantage of England, 
 than first to purchase with that produce the gold of Portugal, and 
 afterwards to purchase with that gold those consumable goods. A 
 direct foreign trade of consumption is always more advantageous 
 
 1 Travels, vol. i. Letter xvi.
 
 126 THE NATURE AND CAUSES OF BOOK iv. 
 
 than a round-about one ; and to bring the same value of foreign 
 goods to the home market, requires a much smaller capital in the 
 one way than in the other. If a smaller share of its industry, there- 
 fore, had been employed in producing goods fit for the Portugal 
 market, and a greater in producing those fit for the other markets, 
 where those consumable goods for which there is a demand in Great 
 Britain are to be had, it would have been more for the advantage of 
 England. To procure both the gold, which it wants for its own 
 use, and the consumable goods, would, in this way, employ a much 
 smaller capital than at present. There would be a spare capital, 
 therefore, to be employed for other purposes, in exciting an ad- 
 ditional quantity of industry, and in raising a greater annual 
 produce. 
 
 Though Britain were entirely excluded from the Portugal trade, 
 it could find very little difficulty in procuring. all the annual sup- 
 plies of gold which it wants, either for the purposes of plate, or of 
 coin, or of foreign trade. Gold, like every other commodity, is 
 always somewhere or another to be got for its value by those who 
 have that value to give for it. The annual surplus of gold in Por- 
 tugal, besides, would still be sent abroad, and though not carried 
 away by Great Britain, would be carried away by some other 
 nation, which would be glad to sell it again for its price, in the 
 same manner as Great Britain does at present. In buying gold of 
 Portugal, indeed, we buy it at the first hand ; whereas, in buying 
 it of any other nation, except Spain, we should buy it at the 
 second, and might pay somewhat dearer. This difference, however, 
 would surely be too insignificant to deserve the public attention. 
 
 Almost all our gold, it is said, comes from Portugal. With other 
 nations the balance of trade is either against us, or not much in our 
 favour. But we should remember, that the more gold we import 
 from one country, the less we must necessarily import from all 
 others. The effectual demand for gold, like that for every other 
 commodity, is in every country limited to a certain quantity. If 
 nine-tenths of this quantity are imported from one country, there 
 remains a tenth only to be imported from all others. The more 
 gold besides that is annually imported from some particular coun- 
 tries, over and above what is requisite for plate and for coin, the 
 more must necessarily be exported to some others ; and the more 
 that most insignificant object of modern policy, the balance of trade,
 
 CHAP. vi. THE WEALTH OF NATIONS. 127 
 
 appears to be in our favour with some particular countries, the more 
 it must necessarily appear to be against us with many others. 
 
 It was upon this silly notion, however, that England could not 
 subsist without the Portugal trade, that, towards the end of the late 
 war, France and Spain, without pretending either offence or provo- 
 cation, required the King of Portugal to exclude all British ships 
 from his ports, and, for the security of this exclusion, to receive into 
 them French or Spanish garrisons. Had the King of Portugal sub- 
 mitted to those ignominious terms which his brother-in-law the 
 King of Spain proposed to him, Britain would have been freed from 
 a much greater inconveniency than the loss of the Portugal trade, 
 the burden of supporting a very weak ally, so unprovided of every- 
 thing for his own defence, that the whole power of England, had it 
 been directed to that single purpose, could scarce, perhaps, have de- 
 fended him for another campaign. The loss of the Portugal trade 
 would, no doubt, have occasioned a considerable embarrassment to 
 the merchants at that time engaged in it, who might not, perhaps, 
 have found out, for a year or two, any other equally advantageous 
 method of employing their capitals ; and in this would probably 
 have consisted all the inconveniency which England could have 
 suffered from this notable piece of commercial policy. 1 
 
 The great annual importation of gold and silver is neither for 
 the purpose of plate nor of coin, but of foreign trade. A round- 
 about foreign trade of consumption can be carried on more advanta- 
 geously by means of these metals than of almost any other goods. 
 As they are the universal instruments of commerce, they are more 
 readily received in return for all commodities than any other goods ; 
 and on account of their small bulk and great value, it costs less to 
 transport them backward and forward from one place to another 
 than almost any other sort of merchandise, and they lose less of 
 
 1 The treaties of commerce, negotiated ferent reason from that of the earlier 
 
 in the seventeenth, eighteenth, and part diplomacy. They are intended to further 
 
 of the nineteenth centuries, were founded the intercourse of nations, and the diplo- 
 
 . on diplomatic or political, and not on eco- macy by which they are accompanied has 
 
 nomical grounds. That with Portugal was no political ends. They assist foreign 
 
 notably intended to narrow the trade with trade, because the contracting parties 
 
 France, and to secure an ally in Por- agree to such an abolition of protection 
 
 tugal. It may also have indirectly pur- <r restriction as will render trade possi- 
 
 posed to increase the stock of the precious ble, and they can be carried out by such 
 
 metals. a country as this, because, as long as Eng- 
 
 Modern treaties of commerce, such as land raises a large revenue by customs, 
 
 that of Mr. Cobden with France, are also she can always negotiate on the basis of the 
 
 diplomatic; but they have a totally dif- alterations which she makes in her tariff.
 
 128 THE NATURE AND CAUSES OF BOOK iv. 
 
 their value by being- so transported. Of all the commodities, there- 
 fore, which are bought in one foreign country, for no other purpose 
 but to be sold or exchanged again for some other goods in another, 
 there are none so convenient as gold and silver. In facilitating all 
 the different round-about foreign trades of consumption which are 
 carried on in Great Britain, consists the principal advantage of the 
 Portugal trade ; and though it is not a capital advantage, it is, no 
 doubt, a considerable one. 
 
 That any annual addition which, it can reasonably be supposed, is 
 made either to the plate or to the coin of the kingdom, could require 
 but a very small annual importation of gold and silver, seems evident 
 enough ; and though we had no direct trade with Portugal, this small 
 quantity could always, somewhere or another, be very easily got. 
 
 Though the goldsmiths' trade be very considerable in Great 
 Britain, the far greater part of the new plate which they annually 
 sell, is made from other old plate melted down ; so that the addition 
 annually made to the whole plate of the kingdom cannot be very 
 great, and could require but a very small annual importation. 
 
 It is the same case with the coin. Nobody imagines, I believe, 
 that even the greater part of the annual coinage, amounting, for ten 
 years together, before the late reformation of the gold coin, to up- 
 wards of eight hundred thousand pounds a year in gold, was an 
 annual addition to the money before current in the kingdom. In 
 a country where the expense of the coinage is defrayed by the 
 Government, the value of the coin, even when it contains its full 
 standard weight of gold and silver, can never be much greater than 
 that of an equal quantity of those metals uncoined ; because it re- 
 quires only the trouble of going to the Mint, and the delay perhaps 
 of a few weeks, to procure for any quantity of uncoined gold and 
 silver an equal quantity of those metals in coin. But, in every 
 country, the greater part of the current coin is almost always more 
 or less worn, or otherwise degenerated from its standard. In Great 
 Britain it was, before the late reformation, a good deal so, the gold 
 being more than two per cent, and the silver more than eight per 
 cent, below its standard weight. But if forty-four guineas and 
 a half, containing their full standard weight, a pound weight of 
 gold, could purchase very little more than a pound weight of un- 
 coined gold, forty-four guineas and a half wanting part of their 
 weight could not purchase a pound weight, and something was to be
 
 CHAP. vi. THE WEALTH OF NATIONS. 129 
 
 added in order to make up the deficiency. The current price of gold 
 bullion at market, therefore, instead of being the same with the 
 Mint price, or 46 14*. 6d., was then about 47 14*. and sometimes 
 about 48. When the greater part of the coin, however, was in 
 this degenerate condition, forty-four guineas and a half, fresh from 
 the Mint, would purchase no more goods in the market than any 
 other ordinary guineas, because when they came into the coffers of 
 the merchant, being confounded with other money, they could not 
 afterwards be distinguished without more trouble than the difference 
 was worth. Like other guineas, they were worth no more than 
 46 14*. 6d. If thrown into the melting-pot, however, they pro- 
 duced, without any sensible loss, a pound weight of standard gold, 
 which could be sold at any time for between 47 14*. and 48, 
 either in gold or silver, as fit for all the purposes of coin as that 
 which had been melted down. There was an evident profit, there- 
 fore, in melting down new coined money, and it was done so instan- 
 taneously, that no precaution of Government could prevent it. The 
 operations of the Mint were, upon this account, somewhat like the 
 web of Penelope ; the work that was done in the day was undone 
 in the night. The Mint was employed, not so much in making 
 daily additions to the coin, as in replacing the very best part of it 
 which was daily melted down. 
 
 Were the private people, who carry their gold and silver to the 
 Mint, to pay themselves for the coinage, it would add to the value 
 of those metals in the same manner as the fashion does to that of 
 plate. Coined gold and silver would be more valuable than un- 
 coined. The seignorage, if it was not exorbitant, would add to the 
 bullion the whole value of the duty ; because, the Government 
 having everywhere the exclusive privilege of coining, no coin can 
 come to market cheaper than they think proper to afford it. If the 
 duty was exorbitant indeed, that is, if it was very much above the 
 real value of the labour and expense requisite for coinage, false 
 coiners, both at home and abroad, might be encouraged, by the 
 great difference between the value of bullion and that of coin, to 
 pour in so great a quantity of counterfeit money as might reduce 
 the value of the Government money. In France, however, though 
 the seignorage is eight per cent., 1 no sensible inconveniency of this 
 kind is found to arise from it. The dangers to which a false coiner 
 
 1 See vol. i. p. 47. 
 
 VOL. II. K
 
 130 THE NATURE AND CAUSES OF BOOK iv. 
 
 is everywhere exposed, if he lives in the country of which he coun- 
 terfeits the coin, and to which his agents or correspondents are ex- 
 posed if he lives in a foreign country, are by far too great to be 
 incurred for the sake of a profit of six or seven per cent. 
 
 The seignorage in France raises the value of the coin higher than 
 in proportion to the quantity of pure gold which it contains. Thus 
 by the edict of January, 1726, the Mint price of fine gold of 
 twenty-four carats was fixed at seven hundred and forty livres nine 
 sous and one denier one-eleventh, the mark of eight Paris ounces.*" 
 The gold coin of France, making an allowance for the remedy of 
 the Mint, contains twenty-one carats and three-fourths of fine gold, 
 and two carats one-fourth of alloy. The mark of standard gold, 
 therefore, is worth no more than about six hundred and seventy-one 
 livres ten deniers. But in France this mark of standard gold is 
 coined into thirty louis-d'ors of twenty-four livres each, or into 
 seven hundred and twenty livres. The coinage, therefore, increases 
 the value of a mark of standard gold bullion by the difference be- 
 tween six hundred and seventy-one livres ten deniers, and seven 
 hundred and twenty livres ; or by forty-eight livres nineteen sous 
 and two deniers. 
 
 A seignorage will, in many cases, take away altogether, and will, 
 in all cases, diminish the profit of melting down the new coin. This 
 profit always arises from the difference between the quantity of 
 bullion which the common currency ought to contain, and that 
 which it actually does contain. If this difference is less than the 
 seignorage, there will be loss instead of profit. If it is equal to the 
 seignorage, there will be neither profit nor loss. If it is greater than 
 the seignorage, there will indeed be some profit, but less than if 
 there was no seignorage. If, before the late reformation of the gold 
 coin, for example, there had been a seignorage of five per cent, upon 
 the coinage, there would have been a loss of three per cent, upon 
 the inciting down of the gold coin. If the seignorage had been 
 two per cent., there would have been neither profit nor loss. If the 
 seignorage had been one per cent., there would have been a profit, 
 but of one per cent, only instead of two per cent. Wherever money 
 is received by tale, therefore, and not by weight, a seignorage is the 
 most effectual preventative of the melting down of the coin, and, 
 
 * See Dictionnaire des Monnoies, torn. ii. de Bazinghen, Conseiller-Commissaire en 
 article Seigneurage, p. 489, par M. Abot la Cour des Monnoies a Paris.
 
 CHAP. vi. THE WEALTH OF NATIONS. 131 
 
 for the same reason, of its exportation. It is the best and heaviest 
 pieces that are commonly either melted down or exported ; because 
 it is upon such that the largest profits are made. 
 
 The law for the encouragement of the coinage, by rendering it 
 duty-free, was first enacted during the reign of Charles II for a 
 limited time ; and afterwards continued, by different prolongations, 
 till 1769, when it was rendered perpetual. The Bank of England, 
 in order to replenish their coffers with money, are frequently obliged 
 to carry bullion to the Mint ; and it was more for their interest, 
 they probably imagined, that the coinage, should be at the 
 expense of the Government than at their own. It was, probably, 
 out of complaisance to this great company that the Government 
 agreed to render this law perpetual. Should the custom of weighing 
 gold, however, come to be disused, as it is very likely to be on 
 account of its inconveniency ; should the gold coin of England 
 come to be received by tale, as it was before the late re-coinage, 
 this great company may, perhaps, find that they have upon this, as 
 upon some other occasions, mistaken their own interest not a little. 
 
 Before the late re-coinage, when the gold currency of England 
 was two per cent, below its standard weight, as there was no 
 seignorage, it was two per cent, below the value of that quantity 
 of standard gold bullion which it ought to have contained. When 
 this great company, therefore, bought gold bullion in order to have 
 it coined, they were obliged to pay for it two per cent, more than it 
 was worth after the coinage. But if there had been a seignorage of 
 two per cent, upon the coinage, the common gold currency, though 
 two per cent, below its standard weight, would notwithstanding 
 have been equal in value to the quantity of standard gold which it 
 ought to have contained ; the value of the fashion compensating in 
 this case the diminution of the weight. They would indeed have 
 had the seignorage to pay, which being two per cent., their loss 
 upon the whole transaction would have been two per cent, exactly 
 the same, but no greater than it actually was. 
 
 If the seignorage had been five per cent, and the gold currency 
 only two per cent, below its standard weight, the Bank would in 
 this case have gained three per cent, upon the price of the bullion ; 
 but as they would have had a seignorage of five per cent, to pay 
 upon the coinage, their loss upon the whole transaction would, in 
 the same manner, have been exactly two per cent. 
 
 K 2,
 
 132 THE NATURE AND CAUSES OF BOOK iv. 
 
 If the seignorage had been only one per cent, and the gold 
 currency two per cent, below its standard weight, the Bank would 
 in this case have lost only one per cent, upon the price of the 
 bullion ; but, as they would likewise have had a seignorage of one 
 per cent, to pay, their loss upon the whole transaction would have 
 been exactly two per cent, in the same manner as in all other cases. 
 
 If there was a reasonable seignorage, while at the same time the 
 coin contained its full standard weight, as it has done very nearly 
 since the late re-coinage, whatever the Bank might lose by the 
 seignorage, they would gain upon the price of the bullion ; and what- 
 ever they might gain upon the price of the bullion, they would lose 
 by the seignorage. They would neither lose nor gain, therefore, upon 
 the whole transaction, and they would in this, as in all the foregoing 
 cases, be exactly in the same situation as if there was no seignorage. 
 
 When the tax upon a commodity is so moderate as not to 
 encourage smuggling, the merchant who deals in it, though he 
 advances, does not properly pay the tax, as he gets it back in 
 the price of the commodity. The tax is finally paid by the last 
 purchaser or consumer. But money is a commodity with regard 
 to which every man is a merchant. Nobody buys it but in order 
 to sell it again ; and with regard to it, there is in ordinary cases no 
 last purchaser or consumer. When the tax upon coinage, therefore, 
 is so moderate as not to encourage false coinage, though everybody 
 advances the tax, nobody finally pays it; because everybody gets 
 it back in the advanced value of the coin. 
 
 A moderate seignorage, therefore, would not in any case augment 
 the expense of the Bank, or of any other private persons who carry 
 their bullion to the Mint in order to be coined, and the want of 
 a moderate seignorage does not in any case diminish it. Whether 
 there is or is not a seignorage, if the currency contains its full 
 standard weight, the coinage costs nothing to anybody, and if it is 
 short of that weight, the coinage must always cost the difference 
 between the quantity of bullion which ought to be contained in it, 
 and that which actually is contained in it. 
 
 The Government, therefore, when it defrays the expense of 
 coinage, not only incurs some small expense, but loses some small 
 revenue which it might get by a proper duty ; and neither the 
 Bank nor any other private persons are in the smallest degree 
 benefited by this useless piece of generosity.
 
 CHAP. vi. THE WEALTH OF NATIONS. 133 
 
 The directors of the Bank, however, would probably be unwilling 
 to agree to the imposition of a seignorage upon the authority of 
 a speculation which promises them no gain, but only pretends to 
 insure them from any loss. In the present state of the gold coin, 
 and as long as it continues to be received by weight, they certainly 
 would gain nothing by such a change. But if the custom of 
 weighing the gold coin should ever go into disuse, as it is very 
 likely to do, and if the gold coin should ever fall into the same state 
 of degradation in which it was before the late re-coinage, the gain, 
 or more properly the savings of the Bank, in consequence of the 
 imposition of a seignorage, would probably be very considerable. 
 The Bank of England is the only company which sends any con- 
 siderable quantity of bullion to the Mint, and the burden of the 
 annual coinage falls entirely, or almost entirely, upon it. If this 
 annual coinage had nothing to do but to repair the unavoidable 
 losses and necessary wear and tear of the coin, it could seldom 
 exceed fifty thousand or at most a hundred thousand pounds. But 
 when the coin is degraded below its standard weight, the annual 
 coinage must, besides this, fill up the large vacuities which 
 exportation and the melting-pot are continually making in the 
 current coin. It was upon this account that during the ten or 
 twelve years immediately preceding the late reformation of the 
 gold coin, the annual coinage amounted at an average to more than 
 eight hundred and fifty thousand pounds. But if there had been 
 a seignorage of four or five per cent, upon the gold coin, it would 
 probably, even in the state in which things then were, have put an 
 effectual stop to the business both of exportation and of the melting- 
 pot. The Bank, instead of losing every year about two and a half 
 per cent, upon the bullion which was to be coined into more than 
 eight hundred and fifty thousand pounds, or incurring an annual loss 
 of more than twenty-one thousand two hundred and fifty pounds, 
 would not probably have incurred the tenth part of that loss. 1 
 
 The revenue allotted by Parliament for defraying the expense of 
 
 1 At the present time, the Bank of gold rarely reaches the Bank, the heavier 
 
 England is still the only agent between pieces only flowing back to the central 
 
 the Mint and the public. But it receives institution. In 1 869, it was supposed 
 
 the old coin by weight, a slight allowance that there was a very large amount of 
 
 being made for wear. The Government light gold in circulation, but in the ten 
 
 still exacts no seignorage for gold coin. years from 1869 to 1878 inclusive, a 
 
 Hence the public defrays ultimately the large quantity of gold has been coined 
 
 cost of wear, though the occurrence of (46,792,979), and it does not appear 
 
 this charge is occasional, for the lighter that much light gold is now current.
 
 134 THE NATURE AND CAUSES OF BOOK iv. 
 
 the coinage is but fourteen thousand pounds a year, and the real 
 expense which it costs the Government, or the fees of the officers 
 of the Mint, do not upon ordinary occasions, I am assured, exceed 
 the half of that sum. The saving of so very small a sum, or even 
 the gaining of another which could not well be much larger, are 
 objects too inconsiderable, it may be thought, to deserve the serious 
 attention of Government. But the saving of eighteen or twenty 
 thousands pounds a year in case of an event which is not improbable, 
 which has frequently happened before, and which is very likely to 
 happen again, is surely an object which well deserves the serious 
 attention even of so great a company as the Bank of England. 
 
 Some of the foregoing reasonings and observations might perhaps 
 have been more properly placed in those chapters of the First Book 
 which treat of the origin and use of money, and of the difference 
 between the real and the nominal price of commodities. But as 
 the law for the encouragement of coinage derives its origin from 
 those vulgar prejudices which have been introduced by the mer- 
 cantile system, I judged it more proper to reserve them for this 
 chapter. Nothing could be more agreeable to the spirit of that 
 system than a sort of bounty upon the production of money, the 
 very thing which, it supposes, constitutes the wealth of every 
 nation. It is one of its many admirable expedients for enriching 
 the country. 
 
 CHAPTER VII. 
 
 OF COLONIES. 
 
 PART I. 
 
 Of the Motives for establishing new Colonies. 
 
 THE interest which occasioned the first settlement of the 
 different European colonies in America and the West Indies 
 was not altogether so plain and distinct as that which directed 
 the establishment of those of ancient Greece and Rome. 
 
 All the different states of ancient Greece possessed, each of them, 
 but a very small territory, and when the people in any one of them
 
 CHAP. vii. THE WEALTH OF NATIONS. 135 
 
 multiplied beyond what that territory could easily maintain, a part 
 of them were sent in quest of a new habitation in some remote and 
 distant part of the world ; the warlike neighbours who surrounded 
 them on all sides rendering it difficult for any of them to enlarge 
 very much its territory at home. The colonies of the Dorians 
 resorted chiefly to Italy and Sicily, which, in the times preceding 
 the foundation of Rome, were inhabited by barbarous and uncivilized 
 nations : those of the lonians and .ZEolians, the two other great 
 tribes of the Greeks, to Asia Minor and the islands of the ^Egean 
 Sea, of which the inhabitants seem at that time to have been 
 pretty much in the same state as those of Sicily and Italy. The 
 mother city, though she considered the colony as a child, at all 
 times entitled to great favour and assistance, and owing in return 
 much gratitude and respect, yet considered it as an emancipated 
 child, over whom she pretended to claim no direct authority or 
 jurisdiction. The colony settled its own form of government, 
 enacted its own laws, elected its own magistrates, and made peace 
 or war with its neighbours as an independent state, which had no 
 occasion to wait for the approbation or consent of the mother city. 
 Nothing can be more plain and distinct than the interest which 
 directed every such establishment. 1 
 
 Rome, like most of the other ancient republics, was originally 
 founded upon an agrarian law, which divided the public territory 
 in a certain proportion amorg the different citizens who composed 
 the state. The course of human affairs, by marriage, by succes- 
 sion, and by alienation, necessarily deranged this original division, 
 and frequently threw the lands, which had been allotted for the 
 maintenance of many different families, into the possession of a 
 single person. To remedy this disorder for such it was supposed 
 to be a law was made restricting the quantity of land which any 
 citizen could possess to five hundred jugera, about three hundred 
 and fifty English acres. This law, however, though we read of its 
 having been executed upon one or two occasions, was either 
 neglected or evaded, and the inequality of fortunes went on 
 continually increasing. The greater part of the citizens had no 
 
 1 The relations supposed to exist be- undutifulness of the latter. It seems, 
 
 tween mother country and colony are however, that the relations between the 
 
 given with distinctness in Thucydides, mother state and the colony were more 
 
 i. 25, where the differences between intimate in the Dorian than in the 
 
 Corinth and Corcyra are traced to the other great families of Hellenic origin.
 
 136 THE NATURE AND CAUSES OF BOOK iv. 
 
 land, and without it the manners and customs of those times 
 rendered it difficult for a freeman to maintain his independency. 
 In the present times, though a poor man has no land of his own, 
 if he has a little stock, he may either farm the lands of another, or 
 he may carry on some little retail trade ; and if he has no stock, he 
 may find employment either as a country labourer or as an artificer. 
 "But among the ancient Romans the lands of the rich were all 
 cultivated by slaves, who wrought under an overseer, who was 
 likewise a slave ; so that a poor freeman had little chance of being 
 employed either as a farmer or as a labourer. All trades and 
 manufactures too, even the retail trade, were carried on by the 
 slaves of the rich for the benefit of their masters, whose wealth, 
 authority, and protection made it difficult for a poor freeman to 
 maintain the competition against them. The citizens, therefore, 
 who had no land, had scarce any other means of subsistence but the 
 bounties of the candidates at the annual elections. The tribunes, 
 when they had a mind to animate the people against the rich and 
 the great, put them in mind of the ancient division of lands, and 
 represented that law which restricted this sort of private property 
 as the fundamental law of the republic. The people became 
 clamorous to get land, and the rich and the great, we may believe, 
 were perfectly determined not to give them any part of theirs. 
 To satisfy them in some measure, therefore, they frequently pro- 
 posed to send out a new colony. But conquering Rome was, even 
 upon such occasions, under no necessity of turning out her citizens 
 to seek their fortune, if one may say so, through the wide world, 
 without knowing where they were to settle. She assigned them 
 lands generally in the conquered provinces of Italy, where, being 
 'within the dominions of the republic, they could never form any 
 independent state ; but were at best but a sort of corporation, 
 which, though it had the power of enacting bye-laws for its own 
 government, was at all times subject to the correction, jurisdiction, 
 and legislative authority of the mother city. The sending out a 
 colony of this kind, not only gave some satisfaction to the people, 
 but often established a sort of garrison too in a newly-conquered 
 province, of which the obedience might otherwise have been 
 doubtful. A Roman colony, therefore, whether we consider the 
 nature of the establishment itself or the motives for making it, 
 was altogether different from a Greek one. The words accordingly
 
 CHAP. vii. THE WEALTH OF NATIONS. 137 
 
 which in the original languages denote those different establish- 
 ments, have very different meanings. The Latin word (Colonia) 
 signifies simply a plantation ; the Greek word (o/n-oiKta), on the 
 contrary, signifies a separation of dwelling, a departure from home, 
 a going out of the house. But though the Roman colonies were 
 in many respects different from the Greek ones, the interest which 
 prompted to establish them was equally plain and distinct. Both 
 institutions derived their origin either from irresistible necessity or 
 from clear and evident utility. 
 
 The establishment of the European colonies in America and the 
 West Indies arose from no necessity; and though the utility which 
 has resulted from them has been very great, it is not altogether 
 so clear and evident. It was not understood at their first establish- 
 ment, and was not the motive either of that establishment or of the 
 discoveries which gave occasion to it, and the nature, extent, and 
 limits of that utility are not. perhaps, well understood at this day. 
 
 The Venetians, during the fourteenth and fifteenth centuries, 
 carried on a very advantageous commerce in spiceries and other 
 East India goods, which they distributed among the other nations 
 of Europe. They purchased them chiefly in Egypt, at that time 
 under the dominion of the Mamelukes, the enemies of the Turks, 
 of whom the Venetians were the enemies ; and this union of interest, 
 assisted by the money of Venice, formed such a connection as gave 
 the Venetians almost a monopoly of the trade. 1 
 
 The great profits of the Venetians tempted the avidity of the 
 Portuguese. They had been endeavouring, during the course of the 
 fifteenth century, to find out by sea a way to the countries from 
 which the Moors brought them ivory and gold-dust across the 
 Desert. They discovered the Madeiras, the Canaries, the Azores, 
 the Cape de Verd islands, the coast of Guinea, that of Loango, 
 Congo, Angola, and Benguela, and, finally, the Cape of Good 
 Hope. They had long wished to share in the profitable traffic of 
 the Venetians, and this last discovery opened to them a probable 
 prospect of doing so. In 1497, Vasco de Gama sailed from the 
 port of Lisbon with a fleet of four ships, and, after a navigation of 
 eleven months, arrived upon the coast of Hindostan, and thus com- 
 pleted a course of discoveries which had been pursued with great 
 
 1 According to Sanuto, himself a Ve- the toll levied by the Sultan of Egypt was 
 netian, however (Gesta Dei per Francos), enormous and ruinous to trade.
 
 138 THE NATURE AND CAUSES OF BOOK iv. 
 
 steadiness, and with very little interruption, for near a century 
 together. 
 
 Some years before this, while the expectations of Europe were in 
 suspense about the projects of the Portuguese, of which the success 
 appeared yet to be doubtful, a Genoese pilot formed the yet more 
 daring project of sailing to the East Indies by the West. The 
 situation of those countries was at that time very imperfectly 
 known in Europe. The few European travellers who had been 
 there had magnified the distance ; perhaps through simplicity and 
 ignorance, what was really very great, appearing almost infinite to 
 those who could not measure it ; or, perhaps, in order to increase 
 somewhat more the marvellous of their adventures in visiting regions 
 so immensely remote from Europe. The longer the way was by the 
 East, Columbus very justly concluded, the shorter it would be 
 by the West. He proposed, therefore, to take that way, as both 
 the shortest and the surest, and he had the good fortune to convince 
 Isabella of Castile of the probability of his project. He sailed from 
 the port of Palos in August 1492, near five years before the expe- 
 dition of Vasco de Gama set out from Portugal, and, after a voyage 
 of between two and three months, discovered first some of the small 
 Bahama or Lucayan islands, and afterwards the great island of 
 St. Domingo. 
 
 But the countries which Columbus discovered, either in this 
 or in any of his subsequent voyages, had no resemblance to those 
 which he had gone in quest of. Instead of the wealth, cultivation, 
 and populousness of China and Hindostan, he found in St. Domingo, 
 and in all the other parts of the new world which he ever visited, 
 nothing but a country quite covered with wood, uncultivated, and 
 inhabited only by some tribes of naked and miserable savages. He 
 was not very willing, however, to believe that they were not the 
 same with some of the countries described by Marco Polo, the first 
 European who had visited, or at least had left behind him any 
 description of China or the East Indies ; and a very slight resem- 
 blance, such as that which he found between the name of Cibao, a 
 mountain in St. Domingo, and that of Cipango, mentioned by 
 Marco Polo, was frequently sufficient to make him return to this 
 favourite prepossession, though contrary to the clearest evidence. 
 In his letters to Ferdinand and Isabella, he called the countries 
 which he discovered the Indies. He entertained no doubt but
 
 CHAP. vii. THE WEALTH OF NATIONS. 139 
 
 that they were the extremity of those which had been described by 
 Marco Polo, and that they were not very distant from the Gauges, 
 or from the countries which had been conquered by Alexander. 
 Even when at last convinced that they were different, he still 
 flattered himself that those rich countries were at no great distance, 
 and, in a subsequent voyage, accordingly, went in quest of them 
 along the coast of Terra Firma, and towards the Isthmus of Darien. 
 
 In consequence of this mistake of Columbus, the name of the 
 Indies has stuck to those unfortunate countries ever since; and 
 when it was at last clearly discovered that the new were altogether 
 different from the old Indies, the former were called the West, 
 in contradistinction to the latter, which were called the East Indies. 
 
 It was of importance to Columbus, however, that the countries 
 which he had discovered, whatever they were, should be represented 
 to the court of Spain as of very great consequence ; and, in what 
 constitutes the real riches of every country, the animal and vegetable 
 productions of the soil, there was at that time nothing which could 
 well justify such a representation of them. 
 
 The Cori, something between a rat and a rabbit, and supposed 
 by M. Buffon 1 to be the same with the Aperea of Brazil, was the 
 largest viviparous quadruped in St. Domingo. This species seems 
 never to have been very numerous, and the dogs and cats of the 
 Spaniards are said to have long ago almost entirely extirpated it, 
 as well as some other tribes of a still smaller size. These, however, 
 together with a pretty large lizard, called the Ivana or Iguana, 
 constituted the principal part of the animal food which the land 
 afforded. 
 
 The vegetable food of the inhabitants, though from their want of 
 industry not very abundant, was not altogether so scanty. It 
 consisted in Indian corn, yams, potatoes, bananas, &c., plants which 
 were then altogether unknown in Europe, and which have never 
 since been very much esteemed in it, or supposed to yield a sus- 
 tenance equal to what is drawn from the common sorts of grain and 
 pulse which have been cultivated in this part of the world time out 
 of mind. 
 
 The cotton-plant indeed afforded the material of a very important 
 manufacture, and was at that time to Europeans undoubtedly the 
 most valuable of all the vegetable productions of those islands. But 
 1 Histoire Naturelle, vol. xv. p. i6i.
 
 140 THE NATURE AND CAUSES OF BOOK iv. 
 
 though in the end of the fifteenth century the muslins and other 
 cotton goods of the East Indies were much esteemed in every 
 part of Europe, the cotton manufacture itself was not cultivated 
 in any part of it. Even this production, therefore, could not at 
 that time appear in the eyes of Europeans to be of very great 
 consequence. 
 
 Finding nothing either in the animals or vegetables of the newly- 
 discovered countries which could justify a very advantageous re- 
 presentation of them, Columbus turned his view towards their 
 minerals ; and in the richness of the productions of this third 
 kingdom, he flattered himself he had found a full compensation for 
 the insignificancy of those of the other two. The little bits of gold 
 with which the inhabitants ornamented their dress, and which, he 
 was informed, they frequently found in the rivulets and torrents 
 that fell from the mountains, were sufficient to satisfy him that 
 those mountains abounded with the richest gold mines. St. 
 Domingo, therefore, was represented as a country abounding 
 with gold, and, upon that account (according to the prejudices 
 not only of the present times, but of those times), an inexhaustible 
 source of real wealth to the crown and kingdom of Spain. When 
 Columbus, upon his return from his first voyage, was introduced 
 with a sort of triumphal honours to the sovereigns of Castile and 
 Arragon, the principal productions of the countries which he had 
 discovered were carried in solemn procession before him. The only 
 valuable part of them consisted in some little fillets, bracelets, and 
 other ornaments of gold, and in some bales of cotton. The rest 
 were mere objects of vulgar wonder and curiosity; some reeds of an 
 extraordinary size, some birds of a very beautiful plumage, and 
 some stuffed skins of the huge alligator and manati, all of which 
 were preceded by six or seven of the wretched natives, whose 
 singular colour and appearance added greatly to the novelty of 
 the show. 
 
 In consequence of the representations of Columbus, the council 
 of Castile determined to take possession of countries of which the 
 inhabitants were plainly incapable of defending themselves. The 
 pious purpose of converting them to Christianity sanctified the 
 injustice of the project. But the hope of finding treasures of gold 
 there, was the sole motive which prompted to undertake it ; and to 
 give this motive the greater weight, it was proposed by Columbus
 
 CHAP. vii. THE WEALTH OF NATIONS. 141 
 
 that the half of all the gold and silver that should be found there 
 should belong to the Crown. This proposal was approved of by the 
 council. 
 
 As long as the whole or the far greater part of the gold, which 
 the first adventurers imported into Europe, was got by so very easy 
 a method as the plundering of the defenceless natives, it was not 
 perhaps very difficult to pay even this heavy tax. But when the 
 natives were once fairly stripped of all that they had, which, in St. 
 Domingo and in all the other countries discovered by Columbus, 
 was done completely in six or eight years, and when in order to 
 find more it had become necessary to dig for it in the mines, there 
 was no longer any possibility of paying this tax. The rigorous 
 exaction of it, accordingly, first occasioned, it is said, the total 
 abandoning of the mines of St. Domingo, which have never been 
 wrought since. It was soon reduced therefore to a third, then to a 
 fifth, afterwards to a tenth, and at last to a twentieth part of the 
 gross produce of the gold mines. The tax upon silver continued for 
 a long time to be a fifth of the gross produce. It was reduced to a 
 tenth only in the course of the present century. But the first adven- 
 turers do not appear to have been much interested about silver. 
 Nothing less precious than gold seemed worthy of their attention. 
 
 All the other enterprises of the Spaniards in the new world, 
 subsequent to those of Columbus, seem to have been prompted 
 by the same motive. It was the sacred thirst of gold that carried 
 Oieda, Nicuessa, and Vasco Nugnes de Balboa to the isthmus of 
 Darien, that carried Cortez to Mexico, and Almagro and Pizarro 
 to Chili and Peru. When those adventurers arrived upon any 
 unknown coast, their first inquiry was always if there was any gold 
 to be found there ; and according to the information which they 
 received concerning this particular, they determined either to quit 
 the country or to settle in it. 
 
 Of all those expensive and uncertain projects, however, which 
 bring bankruptcy upon the greater part of the people who engage 
 in them, there is none perhaps more perfectly ruinous than the 
 search after new silver and gold mines. It is perhaps the most dis- 
 advantageous lottery in the world, or the one in which the gain of 
 those who draw the prizes bears the least proportion to the loss of 
 those who draw the blanks ; for though the prizes are few and the 
 blanks many, the common price of a ticket is the whole fortune of a
 
 142 THE NATURE AND CAUSES OF BOOK rv. 
 
 very rich man. 1 Projects of mining, instead of replacing the 
 capital employed in them, together with the ordinary profits of 
 stock, commonly absorb both capital and profit. They are the 
 projects, therefore, to which of all others a prudent lawgiver, who 
 desired to increase the capital of his nation, would least choose 
 to give any extraordinary encouragement, or to turn towards them 
 a greater share of that capital than what would go to them of 
 its own accord. Such in reality is the absurd confidence which 
 almost all men have in their own good fortune, that wherever there 
 is the least probability of success, too great a share of it is apt to go 
 to them of its own accord. 
 
 But though the judgment of sober reason and experience con- 
 cerning such projects has always been extremely unfavourable, 
 that of human avidity has commonly been quite otherwise. The 
 same passion which has suggested to so many people the absurd 
 idea of the philosopher's stone, has suggested to others the equally 
 absurd one of immense rich mines of gold and silver. They 
 did not consider that the value of those metals has, in all ages 
 and nations, arisen chiefly from their scarcity, and that their 
 scarcity has arisen from the very small quantities of them which 
 nature has anywhere deposited in one place, from the hard and 
 intractable substances with which she has almost everywhere sur- 
 rounded those small quantities, and consequently from the labour 
 and expense which are everywhere necessary in order to penetrate 
 to and get at them. 2 They flattered themselves that veins of those 
 
 1 This criticism of Smith has been veri- crust of the earth. Gold is, after all, by 
 fied in later times. The additions which far the most restricted, in its native dis- 
 California and Australia have made to the tribution, of all the precious metals, 
 wealth of the world have not consisted Silver and argentiferous lead, on the con- 
 in the gold found there, still less in the trary, expand so largely downwards into 
 fortunes gained by the miners in those the bowels of the rocks, as to lead us to 
 regions, but in the rapid plantation of believe that they must yield enormous 
 new colonies, in the demand which has profits to the skilful miner for ages to 
 sprung up in those colonies for European come ; and the more so in proportion 
 goods, and in the subsequent develop- as better machinery and new inventions 
 ruent of important raw material from shall lessen the difficulty of subterraneous 
 those regions. The export of Australian mining. It may indeed be well doubted 
 wool, amounting in the year 1879 * whether the quantities both of gold and 
 more than a million tons weight, is a far silver, procured from regions unknown to 
 more important produce than all the gold our progenitors, will prove more than 
 which the colony has added to the cur- sufficient to meet the exigencies of an 
 rencies and the luxury of the world. enormously increased population and our 
 
 2 Sir Roderick Murchison (Siluria, 457) augmenting commerce and luxury. But 
 says, ' The fear that gold may be greatly this is not the theme for a geologist ; and 
 depreciated in value relating to silver, is I would simply say, that Providence 
 unwarranted by the data registered in the seems to have originally adjusted the
 
 CHAP. vii. THE WEALTH OF NATIONS. 143 
 
 metals might in many places be found as large and as abundant as 
 those which are commonly found of lead, or copper, or tin, or iron. 
 The dream of Sir Walter Raleigh concerning the golden city and 
 country of Eldorado, 1 may satisfy us that even wise men are not 
 always exempt from such strange delusions. More than a hundred 
 years after the death of that great man, the Jesuit Gumila 2 was 
 still convinced of the reality of that wonderful country, and ex- 
 pressed with great warmth, and, I dare to say, with great sincerity, 
 how happy he should be to carry the light of the Gospel to a people 
 who could so well reward the pious labours of their missionary. 
 
 In the countries first discovered by the Spaniards, no gold or 
 silver mines are at present known which are supposed to be worth 
 the working. The quantities of those metals which the first adven- 
 turers are said to have found there, had probably been very much 
 magnified, as well as the fertility of the mines which were wrought 
 immediately after the first discovery. What those adventurers were 
 reported to have found, however, was sufficient to inflame the avidity 
 of all their countrymen. Every Spaniard who sailed to America 
 expected to find an Eldorado. Fortune too did upon this what she 
 has done upon very few other occasions : she realised in some mea- 
 sure the extravagant hopes of her votaries, and in the discovery and 
 conquest of Mexico and Peru (of which the one happened about 
 thirty, the other about forty years after the first expedition of 
 Columbus), she presented them with something not very unlike 
 that profusion of the precious metals which they sought for. 
 
 A project of commerce to the East Indies, therefore, gave occa- 
 sion to the first discovery of the West. A project of conquest gave 
 occasion to all the establishments of the Spaniards in those newly- 
 discovered countries. The motive which excited them to this con- 
 quest was a project of gold and silver mines ; and a course of acci- 
 dents, which no human wisdom could foresee, rendered this project 
 much more successful than the undertakers had any reasonable 
 grounds for expecting. 
 
 relative value of these two precious and the superficial distribution of the 
 
 metals, and that their relations having other, "Surely there is a vein for the 
 
 remained the same for ages, will long silver the earth hath dust of gold" 
 
 survive all theories. Modern science, (Job xxviii. I, 6).' 
 
 instead of contradicting, only confirms l The discovery of the large, rich, and 
 the truth of the aphorism of the patri- beautiful empire of Guiana, &c., pub- 
 arch Job, which thus shadowed forth lished in 1596. 
 the downward persistence of the one, 3 El Orinoco illustrado, vol. i. cap. xxv.
 
 144 THE NATURE AND CA USES OF BOOK iv. 
 
 The first adventurers of all the other nations of Europe, who 
 attempted to make settlements in America, were animated by the 
 like chimerical views; but they were not equally successful. It was 
 more than a hundred years after the first settlement of the Brazils 
 before any silver, gold, or diamond mines were discovered there. 
 In the English, French, Dutch, and Danish colonies, none have 
 ever yet been discovered ; at least, none that are at present supposed 
 to be worth the working. The first English settlers in North Ame- 
 rica, however, offered a fifth of all the gold and silver which should 
 be found there to the king, as a motive for granting them their 
 patents. In the patents to Sir Walter Raleigh, to the London and 
 Plymouth companies, to the council of Plymouth, &c., this fifth was 
 accordingly reserved to the crown. To the expectation of finding 
 gold and silver mines, those first settlers too joined that of discover- 
 ing a north-west passage to the East Indies. They have hitherto 
 been disappointed in both. 
 
 PART II. 
 
 Causes of the Prosperity of new Colonies. 
 
 THE colony of a civilised nation which takes possession, either of 
 a waste country, or of one so thinly inhabited, that the natives easily 
 give place to the new settlers, advances more rapidly to wealth and 
 greatness than any other human society. 
 
 The colonists carry out with them a knowledge of agriculture and 
 of other useful arts, superior to what can grow up of its own accord 
 in the course of many centuries among savage and barbarous nations. 
 They carry out with them too the habit of subordination, some 
 notion of the regular government which takes place in their own 
 countiy, of the system of laws which support it, and of a regular 
 administration of justice; and they naturally establish something 
 of the same kind in the new settlement. But among savage and 
 barbarous nations, the natural progress of law and government is 
 still slower than the natural progress of arts, after law and govern- 
 ment has been so far established as is necessary for their protec- 
 tion. Every colonist gets more land than he can possibly cultivate. 
 He has no rent, and scarce any taxes to pay. No landlord shares 
 with him in its produce, and the share of the sovereign is commonly
 
 CHAP. vii. THE WEALTH OF NATIONS. 145. 
 
 but a trifle. He has every motive to render as great as possible a 
 produce, which is thus to be almost entirely his own. But his land 
 is commonly so extensive, that with all his own industry, and with 
 all the industry of other people whom he can get to employ, he can 
 seldom make it produce the tenth part of what it is capable of pro- 
 ducing. He is eager, therefore, to collect labourers from all quar- 
 ters, and to reward them with the most liberal wages. But those 
 liberal wages, joined to the plenty and cheapness of land, soon make 
 those labourers leave him in order to become landlords themselves, 
 and to reward, with equal liberality, other labourers, who soon leave 
 them for the same reason that they left their first master. The 
 liberal reward of labour encourages marriage. The children, during 
 the tender years of infancy, are well fed and properly taken care of, 
 and when they are grown up, the value of their labour greatly over- 
 pays their maintenance. When arrived at maturity, the high price 
 of labour and the low price of land enable them to establish them- 
 selves in the same manner as their fathers did before them. 1 
 
 In other countries, rent and profit eat up wages, and the two 
 superior orders of people oppress the inferior one. But in new 
 colonies, the interest of the two superior orders obliges them to 
 treat the inferior one with more generosity and humanity; at least, 
 where that inferior one is not in a state of slavery. Waste lands, 
 of the greatest natural fertility, are to be had for a trifle. The 
 increase of revenue which the proprietor, who is always the under- 
 taker, expects from their improvement, constitutes his profit ; which 
 in these circumstances is commonly very great. But this great 
 profit cannot be made without employing the labour of other people 
 in clearing and cultivating the land ; and the disproportion between 
 the great extent of the land and the small number of the people, 
 which commonly takes place in new colonies, makes it difficult for 
 him to get this labour. He does not, therefore, dispute about wages, 
 but is willing to employ labour at any price. The high wages of 
 labour encourage population. The cheapness and plenty of good 
 land encourage improvement, and enable the proprietor to pay those 
 
 1 To these causes may be added, that and services ; and where there is such 
 
 in such new countries there is no mere expenditure, there is also, by force of 
 
 spending class, or this class is small, and circumstances, great penury; because the 
 
 in no great credit. Where there are great ministers of mere luxury compete for 
 
 families of ancient opulence, there is also existence with those who are engaged in 
 
 great expenditure on unproductive objects industrial pursuits. 
 
 VOL. II. L
 
 146 THE NATURE AND CAUSES OF BOOK iv. 
 
 high wages. In those wages consists almost the whole price of the 
 land ; and though they are high, considered as the wages of labour, 
 they are low, considered as the price of what is so very valuable. 
 "What encourages the progress of population and improvement, 
 encourages that of real wealth and greatness. 
 
 The progress of many of the ancient Greek colonies towards 
 wealth and greatness, seems accordingly to have been very rapid. 
 In the course of a century or two, several of them appear to have 
 rivalled, and even to have surpassed their mother cities. Syracuse 
 and Agrigentum in Sicily, Tarentum and Locri in Italy, Ephesus 
 and Miletus in Lesser Asia, appear by all accounts to have been at 
 least equal to any of the cities of ancient Greece. Though posterior 
 in their establishment, yet all the arts of refinement, philosophy, 
 poetry, and eloquence seem to have been cultivated as early, and to 
 have been improved as highly in them, as in any part of the mother 
 country. The schools of the two oldest Greek philosophers, those 
 of Thales and Pythagoras, were established, it is remarkable, not in 
 ancient Greece, but the one in an Asiatic, the other in an Italian 
 colony. All those colonies had established themselves in countries 
 inhabited by savage and barbarous nations, who easily gave place 
 to the new settlers. They had plenty of good land, and as they 
 were altogether independent of the mother city, they were at liberty 
 to manage their own affairs in the way that they judged was most 
 suitable to their own interest. 
 
 The history of the Roman colonies is by no means so brilliant. 
 Some of them, indeed, such as Florence, have in the course of many 
 ages, and after the fall of the mother city, grown up to be consider- 
 able states. But the progress of no one of them seems ever to have 
 been very rapid. They were all established in conquered provinces, 
 which in most cases had been fully inhabited before. The quantity 
 of land assigned to each colonist was seldom very considerable, and 
 as the colony was not independent, they were not always at liberty 
 to manage their own affairs in the way that they judged was most 
 suitable to their own interest. 1 
 
 In the plenty of good land, the European colonies established in 
 
 1 For the character of the ancient be found in the Spanish settlements of 
 
 Roman colonies, see Niebuhr's History of the New World. Still, Roman colonies 
 
 Rome, Hare's and Thirlwall's translation, became the principal cities of Europe east 
 
 vol. ii. p. 43. In general, the nearest of the Rhine, 
 counterpart to these Roman colonies is to
 
 CHAP. TII. THE WEALTH OF NATIONS. 147 
 
 America and the West Indies resemble, and even greatly surpass, 
 those of ancient Greece. In their dependency upon the mother 
 state, they resemble those of ancient Rome ; but their great distance 
 from Europe has in all of them alleviated more or less the effects 
 of this dependency. Their situation has placed them less in the 
 view and less in the power of their mother country. In pursuing 
 their interest their own way, their conduct has, upon many occasions, 
 been overlooked, either because not known or not understood in 
 Europe ; and upon some occasions it has been fairly suffered and 
 submitted to, because their distance rendered it difficult to restrain 
 it. Even the violent and arbitrary Government of Spain has, upon 
 many occasions, been obliged to recall or soften the orders which had 
 been given for the government of her colonies, for fear of a general 
 insurrection. The progress of all the European colonies in wealth, 
 population, and improvement, has accordingly been very great. 
 
 The Crown of Spain, by its share of the gold and silver, derived 
 some revenue from its colonies from the moment of their first estab- 
 lishment. It was a revenue, too, of a nature to excite in human 
 avidity the most extravagant expectations of still greater riches. 
 The Spanish colonies, therefore, from the moment of their first 
 establishment, attracted very much the attention of their mother 
 country; while those of the other European nations were for a long 
 time in a great measure neglected. The former did not, perhaps, 
 thrive the better in consequence of this attention, nor the latter 
 the worse in consequence of this neglect. In proportion to the 
 extent of the country which they in some measure possess, the 
 Spanish colonies are considered as less populous and thriving than 
 those of almost any other European nation. The progress even of 
 the Spanish colonies, however, in population and improvement, 
 has certainly been very rapid and very great. The city of Lima, 
 founded since the conquest, is represented by Ulloa 1 as containing 
 fifty thousand inhabitants near thirty years ago. Quito, which 
 had been but a miserable hamlet of Indians, is represented by the 
 same author as in his time equally populous. Gemelli Careri, 2 a 
 pretended traveller, it is said, indeed, but who seems everywhere to 
 have written upon extreme good information, represents the city of 
 
 1 See for a description of Lima, and Parte, lib. i. cap. v. For Quito, see the 
 
 the population of various races which it same author, Prim. Parte, lib. v. cap. v. 
 contained in 1 740, Ulloa, Relaeion de 2 Voyage du Tour du Monde, torn. vi. 
 
 Viage a la America Meridional, Seg. p. 36. 
 
 L 2,
 
 148 THE NATURE AND CAUSES OF BOOK iv. 
 
 Mexico as containing a hundred thousand inhabitants ; a number 
 which, in spite of all the exaggerations of the Spanish writers, is 
 probably more than five times greater than what it contained in the 
 time of Montezuma. These numbers exceed greatly those of Boston, 
 New York, and Philadelphia, the three greatest cities of the English 
 colonies. Before the conquest of the Spaniards there were no cattle 
 fit for draught, either in Mexico or Peru. The llama was their only 
 beast of burden, and its strength seems to have been a good deal 
 inferior to that of a common ass. The plough was unknown among 
 them. They were ignorant of the use of iron. They had no coined 
 money, nor any established instrument of commerce of any kind. 
 Their commerce was carried on by barter. A sort of wooden spade 
 was their principal instrument of agriculture. Sharp stones served 
 them for knives and hatchets to cut with ; fish-bones and the hard 
 sinews of certain animals served them for needles to sew with ; and 
 these seem to have been their principal instruments of trade. In 
 this state of things, it seems impossible that either of those empires 
 could have been so much improved or so well cultivated as at pre- 
 sent, when they are plentifully furnished with all sorts of European 
 cattle, and when the use of iron, of the plough, and of many of the 
 arts of Europe, has been introduced among them. But the popu- 
 lousness of every country must be in proportion to the degree of its 
 improvement and cultivation. In spite of the cruel destruction of 
 the natives which followed the conquest, these two great empires 
 are, probably, more populous now than they ever were before : and 
 the people are surely very different ; for we must acknowledge, I 
 apprehend, that the Spanish Creoles are in many respects superior to 
 the ancient Indians. 
 
 After the settlements of the Spaniards, that of the Portuguese 
 in Brazil is the oldest of any European nation in America. But 
 as for a long time after the first discovery, neither gold nor silver 
 mines were found in it, and as it afforded, upon that account, 
 little or no revenue to the Crown, it was for a long time in a 
 great measure neglected ; and during this state of neglect, it grew 
 up to be a great and powerful colony. While Portugal was under 
 the dominion of Spain, Brazil was attacked by the Dutch, who 
 got possession of seven of the fourteen provinces into which it is 
 divided. They expected soon to conquer the other seven, when 
 Portugal recovered its independency by the elevation of the family
 
 CHAP. vii. THE WEALTH OF NATIONS. 149 
 
 of Braganza to the throne. The Dutch then, as enemies to the 
 Spaniards, became friends to the Portuguese, who were likewise 
 the enemies of the Spaniards. They agreed, therefore, to leave 
 that part of Brazil which they had not conquered to the King of 
 Portugal, who agreed to leave that part which they had conquered 
 to them, as a matter not worth disputing about with such good 
 allies. But the Dutch Government soon began to oppress the 
 Portuguese colonists, who, instead of amusing themselves with com- 
 plaints, took arms against their new masters, and by their own 
 valour and resolution, with the connivance, indeed, but without 
 any avowed assistance from the mother country, drove them out 
 of Brazil. The Dutch, therefore, finding it impossible to keep any 
 part of the country to themselves, were contented that it should 
 be entirely restored to the crown of Portugal. In this colony 
 there are said to be more than six hundred thousand people, either 
 Portuguese or descended from Portuguese, Creoles, mulattoes, and 
 a mixed race between Portuguese and Brazilians. No one colony 
 in America is supposed to contain so great a number of European 
 extraction. 
 
 Towards the end of the fifteenth, and during the greater part 
 of the sixteenth century, Spain and Portugal were the two great 
 naval powers upon the ocean ; for though the commerce of Venice 
 extended to every part of Europe, its fleets had scarce ever sailed 
 beyond the Mediterranean. The Spaniards, in virtue of the first 
 discovery, claimed all America as their own ; and though they 
 could not hinder so great a naval power as that of Portugal from 
 settling in Brazil, such was, at that time, the terror of their name, 
 that the greater part of the other nations of Europe were afraid 
 to establish themselves in any other part of that great continent. 
 The French, who attempted to settle in Florida, were all murdered 
 by the Spaniards. But the declension of the naval power of this 
 latter nation, in consequence of the defeat or miscarriage of what 
 they called their Invincible Armada, which happened towards the end 
 of the sixteenth century, 1 put it out of their power to obstruct any 
 longer the settlements of the other European nations. In the course 
 of the seventeenth century, therefore, the English, French, Dutch, 
 Danes and Swedes, all the great nations who had any ports upon the 
 ocean, attempted to make some settlements in the new world. 
 
 1 i.e. A.D. 1588.
 
 150 THE NATURE AND CAUSES OF BOOK iv. 
 
 The Swedes established themselves in New Jersey; and the 
 number of Swedish families still to be found there sufficiently 
 demonstrates that this colony was very likely to prosper, had it 
 been protected by the mother country. But being neglected by 
 Sweden, it was soon swallowed up by the Dutch colony of New 
 York, which again, in 1674, fell under the dominion of the 
 English. 
 
 The small islands of St. Thomas and Santa Cruz are the only 
 countries in the new world that have ever been possessed by the 
 Danes. These little settlements too were under the government 
 of an exclusive company, which had the sole right, both of pur- 
 chasing the surplus produce of the colonists, and of supplying 
 them with such goods of other countries as they wanted, and 
 which, therefore, both in its purchases and sales, had not only 
 the power of oppressing them, but the greatest temptation to do 
 so. The government of an exclusive company of merchants is, 
 perhaps, the worst of all governments for any country whatever. 
 It was not, however, able to stop altogether the progress of these 
 colonies, though it rendered it more slow and languid. The late 
 King of Denmark dissolved this company, and since that time 
 the prosperity of these colonies has been very great. 
 
 The Dutch settlements in the West, as well as those in the 
 East Indies, were originally put under the government of an 
 exclusive company. The progress of some of them, therefore, 
 though it has been considerable, in comparison with that of almost 
 any country that has been long peopled and established, has been 
 languid and slow in comparison with that of the greater part of 
 new colonies. The colony of Surinam, though very considerable, 
 is still inferior to the greater part of the sugar colonies of the 
 other European nations. The colony of Nova Belgia, now divided 
 into the two provinces of New York and New Jersey, would pro- 
 bably have soon become considerable too, even though it had 
 remained under the government of the Dutch. The plenty and 
 cheapness of good land are such powerful causes of prosperity, 
 that the very worst government is scarce capable of checking 
 altogether the efficacy of their operation. The great distance too 
 from the mother country would enable the colonists to evade more 
 or less, by smuggling, the monopoly which the company enjoyed 
 against them. At present, the company allows all Dutch ships
 
 CHAP. vii. THE WEALTH OF NATIONS. 151 
 
 to trade to Surinam upon paying- two-and-a-half per cent, upon 
 the value of their cargo for a licence ; and only reserves to itself 
 exclusively the direct trade from Africa to America, which consists 
 almost entirely in the slave trade. This relaxation in the ex- 
 clusive privileges of the company is probably the principal cause 
 of that degree of prosperity which that colony at present enjoys. 
 Cura9oa and Eustatia, the two principal islands belonging to the 
 Dutch, are free ports open to the ships of all nations ; and this 
 freedom, in the midst of better colonies whose ports are open to 
 those of one nation only, has been the great cause of the prosperity 
 of those two barren islands. 
 
 The French colony of Canada was, during the greater part of 
 the last century, and some part of the present, under the govern- 
 ment of an exclusive company. Under so unfavourable an adminis- 
 tration its progress was necessarily very slow in comparison with 
 that of other new colonies ; but it became much more rapid when 
 this company was dissolved after the fall of what is called the 
 Mississippi scheme. When the English got possession of this 
 country, they found in it near double the number of inhabitants 
 which father Charlevoix 1 had assigned to it between twenty and 
 thirty years before. That Jesuit had travelled over the whole 
 country, and had no inclination to represent it as less considerable 
 than it really was. 
 
 The French colony of St. Domingo was established by pirates 
 and freebooters, who, for a long time, neither required the pro- 
 tection nor acknowledged the authority of France ; and when that 
 race of banditti became so far citizens as to acknowledge this 
 authority, it was for a long time necessary to exercise it with 
 very great gentleness. During this period the population and 
 improvement of this colony increased very fast. Even the op- 
 pression of the exclusive company, to which it was for some time 
 subjected, with all the other colonies of France, though it no doubt 
 retarded, had not been able to stop its progress altogether. The 
 course of its prosperity returned as soon as it was relieved from 
 that oppression. It is now the most important of the sugar 
 colonies of the West Indies, and its produce is said to be greater 
 than that of all the English sugar colonies put together. The 
 other sugar colonies of France are in general all very thriving. 
 
 1 ' Une Colonie de viat & vint-cinq mille Ames.' Charlevoix, ii. 390, 1'an 1713.
 
 152 THE NATURE AND CAUSES OF BOOK iv. 
 
 But there are no colonies of which the progress has been more 
 rapid than that of the English in North America. 
 
 Plenty of good land, and liberty to manage their own affairs 
 their own way, seem to be the two great causes of the prosperity 
 of all new colonies. 
 
 In the plenty of good land the English colonies of North America, 
 though, no doubt, very abundantly provided, are, however, inferior 
 to those of the Spaniards and Portuguese, and not superior to 
 some of those possessed by the French before the late war. But 
 the political institutions of the English colonies have been more 
 favourable to the improvement and cultivation of this land than 
 those of any of the other three nations. 
 
 First, the engrossing of uncultivated land, though it has by 
 n,o means been prevented altogether, has been more restrained in 
 the English colonies than in any other. The colony law, which 
 imposes upon every proprietor the obligation of improving and 
 cultivating, within a limited time, a certain proportion of his lands, 
 and which, in case of failure, declares those neglected lands grant- 
 able to any other person ; though it has not, perhaps, been very 
 strictly executed, has, however, had some effect. 
 
 Secondly, in Pennsylvania there is no right of primogeniture, 
 and lands, like moveables, are divided equally among all the 
 children of the family. In three of the provinces of New England 
 the oldest has only a double share, as in the Mosaical law. Though 
 in those provinces, therefore, too great a quantity of land should 
 sometimes be engrossed by a particular individual, it is likely, 
 in the course of a generation or two, to be sufficiently divided 
 again. In the other English colonies, indeed, the right of primo- 
 geniture takes place, as in the law of England. But in all the 
 English colonies the tenure of their lands, which are all held by 
 free socage, facilitates alienation, and the grantee of any extensive 
 tract of land generally finds it for his interest to alienate, as fast 
 as he can, the greater part of it, reserving only a small quit rent. 
 In the Spanish and Portuguese colonies, what is called the right 
 of Majorazzo* takes place in the succession of all those great 
 estates to which any title of honour is annexed. Such estates go 
 all to one person, and are in effect entailed and unalienable. The 
 French colonies, indeed, are subject to the custom of Paris, which, 
 
 * Jus Majoratus.
 
 CHAP. vii. THE WEALTH OF NATIONS. 153 
 
 in the inheritance of land, is much more favourable to the younger 
 children than the law of England. But, in the French colonies, 
 if any part of an estate, held by the noble tenure of chivalry and 
 homage, is alienated, it is, for a limited time, subject to the right 
 of redemption, either by the heir of the superior or by the heir 
 of the family; and all the largest estates of the country are held 
 by such noble tenures, which necessarily embarrass alienation. But, 
 in a new colony, a great uncultivated estate is likely to be much 
 more speedily divided by alienation than by succession. The plenty 
 and cheapness of good land, it has already been observed, are the 
 principal causes of the rapid prosperity of new colonies. The 
 engrossing of land, in effect, destroys this plenty and cheapness. 
 The engrossing of uncultivated land, besides, is the greatest ob- 
 struction to its improvement. But the labour that is employed 
 in the improvement and cultivation of land affords the greatest 
 and most valuable produce to the society. The produce of labour, 
 in this case, pays not only its own wages, and the profit of the 
 stock which employs it, but tne rent of the land too upon which 
 it is employed. The labour of the English colonists, therefore, 
 being more employed in the improvement and cultivation of land, 
 is likely to afford a greater and more valuable produce than that 
 of any of the other three nations, which, by the engrossing of 
 land, is more or less diverted towards other employments. 
 
 Thirdly, the labour of the English colonists is not only likely to 
 afford a greater and more valuable produce, but, in consequence of 
 the moderation of their taxes, a greater proportion of this produce 
 belongs to themselves, which they may store up and employ in 
 putting into motion a still greater quantity of labour. The English 
 colonists have never yet contributed anything towards the defence 
 of the mother country, or towards the support of its civil govern- 
 ment. They themselves, on the contrary, have hitherto been 
 defended almost entirely at the expense of the mother country. 
 But the expense of fleets and armies is out of all proportion greater 
 than the necessary expense of civil government. The expense of 
 their own civil government has always been very moderate. It has 
 generally been confined to what was necessary for paying competent 
 salaries to the governor, to the judges, and to some other officers of 
 police, and for maintaining a few of the most useful public works. 
 The expense of the civil establishment of Massachusetts Bay,
 
 154 THE NATURE AND CAUSES OF BOOK iv. 
 
 before the commencement of the present disturbances, used to be 
 
 but about ^18,000 a year; that of New Hampshire and Rhode 
 
 Island, ^3,500 each ; that of Connecticut, ^4,000 ; that of New 
 
 York and Pennsylvania, ^4,500 each ; that of New Jersey, j J J,2OO ; 
 
 that of Virginia and South Carolina, ^8,000 each. The civil 
 
 establishment of Nova Scotia and Georgia are partly supported by 
 
 an annual grant of Parliament. But Nova Scotia pays, besides, 
 
 about ^7,000 a year towards the public expenses of the colony; and 
 
 Georgia, about j6 J 2,5oo a year. All the different civil establishments 
 
 in North America, in short, exclusive of those of Maryland and 
 
 North Carolina, of which no exact account has been got, did not, 
 
 before the commencement of the present disturbances, cost the 
 
 inhabitants above ^64,700 a year ; an ever-memorable example at 
 
 how small an expense three millions of people may not only be 
 
 governed, but well governed. The most important part of the 
 
 expense of government, indeed, that of defence and protection, has 
 
 constantly fallen upon the mother country. The ceremonial too of 
 
 the civil government in the colonies, upon the reception of a new 
 
 governor, upon the opening of a new assembly, &c., though suf- 
 
 . ficiently decent, is not accompanied with any expensive pomp or 
 
 parade. Their ecclesiastical government is conducted upon a plan 
 
 equally frugal. Tithes are unknown among them ; and their clergy, 
 
 who are far from being numerous, are maintained either by moderate 
 
 stipends, or by the voluntary contributions of the people. The 
 
 power of Spain and Portugal, on the contrary, derives some support 
 
 from the taxes levied upon their colonies. France, indeed, has 
 
 never drawn any considerable revenue from its colonies, the taxes 
 
 which it levies upon them being generally spent among them. But 
 
 the colony government of all these three nations is conducted upon 
 
 a much more expensive plan, and is accompanied with a much more 
 
 expensive ceremonial. The sums spent upon the reception of a new 
 
 viceroy of Peru, for example, have frequently been enormous. Such 
 
 ceremonials are not only real taxes paid by the rich colonists upon 
 
 these particular occasions, but they serve to introduce among them 
 
 the habit of vanity and expense upon all other occasions. They are 
 
 not only very grievous occasional taxes, but they contribute to 
 
 establish perpetual taxes of the same kind still more grievous ; the 
 
 ruinous taxes of private luxury and extravagance. In the colonies 
 
 of all those three nations too, the ecclesiastical government is
 
 CHAP. vii. THE WEALTH OF NATIONS. 155 
 
 extremely oppressive. Tithes take place in all of them, and are 
 levied with the utmost rigour in those of Spain and Portugal. 
 All of them besides are oppressed with a numerous race of mendicant 
 friars, whose beggary being not licensed, but consecrated by religion, 
 is a most grievous tax upon the poor people, who are most carefully 
 taught that it is a duty to give, and a very great sin to refuse them 
 their charity. Over and above all this, the clergy are, in all of 
 them, the greatest engrossers of land. 
 
 Fourthly, in the disposal of their surplus produce, or of what is 
 over and above their own consumption, the English colonies have 
 been more favoured, and have been allowed a more extensive market, 
 than those of any other European nation. Every European nation 
 has endeavoured more or less to monopolise to itself the commerce 
 of its colonies, and, upon that account, has prohibited the ships of 
 foreign nations from trading to them, and has prohibited them from 
 importing European goods from any foreign nation. But the 
 manner in which this monopoly has been exercised in different 
 nations has been very different. 
 
 Some nations have given up the whole commerce of their colonies 
 to an exclusive company, of whom the colonists were obliged to buy 
 all such European goods as they wanted, and to whom they were 
 obliged to sell the whole of their own surplus produce. It was the 
 interest of the company, therefore, not only to sell the former as 
 dear, and to buy the latter as cheap as possible, but to buy no more 
 of the latter, even at this low price, than what they could dispose 
 of for a very high price in Europe. It was their interest, not only 
 to degrade in all cases the value of the surplus produce of the colony, 
 but in many cases to discourage and keep down the natural increase 
 of its quantity. Of all the expedients that can well be contrived to 
 stunt the natural growth of a new colony, that of an exclusive 
 company is undoubtedly the most effectual. This, however, has 
 been the policy of Holland, though their company, in the course of 
 the present century, has given up in many respects the exertion of 
 their exclusive privilege. This too was the policy of Denmark till 
 the reign of the late king. It has occasionally been the policy of 
 France, and of late, since 1755, after it had been abandoned by all 
 other nations, on account of its absurdity, it has become the policy 
 of Portugal with regard at least to two of the principal provinces of 
 Brazil, Pernambuco and Maranhao.
 
 156 THE NATURE AND CAUSES OF BOOK iv. 
 
 Other nations, without establishing an exclusive company, have 
 confined the whole commerce of their colonies to a particular port 
 of the mother country, from whence no ship was allowed to sail, 
 but either in a fleet and at a particular season, or, if single, in con- 
 sequence of a particular licence, which in most cases was very well 
 paid for. This policy opened, indeed, the trade of the colonies to 
 all the natives of the mother country, provided they traded from the 
 proper port, at the proper season, and in the proper vessels. But as 
 all the different merchants, who joined their stocks in order to fit 
 out those licensed vessels, would find it for their interest to act in 
 concert, the trade which was carried on in this manner would 
 necessarily be conducted very nearly upon the same principles as 
 that of an exclusive company. The profit of those merchants 
 would be almost equally exorbitant and oppressive ; the colonies 
 would be ill supplied, and would be obliged both to buy very dear, 
 and to sell very cheap. This, however, till within these few years, 
 had always been the policy of Spain, and the price of all European 
 goods, accordingly, is said to have been enormous in the Spanish 
 West Indies. At Quito, we are told by Ulloa 1 , a pound of iron 
 sold for about four and sixpence, and a pound of steel for about six 
 and ninepence sterling. But it is chiefly in order to purchase 
 European goods that the colonies part with their own produce. 
 The more, .therefore, they pay for the one, the less they really get 
 for the other, and the dearness of the one is the same thing with 
 the cheapness of the other. The policy of Portugal is in this 
 respect the same as the ancient policy of Spain, with regard to all 
 its colonies, except Pernambuco and Maranhao, and with regard to 
 these it has lately adopted a still worse. 
 
 Other nations leave the trade of their colonies free to all their 
 subjects who may carry it on from all the different ports of the 
 mother countiy, and who have occasion for no other licence than 
 the common dispatches of the custom-house. In this case the 
 number and dispersed situation of the different traders renders it 
 impossible for them to enter into any general combination, and 
 their competition is sufficient to hinder them from making very 
 exorbitant profits. Under so liberal a policy, the colonies ar$ 
 
 1 ' Vale el Quintal de Hierro a ciento viii. Adam Smith has confused the quin- 
 y mas pesas, y ciento y cinquenta el de tal (100 Spanish pounds) with the English 
 Azero.' Ulloa, primi parte, lib. v. cap. pound. The quintal = 101*44 Ibs. English.
 
 CHAP. vii. THE WEALTH OF NATIONS. 157 
 
 enabled both to sell their own produce and to buy the goods of 
 Europe at a reasonable price. But since the dissolution of the 
 Plymouth company, when our colonies were but in their infancy, 
 this has always been the policy of England. It has generally too 
 been that of France, and has been uniformly so since the dissolution 
 of what, in England, is commonly called their Mississippi Company. 
 The profits of the trade, therefore, which France and England carry 
 on with their colonies, though no doubt somewhat higher than if 
 the competition was free to all other nations, are, however, by no 
 means exorbitant ; and the price of European goods accordingly 
 is not extravagantly high in the greater part of the colonies of either 
 of those nations. 
 
 In the exportation of their own surplus produce too, it is only 
 with regard to certain commodities that the colonies of Great Britain 
 are confined to the market of the mother country. These commo- 
 dities having been enumerated in the Act of Navigation and in some 
 other subsequent Acts, have upon that account been called enumerated 
 commodities. The rest are called non-enumerated; and may be 
 exported directly to other countries, provided it is in British or 
 Plantation ships, of which the owners and three-fourths of the 
 mariners are British subjects. 
 
 Among the non-enumerated commodities are some of the most 
 important productions of America and the West Indies ; grain of 
 all sorts, lumber, salt provisions, fish, sugar, and rum. 
 
 Grain is naturally the first and principal object of the culture 
 of all new colonies. By allowing them a very extensive market 
 for it, the law encourages them to extend this culture much beyond 
 the consumption of a thinly-inhabited country, and thus to provide 
 beforehand an ample subsistence for a continually increasing popu- 
 lation. 
 
 In a country quite covered with wood, where timber consequently 
 is of little or no value, the expense of clearing the ground is the 
 principal obstacle to improvement. By allowing the colonies a very 
 extensive market for their lumber, the law endeavours to facilitate 
 improvement by raising the price of a commodity which would 
 otherwise be of little value, and thereby enabling them to make 
 some profit of what would otherwise be mere expense. 
 
 In a country neither half-peopled nor half-cultivated, cattle 
 naturally multiply beyond the consumption of the inhabitants, and
 
 158 THE NATURE AND CAUSES OF BOOK iv. 
 
 are often upon that account of little or no value. But it is ne- 
 cessary, it has already been shown, that the price of cattle should 
 bear a certain proportion to that of com before the greater part 
 of the lands of any country can be improved. By allowing to 
 American cattle, in all shapes, dead and alive, a very extensive 
 market, the law endeavours to raise the value of a commodity of 
 which the high price is so very essential to improvement. The 
 good effects of this liberty, however, must be somewhat diminished 
 by the 4th of George III, c. 15, which puts hides and skins among 
 the enumerated commodities, and thereby tends to reduce the value 
 of American cattle. 
 
 To increase the shipping and naval power of Great Britain, by 
 the extension of the fisheries of our colonies, is an object which 
 the Legislature seems to have had almost constantly in view. 
 Those fisheries, upon this account, have had all the encouragement 
 which freedom can give them, and they have flourished accordingly. 
 The New England fishery in particular was, before the late disturb- 
 ances, one of the most important, perhaps, in the world. The whale 
 fishery, which, notwithstanding an extravagant bounty, is in Great 
 Britain carried on to so little purpose, that in the opinion of many 
 people (which I do not, however, pretend to warrant) the whole 
 produce does not much exceed the value of the bounties which 
 are annually paid for it, is in New England carried on without 
 any bounty to a very great extent. Fish is one of the principal 
 articles with which the North Americans trade to Spain, Portugal, 
 and the Mediterranean. 
 
 Sugar was originally an enumerated commodity which could be 
 exported only to Great Britain. But in 1731, upon a representation 
 of the sugar planters, its exportation was permitted to all parts 
 of the world. The restrictions, however, with which this liberty 
 was granted, joined to the high price of sugar in Great Britain, 
 have rendered it in a great measure ineffectual. Great Britain 
 and her colonies still continue to be almost the sole market for 
 all the sugar produced in the British plantations. Their con- 
 sumption increases so fast that, though in consequence of the 
 increasing improvement of Jamaica as well of the Ceded Islands, 
 the importation of sugar has increased very greatly within these 
 twenty years, the exportation to foreign countries is said to be not 
 much greater than before.
 
 CHAP. vii. THE WEALTH OF NATIONS. 159 
 
 Rum is a very important article in the trade which the Americans 
 carry on to the coast of Africa, from which they bring back negro 
 slaves in return. 
 
 If the whole surplus produce of America in grain of all sorts, 
 in salt provisions and in fish, had been put into the enumeration, 
 and thereby forced into the market of Great Britain, it would have 
 interfered too much with the produce of the industry of our own 
 people. It was probably not so much from any regard to the 
 interest of America, as from a jealousy of this interference, that 
 those important commodities have not only been kept out of the 
 enumeration, but that the importation into Great Britain of all 
 grain, except rice, and of salt provisions, has, in the ordinary state 
 of the law, been prohibited. 
 
 The non -enumerated commodities could originally be exported to 
 all parts of the world. Lumber and rice, having been once put 
 into the enumeration, when they were afterwards taken out of it, 
 were confined, as to the European market, to the countries that 
 lie south of Cape Finisterre. By the 6th of George III, c. 52, all 
 non-enumerated commodities were subjected to the like restriction. 
 The parts of Europe which lie south of Cape Finisterre are not 
 manufacturing countries, and we were less jealous of the colony 
 ships carrying home from them any manufactures which could 
 interfere with our own. 
 
 The enumerated commodities are of two sorts : first, such as are 
 either the peculiar produce of America, or as cannot be produced, 
 or at least are not produced, in the mother country. Of this kind 
 are molasses, coffee, cocoa-nuts, tobacco, pimento, ginger, whale-fins, 
 raw silk, cotton-wool, beaver and other peltry of America, indigo, 
 fustic, and other dyeing woods ; secondly, such as are not the peculiar 
 produce of America, but which are and may be produced in the 
 mother country, though not in such quantities as to supply the greater 
 part of her demand, which is principally supplied from foreign 
 countries. Of this kind are all naval stores, masts, yards and 
 bowsprits, tar, pitch and turpentine, pig and bar iron, copper ore, 
 hides and skins, pot and pearl ashes. The largest importation of 
 commodities of the first kind could not discourage the growth or 
 interfere with the sale of any part of the produce of the mother 
 country. By confining them to the home market, our merchants, 
 it was expected, would not only be enabled to buy them cheaper
 
 160 THE NATURE AND CAUSES OF BOOK iv. 
 
 in the plantations, and consequently to sell them with a better 
 profit at home, but to establish between the plantations and foreign 
 countries an advantageous carrying trade, of which Great Britain 
 was necessarily to be the centre or emporium, as the European 
 country into which those commodities were first to be imported. 
 The importation of commodities of the second kind might be so 
 managed too, it was supposed, as to interfere, not with the sale 
 of those of the same kind which were produced at home, but with 
 that of those which were imported from foreign countries ; because, 
 by means of proper duties, they might be rendered always some- 
 what dearer than the former, and yet a good deal cheaper than 
 the latter. By confining such commodities to the home market, 
 therefore, it was proposed to discourage the produce, not of Great 
 Britain, but of some foreign countries with which the balance of 
 trade was believed to be unfavourable to Great Britain. 
 
 The prohibition of exporting from the colonies to any other 
 country but Great Britain, masts, yards and bowsprits, tar, pitch 
 and turpentine, naturally tended to lower the price of timber in 
 the colonies, and consequently to increase the expense of clearing 
 their lands, the principal obstacle to their improvement. But 
 about the beginning of the present century, in 1703, the Pitch 
 and Tar Company of Sweden endeavoured to raise the price of their 
 commodities to Great Britain, by prohibiting their exportation, 
 except in their own ships, at their own price, and in such quantities 
 as they thought proper. In order to counteract this notable piece 
 of mercantile policy, and to render herself as much as possible 
 independent, not only of Sweden but of all the other Northern 
 powers, Great Britain gave a bounty upon the importation of naval 
 stores from America, and the effect of this bounty was to raise 
 the price of timber in America, much more than the confinement 
 to the home market could lower it ; and as both regulations were 
 enacted at the same time, their joint effect was rather to encourage 
 than to discourage the clearing of land in America. 
 
 Though pig and bar iron too have been put among the enume- 
 rated commodities, yet as, when imported from America, they are 
 exempted from considerable duties to which they are subject when 
 imported from any other country, the one part of the regulation 
 contributes more to encourage the erection of furnaces in America 
 than the other to discourage it. There is no manufacture which
 
 CHAP. vii. THE WEALTH OF NATIONS. 161 
 
 occasions so great a consumption of wood as a furnace, or which 
 can contribute so much to the clearing of a country overgrown 
 with it. 
 
 The tendency of some of these regulations to raise the value 
 of timber in America, and thereby to facilitate the clearing of the 
 land, was neither, perhaps, intended nor understood by the Legis- 
 lature. Though their beneficial effects, however, have been in 
 this respect accidental, they have not upon that account been less 
 real. 
 
 The most perfect freedom of trade is permitted between the 
 British colonies of America and the West Indies, both in the 
 enumerated and in the non-enumerated commodities. Those colonies 
 are now become so populous and thriving, that each of them finds 
 in some of the others a great and extensive market for every 
 part of its produce. All of them taken together, they make a great 
 internal market for the produce of one another. 
 
 The liberality of England, however, towards the trade of her 
 colonies has been confined chiefly to what concerns the market for 
 their produce, either in its rude state, or in what may be called the 
 very first stage of manufacture. The more advanced or more 
 refined manufactures even of the colony produce, the merchants 
 and manufacturers of Great Britain choose to reserve to themselves, 
 and have prevailed upon the Legislature to prevent their establish- 
 ment in the colonies, sometimes by high duties, and sometimes by 
 absolute prohibitions. 
 
 While, for example, Muscovado sugars from the British planta- 
 tions pay upon importation only 6s. ^d. the hundredweight, white 
 sugars pay i is. id. ; and refined, either double or single, in 
 loaves, j J 4 zs. ^-/-^d. When those high duties were imposed, Great 
 Britain was the sole, and she still continues to be the principal 
 market to which the sugars of the British colonies could be ex- 
 ported. They amounted, therefore, to a prohibition, at first of 
 claying or refining sugar for any foreign market, and at present 
 of claying or refining it for the market, which takes off, perhaps, 
 more than nine-tenths of the whole produce. The manufacture of 
 claying or refining sugar accordingly, though it has flourished in 
 all the sugar colonies of France, has been little cultivated in any 
 of those of England, except for the market of the colonies them- 
 selves. While Grenada was in the hands of the French, there was 
 
 VOL. n. M
 
 162 THE NATURE AND CAUSES OF BOOK iv. 
 
 a refinery of sugar, by claying at least, upon almost every planta- 
 tion. Since it fell into those of the English, almost all works of 
 this kind have been given up, and there are at present (October 
 I 773)> I am assured, not above two or three remaining in the 
 island. At present, however, by an indulgence of the Custom- 
 house, clayed or refined sugar, if reduced from loaves into powder, 
 is commonly imported as Muscovado. 
 
 While Great Britain encourages in America the manufactures 
 of pig and bar iron, by exefhpting them from duties to which the 
 like commodities are subject when imported from any other country, 
 she imposes an absolute prohibition upon the erection of steel 
 furnaces and slit-mills in any of her American plantations. She 
 will not suffer her colonists to work in those more refined manu- 
 factures, even for their own consumption ; but insists upon their 
 purchasing of her merchants and manufacturers all goods of this 
 kind which they have occasion for. 
 
 She prohibits the exportation from one province to another by 
 water, and even the carriage by land upon horseback or in a cart, 
 of hats, of wools and woollen goods, of the produce of America; 
 a regulation which effectually prevents the establishment of any 
 manufacture of such commodities for distant sale, and confines the 
 industry of her colonists in this way to such coarse and household 
 manufactures as a private family commonly makes for its own 
 use, or for that of some of its neighbours in the same province. 
 
 To prohibit a great people, however, from making all that they 
 can of every part of their own produce, or from employing their 
 stock and industry in the way that they judge most advantageous 
 to themselves, is a manifest violation of the most sacred rights of 
 mankind. Unjust, however, as such prohibitions may be, they 
 have not hitherto been very hurtful to the colonies. Land is still 
 so cheap, and, consequently, labour so dear among them, that they 
 can import from the mother country almost all the more refined 
 or more advanced manufactures cheaper than they could make them 
 for themselves. Though they had not, therefore, been prohibited 
 from establishing such manufactures, yet in their present state of 
 improvement, a regard to their own interest would, probably, have 
 prevented them from doing so. In their present state of improve- 
 ment, those prohibition?, perhaps, without cramping their industry, 
 or restraining it from any employment to which it would have
 
 CHAP. vii. THE WEALTH OF NATIONS. 163 
 
 gone of its own accord, are only impertinent badges of slavery im- 
 posed upon them, without any sufficient reason, by the groundless 
 jealousy of the merchants and manufacturers of the mother country. 
 In a more advanced state, they might be really oppressive and 
 insupportable. 
 
 Great Britain too, as she confines to her own market some of the 
 important productions of the colonies, so in compensation she gives 
 to some of them an advantage in that market ; sometimes by im- 
 posing higher duties upon the like productions when imported from 
 other countries, and sometimes by giving bounties upon their im- 
 portation from the colonies. In the first way she gives an advan- 
 tage in the home market to the sugar, tobacco, and iron of her own 
 colonies, and in the second to their raw silk, to their hemp and flax, 
 to their indigo, to their naval stores, and to their building-timber. 
 This second way of encouraging the colony produce by bounties 
 upon importation, is, so far as I have been able to learn, peculiar 
 to Great Britain. The first is not. Portugal does not content 
 herself with imposing higher duties upon the importation of 
 tobacco from any other country, but prohibits it under the severest 
 penalties. 
 
 With regard to the importation of goods from Europe, England 
 has likewise dealt more liberally with her colonies than any other 
 nation. 
 
 Great Britain allows a part, almost always the half, generally a 
 larger portion, and sometimes the whole of the duty which is paid 
 upon the importation of foreign goods, to be drawn back upon their 
 exportation to any foreign country. No independent foreign country, 
 it was easy to foresee, would receive them if they came to it loaded 
 with the heavy duties to which almost all foreign goods are subjected 
 on their importation into Great Britain. Unless, therefore, some 
 part of those duties was drawn back upon exportation, there was an 
 end of the carrying trade ; a trade so much favoured by the mer- 
 cantile system. 
 
 Our colonies, however, are by no means independent foreign 
 countries ; and Great Britain having assumed to herself the exclu- 
 sive right of supplying them with all goods from Europe, might 
 have forced them (in the same manner as other countries have done 
 their colonies), to receive such goods, loaded with all the same duties 
 which they paid in the mother country. But, on the contrary, till 
 
 M 2
 
 164 TEE NATURE AND CAUSES OF BOOK IT. 
 
 1763, the same drawbacks were paid upon the exportation of the 
 greater part of foreign goods to our colonies as to any independent 
 foreign country. In 1763, indeed, by the 4th of Geo. Ill, c. 15, 
 this indulgence was a good deal abated, and it was enacted, ' That 
 no part of the duty called the old subsidy should be drawn back for 
 any goods of the growth, production, or manufacture of Europe 
 or the East Indies, which should be exported from this kingdom to 
 any British colony or plantation in America ; wines, white calicoes 
 and muslins excepted.' Before this law, many different sorts of 
 foreign goods might have been bought cheaper in the plantations 
 than in the mother country; and some may still. 
 
 Of the greater part of the regulations concerning the colony 
 trade, the merchants who carry it on, it must be observed, have 
 been the principal advisers. We must not wonder, therefore, if, in 
 the greater part of them, their interest has been more considered 
 than either that of the colonies or that of the mother country. In 
 their exclusive privilege of supplying the colonies with all the goods 
 which they wanted from Europe, and of purchasing all such parts 
 of their surplus produce as could not interfere with any of the trades 
 which they themselves carried on at home, the interest of the 
 colonies was sacrificed to the interest of those merchants. In allow- 
 ing the same drawbacks upon the re-exportation of the greater part 
 of European and East India goods to the colonies, as upon their 
 re-exportation to any independent country, the interest of the 
 mother country was sacrificed to it, even according to the mercantile 
 ideas of that interest. It was for the interest of the merchants to 
 pay as little as possible for the foreign goods which they sent to the 
 colonies, and, consequently, to get back as much as possible of the 
 duties which they advanced upon their importation into Great 
 Britain. They might thereby be enabled to sell in the colonies, 
 either the same quantity of goods with a greater profit, or a greater 
 quantity with the same profit, and, consequently, to gain something 
 either in the one way or the other. It was, likewise, for the in- 
 terest of the colonies to get all such goods as cheap and in as great 
 abundance as possible. But this might not always be for the 
 interest of the mother country. She might frequently suffer both 
 in her revenue, by giving back a great part of the duties which had 
 been paid upon the importation of such goods ; and in her manu- 
 factures, by being undersold in the colony market, in consequence
 
 CHAP. vii. THE WEALTH OF NATIONS. 165 
 
 of the easy terms upon which foreign manufactures could be carried 
 thither by means of those drawbacks. The progress of the linen 
 manufacture of Great Britain, it is commonly said, has been a good 
 deal retarded by the drawbacks upon the re-exportation of German 
 linen to the American colonies. 
 
 But though the policy of Great Britain with regard to the trade 
 of her colonies has been dictated by the same mercantile spirit as 
 that of other nations, it has, however, upon the whole, been less 
 illiberal and oppressive than that of any of them. 
 
 In everything, except their foreign trade, the liberty of the 
 English colonists to manage their own affairs their own way is com- 
 plete. It is in every respect equal to that of their fellow-citizens at 
 home, and is secured in the same manner, by an assembly of the 
 representatives of the people, who claim the sole right of imposing 
 taxes for the support of the colony government. The authority of 
 this assembly overawes the executive power, and neither the meanest 
 nor the most obnoxious colonist, as long as he obeys the law, has 
 anything to fear from the resentment, either of the governor, or of 
 any other civil or military officer in the province. The colony 
 assemblies, though, like the House of Commons in England, they 
 are not always a very equal representation of the people, yet they 
 approach more nearly to that character ; and as the executive power 
 either has not the means to corrupt them, or, on account of the sup- 
 port which it receives from the mother country, is not under the 
 necessity of doing so, they are perhaps in general more influenced 
 by the inclinations of their constituents. The councils, which, in 
 the colony legislatures, correspond to the House of Lords in Great 
 Britain, are not composed of an hereditary nobility. In some of 
 the colonies, as in three of the governments of New England, those 
 councils are not appointed by the king, but chosen by the represen- 
 tatives of the people. In none of the English colonies is there any 
 hereditary nobility. In all of them, indeed, as in all other free 
 countries, the descendant of an old colony family is more respected 
 than an upstart of equal merit and fortune ; but he is only more 
 respected, and he has no privileges by which he can be troublesome 
 to his neighbours. Before the commencement of the present dis- 
 turbances, tKe colony assemblies had not only the legislative, but a 
 part of the executive power. In Connecticut and Rhode Island, 
 they elected the governor. In the other colonies they appointed
 
 166 THE NATURE AND CAUSES OF BOOK iv. 
 
 the revenue officers who collected the taxes imposed by those 
 respective assemblies, to whom those officers were immediately 
 responsible. There is more equality, therefore, among the English 
 colonists than among- the inhabitants of the mother country. Their 
 manners are more republican, and their governments, those of three 
 of the provinces of New England in particular, have hitherto been 
 more republican too. 
 
 The absolute governments of Spain, Portugal, and France, on the 
 contrary, take place in their colonies ; and the discretionary powers 
 which such governments commonly delegate to all their inferior 
 officers are, on account of the great distance, naturally exercised 
 there with more than ordinary violence. Under all absolute govern- 
 ments there is more liberty in the capital than in any other part of 
 the country. The sovereign himself can never have either interest 
 or inclination to pervert the order of justice, or to oppress the great 
 body of the people. In the capital his presence overawes more or 
 less all his inferior officers, -who in the remoter provinces, from 
 whence the complaints of the people are less likely to reach him, 
 can exercise their tyranny with much more safety. But the 
 European colonies in America are more remote than the most distant 
 provinces of the greatest empires which had ever been known 
 before. The government of the English colonies is perhaps the 
 only one which, since the world began, could give perfect security 
 to the inhabitants of so very distant a province. The administra- 
 tion of the French colonies, however, has always - been conducted 
 with more gentleness and moderation than that of the Spanish and 
 Portuguese. This superiority of conduct is suitable both to the 
 character of the French nation, and to what forms the character of 
 every nation, the nature of their government, which, though arbi- 
 trary and violent in comparison with that of Great Britain, is legal 
 and free in comparison with those of Spain and Portugal. 
 
 It is in the progress of the North American colonies, however, 
 that the superiority of the English policy chiefly appears. The 
 progress of the sugar colonies of France has been at least equal, 
 perhaps superior, to that of the greater part of those of England ; 
 and yet the sugar colonies of England enjoy a free government 
 nearly of the same kind with that which takes place in her colonies 
 of North America. But the sugar colonies of France are not dis- 
 couraged, like those of England, from refining their own sugar ;
 
 CHAP. vii. THE WEALTH OF NATIONS. 167 
 
 and, what is of still greater importance, the genius of their govern- 
 ment naturally introduces a better management of their negro 
 slaves. 
 
 In all European colonies the culture of the sugar-cane is carried 
 on by negro slaves. The constitution of those who have been born 
 in the temperate climate of Europe could not, it is supposed, sup- 
 port the labour of digging the ground under the burning sun of 
 the West Indies ; and the culture of the sugar-cane, as it is 
 managed at present, is all hand labour, though, in the opinion of 
 many, the drill plough might be introduced into it with great 
 advantage. But, as the profit and success of the cultivation which 
 is carried on by means of cattle, depend very much upon the good 
 management of those cattle, so the profit and success of that which 
 is carried on by slaves must depend equally upon the good manage- 
 ment of those slaves ; and in the good management of their slaves 
 the French planters, I think it is generally allowed, are superior to 
 the English. The law, so far as it gives some weak protection to 
 the slave against the violence of his master, is likely to be better 
 executed in a colony where the government is in a great measure 
 arbitrary, than in one where it is altogether free. In every country 
 where the unfortunate law of slavery is established, the magistrate, 
 when he protects the slave, intermeddles in some measure in the 
 management of the private property of the master ; and, in a free 
 country, where the master is perhaps either a member of the colony 
 assembly, or an elector of such a member, he dare not do this but 
 with the greatest caution and circumspection. The respect which 
 he is obliged to pay to the master, renders it more difficult for him 
 to protect the slave. But in a country where the government is in 
 a great measure arbitrary, where it is usual for the magistrate to 
 intermeddle even in the management of the private property of 
 individuals, and to send them, perhaps, a lettre de cachet if they do 
 not manage it according to his liking, it is much easier for him to 
 give some protection to the slave ; and common humanity naturally 
 disposes him to do so. The protection of the magistrate renders 
 the slave less contemptible in the eyes of his master, who is thereby 
 induced to consider him with more regard, and to treat him with 
 more gentleness. Gentle usage renders the slave not only more 
 faithful, but more intelligent, and therefore, upon a double account, 
 more useful. He approaches more to the condition of a free
 
 168 THE NATURE AND CAUSES OF BOOK iv. 
 
 servant, and may possess some degree of integrity and attachment 
 to his master's interest virtues which frequently belong to free 
 servants, but which never can belong to a slave, who is treated as 
 slaves commonly are in countries where the master is perfectly free 
 and secure. 1 
 
 That the condition of a slave is better under an arbitrary than 
 under a free government, is, I believe, supported by the history of 
 all ages and nations. In the Roman history, the first time we read 
 of the magistrate interposing to protect the slave from the violence 
 of his master is under the Emperors. When Vedius Pollio, 2 in the 
 presence of Augustus, ordered one of his slaves, who had committed 
 a slight fault, to be cut into pieces and thrown into his fishpond in 
 order to feed his fishes, the Emperor commanded him, with indig- 
 nation, to emancipate immediately not only that slave but all the 
 others that belonged to him. Under the Republic, no magistrate 
 could have had authority enough to protect the slave, much less to 
 punish the master. 
 
 The stock, it is to be observed, which has improved the sugar 
 colonies of France, particularly the great colony of St. Domingo, 
 has been raised almost entirely from the gradual improvement and 
 cultivation of those colonies. It has been almost altogether the 
 produce of the soil and of the industry of the colonists, or, what comes 
 to the same thing, the price of that produce gradually accumulated 
 by good management, and employed in raising a still greater pro- 
 duce. But the stock which has improved and cultivated the sugar 
 colonies of England has, a great part of it, been sent out from 
 England, and has by no means been altogether the produce of the 
 soil and industry of the colonists. The prosperity of the English 
 sugar colonies has been, in a great measure, owing to the great 
 riches of England, of which a part has overflowed, if one may say so, 
 upon those colonies. But the prosperity of the sugar colonies of 
 France has been entirely owing to the good conduct of the colonists, 
 which must therefore have had some superiority over that of the 
 English ; and this superiority has been marked in nothing so much 
 as in the good management of their slaves. 
 
 1 How true this reasoning is, will be Stowe's tale was a fiction, and therefore 
 
 manifest from the evidence afforded us as may be said to be an exaggeration, but 
 
 to the condition of the plantation slaves there is no exaggeration in the accounts 
 
 in the American Union, before the out- given by Mr. Olmsted and Mrs. Butler, 
 
 break of the American civil war. Mrs. 2 ThestoryistoldinSenecadeIra,iii.4O.
 
 CHAP. vii. THE WEALTH OF NATIONS. 169 
 
 Such have been the general outlines of the policy of the different 
 European nations with regard to their colonies. 
 
 The policy of Europe, therefore, has very little to boast of, 
 either in the original establishment, or, so far as concerns their 
 internal government, in the subsequent prosperity of the colonies of 
 America. 
 
 Folly and injustice seem to have been the principles which pre- 
 sided over, and directed the first project of establishing those 
 colonies ; the folly of hunting after gold and silver mines, and the 
 injustice of coveting the possession of a country whose harmless 
 natives, far from having ever injured the people of Europe, had 
 received the first adventurers with every mark of kindness and 
 hospitality. 
 
 The adventurers, indeed, who formed some of the 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, restrained at home, fled for freedom to 
 America, and established there the four governments of New 
 England. The English Catholics, treated with much greater in- 
 justice, established that of Maryland ; the Quakers that of Penn- 
 sylvania. The Portuguese Jews, persecuted by the Inquisition, 
 stripped of their fortunes, and banished to Brazil, introduced by 
 their example some sort of order and industry among the transported 
 felons and strumpets by whom that colony was originally peopled, 
 and taught them the culture of the sugar-cane. Upon all these 
 different occasions it was not the wisdom and policy, but the dis- 
 order and injustice of the European governments, which peopled 
 and cultivated America. 
 
 In effectuating some of the most important of these establish- 
 ments, the different governments of Europe had as little merit as in 
 projecting them. The conquest of Mexico was the project, not of 
 the council of Spain, but of a governor of Cuba ; and it was 
 effectuated by the spirit of the bold adventurer to whom it was 
 entrusted, in spite of everything which that governor, who soon 
 repented of having trusted such a person, could do to thwart it. 
 The conquerors of Chili and Peru, and of almost all the other Spanish 
 settlements upon the continent of America, carried out with them 
 no other public encouragement but a general permission to make
 
 170 THE NATURE AND CAUSES OF BOOK iv. 
 
 settlements and conquests in the name of the King of Spain. 
 Those adventures were all at the private risk and expense of the 
 adventurers. The Government of Spain contributed scarce any- 
 thing to any of them ; that of England contributed as little 
 towards effectuating the establishment of some of its most im- 
 portant colonies in North America. 
 
 When those establishments were effectuated, and had become so 
 considerable as to attract the attention of the mother country, the 
 first regulations which she made with regard to them had always in 
 view to secure to herself the monopoly of their commerce, to confine 
 their market and to enlarge her own at their expense, and, con- 
 sequently, rather to damp and discourage than to quicken and 
 forward the course of their prosperity. In the different ways in 
 which this monopoly has been exercised consists one of the most 
 essential differences in the policy of the different European nations 
 with regard to their colonies. The best of them all, that of 
 England, is only somewhat less illiberal and oppressive than that of 
 any of the rest. * 
 
 In what way, therefore, has the policy of Europe contributed 
 either to the first establishment or to the present grandeur of the 
 colonies of America? In one way, and in one way only, it has 
 contributed a good deal. Magna virum Mater ! It bred and formed 
 the men who were capable of achieving such great actions and of 
 laying the foundation of so great an empire ; and there is no other 
 quarter of the world of which the policy is capable of forming, or 
 has ever actually and in fact formed such men. The colonies owe 
 to the policy of Europe the education and great views of their 
 active and enterprising founders ; and some of the greatest and 
 most important of them, so far as concerns their internal government, 
 owe to it scarce anything else. 
 
 1 It is plain that the mercantile policy point of fact, both countries adopted, in 
 which this country carried out with the so far as the principles of the colonial 
 American plantations was one in which system restrained the market, the worst 
 both parties suffered a loss. The colo- and least profitable mode of carrying 
 nies were allowed a monopoly of sale in on their trade. But so wedded were 
 England ; the English merchants as- the statesmen of the age to their theory, 
 sumed a monoply of exportation to the that the concession of Independence was 
 colonies. Had the trade between the interpreted as necessitating the down- 
 mother country and its dependencies fall of British commerce, and the only 
 been natural, it is manifest that these consolation which the English Govern- 
 irregularities were superfluous ; if it was ment felt was that Great Britain had 
 not natural, it is equally manifest that still some colonies left, 
 the regulations were mischievous. la
 
 CHAP. vn. THE WEALTH OF NATIONS. 171 
 
 PART III. 
 
 Of the Advantages which Europe has derived from the Discovery of 
 America, and from that of a passage to the East Indies by the 
 Cape of Good Hope. 
 
 SUCH are the advantages which the colonies of America have 
 derived from the policy of Europe. 
 
 What are those which Europe has derived from the discovery and 
 colonisation of America ? 
 
 Those advantages may be divided, first, into the general ad- 
 vantages which Europe, considered as one great country, has 
 derived from those great events ; and, secondly, into the particular 
 advantages which each colonising country has derived from the 
 colonies which particularly belong to it, in consequence of the 
 authority or dominion which it exercises over them. 
 
 The general advantages which Europe, considered as one great 
 country, has derived from the discovery and colonisation of 
 America, consist, first, in the increase of its enjoyments ; and, 
 secondly, in the augmentation of its industry. 
 
 The surplus produce of America, imported into Europe, furnishes 
 the inhabitants of this great continent with a variety of commodities 
 which they could not otherwise have possessed, some for conveni- 
 ency and use, some for pleasure, and some for ornament, and 
 thereby contributes to increase their enjoyments. 
 
 The discovery and colonisation of America, it will readily be 
 allowed, have contributed to augment the industry, first, of all the 
 countries which trade to it directly, such as Spain, Portugal, France, 
 and England ; and, secondly, of all those which, without trading to 
 it directly, send, through the medium of other countries, goods to it 
 of their own produce ; such as Austrian Flanders and some provinces 
 of Germany, which, through the medium of the countries before 
 mentioned, send to it a considerable quantity of linen and other 
 goods. All such countries have evidently gained a more extensive 
 market for their surplus produce, and must consequently have been 
 encouraged to increase its quantity. 
 
 But that those great events should likewise have contributed to 
 encourage the industry of countries such as Hungary and Poland,
 
 172 THE NATURE AND CAUSES OF BOOK iv. 
 
 which may never, perhaps, have sent a single commodity of their 
 own produce to America, is not, perhaps, altogether so evident. 
 That those events have done so, however, cannot be doubted. Some 
 part of the produce of' America is consumed in Hungary and 
 Poland, and there is some demand there for the sugar, chocolate, and 
 tobacco of that new quarter of the world. But those commodities 
 must be purchased with something which is either the produce of 
 the industry of Hungary and Poland, or with something which had 
 been purchased with some part of that produce. Those commodi- 
 ties of America are new values, new equivalents, introduced into 
 Hungary and Poland, to be exchanged there for the surplus produce 
 of those countries. By being carried thither they create a new and 
 more extensive market for that surplus produce. They raise its value, 
 and thereby contribute to encourage its increase. Though no part 
 of it may ever be carried to America, it may be carried to other 
 countries which purchase it with a part of their share of the surplus 
 produce of America ; and it may find a market by means of the 
 circulation of that trade which was originally put into motion by 
 the surplus produce of America. 
 
 Those great events may even have contributed to increase the 
 enjoyments and to augment the industry of countries which not 
 only never sent any commodities to America, but never received any 
 from it. Even such countries may have received a greater abun- 
 dance of other commodities from, countries of which the surplus 
 produce had been augmented by means of the American trade. 
 This greater abundance, as it must necessarily have increased their 
 enjoyments, so it must likewise have augmented their industry. A 
 greater number of new equivalents of some kind or other must have 
 been presented to them to be exchanged for the surplus produce of 
 that industry. A more extensive market must have been created 
 for that surplus produce, so as to raise its value, and thereby 
 encourage its increase. The mass of commodities annually thrown 
 into the great circle of European commerce, and by its various 
 revolutions annually distributed among all the different nations 
 comprehended within it, must have been augmented by the whole 
 surplus produce of America. A greater share of this greater mass, 
 therefore, is likely to have fallen to each of those nations, to have 
 increased their enjoyments and augmented their industry. 
 
 The exclusive trade of the mother countries tends to diminish, or,
 
 CHAP. vii. THE WEALTH OF NATIONS. 173 
 
 at least, to keep down below what they would otherwise rise to, both 
 the enjoyments and industry of all those nations in general, and of 
 the American colonies in particular. It is a dead weight upon the 
 action of one of the great springs which puts into motion a great 
 part of the business of mankind. By rendering the colony produce 
 dearer in all other countries, it lessens its consumption, and thereby 
 cramps the industry of the colonies, and both the enjoyments and 
 the industry of all other countries, which both enjoy less when they 
 pay more for what they enjoy, and produce less when they get less 
 for what they produce. By rendering the produce of all other coun- 
 tries dearer in the colonies, it cramps, in the same manner, the in- 
 dustry of all other countries, and both the enjoyments and the in- 
 dustry of the colonies. It is a clog which, for the supposed benefit 
 of some particular countries, embarrasses the pleasures and encum- 
 bers the industry of all other countries ; but of the colonies more 
 than of any other. It not only excludes, as much as possible, all 
 other countries from one particular market, but it confines, as much 
 as possible, the colonies to one particular market; and the difference 
 is very great between being excluded from one particular market, 
 when all others are open, and being confined to one particular 
 market, when all others are shut up. The surplus produce of the 
 colonies, however, is the original source of all that increase of en- 
 joyments and industry which Europe derives from the discovery and 
 colonisation of America; and the exclusive trade of the mother 
 countries tends to render this source much less abundant than it 
 otherwise would be. 
 
 The particular advantages which each colonising country derives 
 from the colonies which particularly belong to it, are of two dif- 
 ferent kinds : first, those common advantages which every empire 
 derives from the provinces subject to its dominion ; and, secondly, 
 those peculiar advantages which are supposed to result from pro- 
 vinces of so very peculiar a nature as the European colonies of 
 America. 
 
 The common advantages which every empire derives from the 
 provinces subject to its dominion, consist, first, in the military force 
 which they furnish for its defence ; and, secondly, in the revenue 
 which they furnish for the support of its civil government. The 
 Roman colonies furnished occasionally both one and the other. The 
 Greek colonies, sometimes, furnished a military force ; but seldom
 
 174 THE NATURE AND CAUSES OF BOOK iv. 
 
 any revenue. They seldom acknowledged themselves subject to the 
 dominion of the mother city. They were generally her allies in 
 war, but very seldom her subjects in peace. 
 
 The European colonies of America have never yet furnished any 
 military force for the defence of the mother country. Their military 
 force has never yet been sufficient for their own defence ; and in the 
 different wars in which the mother countries have been engaged, 
 the defence of their colonies has generally occasioned a very con- 
 siderable distraction of the military force of those countries. In 
 this respect, therefore, all the European colonies have, without ex- 
 ception, been a cause rather of weakness than of strength to their 
 respective mother countries. 
 
 The colonies of Spain and Portugal only have contributed any 
 revenue towards the defence of the mother country, or the support 
 of her civil government. The taxes which have been levied upon 
 those of other European nations, upon those of England in par- 
 ticular, have seldom been equal to the expense laid out upon them 
 in time of peace, and never sufficient to defray that which they occa- 
 sioned in time of war. Such colonies, therefore, have been a source 
 of expense and not of revenue to their respective mother countries. 
 
 The advantages of such colonies to their respective mother coun- 
 tries consist altogether in those peculiar advantages which are 
 supposed to result from provinces of so very peculiar a nature as 
 the European colonies of America ; and the exclusive trade, it is 
 acknowledged, is the sole source of all those peculiar advantages. 
 
 In consequence of this exclusive trade, all that part of the surplus 
 produce of the English colonies, for example, which consists in what 
 are called enumerated commodities, can be sent to no other country 
 but England. Other countries must afterwards buy it of her. It 
 must be cheaper therefore in England than it can be in any other 
 countiy, and must contribute more to increase the enjoyments of 
 England than those of any other country. It must likewise con- 
 tribute more to encourage her industry. For all those parts of her 
 own surplus produce which England exchanges for those enumerated 
 commodities, she must get a better price than any other countries 
 can get for the like parts of theirs, when they exchange them for 
 the same commodities. The manufactures of England, for example, 
 will purchase a greater quantity of the sugar and tobacco of her own 
 colonies than the like manufactures of other countries can purchase
 
 CHAP. vii. THE WEALTH OF NATIONS. 175 
 
 of that sugar and tobacco. So far, therefore, as the manufactures 
 of England and those of other countries are both to be exchanged 
 for the sugar and tobacco of the English colonies, this superiority of 
 price gives an encouragement to the former, beyond what the latter 
 can in these circumstances enjoy. The exclusive trade of the colo- 
 nies, therefore, as it diminishes, or at least keeps down below what 
 they would otherwise rise to, both the enjoyments and the industry 
 of the countries which do not possess it ; so it gives an evident ad- 
 vantage to the countries which do possess it over those other 
 countries. 
 
 This advantage, however, will, perhaps, be found to be rather 
 what may be called a relative than an absolute advantage ; and to 
 give a superiority to the country which enjoys it, rather by de- 
 pressing the industry and produce of other countries, than by 
 raising those of that particular country above what they would 
 naturally rise to in the case of free trade. 
 
 The tobacco of Maryland and Virginia, for example, by means of 
 the monopoly which England enjoys of it, certainly comes cheaper 
 to England than it can do to France, to whom England commonly 
 sells a considerable part of it. But had France and all other Euro- 
 pean countries been, at all times, allowed a free trade to Maryland 
 and Virginia, the tobacco of those colonies might, by this time, 
 have come cheaper than it actually does, not only to all those other 
 countries, but likewise to England. The produce of tobacco, in 
 consequence of a market so much more extensive than any which it 
 has hitherto enjoyed, might, and probably would, by this time have 
 been so much increased as to reduce the profits of a tobacco planta- 
 tion to their natural level with those of a corn plantation, which, it 
 is supposed, they are still somewhat above. The price of tobacco 
 might, and probably would, by this time have fallen somewhat 
 lower than it is at present. An equal quantity of the commodities 
 either of England, or of those of other countries, might have pur- 
 chased in Maryland and Virginia a greater quantity of tobacco than 
 it can do at present, and consequently have been sold there for so 
 much a better price. So far as that weed, therefore, can, by its 
 cheapness and abundance, increase the enjoyments or augment the 
 industry either of England or of any other country, it would, pro- 
 bably, in the case of a free trade, have produced both these effects 
 in somewhat a greater degree than it can do at present. England,
 
 176 THE NATURE AND CAUSES OF BOOK iv. 
 
 indeed, would not in this case have had any advantage over other 
 countries. She might have bought the tobacco of her colonies 
 somewhat cheaper, and, consequently, have sold some of her own 
 commodities somewhat dearer than she actually does. But she 
 could neither have bought the one cheaper nor sold the other dearer 
 than any other country might have done. She might perhaps have 
 gained an absolute, but she would certainly have lost a relative 
 advantage. 
 
 In order, however, to obtain this relative advantage in the colony 
 trade, in order to execute the invidious and malignant project of 
 excluding as much as possible other nations from any share in it, 
 England, there are very probable reasons for believing, has not only 
 sacrificed a part of the absolute advantage which she, as well as 
 every other nation, might have derived from that trade, but has 
 subjected herself both to an absolute and to a relative disadvantage 
 in almost every other branch of trade. 
 
 When, by the Act of Navigation, England assumed to herself the 
 monopoly of the colony trade, the foreign capitals which had before 
 been employed in it were necessarily withdrawn from it. The 
 English capital, which had before carried on but a part of it, was 
 now to carry on the whole. The capital which had before supplied 
 the colonies with but a part of the goods which they wanted from 
 Europe, was now all that was employed to supply them with the 
 whole. But it could not supply them with the whole, and the 
 goods with which it did supply them were necessarily sold very dear. 
 The capital which had before bought but a part of the surplus pro- 
 duce of the colonies, was now all that was employed to supply the 
 whole. But it could not buy the whole at anything near the old 
 price, and, therefore, whatever it did buy it necessarily bought very 
 cheap. But in an employment of capital in which the merchant 
 sold very dear and bought very cheap, the profit must have been 
 very great, and much above the ordinary level of profit in other 
 branches of trade. This superiority of profit in the colony trade 
 could not fail to draw from other branches of trade a part of the 
 capital which had before been employed in them. But this revul- 
 sion of capital, as it must have gradually increased the competition 
 of capitals in the colony trade, so it must have gradually diminished 
 that competition in all those other branches of trade ; as it must 
 have gradually lowered the profits of the one, so it must have
 
 CHAP. vn. THE WEALTH OF NATIONS. 177 
 
 gradually raised those of the other, till the profits of all came to a 
 new level, different from and somewhat higher than that at which 
 they had been before. 
 
 This double effect, of drawing- capital from all other trades, and 
 of raising the rate of profit somewhat higher than it otherwise 
 would have been in all trades, -was not only produced by this 
 monopoly upon its first establishment, but has continued to be pro- 
 duced by it ever since. 
 
 First, this monopoly has been continually drawing capital from 
 all other trades to be employed in that of the colonies. 
 
 Though the wealth of Great Britain has increased very much 
 since the establishment of the Act of Navigation, it certainly has not 
 increased in the same proportion as that of the colonies. But the 
 foreign trade of every country naturally increases in proportion to 
 its wealth, its surplus produce in proportion to its whole produce j 
 and Great Britain having engrossed to herself almost the whole of 
 what may be called the foreign trade of the colonies, and her capital 
 not having increased in the same proportion as the extent of that 
 trade, she could not carry it on without continually withdrawing 
 from other branches of trade some part of the capital which had be- 
 fore been employed in them, as well as withholding from them a 
 great deal more which would otherwise have gone to them. Since 
 the establishment of the Act of Navigation, accordingly, the colony 
 trade has been continually increasing, while many other branches of 
 foreign trade, particularly of that to other parts of Europe, have 
 been continually decaying. Our manufactures for foreign sale, 
 instead of being suited, as before the Act of Navigation, to the neigh- 
 bouring market of Europe, or to the more distant one of the coun- 
 tries which lie round the Mediterranean Sea, have, the greater part 
 of them, been accommodated to the still more distant one of the 
 colonies, to the market in which they have the monopoly, rather 
 than to that in which they have many competitors. The causes of 
 decay in other branches of foreign trade, which, by Sir Matthew 
 Decker and other writers, 1 have been sought for in the excess and 
 improper mode of taxation, in the high price of labour, in the increase 
 of luxury, &c., may all be found in the overgrowth of the colony 
 trade. The mercantile capital of Great Britain, though very great, 
 
 1 See above, page 88. 
 VOL. II. N
 
 178 THE NATURE AND CAUSES OF BOOK iv. 
 
 yet not being infinite, and though greatly increased since the Act 
 of Navigation, yet not being increased in the same proportion as the 
 colony trade, that trade could not possibly be carried on without 
 withdrawing some part of that capital from other branches of trade, 
 nor consequently without some decay of those other branches. 
 
 England, it must be observed, was a great trading country, her 
 mercantile capital was very great and likely to become still greater 
 and greater every day, not only before the Act of Navigation had 
 established the monopoly of the colony trade, but before that trade 
 was very considerable. In the Dutch war, during the government 
 of Cromwell, her navy was superior to that of Holland; and in 
 that which broke out in the beginning of the reign of Charles II, 
 it was at least equal, perhaps superior, to the united navies of France 
 and Holland. Its superiority, perhaps, would scarce appear greater 
 in the present times ; at least, if the Dutch navy was to bear the 
 same proportion to the Dutch commerce now which it did then. 
 But this great naval power could not, in either of those wars, be 
 owing to the Act of Navigation. 1 During the first of them, the 
 plan of that Act had been but just formed ; and though before the 
 breaking out of the second it had been fully enacted by legal 
 authority, yet no part of it could have had time to produce any 
 considerable effect, and least of all that part which established the 
 exclusive trade to the colonies. Both the colonies and their trade 
 were inconsiderable then in comparison of what they are now. The 
 island of Jamaica was an unwholesome desert, little inhabited, and 
 less cultivated. New York and New Jersey were in the possession 
 of the Dutch ; the half of St. Christopher's in that of the French. 
 The island of Antigua, the two Carolinas, Pennsylvania, Georgia, 
 and Nova Scotia, were not planted. Virginia, Maryland, and New 
 England were planted ; and though they were very thriving 
 colonies, yet there was not, perhaps, at that time either in Europe 
 or America a single person who foresaw or even suspected the rapid 
 progress which they have since made in wealth, population, and 
 
 1 In this passage the author is inclined to bring about whatever results might 
 
 to withdraw a little of that laudation have been expected from it, the Dutch 
 
 which he previously bestowed on the Act navy was so far from being depressed, 
 
 of Navigation. It does not appear that that, for the first and last time, it in- 
 
 the nation grew in mercantile strength flicted humiliating losses on the British 
 
 by that Act, but in spite of it. Nay, marine, 
 alter it had been established long enough
 
 CHAP. vn. THE WEALTH OF NATIONS. 179 
 
 improvement. The island of Barbadoes, in short, was the only 
 British colony of any consequence of which the condition at that 
 time bore any resemblance to what it is at present. The trade 
 of the colonies, of which England, even for some time after the Act 
 of Navigation, enjoyed but a part (for the Act of Navigation was 
 not very strictly executed till several years after it was enacted), 
 could not at that time be the cause of the great trade of England, 
 nor of the great naval power which was supported by that trade. 
 The trade which at that time supported that great naval power 
 was the trade of Europe, and of the countries which lie round the 
 Mediterranean Sea. But the share which Great Britain at present 
 enjoys of that trade could not support any such great naval power. 
 Had the growing trade of the colonies been left free to all nations, 
 whatever share of it might have fallen to Great Britain (and a very 
 considerable share would probably have fallen to her), must have 
 been all an addition to this great trade of which she was before in 
 possession. In consequence of the monopoly, the increase of the 
 colony trade has not so much occasioned an addition to the 
 trade which Great Britain had before, as a total change in its 
 direction. 
 
 Secondly, this monopoly has necessarily contributed to keep up 
 the rate of profit in all the different branches of British trade higher 
 than it naturally would have been had all nations been allowed 
 a free trade to the British colonies. 
 
 The monopoly of the colony trade, as it necessarily drew towards 
 that trade a greater proportion of the capital of Great Britain than, 
 what would have gone to it of its own accord ; so by the expulsion 
 of all foreign capitals it necessarily reduced the whole quantity of 
 capital employed in that trade below what it naturally would have 
 been in the case of a free trade. But, by lessening the competition 
 of capitals in that branch of trade, it necessarily raised the rate of 
 profit in that branch. By lessening too the competition of British 
 capitals in all other branches of trade, it necessarily raised the rate 
 of British profit in all those other branches. Whatever may have 
 been, at any particular period, since the establishment of the Act of 
 Navigation, the state or extent of the mercantile capital of Great 
 Britain, the monopoly of the colony trade must, during the con- 
 tinuance of that state, have raised the ordinary rate of British 
 profit higher than it otherwise would have been both in that and 
 
 N 2
 
 180 THE NATURE AND CAUSES OF BOOK iv. 
 
 in all the other branches of British trade. If, since the establish- 
 ment of the Act of Navigation, the ordinary rate of British profit 
 has fallen considerably, as it certainly has, it must have fallen still 
 lower, had not the monopoly established by that Act contributed to 
 keep it up. 
 
 But whatever raises in any country the ordinary rate of profit 
 higher than it otherwise would be, necessarily subjects that country 
 both to an absolute and to a relative disadvantage in every branch 
 of trade of which she has not the monopoly. 
 
 It subjects her to an absolute disadvantage ; because in such 
 branches of trade her merchants cannot get this greater profit, 
 without selling dearer than they otherwise would do both the goods 
 of foreign countries which they import into their own, and the 
 goods of their own country which they export to foreign countries. 
 Their own country must both buy dearer and sell dearer ; must 
 both buy less and sell less ; must both enjoy less and produce less, 
 than she otherwise would do. 
 
 It subjects her to a relative disadvantage ; because in such 
 branches of trade it sets other countries which are not subject to 
 the same absolute disadvantage, either more above her or less below 
 her than they otherwise would be. It enables them both to enjoy 
 more and to produce more in proportion to what she enjoys and 
 produces. It renders their superiority greater or their inferiority 
 less than it otherwise would be. By raising the price of her 
 produce above what it otherwise would be, it enables the merchants 
 of other countries to undersell her in foreign markets, and thereby 
 to justle her out of almost all those branches of trade of which she 
 has not the monopoly. 
 
 Our merchants frequently complain of the high wages of British 
 labour as the cause of their manufactures being undersold in foreign 
 markets ; but they are silent about the high profits of stock. They 
 complain of the extravagant gain of other people ; but they say 
 nothing of their own. The high profits of British stock, however, 
 may contribute towards raising the price of British manufactures in 
 many cases as much, and in some perhaps more, than the high 
 wages of British labour. 
 
 It is in this manner that the capital of Great Britain, one may 
 justly say, has partly been drawn and partly been driven from the 
 greater part of the different branches of trade of which she has not
 
 CHAP. vii. THE WEALTH OF NATIONS. 181 
 
 the monopoly; from the trade of Europe in particular, and from 
 that of the countries which lie round the Mediterranean Sea. 
 
 It has partly been drawn from those branches of trade ; by the 
 attraction of superior profit in the colony trade in consequence of 
 the continual increase of that trade, and of the continual insuf- 
 ficiency of the capital which had carried it on one year to carry it 
 on the next. 
 
 It has partly been driven from them ; by the advantage which 
 the high rate of profit, established in Great Britain, gives to other 
 countries, in all the different branches of trade of which Great 
 Britain has not the monopoly. 
 
 As the monopoly of the colony trade has drawn from those other 
 branches a part of the British capital which would otherwise have been 
 employed in them, so it has forced into them many foreign capitals 
 which would never have gone to them, had they not been expelled 
 from the colony trade. In those other branches of trade it has 
 diminished the competition of British capitals, and thereby raised 
 the rate of British profit higher than it otherwise would have been. 
 On the contrary, it has increased the competition of foreign capitals, 
 and thereby sunk the rate of foreign profit lower than it otherwise 
 would have been. Both in the one way and in the other it must 
 evidently have subjected Great Britain to a relative disadvantage in 
 all those other branches of trade. 
 
 The colony trade, however, it may perhaps be said, is more 
 advantageous to Great Britain than any other ; and the monopoly, 
 by forcing into that trade a greater proportion of the capital of 
 Great Britain than what would otherwise have gone to it, has 
 turned that capital into an employment more advantageous to the 
 country than any other which it could have found. 
 
 The most advantageous employment of any capital to the country 
 to which it belongs, is that which maintains there the greatest 
 quantity of productive labour, and increases the most the annual 
 produce of the land and labour of that country. But the quantity 
 of productive labour which any capital employed in the foreign 
 trade of consumption can maintain, is exactly in proportion, it has 
 been shown in the Second Book, to the frequency of its returns. A 
 capital of a thousand pounds, for example, employed in a foreign 
 trade of consumption, of which the returns are made regularly once 
 in the year, can keep in constant employment, in the country to
 
 182 TEE NATURE AND CAUSES OF BOOK IT. 
 
 which it belongs, a quantity of productive labour equal to what 
 a thousand pounds can maintain there for a year. If the returns 
 are made twice or thrice in the year, it can keep in constant em- 
 ployment a quantity of productive labour equal to what two or 
 three thousand pounds can maintain there for a year. A foreign 
 trade of consumption carried on with a neighbouring, is upon this 
 account, in general, more advantageous than one carried on with 
 a distant country; and for the same reason a direct foreign trade of 
 consumption, as it has likewise been shown in the Second Book, is 
 in general more advantageous than a round-about one. 
 
 But the monopoly of the colony trade, so far as it has operated 
 upon the employment of the capital of Great Britain, has in all 
 cases forced some part of it from a foreign trade of consumption 
 carried on with a neighbouring, to one carried on with a more 
 distant country, and in many cases from a direct foreign trade 
 of consumption to a round-about one. 
 
 First, the monopoly of the colony trade has in all cases forced 
 some part of the capital of Great Britain from a foreign trade of 
 consumption carried on with a neighbouring, to one carried on with 
 a more distant country. 
 
 It has, in all cases, forced some part of that capital from the 
 trade with Europe, and with the countries which lie round the 
 Mediterranean Sea, to that with the more distant regions of 
 America and the West Indies, from which the returns are neces- 
 sarily less frequent, not only on account of the greater distance, 
 but on account of the peculiar circumstances of those countries. 
 New colonies, it has already been observed, are always under- 
 stocked. Their capital is always much less than what they could 
 employ with great profit and advantage in the improvement and 
 cultivation of their land. They have a constant demand, therefore, 
 for more capital than they have of their own ; and, in order to 
 supply the deficiency of their own, they endeavour to borrow as 
 much as they can of the mother country, to whom they are, there- 
 fore, always in debt. The most common way in which the colonists 
 contract this debt, is not by borrowing upon bond of the rich 
 people of the mother country, though they sometimes do this too, 
 but by running as much in arrear to their correspondents, who 
 supply them with goods from Europe, as those correspondents will 
 allow them. Their annual returns frequently do not amount to
 
 CHAP. vn. THE WEALTH OF NATIONS. 183 
 
 more than a third, and sometimes not to so great a proportion of 
 what they owe. The whole capital, therefore, which their cor- 
 respondents advance to them is seldom returned to Britain in less 
 than three, and sometimes not in less than four or five years. But 
 a British capital of a thousand pounds, for example, which is re- 
 turned to Great Britain only once in five years, can keep in con- 
 stant employment only one-fifth part of the British industry which 
 it could maintain if the whole was returned once in the year; and, 
 instead of the quantity of industry which a thousand pounds could 
 maintain for a year, can keep in constant employment the quantity 
 only which two hundred pounds can maintain for a year. The 
 planter, no doubt, by the high price which he paj r s for the goods 
 from Europe, by the interest upon the bills which he grants at 
 distant dates, and by the commission upon the renewal of those 
 which he grants at near dates, makes up, and probably more than 
 makes up, all the loss which his correspondent can sustain by this 
 delay. But, though he may make up the loss of his correspondent, 
 he cannot make up that of Great Britain. In a trade of which the 
 returns are very distant, the profit of the merchant may be as great 
 or greater than in one in which they are very frequent and near ; 
 but the advantage of the country in which he resides, the quantity 
 of productive labour constantly maintained there, the annual 
 produce of the land and labour, must always be much less. That 
 the returns of the trade to America, and still more those of that 
 to the West Indies, are, in general, not only more distant, but 
 more irregular, and more uncertain too, than those of the trade 
 to any part of Europe, or even of the countries which lie round the 
 Mediterranean Sea, will readily be allowed, I imagine, by every- 
 body who has any experience of those different branches of trade. 
 
 Secondly, the monopoly of the colony trade has, in many cases, 
 forced some part of the capital of Great Britain from a direct 
 foreign trade of consumption into a round-about one. 
 
 Among the enamerated commodities which can be sent to no 
 other market but Great Britain, there are several of which the 
 quantity exceeds very much the consumption of Great Britain, 
 and of which a part, therefore, must be exported to other countries. 
 But this cannot be done without forcing some part of the capital 
 of Great Britain into a round-about foreign trade of consumption. 
 Maryland and Virginia, for example, send annually to Great Britain
 
 184 THE NATURE AND CAUSES OF BOOK iv. 
 
 upwards of ninety-six thousand hogsheads of tobacco, and the con- 
 sumption of Great Britain is said not to exceed fourteen thousand. 
 Upwards of eighty-two thousand hogsheads, therefore, must be 
 exported to other countries, to France, to Holland, and to the 
 countries which lie round the Baltic and Mediterranean Seas. 
 But that part of the capital of Great Britain which brings those 
 eighty-two thousand hogsheads to Great Britain, which re-exports 
 them from thence to those other countries, and which brings back 
 from those other countries to Great Britain either goods or money 
 in return^ is employed in a round-about foreign trade of con- 
 sumption, and is necessarily forced into this employment in order 
 to dispose of this great surplus. If we would compute in how 
 many years the whole of this capital is likely to come back to 
 Great Britain, we must add to the distance of the American returns 
 that of the returns from those other countries. If, in the direct 
 foreign trade of consumption which we carry on with America, 
 the whole capital employed frequently does not come back in less 
 than three or four years ; the whole capital employed in this round- 
 about one is not likely to come back in less than four or five. 
 If the one can keep in constant employment but a third or a fourth 
 part of the domestic industry which could be maintained by a 
 capital returned once in the year, the other can keep in constant 
 employment but a fourth or a fifth part of that industry. At some 
 of the outports a credit is commonly given to those foreign corre- 
 spondents to whom they export their tobacco. At the port of 
 London, indeed, it is commonly sold for ready money. The rule 
 is, Weigh and pay. At the port of London, therefore, the final 
 returns of the whole round-about trade are more distant than the 
 returns from America by the time only which the goods may lie 
 unsold in the warehouse ; where, however, they may sometimes lie 
 long enough. But, had not the colonies been confined to the 
 market of Great Britain for the sale of their tobacco, very little 
 more of it would probably have come to us than what was necessary 
 for the home consumption. 1 The goods which Great Britain pur- 
 
 1 It does not follow that a country trade, the more will such a determina- 
 
 which assumes no monopoly of import, tion take place. This country has now 
 
 and puts imported goods at no disad- become the entrep6t of many important 
 
 vantage on their exportation, will cease objects of commerce, as cotton, wool, and 
 
 to become an entrepot, in other words, metals. Before long, it will be the entre- 
 
 to appropriate a large share of the carry- p6t of corn, 
 ing trade. On the contrary, the freer the
 
 CHAP. vii. THE WEALTH OF NATIONS. 185 
 
 chases at present for her own consumption with the great surplus 
 of tobacco which she exports to other countries, she would, in this 
 case, probably have purchased with the immediate produce of her 
 own industry, or with some part of her own manufactures. That 
 produce, those manufactures, instead of being almost entirely suited 
 to one great market, as at present, would probably have been fitted 
 to a great number of smaller markets. Instead of one great round- 
 about foreign trade of consumption, Great Britain would probably 
 have carried on a great number of small direct foreign trades of the 
 same kind. On account of the frequency of the returns, a part, 
 and probably but a small part, perhaps not above a third or a 
 fourth of the capital which at present carries on this great round- 
 about trade, might have been sufficient to carry on all those small 
 direct ones, might have kept in constant employment an equal 
 quantity of British industry, and have equally supported the annual 
 produce of the land and labour of Great Britain. All the purposes 
 of this trade being in this manner answered by a much smaller 
 capital, there would have been a large spare capital to apply to 
 other purposes ; to improve the lands, to increase the manufac- 
 tures, and to extend the commerce of Great Britain ; to come into 
 competition at least with the other British capitals employed in 
 all those different ways, to reduce the rate of profit in them 
 all, and thereby to give to Great Britain, in all of them, a supe- 
 riority over other countries still greater than what she at present 
 enjoys. 
 
 The monopoly of the colony trade too has forced some part of 
 the capital of Great Britain from all foreign trade of consumption 
 to a carrying trade ; and, consequently, from supporting more or 
 less the industry of Great Britain, to be employed altogether in- 
 supporting partly that of the colonies, and partly that of some 
 other countries. 
 
 The goods, for example, which are annually purchased with the 
 great surplus of eighty-two thousand hogsheads of tobacco annually 
 re-exported from Great Britain, are not all consumed in Great 
 Britain. Part of them, linen from Germany and Holland, for 
 example, is returned to the colonies for their particular consumption. 
 But that part of the capital of Great Britain which buys the 
 tobacco with which this linen is afterwards bought, is necessarily 
 withdrawn from supporting the industry of Great Britain, to be
 
 186 THE NATURE AND CAUSES OF BOOK iv. 
 
 employed altogether in supporting-, partly that of the colonies, and 
 partly that of the particular countries who pay for this tobacco 
 with the produce of their own industry. 
 
 The monopoly of the colony trade besides, by forcing towards 
 it a much greater proportion of the capital of Great Britain than 
 what would naturally have gone to it, seems to have broken alto- 
 gether that natural balance which would otherwise have taken 
 place among all the different branches of British industry. The 
 industry of Great Britain, instead of being accommodated to a 
 great number of small markets, has been principally suited to one 
 great market. Her commerce, instead of running in a great 
 number of small channels, has been taught to run principally in 
 one great channel. But the whole system of her industry and 
 commerce has thereby been rendered less secure ; the whole state 
 of her body politic less healthful, than it otherwise would have 
 been. In her present condition, Great Britain resembles one of 
 those unwholesome bodies in which some of the vital parts are 
 overgrown, and which, upon that account, are liable to many 
 dangerous disorders scarce incident to those in which all the parts 
 are more properly proportioned. A small stop in that great 
 blood-vessel, which has been artificially swelled beyond its natural 
 dimensions, and through which an unnatural proportion of the 
 industry and commerce of the country has been forced to circulate, 
 is very likely to bring on the most dangerous disorders upon the 
 whole body politic. The expectation of a rupture with the colonies, 
 accordingly, has struck the people of Great Britain with more 
 terror than they ever felt for a Spanish armada or a French in- 
 vasion. It was this terror, whether well or ill grounded, which 
 rendered the repeal of the Stamp Act, among the merchants at 
 least, a popular measure. In the total exclusion from the colony 
 market, was it to last only for a few years, the greater part of 
 our merchants used to fancy that they foresaw an entire stop to 
 their trade ; the greater part of our master manufacturers, the 
 entire ruin of their business ; and the greater part of our workmen, 
 an end of their employment. A rupture with any of our neigh- 
 bours upon the Continent, though likely too to occasion some stop 
 or interruption in the employments of some of all these different 
 orders of people, is foreseen however, without any such general 
 emotion. The blood, of which the circulation is stopped in some
 
 CHAP. vii. THE^WEALTH OF NATIONS. 187 
 
 of the smaller vessels, easily disgorges itself into the greater, 
 without occasioning any dangerous disorder ; but, when it is 
 stopped in any of the greater vessels, convulsions, apoplexy, or 
 death are the immediate and unavoidable consequences. If but 
 one of those overgrown manufactures, which by means either of 
 bounties, or of the monopoly of the home and colony markets, 
 have been artificially raised up to an unnatural height, finds some 
 small stop or interruption in its employment, it frequently occasions 
 a mutiny and disorder alarming to Government, and embarrassing 
 even to the deliberations of the Legislature. How great, there- 
 fore, would be the disorder and confusion, it was thought, which 
 must necessarily be occasioned by a sudden and entire stop in 
 the employment of so great a proportion of our principal manu- 
 facturers ! 
 
 Some moderate and gradual relaxation of the laws which give 
 to Great Britain the exclusive trade to the colonies, till it is 
 rendered in a great measure free, seems to be the only expedient 
 which can, in all future times, deliver her from this danger, which 
 can enable her or even force her to withdraw some part of her 
 capital from this overgrown employment, and to turn it, though 
 with less profit, towards other employments ; and which, by 
 gradually diminishing one branch of her industry and gradually 
 increasing all the rest, can by degrees restore all the different 
 branches of it to that natural, healthful, and proper proportion 
 which perfect liberty necessarily establishes, and which perfect 
 liberty can alone preserve. To open the colony trade all at once 
 to all nations, might not only occasion some transitory incou- 
 veniency, but a great permanent loss to the greater part of those 
 whose industry or capital is at present engaged in it. The sudden 
 loss of the employment even of the ships which import the eighty- 
 two thousand hogsheads of tobacco, which are over and above the 
 consumption of Great Britain, might alone be felt very sensibly. 
 Such are the unfortunate effects of all the regulations of the mer- 
 cantile system ! They not only introduce very dangerous disorders 
 into the state of the body politic, but disorders which it is often 
 difficult to remedy, without occasioning, for a time at least, still 
 greater disorders. In what manner, therefore, the colony trade 
 ought gradually to be opened ; what are the restraints which ought 
 first, and what are those which ought last to be taken away ; or
 
 188 THE NATURE AND CAUSES OF BOOK iv. 
 
 in what manner the natural system of perfect liberty and justice 
 ought gradually to be restored, we must leave to the wisdom of 
 future statesmen and legislators to determine. 1 
 
 Five different events, unforeseen and un thought of, have very 
 fortunately concurred to hinder Great Britain from feeling, so sen- 
 sibly as it was generally expected she would, the total exclusion 
 which has now taken place for more than a year (from the ist of 
 December, 1774) from a very important branch of the colony trade, 
 that of the twelve associated provinces of North America. First, 
 those colonies, in preparing themselves for their non-importation 
 agreement, drained Great Britain completely of all the commodities 
 which were fit for their market : secondly, the extraordinary de- 
 mand of the Spanish Flota has, this year, drained Germany and 
 the North of many commodities, linen in particular, which used to 
 come into competition, even in the British market, with the manu- 
 factures of Great Britain : thirdly, the peace between Russia and 
 Turkey has occasioned an extraordinary demand from the Turkey 
 market, which, during the distress of the country, and while a 
 Russian fleet was cruizing in the Archipelago, had been very 
 poorly supplied : fourthly, the demand of the north of Europe for 
 the manufactures of Great Britain has been increasing from year 
 to year for some time past : and, fifthly, the late partition and con- 
 sequential pacification of Poland, by opening the market of that 
 great country, have this year added an extraordinary demand from 
 thence to the increasing demand of the North. These events are 
 all, except the fourth, in their nature transitory and accidental, and 
 the exclusion from so important a branch of the colony trade, if 
 unfortunately it should continue much longer, may still occasion some 
 degree of distress. This distress, however, as it will come on 
 gradually, will be felt much less severely than if it had come on all 
 at once ; and, in the meantime, the industry and capital of the 
 country may find a new employment and direction, so as to prevent 
 this distress from ever rising to any considerable height. 
 
 1 In point of fact, changes like those for the employment of capital which it 
 
 which the Author could not but feel opens, rapidly counterpoise these transient 
 
 alarmed at, have not produced the mis- inconveniences, even if they do not in- 
 
 chiefs anticipated from them. Every stantly obviate them. Vested interests 
 
 concession to commercial freedom is are alarmed at change, but it is not 
 
 followed by an increase of commercial rarely the case that these very interests 
 
 activity. There may follow on it some find the change incomparably more bene- 
 
 little local difficulty or distress ; but the ficent than the ancient restriction, 
 energy which it awakens, the channels
 
 CHAP. vii. THE WEALTH OF NATIONS. 189 
 
 The monopoly of the colony trade, therefore, so far as it has 
 turned towards that trade a greater proportion of the capital of 
 Great Britain than what would otherwise have gone to it, has in 
 all cases turned it, from a foreign trade of consumption with a 
 neighbouring, into one with a more distant country ; in many cases, 
 from a direct foreign trade of consumption, into a round-about one ; 
 and in some cases, from all foreign trade of consumption, into a 
 carrying trade. In has in all cases, therefore, turned it, from a 
 direction in which it would have maintained a greater quantity of 
 productive labour, into one in which it can maintain a much smaller 
 quantity. By suiting, besides, to one particular market only, so 
 great a part of the industry and commerce of Great Britain, it has 
 rendered the whole state of that industry and commerce more pre- 
 carious and less secure, than if their produce had been accommodated 
 to a greater variety of markets. 
 
 We must carefully distinguish between the effects of the colony 
 trade and those of the monopoly of that trade. The former are 
 always and necessarily beneficial ; the latter always and necessarily 
 hurtful. But the former are so beneficial, that the colony trade, 
 though subject to a monopoly, and notwithstanding the hurtful 
 effects of that monopoly, is still upon the whole beneficial, and 
 greatly beneficial ; though a good deal less so than it otherwise 
 would be. 
 
 The effect of the colony trade in its natural and free state, is to 
 open a great though distant market for such parts of the produce 
 of British industry as may exceed the demand of the markets nearer 
 home, of those of Europe, and of the countries which lie round the 
 Mediterranean Sea. In its natural and free state, the colony trade, 
 without drawing from those markets any part of the produce which 
 had ever been sent to them, encourages Great Britain to increase 
 the surplus continually, by continually presenting new equivalents 
 to be exchanged for it. In its natural and free state, the colony 
 trade tends to increase the quantity of productive labour in Great 
 Britain, but without altering in any respect the direction of that 
 which had been employed there before. In the natural and free 
 state of the colony trade, the competition of all other nations would 
 hinder the rate of profit from rising above the common level either 
 in the new market or in the new employment. The new market, 
 without drawing anything from the old one, would create, if one
 
 190 THE NATURE AND CAUSES OF BOOK iv. 
 
 may say so, a new produce for its own supply; and that new pro- 
 duce would constitute a new capital for carrying 1 on the new 
 employment, which in the same manner would draw nothing from 
 the old one. 
 
 The monopoly of the colony trade, on the contrary, by excluding 
 the competition of other nations, and thereby raising the rate of 
 profit both in the new market and in the new employment, draws 
 produce from the old market and capital from the old employment. 
 To augment our share of the colony trade beyond what it other- 
 wise would be, is the avowed purpose of the monopoly. If our 
 share of that trade were to be no greater with than it would have 
 been without the monopoly, there could have been no reason for 
 -establishing the monopoly. But whatever forces into a branch of 
 trade of which the returns are slower and more distant than those 
 of the greater part of other trades, a greater proportion of the 
 capital of any country than what of its own accord would go to 
 that branch, necessarily renders the whole quantity of productive 
 labour annually maintained there, the whole annual produce of the 
 land and labour of that country, less than they otherwise would be. 
 It keeps down the revenue of the inhabitants of that country 
 below what it would naturally rise to, and thereby diminishes their 
 power of accumulation. It not only hinders, at all times, their 
 capital from maintaining so great a quantity of productive labour 
 as it would otherwise maintain, but it hinders it from increasing so 
 fast as it would otherwise increase, and consequently from main- 
 taining a still greater quantity of productive labour. 
 
 The natural good effects of the colony trade, however, more than 
 counterbalance to Great Britain the bad effects of the monopoly, so 
 that, monopoly and all together, that trade, even as it is carried on 
 at present, is not only advantageous, but greatly advantageous. 
 The new market and the new employment which are opened by 
 the colony trade, are of much greater extent than that portion of 
 the old market and of the old employment which is lost by the 
 monopoly. The new produce and the new capital which has been 
 created, if one may say so, by the colony trade, maintain in Great 
 Britain a greater quantity of productive labour than what can have 
 been thrown out of employment by the revulsion of capital from 
 other trades of which the returns are more frequent. If the colony 
 trade, however, even as it is carried on at present, is advantageous
 
 CHAP. vii. THE WEALTH OF NATIONS. 191 
 
 to Great Britain, it is not by means of the monopoly, but in spite 
 of the monopoly. 
 
 It is rather for the manufactured than for the rude produce of 
 Europe that the colony trade opens a new market. Agriculture 
 is the proper business of all new colonies ; a business which the 
 cheapness of land renders more advantageous than any other. 
 They abound, therefore, in the rude produce of land,-and instead of 
 importing- it from other countries, they have generally a large sur- 
 plus to export. In new colonies, agriculture either draws hands 
 from all other employments, or keeps them from going to any other 
 employment. There are few hands to spare for the necessary, and 
 none for the ornamental manufactures. The greater part of the 
 manufactures of both kinds, they find it cheaper to purchase of other 
 countries than to make for themselves. It is chiefly by encouraging 
 the manufactures of Europe that the colony trade indirectly en- 
 courages its agriculture. The manufacturers of Europe, to whom 
 that trade gives employment, constitute a new market for the 
 produce of the land ; and the most advantageous of all markets 
 the home market for the corn and cattle, for the bread and 
 butcher's-meat of Europe is thus greatly extended by means of 
 the trade to America. 
 
 But that the monopoly of the trade of populous and thriving 
 colonies is not alone sufficient to establish, or even to maintain 
 manufactures in any country, the examples of Spain and Portugal 
 sufficiently demonstrate. Spain and Portugal were manufacturing 
 countries before they had any considerable colonies. Since they 
 had the richest and most fertile in the world, they have both ceased 
 to be so. 
 
 In Spain and Portugal, the bad effects of the monopoly, aggra- 
 vated by other causes, have, perhaps, nearly overbalanced the 
 natural good effects of the colony trade. These causes seem to be, 
 other monopolies of different kinds ; the degradation of the value 
 of gold and silver below what it is in most other countries ; the 
 exclusion from foreign markets by improper taxes upon exportation, 
 and the narrowing of the home market, by still more improper 
 taxes upon the transportation of goods from one part of the country 
 to another ; but above all, that irregular and partial administration 
 of justice, which often protects the rich and powerful debtor from 
 the pursuit of his injured creditor, and which makes the industrious
 
 192 THE NATURE AND CAUSES OF BOOK iv. 
 
 part of the nation afraid to prepare goods for the consumption of 
 those haughty and great men, to whom they dare not refuse to sell 
 upon credit, and from whom they are altogether uncertain of 
 repayment. 
 
 In England, on the contrary, the natural good effects of the 
 colony trade, assisted by other causes, have in a great measure 
 conquered the bad effects of the monopoly. These causes seem to 
 be, the general liberty of trade, which, notwithstanding some 
 restraints, is at least equal, perhaps superior, to what it is in any 
 other country ; the liberty of exporting, duty free, almost all sorts 
 of goods which are the produce of domestic industry, to almost any 
 foreign country ; and what, perhaps, is of still greater importance, 
 the unbounded liberty of transporting them from any one part of 
 our own country to any other, without being obliged to give any 
 account to any public office, without being liable to question or 
 examination of any kind ; but above all, that equal and impartial 
 administration of justice which renders the rights of the meanest 
 British subject respectable to the greatest, and which, by securing 
 to every man the fruits of his own industry, gives the greatest and 
 most effectual encouragement to every sort of industry. 
 
 If the manufactures of Great Britain, however, have been 
 advanced, as they certainly have, by the colony trade, it has not 
 been by means of the monopoly of that trade, but in spite of the 
 monopoly. The effect of the monopoly has been, not to augment 
 the quantity, but to alter the quality and shape of a part of the 
 manufactures of Great Britain, and to accommodate to a market, 
 from which the returns are slow and distant, what would otherwise 
 have been accommodated to one from which the returns are frequent 
 and near. Its effect has consequently been to turn a part of the 
 capital of Great Britain from an employment in which it would 
 have maintained a greater quantity of manufacturing industry, to 
 one in which it maintains a much smaller, and thereby to diminish, 
 instead of increasing, the whole quantity of manufacturing industry 
 maintained in Great Britain. 
 
 The monopoly of the colony trade, therefore, like all the other 
 mean and malignant expedients of the mercantile system, depresses 
 the industry of all other countries, but chiefly that of the colonies, 
 without in the least increasing, but on the contrary diminishing, 
 that of the country in whose favour it is established.
 
 CHAP. VIL THE WEALTH OF NATIONS. 193 
 
 The monopoly hinders the capital of that country, whatever may 
 at any particular time be the extent of that capital, from maintain- 
 ing 1 so great a quantity of productive labour as it would otherwise 
 maintain, and from affording so great a revenue to the industrious 
 inhabitants as it would otherwise afford, But as capital can be 
 increased only by savings from revenue, the monopoly, by hindering- 
 it from affording so great a revenue as it would otherwise afford, 
 necessarily hinders it from increasing so fast as it would otherwise 
 increase, and consequently from maintaining a still greater quantity 
 of productive labour, and affording a still greater revenue to the 
 industrious inhabitants of that country. One great original source 
 of revenue, therefore, the wages of labour, the monopoly must neces- 
 sarily have rendered at all times less abundant than it otherwise 
 would have been. 
 
 By raising the rate of mercantile profit, the monopoly discourages 
 the improvement of land. The profit of improvement depends upon 
 the difference between what the land actually produces, and what, 
 by the application of a certain capital, it can be made to produce. 
 If this difference affords a greater profit than what can be drawn 
 from an equal capital in any mercantile employment, the improve- 
 ment of land will draw capital from all mercantile employments. 
 If the profit is less, mercantile employments will draw capital from 
 the improvement of land. Whatever therefore raises the rate of mer- 
 cantile profit, either lessens the superiority or increases the inferiority 
 of the profit of improvement ; and in the one case hinders capital 
 from going to improvement, and in the other draws capital from it. 
 But by discouraging improvement, the monopoly necessarily retards 
 the natural increase of another great original source of revenue, the 
 rent of land. By raising the rate of profit too the monopoly neces- 
 sarily keeps up the market rate of interest higher than it otherwise 
 would be. But the price of land in proportion to the rent which it 
 affords, the number of years' purchase which is commonly paid for 
 it, necessarily falls as the rate of interest rises, and rises as the rate 
 of interest falls. The monopoly, therefore, hurts the interest of the 
 landlord two different ways, by retarding the natural increase, first, 
 of his rent, and secondly, of the price which he would get for his 
 land in proportion to the rent which it affords. 1 
 
 1 This statement of Adam Smith is, may be doubted whether the rate of mer- 
 to say the least, exceedingly dubious. It cantile profit was heightened by the 
 
 VOL. II. O
 
 194 THE NATURE AND CAUSES OF BOOK IT. 
 
 The monopoly, indeed, raises the rate of mercantile profit, and 
 thereby augments somewhat the gain of our merchants. But as it 
 obstructs the natural increase of capital, it tends rather to diminish 
 than to increase the sum total of the revenue which the inhabitants 
 of the country derive from the profits of stock ; a small profit upon 
 a great capital generally affording a greater revenue than a great 
 profit upon a small one. The monopoly raises the rate of profit, but 
 it -hinders the sum of profit from rising so high as it otherwise 
 would do. 
 
 All the original sources of revenue, the wages of labour, the rent 
 of land, and the profits, of stock, the monopoly renders much less 
 ahundant than they otherwise would be. To promote the little 
 interest of one little order of men in one country, it hurts the in- 
 terest of all other orders of men in that country, and of all men in 
 all other countries. 
 
 It is solely by raising the ordinary rate of profit that the mono- 
 poly either has proved or could prove advantageous to any one par- 
 ticular order of men. But besides all the bad effects to the country 
 in. general, which have already been mentioned as necessarily result- 
 ing from a high rate of profit, there is one more fatal, perhaps, than 
 all these put together, but which, if we may judge from experience, 
 is inseparably connected with it. The high rate of profit seems 
 everywhere to destroy that parsimony which in other circumstances 
 is.natural to the character of the merchant. When profits are high, 
 that sober virtue seems to be superfluous, and expensive luxury to 
 suit better the affluence of his situation. But the owners of the 
 great mercantile capitals are necessarily the leaders and conductors 
 of the whole industry of every nation, and their example has a much 
 greater influence upon the manners of the whole industrious part of 
 it than that of any other order of men. If his employer is atten- 
 tive and parsimonious, the workman is very likely to be so too ; 
 but if the master is dissolute and disorderly, the servant, who shapes 
 
 monopoly of the colony trade, although is the same thing, land rises in value., 
 
 it may be conceded that this monopoly That rents did rise, and land did greatly 
 
 starved, capital by driving it from its increase in value during the first half of 
 
 natural objects into those which were the eighteenth century, is perfectly certain, 
 
 factitious. But the rent of land and the The rise, we admit, was not due to the 
 
 rate of interest are closely allied, and it monopoly, but in spite of it. But the 
 
 cannot be doubted that when profit is rent of land is not the result of one cause, 
 
 high, population abundant, and agricul- such as the rate of profit, but of a com- 
 
 tare progressive, rents increase, or, what plexity of causes operating together.
 
 CHAP. vn. THE WEALTH OF NATIONS. 195 
 
 his work according to the pattern which his master prescribes to 
 him, will shape his life too according to the example which he sets 
 him. Accumulation is thus prevented in the hands of all those 
 who are naturally the most disposed to accumulate ; and the funds 
 destined for the maintenance of productive labour receive no 
 augmentation from the revenue of those who ought naturally to 
 augment them the most. The capital of the country, instead of 
 increasing, gradually dwindles away, and the quantity of produc- 
 tive labour maintained in it grows every day less and less. Have 
 the exorbitant profits of the merchants of Cadiz and Lisbon 
 augmented the capital of Spain and Portugal? Have they alle- 
 viated the poverty, have they promoted the industry of those two 
 beggarly countries?- Such has been the tone of mercantile expense 
 in those two trading cities, that those exorbitant profits, far from 
 augmenting the general capital of the country, seem scarce to have 
 been sufficient to keep up the capitals upon which they were made. 
 Foreign capitals are every day intruding themselves, if I may say 
 so, more and more into the trade of Cadiz and Lisbon. It is to 
 expel those foreign capitals from a trade which their own grows 
 every day more and more insufficient for carrying on, that the 
 Spaniards and Portuguese endeavour every day to straiten more 
 and more the galling bands of their absurd monopoly. Compare 
 the mercantile manners of Cadiz and Lisbon with those of Amster- 
 dam, and you will be sensible how differently the conduct and 
 character of merchants are affected by the high and by the low 
 profits of stock. The merchants of London, indeed, have not yet 
 generally become such magnificent lords as those of Cadiz and 
 Lisbon ; but neither are they in general such attentive and parsi- 
 monious burghers as those of Amsterdam. They are supposed, 
 however, many of them, to be a good deal richer than the greater 
 part of the former, and not quite so rich as many of the latter. 
 But the rate of their profit is commonly much lower than that of 
 the former, and a good deal higher than that of the latter. ' Light 
 come light go,' says the proverb ; and the ordinary tone of expense 
 seems everywhere to be regulated, not so much according to the 
 real ability of spending, as to the supposed facility of getting money 
 to spend. 
 
 It is thus that the single advantage which the monopoly procures 
 
 2
 
 196 THE NATURE AND CAUSES OF BOOK IT. 
 
 to a single order of men is in many different ways hurtful to the 
 general interest of the country. 
 
 To found a great empire for the sole purpose of raising up a 
 people of customers, may at first sight appear a project fit only for 
 a nation of shopkeepers. It is, however, a project altogether unfit 
 for a nation of shopkeepers, but extremely fit for a nation whose 
 government is influenced by shopkeepers. Such statesmen, and 
 such statesmen only, are capable of fancying that they will find some 
 advantage in employing the blood and treasure of their fellow- 
 citizens to found and maintain such an empire. Say to a shopkeeper, 
 ' Buy me a good estate, and I shall always buy my clothes at your 
 shop, even though I should pay somewhat dearer than what I can 
 have them for at other shops ;' and you will not find him very for- 
 ward to embrace your proposal. But should any other person buy 
 you such an estate, the shopkeeper would be much obliged to your 
 benefactor if he would enjoin you to buy all your clothes at his 
 shop. England purchased for some of her subjects, who found 
 themselves uneasy at home, a great estate in a distant country. 
 The price, indeed, was very small, and instead of thirty years' pur- 
 chase, the ordinary price of land in the present times, it amounted 
 to little more than the expense of the different equipments which 
 made the first discovery, reconnoitred the coast, and took a fictitious 
 possession of the country. The land was good and of great extent, 
 and the cultivators having plenty of good ground to work upon, and 
 being for some time at liberty to sell their produce where they pleased, 
 became in the course of little more than thirty or forty years (between 
 1620 and 1660) so numerous and thriving a people, that the shop- 
 keepers and other traders of England wished to secure to themselves 
 the monopoly of their custom. Without pretending, therefore, that 
 they had paid any part, either of the original purchase-money, or of 
 the subsequent expense of improvement, they petitioned the Parlia- 
 ment that the cultivators of America might for the future be con- 
 fined to their shop : first, for buying all the goods which they 
 wanted from Europe ; and, secondly, for selling all such parts of 
 their own produce as those traders might find it convenient to buy. 
 For they did not find it convenient to buy every part of it. Some 
 parts of it imported into England might have interfered with some 
 of the trades which they themselves carried on at home. Those 
 particular parts of it, therefore, they were willing that the colonists
 
 CHAP. vn. THE WEALTH OF NATIONS. 197 
 
 should sell where they could ; the farther off the better ; and upon 
 that account proposed that their market should be confined to the 
 countries south of Cape Finisterre. A clause in the famous Act of 
 Navigation established this truly shopkeeper proposal into a law. 
 
 The maintenance of this monopoly has hitherto been the principal, 
 or more properly perhaps the sole end and purpose of the dominion 
 which Great Britain assumes over her colonies. In the exclusive 
 trade, it is supposed, consists the great advantage of provinces, 
 which have never yet afforded either revenue or military force for 
 the support of the civil government, or the defence of the mother 
 country. The monopoly is the principal badge of their dependency, 
 and it is the sole fruit which has hitherto been gathered from that 
 dependency. Whatever expense Great Britain has hitherto laid out 
 in maintaining this dependency, has really been laid out in order to 
 support this monopoly. The expense of the ordinary peace estab- 
 lishment of the colonies amounted, before the commencement of the 
 present disturbances, to the pay of twenty regiments of foot; to the 
 expense of the artillery, stores, and extraordinary provisions with 
 which it was necessary to supply them ; and to the expense of a 
 very considerable naval force which was constantly kept up, in order 
 to guard, from th'e smuggling vessels of other nations, the immense 
 coast of North America, and that of our West Indian Islands. The 
 whole expense of this peace establishment was a charge upon the 
 revenue of Great Britain, and was, at the same time, the smallest 
 part of what the dominion of the colonies has cost the mother 
 country. If we would know the amount of the whole, we must add 
 to the annual expense of this peace establishment the interest of the 
 sums which, in consequence of her considering her colonies as pro- 
 vinces subject to her dominion, Great Britain has upon different 
 occasions laid out upon their defence. We must add to it, in par- 
 ticular, the whole expense of the late war, and a great part of that 
 of the war which preceded it. The late war was altogether a colony 
 quarrel, and the whole expense of it, in whatever part of the world 
 it may have been laid out, whether in Germany or the East Indies, 
 ought justly to be stated to the account of the colonies. It amounted 
 to more than ninety millions Stirling, including not only the new 
 debt which was contracted, but the two shillings in the pound 
 additional land-tax, and the sums which were every year borrowed 
 from the sinking fund. The Spanish war which began in 1739 was
 
 198 THE NATURE AND CAUSES OF BOOK IT. 
 
 principally a colony quarrel. Its principal object was to prevent 
 the search of the colony ships which carried on a contraband trade 
 with the Spanish main. 1 This whole expense is, in reality, a bounty 
 which has been given in order to support a monopoly. The pre- 
 tended purpose of it was to encourage the manufactures and to 
 increase the commerce of Great Britain. But its real effect has 
 been to raise the rate of mercantile profit, and to enable our mer- 
 chants to turn into a branch of trade, of which the returns are more 
 slow and distant than those of the greater part of other trades, 
 a greater proportion of their capital than they otherwise would 
 have done ; two events which, if a bounty could have prevented, it 
 might perhaps have been very well worth while to give such a 
 bounty. 
 
 Under the present system of management, therefore, Great 
 Britain derives nothing but loss from the dominion which she 
 assumes over her colonies. 
 
 To propose that Great Britain should voluntarily give up all 
 authority over her colonies, and leave them to elect their own 
 magistrates, to enact their own laws, and to make peace and war as 
 they might think proper, would be to propose such a measure as 
 never was and never will be adopted by any nation in the world. 
 No nation ever voluntarily gave up the dominion of any province, 
 how troublesome soever it might be to govern it, and how small 
 soever the revenue which it afforded might be in proportion to the 
 expense which it occasioned. 2 Such sacrifices, though they might 
 frequently be agreeable to the interest, are always mortifying to the 
 pride of every nation, and, what is perhaps of still greater con- 
 sequence, they are always contrary to the private interest of the 
 governing part of it, who would thereby be deprived of the disposal 
 of many places of trust and profit, of many opportunities of ac- 
 quiring wealth and distinction, which the possession of the most tur- 
 bulent, and, to the great body of the people, the most unprofitable 
 
 1 Walpole resisted by every means in pute about this right gave occasion to 
 
 his power the breach with Spain. The the war. The people too were goaded 
 
 peace of Utrecht contained the Assiento into madness by the fictitious or exag- 
 
 contract, by which a single ship was al- gerated story of Jenkins' ears, 
 
 lowed to trade between Great Britain and * We have learned, and are still learn- 
 
 the Spanish possessions of Western South ing, more wisdom than Smith gave this 
 
 America. The merchants resented this country credit for a century ago. At 
 
 limitation, and took to smuggling. To least, we are beginning to understand the 
 
 obviate this, the Spanish government nature of the bargain which we make 
 
 claimed the right of search, and the dis- with our colonies or dependencies.
 
 CHAP. vn. THE WEALTH OF NATIONS. 199 
 
 province seldom fails to afford. The most visionary enthusiast 
 would scarce be capable of proposing such a measure, with any 
 serious hopes at least of its ever 'being adopted. If it was adopted, 
 however, Great Britain would not only be immediately freed from 
 the whole annual expense of the peace establishment of the colonies, 
 but might settle with them such a treaty of commerce as would 
 effectually secure to her a free trade, more advantageous to the 
 great body of the people, though less so to the merchants, than the 
 monopoly which she at present enjoys. By thus parting good 
 friends, the natural affection of the colonies to the mother country, 
 which, perhaps, our late dissensions have well nigh extinguished, 
 woOld quickly revive. It might dispose them not only to respect, 
 for whole centuries together, that treaty of commerce which they 
 had concluded with us at parting, but to favour us in war as well 
 as in trade, and, instead of turbulent and factious subjects, to 
 become our most faithful, affectionate, and generous allies ; and the 
 same sort of parental affection on the one hand, and filial respect on 
 the other, might revive between Great Britain and her colonies, 
 which used to subsist between those of ancient Greece and the 
 mother city from which they descended. 1 
 
 In order to render any province advantageous to the empire to 
 which it belongs, it ought to afford, in time of peace, a revenue 
 to the public sufficient not only for defraying the whole expense of 
 its own peace establishment, but for contributing its proportion to the 
 support of the general government of the empire. Every province 
 necessarily contributes, more or less, to increase the expense of that 
 general government. If any particular province, therefore, does not 
 contribute its share towards defraying this expense, an unequal 
 burden must be thrown upon some other part of the empire. The 
 extraordinary revenue too which every ^province affords to the public 
 in time of war, ought, from parity of reason, to bear the same pro- 
 portion to the extraordinary revenue of the whole empire which 
 
 1 Nothing can be more true than the always look with veneration on the 
 observations in the text. The United country from which they have sprung 
 States have grown from three to forty and the associations which it preserves, 
 millions, but the animosities which were But political bitterness still rankles, and 
 kindled by the War of Independence have the relations which might have been, as 
 hardly been extinguished. The Ameri- the author says, like those between the 
 can people are one with us in descent, in colonies of ancient Greece and the mother 
 customs, with the exception of some social cities, have occasionally more nearly re- 
 differences, in laws, in literature, and sembled those of Corinth and Corcyra.
 
 206 THE NATURE AND CAUSES OF BOOK iv. 
 
 its ordinary revenue does in time of peace. That neither the 
 ordinary nor extraordinary revenue which Great Britain derives 
 from her colonies bears this proportion to the whole revenue of 
 the British empire, will readily be allowed. The monopoly, it 
 has been supposed, indeed, by increasing the private revenue of 
 the people of Great Britain, and thereby enabling- them to pay 
 greater taxes, compensates the deficiency of the public revenue of 
 the colonies. But this monopoly, I have endeavoured to show, 
 though a very grievous tax upon the colonies, and though it may 
 increase the revenue of a particular order of men in Great Britain, 
 diminishes instead of increasing that of the great body of the 
 people, and consequently diminishes instead of increasing the ability 
 of the great body of the people to pay taxes. The men too whose 
 revenue the monopoly increases, constitute a particular order, which 
 it is both absolutely impossible to tax beyond the proportion of 
 other orders, and extremely impolitic even to attempt to tax beyond 
 that proportion, as I shall endeavour to show in the following Book. 
 No particular resource, therefore, can be drawn from this particular 
 order. 
 
 The colonies may be taxed either by their own assemblies, or by 
 the Parliament of Great Britain. 
 
 That the colony assemblies can ever be so managed as to levy 
 upon their constituents a public revenue sufficient not only to main- 
 tain at all times their own civil and military establishment, but to 
 pay their proper proportion of the expense of the general govern- 
 ment of the British empire, seems not very probable. It was a 
 long time before even the parliament of England, though placed 
 immediately under the eye of the sovereign, could be brought under 
 such a system of management, or could be rendered sufficiently 
 liberal in their grants for supporting the civil and military estab- 
 lishments even of their own country. It was only by distributing 
 among the particular members of Parliament a great part either of 
 the offices or of the disposal of the offices arising from this civil 
 and military establishment, that such a system of management 
 could be established even with regard to the Parliament of England. 
 But the distance of the colony assemblies from the eye of the 
 sovereign, their number, their dispersed situation, and their various 
 constitutions, would render it very difficult to manage them in the 
 same manner, even though the sovereign had the same means of
 
 CHAP. vn. THE WEALTH OF NATIONS. 201 
 
 doing it ; and those means are wanting. It would be absolutely 
 impossible to distribute among all the leading members of all 
 the colony assemblies such a share, either of the offices or of the 
 disposal of the offices arising from the general government of the 
 British empire, as to dispose them to give up their popularity at 
 home and to tax their constituents for the support of that general 
 government, of which almost the whole emoluments were to be di- 
 vided among people who were strangers to them. The unavoidable 
 ignorance of administration, besides, concerning the relative im- 
 portance of the different members of those different assemblies, the 
 offences which must frequently be given, the blunders which must 
 constantly be committed in attempting to manage them in this 
 manner, seems to render such a system of management altogether 
 impracticable in regard to them. 
 
 The colony assemblies, besides, cannot be supposed the proper 
 judges of what is necessary for the defence and support of the 
 whole empire. The care of that defence and support is not en- 
 trusted to them. It "is not their business, and they have no regular 
 means of information concerning it. The assembly of a province, 
 like the vestry of a parish, may judge very properly concerning the 
 affairs of its own particular district, but can have no proper means 
 of judging concerning those of the whole empire. It cannot even 
 judge properly concerning the proportion which its own province 
 bears to the whole empire, or concerning the relative degree of its 
 wealth and importance, compared with the other provinces ; be- 
 cause those other provinces are not under the inspection and super- 
 intondency of the assembly of a particular province. What is 
 necessary for the defence and support of the whole empire, and in 
 what proportion each part ought to contribute, can be judged of 
 only by that assembly which inspects and superintends the affairs 
 of the whole empire. 
 
 It has been proposed, accordingly, that the colonies should be 
 taxed by requisition, the Parliament of Great Britain determining 
 the sum which each colony ought to pay, and the provincial 
 assembly assessing and levying it in the way that suited best the 
 circumstances of the province. What concerned the whole empire 
 would in this way be determined by the assembly which inspects 
 and superintends the affairs of the whole empire ; and the provincial 
 affairs of each colony might still be regulated by its own assembly.
 
 202 THE NATURE AND CAUSES OF BOOK iv. 
 
 Though the colonies should in this case have no representatives in 
 the British Parliament, yet, if we may judge by experience, there is 
 no probability that the parliamentary requisition would be un- 
 reasonable. The Parliament of England has not upon any occasion 
 shown the smallest disposition to overburden those parts of the 
 empire which are not represented in Parliament. The islands of 
 Guernsey and Jersey, without any means of resisting the authority 
 of Parliament, are more lightly taxed than any part of Great Britain. 
 Parliament in attempting to exercise its supposed right, whether 
 well or ill grounded, of taxing the colonies, has never hitherto 
 demanded of them anything which even approached to a just pro- 
 portion to what was paid by their fellow-subjects at home. If the 
 contribution of the colonies, besides, was to rise or fall in propor- 
 tion to the rise or fall of the land-tax, Parliament could not tax 
 them without taxing at the same time its own constituents, and 
 the colonies might in this case be considered as virtually represented 
 in Parliament. 
 
 Examples are not wanting of empires in which all the different 
 provinces are not taxed, if I may be allowed the expression, in one 
 mass, but in which the sovereign regulates the sum which each 
 province ought to pay, and in some provinces assesses and levies it 
 as he thinks proper, while in others he leaves it to be assessed and 
 levied as the respective states of each province shall determine. In 
 some provinces of France the king not only imposes what taxes he 
 thinks proper, but assesses and levies them in the way he thinks 
 proper. From others he demands a certain sum, but leaves it to 
 the states of each province to assess and levy that sum as they 
 think proper. According to the scheme of taxing by requisition, 
 the Parliament of Great Britain would stand nearly in the same 
 situation towards the colony assemblies as the King of France 
 does towards the states of those provinces which still enjoy the 
 privilege of having states of their own, the provinces of France 
 which are supposed to be the best governed. 
 
 But though, according to this scheme, the colonies could have no 
 just reason to fear that their share of the public burdens should ever 
 exceed the proper proportion to that of their fellow-citizens at home, 
 Great Britain might have just reason to fear that it never would 
 amount to that proper proportion. The Parliament of Great Bri- 
 tain has not for some time past had the same established authority
 
 CHAP. viz. THE WEALTH OF NATIONS. 203 
 
 in the colonies which the French king has in those provinces of 
 France which still enjoy the privilege of having states of their own. 
 The colony assemblies, if they were not very favourably disposed 
 (and unless more skilfully managed than they ever have been 
 hitherto, they are not very likely to be so) might still find many 
 pretences for evading or rejecting the most reasonable requisitions 
 of Parliament. A French war breaks out, we shall suppose ; ten 
 millions must immediately be raised, in order to defend the seat of 
 empire. This sum must -be borrowed upon the credit of some 
 parliamentary fund mortgaged for paying the interest. Part of 
 this fund Parliament proposes to raise by a tax to be levied in 
 Great Britain, and part of it -by a requisition to all the different 
 colony assemblies of America and the West Indies. Would people 
 readily advance their money upon the credit of a fund which partly 
 depended upon the good-humour of all those assemblies, far distant 
 from the seat of the war, and sometimes perhaps thinking themselves 
 not much concerned in the event of it? Upon such a fund no 
 more money would probably be advanced than what the tax to be 
 levied in Great Britain might be supposed to answer for. The 
 whole burden of the debt contracted on account of the war would 
 in this manner fall, as it always has done hitherto, upon Great 
 Britain ; upon a part of the empire, and not upon the whole empire. 
 Great Britain is, perhaps, since the world began, the only state 
 which, as it has extended its empire, has only increased its expense 
 without once augmenting its resources. Other states have generally 
 disburdened themselves upon their subject and subordinate pro- 
 vinces of the most considerable part of the expense of defending the 
 empire. Great Britain has hitherto suffered her subject and sub- 
 ordinate provinces to disburden themselves upon her of almost this 
 whole expense. In order to put Great Britain upon a footing of 
 equality with her own colonies, which the law has hitherto sup- 
 posed to be subject and subordinate, it seems necessary, upon the 
 scheme of taxing them by parliamentary requisition, that Parlia- 
 ment should have some means of rendering its requisitions imme- 
 diately effectual, in case the colony assemblies should attempt to 
 evade or reject them ; and what those means are it is not very easy 
 to conceive, and it has not yet been explained. 
 
 Should the Parliament of Great Britain, at the same time, be ever 
 fully established in the right of taxing the colonies, even independent
 
 204 THE NATURE AND CAUSES OF BOOK iv. 
 
 of the consent of their own assemblies, the importance of those 
 assemblies would from that moment be at an end, and with it, that 
 of all the leading men of British America. Men desire to have 
 some share in the management of public affairs chiefly on account 
 of the importance which it gives them. Upon the power which 
 the greater part of the leading men, the natural aristocracy of 
 every country, have of preserving or defending their respective 
 importance, depends the stability and duration of every system of 
 free government. In the attacks which those leading men are 
 continually making upon the importance of one another, and in the 
 defence of their own, consists the whole play of domestic faction 
 and ambition. The leading men of America, like those of all other 
 countries, desire to preserve their own importance. They feel, or 
 imagine, that if their assemblies, which they are fond of calling 
 Parliaments, and of considering as equal in authority to the Parlia- 
 ment of Great Britain, should be so far degraded as to become the 
 humble ministers and executive officers of that Parliament, the* 
 greater part of their own importance would be at an end. They 
 have rejected, therefore, the proposal of being taxed by parliamentary 
 requisition, and, like other ambitious and high-spirited men, have 
 rather chosen to draw the sword in defence of their own im- 
 portance. 1 
 
 Towards the declension of the Roman republic, the allies of 
 Rome, who had borne the principal burden of defending the state 
 and extending the empire, demanded to be admitted to all the 
 privileges of Roman citizens. Upon being refused, the social war 
 broke out. During the course of that war, Rome granted those 
 privileges to the greater part of them, one by one, and in proportion 
 as they detached themselves from the general confederacy. The 
 Parliament of Great Britain insists upon taxing the colonies ; and 
 they refuse to be taxed by a Parliament in which they are not 
 represented. If to each colony, which should, detach itself from the 
 general confederacy, Great Britain should allow such a number of 
 representatives as suited the proportion of what it contributed to 
 the public revenue of the empire, in consequence of its being sub- 
 jected to the some taxes, and in compensation admitted to the same 
 freedom of trade with its fellow-subjects at home the number of 
 
 1 For the expansion of this reasoning Parliaments in matters of imperial policy, 
 as to the effect of subordinating colonial see Mr. Goldwin Smith's ' The Empire.'
 
 CHAP. vii. THE WEALTH OF NATIONS. 205 
 
 its representatives to be augmented as the proportion of its contri- 
 bution might afterwards augment a new method of acquiring 
 importance, a new and more dazzling object of ambition would be 
 presented to the leading men of each colony. Instead of piddling 
 for the little prizes which are to be found in what may be called 
 the paltry raffle of colony faction, they might then hope, from the 
 presumption which men naturally have in their own ability and 
 good fortune, to draw some of the great prizes which sometimes 
 come from the wheel of the great state lottery of British politics. 
 Unless this or some other method is fallen upon (and there seems 
 to be none more obvious than this), of preserving the importance 
 and of gratifying the ambition of the leading men of America, it is 
 not very probable that they will ever voluntarily submit to us ; and 
 we ought to consider that the blood which must be shed in forcing 
 them to do so, is, every drop of it, the blood either of those who 
 are, or of those whom we wish to have for our fellow-citizens. 
 They are very weak who flatter themselves that, in the state to 
 which things have come, our colonies will be easily conquered by 
 force alone. The persons who now govern the resolutions of what 
 they call their Continental Congress, feel in themselves at this 
 moment a degree of importance which, perhaps, the greatest 
 subjects in Europe scarce feel. From shopkeepers, tradesmen, and 
 attorneys, they are become statesmen and legislators, and are 
 employed in contriving a new form of government for an extensive 
 empire, which, they flatter themselves, will become, and which, 
 indeed, seems very likely to become, one of the greatest and 
 most formidable that ever was in the world. Five hundred 
 different people, perhaps, who in different ways act immediately 
 under the continental congress ; and five hundred thousand, 
 perhaps, who act under those five hundred, all feel in the same 
 manner a proportionable rise in their own importance. Almost 
 every individual of the governing party in America fills at present, 
 in his own fancy, a station superior, not only to what he had ever 
 filled before, but to what he had ever expected to fill ; and unless 
 some new object of ambition is presented either to him or to his 
 leaders, if he has the ordinary spirit of a man, he will die in defence 
 of that station. 
 
 It is a remark of the President Henaut l that we now read with 
 1 Hietoire de France, vol. i. p. 473. Edit. 1768.
 
 206 TEE NATURE AND CAUSES OF BOOK iv. 
 
 pleasure the account of many little transactions of the Ligue, which 
 when they happened were not perhaps considered as very important 
 pieces of news. But every man then, says he, fancied himself of 
 some importance ; and the innumerable memoirs which have come 
 down to us from those times, were, the greater part of them, written 
 by people who took pleasure in recording- and magnifying events 
 in which they flattered themselves they had been considerable 
 actors. How obstinately the city of Paris upon that occasion 
 defended itself, what a dreadful famine it supported rather than 
 submit to the best and afterwards the most beloved of all the 
 French kings, is well known. The greater part of the citizens, 
 or those who governed the greater part of them, fought in defence 
 of their own importance, which they foresaw was to be at an end 
 whenever the ancient government should be re-established. Our 
 colonies, unless they can be induced to consent to a union, are very 
 likely to defend themselves against the best of all mother countries, 
 as obstinately as the city of Paris did against one of the best of 
 kings. 
 
 The idea of representation was unknown in ancient times. When 
 the people of one state were admitted to the right of citizenship in 
 another, they had no other means of exercising that right but by 
 coming in a body to vote and deliberate with the people of that other 
 state. The admission of the greater part of the inhabitants of Italy 
 to the privileges of Roman citizens completely ruined the Roman 
 republic. It was no longer possible to distinguish between who 
 was and who was not a Roman citizen. No tribe could know its 
 own members. A rabble of any kind could be introduced into the 
 assemblies of the people, could drive out the real citizens, and 
 decide upon the affairs of the republic as if they themselves had been 
 such. But though America was to send fifty or sixty new repre- 
 sentatives to Parliament, the door-keeper of the House of Commons 
 could not find any great difficulty in distinguishing between who 
 was and who was not a member. Though the Roman constitution, 
 therefore, was necessarily ruined by the union of Rome with the 
 allied states of Italy, there is not the least probability that the 
 British constitution would be hurt by the union of Great Britain 
 with her colonies. That constitution, on the contrary, would be 
 completed by it; and seems to be imperfect without it. The 
 assembly which deliberates and decides concerning the affairs of
 
 CHAP. vii. THE WEALTH OF NATIONS. 207 
 
 every part of the empire, in order to be properly informed, ought 
 certainly to have representatives from every part of it. That this 
 union, however, could be easily effectuated, or that difficulties and 
 great difficulties might not occur in the execution, I do not pretend. 
 I have yet heard h of none, however^ which appear insurmountable. 
 The principal perhaps arise, not from the nature of things, but 
 from the prejudices and opinions of the people both on this and on 
 the other side of the Atlantic. 
 
 We, on this side the water, ace afraid lest the multitude of 
 American representatives should overturn the balance of the con- 
 stitution, and increase too much either the influence of the Crown 
 on the one hand, or the force of the democracy on the other. But 
 if the number of American representatives was to be in proportion 
 to the produce of American taxation, the number of people to be 
 managed would increase exactly in proportion to the means of 
 managing them; and the means of managing, to the number of 
 people to be managed. The monarchical and demoeratical parts of 
 the constitution would, after the union, stand exactly in the same 
 degree of relative force with regard to one another as they had done 
 before. 
 
 The people on the other side of the water are afraid lest their 
 distance from the seat of government might expose them to many 
 oppressions. But their representatives in Parliament, of which the 
 number ought from the first to be considerable, would easily be 
 able to protect them from all oppression. The distance could not 
 much weaken the dependency of the representative upon the con- 
 stituent, and the former would still feel that he owed his seat in 
 Parliament, and all the consequence which he derived from it, to 
 the good- will of the latter. It would be the interest of the former, 
 therefore, to cultivate that good-will by complaining, with all the 
 authority of a member of the Legislature, of every outrage which 
 any civil OP military officer might be guilty of in those remote 
 parts of the empire. The distance of America from the seat .of 
 government, besides, the natives of that country might flatter 
 themselves, with some appearance of reason too, would not be of 
 very long continuance. Such has hitherto been the rapid progress 
 of that country in wealth, population and improvement, that in the 
 course of little more than a century, perhaps, the produce of 
 American might exceed that of British taxation. The seat of the
 
 208 THE NATURE AND CAUSES OF BOOK rv. 
 
 empire would then naturally remove itself to that part of the empire 
 which contributed most to the general defence and support of the 
 whole. 
 
 The discovery of America, and that of a passage to the East 
 Indies by the Cape of Good Hope, are the two greatest and most 
 important events recorded in the history of mankind. Their con- 
 sequences have already been very great : but, in the short period 
 of between two and three centuries which has elapsed since these 
 discoveries were made, it is impossible that the whole extent of 
 their consequences can have been seen. What benefits or what 
 misfortunes to mankind may hereafter result from those great events, 
 no human wisdom can foresee. By uniting, in some measure, the 
 most distant parts of the world, by enabling them to relieve one 
 another's wants, to increase one another's enjoyments, and to 
 encourage one another's industry, their general tendency would 
 seem to be beneficial. To the natives, however, both of the East 
 and West Indies, all the commercial benefits which can have 
 resulted from those events have been sunk and lost in the dreadful 
 misfortunes which they have occasioned. These misfortunes, 
 however, seem to have arisen rather from accident than from any- 
 thing in the nature of those events themselves. At the particular 
 time when these discoveries were made, the superiority of force 
 happened to be so great on the side of the Europeans, that they 
 were enabled to commit with impunity every sort of injustice in 
 those remote countries. Hereafter, perhaps, the natives of those 
 countries may grow stronger, or those of Europe may grow weaker, 
 and the inhabitants of all the different quarters of the world may 
 arrive at that equality of courage and force which, by inspiring 
 mutual fear, can alone overawe the injustice of independent nations 
 into some sort of respect for the rights of one another. But 
 nothing seems more likely to establish this equality of force than 
 that mutual communication of knowledge and of all sorts of im- 
 provements which an extensive commerce from all countries to all 
 countries naturally, or rather necessarily, carries along with it. 
 
 In the meantime, one of the principal effects of those discoveries 
 has been to raise the merchant system to a degree of splendour 
 and glory which it could never otherwise have attained to. It is 
 the object of that system to enrich a great nation rather by trade 
 and manufactures than by the improvement and cultivation of
 
 CHAP. vn. THE WEALTH OF NATIONS. 20$ 
 
 land, rather by the industry of the towns than by that of the 
 country. But, in "consequence of those discoveries, the commercial 
 towns of Europe, instead of being the manufacturers and carriers 
 for but a very small part of the world (that part of Europe which 
 is washed by the Atlantic Ocean, and the countries which lie round 
 the Baltic and Mediterranean Seas), have now become the manu- 
 facturers for the numerous and thriving cultivators of America, 
 and the carriers, and in some respects the manufacturers too, 
 for almost all the different nations of Asia, Africa, and America. 
 Two new worlds have been opened to their industry, each of 
 them much greater and more extensive than the old one, and the 
 market of one of them is growing still greater and greater every 
 day. 1 
 
 The countries which possess the colonies of America, and which 
 trade directly to the East Indies, enjoy, indeed, the whole show 
 and splendour of this great commerce. Other countries, however, 
 notwithstanding all the invidious restraints by which it is meant 
 to exclude them, frequently enjoy a greater share of the real benefit 
 of it. The colonies of Spain and Portugal, for example, give more 
 real encouragement to the industry of other countries than to that 
 of Spain and Portugal. In the single article of linen alone the 
 consumption of those colonies amounts, it is said, but I do not 
 pretend to warrant the quantity, to more than three millions 
 sterling a year. But this great consumption is almost entirely 
 supplied by France, Flanders, Holland, and Germany. Spain and 
 Portugal furnish but a small part of it. The capital which sup- 
 plies the colonies with this great quantity of linen is annually 
 distributed among and furnishes a revenue to the inhabitants of 
 those other countries. The profits of it only are spent in Spain 
 and Portugal, where they help to support the sumptuous profusion 
 of the merchants of Cadiz and Lisbon. 
 
 1 The prominence which Europe, and the southern hemisphere. Great Britain 
 especially Great Britain, has in the mar- itself has, in the vicinity of this groat 
 kets of the world, though it has been area of inhabited land, a nearer coin- 
 supported by long occupation, is really munication with all parts of the civilised 
 due to physical causes. The great mass world, or, indeed, of that which would 
 of dry land is in the northern hemisphere be civilised, than any other place. There 
 and in Europe. The climate of this are other circumstances, too, equally na- 
 region, owing also to natural causes, is tural which aid the position which this 
 milder and more equable than that of country occupies. 
 
 VOL. II. P
 
 210 THE NATURE AND CAUSES OF BOOK iv. 
 
 Even the regulations by which each nation endeavours to secure 
 to itself the exclusive trade of its own colonies, are frequently more 
 hurtful to the countries in favour of which they are established than 
 to those against which they are established. The unjust oppression 
 of the industry of other countries falls back, if I may say so, upon 
 the heads of the oppressors, and crushes their industry more than 
 it does that of those other countries. By those regulations, for 
 example, the merchant of Hamburg must send the linen which 
 he destines for the American market to London, and he must 
 bring back from thence the tobacco which he destines for the 
 German market ; because he can neither send the one directly to 
 America, nor bring back the other directly from thence. By this 
 restraint he is probably obliged to sell the one somewhat cheaper, 
 and to buy the other somewhat dearer than he otherwise might 
 have done; and his profits are probably somewhat abridged by 
 means of it. In this trade, however, between Hamburg and 
 London, he certainly receives the returns of his capital much 
 more quickly than he could possibly have done in the direct trade 
 to America, even though we should suppose, what is by no means 
 the case, that the payments of America were as punctual as those 
 of London. In the trade, therefore, to which those regulations 
 confine the merchant of Hamburg, his capital can keep in constant 
 employment a much greater quantity of German industry than it 
 possibly could have done in the trade from which he is excluded. 
 Though the one employment, therefore, may to him perhaps be 
 less profitable than the other, it cannot be less advantageous to 
 his country. It is quite otherwise with the employment into 
 which the monopoly naturally attracts, if I may say so, the capital 
 of the London merchant. That employment may, perhaps, be 
 more profitable to him than the greater part of other employments, 
 but, on account of the slowness of the returns, it cannot be more 
 advantageous to his country. 
 
 After all the unjust attempts, therefore, of every country in 
 Europe to engross to itself the whole advantage of the trade of 
 its own colonies, no country has yet been able to engross to itself 
 anything but the expense of supporting in time of peace and of 
 defending in time of war the oppressive authority which it assumes 
 over them. The inconveniences resulting from the possession of
 
 CHAP. vir. THE WEALTH OF NATIONS. 211 
 
 its colonies, every country has engrossed to itself completely. The 
 advantages resulting from their trade it has been obliged to share 
 with many other countries. 1 
 
 At first sight, no doubt, the monopoly of the great commerce 
 of America naturally seems to be an acquisition of the highest 
 value. To the undiscerning eye of giddy ambition, it naturally 
 presents itself amidst the confused scramble of politics and war 
 as a very dazzling object to fight for. The dazzling splendour of 
 the object, however, the immense greatness of the commerce, is 
 the very quality which renders the monopoly of it hurtful, or which 
 makes one employment, in its own nature necessarily less advan- 
 tageous to the country than the greater part of other employments, 
 absorb a much greater proportion of the capital of the country 
 than what would otherwise have gone to it. 
 
 The mercantile stock of every country, it has been shown in 
 the Second Book, 2 naturally seeks, if one may say so, the employ- 
 ment most advantageous to that country. If it is employed in 
 the carrying trade, the country to which it belongs becomes the 
 emporium of the goods of all the countries whose trade that stock 
 carries on. But the owner of that stock necessarily wishes to 
 dispose of as great a part of those goods as he can at home. He 
 thereby saves himself the trouble, risk, and expense of exporta- 
 tion, and he will upon that account be glad to sell them at home, 
 not only for a much smaller price, but with somewhat a smaller 
 profit than he might expect to make by sending them abroad. 
 He naturally, therefore, endeavours as much as he can to turn his 
 carrying trade into a foreign trade of consumption. If his stock 
 again is employed in a foreign trade of consumption, he will, for 
 the same reason, be glad to dispose of at home as great a part 
 as he can of the home goods, which he collects in order to export 
 to some foreign market, and he will thus endeavour, as much as 
 he can, to turn his foreign trade of consumption into a home trade. 
 The mercantile stock of every country naturally courts in this 
 manner the near, and shuns the distant employment; naturally 
 courts the employment in which the returns are frequent, and 
 shuns that in which they are distant and slow; naturally courts 
 
 1 For the loss which the obligations of mother country, see as before, Mr. Gold- 
 government and defence bring on the win Smith's 'The Empire.' 2 ch. v. 
 
 P 2,
 
 212 THE NATURE AND CAUSES OF BOOK iv. 
 
 the employment in which it can maintain the greatest quantity 
 of productive labour in the country to which it belongs, or in. 
 which its owner resides, and shuns that in which it can main- 
 tain there the smallest quantity. It naturally courts the em- 
 ployment which in ordinary cases is most advantageous, and 
 shuns that which in ordinary cases is least advantageous to that 
 country. 
 
 But if in any of those distant employments, which in ordinary 
 cases are less advantageous to the country, the profit should happen 
 to rise somewhat higher than what is sufficient to balance the 
 natural preference which is given to nearer employments, this 
 superiority of profit will draw stock from those nearer employ- 
 ments, till the profits of all return to their proper level. This 
 superiority of profit, however, is a proof that in the actual cir- 
 cumstances of the society, those distant employments are somewhat 
 understocked in proportion to other employments, and that the 
 stock of the society is not distributed in the properest manner 
 among all the different employments carried on in it. It is a 
 proof that something is either bought cheaper or sold dearer than 
 it ought to be, and that some particular class of citizens is more 
 or less oppressed either by paying more or by getting less than 
 what is suitable to that equality, which ought to take place, and 
 which naturally does take place, among all the different classes 
 of them. Though the same capital never will maintain the same 
 quantity of productive labour in a distant as in a near employ- 
 ment, yet a distant employment may be as necessary for the 
 welfare of the society as a near one ; the goods which the distant 
 employment deals in being necessary, perhaps, for carrying on 
 many of the nearer employments. But if the profits of those 
 who deal in such goods are above their proper level, those 
 goods will be sold dearer than they ought to be, or somewhat 
 above their natural price, and all those engaged in the nearer 
 employments will be more or less oppressed by this high price. 
 Their interest, therefore, in this case requires that some stock 
 should be withdrawn from those nearer employments, and turned 
 towards that distant one, in order to reduce its profits to their 
 proper level, and the price of the goods which it deals in to their 
 natural price. In this extraordinary case/ the public interest re- 
 quires that some stock should be withdrawn from those employ-
 
 CHAP. vii. THE WEALTH OF NATIONS. 213 
 
 ments which in ordinary cases are more advantageous, and turned 
 towards one which in ordinary cases is less advantageous to 
 the public; and in this extraordinary case, the natural interests 
 and inclinations of men coincide as exactly with the public in- 
 terest as in all other ordinary cases, and lead them to with- 
 draw stock from the near, and to turn it towards the distant 
 employment. 
 
 It is thus that the private interests and passions of individuals 
 naturally dispose them to turn their stock towards the employ- 
 ments which in ordinary cases are most advantageous to the 
 society. But if from this natural preference they should turn too 
 much of it towards those employments, the fall of profit in them 
 and the rise of it in all others immediately dispose them to alter 
 this faulty distribution.. Without any intervention of law, there- 
 fore, the private interests and passions of men naturally lead them 
 to divide and distribute the stock of every society, among all the 
 different employments carried on in it, as nearly as possible in 
 the proportion which is most agreeable to the interest of the whole 
 society. 
 
 All the different regulations of the mercantile system necessarily 
 derange more or less this natural and most advantageous distri- 
 bution of stock. But those which concern the trade to America 
 and the East Indies derange it, perhaps, more than any other ; 
 because the trade to those two great continents absorbs a greater 
 quantity of stock than any two other branches of trade. The 
 regulations, however, by which this derangement is effected in 
 those two different branches of trade are not altogether the same. 
 Monopoly is the great engine of both ; but it is a different sort 
 of monopoly. Monopoly of one kind or another, indeed, seems 
 to be the sole engine of the mercantile system. 
 
 In the trade to America, every nation endeavours to engross as 
 much as possible the whole market of its own colonies, by fairly 
 excluding all other nations from any direct trade to them. During 
 the greater part of the sixteenth century, the Portuguese endea- 
 voured to manage the trade to the East Indies in the same manner, 
 by claiming the sole right of sailing in the Indian seas, on account 
 of the merit of having first found out the road to them. The Dutch 
 still continue to exclude all other European nations from any direct 
 trade to their spice islands. Monopolies of this kind are evidently
 
 214 THE NATURE AND CAUSES OF BOOK IT. 
 
 established against all other European nations, who are thereby not 
 only excluded from a trade to which it might be convenient for 
 them to turn some part of their stock, but are obliged to buy the 
 goods which that trade deals in somewhat dearer, than if they could 
 import them themselves directly from the countries which produce 
 them. 
 
 But since the fall of the power of Portugal, no European nation 
 has claimed the exclusive right of sailing in the Indian seas, of 
 which the principal ports are now open to the ships of all European 
 nations. Except in Portugal, however, and within these few years 
 in France, the trade to the East Indies has in every European 
 country been subjected to an exclusive company, Monopolies of 
 this kind are properly established against the very nation which 
 erects them. The greater part of that nation are thereby not only 
 excluded from a trade to which it might be convenient for them to 
 turn some part of their stock, but are obliged to buy the goods 
 which that trade deals in, somewhat dearer than if it was open and 
 free to all their countrymen. Since the establishment of the English 
 East India Company, for example, the other inhabitants of England, 
 over and above being excluded from the trade, must have paid in 
 the price of the East India goods which they have consumed, not 
 only for all the extraordinary profits which the Company may have 
 made upon those goods in consequence of their monopoly, but for 
 all the extraordinary waste which the fraud and abuse, inseparable 
 from the management of the affairs of so great a Company, must 
 necessarily have occasioned. The absurdity of this second kind 
 of monopoly, therefore, is much more manifest than that of the 
 first. 1 
 
 Both these kinds of monopolies derange more or less the natural 
 distribution of the stock of the society; but they do not always 
 derange it in the same way. 
 
 Monopolies of the first kind always attract to the particular 
 
 1 No better proof can be found of the sustained under the system, partly in 
 
 truth which the text inculcates, than the the price of the produce, partly in the 
 
 great fall in the price of Eastern pro- discouragement which the exclusive trade 
 
 duce, of freights to and from the regions in question put upon home industry. It 
 
 formerly occupied by the great Company's is no small evidence of Adam Smith's 
 
 monopoly, and the shortening of the time sagacity, that he exposed so early and so 
 
 consumed in voyages, since that monopoly fufly the mischievous character of this 
 
 has been broken up. Tt is impossible to privilege of sole trade conferred on a 
 
 estimate the lose which this country joint-stock company.
 
 CHAP. vii. THE WEALTH OF NATIONS. 215 
 
 trade in which they are established a greater proportion of the 
 stock of the society than what would go to that trade of its own 
 accord. 
 
 Monopolies of the second kind may sometimes attract stock 
 towards the particular trade in which they are established, and 
 sometimes repel it from that trade according to different circum- 
 stances. In poor countries, they naturally attract towards that 
 trade more stock than would otherwise go to it. In rich countries, 
 they naturally repel from it a good deal of stock which would 
 otherwise go to it. 
 
 Such poor countries as Sweden and Denmark, for example, would 
 probably have never sent a single ship to the East Indies, had not 
 the trade been subjected to an exclusive company. The establish- 
 ment of such a company necessarily encourages adventurers. Their 
 monopoly secures them against all competitors in the home market, 
 and they have the same chance for foreign markets with the traders 
 of other nations. Their monopoly shows them the certainty of a 
 great profit upon a considerable quantity of goods, and the chance 
 of a considerable profit upon a great quantity. 1 Without such ex- 
 traordinary encouragement, the poor traders of such poor countries 
 would probably never have thought of hazarding their small capitals 
 in so very distant and uncertain an adventure as the trade to the 
 East Indies must naturally have appeared to them. 
 
 Such a rich country as Holland, on the contrary, would probably, 
 in the case of a free trade, send many more ships to the East Indies 
 than it actually does. The limited stock of the Dutch East India 
 Company probably repels from that trade many great mercantile 
 capitals which would otherwise go to it. The mercantile capital of 
 Holland is so great that it is, as it were, continually overflowing, 
 sometimes into the public funds of foreign countries, sometimes into 
 loans to private traders and adventurers of foreign countries, some- 
 times into the most round-about foreign trades of consumption, and 
 sometimes into the carrying trade. All near employments being 
 completely filled up, all the capital which can be placed in them 
 
 1 It may be doubted whether this trade monopoly with the East, enjoyed 
 ' chance of a considerable profit ' did not by any company, has ever satisfied those 
 lower the real profit attained, in just the who have obtained it, but that all these 
 same way that the value of every chance companies, though they may have some- 
 is over-estimated by those who are led by times succeeded as conquerors, have iu- 
 it. At any rate, it is certain that no variably failed as traders.
 
 216 THE NATURE AND CAUSES OF BOOK iv. 
 
 with any tolerable profit being already placed in them, the capital 
 of Holland necessarily flows towards the most distant employments. 1 
 The trade to the East Indies, if it was altogether free, would pro- 
 bably absorb the greater part of this redundant capital. The East 
 Indies offer a market both for the manufacturers of Europe and for 
 the gold and silver as well as for several other productions of 
 America, greater and more extensive than both Europe and America 
 put together. 
 
 Every derangement of the natural distribution of stock is 
 necessarily hurtful to the society in which it takes place ; whether 
 it be by repelling from a particular trade the stock which would 
 otherwise go to it, or by attracting towards a particular trade that 
 which would not otherwise come to it. If, without any exclusive 
 company, the trade of Holland to the East Indies would be greater 
 than it actually is, that country must suffer a considerable loss by 
 part of its capital being excluded from the employment most con- 
 venient for that part. And in the same manner, if, without an 
 exclusive company, the trade of Sweden and Denmark to the East 
 Indies would be less than it actually is, or, what perhaps is more 
 probable, would not exist at all, those two countries must likewise 
 suffer a considerable loss by part of their capital being drawn into 
 an employment which must be more or less unsuitable to their 
 present circumstances. Better for them, perhaps, in their present 
 circumstances, to buy East India goods of other nations, even 
 though they should pay somewhat dearer, than to turn so great a 
 part of their small capital to so very distant a trade, in which the 
 returns are so very slow, in which that capital can maintain so 
 small a quantity of productive labour at home, where productive 
 labour is so much wanted, where so little is done, and where so 
 much is to do. 
 
 Though without an exclusive company, therefore, a particular 
 country should not be able to carry on any direct trade to the East 
 Indies, it will not from thence follow that such a company ought to 
 
 1 This passage contains the germ of the ment of other capital in foreign advances, 
 theory subsequently developed by Mr. In point of fact, the emigration of super- 
 Mill, as to the tendency of profits to a fluous capital is as advantageous as the 
 minimum, and the necessity that there emigration of superfluous labour. The 
 exists, under such circumstances, that misfortune ia, that there, is no harmony 
 fre.sh channels should ba dug for capital in their respective movements, but that 
 at home, by the discovery of improve- the emigration of men is wasteful, and 
 menta in production, and iu the employ- that of capital inconsiderate or timid.
 
 CHAP. vii. THE WEALTH OF NATIONS. 217 
 
 be established there, but only that such a country ought not in 
 these circumstances to trade directly to the East Indies. That such 
 companies are not in general necessary for carrying on the East 
 India trade, is sufficiently demonstrated by the experience of the 
 Portuguese, who enjoyed almost the whole of it for more than a 
 century together without any exclusive company. 
 
 No private merchant, it has been said, could well have capital 
 sufficient to maintain factors and agents in the different ports of the 
 East Indies, in order to provide goods for the ships which he might 
 occasionally send thither ; and yet, unless he was able to do this, 
 the difficulty of finding a cargo might frequently make his ships 
 lose the season for returning, and the expense of so long a delay 
 would not only eat up the whole profit of the adventure, but fre- 
 quently occasion a very considerable loss. This argument, however, 
 if it proved anything at all, would prove that no one great branch 
 of trade could be carried on without an exclusive company, which is 
 contrary to the experience of all nations. There is no great branch 
 of trade in which the capital of any one private merchant is suffi- 
 cient for carrying on all the subordinate branches which must be 
 carried on in order to carry on the principal one. But when a 
 nation is ripe for any great branch of trade, some merchants na- 
 turally turn their capitals towards the principal, and some towards 
 the subordinate branches of it ; and though all the different branches 
 of it are in this manner carried on, yet it very seldom happens that 
 they are all carried on by the capital of one private merchant. If a 
 nation, therefore, is ripe for the East India trade, a certain portion 
 of its capital will naturally divide itself among all the different 
 branches of that trade. Some of its merchants will find it for their 
 interest to reside in the East Indies, and to employ their capitals 
 there in providing goods for the ships which are to be sent out by 
 other merchants who reside in Europe. The settlements which 
 different European nations have obtained in the East Indies, if they 
 were taken from the exclusive companies to which they at present 
 belong and put under the immediate protection of the sovereign, 
 would render this residence both safe and easy, at least to the mer- 
 chants of the particular nations to whom those settlements belong. 
 If at any particular time that part of the capital of any country 
 which of its own accord tended and inclined, if I may say so, 
 towards the East India trade, was not sufficient for carrying on
 
 218 THE NATURE AND CAUSES OF BOOK rv. 
 
 all those different branches of it, it would be a proof that, at that 
 particular time, that country was not ripe for that trade, and that 
 it would do better to buy for some time, even at a higher price, 
 from other European nations, the East India goods it had occasion 
 for, than to import them itself directly from the East Indies. What 
 it might lose by the high price of those goods could seldom be 
 equal to the loss which it would sustain by the distraction of a 
 large portion of its capital from other employments more necessary, 
 or more useful, or more suitable to its circumstances and situation, 
 than a direct trade to the East Indies. 
 
 Though the Europeans possess many considerable settlements 
 both upon the coast of Africa and in the East Indies, they have 
 not yet established in either of those countries such numerous and 
 thriving colonies as those in the islands and continent of America. 
 Africa, however, as well as several of the countries comprehended 
 under the general name of the East Indies, are inhabited by bar- 
 barous nations. -But those nations were by no means so weak and 
 defenceless as the miserable and helpless Americans ; and in pro- 
 portion to the natural fertility of the countries which they in- 
 habited, they were besides much more populous. The most 
 barbarous nations either of Africa or of the East Indies were 
 shepherds ; even the Hottentots were so. But the natives of every 
 part of America, except Mexico and Peru, were only hunters; and 
 the difference is very great between the number of shepherds and 
 that of hunters whom the same extent of equally fertile territory 
 -can maintain. In Africa and the East Indies, therefore, it was more 
 difficult to displace the natives, and to extend the European planta- 
 tions over the greater part of the lands of the original inhabitants. 
 The genius of exclusive companies, besides, is unfavourable, it has 
 already been observed, to the growth of new colonies, and has pro- 
 bably been the principal cause of the little progress which they 
 have made in the East Indies. The Portuguese carried on the 
 trade both to Africa and the East Indies without any exclusive 
 companies, and their settlements at Congo, Angola, and Benguela 
 on the coast of Africa, and at Goa in the East Indies, though much 
 depressed by superstition and every sort of bad government, yet 
 bear some faint resemblance to the colonies of America, and are 
 partly inhabited by Portuguese who have been established there for 
 several generations. The Dutch settlements at the Cape of Good
 
 CHAP. VH. THE WEALTH OF NATIONS. 219 
 
 Hope and at Batavia are at present the most considerable colonies 
 which the Europeans have established either in Africa or in the 
 East Indies, and both these settlements are peculiarly fortunate in 
 their situation. The Cape of Good Hope was inhabited by a race 
 of people almost as barbarous and quite as incapable of defending 
 themselves as the natives of America. It is besides the half-way 
 house, if one may say so, between Europe and the East Indies, at 
 which almost every European ship makes some stay both in going 
 and returning. The supplying of those ships with every sort of 
 fresh provisions, with fruit and sometimes with wine, affords alone 
 a very extensive market for the surplus produce of the colonists. 
 What the Cape of Good Hope is between Europe and every part of 
 the East Indies, Batavia is between the principal countries of the 
 East Indies. It lies upon the most frequented road from Hindostan 
 to China and Japan, and is nearly about midway upon that road. 
 Almost all the ships too that sail between Europe and China touch 
 at Batavia ; and it is, over and above all this, the centre and prin- 
 cipal mart of what is called the country trade of the East Indies ; 
 not only of that part of it which is carried on by Europeans, but of 
 that which is carried on by the native Indians ; and vessels navi- 
 gated by the inhabitants of China and Japan, of Tonquin, Malacca, 
 Cochin-China, and the Island of Celebes, are frequently to be seen 
 in its port. Such advantageous situations have enabled those two 
 colonies to surmount all the obstacles which the oppressive genius 
 of an exclusive company may have occasionally opposed to their 
 growth. They have enabled Batavia to surmount the additional 
 disadvantage of perhaps the most unwholesome climate in the 
 world. 
 
 The English and Dutch companies, though they have established 
 no considerable colonies, except the two above mentioned, have both 
 made considerable conquests in the East Indies. But in the manner 
 in which they both govern their new subjects, the natural genius 
 of an exclusive company has shown itself most distinctly. In the 
 spice islands, the Dutch are said to burn all the spiceries which a 
 fertile season produces beyond what they expect to dispose of in 
 Europe with such a profit as they think sufficient. In the islands 
 where they have no settlements, they give a premium to those who 
 collect the young blossoms and green leaves of the clove and nut- 
 meg trees which naturally grow there, but which this savage policy
 
 220 THE NATURE AND CAUSES OF BOOK IT. 
 
 has now, it is said, almost completely extirpated. Even in the islands 
 where they have settlements they have very much reduced, it is 
 said, the number of those trees. If the produce even of their own 
 islands was mtich greater than what suited their market, the 
 natives, they suspect, might find means to convey some part of 
 it to other nations ; and the best way, they imagine, to secure 
 their own monopoly, is to take care that no more shall grow than 
 what they themselves carry to market. By different arts of 
 oppression they have reduced the population of several of the 
 Moluccas nearly to the number which is sufficient to supply with 
 fresh provisions and other necessaries of life their own insignificant 
 garrisons, and such of their ships as occasionally come there for 
 a cargo of spices. Under the government even of the Portuguese, 
 however, those islands are said to have been tolerably well inhabited. 
 The English company have not yet had time to establish in Bengal 
 so perfectly destructive a system. The plan of their government, 
 however, has had exactly the same tendency. It has not been 
 uncommon, I am well assured, for the chief, that is, the first clerk 
 of a factory, to order a peasant to plough up a rich field of poppies, 
 and sow it with rice or some other grain. The pretence was, to 
 prevent a scarcity of provisions ; but the real reason, to give the 
 chief an opportunity of selling at a better price a large quantity of 
 opium, which he happened then to have upon hand. Upon other 
 occasions the order has been reversed, and a rich field of rice or 
 other grain has been ploughed up, in order to make room for a 
 plantation of poppies ; when the chief foresaw that extraordinary 
 profit was likely to be made by opium. The servants of the 
 company have upon several occasions attempted to establish in their 
 own favour the monopoly of some of the most important branches, 
 not only of the foreign, but of the inland trade of the country. 
 Had they been allowed to go on, it is impossible that they should 
 not at some time or another have attempted to restrain the pro- 
 duction of the particular articles of which they had thus usurped 
 the monopoly, not only to the quantity which they themselves 
 could purchase, but to that which they could expect to sell with 
 such a profit as they might think sufficient. In the course of a 
 century or two, the policy of the English company would in this 
 manner have probably proved as completely destructive as that of 
 the Dutch.
 
 CHAP. vii. THE WEALTH OF NATIONS. 221 
 
 Nothing, however, can be more directly contrary to the real 
 interest of those companies, considered as the sovereigns of the 
 countries which they have conquered, than this destructive plan. 
 In almost all countries the revenue of the sovereign is drawn from 
 that of the people. The greater the revenue of the people, there- 
 fore, the greater the annual produce of their land and labour, the 
 more they can afford to the sovereign. 1 It is his interest, therefore, 
 to increase as much as possible that annual produce. But if this 
 is the interest of eveiy sovereign, it is peculiarly so of one whose 
 revenue, like that of the sovereign of Bengal, arises chiefly from 
 a land-rent. That rent must necessarily be in proportion to the 
 quantity and value of the produce, and both the one and the other 
 must depend upon the extent of the market. The quantity will 
 always be suited with more or less exactness to the consumption of 
 those who can aford to pay for it, and the price which they will 
 pay will always be in proportion to the eagerness of their com- 
 petition. It is the interest of such a sovereign, therefore, to open 
 the most extensive market for the produce of his country, to allow 
 the most perfect freedom of commerce, in order to increase as much 
 as possible the number and the competition of buyers ; and upon 
 this account to abolish, not only all monopolies, but all restraints 
 upon the transportation of the home produce from one part of the 
 country to another, upon its exportation to foreign countries, or 
 upon the importation of goods of any kind for which it can be 
 exchanged. He is in this manner most likely to increase both the 
 quantity and value of that produce, and consequently of his own 
 share of it, or of his own revenue. 
 
 But a company of merchants are, it seems, incapable of con- 
 sidering themselves as sovereigns, even after they have become such. 
 Trade, or buying in order to sell again, they still consider as their 
 principal business, and, by a strange absurdity, regard the character 
 of the sovereign as but an appendix to that of the merchant, as 
 something which ought to be made subservient to it, or by means 
 
 1 This is not only the fact, but it is the mass of the community. But this re- 
 
 also true, that the revenue of the sove- suit is best obtained by freedom of trade, 
 
 reign can be derived only from that with what freedom of trade implies a 
 
 excess of income over expenditure which cheapening of articles to the lowest 
 
 can be devoted to saving. It is therefore possible amount which production can 
 
 the first interest of a government, in so effect and the competition of merchants 
 
 far as it requires a revenue, to facilitate can assure. All limitations on trade 
 
 the power of purchase which wages give imply artificial dearness.
 
 222 THE NATURE AND CAUSES OF BOOK iv. 
 
 of which they may be enabled to buy cheaper in India, and thereby 
 to sell with a better profit in Europe. They endeavour for this 
 purpose to keep out as much as possible all competitors from the 
 market of the countries which are subject to their government, and 
 consequently to reduce, at least, some part of the surplus produce 
 of those countries to what is barely sufficient for supplying their 
 own demand, or to what they can expect to sell in Europe with 
 such a profit as they may think reasonable. Their mercantile 
 habits draw them in this manner, almost necessarily, though 
 perhaps insensibly, to prefer upon all ordinary occasions the little 
 and transitory profit of the monopolist to the great aud permanent 
 revenue of the sovereign, and would gradually lead them to treat 
 the countries subject to their government nearly as the Dutch treat 
 the Moluccas. It is the interest of the East India Company, con- 
 sidered as sovereigns, that the European goods which are carried to 
 their Indian dominions should be sold there as cheap as possible ; 
 and that the Indian goods which are brought from thence should 
 bring there as good a price, or should be sold there as dear as 
 possible. But the reverse of this is their interest as merchants. 
 As sovereigns, their interest is exactly the same with that of the 
 country which they govern. As merchants, their interest is directly 
 opposite to that interest. 1 
 
 But if the genius of such a government, even as to what concerns 
 its direction in Europe, is in this manner essentially and perhaps 
 incurably faulty, that of its administration in India is still more so. 
 That administration is necessarily composed of a council of mer- 
 chants, a profession no doubt extremely respectable, but which in 
 no country in the world carries along with it that sort of authority 
 which naturally overawes the people, and without force commands 
 their willing obedience. Such a council can command obedience 
 only by the military force with which they are accompanied, and 
 their government is therefore necessarily military and despotical. 
 
 1 Only opposed from a short-sighted rate of profit on certain transactions by 
 
 view of what constitutes mercantile in- artificially inflating prices. But they 
 
 terest. The interest of merchants con- forgot or did not see, that while they 
 
 gists quite as much in multiplying their got one customer at a good or high price, 
 
 customers, in extending the area of the same price lost them a hundred 
 
 demand and supply, as that of govern- others, whose contributions would have 
 
 ments can do. The Company in Smith's been, in the aggregate, vastly more valu- 
 
 t in ie fell into the error which was common able than a higli profit on a solitary 
 
 to administrations and traders, that of case, 
 attempting to secure artificially a high
 
 CHAP. vii. THE WEALTH OF NATIONS. 223 
 
 Their proper business, however, is that of merchants. It is to sell, 
 upon their master's account, the European goods consigned to them, 
 and to buy in return Indian goods for the European market. It is 
 to sell the one as dear and to buy the other as cheap as possible, 
 and consequently to exclude as much as possible all rivals from the 
 particular market where they keep their shop. The genius of the 
 administration, therefore, so far as concerns the trade of the com- 
 pany, is the same as that of the direction. It tends to make 
 government subservient to the interest of monopoly, and conse- 
 quently to stunt the natural growth of some parts at least of the 
 surplus produce of the country to what is barely sufficient for 
 answering the demand of the company. 
 
 All the members of the administration, besides, trade more or- 
 less upon their own account, and it is in vain to prohibit them 
 from doing so. Nothing can be more completely foolish than to 
 expect that the clerks of a great counting-house at ten thousand 
 miles distance, and consequently almost quite out of sight, should, 
 upon a simple order from their masters, give up at once doing any 
 sort of business upon their own account, abandon for ever all hopes 
 of making a fortune, of which they have the means in their hands, 
 and content themselves with the moderate salaries which those 
 masters allow them, and which, moderate as they are, can seldom 
 be augmented, being commonly as large as the real profits of the 
 company trade can afford. In such circumstances, to prohibit the 
 servants of the company from trading upon their own account can 
 have scarce any other effect than to enable the superior servants, 
 under pretence of executing their masters' orders, to oppress such of 
 the inferior ones as have had the misfortune to fall under their 
 displeasure. The servants naturally endeavour to establish the same 
 monopoly in favour of their own private trade as of the public trade 
 of the company. If they are suffered to act as they could wish, 
 they will establish this monopoly openly and directly, by fairly 
 prohibiting all other people from trading in the articles in which 
 they choose to deal ; and this, perhaps, is the best and least 
 oppressive way of establishing it. But if, by an order from 
 Europe, they are prohibited from doing this, they will, notwith- 
 standing, endeavour to establish a monopoly of the same kind, 
 secretly and indirectly, in a way that is much more destructive to 
 the country. They will employ the whole authority of government,
 
 224 THE NATURE AND CAUSES OF BOOK iv, 
 
 and pervert the administration of justice, in order to harass and 
 ruin those who interfere with them in any branch of commerce 
 which, by means of agents, either concealed, or at least not 
 publicly avowed, they may choose to carry on. 1 Bat the private 
 trade of the servants will naturally extend to a much greater 
 variety of articles than the public trade of the company. The 
 public trade of the company extends no farther than the 
 trade with Europe, and comprehends a part only of the foreign 
 trade of the country; but the private trade of the servants may 
 extend to all the different branches both of its inland and 
 foreign trade. The monopoly of the company can tend only to 
 stunt the natural growth of that part of the surplus produce which, 
 in the case of a free trade, would be exported to Europe. That of 
 the servants tends to stunt the natural growth of every part of the 
 produce in which they choose to deal, of what is destined for home 
 consumption, as well as of what is destined for exportation ; and 
 consequently to degrade the cultivation of the whole country, and 
 to reduce the number of its inhabitants. It tends to reduce the 
 quantity of every sort of produce, even that of the necessaries of 
 life, whenever the servants of the company choose to deal in them, 
 to what those servants can both afford to buy and expect to sell 
 with such a profit as pleases them. 
 
 From the nature of their situation too the servants must be more 
 disposed to support with rigorous severity their own interest against 
 that of the country which they govern, than their masters can be 
 to support theirs. The country belongs to their masters, who 
 cannot avoid having some regard for the interest of what belongs 
 to them. But it does not belong to the servants. The real interest 
 of their masters, if they were capable of understanding it, is the 
 same with that of the country,* and it is from ignorance chiefly, 
 and the meanness of mercantile prejudice, that they ever oppress it. 
 But the real interest of the servants is by no means the same with 
 that of the country, and the most perfect information would not ne- 
 cessarily put an end to their oppressions. The regulations accord- 
 ingly which have been sent out from Europe, though they have 
 been frequently weak, have upon most occasions been well-meaning. 
 
 1 See on this subject Macaulay's Life same with that of the country, in the 
 
 of Lord Clyde. government of which his vote gives him 
 
 * The interest of every proprietor of some influence. See Book V. chap. i. 
 
 India Stock, however, is by no means the part Hi.
 
 CHAP. vii. THE WEALTH OF NATIONS. 225 
 
 More intelligence and perhaps less good-meaning has sometimes 
 appeared in those established by the servants in India. It is a very 
 singular government in which every member of the administration 
 wishes to get out of the country, and consequently to have done 
 with the government, as soon as he can, and to whose interest, the 
 day after he has left it and carried his whole fortune with him, 
 it is perfectly indifferent though the whole country was swallowed 
 up by an earthquake. 
 
 I mean not, however, by anything which I have here said, to 
 throw any odious imputation upon the general character of the 
 servants of the East India Company, and much less upon that of 
 any particular persons. It is the system of government, the situa- 
 tion in which they are placed, that I mean to censure; not the 
 character of those who have acted in it. They acted as their situa- 
 tion naturally directed, and they who have clamoured the loudest 
 against them would, probably, not have acted better themselves. 
 In war and negotiation, the Councils of Madras and Calcutta have 
 upon several occasions conducted themselves with a resolution and 
 decisive wisdom which would have done honour to the senate of 
 Rome in the best days of that republic. The members of those 
 Councils, however, had been bred to professions very different from 
 war and politics. But their situation alone, without education, 
 experience, or even example, seems to have formed in them all 
 at once the great qualities which it required, and to have inspired 
 them both with abilities and virtues which they themselves could 
 not well know that they, possessed. If upon some occasions, there- 
 fore, it has animated them to actions of magnanimity which could 
 not well have been expected from them, we should not wonder if 
 upon others it has prompted them to exploits of somewhat a 
 different nature. 1 
 
 Such exclusive companies, therefore, are nuisances in every re- 
 spect ; always more or less inconvenient to the countries in which 
 they are established, and destructive to those which have the mis- 
 fortune to fall under their government. 
 
 1 It is plain that in this passage Smith which that extraordinary genius created 
 must have had the career of Clive before the British Empire in India, 
 his mind, and the circumstances under 
 
 VOL. II.
 
 226 THE NATURE AND CAUSES OF BOOK iv. 
 
 CHAPTER Vin. 
 
 CONCLUSION OP THE MERCANTILE SYSTEM. 
 
 the encouragement of exportation and the dis- 
 JL couragement of importation are the two great engines by 
 which the mercantile system proposes to enrich every country, 
 yet, with regard to some particular commodities, it seems to follow 
 an opposite plan : to discourage exportation and to encourage im- 
 portation. Its ultimate object, however, it pretends, is always the 
 same to enrich the country by an advantageous balance of trade. 
 It discourages the exportation of the materials of manufacture, and 
 of the instruments of trade, in order to give our own workmen an 
 advantage, and to enable them to undersell those of other nations 
 in all foreign markets; and by restraining, in this manner, the 
 exportation of a few commodities, of no great price, it proposes to 
 occasion a much greater and more valuable exportation of others. 
 It encourages the importation of the materials of manufacture, in 
 order that our own people may be enabled to work them up more 
 cheaply, and thereby prevent a greater and more valuable impor- 
 tation of the manufactured commodities. I do not observe, at least 
 in our Statute Book, any encouragement given to the importation 
 of the instruments of trade. When manufactures have advanced 
 to a certain pitch of greatness, the fabrication of the instruments of 
 trade becomes itself the object of a great number of very important 
 manufactures. To give any particular encouragement to the im- 
 portation of such instruments, would interfere too much with the 
 interest of those manufactures. Such importation, therefore, in- 
 stead of being encouraged, has frequently been prohibited. Thus 
 the importation of wool cards, except from Ireland, or when 
 brought in as wreck or prize goods, was prohibited by the 3rd 
 of Edward IV ; which prohibition was renewed by the 39th of 
 Elizabeth, and has been continued and rendered perpetual by sub- 
 sequent laws. 
 
 The importation of the materials of manufacture has sometimes 
 been encouraged by an exemption from the duties to which other 
 goods are subject, and sometimes by bounties.
 
 CHAP. vin. THE WEALTH OF NATIONS. 227 
 
 The importation of sheep's wool from several different countries, 
 of cotton wool from all countries, of undressed flax, of the greater 
 part of dyeing drugs, of the greater part of undressed hides from 
 Ireland or the British colonies, of seal skins from the British Green- 
 land fishery, of pig and bar iron from the British colonies, as well 
 as of several other materials of manufacture, has been encouraged 
 by an exemption from all duties, if properly entered at the Custom 
 House. The private interest of our merchants and manufacturers 
 may, perhaps, have extorted from the Legislature these exemptions, 
 as well as the greater part of our other commercial regulations. 
 They are, however, perfectly just and reasonable, and if, con- 
 sistently with the necessities of the State, they could be extended 
 to aft the other materials of manufacture, the public would cer- 
 tainly be a gainer. 
 
 The avidity of our great manufacturers, however, has in some 
 cases extended these exemptions a good deal beyond what can 
 justly be considered as the rude materials of their work. By the 
 24th George II, chap. 46, a small duty of only one penny the pound 
 was imposed upon the importation of foreign brown linen yarn, 
 instead of mueh higher duties to whjch it had been subjected 
 before, viz. of sixpence the pound upon sail yarn, of one shilling 
 the pound upon all French and Dutch yarn, and of two pound 
 thirteen shillings and fourpence upon the hundredweight of all 
 spruce or Muscovia yarn. But our manufacturers were not long 
 satisfied with this reduction. By the 2Qth of the same king, 
 chap. 15, the same law which gave a bounty upon the exportation 
 of British and Irish linen of which the price did not exceed eighteen- 
 pence the yard, even this small duty upon the importation of brown 
 linen yarn was taken away. In the different operations, however, 
 which are necessary for the preparation of linen yarn, a good deal 
 more industry is employed than in the subsequent operation of 
 preparing linen cloth from linen yarn. To say nothing of the 
 industry of the flax-growers and flax-dressers, three or four spinners, 
 at least, are necessary in order to keep one weaver in constant 
 employment ; and more than four-fifths of the whole quantity of 
 labour, necessary for the preparation of linen cloth, is employed in 
 that of linen yarn ; but our spinners are poor people, women com- 
 monly, scattered about in all different parts of the country, without 
 support or protection. It is not by the sale of their work, but by
 
 228 THE NATURE AND CAUSES OF BOOK IT. 
 
 that of the complete work of the weavers, that our great master 
 manufacturers make their profits. As it is their interest to sell 
 the complete manufacture as dear, so is it to buy the materials 
 as cheap as possible. By extorting from the Legislature bounties 
 upon the exportation of their own linen, high duties upon the 
 importation of all foreign linen, and a total prohibition of the home 
 consumption of some sorts of French linen, they endeavour to sell 
 their own goods as dear as possible. By encouraging the impor- 
 tation of foreign linen yarn, and thereby bringing it into com- 
 petition with that which is made by our own people, they endeavour 
 to buy the work of the poor spinners as cheap as possible. They 
 are as intent to keep down the wages of their own weavers as the 
 earnings of the poor spinners, and it is by no means for the benefit 
 of the workman that they endeavour either to raise the price of 
 the complete work, or to lower that of the rude materials. It is 
 the industry which is carried on for the benefit of the rich and the 
 powerful that is principally encouraged by our mercantile system. 
 That which is carried on for the benefit of the poor and the in- 
 digent is, too often, either neglected or oppressed. 
 
 Both the bounty upon the exportation of linen, and the exemp- 
 tion from duty upon the importation of foreign yarn, which were 
 granted only for fifteen years, but continued by two different pro- 
 longations, expire with the end of the session of Parliament which 
 shall immediately follow the 24th of June, 1786. 
 
 The encouragement given to the importation of the materials of 
 manufacture by bounties has been principally confined to such as 
 were imported from our American plantations. 
 
 The first bounties of this kind were those granted, about the 
 beginning of the present century, upon the importation of naval 
 stores from America. Under this denomination were comprehended 
 timber fit for masts, yards, and bowsprits ; hemp, tar, pitch, and 
 turpentine. The bounty, however, of one pound the ton upon 
 masting timber, and that of six pounds the ton upon hemp, were 
 extended to such as should be imported into England from Scot- 
 land. Both these bounties continued without any variation, at the 
 same rate, till they were severally allowed to expire ; that upon 
 hemp on the 1st of January, 1741, and that upon masting-timber 
 at the end of the session of Parliament immediately following the 
 24th of June, 1781.
 
 CHAP. vm. THE WEALTH OF NATIONS. 229 
 
 The bounties upon the importation of tar, pitch, and turpentine 
 underwent, during their continuance, several alterations. Originally 
 that upon tar was four pounds the ton ; that upon pitch, the same ; 
 and that upon turpentine, three pounds the ton. The bounty of 
 four pounds the ton upon tar was afterwards confined to such as 
 had been prepared in a particular manner ; that upon other good, 
 clean, and merchantable tar was reduced to two pounds four shil- 
 lings the ton. The bounty upon pitch was likewise reduced to one 
 pound, and that upon turpentine to one pound ten shillings the ton. 
 
 The second bounty upon the importation of any of the materials 
 of manufacture, according to the order of time, was that granted by 
 the 2 rst George II, chap. 30, upon the importation of Indigo from 
 the British plantations. When the plantation indigo was worth 
 three-fourths of the price of the best French indigo, it was by this 
 Act entitled to a bounty of sixpence the pound. This bounty, 
 which, like most others, was granted only for a limited time, was 
 continued by several prolongations, but was reduced to fourpence 
 the pound. It was allowed to expire with the end of the session 
 of Parliament which followed the 25th March, 1781. 
 
 The third bounty of this kind was that granted (much about the 
 time that we were beginning sometimes to court and sometimes to 
 quarrel with our American colonies) by the 4th George III, chap. 26, 
 upon the importation of hemp, or undressed flax, from the British 
 plantations. This bounty was granted for twenty-one years, from 
 the 24th June, 1764, to the 24th June, 1785. For the first seven 
 years it was to be at the rate of eight pounds the ton, for the second 
 at six pounds, and for the third at four pounds. It was not ex- 
 tended to Scotland, of which the climate' (although hemp is some- 
 times raised there in small quantities, and of an inferior quality) is 
 not very fit for that produce. Such a bounty upon the importation 
 of Scotch flax into England would have been too great a dis- 
 couragement to the native produce of the southern part of the 
 United Kingdom. 
 
 The fourth bounty of this kind was that granted by the 5th Geo. 
 Ill, chap. 45, upon the importation of wood from America. It 
 was granted for nine years, from the ist January, 1766, to the 
 ist January, 1775. During the first three years, it was to be for 
 every hundred and twenty good deals, at the rate of one pound ; 
 and for every load containing fifty cubic feet of other squared
 
 230 THE NATURE AND CAUSES OF BOOK iv. 
 
 timber at the rate of twelve shillings. For the second three years, 
 it was for deals, to be at the rate of fifteen shillings, and for other 
 squared timber, at the rate of eight shillings ; and for the third 
 three years, it was for deals, to be at the rate of ten shillings, and 
 for other squared timber, at the rate of five shillings. 
 
 The fifth bounty of this kind was that granted by the 9th Geo. 
 Ill, chap. 38, upon the importation of raw silk from the British 
 plantations. It was granted for twenty-one years, from the 1st 
 January, 1770, to the 1st January, 1791. For the first seven years 
 it was to be at the rate of twenty-five pounds for every hundred 
 pounds' value ; for the second, at twenty pounds ; and for the third, 
 at fifteen pounds. The management of the silk-worm, and the 
 preparation of silk, requires so much hand labour ; and labour is so 
 very dear in America, that even this great bounty, I have been in- 
 formed, was not likely to produce any considerable effect. 
 
 The sixth bounty of this kind was that granted by nth Geo. 
 Ill, chap. 50, for the importation of pipe, hogshead, and barrel 
 staves and heading from the British plantations. It was granted 
 for nine years, from ist January, 1772, to the 1st January, 1781. 
 For the first three years, it was for a certain quantity of each, to 
 be at the rate of six pounds ; for the second three years, at four 
 pounds ; and for the third three years, at two pounds. 
 
 The seventh, and last bounty of this kind, was that granted by 
 the T9th Geo. Ill, chap. 37, upon the importation of hemp from 
 Ireland. It was granted in the same manner as that for the impor- 
 tation of hemp and undressed flax from America, for twenty-one 
 years, from the 24th June, 1779, to the 24th June, 1800. This 
 term is divided, likewise, into three periods of seven years each ; 
 and in each of those periods, the rate of the Irish bounty is the 
 same with that of the American. It does not, however, like the 
 American bounty, extend to the importation of undressed flax. It 
 would have been too great a discouragement to the cultivation of 
 that plant in Great Britain. Wben this last bounty was granted, 
 the British and Irish Legislatures were not in much better humour 
 with one another than the British and American had been before. 
 But this boon to Ireland, it is to be hoped, has been granted under 
 more fortunate auspices than all those to America. 
 
 The same commodities upon which we thus gave bounties, when 
 imported from America, were subjected to considerable duties when
 
 CHAP. vin. THE WEALTH OF NATIONS. 231 
 
 imported from any other country. The interest of our American 
 colonies was regarded as the same with that of the mother country. 
 Their wealth was considered as our wealth. Whatever money was 
 sent out to them, it was said, came all back to as by the balance of 
 trade, and we could never become a farthing 1 the poorer by any ex- 
 pense which we could lay out upon them. They were our own in 
 every respect, and it was an expense laid out upon the improvement 
 of our own property, and for the profitable employment of our own 
 people. It is unnecessary, I apprehend, at present to say anything* 
 further, in order to expose the folly of a system, which fatal expe- 
 rience has now sufficiently exposed. Had our American colonies 
 really been a part of Great Britain, those bounties might have been 
 considered as bounties upon production, and would still have been 
 liable to all the objections to which such bounties are liable, but to 
 no other. 
 
 The exportation of the materials of manufacture is sometimes 
 discouraged by absolute prohibitions, and sometimes by high 
 duties. 
 
 Our woollen manufacturers have been more successful than any 
 other class of workmen in persuading the Legislature that the 
 prosperity of the nation depended upon the success and extension 
 of their particular business. They have not only obtained a mono- 
 poly against the consumers by an absolute prohibition of importing 
 woollen cloths from any foreign country, but they have likewise 
 obtained another monopoly against the sheep farmers and growers 
 of wool, by a similar prohibition of the exportation of live sheep 
 and wool. The severity of many of the laws which have been 
 enacted for the security of the revenue is very justly complained of, 
 as imposing heavy penalties upon actions which, antecedent to the 
 statutes that declared them to be crimes, had always been under- 
 stood to be innocent. But the cruellest of our revenue laws, I will 
 venture to affirm, are mild and gentle in comparison of some of 
 those which the clamour of our merchants and manufacturers has 
 extorted from the Legislature, for the support of their own absurd 
 and oppressive monopolies. Like the laws of Draco, these laws 
 may be said to be all written in blood. 
 
 By the 8th of Elizabeth, c. 3, the exporter of sheep, lambs or 
 rams, was for the first offence to forfeit all his goods for ever, to 
 suffer a year's imprisonment, and then to have his left hand cut off
 
 232 THE NATURE AND CAUSES OF BOOK iv. 
 
 in a market town upon a market day, to be there nailed up ; and 
 for the second offence to be adjudged a felon, and to suffer death 
 accordingly. To prevent the breed of our sheep from being propa- 
 gated in foreign countries, seems to have been the object of this 
 law. By the I3th and I4th of Charles II, c. 18, the exportation 
 of wool was made felony, and the exporter subjected to the same 
 penalties and forfeitures as a felon. 
 
 For the honour of the national humanity, it is to be hoped that 
 neither of these statutes were ever executed. The first of them, 
 however, so far as I know, has never been directly repealed, and 
 Serjeant Hawkins 1 seems to consider it as still in force. It may 
 however, perhaps, be considered as virtually repealed by the I2th 
 of Charles II, c. 32, s. 3, which, without expressly taking away the 
 penalties imposed by former statutes, imposes a new penalty, viz. 
 That of twenty shillings for every sheep exported, or attempted to 
 be exported, together with the forfeiture of the sheep and of the 
 owner's share of the ship. The second of them was expressly 
 repealed by the yth and 8th of William III, c. 28, s. 4. By which 
 it is declared that, 'Whereas the statute of the I3th and 14th of 
 King Charles II, made against the exportation of wool, among 
 other things in the said Act mentioned, doth enact the same to be 
 deemed felony ; by the severity of which penalty the prosecution of 
 offenders hath not been so effectually put in execution: Be it, there- 
 fore, enacted by the authority foresaid, that so much of the said Act 
 which relates to the making the said offence felony, be repealed and 
 made void.' 
 
 The penalties, however, which are either imposed by this milder 
 statute, or which, though imposed by former statutes, are not 
 repealed by this one, are still sufficiently severe. Besides the for- 
 feiture of the goods, the exporter incurs the penalty of three shil- 
 lings for every pound weight of wool either exported or attempted 
 to be exported, that is, about four or five times the value. Any 
 merchant or other person convicted of this offence is disabled from 
 requiring any debt or account belonging to him from any factor or 
 other person. Let his fortune be what it will, whether he is or is 
 not able to pay those heavy penalties, the law means to ruin him 
 completely. But as the morals of the great body of the people are 
 not yet so corrupt as those of the contrivers of this statute, I have 
 1 Pleas of the Crown, i. 195.
 
 CHAP. vm. THE WEALTH OF NATIONS. 233 
 
 not heard that any advantage has ever been taken of this clause. 
 If the person convicted of this offence is not able to pay the penal- 
 ties within three months after judgment, he is to be transported 
 for seven years, and if he returns before the expiration of that term, 
 he is liable to the pains of felony, without benefit of clergy. The 
 owner of the ship knowing this offence forfeits all his interest in 
 the ship and furniture. The master and mariners knowing this 
 offence forfeit all their goods and chattels, and suffer three months' 
 imprisonment. By a subsequent statute the master suffers six 
 months' imprisonment. 
 
 In order to prevent exportation, the whole inland commerce of 
 wool is laid under very burdensome and oppressive restrictions. 
 It cannot be packed in any box, barrel, cask, case, chest, or any 
 other package, but only in packs of leather or pack-cloth, on which 
 must be marked on the outside the words wool or yarn, in large 
 letters not less than three inches long, on pain of forfeiting the 
 same and the package, and three shillings for every pound weight, 
 to be paid by the owner or packer. It cannot be loaded on any 
 horse or cart, or carried by land within five miles of the coast, 
 but between sunrising and sunsetting, on pain of forfeiting the 
 same, the horses and carriages. The hundred next adjoining to 
 the sea-coast, out of or through which the wool is carried or 
 exported, forfeits twenty pounds if the wool is under the value 
 of ten pounds ; and if of greater value, then treble that value, 
 together with treble costs, to be sued for within the year. The 
 execution to be against any two of the inhabitants whom the 
 sessions must reimburse by an assessment on the other inhabitants, 
 as in the cases of robbery. And if any person compounds with 
 the hundred for less than this penalty, he is to be imprisoned for 
 five years, and any other person may prosecute. These regulations 
 take place through the whole kingdom. 
 
 But in the particular counties of Kent and Sussex the restric- 
 tions are still more troublesome. Every owner of wool within ten 
 miles of the sea-coast must give an account in writing, three days 
 after shearing, to the next officer of the customs, of the number 
 of his fleeces, and of the places where they are lodged. And 
 before he removes any part of them he must give the like notice 
 of the number and weight of the fleeces, -and of the name and 
 abode of the person to whom they are sold, and of the place to
 
 234 THE NATURE AND CAUSES OF BOOK iv. 
 
 which it is intended they should be carried. No person within 
 fifteen miles of the sea, in the said counties, can buy any wool 
 before he enters into bond to the king-, that no part of the wool 
 which he shall so buy shall be sold by him to any other person 
 'within fifteen miles of the sea. If any wool is found carrying 
 towards the sea-side in the said counties, unless it has been 
 entered and security given as aforesaid, it is forfeited, and the 
 offender also forfeits three shillings for every pound weight. If 
 any person lays any wool, not entered as aforesaid, within fifteen 
 miles of the sea, it must be seized and forfeited ; and if, after such 
 seizure, any person shall claim the same, he must give security to 
 the Exchequer, that if he is cast upon trial he shall pay treble 
 costs, besides all other penalties. 
 
 When such restrictions are imposed upon the inland trade, the 
 coasting trade, we may believe, cannot be left very free. Every 
 owner of wool who carrieth or causeth to be carried any wool to 
 any port or place on the sea-coast, in order to be from thence 
 transported by sea to any other place or port on the coast, must 
 first cause an entry thereof to be made at the port from whence 
 it is intended to be conveyed, containing the weight, marks, and 
 number of the packages before he ; brings the same within five 
 miles of that port, on pain of forfeiting the same, and also the 
 horses, carts, and other carriages ; and also of suffering and for- 
 feiting, as by the other laws in force against the exportation of 
 wool. This law, however (ist Will. Ill, c. 32), is so very indulgent 
 as to declare, that ' this shall not hinder any person from carrying 
 his wool home from the place of sheaving, though it be within 
 five miles of the sea, provided that in ten days after shearing, 
 and before he remove the wool, he do under his hand certify to 
 the next officer of the customs the true number of fleeces, and 
 where it is housed ; and do not remove the same, without certi- 
 fying to such officer, under his hand, his intention so to do, thiee 
 days before.' Bond must be given that the wool to be carried 
 coastways is to be landed at the particular port for which it is 
 entered outwards ; and if any part of it is landed without the 
 presence of an officer, not only the forfeiture of the wool is in- 
 curred as in other goods, but the usual additional penalty of three 
 shillings for every pound weight is likewise incurred. 
 
 Our woollen manufacturers, in order to justify their demand of
 
 CHAP. vni. THE WEALTH OF NATIONS. 235 
 
 such extraordinary restrictions and regulations, confidently asserted 
 that English wool was of a peculiar quality, superior to that of any 
 other country; that the wool of other countries could not, without 
 some mixture of it, be wrought up into any tolerable manufacture ; 
 that fine cloth could not be made without it ; that England, there- 
 fore, if the exportation of it could be totally prevented, could 
 monopolize to herself almost the whole woollen trade of the world ; 
 and thus, having no rivals, could sell at what price she pleased, and 
 in a short time acquire the most incredible degree of wealth by the 
 most advantageous balance of trade. This doctrine, like most other 
 doctrines which are confidently asserted by any considerable number 
 of people, was, and still continues to be, most implicitly believed by 
 a much greater number ; by almost all those who are either un- 
 acquainted with the woollen trade, or who have not made particular 
 inquiries. It is, however, so perfectly false that English wool is in 
 any respect necessary for the making of fine cloth, that it is alto- 
 gether unfit for it. Fine cloth is made altogether of Spanish wool. 
 English wool cannot be even so mixed with Spanish wool as to 
 enter into the composition without spoiling and degrading in some 
 degree the fabric of the cloth. 
 
 It has been shown in the foregoing part of this work, that the 
 effect of these regulations has been to depress the price of English 
 wool, not only below what it naturally would be in the present 
 times, but very much below what it actually was in the time of 
 Edward III. The price of Scotch wool, when in consequence of 
 the Union it became subject to the same regulations, is said to have 
 fallen about one-half. It is observed by the very accurate and 
 intelligent author on the Memoirs of Wool, the Rev. Mr. John 
 Smith, that the price of the best English wool in England is 
 generally below what wool of a very inferior quality commonly 
 sells for in the market of Amsterdam. 1 To depress the price of this 
 commodity below what may be called its natural and proper price, 
 was the avowed purpose of those regulations ; and there seems to 
 be no doubt of their having produced the effect that was expected 
 from them. 
 
 This reduction of price, it may perhaps be thought, by dis- 
 couraging the growing of wool, must have reduced very much 
 the annual produce of that commodity, though not below what it 
 1 Smith's Memoirs of Wool, vol. ii. p. 215.
 
 236 THE NATURE AND CAUSES OF BOOK iv. 
 
 formerly was, yet below what, in the present state of things, it 
 probably would have been, had it, in consequence of an open and 
 free market, been allowed to rise to the natural and proper price. 
 I am, however, disposed to believe that the quantity of the annual 
 produce cannot have been much, though it may perhaps have been 
 a little, affected by these regulations. The growing of wool is not 
 the chief purpose for which the sheep farmer employs his industry 
 and stock. He expects his profit, not so much from the price of 
 the fleece, as from that of the carcase ; and the average or ordinary 
 price of the latter must even in many cases make up to him what- 
 ever deficiency there may be in the average or ordinary price of the 
 former. It has been observed in the foregoing part of this work, 1 
 that ' Whatever regulations tend to sink the price, either of wool 
 or of raw -hides, below what it naturally would be, must, in an 
 improved and cultivated country, have some tendency to raise the 
 price of butchers-meat. The price both of the great and small 
 cattle which are fed on improved and cultivated land, must be 
 sufficient to pay the rent which the landlord and the profit which 
 the farmer has reason to expect from improved and cultivated land. 
 If it is not, they will soon cease to feed them. Whatever part of 
 this price, therefore, is not paid by the wool and the hide, must be 
 paid by the carcase. The less there is paid for the one, the more 
 must be paid for the other. In what manner this price is to be 
 divided upon the different parts of the beast is indifferent to the 
 landlords and farmers, provided it is all paid to them. In an im- 
 proved and cultivated country, therefore, their interest as landlords 
 and farmers cannot be much affected by such regulations, though 
 their interest as consumers may, by the rise in the price of pro- 
 visions.' According to this reasoning, therefore, this degradation 
 in the price of wool is not likely, in an improved and cultivated 
 country, to occasion any diminution in the annual produce of that 
 commodity, except so far as, by raising the price of mutton, it may 
 somewhat diminish the demand for, and consequently the pro- 
 duction of, that particular species of butcher's-meat. Its effect, 
 however, even in this way, it is probable, is not very considerable. 
 
 But though its effect upon the quantity of the annual produce 
 may not have been very considerable, its effects upon the quality, 
 it may perhaps be thought, must necessarily have been very great. 
 1 Book I. chap. ii. (vol. i. p. 245).
 
 CHAP. vm. THE WEALTH OF NATIONS. 237 
 
 The degradation in the quality of English wool, if not below what it 
 was in former times, yet below what it naturally would have been in 
 the present state of improvement and cultivation, must have been, 
 it may perhaps be supposed, very nearly in proportion to the degra- 
 dation of price. As the quality depends upon the breed, upon the 
 pasture, and upon the management and cleanliness of the sheep 
 during the whole progress of the growth of the fleece, the attention 
 to these circumstances, it may naturally enough be imagined, can 
 never be greater than in proportion to the recompense which the 
 price of the fleece is likely to make for the labour and expense 
 which that attention requires. It happens, however, that the good- 
 ness of the fleece depends in a great measure upon the health, 
 growth, and bulk of the animal ; the same attention which is neces- 
 sary for the improvement of the carcase, is, in some respects, 
 sufficient for that of the fleece. Notwithstanding the degradation 
 of price, English wool is said to have been improved considerably 
 during the course even of the present century. The improvement 
 might perhaps have been greater if the price had been better ; but 
 the lowness of price, though it may have obstructed, yet certainly 
 it has not altogether prevented that improvement. 
 
 The violence of these regulations, therefore, seems to have affected 
 neither the quantity nor the quality of the annual produce of wool 
 so much as it might have been expected to do (though I think it 
 probable that it may have affected the latter a good deal more than 
 the former) ; and the interest of the growers of wool, though it 
 must have been hurt in some degree, seems, upon the whole, to have 
 been much less hurt than could well have been imagined. 
 
 These considerations, however, will not justify the absolute pro- 
 hibition of the exportation of wool ; but they will fully justify the 
 imposition of a considerable tax upon that exportation. 
 
 To hurt in any degree the interest of any one order of citizens, 
 for no other purpose but to promote that of some other, is evidently 
 contrary to that justice and equality of treatment which the 
 sovereign owes to all the different orders of his subjects. But 
 the prohibition certainly hurts, in some degree, the interest of the 
 growers of wool, for no other purpose but to promote that of the 
 manufacturers. 
 
 Every different order of citizens is bound to contribute to the 
 support of the sovereign or commonwealth. A tax of five, or even
 
 238 THE NATURE AND CAUSES OF BOOK iv. 
 
 of ten shillings upon the exportation of every tod of wool, would 
 produce a very considerable revenue to the sovereign. It would 
 hurt the interest of the growers somewhat less than the prohibition, 
 because it would not probably lower the price of wool quite so 
 much. It would afford a sufficient advantage to the manufacturer, 
 because, though he might not buy his wool altogether so cheap as 
 under the prohibition, he would still buy it, at least, five or ten 
 shillings cheaper than any foreign manufacturer could buy it, be- 
 sides saving the freight and insurance, which the other would be 
 obliged to pay. It is scarce possible to devise a tax which could 
 produce any considerable revenue to the sovereign, and at the same 
 time occasion so little inconveniency to anybody. 1 
 
 The prohibition, notwithstanding all the penalties which guard 
 it, does not prevent the exportation of wool. It is exported, it is 
 well known, in great quantities. The great difference between the 
 price in the home and that in the foreign market, presents such a 
 temptation to smuggling, that all the rigour of the law cannot pre- 
 vent it. This illegal exportation is advantageous to nobody but the 
 smuggler. A legal exportation subject to a tax, by affording a re- 
 venue to the sovereign, and thereby saving the imposition of some 
 other, perhaps, more burdensome and inconvenient taxes, might 
 prove advantageous to all the different subjects of the State. 
 
 The exportation of fuller's earth, or fuller's clay, supposed to be 
 necessary for preparing and cleansing the woollen manufactures, has 
 been subjected to nearly the same penalties as the exportation of 
 wool. Even tobacco-pipe clay, though acknowledged to be dif- 
 ferent from fuller's clay, yet, on account of their resemblance, and 
 because fuller's clay might sometimes be exported as tobacco-pipe 
 clay, has been laid under the same prohibitions and penalties. 
 
 By the I3th and I4th of Charles II, chap. 7, the exportation, not 
 
 1 Such an export duty would have heen check the consumption of that on which 
 
 only an alternative of evils. It is very the duty is levied, and thereby to induce 
 
 rarely the case that export duties can be an artificial barrenness in its production, 
 
 made to fall on the country importing the by excluding from the market those quan- 
 
 commodity. The only circumstances in tities, the production of which has been, 
 
 which they are effectual, is when a coun- before the duty was levied, carried on 
 
 try has a monopoly of produce in an under the most disadvantageous circum- 
 
 article for which no substitute can be stances. Smith has shown what was the 
 
 found, which is in demand, and in the effect of the prohibition in lowering the 
 
 use of which no economy is possible. It price of wool. To have allowed its expor- 
 
 is needless to say that such articles are, tation under a duty would have only 
 
 and must be, very few. In all other lightened the evil, without removing it. 
 cases, the effect of an export duty is to
 
 CHAP. vm. THE WEALTH OF NATIONS. 239 
 
 only of raw hides, but of tanned leather, except in the shape of 
 boots, shoes, or slippers, was prohibited; and the. law gave a mono- 
 poly to our bootmakers and shoemakers, not only against our 
 graziers, but against our tanners. By subsequent statutes our 
 tanners have got themselves exempted from this monopoly, upon 
 paying a small tax of only one shilling on the hundredweight of 
 tanned leather, weighing one hundred and twelve pounds. They have 
 obtained likewise the drawback of two-thirds of the excise duties 
 imposed upon their commodity, even when exported without further 
 manufacture. All manufactures of leather may be exported duty 
 free ; and the exporter is besides entitled to the drawback of the 
 whole duties of excise. Our graziers still continue subject to the 
 old monopoly. Graziers separated from one another, and dispersed 
 through all the different corners of the country, cannot, without 
 great difficulty, combine together, for the purpose either of imposing 
 monopolies upon their fellow-citizens, or of exempting themselves 
 from such, as may have been imposed upon them by other people. 
 Manufacturers of all kinds, collected together in numerous bodies in 
 all great cities, easily can. Even the horns of cattle are prohibited 
 to be exported ; and the two insignificant trades of the homer and 
 combmaker enjoy, in this respect, a monopoly against the graziers. 
 
 Restraints, either by prohibitions or by taxes, upon the exporta- 
 tion of goods which are partially but not completely manufactured, 
 are not peculiar to the manufacture of leather. As long as any- 
 thing remains to be done, in order to fit any commodity for imme- 
 diate use and consumption, our manufacturers think that they them- 
 selves ought to have the doing of it. Woollen yarn and worsted 
 are prohibited to be exported under the same penalties as wool. 
 Even white cloths are subject to a duty upon exportation, and our 
 dyers have so far obtained a monopoly against our clothiers. Our 
 clothiers would probably have been able to defend themselves against 
 it, but it happens that the greater part of our principal clothiers are 
 themselves likewise dyers. Watch-cases, clock-cases, and dial-plates 
 for clocks and watches, have been prohibited to be exported. Our 
 clockmakers and watchmakers are, it seems, unwilling that the price 
 of this sort of workmanship should be raised upon them by the com- 
 petition of foreigners. 
 
 By some old statutes of Edward III, Henry VIII, and Ed- 
 ward VI, the exportation of all metals was prohibited. Lead and
 
 240 THE NATURE AND CAUSES OF BOOK iv. 
 
 tin were alone excepted, probably on account of the great abund- 
 ance of those metals, in the exportation of which a considerable 
 part of the trade of the kingdom in those days consisted. For the 
 encouragement of the mining- trade, the 5th of William and Mary, 
 chap. 17, exempted from this prohibition iron, copper, and mundic 
 metal made from British ore. The exportation of all sorts of 
 copper bars, foreign as well as British, was afterwards permitted 
 by the 9th and loth of William III, chap. 26. The exportation of 
 unmanufactured brass, of what is called gun-metal, bell-metal, and 
 shroff-metal, still continues to be prohibited. Brass manufactures 
 of all sorts may be exported duty free. 
 
 The exportation of the materials of manufacture, where it is not 
 altogether prohibited, is in many cases subjected to considerable 
 duties. 
 
 By the 8th George I, chap. 15, the exportation of all goods, the 
 produce or manufacture of Great Britain, upon which any duties 
 had been imposed by former statutes, was rendered duty free. The 
 following goods, however, were excepted : alum, lead, lead ore, 
 tin, tanned leather, copperas, coals, wool cards, white woollen cloths, 
 lapis calaminaris, skins of all sorts, glue, coney hair or wool, hare's 
 wool, hair of all sorts, horses, and litharge of lead. If you except 
 horses, all these are either materials of manufacture, or incomplete 
 manufactures (which may be considered as materials for still further 
 manufacture), or instruments of trade. This statute leaves them 
 subject to all the old duties which had ever been imposed upon 
 them, the old subsidy and one per cent, outwards. 
 
 By the same statute, a great number of foreign drugs for dyers' 
 use are exempted from all duties upon importation. Each of them, 
 however, is afterwards subjected to a certain duty, not indeed a very 
 heavy one, upon exportation. Our dyers, it seems, while they 
 thought it for their interest to encourage the importation of those 
 drugs, by an exemption from all duties, thought it likewise for 
 their interest to throw some small discouragement upon their ex- 
 portation. The avidity, however, which suggested this notable 
 piece of mercantile ingenuity, most probably disappointed itself of 
 its object. It necessarily taught the importers to be more careful 
 than they might otherwise have been, that their importation should 
 not exceed what was necessary for the supply of the home market. 
 The home market was at all times likely to be more scantily sup-
 
 CHAP. vm. THE WEALTH OF NATIONS. 241 
 
 plied; the commodities were at all times likely to be somewhat 
 dearer there than they would have been had the exportation been 
 rendered as free as the importation. 
 
 By the above-mentioned statute, gum senega, or gum arabic, 
 being among the enumerated dyeing drugs, might be imported duty 
 free. They were subjected, indeed, to a small poundage duty, 
 amounting only to threepence in the hundredweight upon their re- 
 exportation. France enjoyed, at that time, an exclusive trade to 
 the country most productive of those drugs, that which lies in the 
 neighbourhood of the Senegal ; and the British market could not 
 easily be supplied by the immediate importation of them from the 
 place of growth. By the 25th Geo. II, therefore, gum senega was 
 allowed to be imported (contrary to the general dispositions of the 
 Act of Navigation) from any part of Europe. As the law, however, 
 did not mean to encourage this species of trade, so contrary to the 
 general principles of the mercantile policy of England, it imposed 
 a duty of ten shillings the hundredweight upon such importation, 
 and no part of this duty was to be afterwards drawn back upon its 
 exportation. The successful war which began in 1755 gave Great 
 Britain the same exclusive trade to those countries which France 
 had enjoyed before. Our manufacturers, as soon as the peace was 
 made, endeavoured to avail themselves of this advantage, and to 
 establish a monopoly in their own favour, both against the growers, 
 and against the importers of this commodity. By the 5th Geo. Ill, 
 therefore, chap. 37, the exportation of gum senega from his Ma- 
 jesty's dominions in Africa was confined to Great Britain, and was 
 subjected to all the same restrictions, regulations, forfeitures, and 
 penalties as that of the enumerated commodities of the British 
 colonies in America and the West Indies. Its importation, indeed, 
 was subjected to a small duty of sixpence the hundredweight, but 
 its re-exportation was subjected to the enormous duty of .^i 10*. 
 the hundredweight. It was the intention of our manufacturers 
 that the whole produce of those countries should be imported into 
 Great Britain, and in order that they themselves might be enabled 
 to buy it at their own price, that no part of it should be exported 
 again, but at such an expense as would sufficiently discourage that 
 exportation. Their avidity, however, upon this, as well as upon 
 many other occasions, disappointed itself of its object. This enor- 
 mous duty presented such a temptation to smuggling, that great 
 VOL. n. B
 
 242 THE NATURE AND CAUSES OF BOOK iv. 
 
 quantities of this commodity were clandestinely exported, probably 
 to all the manufacturing- countries of Europe, but particularly to 
 Holland, not only from Great Britain but from Africa. Upon this 
 account, by the I4th Geo. Ill, chap. 10, this duty of exportation 
 was reduced to five shillings the hundredweight. 
 
 In the book of rates, according to which the old subsidy was 
 levied, beaver skins were estimated at six shillings and eightpence 
 a piece, and the different subsidies and imposts, which before the 
 year 1722 had been laid upon their importation, amounted to one- 
 fifth part of the rate, or to sixteenpence upon each skin ; all of 
 which, except half the old subsidy, amounting only to twopence, 
 was drawn back upon exportation. This duty upon the importation 
 of so important a material of manufacture had been thought too 
 high, and, in the year 1722, the rate was reduced to two shillings 
 and sixpence, which reduced the duty upon importation to sixpence, 
 and of this only one-half was to be drawn back upon exportation. 
 The same successful war put the country most productive of beaver 
 under the dominion of Great Britain, and beaver skins being among 
 the enumerated commodities, their exportation from America was 
 consequently confined to the market of Great Britain. Our manu- 
 facturers soon bethought themselves of the advantage which they 
 might make of this circumstance, and in the year 1764, the duty 
 upon the importation of beaver skin was reduced to one penny, but 
 the duty upon exportation was raised to sevenpence each skin, with- 
 out any drawback of the duty upon importation. By the same 
 law, a duty of eighteenpence the pound was imposed upon the ex- 
 portation of beaver wool or wombs, without making any alteration 
 in the duty upon the importation of that commodity, which, when 
 imported by British and in British shipping, amounted at that time 
 to between fourpence and fivepence the piece. 
 
 Coals may be considered both as a material of manufacture and 
 as an instrument of trade. Heavy duties, accordingly, have been 
 imposed upon their exportation, amounting at present (1783) to 
 more than five shillings the ton, or to more than fifteen shillings the 
 chaldron, Newcastle measure ; which is in most cases more than 
 the original value of the commodity at the coal pit, or even at the 
 shipping port for exportation. 
 
 The exportation, however, of the instruments of trade, properly 
 so called, is commonly restrained, not by high duties, but by abso-
 
 CHAP. vin. THE WEALTH OF NATIONS. 243 
 
 lute prohibitions. Thus by the 7th and 8th of Will. Ill, chap. 20, 
 sect. 8, the exportation of frames or engines for knitting gloves or 
 stockings is prohibited under the penalty, not only of the forfeiture 
 of such frames or engines, so exported, or attempted to be exported, 
 but of ^40, one-half to the King, the other to the person who shall 
 inform or sue for the same. In the same manner, by the I4th 
 Geo. Ill, chap. 71, the exportation to foreign parts of any utensils 
 made use of in the cotton, linen, woollen, and silk manufactures, is 
 prohibited under the penalty, not only of the forfeiture of such 
 utensils, but of <^?20O, to be paid by the person who shall offend in 
 this manner, and likewise of ^200 to be paid by the master of the 
 ship who shall knowingly suffer such utensils to be loaded on board 
 his ship. 
 
 When such heavy penalties were imposed upon the exportation of 
 the dead instruments of trade, it could not well be expected that 
 the living instrument, the artificer, should be allowed to go free. 
 Accordingly, by the 5th Geo. I, chap. 27, the person who shall be 
 convicted of enticing any artificer of or in any of the manufactures 
 of Great Britain, to go into any foreign parts in order to practise 
 or teach his trade, is liable for the first offence to be fined in any 
 sum not exceeding <^?ioo, and to three months' imprisonment, and 
 until the fine shall be paid ; and for the second offence, to be fined 
 in any sum at the discretion of the court, and to imprisonment 
 for twelve months, and until the fine shall be paid. By the 23rd 
 Geo. II, chap. 13, this penalty is increased for the first offence to 
 ^500 for every artificer so enticed, and to twelve months' imprison- 
 ment, and until the fine shall be paid ; and for the second offence to 
 ^1,000, and to two years' imprisonment, and until the fine shall be 
 paid. 
 
 By the former of those two statutes, upon proof that any person 
 has been enticing any artificer, or that any artificer has promised or 
 contracted to go into foreign parts for the purposes aforesaid, such 
 artificer may be obliged to give security at the discretion of the 
 court, that he shall not go beyond the seas, and may be committed 
 to prison until he give such security. 
 
 If any artificer has gone beyond the seas, and is exercising or 
 teaching his trade in any foreign country, upon warning being 
 given to him by any of his Majesty's ministers or consuls abroad, or 
 by one of his Majesty's Secretaries of State for the time being, if 
 
 E 2
 
 244 THE NATURE AND CAUSES OF BOOK iv. 
 
 he does not, within six months after such warning, return into this 
 realm, and from thenceforth abide and inhabit continually within 
 the same, he is from thenceforth declared incapable of taking any 
 legacy devised to him within this kingdom, or of being executor or 
 administrator to any person, or of taking any lands within this 
 kingdom by descent, devise, or purchase. He likewise forfeits to 
 the king all his lands, goods, and chattels, is declared an alien in 
 every respect, and is put out of the king's protection. 
 
 It is unnecessary, I imagine, to observe, how contrary such regu- 
 lations are to the boasted liberty of the subject, of which we affect 
 to be so very jealous ; but which, in this case, is so plainly sacrificed 
 to the futile interests of our merchants and manufacturers. 
 
 The laudable motive of all these regulations is to extend our 
 own manufactures, not by their own improvement, but by the 
 depression of those of all our neighbours, and by putting an end, 
 as much as possible, to the troublesome competition of such odious 
 and disagreeable rivals. Our master manufacturers think it rea- 
 sonable that they themselves should have the monopoly of the 
 ingenuity of all their countrymen. Though by restraining, in 
 some trades, the number of apprentices which can be employed at 
 one time, and by imposing the necessity of a long apprenticeship 
 in all trades, they endeavour, all of them, to confine the knowledge 
 of their respective employments to as small a number as possible ; 
 they are unwilling, however, that any part of this small number 
 should go abroad to instruct foreigners. 
 
 Consumption is the sole end and purpose of all production ; and 
 the interest of the producer ought to be attended to, only so far as it 
 may be necessary for promoting that of the consumer. The maxim 
 is so perfectly self-evident, that it would be absurd to attempt to 
 prove it. But in the mercantile system, the interest of the con- 
 sumer is almost constantly sacrificed to that of the producer ; and 
 it seems to consider production, and not consumption, as the 
 ultimate end and object of all industry and commerce. 
 
 In the restraints upon the importation of all foreign commodities 
 which can come into competition with those of our own growth 
 or manufacture, the interest of the home consumer is evidently 
 sacrificed to that of the producer. It is altogether for the benefit 
 of the latter, that the former is obliged to pay that enhancement 
 of price which this monopoly almost always occasions.
 
 CHAP. vni. THE WEALTH OF NATIONS. 245 
 
 It is altogether for the benefit of the producer that bounties are 
 granted upon the exportation of some of his productions. The 
 home consumer is obliged to pay, first, the tax which is necessary 
 for paying the bounty; and, secondly, the still greater tax which 
 necessarily arises from the enhancement of the price of the com- 
 modity in the home market. 
 
 By the famous treaty of commerce with Portugal, the consumer 
 is prevented by High duties from purchasing of a neighbouring 
 country a commodity which our own climate does not produce, 
 but is obliged to purchase it of a distant country, though it is 
 acknowledged that the commodity of the distant country is of a 
 worse quality than that of the near one. The home consumer is 
 obliged to submit to this inconveniency, in order that the producer 
 may import into the distant country some of his productions 
 upon more advantageous terms than he would otherwise have been 
 allowed to do. The consumer, too, is obliged to pay whatever 
 enhancement in the price of those very productions this forced ex- 
 portation may occasion in the home market. 
 
 But in the system of laws which has been established for the 
 management of our American and West Indian colonies, the interest 
 of the home consumer has been sacrificed to that of the producer 
 with a more extravagant profusion than in all our other commercial 
 regulations. A great empire has been established for the sole 
 purpose of raising up a nation of customers who should be obliged 
 to buy from the shops of our different producers all the goods 
 with which these could supply them. For the sake of that little 
 enhancement of price which this monopoly might afford our pro- 
 ducers, the home consumers have been burdened with the whole 
 expense of maintaining and defending that empire. For this 
 purpose, and for this purpose only, in the two last wars, more than 
 two hundred millions have been spent, and a new debt of more 
 than a hundred and seventy millions has been contracted over and 
 above all that had been expended for the same purpose in former 
 wars. The interest of this debt alone is not only greater than 
 the whole extraordinary profit which, it ever could be pretended, 
 was made by the monopoly of the colony trade, but than the whole 
 value of that trade, or than the whole value of the goods, which at 
 an average have been annually exported to the colonies. 
 
 It cannot be very difficult to determine who have been the con-
 
 246 THE NATURE AND CAUSES OF BOOK iv. 
 
 trivers of this whole mercantile system : not the consumers, we 
 may believe, whose interest has been entirely neglected, but the 
 producers whose interest has been so carefully attended to; and 
 among this latter class our merchants and manufacturers have been 
 by far the principal architects. In the mercantile regulations, 
 which have been taken notice of in this chapter, the interest of 
 our manufacturers has been most peculiarly attended to ; and the 
 interest, not so much of the consumers as that of some other sets 
 of producers, has been sacrificed to it. 1 
 
 CHAPTER IX. 
 
 OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLITICAL 
 ECONOMY WHICH REPRESENT THE PRODUCE OF LAND AS EITHER THE 
 SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF 
 EVERY COUNTRY. 
 
 THE agricultural systems of political economy will not require 
 so long an explanation as that which I have thought it 
 necessary to bestow upon the mercantile or commercial system. 
 
 That system which represents the produce of land as the sole 
 source of the revenue and wealth of every country, has, so far as I 
 know, never been adopted by any nation, and it at present exists 
 only in the speculations of a few men of great learning and in- 
 genuity in France. It would not, surely, be worth while to 
 examine at great length the errors of a system which never has 
 
 1 It is almost superfluous to say, that trimental to trade. The chapter, how- 
 all the restrictions complained of in the ever, is historically instructive in the 
 text have been removed, and that mainly highest degree, partly because it shows 
 by the persistent representations of that how radically wrong were the views 
 very mercantile class which Adam Smith entertained by statesmen and merchants 
 charges, and apparently with justice, a century ago, partly because the errors 
 with instituting the system for their committed by our forefathers are being 
 personal benefit. The fact is, they found reproduced in the fiscal and economical 
 out in course of time, that the restric- policy of the United States and our own 
 tions which they had imposed were not colonies, where the mischief is greater, 
 to their own advantage, but that they and the error more indefensible, 
 produced effects which were highly de-
 
 CHAP. ix. THE WEALTH OF NATIONS. 247 
 
 done, and probably never will do any harm in any part of the 
 world. I shall endeavour to explain, however, as distinctly as I 
 can, the great outlines of this very ingenious system. 
 
 M. Colbert, the famous Minister of Louis XIV, was a man of 
 probity, of great industry and knowledge of detail ; of great 
 experience and acuteness in the examination of public accounts, and 
 of abilities, in short, every way fitted for introducing method and 
 good order into the collection and expenditure of the public revenue. 
 That Minister had unfortunately embraced all the prejudices of the 
 mercantile system, in its nature and essence a system of restraint 
 and regulation, and such as could scarce fail to be agreeable to a 
 laborious and plodding man of business, who had been accustomed 
 to regulate the different departments of public offices, and to 
 establish the necessary checks and controls for confining each to its 
 proper sphere. The industry and commerce of a great country he 
 endeavoured to regulate upon the same model as the departments of 
 a public office ; and instead of allowing every man to pursue his 
 own interest his own way, upon the liberal plan of equality, liberty, 
 and justice, he bestowed upon certain branches of industry extra- 
 ordinary privileges, while he laid others under as extraordinary re- 
 straints. He was not only disposed, like other European Ministers, 
 to encourage more the industry of the towns than that of the 
 country, but, in order to support the industry of the towns, he was 
 willing even to depress and keep down that of the country. In 
 order to render provisions cheap to the inhabitants of the towns, 
 and thereby to encourage manufactures and foreign commerce, he 
 prohibited altogether the exportation of corn, and thus excluded the 
 inhabitants of the country from every foreign market for by far the 
 most important part of the produce of their industry. This prohi- 
 bition, joined to the restraints imposed by the ancient provincial 
 laws of France upon the transportation of corn from one province to 
 another, and to the arbitrary and degrading taxes which are levied 
 upon the cultivators in almost all the provinces, discouraged and 
 kept down the agriculture of that country very much below the 
 state to which it would naturally have risen in so very fertile a soil 
 and so very happy a climate. This state of discouragement and 
 depression was felt more or less in every different part of the 
 country, and many different inquiries were set on foot concerning 
 the causes of it. One of those causes appeared to be the preference
 
 248 THE NATURE AND CAUSES OF BOOK iv. 
 
 given, by the institutions of M. Colbert, to the industry of the 
 towns above that of the country. 
 
 If the rod be bent too much one way, says the proverb, in order 
 to make it straight you must bend it as much the other. The 
 French philosophers, who have proposed the system which repre- 
 sents agriculture as the sole source of the revenue and wealth of 
 every country, seem to have adopted this proverbial maxim ; and 
 as in the plan of M. Colbert the industry of the towns was certainly 
 overvalued in comparison with that of the country, so in their 
 system it seems to be as certainly undervalued. 
 
 The different orders of people who have ever been supposed to 
 contribute in any respect towards the annual produce of the land 
 and labour of the country, they divide into three classes. The 
 first is the class of the proprietors of land ; the second is the 
 class of the cultivators, of farmers and country labourers, whom 
 they honour with the peculiar application of the productive class ; 
 the third is the class of artificers, manufacturers, and merchants, 
 whom they endeavour to degrade by the humiliating appellation of 
 the barren or unproductive class. 1 
 
 The class of proprietors contributes to the annual produce by the 
 expense which they may occasionally lay out upon the improvement 
 of the land, upon the buildings, drains, enclosures, and other 
 ameliorations which they may either make or maintain upon it, 
 and by means of which the cultivators are enabled, with the same 
 capital, to raise a greater produce, and consequently to pay a 
 greater rent. This advanced rent may be considered as the in- 
 terest or profit due to the proprietor upon the expense or capital 
 which he thus employs in the improvement of his land. Such 
 expenses are in this system called ground expenses (defenses 
 fonder es). 
 
 The cultivators or farmers contribute to the annual produce by 
 what are in this system called the original and annual expenses 
 (defenses primitives et defenses annuell-es) which they lay out upon 
 the cultivation of the land. The original expenses consist in the 
 instruments of husbandry, in the stock of cattle, in the seed, and in 
 
 1 ' Volla maintenant la socie'te' partage"e pent distinguer lea deux classes non dis- 
 
 en trois classes : la classe des labourers, ponibles en classe productrice qui est 
 
 a laquelle on peut conserver le nom de celle des cultivateurs, et classe sUrile qui 
 
 cUisse productrice; la classe des artisans comprend tous lea autres membres sti- 
 
 et autres gtipendtes des produits de la pendie"s de la socie"teY Turgot, Sur la 
 
 terre; et la classe des proprietaires. On Formation, &c., 15-18.
 
 CHAP. ix. THE WEALTH OF NATIONS. 249 
 
 the maintenance of the farmer's family, servants and cattle, during 
 at least a great part of the first year of his occupancy, or till he can 
 receive some return from the land. The annual expenses consist 
 in the seed, in the wear and tear of the implements of husbandry, 
 and in the annual maintenance of the farmer's servants and cattle, 
 and of his family too, so far as any part of them can be con- 
 sidered as servants employed in cultivation. That part of the 
 produce of the land which remains to him after paying- the rent, 
 ought to be sufficient, first, to replace to him within a reasonable 
 time, at least during the term of his occupancy, the whole of his 
 original expenses, together with the ordinary profits of stock ; and, 
 secondly, to replace to him annually the whole of his annual ex- 
 penses, together likewise with the ordinary profits of stock. Those 
 two sorts of expenses are two capitals which the farmer employs in 
 cultivation ; and unless they are regularly restored to him, together 
 with a reasonable profit, he cannot carry on his employment upon a 
 level with other employments, but, from a regard to his own in- 
 terest, must desert it as soon as possible, and seek some other. 
 That part of the produce of the land which is thus necessary for 
 enabling the farmer to continue his business, ought to be considered 
 as a fund sacred to cultivation, which if the landlord violates he 
 necessarily reduces the produce of his own land, and in a few years 
 not only disables the farmer from paying this racked rent, but from 
 paying the reasonable rent which he might otherwise have got for 
 his land. The rent which properly belongs to the landlord, is no 
 more than the net produce which remains after paying in the com- 
 pletest manner all the necessary expenses which must be previously 
 laid out in order to raise the gross, or the whole produce. It is 
 because the labour of the cultivators, over and above paying com- 
 pletely all those necessary expenses, affords a net produce l of this 
 kind, that this class of people are in this system peculiarly distin- 
 guished by the honourable appellation of the productive class. 
 Their original and annual expenses are for the same reason called, 
 in this system, productive expenses, because, over and above re- 
 placing their own value, they occasion the annual reproduction of 
 this net produce. 
 
 The ground expenses, as they are called, or what the landlord 
 lays out upon the improvement of his land, are in this system, too, 
 1 'Produit net.' Turgot, passim.
 
 250 THE NATURE AND CAUSES OF BOOK iv. 
 
 honoured with the appellation of productive expenses. Till the 
 whole of those expenses, together with the ordinary profits of stock, 
 have been completely repaid to him by the advanced rent which he 
 gets for his land, that advanced rent ought to be regarded as sacred 
 and inviolable, both by the church and by the king; ought to be 
 subject neither to tithe nor to taxation. If it is otherwise, by dis- 
 couraging the improvement of land, the church discourages the 
 future increase of her own tithes, and the king the future increase 
 of his own taxes. As in a well-ordered state of things, therefore, 
 those ground expenses, over and above reproducing in the com- 
 pletest manner their own value, occasion likewise after a certain 
 time a reproduction of a net produce, they are in this system con- 
 sidered as productive expenses. 
 
 The ground expenses of the landlord, however, together with the 
 original and the annual expenses of the farmer, are the only three 
 sorts of expenses which in this system are considered as productive. 
 All other expenses and all other orders of people, even those who in 
 the common apprehensions of men are regarded as the most produc- 
 tive, are in this account of things represented as altogether barren 
 and unproductive. 
 
 Artificers and manufacturers, in particular, whose industry, in the 
 common apprehensions of men, increases so much the value of the 
 rude produce of land, are in this system represented as a class of 
 people altogether barren and unproductive. Their labour, it is 
 said, replaces only the stock which employs them, together with its 
 ordinary profits. That stock consists in the materials, tools, and 
 wages advanced to them by their employer, and is the fund 
 destined for their employment and maintenance. Its profits are 
 the fund destined for the maintenance of their employer. Their 
 employer, as he advances to them the stock of materials, tools, and 
 wages necessary for their employment, so he advances to himself 
 what is necessary for his own maintenance, and this maintenance 
 he generally proportions to the profit which he expects to make 
 by the price of their work. Unless its price repays to him the 
 maintenance which he advances to himself, as well as the materials, 
 tools, and wages which he advances to his workmen, it evidently 
 does not repay to him the whole expense which he lays out upon it. 
 The profits of manufacturing stock, therefore, are not, like the rent 
 of land, a net produce which remains after completely repaying
 
 CHAP. ix. THE WEALTH OF NATIONS. 251 
 
 the whole expense which must be laid out in order to obtain them. 
 The stock of the farmer yields him a profit as well as that of the 
 master manufacturer ; and it yields a rent likewise to another 
 person, which that of the master manufacturer does not. The 
 expense, therefore, laid out in employing and maintaining artificers 
 and manufacturers, does no more than continue, if one may say so, 
 the existence of its own value, and does not produce any new value. 
 It is therefore altogether a barren and unproductive expense. The 
 expense, on the contrary, laid out in employing farmers and country 
 labourers, over and above continuing the existence of its own value, 
 produces a new value, the rent of the landlord. It is therefore a 
 productive expense. 
 
 Mercantile stock is equally barren and unproductive with manu- 
 facturing stock. It only continues the existence of its own value, 
 without producing any new value. Its profits are only the repay- 
 ment of the maintenance which its employer advances to himself 
 during the time that he employs it, or till he receives the returns of 
 it. They are only the repayment of a part of the expense which 
 must be laid out in employing it. 
 
 The labour of artificers and manufacturers never adds anything 
 to the value of the whole annual amount of the rude produce of the 
 land. It adds indeed greatly to the value of some particular parts 
 of it. But the consumption which in the meantime it occasions of 
 other parts, is precisely equal to the value which it adds to those 
 parts; so that the value of the whole amount is not, at any one 
 moment of time, in the least augmented by it. The person who 
 works the lace of a pair of fine ruffles, for example, will sometimes 
 raise the value of perhaps a pennyworth of flax to thirty pounds 
 sterling. But though at first sight he appears thereby to multiply 
 the value of a part of the rude produce about seven thousand and 
 two hundred times, he in reality adds nothing to the value of the 
 whole annual amount of the rude produce. The working of that 
 lace costs him perhaps two years' labour. The thirty pounds which 
 he gets for it when it is finished, is no more than the repayment 
 of the subsistence which he advances to himself during the two 
 years that he is employed about it. The value which, by every 
 day's, month's, or year's labour he adds to the flax, does no more 
 than replace the value of his own consumption during that day, 
 month, or year. At no moment of time, therefore, does he add
 
 252 THE NATURE AND CAUSES OF BOOK rr. 
 
 anything to the value of the whole annual amount of the rude 
 produce of the land ; the portion of that produce which he is 
 continually consuming being always equal to the value which he is 
 continually producing. The extreme poverty of the greater part of 
 the persons employed in this expensive, though trifling manu- 
 facture, may satisfy us that the price of their work does not in 
 ordinary cases exceed the value of their subsistence. It is other- 
 wise with the work of farmers and country labourers. The rent of 
 the landlord is value, which, in ordinary cases, it is continually 
 producing, over and above replacing, in the most complete manner, 
 the whole consumption, the whole expense laid out upon the employ- 
 ment and maintenance both of the workmen and of their employers. 
 Artificers, manufacturers, and merchants can augment the 
 revenue and wealth of their society by parsimony only; or, as it is 
 expressed in this system, by privation, that is, by depriving them- 
 selves of a part of the funds destined for their own subsistence. 
 They annually reproduce nothing but those funds. Unless, there- 
 fore, they annually save some part of them, unless they annually 
 deprive themselves of the enjoyment of some part of them, the 
 revenue and wealth of their society can never be in the smallest 
 degree augmented by means of their industry. Farmers and 
 country labourers, on the contrary, may enjoy completely the 
 whole funds destined for their own subsistence, and yet augment at 
 the same time the revenue and wealth of their society. Over and 
 above what is destined for their own subsistence, their industry 
 annually affords a net produce, of which the augmentation 
 necessarily augments the revenue and wealth of their society. 
 Nations, therefore, which, like France or England, consist in 
 a great measure of proprietors and cultivators, can be enriched 
 by industry and enjoyment. Nations, on the contrary, which, like 
 Holland and Hamburg, are composed chiefly of merchants, arti- 
 ficers, and manufacturers, can grow rich only through parsimony 
 and privation. 1 As the interest of nations so differently circum- 
 
 1 No one is, or ever will be, enriched of either England or France when the 
 
 by anything but parsimony. Whether Economists wrote, it is still farther from 
 
 privation is also necessary, depends on the truth at present. Smith criticises 
 
 the means and the necessities of those the notion that a nation of farmers can 
 
 who do save. Nor is the contrast be- grow rich without parsimony, but he 
 
 tween the moral and social tendencies constantly affirms the ideal virtues of an 
 
 of the respective classes alluded to in agricultural people, 
 the text more accurate. It was not true
 
 CHAP. ix. THE WEALTH OF NATIONS. 253 
 
 stanced is very different, so is likewise the common character of 
 the people. In those of the former kind, liberality, frankness, and 
 good fellowship naturally make a part of that common character. 
 In the latter, narrowness, meanness, and a selfish disposition, averse 
 to all social pleasure and enjoyment. 
 
 The unproductive class, that of merchants, artificers, and manu- 
 facturers, is maintained and employed altogether at the expense of 
 the two other classes of that of proprietors, and of that of culti- 
 vators. They furnish it both with the materials of its work and 
 with the fund of its subsistence, with the corn and cattle which it 
 consumes while it is employed about that work. The proprietors 
 and cultivators finally pay both the wages of all the workmen of 
 the unproductive class, and the profits of all their employers. 
 Those workmen and their employers are properly the servants of 
 the proprietors and cultivators. They are only servants who work 
 without doors, as menial servants work within. Both the one and 
 the other, however, are equally maintained at the expense of the 
 same masters. The labour of both is equally unproductive. It 
 adds nothing to the value of the sum total of the rude produce of 
 the land. Instead of increasing the value of that sum total, it is 
 a charge and expense which must be paid out of it. 
 
 The unproductive class, however, is not only useful, but greatly 
 useful to the other two classes. By means of the industry of 
 merchants, artificers, and manufacturers, the proprietors and culti- 
 vators can purchase both the foreign goods and the manufactured 
 produce of their own country which they have occasion for, with the 
 produce of a much smaller quantity of their own labour than what 
 they would be obliged to employ if they were to attempt, in an 
 awkward and unskilful manner, either to import the one or to make 
 the other for their own use. By means of the unproductive class, 
 the cultivators are delivered from many cares which would other- 
 wise distract their attention from the cultivation of land. The 
 superiority of produce, which, in consequence of this undivided 
 attention, they are enabled to raise, is fully sufficient to pay the 
 whole expense which the maintenance and employment of the 
 unproductive class costs either the proprietors or themselves. The 
 industry of merchants, artificers, and manufacturers, though in its 
 own nature altogether unproductive, yet contributes in this manner 
 indirectly to increase the produce of the land. It increases the
 
 254 THE NATURE AND CAUSES OF BOOK iv. 
 
 productive powers of productive labour, by leaving it at liberty to 
 confine itself to its proper employment, the cultivation of land ; 
 and the plough goes frequently the easier and the better by means 
 of the labour of the man whose business is most remote from the 
 plough. 
 
 It can never be the interest of the proprietors and cultivators to 
 restrain or to discourage in any respect the industry of merchants, 
 artificers, and manufacturers. The greater the liberty which this 
 unproductive class enjoys, the greater will be the competition in all 
 the different trades which compose it, and the cheaper will the 
 other two classes be supplied, both with foreign goods and with 
 the manufactured produce of their own country. 
 
 It can never be the interest of the unproductive class to oppress 
 the other two classes. It is the surplus produce of the land, or 
 what remains after deducting the maintenance, first, of the 
 cultivators, and afterwards of the proprietors, that maintains and 
 employs the unproductive class. The greater this surplus, the 
 greater must likewise be the maintenance and employment of that 
 class. The establishment of perfect justice, of perfect liberty, and 
 of perfect equality, is the very simple secret which most effectually 
 secures the highest degree of prosperity to all the three classes. 
 
 The merchants, artificers, and manufacturers of those mercantile 
 states which, like Holland and Hamburg, consist chiefly of this 
 unproductive class, are in the same manner maintained and em- 
 ployed altogether at the expense of the proprietors and cultivators 
 of land. The only difference is, that those proprietors and culti- 
 vators are, the greater part of them, placed at a most inconvenient 
 distance from the merchants, artificers, and manufacturers whom 
 they supply with the materials of their work and the fund of their 
 subsistence, are the inhabitants of other countries, and the subjects 
 of other governments. 
 
 Such mercantile states, however, are not only useful, but greatly 
 useful to the inhabitants of those other countries. They fill up, in 
 some measure, a very important void, and supply the place of the 
 merchants, artificers, and manufacturers whom the inhabitants of 
 those countries ought to find at home, but whom, from some defect 
 in their policy, they do not find at home. 
 
 It can never be the interest of those landed nations, if I may call 
 them so, to discourage or distress the industry of such mercantile
 
 CHAP. ix. THE WEALTH OF NATIONS. 255 
 
 states, by imposing high duties upon their trade, or upon the com- 
 modities which they furnish. Such duties, by rendering those 
 commodities dearer, could serve only to sink the real value of the 
 surplus produce of their own land, with which, or, what comes to 
 the same thing, with the price of which those commodities are 
 purchased. Such duties could serve only to discourage the increase 
 of that surplus produce, and consequently the improvement and 
 cultivation of their own land. The most effectual expedient, on the 
 contrary, for raising the value of that surplus produce, for en- 
 couraging its increase, and consequently the improvement and 
 cultivation of their own land, would be to allow the most perfect 
 freedom to the trade of all such mercantile nations. 
 
 This perfect freedom of trade would even be the most effectual 
 expedient for supplying them, in due time, with all the artificers, 
 manufacturers, and merchants whom they wanted at home, and for 
 filling up in the properest and most advantageous manner that 
 very important void which they felt there. 
 
 The continual increase of the surplus produce of their land 
 would, in due time, create a greater capital than what could be 
 employed with the ordinary rate of profit in the improvement and 
 cultivation of land ; and the surplus part of it would naturally turn 
 itself to the employment of artificers and manufacturers at home. 
 But those artificers and manufacturers, finding at home both the 
 materials of their work and the fund of their subsistence, might 
 immediately, even with much less art and skill, be able to work as 
 cheap as the like artificers and manufacturers of such mercantile 
 states, who had both to bring from a great distance. Even though, 
 from want of art and skill, they might not for some time be able to 
 work as cheap, yet, finding a market at home, they might be 
 able to sell their work there as cheap as that of the artificers and 
 manufacturers of such mercantile states, which could not be brought 
 to that market but from so great a distance ; and as their art and 
 skill improved, they would soon be able to sell it cheaper. The 
 artificers and manufacturers of such mercantile states, therefore, 
 would immediately be rivalled in the market of those landed 
 nations, and soon after undersold and justled out of it altogether. 
 The cheapness of the manufactures of those landed nations, in 
 consequence of the gradual improvements of art and skill, would, 
 in due time, extend their sale beyond the home market, and carry
 
 256 THE NATURE AND CAUSES OF BOOK iv. 
 
 them to many foreign markets, from which they would in the same 
 manner gradually justle out many of the manufactures of such 
 mercantile nations. 
 
 This continual increase both of the rude and manufactured 
 produce of those landed nations would in due time create a greater 
 capital than could, with the ordinary rate of profit, be employed 
 either in agriculture or in manufactures. The surplus of this 
 capital would naturally turn itself to foreign trade, and be em- 
 ployed in exporting to foreign countries such parts of the rude 
 and manufactured produce of its own country as exceeded the 
 demand of the home market. In the exportation of the produce of 
 their own country, the merchants of a landed nation would have an 
 advantage of the same kind over those of mercantile nations, which 
 its artificers and manufacturers had over the artificers and manu- 
 facturers of such nations : the advantage of finding at home that 
 cargo, and those stores and provisions, which the others were 
 obliged to seek for at a distance. With inferior art and skill in 
 navigation, therefore, they would be able to sell that cargo as 
 cheap in foreign markets as the merchants of sueh mercantile 
 nations ; and with equal art and skill they would be able to sell it 
 cheaper. They would soon, therefore, rival those mercantile nations 
 in this branch of foreign trade, and in due time would justle them 
 out of it altogether. 
 
 According to this liberal and generous system, therefore, the 
 most advantageous method in which a landed nation can raise up 
 artificers, manufacturers, and merchants of its own, is to grant the 
 most perfect freedom of trade to the artificers, manufacturers, and 
 merchants of all other nations. It thereby raises the value of the 
 surplus produce of its own land, of which the continual increase 
 gradually establishes a fund which in due time necessarily raises 
 up all the artificers, manufacturers, and merchants whom it has 
 occasion for. 
 
 "When a landed nation, on the contrary, oppresses either by high 
 duties or by prohibitions the trade of foreign nations, it necessarily 
 hurts its own interest in two different ways. First, by raising the 
 price of all foreign goods and of all sorts of manufactures, it 
 necessarily sinks the real value of the surplus produce of its own 
 land, with which, or, what comes to the same thing, with the price 
 of which, it purchases those foreign goods and manufactures.
 
 CHAP. ix. THE WEALTH OF NATIONS. 257 
 
 Secondly, by giving a sort of monopoly of the home market to its 
 own merchants, artificers, and manufacturers, it raises the rate of 
 mercantile and manufacturing profit in proportion to that of agri- 
 cultural profit, and consequently either draws from agriculture a 
 part of the capital which had before been employed in it, or hinders 
 from going to it a part of what would otherwise have gone to it. 
 This policy, therefore, discourages agriculture in two different ways : 
 first, by sinking the real value of its produce, and thereby lowering 
 the rate of its profit ; and, secondly, by raising the rate of profit in 
 all other employments. Agriculture is rendered less advantageous, 
 and trade and manufactures more advantageous than they otherwise 
 would be ; and every man is tempted by his own interest to turn, 
 as much as he can, both his capital and his industry from the former 
 to the latter employments. 
 
 Though, by this oppressive policy, a landed nation should be able 
 to raise up artificers, manufacturers, and merchants of its own, 
 somewhat sooner than it could do by the freedom of trade a matter, 
 however, which is not a little doubtful yet it would raise them up, 
 if one may say so, prematurely, and before it was perfectly ripe for 
 them. By raising up too hastily one species of industry, it would 
 depress another more valuable species of industry. By raising up 
 too hastily a species of industry which only replaces the stock which 
 employs it, together with the ordinary profit, it would depress a 
 species of industry which, over and above replacing that stock with 
 its profit, affords likewise a net produce, a free rent to the landlord. 
 It would depress productive labour, by encouraging too hastily that 
 labour which is altogether barren and unproductive. 
 
 In what manner, according to this system, the sum total of the 
 annual produce of the land is distributed among the three classes 
 above mentioned, arid in what manner the labour of the unproduc- 
 tive class does no more than replace the value of its own consump- 
 tion, without increasing in any respect the value of that sum total, 
 is represented by M. Quesnai, the very ingenious and profound author 
 of this system, in some arithmetical formularies. The first of these 
 formularies, which by way of eminence he peculiarly distinguishes 
 by the name of the Economical Table, represents the manner in 
 which he supposes this distribution takes place, in a state of the 
 most perfect liberty, and therefore of the highest prosperity; in 
 a state where the annual produce is such as to afford the greatest 
 
 VOL. II. S
 
 258 THE NATURE AND CAUSES OF BOOK iv. : 
 
 possible net produce, and where each class enjoys its proper share of 
 the whole annual produce. 1 Some subsequent formularies represent 
 the manner in which he supposes this distribution is made in different 
 states of restraint and regulation ; in which either the class of proprie- 
 tors, or the barren and unproductive class, is more favoured than 
 the class of cultivators, and in which either the one or the other 
 encroaches more or less upon the share which ought properly to 
 belong to this productive class. Every such encroachment, every viola- 
 tion of that natural distribution, which the most perfect liberty would 
 establish, must, according to this system, necessarily degrade more or 
 less, from one year to another, the value and sum total of the annual 
 produce, and must necessarily occasion a gradual declension in the 
 real wealth and revenue of the society ; a declension of which the 
 progress must be quicker or slower, according to the degree of this 
 eDcroachment, according as that natural distribution, which the 
 most perfect liberty would establish, is more or less violated. Those 
 subsequent formularies represent the different degrees of declension, 
 which, according to this system, correspond to the different degrees 
 in which this natural distribution of things is violated. 
 
 Some speculative physicians seem to have imagined that the 
 health of the human body could be preserved only by a certain pre- 
 cise regimen of diet and exercise, of which every, the smallest, 
 violation necessarily occasioned some degree of disease or disorder 
 proportioned to the degree of the violation. Experience, however, 
 would seem to show that the human body frequently preserves, to 
 all appearance at least, the most perfect state of health under a vast 
 variety of different regimens ; even under some which are generally 
 believed to be very far from being perfectly wholesome. But the 
 healthful state of the human body, it would seem, contains in itself 
 some unknown principle of preservation, capable either of preventing 
 or of correcting, in many respects, the bad effects even of a very 
 faulty regimen. M. Quesnai, who was himself a physician, and a 
 very speculative physician, seems to have entertained a notion of 
 the same kind concerning the political body, and to have imagined 
 that it would thrive and prosper only under a certain precise regi- 
 men, the exact regimen of perfect liberty and perfect justice. He 
 seems not to have considered that in the political body, the natural 
 effort which every man is continually making to better his own 
 
 1 Analyse da Tableau ^conomique.
 
 CHAP. ix. THE WEALTH OF NATIONS. 259 
 
 condition is a principle of preservation capable of preventing and 
 correcting, in many respects, the bad effects of a political economy 
 in some degree both partial and oppressive. Such a political 
 economy, though it no doubt retards more or less, is not always 
 capable of stopping altogether the natural progress of a nation 
 towards wealth and prosperity, and still less of making it go back- 
 wards. If a nation could not prosper without the enjoyment of 
 perfect liberty and perfect justice, there is not in the world a nation 
 which could ever have prospered. In the political body, however, 
 the wisdom of nature has fortunately made ample provision for 
 remedying many of the bad effects of the folly and injustice of 
 man ; in the same manner as it has done in the natural body for 
 remedying those of his sloth and intemperance. 
 
 The capital error of this system, however, seems to lie in its 
 representing the class of artificers, manufacturers, and merchants 
 as altogether barren and unproductive. The following observations 
 may serve to show the impropriety of this representation. 
 
 First, This class, it is acknowledged, reproduces annually the value 
 of its own annual consumption, and continues, at least, the existence 
 of the stock or capital which maintains and employs it. But upon 
 this account alone the denomination of barren or unproductive 
 should seem to be very improperly applied to it. We should not call 
 a marriage barren or unproductive, though it produced only a son 
 and a daughter, to replace the father and mother, and though it 
 did not increase the number of the human species, but only con- 
 tinued it as it was before. Farmers and country labourers, indeed, 
 over and above the stock which maintains and employs them, 
 reproduce annually a net produce, a free rent to the landlord. As 
 a marriage which affords three children is certainly more productive 
 than one which affords only two, so the labour of farmers and 
 country labourers is certainly more productive than that of 
 merchants, artificers, and manufacturers. The superior produce 
 of the one class, however, does not render the other barren or 
 unproductive. 
 
 Secondly, It seems, upon this account, altogether improper to 
 consider artificers, manufacturers, and merchants in the same light 
 as menial servants. The labour of menial servants does not con- 
 tinue the existence of the fund which maintains and employs them. 
 Their maintenance and employment is altogether at the expense of 
 
 8 2
 
 260 THE NATURE AND CAUSES OF BOOK iv. 
 
 their masters, and the work which they perform is not of a nature 
 to repay that expense. That work consists in services which perish 
 generally in the very instant of their performance, and does not fix or 
 realise itself in any vendible commodity which can replace the value 
 of their wages and maintenance. The labour, on the contrary, of 
 artificers, manufacturers, and merchants, naturally does fix and 
 realise itself in some such vendible commodity. It is upon this 
 account that, in the chapter in which I treat of productive and 
 unproductive labour, 1 I have classed artificers, manufacturers, and 
 merchants among the productive labourers, and menial servants 
 among the barren or unproductive. 
 
 Thirdly, It seems, upon every supposition, improper to say that 
 the labour of artificers, manufacturers, and merchants does not 
 increase the real revenue of the society. Though we should suppose, 
 for example, as it seems to be supposed in this system, that the 
 value of the daily, monthly, and yearly consumption of this class 
 was exactly equal to that of its daily, monthly, and yearly produc- 
 tion, yet it would not from thence follow that its labour added 
 nothing to the real revenue, to the real value of the annual produce 
 of the land and labour of the society. An artificer, for example, who, 
 in the first six months after harvest, executes ten pounds' worth of 
 work, though he should in the same time consume ten pounds' worth 
 of corn and other necessaries, yet really adds the value of ten pounds 
 to the annual produce of the land and labour of the society. While 
 he has been consuming a half-yearly revenue of ten pounds' worth 
 of corn and other necessaries, he has produced an equal value of 
 work capable of purchasing, either to himself or to some other 
 person, an equal half-yearly revenue. The value, therefore, of what 
 has been consumed and produced during these six months is equal, 
 not to ten, but to twenty pounds. It is possible, indeed, that no 
 more than ten pounds' worth of this value may ever have existed at 
 any one moment of time. But if the ten pounds' worth of corn and 
 other necessaries, which were consumed by the artificer, had been 
 consumed by a soldier or by a menial servant, the value of that part 
 of the annual produce which existed at the end of the six months, 
 would have been ten pounds less than it actually is in consequence of 
 the labour of the artificer. Though the value of what the artificer 
 produces, therefore, should not at any one moment of time be sup- 
 
 1 Book II. chap. iii.
 
 CHAP. ix. THE WEALTH OF NATIONS. 261 
 
 posed greater than the value he consumes, yet at every moment of 
 time the actually existing value of goods in the market is, in con- 
 sequence of what he produces, greater than it otherwise would be. 1 
 
 When the patrons of this system assert that the consumption of 
 artificers, manufacturers, and merchants is equal to the value of 
 what they produce, they probably mean no more than that their 
 revenue, or the fund destined for their consumption, is equal to it. But 
 if they had expressed themselves more accurately, and only asserted 
 that the revenue of this class was equal to the value of what they 
 produced, it might readily have occurred to the reader, that what 
 would naturally be saved out of this revenue must necessarily 
 increase more or less the real wealth of the society. In order, 
 therefore, to make out something like an argument, it was necessary 
 that they should express themselves as they have done ; and this 
 argument, even supposing things actually were as it seems to presume 
 them to be, turns out to be a very inconclusive one. 
 
 Fourthly, Farmers and country labourers can no more augment, 
 without parsimony, the real revenue, the annual produce of the land 
 and labour of their society, than artificers, manufacturers, and mer- 
 chants. The annual produce of the land and labour of any society can 
 be augmented only in two ways : either, first, by some improvement 
 in the productive powers of the useful labour actually maintained with- 
 in it ; or, secondly, by some increase in the quantity of that labour. 
 
 The improvement in the productive powers of useful labour 
 depends, first, upon the improvement in the ability of the workman ; 
 and, secondly, upon that of the machinery with which he works. 
 But the labour of artificers and manufacturers, as it is capable of 
 being more subdivided, and the labour of each workman reduced to 
 a greater simplicity of operation, than that of farmers and country 
 
 1 The question is, has the labour of the estimate which society puts on the pro- 
 artisan added to the real wealth of society ] duct of the labour itself. Without this 
 And the answer must be in the affirma- anticipation, labour would not be set in 
 tive, even if, as is presumed, the addition motion ; without this confirmation which 
 to the money value of the artisan's pro- the operation of exchange gives of the 
 duct is no more than the money value of value which is embodied in the product 
 the food which he has consumed during by labour, the employment of labour in 
 the process. It is inevitably the case, this direction would cease. The saving 
 however, that the money value of his pro- of such artisans is parsimony exercised 
 duct is greater, on the average, than the not upon the means of bare subsistence 
 cost of production, else the labour would and other elements of necessary cost, but 
 not be undertaken. The profit which on the profit which remains over and 
 accompanies the artisan's labour is at above this cost, 
 once the impulse to the labour, and the
 
 262 THE NATURE AND CAUSES OF BOOKIV. 
 
 labourers, so it is likewise capable of both these sorts of improve- 
 ment in a much higher degree.* In this respect, therefore, the 
 class of cultivators can have no sort of advantage over that of arti- 
 ficers and manufacturers. 
 
 The increase in the quantity of useful labour actually employed 
 within any society, must depend altogether upon the increase of the 
 capital which employs it ; and the increase of that capital again 
 must be exactly equal to the amount of the savings from the 
 revenue, either of the particular persons who manage and direct the 
 employment of that capital, or of some other persons who lend it 
 to them. If merchants, artificers, and manufacturers are, as this 
 system seems to suppose, naturally more inclined to parsimony and 
 saving than proprietors and cultivators, they are, so far, more likely 
 to augment the quantity of useful labour employed within their 
 society, and consequently to increase its real revenue, the annual 
 produce of its land and labour. 
 
 Fifthly and lastly, though the revenue of the inhabitants of every 
 country was supposed to consist altogether, as this system seems to 
 suppose, in the quantity of subsistence which their industry could 
 procure to them, yet, even upon this supposition, the revenue of a 
 trading and manufacturing country must, other things being equal, 
 always be much greater than that of one without trade or manufac- 
 tures. By means of trade and manufactures, a greater quantity of 
 subsistence can be annually imported into a particular country than 
 what its own lands, in the actual state of their cultivation, 
 could afford. The inhabitants of a town, though they frequently 
 possess no lands of their own, yet draw to themselves by their 
 industry such a quantity of the rude produce of the lands of 
 other people as supplies them, not only with the materials of 
 their work, but with the fund of their subsistence. What a town 
 always is with regard to the country in its neighbourhood, one 
 independent state or country may frequently be with regard to 
 other independent states or countries. It is thus that Holland 
 draws a great part of its subsistence from other countries ; live 
 cattle from Holstein and Jutland, and corn from almost all the 
 different countries of Europe. A small quantity of manufactured 
 produce purchases a great quantity of rude produce. A trading 
 and manufacturing country, therefore, naturally purchases with a 
 * See Book I. chap, i
 
 CHAP. ix. THE WEALTH OF NATIONS. 263 
 
 small part of its manufactured produce a great part of the rude pro- 
 duce of other countries ; while, on the contrary, a country without 
 trade and manufactures is generally obliged to purchase, at the 
 expense of a great part of its rude produce, a very small part of the 
 manufactured produce of other countries. The one exports what 
 can subsist and accommodate but a very few, and imports the sub- 
 sistence and accommodation of a great number ; the other exports 
 the accommodation and subsistence of a great number, and imports 
 that of a very few only. The inhabitants of the one must always 
 enjoy a much greater quantity of subsistence than what their own 
 lands, in the actual state of their cultivation, could afford. The 
 inhabitants of the other must always enjoy a much smaller quantity. 
 This system, however, with all its imperfections, is, perhaps, the 
 nearest approximation to the truth that has yet been published 
 upon the subject of political economy, and is upon that account well 
 worth the consideration of every man who wishes to examine with 
 attention the principles of that very important science. Though in 
 representing the labour which is employed upon land as the only 
 productive labour, the notions which it inculcates are perhaps too 
 narrow and confined ; yet in representing the wealth of nations as 
 consisting, not in the unconsumable riches of money, but in the 
 consumable goods annually reproduced by the labour of the society, 
 and in representing perfect liberty as the only effectual expedient 
 for rendering this annual reproduction the greatest possible, its doc- 
 trine seems to be in every respect as just as it is generous and 
 liberal. Its followers are very numerous ; and as men are fond of 
 paradoxes, and of appearing to understand what surpasses the com- 
 prehension of ordinary people, the paradox which it maintains, con- 
 cerning the unproductive nature of manufacturing labour, has not 
 perhaps contributed a little to increase the number of its admirers. 
 They have for some years past made a pretty considerable sect, 
 distinguished in the French republic of letters by the name of ' The 
 Economists.' Their works have certainly been of some service to 
 their country; not only by bringing into general discussion many 
 subjects which had never been well examined before, but by influ- 
 encing in some measure the public administration in favour of 
 agriculture. It has been in consequence of their representations, 
 accordingly, that the agriculture of France has been delivered from 
 several of the oppressions which it before laboured under. The
 
 264 THE NATURE AND CAUSES OF BOOK iv. 
 
 term during which such a lease can be granted, as will be valid 
 against every future purchaser or proprietor of land, has been pro- 
 longed from nine to twenty-seven years. The ancient provincial 
 restraints upon the transportation of corn from one province of the 
 kingdom to another, have been entirely taken away, and the liberty 
 of exporting it to all foreign countries has been established as the 
 common law of the kingdom in all ordinary cases. This sect, in 
 their works, which are very numerous, and which treat not only of 
 what is properly called Political Economy, or of the nature and 
 causes of the wealth of nations, but of every other branch of the 
 system of civil government, all follow implicitly, and without any 
 sensible variation, the doctrine of M. Quesnai. There is upon this 
 account little variety in the greater part of their works. The most 
 distinct and best connected account of this doctrine is to be found 
 in a little book written by M. Mercier de la Riviere, sometime 
 Intendant of Martinico, entitled ' The Natural and Essential Order 
 of Political Societies.' 1 The admiration of this whole sect for their 
 master, who was himself a man of the greatest modesty and sim- 
 plicity, is not inferior to that of any of the ancient philosophers 
 for the founders of their respective systems. ' There have been, 
 since the world began/ says a very diligent and respectable author, 
 the Marquis de Mirabeau, 2 'three great inventions which have 
 principally given stability to political societies, independent of many 
 other inventions which have enriched and adorned them. The first 
 is the invention of writing, which alone gives human nature the 
 power of transmitting, without alteration, its laws, its contracts, its 
 annals, and its discoveries ; the second is the invention of money, 
 which binds together all the relations between civilised societies ; 
 the third is the Economical Table, the result of the other two, 
 which completes them both by perfecting their object : the great 
 discovery of our age, but of which our posterity will reap the benefit. 
 As the political economy of the nations of modern Europe has 
 been more favourable to manufactures and foreign trade, the in- 
 dustry of the towns, than to agriculture, the industry of the country, 
 
 1 Edited by Daire, and published in generally deserving of the name which 
 
 Gillaumin's series of Political Econo- is given to one of them, viz. ' Ennuyeux 
 
 mists. fatras,' Smith must have over-estimated 
 
 8 This writer, the father of a more this author. I have not been able to dis- 
 
 eminent person, was a follower of Du cover the passage in L'Ami des Hommes, 
 
 Quesnai, and the author of several works or The'orie de I'lmpdt, which I have found 
 
 on Political Economy. If his works were in the Bodleian.
 
 CHAP. ix. THE WEALTH OF NATIONS. 265 
 
 so that of other nations has followed a different plan, and has been 
 more favourable to agriculture than to manufactures and foreign trade. 
 
 The policy of China favours agriculture more than all other 
 employments. In China, the condition of a labourer is said to be 
 as much superior to that of an artificer, as in most parts of Europe 
 that of an artificer is to that of a labourer. In China, the great 
 ambition of every man is to get possession of some little bit of land, 
 either in property or in lease; and leases are there said to be 
 granted upon very moderate terms, and to be sufficiently secured to 
 the lessees. The Chinese have little respect for foreign trade. Your 
 beggarly commerce ! was the language in which the mandarins of 
 Pekin used to talk to Mr. De Lange, the Russian envoy, concerning 
 it.* Except with Japan, the Chinese oarry on, themselves, and in 
 their own bottoms, little or no foreign trade ; and it is only into 
 one or two ports of their kingdom that they even admit the ships 
 of foreign nations. Foreign trade, therefore, is, in China, every 
 way confined within a much narrower circle than that to which it 
 would naturally extend itself, if more freedom was allowed to it, 
 either in their own ships, or in those of foreign nations. 
 
 Manufactures, as in a small bulk they frequently contain a great 
 value, and can upon that account be transported at less expense 
 from one country to another than most parts of rude produce, are, 
 in almost all countries, the principal support of foreign trade. In 
 countries, besides, less extensive and less favourably circumstanced 
 for interior commerce than China, they generally require the support 
 of foreign trade. Without an extensive foreign market, they could 
 not well flourish, either in countries so moderately extensive as to 
 afford but a narrow home market, or in countries where the com- 
 munication between one province and another was so difficult as to 
 render it impossible for the goods of any particular place to enjoy 
 the whole of that home market which the country could afford. 
 The perfection of manufacturing industry, it must be remembered, 
 depends altogether upon the division of labour ; and the degree to 
 which the division of labour can be introduced into any manufac- 
 ture, is necessarily regulated, it has already been shown, by the 
 extent of the market. But the great extent of the empire of China, 
 the vast multitude of its inhabitants, the variety of climate, and 
 consequently of productions in its different provinces, and the easy 
 
 * See the Journal of Mr. De Lange, in Bell's Travels, vol. ii. pp. 258, 276, 293.
 
 266 THE NATURE AND CAUSES OF BOOK iv. 
 
 communication by means of water-carriage between the greater part 
 of them, render the home market of that country of so great extent 
 as to be alone sufficient to support very great manufactures, and 
 to admit of very considerable subdivisions of labour. The home 
 market of China is, perhaps, in extent not much inferior to the 
 market of all the different countries of Europe put together, A more 
 extensive foreign trade, however, which to this great home market 
 added the foreign market of all the rest of the world, especially if 
 any considerable part of this trade was carried on in Chinese ships, 
 could scarce fail to increase very much the manufactures of China, 
 and to improve very much the productive powers of its manufac- 
 turing industry. By a more extensive navigation, the Chinese would 
 naturally learn the art of using and constructing themselves all the 
 different machines made use of in other countries, as well as the other 
 improvements of art and industry which are practised in all the 
 different parts of the world. Upon their present plan, they have 
 little opportunity of improving themselves by the example of any 
 other nation, except that of the Japanese. 
 
 The policy of ancient Egypt too, and that of the Gentoo govern- 
 ment of Hindostan, seem to have favoured agriculture more than 
 all other employments. 
 
 Both in ancient Egypt and Hindostan, the whole body of the 
 people was divided into different castes or tribes, each of which 
 was confined, from father to son, to a particular employment or 
 class of employments. The son of a priest was necessarily a priest ; 
 the son of a soldier, a soldier ; the son of a labourer, a labourer ; 
 the son of a weaver, a weaver; the son of a tailor, a tailor, &c. 
 In both countries the caste of the priests held the highest rank, 
 and that of the soldiers the next ; and in both countries the caste 
 of the farmers and labourers was superior to the casts of merchants 
 and manufacturers. 
 
 The government of both countries was particularly attentive to 
 the interest of agriculture. The works constructed by the ancient 
 sovereigns of Egypt for the proper distribution of the waters of 
 the Nile were famous in antiquity; and the ruined remains of 
 some of them are still the admiration of travellers. Those of the 
 same kind which were constructed by the ancient sovereigns of 
 Hindostan for the proper distribution of the waters of the Ganges 
 as well as of many other rivers, though they have been less cele-
 
 CHAP. ix. THE WEALTH OF NATIONS. 267 
 
 brated, seem to have been equally great. Both countries, accord- 
 ingly, though subject occasionally to dearths, have been famous 
 for their great fertility. Though both were extremely populous, 
 yet, in years of modern plenty, they were both able to export great 
 quantities of grain to their neighbours. 
 
 The ancient Egyptians had a superstitious aversion to the sea ; 
 and as the Gentoo religion does not permit its followers to light 
 a fire, nor consequently to dress any victuals upon the water, it 
 in effect prohibits them from all distant sea voyages. Both the 
 Egyptians and Indians must have depended almost altogether upon 
 the navigation of other nations for the exportation of their surplus 
 produce ; and this dependency, as it must have confined the market, 
 so it must have discouraged the increase of this surplus produce. 
 It must have discouraged too the increase of the manufactured 
 produce more than that of the rude produce. Manufactures re- 
 quire a much more extensive market than the most important 
 parts of the rude produce of the land. A single shoemaker will 
 make more than three hundred pairs of shoes in the year ; and his 
 own family will not perhaps wear out six pairs. Unless therefore 
 he has the custom of at least fifty such families as his own, he 
 cannot dispose of the whole produce of his own labour. The most 
 numerous class of artificers will seldom, in a large country, make 
 more than one in fifty or one in a hundred of the whole number 
 of families contained in it. But in such large countries as France 
 and England, the number of people employed in agriculture has 
 by some authors been computed at a half, by others at a third, and 
 by no author that I know of at less than a fifth of the whole 
 inhabitants of the country. But as the produce of the agriculture 
 of both France and England is, the far greater part of it, consumed 
 at home, each person employed in it must, according to these 
 computations, require little more than the custom of one, two, 
 or, at most, of four such families as his own, in order to dispose 
 of the whole produce of his own labour. Agriculture, therefore, 
 can support itself under the discouragement of a confined market, 
 much better than manufactures. In both ancient Egypt and Hin- 
 dostan, indeed, the confinement of the foreign market was in some 
 measure compensated by the conveniency of many inland naviga- 
 tions, which opened, in the most advantageous manner, the whole 
 extent of the home market to every part of the produce of every
 
 268 THE NATURE AND CAUSES OF BOOK iv. 
 
 different district of those countries. The great extent of Hindostan 
 too rendered the home market of that country very great, and 
 sufficient to support a great variety of manufactures. But the 
 small extent of ancient Egypt, which was never equal to England, 
 must at all times have rendered the home market of that country 
 too narrow for supporting any great variety of manufactures. 
 Bengal, accordingly, the province of Hindostan, which commonly 
 exports the greatest quantity of rice, has always been more re- 
 markable for the exportation of a great variety of manufactures 
 than for that of its grain. Ancient Egypt, on the contrary, though 
 it exported some manufactures, fine linen in particular, as well 
 as some other goods, was always most distinguished for its great 
 exportation of grain. It was long the granary of the Roman 
 Empire. 
 
 The sovereigns of China, of ancient Egypt, and of the different 
 kingdoms into which Hindostan has at different times been divided, 
 have always derived the whole, or by far the most considerable 
 part, of their revenue from some sort of land-tax or land-rent. 
 This land-tax or land-rent, like the tithe in Europe, consisted in 
 a certain proportion, a fifth, it is said, of the produce of the land, 
 which was either delivered in kind, or paid in money, according 
 to a certain valuation, and which therefore varied from year to 
 year according to all the variations of the produce. It was natural, 
 therefore, that the sovereigns of those countries should be particu- 
 larly attentive to the interests of agriculture, upon the prosperity 
 or declension of which immediately depended the yearly increase 
 or diminution of their own revenue. 
 
 The policy of the ancient republics of Greece, and that of Rome, 
 though it honoured agriculture more than manufactures or foreign 
 trade, yet seems rather to have discouraged the latter employ- 
 ments than to have given any direct or intentional encouragement 
 to the former. In several of the ancient states of Greece, foreign 
 trade was prohibited altogether ; and in several others the employ- 
 ments of artificers and manufacturers were considered as hurtful 
 to the strength and agility of the human body, as rendering it 
 incapable of those habits which their military and gymnastic ex- 
 ercises endeavoured to form in it, and as thereby disqualifying it 
 more or less for undergoing the fatigues and encountering the 
 dangers of war. Such occupations were considered as fit only for
 
 CHAP. ix. THE WEALTH OF NATIONS. 269 
 
 slaves, and the free citizens of the state were prohibited from 
 exercising them. Even in those states where no such prohibition 
 took place, as in Rome and Athens, the great body of the people 
 were in effect excluded from all the trades which are now com- 
 monly exercised by the lower sort of the inhabitants of towns. 
 Such trades were, at Athens and Rome, all occupied by the slaves 
 of the rich, who exercised them for the benefit of their masters, 
 whose wealth, power, and protection made it almost impossible 
 for a poor freeman to find a market for his work when it came 
 into competition with that of the slaves of the rich. Slaves, 
 however, are very seldom inventive ; and all the most important 
 improvements, either in machinery, or in the arrangement and dis- 
 tribution of work which facilitate and abridge labour, have been 
 the discoveries of freemen. 1 Should a slave propose any improve- 
 ment of this kind, his master would be very apt to consider the 
 proposal as the suggestion of laziness and a desire to save his 
 own labour at the master's expense. The poor slave, instead of 
 reward, would probably meet with much abuse, perhaps with some 
 punishment. In the manufactures carried on by slaves, therefore, 
 more labour must generally have been employed to execute the 
 same quantity of work, than in those carried on by freemen. The 
 work of the former must, upon that account, generally have been 
 dearer than that of the latter. The Hungarian mines, it is re- 
 marked by M. Montesquieu, 2 though not richer, have always been 
 wrought with less expense, and therefore with more profit, than 
 the Turkish mines in their neighbourhood. The Turkish mines 
 are wrought by slaves, and the arms of those slaves are the only 
 machines which the Turks have ever thought of employing. The 
 Hungarian mines are wrought by freemen, who employ a great 
 deal of machinery, by which they facilitate and abridge their own 
 labour. From the very little that is known about the price of 
 
 1 There can, it seems, be little doubt But had the mechanical increased in 
 
 that the scanty progress which ancient antiquity as fully as the fine arts did, 
 
 civilisation made in mechanical science the incursion of the barbarians would have 
 
 (the chief means by which labour is eco- been foiled as successfully as a similar 
 
 noinised), is to be explained by the pre- irruption would be in our own days, 
 valence of slavery. Where labour is a ' Les Mines des Turcs dans le Bannat 
 
 degraded in the persons of those who de Temeswar e"toient plus riches que 
 
 exercise it, it will not betake itself to celles de Hongrie, et elles ne produisoient 
 
 those means of shortening and economis- pas tant, parce qu'ils n'imaginoient jamais 
 
 ing it which have been adopted with such que les bras de leurs Esclaves.' Esprit 
 
 signal success in modern civilisation. des Loix, lib. xv. chap. viii.
 
 270 THE NATURE AND CAUSES OF BOOK rv. 
 
 manufactures in the times of the Greeks and Romans, it would 
 appear that those of the finer sort were excessively dear. Silk 
 sold for its weight in gold. It was not, indeed, in those times a 
 European manufacture ; and as it was all brought from the East 
 Indies, the distance of the carriage may in some measure account 
 for the greatness of the price. The price, however, which a lady, 
 it is said, would sometimes pay for a piece of very fine linen, 
 seems to have been equally extravagant ; and as linen was always 
 either a European, or, at farthest, an Egyptian manufacture, this 
 high price can be accounted for only by the great expense of the 
 labour which must have been employed about it, and the expense 
 of this labour again could arise from nothing but the awkwardness 
 of the machinery which it made use of. The price of fine woollens, 
 too, though not quite so extravagant, seems however to have been 
 much above that of the present times. Some cloths, we are told 
 by Pliny, dyed in a particular manner, cost a hundred denarii, 
 or three pounds six shillings and eightpence the pound weight.* 
 Others dyed in another manner cost a thousand denarii the pound 
 weight, or thirty-three pounds six shillings and eightpence. (The 
 Roman pound, it must be remembered, contained only twelve of 
 our avoirdupois ounces.) This high price, indeed, seems to have 
 been principally owing to the dye. But had not the cloths them- 
 selves been much dearer than any which are made in the present 
 times, so very expensive a dye would not probably have been 
 bestowed upon them. The disproportion would have been too 
 great between the value of the accessory and that of the principal. 
 The price mentioned by the same author f of some Triclinaria 
 a sort of woollen pillows or cushions make use of to lean upon as 
 they reclined upon their couches at table, passes all credibility ; 
 some of them being said to have cost more than thirty thousand, 
 others more than three hundred thousand pounds. This high 
 price too is not said to have arisen from the dye. In the dress 
 of the people of fashion of both sexes, there seems to have been 
 much less variety, it is observed by Dr. Arbuthnot, in ancient 
 than in modern times ; and the very little variety which we find 
 in that of the ancient statues confirms his observation. He infers 
 from this, that their dress must upon the whole have been cheaper 
 than ours; but the conclusion does not seem to follow. When 
 
 * Plin. 1. ix. c. 39. t Ib. 1. viii. c. 48.
 
 CHAP. ix. THE WEALTH OF NATIONS. 271 
 
 the expense of fashionable dress is very great, the variety must 
 be very small ; but when, by the improvements in the productive 
 powers of manufacturing art and industry, the expense of any one 
 dress comes to be very moderate, the variety will naturally be very 
 great. The rich not being able to distinguish themselves by the 
 expense of any one dress, will naturally endeavour to do so by 
 the multitude and variety of their dresses. 
 
 The greatest and most important branch of the commerce of 
 every nation, it has already been observed, is that which is carried 
 on between the inhabitants of the town and those of the country. 
 The inhabitants of the town draw from the country the rude 
 produce which constitutes both the materials of their work and 
 the fund of their subsistence ; and they pay for this rude produce 
 by sending back to the country a certain portion of it manufactured 
 and prepared for immediate use. The trade which is carried on 
 between these two different sets of people, consists ultimately in 
 a certain quantity of rude produce exchanged for a certain quantity 
 of manufactured produce. The dearer the latter, therefore, the 
 cheaper the former ; and whatever tends in any country to raise 
 the price of manufactured produce, tends to lower that of the 
 rude produce of the land, and thereby to discourage agriculture. 
 The smaller the quantity of manufactured produce which any given 
 quantity of rude produce, or, what comes to the same thing, which 
 the price of any given quantity of rude produce is capable of pur- 
 chasing, the smaller the exchangeable value of that given quantity 
 of rude produce, the smaller the encouragement which either the 
 landlord has to increase its quantity by improving, or the farmer 
 by cultivating the land. Whatever, besides, tends to diminish 
 in any country the number of artificers and manufacturers, tends 
 to diminish the home market, the most important of all markets 
 for the rude produce of the land, and thereby still further to 
 discourage agriculture. 
 
 Those systems, therefore, which preferring agriculture to all other 
 employments, in order to promote it, impose restraints upon manu- 
 factures and foreign trade, act contrary to the very end which they 
 propose, and indirectly discourage that very species of industry 
 which they mean to promote. 1 They are so far, perhaps, more 
 
 1 The check which a mercantile theory the fact that manufactures cannot be 
 may impose on agriculture is limited by expanded except as agriculture progres-
 
 272 THE NATURE AND CAUSES OF BOOK iv. 
 
 inconsistent than even the mercantile system. That system, by 
 encouraging manufactures and foreign trade more than agricul- 
 ture, turns a certain portion of the capital of the society from 
 supporting a more advantageous, to support a less advantageous 
 species of industry. But still it really and in the end encourages 
 that species of industry which it means to promote. Those agri- 
 cultural systems, on the contrary, really and in the end discourage 
 their own favourite species of industry. 
 
 It is thus that every system which endeavours, either by extra- 
 ordinary encouragements, to draw towards a particular v species of 
 industry a greater share of the capital of the society than what 
 would naturally go to it ; or, by extraordinary restraints, to force 
 from a particular species of industry some share of the capital which 
 would otherwise be employed in it, is in reality subversive of the 
 great purpose which it means to promote. It retards, instead of 
 accelerating, the progress of the society towards real wealth and 
 greatness ; and diminishes, instead of increasing, the real value of 
 the annual produce of its land and labour. 
 
 All systems either of preference or of restraint, therefore, being 
 thus completely taken away, the obvious and simple system of natural 
 liberty establishes itself of its own accord. Every man, as long as 
 he does not violate the laws of justice, is left perfectly free to 
 pursue his own interest his own way, and to bring both his industry 
 and capital into competition with those of any other man, or order 
 of men. The sovereign is completely discharged from a duty, in 
 the attempting to perform which he must always be exposed to 
 innumerable delusions, and for the proper performance of which no 
 human wisdom or knowledge could ever be sufficient, the duty of 
 superintending the industry of private people, and of directing it 
 towards the employments most suitable to the interest of the 
 society. According to the system of natural liberty, the sovereign 
 has only three duties to attend to ; three duties of great import- 
 ance, indeed, but plain and intelligible to common understandings : 
 first, the duty of protecting the society from the violence and 
 
 sively supplies the means of maintenance in the next place, injures agriculture 
 
 to manufacturers by its progressive im- itself by discouraging that demand for 
 
 provements in production. But any sys- its produce which a prosperous manu- 
 
 tem which attempts to discourage manu- factory stimulates. The landowner has 
 
 factures in the interest of agriculture, gained largely in this country by the 
 
 inflicts, in the first place, a wrong on abolition of laws designed for his special 
 
 those who purchase manufactures, and benefit.
 
 CHAP. ix. THE WEALTH OF NATIONS. 273 
 
 invasion of other independent societies ; secondly, the duty of pro- 
 tecting, as far as possible, every member of the society from the 
 injustice or oppression of every other member of it, or the duty of 
 establishing an exact administration of justice ; and, thirdly, the 
 duty of erecting 1 and maintaining certain public works and certain 
 public institutions, which it can never be for the interest of any 
 individual, or small number of individuals, to erect and maintain ; 
 because the profit could never repay the expense to any individual 
 or small number of individuals, though it may frequently do much 
 more than repay it to a great society. 
 
 The proper performance of those several duties of the sovereign 
 necessarily supposes a certain expense; and this expense again 
 necessarily requires a certain revenue to support it. In the fol- 
 lowing Book, therefore, I shall endeavour to explain, first, what 
 are the necessary expenses of the sovereign or commonwealth ; and 
 which of those expenses ought to be defrayed by the general con- 
 tribution of the whole society ; and which of them, by that of some 
 particular part only, or of some particular members of the society : 
 secondly, what are the different methods in which the whole society 
 may be made to contribute towards defraying the expenses in- 
 cumbent on the whole society, and what are the principal advan- 
 tages and inconveniences of each of those methods ; and, thirdly, 
 what are the reasons and causes which have induced almost all 
 modern governments to mortgage some part of this revenue, or to 
 contract debts, and what have been the effects of those debts upon 
 the real wealth, the annual produce of the land and labour of the 
 society. The following Book, therefore, will naturally be divided 
 into three chapters. 
 
 VOL. TI.
 
 BOOK V. 
 
 
 
 OF THE REVENUE OF THE SOVEREIGN OR 
 COMMONWEALTH. 
 
 CHAPTER I. 
 
 OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH. 
 
 PART I. 
 
 Of the Expense of Defence. 
 
 THE first duty of the sovereign, that of protecting the society 
 from the violence and invasion of other independent societies, 
 can be performed only by means of a military force. But the 
 expense both of preparing this military force in time of peace, and 
 of employing it in time of war, is very different in the different 
 states of society, in the different periods of improvement. 
 
 Among nations of hunters, the lowest and rudest state of so- 
 ciety, such as we find it among the native tribes of North America, 
 every man is a warrior as well as a hunter. When he goes to war, 
 either to defend his society, or to revenge the injuries which have 
 been done to it by other societies, he maintains himself by his own 
 labour, in the same manner as when he lives at home. His so- 
 ciety (for in this state of things there is properly neither sovereign 
 nor commonwealth) is at no sort of expense, either to prepare him 
 for the field, or to maintain him while he is in it. 
 
 Among nations of shepherds, a more advanced state of society, 
 such as we find it among the Tartars and Arabs, every man is, 
 in the same manner, a warrior. Such nations have commonly no 
 fixed habitation, but live, either in tents, or in a sort of covered 
 waggons, which are easily transported from place to place. The 
 whole tribe or nation changes its situation according to the different 
 seasons of the year, as well as according to other accidents. When
 
 CHAP. i. THE WEALTH OF NATIONS. 275 
 
 its herds and flocks have consumed the forage of one part of the 
 country it removes to another, and from that to a third. In the 
 dry season it comes down to the banks of the rivers, in the wet 
 season it retires to the upper country. When such a nation goes 
 to war, the warriors will not trust their herds and flocks to the 
 feeble defence of their old men, their women and children ; and 
 their old men, their women and children, will not be left behind 
 without defence and without subsistence. 'The whole nation, be- 
 sides, being accustomed to a wandering life, even in time of peace, 
 easily takes the field in time of war. Whether it marches as an 
 army, or moves about as a company of herdsmen, the way of life 
 is nearly the same, though the object proposed by it be very dif- 
 ferent. They all go to war together, therefore, and every one does 
 as well as he can. Among the Tartars, even the women have 
 been frequently known to engage in battle. If they conquer, 
 whatever belongs to the hostile tribe is the recompense of the 
 victory; but if they are vanquished, all is lost, and not only 
 their herds and flocks, but their women and children, become the 
 booty of the conqueror. Even the greater part of those who 
 survive the action are obliged to submit to him for the sake of 
 immediate subsistence. The rest are commonly dissipated and 
 dispersed in the desert. 
 
 The ordinary life, the Ordinary exercises of a Tartar or Arab, 
 prepare him sufficiently for war. Running, wrestling, cudgel- 
 playing, throwing the javelin, drawing the bow, &c., are the 
 common pastimes of those who live in the open air, and are all 
 of them the images of war. When a Tartar or Arab actually goes 
 to war, he is maintained, by his own herds and flocks which he 
 carries with him, in the same manner as in peace. His chief or 
 sovereign (for those nations have all chiefs or sovereigns) is at 
 no sort of expense in preparing him for the field j and when he 
 is in it, the chance of plunder is the only pay which he either 
 expects or requires. 
 
 An army of hunters can seldom exceed two or three hundred 
 men. The precarious subsistence which the chase affords could 
 seldom allow a greater number to keep together for any consider- 
 able time. An army of shepherds, on the contrary, may sometimes 
 amount to two or three hundred thousand. As long as nothing 
 stops their progress, as long as they can go on from one district, 
 
 T 2
 
 276 THE NATURE AND CAUSES OF BOOK r. 
 
 of which they have consumed the forage, to another which is yet 
 entire, there seems to be scarce any limit to the numbers who can 
 march on together. A nation of hunters can never be formidable 
 to the civilised nations in their neighbourhood. A nation of shep- 
 herds may. Nothing can be more contemptible than an Indian 
 war in North America. Nothing, on the contrary, can be more 
 dreadful than a Tartar invasion has frequently been in Asia. The 
 judgment of Thucydides, 1 that both Europe and Asia could not 
 resist the Scythians united, has been verified by the experience 
 of all ages. The inhabitants of the extensive but defenceless plains 
 of Scythia or Tartary have been frequently united under the 
 dominion of the chief of some conquering horde or clan, and the 
 havoc and devastation of Asia have always signalised their union. 
 The inhabitants of the inhospitable deserts, of Arabia, the other 
 great nation of shepherds, have never been united but once, under 
 Mahomet and his immediate successors. Their union, which was 
 more the effect of religious enthusiasm than of conquest, was 
 signalised in the same manner. If the hunting nations of America 
 should ever become shepherds, their neighbourhood would be much 
 more dangerous to the European colonies than it is at present. 
 
 In a yet more advanced state of society, among those nations 
 of husbandmen who have little foreign commerce and no other 
 manufactures but those coarse and household ones which almost 
 every private family prepares for its own use, every man, in the 
 same manner, either is a warrior, or easily becomes such. They 
 who live by agriculture generally pass the whole day in the open 
 air, exposed to all the inclemencies of the seasons. The hardiness 
 of their ordinary life prepares them for the fatigues of war, to 
 some of which their necessary occupations bear a great analogy. 
 The necessary occupation of a ditcher prepares him to work in 
 the trenches, and to fortify a camp as well as to enclose a field. 
 The ordinary pastimes of such husbandmen are the same as those 
 of shepherds, and are in the same manner the images of war. But 
 as husbandmen have less leisure than shepherds, they are not so 
 frequently employed in those pastimes. They are soldiers, but 
 soldiers not quite so much masters of their exercise. Such as they 
 are, however, it seldom costs the sovereign or commonwealth any 
 expense to prepare them for the field. 
 
 1 " 97-
 
 CHAP. i. THE WEALTH OF NATIONS. 277 
 
 Agriculture, even in its rudest and lowest state, supposes a 
 settlement some sort of fixed habitation which cannot be aban- 
 doned without a great loss. When a nation of mere husbandmen, 
 therefore, goes to war, the whole people cannot take the field 
 together. The old. men, the women and children, at least, must 
 remain at home to take care of the habitation. All the men of 
 the military age, however, may take the field, and, in small nations 
 of this kind, have frequently done so. In every nation the men 
 of the military age are supposed to amount to about a fourth or 
 a fifth part of the whole body of the people. If the campaign, 
 too, should begin after seed-time, and end before harvest, both the 
 husbandman and his principal labourers can be spared from the 
 farm without much loss. He trusts that the work which must 
 be done in the meantime can be well enough executed by the 
 old men, the women, and the children. He is not unwilling, 
 therefore, to serve without pay during a short campaign, and it 
 frequently costs the sovereign or commonwealth as little to main- 
 tain him in the field as to prepare him for it. The citizens of 
 all the different states of ancient Greece seem to have served in 
 this manner till after the second Persian war; and the people of 
 Peloponnesus till after the Peloponnesian war. The Peloponnesians, 
 Thucydides 1 observes, generally left the field in the summer, and 
 returned home to reap the harvest. The Roman people, under 
 their kings, and during the first ages of the republic, served in 
 the same manner. It was not till the siege of Veii that they 
 who stayed at home began to contribute something towards main- 
 taining those who went to war. In the European monarchies, 
 which were founded upon the ruins of the Roman Empire, both 
 before and for some time after the establishment of what is pro- 
 perly called the feudal law, the great lords, with all their immediate 
 dependants, used to serve the Crown at their own expense. In 
 the field, in the same manner as at home, they maintained them- 
 selves by their own revenue, and not by any stipend or pay which 
 they received from the king upon that particular occasion. 
 
 In a more advanced state of society, two different causes con- 
 tribute to render it altogether impossible that they who take the 
 field should maintain themselves at their own expense. Those two 
 
 1 Such was always the practice of the Peloponnesians during the war, till they 
 fortified Decelea.
 
 278 THE NATURE AND CAUSES OF BOOK v. 
 
 causes are, the progress of manufactures, and the improvement in 
 the art of war. 
 
 Though a husbandman should be employed in an expedition, 
 provided it begins after seed-time and ends before harvest, the 
 interruption of his business will not always occasion any con- 
 siderable diminution of his revenue. Without the intervention of 
 his labour, Nature does herself the greater part of the work which 
 remains to be done. But the moment that an artificer, a smith, a 
 carpenter, or a weaver, for example, quits his workhouse, the sole 
 source of his revenue is completely dried up. Nature does nothing 
 for him, he does all for himself. When he takes the field, therefore, 
 in defence of the public, as he has no revenue to maintain himself, 
 he must necessarily be maintained by the public. But in a country 
 of which a great part of the inhabitants are artificers and manufac- 
 turers, a great part of the people who go to war must be drawn 
 from those classes, and must therefore be maintained by the public 
 as long as they are employed in its service. 
 
 When the art of war too has gradually grown up to be a very 
 intricate and complicated science, when the event of war ceases to 
 be determined, as in the first ages of society, by a single irregular 
 skirmish or battle, but when the contest is generally spun out 
 through several different campaigns, each of which lasts during the 
 greater part of the year, it becomes universally necessary that the 
 public should maintain those who serve the public in war, at least 
 while they are employed in that service. Whatever in time of peace 
 might be the ordinary occupation of those who go to war, so very 
 tedious and expensive a service would otherwise be by far too heavy 
 a burden upon them. After the second Persian war, accordingly, 
 the armies of Athens seem to have been generally composed of 
 mercenary troops ; consisting, indeed, partly of citizens, but partly 
 too of foreigners ; and all of them equally hired and paid at the 
 expense of the state. From the time of the siege of Veii, the 
 armies of Rome received pay for their service during the time 
 which they remained in the field. Under the feudal governments 
 the military service both of the great lords and their immediate 
 dependants was, after a certain period, universally exchanged for a 
 payment in money, which was employed to maintain those who 
 served in their stead. 
 
 The number of those who can go to war, in proportion to the
 
 CHAP. i. THE WEALTH OF NATIONS. 279 
 
 whole number of the people, is necessarily much smaller in a 
 civilised than in a rude state of society. In a civilised society, as 
 the soldiers are maintained altogether by the labour of those who 
 are not soldiers, the number of the former can never exceed what 
 the latter can maintain, over and above maintaining, in a manner 
 suitable to their respective stations, both themselves and the other 
 officers of government and law whom they are obliged to main- 
 tain. In the little agrarian states of ancient Greece, a fourth or a 
 fifth part of the whole body of the people considered themselves 
 as soldiers, j*nd would sometimes, it is said, take the field. Among 
 the civilised nations of modern Europe, it is commonly computed 
 that not more than one hundredth part of the inhabitants of any 
 country can be employed as soldiers, without ruin to the country 
 which pays the expense of their service. 
 
 The expense of preparing the army for the field seems not to 
 have become considerable in any nation till long after that of 
 maintaining it in the field had devolved entirely upon the sovereign 
 or commonwealth. In all the different republics of ancient Greece, 
 to learn his military exercises was a necessary part of education 
 imposed by the state upon every free citizen. In every city there 
 seems to have been a public field, in which, under the protection of 
 the public magistrate, the young people were taught their different 
 exercises by different masters. In this very simple institution con- 
 sisted the whole expense which any Grecian state seems ever to 
 have been at in preparing its citizens for war. In ancient Borne 
 the exercises of the Campus Martius answered the same purpose 
 with those of the Gymnasium in ancient Greece. Under the feudal 
 governments, the many public ordinances that the citizens of every 
 district should practise archery as well as several other military 
 exercises, were intended for promoting the same purpose, but do not 
 seem to have promoted it so well. Either from want of interest in 
 the officers entrusted with the execution of those ordinances, or 
 from some other cause, they appear to have been universally 
 neglected ; and in the progress of all those governments, military 
 exercises seem to have gone gradually into disuse among the great 
 body of the people. 
 
 In the republics of ancient Greece and Rome, during the whole 
 period of their existence, and under the feudal governments for a 
 considerable time after their first establishment, the trade of a
 
 280 THE NATURE AND CAUSES OF BOOK v. 
 
 soldier was not a separate distinct trade, which constituted the sole 
 or principal occupation of a particular class of citizens. Every 
 subject of the state, whatever might be the ordinary trade or occu- 
 pation by which he gained his livelihood, considered himself, upon 
 all ordinary occasions, as fit likewise to exercise the trade of a 
 soldier, and upon many extraordinary occasions as bound to exer- 
 cise it. 
 
 The art of war, however, as it is certainly the noblest of all arts, 
 so in the progress of improvement it necessarily becomes one of the 
 most complicated among them. The state of the mechanical, as 
 well as of some other arts, with which it is necessarily connected, 
 determines the degree of perfection to which it is capable of being 
 carried at any particular time. But in order to carry it to this 
 degree of perfection, it is necessary that it should become the sole 
 or principal occupation of a particular class of citizens, and the 
 division of labour is as necessary for the improvement of this as of 
 every other art. Into other arts the division of labour is naturally 
 introduced by the prudence of individuals, who find that they pro- 
 mote their private interest better by confining themselves to a par- 
 ticular trade, than by exercising a great number. But it is the 
 wisdom of the state only which can render the trade of the soldier 
 only a particular trade separate and distinct from all others. A 
 private citizen who, in time of profound peace, and without any 
 particular encouragement from the public, should spend the greater 
 part of his time in military exercises, might, no doubt, both im- 
 prove himself very much in them, and amuse himself very well ; but 
 he certainly would not promote his own interest. It is the wisdom 
 of the state only which can render it for his interest to give up the 
 greater part of his time to this peculiar occupation ; and states 
 have not always had this wisdom, even when their circumstances 
 had become such that the preservation of their existence required 
 that they should have it. 
 
 A shepherd has a great deal of leisure ; a husbandman, in the 
 rude state of husbandry, has some ; an artificer or manufacturer has 
 none at all. The first may, without any loss, employ a great deal 
 of his time in martial exercises ; the second may employ some part 
 of it ; but the last cannot employ a single hour in them without 
 some loss, and his attention to his own interest naturally leads him 
 to neglect them altogether. These improvements in husbandry too,
 
 CHAP. i. THE WEALTH OF NATIONS. 281 
 
 which the progress of arts and manufactures necessarily introduces, 
 leave the husbandman as little leisure as the artificer. Military 
 exercises come to be as much neglected by the inhabitants of the 
 country as by those of the town, and the great body of the people 
 becomes altogether unwarlike. That wealth, at the same time, 
 which always follows the improvements of agriculture and manufac- 
 tures, and which in reality is no more than the accumulated produce 
 of those improvements, provokes the invasion of all their neigh- 
 bours. An industrious, and upon that account a wealthy nation, is 
 of all nations the most likely to be attacked ; and unless the state 
 takes some new measures for the public defence, the natural habits of 
 the people render them altogether incapable of defending themselves. 
 
 In these circumstances, there seem to be but two methods by 
 which the state can make any tolerable provision for the public 
 defence. 
 
 It may either, first, by means of a very rigorous police, and in 
 spite of the whole bent of the interest, genius, and inclinations of 
 the people, enforce the practice of military exercises, and oblige 
 either all the citizens of the military age, or a certain number of 
 them, to join in some measure the trade of a soldier to whatever 
 other trade or profession they may happen to carry on. 
 
 Or, secondly, by maintaining and employing a certain number of 
 citizens in the constant practice of military exercises, it may render 
 the trade of a soldier a particular trade, separate and distinct from 
 all others. 
 
 If the state has recourse to the first of those two expedients, its 
 military force is said to consist in a militia ; if to the second, it is said 
 to consist in a standing army. The practice of military exercises is 
 the sole or principal occupation of the soldiers of a standing army, 
 and the maintenance or pay which the state affords them is the 
 principal and ordinary fund of their subsistence. The practice of 
 military exercises is only the occasional occupation of the soldiers of 
 a militia, and they derive the principal and ordinary fund of their 
 subsistence from some other occupation. In a militia, the character 
 of the labourer, artificer, or tradesman predominates over that of 
 the soldier; in a standing army, that of the soldier predominates 
 over every other character ; and in this distinction seems to consist 
 the essential difference between those two different species of mili- 
 tary force.
 
 282 THE NATURE AND CAUSES OF BOOK v. 
 
 Militias have been of several different kinds. In some countries, 
 the citizens destined for defending the state seem to have been 
 exercised only, without being, if 1 may say so, regimented ; that is, 
 without being divided into separate and distinct bodies of troops, 
 each of which performed its exercises under its own proper and 
 permanent officers. In the republics of ancient Greece and Rome, 
 each citizen, as long as he remained at home, seems to have prac- 
 tised his exercises either separately and independently, or with such 
 of his equals as he liked best ; and not to have been attached to any 
 particular body of troops till he was actually called upon to take the 
 field. In other countries, the militia has not only been exercised, 
 but regimented. In England, in Switzerland, and, I believe, in every 
 other country of modern Europe, where any imperfect military force 
 of this kind has been established, every militiaman is, even in time 
 of peace, attached to a particular body of troops, which performs its 
 exercises under its own proper and permanent officers. 
 
 Before the invention of fire-arms, that army was superior in 
 which the soldiers had, each individually, the greatest skill and 
 dexterity in the use of their arms. Strength and agility of body 
 were of the highest consequence, and commonly determined the fate 
 of battles. But this skill and dexterity in the use of their arms 
 could be acquired only in the same manner as fencing is at present, 
 by practising, not in great bodies, but each man separately, in a 
 particular school, under a particular master, or with his own par- 
 ticular equals and companions. Since the invention of fire-arms, 
 strength and agility of body, or even extraordinary dexterity and 
 skill in the use of arms, though they are far from being of no con- 
 sequence, are, however, of less consequence. The nature of the 
 weapon, though it by no means puts the awkward upon a level with 
 the skilful, puts him more nearly so than he ever was before. All 
 the dexterity and skill, it is supposed, which are necessary for 
 using it, can be well enough acquired by practising in great 
 bodies. 1 
 
 1 It used to be estimated, before arms pliances of modern discipline, has been 
 
 of precision were introduced into modern nearly restored, as far as the individual 
 
 warfare, that it took the weight of an efficiency of the soldier goes. In short, 
 
 enemy's body in bullets to kill him. Of it has rendered it necessary that the iu- 
 
 late years, however, this state of things telligence, quickness, and presence of 
 
 has been reversed, and the ancient theory mind possessed by the ancient soldier 
 
 of war, combined of course with the ap- should be present in his modern counter-
 
 CHAP. i. THE WEALTH OF NATIONS. 283 
 
 Regularity, order, and prompt obedience to command, are qualities 
 which, in modern armies, are of more importance towards deter- 
 mining- the fate of battles, than the dexterity and skill of the 
 soldiers in the use of their arms. But the noise of fire-arms, the 
 smoke, and the invisible death to which every man feels himself 
 every moment exposed, as soon as he comes within cannon-shot, 
 and frequently a long- time before the battle can be well said to be 
 engaged, must render it very difficult to maintain any considerable 
 degree of this regularity, order, and prompt obedience, even in the 
 beginning of a modern battle. In an ancient battle there was no 
 noise but what arose from the human voice ; there was no smoke, 
 there was no invisible cause of wounds or death. Every man, till 
 some mortal weapon actualy did approach him, saw clearly that no 
 such weapon was near him. In these circumstances, and among 
 troops who had some confidence in their own skill and dexterity in 
 the use of their arms, it must have been a good deal less difficult to 
 preserve some degree of regularity and order, not only in the 
 beginning, but through the whole progress of an ancient battle, and 
 till. one of the two armies was fairly defeated. But the habits of 
 regularity, order, and prompt obedience to command, can be 
 acquired only by troops which are exercised in great bodies. 
 
 A militia, however, in whatever manner it may be either dis- 
 ciplined or exercised, must always be much inferior to a well- 
 disciplined and well-exercised standing army. 
 
 The soldiers, who are exercised only once a week, or once a 
 month, can never be so expert in the use of their arms as those 
 who are exercised every day, or every other day; and though this 
 circumstance may not be of so much consequence in modern as it 
 was in ancient times, yet the acknowledged superiority of the 
 Prussian troops, owing, it is said, very much to their superior 
 expertness in their exercise, may satisfy us that it is, even at this 
 day, of very considerable consequence. 1 
 
 The soldiers, who are bound to obey their officer only once a 
 
 part. Obedience, regularity, and order, Great had brought his army during the 
 
 the qualities on which Smith comments, middle of the last century. (See below, 
 
 are not less necessary, but they were also page 289.) The decline of the Prussian 
 
 necessary in those ancient tactics of force, its restoration, and its remarkable 
 
 which we have historical evidence. effectiveness in our own day, are pheno- 
 
 1 The author was of course adverting" mena of singular military interest, 
 to the perfection into which Frederic the
 
 284 THE NATURE AND CAUSES OF BOOK v. 
 
 week or once a month, and who are at all other times at liberty to 
 manage their own affairs their own way, without being in any 
 respect accountable to him, can never be under the same awe in his 
 presence, can never have the same disposition to ready obedience, 
 with those whose whole life and conduct are every day directed by 
 him, and who every day even rise and go to bed, or at least retire 
 to their quarters, according to his orders. In what is called dis- 
 cipline, or in the habit of ready obedience, a militia must always be 
 still more inferior to a standing army, than it may sometimes be in 
 what is called the manual exercise, or in the management and use 
 of its arms. But in modern war the habit of ready and instant 
 obedience is of much greater consequence than a considerable supe- 
 riority in the management of arms. 
 
 Those militias which, like the Tarter or Arab militia, go to war 
 under the same chieftains whom they are accustomed to obey in 
 peace, are by far the best. In respect for their officers, in the habit 
 of ready obedience, they approach nearest to standing armies. The 
 Highland militia, when it served under its own chieftains, had some 
 advantage of the same kind. As the Highlanders, however, were 
 not wandering, but stationary shepherds, as they had all a fixed 
 habitation, and were not, in peaceable times, accustomed to follow 
 their chieftain from place to place; so in time of war they were 
 less willing to follow him to any considerable distance, or to con- 
 tinue for any long time in the field. When they had acquired any 
 booty they were eager to return home, and his authority was 
 seldom sufficient to detain them. In point of obedience they were 
 always much inferior to what is reported of the Tartars and Arabs. 
 As the Highlanders too, from their stationary life, spend less of their 
 time in the open air, they were always less accustomed to military 
 exercises, and were less expert in the use of their arms than the 
 Tartars and Arabs are said to be. 
 
 A militia of any kind, it must be observed, however, which has 
 served for several successive campaigns in the field, becomes in 
 every respect a standing army. The soldiers are every day exercised 
 in the use of their arms, and, being constantly under the command 
 of their officers, are habituated to the same prompt obedience which 
 takes place in standing armies. What they were before they took 
 the field, is of little importance. They necessarily become in every 
 respect a standing army, after they have passed a few campaigns in
 
 CHAP. r. THE WEALTH OF NATIONS. 285 
 
 it. Should the war in America drag out through another campaign, 
 the American militia may become in every respect a match for that 
 standing army, of which the valour appeared, in the last war, at 
 least not inferior to that of the hardiest veterans of Prance and 
 Spain, 
 
 This distinction being well understood, the history of all ages, it 
 will be found, bears testimony to the irresistible superiority which 
 a well-regulated standing army has over a militia. 
 
 One of the first standing armies of which we have any distinct 
 account, in any well-authenticated history, is that of Philip of 
 Macedon. His frequent wars with the Thracians, Illyrians, Thessa- 
 lians, and some of the Greek cities in the neighbourhood of Macedon, 
 gradually formed his troops, which in the beginning were probably 
 militia, to the exact discipline of a standing army. When he was 
 at peace, which he was very seldom, and never for any long time 
 together, he was careful not to disband that army.' It vanquished 
 and subdued, after a long and violent struggle indeed, the gallant 
 and well-exercised militias of the principal republics of ancient 
 Greece ; and afterwards, with very little struggle, the effeminate 
 and ill-exercised militia of the great Persian empire. The fall of 
 the Greek republics and of the Persian empire was the effect of 
 the irresistible superiority which a standing army has over every 
 sort of militia. It is the first great revolution in the affairs of 
 mankind of which history has preserved any distinct or circum- 
 stantial account. 
 
 The fall of Carthage, and the consequent elevation of Rome, is 
 the second. All the varieties in the fortune of those two famous 
 republics may very well be accounted for from the same cause. 
 
 From the end of the first to the beginning of the second Cartha- 
 ginian war, the armies of Carthage were continually in the fieldj 
 and employed under three great generals, who succeeded one another 
 in the command Hamilcar, his son-in-law Hasdrubal, and his son 
 Hannibal ; first in chastising their own rebellious slaves, afterwards 
 in subduing the revolted nations of Africa, and, lastly, in conquering 
 the great kingdom of Spain. The army which Hannibal led from 
 Spain into Italy must necessarily, in those different wars, have been 
 gradually formed to the exact discipline of a standing army. The 
 Romans, in the meantime, though they had not been altogether at 
 peace, yet they had not, during this period, been engaged in any
 
 286 THE NATURE AND CAUSES OF BOOK v. 
 
 war of very great consequence ; and their military discipline, it is 
 generally said, was a good deal relaxed. The Roman armies which 
 Hannibal encountered at Trebia, Thrasymenus, and Canna3, were 
 militia opposed to a standing army. This circumstance, it is pro- 
 bable, contributed more than any other to determine the fate of 
 those battles. 
 
 The standing army which Hannibal left behind him in Spain had 
 the like superiority over the militia which the Romans sent to 
 oppose it, and in a few years, under the command of his brother, 
 the younger Hasdrubal, expelled them almost entirely from that 
 country. 
 
 Hannibal was ill supplied from home. The Roman militia, being 
 continually in the field, became in the progress of the war a well- 
 disciplined and well-exercised standing army; and the superiority 
 of Hanuibal grew every day less and less. Hasdrubal judged it 
 necessary to lead the whole, or almost the whole of the standing 
 army which he commanded in Spain, to the assistance of his brother 
 in Italy. In his march he is said to have been misled by his 
 guides ; and in a country which he did not know, was surprised 
 and attacked by another standing army, in every respect equal or 
 superior to his own, and was entirely defeated. 
 
 When Hasdrubal had left Spain, the great Scipio found nothing 
 to oppose him but a militia inferior to his own. He conquered 
 and subdued that militia, and, in the course of the war, his own 
 militia necessarily became a well-disciplined and well- exercised 
 standing army. That standing army was afterwards carried to 
 Africa, where it found nothing but a militia to oppose it. In order 
 to defend Carthage it became necessary to recall the standing army 
 of Hannibal. The disheartened and frequently defeated African 
 militia joined it, and, at the battle of Zama, composed the greater 
 part of the troops of Hannibal. The event of that day determined 
 the fate of the two rival republics. 
 
 From the end of the second Carthaginian war till the fall of the 
 Roman republic, the armies of Rome were in every respect standing 
 armies. The standing army of Macedon made some resistance to 
 their arms. In the height of their grandeur, it cost them two 
 great wars and three great battles to subdue that little kingdom ; 
 of which the conquest would probably have been still more difficult, 
 had it not been for the cowardice of its last king. The militias of
 
 CHAP. i. THE WEALTH OF NATIONS. 287 
 
 all the civilised nations of the ancient world, of Greece, of Syria, 
 and of Egypt, made but a feeble resistance to the standing- armies 
 of Rome. The militias of some barbarous nations defended them- 
 selves much better. The Scythian or Tartar militia, which Mithri- 
 dates drew from the countries north of the Euxine and Caspian 
 seas, were the most formidable enemies whom the Romans had to 
 encounter after the second Carthaginian war. The Parthian and 
 German militias too were always respectable, and, upon several 
 occasions, gained very considerable advantages over the Roman 
 armies. In general, however, and when the Roman armies were 
 well commanded, they appear to have been very much superior ; 
 and if the Romans did not pursue the final conquest either of 
 Parthia or Germany, it was probably because they judged that it 
 was not worth while to add those two barbarous countries to an 
 empire which was already too large. The ancient Parthians appear 
 to have been a nation of Scythian or Tartar extraction, and to have 
 always retained a good deal of the manners of their ancestors. The 
 'ancient Germans were, like the Scythians or Tartars, a nation of 
 wandering shepherds, who went to war under the same chiefs 
 whom they were accustomed to follow in peace. Their militia was 
 exactly of the same kind with that of the Scythians or Tartars, from 
 whom too they were probably descended. 
 
 Many different causes contributed to relax the discipline of the 
 Roman armies. Its extreme severity was, perhaps, one of those 
 causes. In the days of their grandeur, when no enemy appeared 
 capable of opposing them, their heavy armour was laid aside as 
 unnecessarily burdensome, their laborious exercises were neglected 
 as unnecessarily toilsome. Under the Roman emperors, besides, 
 the standing armies of Rome, those particularly which guarded the 
 German and Pannonian frontiers, became dangerous to their masters, 
 against whom they used frequently to set up their own generals. 
 In order to render them less formidable, according to some authors, 
 Diocletian, according to others, Constantine, first withdrew them 
 from the frontier, where they had always before been encamped in 
 great bodies, generally of two or three legions each, and dispersed 
 them in small bodies through the different provincial towns, from 
 whence they were scarce ever removed, but when it became neces- 
 sary to repel an invasion. Small bodies of soldiers quartered in 
 trading and manufacturing towns, and seldom removed from those
 
 288 THE NATURE AND CAUSES OF BOOK v. 
 
 quarters, became themselves traders, artificers, and manufacturers. 
 The civil came to predominate over the military character ; and the 
 standing 1 armies of Rome gradually degenerated into a corrupt, 
 neglected, and undisciplined militia, incapable of resisting the attack 
 of the German and Scythian militias, which soon afterwards invaded 
 the western empire. It was only by hiring the militia of some of 
 those nations, to oppose to that of others, that the emperors 
 were for some time able to defend themselves. 1 The fall of 
 the western empire is the third great revolution in the affairs of 
 mankind, of which ancient history has preserved any distinct or 
 circumstantial account. It was brought about by the irresistible 
 superiority which the militia of a barbarous has over that of a 
 civilised nation ; which the militia of a nation of shepherds has 
 over that of a nation of husbandmen, artificers, and manufacturers, 
 The victories which have been gained by militias have generally 
 been, not over standing armies, but over other militias in exercise 
 and discipline inferior to themselves. Such were the victories 
 which the Greek militia gained over that of the Persian empire ; 
 and such too were those which in later times the Swiss militia 
 gained over that of the Austrians and Burgundians. 
 
 The military force of the German and Scythian nations who 
 established themselves upon the ruins of the western empire, 
 continued for some time to be of the same kind in their new 
 settlements, as it had been in their original country. It was a 
 militia of shepherds and husbandmen, which, in time of war, took 
 the field under the command of the chieftains whom* it was accus- 
 tomed to obey in peace. It was, therefore, tolerably well exercised, 
 and tolerably well disciplined. As art and industry advanced, 
 however, the authority of the chieftains gradually decayed, and the 
 great body of the people had less time to spare for military exercise. 
 Both the discipline and the exercise of the feudal militia, therefore, 
 went gradually to ruin, and standing armies were gradually in- 
 troduced to supply the place of it. When the expedient of a 
 
 1 It is possible that the degeneracy sentative Government in Europe, Lec- 
 
 which the text comments on was due in ture 22; Gibbon, chap, x.) It was 
 
 great degree to the causes alleged. But impossible that any resources could be 
 
 the Roman empire was exhausted as permanently able to make head against 
 
 much by the oppressive taxation which the grinding despotism to which the 
 
 the centralisation of the government provincials of the Roman empire were 
 
 made necessary, as by the declke of subjected, 
 military discipline. (See Guizot'a Repre-
 
 CHAP. i. THE WEALTH OF NATIONS. 289 
 
 standing army, besides, had once been adopted by one civilised 
 nation, it became necessary that all its neighbours should follow 
 the example. They soon found that their safety depended upon 
 their doing so, and that their own militia was altogether incapable 
 of resisting the attack of such an army. 
 
 The soldiers of a standing army, though they may never have 
 seen an enemy, yet have frequently appeared to possess all the 
 courage of veteran troops, and the very moment that they took the 
 field to have been fit to face the hardiest and most experienced 
 veterans. In 1756, when the Russian army marched into Poland, 
 the valour of the Russian soldiers did not appear inferior to "that of 
 the Prussians, at that time supposed to be the hardiest and most 
 experienced veterans in Europe. The Russian empire, however, 
 had enjoyed a profound peace for near twenty years before, and 
 could at that time have very few soldiers who had ever seen an 
 enemy. When the Spanish war broke out in 1739, England had 
 enjoyed a profound peace for about eight and twenty years. The 
 valour of her soldiers, however, far from being corrupted by that 
 long peace, was never more distinguished than in the attempt upon 
 Carthagena, the first unfortunate exploit of that unfortunate war. 
 In a long peace, the generals, perhaps, may sometimes forget their 
 skill ; but, where a well-regulated standing army has been kept up, 
 the soldiers seem never to forget their valour. 
 
 When a civilised nation depends for its defence upon a militia, it 
 is at all times exposed to be conquered by any barbarous nation 
 which happens to be in its neighbourhood. The frequent conquests 
 of all the civilised countries in Asia by the Tartars, sufficiently 
 demonstrates the natural superiority which the militia of a barbarous 
 has over that of a civilised nation. A well-regulated standing army 
 is superior to every militia. Such an army, as it can best be 
 maintained by an opulent and civilised nation, so it can alone defend 
 such a nation against the invasion of a poor and barbarous neigh- 
 bour. It is only by means of a standing army, therefore, that the 
 civilisation of any country can be perpetuated, or even preserved for 
 any considerable time. 
 
 As it is only by means of a well-regulated standing army that 
 a civilised country can be defended, so it is only by means of it that 
 a barbarous country can be suddenly and tolerably civilised. A 
 standing army establishes, with an irresistible force, the law of the 
 
 VOL. n. u
 
 290 THE NATURE AND CAUSES OF BOOK v. 
 
 sovereign through the remotest provinces of the empire, and main- 
 tains some degree of regular government in countries which could 
 not otherwise admit of any. Whoever examines, with attention, 
 the improvements which Peter the Great introduced into the 
 Russian empire, will find that they almost all resolve themselves 
 into the establishment of a well-regulated standing army. It is 
 the instrument which executes and maintains all his other regula- 
 tions. That degree of order and internal peace, which that empire 
 has ever since enjoyed, is altogether owing to the influence of that 
 army. 1 
 
 Men of republican principles have been jealous of a standing 
 army as dangerous to liberty. It certainly is so, wherever the 
 interest of the general and that of the principal officers are not 
 necessarily connected with the support of the constitution of the 
 State. The standing army of Caesar destroyed the Roman republic. 
 The standing army of Cromwell turned the Long Parliament out of 
 doors. But where the sovereign is himself the general, and the 
 principal nobility and gentry of the country the chief officers of 
 the army ; where the military force is placed under the command of 
 those who have the greatest interest in the support of the civil 
 authority, because they have themselves the greatest share of that 
 authority, a standing army can never be dangerous to liberty. On 
 the contrary, it may in some cases be favourable to liberty. The 
 security which it gives to the sovereign renders unnecessary that 
 troublesome jealousy which, in some modern republics, seems to 
 watch over the minutest actions, and to be at all times ready to 
 disturb the peace of every citizen. Where the security of the 
 magistrate, though supported by the principal people of the 
 country, is endangered by every popular discontent ; where a small 
 tumult is capable of bringing about in a few hours a great revolu- 
 tion, the whole authority of government must be employed to 
 support and punish every murmur and complaint against it. To 
 a sovereign, on the contrary, who feels himself supported, not only 
 by the natural aristocracy of the country, but by a well-regulated 
 
 1 But, on the other hand, the ultimate rupticn of officials, the impossibility of 
 
 progress of a country which owes its checking malpractices, and the general 
 
 political organisation to the control of lack of energy which characterises a 
 
 an army is arrested by the cause which country which is over-governed, and 
 
 gives, or appears to give, solidity to the which is never so much over-governed 
 
 constitution. The reason is to be found as when its affairs are directed from a 
 
 in the centralisation of power, the cor- military bureau.
 
 CHAP. i. THE WEALTH OF NATIONS. 291 
 
 standing army, the rudest, the most groundless, and the most 
 licentious remonstrances can give little disturbance. He can safely 
 pardon or neglect them, and his consciousness of his own superiority 
 naturally disposes him to do so. That degree of liberty which 
 approaches to licentiousness can be tolerated only in countries 
 where the sovereign is secured by a well-regulated standing army. 
 It is in such countries only that the public safety does not require 
 that the sovereign should be trusted with any discretionary power, 
 for suppressing even the impertinent wantonness of this licentious 
 liberty. 1 
 
 The first duty of the sovereign, therefore, thai of defending the 
 society from the violence and injustice of other independent societies, 
 grows gradually more and more expensive as the society advances 
 in civilisation. The military force of the society, which originally 
 cost the sovereign no expense either in time of peace or in time of 
 war, must, in the progress of improvement, first be maintained by 
 him in time of war, and afterwards even in time of peace. 
 
 The great change introduced into the art of war by the invention 
 of fire-arms, has enhanced still further both the expense of exercising 
 and disciplining any particular number of soldiers in time of peace, 
 and that of employing them in time of war. Both their arms and 
 their ammunition are become more expensive. A musket is a more 
 expensive machine than a javelin or a bow and arrows ; a cannon or 
 a mortar than a balista or a catapulta. The powder which is spent 
 in a modern review is lost irrecoverably, and occasions a very 
 considerable expense. The javelins and arrows which were thrown 
 or shot in an ancient one, could easily be picked up again, and were 
 besides of very little value. The cannon and the mortar are not 
 only much dearer, but much heavier machines than the balista, or 
 catapulta, and require a greater expense, not only to prepare them 
 for the field, but to carry them to it. Ae the superiority of the 
 modern artillery too, over that of the ancients, is very great, it has 
 
 1 Adam Smith was intimate with tion. The history however of the Ameri- 
 
 Hume, and here, at least, adopted his can Union is clear proof of how compatible 
 
 political tenets. There was much in the are public liberty and the devotion of a 
 
 history of his own time which justified, whole nation to the pursuits of peace. A 
 
 or appeared to justify, the view that general determination to obey and uphold 
 
 liberty is incompatible with the absence the law, is a far stronger guarantee of 
 
 of a powerful executive, aided by an liberty and order than any military 
 
 army, for the republics of the time were organisation whatever, on which a sove- 
 
 rather nominal than real, rather oligar- reign or an administration can rely, 
 chical than democratic in their constitu- 
 
 U 3
 
 292 THE NATURE AND CAUSES OF BOOK v. 
 
 become much more difficult, and consequently much more expensive, 
 to fortify a town so as to resist even for a few weeks the attack of 
 that superior artillery. In modern times, many different causes 
 contribute to render the defence of the society more expensive. 
 The unavoidable effects of the natural progress of improvement 
 have, in this respect, been a good deal enhanced by a great revolu- 
 tion in the art of war, to which a mere accident, the invention of 
 gunpowder, seems to have given occasion. 
 
 In modern war, the great expense of fire-arms gives an evident 
 advantage to the nation which can best afford that expense; and 
 consequently, to an opulent and civilised, over a poor and barbarous 
 nation. In ancient times, the opulent and civilised found it difficult 
 to defend themselves against the poor and barbarous nations. In 
 modern times, the poor and barbarous find it difficult to defend 
 themselves against the opulent and civilised. The invention of 
 fire-arms, an invention which at first sight appears to be so 
 pernicious, is certainly favourable both to the permanency and to 
 the extension of civilisation. 1 
 
 PART II. 
 
 Of the Expense of Justice. 
 
 The second duty of the sovereign, that of protecting, as far as 
 possible, every member of the society from the injustice or oppres- 
 sion of every other member of it, or the duty of establishing an 
 exact administration of justice, requires too very different degrees 
 of expense in the different periods of society. 
 
 Among nations of hunters, as there is scarce any property, or at 
 least none that exceeds the value of two or three days' labour ; so 
 there is seldom any established magistrate or any regular adminis- 
 
 1 The expense of warfare has increased society than the enormous cost at which 
 
 enormously since the time in which the machinery of defence is maintained. 
 
 Smith wrote. The small arms of our It was calculated that the cost of war 
 
 day are, in fact, machines made with the within 1853 and 1866 was 1,91 3,000,000, 
 
 most perfect nicety, and large guns are and at the present time (1880) the annual 
 
 manufactured upon calculations of the charges of the war budgets of Europe 
 
 most elaborate precision. Simultaneously have risen from 117 to 161 millions 
 
 with the science of attack in war, has sterling. To these must be added the 
 
 progressed even more notably that of increase in the national debts of Europe 
 
 defence. War has not only become more from 1865 to 1879, viz. 1,697,850,000, 
 
 costly, but much more difficult. But or at 4 per cent, an annual burden of 
 
 nothing is more characteristic of modern 67,914,000.
 
 CHAP. i. THE WEALTH OF NATIONS. 293 
 
 tration of justice. Men who have no property can injure one 
 another only in their persons or reputations. But when one man 
 kills, wounds, beats, or defames another, though he to whom the 
 injury is done suffers, he who does it receives no benefit. It is 
 otherwise with the injuries to property. The benefit of the person 
 who does the injury is often equal to the loss of him who suffers it. 
 Envy, malice, or resentment are the only passions which can 
 prompt one man to injure another in his person or reputation. 
 But the greater part of men are not very frequently under the 
 influence of those passions; and the very worst men are so only 
 occasionally. As their gratification too, how agreeable soever it 
 may be to certain characters, is not attended with any real or 
 permanent advantage, it is in the greater part of men commonly 
 restrained by prudential considerations. Men may live together in 
 society with some tolerable degree of security, though there is no 
 civil magistrate to protect them from the injustice of those passions. 
 But avarice and ambition in the rich, in the poor the hatred of 
 labour and the love of present ease and enjoyment, are the passions 
 which prompt to invade property passions much more steady In 
 their operation; and much more universal in their influence. 
 Wherever there is great property there is great inequality. For 
 one very rich man, there must be at least five hundred poor, and 
 the affluence of the few supposes the indigence of the many. The 
 affluence of the rich excites the indignation of the poor, who are 
 often both driven by want, and prompted by envy, to invade his 
 possessions. It is only under the shelter of the civil magistrate 
 that the owner of that valuable property, which is acquired by the 
 labour of many years, or perhaps of many successive generations, 
 can sleep a single night in security. He is at all times surrounded 
 by unknown enemies, whom, though he never provoked, he can 
 never appease, and from whose injustice he can be protected only 
 by the powerful arm of the civil magistrate continually held up to 
 chastise it. The acquisition of valuable and extensive property, 
 therefore, necessarily requires the establishment of civil government. 
 Where there is no property, or at least none that exceeds the value 
 of two or three days' labour, civil government is not so necessary. 
 
 Civil government supposes a certain subordination. But as the 
 necessity of civil government gradually grows up with the acquisi- 
 tion of valuable property, so the principal causes which naturally
 
 294 THE NATUKK AJ\JJ UAUiWiS U* BOOK v. 
 
 introduce subordination gradually grow up with the growth of that 
 valuable property. 
 
 The causes or circumstances which naturally introduce subordina- 
 tion, or which naturally, and antecedent to any civil situation, give 
 some men some superiority over the greater part of their brethren, 
 seem to be four in number. 
 
 The first of those causes or circumstances is the superiority of 
 personal qualifications -of strength, beauty, and agility of body; of 
 wisdom and virtue, of prudence, justice, fortitude, and moderation 
 of mind. The qualifications of the body, unless supported by those 
 of the mind, can give little authority in any period of society. He 
 is a very strong man who, by mere strength of body, can force two 
 weak ones to obey him. The qualifications of the mind can alone 
 give very great authority. They are, however, invisible qualities ; 
 always disputable, and generally disputed. No society, whether 
 barbarous or civilised, has ever found it convenient to settle the 
 rules of precedency, of rank and subordination, according to those 
 invisible qualities, but according to something that is more plain 
 and palpable. 
 
 The second of those causes or circumstances is the superiority of 
 age. An old man, provided his age is not so far advanced as to 
 give suspicion of dotage, is everywhere more respected than a young 
 man of equal rank, fortune, and abilities. Among nations of hunters, 
 such as the native tribes of North America, age is the sole founda- 
 tion of rank and precedency. Among them, father is the appellation 
 of a superior ; brother, of an equal ; and son, of an inferior. In the 
 most opulent and civilised nations, age regulates rank among those 
 who are in every other respect equal, and among whom, therefore, 
 there is nothing else to regulate it. Among brothers and among 
 sisters, the eldest always take place ; and in the succession of the 
 paternal estate everything which cannot be divided, but must go 
 entire to one person, such as a title of honour, is in most cases given 
 to the eldest. Age is a plain and palpable quality which admits of 
 no dispute. 
 
 The third of those causes or circumstances is the superiority of 
 fortune. The authority of riches, however, though great in every 
 age of society, is perhaps greatest in the rudest age of society which 
 admits of any considerable inequality of fortune. A Tartar chief, 
 the increase of whose herds and flocks is sufficient to maintain a
 
 CHAP. i. THE WEALTH OF NATIONS. 295 
 
 thousand men, cannot well employ that increase in any other way 
 than in maintaining a thousand men. The rude state of his society 
 does not afford him any manufactured produce, any trinkets or 
 baubles of any kind, for which he can exchange that part of his 
 rude produce which is over and above his own consumption. The 
 thousand men whom he thus maintains, depending entirely upon 
 him for their subsistence, must both obey his orders in war, and 
 submit to his jurisdiction in peace. He is necessarily both their 
 general and their judge, and his chieftainship is the necessary effect 
 of the superiority of his fortune. In an opulent and civilised 
 society, a man may possess a much greater fortune, and yet not be 
 able to command a dozen of people. Though the produce of his 
 estate may be sufficient to maintain, and may perhaps actually 
 maintain, more than a thousand people, yet as those people pay for 
 everything which they get from him, as he gives scarce anything 
 to anybody but in exchange for an equivalent, there is scarce any- 
 body who considers himself as entirely dependent upon him, and 
 his authority extends only over a few menial servants. The au- 
 thority of fortune, however, is very great even in an opulent and 
 civilised society. That it is much greater than that, either of age, 
 or of personal qualities, has been the constant complaint of every 
 period of society which admitted of any considerable inequality of 
 fortune. The first period of society, that of hunters, admits of no 
 such inequality. Universal poverty establishes there universal 
 equality, and the superiority, either of age or of personal qualities, 
 are the feeble but the sole foundations of authority and subordina- 
 tion. There is therefore little or no authority or subordination in 
 this period of society. The second period of society, that of shep- 
 herds, admits of very great inequalities of fortune, and there is no 
 period in which the superiority of fortune gives so great authority 
 to those who possess it. There is no period accordingly in which 
 authority and subordination are more perfectly established. The 
 authority of an Arabian scherif is very great ; that of a Tartar khan 
 altogether despotical. 
 
 The fourth of those causes or circumstances is the superiority of 
 birth. Superiority of birth supposes an ancient superiority of for- 
 tune in the family of the person who claims it. All families are 
 equally ancient ; and the ancestors of the prince, though they may 
 be better known, cannot well be more numerous than those of the
 
 296 THE NATURE AND CAUSES OF BOOK v. 
 
 beggar. Antiquity of family means everywhere the antiquity either 
 of wealth, or of that greatness which is commonly either founded 
 upon wealth, or accompanied with it. Upstart greatness is every- 
 where less respected than ancient greatness. The hatred of usurpers, 
 the love of the family of an ancient monarch, are, in a great measure, 
 founded upon the contempt which men naturally have for the former, 
 and upon their veneration for the latter. As a military officer sub- 
 mits without reluctance to the authority of a superior by whom he 
 has always been commanded, but cannot bear that his inferior should 
 be set over his head ; so men easily submit to a family to whom 
 they and their ancestors have always submitted, but are fired with 
 indignation when another family, in whom they had never acknow- 
 ledged any such superiority, assumes a dominion over them. 
 
 The distinction of birth, being subsequent to the inequality of 
 fortune, can have no place in nations of hunters, among whom all 
 men, being equal in fortune, must likewise be very nearly equal in 
 birth. The son of a wise and brave man may indeed, even among 
 them, be somewhat more respected than a man of equal merit who 
 has the misfortune to be the son of a fool or a coward. The dif- 
 ference, however, will not be very great ; and there never was, I 
 believe, a great family in the world whose illustration was entirely 
 derived from the inheritance of wisdom and virtue. 
 
 The distinction of birth not only may, but always does take place 
 among nations of shepherds. Such nations are always strangers to 
 every sort of luxury, and great wealth can scarce ever be dissipated 
 among them by improvident profusion. There are no nations ac- 
 cordingly who abound more in families revered and honoured on 
 account of their descent from a long race of great and illustrious 
 ancestors ; because there are no nations among whom wealth is 
 likely to continue longer in the same families. 
 
 Birth and fortune are evidently the two circumstances which 
 principally set one man above another. They are the two great 
 sources of personal distinction, and are therefore the principal causes 
 which naturally establish authority and subordination among men. 
 Among nations of shepherds, both those causes operate with their 
 full force. The great shepherd or herdsman, respected on account of 
 his great wealth, and of the great number of those who depend upon 
 him for subsistence, and revered on account of the nobleness of his 
 birth and of the immemorial antiquity of his illustrious family, has
 
 CHAP. i. THE WEALTH OF NATIONS. 297 
 
 a natural authority over all the inferior shepherds or herdsmen of 
 his horde or clan. He can command the united force of a greater 
 number of people than any of them. His military power is greater 
 than that of any of them. In time of war, they are all of them 
 naturally disposed to muster themselves under his banner, rather 
 than under that of any other person, and his birth and fortune thus 
 naturally procure to him some sort of executive power. By com- 
 manding too the united force of a greater number of people than 
 any of them, he is best able to compel any one of them who may 
 have injured another to compensate the wrong. He is the person, 
 therefore, to whom all those who are too weak to defend themselves 
 naturally look up for protection. It is to him that they naturally 
 complain of the injuries which they imagine have been done to 
 them, and his interposition in such cases is more easily submitted 
 to, even by the person complained of, than that of any other person 
 would be. His birth and fortune thus naturally procure him some 
 sort of judicial authority. 
 
 It is in the age of shepherds, in the second period of society, that 
 the inequality of fortune first begins to take place, and introduces 
 among men a degree of authority and subordination which could 
 not possibly exist before. It thereby introduces some degree of 
 that civil government which is indispensably necessary for its own 
 preservation; and it seems to do this naturally, and even inde- 
 pendent of the consideration of that necessity. The consideration 
 of that necessity come& no doubt afterwards to contribute very much 
 to maintain and secure that authority and subordination. The rich, 
 in particular, are necessarily interested to support that order of 
 things, which can alone secure them in the possession of their own 
 advantages. Men of inferior wealth combine to defend those of 
 superior wealth in the possession of their property, in order that 
 men of superior wealth may combine to defend them in the posses- 
 sion of theirs. All the inferior shepherds and herdsmen feel that 
 the security of their own herds and flocks depends upon the security 
 of those of the great shepherd or herdsman ; that the maintenance 
 of their lesser authority depends upon that of his greater authority, 
 and that upon their subordination to him depends his power of 
 keeping their inferiors in subordination to them. They constitute 
 a sort of little nobility, who feel themselves interested to defend the 
 property and to support the authority of their own little sovereign,
 
 298 THE NATURE AND CAUSES OF BOOK v. 
 
 in order that he may be able to defend their property and to support 
 their authority. Civil government, so far as it is instituted for the 
 security of property, is in reality instituted for the defence of the 
 rich against the poor, or of those who have some property against 
 those who have none at all. 
 
 The judicial authority of such a sovereign, however, far from 
 being a cause of expense, was for a long time a source of revenue to 
 him. The persons who applied to him for justice were always 
 willing to pay for it, and a present never failed to accompany a 
 petition. After the authority of the sovereign too was thoroughly 
 established, the person found guilty, over and above the satisfaction 
 which he was obliged to make to the party, was likewise forced to 
 pay an amercement to the sovereign. He had given trouble, he 
 had disturbed, he had broke the peace of his lord the king, and for 
 those offences an amercement was thought due. In the Tartar 
 governments of Asia, in the governments of Europe which were 
 founded by the German and Scythian nations who overturned the 
 Roman Empire, the administration of justice was a considerable 
 source of revenue, both to the sovereign, and to all the lesser chiefs 
 or lords who exercised under him any particular jurisdiction, either 
 over some particular tribe or clan, or over some particular territory 
 or district. Originally both the sovereign and the inferior chiefs 
 used to exercise this jurisdiction in their own persons ; afterwards 
 they universally found it convenient to delegate it to some substitute, 
 bailiff, or judge. This substitute, however, was still obliged to 
 account to his principal or constituent for the profits of the juris- 
 diction. Whoever reads the instructions* which were given to the 
 judges of the circuit in the time of Henry II, will see clearly that 
 those judges were a sort of itinerant factors, sent round the country 
 for the purpose of levying certain branches of the king's revenue. 
 In those days, the administration of justice not only afforded a cer- 
 tain revenue to the sovereign, but to procure this revenue seems to 
 have been one of the principal advantages which he proposed to 
 obtain by the administration of justice. 
 
 This scheme of making the administration of justice subservient 
 to the purposes of revenue, could scarce fail to be productive of 
 several very gross abuses. The person who applied for justice with 
 a large present in his hand, was likely to get more than justice ; 
 
 * They are to be found in Tyrrell's History of England.
 
 CHAP. i. THE WEALTH OF NATIONS. 299 
 
 while he who applied for it with, a small one, was likely to get some- 
 thing less. Justice too might frequently be delayed, in order that 
 this present might be repeated. The amercement, besides, of the 
 person complained of, might frequently suggest a very strong reason 
 for finding him in the wrong, even when he had not really been so. 
 That such abuses were far from being uncommon, the ancient his- 
 tory of every country in Europe bears witness. 
 
 When the sovereign or chief exercised his judicial authority in 
 his own person, how much soever he might abuse it, it must have 
 been scarce possible to get any redress ; because there could seldom 
 be anybody powerful enough to call him to account. When he 
 exercised it by a bailiff, indeed, redress might sometimes be had. If 
 it was for his own benefit only that the bailiff had been guilty of 
 any act of injustice, the sovereign himself might not always be 
 unwilling to punish him, or to oblige him to repair the wrong. 
 But if it was for the benefit of his sovereign, if it was in order to 
 make court to the person who appointed him and who might prefer 
 him, that he had committed any act of oppression, redress would 
 upon -most occasions be as impossible as if the sovereign had com- 
 mitted it himself. In all barbarous governments, accordingly, in 
 all those ancient governments of Europe in particular, which were 
 founded upon the ruins of the Roman empire, the administration of 
 justice appears for a long time to have been extremely corrupt ; far 
 from being quite equal and impartial even under the best monarchs, 
 and altogether profligate under the worst. 
 
 Among nations of shepherds, where the sovereign or chief is only 
 the greatest shepherd or herdsman of the horde or clan, he is main- 
 tained in the same manner as any of his vassals or subjects, by the 
 increase of his own herds or flocks. Among those nations of hus- 
 bandmen who are but just come out of the shepherd state, and who 
 are not much advanced beyond that state, such as the Greek 
 tribes appear to have been about the time of the Trojan war, and 
 our German and Scythian ancestors when they first settled upon 
 the ruins of the Western Empire, the sovereign or chief is, in the 
 same manner, only the greatest landlord of the country, and is 
 maintained, in the same manner as any other landlord, by a revenue 
 derived from his own private estate, or from what, in modern Europe, 
 was called the demesne of the Crown. His subjects, upon ordinary 
 occasions, contribute nothing to his support, except when, in order
 
 300 THE NATURE AND CAUSES OF BOOK v. 
 
 to protect them from the oppression of some of their fellow-subjects, 
 they stand in need of his authority. The presents which they 
 make him upon such occasions, constitute the whole ordinary revenue, 
 the whole of the emoluments which, except perhaps upon some very 
 extraordinary emergencies, he derives from his dominion over them. 
 When Agamemnon, in Homer, offers to Achilles for his friendship 
 the sovereignty of seven Greek cities, the sole advantage which he 
 mentions as likely to be derived from it was, that the people would 
 honour him with presents. 1 As long as such presents, as long as 
 the emoluments of justice, or what may be called the fees of court, 
 constituted in this manner the whole ordinary revenue which the 
 sovereign derived from his sovereignty, it could not well be expected, 
 it could not even decently be proposed that he should give them up 
 altogether. It might, and it frequently was proposed, that he 
 should regulate and ascertain them. But after they had been so 
 regulated and ascertained, how to hinder a person who was all- 
 powerful from extending them beyond those regulations, was still 
 very difficult, not to say impossible. During the continuance of 
 this state of things, therefore, the corruption of justice, naturally 
 resulting from the arbitrary and uncertain nature of those presents, 
 scarce admitted of any effectual remedy. 
 
 But when from different causes, chiefly from the continually 
 increasing expense of defending the nation against the invasion of 
 other nations, the private estate of the sovereign had become alto- 
 gether insufficient for defraying the expense of the sovereignty, and 
 when it had become necessary that the people should, for their 
 own security, contribute towards this expense by taxes of different 
 kinds, it seems to have been very commonly stipulated that no pre- 
 sent for the administration of justice should, under any pretence, be 
 accepted either by the sovereign, or by his bailiffs and substitutes, 
 the judges. Those presents, it seems to have been supposed, could 
 more easily be abolished altogether than effectually regulated and 
 ascertained. Fixed salaries were appointed to the judges, which 
 were supposed to compensate to them the loss of whatever might 
 have been their share of the ancient emoluments of justice; as the 
 taxes more than compensated to the sovereign, the loss of his. 
 Justice was then said to be administered gratis. 
 
 Justice, however, never was in reality administered gratis in any 
 
 1 Iliad, ix- 291 sqcj.
 
 CHAP. i. THE WEALTH OF NATIONS. 301 
 
 country. Lawyers and attorneys, at least, must always be paid by 
 the parties ; and, if they were not, they would perform their duty 
 still worse than they actually perform it. The fees annually paid 
 to lawyers and attorneys amount, in every court, to a much greater 
 sum than the salaries of the judges. The circumstance of those 
 salaries being paid by the Crown, can nowhere much diminish the 
 necessary expense of a law-suit. But it was not so much to diminish 
 the expense, as to prevent the corruption of justice, that the judges 
 were prohibited from receiving any present or fee from the parties. 
 
 The office of judge is in itself so very honourable, that men are 
 willing to accept of it, though accompanied with very small emolu- 
 ments. The inferior office of justice of peace, though attended with 
 a good deal of trouble, and in most cases with no emoluments at all, 
 is an object of ambition to the greater part of our country gentle- 
 men. The salaries of all the different judges, high and low, together 
 with the whole expense of the administration and execution of 
 justice, even where it is not managed with very good economy, 
 makes, in any civilised country, but a very inconsiderable part of 
 the whole expense of government. 
 
 The whole expense of justice too might easily be defrayed by the 
 fees of court; and, without exposing the administration of justice to 
 any real hazard of corruption, the public revenue might thus be 
 entirely discharged from a certain, though perhaps but a small, 
 incumbrance. It is difficult to regulate the fees of court effectually, 
 where a person so powerful as the sovereign is to share in them, 
 and to derive any considerable part of his revenue from them. It 
 is very easy, where the judge is the principal person who can reap 
 any benefit from them. The law can very easily oblige the judge 
 to respect the regulation, though it might not always be able to 
 make the sovereign respect it. Where the fees of court are precisely 
 regulated and ascertained, where they are all paid at once, at a cer- 
 tain period of every process, into the hands of a cashier or receiver, 
 to be by him distributed in certain known proportions among the 
 different judges after the process is decided, and not till it is decided, 
 there seems to be no more danger of corruption than where such 
 fees are prohibited altogether. Those fees, without occasioning any 
 considerable increase in the expense of a law-suit, might be rendered 
 fully sufficient for defraying the whole expense of justice. By not 
 being paid to the judges till the process was determined, they might
 
 302 THE NATURE AND CAUSES OF BOOK v, 
 
 be some incitement to the diligence of the court in examining and 
 deciding it. In courts which consisted of a considerable number of 
 judges, by proportioning the share of each judge to the number of 
 hours and days which he had employed in examining the process, 
 either in the court or in a committee by order of the court, those 
 fees might give some encouragement to the diligence of each par- 
 ticular judge. Public services are never better performed than 
 when their reward comes only in consequence of their being per- 
 formed, and is proportioned to the diligence employed in performing 
 them. In the different parliaments of France, the fees of court 
 (called epices and vacations) constitute the far greater part of the 
 emoluments of the judges. After all deductions are made, the net 
 salary paid by the Crown to a counsellor or judge in the parliament 
 of Toulouse, in rank and dignity the second parliament of the king- 
 dom, amounts only to a hundred and fifty livres, about six pounds 
 eleven shillings sterling a year. About seven years ago that sum 
 was in the same place the ordinary yearly wages of a- common foot- 
 man. The distribution of those epices too is according to the 
 diligence of the judges. A diligent judge gains a comfortable, 
 though moderate, revenue by his office ; an idle one gets little more 
 than his salary. Those parliaments are perhaps, in many respects, 
 not veiy convenient courts of justice ; but they have never been 
 accused ; they seem never even to have been suspected of corruption. 
 The fees of court seem originally to have been the principal sup- 
 port of the different courts of justice in England. Each court 
 endeavoured to draw to itself as much business as it could, and was, 
 upon that account, willing to take cognisance of many suits which 
 were not originally intended to fall under its jurisdiction. The 
 Court of King's Bench, instituted for the trial of criminal causes 
 only, took cognisance of civil suits ; the plaintiff pretending that 
 the defendant, in not doing him justice, had been guilty of some 
 trespass or misdemeanour. The Court of Exchequer, instituted for 
 the levying of the king's revenue, and for enforcing the payment of 
 such debts only as were due to the king, took cognisance of all 
 other contract debts ; the plaintiff alleging that he could not pay 
 the king, because the defendant would not pay him. In conse- 
 quence of such fictions it came, in many cases, to depend altogether 
 upon the parties before what court they would choose to have their 
 cause tried ; and each court endeavoured, by superior despatch and
 
 CHAP. i. THE WEALTH OF NATIONS. 303 
 
 impartiality, to draw to itself as many causes as it could. The pre- 
 sent admirable constitution of the courts of justice in England was, 
 perhaps, originally in a great measure formed by this emulation, 
 which anciently took place between their respective judges; each 
 judge endeavouring to give, in his own court, the speediest and 
 most effectual remedy, which the law would admit, for every sort of 
 injustice. Originally the courts of law gave damages only for breach 
 of contract. The Court of Chancery, as a court of conscience, first 
 took upon it to enforce the specific performance of agreements. When 
 the breach of contract consisted in the non-payment of money, the 
 damage sustained could be compensated in no other way than by 
 ordering payment, which was equivalent to a specific performance of 
 the agreement. In such cases, therefore, the remedy of the courts 
 of law was sufficient. It was not so in others. When the tenant 
 sued his lord for having unjustly ousted him of his lease, the damages 
 which he recovered were by no means equivalent to the possession 
 of the land. Such causes therefore, for some time, went all to the 
 Court of Chancery, to the no small loss of the courts of law. It 
 was to draw back such causes to themselves that the courts of law 
 are said to have invented the artificial and fictitious writ of eject- 
 ment, the most effectual remedy for an unjust ouster or dispossession 
 of land. 1 
 
 A stamp-duty upon the law proceedings of each particular court, 
 to be levied by that court, and applied towards the maintenance of 
 the judges and other officers belonging to it, might, in the same 
 manner, afford a revenue sufficient for defraying the expense of the 
 administration of justice, without bringing any burden upon the 
 general revenue of the society. The judges indeed might, in this 
 case, be under the temptation of multiplying unnecessarily the pro- 
 ceedings upon every cause, in order to increase, as much as possible, 
 
 1 It seems that originally the choice of enactment as by the means which these 
 
 court in which an action was tried was courts had at their disposal in order to 
 
 optional, each court having some process punish contempt or disobedience. It is 
 
 effectual enough to constrain obedience notorious that the writ of mandamus by 
 
 to its decrees, and being careful to en- which the Court of King's Bench vindi- 
 
 courage business by the speed and equity cated its authority, and that of subpoana by 
 
 of its decisions, or by some other recom- which Chancery constrains an appearance, 
 
 mendation. The use of the papal curia were inventions of lawyers ; originally 
 
 was no doubt founded on the fair adminis- intended to draw business to the court, 
 
 tration of justice at that court, and the and sustained by authority in order to 
 
 supremacy of the different tribunals in effect a general subordination to central 
 
 which the common law was administered power, and that they were not manifesta- 
 
 was not so much achieved by positive tionsof any high theory of jurisprudence.
 
 304 THE NATURE AND CAUSES OF BOOK v. 
 
 the produce of such a stamp-duty. It has been the custom in 
 modern Europe to regulate, upon most occasions, the payment of 
 the attorneys and clerks of court, according 1 to the number of pages 
 which they had occasion to write ; the court, however, requiring 
 that each page should contain so many lines, and each line so many 
 words. In order to increase their payment, the attorneys and clerks 
 have contrived to multiply words beyond all necessity, to the cor- 
 ruption of the law language of, I believe, every court of justice in 
 Europe. A like temptation might perhaps occasion a like corrup- 
 tion in the form of law proceedings. 
 
 But whether the administration of justice be so contrived as to 
 defray its own expense, or whether the judges be maintained by 
 fixed salaries paid to them from some other fund, it does not seem 
 necessary that the person or persons entrusted with the executive 
 power should be charged with the management of that fund, or 
 with the payment of those salaries. That fund might arise from 
 the rent of landed estates, the management of each estate being 
 entrusted to the particular court which was to be maintained by it. 
 That fund might arise even from the interest of a sum of money, 
 the lending out of which might, in the same manner, be entrusted 
 to the court which was to be maintained by it. A part, though 
 indeed but a small part, of the salary of the judges of the Court of 
 Session in Scotland, arises from the interest of a sum of money. 
 The necessary instability of such a fund seems, however, to render 
 it an improper one for the maintenance of an institution which 
 ought to last for ever. 
 
 The separation of the judicial from the executive power seems 
 originally to have arisen from the increasing business of the society, 
 in consequence of its increasing improvement. The administration of 
 justice became so laborious and so complicated a duty as to require 
 the undivided attention of the persons to whom it was entrusted. 
 The person entrusted with the executive power, not having leisure 
 to attend to the decision of private causes himself, a deputy was 
 appointed to decide them in his stead. In the progress of the 
 Roman greatness, the consul was too much occupied with the poli- 
 tical affairs of the state to attend to the administration of justice. 
 A praetor, therefore, was appointed to administer it in his stead. 
 In the progress of the European monarchies which were founded 
 upon the ruins of the Roman empire, the sovereigns and the great
 
 CHAP. i. THE WEALTH OF NATIONS. 305 
 
 lords came universally to consider the administration of justice as 
 an office both too laborious and too ignoble for them to execute in 
 their own persons. They universally, therefore, discharged them- 
 selves of it by appointing a deputy, bailiff, or judge. 1 
 
 When the judicial is united to the executive power, it is scarce 
 possible that justice should not frequently be sacrificed to what is 
 vulgarly called politics. The persons entrusted with the great 
 interests of the state may, even without any corrupt views, some- 
 times imagine it necessary to sacrifice to those interests the rights 
 of a private man. But upon the impartial administration of justice 
 depends the liberty of every individual, the sense which he has of 
 his own security. In order to make every individual feel himself 
 perfectly secure in the possession of every right which belongs to 
 him, it is not only necessary that the judicial should be separated 
 from the executive power, but that it should be rendered as much 
 as possible independent of that power. The judge should not be 
 liable to be removed from his office according to the caprice of that 
 power. The regular payment of his salary should not depend upon 
 the good-will, or even upon the good economy, of that power. 
 
 PART III. 
 
 Of the Expense of Public Works and Public Institutions. 
 
 THE third and last duty of the sovereign or commonwealth is 
 that of erecting and maintaining those public institutions and those 
 public works, which, though they may be in the highest degree 
 advantageous to a great society, are, however, of such a nature, 
 that the profit could never repay the expense to any individual 
 or small number of individuals, and which it, therefore, cannot 
 be expected that any individual or small number of individuals 
 should erect or maintain. The performance of this duty requires too 
 very different degrees of expense in the different periods of society. 
 
 After the public institutions and public works necessary for the 
 defence of the society, and for the administration of justice, both of 
 
 1 For some facts as to the administra- tunes ago, see the Editor's Agriculture 
 tion of justice in the lowest courts, which and Prices, vol. i. chap. 6. 
 were customary in this country five cen- 
 
 VOL. II. X
 
 306 THE NATURE AND CAUSES OF BOOK v. 
 
 which have already been mentioned, the other works and institu- 
 tions of this kind are chiefly those for facilitating the commerce of 
 the society, and those for promoting the instruction of the people. 
 The institutions for instruction are of two kinds : those for the 
 education of the youth, and those for the instruction of people of 
 all ages. The consideration of the manner in which the expense of 
 those different sorts of public works and institutions may be most 
 properly defrayed, will divide this Third Part of the present chapter 
 into three different articles. 1 
 
 ARTICLE I. 
 
 Of the Public Works and Institutions for facilitating the Commerce 
 
 of the Society. 
 
 And first, of those which are necessary for facilitating Commerce 
 
 in general* 
 
 That the erection and maintenance of the public works which 
 facilitate the commerce of any country, such as good roads, bridges, 
 navigable canals, harbours, &c. must require very different degrees 
 of expense in the different periods of society, is evident without any 
 proof. The expense of making and maintaining the public roads of 
 any country must evidently increase with the annual produce of the 
 land and labour of that country, or with the quantity and weight of 
 
 1 A government may,, or should, in- enterprise in a community are too weak 
 terfere with the ordinary process of pro- to enable the community to obtain those 
 duction and exchange in three cases : great works on which the material pro- 
 i. When the state can perform a service gress of a society depends. This de- 
 at a far better and cheaper rate than any ficiency is matter of degree, and should 
 private individual or company can, and be met proportionately by government, 
 when there are sufficient checks fur- In this country, for example, roads, 
 nished against mismanagement in per- canals, and railways have almost invaria- 
 forming the service. An example of this bly been constructed by private enter- 
 kind is the Post-office. 2. When the prise; but they have been rarely thus 
 service rendered or work done is of great effected in foreign countries, the state 
 immediate or ultimate value, but when having assisted in many cases, and having 
 the community at large is unable or altogether accomplished the work in more, 
 unwilling to appreciate and recompense In general, however, the interference of 
 the service, or when the person rendering government is, when it can be avoided, 
 the service is otherwise unable to ap- to be deprecated. There is nothing in 
 propriate any advantage to himself. This which an over-governed country is more 
 class of cases comprise endowments mischievously over-governed than under 
 granted or permitted by government in those circumstances in which an adminis- 
 aid of education, learning, science or art. tration is perpetually undertaking the 
 3. When the habits of association and initiative in industrial enterprises.
 
 CHAP. i. THE WEALTH OF NATIONS. 307 
 
 the goods which it becomes necessary to fetch and carry upon those 
 roads. The strength of a bridge must be suited to the number and 
 weight of the carriages which are likely to pass over it ; the depth 
 and the supply of water for a navigable canal must be proportioned 
 to the number and tonnage of the lighters which are likely to carry 
 goods upon it ; the extent of a harbour to the number of the ship- 
 ping which are likely to take shelter in it. 
 
 It does not seem necessary that the expense of those public 
 works should be defrayed from that public revenue, as it is com- 
 monly called, of which the collection and application is in most 
 countries assigned to the executive power. The greater part of 
 such public works may easily be so managed as to afford a particular 
 revenue sufficient for defraying their own expense, without bringing 
 any burden upon the general revenue of the society. 
 
 A highway, a bridge, a navigable canal, for example, may in 
 most cases be both made and maintained by a small toll upon the 
 carriages which make use of them ; a harbour, by a moderate port- 
 duty upon the tonnage of the shipping which load or unload in it. 
 The coinage, another institution for facilitating commerce, in many 
 countries not only defrays its own expense, but affords a small 
 revenue or seignorage to the sovereign. The Post-office, another 
 institution for the same purpose, over and above defraying its own 
 expense, affords in almost all countries a very considerable revenue 
 to the sovereign. 
 
 When the carriages which pass over a highway or a bridge, and 
 the lighters which sail upon a navigable canal, pay toll in propor- 
 tion to their weight or their tonnage, they pay for the maintenance 
 of those public works exactly in proportion to the wear and tear 
 which they occasion of them. It seems scarce possible to invent a 
 more equitable way of maintaining such works. This tax or toll, 
 too, though it is advanced by the carrier, is finally paid by the 
 consumer, to whom it must always be charged in the price of the 
 goods. As the expense of carriage, however, is very much reduced 
 by means of such public works, the goods, notwithstanding the toll, 
 come cheaper to the consumer than they could otherwise have done ; 
 their price not being so much raised by the toll, as it is lowered by 
 the cheapness of the carriage. The person who finally pays this 
 tax, therefore, gains by the application more than he loses by the 
 payment of it. His payment is exactly in proportion to his gain. 
 
 x %
 
 308 THE NATURE AND CA USES OF BOOK v. 
 
 It is in reality no more than a part of that gain which he is obliged 
 to give up in order to get the rest. It seems impossible to imagine 
 a more equitable method of raising a tax. 
 
 When the toll upon carriages of luxury, upon coaches, post- 
 chaises, &c., is made somewhat higher in proportion to their weight 
 than upon carriages of necessary use, such as carts, waggons, &c., 
 the indolence and vanity of the rich is made to contribute in a very 
 easy manner to the relief of the poor, by rendering cheaper the 
 transportation of heavy goods to all the differents parts of the 
 country. 
 
 When high roads, bridges, canals, &c. are in this manner made 
 and supported by the commerce which is carried on by means of 
 them, they can be made only where that commerce requires them, 
 and consequently where it is proper to make them. Their expense 
 too, their grandeur and magnificence, must be suited to what that 
 commerce can afford to pay. They must be made consequently 
 as it is proper to make them. A magnificent high road cannot be 
 made through a desert country where there is little or no commerce, 
 or merely because it happens to lead to the country villa of the 
 intendant of the province, or to that of some great lord to whom 
 the intendant finds it convenient to make his court. A great 
 bridge cannot be thrown over a river at a place where nobody 
 passes, or merely to embellish the view from the windows of a 
 neighbouring palace : things which sometimes happen, in countries 
 where works of this kind are carried on by any other revenue than 
 that which they themselves are capable of affording. 
 
 In several different parts of Europe the toll or lock-duty upon a 
 canal is the property of private persons, whose private interest 
 obliges them to keep up the canal. If it is not kept in tolerable 
 order, the navigation necessarily ceases altogether, and along with 
 it the whole profit which they can make by the tolls. If those tolls 
 were put under the management of commissioners, who had them- 
 selves no interest in them, they might be less attentive to the main- 
 tenance of the works which produced them. The canal of Langue- 
 doc cost the King of France and the province upwards of thirteen, 
 millions of livres, which (at twenty-eight livres the mark of silver, 
 the value of French money in the end of the last century) amounted 
 to upwards of nine hundred thousand pounds sterling. When that 
 great work was finished, the most likely method, it was found, of
 
 GHAP. i. THE WEALTH OF NATIONS. 809 
 
 keeping it in constant repair was to make a present of the tolls to 
 Riquet, the engineer, who planned and conducted the work. Those 
 tolls constitute at present a very large estate to the different 
 branches of the family of that gentleman, who have, therefore, 
 a great interest to keep the work in constant repair. But had those 
 tolls been put under the management of commissioners, who had no 
 such interest, they might perhaps have been dissipated in orna- 
 mental and unnecessary expenses, while the most essential parts of 
 the work were allowed to go to ruin. 
 
 The tolls for the maintenance of a high road cannot with any 
 safety be made the property of private persons. A high road, 
 though entirely neglected, does not become altogether impassable, 
 though a canal does. The proprietors of the tolls upon a high 
 road, therefore, might neglect altogether the repair of the road, 
 and yet continue to levy very nearly the same tolls. It is proper, 
 therefore, that the tolls for the maintenance of such a work should 
 be put under the management of commissioners or trustees. 
 
 In Great Britain, the abuses which the trustees have committed 
 in the management of those tolls, have in many cases been very 
 justly complained of. At many turnpikes, it has been said, the 
 money levied is more than double of what is necessary for executing, 
 in the completest manner, the work which is often executed in a 
 very slovenly manner, and sometimes not executed at all. 1 The 
 system of repairing the high roads by tolls of this kind, it must be 
 observed, is not of very long standing. We should not wonder, 
 therefore, if it has not yet been brought to that degree of perfection 
 of which it seems capable. If mean and improper persons are 
 frequently appointed trustees, and if proper courts of inspection 
 and account have not yet been established for controlling their 
 conduct, and for reducing the tolls to what is barely sufficient for 
 executing the work to be done by them, the recency of the 
 institution both accounts and apologises for those defects, of which, 
 by the wisdom of Parliament, the greater part may in due time be 
 gradually remedied. 
 
 The money levied at the different turnpikes in Great Britain is 
 supposed to exceed so much what is necessary for repairing the 
 roads, that the savings which, with proper economy, might be 
 
 1 For the state of the roads a century ago, even when tolls were levied, see 
 Smollett's Humphrey Clinker.
 
 310 THE NATURE AND CAUSES OF BOOK v. 
 
 made from it, have 'been considered, even by some ministers, as 
 a very great resource which might at some time or another be 
 applied to the exigencies of the state. Government, it has been 
 said, by taking the management of the turnpikes into its own 
 hands, and by employing the soldiers, who would work for a very 
 small addition to their pay, could keep the roads in good order at 
 a much less expense than it can be done by trustees, who have no 
 other workmen to employ but such as derive their whole sub- 
 sistence from their wages. A great revenue, half a million, 
 perhaps,* it has been pretended, might in this manner be gained 
 without laying any new burden upon the people ; and the turnpike 
 roads might be made to contribute to the general expense of the 
 state, in the same manner as the Post-office does at present. 
 
 That a considerable revenue might be gained in this manner I 
 have no doubt, though probably not near so much as the projectors 
 of this plan have supposed. The plan itself, however, seems liable 
 to several very important objections. 
 
 First, if the tolls which are levied at the turnpikes should ever 
 be considered as one of the resources for supplying the exigencies of 
 the state, they would certainly be augmented as those exigencies 
 were supposed to require. According to the policy of Great Britain, 
 therefore, they would probably be augmented very fast. The 
 facility with which a great revenue could be drawn from them, 
 would probably encourage administration to recur very frequently 
 to this resource. Though it may, perhaps, be more than doubtful 
 whether half a million could by any economy be saved out of the 
 present tolls, it can scarce be doubted but that a million might be 
 saved out of them, if they were doubled ; and perhaps two millions, 
 if they were tripled.f This great revenue too might be levied 
 without the appointment of a single new officer to collect and 
 receive it. But the turnpike tolls being continually augmented 
 in this manner, instead of facilitating the inland commerce of the 
 country, as at present, would soon become a very great incum- 
 brance upon it. The expense of transporting all heavy goods from 
 
 * Since publishing the two first editions Government, would not be sufficient to 
 
 of this book, I have got good reasons to keep in repair five of the principal roads 
 
 believe that all the turnpike tolls levied in the kingdom. 
 
 in Great Britain do not produce a net ( I have now good reasons to believe 
 
 revenue that amounts to half a million ; that all these conjectural sums are by 
 
 a sum which, under the management of much too large.
 
 CHAP. i. THE WEALTH OF NATIONS. 311 
 
 one part of the country to another would soon be so much increased, 
 the market for all such goods, consequently, would soon he so much 
 narrowed, that their production would be in a great measure dis- 
 couraged, and the most important branches of the domestic industry 
 of the country annihilated altogether. 
 
 Secondly, a tax upon carriages in proportion to their weight, 
 though a very equal tax when applied to the sole purpose of 
 repairing the roads, is a very unequal one when applied to any 
 other purpose, or to supply the common exigencies of the state. 
 "When it is applied to the sole purpose above mentioned, each 
 carriage is supposed to pay exactly for the wear and tear which 
 that carriage occasions of the roads ; but when it is applied to any 
 other purpose, each carriage is supposed to pay for more than that 
 wear and tear, and contributes to the supply of some other exigency 
 of the state. But as the turnpike toll raises the price of goods in 
 proportion to their weight and not to their value, it is chiefly paid 
 by the consumers of coarse and bulky, not by those of precious and 
 light commodities. Whatever exigency of the state therefore this 
 tax might be intended to supply, that exigency would be chiefly 
 supplied at the expense of the poor, not of the rich ; at the expense 
 of those who are least able to supply it, not of those who are most 
 able. 
 
 Thirdly, if Government should at any time neglect the reparation 
 of the high roads, it would be still more difficult than it is at 
 present to compel the proper application of any part of the turnpike 
 tolls. A large revenue might thus be levied upon the people, 
 without any part of it being applied to the only purpose to which 
 a revenue levied in this manner ought ever to be applied. If the 
 meanness and poverty of the trustees of turnpike roads render it 
 sometimes difficult at present to oblige them to repair their wrong, 
 their wealth and greatness would render it ten times more so in the 
 case which is here supposed. 
 
 In France, the funds destined for the reparation of the high roads 
 are under the immediate direction of the executive power. Those 
 funds consist, partly in a certain number of days 7 labour which the 
 country people are in most parts of Europe obliged to give to the 
 reparation of the highways, and partly in such a portion of the 
 general revenue of the state as the king chooses to spare from his 
 other expenses.
 
 312 THE NATURE AND CAUSES OF BOOK v. 
 
 By the ancient law of France, as well as by that of most other 
 parts of Europe, the labour of the country people was under the 
 direction of a local or provincial magistracy, which had no im- 
 mediate dependency upon the king's council ; but by the present 
 practice, both the labour of the country people, and whatever other 
 fund the king may choose to assign for the reparation of the high 
 roads in any particular province or generality, are entirely under 
 the management of the intendant, an officer who is appointed and 
 removed by the king's council, who receives his orders from it, and 
 is in constant correspondence with it. In the progress of des- 
 potism the authority of the executive power gradually absorbs that 
 of every other power in the state, and assumes to itself the manage- 
 ment of every branch of revenue which is destined for any public 
 purpose. In France, however, the great post-roads, the roads 
 which make the communication between the principal towns of 
 the kingdom, are in general kept in good order, and in some 
 provinces are even a good deal superior to the greater part of the 
 turnpike roads of England. But what we call the cross-roads, that 
 is, the far greater part of the roads in the country, are entirely 
 neglected, and are in many places absolutely impassable for any 
 heavy carriage. In some places it is even dangerous to travel on 
 horseback, and mules are the only conveyance which can safely be 
 trusted. The proud minister of an ostentatious court may fre- 
 quently take pleasure in executing a work of splendour and 
 magnificence, such as a great highway which is frequently seen 
 by the principal nobility, whose applauses not only flatter his 
 vanity, but even contribute to support his interest at court. But 
 to execute a great number of little works, in which nothing that 
 can be done can make any great appearance, or excite the smallest 
 degree of admiration in any traveller, and which, in short, have 
 nothing to recommend them but their extreme utility, is a business 
 which appears in every respect too mean and paltry to merit the 
 attention of so great a magistrate. Under such an administration, 
 therefore, such works are almost always entirely neglected. 
 
 In China, and in several other governments of Asia, the executive 
 power charges itself both with the reparation of the high roads and 
 with the maintenance of the navigable canals. In the instructions 
 which are given to the governor of each province, those objects, it 
 is said, are constantly recommended to him, and the judgment
 
 CHAP. i. THE WEALTH OF NATIONS. 313 
 
 which the court forms of his conduct is very much regulated by 
 the attention which he appears to have paid to this part of his 
 instructions. This branch of public police accordingly is said to be 
 very much attended to in all those countries, but particularly in 
 China, where the high roads, and still more the navigable canals, 
 it is pretended, exceed very much everything of the same kind 
 which is known in Europe. The accounts of those works, however, 
 which have been transmitted to Europe, have generally been drawn 
 up by weak and wondering travellers ; frequently by stupid and 
 lying missionaries. If they had been examined by more intelligent 
 eyes, and if the accounts of them had been reported by more faithful 
 witnesses, they would not, perhaps, appear to be so wonderful. 
 The account which Bernier J gives of some works of this kind in 
 Hindostan falls very much short of what had been reported of them 
 by other travellers, more disposed to the marvellous than he was. 
 It may too, perhaps, be in those countries, as it is in France, where 
 the great roads, the great communications which are likely to be 
 the subjects of conversation at the court and in the capital, are 
 attended to, and all the rest neglected. In China, besides, in 
 Hindostan, and in several other governments of Asia, the revenue 
 of the sovereign arises almost altogether from a land-tax or land- 
 rent, which rises or falls with the rise and fall of the annual 
 produce of the land. The great interest of the sovereign, there- 
 fore, his revenue, is in such countries necessarily and immediately 
 connected with the cultivation of land, with the greatness of its 
 produce, and with the value of its produce. But in order to render 
 that produce both as great and as valuable as possible, it is 
 necessary to procure to it as extensive a market as possible, and 
 consequently to establish the freest, the easiest, and the least 
 expensive communication between all the different parts of the 
 country; which can be done only by means of the best roads 
 and the best navigable canals. But the revenue of the sovereign 
 does not, in any part of Europe, arise chiefly from a land-tax or 
 land-rent. In all the great kingdoms of Europe, perhaps, the 
 greater part of it may ultimately depend upon the produce of the 
 land ; but that dependency is neither so immediate nor so evident. 
 In Europe, therefore, the sovereign does not feel himself so directly 
 
 1 The Revolution of the Empire of the Great Mogul : A Letter to Colbert on the 
 Extent of Hiudostan, &c.
 
 51 4 THE NATURE ANT) CAUSES OF BOOK v. 
 
 called upon to promote the increase, both in quantity and value, of 
 the produce of the land, or, by maintaining- good roads and canals, 
 to provide the most extensive market for that produce. Though 
 it should be true, therefore, what I apprehend is not a little 
 doubtful, that in some parts of Asia this department of the public 
 police is very properly managed by the executive power, there 
 is not the least probability that, during the present state of 
 things, it could be tolerably managed by that power in any part 
 of Europe. 
 
 Even those public works which are of such a nature that they 
 cannot afford any revenue for maintaining themselves, but of which 
 the conveniency is nearly confined to some particular place or dis- 
 trict, are always better maintained by a local or provincial revenue, 
 under the management of a local and provincial administration, 
 than by the general revenue of the state, of which the executive 
 power must always have the management. Were the streets of 
 London to be lighted and paved at the expense of the Treasury, is 
 there any probability that they would be so well lighted and paved 
 as they are at present, or even at so small an expense ? The expense, 
 besides, instead of being raised by a local tax upon the inhabitants 
 of each particular street, parish, or district in London, would, in this 
 case, be defrayed out of the general revenue of the state, and would 
 consequently be raised by a tax upon all the inhabitants of the 
 kingdom, of whom the greater part derive no sort of TDenefit from 
 the lighting and paving of the streets of London. 
 
 The abuses which sometimes creep into the local and provincial 
 administration of a local and provincial revenue, how enormous 
 soever they may appear, are in reality, however, almost always very 
 trifling, in comparison of those which commonly take place in 
 the administration and expenditure of the revenue of a great 
 empire. They are, besides, much more easily corrected. Under 
 the local or provincial administration of the justices of the peace in 
 Great Britain, the six days' labour which the country people are 
 obliged to give to the reparation of the highways is not always 
 perhaps very judiciously applied, but it is scarce ever exacted with 
 any circumstance of cruelty or oppression. In France, under the 
 administration of the intendants, the application is not always more 
 judicious, and the exaction is frequently the most cruel and oppres- 
 sive. Such corvees, as they are called, make one of the principal
 
 CHAP. i. THE WEALTH OF NATIONS. 315 
 
 instruments of tyranny "by which those officers chastise any parish 
 or communaute which has had the misfortune to fall under their 
 displeasure. 
 
 Of the Public Worses and Institutions which are necessary for 
 facilitating particular Branches of Commerce. 
 
 The object of the public works and institutions above men- 
 tioned is to facilitate commerce in general. But, in order to faci- 
 litate some particular branches of it, particular institutions are 
 necessary, which again require a particular and extraordinary 
 expense. 
 
 Some particular branches of commerce, which are carried on with 
 barbarous and uncivilised nations, require extraordinary protection. 
 An ordinary store or counting-house could give little security to 
 the goods of the merchants who trade to the western coast of 
 Africa. To defend them from the barbarous natives, it is necessary 
 that the place where they are deposited should be, in some measure, 
 fortified. The disorders in the Government of Hindostan have 
 been supposed to render a like precaution necessary even among 
 that mild and gentle people ; and it was under pretence of securing 
 their persons and property from violence, that both the English 
 and French East India Companies were allowed to erect the first 
 forts which they possessed in that country. Among other nations, 
 whose vigorous government will suffer no strangers to possess any 
 fortified place within their territory, it may be necessary to main- 
 tain some ambassador, minister, or consul, who may both decide, 
 according to their own customs, the differences arising among his 
 own countrymen, and, in their disputes with the natives, may, by 
 means of his public character, interfere with more authority, and 
 afford them a more powerful protection, than they could expect 
 from any private man. The interests of commerce have frequently 
 made it necessary to maintain ministers in foreign countries, where 
 the purposes, either of war or alliance, would not have required 
 any. The commerce of the Turkey Company first occasioned 
 the establishment of an ordinary ambassador at Constantinople. 
 The first English embassies to Russia arose altogether from com- 
 mercial interests. The constant interference with those interests 
 necessarily occasioned between the subjects of the different states of
 
 316 THE NATURE AND CAUSES OF BOOK v. 
 
 Europe, has probably introduced the custom of keeping, in all 
 neighbouring countries, ambassadors or ministers constantly resi- 
 dent even in the time of peace. This custom, unknown to ancient 
 times, seems not to be older than the end of the fifteenth or be- 
 ginning of the sixteenth century; that is, than the time when 
 commerce first began to extend itself to the greater part of the 
 nations of Europe, and when they first began to attend to its 
 interests. 
 
 It seems not unreasonable, that the extraordinary expense, which 
 the protection of any particular branch of commerce may occasion, 
 should be defrayed by a moderate tax upon that particular branch ; 
 by a moderate fine, for example, to be paid by the traders when 
 they first enter into it, or, what is more equal, by a particular duty 
 of so much per cent, upon the goods which they either import into, 
 or export out of, the particular countries with which it is carried on. 
 The protection of trade in general from pirates and freebooters is 
 said to have given occasion to the first institution of the duties of 
 customs. But if it was thought reasonable to lay a general tax 
 upon trade, in order to defray the expense of protecting trade in 
 general, it should seem equally reasonable to lay a particular tax 
 upon a particular branch of trade, in order to defray the extra- 
 ordinary expense of protecting that branch. 
 
 The protection of trade in general has always been considered as 
 essential to the defence of the commonwealth, and, upon that 
 account, a necessary part of the duty of the executive power. The 
 collection and application of the general duties of customs, there- 
 fore, have always been left to that power. But the protection of 
 any particular branch of trade is a part of the general protection of 
 trade ; a part, therefore, of the duty of that power ; and if nations 
 always acted consistently, the particular duties levied for the pur- 
 poses of such particular protection should always have been left 
 equally to its disposal. But in this respect, as well as in many 
 others, nations have not always acted consistently; and in the 
 greater part of the commercial states of Europe, particular com- 
 panies of merchants have had the address to persuade the Legis- 
 lature to entrust to them the performance of this part of the duty 
 of the sovereign, together with all the powers which are necessarily 
 connected with it. 
 
 These companies, though they may, perhaps, have been useful for
 
 CHAP. i. THE WEALTH OF NATIONS. 317 
 
 the first introduction of some branches of commerce, by making, at 
 their own expense, an experiment which the state might not think 
 it prudent to make, have in the long run proved, universally, either 
 burdensome or useless, and have either mismanaged or confined the 
 trade. 
 
 When those companies do not trade upon a joint stock, but are 
 obliged to admit any person, properly qualified, upon paying a 
 certain fine, and agreeing to submit to the regulations of the com- 
 pany, each member trading upon his own stock, and at his own 
 risk, they are called regulated companies. When they trade upon a 
 joint stock, each member sharing in the common profit or loss in 
 proportion to his share in this stock, they are called joint-stock 
 companies. Such companies, whether regulated or joint-stock, 
 sometimes have, and sometimes have not, exclusive privileges. 
 
 Regulated companies resemble in every respect the corporations 
 of trades, so common in the cities and towns of all the different 
 countries of Europe, and are a sort of enlarged monopolies of the same 
 kind. As no inhabitant of a town can exercise an incorporated trade, 
 without first obtaining his freedom in the corporation, so in most 
 cases no subject of the State can lawfully carry on any branch of 
 foreign trade, for which a regulated company is established, without 
 first becoming a member of that company. The monopoly is more 
 or less strict according as the terms of admission are more or less 
 difficult; and according as the directors of the company have 
 more or less authority, or have it more or less in their power to 
 manage, in such a manner as to confine the greater part of the 
 trade to themselves and their particular friends. In the most 
 ancient regulated companies the privileges of apprenticeship were 
 the same as in other corporations, and entitled the person who had 
 served his time to a member of the company, to become himself a 
 member, either without paying any fine, or upon paying a much 
 smaller one than what was exacted of other people. The usual 
 corporation spirit, wherever the law does not restrain it, prevails in 
 all regulated companies. When they have been allowed to act 
 according to their natural genius, they have always, in order to 
 confine the competition to as small a number of persons as possible, 
 endeavoured to subject the trade to many burdensome regulations. 
 When the law has restrained them from doing this, they have 
 become altogether useless and insignificant.
 
 318 THE NATURE AND CAUSES OF BOOK v. 
 
 The regulated companies for foreign commerce which at present 
 subsist in Great Britain are, the Ancient Merchant Adventurers 
 Company, now commonly called the Hamburg Company, the Russia 
 Company, the Eastland Company, the Turkey Company, and the 
 African Company. 
 
 The terms of admission into the Hamburg Company are now 
 said to be quite easy; and the directors either have it not in their 
 power to subject the trade to any burdensome restraints or regu- 
 lations, or, at least, have not of late exercised that power. -It has 
 not always been so. About the middle of the last century, the fine 
 for admission, was fifty, and at one time one hundred pounds, and 
 the conduct of the company was said to be extremely oppressive. 
 In 1643, in 1645, and in 1661, the clothiers and free traders of 
 the West of England complained of them to Parliament, as of 
 monopolists who confined the trade and oppressed the manufactures 
 of the country. Though those complaints produced no Act of 
 Parliament, they had probably intimidated the company so far as 
 to oblige them to reform their conduct. Since that time, at least, 
 there has been no complaints against them. By the loth and nth 
 of William III, c. 6, the fine for admission into the Russian Com- 
 pany was reduced to five pounds ; and by the 25th of Charles II, 
 c. 7, that for admission into the Eastland Company, to forty shil- 
 lings, while, at the same time, Sweden, Denmark, and Norway, all 
 the countries on the north side of the Baltic, were exempted from 
 their exclusive charter. The conduct of those companies had pro- 
 bably given occasion to those two Acts of Parliament. Before that 
 time, Sir Josiah Child l had represented both these and the Ham- 
 burg Company as extremely oppressive, and imputed to their bad 
 management the low state of the trade which we at that time 
 carried on to the countries comprehended within their respective 
 charters. But though such companies may not, in the present times, 
 be very oppressive, they are certainly altogether useless. To be 
 merely useless, indeed, is perhaps the highest eulogy which can ever 
 justly be bestowed upon a regulated company; and all the three 
 companies above mentioned seem, in their present state, to deserve 
 this eulogy. 
 
 The fine for admission into the Turkey Company was formerly 
 twenty-five pounds for all persons under twenty-six, years of age, 
 1 Discourse of Trade, chap. iii,.
 
 CHAP. i. THE WEALTH OF NATIONS. 319 
 
 and fifty pounds for all persons above that age. Nobody but 
 mere merchants could be admitted; a restriction which excluded 
 all shopkeepers and retailers. By a bye-law, no British manu- 
 factures could be exported to Turkey but in the general ships 
 of the company; and as those ships sailed always from the port 
 of London, this restriction confined the trade to that expensive 
 port, and the traders to those who lived in London and in its 
 neighbourhood. By another bye-law, no person living within 
 twenty miles of London, and not free of the city, could be admitted 
 a member ; another restriction, which, joined to the foregoing, 
 necessarily excluded all but the freemen of London. As the time 
 for the loading and sailing of those general ships depended alto- 
 gether upon the directors, they could easily fill them with their 
 own goods and those of their particular friends, to the exclusion 
 of others, who, they might pretend, had made their proposals too 
 late. In this state of things, therefore, this company was in 
 every respect a strict and oppressive monopoly. Those abuses 
 gave occasion to the Act of the 26th George II, chap. 18, reducing 
 the fine for admission to twenty pounds for all persons, without 
 any distinction of ages, or any restriction, either to mere merchants 
 or to the freemen of London, and granting to all such persons 
 the liberty of exporting, from all ports of Great Britain to 
 any port in Turkey, all British goods of which the exportation 
 was not prohibited; and of importing from thence all Turkish 
 goods of which the importation was not prohibited, upon paying 
 both the .general duties of customs, and the particular duties 
 assessed for defraying the necessary expenses of the company; 
 and submitting, at the same time, to the lawful authority of the 
 British ambassador and consuls resident in Turkey, and to the 
 bye-laws of the company duly enacted. To prevent any oppression 
 by those bye-laws, it was by the same Act ordained, that if any 
 seven members of the company conceived themselves aggrieved 
 by any bye -law which should be enacted after the passing of 
 this Act, they might appeal to the Board of Trade and Planta- 
 tions (to the authority of which, a Committee of the Privy Council 
 has now succeeded), provided such appeal was brought within 
 twelve months after the bye-law was enacted ; and that if any 
 seven members conceived themselves aggrieved by any bye-law 
 which had been enacted before the passing of this Act, they might
 
 320 THE NATURE AND CAUSES OF BOOK v. 
 
 bring a like appeal, provided it was within twelve months after 
 the day on which this Act was to take place. The experience 
 of one year, however, may not always be sufficient to discover 
 to all the members of a great company the pernicious tendency 
 of a particular bye-law ; and if several of them should afterwards 
 discover it, neither the Board of Trade nor the Committee of 
 Council can afford them any redress. The object, besides, of the 
 greater part of the bye-laws of all regulated companies, as well 
 as of all other corporations, is not so much to oppress those who 
 are already members, as to discourage others from becoming so, 
 which may be done, not only by a high fine, but by many other 
 contrivances. The constant view of such companies is always to 
 raise the rate of their own profit as high as they can; to keep 
 the market, both for the goods which they export, and for those 
 which they import, as much understocked as they can ; which can 
 be done only by restraining the competition, or by discouraging 
 new adventurers from entering into the trade. A fine even 
 of twenty pounds, besides, though it may not perhaps be sufficient 
 to discourage any man from entering into the Turkey trade, with 
 an intention to continue in it, may be enough to discourage a 
 speculative merchant from hazarding a single adventure in it. 
 In all trades, the regular established traders, even though not 
 incorporated, naturally combine to raise profits, which are no way 
 so likely to be kept at all times down to their proper level, as 
 by the occasional competition of speculative adventurers. The 
 Turkey trade, though in some measure laid open by this Act of 
 Parliament, is still considered by many people as very far from 
 being altogether free. The Turkey Company contribute to main- 
 tain an ambassador and two or three consuls, who, like other 
 public ministers, ought to be maintained altogether by the State, 
 and the trade laid open to all His Majesty's subjects. The different 
 taxes levied by the company for this and other corporation pur- 
 poses, might afford a revenue much more than sufficient to enable 
 the State to maintain such ministers. 
 
 Regulated companies, it was observed by Sir Josiah Child, 1 , 
 though they had frequently supported public ministers, had never 
 maintained any forts or garrisons in the countries to which they 
 
 1 Discourse of Trade, chap. iii.
 
 CHAP. i. THE WEALTH OF NATIONS. 321 
 
 traded ; whereas joint-stock companies frequently had. And in 
 reality the former seem to be much more unfit for this sort of 
 service than the latter. First, the directors of a regulated com- 
 pany have no particular interest in the prosperity of the general 
 trade of the company, for the sake of which such forts and garrisons 
 are maintained. The decay of that general trade may even fre- 
 quently contribute to the advantage of their own private trade ; 
 as, by diminishing the number of their competitors, it may enable 
 them both to buy cheaper and to sell dearer. The directors of 
 a joint-stock company, on the contrary, having only their share 
 in the profits which are made upon the common stock committed 
 to their management, have no private trade of their own, of which 
 the interest can be separated from that of the general trade of 
 the company. Their private interest is connected with the pro- 
 sperity of the general trade of the company, and with the main- 
 tenance of the forts and garrisons which are necessary for its 
 defence. They are more likely, therefore, to give that continual 
 and careful attention which that maintenance necessarily requires. 
 Secondly, the directors of a joint-stock company have always the 
 management of a large capital, the joint stock of the company, 
 a part of which they may frequently employ, with propriety, in 
 building, repairing, and maintaining such necessary forts and 
 garrisons. But the directors of a regulated company, having the 
 management of no common capital, have no other fund to employ 
 in this way but the casual revenue arising from the admission 
 fines, and from the corporation duties imposed upon the trade 
 of the company. Though they had the same interest, therefore, 
 to attend to the maintenance of such fgrts and garrisons, they can 
 seldom have the same ability to render that attention effectual. 
 The maintenance of a public minister requiring scarce any atten- 
 tion, and but a moderate and limited expense, is a business much 
 more suitable both to the temper and abilities of a regulated 
 company. 
 
 Long after the time of Sir Josiah Child, however, in 1750? a 
 regulated company was established, the present company of mer- 
 chants trading to Africa, which was expressly charged at first 
 with the maintenance of all the British forts and garrisons that 
 lie between Cape Blanc and the Cape of Good Hope, and after- 
 wards with that of those only which lie between Cape Rouge and 
 
 VOL. II. Y
 
 322 THE NATURE AND CAUSES OF BOOK v. 
 
 the Gape of Good Hope. The Act which establishes this company 
 (the 23rd of George II, chap. 31) seems to have had two distinct 
 objects in view : first, to restrain effectually the oppressive and 
 monopolizing spirit which is natural to the directors of a regulated 
 company ; and, secondly, to force them, as much as possible, to 
 give an attention, which is not natural to them, towards the 
 maintenance of forts and garrisons. 
 
 For the first of these purposes, the fine for admission is limited 
 to forty shillings. The company is prohibited from trading in 
 their corporate capacity, or upon a joint stock ; from borrowing 
 money upon common seal, or from laying any restraints upon the 
 trade which may be carried on freely from all places, and by all 
 persons being British subjects and paying the fine. The govern- 
 ment is in a committee of nine persons who meet at London, but 
 who are chosen annually by the freemen of the company at London, 
 Bristol, and Liverpool, three from each place. No committee-man 
 can be continued in office for more than three years together. Any 
 committee-man might be removed by the Board of Trade and 
 Plantations ; now by a committee of council, after being heard in 
 his own defence. The committee are forbid to export negroes 
 from Africa, or to import any African goods into Great Britain. 
 But as they are charged with the maintenance of forts and garri- 
 sons, they may, for that purpose, export from Great Britain to 
 Africa goods and stores of different kinds. Out of the moneys 
 which they shall receive from the company, they are allowed a 
 sum not exceeding eight hundred pounds for the salaries of their 
 clerks and agents at London, Bristol, and Liverpool, the house- 
 rent of their office at London, and all other expenses of manage- 
 ment, commission, and agency in England. What remains of this 
 sum, after defraying these different expenses, they may divide 
 among themselves, as compensation for their trouble, in what 
 manner they think proper. By this constitution, it might have 
 been expected that the spirit of monopoly would have been 
 effectually restrained, and the first of these purposes sufficiently 
 answered. It would seem, however, that it had not. Though by 
 the 4th of George III, chap. 20, the fort of Senegal, with all its de- 
 pendencies, had been vested in the company of merchants trading 
 to Africa, yet in the year following (by the 5th of George III, 
 chap. 44), not only Senegal and its dependencies, but the whole
 
 CHAP. i. THE WEALTH OF NATIONS. 323 
 
 coast, from the port of Sallee in South Barbary to Cape Rouge, 
 was exempted from the jurisdiction of that company, was vested 
 in the Crown, and the trade to it declared free to all His Majesty's 
 subjects. The company had been suspected of restraining the 
 trade, and of establishing some sort of improper monopoly. It 
 is not, however, very easy to conceive how, under the regulations 
 of the 231x1 George II, they could do so. In the printed debates 
 of the House of Commons, not always the most authentic records 
 of truth, I observe, however, that they have been accused of this. 
 The members of the committee of nine, being all merchants, and 
 the governors and factors, in their different forts and settlements, 
 being all dependent upon them, it is not unlikely that the latter 
 might have given peculiar attention to the consignments and 
 commissions of the former, which would establish a real monopoly. 
 For the second of these purposes, the maintenance of the forts 
 and garrisons, an annual sum has been allotted to them by Parlia- 
 ment, generally about ^13,000. For the proper application of 
 this sum, the committee is obliged to account annually to the 
 Cursitor Baron of Exchequer, which account is afterwards to be 
 laid before Parliament. But Parliament, which gives so little 
 attention to the application of millions, is not likely to give much 
 to that of .^13,000 a year ; and the Cursitor Baron of Exchequer, 
 from his profession and education, is not likely to be profoundly 
 skilled in the proper expense of forts and garrisons. The captains 
 of His Majesty's navy, indeed, or any other commissioned officers 
 appointed by the Board of Admiralty, may inquire into the con- 
 dition of the forts and garrisons, and report their observations to 
 that Board. But that Board seems to have no direct jurisdiction 
 over the committee, nor any authority to correct those whose 
 conduct it may thus inquire into ; and the captains of His 
 Majesty's navy, besides, are not supposed to be always deeply 
 learned in the science of fortification. Removal from an office, 
 which can be enjoyed only for the term of three years, and of 
 which the lawful emoluments, even during that term, are so veiy 
 small, seems to be the utmost punishment to which any committee- 
 man is liable for any fault, except direct malversation or embezzle- 
 ment, either of the public money or of that of the company ; and 
 the fear of that punishment can never be a motive of sufficient 
 weight to force a continual and careful attention to a business 
 
 Y 2
 
 324 THE NATUEE AND CAUSES OF BOOK v. 
 
 to which he has no other interest to attend. The committee are 
 accused of having sent out bricks and stones from England for 
 the reparation of Cape Coast Castle on the coast of Guinea, a 
 business for which Parliament had several times granted an ex- 
 traordinary sum of money. These bricks and stones too which had 
 thus been sent upon so long a voyage, were said to have been of 
 so bad a quality, that it was necessary to rebuild from the founda- 
 tion the walls which had been repaired with them. The forts 
 and garrisons which lie north of Cape Rouge, are not only main- 
 tained at the expense of the State, but are under the immediate 
 government of the executive power; and why those which lie 
 south of that Cape, and which too are, in part at least, maintained 
 at the expense of the State, should be under a different govern- 
 ment, it seems not very easy even to imagine a good reason. 
 The protection of the Mediterranean trade was the original purpose 
 or pretence of the garrisons of Gibraltar and Minorca, and the 
 maintenance and government of those garrisons has always been, 
 very properly, committed, not to the Turkey Company, but to the 
 executive povVer. In the extent of its dominion consists, in a great 
 measure, the pride and dignity of that power ; and it is not very 
 likely to fail in attention to what is necessary for the defence of 
 that dominion. The garrisons at Gibraltar and Minorca, accord- 
 ingly, have never been neglected ; though Minorca has been twice 
 taken, and is now probably lost for ever, that disaster was never 
 even imputed to any neglect in the executive power. I would 
 not, however, be understood to insinuate, that either of those ex- 
 pensive garrisons was ever, even in the smallest degree, necessary 
 for the purpose for which they were originally dismembered from 
 the Spanish monarchy. That dismemberment, perhaps, never 
 served any other real purpose than to alienate from England her 
 natural ally the King of Spain, and to unite the two principal 
 branches of the house of Bourbon in a much stricter and more 
 permanent alliance than the ties of blood could ever have united 
 them. 1 
 
 1 There is probably no publicist or excuse, but the disreputable motive 
 
 statesman of any eminence who has not which has been given for its retention, 
 
 commented on the impolicy of retaining the facilities namely which it affords of 
 
 the fort of Gibraltar. Not only does it smuggling prohibited goods into Spain, 
 
 not subserve the military purpose for cannot be an equivalent to the coat of its 
 
 which its original occupation was the maintenance. It is something else to
 
 CHAP. i. THE WEALTH OF NATIONS. 325 
 
 Joint-stock companies, established either by royal charter or by 
 Act of Parliament, differ in several respects, not only from regulated 
 companies, but from private copartneries. 
 
 First, in a private copartnery, no partner, without the consent of 
 the company, can transfer his share to another person, or introduce 
 a new member into the company. Each member, however, may, 
 upon proper warning, withdraw from the copartnery, and demand 
 payment from them of his share of the common stock. In a joint- 
 stock company on the contrary, no member can demand payment 
 of his share from the company; but each member can, without 
 their consent, transfer his share to another person, and thereby 
 introduce a new member. The value of a share in a joint stock is 
 always the price which it will bring in the market ; and this may 
 be either greater or less, in any proportion, than the sum which its 
 owner stands credited for in the stock of the company. 
 
 Secondly, in a private copartnery, each partner is bound for the 
 debts contracted by the company to the whole extent of his fortune. 
 In a joint-stock company, on the contrary, each partner is bound 
 only to the extent of his share. 1 
 
 The trade of a joint-stock company is always managed by a 
 court of directors. This court, indeed, is frequently subject, in 
 many respects, to the control of a general court of proprietors. 
 But the greater part of those proprietors seldom pretend to under- 
 stand anything of the business of the company; and when the 
 spirit of faction happens not to prevail among them, give them- 
 selves no trouble about it, but receive contentedly such half-yearly 
 or yearly dividend as the directors think proper to make to them. 
 This total exemption from trouble and from risk, beyond a limited 
 
 add, that its first seizure was an act of managers and directors, who are in effect 
 the worst political immorality, its c n- borrowers of such capital, and the equally 
 tinued occupation is a permanent defiance disgraceful negligence of the English 
 of public conscience. See Mr. Goldwin bankruptcy law. As far as the share- 
 Smith's ' The Empire.' holders of such partnerships are con- 
 1 The principle of limited liability cerned, no notice seems to be taken of 
 (partnerships en commandite"), has been the economical law, that if risks are 
 of late years greatly extended in this eliminated, the rate of profit attainable 
 country. Unfortunately this expedient, on investments in which the capitalist 
 which might have done much towards gives no labour is not and will not, on 
 facilitating the relations of lenders and the average, be in excess of the ordinary 
 borrowers, has been seriously compro- rate of interest. That an error should 
 raised by the unreasoning cupidity of those have been so general on this point, is 
 who have ventured their capital in these due to the distinction drawn between 
 companies, the disgraceful dishonesty of rates of interest and rates of profit.
 
 326 THE NATURE AND CAUSES OF BOOK v. 
 
 sum, encourages many people to become adventurers in joint-stock 
 companies, who would, upon no account, hazard their fortunes in 
 any private copartnery. Such companies, therefore, commonly 
 draw to themselves much greater stocks than any private copartnery 
 can boast of. The trading stock of the South Sea Company at 
 one time amounted to upwards of thirty-three millions eight 
 hundred thousand pounds. The divided capital of the Bank of 
 England amounts, at present, to ten millions seven hundred and 
 eighty thousand pounds. The directors of such companies, how- 
 ever, being the managers rather of other people's money than of 
 their own, it cannot well be expected that they should watch over 
 it with the same anxious vigilance with which the partners in a 
 private copartnery frequently watch over their own. Like the 
 stewards of a rich man, they are apt to consider attention to small 
 matters as not for their master's honour, and very easily give 
 themselves a dispensation from having it. Negligence and pro- 
 fusion, therefore, must always prevail, more or less, in the manage- 
 ment of the affairs of such a company. It is upon this account that 
 joint-stock companies for foreign trade have seldom been able to 
 maintain the competition against private adventurers. They have 
 accordingly, very seldom succeeded without an exclusive privilege, 
 and frequently have not succeeded with one. Without an ex- 
 clusive privilege they have commonly mismanaged the trade ; 
 with an exclusive privilege they have both mismanaged and con- 
 fined it. 1 
 
 The Royal African Company, the predecessors of the present 
 African Company, had an exclusive privilege by charter; but as 
 that charter had not been confirmed by Act of Parliament, the trade, 
 in consequence of the Declaration of Rights, was, soon after the 
 revolution, laid open to all His Majesty's subjects. The Hudson's 
 Bay Company are, as to their legal rights, in the same situation as 
 the Royal African Company. Their exclusive charter has not been 
 
 1 In our time, Smith's criticism of joint- that directors trade worse than indi- 
 
 stock partnership has received abundant viduals do, in the mismanagement of 
 
 confirmation from experience. The stock railway enterprise, and the prodigious 
 
 of the South Sea Company, like that of loss of capital which has ensued from 
 
 the Bank of England, was based on such mismanagement. It may be added, 
 
 Government loans, advanced for the that the public suffers in the end by this 
 
 sake of trade privileges, and forming the misconduct, and that it will suffer, until 
 
 nucleus of the dividend payable to the it asserts that it will not be mulcted in 
 
 proprietors. But modern experience order to obviate the frauds and follies of 
 
 discovers the illustration of the maxim, those who are unscrupulous or reckless.
 
 CHAP. i. THE WEALTH OF NATIONS. 327 
 
 confirmed by Act of Parliament. The South Sea Company, as long 
 as they continued to be a trading- company, had an exclusive privi- 
 lege confirmed by Act of Parliament ; as have likewise the present 
 United Company of Merchants trading to the East Indies. 
 
 The Royal African Company soon found that they could not 
 maintain the competition against private adventurers, whom, not- 
 withstanding the Declaration of Rights, they continued for some 
 time to call interlopers, and to persecute as such. In 1698, how- 
 ever, the private adventurers were subjected to a duty of ten per 
 cent, upon almost all the different branches of their trade, to be 
 employed by the company in the maintenance of their forts and 
 garrisons. But, notwithstanding this heavy tax, the company were 
 still unable to maintain the competition. Their stock and credit 
 gradually declined. In 1712, their debts had become so great, 
 that a particular Act of Parliament was thought necessary, both for 
 their security and for that of their creditors. It was enacted, that 
 the resolution of two-thirds of these creditors in number and value 
 should bind the rest, both with regard to the time which should be 
 allowed to the company for the payment of their debts, and with 
 regard to any other agreement which it might be thought proper 
 to make with them concerning those debts. In 1730, their affairs 
 were in so great disorder, that they were altogether incapable of 
 maintaining their forts and garrisons, the sole purpose and pretext 
 of their institution. From that year, till their final dissolution, 
 the Parliament judged it necessary to allow the annual sum of ten 
 thousand pounds for that purpose. In 1732, after having been for 
 many years losers by the trade of carrying negroes to the West 
 Indies, they at last resolved to give it up altogether ; to sell to the 
 private traders to America the negroes which they purchased upon 
 the coast, and to employ their servants in a trade to the inland 
 parts of Africa for gold dust, elephants' teeth, dyeing drugs, &c. 
 But their success in this more confined trade was not greater than 
 in their former extensive one. Their affairs continued to go 
 gradually to decline, till at last, being in every respect a bankrupt 
 company, they were dissolved by Act of Parliament, and their forts 
 and garrisons vested in the present regulated company of merchants 
 trading to Africa. Before the erection of the Royal African Com- 
 pany, there had been three other joint-stock companies successively 
 established, one after another, for the African trade. They were all
 
 328 THE NATURE AND CAUSES OF BOOK v. 
 
 equally unsuccessful. They all, however, had exclusive charters, 
 which, though not confirmed by Act of Parliament, were in those 
 days supposed to convey a real and exclusive privilege. 
 
 The Hudson's Bay Company, before their misfortunes in the late 
 war, had been much more fortunate than the Royal African Com- 
 pany. Their necessary expense is much smaller. The whole 
 number of people whom they maintain in their different settlements 
 and habitations, which they have honoured with the name of forts, 
 is said not to exceed a hundred and twenty persons. This number, 
 however, is sufficient to prepare beforehand the cargo of furs and 
 other goods necessary for loading their ships, which, on account of 
 the ice, can seldom remain above six or eight weeks in those seas. 
 This advantage of having a cargo ready prepared, could not for 
 several years be acquired by private adventurers, and without it 
 there seems to be no possibility of trading to Hudson's Bay. The 
 moderate capital of the company, which, it is said, does not exceed 
 one hundred and ten thousand pounds, may besides be sufficient to 
 enable them to engross the whole, or almost the whole, trade and 
 surplus produce of the miserable though extensive country com- 
 prehended within their charter. No private adventurers, ac- 
 cordingly, have ever attempted to trade to that country in 
 competition with them. This company, therefore, have always 
 enjoyed an exclusive trade in fact, though they may have no right 
 to it in law. 1 Over and above all this, the moderate capital of this 
 company is said to be divided among a very small number of 
 proprietors. But a joint-stock company, consisting of a small 
 number of proprietors, with a moderate capital, approaches very 
 nearly to the nature of a private copartnery, and may be capable of 
 nearly the same degree of vigilance and attention. It is not to be 
 wondered at, therefore, if, in consequence of these different advan- 
 tages, the Hudson's Bay Company had, before the late war, been 
 
 1 The extinction of the Hudson's Bay after the surrender of their privileges a 
 
 Company as the lords of a vast portion twentieth of the land in the fertile belt. 
 
 of the northern continent of America, The company can carry on their trade 
 
 and the transference of their regalian without let or hindrance, and is to be 
 
 rights (if they could be considered rights liable to no exceptional tax. These and 
 
 in any sense) to the Canadian dominion, minor provisions introduced into the 
 
 was finally effected in the year 1869. The settlement, are no bad bargain for a 
 
 Canadian government paid 300,000 to company which existed under an illegal 
 
 the company. The company retained charter, and whose capital, less than a 
 
 50,000 acres in blocks adjoining their century ago, was valued at 110,000. 
 stations, and can claim within fifty years
 
 CHAP. i. THE WEALTH OF NATIONS. 329 
 
 able to carry on their trade with a considerable degree of success. 
 It does not seem probable, however, that their profits ever ap- 
 proached to what the late Mr. Dobbs imagined them. A much 
 more sober and judicious writer, Mr. Anderson, 1 author of the 
 Historical and Chronological Deduction of Commerce, very justly 
 observes, that upon examining the accounts which Mr. Dobbs 
 himself has given for several years together, of their exports and 
 imports, and upon making proper allowances for their extraordinary 
 risk and expense, it does not appear that their profits deserve to be 
 envied, or that they can much, if at all, exceed the ordinary profits 
 of trade. 2 
 
 The South Sea Company never had any forts or garrisons to 
 maintain, and therefore were entirely exempted from one great 
 expense, to which other joint-stock companies for foreign trade are 
 subject. But they had an immense capital divided among an 
 immense number of proprietors. It was naturally to be expected, 
 therefore, that folly, negligence, and profusion should prevail in the 
 whole management of their affairs. The knavery and extravagance 
 of their stock-jobbing projects are sufficiently known, and the 
 explication of them would be foreign to the present subject. Their 
 mercantile projects were not much better conducted. The first 
 trade which they engaged in was that of supplying the Spanish 
 West Indies with negroes, of which (in consequence of what was 
 called the Assiento contract granted them by the treaty of Utrecht) 
 they had the exclusive privilege. But as it was not expected that 
 much profit could be made by this trade, both the Portuguese and 
 French companies, who had enjoyed it upon the same terms before 
 them, having been ruined by it, they were allowed, as compensation, 
 to send annually a ship of a certain burden to trade directly to the 
 Spanish West Indies. Of the ten voyages which this annual ship 
 was allowed to make, they are said to have gained considerably by 
 one, that of the Royal Caroline in 1731, and to have been losers, 
 more or less, by almost all the rest. Their ill success was imputed, 
 by their factors and agents, to the extortion and oppression of the 
 Spanish Government; but was, perhaps, principally owing to the 
 profusion and depredations of those very factors and agents, some 
 
 1 Vcl. iii. p. 236. The statistics of the trade are to be found 
 
 3 An Account of the Countries adjoin- in p. 193. 
 ing the Hudson's Bay, by Arthur Dobbs.
 
 330 THE NATURE AND CAUSES OF BOOK v. 
 
 of whom are said to have acquired great fortunes even in one year. 
 In 1734, the company petitioned the King that they might be 
 allowed to dispose of the trade and tonnage of their annual ship, 
 on account of the little profit which they made by it, and to 
 accept of such equivalent as they could obtain from the King of 
 Spain. 
 
 In 1724, this company had undertaken the whale-fishery. Of 
 this, indeed, they had no monopoly ; but as long as they earned it 
 on, no other British subjects appear to have engaged in it. Of the 
 eight voyages which their ships made to Greenland, they were 
 gainers by one, and losers by all the rest. After their eighth and 
 last voyage, when they had sold their ships, stores, and utensils, 
 they found that their whole loss upon this branch, capital and in- 
 terest included, amounted to upwards of two hundred and thirty- 
 seven thousand pounds. 
 
 In 1722, this company petitioned the Parliament to be allowed 
 to divide their immense capital of more than thirty -three millions 
 eight hundred thousand pounds, the whole of which had been lent 
 to Government, into two equal parts : the one half, or upwards of 
 sixteen millions nine hundred thousand pounds, to be put upon the 
 same footing with other Government annuities, and not to be sub- 
 ject to the debts contracted or losses incurred by the directors of 
 the company, in the prosecution of their mercantile projects ; the 
 other half to remain, as before, a trading stock, and to be subject to 
 those debts and losses. The petition was too reasonable not to be 
 granted. In 1733, they again petitioned the Parliament, that 
 three-fourths of their trading stock might be turned into annuity 
 stock, and only one-fourth remain as trading stock, or exposed to 
 the hazards arising from the bad management of their directors. 
 Both their annuity and trading stocks had, by this time, been 
 reduced more than two millions each, by several different pay- 
 ments from Government; so that this fourth amounted only to 
 ,^3,662,784 8*. 6d. In 1748, all the demands of the company 
 upon the King of Spain, in consequence of the Assiento contract, 
 were by the treaty of Aix-la-Chapelle, given up for what was sup- 
 posed an equivalent. An end was put to their trade with the 
 Spanish West Indies, the remainder of their trading stock was 
 turned into an annuity stock, and the company ceased in every 
 respect to be a trading company.
 
 CHAP. i. THE WEALTH OF NATIONS. 331 
 
 It ought to be observed, that in the trade which the South Sea 
 Company carried on by means of their annual ship, the only trade 
 by which it ever was expected that they could make any considerable 
 profit, they were not without competitors, either in the foreign or 
 in the home market. At Carthagena, Porto Bello, and La Vera 
 Cruz, they had to encounter the competition of the Spanish mer- 
 chants, who brought from Cadiz to those markets European goods, 
 of the same kind with the outward cargo of their ship ; and in 
 England they had to encounter that of the English merchants, who 
 imported from Cadiz goods of the Spanish West Indies, of the same 
 kind with the inward cargo. The goods both of the Spanish and 
 English merchants, indeed, were perhaps subject to higher duties. 
 But the loss occasioned by the negligence, profusion, and malversa- 
 tion of the servants of the company, had probably been a tax much 
 heavier than all those duties. That a joint-stock company should 
 be able to carry on successfully any branch of foreign trade, when 
 private adventurers can come into any sort of open and fair com- 
 petition with them, seems contrary to all experience. 
 
 The old English East India Company was established in 1 600, 
 by a charter from Queen Elizabeth. In the first twelve voyages 
 which they fitted out for India, they appear to have traded as a 
 regulated company, with separate stocks, though only in the general 
 ships of the company. In 1612, they united into a joint-stock. 
 Their charter was exclusive, and though not confirmed by Act of 
 Parliament, was in those days supposed to convey a real exclusive 
 privilege. For many years, therefore, they were not much disturbed 
 by interlopers. Their capital, which never exceeded seven hundred 
 and forty-four thousand pounds, and of which fifty pounds was a 
 share, was not so exorbitant, nor their dealings so extensive, as to 
 afford either a pretext for gross negligence and profusion, or a cover 
 to gross malversation. Notwithstanding some extraordinary losses, 
 occasioned partly by the malice of the Dutch East India Company, 
 and partly by other accidents, they carried on for many years a 
 successful trade. But in process of time, when the principles of 
 liberty were better understood, it became every day more and more 
 doubtful how far a royal charter, not confirmed by Act of Parlia- 
 ment, could convey an exclusive privilege. Upon this question 
 the decisions of the courts of justice were not uniform, but varied 
 with the authority of Government and the humours of the times.
 
 332 THE NATURE AND CAUSES OF BOOK v. 
 
 Interlopers multiplied upon them ; and towards the end of the reign 
 of Charles II, through the whole of that of James II, and during- a 
 part of that of William III, reduced them to great distress. In 
 1698, a proposal was made to Parliament of advancing two millions 
 to Government at eight per cent., provided the subscribers were 
 erected into a new East India Company with exclusive privileges. 
 The old Eatt India Company offered seven hundred thousand pounds, 
 nearly the amount of their capital, at four per cent., upon the same 
 conditions. But such was at that time the state of public credit, 
 that it was more convenient for Government to borrow two millions 
 at eight per cent, than seven hundred thousand pounds at four. The 
 proposal of the new subscribers was accepted, and a new East India 
 Company established in consequence. The old East India Company, 
 however, had a right to continue their trade till 1701. They had, 
 at the same time, in the name of their treasurer, subscribed, very 
 artfully, three hundred and fifteen thousand pounds into the stock 
 of the new. By a negligence in the expression of the Act of Par- 
 liament, which vested the East India trade in the subscribers to this 
 loan of two millions, it did not appear evident that they were all 
 obliged to unite into a joint-stock. A few private traders, whose 
 subscriptions amounted only to seven thousand two hundred pounds, 
 insisted upon the privilege of trading separately upon their own 
 stocks and at their own risk. The old East India Company had a 
 right to a separate trade upon their old stock till 1701 ; and they 
 had likewise, both before and after that period, a right, like that of 
 other private traders, to a separate trade upon the three hundred 
 and fifteen thousand pounds, which they had subscribed into the 
 stock of the new company. The competition of the two companies 
 with the private traders^ and with one another, is said to have well 
 nigh ruined both. Upon a subsequent occasion, in 1730, when a 
 proposal was made to Parliament for putting the trade under the 
 management of a regulated company, and thereby laying it in some 
 measure open, the East India Company, in opposition to this pro- 
 posal, represented in very strong terms what had been at this 
 time the miserable effects, as they thought them, of this competi- 
 tion. In India, they said, it raised the price of goods so high, that 
 they were not worth the buying ; and in England, by overstocking 
 the market, it sunk their price so low, that no profit could be made 
 by them. That by a more plentiful supply, to the great advantage
 
 CHAP. i. THE WEALTH OF NATIONS. 333 
 
 and conveniency of the public, it must have reduced very much the 
 price of India goods in the English market, cannot well be doubted ; 
 but that it should have raised very much their price in the Indian 
 market seems not very probable, as all the extraordinary demand 
 which that competition could occasion must have been but as a 
 drop of water in the immense ocean of Indian commerce. The in- 
 crease of demand, besides, though in the beginning it may sometimes 
 raise the price of goods, never fails to lower it in the long run. It 
 encourages production, and thereby increases the competition of 
 the producers, who, in order to undersell one another, have recourse 
 to new divisions of labour and new improvements of art, which 
 might never otherwise have been thought of. The miserable effects 
 of which the company complained, were the cheapness of consump- 
 tion and the encouragement given to production, precisely the two 
 effects which it is the great business of political economy to pro- 
 mote. The competition, however, of which they gave this doleful 
 account had not been allowed to bs of long continuance. In 1702, 
 the two companies were, in some measure, united by an indenture 
 tripartite, to which the Queen was the third party; and in 1708, 
 they were, by Act of Parliament, perfectly consolidated into one 
 company by their present name of the United Company of Mer- 
 chants trading to the East Indies. Into this Act it was thought 
 worth while to insert a clause, allowing the separate traders to 
 continue their trade till Michaelmas 1711, but at the same time 
 empowering the directors, upon three years' notice, to redeem their 
 little capital of seven thousand two hundred pounds, and thereby to 
 convert the whole stock of the company into a joint-stock. By the 
 same Act, the capital of the company, in consequence of a new loan 
 to Government was augmented from two millions to three millions 
 two hundred thousand pounds. In 1743, the company advanced 
 another million to Government. But this million being raised, not 
 by a call upon the proprietors, but by selling annuities and con- 
 tracting bond-debts, it did not augment the stock upon which the 
 proprietors could claim a dividend. It augmented, however, their 
 trading stock, it being equally liable, with the other three millions 
 two hundred thousand pounds, to the losses sustained and debts 
 contracted by the company in prosecution of their mercantile pro- 
 jects. From 1708, or at least from 1711, this company, being 
 delivered from all competitors, and fully established in the monopoly
 
 334 THE NATURE AND CAUSES OF BOOK v. 
 
 of the English commerce to the East Indies, carried on a successful 
 trade, and from their profits made annually a moderate dividend to 
 their proprietors. During 1 the French war, which began in 1741, 
 the ambition of M. Dupleix, the French governor of Pondicherry, 
 involved them in the wars of the Carnatic and in the politics of the 
 Indian princes. After many signal successes, and equally signal 
 losses, they at last lost Madras, at that time their principal settle- 
 ment in India. It was restored to them by the treaty of Aix-la- 
 Chapelle ; and about this time the spirit of war and conquest seems 
 to have taken possession of their servants in India, and never since 
 to have left them. During the French war, which began in 1 755, 
 their arms partook of the general good fortune of those of Great 
 Britain. They defended Madras, took Pondicherry, recovered Cal- 
 cutta, and acquired the revenues of a rich and extensive territory, 
 amounting, it was then said, to upwards of three millions a year. 
 They remained for several years in quiet possession of this revenue ; 
 but in 1767, administration laid claim to their territorial acquisitions, 
 and the revenue arising from them, as of right belonging to the 
 Crown ; and the Company, in compensation for this claim, agreed to 
 pay to Government four hundred thousand pounds a year. They 
 had before this gradually augmented their dividend from about six 
 to ten per cent. ; that is upon their capital of three millions two 
 hundred thousand pounds, they had increased it by a hundred and 
 twenty-eight thousand pounds, or had raised it from one hundred 
 and ninety-two thousand to three hundred and twenty thousand 
 pounds a year. They were attempting about this time to raise it 
 still further, to twelve and a half per cent., which would have made 
 their annual payments to their proprietors equal to what they had 
 agreed to pay annually to Government, or to four hundred thousand 
 pounds a year. But during the two years in which their agreement 
 with Government was to take place, they were restrained from any 
 further increase of dividend by two successive Acts of Parliament, 
 of which the object was to enable them to make a speedier progress 
 in the payment of their debts, which were at this time estimated at 
 upwards of six or seven millions sterling. In 1769, they renewed 
 their agreement with Government for five years more, and stipu- 
 lated, that during the course of that period they should be allowed 
 gradually to increase their dividend to twelve and a half per cent. ; 
 never increasing it, however, more than one per cent, in one year.
 
 CHAP. i. THE WEALTH OF NATIONS. 335 
 
 This increase of dividend, therefore, when it had risen to its utmost 
 height, could augment their annual payments, to their proprietors 
 and Government together, but by six hundred and eight thousand 
 pounds, beyond what they had been before their late territorial 
 acquisitions. What the gross revenue of those territorial acquisi- 
 tions was supposed to amount to, has already been mentioned ; and 
 by an account brought by the Cruttenden East Indiaman in 1768, 
 the net revenue, clear of all deductions and military charges, was 
 stated at two millions forty-eight thousand seven hundred and 
 forty seven pounds. They were said at the same time to possess 
 another revenue, arising partly from lauds, but chiefly from the 
 customs established at their different settlements, amounting to 
 four hundred and thirty-nine thousand pounds. The profits of 
 their trade too, according to the evidence of their chairman before 
 the House of Commons, amounted at this time to at least four 
 hundred thousand pounds a year ; according to that of their ac- 
 countant, to at least five hundred thousand ; according to the 
 lowest account, at least equal to the highest dividend that was to 
 be paid to their proprietors. So great a revenue might certainly 
 have afforded an augmentation of six hundred and eight thousand 
 pounds in their annual payments, and at the same time have left a 
 large sinking fund sufficient for the speedy reduction of their debts. 
 In 1773, however, their debts, instead of being reduced, were 
 augmented by an arrear to the Treasury in the payment of the 
 four hundred thousand pounds, by another to the Custom-house for 
 duties unpaid, by a large debt to the Bank for money borrowed, 
 and by a fourth for bills drawn upon them from India, and wantonly 
 accepted, to the amount of upwards of twelve hundred thousand 
 pounds. The distress which these accumulated claims brought upon 
 them, obliged them not only to reduce all at once their dividend to 
 six per cent., but to throw themselves upon the mercy of Govern- 
 ment, and to supplicate, first, a release from the further payment of 
 the stipulated four hundred thousand pounds a year ; and, secondly, 
 a loan of fourteen hundred thousand, to save them from immediate 
 bankruptcy. The great increase of their fortune had, it seems, only 
 served to furnish their servants with a pretext for greater profusion, 
 and a cover for greater malversation, than in proportion even to 
 that increase of fortune. The conduct of their servants in India, 
 and the general state of their affairs both in India and in Europe,
 
 336 THE NATURE AND CAUSES OF BOOK v. 
 
 became the subjects of a parliamentary inquiry ; in consequence 
 of which several very important alterations were made in the con- 
 stitution of their government, both at home and abroad. In India, 
 their principal settlements of Madras, Bombay, and Calcutta, which 
 had before been altogether independent of one another, were sub- 
 jected to a governor-general, assisted by a council of four assessors, 
 Parliament assuming to itself the first nomination of this governor 
 and council, who were to reside at Calcutta, that city having now 
 become, what Madras was before, the most important of the English 
 settlements in India. The court of the mayor of Calcutta, origin- 
 ally instituted for the trial of mercantile causes which arose in 
 the city and neighbourhood, had gradually extended its jurisdic- 
 tion with the extension of the empire. It was now reduced and 
 confined to the original purpose of its institution. Instead of it, 
 a new supreme court of judicature was established, consisting of 
 a chief justice and three judges to be appointed by the Crown. 
 In Europe, the qualification necessary to entitle a proprietor to 
 vote at their general courts was raised from five hundred pounds, 
 the original price of a share in the stock of the company, to a 
 thousand pounds. In order to vote upon this qualification too, 
 it was declared necessary that he should have possessed it, if 
 acquired by his own purchase, and not by inheritance, for at least 
 one year, instead of six months, the term requisite before. The 
 court of twenty-four directors had before been chosen annually, 
 but it was now enacted that each -director should, for the future, 
 be chosen for four years ; six of them, however, to go out of office 
 by rotation every year, and not to be capable of being re-chosen 
 at the election of the six new directors for the ensuing year. In 
 consequence of these alterations, the courts, both of the proprietors 
 and directors, it was expected, would be likely to act with more 
 dignity and steadiness than they had usually done before. But 
 it seems impossible, by any alterations, to render those courts 
 in any respect fit to govern, or even to share in the government 
 of a great empire ; because the greater part of their members must 
 always have too little interest in the prosperity of that empire 
 to give any serious attention to what may promote it. Frequently 
 a man of great, sometimes even a man of small fortune, is willing 
 to purchase a thousand pounds' share in India stock, merely for 
 the interest which he expects to acquire by a vote in the court
 
 CHAP. i. THE WEALTH OF NATIONS. 337 
 
 of proprietors. It gives him a share, though not in the plunder, 
 yet in the appointment of the plunderers of India; the court of 
 directors, though they make that appointment, being necessarily 
 more or less under the influence of the proprietors, who not only 
 elect those directors, but sometimes overrule the appointments of 
 their servants in India. Provided he can enjoy this influence for 
 a few years, and thereby provide for a certain number of his friends, 
 he frequently cares little about the dividend, or even about the 
 value of the stock upon which his vote is founded. About the 
 prosperity of the great empire, in the government of which that 
 vote gives him a share, he seldom cares at all. No other sovereigns 
 ever were, or, from the nature of things, ever could be, so per- 
 fectly indifferent about the happiness or misery of their subjects, 
 the improvement or waste of their dominions, the glory or disgrace 
 of their administration, as, from irresistible moral causes, the 
 greater part of the proprietors of such a mercantile company are, 
 and necessarily must be. This indifference too was more likely 
 to be increased, than diminished by some of the new regulations, 
 which were made in consequence of the parliamentary inquiry. 
 By a resolution of the House of Commons, for example, it was 
 declared, that when the fourteen hundred thousand pounds lent 
 to the company by Government should be paid, and their bond- 
 debts be reduced to fifteen hundred thousand pounds, they might 
 then, and not till then, divide eight per cent, upon their capital ; 
 and that whatever remained of their revenues and net profits 
 at home, should be divided into four parts ; three of them to 
 be paid into the Exchequer for the use of the public, and the 
 fourth to be reserved as a fund, either for the further reduction 
 of their bond-debts, or for the discharge of other contingent 
 exigencies which the company might labour under. But if the 
 company were bad stewards and bad sovereigns when the whole 
 of their net revenue and profits belonged to themselves and were at 
 their own disposal, they were surely not likely to be better when 
 three-fourths of them were to belong to other people, and the other 
 fourth, though to be laid out for the benefit of the company, yet to be 
 so under the inspection and with the approbation of other people. 1 
 
 1 See for a violent attack on this criti- Ocldlv enough, this translation is dedi- 
 ciam of the East India Company, Mickle's cated to the Duke of Buccleuch, Smith's 
 Lusiad, Introduction, p. clxi. and edition. patron. 
 
 VOL. II. Z
 
 338 THE NATURE AND CAUSES OF BOOK v. 
 
 It might be more agreeable to the company that their own 
 servants and dependants should have either the pleasure of wasting 
 or the profit of embezzling whatever surplus might remain, after 
 paying the proposed dividend of eight per cent., than that it should 
 come into the hands of a set of people with whom those resolutions 
 could scarce fail to set them, in some measure, at variance. The 
 interest of those servants and dependants might so far predominate 
 in the court of proprietors, as sometimes to dispose it to support 
 the authors of depredations which had been committed, in direct 
 violation of its own authority. With the majority of proprietors, 
 the support even of the authority of their own court might some- 
 times be a matter of less consequence than the support of those 
 who had set that authority at defiance. 
 
 The regulations of 1773, accordingly, did not put an end to the 
 disorders of the company's government in India. Notwithstanding 
 that, during a momentary fit of good conduct, they had at one time 
 collected into the treasury of Calcutta more than three millions 
 sterling ; notwithstanding that they had afterwards extended, 
 either their dominion or their depredations, over a vast accession 
 of some of the richest and most fertile countries in India ; all was 
 wasted and destroyed. They found themselves altogether unpre- 
 pared to stop or resist the incursion of Hyder Ali ; and, in con- 
 sequence of those disorders, the company is now (1784) in greater 
 distress than ever ; and, in order to prevent immediate bankruptcy, 
 is once more reduced to supplicate the assistance of Government. 
 Different plans have been proposed by the different parties in 
 Parliament, for the better management of its affairs. And all 
 those plans seem to agree in supposing, what was indeed always 
 abundantly evident, that it is altogether unfit to govern its territorial 
 possessions. Even the company itself seems to be convinced of its 
 own incapacity so far, and seems, upon that account, willing to give 
 them up to Government. 
 
 With the right of possessing forts and garrisons in distant and 
 barbarous countries, is necessarily connected the right of making- 
 peace and war in those countries. The joint-stock companies which 
 have had the one right, have constantly exercised the other, and 
 have frequently had it expressly conferred upon them. How 
 unjustly, how capriciously, how cruelly they have commonly 
 exercised it, is too well known from recent experience.
 
 CHAP. i. THE WEALTH OF NATIONS. 339 
 
 When a company of merchants undertake, at their own risk and 
 expense, to establish a new trade with some remote and barbarous 
 nation, it may not be unreasonable to incorporate them into a joint- 
 stock company, and to grant them, in case of their success, a 
 monopoly of the trade for a certain number of years. It is the 
 easiest and most natural way in which the State can recompense 
 them for hazarding a dangerous and expensive experiment, of 
 which the public is afterwards to reap the benefit. A temporary 
 monopoly of this kind may be vindicated upon the same principles 
 upon which a like monopoly of a new machine is granted to its 
 inventor, and that of a new book to its author. But upon the 
 expiration of the term, the monopoly ought certainly to determine ; 
 the forts and garrisons, if it was found necessary to establish any, 
 to be taken into the hands of Government, their value to be paid 
 to the company, and the trade to be laid open to all the subjects 
 ol the State. By a perpetual monopoly, all the other subjects of the 
 State are taxed very absurdly in two different ways : first, by the 
 high price of goods, which, in the case of a free trade, they could 
 buy much cheaper ; and, secondly, by their total exclusion from a 
 branch of business which it might be both convenient and pro- 
 fitable for many of them to carry on. Tt is for the most worthless 
 of all purposes too that they are taxed in this manner. It is merely 
 to enable the company to support the negligence, profusion, and 
 malversation of their own servants, whose disorderly conduct seldom 
 allows the dividend of the company to exceed the ordinary rate of 
 profit in trades which are altogether free, and very frequently makes 
 it fall even a good deal short of that rate. Without a monopoly, 
 however, a joint-stock company, it would appear from experience, 
 cannot long carry on any branch of foreign trade. To buy in one 
 market, in order to sell, with profit, in another, when there 
 are many competitors in both ; to watch over not only the 
 occasional variations in the demand, but the much greater and 
 more frequent variations in the competition, or in the supply 
 which that demand is likely to get from other people, and to 
 suit with dexterity and judgment both the quantity and quality 
 of each assortment of goods to all these circumstances, is a species 
 of warfare of which the operations are continually changing, and 
 which can scarce ever be conducted successfully, without such an 
 unremitting exertion of vigilance and attention as cannot long be 
 
 z a
 
 340 THE NATURE AND CAUSES OF BOOST. 
 
 expected from the directors of a joint-stock company. The East 
 India Company, upon the redemption of their funds, and the 
 expiration of their exclusive privilege, have a right, by Act of 
 Parliament, to continue a corporation with a joint stock, and to 
 trade in their corporate capacity to the East Indies in common 
 with the rest of their fellow-subjects. But in this situation, the 
 superior vigilance and attention of private adventurers would, in all 
 probability, soon make them weary of the trade. 
 
 An eminent French author, of great knowledge in matters of 
 political economy, the Abbe Morellet, 1 gives a list of fifty-five 
 joint-stock companies for foreign trade, which have been established 
 in different parts of Europe since the year 1600, and which, according 
 to him, have all failed from mismanagement, notwithstanding they 
 had exclusive privileges. He has been misinformed with regard 
 to the history of two or three of them, which were not joint-stock 
 companies and have not failed. But, in compensation, there have 
 been several joint-stock companies which have failed, and which he 
 has omitted. 
 
 The only trades which it seems possible for a joint-stock company 
 to carry on successfully, without an exclusive privilege, are those 
 of which all the operations are capable of being reduced to what is 
 called a routine, or to such a uniformity of method as admits of 
 little or no variation. Of this kind is, first, the banking trade ; 
 secondly, the trade of insurance from fire, and from sea risk and 
 capture in time of war ; thirdly, the trade of making and main- 
 taining a navigable cut or canal ; and, fourthly, the similar trade of 
 bringing water for the supply of a great city. 2 
 
 Though the principles of the banking trade may appear somewhat 
 abstruse, the practice is capable of being reduced to strict rules. 
 
 1 Smith is probably referring to Morel- disadvantage, that their apparent or oc- 
 let's Situation Actuelle de la Compagnie casional profits expose them peculiarly to 
 des Indes. Paris, 1769. competition, and the privilege which Par- 
 
 2 Other and similar kinds of joint-stock liament confers upon them makes them 
 enterprises will present themselves to the liable, or has made them liable, to enor- 
 reader's mind, as for example railways, mous parliamentary extortion. This is 
 telegraph companies, and gas supply. But notably the fact in the case of railways, 
 even in these, for the most part, the same Hence comes a growing opinion that such 
 rule appears which was stated above, that kinds of business, with perhaps the ex- 
 investments of capital made by those who ception of banking, should be assumed by 
 exercise no supervision over such invest- Government, and that in all cases the 
 ments, do not, apart from risk, retuin a greatest publicity should be given to the 
 larger amount of interest than the average accounts between the directors, the share- 
 rate. .But they have besides ail additional holders, and the public.
 
 CHAP. i. THE WEALTH OF NATIONS. 341 
 
 To depart upon any occasion from those rules, in consequence of 
 some flattering- speculation of extraordinary gain, is almost always 
 extremely dangerous, and frequently fatal to the banking company 
 which attempts it. But the constitution of joint-stock companies 
 renders them in general more tenacious of established rules than 
 any private copartnery. Such companies, therefore, seem extremely 
 well fitted for this trade. The principal banking companies in 
 Europe, accordingly, are joint-stock companies, many of which 
 manage their trade very successfully without any exclusive privilege. 
 The Bank of England has no other exclusive privilege, except that 
 no other banking company in England shall ^consist of more than 
 six persons. 1 The two banks of Edinburgh are joint-stock com- 
 panies without any exclusive privilege. 
 
 The value of the risk, either from fire, or from loss by sea, or by 
 capture, though it cannot, perhaps, be calculated very exactly, 
 admits, however, of such a gross estimation as renders it, in some 
 degree, reducible to strict rule and method. The trade of insurance, 
 therefore, may be carried on successfully by a joint-stock company, 
 without any exclusive privilege. Neither the London Assurance nor 
 the Royal Exchange Assurance Companies have any such privilege. 2 
 
 When a navigable cut or canal has been once made, the manage- 
 ment of it becomes quite simple and easy, and is reducible to strict 
 rule and method. Even the making of it is so, as it may be con- 
 tracted for with undertakers at so much a mile, and so much a lock. 
 
 1 The Bank of England has long since 2 The art of the actuary, whether he 
 lost this privilege. But, on the other deals with marine, fire, or Jife insurance, 
 hand, it has gained by the fact that it has been greatly improved during the last 
 alone is empowered to issue notes on pub- century. Improvements in shipbuilding, 
 lie securities and bullion, the amount of in the art of navigation, in hydrography 
 such issue being fixed by the Act of 1*544 and the like, have assisted the me nanism 
 as regards securities, and being made to of marine insurance. The careful sub- 
 vary in proportion to its stock of bullion. division of risks, and the insertion of 
 Such banks as were in existence before cautiously worded covenants in policies, 
 1844 are allowed to continue their issues have made fire insurance a matter of 
 in a limited form. The Bank, however, scientific exactness, while the numerous 
 gains a far more important advantage in and carefully prepared tables, designating 
 the fact that it is virtua'ly master of the the expectancy of life, have made the 
 rate of discount, and therefore is able to business of life insurance far easier. The 
 exact higher terms of accommodation real risk which this kind of business 
 whenever its own state of bullion is runs, like that which banking runs, is 
 diminished by an adverse state of the fraud or folly on the part of the man- 
 foreign exchanges. In other words, when agers a risk, I presume, which human 
 its own resources are lessened and its aifairs constantly incur, but which may 
 liabilities increased, it gains its greatest be obviated in part, at least, by publicity, 
 profits, though the aggregate of the pro- and by the punishments which a well- 
 fits may be lessened by the shrinkage of devised bankruptcy law ought to inflict 
 business. on commercial crimes.
 
 342 THE NATURE AND CAUSES OF BOOK v. 
 
 The same thing may be said of a canal, an aqueduct, or a great pipe 
 for bringing water to supply a great city. Such undertakings, 
 therefore, may be, and accordingly frequently are, very successfully 
 managed by joint-stock companies without any exclusive privilege. 
 
 To establish a joint-stock company, however, for any undertaking, 
 merely because such a company might be capable of managing it 
 successfully; or to exempt a particular set of dealers from some of 
 the general laws which take place with regard to all their neigh- 
 bours, merely because they might be capable of thriving if they 
 had such an exemption, would certainly not be reasonable. 1 To 
 render such an establishment perfectly reasonable, with the circum- 
 stance of being reducible to strict rule and method, two other circum- 
 stances ought to concur. First, it ought to appear with the clearest 
 evidence, that the undertaking is of greater and more general 
 utility than the greater part of common trades ; and, secondly, 
 that it requires a greater capital than can easily be collected into 
 a private copartnery. If a moderate capital was sufficient, the great 
 utility of the undertaking would not be a sufficient reason for 
 establishing a joint-stock company; because, in this case, the 
 demand for what it was to produce would readily and easily be 
 supplied by private adventurers. In the four trades above men- 
 tioned, both those circumstances concur. 
 
 The great and general utility of the banking trade, when pru- 
 dently managed, has been fully explained in the Second Book of 
 this Inquiry. But a public bank which is to support public credit, 
 and upon particular emergencies to advance to Government the 
 whole produce of a tax, to the amount perhaps of several millions, 
 a year or two before it comes in, requires a greater capital than can 
 easily be collected into any private copartnery. 
 
 The trade of insurance gives great security to the fortunes of 
 private people, and by dividing among a great many that loss 
 
 1 The most notable departure from the thus relieved from any liability beyond 
 rule laid down in this passage, is the the amount subscribed for in the shares 
 concession, under cert tin precautions, not which stand in their names. It is well 
 always sufficient, of the principle of known that joint-stock enterprise has 
 limited liability to the shareholders in made a prodigious start under this licence, 
 various industrial avocations. The plea Unluckily, the experiment has not been 
 for this concession is twofold: first, that of very successful, for commercial dishonesty 
 public advantage, it being argued that this has been more rife in these undertakings 
 system renders the application of capital than in others. The fact is, there is 
 and industry more easy and general ; and another thing needed a searching in- 
 next, that of granting a qualified pro- vestigation into the affairs of all such 
 tection to innocent shareholders, who are companies, whenever they are wound up.
 
 CHAP. i. THE WEALTH OF NATIONS. 343 
 
 which would ruin an individual, makes it fall light and easy upon 
 the whole society. In order to give this security, however, it is 
 necessary that the insurers should have a very large capital. Before 
 the establishment of the two joint-stock companies for insurance in 
 London, a list, it is said, was laid before the Attorney- General of 
 one hundred and fifty private insurers who had failed in the course 
 of a few years. 
 
 That navigable cuts and canals, and the works which are some- 
 times necessary for supplying a great city with water, are of great 
 and general utility, while at the same time they frequently require 
 a greater expense than suits the fortunes of private people, is 
 sufficiently obvious. 
 
 Except the four trades above mentioned, I have not been able to 
 recollect any other in which all the three circumstances, requisite 
 for rendering reasonable the establishment of a joint-stock company, 
 concur. The English Copper Company of London, the Lead Smelt- 
 ing Company, the Glass Grinding Company, have not even the 
 pretext of any great or singular utility in the object which they 
 pursue ; nor does the pursuit of that object seem to require any 
 expense unsuitable to the fortunes of many private men. Whether 
 the trade which those companies carry on is reducible to such strict 
 rule and method as to render it fit for the management of a joint- 
 stock company, or whether they have any reason to boast of their 
 extraordinary profits, I do not pretend to know. The Mine-Adven- 
 turers Company has been long ago bankrupt. A share in the 
 stock of the British Linen Company of Edinburgh sells, at present, 
 very much below par, though less so than it did some years ago. 
 The joint-stock companies, which are established for the public- 
 spirited purpose of promoting some particular manufacture, over and 
 above managing their own affairs ill, to the diminution of the 
 general stock of the society, can in other respects scarce ever fail to 
 do more harm than good. Notwithstanding the most upright 
 intentions, the unavoidable partiality of their directors to particular 
 branches of the manufacture, of which the undertakers mislead and 
 impose upon them, is a real discouragement to the rest, and neces- 
 sarily breaks, more or less, that natural proportion which would 
 otherwise establish itself between judicious industry and profit, and 
 which, to the general industry of the country, is of all encourage- 
 ments the greatest and the most effectual.
 
 344 THE NATURE AND CAUSES OF BOOK v. 
 
 ABTICLE II. 
 Of the Exjoense of the Institutions for the Education of Youth. 
 
 The institutions for the education of the youth may, in the same 
 manner, furnish a revenue sufficient for defraying their own expense. 
 The fee or honorary which the scholar pays to the master naturally 
 constitutes a revenue of this kind. 
 
 Even where the reward of the master does not arise altogether 
 from this natural revenue, it still is not necessary that it should be 
 derived from that general revenue of the society, of which the 
 collection and application is, in most countries, assigned to the 
 executive power. Through the greater part of Europe, accordingly, 
 the endowment of schools and colleges makes either no charge upon 
 that general revenue, or but a very small one. It everywhere arises 
 chiefly from some local or provincial revenue, from the rent of some 
 landed estate, or from the interest of some sum of money allotted 
 and put under the management of trustees for this particular pur- 
 pose, sometimes by the sovereign himself, and sometimes by some 
 private donor. 1 
 
 Have those public endowments contributed in general to promote 
 the end of their institution ? Have they contributed to encourage 
 the diligence and to improve the abilities of the teachers? Have 
 they directed the course of education towards objects more useful, 
 both to the individual and to the public, than those to which it 
 would naturally have gone of its own accord ? It should not seem 
 very difficult to give at least a probable answer to each of those 
 questions. 
 
 In every profession, the exertion of the greater part of those who 
 exercise it is always in proportion to the necessity they are under 
 of making that exertion. This necessity is greatest with those to 
 
 1 In the vast variety of instances, the bridge, three colleges also are the founda- 
 
 endowments of universities, colleges, and tions of monarchs ; but one of these was 
 
 schools have been the gift of private per- based on older foundations, the additional 
 
 sons. The State has rarely given any- funds having been supplied from the 
 
 thing, the monarch not much more. Of relics of conventual estates. The same 
 
 all the colleges in Oxford, one only was facts generally apply to schools. Not that 
 
 the actual endowment of a king, and therefore the Legislature is not equitably 
 
 this was only the re-grant of a small justified in meddling with them. All 
 
 quantity of that which had been pre- perpetual grants must be subject to the 
 
 viously granted by a subject. In Cam- control or modification of law.
 
 CHAP. i. THE WEALTH OF NATIONS. 345 
 
 whom the emoluments of their profession are the only source from 
 which they expect their fortune, or even their ordinary revenue and 
 subsistence. In order to acquire this fortune, or even to get this 
 subsistence, they must, in the course of a year, execute a certain 
 quantity of work of a known value ; and, where the competition is 
 free, the rivalship of competitors, who are all endeavouring to jostle 
 one another out of employment, obliges every man to endeavour to 
 execute his work with a certain degree of exactness. The greatness 
 of the objects which are to be acquired by success in some particular 
 professions may, no doubt, sometimes animate the exertion of a few 
 men of extraordinary spirit and ambition. Great objects, however, 
 are evidently not necessary in order to occasion the greatest exer- 
 tions. Rivalship and emulation render excellency, even in mean 
 professions, an object of ambition, and frequently occasion the very 
 greatest exertions. Great objects, on the contrary, alone and 
 unsupported by the necessity of application, have seldom been suffi- 
 cient to occasion any considerable exertion. In England, success in 
 the profession of the law leads to some very great objects of ambi- 
 tion ; and yet how few men, born to easy fortunes, have ever in 
 this country been eminent in that profession 1 
 
 The endowments of schools and colleges have necessarily 
 diminished more or less the necessity of application in the teachers. 
 Their subsistence, so far as it arises from their salaries, is evidently 
 derived from a fund altogether independent of their success and 
 reputation in their particular professions. 
 
 In some universities, the salary makes but a part, and frequently 
 but a small part, of the emoluments of the teacher, of which the 
 greater part arises from the honoraries or fees of his pupils. The 
 necessity of application, though always more or less diminished, is 
 not in this case entirely taken away. Reputation in his profession 
 is still of some importance to him, and he still has some dependency 
 upon the affection, gratitude, and favourable report of those who 
 have attended upon his instructions; and these favourable senti- 
 ments he is likely to gain in no way so well as by deserving them, 
 that is, by the abilities and diligence with which he discharges 
 every part of his duty. 
 
 In other universities the teacher is prohibited from receiving any 
 honorary or fee from his pupils, and his salary constitutes the whole 
 of the revenue which he derives from his office. His interest is, in
 
 346 THE NATURE AND CAUSES OF BOOK v. 
 
 this case, set as directly in opposition to his duty as it is possible to 
 set it. It is the interest of every man to live as much at his ease 
 as he can ; and if his emoluments are to be precisely the same, 
 whether he does or does not perform some very laborious duty, it is 
 certainly his interest, at least as interest is vulgarly understood, 
 either to neglect it altogether, or, if he is subject to some authority 
 which will not suffer him to do this, to perform it in as careless and 
 slovenly a manner as that authority will permit. If he is naturally 
 active and a lover of labour, it is his interest to employ that activity 
 in any way, from which he can derive some advantage, rather than 
 in the performance of his duty, from which he can derive none. 
 
 If the authority to which he is subject resides in the body corpo- 
 rate, the college or university of which he himself is a member, 
 and in which the greater part of the other members are, like him- 
 self, persons who either are or ought to be teachers, they are likely 
 to make a common cause, to be all very indulgent to one another, 
 and every man to consent that his neighbour may neglect his duty, 
 provided he himself is allowed to neglect his own. In the University 
 of Oxford, the greater part of the public professors have for these 
 many years given up altogether even the pretence of teaching. 1 
 
 If the authority to which he is subject resides, not so much in the 
 body corporate of which he is a member, as in some other extraneous 
 persons, in the bishop of the diocese for example ; in the governor 
 of the province, or, perhaps, in some minister of state ; it is not 
 indeed in this case very likely that he will be suffered to neglect his 
 duty altogether. All that such superior:-!, however, can force him to 
 do, is to attend upon his pupils a certain number of hours, that is, 
 to give a certain number of lectures in the week or in the year. 
 What those lectures shall be, must still depend upon the diligence 
 of the teacher ; and that diligence is likely to be proportioned to 
 the motives which he has for exerting it. An extraneous jurisdic- 
 
 1 The condition of Oxford during the tury, when the examinations for degrees 
 
 six years in which Adam Smith resided became something better than a mere 
 
 at Balliol College was lower than at any farce. But the public teach ers of the Uni- 
 
 period of its history. Nominal orthodoxy versity, with some exceptions, received 
 
 was secured by the Act of Uniformity, their salaries and neglected their duties, 
 
 nominal allegiance by the oaths of supre- up to the reform of 1854. That reform, 
 
 macy, abjuration, and political fidelity to though far from perfect, stimulated to 
 
 the reigning house. But the University some extent the academical conscience, 
 
 swarmed with profligates, was a nest of and has induced some important changes, 
 
 noisy Jacobites, and was at the meanest But the Universities will never be really 
 
 literary ebb. Its revival hardly commenced national till they cease to be the tools of 
 
 till the conclusion of the eighteenth cen- political and ecclesiastical intrigues.
 
 CHAP. i. THE WEALTH OF NATIONS. 347 
 
 tion of this kind, besides, is liable to be exercised both ignorantly 
 and capriciously. In its nature it is arbitrary and discretionary, and 
 the persons who exercise it, neither attending upon the lectures of 
 the teacher themselves, nor perhaps understanding the sciences 
 which it is his business to teach, are seldom capable of exercising it 
 with judgment. From the insolence of office too they are frequently 
 indifferent how they exercise it, and are very apt to censure or 
 deprive him of his office wantonly, and without any just cause. 
 The person subject to such jurisdiction is necessarily degraded by it, 
 and, instead of being one of the most respectable, is rendered one of 
 the meanest and most contemptible persons in the society. It is by 
 powerful protection only that he can effectually guard himself 
 against the bad usage to which he is at all times exposed ; and this 
 protection he is most likely to gain, not by ability or diligence in 
 his profession, but by obsequiousness to the will of his superiors, 
 and by being ready at all times to sacrifice to that will the rights, 
 the interest, and the honour of the body corporate of which he is 
 a member. Whoever has attended for any considerable time to the 
 administration of a French university, must have had occasion to 
 remark the effects which naturally result from an arbitrary and 
 extraneous jurisdiction of this kind. 1 
 
 Whatever forces a certain number of students to any college or 
 university, independent of the merit or reputation of the teachers, 
 tends more or less to diminish the necessity of that merit or 
 reputation. 
 
 The privileges of graduates in arts, in law, physic, and divinity, 
 when they can be obtained only by residing a certain number of 
 years in certain universities, necessarily force a certain number of 
 students to such universities, independent of the merit or reputation 
 of the teachers. The privileges of graduates are a sort of statutes of 
 apprenticeship, which have contributed to the improvement of 
 education, just as the other statutes of apprenticeship have to that 
 of arts and manufactures. 2 
 
 1 The objection which Smith makes to much harm to its object, or effect much 
 
 the conduct of French universities still more than a rational animosity against 
 
 remains. In this country the case is dif- institutions which are perverted to nia- 
 
 ferent, official persons being more likely lignant and selfish ends, 
 to err on the side of negligence, than of 2 These privileges, never defensible, 
 
 caprice or oppression. Nor does a bigoted and always odious, have ceased. Apart 
 
 or tyrannical spirit, when it is occasionally from the social advantages which they 
 
 exhibited by Churchmen or partisans, do give, or from the reputation which sue-
 
 348 THE NATURE AND CAUSES OF BOOK v. 
 
 The charitable foundations of scholarships, exhibitions, bursaries, 
 &c., necessarily attach a certain number of students to certain 
 colleges, independent altogether of the merit of those particular 
 colleges. Were the students upon such charitable foundations left 
 free to choose what college they liked best, such liberty might per- 
 haps contribute to excite some emulation among different colleges. 
 A regulation, on the contrary, which prohibited even the indepen- 
 dent members of every particular college from leaving it, and going 
 to any other, without leave first asked and obtained of that which 
 they meant to abandon, would tend very much to extinguish that 
 emulation. 1 
 
 If in each college the tutor or teacher, who was to instruct each 
 student in all arts and sciences, should not be voluntarily chosen by 
 the student, but appointed by the head of the college ; and if, in 
 case of neglect, inability, or bad usage, the student should not be 
 allowed to change him for another, without leave first asked and 
 obtained; such a regulation would not only tend very much to 
 extinguish all emulation among the different tutors of the same 
 college, but to diminish very much in all of them the necessity of 
 diligence and of attention to their respective pupils. Such teachers, 
 though very well paid by their students, might be as much disposed 
 to neglect them, as those who are not paid by them at all, or who 
 have no other recompense but their salary. 
 
 If the teacher happens to be a man of sense, it must be an unplea- 
 sant thing to him to be conscious, while he is lecturing his students, 
 that he is either speaking or reading nonsense, or what is very little 
 better than nonsense. It must too be unpleasant to him to observe 
 the greater part of his students desert his lectures, or perhaps attend 
 upon them with plain enough marks of neglect, contempt, and 
 derision. If he is obliged, therefore, to give a certain number of 
 lectures, these motives alone, without any other interest, might dis- 
 pose him to take some pains to give tolerably good ones. Several 
 
 cessful competition affords, academical The colleges, anxious to maintain their 
 
 degrees confer no monopoly on their pos- monopoly and to let their rooms, exag- 
 
 sessor. It does not follow that their gerated, under the pretence of discipline, 
 
 intrinsic value has fallen, because they the strictness of those rules. To some 
 
 no longer bestow monopolies, or form the extent the mischief of this policy was 
 
 conditions under which certain employ- obviated by the emulation of the better 
 
 ments may be carried on. colleges. But during the last few years 
 
 1 The Laudian Statutes of Oxford for- and at present (1880) the colleges have 
 
 bad emigration from one college to an- taken much greater freedom of action, 
 other, except under certain conditions.
 
 CHAP. i. THE WEALTH OF NATIONS. 349 
 
 different expedients, however, may be fallen upon which will 
 effectually blunt the edge of all those incitements to diligence. The 
 teacher, instead of explaining to his pupils himself the science in 
 which he proposes to instruct them, may read some book upon it ; 
 and if this book is written in a foreign and dead language, by inter- 
 preting it to them into their own ; or, what would give him still 
 less trouble, by making them interpret it to him, and by now and 
 then making an occasional remark upon it, he may flatter himself 
 that he is giving a lecture. The slightest degree of knowledge and 
 application will enable him to do this without exposing himself to 
 contempt or derision, or saying anything that is really foolish, 
 absurd, or ridiculous. The discipline of the college, at the same 
 time, may enable him to force all his pupils to the most regular 
 attendance upon this sham lecture, and to maintain the most 
 decent and respectful behaviour during the whole time of the 
 performance. 
 
 The discipline of colleges and universities is in general contrived, 
 not for the benefit of the students, but for the interest, or, more 
 properly speaking, for the ease of the masters. Its object is, in all 
 cases, to maintain the authority of the master, and, whether he 
 neglects or performs his duty, to oblige the students in all cases to 
 behave to him as if he performed it with the greatest diligence and 
 ability. It seems to presume perfect wisdom and virtue in the one 
 order, and the greatest weakness and folly in the other. Where the 
 masters, however, really perform their duty, there are no examples, 
 I believe, that the greater part of the students ever neglect theirs. 
 No discipline is ever requisite to force attendance upon lectures 
 which are really worth the attending, as is well known wherever 
 any such lectures are given. Force and restraint may, no doubt, be 
 in some degree requisite in order to oblige children or very young 
 boys to attend to those parts of education which it is thought 
 necessary for them to acquire during that early period of life ; but 
 after twelve or thirteen years of age, provided the master does his 
 duty, force or restraint can scarce ever be necessary to carry on any 
 part of education. Such is the generosity of the greater part of 
 young men, that, so far from being disposed to neglect or despise 
 the instructions of their master, provided he shows some serious 
 intention of being of use to them, they are generally inclined to 
 pardon a great deal of incorrectness in the performance of his duty,
 
 350 THE NATURE AND CAUSES OF BOOK v. 
 
 and sometimes even to conceal from the public a good deal of gross 
 negligence. 
 
 Those parts of education, it is to be observed, for the teaching 
 of which there are no public institutions, are generally the best 
 taught. When a young man goes to a fencing or a dancing school 
 he does not, indeed, always learn to fence or to dance very well ; but 
 he seldom fails of learning to fence or to dance. The good effects 
 of the riding school are not commonly so evident. The expense of 
 a riding school is so great, that in most places it is a public institu- 
 tion. The three most essential parts of literary education to read, 
 write, and account, it still continues to be more common to acquire 
 in private than in public schools ; and it very seldom happens that 
 anybody fails of acquiring them to the degree in which it is neces- 
 sary to acquire them. 
 
 In England the public schools are much less corrupted than the 
 universities. In the schools the youth are taught, or at least may 
 be taught, Greek and Latin, that is, everything which the masters 
 pretend to teach, or which it is expected they should teach. In 
 the universities the youth neither are taught, nor always can find 
 any proper means of being taught, the sciences, which it is the 
 business of those incorporated bodies to teach. The reward of the 
 schoolmaster in most cases depends principally, in some cases almost 
 entirely, upon the fees or honoraries of his scholars. Schools have 
 no exclusive privileges. In order to obtain the honours of gradua- 
 tion, it is not necessary that a person should bring a certificate of 
 his having studied a certain number of years at a public school. If 
 upon examination he appears to understand what is taught there, 
 no questions are asked about the place where he learnt it. 
 
 The parts of education which are commonly taught in univer- 
 sities, it may, perhaps, be said are not very well taught. But 
 had it not been for those institutions they would not have been 
 commonly taught at all, and both the individual and the public 
 would have suffered a good deal from the want of those important 
 parts of education. 1 
 
 1 The author has here hit on the chief, claims, those who minister to the higher 
 
 indeed the only, justification of educa- education of the country, or develop its 
 
 tional endowments. They are a negative capacities in other ways than those, the 
 
 answer to the question, Does the public process of which can be or is appropriated 
 
 at large care to adequately remunerate, by the person who gives his attention to 
 
 even upon a modest assertion of their such objects ? A man who makes a die-
 
 CHAP. i. THE WEALTH OF NATIONS. 351 
 
 The present universities of Europe were originally, the greater 
 part of them, ecclesiastical corporations, instituted for the education 
 of Churchmen. They were founded by the authority of the Pope, 
 and were so entirely under his immediate protection, that their men- 
 hers, whether masters or students, had all of them what was then 
 called the benefit of clergy, that is, were exempted from the civil 
 jurisdiction of the countries in which their respective universities 
 were situated, and were amenable only to the ecclesiastical tribunals. 
 What was taught in the greater part of those universities was, 
 suitable to the end of their institution, either theology, or something 
 that was merely preparatory to theology. 
 
 When Christianity was first established by law, a corrupted Latin 
 had become the common language of all the western parts of Europe. 
 The service of the Church accordingly, and the translation of the 
 Bible which was read in churches, were both in that corrupted 
 Latin, that is, in the common language of the country. After the 
 irruption of the barbarous nations who overturned the Roman 
 empire, Latin gradually ceased to be the language of any part of 
 Europe. But the reverence of the people naturally preserves the 
 established forms and ceremonies of religion, long after the circum- 
 stances which first introduced and rendered them reasonable are no 
 more. Though Latin, thei'efore, was no longer understood any- 
 where by the great body of the people, the whole service of the 
 Church still continued to be performed in that language. Two 
 different languages were thus established in Europe, in the same 
 manner as in ancient Egypt : a language of the priests and a 
 language of the people ; a sacred and a profane ; a learned and an 
 unlearned language. But it was necessaiy that the priests should 
 understand something of that sacred and learned language in' which 
 they were to officiate ; and the study of the Latin language there- 
 fore made, from the beginning, an essential part of university 
 education. 
 
 It was not so with that either of the Greek or of the Hebrew 
 
 covery in physics may confer an enormous are quite irrespective of the just or un- 
 
 benefit on society at great cost to himself, just, the wisj or unwise, exercise of 
 
 and, under the circumstances, has no patronage by those who confer or appoint 
 
 means of appropriating the advantages to the emolument in question, and who 
 
 of the discovery to his own profit. Simi- constantly pervert it without shame or 
 
 larly with other kinds of intellectual compunction, on partisan grounds of 
 
 activity. This question, and the nega- politics or polemics, 
 tive answer which endowments give it,
 
 352 TEE NATURE AND CAUSES OF BOOK v. 
 
 language. The infallible decrees of the Church had pronounced the 
 Latin translation of the Bible, commonly called the Latin Vulgate, 
 to have been equally dictated by divine inspiration, and therefore of 
 equal authority with the Greek and Hebrew originals. The know- 
 ledge of those two languages, therefore, not being indispensably 
 requisite to a Churchman, the study of them did not for a long time 
 make a necessary part of the common course of university education. 
 There are some Spanish universities, I am assured, in which the 
 study of the Greek language has never yet made any part of that 
 course. The first reformers found the Greek text of the New Testa- 
 ment, and even the Hebrew text of the Old, more favourable to their 
 opinions than the Vulgate translation, which, as might naturally be 
 supposed, had been gradually accommodated to support the doc- 
 trines of the Catholic Church. They set themselves, therefore, to ex- 
 pose the many errors of that translation, which the Roman Catholic 
 clergy were thus put under the necessity of defending or explain- 
 ing. But this could not well be done without some knowledge of 
 the original languages, of which the study was therefore gradually 
 introduced into the greater part of universities; both of those which 
 embraced and of those which rejected the doctrines of the Reforma- 
 tion. The Greek language was connected with every part of that 
 classical learning, which, though at first principally cultivated by 
 Catholics and Italians, happened to come into fashion much about 
 the same time that the doctrines of the Reformation were set on 
 foot. 1 In the greater part of universities, therefore, that language 
 was taught previous to the study of philosophy, and as soon as the 
 student had made some progress in the Latin. The Hebrew 
 language having no connection with classical learning, and, ex- 
 cept the Holy Scriptures, being the language of not a single book 
 in any esteem, the study of it did not commonly commence till after 
 that of philosophy, and when the student had entered upon the 
 study of theology. 
 
 Originally the first rudiments both of the Greek and Latin 
 languages were taught in universities, and in some universities they 
 still continue to be so. In others it is expected that the student 
 should have previously acquired at least the rudiments of one or 
 both of those languages, of which the study continues to make 
 everywhere a very considerable part of university education. 
 1 See on this subject Mr. Seebohm's ' Oxford Eeformers.'
 
 CHAP. i. THE WEALTH OF NATIONS. 353 
 
 The ancient Greek philosophy was divided into three great 
 branches: physics, or natural philosophy; ethics, or moral philo- 
 sophy; and logic. This general division seems perfectly agreeable 
 to the nature of things. 
 
 The great phenomena of nature, the revolutions of the heavenly 
 bodies, eclipses, comets ; thunder, lightning, and other extraor- 
 dinary meteors ; the generation, the life, growth, and dissolution 
 of plants and animals, are objects which, as they necessarily excite 
 the wonder, so they naturally call forth the curiosity of mankind to 
 inquire into their causes. Superstition first attempted t^ satisfy 
 this curiosity by referring all those wonderful appearances to the 
 immediate agency of the gods. Philosophy afterwards endeavoured 
 to account for them, from more familiar causes, or from such as 
 mankind were better acquainted with, than the agency of the gods. 
 As those great phenomena are the first objects of human curiosity, 
 so the science which pretends to explain them must naturally have 
 been the first branch of philosophy that was cultivated. The first 
 philosophers, accordingly, of whom history has preserved any 
 account, appear to have been natural philosophers. 
 
 In every age and country of the world men must have attended 
 to the characters, designs, and actions of one another, and many re- 
 putable rules and maxims for the conduct of human life must have 
 been laid down and approved of by common consent. As soon as 
 writing came into fashion, wise men, or those who fancied them- 
 selves such, would naturally endeavour to increase the number of 
 those established and respected maxims, and to express their own 
 sense of what was either proper or improper conduct, sometimes 
 in the more artificial form of apologues, like what are called the 
 Fables of jEsop ; and sometimes in the more simple one of apo- 
 phthegms, or wise sayings, like the Proverbs of Solomon, the verses 
 of Theognis and Phocyllides, and some part of the works of Hesiod. 
 They might continue in this manner for a long time merely to 
 multiply the number of those maxims of prudence and morality, 
 without even attempting to arrange them in any very distinct or 
 methodical order, much less to connect them together by one or 
 more general principles, from which they were all deducible, like 
 effects from their natural causes. The beauty of a systematical 
 arrangement of different observations connected by a few common 
 principles, was first seen in the rude essays of those ancient times 
 
 VOL. li. A a
 
 354 TffE NATURE AND CAUSES OF BOOK v. 
 
 towards a system of natural philosophy. Something of the same 
 kind was afterwards attempted in morals. The maxims of common 
 life were arranged in some methodical order, and connected together 
 by a few common principles, in the same manner as they had 
 attempted to arrange and connect the phenomena of nature. The 
 science which pretends to investigate and explain those connecting 
 principles, is what is properly called moral philosophy. 
 
 Different authors gave different systems both of natural and 
 moral philosophy. But the arguments by which they supported 
 those different systems, far from being always demonstrations, were 
 frequently at best but very slender probabilities, and sometimes 
 mere sophisms, which had no other foundation but the inaccuracy 
 and ambiguity of common language. Speculative systems have in 
 all ages of the world been adopted for reasons too frivolous to have 
 determined the judgment of any man of common sense, in a matter 
 of the smallest pecuniary interest. Gross sophistry has scarce ever 
 had any influence upon the opinions of mankind, except in matters 
 of philosophy and speculation ; and in these it has frequently had 
 the greatest. The patrons of each system of natural and moral 
 philosophy naturally endeavoured to expose the weakness of the 
 arguments adduced to support the systems which were opposite to 
 their own. In examining those arguments, they were necessarily 
 led to consider the difference between a probable and a demonstra- 
 tive argument, between a fallacious and a conclusive one ; and 
 logic, or the science of the general principles of good and bad 
 reasoning, necessarily arose out of the observations which a scrutiny 
 of this kind gave occasion to. Though in its origin posterior both 
 to physics and to ethics, it was commonly taught, not indeed in all, 
 but in the greater part of the ancient schools of philosophy, pre- 
 viously to either of those sciences. The student, it seems to have 
 been thought, ought to understand well the difference between good 
 and bad reasoning, before he was led to reason upon subjects of so 
 great importance. 
 
 This ancient division of philosophy into three parts was, in the 
 greater part of the universities of Europe, changed for another into 
 five. 
 
 In the ancient philosophy, whatever was taught concerning the 
 nature either of the human mind or of the Deity, made a part of 
 the system of physics. Those beings, in whatever their essence
 
 CHAP. i. THE WEALTH OF NATIONS. 355 
 
 might be supposed to consist, were parts of the great system of the 
 universe, and parts too productive of the most important effects. 
 Whatever human reason could either conclude or conjecture con- 
 cerning them, made, as it were, two chapters, though no doubt 
 two very important ones, of the science which pretended to give an 
 account of the origin and revolutions of the great system of the 
 universe. But in the universities of Europe, where philosophy was 
 taught only as subservient to theology, it was natural to dwell 
 longer upon these two chapters than upon any other of the science. 
 They were gradually more and more extended, and were divided 
 into many inferior chapters, till at last the doctrine of spirits, of 
 which so little can be known, came to take up as much room in the 
 system of philosophy as the doctrine of bodies, of which so much 
 can be known. The doctrines concerning those two subjects were 
 considered as making two distinct sciences. What are called meta- 
 physics or pneumatics were set in opposition to physics, and were 
 cultivated not only as the more sublime, but, for the purposes of a 
 particular profession, as the more useful science of the two! The 
 proper subject of experiment and observation (a subject in which a 
 careful attention is capable of making so many useful discoveries), 
 was almost entirely neglected. The subject in which, after a few very 
 simple and almost obvious truths, the most careful attention can dis- 
 cover nothing but obscurity and uncertainty, and can consequently 
 produce nothing but subtleties and sophisms, was greatly cultivated . 
 
 When those two sciences had thus been set in opposition to one 
 another, the comparison between them naturally gave birth to 
 a third, to what was called ontology, or the science which treated 
 of the qualities and attributes which were common to both the 
 subjects of the other two sciences. But if subtleties and sophisms 
 composed the greater part of the metaphysics or pneumatics of the 
 schools, they composed the whole of this cobweb science of ontology, 
 which was likewise sometimes called metaphysics. 
 
 Wherein consisted the happiness and perfection of a man, con- 
 sidered not only as an individual, but as the member of a family, 
 of a state, and of the great society of mankind, was the object which 
 the ancient moral philosophy proposed to investigate. In that 
 philosophy the duties of human life were treated of as subservient 
 to the happiness and perfection of human life. But when moral as 
 well as natural philosophy came to be taught only as subservient 
 
 A a 2
 
 356 THE NATURE AND CAUSES OF BOOK Y. 
 
 to theology, the duties of human life were treated of as chiefly 
 subservient to the happiness of a life to come. In the ancient 
 philosophy the perfection of virtue was represented as necessarily 
 productive, to the person who possessed it, of the most perfect 
 happiness in this life. In the modern philosophy it was frequently 
 represented as generally, or rather as almost always inconsistent 
 with any degree of happiness in this life ; and heaven was to be 
 earned only by penance and mortification, by the austerities and 
 abasement of a monk ; not by the liberal, generous, and spirited 
 conduct of a man. Casuistry and an ascetic morality made up, in 
 most cases, the greater part of the moral philosophy of the schools. 
 By far the most important of all the different branches of philosophy 
 became in this manner by far the most corrupted. 
 
 Such, therefore, was the common course of philosophical education 
 in the greater part of the universities in Europe. Logic was 
 taught first : ontology came in the second place : pneumatology, 
 comprehending the doctrine concerning the nature of the human 
 soul and of the Deity, in the third : in the fourth followed a debased 
 system of moral philosophy, which was considered as immediately 
 connected with the doctrines of pneumatology, with the immortality 
 of the human soul, and with the rewards and punishments which, 
 from the justice of the Deity, were to be expected in a life to come : 
 a short and superficial system of physics usually concluded the course. 
 
 The alterations which the universities of Europe thus introduced 
 into the ancient course of philosophy, were all meant for the 
 education of ecclesiastics, and to render it a more proper intro- 
 duction to the study of theology. But the additional quantity 
 of subtlety and sophistry, the casuistry and the ascetic morality 
 which those alterations introduced into it, certainly did not render it 
 more proper for the education of gentlemen or men of the world, or 
 more likely either to improve the understanding or to mend the heart. 
 This course of philosophy is what still continues to be taught in 
 the greater part of the universities of Europe ; with more or less 
 diligence, according as the constitution of each particular university 
 happens to render diligence more or less necessary to the teachers. 
 In some of the richest and best endowed universities, the tutors 
 content themselves with teaching a few unconnected shreds and 
 parcels of this corrupted course; and even these they commonly 
 teach very negligently and superficially.
 
 CHAP. i. THE WEALTH OF NATIONS. 357 
 
 The improvements which, in modern times, have been made in 
 several different branches of philosophy, have not, the greater part 
 of them, been made in universities ; though some no doubt have. 
 The greater part of universities have not even been very forward to 
 adopt those improvements, after they were made ; and several of 
 those learned societies have chosen to remain, for a long time, the 
 sanctuaries in which exploded systems and obsolete prejudices found 
 shelter and protection, after they had been hunted out of every 
 other corner of the world. In general, the richest and best 
 endowed universities have been the slowest in adopting those 
 improvements, and the most averse to permit any considerable 
 change in the established plan of education. Those improvements 
 were more easily introduced into some of the poorer universities, in 
 which the teachers, depending upon their reputation for the greater 
 part of their subsistence, were obliged to pay more attention to the 
 current opinions of the world. 
 
 But though the public schools and universities of Europe were 
 originally intended only for the education of a particular profession, 
 that of Churchmen ; and though they were not always very diligent 
 in instructing their pupils even in the sciences which were sup- 
 posed necessary for that profession, yet they gradually drew to 
 themselves the education of almost all other people, particularly 
 of almost all gentlemen and men of fortune. No better method, 
 it seems, could be fallen upon of spending, with any advantage, 
 the long interval between infancy and that period of life at which 
 men begin to apply in good earnest to the real business of the 
 world, the business which is to employ them during the remainder 
 of their days. The greater part of what is taught in schools and 
 universities, however, does not seem to be the most proper pre- 
 paration for that business. 
 
 In England it becomes every day more and more the custom to 
 send young people to travel in foreign countries immediately upon 
 their leaving school, and without sending them to any university. 
 Our young people, it is said, generally return home much improved 
 by their travels. A young man who goes abroad at seventeen or 
 eighteen, and returns home at one-and-twenty, returns three or 
 four years older than he was when he went abroad ; and at that 
 age it is very difficult not to improve a good deal in three or four 
 years. In the course of his travels, he generally acquires some
 
 358 THE NATURE AND CAUSES OF BOOK y. 
 
 knowledge of one or two foreign languages ; a knowledge, however, 
 which is seldom sufficient to enable him either to speak or write 
 them with propriety. In other respects he commonly returns home 
 more conceited, more unprincipled, more dissipated, and more 
 incapable of any serious application either to study or to business, 
 than he could well have become in so short a time, had he lived at 
 home. By travelling so very young, by spending in the most 
 frivolous dissipation the most precious years of his life, at a distance 
 from the inspection and control of his parents and relations, every 
 useful habit, which the earlier parts of his education might have 
 had some tendency to form in him, instead of being riveted and 
 confirmed, is almost necessarily either weakened or effaced. Nothing 
 but the discredit into which the universities are allowing them- 
 selves to fall, could ever have brought into repute so very absurd 
 a practice as that of travelling at this early period of life. By 
 sending his son abroad, a father delivers himself, at least for some 
 time, from so disagreeable an object as that of a son unemployed, 
 neglected, and going to ruin before his eyes. 1 
 
 Such have been the effects of some of the modern institutions for 
 education. 
 
 Different plans and different institutions for education seem to 
 have taken place in other ages and nations. 
 
 In the republics of ancient Greece, every free citizen was in- 
 structed, under the direction of the public magistrate, in gymnastic 
 exercises and in music. By gymnastic exercises it was intended 
 to harden his body, to sharpen his courage, and to prepare him for 
 the fatigues and dangers of war ; and as the Greek militia was, 
 by all accounts, one of the best that ever was in the world, this 
 part of their public education must have answered completely the 
 purpose for which it was intended. By the other part, music, it 
 was proposed, at least by the philosophers and historians who have 
 given us an account of those institutions, to humanise the mind, to 
 soften the temper, and to dispose it for performing all the social 
 and moral duties both of public and private life. 
 
 1 Novels are perhaps not very good than Smollett's Adventures of Peregrine 
 
 material for history, but they have always Pickle. Smith had himself acted as tutor 
 
 been allowed to be fair evidence of con- to the Duke of Bnccleugh between 1763 
 
 temporary manners, and nothing, it seems, and 1766, and, though his pupil turned 
 
 gives a better illustration of Smith's out well, he must have often witnessed 
 
 strictures on the grand tour of his day a contrary phenomenon.
 
 CHAP. i. THE WEALTH OF NATIONS. 359 
 
 In ancient Rome the exercises of the Campus Martins answered 
 the same purpose as those of the Gymnasium in ancient Greece, 
 and they seem to have answered it equally well. But among the 
 Romans there was nothing which corresponded to the musical 
 education of the Greeks. The morals of the Romans, however, 
 both in private and public life, seem to have been not only equal, 
 but, upon the whole, a good deal superior to those of the Greeks. 
 That they were superior in private life, we have the express 
 testimony of Polybius x and of Dionysius of Halicarnassus, two 
 authors well acquainted with both nations ; and the whole tenor of 
 the Greek and Roman history bears witness to the superiority of 
 the public morals of the Romans. The good temper and modera- 
 tion of contending factions seems to be the most essential circum- 
 stance in the public morals of a free people. But the factions of 
 the Greeks were almost always violent and sanguinary ; whereas, 
 till the time of the Gracchi, no blood had ever been shed in any 
 Roman faction; and from the time of the Gracchi the Roman 
 republic may be considered as in reality dissolved. Notwithstand- 
 ing, therefore, the very respectable authority of Plato, Aristotle, 
 and Polybius, and notwithstanding the very ingenious reasons by 
 which M. Montesquieu endeavours to support that authority, it 
 seems probable that the musical education of the Greeks had no 
 great effect in mending their morals, since, without any such 
 education, those of the Romans were upon the whole superior. 
 The respect of those ancient sages for the institutions of their 
 ancestors, had probably disposed them to find much political 
 wisdom in what was, perhaps, merely an ancient custom, continued, 
 without interruption, from the earliest period of those societies to 
 the times in which they had arrived at a considerable degree of 
 refinement. Music and dancing are the great amusements of 
 almost all barbarous nations, and the great accomplishments which 
 are supposed to fit any man for entertaining his society. It is so 
 at this day among the negroes on the coast of Africa. It was so 
 among the ancient Celts, among the ancient Scandinavians, and, as 
 we may learn from Homer, 2 among the ancient Greeks in the times 
 preceding the Trojan war. When the Greek tribes had formed 
 
 1 Hist. vi. 54. Dionysius constantly 2 The reference is probably to II. xviii. 
 
 dwells on the merits of the Roman 494, 594. 
 character.
 
 360 THE NATURE AND CAUSES OF BOOK v. 
 
 themselves into little republics, it was natural that the study of 
 those accomplishments should, for a long time, make a part of the 
 public and common education of the people. 
 
 The masters who instructed the young- people either in music or 
 in military exercises, do not seem to have been paid, or even 
 appointed by the state, either in Borne or even in Athens, the 
 Greek republic of whose laws and customs we are the best informed. 
 The state required that every free citizen should fit himself for 
 defending it in war, and should, upon that account, learn his 
 military exercises. But it left him to learn them of such masters 
 as he could find, and it seems to have advanced nothing for this 
 purpose but a public field or place of exercise, in which he should 
 practise and perform them. 
 
 In the early ages both of the Greek and Roman republics, the 
 other parts of education seem to have consisted in learning to read, 
 write, and account according to the arithmetic of the times. These 
 accomplishments the richer citizens seem frequently to have ac- 
 quired at home, by the assistance of some domestic pedagogue who 
 was generally either a slave or a freed-man ; and the poorer citizens, 
 in the schools of such masters as made a trade of teaching for 
 hire. Suoh parts of education, however, were abandoned altogether 
 to the care of the parents or guardians of each individual. It does 
 not appear that the state ever assumed any inspection or direction 
 of them. By a law of Solon, 1 indeed, the children were acquitted 
 from maintaining those parents in their old age who had neglected 
 to instruct them in some profitable trade or business. 
 
 In the progress of refinement, when philosophy and rhetoric came 
 into fashion, the better sort of people used to send their children to 
 the schools of philosophers and rhetoricians, in order to be in- 
 structed in these fashionable sciences. But those schools were not 
 supported by the public. They were for a long time barely tolerated 
 by it. The demand for philosophy and rhetoric was for a long time 
 so small, that the first professed teachers of either could not find 
 constant employment in any one city, but were obliged to travel 
 about from place to place. In this manner lived Zeno of Elea, 
 Protagoras, Gorgias, Hippias, and many others. As the demand 
 increased, the schools both of philosophy and rhetoric became 
 stationary ; first in Athens, and afterwards in several other cities. 
 1 Plutarch, Solon, 22, 34.
 
 CHAP. i. THE WEALTH OF NATIONS. . 361 
 
 The state, however, seems never to have encouraged them further 
 than by assigning to some of them a particular place to teach in, 
 which was sometimes done too by private donors. The state seems to 
 have assigned the Academy to Plato, the Lyceum to Aristotle, and the 
 Portico to Zeno of Citta, the founder of the Stoics. But Epicurus 
 bequeathed his gardens to his own school. Till about the time of 
 Marcus Antonius, however, no teacher appears to have had any 
 salary from the public, or to have had any other emoluments but 
 what arose from the honoraries or fees of his scholars. The bounty 
 which that philosophical emperor, as we learn from Lucian, 1 be- 
 stowed upon one of the teachers of philosophy, probably lasted no 
 longer than his own life. There was nothing equivalent to the 
 privileges of graduation, and to have attended any of those schools 
 was not necessary in order to be permitted to practise any particular 
 trade or profession. If the opinion of their own utility could not 
 draw scholars to them, the law neither forced anybody to go to 
 them, nor rewarded anybody for having gone to them. The 
 teachers had no jurisdiction over their pupils, nor any other 
 authority besides that natural authority which superior virtue and 
 abilities never fail to procure from young people towards those who 
 are entrusted with any part of their education. 
 
 At Rome, the study of the civil law made a part of the educa- 
 tion, not of the greater part of the citizens, but of some particular 
 families. The young people, however, who wished to acquire 
 knowledge in the law, had no public school to go to, and had no 
 other method of studying it than by frequenting the company of 
 such of their relations and friends as were supposed to understand 
 it. It is perhaps worth while to remark, that though the laws of 
 the twelve tables were, many of them, copied from those of some 
 ancient Greek republics, yet law never seems to have grown up to 
 be a science in any republic of ancient Greece. In Rome it became 
 a science very early, and gave a considerable degree of illustration 
 to those citizens who had the reputation of understanding it. In 
 the republics of ancient Greece, particularly in Athens, the ordinary 
 courts of justice consisted of numerous, and therefore disorderly, 
 bodies of people, who frequently decided almost at random, or as 
 clamour, faction, and party spirit happened to determine. The 
 ignominy of an unjust decision, when it was to be divided among 
 
 1 Eunuchus, cap. iii.
 
 362 THE NATURE AND CAUSES OF BOOK v. 
 
 five hundred, a thousand, or fifteen hundred people (for some of 
 their courts were so very numerous), could not fall very heavy 
 upon any individual. At Rome, on the contrary, the principal 
 courts of justice consisted either of a single judge, or of a small 
 number of judges, whose characters, especially as they deliberated 
 always in public, could not fail to be very much affected by any 
 rash or unjust decision. In doubtful cases, such courts, from their 
 anxiety to avoid blame, would naturally endeavour to shelter them- 
 selves under the example or precedent of the judges who had sat 
 before them, either in the same or in some other court. This 
 attention to practice and precedent necessarily formed the Roman 
 law into that regular and orderly system in which it has been 
 delivered down to us ; and the like attention has had the like effects 
 upon the laws of every other country where such attention has 
 taken place. The superiority of character in the Romans over that 
 of the Greeks, so much remarked by Polybius and Dionysius of 
 Halicarnassus, was probably more owing to the better constitution 
 of their courts of justice than to any of the circumstances to which 
 those authors ascribe it. The Romans are said to have been parti- 
 cularly distinguished for their superior respect to an oath. But the 
 people who were accustomed to make oath only before some diligent 
 and well-informed court of justice, would naturally be much more 
 attentive to what they swore, than they who were accustomed to do 
 the same thing before mobbish and disorderly assemblies. 
 
 The abilities, both civil and military, of the Greeks and Romans, 
 will readily be allowed to have been, at least, equal to those of 
 any modern nation. Our prejudice is perhaps rather to overrate 
 them. But, except in what related to military exercises, the state 
 seems to have been at no pains to form those great abilities ; for I 
 cannot be induced to believe that the musical education of the 
 Greeks could be of much consequence in forming them. Masters, 
 however, had been found, it seems, for instructing the better sort of 
 people among those nations in every art and science in which the 
 circumstances of their society rendered it necessary or convenient 
 for them to be instructed. The demand for such instruction pro- 
 duced, what it always produces, the talent for giving it ; and the 
 emulation which an unrestrained competition never fails to excite, 
 appears to have brought that talent to a very high degree of perfec- 
 tion. In the attention which the ancient philosophers excited, in
 
 CHAP. i. THE WEALTH OF NATIONS. 363 
 
 the empire which they acquired over the opinions and principles 
 of their auditors, in the faculty which they possessed of giving- a 
 certain tone and character to the conduct and conversation of those 
 auditors, they appear to have been much superior to any modern 
 teachers. In modern times, the diligence of public teachers is more 
 or less corrupted by the circumstances which render them more or 
 less independent of their success and reputation in their particular 
 professions. Their salaries too put the private teacher, who would 
 pretend to come into competition with them, in the same state with 
 a merchant who attempts to trade without a bounty, in competition 
 with those who trade with a considerable one. If he sells his goods 
 at nearly the same price, he cannot have the same profit, and 
 poverty and beggary at least, if not bankruptcy and ruin, will 
 infallibly be his lot. 1 If he attempts to sell them much dearer, he 
 is likely to have so few customers that his circumstances will not be 
 much mended. The privileges of graduation, besides, are in many 
 countries necessary, or at least extremely convenient to most men 
 of learned professions, that is, to the far greater part of those who 
 have occasion for a learned education. But those privileges can be 
 obtained only by attending the lectures of the public teachers. The 
 most careful attendance upon the ablest instructions of any private 
 teacher cannot always give any title to demand them. It is from 
 these different causes that the private teacher of any of the sciences 
 which are commonly taught in universities, is in modern times gene- 
 rally considered as in the very lowest order of men of letters. A 
 man of real abilities can scarce find out a more humiliating or a 
 more unprofitable employment to turn them to. The endowments 
 of schools and colleges have in this manner not only corrupted the 
 diligence of public teachers, but have rendered it almost impossible 
 to have any good private ones. 
 
 Were there no public institutions for education, no system, no 
 
 1 The effect of endowments in aid of always the case, that where the greatest 
 teachers is to lower the remuneration of endowments are bestowed on certain 
 those who, being unendowed, compete branches of learning, the market remune- 
 for similar occupations. The endowed ration of such learning is, as far as corn- 
 teacher can afford to offer his services at petition settles it, very small. Thus in 
 a lower rate than it might be expected England, where endowments are very 
 he would if he depended for his subsist- large, unendowed teachers are far worse 
 ence on the emoluments of his office, and paid than in the United States, where 
 the unendowed teacher must follow his endowments are chiefly confined to build- 
 prices, or cannot, at least, succeed in ings and libraries, 
 getting a much higher rate. Hence it is
 
 364 THE NATURE AND CAUSES OF BOOK v. 
 
 science would be taught for which there was not some demand, or 
 which the circumstances of the times did not render it either neces- 
 sary or convenient, or at least fashionable to learn. A private 
 teacher could never find his account in teaching either an exploded 
 and antiquated system of a science acknowledged to be useful, or a 
 science universally believed to be a mere useless and pedantic heap 
 of sophistry and nonsense. Such systems, such sciences, can sub- 
 sist nowhere but in those incorporated societies for education whose 
 prosperity and revenue are in a great measure independent of their 
 reputation, and altogether independent of their industry. Were 
 there no public institutions for education, a gentleman, after going 
 through, with application and abilities, the most complete course 
 of education which the circumstances of the times were supposed 
 to afford, could not come into the world completely ignorant of 
 everything which is the common subject of conversation among 
 gentlemen and men of the world. 
 
 There are no public institutions for the education of women, and 
 there is accordingly nothing useless, absurd, or fantastical in the 
 common course of their education. They are taught what their 
 parents or guardians judge it necessary or useful for them to learn ; 
 and they are taught nothing else. Every part of their education 
 tends evidently to some useful purpose ; either to improve the 
 natural attractions of their person, or to form their mind to reserve, 
 to modesty, to chastity, and to economy; to render them both 
 likely to become the mistresses of a family, and to behave properly 
 when they have become such; In every part of her life a woman 
 feels some conveniency or advantage from every part of her educa- 
 tion. It seldom happens that a man, in any part of his life, derives 
 any conveniency or advantage from some of the most laborious and 
 troublesome parts of his education. 
 
 Ought the public, therefore, to give no attention, it may be asked, 
 to the education of the people ? Or if it ought to give any, what 
 are the different parts of education which it ought to attend to in 
 the different orders of the people ? and in what manner ought it to 
 attend to them ? 
 
 In some cases the state of the society necessarily places the 
 greater part of individuals in such situations as naturally form in 
 them, without any attention of government, almost all the abilities 
 and virtues which that state requires, or perhaps can admit of. In
 
 CHAP. i. THE WEALTH OF NATIONS. 365 
 
 other cases the state of the society does not place the greater part 
 of individuals in such situations, and some attention of government 
 is necessary in order to prevent the almost entire corruption and 
 degeneracy of the great body of the people. 
 
 In the progress of the division of labour, the employment of the 
 far greater part of those who live by labour, that is, of the great 
 body of the people, comes to be confined to a few very simple opera- 
 tions; frequently to one or two. But the understandings of the 
 greater part of men are necessarily formed by their ordinary employ- 
 ments. The man whose whole life is spent in performing a few 
 simple operations, of which the effects too are, perhaps, always the 
 same, or very nearly the same, has no occasion to exert his under- 
 standing or to exercise his invention in finding out expedients for 
 removing difficulties which never occur. He naturally loses, there- 
 fore, the habit of such exertion, and generally becomes as stupid 
 and ignorant as it is possible for a human creature to become. 1 
 The torpor of his mind renders him not only incapable of relishing 
 or bearing a part in any rational conversation, but of conceiving 
 any generous, noble, or tender sentiment, and consequently of form- 
 ing any just judgment concerning many even of the ordinary 
 duties of private life. Of the great and extensive interests of his 
 country, he is altogether incapable of judging ; and, unless very 
 particular pains have been taken to render him otherwise, he is 
 equally incapable of defending his country in war. The uniformity 
 of his stationary life naturally corrupts the courage of his mind, and 
 makes him regard with abhorrence the irregular, uncertain, and 
 adventurous life of a soldier. It corrupts even the activity of his 
 body, and renders him incapable of exerting his strength with 
 vigour and perseverance in any other employment than that to 
 which he has been bred. His dexterity at his own particular 
 trade seems, in this manner, to be acquired at the expense of his 
 
 1 The experience of modern society been generally adopted in many towns, 
 affords a corrective to this sweeping especially in Lancashire and Yorkshire, 
 charge. The manufacturing populations and there are no. persons more alive to 
 of many large towns, among whom the the benefits of education than the factory 
 division of labour is carried to the farthest hands of the north-west counties of Eng- 
 limit conceivable, are honourably distin- land. There were other reasons which 
 guished by the energy with which they made such people indifferent to public 
 have furthered the means of local educa- questions in Smith's days, and in parti- 
 tion, through the maintenance of media- cular the exclusion of the mass of artisans 
 nics' institutes, libraries, and schools- from all political power. 
 This machinery of adult education has
 
 366 THE NATURE AND CAUSES OF BOOK v. 
 
 intellectual, social, and martial virtues. But in every improved and 
 civilised society this is the state into which the labouring- poor, 
 that is, the great body of the people, must necessarily fall, unless 
 Government takes some pains to prevent it. 
 
 It is otherwise in the barbarous societies, as they are commonly 
 called, of hunters, of shepherds, and even of husbandmen in that 
 rude state of husbandry which precedes the improvement of manu- 
 factures and the extension of foreign commerce. In such societies 
 the varied occupations of every man oblige every man to exert his 
 capacity, and to invent expedients for removing difficulties which 
 are continually occurring. Invention is kept alive, and the mind is 
 not suffered to fall into that drowsy stupidity which, in a civilised 
 society, seems to benumb the understanding of almost all the 
 inferior ranks of people. 1 In those barbarous societies, as they are 
 called, every man, it has already been observed, is a warrior. Every 
 man too is in some measure a statesman, and can form a tolerable 
 judgment concerning the interest of the society, and the conduct of 
 those who govern it. How far their chiefs are good judges in 
 peace, or good leaders in war, is obvious to the observation of 
 almost every single man among them. In such a society, indeed, 
 no man can well acquire that improved and refined understanding 
 which a few men sometimes possess in a more civilised state. 
 Though in a rude society there is a good deal of variety in the occu- 
 pations of every individual, there is not a great deal in those of the 
 whole society. Every man does, or is capable of doing, almost 
 everything which any other man does, or is capable of doing. 
 Everyman has a considerable degree of knowledge, ingenuity, and 
 invention ; but scarce any man has a great degree. The degree, 
 however, which is commonly possessed, is generally sufficient for 
 conducting the whole simple business of the society. In a civilised 
 state, on the contrary, though there is little variety in the occu- 
 pations of the greater part of individuals, there is an almost 
 infinite variety in those of the whole society. These varied occu- 
 
 1 The care which the Government be- quickness in adapting themselves to cir- 
 stows on the education of the people, cumstances. At home, they have sue- 
 throughout the greater part of Northern ceeded in solving some of the most corn- 
 Germany, bears its fruits at home, and plicated problems attending the relations 
 when such persons emigrate. The German of capital and labour, and have shown as 
 settlers in the United States are ad- much energy and courage in war as they 
 initted to be of the best kind, both for have in the ordinary and peaceful busi- 
 their obedience to law, and for their ness of life.
 
 CHAP. i. THE WEALTH OF NATIONS. 367 
 
 pations present an almost infinite variety of objects to the contem- 
 plation of those few, who, being- attached to no particular occupation 
 themselves, have leisure and inclination to examine the occupations 
 of other people. The contemplation of so great a variety of objects 
 necessarily exercises their minds in endless comparisons and combi- 
 nations, and renders their understandings, in an extraordinary 
 degree, both acute and comprehensive. Unless those few, however, 
 happen to be placed in some very particular situations, their great 
 abilities, though honourable to themselves, may contribute very 
 little to the good government or happiness of their society. 1 Not- 
 withstanding the great abilities of those few, all the nobler parts of 
 the human character may be, in a great measure, obliterated and 
 extinguished in the great body of the people. 
 
 The education of the common people requires perhaps, in a civi- 
 lised and commercial society, the attention gf the public more than 
 that of people of some rank and fortune. People of some rank and 
 fortune are generally eighteen or nineteen years of age before they 
 enter upon that particular business, profession, or trade, by which 
 they propose to distinguish themselves in the world. They have 
 before that full time to acquire, or at least to fit themselves for 
 afterwards acquiring, every accomplishment which can recommend 
 them to the public esteem, or render them worthy of it. Their 
 parents or guardians are generally sufficiently anxious that they 
 should be so accomplished, and are, in most cases, willing enough 
 to lay out the expense which is necessary for that purpose. If they 
 are not always properly educated, it is seldom from want of expense 
 laid out upon their education ; but from the improper application of 
 that expense. It is seldom from the want of masters ; but from 
 the negligence and incapacity of the masters who are to be had, and 
 from the difficulty, or rather from the impossibility which there is, 
 in the present state of things, of finding any better. The employ- 
 ments, too, in which people of some rank or fortune spend their 
 lives, are not, like those of the common people, simple and uniform. 
 
 1 A lamentation over the inefficiency equal abilities a less influential position 
 
 of high cultivation in civilised societies, than that of Adam Smith, in his retire- 
 
 unless it be accompanied by opportunities ment at Kirkaldy. But it is certain that 
 
 of action, is common among thinkers and no statesman has ever influenced a larger 
 
 writers of every age. But individuals are circle of thought than the author of ' The 
 
 very indifferent judges of the influences Wealth of Nations,' or has dona more to 
 
 which they exert. To outward appear- define the scientific phase of political 
 
 ance, no person could have occupied with philosophy.
 
 368 THE NATURE AND CAUSES OF BOOK v. 
 
 They are almost all of them extremely complicated, and such as 
 exercise the head more than the hands. The understandings of 
 those who are engaged in such employments can seldom grow torpid 
 for want of exercise. The employments of people of some rank and 
 fortune, besides, are seldom such as harass them from morning to 
 night. They generally have a good deal of leisure, during which 
 they may perfect themselves in every branch either of useful or 
 ornamental knowledge of which they may have laid the foundation, 
 or for which they may have acquired some taste in the earlier part 
 of life. 
 
 It is otherwise with the common people. They have little time 
 to spare for education. Their parents can scarce afford to main- 
 tain them even in infancy. As soon as they are able to work, 
 they must apply to some trade by which they can earn their sub- 
 sistence. That trade, too, is generally so simple and uniform as to 
 give little exercise to the understanding ; while, at the same time, 
 their labour is both so constant and so severe, that it leaves them 
 little leisure and less inclination to apply to, or even think of any- 
 thing else. 
 
 But though the common people cannot, in any civilised society, 
 be so well instructed as people of some rank and fortune, the most 
 essential parts of education, however, to read, write, and account, 
 can be acquired at so early a period of life, that the greater part 
 even of those who are to be bred to the lowest occupations have 
 time to acquire them before they can be employed in those occupa- 
 tions. For a very small expense the public can facilitate, can 
 encourage, and can even impose upon almost the whole body of 
 the people, the necessity of acquiring those most essential parts of 
 education. 1 
 
 The public can facilitate this acquisition by establishing in every 
 parish or district a little school, where children may be taught for 
 a reward so moderate, that even a common labourer may afford it ; 
 the master being partly, but not wholly paid by the public ; because 
 if he was wholly, or even principally paid by it, he would soon learn 
 
 1 The chief hindrance to the general because there is less variety in the reli- 
 
 education of the English nation is the gious opinions of the Scotch people than 
 
 overpowering bitterness of religious sects. there is in that of England. The diffi- 
 
 Scotland has been more fortunate, partly culty in the latter country has been en- 
 
 because a system of national education hanced by the adoption of the voluntary 
 
 was commenced attheKeformation, partly as well as the denominational system.
 
 CHAP. r. THE WEALTH OF NATIONS. 369 
 
 to neglect his business. In Scotland the establishment of such 
 parish schools has taught almost the whole common people to read, 
 and a very great proportion of them to write and account. In 
 England the establishment of charity schools has had an effect of the 
 same kind, though not so universally, because the establishment is 
 not so universal. If in those little schools the books, by which the 
 children are taught to read, were a little more instructive than they 
 generally are, and if, instead of a little smattering of Latin, which 
 the children of the common people are sometimes taught there, and 
 which can scarce ever be of any use to them, they were instructed 
 in the elementary parts of geometry and mechanics, the literary 
 education of this rank of people would perhaps be as complete as it 
 can be. There is scarce a common trade which does not afford some 
 opportunities of applying to it the principles of geometry and 
 mechanics, and which would not therefore gradually exercise and 
 improve the common people in those principles, the necessary intro- 
 duction to the most sublime as well as to the most useful sciences. 
 
 The public can encourage the acquisition of those most essential 
 parts of education by giving small premiums, and little badges of 
 distinction, to the children of the common people who excel in 
 them. 
 
 The public can impose upon almost the whole body of the people 
 the necessity of acquiring those most essential parts of education, 
 by obliging every man to undergo an examination or probation in 
 them before he can obtain the freedom in any corporation, or be 
 allowed to set up in any trade either in a village or town corporate. 
 It was in this manner, by facilitating the acquisition of their mili- 
 tary and gymnastic exercises, by encouraging it, and even by impos- 
 ing upon the whole body of the people the necessity of learning those 
 exercises, that the Greek and Roman republics maintained the mar- 
 tial spirit of their respective citizens. They facilitated the acquisi- 
 tion of those exercises by appointing a certain place for learning and 
 practising them, and by granting to certain masters the privilege 
 of teaching in that place. Those masters do not appear to have had 
 either salaries or exclusive privileges of any kind. Their reward 
 consisted altogether in what they got from their scholars ; and a 
 citizen who had learnt his exercises in the public Gymnasia, had no 
 sort of legal advantage over one who had learnt them privately, pro- 
 vided the latter had learnt them equally well. Those republics 
 
 VOL. II. B b
 
 370 THE NATURE AND CAUSES OF BOOK v. 
 
 encouraged the acquisition of those exercises, by bestowing little 
 premiums and badges of distinction upon those who excelled in them. 
 To have gained a prize in the Olympic, Isthmian, or Nemsean games, 
 gave illustration not only to the person who gained it, but to his 
 whole family and kindred. The obligation which every citizen was 
 under to serve a certain number of years, if called upon, in the 
 armies of the republic, sufficiently imposed the necessity of learning 
 those exercises without which he 'could not be fit for that service. 
 
 That in the progress of improvement the practice of military 
 exercises, unless government takes proper pains to support it, goes 
 gradually to decay, and, together with it, the martial spirit of the 
 great body of the people, the example of modern Europe sufficiently 
 demonstrates. But the security of every society must always 
 depend, more or less, upon the martial spirit of the great body of 
 the people. In the present times, indeed, that martial spirit alone, 
 and unsupported by a well -disciplined standing army, would not, 
 perhaps, be sufficient for the defence and security of any society. 
 But where every citizen had the spirit of a soldier, a smaller 
 standing army would surely be requisite. That spirit, besides, 
 would necessarily diminish very much the dangers to liberty, whether 
 real or imaginary, which are commonly apprehended from a standing 
 army. As it would very much facilitate the operations of that 
 army against a foreign invader, so it would obstruct them as much 
 if unfortunately they should ever be directed against the constitution 
 of the state. 1 
 
 The ancient institutions of Greece and Rome seem to have been 
 much more effectual for maintaining the martial spirit of the great 
 body of the people, than the establishment of what are called the 
 militias of modern times. They were much more simple. When 
 they were once established, they executed themselves, and it required 
 little or no attention from government to maintain them in the 
 most perfect vigour. Whereas to maintain even in tolerable execu- 
 
 1 General education would doubtlessly ordinary circumstances. It costs now-a- 
 
 vastly facilitate the acquisition of mili- days, according to ordinary computation, 
 
 tary drill. It is eaid that a recruit who 100 to catch and train a recruit. If 
 
 knows how to read and write can learn primary education were supplied, an an- 
 
 his exercises in half the time needed by nual saving of 2,500,000 would be ef- 
 
 one who is wholly illiterate. Not only, fected on such a computation, that is, 
 
 then, is general education a matter of three times the grant annually made for 
 
 safety in emergencies when a rapid train- an expensive and inefficient process of 
 
 ing is requisite, but of economy under denominational education.
 
 CHAP. i. THE WEALTH OF NATIONS. 371 
 
 tion the complex regulations of any modern militia, requires the 
 continual and painful attention of government, without which they 
 are constantly falling into total neglect and disuse. The influence, 
 besides, of the ancient institutions was much more universal. By 
 means of them the whole body of the people was completely in- 
 structed in the use of arms. 1 Whereas it is but a very small part 
 of them who can ever be so instructed by the regulations of any 
 modern militia ; except, perhaps, that of Switzerland. But a 
 coward, a man incapable either of defending or of revenging 
 himself, evidently wants one of the most essential parts of the 
 character of a man. He is as much mutilated and deformed in his 
 mind as another is in his body, who is either deprived of some of 
 its most essential members, or has lost the use of them. He is 
 evidently the more wretched and miserable of the two ; because 
 happiness and misery, which reside altogether in the mind, must 
 necessarily depend more upon the healthful or unhealthful, the 
 mutilated or entire state of the mind, than upon that of the body. 
 Even though the martial spirit of the people were of no use towards 
 the defence of the society, yet to prevent that sort of mental muti- 
 lation, deformity and wretchedness, which cowardice necessarily 
 involves in it, from spreading themselves through the great body of 
 the people, would still deserve the most serious attention of govern- 
 ment ; in the same manner as it would deserve its most serious 
 attention to prevent a leprosy or any other loathsome and offensive 
 disease, though neither mortal nor dangerous, from spreading itself 
 among them ; though, perhaps, no other public good might result 
 from such attention besides the prevention of so great a public 
 evil. 
 
 The same thing may be said of the gross ignorance and stupidity 
 which, in a civilised society, seem so frequently to benumb the 
 understandings of all the inferior ranks of people. A man, without 
 the proper use of the intellectual faculties of a man, is, if possible, 
 more contemptible than even a coward, and seems to be mutilated 
 
 1 It should be remembered, however, is liable to a very formidable reduction, 
 
 that the militias of ancient Greece and when the character of the population is 
 
 Rome were taken from the freemen, and taken into account, for the numbers of 
 
 that in almost every community the num- those persons who obtained the fullest 
 
 ber of slaves far exceeded that of free military training were, in proportion, 
 
 persons. The military training, then, of probably less than those who were called 
 
 the people en masse, which Smith so out in the militias of the last century, 
 frequently comments on in this chapter, 
 
 B b 2,
 
 372 THE NATURE AND CAUSES OF BOOK T. 
 
 and deformed in a still more essential part of the character of human 
 nature. Though the state was to derive no advantage from the 
 instruction of the inferior ranks of people, it would still deserve its 
 attention that they should not be altogether uninstructed. The 
 state, however, derives no inconsiderable advantage from their 
 instruction. The more they are instructed, the less liable they are 
 to the delusions of enthusiasm and superstition, which, among 
 ignorant nations, frequently occasion the most dreadful disorders. 
 An instructed and intelligent people besides are always more decent 
 and orderly than an ignorant and stupid one. They feel themselves, 
 each individually, more respectable, and more likely to obtain the 
 respect of their lawful superiors, and they are therefore more dis- 
 posed to respect those superiors. They are more disposed to 
 examine, and more capable of seeing through, the interested com- 
 plaints of faction and sedition, and they are, upon that account, 
 less apt to be misled into any wanton or unnecessary opposition to 
 the measures of government. In free countries, where the safety 
 of government depends very much upon the favourable judgment 
 which the people may form of its conduct, it must surely be of the 
 highest importance that they should not be disposed to judge rashly 
 or capriciously concerning it. 
 
 ARTICLE III. 
 
 Of the Expense of the Institutions for the Instruction of People of 
 
 all Ages. 
 
 The institutions for the instruction of people of all ages are chiefly 
 those for religious instruction. This is a species of instruction of 
 which the object is not so much to render the people good citizens 
 in this world, as to prepare them for another and a better world in 
 a life to come. The teachers of the doctrine which contains this 
 instruction, in the same manner as other teachers, may either 
 depend altogether for their subsistence upon the voluntary contri- 
 butions of their hearers, or they may derive it from some other 
 fund to which the law of their country may entitle them ; such as 
 a landed estate, a tithe or land-tax, an established salary or stipend. 
 Their exertion, their zeal and industry, are likely to be much 
 greater in the former situation than in the latter. In this respect
 
 CHAP. i. THE WEALTH OF NATIONS. 373 
 
 the teachers of new religions have always had a considerable 
 advantage in attacking those ancient and established systems of 
 which the clergy, reposing themselves upon their benefices, had 
 neglected to keep up the fervour of faith and devotion in the great 
 body of the people ; and having given themselves up to indolence, 
 were become altogether incapable of making any vigorous exertion 
 in defence even of their own establishment. The clergy of an 
 established and well-endowed religion frequently become men of 
 learning and elegance, who possess all the virtues of gentlemen, or 
 which can recommend them to the esteem of gentlemen ; but they 
 are apt gradually to lose the qualities, both good and bad, which 
 gave them authority and influence with the inferior ranks of people, 
 and which had perhaps been the original causes of the success and 
 establishment of their religion. Such a clergy, when attacked by 
 a set of popular and bold, though perhaps stupid and ignorant 
 enthusiasts, feel themselves as perfectly defenceless as the indolent, 
 effeminate, and full-fed nations of the southern parts of Asia, when 
 they were invaded by the active, hardy, and hungry Tartars of the 
 north. Such a clergy, upon such an emergency, have commonly 
 no other resource than to call upon the civil magistrate to persecute, 
 destroy, or drive out their adversaries, as disturbers of the public 
 peace. It was thus that the Roman Catholic clergy called upon 
 the civil magistrate to persecute the Protestants, and the Church 
 of England to persecute the Dissenters ; and that in general every 
 religious sect, when it has once enjoyed for a century or two the 
 security of a legal establishment, has found itself incapable of 
 making any vigorous defence against any new sect which chose to 
 attack its doctrine or discipline. Upon such occasions the advan- 
 tage in point of learning and good writing may sometimes be on 
 the side of the Established Church ; but the arts of popularity, 
 all the arts of gaining proselytes, are constantly on the side of its 
 adversaries. In England those arts have been long neglected by 
 the well-endowed clergy of the Established Church, and are at 
 present chiefly cultivated by the Dissenters and by the Methodists. 1 
 The independent provisions, however, which in many places have 
 been made for dissenting teachers, by means of voluntary subscrip- 
 tions, of trust rights, and other evasions of the law, seem very 
 
 1 At or about the time in which Smith of Welsh dissent were at the zenith of 
 wrote, Whitfield, Wesley, and the founders their popularity and reputation.
 
 374 THE NATURE AND CAUSES OF BOOK v. 
 
 much to have abated the zeal and activity of those teachers. They 
 have many of them become very learned, ingenious, and respectable 
 men ; but they have in general ceased to be very popular preachers. 
 The Methodists, without half the learning of the Dissenter s, are 
 much more in vogue. 
 
 In the Church of Rome, the industry and zeal of the inferior 
 clergy is kept more alive by the powerful motive of self-interest, 
 than perhaps in any established Protestant Church. The parochial 
 clergy derive, many of them, a very considerable part of their sub- 
 sistence from the voluntary oblations of the people ; a source of 
 revenue which confession gives them many opportunities of im- 
 proving. The mendicant orders derive their whole subsistence from 
 such oblations. It is with them, as with the hussars and light 
 infantry of some armies ; no plunder, no pay. The parochial clergy 
 are like those teachers whose reward depends partly upon their 
 salary, and partly upon the fees or honoraries which they get from 
 their pupils, and these must always depend more or less upon their 
 industry and reputation. The mendicant orders are like those 
 teachers whose subsistence depends altogether upon their industry. 
 They are obliged, therefore, to use every art which can animate the 
 devotion of the common people. The establishment of the two 
 great mendicant orders of St. Dominic and St. Francis, it is observed 
 by Machiavel, revived, in the thirteenth and fourteenth centuries, 
 the languishing faith and devotion of the Catholic Church. In 
 Roman Catholic countries the spirit of devotion is supported alto- 
 gether by the monks and by the poorer parochial clergy. The 
 great dignitaries of the Church, with all the accomplishments of 
 gentlemen and men of the world, and sometimes with those of men 
 of learning, are careful enough to maintain the necessary discipline 
 over their inferiors, but seldom give themselves any trouble about 
 the instruction of the people. 
 
 ' Most of the arts and professions in a state/ says by far the 
 most illustrious philosopher and historian of the present age, 1 ' are 
 of such a nature, that, while they promote the interests of the 
 society, they are also useful or agreeable to some individuals ; and 
 
 1 The passage in the text is quoted of intimacy with Hume, and that he 
 
 from the commencement of the xxixth entertained a profound respect for Hume's 
 
 chapter of Hume's History of England. abilities. I am indebted for this reference 
 
 It is well known that Smith was on terms to Mr. Toynbee, of Balliol College.
 
 CHAP. i. THE WEALTH OF NATIONS. 375 
 
 in that case, the constant rule of the magistrate, except perhaps 
 on the first introduction of any art, is to leave the profession to 
 itself, and trust its encouragement to the individuals who reap the 
 benefit of it. The artisans finding their profits to rise by the 
 favour of their customers, increase, as much as possible, their skill 
 and industry ; and as matters are not disturbed by any injudicious 
 tampering, the commodity is always sure to be at all times nearly 
 proportioned to the demand. 
 
 ' But there are also some callings, which, though useful and even 
 necessary in a state, bring no advantage or pleasure to any indi- 
 vidual, and the supreme power is obliged to alter its conduct with 
 regard to the retainers of those professions. It must give them 
 public encouragement in order to their subsistence ; and it must 
 provide against that negligence to which they will naturally be 
 subject, either by annexing particular honours to the profession, by 
 establishing a long subordination of ranks and a strict dependence, 
 or by some other expedient. The persons employed in the finances, 
 fleets, and magistracy, are instances of this order of men. 
 
 ' It may naturally be thought, at first sight, that the ecclesiastics 
 belong to the first class, and that their encouragement, as well as 
 that of lawyers and physicians, may safely be entrusted to the 
 liberality of individuals, who are attached to their doctrines, and 
 who find benefit or consolation from their spiritual ministry and 
 assistance. Their industry and vigilance will, no doubt, be whetted 
 by such an additional motive ; and their skill in the profession, as 
 well as their address in governing the minds of the people, must 
 receive daily increase, from their increasing practice, study, and 
 attention. 
 
 ' But if we consider the matter more closely, we shall find that 
 this interested diligence of the clergy is what every wise legislator 
 will study to prevent ; because, in every religion except the true, it 
 is highly pernicious, and it has even a natural tendency to pervert 
 the true, by infusing into it a strong mixture of superstition, folly, 
 and delusion. Each ghostly practitioner, in order to render himself 
 more precious and sacred in the eyes of his retainers, will inspire 
 them with the most violent abhorrence of all other sects, and con- 
 tinually endeavour, by some novelty, to excite the languid devotion 
 of his audience. No regard will be paid to truth, morals, or de- 
 cency in the doctrines inculcated. Every tenet will be adopted that
 
 376 THE NATURE AND CAUSES OF BOOK v. 
 
 best suits the disorderly affections of the human frame. Customers 
 will be drawn to each conventicle by new industry and address in 
 practising on the passions and credulity of the populace. And in 
 the end, the civil magistrate will find that he has dearly paid for 
 his pretended frugality in saving a fixed establishment for the 
 priests, and that in reality the most decent and advantageous com- 
 position which he can make with the spiritual guides, is to bribe 
 their indolence, by assigning stated salaries to their profession, and 
 rendering it superfluous for them to be farther active than merely 
 to prevent their flock from straying in quest of new pastures. And 
 in this manner ecclesiastical establishments, though commonly they 
 arose at first from religious views, prove in the end advantageous 
 to the political interests of society.' 
 
 But whatever may have been the good or bad effects of the 
 independent provision of the clergy, it has, perhaps, been very 
 seldom bestowed upon them from any view to those effects. Times 
 of violent religious controversy have generally been times of equally 
 violent political faction. Upon such occasions, each political party 
 has either found it, or imagined it, for its interest, to league itself 
 with some one or other of the contending religious sects. But this 
 could be done only by adopting, or at least by favouring, the tenets 
 of that particular sect. The sect which had the good fortune to be 
 leagued with the conquering party necessarily shared in the victory 
 of its ally, by whose favour and protection it was soon enabled in 
 some degree to silence and subdue all its adversaries. Those ad- 
 versaries had generally leagued themselves with the enemies of the 
 conquering party, and were therefore the enemies of that party. 
 The clergy of this particular sect having thus become complete 
 masters of the field, and their influence and authority with the great 
 body of the people being in its highest vigour, they were powerful 
 enough to overawe the chiefs and leaders of their own party, and to 
 oblige the civil magistrate to respect their opinions and inclinations. 
 Their first demand was, generally, that he should silence and subdue 
 all their adversaries ; and their second, that he should bestow an 
 independent provision on themselves. As they had generally con- 
 tributed a good deal to the victory, it seemed not unreasonable that 
 they should have some share in the spoil. They were weary, be- 
 sides, of humouring the people, and of depending upon their caprice 
 for a subsistence. In making this demand, therefore, they consulted
 
 CHAP. i. THE WEALTH OF NATIONS. 377 
 
 their own ease and comfort, without troubling themselves about the 
 effect which it might have in future times upon the influence and 
 authority of their order. The civil magistrate, who could comply 
 with this demand only by giving them something which he would 
 have chosen much rather to take or to keep to himself, was seldom 
 very forward to grant it. Necessity, however, always forced him 
 to submit at last, though frequently not till after many delays, 
 evasions, and affected excuses. 
 
 But if politics had never called in the aid of religion, had the 
 conquering party never adopted the tenets of one sect more than 
 those of another, when it had gained the victory, it would probably 
 have dealt equally and impartially with all the different sects, and 
 have allowed every man to choose his own priest and his own 
 religion as he thought proper. There would in this case, no doubt, 
 have been a great multitude of religious sects. Almost every 
 different congregation might probably have made a little sect by 
 itself, or have entertained some peculiar tenets of its own. Each 
 teacher would no doubt have felt himself under the necessity of 
 making the utmost exertion, and of using every art both to preserve 
 and to increase the number of his disciples. But as every other 
 teacher would have felt himself under the same necessity, the success 
 of no one teacher, or sect of teachers, could have been very great. 
 The interested and active zeal of religious teachers can be dangerous 
 and troublesome only where there is either but one sect tolerated in 
 the society, or where the whole of a large society is divided into 
 two or three great sects, the teachers of each acting by concert, and 
 under a regular discipline and subordination. But that zeal must 
 be altogether innocent where the society is divided into two or three 
 hundred, or perhaps into as many thousand small sects, of which no 
 one could be considerable enough to disturb the public tranquillity. 
 The teachers of each sect, seeing themselves surrounded on all sides 
 with more adversaries than friends, would be obliged to learn that 
 candour and moderation which is so seldom to be found among the 
 teachers of those great sects, whose tenets, being supported by the 
 civil magistrate, are held in veneration by almost all the inhabitants 
 of extensive kingdoms and empires, and who therefore see nothing 
 round them but followers, disciples, and humble admirers. The 
 teachers of each little sect, finding themselves almost alone, would 
 be obliged to respect those of almost every other sect, and the
 
 378 THE NATURE AND CAUSES OF BOOK v. 
 
 concessions which they would mutually find it both convenient and 
 agreeable to make to one another, might in time probably reduce 
 the doctrine of the greater part of them to that pure and rational 
 religion, free from every mixture of absurdity, imposture, or fana- 
 ticism, such as wise men have in all ages of the world wished to see 
 established, but such as positive law has perhaps never yet estab- 
 lished, and probably never will establish in any country ; because, 
 with regard to religion, positive law always has been, and probably 
 always will be, more or less influenced by popular superstition 
 and enthusiasm. This plan of ecclesiastical government, or more 
 properly of no ecclesiastical government, was what the sect called 
 Independents, a sect no doubt of very wild enthusiasts, proposed to 
 establish in England towards the end of the civil war. If it had 
 been established, though of a very unphilosophical origin, it would 
 probably by this time have been productive of the most philo- 
 sophical good temper and moderation with regard to every sort of 
 religious principle. It has been established in Pennsylvania, where, 
 though the Quakers happen to be the most numerous, the law in 
 reality favours no one sect more than another, and it is there said 
 to have been productive of this philosophical good temper and 
 moderation. 1 
 
 But though this equality of treatment should not be productive 
 of this good temper and moderation in all, or even in the greater 
 part of the religious sects of a particular country, yet, provided 
 those sects were sufficiently numerous, and each of them conse- 
 quently too small to disturb the public tranquillity, the excessive 
 zeal of each for its particular tenets could not well be productive of 
 any very hurtful effects, but, on the contrary, of several good ones; 
 and if the government was perfectly decided both to let them all 
 alone, and to oblige them all to let alone one another, there is little 
 danger that they would not of their own accord subdivide them- 
 selves fast enough, so as soon to become sufficiently numerous. 
 
 In every civilised society, in every society where the distinction 
 of ranks has once been completely established, there have been 
 always two different schemes or systems of morality current at the 
 
 1 The beneficent effects of a social sys- century ago. There is, perhaps, no kind 
 
 tern in which the State enforces an abso- of insolence so galling as that which 
 
 lute equality of all religious sects, are as arises from the privileges of a dominant 
 
 characteristic in the United States at Church, none which wise statesmen are 
 
 present as they were in Pennsylvania a more bound to discountenance.
 
 CHAP. i. THE WEALTH OF NATIONS. 379 
 
 same time ; of which, the one may be called the strict or austere, 
 the other the liberal, or, if you will, the loose system. The former 
 is generally admired and revered by the common people ; the latter 
 is commonly more esteemed and adopted by what are called people 
 of fashion. The degree of disapprobation with which we ought to 
 mark the vices of levity the vices which are apt to arise from great 
 prosperity, and from the excess of gaiety and good-humour seems 
 to constitute the principal distinction between those two opposite 
 schemes or systems. In the liberal or loose system, luxury, wanton 
 and even disorderly mirth, the pursuit of pleasure to some degree of 
 intemperance, the breach of chastity, at least in one of the two 
 sexes, &c., provided they are not accompanied with gross indecency 
 and do not lead to falsehood or injustice, are generally treated with 
 a good deal of indulgence, and are easily either excused or pardoned 
 altogether. In the austere system, on the contrary, those excesses 
 are regarded with the utmost abhorrence and detestation. The 
 vices of levity are always ruinous to the common people, and a 
 single week's thoughtlessness and dissipation is often sufficient to 
 undo a poor workman for ever, and to drive him through despair 
 upon committing the most enormous crimes. The wiser and better 
 sort of the common people, therefore, have always the utmost 
 abhorrence and detestation of such excesses, which their experience 
 tells them are so immediately fatal to people of their condition. 
 The disorder and extravagance of several years, on the contrary, will 
 not always ruin a man of fashion, and people of that rank are very 
 apt to consider the power of indulging in some degree of excess as 
 one of the advantages of their fortune, and the liberty of doing so 
 without censure or reproach as one of the privileges which belong 
 to their station. In people of their own station, therefore, they 
 regard such excesses with but a small degree of disapprobation, and 
 censure them either very slightly or not at all. 
 
 Almost all religious sects have begun among the common people, 
 from whom they have generally drawn their earliest, as well as 
 their most numerous proselytes. The austere system of morality 
 has, accordingly, been adopted by those sects almost constantly, or 
 with very few exceptions (for there have been some). It was the 
 system by which they could best recommend themselves to that 
 order of people to whom they first proposed their plan of reforma- 
 tion upon what had been before established. Many of them,
 
 380 THE NATURE AND CAUSES OF BOOK v. 
 
 perhaps the greater part of them, have even endeavoured to gain 
 credit by refining upon this austere system, and by carrying it to 
 some degree of folly and extravagance ; and this excessive rigour 
 has frequently recommended them more than anything else to the 
 respect and veneration of the common people. 
 
 A man of rank and fortune is by his station the distinguished 
 member of a great society, who attend to every part of his conduct, 
 and who thereby oblige him to attend to every part of it himself. 
 His authority and consideration depend very much upon the respect 
 which this society bears to him. He dare not do anything which 
 would disgrace or discredit him in it, and he is obliged to a very 
 strict observation of that species of morals, whether liberal or 
 austere, which the general consent of this society prescribes to 
 persons of his rank and fortune, A man of low condition, on the 
 contrary, is far from being a distinguished member of any great 
 society. While he remains in a country village his conduct may be 
 attended to, and he may be obliged to attend to it himself. In this 
 situation, and in this situation only, he may have what is called a 
 character to lose. But as soon as he comes into a great city, he is 
 sunk in obscurity and darkness. His conduct is observed and 
 attended to by nobody, and he is therefore very likely to neglect it 
 himself, and to abandon himself to every sort of low profligacy and 
 vice. He never emerges so effectually from this obscurity, his 
 conduct never excites so much the attention of any respectable 
 society, as by his becoming the member of a small religious sect. 
 He from that moment acquires a degree of consideration which he 
 never had before. All his brother sectaries are, for the credit of 
 the sect, interested to observe his conduct, and if he gives occasion 
 to any scandal, if he deviates very much from those austere morals 
 which they almost always require of one another, to punish him by 
 what is always a very severe punishment, even where no civil effects 
 attend it, expulsion or excommunication from the sect. In little 
 religious sects, accordingly, the morals of the common people have 
 been almost always remarkably regular and orderly ; generally 
 much more so than in the Established Church. The morals of those 
 little sects, indeed, have frequently been rather disagreeably rigorous 
 and unsocial. 
 
 TKere are two very easy and effectual remedies, however, by 
 whose joint operation the state might, without violence, correct
 
 CHAP. i. THE WEALTH OF NATIONS. 381 
 
 whatever was unsocial or disagreeably rigorous in the morals of all 
 the little sects into which the country was divided. 
 
 The first of those remedies is the study of sciqnce and philosophy, 
 which the state might render almost universal among all people of 
 middling or more than middling rank and fortune ; not by giving 
 salaries to teachers in order to make them negligent and idle, but 
 by instituting some sort of probation, even in the higher and more 
 difficult sciences, to be undergone by every person before he was 
 permitted to exercise any liberal profession, or before he could be 
 received as a candidate for any honourable office of trust or profit. 
 If the state imposed upon this order of men the necessity of learning, 
 it would have no occasion to give itself any trouble about providing 
 them with proper teachers. They would soon find better teachers 
 for themselves than any whom the state could provide for them. 
 Science is the great antidote to the poison of enthusiasm and 
 superstition ; and where all the superior ranks of people were 
 secured from it, the inferior ranks could not be much exposed 
 to it. 
 
 The second of those remedies is the frequency and gaiety of 
 public diversions. The state, by encouraging, that is, by giving 
 entire liberty to all those who for their own interest would attempt, 
 without scandal or indecency, to amuse and divert the people by 
 painting, poetry, music, dancing, by all sorts of dramatic repre- 
 sentations and exhibitions, would easily dissipate, in the greater 
 part of them, that melancholy and gloomy humour which is almost 
 always the nurse of popular superstition and enthusiasm. Public 
 diversions have always been the objects of dread and hatred to all 
 the fanatical promoters of those popular frenzies. The gaiety and 
 good-humour which those diversions inspire were altogether in- 
 consistent with that temper of mind which was fittest for their 
 purpose, or which they could best work upon. Dramatic repre- 
 sentations besides, frequently exposing their artifices to public 
 ridicule, and sometimes even to public execration, were upon that 
 account, more than all other diversions, the objects of their peculiar 
 abhorrence. 
 
 In a country where the law favoured the teachers of no one 
 religion more than those of another, it would not be necessary that 
 any of them should have any particular or immediate dependency 
 upon the sovereign or executive power, or that he should have
 
 382 THE NATURE AND CAUSES OF BOOK v. 
 
 anything to do, either in appointing or in dismissing them from 
 their offices. In such a situation he would have no occasion to 
 give himself any concern about them, further than to keep the 
 peace among them, in the same manner as among the rest of his 
 subjects; that is, to hinder them from persecuting, abusing, or 
 oppressing one another. But it is quite otherwise in countries 
 where there is an established or governing religion. The sovereign 
 can in this case never be secure, unless he has the means of 
 influencing in a considerable degree the greater part of the teachers 
 of that religion. 
 
 The clergy of every established Church constitute a great incor- 
 poration. They can act in concert, and pursue their interest upon 
 one plan and with one spirit, as much as if they were under the 
 direction of one man ; and they are frequently too under such 
 direction. Their interest as an incorporated body is never the same 
 with that of the sovereign, and is sometimes directly opposite to it. 
 Their great interest is to maintain their authority with the people ; 
 and this authority depends upon the supposed certainty and im- 
 portance of the whole doctrine which they inculcate, and upon the sup- 
 posed necessity of adopting every part of it with the most implicit 
 faith, in order to avoid eternal misery. Should the sovereign have 
 the imprudence to appear either to deride or doubt himself of the 
 most trifling part of their doctrine, or from humanity attempt to 
 protect those who did either the one or the other, the punctilious 
 honour of a clergy who have no sort of dependency upon him, is 
 immediately provoked to proscribe him as a profane person, and to 
 employ all the terrors of religion in order to oblige the people to 
 transfer their allegiance to some other orthodox and obedient prince. 
 Should he oppose any of their pretensions or usurpations, the 
 danger is equally great. The princes who have dared in this 
 manner to rebel against the Church, over and above this crime of 
 rebellion, have generally been charged too with the additional crime 
 of heresy, notwithstanding their solemn protestations of their faith 
 and humble submission to every tenet which she thought proper to 
 prescribe to them. But the authority of religion is superior to 
 every other authority. The fears which it suggests conquer all 
 other fears. When the authorised teachers of religion propagate 
 through the great body of the people doctrines subversive of the 
 authority of the sovereign, it is by violence only, or by the force of
 
 CHAP. i. THE WEALTH OF NATIONS. 383 
 
 a standing army, that he can maintain his authority. Even a 
 standing army cannot in this case give him any lasting security ; 
 because if the soldiers are not foreigners, which can seldom be the 
 case, but drawn from the great body of the people, which must 
 almost always be the case, they are likely to be soon corrupted by 
 those very doctrines. The revolutions which the turbulence of the 
 Greek clergy was continually occasioning at Constantinople, as 
 long as the Eastern empire subsisted ; the convulsions which, 
 during the course of several centuries, the turbulence of the Roman 
 clergy was continually occasioning in every part of Europe, suffi- 
 ciently demonstrate how precarious and insecure must always be 
 the situation of the sovereign who has no proper means of in- 
 fluencing the clergy of the established and governing religion of 
 his country. 
 
 Articles of faith, as well as all other spiritual matters, it is 
 evident enough, are not within the proper department of a temporal 
 sovereign, who, though he may be very well qualified for protecting, 
 is seldom supposed to be so for instructing the people. With regard 
 to such matters, therefore, his authority can seldom be sufficient to 
 counterbalance the united authority of the clergy of the Established 
 Church. The public tranquillity, however, and his own security, 
 may frequently depend upon the doctrines which they may think 
 proper to propagate concerning such matters. As he can seldom 
 directly oppose their decision, therefore, with proper weight and 
 authority, it is necessary that he should be able to influence it ; 
 and he can influence it only by the fears and expectations which 
 he may excite in the greater part of the individuals of the 
 order. Those fears and expectations may consist in the fear of de- 
 privation or other punishment, and in the expectation of further 
 preferment. 
 
 In all Christian Churches the benefices of the clergy are a sort of 
 freeholds which they enjoy, not during pleasure, but during life 
 or good behaviour. If they held them by a more precarious tenure, 
 and were liable to be turned out upon every slight disobligation 
 either of the sovereign or his ministers, it would perhaps be im- 
 possible for them to maintain their authority with the people, who 
 would then consider them as mercenary dependants upon the court, 
 in the sincerity of whose instructions they could no longer have 
 any confidence. But should the sovereign attempt irregularly and
 
 384 THE NATURE AND CAUSES OF BOOK v. 
 
 by violence to deprive any number of clergymen of their freeholds 
 on account perhaps of their having propagated, with more than 
 ordinary zeal, some factious or seditious doctrine, he would only 
 render, by such persecution, both them and their doctrine ten times 
 more popular, and therefore ten times more troublesome and 
 dangerous than they had been before. Fear is in almost all cases 
 a wretched instrument of government, and ought in particular 
 never to be employed against any order of men who have the 
 smallest pretensions to independency. To attempt to terrify them, 
 serves only to irritate their bad humour, and to confirm them in an 
 opposition which more gentle usage perhaps might easily induce 
 them either to soften or to lay aside altogether. The violence 
 which the French Government usually employed in order to oblige 
 all their parliaments, or sovereign courts of justice, to enregister 
 any unpopular edict, very seldom succeeded. The means commonly 
 employed, however, the imprisonment of all the refractory members, 
 one would think were forcible enough. The princes of the house 
 of Stewart sometimes employed the like means in order to influence 
 some of the members of the Parliament of England ; and they 
 generally found them equally intractable. The Parliament of 
 England is now managed in another manner ; and a very small 
 experiment which the Duke of Choiseul made about twelve years 
 ago upon the parliament of Paris, demonstrated sufficiently that all 
 the parliaments of France might have been managed still more 
 easily in the same manner. 1 That experiment was not pursued. 
 For though management and persuasion are always the easiest and 
 the safest instruments of government, as force and violence are the 
 worst and the most dangerous, yet such, it seems, is the natural 
 insolence of man, that he almost always disdains to use the 
 good instrument, except when he cannot or dare not use the bad 
 one. The French Government could and durst use force, and there- 
 fore disdained to use management and persuasion. But there is no 
 
 1 Smith refers to the attempt which 'Les parlements,' says Sismondi (vol. 
 
 the Due de Choiaeul made in 1 760 and xvii.), ' par les principes qu'ils profes- 
 
 1761 to associate the parliaments of saient avaient re"ussi a persuader au 
 
 France with his general policy, and in peuple qu'ils e"taient une sorte de repre 1 - 
 
 particular with his attack on the power Mentation nationale. Leurs vues e"troites, 
 
 of the Jesuits. The alliance was tern- leur personnalite", leur ignorance des 
 
 porary only, for these assemblies had principes du gouvernement ne me"ritaient 
 
 little in their constitution to give them guere 1'affection qu'ils avaient inspire'e.' 
 permanent influence with the people.
 
 CHAP. i. THE WEALTH OF NATIONS. 385 
 
 order of men, it appears, I believe, from the experience of all ages, 
 upon whom it is so dangerous, or rather so perfectly ruinous, to 
 employ force and violence, as upon the respected clergy of any 
 established Church. The rights, the privileges, the personal liberty 
 of every individual ecclesiastic, who is upon good terms with his 
 own order, are, even in the most despotic governments, more 
 respected than those of any other person of nearly equal rank and 
 fortune. It is so in every gradation of despotism, from that of the 
 gentle and mild government of Paris, to that of the violent and 
 furious government of Constantinople. But though this order of 
 men can scarce ever be forced, they may be managed as easily 
 as any other ; and the security of the sovereign, as well as the 
 public tranquillity, seems to depend very much upon the means 
 which he has of managing them; and those means seem to 
 consist altogether in the preferment which he has to bestow upon 
 them. 
 
 In the ancient constitution of the Christian Church, the bishop 
 of each diocese was elected by the joint votes of the clergy and of 
 the people of the episcopal city. The people did not long retain 
 their right of election ; and while they did retain it, they almost 
 always acted under the influence of the clergy, who in such spiritual 
 matters appeared to be their natural guides. The clergy, however, 
 soon grew weary of the trouble of managing them, and found it 
 easier to elect their own bishops themselves. The abbot, in the 
 same manner, was elected by the monks of the monastery, at least . 
 in the greater part of abbacies. All the inferior ecclesiastical 
 benefices comprehended within the diocese were collated by the 
 bishop, who bestowed them upon such ecclesiastics as he thought 
 proper. All Church preferments were in this manner in the disposal 
 of the Church. The sovereign, though he might have some indirect 
 influence in those elections, and though it was sometimes usual to 
 ask both his consent to elect and his approbation of the election, 
 yet had no direct or sufficient means of managing the clergy. The 
 ambition of every clergyman naturally led him to pay court, not so 
 much to his sovereign as to his own order, from which only he 
 could expect preferment. 
 
 Through the greater part of Europe the Pope gradually drew to 
 himself first the collation of almost all bishoprics and abbacies, or 
 of what were called consistorial benefices, and afterwards, by 
 
 VOL. II. C C
 
 386 THE NATURE AND CAUSES OF BOOK v. 
 
 various machinations and pretences, of the greater part of inferior 
 benefices comprehended within each diocese ; little more being left 
 to the bishop than what was barely necessary to give him a decent 
 authority with his own clergy. By this arrangement the condition 
 of the sovereign was still worse than it had been before. The clergy 
 of all the different countries of Europe were thus formed into a sort 
 of spiritual army, dispersed in different quarters, indeed, but of 
 which all the movements and operations could now be directed by 
 one head, and conducted upon one uniform plan. The clergy of 
 each particular country might be considered as a particular detach- 
 ment of that army, of which the operations could easily be supported 
 and seconded by all the other detachments quartered in the different 
 countries round about. Each detachment was not only independent 
 of the sovereign of the country in which it was quartered, and by 
 which it was maintained, but dependent upon a foreign sovereign, 
 who could at any time turn its arms against the sovereign of that 
 particular country, and support them by the arms of all the other 
 detachments. 
 
 Those arms were the most formidable that can well be imagined. 
 In the ancient state of Europe, before the establishment of arts and 
 manufactures, the wealth of the clergy gave them the same sort of 
 influence over the common people which that of the great barons 
 gave them over their respective vassals, tenants, and retainers. In 
 the great landed estates, which the mistaken piety both of princes 
 and private persons had bestowed upon the Church, jurisdictions 
 were established of the same kind with those of the great barons ; 
 and for the same reason. In those great landed estates, the clergy, 
 or their bailiffs, could easily keep the peace without the support or 
 assistance either of the king or of any other person; and neither the 
 king nor any other person could keep the peace there without the 
 support and assistance of the clergy. The jurisdictions of the clergy, 
 therefore, in their particular baronies or manors, were equally inde- 
 pendent, and equally exclusive of the authority of the king's courts, 
 as those of the great temporal lords. The tenants of the clergy 
 were, like those of the great barons, almost all tenants at will, 
 entirely dependent upon their immediate lords, and therefore liable 
 to be called out at pleasure, in order to fight in any quarrel in which 
 the clergy might think proper to engage them. Over and above 
 the rents of those estates, the clergy possessed in the tithes a very
 
 CHAP. i. THE WEALTH OF NATIONS. 387 
 
 large portion of the rents of all the other estates in every kingdom 
 of Europe. The revenues arising from both those species of rents 
 were, the greater part of them, paid in kind, in corn, wine, cattle, 
 poultry, &c. The quantity exceeded greatly what the clergy could 
 themselves consume ; and there were neither arts nor manufactures 
 for the produce of which they could exchange the surplus. The 
 clergy could derive advantage from this immense surplus in no other 
 way than by employing it, as the great barons employed the like 
 surplus of their revenues, in the most profuse hospitality, and in the 
 most extensive charity. Both the hospitality and the charity of the 
 ancient clergy, accordingly, are said to have been very great. They 
 not 'only maintained almost the whole poor of every kingdom, but 
 many knights and gentlemen had frequently no other means of 
 subsistence than by travelling about from monastery to monastery, 
 under pretence of devotion, but in reality to enjoy the hospitality of 
 the clergy. The retainers of some particular prelates were often as 
 numerous as those of the greatest lay-lords ; and the retainers of all 
 the clergy taken together were, perhaps, more numerous than those 
 of all the lay-lords. There was always much more union among the 
 clergy than among the lay-lords. The former were under a regular 
 discipline and subordination to the Papal authority ; the latter 
 were under no regular discipline or subordination, but almost always 
 equally jealous of one another, and of the king. Though the tenants 
 and retainers of the clergy, therefore, had both together been less 
 numerous than those of the great lay-lords (and their tenants were 
 probably much less numerous), yet their union would have rendered 
 them more formidable. The hospitality and charity of the clergy 
 too, not only gave them the command of a great temporal force, but 
 increased very much the weight of their spiritual weapons. Those 
 virtues procured them the highest respect and veneration among all 
 the inferior ranks of people, of whom many were constantly, and 
 almost all occasionally, fed by them. Everything belonging or 
 related to so popular an order, its possessions, its privileges, its 
 doctrines, necessarily appeared sacred in the eyes of the common 
 people, and every violation of them, whether real or pretended, the 
 highest act of sacrilegious wickedness and profaneness. In this state 
 of things, if the sovereign frequently found it difficult to resist the 
 confederacy of a few of the great nobility, we cannot wonder that he 
 should find it still more so to resist the united force of the clergy of 
 
 c c 1
 
 388 THE NATURE AND CA USES OF BOOK v. 
 
 his own dominions, supported by that of the clergy of all the neigh- 
 bouring- dominions. In such circumstances the wonder is, not that 
 
 O * 
 
 he was sometimes obliged to yield, but that he ever was able to 
 resist. 
 
 The privileges of the clergy in those ancient times (which to us 
 who live in the present times appear the most absurd), their total 
 exemption from the secular jurisdiction, for example, or what in 
 England was called the benefit of clergy, were the natural, or rather 
 the necessary, consequences of this state of things. How dangerous 
 must it have been for the sovereign to attempt to punish a clergy- 
 man for any crime whatever, if his own order were disposed to pro- 
 tect him, and to represent either the proof as insufficient for 
 convicting so holy a man, or the punishment as too severe to be 
 inflicted upon one whose person had been rendered sacred by reli- 
 gion ! The sovereign could, in such circumstances, do no better 
 than leave him to be tried by the ecclesiastical courts, who, for the 
 honour of their own order, were interested to restrain, as much as 
 possible, every member of it from committing enormous crimes, or 
 even from giving occasion to such gross scandal as might disgust 
 the minds of the people. 
 
 In the state in which things were through the greater part of 
 Europe during the tenth, eleventh, twelfth, and thirteenth centuries, 
 and for some time both before and after that period, the constitution 
 of the Church of Rome may be considered as the most formidable 
 combination that ever was formed against the authority and security 
 of civil government, as well as against the liberty, reason, and 
 happiness of mankind, which can flourish only where civil govern- 
 ment is able to protect them. In that constitution the grossest 
 delusions of superstition were supported in such a manner by the 
 private interests of so great a number of people as put them out of 
 all danger from any assault of human reason ; because though 
 human reason might perhaps have been able to unveil, even to the 
 eyes of the common people, some of the delusions of superstition, it 
 could never have dissolved the ties of private interest. Had this 
 constitution been attacked by no other enemies but the feeble efforts 
 of human reason, it must have endured for ever. But that immense 
 and well-built fabric, which all the wisdom and virtue of man could 
 never have shaken, much less have overturned, was, by the natural 
 course of things, first weakened, and afterwards in part destroyed,
 
 CHAP. i. THE WEALTH OF NATIONS. 389 
 
 and is now likely, in the course of a few centuries more perhaps, to 
 crumble into ruins altogether. 
 
 The gradual improvements of afts, manufactures, and commerce, 
 the same causes which destroyed the power of the great barons, 
 destroyed in the same manner, through the greater part of Europe, 
 the whole temporal power of the clergy. In the produce of arts, 
 manufactures, and commerce, the clergy, like the great barons, 
 found something for which they could exchange their rude produce, 
 and thereby discovered the means of spending their whole revenues 
 upon their own persons, without giving any considerable share of 
 them to other people. Their chanty became gradually less exten- 
 sive, their hospitality less liberal or less profuse. Their retainers 
 became consequently less numerous, and by degrees dwindled away 
 altogether. The clergy too, like the great barons, wished to get 
 a better rent from their landed estates, in order to spend it, in the 
 same manner, upon the gratification of their own private vanity and 
 folly. But this increase of rent could be got only by granting 
 leases to their tenants, who thereby became in a great measure 
 independent of them. The ties of interest, which bound the 
 inferior ranks of people to the clergy, were in this manner gradually 
 broken and dissolved. They were even broken and dissolved sooner 
 than those which bound the same ranks of people to the great barons; 
 because the benefices of the Church being, the greater part of them, 
 much smaller than the estates of the great barons, the possessor of 
 each benefice was much sooner able to spend the whole of its revenue 
 upon his own person. During the greater part of the fourteenth 
 and fifteenth centuries the power of the great barons was, through 
 the greater part of Europe, in full vigour. But the temporal power 
 of the clergy, the absolute command which they once had over 
 the great body of the people, was very much decayed. The power 
 of the Church was by that time very nearly reduced through the 
 greater part of Europe to what arose from her spiritual authority ; 
 and even that spiritual authority was much weakened when it ceased 
 to be supported by the charity and hospitality of the clergy. The 
 inferior ranks of people no longer looked upon that order, as 
 they had done before, as the comforters of their distress and the 
 relievers of their indigence. On the contrary, they were pro- 
 voked and disgusted by the vanity, luxury, and expense of the 
 richer clergy, who appeared to spend upon their own pleasures
 
 390 THE NATURE AND CAUSES OF BOOK v. 
 
 what had always been before regarded as the patrimony of the 
 poor. 1 
 
 In this situation of things, the sovereigns in the different states 
 of Europe endeavoured to recover the influence which they had once 
 had in the disposal of the great benefices of the Church, by pro- 
 curing to the deans and chapters of each diocese the restoration of 
 their ancient right of electing the bishop, and to the monks of each 
 abbacy that of electing the abbot. The re-establishment of this 
 ancient order was the object of several statutes enacted in England 
 during the course of the fourteenth century, particularly of what is 
 called the Statute of Provisors, and of the Pragmatic Sanction estab- 
 lished in France in the fifteenth century. In order to render the 
 election valid, it was necessary that the sovereign should both con- 
 sent to it beforehand, and afterwards approve of the person elected ; 
 and though the election was still supposed to be free, he had, how- 
 ever, all the indirect means which his situation necessarily afforded 
 him, of influencing the clergy in his own dominions. Other regula- 
 tions of a similar tendency were established in other parts of Europe. 
 But the power of the Pope in the collation of the great benefices of 
 the Church seems, before the Reformation, to have been nowhere 
 so effectually and so universally restrained as in France and England. 
 The Concordat afterwards, in the sixteenth century, gave to the 
 kings of France the absolute right of presenting to all the great, or 
 what are called the consistorial benefices of the Gallican Church. 
 
 Since the establishment of the Pragmatic Sanction and of the 
 Concordat, the clergy of France have in general shown less respect 
 to the decrees of the Papal Court than the clergy of any other 
 Catholic country. In all the disputes which their sovereign has 
 had with the Pope, they have almost constantly taken part with 
 the former. This independency of the clergy of France upon the 
 Court of Rome seems to be principally founded upon the Prag- 
 matic Sanction and the Concordat. In the earlier periods of the 
 monarchy, the clergy of France appear to have been as much 
 devoted to the Pope as those of any other country. When Robert, 
 
 1 The clergy in England fell into dis- Reformation to have been the first enemy 
 
 repute with the people at or about the of the Papal power. See the Fasciculus 
 
 time in which society was shaken to its rerum Expetendarum. On him followed 
 
 centre by the great plague of 1348. It Piers Plowman and other satirists. But 
 
 was after this event that Wicklif began if we rely on Gascoigne's work, the lowest 
 
 his attacks on the Church. He was re- degradation of the Church was in the first 
 
 puted by the Roman party at the half of the fifteenth century.
 
 CHAP. i. THE WEALTH OF NATIONS. 391 
 
 the second prince of the Capetian race, was most unjustly excom- 
 municated by the Court of Rome, his own servants, it is said, 
 threw the victuals which came from his table to the dogs, and 
 refused to taste anything themselves which had leen polluted 
 by the contact of a person in his situation. They were taught 
 to do so, it may very safely be presumed, by the clergy of his own 
 dominions. 
 
 The claim of collating to the great benefices of the Church (a 
 claim in defence of which the Court of Rome had frequently shaken 
 and sometimes overturned the thrones of some of the greatest 
 sovereigns in Christendom) was in this manner either restrained 
 or modified, or given up altogether, in many different parts of 
 Europe, even before the time of the Reformation. As the clergy 
 had now less influence over the people, so the State had more 
 influence over the clergy. The clergy therefore had both less 
 power and less inclination to disturb the State. 
 
 The authority of the Church of Rome was in this state of 
 declension when the disputes which gave birth to the Reforma- 
 tion began in Germany, and soon spread themselves through every 
 part of Europe. The new doctrines were everywhere received with 
 a high degree of popular favour. They were propagated with all 
 that enthusiastic zeal which commonly animates the spirit of party 
 when it attacks established authority. The teachers of those doc- 
 trines, though perhaps in other respects not more learned than 
 many of the divines who defended the Established Church, seem in 
 general to have been better acquainted with ecclesiastical history, 
 and with the origin and progress of that system of opinions upon 
 which the authority of the Church was established, and they had 
 thereby some advantage in almost every dispute. The austerity 
 of their manners gave them authority with the common people, 
 who contrasted the strict regularity of their conduct with the 
 disorderly lives of the greater part of their own clergy. They 
 possessed too in a much higher degree than their adversaries all 
 the arts of popularity and of gaining proselytes arts which the 
 lofty and dignified sons of the Church had long neglected, as being 
 to them in a great measure useless. The reason of the new 
 doctrines recommended them to some, their novelty to many ; the 
 hatred and contempt of the established clergy to a still greater 
 number ; but the zealous, passionate and fanatical, though fre-
 
 392 THE NATURE AND CAUSES OF BOOK v. 
 
 quently coarse and rustic eloquence with which they were almost 
 everywhere inculcated, recommended them to by far the greatest 
 number. 
 
 The success of the new doctrines was almost everywhere so 
 great, that the princes who at that time happened to be on bad 
 terms with the Court of Rome, were by means of them easily 
 enabled, in their own dominions, to overturn the Church, which, 
 having lost the respect and veneration of the inferior ranks of 
 people, could make scarce any resistance. The Court of Rome 
 had disobliged some of the smaller princes in the northern parts 
 of Germany, whom it had probably considered as too insignificant 
 to be worth the managing. They universally, therefore, established 
 the Reformation in their own dominions. The tyranny of Christiern 
 II and of Troll, Archbishop of Upsal, enabled Gustavus Vasa to 
 expel them both from Sweden. The Pope favoured the tyrant 
 and the archbishop, and Gustavus Vasa found no difficulty in 
 establishing the Reformation in Sweden. Christiern II was after- 
 wards deposed from the throne of Denmark, where his conduct 
 had rendered him as odious as in Sweden. The Pope, however, 
 was still disposed to favour him, and Frederick of Holstein, who 
 had mounted the throne in his stead, revenged himself by following 
 the example of Gustavus Vasa. The magistrates of Berne and 
 Zurich, who had no particular quarrel with the Pope, established 
 with great ease the Reformation in their respective cantons, where 
 just before some of the clergy had, by an imposture somewhat 
 grosser than ordinary, rendered the whole order both odious and 
 contemptible. 
 
 In this critical situation of its affairs, the Papal Court was at suf- 
 ficient pains to cultivate the friendship of the powerful sovereigns 
 of France and Spain, of whom the latter was at that time emperor 
 of Germany. With their assistance it was enabled, though not 
 without great difficulty and much bloodshed, either to suppress 
 altogether, or to obstruct very much the progress of the Reforma- 
 tion in their dominions. It was well enough inclined too to be 
 complaisant to the King of England ; but from the circumstances 
 of the times, it could not be so without giving offence to a still 
 greater sovereign, Charles V, King of Spain and Emperor of 
 Germany. Henry VIII, accordingly, though he did not embrace 
 himself the greater part of the doctrines of the Reformation, was
 
 CHAP. i. THE WEALTH OF NATIONS. . 393 
 
 yet enabled, by their general prevalence, to suppress all the monas- 
 teries, and to abolish the authority of the Church of Rome in 
 his dominions. That he should go so far, though he went no 
 farther, gave some satisfaction to the patrons of the Reformation, 
 who, having got possession of the government in the reign of 
 his son and successor, completed without any difficulty the work 
 which Henry VIII had begun. 
 
 In some countries, as in Scotland, where the government was 
 weak, unpopular, and not very firmly established, the Reformation 
 was strong enough to overturn, not only the Church, but the 
 State likewise, for attempting to support the Church. 
 
 Among the followers of the Reformation, dispersed in all the 
 different countries of Europe, there was no general tribunal, which, 
 like that of the Court of Rome, or an oecumenical council, could 
 settle all disputes among them, and with irresistible authority 
 prescribe to all of them the precise limits of orthodoxy. When 
 the followers of the Reformation in one country, therefore, happened 
 to differ from their brethren in another, as they had no common 
 judge to appeal to, the dispute could never be decided ; and many 
 such disputes arose among them. Those concerning the govern- 
 ment of the Church, and the right of conferring ecclesiastical 
 benefices, were perhaps the most interesting to the peace and 
 welfare of civil society. They gave birth accordingly to the two 
 principal parties or sects among the followers of the Reforma- 
 tion, the Lutheran and Calvinistic sects, the only sects among 
 them of which the doctrine and discipline have ever yet been 
 established by law in any part of Europe. 
 
 The followers of Luther, together with what is called the Church 
 of England, preserved more or less of the episcopal government, 
 established subordination among the clergy, gave the sovereign 
 the disposal of all the bishoprics and other consistorial benefices 
 within his dominions, and thereby rendered him the real head 
 of the Church ; and without depriving the bishop of the right 
 of collating to the smaller benefices within his diocese, they, even 
 to those benefices, not only admitted, but favoured the right of 
 presentation both in the sovereign and in all other lay patrons. 
 This system of Church government was from the beginning favour- 
 able to peace and good order, and to submission to the civil 
 sovereign. It has never, accordingly, been the occasion of any
 
 394 . THE NATURE AND CAUSES OF BOOK v. 
 
 tumult or civil commotion in any country in which it has once 
 been established. The Church of England in particular has always 
 valued herself, with great reason, upon the unexceptionable loyalty 
 of her principles. Under such a government, the clergy naturally 
 endeavour to recommend themselves to the sovereign, to the 
 court, and to the nobility and gentry of the country, by whose 
 influence they chiefly expect to obtain preferment. They pay 
 court to those patrons, sometimes, no doubt, by the vilest flattery 
 and assentation, but frequently too by cultivating all those arts 
 which best deserve, and which are therefore most likely to gain 
 them, the esteem of people of rank and fortune, by their knowledge 
 in all the different branches of useful and ornamental learning, 
 by the decent liberality of their manners, by the social good-humour 
 of their conversation, and by their avowed contempt of those 
 absurd and hypocritical austerities which fanatics inculcate and 
 pretend to practise, in order to draw upon themselves the venera- 
 tion, and upon the greater part of men of rank and fortune, who 
 avow that they do not practise them, the abhorrence of the common 
 people. Such a clergy, however, while they pay their court in 
 this manner to the higher ranks of life, are very apt to neglect 
 altogether the means of maintaining their influence and authority 
 with the lower. They are listened to, esteemed, and respected by 
 their superiors; but before their inferiors they are frequently 
 incapable of defending, effectually and to the conviction of such 
 hearers, their own sober and moderate doctrines against the most 
 ignorant enthusiast who chooses to attack them. 
 
 The followers of Zuinglius, or more properly those of Calvin, 
 on the contrary, bestowed upon the people of each parish, whenever 
 the church became vacant, the right of electing their own pastor, 
 and established at the same time the most perfect equality among 
 the clergy. The former part of this institution, as long as it 
 remained in vigour, seems to have been productive of nothing 
 but disorder and confusion, and to have tended equally to corrupt 
 the morals both of the clergy and of the people. The latter part 
 seems never to have had any effects but what were perfectly 
 agreeable. 
 
 As long as the people of each parish preserved the right of 
 electing their own pastors, they acted almost always under the 
 influence of the clergy, and generally of the most factious and
 
 CHAP. i. THE WEALTH OF NATIONS. . 395 
 
 fanatical of the order. The clergy, in order to preserve their 
 influence in those popular elections, became, or affected to become, 
 many of them, fanatics themselves, encouraged fanaticism among 
 the people, and gave the preference almost always to the most 
 fanatical candidate. So small a matter as the appointment of a 
 parish priest occasioned almost always a violent contest, not only 
 in one parish, but in all the neighbouring parishes, who seldom 
 failed to take part in the quarrel. When the parish happened 
 to be situated in a great city, it divided all the inhabitants into 
 two parties, and when that city happened either to constitute 
 itself a little republic, or to be the head and capital of a little 
 republic, as is the case with many of the considerable cities in 
 Switzerland and Holland, every paltry dispute of this kind, over 
 and above exasperating the animosity of all their other factions, 
 threatened to leave behind it both a new schism in the Church 
 and a new faction in the State. In those small republics, there- 
 fore, the magistrate very soon found it necessary, for the sake of 
 preserving the public peace, to assume to himself the right of 
 presenting to all vacant benefices. In Scotland, the most ex- 
 tensive country in which this Presbyterian form of Church govern- 
 ment has ever been established, the rights of patronage were in 
 effect abolished by the Act which established Presbytery in the 
 beginning of the reign of William III. That Act at least put 
 it in the power of certain classes of people in each parish to 
 purchase, for a very small price, the right of electing their own 
 pastor. The constitution which this Act established was allowed 
 to subsist for about two-and-twenty years, but was abolished by 
 the loth of Queen Anne, chap. 12, on account of the confusions and 
 disorders which this more popular mode of election had almost every- 
 where occasioned. In so extensive a country as Scotland, however, 
 a tumult in a remote parish was not so likely to give disturbance 
 to Government as in a smaller state. The loth of Queen Anne 
 restored the rights of patronage. But though in Scotland the 
 law gives the benefice without any exception to the person pre- 
 sented by the patron, yet the Church requires sometimes (for she 
 has not in this respect been very uniform in her decisions) a 
 certain concurrence of the people before she will confer upon the 
 presentee what is called the cure of souls, or the ecclesiastical 
 jurisdiction in the parish. She sometimes at least, from an
 
 396 THE NATURE AND CAUSES OF BOOK v. 
 
 affected concern for the peace of the parish, delays the settlement 
 till this concurrence can be procured. The private tampering of 
 some of the neighbouring- clergy, sometimes to procure, but more 
 frequently to prevent this concurrence, and the popular arts which 
 they cultivate in order to enable them upon such occasions to 
 tamper more effectually, are perhaps the causes which principally 
 keep up whatever remains of the old fanatical spirit, either in the 
 clergy or in the people of Scotland. 1 
 
 The equality which the Presbyterian form of Church government 
 establishes among the clergy, consists, first, in the equality of 
 authority or ecclesiastical jurisdiction ; and, secondly, in the equality 
 of benefice. In all Presbyterian Churches the equality of authority 
 is perfect ; that of benefice is not so. The difference, however, 
 between one benefice and another is seldom so considerable as com- 
 monly to tempt the possessor even of the small one to pay court to 
 his patron, by the vile arts of flattery and assentation, in order to 
 get a better. In all the Presbyterian Churches where the rights of 
 patronage are thoroughly established, it is by nobler and better 
 arts that the established clergy in general endeavour to gain the 
 favour of their superiors ; by their learning, by the irreproachable 
 regularity of their life, and by the faithful and diligent discharge of 
 their duty. Their patrons even frequently complain of the inde- 
 pendency of their spirit, which they are apt to construe into in- 
 gratitude for past favours, but which at worst, perhaps, is seldom 
 any more than that indifference which naturally arises from the 
 consciousness that no further favours of the kind are ever to be 
 expected. There is scarce perhaps to be found anywhere in Europe 
 a more learned, decent, independent, and respectable set of men 
 than the greater part of the Presbyterian clergy of Holland, Geneva, 
 Switzerland, and Scotland. 
 
 Where the Church benefices are all nearly equal, none of them 
 can be very great, and this mediocrity of benefice, though it may 
 
 1 The contest between the State and able, both for the liberality with which 
 the Church in Scotland, the former sup- the people have supported it, and for 
 porting, the latter resisting the rights the good sense which has character- 
 of patrons, continued up to 1843, when ised its proceedings. The fact is, in 
 a crisis, immediately provoked by the Smith's day the fanaticism, which was 
 Auchterarder case, occurred, the most bred by the atrocious persecutions in- 
 eminent ministers of the Scotch Estab- stituted by the last two Stuart kings, 
 lishment seceded in a body, and a Free had not subsided, and was kept up by 
 Church was formed. The history of that even the semblance of State control. 
 Free Church has been very remark-
 
 CHAP. i. THE WEALTH OF NATIONS. 397 
 
 no doubt be carried too far, has, however, some very agreeable 
 effects. Nothing but the most exemplary morals can give dignity 
 to a man of small fortune. The vices of levity and vanity neces- 
 sarily render him ridiculous, and are, besides, almost as ruinous to 
 him as they are to the common people. In his own conduct, there- 
 fore, he is obliged to follow that system of morals which the 
 common people respect the most. He gains their esteem and 
 affection by that plan of life which his own interest and situation 
 would lead him to follow. The common people look upon him 
 with that kindness with which we naturally regard one who ap- 
 proaches somewhat to our own condition, but who, we think, ought 
 to be in a higher. Their kindness naturally provokes his kindness. 
 He becomes careful to instruct them, and attentive to assist and 
 relieve them. He does not even despise the prejudices of people 
 who are disposed to be so favourable to him, and never treats them 
 with those contemptuous and arrogant airs which we so often meet 
 with in the proud dignitaries of opulent and well-endowed Churches. 
 The Presbyterian clergy, accordingly, have more influence over the 
 minds of the common people than perhaps the clergy of any other 
 established Church. It is accordingly in Presbyterian countries 
 only that we ever find the common people converted, without per- 
 secution, completely, and almost to a man, to the established 
 Church. 
 
 In countries where Church benefices are the greater part of them 
 very moderate, a chair in a University is generally a better estab- 
 lishment than a Church benefice. The Universities have, in this 
 case, the picking and choosing of their members from all the 
 Churchmen of the country, who, in every country, constitute by 
 far the most numerous class of men of letters. Where Church 
 benefices, on the contrary, are many of them very considerable, the 
 Church naturally draws from the Universities the greater part of 
 their eminent men of letters, who generally find some patron who 
 does himself honour by procuring them Church preferment. In 
 the former situation we are likely to find the Universities filled 
 with the most eminent men of letters that are to be found in the 
 country. In the latter we are likely to find few eminent men 
 among them, and those few among the youngest members of the 
 society, who are likely too to be drained away from it, before they 
 can have acquired experience and knowledge enough to be of much
 
 398 THE NATURE AND CAUSES OF BOOK v. 
 
 use to it. It is observed by M. de Voltaire, that Father Porree, 
 a Jesuit of no great eminence in the republic of letters, was the 
 only professor they had ever had in France whose works were 
 worth the reading. In a country which has produced so many 
 eminent men of letters, it must appear somewhat singular that 
 scarce one of them should have been a professor in a University- 
 The famous Gassendi was, in the beginning of his life, a professor 
 in the University of Aix. Upon the first dawning of his genius, 
 it was represented to him, that by going into the Church he could 
 easily find a much more quiet and comfortable subsistence, as well 
 as a better situation for pursuing his studies ; and he immediately 
 followed the advice. The observation of M. de Voltaire may be 
 applied, I believe, not only to France, but to all other Roman 
 Catholic countries. We very rarely find, in any of them, an 
 eminent man of letters who is a professor in a University, except, 
 perhaps, in the professions of law and physic professions from which 
 the Church is not so likely to draw them. After the Church of 
 Rome, that of England is by far the richest and best endowed 
 Church in Christendom. In England, accordingly, the Church is 
 continually draining the Universities of all their best and ablest 
 members ; and an old college tutor who is known and distinguished 
 in Europe as an eminent man of letters, is as rarely to be found there 
 as in any Roman Catholic country. In Geneva, on the contrary, 
 in the Protestant cantons of Switzerland, in the Protestant coun- 
 tries of Germany, in Holland, in Scotland, in Sweden, and Den- 
 mark, the most eminent men of letters whom those countries have 
 produced, have, not all indeed, but the far greater part of them, 
 been professors in Universities. In those countries the Universities 
 are continually draining the Church of all its most eminent men of 
 letters. 
 
 It may, perhaps, be worth while to remark, that, if we except the 
 poets, a few orators, and a few historians, the far greater part of 
 the other eminent men of letters, both of Greece and Rome, appear 
 to have been either public or private teachers ; generally either of 
 philosophy or of rhetoric. This remark will be found to hold true 
 from the days of Lysias and Isocrates, of Plato and Aristotle, down 
 to those of Plutarch and Epictetus, of Suetonius and Quintilian. 
 To impose upon any man the necessity of teaching year after year 
 any particular branch of science, seems, in reality, to be the most
 
 CHAP. i. THE WEALTH OF NATIONS. 399 
 
 effectual method for rendering- him completely master of it himself. 
 By being- obliged to go every year over the same ground, if he is 
 good for anything, he necessarily becomes in a few years well 
 acquainted with every part of it ; and if upon any particular point 
 he should form too hasty an opinion one year, when he comes in 
 the course of his lectures to reconsider the same subject the year 
 thereafter, he is very likely to correct it. As to be a teacher of 
 science is certainly the natural employment of a mere man of 
 letters, so is it likewise, perhaps, the education which is most likely 
 to render him a man of solid learning and knowledge. The medio- 
 crity of Church benefices naturally tends to draw the greater part 
 of men of letters, in the country where it takes place, to the 
 employment in which they can be most useful to the public, and, 
 at the same time, to give them the best education, perhaps, they 
 are capable of receiving. It tends to render their learning both as 
 solid as possible and as useful as possible. 
 
 The revenue of every established Church, such parts of it ex- 
 cepted as may arise from particular lands or manors, is a branch, it 
 ought to be observed, of the general revenue of the State, which is 
 thus diverted to a purpose very different from the defence of the 
 State. The tithe, for example, is a real land-tax, which puts it 
 out of the power of the proprietors of land to contribute so largely 
 towards the defence of the State as they otherwise might be able to 
 do. The rent of land, however, is, according to some, the sole 
 fund, and according to others the principal fund from which, in all 
 great monarchies, the exigencies of the State must be ultimately 
 supplied. The more of this fund that is given to the Church, the 
 less, it is evident, can be spared to the State. It may be laid down 
 as a certain maxim, that, all other things being supposed equal, the 
 richer the Church, the poorer must necessarily be either the sove- 
 reign on the one hand, or the people on the other ; and, in all cases, 
 the less able must the State be to defend itself. In several Pro- 
 testant countries, particularly in all the Protestant cantons of 
 Switzerland, the revenue which anciently belonged to the Roman 
 Catholic Church, the tithes and Church lands, has been found a 
 fund sufficient not only to afford competent salaries to the estab- 
 lished clergy, but to defray, with little or no addition, all the other 
 expenses of the State. The magistrates of the powerful canton of 
 Berne in particular, have accumulated out of the savings from this
 
 400 THE NATURE AND CAUSES OF BOOK v. 
 
 fund a very large sum, supposed to amount to several millions, part 
 of which is deposited in a public treasury, and part is placed at 
 interest in what are called the public funds of the different indebted 
 nations of Europe, chiefly in those of France and Great Britain. 
 What may be the amount of the whole expense which the Church, 
 either of Berne or of any other Protestant canton, costs the State, 
 I do not pretend to know. By a very exact account, it appears 
 that in 1755, the whole revenue of the clergy of the Church of 
 Scotland, including their glebe or church lands, and the rent of 
 their manses or dwelling-houses, estimated according to a reasonable 
 valuation, amounted only to 68,514 is. 5rV^ This very mode- 
 rate revenue affords a decent subsistence to nine hundred and forty- 
 four ministers. The whole expense of the Church, including what 
 is occasionally laid out for the building and reparation of churches 
 and of the manses of ministers, cannot well be supposed to exceed 
 eighty or eighty-five thousand pounds a-year. The most opulent 
 Church in Christendom does not maintain better the uniformity of 
 faith, the fervour of devotion, the spirit of order, regularity, and 
 austere morals in the great body of the people, than this very 
 poorly-endowed Church of Scotland. All the good effects, both 
 civil and religious, which an established Church can be supposed to 
 produce, are produced by it as completely as by any other. The 
 greater part of the Protestant Churches of Switzerland, which in 
 general are not better endowed than the Church of Scotland, pro- 
 duce those effects in a still higher degree. In the greater part of 
 the Protestant cantons, there is not a single person to be found 
 who does not profess himself to be of the established Church. If 
 he professes himself to be of any other, indeed, the law obliges him 
 to leave the canton. But so severe, or rather indeed so oppressive 
 a law, could never have been executed in such free countries, had 
 not the diligence of the clergy beforehand converted to the estab- 
 lished Church the whole body of the people, with the exception of, 
 perhaps, a few individuals only. In some parts of Switzerland, 
 accordingly, where, from the accidental union of a Protestant and 
 Roman Catholic country, the conversion has not been so complete, 
 both religions are not only tolerated but established by law. 
 
 The proper performance of every service seems to require that its 
 pay or recompense should be, as exactly as possible, proportioned 
 to the nature of the service. If any service is very much under-
 
 CHAP. i. THE WEALTH OF NATIONS. 401 
 
 paid, it is very apt to suffer by the meanness and incapacity of the 
 greater part of those who are employed in it. If it is very much 
 overpaid, it is apt to suffer, perhaps, still more by their negligence 
 and idleness. A man of a large revenue, whatever may be his 
 profession, thinks he ought to live like other men of large revenues, 
 and to spend a great part of his time in festivity, in vanity, and in 
 dissipation. But in a clergyman this train of life not only con- 
 sumes the time which ought to be employed in the duties of his 
 function, but in the eyes of the common people destroys almost 
 entirely that sanctity of character which can alone enable him to 
 perform those duties with proper weight and authority. 
 
 PART IV. 
 
 Of the Expense of supporting the Dignity of the Sovereign. 
 
 OVER and above the expense necessary for enabling the sovereign 
 to perform his several duties, a certain expense is requisite for the 
 support of his dignity. This expense varies both with the different 
 periods of improvement, and with the different forms of govern- 
 ment. 
 
 In an opulent and improved society, where all the different orders 
 of people are growing every day more expensive in their houses, 
 in their furniture, in their tables, in their dress, and in their 
 equipage, it cannot well be expected that the sovereign should 
 alone hold out against the fashion. He naturally therefore, or 
 rather necessarily, becomes more expensive in all those different 
 articles too. His dignity even seems to require that he should 
 become so. 
 
 As, in point of dignity, a monarch is more raised above his 
 subjects than the chief magistrate of "any republic is ever supposed 
 to be above his fellow-citizens, so a greater expense is necessary 
 for supporting that higher dignity. We naturally expect more 
 splendour in the court of a king than in the mansion-house of a doge 
 or burgomaster. 
 
 CONCLUSION. 
 
 The expense of defending the society, and that of supporting the 
 dignity of the chief magistrate, are both laid out for the general 
 
 VOL. II. D d
 
 402 THE NATURE AND CAUSES OF BOOK v. 
 
 benefit of the whole society. It is reasonable, therefore, that they 
 should be defrayed by the general contribution of the whole society, 
 all the different members contributing, as nearly as possible, in 
 proportion to their respective abilities. 
 
 The expense of the administration of justice too, may, no doubt, 
 be considered as laid out for the benefit of the whole society. 
 There is no impropriety, therefore, in its being defrayed by the 
 general contribution of the whole society. The persons, however, 
 who give occasion to this expense are those who, by their injustice 
 in one way or another, make it necessary to seek redress or pro- 
 tection from the courts of justice. The persons again most imme- 
 diately benefited by this expense, are those whom the courts of 
 justice either restore to their rights, or maintain in their rights. 
 The expense of the administration of justice, therefore, may very 
 properly be defrayed by the particular contribution of one or other, 
 or both of those two different sets of persons, according as different 
 occasions may require, that is, by the fees of court. It cannot be 
 necessary to have recourse to the general contribution of the whole 
 society, except for the conviction of those criminals who have not 
 themselves any estate or fund sufficient for paying those fees. 1 
 
 Those local or provincial expenses of which the benefit is local 
 or provincial (what is laid out, for example, upon the police of a 
 particular town or district) ought to be defrayed by a local or 
 provincial revenue, and ought to be no burden upon the general 
 revenue of the society. It is unjust that the whole society should 
 contribute towards an expense of which the benefit is confined to a 
 part of the society. 2 
 
 1 But, on the other hand, as Bentham curred in the administration of justice 
 
 argued, the very fact that a man is con- were put on the community, that the ex- 
 
 strained to vindicate a right in a court travagant cost of legal proceedings would 
 
 of justice, is a proof that society, as far at become matter of public animadversion, 
 least as he is concerned, has failed to 2 The truth of this rule is indisputable, 
 
 accord him that security which society is But if it be true, its application must be 
 
 primarily constituted to guarantee, what- extended. Not only should local charges 
 
 ever else it may be bound to do. Besides, be borne by the locality which is bene- 
 
 it is plain that in many private wrongs fited, or made liable to special charges, 
 
 law ignores, or scantily recompenses, the but those persons within the locality 
 
 injury inflicted on the individual, and who are benefited by local expenditure, 
 
 considers only the detriment which society because the effect of such expenditure 
 
 has taken by the commission of crime. aids them in obtaining their revenue, 
 
 In these cases then at least, the indi- should on equitable principles defray the 
 
 vidual should have justice done him at charge. Now this is notoriously the case 
 
 the general expense of the public ; and with the maintenance of the poor, in a 
 
 it is probable, if more of the charges in- very great degree, and with the con-
 
 CHAP. i. THE WEALTH OF NATIONS. 403 
 
 The expense of maintaining- good roads and communications is, 
 no doubt, beneficial to the whole society, and may therefore,, 
 without any injustice, be defrayed by the general contribution of 
 the whole society. This expense, however, is most immediately 
 and directly beneficial to those who travel or carry goods from one 
 place to another, and to those who consume such goods. The turn- 
 pike tolls in England, and the duties called peages in other countries, 
 lay it altogether upon those two different sets of people, and thereby 
 discharge the general revenue of the society from a very considerable 
 burden. 
 
 The expense of the institutions for education and religious in- 
 struction is likewise, no doubt, beneficial to the whole society, and 
 may therefore, without injustice, be defrayed by the general con- 
 tribution of the whole society. This expense, however, might 
 perhaps with equal propriety, and even with some advantage, be 
 defrayed altogether by those who receive the immediate benefit of 
 such education and instruction, or by the voluntary contribution of 
 those who think they have occasion for either the one or the 
 other. 
 
 When the institutions or public works which are beneficial to 
 the whole society, either cannot be maintained altogether, or are 
 not maintained altogether by the contribution of such particular 
 members of the society as are most immediately benefited by them, 
 the deficiency must in most cases be made up by the general con- 
 tribution of the whole society. The general revenue of the society, 
 over and above defraying the expense of defending the society, and 
 of supporting the dignity of the chief magistrate, must make up 
 for the deficiency of many particular branches of revenue. The 
 sources of this general or public revenue I shall endeavour to 
 explain in the following chapter. 
 
 struction and repair of roads absolutely. contingencies, while the repair of roads 
 But the maintenance of the sick and in the country is continually thrust on 
 infirm poor is constantly put on those the inhabitants of towns, who repair 
 who do not use labour productively, and their own roads at their own charges, and 
 who are nevertheless made to insure such are as far as possible garrisoned by toll- 
 labour against its natural or adventitious gates. 
 
 D d Z
 
 404 THE NATURE AND CAUSES OF BOOK v. 
 
 CHAPTER H. 
 
 OF THE SOUBCES OF THE GENEEA.L OR PUBLIC REVENUE OF THE 
 
 SOCIETY. 
 
 THE revenue which must defray, not only the expense of 
 defending the society and of supporting the dignity of the 
 chief magistrate, but all the other necessary expenses of govern- 
 ment, for which the constitution of the state has not provided any 
 particular revenue, may be drawn, either, first, from some fund 
 which peculiarly belongs to the sovereign or commonwealth, and 
 which is independent of the revenue of the people ; or, secondly, 
 from the revenue of the people. 
 
 PART I. 
 
 Of the Funds or Sources of Revenue which may peculiarly belong to 
 the Sovereign or Commonwealth. 
 
 THE funds or sources of revenue which may peculiarly belong to 
 the sovereign or commonwealth must consist, either in stock, or in 
 land. 
 
 The sovereign, like any other owner of stock, may derive a 
 revenue from it, either by employing it himself, or by lending it. 
 His revenue is in the one case profit, in the other interest. 
 
 The revenue of a Tartar or Arabian chief consists in profit. It 
 arises principally from the milk and increase of his own herds and 
 flocks, of which he himself superintends the management, and is 
 the principal shepherd or herdsman of his own horde or tribe. 
 It is, however, in this earliest and rudest state of civil government 
 only ihat profit has ever made the principal part of the public 
 revenue of a monarchical state. 
 
 Small republics have sometimes derived a considerable revenue 
 from the profit of mercantile projects. The republic of Hamburg 
 is said to do so from the profits of a public wine-cellar and 
 apothecary's shop.* The state cannot be very great of which the 
 
 * See Me'moires concernant les Droits the Court for the use of a commission 
 et Impositions en Europe, tome i. p. 73. employed for some years past in consider- 
 This work was compiled by the order of ing the proper means for reforming the
 
 CHAP. ii. THE WEALTH OF NATIONS. 405 
 
 sovereign has leisure to carry on the trade of a wine-merchant or 
 apothecary. The profit of a public bank has been a source of 
 revenue to more considerable states. It has been so not only to 
 Hamburg, but to Venice and Amsterdam. A revenue of this 
 kind has even by some people been thought not below the attention 
 of so great an empire as that of Great Britain. Reckoning- the 
 ordinary dividend of the Bank of England at five and a half per 
 cent., and its capital at ten millions seven hundred and eighty 
 thousand pounds, the net annual profit, after paying the expense 
 of management, must amount, it is said, to five hundred and ninety- 
 two thousand nine hundred pounds. Government, it is- pretended, 
 could borrow this capital at three per cent, interest, and, by taking 
 the management of the bank into its own hands, might make a 
 clear profit of two hundred and sixty-nine thousand five hundred 
 pounds a year. The orderly, vigilant, and parsimonious adminis- 
 tration of such aristocracies as those of Venice and Amsterdam, is 
 extremely proper, it appears from experience, for the management 
 of a mercantile project of this kind. But whether such a Govern- 
 ment as that of England, which, whatever may be its virtues, 
 has never been famous for good economy which, in time of peace, 
 has generally conducted itself with the slothful and negligent 
 profusion that is perhaps natural to monarchies, and in time of 
 war has constantly acted with all the thoughtless extravagance that 
 democracies are apt to fall into could be safely trusted with the 
 management of such a project, must at least be a good deal more 
 doubtful. 
 
 The Post-office is properly a mercantile project. The Government 
 advances the expense of establishing the different offices, and of 
 buying or hiring the necessary horses or carriages, and is repaid 
 with a large profit by the duties upon what is carried. It is 
 perhaps the only mercantile project which has been successfully 
 managed by, I believe, every sort of Government. The capital to 
 be advanced is not very considerable. There is no mystery in the 
 business. The returns are not only certain, but immediate. 1 
 
 finances of France. The account of the procure. It is much shorter, and pro- 
 French taxes, which takes up three bably not quite so exact as that of the 
 volumes in quarto, may be regarded as French taxes. 
 
 perfectly authentic. That of those of * The exact, successful, and profitable 
 
 other European nations was compiled management of a Post-office by the 
 
 from such informations as the French Government, is due to the fact that the 
 
 ministers at the different courts could public being interested to the same ex-
 
 406 THE NATURE AND CAUSES OF BOOK v. 
 
 Princes, however, have frequently engaged in many other mer- 
 cantile projects, and have been willing, like private persons, to 
 mend their fortunes by becoming adventurers in the common 
 branches of trade. They have scarce ever succeeded. The profusion 
 with which the affairs of princes are always managed, renders it 
 almost impossible that they should. The agents of a prince regard 
 the wealth of their master as inexhaustible ; are careless at what 
 price they buy; are careless at what price they sell ; are careless 
 at what expense they transport his goods from one place to another. 
 Those agents frequently live with the profusion of princes, and 
 sometimes too, in spite of that profusion, and by a proper method 
 of making up their accounts, acquire the fortunes of princes. It 
 was thus, as we are told by Machiavel, 1 that the agents of Lorenzo 
 of Medicis, not a prince of mean abilities, carried on his trade. The 
 republic of Florence was several times obliged to pay the debt into 
 which their extravagance had involved him. He found it con- 
 venient, accordingly, to give up the business of merchant, the 
 business to which his family had originally owed their fortune, and 
 in the latter part of his life to employ both what remained of that 
 fortune, and the revenue of the state of which he had the disposal, 
 in projects and expenses more suitable to his station. 
 
 No two characters seem more inconsistent than those of trader 
 and sovereign. If the trading spirit of the English East India 
 Company renders them very bad sovereigns, the spirit of sovereignty 
 seems to have rendered them equally bad traders. While they were 
 traders only, they managed their trade successfully, and were able 
 to pay from their profits a moderate dividend to the proprietors of 
 their stock. Since they became sovereigns, with a revenue which, 
 it is said, was originally more than three millions sterling, they 
 have been obliged to beg the extraordinary assistance of Govern- 
 
 tent with the Government in the proper revenue should suffer. The public in- 
 
 adminibtration of the office, can act, sists that a public service should not be 
 
 and will act, with great vigilance on considered as a mere means for making a 
 
 the Post-office officials. The motive of revenue, for in this case legitimate profit 
 
 the Government is the enlargement of becomes sheer taxation, and taxation of 
 
 its revenue frcm the Post; that of the an invidious and differential kind. Be- 
 
 public is the regular, frequent, and punc- sides, it argues that cheap communication 
 
 tual distribution of its correspondence. is likely to swell the gross profits of the 
 
 There is and has been only one difference Post-office, by the increased use of the 
 
 between the Government and the public convenience. And the public is in the 
 
 as regards this branch of administrative right, 
 business. The Government is afraid of * 1st. Fior. lib. viii. 
 cheapening the means of transit, leat the
 
 CHAP. ii. THE WEALTH OF NATIONS. 407 
 
 ment in order to avoid immediate bankruptcy. la their former 
 situation, their servants in India considered themselves as the clerks 
 of merchants; in their present situation, those servants consider 
 themselves as the ministers of sovereigns. 
 
 A state may sometimes derive some part of its public revenue 
 from the interest of money, as well as from the profits of stock. If 
 it has amassed a treasure, it may lend a part of that treasure, either 
 to foreign states or to its own subjects. 
 
 The canton of Berne derives a considerable revenue by lending a 
 part of its treasure to foreign states; that is, by placing it in the 
 public funds of the different indebted nations of Europe, chiefly in 
 those of France and England. The security of this revenue must 
 depend, first, upon the security of the funds in which it is placed, 
 or upon the good faith of the Government which has the manage- 
 ment of them ; and, secondly, upon the certainty or probability of 
 the continuance of peace with the debtor nation. In the case of a 
 war, the very first act of hostility, on the part of the debtor nation, 
 might be the forfeiture of the funds of its creditor. This policy of 
 lending money to foreign states is, so far as I know, peculiar to the 
 canton of Berne. 
 
 The city of Hamburg* has established a sort of public pawn-shop, 
 which lends money to the subjects of the state upon pledges at six 
 per cent, interest. This pawn-shop, or Lombard, as it is called, 
 affords a revenue, it is pretended, to the state of a hundred and fifty 
 thousand crowns, which, at four-and-sixpence the crown, amounts to 
 <^33>75 sterling. 
 
 The Government of Pennsylvania, without amassing any treasure, 
 invented a method of lending, not money indeed, but what is 
 equivalent to money, to its subjects. By advancing to private 
 people, at interest, and upon land security to double the value, 
 paper bills of credit to be redeemed fifteen years after their date, 
 and in the meantime made transferable from hand to hand like 
 bank notes, and declared by act of assembly to be a legal tender in 
 all payments from one inhabitant of the province to another, it 
 raised a moderate revenue, which went a considerable way towards 
 defraying an annual expense of about ^4,500, the whole ordinary 
 expense of that frugal and orderly government. The success of an 
 expedient of this kind must have depended upon three different 
 
 * See M&noires concernant les Droits et Impositions en Europe, tome i. p. 73.
 
 408 THE NATURE AND CAUSES OF BOOK T. 
 
 circumstances : first, upon the demand for some other instrument of 
 commerce, besides gold and silver money, or upon the demand for 
 such a quantity of consumable stock as could not be had without 
 sending abroad the greater part of their gold and silver money, in 
 order to purchase it ; secondly, upon the good credit of the Govern- 
 ment which made use of this expedient ; and, thirdly, upon the 
 moderation with which it was used, the whole value of the paper 
 bills of credit never exceeding that of the gold and silver money 
 which would have been necessary for carrying on their circulation, 
 had there been no paper bills of credit. 1 The same expedient was 
 upon different occasions adopted by several other American colonies ; 
 but, from want of this moderation, it produced, in the greater part 
 of them, much more disorder than conveniency. 
 
 The unstable and perishable nature of stock and credit, however, 
 render them unfit to be trusted to, as the principal funds of that 
 sure, steady, and permanent revenue which can alone give security 
 and dignity to government. The government of no great nation, 
 that was advanced beyond the shepherd state, seems ever to have 
 derived the greater part of its public revenue from such sources. 
 
 Land is a fund of a more stable and permanent nature ; and the 
 rent of public lands, accordingly, has been the principal source of 
 the public revenue of many a great nation that was much advanced 
 beyond the shepherd state. From the produce or rent of the public 
 lands, the ancient republics of Greece and Italy derived, for a long 
 time, the greater part of that revenue which defrayed the necessary 
 expenses of the commonwealth. The rent of the Crown lands con- 
 stituted for a long time the greater part of the revenue of the 
 ancient sovereigns of Europe. 
 
 War, and the preparation for war, are the two circumstances 
 
 1 The states constituting the American found than that which conceives a govern- 
 
 Union, in their individual capacity, and ment to be possessed by some inherent 
 
 the Union itself in its capacity as the force of its own, by which it can exercise 
 
 aggregate power of the Federation, have the power of issuing a paper currency, 
 
 constantly adopted the expedient which and can maintain it at full credit. For- 
 
 is referred to in the text, without, how- tunately we have passed through this 
 
 ever, providing the cautions which the phase of economical delusion, have learnt 
 
 text asserts to govern the limit of such the impolicy of a discretionary issue of 
 
 a paper currency. The consequence, from legal tender, inconvertible paper, and can 
 
 time to time, has been the creation of a therefore turn a deaf ear to the most 
 
 public debt in the most expensive form, plausible theories of currency quacks, as 
 
 and the circulation of a paper currency mathematicians do to tho^e who profess 
 
 which it has been exceedingly difficult to to square the circle, and mechanicians to 
 
 liquidate. But it seems that no more those who assert that they have discovered 
 
 inveterate and recurrent fallacy can be perpetual motion.
 
 CHAP. ii. THE WEALTH OF NATIONS. 409 
 
 which in modern times occasion the greater part of the necessary 
 expense of all great states. But in the ancient republics of Greece 
 and Italy every citizen was a soldier, who both served and prepared 
 himself for service at his own expense. Neither of those two 
 circumstances, therefore, could occasion any very considerable ex- 
 pense to the state. The rent of a very moderate landed estate might 
 be fully sufficient for defraying all the other necessary expenses of 
 government. 
 
 In the ancient monarchies of Europe, the manners and customs of 
 the times sufficiently prepared the great body of the people for war ; 
 and when they took the field, they were, by the condition of their 
 feudal tenures, to be maintained, either at their own expense, or at 
 that of their immediate lords, without bringing any new charge 
 upon the sovereign. The other expenses of government were, the 
 greater part of them, very moderate. The administration of justice, 
 it has been shown, instead of being a cause of expense, was a source 
 of revenue. The labour of the country people, for three days before 
 and for three days after harvest, was thought a fund sufficient for 
 making and maintaining all the bridges, highways, and other 
 public works which the commerce of the country was supposed to 
 require. In those days the principal expense of the sovereign seems 
 to have consisted in the maintenance of his own family and house- 
 hold. The officers of his household, accordingly, were then the 
 great officers of state. The lord treasurer received his rents. The 
 lord steward and lord chamberlain looked after the expense of his 
 family. The care of his stables was committed to the lord con- 
 stable and the lord marshal. His houses were all built in the form 
 of castles, and seem to have been the principal fortresses which he 
 possessed. The keepers of those houses or castles might be con- 
 sidered as a sort of military governors. They seem to have been 
 the only mititary officers whom it was necessary to maintain in 
 time of peace. 1 In these circumstances, the rent of a great landed 
 
 1 In the middle ages, the ordinary ex- writs), consuming the produce which had 
 
 penses of the Crown were defrayed from been stored up by his bailiffs against his 
 
 the rents and profits of the Crown estates, coming, or had been purchased by his 
 
 and from those incidental sources of re- purveyors. After the great plague, when, 
 
 venue which were contained in the inci- owing to the increased cost of labour, 
 
 dents of feudal times. The king, like bailiff cultivation ceased to be so profitable, 
 
 other feudal proprietors, journeyed from the Crown let its estates, and received 
 
 castle to castle, from manor to manor its rents in money. Under these cir- 
 
 (we can trace his journeys in the records cumstances, the habit of migration be- 
 
 coutained in the Fcedera, and in other came much less frequent.
 
 410 THE NATURE AND CAUSES OF BOOK v. 
 
 estate might, upon ordinary occasions, very well defray all the 
 necessary expenses of government. 
 
 In the present state of the greater part of the civilised monarchies 
 of Europe, the rent of all the lands in the country, managed as they 
 probably would be if they all belonged to one proprietor, would 
 scarce perhaps amount to the ordinary revenue which they levy 
 upon the people even in peaceable times. The ordinary revenue of 
 Great Britain, for example, including not only what is necessary 
 for defraying the current expense of the year, but for paying the 
 interest of the public debts, and for sinking a part of the capital of 
 those debts, amounts to upwards of ten millions a year. But the 
 land-tax, at four shillings in the pound, falls short of two millions 
 a year. This land-tax, as it is called, however, is supposed to be 
 one fifth, not only of the rent of all the land, but of that of all the 
 houses, and of the interest of all the capital stock of Great Britain, 
 that part of it only excepted which is either lent to the public, or 
 employed as farming stock in the cultivation of land. 1 A very 
 considerable part of the produce of this tax arises from the rent of 
 houses and the interest of capital stock. The land-tax of the city 
 of London, for example, at four shillings in the pound, amounts to 
 j J i23,399 6*. *jd. ; that of the city of Westminster, to ^63,092 
 i*. 5</. ; that of the palaces of Whitehall and St. James's, to 
 j > 3O,754 6s. $d. A certain proportion of the land-tax is in the 
 same manner assessed upon all the other cities and towns corporate 
 in the kingdom, and arises almost altogether, either from the rent 
 of houses or from what is supposed to be the interest of trading 
 and capital stock. According to the estimation, therefore, by which 
 Great Britain is rated to the land tax, the whole mass of revenue 
 arising from the rent of all the lands, from that of all the houses, 
 and from the interest of all the capital stock, that part of it only 
 excepted which is either lent to the public or employed in the 
 cultivation of land, does not exceed ten millions sterling a year, the 
 
 1 The assessment to the land-tax was that corn was extraordinarily cheap; 
 
 made at the conclusion of the I7th cen- that rents rose enormously; and that, 
 
 tury, and no fresh assessment has been nevertheless, considerable quantities of 
 
 made since. It therefore did not repre- corn grown in England and Wales were 
 
 sent in Smith's time any such proportion exported, are proofs, if any are needed, 
 
 to the annual rent of land as he assumes, of how utterly unfounded was the state- 
 
 and its present proportion is immeasur- ment that in any 'particular county or 
 
 ably less real. The facts that the popula- district' the rate at which the land-tax 
 
 lation of England and Wales doubled was assessed was ' nearly equal to the 
 
 between 1 700 and 1 750, or nearly so ; value ' of the land.
 
 CHAP. IT. THE WE A L TH OF NA TIONS. 4 1 1 
 
 ordinary revenue which Government levies upon the people even in 
 peaceable times. The estimation by which Great Britain is rated 
 to the land-tax is, no doubt, taking- the whole kingdom at an 
 average, very much below the real value ; though in several par- 
 ticular counties and districts it is said to be nearly equal to that 
 value. The rent of the lands alone, exclusive of that of houses, 
 and of the interest of stock, has by many people been estimated at 
 twenty millions; an estimation made in a great measure at random, 
 and which, I apprehend, is as likely to be above as below the truth. 
 But if the lands of Great Britain, in the present state of their 
 cultivation, do not afford a rent of more than twenty millions a 
 year, they could not well afford the half, most probably not the 
 fourth part of that rent, if they all belonged to a single proprietor, 
 and were put under the negligent, expensive, and oppressive 
 management of his factors and agents. The Crown lands of Great 
 Britain do not at present afford the fourth part of the rent which 
 could probably be drawn from them, if they were the property of 
 private persons. If the Crown lands were more extensive, it is 
 probable they would be still worse managed. 
 
 The revenue which the great body of the people derives from 
 land is in proportion, not to the rent, but to the produce of the 
 land. The whole annual produce of the land of every country, if 
 we except what is reserved for seed, is either annually consumed by 
 the great body of the people, or exchanged for something else that 
 is consumed by them. Whatever keeps down the produce of the 
 laud below what it would otherwise rise to, keeps down the revenue 
 of the great body of the people still more than it does that of the 
 proprietors of land. The rent of land, that portion of the produce 
 which belongs to the proprietors, is scarce anywhere in Great 
 Britain supposed to be more than a third part of the whole produce. 
 If the land, which in one state of cultivation affords a rent of ten 
 millions sterling a year, would in another afford a rent of twenty 
 millions, the rent being, in both cases, supposed a third part of the 
 produce, the revenue of the proprietors would be less than it other- 
 wise might be by ten millions a year only, but the revenue of the 
 great body of the people would be less than it otherwise might be 
 by thirty millions a year, deducting only what would be necessary 
 for seed. The population of the country would be less by the 
 number of people which thirty millions a year, deducting always
 
 412 THE NATURE AND CAUSES OF HOOK v. 
 
 the seed, could maintain, according to the particular mode of living 
 and expense which might take place in the different ranks of men 
 among whom the remainder was distributed. 
 
 Though there is not at present, in Europe, any civilised state of 
 any kind which derives the greater part of its public revenue from 
 the rent of lands which are the property of the state, yet, in all the 
 great monarchies of Europe, there are still many large tracts of 
 land which belong to the Crown. They are generally forest ; and 
 sometimes forest where, after travelling several miles, you will 
 scarce find a single tree ; a mere waste and loss of country in 
 respect both of produce and population. In every great monarchy 
 of Europe the sale of the Crown lands would produce a very large 
 sum of money, which, if applied to the payment of the public debts, 
 would deliver from mortgage a much greater revenue than any 
 which those lands have ever afforded to the Crown. In countries 
 where lands, improved and cultivated very highly, and yielding at 
 the time of sale as great a rent as can easily be got from them, 
 commonly sell at thirty years' purchase ; the unimproved, uncult- 
 vated, and low-rented Crown lands might well be expected to sell at 
 forty, fifty, or sixty years' purchase. The Crown might imme- 
 diately enjoy the revenue which this great price would redeem from 
 mortgage. In the course of a few years it would probably enjoy 
 another revenue. When the Crown lands had become private 
 property, they would, in the course of a few years, become well- 
 improved and well-cultivated. The increase of their produce would 
 increase the population of the country, by augmenting the revenue 
 and consumption of the people. But the revenue which the Crown 
 derives from the duties of customs and excise would necessarily 
 increase with the revenue and consumption of the people. 
 
 The revenue which, in any civilised monarchy, the Crown derives 
 from the Crown lands, though it appears to cost nothing to indi- 
 viduals, in reality costs more to the society than perhaps any other 
 equal revenue which the Crown enjoys. It would, in all cases, be 
 for the interest of the society to replace this revenue to the Crown 
 by some other equal revenue, and to divide the lands among the 
 people, which could not well be done better, perhaps, than by 
 exposing them to public sale. 1 
 
 1 The income which the Crown derived has been commuted for a fixed annual 
 from the estates vested in that dignity sum paid to the monarch, and the man-
 
 CHAP. ii. THE WEALTH OF NATIONS. 413 
 
 Lands for the purposes of pleasure and magnificence, parks, gardens, 
 public walks, &c., possessions which are everywhere considered as 
 causes of expense, not as sources of revenue, seem to be the only 
 lands which, in a great and civilised monarchy, ought to belong to 
 the Crown. 
 
 Public stock and public lands, therefore, the two sources of 
 revenue which may peculiarly belong to the sovereign or common- 
 wealth, being both improper and insufficient funds for defraying 
 the necessary expense of any great and civilised state, it remains 
 that this expense must, the greater part of it, be defrayed by taxes 
 of one kind or another ; the people contributing a part of their own 
 private revenue in order to make up a public revenue to the sovereign 
 or commonwealth. 
 
 PART II. 
 
 Of Taxes* 
 
 THE private revenue of individuals, it has been shown in the 
 First Book of this Inquiry, arises ultimately from three dif- 
 ferent sources : rent, profit, and wages. Every tax must finally be 
 paid from some one or other of those three different sorts of revenue, 
 or from all of them indifferently. I shall endeavour to give the best 
 account I can, first, of those taxes which, it is intended, should fall 
 upon rent ; secondly, of those which, it is intended, should fall upon 
 profit; thirdly, of those which, it is intended, should fall upon 
 wages ; and, fourthly, of those which, it is intended, should fall in- 
 
 agement of the estates is transferred to rights justly, there would be no need for 
 the Woods and Forests office. It is to administration, for police, military or 
 be regretted that those lands, except such domestic, or for the machinery of justice, 
 as are ornamental, are not sold, since the But this cannot be, and it is therefore 
 waste incurred in the management of cheaper, as well as safer, that those func- 
 the estates is enormous and scandalous. tions should be delegated to others, and 
 A similar course of policy would be ad- exercised on behalf of those by whom 
 vantageous in the case of the Duchy of they are delegated. There is therefore 
 Cornwall, the income of which is vested no right in any person or body of persons 
 in the eldest son of the monarch, and to govern, to legislate, to administer 
 which might be beneficially commuted for public affairs, to levy a revenue, except 
 an annual allowance. in so far as the right is conferred on such 
 1 The principle on which taxation is official personages. We have long out- 
 justified altogether is that which Smith lived any theory of innate or transcen- 
 dwelt on as fundamental in economical dental right on the part of rulers, any 
 inquiries, the division, namely, of labour indefeasible or indelible duty on the part 
 or employments. If everybody could of subjects. Assertions to the contrary 
 protect himself, and interpret his own can only rest on superstition or fraud.
 
 414 
 
 BOOK V. 
 
 differently upon all those three different sources of private revenue. 
 The particular consideration of each of these four different sorts of 
 taxes will divide the Second Part of the present chapter into four 
 articles, three of which will require several other subdivisions. 
 Many of those taxes, it will appear from the following review, are 
 not finally paid from the fund, or source of revenue, upon which it 
 was intended they should fall. 
 
 Before I enter upon the examination of particular taxes, it is 
 necessary to premise the four following maxims with regard to taxes 
 in general. 
 
 I. The subjects of every state ought to contribute towards the 
 support of the government, as nearly as possible, in proportion to 
 their respective abilities j 1 that is, in proportion to the revenue 
 
 1 This word, notwithstanding Smith's 
 explanation of it, is open to question, 
 standing as it does in the first and 
 most important of these famous canons 
 of taxation. If we understand it of 
 capacity to bear taxation, then there 
 is danger of s ach an interpretation as will 
 justify a graduated property- tax. If it 
 means the enjoyments of life, then a 
 miser would escape taxation, seeing that 
 he does not expend his income. If the 
 emphasis be laid on protection, then women 
 and children being more protected than 
 other persons should pay a heavier tax a 
 proposal which might indeed restore the 
 usages of a past age, but which is revolt- 
 ing to the conscience of the public mind. 
 The fact is we do not know what income 
 or abilities are, until we recognise that 
 taxation can be levied only on that which 
 a man can save. 
 
 The basis of all wealth is labour. To 
 this there is but one exception, rent ; 
 rent being a subduction from the profits 
 of labour, due to the fact that land in 
 fully-settled countries is limited in extent, 
 and has been appropriated, while the 
 demands of population enable the agri- 
 culturist to sell his produce at a higher 
 cost than is sufficient to compensate him 
 for the outlay he has been at in cultiva- 
 tion, the labour he has bestowed, and 
 the ordinary profit on capital. 
 
 Again, it is manifest, since labour is 
 the source of wealth, that labour must be 
 maintained in order to be productive. 
 Take aw.iy the maintenance of labour, 
 and the labour itself ceases to be, and to 
 produce. It is therefore impossible to 
 
 subtract anything by way of taxation 
 from the resources which the labourer has 
 and uses for the purpose of maintaining 
 himself, any more than it is to take away 
 any part of the coals necessary in order to 
 create a certain amount of steam-power. 
 In short, taxation can be based only on 
 that which is t he excess of value over cost. 
 
 Again, it is necessary that the charges 
 which are incurred in fitting the labourer 
 for his employment should be replaced. 
 Economically considered, the mainten- 
 ance and education of labour are as much 
 an investment of capital as the charges 
 incurred for draining a field, or for con- 
 structing a machine, or breeding horses 
 and other cattle for the market. This 
 fact would never have been lost sight 
 of had it not been for the inordinate 
 alarms about excess of population, to 
 which the Malthusian theory, under a 
 mistaken interpretation of facts, and in 
 the utter absence of intelligible and easy 
 inducti ,ns, has given birth. 
 
 The ordinary way in which most of that 
 capital is replaced which is worn out in 
 the exhaustion of the individual labourer, 
 13 in the maintenance and education of 
 other labour which is to fill the place of 
 that which is exhausted. Not that this 
 is all. The labourer is bound to provide 
 for that part of his own life which is pro- 
 longed beyond his industrial activity. He 
 must insure himself against sickness and 
 old age, or he must depend on the efforts 
 of others for his maintenance in the event 
 of these contingencies. Here are then 
 three deductions from the gross wages of 
 labour ; ist, the maintenance of active
 
 CHAP. ii. THE WEALTH OF NATIONS. 415 
 
 which they respectively enjoy under the protection of the state. 
 The expense of government to the individuals of a great nation, is 
 like the expense of management to the joint tenants of a great 
 estate, who are all obliged to contribute in proportion to their re- 
 spective interests in the estate. In the observation or neglect of 
 this maxim consists, what is called the equality or inequality of tax- 
 ation. Every tax, it must be observed once for all, which falls 
 finally upon one only of the three sorts of revenue above-mentioned, 
 is necessarily unequal, in so far as it does not affect the other two. 1 
 In the following examination of different taxes I shall seldom take 
 much further notice of this sort of inequality, but shall, in most 
 cases, confine my observations to that inequality which is occasioned 
 by a particular tax falling unequally even upon that particular sort 
 of private revenue which is affected by it. 
 
 II. The tax which each individual is bound to pay ought to be 
 certain, and not arbitrary. The time of payment, the manner of 
 payment, the quantity to be paid, ought all to be clear and plain to 
 the contributor, and to every other person. Where it is otherwise, 
 every person subject to the tax is put more or less in the power of 
 the tax-gatherer, who can either aggravate the tax upon any 
 obnoxious contributor, or extort, by the terror of such aggravation, 
 some present or perquisite to himself. The uncertainty of taxation 
 encourages the insolence and favours the corruption of an order of 
 men who are naturally unpopular, even where they are neither 
 
 labour ; 2nd, the replacement of capital should be exempt ; the fact being that 
 
 invested in active labour ; 3rd, the insur- savings, or what might be savings, can 
 
 ance needed to provide for human life alone be taxed. And similarly Mr. Ri- 
 
 during the temporary or permanent sus- cardo's argument, to the effect that 
 
 pension of active labour. capital should not be taxed, is, in my 
 
 It will be seen that taxation can be opinion, an imperfect recognition of the 
 
 levied only on that part of wages or pro- principle which I have attempted to lay 
 
 fits (in so far as profits are wages dis- down, for capital is, as everybody knows, 
 
 guised) , which remains over and above the the product of saving. A little considera- 
 
 above-named necessary outgoings. But tion will, I hope, show that neither of 
 
 this is what a man can save or spend, apart these positions can be maintained, 
 from necessary spending or necessary * A system of taxation which does not 
 
 saving, and it is in this margin of profit, call on all who live under the protection 
 
 or value over cost, that ability to contri- of the state to assist its expenses is un- 
 
 bute revenue, enjoyment, and whatever equal. But the practical difficulty is, 
 
 also constitutes Adam Smith's capacity, to determine what each person has from 
 
 consist. which he can contribute. It is possible 
 
 Furthermore, in so far as a system of that the amount of rent, wages, or pro- 
 taxation violates this rule, it is unjust and fits possessed by each individual may be 
 partial. It is because the conviction, that so small that no margin is left beyond 
 all income cannot be taxed, is general and the bare necessaries of life, 
 sound, that Mr. Mail urges that savings
 
 416 TEE NATURE AND CAUSES OF BOOK v, 
 
 insolent nor corrupt. The certainty of what each individual ought 
 to pay is, in taxation, a matter of so great importance, that a very 
 considerable degree of inequality, it appears, I believe, from the 
 experience of all nations, is not near so great an evil as a very small 
 degree of uncertainty. 
 
 III. Every tax ought to be levied at the time, or in the manner 
 in which it is most likely to be convenient for the contributor to 
 pay it. A tax upon the rent of land or of houses, payable at the 
 same term at which such rents are usually paid, is levied at the 
 time when it is most likely to be convenient for the contributor 
 to pay ; or, when he is most likely to have wherewithal to pay. 
 Taxes upon such consumable goods as are articles of luxury are 
 all finally paid by the consumer, and generally in a manner that 
 is very convenient for him. He pays them by little and little, 
 as he has occasion to buy the goods. As he is at liberty too, 
 either to buy, or not to buy as he pleases, it must be his own 
 fault if he ever suffers any considerable inconveniency from such 
 taxes. 
 
 IV. Every tax ought to be so contrived as both to take out and 
 to keep out of the pockets of the people as little as possible over 
 and above what it brings into the public treasury of the state. A 
 tax may either take out or keep out of the pockets of the people a 
 great deal more that it brings into the public treasury, in the four 
 following ways. First, the levying of it may require a great num- 
 ber of officers, whose salaries may eat up the greater part of the 
 produce of the tax, and whose perquisites may impose another 
 additional tax upon the people. 1 Secondly, it may obstruct the 
 industry of the people, and discourage them from applying to cer- 
 tain branches of business which might give maintenance and 
 employment to great multitudes. While it obliges the people to 
 pay, it may thus diminish, or perhaps destroy some of the funds, 
 which might enable them more easily to do so. Thirdly, by the 
 forfeitures and other penalties which those unfortunate individuals 
 incur who attempt unsuccessfully to evade the tax, it may frequently 
 ruin them, and thereby put an end to the benefit which the com- 
 munity might have received from the employment of their capitals. 
 
 1 Smith was a Scotch Commissioner of amount as to leave nothing, after ex- 
 Customs, and must no doubt have noticed penses were paid, for transmission to the 
 what Macpherson records, that the Scotch Exchequer in London. See the 'Annals, 
 customs were frequently so small in of Commerce,' vols. iii, iv, passim.
 
 CHAP. ii. THE WEALTH OF NATIONS. 417 
 
 An injudicious tax offers a great temptation to smuggling. But 
 the penalties of smuggling must rise in proportion to the tempta- 
 tion. The law, contrary to all the ordinary principles of justice, 
 first creates the temptation, and then punishes those who yield to 
 it ; and it commonly enhances the punishment too in proportion to 
 the very circumstance which ought certainly to alleviate it, the 
 temptation to commit the crime.* Fourthly, by subjecting the 
 people to the frequent visits and the odious examination of the tax- 
 gatherers, it may expose them to much unnecessary trouble, vexa- 
 tion, and oppression ; and though vexation is not, strictly speaking, 
 expense, it is certainly equivalent to the expense at which every 
 man would be willing to redeem himself from it. It is in some 
 one or other of these four different ways that taxes are frequently 
 so much more burdensome to the people than they are beneficial to 
 the sovereign. 
 
 The eyident justice and utility of the foregoing maxims have 
 recommended them more or less to the attention of all nations. All 
 nations have endeavoured, to the best of their judgment, to render 
 their taxes as equal as they could contrive ; as certain, as convenient 
 to the contributor, both in the time and in the mode of payment, 
 and, in proportion to the revenue which they brought to the prince, 
 as little burdensome to the people. The following short review of 
 some of the principal taxes which have taken place in different ages 
 and countries will show that the endeavours of all nations have not 
 in this respect been equally successful. 
 
 ARTICLE I. 
 Taxes upon Rent. Taxes upon the Rent of Land. 
 
 A tax upon the rent of land may either be imposed according to 
 a certain canon, every district being valued at a certain rent, which 
 valuation is not afterwards to be altered ; or it may be imposed in 
 such a manner as to vary with every variation in the real rent of the 
 land, and to rise or fall with the improvement or declension of its 
 cultivation. 
 
 A land-tax which, like that of Great Britain, is assessed upon 
 each district according to a certain invariable canon, though it should 
 be equal at the time of its first establishment, necessarily becomes 
 
 * See Sketches of the History of Man, p. 474, et seq. 
 VOL. II. E 6
 
 418 THE NATURE AND CAUSES OF BOOK v. 
 
 unequal in process of time, according 1 to the unequal degrees of im- 
 provement or neglect in the cultivation of the different parts of the 
 country. In England, the valuation according to which the dif- 
 ferent counties and parishes were assessed to the land-tax by the 
 4th of William and Mary, was very unequal even at its first estab- 
 lishment. 1 This tax, therefore, so far offends against the first of 
 the four maxims above mentioned. It is perfectly agreeable to the 
 other three. It is perfectly certain. The time of payment for the 
 tax, being the same as that for the rent, is as convenient as it can 
 be to the contributor. Though the landlord is in all cases the real 
 contributor, the tax is commonly advanced by the tenant, to whom 
 the landlord is obliged to allow it in the payment of the rent. This 
 tax is levied by a much smaller number of officers than any other 
 which affords nearly the same revenue. As the tax upon each dis- 
 trict does not rise with the rise of the rent, the sovereign does not 
 share in the profits of the landlord's improvements. Those improve- 
 ments sometimes contribute, indeed, to the discharge of the other 
 landlords of the district. But the aggravation of the tax, which 
 this may sometimes occasion upon a particular estate, is always so 
 very small, that it never can discourage those improvements, nor 
 keep down the produce of the land below what it would otherwise 
 rise to. As it has no tendency to diminish the quantity, it can have 
 none to raise the price of that produce. It does not obstruct the 
 industry of the people. It subjects the landlord to no other incon- 
 veniency besides the unavoidable one of paying the tax. 
 
 The advantage, however, which the landlord has derived from the 
 invariable constancy of the valuation by which all the lands of Great 
 Britain are rated to the land-tax, has been principally owing to some 
 circumstances altogether extraneous to the nature of the tax. 
 
 It has been owing in part to the great prosperity of almost every 
 part of the country, the rents of almost all the estates of Great 
 Britain having, since the time when this valuation was first estab- 
 lished, been continually rising, and scarce any of them having 
 fallen. The landlords, therefore, have almost all gained the dif- 
 
 1 It is said that certain districts, where they safely could, for example, the city 
 
 the principles of the Revolution were and the University of Oxford. Of course 
 
 adopted generally, taxed themselves to the inequality of the tax is still more 
 
 the full amount ; whereas those where marked at present. In fact, it has ceased 
 
 Jacobite and Nonjuring adherents were to be a tax proper, and is little else than 
 
 numerous, assessed themselves as low as a redeemable rent-charge.
 
 CHAP. ii. THE WEALTH OF NATIONS. 419 
 
 ference between the tax which they would have paid, according 
 to the present rent of their estates, and that which they actually 
 pay according to the ancient valuation. 1 Had the state of the 
 country been different, had rents been gradually falling in con- 
 sequence of the declension of cultivation, the landlords would 
 almost all have lost this difference. In the state of things which 
 has happened to take place since the Revolution, the constancy of 
 the valuation has been advantageous to the landlord and hurtful 
 to the sovereign. In a different state of things it might have been 
 advantageous to the sovereign and hurtful to the landlord. 
 
 As the tax is made payable in money, so the valuation of the 
 land is expressed in money. Since the establishment of this valua- 
 tion the value of silver has been pretty uniform, and there has 
 been no alteration in the standard of the coin either as to weight or 
 fineness. Had silver risen considerably in its value, as it seems to 
 have done in the course of the two centuries which preceded the 
 discovery of the mines of America, the constancy of the valuation 
 might have proved very oppressive to the landlord. 2 Had silver 
 fallen considerably in its value, as it certainly did for about a 
 century at least after the discovery of those mines, the same con- 
 stancy of valuation would have reduced very much this branch 
 of the revenue of the sovereign. Had any considerable alteration 
 been made in the standard of the money, either by sinking the 
 same quantity of silver to a lower denomination, or by raising it to 
 a higher ; had an ounce of silver, for example, instead of being 
 coined into five shillings and twopence, been coined, either into 
 pieces which bore so low a denomination as two shillings and seven- 
 pence, or into pieces which bore so high a one as ten shillings and 
 fourpence, it would in the one case have hurt the revenue of the 
 proprietor, in the other that of the sovereign. 
 
 In circumstances, therefore, somewhat different from those which 
 have actually taken place, this constancy of valuation might have 
 
 1 For reasons already stated, the rent pole constantly held before the land- 
 
 of land in the first half of the eighteenth owners the certainty of a full land-tax, 
 
 century rose far above the amount pay- in order to enlist them on the side of his 
 
 able for the fixed land-tax, and the land- pacific policy. 
 
 owners easily bore a charge which was 2 There is no reason to believe, as has 
 at first excessively onerous when justly been already stated, that silver rose con- 
 levied, and which was always resented siderably in value during the fifteenth 
 till the growth of the public expenditure, century. But Smith was very ill pro- 
 as well as the interest of the debt, neces- vided on the evidence of prices, 
 sarily made it a permanent impost Wai- 
 EC 3
 
 420 THE NATURE AND CAUSES OF BOOK v. 
 
 been a very great inconveniency, either to the contributors, or to 
 the commonwealth. In the course of ages such circumstances, 
 however, must, at some time or other, happen. But though em- 
 pires, like all the other works of men, have all hitherto proved 
 mortal, yet every empire aims at immortality. Every constitu- 
 tion, therefore, which it is meant should be as permanent as the 
 empire itself, ought to be convenient, not in certain circumstances 
 only, but in all circumstances ; or ought to be suited, not to those 
 circumstances which are transitory, occasional, or accidental, but to 
 those which are necessary and therefore always the same. 
 
 A tax upon the rent of land which varies with every variation 
 of the rent, or which rises and falls according to the improvement 
 or neglect of cultivation, is recommended by that sect of men of 
 letters in France, who call themselves the Economists, as the most 
 equitable of all taxes. All taxes, they pretend, fall ultimately upon 
 the rent of land, and ought therefore to be imposed equally upon 
 the fund which must finally pay them. 1 That all taxes ought to 
 fall as equally as possible upon the fund which must finally pay 
 them, is certainly true. But, without entering into the disagree- 
 able discussion of the metaphysical arguments by which they 
 support their very ingenious theory, it will sufficiently appear from 
 the following review, what are the taxes which fall finally upon the 
 rent of the land, and what are those which fall finally upon some 
 other fund. 
 
 In the Venetian territory all the arable lands which are given in 
 lease to farmers are taxed at a tenth of the rent.* The leases are 
 recorded in a public register which is kept by the officers of revenue 
 in each province or district. When the proprietor cultivates his own 
 lands, they are valued according to an equitable estimation, and he is 
 allowed a deduction of one-fifth of the tax, so that for such lands he 
 pays only eight instead of ten per cent, of the supposed rent. 
 
 1 It is plain, for example, thnt taxes a reductio ad dbsurdum. It is plain that 
 
 levied on foreign imports do not fall, and taxes levied on rent are collected more 
 
 cannot fall, upon the owners of land. If easily and more cheaply than any others, 
 
 they are levied on those articles which But does any one imagine that if the 
 
 are produced at home also, and which whole taxation of this country, imperial 
 
 are untaxed, they are rather a means for and local, were taken from rent, that 
 
 raising the price of home products. If tbe landlord would ultimately recover a 
 
 they are excises levied on commodities greater income than he had before ? 
 
 to be exported, and not drawn back on * Memoires concernant les Droits, pp. 
 
 exportation, they are also no cliarge on 240, 241. 
 land. But the theory may be tested by
 
 CHAP. ii. THE WEALTH OF NATIONS. 421 
 
 A land-tax of this kind is certainly more equal than the land-tax 
 of England. It might not, perhaps, be altogether so certain, and 
 the assessment of the tax might frequently occasion a good deal 
 more trouble to the landlord. It might too be a good deal more 
 expensive in the levying. 
 
 Such a system of administration, however, might perhaps be 
 contrived as would, in a great measure, both prevent this uncer- 
 tainty and moderate this expense. 
 
 The landlord and tenant, for example, might jointly be obliged 
 to record their lease in a public register. Proper penalties might 
 be enacted against concealing or misrepresenting any of the con- 
 ditions ; and if part of those penalties was to be paid to either 
 of the two parties who informed against and convicted the other 
 of such concealment or misrepresentation, it would effectually deter 
 them from combining together in order to defraud the public 
 revenue. All the conditions of the lease might be sufficiently 
 known from such a record. 
 
 Some landlords, instead of raising the rent, take a fine for the 
 renewal of the lease. 1 This practice is in most cases the expedient 
 of a spendthrift, who for a sum of ready money sells a future 
 revenue of much greater value. It is in most cases, therefore, 
 hurtful to the landlord. It is frequently hurtful to the tenant, 
 and it is always hurtful to the community. It frequently takes 
 from the tenant so great a part of his capital, and thereby di- 
 minishes so much his ability to cultivate the land, that he finds 
 it more difficult to pay a small rent than it would otherwise have 
 been to pay a great one. Whatever diminishes his ability to cul- 
 tivate, necessarily keeps down, below what it would otherwise have 
 been, the most important part of the revenue of the community. 
 By rendering the tax upon such fines a good deal heavier than upon 
 the ordinary rent, this hurtful practice might be discouraged, to the no 
 small advantage of all the different parties concerned of the land- 
 lord, of the tenant, of the sovereign, and of the whole community. 
 
 1 The custom of taking fines on re- beth, the corporations were disabled from 
 newal is nearly extinct. It was adopted making full use of this power, but, un- 
 by tenants for life, especially the life fortunately, were prohibited from grant- 
 tenants of corporate estates, in order that ing even building leases, except for very 
 the present occupier might obtain an ex- short terms. The consequences in towns 
 ceptional advantage at the expense of where corporations hold large property 
 his successor. So dishonest was the ex- were, and remain, mischievously serious, 
 pedient, that even in the days of Eliza-
 
 422 THE NATURE AND CAUSES OF BOOK v. 
 
 Some leases prescribe to the tenant a certain mode of cultivation, 
 and a certain succession of crops during the whole continuance of 
 the lease. This condition, which is generally the effect of the land- 
 lord's conceit of his own superior knowledge (a conceit in most 
 cases very ill founded), ought always to be considered as an ad- 
 ditional rent ; as a rent in service instead of a rent in money. 1 
 In order to discourage the practice, which is generally a foolish 
 one, this species of rent might be valued rather high, and conse- 
 quently taxed somewhat higher than common money rents. 
 
 Some landlords, instead of a rent in money, require a rent in 
 kind, in corn, cattle, poultry, wine, oil, &c. ; others again require a 
 rent in service. Such rents are always more hurtful to the tenant 
 than beneficial to the landlord. They either take more or keep 
 more out of the pocket of the former, than they put into that of the 
 latter. In every country where they take place, the tenants are 
 poor and beggarly, pretty much according to the degree in which 
 they take place. By valuing, in the same manner, such rents 
 rather high, and consequently taxing them somewhat higher than 
 common money rents, a practice which is hurtful to the whole 
 community might perhaps be sufficiently discouraged. 
 
 When the landlord chose to occupy himself a part of his own 
 lands, the rent might be valued according to an equitable arbitra- 
 tion of the farmers and landlords in the neighbourhood, and a 
 moderate abatement of the tax might be granted to him, in the 
 same manner as in the Venetian territory ; provided the rent of the 
 lands which he occupied did not exceed a certain sum. It is of 
 importance that the landlord should be encouraged to cultivate 
 a part of his own land. His capital is generally greater than that 
 of the tenant, and with less skill he can frequently raise a greater 
 produce. The landlord can afford to try experiments, and is 
 generally disposed to do so. His unsuccessful experiments occasion 
 only a moderate loss to himself; his successful ones contribute 
 
 1 The prescription of a particular course ment, which should be met by declaring 
 
 of cultivation in farming leases, is a all such clauses of reservation void in law. 
 
 foolish and irritating custom, for which, Besides, such covenants stimulate of- 
 
 in so far as precautions are needed that fences against the game laws, and cause 
 
 no damage should be done to the land, great expense in adjudicating on such 
 
 other more efficient remedies could be cases and maintaining poachers when 
 
 found. Still more mischievous, however, committed. This folly of excessive game 
 
 is the reservation of game in leases or preserving did not, it appears, exist in 
 
 similar occupancies : a waste of public Smith's time, 
 resources on behalf of a frivolous amuse-
 
 CHAP. IT. THE WEALTH OF NATIONS. 423 
 
 to the improvement and better cultivation of the whole country. 
 It might be of importance, however, that the abatement of the tax 
 should encourage him to cultivate to a certain extent only. If the 
 landlords should, the greater part of them, be tempted to farm the 
 whole of their own lands, the country (instead of sober and indus- 
 trious tenants, who are bound by their own interest to cultivate as 
 well as their capital and skill will allow them) would be filled with 
 idle and profligate bailiffs, whose abusive management would soon 
 degrade the cultivation, and reduce the annual produce of the land, 
 to the diminution, not only of the revenue of their masters, but of 
 the most important part of that of the whole society. 
 
 Such a system of administration might, perhaps, free a tax of 
 this kind from any degree of uncertainty which could occasion 
 either oppression or inconveniency to the contributor, and might 
 at the same time serve to introduce into the common management 
 of land such a plan or policy as might contribute a good deal 
 to the general improvement and good cultivation of the country. 
 
 The expense of levying a land-tax, which varied with every 
 variation of the rent, would no doubt be somewhat greater than 
 that of levying one which was always rated according to a fixed 
 valuation. Some additional expense would necessarily be incurred 
 both by the different register offices which it would be proper to 
 establish in the different districts of the country, and by the 
 different valuations which might occasionally be made of the lands 
 which the proprietor chose to occupy himself. The expense of all 
 this, however, might be very moderate, and much below what is 
 incurred in the levying of many other taxes, which afford a very 
 inconsiderable revenue in comparison of what might easily be 
 drawn from a tax of this kind. 
 
 The discouragement which a variable land-tax of this kind might 
 give to the improvement of land, seems to be the most important 
 objection which can be made to it. The landlord would certainly 
 l)e less disposed to improve, when the sovereign, who contributed 
 nothing to the expense, was to share in the profit of the improve- 
 ment. 1 Even this objection might perhaps be obviated by allowing 
 
 1 In so far as the increased value of In so far as the increased value depends 
 
 land is due to the skill of the agricul- on the outlay of capital, fixed in the soil, 
 
 turist, and thereupon the natural growth the degree of discouragement will depend 
 
 of rent, a land-tax varying with rent will on the amount of the tax. If a man 
 
 not and cannot discourage improvement. builds a house, he is assessed to the poor-
 
 424 THE NATURE AND CAUSES OF BOOK v. 
 
 the landlord, before he began his improvement, to ascertain, in 
 conjunction with the officers of revenue, the actual value of his 
 lands, according to the equitable arbitration of a certain number 
 of landlords and farmers in the neighbourhood, equally chosen by 
 both parties ; and by rating him according to this valuation for 
 such a number of years, as might be fully sufficient for his com- 
 plete indemnification. To draw the attention of the sovereign 
 towards the improvement of the land, from a regard to the increase 
 of his own revenue, is one of the principal advantages proposed by 
 this species of land-tax. The term, therefore, allowed for the in- 
 demnification of the landlord, ought not to be a great deal longer 
 than what was necessary for that purpose ; lest the remoteness of 
 the interest should discourage too much this attention. It had 
 better, however, be somewhat too long than in any respect too 
 short. No incitement to the attention of the sovereign can ever 
 counterbalance the smallest discouragement to that of the landlord. 
 The attention of the sovereign can be at best but a very general 
 and vague consideration of what is likely to contribute to the better 
 cultivation of the greater part of his dominions. The attention of* 
 the landlord is a particular and minute consideration of what is 
 likely to be the most advantageous application of every inch of 
 ground upon his estate. The principal attention of the sovereign 
 ought to be to encourage, by every means in his power, the 
 attention both of the landlord and of the farmer ; by allowing both 
 to pursue their own interest in their own way, and according to 
 their own judgment ; by giving to both the most perfect security 
 that they shall enjoy the full recompense of their own industry; 
 and by procuring to both the most extensive market for every part 
 of their produce, in consequence of establishing the easiest and 
 safest communications both by land and by water, through every 
 part of his own dominions, as well as the most unbounded freedom 
 of exportation to the dominions of all other princes. 
 
 If by such a system of administration a tax of this kind could be 
 so managed as to give, not only no discouragement, but, on the 
 contrary, some encouragement to the improvement of land, it does 
 
 rate. But such a contingency does not of wealth ; and there can be no reason 
 
 discourage this form of laying out capital why the landowner should be considered 
 
 on land. Nor, again, does the fact, that more open to discouragement than any 
 
 as weilth has increased, taxation has other person who saves and capitalises 
 
 increased also, hinder the accumulation his savings.
 
 CHAP. ii. THE WEALTH OF NATIONS. 425 
 
 not appear likely to occasion any other inconveniency to the land- 
 lord, except always the unavoidable one of being obliged to pay 
 the tax. 
 
 In all the variations of the state of the society, in the improve- 
 ment and in the declension of agriculture ; in all the variations in 
 the value of silver, and in all those in the standard of the coin, a 
 tax of this kind would, of its own accord and without any attention 
 of Government, readily suit itself to the actual situation of things, 
 and would be equally just and equitable in all those different 
 changes. It would, therefore, be much more proper to be estab- 
 lished as a perpetual and unalterable regulation, or as what is called 
 a fundamental law of the commonwealth, than any tax which was 
 always to be levied according to a certain valuation. 
 
 Some states, instead of the simple and obvious expedient of a 
 register of leases, have had recourse to the laborious and expensive 
 one of an actual survey and valuation of all the lands in the 
 country. They have suspected, probably, that the lessor and lessee, 
 in order to defraud the public revenue, might combine to conceal 
 the real terms of the lease. Domesday Book seems to have been 
 the result of a very accurate survey of this kind. 
 
 In the ancient dominions of the King of Prussia, the land-tax is 
 assessed according to an actual survey and valuation, which is 
 reviewed and altered from time to time.* According to that 
 valuation, the lay proprietors pay from twenty to twenty-five per 
 cent, of their revenue ; ecclesiastics from forty to forty-five per 
 cent. The survey and valuation of Silesia was made by order of the 
 present king ; it is said with great accuracy. According to that 
 valuation, the lands belonging to the Bishop of Breslau are taxed at 
 twenty-five per cent, of their rent ; the other revenues of the 
 ecclesiastics of both religions at fifty per cent. ; the commanderies 
 of the Teutonic order, and of that of Malta, at forty per cent. ; 
 lands held by a noble tenure, at thirty-eight and one-third per 
 cent. ; lands held by a base tenure, at thirty-five and one-third 
 per cent. 
 
 The survey and valuation of Bohemia is said to have been the 
 work of more than a hundred years. It was not perfected till after 
 the peace of 1748, by the orders of the present empress queen. f 
 
 * M&noires concernant lea Droits, &c., torn. i. pp. 114, HJ, Ii6, &o. 
 t Id. torn. i. pp. 83, 84.
 
 426 THE NATURE AND CAUSES OF BOOK v. 
 
 The survey of the Duchy of Milan, which was begun in the time of 
 Charles VI, was not perfected till after 1 760. It is esteemed one 
 of the most accurate that has ever been made. The survey of Savoy 
 and Piedmont was executed under the orders of the late King of 
 Sardinia.* 
 
 In the dominions of the King of Prussia the revenue of the 
 Church is taxed much higher than that of lay proprietors. The 
 revenue of the Church is, the greater part of it, a burden upon the 
 rent of land. It seldom happens that any part of it is applied 
 towards the improvement of land, or is so employed as to contri- 
 bute in any respect towards increasing the revenue of the great 
 body of the people. His Prussian Majesty had probably, upon that 
 account, thought it reasonable that it should contribute a good deal 
 more towards relieving the exigencies of the State. In some 
 countries the lands of the Church are exempted from all taxes ; in 
 others they are taxed more lightly than other lands. In the Duchy 
 of Milan, the lands which the Church possessed before 1575 are 
 rated to the tax at a third only of their value. 
 
 In Silesia, lands held by a noble tenure are taxed three per cent, 
 higher than those held by a base tenure. The honours and privi- 
 leges of different kinds annexed to the former, his Prussian Majesty 
 had probably imagined, would sufficiently compensate to the pro- 
 prietor a small aggravation of the tax ; while at the same time the 
 humiliating inferiority of the latter would be in some measure 
 alleviated by being taxed somewhat more lightly. In other coun- 
 tries, the system of taxation, instead of alleviating, aggravates this 
 inequality. In the dominions of the King of Sardinia, and in those 
 provinces of France which are subject to what is called the real or 
 predial ta'dU. the tax falls altogether upon the lands held by a base 
 tenure. Those held by a noble one are exempted. 
 
 A land-tax assessed according to a general survey and valuation, 
 how equal soever it may be at first, must, in the course of a very 
 moderate period of time, become unequal. To prevent its becoming 
 so would require the continual and painful attention of Government 
 to all the variations in the state and produce of every different farm 
 in the country. The Governments of Prussia, of Bohemia, of Sar- 
 dinia, and of the Duchy of Milan, actually exert an attention of this 
 kind ; an attention so unsuitable to the nature of government, that 
 
 * Memoires concernant les Droits, &C., torn. i. p. 280, &c., also p. 287, &c. to 316.
 
 CHAP. ii. THE WEALTH OF NATIONS. 427 
 
 it is not likely to be of long continuance, and which, if it is con- 
 tinued, will probably in the long-run occasion much more trouble 
 and vexation than it can possibly bring relief to the contributors. 
 
 In 1666, the generality of Montauban was assessed to the real 
 or predial tattle according, it is said, to a very exact survey and 
 valuation.* By 1727, this assessment had become altogether un- 
 equal. In order to remedy this inconveniency, Government has 
 found no better expedient than to impose upon the whole generality 
 an additional tax of a hundred and twenty thousand livres. This 
 additional tax is rated upon all the different districts subject to the 
 faille according to the whole assessment. But it is levied only 
 upon those which in the actual state of things are by that assess- 
 ment undertaxed, and it is applied to the relief of those which by 
 the same assessment are overtaxed. Two districts, for example, 
 one of which ought in the actual state of things to be taxed at nine 
 hundred, the other at eleven hundred livres, are by the old assess- 
 ment both taxed at a thousand livres. Both these districts are by 
 the additional tax rated at eleven hundred livres each. But this 
 additional tax is levied only upon the district undercharged, and it 
 is applied altogether to the relief of that overcharged, which con- 
 sequently pays only nine hundred livres. The Government neither 
 gains nor loses by the additional tax, which is applied altogether, to 
 remedy the inequalities arising from the old assessment. The 
 application is pretty much regulated according to the discretion of 
 the intendant of the generality, and must, therefore, be in a great 
 measure arbitrary. 
 
 Taxes which are proportioned, not to the Kent, but to the Produce 
 
 of Land. 
 
 Taxes upon the produce of land are in reality taxes upon the 
 rent ; and though they may be originally advanced by the farmer, 
 are finally paid by the landlord. 1 When a certain portion of the 
 
 * Me"moires concernant les Droits, &c., however, as agricultural skill is special, 
 
 torn ii. p. 139, &c. an I cannot therefore be appropriated by 
 
 1 If the rate of production from land the landowner, the tithe will fall on the 
 
 were uniform and unchangeable, the tithe tenant. The distinction between these 
 
 would fall on the landlord, because rent two contingencies is not only important, 
 
 is all that remains after the cost of pro- but is fundamental as far as regards the 
 
 duction is satisfied, and demand raises incidence of the tax. 
 the price above that cost. As long,
 
 428 THE NATURE AND CAUSES OF BOOK v. 
 
 produce is to be paid away for a tax, the farmer computes, as well 
 as he can, what the value of this portion is, one year with another, 
 likely to amount to, and he makes a proportionable abatement in 
 the rent which he agrees to pay to the landlord. There is no 
 farmer who does not compute beforehand what the Church tithe, 
 which is a land-tax of this kind, is, one year with another, likely to 
 amount to. 
 
 The tithe, and every other land-tax of this kind, under the 
 appearance of perfect equality, are very unequal taxes ; a certain 
 portion of the produce being-, in different situations, equivalent to a 
 very different portion of the rent. In some very rich lands the 
 produce is so great that the one-half of it is fully sufficient to 
 replace to the farmer his capital employed in cultivation, together 
 with the ordinary profits of farming stock in the neighbourhood. 
 The other half, or, what comes to the same thing, the value of the 
 other half, he could afford to pay as rent to the landlord, if there 
 was no tithe. But if a tenth of the produce is taken from him in 
 the way of tithe, he must require an abatement of the fifth part of 
 his rent, otherwise he cannot get back his capital with the ordinary 
 profit. In this case the rent of the landlord, instead of amounting 
 to a half, or five-tenths of the whole produce, will amount only 
 to four-tenths of it. In poorer lands, on the contrary, the produce 
 is sometimes so small, and the expense of cultivation so great, that 
 it requires four -fifths of the whole produce to replace to the farmer 
 his capital with the ordinary profit. In this case, though there was 
 no tithe, the rent of the landlord could amount to no more than 
 one-fifth, or two-tenths of the whole produce. But if the farmer 
 pays one-tenth of the produce in the way of tithe, he must require 
 an equal abatement of the rent of the landlord, which will thus be 
 reduced to one-tenth only of the whole produce. Upon the rent of 
 rich lands, the tithe may sometimes be a tax of no more than one- 
 fifth part, or four shillings in the pound ; whereas, upon that of 
 poorer lands, it may sometimes be a tax of one-half, or of ten shil- 
 lings in the pound. 
 
 The tithe, as it is frequently a very unequal tax upon the rent, 
 so it is always a great discouragement both to the improvements of 
 the landlord and to the cultivation of the farmer. The one cannot 
 venture to make the most important, which are generally the most 
 expensive improvements, nor the other to raise the most valuable,
 
 CHAP. IT. THE WEALTH OF NATIONS. 429 
 
 which are generally too the most expensive crops, when the Church, 
 which lays out no part of the expense, is to share so very largely in 
 the profit. The cultivation of madder was for a long time confined 
 by the tithe to the United Provinces, which, being Presbyterian 
 countries, and upon that account exempted from this destructive 
 tax, enjoyed a sort of monopoly of that useful dyeing drug against 
 the rest of Europe. The late attempts to introduce the culture of 
 this plant into England have been made only in consequence of the 
 statute which enacted that five shillings an acre should be received 
 in lieu of all manner of tithe upon madder. 
 
 As through the greater part of Europe, the Church, so in many 
 different countries of Asia, the State, is principally supported by a 
 land-tax, proportioned, not to the rent, but to the produce of the 
 land. In China, the principal revenue of the sovereign consists in 
 a tenth part of the produce of all the lands of the empire. This 
 tenth part, however, is estimated so very moderately, that, in many 
 provinces, it is said not to exceed a thirtieth part of the ordinary 
 produce. The land-tax or land-rent which used to be paid to the 
 Mahometan Government of Bengal, before that country fell into 
 the hands of the English East India Company, is said to have 
 amounted to about a fifth part of the produce. The land-tax 
 of ancient Egypt is said likewise to have amounted to a fifth 
 part. 
 
 In Asia, this sort of land-tax is said to interest the sovereign in 
 the improvement and cultivation of land. The sovereigns of China, 
 those of Bengal while under the Mahometan Government, and those 
 of ancient Egypt, are said accordingly to have been extremely 
 attentive to the making and maintaining of good roads and navi- 
 gable canals, in order to increase, as much as possible, both the 
 quantity and value of every part of the produce of land, by pro- 
 curing to every part of it the most extensive market which their 
 dominions could afford. The tithe of the Church is divided into 
 such small portions, that no one of its proprietors can have any 
 interest of this kind. The parson of a parish could never find his 
 account in making a road or canal to a distant part of the country, 
 in order to extend the market for the produce of his own particular 
 parish. Such taxes, when destined for the maintenance of the 
 State, have some advantages which may serve in some measure 
 to balance their inconveniency. When destined for the main-
 
 430 THE NATURE AND CAUSES OF BOOK v. 
 
 tenance of the Church, they are attended with nothing but incon- 
 veniency. 
 
 Taxes upon the produce of land may be levied either in kind, or, 
 according to a certain valuation, in money. 
 
 The parson of a parish, or a gentleman of small fortune who lives 
 upon his estate, may sometimes, perhaps, find some advantage in 
 receiving, the one his tithe, and the other his rent, in kind. The 
 quantity to be collected, and the district within which it is to be col- 
 lected, are so small that they both can oversee, with their own eyes, 
 the collection and disposal of every part of what is due to them. 
 A gentleman of great fortune, who lived in the capital, would be in 
 danger of suffering much by the neglect, and more by the fraud of 
 his factors and agents, if the rents of an estate in a distant province 
 were to be paid to him in this manner. The loss of the sovereign, 
 from the abuse and depredation of his tax-gatherers, would neces- 
 sarily be much greater. The servants of the most careless private 
 person are, perhaps, more under the eye of their master than those 
 of the most careful prince ; and a public revenue which was paid in 
 kind would suffer so much from the mismanagement of the collec- 
 tors, that a very small part of what was levied upon the people 
 would ever arrive at the treasury of the prince. Some part of the 
 public revenue of China, however, is said to be paid in this manner. 
 The mandarins and other tax-gatherers will, no doubt, find their 
 advantage in continuing the practice of a payment which is so 
 much more liable to abuse than any payment in money. 
 
 A tax upon the produce of land which is levied in money, may 
 be levied either according to a valuation which varies with all the 
 variations of the market price, or according to a fixed valuation, a 
 bushel of wheat, for example, being always valued at one and the 
 same money price, whatever may be the state of the market. The 
 produce of a tax levied in the former way, will vary only according 
 to the variations in the real produce of the land, according to the 
 improvement or neglect of cultivation. The produce of a tax levied 
 in the latter way will vary not only according to the variations in 
 the produce of the land, but according to both those in the value of 
 the precious metals, and those in the quantity of those metals which 
 is at different times contained in coin of the same denomination. 
 The produce of the former will always bear the same proportion to 
 the value of the real produce of the land ; the produce of the latter
 
 CHAP. ii. THE WEALTH OF NATIONS. 431 
 
 may, at different times, bear very different proportions to that 
 value. 1 
 
 When, instead either of a certain portion of the produce of land, 
 or of the price of a certain portion, a certain sum of money is to be 
 paid in full compensation for all tax or tithe, the tax becomes, in 
 this case, exactly of the same nature with the land-tax of England. 
 It neither rises nor falls with the rent of the land. It neither 
 encourages nor discourages improvement. The tithe in the greater 
 part of those parishes which pay what is called a modus in lieu of 
 all other tithe, is a tax of this kind. During the Mahometan 
 Government of Bengal, instead of the payment in kind of a fifth 
 part of the produce, a modus, and it is said a very moderate one, 
 was established in the greater part of the districts or zemindaries 
 of the country. Some of the servants of the East India Company, 
 under pretence of restoring the public revenue to its proper value, 
 have in some provinces exchanged this modus for a payment in 
 kind. Under their management, this change is likely both to dis- 
 courage cultivation and to give new opportunities for abuse in the 
 collection of the public revenue, which has fallen very much below 
 what it was said to have been when it first fell under the manage- 
 
 1 As is well known, the tithe levied on t'le progressive productiveness of land, or 
 behalf of the clergy and the lay impro- in the skill of the agriculturist, but has a 
 priator has been commuted for a money stationary interest, i.e. one which varies 
 payment by 6 & 7 Will. IV, cap. 71, and only with the rise and fall of money, ex- 
 subsequent amending Acts. The prin- pressed in the rise and fall of grain, or with 
 ciple on which this commutation is the rise and fall in grain, as representing 
 founded is: The average price of wheat, scarce or abundant years. The objections, 
 barley, and oats was taken for seven therefore, which applied to the old system 
 years previous to the passage of the Act, of tithing have passed away. Those eccle- 
 and published in the London Gaaette. siastical endowments, however, which 
 Thenceforward, on January of every year, consist of glebe, though they are free 
 a similar advertisement is inserted. Every from the objections alleged against tithe, 
 rent-charge shall be deemed of the value are, like other rents, progressively in- 
 of so many bushels of wheat, barley, and creased with the general increase of rent, 
 oats in equal quantities, as the same The tithe-owner has, by carelessness on 
 would have been competent to purchase the part of the promoters of the change 
 according to the prices inserted in the (it could hardly have been by design, 
 first advertisement, and after every 1st of since so large a section of both Houses 
 January it shall vary, so as always to of Parliament were impropriate tithe- 
 consist of the price of the same quantities owners), been injured in an important 
 according to the advertisement then next particular. Only three kinds of grain 
 preceding. were reckoned, and no notice was taken 
 
 The amount then of 100 tithe rent- of wool, meat, butter, and cheese. Now 
 
 charge varies with the price of these three these articles, especially in a country 
 
 kinds of grain, rising as corn rises, and which has adopted a free trade in corn, 
 
 falling as it falls. Unless, therefore, perpetually tend towards a rise in relative 
 
 agriculture were to retrogress in its effi- value, and since the Tithe Commutation 
 
 ciency, the tithe-owner does not share in Act have greatly risen in price.
 
 432 THE NATURE AND CAUSES OF BOOK v. 
 
 ment of the company. The servants of the company may, perhaps, 
 have profited by this change, but at the expense, it is probable, 
 both of their masters and of the country. 
 
 Taxes upon the Rent of Houses. 
 
 The rent of a house may be distinguished into two parts, of which 
 the one may very properly be called the building rent, the other is 
 commonly called the ground rent. 
 
 The building rent is the interest or profit of the capital expended 
 in building the house. In order to put the trade of a builder upon 
 a level with other trades, it is necessary that this rent should be 
 sufficient, first, to pay him the same interest which he would have 
 got for his capital if he had lent it upon good security; and, secondly, 
 to keep the house in constant repair, or, what comes to the same 
 thing, to replace within a certain term of years the capital which 
 had been employed in building it. The building rent, or the ordi- 
 nary profit of building, is, therefore, everywhere regulated by the 
 ordinary interest of money. Where the market rate of interest is 
 four per cent., the rent of a house which, over and above paying 
 the ground rent, affords six or six and a-half per cent, upon the 
 whole expense of building, may perhaps afford a sufficient profit to 
 the builder. Where the market rate of interest is five per cent., it 
 may perhaps require seven or seven and a-half per cent. If, in 
 proportion to the interest of money, the trade of the builder affords 
 at any time a much greater profit than this, it will soon draw so 
 much capital from other trades as will reduce the profit to its 
 proper level. If it affords at any time much less than this, other 
 trades will soon draw so much capital from it as will again raise 
 that profit. 
 
 Whatever part of the whole rent of a house is over and above 
 what is sufficient for affording this reasonable profit, naturally goes 
 to the ground rent ; and where the owner of the ground and the 
 owner of the building are two different persons, is, in most cases, 
 completely paid to the former. This surplus rent is the price which 
 the inhabitant of the house pays for some real or supposed advan- 
 tage of the situation. In country houses, at a distance from any 
 great town, where there is plenty of ground to choose upon, the 
 ground rent is scarce anything, or no more than what the ground
 
 CHAP. ii. THE WEALTH OF NATIONS. 433 
 
 which the house stands upon would pay if employed in agriculture. 
 In country villas in the neighbourhood of some great town it is 
 sometimes a good deal higher, and the peculiar conveniency or 
 beauty of situation is there frequently well paid for. Ground rents 
 are generally highest in the capital, and in those particular parts 
 of it where there happens to be the greatest demand for houses, 
 whatever be the reason of that demand, whether for trade and 
 business, for pleasure and society, or for mere vanity and fashion. 1 
 
 A tax upon house rent, payable by the tenant and proportioned 
 to the whole rent of each house, could not, for any considerable 
 time at least, affect the building rent. If the builder did not get 
 his reasonable profit, he would be obliged to quit the trade, which, 
 by raising the demand for building, would in a short time bring 
 back his profit to its proper level with that of other trades. Neither 
 would such a tax fall altogether upon the ground rent, but it would 
 divide itself in such a manner as to fall, partly upon the inhabitant 
 of the house, and partly upon the owner of the ground. 
 
 Let us suppose, for example, that a particular person judges that 
 he can afford for house rent an expense of sixty pounds a year; and 
 let us suppose too that a tax of four shillings in the pound, or of 
 one-fifth, payable by the inhabitant, is laid upon house rent. A 
 house of sixty pounds rent will in this case cost him seventy-two 
 pounds a year, which is twelve pounds more than he thinks he can 
 afford. He will, therefore, content himself with a worse house, or 
 a house of fifty pounds rent, which, with the additional ten pounds 
 that he must pay for the tax. will make up the sum of sixty pounds 
 a year, the expense which he judges he can afford, and in order to 
 pay the tax he will give up a part of the additional conveniency 
 which he might have had from a house of ten pounds a year more 
 rent. He will give up, I say, a part of this additional conveniency, 
 for he will seldom be obliged to give up the whole, but will, in 
 
 1 Ground rents are enormously en- comes than it is in the case of those who- 
 hanced when, owing to the fact that are better off. The worst state of things 
 available sites for building are in the is however induced when corporations are 
 hands of one or a few persons, a mono- lessors, for in these instances the corpo- 
 poly of such sites is practically conferred. ration was (till lately) disabled from grant- 
 It is certain too that much of the misery ing leases for more than forty years, could 
 which characterises the habitations of the not be, except in very rare instances, an 
 poor in large towns is owing to the fre- improving landlord, and was therefore 
 quent occurrence of such a monopoly, the means of making the habitations of 
 since rent is a far heavier item in the the poor worse than they otherwise would 
 charges necessarily levied on small in- be. Evidence of this fact is overwhelming* 
 
 VOL. II. F f
 
 434 THE NATURE AND CAUSES OF BOOK v. 
 
 consequence of the tax, get a better house for fifty pounds a year 
 than he could have got if there had been no tax. For as a tax of 
 this kind, by taking away this particular competitor, must diminish 
 the competition for houses of sixty pounds rent, so it must likewise 
 diminish it for those of fifty pounds rent, and in the same manner 
 for those of all other rents, except the lowest rent, for which it 
 would for some time increase the competition. But the rents of 
 every class of houses for which the competition was diminished, 
 would necessarily be more or less reduced. As no part of this 
 reduction, however, could, for any considerable time at least, affect 
 the building rent, the whole of it must in the long-run necessarily 
 fall upon the ground rent. The final payment of this tax, there- 
 fore, would fall, partly upon the inhabitant of the house, who, in 
 order to pay his share, would be obliged to give up a part of his 
 convenieucy, and partly upon the owner of the ground, who, in 
 order to pay his share, would be obliged to give up part of his 
 revenue. In what proportion this final payment would be divided 
 between them, it is not perhaps very easy to ascertain. The division 
 would probably be very different in different circumstances, and 
 a tax of this kind might, according to those different circum- 
 stances, affect very unequally both the inhabitant of the house and 
 the owner of the ground. 
 
 The inequality with which a tax of this kind might fall upon the 
 owners of different ground rents, would arise altogether from the 
 accidental inequality of this division. But the inequality with 
 which it might fall upon the inhabitants of different houses would 
 arise not only from this, but from another cause. The proportion 
 of the expense of house rent to the whole expense of living is dif- 
 ferent in the different degrees of fortune. It is perhaps highest in 
 the highest degree, and it diminishes gradually through the in- 
 ferior degrees, so as in general to be lowest in the lowest degree. 
 The necessaries of life occasion the great expense of the poor. They 
 find it difficult to get food, and the greater part of their little 
 revenue is spent in getting it. The luxuries and vanities of life 
 occasion the principal expense of the rich ; and a magnificent house 
 embellishes and sets off" to the best advantage all the other luxuries 
 and vanities which they possess. A tax upon house rents, there- 
 fore, would in general fall heaviest upon the rich ; and in this sort 
 of inequality there would not, perhaps, be anything very unreason-
 
 CHAP. ii. THE WEALTH OF NATIONS. 435 
 
 able. It is not very unreasonable that the rich should contribute 
 to the public expense, not only in proportion ' to their revenue, but 
 something more than in that proportion. 
 
 The rent of houses, though it in some respects resembles the rent 
 of land, is in one respect essentially different from it. The rent of 
 land is paid for the use of a productive subject. The land which 
 pays it produces it. The rent of houses is paid for the use of an 
 unproductive subject. Neither the house nor the ground which it 
 stands upon produce anything. The person who pays the rent, 
 therefore, must draw it from some other source of revenue, distinct 
 from and independent of this subject. A tax upon the rent of 
 houses, so far as it falls upon the inhabitants, must be drawn from 
 the same source as the rent itself, and must be paid from their 
 revenue, whether derived from the wages of labour, the profits of 
 stock, or the rent of land. So far as it falls upon the inhabitants, 
 it is one of those taxes which fall, not upon one only, but indif- 
 ferently upon all the three different sources of revenue, and is in every 
 respect of the same nature as a tax upon any other sort of consum- 
 able commodities. In general, there is not perhaps any one article 
 of expense or consumption by which the liberality or narrowness 
 of a man's whole expense can be better judged of than by his house 
 rent. A proportional tax upon this particular article of expense 
 might, perhaps, produce a more considerable revenue than any 
 which has hitherto been drawn from it in any part of Europe. If 
 the tax indeed was very high, the greater part of people would 
 endeavour to evade it as much as they could, by contenting them- 
 selves with smaller houses, and by turning the greater part of their 
 expense into some other channel. 
 
 The rent of houses might easily be ascertained with sufficient 
 accuracy, by a policy of the same kind with that which would be 
 necessary for ascertaining the ordinary rent of land. Houses not 
 
 1 A tax on houses has been lauded as fers on the house-owner. A house in the 
 
 supremely equitable, since it is averred country with accommodation equal to that 
 
 that a man's rent is generally proper- in a good London street, will be let at 
 
 tionate to his income. But it may be one-fourth the London rent, or even less, 
 
 doubted whether this is true. It can be But the contrast is still more striking 
 
 true only if the choice of locality is in the lowest class of town houses. The 
 
 wholly voluntary. If the exigencies of lodging of a London artisan, poor and 
 
 a man's occupation compel him to reside confined as it often is, often costs him 
 
 within a given area, the rent of houses as much as the rent of a good substantial 
 
 within that area is raised by the mono- house in a country place would amount 
 
 poly power which such a condition con- to. 
 
 F f 2,
 
 436 THE NATURE AND CAUSES OF BOOK v. 
 
 inhabited ought to pay no tax. A tax upon them would fall 
 altogether upon the proprietor, who would thus be taxed for a 
 subject which afforded him neither conveniency nor revenue. 
 Houses inhabited by the proprietor ought to be rated, not according 
 to the expense which they might have cost in building, but 
 according to the rent which an equitable arbitration might judge 
 them likely to bring, if leased to a tenant. If rated according to 
 the expense which they may have cost in building, a tax of three or 
 four shillings in the pound, joined with other taxes, would ruin almost 
 all the rich and great families of this and, I believe, of every other 
 civilised country. Whoever will examine, with attention, the 
 different town and country houses of some of the richest and 
 greatest families in this country, will find that, at the rate of only 
 six and a half or seven per cent, upon the original expense of 
 building, their house rent is nearly equal to the whole net rent of 
 their estates. It is the accumulated expense of several successive 
 generations, laid out upon objects of great beauty and magnificence, 
 indeed; but, in proportion to what they cost, of very small ex- 
 changeable value.* 
 
 Ground rents are a still more proper subject of taxation than the 
 rent of houses. A tax upon ground rents would not raise the rents 
 of houses. It would fall altogether upon the owner of the ground 
 rent, who acts always as a monopolist, and exacts the greatest rent 
 which can be got for the use of bis ground. More or less can be 
 got for it according as the competitors happen to be richer or 
 poorer, or can afford to gratify their fancy for a particular spot of 
 ground at a greater or smaller expense. In every country the 
 greatest number of rich competitors is in the capital, and it is there 
 accordingly that the highest ground rents are always to be found. 
 As the wealth of those competitors would in no respect be increased 
 by a tax upon ground rents, they would not probably be disposed to 
 jay more for the use of the ground. Whether the tax was to be 
 
 * Since the first publication of this houses at nominal sums. The Legislature 
 
 bonk, a tax nearly upon the above-men- might concede a little to the vanity of 
 
 tioned principles has been imposed. 1 potentates in country places, but the 
 
 1 No doubt an ad valorem tax on the public undoubtedly feels that it is a 
 
 palaces of the rich would be a very scandal when places like Chatsworth and 
 
 onerous burden, and might perhaps be Belvoir are rated at such sums as 200 
 
 unjust in its incidence. But there is no a year, because, forsooth, they could not 
 
 apology for running into the opposite be let at a higher annual rent. Mr. Mill 
 
 extreme, and setting the value of such has commented forcibly on this anomaly.
 
 CHAP. ft. THE WEALTH OF NATIONS. 437 
 
 advanced by the inhabitant or by the owner of the ground, would 
 be of little importance. The more the inhabitant was obliged to 
 pay for the tax, the less he would incline to pay for the ground ; so 
 that the final payment of the tax would fall altogether upon the 
 owner of the ground rent. The ground rents of uninhabited houses 
 ought to pay no tax. 1 
 
 Both ground rents and the ordinary rent of land are a species of 
 revenue which the owner, in many cases, enjoys without any care or 
 attention of his own. Though a part of this revenue should be 
 taken from him in order to defray the expenses of the State, no 
 discouragement will thereby be given to any sort of industry. The 
 annual produce of the land and labour of the society, the real wealth 
 and revenue of the great body of the people, might be the same 
 after such a tax as before. Ground rents, and the ordinary rent of 
 land, are therefore, perhaps, the species of revenue which can best 
 bear to have a peculiar tax imposed upon them. 
 
 Ground rents seem, in this respect, a more proper subject of 
 peculiar taxation than even the ordinary rent of land. The 
 ordinaiy rent of land is, in many cases, owing partly at least 
 to the attention and good management of the landlord. A very 
 heavy tax might discourage too much this attention and good 
 management. Ground rents, so far as they exceed the ordinary 
 rent of land, are altogether owing to the good government of the 
 sovereign, which, by protecting the industry either of the whole 
 people, or of the inhabitants of some particular place, enables them 
 to pay so much more than its real value for the ground which they 
 build their houses upon, or to make to its owner so much more 
 than compensation for the loss which he might sustain by this use 
 of it. Nothing can be more reasonable than that a fund which 
 owes its existence to the good government of the State, should 
 be taxed peculiarly, or should contribute something more than 
 
 1 It may be doubted whether the in- modities. But a tax on ground rents is 
 
 cidence of such a tax advanced by the one of the most just taxes that could be 
 
 tenant is always paid in the end by the levied. The value of a ground rent is 
 
 owner, unless indeed the tenant is em- not in any degree due to any labour or 
 
 powered, any stipulation to the contrary expense on the part of the owner, but 
 
 notwithstanding, to repay himself out of arises from the growth of population and 
 
 his rent, at the time when it is due to the wealth. To make population and wealth 
 
 landlord. The fact is, rent is more or pay taxes, and to relieve from all con- 
 
 less a matter of custom, and competition tribution that which gets its sole value 
 
 does not settle its price so rapidly and from these causes, is to add wrong to 
 
 conclusively as it does certain other com- wrong.
 
 438 THE NATURE AND CAUSES OF BOOK y. 
 
 the greater part of other funds, towards the support of that 
 government. 
 
 Though, in many different countries of Europe, taxes have been 
 imposed upon the rent of houses, I do not know of any in which 
 ground rents have been considered as a separate subject of taxation. 
 The contrivers of taxes have, probably, found some difficulty in 
 ascertaining what part of the rent ought to be considered as 
 ground rent, and what part ought to be considered as building 
 rent. It should not, however, seem very difficult to distinguish 
 those two parts of the rent from one another. 
 
 In Great Britain, the rent of houses is supposed to be taxed in 
 the same proportion as the rent of land, by what is called the 
 annual land-tax. The valuation, according to which each different 
 parish and district is assessed to this tax, is always the same. It 
 was originally extremely unequal, and it still continues to be so. 
 Through the greater part of the kingdom this tax falls still more 
 lightly upon the rent of houses than upon that of land. In some 
 few districts only, which were originally rated high, and in which 
 the rents of houses have fallen considerably, the land-tax of three 
 or four shillings in the pound is said to amount to an equal pro- 
 portion of the real rent of houses. Untenanted houses, though by 
 law subject to the tax, are, in most districts, exempted from it by 
 the favour of the assessors; and this exemption sometimes occasions 
 some little variation in the rate qf particular houses, though that of 
 the district is always the same. Improvements of rent, by new 
 buildings, repairs, &c., go to the discharge of the district, which 
 occasions still further variations in the rate of particular houses. 
 
 In the province of Holland* every house is taxed at two and a 
 half per cent, of its value, without any regard either to the rent 
 which it actually pays, or to the circumstance of its being tenanted 
 or untenanted. There seems to be a hardship in obliging the 
 proprietor to pay a tax for an untenanted house, from which he can 
 derive no revenue ; especially so very heavy a tax. In Holland, 
 where the market rate of interest does not exceed three per cent., 
 two and a half per cent, upon the whole value of the house must, 
 in most cases, amount to more than a third of the building rent, 
 perhaps of the whole rent. The valuation, indeed, according to 
 which the houses are rated, though very unequal, is said to be 
 
 * Memoires concernant les Droits, &c. p. 2 23.
 
 CHAP. n. THE WEALTH OF NATIONS. 439 
 
 always below the real value. When a house is rebuilt, improved, 
 or enlarged, there is a new valuation, and the tax is rated 
 accordingly. 
 
 The contrivers of the several taxes which in England have, at 
 different times, been imposed upon houses, seem to have imagined 
 that there was some great difficulty in ascertaining, with tolerable 
 exactness, what was the real rent of every house. They have 
 regulated their taxes, therefore, according to some more obvious 
 circumstance, such as they had probably imagined would, in most 
 cases, bear some proportion to the rent. 
 
 The first tax of this kind was hearth-money; or a tax of two 
 shillings upon every hearth. In order to ascertain how many 
 hearths were in the house, it was necessaiy that the tax-gatherer 
 should enter every room in it. This odious visit rendered the tax 
 odious. Soon after the Revolution, therefore, it was abolished as a 
 badge of slavery. 
 
 The next tax of this kind was a tax of two shillings upon every 
 dwelling-house inhabited. A house with ten windows to pay four 
 shillings more ; a house with twenty windows and upwards to pay 
 eight shillings. This tax was afterwards so far altered, that houses 
 with twenty windows, and with less than thirty, were ordered to 
 pay ten shillings, and those with thirty windows and upwards to 
 pay twenty shillings. The number of windows can, in most cases, 
 be counted from the outside, and, in all cases, without entering 
 every room in the house. The visit of the tax-gatherer, therefore, 
 was less offensive in this tax than in the hearth-money. 
 
 This tax was afterwards repealed, and in the room of it was 
 established the window-tax, which has undergone too several 
 alterations and augmentations. The window-tax, as it stands at 
 present (January, 1775), over and above the duty of three shillings 
 upon every house in England, and of one shilling upon every house 
 in Scotland, lays a duty upon every window, which, in England, 
 augments gradually from twopence, the lowest rate, upon houses 
 with not more than seven windows, to two shillings, the highest 
 rate, upon houses with twenty-five windows and upwards. 
 
 The principal objection to all such taxes is their inequality, an 
 inequality of the worst kind, as they must frequently fall much 
 heavier upon the poor than upon the rich. A house of ten pounds 
 rent in a country town may sometimes have more windows than
 
 440 TUE NATURE AND CAUSES OF BOOK v. 
 
 a house of five hundred pounds rent in London ; and though the 
 inhabitant of the former is likely to be a much poorer man than 
 that of the latter, yet, so far as his contribution is regulated by 
 the window-tax, he must contribute more to the support of the 
 State. Such taxes are, therefore, directly contrary to the first of 
 the four maxims above mentioned. They do not seem to offend 
 much against any of the other three. 
 
 The natural tendency of the window-tax, and of all other taxes 
 upon houses, is to lower rents. The more a man pays for the tax, 
 the less, it is evident, he can afford to pay for the rent. Since the 
 imposition of the window-tax, however, the rents of houses have 
 upon the whole risen, more or less, in almost every town and village 
 of Great Britain with which I am acquainted. Such has been 
 almost everywhere the increase of the demand for houses, that it 
 has raised the rents more than the window-tax could sink them ; 
 one of the many proofs of the great prosperity of the country, and 
 of the increasing revenue of its inhabitants. Had it not been for 
 the tax, rents would probably have risen still higher. 1 
 
 ARTICLE II. 
 Taxes upon Profit, or upon the Revenue arising from Stock. 
 
 The revenue or profit arising from stock naturally divides 
 itself into two parts : that which pays the interest, and which 
 belongs to the owner of the stock ; and that surplus part which 
 is over and above what is necessary for paying the interest. 
 
 This latter part of profit is evidently a subject not taxable 
 directly. It is the compensation, and in most cases it is no more 
 than a very moderate compensation, for the risk and trouble of 
 employing the stock. The employer must have this compensation, 
 otherwise he cannot, consistently with his own interest, continue 
 the employment. If he was taxed directly, therefore, in proportion 
 to the whole profit, he would be obliged either to raise the rate of 
 
 1 The objections to both hearth and vent a proper circulation of air in cham- 
 window-taxes are chiefly based upon bers, as motives of economy encouraged 
 sanitary considerations. These taxes, in- such expedient. Few taxes can be worse 
 duuing ptrsons to close windows and to than these, the avoidance of which con- 
 block up chimneys, had a tendency to strains the object of them to injure his 
 obstruct a due supply of light, and pre- bodily condition.
 
 CHAP. ii. THE WEALTH OF NATIONS. 441 
 
 his profit, or to charge the tax upon the interest of money; that is, 
 to pay less interest. If he raised the rate of his profit in propor- 
 tion to the tax, the whole tax, though it might be advanced by him, 
 would be finally paid by one or other of two different sets of people, 
 according to the different ways in which he might employ the 
 stock of which he had the management. If he employed it as 
 a farming stock in the cultivation of land, he could raise the rate of 
 his profit only by retaining a greater portion, or, what comes to the 
 same thing, the price of a greater portion of the produce of the 
 land ; and as this could be done only by a reduction of rent, 
 the final payment of the tax would fall upon the landlord. If 
 he employed it as a mercantile or manufacturing stock, he could 
 raise the rate of his profit only by raising the price of his goods ; 
 in which case the final payment of the tax would fall altogether 
 upon the consumers of those goods. If he did not raise the rate of 
 his profit, he would be obliged to charge the whole tax upon that 
 part of it which was allotted for the interest of money. He could 
 afford less interest for whatever stock he borrowed, and the whole 
 weight of the tax would in this case fall ultimately upon the 
 interest of money. So far as he could not relieve himself from the 
 tax in the one way, he would be obliged to relieve himself in the 
 other. 1 
 
 The interest of money seems at first sight a subject equally 
 capable of being taxed directly as the rent of land. Like the rent 
 of land, it is a net produce which remains after completely com- 
 pensating the whole risk and trouble of employing the stock. As 
 a tax upon the rent of land cannot raise rents, because the net 
 produce which remains after replacing the stock of the farmer, 
 together with his reasonable profit, cannot be greater after the tax 
 than before it ; so, for the same reason, a tax upon the interest 
 
 1 It is asserted by Mr. Mill, that a to be varied according to the costs of the 
 general tax on profits cannot be shifted trader's occupation, and the competition 
 from the person who pays it to any other may be solely that for customers. Under 
 person, though a particular tax as for such circumstances too, the tax on profits 
 example that on brewers will be. But may strike off a certain proportion of 
 such a theory assumes that in practice such traders, those namely as could only 
 the rate of profit is entirely determined just maintain themselves before the tax 
 by competition. It does not, however, was imposed, and thereby increase the 
 follow that this is the course of business aggregate profits of those who remain in 
 in all occupations. The competition may the calling. Here, however, as else- 
 be, not that of cheapness or dearness, where, all difficulties are cleared up if 
 but prices may be paid at a high standard we remember that no tax can be levied 
 and by a general agreement, this standard on that which a person cannot save.
 
 442 TEE NATURE AND CAUSES OF BOOK v. 
 
 of money could not raise the rate of interest ; the quantity of stock 
 or money in the country, like the quantity of land, being- supposed 
 to remain the same after the tax as before it. The ordinary rate of 
 profit, it has been shown in the First Book, is everywhere regu- 
 lated by the quantity of stock to be employed in proportion to the 
 quantity of the employment, or of the business which must be done 
 by it. But the quantity of the employment, or of the business to 
 be done by stock, could neither be increased nor diminished by any 
 tax upon the interest of money. If th'e quantity of the stock to 
 be employed, therefore, was neither increased nor diminished by it, 
 the ordinary rate of profit would necessarily remain the same. But 
 the portion of this profit necessary for compensating- the risk and 
 trouble of the employer, would likewise remain the same ; that risk 
 and trouble being in no respect altered. The residue, therefore, 
 that portion which belongs to the owner of the stock, and which 
 pays the interest of money, would necessarily remain the same too. 
 At first sight, therefore, the interest of money seems to be a subject 
 as fit to be taxed directly as the rent of land. 
 
 There are, however, two different circumstances which render the 
 interest of money a much less proper subject of direct taxation 
 than the rent of land. 
 
 First, the quantity and value of the land which any man pos- 
 sesses can never be a secret, and can always be ascertained with 
 great exactness. But the whole amount of the capital stock which 
 he possesses is almost always a secret, and can scarce ever be ascer- 
 tained with tolerable exactness. It is liable, besides, to almost 
 continual variations. A year seldom passes away, frequently not a 
 month, sometimes scarce a single day, in which it does not rise or 
 fall more or less. An inquisition into every man's private circum- 
 stances, and an inquisition which, in order to accommodate the tax 
 to them, watched over all the fluctuations of his fortune, would 
 be a source of such continual and endless vexation as no people 
 could support. 1 
 
 Secondly, land is a subject which cannot be removed ; whereas 
 stock easily may. The proprietor of land is necessarily a citizen of 
 the particular country in which his estate lies. The proprietor of 
 
 1 It is said that the voluntary returns from suspicion, and highly creditable to 
 of the American merchants to the pro- those who make the return, 
 perty tax levied in the Union are free
 
 CHAP. ii. THE WEALTH OF NATIONS. 443 
 
 stock is properly a citizen of the world, and is not necessarily 
 attached to any particular country. He would be apt to abandon 
 the country in which he was exposed to a vexatious inquisition, 
 in order to be assessed to a burdensome tax, and would remove his 
 stock to some other country where he could either carry on his 
 business or enjoy his fortune more at his ease. By removing his 
 stock, he would put an end to all the industry which it had main- 
 tained in the country which he left. Stock cultivates land; stock 
 employs labour. A tax which tended to drive away stock from any 
 particular country, would so far tend to dry up every source of 
 revenue, both to the sovereign and to the society. Not only the 
 profits of stock, but the rent of land and the wages of labour, 
 would necessarily be more or less diminished by its removal. 1 
 
 The nations, accordingly, who have attempted to tax the revenue 
 arising from stock, instead of any severe inquisition of this kind, 
 have been obliged to content themselves with some very loose, and, 
 therefore, more or less arbitrary estimation. The extreme inequality 
 and uncertainty of a tax assessed in this manner, can be compen- 
 sated only by its extreme moderation, in consequence of which 
 every man finds himself rated so very much below his real revenue, 
 that he gives himself little disturbance though his neighbour should 
 be rated somewhat lower. 
 
 By what is called the land-tax in England, it was intended that 
 stock should be taxed in the same proportion as land. When the 
 tax upon land was at four shillings in the pound, or at one-fifth 
 of the supposed rent, it was intended that stock should be taxed at 
 one-fifth of the supposed interest. When the present annual land-tax 
 was first imposed, the legal rate of interest was six per cent. Every 
 hundred pounds stock, accordingly, was supposed to be taxed at 
 twenty-four shillings, the fifth part of six pounds. Since the legal 
 rate of interest has been reduced to five per cent., every hundred 
 pounds stock is supposed to be taxed at twenty shillings only. The 
 sum to be raised, by what is called the land-tax, was divided 
 between the country and the principal towns. The greater part of 
 it was laid upon the country ; and of what was laid upon the towns, 
 
 1 'Le capitaliste preteur d'argent doit raisonnable de charger son commerce 
 
 tre conside"r comine marchand d'une d'un impot que de mettre un impdt sur 
 
 desire"e absolument ne'cessaire a la pro- le fermier qui sert a engraisser les terres.' 
 
 duction des richesses et qui ne saurait Turgot, 95- 
 <*tre a trop has prix. II est aussi de*-
 
 '444 THE NATURE AND CAUSES OF BOOK v. 
 
 the greater part was assessed upon the houses. What remained 
 to be assessed upon the stock or trade of the towns (for the stock 
 upon the land was not meant to be taxed) was very much below the 
 real value of that stock or trade. Whatever inequalities, therefore, . 
 there might be in the original assessment, gave little disturbance. 
 Every parish and district still continues to be rated for its land, 
 its houses, and its stock, according to the original assessment; and 
 the almost universal prosperity of the country, which in most places 
 has raised very much the value of all these, has rendered those 
 inequalities of still less importance now. The rate too upon each 
 district continuing always the same, the uncertainty of this tax, so 
 far as it might be assessed upon the stock of any individual, has 
 been very much diminished, as well as rendered of much less conse- 
 quence. If the greater part of the lands of England are not rated 
 to the land-tax at half their actual value, the greater part of the 
 stock of England is, perhaps, scarce rated at the fiftieth part of its 
 actual value. In some towns the whole land-tax is assessed upon 
 houses ; as in Westminster, where stock and trade are free. It is 
 otherwise in London. 
 
 In all countries a severe inquisition into the circumstances of 
 private persons has been carefully avoided. 
 
 At Hamburg* every 'inhabitant is obliged to pay to the State 
 one-fourth per cent, of all that he possesses ; and as the wealth of 
 the people of Hamburg consists principally in stock, this tax may 
 be considered as a tax upon stock. Every man assesses himself, 
 and, in the presence of the magistrate, puts annually into the public 
 coffer a certain sum of money, which he declares upon oath to be 
 one-fourth per cent, of all that he possesses, but without declaring 
 what it amounts to, or being liable to any examination upon that 
 subject. This tax is generally supposed to be paid with great 
 fidelity. In a small republic, where the people have entire con- 
 fidence in their magistrates, are convinced of the necessity of the 
 tax for the support of the State, and believe that it will be faith- 
 fully applied to that purpose, such conscientious and voluntary 
 payment may sometimes be expected. It is not peculiar to the 
 people of Hamburg. 
 
 The canton of Underwald in Switzerland is frequently ravaged 
 by storms and inundations, and is thereby exposed to extraordinary 
 * M&noires concernant lea Droits, torn. i. p. 74.
 
 CHAP. ii. THE WEALTH OF NATIONS. 445 
 
 expenses. Upon such occasions the people assemble, and every one 
 is said to declare with the greatest frankness what he is worth, in 
 order to be taxed accordingly. At Zurich, the law orders that, in 
 cases of necessity, every one should be taxed in proportion to his 
 revenue, the amount of which he is obliged to declare upon oath. 
 They have no suspicion, it is said, that any of their fellow-citizens 
 will deceive them. At Basle, the principal revenue of the State 
 arises from a small custom upon goods exported. All the citizens 
 make oath that they will pay every three months all the taxes 
 imposed by the law. All merchants, and even all inn-keepers, are 
 trusted with keeping themselves the account of the goods which 
 they sell either within or without the territory. At the end of 
 every three months they send this account to the treasurer, with 
 the amount of the tax computed at the bottom of it. It is not 
 suspected that the revenue suffers by this confidence.* 
 
 To oblige every citizen to declare publicly upon oath the amount 
 of his fortune, must not, it seems, in those Swiss cantons, be 
 reckoned a hardship. At Hamburg, it would be reckoned the 
 greatest. Merchants engaged in the hazardous projects of trade, 
 all tremble at the thoughts of being obliged at all times to expose 
 the real state of their circumstances. The ruin of their credit and 
 the miscarriage of their projects, they foresee, would too often be 
 the consequence. A sober and parsimonious people, who are 
 strangers to all such projects, do not feel that they have occasion 
 for any such concealment. 
 
 In Holland, soon after the exaltation of the late Prince of Orange 
 to the stadtholdership, a tax of two per cent., or the fiftieth penny, 
 as it was called, was imposed upon the whole substance of every 
 citizen. Every citizen assessed himself and paid his tax in the 
 same manner as at Hamburg; and it was in general supposed to 
 have been paid with great fidelity. The people had at that time 
 the greatest affection for their new Government, which they had 
 just established by a general insurrection. The tax was to be paid 
 but once ; in order to relieve the State in a particular exigency. 
 It was, indeed, too heavy to be permanent. In a country where 
 the market rate of interest seldom exceeds three per cent., a tax 
 of two per cent, amounts to thirteen shillings and fourpence in the 
 pound upon, the highest net revenue which is commonly drawn, 
 * M&noires concernant les. Droits, torn. i. pp. 163, 166, 171.
 
 446 THE NATURE AND CAUSES OF BOOK v. 
 
 from stock. It is a tax which very few people could pay without 
 encroaching more or less upon their capitals. In a particular exi- 
 gency the people may, from great public zeal, make a great effort, 
 and give up even a part of their capital, in order to relieve the 
 State. But it is impossible that they should continue to do so for 
 any considerable time ; and, if they did, the tax would soon ruin 
 them so completely as to render them altogether incapable of sup- 
 porting the State. 
 
 The tax upon stock imposed by the Land-tax Bill in England, 
 though it is proportioned to the capital, is not intended to diminish 
 or take away any part of that capital. It is meant only to be 
 a tax upon the interest of money proportioned to that upon the 
 rent of land ; so that when the latter is at four shillings in the 
 pound, the former may be at four shillings in the pound too. 
 The tax at Hamburg, and the still more moderate taxes of 
 Underwald and Zurich, are meant, in the same manner, to be 
 taxes, not upon the capital, but upon the interest or net revenue 
 of stock. That of Holland was meant to be a tax upon the 
 capital. 
 
 Taxes upon the Profit of particular Employments. 
 
 In some countries, extraordinary taxes are imposed upon the 
 profits of stock, sometimes when employed in particular branches 
 of trade, and sometimes when employed in agriculture. 
 
 Of the former kind are in England the tax upon hawkers and 
 pedlars, that upon hackney coaches and chairs, and that which 
 the keepers of ale-houses pay for a licence to retail ale and 
 spirituous liquors. During the late war, another tax of the same 
 kind was proposed upon shops. The war having been undertaken, 
 it was said, in defence of the trade of the country, the merchants 
 who were to profit by it ought to contribute towards the support 
 of it. 
 
 A tax, however, upon the profits of stock employed in any 
 particular branch of trade can never fall finally upon the dealers 
 (who must in all ordinary cases have their reasonable profit, and 
 where the competition is free can seldom have more than that 
 profit), but always upon the consumers, who must be obliged to 
 pay in the price of the goods the tax which the dealer advances, 
 and generally with some overcharge.
 
 CHAP. ii. THE WEALTH OF NATIONS. 447 
 
 A tax of this kind, when it is proportioned to the trade of the 
 dealer, is finally paid by the consumer, and occasions no oppression 
 to the dealer. When it is not so proportioned, but is the same 
 upon all dealers, though in this case too it is finally paid by the 
 consumer, yet it favours the great, and occasions some oppression 
 to the small dealer. The tax of five shillings a week upon every 
 hackney coach, and that of ten shillings a year upon every hackney 
 chair, so far as it is advanced by the different keepers of such 
 coaches and chairs, is exactly enough proportioned to the extent 
 of their respective dealings. It neither favours the great nor 
 oppresses the smaller dealer. The tax of twenty shillings a year 
 for a licence to sell ale ; of forty shillings for a licence to sell 
 spirituous liquors ; and of forty shillings more for a licence to 
 sell wine, being the same upon all retailers, must necessarily give 
 some advantage to the great, and occasion some oppression to the 
 small dealers. The former must find it more easy to get back 
 the tax in the price of their goods than the latter. The moderation 
 of the tax, however, renders this inequality of less importance, and 
 it may to many people appear not improper to give some dis- 
 couragement to the multiplication of little ale-houses. The tax 
 upon shops, it was intended, should be the same upon all shops. 
 It could not well have been otherwise. It would have been 
 impossible to proportion with tolerable exactness the tax upon a 
 shop to the extent of the trade carried on in it, without such 
 an inquisition as would have been altogether insupportable in a 
 free country. If the tax had been considerable, it would have 
 oppressed the small, and forced almost the whole of the retail 
 trade into the hands of the great dealers. The competition of 
 the former being taken away, the latter would have enjoyed a 
 monopoly of the trade, and, like all other monopolists, would soon 
 have combined to raise their profits much beyond what was neces- 
 sary for the payment of the tax. The final payment, instead of 
 falling upon the shopkeeper, would have fallen upon the consumer, 
 with a considerable overcharge to the profit of the shopkeeper. 
 For these reasons, the project of a tax upon shops was laid aside, 
 and in the room of it was substituted the subsidy 1759. 
 
 What in France is called the personal taille is, perhaps, the 
 most important tax upon the profits of stock employed in agri- 
 culture that is levied in any part of Europe.
 
 448 THE NATURE AND CAUSES OF BOOK v, 
 
 In the disorderly state of Europe during the prevalence of the 
 feudal government, the sovereign was obliged to content himself 
 with taxing those who were too weak to refuse to pay taxes. 
 The great lords, though willing to assist him upon particular 
 emergencies, refused to subject themselves to any constant tax, 
 and he was not strong enough to force them. The occupiers 
 of land all over Europe were, the greater part of them, originally 
 bondmen. Through the greater part of Europe they were gradu- 
 ally emancipated. Some of them acquired the property of landed 
 estates which they held by some base or ignoble tenure, sometimes 
 under the king, and sometimes under some other great lord, like 
 the ancient copyholders of England ; others, without acquiring 
 the property, obtained leases for terms of years of the land which 
 they occupied under their lord, and thus became less dependent 
 upon him. The great lords seem to have beheld the degree of 
 prosperity and independency which this inferior order of men had 
 thus come to enjoy, with a malignant and contemptuous indigna- 
 tion, and willingly consented that the sovereign should tax them. 1 
 In some countries this tax was confined to the lands which were 
 held in property by an ignoble tenure, and, in this case, the taille 
 was said to be real. The land-tax established by the late King 
 of Sardinia, and the taille in the provinces of Languedoc, Pro- 
 vence, Dauphin e, and Brittany, in the generality of Montauban, 
 and in the elections of Agen and Condom, as well as in some 
 other districts of France, are taxes upon lands held in property 
 by an ignoble tenure. In other countries the tax was laid upon 
 the supposed profits of all those who held in farm or lease lands 
 belonging to other people, whatever might be the tenure by which 
 the proprietor held them; and in this case the taille was said to 
 be personal. In the greater part of those provinces of France, 
 
 1 The taille of France was the repre- the personal property of all those who 
 sentative of the mediaeval tallage, the came within the compass of the tax. Ex- 
 twentieths, fifteenths, &c. of the Plan- emptions from the tax were granted by 
 tagenet kings In England, the imposi- the king on a favourable return from a 
 tion of this tax was granted or withheld jury to a writ known as ad quod damnum, 
 by Parliament ; in France, its levy was the question put before the jury being 
 more or less arbitrary, discretional, and whether the king would suffer loss by the 
 peculiar. But any person who is at the remission of taxation. It is obvious that 
 pains to examine the subsidy rolls of the a j ury would generally be indisposed to 
 three Edwards, which are preserved in make a favourable return. The equivalent 
 great numbers in the Public Record Office, exemptions in France seem to have been 
 will find that these taxes were levied on acts of favour on the part of the sovereign.
 
 CHAP. ii. THE WEALTH OF NATIONS. 449 
 
 which are called the Countries of Elections, the taille is of this 
 kind. The real taille, as it is imposed only upon a part of the 
 lands -of the country, is necessarily an unequal, but it is not always 
 an arbitrary tax, though it is so upon some occasions. The personal 
 taille, as it is intended to be proportioned to the profits of a certain 
 class of people who can only be guessed at, is necessarily both 
 arbitrary and unequal. 
 
 In France, the personal taille at present (1775) annually imposed 
 upon the twenty generalities, called the Countries of Elections, 
 amounts to 40,107,239 livres, 16 sous.* The proportion in which 
 this sum is assessed upon those different provinces, varies from 
 year to year, according to the reports which are made to the king's 
 council concerning the goodness or badness of the crops, as well 
 as other circumstances, which may either increase or diminish 
 their respective abilities to pay. Each generality is divided into a 
 certain number of elections, and the proportion in which the sum 
 imposed upon the whole generality is divided among those different 
 elections, varies likewise from year to year, according to the reports 
 made to the council concerning their respective abilities. It seems 
 impossible that the council, with the best intentions, can ever 
 proportion with tolerable exactness either of those two assessments 
 to the real abilities of the province or district upon which they 
 are respectively laid. Ignorance and misinformation must always, 
 more or less, mislead the most upright council. The proportion 
 which each parish ought to support of what is assessed upon the 
 whole election, and that which each individual ought to support 
 of what is assessed upon his particular parish, are both in the 
 same manner varied, from year to year, according as circumstances 
 are supposed to require. These circumstances are judged of, in 
 the one case, by the officers of the election ; in the other by those 
 of the parish ; and both the one and the other are, more or less, 
 under the direction and influence of the intendant. Not only 
 ignorance and misinformation, but friendship, party animosity, and 
 private resentment, are said frequently to mislead such assessors. 
 No man subject to such a tax, it is evident, can ever be certain, 
 before he is assessed, of what he is to pay. He cannot even be 
 certain after he is assessed. If any person has been taxed who 
 ought to have been exempted, or if any person has been taxed 
 
 * M^moires concernant les Droits, &c., torn. ii. p. 1 7. 
 VOL. II. G g
 
 450 THE NATURE AND CAUSES OF BOOK v. 
 
 beyond his proportion, though both must pay in the mean time, 
 yet if they complain and make good their complaints, the whole 
 parish is reimposed next year in order to reimburse them. If any 
 of the contributors become bankrupt or insolvent, the collector is 
 obliged to advance his tax, and the whole parish is reimposed 
 next year in order to reimburse the collector. If the collector 
 himself should become bankrupt, the parish which elects him must 
 answer for his conduct to the receiver-general of the election. 
 But, as it might be troublesome for the receiver to prosecute the 
 whole parish, he takes at his choice five or six of the richest con- 
 tributors, and obliges them to make good what had been lost by 
 the insolvency of the collector. The parish is afterwards reimposed 
 in order to reimburse those five or six. Such reimpositions are 
 always over and above the taille of the particular year in which 
 they are laid on. 
 
 When a tax is imposed upon the profits of stock in a particular 
 branch of trade, the traders are all careful to bring no more goods 
 to market than what they can sell at a price sufficient to reimburse 
 them for advancing the tax. Some of them withdraw a part of 
 their stocks from the trade, and the market is more sparingly 
 supplied than before. The price of the goods rises, and the final 
 payment of 'the tax falls upon the consumer. Bnt when a tax 
 is imposed upon the profits of stock employed in agriculture, it is 
 not the interest of the farmers to withdraw any part of their stock 
 from that employment. Each farmer occupies a certain quantity 
 of land, for which he pays rent. For the proper cultivation of 
 this land a certain quantity of stock is necessary, and by with- 
 drawing any part of this necessary quantity, the farmer is not 
 likely to be more able to pay either the rent or the tax. In order to 
 pay the tax, it can never be his interest to diminish the quantity of 
 his produce, nor consequently to supply the market more sparingly 
 than before. The tax, therefore, will never enable him to raise 
 the price of his produce, so as to reimburse himself by throwing 
 the final payment upon the consumer. The farmer, however, must 
 have his reasonable profit as well as every other dealer, otherwise 
 he must give up the trade. After the imposition of a tax of 
 this kind, he can get this reasonable profit only by paying less 
 rent to the landlord. The more he is obliged to pay in the way 
 of tax, the less he can afford to pay in the way of rent. A tax of
 
 CHAP. ii. THE WEALTH OF NATIONS. 451 
 
 this kind imposed during the currency of a lease may, no doubt, 
 distress or ruin the farmer. Upon the renewal of the lease, it 
 must always fall upon the landlord. 
 
 In the countries where the personal taille takes place, the farmer 
 is commonly assessed in proportion to the stock which he appears 
 to employ in cultivation. He is, upon this account, frequently 
 afraid to have a good team of horses or oxen, but endeavours to 
 cultivate with the meanest and most wretched instruments of 
 husbandry that he can. Such is his distrust in the justice of his 
 assessors, that he counterfeits poverty, and wishes to appear scarce 
 able to pay anything, for fear of being obliged to pay too much. 
 By this miserable policy he does not, perhaps, always consult his 
 own interest in the most effectual manner, and he probably loses 
 more by the diminution of his produce than he saves by that of 
 his tax. Though, in consequence of this wretched cultivation, the 
 market is, no doubt, somewhat worse supplied, yet the small rise 
 of price which this may occasion, as it is not likely even to in- 
 demnify the farmer for the diminution of his produce, it is still 
 less likely to enable him to pay more rent to the landlord. The 
 public, the farmer, the landlord, all suffer more or less by this 
 degrading cultivation. That the personal taille tends, in many 
 different ways, to discourage cultivation, and consequently to dry 
 up the principal source of the wealth of every great country, I 
 have already had occasion to observe in the Third Book of this 
 Inquiry. 1 
 
 What are called poll-taxes in the southern provinces of North 
 America and in the West Indian islands (annual taxes of so much 
 a head upon every negro) are properly taxes upon the profits of a 
 certain species of stock employed in agriculture. As the planters 
 are, the greater part of them, both farmers and landlords, the final 
 payment of the tax falls upon them in their quality of landlords 
 without any retribution. 
 
 Taxes of so much a head upon the bondmen employed in cultiva- 
 tion seem anciently to have been common all over Europe. There 
 subsists at present a tax of this kind in the empire of Russia. It is 
 probably upon this account that poll-taxes of all kinds have often 
 been represented as badges of slavery. 2 Every tax, however, is to 
 
 1 Book III. chap. ii. which was reputed to have been the 
 
 8 For the celebrated poll-tax of 1381, proximate cause of Tyler's rebellion, see 
 
 oga
 
 452 THE NATURE AND CAUSES OF BOOK v. 
 
 the person who pays it a badge, not of slavery, but of liberty. It 
 denotes that he is subject to government, indeed, but that, as he 
 has some property, he cannot himself be the property of a master. 
 A poll-tax upon slaves is altogether different from a poll-tax upon 
 freemen. The latter is paid by the persons upon whom it is im- 
 posed ; the former by a different set of persons. The latter is either 
 altogether arbitrary or altogether unequal, and in most cases is both 
 the one and the other ; the former, though in some respects unequal, 
 different slaves being of different values, is in no respect arbitrary. 
 Every master who knows the number of his own slaves, knows 
 exactly what he has to pay. Those different taxes, however, being 
 called by the same name, have been considered as of the same 
 nature. 
 
 The taxes which in Holland are imposed upon men and maid 
 servants, are taxes, not upon stock, but upon expense, and so far 
 resemble the taxes upon consumable commodities. The tax of a 
 guinea a head for every man servant, which has lately been imposed 
 in Great Britain, is of the same kind. It falls heaviest upon the 
 middling rank. A man of two hundred a year may keep a single 
 man servant ; a man of ten thousand a year will not keep fifty. 
 It does not affect the poor. 1 
 
 Taxes upon the profits of stock in particular employments can 
 never affect the interest of money. Nobody will lend his money 
 for less interest to those who exercise the taxed, than to those who 
 exercise the unaxed employments. Taxes upon the revenue arising 
 from stock in all employments, where the Government attempts to 
 levy them with any degree of exactness, will, in many cases, fall 
 upon the interest of money. The Vingtieme, or twentieth penny, 
 in France, is a tax of the same kind with what is called the land- 
 tax in England, and is assessed, in the same manner, upon the 
 revenue arising from land, houses, and stock. So far as it affects 
 
 the Editor's Agriculture and Prices, vol. i. greater assistance towards humanising or 
 
 chap. iv. p. 84. Poll-taxes, at a uniform refining the manners of the poorer classes 
 
 rate of a dollar a head for adults, have than the relations of muster and servant, 
 
 been frequently levied in some of the when these rel \tions are carried out with 
 
 .States constituting the American Union. mutual honour, good faith, and justice. 
 
 1 In so far as an assessed tax or licence The influence of domestic service on wo- 
 
 discouragea the employment of male ser- men is generally good. The attendance 
 
 vants, it is an impost which indirectly of common soldiers on officers in a regi- 
 
 affects the poor. But it has other im- ment has similarly beneficial effects upon 
 
 plied inconveniences. There is probably men who are generally taken from the 
 
 no process which can be made to confer poorest and least refined ranks of society.
 
 CHAP. ii. THE WEALTH OF NATIONS. 453 
 
 stock, it is assessed; though not with great rigour, yet with nouch 
 more exactness than that part of the land-tax of England which is 
 imposed upon the same fund. It, in many cases, falls altogether 
 upon the interest of money. Money is frequently sunk in France 
 upon what are called Contracts for the constitution of a rent ; that 
 is, perpetual annuities redeemable at any time by the debtor upon 
 repayment of the sum originally advanced, but of which this re- 
 demption is not exigible by the creditor except in particular cases. 
 The Vingtieme seems not to have raised the rate of those annuities, 
 though it is exactly levied upon them all. 
 
 APPENDIX TO ARTICLES I. AND II. 
 Taxes upon the capital Value of Land, Houses, and Slock. 
 
 "While property remains in the possession of the same person, 
 whatever permanent taxes may have been imposed upon it, they 
 have never been intended to diminish or take away any part of its 
 capital value, but only some part of the revenue arising from it. 
 But when property changes hands, when it is transmitted either 
 from the dead to the living, or from the living to the living, such 
 taxes have frequently been imposed upon it as necessarily take away 
 some part of its capital value. 
 
 The transference of all sorts of property from the dead to the 
 living, and that of immoveable property, of lands and houses, from 
 the living to the living, are transactions which are in their nature 
 either public and notorious, or such as cannot be long concealed. 
 Such transactions, therefore, may be taxed directly. The trans- 
 ference of stock, or moveable property, from the living to the living, 
 by the lending of money, is frequently a secret transaction, and may 
 always be made so. It cannot easily, therefore, be taxed directly. 
 It has been taxed indirectly in two different ways : first, by requiring 
 that the deed, containing the obligation to repay, should be written 
 upon paper or parchment which had paid a certain stamp-duty, 
 otherwise not to be valid ; secondly, by requiring, under the like 
 penalty of invalidity, that it should be recorded either in a public 
 or secret register, and by imposing certain duties upon such registra- 
 tion. Stamp-duties and duties of registration have frequently been 
 imposed likewise upon the deeds transferring property of all kinds
 
 454 THE NATURE AND CAUSES OF BOOK r. 
 
 from the dead to the living, and upon those transferring- immoveable 
 property from the living to the living transactions which might 
 easily have been taxed directly. 
 
 The Vicesima Hereditatum, the twentieth penny of inheritances, 
 imposed by Augustus upon the ancient Romans, was a tax upon the 
 transference of property from the dead to the living. Dion Cassius,* 
 the author who writes concerning it the least indistinctly, says, that 
 it was imposed upon all successions, legacies, and donations, in case of 
 death, except upon those to the nearest relations, and to the poor. 
 
 Of the same kind is the Dutch tax upon successions. f Collateral 
 successions are taxed, according to the degree of relation, from five 
 to thirty per cent, upon the whole value of the succession. Testa- 
 mentary donations, or legacies to collaterals, are subject to the like 
 duties. Those from husband to wife, or from wife to husband, to 
 the fiftieth penny. The Luctuosa Hereditas, the mournful succes- 
 sion of ascendants to descendants, to the twentieth penny only. 
 Direct successions, or those of descendants to ascendants, pay no 
 tax. The death of a father, to such of his children as live in the 
 same house with him, is seldom attended with any increase, and 
 frequently with a considerable diminution of revenue ; by the loss 
 of his industry, of his office, or of some life-rent estate, of which he 
 may have been in possession. That tax would be cruel and op- 
 pressive which aggravated their loss by taking from them any part 
 of his succession. It may, however, sometimes be otherwise with 
 those children who, in the language of the Roman law, are said to 
 be emancipated ; in that of the Scotch law, to be foris-familiated ; 
 that is, who have received their portion, have got families of their 
 own, and are supported by funds separate and independent of those 
 of their father. Whatever part of his succession might come to 
 such children, would be a real addition to their fortune, and might, 
 therefore, perhaps, without more inconveniency than what attends 
 all duties of this kind, be liable to some tax. 1 
 
 * Lib. 55. See also Burnham de Vecti- tax on property passing under will, or on 
 
 galibus pop. Rom. cap. xi., and Bouchaud the estates of intestate persons, the tax 
 
 tie I'lmp6t du Vingtieme sur les succes- being higher in the latter than in tbe 
 
 sions. former case. Besides this initiatory tax, 
 
 t Me*moires concemant les Droits, &c. another was paid on legacies, the rate 
 
 torn. i. p. 225. varying with the proximity of blood be- 
 
 1 Up to the 36th Geo. Ill (1796) no tween the devisor and legat e. This 
 
 duty was paid on wills and legacies. But variation might have been adopted on 
 
 at that time Pitt was constrained, for the principle of the Dutch law adverted 
 
 purposes of revenue, to levy an ad valorem to in the text, since the Dutch are re-
 
 CHAP. ii. THE WEALTH OF NATION'S, 455 
 
 The casualties of the feudal law were taxes upon the transference 
 of land, both from the dead to the living, and from the living to 
 the living. In ancient times, they constituted in every part of 
 Europe one of the principal branches of the revenue of the Crown. 
 
 The heir of every immediate vassal of the Crown paid a certain 
 duty, generally a year's rent, upon receiving the investiture of the 
 estate. If the heir was a minor, the whole rents of the estate, 
 during the continuance of the minority, devolved to the superior 
 without any other charge, besides the maintenance of the minor 
 and the payment of the widow's dower, when there happened to be 
 a dowager upon the land. When the minor came to be of age, 
 another tax, called Relief, was still due to the superior, which 
 generally amounted likewise to a year's rent. A long minority 
 (which in the present times so frequently disburdens a great estate 
 of all its incumbrances, and restores the family to their ancient 
 splendour) could in those times have no such effect. The waste, 
 and not the disincumbrance of the estate, was the common effect of 
 a long minority. 1 
 
 By the feudal law, the vassal could not alienate without the con- 
 sent of his superior, who generally extorted a fine or composition for 
 granting it. This fine, which was at first arbitrary, came in many 
 countries to be regulated at a certain portion of the price of the 
 land. 2 In some countries, where the greater part of the other feudal 
 
 ported to have been the fathers of modern 1 For the incidents by which the estates 
 finance. But there is a further reason of military tenants were affected, see 
 for the variability of the tax. Had a Blackstone's first book, and Gilbert's 
 high rate been levied on relations in the Feudal Tenures. During the Protec- 
 ascending or descending line, a direct torate, a land-tax was substituted in place 
 stimulus would have been given to dona- of these incidents. At the Restoration, 
 tiones inter vivos. the Court of Wards and Liveries was 
 Pitt could not persuade the landowners, revived, as it bad not been abolished by 
 who were of course absolute in the Houses any legal statute. The inconvenience, 
 of Parliament, into extending the probate however, of this court was so great that 
 and legacy duty to their own estates. Parliament resolved to convert military 
 Hence land or real property was exempted service into common socage. But it did 
 from these Acts. In 1853, however, landed not emancipate the copyholders, and in- 
 estate was made liable to a moderate sue- stead of assessing a land-tax on the mill- 
 cession duty. It is not liable to probate tary tenants, equal in amount to the 
 duty, and the legatee or successor does average receipts of the Exchequer from 
 not pay on the value of the estate which this service, it compensated the Crown 
 he inherits, but on a calculation of the for its loss of revenue by imposing the 
 time during which, at his age, he is likely excise on the general public, 
 to enjoy the estate. The unfairness of a By the statute Quia emptwcs, i8th 
 this exemption from public burdens has Edw. I, the tenants of a manor could 
 been often severely commented on. The alienate without the consent of their 
 Budget of March, 1880, was worse in this superior lord. It is generally alleged 
 particular than any which preceded it. that this enactment was made in order
 
 456 THE NATURE AND CAUSES OF BOOK r. 
 
 customs have gone into disuse, this tax upon the alienation of land 
 still continues to make a very considerable branch of the revenue of 
 the sovereign. In the canton of Berne it is so high as a sixth part 
 of the price of all noble fiefs, and a tenth part of that of all ignoble 
 ones.* In the canton of Lucerne the tax upon the sale of lands is 
 not universal, and takes place only in certain districts. But if any 
 person sells his land, in order to remove out of the territory, he 
 pays ten per cent, upon the whole price of the sale.f Taxes of the 
 same kind upon the sale either of all lands, or of lands held by 
 certain tenures, take place in many other countries, and make a 
 more or less considerable branch of the revenue of the sovereign. 
 
 Such transactions may be taxed indirectly, by means either of 
 stamp-duties, or of duties upon registration ; and those duties either 
 may or may not be proportioned to the value of the subject which 
 is transferred. 
 
 In Great Britain, the stamp-duties are higher or lower, not so 
 much according to the value of the property transferred (an eighteen- 
 penny or half-crown stamp being sufficient upon a bond for the 
 largest sum of money) as according to the nature of the deed. The 
 highest do not exceed six pounds upon every sheet of paper, or skin 
 of parchment ; and these high duties fall chiefly upon grants from 
 the Crown, and upon certain law proceedings, without any regard 
 to the value of the subject. There are in Great Britain no duties 
 on the registration of deeds or writings, except the fees of the 
 officers who keep the register; and these are seldom more than a 
 reasonable recompense for their labour. The Crown derives no 
 revenue from them. 
 
 In Holland, J there are both stamp-duties and duties upon regi- 
 stration, which in some cases are and in some are not proportioned 
 to the value of the property transferred. All testaments must be 
 written upon stamped paper, of which the price is proportioned to 
 the property disposed of, so that there are stamps which cost from 
 threepence, or three stivers a sheet, to three hundred florins, equal 
 
 to prevent subinfeudation, the statute de- last relics of the custom having been 
 
 claring that the alienee should hold of abolished in 1737, nth Geo. II, cap. 19. 
 
 the same fcuperior as the alienor formerly The ancient English law seems to have 
 
 held under. But a corresponding disability favoured the maintenance of a class of 
 
 under which the superior rested, that of yeomen proprietors. 
 
 being incapable of granting his estate * Me"moires concernant les Droits, &c., 
 
 without the assent of his inferior (this torn. i. p. 154. 
 assent being known by the name of ) Id. p. 157. 
 aUorninent), continued much longer, the * Id. pp. 22,3, 224, 225.
 
 CHAP. ii. THE WEALTH OF NATIONS. 457 
 
 to about twenty-seven pounds ten shilling's of our money. If the 
 stamp is of an inferior price to what the testator ought to have 
 made use of, his succession is confiscated. This is over and above 
 all their other taxes on succession. Except bills of exchange, and 
 some other mercantile bills, all other deeds, bonds, and contracts 
 are subject to a stamp-duty. This duty, however, does not rise in 
 proportion to the value of the subject. All sales of land and of 
 houses, and all mortgages upon either, must be registered, and, 
 upon registration, pay a duty to the State of two and a half per 
 cent, upon the amount of the price or of the mortgage. This duty 
 is extended to the sale of all ships and vessels of more than two tons 
 burthen, whether decked or undecked. These, it seems, are con- 
 sidered as a sort of houses upon the water. The sale of moveables, 
 when it is ordered by a court of justice, is subject to the like duty 
 of two and a half per cent. 
 
 In France, there are both stamp-duties and duties upon registra- 
 tion. The former are considered as a branch of the aides or excise, 
 and in the provinces where those duties take place, are levied by 
 the excise officers ; the latter are considered as a branch of the 
 domain of the Crown, and are levied by a different set of officers. 
 
 Those modes of taxation, by stamp-duties and by duties upon 
 registration, are of very modern invention. In the course of little 
 more than a century, however, stamp-duties have, in Europe, 
 become almost universal, and duties upon registration extremely 
 common. There is no art which one government sooner learns 
 of another than than of draining money from the pockets of the 
 people. 
 
 Taxes upon the transference of property from the dead to the 
 living, fall finally as well as immediately upon the person to whom 
 the property is transferred ; taxes upon the sale of land fall 
 altogether upon the seller. The seller is almost always under the 
 necessity of selling, and must, therefore, take such a price as he can 
 get ; the buyer is scarce ever under the necessity of buying, and 
 will, therefore, only give such a price as he likes. He considers 
 what the land will cost him in tax and price together. The more 
 he is obliged to pay in the way of tax, the less he will be disposed 
 to give in the way of price. Such taxes, therefore, fall almost 
 always upon a necessitous person, and must, therefore, be frequently 
 very cruel and oppressive. Taxes upon the sale of new-built houses,
 
 458 TEE NATURE AND CAUSES OF BOOK v. 
 
 where the building is sold without the ground, fall generally upon 
 th buyer, because the builder must generally have his profit, 
 otherwise he must give up the trade. If he advances the tax, there- 
 fore, the buyer must generally repay it to him. Taxes upon the 
 sale of old houses, for the same reason as those upon the sale of 
 land, fall generally upon the seller, whom in most cases either 
 conveniency or necessity obliges to sell. The number of new-built 
 houses that are annually brought to market is more or less regu- 
 lated by the demand. Unless the demand is such as to afford the 
 builder his profit, after paying all expenses, he will build no more 
 houses. The number of old houses which happen at any time to 
 come to market is regulated by accidents of which the greater part 
 have no relation to the demand. Two or three great bankruptcies 
 in a mercantile town will bring many houses to sale, which must 
 be sold for what can be got for them. Taxes upon the sale of 
 ground rents fall altogether upon the seller, for the same reason as 
 those upon the sale of land. Stamp-duties, and duties upon the 
 registration of bonds and contracts for borrowed money, fall alto- 
 gether upon the borrower, and, in fact, are always paid by him. 
 Duties of the same kind upon law proceedings fall upon the suitors. 
 They reduce to both the capital value of the subject in dispute. 
 The more it costs to acquire any property, the less must be the net 
 value of it when acquired. 
 
 All taxes upon the transference of property of every kind, so far 
 as they diminish the capital value of that property, tend to diminish 
 the funds destined for the maintenance of productive labour. They 
 are all more or less unthrifty taxes that increase the revenue of the 
 sovereign, which seldom maintains any unproductive labourers ; at 
 the expense of the capital of the people, which maintains none but 
 productive. 
 
 Such taxes, even when they are proportioned to the value of the 
 property transferred, are still unequal ; the frequency of transference 
 not being always equal in property of equal value. When they are 
 not proportioned to this value, which is the case with the greater 
 part of the stamp-duties and duties of registration, they are still 
 more so. They are in no respect arbitrary, but are or may be in all 
 cases perfectly clear and certain. Though they sometimes fall upon 
 the person who is not very able to pay, the time of payment is in 
 most cases sufficiently convenient for him. When the payment
 
 CHAP. n. THE WEALTH OF NATIONS. 459 
 
 becomes due, he must in most cases have the money to pay. They 
 are levied at very little expense, and in general subject the con- 
 tributors to no other inconveniency besides always the unavoidable 
 one of paying- the tax. 
 
 In France, the stamp-duties are not much complained of. Those 
 of registration, which they call the controle, are. They give occa- 
 sion, it is pretended, to much extortion in the officers of the farmers- 
 general who collect the tax, which is in a great measure arbitrary 
 and uncertain. In the greater part of the libels which have been 
 written against the present system of finances in France, the abuses 
 of the controle make a principal article. Uncertainty, however, 
 does not seem to be necessarily inherent in the nature of such taxes. 
 If the popular complaints are well founded, the abuse must arise, 
 not so much from the nature of the tax, as from the want of pre- 
 cision and distinctness in the words of the edicts or laws which 
 impose it. 
 
 The registration of mortgages, and in general of all rights upon- 
 immoveable property, as it gives great security both to creditors and 
 purchasers, is extremely advantageous to the public. That of the 
 greater part of deeds of other kinds is frequently inconvenient and 
 even dangerous to individuals, without any advantage to the public. 
 All registers which, it is acknowledged, ought to be kept secret, ought 
 certainly never to exist. The credit of individuals ought certainly 
 never to depend upon so very slender a security as the probity and 
 religion of the inferior officers of revenue. But where the fees 
 of registration have been made a source of revenue to the sovereign, 
 register offices have commonly been multiplied without end, both 
 for the deeds which ought to be registered, and for those which 
 ought not. In France, there are several different sorts of secret 
 registers. This abuse, though not perhaps a necessary, it must be 
 acknowledged, is a very natural effect of such taxes. 
 
 Such stamp-duties as those in England upon cards and dice, upon 
 newspapers and periodical pamphlets, &c., are properly taxes upon 
 consumption ; the final payment falls upon the persons who use or 
 consume such commodities. Such stamp-duties as those upon 
 licences to retail ale, wine, and spirituous liquors, though intended, 
 perhaps, to fall upon the profits of the retailers, are likewise finally 
 paid by the consumers of those liquors. Such taxes, though called 
 by the same name, and levied by the same officers and in the same
 
 460 THE NATURE AND CAUSES OF BOOK v. 
 
 manner with the stamp-duties above mentioned upon the trans- 
 ference of property, are, however, of a quite different nature, and 
 fall upon quite different funds. 
 
 ARTICLE III. 
 Taxes upon the Wages of Labour. 
 
 The wages of the inferior classes of workmen, I have endeavoured 
 to show in the First Book, are everywhere necessarily regulated by 
 two different circumstances : the demand for labour, and the ordi- 
 nary or average price of provisions. The demand for labour, 
 according as it happens to be either increasing, stationary, or 
 declining, or to require an increasing, stationary, or declining 
 population, regulates the subsistence of the labourer, and deter- 
 mines in what degree it shall be, either liberal, moderate, or scanty. 
 The ordinary or average price of provisions determines the quantity 
 of money which must be paid to the workman in order to enable 
 him, one year with another, to purchase this liberal, moderate, or 
 scanty subsistence. While the demand for labour and the price of 
 provisions, therefore, remain the same, a direct tax upon the wages 
 of labour can have no other effect than to raise them somewhat 
 higher than the tax. Let us suppose, for example, that in a parti- 
 cular place the demand for labour and the price of provisions were 
 such as to render ten shillings a week the ordinary wages of labour, 
 and that a tax of one-fifth, or four shillings in the pound, was 
 imposed upon wages. If the demand for labour and the price of 
 provisions remained the same, it would still be necessary that the 
 labourer should in that place earn such a subsistence as can be 
 bought only for ten shillings a week, or that after paying the tax 
 he should have ten shillings a week free wages. But in order to 
 leave him such free wages after paying such a tax, the price of 
 labour must in that place soon rise, not to twelve shillings a week 
 only, but to twelve and sixpence ; that is, in order to enable him to 
 pay a tax of one-fifth, his wages must necessarily soon rise, not 
 one-fifth part only, but one-fourth. Whatever was the proportion 
 of the tax, the wages of labour must in all cases rise, not only 
 in that proportion, but in a higher proportion. If the tax, for
 
 CHAP. ii. THE WEALTH OF NATIONS. 461 
 
 example, was one-tenth, the wages of labour must necessarily soon 
 rise, not one-tenth part only, but one-eighth. 
 
 A direct tax upon the wages of labour, therefore, though the 
 labourer might perhaps pay it out of his hand, could not properly 
 be said to be even advanced by him ; at least if the demand for 
 labour and the average price of provisions remained the same after 
 the tax as before it. In all such cases, not only the tax, but some- 
 thing more than the tax, would in reality be advanced by the 
 person who immediately employed him. The final payment would 
 in different cases fall upon different persons. The rise which such 
 a tax might occasion in the wages of manufacting labour would 
 be advanced by the master manufacturer, who would both be en- 
 titled and obliged to charge it, with a profit, upon the price of his 
 goods. The final payment of this rise of wages, therefore, together 
 with the additional profit of the master manufacturer, would fall 
 upon the consumer. The rise which such a tax might occasion in 
 the wages of country labour would be advanced by the farmer, who, 
 in order to maintain the same number of labourers as before, would 
 be obliged to employ a greater capital. In order to get back this 
 greater capital, together with the ordinary profits of stock, it would 
 be necessary that he should retain a larger portion, or, what comes 
 to the same thing, the price of a larger portion, of the produce of 
 the land, and consequently that he should pay less rent to the 
 landlord. The final payment of this rise of wages, therefore, would 
 in this case fall upon the landlord, together with the additional 
 profit of the farmer who had advanced it. In all cases, a direct 
 tax upon the wages of labour must, in the long run, occasion both 
 a greater reduction in the rent of land, and a greater rise in the price 
 of manufactured goods, than would have followed from the proper 
 assessment of a sum equal to the produce of the tax, partly upon 
 the rent of land, and partly upon consumable commodities. 
 
 If direct taxes upon the wages of labour have not always occa- 
 sioned a proportionable rise in those wages, it is because they have 
 generally occasioned a considerable fall in the demand for labour. 
 The declension of industry, the decrease of employment for the poor, 
 the diminution of the annual produce of the land and labour of the 
 country, have generally been the effects of such taxes. In con- 
 sequence of them, however, the price of labour must always be 
 higher than it otherwise would have been in the actual state of the
 
 462 THE NATURE AND CAUSES OF BOOK v. 
 
 demand ; and this enhancement of price, together with the profit of 
 those who advance it, must always be finally paid by the landlords 
 and consumers. 1 
 
 A tax upon the wages of country labour does not raise the price 
 of the rude produce of land in proportion to the tax ; for the same 
 reason that a tax upon the farmer's profit does not raise that price 
 in that proportion. 
 
 Absurd and destructive as such taxes are, however, they take 
 place in many countries. In France, that part of the taille which 
 is charged upon the industry of workmen and day labourers in 
 country villages is properly a tax of this kind. Their wages are 
 computed according to the common rate of the district in which 
 they reside, and that they may be as little liable as possible to any 
 overcharge, their yearly gains are estimated at no more than two 
 hundred working days in the year.* The tax of each individual is 
 varied from year to year according to different circumstances, of 
 which the collector or the commissary, whom the intendant appoints 
 to assist him, are the judges. In Bohemia, in consequence of the 
 alteration in the system of finances which was begun in 1748, 
 a very heavy tax is imposed upon the industry of artificers. 
 They are divided into four classes. The highest class pay a 
 hundred florins a year ; which, at two and twenty-pence halfpenny 
 a florin, amounts to ^9 7*. 6d. The second class are taxed at 
 seventy; the third at fifty; and the fourth, comprehending artificers 
 in villages and the lowest class of those in towns, at twenty-five 
 florins.f 
 
 The recompense of ingenious artists and of men of liberal pro- 
 fessions, I have endeavoured to show in the First Book, necessarily 
 keeps a certain proportion to the emoluments of inferior trades. 
 A tax upon this recompense, therefore, could have no other effect 
 than to raise it somewhat higher than in proportion to the tax. 
 If it did not rise in this manner, the ingenious arts and the 
 liberal professions, being no longer upon a level with other trades, 
 
 1 For the reason given above, that that employment is continued, and the 
 
 taxation can be levied only on that which number of labourers is not reduced by 
 
 the taxpayer can save, the effect of a tax famine, wages must rise by at least the 
 
 upon wages will be determined by the amount of the tax. If it is, the tax may 
 
 answer to this question : Is the rate of be made to fall on the labourer, 
 
 wages in excess of the necessary main- * Me'moires concernant les Droits, &c. 
 
 tenance and other obligatory outgoings torn. ii. p. 108. 
 
 of the labourer? If it is not, assuming t Id. torn. iii. p. 87.
 
 CHAP. ir. THE WEALTH OF NATIONS. 463 
 
 would be so much deserted that they would soon return to that 
 level. 
 
 The emoluments of offices are not, like those of trades and pro- 
 fessions, regulated by the free competition of the market, and do 
 not, therefore, always bear a just proportion to what the nature of 
 the employment requires. They are perhaps, in most countries, 
 higher than it requires ; the persons who have the administration 
 of government being generally disposed to reward both themselves 
 and their immediate dependants rather more than enough. The 
 emoluments of offices, therefore, can in most cases very well bear 
 to be taxed. The persons, besides, who enjoy public offices, 
 especially the more lucrative, are in all countries the objects of 
 general envy ; and a tax upon their emoluments, even though it 
 should be somewhat higher than upon any other sort of revenue, is 
 always a very popular tax. In England, for example, when by the 
 land-tax every other sort of revenue was supposed to be assessed at 
 four shillings in the pound, it was very popular to lay a real tax of 
 five shillings and sixpence in the pound upon the salaries of offices 
 which exceeded a hundred pounds a year ; the pensions of the 
 younger branches of the royal family, the pay of the officers of the 
 army and navy, and a few others less obnoxious to envy excepted. 
 There are in England no other direct taxes upon the wages of 
 labour. 
 
 ARTICLE IV. 
 
 Taxes which it is intended should fall indifferently upon every different 
 species of Revenue. 
 
 The taxes which it is intended should fall indifferently upon 
 every different species of revenue, are capitation taxes, and taxes 
 upon consumable commodities. These must be paid indifferently 
 from whatever revenue the contributors may possess ; from the rent 
 of their land, from the profits of their stock, or from the wages of 
 their labour. 
 
 Capitation Taxes. 
 
 Capitation taxes, if it is attempted to proportion them to the 
 fortune or revenue of the contributor, become altogether arbitrary. 
 The state of a man's fortune varies from day to day, and without an
 
 464 THE NATURE AND CAUSES OF BOOK v. 
 
 inquisition more intolerable than any tax, and renewed at least once 
 every year, can only be guessed at. His assessment, therefore, 
 must in most cases depend upon the good or bad humour of his 
 assessors, and must, therefore, be altogether arbitrary and uncertain. 
 
 Capitation taxes, if they are proportioned not to the supposed 
 fortune, but to the rank of each contributor, become altogether 
 unequal ; the degrees of fortune being frequently unequal in the 
 same degree of rank. 
 
 Such taxes, therefore, if it is attempted to render them equal, 
 become altogether arbitraiy and uncertain; and if it is attempted 
 to render them certain and not arbitrary , become altogether unequal. 
 Let the tax be light or heavy, uncertainty is always a great 
 grievance. In a light tax a considerable degree of inequality 
 may be supported ; in a heavy one it is altogether intolerable. 
 
 In the different poll-taxes which took place in England during 
 the reign of William III, the contributors were, the greater part of 
 them, assessed according to the degree of their rank; as dukes, 
 marquesses, earls, viscounts, barons, esquires, gentlemen, the eldest 
 and youngest sons of peers, &C. 1 All shopkeepers and tradesmen 
 worth more than three hundred pounds, that is, the better sort of 
 them, were subject to the same assessment, how great soever might 
 be the difference in their fortunes. Their rank was more considered 
 than their fortune. Several of those who in the first poll-tax were 
 rated according to their supposed fortune, were afterwards rated 
 according to their rank. Serjeants, attorneys, and proctors-at-law, 
 who in the first poll-tax were assessed at three shillings in the 
 pound of their supposed income, were afterwards assessed as gentle- 
 men. In the assessment of a tax which was not very heavy, a 
 considerable degree of inequality had been found less insupportable 
 than any degree of uncertainty. 
 
 In the capitation which has been levied in France without any 
 interruption since the beginning of the present century, the highest 
 orders of people are rated according to their rank by an invariable 
 tariff; the lower orders of people, according to what is supposed to 
 
 1 The two poll-taxes levied in the mum for a man and his wife was sixty 
 
 reign of Richard II were graduated. The groats, the minimum one. Married women 
 
 Duke of Lancaster, the King's uncle, were not made liable, and the period of 
 
 was rated in the first at five hundred nonage in the first was sixteen, in the 
 
 and twenty times the payment of the second fifteen, years. See Rot. Parl. iii. 
 
 labourer. In the second tax, the maxi- 57; iii. 88.
 
 CHAP. ii. THE WEALTH OF NATIONS. 465 
 
 be their fortune, by an assessment which varies from year to year. 
 The officers of the king's court, the judges and other officers in the 
 superior courts of justice, the officers of the troops, &c., are assessed 
 in the first manner ; the inferior ranks of people in the provinces 
 are assessed in the second. In France, the great easily submit to 
 a considerable degree of inequality in a tax which, so far as it 
 affects them, is not a very heavy one, but could not brook the 
 arbitrary assessment of an intendant. The inferior ranks of people 
 must, in that country, suffer patiently the usage which their 
 superiors think proper to give them. 
 
 In England, the different poll-taxes never produced the sum 
 which had been expected from them, or which it was supposed 
 they might have produced, had they been exactly levied. In 
 France, the capitation always produces the sum expected from it. 
 The mild Government of England, when it assessed the different ranks 
 of people to the poll-tax, contented itself with what that assessment 
 happened to produce, and required no compensation for the loss which 
 the State might sustain either by those who could not pay, or by those 
 who would not pay (for there were many such), and who, by the indul- 
 gent execution of the law, were not forced to pay. The more severe 
 Government of France assesses upon each generality a certain sum, 
 which the intendant must find as he can. If any province com- 
 plains of being assessed too high, it may, in the assessment of next 
 year, obtain an abatement proportioned to the overcharge of the 
 year before ; but it must pay in the meantime. The intendant, in 
 order to be sure of finding the sum assessed upon his generality, 
 was empowered to assess it in a larger sum, that the failure or 
 inability of some of the contributors might be compensated by the 
 overcharge of the rest; and till 1765, the fixation of this surplus 
 assessment was left altogether to his discretion. In that year 
 indeed the council assumed this power to itself. In the capitation 
 of the provinces, it is observed by the perfectly well-informed author 
 of the Memoirs upon the impositions in France, 1 the proportion 
 which falls upon the nobility, and upon those whose privileges 
 exempt them from the taille, is the least considerable. The largest 
 falls upon those subject to the taille, who are assessed to the capita- 
 tion at so much a pound of what they pay to that other tax. 
 
 1 The author is said to be M. Moreau 4to., three being occupied with a state- 
 de Beaumont. The work is in five vols. ment of French finance. 
 
 VOL. II. H h
 
 466 THE NATURE AND CAUSES OF BOOK v. 
 
 Capitation taxes, so far as they are levied upon the lower ranks of 
 people, are direct taxes upon the wages of labour, and are attended 
 with all the inconveniences of such taxes. 
 
 Capitation taxes are levied at little expense ; and, where they 
 are rigorously exacted, afford a very sure revenue to the State. It 
 is upon this account that in countries where the ease, comfort, and 
 security of the inferior ranks of people are little attended to, capita- 
 tion taxes are very common. It is in general, however, but a small 
 part of the public revenue, which, in a great empire has ever been 
 drawn from such taxes ; and the greatest sum which they have 
 ever afforded might always have been found in some other way 
 much more convenient to the people. 
 
 Taxes upon consumable Commodities. 
 
 The impossibility of taxing the people, in proportion to their 
 revenue, by any capitation, seems to have given occasion to the 
 invention of taxes upon consumable commodities. The State not 
 knowing how to tax, directly and proportionably, the revenue of its 
 subjects, endeavours to tax it indirectly by taxing their expense, 
 which, it is supposed, will in most cases be nearly in proportion to 
 their revenue. Their expense is taxed by taxing the consumable 
 commodities upon which it is laid out. 
 
 Consumable commodities are either necessaries or luxuries. 
 
 By necessaries I understand, not only the commodities which are 
 indispensably necessary for the support of life, but whatever the 
 custom of the country renders it indecent for creditable people, even 
 of the lowest order, to be without. A linen shirt, for example, is, 
 strictly speaking, not a necessary of life. The Greeks and Komans 
 lived, I suppose, very comfortably, though they had no linen. 1 
 But in the present times, through the greater part of Europe, 
 a creditable day-labourer would be ashamed to appear in public 
 without a linen shirt, the want of which would be supposed to 
 denote that disgraceful degree of poverty which, it is presumed, 
 
 1 According to Thucydides, i. 6, the valent, of substituting flannel for linen. 
 
 Athenians abandoned the use of linen In Pliny's time, linen garments were 
 
 garments, in consequence of the growth used in Rome, though some of the ancient 
 
 of refinement, 8id TO appoSiatrov, a little families took credit with themselves for 
 
 while before the commencement of the keeping to woollen garments and dis- 
 
 Peloponnesian war. It is possible that daining the use of linen. See Mr. 
 
 a contrary impulse has .induced the Warden's History of the Linen Trade, 
 
 modern custom, now extensively pre- Ancient and Modern.
 
 CHAP. ii. THE WEALTH OF NATIONS. 467 
 
 nobody can well fall into without extreme bad conduct. Custom, 
 in the same manner, has rendered leather shoes a necessary of life 
 in England. The poorest creditable person of either sex would 
 be ashamed to appear in public without them. In Scotland, 
 custom has rendered them a necessary of life to the lowest 
 order of men, but not to the same order of women, who may, 
 without any discredit, walk about bare-footed. In France, 
 they are necessaries neither to men nor to women; the lowest 
 rank of both sexes appearing there publicly, without any 
 discredit, sometimes in wooden shoes, and sometimes bare-footed. 
 Under necessaries, therefore, I comprehend, not only those things 
 which nature, but those things which the established rules of 
 decency have rendered necessary to the lowest rank of people. All 
 other things I call luxuries, without meaning by this appellation 
 to throw the smallest degree of reproach upon the temperate use of 
 them. Beer and ale, for example, in Great Britain, and wine, even 
 in the wine countries, I call luxuries. A man of any rank may, 
 without any reproach, abstain totally from tasting such liquors. 
 Nature does not render them necessary for the support of life ; and 
 custom nowhere renders it indecent to live without them. 
 
 As the wages of labour are everywhere regulated, partly by the 
 demand for it, and partly by the average price of the necessary 
 articles of subsistence ; whatever raises this average price must 
 necessarily raise those wages, so that the labourer may still be able 
 to purchase that quantity of those necessary articles which the state 
 of the demand for labour, whether increasing, stationary, or de- 
 clining, requires that he should have.* A tax upon those articles 
 necessarily raises their price somewhat higher than the amount of 
 the tax, because the dealer, who advances the tax, must generally 
 get it back with a profit. Such a tax must, therefore, occasion 
 a rise in the wages of labour proportionable to this rise of price. 
 
 It is thus that a tax upon the necessaries of life operates exactly 
 in the same manner as a direct tax upon the wages of labour. The 
 labourer, though he may pay it out of his hand, cannot, for any con- 
 siderable time at least, be properly said even to advance it. It must 
 always in the long-run be advanced to him by his immediate em- 
 ployer in the advanced rate of his wages. His employer, if he is a 
 manufacturer, will charge upon the price of his goods this rise of 
 
 * See Book I. chap. viii. 
 H h 3
 
 468 THE NATURE AND CAUSES OF BOOK v. 
 
 wages, together with a profit ; so that the final payment of the 
 tax, together with this overcharge, will fall upon the consumer. 1 
 If his employer is a farmer, the final payment, together with a like 
 overcharge, will fall upon the rent of the landlord. 2 
 
 It is otherwise with taxes upon what I call luxuries, even upon 
 those of the poor. The rise in the price of the taxed commodities 
 will not necessarily occasion any rise in the wages of labour. A tax 
 upon tobacco, for example, though a luxury of the poor as well as 
 of the rich, will not raise wages. Though it is taxed in England 
 at three times, and in France at fifteen times its original price, those 
 high duties seem to have no effect upon the wages of labour. The 
 same thing may be said of the taxes upon tea and sugar, which in 
 England and Holland have become luxuries of the lowest ranks of 
 people, and of those upon chocolate, which in Spain is said to have 
 become so. The different taxes which in Great Britain have in the 
 course of the present century been imposed upon spirituous liquors, 
 are not supposed to have had any effect upon the wages of labour. 
 The rise in the price of porter, occasioned by an additional tax of 
 three shillings upon the barrel of strong beer, has not raised the 
 wages of common labour in London. These were about eighteen- 
 pence and twenty-pence a day before the tax, and they are not more 
 now. 
 
 The high price of such commodities does not necessarily diminish 
 the ability of the inferior ranks of people to bring up families. 
 Upon the sober and industrious poor, taxes upon such commodities 
 
 1 Let a tax be laid upon wheat, which affects all labour, on profits. 
 
 in this country at least is the raw mate- * If the wages of agricultural labour 
 
 rial, so to speak, of labour. What is its rise so much as to materially increase the 
 
 incidence ? If the labourer earns more cost of production, the effect of the rise 
 
 wages than is sufficient for his mainte- will be felt in the diminution of rents, 
 
 nance and whatever other exigencies affect But before this result occurs, an attempt, 
 
 his condition, he will pay the tax, and and probably a successful attempt, will 
 
 cannot shift it on other shoulders. His be made to supplement the increased cost 
 
 spending power is of course curtailed, and of labour by agricultural machinery. In 
 
 therefore he is a worse customer to those the interval between the employment of 
 
 who, in the absence of the tax, might have machinery, and while the cost arising 
 
 supplied the commodities which he would from a diminished population is being 
 
 have purchased with his surplus revenue. felt, the void has been partially filled up 
 
 But the same stint applies to everybody by the establishment of a system of gang 
 
 who pays taxes, rich or poor. If, however, labour, in which children are gathered 
 
 the labourer has nothing beyond his ab- and worked by a contractor. The negli- 
 
 solute necessities, the tax will fall first gence of the Legislature has suffered the 
 
 on the employer ; next, in so far as the material and moral evils of this system 
 
 cost is felt in production, on the con- to go unchecked for too long a period 
 
 sumer, or in case the rise is universal and already.
 
 CHAP. ii. THE WEALTH OF NATIONS. 469 
 
 act as sumptuary laws, and dispose them either to moderate, or to 
 refrain altogether from the use of superfluities which they can no 
 longer easily afford. Their ability to bring up families, in conse- 
 quence of this forced frugality, instead of being diminished, is 
 frequently, perhaps, increased by the tax. 1 It is the sober and 
 industrious poor who generally bring up the most numerous families, 
 and who principally supply the demand for useful labour. All the 
 poor indeed are not sober and industrious, and the dissolute and dis- 
 orderly might continue to indulge themselves in the use of such 
 commodities after this rise of price in the same manner as before, 
 without regarding the distress which this indulgence might bring 
 upon their families. Such disorderly persons, however, seldom rear 
 up numerous families ; their children generally perishing from 
 neglect, mismanagement, and the scantiness or unwholesomeness of 
 their food. If by the strength of their constitution they survive 
 the hardships to which the bad conduct of their parents exposes 
 them, yet the example of that bad conduct commonly corrupts their 
 morals ; so that, instead of being useful to society by their industry, 
 they become public nuisances by their vices and disorders. Though 
 the advanced price of the luxuries of the poor, therefore, might 
 increase somewhat the distress of such disorderly families, and 
 thereby diminish somewhat their ability to bring up children, it 
 would not probably diminish much the useful population of the 
 country. 
 
 Any rise in the average price of necessaries, unless it is compen- 
 sated by a proportionable rise in the wages of labour, must neces- 
 sarily diminish more or less the ability of the poor to bring up 
 numerous families, and consequently to supply the demand for 
 useful labour ; whatever may be the state of that demand, whether 
 increasing, static-nary, or declining; or such as requires an increasing, 
 stationary, or declining population. 
 
 Taxes upon luxuries have no tendency to raise the price of any 
 other commodities except that of the commodities taxed. Taxes 
 upon necessaries, by raising the wages of labour, necessarily tend to 
 raise the price of all manufactures, and consequently to diminish the 
 extent of their sale and consumption. Taxes upon luxuries are 
 
 1 Dupont de Nemour severely criticises affect wages. Note to Turgot, Sur la 
 the passage ' forced frugality,' &c., and on Formation, &c. 
 the theory that taxes on luxuries do not
 
 470 THE NATURE AND CAUSES OF BOOK v. 
 
 finally paid by the consumers of the commodities taxed, without any 
 retribution. They fall indifferently upon every species of revenue, 
 the wages of labour, the profits of stock, and the rent of land. 
 Taxes upon necessaries, so far as they affect the labouring poor, are 
 finally paid, partly by landlords in the diminished rent of their 
 lands, and partly by rich consumers, whether landlords or others, in 
 the advanced price of manufactured goods ; and always with a con- 
 siderable overcharge. The advanced price of such manufactures as 
 are real necessaries of life, and are destined for the consumption of 
 the poor, of coarse woollens, for example, must be compensated to 
 the poor by a further advancement of their wages. The middling 
 and superior ranks of people, if they understood their own interest, 
 ought always to oppose all taxes upon the necessaries of life, as well 
 as all direct taxes upon the wages of labour. The final payment of 
 both the one and the other falls altogether upon themselves, and 
 always with a considerable overcharge. They fall heaviest upon 
 the landlords, who always pay in a double capacity ; in that of 
 landlords, by the reduction of their rent ; and in that of rich con- 
 sumers, by the increase of their expense. The observation of Sir 
 Matthew Decker, that certain taxes are, in the price of certain 
 goods, sometimes repeated and accumulated four or five times, is 
 perfectly just with regard to taxes upon the necessaries of life. In 
 the price of leather, for example, you must pay, not only for the tax 
 upon the leather of your own shoes, but for a part of that upon those 
 of the shoemaker and the tanner. You must pay too for the tax 
 upon the salt, upon the soap, and upon the candles which those 
 workmen consume while employed in your service, and for the tax 
 upon the leather which the saltmaker, the soapmaker, and the 
 candlemaker consume while employed in their service. 
 
 In Great Britain, the principal taxes upon the necessaries of life 
 are those upon the four commodities just now mentioned salt, 
 leather, soap, and candles. 
 
 Salt is a very ancient and a very universal subject of taxation. 
 It was taxed among the Romans, and it is so at present in, I believe, 
 every part of Europe. The quantity annually consumed by any 
 individual is so small, and may be purchased so gradually, that 
 nobody, it seems to have been thought, could feel very sensibly even 
 a pretty heavy tax upon it. It is in England taxed at three shil- 
 lings and fourpence a bushel ; about three times the original price
 
 CHAP. n. THE WEALTH OF NATIONS. 471 
 
 of the commodity. 1 In some other countries the tax is still 
 higher. Leather is a real necessary of life. The use of linen renders 
 soap such. In countries where the winter nights are long, candles 
 are a necessary instrument of trade. Leather and soap are in Great 
 Britain taxed at three halfpence a pound ; candles at a penny ; 
 taxes which, upon the original price of leather, may amount to about 
 eight or ten per cent. ; upon that of soap to about twenty or five 
 and twenty per cent. ; and upon that of candles to about fourteen or 
 fifteen per cent. ; taxes which, though lighter than that upon salt, 
 are still very heavy. As all those four commodities are real neces- 
 saries of life, such heavy taxes upon them must increase somewhat 
 the expense of the sober and industrious poor, and must consequently 
 raise more or less the wages of their labour. 
 
 In a country where the winters are so cold as in Great Britain, 
 fuel is, during that season, in the strictest sense of the word, a 
 necessary of life, not only for the purpose of dressing victuals, but 
 for the comfortable subsistence of many different sorts of workmen 
 who work within doors; and coals are the cheapest of all fuel. The 
 price of fuel has so important an influence upon that of labour, that 
 all over Great Britain manufacturers have confined themselves prin- 
 cipally to the coal countries ; other parts of the country, on account 
 of the high price of this necessary article, not being able to work so 
 cheap. In some manufactures, besides, coal is a necessary instru- 
 ment of trade ; as in those of glass, iron, and all other metals. If 
 a bounty could in any case be reasonable, it might perhaps be so 
 upon the transportation of coals from those parts of the country in 
 which they abound, to those in which they are wanted. But the 
 Legislature, instead of a bounty, has imposed a tax of three shillings 
 and threepence a ton upon coal carried coastways ; which upon most 
 sorts of coal is more than sixty per cent, of the original price at the 
 coal-pit. Coals carried either by land or by inland navigation pay 
 no duty. Where they are naturally cheap, they are consumed duty 
 free ; where they are naturally dear, they are loaded with a heavy 
 duty. 2 
 
 1 As an illustration of the rule so many public treasury. The taxes mentioned in 
 
 times insisted on, it may be observed that the text, and to which Sir Matthew 
 
 nearly the only tax which the poorest in- Decker's criticism applies, have all been 
 
 habitants of India can pay is that on salt. swept away, some only recently, others 
 
 They can limit the waste, or unnecessary long ago. 
 
 consumption of this article, and so may 2 Added to these is the tax levied by 
 
 be made to contribute something to the the Corporation of London on all coal
 
 472 THE NATURE AND CAUSES OF BOOK v. 
 
 Such taxes, though they raise the price of subsistence, and conse- 
 quently the wages of labour, yet they afford a considerable revenue 
 to Government, which it might not be easy to find in any other 
 way. There may, therefore, be good reasons for continuing them. 
 The bounty upon the exportation of corn, so far as it tends in the 
 actual state of tillage to raise the price of that necessary article, 
 produces all the like bad effects ; and instead of affording any 
 revenue, frequently occasions a very great expense to Government. 
 The high duties upon the importation of foreign corn, which in 
 years of moderate plenty amount to a prohibition ; and the absolute 
 prohibition of the importation either of live cattle or of salt pro- 
 visions, which takes place in the ordinary state of the law, and 
 which, on account of the scarcity, is at present suspended for a 
 limited time with regard to Ireland and the British plantations, 
 have all the bad effects of taxes upon the necessaries of life, and 
 produce no revenue to Government. Nothing seems necessary for 
 the repeal of such regulations, but to convince the public of the 
 futility of that system in consequence of which they have been 
 established. 
 
 Taxes upon the necessaries of life are much higher in many other 
 countries than in Great Britain. Duties upon flour and meal when 
 ground at the mill, and upon bread when baked at the oven, take 
 place in many countries. In Holland, the money price of the bread 
 consumed in towns is supposed to be doubled by means of such 
 taxes. In lieu of a part of them, the people who live in the country 
 pay every year so much a head, according to the sort of bread they 
 are supposed to consume. Those who consume wheaten bread, pay 
 three gilders fifteen stivers ; about six shillings and ninepence half- 
 penny. These, and some other taxes of the same kind, by raising 
 the price of labour, are said to have ruined the greater part of the 
 manufactures of Holland.* Similar taxes, though not quite so 
 heavy, take place in the Milanese, in the states of Genoa, in the 
 duchy of Modena, in the duchies of Parma, Placentia, and Guastalla, 
 and in the ecclesiastical state. A Frenchf author of some note has 
 
 brought within the compass of its fiscal pose an export duty. The promise of 
 
 jurisdiction. This tax, for which no course is the grant of that which no 
 
 apology can be ojffered, extends for a con- rational and intelligent person would ever 
 
 siderable space round the metropolis. withhold in time of peace. 
 
 All other duties on coal are now repealed, * M^moires coucernant les Droits, &c. 
 
 and, by the commercial treaty with pp. 210, 211. 
 
 France, this country is bound not to im- t Le Keformateur.
 
 CHAP, n, THE WEALTH OF NATIONS. 473 
 
 proposed to reform the finances of his country, by substituting in 
 the room of the greater part of other taxes, this most ruinous of all 
 taxes. There is nothing so absurd, says Cicero, 1 which has not some- 
 times been asserted by some philosophers. 
 
 Taxes xipon butcher's-meat are still more common than those 
 upon bread. It may indeed be doubted whether butcher's-meat is 
 anywhere a necessity of life. Grain and other vegetables, with the 
 help of milk, cheese, and butter, or oil, where butter is not to be 
 had, it is known from experience can, without any butcher's-meat, 
 afford the most plentiful, the most wholesome, the most nourishing, 
 and the most invigorating diet. Decency nowhere requires that 
 any man should eat butcher's-meat, as it in most places requires 
 that he should wear a linen shirt or a pair of leather shoes. 
 
 Consumable commodities, whether necessaries or luxuries, may 
 be taxed in two different ways. The consumer may either pay an 
 annual sum on account of his using or consuming goods of a 
 certain kind, or the goods may be taxed while they remain in the 
 hands of the dealer, and before they are delivered to the consumer. 
 The consumable goods which last a considerable time before they 
 are consumed altogether, are most properly taxed in the one way ; 
 those of which the consumption is either immediate or more speedy, 
 in the other. The coach-tax and plate-tax are examples of the 
 former method of imposing ; the greater part of the other duties 
 of excise and customs, of the latter. 
 
 A coach may, with good management, last ten or twelve years. 
 It might be taxed, once for all, before it comes out of the hands of 
 the coachmaker. But it is certainly more convenient for the buyer 
 to pay four pounds a year for the privilege of keeping a coach, than 
 to pay all at once forty or forty-eight pounds additional price to the 
 coachmaker ; or a sum equivalent to what the tax is likely to cost 
 him during the time he uses the same coach. A service of plate, in 
 the same manner, may last more than a century. It is certainly 
 easier for the consumer to pay five shillings a year for every hundred 
 ounces of plate, near one per cent, of the value, than to redeem 
 this long annuity at five-and-twenty or thirty years' purchase, 
 which would enhance the price at least five-and-twenty or thirty 
 per cent. The different taxes which affect houses are certainly 
 more conveniently paid by moderate annual payments than by a 
 1 De Divinatione, lib. ii. cap. 58.
 
 474 THE NATURE AND CAUSES OF BOOK v. 
 
 heavy tax of equal value upon the first building or sale of the 
 house. 
 
 It was the well-known proposal of Sir Matthew Decker, that all 
 commodities, even those of which the consumption is either im- 
 mediate or very speedy, should be taxed in this manner ; the dealer 
 advancing nothing, but the consumer paying a certain annual sum 
 for the licence to consume certain goods. The object of his scheme 
 was to promote all the different branches of foreign trade, par- 
 ticularly the carrying trade, by taking away all duties upon im- 
 portation and exportation, and thereby enabling the merchant to 
 employ his whole capital and credit in the purchase of goods and 
 the freight of ships, no part of either being diverted towards the 
 advancing of taxes. The project, however, of taxing in this manner 
 goods of immediate or speedy consumption, seems liable to the 
 four following very important objections. First, the tax would 
 be more unequal, or not so well proportioned to the expense and 
 consumption of the different contributors, as in the way in which it 
 is commonly imposed. The taxes upon ale, wine, and spirituous 
 liquors, which are advanced by the dealers, are finally paid by the 
 different consumers exactly in proportion to their respective con- 
 sumption. But if the tax was to be paid by purchasing a licence 
 to drink those liquors, the sober would, in proportion to his con- 
 sumption, be taxed much more heavily than the drunken consumer. 
 A family which exercised great hospitality would be taxed much 
 more lightly than one who entertained fewer guests. Secondly, 
 this mode of taxation, by paying for an annual, half-yearly, or 
 quarterly licence to consume certain goods, would diminish very 
 much one of the principal conveniences of taxes upon goods of 
 speedy consumption ; the piece-meal payment. In the price of 
 threepence-halfpenny, which is at present paid for a pot of porter, 
 the different taxes upon malt, hops, and beer, together with the 
 extraordinary profit which the brewer charges for having advanced 
 them, may perhaps amount to about three halfpence. If a work- 
 man can conveniently spare those three halfpence, he buys a pot of 
 porter; if he cannot, he contents himself with a pint, and, as a 
 penny saved is a penny got, he thus gains a farthing by his tem- 
 perance. He pays the tax piecemeal, as he can afford to pay 
 it, and when he can afford to pay it ; and every act of pay- 
 ment is perfectly voluntary, and what he can avoid, if he chooses
 
 CHAP. n. THE WEALTH OF NATIONS. 475 
 
 to do so. Thirdly, such taxes would operate less as sumptuary 
 laws. When the licence was once purchased, whether the pur- 
 chaser drank much or drank little, his tax would be the same. 
 Fourthly, if a workman was to pay all at once, by yearly, half- 
 yearly, or quarterly payments, a tax equal to what he at present 
 pays, with little or no inconveniency, upon all the different 
 pots and pints of porter which he drinks in any such period 
 of time, the sum might frequently distress him very much. This 
 mode of taxation, therefore, it seems evident, could never, without 
 the most grievous oppression, produce a revenue nearly equal to 
 what is derived from the present mode without any oppression. In 
 several countries, however, commodities of an immediate or very 
 speedy consumption are taxed in this manner. In Holland, people 
 pay so much a head for a licence to drink tea. I have already 
 mentioned a tax upon bread, which, so far as it is consumed in farm- 
 houses and country villages, is there levied in the same manner. 1 
 
 The duties of excise are imposed chiefly upon goods of home 
 produce destined for home consumption. They are imposed only 
 upon a few sorts of goods of the most general use. There can 
 never be any doubt either concerning the goods which are subject 
 to those duties, or concerning the particular duty which each 
 species of goods is subject to. They fall almost altogether upon 
 what I call luxuries, excepting always the four duties above men- 
 tioned upon salt, soap, leather, candles, and, perhaps, that upon 
 green glass. 
 
 The duties of customs are much more ancient than those of 
 excise. They seem to have been called customs, as denoting cus- 
 tomary payments which had been in use from time immemorial. 
 They appear to have been originally considered as taxes upon the 
 profits of merchants. During the barbarous times of feudal 
 anarchy, merchants, like all the other inhabitants of burghs, were 
 
 1 Licences of consumption can be con- carriage, has been levied without check - 
 veniently substituted for what Smith ing the use of public carriages. Very few 
 calls piecemeal taxes, only when the tax people would keep a horse and carriage 
 represents a small percentage on the under a tax of 1 8 53. a year, the charge 
 value of such articles as are consumed, levied up to 1869 on the London hack- 
 used, or, in the case of service, hired, ney carriages, and levied, not indeed 
 during a considerable space of time. In without inconvenience, but without dis- 
 effect to license the use of a carriage, couraging the use of such vehicles. The 
 horse, plate, or servant, is to distribute tax has been repealed, but without the 
 the tax annually over all the uses of these resultant advantages expected from the 
 conveniences. On the other hand, a tax change, 
 which would be prohibitive on a private
 
 476 THE NATURE AND CAUSES OF BOOK v. 
 
 considered as little better than emancipated bondmen, whose per- 
 sons were despised^ and whose gains were envied. The great 
 nobility, who had consented that the king should tallage the profits 
 of their own tenants, were not unwilling that he should tallage 
 likewise those of an order of men whom it was much less their 
 interest to protect. In those ignorant times, it was not under- 
 stood that the profits of merchants are a subject not taxable 
 directly, or that the final payment of all such taxes must fall, 
 with a considerable overcharge, upon the consumers. 
 
 The gains of alien merchants were looked upon more unfavour- 
 ably than those of English merchants. It was natural, therefore, 
 that those of the former should be taxed more heavily than those 
 of the latter. This distinction between the duties upon aliens and 
 those upon English merchants, which was begun from ignorance, 
 has been continued from the spirit of monopoly, or in order to give 
 our own merchants an advantage both in the home and in the 
 foreign market. 
 
 With this distinction, the ancient duties of customs were im- 
 posed equally upon all sorts of goods, necessaries as well as luxuries, 
 goods exported as well as goods imported. Why should the dealers 
 in one sort of goods, it seems to have been thought, be more 
 favoured than those in another ? or why should the merchant ex- 
 porter be more favoured than the merchant importer ? 
 
 The ancient customs were divided into three branches. The 
 first, and perhaps the most ancient of all those duties, was that 
 upon wool and leather. It seems to have been chiefly or altogether 
 an exportation duty. When the woollen manufacture came to be 
 established in England, lest the king should lose any part of his 
 customs upon wool by the exportation of woollen cloths, a like duty 
 was imposed upon them. The other two branches were, first, a 
 duty upon wine, which, being imposed at so much a ton, was called 
 a tonnage ; and, secondly, a duty upon all other goods, which, 
 being imposed at so much a pound of their supposed value, was 
 called a poundage. In the forty-seventh year of Edward III, a 
 duty of sixpence in the pound was imposed upon all goods exported 
 and imported, except wools, wool-fells, leather, and wines, which 
 were subject to particular duties. In the fourteenth of Richard II, 
 this duty was raised to one shilling in the pound ; but three years 
 afterwards it was again reduced to sixpence. It was raised to
 
 CHAP. ii. THE WEALTH OF NATIONS. 477 
 
 eightpence in the second year of Henry IV ; and in the fourth year 
 of the same prince, to one shilling. From this time to the ninth 
 year of William III, this duty continued at one shilling in the 
 pound. The duties of tonnage and poundage were generally 
 granted to the king by one and the same Act of Parliament, and 
 were called the subsidy of tonnage and poundage. The subsidy 
 of poundage having continued for so long a time at one shilling in 
 the pound, or at five per cent. ; a subsidy came, in the language of 
 the customs, to denote a general duty of this kind of five per cent. 
 This subsidy, which is now called the old subsidy, still continues 
 to be levied according to the book of rates established in the twelfth 
 of Charles II. The method of ascertaining, by a book of rates, 
 the value of goods subject to this duty, is said to be older than 
 the time of James I. The new subsidy imposed by the ninth and 
 tenth of William III, was an additional five per cent, upon the 
 greater part of goods. The one-third and the two-third subsidy 
 made up between them another five per cent, of which they were 
 proportionable parts. The subsidy of 1747 made a fourth five per 
 cent, upon the greater part of goods ; and that of 1759, a ^h 
 upon some particular sorts of goods. Besides those five subsidies, 
 a great variety of other duties have occasionally been imposed upon 
 particular sorts of goods, in order sometimes to relieve the exigencies 
 of the state, and sometimes to regulate the trade of the country, 
 according to the principles of the mercantile system. 
 
 That system has come gradually more and more into fashion. 
 The old subsidy was imposed indifferently upon exportation as well 
 as importation. The four subsequent subsidies, as well as the other 
 duties which have since been occasionally imposed upon particular 
 sorts of goods, have, with a few exceptions, been laid altogether 
 upon importation. The greater part of the ancient duties which 
 had been imposed upon the exportation of the goods of home 
 produce and manufacture, have either been lightened or taken away 
 altogether. In most cases they have been taken away. Bounties 
 have even been given upon the exportation of some of them. 
 Drawbacks too, sometimes of the whole, and, in most cases, of 
 a part of the duties which are paid upon the importation of foreign 
 goods, have been granted upon their exportation. Only half the 
 duties imposed by the old subsidy upon importations are drawn back 
 upon exportation; but the whole of those imposed by the latter
 
 478 THE NATURE AND CAUSES OF BOOK v. 
 
 subsidies and other imposts are, upon the greater part of goods, 
 drawn back in the same manner. This growing favour of exporta- 
 tion and discouragement of importation, have suffered only a few 
 exceptions, which chiefly concern the materials of some manufac- 
 tures. These, our merchants and manufacturers are willing should 
 come as cheap as possible to themselves, and as dear as possible 
 to their rivals and competitors in other countries. Foreign ma- 
 terials are, upon this account, sometimes allowed to be imported 
 duty free; Spanish wool, for example, flax, and raw linen yarn. 
 The exportation of the materials of home produce, and of those 
 which are the peculiar produce of our colonies, has sometimes been 
 prohibited, and sometimes subjected to higher duties. The ex- 
 portation of English wool has been prohibited ; that of beaver 
 skins, of beaver wool, and of gum Senega, has been subjected to 
 higher duties ; Great Britain, by the conquest of Canada and 
 Senegal, having got almost the monopoly of those commodities. 
 
 That the mercantile system has not been very favourable to the 
 revenue of the great body of the people, to the annual produce of 
 the land and labour of the country, I have endeavoured to show 
 in the Fourth Book of this inquiry. It seems not to have been more 
 favourable to the revenue of the sovereign ; so far at least as that 
 revenue depends upon the duties of custom. 
 
 In consequence of that system, the importation of several sorts 
 of goods has been prohibited altogether. This prohibition has in 
 some cases entirely prevented, and in others has very much 
 diminished the importation of those commodities, by reducing the 
 importers to the necessity of smuggling. It has entirely pre- 
 vented the importation of foreign woollens, and it has very much 
 diminished that of foreign silks and velvets. In both cases it has 
 entirely annihilated the revenue of customs which might have been 
 levied upon such importation. 
 
 The high duties which have been imposed upon the importation 
 of many different sorts of foreign goods, in order to discourage 
 their consumption in Great Britain, have in many cases served 
 only to encourage smuggling, and in all cases have reduced the 
 revenue of the customs below what more moderate duties would 
 have afforded. The saying of Dr. Swift, that in the arithmetic of 
 the customs two and two, instead of making four, make sometimes 
 only one, holds perfectly true with regard to such heavy duties,
 
 CHAP. H. THE WEALTH OF NATIONS. 479 
 
 which never could have been imposed, had not the mercantile 
 system taught us, in many cases, to employ taxation as an instru- 
 ment, not of revenue, but of monopoly. 
 
 The bounties which are sometimes given upon the exportation of 
 home produce and manufactures, and the drawbacks which are 
 paid upon the re-exportation of the greater part of foreign goods, 
 have given occasion to many frauds, and to a species of smuggling 
 more destructive of the public revenue than any other. In order 
 to obtain the bounty or drawback, the goods, it is well known, are 
 sometimes shipped and sent to sea, but soon afterwards clandes- 
 tinely re-landed in some other part of the country. The defalcation 
 of the revenue of customs occasioned by bounties and drawbacks, of 
 which a great part are obtained fraudulently, is very great. The 
 gross produce of the customs in the year which ended on the 5th 
 of January, 1755, amounted to ^5,068,000. The bounties which 
 were paid out of this revenue, though in that year there was no 
 bounty upon corn, amounted to ^167,800. The drawbacks which 
 were paid upon debentures and certificates, to ^2,156,800. Bounties 
 and drawbacks together, amounted to ^2,324,600. In consequence 
 of these deductions the revenue of the customs amounted only to 
 2, 743,400 ; from which, deducting ^287,900 for the expense of 
 management in salaries and other incidents, the net revenue of 
 the customs for that year comes out to be ^2,455,500. The 
 expense of management amounts in this manner to between five and 
 six per cent, upon the gross revenue of the customs, and to some- 
 thing more than ten per cent, upon what remains of that revenue, 
 after deducting what is paid away in bounties and drawbacks. 
 
 Heavy duties being imposed upon almost all goods imported, 
 our merchant importers smuggle as much, and make entry of as 
 little as they can. Our merchant exporters, on the contrary, make 
 entry of more than they export ; sometimes out of vanity, and to 
 pass for great dealers in goods which pay no duty, and sometimes 
 to gain a bounty or a drawback. Our exports, in consequence of 
 these different frauds, appear upon the Custom-house books greatly 
 to overbalance our imports j to the unspeakable comfort of those 
 politicians who measure the national prosperity by what they call 
 the balance of trade. 
 
 All goods imported, unless particularly exempted (and such 
 exemptions are not very numerous), are liable to some duties of
 
 480 THE NATURE AND CAUSES OF BOOK v. 
 
 customs. If any goods are imported not mentioned in the book of 
 rates, they are taxed at 4$. g-^d. for every twenty shillings' value, 
 according to the oath of the importer, that is, nearly at five sub- 
 sidies, or five poundage duties. The book of rates is extremely 
 comprehensive, and enumerates a great variety of articles, many of 
 them little used, and therefore not well known. It is upon this 
 account frequently uncertain under what article a particular sort of 
 goods ought to be classed, and consequently what duty they ought 
 to pay. Mistakes with regard to this sometimes ruin the Custom- 
 house officer, and frequently occasion much trouble, expense, and 
 vexation to the importer. In point of perspicuity, precision, and 
 distinctness, therefore, the duties of customs are much inferior to 
 those of excise. 
 
 In order that the greater part of the members of any society 
 should contribute to the public revenue in proportion to their 
 respective expense, it does not seem necessary that every single 
 article of that expense should be taxed. The revenue, which is 
 levied by the duties of excise, is supposed to fall as equally upon 
 the contributors as that which is levied by the duties of customs ; 
 and the duties of excise are imposed upon a few articles only of the 
 most general use and consumption. It has been the opinion of 
 many people, that, by proper management, the duties of customs 
 might likewise, without any loss to the public revenue, and with 
 great advantage to foreign trade, be confined to a few articles 
 only. 
 
 The foreign articles, of the most general use and consumption in 
 Great Britain, seem at present to consist chiefly in foreign wines 
 and brandies ; in some of the productions of America and the West 
 Indies, sugar, rum, tobacco, cocoa-nuts, &c., and in some of those 
 of the East Indies, tea, coffee, china-ware, spiceries of all kinds, 
 several sorts of piece-goods, &c. These different articles afford 
 perhaps, at present, the greater part of the revenue which is drawn 
 from the duties of customs. The taxes which at present subsist 
 upon foreign manufactures, if you except those upon the few con- 
 tained in the foregoing enumeration, have the greater part of them 
 been imposed for the purpose, not of revenue, but of monopoly, 
 or to give our own merchants an advantage in the home market. 
 By removing all prohibitions, and by subjecting all foreign manu- 
 factures to such moderate taxes as it was found from experience
 
 CHAP. IT. THE WEALTH OF NATIONS. 481 
 
 afforded upon each article the greatest revenue to the public, our 
 own workmen might still have a considerable advantage in the 
 home market, and many articles, some of which at present afford 
 no revenue to Government, and otheis a very inconsiderable one, 
 might afford a very great one. 
 
 High taxes, sometimes by diminishing the consumption of the 
 taxed commodities, and sometimes by encouraging smuggling, 
 frequently afford a smaller revenue to Government than what might 
 be drawn from more moderate taxes. 
 
 When the diminution of revenue is the effect of the diminution of 
 consumption, there can be but one remedy, and that is the lowering 
 of the tax. 
 
 When the diminution of the revenue is the effect of the encourage- 
 ment given to smuggling, it may perhaps be remedied in two ways : 
 either by diminishing the temptation to smuggle, or by increasing 
 the difficulty of smuggling. The temptation to smuggle can be 
 diminished only by the lowering of the tax ; and the difficulty of 
 smuggling can be increased only by establishing that system of 
 administration which is most popular for preventing it. 
 
 The excise laws, it appears, I believe, from experience, obstruct 
 and embarrass the operations of the smuggler much more effectually 
 than those of the customs. By introducing into the customs a 
 system of administration as similar to that of the excise as the 
 nature of the different duties will admit, the difficulty of smuggling 
 might be very much increased. This alteration, it has been sup- 
 posed by many people, might very easily be brought about. 
 
 The importer of commodities liable to any duties of customs, it 
 has been said, might at his option be allowed either to carry them 
 to his own private warehouse, or to lodge them in a warehouse 
 provided either at his own expense or at that of the public, but 
 under the key of the Custom-house officer, and never to be opened 
 but in his presence. If the merchant carried them to his own 
 private warehouse, the duties to be immediately paid, and never 
 afterwards to be drawn back, and that warehouse to be at all times 
 subject to the visit and examination of the Custom-house officer, in 
 order to ascertain how far the quantity contained in it corresponded 
 with that for which the duty had been paid. If he carried them to 
 the public warehouse, no duty to be paid till they were taken out 
 for home consumption. If taken out for exportation, to be duty- 
 
 VOL. II. I i
 
 482 THE NATURE AND CAUSES OF BOOK v. 
 
 free ; proper security being always given that they should be so 
 exported. The dealers in those particular commodities, either by 
 wholesale or retail, to be at all times subject to the visit and 
 examination of the Custom-house officer, and to be obliged to justify 
 by proper certificates the payment of the duty upon the whole 
 quantity contained in their shops or warehouses. What are called 
 the excise-duties upon rum imported are at present levied in this 
 manner, and the same system of administration might perhaps be 
 extended to all duties upon goods imported ; provided always that 
 those duties were, like the duties of excise, confined to a few sorts 
 of goods of the most general use and consumption. If they were 
 extended to almost all sorts of goods, as at present, public ware- 
 houses of sufficient extent could not easily be provided, and goods 
 of a very delicate nature, or of which the preservation required 
 much care and attention, could not safely be trusted by the merchant 
 in any warehouse but his own. 
 
 If by such a system of administration smuggling, to any con- 
 siderable extent, could be prevented even under pretty high duties, 
 and if every duty was occasionally either heightened or lowered 
 according as it was most likely, either the one way or the other, 
 to afford the greatest revenue to the State taxation being always 
 employed as an instrument of revenue and never of monopoly it 
 seems not improbable that a revenue, at least equal to the present 
 net revenue of the customs, might be drawn from duties upon the 
 importation of only a few sorts of goods of the most general use 
 and consumption, and that the duties of customs might thus be 
 brought to the same degree of simplicity, certainty, and precision, 
 as those of excise. 1 What the revenue at present loses, by draw- 
 backs upon the re-exportation of foreign goods which are afterwards 
 re-landed and consumed at home, would under this system be saved 
 altogether. If to this saving, which would alone be very con- 
 siderable, was added the abolition of all bounties upon the expor- 
 tation of home produce ; in all cases in which those bounties were 
 not in reality drawbacks of some duties of excise which had before 
 been advanced ; it cannot well be doubted but that the net revenue 
 of customs might, after an alteration of this kind, be fully equal to 
 what it had ever been before. 
 
 If by such a change of system the public revenue suffered no 
 1 This prediction has been signally verified in the present tariff of duties.
 
 CHAP. ii. THE WEALTH OF NATIONS. 483 
 
 loss, the trade and manufactures of the country would certainly 
 gain a very considerahle advantage. The trade in the commodities 
 not taxed, by far the greatest number, would be perfectly free, and 
 might be carried on to and from all parts of the world with every 
 possible advantage. Among those commodities would be com- 
 prehended all the necessaries of life, and all the materials of 
 manufacture. So far as the free importation of the necessaries 
 of life reduced their average money price in the home market, it 
 would reduce the money price of labour, but without reducing in 
 any respect its real recompense. The value of money is in pro- 
 portion to the quantity of the necessaries of life which it will 
 purchase. That of the necessaries of life is altogether independent 
 of the quantity of money which can be had for them. The reduc- 
 tion in the money price of labour would necessarily be attended 
 with a proportionable one in that of all home manufactures, which 
 would thereby gain some advantage in all foreign markets. The 
 price of some manufactures would be reduced in a still greater 
 proportion by the free importation of the raw materials. If raw 
 silk could be imported from China and Hindostan duty-free, the 
 silk manufacturers in England could greatly undersell those of both 
 France and Italy. There would be no occasion to prohibit the 
 importation of foreign silks and velvets. The cheapness of their 
 goods would secure to our own workmen, not only the possession 
 of the home, but a very great command of the foreign market. 
 Even the trade in the commodities taxed would be carried on with 
 much more advantage than at present. If those commodities were 
 delivered out of the public warehouse for foreign exportation, being 
 in this case exempted from all taxes, the trade in them would be 
 perfectly free. The carrying trade in all sorts of goods would 
 under this system enjoy every possible advantage. If those com- 
 modities were delivered out for home consumption, the importer 
 not being obliged to advance the tax till he had an opportunity of 
 selling his goods, either to some dealer or to some consumer, he 
 could always afford to sell them cheaper than if he had been 
 obliged to advance it at the moment of importation. Under the 
 same taxes, the foreign trade of consumption, even in the taxed 
 commodities, might in this manner be carried on with much more 
 advantage that it can at present. 
 
 It was the object of the famous excise scheme of Sir Robert 
 
 i i 2
 
 484 THE NATURE AND CAUSES OF BOOK T. 
 
 Walpole to establish, with regard to wine and tobacco, a system 
 not very unlike that which is here proposed. But though the bill 
 which was then brought into Parliament comprehended those two 
 commodities only, it was generally supposed to be meant as an 
 introduction to a more extensive scheme of the same kind. Faction, 
 combined with the interest of smuggling merchants, raised so 
 violent, though so unjust, a clamour against that bill, that the 
 minister thought proper to drop it ; and, from a dread of exciting 
 a clamour of the same kind, none of his successors have dared to 
 resume the project. 
 
 The duties upon foreign luxuries imported for home consumption, 
 though they sometimes fall upon the poor, fall principally upon people 
 of middling or more than middling fortune. Such are, for example, 
 the duties upon foreign wines, upon coffee, chocolate, tea, sugar, &c. 
 
 The duties upon the cheaper luxuries of home produce destined 
 for home consumption, fall pretty equally upon people of all ranks 
 in proportion to their respective expense. The poor pay the duties 
 upon malt, hops, beer, and ale, upon their own consumption ; the 
 rich upon both their own consumption and that of their servants. 
 
 The whole consumption of the inferior ranks of people, or of 
 those below the middling rank, it must be observed, is in every 
 country much greater, not only in quantity, but in value, than 
 that of the middling and of those above the middling rank. The 
 whole expense of the inferior is much greater than that of the 
 superior ranks. In the first place, almost the whole capital of 
 every country is annually distributed among the inferior ranks of 
 people, as the wages of productive labour. Secondly, a great part 
 of the revenue arising from both the rent of land and the profits of 
 stock is annually distributed among the same rank, in the wages 
 and maintenance of menial servants, and other unproductive 
 labourers. Thirdly, some part of the profits of stock belongs to 
 the same rank, as a revenue arising from the employment of their 
 small capitals. The amount of the profits annually made by small 
 shopkeepers, tradesmen, and retailers of all kinds, is everywhere very 
 considerable, and makes a very considerable portion of the annual 
 produce. Fourthly, and lastly, some part even of the rent of land 
 belongs to the same rank ; a considerable part to those who are 
 somewhat below the middling rank, and a small part even to the 
 lowest rank ; common labourers sometimes possessing in property
 
 CHAP. ii. THE WEALTH OF NATIONS. 485 
 
 an acre or two of land. Though the expense of those inferior ranks 
 of people, therefore, taking them individually, is very small, yet the 
 whole mass of it, taking them collectively, amounts always to by 
 much the largest portion of the whole expense of the society; what 
 remains of the annual produce of the land and labour of the country 
 for the consumption of the superior ranks being always much less, 
 not only in quantity but in value. The taxes upon expense, there- 
 fore, which fall chiefly upon that of the superior ranks of people, 
 upon the smaller portion of the annual produce, are likely to be 
 much less productive than either those which fall indifferently 
 upon the expense of both ranks, or even those which fall chiefly 
 upon that of the inferior ranks, than either those which fall in- 
 differently upon the whole annual produce, or those which fall 
 chiefly upon the larger portion of it. The excise upon the materials 
 and manufacture of home-made fermented and spirituous liquors is 
 accordingly, of all the different taxes upon expense, by far the most 
 productive ; and this branch of the excise falls very much, perhaps 
 principally, upon the expense of the common people. In the year 
 which ended on the 5th of July, 1775, the gross produce of this 
 branch of the excise amounted to 3,341,837 9*. yd. 
 
 It must always be remembered, however, that it is the luxurious 
 and not the necessary expense of the inferior ranks of people that 
 ought ever to be taxed. The final payment of any tax upon their 
 necessary expense would fall altogether upon the superior ranks of 
 people ; upon the smaller portion of the annual produce, and not 
 upon the greater. Such a tax must in all cases either raise the 
 wages of labour, or lessen the demand for it. It could not raise the 
 wages of labour, without throwing the final payment of the tax 
 upon the superior ranks of people. It could not lessen the demand 
 for labour, without lessening the annual produce of the land and 
 labour of the country, the fund from which all taxes must be 
 finally paid. Whatever might be the state to which a tax of this 
 kind reduced the demand for labour, it must always raise wages 
 higher than they otherwise would be in that state ; and the final 
 payment of this enhancement of wages must in all cases fall upon 
 the superior ranks of people. 
 
 Fermented liquors brewed, and spirituous liquors distilled, not 
 for sale, but for private use, are not in Great Britain liable to any 
 duties of excise. This exemption, of which the object is to save
 
 486 THE NATURE AND CAUSES OF BOOK v. 
 
 private families from the odious visit and examination of the tax- 
 gatherer, occasions the burden of those duties to fall frequently 
 much lighter upon the rich than upon the poor. It is not, indeed, 
 very common to distil for private use, though it is done sometimes. 
 But in the country, many middling and almost all rich and great 
 families brew their own beer. . Their strong beer, therefore, costs 
 them eight shillings a barrel less than it costs the common brewer, 
 who must have his profit upon the tax, as well as upon all the other 
 expense which he advances. Such families, therefore, must drink 
 their beer at least nine or ten shillings a barrel cheaper than any 
 liquor of the same quality can be drunk by the common people, to 
 whom it is everywhere more convenient to buy their beer, by little 
 and little, from the brewery or the ale-house. Malt, in the same 
 manner, that is made for the use of a private family, is not liable to 
 the visit or examination of the tax-gatherer ; but in this case the 
 family must compound at seven shillings and sixpence a head for 
 the tax. Seven shillings and sixpence are equal to the excise upon 
 ten bushels of malt ; a quantity fully equal to what all the different 
 members of any sober family, men, women, and children, are at an 
 average likely to consume. But in rich and great families,- where 
 country hospitality is much practised, the malt liquors consumed by 
 the members of the family make but a small part of the consump- 
 tion of the house. Either on account of this composition, however, 
 or for other reasons, it is not near so common to malt as to brew for 
 private use. It is difficult to imagine any equitable reason why 
 those who either brew or distil for private use should not be 
 subject to a composition of the same kind. 
 
 A greater revenue than what is at present drawn from all the 
 heavy taxes upon malt, beer, and ale, might be raised, it has fre- 
 quently been said, by a much lighter tax upon malt, the oppor- 
 tunities of defrauding the revenue being much greater in a brewery 
 than in a malt-house, and those who brew for private use being 
 exempted from all duties or composition for duties, which is not the 
 case with those who malt for private use. 
 
 In the porter brewery of London, a quarter of malt is commonly 
 brewed into more than two barrels and a half, sometimes into three 
 barrels of porter. The different taxes upon malt amount to six 
 shillings a quarter; those upon strong beer and ale to eight 
 shillings a barrel. In the porter brewery, therefore, the different
 
 CHAP. II. 
 
 THE WEALTH OF NATIONS. 
 
 487 
 
 taxes upon malt, beer, and ale amount to between twenty-six and 
 thirty shillings upon the produce of a quarter of malt. In the 
 country brewery, for common country sale, a quarter of malt is 
 seldom brewed into less than two barrels of strong and one barrel 
 of small beer ; frequently into two barrels and a half of strong beer. 
 The different taxes upon small beer amount to one shilling and 
 fourpence a barrel. In the country brewery, therefore, the different 
 taxes upon malt, beer, and ale seldom amount to less than twenty- 
 three shillings and fourpence, frequently to twenty-six shillings, 
 upon the produce of a quarter of malt. Taking the whole kingdom 
 at an average, therefore, the whole amount of the duties upon malt, 
 beer, and ale cannot be estimated at less than twenty-four or 
 twenty-five shillings upon the produce of a quarter of malt. But 
 by taking off all the different duties upon beer and ale, and by 
 tripling the malt-tax, or by raising it from six to eighteen shillings 
 upon the quarter- of malt, a greater revenue, it is said, might be 
 raised by this single tax than what is at present drawn from all 
 those heavier taxes. 
 
 In 1772, the old malt-tax produced 
 
 The additional 
 In 1773, the old tax produced 
 
 The additional 
 In 1774, the old tax produced 
 
 The additional 
 In 1775, *h e ld tax produced 
 
 The additional 
 
 Average of these four years 
 
 In 1772, the country excise produced 
 
 The London brewery 
 In 1773, the country excise 
 
 The London brewery 
 In 1/74, the country excise 
 
 The London brewery 
 In i775> the country excise 
 
 The London brewery 
 
 s. d. 
 722,923 ii ii 
 356,7/6 7 9i 
 561,627 3 7j 
 278,650 15 33 
 624,614 17 
 310,745 2 
 657,357 o 
 323,785 " 
 
 Average of these four years 
 To which adding the average malt-tax, or 
 
 The whole amount of those different taxes comes out to be 
 
 But by tripling the malt-tax, or by raising it from six to 
 eighteen shillings upon the quarter of malt, that single tax 
 would produce .. .. .. .. 
 
 A sum which exceeds the foregoing by . . 
 
 4)3>835>5 8 I2 f 
 
 958,895 3 o 
 
 1,243,128 5 3 
 
 408,260 7 2| 
 
 1,245,808 3 3 
 
 405,406 17 loi 
 
 1,246 373 H 5z 
 
 320,601 18 oj 
 
 1,214,583 6 i 
 
 463,670 7 oj 
 
 4)6,547.832 19 2} 
 
 1,636,958 4 9$ 
 
 958,895 3 o 
 
 2,595.853 7 9tt 
 
 2,876,685 9 
 280,832 i
 
 488 THE NATURE AND CAUSES OF BOOK v. 
 
 Under the old malt-tax, indeed, is comprehended a tax of four 
 shillings upon the hogshead of cider, and another of ten shillings 
 upon the barrel of mam. In 1774 the tax upon cider produced 
 only 3,083 6s. Sd. It probably fell somewhat short of its usual 
 amount, all the different taxes upon cider having that year produced 
 less than ordinary. The tax upon mum, though much heavier, is 
 still less productive, on account of the smaller consumption of that 
 liquor. But to balance whatever may be the ordinary amount of 
 those two taxes, there is comprehended under what is called the 
 country excise, first, the old excise of six shillings and eightpence 
 upon the hogshead of cider ; secondly, a like tax of six shillings and 
 eightpence upon the hogshead of verjuice ; thirdly, another of eight 
 shillings and ninepence upon the hogshead of vinegar ; and, lastly, 
 a fourth tax of elevenpence upon the gallon of me*ad or metheglin. 
 The produce of those different taxes will probably much more than 
 counterbalance that of the duties imposed by what is called the 
 annual malt-tax upon cider and mum. 
 
 Malt is consumed not only in the brewery of beer and ale, but in 
 the manufacture of low wines and spirits. If the malt-tax was to 
 be raised to eighteen shillings upon the quarter, it might be neces- 
 sary to make some abatement in the different excises which are 
 imposed upon those particular sorts of low wines and spirits of 
 which malt makes any part of the materials. In what are called 
 malt spirits, it makes commonly but a third part of the materials; 
 the other two-thirds being either raw barley, or one-third barley 
 and one-third wheat. In the distillery of malt spirits, both the 
 opportunity and the temptation to smuggle are much greater than 
 either in a brewery or in a malt-house ; the opportunity, on account 
 of the smaller bulk and greater value of the commodity; and the 
 temptation, on account of the superior height of the duties, which 
 amount to 3.?. lof r/.* upon the gallon of spirits. By increasing the 
 duties upon malt, and reducing those upon the distillery, both the 
 opportunities and the temptation to smuggle would be diminished, 
 which might occasion a still further augmentation of the revenue. 
 
 It has for some time past been the policy of Great Britain to 
 discourage the consumption of spirituous liquors, on account of their 
 
 * Though the duties directly imposed distilled, amount to 33. io$d. Both low 
 
 upon proof spirits amount only to 2. 6d. wines and proof spirits are, to prevent 
 
 per gallon, these added to the duties frauds, now rated according to what they 
 
 upon the low wines, from which they are gauge in the wash.
 
 CHAP. ii. THE WEALTH OF NATIONS. 489 
 
 supposed tendency to ruin the health and to corrupt the morals of 
 the common people. According- to this policy, the abatement of the 
 taxes upon the distillery ought not to be so great as to reduce in 
 any respect the price of those liquors. Spirituous liquor might 
 remain as dear as ever ; while at the same time the wholesome and 
 invigorating liquors of beer and ale might be considerably reduced 
 in their price. The people might thus be in part relieved from one 
 of the burdens of which they at present complain the most, while at 
 the same time the revenue might be considerably augmented. 
 
 The objections of Dr. Davenant to this alteration in the present 
 system of excise duties, seem to be without foundation. 1 Those 
 objections are, that the tax, instead of dividing themselves, as at 
 present, pretty equally upon the profit of the maltster, upon that of 
 the brewer, and upon that of the retailer, would, so far as it affected 
 profit, fall altogether upon that of the maltster ; that the maltster 
 could not so easily get back the amount of the tax in the advanced 
 price of his malt, as the brewer and retailer in the advanced price 
 of their liquor ; and that so heavy a tax upon malt might reduce 
 the rent and profit of barley land. 
 
 No tax can ever reduce, for any considerable time, the rate of 
 profit in any particular trade, which must always keep its level 
 with other trades in the neighbourhood. The present duties upon 
 malt, beer, and ale do not affect the profits of the dealers in those 
 commodities, who all get back the tax with an additional profit, in 
 the enhanced price of their goods. A tax, indeed, may render the 
 goods upon which it is imposed so dear as to diminish the con- 
 sumption of them. But the consumption of malt is in malt liquors; 
 and a tax of eighteen shillings upon the quarter of malt could not 
 well render those liquors dearer than the different taxes, amounting 
 to twenty-four or twenty-five shillings, do at present. Those liquors, 
 on the contrary, would probably become cheaper, and the consumption 
 of them would be more likely to increase than to diminish. 
 
 It is not very easy to understand why it should be more difficult 
 for the maltster to get back eighteen shillings in the advanced price 
 of his malt, than it is at present for the brewer to get back twenty- 
 four or twenty-five, sometimes thirty shillings, in that of his liquor. 
 The maltster, indeed, instead of a tax of six shillings, would be 
 obliged to advance one of eighteen shillings upon every quarter of 
 
 1 See Davemmt's Essay on Ways and Means, WhUworth'u edition, vol. I.
 
 490 THE NATURE AND CAUSES OF BOOK v. 
 
 malt. But the brewer is at present obliged to advance a tax of 
 twenty-four or twenty-five, sometimes thirty shillings, upon every 
 quarter of malt which he brews. It could not be more inconvenient 
 for the maltster to advance a lighter tax, than it is at present for 
 the brewer to advance a heavier one. The maltster doth not always 
 keep in his granaries a stock of malt which it will require a longer 
 time to dispose of, than the stock of beer and ale which the brewer 
 frequently keeps in his cellars. The former, therefore, may fre- 
 quently get the returns of his money as soon as the latter. But 
 whatever inconveniency might arise to the maltster from being 
 obliged to advance a heavier tax, it could easily be remedied by 
 granting him a few months' longer credit than is at present com- 
 monly given to the brewer. 
 
 Nothing could reduce the rent and profit of barley land which did 
 not reduce the demand for barley. But a change of system, which 
 reduced the duties upon a quarter of malt brewed into beer and ale 
 from twenty-four and twenty-five shillings to eighteen shillings, 
 would be more likely to increase than diminish that demand. 
 The rent and profit of barley land, besides, must always be nearly 
 equal to those of other equally fertile and equally well-cultivated 
 land. If they were less, some part of the barley land would soon be 
 turned to some other purpose ; and if they were greater, more land 
 would soon be turned to the raising of barley. When the ordinary 
 price of any particular produce of land is at what may be called a 
 monopoly price, a tax upon it necessarily reduces the rent and 
 profit of the land which grows it. A tax upon the produce of those 
 precious vineyards, of which the wine falls so much short of the 
 effectual demand, that its price is always above the natural propor- 
 tion to that of the produce of other equally fertile and equally well- 
 cultivated land, would necessarily reduce the rent and profit of 
 those vineyards. The price of the wines being already the highest 
 that could be got for the quantity commonly sent to market, it 
 could not be raised higher without diminishing that quantity; and 
 the quantity could not be diminished without still greater loss, 
 because the lands could not be turned to any other equally valuable 
 produce. The whole weight of the tax, therefore, would fall upon 
 the rent and profit; properly upon the rent of the vineyard. When 
 it has been proposed to lay any new tax upon sugar, our sugar- 
 planters have frequently complained that the whole weight of such
 
 CHAP. ii. THE WEALTH OF NATIONS. 491 
 
 taxes fell, not upon the consumer, but upon the producer ; they 
 never having been able to raise the price of their sugar after the tax 
 higher than it was before. The price had, it seems, before the tax, 
 being a monopoly price ; and the argument adduced to show that 
 sugar was an improper subject of taxation, demonstrated, perhaps, 
 that it was a proper one : the gains of the monopolists, whenever 
 they can be come at, being certainly of all subjects the most proper. 
 But the ordinary price of barley has never been a monopoly price ; 
 and the rent and profit of barley land have never been above their 
 natural proportion to those of other equally fertile and well-culti- 
 vated land. The different taxes which have been imposed upon 
 malt, beer, and ale, have never lowered the price of barley have 
 never reduced the rent and profit of barley land. The price of malt 
 to the brewer has constantly risen in proportion to the taxes im- 
 posed upon it ; and those taxes, together with the different duties 
 upon beer and ale, have constantly either raised the price, or, what 
 comes to -the same thing, reduced the quality of those commodities 
 to the consumer. The final payment of those taxes has fallen 
 constantly upon the consumer, and not upon the producer. 1 
 
 The only people likely to suffer by the change of system here 
 proposed, are those who brew for their own private use. But the 
 exemption which this superior rank of people at present enjoy from 
 very heavy taxes which are paid by the poor labourer and artificer, 
 is surely most unjust and unequal, and ought to be taken away, 
 even though this change was never to take place. It has probably 
 been the interest of this superior order of people, however, which 
 has hitherto prevented a change of system that could not well fail 
 both to increase the revenue and to relieve the people. 
 
 Besides such duties as those of customs and excise above men- 
 tioned, there are several others which affect the price of goods more 
 unequally and more indirectly. Of this kind are the duties which 
 in French are called peages, which in old Saxon times were called 
 duties of passage, and which seem to have been originally estab- 
 lished for the same purpose as our turnpike tolls, or the tolls upon 
 our canals and navigable rivers, for the maintenance of the road or 
 of the navigation. Those duties, when applied to such purposes, are 
 
 1 The malt duties were repealed in the too early to foresee all the results of this 
 second budget of 1880, and a tax on the change, but it is almost certain that land- 
 fermentable elements of worts was im- owner, farmer, and brewer will ultimately 
 posed in lieu of those duties. It is, as yet, be benefited.
 
 492 THE NATURE AND CAUSES OF BOOK v. 
 
 most properly imposed according to the bulk or weight of the goods. 
 As they were originally local and provincial duties, applicable 
 to local aiid provincial purposes, the administration of them was 
 in most cases entrusted to the particular town, parish, or lord- 
 ship in which they were levied ; such communities being in some 
 way or other supposed to be accountable for the application. The 
 sovereign, who is altogether unaccountable, has in many coun- 
 tries assumed to himself the administration of those duties ; and 
 though he has in most cases enhanced very much the duty, he has 
 in many cases neglected the application. If the turnpike tolls of 
 Great Britain should ever become one of the resources of Government, 
 we may learn, by the example of many other nations, what would 
 probably be the consequence. Such tolls are no doubt finally paid by 
 the consumer ; but the consumer is not taxed in proportion to his 
 expense, when he pays, not according to the value, but according to 
 the bulk or weight of what he consumes. When such duties are 
 imposed, not according to the bulk or weight, but according to the 
 supposed value of the goods, they become properly a sort of inland 
 customs or excises, which obstruct very much the most important 
 of all branches of commerce, the interior commerce of the country. 
 
 In some small states, duties similar to those passage duties are 
 imposed upon goods carried across the territory, either by land or 
 by water, from one foreign country to another. These are in some 
 countries called transit-dues. Some of the little Italian states, 
 which are situated upon the Po, and the rivers which run into it, 
 derive some revenue from duties of this kind, which are paid alto- 
 gether by foreigners, and which, perhaps, are the only duties that one 
 state can impose upon the subjects of another, without obstructing 
 in any respect the industry or commerce of its own. The most 
 important transit-duty in the world is that levied by the King of 
 Denmark upon all merchant ships which pass through the Sound. 1 
 
 Such taxes upon luxuries as the greater part of the duties of 
 customs and excise, though they all fall indifferently upon every 
 
 1 The Sound Dues were abolished by a sum, Great Britain paid 1,125,206. The 
 
 convention entered into on March 14, United States were not a party to this 
 
 1857, between Denmark, on the one arrangement, but they subsequently paid 
 
 hand, and various European states on Denmark 717,829 rix-dollars. The abo- 
 
 the other. These states paid Denmark, lition, however, of this impost was made 
 
 by way of compensation, 30,476,325 rix- necessary by the fact that the United 
 
 dollars, equal, at 9 rix-dollars to the States refused to pay the dues, 
 pound sterling, to 3,385,258. Of this
 
 CHAP. ii. THE WEALTH OF NATIONS. 493 
 
 species of revenue, and are paid finally, or without any retribution, 
 by whoever consumes the commodities upon which they are imposed, 
 yet they do not always fall equally or proportionably upon the 
 revenue of every individual. As every man's humour regulates the 
 degree of his consumption, every man contributes rather according 
 to his humour than in proportion to his revenue ; the profuse con- 
 tribute more, the parsimonious less, than their proper proportion. 
 During the minority of a man of great fortune, he contributes 
 commonly very little, by his consumption, towards the support of 
 that State from whose protection he derives a great revenue. Those 
 who live in another country contribute nothing, by their consump- 
 jtion, towards the support of the Government of that country in 
 'which is situated the source of their revenue. If in this latter 
 country there should be no land-tax, nor any considerable duty 
 upon the transference either of moveable or immoveable property, 
 as is the case in Ireland, such absentees may derive a great revenue 
 from the protection of a Government to the support of which they 
 do not contribute a single shilling. This inequality is likely to be 
 greatest in a country of which the Government is in some respects 
 subordinate and dependent upon that of some other. The people 
 who possess the most extensive property in the dependent, will in 
 this case generally choose to live in the governing country. Ire- 
 land is precisely in this situation, and we cannot therefore wonder 
 that the proposal of a tax upon absentees should be so very popular 
 in that country. It might, perhaps, be a little difficult to ascertain 
 either what sort or what degree of absence would subject a man to 
 be taxed as an absentee, or at what precise time the tax should either 
 begin or end. If you accept, however, this very peculiar situation, 
 any inequality in the contribution of individuals which can arise 
 from such taxes, is much more than compensated by the very 
 circumstance which occasions that inequality the circumstance 
 that every man's contribution is altogether voluntary, it being 
 altogether in his power either to consume or not to consume the 
 commodity taxed. Where such taxes, therefore, are properly 
 assessed and upon proper commodities, they are paid with less 
 grumbling than any other. When they are advanced by the 
 merchant or manufacturer, the consumer, who finally pays them, 
 soon comes to confound them with the price of the commodities, 
 and almost forgets that he pays any tax.
 
 494 THE NATURE AND CA USES OF BOOK v. 
 
 Such taxes are or may be perfectly certain, or may be assessed 
 so as to leave no doubt concerning- either what ought to be paid, 
 or when it ought to be paid, concerning- either the quantity or the 
 time of payment. Whatever uncertainty there may sometimes be, 
 either in the duties of customs in Great Britain, or in other duties 
 of the same kind in other countries, it cannot arise from the nature 
 of those duties, but from the inaccurate or unskilful manner in 
 which the law that imposes them is expressed. 
 
 Taxes upon luxuries generally are, and always may be, paid 
 piece-meal, or in proportion as the contributors have occasion to 
 purchase the goods upon which they are imposed. In the time and 
 mode of payment they are, or may be, of all taxes the most con- 
 venient. Upon the whole, such taxes, therefore, are perhaps as 
 agreeable to the three first of the four general maxims concerning 
 taxation as any other. They offend in every respect against the 
 fourth. 
 
 Such taxes, in proportion to what they bring into the public 
 treasury of the State, always take out or keep out of the pockets of 
 the people more than almost any other taxes. They seem to do 
 this in all the four different ways in which it is possible to do it. 
 
 First, the levying of such taxes, even when imposed in the most 
 judicious manner, requires a great number of Custom-house and 
 excise officers, whose salaries and perquisites are a real tax upon the 
 people, which brings nothing into the treasury of the State. This 
 expense, however, it must be acknowledged, is more moderate in 
 Great Britain than in most other countries. In the year which 
 ended on the 5th of July, 1775, the gross produce of the different 
 duties, under the management of the commissioners of excise in 
 England, amounted to ^5,507.308 18*. 8j<., which was levied at 
 an expense of little more than five and a half per cent. From this 
 gross produce, however, there must be deducted what was paid away 
 in bounties and drawbacks upon the exportation of exciseable goods, 
 which will reduce the net produce below five millions.* The levy- 
 ing of the salt duty, an excise duty, but under a different manage- 
 ment, is much more expensive. The net revenue of the customs 
 does not amount to two millions and a half, which is levied at an 
 expense of more than ten per cent, in the salaries of officers and 
 
 * The net produce of that year, after deducting all expenses and allowances, 
 amounted to 4,9/5.652 193. 6d.
 
 CHAP. ii. THE WEALTH OF NATIONS. 495 
 
 other incidents. But the perquisites of Custom-house officers are 
 everywhere much greater than their salaries ; at some ports more 
 than double or triple those salaries. If the salaries of officers 
 and other incidents, therefore, amount to more than ten per cent, 
 upon the net revenue of the customs, the whole expense of 
 levying that revenue may amount, in salaries and perquisites to- 
 gether, to more than twenty or thirty per cent. The officers of 
 excise receive few or no perquisites, and the administration of that 
 branch of the revenue being of more recent establishment, in 
 in general less corrupted than that of the customs, into which 
 length of time has introduced and authorised many abuses. By 
 charging upon malt the whole revenue which is at present levied 
 by the different duties upon malt and malt liquors, a saving, it is 
 supposed, of more than fifty thousand pounds might be made in the 
 annual expense of the excise. By confining the duties of customs 
 to a few sorts of goods, and by levying those duties according to 
 the excise laws, a much greater saving might probably be made in 
 the annual expense of the customs. 
 
 Secondly, such taxes necessarily occasion some obstruction or dis- 
 couragement to certain branches of industry. As they always raise 
 the price of the commodity taxed, they so far discourage its con- 
 sumption, and consequently its production. If it is a commodity 
 of home growth or manufacture, less labour comes o be employed 
 in raising and producing it. If it is a foreign commodity of which 
 the tax increases in this manner the price, the commodities of the 
 same kind which are made at home may thereby, indeed, gain some 
 advantage in the home market, and a greater quantity of domestic 
 industry may thereby be turned toward preparing them. But 
 though this rise of price in a foreign commodity may encourage 
 domestic industry in one particular branch, it necessarily dis- 
 courages that industry in almost every other. The dearer the 
 Birmingham manufacturer buys his foreign wine, the cheaper he 
 necessarily sells that part of his hardware with which, or, what 
 comes to the same thing, with the price of which he buys it. That 
 part of his hardware, therefore, becomes of less value to him, and 
 he has less encouragement to work at it. The dearer the consumers 
 in one country pay for the surplus produce of another, the cheaper 
 they necessarily sell that part of their own surplus produce with 
 which, or, what comes to the same thing, with the price of which
 
 496 THE NATURE AND CAUSES OF BOOK v. 
 
 they buy it. That part of their own surplus produce becomes of 
 less value to them, and they have less encouragement to increase its 
 quantity. All taxes upon consumable commodities, therefore, tend 
 to reduce the quantity of productive labour below what it other- 
 wise would be, either in preparing the commodities taxed, if they 
 are home commodities, or in preparing those with which they are 
 purchased, if they are foreign commodities. Such taxes too always 
 alter, more or less, the natural direction of national industry, and turn 
 it into a channel always different from, and generally less advanta- 
 geous than that in which it would have run of its own accord. 
 
 Thirdly, the hope of evading such taxes by smuggling gives fre- 
 quent occasion to forfeitures and other penalties, which entirely ruin 
 the smuggler a person who, though no doubt highly blameable for 
 violating the laws of his country, is frequently incapable of violating 
 those of natural justice, and would have been, in every respect, 
 an excellent citizen, had not the laws of his country made that 
 a crime which nature never meant to be so. In those corrupted 
 governments where there is at least a general suspicion of much 
 unnecessary expense and great misapplication of the public revenue, 
 the laws which guard it are little respected. Not many people are 
 scrupulous about smuggling, when, without perjury, they can find 
 an easy and safe opportunity of doing so. To pretend to have any 
 scruple about buying smuggled goods, though a manifest encou- 
 ragement to the violation of the revenue laws and to the perjury 
 which almost always attends it, would in most countries be re- 
 garded as one of those pedantic pieces of hypocrisy which, instead 
 of gaining credit with anybody, serve only to expose the person 
 who affects to practise them to the suspicion of being a greater 
 knave than most of his neighbours. By this indulgence of the 
 public, the smuggler is often encouraged to continue a trade which 
 he is thus taught to consider as in some measure innocent ; and 
 when the severity of the revenue laws is ready to fall upon him, he 
 is frequently disposed to defend with violence what he has been 
 accustomed to regard as his just property. From being at first, 
 perhaps, rather imprudent than criminal, he at last too often 
 becomes one of the hardiest and most determined violators of the 
 laws of society. By the ruin of the smuggler, his capital, which 
 had before been employed in maintaining productive labour, is 
 absorbed either in the revenue of the State or in that of the revenue
 
 CHAP. ii. THE WEALTH OF NATIONS. 497 
 
 officer, and is employed in maintaining unproductive, to the dimi- 
 nution of the general capital of the society, and of the useful in- 
 dustry which it might otherwise have maintained. 
 
 Fourthly, such taxes, by subjecting at least the dealers in the 
 taxed commodities to the frequent visits and odious examination of 
 the tax-gatherers, expose them sometimes, no doubt, to some degree 
 of oppression, and always to much trouble and vexation; and 
 though vexation, as has already been said, is not strictly speaking 
 expense, it is certainly equivalent to the expense at which every man 
 would be willing to redeem himself from it. The laws of excise, 
 though more effectual for the purpose for which they were insti- 
 tuted, are, in this respect, more vexatious than those of the customs. 
 When a merchant has imported goods subject to certain duties of 
 customs, when he has paid those duties, and lodged the goods in his 
 warehouse, he is not in most cases liable to any further trouble or 
 vexation from the Custom-house officer. It is otherwise with goods 
 subject to duties of excise. The dealers have no respite from the 
 continual visits and examination of the excise officers. The duties 
 of excise are, upon this account, more unpopular than those of the 
 customs ; and so are the officers who levy them. Those officers, it 
 is pretended, though in general perhaps they do their duty fully 
 as well as those of the customs, yet, as that duty obliges them 
 to be frequently very troublesome to some of their neighbours, 
 commonly contract a certain hardness of character which the others 
 frequently have not. This observation, however, may very probably 
 be the mere suggestion of fraudulent dealers, whose smuggling is 
 either prevented or detected by their diligence. 
 
 The inconveniences, however, which are perhaps in some degree 
 inseparable from taxes upon consumable commodities, fall as light 
 upon the people of Great Britain as upon those of any other country 
 of which the government is nearly as expensive. Our State is not 
 perfect, and might be mended, but it is as good or better than that 
 of most of our neighbours. 
 
 In consequence of the notion that duties upon consumable goods 
 were taxes upon the profits of merchants, those duties have, in 
 some countries, been repeated upon every successive sale of the 
 goods. If the profits of the merchant importer or merchant manu- 
 facturer were taxed, equality seemed to require that those of all 
 the middle buyers, who intervened between either of them and 
 
 VOL. II. K k
 
 498 THE NATURE AND CAUSES OF BOOK v. 
 
 the consumer, should likewise be taxed. The famous Alcavala of 
 Spain seems to have been established upon this principle. It was 
 at first a tax of ten per cent., afterwards of fourteen per cent., and 
 is at present of only six per cent, upon the sale of every sort of 
 property, whether moveable or immoveable; and it is repeated 
 every time the property is sold."* The levying of this tax requires 
 a multitude of revenue officers sufficient to guard the transporta- 
 tion of goods, not only from one province to another, but from 
 one shop to another. It subjects, not only the dealers in some 
 sorts of goods, but those in all sorts every farmer, every manu- 
 facturer, every merchant and shopkeeper to the continual visits 
 and examination of the tax-gatherers. Through the greater part 
 of a country in which a tax of this kind is established, nothing 
 can be produced for distant sale. The produce of every part of 
 the country must be proportioned to the consumption of the neigh- 
 bourhood. It is to the Alcavala, accordingly, that Ustaritz l imputes 
 the ruin of the manufactures of Spain. He might have imputed to 
 it likewise the declension of agriculture, it being imposed not only 
 upon manufactures, but upon the rude produce of the land. 
 
 In the kingdom of Naples there is a similar tax of three per 
 cent, upon the value of all contracts, and consequently upon that 
 of all contracts of sale. It is both lighter than the Spanish tax, 
 and the greater part of towns and parishes are allowed to pay 
 a composition in lieu of it. They levy this composition in what 
 manner they please, generally in a way that gives no interruption 
 to the interior commerce of the place. The Neapolitan tax, there- 
 fore, is not near so ruinous as the Spanish one. 
 
 The uniform system of taxation, which, with a few exceptions 
 of no great consequence, takes place in all the different parts of 
 the United Kingdom of Great Britain, leaves the interior com- 
 merce of the country, the inland and coasting trade, almost 
 entirely free. The inland trade is almost perfectly free, and the 
 greater part of goods may be carried from one end of the king- 
 dom to the other without requiring any permit or let-pass, without 
 being subject to question, visit, or examination from the revenue 
 officers. There are a few exceptions, but they are such as can 
 
 * Me'moires concernant les Droits, &c., Marina. The work was translated into 
 torn. i. p. 455. English by Mr. Kippax, and into French 
 
 1 TYorica y Pratica del Comercio y by Forbonnais.
 
 CHAP. ii. THE WEALTH OF NATIONS. 499 
 
 give no interruption to any important branch of the inland com- 
 merce of the country. Goods carried coastwise, indeed, require 
 certificates or coast- cockets. If you except coals, however, the 
 rest are almost all duty-free. This freedom of interior commerce, 
 the effect of the uniformity of the system of taxation, is perhaps 
 one of the principal causes of the prosperity of Great Britain; 
 every great country being necessarily the best and most extensive 
 market for the greater part of the productions of its own industry. 
 If the same freedom, in consequence of the same uniformity, could 
 be extended to Ireland and the plantations, both the grandeur of 
 the State and the prosperity of every part of the empire would 
 probably be still greater than at present. 
 
 In France, the different revenue laws which take place in the 
 different provinces require a multitude of revenue officers to sur- 
 round, not only the frontiers of the kingdom, but those of almost 
 each particular province, in order either to prevent the importa- 
 tion of certain goods, or to subject it to the payment of certain 
 duties, to the no small interruption of the interior commerce of 
 the country. Some provinces are allowed to compound for the 
 gabelle or salt-tax ; others are exempted from it altogether. Some 
 provinces are exempted from the exclusive sale of tobacco, which 
 the farmers-general enjoy through the greater part of the kingdom. 
 The Aides, which correspond to the excise in England, are very 
 different in different provinces. Some provinces are exempted 
 from them, and pay a composition or equivalent. In those in 
 which they take place and are in farm, there are many local duties 
 which do not extend beyond a particular town or district. The 
 Traites, which correspond to our customs, divide the kingdom into 
 three great parts : first, the provinces subject to the tariff of 1 664, 
 which are called the provinces of the five great farms, and under 
 which are comprehended Picardy, Normandy, and the greater part 
 of the interior provinces of the kingdom ; secondly, the provinces 
 subject to the tar iff of 1667, which are called the provinces reckoned 
 foreign, and under which are comprehended the greater part of 
 the frontier provinces ; and, thirdly, those provinces which are 
 said to be treated as foreign, or which, because they are allowed 
 a free commerce with foreign countries, are in their commerce 
 with the other provinces of France subjected to the same duties 
 as other foreign countries. These are Alsace, the three bishoprics 
 
 xka
 
 500 TEE NATURE AND CAUSES OF BOOK r. 
 
 of Metz, Tonl, and Verdun, and the three cities of Dunkirk, Bay- 
 onne, and Marseilles. Both in the provinces of the five great 
 farms (called so on account of an ancient division of the duties 
 of customs into five great branches, each of which was originally 
 the subject of a particular farm, though they are now all united 
 into one), and in those which are said to be reckoned foreign, there 
 are many local duties which do not extend beyond a particular 
 town or district. There are some such even in the provinces which 
 are said to be treated as foreign, particularly in the city of Mar- 
 seilles. It is unnecessary to observe how much both the restraints 
 upon the interior commerce of the country and the number of 
 the revenue officers must be multiplied, in order to guard the 
 frontiers of those different provinces and districts, which are subject 
 to such different systems of taxation. 
 
 Over and above the general restraints arising from this com- 
 plicated system of revenue laws, the commerce of wine (after corn 
 perhaps the most important production of France) is in the greater 
 part of the provinces subject to particular restraints, arising from 
 the favour which has been shown to the vineyards of particular 
 provinces and districts above those of others. The provinces most 
 famous for their wines, it will be found, I believe, are those in 
 which the trade in that article is subject to the fewest restraints 
 of this kind. The extensive market which such provinces enjoy 
 encourages good management both in the cultivation of their 
 vineyards, and in the subsequent preparation of their wines. 
 
 Such various and complicated revenue laws are not peculiar to 
 France. The little duchy of Milan is divided into six provinces, 
 in each of which there is a different system of taxation with 
 regard to several different sorts of consumable goods. The still 
 smaller territories of the Duke of Parma are divided into three 
 or four, each of which has, in the same manner, a system of its 
 own. Under such absurd management, nothing but the great 
 fertility of the soil and happiness of the climate could preserve 
 such countries from soon relapsing into the lowest state of poverty 
 and barbarism. 
 
 Taxes upon consumable commodities may either be levied by 
 an administration of which the officers are appointed by Govern- 
 ment and are immediately accountable to Government, of which 
 the revenue must in this case vary from year to year, according
 
 CHAP. ii. THE WEALTH OF NATIONS. 501 
 
 to the occasional variations in the produce of the tax, or they 
 may be let in farm for a rent certain, the farmer being allowed 
 to appoint his own officers, who, though obliged to levy the tax 
 in the manner directed by the law, are under his immediate in- 
 spection, and are immediately accountable to him. The best and 
 most frugal way of levying a tax can never be by farm. Over 
 and above what is necessary for paying the stipulated rent, the 
 salaries of the officers, and the whole expense of administration, 
 the farmer must always draw from the produce of the tax a 
 certain profit proportioned at least to the advance which he makes, 
 to the risk which he runs, to the trouble which he is at, and 
 to the knowledge and skill which it requires to manage so very 
 complicated a concern. Government, by establishing an admin- 
 istration under their own immediate inspection, of the same kind 
 with that which the farmer establishes, might at least save this 
 profit, which is almost always exorbitant. To farm any consider- 
 able branch of the public revenue, requires either a great capital 
 or a great credit circumstances which would alone restrain the 
 competition for such an undertaking to a very small number of 
 people. Of the few who have this capital or credit, a still smaller 
 number have the necessary knowledge or experience ; another circum- 
 stance which restrains the competition still further. The very few 
 who are in condition to become competitors, find it more for their 
 interest to combine together, to become co-partners instead of com- 
 petitors, and when the farm is set up to auction, to offer no rent, 
 but what is much below the real value. In countries where the 
 public revenues are in farm, the farmers are generally the most 
 opulent people. Their wealth would alone excite the public in- 
 dignation, and the vanity which almost always accompanies such 
 upstart fortunes, the foolish ostentation with which they commonly 
 display that wealth, excites that indignation still more. 
 
 The farmers of the public revenue never find the laws too severe 
 which punish any attempt to evade the payment of a tax. They 
 have no bowels for the contributors, who are not their subjects, 
 and whose universal bankruptcy, if it should happen the day after 
 their farm is expired, would not much affect their interest. In 
 the greatest exigencies of the State, when the anxiety of the 
 sovereign for the exact payment of his revenue is necessarily the 
 greatest, they seldom fail to complain, that without laws more
 
 502 THE NATURE AND CAUSES OF BOOK v. 
 
 rigorous than those which actually take place, it will be impossible 
 for them to pay even the usual rent. In those moments of public 
 distress their demands cannot be disputed. The revenue laws, 
 therefore, become gradually more and more severe. The most 
 sanguinary are always to be found in countries where the greater 
 part of the public revenue is in farm ; the mildest, in countries 
 where it is levied under the immediate inspection of .the sovereign. 
 Even a bad sovereign feels more compassion for his people than 
 can ever be expected from the farmers of his revenue. He knows 
 that the permanent grandeur of his family depends upon the 
 prosperity of his people, and he will never knowingly ruin that 
 prosperity for the sake of any momentary interest of his own. 
 It is otherwise with the farmers of his revenue, whose grandeur 
 may frequently be the effect of the ruin and not of the prosperity 
 of his people. 
 
 A tax is sometimes not only farmed for a certain rent, but the 
 farmer has, besides, the monopoly of the commodity taxed. In 
 France, the duties upon tobacco and salt are levied in this manner. 
 In such cases the farmer, instead of one, levies two exorbitant 
 profits upon the people the profit of the farmer, and the still 
 more exorbitant one of the monopolist. Tobacco being a luxury, 
 every man is allowed to buy or not to buy, as he chooses. But 
 salt being a necessary, every man is obliged to buy of the farmer 
 a certain quantity of it, because, if he did not buy this quantity 
 of the farmer, he would, it is presumed, buy it of some smuggler. 
 The taxes upon both commodities are exorbitant. The tempta- 
 tion to smuggle consequently is to many people irresistible, while 
 at the same time the rigour of the law and the vigilance of the 
 farmer's officers render the yielding to that temptation almost cer- 
 tainly ruinous. The smuggling of salt and tobacco sends every year 
 several hundred people to the galleys, besides a very considerable 
 number whom it sends to the gibbet. Those taxes levied in this 
 manner yield a very considerable revenue to Government: In 
 1767, the farm of tobacco was let for twenty-two millions five 
 hundred and forty-one thousand two hundred and seventy-eight 
 livres a year ; that of salt, for thirty-six millions four hundred 
 and ninety-two thousand four hundred and four livres. The farm 
 in both cases was to commence in 1768, and to last for six years. 
 Those who consider the blood of the people as nothing in com-
 
 CHAP. IT. THE WEALTH OF NATIONS. 503 
 
 parison with the revenue of the prince, may perhaps approve of 
 this method of levying- taxes. Similar taxes and monopolies of 
 salt and tobacco have been established in many other 'countries, 
 particularly in the Austrian and Prussian dominions, and in the 
 greater part of the states of Italy. 
 
 In France, the greater part of the actual revenue of the Crown is. 
 derived from eight different sources : the taille, the capitation, the 
 two vingtiemes, the gabelles, the aides, the traites, the domaine, 
 and the farm of tobacco. The five last are, in the greater part of 
 the provinces, under farm. The three first are everywhere levied 
 by an administration under the immediate inspection and direction 
 of Government, and it is universally acknowledged that, in propor- 
 tion to what they take out of the pockets of the people, they bring 
 more into the treasury of the prince than the other five, of which 
 the administration is much more wasteful and expensive. 
 
 The finances of France seem, in their present state, to admit of 
 three very obvious reformations. First, by abolishing the taille and 
 the capitation, and by increasing the number of vingtiemes, so as to 
 produce an additional revenue equal to the amount of those other 
 taxes, the revenue of the Crown might be preserved ; the expense 
 of collection might be much diminished ; the vexation of the inferior 
 ranks of people, which the taille and capitation occasion, might be 
 entirely prevented ; and the superior ranks might not be more 
 burdened than the greater part of them are at present. The 
 vingtieme, I have already observed, is a tax very nearly of the 
 same kind with what is called the land-tax of England. The 
 burden of the taille, it is acknowledged, falls finally upon the pro- 
 prietors of land ; and as the greater part of the capitation is assessed 
 upon those who are subject to the taille at so much a pound of that 
 other tax, the final payment of the greater part of it must likewise 
 fall upon the same order of people. Though the number of the 
 vingtiemes, therefore, was increased so as to produce an additional 
 revenue equal to the amount of both those taxes, the superior ranks 
 of people might not be more burdened than they are at present. 
 Many individuals no doubt would, on account of the great 
 inequalities with which the taille is commonly assessed upon the 
 estates and tenants of different individuals. The interest and 
 opposition of such favoured subjects are the obstacles most likely to 
 prevent this or any other reformation of the same kiud. Secondly,
 
 504 THE NATURE AND CAUSES OF BOOK v. 
 
 by rendering 1 the gabelle, the aides, the traites, the taxes upon 
 tobacco, all the different customs and excises, uniform in all the 
 different parts of the kingdom, those taxes might be levied at much 
 less expense, and the interior commerce of the kingdom might be 
 rendered as free as that of England. Thirdly, and lastly, by sub- 
 jecting all those taxes to an administration under the immediate 
 inspection and direction of Government, the exorbitant profits of 
 the farmers-general might be added to the revenue of the State. 
 The opposition arising from the private interest of individuals is 
 likely to be as effectual for preventing the two last as the first- 
 mentioned scheme of reformation. 
 
 The French system of taxation seems, in every respect, inferior to 
 the British. In Great Britain, ten millions sterling are annually 
 levied upon less than eight millions of people, without its being 
 possible to say that any particular order is oppressed. From the 
 collections of the Abbe Expilly, and the observations of the author 
 of the Essay upon the Legislation and Commerce of Corn, it 
 appears probable that France, including the provinces of Lorraine 
 and Bar, contains about twenty-three or twenty-four millions of 
 people ; three times the number perhaps contained in Great Britain. 
 The soil and climate of France are better than those of Great 
 Britain. The country has been much longer in a state of improve- 
 ment and cultivation, and is, upon that account, better stocked 
 with all those things which it requires a long time to raise up and 
 accumulate, such as great towns, and convenient and well-built 
 houses, both in town and country. With these advantages, it might 
 be expected that in France a revenue of thirty millions might be 
 levied for the support of the State, with as little incouveniency as a 
 revenue of ten millions is in Great Britain. In 1765 and 1766, 
 the whole revenue paid into the treasury of France, according to 
 the best, though, I acknowledge, very imperfect accounts which I 
 could get of it, usually run between 308 and 325 millions of livres ; 
 that is, it did not amount to fifteen millions sterling ; not the half 
 of what might have been expected, had the people contributed in 
 the same proportion to their numbers as the people of Great Britain. 
 The people of France, however, it is generally acknowledged, are much 
 more oppressed by taxes than the people of Great Britain. France, 
 however, is certainly the great empire in Europe, which, after that of 
 Great Britain, enjoys the mildest and most indulgent government.
 
 CHAP. ii. TEE WEALTH OF NATIONS. 505 
 
 In Holland, the heavy taxes upon the necessaries of life have 
 ruined, it is said, their principal manufactures, and are likely to 
 discourage gradually even their fisheries and their trade in ship- 
 building. The taxes upon the necessaries of life are inconsiderable 
 in Great Britain, and no manufacture has hitherto been ruined by 
 them. The British taxes which bear hardest on manufactures are 
 some duties upon the importation of raw materials, particularly 
 upon that of raw silk. The revenue of the States General and of 
 the different cities, however, is said to amount to more than five 
 millions two hundred and fifty thousand pounds sterling ; and as 
 the inhabitants of the United Provinces cannot well be supposed to 
 amount to more than a third part of those of Great Britain, 
 they must, in proportion to their number, be much more heavily 
 taxed. 
 
 After all the proper subjects of taxation have been exhausted, if 
 the exigencies of the State still continue to require new taxes, they 
 must be imposed upon improper ones. The taxes upon the neces- 
 saries of life, therefore, may be no impeachment of the wisdom of 
 that republic, which, in order to acquire and to maintain its inde- 
 pendency, has, in spite of its great frugality, been involved in such 
 expensive wars as have obliged it to contract great debts. The 
 singular countries of Holland and Zealand, besides, require a con- 
 siderable expense even to preserve their existence, or to prevent 
 their being swallowed up by the sea, which must have contributed 
 to increase considerably the load of taxes in those two provinces. 
 The republican form of government seems to be the principal 
 support of the present grandeur of Holland. The owners of great 
 capitals, the great mercantile families, have generally either some 
 direct share or some indirect influence in the administration of that 
 government. For the sake of the respect and authority which they 
 derive from this situation, they are willing to live in a country 
 where their capital, if they employ it themselves, will bring them 
 less profit, and if they lend it to another, less interest ; and where 
 the very moderate revenue which they can draw from it will pur- 
 chase less of the necessaries and conveniences of life than in any 
 other part of Europe. The residence of such wealthy people neces- 
 sarily keeps alive, in spite of all disadvantages, a certain degree of 
 industry in the country. Any public calamity which should 
 destroy the republican form of government, which should throw the
 
 506 THE NATURE AND CAUSES OF BOOK v. 
 
 whole administration into the hands of nobles and of soldiers, which 
 should annihilate altogether the importance of those wealthy 
 merchants, would soon render it disagreeable to them to live in a 
 country where they were no longer likely to be much respected. 
 They would remove both their residence and their capital to some 
 other country, and the industry and commerce of Holland would 
 soon follow the capitals which supported them. 
 
 CHAPTER III. 
 
 OF PUBLIC DEBTS. 
 
 IN that rude state of society which precedes the extension of 
 commerce and the improvement of manufactures, when those 
 expensive luxuries which commerce and manufactures can alone 
 introduce are altogether unknown, the person who possesses a large 
 revenue, I have endeavoured to show in the Third Book of this 
 Inquiry, can spend or enjoy that revenue in no other way than by 
 maintaining nearly as many people as it can maintain. A large 
 revenue may at all times be said to consist in the command of a 
 large quantity of the necessaries of life. In that rude state of 
 things, it is commonly paid in a large quantity of those necessaries, 
 in the materials of plain food and coarse clothing, in corn and cattle, 
 in wool and raw hides. When neither commerce nor manufactures 
 furnish anything for which the owner can exchange the greater 
 part of those materials which are over and above his own consump- 
 tion, he can do nothing with the surplus but feed and clothe nearly 
 as many people as it will feed and clothe. A hospitality in which 
 there is no luxury, and a liberality in which there is no ostentation, 
 occasion, in this situation of things, the principal expenses of the 
 rich and the great. But these, I have likewise endeavoured to 
 show in the same book, are expenses by which people are not very 
 apt to ruin themselves. There is not, perhaps, any selfish pleasure 
 so frivolous, of which the pursuit has not sometimes ruined even 
 sensible men. A passion for cock-fighting has ruined many. But 
 the instances, I believe, are not very numerous of people who have
 
 CHAP. in. THE WEALTH OF NATIONS. 507 
 
 been ruined by a hospitality or liberality of this kind, though the 
 hospitality of luxury and the liberality of ostentation have ruined 
 many. Among- our feudal ancestors, the long time during which 
 estates used to continue in the same family, sufficiently demonstrates 
 the general disposition of people to live within their income. 
 Though the rustic hospitality, constantly exercised by the great 
 landholders, may not, to us in the present times, seem consistent 
 with that order, which we are apt to consider as inseparably con- 
 nected with good economy, yet we must certainly allow them to 
 have been at least so far frugal as not commonly to have spent 
 their whole income. A part of their wool and raw hides they had 
 generally an opportunity of selling for money. Some part of this 
 money, perhaps, they spent in purchasing the few objects of vanity 
 and luxury with which the circumstances of the times could furnish 
 them ; but some part of it they seem commonly to have hoarded. 
 They could not well, indeed, do anything else but hoard whatever 
 money they saved. To trade was disgraceful to a gentleman, and 
 to lend money at interest, which at that time was considered as 
 usury and prohibited by law, would have been still more so. In 
 those times of violence and disorder, besides, it was convenient to 
 have a hoard of money at hand, that, in case they should be driven 
 from their own home, they might have something of known value 
 to carry with them to some place of safety. The same violence, 
 which made it convenient to hoard, made it equally convenient to 
 conceal the hoard. The frequency of treasure-trove, or of treasure 
 found of which no owner was known, sufficiently demonstrates the 
 frequency in those times both of hoarding and of concealing the 
 hoard. Treasure-trove was then considered as an important branch 
 of the revenue of the sovereign. All the treasure-trove of the 
 kingdom would scarce perhaps in the present times make an 
 important branch of the revenue of a private gentleman of a good 
 estate. 
 
 The same disposition to save and to hoard prevailed in the 
 sovereign as well as in the subject. Among nations to whom 
 commerce and manufactures are little known, the sovereign, it 
 has already been observed in the Fourth Book, is in a situation 
 which naturally disposes him to the parsimony requisite for accu- 
 mulation. In that situation, the expense even of a sovereign 
 cannot be directed by that vanity which delights in the gaudy
 
 508 THE NATURE AND CAUSES OF BOOK v. 
 
 finery of a court. The ignorance of the times affords but few of 
 the trinkets in which that finery consists. Standing armies are not 
 then necessary, so that the expense even of a sovereign, like that of 
 any other great lord, can be employed in scarce anything but 
 bounty to his tenants and hospitality to his retainers. But bounty 
 and hospitality very seldom lead to extravagance, though vanity 
 almost always does. All the ancient sovereigns of Europe, accord- 
 ingly, it has already been observed, had treasures. Every Tartar 
 chief in the present times is said to have one. 
 
 In a commercial country abounding with every sort of expensive 
 luxury, the sovereign, in the same manner as almost all the great 
 proprietors in his dominions, naturally spends a great part of his 
 revenue in purchasing those luxuries. His own and the neigh- 
 bouring countries supply him abundantly with all the costly 
 trinkets which compose the splendid but insignificant pageantry 
 of a court. For the sake of an inferior pageantry of the same kind, 
 his nobles dismiss their retainers, make their tenants independent, 
 and become gradually themselves as insignificant as the greater 
 part of the wealthy burghers in his dominions. The same frivolous 
 passions, which influence their conduct, influence his. How can 
 it be supposed that he should be the only rich man in his dominions 
 who is insensible to pleasures of this kind ? If he does not, what 
 he is very likely to do, spend upon those pleasures so great a part 
 of bis revenue as to debilitate very much the defensive power of 
 the State, it cannot well be expected that he should not spend upon 
 them all that part of it which is over and above what is necessary 
 for supporting that defensive power. His ordinary expense becomes 
 equal to his ordinary revenue, and it is well if it does not frequently 
 exceed it. The amassing of treasure can no longer be expected, 
 and, when extraordinary exigencies require extraordinary expenses, 
 he must necessarily call upon his subjects for an extraordinary aid. 
 The present and the late King of Prussia are the only great princes 
 of Europe who, since the death of Henry IV of France in 1610, are 
 supposed to have amassed any considerable treasure. The parsimony 
 which leads to accumulation has become almost as rare in re- 
 publican as in monarchical governments. The Italian republics, 
 the United Provinces of the Netherlands, are all in debt. The 
 canton of Berne is the single republic in Europe which has amassed 
 any considerable treasure. The other Swiss republics have not.
 
 CHAP. in. THE WEALTH OF NATIONS. 509 
 
 The taste for some sort of pageantry, for splendid buildings, at 
 least, and other public ornaments, frequently prevails as much in 
 the apparently sober senate-house of a little republic as in the 
 dissipated court of the greatest king. 
 
 The want of parsimony in time of peace, imposes the necessity of 
 contracting debt in time of war. When war comes, there is no 
 money in the treasury but what is necessary for carrying on the 
 ordinary expense of the peace establishment. In war, an establish- 
 ment of three or four times that expense becomes necessary for the 
 defence of the State, and consequently a revenue three or four 
 times greater than the peace revenue. Supposing that the sove- 
 reign should have, what he scarce ever has, the immediate means of 
 augmenting his revenue in proportion to the augmentation of his 
 expense, yet still the produce of the taxes, from which this increase 
 of revenue must be drawn, will not begin to come into the treasury 
 till perhaps ten or twelve months after they are imposed. But the 
 moment in which war begins, or rather the moment in which it 
 appears likely to begin, the army must be augmented, the fleet 
 must be fitted out, the garrison towns must be put into a posture 
 of defence ; that army, that fleet, those garrisoned towns must be 
 furnished with arms, ammunition, and provisions. An immediate 
 and great expense must be incurred in that moment of immediate 
 danger, which will not wait for the gradual and. slow returns of the 
 new taxes. In this exigency, Government can have no other 
 resource but in borrowing. 
 
 The same commercial state of society which, by the operation of 
 moral causes, brings Government in this manner into the necessity 
 of borrowing, produces in the subjects both an ability and an 
 inclination to lend. If it commonly brings along with it the 
 necessity of borrowing, it likewise brings along with it the facility 
 of doing so. 
 
 A country abounding with merchants and manufacturers, neces- 
 sarily abounds with a set of people through whose hands not only 
 their own capitals, but the capitals of all those who either lend their 
 money or trust them with goods, pass as frequently, or more 
 frequently, than the revenue of a private man, who, without trade 
 or business, lives upon his income, passes through his hands. The 
 revenue of such a man can regularly pass through his hands only 
 once in a year. But the whole amount of the capital and credit of
 
 510 THE NATURE AND CAUSES OF BOOK v. 
 
 a merchant, who deals in a trade of which the returns are very 
 quick, may sometimes pass through his hands two, three, or four 
 times in a year. A country abounding- with merchants and manu- 
 facturers, therefore, necessarily abounds with a set of people who 
 have it at all times in their power to advance, if they choose to do 
 so, a very large sum of money to Government. Hence the ability 
 in the subjects of a commercial state to lend. 
 
 Commerce and manufactures can seldom nourish long in any 
 state which does not enjoy a regular administration of justice, in 
 which the people do not feel themselves secure in the possession of 
 their property, in which the faith of contracts is not supported by 
 law, and in which the authority of the state is not supposed to be 
 regularly employed in enforcing the payment of debts from all those 
 who are able to pay. Commerce and manufactures, in short, can 
 seldom nourish in any state in which there is not a certain degree 
 of confidence in the justice of government. The same confidence 
 which disposes great merchants and manufacturers, upon ordinary 
 occasions, to trust their property to the protection of a particular 
 government, disposes them, upon extraordinary occasions, to trust 
 that government with the use of their property. By lending money 
 to government, they do not even for a moment diminish their ability 
 to carry on their trade and manufactures ; on the contrary, they com- 
 monly augment it. . The necessities of the state render government 
 upon most occasions willing to borrow upon terms extremely advan- 
 tageous to the lender. The security which it grants to the original 
 creditor, is made transferable to any other creditor, and, from the 
 universal confidence in the justice of the state, generally sells in the 
 market for more than was originally paid for it. The merchant or 
 moneyed man makes money by lending money to government, and, 
 instead of diminishing, increases his trading capital. He generally 
 considers it as a favour, therefore, when the administration admits 
 him to a share in the first subscription for a new loan. Hence the 
 inclination or willingness in the subjects of a commercial state to 
 lend. 
 
 The government of such a state is very apt to repose itself upon 
 this ability and willingness of its subjects to lend it their money on 
 extraordinary occasions. It foresees the facility of borrowing, and 
 therefore dispenses itself from the duty of saving. 
 
 In a rude state of society there are no great mercantile or manu-
 
 CHAP. in. THE WEALTH OF NATIONS. 611 
 
 facturing capitals. The individuals who hoard whatever money 
 they can save, and who conceal their hoard, do so from a distrust 
 of the justice of government, from a fear that if it was known that 
 they had a hoard, and where that hoard was to be found, they 
 would quickly be plundered. In such a state of things few people 
 would be able, and nobody would be willing, to lend their money to 
 Government on extraordinary exigencies. The sovereign feels that 
 he must provide for such exigencies by saving, because he foresees 
 the absolute impossibility of borrowing. This foresight increases 
 still further his natural disposition to save. 
 
 The progress of the enormous debts which at present oppress, 
 and will in the long-run probably ruin, all the great nations of 
 Europe, has been pretty uniform. Nations, like private men, have 
 generally begun to borrow upon what may be called personal 
 credit, without assigning or mortgaging any particular fund for the 
 payment of the debt ; and when this resource has failed them, they 
 have gone on to borrow upon assignments or mortgages of par- 
 ticular funds. 
 
 What is called the unfunded debt of Great Britain, is con- 
 tracted in the former of those two ways. It consists partly in a 
 debt which bears, or is supposed to bear, no interest, and which 
 resembles the debts that a private man contracts upon account; 
 and partly in a debt which bears interest, and which resembles 
 what a private man contracts upon his bill or promissory note. 
 The debts which are due either for extraordinary services, or for 
 services either not provided for, or not paid at the time when they 
 are performed part of the extraordinaries of the army, navy, and 
 ordnance, the arrears of subsidies to foreign princes, those of 
 seamen's wages, &c. usually constitute a debt of the first kind ; 
 Navy and Exchequer bills, which are issued sometimes in payment 
 of a part of such debts and sometimes for other purposes, constitute 
 a debt of the second kind ; Exchequer bills bearing interest from 
 the day on which they are issued, and navy bills six months after 
 they are issued. The Bank of England, either by voluntarily 
 discounting those bills at their current value, or by agreeing with 
 Government for certain considerations to circulate Exchequer bills, 
 that is, to receive them at par, paying the interest which happens 
 to be due upon them, keeps up their value and facilitates their 
 circulation, and thereby frequently enables Government to contract
 
 512 THE NATURE AND CAUSES OF BOOK v. 
 
 a very large debt of this kind. In France, where there is no bank, 
 the State bills (billets d'etaf)* have sometimes sold at sixty and 
 seventy per cent, discount. During the great re-coinage in King 
 William's time, when the Bank of England thought proper to put 
 a stop to its usual transactions, Exchequer bills and tallies are said 
 to have sold from twenty-five to sixty per cent, discount ; owing 
 partly, no doubt, to the supposed instability of the new Government 
 established by the Revolution, but partly too to the want of the 
 support of the Bank of England. 
 
 When this resource is exhausted, and it becomes necessary, in 
 order to raise money, to assign or mortgage some particular branch 
 of the public revenue for the payment of the debt, Government has 
 upon different occasions done this in two different ways. Some- 
 times it has made this assignment or mortgage for a short period of 
 time only, a year, or a few years, for example; and sometimes for 
 perpetuity. In the one case, the fund was supposed sufficient to 
 pay, within. the limited time, both principal and interest of the 
 money borrowed ; in the other, it was supposed sufficient to pay 
 the interest only, or a perpetual annuity equivalent to the interest, 
 Government being at liberty to redeem at any time this annuity, 
 upon paying back the principal sum borrowed. When money was 
 raised in the one way, it was said to be raised by anticipation ; 
 when in the other, by perpetual funding, or, more shortly, by 
 funding. 
 
 In Great Britain, the annual land and malt taxes are regularly 
 anticipated every year, by virtue of a borrowing clause constantly 
 inserted into the Acts which impose them. The Bank of England 
 generally advances at an interest, which since the Revolution has 
 varied from eight to three per cent, the sums for which those taxes 
 are granted, and receives payment as their produce gradually comes 
 in. If there is a deficiency, which there always is, it is provided 
 for in the supplies of the ensuing year. The only considerable 
 branch of the public revenue which yet remains unmortgaged is 
 thus regularly spent before it comes in. Like an improvident 
 spendthrift, whose pressing occasions will not allow him to wait for 
 the regular payment of his revenue, the State is in the constant 
 practice of borrowing of its own factors and agents, and of paying 
 interest for the use of its own money. 
 
 * See Examen des Reflexions Politiques sur les Finances.
 
 CHAP. in. THE WEALTH OF NATIONS. 513 
 
 In the reign of King William, and during a great part of that of 
 Queen Anne, before we had become so familiar as we are now with 
 the practice of perpetual funding, the greater part of the new taxes 
 were imposed but for a short period of time (for four, five, six, or 
 seven years only), and a great part of the grants of every year con- 
 sisted in loans upon anticipations of the produce of those taxes. The 
 produce being frequently insufficient for paying within the limited 
 term the principal and interest of the money borrowed, deficiencies 
 arose, to make good which it became necessary to prolong the term. 
 
 In 1697, by the 8th of William III, c. 20, the deficiencies of 
 several taxes were charged upon what was then called the 1st 
 general mortgage or fund, consisting of a prolongation to the 1st 
 of August, 1706, of several different taxes, which would have 
 expired within a shorter term, and of which the produce was accu- 
 mulated into one general fund. The deficiencies charged upon this 
 prolonged term amounted to ^5,160,459 14*. <)^d. 
 
 In 1701, those duties, with some others, were still further pro- 
 longed for the like purposes till the ist of August, 1710, and 
 were called the second general mortgage or fund. The deficiencies 
 charged upon it amounted to ^'2,055,999 7*- iii^. 
 
 In 1 707, those duties were still further prolonged, as a fund for 
 new loans, to the ist of August, 1712, and were called the third 
 general mortgage or fund. The sum borrowed upon it was 
 ^983,254 ii*. 9K 
 
 In 1 708, those duties were all (except the old subsidy of tonnage 
 and poundage, of which one moiety only was made a part of this 
 fund, and a duty upon the importation of Scotch linen, which had 
 been taken off by the articles of union) still further continued, as a 
 fund for new loans, to the ist of August, 1714, and were called 
 the fourth general mortgage or fund. The sum borrowed upon it 
 was ^925,176 9*. i\d. 
 
 In 1 709, those duties were all (except the old subsidy of tonnage 
 and poundage, which was now left out of this fund altogether) still 
 further continued for the same purpose to the ist of August, 1716, 
 and were called the fifth general mortgage or fund. The sum 
 borrowed upon it was ^922,029 6s. od. 
 
 In 1710, those duties were again prolonged to the ist of August, 
 1720, and were called the sixth general mortgage or fund. The 
 sum borrowed upon it was ^1,296,552 9*. nf?. 
 
 VOL. II. L 1
 
 514 THE NATURE AND CAUSES OF BOOK v. 
 
 In 1711, the same duties (which at this time were thus subject 
 to four different anticipations) together with several others were 
 continued for ever, and made a fund for paying the interest of the 
 South Sea Company, which had that year advanced to Govern- 
 ment, for paying debts and making good deficiencies, the sum of 
 ^9,177,967 i5* 4^-j the greatest loan which at that time had 
 ever been made. 
 
 Before this period, the principal, so far as I have been able to 
 observe, the only taxes which in order to pay the interest of a debt 
 had been imposed for perpetuity, were those for paying the interest 
 of the money which had been advanced to Government by the Bank 
 and East India Company, and of what it was expected would be 
 advanced, but which was never advanced, by a projected land-bank. 
 The Bank fund at this time amounted to ^3,375,027 17*. io\d., for 
 which was paid an annuity or interest of ^206,501 13*. $d. The 
 East India fund amounted to ^3,200,000, for which was paid an 
 annuity or interest of ^160,000 ; the Bank fund being at six per 
 cent., the East India fund at five per cent, interest. 
 
 In 1715, by the first of George I, c. 12, the different taxes which 
 had been mortgaged for paying the Bank annuity, together with 
 several others which by this Act were likewise rendered perpetual, 
 were accumulated into one common fund, called ' The Aggregate 
 Fund/ which was charged, not only with the payments of the Bank 
 annuity, but with several other annuities and burdens of different 
 kinds. This fund was afterwards augmented by the third of 
 George I, c. 8, and by the fifth of George I, c. 3, and the different 
 duties which were then added to it were likewise rendered perpetual. 
 In 17173 by the third of George I, c. 7, several other taxes were 
 rendered perpetual, and accumulated into another common fund, 
 called ' The General Fund,' for the payment of certain annuities, 
 amounting in the whole to ^724,849 6*. io\d. 
 
 In consequence of those different Acts, the greater part of the 
 taxes which before had been anticipated only for a short term of 
 years, were rendered perpetual as a fund for paying, not the capital, 
 but the interest only, of the money which had been borrowed upon 
 them by different successive anticipations. 
 
 Had money never been raised but by anticipation, the course of 
 a few years would have liberated the public revenue, without any 
 other attention of Government besides that of not overloading the
 
 CHAP. in. THE WEALTH OF NATIONS. 515 
 
 fund by charging- it with more debt than it could pay within the 
 limited term, and of not anticipating a second time before the 
 expiration of the first anticipation. But the greater part of Euro- 
 pean Governments have been incapable of those attentions. They 
 have frequently overloaded the fund even upon the first anticipa- 
 tion ; and when this happened not to be the case, they have 
 generally taken care to overload it, by anticipating a second and a 
 third time before the expiration of the first anticipation. The fund 
 becoming in this manner altogether insufficient for paying both 
 principal and interest of the money borrowed upon it, it became 
 necessary to charge it with the interest only, or a perpetual annuity 
 equal to the interest, and such unprovident anticipations necessarily 
 gave birth to the more ruinous practice of perpetual funding. But 
 though this practice necessarily puts off the liberation of the public 
 revenue from a fixed period to one so indefinite that it is not very 
 likely ever to arrive, yet as a greater sum can in all cases be raised 
 by this new practice than by the old one of anticipations, the 
 former, when men have once become familiar with it, has in the 
 great exigencies of the State been universally preferred to the latter. 
 To relieve the present exigency is always the object which princi- 
 pally interests those immediately concerned in the administration 
 of public affairs. The future liberation of the public revenue they 
 leave to the care of posterity. 1 
 
 During the reign of Queen Anne, the market rate of interest had 
 fallen from six to five per cent., and in the twelfth year of her reign 
 five per cent, was declared to be the highest rate which could law- 
 fully be taken for money borrowed upon private security. Soon 
 after the greater part of the temporary taxes of Great Britain had 
 been rendered perpetual, and distributed into the Aggregate, South 
 Sea, and General Funds, the creditors of the public, like those of 
 private persons, were induced to accept of five per cent, for the 
 interest of their money, which occasioned a saving of one per 
 cent, upon the capital of the greater part of the debts which had 
 been thus funded for perpetuity, or of one-sixth of the greater part of 
 the annuities which were paid out of the three great funds above 
 mentioned. This having left a considerable surplus in the produce 
 of the different taxes, which had been accumulated into those 
 
 1 For a detailed account of the process up to the middle of the Continental war, 
 by which the public debt was accumulated, see Grellier's Hist, of the National Debt. 
 
 LU
 
 516 THE NATURE AND CAUSES OF BOOK y. 
 
 funds, over and above what was necessary for paying the annuities 
 which were now charged upon them', and laid the foundation of 
 what has been called the Sinking Fund. In 1717, it amounted to 
 3^323,434 7*. 7%d. In 1727, the interest of the greater part of the 
 public debts was still further reduced to four per cent. ; and in 
 1753 an< l *757 ^0 three and a half and three per cent. ; which 
 reductions still further augmented the sinking fund. 
 
 A sinking fund, though instituted for the payment of old, 
 facilitates very much the contracting of new debts. It is a sub- 
 sidiary fund always at hand to be mortgaged in aid of any other 
 doubtful fund, upon which money is proposed to be raised in any 
 exigency of the State. Whether the sinking fund of Great Britain 
 has been more frequently applied to the one or to the other of 
 those two purposes, will sufficiently appear by-and-by. 
 
 Besides those two methods of borrowing, by anticipations and by 
 perpetual funding, there are two other methods, which hold a sort 
 of middle place between them. These are, that of borrowing upon 
 annuities for terms of years, and that of borrowing upon annuities 
 for lives. 
 
 During the reigns of King William and Queen Anne, large sums 
 were frequently borrowed upon annuities for terms of years, which 
 were sometimes longer and sometimes shorter. In 1693, an Act was 
 passed for borrowing one million upon an annuity of fourteen per 
 cent., or of ^"140,000 a year for sixteen years. In 1691, an Act was 
 passed for borrowing a million upon annuities for lives, upon terms 
 which in the present times would appear very advantageous. But 
 the subscription was not filled up. In the following year the 
 deficiency was made good by borrowing upon annuities for lives at 
 fourteen per cent., or at little more than seven years' purchase. In 
 1695, the persons who had purchased those annuities were allowed 
 to exchange them for others of ninety-six years, upon paying into 
 the Exchequer sixty -three pounds in the hundred; that is, the 
 difference between fourteen per cent, for life, and fourteen per cent, 
 for ninety-six years, was sold for sixty-three pounds, or for four 
 and a half years'- purchase. Such was the supposed instability of 
 Government, that even these terms procured few purchasers. In 
 the reign of Queen Anne, money was upon different occasions bor- 
 rowed both upon annuities for lives and upon annuities for terms 
 of thirty-two, of eighty-nine, of ninety-eight, and of ninety-nine
 
 CHAP. in. THE WEALTH OF NATIONS. 517 
 
 years. In 1719, the proprietors of the annuities for thirty-two 
 years were induced to accept in lieu of them South-Sea stock to the 
 amount of eleven and a half years' purchase of the annuities, 
 together with an additional quantity of stock equal to the arrears 
 which happened then to be due upon them. In 1720, the greater 
 part of the other annuities for terms of years both long and short 
 were subscribed into the same fund. The long annuities at that 
 time amounted to .666,82 1 8s. $\d. a year. On the 5th of January, 
 J775, the remainder of them, or what was not subscribed at that 
 time, amounted only to i 36,453 123. 8d. 
 
 During the two wars which begun in 1739 and in 1755, little 
 money was borrowed either upon annuities for terms of years, or 
 upon those for lives. An annuity for ninety-eight or ninety-nine 
 years, however, is worth nearly as much money as a perpetuity, 
 and should, therefore, one might think, be a fund for borrowing 
 nearly as much. But those who, in order to make family settle- 
 ments, and to provide for remote futurity, buy into the public 
 stocks, would not care to purchase into one of which the value was 
 continually diminishing ; and such people make a very considerable 
 proportion both of the proprietors and purchasers of stock. An 
 annuity for a long term of years, therefore, though its intrinsic 
 value may be very nearly the same with that of a perpetual annuity, 
 will not find nearly the same number of purchasers. The sub- 
 scribers to a new loan, who mean generally to sell their subscription 
 as soon as possible, prefer greatly a perpetual annuity redeemable by 
 Parliament, to an irredeemable annuity for a long term of years of 
 only equal amount. The value of the former may be supposed 
 always the same, or very nearly the same ; and it makes, therefore, 
 a more convenient transferable stock than the latter. 
 
 During the two last-mentioned wars, annuities, either for terms 
 of years or for lives, were seldom granted but as premiums to the 
 subscribers to a new loan, over and above the redeemable annuity 
 or interest upon the credit of which the loan was supposed to be 
 made. They were granted, not as the proper fund upon which the 
 money was borrowed, but as an additional encouragement to the 
 lender. 
 
 Annuities for lives have occasionally been granted in two dif- 
 ferent ways : either upon separate lives or upon lots of lives, which 
 in French are called Tontines, from the name of their inventor.
 
 518 THE NATURE AND CAUSES OF BOOK v. 
 
 When annuities are granted upon separate lives, the death of every 
 individual annuitant disburthens the public revenue so far as it was 
 affected by his annuity. When annuities are granted upon tontines, 
 the liberation of the public revenue does not commence till the 
 death of all the annuitants comprehended in one lot, which may 
 sometimes consist of twenty or thirty persons, of whom the sur- 
 vivors succeed to the annuities of all those who die before them, the 
 last survivor succeeding to the annuities of the whole lot. Upon the 
 same revenue more money can always be raised by tontines than by 
 annuities for separate lives. An annuity, with a right of survivor- 
 ship, is really worth more than an equal annuity for a separate life, 
 and from the confidence which every man naturally has in his own 
 good fortune, the principle upon which is founded the success of all 
 lotteries, such an annuity generally sells for something more than 
 it is worth. In countries where it is usual for Government to raise 
 money by granting annuities, tontines are upon this account gene- 
 rally preferred to annuities for separate lives. The expedient which 
 will raise most money, is almost always preferred to that which is 
 likely to bring about in the speediest manner the liberation of the 
 public revenue. 
 
 In France, a much greater proportion of the public debts consists 
 in annuities for lives than in England. According to a memoir 
 presented by the Parliament of Bourdeaux to the King in 1764, the 
 whole public debt of France is estimated at twenty-four hundred 
 millions of livres ; of which the capital for which annuities for lives 
 has been granted, is supposed to amount to three hundred millions, 
 the eighth part of the whole public debt. The annuities themselves 
 are computed to amount to thirty millions a year, the fourth part 
 of one hundred and twenty millions, the supposed interest of that 
 whole debt. These estimations, I know very well, are not exact, 
 but having been presented by so very respectable a body as approxi- 
 mations to th'e truth, they may, I apprehend, be considered as such. 
 It is not the different degrees of anxiety in the two Governments 
 of France and England for the liberation of the public revenue, 
 which occasions this difference in their respective modes of borrow- 
 ing ; it arises altogether from the different views and interests of 
 the lenders. 
 
 In England, the seat of Government being in the greatest mer- 
 cantile city in the world, the merchants are generally the people
 
 CHAP. m. THE WEALTH OF NATIONS. 519 
 
 who advance money to Government. By advancing it, they do not 
 mean to diminish, but, on the contrary, to increase their mercantile 
 capitals ; and, unless they expected to sell with some profit their 
 share in the subscription for a new loan, they never would sub- 
 scribe. But if by advancing their money they were to purchase, 
 instead of perpetual annuities, annuities for lives only, whether 
 their own or those of other people, they would not always be so 
 likely to sell them with a profit. Annuities upon their own lives 
 they would always sell with loss, because no man will give for an 
 annuity upon the life of another, whose age and state of health are 
 nearly the same with his own, the same price which he would give 
 for one upon his own. An annuity upon the life of a third person, 
 indeed, is, no doubt, of equal value to the buyer and seller, but its 
 real value begins to diminish from the moment it is granted, and 
 continues to do so more and more as long as it subsists. It can 
 never, therefore, make so convenient a transferable stock as a per- 
 petual annuity, of which the real value may be supposed always the 
 same, or very nearly the same. 
 
 In France, the seat of Government not being in a great mercan- 
 tile city, merchants do not make so great a proportion of the people 
 who advance money to Government. The people concerned in the 
 finances, the farmers-general, the receivers of the taxes which are not 
 in farm, the court bankers, &c., make the greater part of those who 
 advance their money in all public exigencies. Such people are com- 
 monly men of mean birth, but of great wealth, and frequently of 
 great pride. They are too proud to marry their equals, and women of 
 quality disdain to marry them. They frequently resolve, therefore, 
 to live bachelors, and having neither any families of their own, nor 
 much regard for those of their relations, whom they are not always 
 very fond of acknowledging, they desire only to live in splendour 
 during their own time, and are not unwilling that their fortune 
 should end with themselves. The number of rich people, besides, 
 who are either averse to marry, or whose condition of life renders it 
 either improper or inconvenient for them to do so, is much greater 
 in France than in England. To such people, who have little or no 
 care for posterity, nothing can be more convenient than to exchange 
 their capital for a revenue which is to last just as long and no 
 longer than they wish it to do. 
 
 The ordinary expense of the greater part of modern Governments
 
 520 THE NATURE AND CAUSES OF BOOK y. 
 
 in time of peace bsing equal or nearly equal to their ordinary 
 revenue, when war comes they are both unwilling and unable to 
 increase their revenue in proportion to the increase of their expense. 
 They are unwilling, for fear of offending the people, who, by so 
 great and so sudden an increase of taxes, would soon be disgusted 
 with the war; and they are unable, from not well knowing what 
 taxes would be sufficient to produce the revenue wanted. The faci- 
 lity of borrowing delivers them from the embarrassment which this 
 fear and inability would otherwise occasion. By means of borrow- 
 ing they are enabled, with a very moderate increase of taxes, to 
 raise from year to year money sufficient for carrying on the war, 
 and by the practice of perpetually funding they are enabled, 
 with the smallest possible increase of taxes, to raise annually the 
 largest possible sum of money. In great empires, the people who 
 live in the capital, and in the provinces remote from the scene of 
 action, feel many of them scarce any inconveniency from the war, 
 but enjoy, at their ease, the amusement of reading in the news- 
 papers the exploits of their own fleets and armies. To them, this 
 amusement compensates the small difference between the taxes 
 which they pay on account of the war, and those which they had 
 been accustomed to pay in time of peace. They are commonly dis- 
 satisfied with the return of peace, which puts an end to their 
 amusement, and to a thousand visionary hopes of conquest and 
 national glory, from a longer continuance of the war. 
 
 The return of peace, indeed, seldom relieves them from the 
 greater part of the taxes imposed during the war. These are 
 mortgaged for the interest of the debt contracted in order to carry 
 it on. If, over and above paying the interest of the debt and 
 defraying the ordinary expense of Government, the old revenue, 
 together with the new taxes, produce some surplus revenue, it may 
 perhaps be converted into a sinking fund for paying off the debt. 
 But, in the first place, this sinking fund, even supposing it should 
 be applied to no other purpose, is generally altogether inadequate 
 for paying, in the course of any period during which it can reason- 
 ably be expected that peace should continue, the whole debt con- 
 tracted during the war ; and, in the second place, this fund is 
 almost always applied to other purposes. 
 
 The new taxes were imposed for the sole purpose of paying the 
 interest of the money borrowed upon them. If they produce more,
 
 CHAP. in. THE WEALTH OF NATIONS. 521 
 
 it is generally something which was neither intended nor expected, 
 and is therefore seldom very considerable. Sinking funds have 
 generally arisen, not so much from any surplus of the taxes which 
 was over and above what was necessary for paying the interest or 
 annuity originally charged upon them, as from a subsequent reduc- 
 tion of that interest. That of Holland in 1655, and that of the 
 ecclesiastical State in 1685, were both formed in this manner. 
 Hence the usual insufficiency of such funds. 
 
 During the most profound peace, various events occur which 
 require an extraordinary expense, and Government finds it always 
 more convenient to defray this expense by misapplying the sinking 
 fund than by imposing a new tax. Every new tax is immediately 
 felt more or less by the people. It occasions always some murmur, 
 and meets with some opposition. The more taxes may have been 
 multiplied, the higher they may have been raised upon every dif- 
 ferent subject of taxation ; the more loudly the people complain of 
 every new tax, the more difficult it becomes, too, either to find out 
 new subjects of taxation, or to raise much higher the taxes already 
 imposed upon the old. A momentary suspension of the payment of 
 debt is not immediately felt by the people, and occasions neither 
 murmur nor complaint. To borrow of the sinking fund is always 
 on obvious and easy expedient for getting out of the present diffi- 
 culty. The more the public debts may have been accumulated, the 
 more necessary it may have become a study to reduce them, the 
 more dangerous, the more ruinous it may be to misapply any part 
 of the sinking fund ; the less likely is the public debt to be reduced 
 to any considerable degree, the more likely, the more certainly is the 
 sinking fund to be misapplied towards defraying all the extraordinary 
 expenses which occur in time of peace. When a nation is already 
 overburdened with taxes, nothing but the necessities of a new war, 
 nothing but either the animosity of national vengeance, or the 
 anxiety for national security, can induce the people to submit, with 
 tolerable patience, to a new tax. Hence the usual misapplication 
 of the sinking fund. 
 
 In Great Britain, from the time that we had first recourse to the 
 ruinous expedient of perpetual funding, the reduction of the public 
 debt in time of peace has never borne any proportion to its accumu- 
 lation in time of war. It was in the war which began in 1688, 
 and was concluded by the treaty of Byswick in 1697, that the
 
 522 THE NATURE AND CAUSES OF BOOK v. 
 
 foundation of the present enormous debt of Great Britain was 
 first laid. 
 
 On the 3 ist of December, 1697, the public debts of Great 
 Britain, funded and unfunded, amounted to ^21,515,742 13*. 8^. 
 A great part of those debts had been contracted upon short antici- 
 pations, and some part upon annuities for lives ; so that before the 
 3ist of December, 1701, in less than four years, there had partly 
 been paid off, and partly reverted to the public, the sum of 
 ^5,121,041 12*. off/., a greater reduction of the public debt than 
 has ever since been brought about in so short a period of time. 
 The remaining debt, therefore, amounted only to j^i 6,394,701 
 
 In the war which began in 1702, and which was concluded by 
 the treaty of Utrecht, the public debts were still more accumulated. 
 On the 3ist of December, 1714, they amounted to ^53,681,076 
 5*. 6^d. The subscription into the South Sea fund of the short 
 and long annuities increased the capital of the public debts, so that 
 on the 3 ist of December, 1722, it amounted to ^"55,282,978 
 is. 3!^. The reduction of the debt began in 1723, and went on so 
 slowly that, on the 3 ist of December, 1739, during seventeen 
 years of profound peace, the whole sum paid off was no more than 
 j^S, 328,354 17*. n T 3 ^/., the capital of the public debt at that time 
 amounting to ^46,954,623 3*. 4^d. 
 
 The Spanish war, which began in 1739, and the French war 
 which soon followed it, occasioned a further increase of the 
 debt, which, on the 3 ist of December, 1748, after the war had 
 been concluded by the treaty of Aix-la-Chapelle, amounted to 
 ^78,293,313 i*. lofd. The most profound peace of seventeen 
 yearsj continuance had taken no more than ^8,328,354 17*. n T V/. 
 from it. A war of less than nine years' continuance added 
 .^31,338,689 1 8*. 6\d, to it.* 
 
 During the administration of Mr. Pelham, the interest of the 
 public debt was reduced, or at least measures were taken for re- 
 ducing it, from four to three per cent. ; the sinking fund was 
 increased, and some part of the public debt was paid off. In 1 755, 
 before the breaking out of the late war, the funded debt of Great 
 Britain amounted to ^72,289,673. On the 5th of January, 1763, 
 
 * See James Postlethwaite's History of the Public Revenue.
 
 CHAP. in. THE WEALTH OF NATIONS. 523 
 
 at the conclusion of the peace, the funded debt amounted to 
 .^122,603,336 Ss. i\d. The unfunded debt has been stated at 
 ^13,927,589 is. 2d. But the expense occasioned by the war did 
 not end with the conclusion of the peace ; so that though, on the 
 5th of January, 1764, the funded debt was increased (partly by a 
 new loan, and partly by funding a part of the unfunded debt) to 
 ^129,586,789 i os. if^., there still remained (according to the very 
 well-informed author of the Considerations on the Trade and 
 Finances of Great Britain *) an unfunded debt which was brought 
 to account in that and the following year, of ^9,975,017 12s. l\\d. 
 In 1764, therefore, the public debt of Great Britain, funded 
 and unfunded together, amounted, according to this author, to 
 ^139,516,807 2s. 4$. The annuities for lives, too, which had 
 been granted as premiums to the subscribers to the new loans 
 in I757> estimated at fourteen years' purchase, were valued at 
 j > 472,5oOj and the annuities for long terms of years, granted as 
 premiums likewise, in 1761 and 1762, estimated at 27^ years' pur- 
 chase, were valued at ^6,826,875. During a peace of about 
 seven years' continuance, the prudent and truly patriot administra- 
 tion of Mr. Pelham was not able to pay off an old debt of six mil- 
 lions. During a war of nearly the same continuance, a new debt of 
 more than seventy-five millions was contracted. 
 
 On the 5th of January, 1775, the funded debt of Great Britain 
 amounted to .if 124,996,086 is. 6\d.\ the unfunded, exclusive of 
 a large civil list debt, to ^4,150,236 y. ii^d. ; both together, to 
 ^129,146,322 5*. 6d. According to this account, the whole debt 
 paid off during eleven years' profound peace amounted only to 
 ^10,415,474 16*. qld. Even this small reduction of debt, how- 
 ever, has not been all made from the savings out of the ordinary 
 revenue of the State. Several extraneous sums, altogether inde- 
 pendent of that ordinary revenue, have contributed towards it. 
 Amongst these we may reckon an additional shilling in the pound 
 land-tax for three years ; the two millions received from the East 
 India Company, as indemnification for their territorial acquisitions ; 
 and the one hundred and ten thousand pounds received from the 
 Bank for the renewal of their charter. To these must be added 
 several other sums, which, as they arose out of the late war, ought 
 
 1 This work was ascribed to Mr. George Grenville, the author of the Stamp Act, 
 London, 1766.
 
 524 THE NATURE AND CAUSES OF BOOK v. 
 
 perhaps to be considered as deductions from the expenses of it. 
 
 The principal are 
 
 s. d. 
 
 The produce of French prizes .. .. .. .. .. 690,449 18 9 
 
 Composition for French prisoners .. .. .. .. .. 670,000 o o 
 
 What has "been received from the sale of the ceded islands . . 955 
 
 Total .. 1,455,949 18 9 
 
 If we add to this sum the balance of the Earl of Chatham's and 
 Mr. Calcraft's accounts, and other army savings of the same kind, 
 together with what has been received from the Bank, the East India 
 Company, and the additional shilling in the pound land-tax, the whole 
 must be a good deal more than five millions. The debt, therefore, which 
 since the peace has been paid out of the savings from the ordinary 
 revenue of the State, has not, one year with another, amounted to 
 half a million a year. The sinking fund has, no doubt, been con- 
 siderably augmented since the peace, by the debt which has been 
 paid off, by the reduction of the redeemable four per cents, to three 
 per cents , and by the annuities for lives which have fallen in, and, 
 if peace was to continue, a million, perhaps, might now be annually 
 spared out of it towards the discharge of the debt. Another mil- 
 lion, accordingly, was paid in the course of last year ; l but, at the 
 same time, a large civil list debt was left unpaid, and we are now in- 
 volved in a new war, which, in its progress, may prove as expensive 
 as any of our former wars.* The new debt which will probably be 
 contracted before the end of the next campaign, may perhaps be 
 nearly equal to all the old debt which has been paid off from the 
 savings out of the ordinary revenue of the State. It will be 
 altogether chimerical, therefore, to expect that the public debt 
 should ever be completely discharged by any savings which are 
 likely to be made from that ordinary revenue as it stands at 
 present. 
 
 The public funds of the different indebted nations of Europe, 
 particularly those of England, have by one author been represented 
 as the accumulation of a great capital superadded to the other 
 capital of the country, by means of which its trade is extended, 
 
 1 Adam Smith probably means 1775. profound peace of eleven years, little 
 
 * It has proved more expensive than more than ten millions of debt was paid ; 
 
 any of our former wars, and has in- during a war of seven years, more than 
 
 volved us in an additional debt of more one hundred millions was contracted, 
 than one hundred millions. During a
 
 CHAP. in. THE WEALTH OF NATIONS. 525 
 
 its manufactures multiplied, and its lands cultivated and im- 
 proved much beyond what they could have been by means of 
 that other capital only. He does not consider that the capital 
 which the first creditors of the public advanced to Government, 
 was, from the moment in which they advanced it, a certain portion 
 of the annual produce turned away from serving in the function of 
 a capital, to serve in that of a revenue from maintaining pro- 
 ductive labourers to maintain unproductive ones and to be spent 
 and wasted, generally in the course of the year, without even the 
 hope of any future reproduction. In return for the capital which 
 they advanced, they obtained, indeed, an annuity in the public 
 funds in most cases of more than equal value. This annuity, no 
 doubt, replaced to them their capital, and enabled them to carry on 
 their trade and business to the same or perhaps to a greater extent 
 than before ; that is, they were enabled either to borrow of other 
 people a new capital upon the credit of this annuity, or by selling 
 it to get from other people a new capital of their own, equal or 
 superior to that which they had advanced to Government. This 
 new capital, however, which they in this manner either bought or 
 borrowed of other people, must have existed in the country before, 
 and must have been employed, as all capitals are, in maintaining 
 productive labour. When it came into the hands of those who had 
 advanced their money to Government, though it was in some re- 
 spects a new capital to them, it was not so to the country, but was 
 only a capital withdrawn from certain employments in order to be 
 turned towards others. Though it replaced to them what they had 
 advanced to Government, it did not replace it to the country. Had 
 they not advanced this capital to Government, there would have 
 been in the country two capitals, two portions of the annual pro- 
 duce, instead of one, employed in maintaining productive labour. > 
 When for defraying the expense of Government a revenue is 
 raised within the year from the produce of free or unmortgaged 
 taxes, a certain portion of the revenue of private people is only turned 
 away from maintaining one species of unproducive labour towards 
 maintaining another. Some part of what they pay in those taxes 
 might no doubt have been accumulated into capital, and con- 
 sequently employed in maintaining productive labour; but the 
 greater part would probably have been spent and consequently em- 
 ployed in maintaining unproductive labour. The public expense,
 
 526 THE NATURE AND CAUSES OF BOOK v. 
 
 however, when defrayed in this manner, no doubt hinders more 
 or less the further accumulation of new capital, but it does not 
 necessarily occasion the destruction of any actually existing- capital. 
 
 When the public expense is defrayed by funding, it is defrayed 
 by the annual destruction of some capital which had before existed 
 in the country; by the perversion of some portion of the annual 
 produce which had before been destined for the maintenance of pro- 
 ductive labour, towards that of unproductive labour. As in this 
 case, however, the taxes are lighter than they would have been, 
 had a revenue sufficient for defraying the same expense been raised 
 within the year, the private revenue of individuals is necessarily less 
 burdened, and consequently their ability to save and accumulate 
 some part of that revenue into capital is a good deal less impaired. 
 If the method of funding destroys more old capital, it at the same 
 time hinders less the accumulation or acquisition of new capital, 
 than that of defraying the public expense by a revenue raised within 
 the year. Under the system of funding, the frugality and industry 
 of private people can more easily repair the breaches which the 
 waste and extravagance of Government may occasionally make in 
 the general capital of the society. 1 
 
 It is only during the continuance of war, however, that the 
 system of funding has this advantage over the other system. 
 Were the expense of war to be defrayed always by a revenue raised 
 within the year, the taxes from which that extraordinary revenue 
 was drawn would last no longer than the war. The ability of 
 private people to accumulate, though less during the war, would 
 have been greater during the peace than under the system of fund- 
 ing. War would not necessarily have occasioned the destruction of 
 any old capitals, and peace would have occasioned the accumulation 
 of many more new. Wars would in general be more speedily con- 
 
 1 Undoubtedly the funds obtained by payers. Taxation attempts equality, 
 loan for the purposes of carrying on the never actually effects it, but is con- 
 charges of a war, are deductions from the stantly levied in equal quantities from 
 resources of a community. But they may unequal resources. Besides, it does not 
 in part be derived from hoards of un- follow that those who can most easily 
 employed capital, and in such a case no assist in advancing a loan, are the per- 
 loss ensues, in so far as they are thus sons who would be most justly taxed; 
 derived, to the productive powers of the on the contrary, they are generally that 
 society. Even, however, if the neces- part of the community which adds, by its 
 sary charges were taken from true capital, parsimony, to the resources of the nation, 
 they could not without great distress be and is the source from which accumula- 
 levied from the general body of tax- tions and additions of capital are derived.
 
 CHAP. ni. THE WEALTH OF NATIONS. 527 
 
 eluded, and less wantonly undertaken. The people feeling, during 
 the continuance of the war, the complete burden of it, would soon 
 grow weary of it, and Government, in order to humour them, would 
 not be under the necessity of carrying it on longer than it was 
 necessary to do so. The foresight of the heavy and unavoidable 
 burdens of war would hinder the people from wantonly calling for 
 it when there was no real or solid interest to fight for. The seasons 
 during which the ability of private people to accumulate was some- 
 what impaired, would occur more rarely, and be of shorter continu- 
 ance. Those on the contrary, during which that ability was in the 
 highest vigour, would be of much longer duration than they can 
 well be under the system of funding. 1 
 
 When funding, besides, has made a certain progress, the multi- 
 plication of taxes which it brings along with it sometimes impairs 
 as much the ability of private people to accumulate even in time 
 of peace, as the other system would in time of war. The 
 peace revenue of Great Britain amounts at present to more 
 than ten millions a year. If free and unmortgaged, it might be 
 sufficient, with proper management and without contracting a 
 shilling of new debt, to carry on the most vigorous war. The 
 private revenue of the inhabitants of Great Britain is at present 
 as much encumbered in time of peace, their ability to accumulate is 
 as much impaired as it would have been in the time of the most 
 expensive war, had the pernicious system of funding never been 
 adopted. 
 
 In the payment of the interest of the public debt, it has been said, 
 it is the right hand which pays the left. The money does not go 
 out of the country : it is only a part of the revenue of one set of the 
 inhabitants which is transferred to another ; and the nation is not 
 a farthing the poorer. This apology is founded altogether in the 
 sophistry of the mercantile system ; and after the long examination 
 which I have already bestowed upon that system, it may perhaps 
 
 1 The expenses of Chatham's wars of steam power, and of the industries de- 
 were chiefly defrayed by loans, and so pendant on it. In later times, as in the 
 also those of the American war of in- Crimean war, the charge has been met 
 dependence. Hence, wasteful as they partly by loan, partly by increased taxa- 
 were, they did not press so heavily on the tion ; while in the Abyssinian war the 
 immediate resources of the people as whole cost has been defrayed out of the 
 might have been the case, had more of revenue, and that by a tax levied on one 
 the outlay been defrayed in the current class of the community. In the Natal 
 years. Besides, immediately on the latter war, the charge has been imposed on a 
 war, came the discoveries of Watt and narrow section of the same, or the poorer 
 Arkwright, and the great development members of the same clasa.
 
 528 THE NATURE AND CAUSES OF BOOK v. 
 
 be unnecessary to say anything further about it. It supposes, 
 besides, that the whole public debt is owing to the inhabitants of 
 the country, which happens not to be true ; the Dutch, as well as 
 several other foreign nations, having a very considerable share in 
 our public funds. But though the whole debt were owing to the 
 inhabitants of the country, it would not upon that account be less 
 pernicious. 
 
 Land and capital stock are the two original sources of all revenue, 
 both private and public. Capital stock pays the wages of pro- 
 ductive labour, whether employed in agriculture, manufactures, or 
 commerce. The management of those two' original sources of 
 revenue belongs to two different sets of people the proprietors of 
 land, and the owners or employers of capital stock. 
 
 The proprietor of land is interested for the sake of his own 
 revenue to keep his estate in as good condition as he can, by 
 building and repairing his tenants' houses, by making and main- 
 taining the necessary drains and enclosures, and all those other 
 expensive improvements which it properly belongs to the landlord 
 to make and maintain. But by different land-taxes the revenue 
 of the landlord may be so much diminished ; and by different 
 duties upon the necessaries and conveniences of life, that diminished 
 revenue may be rendered of so little real value, that he may find 
 himself altogether unable to make or maintain those expensive 
 improvements. When the landlord, however, ceases to do his part, 
 it is altogether impossible that the tenant should continue to do 
 his. As the distress of the landlord increases, the agriculture of 
 the country must necessarily decline. 
 
 When, by different taxes upon the necessaries and conveniences 
 of life, the owners and employers of capital stock find, that whatever 
 revenue they derive from it, will not, in a particular country, 
 purchase the same quantity of those necessaries and conveniences, 
 which an equal revenue would in almost any other, they will be 
 disposed to remove to some other. And when, in order to raise 
 those taxes, all or the greater part of merchants and manufacturers, 
 that is, all or the greater part of the employers of great capitals, 
 come to be continually exposed to the mortifying and vexatious 
 visits of the tax-gatherers, this disposition to remove will soon 
 be changed into an actual removal. The industry of the country 
 will necessarily fall with the removal of the capital which sup-
 
 CHAP. in. THE WEALTH OF NATIONS. 529 
 
 ported it, and the ruin of trade and manufactures will follow the 
 declension of agriculture. 
 
 To transfer from the owners of those two great sources of 
 revenue, land and capital stock, from the persons immediately 
 interested in the good condition of every particular portion of 
 land, and in the good management of every particular portion 
 of capital stock, to another set of persons (the creditors of the 
 public, who have no such particular interest) the greater part of 
 the revenue arising from either, must, in the long run, occasion 
 both the neglect of land, and the waste or removal of capital 
 stock. A creditor of the public has no doubt a general interest 
 in the prosperity of the agriculture, manufactures, and commerce 
 of the country, and consequently in the good condition of its lands, 
 and in the good management of its capital stock. Should there 
 be any general failure or declension in any of these things, the 
 produce of the different taxes might no longer be sufficient to 
 pay him the annuity or interest which is due to him. But a 
 creditor of the public, considered merely as such, has no interest 
 in the good condition of any particular portion of land, or in the 
 good management of any particular portion of capital stock. As 
 a creditor of the public, he has no knowledge of any such particular 
 portion. He has no inspection of it. He can have no care about 
 it. Its ruin may in some cases be unknown to him, and cannot 
 directly affect him. 
 
 The practice of funding has gradually enfeebled every state which 
 has adopted it. The Italian republics seem to have begun it. 
 Genoa and Venice, the only two remaining which can pretend to 
 an independent existence, have both been enfeebled by it ; Spain 
 seems to have learned the practice from the Italian republics, and 
 (its taxes being probably less judicious than theirs) it has, in 
 proportion to its natural strength, been still more enfeebled. The 
 debts of Spain are of very old standing. It was deeply in debt 
 before the end of the sixteenth century, about a hundred years 
 before England owed a shilling. France, notwithstanding all its 
 natural resources, languishes under an oppressive load of the same 
 kind. The republic of the United Provinces is as much enfeebled 
 by its debts as either Genoa or Venice. Is it likely that in Great 
 Britain alone a practice, which has brought either weakness or deso- 
 lation into every other country, should prove altogether innocent? 
 
 VOL. II. M m
 
 530 THE NATURE AND CAUSES OF BOOK v. 
 
 The system of taxation established in those different countries, 
 it may be said, is inferior to that of England. I believe it is so. 
 But it ought to be remembered, that when the wisest government 
 has exhausted all the proper subjects of taxation, it must, in cases 
 of urgent necessity, have recourse to improper ones. The wise 
 republic of Holland has upon some occasions been obliged to have 
 recourse to taxes as inconvenient as the greater part of those of 
 Spain. Another war begun before any considerable liberation of 
 the public revenue had been brought about, and growing in its 
 progress as expensive as the last war, may, from irresistible 
 necessity, render the British system of taxation as oppressive as 
 that of Holland, or even as that of Spain. To the honour of 
 our present system of taxation, indeed, it has hitherto given so 
 little embarrassment to industry, that, during the course even of 
 the most expensive wars, the frugality and good conduct of in- 
 dividuals seem to have been able, by saving and accumulation, 
 to repair all the breaches which the waste and extravagance of 
 Government had made in the general capital of the society. At the 
 conclusion of the late war, the most expensive that Great Britain 
 ever waged, her agriculture was as flourishing, her manufacturers 
 as numerous and as fully employed, and her commerce as extensive, 
 as they had ever been before. The capital, therefore, which sup- 
 ported all those different branches of industry, must have been 
 equil to what it had ever been before. Since the peace, agricul- 
 ture has been still further improved, the rents of houses have 
 risen in every town and village of the country a proof of the 
 increasing wealth and revenue of the people ; and the annual 
 amount of the greater part of the old taxes, of the principal 
 branches of the excise and customs in particular, has been con- 
 tinually increasing an equally clear proof of an increasing con- 
 sumption, and consequently of an increasing produce, which could 
 alone support that consumption. Great Britain seems to support 
 with ease a burden which, half a century ago, nobody believed 
 her capable of supporting. Let us not, however, upon this ac- 
 count, rashly conclude that she is capable of supporting any burden, 
 nor even be too confident that she could support, without great 
 distress, a burden a little greater than what has already been laid 
 upon her. 
 
 When national debts have once been accumulated to a certain
 
 CHAP. m. THE WEALTH OF NATIONS. 531 
 
 degree, there is scarce, I believe, a single instance of their having 
 been fairly and completely paid. The liberation of the public 
 revenue, if it has ever been brought about at all, has always been 
 brought about by a bankruptcy ; sometimes by an avowed one, but 
 always by a real one, though frequently by a pretended payment. 
 
 The raising of the denomination of the coin has been the most 
 usual expedient by which a real public bankruptcy has been dis- 
 guised under the appearance of a pretended payment. If a sixpence, 
 for example, should either by Act of Parliament or Royal Pro- 
 clamation be raised to the denomination of a shilling, and twenty 
 sixpences to that of a pound sterling, the person who under the 
 old denomination had borrowed twenty shillings, or near four 
 ounces of silver, would, under the new, pay with twenty sixpences, 
 or with something less than two ounces. 1 A national debt of 
 about a hundred and twenty-eight millions, nearly the capital 
 of the funded and unfunded debt of Great Britain, might in this 
 manner be paid with about sixty-four millions of our present money. 
 It would indeed be a pretended payment only, and the creditors 
 of the public would really be defrauded of ten shillings in the 
 pound of what was due to them. The calamity too would extend 
 much further than to the creditors of the public, and those of 
 every private person would suffer a proportionable loss ; and this 
 without any advantage, but in most cases with a great additional 
 loss to the creditors of the public. If the creditors of the public 
 indeed were generally much in debt to other people, they might 
 in some measure compensate their loss by paying their creditors 
 in the same coin in which the public had paid them. But in 
 most countries the creditors of the public are, the greater part 
 of them, wealthy people, who stand more in the relation of creditors 
 than in that of debtors towards the rest of their fellow-citizens. 
 A pretended payment of this kind, therefore, instead of alleviating, 
 aggravates in most cases the loss of the creditors of the public, 
 and, without any advantage to the public, extends the calamity 
 to a great number of other innocent people. It occasions a general 
 and most pernicious subversion of the fortunes of private people ; 
 enriching in most cases the idle and profuse debtor at the expense 
 of the industrious and frugal creditor, and transporting a great 
 
 1 The same facts apply in degree to ' may be, as, for example, to the suggested 
 any diminution of the pure metal con- depreciation of the sovereign by id. in 
 tained in a currency, however slight it the pound sterling. 
 
 M m 2
 
 532 THE NATURE AND CA USES OF BOOK v. 
 
 part of the national capital from the hands which were likely to 
 increase and improve it, to those which are likely to dissipate and 
 destroy it. When it becomes necessary for a state to declare itself 
 bankrupt, in the same manner as when it becomes necessary for 
 an individual to do so, a fair, open, and avowed bankruptcy is 
 always the measure which is both least dishonourable to the debtor, 
 and least hurtful to the creditor. The honour of a state is surely 
 very poorly provided for, when, in order to cover the disgrace 
 of a real bankruptcy, it has recourse to a juggling trick of this 
 kind, so easily seen through, and at the same time so extremely 
 pernicious. 
 
 Almost all states, however, ancient as well as modern, when 
 reduced to this necessity, have, upon some occasions, played this 
 very juggling trick. The Romans, at the end of the first Punic 
 war, reduced the As, the coin or denomination by which they 
 computed the value of all their other coins, from containing twelve 
 ounces of copper to contain only two ounces; that is, they raised 
 two ounces of copper to a denomination which had always before 
 expressed the value of twelve ounces. The republic was, in this 
 manner, enabled to pay the great debts which it contracted with 
 the sixth part of what it really owed. So sudden and so great 
 a bankruptcy, we should in the present times be apt to imagine, 
 must have occasioned a very violent popular clamour. It does 
 not appear to have occasioned any. The law which enacted it 
 was, like all other laws relating to the coin, introduced and carried 
 through the assembly of the people by a tribune, and was prob- 
 ably a very popular law. In Rome, as in all the other ancient 
 republics, the poor people were constantly in debt to the rich and 
 the great, who, in order to secure their votes at the annual elections, 
 used to lend them money at exorbitant interest, which, being never 
 paid, soon accumulated into a sum too great either for the debtor 
 to pay, or for anybody else to pay for him. The debtor, for fear 
 of a very severe execution, was obliged, without any further gratuity, 
 to vote for the candidate whom the creditor recommended. In 
 spite of all the laws against bribery and corruption, the bounty 
 of the candidates, together with the occasional distributions of 
 corn, which were ordered by the senate, were the principal funds 
 from which, during the latter times of the Roman republic, the 
 poorer citizens derived their subsistence. To deliver themselves
 
 CHAP. in. THE WEALTH OF NATIONS. 533 
 
 from this subjection to their creditors, the poorer citizens were 
 continually calling out either for an entire abolition of debts, or 
 for what they called New Tables; that is, for a law which should 
 entitle them to a complete acquittance upon paying only a certain 
 proportion of their accumulated debts. The law which reduced 
 the coin of all denominations to a sixth part of its former value, 
 as it enabled them to pay their debts with a sixth part of what 
 they really owed, was equivalent to the most advantageous new 
 tables. In order to satisfy the people, the rich and the great 
 were, upon several different occasions, obliged to consent to laws 
 both for abolishing debts, and for introducing new tables ; and 
 they probably were induced to consent to this law, partly for the 
 same reason, and partly that, by liberating the public revenue, 
 they might restore vigour to that government of which they them- 
 selves had the principal direction. An operation of this kind would 
 at once reduce a debt of a hundred and twenty-eight millions to 
 twenty-one millions three hundred and thirty-three thousand three 
 hundred and thirty-three pounds six shillings and eightpence. 
 In the course of the second Punic war, the As was still further 
 reduced, first, from two ounces of copper to one ounce, and after- 
 wards from one ounce to half an ounce ; that is, to the twenty- 
 fourth part of its original value. By combining the three Roman 
 operations into one, a debt of a hundred and twenty-eight millions 
 of our present money might in this manner be reduced all at once 
 to a debt of five millions three hundred and thirty-three thousand 
 three hundred and thirty-three pounds six shillings and eightpence. 
 Even the enormous debt of Great Britain might in this manner 
 soon be paid. 
 
 By means of such expedients, the coin of, I believe, all nations 
 has been gradually reduced more and more below its original value, 
 and the same nominal sum has been gradually brought to contain a 
 smaller and a smaller quantity of silver. 
 
 Nations have sometimes, for the same purpose, adulterated the 
 standard of their coin ; that is, have mixed a greater quantity of 
 alloy in it. If in the pound weight of our silver coin, for ex- 
 ample, instead of eighteen pennyweight, according to the present 
 standard, there was mixed eight ounces of alloy; a pound sterling, 
 or twenty shillings of such coin, would be worth little more than 
 six shillings and eightpence of our present money. The quantity
 
 534 THE NATURE AND CAUSES OF BOOK v. 
 
 of silver contained in six shillings and eightpence of our present 
 money, would thus be raised very nearly to the denomination of a 
 pound sterling. The adulteration of the standard has exactly the 
 same effect with what the French call an augmentation, or a direct 
 raisins- of the denomination of the coin. 
 
 o 
 
 An augmentation, or a direct raising of the denomination of the 
 coin, always is, and from its nature must be, an open and avowed 
 operation. By means of it, pieces of a smaller weight and bulk are 
 called by the same name which had before been given to pieces of 
 a greater weight and bulk. The adulteration of the standard, on 
 the contrary, has generally been a concealed operation. By means 
 of it, pieces were issued from the Mint of the same denominations, 
 and, as nearly as could be contrived, of the same weight, bulk, and 
 appearance, with pieces which had been current before of much 
 greater value. When King John of France,* in order to pay his 
 debts, adulterated his coin, all the officers of his Mint were sworn 
 to secrecy. Both operations are unjust. But a simple augment- 
 ation is an injustice of open violence ; whereas an adulteration is 
 an injustice of treacherous fraud. This latter operation, therefore, 
 as soon as it has been discovered (and it could never be concealed 
 very long) has always excited much greater indignation than the 
 former. The coin after any considerable augmentation has very 
 seldom been brought back to its former weight ; but after the 
 greatest adulterations it has almost always been brought back to 
 its former fineness. It has scarce ever happened that the fury 
 and indignation of the people could otherwise be appeased. 1 
 
 In the end of the reign of Henry VIII, and in the beginning of 
 that of Edward VI, the English coin was not only raised in its 
 denomination, but adulterated in its standard. The like frauds 
 were practised in Scotland during the minority of James VI. 
 They have ocpasionally been practised in most other countries. 
 
 * See Du Cange, Glossary, voce Moneta; to accept a percentage of their debts, may 
 
 the Benedictine edition. See also Wo- be righted by insisting on payments by 
 
 lowski's edition of the work of Nicolas weight. But the fraud of issuing base 
 
 Oresme, Bishop of Lisieux, in the tune of money strikes at the root of all confidence 
 
 John. _ in pecuniary transactions, creates a uni- 
 
 1 The reason of this indignation is versal distrust, puts an extraordinary 
 
 ( bvious and natural. The fraud, which power in the hands of those who are able 
 
 consists in lowering the weight of the to interpret or arbitrate such base money, 
 
 coin, is easily detected, and, except in the and inflicts the greatest wrong on those 
 
 case of those who, receiving fixed pay- classes of the community which the State 
 
 scents from their debtors, are constrained is especially bound to protect.
 
 CHAP. in. THE WEALTH OF NATIONS. 535 
 
 That the public revenue of Great Britain can never be completely 
 liberated, or even that any considerable progress can ever be made 
 towards that liberation, while the surplus of that revenue, or what 
 is over and above defraying 'the annual expense of the peace 
 establishment, is so very small, it seems altogether in vain to 
 expect. That liberation, it is evident, can never be brought about 
 without either some very considerable augmentation of the public 
 revenue, or some equally considerable reduction of the public 
 expense. 
 
 A more equal land-tax, a more equal tax upon the rent of houses, 
 and such alterations in the present system of customs and excise as 
 those which have been mentioned in the foregoing chapter, might, 
 perhaps, without increasing the burden of the greater part of the 
 people, but only distributing the weight of it more equally upon 
 the whole, produce a considerable augmentation of revenue. The 
 most sanguine projector, however, could scarce flatter himself that 
 any augmentation of this kind would be such as could give any 
 reasonable hopes, either of liberating the public revenue altogether, 
 or even of making such progress towards that liberation in time of 
 peace, as either to prevent or to compensate the further accumulation 
 of the public debt in the next war. 
 
 By extending the British system of taxation to all the different 
 provinces of the empire inhabited by people of either British or 
 European extraction, a much greater augmentation of revenue 
 might be expected. This, however, could scarce, perhaps, be done, 
 consistently with the principles of the British Constitution, without 
 admitting into the British Parliament, or if you will into the states- 
 general of the British Empire, a fair and equal representation of all 
 those different provinces, that of each province bearing the same 
 proportion to the produce of its taxes, as the representation of Great 
 Britain might bear to the produce of the taxes levied upon Great 
 Britain. The private interest of many powerful individuals, the 
 confirmed prejudices of great bodies of people, seem, indeed, at 
 present, to oppose to so great a change such obstacles as it may be 
 very difficult, perhaps altogether impossible, to surmount. Without, 
 however, pretending to determine whether such a union be prac- 
 ticable or impracticable, it may not, perhaps, be improper, in a 
 speculative work of this kind, to consider how far the British system 
 of taxation might be applicable to all the different provinces of the
 
 536 THE NATURE AND CAUSES OF BOOK v. 
 
 empire; what revenue might be expected from it if so applied, and 
 in what manner a general union of this kind might be likely to 
 affect the happiness and prosperity of the different provinces com- 
 prehended within it, Such a speculation can at worst be regarded 
 but as a new Utopia, less amusing certainly, but not more useless 
 and chimerical than the old one. 
 
 The land-tax, the stamp-duties, and the different duties of customs 
 and excise, constitute the four principal branches of the British 
 taxes. 
 
 Ireland is certainly as able and our American and West Indian 
 plantations more able to pay a land-tax than Great Britain. 
 Where the landlord is subject neither to tithe nor poors-rate, he 
 must certainly be more able to pay such a tax, than where he is 
 subject to both those other burdens. The tithe, where there is no 
 modus, and where it is levied in kind, diminishes more what would 
 otherwise be the rent of the landlord, than a land-tax which really 
 amounted to five shillings in the pound. Such a tithe will be 
 found in most cases to amount to more than a fourth part of the 
 real rent of the land, or of what remains after replacing completely 
 the capital of the farmer, together with his reasonable profit. If 
 all moduses and all impropriations were taken away, the complete 
 church- tithe of Great Britain and Ireland could not well be esti- 
 mated at less than six or seven millions. If there were no tithe 
 either in Great Britain or Ireland, the landlords could afford to pay 
 six or seven millions additional land-tax, without being more 
 burdened than a very great part of them are at present. America 
 pays no tithe, and could therefore very well afford to pay a land- 
 tax. The lands in America and the West Indies, indeed, are in 
 general not tenanted nor leased out to farmers. They could not 
 therefore be assessed according to any rent-roll. But neither were 
 the lands of Great Britain, in the 4th of William and Mary, 
 assessed according to any rent-roll, but according to a very loose 
 and inaccurate estimation. The lands in America might be assessed 
 either in the same manner, or according to an equitable valuation 
 in consequence of an accurate survey, like that which was lately 
 made in the Milanese, and in the dominions of Austria, Prussia, 
 and Sardinia. 
 
 Stamp duties, it is evident, might be levied without any variation 
 in all countries where the forms of law process, and the deeds by
 
 CHAP. m. THE WEALTH OF NATIONS. 537 
 
 which property both real and personal is transferred, are the same 
 or nearly the same. 
 
 The extension of the Custom-house laws of Great Britain to 
 Ireland and the plantations, provided it was accompanied, as in 
 justice it ought to be, with an extension of the freedom of trade, 
 would be in the big-best degree advantageous to both. All the 
 invidious restraints which at present oppress the trade of Ireland, 
 the distinction between the enumerated and non-enumerated com- 
 modities of America, would be entirely at an end. The countries 
 north of Cape Finisterre would be as open to every part of the 
 produce of America as those south of that Cape are to some parts 
 of that produce at present. The trade between all the different 
 parts of the British Empire would, in consequence of this uniformity 
 in the Custom-house laws, be as free as the coasting trade of Great 
 Britain is at present. The British empire would thus afford within 
 itself an immense internal market for every part of the produce of 
 all its different provinces. So great an extension of market would 
 soon compensate both to Ireland and the plantations, all that they 
 could suffer from the increase of the duties of customs. 
 
 The excise is the only part of the British system of taxation 
 which would require to be varied in any respect according as it 
 was applied to the different provinces of the Empire. It might be 
 applied to Ireland without any variation, the produce and con- 
 sumption of that kingdom being exactly of the same nature with 
 those of Great Britain. In its application to America and the 
 West Indies, of which the produce and consumption are so very 
 different from those of Great Britain, some modification might be 
 necessary, in the same manner as in its application to the cider and 
 beer counties of England. 
 
 A fermented liquor, for example, which is called beer, but which, 
 as it is made of molasses, bears very little resemblance to our beer, 
 makes a considerable part of the common drink of the people in 
 America. This liquor, as it can be kept only for a few days, 
 cannot, like our beer, be prepared and stored up for sale in great 
 breweries ; but every private family must brew it for their own use, 
 in the same manner as they cook their victuals. But to subject 
 every private family to the odious visits and examination of the tax- 
 gatherers, in the same manner as we subject the keepers of alehouses 
 and the brewers for public sale, would be altogether inconsistent with
 
 538 THE NATURE AND CAUSES OF BOOK v. 
 
 liberty. If for the sake of equality it was thought necessary to lay 
 a tax upon this liquor, it might be taxed by taxing the material of 
 which it is made, either at the place of manufacture, or, if the cir- 
 cumstances of the trade rendered such an excise improper, by laying 
 a duty upon its importation into the colony in which it was to be 
 consumed. Besides the duty of one penny a gallon imposed by the 
 British Parliament upon the importation of molasses into America, 
 there is a provincial tax of this kind upon their importation into 
 Massachusetts Bay, in ships belonging to any other colony, of eight- 
 pence the hogshead ; and another upon their importation, from the 
 northern colonies, into South Carolina, of fivepence the gallon. 
 Or if neither of these methods was found convenient, each family 
 might compound for its consumption of this liquor, either according 
 to the number of persons of which it consisted, in the same manner 
 as private families compound for the malt-tax in England ; or 
 according to the different ages and sexes of those persons, in the 
 same manner as several different taxes are levied in Holland ; or 
 nearly as Sir Matthew Decker proposes, that all taxes upon con- 
 sumable commodities should be levied in England. This mode of 
 taxation, it has already been observed, when applied to objects of a 
 speedy consumption, is not a very convenient one. It might be 
 adopted, however, in cases where no better could be done. 
 
 Sugar, rum, and tobacco are commodities which are nowhere 
 necessaries of life, which are become objects of almost universal 
 consumption, and which are therefore extremely proper subjects of 
 taxation. If a union with the colonies was to take place, those 
 commodities might be taxed either before they go out of the hands 
 of the manufacturer or grower ; or, if this mode of taxation did not 
 suit the circumstances of those persons, they might be deposited in 
 public warehouses both at the place of manufacture, and at all the 
 different ports of the empire to which they might afterwards be 
 transported, to remain there, under the joint custody of the owner 
 and the revenue officer, till such time as they should be delivered 
 out either to the consumer, to the merchant retailer for home con- 
 sumption, or to the merchant exporter, the tax not to be advanced 
 till such delivery. When delivered out for exportation, to go duty 
 free, upon proper security being given that they should really be 
 exported out of the empire. These are perhaps the principal com- 
 modities with regard to which a union with the colonies might
 
 CHAP. in. THE WEALTH OF NATIONS. 539 
 
 require some considerable change in the present system of British 
 taxation. 
 
 What might be the amount of the revenue which this system of 
 taxation extended to all the different provinces of the empire might 
 produce, it must, no doubt, be altogether impossible to ascertain 
 with tolerable exactness. By means of this system there is annually 
 levied in Great Britain, upon less than eight millions of people, 
 more than ten millions of revenue. Ireland contains more than two 
 millions of people, and, according to the accounts laid before the 
 Congress, the twelve different associated provinces of America con- 
 tain more than three. Those accounts, however, may have been 
 exaggerated, in order, perhaps, either to encourage their own people, 
 or to intimidate those of this country, and we shall suppose therefore 
 that our North American and West Indian colonies taken together 
 contain no more than three millions; or that the whole British 
 empire, in Europe and America, contains no more than thirteen 
 millions of inhabitants. If upon less than eight millions of in- 
 habitants this system of taxation raises a revenue of more than ten 
 millions sterling, it ought upon thirteen millions of inhabitants to 
 raise a revenue of more than sixteen millions two hundred and fifty 
 thousand pounds sterling. From this revenue, supposing that this 
 system could produce it, must be deducted the revenue usually 
 raised in Ireland and the plantations for defraying the expense of 
 their respective civil governments. The expense of the civil and 
 military establishment of Ireland, together with the interest of the 
 public debt, amounts, at a medium of the two years which ended 
 March 1775, to something less than seven hundred and fifty 
 thousand pounds a year. By a very exact account of the revenue 
 of the principal colonies of America and the West Indies, it 
 amounted, before the commencement of the present disturbances, 
 to a hundred and forty-one thousand eight hundred pounds. In 
 this account, however, the revenue of Maryland, of North Carolina, 
 and of all our late acquisitions both upon the continent and in the 
 islands, is omitted, which may perhaps make a difference of thirty 
 or forty thousand pounds. For the sake of even numbers, therefore, 
 let us suppose that the revenue necessary for supporting the civil 
 government of Ireland, and the plantations, may amount to a 
 million. There would remain consequently a revenue of fifteen 
 millions two hundred and fifty thousand pounds, to be applied
 
 540 THE NATURE AND CAUSES OF BOOK v. 
 
 towards defraying the general expense of the empire, and towards 
 paying the public debt. But if from the present revenue of Great 
 Britain a million could in peaceable times be spared towards the 
 payment of that debt, six millions two hundred and fifty thousand 
 pounds could very well be spared from this improved revenue. This 
 great sinking fund too might be augmented every year by the in- 
 terest of the debt which had been discharged the year before, and 
 might in this manner increase so very rapidly, as to be sufficient in 
 a few years to discharge the whole debt, and thus to restore com- 
 pletely the at present debilitated and languishing vigour of the 
 empire. In the meantime, the people might be relieved from some 
 of the most burdensome taxes ; from those which are imposed either 
 upon the necessaries of life, or upon the materials of manufacture. 
 The labouring poor would thus be enabled to live better, to work 
 cheaper, and to send their goods cheaper to market. The cheapness of 
 their goods would increase the demand for them, and consequently for 
 the labour of those who produced them. This increase in the demand 
 for labour would both increase the numbers and improve the cir- 
 cumstances of the labouring poor. Their consumption would increase, 
 and together with it the revenue arising from all those articles of 
 their consumption upon which the taxes might be allowed to remain. 
 The revenue arising from this system of taxation, however, might 
 not immediately increase in proportion to the number of people who 
 were subjected to it. Great indulgence would for some time be 
 due to those provinces of the empire which were thus subjected to 
 burthens to which they had not before been accustomed, and even 
 when the same taxes came to be levied everywhere as exactly as 
 possible, they would not everywhere produce a revenue proportioned 
 to the numbers of the people. In a poor country, the consumption 
 of the principal commodities subject to the duties of customs and 
 excise is very small ; and in a thinly-inhabited country the oppor- 
 tunities of smuggling are very great. The consumption of malt 
 liquors among the inferior ranks of people in Scotland is very small, 
 and the excise upon malt, beer, and ale produces less there than in 
 England in proportion to the numbers of the people and the rate of 
 the duties, which upon malt is different on account of a supposed 
 difference of quality. In these particular branches of the excise, 
 there is not, I apprehend, much more smuggling in the one country 
 than in the other. The duties upon the distillery, and the greater
 
 CHAP. in. THE WEALTH OF NATIONS. 541 
 
 part of the duties of customs, in proportion to the numbers of people 
 in the respective countries, produce less in Scotland than in Eng- 
 land, not only on account of the smaller consumption of the taxed 
 commodities, but of the much greater facility of smuggling. In 
 Ireland, the inferior ranks of people are still poorer than in Scot- 
 land, and many parts of the country are almost as thinly inhabited. 
 In Ireland, therefore, the consumption of the taxed commodities 
 might, in proportion to the number of the people, be still less than 
 in Scotland, and the facility of smuggling nearly the same. l In 
 America and the West Indies, the white people even of the lowest 
 rank are in much better circumstances than those of the same rank 
 in England, and their consumption of all the luxuries in which they 
 usually indulge themselves is probably much greater. The blacks, 
 indeed, who make the greater part of the inhabitants both of the 
 southern colonies upon the continent and of the West India islands, 
 as they are in a state of slavery, are, no doubt, in a worse condition 
 than the poorest people either in Scotland or Ireland. We must 
 not, however, upon that account, imagine that they are worse fed, 
 or that their consumption of articles which might be subjected to 
 moderate duties, is less than that even of the lower ranks of people 
 in England. In order that they may work well, it is the interest 
 of their master that they should be fed well and kept in good heart, 
 in the same manner as it is his interest that his working cattle 
 should be so. The blacks accordingly have almost everywhere their 
 allowance of rum and of molasses or spruce beer, in the same manner 
 as the white servants ; and this allowance would not probably be 
 withdrawn, though those articles should be subjected to moderate 
 duties. The consumption of the taxed commodities, therefore, in 
 proportion to the number of inhabitants, would probably be as great 
 in America and the West Indies as in any part of the British em- 
 pire. The opportunities of smuggling, indeed, would be much 
 greater ; America, in proportion to the extent of the country, being 
 much more thinly inhabited than either Scotland or Ireland. If 
 the revenue, however, which is at present raised by the different 
 duties upon malt and malt liquors, was to be levied by a single 
 duty upon malt, the opportunity of smuggling in the most im- 
 portant branch of the excise would be almost entirely taken away ; 
 
 1 This graduated form of general tax- motives, partly for political reasons. As 
 ation has been habitually adopted with an expedient for improving the condition 
 regard to Ireland, partly irom economical of the poor, the plan has failed.
 
 542 THE NATURE AND CAUSES OF BOOK v. 
 
 and if the duties of customs, instead of being imposed upon almost 
 all the different articles of importation, were confined to a few of 
 the most general use and consumption, and if the levying of those 
 duties was subjected to the excise laws, the opportunity of smuggling, 
 though not so entirely taken away, would be very much diminished. 
 In consequence of those two, apparently, very simple and easy altera- 
 tions, the duties of customs and excise might probably produce a 
 revenue as great in proportion to the consumption of the most 
 thinly-inhabited province as they do at present in proportion to 
 that of the most populous.. 
 
 The Americans, it has been said, indeed, have no gold or silver 
 money ; the interior commerce of the country being carried on by 
 a paper currency, and the gold and silver which occasionally come 
 among them being all sent to Great Britain in return for the com- 
 modities which they receive from us. But without gold and silver, 
 it is added, there is no possibility of paying taxes. We already get 
 all the gold and silver which they have. How is it possible to draw 
 from them what they have not ? 
 
 The present scarcity of gold and silver money in America is not 
 the effect of the poverty of that country, or of the inability of the 
 people there to purchase those metals. In a country where the 
 wages of labour are so much higher, and the price of provisions so 
 much lower than in England, the greater part of the people must 
 surely have wherewithal to purchase a greater quantity, if it was 
 either necessary or convenient for them to do so. The scarcity of 
 those metals, therefore, must be the effect of choice, and not of 
 necessity. 
 
 It is for transacting either domestic or foreign business, that gold 
 and silver money is either necessary or convenient. 
 
 The domestic business of every country, it has been shown in 
 the Second Book of this inquiry, may, at least in peaceable times, be 
 transacted by means of a paper currency, with nearly the same de- 
 gree of conveniency as by gold and silver money. It is convenient 
 for the Americans, who could always employ with profit in the im- 
 provement of their lands a greater stock than they can easily get, to 
 save as much as possible the expense of so costly an instrument of 
 commerce as gold and silver, and rather to employ that part of their 
 surplus produce which would be necessary for purchasing those 
 metals, in purchasing the instruments of trade, the materials of
 
 CHAP. in. THE WEALTH OF NATIONS. 543 
 
 clothing, several parts of household furniture, and the iron-work 
 necessary for building and extending their settlements and plan- 
 tations ; in purchasing, not dead stock, but active and productive 
 stock. The colony governments find it for their interest to supply 
 the people with such a quantity of paper money as is fully sufficient 
 and generally more than sufficient for transacting their domestic 
 business. Some of those governments, that of Pennsylvania par- 
 ticularly, derive a revenue from lending, this paper money to their 
 subjects at an interest of so much per cent. Others, like that of 
 Massachusetts Bay, advance upon extraordinary emergencies a 
 paper money of this kind for defraying the public expense, and 
 afterwards, when it suits the conveniency of the colony, redeem it 
 at the depreciated value to which it gradually falls. In 1747,* that 
 colony paid, in this manner, the greater part of its public debts, 
 with the tenth part of the money for which its bills had been 
 granted. It suits the conveniency of the planters to save the 
 expense of employing gold and silver money in their domestic 
 transactions; and it suits the conveniency of the colony govern- 
 ment to supply them with a medium, which, though attended 
 with some very considerable disadvantages, enables them to save 
 that expense. The redundancy of paper money necessarily banishes 
 gold and silver from the domestic transactions of the colonies, for 
 the same reason that it has banished those metals from the greater 
 part of the domestic transactions in Scotland ; and in both countries 
 it is not the poverty, but the enterprising and projecting spirit of 
 the people, their desire of employing all the stock which they can 
 get as active and productive stock, which has occasioned this re- 
 dundancy of paper money. 
 
 In the exterior commerce which the different colonies carry on 
 with Great Britain, gold and silver are more or less employed, 
 exactly in proportion as they are more or less necessary. Where 
 those metals are not necessary, they seldom appear ; where they are 
 necessary, they are generally found. 
 
 In the commerce between Great Britain and the tobacco colonies, 
 the British goods are generally advanced to the colonists at a pretty 
 long credit, and are afterwards paid for in tobacco, rated at a 
 certain price. It is more convenient for the colonists to pay in 
 tobacco than in gold and silver. It would be more convenient for 
 * See Hutchinson's History of Massachusetts Bay, vol. ii. p. 436, et seq.
 
 544 THE NATURE AND CAUSES OF BOOK v. 
 
 any merchant to pay for the goods which his correspondents had sold 
 to him in some other sort of goods which he might happen to deal 
 in, than in money. Such a merchant would have no occasion to 
 keep any part of his stock by him unemployed, and in ready money, 
 for answering occasional demands. He could have, at all times, 
 a larger quantity of goods in his shop or warehouse, and he could 
 deal to a greater extent. But it seldom happens to be convenient 
 for all the correspondents of a merchant to receive payment for the 
 goods which they sell to him, in goods of some other kind which he 
 happens to deal in. The British merchants who trade to Virginia 
 and Maryland happen to be a particular set of correspondents, to 
 whom it is more convenient to receive payment for the goods which 
 they sell to those colonies in tobacco than in gold and silver. 
 They expect to make a profit by the sale of the tobacco ; they 
 could make none by that of the gold and silver. Gold and silver, 
 therefore, very seldom appear in the commerce between Great 
 Britain and the tobacco colonies. Maryland and Virginia have as 
 little occasion for those metals in their foreign as in their domestic 
 commerce. They are said, accordingly, to have less gold and silver 
 money than any other colonies in America. They are reckoned, how- 
 ever, as thriving, and consequently as rich as any of their neighbours. 
 
 In the northern colonies, Pennsylvania, New York, New Jersey, 
 the four governments of New England, &c. the value of their own 
 produce which they export to Great Britain is not equal to that of 
 the manufactures which they import for their own use, and for that 
 of some of the other colonies to which they are the carriers. A 
 balance, therefore, must be paid to the mother country in gold and 
 silver, and this balance they generally find. 
 
 In the sugar colonies, the value of the produce annually exported 
 to Great Britain is much greater than that of all the goods im- 
 ported from thence. If the sugar and rum annually sent to the 
 mother country were paid for in those colonies, Great Britain would 
 be obliged to send out every year a very large balance in money, 
 and the trade to the West Indies would, by a certain species of 
 politicians, be considered as extremely disadvantageous. But it so 
 happens that many of the principal proprietors of the sugar planta- 
 tions reside in Great Britain. Their rents are remitted to them in 
 sugar and rum, the produce of their estates. The sugar and rum 
 which the West India merchants purchase in those colonies upon
 
 CHAP. in. THE WEALTH OF NATIONS. 545 
 
 their own account, are not equal in value to the goods which they 
 annually sell there. A balance, therefore, must necessarily be paid 
 to them in gold and silver, and this balance too is generally found. 
 
 The difficulty and irregularity of payment from the different 
 colonies to Great Britain, have not been at all in proportion to the 
 greatness or smallness of the balances which were respectively due 
 from them. Payments have in general been more regular from the 
 northern than from the tobacco colonies, though the former have 
 generally paid a pretty large balance in money, while the latter 
 have either paid no balance, or a much smaller one. The difficulty 
 of getting payment from our different sugar colonies has been 
 greater or less in proportion, not so much to the extent of the 
 balances respectively due from them, as to the quantity of un- 
 cultivated land which they contained ; that is, to the greater or 
 smaller temptation which the planters have been under of over- 
 trading, or of undertaking the settlement and plantation of greater 
 quantities of waste land than suited the extent of their capitals. 
 The returns from the great island of Jamaica, where there is still 
 much uncultivated land, have, upon this account, been in general 
 more irregular and uncertain than those from the smaller islands of 
 Barbadoes, Antigua, and St. Christopher, which have for these 
 many years been completely cultivated, and have, upon that 
 account, afforded less field for the speculations of the planter. The 
 new acquisitions of Grenada, Tobago, St. Vincent's, and Dominica, 
 have opened a new field for speculations of this kind ; and the 
 returns from those islands have of late been as irregular and un- 
 certain as those from the great island of Jamaica. 
 
 It is not, therefore, the poverty of the colonies which occasions, 
 in the greater part of them, the present scarcity of gold and silver 
 money. Their great demand for active and productive stock makes 
 it convenient for them to have as little dead stock as possible, and 
 disposes them upon that account to content themselves with a 
 cheaper though less commodious instrument of commerce than 
 gold and silver. They are thereby enabled to convert the value 
 of that gold and silver into the instruments of trade, into the 
 materials of clothing, into household furniture, and into the iron 
 work necessary for building and extending their settlements and 
 plantations. In those branches of business which cannot be trans- 
 acted without gold and silver money, it appears that they can 
 
 VOL. n. N n
 
 546 THE NATURE AND CAUSES OF BOOK v. 
 
 always find the necessary quantity of those metals ; and if they 
 frequently do not find it, their failure is generally the effect, not 
 of their necessary poverty, but of their unnecessary and excessive 
 enterprise. It is not because they are poor that their payments are 
 irregular and uncertain, but because they are too eager to become 
 excessively rich. Though all that part of the produce of the colony 
 taxes, which was over and above what was necessary for defraying 
 the expense of their own civil and military establishments, were to 
 be remitted to Great Britain in gold and silver, the colonies have 
 abundantly wherewithal to purchase the requisite quantity of those 
 metals. They would in this case be obliged, indeed, to exchange 
 a part of their surplus produce, with which they now purchase 
 active and productive stock, for dead stock. In transacting their 
 domestic business, they would be obliged to employ a costly instead 
 of a cheap instrument of commerce; and the expense of purchasing 
 this costly instrument might damp somewhat the vivacity and 
 ardour of their excessive enterprise in the improvement of land. 
 It might not, however, be necessary to remit any part of the 
 American revenue in gold and silver. It might be remitted in 
 bills drawn upon and accepted by particular merchants or com- 
 panies in Great Britain, to whom a part of the surplus produce 
 of America had been consigned, who would pay into the treasury 
 the American revenue in money, after having themselves received 
 the value of it in goods ; and the whole business might frequently 
 be transacted without exporting a single ounce of gold or silver 
 from America. 
 
 It is not contrary to justice that both Ireland and America should 
 contribute towards the discharge of the public debt of Great 
 Britain. That debt has been contracted in support of the Govern- 
 ment established by the Revolution, a Government to which the 
 Protestants of Ireland owe, not only the whole authority which 
 they at present enjoy in their own country, but every security 
 which they possess for their liberty, their property, and their 
 religion ; a Government to which several of the colonies of America 
 owe their present charters, and consequently their present con- 
 stitution, and to which all the colonies of America owe the liberty, 
 security, and property which they have ever since enjoyed. That 
 public debt has been contracted in the defence, not of Great Britain 
 alone, but of all the different provinces of the empire ; the immense
 
 CHAP. in. THE WEALTH OF NATIONS. 547 
 
 debt contracted in the late war in particular, and a great part of 
 that contracted in the war before, were both properly contracted in 
 defence of America. 
 
 By a union with Great Britain, Ireland would gain, besides the 
 freedom of trade, other advantages much more important, and 
 which would much more than compensate any increase of taxes 
 that might accompany that union. By the union with England, 
 the middling and inferior ranks of people in Scotland gained a 
 complete deliverance from the power of an aristocracy which had 
 always before oppressed them. By an union with Great Britain, 
 the greater part of the people of all ranks in Ireland would gain 
 an equally complete deliverance from a much more oppressive 
 aristocracy ; an aristocracy not founded, like that of Scotland, in 
 the natural and respectable distinctions of birth and fortune, but 
 in the most odious of all distinctions, those of religious and political 
 prejudices distinctions which, more than any other, animate both 
 the insolence of the oppressors and the hatred and indignation of 
 the oppressed, and which commonly render the inhabitants of the 
 same country more hostile to one another than those of different 
 countries ever are. Without a union with Great Britain, the 
 inhabitants of Ireland are not likely for many ages to consider 
 themselves as one people. 
 
 No oppressive aristocracy has ever prevailed in the colonies. 
 Even they, however, would, in point of happiness and tranquillity, 
 gain considerably by a union with Great Britain. It would, at 
 least, deliver them from those rancorous and virulent factions which 
 are inseparable from small democracies, and which have so frequently 
 divided the affections of their people and disturbed the tranquillity 
 of their governments, in their form so nearly democratical. In the 
 case of a total separation from Great Britain, which, unless pre- 
 vented by a union of this kind, seems very likely to take place, 
 those factions would be ten times more virulent than ever. Before 
 the commencement of the present disturbances, the coercive power 
 of the mother country had always been able to restrain those 
 factions from breaking out into anything worse than gross 
 brutality and insult. If that coercive power was entirely taken 
 away, they would probably soon break out into open violence 
 and bloodshed. In all great countries which are united under 
 one uniform government, the spirit of party commonly prevails 
 
 N n 2
 
 548 THE NATURE AND CAUSES OF BOOK v. 
 
 less in the remote provinces than in the centre of the empire. The 
 distance of those provinces from the capital, from the principal 
 seat of the great scramble of faction and ambition, makes them 
 enter less into the views of any of the contending parties, and 
 renders them more indifferent and impartial spectators of the 
 conduct of all. The spirit of party prevails less in Scotland than 
 in England. In the case of a union, it would probably prevail less 
 in Ireland than in Scotland, and the colonies would probably soon 
 enjoy a degree of concord and unanimity at present unknown in any 
 part of the British empire. Both Ireland and the colonies, indeed, 
 would be subjected to heavier taxes than any which they at present 
 pay. In consequence, however, of a diligent and faithful applica- 
 tion of the public revenue towards the discharge of the national 
 debt, the greater part of those taxes might not be of long con- 
 tinuance, and the public revenue of Great Britain might soon be 
 reduced to what was necessary for maintaining a moderate peace 
 establishment. 
 
 The territorial acquisitions of the East India Company, the un- 
 doubted right of the Crown, that is, of the State and people of 
 Great Britain, might be rendered another source of revenue more 
 abundant, perhaps, than all those already mentioned. Those coun- 
 tries are represented as more fertile, more extensive, and, in pro- 
 portion to their extent, much richer and more populous than Great 
 Britain. In order to draw a great revenue from them, it would not, 
 probably, be necessary to introduce any new system of taxation into 
 countries which are already sufficiently and more than sufficiently 
 taxed. It might, perhaps, be more proper to lighten than to 
 aggravate the burden of those unfortunate countries, and to en- 
 deavour to draw a revenue from them, not by imposing new taxes, 
 but by preventing the embezzlement and misapplication of the 
 greater part of those which they already pay. 
 
 If it should be found impracticable for Great Britain to draw 
 any considerable augmentation of revenue from any of the resources 
 above mentioned, the only resource which can remain to her is 
 a diminution of her expense. In the mode of collecting and in 
 that of expending the public revenue, though in both there may be 
 still room for improvement, Great Britain seems to be at least as 
 economical as any of her neighbours. The military establishment 
 which she maintains for her own defence in time of peace, is more
 
 CHAp.m. THE WEALTH OF NATIONS. 549 
 
 moderate than that of any European State which can pretend to 
 rival her either in wealth or in power. None of those articles, 
 therefore, seem to admit of any considerable reduction of expense. 
 The expense of the peace establishment of the colonies was, before 
 the commencement of the present disturbances, very considerable, 
 and is an expense which may, and if no revenue can be drawn from 
 them, ought certainly to be saved altogether. This constant ex- 
 pense in time of peace, though very great, is insignificant in com- 
 parison with what the defence of the colonies has cost us in time of 
 war. The last war, which was undertaken altogether on account of 
 the colonies, cost Great Britain, it has already been observed, up- 
 wards of ninety millions. The Spanish war of 1 739 was principally 
 undertaken on their account; in which, and in the French war 
 that was the consequence of it, Great Britain spent upwards of 
 forty millions, a great part of which ought justly to be charged 
 to the colonies. In those two wars the colonies cost Great Britain 
 much more than double the sum which the national debt amounted 
 to before the commencement of the first of them. Had it not been 
 for those wars that debt might, and probably would by this time, 
 have been completely paid ; and had it not been for the colonies, 
 the former of those wars might not, and the latter certainly would 
 not have been undertaken. It was because the colonies were 
 supposed to be provinces of the British empire, that this expense 
 was laid out upon them. But countries which contribute neither 
 revenue nor military force towards the support of the empire, 
 cannot be considered as provinces. They may perhaps be con- 
 sidered as appendages, as a sort of splendid and showy equipage 
 of the empire. But if the empire can no longer support the ex- 
 pense of keeping up this equipage, it ought certainly to lay it 
 down; and if it cannot raise its revenue in proportion to its 
 expense, it ought, at least, to accommodate its expense to its 
 revenue. If the colonies, notwithstanding their refusal to submit 
 to British taxes, are still to be considered as provinces of the 
 British empire, their defence in some future war may cost Great 
 Britain as great an expense as it ever has done in any former war. 
 The rulers of Great Britain have, for more than a century past, 
 amused the people with the imagination that they possessed a great 
 empire on the west side of the Atlantic. This empire, however, 
 has hitherto existed in imagination only. It has hitherto been,
 
 60 THE NATURE AND CAUSES, ETC. BOOK v. 
 
 not an empire, but the project of an empire ; not a gold mine, but 
 the project of a gold mine ; a project which has cost, which con- 
 tinues to cost, and which, if pursued in the same way as it has 
 been hitherto, is. likely to cost immense expense, without being 
 likely to bring any profit ; for the effects of the monopoly of the 
 colony trade, it has been shown, are, to the great body of the 
 people, mere loss instead of profit. It is surely now time that our 
 rulers should either realize this golden dream, in which they have 
 been indulging themselves, perhaps, as well as the people, or that 
 they should awake from it themselves, and endeavour to awaken 
 the people. If the project cannot be completed, it ought to be 
 given up. If any of the provinces of the British empire cannot 
 be made to contribute towards the support of the whole empire, it 
 is surely time that Great Britain should free herself from the ex- 
 pense of defending those provinces in time of war, and of sup- 
 porting any part of their civil or military establishments in time of 
 peace, and endeavour to accommodate her future views and designs 
 to the real mediocrity of her circumstances.
 
 INDEX. 
 
 A. 
 
 ABASSIDES, during reigns of, Saracens 
 
 opulent, i. 405. 
 
 Abbeville, woollen manufacture at, ii. 35. 
 Abilities of those who labour, a form of 
 
 fixed capital, i 279. 
 
 Ability, improvement in labourers', ii. 261 . 
 Absentees may derive a great income, 
 without contributing to expense of go- 
 vernment, ii. 493. 
 Absolute government, gives most liberty 
 
 in the capital, ii. 166. 
 Academy, assigned by the State to Plato, 
 
 ii. 361. 
 
 Academy of Sciences, French, publica- 
 tions of, i. 133. 
 Acapulco ships, trading to India, i. 215; 
 
 carry silver, i 217. 
 Accommodation bills, nature of, i. 312 
 
 note. 
 
 Achilles, offers of Agamemnon to, ii. 300. 
 Acts of Parliament 
 18 Elizabeth, i. 35. 
 5 Elizabeth, i. 126, 127. 
 12 Anne, cap. 12. i. 138. 
 12 Anne, ib. 
 25 Edward III, ib. note. 
 43 Elizabeth, i. 144. 
 13, 14 Charles II, ib. 
 i James II, ib. 
 1 William III, i. 145. 
 8, 9 William III, i. 146. 
 8 George III, i. 149. 
 31 George II, i. 150, 151. 
 
 3 George III, ib. 
 25 Edward III, i. 187. 
 51 Henry III (Assize), i. 189. 
 14 Henry VI, i. 190. 
 3 Edward IV, ib. 
 l, 2 Philip and Mary, ib. 
 i Elizabeth, ib. 
 5 Elizabeth, i. 191. 
 
 Acts of Parliament 
 
 51 Henry III (Assize), i. 193, 
 Tumbrel and Pillory, Statute of, i. 
 
 194. 
 36 Edward III, cap. n, i. 246 note, 
 
 1 1 Edward III, cap. 5, ib. 
 
 3 Edward IV, i. 258. 
 
 4 Henry VII, ib. 
 
 1 Anne, cap. 7, i. 319. 
 
 3 George I, cap. 8, ib. 
 
 8 George I, cap. 11, i. 320, 
 
 4 George III, cap. 25, ib. 
 
 7 George I, cap. 21, ii. 74. 
 15 Charles II, cap. 7, ii. 76. 
 
 4 George III, cap. 15, ib. 
 
 23 George II, cap. 24, ii. 97. 
 
 5, 6 Edward VI, cap. 14, ii. 104, 
 15 Charles II, cap. 7, ii. 109. 
 
 1 2 George III, ib. 
 
 1 5 Charles II, cap. 7, ii. ill. 
 22 Charles IT, cap. 13, ii. 113. 
 i.} George III, ib. 
 
 12 Charles II, cap. 4, ii. 1 14 
 1 5 Charles II, ib. 
 
 22 Charles II, ib. 
 
 i William and Mary, ii. 115. 
 11,12 William III, cap. 20, ib. 
 
 13 George III, cap. 43, ii. 119. 
 4 George III, cap. 15, ii. 158. 
 6 George III, cap. 52, ii. 159. 
 4 George III, cap. 15, ii. 164. 
 
 3 Edward IV, ii. 226. 
 39 Elizabeth, ib. 
 
 24 George II, cap. 46, ii. 227. 
 
 4 George III, cap. 26, ii. 229. 
 
 5 George III, cap. 45, ib. 
 21 George IT, cap. 30, ib. 
 
 9 George III, cap. 58, ii. 230. 
 
 1 1 George III, cap. 50, ib. 
 19 George III, cap. 37, ib. 
 
 8 Elizabeth, cap. 3, ii. 231. 
 
 12 Charles II, cap. 32, ii. 232. 
 13, 14 Charles II, cap. 18, ib.
 
 552 
 
 INDEX. 
 
 Acts of Parliament 
 
 7, 8 William III, cap. 28, ii. 232. 
 
 i William III, cap. 32, ii. 234. 
 13, 14 Charles II, cap. 7, ii. 238. 
 Undated, of Edward III, Henry 
 VIII, Edward VI, ii. 239. 
 
 5 William and Mary, cap. 1 7, ii. 240. 
 
 9, 10 William III, cap. 26, ib. 
 
 8 George I, cap. 15, ib. 
 25 George II, ii. 241. 
 
 5 George III, cap. 37. ib. 
 14 George III, cap. 10, ii. 242. 
 
 7, 8 William III, cap. 20, ii. 243. 
 14 George III, cap. 71, ib. 
 
 5 George I, cap. 27, ib. 
 23 George II, cap. 13. ib. 
 10, ii William III, cap. 6, ii. 318. 
 
 25 Charles II, cap. 7, ib. 
 
 26 George II, cap. 18, ii. 319. 
 23 George II, cap. 31, ii. 322. 
 
 4 George III, cap. 20, ib. 
 
 5 George III, cap. 44, ib. 
 10 Anne, cap. 12, ii. 395. 
 
 4 William and Mary, ii. 418. 
 47 Edward III, ii. 476. 
 14 Richard II, ib. 
 
 2 Henry IV, ib. 
 
 4 Henry IV, ib. 
 
 9, 10 William III, ii. 477. 
 1 2 Charles II, ib. 
 8 William III, cap. 20, ii. 513. 
 i George I, cap. 12, ii. 514. 
 
 3 George I, cap. 8, ib. 
 
 5 George i, cap. 7, ib. 
 3 George I, cap. 7, ib. 
 
 Scotch : Gulielmi (1695), i. 296. 
 James II (1449), i. 395. 
 forbad exportation of precious metals, 
 ii. 3- 
 
 Administration of India faulty, ii. 222; 
 local, not so liable to abuse as im- 
 perial, ii. 314. 
 
 Admiralty, Board of, their control over 
 African forts, ii. 323. 
 
 Adulteration of coin, an expedient for 
 reducing debt, ii. 534. 
 
 Advantage, of Colonial trade rather rela- 
 tive than absolute, ii. 1 76. 
 
 ^Eolians, colonies of, ii. 135. 
 
 j3Esop, fables of, their object, ii. 353. 
 
 Affectation of trading for the public good, 
 ii. 28. 
 
 Africa, internal, its want of rivers cause 
 that it is barbarous, i. 22; European 
 settlements on coast of, ii. 218; pos- 
 sessions of Great Britain in, ii. 241. 
 
 African company, obligations of, ii. 321. 
 
 Agamemnon, his offers to Achilles, ii. 300. 
 
 Age, influence and authority of, ii. 299. 
 
 Aggregate Fund, the, its origin, ii. 514. 
 
 Agio, of bank of Amsterdam, i. 330 ; of 
 banks of deposit, ii. 54. 
 
 Agrarian laws, at Rome, ii. 135. 
 
 Agricultural system, advocated by a few 
 F rench philosophers, ii. 246 ; capital 
 error of, ii. 259; nearest approxima- 
 tion to truth, ii. 263 ; why if it de- 
 presses manufactures, it injures its own 
 end, ii. 272. 
 
 Agriculture, productiveness of, i. 2 note ; 
 depressed by policy of Europe, i. 3 ; 
 does not admit subdivisions of labour, 
 i. 7 J few fortunes made by, i. 132 ; in- 
 numerable volumes on, i. 133; capital 
 of, local, i. 368 ; the poorer a country 
 is, the more its capital should be em- 
 ployed in, i. 370 ; superiority of, in 
 richest nations, i. 372; difficulty of 
 getting a fortune by, i. 380 ; preferred 
 to manufacture, i. 385 ; how bettered 
 by manufactures, i. 410; -effects of, 
 more durable than those of commerce, 
 i. 423 ; system of, ii. i ; effects of mo- 
 nopoly on, ii. 32 ; improvements in, ii. 
 8 1 note; discouraged in Spain and 
 Portugal, ii. 87 ; proper business of 
 colonies, ii. 191 ; of France discou- 
 raged, ii. 247 ; in France, relieved by 
 efforts of Economists, ii. 263; more 
 easy in confined market, ii. 267 ; im- 
 plies a settlement, ii. 277. 
 
 Agrigentum, rapid growth of, ii. 146. 
 
 Aide*, a form of French excise, ii. 499. 
 
 Air, waggon way in, banking is like, i. 
 322. 
 
 Alcalvala, a tax in Spain, destructive, ii. 
 498. 
 
 Alehouse, trade with the, apparently 
 losing, ii, 66. 
 
 Alehouses, do not cause drunkenness, 
 but vice versa, i. 365 ; licences to, ii. 
 446. 
 
 Alexander, taught by Aristotle, i. 141. 
 
 Alexander III, bull of, i. 393. 
 
 Almayro, voyage of, to Chili and Peru, ii. 
 141. 
 
 America, discovery of mines in, i. 33 ; 
 mines in, effect on money, i. 35 ; popu- 
 lation in, i. 74; colonies of, rate of 
 interest in, i. 96 ; mines of, their dis- 
 covery, i. 203 ; a market for its own 
 silver, i. 213; mines of, not only exist- 
 ing, i. 220; native grasses of, i. 234; 
 growth of population in, i. 418 ; at dis- 
 covery of, question put by Spaniards, ii. 
 2 ; manufactures of, flourished in their 
 own Civil War, ii. 18 note; real advan- 
 tages of its discovery, ii. 20 ; only two 
 civilised nations in, ii. 21; state of in 
 1775, ii, 73; peopled and cultivated by 
 folly and injustice of European Go- 
 vernments, ii. 1 69 ; discovery of, its 
 benefits to Europe, ii. 171; condition 
 of in time of Cromwell, ii. 1 78 ; leading
 
 INDEX. 
 
 553 
 
 men in, desire to preserve their own 
 importance, ii . 204 ; material progress 
 of, in a century would make it equal 
 Great Britain, ii. 207; discovery of, 
 one of the greatest events, &c., ii. 208 ; 
 nations trading to, strive to exclude 
 others, ii. 213; natives of, except 
 Mexico and Peru, hunters, ii. 218; 
 war in, and effects on militia of, ii. 
 285 ; discovery of mines in, and effect 
 on silver, ii, 419; people of, are said 
 to have no gold or silver, ii. 542. 
 
 America, British, exports salt provisions, 
 i. 240. 
 
 America, North, colonies in, planted by 
 sea coast, or rivers, i. 2 1 ; paper cur- 
 rencies of, i. 328; progress of, due to 
 agriculture, i. 371 ; has no manufac- 
 tures for distant sale, i. 384; trade 
 with, compared with what might be 
 with France, ii. 71. 
 
 American war, rise in price of herring 
 casks since, ii. 96. 
 
 Americans, effects of their adopting a 
 system of monopoly, i. 371. 
 
 Amsterdam, bank of, its Agio, i. 330 ; 
 merchant of, how he would trade, ii. 
 26; bank money of, ii. 52 ; origin of 
 bank of, ii. 53; currency of in 1609, ii. 
 54 ; bank of, great warehouse for Eu- 
 ropean bullion, ii. 58 ; bank of, its go- 
 vernment, ii. 60 ; city of, its revenues 
 from the bank, ii. 61 ; attentive and 
 parsimonious burghers of, ii. 195 ; 
 English wool depreciated in, ii. 235 ; 
 administration of, vigilant and parsi- 
 monious, ii. 405. 
 
 Anderson, Mr., his 'Diplomata Scotiae,' 
 i. 194; on Dobbs' statistics, ii. 329. 
 
 Angola, discovered by Portugese, ii. 137; 
 settlement of Portuguese, ii. 218. 
 
 Animal food, when it rises in price, and 
 why, i. 255. 
 
 Animals, marked difference in capacities 
 of, i. 1 7 ; law of their increase, i, 84. 
 
 Anne, mode of taxing in time of, ii. 513; 
 rate of interest in time of, ii. 515; in 
 time of, annuities created, ii. 516. 
 
 Annuities, perpetual, not redeemable by 
 debtor in France, ii. 453. 
 
 Annuities for lives, kinds of, ii. 517. 
 
 Annuities, permanent, when and why 
 created, ii. 517. 
 
 Anticipation, borrowing by, ii. 512. 
 
 Antigua, completely cultivated, ii. 545. 
 
 Antoninus, his gift to a philosopher, ii. 
 361. 
 
 Aperea, animal of Brazil, ii. 139. 
 
 'ATroi/tt'a, meaning of, ii. 137. 
 
 Apologues, origin of, ii. 353. 
 
 Apothecaries, profit of, and why great, i. 
 117. 
 
 Apples, once imported from Flanders, i. 
 82. 
 
 Apprentices, laws or customs regulating, 
 i. 125. 
 
 Apprenticeship, effects of, i. 65 ; custom 
 of, in Europe, i. 1 06 ; duration of, why 
 seven years, i. 126; statute of, ib. ; 
 no security against fraud, nor incen- 
 tive to industry, i. 128 ; unknown to 
 ancients, i. 1 29 and note ; long, un- 
 necessary, ib. ; statute of, obstructs 
 the circulation of labour, i. 142 ; in 
 ancient regulated companies, ii. 317. 
 
 Arabia, incursions of natives of, ii. 2 76. 
 
 Arabians, histories of, full of genealogies, 
 i. 417. 
 
 Arabs, hospitality of, i. 412 ; life of, ii. 
 274; militia of, good, ii. 284. 
 
 Arbuthnot, Dr., on ancient costume, ii. 
 270. 
 
 Aristocracy, Irish, founded on the most 
 odious distinction; none in colonies, ii. 
 547- 
 
 Aristotle, on the use of money, i. 24 note; 
 his rewards for teaching Alexander, i. 
 141 ; on slave labour, i. 391 ; his view 
 of political economy, ii. i note; oil 
 Greek education, ii. 359. 
 
 Arithmetic, political, writer has no great 
 faith in, ii. 1 1 1 ; of customs, two and 
 two do not make four in, ii. 478. 
 
 Armada, invincible, consequence of de- 
 feat of, ii. 149. 
 
 Army may be maintained in three ways, 
 ii. 13 ; in colonies, amount of, ii. 197. 
 
 Army, standing, characteristics of, ii. 281 ; 
 superior to militia, ii. 283 ; benefits of, 
 ii. 289 ; may be diminished by general 
 military drill, ii. 370. 
 
 Artificer, labour of, how cheapened, i. 
 130 ; analysis of value of labour of, ii. 
 260. 
 
 Artificers, held to possess skilled labour, 
 i. 1 06 ; necessary for cultivating land, 
 i. 383 ; in America, buy land, i. 384 ; 
 increase when no more land is to be had, 
 ib. ; the living instrument not allowed 
 to emigrate, ii. 243 ; a barren class, ii. 
 250; not same as menials, ii. 259; if 
 they take the field in war, must be 
 paid, duly, ii. 278. 
 
 Artillery, modern, costliness of, ii. 291. 
 
 Artisan, addition to wealth of society by 
 labour of, ii. 261 note. 
 
 As, Roman, its use, i. 40. 
 
 Asceticism, formed part of modern theo- 
 ries of morals, ii. 356. 
 
 Asia, practice of buying silver in, i. 218 ; 
 governments of, stimulate hoarding, i. 
 282. 
 
 Asinius Celer, bought a surmullet, i. 
 229.
 
 554 
 
 INDEX. 
 
 Assemblies, colonial, would not readily 
 grant supplies, ii. 200 ; colonial, can- 
 not judge what is needed for imperial 
 purposes, ii. 201. 
 
 Assiento contract, ii. 198 note; stipula- 
 tions of, ii. 329. 
 
 Assize, statute of, i. 193. 
 
 Assize of Bread, effect of, i. 150 and note. 
 
 Athenians, employed philosophers as 
 statesmen, i. 142. 
 
 Athens, mercenary troops of, ii. 278. 
 
 Attention of mother country to colonies, 
 did not make them thrive, ii. 147 ; of 
 sovereigns, nothing compared with at- 
 tion of owner, ii. 424. 
 
 Attorney, what determines his wa?es, i. 
 no; verbose, i. 358; wages of regu- 
 lated, ii. 304. 
 
 Augustus, ordered slaves of Vedius Pollio 
 to be emancipated, ii. 168 ; imposed 
 the vicesima, ii. 454. 
 
 Austerity, encouraged by poorer classes, 
 
 ii. 379- 
 
 Australia, mines of, ii. 142. 
 Austrians, victories of Swiss on, ii. 288. 
 Avarice, corn dealer suffers by mistaken, 
 
 ii. too. 
 Azores, discovered by Portuguese, ii. 137. 
 
 B. 
 
 Babbage, Mr., his addition to Smith's 
 effects of division of labour, i. 9 note. 
 
 Bacon, believed that gain of one is the 
 loss of another, ii. 63. 
 
 Bahamas, discovery of, ii. 138. 
 
 Bailiffs, cultivation by, to be discouraged, 
 ii. 423. 
 
 Balance, favourable to France, not neces- 
 sarily disadvantageous to England, ii. 
 47 ; adverse, two kinds of, ii. 48 and 
 note; of produce and consumption, not 
 balance of trade, ii. 72; natural, of in- 
 dustry, ii. 78. 
 
 Balance of trade, Mun's theory of, ii. 4 ; 
 policy of, ii. 23 ; doctrine of, absurd, 
 ii. 63 ; unfavourable, predictions from, 
 ii. 71; insignificant object, ii. 126; ul- 
 timate object of mercantile system, ii. 
 226; measure of national prosperity 
 with some politicians, ii. 479. 
 
 Baltic, flax and hemp of, i. 369. 
 
 Bananas, plant of new world, ii. 1 39. 
 
 Bank, books of, order on, ii. 53 ; public, 
 profit on, ii. 405. 
 
 Bank of Amsterdam, government of, ii. 
 60. 
 
 Bank of England, carries bullion to Mint, 
 ii. 131 ; chief customer of Mint, its 
 losses by coinage, ii. 133; capital of, ii. 
 326; its assistance in circulating Ex- 
 chequer Bills, ii. 512. 
 
 Banker, his power of circulating his notes, 
 i. 291. 
 
 Bankers, London, give no interest on de- 
 posit, i. 94 ; Edinburgh, their rates on 
 deposit, ib. ; London, modern business 
 of, i. 298 note; how drawers and re- 
 drawers elude their vigilance, i. 313. 
 
 Banking, aids industry more than it 
 maintains idleness, i. 294; judicious, 
 benefits of, i. 321; judicious, like a 
 waggon way through air, i. 322; re- 
 straints put on by law, invasions of li- 
 berty, not judicious, i. 325 ; depends 
 on strict rules for success, ii. 340. 
 
 Bank money, custom of, ii. 52; of Am- 
 sterdam, its origin, ii. 54. 
 
 Bank notes, enable society to increase ma- 
 terials, tools, and maintenance, i. 295 ; 
 issued in excess, return to the bank, 
 i. 301 ; small, inconvenience of, i. 324. 
 
 Bankruptcy, undue leniency to, may 
 raise the rate of interest, i. 100 ; most 
 frequent in hazardous trades, i. 116; 
 shame of, i. 345 and note; has been 
 committed by Governments, ii. 531. 
 
 Banks, may be allowed free competition 
 if their issues are restrained to notes 
 in large sums, i. 331. 
 
 Banks, Scotch, employed London agents, 
 i. 302 ; their imprudence, and its ef- 
 fects, i. 303. 
 
 Bar iron, American, relieved of duties, ii. 
 1 60. 
 
 Barbadoes, flourishing in time of Crom- 
 well, ii. 1 79 ; completely cultivated, ii. 
 
 545- 
 
 Baretti, Mr., on exportation of gold from 
 Portugal, ii. 125. 
 
 Barley, effects of malt tax on price of, ii. 
 490 ; ordinary price of, never a mo- 
 nopoly price, ii. 491. 
 
 Barons, ancient, origin of their power, i. 
 412. 
 
 Barren, or unproductive class, of Econo- 
 mists, ii. 248. 
 
 Barter, may be employed instead of 
 money, ii. 9. 
 
 Basle, customs duties in, ii. 445. 
 
 Bastiat, M., on expenditure, cited, i. 344 
 note. 
 
 Batavia, Dutch settlement at, ii. 219. 
 
 Battles, ancient and modern, differences 
 of, ii. 283. 
 
 Beaver skins, duties on, ii. 242. 
 
 Beaver skins and wool, loaded with ex- 
 port duty, ii. 478. 
 
 Becket, magnificence of, i. 411. 
 
 Beggar and scholar once nearly identical, 
 i. 140. 
 
 Benefices, great, in England, their effects, 
 i. 139 ; of clergy, freeholds and why, ii. 
 383..
 
 INDEX. 
 
 555 
 
 Bengal, early civilisation of, i. 21 ; misery 
 in, i. 76 ; rates of wages, and profits of 
 stock in, i. 99; piece goods of, i. 216 ; 
 drought in, ii. loj ; destructive policy 
 of English in, ii. 220 ; revenue of sove- 
 reign in, ii. 221; its exportations of 
 rice an<l manufactures, ii. 268 ; revenue 
 of East India Company in a land-tax, 
 ii. 429 ; changes in assessment of tithe 
 in, ii. 431. 
 
 Benguela, discovered by Portuguese, ii. 
 137; settlement of Portuguese, ii, 218. 
 
 Bentham, his defence of usury, i. 93 
 note. 
 
 Berne, position of farmers in, i, 397 ; es- 
 tablishment of reformation in, ii. 392 ; 
 magistrates of, meet their expenditure 
 from tithes and church lands, ii. 399 ; 
 revenues of, source of, ii. 407 ; tax on 
 alienation in, ii. 456 ; has a treasure, 
 ii. 508. 
 
 Bernier, his account of works in Hin- 
 dostan, ii. 313. 
 
 Billets d'Etat, in France, often at dis- 
 count, ii. 512. 
 
 Bills, at Amsterdam, of a certain value, 
 paid in bank money, ii. 54. 
 
 Birch, Dr., his Life of Prince Henry, i. 
 1 60. 
 
 Birmingham, wages in, i. 1 20 ; not af- 
 fected by apprenticeship statute, i. 127; 
 consumption of precious metals in, i. 
 217 ; goods of. fall in price of, i. 257; 
 its manufacture of hardware, ii. 495. 
 
 Birth, superiority of, influence of and 
 why, ii. 295. 
 
 Bishops, election of, in ancient times, ii. 
 
 385- 
 
 Blacks, condition of in West Indies and 
 southern plantations, ii. 541. 
 
 Blackstone, Dr., cited as to certain 
 tenures, i. 394. 
 
 Boat fishing of herrings ruined, ii. 96. 
 
 Body, human, its power of reparation, ii. 
 258 ; qualifications of, not so influ- 
 ential as those of mind, ii. 294. 
 
 Bohemia, predial slavery in, i. 390 ; sur- 
 vey and valuation of, ii. 425 ; govern- 
 ment of, attends to its survey of land- 
 tax, ii. 426 ; tax on artificers in, ii. 
 462. 
 
 Bordeaux, trade in, i. 338. 
 
 Borlase, Mr. on rent of tin mines, i. 180. 
 
 Born, Ralph de, his expenses, i. 188. 
 
 Borrowing, difficulty of, real reason of 
 scarcity of money, ii. 10; disguises the 
 costs of war, ii. 520. 
 
 Boston, Mexico greater than, ii. 146. 
 
 Bounties, when given, ii. 24; granted 
 for domestic industry, their defence, 
 ii. 79 ; on fisheries encourage rashness, 
 ii. 97; in whale fishery, ii. 158; on 
 
 colonial produce, peculiar to Great 
 Britain, ii. 163 ; in interest of pro- 
 ducer, ii. 245 ; amount of in 1754, ii. 
 
 479- 
 
 Bounty, of 1688, its effects, i. 205, 207, 
 208 ; effects of, on price of corn, and 
 amount of, i. 210 ; could not lower 
 price of grain, ii. 81 ; burdensome to 
 those who pay, and very little advan- 
 tage to those who receive, ii. 84 ; on 
 corn, like policy of Spain and Por- 
 tugal, ii, 88 ; on production more liable 
 to fraud than on exportation, ii. 92 ; 
 may be no more than drawback, ii. 98 ; 
 on corn, occasional amount of, ii. 99 ; 
 established by i William and Mary, ii. 
 115; deserves no praise, ii. 117; of 1 3 
 George III, ii. 119 ; on production of 
 money, a duty-free coinage, ii. 134 ; on 
 naval stores, ii. 228. 
 
 Boy, inventor of the valve of the steam 
 engine, i. n. 
 
 Brady, on boroughs, cited, i. 400 note. 
 
 Braganza, family of, elevation of, to the 
 throne, ii. 148. 
 
 Brass, exportation of, prohibited, ii. 240. 
 
 Brazil, gold of, tax on, i. 224 ; gold of, i. 
 375; production of gold in, ii. 125; 
 late discovery of minerals in, ii. 144 ; 
 oldest settlement after that of Spani- 
 ards, ii. 148; population of, ii. 149; two 
 principal provinces of, ii. 155. 
 
 Bread, relative price to wheat, i. 157 ; 
 taxes on, in different countries, ii. 472. 
 
 Breslau, land tax of bishopric of, ii, 425. 
 
 Brewer, employment of, necessary, ii. 66. 
 
 Bricklayer, why his wages are high, i. 108. 
 
 Bricks, sent out from England to Africa, 
 
 ii. 324- 
 
 Britain, great wages in, i. 77. 
 British Linen Company, value of shares 
 
 in, ii. 343. 
 British manufactures flourished during 
 
 Seven Years' War, and why, ii. 17. 
 Brutus, the virtuous, his rates of interest, 
 
 1.99. 
 
 Buccaneers, infested Hispaniola, i. 241. 
 Budget, the, of March 1880, ii. 455 note. 
 Buenos Ayres, price of oxen at, i. 157; 
 
 prices in, i. 197 ; cattle worth no more 
 
 than hide at, i. 241. 
 Buffon, M., cited as to price of pork, i. 
 
 237 ; on the ' Cori ' of St. Domingo, ii. 
 
 139- 
 
 Building rent, element in house rent, 
 what, ii. 432. 
 
 Buildings, for business, form of fixed 
 capital, i. 279. 
 
 Bullion, gold exportation, i. 45 ; fluctua- 
 tions in price of, i. 47 ; exports and 
 imports of, ii. 16 ; credits for at Am- 
 sterdam, ii, 55 ; European, Amsterdam
 
 556 
 
 INDEX. 
 
 bank, great warehouse of, ii. 58 ; would 
 have seignorage added to value, when 
 coined, ii. 129; losses on purchase of 
 by bank, ii. 131. 
 Burcester (Bicester), Oxford, prices at, i. 
 
 243- 
 Burghers, emancipated before country 
 
 people, i. 400 ; enmity of, towards 
 
 lords, i. 402. 
 Burgundians, victories of Swiss over, ii. 
 
 288. 
 
 Burn, Dr., on the poor law, i, 145, 147-9. 
 Bushel of salt, foreign and English, 
 
 weight of, ii. 94. 
 
 Busses, bounty on tonnage of, ii. 93. 
 Butcher, profitable trade, and why, i. 105. 
 Bye products, sold at low prices, i. 1 2 2 
 
 and note. 
 Byron, Mr., prices of horses according to, 
 
 in Chili, i. 197. 
 
 C 
 
 Cabbages, price of, i. 82. 
 
 Cadiz, importations of specie to, i. 218; 
 merchants of, their profits and manners, 
 ii. 195 ; merchants of, sumptuous pro- 
 fusion of, ii. 209. 
 
 Caesar, army of, destroyed the Koman 
 republic, ii. 290. 
 
 Calcraf t, Mr., his accounts, ii. 5 24. 
 
 Calcutta, land carriage from, i. 20 and 
 note; value of gold to silver in, i. 
 222; councils of, wise and astute in 
 emergencies, ii. 225 ; court of mayor 
 of, ii. 336. 
 
 California, mines of, ii. 142 note. 
 
 Calvin, his followers, ii. 394. 
 
 Cameron, Mr., of Lochiel, his territorial 
 jurisdiction, i. 413. 
 
 Campus Martius, exercises in, ii. 279. 
 
 Canada, French colony of, ii. 151 ; con- 
 quest of, and policy of England after, 
 ii. 478. 
 
 Canals, lock tolls on, ii. 308 ; in China, 
 ii. 313; management of by joint-stock 
 company, ii. 341. 
 
 Canaries, discovered by Portuguese, ii. 
 137. 
 
 Candles, tax on, a tax on necessaries, ii. 
 471. 
 
 Cantillon, Mr., his theory of wages, i. 70. 
 
 Cantons, Protestant, of Switzerland, do 
 not tolerate Roman Catholics, ii. 400. 
 
 Capacity, kept up by variety of occupa- 
 tion, ii. 260. 
 
 Cape de Verd Islands discovered by 
 Portuguese, ii. 137. 
 
 Cape of Good Hope discovered by Portu- 
 guese, ii. 137; Dutch settlement at, ii. 
 219. 
 
 Cape passage, benefits of discovering, ii. 
 
 21 ; discovery of, one of the greatest 
 events in history of mankind, ii. 208. 
 
 Capital, its employments, treated in 
 Second Book, i. 3 ; profit of, i. 69 ; 
 invested in human machine, i. 106; 
 always saved, or stored in some degree, 
 i. 273 note; distinguished from stock, 
 i. 275 ; ways in which it may afford a 
 revenue, i. 276; circulating and fixed, 
 ib. ; circulating and fixed, relations of, 
 i. 280 ; end of both kinds of, i. 281 ; 
 effects of judicious banking on, i. 
 321 ; always employed with a view to 
 profit, i. 334 ; replacing produce, main- 
 tains productive hands, ib. ; increase 
 of, dimunition of profit, i. 356 ; lent at 
 interest, an assignment of a portion of 
 annual produce, ib. ; ways of em- 
 ploying, i. 363 ; may be insufficient to 
 work up home produce,!. 370; com- 
 paratively rapid replacement of, i. 374, 
 375 ; its destination determined by 
 prospect of private profit, i. 379 ; 
 natural course of, i. 385 ; money a small 
 part of national, ii. 10; of society, 
 limits its industry, ii. 25 ; in home 
 trade, advantage of, ii. 27 ; private, 
 absurdity of attempting to direct, ii. 
 29 ; as augmented, so industry is aug- 
 mented, ii. 30 ; of a country equals the 
 capitals of all its inhabitants, ii. 66 ; 
 exhaustion of, by consumption, ii. 7 2 > 
 of manufacturer misapplied if com- 
 pulsorily directed to shopke'eping, ii. 
 1 06 ; effects of colonial monopoly on, 
 ii. 1 76 ; said to be more advantageously 
 employed in colony trade, but reasons 
 against, ii. 181 ; and revenue applied 
 to mono ply, ii. 190 ; of Great Britain, 
 diverted by monopoly, and its industry 
 diminished, ii. 192 ; increase of, cause 
 of increase of useful labour, ii. 262 ; 
 amount of, a secret and not easily 
 ascertained, ii. 442 ; taxes on, their 
 effects, ii. 458 ; a portion destroyed 
 by the act of funding, ii. 526 and note; 
 and land sources of revenue, and how, 
 ii. 528 ; discouraged and banished by 
 excessive taxation, ib. ; see also fixed, 
 circulating. 
 
 Capitalist, functions of, i. 362 note. 
 
 Capitals, great, used in trade, i. 337 ; 
 how increased and diminished, i. 340. 
 
 Capitation taxes, levied on revenue, 
 arbitrary on rank, ii, 463, 464 ; their 
 advantages as a source of revenue, 
 ii. 466. 
 
 Cards, stamp duties on, their incidence, 
 ii. 459. 
 
 Carneades, sent to Rome by Athens, i. 
 142. 
 
 Carpenter, short duration of his physical
 
 INDEX. 
 
 557 
 
 vigour, i. 86; why his wages are lower 
 than mason's, i. 108. 
 
 Carriage, land, charges of, i. 19 ; water, 
 its effects on a market, its economy, 
 ib. ; effect of economy in cost of, ii. 
 
 37- 
 
 Carriages, tax on, in proportion to weight, 
 discussed, ii. 311. 
 
 Carrier, merchant, his function, ii. 117. 
 
 Carrots, price of, i. 82. 
 
 Carrying trade, least advantageous, ii. 
 26 ; impossible without drawbacks, iL 
 163. 
 
 Carthage, fall of, and causes of, ii. 285. 
 
 Carthagena, .attempt on, ii. 289. 
 
 Carthaginians, naval skill of, i. 21. 
 
 Cash accounts, Scotch system of, i. 297. 
 
 Casks, herring, rise in price of, ii. 96. 
 
 Castile, council of, determined to take 
 possession of New World, ii. 140. 
 
 Castes, in Egypt and Hindostan, ii. 266. 
 
 Castruccio Castracani, a hero of Ma- 
 chiavel's, i. 407. 
 
 Casuistry, its origin, ii. 356. 
 
 Catholics, English, founded Maryland, 
 ii. 169. 
 
 Cato on agriculture, i. 159; cited, ii. 35. 
 
 Cattle, destroy young trees, i. 1 76 ; causes 
 affecting the increase of, i. 230 ; im- 
 portation of forbidden, i. 421 ; among 
 Tartars, wealth, ii. 2 ; foreign, free 
 trade in, little harm to grazier, ii. 32 ; 
 for draught, none in Mexico and Peru 
 before Spanish conquest, ii. 148 ; of 
 Holstein and Jutland, ii. 262. 
 
 Ceded islands, produce of sugar in, ii. 
 158. 
 
 Celebes, vessels of, at Batavia, ii. 219. 
 
 Celts, ancient, their fondness for music, 
 
 ii- 359- 
 
 Chadwick, Mr. E., his theory of com- 
 petition, i. 65 note. 
 
 Chairmen in London, Irish, i. 171. 
 
 Chance, invariably interpreted in favour 
 of those who risk it, i. 112. 
 
 Chancery, Courts of, origin of their juris- 
 diction, ii. 303. 
 
 Charities, apprentices of, generally idle, 
 i. 129. 
 
 Charlevoix the Jesuit, his estimate of 
 Canadian population, ii. 151 and note. 
 
 Charles V, Emperor, said everything 
 abounded in France, but was wanting 
 in Spain, i. 213; his relations to the 
 Pope, ii. 392. 
 
 Charles XII (of Sweden), allied to Ma- 
 zeppa, ii. 19. 
 
 Charters in England, from the Crown, i. 
 1 30 ; character of ancient, evidence of 
 previous condition of towns, i. 399. 
 
 Chatham, Earl of, his accounts, ii. 524. 
 
 Cheapest, interest of all to buy, ii. 68. 
 
 Cheapness, pretented effects of, on in- 
 dustry, i. 87. 
 
 Chevalier, M., on gold, i. 218 note. 
 
 Chiefs, Arab and Tartar, get revenue 
 from profit, ii. 404. 
 
 Child, Sir Josiah, his criticism on certain 
 companies, ii. 318 ; on the military 
 policy of regulated companies, ii. 320. 
 
 Children of soldiers, their appearance and 
 mortality, i. 83. 
 
 Chili, gets iron from Spain, i. 179 ; price 
 of horse at, i. 197 ; cattle of little value 
 in, i. 241. 
 
 China, water carriage in, i. 22; value of 
 silver in, i. 39 ; labour in, i. 75 ; sta- 
 tionary state of, i. 99 ; rate of interest 
 in, L 100; rank of husbandmen in, 
 i. 134; richer than any part of Europe, 
 i. 200; porcelain of, i. 215; value of 
 gold to silver in, i. 222 ; reputed wealth 
 of, i. 372 ; empire of, superior to Mexico 
 and Peru, ii. 21 ; despises commerce, 
 ii. 70 ; Batavia on road from Hindostan 
 to Japan and, ii. 219; policy of, as 
 regards agriculture, ii. 265 ; home 
 market of, ii. 266; roads in, ii. 312; 
 revenue of sovereign in a land tax, 
 ii. 429. 
 
 Choiseul, Due de, mistaken policy of, ii. 
 
 384- 
 
 Christiern II, tyranny of, ii. 392. 
 
 Church, wages of ministers of, i. 137; 
 the, declared the Latin Vulgate in- 
 spired, ii. 352; of England, her loyalty 
 and good sense, ii. 394 ; lands of, taxed 
 highly in Prussia, lightly elsewhere, ii. 
 426 ; owners of tithe of, have no desire 
 to improve land, ii. 429. 
 
 Churchmen, foundations of universities 
 for benefit of, ii. 35 1 . 
 
 Cib.io, a mountain in St. Domingo, ii. 
 138- 
 
 Cicero, his letters quoted, i. 99 ; quotes 
 Cato as an authority on agriculture, i. 
 159; on absurdity of philosophers, ii. 
 
 473- 
 
 Cider, tax on, ii. 488. 
 
 Cipango, mountain mentioned by Marco 
 Polo, ii. 138. 
 
 Circulating capital, its nature, i. 275; 
 provides fixed, and makes it yield a 
 revenue, i. 280; expense of maintaining, 
 no deduction from net revenue, i. 286 ; 
 of an individual, differs from that of a 
 society, ib. 
 
 Circulation, wheel of, differs from goods 
 circulated by it, i. 287 ; wheel of, 
 money, i. 290 and note. 
 
 Circulation, of paper, cannot exceed pub- 
 lic wants, i. 300 ; of a country, how 
 divided, i. 323 ; little can be spared 
 from, for foreign war, ii. 14; amount
 
 558 
 
 INDEX. 
 
 of, in Smith's time, ii, 15; of blood, 
 British trade compared to, ii. 186. 
 
 Cities, medieval, the only sanctuaries 
 against violence, i. 405 and note- 
 
 Citizens, Roman, had to subsist on bribes, 
 ii. 136 ; a mere rabble, ii. 206. 
 
 Civil government, small expense of, in 
 new colonies, ii. 153. 
 
 Civilisation, sudden, can be induced by 
 a standing army only, ii. 289. 
 
 Civil law, study of, at Rome, ii. 361. 
 
 Civil war of 1642, &c., effects of, i. 204. 
 
 Clergy, engrossers of land in Spanish 
 colonies, ii. 155 ; a wealthy, generally 
 indolent, ii. 373 ; power of, ii. 382 ; 
 in ancient times elected their own 
 bishops and abbots, ii. 385 ; ancient 
 policy of, ii. 387; privileges of, ii. 388. 
 
 Clergymen, unproductive labourers, i. 
 333 and note. 
 
 Clerks in a counting-house 10,000 miles 
 off will trade on their own account, ii. 
 223. 
 
 Clive, Lord, Macaulay's Life of, cited, ii. 
 2 24 note. 
 
 Clock- making, art of, can be learned 
 without long apprenticeship, i. 129. 
 
 Cloth, price of, in 1487 and 146?, i. 258 ; 
 fine, made of Spanish wool, ii. 235 ; 
 Roman, price of. ii. 270. 
 
 Clothiers, their remonstrances against the 
 Hamburg Company, ii. 318. 
 
 Clove-trees, extirpated by Dutch, ii. 219. 
 
 Coach-tax, a form of levying a licence on 
 expenditure, ii. 473. 
 
 Coalheavers, wages of, in London, i. 109. 
 
 Coal-mines, fertility and rent of, i. 175 ; 
 most fertile, regulates price, i. 177 an< i 
 note. 
 
 Coals, less wholesome and agreeable than 
 wood, i. 176 ; duties on export of, ii. 
 242 ; taxes on, ii. 471. 
 
 Coast-wise, goods carried, take coast- 
 cockets, ii. 499. 
 
 Cobden, Mr., his translation of Chevalier's 
 treatise, i. 218 note; his commercial 
 treaty, ii. 127 note. 
 
 Cochin China, piice of sugar in, i. 166 ; 
 vessels of, at Batavia, ii. 319. 
 
 Cockets, coast, on goods carried coast- 
 wise, ii. 499. 
 
 Cod, dried, used as currency, i. 24. 
 
 Coin, gold, exportation of, i. 45 ; clipping 
 of, effects of, i. 205 ; in Scotland before 
 the Union, i. 22.? ; quantity of, regulated 
 by use, ii. 12; national, different circu- 
 lation of, from bullion, ii. 16; English, 
 depreciation of, in time of William III, 
 ii. 51 ; amount of, annually minted, 
 ii. 128; raising denomination of, an 
 expedient of a ruinous and unjust kind, 
 
 Coinage, expense of, by whom defrayed, 
 ii. 51 ; effects of repaying cost of, by 
 Government, ii. 128; act of, adds to 
 value of metal, ii. 129 ; duty free, first 
 in reign of Charles II, ii. 131 ; tax on, 
 nobody pays, ii. 132 ; annual, amount 
 of, ii. 133; annual cost of, ii. 1 34 ; 
 expense of, may be defrayed by a 
 seignorage, ii. 307. 
 
 Coiners, false, would be stimulated by 
 exorbitant duty, ii. 129. 
 
 Coins, origin of, i. 26 ; names of, origi- 
 nally weights, i. 27; lowering quan- 
 tity of metal in, i. 35 ; adulteration of. 
 an expedient to reduce debt, ii. 333. 
 
 Coins, gold, newest of, picked out and 
 sent abroad, i. 303. 
 
 Coins, silver, state of, at the end of the 
 1 7th century, i. 206. 
 
 Colbert, M., policy of his fiscal system, ii. 
 40, 247. 
 
 Collection, cost of, in excise and customs, 
 ii. 494. 
 
 Collier, high wages of, and why, i. 105 ; 
 high wages and regular employment 
 of, i. 109. 
 
 Colonia, meaning of, ii. 137. 
 
 Coloni Partiarii, Latin equivalent of 
 Metayers, i. 392. 
 
 Colonial system, effects of, ii. 245. 
 
 Colonial trade, roundabout, ii. 182. 
 
 Colonies, wages and profits in, i. 97 ; 
 interest of, sacrificed to those of mer- 
 chants, ii. 164; agriculture the proper 
 business of, ii. 191 ; dominion over, 
 has monopoly for its end, ii. 197 ; 
 authority over, will not be given up, 
 ii. 198 and note; free trade with, after 
 abandonment of, its effects, ii. 199 ; 
 how they might be taxed, ii. 200 ; 
 would not be over-taxed on requisition, 
 ii. 202 ; no benefit in monopoly of 
 trade of, but loss, ii. 210 ; grants to, 
 supposed to be grants to ourselves, ii. 
 231 ; cost of, ii. 549. 
 
 Colonies, English, a market for silver, 
 i. 213; Spanish, a market for silver, 
 ib. ; British, protection in, i. 371 
 note ; distant, establishment of, and 
 policy towards, ii. 24 ; European, dif- 
 ferent from Greek and Roman, ii. 1 34 ; 
 Roman, origin and character of, ii. 1 36 ; 
 European, motives of, ii. 137 ; English, 
 not yet hurt by certain prohibitions, ii. 
 162; not independent, ii. 163; new, 
 exclusive companies unfavourable to, 
 ii. 218. 
 
 Colonists, new, causes of prosperity of, 
 ii. 144. 
 
 Colony trade, effect of restrictions on, 
 ii. 173? sudden opening of, might be 
 dangerous, ii. 187 ; reasons why in-
 
 INDEX. 
 
 559 
 
 terruption of, has not produced dis- 
 astrous effects, ii. 188; distinction be- 
 tween it, and monopoly of it, ii. 189; 
 monopoly of, no advantage, ii. 550. 
 Columbus, voyage of, ii. 138. 
 Columella on kitchen gardens, i. 162 ; 
 cited as to feeding thrushes, i. 235 ; 
 testimony of, on slave labour, i. 391. 
 Combination, of masters and workmen, 
 i. 69 ; powers of, possessed by towns, 
 i. 132; impossible among corn-dealers, 
 ii. IOT. 
 
 Commerce, principal, between town and 
 countiy, i. 381 ; introduced liberty and 
 good government, i. 411 ; prosperity 
 of, precarious, i. 423 ; system of, ii. i ; 
 instrument of, money, ii. 2; writers on, 
 their habitual error, ii. 23; treaties of, 
 how negotiated, ii. 24 ; has been made 
 a source of discord, ii. 68 ; treaty of, 
 its effects, ii. 122; treaties of, ancient 
 motive for, ii. 127 note ; most im- 
 portant between town and country, ii. 
 271 ; interests of, created Turkish and 
 Bussian Embassies, ii. 315; freedom of 
 interior, a cause of prosperity in Great 
 Britain, ii. 499 ; effects of, on habits of 
 great proprietors, ii. 508 ; takes place 
 in commodities, which it pays best to 
 trade in, ii. 544. 
 Commercial countries, riches seldom last 
 
 long in, in same family, i. 417. 
 Commercial system, prejudices established 
 
 by, ii. 92. 
 Commissaries, Italian cities were, of 
 
 crusading armies, i. 406. 
 Commodities, durable expense on, aids 
 frugality, i. 352; increase of, effects 
 of, on value of silver, i. 359; all regu- 
 lated by demand, but gold and silver 
 most, ii. 8 ; transportation of, profit- 
 able, ii. 16; native, exportation of, most 
 gainful, ii. 64 ; enumerated and non- 
 enumerated, ii. 150; consumable, ne- 
 cessaries or luxuries, ii. 466 ; con- 
 sumable, may be taxed two ways, ii, 
 
 473- 
 
 Common law of England, is said to 
 abhor perpetuities, i. 389. 
 
 Communication, easy or difficult, affects 
 rent, i. 156. 
 
 Companies, exclusive, trading to the East, 
 their mischievous consequences, ii. 22 ; 
 joint-stock, for herring fishing, ruined, 
 ii. 97 ; exclusive, for colony trade, ii. 
 155; exclusive, genius of, unfavourable 
 to growth of colonies, ii. 218 ; exclu- 
 sive, nuisances in every respect, ii. 225; 
 commercial, use of, ii. 317; joint-stock, 
 their general policy, ii. 321 ; joint- 
 stock, characteristics of, ii. 325 ; joint- 
 stock, when successful, ii 340. 
 
 Companionship, term used to denote a 
 journeyman's relations, i. 127. 
 
 Company, Danish, trading, dissolved by 
 King of Denmark, ii. 1 50. 
 
 Company, Dutch, its licences, ii. 151. 
 
 Company, East India, its oppressive 
 policy, i. 77; rates of profit obtained 
 by servants of, i. 101 ; turned dearth 
 into famine, ii. 103 and note; chartered 
 monopoly of, ii. 214; has made con- 
 quests in East Indies, ii. 219; servants 
 of, attempted to obtain monopoly, ii. 
 220; servants of, trade on their own 
 account, ii. 223. 
 
 Company, East India, Dutch, limited 
 stock of, ii. 215 ; policy of, in spice 
 islands, ii. 219. 
 
 Companies, East India, their forts, ii. 
 
 3i5- . 
 Competition, effects of, on price, i. 59 ; 
 
 effects of, upon profits of stock, i. 92 
 
 and note; of capitals, how arises, i. 
 
 356 ; for taxes on consumption might 
 
 be levied in colonies, ii. 538. 
 Conceit of one's abilities, common, i. 
 
 112. 
 Concordat, stipulations of, in sixteenth 
 
 century, ii. 390. 
 
 Confidence, passionate, of interested false- 
 hood, ii. 71. 
 Congo, discovered by Portuguese, ii. 137 ; 
 
 settlement of Portuguese, ii. 218. 
 Congress, Continental, in America, spirit 
 
 of, ii. 205. 
 Connecticut, expense of government in, 
 
 ii. 1 54-. 
 
 Consistorial benefices, patronage of, claim- 
 ed by Pope, ii. 385. 
 
 Constancy of employment, affects wages, 
 i. 107. 
 
 Constantino, military system of, ii. 
 287. 
 
 Constantinople, Embassy at, its origin, ii. 
 315; clerical factions in, ii. 383; 
 violent and furious government of, ii. 
 
 385- 
 Constituti' n, British, no risks to, from 
 
 colonial representation, ii. 206. 
 Consul, Roman, gave up administration 
 
 of justice to praetor, ii. 304. 
 Consumer, taxes paid by, ii. 245. 
 Consumers, circulation of money between, 
 
 i. 323 and note. 
 Consumption, end of production, ii. 244 ; 
 
 annual, replaced by artificers, &c., ii. 
 
 259- 
 
 Contracts, disposition towards effecting, 
 peculiar to man, i. 14; enforced in 
 Chancery, ii. 303 ; for constitution of a 
 rent, a means of sinking money in 
 France, ii. 453. 
 
 Controle, unpopular in France, ii. 459.
 
 560 
 
 INDEX. 
 
 Controversy, religious, generally accom- 
 panies political faction, ii. 376. 
 Conversion price, what it is in Scotland, 
 
 i. 192. 
 
 Co-operation, simple and complex, i. 5 
 note; must fully exist in civilized 
 societies, i. 15; in England and Ger- 
 many, i. 69 note. 
 Copiers, mistakes of, i. 193. 
 Copper, use of, as money, i. 25 note; 
 currency in Rome, i. 40 ; English 
 currency of, ib. ; from Japan, i. 179. 
 Cori, animal in St. Domingo, ii. 139. 
 Corn, value of, in Poland and France, 
 i. 8 ; measure by, from century to 
 century, i. 38 ; price of, its distribution, 
 i. 52 ; rise in price of, under scarcity, 
 i. 59 note; prices of, in the last 
 (seventeenth) and present (eighteenth) 
 century, i. 80 ; in ancient times re- 
 latively dear, i. 196 ; a production of 
 human industry, i. 197 ; chief sub- 
 sistence of labour, i. 198; high price 
 of, due lately (1784, &c.) to bad 
 seasons, i. 209 ; measure of value at 
 distant times, ib. ; variations in price 
 of, due to fact that most of the annual 
 product is annually consumed, i. 221 ; 
 price of corn from 1701 to 1764, i. 
 253; a measure of value, i. 198; of 
 Poland, now exchanged for other pro- 
 duce, i. 406 ; free importation of, no in- 
 jury to English farmer, ii. 33 ; effects 
 of bounty on trade in, ii. 80 ; price of, 
 supposed to have fallen since bounty, 
 ii. 8 1 ; exports of, to home consump- 
 tion, proportion of, ii. 83 ; regulates 
 price of other commodities, ii. 84 ; 
 regulates all prices, ii. 91 ; less liable to 
 be engrossed than other commodities, 
 ii. 101 ; real value of, ii. 112; laws 
 concerning, may be compared to those 
 concerning religion, ii. 116; duty on, 
 small, effects of, ii. 117 note. 
 Corn, foreign, consumption of, ii. 34 and 
 note ; effect of prohibiting its importa- 
 tion, ii. 35. 
 Corn dealers, cannot combine to raise 
 
 prices, ii. 101. 
 Cornfield, its productiveness by side of 
 
 pasture, i. 157. 
 
 Corn-law of 13 Geo. Ill, ii. 119. 
 Corn merchants, favour monopoly more 
 than farmers, ii. 34 ; gained advantage 
 from bounty, ii. 89 and note; trade of, 
 fourfold, ii. 99 ; trade of, valuable to 
 agriculture, ii. 108. 
 Corn prices, some deceptive, i. 192. 
 Corn rents of 18 Elizabeth, i. 35. 
 Com trade, tracts on, ii. 80 and note ; 
 freedom of, prevents famine and palli- 
 
 ates dearth, ii. 103; inland, has derived 
 benefit from 15 Charles II, ii. in. 
 Cornwall, tin mines in, pay i-6th gross 
 
 produce as rent, i. 197. 
 Cornwall, Duke of, his tax on tin, i. 
 
 1 80. 
 Corporations, bye-laws of, and their effect 
 
 on prices, i. 65; privileges of, i. 125; 
 
 not oppressive in Scotland, i. 128; 
 
 charters of, how obtained, i. 1 30 ; re- 
 gulations which assist the action of, i. 
 
 136 ; should be broken down, ii. 44. 
 Corporations of artificers, how they 
 
 affected prices, i. 131. 
 Cortez, voyage of, to Mexico, ii. 141. 
 Corve"e, in France, an instrument of 
 
 tyranny, ii. 314. 
 Cossacks of the Ukraine, their chief, ii. 
 
 19. 
 
 Cost, in wearing out man, must be re- 
 placed, as in machine, by higher wages, 
 
 i. 106. 
 Cotters, a kind of labourers in Scotland, 
 
 i. 122. 
 
 Cotton plant, value of, ii. 139. 
 Council, administration of India guided 
 
 by a, of merchants, ii. 222. 
 Councils, fixed the wages of clergy, i. 
 
 138. 
 Counterfeit, will not be perpetrated at a 
 
 slight seignorage, ii. 130. 
 Country, mulcted by corporations, i. 131 ; 
 
 people in, cannot combine, i. 133; 
 
 commerce between it and town, i. 
 
 381 ; an independent one may stand 
 
 to others as towns to country, ii. 262. 
 Country and town, prices in, i. 118. 
 Country gentlemen, extorted a bounty 
 
 on corn from William III, i. 208 ; 
 
 levied duties, and established bounty 
 
 on corn, ii. 90 and note. 
 Courts, legal, how they took cognizance 
 
 of civil business, ii. 302. 
 Coward, a, is a mutilated man, ii. 371. 
 Creditor, public, in what sense he has a 
 
 public interest, ii. 529. 
 Creoles, Spanish, superior to native In- 
 dians, ii. 148. 
 Crew, in years of scarcity corn-dealer 
 
 treats people as prudent master does 
 
 his, ii. 100. 
 Cromwell, condition of America in time 
 
 of, ii. 178; army of, ejected the Long 
 
 Parliament, ii. 290. 
 Crown, charters granted by, and why, i. 
 
 130. 
 Crown lands in Great Britain, ill managed, 
 
 ii. 411. 
 Crown lands in Europe, generally forest, 
 
 but often without trees better if 
 
 alienated, ii. 412.
 
 INDEX. 
 
 561 
 
 Crusades, poured wealth on Italy, i. 
 
 406. 
 Cruttenden, the, account brought by, ii. 
 
 335-. 
 
 Cuba, inhabitants of, had gold, i. 185. 
 Cultivation, capital employed in, in feudal 
 
 times, i. 336 and note; prescription of, 
 
 in leases, absurd, ii. 422. 
 Cultivators, place of, in social economy, 
 
 ii. 248 ; interest of, sacrificed to that 
 
 of proprietors, &c., ii. 258. 
 Curacies, stipend of, amount of, i. 1 38. 
 Cura9oa, Dutch colony and free port, ii. 
 
 151. 
 
 Curate, stipend of, i. 137- 
 Currency, double, i. 40 note. 
 Currency, colonial, rates of, i. 329. 
 Currency, depreciated, farce of paying 
 
 taxes in, i. 330 note ; depreciated, does 
 
 not lower value of gold and silver, i. 
 
 SSL 
 
 Currency of great states, chiefly its own 
 coin, ii. 53. 
 
 Cursitor Baron, his relations to African 
 Company, ii. 323. 
 
 Custom, the regulator of fashion, i. 101. 
 
 Custom-house, books of, no certain crite- 
 rion, ii. 48. 
 
 Customers exercise the best discipline 
 over workmen, i. 1 36. 
 
 Customers, people of, for nation of shop- 
 keepers, ii. 196. 
 
 Customers, Portuguese said to be better 
 than French, ii. 68. 
 
 Customs, ancient kinds of, ii. 476. 
 
 Customs, duties of, ancient, ii. 475 ; 
 amount of in 1 754, ii. 479 ; chief 
 amount of, whence derived, ii. 480 ; 
 might well be levied with no loss on a 
 few articles only, ib. ; a reform in the 
 collection of, suggested, ii. 482 ; net 
 revenue of, ii. 494 ; might be extended 
 to Ireland and plantations, if coupled 
 with free trade, ii. 537. 
 
 D. 
 
 Dairy, originally a save-all, i. 237. 
 
 Danes, trade of with India, i. 215; pos- 
 sessed St. Thomas and Santa Cruz, 
 ii. 150. 
 
 Daniel, Father, cited, i. 403. 
 
 Danube, navigation of, i. 22. 
 
 Darien, Isthmus of, discovered by Colum- 
 bus, ii. 139. 
 
 Darien, voyages to, ii. 141. 
 
 Davenant, Dr., his opinion of King, i. 
 181 ; his objections to system of ex- 
 cise duties, ii. 489. 
 
 Dead, transference of from to living, 
 always notorious, ii. 453. 
 
 VOL. II. 
 
 Dealer in one business has an advantage, 
 ii. 107. 
 
 Dealer, inland, interest of, never opposed 
 to that of people, ii. 115. 
 
 Dealers, circulation of money among, i. 
 323 and note. 
 
 Dearth, corn dealer prevents, from be- 
 coming famine, ii. 100 ; occasional in 
 Egypt and Hindustan, ii. 267. 
 
 Dearths, generally produced by seasons, 
 ii. 102. 
 
 Debates, printed, of House of Commons, 
 
 323- 
 Debt, British, means of reducing it, ii. 
 
 535- 
 
 Debt, interest of, greater than profits of 
 colonial trade, ii. 245 ; just that Ire- 
 land and America should contribute 
 to, ii. 546. 
 
 Debt, national, no cause of prosperity, 
 ii. 1 1 8. 
 
 Debt of France, its estimated amount, 
 ii. 518. 
 
 Debt, unfunded, of Great Britain, ii. 511. 
 
 Debt, public, increase of, ii. 513, sqq.; its 
 growth and reduction, ii. 526; growth 
 of, ii. 522-3. 
 
 Debts, public, discussed in Fifth Book, 
 i. 4. 
 
 Decelea, fortification of, ii. 277 note. 
 
 Decker, Sir M., on accumulation of taxa- 
 tion, ii. 470 ; his proposal to raise 
 taxation by licences of consumption, ii. 
 475; his proposals for taxation, ii. 538. 
 
 Decline, perpetually predicted by candid 
 people, i. .347. 
 
 Deeds, registration of, needless, ii. 459. 
 
 Defence, a primary object of public 
 policy, ii. 35 ; more important than 
 opulence, ii. 38. 
 
 Defence, expense of, in colonies, has 
 fallen on mother country, ii. 154; 
 never supplied by colonies, not even 
 for themselves, ii. 1 74 ; should be borne 
 by whole society, ii. 401. 
 
 Defence, public, two ways of effecting, ii. 
 281. 
 
 Defence, charges of, great, ii. 292. 
 
 Deity, nature of, anciently a part of 
 physics, ii. 354. 
 
 De Lange, Russian envoy at Pekin, ii. 
 265 and note. 
 
 De la Riviere, Mercier, M., his work 
 cited, ii. 264. 
 
 Demand, economical nature of, i. 58 ; 
 effect of variation of, i. 121 ; effectual, 
 for particular produce, exceeds supply, 
 i. 164; corresponds to supply, i. 197; 
 regulates all commodities, but gold and 
 silver most, ii. 8 ; effects of, on prices, 
 " 333- 
 

 
 562 
 
 INDEX. 
 
 Democracies, small, liable to rancorous 
 
 and virulent factions, ii. 547. 
 Democritus, on kitchen gardens, i. 162. 
 Denmark, policy of trading company in, 
 
 ii. 155 ; East India Company in, ii. 
 
 215; deposition of Chrifltiern from 
 
 throne of, ii. 392 ; his revenue from 
 
 Sound Dues, ii. 492. 
 Dependencies, advantages of, two, defence 
 
 and revenue, ii. 173. 
 Derangement of distribution of stock 
 
 hurtful, ii. 216. 
 Dercyllidas, saying of, ii. 19. 
 Dexterity, increase of, in division of la- 
 bour, i. 9 ; obtained by performing a 
 
 single operation, ii. 107. 
 Diamonds, mining for in India, ii. 183; 
 
 price of in India, ii. 216. 
 Dice, stamp duties on, their incidence, 
 
 ii. 459. 
 Dignity of sovereign, needs support by 
 
 expense, ii. 401. 
 
 Diocletian, military system of, ii. 287. 
 Diogenes, sent to Home by Athens, i. 
 
 142. 
 
 Diomede, armour of, i. 24. 
 Dion Cassius, on the vicesima, cited, 
 
 ii. 454. 
 Dionysius of Halicarnassus, his testimony 
 
 to Roman character, ii. 359. 
 Directors, boards of, ii. 325. 
 Discipline, what is most effective over 
 
 workmen, i. 136; academical deficien- 
 cies of, ii. 349. 
 Disease, peculiar to some labourers, 
 
 i. 86. 
 
 Dissenters, English, activity of, ii. 373. 
 Distress, mercantile, may be anticipated 
 
 from cessation of colony trade, ii. 
 
 188. 
 Distribution, encroachment on natural, 
 
 its effect, ii. 258. 
 Diversions, public, advantage of, ii. 
 
 381. 
 Dobbs, Mr., on Hudson's Bay Company, 
 
 ii. 329- 
 
 Domesday Book, information as to con- 
 dition of towns in, i. 400 ; an accurate 
 survey, ii. 425. 
 
 Domingo, St., inhabitants of, had gold, 
 i. 185 ; colony established by banditti, 
 its produce of sugar, ii. 151. 
 
 Dominica, a new acquisition, ii. 54-5. 
 
 Dominicans, establishment of, ii. 374. 
 
 Dorians, colonies of, ii. 135. 
 
 Doubleday, Mr., his theory of population, 
 i. 83 note. 
 
 Douglas, Dr., his authority on tobacco 
 
 , planting, i. 168 ; honest and downright, 
 his opinion on American currencies, i. 
 328 and note. 
 
 Douglas, Heron & Co., bank of, 314. 
 
 Draco, laws of, like those to support 
 woollen manufacturers, ii. 231. 
 
 Drama, the, an antidote to superstition, 
 ii. 381. 
 
 Drawback, little, on importation of corn, 
 ii. 117. 
 
 Drawbacks, when given, ii. 24 ; reason- 
 able encouragement to trade, ii. 73 and 
 note; given to encourage the carrying 
 trade, ii. 77 ; sometimes claimed on 
 smuggled goods, ii. 78 ; on colonial 
 produce, ii. 163; of subsidies and 
 duties, ii. 477; amount of in 1754, 
 ii. 479. 
 
 Drawing and re-drawing, a well-known 
 expedient, described, i. 309. 
 
 Drought, effects of, on corn, ii. 103. 
 
 Drugs, dyers', relieved from import dues, 
 ii. 240. 
 
 Drummond, Mr., his notes, i. 42. 
 
 Drunkenness, not vice of people of 
 fashion, ii. 67. 
 
 Dunbar, Capt,, on territorial jurisdiction 
 in Scotland, i. 413 note. 
 
 Dunfermline, marriage bed of James in 
 an alehouse at, i. 351. 
 
 Dupleix, M., his career in India, ii. 334. 
 
 Dupont de Nemour, on Smith's expres- 
 sion ' forced frugality,' ii. 469 note. 
 
 Durability of commodities, no advantage 
 in trade, ii. 1 2. 
 
 Dutch, growth of their trade with India, 
 i. 215 ; industry of, i. 338 ; trade of, 
 with Poland and Portugal, i. 376 ; 
 their East India Company, ii. 22 ; car- 
 riers of Europe, at time of Navigation 
 Laws, ii. 36 ; get corn cheaper than our 
 people do, ii. 88 ; destroy spices, ii. 
 101 ; conquer part of Brazil, and re- 
 sign it, ii. 148 ; colony of, New York, 
 occupied by English in 1674,1!. 150; 
 settlements of, in West, ib. ; strove to 
 exclude every one from spice islands, 
 ii. 213. 
 
 Dutch wars in tune of Cromwell and 
 Charles II, ii. 178. 
 
 Dutchman, a woollen manufacturer at 
 Abbeville, ii. 35. 
 
 Duties, high, their assistance to mono- 
 poly, i. 134; ancient, on foreign goods, 
 i. 261; levied on home produce, should 
 be levied also on foreign, ii. 38 ; extra- 
 ordinary, on goods imported by alien 
 merchants, origin of, ii. 69 ; annexed to 
 old subsidy, ii. 75 ; disturb natural 
 balance of industry, ii. 78. 
 
 Dwelling-house, not capital to occupier, 
 but revenue, i. 278. 
 
 Dwelling-houses, tax on inhabited, ii. 
 439-
 
 INDEX. 
 
 563 
 
 Dyer, profits of, i. 63. 
 Dyers, monopoly of, against clothiers, ii. 
 239- 
 
 E. 
 
 Ease, as affecting rates of wages, i. 105. 
 
 East India Company, history of, ii. 331; 
 as traders and sovereigns, ii. 406 ; 
 changes by servants of, in assessment 
 of tithe, ii. 431 ; prospects of a revenue 
 from possessions of, ii. 548. See Com- 
 pany. 
 
 Eastland Company, fine for admission to, 
 ii. 318. 
 
 Ecclesiastical government in English co- 
 lonies, cheap, ii. 154. 
 
 Ecclesiastics, medieval, their incomes, ii. 
 138 note; universities intended for, 
 ii. 356; rights of, invariably respected, 
 ii. 385- 
 
 Economical table of M. Quesnai, ii. 257; 
 praise of, by Mirabeau, ii. 264. 
 
 Economists, the, position of, ii. 263; say 
 that all taxes fall ultimately on rent, 
 ii. 420. 
 
 Edinburgh, journey from London to, i. 
 19 j price of labour in, i. 78 ; lodging 
 and house rent in, i. 123 ; New Town 
 of, contains no Scotch timber, i. 177; 
 little trade in before Union, i. 339. 
 
 Education, high, cost of, reckoned in 
 wages, i. 107 ; domestic, in Greece 
 and Rome, ii. 360 ; female, useful, ii. 
 364 ; popular, its importance in a civi- 
 lised and commercial society, ii. 367 ; 
 means of making it compulsory, ii. 
 369 ; costs of, by whom to be borne, ii. 
 
 43- 
 Edward VI, his adulteration of the coin, 
 
 534- 
 
 Effectual, demand must be, i. 58. 
 
 Egypt, early civilisation of, i. 21 ; caste 
 system in, i. 66 ; its dislike to the sea, 
 i. 372 note; opulent, till conquest of 
 Turks, i. 405 ; how it created its 
 wealth, ii. 70; castes in, ii. 266; policy 
 of ancient, ib. ; its exportation of grain, 
 ii. 268 ; double language in, ii, 351 ; 
 ancient, land-tax of, ii. 429. 
 
 Egyptians, disliked the sea, ii. 267* 
 
 Ejectment, origin of writ of, ii. 303. 
 
 Eldorado, city and country of, ii. 143. 
 
 Elections, countries of, ii. 449. 
 
 Elizabeth, statute of i8th, i. 35 ; first 
 wore stockings, i.. 259 and note; con- 
 trast of wealth in her time and at the 
 conclusion of War of Roses, i. 347 ; 
 statute of, gave licensing power over 
 corn dealer to quarter sessions, ii. 105. 
 
 Emancipation of children in Roman law, 
 ii. 454. 
 
 Embassy, Turkish, arose from the Turkey 
 Company and so the Russian, ii. 315. 
 
 Emigration, rare from England, frequent 
 from Scotland, i. 201. 
 
 Emperors of Rome, protected slaves, ii. 
 168. 
 
 Empire, foundation of a people of cus- 
 tomers by a nation of shopkeepers, ii. 
 196; future of America, ii. 205; in the 
 west, in imagination only, ii. 549. 
 
 Empires, all mortal, but aim at immor- 
 tality, ii. 420. 
 
 Employment, constancy of, affects wages, 
 i. 107 ; most advantageous, every body 
 seeks to engage in, ii. 26 ; distant and 
 near, of capital, less or more produc- 
 tive, ii. 312; its effects on the mind, 
 ii. 365- 
 
 Employments, division of, more correct 
 than ' division of labour,' i. 5 note, 
 
 Empress Queen, ordered survey and valu- 
 ation of Bohemia, ii. 425. 
 
 Encouragement of Trade, Act for, ii. 76. 
 
 Endowments, justification of, i. 139 note; 
 origin of, utility of, ii. 344 note ; effect 
 of, on unendowed teachers, ii. 363. 
 
 Engines, fire, invention of a boy in, i. n. 
 
 England, silk manufactures of, hard- 
 wares, woollens, i. 8 ; charters in, 
 granted by Crown, i. 130; Church in, a 
 lottery, i. 1 39 ; peculiar in its system 
 of Poor-laws, i. 143 ; disorderly under 
 Plantagenets, i. 195 note; richer than 
 Scotland, i. 200 ; imports poultry from 
 France, i. 236 ; price of corn in, low, 
 and amount of notes in, great, i. 326; 
 not parsimonious, 5. 349 ; price of land 
 in, i. 362 ; next in wealth to Holland, 
 i. 379 ; law of, abhors perpetuities, i. 
 389 ; security of tenant in, i. 394 ; 
 sovereign never quite lost power in, i. 
 404 ; natural advantages of, i. 420 ; ex- 
 portation of foreign corn and bullion 
 permitted in, ii. 7 ; navy of, insufficient 
 to carry a million tons of grain, ii. 8 ; 
 exchange between, and Holland, ii. 
 50 ; never expedient to prohibit ex- 
 portation of corn from, ii. 116; na- 
 tural effects of colony trade with, have 
 overbalanced evils of monopoly, ii. 
 192 ; purchased an estate for her sub- 
 jects, ii. 196 ; agriculturists, number 
 of, ii. 267 ; militia in; ii. 282 ; charity 
 schools in, ii. 369 ; tithe on 'madder, 
 commuted in, ii. 429 ; rates of taxation 
 on land and stock in, ii. 444 ; no direct 
 tax on wages of labour in, ii. 463 ; 
 shoes a necessary in, ii. 467. 
 
 England and Portugal, treaty between, ii. 
 123. 
 
 England, Bank of, present capital of, 
 
 002
 
 564 
 
 INDEX. 
 
 i. 220 note; found a scarcity of coin, 
 
 i- 33 > greatest of circulation in 
 
 Europe, commencement of, i. 319; 
 
 dividend of, stability of, privileges of, 
 
 functions of, i. 320. 
 English, industry of, i. 338. 
 English colonies, rapid progress of, and 
 
 causes of, iL J52 ; political liberties of, 
 
 ii. 165. 
 Engrosser, penalties on, by 5 & 6 Edw. 
 
 VI, ii. 104. 
 Engrossers of land, clergy are, in Spanish 
 
 colonies, ii. 155. 
 Engrossing, supposed sometimes to hurt 
 
 the people, ii. no. 
 Engrossing and forestalling, fears of, like 
 
 fears of witchcraft, ii. in. 
 Engrossing of corn, permitted to some 
 
 extent, ii. 109. 
 Engrossing of land, mischievous effects 
 
 of, ii. 153. _ 
 Enjoyments, increase of, by discovery of 
 
 America, ii. 171. 
 Entails, effects of, i. 387; a consequence 
 
 of primogeniture, i. 388 ; preposterous 
 
 foundation of, ib. 
 Entails, Scotch, amount of land under, 
 
 1.389- 
 
 Enterprise may cause delay in payments, 
 as well as poverty, ii. 546. 
 
 Enthusiasm, mischief of, ii. 372 ; anti- 
 dotes to, ii. 381. 
 
 Enumerated and non- enumerated com- 
 modities, ii. 157. 
 
 Enumerated commodities, list of, ii. 159. 
 
 Ephesus, rapid growth of, ii. ^46. 
 
 Epicurus, bequeathed his gardens to his 
 own school, ii. 361. 
 
 Equality, wages and profits tend to, i. 
 103. 
 
 Equality of profits, conditions under 
 which secured, i. 120. 
 
 Equality, religious, benefits of, ii. 378 ; 
 requires no State interference, ii. 382. 
 
 Equipage, chief want of some, i. 174. 
 
 Establishment, good effects of, produced 
 in Scotland, ii, 400. 
 
 Establishment, Church, policy of, ii. 373. 
 
 Establishments, great, in church, state, 
 and army, impoverish a nation, i. 345 ; 
 must be controlled by state, ii. 382. 
 
 Estates, great, in new colonies, rapidly 
 divided, ii. 153. 
 
 Europe, rents in, i. 337 ; rates of interest 
 in, ib. ; growth of population in, i. 418 ; 
 warehouse for its bullion, Bank of ' 
 Amsterdam, ii. 58 ; a few free ports in, 
 but no free trade country in, ii. 72 ; 
 its policy has bred men capable of 
 colonising, ii. 170; probable effects of 
 debt on, ii. 511. 
 
 Europe, commercial towns of, have be- 
 come manufacturers and carriers, ii. 
 209. 
 
 Europe, market of, more extensive, i. 213. 
 
 Europe, modern, can employ only a hun- 
 dredth part of its people as soldiers, 
 ii. 279. 
 
 Europe, policy of, its effects on wages, 
 i. 124; how it has encouraged trade, 
 i. 380 ; how it discouraged agriculture, 
 i. 398 and note; tried to regulate agri- 
 culture, ii. 105; has done little for 
 colonies, ii. 169. 
 
 Europe, sovereigns of, seldom have a 
 land-tax revenue, ii. 313. 
 
 Europe, states of, have inverted by legis- 
 lation the natural course of capital, 
 i. 386. 
 
 Europe, trade of, supported naval power 
 of England before colonial system, ii. 
 179. 
 
 European colonies, in what points they 
 differ from those of Greece and Rome, 
 ii. 146 ; have never furnished defence, 
 ii. 174. 
 
 European goods, price of in colonies, ii. 
 156. 
 
 Europeans, injustice of, checked the bene- 
 fits of the discovery of Amei-ica, ii. 21. 
 
 Europeans settled in America, in con- 
 sequence of defeat of Spanish Armada, 
 ii. 149. 
 
 Eustatia, Dutch colony and free port, ii. 
 
 IJI. 
 
 Exchange, desire for, stimulates produc- 
 tion, i. 14 ; difficulties of, mechanism 
 of, i. 23, 24; rates of gold and silver 
 in Europe, i. 44 ; rates of, between 
 London and Scotch towns, i. 327 ; 
 course of, ii. 48; course of, no criterion, 
 ii. 49. 
 
 Exchange, bills of, in discounting, bankers 
 issue their notes, i. 237 ; privileges of, 
 i. 309 ; bad, effect of discounting them, 
 i. 314; employed to liquidate charges 
 of war, ii. 15. 
 
 Exchequer, Cursitor Baron of, ii. 323. 
 
 Exchequer bills, circulation of, ii. 511. 
 
 Excise, duties of, on what levied, ii. 
 475 ; levied on a few articles only, ii. 
 480 ; more unpopular than customs, 
 ii. 497 ; could not easily be levied in 
 colonies, ii. 537. 
 
 Excise laws, obstruct a smuggler more 
 than customs do, ii. 481. 
 
 Excise scheme of Walpole, features of, ii. 
 
 483. 
 Exclusive trade, sole benefit of, with 
 
 colonies, ii. 174. 
 Executioner, public, high wages of, and 
 
 why, i. 105.
 
 INDEX. 
 
 565 
 
 Executive, separation of, from judicial 
 power, ii. 304. 
 
 Exercises, military, in antiquity, ii. 279. 
 
 Exertion, stimulated by necessity, ii. 344. 
 
 Expedients of mercantile system, mean 
 and malignant, ii. 192. 
 
 Expenditure, great personal, mark of a 
 base and selfish disposition, i. 353. 
 
 Expense, saving of, an improvement of 
 net revenue, i. 290. 
 
 'Expenses, original,' of Economists, ii. 
 248. 
 
 ' Expenses, ground ' (foncieres), of Econo- 
 mists, ii. 248. 
 
 Expilly, Abbe", on population and revenue 
 of France, ii. 504. 
 
 Exportation, least valuable of all branches 
 of industry, i. 370 and note; of pre- 
 cious metals, forbidden, ii. 3 ; encou- 
 ragement to, ii. 29, 73 ; always of that 
 which is in greater demand abroad 
 than at home, ii. 65 ; prohibition of 
 corn, why mischievous, ii. 114; what 
 kinds of, discouraged by mercantile 
 system, ii. 226; of materials, pro- 
 hibited and discouraged, ii. 231 ; sub- 
 sidies imposed on, generally aban- 
 doned, ii. 477. 
 
 Exportation and importation, free, effects 
 of, ii. 115. 
 
 Exportation trade, not necessary, that a 
 country may be rich, i. 385. 
 
 Export duty, justification of, ii. 328 and 
 note. 
 
 Exporter, merchant, trade of, ii. 114; 
 interest of, may be oppposed to that of 
 people, ii. 115. 
 
 Exports, value of, no criterion for, ii. 48 ; 
 on Custom-house books delusive, ii. 
 479- 
 
 F. 
 
 Faction, political, generally goes with 
 ecclesiastical controversy, ii. 376. 
 
 Factions, difference in ferocity of, in 
 Greece and Rome, ii. 359. 
 
 Factory Acts, benefit of, i. 87 note. 
 
 F;iirnuui, Mr., ' On the Funds,' i. 96 note. 
 
 Faith, articles of, cannot be determined 
 by a sovereign, ii. 383. 
 
 Falsehood, passionate confidence of in- 
 terested, ii. 71. 
 
 Families, old, rare in commercial coun- 
 tries, i. 41 7 ; industrious poor generally 
 bring up large, ii. 469. 
 
 Family, prudence in, cannot be folly in 
 a kingdom, ii. 29 ; antiquity of, how 
 it originates, ii. 296 ; great, seldom 
 derived entirely from wisdom and 
 virtue, ib. 
 
 Famine, cause of prices during, i. 59 ; 
 corn dealer obviates, ii. 100; generally 
 
 induced by impolicy of Government, ii. 
 102 and note; prevention of, ii. 116. 
 
 Farm, of town, let to burghers, i. 400 ; 
 taxing by, the worst kind, ii. 501. 
 
 Farmer, capital of, how distributed, i. 
 277 ; what his capital replaces, i. 367 ; 
 station of, inferior to that of proprietor, 
 i. 397 ; bounty supposed to stimulate, 
 ii. 83 ; corn dealer generally contracts 
 with, ii. 104 ; enjoined to do, what 
 manufacturer was prohibited from 
 doing, ii. 106 ; his objects in cultiva- 
 tion, ii. 236. 
 
 Farmers, knowledge possessed by, great, 
 i. 133; on rent, origin of, i. 394; not 
 anxious for monopoly, ii. 34 and note ; 
 relations of corn merchants with bene- 
 ficial to, ii. 108 ; reproduce a net pro- 
 duce, ii. 259 ; effects of a tax on their 
 profits, ii. 450 ; of public revenue, 
 odious and merciless, ii. 501. 
 
 Farms, enlargement of, causes of, i. 416 ; 
 the five great of France, ii. 499. 
 
 Fashion, regulated by custom, i. 101 ; 
 people of, are not drunken, ii. 67. 
 
 Father, death of, usually a pecuniary loss 
 to children, ii. 454. 
 
 Favour, produces mischief to the country 
 on whose behalf it is granted, ii. 210. 
 
 Fecundity, effects of poverty and luxury 
 on, i. 83. 
 
 Fee, farm in, let to burghers, i. 400. 
 
 Fees, costs of, a payment for justice, ii. 
 301 ; of court, might be applied to 
 defraying costs of justice, ib. ; con- 
 sequence of depending on, ii. 345. 
 
 Fertility, causes variation of rent, i. 1 56 ; 
 increase of, increase of other wealth, 
 i. 184. 
 
 Feudal anarchy, in times of, merchants 
 despised; ii. 475. 
 
 Feudal government, violence of, i. 282 ; 
 taxation under, ii. 448 and note. 
 
 Feudal law, effects of, on baronial power, 
 i. 414 ; taxes on transference under, 
 
 " 455- 
 Feudal system, military custom under, 11. 
 
 277; military exercises under, ii. 279. 
 Fiars, Scotch, i. 80 ; public, institution 
 
 of, i. 192 ; public of Scotland, prove 
 
 that corn was cheap, i. 253. 
 Fldeicommissa, in Roman law, i. 388. 
 Field, public, used for exercise, ii. 279. 
 Finn, taking of, in lieu of rent, its effects, 
 
 ii. 421. 
 Finisterre, Cape, limit of certain exports, 
 
 ii. 76 ; south of, limit of free trading 
 
 in colonial produce, ii. 1 59. 
 Firearms, effects of invention of, ii. 282 
 
 and note; expensiveness of, ii. 391. 
 Fish, limit in supply of, i. 247 ; colonial 
 
 trade in, ii. 158.
 
 566 
 
 INDEX. 
 
 Fisherman, low earnings of, i. 105. 
 
 Fisheries, source of capital, i. 281 ; bounty 
 to, its political uses, ii. 93. 
 
 Fisheries, sea, rent for indirect, i. 153. 
 
 Fixed capital, its nature, i. 275 ; derived 
 from circulating, creates revenue by 
 means of circulating, i. 280 ; objects 
 of, i. 284 ; expense of maintaining, to 
 be excluded from net revenue, ib. ; 
 expense of maintaining like repair of 
 private house, i. 285 ; a bank cannot 
 advance this safely to a trader, i. 307. 
 
 Flanders, apples and onions imported 
 from, i. 82 ; traded with England for 
 its wool, i. 173; fine manufactures in, 
 i. 261 ; fine cloths of, i. 407 ; gets its 
 wool from England and Spain, i. 408 ; 
 effects of civil war in, i. 423. 
 
 Flax, price of, its distribution, i. 53 ; 
 trade in, with Riga, i. 374 ; bounties 
 on, ii. 92 note; bounty on, ii. 229 ; 
 imported duty free, ii. 478. 
 
 Fleetwood, Bishop, his Chronicon Pre- 
 ciosum, i. 188 note; misled in a price, 
 i. 193 ; misled by prices, i. 195 ; merits 
 of his book, i. 196 ; gives prices at 
 Bicester, i. 243. 
 
 Florence, growth of, great, ii. 146 ; more 
 than once paid the debts of Lorenzo de 
 Medicis, ii. 406. 
 
 Florida, attempt of French to settle in, 
 ii. 149. 
 
 Flota, Spanish, demand of, ii. 188. 
 
 Fluctuations, occasional, on what they 
 fall, i. 61. 
 
 Folly, great wealth an excuse for, ii. 98 ; 
 and injustice, remedied by nature, ii. 
 
 259- 
 
 Food, if customary, is cheap, its effects 
 on rent, i. 168 ; source of rent, i. 175; 
 increase of, increases the demand for 
 that which is not food, i. 185 ; price of 
 in India, i. 216 ; taxes on, their effect, 
 ii. 39, 472. 
 
 Foreign trade, how it enriched country 
 and merchants, ii. 6. 
 
 Foreign trade of consumption, less ad- 
 vantageous than home, more than vary- 
 ing, ii. 26. 
 
 Foreign wars, not necessarily carried on 
 by gold'and silver, ii. 13. 
 
 Forestalled, when com supposed to be, 
 ii. no. 
 
 Forestalling, engrossing and, fear of, like 
 fears of witchcraft, ii. in. 
 
 Foris-familiated, position of children in 
 Scotch law, ii. 454. 
 
 Forts, not maintained by regulated com- 
 panies, ii. 321. 
 
 Fortune, superiority of, a cause of in- 
 fluence, ii. 294 ; men of small, must 
 have exemplary morals, ii. 397. 
 
 Foundations, charitable, in aid of students, 
 ii. 348. 
 
 France, corn of, its value, silks of, i. 8 ; 
 seignorage in, i. 47 ; corrected, ib. 
 note ; price of grain in, i. 80 ; rates of 
 interest in, i. 95 ; riches of, as com- 
 pared with England, ib. ; apprentice- 
 ships in, i. 127; attempts in, to pre- 
 vent planting of vineyards, i. 164 ; 
 poor, seldom eat meat in, i. 198; ex- 
 portation of grain prohibited in, i. 209 ; 
 money price of labour in has sunk, i. 
 21 1 ; circulation of, i. 223; breeding of 
 poultry in, i. 236 ; corn as dear as in 
 England, but no paper money, i. 326 ; 
 little trade in Parliament towns of, i. 
 338 ; price of land in, i. 362 ; security 
 of tenant in, i. 395 ; purveyance exists 
 in, i. 396 ; taille in, ib. ; sovereign 
 never quite lost power in, i. 404 ; silk 
 introduced in, in reign of Charles IX, 
 i. 409 ; agriculture of, i. 421 and note; 
 exportation of foreign coin and bullion 
 permitted in, ii. 7 ; retaliatory taxation 
 in, ii. 40 ; set first example of oppress- 
 ing industry, ii. 41 ; lawns and cam- 
 brics of, prohibited, general policy to- 
 wards goods of, ii. 46 ; seignorage in, 
 ii. 5 1 ; restraints on trade with Great 
 Britain unwise, ii. 7; southern in- 
 habitants of, sober, ii. 76 ; fall of corn 
 prices in, ii. 81 ; never expedient to 
 prohibit exportation of corn from, ii. 
 116 ; King of, demanded exclusion of 
 British ships from Portugal, ii. 127; 
 amount of seignorage in, ii. 129; Mint 
 price of gold in, ii. 130 ; seignorage in, 
 stated in numbers, ib. ; Canada and 
 St. Domingo, colonies of, ii. 151 ; de- 
 rives no revenue from colonies, ii. 1 54 ; 
 despotism of in colonies also, ii. 166 ; 
 King of, relation of to those provinces 
 which have their own states, ii. 202 ; 
 had a monopoly of senega gum, ii. 241 ; 
 agriculture of, discouraged, ii. 247 ; 
 agriculture of, relieved by arguments 
 of economists, ii. 263 ; number of agri- 
 culturists in, ii. 267 ; parliaments of, 
 ii. 302 ; administration of roads in, ii. 
 311; universities in, administration of, 
 ii. 346; government of, its mistakes, 
 ii. 384 ; clergy of, their comparative 
 indifference to Rome, ii. 390 ; sect of 
 men of letters in, called Economists, 
 ii. 420 ; taxes on base tenure in, ii. 
 426 ; personal taille in, ii. 447 ; stamp 
 duties, &c., in, ii. 457 ; does not com- 
 plain of stamps, &c., ii. 459 ; capitation 
 taxes in, ii. 464 ; situation of inferior 
 ranks in, ii. 465 ; shoes not a neces- 
 sary in, ii. 467 ; number of revenue 
 officers in, ii. 499 ; crown revenue in,
 
 INDEX. 
 
 567 
 
 reform of finances in, ii. 503 ; system of 
 taxation in, inferior to British, ii. 504 ; 
 public debt of, consists greatly of life 
 annuities, ii. 518. 
 
 Fransciscans, establishment of, ii. 374. 
 
 Frauds, hurtful to revenue and fair 
 dealer, ii. 78. 
 
 Frederic of Holstein, his accession to the 
 throne of Denmark, ii. 392. 
 
 Free burghs, origin of, i. 401. 
 
 Freedom, political, granted to people,!. 401 . 
 
 Freedom of commerce, interest of sove- 
 reign, ii. 221. 
 
 Freedom of trade should be perfect, ii. 255. 
 
 Freehold in England, a life estate, i. 394. 
 
 Freemen, of a corporation, interest of, 
 ii. 69 ; tax on, differs from that on 
 slaves, ii. 452. 
 
 Freestone, quarry of, value of, i. 186. 
 
 Free trade, it may be just not to adopt 
 it suddenly, ii. 42 ; hopeless to expect 
 it, ii. 44 and note; has enriched coun- 
 tries, ii. 7 2 i between America and 
 West Indies, and effects of, ii. 161. 
 
 Free traders, medieval, what they were, 
 
 399- 
 
 French, trade of with India annihilated 
 nearly, i. 215 ; invasion of Holland in 
 1672, ii. 59 ; attempted to settle in 
 Florida, ii. 149. 
 
 French colonies, gently administered, ii. 
 1 66. 
 
 French goods, some could be warehoused, 
 but not imported for consumption, 
 ii. 75. 
 
 French war (of 1757-64), its expenses, ii. 
 14 and note. 
 
 Frezier, on Peruvian mines, i. 1 80 ; his 
 estimate of the population of Lima, i. 
 214. 
 
 Friars, mendicant, a grievous tax, ii. 155. 
 
 Frugality, private, repairs state extrava- 
 gance, i. 346. 
 
 Fruit gardens, rent of, i. 162. 
 
 Fuller's earth, exportation of forbidden, 
 ii. 238. 
 
 Fulling mills, invention of, i. 260 and 
 note. 
 
 Funding, borrowing by, ii. 512; per- 
 petual, a ruinous process, ii. 515 ; prac- 
 tice of, injurious to states, ii. 529. 
 
 Funds, English, investments of Dutch in, 
 i. 96. 
 
 Funds, public, considered to be ' a great 
 capital,' ii. 524. 
 
 Furniture of rich comes to poor, i. 351. 
 
 G. 
 
 Gain, chance of, always overvalued, i. 1 1 2 ; 
 end of all improvement, i. 239 ; in trade, 
 mutual and reciprocal, i. 381. 
 
 Games, Olympic, &c., distinctions con- 
 ferred on victors in, ii. 370. 
 
 Ganges, distribution of waters of, ii. 266. 
 
 Gemelli Careri, on growth of Mexico, ii. 
 147 and note. 
 
 Generalities, twenty in France, ii. 449. 
 
 Generals, after a long peace, inferior to 
 soldiers, ii. 289. 
 
 Geneva, Church of, i. 1 39. 
 
 Genoa, rich, but corn dear in, i. lor ; 
 profited by Crusades, i. 406 ; origin of 
 bank of, ii. 53 ; enfeebled by funding 
 system, ii. 529. 
 
 Gentlemen, country, not anxious for 
 monopoly, ii. 34 and note. 
 
 Gentoo government in Hindostan, its 
 policy, ii. 266. 
 
 Gentoos, do not permit a fire to be lighted 
 at sea, ii. 267. 
 
 German irruption, effects of, i. 386. 
 
 Germany, parts of, predial slavery in, i. 
 390; purveyance exists in, i. 396; 
 growth of Reformation in, ii. 392. 
 
 Gibbon, on decline of Roman army, ii. 
 288 note. 
 
 Gibraltar, government of, defence of its 
 retention, ii. 324 and note. 
 
 Gilbert, Chief Baron, cited as to ancient 
 tenures, i. 394. 
 
 Glasgow, increase of trade of, i. 296 ; 
 trade of, i. 339 and note. 
 
 Glasses could enable us to grow grapes in 
 Scotland, ii. 31. 
 
 Golconda, diamond mines of, i. 183. 
 
 Gold and silver, use of as money, i. 25. 
 
 Gold, variations in value of, i. 33 ; coin- 
 age of in England, i. 40 ; when a legal 
 tender, i. 41 note ; value of at English 
 Mint, i. 43 ; often found virgin, i. 182 ; 
 proportion of to silver in India and 
 China, i. 2 1 7 ; and silver, proportionate 
 value of, i. 221 ; seldom used as plate, 
 i. 223; sources of, i. 225 and note; of 
 Brazil, i-375 anc ^ silver freely supplied 
 by trade, ii. 7 ; easiness of carrying, ii. 
 8 ; and silver, in three forms, ii. 13 ; 
 effect of regulations by Portugal on 
 exportation of, ii. 86 ; comes from Por- 
 tugal, ii. 126; of St. Domingo, ii. 140 ; 
 tax on mines of, ii. 141. 
 
 Gold coin, reformation of, i. 43 ; in Scot- 
 land, quantity of in 1707, i. 296 ; state 
 of in Great Britain, ii. 128. 
 
 Gold and silver. See Precious Metals. 
 
 Goldsmiths, high wages of, and why so, 
 i. no. 
 
 Goods, wealth consists not in money, but, 
 ii. 10 ; consumable, maintain fleets and 
 armies, ii. 13; East India, factitious 
 price of, ii. 214 and note; smuggled, 
 to pretend a scruple about buying,
 
 568 
 
 INDEX. 
 
 would be looked on generally as a piece 
 of pedantic hypocrisy/ ii. 496. 
 
 Goodwill,' nature of, i. 51 note; ii. no 
 note. 
 
 Gorgias, his wealth, i. 141. 
 
 Government, interference of unnecessary 
 in order to supply commodities, ii. 7 > 
 cannot prevent exportation of gold and 
 silver, ii. 8 ; does mischief by inter- 
 fering with corn dealer, ii. 103 ; of 
 Spain and Portugal bad, ii, 1 1 8 ; de- 
 ferred to Bank in making coinage duty 
 free, ii. 131 ; maxims of carried out by 
 civilised colonists, ii. 144 ; of mer- 
 chants worst, ii. 150 ; system of, in 
 India censured, not the persons com- 
 posing it, ii. 225 ; a singular, where 
 every member wishes to get out of it as 
 soon as possible, ib. ; when it may com- 
 pete against individual effort, ii. 300 
 and note ; error of in persecuting clergy, 
 ii. 384; learns easily the art of draining 
 people's pockets, ii. 457 ; high price of 
 ground rents proof of a good, ii. 487. 
 
 Governments, barbarous, corrupt in ad- 
 ministration of justice, ii. 299. 
 
 Gracchi, factions in time of, ii. 359. 
 
 Graduates, academical, privileges of, ii. 
 347 and note. 
 
 Graduation, privileges of, their effects, 
 
 ii. 3 6 3- 
 
 Grain, price of in Scotland, i. 79 ; export- 
 ation of prohibited in France, i. 209 ; 
 greater difficulty to convey than gold, 
 ii. 8 ; importations and exportations 
 of, calculations of, ii. in. 
 
 Grandees, Chinese and Indian, retinues 
 of, i. 216. 
 
 Grass land, rent of, i. 158, 9 and note. 
 
 Grasses, artificial, use of, i. 160. 
 
 Graziers, not affected by importation of 
 cattle from Ireland, ii. 32 ; cannot 
 combine to extort monopoly, ii. 239. 
 
 Great Britain, industry of towns in, i. 
 135 ; money price of labour in has 
 risen, i. 211'; engages in American 
 coasting trade, i. 371 ; cost of seven 
 years' war to, ii. 14 ; restraints by, on 
 trade with France unwise, ii. 70 ; 
 carrying trade in prohibited, ii. 117 ; 
 prosperity and security of, their causes, 
 ib. ; one of the richest countries, ii. 
 1 1 8 ; growth of wealth in as compared 
 with that in colonies, ii. 1 77 ; resembles 
 an unwholesome body, ii. 186; losses 
 of in colony wars, ii. 197 ; causes of 
 its commercial eminence, ii. 209 note ; 
 system of turnpike tolls in, ii. 309 ; 
 has not been famous for parsimony, 
 ii. 405 ; taxes on servants in, ii. 45 2 ; 
 stamp duties in, ii. 456; taxation of, 
 
 not exceptionally inconvenient; ii. 
 497- 
 
 Greece, colonies of, origin of, ii. 134; 
 militias of, ii. 282 ; republics of, policy 
 of, ii. 286 ; republics of, education in, 
 ii. 358 ; men of letters in, ii. 398. 
 
 Greek contains no word for apprentice- 
 ships in, i. 1 29 ; revival of language, ii. 
 352. 
 
 Greek colonies, rapid progress of, ii. 146. 
 
 Greek empire, opulent, i. 405. 
 
 Grellier, Mr., charges of the seven years' 
 war, ii. 14 note; history of national 
 debt, ii. 515 note. 
 
 Grenada, when in hands of French, re- 
 fined sugar, ii. 161 ; a new acquisition, 
 ii. 545. 
 
 Grenville, Mr. George, on Trade and 
 Finances, ii. 523 and note. 
 
 Ground rent, element in house rent what, 
 ii. 432. 
 
 Ground rents, where highest, ii. 433 and 
 note ; a tax on, expedient, ii. 436. 
 
 Guernsey and Jersey, islands of, lightly 
 taxed, ii. 202. 
 
 Guicciardini, cited on Italian agriculture, 
 i. 422. 
 
 Guinea, negroes of, drunken, ii. 67; coast 
 of, discovered by Portuguese, ii. 137. 
 
 Guinea, value of, i. 41. 
 
 Guineas, number of in a pound of gold, 
 i. 148. 
 
 Guizot, M., his account of the irruption of 
 barbarians, i. 386 note; on representa- 
 tive government in Europe, ii. 288 note. 
 
 Gumila, the Jesuit, his belief in the 
 Eldorado, ii. 143. 
 
 Gunpowder, bounty on may be justified, 
 ii. 98. 
 
 Gymnasium, Greek, exercises in, ii. 279. 
 
 Gymnastic exercises, part of Greek edu- 
 cation, ii. 358. 
 
 H. 
 
 Hackney coaches, tax on, ii. 446. 
 Hales, Chief Justice, his calculations in 
 
 the 1 7th century, i. 81. 
 Hallam, Mr., his 'Middle Ages' cited, i. 
 
 246 note. 
 Hamburg, bank money of, ii. 52 and note ; 
 
 origin of bank of, ii. 53 ; merchant 
 
 of, constrained to trade to America 
 
 through London, effects on, ii. 210; 
 
 makes a profit from trading, ii. 404 ; 
 
 established a public pawn-shop, ii. 
 
 407 ; property tax in, ii. 444. 
 Hamburg Company, bye-laws of, ii. 318. 
 Hamilcar, generalship of, ii. 285. 
 Hannibal, his army and campaigns, ii. 
 
 285. 
 Hanse Towns, decline of, i. 422.
 
 INDEX. 
 
 669 
 
 Hanseatic League, origin of, i. 403 and 
 
 note. 
 Happiness, object of ancient ethics, ii. 
 
 355- . 
 
 Hardship, as affecting wages, i. 105. 
 
 Hardware, trade of, with French wine, 
 ii. 12; price of, diminished by high 
 price of that exchanged against it, ii. 
 
 495- 
 Hardwares of England, their superiority, 
 
 i. 9. 
 
 Hasdrubal, military ^kill of, ii. 285. 
 Hatters, trade regulations of, i. 125. 
 Hawkers, tax on, ii. 446. 
 Hawkins, Serj., thinks 13 & 14 Car. II 
 
 still in force, ii. 232. 
 Health of body, conditions of, ii. 258. 
 Hearth money, odious, and abolished, ii. 
 
 439- 
 
 Hebrew neglected, till the study of theo- 
 logy commenced, ii. 352. 
 
 Hebrides, herring fishery of, ii. 95. 
 
 Hemp, trade in, with Biga, i. 374; 
 bounty on, ii. 229. 
 
 Hemp, Irish, bounty on, ii. 230. 
 
 Henaut, President, cited, ii. 205 and 
 note. 
 
 Henry II, character of his judges, ii. 298. 
 
 Henry III, assise statute of, i. 28. 
 
 Henry IV of France, accumulated a 
 treasure, ii. 508. 
 
 Henry VII, in I4th year of, action of 
 ejectment invented, i. 394. 
 
 Henry VIII, growth of wealth since 
 times of, i. 94 and note ; his relations 
 to the Pope, ii. 392 ; his adulteration 
 of the coin, ii. 534. 
 
 Henry, Prince, his Life by Dr. Birch, 
 i. 1 60. 
 
 Hereditas Luctuosa, tax on, ii. 454. 
 
 Herrings, bounty on, ii. 92 note; barrels 
 of, amount of, cured, &c., and cost of 
 to Government, ii. 94; resort to sea 
 lochs in Scotland, ii. 95 ; barrel of salt, 
 price of, ii. 96. 
 
 Hesiod, works of, their object, ii. 353. 
 
 Hides, use of, as money, i. 24 ; market of, 
 foreign, i. 241 ; prices of, i. 243 ; made 
 enumerated commodities, ii. 158. 
 
 Higgling, determines price, i. 32. 
 
 Highlanders, militia of, ii. 284. 
 
 Highlands, price of labour in, i. 80 ; 
 fecundity of women in, i. 83 ; price of 
 meat in, i. 158; want of roads in, i. 
 173 ; hospitality in, i. 412 ; tenancies 
 in, ib. ; families, old, in, i. 417. 
 
 Hindostan, caste system in, i. 66 ; rank 
 of husbandmen in, i. 134, hoarding in, 
 i. 282 ; dislike of inhabitants of, to sea, 
 * 37 2 empire of, superior to Mexico 
 and Peru, ii. 2 1 ; Batavia on road from, 
 
 to China and Japan, li. 219 ; castes in, 
 ii. 266 ; works and revenues of, ii. 
 313 ; forts in, why erected, ii. 315. 
 
 Hippias, his ostentation, i. 141. 
 
 Hispaniola, infested by buccaneers, i. 241. 
 
 Hoarding, a common practice in feudal 
 times, ii. 507. 
 
 Hobbes, says that wealth is power, i. 31. 
 
 Hogs, kept as a save-all, i. 236. 
 
 Holland, comparative riches of, rate of 
 interest in, i. 96 ; unfashionable not to 
 be a man of business in, i. lor ; grass 
 lands in, i. 159 ; rich, but corn dear in, 
 i. 201 ; great wealth of, i. 379 ; posi- 
 tion of farmers in, i. 397 ; exporta- 
 tion of coin permitted in, ii. 7 ; imports 
 lean cattle, ii. 33 ; absurd taxation in, 
 ii. 40 ; exchange between, and Eng- 
 land, ii. 50 ; its prosperity due to com- 
 parative adoption of free trade, ii. 72 ; 
 herring fishery of, ii. 95 ; policy of 
 trading companies in, ii. 155 ; effects 
 of their East India Company on trade 
 of, ii. 215; subsistence of, whence de- 
 rived, ii. 262 ; tax on house rents in, 
 ii. 438 ; exceptional property-tax in, 
 ii. 445 ; taxes on servants in, ii. 452; 
 stamp and registration duties in, ii. 
 456 ; taxes on bread in, ii. 472 ; li- 
 cences to drink tea in, ii. 475 ; effect of 
 taxes in, amount of, ii. 505 ; expense 
 in, for keeping out the sea, ib. ; con- 
 strained to have recourse to bad system 
 of taxation, ii. 530. 
 
 Holstein, live cattle in, trade of, ii. 262. 
 
 Home, trade at, better than foreign, i. 
 
 573- 
 
 Home market, in corn, effect of bounty 
 on, ii. 83 ; always best, and best for 
 corn, ii. 112. 
 
 Home products, exportation of, most 
 gainful, ii. 64. 
 
 Home trade, considered unimportant, ii. 
 7 ; is always preferred, ii. 26. 
 
 Homer, his evidence as to administra- 
 tion of justice, ii. 300; his testimony 
 as to fondness of the Greeks for music, 
 
 ii- 359- 
 
 Hop-gardens, rent of, i. i6a. 
 Horns, exportation of, forbidden, ii. 239. 
 Horse, price of, in Chili, i. 197. 
 Hose, regulations as to quality of, i. 
 
 259- 
 
 Hospitality, abuse and virtue of, i. 352 ; 
 necessary in rude times, and why, i. 
 411; simple, seldom ruins people, ii. 
 56. 
 
 Hospitals, Foundling, mortality in, i. 83. 
 
 House, in some parts of the British domi- 
 nions, built in a day, i. 174; value of, 
 its proportion to income, ii. 434.
 
 570 
 
 INDEX. 
 
 House of Commons, doorkeeper of, knows 
 the Members, ii. 206 ; printed debates 
 of, not authentic records of truth, ii. 
 
 323- 
 House rents, tax on, its incidence, ii. 
 
 433- 
 
 House taxes, inequality of, ii. 439. 
 
 Houses, rent of, in London, &c., i. 1 24 ; 
 rent of, twofold, ii. 432 ; an unproduc- 
 tive subject, ii. 435 ; tax on, its policy, 
 ib. note ; of wealthy people, expense 
 of, ii. 436 ; increase of demand for, a 
 proof of prosperity, ii. 440. 
 
 Hudson's Bay Company, legal rights of, 
 ii. 326; history of, ii. 328. 
 
 Hume, Mr., states the proportionate 
 value of fleece to sheep, i. 241 ; his 
 Political Discourses cited, i. 326; his 
 refutation of Locke, Law, Montes- 
 quieu, i. 357; on the benefits of com- 
 merce, i. 411 ; on inability of ancient 
 monarchs to carry on foreign wars, ii. 
 1 8 ; quoted (?) at length, ii. 374. 
 
 Humour, taxes paid by a man's, rather 
 than by his revenue, ii. 493. 
 
 Hungary, predial slavery in, i. 390 ; in- 
 dustry of, affected by discovery of 
 America, ii. 172 ; mines of, ii. 269 and 
 note. 
 
 Hunters, low earnings of, i. 105 ; mili- 
 tary force of, ii. 274; army of, their 
 highest number, ii. 275 ; in North 
 America, determine rank by age, ii. 
 294 ; no gradations of wealth among, 
 ii. 295. 
 
 Husbandmen, occupations of, fit them for 
 war, ii. 276. 
 
 Husbandry, no apprenticeship demanded 
 for, i. 133. 
 
 Hussey, Mr., ' Ancient Weights,' &c., 
 cited, i. 229 note. 
 
 Hutchinson, his History of Massachusetts 
 Bay, ii. 543. 
 
 Hyder Ali, his incursions, ii. 338. 
 
 I. 
 
 Idle, consumption of the, i. 56. 
 
 Iguana, lizard of St. Domingo, ii. 139. 
 
 Ignoble tenure, taxes on, ii. 448. 
 
 Ignorance, gross, effects of, ii. 371. 
 
 Immortality, empires aim at, ii. 420. 
 
 Importation, restraints on, twofold, ii. 23 ; 
 prohibition of, how secured, and with 
 what effects, ii. 25 ; restraints on, 
 hurtful, ii. 113; what kinds of, dis- 
 couraged by mercantile system, ii. 
 226. 
 
 Imports, nearly all pay customs, ii. 480. 
 
 Improvement, undertaken for gain, i. 
 239 ; diminishes price of manufoctures, 
 
 i. 256 ; why regarded as useful, i. 285 ; 
 seldom effected by great proprietors, 
 i. 389 ; land-tax does not discourage, 
 ii. 418. 
 
 Improvidence, cause of scarcity of money, 
 ii. 10. 
 
 Independents, project of, at end of Civil 
 War, ii. 378. 
 
 India, trade of, Portuguese strove to 
 monopolise, ii. 213 ; administration of, 
 faulty, ii. 222. 
 
 Indian corn, plant of New World, ii. 139. 
 
 Indians, North American, wars of, con- 
 temptible, ii. 276. 
 
 Indies, name of, given to New World, by 
 mistake of Columbus, ii. 1 39. 
 
 Indies, East, a market for silver, i. 215 ; 
 trade of goods of, increasing, ib. ; 
 discovery of its benefits, ii. 21 ; at- 
 tempt to get at commerce of, cause 
 why West were discovered, ii. 143. 
 
 Indies, West, sugar plantations in, i. 
 1 66 ; free trade between them and 
 American colonies, ii. 161. 
 
 ' Indies, Two, Establishment of Europeans 
 in,' cited, i. 219. 
 
 Indigo, bounty on, ii. 229. 
 
 Individuals, seek their own advantage, 
 and near home, ii. 26 ; prudence of, 
 induces the division of labour, ii. 
 280. 
 
 Industry, some kinds of, limited to towns, 
 i. 1 8 ; increased by good wages, i. 86 ; 
 what sets it in motion, i. 294 ; needs 
 incentives, i. 338 ; to what extent en- 
 couraged by monopoly, ii. 25 ; general, 
 of society, how limited, ib. ; not di- 
 minished, but employed to greatest 
 advantage, in absence of regulations, ii. 
 29 ; domestic, when it should be 'en- 
 couraged, two cases, ii. 35 ; natural 
 balance of, ii. 78 ; augmentation of, 
 by discovery of America, ii. 171 5 D* - 
 tural balance of, broken by colonial 
 system, ii. 186; hasty raising of one 
 kind, depresses a more valuable, ii. 
 257 ; customs' duties a discouragement 
 to, ii. 495 ; decline of, under dis- 
 couragement of capital, ii. 528. 
 
 Influence of master's example on work- 
 men, ii. 194. 
 
 Injury, different to persons, from that to 
 property, ii. 293. 
 
 Inland dealer, corn trade of, his interests, 
 ii. 99. 
 
 Innkeeper, profits of, high, i. 105. 
 
 Insecurity, effects of, i. 282. 
 
 Instrument, living, the artificer, ii. 243. 
 
 Instruments of trade, forbidden importa- 
 tion, ii. 226. 
 
 Insurance companies, trade of, reducible
 
 INDEX. 
 
 571 
 
 to rule, ii. 341 ; plea given for con- 
 ferring privileges on, ii. 343. 
 
 Insurers, moderate profit of, i. 113. 
 
 Intendants, French, discretionary powers 
 of, ii. 465. 
 
 Interest, a derivative revenue, i. 55 ; 
 rates of, fixed by law, i. 93 ; rate after 
 the late war (i.e., after the Peace of 
 Paris), i. 98 ; prohibition of, not pre- 
 ventive of, i. 100; present rates of, 
 relative to profit, i. 337 and note', 
 stock lent as, is generally employed 
 productively, i. 354 ; diminished by 
 increase of stock, i. 356 ; rates of, be- 
 fore Spanish mines were discovered, 5. 
 357; prohibited, effects of, i, 359: 
 rates of fixed, effects of, i. 360 ; fixing 
 rates of, how far wise, i. 36 1 and note ; 
 price of land relative to rate of, ii. 193 ; 
 taxation of, apparently easy, ii. 441 ; 
 legal, when land-tax imposed, six per 
 cent., ii. 443 ; rate of, in Holland, ii. 
 445 ; rates on, not affected by taxes on 
 stock, ii. 452 ; rate of, in Anne's time, 
 ii- 515 ; payment on, to public creditor, 
 fallacies entertained about, ii. 527. 
 
 Interest, their own, people can be trusted 
 with, ii. 107. 
 
 Interlopers, their operations on East 
 India trade, ii. 331. 
 
 lonians, colonies of, ii. 135. 
 
 Ireland, exports salt provisions, i. 240 ; 
 control over the market of its wool 
 and hides, i. 243-5 5 exportation of 
 cattle of, no damage to English grazier, 
 ii. 32 ; people of, object to exportation 
 of cattle, ii. 33 : salt provisions ex- 
 ported from, in small quantities only, 
 ib. ; importation of wool-cards per- 
 mitted from, ii. 226; light taxes on 
 land in, a benefit to absentees, con- 
 dition of, ii. 493 ; wisdom of extending 
 free trade to, ii. 499 ; as able to pay 
 land-tax as Great Britain, ii. 536 ; in- 
 ferior classes poorer in, than in Scot- 
 land, ii. 541 ; Protestants of, enjoy 
 authority and security at expense of 
 Great Britain, ii. 546 ; gains of, by free 
 trade, ii. 547. 
 
 Irish, live on potatoes in London, i. 171. 
 
 Iron, use of, as money, i. 25 ; fall in 
 price of, i. 68 note ; from Spain to 
 Chili and Peru, i. 179 ; not known in 
 America, ii. 148; price of, at Quito, 
 ii. 156. 
 
 Iron-works, require great capital, i. 277, 
 
 Islands, Scotch, price of labour in, i. 80. 
 
 Isocrates, Contra Sophistas, i. 140. 
 
 Issue, excess of, returns to Bank, i. 301 ; 
 excess of, how prevented by Scotch 
 banks, i. 306. 
 
 Italians, sober people, ii. 67. 
 
 Italy, cattle-feeding in ancient, i. 159 ; 
 has retrograded in wealth, i. 213; 
 veneration felt towards, i. 351 ; effects 
 of slave cultivation in, i. 391 ; republics 
 of, i. 404 ; cities of, first rose to wealth, 
 i. 406 ; introduction of silk into, i. 407 ; 
 general cultivation of, i. 422 ; in little 
 states of, may be necessary to forbid 
 exportation of corn, ii. 116. 
 
 J. 
 
 Jack of all trades, never rich, ii. 107. 
 
 Jamaica, sugar and rum of, i. 374 ; pro- 
 duce of sugar in, ii. 158 ; an unwhole- 
 some desert in time of Cromwell, ii. 
 1 78 ; has much uncultivated land, ii. 
 
 545- 
 
 James I, marriage-bed of, i. 351. 
 James VI of Scotland, adulteration of 
 
 coin in reign of, ii. 534. 
 Japan, copper comes from, i. 1 79 J value 
 
 of gold to silver in, i. 222 ; empire of 
 
 superior to Mexico and Peru, ii. 21 ; 
 
 Batavia on road from Hindostan to 
 
 China and, ii. 219 ; trade of China with, 
 
 ii. 265. 
 
 Jealousy, mercantile, how inflamed, ii. 71. 
 Jealousy of merchants, more mischievous 
 
 than ambition of kings, ii. 68. 
 Jenkins' ears, story of, ii. 198 note. 
 Jersey, New, occupied by Swedes, ii. 
 
 150- 
 
 Jevons, Mr., his calculations about circu- 
 lating currency, i. 287 note; on stock 
 
 of gold coin, ii. 133 note. 
 Jewellers, high wages of, and why so, i. 
 
 no. 
 Jews, Portugese, colonised Brazil, ii. 
 
 169. 
 Job, the patriarch, cited by Sir R. Mur-* 
 
 chison, ii. 143 note. 
 
 John, King, benefactor to towns, i. 403. 
 John of France, his adulterations of the 
 
 currency, ii. 534. 
 Judge, an honourable office, and coveted, 
 
 ii. 301 ; should not be liable to capri- 
 cious removal, ii. 305. 
 Judges, what they were in Henry II's 
 
 time, ii. 298 ; why salaries are paid to, 
 
 ii. 300. 
 Judges, French, their emoluments, ii. 
 
 302. 
 Judicial, separation of this power from 
 
 executive, ii. 304. 
 Juger, Roman, size of, ii. 135. 
 Julius Caesar, wealth at time of, i. 348. 
 Jurisdiction, local, of towns, origin of, i. 
 
 402 ; territorial, did not arise from 
 
 feudal law, i. 413; manorial, character 
 
 of, ib. note.
 
 572 
 
 INDEX. 
 
 Justice, sacrifice of, to utility, ii. 116 ; 
 perfect, never attained in any case, ii. 
 259 ; administration of, variously ex- 
 pensive, ii. 292 ; when purchased, often 
 perverted, ii. 299 ; never administered 
 gratis, ii. 300 ; liberty depends on im- 
 partial administration of, ii. 305 ; ex- 
 pense of administering, should be borne 
 by society, or by litigants, ii. 402 and 
 note; administration of, necessary to 
 a commercial country, ii. 5 10. 
 
 Justice, Courts of, respected at Rome, 
 ii. 362. 
 
 Jutland, live cattle of, trade in, ii. 262. 
 
 K. 
 
 Kalm, M., his Travels in America cited, 
 
 i. 234. 
 
 Kelp, rent for burning, i. 153. 
 Kent, restrictions on wool trade in, ii. 
 
 233- 
 
 Khan, Tartar, authority of, ii. 295. 
 Kidders of corn, licence necessary for, ii. 
 
 i5- 
 
 Kind, rents in, mischievous, ii. 422 ; 
 much more inconvenient generally to 
 take tithe or tax in, ii. 430. 
 
 King, Gregory, his calculations on wages, 
 i. 8 1 and note ; his estimate of average 
 corn prices, i. 207 ; his 'Law of Prices' 
 cited, ii. 103 note. 
 
 Kingdom, what is prudence in a family 
 cannot be folly in a kingdom, ii. 29. 
 
 Kings, impertinence of, in passing sump- 
 tuary laws, i. 350 ; weakness of, in 
 feudal times, i. 414 ; jealousy of 
 merchants more fatal than ambition of, 
 ii. 68. 
 
 Knitting frames, exportation of, pro- 
 hibited, ii. 243. 
 
 ^Knowledge, great, of farmers, i. 133. 
 
 L. 
 
 Labour, annual, the ' fund ' of a nation, 
 i. i ; useful, its proportion to other 
 employments, important, i. 2 ; desire 
 to save, stimulant to invention, i. ii ; 
 real measure of value, i. 30 ; is not 
 that by which value is commonly esti- 
 mated, i. 32 ; has a real and nominal 
 price, i. 34 ; sole measure of value, ib. 
 and note ; prices of, i. 39 and note ; 
 differences in amount, causes of dif- 
 ference in value of produce, i. 49 ; cases 
 in which the whole price is the wages 
 of, i. 54 ; produce of, the natural wages 
 of, i. 67 ; economy of, in production, i. 
 68 and note; scarcity of, its effects, i. 72 ; 
 wages of, in America, i. 73 i payment 
 of, when prosperity is declining, i. 76 ; 
 real recompense of, what it is, i. 82 ; 
 
 produce of, often lost sight of, i. 90; 
 skilled, designated by policy of Europe, 
 i. 1 06 ; scarcity prices of, how they 
 affect different kinds of, i. 109 note ; 
 property in, should be inviolable, i. 
 128; circulation of, should be free, i. 
 142 ; quantity of, how maintained, i. 
 155; real measure of value, i. 197; 
 nearly equal quantities of produce, 
 nearly equal quantities of corn, i. 197-8 
 and note ; ultimate price paid for 
 everything, i. 200 ; cheaper in China 
 than in Europe, i. 201 ; money price of, 
 risen, i. 211 ; price of, in India and 
 China, i. 216 ; sometimes constituted 
 sole recipient of price, i. 283 and note ; 
 productive, unproductive, &c., i. 332 ; 
 varied, in manufactures, i. 409 ; trans- 
 fer of, to new employment, not so dif- 
 ficult as seems, ii. 43 ; natural distri- 
 bution of, ii. 78 ; quantity it can main- 
 tain, designates value of corn, ii. 91 ; 
 high price of, and real cheapness of, in 
 new colonies, ii. 145 ; dear, because 
 land cheap, ii. 162 ; wages of, dimi- 
 nished by monopoly, ii. 193 ; of artifi- 
 cers, effect of, ii. 250 ; productive de- 
 pressed, in order to raise unproductive, 
 ii. 257 ; compulsory on high roads in 
 Great Britain, ii. 314 ; demand for, its 
 effects, ii. 460. 
 
 Labour, division of, i. 5 ; carried out 
 most fully in most trifling manu- 
 factures, ib. ; increases its productive 
 powers, i. 7 ; springs from a desire to 
 exchange, i. 14; limited by extent of 
 the market, i. 18; causes that each 
 person supplies few of his own wants, 
 i. 23 ; none among Peruvians, i. 214; 
 necessitates accumulation of stock, i. 
 273 ; obstructed by hindering trade 
 of corn merchant, ii. 107 ; in the 
 trade of a soldier, ii. 280 ; its effects 
 on the mind and character, ii. 365 and 
 note. 
 
 Labourer, subsistence of, plentiful or 
 scanty, i. 36 and note; improvement 
 in condition of, why not undesirable, 
 i.8 3 . 
 
 Labourers, accidental advantages to, i. 
 72 ; Statute of, i. 187. 
 
 Laing, Mr., on Norway, i. 419 note. 
 
 Lamb, price of, i. 222. 
 
 Lancashire, oatmeal used in, i. 171. 
 
 Land, rent of, its origin, i. 68 and note; 
 occupation of, in colonies, i. 97 ; unim- 
 proved, rent for, i. 1 53 ; quantity of, falls 
 short of effectual demand, i. 164 ; the 
 wealth of a country, i. 254 and note; im- 
 provements of, form of fixed capital, i. 
 279 ; source of capital, i. 281 ; price of,
 
 INDEX. 
 
 573 
 
 depends on rate of Interest, i. 361 ; price 
 of, and rates of interest, go together, ib. ', 
 projectors have argued about possible 
 profits from, i. 380; passion for culti- 
 vating, general, and why, i. 383 ; pur- 
 chase of, bad investment, i. 419 ; mono- 
 poly price of, i. 420 ; cultivation and 
 improvement of, hindered by hindering 
 business of corn merchant, ii. 108 ; 
 plenty of, in new colonies, ii. 144; in 
 English colonies, cultivable, abundant, 
 and not engrossed, ii. 151 ; cheap, and 
 therefore labour dear, ii. 162 ; improve- 
 ment of, discouraged by monopoly, ii. 
 193 ; price of, relative to rate of in- 
 terest, ib. ; improvement of, import- 
 ant to King and Church, ii. 350 ; 
 rent of, source of revenue, ii. 408 ; a 
 productive subject, ii. 435 ; quantity of, 
 never a secret, ii. 442. 
 
 Land and capital, sources of revenue, 
 and how, ii. 528. 
 
 Land-carriage, over costly, i. 20. 
 
 Landed nation, interest of, hurt by high 
 duties and prohibitions, and why, ii. 256. 
 
 Landlord, share of, at present, i. 337 ; 
 duty of, in relation to his estate, ii. 258. 
 
 Landlords, great ones petty princes, i. 
 387 ; affected doubly by a tax on neces- 
 saries, ii. 470. 
 
 Landowner, interest of, secured by well- 
 being of society, i. 263 ; occupation by, 
 should be encouraged to some extent, 
 ii. 422. 
 
 Landowners, life of, in ancient times, ii. 
 507. 
 
 Land-rent, revenue of sovereign in Ben- 
 gal, ii. 221. 
 
 Land-tax, contribution of colonies to rise 
 and fall with the, ii. 202 ; in Eastern 
 countries, ii. 268 ; amount of, ii. 410 ; 
 in Great Britain, peculiarities of, ii. 
 417; expense of levying, least of all 
 processes of collecting taxes, ii. 423 : 
 variable, may discourage improve- 
 ment, ib. and note ; a, similar to tithe, 
 customary in Asia, ii. 429 ; annual 
 in towns, assessment of, ii. 438 ; should 
 be revised, ii. 535. 
 
 Land-tax Bill, its purpose, ii. 446. 
 
 Language, twofold in Egypt, ii. 351. 
 
 Languedoc, canal of, cost of, ii. 308. 
 
 Latin, contains no word for apprentice- 
 ships, i. 129 ; corrupted, a common 
 language in Western Europe, ii, 351. 
 
 Law, cannot regulate wages, i. 82 ; de- 
 fects of, may raise the rate of interest, 
 i. 100 ; profession of, not endowed, i. 
 1 39 ; need not intervene to direct 
 capital, ii. 213; rewards of profession 
 of, ii. 345 ; not studied in Greece, ii. 36 r . 
 
 Law, Mr., his opinion on the industry of 
 Scotland, i. 318; his opinions on in- 
 terest, refuted by Hume, i. 357. 
 
 Lawgiver's anxieties, impertinent and 
 oppressive, i. 128. 
 
 Lawns of Silesia, importation of, permit- 
 ted, ii. 46. 
 
 Laws, durability of, i. 387 ; some, viola- 
 tions of natural liberty, ii. 107. 
 
 Lawyers, earnings of, how explained, i. 
 1 10 ; French, identify entails with cer- 
 tain provisions of Roman law, i. 388. 
 
 Lead, fall in price of, i. 68 note. 
 
 Learning, cost of, affects wages of business 
 learned, i. 106. 
 
 Leases, long, origin of, i. 417; prescrip- 
 tion of cultivation by absurd, ii. 422. 
 
 Leather, exportation of, forbidden, ii. 
 239 ; taxes on, ii. 470. 
 
 Legislators, in Europe anciently the hind- 
 owners, i. 395. 
 
 Legislature, on side of masters, i. 149 ; 
 intimidated by monopolists, ii. 45 ; how 
 far operative on values, ii. 85 note. 
 
 Leisure, degrees of, in different occupa- 
 tions, ii. 280 ; men of, their power to 
 do good, ii. 367. 
 
 Leith, water-carriage from, to London, i. 
 19. 
 
 Lenders, consider their loan as capital, i. 
 353 ; or moneyed men, assign the power 
 of making purchases, i. 355 ; nume- 
 rous in a commercial state, ii. 510 ; 
 different character of, in England and 
 France, ii. 518. 
 
 Lerwick, wages in, i. 123. 
 
 Letters, men of, unprosperous, and why, 
 i. 139. 
 
 Levant, source of silk, i. 407. 
 
 Levity, ruinous to the poor, ii. 379. 
 
 Liability, limited, partnerships in, ii. 325. 
 
 Libels, political, in France, ii. 459. 
 
 Liberty, economical, effects of, on wages 
 and profits, i. 104 ; law of parochial 
 settlement a violation of, i. 149 ; na- 
 tural system of, to be restored, ii. 1 88 
 and note ; of distribution, consequence 
 of invading, ii. 258 ; perfect, not neces- 
 sary to prosperity, ii. 259 ; may not be 
 compromised by a standing army, ii. 290. 
 
 Licences of consumption, objections to 
 such a proposal for raising revenue, ii. 
 
 474- 
 
 Light come light go, proverb applicable to 
 great mercantile profit, ii. 195. 
 
 Ligue, transactions of, interesting, ii. 
 206. 
 
 Lima, population of, in 1713 and 1746, 
 i. 214 ; city of, growth of, ii. 147. 
 
 Linen, manufactures of, i. 89 ; consump- 
 tion of, in Spanish And Portuguese
 
 574 
 
 INDEX. 
 
 colonies, ii. 209 ; bounty on, expired 
 in 1786, ii. 228 ; use of, a necessary 
 or luxury, ii. 466, 
 
 Linen manufacture in Great Britain, 
 affected by drawbacks on German, ii. 
 165. 
 
 Linen yarn, spun in Scotland, i. 123 ; 
 raw, imported duty free, ii. 478. 
 
 Liquors, fermented, and distilled privately, 
 not liable to excise, ii. 485. 
 
 Lisbon, importations of specie to, i. 218 ; 
 supply of gold from, ii. 8 ; packet-boat, 
 its exports of gold, ii. 125 ; voyage of 
 Vasco de Gama from, ii. 137; mer- 
 chants of, their profits and manners, 
 ii. 195 ; merchants of, sumptuous pro- 
 fusion of, ii. 209. 
 
 Liverpool, Earl of, On Coins of the Realm, 
 i. 41 note. 
 
 Llama, beast of burden in America, ii. 148. 
 
 Lloyd, Mr., his wheat prices, i. 269 note. 
 
 Loango, discovered by Portuguese, ii. 1 3 7. 
 
 Loans, in what material made, i. 354 ; 
 difficulty of pledging colonies to in- 
 terest of, ii. 203 ; contracted for on 
 favourable terms by lenders, ii. 510. 
 
 Local charges, should not be borne by 
 society at large, ii. 402. 
 
 Lochs, sea, resort of herrings in Scotland, 
 ii. 95. 
 
 Locke, Mr., his theory of the price of 
 silver, i. 45 ; his opinion on interest 
 refuted by Hume, i. 357 ; his opinion 
 on money, ii. 2. 
 
 Locri, rapid growth of, ii. 146. 
 
 Lodgings, rent of, in London, &c., i. 124. 
 
 Logic, method of, origin of, ii. 354. 
 
 Lombard, the Hamburg pawn-shop, ii. 
 407. 
 
 London, journey between Edinburgh and, 
 i. 19; value of silver in, i. 39; price 
 of labour in, i. 78 ; bankers in, give no 
 interest on deposits, i. 94; wages of 
 tailors in, i. 109 ; house and lodgings, 
 rent of, in, i. 123; people in, who live on 
 potatoes, Irish, i. 171 ; price of meat 
 in, i. 231 ; merchants of, banking 
 system of, i. 298 ; rates of exchange 
 between, and Scotch towns, i. 327 ; 
 port of, rule of trade in, ii. 184 ; 
 merchants of, their manners, ii. 195 ; 
 paving and lighting streets of, ii. 
 314; land-tax assessment in, ii. 444: 
 porter breweries of, ii. 486. 
 
 Lords, enmity of king to, i. 402. 
 
 Loss, chance of, undervalued, i. 113; 
 bounties given to replace, on unpro- 
 fitable labour, ii. 79. 
 
 Lottery, what makes a fair one, i. 1 10 ; 
 never fair, but why seductive, i. 112; 
 Church of England is a, i. 139 ; mining 
 
 a disadvantageous, ii. 141 ; cause of 
 success of, ii. 518. 
 
 Louis the Fat, granted favours to towns, 
 i. 403- 
 
 Lowndes, Mr., on the silver coin, i. 205 ; 
 on coin in time of William III, cited, 
 ii. 51. 
 
 Lucca, expulsion of citizens from, i. 407. 
 
 Lucerne, tax on sale of lands in, ii. 456. 
 
 Lucian, on a salary given by Antoninus, 
 ii. 361. 
 
 Luther, disciples of, their tenets, ii. 393. 
 
 Luxuries, in what sense used, ii. 467 ; 
 effect of tax on, ii. 468 ; home, their 
 chief consumption, ii. 484 ; foreign, 
 their incidence, ii. 488 ; taxes on, piece- 
 meal, ii. 494. 
 
 Luxury, increase of, among the poor, i. 
 82 ; subsistence prior to it, i. 382 ; 
 taxes on, 11.308 ; often ruins men, ii. 507. 
 
 Lyceum, assigned to Aristotle, ii. 361. 
 
 Lycurgus, laws of, could not prevent 
 importation of specie, ii. 8. 
 
 Lyons, manufactures of, consumed at a 
 distance, i. 369 ; origin of silk manu- 
 facture at, i. 407. 
 
 M. 
 
 Macaulay, his Life of Clive cited, ii. 224 
 note. 
 
 Macculloch, Mr., his opinion aa to the 
 causes of low rates of interest in 
 Holland on foreign holders of British 
 funds, i. 96 note ; on rent, i. 169 note ; 
 on the operations of banking, i. 321 
 note. 
 
 Macedon, kingdom of, subdued by Rome 
 with difficulty, ii. 286. 
 
 Machiavelli makes a hero of Castruccio 
 Castracani, i. 407 ; on establishment 
 of Dominicans and Franciscans, ii. 374 ; 
 on the trade of the Medicis, ii. 406. 
 
 Machinery, developments of, under divi- 
 sion of labour, i. 10; notable improve- 
 ments in, i. 260 ; improvement of, an 
 increase in productive powers, ii. 261. 
 
 Machines, form of fixed capital, i. 279. 
 
 Madder, cultivation of, determined by 
 tithe, ii. 429. 
 
 Madeira wine, how it became popular, 
 ii. 76. 
 
 Madeiras, discovery of, by Portuguese, 
 ii. 137. 
 
 Madox, Formulare Anglicanum, i. 129 
 note; Firma Burgi, i. 130 note, 400 
 note, 401 note, 403. 
 
 Madras, councils of, resolute and wise on 
 emergency, ii. 225. 
 
 Mahomet, united Arabians, ii. 276. 
 
 Mahometans, high rates of interest 
 among, i. 101.
 
 INDEX. 
 
 575 
 
 Maize, value of, i. 255. 
 
 Majorazzo, right of, in Spanish and 
 Portuguese colonies, ii. 152. 
 
 Malacca, vessels of, at Batavia, ii. 219. 
 
 Malt, a lower tax on, would perhaps be 
 more productive, ii. 486 ; composition 
 for making privately, ii. 486. 
 
 Malt-tax, produce of, ii. 487. 
 
 Malta, land-tax of commanderies of, ii. 
 
 425- 
 
 Malthus, Mr., his theory of population, 
 i. 75 note ; on agricultural labour, ap- 
 proves of Smith's reasonings, i. 367 note. 
 
 Mamelukes, enemies of Turks, ii. 137. 
 
 Management of colonial assemblies by 
 this country, impossible, ii. 201. 
 
 Manchester, not affected by apprentice- 
 ship statute, i. 127. 
 
 Mandarins, have an interest in the main- 
 tenance of abuses, ii. 430. 
 
 Manilla, Acapulco ships carry silver to, 
 i. 217. 
 
 Manufacture gives greatest scope to divi- 
 sion of labour, i. 7. 
 
 Manufacturer, labour of, fixed in a vend- 
 ible commodity, i. 332 ; what his capital 
 replaces, i. 367 ; capital of, should 
 reside in the country, i. 369 ; sometimes 
 prohibited from being a shop keeper, 
 ii. 105. 
 
 Manufacturers, profit of, i. 131 ; for- 
 tunes gained by, i. 132 ; sophistry of, 
 i. 134; sordid interests of, i. 264; 
 derive advantage from monopoly, ii. 
 31 and note; might be injured by 
 free-trade; how this injury might be 
 alleviated, ii. 45 ; master, profits of, 
 ii. 228; can combine to extort mono- 
 polies, ii. 239 ; obtain restraints on 
 trade for their own advantage, ii. 244 ; 
 a barren class, ii. 250 ; not same as 
 menial servants, ii. 259. 
 
 Manufactures, comparative cheapness of, 
 i. 8a; of China and India, i. 217; 
 lowered in price by improvement, i. 
 256 ; nature does nothing for them, i. 
 368 and note ; preferred to foreign com- 
 merce, i. 385 ; for distant sale, intro- 
 duced in two ways, i. 407 ; for distant 
 sale, caused by growth of refinement, 
 i. 408 ; generally flourish in time of 
 war, and why, ii. 7 ; finer, means of 
 carrying on war, ii. 1 7 ; discouraged in 
 Spain and Portugal, ii. 87 ; bounty on, 
 ii. 90, 91 ; prohibited or prevented in 
 American colonies, ii. 161 ; British, 
 demand for in North of Europe, ii. 188 ; 
 colonies open market for, ii. 191 ; of 
 Great Britain, have flourished in spite 
 of monopoly, ii. 192; easily trans- 
 ported, ii. 265. 
 
 Manufacturing country, revenue of, 
 always great, and why, ii. 262. 
 
 Marco Polo, travels of, i. 75 ; journey of, 
 ii. 138. 
 
 Market, extent of, limits division of 
 labour, i. 18 ; higgling or bargain- 
 ing of, constitutes price, i. 32 ; to 
 hinder farmer from best, unjust, ii. 
 116; more extensive than in any 
 other case, given to English colonies, 
 i.SS- 
 
 Marriage, encouraged in China, i. 76; 
 encouraged by liberal reward of labour, 
 ii. 145 ; what kind of, barren, ii. 259 ; 
 classes in France averse to, ii. 519. 
 
 Maryland, cultivates tobacco, i. 167 ; 
 tobacco of, ii. 74. 
 
 Mason, why his wages are high, i. 108 
 and note. 
 
 Masons, wages of, in the fourteenth cen- 
 tury, i. 138. 
 
 Masquerade dresses, when let out, capital 
 yielding revenue, i. 278. 
 
 Massachusetts, small expense of Govern- 
 ment in, ii. 153; advances of paper 
 money by Government of, ii. 543. 
 
 Masters, counsel the Legislature, i. 149. 
 
 Materials, in hands of manufacturers, 
 a form of circulating capital, i. 280 ; 
 importation of, permitted, ii. 227; 
 enumeration of, paying export duties, 
 ii. 240. 
 
 Materials, raw, effect of abolishing duty 
 on, ii. 483. 
 
 Maury, Capt., on physical geography of 
 sea, ii. 34 note. 
 
 Mazeppa, his treasures, ii. 19. 
 
 Mead or metheglin, tax on, ii. 488. 
 
 Measure, gold and silver not a, of value, 
 
 i- 34- 
 
 Meat, relative price of, to bread, i. 157; 
 seldom consumed by labourer, i. 198 ; 
 seldom exported, i. 240. 
 
 Mechanics, improvements in, why re- 
 garded as useful, i. 285. 
 
 Medicis, Lorenzo de, his unsuccessful 
 trade, ii. 406. 
 
 Mediterranean, ancient civilisation by, 
 i. 21. 
 
 Meggens, Mr., his calculation of imports 
 of specie to Spain, i. 219; his calcula- 
 tion of quantities of gold and silver 
 imported, i. 222. 
 
 Men, differences of natural capacity in, 
 trifling, i. 1 7. 
 
 Menial servants, labour of, adds no value, 
 i. 332 and note; is not fixed in a 
 vendible commodity, ii. 260. 
 
 Mercantile classes, have got rid of the 
 restrictions complained of by Smith, 
 ii. 246 note.
 
 576 
 
 INDEX. 
 
 Mercantile republic, money of, ii. 16. 
 
 Mercantile states, useful to other coun- 
 tries, ii. 254. 
 
 Mercantile system, expedients of, ii. 80 ; 
 favours carrying-trade, ii. 163; effects 
 of, ii. 187; mean and malignant expe- 
 dients of, ii. 192 ; elevated by dis- 
 coveries of America and Cape passage, 
 ii. 208 ; regulations of, derange na- 
 tural distribution of stock, ii. 213 ; 
 ultimate object of, to enrich country, 
 pretended, ii. 226; adopted fully by 
 Colbert, ii. 247 ; doubtful whether it 
 raises artificers, &c., sooner than by 
 freedom of trade, ii. 257; injurious to 
 private and public revenue, ii. 478 ; 
 sophistry of, in relation to public debts, 
 ii. 527. 
 
 Mercenaries, used by Athens, ii. 278. 
 
 Merchant, capital of, general not local, 
 i. 368 ; a citizen of no country, i. 422 ; 
 great, supports smaller dealers in times 
 of loss, ii. 108; does not pay tax on 
 commodity, but advances it, ii. 132 ; 
 private, could not, it is said, deal with 
 India, ii. 217. 
 
 Merchant, wholesale, what his capital 
 replaces, i. 366. 
 
 Merchant carrier of corn, his function, 
 ii. 117. 
 
 Merchant importer of corn, his action, 
 ii. 112. 
 
 Merchants, large gains of, diminish trade, 
 i. 103; sophistry of, i. 134; sordid 
 motives of, i. 264 ; customs of, have 
 given peculiar privilege to bills of 
 exchange, i. 309 ; unimportant, whether 
 native or foreign, i. 369 ; purchase and 
 improve land, i. 410 ; found prohibi- 
 tion of metals inconvenient, ii. 4 ; im- 
 portance of money to, ii. 1 1 ; seldom 
 affect to trade for the public good, ii. 
 28 ; derive advantage from monopoly, 
 ii. 31 and note; jealousy of, more 
 fatal than ambition of kings, ii. 68 ; 
 government of, worst, ii. 150; trade of, 
 with colonies, concerted, ii. 156 ; ad- 
 visers of colonial policy, and why, ii. 
 1 64 ; silent about high profits of stock, 
 ii. 1 80; gains of, augmented by mono- 
 poly, ii. 194; revenue of, cannot be 
 taxed, ii. 200 ; company of, cannot 
 consider themselves sovereigns, ii. 221 ; 
 cannot be forced to declare their for- 
 tunes, ii. 445 ; customs levied on pro- 
 fits of, ii. 475 ; smuggling, opposed 
 Walpole's excise scheme, ii. 484. 
 
 Merchants, alien, taxes on, ii. 476. 
 
 Merovingians, had treasures, ii. 19. 
 
 Messance, M., his opinion on cheapness 
 of food and efficiency of labour, i. 89; 
 
 his observations on the value of silver, 
 i. 209 ; prices collected by, i. 253. 
 
 Metals, general use of, as money, i. 24 ; 
 uncoined, inconveniences of, i. 25 ; 
 value of the most precious, regulates 
 the value of the whole coin, i. 42 and 
 note; price of, varies little from year 
 to year, and why, i. 220; exportation 
 of, prohibited, ii. 239. 
 
 Metals, coarse, production of, i. 220. 
 
 Metals, precious, price at which sold 
 determined by cost of production, i. 
 182. 
 
 Metaphysics or pneumatics, opposed to 
 physics, ii. 355. 
 
 Metayers, origin of, i. 392 and note ; in 
 France, condition of, i. 393 and note. 
 
 Methodists, activity of, ii. 373. 
 
 Methuen, Mr., his treaty, ii. 173. 
 
 Mexicans, at their discovery, ignorant, i. 
 213- 
 
 Mexico, riches of, exaggerated, ii. 22 ; 
 conquest of, by a governor of Cuba, 
 ii. 169. 
 
 Mickle, Mr., his 'Lusiad' cited, ii. 337 
 note. 
 
 Milan, duchy of, attention of, to the in- 
 cidence of its land-tax, ii. 426 ; survey 
 of, ib. ; its absurd system of taxation, 
 ii. 500. 
 
 Miletus, rapid growth of, ii. 146. 
 
 Military force, why needed, ii. 274. 
 
 Military service, exchanged for money, 
 ii. 278. 
 
 Militia, of ancient towns, character of, i. 
 404 ; character of, ii. 281 ; kind of, ii. 
 282 ; inferior to standing army, ii. 283 ; 
 how it may become equal to a standing 
 army, ii. 284 ; certain kinds of, war- 
 like, ii. 287 ; barbarous and civilised, 
 relative power of, ii. 288 ; danger of 
 depending on, ii. 289. 
 
 Mill, Mr., his criticism on Smith's theory 
 of the division of labour, i. 10 note ; 
 on use of word ' undertaker,' i. 285 note; 
 on increase of capital, i. 340 note; 
 on savings, ii. 415 and note. 
 
 Mina, Attic value of, i. 141 and note. 
 
 Mind, qualifications of, more influential 
 than those of body, ii. 294 ; human, 
 nature of, anciently a part of physics, 
 
 fi- 354-. 
 
 Mines, discoveries of, in America, i. 33 ; 
 American, effects of, i. 35 ; effect of 
 abundance from, i. 199 ; fertility and 
 barrenness of, i. 248 ; source of capital, 
 i. 281 ; Spanish, supposed to have 
 lowered rate of interest, i. 357 ; a 
 country without, must get its gold and 
 silver from abroad, ii. 7 ; Turkish and 
 Hungarian, ii. 269 and note.
 
 INDEX. 
 
 677 
 
 Mines, silver, discovery in America, and 
 
 its effects, i. 203. 
 Mines, gold and silver, ruinous the search 
 
 after, ii. 141. 
 Ministers, impertinence of, in passing 
 
 sumptuary laws, i. 350. 
 Minorca, retention of, its justification, ii. 
 
 324- 
 Minors, taxes on, under feudal law, ii. 
 
 455- 
 
 Mint, English, regulations of, in Smith's 
 day, i. 43 ; operations of, like the web 
 of Penelope, ii. 1 29 ; used by the Bank 
 of England, ii. 131. 
 
 Mints, origin of, i. 26. 
 
 Mirabeau, M., his praise of Quennai's 
 Economical Table, ii. 264 and note. 
 
 Misconduct, effects of, same as of pro- 
 digality, i. 344. 
 
 Missionaries, stupid and lying reports of, 
 
 Mississippi scheme, the, an extravagant 
 project, i. 318. 
 
 Mithridates, armies of, ii. 287. 
 
 Moluccas, spiceries of, i. 216 ; spiceries 
 of, destroyed by Dutch, ii. 101 ; popu ; 
 lation of, reduced by Dutch, ii. 220. 
 
 Monarchies, ancient European, their re- 
 venues, ii 409. 
 
 Money, early kinds of, i. 26 ; chief object 
 of exchange, i. 32 ; price in, only nomi- 
 nal, i. 34 ; makes money, i. 97 ; a form 
 of circulating capital, i. 279 and note; 
 that part of circulating capital the 
 maintenance of which occasions a di- 
 minution of net revenue, i. 286 ; ambi- 
 guous use of word, i. 287, ii. I ; circu- 
 lating in a society, never equal to 
 revenue of all its members, i. 289 ; 
 economy of, by use of bank notes, i. 
 292 ; neither material nor tool, i. 294 ; 
 in circulation, calculations on its pro- 
 portion to annual produce, i. 295 and 
 note ; metallic, like a highway, i. 322 ; 
 thought to constitute wealth, double 
 function of, ib. ; according to Locke, 
 a steady friend, ii. 3 ; need of in war 
 and foreign trade, ib. ; a small part of 
 national capital, ii. 10; scarcity of, com- 
 mon complaint, and why, ib. ; every- 
 body a merchant of, ii. 132. 
 
 Monied interest, what it is, i. 355 ; how 
 it increases, i. 356. 
 
 Monopolist, little and transitory profit of, 
 ii. 222. 
 
 Monopolists, gains of, proper subject of 
 taxation, ii. 491. 
 
 Monopoly, prices under, i. 64 and note; 
 prevents benefits of the East from being 
 as great as they could be, ii. 22 ; of 
 home market, how secured, iL 25 ; 
 
 VOL. II. P 
 
 advantage of, to merchants, &c., ii. 31 
 and note ; spirit of, invented doctrines 
 of trade, ii. 68 ; seldom much respected, 
 ii. 76 ; by treaties of commerce, ii. 122 ; 
 established in colonies, ii. 155 ; object 
 of, in colony trade, ii. 190 ; benefits not 
 by, but in spite of, ii. 191 ; promotes 
 interests of one order, hurts all others, 
 ii. 194 ; maintenance of, the end of 
 the colonial system, ii. 197 ; colonial, 
 a tax on colonists and mother country, 
 ii. 200 ; dazzling, but hurtful, ii. 211 ; 
 sole engine of mercantile system, ii. 
 213; of trade, two kinds of, ii. 214; 
 temporary, how vindicated, ii. 339 ; 
 taxation an instrument not of revenue, 
 but of, ii. 479 ; sometimes given to 
 farmers of taxes, ii. 502 ; of colony 
 trade, no advantage, ii. 550. 
 
 Monopoly price, rent a, i. 153. 
 
 Montauban, tax of, generality of, ii. 
 427. 
 
 Montesquieu, quoted as to high rates of 
 interest in Mahometan countries, i. 
 101 ; his opinions on interest refuted 
 by Hume, i. 357; on mines of Hun- 
 gary, ii. 269 and note ; his defence of 
 Greek education, ii. 359. 
 
 Montezuma, magnitude of Mexico under, 
 ii. 148. 
 
 Morality, different social systems of.ii. 378. 
 
 Moral philosophy, method of, its origin, 
 ii. 353 ; ancient, treated of happiness, 
 ii- 355 > ancient compared with modern, 
 ii. 356. 
 
 Morals, of people, not so corrupt as those 
 who contrived 7 and 8 Will. Ill, cap. 
 28, ii. 233 ; superior in Rome to those 
 in Greece, ii. 369. 
 
 Moravia, predial slavery in, i. 390. 
 
 Moreau de Beaumont, cited as to French 
 taxes, ii. 465. 
 
 Morellet, Abbe", on joint-stock companies, 
 ii. 340. 
 
 Mortal, empires are, but aim at immor- 
 tality, ii. 420. 
 
 Mortality of children in foundling hospi- 
 tals, and parish charities, i. 84. 
 
 Mortgage of a branch of the revenue, ii. 
 512. 
 
 Mortgages, generally incurred in order to 
 spend loan, i. 354 ; registration of, ad- 
 vantageous, ii. 459. 
 
 Mother city, privileges of, ii. 135. 
 
 Mother country, interest of, not furthered 
 by colonial system, ii. 164. 
 
 Mountains, in England, Wales, and Scot- 
 land, herding countries, ii. 33. 
 
 Mourning, public, its effects on black 
 cloth, i. 62. 
 
 Mum, tax on, ii. 488.
 
 578 
 
 INDEX. 
 
 Mun, Mr., his simile about foreign: trade, 
 ii. 4 ; his arguments partly solid, partly 
 sophistical, ii. 5 ; title of his book 
 became a maxim, ii. 7- 
 
 Munich, apprenticeships in, i. 127 note. 
 
 Murchison, Sir R., cited as to origin of 
 gold and silver, i. 225 note ; on geology 
 of gold and silver, ii. 142 note. 
 
 Muscovites, trade with China by caravans, 
 i. 215. 
 
 Music, part of Greek education, ii. 358 ; 
 amusement of barbarous races, ii. 359. 
 
 N. 
 
 Nail making, dexterity in, i. 9. 
 
 Nails, use of, as money, i. 24. 
 
 Naples, tax on sales in, ii. 498. 
 
 Nation, if secluded, would need no money, 
 ii. 3 ; wealth of neighbouring, advan- 
 tageous in peace, ii. 69 ; a false political 
 economy only retards progress of, ii. 
 
 259- 
 
 'Nation, Present State of,' cited, ii. 16. 
 
 National debt no cause of prosperity, ii. 
 118. 
 
 Nations, their comparative wealth de- 
 pends on proportion of produce to con- 
 sumption, i. i ; not impoverished by 
 pri vale, but by public prodigality, i. 345 ; 
 taught to think it their interest to 
 beggar their neighbours, ii. 68. 
 
 Natives-, effects of intercourse between 
 Europeans and, in old and new world, 
 ii. 208. 
 
 Nature, does nothing for manufactures, 
 i. 368 and note ; wisdom of, repairs 
 folly and injustice of man, ii. 259 ; 
 labour of, in agriculture, ii. 278 ; phe- 
 nomena of, attract curiosity, ii. 353. 
 
 Naval power of English, not due to Act 
 of Navigation, ii. 177. 
 
 Naval stores, bounty on importation of, 
 ii. 1 60 ; from America, bounty on, and 
 kinds of, ii. 228. 
 
 Navigation, inland, of China and India, 
 i. 217. 
 
 Navigation, Act of, its policy and excuse, 
 " 36> 37 ail< i note; its division of 
 commodities, ii. 157; its effects on 
 capital, ii. 176; caused decay of foreign 
 trade, ii. 177; a clause in, makes a shop- 
 keeper proposal a law, ii. 197. 
 
 Navy, extent of, for colonial system, ii. 
 197. 
 
 Necessaries, what constitutes them, ii. 
 466 ; tax on, how affects labour, ii. 
 467 ; interest of all to oppose taxes on, 
 ii. 470 ; incidence of tax on, ii. 485. 
 
 Necessaries of life, if taxed, taxes should 
 
 be levied on all foreign products, ac- 
 cording to some, ii. 38. 
 
 Necessity, the principal stimulus to exer- 
 tion, ii. 344. 
 
 Neglect of mother country to colonies did 
 them no harm, ii. 147. 
 
 Negroes, proportion of, to tobacco plants, 
 i. 168 ; fond of music and dancing, ii. 
 
 359- 
 
 Netherlands, province of, in debt, ii. 508. 
 New England, fishery of, ii. 158 ; the four 
 
 governments of, pay a balance in specie, 
 
 ii. 544. 
 New Hampshire, expenses of government 
 
 in, ii. 154. 
 New Jersey, expense of government in, 
 
 ii. 154 ; pays a balance in specie, ii. 544. 
 Newmarch, Mr., his calculations about 
 
 circulating currency, i. 288 note. 
 Newspapers, stamps on, ii. 459. 
 New York, wages in, i. 73 ; Mexico 
 
 greater than, ii. 148 ; province of, 
 
 Dutch, but occupied by English in 
 
 1674, ii. 150; expense of government 
 
 in, ii. 154 ; colonists of, pay a balance, 
 
 . " 544- 
 
 Nicuessa, voyage of, to Darien, ii. 141. 
 
 Niebuhr, on Roman colonies, cited, ii. 
 146 note. 
 
 Nile, peculiarities of the, i. 21 ; distribu- 
 tion of waters of, ii. 266. 
 
 Nimeguen, peace of, and concessions of, 
 ii. 41. 
 
 Nobility, hereditary, none in British 
 colonies, ii. 165 ; readiness of, to con- 
 sent that merchants should be taxed, ii. 
 476. 
 
 Non-enumerated commodities, ii. 76. 
 
 Non-importation, agreement among colo- 
 nies to, ii. 1 88. 
 
 Norfolk, trade regulations in, i. 125. 
 
 Norman Conquest, state of wealth at time 
 of, i. 347. _ 
 
 North America, expenses of government 
 in, ii. 154. 
 
 Northumberland, Earl of, household book 
 of, i. 190. 
 
 North-west Passage, attempt to find, ii. 
 144. 
 
 Norway, moors of, pay rent, i. 155. 
 
 Norwich, trade regulations in, i. 125. 
 
 Notes, bank, origin of, i. 291. 
 
 Nova Belgia, Dutch colony of, now New 
 York and New Jersey, ii. 150. 
 
 Nuisances, in every respect, exclusive 
 companies are, ii. 225. 
 
 Numbers, law of the increase of, among 
 animals, i. 84. 
 
 Nuremberg, origin of bank of, ii. 53. 
 
 Nutmeg trees, extirpated by Dutch, ii. 
 219.
 
 INDEX. 
 
 579 
 
 0. 
 
 Oath, sanctity of, great at Rome, ii. 362. 
 Oatmeal, food of the Scotch, i. 79, 
 Occupiers, small, diminution of, i. 237. 
 Odium, popular, makes people averse to 
 
 being corn dealers, ii. 104, 
 Offices, tax on emoluments of, when fair, 
 
 ii. 463. 
 
 Oieda, voyage of, to Darien, ii. 141. 
 Onions, importation from Flanders, i. 82. 
 Ontology, origin of science of, ii. 355. 
 Opera dancers and singers, why well paid, 
 
 i. 112. 
 Operation, single, performance of, gives 
 
 dexterity, ii. 107. 
 Opium, profit of, attempted to be obtained 
 
 by factor, ii. 220. 
 Optional clause, inserted in Scotch notes, 
 
 Opulence, growth of, in a nation, i. 1 2 ; 
 
 great, may be obtained without any ex- 
 portation trade, i. 385 ; less important 
 
 than defence, ii. 38. 
 Orange, Prince of, his exaltation to the 
 
 stadtholdership, ii. 445. 
 Orleans, Duke of, adopted Law's scheme, 
 
 i. 318. 
 
 Ortolans, feeding of, i, 235. 
 Ostentation, often ruinous, ii. 507. 
 Outer, remedy for, ii. 303. 
 Overstocked, market of corn seldom, ii. 
 
 114. 
 Overtrading, a cause of scarcity of money, 
 
 ii. 10. 
 Ox, weight and price of in 1612, i. 160; * 
 
 price of, i. 222. 
 
 Oxen, price of, at Buenos Ayres, i. 157. 
 Oxford, state of in Smith's time, ii. 346 
 
 and note. 
 Oxfordshire, people in, mix wood and 
 
 coals, i. 177. 
 
 P. 
 
 Palladius on kitchen gardens, i. 163. 
 
 Palos, port, from which Columbus sailed, 
 ii. 138. 
 
 Pamphlets, periodical, stamps on, ii. 459. 
 
 Paper, circulation of, its economies, i. 290. 
 
 Paper money, may be made to circulate 
 between dealers, i. 323 ; does not af- 
 fect prices necessarily, i. 326 ; may be 
 substituted for specie, ii. 9. 
 
 Par, of exchange, ii. 49. 
 
 Paradoxes, fondness of men for, ii. 263. 
 
 Paris, house and lodging rent in, i. 123 ; 
 apprenticeships in, i. 127 ; has some 
 industries and trade, i. 339 ; custom of, 
 favourable to younger children, ii. 152 ; 
 siege of, and famine in, ii. 205 ; parlia- 
 ment of, error in dealing with, ii. 384 ; 
 
 P P 
 
 gentle and mild government of, ii. 
 385. 
 
 Parliament, members of. oppose free 
 trade, ii. 45 ; very slowly granted sup- 
 plies, ii. 200 ; proposal that British, 
 should fix colonial contingent of taxes, 
 ii. 20 1 ; does not overburden depen- 
 dencies, ii. 202 ; British, if it succeeds 
 in taxing colonies, will virtually de- 
 stroy the colonial assemblies, ii. 204. 
 
 Parliament, Long, its animosity towards 
 the Dutch, ii. 37; ejected by Crom- 
 well's army, ii. 290. 
 
 Parliament, Scotch, declined Law's 
 scheme, i. 318 ; when it sat at Edin- 
 burgh no trade in that city, i. 339. 
 
 Parliaments, English and French, intract- 
 able, ii. 384. 
 
 Parma, duchy of, its absurb system of 
 taxation, ii. 500. 
 
 Parsimony, its effects, i. 340 ; destroyed 
 by high rates of profit, ii. 194; means 
 by which artificers increase wealth, ii. 
 252 ; necessary in case of all labourers, 
 in order to increase income, ii. 261 ; 
 want of, in peace, necessitates borrow- 
 ing in war, ii. 509. 
 
 Parthians, origin of, ii. 287. 
 
 Parties, political, their league with re- 
 ligious sects, ii. 376. 
 
 Party, greatness of an empire mitigates 
 rancour of, ii. 548. 
 
 Party walls, obligation of building, i. 326. 
 
 Passage, North- West, attempt to find, ii. 
 144. 
 
 Passage, duties of, a Saxon tax, ii. 491. 
 
 Paving, supplied to London from Scot- 
 land, i. 173. 
 
 Peace, restoration of, under a funding 
 system does not relieve a people, ii. 
 520. 
 
 Ptages, duties for repair of roads, ii. 403 ; 
 a kind of tolls in France, ii. 491. 
 
 Pedlar, principles of merchants, 1.418. 
 
 Pedlars, tax on, ii. 446. 
 
 Pelham, Mr., on the bounty, i. 210 ; his 
 patriotic and prudent administration, 
 
 ii. 53- 
 
 Peltry trade with savages, how it aro;>, 
 i. 172. 
 
 Penelope, web of, operations of Mint 
 like, ii. 1 29. 
 
 Pennsylvania, its paper currency, i. 328, 
 329; liberation of slaves in, by Qua- 
 kers, i. 39 1 ; expense of government in, 
 ii. 154; religious equality in, ii. 3/8; 
 government of, its frugality and expe- 
 dients, ii. 407 ; loans of paper cur- 
 rency by government of, ii. 543 ; pays 
 a balance in specie, and always finds 
 it, ii. 544.
 
 580 
 
 INDEX. 
 
 Perpetuities, law of England abhors, i. 389. 
 
 Perquisites of custom-house officers and 
 excise officers, ii. 494. 
 
 Persia, empire of, the causes of its fall, 
 ii. 285. 
 
 Peru, gets iron from Spain, sends silver 
 to Europe, i. 1 79 ; profits of mining in, 
 small, i. 1 80 ; taxes on mines in, i. 
 312; silver of, i. 375 ; riches of, exag- 
 gerated, ii. 22 ; expense of welcoming 
 a viceroy in, ii. 154. 
 
 Peruvians, ancient, had no money, i. 214. 
 
 Peter the Great, foundation of reforms 
 of, ii. 290. 
 
 Pfeffel, on history of house of Suabia, 
 cited, i. 401 note; Abrege de 1'His- 
 toire, &c., cited, i. 403. 
 
 Philip I, of France, granted favours to 
 towns, i. 403. 
 
 Philip, of Macedon, his standing army, 
 ii. 285. 
 
 Philips, Erasmus, probable author of a 
 book cited, ii. 16 and note. 
 
 Philosophers, occupation of, in economy 
 of society, i. ii ; vanity of, leads them 
 to assert differences of natural capacity, 
 i. 17 ; French, undervalued the indus- 
 try of towns, ii. 248 ; the first, natural, 
 ii. 3 = 3 ; have asserted every absurdity, 
 
 ii- 473- 
 
 Philosopher s stone, prospect of, u. 142. 
 
 Philosophy, Greek divisions of, ii. 353 ; 
 in Europe made subservient to theo- 
 logy, ii- 355 ; schools of, stationary, ii. 
 360 ; how it may be generally taught, 
 ii. 381. 
 
 PhocyllMes, verses of, their object, ii. 353. 
 
 Phoenicians, naval skill of, i. 2 1 . 
 
 Physic, profession of, not endowed, i. 
 
 139- 
 
 Physician, what determines his wages, i. 
 no; speculative theories of, as re- 
 gards health, ii. 258. 
 
 Physics, wide significance of, in antiquity, 
 
 ii- 354- 
 
 Piece goods of Bengal, i. 216. 
 Piece work disadvantageous to labourer's 
 
 health, i. 86. 
 Pig iron, American, relieved of duties, ii. 
 
 1 60. 
 
 Pin making, economy of, i. 6. 
 Pisa, profited by crusades, i. 406. 
 Pizarro, voyage of, to Chili and Peru, ii. 
 
 141. 
 
 Piano Carpino, cited, ii. 2 and note. 
 Plantagenets, disorder in England during 
 
 time of, i. 195 and note. 
 Plantations, wisdom of extending free 
 
 trade to, ii. 499 ; American and West 
 
 Indian, as able to pay land-tax as 
 
 Great Britain, ii. 536. 
 
 Planter, has a feeling of independence, i. 
 
 384- 
 
 Planters, generally farmed their own es- 
 tates, i. 55. 
 
 Planters, West India, profits of, i. 166. 
 
 Plate, quantity of, inconsiderable, ii. 14; 
 abundance of in Spain and Portugal, 
 ii. 87. 
 
 Plate tax, form of levying a licence on 
 expenditure, ii. 473. 
 
 Plato, his testimony to the service of 
 sophists, i. 141 ; ideal republic of, 
 criticised by Aristotle, i. 391 ; on 
 Greek education, ii. 359. 
 
 Players, why well paid, i. 112. 
 
 Plenty and scarcity, effects of bounty on, 
 ii. 82. 
 
 Pliny, quoted, i. 25 ; on the early cur- 
 rency of Eome, i. 40 ; quoted on prices, 
 i. 229 ; cited as to slave labour, i. 391 ; 
 on price of cloth, ii. 270 ; use of linen 
 at Rome in time of, ii. 466. 
 
 Ploughman, knowledge possessed by, i. 
 
 133- 
 Plunder, the pay of shepherd soldiers, ii. 
 
 '75- 
 
 Plutarch, on the gains of Isocrates, i. 141. 
 Plymouth company, dissolution of, ii. 
 
 '57- 
 
 Pneumatics opposed to physics, ii. 355. 
 
 Pneumatology, place for, in mediaeval 
 studies, ii. 356. 
 
 Poachers, low earnings of, i. 105. 
 
 Pockets, art of draining, easily learnt by 
 government, ii. 457. 
 
 Pocock, Dr., on hospitality of Arabs, i. 
 412. 
 
 Poivre, M., quoted, i. 166. 
 
 Poland, corn of, its value, i. 8 ; disorders 
 in, have made corn dear, i. 209 ; a 
 beggarly country, i. 251 ; predial 
 slavery in, i. 390 : industry of, how 
 affected by America, ii. 172 ; partition 
 and pacification of, ii. 188; invasion 
 of, by Russia in 1756, ii. 289. 
 
 'Police of Grain,' author of, cited, i. 191, 
 209. 
 
 Policy, public, of nations, treated in Third 
 Book, i. 3. 
 
 Political body, efforts of individuals in 
 correcting bad policy of, ii. 258. 
 
 Political Economy, theories of, discussed 
 in Fourth Book, i. 3 ; object of, to in- 
 crease riches and power, i. 377 ; use 
 of term in Smith's time, ii. i and note ; 
 forms of, partial and oppressive, ii. 
 
 259- 
 
 Politicians, comforts of those who be- 
 lieve in balance of trade, ii. 479. 
 
 Politics, justice may be sacrificed to, ii.
 
 INDEX. 
 
 581 
 
 Poll taxes, on negroes, on bondmen, a 
 badge of slavery, ii. 45 1 and note ; in 
 reign of William III, ii. 464 ; in Eng- 
 land, amount of always falls below 
 estimate, ii. 465. 
 
 Polybius, his testimony to Roman cha- 
 racter, ii. 359. 
 
 Pond, which does not overflow or get 
 empty, a well-managed bank resem- 
 bles, i. 304. 
 
 Poor, distressed by high price of corn, i. 
 256. 
 
 Poor countries, effects of monopoly 
 granted to companies in, ii. 215. 
 
 Poor laws peculiar to England, i. 143. 
 
 Pope, the, his patronage of the Univer- 
 sities, ii. 351 ; appropriated collation of 
 dignities, ii. 385. 
 
 Poppies, peasants ordered to plough up, 
 or plant, ii. 220. 
 
 Population, growth of in America, i. 74 ; 
 growth of, under a 'liberal reward of 
 labour,' i. 84 ^ redundant, may occur 
 in all classes of society, ib. note; re- 
 strained by bounty, ii. 83 ; encourage- 
 ment of, and improvement, encourages 
 true wealth and greatness, ii. 146 ; 
 increasing, stationary, declining, ii. 
 469. 
 
 Porcelain, of China, consumption of, i. 
 215. 
 
 Porre"e, Father, a Jesuit of some emi- 
 nence, ii. 398. 
 
 Porter, malt used in brewing in London, 
 ii. 486. 
 
 Porter, Mr., 'Progress of the Nation,' 
 cited, i. 82 note; on weight of taxa- 
 tion, i. 349 note, 
 
 Porters, in London, Irish, i. 171. 
 
 Portico, assigned to Zeno, ii. 361. 
 
 Ports, bonded warehouses at twenty-five, 
 ii. 119. 
 
 Ports, free, a few in Europe, ii. 72. 
 
 Portugal, a beggarly country, i. 252 ; 
 foreign commerce of, i. 422; forbad 
 exportation of precious metals, ii. 3 ; 
 annual imports of spices to, ii. 17 ; 
 wine trade of, favoured, ii. 68 ; dis- 
 tributes gold and silver, ii. 86 ; beg- 
 garly policy of, ii. 118; treaty be- 
 tween, and England, ii. 123; disputes 
 between, and English merchants, ii. 
 125; Brazil, settlement of, ii. 148; 
 great naval power in fifteenth and 
 sixteenth centuries, ii. 149 ; policy of 
 trading companies in, ii. 155 ; its po- 
 licy with regard to tobacco, ii. 1 63 ; 
 despotism of, in colonies also, ii. 
 1 66 ; deteriorated by colonial posses- 
 sions, ii. 191 ; its colonies more ad- 
 vantageous to other countries than 
 
 to it, ii. 209 ; treaty with, effects of, 
 ii. 245. 
 
 Portugal, king of, his tax on gold, i. 224 ; 
 terms proposed to, ii. 127. 
 
 Portuguese, only nation who traded with 
 India in sixteenth century, i. 2 1 5 ; mo- 
 nopoly of, with East, ii. 22 ; tempted 
 by profits of Venetians, discoveries of, 
 ii. 137 ; strive to monopolize trade of 
 India, ii. 213; trade of, with India, 
 proves a company unnecessary, ii. 217; 
 carried on trade without exclusive 
 companies, ii. 218. 
 
 Portuguese colonies, right of Majorazzo 
 in, ii. 152. 
 
 Post-office, annually a source of revenue, 
 ii. 307 ; a mercantile project, why suc- 
 cessful, ii. 405 and note. 
 
 Potatoes, price of, i. 82 ; field of, its pro- 
 ductiveness of, use as food, i. 1 70 ; 
 cannot be stored, and this is a hin- 
 drance to their being a principal food, 
 i. 171 ; value of, as an article of food, 
 great, i. 255 ; plant of New World, ii. 
 
 139- 
 Potosi, mine of, discovered in 1545, i. 
 
 212. 
 
 Poultry, in farms, a save all, i. 235. 
 Pound, Roman, Tower, Troyes, Scotch, 
 
 i. 27, depreciation of weight in, i. 28 ; 
 
 of gold, coined into 44^ guineas, ii. 128. 
 Poundage, imposition of, ii. 476. 
 Poverty, its effects on life, on marriage, 
 
 on fecundity, i. 83 ; of a nation, not 
 
 relative to its stocks of gold and silver, 
 
 i. 250. 
 Power, wealth is, according to Hobbes, 
 
 i. 31- 
 
 Praetor, Roman, origin of office of, ii. 
 
 304- 
 
 Pragmatic sanction, policy of the, ii. 390. 
 
 Precious metals, high value of, in East, 
 i. 216; consumption of, by wear, i. 
 218; supply and distribution of, i. 
 248; amount between 1849-1868, i. 
 249 note ; liberated by note circulation, 
 how employed, i. 292 ; can always be 
 obtained, i. 343 ; exportation of, for- 
 bidden, ii. 3 ; supply of, better regu- 
 lated by demand, than any other thing, 
 ii. 8 ; clo not vary in value, partly be- 
 cause of easy transport, ii. 9 ; annual 
 importation of, for what, ii. 127 ; coined 
 more valuable than uncoined, ii. 1 29 ; 
 lack of, in America, explained, ii. 542. 
 
 Preference, system of, mischievous, ii. 272. 
 
 Premium in exchange, ii. 50. 
 
 Premiums on excellence excusable, ii. 98. 
 
 Presbyterians, clergy of, respectable, ii. 
 
 39 6 - 
 Price, real, i. 29 ; real, cost of acquiring,
 
 582 
 
 INDEX. 
 
 i. 31 ; determined by higgling, i. 32 ; 
 labour the real, money the nominal, i. 
 34 ; real and nominal, when they cor- 
 respond, i. 38 ; money, the author's 
 use of the term, i. 48 ; distribution of, 
 1.52; resolvable in three parts, i. 54 '> 
 market, what it is, i. 58 ; central, i. 60; 
 market, seldom long below the natural, 
 i. 65 ; rent enters into, i. 154 and note; 
 of corn, effect of rise on, by bounty, ii. 
 83 ; of corn, rise in, discourages con- 
 sumption, ii. 99 ; monopoly, when it 
 occurs, rent is reduced by a tax on the 
 article, ii. 490. 
 
 Prices, rise in, due to demand, overlooked 
 by dealers, i. 62 ; evidence of, scanty, 
 i. 1 88 ; rise of, not always caused by de- 
 gradation in value of silver, i. 227 ! l w . 
 no proof of barbarism, i. 252 ; of wheat, 
 i. 265 sqq. ; high, of foreign goods, 
 cheapen home products, ii. 495. 
 Primogeniture, origin and effects of, i. 
 386 ; hinders multiplication of small 
 proprietors, i. 418 ; not a general cus- 
 tom in English colonies, ii. 152. 
 Prodigal, how he perverts capital, i. 341. 
 Prodigality, hurtful to society, how, i. 
 
 293 and note. 
 
 Produce, never employed solely for the 
 industrious, i. 56 ; augmentation of, 
 twofold, ii. 261 ; small quantity of 
 manufactured brings much raw, ii. 
 262 : taxes on, in reality taxes on rent, 
 ii. 427 and note. 
 Produce, annual, its destination, i. 334 ; 
 
 how it can be increased, i. 346. 
 Produce, net, of economists, ii. 249 and 
 
 note; reproduced by farmer, ii. 259. 
 Produce, rude, three kinds of, i. 227 ; ex- 
 planation of, i. 364. 
 Production, variations in quantities of, 
 
 i. 61 ; consumption is end of, ii. 244. 
 Productive expenses of economists, ii. 
 
 250. 
 
 Productive labour, meaning of, i. 332 and 
 note; must be maintained before un- 
 productive can be, i. 335. 
 Productiveness, degrees of, in labour, 
 
 subject of First Book, i. 2. 
 Professions, why those who practise them, 
 
 get low relative earnings, i. HI. 
 Professors, Oxford, in Smith's time, ii. 
 
 34 6 - 
 
 Profit, origin and meaning of, i. 50 and 
 note ; ordinary or average rate of, i. 
 57; difficulty of determining its rate, 
 i. 92 ; double interest considered fair 
 rate of, i. 102 ; often wages in disguise, 
 i. 117? variations in rate of, due to 
 variations in price, i. 121 ; highest in 
 countries going to ruin, i. 264 and 
 
 note ; increase of capital, diminution 
 of, i. 356; prospect of, the motive 
 which influences capitalists, i. 379 ; in- 
 crease of mercantile, discouragement 
 of other industry, ii. 193 and note; 
 tends to proper level, ii. 212; parts of, 
 and how far taxable, ii. 440. 
 
 Profit and rent, eat up wages in old 
 countries, ii. 145. 
 
 Profit, rate of, affected by colonial system, 
 ii. 1 79 ; and sum of, distinguished, ii. 
 194 ; how regulated, ii. 442 ; not re- 
 duced in particular trades by taxation, 
 ii. 489. 
 
 Profits and interest, relations of, i. 337 
 and note. 
 
 Profits and wages, relations between, i. 66. 
 
 Profits, high, raise prices more than high 
 wages, i. 102 ; tend to equality, i. 103 ; 
 how they affect prices, i. 154; ten- 
 dency of, a minimum, ii. 216 and note; 
 tax on particular, paid by consumer, ii. 
 447 ; effects of taxing, in trade and 
 agriculture, ii. 450. 
 
 Progress, state of, advantageous to labour, 
 i. 86; gradual and imperceptible, 1.347; 
 declension of, how effected, ii. 358. 
 
 Progress of wealth, authorities for, i. 348 
 note. 
 
 Prohibition of some goods for home con- 
 sumption, ii. 75 ; effect of, in lowering 
 value, ii. 86 ; does not prevent smug- 
 gling, ii. 238. 
 
 Prohibitions on foreign goods, origin of, 
 ii. 69 ; removal of, advantageous to the 
 revenue, ii. 480. 
 
 Project, the colonial empire a costly, ii. 
 
 55. 
 
 Property, founded in labour, i. 128; more 
 exposed to risk than person, ii. 293. 
 
 Proprietor, East India, his qualification, 
 ii. 336 ; of land, a citizen of the coun- 
 try ; of stock, a citizen of the world, ii. 
 442. 
 
 Proprietors, great, seldom great im- 
 provers, i. 389 ; small, their passion for 
 improvement, i. 390 ; originally legis- 
 lators, i. 395 small, great improvers, 
 i. 397 ; small, hindered by primogeni- 
 ture, &c., i. 418 ; class of, ii. 248 ; fa- 
 voured more than cultivators, ii. 268. 
 
 Prosperity, of Great Britain, its causes, ii. 
 117; growth of, evidenced by increased 
 demand for houses, ii. 440. 
 
 Prostitutes, in London, Irish, and live on 
 potatoes, i. 171. 
 
 Protagoras, his ostentation, i. 141. 
 
 Protection in United States, i. 371 note. 
 
 Proverbs of Solomon, origin of, ii. 353. 
 
 Provinces, countries contributing neither 
 forces nor revenue, are not, ii. 549.
 
 INDEX. 
 
 583 
 
 Provisions, price of, its influence on la- 
 bour, i. 90; price of, in 17641 i. 161 ; 
 in hands of dealers form of circulating 
 capital, i. 280. 
 
 Provisions and wages, do not vary to- 
 gether, i. 78. 
 
 Provisions, salt, no injury to graziers in 
 importing, ii. 33. 
 
 Provisors, Statute of, ii. 390. 
 
 Prussia, troops of, excellent, ii. 283 and 
 note; ancient dominions of, land-tax 
 in, ii. 425 ; government of, attention of 
 to its land-tax, ii. 426 ; king of, taxes 
 Church revenue higher than lay, ib. ; 
 late and present king of, amassed 
 treasures, ii. 508. 
 
 Public affairs, share of management of, 
 gives local importance, ii. 204. 
 
 Public good, trading for, an affectation, 
 ii. 28. 
 
 Public schools in England, less corrupt 
 than universities, ii. 350. 
 
 Public works, cost of, by whom should it 
 be defrayed, ii. 403. 
 
 Puritans, English, founded New England, 
 ii. 169. 
 
 Purveyance, abolished in England only, 
 i. 396. 
 
 Pythagoras, school of, established in 
 Italy, ii. 146. 
 
 Q. 
 
 Quakers, liberation of slaves by, i. 391 ; 
 
 founded Pennsylvania, ii. 169 ; rule 
 
 of, in Pennsylvania, ii. 378. 
 Quantities, equal, of labour and corn, 
 
 i. 36- 
 
 Quesnai, M., his theory of the distribu- 
 tion of produce of land, ii. 257; a 
 physician, and a speculative one, ii. 
 258 ; leader of Economists, ii. 264. 
 
 Quito, growth of city of, ii. 147 ; price of 
 iron at, ii. 156. 
 
 R. 
 
 Rain, excessive, effects of, on corn, ii. 
 
 103. 
 Raleigh, Sir W., patents to, i. 144 ; 
 
 dream of, ii. 143 and note. 
 Ramazzini quoted on wages and diseases, 
 
 i. 86. 
 Rank, obligations enforced by society 
 
 on, ii. 380. 
 Ranks, inferior, contribute the largest 
 
 part of indirect revenue, ii. 484. 
 Rarities, price of, i. 228. 
 Rate, ordinary, average or natural, i. 57 ; 
 
 of profit differs from sum of profit, ii. 
 
 194. 
 Rates, book of, of 12 Charles II, but 
 
 customs began in the time of James I, 
 
 ii. 477 > very comprehensive and not 
 
 very intelligible, ii. 480. 
 Reason, human, could never by itself 
 
 have overthrown the Roman Church, 
 
 ii. 388. 
 Reformation, effect of teaching of, ii. 
 
 391- 
 
 Reformers, the, their appeals to the ori- 
 ginal languages of the Bible, ii. 352. 
 
 Regiam Majestatem, a Scotch law book, 
 i. 194. 
 
 Regimen, effects of, ii. 258. 
 
 Regimental bands, hardly supplied from 
 soldier's children, i. 83. 
 
 Register, record of leases in, ii. 421 ; of 
 deeds, how made a vehicle for a tax, 
 
 ii. 453- 
 Registers, secret, ought never to exist, ii. 
 
 453- 
 
 Registration, duties on, in Great Britain, 
 Holland. France, ii. 456-457 ; taxes on, 
 complained of in France, ii. 459. 
 
 Regulated companies, characteristics of, 
 ii. 317; their policy as to military estab- 
 lishments, ii. 320. 
 
 Regulation of trade by law, useless or 
 hurtful, ii. 29. 
 
 Relaxation, necessity of, i. 87. 
 
 Relief, feudal, incident of, ii. 455. 
 
 Religion, laws concerning, ii. 116; ex- 
 pense of instruction in, ii. 372 ; autho- 
 rity of, and how it may be used, ii. 
 382 ; costs of, by whom to be borne, 
 ii. 403. 
 
 Religious houses, destruction of, and 
 effects on pauperism, i. 144 and note. 
 
 Rent, perpetual, reservation of, should 
 not be in money, i. 35 ; origin of, i. 52 ; 
 enters into price, i. 56 and note ; ordi- 
 nary or average rate of, i. 57 ; what it 
 is, i. 151 and note; a monopoly price, 
 L 153 ; varies with fertility, i. 156 ; of 
 agricultural land, regulates other rents, 
 i. 168 ; proportion of, in coal mines, i. 
 1 78 ; of land, raised by every improve- 
 ment, i. 261 ; gross and net, distin- 
 guished, i. 284 ; due to superior pro- 
 ductiveness of farmer, i. 368 ; advance 
 of, by landlord, ii. 248 ; of all land less 
 than annual taxation, ii. 410 ; in Great 
 Britain, supposed to be a third of pro- 
 duce, ii. 41 1 ; taxation of, twofold, ii. 
 417; accrues with labour of the owner, 
 ii. 437 ; taxed indirectly by taxing 
 necessaries of labourer, ii. 468 and 
 note. 
 
 Rent and profit, eat up profits in old 
 countries, ii. 145. 
 
 Rents, fixed in money and corn, i. 37 ; 
 mediaeval, nature of, i. 336 and note ;
 
 INDEX, 
 
 rise in, since Middle Ages, i. 337 and 
 note ; in Great Britain, have risen 
 greatly, ii. 418; of West Indian colo- 
 nies remitted in sugar and rum, ii. 544. 
 
 Rents, corn, of 18 Elizabeth, i. 35. 
 
 Representation, of towns* origin of, i. 
 404 ; unknown in ancient times, ii. 
 206 ; in proportion to taxation, could be 
 made, ii. 207 ; must be conceded to 
 colonies, if taxation is extended, ii. 535. 
 
 Representatives, plan of colonial, in 
 British Parliament, ii. 204. 
 
 Republic, mercantile, money of, ii. 16 ; 
 Dutch, a cause of the grandeur of 
 Holland, ii. 505. 
 
 Republicans, oppose a standing army, ii. 
 290. 
 
 Republics, ancient, training in, ii. 279; 
 jealousy of, ii. 290. 
 
 Republics, Italian, rise of, i. 404 ; all in 
 debt, ii. 508 ; began funding system, 
 ii. 529. 
 
 Reputation, men are less prone to attack, 
 than property, ii. 293-. 
 
 Requisition, proposal that colonies should 
 be taxed by, ii. 201 ; parliamentary, 
 repudiated by colonists, ii. 204. 
 
 Restoration, contrast of public wealth at, 
 with at time of Elizabeth, i. 347. 
 
 Restraint, system of, mischievous, ii. 
 272. 
 
 Restraints, extraordinary on importation, 
 ii. 46. 
 
 Retail trade, competition in, i. 366 note. 
 
 Retailer, what his capital replaces, i. 
 366 ; capital of, local in its employ- 
 ment, i. 368. 
 
 Retaliation, in commerce, when excusable, 
 ii. 41. 
 
 Returns, frequency of, signs of commer- 
 cial prosperity, ii. 181. 
 
 Revenue, public, discussed in Fifth Book, 
 i. 4 ; home stock, origin of, i. 275 ; 
 private, in what it consists, i. 288 ; 
 net, improved by saving of expense, i. 
 290 ; supports unproductive labour, i. 
 335 ; spare, source for maintaining 
 unproductive labour, ih. and note ; 
 from people, and state, objects of poli- 
 tical economy, ii. i ; annual, of society, 
 value of its produce and industry, ii. 
 28 ; does not suffer by drawbacks, ii. 
 77 ; derived by Spain, caused some 
 attention to be given to her colonies, 
 ii. 147 ; seldom supplied by colonies, 
 ii. 1 74 ; and capital, affected by mono- 
 poly, ii. 190 ; should be contributed 
 by colony, to meet its costs, ii. 199; 
 the greater private, the more can the 
 sovereign be paid, ii. 221 and note ; 
 derived from administration of justice, 
 
 ii. 298 ; mediaeval, sources of, ii. 409 
 and note ; officers of, their probity and 
 religion a slender security, ii. 459 ; 
 public, impaired by mercantile system, 
 ii. 478 ; peace, of Great Britain, ii. 
 527; calculations of, by association of 
 Ireland and the colonies, ii. 539. 
 
 Revenue laws, most sanguinary where 
 taxes are let to farm, ii. 502. 
 
 Revolution, its effect on scarcity and 
 prosperity of Great Britain, ii. 118. 
 
 Revolutions, in Eastern Empire, provoked 
 by the clergy, ii. 383. 
 
 Rhode Island, expense of government in, 
 ii. 154. 
 
 Ricardo, Mr., his principles of political 
 economy, i. 29 note; on Smith's mea- 
 sure of value, i. 34 note ; his theory of 
 rent, i. 1 69 note ; cited on Scotch bank- 
 ing, i. 299 note; on minting money, 
 i. 302 note ; on Malthus, approving of 
 Smith's preference of agriculture, i. 
 367 note; on Smith's theory of com- 
 parative value of the employment of 
 capitals, i. 370 ; on Smith's theory that 
 a home is better than a foreign trade, 
 i. 373 note; his 'Political Economy' 
 cited, ii. 123 note; on taxation of 
 capital, ii. 415 note. 
 
 Rice, cheaper in China than in Europe, 
 i. 200 ; effects of drought on, ii. 103 ; 
 peasants in Bengal ordered to cultivate, 
 ii. 220. 
 
 Rice fields, productiveness of, rent of, 
 character of, i. 169. 
 
 Rich, expend revenues in luxury, i. i?4 > 
 should contribute to public expense in 
 excess of the proportion of their revenue, 
 
 ."435- 
 
 Rich man, or country, possessed of 
 money, ii. 2 ; countries, effects of mono- 
 poly granted to companies in, ii. 215. 
 
 Riches, in what those of Holland and 
 Genoa consist, i. 201 ; real, consist in 
 power of purchase, i. 289. 
 
 Riga, flax and hemp of, i. 374. 
 
 Riquet, engineer of the canal of Langue- 
 doc, ii. 309. 
 
 Risk of loss, must be anticipated in rates 
 of interest, i. 101. 
 
 Roads, expense of, how met, ii. 307 ; 
 expense of, by whom should it be borne, 
 ii. 403 and note. 
 
 Robert, King of France, excommunicated 
 by the Pope, ii. 390. 
 
 Roman colonies, not so prosperous as 
 Greek, ii. 146. 
 
 Romans adopted a natural law of suc- 
 cession, i. 387 ; early armies of, ii. 277 ; 
 after Punic war lessened their coin,
 
 INDEX. 
 
 585 
 
 Rome, copper money of, i. 40 ; necessity 
 of land to people in, ii. 136; social 
 war at. ii. 204 ; councils of Madras and 
 Calcutta sometimes as wise and reso- 
 lute as that of Rome, ii. 225 ; ancient 
 policy of, with regard to agriculture, 
 ii. 268 ; armies of, receive pay, ii. 
 278; militias of, ii. 282; armies of, 
 at Trebia, &c., ii. 286; late armies of, 
 standing, ib. ; armies of, relaxation of 
 discipline of, ii. 287 ; education in, ii. 
 359 ; study of civil law at, ii. 361 ; 
 distinctions conferred on proficiency by, 
 ii. 369 ; men of letters in, ii. 398. 
 
 Rome, Church of, claims to have emanci- 
 pated slaves, i. 393 ; its policy in 
 stimulating inferior clergy, ii. 374 ; 
 a formidable combination, ii. 388.- 
 
 Roots, for feeding, introduction of, i. 160. 
 
 Rouen, trade in, i. 338. 
 
 Roundabout trade, its deficient import- 
 ance, i. 374 ; less advantageous than 
 direct, ii. 66. 
 
 Royal African Company, privileges of, 
 and history of, ii. 326. 
 
 Royal Caroline, voyage of, in 1731, ii. 
 329- 
 
 Rubruquis, story told by, ii. 2 note. 
 
 Ruddiman, Mr., his opinion on prices, i. 
 194 ; his preface to Anderson cited, 
 i. 223 note, i. 296 note. 
 
 Rude produce, insufficient for carrying 
 on a foreign war, ii. 1 8 and note. 
 
 Ruffhead, Mr., his edition of the Statutes, 
 i. 193. 
 
 Ruffles, lace, rise in value of material by 
 labour, ii. 251. 
 
 Rufus, his dining-room, Westminster Hall, 
 i. 411. 
 
 Ruin, predictions of, ii. 71. 
 
 Rum, produce of Jamaica, i. 374 ; trade 
 in, ii. 159 ; a proper object of taxation, 
 ii. 538. 
 
 Rupture, expectation of with colonies, 
 induced terror, ii. 186. 
 
 Russia, predial slavery in, i. 390 ; army 
 of, in 1756, ii. 289; embassy in, its 
 origin, ii. 315 ; poll-tax on serfs in, ii. 
 451. 
 
 Russia and Turkey, peace between, ii. 
 1 88. 
 
 Russian Company, fine for admission to, 
 ii. 318. 
 
 Sail-cloth, bounty on, may be justified, 
 
 ii. 98. 
 Sailors, motives to follow calling of, i. 
 
 114; pay of, i. 115. 
 
 St. Christopher, completely cultivated, 
 
 " 545; 
 St. Domingo, discovery of, ii. 138 ; sugar 
 
 plantations of, ii. 168. 
 St. Maur, Dupre de, his work on corn 
 
 prices, i. 191 ; merits of his book, i. 
 
 1 96 ; has noticed a rise in the value of 
 
 silver, i. 209; prices collected by, i. 
 
 253. 
 
 St. Thomas, Danish colony, ii. 150. 
 St. Vincent's, a new acquisition, ii. 
 
 545- 
 
 Salaries, tax on, simultaneously with land- 
 tax, ii. 463. 
 
 Sales, taxes on, imposed, because thought 
 to be on the profits of merchants, ii. 
 
 497- 
 
 Salt, used as currency, i. 24 ; amount of, 
 imported for herrings, ii. 122; mono- 
 poly of, mischievous, ii. 502. 
 
 Salt, duty on imports of foreign, ii. 
 94, 470 ; collection of, costly, ii. 
 
 494- 
 
 Salt provisions, exported from Ireland 
 and America, i. 240. 
 
 Saudi, Istoria Civile, &c., cited, i. 467 
 note. 
 
 Santa Cruz, Danish colony, ii. 150. 
 
 Sanuto, his description of mediaeval tolls, 
 i. 399 note ; on the tolls of the Sultan 
 of Egypt, ii. 137 note. 
 
 Saracens, in time of Abassides, opulent, 
 i. 405. 
 
 Sardinia, taxes on bnse tenure in, ii. 426 ; 
 government of, its attention to land- 
 tax, ib. ; king of, his survey, ib. 
 
 Savages, hard and poor life of, i. 2 ; ex- 
 changes among, i. 16 ; spend most of 
 their time in getting food, i. 174; 
 set no value on gold and silver, i. 201 ; 
 inhabited St. Domingo, ii. 138. 
 
 Save-alls in farms, poultry, i. 235 ; pigs, 
 i. 236 ; dairy, i. 237. 
 
 Saving, motive towards, i. 344. 
 
 Saving of expense in machinery and 
 money, i. 290. 
 
 Savings, are always spent, i. 341. 
 
 Savoy and Piedmont, survey of hind of, 
 ii. 426. 
 
 Saxon Heptarchy, wealth at time of, i. 
 348. 
 
 Saxons, silver coins of, i. 40; kings of, 
 accumulated treasures, ii. 1 9. 
 
 Scarcity, effects of, on labour, i. 88, 91 ; 
 of money, common complaint, ii. 10; 
 effects of, never excessive, ii. 102 anil 
 note; years of, chief profit of corn 
 dealer in, ii. 104 ; risks of. obviated by 
 suspending the corn-law, ii. 113. 
 
 Scarcity and plenty, effects of, bounty 
 on, ii. 82.
 
 586 
 
 INDEX. 
 
 Scherif, Arabian, authority of, ii. 295. 
 
 Scholar and beggar, once nearly synony- 
 mous, i. 140. 
 
 Schools, parochial, cheapness and advan- 
 tage of, ii. 368, 
 
 Science, how it may be generally taught, 
 and its benefits, ii. 381. 
 
 Scipio, campaigns of, ii. 286. 
 
 Scotland, Highlands of, industries in, 
 i. 1 8, 19; price of labour in, i. 79 > 
 linen manufacture of, i. 89 ; rates of 
 interest in, i. 94 ; apprenticeships in, 
 i. 127; assize of bread in, i. 150; moors 
 of, pay rent, i. 155; rent of inclosed 
 land in, i. 160; poor of, feed on oat- 
 meal, i. 171 ; some coal mines in, must 
 be worked by landlord, i. 176; con- 
 version price in, i. 192 ; labourers in, 
 consume little meat, i. 198; poorer 
 than England, i. 200 ; price of meat 
 in, i. 231 ; agriculture in, before the 
 union, i. 232 ; dairies not profitable 
 in, i. 238 ; wool of, price after Union, 
 i. 246 ; banking companies in, i. 
 205 ; increase of trade of, silver 
 money of, in 1707, circulation of, i. 
 296 ; commerce of, i. 297 ; banks of, 
 required regular repayments from cus- 
 tomers, advantages of this system, i. 
 305 ; low forms of currency in. i. 324 ; 
 Optional Clause of bankers in, i. 327 ; 
 entails in, i. 389 ; Me"tayer tenants in, 
 i". 393 ; abolition of predial services in, 
 i. 396; could raise wine at a thirty- 
 fold expense, ii. 31 ; herring fisheries 
 of, ii. 95 ; herrings a common food in, 
 ii. 96 ; judge of Court of Session in, 
 ii. 304 ; parochial schools in, ii. 369 ; 
 reformation in, ii. 393 ; patronage of 
 benefices in, ii. 395 ; consumption of 
 malt liquors among people of, small, 
 ii. 540 ; effects of Union on, ii. 547. 
 
 Scotland, Church of, i. 139 ; its income, 
 ii. 400. 
 
 Scythia, militia of, formidable to Rome, 
 ii. 287. 
 
 Scythians, irruption of, effects of, on 
 Europe, i. 386 ; power of, according to 
 Thucydides, ii. 276. 
 
 Sea, voyage by, attempted by Portuguese, 
 ii. 137. 
 
 Seamen discharged at late war, where 
 engaged, ii. 43 ; can carry on any 
 trade anywhere after discharge, ii. 44. 
 
 Sea risks, insurance against, i. 113. 
 
 Secrets in manufacture, power of keeping, 
 i. 63. 
 
 Sects, religious, their lengue with poli- 
 tical parties, ii. 3J6; get proselytes 
 from the poor, ii. 379; morality of, 
 generally high, ii. 380. 
 
 Security of Amsterdam bank, ii. 61 and 
 note; of Great Britain, its cause, ii. 
 117. 
 
 Seebohm, Mr., his Oxford reformers 
 cited, ii. 352 note. 
 
 Seignorage, amount of, in France, ii. 
 129; if not exorbitant, would add to 
 bullion whole value of duty, ib. 
 
 Seius bought a white nightingale, i. 229. 
 
 Seller, certain taxes always fall on, ii. 
 458. 
 
 Senega gum, history of duties on, ii. 
 241 ; loaded with export duty, ii. 
 478. 
 
 Senegal, fort of, vested in African Com- 
 pany, ii. 322 ; conquest of, its effects 
 on English policy, ii. 478. 
 
 Servants, taxes on, ii. 452 and note. 
 
 Services, of tenants, ancient, i. 395. 
 
 Session, court of, fees of judges in, ii. 304. 
 
 Sestertius, value of, in Rome, i. 229 and 
 note. ' 
 
 Settlement, parochial, kernel of English 
 poor law, i. 143 ; sketch of law of, 
 i. 144; law of, should be repealed, 
 ii. 44. 
 
 Seymour, seat of family of, now an inn, 
 
 i- 35 1 -. 
 
 Sheep, killed in Spain for fleece and tal- 
 low, i. 241 ; exportation of, forbidden 
 by penalties, ii. 231. 
 
 Sheffield, wages in, i. 120; trade regula- 
 tions in, i. 125; goods, fall in price of, 
 i. 257. 
 
 Shells, use of, as money, i. 24. 
 
 Shepherds, most barbarous natives of 
 Africa and India were, ii. 218; mili- 
 tary force among, ii. 274; social state 
 of, admits great inequalities of fortune, 
 ii. 295 ; nations of, have old pedigrees, 
 ii. 296. 
 
 Shetland, stockings in, i. 123; fisheries 
 in, and rent paid, i. 153; herring 
 fisheries of, ii. 95. 
 
 Shillings, Scotch, their value in English 
 money, i. 190. 
 
 Shipping, object of legislature to increase, 
 ii. 158. 
 
 Shoes, leathern, use of, in England, ii. 
 467. 
 
 Shopkeepers, prejudice against, un- 
 founded, i. 365 ; people of customers, 
 for nation of shopkeepers, ii. 196. 
 
 Sicily, price of tithe wheat in, i. 229; 
 people of, produce silk and use silk 
 manufactures produced elsewhere, i. 
 369 ; source of silk, i. 407. 
 
 Silesia, lawns of, may be imported, ii. 
 46 ; land-tax in, ii. 425 ; taxes on 
 noble and base tenure in, ii. 426. 
 
 Silk, manufacture of, in France and
 
 INDEX. 
 
 587 
 
 England, i. 8 ; produced in Sicily, i. 
 369 ; from Sicily and Levant brought 
 into Italy in sixteenth century, i. 407 ; 
 raw, bounty on, ii. 230. 
 
 Silk-manufacture, might suffer by free 
 trade, ii. 42 and note. 
 
 Silk-weavers, byelaws of, i. 1 26. 
 
 Silver, variations in value of, i. 33 ; mea- 
 sure by, from year to year, i. 38 ; 
 value of, at English mint, i. 44 ; sel- 
 dom found virgin, i. 182 ; market for 
 civilised world, i. 186 ; price of, regu- 
 lated by demand and supply, ib. ; rise 
 in value of, i. 191 ; that its increase is 
 an increase of wealth, an error, i. 199 ; 
 a superfluity, i. 202 and note ; reduc- 
 tion of value of, when effected, i. 204 ; 
 value of, sank slowly, i. 211; market 
 for, more extensive, i. 212 ; more profit- 
 able than gold to India, its proportion 
 to gold, 1.217; gold and, proportionate 
 value of, i. 221; tax on, reduced, i. 
 224; sources of, i. 225 and note,; value 
 of, in Rome, i. 229 ; quantity of, not 
 relevant to rates of interest, i. 35 7 > 
 stationary supply, or arrested supply 
 of, effects of, i. 359 ; of Peru, i. 375 ; 
 rise in value of, ii. 81 ; degradation in 
 value of, of two kinds, ii. 85 ; effect 
 of regulations by Spain on exportation 
 of, ii. 86 ; rise in real value of, bene- 
 ficial, ii. 112 ; value of, nearly uniform 
 (since imposition of land-tax, ii. 419 
 
 Silver and gold, use of, as money, i. 25 ; 
 freely supplied by trade, ii. 7 ; in three 
 forms, ii. 13. 
 
 Silver coin, state of, in Great Britain, ii. 
 128. 
 
 Silver-mine, value of, i. 186. 
 
 Silver-mines in Europe, generally aban- 
 doned after discoveries in Peru, i. 129. 
 
 Sinking fund, origin of, ii. 516; fre- 
 quently misapplied, and why, ii. 521. 
 
 Situation affects rent, i. 156. 
 
 Sixpences, Bank of England has been 
 obliged to pay in, i. 321. 
 
 Skill, importance of, i. 2. 
 
 Skins, original materials of clothing, i. 
 172. 
 
 Slave, value of labour of, i. 72 ; expense 
 of maintaining, low value of his work, 
 i. 85 and note; use of, in agriculture, 
 manufacture, and trade, in Rome, ii. 
 136 ; negro, cultivates sugar, better 
 treated under despotism, ii. 167; 
 American, condition of, ii. 168 note, 
 
 Slave trade, Dutch, ii. 150. 
 
 Slavery, labour of, bad, i. 390 ; predial, 
 character of, ib. and note ; conse- 
 quences of, in ancient world, i. 391 
 and note ; prohibitions, impertinent 
 
 badges of, ii. 163; effects of, in agri- 
 culture, ii. 269 and note ; a tax not a 
 badge of, but of liberty, ii. 452. 
 
 Slit-mills prohibited in America, ii. 162. 
 
 Smith, Adam, political tenets of, ii. 291 
 note ; a Scotch commissioner of cus- 
 toms, ii. 416 nn'< . 
 
 Smith, Mr. Goldwin, his ' Empire ' cited, 
 ii. 204, 211 note. 
 
 Smith, Mr. John, his 'Memoirs of Wool' 
 cited, i. 242, ii. 235. 
 
 Smollett, his 'Humphrey Clinker' cited, 
 ii. 309 note ; his ' Adventures of Pere- 
 grine Pickle ' cited, ii. 358 note. 
 
 Smuggler, trade of, leads to bankruptcy, 
 i. 1 1 6 ; encouraged by the public, ii. 
 496. 
 
 Smuggling, of precious metals, easy, ii. 
 4; an evasion of monopoly, ii. 150; 
 not prevented by prohibition, ii. 238 ; 
 its relation to injudicious taxation, ii. 
 417; induced by mercantile system, 
 ii. 478; means to obviate, ii. 481 ; 
 not a crime against natural justice, ii. 
 496 ; risk of, in colonies, great, ii. 540. 
 D, taxes on, a tax on necessaries, ii. 
 471. 
 
 Social war, causes of, at Rome, ii. 204. 
 
 Societies should not prematurely force 
 manufactures, i. 370. 
 
 Society, civilised, requires co-operation, 
 i. 15 ; riches of, consist in what it can 
 purchase or consume, i. 289 ; agricul- 
 ture most advantageous to, i. 368 ; 
 advantage of, secured by individual 
 exertion, ii. 26. 
 
 Soil, peculiarities of, affecting produce, i. 
 63- 
 
 Soils, gradually occupied, in less fertile 
 regions, when population increases, i. 
 
 97- 
 
 Soldier, foot, pay of, in 1614, i. 81 ; trade 
 of, not distinct in antiquity, ii. 280. 
 
 Soldiers, children of, i. 83 ; employment 
 of, in handiwork, i. 86 ; readiness to 
 volunteer as, i. 114; unproductive 
 labourers, i. 333 and note; can carry 
 on any trade anywhere, after their 
 discharge, ii. 44 ; after a long peace 
 generals are inferior to, ii. 289. 
 
 Solomon, Proverbs of, ii. 350. 
 
 Solon, laws of, not best, but best possible, 
 ii. 1 20 ; law of, constraining parents 
 to educate their children, ii. 360. 
 
 Sophistry, directions in which it has had 
 influence, ii. 354. 
 
 Sound dues, revenue of, ii. 492 and note. 
 
 South Carolina, expense of government 
 in, ii. 154. 
 
 South Sea Company, purchases of Bank 
 of England .from, i. 320 ; capital of,
 
 I N D E Jt 
 
 ii. 326 ; history of, ii. 329 ; loan ad- 
 vanced by, ii. 514. 
 
 Sovereign, unproductive labourer, i. 333 
 and note; never quite lost power in 
 England, i. 404 ; revenue of, destroyed 
 by wrong done to people, ii. 221 ; great 
 and permanent revenue of, opposed to 
 little and transitory profit of mono- 
 polists, ii. 222; duties of, ii. 272; 
 expense of, requires a revenue, ii. 2 73 ; 
 judicial authority, not an expense, but 
 source of revenue, ii. 298 ; in early 
 tunes, a great landlord, ii. 299 ; sup- 
 port of dignity of, ii. 401 ; function of, 
 and that of trader, incompatible, ii. 
 406 ; attention of, vague compared 
 with that of individual owner, ii. 424 ; 
 hoards of, in primitive times, ii. 507. 
 
 Sovereigns, mediaeval position of, i. 402 ; 
 European, policy of, towards ecclesias- 
 tics, ii. 390. 
 
 Spain, sends iron to Chili and Peru, i. 
 179 ; gone backward in wealth, poor 
 in sixteenth century, i. 213; sheep 
 killed for fleece and tallow in, i. 241 ; 
 a beggarly country, i. 252 ; wool of, ma- 
 nufactured in Great Britain and cloth 
 sent back to Spain, i. 369 ; trade and 
 agriculture of, i. 421 ; forbad exporta- 
 tion of precious metals, ii. 3 ; anuual 
 imports of specie to, ii. 17; distributes 
 gold and silver, ii. 86 ; beggarly, taxes 
 in, ii. 118 ; government of, violent and 
 arbitrary, but forced to treat her colo- 
 nies with some discretion, ii. 147 ; 
 great naval power in fifteenth and six- 
 teenth century, claimed all America, 
 ii. 149 ; despotism of, in colonies, ii. 
 1 66 ; deteriorated by colonial posses- 
 sions, ii. 191 ; its colonies more advan- 
 tageous to other countries than to it, 
 ii. 209; war with, in 1739, " 2 ^9 > 
 alienation of, by retention of Gibraltar, 
 ii. 324 ; some universities in, do not 
 teach Greek, ii. 352 ; mischievous effects 
 of tax called Alcalvala in, ii. 498 ; 
 debts of, have enfeebled it, ii. 529. 
 
 Spain, king of, his tax on mines, i. 180, 
 212; his tax on gold, i. 224; de- 
 manded expulsion of British ships from 
 Portugal, ii. 127. 
 
 Spaniards, passion of, for gold, i. 185; 
 always asked in America for gold and 
 silver, ii. 2 ; animated by hopes of dis- 
 covering the Eldorado, ii. 143. 
 
 Spanish armies, when^conquering Mexico, 
 found difficulty in getting food, i. 214. 
 
 Spanish colonies, progress of, rapid, ii. 
 147 ; right of Majorazzo in, ii. 152. 
 
 Spanish government, effects of, on com- 
 merce of Flanders, i. 423. 
 
 Spanish mines, supposed to have lowered 
 rates of interest, i. 357. 
 
 Spanish writers, exaggerate importance 
 of Mexico and Peru, ii. 22. 
 
 Speculation, men of (i.e. inventors), their 
 use, i. ii ; an occasional source of 
 wealth, i. 119 ; systems of, adopted for 
 frivolous reasons, ii. 354. 
 
 Speke, Capt., his travels referred to, i. 24 
 note. 
 
 Spendthrifts, kings and ministers, the 
 greatest, i. 350. 
 
 Spice islands, Dutch strive to exclude all 
 from, ii. 213 ; policy of Dutch in, ii. 219. 
 
 Spiceries of Moluccas, i. 216. 
 
 Spices, destroyed by Dutch, ii. 101. 
 
 Spinners, three or four to one weaver, ii. 
 227. 
 
 Spirits, taxes on, ii. 488 ; consumption 
 of, discouraged by legislature, ii. 489. 
 
 Spitalfields, silk-weavers of, i. 407. 
 
 Stamp Act, repeal of, popular with mer- 
 chants, and why, ii. 186. 
 
 Stamp Act, American, repeal of, i. 89. 
 
 Stamp duties, on legal proceedings, their 
 convenience, ii. 303 ; on covenants, how 
 imposed, ii. 453 ; in Great Britain and 
 Holland, ii. 456 ; in France, ii. 457. 
 
 State, wisdom of, makes the soldier's a 
 separate profession, ii. 280. 
 
 States, great, currency of; small, cur- 
 rency of, ii. 53. 
 
 Statesmen, folly of, in affecting to direct 
 the employment of capitals, ii. 29. 
 
 Statistics, agricultural, advantage of, ii. 
 101 note. 
 
 Staves, bounty on, ii. 230. 
 
 Steel, price of, at Quito, ii. 156. 
 
 Steel-bow tenants, Scotch form of occu- 
 pancy, i. 393. 
 
 Steel mills, prohibited in America, ii. 162. 
 
 Stewart, house of, its erroneous policy, 
 ii. 384. 
 
 Stock, origin and employment of, i. 50 ; 
 increase of, lowers profit, i. 92 ; pro- 
 fits of, affected favourably and ad- 
 versely, as wages are, i. 105 ; not 
 stored in rude ages of society, i. 273 ; 
 accumulation of, leads to improvement, 
 i. 274 ; always when security is pre- 
 sent, men employ stock in three ways, 
 i. 282 ; at interest, is a capital to 
 lender, i. 353 ; quantity of, which can 
 be lent, how regulated, i. 355 ; in- 
 crease of, diminishes interest, i. 356 ; 
 easily capable of removal, ii. 442 ; 
 taxes on, will not affect rates of in- 
 terest, ii. 452. 
 
 Stock, mercantile, seeks most profitable 
 employment, ii. 211 ; unproductive, 
 ii. 251.
 
 INDEX. 
 
 589 
 
 Stockings, price of, in Shetland isles, i. 
 123 ; knit, not known temp. Edw. IV, 
 i. 259. 
 
 Stone quarries, not rented except con- 
 venient, i. 173. 
 
 Stowe, an ornament to England, i. 351. 
 
 Stupidity, gross, effects of, ii. 371. 
 
 Suabia, house of, its decline, growth of 
 towns under, i. 403. 
 
 Subordination, civil, causes which intro- 
 duce, ii. 294. 
 
 Subsidy, old, nature of, ii. 74 ; old, re- 
 tained on foreign goods exported to 
 English colonies by 4 George III, ii. 
 164; old, amount of, and why five 
 ultimately imposed, ii. 477. 
 
 Subsistence, prior to luxury, i. 382. 
 
 Substitutions, in Roman law, i. 388. 
 
 Success, chances of, affect wages, i. 1 10. 
 
 Succession, natural law of, among Ro- 
 mans, i. 387. 
 
 Successions, Dutch tax on, ii. 454. 
 
 Sugar, use of, as money, i. 21 ; supply, 
 and prices of, i. 166; produce of Ja- 
 maica, i. 374 ; profits of cultivating 
 make slave labour possible, i. 391 ; 
 drawbacks on exported, ii. 75 ; refined, 
 bounty on, nature of, ii. 98 ; colonial 
 produce of, ii. 158 ; checks to refining, 
 in colonies, ii. 161 ; in St. Domingo, 
 successful cultivation of, ii. 1 68 ; effects 
 additional tax on, ii. 491 ; a proper 
 object of taxation, ii. 538. 
 
 Sum of profit differs from rate of profit, 
 ii. 194. 
 
 Sumptuary law restraining use of cloth, 
 i. 259. 
 
 Sumptuary laws, impertinence of, i. 350 
 and note. 
 
 Superstition, its attempted explanations 
 of natural phenomena, ii. 353 ; mis- 
 chief of, ii. 372 ; antidotes to, ii. 381. 
 
 Supply, corresponds to demand, i. 197. 
 
 Surinam, colony of, Dutch, ii. 150. 
 
 Surplus, causes leading to the exporta- 
 tion of, i. 378. 
 
 Surplus produce, of country, makes town 
 industry possible, i. 382. 
 
 Sussex, restrictions on wool trade in, 
 ii. 233. 
 
 Sweden, carrying trade of, i. 378 note; 
 Pitch and Tar Company of, ii. 160 ; 
 East India Company of, ii. 215 : estab- 
 lishment of Reformation in, ii. 392. 
 
 Swedes, trade of, with India, i. 215; 
 settled in New Jersey, ii. 1 50. 
 
 Swift, Dr., saying of, ii. 478. 
 
 Switzerland, republics of, i. 404 ; can- 
 tons of, may be necessary to forbid 
 exportation of corn from, ii. 116; 
 militia of, ii. 282, 371 ; militias of, 
 
 their victories, ii. 288; intolerance of 
 Protestant cantons in, ii. 400. 
 
 Syracuse, ancient, wealth of, ii. 146. 
 
 System, good, not necessarily departed 
 from, ii. 115. 
 
 T. 
 
 Table, Economical, of Quesnai, ii. 257. 
 
 Tables, New, a clamour of Roman 
 populace, ii. 533. 
 
 Taille, French, nature of, i. 396 ; per- 
 sonal, a tax in France, ii. 447 ; real 
 and personal, their difference, ii. 449 ; 
 mode of levying, ib. ; mischievous 
 effects of levying, ii. 451 ; in France, 
 on wages, ii. 462. 
 
 Tailors, wages of, in London, i. 109 ; law 
 fixing their wages, i. 149. 
 
 Talents, natural, differences in, not really 
 great, i. 16. 
 
 Tallage, ancient character of, i. 396. 
 
 Tarentum, rapid growth of, ii. 146. 
 
 Tartar, history written by a, i. 417 ; 
 chief, his questions to Piano Carpino, ii. 2. 
 
 Tartars, taxes levied by, on traders, 
 i. 399 ; chiefs of, keep treasures, ii. 
 19; incursions of, ii. 276; militia of, 
 good, ii. 284; life of, ii. 294; influ- 
 ence of wealth among, ib. ; chiefs of, 
 have hoards, ii. 508. 
 
 Tavernier, on diamonds, i. 183. 
 
 Tax, effect of, in raising value, ii. 86 ; 
 on commodities, paid by consumer, ii. 
 132 ; on exportation of wool, how 
 justified, ii. 237 ; not a badge of 
 slavery, but liberty, ii. 452 ; on trans- 
 ference, its incidence, ii. 547 ; on ne- 
 cessary expense, its real incidence, ii. 
 485 ; none will reduce profits in par- 
 ticular trades, ii. 489. 
 
 Taxation, incidence of, ii. 39 ; retaliatory, 
 how far justified, ii. 40 ; moderation 
 of, in English colonies, ii. 153 ; how it 
 could be effected in colonies, ii. 200 ; 
 by requisition, proposal of, ii. 201 ; 
 principle of, founded on division of 
 labour or employments, ii. 403 note ; 
 Smith's four principles of, ii. 414 
 and note ; uncertainty a grievance in, 
 ii. 464 ; of consumable commodities, of 
 two kinds, ii. 473 ; sometimes an in- 
 strument, not of revenue, but of mono- 
 poly, ii. 479 ; British, best system of, 
 ii- 53; extension of British, to colonies, 
 
 " 535- 
 
 Taxes, paid out of produce, i. 377; levied 
 on goods in England, their ancient 
 names, i. 399 ; on subsistence, are said 
 to raise prices of produce, ii. 38 ; two, 
 levied by bounty on corn, ii. 82 ; all, fall 
 on rent, say Economists, ii. 420 ; high,
 
 590 
 
 INDEX. 
 
 often do not create so good a revenue 
 
 as moderate, ii. 481 ; on luxuries, 
 
 obstruct industry, ii. 495 ; annual, of 
 
 land and malt, anticipated, ii. 512; 
 
 new, murmured at, ii. 521. 
 Taxgatherer, examination of, odious, ii. 
 
 417; visits of, odious, ii. 497. 
 Tea, a drug little known in seventeenth 
 
 century, its present imports, i. 215 ; 
 
 imported despite of sanguinary laws, 
 
 price of, ii. 8. 
 Teachers, low payments of, i. 140; effects 
 
 of endowments on, ii. 345 ; private, 
 
 low status of, and why, ii. 363 ; most 
 
 able men of antiquity were, ii. 398. 
 Temporary statutes, necessity of, proves 
 
 impropriety of general one, ii. 113. 
 Tenancies, small, benefit of, i. 419. 
 Tenant, cannot improve when landlord 
 
 does not, ii. 528. 
 Tenants, in England, trust to honour of 
 
 landlords, i. 394; on lease, indepen- 
 dent, i. 417. 
 
 Tender, legal, in England, 1.41. 
 Tenure, noble and base, land-tax on, in 
 
 Prussia, ii. 425 ; ignoble, taxes on, ii. 
 
 448. 
 Territory, acquisition of new, may raise 
 
 profits, i. 98 and note. 
 Teutonic order, land-tax of comman- 
 
 deries of, ii. 425. 
 Thales, school of, established in Asia, ii. 
 
 146. 
 Theocritus, quoted as to low earnings of 
 
 fishermen, i. 105. 
 
 Theognis, verses of, their object, ii. 353. 
 Theology, physics made inferior to, in 
 
 Europe, ii. 355. 
 Thorn, William, his record of prices in 
 
 1309, i. 1 88. 
 Thornton, Mr., on peasant proprietors, 
 
 i. 4 1 9 note. 
 Thucydides, on relations of colonies and 
 
 mother country, ii. 135 note; on power 
 
 of Scythians, ii. 276; on invasions of 
 
 Attica, cited, ii. 277; on use of linen, 
 
 ii. 466 note. 
 
 Tillage, effects of bounty on, i. 208 ; sup- 
 posed to be encouraged by bounty, ii. 
 
 82. 
 
 Timaeus, quoted by Pliny, i. 25. 
 Timber, value of, in America, raised, ii. 
 
 161 ; American, bounty on, ii. 229. 
 Time, saving of, in division of labour, 
 
 i. 10. 
 Tin, sixth part of produce, rent of, i. 
 
 179 ; mining for, customs of, i. i8r. 
 Tithe, hindrance of, to cultivation, 1.393; 
 
 a real land-tax, ii. 399 ; character of, 
 
 unequal, ii. 428. 
 Tithes, not known in colonies, ii. 154. 
 
 Tobacco, use of, as money, i. 24 ; culti- 
 vation of, i. 167 ; produce of Virginia, 
 i. 374 ; amount of, annually exported ; 
 consumption in Great Britain, i. 378 ; 
 can be cultivated by slaves, and why, 
 i. 392 ; exports and imports of, ii. 74 ; 
 policy of Portugal about, ii. 163; 
 effects of restraint on trade in, ii. 1 76 ; 
 farm of, in France, ii. 502 ; a proper 
 object of taxation, ii. 538; a currency 
 in tobacco colonies, ii. 543. 
 
 Tobacco-pipe clay, exportation of, for- 
 bidden, ii. 238. 
 
 Tobago, a new acquisition, ii. 545. 
 
 Tolls, payment of, who defrays, ii. 307 ; 
 never should be private property, ii. 
 309; on turnpikes, amount of, ii. 310 
 and note ; levy of, effect of, on com- 
 merce, ii. 492. 
 
 Tonnage, European, with India, i. 216. 
 
 Tonnage, imposition of, ii. 476. 
 
 Tonnage bounty, on herring busses, ii. 93 ; 
 leads to fraud, charges of, ii. 95 ; 
 amount of, ii. 121. 
 
 Tonquin, vessels of, at Batavia, ii. 219. 
 
 Tontines, a form of life annuity, ii. 517. 
 
 Tot, M., Du, cited, i. 318. 
 
 Toulouse, judges in Parliament of, their 
 salaries, ii. 302. 
 
 Tower pound, its weight, i. 27 and note. 
 
 Town, stock needed in, greater than in 
 village, i. 94 ; draws its subsistence 
 from country in two ways, i. 131 ; com- 
 merce between, and country, i. 381 ; 
 a continual fair at market, i. 384 ; effect 
 of, upon industry of a country, ii. 262. 
 
 Town and country, prices in, i. 1 1 8. 
 
 Towns, some industries peculiar to, i. 1 8 ; 
 great, corn dear in, i. 201 and note ; 
 favoured after fall of Roman empire, i. 
 
 398- 
 
 Trade, differences of, in large and small 
 towns, i. 119; profit of, i. 131 ; for- 
 tunes gained in, i. 1 32 ; wholesale, kinds 
 of, i. 372 ; each kind of, when advan- 
 tageous, i. 377 ; gain of, mutual and 
 reciprocal, i. 38 r ; freedom of, supplies 
 with wine, why not with gold, ii. 7 ; 
 voluntary, always advantageous to 
 both, ii. 63 ; supported by bounty, 
 losing, ii. 91 ; how great branches of, 
 can be naturally carried on, ii. 217 ; 
 protection of, may justify a tax, ii. 316 ; 
 in land, in Great Britain nearly free, 
 ii. 498 ; thought disgraceful in a land- 
 holder, ii. 507. 
 
 Trade, Board of, its control of Com- 
 panies, ii. 319. 
 
 Trade, carrying, employment of capital 
 in, i. 376 ; effect of great wealth, i. 
 378 and note.
 
 INDEX. 
 
 591 
 
 Trade disputes, power of masters in, i. 70. 
 
 Trade, encouragement of, Act for, ii. 76. 
 
 Trade, foreign, real benefits of, ii. 20; 
 disregarded in China, ii. 265. 
 
 Trade, home, advantages of, i. 373 ; sup- 
 ports more productive labour than 
 foreign, i. 377. 
 
 Trader, function of, and sovereign in- 
 compatible, ii. 406. 
 
 Traders, conspire against the public, i. 
 135 ; influenced by passionate con- 
 fidence of interested falsehood, ii. 71. 
 
 Traders, retail, profit of, in small towns, 
 i. 117. 
 
 Trades, wages higher in new, than in 
 old, i. 120. 
 
 Tradesmen, prejudice against, unfounded, 
 i. 365 ; underling, sneaking arts of, ii. 
 68. 
 
 Trading country, revenue of, great, and 
 why, ii. 262. 
 
 Traites, a form of French customs, ii. 
 
 499- 
 Transference, of property, how taxable, 
 
 ii- 453 5 taxes on, unequal, ii. 458. 
 Transmission, taxes on, ii. 453. 
 Transportation of corn, prohibition of, 
 
 in France abolished, ii. 264. 
 Travel, modern habit of, ii. 357. 
 Travellers, taxes anciently levied on, i. 
 
 399 ! weak and wondering, accounts of, 
 
 " 3i3- 
 
 Treasure, foreign trade means of enlarg- 
 ing, ii. 4 ; seldom accumulated by 
 princes, ii. 14. 
 
 Treasure-trove, once source of revenue to 
 monarchs, i. 282 ; frequent in past 
 times, ii. 507. 
 
 Treasures, where collected by princes, ii. 
 19. 
 
 Treaty, Methuen, supposed to be a mas- 
 terpiece, ii. 1 24 ; with Portugal, effects 
 of, ii. 245. 
 
 Tribunes, stock argument of, ii. 136. 
 
 Triclinaria, price of, ii. 270. 
 
 Troll, Archbishop of Upsal, his tyranny, 
 
 ii. 39 2 - . 
 
 Troyes, fair of, i. 27. 
 
 Truck system, i. 150 and note. 
 
 Trust, affects wages, i. 1 10. 
 
 Trustees of turnpike roads recently in- 
 stituted, ii. 309. 
 
 Tudors, vigorous administration of, i. 195. 
 
 Tumbrel and Pillory, statute of, i. 194. 
 
 Turdi, feeding of, by Komans, i. 235. 
 
 Turgot, M., his 'Distribution of Wealth,' 
 i. i note; his opinion on rent, i. 151 
 note; on comparative advantages of 
 different trades, ii. 26 note; on divi- 
 sion of industry, ii. 248 note. 
 
 Turkey, hoarding in, i. 282. 
 
 Turkey and Russia, peace between, ii. 
 
 188. 
 Turkey Company, fine for admission to, 
 
 ii. 318. 
 
 Turks, Mamelukes and Venetians ene- 
 mies of, ii. 137. 
 Turnips, price of, i. 82. 
 Turnpike roads, extension of, resisted by 
 
 counties near London, i. 156. 
 Turnpike tolls, what would be the effect 
 
 if they became a resource of Govern- 
 - ment, ii. 492. 
 Turnpikes in Great Britain, management 
 
 of, ii. 309. 
 
 Twelve Tables, laws of, studied, ii. 361. 
 Tyler, his rebellion, ii. 451 note. 
 Two and two, sum of, in customs, not 
 
 four, but often one, ii. 478. 
 Tyrrell, his 'History of England' cited, 
 
 ii. 298 note. 
 
 U. 
 
 Ulloa, on price of oxen, i. 157 ; on Peru- 
 vian mines, i. 180 ; on prices in Buenos 
 Ayres, i. 197 ; his estimate of the 
 population of Lima, i. 214; on growth 
 of Lima and Quito, ii. 147 and note; 
 on price of iron at Quito, ii. 156. 
 
 Uncertainty, a grievance in taxation, ii. 
 464. 
 
 Underling tradesmen, sneaking arts of, 
 ii. 68. 
 
 Undertakers, let out certain kinds of fur- 
 niture as capital, i. 278. 
 
 Undertakers of manufactories, how they 
 employ capital, i. 285 and note. 
 
 Underwald, property tax in, ii. 444. 
 
 Union, the, opened market to Highland 
 cattle, i. 158 ; advantages of, to Scot- 
 land, i. 233; effects of, on price of 
 Scotch wool, i. 246 ; its advantage to 
 trade, i. 339; effects of, in Scotland, 
 similar results in Ireland, ii. 547. 
 
 United Provinces, republic of, enfeebled 
 by debts, ii. 529. 
 
 United States, protection in, i. 371 note ; 
 exchange between, and England, ii. 
 50 note. 
 
 'Universities,' ancient use of this word, 
 i. 126. 
 
 Universities, gave licences to beg, i. 140 ; 
 value of, to letters, ii. 350; teachers 
 in, their courses, ii. 356 ; chair in, 
 generally better than a benefice, and 
 effects of such a rule, ii. 397. 
 Universities, European, system of philo- 
 sophy in, ii. 354. 
 Universities, French, administration of, 
 
 " 347- . 
 
 Unproductive class, useful to proprietors 
 and farmers, ii. 253.
 
 592 
 
 INDEX. 
 
 Unproductive expenditure, little of, in 
 new colonies, ii. 145 note. 
 
 Unproductive labour, meaning of, i. 332 
 and note. 
 
 Unwholesomeness, compensated by in- 
 creased wages, i. 115. 
 
 Upholsterers, let out furniture as their 
 capital, i. 278. 
 
 Use, economical meanings of, i. 29 and 
 note. 
 
 Ustaritz, on the Alcalvala of Spain, ii. 
 498. 
 
 Usurpers, why hated, ii. 296. 
 
 Usury, prohibited and disgraceful, ii. 
 
 507- 
 Utensils in manufactures, exportation 
 
 of, prohibited, ii. 243. 
 Utility, partly cause of value of precious 
 
 metals, i. 182 ; sacrifice of justice to, ii. 
 
 116; cause of ancient colonisation, ii. 
 
 137. 
 
 V. 
 
 Valuation, difference of corn and money, 
 ii. 430 and note. 
 
 Value, meanings of, i. 29 ; labour real 
 measure of, i. 30 and note ; exchange- 
 able, of produce and industry, annual 
 revenue of society, ii. 28 ; everybody 
 tries to extract greatest, from his in- 
 dustry, ib. ; of corn, not raised by 
 bounty, but that of silver degraded, ii. 
 84 ; real, of corn, does not vary of 
 silver, does, ii. 91 ; analysis of arti- 
 ficers' labour in relation to, ii. 260. 
 
 Value, measure of, labour, i. 197; corn, 
 i. 198 ; corn becomes, at distant times, 
 i. 209 ; money, ii. 2. 
 
 Vanity in personal expenditure, cause of 
 the downfall of feudal power, i. 415. 
 
 Varro, on kitchen gardens, i. 163 ; cited 
 as to feeding thrushes, i. 235. 
 
 Vasco de Gama, voyage of, ii. 137. 
 
 Vasco Nugnes de Balboa, voyage of, to 
 Darien, ii. 141. 
 
 Vassal, feudal, could not alienate without 
 consent, ii. 455. 
 
 Vedius Pollio, his cruelty to slaves, ii. 
 168. 
 
 Vegetable food, when its price is cheap, 
 and why, i. 255. 
 
 Veii. siege of, and changes after, ii. 277. 
 
 Vendible commodity, labour of menials is 
 not fixed in, ii. 260. 
 
 Venetians, trade of, with Egypt, ii. 137. 
 
 Venice, history of, peculiar, i. 404 ; 
 profited by Crusades, i. 406 ; introduc- 
 tion of silk manufacture into, i. 407 ; 
 Bank money of, ii. 52 ; origin of Bank 
 of, ii. 53 ; Bank of, ii. 405 ; tax on 
 
 land in, ii. 420 ; enfeebled by funding 
 
 system, ii. 529. 
 
 Venison, price of, in England, i. 235. 
 Verjuice, taxes on, ii. 488. 
 Verney, M. Du, cited, i. 318 and note. 
 Versailles, an ornament to France, i. 3 5 1 . 
 Vicesima hereditatum, Komau tax, ii. 
 
 454- 
 
 Villenage extinction of, i. 392 ; hist 
 traces of, i. 401 note. 
 
 Vine, great varieties of, i. 165. 
 
 Vinegar, tax on, ii. 488. 
 
 Vineyard, doubtful whether advantageous 
 to plant, i. 163. 
 
 Vineyards, French, rents of, i. 64. 
 
 Vingtieme, French, nature of, ii. 452. 
 
 Virginia, cultivates tobacco, i. 167 ; 
 drawbacks of, ii. 74 ; expense of 
 government in, ii. 154. 
 
 Visiapour, diamond mines of, i. 183. 
 
 Voltaire, on professors in French uni- 
 versities, ii. 398. 
 
 Vulgate, Latin, its authority, ii. 352. 
 
 W. 
 
 Wages, sometimes confounded with pro- 
 fits, i. 56 ; ordinary or average rate of, 
 i. 5 7 ; do not fall below subsistence, 
 i. 71 ; increase of, i. 73 ; summer and 
 winter, i. 77 > vary from place to 
 place, i. 78 ; do not vary with price of 
 provisions, ib.; cannot be regulated 
 by law, i. 82 ; high, effect of upon in- 
 dustry, i. 86 ; increase of, raises prices, 
 i. 91 ; do not sink with profits of stock, 
 i. 97 ; tend to equality, i. 103 ; inequa- 
 lities of, and causes of these inequalities, 
 i. 104 ; affected by cost of learning the 
 craft, i. 106 ; higher in new than in old 
 trades, i. 120; how they affect prices, 
 i. 154; when highest, i. 263; how 
 raised, i. 357 ; manufacturers wish to 
 keep down, ii. 228 ; tax on, its effects 
 absurd and destructive, ii. 461, 462 ; 
 how regulated, ii. 467. 
 
 Wages and profits, relations between i. 
 66. 
 
 Waggon, time taken to traverse road 
 from Edinburgh to London, i. 19. 
 
 Wakefield, Mr. Gibbon, his correction of 
 Smith's use of the word 'fund,' i. i 
 note ; prefers ' division of employment ' 
 to 'division of labour,' i. 5 note; his 
 comment on Smith's motive force of 
 exchange, i. 16 note; ascribes produc- 
 tiveness of labour to energy of labour- 
 ers, i. 1 8 note ; on power of exchanging, 
 i. 23 note. 
 
 Wales, old families common in, i. 41 7. 
 
 Walpole, Sir Robert, his endeavours to
 
 I N D E X. 
 
 593 
 
 prevent the war of 1739, ii. 198 note; 
 excise scheme of, ii. 483. 
 
 War, unsuccessful, its effects on banking 
 and paper money, i. 322 ; effects of, on 
 commerce, i. 483 ; number of persons 
 discharged at end of, ii. 43 ; art of, its 
 effects, in expense, ii. 278; art of, 
 noble, but complicated, ii. 280 ; ex- 
 pense of, great, in modern times, ii. 409. 
 
 War, Seven Years', a colony quarrel, ii. 
 197. 
 
 War, Spanish, of 1739, chiefly a colony 
 quarrel, ii. 197. 
 
 Warden, Mr. A., his work on the linen 
 trade, i. 95 note, ii. 466 note. 
 
 Warehouse, rent of, for gold, ii. 56. 
 
 Warehouse, bonded, for corn, by 13 
 Geo. Ill, ii. 119. 
 
 Warehouses, bonded, system of, recom- 
 mended, ii. 482. 
 
 Warrants, general, clamour against, i. 
 149. 
 
 Wars, cost of, i. 348. 
 
 Warwick, Earl of, his hospitality, i. 411. 
 
 Watch-cases, exportation of, prohibited, 
 ii. 239. 
 
 Watch-making, can be learned without 
 long apprenticeship, i. 129. 
 
 Watches, fall in price of, i. 257. 
 
 Water-mills, not known in England at 
 beginning of sixteenth century, i. 260 
 and note. 
 
 Way, money a high-, banking a waggon- 
 way in air, i. 322. 
 
 Wealth, is power according to Hobbes, i. 
 31 ; if stationary, wages are not high, 
 i. 74 ; that it increases with silver, an 
 error, i. 199; increase of, necessitates 
 an increase of precious metals, ib. ; 
 land, the, of a country, i. 254 and note ; 
 thought to consist in money, ii. i ; 
 consists, not in money, but in goods, 
 ii. 10 ; of foreigners, advantageous in 
 peace, ii. 69 ; great, an excuse for 
 great folly, ii. 98 ; true, encouraged 
 by encouragement of population and 
 improvement, ii. 146 ; disposition of, 
 according to Economists, ii. 256 ; pro- 
 vokes aggression, ii. 281 ; growth of, 
 how it caused the downfall of the 
 Church, ii. 389. 
 
 Weaver, three or four spinners needed to 
 one, ii. 227. 
 
 ' Weigh and* pay,' rule of London port, 
 ii. 184. 
 
 Weighing gold, custom of, ii. 131. 
 
 West of England, clothiers of, in seven- 
 teenth century, ii. 318. 
 
 West Indies, trade of, considered by 
 some politicians to be advjintageous, ii. 
 544. See Indies. 
 
 VOL. II. O 
 
 Westminster, land-tax assessment in, ii. 
 
 444- 
 Westminster Hall, dining-room of Bufus, 
 
 i. 411. 
 Whale fishery, bounty on, ii. 92 note ; 
 
 British, unprofitable character of, ii. 
 
 158; of South Sea Company, its losses, 
 
 " 33- 
 
 Wheat, price of, in 1601-12, 1757-64, i. 
 161 note; price of, in 1350, i. 187 and 
 note; exportation of, restricted, i. 190 ; 
 dearer in Scotland than in England, 
 i. 200; prices of, 1595-1620, i. 203 
 note; price of, in Rome, i. 229 ; price 
 of, never yet 8o., ii. 113; price of, 
 1259-1582,1. 270. 
 
 Wheel, great, of circulation, money, i. 
 287, 290. 
 
 Whites, condition of lowest in the Plant- 
 ations, mostly superior to that of 
 English poor, ii. 541. 
 
 Wilberforce, Mr., his 'Social Life in 
 Munich,' quoted, i. 65 note, i. 127 
 note. 
 
 William III, unable to refuse the country 
 gentlemen anything, i. 208 ; degene- 
 racy of currency in time of, ii. 50 ; re- 
 coinage in time of, ii. 512 ; mode of 
 borrowing in time of, ii. 513 ; in time 
 of, annuities created, ii. 516. 
 
 Wills and legacies, tax on, ii. 454 note. 
 
 Wilton, an ornament to England, i. 351. 
 
 Windmills, not known in beginning of 
 the sixteenth century, i. 260 and 
 note. 
 
 Window-tax, establishment of, ii. 439. 
 
 Wine, could be raised in Scotland at a 
 thirtyfold expense, ii. 31 ; duties on, 
 what if taken away, ii. 67 ; cheapness 
 of, cause of sobriety, ib. 
 
 Wine, French, trade of hardware for, ii. 
 12. 
 
 Wine, Madeira, how it became popular, 
 ii. 76. 
 
 Wine, trade of, in France, subject to re- 
 straints, ii. 500. 
 
 Wines, choice, effects of tax on, ii. 490. 
 
 Wisdom, deliberate, the Navigation Laws, 
 
 ii- 37- 
 
 Witchcraft, fear of engrossing and fore- 
 stalling like fear of, ii. in. 
 
 Wolverhampton, not affected by appren- 
 ticeship statutes, i. 127. 
 
 Wombs, beaver, duties on, ii. 242. 
 
 Women, in Scotland, their fecundity, i. 
 83 ; among Tartars, fight, ii. 275 ; 
 education of, good, ii. 364. 
 
 Wood, almost valueless in Scotch High- 
 lands, i. 173; fire, price of, i. 1 76 ; 
 planting, as advantageous as corn or 
 pasture, i. 177.
 
 594 
 
 IN D E X. 
 
 Wool, English, trade in, i. 173 and note ; 
 price of, in middle ages, i. 242 and note ; 
 price of, lowered by violence, i. 243 ; 
 in mediaeval times, i. 406 ; exportation 
 of, made a felony, ii. 232 ; restrictions 
 on inland commerce of, ii. 233 ; coast- 
 ing trade in, restrictions on, ii. 234 ; 
 price of, lowered to less than temp. 
 Edw. Ill, ii. 235 ; said to be peculiarly 
 fine, but falsely so, ib. ; tax on ex- 
 portation of, how justified, ii. 237 ; 
 export of, prohibited, ii. 478 ; prices of, 
 i. 423. 
 
 Wool, market of, foreign, i. 241. 
 
 Wool, Scotch, lowered in price by regu- 
 lations, ii. 235. 
 
 Wool, Spanish, manufactured in Great 
 Britain, i. 369 ; origin of, i. 408 note; 
 fine cloth made entirely of, ii. 235 ; 
 imported duty free, ii. 478. 
 
 Wool-cards, importation of, except from 
 Ireland, forbidden, ii. 226. 
 
 Woolcombers, power of monopolising 
 market by, i. 132. 
 
 Woollen cloth, multitude of contributor ies 
 to the manufacture of, i. 12. 
 
 Woollen goods, cannot be produced in 
 one American colony for sale in an- 
 other, ii. 162. 
 
 Woollen manufactures, early seats of, in 
 England, i. 260 note; severity of laws 
 for maintaining, ii. 231. 
 
 Woollen yarn, exportation of, forbidden, 
 ii. 239. 
 
 Woollens, coarse, of England, their su- 
 periority, i. 9 ; no great fall in price 
 of, i. 257. 
 
 Work, finished, in hands of dealers, a 
 form of circulating capital, i. 280. 
 
 ' Workhouse,' term used for factory or 
 
 workshop, i. 5. 
 Workmen, get best discipline from their 
 
 customers, i. 136 ; capital of, i. 364 ; 
 
 advantageous to, that trades should be 
 
 free, ii. 67. 
 
 Y. 
 
 Yams, plant of New World, ii. 139. 
 Yarn, linen importation of, encouraged, 
 
 ii. 227. 
 Year 1740, great scarcity of, i. 91 ; 1309, 
 
 prices of, i. 189 note; 1761, expense 
 
 of, ii. 17. 
 Yeomanry, inferior class in Europe, i. 
 
 397 ; prosperity of, i. 421 and note. 
 York and Lancaster, contrast of wealth 
 
 at end of wars of, and at Norman Con- 
 quest, i. 347. 
 Yorkshire, linen manufacture of, i. 89 ; 
 
 paper currencies of, i. 328. 
 Young, Arthur, his prices of labour, i. 79 
 
 note; on small tenancies, i. 419 note. 
 
 Z. 
 
 Zama, battle of, and armies engaged in, 
 ii. 286. 
 
 Zeal of religious teachers, when dan- 
 gerous, ii. 377. 
 
 Zealand, expense of, to keep out the sea, 
 ii. 505. 
 
 Zeno, of Citta, teaching of, ii. 360 ; 
 founder of Stoics, ii. 361. 
 
 Zuinglius, followers of, their policy, ii. 
 
 394- 
 
 Zurich, establishment of Reformation in, 
 ii. 392 ; income-tax in, ii. 445.
 
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