Adam Smith

The Wealth of Nations

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 Table of contents
BOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE 
POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS
PRODUCE IS NATURALLY DISTRIBUTED AMONG THE DIF- FERENT RANK
S OF THE PEOPLE.  

CHAPTER I. OF THE DIVISION OF LABOUR. 

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

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

CHAPTER IV. OF THE ORIGIN AND USE OF MONEY. 

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

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

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

CHAPTER VIII. OF THE WAGES OF LABOUR. 

CHAPTER IX. OF THE PROFITS OF STOCK. 

CHAPTER X. OF WAGES AND PROFIT IN THE DIFFERENT 
EMPLOYMENTS OF LABOUR AND STOCK. 
PART I. Inequalities arising from the nature of the employments themselves. 

CHAPTER XI. OF THE RENT OF LAND. 

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

CHAPTER I. OF THE DIVISION OF STOCK. 

CHAPTER II. OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF 
THE GENERAL STOCK OF THE SOCIETY, OR OF THE EXPENSE OF 
MAINTAINING THE NATIONAL CAPITAL. 

CHAPTER III. OF THE ACCUMULATION OF CAPITAL, OR OF
PRODUCTIVE AND UNPRODUCTIVE LABOUR. 

CHAPTER IV. OF STOCK LENT AT INTEREST. 
CHAPTER V. OF THE DIFFERENT EMPLOYMENTS OF CAPITALS.  

BOOK III. OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT 
NATIONS  

CHAPTER I. OF THE NATURAL PROGRESS OF OPULENCE.

CHAPTER II. OF THE DISCOURAGEMENT OF AGRICULTURE IN THE 
ANCIENT STATE OF EUROPE, AFTER THE FALL OF THE ROMAN EMPIRE. 

CHAPTER III. OF THE RISE AND PROGRESS OF CITIES AND TOWNS, 
AFTER THE FALL OF THE ROMAN EMPIRE. 

CHAPTER IV. HOW THE COMMERCE OF TOWNS CONTRIBUTED TO THE 
IMPROVEMENT OF THE COUNTRY.  

BOOK IV. OF SYSTEMS OF POLITICAL ECONOMY.  
CHAPTER I. OF THE PRINCIPLE OF THE COMMERCIAL OR MERCANTILE 
SYSTEM. 

CHAPTER II. OF RESTRAINTS UPON IMPORTATION FROM FOREIGN 
COUNTRIES OF SUCH GOODS AS CAN BE PRODUCED AT HOME. 

CHAPTER IV. OF DRAWBACKS. 

CHAPTER V. OF BOUNTIES. 

CHAPTER VI. OF TREATIES OF COMMERCE. 

CHAPTER VII. OF COLONIES. 

CHAPTER VIII. CONCLUSION OF THE MERCANTILE SYSTEM. 

APPENDIX TO BOOK IV 

 BOOK V.  
CHAPTER I. OF THE EXPENSES OF THE SOVEREIGN OR 
COMMONWEALTH. 

CHAPTER II. OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE 
OF THE SOCIETY. 

APPENDIX TO ARTICLES I. AND II.-Taxes upon the Capital Value of Lands, Hou
ses, and Stock. 

CHAPTER III. OF PUBLIC DEBTS. 
BOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS
OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS
NATURALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE
PEOPLE.  The annual labour of every nation is the fund which originally supplies it with all
the necessaries and conveniencies of life which it annually consumes, and which consist
always either in the immediate produce of that labour, or in what is purchased with that
produce from other nations. According, therefore, as this produce, or what is purchased with it,
bears a greater or smaller propor- tion to the number of those who are to consume it, the nation
will be better or worse supplied with all the necessaries and conveniencies for which it has
occasion. But this proportion must in every nation be regulated by two different circumstances:
first, by the skill, dexterity, and judgment with which its labour is generally applied; and,
secondly, by the proportion between the number of those who are employed in useful labour,
and that of those who are not so em- ployed. Whatever be the soil, climate, or extent of
territory of any particular nation, the abundance or scantiness of its annual supply must, in that
particular situation, depend upon those two circumstances. The abundance or scantiness of this
supply, too, seems to depend more upon the former of those two circumstances than upon the
latter. Among the savage nations of hunters and fishers, every individual who is able to work is
more or less employed in useful labour, and endeavours to provide, as well as he  can, the
necessaries and conveniencies of life, for himself, and such of his family or tribe as are either
too old, or too young, or too infirm, to go a-hunting and fishing. Such nations, however, are so
miserably poor, that, from mere want, they are frequently reduced, or at least think themselves
reduced, to the neces- sity sometimes of directly destroying, and sometimes of abandoning
their infants, their old people, and those afflicted with lingering diseases, to perish with hunger,
or to be devoured by wild beasts. Among civi- lized and thriving nations, on the contrary,
though a great number of people do not labour at all, many of whom consume the produce of
ten times, frequently of a hundred times, more labour than the greater part of those who work;
yet the produce of the whole labour of the society is so great, that all are often abundantly
supplied; and a workman, even of the lowest and poorest order, if he is frugal and
indus- trious, may enjoy a greater share of the necessaries and conveniencies of life than it is
possible for any sav- age to acquire. The causes of this improvement in the productive powers
of labour, and the order according to which its produce is naturally distributed among the
different ranks and conditions of men in the society, make the subject of the first book of this
Inquiry. Whatever be the actual state of the skill, dexterity, and judgment, with which labour is
applied in any nation, the abundance or scantiness of its annual supply must depend, during the
continuance of that state, upon the proportion between the number of those who are annually
employed in useful labour, and that of those who are not so employed. The number of useful
and productive labourers, it will here- after appear, is everywhere in proportion to the quantity
of capital stock which is employed in setting them to work, and to the particular way in which
it is so employed. The second book, therefore, treats of the nature of capital stock, of the
manner in which it is gradually accumulated, and of the different quan- tities of labour which it
puts into motion, according to the different ways in which it is employed. Nations tolerably
well advanced as to skill, dexterity, and judgment, in the application of labour, have followed
very different plans in the general conduct or direction of it; and those plans have not all been
equally favourable to the greatness of its produce. The policy of some nations has given
extraordinary encouragement to the industry of the country; that of others to the industry of
towns. Scarce any nation has dealt equally and impartially with every sort of industry. Since
the down-fall of the Roman empire, the policy of Europe has been more favourable to arts,
manufactures, and commerce, the industry of towns, than to agriculture, the Industry of the
country. The circumstances which seem to have introduced and established this policy are
explained in the third book. Though those different plans were, perhaps, first introduced by the
private interests and prejudices of particular orders of men, without any regard to, or foresight
of, their consequences upon the general wel- fare of the society; yet they have given occasion
to very different theories of political economy; of which some magnify the importance of that
industry which is carried on in towns, others of that which is carried on in the country. Those
theories have had a considerable influence, not only upon the opinions of men of learning, but
upon the public conduct of princes and sovereign states. I have endeavoured, in the
fourth book, to explain as fully and distinctly as I can those different theories, and the principal
effects which they have produced in different ages and nations. To explain in what has
consisted the revenue of the great body of the people, or what has been the na- ture of those
funds, which, in different ages and nations, have supplied their annual consumption, is
the object of these four first books. The fifth and last book treats of the revenue of the
sovereign, or common- wealth. In this book I have endeavoured to shew, first, what are the
necessary expenses of the sovereign, or commonwealth; which of those expenses ought to be
defrayed by the general contribution of the whole society, and which of them, by that of some
particular part only, or of some particular members of it: sec- ondly, what are the different
methods in which the whole society may be made to contribute towards de- fraying the
expenses incumbent on the whole society, and what are the principal advantages and
inconve- niencies of each of those methods; and, thirdly and lastly, what are the reasons and
causes which have in- duced 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. 

CHAPTER I. OF THE DIVISION OF LABOUR.  The greatest improvements in the

productive powers of labour, and the greater part of the skill, dexterity, and judgment, with
which it is anywhere directed, or applied, seem to have been the effects of the division of
labour. The effects of the division of labour, in the general business of society, will be more
easily understood, by considering in what manner it operates in some par- ticular
manufactures. It is commonly supposed to be carried furthest in some very trifling ones;  not
perhaps that it really is carried further in them than in others of more importance: but in  those
trifling manufactures which are destined to supply the small wants of but a small number  of
people, the whole number of workmen must necessarily be small; and those employed in
every different branch of the work can often be collected into the same workhouse, and placed
at once under the view of the spectator. In those great manufactures, on the contrary, which are
destined to supply the great wants of the great body of the people, every different branch of the
work employs so great a number of workmen, that it is impossible to collect them all into the
same workhouse. We can seldom see more, at one time, than those employed in one single
branch. Though in such manufactures, therefore, the work may really be divided into a much
greater number of parts, than in those of a more trifling nature, the division is not near so
obvious, and has accordingly been much less ob- served. To take an example, therefore, from a
very trifling manufacture, but one in which the division of labour has been very often taken
notice of, the trade of a pin-maker: a workman not educated to this business (which the
division of labour has rendered a distinct trade), nor acquainted with the use of the machinery
employed in it (to the invention of which the same division of labour has  probably given
occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly
could not make twenty. But in the way in which this business is now carried on, not  only the
whole work is a peculiar trade, but it is divided into a number of branches, of which the greater
part are likewise peculiar trades. One man draws out the wire; another straights it; a third  cuts
it; a fourth points it; a fifth grinds it at the top for receiving the head; to make the head
re- quires two or three distinct operations; to put it on is a peculiar business; to whiten the pins
is an- other; it is even a trade by itself to put them into the paper; and the important business of
making a pin is, in this manner, divided into about eighteen distinct operations, which, in some
manufac- tories, are all performed by distinct hands, though in others the same man will
sometimes per- form two or three of them. I have seen a small manufactory of this kind, where
ten men only were employed, and where some of them consequently performed two or three
distinct operations. But though they were very poor, and therefore but indifferently
accommodated with the necessary machinery, they could, when they exerted themselves, make
among them about twelve pounds of pins in a day. There are in a pound upwards of four
thousand pins of a middling size. Those ten persons, therefore, could make among them
upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of
forty-eight thousand pins, might be considered as mak- ing four thousand eight hundred pins in
a day. But if they had all wrought separately and inde- pendently, and without any of them
having been educated to this peculiar business, they certainly could not each of them have
made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth,
perhaps not the four thousand eight hundredth, part of what they are at present capable of
performing, in consequence of a proper division and combination of their different
operations. In every other art and manufacture, the effects of the division of labour are similar
to what they are in this very trifling one, though, in many of them, the labour can neither be so
much subdivided, nor reduced to so great a simplicity of operation. The division of labour,
however, so far as it can be introduced, occasions, in every art, a proportionable increase of the
productive powers of labour. The separation of different trades and employments from one
another, seems to have taken place in consequence of this advantage. This separation, too, is
generally carried fur- thest in those countries which enjoy the highest degree of industry and
improvement; what is the work of one man, in a rude state of society, being generally that of
several in an improved one. In every improved society, the farmer is generally nothing but a
farmer; the manufacturer, nothing but a manufacturer. The labour, too, which is necessary to
produce any one complete manu- facture, is almost always divided among a great number of
hands. How many different trades are employed in each branch of the linen and woollen
manufactures, from the growers of the flax and the wool, to the bleachers and smoothers of the
linen, or to the dyers and dressers of the cloth! The nature of agriculture, indeed, does not
admit of so many subdivisions of labour, nor of so complete a separation of one business from
another, as manufactures. It is impossible to separate so entirely the business of the grazier
from that of the corn-farmer, as the trade of the carpenter is commonly separated from that of
the smith. The spinner is almost always a distinct person from the weaver; but the ploughman,
the harrower, the sower of the seed, and the reaper of the corn, are often the same. The
occasions for those different sorts of labour returning with the different seasons of the year, it
is impossible that one man should be constantly employed in any one of them. This
impossibility of making so complete and entire a separation of all the different  branches of
labour employed in agriculture, is perhaps the reason why the improvement of the productive
powers of labour, in this art, does not always keep pace with their improvement
in manufactures. The most opulent nations, indeed, generally excel all their neighbours in
agri- culture as well as in manufactures; but they are commonly more distinguished by their
superi- ority in the latter than in the former. Their lands are in general better cultivated, and
having more labour and expense bestowed upon them, produce more in proportion to the
extent and natural fertility of the ground. But this superiority of produce is seldom much more
than in proportion to the superiority of labour and expense. In agriculture, the labour of the rich
country is not always much more productive than that of the poor; or, at least, it is never so
much more productive, as it commonly is in manufactures. The corn of the rich country,
therefore, will not always, in the same degree of goodness, come cheaper to market than that of
the poor. The corn of Poland, in the same degree of goodness, is as cheap as that of France,
notwithstanding the superior opulence and improvement of the latter country. The corn of
France is, in the corn-provinces, fully as good, and in most years nearly about the same price
with the corn of England, though, in opulence and improvement, France is perhaps inferior to
England. The corn-lands of England, however, are better cultivated than those of France, and
the corn-lands of France are said to be much better cultivated than those of Poland. But though
the poor country, notwithstanding the inferiority of its cultivation, can, in some measure, rival
the rich in the cheapness and goodness of its corn, it can pretend to no such competition in its
manufactures, at least if those manufactures suit the soil, climate, and situation, of the rich
country. The silks of France are better and cheaper than those of England, because the silk
manufacture, at least under the present high duties upon the importation of raw silk, does not
so well suit the climate of England as that of France. But the hardware and the coarse woollens
of England are beyond all comparison superior to those of France, and much cheaper, too, in
the same degree of goodness. In Poland there are said to be scarce any manufactures of any
kind, a few of those coarser household manufactures excepted, without which no country can
well subsist. This great increase in the quantity of work, which, in consequence of the division
of labour, the same number of people are capable of performing, is owing to three different
circumstances; first, to the increase of dexterity in every particular workman; secondly, to the
saving of the time which is commonly lost in passing from one species of work to another;
and, lastly, to the inven- tion of a great number of machines which facilitate and abridge
labour, and enable one man to do the work of many. First, the improvement of the dexterity of
the workmen, necessarily increases the quantity of the work he can perform; and the division
of labour, by reducing every man's business to some one simple operation, and by making this
operation the sole employment of his life, necessarily increases very much the dexterity of the
workman. A common smith, who, though accustomed to handle the hammer, has never been
used to make nails, if, upon some particular occasion, he is obliged to attempt it, will scarce, I
am assured, be able to make above two or three hundred nails in a day, and those, too, very bad
ones. A smith who has been accustomed to make nails, but whose sole or principal business
has not been that of a nailer, can seldom, with his utmost dili- gence, make more than eight
hundred or a thousand nails in a day. I have seen several boys, under twenty years of age, who
had never exercised any other trade but that of making nails, and who, when they exerted
themselves, could make, each of them, upwards of two thousand three hundred nails in a day.
The making of a nail, however, is by no means one of the simplest opera- tions. The same
person blows the bellows, stirs or mends the fire as there is occasion, heats the iron, and forges
every part of the nail: in forging the head, too, he is obliged to change his tools.  The different
operations into which the making of a pin, or of a metal button, is subdivided, are all of them
much more simple, and the dexterity of the person, of whose life it has been the sole business
to perform them, is usually much greater. The rapidity with which some of the opera- tions of
those manufactures are performed, exceeds what the human hand could, by those who had
never seen them, be supposed capable of acquiring. Secondly, The advantage which is gained
by saving the time commonly lost in passing from one sort of work to another, is much greater
than we should at first view be apt to imagine it. It is impossible to pass very quickly from one
kind of work to another, that is carried on in a different place, and with quite different tools. A
country weaver, who cultivates a small farm, must loose a good deal of time in passing from
his loom to the field, and from the field to his loom. When the two trades can be carried on in
the same workhouse, the loss of time is, no doubt, much less. It is, even in this case, however,
very considerable. A man commonly saunters a little in turning his hand from one sort of
employment to another. When he first begins the new work, he is seldom very keen and hearty;
his mind, as they say, does not go to it, and for some time he rather trifles than applies to good
purpose. The habit of sauntering, and of indolent careless application, which is naturally, or
rather necessarily, acquired by every country workman who is obliged to change  his work and
his tools every half hour, and to apply his hand in twenty different ways almost every day of
his life, renders him almost always slothful and lazy, and incapable of any
vigorous application, even on the most pressing occasions. Independent, therefore, of his
deficiency in point of dexterity, this cause alone must always reduce considerably the quantity
of work which he is capable of performing. Thirdly, and lastly, everybody must be sensible
how much labour is facilitated and abridged by the application of proper machinery. It is
unnecessary to give any example. I shall only ob- serve, therefore, that the invention of all
those machines by which labour is so much facilitated and abridged, seems to have been
originally owing to the division of labour. Men are much more likely to discover easier and
readier methods of attaining any object, when the whole attention of their minds is directed
towards that single object, than when it is dissipated among a great variety of things. But, in
consequence of the division of labour, the whole of every man's attention comes naturally to be
directed towards some one very simple object. It is naturally to be expected, therefore, that
some one or other of those who are employed in each particular branch of labour should soon
find out easier and readier methods of performing their own particular work, when-  ever the
nature of it admits of such improvement. A great part of the machines made use of in those
manufactures in which labour is most subdivided, were originally the invention of
common workmen, who, being each of them employed in some very simple operation,
naturally turned their thoughts towards finding out easier and readier methods of performing it.
Whoever has been much accustomed to visit such manufactures, must frequently have been
shewn very pretty machines, which were the inventions of such workmen, in order to facilitate
and quicken their own particular part of the work. In the first fire engines {this was the current
designation for steam engines}, a boy was constantly employed to open and shut alternately
the communication between the boiler and the cylinder, according as the piston either ascended
or descended. One of those boys, who loved to play with his companions, observed that, by
tying a string from the han- dle of the valve which opened this communication to another part
of the machine, the valve would open and shut without his assistance, and leave him at liberty
to divert himself with his play-fellows. One of the greatest improvements that has been made
upon this machine, since it was first invented, was in this manner the discovery of a boy who
wanted to save his own labour. All the improvements in machinery, however, have by no
means been the inventions of those who had occasion to use the machines. Many
improvements have been made by the ingenuity of the makers of the machines, when to make
them became the business of a peculiar trade; and some by that of those who are called
philosophers, or men of speculation, whose trade it is not to do any thing, but to observe every
thing, and who, upon that account, are often capable of com- bining together the powers of the
most distant and dissimilar objects in the progress of society, philosophy or speculation
becomes, like every other employment, the principal or sole trade and occupation of a
particular class of citizens. Like every other employment, too, it is subdivided into  a great
number of different branches, each of which affords occupation to a peculiar tribe or class of
philosophers; and this subdivision of employment in philosophy, as well as in every other
busi- ness, improve dexterity, and saves time. Each individual becomes more expert in his own
peculiar branch, more work is done upon the whole, and the quantity of science is considerably
increased by it. It is the great multiplication of the productions of all the different arts, in
consequence of the division of labour, which occasions, in a well-governed society, that
universal opulence which ex- tends itself to the lowest ranks of the people. Every workman has
a great quantity of his own work to dispose of beyond what he himself has occasion for; and
every other workman being exactly in the same situation, he is enabled to exchange a great
quantity of his own goods for a great quan- tity or, what comes to the same thing, for the price
of a great quantity of theirs. He supplies them abundantly with what they have occasion for,
and they accommodate him as amply with what he has occasion for, and a general plenty
diffuses itself through all the different ranks of the society. Observe the accommodation of the
most common artificer or daylabourer in a civilized and thriving country, and you will perceive
that the number of people, of whose industry a part, though but a small part, has been
employed in procuring him this accommodation, exceeds all computation. The woollen coat,
for example, which covers the day-labourer, as coarse and rough as it may appear, is the
produce of the joint labour of a great multitude of workmen. The shep- herd, the sorter of the
wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the
dresser, with many others, must all join their different arts in order to com- plete even this
homely production. How many merchants and carriers, besides, must have been employed in
transporting the materials from some of those workmen to others who often live in a  very
distant part of the country? How much commerce and navigation in particular, how many ship-
builders, sailors, sail-makers, rope-makers, must have been employed in order to bring
to- gether the different drugs made use of by the dyer, which often come from the remotest
corners of the world? What a variety of labour, too, is necessary in order to produce the tools
of the mean- est of those workmen! To say nothing of such complicated machines as the ship
of the sailor, the mill of the fuller, or even the loom of the weaver, let us consider only what a
variety of labour is requisite in order to form that very simple machine, the shears with which
the shepherd clips the wool. The miner, the builder of the furnace for smelting the ore, the
feller of the timber, the burn- er of the charcoal to be made use of in the smelting-house, the
brickmaker, the bricklayer, the workmen who attend the furnace, the millwright, the forger, the
smith, must all of them join their different arts in order to produce them. Were we to examine,
in the same manner, all the different parts of his dress and household furniture, the coarse linen
shirt which he wears next his skin, the shoes which cover his feet, the bed which he lies on,
and all the different parts which compose it, the kitchen-grate at which he prepares his victuals,
the coals which he makes use of for that purpose, dug from the bowels of the earth, and
brought to him, perhaps, by a long sea and a long land-carriage, all the other utensils of his
kitchen, all the furniture of his table, the knives and forks, the earthen or pewter plates upon
which he serves up and divides his victuals, the different hands employed in preparing his
bread and his beer, the glass window which lets in the heat and the light, and keeps out the
wind and the rain, with all the knowledge and art requi- site for preparing that beautiful and
happy invention, without which these northern parts of the world could scarce have afforded a
very comfortable habitation, together with the tools of all the different workmen employed in
producing those different conveniencies; if we examine, I say, all these things, and consider
what a variety of labour is employed about each of them, we shall be sensible that, without the
assistance and co-operation of many thousands, the very meanest per- son in a civilized
country could not be provided, even according to, what we very falsely imagine, the easy and
simple manner in which he is commonly accommodated. Compared, indeed, with the more
extravagant luxury of the great, his accommodation must no doubt appear extremely simple
and easy; and yet it may be true, perhaps, that the accommodation of an European prince  does
not always so much exceed that of an industrious and frugal peasant, as the accommodation  of
the latter exceeds that of many an African king, the absolute masters of the lives and liberties
of ten thousand naked savages. 

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

OF LABOUR.  This division of labour, from which so many advantages are derived, is not
originally the ef- fect of any human wisdom, which foresees and intends that general opulence
to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a
certain propensity in human nature, which has in view no such extensive utility; the propensity
to truck, barter, and ex- change one thing for another. Whether this propensity be one of those
original principles in human nature, of which no further account can be given, or whether, as
seems more probable, it be the necessary conse- quence of the faculties of reason and speech, it
belongs not to our present subject to inquire. It is common to all men, and to be found in no
other race of animals, which seem to know neither this nor any other species of contracts. Two
greyhounds, in running down the same hare, have some- times the appearance of acting in
some sort of concert. Each turns her towards his companion, or endeavours to intercept her
when his companion turns her towards himself. This, however, is not the effect of any contract,
but of the accidental concurrence of their passions in the same object at that particular time.
Nobody ever saw a dog make a fair and deliberate exchange of one bone for  another with
another dog. Nobody ever saw one animal, by its gestures and natural cries signify to another,
this is mine, that yours; I am willing to give this for that. When an animal wants to ob-  tain
something either of a man, or of another animal, it has no other means of persuasion, but
to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a
spaniel en- deavours, by a thousand attractions, to engage the attention of its master who is at
dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren,
and when he has no other means of engaging them to act according to his inclinations,
endeavours by every servile and fawning attention to obtain their good will. He has not time,
however, to do this upon every occasion. In civilized society he stands at all times in need of
the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to
gain the friendship of a few persons. In almost every other race of animals, each individual,
when it is grown up to maturity, is entirely independent, and in its natural state has occasion
for the assistance of no other living creature. But man has almost constant occasion for the help
of his brethren, and it is in vain for him to ex- pect it from their benevolence only. He will be
more likely to prevail if he can interest their self- love in his favour, and shew them that it is
for their own advantage to do for him what he re- quires of them. Whoever offers to another a
bargain of any kind, proposes to do this. Give me that which I want, and you shall have this
which you want, is the meaning of every such offer; and it is in this manner that we obtain
from one another the far greater part of those good offices which we stand in need of. It is not
from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but
from their regard to their own interest. We address ourselves, not to their humanity, but to their
self-love, and never talk to them of our own necessities, but of their advantages. Nobody but a
beggar chooses to depend chiefly upon the benevolence of his fellow- citizens. Even a beggar
does not depend upon it entirely. The charity of well-disposed people, in- deed, supplies him
with the whole fund of his subsistence. But though this principle ultimately provides him with
all the necessaries of life which he has occasion for, it neither does nor can  provide him with
them as he has occasion for them. The greater part of his occasional wants are supplied in the
same manner as those of other people, by treaty, by barter, and by purchase. With the money
which one man gives him he purchases food. The old clothes which another bestows upon him
he exchanges for other clothes which suit him better, or for lodging, or for food, or for money,
with which he can buy either food, clothes, or lodging, as he has occasion. 

As it is by treaty, by barter, and by purchase, that we obtain from one another the greater
part of those mutual good offices which we stand in need of, so it is this same trucking
disposition which originally gives occasion to the division of labour. In a tribe of hunters or
shepherds, a par- ticular person makes bows and arrows, for example, with more readiness and
dexterity than any other. He frequently exchanges them for cattle or for venison, with his
companions; and he finds at last that he can, in this manner, get more cattle and venison, than
if he himself went to the field to catch them. From a regard to his own interest, therefore, the
making of bows and arrows grows to be his chief business, and he becomes a sort of armourer.
Another excels in making the frames and covers of their little huts or moveable houses. He is
accustomed to be of use in this way to his neighbours, who reward him in the same manner
with cattle and with venison, till at last he finds it his interest to dedicate himself entirely to
this employment, and to become a sort of house- carpenter. In the same manner a third
becomes a smith or a brazier; a fourth, a tanner or dresser of hides or skins, the principal part
of the clothing of savages. And thus the certainty of being able to exchange all that surplus part
of the produce of his own labour, which is over and above his own consumption, for such parts
of the produce of other men's labour as he may have occasion for, encourages every man to
apply himself to a particular occupation, and to cultivate and bring to perfection whatever
talent of genius he may possess for that particular species of business. The difference of natural
talents in different men, is, in reality, much less than we are aware  of; and the very different
genius which appears to distinguish men of different professions, when grown up to maturity,
is not upon many occasions so much the cause, as the effect of the division of labour. The
difference between the most dissimilar characters, between a philosopher and a common street
porter, for example, seems to arise not so much from nature, as from habit, cus-  tom, and
education. When they came in to the world, and for the first six or eight years of
their existence, they were, perhaps, very much alike, and neither their parents nor play-fellows
could perceive any remarkable difference. About that age, or soon after, they come to be
employed in very different occupations. The difference of talents comes then to be taken notice
of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge
scarce any resem- blance. But without the disposition to truck, barter, and exchange, every
man must have procured to himself every necessary and conveniency of life which he wanted.
All must have had the same duties to perform, and the same work to do, and there could have
been no such difference of em- ployment as could alone give occasion to any great difference
of talents. As it is this disposition which forms that difference of talents, so remarkable among
men of different professions, so it is this same disposition which renders that difference useful.
Many tribes of animals, acknowledged to be all of the same species, derive from nature a much
more re- markable distinction of genius, than what, antecedent to custom and education,
appears to take place among men. By nature a philosopher is not in genius and disposition half
so different from a street porter, as a mastiff is from a grey-hound, or a grey-hound from a
spaniel, or this last from a shepherd's dog. Those different tribes of animals, however, though
all of the same species are of scarce any use to one another. The strength of the mastiff is not in
the least supported either by the swiftness of the greyhound, or by the sagacity of the spaniel,
or by the docility of the shep- herd's dog. The effects of those different geniuses and talents, for
want of the power or dispo- sition to barter and exchange, cannot be brought into a common
stock, and do not in the least contribute to the better accommodation and conveniency of the
species. Each animal is still obliged to support and defend itself, separately and independently,
and derives no sort of advan- tage from that variety of talents with which nature has
distinguished its fellows. Among men, on the contrary, the most dissimilar geniuses are of use
to one another; the different produces of their respective talents, by the general disposition to
truck, barter, and exchange, being brought, as it were, into a common stock, where every man
may purchase whatever part of the produce of other men's talents he has occasion for. 

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

THE MARKET.  As it is the power of exchanging that gives occasion to the division of labour,
so the extent of this division must always be limited by the extent of that power, or, in other
words, by the extent of the market. When the market is very small, no person can have any
encouragement to dedicate himself entirely to one employment, for want of the power to
exchange all that surplus part of the produce of his own labour, which is over and above his
own consumption, for such parts of the produce of other men's labour as he has occasion
for. There are some sorts of industry, even of the lowest kind, which can be carried on
nowhere but in a great town. A porter, for example, can find employment and subsistence in no
other place. A village is by much too narrow a sphere for him; even an ordinary market-town is
scarce large enough to afford him constant occupation. In the lone houses and very small
villages which are scattered about in so desert a country as the highlands of Scotland, every
farmer must be butcher, baker, and brewer, for his own family. In such situations we can
scarce expect to find even a smith, a carpenter, or a mason, within less than twenty miles of
another of the same trade. The scattered families that live at eight or ten miles distance from
the nearest of them, must learn to perform themselves a great number of little pieces of work,
for which, in more populous coun- tries, they would call in the assistance of those workmen.
Country workmen are almost every- where obliged to apply themselves to all the different
branches of industry that have so much affinity to one another as to be employed about the
same sort of materials. A country carpenter deals in every sort of work that is made of wood; a
country smith in every sort of work that is made of iron. The former is not only a carpenter, but
a joiner, a cabinet-maker, and even a carver in wood, as well as a wheel-wright, a plough-
wright, a cart and waggon-maker. The employments of the latter are still more various. It is
impossible there should be such a trade as even that of a nailer in the remote and inland parts
of the highlands of Scotland. Such a workman at the rate of a thousand nails a-day, and three
hundred working days in the year, will make three hundred thousand nails in the year. But in
such a situation it would be impossible to dispose of one thou- sand, that is, of one day's work
in the year. As by means of water-carriage, a more extensive mar- ket is opened to every sort
of industry than what land-carriage alone can afford it, so it is upon the sea-coast, and along
the banks of navigable rivers, that industry of every kind naturally begins to subdivide and
improve itself, and it is frequently not till a long time after that those improve- ments extend
themselves to the inland parts of the country. A broad-wheeled waggon, attended by two men,
and drawn by eight horses, in about six weeks time, carries and brings back between London
and Edinburgh near four ton weight of goods. In about the same time a ship navigated by six or
eight men, and sailing between the ports of London and Leith, frequently carries and brings
back two hundred ton weight of goods. Six or eight men, therefore, by the help of
water- carriage, can carry and bring back, in the same time, the same quantity of goods
between London and Edinburgh as fifty broad-wheeled waggons, attended by a hundred men,
and drawn by four hundred horses. Upon two hundred tons of goods, therefore, carried by the
cheapest land- carriage from London to Edinburgh, there must be charged the maintenance of a
hundred men for three weeks, and both the maintenance and what is nearly equal to
maintenance the wear and tear of four hundred horses, as well as of fifty great waggons.
Whereas, upon the same quantity of goods carried by water, there is to be charged only the
maintenance of six or eight men, and the wear and tear of a ship of two hundred tons burthen,
together with the value of the superior risk, or the difference of the insurance between land and
water-carriage. Were there no other com- munication between those two places, therefore, but
by land-carriage, as no goods could be trans- ported from the one to the other, except such
whose price was very considerable in proportion to their weight, they could carry on but a
small part of that commerce which at present subsists be- tween them, and consequently could
give but a small part of that encouragement which they at present mutually afford to each
other's industry. There could be little or no commerce of any kind between the distant parts of
the world. What goods could bear the expense of land-carriage be- tween London and
Calcutta? Or if there were any so precious as to be able to support this expense, with what
safety could they be transported through the territories of so many barbarous nations?  Those
two cities, however, at present carry on a very considerable commerce with each other, and by
mutually affording a market, give a good deal of encouragement to each other's industry. Since
such, therefore, are the advantages of water-carriage, it is natural that the first improve-  ments
of art and industry should be made where this conveniency opens the whole world for a market
to the produce of every sort of labour, and that they should always be much later in ex- tending
themselves into the inland parts of the country. The inland parts of the country can for a long
time have no other market for the greater part of their goods, but the country which lies  round
about them, and separates them from the sea-coast, and the great navigable rivers. The ex- tent
of the market, therefore, must for a long time be in proportion to the riches and popu- lousness
of that country, and consequently their improvement must always be posterior to the
im- provement of that country. In our North American colonies, the plantations have constantly
fol- lowed either the sea-coast or the banks of the navigable rivers, and have scarce anywhere
extended themselves to any considerable distance from both. The nations that, according to the
best authenticated history, appear to have been first civi- lized, were those that dwelt round the
coast of the Mediterranean sea. That sea, by far the greatest inlet that is known in the world,
having no tides, nor consequently any waves, except such as are caused by the wind only, was,
by the smoothness of its surface, as well as by the multitude of its islands, and the proximity of
its neighbouring shores, extremely favourable to the infant navi- gation of the world; when,
from their ignorance of the compass, men were afraid to quit the view of the coast, and from
the imperfection of the art of ship-building, to abandon themselves to the boisterous waves of
the ocean. To pass beyond the pillars of Hercules, that is, to sail out of the  straits of Gibraltar,
was, in the ancient world, long considered as a most wonderful and dangerous exploit of
navigation. It was late before even the Phoenicians and Carthaginians, the most
skilful navigators and ship-builders of those old times, attempted it; and they were, for a long
time, the only nations that did attempt it. Of all the countries on the coast of the Mediterranean
sea, Egypt seems to have been the first in which either agriculture or manufactures were
cultivated and improved to any considerable de- gree. Upper Egypt extends itself nowhere
above a few miles from the Nile; and in Lower Egypt, that great river breaks itself into many
different canals, which, with the assistance of a little art, seem to have afforded a
communication by water-carriage, not only between all the great towns, but between all the
considerable villages, and even to many farm-houses in the country, nearly in the same manner
as the Rhine and the Maese do in Holland at present. The extent and easiness  of this inland
navigation was probably one of the principal causes of the early improvement of  Egypt. The
improvements in agriculture and manufactures seem likewise to have been of very
great antiquity in the provinces of Bengal, in the East Indies, and in some of the eastern
provinces of China, though the great extent of this antiquity is not authenticated by any
histories of whose au- thority we, in this part of the world, are well assured. In Bengal, the
Ganges, and several other great rivers, form a great number of navigable canals, in the same
manner as the Nile does in Egypt. In the eastern provinces of China, too, several great rivers
form, by their different branch- es, a multitude of canals, and, by communicating with one
another, afford an inland navigation much more extensive than that either of the Nile or the
Ganges, or, perhaps, than both of them put together. It is remarkable, that neither the ancient
Egyptians, nor the Indians, nor the Chi- nese, encouraged foreign commerce, but seem all to
have derived their great opulence from this inland navigation. All the inland parts of Africa,
and all that part of Asia which lies any considerable way north of the Euxine and Caspian seas,
the ancient Scythia, the modern Tartary and Siberia, seem, in all ages of the world, to have
been in the same barbarous and uncivilized state in which we find them at present. The sea of
Tartary is the frozen ocean, which admits of no navigation; and though some of the greatest
rivers in the world run through that country, they are at too great a distance from one another to
carry commerce and communication through the greater part of it. There are in Africa none of
those great inlets, such as the Baltic and Adriatic seas in Europe, the Mediterranean and Euxine
seas in both Europe and Asia, and the gulfs of Arabia, Persia, India, Bengal, and Siam, in Asia,
to carry maritime commerce into the interior parts of that great conti- nent; and the great rivers
of Africa are at too great a distance from one another to give occasion to any considerable
inland navigation. The commerce, besides, which any nation can carry on by means of a river
which does not break itself into any great number of branches or canals, and which runs into
another territory before it reaches the sea, can never be very considerable, be- cause it is
always in the power of the nations who possess that other territory to obstruct the
com- munication between the upper country and the sea. The navigation of the Danube is of
very little use to the different states of Bavaria, Austria, and Hungary, in comparison of what it
would be, if any of them possessed the whole of its course, till it falls into the Black sea. 

CHAPTER IV. OF THE ORIGIN AND USE OF MONEY.  When the division of labour has
been once thoroughly established, it is but a very small part of a man's wants which the
produce of his own labour can supply. He supplies the far greater part of them by exchanging
that surplus part of the produce of his own labour, which is over and above his own
consumption, for such parts of the produce of other men's labour as he has occa- sion for.
Every man thus lives by exchanging, or becomes, in some measure, a merchant, and
the society itself grows to be what is properly a commercial society. But when the division of
labour first began to take place, this power of exchanging must fre- quently have been very
much clogged and embarrassed in its operations. One man, we shall sup- pose, has more of a
certain commodity than he himself has occasion for, while another has less. The former,
consequently, would be glad to dispose of; and the latter to purchase, a part of this  superfluity.
But if this latter should chance to have nothing that the former stands in need of, no exchange
can be made between them. The butcher has more meat in his shop than he himself can
consume, and the brewer and the baker would each of them be willing to purchase a part of it.
But they have nothing to offer in exchange, except the different productions of their
respective trades, and the butcher is already provided with all the bread and beer which he has
immediate occasion for. No exchange can, in this case, be made between them. He cannot be
their merchant, nor they his customers; and they are all of them thus mutually less serviceable
to one another. In order to avoid the inconveniency of such situations, every prudent man in
every period of society, after the first establishment of the division of labour, must naturally
have endeavoured to manage his affairs in such a manner, as to have at all times by him,
besides the peculiar produce of his own industry, a certain quantity of some one commodity or
other, such as he imagined few peo- ple would be likely to refuse in exchange for the produce
of their industry. Many different com- modities, it is probable, were successively both thought
of and employed for this purpose. In the rude ages of society, cattle are said to have been the
common instrument of commerce; and, though they must have been a most inconvenient one,
yet, in old times, we find things were fre- quently valued according to the number of cattle
which had been given in exchange for them. The armour of Diomede, says Homer, cost only
nine oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the common instrument
of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of
India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India
colonies; hides or dressed leather in some other countries; and there is at this day a village in
Scotland, where it is not uncommon, I am told, for a workman to carry nails instead of money
to the baker's shop or the ale-house. In all countries, however, men seem at last to have been
determined by irresistible reasons to give the preference, for this employment, to metals above
every other commodity. Metals can not only be kept with as little loss as any other commodity,
scarce any thing being less perishable than they are, but they can likewise, without any loss, be
divided into any number of parts, as by fusion those parts can easily be re-united again; a
quality which no other equally durable commodities possess, and which, more than any other
quality, renders them fit to be the instruments of com- merce and circulation. The man who
wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must
have been obliged to buy salt to the value of a whole ox, or a whole sheep, at a time. He could
seldom buy less than this, because what he was to give for it could sel- dom be divided without
loss; and if he had a mind to buy more, he must, for the same reasons,  have been obliged to
buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three
sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he
could easily proportion the quantity of the metal to the precise quantity of the com- modity
which he had immediate occasion for. Different metals have been made use of by different
nations for this purpose. Iron was the common instrument of commerce among the ancient
Spartans, copper among the ancient Ro- mans, and gold and silver among all rich and
commercial nations. Those metals seem originally to have been made use of for this purpose in
rude bars, without any stamp or coinage. Thus we are told by Pliny (Plin. Hist Nat. lib. 33, cap.
3), upon the authority of Timaeus, an ancient historian, that, till the time of Servius Tullius, the
Romans had no coined money, but made use of unstamped bars of copper, to purchase
whatever they had occasion for. These rude bars, therefore, performed at this time the function
of money. The use of metals in this rude state was attended with two very considerable
inconveniences; first, with the trouble of weighing, and secondly, with that of assaying them.
In the precious met- als, where a small difference in the quantity makes a great difference in
the value, even the busi- ness of weighing, with proper exactness, requires at least very
accurate weights and scales. The weighing of gold, in particular, is an operation of some nicety
in the coarser metals, indeed, where a small error would be of little consequence, less accuracy
would, no doubt, be necessary. Yet we should find it excessively troublesome if every time a
poor man had occasion either to buy or sell a farthing's worth of goods, he was obliged to
weigh the farthing. The operation of assaying is still more difficult, still more tedious; and,
unless a part of the metal is fairly melted in the cru- cible, with proper dissolvents, any
conclusion that can be drawn from it is extremely uncertain. Before the institution of coined
money, however, unless they went through this tedious and diffi- cult operation, people must
always have been liable to the grossest frauds and impositions; and instead of a pound weight
of pure silver, or pure copper, might receive, in exchange for their goods, an adulterated
composition of the coarsest and cheapest materials, which had, however, in their outward
appearance, been made to resemble those metals. To prevent such abuses, to facil- itate
exchanges, and thereby to encourage all sorts of industry and commerce, it has been
found necessary, in all countries that have made any considerable advances towards
improvement, to affix a public stamp upon certain quantities of such particular metals, as were
in those countries commonly made use of to purchase goods. Hence the origin of coined
money, and of those public offices called mints; institutions exactly of the same nature with
those of the aulnagers and stamp- masters of woollen and linen cloth. All of them are equally
meant to ascertain, by means of a pub- lic stamp, the quantity and uniform goodness of those
different commodities when brought to market. The first public stamps of this kind that were
affixed to the current metals, seem in many cases to have been intended to ascertain, what it
was both most difficult and most important to ascertain, the goodness or fineness of the metal,
and to have resembled the sterling mark which is at present affixed to plate and bars of silver,
or the Spanish mark which is sometimes affixed to ingots of gold, and which, being struck only
upon one side of the piece, and not covering the whole surface, ascertains the fineness, but not
the weight of the metal. Abraham weighs to Ephron the four hundred shekels of silver which
he had agreed to pay for the field of Machpelah. They are said, however, to be the current
money of the merchant, and yet are received by weight, and not by tale, in the same manner as
ingots of gold and bars of silver are at present. The rev- enues of the ancient Saxon kings of
England are said to have been paid, not in money, but in kind, that is, in victuals and
provisions of all sorts. William the Conqueror introduced the custom of paying them in money.
This money, however, was for a long time, received at the exchequer, by weight, and not by
tale. The inconveniency and difficulty of weighing those metals with exactness, gave occasion
to the institution of coins, of which the stamp, covering entirely both sides of the piece, and
some- times the edges too, was supposed to ascertain not only the fineness, but the weight of
the metal. Such coins, therefore, were received by tale, as at present, without the trouble of
weighing. The denominations of those coins seem originally to have expressed the weight or
quantity of metal contained in them. In the time of Servius Tullius, who first coined money at
Rome, the Roman as or pondo contained a Roman pound of good copper. It was divided, in the
same man- ner as our Troyes pound, into twelve ounces, each of which contained a real ounce
of good cop- per. The English pound sterling, in the time of Edward I. contained a pound,
Tower weight, of sil- ver of a known fineness. The Tower pound seems to have been
something more than the Roman pound, and something less than the Troyes pound. This last
was not introduced into the mint of England till the 18th of Henry the VIII. The French livre
contained, in the time of Charlemagne, a pound, Troyes weight, of silver of a known fineness.
The fair of Troyes in Champaign was at that time frequented by all the nations of Europe, and
the weights and measures of so famous a market were generally known and esteemed. The
Scots money pound contained, from the time of Alexander the First to that of Robert Bruce, a
pound of silver of the same weight and fineness with the English pound sterling. English,
French, and Scots pennies, too, contained all of them originally a real penny-weight of silver,
the twentieth part of an ounce, and the two hundred-and- fortieth part of a pound. The shilling,
too, seems originally to have been the denomination of a weight. "When wheat is at twelve
shillings the quarter," says an ancient statute of Henry III. "then wastel bread of a farthing shall
weigh eleven shillings and fourpence". The proportion, however, between the shilling, and
either the penny on the one hand, or the pound on the other, seems not to have been so constant
and uniform as that between the penny and the pound. Dur- ing the first race of the kings of
France, the French sou or shilling appears upon different occa- sions to have contained five,
twelve, twenty, and forty pennies. Among the ancient Saxons, a shilling appears at one time to
have contained only five pennies, and it is not improbable that it may have been as variable
among them as among their neighbours, the ancient Franks. From the time of Charlemagne
among the French, and from that of William the Conqueror among the English, the proportion
between the pound, the shilling, and the penny, seems to have been uni- formly the same as at
present, though the value of each has been very different; for in every coun- try of the world, I
believe, the avarice and injustice of princes and sovereign states, abusing the confidence of
their subjects, have by degrees diminished the real quantity of metal, which had been originally
contained in their coins. The Roman as, in the latter ages of the republic, was re- duced to the
twenty-fourth part of its original value, and, instead of weighing a pound, came to weigh only
half an ounce. The English pound and penny contain at present about a third only; the Scots
pound and penny about a thirty-sixth; and the French pound and penny about a sixty-sixth part
of their original value. By means of those operations, the princes and sovereign states
which performed them were enabled, in appearance, to pay their debts and fulfil their
engagements with a smaller quantity of silver than would otherwise have been requisite. It was
indeed in appearance only; for their creditors were really defrauded of a part of what was due
to them. All other debtors in the state were allowed the same privilege, and might pay with the
same nominal sum of the new and debased coin whatever they had borrowed in the old. Such
operations, therefore, have al- ways proved favourable to the debtor, and ruinous to the
creditor, and have sometimes produced a greater and more universal revolution in the fortunes
of private persons, than could have been occasioned by a very great public calamity. It is in
this manner that money has become, in all civilized nations, the universal instrument of
commerce, by the intervention of which goods of all kinds are bought and sold, or
exchanged for one another. What are the rules which men naturally observe, in exchanging
them either for money, or for one another, I shall now proceed to examine. These rules
determine what may be called the rela- tive or exchangeable value of goods. The word
VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility
of some particular object, and sometimes the power of purchasing other goods which the
possession of that object conveys. The one may be called 'value in use;' the other, 'value in
ex- change.' The things which have the greatest value in use have frequently little or no value
in ex- change; and, on the contrary, those which have the greatest value in exchange have
frequently lit- tle or no value in use. Nothing is more useful than water; but it will purchase
scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary,
has scarce any value in use; but a very great quantity of other goods may frequently be had in
exchange for it. In order to investigate the principles which regulate the exchangeable value of
commodities, I shall endeavour to shew, First, what is the real measure of this exchangeable
value; or wherein consists the real price of all commodities. Secondly, what are the different
parts of which this real price is composed or made up. And, lastly, what are the different
circumstances which sometimes raise some or all of these different parts of price above, and
sometimes sink them below, their natural or ordinary rate; or, what are the causes which
sometimes hinder the market price, that is, the actual price of commodities, from coinciding
exactly with what may be called their natural price. I shall endeavour to explain, as fully and
distinctly as I can, those three subjects in the three following chapters, for which I must very
earnestly entreat both the patience and attention of the reader: his patience, in order to examine
a detail which may, perhaps, in some places, appear un- necessarily tedious; and his attention,
in order to understand what may perhaps, after the fullest explication which I am capable of
giving it, appear still in some degree obscure. I am always will- ing to run some hazard of
being tedious, in order to be sure that I am perspicuous; and, after tak- ing the utmost pains that
I can to be perspicuous, some obscurity may still appear to remain upon a subject, in its own
nature extremely abstracted. 
CHAPTER V. OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF
THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY.  Every man is rich or poor
according to the degree in which he can afford to enjoy the neces-  saries, conveniencies, and
amusements of human life. But after the division of labour has once thoroughly taken place, it
is but a very small part of these with which a man's own labour can supply him. The far greater
part of them he must derive from the labour of other people, and he must be rich or poor
according to the quantity of that labour which he can command, or which he  can afford to
purchase. The value of any commodity, therefore, to the person who possesses it, and who
means not to use or consume it himself, but to exchange it for other commodities, is equal to
the quantity of labour which it enables him to purchase or command. Labour therefore, is the
real measure of the exchangeable value of all commodities. The real price of every thing, what
every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring
it. What every thing is really worth to the man who has ac- quired it and who wants to dispose
of it, or exchange it for something else, is the toil and trouble which it can save to himself, and
which it can impose upon other people. What is bought with money, or with goods, is
purchased by labour, as much as what we acquire by the toil of our own body. That money, or
those goods, indeed, save us this toil. They contain the value of a certain quantity of labour,
which we exchange for what is supposed at the time to contain the value of an equal quantity.
Labour was the first price, the original purchase money that was paid for all things. It was not
by gold or by silver, but by labour, that all the wealth of the world was originally purchased;
and its value, to those who possess it, and who want to exchange it for some new pro- ductions,
is precisely equal to the quantity of labour which it can enable them to purchase or
com- mand. Wealth, as Mr Hobbes says, is power. But the person who either acquires, or
succeeds to a great fortune, does not necessarily acquire or succeed to any political power,
either civil or mili- tary. His fortune may, perhaps, afford him the means of acquiring both; but
the mere possession of that fortune does not necessarily convey to him either. The power
which that possession im- mediately and directly conveys to him, is the power of purchasing a
certain command over all the labour, or over all the produce of labour which is then in the
market. His fortune is greater or less, precisely in proportion to the extent of this power, or to
the quantity either of other men's labour, or, what is the same thing, of the produce of other
men's labour, which it enables him to purchase or command. The exchangeable value of every
thing must always be precisely equal to the extent of this power which it conveys to its
owner. But though labour be the real measure of the exchangeable value of all commodities, it
is not that by which their value is commonly estimated. It is often difficult to ascertain the
proportion between two different quantities of labour. The time spent in two different sorts of
work will not always alone determine this proportion. The different degrees of hardship
endured, and of inge- nuity exercised, must likewise be taken into account. There may be more
labour in an hour's hard work, than in two hours easy business; or in an hour's application to a
trade which it cost ten years labour to learn, than in a month's industry, at an ordinary and
obvious employment. But it is not easy to find any accurate measure either of hardship or
ingenuity. In exchanging, indeed, the different productions of different sorts of labour for one
another, some allowance is com- monly made for both. It is adjusted, however, not by any
accurate measure, but by the higgling and bargaining of the market, according to that sort of
rough equality which, though not exact, is sufficient for carrying on the business of common
life. Every commodity, besides, is more frequently exchanged for, and thereby compared
with, other commodities, than with labour. It is more natural, therefore, to estimate its
exchangeable value by the quantity of some other commodity, than by that of the labour which
it can produce. The greater part of people, too, understand better what is meant by a quantity of
a particular com- modity, than by a quantity of labour. The one is a plain palpable object; the
other an abstract no- tion, which though it can be made sufficiently intelligible, is not
altogether so natural and obvi- ous. 

But when barter ceases, and money has become the common instrument of commerce,
every particular commodity is more frequently exchanged for money than for any other
commodity. The butcher seldom carries his beef or his mutton to the baker or the brewer, in
order to ex- change them for bread or for beer; but he carries them to the market, where he
exchanges them for money, and afterwards exchanges that money for bread and for beer. The
quantity of money which he gets for them regulates, too, the quantity of bread and beer which
he can afterwards purchase. It is more natural and obvious to him, therefore, to estimate their
value by the quantity of money, the commodity for which he immediately exchanges them,
than by that of bread and beer, the commodities for which he can exchange them only by the
intervention of another com- modity; and rather to say that his butcher's meat is worth three-
pence or fourpence a-pound, than that it is worth three or four pounds of bread, or three or four
quarts of small beer. Hence it comes to pass, that the exchangeable value of every commodity
is more frequently estimated by the quantity of money, than by the quantity either of labour or
of any other commodity which can be had in exchange for it. Gold and silver, however, like
every other commodity, vary in their value; are sometimes cheaper and sometimes dearer,
sometimes of easier and sometimes of more difficult purchase. The quantity of labour which
any particular quantity of them can purchase or command, or the quantity of other goods which
it will exchange for, depends always upon the fertility or barrenness of the mines which
happen to be known about the time when such exchanges are made. The dis- covery of the
abundant mines of America, reduced, in the sixteenth century, the value of gold and silver in
Europe to about a third of what it had been before. As it cost less labour to bring those metals
from the mine to the market, so, when they were brought thither, they could purchase
or command less labour; and this revolution in their value, though perhaps the greatest, is by
no means the only one of which history gives some account. But as a measure of quantity, such
as the natural foot, fathom, or handful, which is continually varying in its own quantity, can
never be an accurate measure of the quantity of other things; so a commodity which is itself
continually varying in its own value, can never be an accurate measure of the value of other
commodities. Equal quantities of labour, at all times and places, may be said to be of equal
value to the labourer. In his ordinary state of health, strength, and spirits; in the ordinary degree
of his skill and dex- terity, he must always lay down the same portion of his ease, his liberty,
and his happiness. The price which he pays must always be the same, whatever may be the
quantity of goods which he receives in return for it. Of these, indeed, it may sometimes
purchase a greater and sometimes a smaller quantity; but it is their value which varies, not that
of the labour which purchases them. At all times and places, that is dear which it is difficult to
come at, or which it costs much labour to acquire; and that cheap which is to be had easily, or
with very little labour. Labour alone, there- fore, never varying in its own value, is alone the
ultimate and real standard by which the value of all commodities can at all times and places be
estimated and compared. It is their real price; money is their nominal price only. But though
equal quantities of labour are always of equal value to the labourer, yet to the per- son who
employs him they appear sometimes to be of greater, and sometimes of smaller value. He
purchases them sometimes with a greater, and sometimes with a smaller quantity of goods, and
to him the price of labour seems to vary like that of all other things. It appears to him dear
in the one case, and cheap in the other. In reality, however, it is the goods which are cheap in
the one case, and dear in the other. In this popular sense, therefore, labour, like commodities,
may be said to have a real and a nominal price. Its real price may be said to consist in the
quantity of the necessaries and conve- niencies of life which are given for it; its nominal price,
in the quantity of money. The labourer is rich or poor, is well or ill rewarded, in proportion to
the real, not to the nominal price of his labour. The distinction between the real and the
nominal price of commodities and labour is not a matter of mere speculation, but may
sometimes be of considerable use in practice. The same real price is always of the same value;
but on account of the variations in the value of gold and silver, the same nominal price is
sometimes of very different values. When a landed estate, therefore, is sold with a reservation
of a perpetual rent, if it is intended that this rent should always be of the same value, it is of
importance to the family in whose favour it is reserved, that it should not con- sist in a
particular sum of money. Its value would in this case be liable to variations of two dif- ferent
kinds: first, to those which arise from the different quantities of gold and silver which
are contained at different times in coin of the same denomination; and, secondly, to those
which arise from the different values of equal quantities of gold and silver at different
times. Princes and sovereign states have frequently fancied that they had a temporary interest
to diminish the quantity of pure metal contained in their coins; but they seldom have fancied
that they had any to augment it. The quantity of metal contained in the coins, I believe of all
nations, has accordingly been almost continually diminishing, and hardly ever augmenting.
Such varia- tions, therefore, tend almost always to diminish the value of a money rent. The
discovery of the mines of America diminished the value of gold and silver in Europe. This
diminution, it is commonly supposed, though I apprehend without any certain proof, is
still going on gradually, and is likely to continue to do so for a long time. Upon this
supposition, there- fore, such variations are more likely to diminish than to augment the value
of a money rent, even though it should be stipulated to be paid, not in such a quantity of coined
money of such a de- nomination (in so many pounds sterling, for example), but in so many
ounces, either of pure sil- ver, or of silver of a certain standard. The rents which have been
reserved in corn, have preserved their value much better than those which have been reserved
in money, even where the denomination of the coin has not been altered. By the 18th of
Elizabeth, it was enacted, that a third of the rent of all college leases should be reserved in
corn, to be paid either in kind, or according to the current prices at the nearest pub-  lic market.
The money arising from this corn rent, though originally but a third of the whole, is, in the
present times, according to Dr. Blackstone, commonly near double of what arises from
the other two-thirds. The old money rents of colleges must, according to this account, have
sunk al- most to a fourth part of their ancient value, or are worth little more than a fourth part
of the corn which they were formerly worth. But since the reign of Philip and Mary, the
denomination of the English coin has undergone little or no alteration, and the same number of
pounds, shillings, and pence, have contained very nearly the same quantity of pure silver. This
degradation, therefore, in the value of the money rents of colleges, has arisen altogether from
the degradation in the price of silver. When the degradation in the value of silver is combined
with the diminution of the quantity of it contained in the coin of the same denomination, the
loss is frequently still greater. In Scot- land, where the denomination of the coin has undergone
much greater alterations than it ever did in England, and in France, where it has undergone still
greater than it ever did in Scotland, some ancient rents, originally of considerable value, have,
in this manner, been reduced almost to noth- ing. Equal quantities of labour will, at distant
times, be purchased more nearly with equal quan- tities of corn, the subsistence of the labourer,
than with equal quantities of gold and silver, or, perhaps, of any other commodity. Equal
quantities of corn, therefore, will, at distant times, be more nearly of the same real value, or
enable the possessor to purchase or command more nearly the same quantity of the labour of
other people. They will do this, I say, more nearly than equal quantities of almost any other
commodity; for even equal quantities of corn will not do it exactly. The subsistence of the
labourer, or the real price of labour, as I shall endeavour to shew hereafter,  is very different
upon different occasions; more liberal in a society advancing to opulence, than in  one that is
standing still, and in one that is standing still, than in one that is going backwards. Every other
commodity, however, will, at any particular time, purchase a greater or smaller quan- tity of
labour, in proportion to the quantity of subsistence which it can purchase at that time. A rent,
therefore, reserved in corn, is liable only to the variations in the quantity of labour which
a certain quantity of corn can purchase. But a rent reserved in any other commodity is liable,
not only to the variations in the quantity of labour which any particular quantity of corn can
purchase, but to the variations in the quantity of corn which can be purchased by any particular
quantity of that commodity. 

Though the real value of a corn rent, it is to be observed, however, varies much less from
cen- tury to century than that of a money rent, it varies much more from year to year. The
money price of labour, as I shall endeavour to shew hereafter, does not fluctuate from year to
year with the money price of corn, but seems to be everywhere accommodated, not to the
temporary or occa- sional, but to the average or ordinary price of that necessary of life. The
average or ordinary price of corn, again is regulated, as I shall likewise endeavour to shew
hereafter, by the value of silver, by the richness or barrenness of the mines which supply the
market with that metal, or by the quantity of labour which must be employed, and
consequently of corn which must be consumed, in order to bring any particular quantity of
silver from the mine to the market. But the value of sil- ver, though it sometimes varies greatly
from century to century, seldom varies much from year to year, but frequently continues the
same, or very nearly the same, for half a century or a century together. The ordinary or average
money price of corn, therefore, may, during so long a period, continue the same, or very nearly
the same, too, and along with it the money price of labour, pro- vided, at least, the society
continues, in other respects, in the same, or nearly in the same, condi- tion. In the mean time,
the temporary and occasional price of corn may frequently be double one year of what it had
been the year before, or fluctuate, for example, from five-and-twenty to fifty shillings the
quarter. But when corn is at the latter price, not only the nominal, but the real value  of a corn
rent, will be double of what it is when at the former, or will command double the quan- tity
either of labour, or of the greater part of other commodities; the money price of labour,
and along with it that of most other things, continuing the same during all these
fluctuations. Labour, therefore, it appears evidently, is the only universal, as well as the only
accurate, mea- sure of value, or the only standard by which we can compare the values of
different commodities, at all times, and at all places. We cannot estimate, it is allowed, the real
value of different com- modities from century to century by the quantities of silver which were
given for them. We can- not estimate it from year to year by the quantities of corn. By the
quantities of labour, we can, with the greatest accuracy, estimate it, both from century to
century, and from year to year. From century to century, corn is a better measure than silver,
because, from century to century, equal quantities of corn will command the same quantity of
labour more nearly than equal quantities of silver. From year to year, on the contrary, silver is
a better measure than corn, because equal quantities of it will more nearly command the same
quantity of labour. But though, in establishing perpetual rents, or even in letting very long
leases, it may be of use to distinguish between real and nominal price; it is of none in buying
and selling, the more common and ordinary transactions of human life. At the same time and
place, the real and the nominal price of all commodities are exactly in proportion to one
another. The more or less money you get for any commodity, in the London market, for
example, the more or less labour it will at that time and place enable you to purchase or
command. At the same time and place, therefore, money is the exact measure of the real
ex- changeable value of all commodities. It is so, however, at the same time and place
only. Though at distant places there is no regular proportion between the real and the money
price of commodities, yet the merchant who carries goods from the one to the other, has
nothing to consider but the money price, or the difference between the quantity of silver for
which he buys them, and that for which he is likely to sell them. Half an ounce of silver at
Canton in China may command a greater quantity both of labour and of the necessaries and
conveniencies of life, than an ounce at London. A commodity, therefore, which sells for half
an ounce of silver at Canton, may there be really dearer, of more real importance to the man
who possesses it there, than a commodity which sells for an ounce at London is to the man
who possesses it at London. If a Lon- don merchant, however, can buy at Canton, for half an
ounce of silver, a commodity which he can afterwards sell at London for an ounce, he gains a
hundred per cent. by the bargain, just as much as if an ounce of silver was at London exactly of
the same value as at Canton. It is of no impor- tance to him that half an ounce of silver at
Canton would have given him the command of more labour, and of a greater quantity of the
necessaries and conveniencies of life than an ounce can do at London. An ounce at London
will always give him the command of double the quantity of all these, which half an ounce
could have done there, and this is precisely what he wants. 

As it is the nominal or money price of goods, therefore, which finally determines the
pru- dence or imprudence of all purchases and sales, and thereby regulates almost the whole
business of common life in which price is concerned, we cannot wonder that it should have
been so much more attended to than the real price. In such a work as this, however, it may
sometimes be of use to compare the different real val- ues of a particular commodity at
different times and places, or the different degrees of power over the labour of other people
which it may, upon different occasions, have given to those who pos- sessed it. We must in this
case compare, not so much the different quantities of silver for which it was commonly sold, as
the different quantities or labour which those different quantities of silver could have
purchased. But the current prices of labour, at distant times and places, can scarce ever  be
known with any degree of exactness. Those of corn, though they have in few places been
regu- larly recorded, are in general better known, and have been more frequently taken notice
of by historians and other writers. We must generally, therefore, content ourselves with them,
not as being always exactly in the same proportion as the current prices of labour, but as being
the near- est approximation which can commonly be had to that proportion. I shall hereafter
have occasion to make several comparisons of this kind. In the progress of industry,
commercial nations have found it convenient to coin several dif- ferent metals into money;
gold for larger payments, silver for purchases of moderate value, and copper, or some other
coarse metal, for those of still smaller consideration, They have always, however, considered
one of those metals as more peculiarly the measure of value than any of the other two; and this
preference seems generally to have been given to the metal which they happen first to make
use of as the instrument of commerce. Having once begun to use it as their stan- dard, which
they must have done when they had no other money, they have generally continued  to do so
even when the necessity was not the same. The Romans are said to have had nothing but
copper money till within five years before the first Punic war (Pliny, lib. xxxiii. cap. 3), when
they first began to coin silver. Copper, therefore, ap- pears to have continued always the
measure of value in that republic. At Rome all accounts appear to have been kept, and the
value of all estates to have been computed, either in asses or in ses- tertii. The as was always
the denomination of a copper coin. The word sestertius signifies two asses and a half. Though
the sestertius, therefore, was originally a silver coin, its value was esti- mated in copper. At
Rome, one who owed a great deal of money was said to have a great deal of other people's
copper. The northern nations who established themselves upon the ruins of the Roman
empire, seem to have had silver money from the first beginning of their settlements, and not to
have known either gold or copper coins for several ages thereafter. There were silver coins in
England in the time of the Saxons; but there was little gold coined till the time of Edward III
nor any cop- per till that of James I. of Great Britain. In England, therefore, and for the same
reason, I believe, in all other modern nations of Europe, all accounts are kept, and the value of
all goods and of all estates is generally computed, in silver: and when we mean to express the
amount of a person's fortune, we seldom mention the number of guineas, but the number of
pounds sterling which we suppose would be given for it. Originally, in all countries, I believe,
a legal tender of payment could be made only in the coin of that metal which was peculiarly
considered as the standard or measure of value. In England, gold was not considered as a legal
tender for a long time after it was coined into money. The pro- portion between the values of
gold and silver money was not fixed by any public law or procla- mation, but was left to be
settled by the market. If a debtor offered payment in gold, the creditor might either reject such
payment altogether, or accept of it at such a valuation of the gold as he  and his debtor could
agree upon. Copper is not at present a legal tender, except in the change of the smaller silver
coins. In this state of things, the distinction between the metal which was the standard, and
that which was not the standard, was something more than a nominal distinction. In process of
time, and as people became gradually more familiar with the use of the dif-  ferent metals in
coin, and consequently better acquainted with the proportion between their respective values, it
has, in most countries, I believe, been found convenient to ascertain this pro- portion, and to
declare by a public law, that a guinea, for example, of such a weight and fineness, should
exchange for one-and-twenty shillings, or be a legal tender for a debt of that amount. In  this
state of things, and during the continuance of any one regulated proportion of this kind,
the distinction between the metal, which is the standard, and that which is not the standard,
becomes little more than a nominal distinction. In consequence of any change, however, in this
regulated proportion, this distinction be- comes, or at least seems to become, something more
than nominal again. If the regulated value of a guinea, for example, was either reduced to
twenty, or raised to two-and-twenty shillings, all ac- counts being kept, and almost all
obligations for debt being expressed, in silver money, the greater part of payments could in
either case be made with the same quantity of silver money as before; but would require very
different quantities of gold money; a greater in the one case, and a smaller in the other. Silver
would appear to be more invariable in its value than gold. Silver would appear  to measure the
value of gold, and gold would not appear to measure the value of silver. The value of gold
would seem to depend upon the quantity of silver which it would exchange for, and the value
of silver would not seem to depend upon the quantity of gold which it would exchange
for. This difference, however, would be altogether owing to the custom of keeping accounts,
and of ex- pressing the amount of all great and small sums rather in silver than in gold money.
One of Mr Drummond's notes for five-and-twenty or fifty guineas would, after an alteration of
this kind, be still payable with five-and-twenty or fifty guineas, in the same manner as before.
It would, after such an alteration, be payable with the same quantity of gold as before, but with
very different quantities of silver. In the payment of such a note, gold would appear to be more
invariable in its value than silver. Gold would appear to measure the value of silver, and silver
would not appear to measure the value of gold. If the custom of keeping accounts, and of
expressing promissory-notes and other obligations for money, in this manner should ever
become general, gold, and not silver, would be considered as the metal which was peculiarly
the standard or measure of value. In reality, during the continuance of any one regulated
proportion between the respective val- ues of the different metals in coin, the value of the most
precious metal regulates the value of the whole coin. Twelve copper pence contain half a
pound avoirdupois of copper, of not the best qual- ity, which, before it is coined, is seldom
worth seven-pence in silver. But as, by the regulation, twelve such pence are ordered to
exchange for a shilling, they are in the market considered as worth a shilling, and a shilling can
at any time be had for them. Even before the late reformation of the gold coin of Great Britain,
the gold, that part of it at least which circulated in London and its neighbourhood, was in
general less degraded below its standard weight than the greater part of the silver. One-and-
twenty worn and defaced shillings, however, were considered as equivalent to a guinea, which,
perhaps, indeed, was worn and defaced too, but seldom so much so. The late regulations have
brought the gold coin as near, perhaps, to its standard weight as it is possible to  bring the
current coin of any nation; and the order to receive no gold at the public offices but by weight,
is likely to preserve it so, as long as that order is enforced. The silver coin still continues in the
same worn and degraded state as before the reformation of the cold coin. In the market,
how- ever, one-and-twenty shillings of this degraded silver coin are still considered as worth a
guinea of this excellent gold coin. The reformation of the gold coin has evidently raised the
value of the silver coin which can be exchanged for it. In the English mint, a pound weight of
gold is coined into forty-four guineas and a half, which at one-and-twenty shillings the guinea,
is equal to forty-six pounds fourteen shillings and sixpence. An ounce of such gold coin,
therefore, is worth £ 3:17:10½ in silver. In England, no duty or seignorage is paid upon the
coinage, and he who carries a pound weight or an ounce weight of standard gold bullion to the
mint, gets back a pound weight or an ounce weight of gold in coin, without any deduction.
Three pounds seventeen shillings and tenpence halfpenny an ounce, therefore, is said to be the
mint price of gold in England, or the quantity of gold coin which the mint gives in return for
standard gold bullion. Before the reformation of the gold coin, the price of standard gold
bullion in the market had, for many years, been upwards of £3:18s. sometimes £ 3:19s, and
very frequently £4 an ounce; that sum, it is probable, in the worn and degraded gold coin,
seldom containing more than an ounce of standard gold. Since the reformation of the gold coin,
the market price of standard gold bullion seldom exceeds £ 3:17:7 an ounce. Before the
reformation of the gold coin, the market price was al- ways more or less above the mint price.
Since that reformation, the market price has been con- stantly below the mint price. But that
market price is the same whether it is paid in gold or in sil- ver coin. The late reformation of
the gold coin, therefore, has raised not only the value of the gold coin, but likewise that of the
silver coin in proportion to gold bullion, and probably, too, in propor- tion to all other
commodities; though the price of the greater part of other commodities being influenced by so
many other causes, the rise in the value of either gold or silver coin in proportion to them may
not be so distinct and sensible. In the English mint, a pound weight of standard silver bullion is
coined into sixty-two shillings, containing, in the same manner, a pound weight of standard
silver. Five shillings and twopence an ounce, therefore, is said to be the mint price of silver in
England, or the quantity of silver coin which the mint gives in return for standard silver
bullion. Before the reformation of the gold coin, the market price of standard silver bullion
was, upon different occasions, five shillings and fourpence, five shillings and fivepence, five
shillings and sixpence, five shillings and sevenpence, and very often five shillings and
eightpence an ounce. Five shillings and sevenpence, however, seems to have been the most
common price. Since the reformation of the gold coin, the market price of standard silver
bullion has fallen occasionally to five shillings and threepence, five shillings and fourpence,
and five shillings and fivepence an ounce, which last price it has scarce ever exceeded. Though
the market price of silver bullion has fallen considerably since the refor- mation of the gold
coin, it has not fallen so low as the mint price. In the proportion between the different metals in
the English coin, as copper is rated very much above its real value, so silver is rated somewhat
below it. In the market of Europe, in the French coin and in the Dutch coin, an ounce of fine
gold exchanges for about fourteen ounces of fine silver. In the English coin, it exchanges for
about fifteen ounces, that is, for more silver than it is worth, according to the common
estimation of Europe. But as the price of copper in bars is not, even in England, raised by the
high price of copper in English coin, so the price of silver in bullion is not sunk by the low rate
of silver in English coin. Silver in bullion still preserves its proper proportion to gold, for the
same reason that copper in bars preserves its proper proportion to silver. Upon the reformation
of the silver coin, in the reign of William III., the price of silver bullion still continued to be
somewhat above the mint price. Mr Locke imputed this high price to the per- mission of
exporting silver bullion, and to the prohibition of exporting silver coin. This permis- sion of
exporting, he said, rendered the demand for silver bullion greater than the demand for sil- ver
coin. But the number of people who want silver coin for the common uses of buying and
sell- ing at home, is surely much greater than that of those who want silver bullion either for
the use of exportation or for any other use. There subsists at present a like permission of
exporting gold bul- lion, and a like prohibition of exporting gold coin; and yet the price of gold
bullion has fallen below the mint price. But in the English coin, silver was then, in the same
manner as now, under- rated in proportion to gold; and the gold coin (which at that time, too,
was not supposed to require any reformation) regulated then, as well as now, the real value of
the whole coin. As the refor- mation of the silver coin did not then reduce the price of silver
bullion to the mint price, it is not very probable that a like reformation will do so now. Were
the silver coin brought back as near to its standard weight as the gold, a guinea, it is probable,
would, according to the present proportion, exchange for more silver in coin than it would
purchase in bullion. The silver coin containing its full standard weight, there would in
this case, be a profit in melting it down, in order, first to sell the bullion for gold coin, and
afterwards to exchange this gold coin for silver coin, to be melted down in the same manner.
Some alteration in the present proportion seems to be the only method of preventing this
inconveniency. The inconveniency, perhaps, would be less, if silver was rated in the coin as
much above its proper proportion to gold as it is at present rated below it, provided it was at
the same time enacted, that silver should not be a legal tender for more than the change of a
guinea, in the same manner as copper is not a legal tender for more than the change of a
shilling. No creditor could, in this case, be cheated in consequence of the high valuation of
silver in coin; as no creditor can at present be cheated in consequence of the high valuation of
copper. The bankers only would suffer by this regulation. When a run comes upon them, they
sometimes endeavour to gain time, by paying in sixpences, and they would be precluded by
this regulation from this discreditable method of evading immediate payment. They would be
obliged, in consequence, to keep at all times in their coffers a greater quantity of cash than at
present; and though this might, no doubt, be a considerable inconveniency to them, it would, at
the same time, be a considerable security to their creditors. Three pounds seventeen shillings
and tenpence halfpenny (the mint price of gold) certainly does not contain, even in our present
excellent gold coin, more than an ounce of standard gold, and it may be thought, therefore,
should not purchase more standard bullion. But gold in coin is more convenient than gold in
bullion; and though, in England, the coinage is free, yet the gold which is carried in bullion to
the mint, can seldom be returned in coin to the owner till after a delay of several weeks. In the
present hurry of the mint, it could not be returned till after a delay of several months. This
delay is equivalent to a small duty, and renders gold in coin somewhat more valuable than an
equal quantity of gold in bullion. If, in the English coin, silver was rated according to its proper
proportion to gold, the price of silver bullion would probably fall below the mint price, even
without any reformation of the silver coin; the value even of the present worn and defaced
silver coin being regulated by the value of the excellent gold coin for which it can
be changed. A small seignorage or duty upon the coinage of both gold and silver, would
probably increase still more the superiority of those metals in coin above an equal quantity of
either of them in bul- lion. The coinage would, in this case, increase the value of the metal
coined in proportion to the extent of this small duty, for the same reason that the fashion
increases the value of plate in pro- portion to the price of that fashion. The superiority of coin
above bullion would prevent the melt- ing down of the coin, and would discourage its
exportation. If, upon any public exigency, it should become necessary to export the coin, the
greater part of it would soon return again, of its own ac- cord. Abroad, it could sell only for its
weight in bullion. At home, it would buy more than that weight. There would be a profit,
therefore, in bringing it home again. In France, a seignorage of about eight per cent. is imposed
upon the coinage, and the French coin, when exported, is said to return home again, of its own
accord. The occasional fluctuations in the market price of gold and silver bullion arise from the
same causes as the like fluctuations in that of all other commodities. The frequent loss of those
metals from various accidents by sea and by land, the continual waste of them in gilding and
plating, in lace and embroidery, in the wear and tear of coin, and in that of plate, require, in all
countries which possess no mines of their own, a continual importation, in order to repair this
loss and this waste. The merchant importers, like all other merchants, we may believe,
endeavour, as well as they can, to suit their occasional importations to what they judge is likely
to be the immediate de- mand. With all their attention, however, they sometimes overdo the
business, and sometimes un- derdo it. When they import more bullion than is wanted, rather
than incur the risk and trouble of exporting it again, they are sometimes willing to sell a part of
it for something less than the ordi- nary or average price. When, on the other hand, they import
less than is wanted, they get some- thing more than this price. But when, under all those
occasional fluctuations, the market price ei- ther of gold or silver bullion continues for several
years together steadily and constantly, either more or less above, or more or less below the
mint price, we may be assured that this steady and constant, either superiority or inferiority of
price, is the effect of something in the state of the coin, which, at that time, renders a certain
quantity of coin either of more value or of less value than the precise quantity of bullion which
it ought to contain. The constancy and steadiness of the effect supposes a proportionable
constancy and steadiness in the cause. The money of any particular country is, at any particular
time and place, more or less an accu- rate measure or value, according as the current coin is
more or less exactly agreeable to its standard, or contains more or less exactly the precise
quantity of pure gold or pure silver which it ought to contain. If in England, for example, forty-
four guineas and a half contained exactly a pound weight of standard gold, or eleven ounces of
fine gold, and one ounce of alloy, the gold coin of England would be as accurate a measure of
the actual value of goods at any particular time and place as the nature of the thing would
admit. But if, by rubbing and wearing, forty-four guineas and a half generally contain less than
a pound weight of standard gold, the diminution, however, being greater in some pieces than in
others, the measure of value comes to be liable to the same sort of uncertainty to which all
other weights and measures are commonly exposed. As it rarely happens that these are exactly
agreeable to their standard, the merchant adjusts the price of his goods as well as he can, not to
what those weights and measures ought to be, but to what, upon an average, he finds, by
experience, they actually are. In consequence of a like disorder in the coin, the price of goods
comes, in the same manner, to be adjusted, not to the quantity of pure gold or silver which the
coin ought to contain, but to that which, upon an average, it is found, by experience, it actually
does contain. By the money price of goods, it is to be observed, I understand always the
quantity of pure gold or silver for which they are sold, without any regard to the denomination
of the coin. Six shillings and eight pence, for example, in the time of Edward I., I consider as
the same money price with a pound sterling in the present times, because it contained, as
nearly as we can judge, the same quantity of pure silver. 

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

early and rude state of society which precedes both the accumulation of stock and
the appropriation of land, the proportion between the quantities of labour necessary for
acquiring dif- ferent objects, seems to be the only circumstance which can afford any rule for
exchanging them for one another. If among a nation of hunters, for example, it usually costs
twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally
exchange for or be worth two deer. It is natural that what is usually the produce of two days or
two hours labour, should be worth double of what is usually the produce of one day's or one
hour's labour. If the one species of labour should be more severe than the other, some
allowance will natu- rally be made for this superior hardship; and the produce of one hour's
labour in the one way may frequently exchange for that of two hour's labour in the other. Or if
the one species of labour requires an uncommon degree of dexterity and ingenuity, the esteem
which men have for such talents, will naturally give a value to their produce, superior to what
would be due to the time employed about it. Such talents can seldom be acquired but
in consequence of long application, and the superior value of their produce may frequently be
no more than a reasonable compensation for the time and labour which must be spent in
acquiring them. In the advanced state of society, allowances of this kind, for superior hardship
and superior skill, are commonly made in the wages of labour; and something of the same kind
must probably have taken place in its earliest and rudest period. In this state of things, the
whole produce of labour belongs to the labourer; and the quantity of labour commonly
employed in acquiring or producing any commodity, is the only circum- stance which can
regulate the quantity of labour which it ought commonly to purchase, com- mand, or exchange
for. As soon as stock has accumulated in the hands of particular persons, some of them will
natu- rally employ it in setting to work industrious people, whom they will supply with
materials and subsistence, in order to make a profit by the sale of their work, or by what their
labour adds to the value of the materials. In exchanging the complete manufacture either for
money, for labour, or for other goods, over and above what may be sufficient to pay the price
of the materials, and the wages of the workmen, something must be given for the profits of the
undertaker of the work, who hazards his stock in this adventure. The value which the workmen
add to the materials, therefore, resolves itself in this case into two parts, of which the one pays
their wages, the other the profits of their employer upon the whole stock of materials and
wages which he advanced. He could have no interest to employ them, unless he expected from
the sale of their work something more than what was sufficient to replace his stock to him; and
he could have no interest to em- ploy a great stock rather than a small one, unless his profits
were to bear some proportion to the extent of his stock. The profits of stock, it may perhaps be
thought, are only a different name for the wages of a particular sort of labour, the labour of
inspection and direction. They are, however, altogether dif- ferent, are regulated by quite
different principles, and bear no proportion to the quantity, the hardship, or the ingenuity of
this supposed labour of inspection and direction. They are regulated altogether by the value of
the stock employed, and are greater or smaller in proportion to the ex- tent of this stock. Let us
suppose, for example, that in some particular place, where the common annual profits of
manufacturing stock are ten per cent. there are two different manufactures, in each of which
twenty workmen are employed, at the rate of fifteen pounds a year each, or at the expense of
three hundred a-year in each manufactory. Let us suppose, too, that the coarse mate-  rials
annually wrought up in the one cost only seven hundred pounds, while the finer materials
in the other cost seven thousand. The capital annually employed in the one will, in this case,
amount only to one thousand pounds; whereas that employed in the other will amount to seven
thousand three hundred pounds. At the rate of ten per cent. therefore, the undertaker of the one
will expect a yearly profit of about one hundred pounds only; while that of the other will
expect about seven hundred and thirty pounds. But though their profits are so very different,
their labour of inspec- tion and direction may be either altogether or very nearly the same. In
many great works, almost the whole labour of this kind is committed to some principal clerk.
His wages properly express the value of this labour of inspection and direction. Though in
settling them some regard is had com- monly, not only to his labour and skill, but to the trust
which is reposed in him, yet they never bear any regular proportion to the capital of which he
oversees the management; and the owner of this capital, though he is thus discharged of almost
all labour, still expects that his profit should bear a regular proportion to his capital. In the
price of commodities, therefore, the profits of stock constitute a component part altogether
different from the wages of labour, and regulated by quite different principles. In this state of
things, the whole produce of labour does not always belong to the labourer. He  must in most
cases share it with the owner of the stock which employs him. Neither is the quan- tity of
labour commonly employed in acquiring or producing any commodity, the only circum- stance
which can regulate the quantity which it ought commonly to purchase, command or ex- change
for. An additional quantity, it is evident, must be due for the profits of the stock which
ad- vanced the wages and furnished the materials of that labour. As soon as the land of any
country has all become private property, the landlords, like all other men, love to reap where
they never sowed, and demand a rent even for its natural produce. The wood of the forest, the
grass of the field, and all the natural fruits of the earth, which, when land was in common, cost
the labourer only the trouble of gathering them, come, even to him, to have an additional price
fixed upon them. He must then pay for the licence to gather them, and must give up to the
landlord a portion of what his labour either collects or produces. This portion, or, what comes
to the same thing, the price of this portion, constitutes the rent of land, and in the price of the
greater part of commodities, makes a third component part. The real value of all the different
component parts of price, it must be observed, is measured by the quantity of labour which
they can, each of them, purchase or command. Labour measures the value, not only of that part
of price which resolves itself into labour, but of that which resolves itself into rent, and of that
which resolves itself into profit. In every society, the price of every commodity finally resolves
itself into some one or other, or all of those three parts; and in every improved society, all the
three enter, more or less, as compo- nent parts, into the price of the far greater part of
commodities. In the price of corn, for example, one part pays the rent of the landlord, another
pays the wages or maintenance of the labourers and labouring cattle employed in producing it,
and the third pays the profit of the farmer. These three parts seem either immediately or
ultimately to make up the whole price of corn. A fourth part, it may perhaps be thought is
necessary for replac- ing the stock of the farmer, or for compensating the wear and tear of his
labouring cattle, and other instruments of husbandry. But it must be considered, that the price
of any instrument of husbandry, such as a labouring horse, is itself made up of the same time
parts; the rent of the land upon which he is reared, the labour of tending and rearing him, and
the profits of the farmer, who advances both the rent of this land, and the wages of this labour.
Though the price of the corn, therefore, may pay the price as well as the maintenance of the
horse, the whole price still resolves itself, either immediately or ultimately, into the same three
parts of rent, labour, and profit. In the price of flour or meal, we must add to the price of the
corn, the profits of the miller, and the wages of his servants; in the price of bread, the profits of
the baker, and the wages of his servants; and in the price of both, the labour of transporting the
corn from the house of the farmer to that of the miller, and from that of the miller to that of the
baker, together with the prof- its of those who advance the wages of that labour. The price of
flax resolves itself into the same three parts as that of corn. In the price of linen we must add to
this price the wages of the flax-dresser, of the spinner, of the weaver, of the bleacher, etc.
together with the profits of their respective employers. As any particular commodity comes to
be more manufactured, that part of the price which re- solves itself into wages and profit,
comes to be greater in proportion to that which resolves itself into rent. In the progress of the
manufacture, not only the number of profits increase, but every subsequent profit is greater
than the foregoing; because the capital from which it is derived must always be greater. The
capital which employs the weavers, for example, must be greater than that which employs the
spinners; because it not only replaces that capital with its profits, but pays, be- sides, the wages
of the weavers: and the profits must always bear some proportion to the capital.  In the most
improved societies, however, there are always a few commodities of which the price resolves
itself into two parts only the wages of labour, and the profits of stock; and a still smaller
number, in which it consists altogether in the wages of labour. In the price of sea-fish,
for example, one part pays the labour of the fisherman, and the other the profits of the capital
em- ployed in the fishery. Rent very seldom makes any part of it, though it does sometimes, as
I shall shew hereafter. It is otherwise, at least through the greater part of Europe, in river
fisheries. A salmon fishery pays a rent; and rent, though it cannot well be called the rent of
land, makes a part of the price of a salmon, as well as wares and profit. In some parts of
Scotland, a few poor people make a trade of gathering, along the sea-shore, those little
variegated stones commonly known by the name of Scotch pebbles. The price which is paid to
them by the stone-cutter, is altogether the wages of their labour; neither rent nor profit makes
an part of it. But the whole price of any commodity must still finally resolve itself into some
one or other or all of those three parts; as whatever part of it remains after paying the rent of
the land, and the price of the whole labour employed in raising, manufacturing, and bringing it
to market, must necessarily be profit to somebody. As the price or exchangeable value of every
particular commodity, taken separately, resolves itself into some one or other, or all of those
three parts; so that of all the commodities which com- pose the whole annual produce of the
labour of every country, taken complexly, must resolve itself into the same three parts, and be
parcelled out among different inhabitants of the country, either as the wages of their labour, the
profits of their stock, or the rent of their land. The whole of what is annually either collected or
produced by the labour of every society, or, what comes to the same thing, the whole price of
it, is in this manner originally distributed among some of its different members. Wages, profit,
and rent, are the three original sources of all revenue, as well as of all ex-  changeable value.
All other revenue is ultimately derived from some one or other of these. Whoever derives his
revenue from a fund which is his own, must draw it either from his  labour, from his stock, or
from his land. The revenue derived from labour is called wages; that de- rived from stock, by
the person who manages or employs it, is called profit; that derived from it by the person who
does not employ it himself, but lends it to another, is called the interest or the use of money. It
is the compensation which the borrower pays to the lender, for the profit which he  has an
opportunity of making by the use of the money. Part of that profit naturally belongs to
the borrower, who runs the risk and takes the trouble of employing it, and part to the lender,
who af- fords him the opportunity of making this profit. The interest of money is always a
derivative rev- enue, which, if it is not paid from the profit which is made by the use of the
money, must be paid from some other source of revenue, unless perhaps the borrower is a
spendthrift, who contracts a second debt in order to pay the interest of the first. The revenue
which proceeds altogether from land, is called rent, and belongs to the landlord. The revenue
of the farmer is derived partly from his labour, and partly from his stock. To him, land is only
the instrument which enables him to earn the wages of this labour, and to make the profits of
this stock. All taxes, and all the revenue which is founded upon them, all salaries, pensions,
and annuities of every kind, are ultimately de- rived from some one or other of those three
original sources of revenue, and are paid either im- mediately or mediately from the wages of
labour, the profits of stock, or the rent of land. When those three different sorts of revenue
belong to different persons, they are readily dis- tinguished; but when they belong to the same,
they are sometimes confounded with one another, at least in common language. A gentleman
who farms a part of his own estate, after paying the expense of cultivation, should gain both
the rent of the landlord and the profit of the farmer. He is apt to denominate, however, his
whole gain, profit, and thus confounds rent with profit, at least in common lan- guage. The
greater part of our North American and West Indian planters are in this situation.  They farm,
the greater part of them, their own estates: and accordingly we seldom hear of the rent of a
plantation, but frequently of its profit. 

Common farmers seldom employ any overseer to direct the general operations of the
farm. They generally, too, work a good deal with their own hands, as ploughmen, harrowers,
etc. What remains of the crop, after paying the rent, therefore, should not only replace to them
their stock employed in cultivation, together with its ordinary profits, but pay them the wages
which are due to them, both as labourers and overseers. Whatever remains, however, after
paying the rent and keeping up the stock, is called profit. But wages evidently make a part of it.
The farmer, by saving these wages, must necessarily gain them. Wages, therefore, are in this
case confounded with prof- it. An independent manufacturer, who has stock enough both to
purchase materials, and to maintain himself till he can carry his work to market, should gain
both the wages of a jour- neyman who works under a master, and the profit which that master
makes by the sale of that journeyman's work. His whole gains, however, are commonly called
profit, and wages are, in this case, too, confounded with profit. A gardener who cultivates his
own garden with his own hands, unites in his own person the three different characters, of
landlord, farmer, and labourer. His produce, therefore, should pay him the rent of the first, the
profit of the second, and the wages of the third. The whole, however, is commonly considered
as the earnings of his labour. Both rent and profit are, in this case, con- founded with
wages. As in a civilized country there are but few commodities of which the exchangeable
value aris- es from labour only, rent and profit contributing largely to that of the far greater
part of them, so the annual produce of its labour will always be sufficient to purchase or
command a much greater quantity of labour than what was employed in raising, preparing, and
bringing that produce to market. If the society were annually to employ all the labour which it
can annually purchase, as the quantity of labour would increase greatly every year, so the
produce of every succeeding year would be of vastly greater value than that of the foregoing.
But there is no country in which the whole annual produce is employed in maintaining the
industrious. The idle everywhere consume a great part of it; and, according to the different
proportions in which it is annually divided be- tween those two different orders of people, its
ordinary or average value must either annually in- crease or diminish, or continue the same
from one year to another. 

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

in every society or neighbourhood an ordinary or average rate, both of wages and profit, in
every different employment of labour and stock. This rate is naturally regulated, as I shall shew
hereafter, partly by the general circumstances of the society, their riches or poverty, their
advancing, stationary, or declining condition, and partly by the particular nature of each
em- ployment. There is likewise in every society or neighbourhood an ordinary or average rate
of rent, which is regulated, too, as I shall shew hereafter, partly by the general circumstances of
the society or neighbourhood in which the land is situated, and partly by the natural or
improved fertility of the land. These ordinary or average rates may be called the natural rates
of wages, profit and rent, at the time and place in which they commonly prevail. When the
price of any commodity is neither more nor less than what is sufficient to pay the  rent of the
land, the wages of the labour, and the profits of the stock employed in raising, pre- paring, and
bringing it to market, according to their natural rates, the commodity is then sold for  what may
be called its natural price. The commodity is then sold precisely for what it is worth, or for
what it really costs the person who brings it to market; for though, in common language, what
is called the prime cost of any commodity does not comprehend the profit of the person who is
to sell it again, yet, if he sells it at a price which does not allow him the ordinary rate of profit
in his neighbourhood, he is evidently a loser by the trade; since, by employing his stock in
some other way, he might have made that profit. His profit, besides, is his revenue, the proper
fund of his subsistence. As, while he is pre- paring and bringing the goods to market, he
advances to his workmen their wages, or their sub- sistence; so he advances to himself, in the
same manner, his own subsistence, which is generally suitable to the profit which he may
reasonably expect from the sale of his goods. Unless they yield him this profit, therefore, they
do not repay him what they may very properly be said to have re-  ally cost him. Though the
price, therefore, which leaves him this profit, is not always the lowest at which a  dealer may
sometimes sell his goods, it is the lowest at which he is likely to sell them for any
con- siderable time; at least where there is perfect liberty, or where he may change his trade as
often as he pleases. The actual price at which any commodity is commonly sold, is called its
market price. It may either be above, or below, or exactly the same with its natural price. The
market price of every particular commodity is regulated by the proportion between the quantity
which is actually brought to market, and the demand of those who are willing to pay
the natural price of the commodity, or the whole value of the rent, labour, and profit, which
must be paid in order to bring it thither. Such people may be called the effectual demanders,
and their de- mand the effectual demand; since it maybe sufficient to effectuate the bringing of
the commodity to market. It is different from the absolute demand. A very poor man may be
said, in some sense, to have a demand for a coach and six; he might like to have it; but his
demand is not an effectual demand, as the commodity can never be brought to market in order
to satisfy it. When the quantity of any commodity which is brought to market falls short of the
effectual demand, all those who are willing to pay the whole value of the rent, wages, and
profit, which must be paid in order to bring it thither, cannot be supplied with the quantity
which they want. Rather than want it altogether, some of them will be willing to give more. A
competition will im- mediately begin among them, and the market price will rise more or less
above the natural price, according as either the greatness of the deficiency, or the wealth and
wanton luxury of the com- petitors, happen to animate more or less the eagerness of the
competition. Among competitors of equal wealth and luxury, the same deficiency will
generally occasion a more or less eager compe- tition, according as the acquisition of the
commodity happens to be of more or less importance to them. Hence the exorbitant price of the
necessaries of life during the blockade of a town, or in a famine. 

When the quantity brought to market exceeds the effectual demand, it cannot be all sold
to those who are willing to pay the whole value of the rent, wages, and profit, which must be
paid in order to bring it thither. Some part must be sold to those who are willing to pay less,
and the low price which they give for it must reduce the price of the whole. The market price
will sink more or less below the natural price, according as the greatness of the excess
increases more or less the competition of the sellers, or according as it happens to be more or
less important to them to get immediately rid of the commodity. The same excess in the
importation of perishable, will occa- sion a much greater competition than in that of durable
commodities; in the importation of or- anges, for example, than in that of old iron. When the
quantity brought to market is just sufficient to supply the effectual demand, and no more, the
market price naturally comes to be either exactly, or as nearly as can be judged of, the same
with the natural price. The whole quantity upon hand can be disposed of for this price,  and can
not be disposed of for more. The competition of the different dealers obliges them all to accept
of this price, but does not oblige them to accept of less. The quantity of every commodity
brought to market naturally suits itself to the effectual de- mand. It is the interest of all those
who employ their land, labour, or stock, in bringing any com- modity to market, that the
quantity never should exceed the effectual demand; and it is the inter- est of all other people
that it never should fall short of that demand. If at any time it exceeds the effectual demand,
some of the component parts of its price must be paid below their natural rate. If it is rent, the
interest of the landlords will immediately prompt them to withdraw a part of their land; and if
it is wages or profit, the interest of the labourers in the one case, and of their employers in the
other, will prompt them to withdraw a part of their labour or stock, from this employment. The
quantity brought to market will soon be no more than sufficient to supply the effectual
demand. All the different parts of its price will rise to their nat- ural rate, and the whole price to
its natural price. If, on the contrary, the quantity brought to market should at any time fall short
of the effec- tual demand, some of the component parts of its price must rise above their
natural rate. If it is rent, the interest of all other landlords will naturally prompt them to prepare
more land for the raising of this commodity; if it is wages or profit, the interest of all other
labourers and dealers will soon prompt them to employ more labour and stock in preparing and
bringing it to market. The quantity brought thither will soon be sufficient to supply the
effectual demand. All the dif- ferent parts of its price will soon sink to their natural rate, and
the whole price to its natural price. The natural price, therefore, is, as it were, the central price,
to which the prices of all com- modities are continually gravitating. Different accidents may
sometimes keep them suspended a good deal above it, and sometimes force them down even
somewhat below it. But whatever may be the obstacles which hinder them from settling in this
centre of repose and continuance, they are constantly tending towards it. The whole quantity of
industry annually employed in order to bring any commodity to mar- ket, naturally suits itself
in this manner to the effectual demand. It naturally aims at bringing al- ways that precise
quantity thither which may be sufficient to supply, and no more than supply, that demand. But,
in some employments, the same quantity of industry will, in different years, produce very
different quantities of commodities; while, in others, it will produce always the same, or
very nearly the same. The same number of labourers in husbandry will, in different years,
produce very different quantities of corn, wine, oil, hops, etc. But the same number of spinners
or weavers will every year produce the same, or very nearly the same, quantity of linen and
woollen cloth. It is only the average produce of the one species of industry which can be
suited, in any respect, to the effectual demand; and as its actual produce is frequently much
greater, and frequently much less, than its average produce, the quantity of the commodities
brought to market will sometimes ex- ceed a good deal, and sometimes fall short a good deal,
of the effectual demand. Even though that demand, therefore, should continue always the
same, their market price will be liable to great fluctuations, will sometimes fall a good deal
below, and sometimes rise a good deal above, their natural price. In the other species of
industry, the produce of equal quantities of labour being always the same, or very nearly the
same, it can be more exactly suited to the effectual demand. While that demand continues the
same, therefore, the market price of the commodities is likely to do so too, and to be either
altogether, or as nearly as can be judged of, the same with the natural price. That the price of
linen and woollen cloth is liable neither to such frequent, nor to such great  variations, as the
price of corn, every man's experience will inform him. The price of the one species of
commodities varies only with the variations in the demand; that of the other varies not only
with the variations in the demand, but with the much greater, and more frequent, variations in
the quantity of what is brought to market, in order to supply that demand.  The occasional and
temporary fluctuations in the market price of any commodity fall chiefly upon those parts of its
price which resolve themselves into wages and profit. That part which re- solves itself into rent
is less affected by them. A rent certain in money is not in the least affected by them, either in
its rate or in its value. A rent which consists either in a certain proportion, or in a certain
quantity, of the rude produce, is no doubt affected in its yearly value by all the occasional and
temporary fluctuations in the market price of that rude produce; but it is seldom affected
by them in its yearly rate. In settling the terms of the lease, the landlord and farmer endeavour,
ac- cording to their best judgment, to adjust that rate, not to the temporary and occasional, but
to the average and ordinary price of the produce. Such fluctuations affect both the value and
the rate, either of wages or of profit, according as the market happens to be either overstocked
or understocked with commodities or with labour, with work done, or with work to be done. A
public mourning raises the price of black cloth ( with which the market is almost always
understocked upon such occasions), and augments the profits of the merchants who possess
any considerable quantity of it. It has no effect upon the wages of the weavers. The market is
understocked with commodities, not with labour, with work done, not with work to be done. It
raises the wages of journeymen tailors. The market is here understocked with labour. There is
an effectual demand for more labour, for more work to be done, than can be had. It sinks the
price of coloured silks and cloths, and thereby reduces the profits of the mer- chants who have
any considerable quantity of them upon hand. It sinks, too, the wages of the workmen
employed in preparing such commodities, for which all demand is stopped for six months,
perhaps for a twelvemonth. The market is here overstocked both with commodities and with
labour. But though the market price of every particular commodity is in this manner
continually gravitating, if one may say so, towards the natural price; yet sometimes particular
accidents, some- times natural causes, and sometimes particular regulations of policy, may, in
many commodities, keep up the market price, for a long time together, a good deal above the
natural price. When, by an increase in the effectual demand, the market price of some
particular com- modity happens to rise a good deal above the natural price, those who employ
their stocks in sup- plying that market, are generally careful to conceal this change. If it was
commonly known, their great profit would tempt so many new rivals to employ their stocks in
the same way, that, the effectual demand being fully supplied, the market price would soon be
reduced to the natural price, and, perhaps, for some time even below it. If the market is at a
great distance from the resi- dence of those who supply it, they may sometimes be able to keep
the secret for several years to- gether, and may so long enjoy their extraordinary profits
without any new rivals. Secrets of this kind, however, it must be acknowledged, can seldom be
long kept; and the extraordinary profit can last very little longer than they are kept. Secrets in
manufactures are capable of being longer kept than secrets in trade. A dyer who has found the
means of producing a particular colour with materials which cost only half the price of those
commonly made use of, may, with good management, enjoy the advantage of his discovery as
long as he lives, and even leave it as a legacy to his posterity. His extraordinary gains arise
from the high price which is paid for his private labour. They properly consist in the
high wages of that labour. But as they are repeated upon every part of his stock, and as their
whole amount bears, upon that account, a regular proportion to it, they are commonly
considered as ex- traordinary profits of stock. Such enhancements of the market price are
evidently the effects of particular accidents, of which, however, the operation may sometimes
last for many years together. Some natural productions require such a singularity of soil and
situation, that all the land in a great country, which is fit for producing them, may not be
sufficient to supply the effectual de- mand. The whole quantity brought to market, therefore,
may be disposed of to those who are will- ing to give more than what is sufficient to pay the
rent of the land which produced them, together with the wages of the labour and the profits of
the stock which were employed in preparing and bringing them to market, according to their
natural rates. Such commodities may continue for whole centuries together to be sold at this
high price; and that part of it which resolves itself into the rent of land, is in this case the part
which is generally paid above its natural rate. The rent of the land which affords such singular
and esteemed productions, like the rent of some vineyards in France of a peculiarly happy soil
and situation, bears no regular proportion to the rent of other equally fertile and equally well
cultivated land in its neighbourhood. The wages of the labour, and the profits of the stock
employed in bringing such commodities to market, on the contrary, are seldom out of their
natural proportion to those of the other employments of labour and stock in their
neighbourhood. Such enhancements of the market price are evidently the effect of natural
causes, which may hinder the effectual demand from ever being fully supplied, and which may
continue, therefore, to operate for ever. A monopoly granted either to an individual or to a
trading company, has the same effect as a secret in trade or manufactures. The monopolists, by
keeping the market constantly understocked by never fully supplying the effectual demand, sell
their commodities much above the natural price, and raise their emoluments, whether they
consist in wages or profit, greatly above their nat- ural rate. The price of monopoly is upon
every occasion the highest which can be got. The natural price, or the price of free competition,
on the contrary, is the lowest which can be taken, not upon every occasion indeed, but for any
considerable time together. The one is upon every occasion the highest which can be squeezed
out of the buyers, or which it is supposed they will consent to give; the other is the lowest
which the sellers can commonly afford to take, and at the same time continue their
business. The exclusive privileges of corporations, statutes of apprenticeship, and all those
laws which restrain in particular employments, the competition to a smaller number than might
otherwise go into them, have the same tendency, though in a less degree. They are a sort of
enlarged monop- olies, and may frequently, for ages together, and in whole classes of
employments, keep up the market price of particular commodities above the natural price, and
maintain both the wages of the labour and the profits of the stock employed about them
somewhat above their natural rate. Such enhancements of the market price may last as long as
the regulations of policy which give occasion to them. The market price of any particular
commodity, though it may continue long above, can sel- dom continue long below, its natural
price. Whatever part of it was paid below the natural rate, the persons whose interest it affected
would immediately feel the loss, and would immediately withdraw either so much land or no
much labour, or so much stock, from being employed about it, that the quantity brought to
market would soon be no more than sufficient to supply the effec- tual demand. Its market
price, therefore, would soon rise to the natural price; this at least would be the case where there
was perfect liberty. The same statutes of apprenticeship and other corporation laws, indeed,
which, when a manufacture is in prosperity, enable the workman to raise his wages a good deal
above their nat- ural rate, sometimes oblige him, when it decays, to let them down a good deal
below it. As in the one case they exclude many people from his employment, so in the other
they exclude him from many employments. The effect of such regulations, however, is not
near so durable in sinking the workman's wages below, as in raising them above their natural
rate. Their operation in the one way may endure for many centuries, but in the other it can last
no longer than the lives of some of the workmen who were bred to the business in the time of
its prosperity. When they are gone, the number of those who are afterwards educated to the
trade will naturally suit itself to the effectual demand. The policy must be as violent as that of
Indostan or ancient Egypt (where every man was bound by a principle of religion to follow the
occupation of his father, and was supposed to commit the most horrid sacrilege if he changed it
for another), which can in any particular em- ployment, and for several generations together,
sink either the wages of labour or the profits of stock below their natural rate. This is all that I
think necessary to be observed at present concerning the deviations, whether occasional or
permanent, of the market price of commodities from the natural price. The natural price itself
varies with the natural rate of each of its component parts, of wages, profit, and rent; and in
every society this rate varies according to their circumstances, according to their riches or
poverty, their advancing, stationary, or declining condition. I shall, in the four fol- lowing
chapters, endeavour to explain, as fully and distinctly as I can, the causes of those
different variations. First, I shall endeavour to explain what are the circumstances which
naturally determine the rate of wages, and in what manner those circumstances are affected by
the riches or poverty, by the advancing, stationary, or declining state of the society. Secondly, I
shall endeavour to shew what are the circumstances which naturally determine the rate of
profit; and in what manner, too, those circumstances are affected by the like variations  in the
state of the society. Though pecuniary wages and profit are very different in the different
employments of labour and stock; yet a certain proportion seems commonly to take place
between both the pecuniary wages in all the different employments of labour, and the
pecuniary profits in all the different em- ployments of stock. This proportion, it will appear
hereafter, depends partly upon the nature of the different employments, and partly upon the
different laws and policy of the society in which they are carried on. But though in many
respects dependent upon the laws and policy, this pro- portion seems to be little affected by the
riches or poverty of that society, by its advancing, sta- tionary, or declining condition, but to
remain the same, or very nearly the same, in all those dif- ferent states. I shall, in the third
place, endeavour to explain all the different circumstances which regulate this proportion. In
the fourth and last place, I shall endeavour to shew what are the circumstances which regulate
the rent of land, and which either raise or lower the real price of all the different sub-  stances
which it produces. 

CHAPTER VIII. OF THE WAGES OF LABOUR.  The produce of labour constitutes the

natural recompence or wages of labour.  In that original state of things which precedes both the
appropriation of land and the ac- cumulation of stock, the whole produce of labour belongs to
the labourer. He has neither landlord nor master to share with him. Had this state continued,
the wages of labour would have augmented with all those improve- ments in its productive
powers, to which the division of labour gives occasion. All things would gradually have
become cheaper. They would have been produced by a smaller quantity of labour; and as the
commodities produced by equal quantities of labour would naturally in this state of things be
exchanged for one another, they would have been purchased likewise with the produce of a
smaller quantity. But though all things would have become cheaper in reality, in appearance
many things might have become dearer, than before, or have been exchanged for a greater
quantity of other goods. Let us suppose, for example, that in the greater part of employments
the productive powers of labour had been improved to tenfold, or that a day's labour could
produce ten times the quan- tity of work which it had done originally; but that in a particular
employment they had been im- proved only to double, or that a day's labour could produce
only twice the quantity of work which it had done before. In exchanging the produce of a day's
labour in the greater part of employ- ments for that of a day's labour in this particular one, ten
times the original quantity of work in them would purchase only twice the original quantity in
it. Any particular quantity in it, therefore, a pound weight, for example, would appear to be
five times dearer than before. In reality, how- ever, it would be twice as cheap. Though it
required five times the quantity of other goods to pur- chase it, it would require only half the
quantity of labour either to purchase or to produce it. The acquisition, therefore, would be
twice as easy as before. But this original state of things, in which the labourer enjoyed the
whole produce of his own labour, could not last beyond the first introduction of the
appropriation of land and the accumu- lation of stock. It was at an end, therefore, long before
the most considerable improvements were made in the productive powers of labour; and it
would be to no purpose to trace further what might have been its effects upon the recompence
or wages of labour. As soon as land becomes private property, the landlord demands a share of
almost all the pro- duce which the labourer can either raise or collect from it. His rent makes
the first deduction from the produce of the labour which is employed upon land. It seldom
happens that the person who tills the ground has wherewithal to maintain himself till he reaps
the harvest. His maintenance is generally advanced to him from the stock of a master,  the
farmer who employs him, and who would have no interest to employ him, unless he was
to share in the produce of his labour, or unless his stock was to be replaced to him with a
profit. This profit makes a second deduction from the produce of the labour which is employed
upon land. The produce of almost all other labour is liable to the like deduction of profit. In all
arts and manufactures, the greater part of the workmen stand in need of a master, to advance
them the materials of their work, and their wages and maintenance, till it be completed. He
shares in the produce of their labour, or in the value which it adds to the materials upon which
it is bestowed; and in this share consists his profit. It sometimes happens, indeed, that a single
independent workman has stock sufficient both to purchase the materials of his work, and to
maintain himself till it be completed. He is both master and workman, and enjoys the whole
produce of his own labour, or the whole value which it adds to the materials upon which it is
bestowed. It includes what are usually two distinct rev- enues, belonging to two distinct
persons, the profits of stock, and the wages of labour. Such cases, however, are not very
frequent; and in every part of Europe twenty workmen serve under a master for one that is
independent, and the wages of labour are everywhere under- stood to be, what they usually are,
when the labourer is one person, and the owner of the stock which employs him another. What
are the common wages of labour, depends everywhere upon the contract usually made between
those two parties, whose interests are by no means the same. The workmen desire to get as
much, the masters to give as little, as possible. The former are disposed to combine in order
to raise, the latter in order to lower, the wages of labour. It is not, however, difficult to foresee
which of the two parties must, upon all ordinary occa- sions, have the advantage in the dispute,
and force the other into a compliance with their terms. The masters, being fewer in number,
can combine much more easily: and the law, besides, authorises, or at least does not prohibit,
their combinations, while it prohibits those of the work- men. We have no acts of parliament
against combining to lower the price of work, but many against combining to raise it. In all
such disputes, the masters can hold out much longer. A land- lord, a farmer, a master
manufacturer, or merchant, though they did not employ a single work- man, could generally
live a year or two upon the stocks, which they have already acquired. Many workmen could
not subsist a week, few could subsist a month, and scarce any a year, without em- ployment. In
the long run, the workman may be as necessary to his master as his master is to him; but the
necessity is not so immediate. We rarely hear, it has been said, of the combinations of masters,
though frequently of those of workmen. But whoever imagines, upon this account, that masters
rarely combine, is as igno- rant of the world as of the subject. Masters are always and
everywhere in a sort of tacit, but con- stant and uniform, combination, not to raise the wages of
labour above their actual rate. To violate this combination is everywhere a most unpopular
action, and a sort of reproach to a master among his neighbours and equals. We seldom,
indeed, hear of this combination, because it is the usual, and, one may say, the natural state of
things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations
to sink the wages of labour even below this rate. These are always conducted with the utmost
silence and secrecy till the moment of execution; and when the workmen yield, as they
sometimes do without resistance, though severely felt by them, they are never heard of by
other people. Such combinations, however, are frequently resisted by a contrary defensive
combination of the workmen, who sometimes, too, without any provocation of this kind,
combine, of their own accord, to raise the price of their labour. Their usual pretences are,
sometimes the high price of provisions, sometimes the great profit which their masters
make by their work. But whether their combinations be offensive or defensive, they are always
abun- dantly heard of. In order to bring the point to a speedy decision, they have always
recourse to the loudest clamour, and sometimes to the most shocking violence and outrage.
They are desperate, and act with the folly and extravagance of desperate men, who must either
starve, or frighten their masters into an immediate compliance with their demands. The
masters, upon these occasions, are just as clamorous upon the other side, and never cease to
call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws
which have been enacted with so much severity against the combination of servants, labourers,
and journeymen. The workmen, accord- ingly, very seldom derive any advantage from the
violence of those tumultuous combinations, which, partly from the interposition of the civil
magistrate, partly from the superior steadiness of the masters, partly from the necessity which
the greater part of the workmen are under of submit- ting for the sake of present subsistence,
generally end in nothing but the punishment or ruin of the ringleaders. But though, in disputes
with their workmen, masters must generally have the advantage, there is, however, a certain
rate, below which it seems impossible to reduce, for any considerable time, the ordinary wages
even of the lowest species of labour. A man must always live by his work, and his wages must
at least be sufficient to maintain him. They must even upon most occasions be somewhat more,
otherwise it would be impossible for him to bring up a family, and the race of such workmen
could not last beyond the first gener- ation. Mr Cantillon seems, upon this account, to suppose
that the lowest species of common labourers must everywhere earn at least double their own
maintenance, in order that, one with another, they may be enabled to bring up two children; the
labour of the wife, on account of her necessary attendance on the children, being supposed no
more than sufficient to provide for herself: But one half the children born, it is computed, die
before the age of manhood. The poor- est labourers, therefore, according to this account, must,
one with another, attempt to rear at least four children, in order that two may have an equal
chance of living to that age. But the necessary maintenance of four children, it is supposed,
may be nearly equal to that of one man. The labour of an able-bodied slave, the same author
adds, is computed to be worth double his maintenance; and that of the meanest labourer, he
thinks, cannot be worth less than that of an able-bodied slave. Thus far at least seems certain,
that, in order to bring up a family, the labour of the hus- band and wife together must, even in
the lowest species of common labour, be able to earn some- thing more than what is precisely
necessary for their own maintenance; but in what proportion, whether in that above-mentioned,
or many other, I shall not take upon me to determine. There are certain circumstances,
however, which sometimes give the labourers an advantage, and enable them to raise their
wages considerably above this rate, evidently the lowest which is consistent with common
humanity. When in any country the demand for those who live by wages, labourers,
journeymen, ser- vants of every kind, is continually increasing; when every year furnishes
employment for a greater number than had been employed the year before, the workmen have
no occasion to combine in order to raise their wages. The scarcity of hands occasions a
competition among masters, who bid against one another in order to get workmen, and thus
voluntarily break through the natural combination of masters not to raise wages. The demand
for those who live by wages, it is evident, cannot increase but in proportion to the increase of
the funds which are destined to the payment of wages. These funds are of two kinds, first, the
revenue which is over and above what is neces- sary for the maintenance; and, secondly, the
stock which is over and above what is necessary for the employment of their masters. When
the landlord, annuitant, or monied man, has a greater revenue than what he judges sufficient to
maintain his own family, he employs either the whole or a part of the surplus in  maintaining
one or more menial servants. Increase this surplus, and he will naturally increase the number of
those servants. When an independent workman, such as a weaver or shoemaker, has got more
stock than what is sufficient to purchase the materials of his own work, and to maintain himself
till he can dispose of it, he naturally employs one or more journeymen with the surplus, in
order to make a profit by their work. Increase this surplus, and he will naturally increase the
number of his jour- neymen. The demand for those who live by wages, therefore, necessarily
increases with the increase of the revenue and stock of every country, and cannot possibly
increase without it. The increase of revenue and stock is the increase of national wealth. The
demand for those who live by wages, therefore, naturally increases with the increase of
national wealth, and cannot possibly increase without it. It is not the actual greatness of
national wealth, but its continual increase, which occasions a rise in the wages of labour. It is
not, accordingly, in the richest countries, but in the most thriving, or in those which are
growing rich the fastest, that the wages of labour are highest. England is certainly, in the
present times, a much richer country than any part of North America. The wages  of labour,
however, are much higher in North America than in any part of England. In the prov-  ince of
New York, common labourers earned in 1773, before the commencement of the late
dis- turbances, three shillings and sixpence currency, equal to two shillings sterling, a-day;
ship- carpenters, ten shillings and sixpence currency, with a pint of rum, worth sixpence
sterling, equal in all to six shillings and sixpence sterling; house-carpenters and bricklayers,
eight shillings cur- rency, equal to four shillings and sixpence sterling; journeymen tailors, five
shillings currency, equal to about two shillings and tenpence sterling. These prices are all
above the London price; and wages are said to be as high in the other colonies as in New York.
The price of provisions is everywhere in North America much lower than in England. A dearth
has never been known there. In the worst seasons they have always had a sufficiency for
themselves, though less for exportation. If the money price of labour, therefore, be higher than
it is anywhere in the mother- country, its real price, the real command of the necessaries and
conveniencies of life which it conveys to the labourer, must be higher in a still greater
proportion. But though North America is not yet so rich as England, it is much more thriving,
and ad- vancing with much greater rapidity to the further acquisition of riches. The most
decisive mark of the prosperity of any country is the increase of the number of its inhabitants.
In Great Britain, and most other European countries, they are not supposed to double in less
than five hundred years. In the British colonies in North America, it has been found that they
double in twenty or five-and-twenty years. Nor in the present times is this increase principally
owing to the continual importation of new inhabitants, but to the great multiplication of the
species. Those who live to old age, it is said, frequently see there from fifty to a hundred, and
sometimes many more, de- scendants from their own body. Labour is there so well rewarded,
that a numerous family of chil- dren, instead of being a burden, is a source of opulence and
prosperity to the parents. The labour of each child, before it can leave their house, is computed
to be worth a hundred pounds clear gain to them. A young widow with four or five young
children, who, among the middling or infe- rior ranks of people in Europe, would have so little
chance for a second husband, is there fre- quently courted as a sort of fortune. The value of
children is the greatest of all encouragements to marriage. We cannot, therefore, wonder that
the people in North America should generally marry very young. Notwithstanding the great
increase occasioned by such early marriages, there is a continual complaint of the scarcity of
hands in North America. The demand for labourers, the funds destined for maintaining them
increase, it seems, still faster than they can find labourers to employ. Though the wealth of a
country should be very great, yet if it has been long stationary, we must not expect to find the
wages of labour very high in it. The funds destined for the payment of wages, the revenue and
stock of its inhabitants, may be of the greatest extent; but if they have con- tinued for several
centuries of the same, or very nearly of the same extent, the number of labour-  ers employed
every year could easily supply, and even more than supply, the number wanted the  following
year. There could seldom be any scarcity of hands, nor could the masters be obliged to bid
against one another in order to get them. The hands, on the contrary, would, in this
case, naturally multiply beyond their employment. There would be a constant scarcity of
employment, and the labourers would be obliged to bid against one another in order to get it. If
in such a coun- try the wages off labour had ever been more than sufficient to maintain the
labourer, and to en- able him to bring up a family, the competition of the labourers and the
interest of the masters would soon reduce them to the lowest rate which is consistent with
common humanity. China has been long one of the richest, that is, one of the most fertile, best
cultivated, most industrious, and most populous, countries in the world. It seems, however, to
have been long stationary. Marco Polo, who visited it more than five hundred years ago,
describes its cultivation, industry, and populousness, almost in the same terms in which they
are described by travellers in the present times. It had, perhaps, even long before his time,
acquired that full complement of riches which the nature of its laws and institutions permits it
to acquire. The accounts of all travellers, inconsistent in many other respects, agree in the low
wages of labour, and in the difficulty which a labourer finds in bringing up a family in China.
If by digging the ground a whole day he can get what will purchase a small quantity of rice in
the evening, he is contented. The condition of arti- ficers is, if possible, still worse. Instead of
waiting indolently in their work-houses for the calls of their customers, as in Europe, they are
continually running about the streets with the tools of their respective trades, offering their
services, and, as it were, begging employment. The poverty of the lower ranks of people in
China far surpasses that of the most beggarly nations in Europe. In the neighbourhood of
Canton, many hundred, it is commonly said, many thousand families have no habitation on the
land, but live constantly in little fishing-boats upon the rivers and canals. The subsistence
which they find there is so scanty, that they are eager to fish up the nas-  tiest garbage thrown
overboard from any European ship. Any carrion, the carcase of a dead dog or  cat, for example,
though half putrid and stinking, is as welcome to them as the most wholesome food to the
people of other countries. Marriage is encouraged in China, not by the profitableness of
children, but by the liberty of destroying them. In all great towns, several are every night
ex- posed in the street, or drowned like puppies in the water. The performance of this horrid
office is even said to be the avowed business by which some people earn their
subsistence. China, however, though it may, perhaps, stand still, does not seem to go
backwards. Its towns are nowhere deserted by their inhabitants. The lands which had once
been cultivated, are nowhere neglected. The same, or very nearly the same, annual labour,
must, therefore, continue to be performed, and the funds destined for maintaining it must not,
consequently, be sensibly diminished. The lowest class of labourers, therefore, notwithstanding
their scanty subsistence, must some way or another make shift to continue their race so far as
to keep up their usual num- bers. But it would be otherwise in a country where the funds
destined for the maintenance of labour were sensibly decaying. Every year the demand for
servants and labourers would, in all the different classes of employments, be less than it had
been the year before. Many who had been bred in the superior classes, not being able to find
employment in their own business, would be glad to seek it in the lowest. The lowest class
being not only overstocked with its own workmen, but with the overflowings of all the other
classes, the competition for employment would be so great in it, as to reduce the wages of
labour to the most miserable and scanty subsistence of the labourer. Many would not be able to
find employment even upon these hard terms, but would ei- ther starve, or be driven to seek a
subsistence, either by begging, or by the perpetration perhaps, of the greatest enormities. Want,
famine, and mortality, would immediately prevail in that class, and from thence extend
themselves to all the superior classes, till the number of inhabitants in the country was reduced
to what could easily be maintained by the revenue and stock which re- mained in it, and which
had escaped either the tyranny or calamity which had destroyed the rest. This, perhaps, is
nearly the present state of Bengal, and of some other of the English settlements in the East
Indies. In a fertile country, which had before been much depopulated, where subsis- tence,
consequently, should not be very difficult, and where, notwithstanding, three or four hun- dred
thousand people die of hunger in one year, we maybe assured that the funds destined for the
maintenance of the labouring poor are fast decaying. The difference between the genius of
the British constitution, which protects and governs North America, and that of the mercantile
com- pany which oppresses and domineers in the East Indies, cannot, perhaps, be better
illustrated than by the different state of those countries. The liberal reward of labour, therefore,
as it is the necessary effect, so it is the natural symp- tom of increasing national wealth. The
scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things
are at a stand, and their starving condition, that they are going fast backwards. In Great Britain,
the wages of labour seem, in the present times, to be evidently more than what is precisely
necessary to enable the labourer to bring up a family. In order to satisfy our- selves upon this
point, it will not be necessary to enter into any tedious or doubtful calculation of what may be
the lowest sum upon winch it is possible to do this. There are many plain symp- toms, that the
wages of labour are nowhere in this country regulated by this lowest rate, which is consistent
with common humanity. First, in almost every part of Great Britain there is a distinction, even
in the lowest species of labour, between summer and winter wages. Summer wages are always
highest. But, on account of the extraordinary expense of fuel, the maintenance of a family is
most expensive in winter. Wages, therefore, being highest when this expense is lowest, it
seems evident that they are not regulated by what is necessary for this expense, but by the
quantity and supposed value of the work. A labourer, it may be said, indeed, ought to save part
of his summer wages, in order to de- fray his winter expense; and that, through the whole year,
they do not exceed what is necessary to maintain his family through the whole year. A slave,
however, or one absolutely dependent on us for immediate subsistence, would not be treated in
this manner. His daily subsistence would be proportioned to his daily necessities. Secondly, the
wages of labour do not, in Great Britain, fluctuate with the price of provisions. These vary
everywhere from year to year, frequently from month to month. But in many places, the money
price of labour remains uniformly the same, sometimes for half a century together. If, in these
places, therefore, the labouring poor can maintain their families in dear years, they must be at
their ease in times of moderate plenty, and in affluence in those of extraordinary
cheapness. The high price of provisions during these ten years past, has not, in many parts of
the kingdom, been accompanied with any sensible rise in the money price of labour. It has,
indeed, in some; owing, probably, more to the increase of the demand for labour, than to that
of the price of provi- sions. Thirdly, as the price of provisions varies more from year to year
than the wages of labour, so, on the other hand, the wages of labour vary more from place to
place than the price of provisions. The prices of bread and butchers' meat are generally the
same, or very nearly the same, through the greater part of the united kingdom. These, and most
other things which are sold by retail, the way in which the labouring poor buy all things, are
generally fully as cheap, or cheaper, in great towns than in the remoter parts of the country, for
reasons which I shall have occasion to explain hereafter. But the wages of labour in a great
town and its neighbourhood, are frequently a fourth or a fifth part, twenty or five-and—twenty
per cent. higher than at a few miles distance. Eighteen pence a day may be reckoned the
common price of labour in London and its neighbourhood. At a few miles distance, it falls to
fourteen and fifteen pence. Tenpence may be reckoned its price in Edinburgh and its
neighbourhood. At a few miles distance, it falls to eightpence, the usual price of common
labour through the greater part of the low country of Scotland, where it varies a good deal less
than in England. Such a difference of prices, which, it seems, is not always sufficient
to transport a man from one parish to another, would necessarily occasion so great a
transportation of the most bulky commodities, not only from one parish to another, but from
one end of the kingdom, almost from one end of the world to the other, as would soon reduce
them more nearly to a level. After all that has been said of the levity and inconstancy of human
nature, it appears evidently from experience, that man is, of all sorts of luggage, the most
difficult to be transported. If the labouring poor, therefore, can maintain their families in those
parts of the kingdom where the price of labour is lowest, they must be in affluence where it is
highest. Fourthly, the variations in the price of labour not only do not correspond, either in
place or time, with those in the price of provisions, but they are frequently quite
opposite. Grain, the food of the common people, is dearer in Scotland than in England, whence
Scot- land receives almost every year very large supplies. But English corn must be sold dearer
in Scot- land, the country to which it is brought, than in England, the country from which it
comes; and in proportion to its quality it cannot be sold dearer in Scotland than the Scotch corn
that comes to the same market in competition with it. The quality of grain depends chiefly
upon the quantity of flour or meal which it yields at the mill; and, in this respect, English grain
is so much superior to the Scotch, that though often dearer in appearance, or in proportion to
the measure of its bulk, it is generally cheaper in reality, or in proportion to its quality, or even
to the measure of its weight. The price of labour, on the contrary, is dearer in England than in
Scotland. If the labouring poor, therefore, can maintain their families in the one part of the
united kingdom, they must be in affluence in the other. Oatmeal, indeed, supplies the common
people in Scotland with the great- est and the best part of their food, which is, in general, much
inferior to that of their neighbours of the same rank in England. This difference, however, in
the mode of their subsistence, is not the cause, but the effect, of the difference in their wages;
though, by a strange misapprehension, I have frequently heard it represented as the cause. It is
not because one man keeps a coach, while his neighbour walks a-foot, that the one is rich, and
the other poor; but because the one is rich, he keeps a coach, and because the other is poor, he
walks a-foot. During the course of the last century, taking one year with another, grain was
dearer in both parts of the united kingdom than during that of the present. This is a matter of
fact which cannot now admit of any reasonable doubt; and the proof of it is, if possible, still
more decisive with re- gard to Scotland than with regard to England. It is in Scotland supported
by the evidence of the public fiars, annual valuations made upon oath, according to the actual
state of the markets, of all the different sorts of grain in every different county of Scotland. If
such direct proof could require any collateral evidence to confirm it, I would observe, that this
has likewise been the case in France, and probably in most other parts of Europe. With regard
to France, there is the clearest proof. But though it is certain, that in both parts of the united
kingdom grain was somewhat dearer in the last century than in the present, it is equally certain
that labour was much cheaper. If the labouring poor, therefore, could bring up their families
then, they must be much more at their ease now. In the last century, the most usual day-wages
of common labour through the greater part of Scotland were sixpence in summer, and
fivepence in winter. Three shillings a- week, the same price, very nearly still continues to be
paid in some parts of the Highlands and Western islands. Through the greater part of the Low
country, the most usual wages of common labour are now eight pence a-day; tenpence,
sometimes a shilling, about Edinburgh, in the coun- ties which border upon England, probably
on account of that neighbourhood, and in a few other places where there has lately been a
considerable rise in the demand for labour, about Glasgow, Carron, Ayrshire, etc. In England,
the improvements of agriculture, manufactures, and com- merce, began much earlier than in
Scotland. The demand for labour, and consequently its price, must necessarily have increased
with those improvements. In the last century, accordingly, as well as in the present, the wages
of labour were higher in England than in Scotland. They have risen, too, considerably since
that time, though, on account of the greater variety of wages paid there in different places, it is
more difficult to ascertain how much. In 1614, the pay of a foot soldier was  the same as in the
present times, eightpence a-day. When it was first established, it would natu- rally be regulated
by the usual wages of common labourers, the rank of people from which foot soldiers are
commonly drawn. Lord-chief-justice Hales, who wrote in the time of Charles II. com- putes
the necessary expense of a labourer's family, consisting of six persons, the father and moth-  er,
two children able to do something, and two not able, at ten shillings a-week, or twenty-
six pounds a-year. If they cannot earn this by their labour, they must make it up, he supposes,
either by begging or stealing. He appears to have enquired very carefully into this subject {See
his scheme for the maintenance of the poor, in Burn's History of the Poor Laws.}. In 1688, Mr
Gre- gory King, whose skill in political arithmetic is so much extolled by Dr Davenant,
computed the ordinary income of labourers and out-servants to be fifteen pounds a-year to a
family, which he supposed to consist, one with another, of three and a half persons. His
calculation, therefore, though different in appearance, corresponds very nearly at bottom with
that of Judge Hales. Both suppose the weekly expense of such families to be about twenty-
pence a-head. Both the pecuniary income and expense of such families have increased
considerably since that time through the greater part of the kingdom, in some places more, and
in some less, though perhaps scarce any- where so much as some exaggerated accounts of the
present wages of labour have lately repre- sented them to the public. The price of labour, it
must be observed, cannot be ascertained very accurately anywhere, different prices being often
paid at the same place and for the same sort of labour, not only according to the different
abilities of the workman, but according to the easiness or hardness of the masters. Where
wages are not regulated by law, all that we can pretend to determine is, what are the most
usual; and experience seems to shew that law can never regulate them properly, though it has
often pretended to do so. The real recompence of labour, the real quantity of the necessaries
and conveniencies of life which it can procure to the labourer, has, during the course of the
present century, increased per- haps in a still greater proportion than its money price. Not only
grain has become somewhat cheaper, but many other things, from which the industrious poor
derive an agreeable and whole- some variety of food, have become a great deal cheaper.
Potatoes, for example, do not at present, through the greater part of the kingdom, cost half the
price which they used to do thirty or forty years ago. The same thing may be said of turnips,
carrots, cabbages; things which were formerly never raised but by the spade, but which are
now commonly raised by the plough. All sort of gar- den stuff, too, has become cheaper. The
greater part of the apples, and even of the onions, con- sumed in Great Britain, were, in the last
century, imported from Flanders. The great improve- ments in the coarser manufactories of
both linen and woollen cloth furnish the labourers with cheaper and better clothing; and those
in the manufactories of the coarser metals, with cheaper and better instruments of trade, as well
as with many agreeable and convenient pieces of house- hold furniture. Soap, salt, candles,
leather, and fermented liquors, have, indeed, become a good deal dearer, chiefly from the taxes
which have been laid upon them. The quantity of these, how- ever, which the labouring poor
an under any necessity of consuming, is so very small, that the increase in their price does not
compensate the diminution in that of so many other things. The common complaint, that
luxury extends itself even to the lowest ranks of the people, and that the labouring poor will
not now be contented with the same food, clothing, and lodging, which satis- fied them in
former times, may convince us that it is not the money price of labour only, but its real
recompence, which has augmented. Is this improvement in the circumstances of the lower
ranks of the people to be regarded as an advantage, or as an inconveniency, to the society? The
answer seems at first abundantly plain. Servants, labourers, and workmen of different kinds,
make up the far greater part of every great political society. But what improves the
circumstances of the greater part, can never be regarded as any inconveniency to the whole. No
society can surely be flourishing and happy, of which the far greater part of the members are
poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole
body of the people, should have such a share of the produce of their own labour as to be
themselves tolerably well fed, clothed, and lodged. Poverty, though it no doubt discourages,
does not always prevent, marriage. It seems even to be favourable to generation. A half-starved
Highland woman frequently bears more than twenty children, while a pampered fine lady is
often incapable of bearing any, and is generally exhausted by two or three. Barrenness, so
frequent among women of fashion, is very rare among those of inferior station. Luxury, in the
fair sex, while it inflames, perhaps, the passion for enjoyment, seems always to weaken, and
frequently to destroy altogether, the powers of generation. But poverty, though it does not
prevent the generation, is extremely unfavourable to the rear- ing of children. The tender plant
is produced; but in so cold a soil, and so severe a climate, soon withers and dies. It is not
uncommon, I have been frequently told, in the Highlands of Scotland, for a mother who has
born twenty children not to have two alive. Several officers of great expe- rience have assured
me, that, so far from recruiting their regiment, they have never been able to supply it with
drums and fifes, from all the soldiers' children that were born in it. A greater num- ber of fine
children, however, is seldom seen anywhere than about a barrack of soldiers. Very few  of
them, it seems, arrive at the age of thirteen or fourteen. In some places, one half the
children die before they are four years of age, in many places before they are seven, and in
almost all places before they are nine or ten. This great mortality, however will everywhere be
found chiefly among the children of the common people, who cannot afford to tend them with
the same care as those of better station. Though their marriages are generally more fruitful than
those of people of fash- ion, a smaller proportion of their children arrive at maturity. In
foundling hospitals, and among the children brought up by parish charities, the mortality is still
greater than among those of the common people. Every species of animals naturally multiplies
in proportion to the means of their subsistence, and no species can ever multiply be yond it.
But in civilized society, it is only among the inferior ranks of people that the scantiness of
subsistence can set limits to the further multiplication of the human species; and it can do so in
no other way than by destroying a great part of the children which their fruitful marriages
produce. The liberal reward of labour, by enabling them to provide better for their children,
and conse- quently to bring up a greater number, naturally tends to widen and extend those
limits. It de- serves to be remarked, too, that it necessarily does this as nearly as possible in the
proportion which the demand for labour requires. If this demand is continually increasing, the
reward of labour must necessarily encourage in such a manner the marriage and multiplication
of labour- ers, as may enable them to supply that continually increasing demand by a
continually increasing population. If the reward should at any time be less than what was
requisite for this purpose, the deficiency of hands would soon raise it; and if it should at any
time be more, their excessive mul- tiplication would soon lower it to this necessary rate. The
market would be so much understocked with labour in the one case, and so much overstocked
in the other, as would soon force back its price to that proper rate which the circumstances of
the society required. It is in this manner that the demand for men, like that for any other
commodity, necessarily regulates the production of men, quickens it when it goes on too
slowly, and stops it when it advances too fast. It is this de-  mand which regulates and
determines the state of propagation in all the different countries of the world; in North
America, in Europe, and in China; which renders it rapidly progressive in the first, slow and
gradual in the second, and altogether stationary in the last. 

The wear and tear of a slave, it has been said, is at the expense of his master; but that of a
free servant is at his own expense. The wear and tear of the latter, however, is, in reality, as
much at the expense of his master as that of the former. The wages paid to journeymen and
servants of every kind must be such as may enable them, one with another to continue the race
of jour- neymen and servants, according as the increasing, diminishing, or stationary demand
of the soci- ety, may happen to require. But though the wear and tear of a free servant be
equally at the ex- pense of his master, it generally costs him much less than that of a slave. The
fund destined for replacing or repairing, if I may say so, the wear and tear of the slave, is
commonly managed by a negligent master or careless overseer. That destined for performing
the same office with regard to the freeman is managed by the freeman himself. The disorders
which generally prevail in the economy of the rich, naturally introduce themselves into the
management of the former; the strict frugality and parsimonious attention of the poor as
naturally establish themselves in that of the latter. Under such different management, the same
purpose must require very different degrees of expense to execute it. It appears, accordingly,
from the experience of all ages and nations, I be- lieve, that the work done by freemen comes
cheaper in the end than that performed by slaves. It is found to do so even at Boston, New-
York, and Philadelphia, where the wages of common labour are so very high. The liberal
reward of labour, therefore, as it is the effect of increasing wealth, so it is the cause of
increasing population. To complain of it, is to lament over the necessary cause and effect  of the
greatest public prosperity. It deserves to be remarked, perhaps, that it is in the progressive
state, while the society is ad- vancing to the further acquisition, rather than when it has
acquired its full complement of riches, that the condition of the labouring poor, of the great
body of the people, seems to be the happiest and the most comfortable. It is hard in the
stationary, and miserable in the declining state. The progressive state is, in reality, the cheerful
and the hearty state to all the different orders of the society; the stationary is dull; the declining
melancholy. The liberal reward of labour, as it encourages the propagation, so it increases the
industry of the common people. The wages of labour are the encouragement of industry,
which, like every other human quality, improves in proportion to the encouragement it
receives. A plentiful subsis- tence increases the bodily strength of the labourer, and the
comfortable hope of bettering his condition, and of ending his days, perhaps, in ease and
plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly,
we shall always find the workmen more active, diligent, and expeditious, than where they are
low; in England, for example, than in Scotland; in the neighbourhood of great towns, than in
remote country places. Some workmen, indeed, when they can earn in four days what will
maintain them through the week, will be idle the other three. This, however, is by no means the
case with the greater part. Workmen, on the contrary, when they are liberally paid by the piece,
are very apt to overwork themselves, and to ruin their health and constitution in a few years. A
carpenter in London, and in some other places, is not supposed to last in his utmost vigour
above eight years. Something of the same kind happens in many other trades, in which the
workmen are paid by the piece; as they generally are in manufactures, and even in country
labour, wherever wages are higher than ordinary. Almost every class of artificers is subject to
some peculiar infirmity occasioned by excessive application to their peculiar species of work.
Ramuzzini, an eminent Italian physician, has written a particular book concerning such
diseases. We do not reckon our soldiers the most industrious set of people among us; yet when
soldiers have been employed in some particular sorts of work, and liberally paid by the piece,
their officers have frequently been obliged to stipulate with the undertaker, that they should not
be allowed to earn above a certain sum every day, according to the rate at which  they were
paid. Till this stipulation was made, mutual emulation, and the desire of greater
gain, frequently prompted them to overwork themselves, and to hurt their health by excessive
labour. Excessive application, during four days of the week, is frequently the real cause of the
idleness of the other three, so much and so loudly complained of. Great labour, either of mind
or body, con- tinued for several days together is, in most men, naturally followed by a great
desire of relaxation, which, if not restrained by force, or by some strong necessity, is almost
irresistible. It is the call of nature, which requires to be relieved by some indulgence,
sometimes of ease only, but sometimes too of dissipation and diversion. If it is not complied
with, the consequences are often dangerous and sometimes fatal, and such as almost always,
sooner or later, bring on the peculiar infirmity of the trade. If masters would always listen to
the dictates of reason and humanity, they have fre- quently occasion rather to moderate, than to
animate the application of many of their workmen. It will be found, I believe, in every sort of
trade, that the man who works so moderately, as to be able to work constantly, not only
preserves his health the longest, but, in the course of the year, exe- cutes the greatest quantity
of work. In cheap years it is pretended, workmen are generally more idle, and in dear times
more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded,
relaxes, and a scanty one quickens their industry. That a little more plenty than ordinary may
render some workmen idle, cannot be well doubted; but that it should have this effect upon the
greater part, or that men in general should work better when they are ill fed, than when they are
well fed, when they are disheartened than when they are in good spirits, when they are
frequently sick than when they are generally in good health, seems not very probable. Years of
dearth, it is to be ob- served, are generally among the common people years of sickness and
mortality, which cannot fail to diminish the produce of their industry. In years of plenty,
servants frequently leave their masters, and trust their subsistence to what they can make by
their own industry. But the same cheapness of provisions, by increasing the fund which is
destined for the maintenance of servants, encourages masters, farmers especially, to employ a
greater number. Farmers, upon such occasions, expect more profit from their corn
by maintaining a few more labouring servants, than by selling it at a low price in the market.
The de- mand for servants increases, while the number of those who offer to supply that
demand dimin- ishes. The price of labour, therefore, frequently rises in cheap years. In years of
scarcity, the difficulty and uncertainty of subsistence make all such people eager to return to
service. But the high price of provisions, by diminishing the funds destined for
the maintenance of servants, disposes masters rather to diminish than to increase the number
of those they have. In dear years, too, poor independent workmen frequently consume the
little stock with which they had used to supply themselves with the materials of their work, and
are obliged to become journeymen for subsistence. More people want employment than easily
get it; many are willing to take it upon lower terms than ordinary; and the wages of both
servants and journeymen frequently sink in dear years. Masters of all sorts, therefore,
frequently make better bargains with their servants in dear than in cheap years, and find them
more humble and dependent in the former than in the latter. They naturally, therefore,
commend the former as more favourable to industry. Landlords and farmers, besides, two of
the largest classes of masters, have another reason for being pleased with dear years. The rents
of the one, and the profits of the other, depend very much upon the price of  provisions.
Nothing can be more absurd, however, than to imagine that men in general should work less
when they work for themselves, than when they work for other people. A poor inde-  pendent
workman will generally be more industrious than even a journeyman who works by the piece.
The one enjoys the whole produce of his own industry, the other shares it with his master. The
one, in his separate independent state, is less liable to the temptations of bad company,  which,
in large manufactories, so frequently ruin the morals of the other. The superiority of
the independent workman over those servants who are hired by the month or by the year, and
whose wages and maintenance are the same, whether they do much or do little, is likely to be
still greater. Cheap years tend to increase the proportion of independent workmen to
journeymen and servants of all kinds, and dear years to diminish it. A French author of great
knowledge and ingenuity, Mr Messance, receiver of the taillies in the election of St Etienne,
endeavours to shew that the poor do more work in cheap than in dear years, by comparing the
quantity and value of the goods made upon those different occasions in three different
manufactures; one of coarse woollens, carried on at Elbeuf; one of linen, and an- other of silk,
both which extend through the whole generality of Rouen. It appears from his ac-  count, which
is copied from the registers of the public offices, that the quantity and value of the goods made
in all those three manufactories has generally been greater in cheap than in dear years, and that
it has always been; greatest in the cheapest, and least in the dearest years. All the three seem to
be stationary manufactures, or which, though their produce may vary somewhat from year to
year, are, upon the whole, neither going backwards nor forwards. The manufacture of linen in
Scotland, and that of coarse woollens in the West Riding of Yorkshire, are growing
manufactures, of which the produce is generally, though with some varia- tions, increasing
both in quantity and value. Upon examining, however, the accounts which have been published
of their annual produce, I have not been able to observe that its variations have had any
sensible connection with the dearness or cheapness of the seasons. In 1740, a year of great
scarcity, both manufactures, indeed, appear to have declined very considerably. But in
1756, another year or great scarcity, the Scotch manufactures made more than ordinary
advances. The Yorkshire manufacture, indeed, declined, and its produce did not rise to what it
had been in 1755, till 1766, after the repeal of the American stamp act. In that and the
following year, it greatly ex- ceeded what it had ever been before, and it has continued to
advance ever since. The produce of all great manufactures for distant sale must necessarily
depend, not so much upon the dearness or cheapness of the seasons in the countries where they
are carried on, as upon the circumstances which affect the demand in the countries where they
are consumed; upon peace or war, upon the prosperity or declension of other rival
manufactures and upon the good or bad humour of their principal customers. A great part of
the extraordinary work, besides, which is probably done in cheap years, never enters the public
registers of manufactures. The men-servants, who leave their masters, become independent
labourers. The women return to their parents, and commonly spin, in order to make clothes for
themselves and their families. Even the independent workmen do not always, work for public
sale, but are employed by some of their neighbours in manufactures for family use. The
produce of their labour, therefore, fre- quently makes no figure in those public registers, of
which the records are sometimes published with so much parade, and from which our
merchants and manufacturers would often vainly pre- tend to announce the prosperity or
declension of the greatest empires. Through the variations in the price of labour not only do not
always correspond with those in the price of provisions, but are frequently quite opposite, we
must not, upon this account, imag- ine that the price of provisions has no influence upon that of
labour. The money price of labour is necessarily regulated by two circumstances; the demand
for labour, and the price of the neces- saries and conveniencies of life. The demand for labour,
according as it happens to be increasing, stationary, or declining, or to require an increasing,
stationary, or declining population, deter- mines the quantities of the necessaries and
conveniencies of life which must be given to the labourer; and the money price of labour is
determined by what is requisite for purchasing this quantity. Though the money price of
labour, therefore, is sometimes high where the price of provisions is low, it would be still
higher, the demand continuing the same, if the price of provi- sions was high. It is because the
demand for labour increases in years of sudden and extraordinary plenty, and diminishes in
those of sudden and extraordinary scarcity, that the money price of labour sometimes rises in
the one, and sinks in the other. In a year of sudden and extraordinary plenty, there are funds in
the hands of many of the em- ployers of industry, sufficient to maintain and employ a greater
number of industrious people than had been employed the year before; and this extraordinary
number cannot always be had. Those masters, therefore, who want more workmen, bid against
one another, in order to get them, which sometimes raises both the real and the money price of
their labour. The contrary of this happens in a year of sudden and extraordinary scarcity. The
funds des- tined for employing industry are less than they had been the year before. A
considerable number of people are thrown out of employment, who bid one against another, in
order to get it, which sometimes lowers both the real and the money price of labour. In 1740, a
year of extraordinary scarcity, many people were willing to work for bare subsistence. In the
succeeding years of plenty, it was more difficult to get labourers and servants. The scarcity of a
dear year, by diminishing the demand for labour, tends to lower its price, as the high price of
provisions tends to raise it. The plenty of a cheap year, on the contrary, by increasing the
demand, tends to raise the price of labour, as the cheapness of provisions tends to lower it. In
the ordinary variations of the prices of provisions, those two opposite causes seem to
counterbalance one another, which is probably, in part, the reason why the wages of labour are
everywhere so much more steady and permanent than the price of provisions. The increase in
the wages of labour necessarily increases the price of many commodities, by increasing that
part of it which resolves itself into wages, and so far tends to diminish their con-  sumption,
both at home and abroad. The same cause, however, which raises the wages of labour, the
increase of stock, tends to increase its productive powers, and to make a smaller quantity
of labour produce a greater quantity of work. The owner of the stock which employs a great
number of labourers necessarily endeavours, for his own advantage, to make such a proper
division and distribution of employment, that they may be enabled to produce the greatest
quantity of work possible. For the same reason, he endeavours to supply them with the best
machinery which ei- ther he or they can think of. What takes place among the labourers in a
particular workhouse, takes place, for the same reason, among those of a great society. The
greater their number, the more they naturally divide themselves into different classes and
subdivisions of employments. More heads are occupied in inventing the most proper
machinery for executing the work of each, and it is, therefore, more likely to be invented.
There me many commodities, therefore, which, in consequence of these improvements, come
to be produced by so much less labour than before, that the increase of its price is more than
compensated by the diminution of its quantity. 

CHAPTER IX. OF THE PROFITS OF STOCK.  The rise and fall in the profits of stock
depend upon the same causes with the rise and fall in the wages of labour, the increasing or
declining state of the wealth of the society; but those causes affect the one and the other very
differently.  The increase of stock, which raises wages, tends to lower profit. When the stocks
of many rich merchants are turned into the same trade, their mutual competition naturally tends
to lower its profit; and when there is a like increase of stock in all the different trades carried
on in the same society, the same competition must produce the same effect in them all. It is not
easy, it has already been observed, to ascertain what are the average wages of labour,  even in a
particular place, and at a particular time. We can, even in this case, seldom determine  more
than what are the most usual wages. But even this can seldom be done with regard to
the profits of stock. Profit is so very fluctuating, that the person who carries on a particular
trade, can- not always tell you himself what is the average of his annual profit. It is affected,
not only by every variation of price in the commodities which he deals in, but by the good or
bad fortune both of his rivals and of his customers, and by a thousand other accidents, to which
goods, when carried either by sea or by land, or even when stored in a warehouse, are liable. It
varies, therefore, not only from year to year, but from day to day, and almost from hour to
hour. To ascertain what is the average profit of all the different trades carried on in a great
kingdom, must be much more difficult; and to judge of what it may have been formerly, or in
remote periods of time, with any degree of precision, must be altogether impossible. But
though it may be impossible to determine, with any degree of precision, what are or were the
average profits of stock, either in the present or in ancient times, some notion may be
formed of them from the interest of money. It may be laid down as a maxim, that wherever a
great deal can be made by the use of money, a great deal will commonly be given for the use of
it; and that, wherever little can be made by it, less will commonly he given for it. Accordingly,
therefore, as the usual market rate of interest varies in any country, we may be assured that the
ordinary profits of stock must vary with it, must sink as it sinks, and rise as it rises. The
progress of interest, there- fore, may lead us to form some notion of the progress of profit. By
the 37th of Henry VIII. all interest above ten per cent. was declared unlawful. More, it  seems,
had sometimes been taken before that. In the reign of Edward VI. religious zeal prohib- ited all
interest. This prohibition, however, like all others of the same kind, is said to have pro- duced
no effect, and probably rather increased than diminished the evil of usury. The statute of Henry
VIII. was revived by the 13th of Elizabeth, cap. 8. and ten per cent. continued to be the
legal rate of interest till the 21st of James I. when it was restricted to eight per cent. It was
reduced to six per cent. soon after the Restoration, and by the 12th of Queen Anne, to five per
cent. All these dif- ferent statutory regulations seem to have been made with great propriety.
They seem to have fol- lowed, and not to have gone before, the market rate of interest, or the
rate at which people of good credit usually borrowed. Since the time of Queen Anne, five per
cent. seems to have been rather above than below the market rate. Before the late war, the
government borrowed at three per cent.; and people of good credit in the capital, and in many
other parts of the kingdom, at three and a-half, four, and four and a-half per cent. Since the
time of Henry VIII. the wealth and revenue of the country have been continually advancing,
and in the course of their progress, their pace seems rather to have been gradually accelerated
than retarded. They seem not only to have been going on, but to have been going on faster and
faster. The wages of labour have been continually increasing during the same period, and, in
the greater part of the different branches of trade and manufactures, the profits of stock have
been diminishing. It generally requires a greater stock to carry on any sort of trade in a great
town than in a country village. The great stocks employed in every branch of trade, and the
number of rich com- petitors, generally reduce the rate of profit in the former below what it is
in the latter. But the wages of labour are generally higher in a great town than in a country
village. In a thriving town, the people who have great stocks to employ, frequently cannot get
the number of workmen they want, and therefore bid against one another, in order to get as
many as they can, which raises the wages of labour, and lowers the profits of stock. In the
remote parts of the country, there is fre- quently not stock sufficient to employ all the people,
who therefore bid against one another, in order to get employment, which lowers the wages of
labour, and raises the profits of stock. In Scotland, though the legal rate of interest is the same
as in England, the market rate is rather higher. People of the best credit there seldom borrow
under five per cent. Even private bankers in Edinburgh give four per cent. upon their
promissory-notes, of which payment, either in whole or in part may be demanded at pleasure.
Private bankers in London give no interest for the money which is deposited with them. There
are few trades which cannot be carried on with a smaller stock in Scotland than in England.
The common rate of profit, therefore, must be some- what greater. The wages of labour, it has
already been observed, are lower in Scotland than in England. The country, too, is not only
much poorer, but the steps by which it advances to a better condition, for it is evidently
advancing, seem to be much slower and more tardy. The legal rate of interest in France has not
during the course of the present century, been always regulated by the market rate {See
Denisart, Article Taux des Interests, tom. iii, p.13}. In 1720, interest was reduced from the
twentieth to the fiftieth penny, or from five to two per cent. In 1724, it was raised to
the thirtieth penny, or to three and a third per cent. In 1725, it was again raised to the
twentieth penny, or to five per cent. In 1766, during the administration of Mr Laverdy, it was
reduced to the twenty-fifth penny, or to four per cent. The Abbé Terray raised it afterwards to
the old rate of five per cent. The supposed purpose of many of those violent reductions of
interest was to prepare the way for reducing that of the public debts; a purpose which has
sometimes been executed. France is, perhaps, in the present times, not so rich a country as
England; and though the legal rate of interest has in France frequently been lower than in
England, the market rate has generally been higher; for there, as in other countries, they have
several very safe and easy methods of evading the law. The profits of trade, I have been
assured by British merchants who had traded in both countries, are higher in France than in
England; and it is no doubt upon this account, that many British subjects chuse rather to
employ their capitals in a country where trade is in disgrace, than in one where it is highly
respected. The wages of labour are lower in France than in England. When you go from
Scotland to England, the difference which you may remark between the dress and countenance
of the common people in the one country and in the other, sufficiently indicates the difference
in their condition. The contrast is still greater when you return from France. France, though no
doubt a richer country than Scotland, seems not to be going forward so fast. It is a common
and even a popular opinion in the country, that it is going backwards; an opinion which I
apprehend, is ill-founded, even with regard to France, but which nobody can possibly entertain
with regard to Scotland, who sees the country now, and who saw it twenty or thirty
years ago. The province of Holland, on the other hand, in proportion to the extent of its
territory and the number of its people, is a richer country than England. The government there
borrow at two per cent. and private people of good credit at three. The wages of labour are said
to be higher in Hol- land than in England, and the Dutch, it is well known, trade upon lower
profits than any people in Europe. The trade of Holland, it has been pretended by some people,
is decaying, and it may per- haps be true that some particular branches of it are so; but these
symptoms seem to indicate suffi- ciently that there is no general decay. When profit
diminishes, merchants are very apt to complain that trade decays, though the diminution of
profit is the natural effect of its prosperity, or of a greater stock being employed in it than
before. During the late war, the Dutch gained the whole carrying trade of France, of which they
still retain a very large share. The great property which they possess both in French and
English funds, about forty millions, it is said in the latter (in which, I suspect, however, there is
a considerable exaggeration ), the great sums which they lend to private people, in countries
where the rate of interest is higher than in their own, are circum- stances which no doubt
demonstrate the redundancy of their stock, or that it has increased be- yond what they can
employ with tolerable profit in the proper business of their own country; but they do not
demonstrate that that business has decreased. As the capital of a private man, though acquired
by a particular trade, may increase beyond what he can employ in it, and yet that trade continue
to increase too, so may likewise the capital of a great nation. In our North American and West
Indian colonies, not only the wages of labour, but the inter- est of money, and consequently the
profits of stock, are higher than in England. In the different colonies, both the legal and the
market rate of interest run from six to eight percent. High wages of labour and high profits of
stock, however, are things, perhaps, which scarce ever go together, except in the peculiar
circumstances of new colonies. A new colony must always, for some time, be more
understocked in proportion to the extent of its territory, and more underpeopled in pro-  portion
to the extent of its stock, than the greater part of other countries. They have more land than
they have stock to cultivate. What they have, therefore, is applied to the cultivation only
of what is most fertile and most favourably situated, the land near the sea-shore, and along
the banks of navigable rivers. Such land, too, is frequently purchased at a price below the value
even of its natural produce. Stock employed in the purchase and improvement of such lands,
must yield a very large profit, and, consequently, afford to pay a very large interest. Its rapid
accumu- lation in so profitable an employment enables the planter to increase the number of
his hands faster than he can find them in a new settlement. Those whom he can find, therefore,
are very liberally rewarded. As the colony increases, the profits of stock gradually diminish.
When the most fertile and best situated lands have been all occupied, less profit can be made
by the culti- vation of what is inferior both in soil and situation, and less interest can be
afforded for the stock which is so employed. In the greater part of our colonies, accordingly,
both the legal and the mar- ket rate of interest have been considerably reduced during the
course of the present century. As riches, improvement, and population, have increased, interest
has declined. The wages of labour do not sink with the profits of stock. The demand for labour
increases with the increase of stock, whatever be its profits; and after these are diminished,
stock may not only continue to increase, but to increase much faster than before. It is with
industrious nations, who are advancing in the acquisition of riches, as with industrious
individuals. A great stock, though with small profits, generally increases faster than a small
stock with great profits. Money, says the proverb, makes money. When you have got a little, it
is often easy to get more. The great difficulty is to get that lit- tle. The connection between the
increase of stock and that of industry, or of the demand for useful labour, has partly been
explained already, but will be explained more fully hereafter, in treating of the accumulation of
stock. The acquisition of new territory, or of new branches of trade, may sometimes raise the
profits of stock, and with them the interest of money, even in a country which is fast advancing
in the acquisition of riches. The stock of the country, not being sufficient for the whole
accession of business which such acquisitions present to the different people among whom it is
divided, is ap- plied to those particular branches only which afford the greatest profit. Part of
what had before been employed in other trades, is necessarily withdrawn from them, and
turned into some of the new and more profitable ones. In all those old trades, therefore, the
competition comes to be Jess than before. The market comes to be less fully supplied with
many different sorts of goods. Their price necessarily rises more or less, and yields a greater
profit to those who deal in them, who can, therefore, afford to borrow at a higher interest. For
some time after the conclusion of the late war, not only private people of the best credit, but
some of the greatest companies in London, com- monly borrowed at five per cent. who, before
that, had not been used to pay more than four, and four and a half per cent. The great accession
both of territory and trade by our acquisitions in North America and the West Indies, will
sufficiently account for this, without supposing any diminution in the capital stock of the
society. So great an accession of new business to be carried on by the old stock, must
necessarily have diminished the quantity employed in a great number of particular branches, in
which the competition being less, the profits must have been greater. I shall hereafter have
occasion to mention the reasons which dispose me to believe that the capital stock of Great
Britain was not diminished, even by the enormous expense of the late war. The diminution of
the capital stock of the society, or of the funds destined for the mainte- nance of industry,
however, as it lowers the wages of labour, so it raises the profits of stock, and consequently the
interest of money. By the wages of labour being lowered, the owners of what stock remains in
the society can bring their goods at less expense to market than before; and less stock being
employed in supplying the market than before, they can sell them dearer. Their goods cost
them less, and they get more for them. Their profits, therefore, being augmented at both ends,
can well afford a large interest. The great fortunes so suddenly and so easily acquired
in Bengal and the other British settlements in the East Indies, may satisfy us, that as the wages
of labour are very low, so the profits of stock are very high in those ruined countries. The
interest of money is proportionably so. In Bengal, money is frequently lent to the farmers at
forty, fifty, and sixty per cent. and the succeeding crop is mortgaged for the payment. As the
profits which can af- ford such an interest must eat up almost the whole rent of the landlord, so
such enormous usury must in its turn eat up the greater part of those profits. Before the fall of
the Roman republic, a usury of the same kind seems to have been common in the provinces,
under the ruinous admi- nistration of their proconsuls. The virtuous Brutus lent money in
Cyprus at eight-and-forty per cent. as we learn from the letters of Cicero. In a country which
had acquired that full complement of riches which the nature of its soil and climate, and its
situation with respect to other countries, allowed it to acquire, which could, therefore, advance
no further, and which was not going backwards, both the wages of labour and the profits of
stock would probably be very low. In a country fully peopled in proportion to what either its
territory could maintain, or its stock employ, the competition for employment
would necessarily be so great as to reduce the wages of labour to what was barely sufficient to
keep up the number of labourers, and the country being already fully peopled, that number
could never be augmented. In a country fully stocked in proportion to all the business it had to
transact, as great a quantity of stock would be employed in every particular branch as the
nature and extent of the trade would admit. The competition, therefore, would everywhere be
as great, and, consequently, the ordinary profit as low as possible. But, perhaps, no country has
ever yet arrived at this degree of opulence. China seems to have been long stationary, and had,
probably, long ago acquired that full complement of riches which is consistent with the nature
of its laws and institutions. But this complement may be much infe- rior to what, with other
laws and institutions, the nature of its soil, climate, and situation, might admit of. A country
which neglects or despises foreign commerce, and which admits the vessel of foreign nations
into one or two of its ports only, cannot transact the same quantity of business which it might
do with different laws and institutions. In a country, too, where, though the rich, or the owners
of large capitals, enjoy a good deal of security, the poor, or the owners of small capi- tals,
enjoy scarce any, but are liable, under the pretence of justice, to be pillaged and plundered
at any time by the inferior mandarins, the quantity of stock employed in all the different
branches of business transacted within it, can never be equal to what the nature and extent of
that business might admit. In every different branch, the oppression of the poor must establish
the monopoly of the rich, who, by engrossing the whole trade to themselves, will be able to
make very large prof- its. Twelve per cent. accordingly, is said to be the common interest of
money in China, and the ordinary profits of stock must be sufficient to afford this large
interest. A defect in the law may sometimes raise the rate of interest considerably above what
the condition of the country, as to wealth or poverty, would require. When the law does not
enforce the performance of contracts, it puts all borrowers nearly upon the same footing with
bankrupts, or people of doubtful credit, in better regulated countries. The uncertainty of
recovering his money makes the lender exact the same usurious interest which is usually
required from bankrupts. Among the barbarous nations who overran the western provinces of
the Roman em- pire, the performance of contracts was left for many ages to the faith of the
contracting parties. The courts of justice of their kings seldom intermeddled in it. The high rate
of interest which took place in those ancient times, may, perhaps, be partly accounted for from
this cause. When the law prohibits interest altogether, it does not prevent it. Many people must
borrow, and nobody will lend without such a consideration for the use of their money as is
suitable, not only to what can be made by the use of it, but to the difficulty and danger of
evading the law. The high rate of interest among all Mahometan nations is accounted for by M.
Montesquieu, not from their poverty, but partly from this, and partly from the difficulty of
recovering the money. 
The lowest ordinary rate of profit must always be something more than what is sufficient
to compensate the occasional losses to which every employment of stock is exposed. It is this
surplus only which is neat or clear profit. What is called gross profit, comprehends frequently
not only this surplus, but what is retained for compensating such extraordinary losses. The
interest which the borrower can afford to pay is in proportion to the clear profit only. The
lowest ordinary rate of interest must, in the same manner, be something more than sufficient to
compensate the occa- sional losses to which lending, even with tolerable prudence, is exposed.
Were it not, mere charity or friendship could be the only motives for lending. In a country
which had acquired its full complement of riches, where, in every particular branch of
business, there was the greatest quantity of stock that could be employed in it, as the ordinary
rate of clear profit would be very small, so the usual market rate of interest which could  be
afforded out of it would be so low as to render it impossible for any but the very wealthiest
peo- ple to live upon the interest of their money. All people of small or middling fortunes
would be obliged to superintend themselves the employment of their own stocks. It would be
necessary that almost every man should be a man of business, or engage in some sort of trade.
The province of Holland seems to be approaching near to this state. It is there unfashionable
not to be a man of business. Necessity makes it usual for almost every man to be so, and
custom everywhere regu- lates fashion. As it is ridiculous not to dress, so is it, in some
measure, not to be employed like other people. As a man of a civil profession seems awkward
in a camp or a garrison, and is even in some danger of being despised there, so does an idle
man among men of business. The highest ordinary rate of profit may be such as, in the price of
the greater part of com- modities, eats up the whole of what should go to the rent of the land,
and leaves only what is sufficient to pay the labour of preparing and bringing them to market,
according to the lowest rate at which labour can anywhere be paid, the bare subsistence of the
labourer. The workman must always have been fed in some way or other while he was about
the work, but the landlord may not always have been paid. The profits of the trade which the
servants of the East India Company carry on in Bengal may not, perhaps, be very far from this
rate. The proportion which the usual market rate of interest ought to bear to the ordinary rate
of clear profit, necessarily varies as profit rises or falls. Double interest is in Great Britain
reckoned what the merchants call a good, moderate, reasonable profit; terms which, I
apprehend, mean no more than a common and usual profit. In a country where the ordinary
rate of clear profit is eight or ten per cent. it may be reasonable that one half of it should go to
interest, wherever business is carried on with borrowed money. The stock is at the risk of the
borrower, who, as it were, insures it to the lender; and four or five per cent. may, in the greater
part of trades, be both a sufficient profit upon the risk of this insurance, and a sufficient
recompence for the trouble of employing the stock. But the proportion between interest and
clear profit might not be the same in countries where the ordinary rate of profit was either a
good deal lower, or a good deal higher. If it were a good deal lower, one half of it, perhaps,
could not be afforded for interest; and more might be af- forded if it were a good deal
higher. In countries which are fast advancing to riches, the low rate of profit may, in the price
of many commodities, compensate the high wages of labour, and enable those countries to sell
as cheap as their less thriving neighbours, among whom the wages of labour may be lower. In
reality, high profits tend much more to raise the price of work than high wages. If, in the linen
manufacture, for example, the wages of the different working people, the flax-dressers,
the spinners, the weavers, etc. should all of them be advanced twopence a-day, it would be
necessary to heighten the price of a piece of linen only by a number of twopences equal to the
number of people that had been employed about it, multiplied by the number of days during
which they had been so employed. That part of the price of the commodity which resolved
itself into the wages, would, through all the different stages of the manufacture, rise only in
arithmetical proportion to this rise of wages. But if the profits of all the different employers of
those working people should be raised five per cent. that part of the price of the commodity
which resolved itself into profit would, through all the different stages of the manufacture, rise
in geometrical proportion to this rise of profit. The employer of the flax dressers would, in
selling his flax, require an additional five per cent. upon the whole value of the materials and
wages which he advanced to his workmen. The employer of the spinners would require an
additional five per cent. both upon the advanced price of the flax, and upon the wages of the
spinners. And the employer of the weavers would re- quire alike five per cent. both upon the
advanced price of the linen-yarn, and upon the wages of the weavers. In raising the price of
commodities, the rise of wages operates in the same manner as simple interest does in the
accumulation of debt. The rise of profit operates like compound interest. Our merchants and
master manufacturers complain much of the bad effects of high wages in raising the price, and
thereby lessening the sale of their goods, both at home and abroad. They say nothing
concerning the bad effects of high profits; they are silent with regard to the pernicious effects
of their own gains; they complain only of those of other people. 

CHAPTER X. OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS

OF LABOUR AND STOCK.  The whole of the advantages and disadvantages of the different
employments of labour and stock, must, in the same neighbourhood, be either perfectly equal,
or continually tending to equality. If, in the same neighbourhood, there was any employment
evidently either more or less advantageous than the rest, so many people would crowd into it in
the one case, and so many would desert it in the other, that its advantages would soon return to
the level of other employ- ments. This, at least, would be the case in a society where things
were left to follow their natural course, where there was perfect liberty, and where every man
was perfectly free both to choose what occupation he thought proper, and to change it as often
as he thought proper. Every man's interest would prompt him to seek the advantageous, and to
shun the disadvantageous employ- ment. Pecuniary wages and profit, indeed, are everywhere
in Europe extremely different, according to the different employments of labour and stock. But
this difference arises, partly from certain circumstances in the employments themselves,
which, either really, or at least in the imagination of men, make up for a small pecuniary gain
in some, and counterbalance a great one in others, and partly from the policy of Europe, which
nowhere leaves things at perfect liberty. The particular consideration of those circumstances,
and of that policy, will divide this Chap- ter into two parts. 

PART I. Inequalities arising from the nature of the employments themselves.  The five
following are the principal circumstances which, so far as I have been able to ob- serve, make
up for a small pecuniary gain in some employments, and counterbalance a great one in others.
First, the agreeableness or disagreeableness of the employments themselves; secondly, the
easiness and cheapness, or the difficulty and expense of learning them; thirdly, the
constancy or inconstancy of employment in them; fourthly, the small or great trust which must
be reposed in those who exercise them; and, fifthly, the probability or improbability of success
in them. First, the wages of labour vary with the ease or hardship, the cleanliness or dirtiness,
the hon- ourableness or dishonourableness, of the employment. Thus in most places, take the
year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier.
A jour- neyman weaver earns less than a journeyman smith. His work is not always easier, but
it is much cleanlier. A journeyman blacksmith, though an artificer, seldom earns so much in
twelve hours, as a collier, who is only a labourer, does in eight. His work is not quite so dirty,
is less dangerous, and is carried on in day-light, and above ground. Honour makes a great part
of the reward of all honourable professions. In point of pecuniary gain, all things considered,
they are generally under-recompensed, as I shall endeavour to shew by and by. Disgrace has
the contrary effect. The trade of a butcher is a brutal and an odious business; but it is in most
places more profitable than the greater part of common trades. The most detestable of all
employments, that of public execu- tioner, is, in proportion to the quantity of work done, better
paid than any common trade what- ever. Hunting and fishing, the most important employments
of mankind in the rude state of soci- ety, become, in its advanced state, their most agreeable
amusements, and they pursue for plea- sure what they once followed from necessity. In the
advanced state of society, therefore, they are all very poor people who follow as a trade, what
other people pursue as a pastime. Fishermen have been so since the time of Theocritus. {See
Idyllium xxi.}. A poacher is everywhere a very poor man in Great Britain. In countries where
the rigour of the law suffers no poachers, the licensed hunter is not in a much better condition.
The natural taste for those employments makes more people follow them, than can live
comfortably by them; and the produce of their labour, in propor- tion to its quantity, comes
always too cheap to market, to afford any thing but the most scanty subsistence to the
labourers. Disagreeableness and disgrace affect the profits of stock in the same manner as the
wages of labour. The keeper of an inn or tavern, who is never master of his own house, and
who is exposed to the brutality of every drunkard, exercises neither a very agreeable nor a very
creditable busi- ness. But there is scarce any common trade in which a small stock yields so
great a profit. Secondly, the wages of labour vary with the easiness and cheapness, or the
difficulty and ex- pense, of learning the business. When any expensive machine is erected, the
extraordinary work to be performed by it before it is worn out, it must be expected, will replace
the capital laid out upon it, with at least the ordi- nary profits. A man educated at the expense
of much labour and time to any of those employ- ments which require extraordinary dexterity
and skill, may be compared to one of those expensive machines. The work which he learns to
perform, it must be expected, over and above the usual wages of common labour, will replace
to him the whole expense of his education, with at least the ordinary profits of an equally
valuable capital. It must do this too in a reasonable time, regard being had to the very uncertain
duration of human life, in the same manner as to the more cer- tain duration of the
machine. The difference between the wages of skilled labour and those of common labour, is
founded upon this principle. The policy of Europe considers the labour of all mechanics,
artificers, and manufacturers, as skilled labour; and that of all country labourers us common
labour. It seems to suppose that of the former to be of a more nice and delicate nature than that
of the latter. It is so perhaps in some cases; but in the greater part it is quite otherwise, as I shall
endeavour to shew by and by. The laws and customs of Europe, therefore, in order to qualify
any person for exercising the one species of labour, impose the necessity of an apprenticeship,
though with different degrees of rigour in different places. They leave the other free and open
to every body. During the contin- uance of the apprenticeship, the whole labour of the
apprentice belongs to his master. In the meantime he must, in many cases, be maintained by his
parents or relations, and, in almost all cases, must be clothed by them. Some money, too, is
commonly given to the master for teaching him his trade. They who cannot give money, give
time, or become bound for more than the usual number of years; a consideration which, though
it is not always advantageous to the master, on account of the usual idleness of apprentices, is
always disadvantageous to the apprentice. In coun- try labour, on the contrary, the labourer,
while he is employed about the easier, learns the more difficult parts of his business, and his
own labour maintains him through all the different stages of his employment. It is reasonable,
therefore, that in Europe the wages of mechanics, artificers, and manufacturers, should be
somewhat higher than those of common labourers. They are so ac- cordingly, and their
superior gains make them, in most places, be considered as a superior rank of people. This
superiority, however, is generally very small: the daily or weekly earnings of jour- neymen in
the more common sorts of manufactures, such as those of plain linen and woollen cloth,
computed at an average, are, in most places, very little more than the day-wages of
common labourers. Their employment, indeed, is more steady and uniform, and the superiority
of their earnings, taking the whole year together, may be somewhat greater. It seems evidently,
however, to be no greater than what is sufficient to compensate the superior expense of their
education. Education in the ingenious arts, and in the liberal professions, is still more tedious
and expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and
physicians, ought to be much more liberal; and it is so accordingly. The profits of stock seem
to be very little affected by the easiness or difficulty of learning the trade in which it is
employed. All the different ways in which stock is commonly employed in great towns seem,
in reality, to be almost equally easy and equally difficult to learn. One branch, either of foreign
or domestic trade, cannot well be a much more intricate business than another. Thirdly, the
wages of labour in different occupations vary with the constancy or inconstancy of
employment. Employment is much more constant in some trades than in others. In the greater
part of manufactures, a journeyman maybe pretty sure of employment almost every day in the
year that he is able to work. A mason or bricklayer, on the contrary, can work neither in hard
frost nor in foul weather, and his employment at all other times depends upon the occasional
calls of his cus- tomers. He is liable, in consequence, to be frequently without any. What he
earns, therefore, while he is employed, must not only maintain him while he is idle, but make
him some compen- sation for those anxious and desponding moments which the thought of so
precarious a situation must sometimes occasion. Where the computed earnings of the greater
part of manufacturers, ac- cordingly, are nearly upon a level with the day-wages of common
labourers, those of masons and bricklayers are generally from one-half more to double those
wages. Where common labourers earn four or five shillings a-week, masons and bricklayers
frequently earn seven and eight; where the former earn six, the latter often earn nine and ten;
and where the former earn nine and ten, as in London, the latter commonly earn fifteen and
eighteen. No species of skilled labour, however, seems more easy to learn than that of masons
and bricklayers. Chairmen in London, during the summer season, are said sometimes to be
employed as bricklayers. The high wages of those work- men, therefore, are not so much the
recompence of their skill, as the compensation for the incon- stancy of their employment. A
house-carpenter seems to exercise rather a nicer and a more ingenious trade than a mason. In
most places, however, for it is not universally so, his day-wages are somewhat lower. His
em- ployment, though it depends much, does not depend so entirely upon the occasional calls
of his customers; and it is not liable to be interrupted by the weather. When the trades which
generally afford constant employment, happen in a particular place not to do so, the wages of
the workmen always rise a good deal above their ordinary proportion to those of common
labour. In London, almost all journeymen artificers are liable to be called upon and dismissed
by their masters from day to day, and from week to week, in the same manner as day-labourers
in other places. The lowest order of artificers, journeymen tailors, accordingly, earn their half-
a-crown a-day, though eighteen pence may be reckoned the wages of common labour. In small
towns and country villages, the wages of journeymen tailors frequently scarce equal those of
common labour; but in London they are often many weeks without employment, partic- ularly
during the summer. When the inconstancy of employment is combined with the hardship,
disagreeableness, and dirtiness of the work, it sometimes raises the wages of the most common
labour above those of the most skilful artificers. A collier working by the piece is supposed, at
Newcastle, to earn com- monly about double, and, in many parts of Scotland, about three
times, the wages of common labour. His high wages arise altogether from the hardship,
disagreeableness, and dirtiness of his work. His employment may, upon most occasions, be as
constant as he pleases. The coal-heavers in London exercise a trade which, in hardship,
dirtiness, and disagreeableness, almost equals that of colliers; and, from the unavoidable
irregularity in the arrivals of coal-ships, the employment of the greater part of them is
necessarily very inconstant. If colliers, therefore, commonly earn dou- ble and triple the wages
of common labour, it ought not to seem unreasonable that coal-heavers should sometimes earn
four and five times those wages. In the inquiry made into their condition a few years ago, it
was found that, at the rate at which they were then paid, they could earn from six to ten
shillings a-day. Six shillings are about four times the wages of common labour in Lon- don;
and, in every particular trade, the lowest common earnings may always be considered as those
of the far greater number. How extravagant soever those earnings may appear, if they
were more than sufficient to compensate all the disagreeable circumstances of the business,
there would soon be so great a number of competitors, as, in a trade which has no exclusive
privilege, would quickly reduce them to a lower rate. The constancy or inconstancy of
employment cannot affect the ordinary profits of stock in any particular trade. Whether the
stock is or is not constantly employed, depends, not upon the trade, but the trader. Fourthly, the
wages of labour vary according to the small or great trust which must be re- posed in the
workmen. The wages of goldsmiths and jewellers are everywhere superior to those of many
other work- men, not only of equal, but of much superior ingenuity, on account of the precious
materials with which they are entrusted. We trust our health to the physician, our fortune, and
sometimes our life and reputation, to the lawyer and attorney. Such confidence could not safely
be reposed in people of a very mean or low condition. Their reward must be such, therefore, as
may give them that rank in the society which so important a trust requires. The long time and
the great expense which must be laid out in their education, when combined with this
circumstance, necessarily en- hance still further the price of their labour. When a person
employs only his own stock in trade, there is no trust; and the credit which he may get from
other people, depends, not upon the nature of the trade, but upon their opinion of his fortune,
probity and prudence. The different rates of profit, therefore, in the different branch- es of
trade, cannot arise from the different degrees of trust reposed in the traders. Fifthly, the wages
of labour in different employments vary according to the probability or im- probability of
success in them. The probability that any particular person shall ever be qualified for the
employments to which he is educated, is very different in different occupations. In the greatest
part of mechanic trades success is almost certain; but very uncertain in the liberal professions.
Put your son ap- prentice to a shoemaker, there is little doubt of his learning to make a pair of
shoes; but send him to study the law, it as at least twenty to one if he ever makes such
proficiency as will enable him to live by the business. In a perfectly fair lottery, those who
draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession,
where twenty fail for one that succeeds, that one ought to gain all that should have been gained
by the unsuccessful twenty. The counsellor at law, who, perhaps, at near forty years of age,
begins to make something by his profession, ought to receive the retribution, not only of his
own so tedious and expensive education, but of that of more than twenty others, who are never
likely to make any thing by it. How extravagant soever the fees of counsellors at law may
sometimes appear, their real retribution is never equal to this. Compute, in any particular place,
what is likely to be annually gained, and what is likely to be annually spent, by all the different
workmen in any common trade, such as that of shoemakers or weavers, and you will find that
the former sum will generally exceed the latter. But make the same computation with regard to
all the counsellors and students of law, in all the different Inns of Court, and you will find that
their annual gains bear but a very small proportion to their annual expense, even though you
rate the former as high, and the latter as low, as can well be done. The  lottery of the law,
therefore, is very far from being a perfectly fair lottery; and that as well as many  other liberal
and honourable professions, is, in point of pecuniary gain, evidently
under- recompensed. Those professions keep their level, however, with other occupations; and,
notwithstanding these discouragements, all the most generous and liberal spirits are eager to
crowd into them. Two different causes contribute to recommend them. First, the desire of the
reputation which at- tends upon superior excellence in any of them; and, secondly, the natural
confidence which every man has, more or less, not only in his own abilities, but in his own
good fortune. To excel in any profession, in which but few arrive at mediocrity, it is the most
decisive mark of what is called genius, or superior talents. The public admiration which attends
upon such dis- tinguished abilities makes always a part of their reward; a greater or smaller, in
proportion as it is higher or lower in degree. It makes a considerable part of that reward in the
profession of physic; a still greater, perhaps, in that of law; in poetry and philosophy it makes
almost the whole. There are some very agreeable and beautiful talents, of which the possession
commands a certain sort of admiration, but of which the exercise, for the sake of gain, is
considered, whether from reason or prejudice, as a sort of public prostitution. The pecuniary
recompence, therefore, of those who exercise them in this manner, must be sufficient, not only
to pay for the time, labour, and expense of acquiring the talents, but for the discredit which
attends the employment of them as the means of subsistence. The exorbitant rewards of
players, opera-singers, opera-dancers, etc. are founded upon those two principles; the rarity
and beauty of the talents, and the discredit of employing them in this manner. It seems absurd
at first sight, that we should despise their per- sons, and yet reward their talents with the most
profuse liberality. While we do the one, however, we must of necessity do the other, Should
the public opinion or prejudice ever alter with regard to such occupations, their pecuniary
recompence would quickly diminish. More people would apply to them, and the competition
would quickly reduce the price of their labour. Such talents, though far from being common,
are by no means so rare as imagined. Many people possess them in great perfection, who
disdain to make this use of them; and many more are capable of acquiring them, if any thing
could be made honourably by them. The over-weening conceit which the greater part of men
have of their own abilities, is an an- cient evil remarked by the philosophers and moralists of
all ages. Their absurd presumption in their own good fortune has been less taken notice of. It
is, however, if possible, still more uni- versal. There is no man living, who, when in tolerable
health and spirits, has not some share of it. The chance of gain is by every man more or less
over-valued, and the chance of loss is by most men under-valued, and by scarce any man, who
is in tolerable health and spirits, valued more than it is worth. That the chance of gain is
naturally overvalued, we may learn from the universal success of lotteries. The world neither
ever saw, nor ever will see, a perfectly fair lottery, or one in which the whole gain
compensated the whole loss; because the undertaker could make nothing by it. In the state
lotteries, the tickets are really not worth the price which is paid by the original subscribers, and
yet commonly sell in the market for twenty, thirty, and sometimes forty per cent. advance.  The
vain hopes of gaining some of the great prizes is the sole cause of this demand. The
soberest people scarce look upon it as a folly to pay a small sum for the chance of gaining ten
or twenty thousand pounds, though they know that even that small sum is perhaps twenty or
thirty per cent. more than the chance is worth. In a lottery in which no prize exceeded twenty
pounds, though in other respects it approached much nearer to a perfectly fair one than the
common state lotteries, there would not be the same demand for tickets. In order to have a
better chance for some of the great prizes, some people purchase several tickets; and others,
small shares in a still greater number. There is not, however, a more certain proposition in
mathematics, than that the more tickets you adventure upon, the more likely you are to be a
loser. Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the
number of your tickets, the near- er you approach to this certainty. That the chance of loss is
frequently undervalued, and scarce ever valued more than it is worth, we may learn from the
very moderate profit of insurers. In order to make insurance, either from fire or sea-risk, a trade
at all, the common premium must be sufficient to compensate the common losses, to pay the
expense of management, and to afford such a profit as might have been drawn from an equal
capital employed in any common trade. The person who pays no more than this, evidently pays
no more than the real value of the risk, or the lowest price at which he can reasonably expect to
insure it. But though many people have made a little money by insur- ance, very few have
made a great fortune; and, from this consideration alone, it seems evident enough that the
ordinary balance of profit and loss is not more advantageous in this than in other common
trades, by which so many people make fortunes. Moderate, however, as the premium
of insurance commonly is, many people despise the risk too much to care to pay it. Taking the
whole kingdom at an average, nineteen houses in twenty, or rather, perhaps, ninety-nine in a
hundred, are not insured from fire. Sea-risk is more alarming to the greater part of people; and
the propor- tion of ships insured to those not insured is much greater. Many sail, however, at
all seasons, and even in time of war, without any insurance. This may sometimes, perhaps, be
done without any imprudence. When a great company, or even a great merchant, has twenty or
thirty ships at sea, they may, as it were, insure one another. The premium saved up on them all
may more than com- pensate such losses as they are likely to meet with in the common course
of chances. The neglect of insurance upon shipping, however, in the same manner as upon
houses, is, in most cases, the effect of no such nice calculation, but of mere thoughtless
rashness, and presumptuous contempt of the risk. The contempt of risk, and the presumptuous
hope of success, are in no period of life more ac- tive than at the age at which young people
choose their professions. How little the fear of misfor- tune is then capable of balancing the
hope of good luck, appears still more evidently in the readi- ness of the common people to
enlist as soldiers, or to go to sea, than in the eagerness of those of better fashion to enter into
what are called the liberal professions. What a common soldier may lose is obvious enough.
Without regarding the danger, however, young volunteers never enlist so readily as at the
beginning of a new war; and though they have scarce any chance of preferment, they figure to
themselves, in their youthful fancies, a thousand occasions of acquiring honour and distinction
which never occur. These romantic hopes make the whole price of their blood. Their pay is
less than that of common labourers, and, in actual ser- vice, their fatigues are much
greater. The lottery of the sea is not altogether so disadvantageous as that of the army. The son
of a creditable labourer or artificer may frequently go to sea with his father's consent; but if he
enlists as a soldier, it is always without it. Other people see some chance of his making
something by the one trade; nobody but himself sees any of his making any thing by the other.
The great admiral is less the object of public admiration than the great general; and the highest
success in the sea ser- vice promises a less brilliant fortune and reputation than equal success
in the land. The same dif- ference runs through all the inferior degrees of preferment in both.
By the rules of precedency, a captain in the navy ranks with a colonel in the army; but he does
not rank with him in the com- mon estimation. As the great prizes in the lottery are less, the
smaller ones must be more numer- ous. Common sailors, therefore, more frequently get some
fortune and preferment than common soldiers; and the hope of those prizes is what principally
recommends the trade. Though their skill and dexterity are much superior to that of almost any
artificers; and though their whole life is one continual scene of hardship and danger; yet for all
this dexterity and skill, for all those hard- ships and dangers, while they remain in the condition
of common sailors, they receive scarce any other recompence but the pleasure of exercising the
one and of surmounting the other. Their wages are not greater than those of common labourers
at the port which regulates the rate of seamen's wages. As they are continually going from port
to port, the monthly pay of those who sail from all the different ports of Great Britain, is more
nearly upon a level than that of any other workmen in those different places; and the rate of the
port to and from which the greatest num- ber sail, that is, the port of London, regulates that of
all the rest. At London, the wages of the greater part of the different classes of workmen are
about double those of the same classes at Edinburgh. But the sailors who sail from the port of
London, seldom earn above three or four shillings a month more than those who sail from the
port of Leith, and the difference is fre- quently not so great. In time of peace, and in the
merchant-service, the London price is from a guinea to about seven-and-twenty shillings the
calendar month. A common labourer in London, at the rate of nine or ten shillings a week, may
earn in the calendar month from forty to five-and- forty shillings. The sailor, indeed, over and
above his pay, is supplied with provisions. Their value, however, may not perhaps always
exceed the difference between his pay and that of the common labourer; and though it
sometimes should, the excess will not be clear gain to the sailor, because he cannot share it
with his wife and family, whom he must maintain out of his wages at home. The dangers and
hair-breadth escapes of a life of adventures, instead of disheartening young people, seem
frequently to recommend a trade to them. A tender mother, among the inferior ranks of people,
is often afraid to send her son to school at a sea-port town, lest the sight of the  ships, and the
conversation and adventures of the sailors, should entice him to go to sea. The dis- tant
prospect of hazards, from which we can hope to extricate ourselves by courage and address,
is not disagreeable to us, and does not raise the wages of labour in any employment. It is
otherwise with those in which courage and address can be of no avail. In trades which are
known to be very unwholesome, the wages of labour are always remarkably high.
Unwholesomeness is a species of disagreeableness, and its effects upon the wages of labour are
to be ranked under that general head. In all the different employments of stock, the ordinary
rate of profit varies more or less with the certainty or uncertainty of the returns. These are, in
general, less uncertain in the inland than in the foreign trade, and in some branches of foreign
trade than in others; in the trade to North America, for example, than in that to Jamaica. The
ordinary rate of profit always rises more or less with the risk. It does not, however, seem to rise
in proportion to it, or so as to compensate it com- pletely. Bankruptcies are most frequent in
the most hazardous trades. The most hazardous of all trades, that of a smuggler, though, when
the adventure succeeds, it is likewise the most profitable, is the infallible road to bankruptcy.
The presumptuous hope of success seems to act here as upon all other occasions, and to entice
so many adventurers into those hazardous trades, that their competition reduces the profit
below what is sufficient to compensate the risk. To compensate it completely, the common
returns ought, over and above the ordinary profits of stock, not only to make up for all
occasional losses, but to afford a surplus profit to the adventurers, of the same na- ture with the
profit of insurers. But if the common returns were sufficient for all this, bank- ruptcies would
not be more frequent in these than in other trades. Of the five circumstances, therefore, which
vary the wages of labour, two only affect the prof- its of stock; the agreeableness or
disagreeableness of the business, and the risk or security with which it is attended. In point of
agreeableness or disagreeableness, there is little or no difference in the far greater part of the
different employments of stock, but a great deal in those of labour; and the ordinary profit of
stock, though it rises with the risk, does not always seem to rise in pro- portion to it. It should
follow from all this, that, in the same society or neighbourhood, the aver- age and ordinary
rates of profit in the different employments of stock should be more nearly upon a level than
the pecuniary wages of the different sorts of labour. They are so accordingly. The difference
between the earnings of a common labourer and those of a well employed lawyer or physician,
is evidently much greater than that between the ordinary profits in any two different branches
of trade. The apparent difference, besides, in the profits of different trades, is generally a
deception arising from our not always distinguishing what ought to be considered as wages,
from what ought to be considered as profit. Apothecaries' profit is become a bye-word,
denoting something uncommonly extravagant. 

This great apparent profit, however, is frequently no more than the reasonable wages of
labour. The skill of an apothecary is a much nicer and more delicate matter than that of any
artificer whatever; and the trust which is reposed in him is of much greater importance. He is
the physi- cian of the poor in all cases, and of the rich when the distress or danger is not very
great. His re- ward, therefore, ought to be suitable to his skill and his trust; and it arises
generally from the price at which he sells his drugs. But the whole drugs which the best
employed apothecary in a large market-town, will sell in a year, may not perhaps cost him
above thirty or forty pounds. Though he should sell them, therefore, for three or four hundred,
or at a thousand per cent. prof- it, this may frequently be no more than the reasonable wages of
his labour, charged, in the only way in which he can charge them, upon the price of his drugs.
The greater part of the apparent profit is real wages disguised in the garb of profit. In a small
sea-port town, a little grocer will make forty or fifty per cent. upon a stock of a sin- gle
hundred pounds, while a considerable wholesale merchant in the same place will scarce
make eight or ten per cent. upon a stock of ten thousand. The trade of the grocer may be
necessary for the conveniency of the inhabitants, and the narrowness of the market may not
admit the employ- ment of a larger capital in the business. The man, however, must not only
live by his trade, but live by it suitably to the qualifications which it requires. Besides
possessing a little capital, he must be able to read, write, and account and must be a tolerable
judge, too, of perhaps fifty or sixty different sorts of goods, their prices, qualities, and the
markets where they are to be had cheapest. He must have all the knowledge, in short, that is
necessary for a great merchant, which nothing hinders him from becoming but the want of a
sufficient capital. Thirty or forty pounds a year cannot be considered as too great a recompence
for the labour of a person so accomplished. Deduct this from the seemingly great profits of his
capital, and little more will remain, perhaps, than the ordinary profits of stock. The greater part
of the apparent profit is, in this case too, real wages. The difference between the apparent profit
of the retail and that of the wholesale trade, is much less in the capital than in small towns and
country villages. Where ten thousand pounds can be employed in the grocery trade, the wages
of the grocer's labour must be a very trifling addi- tion to the real profits of so great a stock.
The apparent profits of the wealthy retailer, therefore, are there more nearly upon a level with
those of the wholesale merchant. It is upon this account that goods sold by retail are generally
as cheap, and frequently much cheaper, in the capital than in small towns and country villages.
Grocery goods, for example, are generally much cheaper; bread and butchers' meat frequently
as cheap. It costs no more to bring grocery goods to the great town than to the country village;
but it costs a great deal more to bring corn and cattle, as the greater part of them must be
brought from a much greater distance. The prime cost of grocery goods, therefore, being the
same in both places, they are cheapest where the least profit is charged upon them. The prime
cost of bread and butchers' meat is greater in the great town than in the country village; and
though the profit is less, therefore they are not always cheaper there, but often equally cheap.
In such articles as bread and butchers' meat, the same cause which dimin- ishes apparent profit,
increases prime cost. The extent of the market, by giving employment to greater stocks,
diminishes apparent profit; but by requiring supplies from a greater distance, it in- creases
prime cost. This diminution of the one and increase of the other, seem, in most cases,  nearly to
counterbalance one another; which is probably the reason that, though the prices of corn and
cattle are commonly very different in different parts of the kingdom, those of bread
and butchers' meat are generally very nearly the same through the greater part of it.  Though the
profits of stock, both in the wholesale and retail trade, are generally less in the capital than in
small towns and country villages, yet great fortunes are frequently acquired from small
beginnings in the former, and scarce ever in the latter. In small towns and country villages, on
account of the narrowness of the market, trade cannot always be extended as stock extends.
In such places, therefore, though the rate of a particular person's profits may be very high, the
sum or amount of them can never be very great, nor consequently that of his annual
accumulation. In great towns, on the contrary, trade can be extended as stock increases, and the
credit of a frugal and thriving man increases much faster than his stock. His trade is extended
in proportion to the amount of both; and the sum or amount of his profits is in proportion to the
extent of his trade, and his annual accumulation in proportion to the amount of his profits. It
seldom happens, how- ever, that great fortunes are made, even in great towns, by any one
regular, established, and well- known branch of business, but in consequence of a long life of
industry, frugality, and attention. Sudden fortunes, indeed, are sometimes made in such places,
by what is called the trade of specu- lation. The speculative merchant exercises no one regular,
established, or well-known branch of business. He is a corn merchant this year, and a wine
merchant the next, and a sugar, tobacco, or tea merchant the year after. He enters into every
trade, when he foresees that it is likely to lie more than commonly profitable, and he quits it
when he foresees that its profits are likely to re- turn to the level of other trades. His profits and
losses, therefore, can bear no regular proportion to those of any one established and well-
known branch of business. A bold adventurer may some- times acquire a considerable fortune
by two or three successful speculations, but is just as likely to lose one by two or three
unsuccessful ones. This trade can be carried on nowhere but in great towns. It is only in places
of the most extensive commerce and correspondence that the intel- ligence requisite for it can
be had.  

The five circumstances above mentioned, though they occasion considerable inequalities in the
wages of labour and profits of stock, occasion none in the whole of the advantages and
disad- vantages, real or imaginary, of the different employments of either. The nature of those
circum- stances is such, that they make up for a small pecuniary gain in some, and
counterbalance a great one in others. In order, however, that this equality may take place in the
whole of their advantages or disad- vantages, three things are requisite, even where there is the
most perfect freedom. First the em- ployments must be well known and long established in the
neighbourhood; secondly, they must be in their ordinary, or what may be called their natural
state; and, thirdly, they must be the sole or principal employments of those who occupy
them. First, This equality can take place only in those employments which are well known, and
have been long established in the neighbourhood. Where all other circumstances are equal,
wages are generally higher in new than in old trades. When a projector attempts to establish a
new manufacture, he must at first entice his workmen from other employments, by higher
wages than they can either earn in their own trades, or than the nature of his work would
otherwise require; and a considerable time must pass away before he can venture to reduce
them to the common level. Manufactures for which the de- mand arises altogether from fashion
and fancy, are continually changing, and seldom last long enough to be considered as old
established manufactures. Those, on the contrary, for which the demand arises chiefly from use
or necessity, are less liable to change, and the same form or fabric may continue in demand for
whole centuries together. The wages of labour, therefore, are likely to be higher in
manufactures of the former, than in those of the latter kind. Birmingham deals chiefly in
manufactures of the former kind; Sheffield in those of the latter; and the wages of labour in
those two different places are said to be suitable to this difference in the nature of
their manufactures. The establishment of any new manufacture, of any new branch of
commerce, or of any new practice in agriculture, is always a speculation from which the
projector promises himself extraor- dinary profits. These profits sometimes are very great, and
sometimes, more frequently, perhaps, they are quite otherwise; but, in general, they bear no
regular proportion to those of other old trades in the neighbourhood. If the project succeeds,
they are commonly at first very high. When the trade or practice becomes thoroughly
established and well known, the competition reduces them to the level of other
trades. Secondly, this equality in the whole of the advantages and disadvantages of the
different em- ployments of labour and stock, can take place only in the ordinary, or what may
be called the nat- ural state of those employments. The demand for almost every different
species of labour is sometimes greater, and sometimes less than usual. In the one case, the
advantages of the employment rise above, in the other they fall below the common level. The
demand for country labour is greater at hay-time and harvest than during the greater part of the
year; and wages rise with the demand. In time of war, when forty or fifty thousand sailors are
forced from the merchant service into that of the king, the de- mand for sailors to merchant
ships necessarily rises with their scarcity; and their wages, upon such occasions, commonly
rise from a guinea and seven-and-twenty shillings to forty shilling's and three pounds a-month.
In a decaying manufacture, on the contrary, many workmen, rather than quit their own trade,
are contented with smaller wages than would otherwise be suitable to the nature of their
employment. The profits of stock vary with the price of the commodities in which it is
employed. As the price of any commodity rises above the ordinary or average rate, the profits
of at least some part of the stock that is employed in bringing it to market, rise above their
proper level, and as it falls they sink below it. All commodities are more or less liable to
variations of price, but some are much more so than others. In all commodities which are
produced by human industry, the quantity of industry annually employed is necessarily
regulated by the annual demand, in such a manner that the average annual produce may, as
nearly as possible, be equal to the average annual con- sumption. In some employments, it has
already been observed, the same quantity of industry will always produce the same, or very
nearly the same quantity of commodities. In the linen or woollen manufactures, for example,
the same number of hands will annually work up very nearly the same quantity of linen and
woollen cloth. The variations in the market price of such com- modities, therefore, can arise
only from some accidental variation in the demand. A public mourning raises the price of
black cloth. But as the demand for most sorts of plain linen and woollen cloth is pretty
uniform, so is likewise the price. But there are other employments in which the same quantity
of industry will not always produce the same quantity of commodities. The same quantity of
industry, for example, will, in different years, produce very different quan- tities of corn, wine,
hops, sugar tobacco, etc. The price of such commodities, therefore, varies not only with the
variations of demand, but with the much greater and more frequent variations of quantity, and
is consequently extremely fluctuating; but the profit of some of the dealers must  necessarily
fluctuate with the price of the commodities. The operations of the speculative mer- chant are
principally employed about such commodities. He endeavours to buy them up when
he foresees that their price is likely to rise, and to sell them when it is likely to fall.  Thirdly,
this equality in the whole of the advantages and disadvantages of the different em- ployments
of labour and stock, can take place only in such as are the sole or principal employ-  ments of
those who occupy them. When a person derives his subsistence from one employment, which
does not occupy the greater part of his time, in the intervals of his leisure he is often willing to
work at another for less wages than would otherwise suit the nature of the employment. There
still subsists, in many parts of Scotland, a set of people called cottars or cottagers, though they
were more frequent some years ago than they are now. They are a sort of out- servants of the
landlords and farmers. The usual reward which they receive from their master is a house, a
small garden for pot-herbs, as much grass as will feed a cow, and, perhaps, an acre or  two of
bad arable land. When their master has occasion for their labour, he gives them, besides,  two
pecks of oatmeal a-week, worth about sixteen pence sterling. During a great part of the year, he
has little or no occasion for their labour, and the cultivation of their own little possession is
not sufficient to occupy the time which is left at their own disposal. When such occupiers were
more numerous than they are at present, they are said to have been willing to give their spare
time for a very small recompence to any body, and to have wrought for less wages than other
labourers. In ancient times, they seem to have been common all over Europe. In countries ill
cultivated, and worse inhabited, the greater part of landlords and farmers could not otherwise
provide themselves with the extraordinary number of hands which country labour requires at
certain seasons. The daily or weekly recompence which such labourers occasionally received
from their masters, was evidently not the whole price of their labour. Their small tenement
made a considerable part of it. This daily or weekly recompence, however, seems to have been
considered as the whole of it, by many writers who have collected the prices of labour and
provisions in ancient times, and who have taken pleasure in representing both as wonderfully
low. The produce of such labour comes frequently cheaper to market than would otherwise
be suitable to its nature. Stockings, in many parts of Scotland, are knit much cheaper than they
can anywhere be wrought upon the loom. They are the work of servants and labourers who
derive the principal part of their subsistence from some other employment. More than a
thousand pair of Shetland stockings are annually imported into Leith, of which the price is
from fivepence to seven-pence a pair. At Lerwick, the small capital of the Shetland islands,
tenpence a-day, I have been assured, is a common price of common labour. In the same
islands, they knit worsted stock- ings to the value of a guinea a pair and upwards. The spinning
of linen yarn is carried on in Scotland nearly in the same way as the knitting of  stockings, by
servants, who are chiefly hired for other purposes. They earn but a very scanty sub- sistence,
who endeavour to get their livelihood by either of those trades. In most parts of Scotland, she is
a good spinner who can earn twentypence a-week. In opulent countries, the market is generally
so extensive, that any one trade is sufficient to employ the whole labour and stock of those
who occupy it. Instances of people living by one em- ployment, and, at the same time, deriving
some little advantage from another, occur chiefly in pour countries. The following instance,
however, of something of the same kind, is to be found in the capital of a very rich one. There
is no city in Europe, I believe, in which house-rent is dearer than in London, and yet I know no
capital in which a furnished apartment can be hired so cheap. Lodging is not only much
cheaper in London than in Paris; it is much cheaper than in Edin- burgh, of the same degree of
goodness; and, what may seem extraordinary, the dearness of house- rent is the cause of the
cheapness of lodging. The dearness of house-rent in London arises, not only from those causes
which render it dear in all great capitals, the dearness of labour, the dear- ness of all the
materials of building, which must generally be brought from a great distance, and, above all,
the dearness of ground-rent, every landlord acting the part of a monopolist, and fre- quently
exacting a higher rent for a single acre of bad land in a town, than can be had for a hun-  dred of
the best in the country; but it arises in part from the peculiar manners and customs of
the people, which oblige every master of a family to hire a whole house from top to bottom.
A dwelling-house in England means every thing that is contained under the same roof. In
France, Scotland, and many other parts of Europe, it frequently means no more than a single
storey. A tradesman in London is obliged to hire a whole house in that part of the town where
his cus- tomers live. His shop is upon the ground floor, and he and his family sleep in the
garret; and he endeavours to pay a part of his house-rent by letting the two middle storeys to
lodgers. He expects to maintain his family by his trade, and not by his lodgers. Whereas at
Paris and Edinburgh, peo- ple who let lodgings have commonly no other means of subsistence;
and the price of the lodging must pay, not only the rent of the house, but the whole expense of
the family.  PART II.—Inequalities occasioned by the Policy of Europe.  Such are the
inequalities in the whole of the advantages and disadvantages of the different employments of
labour and stock, which the defect of any of the three requisites above mentioned must
occasion, even where there is the most perfect liberty. But the policy of Europe, by not
leav- ing things at perfect liberty, occasions other inequalities of much greater importance. It
does this chiefly in the three following ways. First, by restraining the competition in
some employments to a smaller number than would otherwise be disposed to enter into them;
sec- ondly, by increasing it in others beyond what it naturally would be; and, thirdly, by
obstructing the free circulation of labour and stock, both from employment to employment, and
from place to place. First, The policy of Europe occasions a very important inequality in the
whole of the advan- tages and disadvantages of the different employments of labour and stock,
by restraining the competition in some employments to a smaller number than might otherwise
be disposed to enter into them. The exclusive privileges of corporations are the principal means
it makes use of for this pur- pose. The exclusive privilege of an incorporated trade necessarily
restrains the competition, in the town where it is established, to those who are free of the trade.
To have served an apprenticeship in the town, under a master properly qualified, is commonly
the necessary requisite for obtaining this freedom. The bye-laws of the corporation regulate
sometimes the number of apprentices which any master is allowed to have, and almost always
the number of years which each appren- tice is obliged to serve. The intention of both
regulations is to restrain the competition to a much smaller number than might otherwise be
disposed to enter into the trade. The limitation of the number of apprentices restrains it
directly. A long term of apprenticeship restrains it more indi- rectly, but as effectually, by
increasing the expense of education. In Sheffield, no master cutler can have more than one
apprentice at a time, by a bye-law of the corporation. In Norfolk and Norwich, no master
weaver can have more than two apprentices, under pain of forfeiting five pounds a-month to
the king. No master hatter can have more than two apprentices anywhere in England, or in the
English plantations, under pain of forfeiting; five pounds a-month, half to the king, and half to
him who shall sue in any court of record. Both these regulations, though they have been
confirmed by a public law of the kingdom, are evidently dictated by the same corporation-
spirit which enacted the bye-law of Sheffield. The silk-weavers in London had scarce been
incorporated a year, when they enacted a bye-law, restraining any master from having more
than two apprentices at a time. It required a particular act of parliament to re-  scind this bye-
law. Seven years seem anciently to have been, all over Europe, the usual term established for
the duration of apprenticeships in the greater part of incorporated trades. All such
incorporations were anciently called universities, which, indeed, is the proper Latin name for
any incorporation whatever. The university of smiths, the university of tailors, etc. are
expressions which we com- monly meet with in the old charters of ancient towns. When those
particular incorporations, which are now peculiarly called universities, were first established,
the term of years which it was necessary to study, in order to obtain the degree of master of
arts, appears evidently to have been copied from the term of apprenticeship in common trades,
of which the incorporations were much more ancient. As to have wrought seven years under a
master properly qualified, was necessary, in order to entitle my person to become a master, and
to have himself apprentices in a common trade; so to have studied seven years under a master
properly qualified, was necessary to entitle him to become a master, teacher, or doctor (words
anciently synonymous), in the liberal arts, and to have scholars or apprentices (words likewise
originally synonymous) to study under him. By the 5th of Elizabeth, commonly called the
Statute of Apprenticeship, it was enacted, that no person should, for the future, exercise any
trade, craft, or mystery, at that time exercised in England, unless he had previously served to it
an apprenticeship of seven years at least; and what before had been the bye-law of many
particular corporations, became in England the general and public law of all trades carried on
in market towns. For though the words of the statute are very general, and seem plainly to
include the whole kingdom, by interpretation its operation has been limited to market towns; it
having been held that, in country villages, a person may exercise sev- eral different trades,
though he has not served a seven years apprenticeship to each, they being necessary for the
conveniency of the inhabitants, and the number of people frequently not being sufficient to
supply each with a particular set of hands. By a strict interpretation of the words, too,  the
operation of this statute has been limited to those trades which were established in
England before the 5th of Elizabeth, and has never been extended to such as have been
introduced since that time. This limitation has given occasion to several distinctions, which,
considered as rules of police, appear as foolish as can well be imagined. It has been adjudged,
for example, that a coach- maker can neither himself make nor employ journeymen to make
his coach-wheels, but must buy them of a master wheel-wright; this latter trade having been
exercised in England before the 5th of Elizabeth. But a wheel-wright, though he has never
served an apprenticeship to a coach- maker, may either himself make or employ journeymen to
make coaches; the trade of a coach- maker not being within the statute, because not exercised
in England at the time when it was made. The manufactures of Manchester, Birmingham, and
Wolverhampton, are many of them, upon this account, not within the statute, not having been
exercised in England before the 5th of Elizabeth. In France, the duration of apprenticeships is
different in different towns and in different trades. In Paris, five years is the term required in a
great number; but, before any person can be qualified to exercise the trade as a master, he
must, in many of them, serve five years more as a journeyman. During this latter term, he is
called the companion of his master, and the term itself is called his companionship. In
Scotland, there is no general law which regulates universally the duration of appren- ticeships.
The term is different in different corporations. Where it is long, a part of it may gener- ally be
redeemed by paying a small fine. In most towns, too, a very small fine is sufficient to
pur- chase the freedom of any corporation. The weavers of linen and hempen cloth, the
principal man- ufactures of the country, as well as all other artificers subservient to them,
wheel-makers, reel- makers, etc. may exercise their trades in any town-corporate without
paying any fine. In all towns- corporate, all persons are free to sell butchers' meat upon any
lawful day of the week. Three years is, in Scotland, a common term of apprenticeship, even in
some very nice trades; and, in general, I know of no country in Europe, in which corporation
laws are so little oppressive. The property which every man has in his own labour, as it is the
original foundation of all other property, so it is the most sacred and inviolable. The patrimony
of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing
this strength and dexterity in what manner he thinks proper, without injury to his neighbour, is
a plain violation of this most sacred property. It is a manifest encroachment upon the just
liberty, both of the workman, and of those who might be disposed to employ him. As it hinders
the one from working at what he thinks proper, so it hinders the others from employing whom
they think proper. To judge whether he is fit to be employed, may surely be trusted to the
discretion of the employers, whose interest it so much concerns. The affected anxiety of the
lawgiver, lest they should employ an im- proper person, is evidently as impertinent as it is
oppressive. The institution of long apprenticeships can give no security that insufficient
workmanship shall not frequently be exposed to public sale. When this is done, it is generally
the effect of fraud, and not of inability; and the longest apprenticeship can give no security
against fraud. Quite dif- ferent regulations are necessary to prevent this abuse. The sterling
mark upon plate, and the stamps upon linen and woollen cloth, give the purchaser much greater
security than any statute of apprenticeship. He generally looks at these, but never thinks it
worth while to enquire whether the workman had served a seven years apprenticeship. The
institution of long apprenticeships has no tendency to form young people to industry.
A journeyman who works by the piece is likely to be industrious, because he derives a benefit
from every exertion of his industry. An apprentice is likely to be idle, and almost always is so,
because he has no immediate interest to be otherwise. In the inferior employments, the sweets
of labour consist altogether in the recompence of labour. They who are soonest in a condition
to enjoy the sweets of it, are likely soonest to conceive a relish for it, and to acquire the early
habit of industry. A young man naturally conceives an aversion to labour, when for a long time
he receives no ben- efit from it. The boys who are put out apprentices from public charities are
generally bound for more than the usual number of years, and they generally turn out very idle
and worthless. Apprenticeships were altogether unknown to the ancients. The reciprocal duties
of master and apprentice make a considerable article in every modern code. The Roman law is
perfectly silent with regard to them. I know no Greek or Latin word (I might venture, I believe,
to assert that there is none) which expresses the idea we now annex to the word apprentice, a
servant bound to work at a particular trade for the benefit of a master, during a term of years,
upon condi- tion that the master shall teach him that trade. Long apprenticeships are altogether
unnecessary. The arts, which are much superior to com- mon trades, such as those of making
clocks and watches, contain no such mystery as to require a long course of instruction. The
first invention of such beautiful machines, indeed, and even that of some of the instruments
employed in making them, must no doubt have been the work of deep thought and long time,
and may justly be considered as among the happiest efforts of human ingenuity. But when both
have been fairly invented, and are well understood, to explain to any young man, in the
completest manner, how to apply the instruments, and how to construct the machines, cannot
well require more than the lessons of a few weeks; perhaps those of a few days might be
sufficient. In the common mechanic trades, those of a few days might certainly be sufficient.
The dexterity of hand, indeed, even in common trades, cannot be acquired without much
practice and experience. But a young man would practice with much more diligence
and attention, if from the beginning he wrought as a journeyman, being paid in proportion to
the lit- tle work which he could execute, and paying in his turn for the materials which he
might some- times spoil through awkwardness and inexperience. His education would
generally in this way be more effectual, and always less tedious and expensive. The master,
indeed, would be a loser. He would lose all the wages of the apprentice, which he now saves,
for seven years together. In the end, perhaps, the apprentice himself would be a loser. In a trade
so easily learnt he would have more competitors, and his wages, when he came to be a
complete workman, would be much less than at present. The same increase of competition
would reduce the profits of the masters, as well as the wages of workmen. The trades, the
crafts, the mysteries, would all be losers. But the public would be a gainer, the work of all
artificers coming in this way much cheaper to market. It is to prevent his reduction of price,
and consequently of wages and profit, by restraining that free competition which would most
certainly occasion it, that all corporations, and the greater part of corporation laws have been
established. In order to erect a corporation, no other authority in ancient times was requisite, in
many parts of Europe, but that of the town-corporate in which it was established. In England,
indeed, a charter from the king was likewise necessary. But this pre- rogative of the crown
seems to have been reserved rather for extorting money from the subject, than for the defence
of the common liberty against such oppressive monopolies. Upon paying a fine to the king, the
charter seems generally to have been readily granted; and when any particular class of
artificers or traders thought proper to act as a corporation, without a charter, such adul- terine
guilds, as they were called, were not always disfranchised upon that account, but obliged
to fine annually to the king, for permission to exercise their usurped privileges {See Madox
Firma Burgi p. 26 etc.}. The immediate inspection of all corporations, and of the bye-laws
which they might think proper to enact for their own government, belonged to the town-
corporate in which they were established; and whatever discipline was exercised over them,
proceeded commonly, not from the king, but from that greater incorporation of which those
subordinate ones were only parts or members. The government of towns-corporate was
altogether in the hands of traders and artificers, and it was the manifest interest of every
particular class of them, to prevent the market from being overstocked, as they commonly
express it, with their own particular species of industry; which is in reality to keep it always
understocked. Each class was eager to establish regulations proper for this purpose, and,
provided it was allowed to do so, was willing to consent that every other class  should do the
same. In consequence of such regulations, indeed, each class was obliged to buy the goods
they had occasion for from every other within the town, somewhat dearer than they otherwise
might have done. But, in recompence, they were enabled to sell their own just as much  dearer;
so that, so far it was as broad as long, as they say; and in the dealings of the different class-  es
within the town with one another, none of them were losers by these regulations. But in
their dealings with the country they were all great gainers; and in these latter dealings consist
the whole trade which supports and enriches every town. Every town draws its whole
subsistence, and all the materials of its industry, from the: coun- try. It pays for these chiefly in
two ways. First, by sending back to the country a part of those materials wrought up and
manufactured; in which case, their price is augmented by the wages of the workmen, and the
profits of their masters or immediate employers; secondly, by sending to it a part both of the
rude and manufactured produce, either of other countries, or of distant parts of the same
country, imported into the town; in which case, too, the original price of those goods
is augmented by the wages of the carriers or sailors, and by the profits of the merchants who
em- ploy them. In what is gained upon the first of those branches of commerce, consists the
advan- tage which the town makes by its manufactures; in what is gained upon the second, the
advan- tage of its inland and foreign trade. The wages of the workmen, and the profits of their
different employers, make up the whole of what is gained upon both. Whatever regulations,
therefore, tend to increase those wages and profits beyond what they otherwise: would be, tend
to enable the town to purchase, with a smaller quantity of its labour, the produce of a greater
quantity of the labour of the country. They give the traders and artificers in the town an
advantage over the land- lords, farmers, and labourers, in the country, and break down that
natural equality which would otherwise take place in the commerce which is carried on
between them. The whole annual pro- duce of the labour of the society is annually divided
between those two different sets of people. By means of those regulations, a greater share of it
is given to the inhabitants of the town than would otherwise fall to them, and a less to those of'
the country. The price which the town really pays for the provisions and materials annually
imported into it, is the quantity of manufactures and other goods annually exported from it.
The dearer the latter are sold, the cheaper the former are bought. The industry of the town
becomes more, and that of the country less advantageous. That the industry which is carried on
in towns is, everywhere in Europe, more advantageous than that which is carried on in the
country, without entering into any very nice computations, we may satisfy ourselves by one
very simple and obvious observation. In every country of Europe, we find at least a hundred
people who have acquired great fortunes, from small beginnings, by trade and manufactures,
the industry which properly belongs to towns, for one who has done so by that which properly
belongs to the country, the raising of rude produce by the improvement and culti-  vation of
land. Industry, therefore, must be better rewarded, the wages of labour and the profits of stock
must evidently be greater, in the one situation than in the other. But stock and labour
natu- rally seek the most advantageous employment. They naturally, therefore, resort as much
as they can to the town, and desert the country. The inhabitants of a town being collected into
one place, can easily combine together. The most insignificant trades carried on in towns have,
accordingly, in some place or other, been incorporated; and even where they have never been
incorporated, yet the corporation-spirit, the jealousy of strangers, the aversion to take
apprentices, or to communicate the secret of their trade, generally prevail in them, and often
teach them, by voluntary associations and agreements, to pre- vent that free competition which
they cannot prohibit by bye-laws. The trades which employ but a small number of hands, run
most easily into such combinations. Half-a-dozen wool-combers, per- haps, are necessary to
keep a thousand spinners and weavers at work. By combining not to take apprentices, they can
not only engross the employment, but reduce the whole manufacture into a sort of slavery to
themselves, and raise the price of their labour much above what is due to the na-  ture of their
work. The inhabitants of the country, dispersed in distant places, cannot easily combine
together. They have not only never been incorporated, but the incorporation spirit never has
prevailed among them. No apprenticeship has ever been thought necessary to qualify for
husbandry, the great trade of the country. After what are called the fine arts, and the liberal
professions, however, there is perhaps no trade which requires so great a variety of knowledge
and experience. The innumerable volumes which have been written upon it in all languages,
may satisfy us, that among the wisest and most learned nations, it has never been regarded as a
matter very easily understood. And from all those volumes we shall in vain attempt to collect
that knowledge of its various and complicated operations which is commonly possessed even
by the common farmer; how contemptuously soever the very contemptible authors of some of
them may sometimes affect to speak of him. There is scarce any common mechanic trade, on
the contrary, of which all the operations may not be as completely and distinctly explained in a
pamphlet of a very few pages, as it is possible for words illustrated by figures to explain them.
In the history of the arts, now pub- lishing by the French Academy of Sciences, several of them
are actually explained in this manner. The direction of operations, besides, which must be
varied with every change of the weather, as well as with many other accidents, requires much
more judgment and discretion, than that of those which are always the same, or very nearly the
same. Not only the art of the farmer, the general direction of the operations of husbandry, but
many inferior branches of country labour require much more skill and experience than the
greater part of mechanic trades. The man who works upon brass and iron, works with
instruments, and upon materials of which the temper is always the same, or very nearly the
same. But the man who ploughs the ground with a team of horses or oxen, works with
instruments of which the health, strength, and temper, are very different upon different
occasions. The condition of the materials which he works upon, too, is as variable as that of the
instruments which he works with, and both require to be managed with much judgment and
discretion. The common ploughman, though generally regarded as the pattern of stupidity and
ignorance, is seldom defective in this judgment and discretion. He is less accustomed, indeed,
to social intercourse, than the mechanic who lives in a town. His voice and language are more
uncouth, and more difficult to be understood by those who are not used to them. His
understanding, however, being accustomed to consider a greater variety of objects, is generally
much superior to that of the other, whose whole attention, from morning till night, is
commonly occupied in performing one or two very simple operations. How much the lower
ranks of people in the country are really superior to those of the town, is well known to every
man whom either business or curiosity has led to converse much with both. 

In China and Indostan, accordingly, both the rank and the wages of country labourers are said
to be superior to those of the greater part of artificers and manufacturers. They would probably
be so everywhere, if corporation laws and the corporation spirit did not prevent it. The
superiority which the industry of the towns has everywhere in Europe over that of the  country,
is not altogether owing to corporations and corporation laws. It is supported by many other
regulations. The high duties upon foreign manufactures, and upon all goods imported by alien
merchants, all tend to the same purpose. Corporation laws enable the inhabitants of towns to
raise their prices, without fearing to be undersold by the free competition of their own
coun- trymen. Those other regulations secure them equally against that of foreigners. The
enhancement of price occasioned by both is everywhere finally paid by the landlords, farmers,
and labourers, of the country, who have seldom opposed the establishment of such monopolies.
They have com- monly neither inclination nor fitness to enter into combinations; and the
clamour and sophistry of merchants and manufacturers easily persuade them, that the private
interest of a part, and of a subordinate part, of the society, is the general interest of the
whole. In Great Britain, the superiority of the industry of the towns over that of the country
seems to have been greater formerly than in the present times. The wages of country labour
approach near- er to those of manufacturing labour, and the profits of stock employed in
agriculture to those of trading and manufacturing stock, than they are said to have none in the
last century, or in the beginning of the present. This change may be regarded as the necessary,
though very late conse- quence of the extraordinary encouragement given to the industry of the
towns. The stocks ac- cumulated in them come in time to be so great, that it can no longer be
employed with the ancient profit in that species of industry which is peculiar to them. That
industry has its limits like every other; and the increase of stock, by increasing the competition,
necessarily reduces the profit. The lowering of profit in the town forces out stock to the
country, where, by creating a new demand for country labour, it necessarily raises its wages. It
then spreads itself, if I my say so, over the face of the land, and, by being employed in
agriculture, is in part restored to the country, at the ex- pense of which, in a great measure, it
had originally been accumulated in the town. That every- where in Europe the greatest
improvements of the country have been owing to such over flowings of the stock originally
accumulated in the towns, I shall endeavour to shew hereafter, and at the same time to
demonstrate, that though some countries have, by this course, attained to a consid- erable
degree of opulence, it is in itself necessarily slow, uncertain, liable to be disturbed
and interrupted by innumerable accidents, and, in every respect, contrary to the order of nature
and of reason. The interests, prejudices, laws, and customs, which have given occasion to it, I
shall en- deavour to explain as fully and distinctly as I can in the third and fourth books of this
Inquiry. People of the same trade seldom meet together, even for merriment and diversion, but
the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
It is impossible, indeed, to prevent such meetings, by any law which either could be executed,
or would be consistent with liberty and justice. But though the law cannot hinder people of the
same trade from sometimes assembling together, it ought to do nothing to facilitate such
assemblies, much less to render them necessary. A regulation which obliges all those of the
same trade in a particular town to enter their names and places of abode in a public register,
facilitates such assemblies. It connects individuals who might never otherwise be known to one
another, and gives every man of the trade a direction where to find every other man of it. A
regulation which enables those of the same trade to tax themselves, in order to provide for their
poor, their sick, their widows and orphans, by giving them a common interest to
manage, renders such assemblies necessary. An incorporation not only renders them necessary,
but makes the act of the majority binding upon the whole. In a free trade, an effectual
combination cannot be established but by the unan- imous consent of every single trader, and it
cannot last longer than every single trader continues of the same mind. The majority of a
corporation can enact a bye-law, with proper penalties, which will limit the competition more
effectually and more durably than any voluntary combination whatever. 

The pretence that corporations are necessary for the better government of the trade, is with-  out
any foundation. The real and effectual discipline which is exercised over a workman, is
not that of his corporation, but that of his customers. It is the fear of losing their employment
which restrains his frauds and corrects his negligence. An exclusive corporation necessarily
weakens the force of this discipline. A particular set of workmen must then be employed, let
them behave well or ill. It is upon this account that, in many large incorporated towns, no
tolerable workmen are to be found, even in some of the most necessary trades. If you would
have your work tolerably exe- cuted, it must be done in the suburbs, where the workmen,
having no exclusive privilege, have nothing but their character to depend upon, and you must
then smuggle it into the town as well as you can. It is in this manner that the policy of Europe,
by restraining the competition in some employ- ments to a smaller number than would
otherwise be disposed to enter into them, occasions a very important inequality in the whole of
the advantages and disadvantages of the different employ- ments of labour and
stock. Secondly, The policy of Europe, by increasing the competition in some employments
beyond what it naturally would be, occasions another inequality, of an opposite kind, in the
whole of the advantages and disadvantages of the different employments of labour and stock. It
has been considered as of so much importance that a proper number of young people should be
educated for certain professions, that sometimes the public, and sometimes the piety of private
founders, have established many pensions, scholarships, exhibitions, bursaries, etc. for this
purpose, which draw many more people into those trades than could otherwise pretend to
fol- low them. In all Christian countries, I believe, the education of the greater part of
churchmen is paid for in this manner. Very few of them are educated altogether at their own
expense. The long, tedious, and expensive education, therefore, of those who are, will not
always procure them a suit- able reward, the church being crowded with people, who, in order
to get employment, are willing to accept of a much smaller recompence than what such an
education would otherwise have enti- tled them to; and in this manner the competition of the
poor takes away the reward of the rich. It would be indecent, no doubt, to compare either a
curate or a chaplain with a journeyman in any common trade. The pay of a curate or chaplain,
however, may very properly be considered as of the same nature with the wages of a
journeyman. They are all three paid for their work according to the contract which they may
happen to make with their respective superiors. Till after the mid- dle of the fourteenth century,
five merks, containing about as much silver as ten pounds of our present money, was in
England the usual pay of a curate or a stipendiary parish priest, as we find it regulated by the
decrees of several different national councils. At the same period, fourpence a-day, containing
the same quantity of silver as a shilling of our present money, was declared to be the pay of a
master mason; and threepence a-day, equal to ninepence of our present money, that of a
journeyman mason. {See the Statute of Labourers, 25, Ed. III.} The wages of both
these labourer's, therefore, supposing them to have been constantly employed, were much
superior to those of the curate. The wages of the master mason, supposing him to have been
without employ- ment one-third of the year, would have fully equalled them. By the 12th of
Queen Anne, c. 12. it is declared, "That whereas, for want of sufficient maintenance and
encouragement to curates, the cures have, in several places, been meanly supplied, the bishop
is, therefore, empowered to ap- point, by writing under his hand and seal, a sufficient certain
stipend or allowance, not exceeding fifty, and not less than twenty pounds a-year". Forty
pounds a-year is reckoned at present very good pay for a curate; and, notwithstanding this act
of parliament, there are many curacies under twenty pounds a-year. There are journeymen
shoemakers in London who earn forty pounds a- year, and there is scarce an industrious
workman of any kind in that metropolis who does not earn more than twenty. This last sum,
indeed, does not exceed what frequently earned by com- mon labourers in many country
parishes. Whenever the law has attempted to regulate the wages of workmen, it has always
been rather to lower them than to raise them. But the law has, upon many occasions, attempted
to raise the wages of curates, and, for the dignity of the church, to oblige the rectors of parishes
to give them more than the wretched maintenance which they them- selves might be willing to
accept of. And, in both cases, the law seems to have been equally ineffectual, and has never
either been able to raise the wages of curates, or to sink those of labour-  ers to the degree that
was intended; because it has never been able to hinder either the one from being willing to
accept of less than the legal allowance, on account of the indigence of their situ-  ation and the
multitude of their competitors, or the other from receiving more, on account of the contrary
competition of those who expected to derive either profit or pleasure from
employing them. The great benefices and other ecclesiastical dignities support the honour of
the church, notwithstanding the mean circumstances of some of its inferior members. The
respect paid to the profession, too, makes some compensation even to them for the meanness
of their pecuniary recompence. In England, and in all Roman catholic countries, the lottery of
the church is in reality much more advantageous than is necessary. The example of the
churches of Scotland, of Geneva, and of several other protestant churches, may satisfy us, that
in so creditable a profession, in which education is so easily procured, the hopes of much more
moderate benefices will draw a sufficient number of learned, decent, and respectable men into
holy orders. In professions in which there are no benefices, such as law and physic, if an equal
proportion of people were educated at the public expense, the competition would soon be so
great as to sink very much their pecuniary reward. It might then not be worth any man's while
to educate his son to either of those professions at his own expense. They would be entirely
abandoned to such as had been educated by those public charities, whose numbers and
necessities would oblige them in general to content themselves with a very miserable
recompence, to the entire degradation of the now respectable professions of law and
physic. That unprosperous race of men, commonly called men of letters, are pretty much in the
situ- ation which lawyers and physicians probably would be in, upon the foregoing
supposition. In every part of Europe, the greater part of them have been educated for the
church, but have been hindered by different reasons from entering into holy orders. They have
generally, therefore, been educated at the public expense; and their numbers are everywhere so
great, as commonly to re- duce the price of their labour to a very paltry recompence. Before the
invention of the art of printing, the only employment by which a man of letters could make any
thing by his talents, was that of a public or private teacher, or by communicating to other
people the curious and useful knowledge which he had acquired himself; and this is still surely
a more honourable, a more useful, and, in general, even a more profitable employment than
that other of writing for a bookseller, to which the art of printing has given occasion. The time
and study, the genius, knowledge, and application requisite to qualify an eminent teacher of the
sciences, are at least equal to what is necessary for the greatest practitioners in law and
physic. But the usual reward of the eminent teacher bears no proportion to that of the lawyer or
physi- cian, because the trade of the one is crowded with indigent people, who have been
brought up to it at the public expense; whereas those of the other two are encumbered with
very few who have not been educated at their own. The usual recompence, however, of public
and private teachers, small as it may appear, would undoubtedly be less than it is, if the
competition of those yet more indigent men of letters, who write for bread, was not taken out
of the market. Before the inven- tion of the art of printing, a scholar and a beggar seem to have
been terms very nearly synony- mous. The different governors of the universities, before that
time, appear to have often granted licences to their scholars to beg. In ancient times, before any
charities of this kind had been established for the education of indigent people to the learned
professions, the rewards of eminent teachers appear to have been much more considerable.
Isocrates, in what is called his discourse against the sophists, re- proaches the teachers of his
own times with inconsistency. "They make the most magnificent promises to their scholars,"
says he, "and undertake to teach them to be wise, to be happy, and to be just; and, in return for
so important a service, they stipulate the paltry reward of four or five minae." "They who teach
wisdom," continues he, "ought certainly to be wise themselves; but if any man were to sell
such a bargain for such a price, he would be convicted of the most evident folly." He certainly
does not mean here to exaggerate the reward, and we may be assured that it was not less than
he represents it. Four minae were equal to thirteen pounds six shillings and eightpence; five
minae to sixteen pounds thirteen shillings and fourpence. Something not less than the largest of
those two sums, therefore, must at that time have been usually paid to the most eminent
teachers at Athens. Isocrates himself demanded ten minae, or £ 33:6:8 from each scholar.
When he taught at Athens, he is said to have had a hundred scholars. I understand this to be the
number whom he taught at one time, or who attended what we would call one course
of lectures; a number which will not appear extraordinary from so great a city to so famous a
teacher, who taught, too, what was at that time the most fashionable of all sciences, rhetoric.
He must have made, therefore, by each course of lectures, a thousand minae, or £ 3335:6:8. A
thousand minae, accordingly, is said by Plutarch, in another place, to have been his didactron,
or usual price of teaching. Many other eminent teachers in those times appear to have acquired
great for- tunes. Georgias made a present to the temple of Delphi of his own statue in solid
gold. We must not, I presume, suppose that it was as large as the life. His way of living, as well
as that of Hippias and Protagoras, two other eminent teachers of those times, is represented by
Plato as splendid, even to ostentation. Plato himself is said to have lived with a good deal of
magnificence. Aristotle, after having been tutor to Alexander, and most munificently rewarded,
as it is universally agreed, both by him and his father, Philip, thought it worth while,
notwithstanding, to return to Athens, in order to resume the teaching of his school. Teachers of
the sciences were probably in those times less common than they came to be in an age or two
afterwards, when the competition had probably somewhat reduced both the price of their
labour and the admiration for their persons. The most eminent of them, however, appear
always to have enjoyed a degree of consideration much superior to any of the like profession in
the present times. The Athenians sent Carneades the academic, and Diogenes the stoic, upon a
solemn embassy to Rome; and though their city had then declined from its former grandeur, it
was still an independent and considerable republic. Carneades, too, was a Babylonian by birth;
and as there never was a people more jealous of admitting foreigners to public offices than the
Athenians, their consideration for him must have been very great. This inequality is, upon the
whole, perhaps rather advantageous than hurtful to the public. It may somewhat degrade the
profession of a public teacher; but the cheapness of literary education is surely an advantage
which greatly overbalances this trifling inconveniency. The public, too, might derive still
greater benefit from it, if the constitution of those schools and colleges, in which education is
carried on, was more reasonable than it is at present through the greater part of
Eu- rope. Thirdly, the policy of Europe, by obstructing the free circulation of labour and stock,
both from employment to employment, and from place to place, occasions, in some cases, a
very incon- venient inequality in the whole of the advantages and disadvantages of their
different employ- ments. The statute of apprenticeship obstructs the free circulation of labour
from one employment to another, even in the same place. The exclusive privileges of
corporations obstruct it from one place to another, even in the same employment. It frequently
happens, that while high wages are given to the workmen in one manufacture, those in another
are obliged to content themselves with bare subsistence. The one is in an advanc- ing state, and
has therefore a continual demand for new hands; the other is in a declining state,  and the
superabundance of hands is continually increasing. Those two manufactures may some- times
be in the same town, and sometimes in the same neighbourhood, without being able to lend the
least assistance to one another. The statute of apprenticeship may oppose it in the one case, and
both that and an exclusive corporation in the other. In many different manufactures, however,
the operations are so much alike, that the workmen could easily change trades with
one another, if those absurd laws did not hinder them. The arts of weaving plain linen and plain
silk, for example, are almost entirely the same. That of weaving plain woollen is somewhat
different; but the difference is so insignificant, that either a linen or a silk weaver might
become a tolerable workman in a very few days. If any of those three capital manufactures,
therefore, were decaying, the workmen might find a resource in one of the other two which
was in a more prosperous condition; and their wages would neither rise too high in the
thriving, nor sink too low in the decaying manufacture. The linen manufacture, indeed, is in
England, by a particular statute, open to every body; but as it is not much cultivated through
the greater part of the country, it can afford no general resource to the work men of other
decaying manufactures, who, wherever the statute of apprenticeship takes place, have no other
choice, but dither to come upon the parish, or to work as common labourers; for which, by
their habits, they are much worse qualified than for any sort of manufacture that bears any
resemblance to their own. They generally, therefore, chuse to come upon the parish. Whatever
obstructs the free circulation of labour from one employment to another, obstructs that of stock
likewise; the quantity of stock which can be employed in any branch of business de- pending
very much upon that of the labour which can be employed in it. Corporation laws, how- ever,
give less obstruction to the free circulation of stock from one place to another, than to that
of labour. It is everywhere much easier for a wealthy merchant to obtain the privilege of
trading in a town-corporate, than for a poor artificer to obtain that of working in it. The
obstruction which corporation laws give to the free circulation of labour is common, I
be- lieve, to every part of Europe. That which is given to it by the poor laws is, so far as I
know, pecu- liar to England. It consists in the difficulty which a poor man finds in obtaining a
settlement, or even in being allowed to exercise his industry in any parish but that to which he
belongs. It is the labour of artificers and manufacturers only of which the free circulation is
obstructed by corpo- ration laws. The difficulty of obtaining settlements obstructs even that of
common labour. It may be worth while to give some account of the rise, progress, and present
state of this disorder, the greatest, perhaps, of any in the police of England. When, by the
destruction of monasteries, the poor had been deprived of the charity of those religious houses,
after some other ineffectual attempts for their relief, it was enacted, by the 43d of Elizabeth, c.
2. that every parish should be bound to provide for its own poor, and that over- seers of the
poor should be annually appointed, who, with the church-wardens, should raise, by a  parish
rate, competent sums for this purpose. By this statute, the necessity of providing for their own
poor was indispensably imposed upon every parish. Who were to be considered as the poor of
each parish became, therefore, a question of some importance. This question, after some
variation, was at last determined by the 13th and 14th of Charles II. when it was enacted, that
forty days undisturbed residence should gain any person a settlement in any parish; but that
within that time it should be lawful for two justices of the peace, upon complaint made by the
church-wardens or overseers of the poor, to re- move any new inhabitant to the parish where he
was last legally settled; unless he either rented a tenement of ten pounds a-year, or could give
such security for the discharge of the parish where he was then living, as those justices should
judge sufficient. Some frauds, it is said, were committed in consequence of this statute; parish
officers some- time's bribing their own poor to go clandestinely to another parish, and, by
keeping themselves concealed for forty days, to gain a settlement there, to the discharge of that
to which they properly belonged. It was enacted, therefore, by the 1st of James II. that the forty
days undisturbed resi- dence of any person necessary to gain a settlement, should be accounted
only from the time of his delivering notice, in writing, of the place of his abode and the number
of his family, to one of the church-wardens or overseers of the parish where he came to
dwell. But parish officers, it seems, were not always more honest with regard to their own than
they had been with regard to other parishes, and sometimes connived at such intrusions,
receiving the notice, and taking no proper steps in consequence of it. As every person in a
parish, therefore, was supposed to have an interest to prevent as much as possible their being
burdened by such in- truders, it was further enacted by the 3rd of William III. that the forty
days residence should be accounted only from the publication of such notice in writing on
Sunday in the church, immedi- ately after divine service. "After all," says Doctor Burn, "this
kind of settlement, by continuing forty days after publi- cation of notice in writing, is very
seldom obtained; and the design of the acts is not so much for gaining of settlements, as for the
avoiding of them by persons coming into a parish clandestinely, for the giving of notice is only
putting a force upon the parish to remove. But if a person's situation is such, that it is doubtful
whether he is actually removable or not, he shall, by giving of notice, compel the parish either
to allow him a settlement uncontested, by suffering him to con- tinue forty days, or by
removing him to try the right." This statute, therefore, rendered it almost impracticable for a
poor man to gain a new settle- ment in the old way, by forty days inhabitancy. But that it might
not appear to preclude altogether the common people of one' parish from ever establishing
themselves with security in another, it appointed four other ways by which a settlement might
be gained without any notice delivered or published. The first was, by being taxed to parish
rates and paying them; the second, by being elected into an annual parish office, and serving in
it a year; the third, by serving an appren- ticeship in the parish; the fourth, by being hired into
service there for a year, and continuing in the same service during the whole of it. Nobody can
gain a settlement by either of the two first ways, but by the public deed of the whole parish,
who are too well aware of the consequences to adopt any new-comer, who has nothing but his
labour to support him, either by taxing him to parish rates, or by electing him into a parish
office. No married man can well gain any settlement in either of the two last ways. An
apprentice is scarce ever married; and it is expressly enacted, that no married servant shall gain
any settlement by being hired for a year. The principal effect of introducing settlement by
service, has been to put out in a great measure the old fashion of hiring for a year; which
before had been so cus- tomary in England, that even at this day, if no particular term is agreed
upon, the law intends that every servant is hired for a year. But masters are not always willing
to give their servants a settle- ment by hiring them in this manner; and servants are not always
willing to be so hired, because, as every last settlement discharges all the foregoing, they might
thereby lose their original settle- ment in the places of their nativity, the habitation of their
parents and relations. No independent workman, it is evident, whether labourer or artificer, is
likely to gain any new settlement, either by apprenticeship or by service. When such a person,
therefore, carried his industry to a new parish, he was liable to be removed, how healthy and
industrious soever, at the caprice of any churchwarden or overseer, unless he either rented a
tenement of ten pounds a- year, a thing impossible for one who has nothing but his labour to
live by, or could give such security for the discharge of the parish as two justices of the peace
should judge sufficient. What security they shall require, indeed, is left altogether to their
discretion; but they cannot well require less than thirty pounds, it having been enacted, that the
purchase even of a freehold estate of less than thirty pounds value, shall not gain any person a
settlement, as not being suffi- cient for the discharge of the parish. But this is a security which
scarce any man who lives by labour can give; and much greater security is frequently
demanded. In order to restore, in some measure, that free circulation of labour which those
different statutes had almost entirely taken away, the invention of certificates was fallen upon.
By the 8th and 9th of William III. it was enacted that if any person should bring a certificate
from the parish where he was last legally settled, subscribed by the church-wardens and
overseers of the poor, and allowed by two justices of the peace, that every other parish should
be obliged to receive him; that he should not be removable merely upon account of his being
likely to become chargeable, but only upon his becoming actually chargeable; and that then the
parish which granted the certifi- cate should be obliged to pay the expense both of his
maintenance and of his removal. And in order to give the most perfect security to the parish
where such certificated man should come to reside, it was further enacted by the same statute,
that he should gain no settlement there by any means whatever, except either by renting a
tenement of ten pounds a-year, or by serving upon his own account in an annual parish office
for one whole year; and consequently neither by notice nor by service, nor by apprenticeship,
nor by paying parish rates. By the 12th of Queen Anne, too, stat. 1, c.18, it was further enacted,
that neither the servants nor apprentices of such certificated man should gain any settlement in
the parish where he resided under such certificate. How far this invention has restored that free
circulation of labour, which the preceding statutes had almost entirely taken away, we may
learn from the following very judicious obser- vation of Doctor Burn. "It is obvious," says he,
"that there are divers good reasons for requiring certificates with persons coming to settle in
any place; namely, that persons residing under them can gain no settlement, neither by
apprenticeship, nor by service, nor by giving notice, nor by paying parish rates; that they can
settle neither apprentices nor servants; that if they become chargeable, it is certainly known
whither to remove them, and the parish shall be paid for the re- moval, and for their
maintenance in the mean time; and that, if they fall sick, and cannot be re-  moved, the parish
which gave the certificate must maintain them; none of all which can be with- out a certificate.
Which reasons will hold proportionably for parishes not granting certificates in ordinary cases;
for it is far more than an equal chance, but that they will have the certificated per-  sons again,
and in a worse condition." The moral of this observation seems to be, that certificates ought
always to be required by the parish where any poor man comes to reside, and that they ought
very seldom to be granted by that which he purposes to leave. "There is somewhat of
hard- ship in this matter of certificates," says the same very intelligent author, in his History of
the Poor Laws, "by putting it in the power of a parish officer to imprison a man as it were for
life, however inconvenient it may be for him to continue at that place where he has had the
misfortune to ac- quire what is called a settlement, or whatever advantage he may propose
himself by living else- where." Though a certificate carries along with it no testimonial of good
behaviour, and certifies noth- ing but that the person belongs to the parish to which he really
does belong, it is altogether discre- tionary in the parish officers either to grant or to refuse it.
A mandamus was once moved for, says Doctor Burn, to compel the church-wardens and
overseers to sign a certificate; but the Court of King's Bench rejected the motion as a very
strange attempt. The very unequal price of labour which we frequently find in England, in
places at no great distance from one another, is probably owing to the obstruction which the
law of settlements gives to a poor man who would carry his industry from one parish to
another without a certificate. A single man, indeed who is healthy and industrious, may
sometimes reside by sufferance with- out one; but a man with a wife and family who should
attempt to do so, would, in most parishes, be sure of being removed; and, if the single man
should afterwards marry, he would generally be removed likewise. The scarcity of hands in
one parish, therefore, cannot always be relieved by their superabundance in another, as it is
constantly in Scotland, and I believe, in all other coun- tries where there is no difficulty of
settlement. In such countries, though wages may sometimes rise a little in the neighbourhood
of a great town, or wherever else there is an extraordinary de- mand for labour, and sink
gradually as the distance from such places increases, till they fall back to the common rate of
the country; yet we never meet with those sudden and unaccountable dif- ferences in the wages
of neighbouring places which we sometimes find in England, where it is often more difficult
for a poor man to pass the artificial boundary of a parish, than an arm of the sea, or a ridge of
high mountains, natural boundaries which sometimes separate very distinctly different rates of
wages in other countries. To remove a man who has committed no misdemeanour, from the
parish where he chooses to reside, is an evident violation of natural liberty and justice. The
common people of England, however, so jealous of their liberty, but like the common people
of most other countries, never rightly understanding wherein it consists, have now, for more
than a century together, suffered themselves to be exposed to this oppression without a
remedy. Though men of reflection, too, have some times complained of the law of settlements
as a public grievance; yet it has never been the object of any general popular clamour, such as
that against general warrants, an abusive prac- tice undoubtedly, but such a one as was not
likely to occasion any general oppression. There is scarce a poor man in England, of forty
years of age, I will venture to say, who has not, in some part of his life, felt himself most
cruelly oppressed by this ill-contrived law of settlements. I shall conclude this long chapter
with observing, that though anciently it was usual to rate wages, first by general laws
extending over the whole kingdom, and afterwards by particular or- ders of the justices of
peace in every particular county, both these practices have now gone en- tirely into disuse. "By
the experience of above four hundred years," says Doctor Burn, "it seems time to lay aside all
endeavours to bring under strict regulations, what in its own nature seems incapable of minute
limitation; for if all persons in the same kind of work were to receive equal  wages, there would
be no emulation, and no room left for industry or ingenuity." 

Particular acts of parliament, however, still attempt sometimes to regulate wages in

particular trades, and in particular places. Thus the 8th of George III. prohibits, under heavy
penalties, all master tailors in London, and five miles round it, from giving, and their workmen
from accept- ing, more than two shillings and sevenpence halfpenny a-day, except in the case
of a general mourning. Whenever the legislature attempts to regulate the differences between
masters and their workmen, its counsellors are always the masters. When the regulation,
therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes
otherwise when in favour of the masters. Thus the law which obliges the masters in several
different trades to pay their workmen in money, and not in goods, is quite just and equitable. It
imposes no real hard- ship upon the masters. It only obliges them to pay that value in money,
which they pretended to pay, but did not always really pay, in goods. This law is in favour of
the workmen; but the 8th of George III. is in favour of the masters. When masters combine
together, in order to reduce the wages of their workmen, they commonly enter into a private
bond or agreement, not to give more than a certain wage, under a certain penalty. Were the
workmen to enter into a contrary combi- nation of the same kind, not to accept of a certain
wage, under a certain penalty, the law would punish them very severely; and, if it dealt
impartially, it would treat the masters in the same man- ner. But the 8th of George III. enforces
by law that very regulation which masters sometimes at- tempt to establish by such
combinations. The complaint of the workmen, that it puts the ablest and most industrious upon
the same footing with an ordinary workman, seems perfectly well founded. In ancient times,
too, it was usual to attempt to regulate the profits of merchants and other dealers, by regulating
the price of provisions and ether goods. The assize of bread is, so far as I  know, the only
remnant of this ancient usage. Where there is an exclusive corporation, it may, perhaps, be
proper to regulate the price of the first necessary of life; but, where there is none,
the competition will regulate it much better than any assize. The method of fixing the assize of
bread, established by the 31st of George II. could not be put in practice in Scotland, on account
of a de- fect in the law, its execution depending upon the office of clerk of the market, which
does not exist there. This defect was not remedied till the third of George III. The want of an
assize occa- sioned no sensible inconveniency; and the establishment of one in the few places
where it has yet taken place has produced no sensible advantage. In the greater part of the
towns in Scotland, how- ever, there is an incorporation of bakers, who claim exclusive
privileges, though they are not very strictly guarded. The proportion between the different
rates, both of wages and profit, in the dif- ferent employments of labour and stock, seems not
to be much affected, as has already been ob- served, by the riches or poverty, the advancing,
stationary, or declining state of the society. Such revolutions in the public welfare, though they
affect the general rates both of wages and profit, must, in the end, affect them equally in all
different employments. The proportion between them, therefore, must remain the same, and
cannot well be altered, at least for any considerable time, by any such revolutions. 

CHAPTER XI. OF THE RENT OF LAND.  Rent, considered as the price paid for the use of
land, is naturally the highest which the ten- ant can afford to pay in the actual circumstances of
the land. In adjusting the terms of the lease, the landlord endeavours to leave him no greater
share of the produce than what is sufficient to keep up the stock from which he furnishes the
seed, pays the labour, and purchases and main- tains the cattle and other instruments of
husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is
evidently the smallest share with which the tenant can con- tent himself, without being a loser,
and the landlord seldom means to leave him any more. What- ever part of the produce, or,
what is the same thing, whatever part of its price, is over and above this share, he naturally
endeavours to reserve to himself as the rent of his land, which is evidently the highest the
tenant can afford to pay in the actual circumstances of the land. Sometimes, in-  deed, the
liberality, more frequently the ignorance, of the landlord, makes him accept of some- what less
than this portion; and sometimes, too, though more rarely, the ignorance of the tenant makes
him undertake to pay somewhat more, or to content himself with somewhat less, than
the ordinary profits of farming stock in the neighbourhood. This portion, however, may still be
con- sidered as the natural rent of land, or the rent at which it is naturally meant that land
should, for the most part, be let. The rent of land, it may be thought, is frequently no more than
a reasonable profit or interest for the stock laid out by the landlord upon its improvement. This,
no doubt, may be partly the case upon some occasions; for it can scarce ever be more than
partly the case. The landlord de- mands a rent even for unimproved land, and the supposed
interest or profit upon the expense of improvement is generally an addition to this original rent.
Those improvements, besides, are not always made by the stock of the landlord, but sometimes
by that of the tenant. When the lease comes to be renewed, however, the landlord commonly
demands the same augmentation of rent as if they had been all made by his own. He sometimes
demands rent for what is altogether incapable of human improvements. Kelp is a species of
sea-weed, which, when burnt, yields an alkaline salt, useful for making glass, soap,  and for
several other purposes. It grows in several parts of Great Britain, particularly in Scotland, upon
such rocks only as lie within the high-water mark, which are twice every day covered with the
sea, and of which the produce, therefore, was never augmented by human industry. The
land- lord, however, whose estate is bounded by a kelp shore of this kind, demands a rent for it
as much as for his corn-fields. The sea in the neighbourhood of the islands of Shetland is more
than commonly abundant in fish, which makes a great part of the subsistence of their
inhabitants. But, in order to profit by the produce of the water, they must have a habitation
upon the neighbouring land. The rent of the landlord is in proportion, not to what the farmer
can make by the land, but to what he can make both by the land and the water. It is partly paid
in sea-fish; and one of the very few instances in which rent makes a part of the price of that
commodity, is to be found in that country. The rent of land, therefore, considered as the price
paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what
the landlord may have laid out upon the im- provement of the land, or to what he can afford to
take, but to what the farmer can afford to give. Such parts only of the produce of land can
commonly be brought to market, of which the ordinary price is sufficient to replace the stock
which must be employed in bringing them thither, together with its ordinary profits. If the
ordinary price is more than this, the surplus part of it will naturally go to the rent of the land. If
it is not more, though the commodity may be brought to market, it can afford no rent to the
landlord. Whether the price is, or is not more, depends upon the demand. There are some parts
of the produce of land, for which the demand must always be such as to afford a greater price
than what is sufficient to bring them to market; and there are others for which it either may or
may not be such as to afford this greater price. The former must always af-  ford a rent to the
landlord. The latter sometimes may and sometimes may not, according to dif- ferent
circumstances. Rent, it is to be observed, therefore, enters into the composition of the price of
commodities in a different way from wages and profit. High or low wages and profit are the
causes of high or low price; high or low rent is the effect of it. It is because high or low wages
and profit must be paid, in order to bring a particular commodity to market, that its price is
high or low. But it is be- cause its price is high or low, a great deal more, or very little more, or
no more, than what is suffi- cient to pay those wages and profit, that it affords a high rent, or a
low rent, or no rent at all. The particular consideration, first, of those parts of the produce of
land which always afford some rent; secondly, of those which sometimes may and sometimes
may not afford rent; and, thirdly, of the variations which, in the different periods of
improvement, naturally take place in the relative value of those two different sorts of rude
produce, when compared both with one an- other and with manufactured commodities, will
divide this chapter into three parts.  PART I.—Of the Produce of Land which always affords
Rent.  As men, like all other animals, naturally multiply in proportion to the means of their
subsis- tence, food is always more or less in demand. It can always purchase or command a
greater or smaller quantity of labour, and somebody can always be found who is willing to do
something in order to obtain it. The quantity of labour, indeed, which it can purchase, is not
always equal to what it could maintain, if managed in the most economical manner, on account
of the high wages which are sometimes given to labour; but it can always purchase such a
quantity of labour as it can maintain, according to the rate at which that sort of labour is
commonly maintained in the neighbourhood. But land, in almost any situation, produces a
greater quantity of food than what is sufficient to maintain all the labour necessary for bringing
it to market, in the most liberal way in which that labour is ever maintained. The surplus, too,
is always more than sufficient to replace the stock which employed that labour, together with
its profits. Something, therefore, always remains for a rent to the landlord. The most desert
moors in Norway and Scotland produce some sort of pasture for cattle, of which the milk and
the increase are always more than sufficient, not only to maintain all the labour necessary for
tending them, and to pay the ordinary profit to the farmer or the owner of the herd or flock, but
to afford some small rent to the landlord. The rent increases in proportion to the goodness of
the pasture. The same extent of ground not only maintains a greater number of cattle, but as
they we brought within a smaller compass, less labour becomes requisite to tend them, and to
collect their produce. The landlord gains both ways; by the increase of the produce, and by the
diminution of the labour which must be maintained out of it. The rent of land not only varies
with its fertility, whatever be its produce, but with its situ- ation, whatever be its fertility. Land
in the neighbourhood of a town gives a greater rent than land equally fertile in a distant part of
the country. Though it may cost no more labour to cultivate the one than the other, it must
always cost more to bring the produce of the distant land to market. A  greater quantity of
labour, therefore, must be maintained out of it; and the surplus, from which are drawn both the
profit of the farmer and the rent of the landlord, must be diminished. But in remote parts of the
country, the rate of profit, as has already been shewn, is generally higher than in the
neighbourhood of a large town. A smaller proportion of this diminished surplus,
therefore, must belong to the landlord. Good roads, canals, and navigable rivers, by
diminishing the expense of carriage, put the re- mote parts of the country more nearly upon a
level with those in the neighbourhood of the town. They are upon that account the greatest of
all improvements. They encourage the cultivation of the remote, which must always be the
most extensive circle of the country. They are advantageous to the town by breaking down the
monopoly of the country in its neighbourhood. They are advan- tageous even to that part of the
country. Though they introduce some rival commodities into the old market, they open many
new markets to its produce. Monopoly, besides, is a great enemy to good management, which
can never be universally established, but in consequence of that free and universal competition
which forces every body to have recourse to it for the sake of self defence. It is not more than
fifty years ago, that some of the counties in the neighbourhood of London petitioned the
parliament against the extension of the turnpike roads into the remoter counties. Those remoter
counties, they pretended, from the cheapness of labour, would be able to sell their grass and
corn cheaper in the London market than themselves, and would thereby re- duce their rents,
and ruin their cultivation. Their rents, however, have risen, and their cultivation has been
improved since that time. A corn field of moderate fertility produces a much greater quantity
of food for man, than the best pasture of equal extent. Though its cultivation requires much
more labour, yet the surplus which remains after replacing the seed and maintaining all that
labour, is likewise much greater. If a pound of butcher's meat, therefore, was never supposed to
be worth more than a pound of bread, this greater surplus would everywhere be of greater
value and constitute a greater fund, both for the profit of the farmer and the rent of the
landlord. It seems to have done so universally in the rude beginnings of agriculture. But the
relative values of those two different species of food, bread and butcher's meat, are very
different in the different periods of agriculture. In its rude beginnings, the unimproved wilds,
which then occupy the far greater part of the country, are all abandoned to cattle. There is more
butcher's meat than bread; and bread, therefore, is the food for which there is the
greatest competition, and which consequently brings the greatest price. At Buenos Ayres, we
are told by Ulloa, four reals, one-and-twenty pence halfpenny sterling, was, forty or fifty years
ago, the ordi- nary price of an ox, chosen from a herd of two or three hundred. He says nothing
of the price of bread, probably because he found nothing remarkable about it. An ox there, he
says, costs little more than the labour of catching him. But corn can nowhere be raised without
a great deal of labour; and in a country which lies upon the river Plate, at that time the direct
road from Europe to the silver mines of Potosi, the money-price of labour could be very cheap.
It is otherwise when cultivation is extended over the greater part of the country. There is then
more bread than butcher's meat. The competition changes its direction, and the price of
butcher's meat becomes greater than the price of bread. By the extension, besides, of
cultivation, the unimproved wilds become insufficient to supply the demand for butcher's meat.
A great part of the cultivated lands must be employed in rearing and fattening cattle; of which
the price, therefore, must be sufficient to pay, not only the labour necessary for tending them,
but the rent which the landlord, and the profit which the farmer, could have drawn from such
land employed in tillage. The cattle bred upon the most uncultivated moors, when brought to
the same market, are, in proportion to their weight or goodness, sold at the same price as those
which are reared upon the most improved land. The proprietors of those moors profit by it, and
raise the rent of their land in proportion to the price of their cattle. It is not more than a century
ago, that in many parts of the Highlands of Scotland, butcher's meat was as cheap or cheaper
than even bread made of oatmeal. The Union opened the market of England to  the Highland
cattle. Their ordinary price, at present, is about three times greater than at the beginning of the
century, and the rents of many Highland estates have been tripled and quadru- pled in the same
time. In almost every part of Great Britain, a pound of the best butcher's meat is, in the present
times, generally worth more than two pounds of the best white bread; and in plen- tiful years it
is sometimes worth three or four pounds. It is thus that, in the progress of improvement, the
rent and profit of unimproved pasture come to be regulated in some measure by the rent and
profit of what is improved, and these again by the rent and profit of corn. Corn is an annual
crop; butcher's meat, a crop which requires four or five years to grow. As an acre of land,
therefore, will produce a much smaller quantity of the one species of food than of the other, the
inferiority of the quantity must be compensated by the superiority of the price. If it was more
than compensated, more corn-land would be turned into pasture; and if it was not
compensated, part of what was in pasture would be brought back into corn. This equality,
however, between the rent and profit of grass and those of corn; of the land of  which the
immediate produce is food for cattle, and of that of which the immediate produce is food for
men, must be understood to take place only through the greater part of the improved lands of a
great country. In some particular local situations it is quite otherwise, and the rent and profit of
grass are much superior to what can be made by corn. Thus, in the neighbourhood of a great
town, the demand for milk, and for forage to horses, frequently contribute, together with the
high price of butcher's meat, to raise the value of grass above what may be called its natural
proportion to that of corn. This local advantage, it is evident, cannot be communicated to the
lands at a distance. Particular circumstances have sometimes rendered some countries so
populous, that the whole territory, like the lands in the neighbourhood of a great town, has not
been sufficient to produce both the grass and the corn necessary for the subsistence of their
inhabitants. Their lands, therefore, have been principally employed in the production of grass,
the more bulky com- modity, and which cannot be so easily brought from a great distance; and
corn, the food of the great body of the people, has been chiefly imported from foreign
countries. Holland is at present in this situation; and a considerable part of ancient Italy seems
to have been so during the pros- perity of the Romans. To feed well, old Cato said, as we are
told by Cicero, was the first and most profitable thing in the management of a private estate; to
feed tolerably well, the second; and to feed ill, the third. To plough, he ranked only in the
fourth place of profit and advantage. Tillage, indeed, in that part of ancient Italy which lay in
the neighbour hood of Rome, must have been very much discouraged by the distributions of
corn which were frequently made to the people, ei- ther gratuitously, or at a very low price.
This corn was brought from the conquered provinces, of which several, instead of taxes, were
obliged to furnish a tenth part of their produce at a stated price, about sixpence a-peck, to the
republic. The low price at which this corn was distributed to the people, must necessarily have
sunk the price of what could be brought to the Roman market from Latium, or the ancient
territory of Rome, and must have discouraged its cultivation in that country. In an open
country, too, of which the principal produce is corn, a well-inclosed piece of grass will
frequently rent higher than any corn field in its neighbourhood. It is convenient for
the maintenance of the cattle employed in the cultivation of the corn; and its high rent is, in this
case, not so properly paid from the value of its own produce, as from that of the corn lands
which are cultivated by means of it. It is likely to fall, if ever the neighbouring lands are
completely inclosed. The present high rent of inclosed land in Scotland seems owing to the
scarcity of inclosure, and will probably last no longer than that scarcity. The advantage of
inclosure is greater for pasture than for corn. It saves the labour of guarding the cattle, which
feed better, too, when they are not liable to be disturbed by their keeper or his dog. But where
there is no local advantage of this kind, the rent and profit of corn, or whatever else is the
common vegetable food of the people, must naturally regulate upon the land which is fit
for producing it, the rent and profit of pasture. The use of the artificial grasses, of turnips,
carrots, cabbages, and the other expedients which have been fallen upon to make an equal
quantity of land feed a greater number of cattle than when in natural grass, should somewhat
reduce, it might be expected, the superiority which, in an improved country, the price of
butcher's meat naturally has over that of bread. It seems accord- ingly to have done so; and
there is some reason for believing that, at least in the London market, the price of butcher's
meat, in proportion to the price of bread, is a good deal lower in the present times than it was
in the beginning of the last century. In the Appendix to the life of Prince Henry, Doctor Birch
has given us an account of the prices of butcher's meat as commonly paid by that prince. It is
there said, that the four quarters of an ox, weighing six hundred pounds, usually cost him nine
pounds ten shillings, or thereabouts; that is thirty-one shillings and eight-pence per hundred
pounds weight. Prince Henry died on the 6th of November 1612, in the nineteenth year of his
age. In March 1764, there was a parliamentary inquiry into the causes of the high price of
provi- sions at that time. It was then, among other proof to the same purpose, given in evidence
by a Virginia merchant, that in March 1763, he had victualled his ships for twentyfour or
twenty-five shillings the hundred weight of beef, which he considered as the ordinary price;
whereas, in that dear year, he had paid twenty-seven shillings for the same weight and sort.
This high price in 1764 is, however, four shillings and eight-pence cheaper than the ordinary
price paid by Prince Henry; and it is the best beef only, it must be observed, which is fit to be
salted for those distant voyages. The price paid by Prince Henry amounts to 3d. 4/5ths per
pound weight of the whole carcase, coarse and choice pieces taken together; and at that rate the
choice pieces could not have been sold by retail for less than 4½d. or 5d. the pound. In the
parliamentary inquiry in 1764, the witnesses stated the price of the choice pieces of the best
beef to be to the consumer 4d. and 4½d. the pound; and the coarse pieces in general to be from
seven farthings to 2½d. and 2¾d.; and this, they said, was in general one halfpenny dearer than
the same sort of pieces had usually been sold in the month of March. But even this high  price
is still a good deal cheaper than what we can well suppose the ordinary retail price to
have been in the time of Prince Henry. During the first twelve years of the last century, the
average price of the best wheat at the Windsor market was £ 1:18:3½d. the quarter of nine
Winchester bushels. But in the twelve years preceding 1764 including that year, the average
price of the same measure of the best wheat at the same market was £ 2:1:9½d. In the first
twelve years of the last century, therefore, wheat appears to have been a good deal cheaper,
and butcher's meat a good deal dearer, than in the twelve years preceding 1764, includ- ing that
year. In all great countries, the greater part of the cultivated lands are employed in producing
either food for men or food for cattle. The rent and profit of these regulate the rent and profit of
all other cultivated land. If any particular produce afforded less, the land would soon be turned
into corn or pasture; and if any afforded more, some part of the lands in corn or pasture would
soon be turned to that produce. Those productions, indeed, which require either a greater
original expense of improvement, or a greater annual expense of cultivation in order to fit the
land for them, appear commonly to af- ford, the one a greater rent, the other a greater profit,
than corn or pasture. This superiority, how- ever, will seldom be found to amount to more than
a reasonable interest or compensation for this superior expense. In a hop garden, a fruit garden,
a kitchen garden, both the rent of the landlord, and the profit of the farmer, are generally
greater than in acorn or grass field. But to bring the ground into this condition requires more
expense. Hence a greater rent becomes due to the landlord. It requires, too, a more attentive
and skilful management. Hence a greater profit becomes due to the farmer. The crop, too, at
least in the hop and fruit garden, is more precarious. Its price, therefore, besides compensating
all occasional losses, must afford something like the profit of insurance. The cir- cumstances of
gardeners, generally mean, and always moderate, may satisfy us that their great ingenuity is
not commonly over-recompensed. Their delightful art is practised by so many rich people for
amusement, that little advantage is to be made by those who practise it for profit; be- cause the
persons who should naturally be their best customers, supply themselves with all their most
precious productions. The advantage which the landlord derives from such improvements,
seems at no time to have been greater than what was sufficient to compensate the original
expense of making them. In the ancient husbandry, after the vineyard, a well-watered kitchen
garden seems to have been the part of the farm which was supposed to yield the most valuable
produce. But Democritus, who wrote upon husbandry about two thousand years ago, and who
was regarded by the ancients as one of the fathers of the art, thought they did not act wisely
who inclosed a kitchen garden. The profit, he said, would not compensate the expense of a
stone-wall: and bricks (he meant, I suppose, bricks baked in the sun) mouldered with the rain
and the winter-storm, and required continual repairs. Columella, who reports this judgment of
Democritus, does not controvert it, but proposes a very frugal method of inclosing with a
hedge of brambles and briars, which he says he had found by experience to be both a lasting
and an impenetrable fence; but which, it seems, was not com- monly known in the time of
Democritus. Palladius adopts the opinion of Columella, which had before been recommended
by Varro. In the judgment of those ancient improvers, the produce of a kitchen garden had, it
seems, been little more than sufficient to pay the extraordinary culture and the expense of
watering; for in countries so near the sun, it was thought proper, in those times as in the
present, to have the command of a stream of water, which could be conducted to every bed in
the garden. Through the greater part of Europe, a kitchen garden is not at present supposed to
deserve a better inclosure than mat recommended by Columella. In Great Britain, and some
other northern countries, the finer fruits cannot be brought to perfection but by the assistance
of a wall. Their price, therefore, in such countries, must be sufficient to pay the ex- pense of
building and maintaining what they cannot be had without. The fruit-wall frequently surrounds
the kitchen garden, which thus enjoys the benefit of an inclosure which its own pro- duce could
seldom pay for. That the vineyard, when properly planted and brought to perfection, was the
most valuable part of the farm, seems to have been an undoubted maxim in the ancient
agriculture, as it is in the modern, through all the wine countries. But whether it was
advantageous to plant a new vine- yard, was a matter of dispute among the ancient Italian
husbandmen, as we learn from Col- umella. He decides, like a true lover of all curious
cultivation, in favour of the vineyard; and en- deavours to shew, by a comparison of the profit
and expense, that it was a most advantageous im- provement. Such comparisons, however,
between the profit and expense of new projects are com- monly very fallacious; and in nothing
more so than in agriculture. Had the gain actually made by such plantations been commonly as
great as he imagined it might have been, there could have been no dispute about it. The same
point is frequently at this day a matter of controversy in the wine countries. Their writers on
agriculture, indeed, the lovers and promoters of high cultivation, seem generally disposed to
decide with Columella in favour of the vineyard. In France, the anxiety of the proprietors of
the old vineyards to prevent the planting of any new ones, seems to favour their opinion, and to
indicate a consciousness in those who must have the experience, that this species of cultivation
is at present in that country more profitable than any other. It seems, at the same time,
however, to indicate another opinion, that this superior profit can last no longer than the laws
which at present restrain the free cultivation of the vine. In 1731, they obtained an order of
council, prohibiting both the planting of new vineyards, and the renewal of these old ones,
of which the cultivation had been interrupted for two years, without a particular permission
from the king, to be granted only in consequence of an information from the intendant of the
province, certifying that he had examined the land, and that it was incapable of any other
culture. The pre- tence of this order was the scarcity of corn and pasture, and the
superabundance of wine. But had this superabundance been real, it would, without any order of
council, have effectually prevented the plantation of new vineyards, by reducing the profits of
this species of cultivation below their natural proportion to those of corn and pasture. With
regard to the supposed scarcity of corn occa- sioned by the multiplication of vineyards, corn is
nowhere in France more carefully cultivated than in the wine provinces, where the land is fit
for producing it: as in Burgundy, Guienne, and the Upper Languedoc. The numerous hands
employed in the one species of cultivation neces- sarily encourage the other, by affording a
ready market for its produce. To diminish the number of those who are capable of paying it, is
surely a most unpromising expedient for encouraging the cultivation of corn. It is like the
policy which would promote agriculture, by discouraging man- ufactures. The rent and profit
of those productions, therefore, which require either a greater original ex- pense of
improvement in order to fit the land for them, or a greater annual expense of
cultivation, though often much superior to those of corn and pasture, yet when they do no more
than com- pensate such extraordinary expense, are in reality regulated by the rent and profit of
those com- mon crops. It sometimes happens, indeed, that the quantity of land which can be
fitted for some partic- ular produce, is too small to supply the effectual demand. The whole
produce can be disposed of to those who are willing to give somewhat more than what is
sufficient to pay the whole rent, wages, and profit, necessary for raising and bringing it to
market, according to their natural rates, or according to the rates at which they are paid in the
greater part of other cultivated land. The surplus part of the price which remains after
defraying the whole expense of improvement and cultivation, may commonly, in this case, and
in this case only, bear no regular proportion to the like surplus in corn or pasture, but may
exceed it in almost any degree; and the greater part of this excess naturally goes to the rent of
the landlord. The usual and natural proportion, for example, between the rent and profit of
wine, and those of corn and pasture, must be understood to take place only with regard to those
vineyards which produce nothing but good common wine, such as can be raised almost
anywhere, upon any light, gravelly, or sandy soil, and which has nothing to recommend it but
its strength and whole- someness. It is with such vineyards only, that the common land of the
country can be brought into competition; for with those of a peculiar quality it is evident that it
cannot. The vine is more affected by the difference of soils than any other fruit-tree. From
some it de- rives a flavour which no culture or management can equal, it is supposed, upon any
other. This flavour, real or imaginary, is sometimes peculiar to the produce of a few vineyards;
sometimes it extends through the greater part of a small district, and sometimes through a
considerable part of a large province. The whole quantity of such wines that is brought to
market falls short of the effectual demand, or the demand of those who would be willing to pay
the whole rent, profit, and wages, necessary for preparing and bringing them thither, according
to the ordinary rate, or ac- cording to the rate at which they are paid in common vineyards. The
whole quantity, therefore, can be disposed of to those who are willing to pay more, which
necessarily raises their price above that of common wine. The difference is greater or less,
according as the fashionableness and scar- city of the wine render the competition of the
buyers more or less eager. Whatever it be, the greater part of it goes to the rent of the landlord.
For though such vineyards are in general more carefully cultivated than most others, the high
price of the wine seems to be, not so much the ef- fect, as the cause of this careful cultivation.
In so valuable a produce, the loss occasioned by negli- gence is so great, as to force even the
most careless to attention. A small part of this high price, therefore, is sufficient to pay the
wages of the extraordinary labour bestowed upon their culti- vation, and the profits of the
extraordinary stock which puts that labour into motion. The sugar colonies possessed by the
European nations in the West Indies may be compared to those precious vineyards. Their
whole produce falls short of the effectual demand of Europe, and can be disposed of to those
who are willing to give more than what is sufficient to pay the whole rent, profit, and wages,
necessary for preparing and bringing it to market, according to the rate at which they are
commonly paid by any other produce. In Cochin China, the finest white sugar generally sells
for three piastres the quintal, about thirteen shillings and sixpence of our money, as we are told
by Mr Poivre {Voyages d'un Philosophe.}, a very careful observer of the agriculture of that
country. What is there called the quintal, weighs from a hundred and fifty to two hundred Paris
pounds, or a hundred and seventy-five Paris pounds at a medium, which re- duces the price of
the hundred weight English to about eight shillings sterling; not a fourth part of what is
commonly paid for the brown or muscovada sugars imported from our colonies, and not a sixth
part of what is paid for the finest white sugar. The greater part of the cultivated lands in Cochin
China are employed in producing corn and rice, the food of the great body of the peo- ple. The
respective prices of corn, rice, and sugar, are there probably in the natural proportion, or in that
which naturally takes place in the different crops of the greater part of cultivated land,
and which recompenses the landlord and farmer, as nearly as can be computed, according to
what is usually the original expense of improvement, and the annual expense of cultivation.
But in our sugar colonies, the price of sugar bears no such proportion to that of the produce of
a rice or corn field either in Europe or America. It is commonly said that a sugar planter
expects that the rum and the molasses should defray the whole expense of his cultivation, and
that his sugar should be all clear profit. If this be true, for I pretend not to affirm it, it is as if a
corn farmer expected to de- fray the expense of his cultivation with the chaff and the straw,
and that the grain should be all clear profit. We see frequently societies of merchants in
London, and other trading towns, pur- chase waste lands in our sugar colonies, which they
expect to improve and cultivate with profit, by means of factors and agents, notwithstanding
the great distance and the uncertain returns, from the defective administration of justice in
those countries. Nobody will attempt to improve and cultivate in the same manner the most
fertile lands of Scotland, Ireland, or the corn provinces of North America, though, from the
more exact administration of justice in these countries, more regular returns might be
expected. In Virginia and Maryland, the cultivation of tobacco is preferred, as most profitable,
to that of corn. Tobacco might be cultivated with advantage through the greater part of Europe;
but, in al- most every part of Europe, it has become a principal subject of taxation; and to
collect a tax from every different farm in the country where this plant might happen to be
cultivated, would be more difficult, it has been supposed, than to levy one upon its importation
at the custom-house. The cultivation of tobacco has, upon this account, been most absurdly
prohibited through the greater part of Europe, which necessarily gives a sort of monopoly to
the countries where it is al- lowed; and as Virginia and Maryland produce the greatest quantity
of it, they share largely, though with some competitors, in the advantage of this monopoly. The
cultivation of tobacco, however, seems not to be so advantageous as that of sugar. I have never
even heard of any tobacco plantation that was improved and cultivated by the capital of
merchants who resided in Great Britain; and our tobacco colonies send us home no such
wealthy planters as we see frequently ar- rive from our sugar islands. Though, from the
preference given in those colonies to the culti- vation of tobacco above that of corn, it would
appear that the effectual demand of Europe for to- bacco is not completely supplied, it
probably is more nearly so than that for sugar; and though the present price of tobacco is
probably more than sufficient to pay the whole rent, wages, and profit, necessary for preparing
and bringing it to market, according to the rate at which they are com- monly paid in corn land,
it must not be so much more as the present price of sugar. Our tobacco planters, accordingly,
have shewn the same fear of the superabundance of tobacco, which the pro- prietors of the old
vineyards in France have of the superabundance of wine. By act of assembly, they have
restrained its cultivation to six thousand plants, supposed to yield a thousand weight
of tobacco, for every negro between sixteen and sixty years of age. Such a negro, over and
above this quantity of tobacco, can manage, they reckon, four acres of Indian corn. To prevent
the market from being overstocked, too, they have sometimes, in plentiful years, we are told by
Dr Douglas {Douglas's Summary, vol. ii. p. 379, 373.} (I suspect he has been ill informed),
burnt a certain quantity of tobacco for every negro, in the same manner as the Dutch are said to
do of spices. If such violent methods are necessary to keep up the present price of tobacco, the
superior advan- tage of its culture over that of corn, if it still has any, will not probably be of
long continuance. It is in this manner that the rent of the cultivated land, of which the produce
is human food, regulates the rent of the greater part of other cultivated land. No particular
produce can long af- ford less, because the land would immediately be turned to another use;
and if any particular pro- duce commonly affords more, it is because the quantity of land which
can be fitted for it is too small to supply the effectual demand. In Europe, corn is the principal
produce of land, which serves immediately for human food. Except in particular situations,
therefore, the rent of corn land regulates in Europe that of all other cultivated land. Britain
need envy neither the vineyards of France, nor the olive plantations of Italy. Except in
particular situations, the value of these is regulated by that of corn, in which the fertility of
Britain is not much inferior to that of either of those two countries. If, in any country, the
common and favourite vegetable food of the people should be drawn from a plant of which the
most common land, with the same, or nearly the same culture, pro- duced a much greater
quantity than the most fertile does of corn; the rent of the landlord, or the surplus quantity of
food which would remain to him, after paying the labour, and replacing the stock of the farmer,
together with its ordinary profits, would necessarily be much greater. What- ever was the rate
at which labour was commonly maintained in that country, this greater surplus could always
maintain a greater quantity of it, and, consequently, enable the landlord to purchase or
command a greater quantity of it. The real value of his rent, his real power and authority,
his command of the necessaries and conveniencies of life with which the labour of other
people could supply him, would necessarily be much greater. A rice field produces a much
greater quantity of food than the most fertile corn field. Two crops in the year, from thirty to
sixty bushels each, are said to be the ordinary produce of an acre. Though its cultivation,
therefore, requires more labour, a much greater surplus remains after maintaining all that
labour. In those rice countries, therefore, where rice is the common and favourite vegetable
food of the people, and where the cultivators are chiefly maintained with it, a  greater share of
this greater surplus should belong to the landlord than in corn countries. In Car- olina, where
the planters, as in other British colonies, are generally both farmers and landlords, and where
rent, consequently, is confounded with profit, the cultivation of rice is found to be more
profitable than that of corn, though their fields produce only one crop in the year, and  though,
from the prevalence of the customs of Europe, rice is not there the common and
favourite vegetable food of the people. A good rice field is a bog at all seasons, and at one
season a bog covered with water. It is unfit either for corn, or pasture, or vineyard, or, indeed,
for any other vegetable produce that is very useful to men; and the lands which are fit for those
purposes are not fit for rice. Even in the rice countries, therefore, the rent of rice lands cannot
regulate the rent of the other cuitivated land which can never be turned to that produce. The
food produced by a field of potatoes is not inferior in quantity to that produced by a field  of
rice, and much superior to what is produced by a field of wheat. Twelve thousand weight
of potatoes from an acre of land is not a greater produce than two thousand weight of wheat.
The food or solid nourishment, indeed, which can be drawn from each of those two plants, is
not alto- gether in proportion to their weight, on account of the watery nature of potatoes.
Allowing, how- ever, half the weight of this root to go to water, a very large allowance, such
an acre of potatoes will still produce six thousand weight of solid nourishment, three times the
quantity produced by the acre of wheat. An acre of potatoes is cultivated with less expense
than an acre of wheat; the fallow, which generally precedes the sowing of wheat, more than
compensating the hoeing and other ex- traordinary culture which is always given to potatoes.
Should this root ever become in any part of Europe, like rice in some rice countries, the
common and favourite vegetable food of the people, so as to occupy the same proportion of the
lands in tillage, which wheat and other sorts of grain for human food do at present, the same
quantity of cultivated land would maintain a much greater number of people; and the labourers
being generally fed with potatoes, a greater surplus would remain after replacing all the stock,
and maintaining all the labour employed in cultivation. A greater share of this surplus, too,
would belong to the landlord. Population would increase, and rents would rise much beyond
what they are at present. The land which is fit for potatoes, is fit for almost every other useful
vegetable. If they occu- pied the same proportion of cultivated land which corn does at present,
they would regulate, in the same manner, the rent of the greater part of other cultivated land. In
some parts of Lancashire, it is pretended, I have been told, that bread of oatmeal is a  heartier
food for labouring people than wheaten bread, and I have frequently heard the same doc- trine
held in Scotland. I am, however, somewhat doubtful of the truth of it. The common people in
Scotland, who are fed with oatmeal, are in general neither so strong nor so handsome as
the same rank of people in England, who are fed with wheaten bread. They neither work so
well, nor look so well; and as there is not the same difference between the people of fashion in
the two countries, experience would seem to shew, that the food of the common people in
Scotland is not so suitable to the human constitution as that of their neighbours of the same
rank in England. But it seems to be otherwise with potatoes. The chairmen, porters, and coal-
heavers in London, and those unfortunate women who live by prostitution, the strongest men
and the most beautiful women perhaps in the British dominions, are said to be, the greater part
of them, from the lowest rank of people in Ireland, who are generally fed with this root. No
food can afford a more decisive proof of its nourishing quality, or of its being peculiarly
suitable to the health of the human con- stitution. It is difficult to preserve potatoes through the
year, and impossible to store them like corn, for two or three years together. The fear of not
being able to sell them before they rot, discourages their cultivation, and is, perhaps, the chief
obstacle to their ever becoming in any great country, like bread, the principal vegetable food of
all the different ranks of the people.  

PART II.—Of the Produce of Land, which sometimes does, and sometimes does not,
afford Rent.  Human food seems to be the only produce of land, which always and necessarily
affords some rent to the landlord. Other sorts of produce sometimes may, and sometimes may
not, according to different circumstances.  After food, clothing and lodging are the two great
wants of mankind. Land, in its original rude state, can afford the materials of clothing and
lodging to a much greater number of people than it can feed. In its improved state, it can
sometimes feed a greater number of people than it can supply with those materials; at least in
the way in which they re- quire them, and are willing to pay for them. In the one state,
therefore, there is always a super- abundance of these materials, which are frequently, upon
that account, of little or no value. In the other, there is often a scarcity, which necessarily
augments their value. In the one state, a great part of them is thrown away as useless and the
price of what is used is considered as equal only to the labour and expense of fitting it for use,
and can, therefore, afford no rent to the landlord. In the other, they are all made use of, and
there is frequently a demand for more than can be had. Somebody is always willing to give
more for every part of them, than what is sufficient to pay the  expense of bringing them to
market. Their price, therefore, can always afford some rent to the landlord. The skins of the
larger animals were the original materials of clothing. Among nations of hunters and
shepherds, therefore, whose food consists chiefly in the flesh of those animals, every- man, by
providing himself with food, provides himself with the materials of more clothing than he can
wear. If there was no foreign commerce, the greater part of them would be thrown away
as things of no value. This was probably the case among the hunting nations of North America,
be- fore their country was discovered by the Europeans, with whom they now exchange their
surplus peltry, for blankets, fire-arms, and brandy, which gives it some value. In the present
commercial state of the known world, the most barbarous nations, I believe, among whom land
property is established, have some foreign commerce of this kind, and find among their
wealthier neigh- bours such a demand for all the materials of clothing, which their land
produces, and which can neither be wrought up nor consumed at home, as raises their price
above what it costs to send them to those wealthier neighbours. It affords, therefore, some rent
to the landlord. When the greater part of the Highland cattle were consumed on their own hills,
the exportation of their hides made the most considerable article of the commerce of that
country, and what they were ex- changed for afforded some addition to the rent of the
Highland estates. The wool of England, which in old times, could neither be consumed nor
wrought up at home, found a market in the then wealthier and more industrious country of
Flanders, and its price afforded something to the rent of the land which produced it. In
countries not better cultivated than England was then, or than the Highlands of Scotland are
now, and which had no foreign commerce, the materials of clothing would evidently be so
superabundant, that a great part of them would be thrown away as useless, and no part could
afford any rent to the landlord. The materials of lodging cannot always be transported to so
great a distance as those of cloth- ing, and do not so readily become an object of foreign
commerce. When they are superabundant in the country which produces them, it frequently
happens, even in the present commercial state of the world, that they are of no value to the
landlord. A good stone quarry in the neighbourhood of London would afford a considerable
rent. In many parts of Scotland and Wales it affords none. Barren timber for building is of
great value in a populous and well-cultivated country, and the land which produces it affords a
considerable rent. But in many parts of North America, the land- lord would be much obliged
to any body who would carry away the greater part of his large trees.  In some parts of the
Highlands of Scotland, the bark is the only part of the wood which, for want of roads and
water-carriage, can be sent to market; the timber is left to rot upon the ground.  When the
materials of lodging are so superabundant, the part made use of is worth only the  labour and
expense of fitting it for that use. It affords no rent to the landlord, who generally grants  the use
of it to whoever takes the trouble of asking it. The demand of wealthier nations,
however, sometimes enables him to get a rent for it. The paving of the streets of London has
enabled the owners of some barren rocks on the coast of Scotland to draw a rent from what
never afforded any before. The woods of Norway, and of the coasts of the Baltic, find a market
in many parts of Great Britain, which they could not find at home, and thereby afford some
rent to their proprietors. Countries are populous, not in proportion to the number of people
whom their produce can clothe and lodge, but in proportion to that of those whom it can feed.
When food is provided, it is easy to find the necessary clothing and lodging. But though these
are at hand, it may often be difficult to find food. In some parts of the British dominions, what
is called a house may be built by one day's labour of one man. The simplest species of
clothing, the skins of animals, require somewhat more labour to dress and prepare them for
use. They do not, however, require a great deal. Among savage or barbarous nations, a
hundredth, or little more than a hundredth part of the labour of the whole year, will be
sufficient to provide them with such clothing and lodging as satisfy the greater part of the
people. All the other ninety-nine parts are frequently no more than enough to provide them
with food. But when, by the improvement and cultivation of land, the labour of one family can
provide food for two, the labour of half the society becomes sufficient to provide food for the
whole. The other half, therefore, or at least the greater part of them, can be employed in
providing other things, or in satisfying the other wants and fancies of mankind. Clothing and
lodging, household furniture, and what is called equipage, are the principal objects of the
greater part of those wants and fancies. The rich man consumes no more food than his poor
neighbour. In quality it may be very different, and to select and prepare it may require more
labour and art; but in quantity it is very nearly the same. But compare the spacious palace and
great wardrobe of the one, with the hovel and the few rags of the other, and you will be
sensible that the difference between their clothing, lodging, and household furniture, is almost
as great in quantity as it is in quality. The desire of food is limited in every man by the narrow
capacity of the human stomach; but the de- sire of the conveniencies and ornaments of
building, dress, equipage, and household furniture, seems to have no limit or certain boundary.
Those, therefore, who have the command of more food than they themselves can consume, are
always willing to exchange the surplus, or, what is the same thing, the price of it, for
gratifications of this other kind. What is over and above satis- fying the limited desire, is given
for the amusement of those desires which cannot be satisfied, but seem to be altogether
endless. The poor, in order to obtain food, exert themselves to gratify those fancies of the rich;
and to obtain it more certainly, they vie with one another in the cheap- ness and perfection of
their work. The number of workmen increases with the increasing quan- tity of food, or with
the growing improvement and cultivation of the lands; and as the nature of their business
admits of the utmost subdivisions of labour, the quantity of materials which they can work up,
increases in a much greater proportion than their numbers. Hence arises a demand  for every
sort of material which human invention can employ, either usefully or ornamentally,
in building, dress, equipage, or household furniture; for the fossils and minerals contained in
the bowels of the earth, the precious metals, and the precious stones. Food is, in this manner,
not only the original source of rent, but every other part of the pro- duce of land which
afterwards affords rent, derives that part of its value from the improvement of the powers of
labour in producing food, by means of the improvement and cultivation of land. Those other
parts of the produce of land, however, which afterwards afford rent, do not afford it always.
Even in improved and cultivated countries, the demand for them is not always such as to afford
a greater price than what is sufficient to pay the labour, and replace, together with its  ordinary
profits, the stock which must be employed in bringing them to market. Whether it is or  is not
such, depends upon different circumstances. Whether a coal mine, for example, can afford any
rent, depends partly upon its fertility, and partly upon its situation. A mine of any kind may be
said to be either fertile or barren, according as the quantity of mineral which can be brought
from it by a certain quantity of labour, is greater or less than what  can be brought by an equal
quantity from the greater part of other mines of the same kind. Some coal mines,
advantageously situated, cannot be wrought on account of their barrenness. 

The produce does not pay the expense. They can afford neither profit nor rent. There are some,
of which the produce is barely sufficient to pay the labour, and replace, to-  gether with its
ordinary profits, the stock employed in working them. They afford some profit to  the
undertaker of the work, but no rent to the landlord. They can be wrought advantageously
by nobody but the landlord, who, being himself the undertaker of the work, gets the ordinary
profit of the capital which he employs in it. Many coal mines in Scotland are wrought in this
manner, and can be wrought in no other. The landlord will allow nobody else to work them
without paying some rent, and nobody can afford to pay any. Other coal mines in the same
country, sufficiently fertile, cannot be wrought on account of their situation. A quantity of
mineral, sufficient to defray the expense of working, could be brought from the mine by the
ordinary, or even less than the ordinary quantity of labour: but in an inland country, thinly
inhabited, and without either good roads or water-carriage, this quantity could not be
sold. Coals are a less agreeable fuel than wood: they are said too to be less wholesome. The
expense of coals, therefore, at the place where they are consumed, must generally be somewhat
less than that of wood. The price of wood, again, varies with the state of agriculture, nearly in
the same manner, and exactly for the same reason, as the price of cattle. In its rude beginnings,
the greater part of every country is covered with wood, which is then a mere incumbrance, of
no value to the landlord, who would gladly give it to any body for the cutting. As agriculture
advances, the woods are partly cleared by the progress of tillage, and partly go to decay in
consequence of the increased number of cattle. These, though they do not increase in the same
proportion as corn, which is altogether the acquisition of human industry, yet multiply under
the care and protection of men, who store up in the season of plenty what may maintain them
in that of scarcity; who, through the whole year, furnish them with a greater quantity of food
than uncultivated nature provides for them; and who, by destroying and extirpating their
enemies, secure them in the free enjoyment of all that she provides. Numerous herds of cattle,
when allowed to wander through the woods, though they do not destroy the old trees, hinder
any young ones from coming up; so that, in the course of a century or two, the whole forest
goes to ruin. The scarcity of wood then raises its price. It affords a good rent; and the landlord
sometimes finds that he can scarce employ his best lands more ad- vantageously than in
growing barren timber, of which the greatness of the profit often compen- sates the lateness of
the returns. This seems, in the present times, to be nearly the state of things in several parts of
Great Britain, where the profit of planting is found to be equal to that of either corn or pasture.
The advantage which the landlord derives from planting can nowhere exceed, at least for any
considerable time, the rent which these could afford him; and in an inland country,  which is
highly cuitivated, it will frequently not fall much short of this rent. Upon the sea-coast of a
well-improved country, indeed, if coals can conveniently be had for fuel, it may sometimes
be cheaper to bring barren timber for building from less cultivated foreign countries than to
raise it at home. In the new town of Edinburgh, built within these few years, there is not,
perhaps, a sin- gle stick of Scotch timber. Whatever may be the price of wood, if that of coals
is such that the expense of a coal fire is nearly equal to that of a wood one we may be assured,
that at that place, and in these circum- stances, the price of coals is as high as it can be. It
seems to be so in some of the inland parts of England, particularly in Oxfordshire, where it is
usual, even in the fires of the common people, to mix coals and wood together, and where the
difference in the expense of those two sorts of fuel cannot, therefore, be very great. Coals, in
the coal countries, are everywhere much below this highest price. If they were not, they could
not bear the expense of a distant carriage, either by land or by water. A small quantity only
could be sold; and the coal masters and the coal proprietors find it more for their interest to sell
a great quantity at a price somewhat above the lowest, than a small quantity at the highest. The
most fertile coal mine, too, regulates the price of coals at all the other mines in its
neighbourhood. Both the proprietor and the undertaker of the work find, the one that he can get
a greater rent, the other that he can get a greater profit, by somewhat underselling all their
neighbours. Their neighbours are soon obliged to sell at the same price, though they cannot so
well afford it, and though it always diminishes, and sometimes takes away altogether,
both their rent and their profit. Some works are abandoned altogether; others can afford no
rent, and can be wrought only by the proprietor. The lowest price at which coals can be sold
for any considerable time, is, like that of all other commodities, the price which is barely
sufficient to replace, together with its ordinary profits, the stock which must be employed in
bringing them to market. At a coal mine for which the landlord can get no rent, but, which he
must either work himself or let it alone altogether, the price of coals must generally be nearly
about this price. Rent, even where coals afford one, has generally a smaller share in their price
than in that of most other parts of the rude produce of land. The rent of an estate above ground,
commonly amounts to what is supposed to be a third of the gross produce; and it is generally a
rent certain and independent of the occasional variations in the crop. In coal mines, a fifth of
the gross pro- duce is a very great rent, a tenth the common rent; and it is seldom a rent certain,
but depends upon the occasional variations in the produce. These are so great, that in a country
where thirty years purchase is considered as a moderate price for the property of a landed
estate, ten years pur- chase is regarded as a good price for that of a coal mine. The value of a
coal mine to the proprietor, frequently depends as much upon its situation as upon its fertility.
That of a metallic mine depends more upon its fertility, and less upon its situ- ation. The
coarse, and still more the precious metals, when separated from the ore, are so valu- able, that
they can generally bear the expense of a very long land, and of the most distant sea car- riage.
Their market is not confined to the countries in the neighbourhood of the mine, but ex- tends to
the whole world. The copper of Japan makes an article of commerce in Europe; the iron  of
Spain in that of Chili and Peru. The silver of Peru finds its way, not only to Europe, but
from Europe to China. The price of coals in Westmoreland or Shropshire can have little effect
on their price at New- castle; and their price in the Lionnois can have none at all. The
productions of such distant coal mines can never be brought into competition with one another.
But the productions of the most distant metallic mines frequently may, and in fact commonly
are. The price, therefore, of the coarse, and still more that of the precious metals, at the most
fer- tile mines in the world, must necessarily more or less affect their price at every other in it.
The price of copper in Japan must have some influence upon its price at the copper mines in
Europe. The price of silver in Peru, or the quantity either of labour or of other goods which it
will pur- chase there, must have some influence on its price, not only at the silver mines of
Europe, but at those of China. After the discovery of the mines of Peru, the silver mines of
Europe were, the greater part of them, abandoned. The value of silver was so much reduced,
that their produce could no longer pay the expense of working them, or replace, with a profit,
the food, clothes, lodg- ing, and other necessaries which were consumed in that operation. This
was the case, too, with the mines of Cuba and St. Domingo, and even with the ancient mines of
Peru, after the discovery of those of Potosi. The price of every metal, at every mine, therefore,
being regulated in some measure by its price at the most fertile mine in the world that is
actually wrought, it can, at the greater part of mines, do very little more than pay the expense
of working, and can seldom afford a very high rent to the landlord. Rent accordingly, seems at
the greater part of mines to have but a small share in the price of the coarse, and a still smaller
in that of the precious metals. Labour and profit make up the greater part of both. A sixth part
of the gross produce may be reckoned the average rent of the tin mines of Corn-  wall, the most
fertile that are known in the world, as we are told by the Rev. Mr. Borlace, vice- warden of the
stannaries. Some, he says, afford more, and some do not afford so much. A sixth part of the
gross produce is the rent, too, of several very fertile lead mines in Scotland. In the silver mines
of Peru, we are told by Frezier and Ulloa, the proprietor frequently exacts no other
acknowledgment from the undertaker of the mine, but that he will grind the ore at his mill,
paying him the ordinary multure or price of grinding. Till 1736, indeed, the tax of the king
of Spain amounted to one fifth of the standard silver, which till then might be considered as the
real rent of the greater part of the silver mines of Peru, the richest which have been known in
the world. If there had been no tax, this fifth would naturally have belonged to the landlord,
and many mines might have been wrought which could not then be wrought, because they
could not afford this tax. The tax of the duke of Cornwall upon tin is supposed to amount to
more than five per cent. or one twentieth part of the value; and whatever may be his
proportion, it would natu- rally, too, belong to the proprietor of the mine, if tin was duty free.
But if you add one twentieth to one sixth, you will find that the whole average rent of the tin
mines of Cornwall, was to the whole average rent of the silver mines of Peru, as thirteen to
twelve. But the silver mines of Peru are not now able to pay even this low rent; and the tax
upon silver was, in 1736, reduced from one fifth to one tenth. Even this tax upon silver, too,
gives more temptation to smuggling than the tax of one twentieth upon tin; and smuggling
must be much easier in the precious than in the bulky com- modity. The tax of the king of
Spain, accordingly, is said to be very ill paid, and that of the duke of Cornwall very well. Rent,
therefore, it is probable, makes a greater part of the price of tin at the most fertile tin mines
than it does of silver at the most fertile silver mines in the world. After re- placing the stock
employed in working those different mines, together with its ordinary profits, the residue
which remains to the proprietor is greater, it seems, in the coarse, than in the pre- cious
metal. Neither are the profits of the undertakers of silver mines commonly very great in Peru.
The same most respectable and well-informed authors acquaint us, that when any person
undertakes to work a new mine in Peru, he is universally looked upon as a man destined to
bankruptcy and ruin, and is upon that account shunned and avoided by every body. Mining, it
seems, is consid- ered there in the same light as here, as a lottery, in which the prizes do not
compensate the blanks, though the greatness of some tempts many adventurers to throw away
their fortunes in such unprosperous projects. As the sovereign, however, derives a considerable
part of his revenue from the produce of sil- ver mines, the law in Peru gives every possible
encouragement to the discovery and working of new ones. Whoever discovers a new mine, is
entitled to measure off two hundred and forty-six feet in length, according to what he supposes
to be the direction of the vein, and half as much in breadth. He becomes proprietor of this
portion of the mine, and can work it without paving any acknowledgment to the landlord. The
interest of the duke of Cornwall has given occasion to a regulation nearly of the same kind in
that ancient dutchy. In waste and uninclosed lands, any per- son who discovers a tin mine may
mark out its limits to a certain extent, which is called bounding a mine. The bounder becomes
the real proprietor of the mine, and may either work it himself, or give it in lease to another,
without the consent of the owner of the land, to whom, however, a very small acknowledgment
must be paid upon working it. In both regulations, the sacred rights of private property are
sacrificed to the supposed interests of public revenue. The same encouragement is given in
Peru to the discovery and working of new gold mines; and in gold the king's tax amounts only
to a twentieth part of the standard rental. It was once a fifth, and afterwards a tenth, as in silver;
but it was found that the work could not bear even the lowest of these two taxes. If it is rare,
however, say the same authors, Frezier and Ulloa, to find a person who has made his fortune
by a silver, it is still much rarer to find one who has done so by a gold mine. This twentieth
part seems to be the whole rent which is paid by the greater part of the gold mines of Chili and
Peru. Gold, too, is much more liable to be smuggled than even silver; not only on account of
the superior value of the metal in proportion to its bulk, but on account of the peculiar way in
which nature produces it. Silver is very seldom found virgin, but, like most other metals, is
generally mineralized with some other body, from which it is impossible to sepa- rate it in such
quantities as will pay for the expense, but by a very laborious and tedious operation, which
cannot well be carried on but in work-houses erected for the purpose, and, therefore, ex- posed
to the inspection of the king's officers. Gold, on the contrary, is almost always found virgin. It
is sometimes found in pieces of some bulk; and, even when mixed, in small and almost
insen- sible particles, with sand, earth, and other extraneous bodies, it can be separated from
them by a very short and simple operation, which can be carried on in any private house by any
body who is possessed of a small quantity of mercury. If the king's tax, therefore, is but ill paid
upon silver, it is likely to be much worse paid upon gold; and rent must make a much smaller
part of the price of gold than that of silver. The lowest price at which the precious metals can
be sold, or the smallest quantity of other goods for which they can be exchanged, during any
considerable time, is regulated by the same principles which fix the lowest ordinary price of all
other goods. The stock which must commonly be employed, the food, clothes, and lodging,
which must commonly be consumed in bringing them from the mine to the market, determine
it. It must at least be sufficient to replace that stock, with the ordinary profits. Their highest
price, however, seems not to be necessarily determined by any thing but the ac- tual scarcity or
plenty of these metals themselves. It is not determined by that of any other com- modity, in the
same manner as the price of coals is by that of wood, beyond which no scarcity can ever raise
it. Increase the scarcity of gold to a certain degree, and the smallest bit of it may become more
precious than a diamond, and exchange for a greater quantity of other goods. The demand for
those metals arises partly from their utility, and partly from their beauty. If you except iron,
they are more useful than, perhaps, any other metal. As they are less liable to rust and impurity,
they can more easily be kept clean; and the utensils, either of the table or the kitchen, are often,
upon that account, more agreeable when made of them. A silver boiler is more cleanly than a
lead, copper, or tin one; and the same quality would render a gold boiler still better than a
silver one. Their principal merit, however, arises from their beauty, which renders
them peculiarly fit for the ornaments of dress and furniture. No paint or dye can give so
splendid a colour as gilding. The merit of their beauty is greatly enhanced by their scarcity.
With the greater part of rich people, the chief enjoyment of riches consists in the parade of
riches; which, in their eye, is never so complete as when they appear to possess those decisive
marks of opulence which nobody can possess but themselves. In their eyes, the merit of an
object, which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or
by the great labour which it re- quires to collect any considerable quantity of it; a labour which
nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher
price than things much more beautiful and useful, but more common. These qualities of utility,
beauty, and scarcity, are the original foundation of the high price of those metals, or of the
great quantity of other goods for which they can everywhere be exchanged. This value was
antecedent to, and independent of their being employed as coin, and was the quality which
fitted them for that employment. That employ- ment, however, by occasioning a new demand,
and by diminishing the quantity which could be employed in any other way, may have
afterwards contributed to keep up or increase their value. The demand for the precious stones
arises altogether from their beauty. They are of no use but as ornaments; and the merit of their
beauty is greatly enhanced by their scarcity, or by the difficulty and expense of getting them
from the mine. Wages and profit accordingly make up, upon most occasions, almost the whole
of the high price. Rent comes in but for a very small share, frequently for no share; and the
most fertile mines only afford any considerable rent. When Tavernier, a jeweller, visited the
diamond mines of Golconda and Visiapour, he was in- formed that the sovereign of the
country, for whose benefit they were wrought, had ordered all of them to be shut up except
those which yielded the largest and finest stones. The other, it seems, were to the proprietor not
worth the working. As the prices, both of the precious metals and of the precious stones, is
regulated all over the world by their price at the most fertile mine in it, the rent which a mine
of either can afford to its proprietor is in proportion, not to its absolute, but to what may be
called its relative fertility, or to its superiority over other mines of the same kind. If new mines
were discovered, as much supe- rior to those of Potosi, as they were superior to those of
Europe, the value of silver might be so much degraded as to render even the mines of Potosi
not worth the working. Before the discovery of the Spanish West Indies, the most fertile mines
in Europe may have afforded as great a rent to their proprietors as the richest mines in Peru do
at present. Though the quantity of silver was much less, it might have exchanged for an equal
quantity of other goods, and the proprietor's share might have enabled him to purchase or
command an equal quantity either of labour or of commodities. The value, both of the produce
and of the rent, the real revenue which they afforded, both to the public and to the proprietor,
might have been the same. The most abundant mines, either of the precious metals, or of the
precious stones, could add little to the wealth of the world. A produce, of which the value is
principally derived from its scar- city, is necessarily degraded by its abundance. A service of
plate, and the other frivolous orna- ments of dress and furniture, could be purchased for a
smaller quantity of commodities; and in this would consist the sole advantage which the world
could derive from that abundance. It is otherwise in estates above ground. The value, both of
their produce and of their rent, is in proportion to their absolute, and not to their relative
fertility. The land which produces a cer- tain quantity of food, clothes, and lodging, can always
feed, clothe, and lodge, a certain number of people; and whatever may be the proportion of the
landlord, it will always give him a propor- tionable command of the labour of those people,
and of the commodities with which that labour can supply him. The value of the most barren
land is not diminished by the neighbourhood of the most fertile. On the contrary, it is generally
increased by it. The great number of people main- tained by the fertile lands afford a market to
many parts of the produce of the barren, which they could never have found among those
whom their own produce could maintain. Whatever increases the fertility of land in producing
food, increases not only the value of the lands upon which the improvement is bestowed, but
contributes likewise to increase that of many other lands, by creating a new demand for their
produce. That abundance of food, of which, in consequence of the improvement of land, many
people have the disposal beyond what they them- selves can consume, is the great cause of the
demand, both for the precious metals and the pre- cious stones, as well as for every other
conveniency and ornament of dress, lodging, household furniture, and equipage. Food not only
constitutes the principal part of the riches of the world, but it is the abundance of food which
gives the principal part of their value to many other sorts of riches. The poor inhabitants of
Cuba and St. Domingo, when they were first discovered by the Spaniards, used to wear little
bits of gold as ornaments in their hair and other parts of their dress. They seemed to value them
as we would do any little pebbles of somewhat more than ordinary beauty, and to consider
them as just worth the picking up, but not worth the refusing to any body who asked them,
They gave them to their new guests at the first request, without seeming to think that they had
made them any very valuable present. They were astonished to observe the rage of the
Spaniards to obtain them; and had no notion that there could anywhere be a country in which
many people had the disposal of so great a superfluity of food; so scanty always
among themselves, that, for a very small quantity of those glittering baubles, they would
willingly give as much as might maintain a whole family for many years. Could they have
been made to under- stand this, the passion of the Spaniards would not have surprised them. 

PART III.—Of the variations in the Proportion between the respective Values of that sort
of Produce which always affords Rent, and of that which sometimes does, and sometimes does
not, afford Rent.  The increasing abundance of food, in consequence of the increasing
improvement and culti- vation, must necessarily increase the demand for every part of the
produce of land which is not food, and which can be applied either to use or to ornament. In
the whole progress of improve- ment, it might, therefore, be expected there should be only one
variation in the comparative val- ues of those two different sorts of produce. The value of that
sort which sometimes does, and sometimes does not afford rent, should constantly rise in
proportion to that which always affords some rent. As art and industry advance, the materials
of clothing and lodging, the useful fossils and materials of the earth, the precious metals and
the precious stones, should gradually come to be more and more in demand, should gradually
exchange for a greater and a greater quantity of food; or, in other words, should gradually
become dearer and dearer. This, accordingly, has been the case with most of these things upon
most occasions, and would have been the case with all of them upon all occasions, if particular
accidents had not, upon some occasions, increased the sup- ply of some of them in a still
greater proportion than the demand. The value of a free-stone quarry, for example, will
necessarily increase with the increasing im- provement and population of the country round
about it, especially if it should be the only one in the neighbourhood. But the value of a silver
mine, even though there should not be another with- in a thousand miles of it, will not
necessarily increase with the improvement of the country in which it is situated. The market
for the produce of a free-stone quarry can seldom extend more than a few miles round about it,
and the demand must generally be in proportion to the improve- ment and population of that
small district; but the market for the produce of a silver mine may ex- tend over the whole
known world. Unless the world in general, therefore, be advancing in im- provement and
population, the demand for silver might not be at all increased by the improve- ment even of a
large country in the neighbourhood of the mine. Even though the world in general  were
improving, yet if, in the course of its improvements, new mines should be discovered,
much more fertile than any which had been known before, though the demand for silver would
neces- sarily increase, yet the supply might increase in so much a greater proportion, that the
real price of that metal might gradually fall; that is, any given quantity, a pound weight of it,
for example, might gradually purchase or command a smaller and a smaller quantity of labour,
or exchange for a smaller and a smaller quantity of corn, the principal part of the subsistence of
the labourer. The great market for silver is the commercial and civilized part of the world.  If,
by the general progress of improvement, the demand of this market should increase, while, at
the same time, the supply did not increase in the same proportion, the value of silver would
gradually rise in proportion to that of corn. Any given quantity of silver would exchange for a
greater and a greater quantity of corn; or, in other words, the average money price of corn
would gradually become cheaper and cheaper. If, on the contrary, the supply, by some
accident, should increase, for many years together, in a greater proportion than the demand,
that metal would gradually become cheaper and cheaper; or, in other words, the average
money price of corn would, in spite of all improvements, gradually become dearer and
dearer. But if, on the other hand, the supply of that metal should increase nearly in the same
propor- tion as the demand, it would continue to purchase or exchange for nearly the same
quantity of corn; and the average money price of corn would, in spite of all improvements.
continue very nearly the same. These three seem to exhaust all the possible combinations of
events which can happen in the progress of improvement; and during the course of the four
centuries preceding the present, if we may judge by what has happened both in France and
Great Britain, each of those three different combinations seems to have taken place in the
European market, and nearly in the same order, too, in which I have here set them
down. Digression concerning the Variations in the value of Silver during the Course of the
Four last Centuries. First Period.—In 1350, and for some time before, the average price of the
quarter of wheat in England seems not to have been estimated lower than four ounces of silver,
Tower weight, equal to about twenty shillings of our present money. From this price it seems
to have fallen gradually to two ounces of silver, equal to about ten shillings of our present
money, the price at which we find it estimated in the beginning of the sixteenth century, and at
which it seems to have con- tinued to be estimated till about 1570. In 1350, being the 25th of
Edward III. was enacted what is called the Statute of Labourers. In the preamble, it complains
much of the insolence of servants, who endeavoured to raise their wages upon their masters. It
therefore ordains, that all servants and labourers should, for the fu- ture, be contented with the
same wages and liveries (liveries in those times signified not only clothes, but provisions)
which they had been accustomed to receive in the 20th year of the king, and the four preceding
years; that, upon this account, their livery-wheat should nowhere be esti- mated higher than
tenpence a-bushel, and that it should always be in the option of the master to  deliver them
either the wheat or the money. Tenpence: a-bushel, therefore, had, in the 25th of Ed- ward III.
been reckoned a very moderate price of wheat, since it required a particular statute to  oblige
servants to accept of it in exchange for their usual livery of provisions; and it had been
reck- oned a reasonable price ten years before that, or in the 16th year of the king, the term to
which the statute refers. But in the 16th year of Edward III. tenpence contained about half an
ounce of silver, Tower weight, and was nearly equal to half-a-crown of our present money.
Four ounces of silver, Tower weight, therefore, equal to six shillings and eightpence of the
money of those times, and to near twenty shillings of that of the present, must have been
reckoned a moderate price for the quarter of eight bushels. This statute is surely a better
evidence of what was reckoned, in those times, a moderate price of grain, than the prices of
some particular years, which have generally been recorded by histo- rians and other writers, on
account of their extraordinary dearness or cheapness, and from which, therefore, it is difficult
to form any judgment concerning what may have been the ordinary price. There are, besides,
other reasons for believing that, in the beginning of the fourteenth century, and for some time
before, the common price of wheat was not less than four ounces of silver the quarter, and that
of other grain in proportion. In 1309, Ralph de Born, prior of St Augustine's, Canterbury, gave
a feast upon his instal- lation-day, of which William Thorn has preserved, not only the bill of
fare, but the prices of many particulars. In that feast were consumed, 1st, fifty-three quarters of
wheat, which cost nineteen pounds, or seven shillings, and twopence a-quarter, equal to about
one-and-twenty shillings and sixpence of our present money; 2dly, fifty-eight quarters of malt,
which cost seventeen pounds ten shillings, or six shillings a-quarter, equal to about eighteen
shillings of our present money; 3dly, twenty quarters of oats, which cost four pounds, or four
shillings a-quarter, equal to about twelve shillings of our present money. The prices of malt
and oats seem here to lie higher than their ordinary proportion to the price of wheat. These
prices are not recorded, on account of their extraordinary dearness or cheapness, but are
mentioned accidentally, as the prices actually paid for large quantities of grain consumed at
a feast, which was famous for its magnificence. In 1262, being the 51st of Henry III. was
revived an ancient statute, called the assize of bread and ale, which, the king says in the
preamble, had been made in the times of his progenitors, some time kings of England. It is
probably, therefore, as old at least as the time of his grandfather, Henry II. and may have been
as old as the Conquest. It regulates the price of bread according as the prices of wheat may
happen to be, from one shilling to twenty shillings the quarter of the money of those times. But
statutes of this kind are generally presumed to provide with equal care for all deviations from
the middle price, for those below it, as well as for those above it. Ten shillings, therefore,
containing six ounces of silver, Tower weight, and equal to about thirty shillings of our present
money, must, upon this supposition, have been reckoned the middle price of the quarter of
wheat when this statute was first enacted, and must have continued to be so in the 51st of
Henry III. We cannot, therefore, be very wrong in supposing that the middle price was not less
than one-third of the highest price at which this statute regulates the price of bread, or than six
shillings and eightpence of the money of those times, con- taining four ounces of silver, Tower
weight. From these different facts, therefore, we seem to have some reason to conclude that,
about the middle of the fourteenth century, and for a considerable time before, the average or
ordinary price of the quarter of wheat was not supposed to be less than four  ounces of silver,
Tower weight. From about the middle of the fourteenth to the beginning of the sixteenth
century, what was reckoned the reasonable and moderate, that is, the ordinary or average
price of wheat, seems to have sunk gradually to about one half of this price; so as at last
to have fallen to about two ounces of silver, Tower weight, equal to about ten shillings of our
present money. It continued to be estimated at this price till about 1570. In the household book
of Henry, the fifth earl of Northumberland, drawn up in 1512 there are two different
estimations of wheat. In one of them it is computed at six shilling and eightpence the quarter,
in the other at five shillings and eightpence only. In 1512, six shillings and eightpence
contained only two ounces of silver, Tower weight, and were equal to about ten shillings of our
present money. From the 25th of Edward III. to the beginning of the reign of Elizabeth, during
the space of more than two hundred years, six shillings and eightpence, it appears from several
different statutes, had continued to be considered as what is called the moderate and
reasonable, that is, the ordinary or average price of wheat. The quantity of silver, however,
contained in that nominal sum was, during the course of this period, contin- ually diminishing
in consequence of some alterations which were made in the coin. But the increase of the value
of silver had, it seems, so far compensated the diminution of the quantity of it contained in the
same nominal sum, that the legislature did not think it worth while to attend to this
circumstance. Thus, in 1436, it was enacted, that wheat might be exported without a licence
when the price was so low as six shillings and eightpence: and in 1463, it was enacted, that
no wheat should be imported if the price was not above six shillings and eightpence
the quarter: The legislature had imagined, that when the price was so low, there could be no
inconveniency in exportation, but that when it rose higher, it became prudent to allow of
importation. Six shillings and eightpence, therefore, containing about the same quantity of
silver as thirteen shillings and fourpence of our present money (one-third part less than the
same nominal sum contained in the time of Edward III), had, in those times, been considered
as what is called the moderate and reasonable price of wheat. In 1554, by the 1st and 2nd of
Philip and Mary, and in 1558, by the 1st of Elizabeth, the exportation of wheat was in the same
manner prohibited, whenever the price of the quarter should exceed six shillings and
eightpence, which did not then contain two penny worth more silver than the same nominal
sum does at present. But it had soon been found, that to restrain the exportation of wheat till
the price was so very low, was, in reality, to prohibit it altogether. In 1562, therefore, by the
5th of Elizabeth, the expor- tation of wheat was allowed from certain ports, whenever the price
of the quarter should not exceed ten shillings, containing nearly the same quantity of silver as
the like nominal sum does at present. This price had at this time, therefore, been considered
as what is called the moderate and reasonable price of wheat. It agrees nearly with the
esti- mation of the Northumberland book in 1512. That in France the average price of grain
was, in the same manner, much lower in the end of the fifteenth and beginning of the sixteenth
century, than in the two cen- turies preceding, has been observed both by Mr Dupré de St
Maur, and by the elegant author of the Essay on the Policy of Grain. Its price, during the same
period, had probably sunk in the same manner through the greater part of Europe. This rise in
the value of silver, in proportion to that of corn, may either have been owing altogether to the
increase of the demand for that metal, in consequence of in- creasing improvement and
cultivation, the supply, in the mean time, continuing the same as before; or, the demand
continuing the same as before, it may have been owing altogether to the gradual diminution of
the supply: the greater part of the mines which were then known in the world being much
exhausted, and, consequently, the expense of working them much increased; or it may have
been owing partly to the one, and part- ly to the other of those two circumstances. In the end of
the fifteenth and beginning of the sixteenth centuries, the greater part of Europe was
approaching towards a more set- tled from of government than it had enjoyed for several ages
before. The increase of security would naturally increase industry and improvement; and the
demand for the precious metals, as well as for every other luxury and ornament, would
naturally in- crease with the increase of riches. A greater annual produce would require a
greater quantity of coin to circulate it; and a greater number of rich people would require
a greater quantity of plate and other ornaments of silver. It is natural to suppose, too, that  the
greater part of the mines which then supplied the European market with silver might be a good
deal exhausted, and have become more expensive in the working. They had been wrought,
many of them, from the time of the Romans. It has been the opinion, however, of the greater
part of those who have written upon the prices of commodities in ancient times, that, from the
Conquest, perhaps from the invasion of Julius Caesar, till the discovery of the mines of
America, the value of silver was continually diminishing. This opinion they seem to have been
led into, partly by the observations which they had occasion to make upon the prices both
of corn and of some other parts of the rude produce of land, and partly by the popular no- tion,
that as the quantity of silver naturally increases in every country with the increase  of wealth, so
its value diminishes as it quantity increases. In their observations upon the prices of corn, three
different circumstances seem frequently to have misled them. First, in ancient times, almost all
rents were paid in kind; in a certain quantity of corn, cattle, poultry, etc. It sometimes
happened, however, that the landlord would stip- ulate, that he should be at liberty to demand
of the tenant, either the annual payment in kind or a certain sum of money instead of it. The
price at which the payment in kind was in this manner exchanged for a certain sum of money,
is in Scotland called the con- version price. As the option is always in the landlord to take
either the substance or the price, it is necessary, for the safety of the tenant, that the conversion
price should rather be below than above the average market price. In many places, accordingly,
it is not much above one half of this price. Through the greater part of Scotland this custom
still continues with regard to poultry, and in some places with regard to cattle. It
might probably have continued to take place, too, with regard to corn, had not the institution of
the public fiars put an end to it. These are annual valuations, according to the judg- ment of an
assize, of the average price of all the different sorts of grain, and of all the  different qualities of
each, according to the actual market price in every different coun- ty. This institution rendered
it sufficiently safe for the tenant, and much more conve- nient for the landlord, to convert, as
they call it, the corn rent, rather at what should happen to be the price of the fiars of each year,
than at any certain fixed price. But the writers who have collected the prices of corn in ancient
times seem frequently to have mistaken what is called in Scotland the conversion price for the
actual market price. Fleetwood acknowledges, upon one occasion, that he had made this
mistake. As he wrote his book, however, for a particular purpose, he does not think proper to
make this acknowledgment till after transcribing this conversion price fifteen times. The price
is eight shillings the quarter of wheat. This sum in 1423, the year at which he begins with it,
contained the same quantity of silver as sixteen shillings of our present money. But in 1562,
the year at which he ends with it, it contained no more than the same nominal sum does at
present. Secondly, they have been misled by the slovenly manner in which some
ancient statutes of assize had been sometimes transcribed by lazy copiers, and sometimes,
per- haps, actually composed by the legislature. The ancient statutes of assize seem to have
begun always with determining what ought to be the price of bread and ale when the price of
wheat and barley were at the lowest; and to have proceeded gradually to determine what it
ought to be, according as the prices of those two sorts of grain should gradually rise above this
lowest price. But the transcribers of those statutes seem frequently to have thought it sufficient
to copy the regulation as far as the three or four first and lowest prices; saving in this
manner their own labour, and judging, I suppose, that this was enough to show what
propor- tion ought to be observed in all higher prices. Thus, in the assize of bread and ale, of
the 51st of Henry III. the price of bread was regulated according to the different prices of
wheat, from one shilling to twenty shillings the quarter of the money of those times. But in the
manuscripts from which all the different editions of the statutes, preceding that of Mr
Ruffhead, were printed, the copiers had never transcribed this regulation beyond the price of
twelve shillings. Several writers, therefore, being misled by this faulty transcription, very
naturally con- clude that the middle price, or six shillings the quarter, equal to about
eighteen shillings of our present money, was the ordinary or average price of wheat at that
time. In the statute of Tumbrel and Pillory, enacted nearly about the same time, the price of ale
is regulated according to every sixpence rise in the price of barley, from two shillings, to four
shillings the quarter. That four shillings, however, was not considered as the highest price to
which barley might frequently rise in those times, and that these prices were only given as an
example of the proportion which ought to be observed in all other prices, whether higher or
lower, we may infer from the last words of the statute: "Et sic deinceps crescetur vel
diminuetur per sex denarios." The expression is very slovenly, but the meaning is plain
enough, "that the price of ale is in this manner to be increased or diminished according to every
sixpence rise or fall in the price of bar- ley." In the composition of this statute, the legislature
itself seems to have been as negligent as the copiers were in the transcription of the other. In an
ancient manuscript of the Regiam Majestatem, an old Scotch law book, there is a statute of
assize, in which the price of bread is regulated according to all the dif-  ferent prices of wheat,
from tenpence to three shillings the Scotch boll, equal to about half an English quarter. Three
shillings Scotch, at the time when this assize is supposed to have been enacted, were equal to
about nine shillings sterling of our present money Mr Ruddiman seems {See his Preface to
Anderson's Diplomata Scotiae.} to conclude from this, that three shillings was the highest price
to which wheat ever rose in those times, and that tenpence, a shilling, or at most two shillings,
were the ordinary prices. Upon consulting the manuscript, however, it appears evidently, that
all these prices are only set down as examples of the proportion which ought to be observed
between the respective prices of wheat and bread. The last words of the statute are "reliqua
judicabis secundum praescripta, habendo respectum ad pretium bladi."—"You shall judge of
the remaining cases, according to what is above written, having respect to the price
of corn." Thirdly, they seem to have been misled too, by the very low price at which wheat  was
sometimes sold in very ancient times; and to have imagined, that as its lowest price  was then
much lower than in later times its ordinary price must likewise have been much lower. They
might have found, however, that in those ancient times its highest price was fully as much
above, as its lowest price was below any thing that had ever been known in later times. Thus,
in 1270, Fleetwood gives us two prices of the quarter of wheat. The one is four pounds sixteen
shillings of the money of those times, equal to fourteen pounds eight shillings of that of the
present; the other is six pounds eight shillings, equal to nineteen pounds four shillings of our
present money. No price can be found in the end of the fifteenth, or beginning of the sixteenth
century, which ap- proaches to the extravagance of these. The price of corn, though at all times
liable to variation varies most in those turbulent and disorderly societies, in which the
inter- ruption of all commerce and communication hinders the plenty of one part of the
coun- try from relieving the scarcity of another. In the disorderly state of England under
the Plantagenets, who governed it from about the middle of the twelfth till towards the end of
the fifteenth century, one district might be in plenty, while another, at no great dis-  tance, by
having its crop destroyed, either by some accident of the seasons, or by the incursion of some
neighbouring baron, might be suffering all the horrors of a famine; and yet if the lands of some
hostile lord were interposed between them, the one might not be able to give the least
assistance to the other. Under the vigorous administration of the Tudors, who governed
England during the latter part of the fifteenth, and through the whole of the sixteenth century,
no baron was powerful enough to dare to disturb the public security. The reader will find at the
end of this chapter all the prices of wheat which have been collected by Fleetwood, from 1202
to 1597, both inclusive, reduced to the money of the present times, and digested, according to
the order of time, into seven divisions of twelve years each. At the end of each division, too, he
will find the average price of the twelve years of which it consists. In that long period of time,
Fleetwood has been able to collect the prices of no more than eighty years; so that four years
are wanting to make out the last twelve years. I have added, therefore, from the accounts of
Eton college, the prices of 1598, 1599, 1600, and 1601. It is the only addition which I have
made. The reader will see, that from the beginning of the thirteenth till after the middle of the
six- teenth century, the average price of each twelve years grows gradually lower and
lower; and that towards the end of the sixteenth century it begins to rise again. The prices,
in- deed, which Fleetwood has been able to collect, seem to have been those chiefly
which were remarkable for extraordinary dearness or cheapness; and I do not pretend that
any very certain conclusion can be drawn from them. So far, however, as they prove any thing
at all, they confirm the account which I have been endeavouring to give. Fleet- wood himself,
however, seems, with most other writers, to have believed, that, during all this period, the
value of silver, in consequence of its increasing abundance, was con- tinually diminishing. The
prices of corn, which he himself has collected, certainly do not agree with this opinion. They
agree perfectly with that of Mr Dupré de St Maur, and with that which I have been
endeavouring to explain. Bishop Fleetwood and Mr Dupré de St Maur are the two authors who
seem to have collected, with the greatest diligence and fidelity, the prices of things in ancient
times. It is some what curious that, though their opinions are so very different, their facts, so
far as they relate to the price of corn at least, should coincide so very exactly. It is not,
however, so much from the low price of corn, as from that of some other parts of the rude
produce of land, that the most judicious writers have inferred the great value of silver in those
very ancient times. Corn, it has been said, being a sort of manufacture, was, in those rude ages,
much dearer in proportion than the greater part of other commodities; it is meant, I suppose,
than the greater part of unmanufactured commodities, such as cattle, poultry, game of all kinds,
etc. That in those times of poverty and barbarism these were proportionably much cheaper than
corn, is undoubtedly true. But this cheapness was not the effect of the high value of silver,
but of the low value of those commodities. It was not because silver would in such
times purchase or represent a greater quantity of labour, but because such commodities would
purchase or represent a much smaller quantity than in times of more opulence and
improvement. Silver must certainly be cheaper in Spanish America than in Europe; in the
country where it is produced, than in the country to which it is brought, at the ex- pense of a
long carriage both by land and by sea, of a freight, and an insurance. One- and-twenty pence
halfpenny sterling, however, we are told by Ulloa, was, not many years ago, at Buenos Ayres,
the price of an ox chosen from a herd of three or four hun- dred. Sixteen shillings sterling, we
are told by Mr Byron, was the price of a good horse in the capital of Chili. In a country
naturally fertile, but of which the far greater part is altogether uncultivated, cattle, poultry,
game of all kinds, etc. as they can be acquired with a very small quantity of labour, so they will
purchase or command but a very small quantity. The low money price for which they may be
sold, is no proof that the real value of silver is there very high, but that the real value of those
commodities is very low. Labour, it must always be remembered, and not any particular
commodity, or set of commodities, is the real measure of the value both of silver and of all
other commodi- ties. But in countries almost waste, or but thinly inhabited, cattle, poultry,
game of all kinds, etc. as they are the spontaneous productions of Nature, so she frequently
pro- duces them in much greater quantities than the consumption of the inhabitants re- quires.
In such a state of things, the supply commonly exceeds the demand. In dif-  ferent states of
society, in different states of improvement, therefore, such commodities will represent, or be
equivalent, to very different quantities of labour. In every state of society, in every stage of
improvement, corn is the production of human industry. But the average produce of every sort
of industry is always suited, more or less exactly, to the average consumption; the average
supply to the average de- mand. In every different stage of improvement, besides, the raising
of equal quantities of corn in the same soil and climate, will, at an average, require nearly
equal quantities of labour; or, what comes to the same thing, the price of nearly equal
quantities; the continual increase of the productive powers of labour, in an improved state of
culti- vation, being more or less counterbalanced by the continual increasing price of cattle,  the
principal instruments of agriculture. Upon all these accounts, therefore, we may rest assured,
that equal quantities of corn will, in every state of society, in every stage of  improvement,
more nearly represent, or be equivalent to, equal quantities of labour, than equal quantities of
any other part of the rude produce of land. Corn, accordingly, it has already been observed, is,
in all the different stages of wealth and improvement, a more accurate measure of value than
any other commodity or set of commodities. In all those different stages, therefore, we can
judge better of the real value of silver, by com- paring it with corn, than by comparing it with
any other commodity or set of commodi- ties. Corn, besides, or whatever else is the common
and favourite vegetable food of the people, constitutes, in every civilized country, the principal
part of the subsistence of the labourer. In consequence of the extension of agriculture, the land
of every country produces a much greater quantity of vegetable than of animal food, and the
labourer everywhere lives chiefly upon the wholesome food that is cheapest and most
abundant. Butcher's meat, except in the most thriving countries, or where labour is most
highly rewarded, makes but an insignificant part of his subsistence; poultry makes a
still smaller part of it, and game no part of it. In France, and even in Scotland, where labour  is
somewhat better rewarded than in France, the labouring poor seldom eat butcher's meat, except
upon holidays, and other extraordinary occasions. The money price of labour, therefore,
depends much more upon the average money price of corn, the sub- sistence of the labourer,
than upon that of butcher's meat, or of any other part of the rude produce of land. The real
value of gold and silver, therefore, the real quantity of labour which they can purchase or
command, depends much more upon the quantity of corn which they can purchase or
command, than upon that of butcher's meat, or any other part of the rude produce of land. Such
slight observations, however, upon the prices either of corn or of other com- modities, would
not probably have misled so many intelligent authors, had they not been influenced at the same
time by the popular notion, that as the quantity of silver naturally increases in every country
with the increase of wealth, so its value diminishes as its quantity increases. This notion,
however, seems to be altogether groundless. The quantity of the precious metals may increase
in any country from two different causes; either, first, from the increased abundance of the
mines which supply it; or, secondly, from the increased wealth of the people, from the
increased produce of their annual labour. The first of these causes is no doubt necessarily
connected with the diminution of the value of the precious metals; but the second is not. When
more abundant mines are discovered, a greater quantity of the precious met- als is brought to
market; and the quantity of the necessaries and conveniencies of life for which they must be
exchanged being the same as before, equal quantities of the metals must be exchanged for
smaller quantities of commodities. So far, therefore, as the increase of the quantity of the
precious metals in any country arises from the in- creased abundance of the mines, it is
necessarily connected with some diminution of their value. When, on the contrary, the wealth
of any country increases, when the annual pro- duce of its labour becomes gradually greater
and greater, a greater quantity of coin be- comes necessary in order to circulate a greater
quantity of commodities: and the people, as they can afford it, as they have more commodities
to give for it, will naturally pur- chase a greater and a greater quantity of plate. The quantity of
their coin will increase from necessity; the quantity of their plate from vanity and ostentation,
or from the same reason that the quantity of fine statues, pictures, and of every other luxury
and cu- riosity, is likely to increase among them. But as statuaries and painters are not likely
to be worse rewarded in times of wealth and prosperity, than in times of poverty and
de- pression, so gold and silver are not likely to be worse paid for. The price of gold and silver,
when the accidental discovery of more abundant mines does not keep it down, as it naturally
rises with the wealth of every country; so, whatever be the state of the mines, it is at all times
naturally higher in a rich than in a poor country. Gold and silver, like all other commodities,
naturally seek the market where the best price is given for them, and the best price is
commonly given for every thing in the country which can best afford it. Labour, it must be
remembered, is the ultimate price which is paid for every thing; and in countries where labour
is equally well rewarded, the money price of labour will be in proportion to that of the
subsistence of the labourer. But gold and silver will naturally exchange for a greater quantity
of sub- sistence in a rich than in a poor country; in a country which abounds with
subsistence, than in one which is but indifferently supplied with it. If the two countries are at
a great distance, the difference may be very great; because, though the metals naturally fly
from the worse to the better market, yet it may be difficult to transport them in such quantities
as to bring their price nearly to a level in both. If the countries are near, the difference will be
smaller, and may sometimes be scarce perceptible; because in this case the transportation will
be easy. China is a much richer country than any part of Eu- rope, and the difference between
the price of subsistence in China and in Europe is very great. Rice in China is much cheaper
than wheat is any where in Europe. England is a much richer country than Scotland, but the
difference between the money price of corn in those two countries is much smaller, and is but
just perceptible. In proportion to the quantity or measure, Scotch corn generally appears to be a
good deal cheaper than English; but, in proportion to its quality, it is certainly somewhat
dearer. Scotland receives almost every year very large supplies from England, and every
commodity must commonly be somewhat dearer in the country to which it is brought than in
that from which it comes. English corn, therefore, must be dearer in Scotland than in
Eng- land; and yet in proportion to its quality, or to the quantity and goodness of the flour
or meal which can be made from it, it cannot commonly be sold higher there than the Scotch
corn which comes to market in competition with it. The difference between the money price of
labour in China and in Europe, is still greater than that between the money price of subsistence;
because the real recompence of labour is higher in Europe than in China, the greater part of
Europe being in an im- proving state, while China seems to be standing still. The money price
of labour is lower in Scotland than in England, because the real recompence of labour is
much lower: Scotland, though advancing to greater wealth, advances much more slowly
than England. The frequency of emigration from Scotland, and the rarity of it from
England, sufficiently prove that the demand for labour is very different in the two countries.
The proportion between the real recompence of labour in different countries, it must
be remembered, is naturally regulated, not by their actual wealth or poverty, but by
their advancing, stationary, or declining condition. Gold and silver, as they are naturally of the
greatest value among the richest, so they are naturally of the least value among the poorest
nations. Among savages, the poorest of all nations, they are scarce of any value. In great
towns, corn is always dearer than in remote parts of the country. This, however, is the effect,
not of the real cheapness of silver, but of the real dearness of corn. It does not cost less labour
to bring silver to the great town than to the remote parts of the country; but it costs a great deal
more to bring corn. In some very rich and commercial countries, such as Holland and the
territory of Genoa, corn is dear for the same reason that it is dear in great towns. They do not
pro- duce enough to maintain their inhabitants. They are rich in the industry and skill of their
artificers and manufacturers, in every sort of machinery which can facilitate and abridge
labour; in shipping, and in all the other instruments and means of carriage and commerce: but
they are poor in corn, which, as it must be brought to them from distant countries, must, by an
addition to its price, pay for the carriage from those countries. It does not cost less labour to
bring silver to Amsterdam than to Dantzic; but it costs a great deal more to bring corn. The real
cost of silver must be nearly the same in both places; but that of corn must be very different.
Diminish the real opulence either of Holland or of the territory of Genoa, while the number of
their inhabitants remains the same; diminish their power of supplying themselves from distant
countries; and the price of corn, instead of sinking with that diminution in the quantity of their
silver, which must necessarily accompany this declension, either as its cause or as its
effect, will rise to the price of a famine. When we are in want of necessaries, we must part with
all superfluities, of which the value, as it rises in times of opulence and prosperity, so it sinks
in times of poverty and distress. It is otherwise with necessaries. Their real  price, the quantity
of labour which they can purchase or command, rises in times of poverty and distress, and
sinks in times of opulence and prosperity, which are always times of great abundance; for they
could not otherwise be times of opulence and pros- perity. Corn is a necessary, silver is only a
superfluity. Whatever, therefore, may have been the increase in the quantity of the precious 

metals, which, during the period between the middle of the fourteenth and that of the sixteenth
century, arose from the increase of wealth and improvement, it could have no tendency to
diminish their value, either in Great Britain, or in my other part of Europe. If those who have
collected the prices of things in ancient times, therefore, had, during this period, no reason to
infer the diminution of the value of silver from any obser- vations which they had made upon
the prices either of corn, or of other commodities, they had still less reason to infer it from any
supposed increase of wealth and improve- ment. Second Period.—But how various soever may
have been the opinions of the learned concerning the progress of the value of silver during the
first period, they are unanimous concerning it during the second. From about 1570 to about
1640, during a period of about seventy years, the vari- ation in the proportion between the
value of silver and that of corn held a quite opposite course. Silver sunk in its real value, or
would exchange for a smaller quantity of labour than before; and corn rose in its nominal price,
and, instead of being commonly sold for about two ounces of silver the quarter, or about ten
shillings of our present money, came to be sold for six and eight ounces of silver the quarter, or
about thirty and forty shillings of our present money. The discovery of the abundant mines of
America seems to have been the sole cause of this diminution in the value of silver, in
proportion to that of corn. It is accounted for, accordingly, in the same manner by every body;
and there never has been any dis- pute, either about the fact, or about the cause of it. The
greater part of Europe was, dur- ing this period, advancing in industry and improvement, and
the demand for silver must consequently have been increasing; but the increase of the supply
had, it seems, so far exceeded that of the demand, that the value of that metal sunk
considerably. The discovery of the mines of America, it is to be observed, does not seem to
have had any very sensible effect upon the prices of things in England till after 1570; though
even the mines of Potosi had been discovered more than twenty years before. From 1595 to
1620, both inclusive, the average price of the quarter of nine bushels of the best wheat, at
Windsor market, appears, from the accounts of Eton college, to have been £ 2:1:6 9/13. From
which sum, neglecting the fraction, and deducting a ninth, or 4s. 7 1/3d., the price of the
quarter of eight bushels comes out to have been £ 1:16:10 2/3. And from this sum, neglecting
likewise the fraction, and deducting a ninth, or 4s. 1 1/9d., for the difference between the price
of the best wheat and that of the mid- dle wheat, the price of the middle wheat comes out to
have been about £ 1:12:8 8/9, or about six ounces and one-third of an ounce of silver. From
1621 to 1636, both inclusive, the average price of the same measure of the best wheat, at the
same market, appears, from the same accounts, to have been £ 2:10s.; from which, making the
like deductions as in the foregoing case, the average price of the quarter of eight bushels of
middle wheat comes out to have been £ 1:19:6, or about seven ounces and two-thirds of an
ounce of silver. Third Period.—Between 1630 and 1640, or about 1636, the effect of the
discovery of the mines of America, in reducing the value of silver, appears to have been
com- pleted, and the value of that metal seems never to have sunk lower in proportion to
that of corn than it was about that time. It seems to have risen somewhat in the course of  the
present century, and it had probably begun to do so, even some time before the end of the
last. From 1637 to 1700, both inclusive, being the sixty-four last years of the last century the
average price of the quarter of nine bushels of the best wheat, at Windsor market, appears,
from the same accounts, to have been £ 2:11:0 1/3, which is only 1s. 0 1/3d. dearer than it had
been during the sixteen years before. But, in the course of these sixty-four years, there
happened two events, which must have produced a much greater scarcity of corn than what the
course of the season is would otherwise have occasioned, and which, therefore, without
supposing any further reduction in the value of silver, will much more than account for this
very small enhancement of price. The first of these events was the civil war, which, by
discouraging tillage and inter- rupting commerce, must have raised the price of corn much
above what the course of the seasons would otherwise have occasioned. It must have had this
effect, more or less, at all the different markets in the kingdom, but particularly at those in the
neigh- bourhood of London, which require to be supplied from the greatest distance. In
1648, accordingly, the price of the best wheat, at Windsor market, appears, from the same
ac- counts, to have been £ 4:5s., and, in 1649, to have been £ 4, the quarter of nine
bushels. The excess of those two years above £ 2:10s. (the average price of the sixteen years
pre- ceding 1637 is £ 3:5s., which, divided among the sixty four last years of the last
century, will alone very nearly account for that small enhancement of price which seems to
have taken place in them.) These, however, though the highest, are by no means the only high
prices which seem to have been occasioned by the civil wars. The second event was the bounty
upon the exportation of corn, granted in 1688. The bounty, it has been thought by many
people, by encouraging tillage, may, in a long course of years, have occasioned a greater
abundance, and, consequently, a greater cheapness of corn in the home market, than what
would otherwise have taken place there. How far the bounty could produce this effect at any
time I shall examine here- after: I shall only observe at present, that between 1688 and 1700, it
had not time to produce any such effect. During this short period, its only effect must have
been, by en- couraging the exportation of the surplus produce of every year, and thereby
hindering the abundance of one year from compensating the scarcity of another, to raise the
price in the home market. The scarcity which prevailed in England, from 1693 to 1699,
both inclusive, though no doubt principally owing to the badness of the seasons, and,
there- fore, extending through a considerable part of Europe, must have been somewhat
en- hanced by the bounty. In 1699, accordingly, the further exportation of corn was
prohib- ited for nine months. There was a third event which occurred in the course of the same
period, and which, though it could not occasion any scarcity of corn, nor, perhaps, any
augmen- tation in the real quantity of silver which was usually paid for it, must necessarily
have occasioned some augmentation in the nominal sum. This event was the great
debase- ment of the silver coin, by clipping and wearing. This evil had begun in the reign
of Charles II. and had gone on continually increasing till 1695; at which time, as we may learn
from Mr Lowndes, the current silver coin was, at an average, near five-and-twenty per cent.
below its standard value. But the nominal sum which constitutes the market price of every
commodity is necessarily regulated, not so much by the quantity of silver, which, according to
the standard, ought to be contained in it, as by that which, it is found by experience, actually is
contained in it. This nominal sum, therefore, is neces- sarily higher when the coin is much
debased by clipping and wearing, than when near to its standard value. In the course of the
present century, the silver coin has not at any time been more below its standard weight than it
is at present. But though very much defaced, its value has been kept up by that of the gold
coin, for which it is exchanged. For though, before the late recoinage, the gold coin was a good
deal defaced too, it was less so than the sil- ver. In 1695, on the contrary, the value of the silver
coin was not kept up by the gold coin; a guinea then commonly exchanging for thirty shillings
of the worn and clipt sil- ver. Before the late recoinage of the gold, the price of silver bullion
was seldom higher than five shillings and sevenpence an ounce, which is but fivepence above
the mint price. But in 1695, the common price of silver bullion was six shillings and
fivepence an ounce, {Lowndes's Essay on the Silver Coin, 68.} which is fifteen pence above
the mint price. Even before the late recoinage of the gold, therefore, the coin, gold and sil- ver
together, when compared with silver bullion, was not supposed to be more than eight per cent.
below its standard value, In 1695, on the contrary, it had been supposed to be near five-and-
twenty per cent. below that value. But in the beginning of the present century, that is,
immediately after the great recoinage in King William's time, the greater part of the current
silver coin must have been still nearer to its standard weight than it is at present. In the course
of the present century, too, there has been no great public calamity, such as a civil war, which
could either discourage tillage, or inter- rupt the interior commerce of the country. And though
the bounty which has taken place through the greater part of this century, must always raise the
price of corn some- what higher than it otherwise would be in the actual state of tillage; yet, as
in the course of this century, the bounty has had full time to produce all the good effects
commonly imputed to it to encourage tillage, and thereby to increase the quantity of corn in
the home market, it may, upon the principles of a system which I shall explain and exam- ine
hereafter, be supposed to have done something to lower the price of that com- modity the one
way, as well as to raise it the other. It is by many people supposed to have done more. In the
sixty-four years of the present century, accordingly, the average price of the quarter of nine
bushels of the best wheat, at Windsor market, appears, by the accounts of Eton college, to have
been £ 2:0:6 10/32, which is about ten shillings and sixpence, or more than five-and-twenty
percent. cheaper than it had been during the sixty-four last years of the last century; and about
nine shillings and sixpence cheap- er than it had been during the sixteen years preceding 1636,
when the discovery of the abundant mines of America may be supposed to have produced its
full effect; and about one shilling cheaper than it had been in the twenty-six years preceding
1620, be- fore that discovery can well be supposed to have produced its full effect. According
to this account, the average price of middle wheat, during these sixty-four first years of
the present century, comes out to have been about thirty-two shillings the quarter of
eight bushels. The value of silver, therefore, seems to have risen somewhat in proportion to
that of corn during the course of the present century, and it had probably begun to do so even
some time before the end of the last. In 1687, the price of the quarter of nine bushels of the
best wheat, at Windsor mar- ket, was £ 1:5:2, the lowest price at which it had ever been from
1595. In 1688, Mr Gregory King, a man famous for his knowledge in matters of this kind,
estimated the average price of wheat, in years of moderate plenty, to be to the grower 3s. 6d.
the bushel, or eight-and-twenty shillings the quarter. The grower's price I understand to be the
same with what is sometimes called the contract price, or the price at which a farmer contracts
for a certain number of years to deliver a certain quan- tity of corn to a dealer. As a contract of
this kind saves the farmer the expense and trou- ble of marketing, the contract price is
generally lower than what is supposed to be the average market price. Mr King had judged
eight-and-twenty shillings the quarter to be at that time the ordinary contract price in years of
moderate plenty. Before the scarcity occasioned by the late extraordinary course of bad
seasons, it was, I have been assured, the ordinary contract price in all common years. In 1688
was granted the parliamentary bounty upon the exportation of corn. The country gentlemen,
who then composed a still greater proportion of the legislature than they do at present, had felt
that the money price of corn was falling. The bounty was an expedient to raise it artificially to
the high price at which it had frequently been sold in the times of Charles I. and II. It was to
take place, therefore, till wheat was so high as fortyeight shillings the quarter; that is, twenty
shillings, or 5-7ths dearer than Mr King had, in that very year, estimated the grower's price to
be in times of moderate plenty. If his calculations deserve any part of the reputation which they
have obtained very univ- ersally, eight-and-forty shillings the quarter was a price which,
without some such expe- dient as the bounty, could not at that time be expected, except in
years of extraordinary scarcity. But the government of King William was not then fully settled.
It was in no condition to refuse anything to the country gentlemen, from whom it was, at that
very time, soliciting the first establishment of the annual land-tax. The value of silver,
therefore, in proportion to that of corn, had probably risen somewhat before the end of the last
century; and it seems to have continued to do so during the course of the greater part of the
present, though the necessary operation of the bounty must have hindered that rise from being
so sensible as it otherwise would have been in the actual state of tillage. In plentiful years, the
bounty, by occasioning an extraordinary exportation, neces- sarily raises the price of corn
above what it otherwise would be in those years. To en- courage tillage, by keeping up the
price of corn, even in the most plentiful years, was the avowed end of the institution. In years
of great scarcity, indeed, the bounty has generally been suspended. It must, however, have had
some effect upon the prices of many of those years. By the ex- traordinary exportation which it
occasions in years of plenty, it must frequently hinder the plenty of one year from
compensating the scarcity of another. Both in years of plenty and in years of scarcity,
therefore, the bounty raises the price of corn above what it naturally would be in the actual
state of tillage. If during the sixty-four first years of the present century, therefore, the average
price has been lower than during the sixty-four last years of the last century, it must, in the
same state of tillage, have been much more so, had it not been for this operation of the
bounty. But, without the bounty, it may be said the state of tillage would not have been
the same. What may have been the effects of this institution upon the agriculture of
the country, I shall endeavour to explain hereafter, when I come to treat particularly
of bounties. I shall only observe at present, that this rise in the value of silver, in propor- tion to
that of corn, has not been peculiar to England. It has been observed to have taken place in
France during the same period, and nearly in the same proportion, too, by three very faithful,
diligent, and laborious collectors of the prices of corn, Mr Dupré de St Maur, Mr Messance,
and the author of the Essay on the Police of Grain. But in France, till 1764, the exportation of
grain was by law prohibited; and it is somewhat difficult to suppose, that nearly the same
diminution of price which took place in one country, notwithstanding this prohibition, should,
in another, be owing to the extraor- dinary encouragement given to exportation. It would be
more proper, perhaps, to consider this variation in the average money price of corn as the
effect rather of some gradual rise in the real value of silver in the European market, than of any
fall in the real average value of corn. Corn, it has already been observed, is, at distant periods
of time, a more accurate measure of value than ei- ther silver or, perhaps, any other
commodity. When, after the discovery of the abundant mines of America, corn rose to three
and four times its former money price, this change was universally ascribed, not to any rise in
the real value of corn, but to a fall in the real value of silver. If, during the sixty-four first years
of the present century, there- fore, the average money price of corn has fallen somewhat below
what it had been dur- ing the greater part of the last century, we should, in the same manner,
impute this change, not to any fall in the real value of corn, but to some rise in the real value of
sil- ver in the European market. The high price of corn during these ten or twelve years past,
indeed, has occasioned a suspicion that the real value of silver still continues to fall in the
European market. This high price of corn, however, seems evidently to have been the effect of
the extraordinary unfavourableness of the seasons, and ought, therefore, to be regarded, not as
a permanent, but as a transitory and occasional event. The seasons, for these ten  or twelve
years past, have been unfavourable through the greater part of Europe; and the disorders of
Poland have very much increased the scarcity in all those countries, which, in dear years, used
to be supplied from that market. So long a course of bad sea- sons, though not a very common
event, is by no means a singular one; and whoever has inquired much into the history of the
prices of corn in former times, will be at no loss to recollect several other examples of the same
kind. Ten years of extraordinary scarcity, besides, are not more wonderful than ten years of
extraordinary plenty. The low price of corn, from 1741 to 1750, both inclusive, may very well
be set in opposition to its high price during these last eight or ten years. From 1741 to 1750, the
average price of the quarter of nine bushels of the best wheat, at Windsor market, it
appears from the accounts of Eton college, was only £ 1:13:9 4/5, which is nearly 6s.3d.
below the average price of the sixty-four first years of the present century. The average price
of the quarter of eight bushels of middle wheat comes out, according to this account, to have
been, during these ten years, only £ 1:6:8. Between 1741 and 1750, however, the bounty must
have hindered the price of corn from falling so low in the home market as it naturally would
have done. During these ten years, the quantity of all sorts of grain exported, it appears from
the custom-house books, amounted to no less than 8,029,156 quarters, one bushel. The bounty
paid for this amounted to £ 1,514,962:17:4 1/2. In 1749, accordingly, Mr Pelham, at that
time prime minister, observed to the house of commons, that, for the three years preceding, a
very extraordinary sum had been paid as bounty for the exportation of corn. He had good
reason to make this observation, and in the following year he might have had still better. In that
single year, the bounty paid amounted to no less than £ 324,176:10:6. {See Tracts on the Corn
Trade, Tract 3,} It is unnecessary to observe how much this forced exportation must have
raised the price of corn above what it otherwise would have been in the home market. At the
end of the accounts annexed to this chapter the reader will find the partic-  ular account of those
ten years separated from the rest. He will find there, too, the par- ticular account of the
preceding ten years, of which the average is likewise below, though not so much below, the
general average of the sixty-four first years of the cen- tury. The year 1740, however, was a
year of extraordinary scarcity. These twenty years preceding 1750 may very well be set in
opposition to the twenty preceding 1770. As the former were a good deal below the general
average of the century, notwithstanding the intervention of one or two dear years; so the latter
have been a good deal above it, notwithstanding the intervention of one or two cheap ones, of
1759, for example. If the former have not been as much below the general average as the latter
have been above it, we ought probably to impute it to the bounty. The change has evidently
been too sudden to be ascribed to any change in the value of silver, which is always slow
and gradual. The suddenness of the effect can be accounted for only by a cause which
can operate suddenly, the accidental variations of the seasons. The money price of labour in
Great Britain has, indeed, risen during the course of the present century. This, however, seems
to be the effect, not so much of any diminu- tion in the value of silver in the European market,
as of an increase in the demand for labour in Great Britain, arising from the great, and almost
universal prosperity of the country. In France, a country not altogether so prosperous, the
money price of labour has, since the middle of the last century, been observed to sink gradually
with the aver- age money price of corn. Both in the last century and in the present, the day
wages of common labour are there said to have been pretty uniformly about the twentieth part
of the average price of the septier of wheat; a measure which contains a little more than four
Winchester bushels. In Great Britain, the real recompence of labour, it has already been shewn,
the real quantities of the necessaries and conveniencies of life which are given to the labourer,
has increased considerably during the course of the present cen- tury. The rise in its money
price seems to have been the effect, not of any diminution of the value of silver in the general
market of Europe, but of a rise in the real price of labour, in the particular market of Great
Britain, owing to the peculiarly happy circum- stances of the country. For some time after the
first discovery of America, silver would continue to sell at its former, or not much below its
former price. The profits of mining would for some time be very great, and much above their
natural rate. Those who imported that metal into Europe, however, would soon find that the
whole annual importation could not be disposed of at this high price. Silver would gradually
exchange for a smaller and a smaller quantity of goods. Its price would sink gradually lower
and lower, till it fell to its natural price; or to what was just sufficient to pay, according to their
natural rates, the wages of the labour, the profits of the stock, and the rent of the land, which
must be paid in order to bring it from the mine to the market. In the greater part of the
silver mines of Peru, the tax of the king of Spain, amounting to a tenth of the gross
produce, eats up, it has already been observed, the whole rent of the land. This tax was
originally a half; it soon afterwards fell to a third, then to a fifth, and at last to a tenth, at
which late it still continues. In the greater part of the silver mines of Peru, this, it seems, is
all that remains, after replacing the stock of the undertaker of the work, together with
its ordinary profits; and it seems to be universally acknowledged that these profits, which were
once very high, are now as low as they can well be, consistently with carrying on the
works. The tax of the king of Spain was reduced to a fifth of the registered silver in
1504 {Solorzano, vol, ii.}, one-and-forty years before 1545, the date of the discovery of
the mines of Potosi. In the course of ninety years, or before 1636, these mines, the most fertile
in all America, had time sufficient to produce their full effect, or to reduce the value of silver
in the European market as low as it could well fall, while it continued to pay this tax to the
king of Spain. Ninety years is time sufficient to reduce any com- modity, of which there is no
monopoly, to its natural price, or to the lowest price at which, while it pays a particular tax, it
can continue to be sold for any considerable time together. The price of silver in the European
market might, perhaps, have fallen still lower, and it might have become necessary either to
reduce the tax upon it, not only to one- tenth, as in 1736, but to one twentieth, in the same
manner as that upon gold, or to give up working the greater part of the American mines which
are now wrought. The grad- ual increase of the demand for silver, or the gradual enlargement
of the market for the produce of the silver mines of America, is probably the cause which has
prevented this from happening, and which has not only kept up the value of silver in the
European market, but has perhaps even raised it somewhat higher than it was about the
middle of the last century. Since the first discovery of America, the market for the produce of
its silver mines has been growing gradually more and more extensive. First, the market of
Europe has become gradually more and more extensive. Since the discovery of America, the
greater part of Europe has been much improved. Eng- land, Holland, France, and Germany;
even Sweden, Denmark, and Russia, have all ad- vanced considerably, both in agriculture and
in manufactures. Italy seems not to have gone backwards. The fall of Italy preceded the
conquest of Peru. Since that time it seems rather to have recovered a little. Spain and Portugal,
indeed, are supposed to have gone backwards. Portugal, however, is but a very small part of
Europe, and the de- clension of Spain is not, perhaps, so great as is commonly imagined. In the
beginning of the sixteenth century, Spain was a very poor country, even in comparison
with France, which has been so much improved since that time. It was the well known re- mark
of the emperor Charles V. who had travelled so frequently through both coun- tries, that every
thing abounded in France, but that every thing was wanting in Spain. The increasing produce
of the agriculture and manufactures of Europe must neces- sarily have required a gradual
increase in the quantity of silver coin to circulate it; and the increasing number of wealthy
individuals must have required the like increase in the quantity of their plate and other
ornaments of silver. Secondly, America is itself a new market, for the produce of its own silver
mines; and as its advances in agriculture, industry, and population, are much more rapid
than those of the most thriving countries in Europe, its demand must increase much
more rapidly. The English colonies are altogether a new market, which, partly for coin,
and partly for plate, requires a continual augmenting supply of silver through a great
conti- nent where there never was any demand before. The greater part, too, of the Spanish and
Portuguese colonies, are altogether new markets. New Granada, the Yucatan, Paraguay, and
the Brazils, were, before discovered by the Europeans, inhabited by sav- age nations, who had
neither arts nor agriculture. A considerable degree of both has now been introduced into all of
them. Even Mexico and Peru, though they cannot be considered as altogether new markets, are
certainly much more extensive ones than they ever were before. After all the wonderful tales
which have been published con- cerning the splendid state of those countries in ancient times,
whoever reads, with any degree of sober judgment, the history of their first discovery and
conquest, will evi- dently discern that, in arts, agriculture, and commerce, their inhabitants
were much more ignorant than the Tartars of the Ukraine are at present. Even the Peruvians,
the more civilized nation of the two, though they made use of gold and silver as
ornaments, had no coined money of any kind. Their whole commerce was carried on by barter,
and there was accordingly scarce any division of labour among them. Those who cultivated the
ground, were obliged to build their own houses, to make their own household furniture, their
own clothes, shoes, and instruments of agriculture. The few artificers among them are said to
have been all maintained by the sovereign, the nobles, and the priests, and were probably their
servants or slaves. All the ancient arts of Mexico and Peru have never furnished one single
manufacture to Europe. The Spanish armies, though they scarce ever exceeded five hundred
men, and frequently did not amount to half that number, found almost everywhere great
difficulty in procuring subsistence. The famines which they are said to have occasioned almost
wherever they went, in countries, too, which at the same time are represented as very populous
and well culti- vated, sufficiently demonstrate that the story of this populousness and high
cultivation is in a great measure fabulous. The Spanish colonies are under a government in
many respects less favourable to agriculture, improvement, and population, than that of
the English colonies. They seem, however, to be advancing in all those much more
rapidly than any country in Europe. In a fertile soil and happy climate, the great abundance and
cheapness of land, a circumstance common to all new colonies, is, it seems, so great an
advantage, as to compensate many defects in civil government. Frezier, who visited Peru in
1713, represents Lima as containing between twenty-five and twenty- eight thousand
inhabitants. Ulloa, who resided in the same country between 1740 and 1746, represents it as
containing more than fifty thousand. The difference in their ac- counts of the populousness of
several other principal towns of Chili and Peru is nearly the same; and as there seems to be no
reason to doubt of the good information of either, it marks an increase which is scarce inferior
to that of the English colonies. America, therefore, is a new market for the produce of its own
silver mines, of which the demand must increase much more rapidly than that of the most
thriving country in Europe. Thirdly, the East Indies is another market for the produce of the
silver mines of America, and a market which, from the time of the first discovery of those
mines, has been continually taking off a greater and a greater quantity of silver. Since that
time, the direct trade between America and the East Indies, which is carried on by means of
the Acapulco ships, has been continually augmenting, and the indirect intercourse by the way
of Europe has been augmenting in a still greater proportion. During the sixteenth century, the
Portuguese were the only European nation who carried on any regular trade to the East Indies.
In the last years of that century, the Dutch began to encroach upon this monopoly, and in a few
years expelled them from their principal settlements in India. During the greater part of the last
century, those two nations divided the most considerable part of the East India trade between
them; the trade of the Dutch contin- ually augmenting in a still greater proportion than that of
the Portuguese declined. The English and French carried on some trade with India in the last
century, but it has been greatly augmented in the course of the present. The East India trade of
the Swedes and Danes began in the course of the present century. Even the Muscovites now
trade regu- larly with China, by a sort of caravans which go over land through Siberia and
Tartary to Pekin. The East India trade of all these nations, if we except that of the French,
which the last war had well nigh annihilated, has been almost continually augmenting.
The increasing consumptions of East India goods in Europe is, it seems, so great, as to af- ford
a gradual increase of employment to them all. Tea, for example, was a drug very lit- tle used in
Europe, before the middle of the last century. At present, the value of the tea annually imported
by the English East India company, for the use of their own coun- trymen, amounts to more
than a million and a half a year; and even this is not enough; a great deal more being constantly
smuggled into the country from the ports of Hol- land, from Gottenburgh in Sweden, and from
the coast of France, too, as long as the French East India company was in prosperity. The
consumption of the porcelain of China, of the spiceries of the Moluccas, of the piece goods of
Bengal, and of innu- merable other articles, has increased very nearly in a like proportion. The
tonnage, ac- cordingly, of all the European shipping employed in the East India trade, at any
one time during the last century, was not, perhaps, much greater than that of the English East
India company before the late reduction of their shipping. But in the East Indies, particularly in
China and Indostan, the value of the precious metals, when the Europeans first began to trade
to those countries, was much higher than in Europe; and it still continues to be so. In rice
countries, which generally yield two, sometimes three crops in the year, each of them more
plentiful than any common crop of corn, the abundance of food must be much greater than in
any corn country of equal extent. Such countries are accordingly much more populous. In
them, too, the rich, having a greater superabundance of food to dispose of beyond what they
them- selves can consume, have the means of purchasing a much greater quantity of the labour
of other people. The retinue of a grandee in China or Indostan accordingly is, by all accounts,
much more numerous and splendid than that of the richest subjects in Europe. The same
superabundance of food, of which they have the disposal, enables them to give a greater
quantity of it for all those singular and rare productions which nature furnishes but in very
small quantities; such as the precious metals and the pre- cious stones, the great objects of the
competition of the rich. Though the mines, there- fore, which supplied the Indian market, had
been as abundant as those which supplied the European, such commodities would naturally
exchange for a greater quantity of food in India than in Europe. But the mines which supplied
the Indian market with the precious metals seem to have been a good deal less abundant, and
those which sup- plied it with the precious stones a good deal more so, than the mines which
supplied the European. The precious metals, therefore, would naturally exchange in India for
a somewhat greater quantity of the precious stones, and for a much greater quantity of food
than in Europe. The money price of diamonds, the greatest of all superfluities, would be
somewhat lower, and that of food, the first of all necessaries, a great deal lower in the one
country than in the other. But the real price of labour, the real quantity of the necessaries of life
which is given to the labourer, it has already been observed, is lower both in China and
Indostan, the two great markets of India, than it is through the greater part of Europe. The
wages of the labourer will there purchase a smaller quantity of food: and as the money price of
food is much lower in India than in Europe, the money price of labour is there lower upon a
double account; upon account both of the small quantity of food which it will purchase, and of
the low price of that food. But in countries of equal art and industry, the money price of the
greater part of manufactures will be in proportion to the money price of labour; and in
manufacturing art and indus- try, China and Indostan, though inferior, seem not to be much
inferior to any part of Europe. The money price of the greater part of manufactures, therefore,
will naturally be much lower in those great empires than it is anywhere in Europe. Through
the greater part of Europe, too, the expense of land-carriage increases very much both the real
and nominal price of most manufactures. It costs more labour, and therefore more money, to
bring first the materials, and afterwards the complete manufacture to mar- ket. In China and
Indostan, the extent and variety of inland navigations save the greater part of this labour, and
consequently of this money, and thereby reduce still lower both the real and the nominal price
of the greater part of their manufactures. Upon all these accounts, the precious metals are a
commodity which it always has been, and still con- tinues to be, extremely advantageous to
carry from Europe to India. There is scarce any commodity which brings a better price there;
or which, in proportion to the quantity of labour and commodities which it costs in Europe,
will purchase or command a greater quantity of labour and commodities in India. It is more
advantageous, too, to carry sil- ver thither than gold; because in China, and the greater part of
the other markets of India, the proportion between fine silver and fine gold is but as ten, or at
most as twelve to one; whereas in Europe it is as fourteen or fifteen to one. In China, and the
greater part of the other markets of India, ten, or at most twelve ounces of silver, will
purchase an ounce of gold; in Europe, it requires from fourteen to fifteen ounces. In the
cargoes, therefore, of the greater part of European ships which sail to India, silver has
generally been one of the most valuable articles. It is the most valuable article in the
Acapulco ships which sail to Manilla. The silver of the new continent seems, in this manner,
to be one of the principal commodities by which the commerce between the two extrem- ities
of the old one is carried on; and it is by means of it, in a great measure, that those distant parts
of the world are connected with one another. In order to supply so very widely extended a
market, the quantity of silver annually brought from the mines must not only be sufficient to
support that continued increase, both of coin and of plate, which is required in all thriving
countries; but to repair that continual waste and consumption of silver which takes place in all
countries where that metal is used. The continual consumption of the precious metals in coin
by wearing, and in plate both by wearing and cleaning, is very sensible; and in commodities of
which the use is so very widely extended, would alone require a very great annual supply. The
consump- tion of those metals in some particular manufactures, though it may not perhaps
be greater upon the whole than this gradual consumption, is, however, much more sensible, as
it is much more rapid. In the manufactures of Birmingham alone, the quantity of gold and
silver annually employed in gilding and plating, and thereby dis- qualified from ever
afterwards appearing in the shape of those metals, is said to amount to more than fifty thousand
pounds sterling. We may from thence form some notion how great must be the annual
consumption in all the different parts of the world, either in manufactures of the same kind
with those of Birmingham, or in laces, embroideries, gold and silver stuffs, the gilding of
books, furniture, etc. A considerable quantity, too, must be annually lost in transporting those
metals from one place to an- other both by sea and by land. In the greater part of the
governments of Asia, besides, the almost universal custom of concealing treasures in the
bowels of the earth, of which the knowledge frequently dies with the person who makes the
concealment, must occa- sion the loss of a still greater quantity.  

The quantity of gold and silver imported at both Cadiz and Lisbon (including not only what
comes under register, but what may be supposed to be smuggled) amounts, according to the
best accounts, to about six millions sterling a-year. According to Mr Meggens {Postscript to
the Universal Merchant p. 15 and 16. This postscript was not printed till 1756, three years after
the publication of the book, which has never had a second edition. The postscript is, therefore,
to be found in few copies; it corrects several errors in the book.}, the annual importation of the
precious metals into Spain, at an average of six years, viz. from 1748 to 1753, both inclusive,
and into Por- tugal, at an average of seven years, viz. from 1747 to 1753, both inclusive,
amounted in silver to 1,101,107 pounds weight, and in gold to 49,940 pounds weight. The
silver, at sixty two shillings the pound troy, amounts to £ 3,413,431:10s. sterling. The gold,
at forty-four guineas and a half the pound troy, amounts to £ 2,333,446:14s. sterling.
Both together amount to £ 5,746,878:4s. sterling. The account of what was imported
under register, he assures us, is exact. He gives us the detail of the particular places from  which
the gold and silver were brought, and of the particular quantity of each metal, which, according
to the register, each of them afforded. He makes an allowance, too, for  the quantity of each
metal which, he supposes, may have been smuggled. The great experience of this judicious
merchant renders his opinion of considerable weight. According to the eloquent, and
sometimes well-informed, author of the Philo- sophical and Political History of the
Establishment of the Europeans in the two Indies, the annual importation of registered gold and
silver into Spain, at an average of eleven years, viz. from 1754 to 1764, both inclusive,
amounted to 13,984,185 3/5 piastres of ten reals. On account of what may have been
smuggled, however, the whole annual impor- tation, he supposes, may have amounted to
seventeen millions of piastres, which, at 4s. 6d. the piastre, is equal to £ 3,825,000 sterling. He
gives the detail, too, of the particular places from which the gold and silver were brought, and
of the particular quantities of each metal, which according to the register, each of them
afforded. He informs us, too, that if we were to judge of the quantity of gold annually imported
from the Brazils to Lisbon, by the amount of the tax paid to the king of Portugal, which it
seems, is one- fifth of the standard metal, we might value it at eighteen millions of cruzadoes,
or forty- five millions of French livres, equal to about twenty millions sterling. On account
of what may have been smuggled, however, we may safely, he says, add to this sum an eighth
more, or £ 250,000 sterling, so that the whole will amount to £ 2,250,000 ster- ling. According
to this account, therefore, the whole annual importation of the precious metals into both Spain
and Portugal, mounts to about £ 6,075,000 sterling. Several other very well authenticated,
though manuscript accounts, I have been as- sured, agree in making this whole annual
importation amount, at an average, to about six millions sterling; sometimes a little more,
sometimes a little less. The annual importation of the precious metals into Cadiz and Lisbon,
indeed, is not equal to the whole annual produce of the mines of America. Some part is
sent annually by the Acapulco ships to Manilla; some part is employed in a contraband  trade,
which the Spanish colonies carry on with those of other European nations; and some part, no
doubt, remains in the country. The mines of America, besides, are by no means the only gold
and silver mines in the world. They, are, however, by far the most abundant. The produce of all
the other mines which are known is insignificant, it is ac- knowledged, in comparison with
their's; and the far greater part of their produce, it is likewise acknowledged, is annually
imported into Cadiz and Lisbon. But the consump- tion of Birmingham alone, at the rate of
fifty thousand pounds a-year, is equal to the hundred-and-twentieth part of this annual
importation, at the rate of six millions a-year. The whole annual consumption of gold and
silver, therefore, in all the different coun- tries of the world where those metals are used, may,
perhaps, be nearly equal to the whole annual produce. The remainder may be no more than
sufficient to supply the in- creasing demand of all thriving countries. It may even have fallen
so far short of this demand, as somewhat to raise the price of those metals in the European
market. The quantity of brass and iron annually brought from the mine to the market, is out of
all proportion greater than that of gold and silver. We do not, however, upon this account,
imagine that those coarse metals are likely to multiply beyond the demand, or to become
gradually cheaper and cheaper. Why should we imagine that the precious metals are likely to
do so? The coarse metals, indeed, though harder, are put to much harder uses, and, as they are
of less value, less care is employed in their preservation. The precious metals, however, are not
necessarily immortal any more than they, but are liable, too, to be lost, wasted, and consumed,
in a great variety of ways. The price of all metals, though liable to slow and gradual variations,
varies less from year to year than that of almost any other part of the rude produce of land: and
the price of the precious metals is even less liable to sudden variations than that of the  coarse
ones. The durableness of metals is the foundation of this extraordinary steadi- ness of price.
The corn which was brought to market last year will be all, or almost all, consumed, long
before the end of this year. But some part of the iron which was  brought from: the mine two or
three hundred years ago, may be still in use, and, per- haps, some part of the gold which was
brought from it two or three thousand years ago. The different masses of corn, which, in
different years, must supply the consumption of the world, will always be nearly in proportion
to the respective produce of those dif- ferent years. But the proportion between the different
masses of iron which may be in use in two different years, will be very little affected by any
accidental difference in the produce of the iron mines of those two years; and the proportion
between the masses of gold will be still less affected by any such difference in the produce of
the gold mines. Though the produce of the greater part of metallic mines, therefore, varies,
perhaps, still more from year to year than that of the greater part of corn fields, those
variations have not the same effect upon the price of the one species of commodities as upon
that of the other. Variations in the Proportion between the respective Values of Gold and
Silver. Before the discovery of the mines of America, the value of fine gold to fine silver was
regulated in the different mines of Europe, between the proportions of one to ten and one to
twelve; that is, an ounce of fine gold was supposed to be worth from ten to  twelve ounces of
fine silver. About the middle of the last century, it came to be regu- lated, between the
proportions of one to fourteen and one to fifteen; that is, an ounce of fine gold came to be
supposed worth between fourteen and fifteen ounces of fine silver. Gold rose in its nominal
value, or in the quantity of silver which was given for it. Both metals sunk in their real value,
or in the quantity of labour which they could purchase; but silver sunk more than gold. Though
both the gold and silver mines of America ex- ceeded in fertility all those which had ever been
known before, the fertility of the silver mines had, it seems, been proportionally still greater
than that of the gold ones. The great quantities of silver carried annually from Europe to India,
have, in some of the English settlements, gradually reduced the value of that metal in
proportion to gold. In the mint of Calcutta, an ounce of fine gold is supposed to be worth
fifteen ounces of fine silver, in the same manner as in Europe. It is in the mint, perhaps,
rated too high for the value which it bears in the market of Bengal. In China, the proportion of
gold to silver still continues as one to ten, or one to twelve. In Japan, it is said to be as  one to
eight. The proportion between the quantities of gold and silver annually imported into Europe,
according to Mr Meggens' account, is as one to twenty-two nearly; that is, for  one ounce of
gold there are imported a little more than twenty-two ounces of silver. The great quantity of
silver sent annually to the East Indies reduces, he supposes, the quan- tities of those metals
which remain in Europe to the proportion of one to fourteen or fifteen, the proportion of their
values. The proportion between their values, he seems to think, must necessarily be the same
as that between their quantities, and would there- fore be as one to twenty-two, were it not for
this greater exportation of silver. But the ordinary proportion between the respective values of
two commodities is not necessarily the same as that between the quantities of them which are
commonly in the market. The price of an ox, reckoned at ten guineas, is about three score
times the price of a lamb, reckoned at 3s. 6d. It would be absurd, however, to infer from
thence, that there are commonly in the market three score lambs for one ox; and it would
be just as absurd to infer, because an ounce of gold will commonly purchase from four- teen or
fifteen ounces of silver, that there are commonly in the market only fourteen or fifteen ounces
of silver for one ounce of gold. The quantity of silver commonly in the market, it is probable,
is much greater in proportion to that of gold, than the value of a certain quantity of gold is to
that of an equal quantity of silver. The whole quantity of a cheap commodity brought to market
is commonly not only greater, but of greater value, than the whole quantity of a dear one. The
whole quantity of bread annually brought to market, is not only greater, but of greater value,
than the whole quantity of butcher's meat; the whole quantity of butcher's meat, than the whole
quantity of poultry; and the whole quantity of poultry, than the whole quantity of wild fowl.
There are so many more purchasers for the cheap than for the dear commodity, that, not only a
greater quantity of it, but a greater value can commonly be disposed of. The whole quantity,
therefore, of the cheap commodity, must commonly be greater in proportion to the whole
quantity of the dear one, than the value of a certain quantity of the dear one, is to the value of
an equal quantity of the cheap one. When we compare the precious metals with one another,
silver is a cheap, and gold a dear commodity. We ought naturally to expect, therefore, that
there should always be in the market, not only a greater quantity, but a greater value of silver
than of gold. Let any man, who has a little of both, compare his own silver with his gold
plate, and he will probably find, that not only the quantity, but the value of the former,
greatly exceeds that of the latter. Many people, besides, have a good deal of silver who have
no gold plate, which, even with those who have it, is generally confined to watch-cases,  snuff-
boxes, and such like trinkets, of which the whole amount is seldom of great value. In the
British coin, indeed, the value of the gold preponderates greatly, but it is not so  in that of all
countries. In the coin of some countries, the value of the two metals is nearly equal. In the
Scotch coin, before the union with England, the gold preponderated very little, though it did
somewhat {See Ruddiman's Preface to Anderson's Diplomata, etc. Scotiae.}, as it appears by
the accounts of the mint. In the coin of many countries the silver preponderates. In France, the
largest sums are commonly paid in that metal, and it is there difficult to get more gold than
what is necessary to carry about in your pocket. The superior value, however, of the silver
plate above that of the gold, which takes place in all countries, will much more than
compensate the preponderancy of the gold coin above the silver, which takes place only in
some countries. Though, in one sense of the word, silver always has been, and probably always
will be, much cheaper than gold; yet, in another sense, gold may perhaps, in the present state of
the Spanish market, be said to be somewhat cheaper than silver. A commodity may be said to
be dear or cheap not only according to the absolute greatness or small- ness of its usual price,
but according as that price is more or less above the lowest for which it is possible to bring it to
market for any considerable time together. This lowest price is that which barely replaces, with
a moderate profit, the stock which must be em- ployed in bringing the commodity thither. It is
the price which affords nothing to the landlord, of which rent makes not any component part,
but which resolves itself alto- gether into wages and profit. But, in the present state of the
Spanish market, gold is cer- tainly somewhat nearer to this lowest price than silver. The tax of
the king of Spain upon gold is only one-twentieth part of the standard metal, or five per cent.;
whereas his tax upon silver amounts to one-tenth part of it, or to ten per cent. In these taxes,
too, it has already been observed, consists the whole rent of the greater part of the gold
and silver mines of Spanish America; and that upon gold is still worse paid than that
upon silver. The profits of the undertakers of gold mines, too, as they more rarely make a
for- tune, must, in general, be still more moderate than those of the undertakers of silver mines.
The price of Spanish gold, therefore, as it affords both less rent and less profit, must, in the
Spanish market, be somewhat nearer to the lowest price for which it is possible to bring it
thither, than the price of Spanish silver. When all expenses are com- puted, the whole quantity
of the one metal, it would seem, cannot, in the Spanish mar- ket, be disposed of so
advantageously as the whole quantity of the other. The tax, in- deed, of the king of Portugal
upon the gold of the Brazils, is the same with the ancient tax of the king of Spain upon the
silver of Mexico and Peru; or one-fifth part of the stan- dard metal. It may therefore be
uncertain, whether, to the general market of Europe, the whole mass of American gold comes
at a price nearer to the lowest for which it is possible to bring it thither, than the whole mass of
American silver. The price of diamonds and other precious stones may, perhaps, be still nearer
to the lowest price at which it is possible to bring them to market, than even the price
of gold. Though it is not very probable that any part of a tax, which is not only imposed upon
one of the most proper subjects of taxation, a mere luxury and superfluity, but which affords so
very important a revenue as the tax upon silver, will ever be given up as long as it is possible to
pay it; yet the same impossibility of paying it, which, in 1736. made it necessary to reduce it
from one-fifth to one-tenth, may in time make it neces- sary to reduce it still further; in the
same manner as it made it necessary to reduce the tax upon gold to one-twentieth. That the
silver mines of Spanish America, like all other mines, become gradually more expensive in the
working, on account of the greater depths at which it is necessary to carry on the works, and of
the greater expense of drawing out the water, and of supplying them with fresh air at those
depths, is ac- knowledged by everybody who has inquired into the state of those mines. These
causes, which are equivalent to a growing scarcity of silver (for a commodity may be said to
grow scarcer when it becomes more difficult and expensive to collect a certain quantity of it),
must, in time, produce one or other of the three following events: The increase of the expense
must either, first, be compensated altogether by a propor- tionable increase in the price of the
metal; or, secondly, it must be compensated alto- gether by a proportionable diminution of the
tax upon silver; or, thirdly, it must be compensated partly by the one and partly by the other of
those two expedients. This third event is very possible. As gold rose in its price in proportion
to silver, notwith- standing a great diminution of the tax upon gold, so silver might rise in its
price in pro- portion to labour and commodities, notwithstanding an equal diminution of the
tax upon silver. Such successive reductions of the tax, however, though they may not prevent
alto- gether, must certainly retard, more or less, the rise of the value of silver in the Euro-  pean
market. In consequence of such reductions, many mines may be wrought which could not be
wrought before, because they could not afford to pay the old tax; and the quantity of silver
annually brought to market, must always be somewhat greater, and, therefore, the value of any
given quantity somewhat less, than it otherwise would have been. In consequence of the
reduction in 1736, the value of silver in the European market, though it may not at this day be
lower than before that reduction, is, probably, at least ten per cent. lower than it would have
been, had the court of Spain continued to exact the old tax. That, notwithstanding this
reduction, the value of silver has, during the course of the present century, begun to rise
somewhat in the European market, the facts and arguments which have been alleged above,
dispose me to believe, or more properly to suspect and conjecture; for the best opinion which I
can form upon this subject, scarce, perhaps, deserves the name of belief. The rise, indeed,
supposing there has been any, has hitherto been so very small, that after all that has been said,
it may, perhaps, appear to many people uncertain, not only whether this event has
actually taken place, but whether the contrary may not have taken place, or whether the value
of silver may not still continue to fall in the European market. It must be observed, however,
that whatever may be the supposed annual impor- tation of gold and silver, there must be a
certain period at which the annual consump- tion of those metals will be equal to that annual
importation. Their consumption must increase as their mass increases, or rather in a much
greater proportion. As their mass increases, their value diminishes. They are more used, and
less cared for, and their con- sumption consequently increases in a greater proportion than their
mass. After a cer- tain period, therefore, the annual consumption of those metals must, in this
manner, become equal to their annual importation, provided that importation is not
continually increasing; which, in the present times, is not supposed to be the case. If, when the
annual consumption has become equal to the annual importation, the annual importation
should gradually diminish, the annual consumption may, for some time, exceed the annual
importation. The mass of those metals may gradually and insensibly diminish, and their value
gradually and insensibly rise, till the annual importation becoming again stationary, the annual
consumption will gradually and insensibly accommodate itself to what that annual importation
can maintain. Grounds of the suspicion that the Value of Silver still continues to decrease. The
increase of the wealth of Europe, and the popular notion, that as the quantity of the precious
metals naturally increases with the increase of wealth, so their value diminishes as their
quantity increases, may, perhaps, dispose many people to believe that their value still continues
to fall in the European market; and the still gradually in- creasing price of many parts of the
rude produce of land may confirm them still farther in this opinion. That that increase in the
quantity of the precious metals, which arises in any coun- try from the increase of wealth, has
no tendency to diminish their value, I have endeav- oured to shew already. Gold and silver
naturally resort to a rich country, for the same reason that all sorts of luxuries and curiosities
resort to it; not because they are cheaper there than in poorer countries, but because they are
dearer, or because a better price is given for them. It is the superiority of price which attracts
them; and as soon as that su- periority ceases, they necessarily cease to go thither. If you
except corn, and such other vegetables as are raised altogether by human industry, that all other
sorts of rude produce, cattle, poultry, game of all kinds, the use- ful fossils and minerals of the
earth, etc. naturally grow dearer, as the society advances in wealth and improvement, I have
endeavoured to shew already. Though such com- modities, therefore, come to exchange for a
greater quantity of silver than before, it will not from thence follow that silver has become
really cheaper, or will purchase less labour than before; but that such commodities have
become really dearer, or will pur- chase more labour than before. It is not their nominal price
only, but their real price, which rises in the progress of improvement. The rise of their nominal
price is the ef- fect, not of any degradation of the value of silver, but of the rise in their real
price. Different Effects of the Progress of Improvement upon three different sorts of
rude Produce. These different sorts of rude produce may be divided into three classes. The
first comprehends those which it is scarce in the power of human industry to multiply at
all. The second, those which it can multiply in proportion to the demand. The third, those in
which the efficacy of industry is either limited or uncertain. In the progress of wealth and
improvement, the real price of the first may rise to any degree of extravagance, and  seems not
to be limited by any certain boundary. That of the second, though it may rise  greatly, has,
however, a certain boundary, beyond which it cannot well pass for any con- siderable time
together. That of the third, though its natural tendency is to rise in the progress of
improvement, yet in the same degree of improvement it may sometimes happen even to fall,
sometimes to continue the same, and sometimes to rise more or less, according as different
accidents render the efforts of human industry, in multi- plying this sort of rude produce, more
or less successful. First Sort.—The first sort of rude produce, of which the price rises in the
progress of improvement, is that which it is scarce in the power of human industry to multiply
at all. It consists in those things which nature produces only in certain quantities, and which
being of a very perishable nature, it is impossible to accumulate together the pro- duce of many
different seasons. Such are the greater part of rare and singular birds and fishes, many different
sorts of game, almost all wild-fowl, all birds of passage in partic- ular, as well as many other
things. When wealth, and the luxury which accompanies it, increase, the demand for these is
likely to increase with them, and no effort of human industry may be able to increase the
supply much beyond what it was before this in- crease of the demand. The quantity of such
commodities, therefore, remaining the same, or nearly the same, while the competition to
purchase them is continually in- creasing, their price may rise to any degree of extravagance,
and seems not to be limited by any certain boundary. If woodcocks should become so
fashionable as to sell for twen- ty guineas a-piece, no effort of human industry could increase
the number of those brought to market, much beyond what it is at present. The high price paid
by the Ro- mans, in the time of their greatest grandeur, for rare birds and fishes, may in this
man- ner easily be accounted for. These prices were not the effects of the low value of silver  in
those times, but of the high value of such rarities and curiosities as human industry could not
multiply at pleasure. The real value of silver was higher at Rome, for some- time before, and
after the fall of the republic, than it is through the greater part of Eu- rope at present. Three
sestertii equal to about sixpence sterling, was the price which the republic paid for the modius
or peck of the tithe wheat of Sicily. This price, however, was probably below the average
market price, the obligation to deliver their wheat at this rate being considered as a tax upon
the Sicilian farmers. When the Romans, there- fore, had occasion to order more corn than the
tithe of wheat amounted to, they were bound by capitulation to pay for the surplus at the rate of
four sestertii, or eightpence sterling the peck; and this had probably been reckoned the
moderate and reasonable, that is, the ordinary or average contract price of those times; it is
equal to about one- and-twenty shillings the quarter. Eight-and-twenty shillings the quarter
was, before the late years of scarcity, the ordinary contract price of English wheat, which in
quality is inferior to the Sicilian, and generally sells for a lower price in the European market.
The value of silver, therefore, in those ancient times, must have been to its value in the  present,
as three to four inversely; that is, three ounces of silver would then have pur- chased the same
quantity of labour and commodities which four ounces will do at present. When we read in
Pliny, therefore, that Seius {Lib. X, c. 29.} bought a white nightingale, as a present for the
empress Agrippina, at the price of six thousand ses- tertii, equal to about fifty pounds of our
present money; and that Asinius Celer {Lib. IX, c. 17.} purchased a surmullet at the price of
eight thousand sestertii, equal to about sixty-six pounds thirteen shillings and fourpence of our
present money; the extrav- agance of those prices, how much soever it may surprise us, is apt,
notwithstanding, to appear to us about one third less than it really was. Their real price, the
quantity of labour and subsistence which was given away for them, was about one-third more
than their nominal price is apt to express to us in the present times. Seius gave for the
night- ingale the command of a quantity of labour and subsistence, equal to what £ 66:13:
4d. would purchase in the present times; and Asinius Celer gave for a surmullet the com- mand
of a quantity equal to what £ 88:17: 9d. would purchase. What occasioned the ex- travagance
of those high prices was, not so much the abundance of silver, as the abun- dance of labour and
subsistence, of which those Romans had the disposal, beyond what was necessary for their
own use. The quantity of silver, of which they had the disposal, was a good deal less than what
the command of the same quantity of labour and subsis- tence would have procured to them in
the present times. Second sort.—The second sort of rude produce, of which the price rises in
the progress of improvement, is that which human industry can multiply in proportion to the
demand. It consists in those useful plants and animals, which, in uncultivated countries, nature
produces with such profuse abundance, that they are of little or no value, and which, as
cultivation advances, are therefore forced to give place to some more profitable produce.
During a long period in the progress of improvement, the quantity of these is continually
diminishing, while, at the same time, the demand for them is continually increasing. Their real
value, therefore, the real quantity of labour which they will purchase or command, gradually
rises, till at last it gets so high as to render them as profitable a produce as any thing else which
human industry can raise upon the most fertile and best cultivated land. When it has got so
high, it cannot well go higher. If it did, more land and more industry would soon be employed
to increase their quantity. When the price of cattle, for example, rises so high, that it is as
profitable to culti- vate land in order to raise food for them as in order to raise food for man, it
cannot well go higher. If it did, more corn land would soon be turned into pasture. The
extension of tillage, by diminishing the quantity of wild pasture, diminishes the quantity
of butcher's meat, which the country naturally produces without labour or cultivation; and, by
increasing the number of those who have either corn, or, what comes to the same thing, the
price of corn, to give in exchange for it, increases the demand. The price of butcher's meat,
therefore, and, consequently, of cattle, must gradually rise, till it gets so high, that it becomes
as profitable to employ the most fertile and best cultivated lands in raising food for them as in
raising corn. But it must always be late in the progress of improvement before tillage can be so
far extended as to raise the price of cattle to this height; and, till it has got to this height, if the
country is advancing at all, their price must be continually rising. There are, perhaps, some
parts of Europe in which the price of cattle has not yet got to this height. It had not got to this
height in any part of Scotland before the Union. Had the Scotch cattle been always confined
to the market of Scotland, in a country in which the quantity of land, which can be applied to
no other purpose but the feeding of cattle, is so great in proportion to what can be ap- plied to
other purposes, it is scarce possible, perhaps, that their price could ever have risen so high as to
render it profitable to cultivate land for the sake of feeding them. In England, the price of
cattle, it has already been observed, seems, in the neighbourhood of London, to have got to this
height about the beginning of the last century; but it was much later, probably, before it got
through the greater part of the remoter counties, in some of which, perhaps, it may scarce yet
have got to it. Of all the different substances, however, which compose this second sort of rude
produce, cattle is, perhaps, that of which the price, in the progress of improvement, rises first to
this height. Till the price of cattle, indeed, has got to this height, it seems scarce possible
that the greater part, even of those lands which are capable of the highest cultivation, can
be completely cultivated. In all farms too distant from any town to carry manure from it, that
is, in the far greater part of those of every extensive country, the quantity of well cultivated
land must be in proportion to the quantity of manure which the farm itself produces; and this,
again, must be in proportion to the stock of cattle which are main- tained upon it. The land is
manured, either by pasturing the cattle upon it, or by feed- ing them in the stable, and from
thence carrying out their dung to it. But unless the price of the cattle be sufficient to pay both
the rent and profit of cultivated land, the farmer cannot afford to pasture them upon it; and he
can still less afford to feed them in the stable. It is with the produce of improved and cultivated
land only that cattle can be fed in the stable; because, to collect the scanty and scattered
produce of waste and unimproved lands, would require too much labour, and be too expensive.
It the price of the cattle, therefore, is not sufficient to pay for the produce of improved and
cuitivated land, when they are allowed to pasture it, that price will be still less sufficient to pay
for that produce, when it must be collected with a good deal of additional labour, and brought
into the stable to them. In these circumstances, therefore, no more cattle can with profit be fed
in the stable than what are necessary for tillage. But these can never afford manure enough for
keeping constantly in good condition all the lands which they are capable of cultivating. What
they afford, being insufficient for the whole farm, will naturally be reserved for the lands to
which it can be most advantageously or conve- niently applied; the most fertile, or those,
perhaps, in the neighbourhood of the farm- yard. These, therefore, will be kept constantly in
good condition, and fit for tillage. The rest will, the greater part of them, be allowed to lie
waste, producing scarce any thing but some miserable pasture, just sufficient to keep alive a
few straggling, half-starved cattle; the farm, though much overstocked in proportion to what
would be necessary for its complete cultivation, being very frequently overstocked in
proportion to its actual produce. A portion of this waste land, however, after having been
pastured in this wretched manner for six or seven years together, may be ploughed up, when it
will yield, perhaps, a poor crop or two of bad oats, or of some other coarse grain; and
then, being entirely exhausted, it must be rested and pastured again as before, and
another portion ploughed up, to be in the same manner exhausted and rested again in its
turn. Such, accordingly, was the general system of management all over the low country
of Scotland before the Union. The lands which were kept constantly well manured and in good
condition seldom exceeded a third or fourth part of the whole farm, and some- times did not
amount to a fifth or a sixth part of it. The rest were never manured, but a  certain portion of
them was in its turn, notwithstanding, regularly cultivated and ex- hausted. Under this system
of management, it is evident, even that part of the lands of Scotland which is capable of good
cultivation, could produce but little in comparison of what it may be capable of producing. But
how disadvantageous soever this system may appear, yet, before the Union, the low price of
cattle seems to have rendered it almost unavoidable. If, notwithstanding a great rise in the
price, it still continues to prevail through a considerable part of the country, it is owing in many
places, no doubt, to ignorance and attachment to old customs, but, in most places, to the
unavoidable ob- structions which the natural course of things opposes to the immediate or
speedy estab- lishment of a better system: first, to the poverty of the tenants, to their not having
yet had time to acquire a stock of cattle sufficient to cultivate their lands more completely, the
same rise of price, which would render it advantageous for them to maintain a greater stock,
rendering it more difficult for them to acquire it; and, secondly, to their not having yet had time
to put their lands in condition to maintain this greater stock properly, supposing they were
capable of acquiring it. The increase of stock and the improvement of land are two events
which must go hand in hand, and of which the one can nowhere much outrun the other.
Without some increase of stock, there can be scarce any improvement of land, but there can be
no considerable increase of stock, but in consequence of a considerable improvement of land;
because otherwise the land could not maintain it. These natural obstructions to the
establishment of a better sys- tem, cannot be removed but by a long course of frugality and
industry; and half a cen- tury or a century more, perhaps, must pass away before the old
system, which is wear- ing out gradually, can be completely abolished through all the different
parts of the country. Of all the commercial advantages, however, which Scotland has derived
from the Union with England, this rise in the price of cattle is, perhaps, the greatest. It has  not
only raised the value of all highland estates, but it has, perhaps, been the principal cause of the
improvement of the low country. In all new colonies, the great quantity of waste land, which
can for many years be applied to no other purpose but the feeding of cattle, soon renders them
extremely abundant; and in every thing great cheapness is the necessary consequence of
great abundance. Though all the cattle of the European colonies in America were
originally carried from Europe, they soon multiplied so much there, and became of so little
value, that even horses were allowed to run wild in the woods, without any owner thinking
it worth while to claim them. It must be a long time after the first establishment of
such colonies, before it can become profitable to feed cattle upon the produce of
cultivated land. The same causes, therefore, the want of manure, and the disproportion
between the stock employed in cultivation and the land which it is destined to cultivate, are
likely to introduce there a system of husbandry, not unlike that which still continues to
take place in so many parts of Scotland. Mr Kalm, the Swedish traveller, when he gives
an account of the husbandry of some of the English colonies in North America, as he found it
in 1749, observes, accordingly, that he can with difficulty discover there the character of the
English nation, so well skilled in all the different branches of agri- culture. They make scarce
any manure for their corn fields, he says; but when one piece of ground has been exhausted by
continual cropping, they clear and cultivate another piece of fresh land; and when that is
exhausted, proceed to a third. Their cattle are al- lowed to wander through the woods and other
uncultivated grounds, where they are half-starved; having long ago extirpated almost all the
annual grasses, by cropping them too early in the spring, before they had time to form their
flowers, or to shed their seeds. {Kalm's Travels, vol 1, pp. 343, 344.} The annual grasses were,
it seems, the best natural grasses in that part of North America; and when the Europeans first
settled there, they used to grow very thick, and to rise three or four feet high. A piece
of ground which, when he wrote, could not maintain one cow, would in former times, he was
assured, have maintained four, each of which would have given four times the quantity of milk
which that one was capable of giving. The poorness of the pasture had, in his opinion,
occasioned the degradation of their cattle, which degenerated sensibly from me generation to
another. They were probably not unlike that stunted breed which was common all over
Scotland thirty or forty years ago, and which is now so much mended through the greater part
of the low country, not so much by a change of the breed, though that expedient has been
employed in some places, as by a more plen- tiful method of feeding them. Though it is late,
therefore, in the progress of improvement, before cattle can bring such a price as to render it
profitable to cultivate land for the sake of feeding them; yet of all the different parts which
compose this second sort of rude produce, they are per- haps the first which bring this price;
because, till they bring it, it seems impossible that improvement can be brought near even to
that degree of perfection to which it has ar- rived in many parts of Europe. As cattle are among
the first, so perhaps venison is among the last parts of this sort of rude produce which bring
this price. The price of venison in Great Britain, how ex- travagant soever it may appear, is not
near sufficient to compensate the expense of a deer park, as is well known to all those who
have had any experience in the feeding of deer. If it was otherwise, the feeding of deer would
soon become an article of common farming, in the same manner as the feeding of those small
birds, called turdi, was among the ancient Romans. Varro and Columella assure us, that it was
a most prof- itable article. The fattening of ortolans, birds of passage which arrive lean in the
coun- try, is said to be so in some parts of France. If venison continues in fashion, and
the wealth and luxury of Great Britain increase as they have done for some time past, its  price
may very probably rise still higher than it is at present. Between that period in the progress of
improvement, which brings to its height the price of so necessary an article as cattle, and that
which brings to it the price of such a superfluity as venison, there is a very long interval, in the
course of which many other sorts of rude produce gradually arrive at their highest price, some
sooner and some later, according to different circumstances. Thus, in every farm, the offals of
the barn and stable will maintain a certain num- ber of poultry. These, as they are fed with
what would otherwise be lost, are a mere save-all; and as they cost the farmer scarce any thing,
so he can afford to sell them for very little. Almost all that he gets is pure gain, and their price
can scarce be so low as to discourage him from feeding this number. But in countries ill
cultivated, and therefore but thinly inhabited, the poultry, which are thus raised without
expense, are often fully sufficient to supply the whole demand. In this state of things, therefore,
they are often as cheap as butcher's meat, or any other sort of animal food. But the whole
quantity of poultry which the farm in this manner produces without expense, must always
be much smaller than the whole quantity of butcher's meat which is reared upon it; and in times
of wealth and luxury, what is rare, with only nearly equal merit, is always pre- ferred to what is
common. As wealth and luxury increase, therefore, in consequence of improvement and
cultivation, the price of poultry gradually rises above that of butcher's meat, till at last it gets so
high, that it becomes profitable to cultivate land for the sake of feeding them. When it has got
to this height, it cannot well go higher. If it did, more land would soon be turned to this
purpose. In several provinces of France, the feeding of poultry is considered as a very
important article in rural economy, and sufficiently profitable to encourage the farmer to raise
a considerable quantity of Indian corn and buckwheat for this purpose. A middling farmer will
there sometimes have four hun- dred fowls in his yard. The feeding of poultry seems scarce yet
to be generally consid- ered as a matter of so much importance in England. They are certainly,
however, dearer in England than in France, as England receives considerable supplies from
France. In the progress of improvements, the period at which every particular sort of animal
food is dearest, must naturally be that which immediately precedes the general practice
of cultivating land for the sake of raising it. For some time before this practice
becomes general, the scarcity must necessarily raise the price. After it has become general,
new methods of feeding are commonly fallen upon, which enable the farmer to raise upon the
same quantity of ground a much greater quantity of that particular sort of animal food. The
plenty not only obliges him to sell cheaper, but, in consequence of these im- provements, he
can afford to sell cheaper; for if he could not afford it, the plenty would not be of long
continuance. It has been probably in this manner that the introduction of clover, turnips,
carrots, cabbages, etc. has contributed to sink the common price of butcher's meat in the
London market, somewhat below what it was about the begin- ning of the last century. The
hog, that finds his food among ordure, and greedily devours many things rejected by every
other useful animal, is, like poultry, originally kept as a save-all. As long as the number of such
animals, which can thus be reared at little or no expense, is fully sufficient to supply the
demand, this sort of butcher's meat comes to market at a much lower price than any other. But
when the demand rises beyond what this quan- tity can supply, when it becomes necessary to
raise food on purpose for feeding and fat- tening hogs, in the same manner as for feeding and
fattening other cattle, the price necessarily rises, and becomes proportionably either higher or
lower than that of other butcher's meat, according as the nature of the country, and the state of
its agriculture, happen to render the feeding of hogs more or less expensive than that of other
cattle. In France, according to Mr Buffon, the price of pork is nearly equal to that of beef. In
most parts of Great Britain it is at present somewhat higher. The great rise in the price both of
hogs and poultry, has, in Great Britain, been fre- quently imputed to the diminution of the
number of cottagers and other small occu- piers of land; an event which has in every part of
Europe been the immediate fore- runner of improvement and better cultivation, but which at
the same time may have contributed to raise the price of those articles, both somewhat sooner
and somewhat faster than it would otherwise have risen. As the poorest family can often
maintain a cat or a dog without any expense, so the poorest occupiers of land can commonly
maintain a few poultry, or a sow and a few pigs, at very little. The little offals of their own
table, their whey, skimmed milk, and butter milk, supply those animals with a part of
their food, and they find the rest in the neighbouring fields, without doing any sensible damage
to any body. By diminishing the number of those small occupiers, therefore, the quantity of
this sort of provisions, which is thus produced at little or no expense, must certainly have been
a good deal diminished, and their price must consequently have been raised both sooner and
faster than it would otherwise have risen. Sooner or later, however, in the progress of
improvement, it must at any rate have risen to the ut- most height to which it is capable of
rising; or to the price which pays the labour and expense of cultivating the land which
furnishes them with food, as well as these are paid upon the greater part of other cultivated
land. The business of the dairy, like the feeding of hogs and poultry, is originally carried on as
a save-all. The cattle necessarily kept upon the farm produce more milk than ei- ther the
rearing of their own young, or the consumption of the farmer's family re- quires; and they
produce most at one particular season. But of all the productions of land, milk is perhaps the
most perishable. In the warm season, when it is most abun- dant, it will scarce keep four-and-
twenty hours. The farmer, by making it into fresh but- ter, stores a small part of it for a week;
by making it into salt butter, for a year; and by making it into cheese, he stores a much greater
part of it for several years. Part of all these is reserved for the use of his own family; the rest
goes to market, in order to find the best price which is to be had, and which can scarce be so
low is to discourage him from sending thither whatever is over and above the use of his own
family. If it is very low indeed, he will be likely to manage his dairy in a very slovenly and
dirty manner, and will scarce, perhaps, think it worth while to have a particular room or
building on purpose for it, but will suffer the business to be carried on amidst the smoke, filth,
and nastiness of his own kitchen, as was the case of almost all the farmers' dairies in Scot- land
thirty or forty years ago, and as is the case of many of them still. The same causes  which
gradually raise the price of butcher's meat, the increase of the demand, and, in consequence of
the improvement of the country, the diminution of the quantity which can be fed at little or no
expense, raise, in the same manner, that of the produce of the dairy, of which the price
naturally connects with that of butcher's meat, or with the ex- pense of feeding cattle. The
increase of price pays for more labour, care, and clean- liness. The dairy becomes more worthy
of the farmer's attention, and the quality of its produce gradually improves. The price at last
gets so high, that it becomes worth while to employ some of the most fertile and best cultivated
lands in feeding cattle merely for the purpose of the dairy; and when it has got to this height, it
cannot well go higher. If it did, more land would soon be turned to this purpose. It seems to
have got to this height through the greater part of England, where much good land is
commonly em- ployed in this manner. If you except the neighbourhood of a few considerable
towns, it seems not yet to have got to this height anywhere in Scotland, where common
farmers seldom employ much good land in raising food for cattle, merely for the purpose of
the dairy. The price of the produce, though it has risen very considerably within these
few years, is probably still too low to admit of it. The inferiority of the quality, indeed,
com- pared with that of the produce of English dairies, is fully equal to that of the price.
But this inferiority of quality is, perhaps, rather the effect of this lowness of price, than
the cause of it. Though the quality was much better, the greater part of what is brought
to market could not, I apprehend, in the present circumstances of the country, be dis-  posed of
at a much better price; and the present price, it is probable, would not pay the expense of the
land and labour necessary for producing a much better quality. Through the greater part of
England, notwithstanding the superiority of price, the dairy is not reckoned a more profitable
employment of land than the raising of corn, or the fat- tening of cattle, the two great objects of
agriculture. Through the greater part of Scot- land, therefore, it cannot yet be even so
profitable. The lands of no country, it is evident, can ever be completely cultivated and
im- proved, till once the price of every produce, which human industry is obliged to raise upon
them, has got so high as to pay for the expense of complete improvement and cultivation. In
order to do this, the price of each particular produce must be sufficient, first, to pay the rent of
good corn land, as it is that which regulates the rent of the greater part of other cultivated land;
and, secondly, to pay the labour and expense of the farmer, as well as they are commonly paid
upon good corn land; or, in other words, to replace with the ordinary profits the stock which he
employs about it. This rise in the price of each particular produce; must evidently be previous
to the improvement and cultivation of the land which is destined for raising it. Gain is the end
of all improve- ment; and nothing could deserve that name, of which loss was to be the
necessary consequence. But loss must be the necessary consequence of improving land for
the sake of a produce of which the price could never bring back the expense. If the com- plete
improvement and cultivation of the country be, as it most certainly is, the greatest of all public
advantages, this rise in the price of all those different sorts of rude produce, instead of being
considered as a public calamity, ought to be regarded as the necessary forerunner and attendant
of the greatest of all public advantages. This rise, too, in the nominal or money price of all
those different sorts of rude pro- duce, has been the effect, not of any degradation in the value
of silver, but of a rise in their real price. They have become worth, not only a greater quantity
of silver, but a greater quantity of labour and subsistence than before. As it costs a greater
quantity of labour and subsistence to bring them to market, so, when they are brought thither
they represent, or are equivalent to a greater quantity. Third Sort.—The third and last sort of
rude produce, of which the price naturally rises in the progress of improvement, is that in
which the efficacy of human industry, in augmenting the quantity, is either limited or
uncertain. Though the real price of this sort of rude produce, therefore, naturally tends to rise in
the progress of improvement, yet, according as different accidents happen to render the efforts
of human industry more or less successful in augmenting the quantity, it may happen
sometimes even to fall, sometimes to continue the same, in very different periods of
improvement, and sometimes to rise more or less in the same period. 

There are some sorts of rude produce which nature has rendered a kind of ap- pendages to
other sorts; so that the quantity of the one which any country can afford, is necessarily limited
by that of the other. The quantity of wool or of raw hides, for exam- ple, which any country
can afford, is necessarily limited by the number of great and small cattle that are kept in it. The
state of its improvement, and the nature of its agri- culture, again necessarily determine this
number. The same causes which, in the progress of improvement, gradually raise the price  of
butcher's meat, should have the same effect, it may be thought, upon the prices of wool and
raw hides, and raise them, too, nearly in the same proportion. It probably would be so, if, in the
rude beginnings of improvement, the market for the latter com- modities was confined within
as narrow bounds as that for the former. But the extent of their respective markets is commonly
extremely different. The market for butcher's meat is almost everywhere confined to the
country which produces it. Ireland, and some part of British America, indeed, carry on a
considerable trade in salt provisions; but they are, I believe, the only countries in the
commercial world which do so, or which export to other countries any considerable part of
their butcher's meat. The market for wool and raw hides, on the contrary, is, in the rude
beginnings of improvement, very seldom confined to the country which produces them. They
can eas- ily be transported to distant countries; wool without any preparation, and raw
hides with very little; and as they are the materials of many manufactures, the industry of  other
countries may occasion a demand for them, though that of the country which produces them
might not occasion any. In countries ill cultivated, and therefore but thinly inhabited, the price
of the wool and the hide bears always a much greater proportion to that of the whole beast,
than in countries where, improvement and population being further advanced, there is
more demand for butcher's meat. Mr Hume observes, that in the Saxon times, the fleece
was estimated at two-fifths of the value of the whole sheep and that this was much above  the
proportion of its present estimation. In some provinces of Spain, I have been as- sured, the
sheep is frequently killed merely for the sake of the fleece and the tallow. The carcase is often
left to rot upon the ground, or to be devoured by beasts and birds of  prey. If this sometimes
happens even in Spain, it happens almost constantly in Chili, at Buenos Ayres, and in many
other parts of Spanish America, where the horned cattle are almost constantly killed merely for
the sake of the hide and the tallow. This, too, used to happen almost constantly in Hispaniola,
while it was infested by the buccaneers, and before the settlement, improvement, and
populousness of the French plantations ( which now extend round the coast of almost the
whole western half of the island) had given some value to the cattle of the Spaniards, who still
continue to possess, not only the eastern part of the coast, but the whole inland mountainous
part of the country. Though, in the progress of improvement and population, the price of the
whole beast necessarily rises, yet the price of the carcase is likely to be much more affected
by this rise than that of the wool and the hide. The market for the carcase being in the  rude
state of society confined always to the country which produces it, must necessarily be extended
in proportion to the improvement and population of that country. But the market for the wool
and the hides, even of a barbarous country, often extending to the whole commercial world, it
can very seldom be enlarged in the same proportion. The state of the whole commercial world
can seldom be much affected by the improvement of any particular country; and the market for
such commodities may remain the same, or very nearly the same, after such improvements, as
before. It should, however, in the natural course of things, rather, upon the whole, be somewhat
extended in conse- quence of them. If the manufactures, especially, of which those
commodities are the materials, should ever come to flourish in the country, the market, though
it might not be much enlarged, would at least be brought much nearer to the place of growth
than before; and the price of those materials might at least be increased by what had
usually been the expense of transporting them to distant countries. Though it might not
rise, therefore, in the same proportion as that of butcher's meat, it ought naturally to
rise somewhat, and it ought certainly not to fall. In England, however, notwithstanding the
flourishing state of its woollen manu- facture, the price of English wool has fallen very
considerably since the time of Edward III. There are many authentic records which
demonstrate that, during the reign of that prince (towards the middle of the fourteenth century,
or about 1339), what was reck- oned the moderate and reasonable price of the tod, or twenty-
eight pounds of English wool, was not less than ten shillings of the money of those times {See
Smith's Memoirs of Wool, vol. i c. 5, 6, 7. also vol. ii.}, containing, at the rate of twenty-pence
the ounce, six ounces of silver, Tower weight, equal to about thirty shillings of our present
money. In the present times, one-and-twenty shillings the tod may be reckoned a good price
for very good English wool. The money price of wool, therefore, in the time of Edward
III. was to its money price in the present times as ten to seven. The superiority of its real price
was still greater. At the rate of six shillings and eightpence the quarter, ten shillings was in
those ancient times the price of twelve bushels of wheat. At the rate of twenty-eight shillings
the quarter, one-and-twenty shillings is in the present times the price of six bushels only. The
proportion between the real price of ancient and modern times, therefore, is as twelve to six, or
as two to one. In those ancient times, a tod of wool would have purchased twice the quantity of
subsistence which it will purchase at present, and consequently twice the quantity of labour, if
the real recompence of labour had been the same in both periods. This degradation, both in the
real and nominal value of wool, could never have happened in consequence of the natural
course of things. It has accordingly been the effect of violence and artifice. First, of the
absolute prohibition of exporting wool from England: secondly, of the permission of importing
it from Spain, duty free: thirdly, of the prohibition of exporting it from Ireland to another
country but England. In conse- quence of these regulations, the market for English wool,
instead of being somewhat extended, in consequence of the improvement of England, has been
confined to the home market, where the wool of several other countries is allowed to come into
compe- tition with it, and where that of Ireland is forced into competition with it. As
the woollen manufactures, too, of Ireland, are fully as much discouraged as is consistent with
justice and fair dealing, the Irish can work up but a smaller part of their own wool  at home, and
are therefore obliged to send a greater proportion of it to Great Britain, the only market they
are allowed. I have not been able to find any such authentic records concerning the price of
raw hides in ancient times. Wool was commonly paid as a subsidy to the king, and its
valu- ation in that subsidy ascertains, at least in some degree, what was its ordinary price.
But this seems not to have been the case with raw hides. Fleetwood, however, from an
ac- count in 1425, between the prior of Burcester Oxford and one of his canons, gives us their
price, at least as it was stated upon that particular occasion, viz. five ox hides at  twelve
shillings; five cow hides at seven shillings and threepence; thirtysix sheep skins of two years
old at nine shillings; sixteen calf skins at two shillings. In 1425, twelve shillings contained
about the same quantity of silver as four-and-twenty shillings of our present money. An ox
hide, therefore, was in this account valued at the same quantity of silver as 4s. 4/5ths of our
present money. Its nominal price was a good deal lower than at present. But at the rate of six
shillings and eightpence the quarter, twelve shillings would in those times have purchased
fourteen bushels and four-fifths of a bushel of wheat, which, at three and sixpence the bushel,
would in the present times cost 51s. 4d. An ox hide, therefore, would in those times have
purchased as much corn as ten shillings and threepence would purchase at present. Its real
value was equal to ten shillings and threepence of our present money. In those ancient times,
when the cattle were half starved during the greater part of the winter, we cannot suppose
that they were of a very large size. An ox hide which weighs four stone of sixteen pounds
of avoirdupois, is not in the present times reckoned a bad one; and in those ancient
times would probably have been reckoned a very good one. But at half-a-crown the
stone, which at this moment (February 1773) I understand to be the common price, such a hide
would at present cost only ten shillings. Through its nominal price, therefore, is higher in the
present than it was in those ancient times, its real price, the real quantity of subsistence which
it will purchase or command, is rather somewhat lower. The price of cow hides, as stated in the
above account, is nearly in the common proportion to that of ox hides. That of sheep skins is a
good deal above it. They had probably been sold with the wool. That of calves skins, on the
contrary, is greatly below it. In countries where the price of cattle is very low, the calves,
which are not intended to be reared in order to keep up the stock, are generally killed very
young, as was the case in Scotland twenty or thirty years ago. It saves the milk, which their
price would not pay for. Their skins, therefore, are commonly good for little. The price of raw
hides is a good deal lower at present than it was a few years ago; owing probably to the taking
off the duty upon seal skins, and to the allowing, for a lim- ited time, the importation of raw
hides from Ireland, and from the plantations, duty free, which was done in 1769. Take the
whole of the present century at an average, their real price has probably been somewhat higher
than it was in those ancient times. The nature of the commodity renders it not quite so proper
for being transported to distant markets as wool. It suffers more by keeping. A salted hide is
reckoned inferior to a fresh one, and sells for a lower price. This circumstance must necessarily
have some tendency to sink the price of raw hides produced in a country which does not
manu- facture them, but is obliged to export them, and comparatively to raise that of those
pro- duced in a country which does manufacture them. It must have some tendency to
sink their price in a barbarous, and to raise it in an improved and manufacturing country.
It must have had some tendency, therefore, to sink it in ancient, and to raise it in modern times.
Our tanners, besides, have not been quite so successful as our clothiers, in con- vincing the
wisdom of the nation, that the safety of the commonwealth depends upon the prosperity of
their particular manufacture. They have accordingly been much less favoured. The exportation
of raw hides has, indeed, been prohibited, and declared a nuisance; but their importation from
foreign countries has been subjected to a duty; and though this duty has been taken off from
those of Ireland and the plantations (for the limited time of five years only), yet Ireland has not
been confined to the market of Great Britain for the sale of its surplus hides, or of those which
are not manufactured at home. The hides of common cattle have, but within these few years,
been put among the enumerated commodities which the plantations can send nowhere but to
the moth- er country; neither has the commerce of Ireland been in this case oppressed hitherto,
in order to support the manufactures of Great Britain. Whatever regulations tend to sink the
price, either of wool or of raw hides, below what it naturally would he, must, in an improved
and cultivated country, have some tendency to raise the price of butcher's meat. The price both
of the great and small cat- tle, 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 im- proved 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 improved 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 provisions. It would be quite
otherwise, however, in an unimproved and uncultivated country, where the greater part of the
lands could be applied to no other purpose but the feeding of cattle, and where the wool and
the hide made the principal part of the value of those cattle. Their interest as landlords and
farmers would in this case be very deeply affected by such regulations, and their interest as
consumers very little. The fall in the price of the wool and the hide would not in this case raise
the price of the car- case; because the greater part of the lands of the country being applicable
to no other purpose but the feeding of cattle, the same number would still continue to be fed.
The same quantity of butcher's meat would still come to market. The demand for it would be
no greater than before. Its price, therefore, would be the same as before. The whole  price of
cattle would fall, and along with it both the rent and the profit of all those lands of which cattle
was the principal produce, that is, of the greater part of the lands of the country. The perpetual
prohibition of the exportation of wool, which is commonly, but very falsely, ascribed to
Edward III., would, in the then circumstances of the country, have been the most destructive
regulation which could well have been thought of. It would not only have reduced the actual
value of the greater part of the lands in the king- dom, but by reducing the price of the most
important species of small cattle, it would have retarded very much its subsequent
improvement. The wool of Scotland fell very considerably in its price in consequence of the
union with England, by which it was excluded from the great market of Europe, and
confined to the narrow one of Great Britain. The value of the greater part of the lands in
the southern counties of Scotland, which are chiefly a sheep country, would have been
very deeply affected by this event, had not the rise in the price of butcher's meat fully
com- pensated the fall in the price of wool. As the efficacy of human industry, in increasing the
quantity either of wool or of raw hides, is limited, so far as it depends upon the produce of the
country where it is exerted; so it is uncertain so far as it depends upon the produce of other
countries. It so far depends not so much upon the quantity which they produce, as upon that
which they do not manufacture; and upon the restraints which they may or may not
think proper to impose upon the exportation of this sort of rude produce. These
circum- stances, as they are altogether independent of domestic industry, so they
necessarily render the efficacy of its efforts more or less uncertain. In multiplying this sort of
rude produce, therefore, the efficacy of human industry is not only limited, but uncertain. In
multiplying another very important sort of rude produce, the quantity of fish that is brought to
market, it is likewise both limited and uncertain. It is limited by the local situation of the
country, by the proximity or distance of its different provinces from the sea, by the number of
its lakes and rivers, and by what may be called the fer- tility or barrenness of those seas, lakes,
and rivers, as to this sort of rude produce. As population increases, as the annual produce of the
land and labour of the country grows greater and greater, there come to be more buyers of fish;
and those buyers, too, have a greater quantity and variety of other goods, or, what is the same
thing, the price of a greater quantity and variety of other goods, to buy with. But it will
generally be impos- sible to supply the great and extended market, without employing a
quantity of labour greater than in proportion to what had been requisite for supplying the
narrow and confined one. A market which, from requiring only one thousand, comes to
require annually ten thousand ton of fish, can seldom be supplied, without employing
more than ten times the quantity of labour which had before been sufficient to supply it.
The fish must generally be sought for at a greater distance, larger vessels must be
employed, and more expensive machinery of every kind made use of. The real price of this
com- modity, therefore, naturally rises in the progress of improvement. It has accordingly done
so, I believe, more or less in every country. Though the success of a particular day's fishing
maybe a very uncertain matter, yet the local situation of the country being supposed, the
general efficacy of industry in bringing a certain quantity of fish to market, taking the course of
a year, or of several years together, it may, perhaps, be thought is certain enough; and it, no
doubt, is so. As it depends more, however, upon the local situation of the country, than upon
the state of its wealth and industry; as upon this account it may in different countries be
the same in very different periods of improvement, and very different in the same period; its
connection with the state of improvement is uncertain; and it is of this sort of uncer- tainty that
I am here speaking. In increasing the quantity of the different minerals and metals which are
drawn from the bowels of the earth, that of the more precious ones particularly, the efficacy
of human industry seems not to be limited, but to be altogether uncertain. The quantity of the
precious metals which is to be found in any country, is not lim- ited by any thing in its local
situation, such as the fertility or barrenness of its own mines. Those metals frequently abound
in countries which possess no mines. Their quantity, in every particular country, seems to
depend upon two different circum- stances; first, upon its power of purchasing, upon the state
of its industry, upon the an- nual produce of its land and labour, in consequence of which it can
afford to employ a greater or a smaller quantity of labour and subsistence, in bringing or
purchasing such superfluities as gold and silver, either from its own mines, or from those of
other coun- tries; and, secondly, upon the fertility or barrenness of the mines which may
happen at any particular time to supply the commercial world with those metals. The quantity
of those metals in the countries most remote from the mines, must be more or less af-  fected by
this fertility or barrenness, on account of the easy and cheap transportation of those metals, of
their small bulk and great value. Their quantity in China and Indostan must have been more or
less affected by the abundance of the mines of America. So far as their quantity in any
particular country depends upon the former of those two circumstances (the power of
purchasing), their real price, like that of all other luxu- ries and superfluities, is likely to rise
with the wealth and improvement of the country, and to fall with its poverty and depression.
Countries which have a great quantity of labour and subsistence to spare, can afford to
purchase any particular quantity of those metals at the expense of a greater quantity of labour
and subsistence, than countries which have less to spare. So far as their quantity in any
particular country depends upon the latter of those two circumstances (the fertility or
barrenness of the mines which happen to supply the commercial world), their real price, the
real quantity of labour and subsistence which they will purchase or exchange for, will, no
doubt, sink more or less in proportion to the fertility, and rise in proportion to the barrenness of
those mines. The fertility or barrenness of the mines, however, which may happen at any
partic- ular time to supply the commercial world, is a circumstance which, it is evident,
may have no sort of connection with the state of industry in a particular country. It seems even
to have no very necessary connection with that of the world in general. As arts and commerce,
indeed, gradually spread themselves over a greater and a greater part of the earth, the search
for new mines, being extended over a wider surface, may have some- what a better chance for
being successful than when confined within narrower bounds. The discovery of new mines,
however, as the old ones come to be gradually exhausted, is a matter of the greatest
uncertainty, and such as no human skill or industry can in- sure. All indications, it is
acknowledged, are doubtful; and the actual discovery and suc- cessful working of a new mine
can alone ascertain the reality of its value, or even of its existence. In this search there seem to
be no certain limits, either to the possible suc- cess, or to the possible disappointment of human
industry. In the course of a century or two, it is possible that new mines may be discovered,
more fertile than any that have ever yet been known; and it is just equally possible, that the
most fertile mine then known may be more barren than any that was wrought before the
discovery of the mines of America. Whether the one or the other of those two events may
happen to take place, is of very little importance to the real wealth and prosperity of the world,
to the real value of the annual produce of the land and labour of mankind. Its nominal value,
the quantity of gold and silver by which this annual produce could be expressed or represented,
would, no doubt, be very different; but its real value, the real quantity of labour which it could
purchase or command, would be precisely the same. A shilling might, in the one case,
represent no more labour than a penny does at present; and a penny, in the other, might
represent as much as a shilling does now. But in the one case, he who had a shilling in his
pocket would be no richer than he who has a penny at present; and in the other, he who had a
penny would be just as rich as he who has a shilling now. The cheapness and abundance of
gold and silver plate would be the sole advantage which the world could derive from the one
event; and the dearness and scar- city of those trifling superfluities, the only inconveniency it
could suffer from the other.  

Conclusion of the Digression concerning the Variations in the Value of Silver.  The greater
part of the writers who have collected the money price of things in an- cient times, seem to
have considered the low money price of corn, and of goods in gen- eral, or, in other words, the
high value of gold and silver, as a proof, not only of the scar- city of those metals, but of the
poverty and barbarism of the country at the time when it took place. This notion is connected
with the system of political economy, which repre- sents national wealth as consisting in the
abundance and national poverty in the scarci- ty, of gold and silver; a system which I shall
endeavour to explain and examine at great length in the fourth book of this Inquiry. I shall only
observe at present, that the high value of the precious metals can be no proof of the poverty or
barbarism of any partic- ular country at the time when it took place. It is a proof only of the
barrenness of the mines which happened at that time to supply the commercial world. A poor
country, as it cannot afford to buy more, so it can as little afford to pay dearer for gold and
silver than a rich one; and the value of those metals, therefore, is not likely to be higher in
the former than in the latter. In China, a country much richer than any part of Europe, the  value
of the precious metals is much higher than in any part of Europe. As the wealth  of Europe,
indeed, has increased greatly since the discovery of the mines of America, so the value of gold
and silver has gradually diminished. This diminution of their value, however, has not been
owing to the increase of the real wealth of Europe, of the annual produce of its land and labour,
but to the accidental discovery of more abundant mines than any that were known before. The
increase of the quantity of gold and silver in Eu- rope, and the increase of its manufactures and
agriculture, are two events which, though they have happened nearly about the same time, yet
have arisen from very dif- ferent causes, and have scarce any natural connection with one
another. The one has arisen from a mere accident, in which neither prudence nor policy either
had or could have any share; the other, from the fall of the feudal system, and from the
estab- lishment of a government which afforded to industry the only encouragement which
it requires, some tolerable security that it shall enjoy the fruits of its own labour. Poland, where
the feudal system still continues to take place, is at this day as beggarly a country as it was
before the discovery of America. The money price of corn, however, has risen; the real value
of the precious metals has fallen in Poland, in the same manner as in other parts of Europe.
Their quantity, therefore, must have increased there as in other places, and nearly in the same
proportion to the annual produce of its land and labour. This increase of the quantity of those
metals, however, has not, it seems, increased that annual produce, has neither improved the
manufactures and agriculture of the country, nor mended the circumstances of its inhabitants.
Spain and Portugal, the countries which possess the mines, are, after Poland, perhaps the two
most beggarly countries in Europe. The value of the precious metals, however, must be lower
in Spain and Por- tugal than in any other part of Europe, as they come from those countries to
all other parts of Europe, loaded, not only with a freight and an insurance, but with the
expense of smuggling, their exportation being either prohibited or subjected to a duty. In
pro- portion to the annual produce of the land and labour, therefore, their quantity must
be greater in those countries than in any other part of Europe; those countries, however, are
poorer than the greater part of Europe. Though the feudal system has been abol- ished in Spain
and Portugal, it has not been succeeded by a much better. As the low value of gold and silver,
therefore, is no proof of the wealth and flour- ishing state of the country where it takes place;
so neither is their high value, or the low money price either of goods in general, or of corn in
particular, any proof of its poverty and barbarism. But though the low money price, either of
goods in general, or of corn in particular, be no proof of the poverty or barbarism of the times,
the low money price of some par- ticular sorts of goods, such as cattle, poultry, game of all
kinds, etc. in proportion to that of corn, is a most decisive one. It clearly demonstrates, first,
their great abundance in proportion to that of corn, and, consequently, the great extent of the
land which they occupied in proportion to what was occupied by corn; and, secondly, the low
value of this land in proportion to that of corn land, and, consequently, the uncultivated
and unimproved state of the far greater part of the lands of the country. It clearly
demon- strates, that the stock and population of the country did not bear the same proportion
to the extent of its territory, which they commonly do in civilized countries; and that soci- ety
was at that time, and in that country, but in its infancy. From the high or low money  price,
either of goods in general, or of corn in particular, we can infer only, that the mines, which at
that time happened to supply the commercial world with gold and sil- ver, were fertile or
barren, not that the country was rich or poor. But from the high or low money price of some
sorts of goods in proportion to that of others, we can infer, with a degree of probability that
approaches almost to certainty, that it was rich or poor, that the greater part of its lands were
improved or unimproved, and that it was either in a more or less barbarous state, or in a more
or less civilized one. Any rise in the money price of goods which proceeded altogether from
the degra- dation of the value of silver, would affect all sorts of goods equally, and raise their
price universally, a third, or a fourth, or a fifth part higher, according as silver happened to  lose
a third, or a fourth, or a fifth part of its former value. But the rise in the price of provisions,
which has been the subject of so much reasoning and conversation, does not affect all sorts of
provisions equally. Taking the course of the present century at an average, the price of corn, it
is acknowledged, even by those who account for this rise by the degradation of the value of
silver, has risen much less than that of some other sorts of provisions. The rise in the price of
those other sorts of provisions, therefore, cannot be owing altogether to the degradation of the
value of silver. Some other causes must be taken into the account; and those which have been
above assigned, will, perhaps, with- out having recourse to the supposed degradation of the
value of silver, sufficiently ex- plain this rise in those particular sorts of provisions, of which
the price has actually risen in proportion to that of corn. As to the price of corn itself, it has,
during the sixty-four first years of the present century, and before the late extraordinary course
of bad seasons, been somewhat lower than it was during the sixty-four last years of the
preceding century. This fact is attested, not only by the accounts of Windsor market, but by the
public fiars of all the different counties of Scotland, and by the accounts of several different
markets in France, which have been collected with great diligence and fidelity by Mr
Messance, and by Mr Dupré de St Maur. The evidence is more complete than could well have
been expected in a matter which is naturally so very difficult to be ascertained. As to the high
price of corn during these last ten or twelve years, it can be suffi- ciently accounted for from
the badness of the seasons, without supposing any degra- dation in the value of silver. The
opinion, therefore, that silver is continually sinking in its value, seems not to be founded upon
any good observations, either upon the prices of corn, or upon those of other provisions. The
same quantity of silver, it may perhaps be said, will, in the present times, even according to the
account which has been here given, purchase a much smaller quantity of several sorts of
provisions than it would have done during some part of the last cen- tury; and to ascertain
whether this change be owing to a rise in the value of those goods, or to a fall in the value of
silver, is only to establish a vain and useless distinc- tion, which can be of no sort of service to
the man who has only a certain quantity of silver to go to market with, or a certain fixed
revenue in money. I certainly do not pre- tend that the knowledge of this distinction will enable
him to buy cheaper. It may not, however, upon that account be altogether useless. It may be of
some use to the public, by affording an easy proof of the prosperous condition of the country.
If the rise in the price of some sorts of provisions be owing altogether to a fall in the value of
silver, it is owing to a circumstance, from which noth- ing can be inferred but the fertility of
the American mines. The real wealth of the coun- try, the annual produce of its land and
labour, may, notwithstanding this circumstance, be either gradually declining, as in Portugal
and Poland; or gradually advancing, as in most other parts of Europe. But if this rise in the
price of some sorts of provisions be owing to a rise in the real value of the land which produces
them, to its increased fer- tility, or, in consequence of more extended improvement and good
cultivation, to its having been rendered fit for producing corn; it is owing to a circumstance
which indi- cates, in the clearest manner, the prosperous and advancing state of the country.
The land constitutes by far the greatest, the most important, and the most durable part of the
wealth of every extensive country. It may surely be of some use, or, at least, it may  give some
satisfaction to the public, to have so decisive a proof of the increasing value of by far the
greatest, the most important, and the most durable part of its wealth. It may, too, be of some
use to the public, in regulating the pecuniary reward of some of its inferior servants. If this rise
in the price of some sorts of provisions be owing to a fall in the value of silver, their pecuniary
reward, provided it was not too large before, ought certainly to be augmented in proportion to
the extent of this fall. If it is not augmented, their real recompence will evidently be so much
diminished. But if this rise of price is owing to the increased value, in consequence of the
improved fer- tility of the land which produces such provisions, it becomes a much nicer
matter to judge, either in what proportion any pecuniary reward ought to be augmented,
or whether it ought to be augmented at all. The extension of improvement and cultivation, as it
necessarily raises more or less, in proportion to the price of corn, that of every sort  of animal
food, so it as necessarily lowers that of, I believe, every sort of vegetable food. It raises the
price of animal food; because a great part of the land which produces it, being rendered fit for
producing corn, must afford to the landlord anti farmer the rent and profit of corn land. It
lowers the price of vegetable food; because, by increasing the fertility of the land, it increases
its abundance. The improvements of agriculture, too, introduce many sorts of vegetable food,
which requiring less land, and not more labour than corn, come much cheaper to market. Such
are potatoes and maize, or what is called Indian corn, the two most important improvements
which the agriculture of Eu- rope, perhaps, which Europe itself, has received from the great
extension of its com- merce and navigation. Many sorts of vegetable food, besides, which in
the rude state of agriculture are confined to the kitchen-garden, and raised only by the spade,
come, in its improved state, to be introduced into common fields, and to be raised by the
plough; such as turnips, carrots, cabbages, etc. If, in the progress of improvement,
therefore, the real price of one species of food necessarily rises, that of another as necessarily
falls; and it becomes a matter of more nicety to judge how far the rise in the one may
be compensated by the fall in the other. When the real price of butcher's meat has once got to
its height (which, with regard to every sort, except perhaps that of hogs flesh, it seems to have
done through a great part of England more than a century ago), any rise which can afterwards
happen in that of any other sort of animal food, cannot much af- fect the circumstances of the
inferior ranks of people. The circumstances of the poor, through a great part of England,
cannot surely be so much distressed by any rise in the price of poultry, fish, wild-fowl, or
venison, as they must be relieved by the fall in that of potatoes. In the present season of
scarcity, the high price of corn no doubt distresses the poor. But in times of moderate plenty,
when corn is at its ordinary or average price, the natural rise in the price of any other sort of
rude produce cannot much affect them. They suffer more, perhaps, by the artificial rise which
has been occasioned by taxes in the price of some manufactured commodities, as of salt, soap,
leather, candles, malt, beer, ale, etc. Effects of the Progress of Improvement upon the real Price
of Manufactures. It is the natural effect of improvement, however, to diminish gradually the
real price of almost all manufactures. That of the manufacturing workmanship
diminishes, perhaps, in all of them without exception. In consequence of better machinery,
of greater dexterity, and of a more proper division and distribution of work, all of which are the
natural effects of improvement, a much smaller quantity of labour becomes requisite for
executing any particular piece of work; and though, in consequence of the flourishing
circumstances of the society, the real price of labour should rise very con-  siderably, yet the
great diminution of the quantity will generally much more than com- pensate the greatest rise
which can happen in the price. There are, indeed, a few manufactures, in which the necessary
rise in the real price of the rude materials will more than compensate all the advantages which
improvement can introduce into the execution of the work in carpenters' and joiners' work, and
in the coarser sort of cabinet work, the necessary rise in the real price of barren timber,
in consequence of the improvement of land, will more than compensate all the
advantages which can be derived from the best machinery, the greatest dexterity, and the
most proper division and distribution of work. But in all cases in which the real price of the
rude material either does not rise at all, or does not rise very much, that of the manufactured
commodity sinks very consid- erably. This diminution of price has, in the course of the present
and preceding century, been most remarkable in those manufactures of which the materials are
the coarser metals. A better movement of a watch, than about the middle of the last century
could have been bought for twenty pounds, may now perhaps be had for twenty shillings.
In the work of cutlers and locksmiths, in all the toys which are made of the coarser metals, and
in all those goods which are commonly known by the name of Birmingham and Sheffield
ware, there has been, during the same period, a very great reduction of price, though not
altogether so great as in watch-work. It has, however, been sufficient to astonish the workmen
of every other part of Europe, who in many cases acknowledge that they can produce no work
of equal goodness for double or even for triple the price. There are perhaps no manufactures, in
which the division of labour can be carried fur- ther, or in which the machinery employed
admits of' a greater variety of improvements, than those of which the materials are the coarser
metals. In the clothing manufacture there has, during the same period, been no such sen- sible
reduction of price. The price of superfine cloth, I have been assured, on the con- trary, has,
within these five-and-twenty or thirty years, risen somewhat in proportion to its quality, owing,
it was said, to a considerable rise in the price of the material, which consists altogether of
Spanish wool. That of the Yorkshire cloth, which is made alto- gether of English wool, is said,
indeed, during the course of the present century, to have fallen a good deal in proportion to its
quality. Quality, however, is so very disputable a matter, that I look upon all information of
this kind as somewhat uncertain. In the clothing manufacture, the division of labour is nearly
the same now as it was a century ago, and the machinery employed is not very different. There
may, however, have been some small improvements in both, which may have occasioned some
reduction of price. 

But the reduction will appear much more sensible and undeniable, if we compare the price of
this manufacture in the present times with what it was in a much remoter period, towards the
end of the fifteenth century, when the labour was probably much less subdivided, and the
machinery employed much more imperfect, than it is at present. In 1487, being the 4th of
Henry VII., it was enacted, that "whosoever shall sell by retail a broad yard of the finest scarlet
grained, or of other grained cloth of the finest making, above sixteen shillings, shall forfeit
forty shillings for every yard so sold." Six- teen shillings, therefore, containing about the same
quantity of silver as four-and- twenty shillings of our present money, was, at that time,
reckoned not an unreasonable price for a yard of the finest cloth; and as this is a sumptuary
law, such cloth, it is prob- able, had usually been sold somewhat dearer. A guinea may be
reckoned the highest price in the present times. Even though the quality of the cloths,
therefore, should be supposed equal, and that of the present times is most probably much
superior, yet, even upon this supposition, the money price of the finest cloth appears to have
been considerably reduced since the end of the fifteenth century. But its real price has
been much more reduced. Six shillings and eightpence was then, and long afterwards,
reck- oned the average price of a quarter of wheat. Sixteen shillings, therefore, was the price of
two quarters and more than three bushels of wheat. Valuing a quarter of wheat in the present
times at eight-and-twenty shillings, the real price of a yard of fine cloth must, in those times,
have been equal to at least three pounds six shillings and sixpence of our present money. The
man who bought it must have parted with the command of a quantity of labour and subsistence
equal to what that sum would purchase in the present times. The reduction in the real price of
the coarse manufacture, though considerable, has not been so great as in that of the fine. In
1463, being the 3rd of Edward IV. it was enacted, that "no servant in husbandry  nor common
labourer, nor servant to any artificer inhabiting out of a city or burgh, shall use or wear in their
clothing any cloth above two shillings the broad yard." In the 3rd of Edward IV., two shillings
contained very nearly the same quantity of silver as four of our present money. But the
Yorkshire cloth which is now sold at four shillings the yard, is probably much superior to any
that was then made for the wearing of the very poorest order of common servants. Even the
money price of their clothing, there- fore, may, in proportion to the quality, be somewhat
cheaper in the present than it was in those ancient times. The real price is certainly a good deal
cheaper. Tenpence was then reckoned what is called the moderate and reasonable price of a
bushel of wheat. Two shillings, therefore, was the price of two bushels and near two pecks of
wheat, which in the present times, at three shillings and sixpence the bushel, would be
worth eight shillings and ninepence. For a yard of this cloth the poor servant must have
part- ed with the power of purchasing a quantity of subsistence equal to what eight
shillings and ninepence would purchase in the present times. This is a sumptuary law, too,
re- straining the luxury and extravagance of the poor. Their clothing, therefore, had
com- monly been much more expensive. The same order of people are, by the same law,
prohibited from wearing hose, of which the price should exceed fourteen-pence the pair, equal
to about eight-and-twenty pence of our present money. But fourteen-pence was in those times
the price of a bushel and near two pecks of wheat; which in the present times, at three and
sixpence the bushel, would cost five shillings and threepence. We should in the present
times consider this as a very high price for a pair of stockings to a servant of the poorest
and lowest order. He must however, in those times, have paid what was really equivalent
to this price for them. In the time of Edward IV. the art of knitting stockings was probably not
known in any part of Europe. Their hose were made of common cloth, which may have been
one of the causes of their dearness. The first person that wore stockings in England is said  to
have been Queen Elizabeth. She received them as a present from the Spanish
ambas- sador. Both in the coarse and in the fine woollen manufacture, the machinery
employed was much more imperfect in those ancient, than it is in the present times. It has
since received three very capital improvements, besides, probably, many smaller ones,
of which it may be difficult to ascertain either the number or the importance. The three capital
improvements are, first, the exchange of the rock and spindle for the spinning- wheel, which,
with the same quantity of labour, will perform more than double the quantity of work.
Secondly, the use of several very ingenious machines, which facilitate and abridge, in a still
greater proportion, the winding of the worsted and woollen yarn, or the proper arrangement of
the warp and woof before they are put into the loom; an operation which, previous to the
invention of those machines, must have been ex- tremely tedious and troublesome. Thirdly, the
employment of the fulling-mill for thick- ening the cloth, instead of treading it in water.
Neither wind nor water mills of any kind were known in England so early as the beginning of
the sixteenth century, nor, so far as I know, in any other part of Europe north of the Alps. They
had been introduced into Italy some time before. The consideration of these circumstances
may, perhaps, in some measure, explain to us why the real price both of the coarse and of the
fine manufacture was so much higher in those ancient than it is in the present times. It cost a
greater quantity of labour to bring the goods to market. When they were brought thither,
therefore, they must have purchased, or exchanged for the price of, a greater quantity. The
coarse manufacture probably was, in those ancient times, carried on in Eng-  land in the same
manner as it always has been in countries where arts and manufac- tures are in their infancy. It
was probably a household manufacture, in which every dif- ferent part of the work was
occasionally performed by all the different members of al- most every private family, but so as
to be their work only when they had nothing else to do, and not to be the principal business
from which any of them derived the greater part of their subsistence. The work which is
performed in this manner, it has already been observed, comes always much cheaper to market
than that which is the principal or sole fund of the workman's subsistence. The fine
manufacture, on the other hand, was not, in those times, carried on in England, but in the rich
and commercial country of Flanders; and it was probably conducted then, in the same manner
as now, by people who derived the whole, or the principal part of their subsistence from it. It
was, besides, a foreign manufacture, and must have paid some duty, the ancient custom of
tonnage and poundage at least, to the king. This duty, indeed, would not probably be very
great. It was not then the policy of Europe to restrain, by high duties, the importation of
for- eign manufactures, but rather to encourage it, in order that merchants might be en- abled to
supply, at as easy a rate as possible, the great men with the conveniencies and  luxuries which
they wanted, and which the industry of their own country could not af- ford them. The
consideration of these circumstances may, perhaps, in some measure explain to us why, in
those ancient times, the real price of the coarse manufacture was, in pro- portion to that of the
fine, so much lower than in the present times.  Conclusion of the Chapter.  I shall conclude this
very long chapter with observing, that every improvement in the circumstances of the society
tends, either directly or indirectly, to raise the real rent of land to increase the real wealth of the
landlord, his power of purchasing the labour, or the produce of the labour of other people. The
extension of improvement and cultivation tends to raise it directly. The land- lord's share of the
produce necessarily increases with the increase of the produce. That rise in the real price of
those parts of the rude produce of land, which is first the effect of the extended improvement
and cultivation, and afterwards the cause of their being still further extended, the rise in the
price of cattle, for example, tends, too, to raise the rent of land directly, and in a still greater
proportion. The real value of the landlord's share, his real command of the labour of other
people, not only rises with the real value of the produce, but the proportion of his share to the
whole produce rises with it. That produce, after the rise in its real price, requires no more
labour to collect it than before. A smaller proportion of it will, therefore, be sufficient to
replace, with the ordinary profit, the stock which employs that labour. A greater proportion of
it must consequently belong to the landlord. All those improvements in the productive powers
of labour, which tend directly to reduce the rent price of manufactures, tend indirectly to raise
the real rent of land. The landlord exchanges that part of his rude produce, which is over and
above his own con- sumption, or, what comes to the same thing, the price of that part of it, for
manufac- tured produce. Whatever reduces the real price of the latter, raises that of the
former. An equal quantity of the former becomes thereby equivalent to a greater quantity of
the latter; and the landlord is enabled to purchase a greater quantity of the
conveniencies, ornaments, or luxuries which he has occasion for. Every increase in the real
wealth of the society, every increase in the quantity of useful labour employed within it, tends
indirectly to raise the real rent of land. A certain proportion of this labour naturally goes to the
land. A greater number of men and cattle are employed in its cultivation, the produce increases
with the increase of the stock which is thus employed in raising it, and the rent increases with
the produce. The contrary circumstances, the neglect of cultivation and improvement, the fall
in the real price of any part of the rude produce of land, the rise in the real price of
man- ufactures from the decay of manufacturing art and industry, the declension of the
real wealth of the society, all tend, on the other hand, to lower the real rent of land, to
reduce the real wealth of the landlord, to diminish his power of purchasing either the labour, or
the produce of the labour, of other people. The whole annual produce of the land and labour of
every country, or, what comes to the same thing, the whole price of that annual produce,
naturally divides itself, it has already been observed, into three parts; the rent of land, the
wages of labour, and the profits of stock; and constitutes a revenue to three different orders of
people; to those who live by rent, to those who live by wages, and to those who live by profit.
These are the three great, original, and constituent, orders of every civilized society, from
whose revenue that of every other order is ultimately derived. The interest of the first of those
three great orders, it appears from what has been just now said, is strictly and inseparably
connected with the general interest of the soci- ety. Whatever either promotes or obstructs the
one, necessarily promotes or obstructs the other. When the public deliberates concerning any
regulation of commerce or po- lice, the proprietors of land never can mislead it, with a view to
promote the interest of their own particular order; at least, if they have any tolerable
knowledge of that interest. They are, indeed, too often defective in this tolerable knowledge.
They are the only one of the three orders whose revenue costs them neither labour nor care, but
comes to them, as it were, of its own accord, and independent of any plan or project of their
own. 

That indolence which is the natural effect of the ease and security of their situation, renders
them too often, not only ignorant, but incapable of that application of mind, which is necessary
in order to foresee and understand the consequence of any public regulation. The interest of the
second order, that of those who live by wages, is as strictly con- nected with the interest of the
society as that of the first. The wages of the labourer, it has already been shewn, are never so
high as when the demand for labour is contin- ually rising, or when the quantity employed is
every year increasing considerably. When this real wealth of the society becomes stationary,
his wages are soon reduced to what is barely enough to enable him to bring up a family, or to
continue the race of labourers. When the society declines, they fall even below this. The order
of proprietors may perhaps gain more by the prosperity of the society than that of labourers;
but there is no order that suffers so cruelly from its decline. But though the interest of the
labour- er is strictly connected with that of the society, he is incapable either of
comprehending that interest, or of understanding its connexion with his own. His condition
leaves him no time to receive the necessary information, and his education and habits are
com- monly such as to render him unfit to judge, even though he was fully informed. In
the public deliberations, therefore, his voice is little heard, and less regarded; except
upon particular occasions, when his clamour is animated, set on, and supported by his
em- ployers, not for his, but their own particular purposes. His employers constitute the third
order, that of those who live by profit. It is the stock that is employed for the sake of profit,
which puts into motion the greater part of the useful labour of every society. The plans and
projects of the employers of stock regulate and direct all the most important operation of
labour, and profit is the end pro- posed by all those plans and projects. But the rate of profit
does not, like rent and wages, rise with the prosperity, and fall with the declension of the
society. On the con- trary, it is naturally low in rich, and high in poor countries, and it is
always highest in the countries which are going fastest to ruin. The interest of this third order,
therefore, has not the same connexion with the general interest of the society, as that of the
other two. Merchants and master manufacturers are, in this order, the two classes of
people who commonly employ the largest capitals, and who by their wealth draw to
themselves the greatest share of the public consideration. As during their whole lives they are
en- gaged in plans and projects, they have frequently more acuteness of understanding than the
greater part of country gentlemen. As their thoughts, however, are commonly exercised rather
about the interest of their own particular branch of business. than about that of the society,
their judgment, even when given with the greatest candour (which it has not been upon every
occasion), is much more to be depended upon with regard to the former of those two objects,
than with regard to the latter. Their superi- ority over the country gentleman is, not so much in
their knowledge of the public inter- est, as in their having a better knowledge of their own
interest than he has of his. It is by this superior knowledge of their own interest that they have
frequently imposed upon his generosity, and persuaded him to give up both his own interest
and that of the public, from a very simple but honest conviction, that their interest, and not
his, was the interest of the public. The interest of the dealers, however, in any particular branch
of trade or manufactures, is always in some respects different from, and even opposite to, that
of the public. To widen the market, and to narrow the competition, is always the interest of the
dealers. To widen the market may frequently be agreeable enough to the interest of the public;
but to narrow the competition must always be against it, and can only serve to enable the
dealers, by raising their profits above what they naturally would be, to levy, for their own
benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or
regulation of commerce which comes from this order, ought always to be listened to with great
precaution, and ought never to be adopted till after having been long and carefully examined,
not only with the most scrupulous, but with the most suspicious attention. It comes from an
order of men, whose interest is never exactly the same with that of the public, who have
gener- ally an interest to deceive and even to oppress the public, and who accordingly
have, upon many occasions, both deceived and oppressed it. 

# PRICES OF WHEAT  
BOOK II. OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK. 

INTRODUCTION.  In that rude state of society, in which there is no division of labour, in

which exchanges are seldom made, and in which every man provides every thing for himself, it
is not necessary that any stock should be accumulated, or stored up before-hand, in order to
carry on the business of the society. Every man endeavours to supply, by his own industry, his
own occasional wants, as they occur. When he is hungry, he goes to the forest to hunt; when
his coat is worn out, he clothes himself with the skin of the first large animal he kills: and
when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that
are nearest it. But when the division of labour has once been thoroughly introduced, the
produce of a man's own labour can supply but a very small part of his occasional wants. The
far greater part of them are supplied by the produce of other men's labour, which he purchases
with the produce, or, what is the same thing, with the price of the produce, of his own. But this
purchase cannot be made till such time as the produce of his own labour has not only been
completed, but sold. A stock of goods of different kinds, therefore, must be stored up
somewhere, sufficient to maintain him, and to supply him with the materials and tools of his
work, till such time at least as both these events can be brought about. A weaver cannot apply
himself entirely to his peculiar business, un- less there is before-hand stored up somewhere,
either in his own possession, or in that of some other person, a stock sufficient to maintain him,
and to supply him with the materials and tools of his work, till he has not only completed, but
sold his web. This accumulation must evidently be previous to his applying his industry for so
long a time to such a peculiar business. As the accumulation of stock must, in the nature of
things, be previous to the division of labour, so labour can be more and more subdivided in
proportion only as stock is previously more and more accumulated. The quantity of materials
which the same number of people can work up, increases in a great proportion as labour comes
to be more and more subdivided; and as the operations of each workman are gradually reduced
to a greater degree of simplicity, a variety of new machines come to be invented for facilitating
and abridging those operations. As the division of labour advances, therefore, in order to give
constant employment to an equal number of work- men, an equal stock of provisions, and a
greater stock of materials and tools than what would have been necessary in a ruder state of
things, must be accumulated before-hand. But the number of workmen in every branch of
business generally increases with the division of labour in that branch; or rather it is the
increase of their number which enables them to class and subdivide themselves in this
manner. As the accumulation of stock is previously necessary for carrying on this great
improvement in the productive powers of labour, so that accumulation naturally leads to this
improvement. The person who employs his stock in maintaining labour, necessarily wishes to
employ it in such a manner as to produce as great a quantity of work as possible. He
endeavours, therefore, both to make among his workmen the most proper distribution of
employment, and to furnish them with the best machines which he can either invent or afford
to purchase. His abilities, in both these respects, are generally in proportion to the extent of his
stock, or to the number of people whom it can employ. The quantity of industry, therefore, not
only increases in every country with the increase of the stock which employs it, but, in
consequence of that increase, the same quantity of industry produces a much greater quantity
of work. Such are in general the effects of the increase of stock upon industry and its
productive pow- ers. In the following book, I have endeavoured to explain the nature of stock,
the effects of its ac- cumulation into capital of different kinds, and the effects of the different
employments of those capitals. This book is divided into five chapters. In the first chapter, I
have endeavoured to shew what are the different parts or branches into which the stock, either
of an individual, or of a great society, naturally divides itself. In the second, I have
endeavoured to explain the nature and oper- ation of money, considered as a particular branch
of the general stock of the society. The stock which is accumulated into a capital, may either be
employed by the person to whom it belongs, or it may be lent to some other person. In the third
and fourth chapters, I have endeavoured to examine the manner in which it operates in both
these situations. The fifth and last chapter treats of the different effects which the different
employments of capital immediately produce upon the quantity, both of national industry, and
of the annual produce of land and labour. 

CHAPTER I. OF THE DIVISION OF STOCK.  When the stock which a man possesses is no

more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of
deriving any revenue from it. He consumes it as spar- ingly as he can, and endeavours, by his
labour, to acquire something which may supply its place before it be consumed altogether. His
revenue is, in this case, derived from his labour only. This is the state of the greater part of the
labouring poor in all countries. But when he possesses stock sufficient to maintain him for
months or years, he naturally en- deavours to derive a revenue from the greater part of it,
reserving only so much for his immediate consumption as may maintain him till this revenue
begins to come in. His whole stock, therefore, is distinguished into two parts. That part which
he expects is to afford him this revenue is called his capital. The other is that which supplies
his immediate consumption, and which consists ei- ther, first, in that portion of his whole stock
which was originally reserved for this purpose; or, secondly, in his revenue, from whatever
source derived, as it gradually comes in; or, thirdly, in such things as had been purchased by
either of these in former years, and which are not yet en- tirely consumed, such as a stock of
clothes, household furniture, and the like. In one or other, or all of these three articles, consists
the stock which men commonly reserve for their own imme- diate consumption. There are two
different ways in which a capital may be employed so as to yield a revenue or  profit to its
employer. First, it maybe employed in raising, manufacturing, or purchasing goods, and selling
them again with a profit. The capital employed in this manner yields no revenue or profit to its
em- ployer, while it either remains in his possession, or continues in the same shape. The
goods of the merchant yield him no revenue or profit till he sells them for money, and the
money yields him as little till it is again exchanged for goods. His capital is continually going
from him in one shape, and returning to him in another; and it is only by means of such
circulation, or successive changes, that it can yield him any profit. Such capitals, therefore,
may very properly be called circulating capitals. Secondly, it may be employed in the
improvement of land, in the purchase of useful ma- chines and instruments of trade, or in such
like things as yield a revenue or profit without chang- ing masters, or circulating any further.
Such capitals, therefore, may very properly be called fixed capitals. Different occupations
require very different proportions between the fixed and circulating capitals employed in
them. The capital of a merchant, for example, is altogether a circulating capital. He has
occasion for no machines or instruments of trade, unless his shop or warehouse be considered
as such. Some part of the capital of every master artificer or manufacturer must be fixed in the
instru- ments of his trade. This part, however, is very small in some, and very great in others, A
master tailor requires no other instruments of trade but a parcel of needles. Those of the master
shoe- maker are a little, though but a very little, more expensive. Those of the weaver rise a
good deal above those of the shoemaker. The far greater part of the capital of all such master
artificers, how- ever, is circulated either in the wages of their workmen, or in the price of their
materials, and re- paid, with a profit, by the price of the work. In other works a much greater
fixed capital is required. In a great iron-work, for example, the furnace for melting the ore, the
forge, the slit-mill, are instruments of trade which cannot be erected without a very great
expense. In coal works, and mines of every kind, the machinery necessary, both for drawing
out the water, and for other purposes, is frequently still more expen- sive. That part of the
capital of the farmer which is employed in the instruments of agriculture is a fixed, that which
is employed in the wages and maintenance of his labouring servants is a circu- lating capital.
He makes a profit of the one by keeping it in his own possession, and of the other by parting
with it. The price or value of his labouring cattle is a fixed capital, in the same manner as that
of the instruments of husbandry; their maintenance is a circulating capital, in the same  manner
as that of the labouring servants. The farmer makes his profit by keeping the labouring cattle,
and by parting with their maintenance. Both the price and the maintenance of the cattle which
are bought in and fattened, not for labour, but for sale, are a circulating capital. The
farmer makes his profit by parting with them. A flock of sheep or a herd of cattle, that, in a
breeding country, is brought in neither for labour nor for sale, but in order to make a profit by
their wool, by their milk, and by their increase, is a fixed capital. The profit is made by keeping
them. Their maintenance is a circulating capital. The profit is made by parting with it; and it
comes back with both its own profit and the profit upon the whole price of the cattle, in the
price of the wool, the milk, and the increase. The whole value of the seed, too, is properly a
fixed capital. Though it goes backwards and forwards between the ground and the granary, it
never changes masters, and therefore does not properly circulate. The farmer makes his profit,
not by its sale, but by its in- crease. The general stock of any country or society is the same
with that of all its inhabitants or mem- bers; and, therefore, naturally divides itself into the
same three portions, each of which has a dis- tinct function or office. The first is that portion
which is reserved for immediate consumption, and of which the characteristic is, that it affords
no revenue or profit. It consists in the stock of food, clothes, house- hold furniture, etc. which
have been purchased by their proper consumers, but which are not yet entirely consumed. The
whole stock of mere dwelling-houses, too, subsisting at anyone time in the country, make a
part of this first portion. The stock that is laid out in a house, if it is to be the dwelling-house of
the proprietor, ceases from that moment to serve in the function of a capital, or  to afford any
revenue to its owner. A dwelling-house, as such, contributes nothing to the revenue of its
inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes
and household furniture are useful to him, which, however, make a part of his expense, and not
of his revenue. If it is to be let to a tenant for rent, as the house itself can produce nothing, the
tenant must always pay the rent out of some other revenue, which he derives, either from
labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and
thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in
the function of a capital to it, and the revenue of the whole body of the people can never be in
the smallest degree increased by it. Clothes and household furniture, in the same manner,
sometimes yield a rev- enue, and thereby serve in the function of a capital to particular
persons. In countries where mas- querades are common, it is a trade to let out masquerade
dresses for a night. Upholsterers fre- quently let furniture by the month or by the year.
Undertakers let the furniture of funerals by the day and by the week. Many people let furnished
houses, and get a rent, not only for the use of the house, but for that of the furniture. The
revenue, however, which is derived from such things, must always be ultimately drawn from
some other source of revenue. Of all parts of the stock, ei- ther of an individual or of a society,
reserved for immediate consumption, what is laid out in houses is most slowly consumed. A
stock of clothes may last several years; a stock of furniture half a century or a century; but a
stock of houses, well built and properly taken care of, may last many  centuries. Though the
period of their total consumption, however, is more distant, they are still as  really a stock
reserved for immediate consumption as either clothes or household furniture. The second of
the three portions into which the general stock of the society divides itself, is the fixed capital;
of which the characteristic is, that it affords a revenue or profit without circu- lating or
changing masters. It consists chiefly of the four following articles. First, of all useful machines
and instruments of trade, which facilitate and abridge labour. Secondly, of all those profitable
buildings which are the means of procuring a revenue, not only to the proprietor who lets them
for a rent, but to the person who possesses them, and pays that rent for them; such as shops,
warehouses, work-houses, farm-houses, with all their necessary buildings, stables, granaries,
etc. These are very different from mere dwelling-houses. They are a sort of instruments of
trade, and may be considered in the same light. Thirdly, of the improvements of land, of what
has been profitably laid out in clearing, drain- ing, inclosing, manuring, and reducing it into the
condition most proper for tillage and culture. An improved farm may very justly be regarded in
the same light as those useful machines which facilitate and abridge labour, and by means of
which an equal circulating capital can afford a much greater revenue to its employer. An
improved farm is equally advantageous and more durable than any of those machines,
frequently requiring no other repairs than the most prof- itable application of the farmer's
capital employed in cultivating it. Fourthly, of the acquired and useful abilities of all the
inhabitants and members of the soci- ety. The acquisition of such talents, by the maintenance
of the acquirer during his education, study, or apprenticeship, always costs a real expense,
which is a capital fixed and realized, as it were, in his person. Those talents, as they make a
part of his fortune, so do they likewise that of the society to which he belongs. The improved
dexterity of a workman may be considered in the same light as a machine or instrument of
trade which facilitates and abridges labour, and which, though it costs a certain expense, repays
that expense with a profit. The third and last of the three portions into which the general stock
of the society naturally divides itself, is the circulating capital, of which the characteristic is,
that it affords a revenue only by circulating or changing masters. It is composed likewise of
four parts. First, of the money, by means of which all the other three are circulated and
distributed to their proper consumers. Secondly, of the stock of provisions which are in the
possession of the butcher, the grazier, the farmer, the corn-merchant, the brewer, etc. and from
the sale of which they expect to derive a profit. Thirdly, of the materials, whether altogether
rude, or more or less manufactured, of clothes, furniture, and building which are not yet made
up into any of those three shapes, but which re- main in the hands of the growers, the
manufacturers, the mercers, and drapers, the timber- merchants, the carpenters and joiners, the
brick-makers, etc. Fourthly, and lastly, of the work which is made up and completed, but
which is still in the hands of the merchant and manufacturer, and not yet disposed of or
distributed to the proper consumers; such as the finished work which we frequently find ready
made in the shops of the smith, the cabinet-maker, the goldsmith, the jeweller, the china-
merchant, etc. The circulating capital consists, in this manner, of the provisions, materials, and
finished work of all kinds that are in the hands of their respective dealers, and of the money
that is necessary for circulating and distributing them to those who are finally to use or to
consume them. Of these four parts, three—provisions, materials, and finished work, are either
annually or in a longer or shorter period, regularly withdrawn from it, and placed either in the
fixed capital, or in the stock reserved for immediate consumption. Every fixed capital is both
originally derived from, and requires to be continually supported by, a circulating capital. All
useful machines and instruments of trade are originally derived from a circulating capital,
which furnishes the materials of which they are made, and the maintenance  of the workmen
who make them. They require, too, a capital of the same kind to keep them in constant
repair. No fixed capital can yield any revenue but by means of a circulating capital. The most
useful machines and instruments of trade will produce nothing, without the circulating capital,
which affords the materials they are employed upon, and the maintenance of the workmen who
employ them. Land, however improved, will yield no revenue without a circulating capital,
which main- tains the labourers who cultivate and collect its produce. To maintain and
augment the stock which maybe reserved for immediate consumption, is the sole end and
purpose both of the fixed and circulating capitals. It is this stock which feeds,  clothes, and
lodges the people. Their riches or poverty depend upon the abundant or sparing sup-  plies
which those two capitals can afford to the stock reserved for immediate consumption.  So great
a part of the circulating capital being continually withdrawn from it, in order to be placed in
the other two branches of the general stock of the society, it must in its turn require con- tinual
supplies without which it would soon cease to exist. These supplies are principally drawn from
three sources; the produce of land, of mines, and of fisheries. These afford continual sup- plies
of provisions and materials, of which part is afterwards wrought up into finished work and by
which are replaced the provisions, materials, and finished work, continually withdrawn
from he circulating capital. From mines, too, is drawn what is necessary for maintaining and
aug- menting that part of it which consists in money. For though, in the ordinary course of
business, this part is not, like the other three, necessarily withdrawn from it, in order to be
placed in the other two branches of the general stock of the society, it must, however, like all
other things, be wasted and worn out at last, and sometimes, too, be either lost or sent abroad,
and must, there- fore, require continual, though no doubt much smaller supplies. Lands, mines,
and fisheries, require all both a fixed and circulating capital to cultivate them;  and their
produce replaces, with a profit not only those capitals, but all the others in the society. Thus the
farmer annually replaces to the manufacturer the provisions which he had consumed, and the
materials which he had wrought up the year before; and the manufacturer replaces to
the farmer the finished work which he had wasted and worn out in the same time. This is the
real ex- change that is annually made between those two orders of people, though it seldom
happens that the rude produce of the one, and the manufactured produce of the other, are
directly bartered for one another; because it seldom happens that the farmer sells his corn and
his cattle, his flax and his wool, to the very same person of whom he chuses to purchase the
clothes, furniture, and in- struments of trade, which he wants. He sells, therefore, his rude
produce for money, with which he can purchase, wherever it is to be had, the manufactured
produce he has occasion for. Land even replaces, in part at least, the capitals with which
fisheries and mines are cultivated. It is the produce of land which draws the fish from the
waters; and it is the produce of the surface of the earth which extracts the minerals from its
bowels. The produce of land, mines, and fisheries, when their natural fertility is equal, is in
propor- tion to the extent and proper application of the capitals employed about them. When
the capitals are equal, and equally well applied, it is in proportion to their natural fertility. In all
countries where there is a tolerable security, every man of common understanding
will endeavour to employ whatever stock he can command, in procuring either present
enjoyment or future profit. If it is employed in procuring present enjoyment, it is a stock
reserved for imme- diate consumption. If it is employed in procuring future profit, it must
procure this profit either by staying with him, or by going from him. In the one case it is a
fixed, in the other it is a circu- lating capital. A man must be perfectly crazy, who, where there
is a tolerable security, does not employ all the stock which he commands, whether it be his
own, or borrowed of other people, in some one or other of those three ways. In those
unfortunate countries, indeed, where men are continually afraid of the violence of their
superiors, they frequently bury or conceal a great part of their stock, in order to have it
al- ways at hand to carry with them to some place of safety, in case of their being threatened
with any of those disasters to which they consider themselves at all times exposed. This is said
to be a com- mon practice in Turkey, in Indostan, and, I believe, in most other governments of
Asia. It seems to have been a common practice among our ancestors during the violence of the
feudal govern- ment. Treasure-trove was, in these times, considered as no contemptible part of
the revenue of the greatest sovereigns in Europe. It consisted in such treasure as was found
concealed in the earth, and to which no particular person could prove any right. This was
regarded, in those times, as so important an object, that it was always considered as belonging
to the sovereign, and neither to the finder nor to the proprietor of the land, unless the right to it
had been conveyed to the latter by an express clause in his charter. It was put upon the same
footing with gold and silver mines, which, without a special clause in the charter, were never
supposed to be comprehended in the general grant of the lands, though mines of lead, copper,
tin, and coal were, as things of smaller consequence. 

CHAPTER II. OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF

THE GENERAL STOCK OF THE SOCIETY, OR OF THE EXPENSE OF MAINTAINING
THE NATIONAL CAPITAL.  It has been shown in the First Book, that the price of the greater
part of commodities resolves itself into three parts, of which one pays the wages of the labour,
another the profits of the stock, and a third the rent of the land which had been employed in
producing and bringing them to market: that there are, indeed, some commodities of which the
price is made up of two of those parts only, the wages of labour, and the profits of stock; and a
very few in which it consists alto- gether in one, the wages of labour; but that the price of
every commodity necessarily resolves it- self into some one or other, or all, of those three
parts; every part of it which goes neither to rent nor to wages, being necessarily profit to some
body. Since this is the case, it has been observed, with regard to every particular commodity,
taken separately, it must be so with regard to all the commodities which compose the whole
annual pro- duce of the land and labour of every country, taken complexly. The whole price or
exchangeable value of that annual produce must resolve itself into the same three parts, and be
parcelled out among the different inhabitants of the country, either as the wages of their labour,
the profits of their stock, or the rent of their land. But though the whole value of the annual
produce of the land and labour of every country, is thus divided among, and constitutes a
revenue to, its different inhabitants; yet, as in the rent of a private estate, we distinguish
between the gross rent and the neat rent, so may we likewise in the revenue of all the
inhabitants of a great country. The gross rent of a private estate comprehends whatever is paid
by the farmer; the neat rent, what remains free to the landlord, after deducting the expense of
management, of repairs, and all other necessary charges; or what, without hurting his estate, he
can afford to place in his stock re- served for immediate consumption, or to spend upon his
table, equipage, the ornaments of his house and furniture, his private enjoyments and
amusements. His real wealth is in proportion, not to his gross, but to his neat rent. The gross
revenue of all the inhabitants of a great country comprehends the whole annual produce of
their land and labour; the neat revenue, what remains free to them, after deducting the expense
of maintaining first, their fixed, and, secondly, their circulating capital, or what, with- out
encroaching upon their capital, they can place in their stock reserved for immediate
consump- tion, or spend upon their subsistence, conveniencies, and amusements. Their real
wealth, too, is in proportion, not to their gross, but to their neat revenue. The whole expense of
maintaining the fixed capital must evidently be excluded from the neat revenue of the society.
Neither the materials necessary for supporting their useful machines and instruments of trade,
their profitable buildings, etc. nor the produce of the labour necessary for fashioning those
materials into the proper form, can ever make any part of it. The price of that labour may
indeed make a part of it; as the workmen so employed may place the whole value of  their
wages in their stock reserved for immediate consumption. But in other sorts of labour, both the
price and the produce go to this stock; the price to that of the workmen, the produce to that
of other people, whose subsistence, conveniencies, and amusements, are augmented by the
labour of those workmen. The intention of the fixed capital is to increase the productive
powers of labour, or to enable the same number of labourers to perform a much greater
quantity of work. In a farm where all the necessary buildings, fences, drains, communications,
etc. are in the most perfect good order, the same number of labourers and labouring cattle will
raise a much greater produce, than in one of equal extent and equally good ground, but not
furnished with equal conveniencies. In man- ufactures, the same number of hands, assisted
with the best machinery, will work up a much greater quantity of goods than with more
imperfect instruments of trade. The expense which is properly laid out upon a fixed capital of
any kind, is always repaid with great profit, and increases the annual produce by a much
greater value than that of the support which such improvements require. This support,
however, still requires a certain portion of that produce. A certain quantity of materials, and the
labour of a certain number of workmen, both of which might have been im- mediately
employed to augment the food, clothing, and lodging, the subsistence and conve- niencies of
the society, are thus diverted to another employment, highly advantageous indeed, but still
different from this one. It is upon this account that all such improvements in mechanics,
as enable the same number of workmen to perform an equal quantity of work with cheaper and
sim- pler machinery than had been usual before, are always regarded as advantageous to every
society. A certain quantity of materials, and the labour of a certain number of workmen, which
had before been employed in supporting a more complex and expensive machinery, can
afterwards be ap- plied to augment the quantity of work which that or any other machinery is
useful only for per- forming. The undertaker of some great manufactory, who employs a
thousand a-year in the maintenance of his machinery, if he can reduce this expense to five
hundred, will naturally em- ploy the other five hundred in purchasing an additional quantity of
materials, to be wrought up by an additional number of workmen. The quantity of that work,
therefore, which his machinery was useful only for performing, will naturally be augmented,
and with it all the advantage and conveniency which the society can derive from that
work. The expense of maintaining the fixed capital in a great country, may very properly be
com- pared to that of repairs in a private estate. The expense of repairs may frequently be
necessary for supporting the produce of the estate, and consequently both the gross and the
neat rent of the landlord. When by a more proper direction, however, it can be diminished
without occasioning any diminution of produce, the gross rent remains at least the same as
before, and the neat rent is necessarily augmented. But though the whole expense of
maintaining the fixed capital is thus necessarily excluded from the neat revenue of the society,
it is not the same case with that of maintaining the circu- lating capital. Of the four parts of
which this latter capital is composed, money, provisions, mate- rials, and finished work, the
three last, it has already been observed, are regularly withdrawn from it, and placed either in
the fixed capital of the society, or in their stock reserved for immediate consumption.
Whatever portion of those consumable goods is not employed in maintaining the former, goes
all to the latter, and makes a part of the neat revenue of the society. The maintenance  of those
three parts of the circulating capital, therefore, withdraws no portion of the annual pro- duce
from the neat revenue of the society, besides what is necessary for maintaining the
fixed capital. The circulating capital of a society is in this respect different from that of an
individual. That of an individual is totally excluded from making any part of his neat revenue,
which must consist altogether in his profits. But though the circulating capital of every
individual makes a part of that of the society to which he belongs, it is not upon that account
totally excluded from making a part likewise of their neat revenue. Though the whole goods in
a merchant's shop must by no means be placed in his own stock reserved for immediate
consumption, they may in that of other people, who, from a revenue derived from other funds,
may regularly replace their value to him, together with its profits, without occasioning any
diminution either of his capital or of theirs. Money, therefore, is the only part of the circulating
capital of a society, of which the mainte- nance can occasion any diminution in their neat
revenue. The fixed capital, and that part of the circulating capital which consists in money, so
far as they affect the revenue of the society, bear a very great resemblance to one
another. First, as those machines and instruments of trade, etc. require a certain expense, first
to erect them, and afterwards to support them, both which expenses, though they make a part
of the gross, are deductions from the neat revenue of the society; so the stock of money which
circulates in any country must require a certain expense, first to collect it, and afterwards to
support it; both which expenses, though they make a part of the gross, are, in the same manner,
deductions from the neat revenue of the society. A certain quantity of very valuable materials,
gold and silver, and of very curious labour, instead of augmenting the stock reserved for
immediate consumption, the subsistence, conveniencies, and amusements of individuals, is
employed in supporting that great but expensive instrument of commerce, by means of which
every individual in the society has his subsistence, conveniencies, and amusements, regularly
distributed to him in their proper proportions. Secondly, as the machines and instruments of
trade, etc. which compose the fixed capital ei- ther of an individual or of a society, make no
part either of the gross or of the neat revenue of ei- ther; so money, by means of which the
whole revenue of the society is regularly distributed among all its different members, makes
itself no part of that revenue. The great wheel of circu- lation is altogether different from the
goods which are circulated by means of it. The revenue of the society consists altogether in
those goods, and not in the wheel which circulates them. In com- puting either the gross or the
neat revenue of any society, we must always, from the whole annual circulation of money and
goods, deduct the whole value of the money, of which not a single far- thing can ever make
any part of either. It is the ambiguity of language only which can make this proposition appear
either doubtful or paradoxical. When properly explained and understood, it is almost self-
evident. When we talk of any particular sum of money, we sometimes mean nothing but the
metal pieces of which it is composed, and sometimes we include in our meaning some obscure
refer- ence to the goods which can be had in exchange for it, or to the power of purchasing
which the possession of it conveys. Thus, when we say that the circulating money of England
has been com- puted at eighteen millions, we mean only to express the amount of the metal
pieces, which some writers have computed, or rather have supposed, to circulate in that
country. But when we say that a man is worth fifty or a hundred pounds a-year, we mean
commonly to express, not only the amount of the metal pieces which are annually paid to him,
but the value of the goods which he can annually purchase or consume; we mean commonly to
ascertain what is or ought to be his way of living, or the quantity and quality of the necessaries
and conveniencies of life in which he can with propriety indulge himself. When, by any
particular sum of money, we mean not only to express the amount of the metal  pieces of which
it is composed, but to include in its signification some obscure reference to the goods which
can be had in exchange for them, the wealth or revenue which it in this case de- notes, is equal
only to one of the two values which are thus intimated somewhat ambiguously by the same
word, and to the latter more properly than to the former, to the money's worth more properly
than to the money. Thus, if a guinea be the weekly pension of a particular person, he can in the
course of the week purchase with it a certain quantity of subsistence, conveniencies, and
amusements. In pro- portion as this quantity is great or small, so are his real riches, his real
weekly revenue. His week- ly revenue is certainly not equal both to the guinea and to what can
be purchased with it, but only to one or other of those two equal values, and to the latter more
properly than to the former, to the guinea's worth rather than to the guinea. If the pension of
such a person was paid to him, not in gold, but in a weekly bill for a guinea, his revenue surely
would not so properly consist in the piece of paper, as in what he could get for it. A guinea
may be considered as a bill for a certain quantity of necessaries and conveniencies  upon all the
tradesmen in the neighbourhood. The revenue of the person to whom it is paid, does not so
properly consist in the piece of gold, as in what he can get for it, or in what he can ex- change
it for. If it could be exchanged for nothing, it would, like a bill upon a bankrupt, be of no more
value than the most useless piece of paper. Though the weekly or yearly revenue of all the
different inhabitants of any country, in the same manner, may be, and in reality frequently is,
paid to them in money, their real riches, how- ever, the real weekly or yearly revenue of all of
them taken together, must always be great or small, in proportion to the quantity of
consumable goods which they can all of them purchase with this money. The whole revenue of
all of them taken together is evidently not equal to both the money and the consumable goods,
but only to one or other of those two values, and to the latter more properly than to the
former. Though we frequently, therefore, express a person's revenue by the metal pieces which
are annually paid to him, it is because the amount of those pieces regulates the extent of his
power of purchasing, or the value of the goods which he can annually afford to consume. We
still consider his revenue as consisting in this power of purchasing or consuming, and not in
the pieces which convey it. But if this is sufficiently evident, even with regard to an individual,
it is still more so with re- gard to a society. The amount of the metal pieces which are annually
paid to an individual, is often precisely equal to his revenue, and is upon that account the
shortest and best expression of its value. But the amount of the metal pieces which circulate in
a society, can never be equal to the revenue of all its members. As the same guinea which pays
the weekly pension of one man to- day, may pay that of another to-morrow, and that of a third
the day thereafter, the amount of the metal pieces which annually circulate in any country,
must always be of much less value than the whole money pensions annually paid with them.
But the power of purchasing, or the goods which can successively be bought with the whole of
those money pensions, as they are succes- sively paid, must always be precisely of the same
value with those pensions; as must likewise be the revenue of the different persons to whom
they are paid. That revenue, therefore, cannot con- sist in those metal pieces, of which the
amount is so much inferior to its value, but in the power of purchasing, in the goods which can
successively be bought with them as they circulate from hand to hand. Money, therefore, the
great wheel of circulation, the great instrument of commerce, like all other instruments of
trade, though it makes a part, and a very valuable part, of the capital, makes no part of the
revenue of the society to which it belongs; and though the metal pieces of which it is
composed, in the course of their annual circulation, distribute to every man the revenue
which properly belongs to him, they make themselves no part of that revenue. Thirdly, and
lastly, the machines and instruments of trade, etc. which compose the fixed cap- ital, bear this
further resemblance to that part of the circulating capital which consists in money; that as
every saving in the expense of erecting and supporting those machines, which does
not diminish the introductive powers of labour, is an improvement of the neat revenue of the
society; so every saving in the expense of collecting and supporting that part of the circulating
capital which consists in money is an improvement of exactly the same kind. It is sufficiently
obvious, and it has partly, too, been explained already, in what manner every saving in the
expense of supporting the fixed capital is an improvement of the neat revenue of the society.
The whole capital of the undertaker of every work is necessarily divided between his fixed  and
his circulating capital. While his whole capital remains the same, the smaller the one part,
the greater must necessarily be the other. It is the circulating capital which furnishes the
materials and wages of labour, and puts industry into motion. Every saving, therefore, in the
expense of maintaining the fixed capital, which does not diminish the productive powers of
labour, must in- crease the fund which puts industry into motion, and consequently the annual
produce of land and labour, the real revenue of every society. The substitution of paper in the
room of gold and silver money, replaces a very expensive in- strument of commerce with one
much less costly, and sometimes equally convenient. Circulation comes to be carried on by a
new wheel, which it costs less both to erect and to maintain than the old one. But in what
manner this operation is performed, and in what manner it tends to increase either the gross or
the neat revenue of the society, is not altogether so obvious, and may therefore require some
further explication. There are several different sorts of paper money; but the circulating notes
of banks and bankers are the species which is best known, and which seems best adapted for
this purpose. When the people of any particular country have such confidence in the fortune,
probity and prudence of a particular banker, as to believe that he is always ready to pay upon
demand such of his promissory notes as are likely to be at any time presented to him, those
notes come to have the same currency as gold and silver money, from the confidence that such
money can at any time be had for them. A particular banker lends among his customers his
own promissory notes, to the extent, we shall suppose, of a hundred thousand pounds. As those
notes serve all the purposes of money, his debtors pay him the same interest as if he had lent
them so much money. This interest is the source of his gain. Though some of those notes are
continually coming back upon him for pay- ment, part of them continue to circulate for months
and years together. Though he has generally in circulation, therefore, notes to the extent of a
hundred thousand pounds, twenty thousand pounds in gold and silver may, frequently, be a
sufficient provision for answering occasional de- mands. By this operation, therefore, twenty
thousand pounds in gold and silver perform all the functions which a hundred thousand could
otherwise have performed. The same exchanges may be made, the same quantity of
consumable goods may be circulated and distributed to their prop- er consumers, by means of
his promissory notes, to the value of a hundred thousand pounds, as by an equal value of gold
and silver money. Eighty thousand pounds of gold and silver, therefore, can in this manner be
spared from the circulation of the country; and if different operations of the the same kind
should, at the same time, be carried on by many different banks and bankers, the whole
circulation may thus be conducted with a fifth part only of the gold and silver which would
otherwise have been requisite. Let us suppose, for example, that the whole circulating money
of some particular country amounted, at a particular time, to one million sterling, that sum
being then sufficient for circu- lating the whole annual produce of their land and labour; let us
suppose, too, that some time thereafter, different banks and bankers issued promissory notes
payable to the bearer, to the ex- tent of one million, reserving in their different coffers two
hundred thousand pounds for answer- ing occasional demands; there would remain, therefore,
in circulation, eight hundred thousand pounds in gold and silver, and a million of bank notes,
or eighteen hundred thousand pounds of paper and money together. But the annual produce of
the land and labour of the country had be- fore required only one million to circulate and
distribute it to its proper consumers, and that an- nual produce cannot be immediately
augmented by those operations of banking. One million, therefore, will be sufficient to
circulate it after them. The goods to be bought and sold being pre- cisely the same as before,
the same quantity of money will be sufficient for buying and selling them. The channel of
circulation, if I may be allowed such an expression, will remain precisely the same as before.
One million we have supposed sufficient to fill that channel. Whatever, there- fore, is poured
into it beyond this sum, cannot run into it, but must overflow. One million eight hundred
thousand pounds are poured into it. Eight hundred thousand pounds, therefore, must overflow,
that sum being over and above what can be employed in the circulation of the country. But
though this sum cannot be employed at home, it is too valuable to be allowed to lie idle. It will,
therefore, be sent abroad, in order to seek that profitable employment which it cannot find
at home. But the paper cannot go abroad; because at a distance from the banks which issue it,
and from the country in which payment of it can be exacted by law, it will not be received in
common payments. Gold and silver, therefore, to the amount of eight hundred thousand
pounds, will be sent abroad, and the channel of home circulation will remain filled with a
million of paper instead of a million of those metals which filled it before. But though so great
a quantity of gold and silver is thus sent abroad, we must not imagine that it is sent abroad for
nothing, or that its proprietors make a present of it to foreign nations. They will exchange it for
foreign goods of some kind or another, in order to supply the consump- tion either of some
other foreign country, or of their own. If they employ it in purchasing goods in one foreign
country, in order to supply the con- sumption of another, or in what is called the carrying trade,
whatever profit they make will be in addition to the neat revenue of their own country. It is like
a new fund, created for carrying on a new trade; domestic business being now transacted by
paper, and the gold and silver being con- verted into a fund for this new trade. If they employ it
in purchasing foreign goods for home consumption, they may either, first, purchase such goods
as are likely to be consumed by idle people, who produce nothing, such as foreign wines,
foreign silks, etc.; or, secondly, they may purchase an additional stock of materials, tools, and
provisions, in order to maintain and employ an additional number of industrious peo- ple, who
reproduce, with a profit, the value of their annual consumption. So far as it is employed in the
first way, it promotes prodigality, increases expense and con- sumption, without increasing
production, or establishing any permanent fund for supporting that expense, and is in every
respect hurtful to the society. 

consumption of the society, it provides a permanent fund for supporting that consumption;
the people who consume reproducing, with a profit, the whole value of their annual
consumption. The gross revenue of the society, the annual produce of their land and labour, is
increased by the whole value which the labour of those workmen adds to the materials upon
which they are em- ployed, and their neat revenue by what remains of this value, after
deducting what is necessary for supporting the tools and instruments of their trade. That the
greater part of the gold and silver which being forced abroad by those operations of  banking, is
employed in purchasing foreign goods for home consumption, is, and must be, em- ployed in
purchasing those of this second kind, seems not only probable, but almost
unavoidable. Though some particular men may sometimes increase their expense very
considerably, though their revenue does not increase at all, we maybe assured that no class or
order of men ever does so; because, though the principles of common prudence do not always
govern the conduct of every individual, they always influence that of the majority of every
class or order. But the revenue of idle people, considered as a class or order, cannot, in the
smallest degree, be increased by those operations of banking. Their expense in general,
therefore, cannot be much increased by them, though that of a few individuals among them
may, and in reality sometimes is. The demand of idle people, therefore, for foreign goods,
being the same, or very nearly the same as before, a very small part of the money which, being
forced abroad by those operations of banking, is employed in purchasing foreign goods for
home consumption, is likely to be employed in purchasing those for their use. The greater part
of it will naturally be destined for the employment of industry, and not for the maintenance of
idleness. When we compute the quantity of industry which the circulating capital of any
society can employ, we must always have regard to those parts of it only which consist in
provisions, mate- rials, and finished work; the other, which consists in money, and which
serves only to circulate those three, must always be deducted. In order to put industry into
motion, three things are requisite; materials to work upon, tools to work with, and the wages or
recompence for the sake of which the work is done. Money is neither a material to work upon,
nor a tool to work with; and though the wages of the workman are commonly paid to him in
money, his real revenue, like that of all other men, consists, not in the money, but in the
money's worth; not in the metal pieces, but in what can be got for them. The quantity of
industry which any capital can employ, must evidently be equal to the num- ber of workmen
whom it can supply with materials, tools, and a maintenance suitable to the na- ture of the
work. Money may be requisite for purchasing the materials and tools of the work, as well as
the maintenance of the workmen; but the quantity of industry which the whole capital
can employ, is certainly not equal both to the money which purchases, and to the materials,
tools, and maintenance, which are purchased with it, but only to one or other of those two
values, and to the latter more properly than to the former. When paper is substituted in the
room of gold and silver money, the quantity of the mate- rials, tools, and maintenance, which
the whole circulating capital can supply, may be increased by the whole value of gold and
silver which used to be employed in purchasing them. The whole value of the great wheel of
circulation and distribution is added to the goods which are circulated and distributed by means
of it. The operation, in some measure, resembles that of the undertaker of some great work,
who, in consequence of some improvement in mechanics, takes down his old machinery, and
adds the difference between its price and that of the new to his circulating capital,  to the fund
from which he furnishes materials and wages to his workmen. What is the proportion which
the circulating money of any country bears to the whole value of the annual produce circulated
by means of it, it is perhaps impossible to determine. It has been computed by different authors
at a fifth, at a tenth, at a twentieth, and at a thirtieth, part of that value. But how small soever
the proportion which the circulating money may bear to the whole value of the annual produce,
as but a part, and frequently but a small part, of that produce, is ever destined for the
maintenance of industry, it must always bear a very considerable proportion to that part. When,
therefore, by the substitution of paper, the gold and silver necessary for circu- lation is reduced
to, perhaps, a fifth part of the former quantity, if the value of only the greater part of the other
four-fifths be added to the funds which are destined for the maintenance of industry, it must
make a very considerable addition to the quantity of that industry, and, conse- quently, to the
value of the annual produce of land and labour. An operation of this kind has, within these
five-and-twenty or thirty years, been performed in Scotland, by the erection of new banking
companies in almost every considerable town, and even in some country villages. The effects
of it have been precisely those above described. The business of the country is almost entirely
carried on by means of the paper of those different banking companies, with which purchases
and payments of all kinds are commonly made. Silver very sel- dom appears, except in the
change of a twenty shilling bank note, and gold still seldomer. But though the conduct of all
those different companies has not been unexceptionable, and has ac- cordingly required an act
of parliament to regulate it, the country, notwithstanding, has evidently derived great benefit
from their trade. I have heard it asserted, that the trade of the city of Glas-  gow doubled in
about fifteen years after the first erection of the banks there; and that the trade of  Scotland has
more than quadrupled since the first erection of the two public banks at Edinburgh; of which
the one, called the Bank of Scotland, was established by act of parliament in 1695, and the
other, called the Royal Bank, by royal charter in 1727. Whether the trade, either of Scotland
in general, or of the city of Glasgow in particular, has really increased in so great a proportion,
dur- ing so short a period, I do not pretend to know. If either of them has increased in this
proportion, it seems to be an effect too great to be accounted for by the sole operation of this
cause. That the trade and industry of Scotland, however, have increased very considerably
during this period, and that the banks have contributed a good deal to this increase, cannot be
doubted. The value of the silver money which circulated in Scotland before the Union in 1707,
and which, immediately after it, was brought into the Bank of Scotland, in order to be
recoined, amounted to £411,117: 10: 9 sterling. No account has been got of the gold coin; but
it appears from the ancient accounts of the mint of Scotland, that the value of the gold annually
coined somewhat exceeded that of the silver. There were a good many people, too, upon this
occasion, who, from a diffidence of repayment, did not bring their silver into the Bank of
Scotland; and there was, be- sides, some English coin, which was not called in. The whole
value of the gold and silver, there- fore, which circulated in Scotland before the Union, cannot
be estimated at less than a million sterling. It seems to have constituted almost the whole
circulation of that country; for though the circulation of the Bank of Scotland, which had then
no rival, was considerable, it seems to have made but a very small part of the whole. In the
present times, the whole circulation of Scotland cannot be estimated at less than two millions,
of which that part which consists in gold and silver, most probably, does not amount to half a
million. But though the circulating gold and silver of Scotland have suffered so great a
diminution during this period, its real riches and prosperity do not appear to have suffered any.
Its agriculture, manufactures, and trade, on the contrary, the an- nual produce of its land and
labour, have evidently been augmented. It is chiefly by discounting bills of exchange, that is,
by advancing money upon them before they are due, that the greater part of banks and bankers
issue their promissory notes. They deduct always, upon whatever sum they advance, the legal
interest till the bill shall become due. The pay- ment of the bill, when it becomes due, replaces
to the bank the value of what had been advanced, together with a clear profit of the interest.
The banker, who advances to the merchant whose bill he discounts, not gold and silver, but his
own promissory notes, has the advantage of being able to discount to a greater amount by the
whole value of his promissory notes, which he finds, by experience, are commonly in
circulation. He is thereby enabled to make his clear gain of interest on so much a larger
sum. The commerce of Scotland, which at present is not very great, was still more
inconsiderable when the two first banking companies were established; and those companies
would have had but little trade, had they confined their business to the discounting of bills of
exchange. They in- vented, therefore, another method of issuing their promissory notes; by
granting what they call cash accounts, that is, by giving credit, to the extent of a certain sum
(two or three thousand pounds for example), to any individual who could procure two persons
of undoubted credit and good landed estate to become surety for him, that whatever money
should be advanced to him, within the sum for which the credit had been given, should be
repaid upon demand, together with the legal interest. Credits of this kind are, I believe,
commonly granted by banks and bankers in all different parts of the world. But the easy terms
upon which the Scotch banking companies accept of repayment are, so far as I know, peculiar
to them, and have perhaps been the principal cause, both of the great trade of those companies,
and of the benefit which the country has re- ceived from it. Whoever has a credit of this kind
with one of those companies, and borrows a thousand pounds upon it, for example, may repay
this sum piece-meal, by twenty and thirty pounds at a time, the company discounting a
proportionable part of the interest of the great sum, from the day on which each of those small
sums is paid in, till the whole be in this manner repaid. All mer- chants, therefore, and almost
all men of business, find it convenient to keep such cash accounts with them, and are thereby
interested to promote the trade of those companies, by readily receiv- ing their notes in all
payments, and by encouraging all those with whom they have any influence to do the same.
The banks, when their customers apply to them for money, generally advance it to them in
their own promissory notes. These the merchants pay away to the manufacturers for goods, the
manufacturers to the farmers for materials and provisions, the farmers to their land- lords for
rent; the landlords repay them to the merchants for the conveniencies and luxuries with which
they supply them, and the merchants again return them to the banks, in order to balance their
cash accounts, or to replace what they my have borrowed of them; and thus almost the
whole money business of the country is transacted by means of them. Hence the great trade of
those companies. By means of those cash accounts, every merchant can, without imprudence,
carry on a greater trade than he otherwise could do. If there are two merchants, one in London
and the other in Edinburgh, who employ equal stocks in the same branch of trade, the
Edinburgh merchant can, without imprudence, carry on a greater trade, and give employment
to a greater number of peo- ple, than the London merchant. The London merchant must always
keep by him a considerable sum of money, either in his own coffers, or in those of his banker,
who gives him no interest for it, in order to answer the demands continually coming upon him
for payment of the goods which he purchases upon credit. Let the ordinary amount of this sum
be supposed five hundred pounds; the value of the goods in his warehouse must always be less,
by five hundred pounds, than it would have been, had he not been obliged to keep such a sum
unemployed. Let us sup- pose that he generally disposes of his whole stock upon hand, or of
goods to the value of his whole stock upon hand, once in the year. By being obliged to keep so
great a sum unemployed, he must sell in a year five hundred pounds worth less goods than he
might otherwise have done. His annual profits must be less by all that he could have made by
the sale of five hundred pounds worth more goods; and the number of people employed in
preparing his goods for the market must be less by all those that five hundred pounds more
stock could have employed. The mer- chant in Edinburgh, on the other hand, keeps no money
unemployed for answering such occa- sional demands. When they actually come upon him, he
satisfies them from his cash account with the bank, and gradually replaces the sum borrowed
with the money or paper which comes in from the occasional sales of his goods. With the same
stock, therefore, he can, without impru- dence, have at all times in his warehouse a larger
quantity of goods than the London merchant; and can thereby both make a greater profit
himself, and give constant employment to a greater number of industrious people who prepare
those goods for the market. Hence the great benefit which the country has derived from this
trade.  

The facility of discounting bills of exchange, it may be thought, indeed, gives the
English merchants a conveniency equivalent to the cash accounts of the Scotch merchants. But
the Scotch merchants, it must be remembered, can discount their bills of exchange as easily as
the English merchants; and have, besides, the additional conveniency of their cash
accounts. The whole paper money of every kind which can easily circulate in any country,
never can ex- ceed the value of the gold and silver, of which it supplies the place, or which (the
commerce being supposed the same) would circulate there, if there was no paper money. If
twenty shilling notes, for example, are the lowest paper money current in Scotland, the whole
of that currency which can easily circulate there, cannot exceed the sum of gold and silver
which would be necessary for transacting the annual exchanges of twenty shillings value and
upwards usually transacted within that country. Should the circulating paper at any time
exceed that sum, as the excess could neither be sent abroad nor be employed in the circulation
of the country, it must immediately return upon the banks, to be exchanged for gold and silver.
Many people would immediately perceive that they had more of this paper than was necessary
for transacting their business at home; and as they could not send it abroad, they would
immediately demand payment for it from the banks. When this superfluous paper was
converted into gold and silver, they could easily find a use for it, by sending it abroad; but they
could find none while it remained in the shape of paper. There would immediately, therefore,
be a run upon the banks to the whole extent of this superfluous paper, and if they showed any
difficulty or backwardness in payment, to a much greater extent; the alarm which this would
occasion necessarily increasing the run. Over and above the expenses which are common to
every branch of trade, such as the ex- pense of house-rent, the wages of servants, clerks,
accountants, etc. the expenses peculiar to a bank consist chiefly in two articles: first, in the
expense of keeping at all times in its coffers, for answering the occasional demands of the
holders of its notes, a large sum of money, of which it loses the interest; and, secondly, in the
expense of replenishing those coffers as fast as they are emptied by answering such occasional
demands. A banking company which issues more paper than can be employed in the
circulation of the country, and of which the excess is continually returning upon them for
payment, ought to in- crease the quantity of gold and silver which they keep at all times in their
coffers, not only in pro- portion to this excessive increase of their circulation, but in a much
greater proportion; their notes returning upon them much faster than in proportion to the excess
of their quantity. Such a com- pany, therefore, ought to increase the first article of their
expense, not only in proportion to this forced increase of their business, but in a much greater
proportion. The coffers of such a company, too, though they ought to be filled much fuller, yet
must empty themselves much faster than if their business was confined within more
reasonable bounds, and must require not only a more violent, but a more constant and
uninterrupted exer- tion of expense, in order to replenish them, The coin, too, which is thus
continually drawn in such large quantities from their coffers, cannot be employed in the
circulation of the country. It comes in place of a paper which is over and above what can be
employed in that circulation, and is, therefore, over and above what can be employed in it too.
But as that coin will not be allowed to lie idle, it must, in one shape or another, be sent abroad,
in order to find that profitable employ- ment which it cannot find at home; and this continual
exportation of gold and silver, by enhanc- ing the difficulty, must necessarily enhance still
farther the expense of the bank, in finding new gold and silver in order to replenish those
coffers, which empty themselves so very rapidly. Such a company, therefore, must in
proportion to this forced increase of their business, increase the sec- ond article of their
expense still more than the first. Let us suppose that all the paper of a particular bank, which
the circulation of the country can easily absorb and employ, amounts exactly to forty thousand
pounds, and that, for answering occasional demands, this bank is obliged to keep at all times in
its coffers ten thousand pounds in gold and silver. Should this bank attempt to circulate forty-
four thousand pounds, the four thou- sand pounds which are over and above what the
circulation can easily absorb and employ, will re- turn upon it almost as fast as they are issued.
For answering occasional demands, therefore, this bank ought to keep at all times in its coffers,
not eleven thousand pounds only, but fourteen thousand pounds. It will thus gain nothing by
the interest of the four thousand pounds excessive circulation; and it will lose the whole
expense of continually collecting four thousand pounds in gold and silver, which will be
continually going out of its coffers as fast as they are brought into them. Had every particular
banking company always understood and attended to its own particular interest, the circulation
never could have been overstocked with paper money. But every particular banking company
has not always understood or attended to its own particular interest, and the circulation has
frequently been overstocked with paper money. By issuing too great a quantity of paper, of
which the excess was continually returning, in order to be exchanged for gold and silver, the
Bank of England was for many years together obliged to coin gold to the extent of between
eight hundred thousand pounds and a million a-year; or, at an average, about eight hundred and
fifty thousand pounds. For this great coinage, the bank (inconsequence of the worn and
degraded state into which the gold coin had fallen a few years ago) was frequently obliged to
purchase gold bullion at the high price of four pounds an ounce, which it soon after issued in
coin at £3:17:10 1/2 an ounce, losing in this manner between two and a half and three per cent.
upon the coinage of so very large a sum. Though the bank, therefore, paid no seignorage,
though the government was properly at the expense of this coinage, this liber- ality of
government did not prevent altogether the expense of the bank. The Scotch banks, in
consequence of an excess of the same kind, were all obliged to employ constantly agents at
London to collect money for them, at an expense which was seldom below one and a half or
two per cent. This money was sent down by the waggon, and insured by the car- riers at an
additional expense of three quarters per cent. or fifteen shillings on the hundred pounds. Those
agents were not always able to replenish the coffers of their employers so fast as  they were
emptied. In this case, the resource of the banks was, to draw upon their correspondents in
London bills of exchange, to the extent of the sum which they wanted. When those
corre- spondents afterwards drew upon them for the payment of this sum, together with the
interest and commission, some of those banks, from the distress into which their excessive
circulation had thrown them, had sometimes no other means of satisfying this draught, but by
drawing a second set of bills, either upon the same, or upon some other correspondents in
London; and the same sum, or rather bills for the same sum, would in this manner make
sometimes more than two or three journeys; the debtor bank paying always the interest and
commission upon the whole ac- cumulated sum. Even those Scotch banks which never
distinguished themselves by their extreme imprudence, were sometimes obliged to employ this
ruinous resource. The gold coin which was paid out, either by the Bank of England or by the
Scotch banks, in exchange for that part of their paper which was over and above what could be
employed in the circulation of the country, being likewise over and above what could be
employed in that circu- lation, was sometimes sent abroad in the shape of coin, sometimes
melted down and sent abroad in the shape of bullion, and sometimes melted down and sold to
the Bank of England at the high price of four pounds an ounce. It was the newest, the heaviest,
and the best pieces only, which were carefully picked out of the whole coin, and either sent
abroad or melted down. At home, and while they remained in the shape of coin, those heavy
pieces were of no more value than the light; but they were of more value abroad, or when
melted down into bullion at home. The Bank of Eng- land, notwithstanding their great annual
coinage, found, to their astonishment, that there was every year the same scarcity of coin as
there had been the year before; and that, notwithstanding the great quantity of good and new
coin which was every year issued from the bank, the state of the coin, instead of growing better
and better, became every year worse and worse. Every year they found themselves under the
necessity of coining nearly the same quantity of gold as they had coined the year before; and
from the continual rise in the price of gold bullion, in consequence of the continual wearing
and clipping of the coin, the expense of this great annual coinage became, every year, greater
and greater. The Bank of England, it is to be observed, by supplying its own coffers with coin,
is indirectly obliged to supply the whole kingdom, into which coin is continually flowing from
those coffers in a great variety of ways. Whatever coin, therefore, was wanted to sup-  port this
excessive circulation both of Scotch and English paper money, whatever vacuities
this excessive circulation occasioned in the necessary coin of the kingdom, the Bank of
England was obliged to supply them. The Scotch banks, no doubt, paid all of them very dearly
for their own imprudence and inattention: but the Bank of England paid very dearly, not only
for its own imprudence, but for the much greater imprudence of almost all the Scotch
banks. The over-trading of some bold projectors in both parts of the united kingdom, was the
orig- inal cause of this excessive circulation of paper money. What a bank can with propriety
advance to a merchant or undertaker of any kind, is not ei- ther the whole capital with which he
trades, or even any considerable part of that capital; but that part of it only which he would
otherwise be obliged to keep by him unemployed and in ready money, for answering
occasional demands. If the paper money which the bank advances never exceeds this value, it
can never exceed the value of the gold and silver which would necessarily circulate in the
country if there was no paper money; it can never exceed the quantity which the circulation of
the country can easily absorb and employ. When a bank discounts to a merchant a real bill of
exchange, drawn by a real creditor upon a real debtor, and which, as soon as it becomes due, is
really paid by that debtor; it only advances to him a part of the value which he would otherwise
be obliged to keep by him unemployed and in ready money, for answering occasional
demands. The payment of the bill, when it becomes due, replaces to the bank the value of what
it had advanced, together with the interest. The coffers of the bank, so far as its dealings are
confined to such customers, resemble a water-pond, from which, though a stream is
continually running out, yet another is continually running in, fully equal to that which runs
out; so that, without any further care or attention, the pond keeps always equally, or very near
equally full. Little or no expense can ever be necessary for replenishing the coffers of such a
bank. A merchant, without over-trading, may frequently have occasion for a sum of ready
money, even when he has no bills to discount. When a bank, besides discounting his bills,
advances him likewise, upon such occasions, such sums upon his cash account, and accepts of
a piece-meal repayment, as the money comes in from the occasional sale of his goods, upon
the easy terms of the banking companies of Scotland; it dispenses him entirely from the
necessity of keeping any part of his stock by him unemployed and in ready money for
answering occasional demands. When such demands actually come upon him, he can answer
them sufficiently from his cash ac- count. The bank, however, in dealing with such customers,
ought to observe with great attention, whether, in the course of some short period (of four, five,
six, or eight months, for example), the sum of the repayments which it commonly receives
from them, is, or is not, fully equal to that of the advances which it commonly makes to them.
If, within the course of such short periods, the sum of the repayments from certain customers
is, upon most occasions, fully equal to that of the advances, it may safely continue to deal with
such customers. Though the stream which is in this case continually running out from its
coffers may be very large, that which is continually running into them must be at least equally
large, so that, without any further care or attention, those cof- fers are likely to be always
equally or very near equally full, and scarce ever to require any extraor- dinary expense to
replenish them. If, on the contrary, the sum of the repayments from certain other customers,
falls commonly very much short of the advances which it makes to them, it can- not with any
safety continue to deal with such customers, at least if they continue to deal with it in  this
manner. The stream which is in this case continually running out from its coffers, is
neces- sarily much larger than that which is continually running in; so that, unless they are
replenished by some great and continual effort of expense, those coffers must soon be
exhausted altogether. The banking companies of Scotland, accordingly, were for a long time
very careful to require frequent and regular repayments from all their customers, and did not
care to deal with any per- son, whatever might be his fortune or credit, who did not make, what
they called, frequent and regular operations with them. By this attention, besides saving almost
entirely the extraordinary expense of replenishing their coffers, they gained two other very
considerable advantages. First, by this attention they were enabled to make some tolerable
judgment concerning the thriving or declining circumstances of their debtors, without being
obliged to look out for any other evidence besides what their own books afforded them; men
being, for the most part, either regular or irregular in their repayments, according as their
circumstances are either thriving or declining. A private man who lends out his money to
perhaps half a dozen or a dozen of debtors, may, either by himself or his agents, observe and
inquire both constantly and carefully into the conduct and situation of each of them. But a
banking company, which lends money to perhaps five hundred different people, and of which
the attention is continually occupied by objects of a very different kind, can have no regular
information concerning the conduct and circumstances of the greater part of its debtors,
beyond what its own books afford it. In requiring frequent and regular repayments from all
their customers, the banking companies of Scotland had probably this advantage in
view. Secondly, by this attention they secured themselves from the possibility of issuing
more paper money than what the circulation of the country could easily absorb and employ.
When they observed, that within moderate periods of time, the repayments of a particular
customer were, upon most occasions, fully equal to the advances which they had made to him,
they might be as- sured that the paper money which they had advanced to him had not, at any
time, exceeded the quantity of gold and silver which he would otherwise have been obliged to
keep by him for an- swering occasional demands; and that, consequently, the paper money,
which they had circulated by his means, had not at any time exceeded the quantity of gold and
silver which would have circulated in the country, had there been no paper money. The
frequency, regularity, and amount of his repayments, would sufficiently demonstrate that the
amount of their advances had at no time exceeded that part of his capital which he would
otherwise have been obliged to keep by him unemployed, and in ready money, for answering
occasional demands; that is, for the purpose of keeping the rest of his capital in constant
employment. It is this part of his capital only which, within moderate periods of time, is
continually returning to every dealer in the shape of money, whether paper or coin, and
continually going from him in the same shape. If the advances of the bank had commonly
exceeded this part of his capital, the ordinary amount of his repayments could not, within
moderate periods of time, have equalled the ordinary amount of its advances. The stream
which, by means of his dealings, was continually running into the coffers of the bank, could
not have been equal to the stream which, by means of the same dealings was
continually running out. The advances of the bank paper, by exceeding the quantity of gold and
silver which, had there been no such advances, he would have been obliged to keep by him for
answering occa- sional demands, might soon come to exceed the whole quantity of gold and
silver which ( the commerce being supposed the same ) would have circulated in the country,
had there been no paper money; and, consequently, to exceed the quantity which the
circulation of the country could easily absorb and employ; and the excess of this paper money
would immediately have returned upon the bank, in order to be exchanged for gold and silver.
This second advantage, though equal- ly real, was not, perhaps, so well understood by all the
different banking companies in Scotland as the first. When, partly by the conveniency of
discounting bills, and partly by that of cash accounts, the creditable traders of any country can
be dispensed from the necessity of keeping any part of their stock by them unemployed, and in
ready money, for answering occasional demands, they can rea- sonably expect no farther
assistance from hanks and bankers, who, when they have gone thus far, cannot, consistently
with their own interest and safety, go farther. A bank cannot, consistently with its own interest,
advance to a trader the whole, or even the greater part of the circulating cap- ital with which he
trades; because, though that capital is continually returning to him in the shape of money, and
going from him in the same shape, yet the whole of the returns is too distant from  the whole of
the outgoings, and the sum of his repayments could not equal the sum of his ad-  vances within
such moderate periods of time as suit the conveniency of a bank. Still less could a bank afford
to advance him any considerable part of his fixed capital; of the capital which the undertaker of
an iron forge, for example, employs in erecting his forge and smelting-houses, his work-
houses, and warehouses, the dwelling-houses of his workmen, etc.; of the capital which
the undertaker of a mine employs in sinking his shafts, in erecting engines for drawing out the
water, in making roads and waggon-ways, etc.; of the capital which the person who undertakes
to im- prove land employs in clearing, draining, inclosing, manuring, and ploughing waste
and uncultivated fields; in building farmhouses, with all their necessary appendages of stables,
gra- naries, etc. The returns of the fixed capital are, in almost all cases, much slower than those
of the circulating capital: and such expenses, even when laid out with the greatest prudence
and judg- ment, very seldom return to the undertaker till after a period of many years, a period
by far too distant to suit the conveniency of a bank. Traders and other undertakers may, no
doubt with great propriety, carry on a very considerable part of their projects with borrowed
money. In justice to their creditors, however, their own capital ought in this case to be
sufficient to insure, if I may say so, the capital of those creditors; or to render it extremely
improbable that those creditors should incur any loss, even though the success of the project
should fall very much short of the expec- tation of the projectors. Even with this precaution,
too, the money which is borrowed, and which it is meant should not be repaid till after a period
of several years, ought not to be borrowed of a bank, but ought to be borrowed upon bond or
mortgage, of such private people as propose to live upon the interest of their money, without
taking the trouble themselves to employ the capital, and who are, upon that account, willing to
lend that capital to such people of good credit as are likely to keep it for several years. A bank,
indeed, which lends its money without the expense of stamped paper, or of attorneys' fees for
drawing bonds and mortgages, and which accepts of repayment upon the easy terms of the
banking companies of Scotland, would, no doubt, be a very convenient creditor to such traders
and undertakers. But such traders and undertakers would surely be most inconvenient debtors
to such a bank. It is now more than five and twenty years since the paper money issued by the
different banking companies of Scotland was fully equal, or rather was somewhat more than
fully equal, to what the circulation of the country could easily absorb and employ. Those
companies, therefore, had so long ago given all the assistance to the traders and other
undertakers of Scotland which it is possible for banks and bankers, consistently with their own
interest, to give. They had even done somewhat more. They had over-traded a little, and had
brought upon themselves that loss, or at least that diminution of profit, which, in this particular
business, never fails to attend the smallest degree of over-trading. Those traders and other
undertakers, having got so much assis- tance from banks and bankers, wished to get still more.
The banks, they seem to have thought, could extend their credits to whatever sum might be
wanted, without incurring any other expense besides that of a few reams of paper. They
complained of the contracted views and dastardly spirit of the directors of those banks, which
did not, they said, extend their credits in proportion to the extension of the trade of the country;
meaning, no doubt, by the extension of that trade, the exten- sion of their own projects beyond
what they could carry on either with their own capital, or with what they had credit to borrow
of private people in the usual way of bond or mortgage. The banks, they seem to have thought,
were in honour bound to supply the deficiency, and to provide them with all the capital which
they wanted to trade with. The banks, however, were of a different opin- ion; and upon their
refusing to extend their credits, some of those traders had recourse to an expedient which, for a
time, served their purpose, though at a much greater expense, yet as effec- tually as the utmost
extension of bank credits could have done. This expedient was no other than the well known
shift of drawing and redrawing; the shift to which unfortunate traders have some- times
recourse, when they are upon the brink of bankruptcy. The practice of raising money in  this
manner had been long known in England; and, during the course of the late war, when the high
profits of trade afforded a great temptation to over-trading, is said to have been carried on to a
very great extent. From England it was brought into Scotland, where, in proportion to the
very limited commerce, and to the very moderate capital of the country, it was soon carried on
to a much greater extent than it ever had been in England. The practice of drawing and
redrawing is so well known to all men of business, that it may, perhaps, be thought
unnecessary to give any account of it. But as this book may come into the hands of many
people who are not men of business, and as the effects of this practice upon the banking trade
are not, perhaps, generally understood, even by men of business themselves, I shall endeavour
to explain it as distinctly as I can. The customs of merchants, which were established when the
barbarous laws of Europe did not enforce the performance of their contracts, and which, during
the course of the two last centuries, have been adopted into the laws of all European nations,
have given such extraordinary privileges to bills of exchange, that money is more readily
advanced upon them than upon any other species of obligation; especially when they are made
payable within so short a period as two or three months after their date. If, when the bill
becomes due, the acceptor does not pay it as soon as it is presented, he becomes from that
moment a bankrupt. The bill is protested, and re- turns upon the drawer, who, if he does not
immediately pay it, becomes likewise a bankrupt. If, before it came to the person who presents
it to the acceptor for payment, it had passed through the hands of several other persons, who
had successively advanced to one another the contents of it, either in money or goods, and
who, to express that each of them had in his turn received those contents, had all of them in
their order indorsed, that is, written their names upon the back of the bill; each indorser
becomes in his turn liable to the owner of the bill for those contents, and, if he fails to pay, he
becomes too, from that moment, a bankrupt. Though the drawer, acceptor, and in- dorsers of
the bill, should all of them be persons of doubtful credit; yet, still the shortness of the  date
gives some security to the owner of the bill. Though all of them may be very likely to
become bankrupts, it is a chance if they all become so in so short a time. The house is crazy,
says a weary traveller to himself, and will not stand very long; but it is a chance if it falls to-
night, and I will venture, therefore, to sleep in it to-night. The trader A in Edinburgh, we shall
suppose, draws a bill upon B in London, payable two months after date. In reality B in London
owes nothing to A in Edinburgh; but he agrees to accept of A 's bill, upon condition, that
before the term of payment he shall redraw upon A in Edinburgh for the same sum, together
with the interest and a commission, another bill, payable likewise two months after date. B
accordingly, before the expiration of the first two months, redraws this bill upon A in
Edinburgh; who, again before the expiration of the second two months, draws a second  bill
upon B in London, payable likewise two months after date; and before the expiration of
the third two months, B in London redraws upon A in Edinburgh another bill payable also
two months after date. This practice has sometimes gone on, not only for several months, but
for sev- eral years together, the bill always returning upon A in Edinburgh with the
accumulated interest and commission of all the former bills. The interest was five per cent. in
the year, and the com- mission was never less than one half per cent. on each draught. This
commission being repeated more than six times in the year, whatever money A might raise by
this expedient might neces- sarily have cost him something more than eight per cent. in the
year and sometimes a great deal more, when either the price of the commission happened to
rise, or when he was obliged to pay compound interest upon the interest and commission of
former bills. This practice was called raising money by circulation. In a country where the
ordinary profits of stock, in the greater part of mercantile projects, are supposed to run between
six and ten per cent. it must have been a very fortunate speculation, of which the returns could
not only repay the enormous expense at which the money was thus bor- rowed for carrying it
on, but afford, besides, a good surplus profit to the projector. Many vast and extensive projects,
however, were undertaken, and for several years carried on, without any other fund to support
them besides what was raised at this enormous expense. The projectors, no doubt, had in their
golden dreams the most distinct vision of this great profit. Upon their awak- ening, however,
either at the end of their projects, or when they were no longer able to carry them on, they very
seldom, I believe, had the good fortune to find it. {The method described in the text was by no
means either the most common or the most expensive one in which those adventurers
sometimes raised money by circulation. It frequently happened, that A in Edinburgh would
enable B in London to pay the first bill of exchange, by drawing, a few days before it became
due, a second bill at three months date upon the same B in London. This bill, being payable to
his own order, A sold in Edinburgh at par; and with its con- tents purchased bills upon London,
payable at sight to the order of B, to whom he sent them by the post. Towards the end of the
late war, the exchange between Edinburgh and London was fre- quently three per cent. against
Edinburgh, and those bills at sight must frequently have cost A that premium. This transaction,
therefore, being repeated at least four times in the year, and being loaded with a commission of
at least one half per cent. upon each repetition, must at that period have cost A, at least,
fourteen per cent. in the year. At other times A would enable to dis- charge the first bill of
exchange, by drawing, a few days before it became due, a second bill at two  months date, not
upon B, but upon some third person, C, for example, in London. This other bill was made
payable to the order of B, who, upon its being accepted by C, discounted it with some  banker
in London; and A enabled C to discharge it, by drawing, a few day's before it became due, a
third bill likewise at two months date, sometimes upon his first correspondent B, and
some- times upon some fourth or fifth person, D or E, for example. This third bill was made
payable to the order of C, who, as soon as it was accepted, discounted it in the same manner
with some banker in London. Such operations being repeated at least six times in the year, and
being loaded with a commission of at least one half per cent. upon each repetition, together
with the legal inter- est of five per cent. this method of raising money, in the same manner as
that described in the text, must have cost A something more than eight per cent. By saving,
however, the exchange be- tween Edinburgh and London, it was less expensive than that
mentioned in the foregoing part of this note; but then it required an established credit with
more houses than one in London, an advantage which many of these adventurers could not
always find it easy to procure.} The bills which A in Edinburgh drew upon B in London, he
regularly discounted two months before they were due, with some bank or banker in
Edinburgh; and the bills which B in London redrew upon A in Edinburgh, he as regularly
discounted, either with the Bank of England, or with some other banker in London. Whatever
was advanced upon such circulating bills was in Edin- burgh advanced in the paper of the
Scotch banks; and in London, when they were discounted at the Bank of England in the paper
of that bank. Though the bills upon which this paper had been advanced were all of them
repaid in their turn as soon as they became due, yet the value which had been really advanced
upon the first bill was never really returned to the banks which ad- vanced it; because, before
each bill became due, another bill was always drawn to somewhat a greater amount than the
bill which was soon to be paid: and the discounting of this other bill was essentially necessary
towards the payment of that which was soon to be due. This payment, there- fore, was
altogether fictitious. The stream which, by means of those circulating bills of exchange, had
once been made to run out from the coffers of the banks, was never replaced by any
stream which really ran into them. The paper which was issued upon those circulating bills of
exchange amounted, upon many occasions, to the whole fund destined for carrying on some
vast and extensive project of agri- culture, commerce, or manufactures; and not merely to that
part of it which, had there been no paper money, the projector would have been obliged to keep
by him unemployed, and in ready money, for answering occasional demands. The greater part
of this paper was, consequently, over and above the value of the gold and silver which would
have circulated in the country, had there been no paper money. It was over and above,
therefore, what the circulation of the country could easily absorb and employ, and upon that
account, immediately returned upon the banks, in order to be exchanged for gold and silver,
which they were to find as they could. It was a capital which those projectors had very artfully
contrived to draw from those banks, not only without their knowledge or deliberate consent,
but for some time, perhaps, without their having the most dis- tant suspicion that they had
really advanced it. When two people, who are continually drawing and redrawing upon one
another, discount their bills always with the same banker, he must immediately discover what
they are about, and see clearly that they are trading, not with any capital of their own, but with
the capital which he advances to them. But this discovery is not altogether so easy when they
discount their bills some- times with one banker, and sometimes with another, and when the
two same persons do not con- stantly draw and redraw upon one another, but occasionally run
the round of a great circle of pro- jectors, who find it for their interest to assist one another in
this method of raising money and to render it, upon that account, as difficult as possible to
distinguish between a real and a fictitious bill of exchange, between a bill drawn by a real
creditor upon a real debtor, and a bill for which there was properly no real creditor but the bank
which discounted it, nor any real debtor but the projector who made use of the money. When a
banker had even made this discovery, he might sometimes make it too late, and might find that
he had already discounted the bills of those projectors to so great an extent, that, by refusing to
discount any more, he would necessarily make them all bankrupts; and thus by ruining them,
might perhaps ruin himself. For his own interest and safety, therefore, he might find it
necessary, in this very perilous situation, to go on for some time, endeavouring, however, to
withdraw gradually, and, upon that account, making every day greater and greater difficulties
about discounting, in order to force these projectors by degrees to have recourse, either to other
bankers, or to other methods of raising money: so as that he himself might, as soon as possible,
get out of the circle. The difficulties, accordingly, which the Bank of England, which the
principal bankers in London, and which even the more prudent Scotch banks began, after a
certain time, and when all of them had already gone too far, to make about dis- counting, not
only alarmed, but enraged, in the highest degree, those projectors. Their own dis-  tress, of
which this prudent and necessary reserve of the banks was, no doubt, the immediate occasion,
they called the distress of the country; and this distress of the country, they said, was altogether
owing to the ignorance, pusillanimity, and bad conduct of the banks, which did not give a
sufficiently liberal aid to the spirited undertakings of those who exerted themselves in order to
beautify, improve, and enrich the country. It was the duty of the banks, they seemed to
think, to lend for as long a time, and to as great an extent, as they might wish to borrow. The
banks, however, by refusing in this manner to give more credit to those to whom they had
already given a great deal too much, took the only method by which it was now possible to
save either their own credit, or the public credit of the country. In the midst of this clamour and
distress, a new bank was established in Scotland, for the ex- press purpose of relieving the
distress of the country. The design was generous; but the execution was imprudent, and the
nature and causes of the distress which it meant to relieve, were not, per- haps, well
understood. This bank was more liberal than any other had ever been, both in granting cash-
accounts, and in discounting bills of exchange. With regard to the latter, it seems to have made
scarce any distinction between real and circulating bills, but to have discounted all equally.  It
was the avowed principle of this bank to advance upon any reasonable security, the whole
cap- ital which was to be employed in those improvements of which the returns are the most
slow and distant, such as the improvements of land. To promote such improvements was even
said to be the chief of the public-spirited purposes for which it was instituted. By its liberality
in granting cash-accounts, and in discounting bills of exchange, it, no doubt, issued great
quantities of its bank notes. But those bank notes being, the greater part of them, over and
above what the circu- lation of the country could easily absorb and employ, returned upon it, in
order to be exchanged for gold and silver, as fast as they were issued. Its coffers were never
well filled. The capital which had been subscribed to this bank, at two different subscriptions,
amounted to one hundred and sixty thousand pounds, of which eighty per cent. only was paid
up. This sum ought to have been paid in at several different instalments. A great part of the
proprietors, when they paid in their first instalment, opened a cash-account with the bank; and
the directors, thinking themselves obliged to treat their own proprietors with the same liberality
with which they treated all other men, allowed many of them to borrow upon this cash-account
what they paid in upon all their subsequent instalments. Such payments, therefore, only put
into one coffer what had the mo- ment before been taken out of another. But had the coffers of
this bank been filled ever so well, its excessive circulation must have emptied them faster than
they could have been replenished by any other expedient but the ruinous one of drawing upon
London; and when the bill became due, paying it, together with interest and commission, by
another draught upon the same place. Its coffers having been filled so very ill, it is said to have
been driven to this resource within a very few months after it began to do business. The estates
of the proprietors of this bank were worth several millions, and, by their subscription to the
original bond or contract of the bank, were really pledged for answering all its engagements.
By means of the great credit which so great a pledge necessarily gave it, it was,
notwithstanding its too liberal conduct, enabled to carry on business for more than two years.
When it was obliged to stop, it had in the circulation about two hundred thousand pounds in
bank notes. In order to support the circulation of those notes, which were continually returning
upon it as fast as they were issued, it had been constantly in the practice of drawing bills of
exchange upon London, of which the number and value were continually increasing, and,
when it stopt, amounted to upwards of six hundred thousand pounds. This bank, therefore, had,
in little more than the course of two years, advanced to different people upwards of  eight
hundred thousand pounds at five per cent. Upon the two hundred thousand pounds which it
circulated in bank notes, this five per cent. might perhaps be considered as a clear gain,
without any other deduction besides the expense of management. But upon upwards of six
hundred thou- sand pounds, for which it was continually drawing bills of exchange upon
London, it was paying, in the way of interest and commission, upwards of eight per cent. and
was consequently losing more than three per cent. upon more than three fourths of all its
dealings. The operations of this bank seem to have produced effects quite opposite to those
which were intended by the particular persons who planned and directed it. They seem to have
intended to support the spirited undertakings, for as such they considered them, which were at
that time car- rying on in different parts of the country; and, at the same time, by drawing the
whole banking business to themselves, to supplant all the other Scotch banks, particularly
those established at Edinburgh, whose backwardness in discounting bills of exchange had
given some offence. This bank, no doubt, gave some temporary relief to those projectors, and
enabled them to carry on their projects for about two years longer than they could otherwise
have done. But it thereby only enabled them to get so much deeper into debt; so that, when
ruin came, it fell so much the heav- ier both upon them and upon their creditors. The
operations of this bank, therefore, instead of re- lieving, in reality aggravated in the long-run
the distress which those projectors had brought both upon themselves and upon their country.
It would have been much better for themselves, their creditors, and their country, had the
greater part of them been obliged to stop two years sooner than they actually did. The
temporary relief, however, which this bank afforded to those projec- tors, proved a real and
permanent relief to the other Scotch banks. All the dealers in circulating bills of exchange,
which those other banks had become so backward in discounting, had recourse to this new
bank, where they were received with open arms. Those other banks, therefore, were enabled to
get very easily out of that fatal circle, from which they could not otherwise have disen-  gaged
themselves without incurring a considerable loss, and perhaps, too, even some degree
of discredit. In the long-run, therefore, the operations of this bank increased the real distress of
the coun- try, which it meant to relieve; and effectually relieved, from a very great distress,
those rivals whom it meant to supplant. At the first setting out of this bank, it was the opinion
of some people, that how fast soever its coffers might be emptied, it might easily replenish
them, by raising money upon the securities of those to whom it had advanced its paper.
Experience, I believe, soon convinced them that this method of raising money was by much
too slow to answer their purpose; and that coffers which originally were so ill filled, and which
emptied themselves so very fast, could be replenished by no other expedient but the ruinous
one of drawing bills upon London, and when they became due, paying them by other draughts
on the same place, with accumulated interest and commission. But though they had been able
by this method to raise money as fast as they wanted it, yet, in- stead of making a profit, they
must have suffered a loss of every such operation; so that in the long-run they must have
ruined themselves as a mercantile company, though perhaps not so soon as by the more
expensive practice of drawing and redrawing. They could still have made nothing by the
interest of the paper, which, being over and above what the circulation of the country
could absorb and employ, returned upon them in order to be exchanged for gold and silver, as
fast as they issued it; and for the payment of which they were themselves continually obliged
to borrow money. On the contrary, the whole expense of this borrowing, of employing agents
to look out for people who had money to lend, of negotiating with those people, and of
drawing the proper bond or assignment, must have fallen upon them, and have been so much
clear loss upon the balance of their accounts. The project of replenishing their coffers in this
manner may be compared to that of a man who had a water-pond from which a stream was
continually running out, and into which no stream was continually running, but who proposed
to keep it always equally full, by em- ploying a number of people to go continually with
buckets to a well at some miles distance, in order to bring water to replenish it. 

But though this operation had proved not only practicable, but profitable to the bank, as
a mercantile company; yet the country could have derived no benefit front it, but, on the
contrary, must have suffered a very considerable loss by it. This operation could not augment,
in the small- est degree, the quantity of money to be lent. It could only have erected this bank
into a sort of gen- eral loan office for the whole country. Those who wanted to borrow must
have applied to this bank, instead of applying to the private persons who had lent it their
money. But a bank which lends money, perhaps to five hundred different people, the greater
part of whom its directors can know very little about, is not likely to be more judicious in the
choice of its debtors than a private person who lends out his money among a few people whom
he knows, and in whose sober and frugal conduct he thinks he has good reason to confide. The
debtors of such a bank as that whose conduct I have been giving some account of were likely,
the greater part of them, to be chimerical projectors, the drawers and redrawers of circulating
bills of exchange, who would employ the money in extravagant undertakings, which, with all
the assistance that could be given them, they would probably never be able to complete, and
which, if they should be completed, would never repay the expense which they had really cost,
would never afford a fund capable of maintaining a quantity of labour equal to that which had
been employed about them. The sober and frugal debtors of private persons, on the contrary,
would be more likely to employ the money borrowed in sober undertakings which were
proportioned to their capitals, and which, though they might have less of the grand and the
marvellous, would have more of the solid and the profitable; which would repay with a large
profit whatever had been laid out upon them, and which would thus af- ford a fund capable of
maintaining a much greater quantity of labour than that which had been employed about them.
The success of this operation, therefore, without increasing in the smallest degree the capital of
the country, would only have transferred a great part of it from prudent and profitable to
imprudent and unprofitable undertakings. That the industry of Scotland languished for want of
money to employ it, was the opinion of the famous Mr Law. By establishing a bank of a
particular kind, which he seems to have imag- ined might issue paper to the amount of the
whole value of all the lands in the country, he pro- posed to remedy this want of money. The
parliament of Scotland, when he first proposed his project, did not think proper to adopt it. It
was afterwards adopted, with some variations, by the Duke of Orleans, at that time regent of
France. The idea of the possibility of multiplying paper money to almost any extent was the
real foundation of what is called the Mississippi scheme, the most extravagant project, both of
banking and stock-jobbing, that perhaps the world ever saw. The different operations of this
scheme are explained so fully, so clearly, and with so much order and distinctness, by Mr Du
Verney, in his Examination of the Political Reflections upon commerce and finances of Mr Du
Tot, that I shall not give any account of them. The principles upon which it was founded are
explained by Mr Law himself, in a discourse concerning money and trade, which he published
in Scotland when he first proposed his project. The splendid but visionary ideas which are set
forth in that and some other works upon the same principles, still continue to make an
impression upon many people, and have, perhaps, in part, contributed to that excess
of banking, which has of late been complained of, both in Scotland and in other places.  The
Bank of England is the greatest bank of circulation in Europe. It was incorporated,
in pursuance of an act of parliament, by a charter under the great seal, dated the 27th of July
1694. It at that time advanced to government the sum of £1,200,000 for an annuity of
£100,000, or for £ 96,000 a-year, interest at the rate of eight per cent. and £4,000 year for the
expense of manage- ment. The credit of the new government, established by the Revolution,
we may believe, must have been very low, when it was obliged to borrow at so high an
interest. In 1697, the bank was allowed to enlarge its capital stock, by an ingraftment of
£1,001,171:10s. Its whole capital stock, therefore, amounted at this time to £2,201,171: 10s.
This ingraftment is said to have been for the support of public credit. In 1696, tallies had been
at forty, and fifty, and sixty, per cent. discount, and bank notes at twenty per cent. {James
Postlethwaite's History of the Public Revenue, p.301.} During the great re-coinage of the
silver, which was going on at this time, the bank had thought proper to discontinue the
payment of its notes, which necessarily occa- sioned their discredit. 

In pursuance of the 7th Anne, c. 7, the bank advanced and paid into the exchequer the sum  of
£400,000; making in all the sum of £1,600,000, which it had advanced upon its original
annu- ity of £96,000 interest, and £4,000 for expense of management. In 1708, therefore, the
credit of government was as good as that of private persons, since it could borrow at six per
cent. interest, the common legal and market rate of those times. In pursuance of the same act,
the bank can- celled exchequer bills to the amount of £ 1,775,027: 17s: 10½d. at six per cent.
interest, and was at the same time allowed to take in subscriptions for doubling its capital. In
1703, therefore, the cap- ital of the bank amounted to £4,402,343; and it had advanced to
government the sum of £3,375,027:17:10½d. By a call of fifteen per cent. in 1709, there was
paid in, and made stock, £ 656,204:1:9d.; and by another of ten per cent. in 1710,
£501,448:12:11d. In consequence of those two calls, therefore, the bank capital amounted to £
5,559,995:14:8d. In pursuance of the 3rd George I. c.8, the bank delivered up two millions of
exchequer Bills to be cancelled. It had at this time, therefore, advanced to government
£5,375,027:17 10d. In pur- suance of the 8th George I. c.21, the bank purchased of the South-
sea company, stock to the amount of £4,000,000: and in 1722, in consequence of the
subscriptions which it had taken in for enabling it to make this purchase, its capital stock was
increased by £ 3,400,000. At this time, therefore, the bank had advanced to the public £
9,375,027 17s. 10½d.; and its capital stock amounted only to £ 8,959,995:14:8d. It was upon
this occasion that the sum which the bank had advanced to the public, and for which it received
interest, began first to exceed its capital stock, or the sum for which it paid a dividend to the
proprietors of bank stock; or, in other words, that the bank began to have an undivided capital,
over and above its divided one. It has continued to have an undivided capital of the same kind
ever since. In 1746, the bank had, upon different occasions, advanced to the public
£11,686,800, and its divided capital had been raised by different calls and subscriptions to £
10,780,000. The state of those two sums has continued to be the same ever since. In pursuance
of the 4th of George III. c.25, the bank agreed to pay to government for the  renewal of its
charter £110,000, without interest or re-payment. This sum, therefore did not in- crease either
of those two other sums. The dividend of the bank has varied according to the variations in the
rate of the interest which it has, at different times, received for the money it had advanced to
the public, as well as ac- cording to other circumstances. This rate of interest has gradually
been reduced from eight to three per cent. For some years past, the bank dividend has been at
five and a half per cent. The stability of the bank of England is equal to that of the British
government. All that it has advanced to the public must be lost before its creditors can sustain
any loss. No other banking company in England can be established by act of parliament, or can
consist of more than six members. It acts, not only as an ordinary bank, but as a great engine of
state. It receives and pays the greater part of the annuities which are due to the creditors of the
public; it circulates exche- quer bills; and it advances to government the annual amount of the
land and malt taxes, which are frequently not paid up till some years thereafter. In these
different operations, its duty to the public may sometimes have obliged it, without any fault of
its directors, to overstock the circu- lation with paper money. It likewise discounts merchants'
bills, and has, upon several different occasions, supported the credit of the principal houses,
not only of England, but of Hamburgh and Holland. Upon one occasion, in 1763, it is said to
have advanced for this purpose, in one week, about £1,600,000, a great part of it in bullion. I
do not, however, pretend to warrant either the greatness of the sum, or the shortness of the
time. Upon other occasions, this great company has been reduced to the necessity of paying in
sixpences. It is not by augmenting the capital of the country, but by rendering a greater part of
that cap- ital active and productive than would otherwise be so, that the most judicious
operations of bank- ing can increase the industry of the country. That part of his capital which
a dealer is obliged to keep by him unemployed and in ready money, for answering occasional
demands, is so much dead stock, which, so long as it remains in this situation, produces
nothing, either to him or to his country. The judicious operations of banking enable him to
convert this dead stock into active and productive stock; into materials to work upon; into tools
to work with; and into provisions and subsistence to work for; into stock which produces
something both to himself and to his country. The gold and silver money which circulates in
any country, and by means of which, the produce of its land and labour is annually circulated
and distributed to the proper consumers, is, in the same manner as the ready money of the
dealer, all dead stock. It is a very valuable part of the cap- ital of the country, which produces
nothing to the country. The judicious operations of banking, by substituting paper in the room
of a great part of this gold and silver, enable the country to con- vert a great part of this dead
stock into active and productive stock; into stock which produces something to the country.
The gold and silver money which circulates in any country may very properly be compared to
a highway, which, while it circulates and carries to market all the grass and corn of the
country, produces itself not a single pile of either. The judicious operations of banking, by
providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air,
enable the country to convert, as it were, a great part of its highways into good pastures, and
corn fields, and thereby to increase, very considerably, the annual produce of its land
and labour. The commerce and industry of the country, however, it must be acknowledged,
though they may be somewhat augmented, cannot be altogether so secure, when they are thus,
as it were, suspended upon the Daedalian wings of paper money, as when they travel about
upon the solid ground of gold and silver. Over and above the accidents to which they are
exposed from the un- skilfulness of the conductors of this paper money, they are liable to
several others, from which no prudence or skill of those conductors can guard them. An
unsuccessful war, for example, in which the enemy got possession of the capital,
and consequently of that treasure which supported the credit of the paper money, would
occasion a much greater confusion in a country where the whole circulation was carried on by
paper, than in one where the greater part of it was carried on by gold and silver. The usual
instrument of com- merce having lost its value, no exchanges could be made but either by
barter or upon credit. All taxes having been usually paid in paper money, the prince would not
have wherewithal either to pay his troops, or to furnish his magazines; and the state of the
country would be much more irretrievable than if the greater part of its circulation had
consisted in gold and silver. A prince, anxious to maintain his dominions at all times in the
state in which he can most easily defend them, ought upon this account to guard not only
against that excessive multiplication of paper money which ruins the very banks which issue it,
but even against that multiplication of it which enables them to fill the greater part of the
circulation of the country with it. The circulation of every country may be considered as
divided into two different branches; the circulation of the dealers with one another, and the
circulation between the dealers and the consumers. Though the same pieces of money, whether
paper or metal, may be employed some- times in the one circulation and sometimes in the
other; yet as both are constantly going on at the same time, each requires a certain stock of
money, of one kind or another, to carry it on. The value of the goods circulated between the
different dealers never can exceed the value of those circulated between the dealers and the
consumers; whatever is bought by the dealers being ulti- mately destined to be sold to the
consumers. The circulation between the dealers, as it is carried on by wholesale, requires
generally a pretty large sum for every particular transaction. That be- tween the dealers and the
consumers, on the contrary, as it is generally carried on by retail, fre- quently requires but very
small ones, a shilling, or even a halfpenny, being often sufficient. But small sums circulate
much faster than large ones. A shilling changes masters more frequently than a guinea, and a
halfpenny more frequently than a shilling. Though the annual purchases of all the consumers,
therefore, are at least equal in value to those of all the dealers, they can gener- ally be
transacted with a much smaller quantity of money; the same pieces, by a more rapid
circu- lation, serving as the instrument of many more purchases of the one kind than of the
other. Paper money may be so regulated as either to confine itself very much to the circulation
be- tween the different dealers, or to extend itself likewise to a great part of that between the
dealers and the consumers. Where no bank notes are circulated under £10 value, as in London,
paper money confines itself very much to the circulation between the dealers. When a ten
pound bank note comes into the hands of a consumer, he is generally obliged to change it at the
first shop where he has occasion to purchase five shillings worth of goods; so that it often
returns into the hands of a dealer before the consumer has spent the fortieth part of the money.
Where bank notes are issued for so small sums as 20s. as in Scotland, paper money extends
itself to a consid- erable part of the circulation between dealers and consumers. Before the Act
of parliament which put a stop to the circulation of ten and five shilling notes, it filled a still
greater part of that circu- lation. In the currencies of North America, paper was commonly
issued for so small a sum as a shilling, and filled almost the whole of that circulation. In some
paper currencies of Yorkshire, it was issued even for so small a sum as a sixpence. Where the
issuing of bank notes for such very small sums is allowed, and commonly prac-  tised, many
mean people are both enabled and encouraged to become bankers. A person whose promissory
note for £5, or even for 20s. would be rejected by every body, will get it to be received  without
scruple when it is issued for so small a sum as a sixpence. But the frequent bankruptcies  to
which such beggarly bankers must be liable, may occasion a very considerable
inconveniency, and sometimes even a very great calamity, to many poor people who had
received their notes in payment. It were better, perhaps, that no bank notes were issued in any
part of the kingdom for a smaller sum than £5. Paper money would then, probably, confine
itself, in every part of the king- dom, to the circulation between the different dealers, as much
as it does at present in London, where no bank notes are issued under £10 value; £5 being, in
most part of the kingdom, a sum which, though it will purchase, perhaps, little more than half
the quantity of goods, is as much considered, and is as seldom spent all at once, as £10 are
amidst the profuse expense of London. Where paper money, it is to be observed, is pretty much
confined to the circulation between dealers and dealers, as at London, there is always plenty of
gold and silver. Where it extends itself to a considerable part of the circulation between dealers
and consumers, as in Scotland, and still more in North America, it banishes gold and silver
almost entirely from the country; almost all the ordinary transactions of its interior commerce
being thus carried on by paper. The suppres- sion of ten and five shilling bank notes, somewhat
relieved the scarcity of gold and silver in Scot- land; and the suppression of twenty shilling
notes will probably relieve it still more. Those metals are said to have become more abundant
in America, since the suppression of some of their paper currencies. They are said, likewise, to
have been more abundant before the institution of those currencies. Though paper money
should be pretty much confined to the circulation between dealers and dealers, yet banks and
bankers might still be able to give nearly the same assistance to the indus- try and commerce of
the country, as they had done when paper money filled almost the whole circulation. The ready
money which a dealer is obliged to keep by him, for answering occasional demands, is
destined altogether for the circulation between himself and other dealers of whom he buys
goods. He has no occasion to keep any by him for the circulation between himself and
the consumers, who are his customers, and who bring ready money to him, instead of taking
any from him. Though no paper money, therefore, was allowed to be issued, but for such sums
as would confine it pretty much to the circulation between dealers and dealers; yet partly by
dis- counting real bills of exchange, and partly by lending upon cash-accounts, banks and
bankers might still be able to relieve the greater part of those dealers from the necessity of
keeping any considerable part of their stock by them unemployed, and in ready money, for
answering occa- sional demands. They might still be able to give the utmost assistance which
banks and bankers can with propriety give to traders of every kind. To restrain private people,
it may be said, from receiving in payment the promissory notes of a banker for any sum,
whether great or small, when they themselves are willing to receive them; or, to restrain a
banker from issuing such notes, when all his neighbours are willing to accept of them, is a
manifest violation of that natural liberty, which it is the proper business of law not to  infringe,
but to support. Such regulations may, no doubt, be considered as in some respect a violation of
natural liberty. But those exertions of the natural liberty of a few individuals, which might
endanger the security of the whole society, are, and ought to be, restrained by the laws of all
governments; of the most free, as well as or the most despotical. The obligation of
building party walls, in order to prevent the communication of fire, is a violation of natural
liberty, exactly of the same kind with the regulations of the banking trade which are here
proposed. A paper money, consisting in bank notes, issued by people of undoubted credit,
payable upon demand, without any condition, and, in fact, always readily paid as soon as
presented, is, in every respect, equal in value to gold and silver money, since gold and silver
money can at anytime be had for it. Whatever is either bought or sold for such paper, must
necessarily be bought or sold as cheap as it could have been for gold and silver. The increase
of paper money, it has been said, by augmenting the quantity, and consequently diminishing
the value, of the whole currency, necessarily augments the money price of commodi- ties. But
as the quantity of gold and silver, which is taken from the currency, is always equal to
the quantity of paper which is added to it, paper money does not necessarily increase the
quantity of the whole currency. From the beginning of the last century to the present time,
provisions never were cheaper in Scotland than in 1759, though, from the circulation of ten and
five shilling bank notes, there was then more paper money in the country than at present. The
proportion between the price of provisions in Scotland and that in England is the same now as
before the great mul- tiplication of banking companies in Scotland. Corn is, upon most
occasions, fully as cheap in Eng- land as in France, though there is a great deal of paper money
in England, and scarce any in France. In 1751 and 1752, when Mr Hume published his
Political Discourses, and soon after the great multiplication of paper money in Scotland, there
was a very sensible rise in the price of provisions, owing, probably, to the badness of the
seasons, and not to the multiplication of paper money. It would be otherwise, indeed, with a
paper money, consisting in promissory notes, of which the immediate payment depended, in
any respect, either upon the good will of those who issued them, or upon a condition which the
holder of the notes might not always have it in his power to fulfil, or of which the payment was
not exigible till after a certain number of years, and which, in the mean time, bore no interest.
Such a paper money would, no doubt, fall more or less below the value of gold and silver,
according as the difficulty or uncertainty of obtaining immediate pay- ment was supposed to be
greater or less, or according to the greater or less distance of time at  which payment was
exigible. Some years ago the different banking companies of Scotland were in the practice of
inserting into their bank notes, what they called an optional clause; by which they promised
payment to the bearer, either as soon as the note should be presented, or, in the option of the
directors, six months after such presentment, together with the legal interest for the said six
months. The direc- tors of some of those banks sometimes took advantage of this optional
clause, and sometimes threatened those who demanded gold and silver in exchange for a
considerable number of their notes, that they would take advantage of it, unless such
demanders would content themselves with a part of what they demanded. The promissory
notes of those banking companies consti- tuted, at that time, the far greater part of the currency
of Scotland, which this uncertainty of pay- ment necessarily degraded below value of gold and
silver money. During the continuance of this abuse (which prevailed chiefly in 1762, 1763, and
1764), while the exchange between London and Carlisle was at par, that between London and
Dumfries would sometimes be four per cent. against Dumfries, though this town is not thirty
miles distant from Carlisle. But at Carlisle, bills were paid in gold and silver; whereas at
Dumfries they were paid in Scotch bank notes; and the uncertainty of getting these bank notes
exchanged for gold and silver coin, had thus degraded them four per cent. below the value of
that coin. The same act of parliament which suppressed ten and five shilling bank notes,
suppressed likewise this optional clause, and thereby restored the exchange between England
and Scotland to its natural rate, or to what the course of trade and remittances might happen to
make it. In the paper currencies of Yorkshire, the payment of so small a sum as 6d. sometimes
de- pended upon the condition, that the holder of the note should bring the change of a guinea
to the person who issued it; a condition which the holders of such notes might frequently find it
very difficult to fulfil, and which must have degraded this currency below the value of gold
and silver money. An act of parliament, accordingly, declared all such clauses unlawful, and
suppressed, in the same manner as in Scotland, all promissory notes, payable to the bearer,
under 20s. value. 

The paper currencies of North America consisted, not in bank notes payable to the bearer
on demand, but in a government paper, of which the payment was not exigible till several
years after it was issued; and though the colony governments paid no interest to the holders of
this paper, they declared it to be, and in fact rendered it, a legal tender of payment for the full
value for which it was issued. But allowing the colony security to be perfectly good, £100,
payable fifteen years hence, for example, in a country where interest is at six per cent., is worth
little more than £40 ready money. To oblige a creditor, therefore, to accept of this as full
payment for a debt of £100, actually paid down in ready money, was an act of such violent
injustice, as has scarce, perhaps, been attempted by the government of any other country which
pretended to be free. It bears the evident marks of having originally been, what the honest and
downright Doctor Douglas assures us it was, a scheme of fraudulent debtors to cheat their
creditors. The government of Pennsyl- vania, indeed, pretended, upon their first emission of
paper money, in 1722, to render their paper of equal value with gold and silver, by enacting
penalties against all those who made any differ- ence in the price of their goods when they sold
them for a colony paper, and when they sold them for gold and silver, a regulation equally
tyrannical, but much less, effectual, than that which it was meant to support. A positive law
may render a shilling a legal tender for a guinea, because it may direct the courts of justice to
discharge the debtor who has made that tender; but no positive law can oblige a person who
sells goods, and who is at liberty to sell or not to sell as he pleases, to ac- cept of a shilling as
equivalent to a guinea in the price of them. Notwithstanding any regulation of this kind, it
appeared, by the course of exchange with Great Britain, that £100 sterling was occa-  sionally
considered as equivalent, in some of the colonies, to £130, and in others to so great a sum  as
£1100 currency; this difference in the value arising from the difference in the quantity of
paper emitted in the different colonies, and in the distance and probability of the term of its
final dis- charge and redemption. No law, therefore, could be more equitable than the act of
parliament, so unjustly complained of in the colonies, which declared, that no paper currency
to be emitted there in time coming, should be a legal tender of payment. Pennsylvania was
always more moderate in its emissions of paper money than any other of our colonies. Its paper
currency, accordingly, is said never to have sunk below the value of the gold and silver which
was current in the colony before the first emission of its paper money. Be- fore that emission,
the colony had raised the denomination of its coin, and had, by act of assem-  bly, ordered 5s.
sterling to pass in the colonies for 6s:3d., and afterwards for 6s:8d. A pound, colony currency,
therefore, even when that currency was gold and silver, was more than thirty per cent. below
the value of £1 sterling; and when that currency was turned into paper, it was seldom  much
more than thirty per cent. below that value. The pretence for raising the denomination of the
coin was to prevent the exportation of gold and silver, by making equal quantities of
those metals pass for greater sums in the colony than they did in the mother country. It was
found, however, that the price of all goods from the mother country rose exactly in proportion
as they raised the denomination of their coin, so that their gold and silver were exported as fast
as ever. The paper of each colony being received in the payment of the provincial taxes, for the
full value for which it had been issued, it necessarily derived from this use some additional
value, over and above what it would have had, from the real or supposed distance of the term
of its final discharge and redemption. This additional value was greater or less, according as
the quantity of paper issued was more or less above what could be employed in the payment of
the taxes of the particular colony which issued it. It was in all the colonies very much above
what could be em- ployed in this manner. A prince, who should enact that a certain proportion
of his taxes should be paid in a paper money of a certain kind, might thereby give a certain
value to this paper money, even though the term of its final discharge and redemption should
depend altogether upon the will of the prince. If the bank which issued this paper was careful
to keep the quantity of it always somewhat below what could easily be employed in this
manner, the demand for it might be such as to make it even bear a premium, or sell for
somewhat more in the market than the quantity of gold or silver cur- rency for which it was
issued. Some people account in this manner for what is called the agio of the bank of
Amsterdam, or for the superiority of bank money over current money, though this bank money,
as they pretend, cannot be taken out of the bank at the will of the owner. The greater part of
foreign bills of exchange must be paid in bank money, that is, by a transfer in the books of the
bank; and the directors of the bank, they allege, are careful to keep the whole quantity of
bank money always below what this use occasions a demand for. It is upon this account, they
say, the bank money sells for a premium, or bears an agio of four or five per cent. above the
same nom- inal sum of the gold and silver currency of the country. This account of the bank of
Amsterdam, however, it will appear hereafter, is in a great measure chimerical. A paper
currency which falls below the value of gold and silver coin, does not thereby sink the value of
those metals, or occasion equal quantities of them to exchange for a smaller quantity of goods
of any other kind. The proportion between the value of gold and silver and that of goods of  any
other kind, depends in all cases, not upon the nature and quantity of any particular
paper money, which may be current in any particular country, but upon the richness or poverty
of the mines, which happen at any particular time to supply the great market of the commercial
world with those metals. It depends upon the proportion between the quantity of labour which
is neces- sary in order to bring a certain quantity of gold and silver to market, and that which is
necessary in order to bring thither a certain quantity of any other sort of goods. If bankers are
restrained from issuing any circulating bank notes, or notes payable to the bearer, for less than
a certain sum; and if they are subjected to the obligation of an immediate and unconditional
payment of such bank notes as soon as presented, their trade may, with safety to  the public, be
rendered in all other respects perfectly free. The late multiplication of banking companies in
both parts of the united kingdom, an event by which many people have been much alarmed,
instead of diminishing, increases the security of the public. It obliges all of them to be  more
circumspect in their conduct, and, by not extending their currency beyond its due propor- tion
to their cash, to guard themselves against those malicious runs, which the rivalship of so many
competitors is always ready to bring upon them. It restrains the circulation of each partic- ular
company within a narrower circle, and reduces their circulating notes to a smaller number. By
dividing the whole circulation into a greater number of parts, the failure of any one
company, an accident which, in the course of things, must sometimes happen, becomes of less
consequence to the public. This free competition, too, obliges all bankers to be more liberal in
their dealings with their customers, lest their rivals should carry them away. In general, if any
branch of trade, or any division of labour, be advantageous to the public, the freer and more
general the compe- tition, it will always be the more so. 

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

AND UNPRODUCTIVE LABOUR.  There is one sort of labour which adds to the value of the
subject upon which it is bestowed; there is another which has no such effect. The former as it
produces a value, may be called pro- ductive, the latter, unproductive labour. {Some French
authors of great learning and ingenuity have used those words in a different sense. In the last
chapter of the fourth book, I shall endeav- our to shew that their sense is an improper one.}
Thus the labour of a manufacturer adds gener- ally to the value of the materials which he
works upon, that of his own maintenance, and of his master's profit. The labour of a menial
servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages
advanced to him by his master, he in reality costs him no expense, the value of those wages
being generally restored, together with a profit, in the im- proved value of the subject upon
which his labour is bestowed. But the maintenance of a menial servant never is restored. A
man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a
multitude or menial servants. The labour of the latter, however, has its value, and deserves its
reward as well as that of the former. But the labour of the manufacturer fixes and realizes itself
in some particular subject or vendible commodity, which lasts for some time at least after that
labour is past. It is, as it were, a certain quantity of labour stocked and stored up, to be
employed, if necessary, upon some other occasion. That subject, or, what is the same thing, the
price of that subject, can afterwards, if necessary, put into motion a quantity of labour equal to
that which had originally produced it. The labour of the menial servant, on the contrary, does
not fix or realize itself in any particular subject or vendible commodity. His services generally
perish in the very instant of their performance, and seldom leave any trace of value be- hind
them, for which an equal quantity of service could afterwards be procured. The labour of some
of the most respectable orders in the society is, like that of menial ser- vants, unproductive of
any value, and does not fix or realize itself in any permanent subject, or vendible commodity,
which endures after that labour is past, and for which an equal quantity of labour could
afterwards be procured. The sovereign, for example, with all the officers both of jus-  tice and
war who serve under him, the whole army and navy, are unproductive labourers. They are the
servants of the public, and are maintained by a part of the annual produce of the industry  of
other people. Their service, how honourable, how useful, or how necessary soever,
produces nothing for which an equal quantity of service can afterwards be procured. The
protection, secu- rity, and defence, of the commonwealth, the effect of their labour this year,
will not purchase its protection, security, and defence, for the year to come. In the same class
must be ranked, some both of the gravest and most important, and some of the most frivolous
professions; churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons,
musicians, opera-singers, opera- dancers, etc. The labour of the meanest of these has a certain
value, regulated by the very same principles which regulate that of every other sort of labour;
and that of the noblest and most use- ful, produces nothing which could afterwards purchase or
procure an equal quantity of labour. Like the declamation of the actor, the harangue of the
orator, or the tune of the musician, the work of all of them perishes in the very instant of its
production. Both productive and unproductive labourers, and those who do not labour at all,
are all equal- ly maintained by the annual produce of the land and labour of the country. This
produce, how great soever, can never be infinite, but must have certain limits. According,
therefore, as a smaller or greater proportion of it is in any one year employed in maintaining
unproductive hands, the more in the one case, and the less in the other, will remain for the
productive, and the next year's produce will be greater or smaller accordingly; the whole
annual produce, if we except the sponta- neous productions of the earth, being the effect of
productive labour. Though the whole annual produce of the land and labour of every country is
no doubt ulti- mately destined for supplying the consumption of its inhabitants, and for
procuring a revenue to them; yet when it first comes either from the ground, or from the hands
of the productive labour- ers, it naturally divides itself into two parts. One of them, and
frequently the largest, is, in the first place, destined for replacing a capital, or for renewing the
provisions, materials, and finished work, which had been withdrawn from a capital; the other
for constituting a revenue either to the owner of this capital, as the profit of his stock, or to
some other person, as the rent of his land. Thus, of the produce of land, one part replaces the
capital of the farmer; the other pays his profit and the rent of the landlord; and thus constitutes
a revenue both to the owner of this capital, as the profits of his stock, and to some other person
as the rent of his land. Of the produce of a great manufactory, in the same manner, one part,
and that always the largest, replaces the capital of the undertaker of the work; the other pays
his profit, and thus constitutes a revenue to the owner of this capital. That part of the annual
produce of the land and labour of any country which replaces a cap- ital, never is immediately
employed to maintain any but productive hands. It pays the wages of productive labour only.
That which is immediately destined for constituting a revenue, either as profit or as rent, may
maintain indifferently either productive or unproductive hands. Whatever part of his stock a
man employs as a capital, he always expects it to be replaced to him with a profit. He employs
it, therefore, in maintaining productive hands only; and after hav- ing served in the function of
a capital to him, it constitutes a revenue to them. Whenever he em- ploys any part of it in
maintaining unproductive hands of any kind, that part is from that moment withdrawn from his
capital, and placed in his stock reserved for immediate consumption. Unproductive labourers,
and those who do not labour at all, are all maintained by revenue; ei- ther, first, by that part of
the annual produce which is originally destined for constituting a rev- enue to some particular
persons, either as the rent of land, or as the profits of stock; or, secondly, by that part which,
though originally destined for replacing a capital, and for maintaining produc- tive labourers
only, yet when it comes into their hands, whatever part of it is over and above their  necessary
subsistence, may be employed in maintaining indifferently either productive or unpro- ductive
hands. Thus, not only the great landlord or the rich merchant, but even the common workman,
if his wages are considerable, may maintain a menial servant; or he may sometimes go to a
play or a puppet-show, and so contribute his share towards maintaining one set of
unpro- ductive labourers; or he may pay some taxes, and thus help to maintain another set,
more hon- ourable and useful, indeed, but equally unproductive. No part of the annual produce,
however, which had been originally destined to replace a capital, is ever directed towards
maintaining unproductive hands, till after it has put into motion its full complement of
productive labour, or all that it could put into motion in the way in which it was employed. The
workman must have earned his wages by work done, before he can employ any part of them in
this manner. That part, too, is generally but a small one. It is his spare revenue only, of which
productive labourers have seldom a great deal. They generally have some, however; and in the
payment of taxes, the great- ness of their number may compensate, in some measure, the
smallness of their contribution. The rent of land and the profits of stock are everywhere,
therefore, the principal sources from which unproductive hands derive their subsistence. These
are the two sorts of revenue of which the owners have generally most to spare. They might
both maintain indifferently, either productive or unproductive hands. They seem, however, to
have some predilection for the latter. The expense of a great lord feeds generally more idle
than industrious people. The rich merchant, though with his capital he maintains industrious
people only, yet by his expense, that is, by the employment of his revenue, he feeds commonly
the very same sort as the great lord. The proportion, therefore, between the productive and
unproductive hands, depends very much in every country upon the proportion between that
part of the annual produce, which, as soon as it comes either from the ground, or from the
hands of the productive labourers, is des- tined for replacing a capital, and that which is
destined for constituting a revenue, either as rent or as profit. This proportion is very different
in rich from what it is in poor countries. Thus, at present, in the opulent countries of Europe, a
very large, frequently the largest, por- tion of the produce of the land, is destined for replacing
the capital of the rich and independent farmer; the other for paying his profits, and the rent of
the landlord. But anciently, during the prevalency of the feudal government, a very small
portion of the produce was sufficient to replace the capital employed in cultivation. It consisted
commonly in a few wretched cattle, maintained altogether by the spontaneous produce of
uncultivated land, and which might, therefore, be considered as a part of that spontaneous
produce. It generally, too, belonged to the landlord, and was by him advanced to the occupiers
of the land. All the rest of the produce properly belonged to him too, either as rent for his land,
or as profit upon this paltry capital. The occupiers of land were generally bond-men, whose
persons and effects were equally his property. Those who were not bond-men were tenants at
will; and though the rent which they paid was often nominally little more than a quit-rent, it
really amounted to the whole produce of the land. Their lord could at all times command their
labour in peace and their service in war. Though they lived at a distance from his house, they
were equally dependent upon him as his retainers who lived in it. But the whole produce of the
land undoubtedly belongs to him, who can dispose of the labour and service of all those whom
it maintains. In the present state of Europe, the share of the landlord seldom exceeds a third,
sometimes not a fourth part of the whole produce of the land. The rent of land, however, in all
the improved parts of the country, has been tripled and quadrupled since those an- cient times;
and this third or fourth part of the annual produce is, it seems, three or four times greater than
the whole had been before. In the progress of improvement, rent, though it increases in
proportion to the extent, diminishes in proportion to the produce of the land. In the opulent
countries of Europe, great capitals are at present employed in trade and man- ufactures. In the
ancient state, the little trade that was stirring, and the few homely and coarse manufactures that
were carried on, required but very small capitals. These, however, must have yielded very
large profits. The rate of interest was nowhere less than ten per cent. and their profits must
have been sufficient to afford this great interest. At present, the rate of interest, in the
im- proved parts of Europe, is nowhere higher than six per cent.; and in some of the most
improved, it is so low as four, three, and two per cent. Though that part of the revenue of the
inhabitants which is derived from the profits of stock, is always much greater in rich than in
poor countries, it is because the stock is much greater; in proportion to the stock, the profits are
generally much less. That part of the annual produce, therefore, which, as soon as it comes
either from the ground, or from the hands of the productive labourers, is destined for replacing
a capital, is not only much greater in rich than in poor countries, but bears a much greater
proportion to that which is immediately destined for constituting a revenue either as rent or as
profit. The funds destined for the maintenance of productive labour are not only much greater
in the former than in the latter, but bear a much greater proportion to those which, though they
may be employed to maintain either productive or unproductive hands, have generally a
predilection for the latter. The proportion between those different funds necessarily determines
in every country the general character of the inhabitants as to industry or idleness. We are more
industrious than our forefathers, because, in the present times, the funds destined for the
maintenance of industry are much greater in proportion to those which are likely to be
employed in the maintenance of idle- ness, than they were two or three centuries ago. Our
ancestors were idle for want of a sufficient encouragement to industry. It is better, says the
proverb, to play for nothing, than to work for nothing. In mercantile and manufacturing towns,
where the inferior ranks of people are chiefly maintained by the employment of capital, they
are in general industrious, sober, and thriving; as in many English, and in most Dutch towns. In
those towns which are principally supported by the constant or occasional residence of a court,
and in which the inferior ranks of people are chiefly maintained by the spending of revenue,
they are in general idle, dissolute, and poor; as at Rome, Versailles, Compeigne, and
Fontainbleau. If you except Rouen and Bourdeaux, there is lit- tle trade or industry in any of
the parliament towns of France; and the inferior ranks of people, being chiefly maintained by
the expense of the members of the courts of justice, and of those who come to plead before
them, are in general idle and poor. The great trade of Rouen and Bourdeaux  seems to be
altogether the effect of their situation. Rouen is necessarily the entrepot of almost all the goods
which are brought either from foreign countries, or from the maritime provinces of France, for
the consumption of the great city of Paris. Bourdeaux is, in the same manner, the entrepot of
the wines which grow upon the banks of the Garronne, and of the rivers which run into it, one
of the richest wine countries in the world, and which seems to produce the wine fittest for
exportation, or best suited to the taste of foreign nations. Such advantageous
situations necessarily attract a great capital by the great employment which they afford it; and
the employ- ment of this capital is the cause of the industry of those two cities. In the other
parliament towns of France, very little more capital seems to be employed than what is
necessary for supplying their own consumption; that is, little more than the smallest capital
which can be employed in them. The same thing may be said of Paris, Madrid, and Vienna. Of
those three cities, Paris is by far the most industrious, but Paris itself is the principal market of
all the manufactures established at Paris, and its own consumption is the principal object of all
the trade which it carries on. London, Lisbon, and Copenhagen, are, perhaps, the only three
cities in Europe, which are both the con- stant residence of a court, and can at the same time be
considered as trading cities, or as cities which trade not only for their own consumption, but
for that of other cities and countries. The situation of all the three is extremely advantageous,
and naturally fits them to be the entrepots of a great part of the goods destined for the
consumption of distant places. In a city where a great rev- enue is spent, to employ with
advantage a capital for any other purpose than for supplying the consumption of that city, is
probably more difficult than in one in which the inferior ranks of people have no other
maintenance but what they derive from the employment of such a capital. The idleness of the
greater part of the people who are maintained by the expense of revenue, cor- rupts, it is
probable, the industry of those who ought to be maintained by the employment of cap- ital, and
renders it less advantageous to employ a capital there than in other places. There was lit- tle
trade or industry in Edinburgh before the Union. When the Scotch parliament was no longer to
be assembled in it, when it ceased to be the necessary residence of the principal nobility
and gentry of Scotland, it became a city of some trade and industry. It still continues, however,
to be the residence of the principal courts of justice in Scotland, of the boards of customs and
excise, etc. A considerable revenue, therefore, still continues to be spent in it. In trade and
industry, it is much inferior to Glasgow, of which the inhabitants are chiefly maintained by the
employment of capital. The inhabitants of a large village, it has sometimes been observed, after
having made con- siderable progress in manufactures, have become idle and poor, in
consequence of a great lord's having taken up his residence in their neighbourhood. The
proportion between capital and revenue, therefore, seems everywhere to regulate the
pro- portion between industry and idleness Wherever capital predominates, industry prevails;
wher- ever revenue, idleness. Every increase or diminution of capital, therefore, naturally tends
to in- crease or diminish the real quantity of industry, the number of productive hands, and
conse- quently the exchangeable value of the annual produce of the land and labour of the
country, the real wealth and revenue of all its inhabitants. Capitals are increased by parsimony,
and diminished by prodigality and misconduct. Whatever a person saves from his revenue he
adds to his capital, and either employs it him- self in maintaining an additional number of
productive hands, or enables some other person to do so, by lending it to him for an interest,
that is, for a share of the profits. As the capital of an individual can be increased only by what
he saves from his annual revenue or his annual gains, so the capital of a society, which is the
same with that of all the individuals who compose it, can be increased only in the same
manner. Parsimony, and not industry, is the immediate cause of the increase of capital.
Industry, in- deed, provides the subject which parsimony accumulates; but whatever industry
might acquire, if parsimony did not save and store up, the capital would never be the
greater. Parsimony, by increasing the fund which is destined for the maintenance of
productive hands, tends to increase the number of those hands whose labour adds to the value
of the subject upon winch it is bestowed. It tends, therefore, to increase the exchangeable value
of the annual produce of the land and labour of the country. It puts into motion an additional
quantity of indus- try, which gives an additional value to the annual produce. What is annually
saved, is as regularly consumed as what is annually spent, and nearly in the same time too: but
it is consumed by a different set of people. That portion of his revenue which a  rich man
annually spends, is, in most cases, consumed by idle guests and menial servants, who leave
nothing behind them in return for their consumption. That portion which he annually saves, as,
for the sake of the profit, it is immediately employed as a capital, is consumed in the same
manner, and nearly in the same time too, but by a different set of people: by
labourers, manufacturers, and artificers, who reproduce, with a profit, the value of their annual
consump- tion. His revenue, we shall suppose, is paid him in money. Had he spent the whole,
the food, clothing, and lodging, which the whole could have purchased, would have been
distributed among the former set of people. By saving a part of it, as that part is, for the sake of
the profit, im- mediately employed as a capital, either by himself or by some other person, the
food, clothing, and lodging, which may be purchased with it, are necessarily reserved for the
latter. The con- sumption is the same, but the consumers are different. By what a frugal man
annually saves, he not only affords maintenance to an additional num- ber of productive hands,
for that of the ensuing year, but like the founder of a public work-house he establishes, as it
were, a perpetual fund for the maintenance of an equal number in all times to come. The
perpetual allotment and destination of this fund, indeed, is not always guarded by any positive
law, by any trust-right or deed of mortmain. It is always guarded, however, by a very
pow- erful principle, the plain and evident interest of every individual to whom any share of it
shall ever belong. No part of it can ever afterwards be employed to maintain any but
productive hands, without an evident loss to the person who thus perverts it from its proper
destination. The prodigal perverts it in this manner: By not confining his expense within his
income, he encroaches upon his capital. Like him who perverts the revenues of some pious
foundation to profane purposes, he pays the wages of idleness with those funds which the
frugality of his fore- fathers had, as it were, consecrated to the maintenance of industry. By
diminishing the funds des- tined for the employment of productive labour, he necessarily
diminishes, so far as it depends upon him, the quantity of that labour which adds a value to the
subject upon which it is be- stowed, and, consequently, the value of the annual produce of the
land and labour of the whole country, the real wealth and revenue of its inhabitants. If the
prodigality of some were not com- pensated by the frugality of others, the conduct of every
prodigal, by feeding the idle with the bread of the industrious, would tend not only to beggar
himself, but to impoverish his country. Though the expense of the prodigal should be
altogether in home made, and no part of it in foreign commodities, its effect upon the
productive funds of the society would still be the same. Every year there would still be a
certain quantity of food and clothing, which ought to have main- tained productive, employed
in maintaining unproductive hands. Every year, therefore, there would still be some diminution
in what would otherwise have been the value of the annual pro- duce of the land and labour of
the country. This expense, it may be said, indeed, not being in foreign goods, and not
occasioning any exportation of gold and silver, the same quantity of money would remain in
the country as before. But if the quantity of food and clothing which were thus consumed by
unproductive, had been distributed among productive hands, they would have reproduced,
together with a profit, the full value of their consumption. The same quantity of money would,
in this case, equally have re- mained in the country, and there would, besides, have been a
reproduction of an equal value of consumable goods. There would have been two values
instead of one. The same quantity of money, besides, can not long remain in any country in
which the value of the annual produce diminishes. The sole use of money is to circulate
consumable goods. By means of it, provisions, materials, and finished work, are bought and
sold, and distributed to their proper consumers. The quantity of money, therefore, which can be
annually employed in any country, must be determined by the value of the consumable goods
annually circulated with- in it. These must consist, either in the immediate produce of the land
and labour of the country itself, or in something which had been purchased with some part of
that produce. Their value, therefore, must diminish as the value of that produce diminishes, and
along with it the quantity of money which can be employed in circulating them. But the money
which, by this annual diminution of produce, is annually thrown out of domestic circulation,
will not be allowed to lie idle. The interest of whoever possesses it requires that it should be
employed; but having no em- ployment at home, it will, in spite of all laws and prohibitions, be
sent abroad, and employed in purchasing consumable goods, which may be of some use at
home. Its annual exportation will, in this manner, continue for some time to add something to
the annual consumption of the country beyond the value of its own annual produce. What in
the days of its prosperity had been saved from that annual produce, and employed in
purchasing gold and silver, will contribute, for some little time, to support its consumption in
adversity. The exportation of gold and silver is, in this case, not the cause, but the effect of its
declension, and may even, for some little time, alleviate the misery of that declension. The
quantity of money, on the contrary, must in every country naturally increase as the value of the
annual produce increases. The value of the consumable goods annually circulated within the
society being greater, will require a greater quantity of money to circulate them. A part of
the increased produce, therefore, will naturally be employed in purchasing, wherever it is to be
had, the additional quantity of gold and silver necessary for circulating the rest. The increase of
those metals will, in this case, be the effect, not the cause, of the public prosperity. Gold and
silver are purchased everywhere in the same manner. The food, clothing, and lodging, the
revenue and maintenance, of all those whose labour or stock is employed in bringing them
from the mine to the market, is the price paid for them in Peru as well as in England. The
country which has this price to pay, will never belong without the quantity of those metals
which it has occasion for; and no country will ever long retain a quantity which it has no
occasion for. Whatever, therefore, we may imagine the real wealth and revenue of a country to
consist in, whether in the value of the annual produce of its land and labour, as plain reason
seems to dic- tate, or in the quantity of the precious metals which circulate within it, as vulgar
prejudices sup- pose; in either view of the matter, every prodigal appears to be a public enemy,
and every frugal man a public benefactor. The effects of misconduct are often the same as
those of prodigality. Every injudicious and unsuccessful project in agriculture, mines, fisheries,
trade, or manufactures, tends in the same manner to diminish the funds destined for the
maintenance of productive labour. In every such project, though the capital is consumed by
productive hands only, yet as, by the injudicious man- ner in which they are employed, they do
not reproduce the full value of their consumption, there must always be some diminution in
what would otherwise have been the productive funds of the society. It can seldom happen,
indeed, that the circumstances of a great nation can be much affected either by the prodigality
or misconduct of individuals; the profusion or imprudence of some being always more than
compensated by the frugality and good conduct of others. With regard to profusion, the
principle which prompts to expense is the passion for present enjoyment; which, though
sometimes violent and very difficult to be restrained, is in general only momentary and
occasional. But the principle which prompts to save, is the desire of bettering our condition; a
desire which, though generally calm and dispassionate, comes with us from the womb, and
never leaves us till we go into the grave. In the whole interval which separates those two
moments, there is scarce, perhaps, a single instance, in which any man is so perfectly
and completely satisfied with his situation, as to be without any wish of alteration or
improvement of any kind. An augmentation of fortune is the means by which the greater part
of men propose and wish to better their condition. It is the means the most vulgar and the most
obvious; and the most likely way of augmenting their fortune, is to save and accumulate some
part of what they acquire, either regularly and annually, or upon some extraordinary occasion.
Though the principle of ex- pense, therefore, prevails in almost all men upon some occasions,
and in some men upon almost all occasions; yet in the greater part of men, taking the whole
course of their life at an average, the principle of frugality seems not only to predominate, but
to predominate very greatly. With regard to misconduct, the number of prudent and successful
undertakings is every- where much greater than that of injudicious and unsuccessful ones.
After all our complaints of the frequency of bankruptcies, the unhappy men who fall into this
misfortune, make but a very small part of the whole number engaged in trade, and all other
sorts of business; not much more, perhaps, than one in a thousand. Bankruptcy is, perhaps, the
greatest and most humiliating calamity which can befal an innocent man. The greater part of
men, therefore, are sufficiently careful to avoid it. Some, indeed, do not avoid it; as some do
not avoid the gallows. Great nations are never impoverished by private, though they sometimes
are by public prodigality and misconduct. The whole, or almost the whole public revenue is, in
most countries, employed in maintaining unproductive hands. Such are the people who
compose a numerous and splendid court, a great ecclesiastical establishment, great fleets and
armies, who in time of peace produce nothing, and in time of war acquire nothing which can
compensate the expense of maintaining them, even while the war lasts. Such people, as they
themselves produce nothing, are all maintained by the produce of other men's labour. When
multiplied, therefore, to an unnec- essary number, they may in a particular year consume so
great a share of this produce, as not to leave a sufficiency for maintaining the productive
labourers, who should reproduce it next year. The next year's produce, therefore, will be less
than that of the foregoing; and if the same disorder should continue, that of the third year will
be still less than that of the second. Those unpro- ductive hands who should be maintained by a
part only of the spare revenue of the people, may consume so great a share of their whole
revenue, and thereby oblige so great a number to en- croach upon their capitals, upon the funds
destined for the maintenance of productive labour, that all the frugality and good conduct of
individuals may not be able to compensate the waste and degradation of produce occasioned
by this violent and forced encroachment. This frugality and good conduct, however, is, upon
most occasions, it appears from expe- rience, sufficient to compensate, not only the private
prodigality and misconduct of individuals, but the public extravagance of government. The
uniform, constant, and uninterrupted effort of every man to better his condition, the principle
from which public and national, as well as private opulence is originally derived, is frequently
powerful enough to maintain the natural progress of things towards improvement, in spite both
of the extravagance of government, and of the greatest errors of administration. Like the
unknown principle of animal life, it frequently restores health and vigour to the constitution, in
spite not only of the disease, but of the absurd prescriptions of the doctor. The annual produce
of the land and labour of any nation can be increased in its value by no other means, but by
increasing either the number of its productive labourers, or the productive powers of those
labourers who had before been employed. The number of its productive labour- ers, it is
evident, can never be much increased, but in consequence of an increase of capital, or of  the
funds destined for maintaining them. The productive powers of the same number of labour- ers
cannot be increased, but in consequence either of some addition and improvement to
those machines and instruments which facilitate and abridge labour, or of more proper division
and distribution of employment. In either case, an additional capital is almost always required.
It is by means of an additional capital only, that the undertaker of any work can either provide
his work- men with better machinery, or make a more proper distribution of employment
among them. When the work to be done consists of a number of parts, to keep every man
constantly employed in one way, requires a much greater capital than where every man is
occasionally employed in every different part of the work. When we compare, therefore, the
state of a nation at two different periods, and find that the annual produce of its land and labour
is evidently greater at the latter than at the former, that its lands are better cultivated, its
manufactures more numerous and more flourishing, and its trade more extensive; we may be
assured that its capital must have increased during the interval between those two periods, and
that more must have been added to it by the good conduct of some, than had been taken from it
either by the private misconduct of others, or by the public extravagance of government. But
we shall find this to have been the case of almost all nations, in all tolerably quiet and
peaceable times, even of those who have not enjoyed the most prudent and parsimonious
governments. To form a right judgment of it, indeed, we must compare the state of the country
at periods somewhat distant from one another. The progress is frequently so gradual, that, at
near periods, the improvement is not only not sensible, but, from the declension either of
certain branches of industry, or of certain districts of the country, things which sometimes
happen, though the country in general is in great prosperity, there frequently arises a suspicion,
that the riches and industry of the whole are decaying. The annual produce of the land and
labour of England, for example, is certainly much greater than it was a little more than a
century ago, at the restoration of Charles II. Though at present few people, I believe, doubt of
this, yet during this period five years have seldom passed away, in which some book or
pamphlet has not been published, written, too, with such abilities as to gain some authority
with the public, and pretending to demonstrate that the wealth of the nation was fast declining;
that the country was depopulated, agriculture neglected, manufactures decaying, and trade
undone. Nor have these publications been all party pamphlets, the wretched offspring of
falsehood and venality. Many of them have been written by very candid and very
intelligent people, who wrote nothing but what they believed, and for no other reason but
because they be- lieved it. The annual produce of the land and labour of England, again, was
certainly much greater at the Restoration than we can suppose it to have been about a hundred
years before, at the acces- sion of Elizabeth. At this period, too, we have all reason to believe,
the country was much more advanced in improvement, than it had been about a century before,
towards the close of the dis- sensions between the houses of York and Lancaster. Even then it
was, probably, in a better condi- tion than it had been at the Norman conquest: and at the
Norman conquest, than during the confusion of the Saxon heptarchy. Even at this early period,
it was certainly a more improved country than at the invasion of Julius Caesar, when its
inhabitants were nearly in the same state with the savages in North America. In each of those
periods, however, there was not only much private and public profusion, many expensive and
unnecessary wars, great perversion of the annual produce from maintaining productive to
maintain unproductive hands; but sometimes, in the confusion of civil discord, such absolute
waste and destruction of stock, as might be supposed, not only to retard, as it cer-  tainly did,
the natural accumulation of riches, but to have left the country, at the end of the pe- riod,
poorer than at the beginning. Thus, in the happiest and most fortunate period of them all, that
which has passed since the Restoration, how many disorders and misfortunes have
occurred, which, could they have been foreseen, not only the impoverishment, but the total
ruin of the country would have been expected from them? The fire and the plague of London,
the two Dutch wars, the disorders of the revolution, the war in Ireland, the four expensive
French wars of 1688, 1701, 1742, and 1756, together with the two rebellions of 1715 and 1745.
In the course of the four French wars, the nation has contracted more than £145,000,000 of
debt, over and above all the other extraordinary annual expense which they occasioned; so that
the whole cannot be computed at less than £200,000,000. So great a share of the annual
produce of the land and labour of the country, has, since the Revolution, been employed upon
different occasions, in maintaining an extraordinary number of unproductive hands. But had
not those wars given this particular direc- tion to so large a capital, the greater part of it would
naturally have been employed in maintaining productive hands, whose labour would have
replaced, with a profit, the whole value of their con- sumption. The value of the annual
produce of the land and labour of the country would have been considerably increased by it
every year, and every years increase would have augmented still more that of the following
year. More houses would have been built, more lands would have been im- proved, and those
which had been improved before would have been better cultivated; more man- ufactures
would have been established, and those which had been established before would have been
more extended; and to what height the real wealth and revenue of the country might by
this time have been raised, it is not perhaps very easy even to imagine. But though the
profusion of government must undoubtedly have retarded the natural progress of England
towards wealth and improvement, it has not been able to stop it. The annual produce of its land
and labour is undoubtedly much greater at present than it was either at the Restoration or at the
Revolution. The capital, therefore, annually employed in cultivating this land, and in
maintaining this labour, must likewise be much greater. In the midst of all the exac- tions of
government, this capital has been silently and gradually accumulated by the private fru- gality
and good conduct of individuals, by their universal, continual, and uninterrupted effort
to better their own condition. It is this effort, protected by law, and allowed by liberty to exert
itself in the manner that is most advantageous, which has maintained the progress of England
towards opulence and improvement in almost all former times, and which, it is to be hoped,
will do so in all future times. England, however, as it has never been blessed with a very
parsimonious govern- ment, so parsimony has at no time been the characteristic virtue of its
inhabitants. It is the highest impertinence and presumption, therefore, in kings and ministers to
pretend to watch over the economy of private people, and to restrain their expense, either by
sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves
always, and without any exception, the greatest spendthrifts in the society. Let them look well
after their own expense, and they may safely trust private people with theirs. If their own
extravagance does not ruin the state, that of the subject never will. As frugality increases, and
prodigality diminishes, the public capital, so the conduct of those whose expense just equals
their revenue, without either accumulating or encroaching, neither in- creases nor diminishes it.
Some modes of expense, however, seem to contribute more to the growth of public opulence
than others. The revenue of an individual may be spent, either in things which are consumed
immedi- ately, and in which one day's expense can neither alleviate nor support that of another;
or it may be spent in things mere durable, which can therefore be accumulated, and in which
every day's expense may, as he chooses, either alleviate, or support and heighten, the effect of
that of the fol- lowing day. A man of fortune, for example, may either spend his revenue in a
profuse and sump- tuous table, and in maintaining a great number of menial servants, and a
multitude of dogs and horses; or, contenting himself with a frugal table, and few attendants, he
may lay out the greater part of it in adorning his house or his country villa, in useful or
ornamental buildings, in useful or ornamental furniture, in collecting books, statues, pictures;
or in things more frivolous, jewels, baubles, ingenious trinkets of different kinds; or, what is
most trifling of all, in amassing a great wardrobe of fine clothes, like the favourite and minister
of a great prince who died a few years ago. Were two men of equal fortune to spend their
revenue, the one chiefly in the one way, the other in the other, the magnificence of the person
whose expense had been chiefly in durable commodities, would be continually increasing,
every day's expense contributing something to support and heighten the effect of that of the
following day; that of the other, on the contrary, would be no greater at the end of the period
than at the beginning. The former too would, at the end of the period, be the richer man of the
two. He would have a stock of goods of some kind or other, which, though it might not be
worth all that it cost, would always be worth something. No trace or vestige of the expense of
the latter would remain, and the effects of ten or twenty years' profusion would be as
completely annihilated as if they had never existed. As the one mode of expense is more
favourable than the other to the opulence of an indi- vidual, so is it likewise to that of a nation.
The houses, the furniture, the clothing of the rich, in a little time, become useful to the inferior
and middling ranks of people. They are able to purchase them when their superiors grow weary
of them; and the general accommodation of the whole people is thus gradually improved, when
this mode of expense becomes universal among men of fortune. In countries which have long
been rich, you will frequently find the inferior ranks of people in possession both of houses and
furniture perfectly good and entire, but of which neither the one could have been built, nor the
other have been made for their use. What was formerly a seat of the family of Seymour, is now
an inn upon the Bath road. The marriage-bed of James I. of Great Britain, which his queen
brought with her from Denmark, as a present fit for a sovereign to make to a sovereign, was, a
few years ago, the ornament of an alehouse at Dunfermline. In some ancient cities, which
either have been long stationary, or have gone somewhat to decay, you will sometimes scarce
find a single house which could have been built for its present inhabitants. If you go into those
houses, too, you will frequently find many excellent, though antiquated pieces of furniture,
which are still very fit for use, and which could as little have been made for them.  Noble
palaces, magnificent villas, great collections of books, statues, pictures, and other curiosi- ties,
are frequently both an ornament and an honour, not only to the neighbourhood, but to
the whole country to which they belong. Versailles is an ornament and an honour to France,
Stowe and Wilton to England. Italy still continues to command some sort of veneration, by the
number of monuments of this kind which it possesses, though the wealth which produced them
has de- cayed, and though the genius which planned them seems to be extinguished, perhaps
from not having the same employment. The expense, too, which is laid out in durable
commodities, is favourable not only to accumulation, but to frugality. If a person should at any
time exceed in it, he can easily reform without exposing himself to the censure of the public.
To reduce very much the number of his servants, to reform his table from great profusion to
great frugality, to lay down his equipage after he has once set it up, are changes which cannot
escape the observation of his neighbours, and which are supposed to imply some
acknowledgment of preceding bad conduct. Few, therefore, of those who have once been so
unfortunate as to launch out too far into this sort of expense, have afterwards the courage to
reform, till ruin and bankruptcy oblige them. But if a person has, at any time, been at too great
an expense in building, in furniture, in books, or pictures, no imprudence can be inferred from
his changing his conduct. These are things in which further expense is fre- quently rendered
unnecessary by former expense; and when a person stops short, he appears to do so, not
because he has exceeded his fortune, but because he has satisfied his fancy.  The expense,
besides, that is laid out in durable commodities, gives maintenance, commonly, to a greater
number of people than that which is employed in the most profuse hospitality. Of two or three
hundred weight of provisions, which may sometimes be served up at a great festival, one half,
perhaps, is thrown to the dunghill, and there is always a great deal wasted and abused. But
if the expense of this entertainment had been employed in setting to work masons,
carpenters, upholsterers, mechanics, etc. a quantity of provisions of equal value would have
been distributed among a still greater number of people, who would have bought them in
pennyworths and pound weights, and not have lost or thrown away a single ounce of them. In
the one way, besides, this expense maintains productive, in the other unproductive hands. In
the one way, therefore, it in- creases, in the other it does not increase the exchangeable value of
the annual produce of the land and labour of the country. I would not, however, by all this, be
understood to mean, that the one species of expense al- ways betokens a more liberal or
generous spirit than the other. When a man of fortune spends his revenue chiefly in hospitality,
he shares the greater part of it with his friends and companions; but when he employs it in
purchasing such durable commodities, he often spends the whole upon his own person, and
gives nothing to any body without an equivalent. The latter species of expense, therefore,
especially when directed towards frivolous objects, the little ornaments of dress and furniture,
jewels, trinkets, gew-gaws, frequently indicates, not only a trifling, but a base and selfish
disposition. All that I mean is, that the one sort of expense, as it always occasions some
accumulation of valuable commodities, as it is more favourable to private frugality,
and, consequently, to the increase of the public capital, and as it maintains productive rather
than unproductive hands, conduces more than the other to the growth of public opulence. 

CHAPTER IV. OF STOCK LENT AT INTEREST.  The stock which is lent at interest is

always considered as a capital by the lender. He expects that in due time it is to be restored to
him, and that, in the mean time, the borrower is to pay him a certain annual rent for the use of
it. The borrower may use it either as a capital, or as a stock re- served for immediate
consumption. If he uses it as a capital, he employs it in the maintenance of productive
labourers, who reproduce the value, with a profit. He can, in this case, both restore the capital,
and pay the interest, without alienating or encroaching upon any other source of revenue. If he
uses it as a stock reserved for immediate consumption, he acts the part of a prodigal,
and dissipates, in the maintenance of the idle, what was destined for the support of the
industrious. He can, in this case, neither restore the capital nor pay the interest, without either
alienating or encroaching upon some other source of revenue, such as the property or the rent
of land. The stock which is lent at interest is, no doubt, occasionally employed in both these
ways, but in the former much more frequently than in the latter. The man who borrows in order
to spend will soon be ruined, and he who lends to him will generally have occasion to repent of
his folly. To borrow or to lend for such a purpose, therefore, is, in all cases, where gross usury
is out of the question, contrary to the interest of both parties; and though it no doubt happens
sometimes, that people do both the one and the other, yet, from the regard that all men have for
their own interest, we may be assured, that it cannot happen so very frequently as we are
sometimes apt to imagine. Ask any rich man of common prudence, to which of the two sorts of
people he has lent the greater part of his stock, to those who he thinks will employ it profitably,
or to those who will spend it idly, and he will laugh at you for proposing the question. Even
among borrowers, therefore, not the people in the world most famous for frugality, the number
of the frugal and industrious sur- passes considerably that of the prodigal and idle. The only
people to whom stock is commonly lent, without their being expected to make any very
profitable use of it, are country gentlemen, who borrow upon mortgage. Even they scarce  ever
borrow merely to spend. What they borrow, one may say, is commonly spent before they
bor- row it. They have generally consumed so great a quantity of goods, advanced to them
upon credit by shop-keepers and tradesmen, that they find it necessary to borrow at interest, in
order to pay the debt. The capital borrowed replaces the capitals of those shop-keepers and
tradesmen which the country gentlemen could not have replaced from the rents of their estates.
It is not properly borrowed in order to be spent, but in order to replace a capital which had
been spent before. Almost all loans at interest are made in money, either of paper, or of gold
and silver; but what the borrower really wants, and what the lender readily supplies him with,
is not the money, but the money's worth, or the goods which it can purchase. If he wants it as a
stock for immediate consumption, it is those goods only which he can place in that stock. If he
wants it as a capital for employing industry, it is from those goods only that the industrious can
be furnished with the tools, materials, and maintenance necessary for carrying on their work.
By means of the loan, the lender, as it were, assigns to the borrower his right to a certain
portion of the annual produce of the land and labour of the country, to be employed as the
borrower pleases. The quantity of stock, therefore, or, as it is commonly expressed, of money,
which can be lent at interest in any country, is not regulated by the value of the money,
whether paper or coin, which serves as the instrument of the different loans made in that
country, but by the value of that part of the annual produce, which, as soon as it comes either
from the ground, or from the hands of the productive labourers, is destined, not only for
replacing a capital, but such a capital as the owner does not care to be at the trouble of
employing himself. As such capitals are com- monly lent out and paid back in money, they
constitute what is called the monied interest. It is distinct, not only from the landed, but from
the trading and manufacturing interests, as in these last the owners themselves employ their
own capitals. Even in the monied interest, however, the money is, as it were, but the deed of
assignment, which conveys from one hand to another those capitals which the owners do not
care to employ themselves. Those capitals may be greater, in al- most any proportion, than the
amount of the money which serves as the instrument of their con- veyance; the same pieces of
money successively serving for many different loans, as well as for many different purchases.
A, for example, lends to W £1000, with which W immediately pur- chases of B £1000 worth
of goods. B having no occasion for the money himself, lends the iden- tical pieces to X, with
which X immediately purchases of C another £1000 worth of goods. C, in the same manner,
and for the same reason, lends them to Y, who again purchases goods with them of D. In this
manner, the same pieces, either of coin or of paper, may, in the course of a few days, serve as
the Instrument of three different loans, and of three different purchases, each of which is, in
value, equal to the whole amount of those pieces. What the three monied men, A, B, and C,
assigned to the three borrowers, W, X, and Y, is the power of making those purchases. In this
power consist both the value and the use of the loans. The stock lent by the three monied men
is equal to the value of the goods which can be purchased with it, and is three times
greater than that of the money with which the purchases are made. Those loans, however, may
be all per- fectly well secured, the goods purchased by the different debtors being so employed
as, in due time, to bring back, with a profit, an equal value either of coin or of paper. And as
the same pieces of money can thus serve as the instrument of different loans to three, or, for
the same reason, to thirty times their value, so they may likewise successively serve as the
instrument of repayment. A capital lent at interest may, in this manner, be considered as an
assignment, from the lender to the borrower, of a certain considerable portion of the annual
produce, upon condition that the burrower in return shall, during the continuance of the loan,
annually assign to the lender a small portion, called the interest; and, at the end of it, a portion
equally considerable with that which had originally been assigned to him, called the
repayment. Though money, either coin or paper, serves generally as the deed of assignment,
both to the smaller and to the more consid- erable portion, it is itself altogether different from
what is assigned by it. In proportion as that share of the annual produce which, as soon as it
comes either from the ground, or from the hands of the productive labourers, is destined for
replacing a capital, in- creases in any country, what is called the monied interest naturally
increases with it. The increase of those particular capitals from which the owners wish to
derive a revenue, without being at the trouble of employing them themselves, naturally
accompanies the general increase of capitals; or, in other words, as stock increases, the
quantity of stock to be lent at interest grows gradually greater and greater. As the quantity of
stock to be lent at interest increases, the interest, or the price which must be paid for the use of
that stock, necessarily diminishes, not only from those general causes which make the market
price of things commonly diminish as their quantity increases, but from other causes which are
peculiar to this particular case. As capitals increase in any country, the profits  which can be
made by employing them necessarily diminish. It becomes gradually more and more difficult
to find within the country a profitable method of employing any new capital. There  arises, in
consequence, a competition between different capitals, the owner of one endeavouring to get
possession of that employment which is occupied by another; but, upon most occasions, he can
hope to justle that other out of this employment by no other means but by dealing upon
more reasonable terms. He must not only sell what he deals in somewhat cheaper, but, in order
to get it to sell, he must sometimes, too, buy it dearer. The demand for productive labour, by
the increase of the funds which are destined for maintaining it, grows every day greater and
greater. Labourers easily find employment; but the owners of capitals find it difficult to get
labourers to employ. Their competition raises the wages of labour, and sinks the profits of
stock. But when the profits which can be made by the use of a capital are in this manner
diminished, as it were, at both ends, the price which can be paid for the use of it, that is, the
rate of interest, must necessarily be diminished with them. Mr Locke, Mr Lawe, and Mr
Montesquieu, as well as many other writers, seem to have imag- ined that the increase of the
quantity of gold and silver, in consequence of the discovery of the Spanish West Indies, was
the real cause of the lowering of the rate of interest through the greater part of Europe. Those
metals, they say, having become of less value themselves, the use of any particular portion of
them necessarily became of less value too, and, consequently, the price which could be paid
for it. This notion, which at first sight seems so plausible, has been so fully exposed by Mr
Hume, that it is, perhaps, unnecessary to say any thing more about it. The following very short
and plain argument, however, may serve to explain more distinctly the fallacy which seems to
have misled those gentlemen. Before the discovery of the Spanish West Indies, ten per cent.
seems to have been the com- mon rate of interest through the greater part of Europe. It has
since that time, in different coun- tries, sunk to six, five, four, and three per cent. Let us
suppose, that in every particular country the value of silver has sunk precisely in the same
proportion as the rate of interest; and that in those countries, for example, where interest has
been reduced from ten to five per cent. the same quan- tity of silver can now purchase just half
the quantity of goods which it could have purchased be- fore. This supposition will not, I
believe, be found anywhere agreeable to the truth; but it is the most favourable to the opinion
which we are going to examine; and, even upon this supposition, it is utterly impossible that
the lowering of the value of silver could have the smallest tendency to lower the rate of
interest. If £100 are in those countries now of no more value than £50 were then, £10 must
now be of no more value than £5 were then. Whatever were the causes which lowered  the
value of the capital, the same must necessarily have lowered that of the interest, and exactly
in the same proportion. The proportion between the value of the capital and that of the interest
must have remained the same, though the rate had never been altered. By altering the rate, on
the con- trary, the proportion between those two values is necessarily altered. If £100 now are
worth no more than £50 were then, £5 now can be worth no more than £2:10s. were then. By
reducing the rate of interest, therefore, from ten to five per cent. we give for the use of a
capital, which is sup- posed to be equal to one half of its former value, an interest which is
equal to one fourth only of the value of the former interest. An increase in the quantity of
silver, while that of the commodities circulated by means of it remained the same, could have
no other effect than to diminish the value of that metal. The nom- inal value of all sorts of
goods would be greater, but their real value would be precisely the same as before. They would
be exchanged for a greater number of pieces of silver; but the quantity of labour which they
could command, the number of people whom they could maintain and em- ploy, would be
precisely the same. The capital of the country would be the same, though a greater  number of
pieces might be requisite for conveying any equal portion of it from one hand to an- other. The
deeds of assignment, like the conveyances of a verbose attorney, would be more
cum- bersome; but the thing assigned would be precisely the same as before, and could
produce only the same effects. The funds for maintaining productive labour being the same,
the demand for it would be the same. Its price or wages, therefore, though nominally greater,
would really be the same. They would be paid in a greater number of pieces of silver, but they
would purchase only the same quantity of goods. The profits of stock would be the same, both
nominally and really. The wages of labour are commonly computed by the quantity of silver
which is paid to the labour- er. When that is increased, therefore, his wages appear to be
increased, though they may some- times be no greater than before. But the profits of stock are
not computed by the number of pieces of silver with which they are paid, but by the proportion
which those pieces bear to the whole capital employed. Thus, in a particular country, 5s. a-
week are said to be the common wages of labour, and ten per cent. the common profits of
stock; but the whole capital of the country being the same as before, the competition between
the different capitals of individuals into which it was divided would likewise be the same.
They would all trade with the same advantages and disadvantages. The common proportion
between capital and profit, therefore, would be the same, and consequently the common
interest of money; what can commonly be given for the use of money being necessarily
regulated by what can commonly be made by the use of it. Any increase in the quantity of
commodities annually circulated within the country, while that of the money which circulated
them remained the same, would, on the contrary, produce many other important effects,
besides that of raising the value of the money. The capital of the country, though it might
nominally be the same, would really be augmented. It might continue to be expressed by the
same quantity of money, but it would command a greater quantity of labour. The quantity of
productive labour which it could maintain and employ would be increased, and consequently
the demand for that labour. Its wages would naturally rise with the demand, and yet might
appear to sink. They might be paid with a smaller quantity of money, but that smaller quantity
might purchase a greater quantity of goods than a greater had done before. The profits of stock
would be diminished, both really and in appearance. The whole capital of the country
being augmented, the competition between the different capitals of which it was composed
would natu- rally be augmented along with it. The owners of those particular capitals would be
obliged to con- tent themselves with a smaller proportion of the produce of that labour which
their respective capitals employed. The interest of money, keeping pace always with the profits
of stock, might, in this manner, be greatly diminished, though the value of money, or the
quantity of goods which any particular sum could purchase, was greatly augmented. In some
countries the interest of money has been prohibited by law. But as something can everywhere
be made by the use of money, something ought everywhere to be paid for the use of it. This
regulation, instead of preventing, has been found from experience to increase the evil of usury.
The debtor being obliged to pay, not only for the use of the money, but for the risk which his
creditor runs by accepting a compensation for that use, he is obliged, if one may say so, to
in- sure his creditor from the penalties of usury. In countries where interest is permitted, the
law in order to prevent the extortion of usury, generally fixes the highest rate which can be
taken without incurring a penalty. This rate ought al- ways to be somewhat above the lowest
market price, or the price which is commonly paid for the use of money by those who can give
the most undoubted security. If this legal rate should be fixed below the lowest market rate, the
effects of this fixation must be nearly the same as those of a total prohibition of interest. The
creditor will not lend his money for less than the use of it is worth,  and the debtor must pay
him for the risk which he runs by accepting the full value of that use. If  it is fixed precisely at
the lowest market price, it ruins, with honest people who respect the laws of their country, the
credit of all those who cannot give the very best security, and obliges them to have recourse to
exorbitant usurers. In a country such as Great Britain, where money is lent to government at
three per cent. and to private people, upon good security, at four and four and a- half, the
present legal rate, five per cent. is perhaps as proper as any. The legal rate, it is to be observed,
though it ought to be somewhat above, ought not to be much above the lowest market rate. If
the legal rate of interest in Great Britain, for example, was fixed so high as eight or ten per
cent. the greater part of the money which was to be lent, would be lent to prodigals and
projectors, who alone would be willing to give this high interest. Sober peo- ple, who will give
for the use of money no more than a part of what they are likely to make by the use of it, would
not venture into the competition. A great part of the capital of the country would  thus be kept
out of the hands which were most likely to make a profitable and advantageous use of it, and
thrown into those which were most likely to waste and destroy it. Where the legal rate
of interest, on the contrary, is fixed but a very little above the lowest market rate, sober people
are universally preferred, as borrowers, to prodigals and projectors. The person who lends
money gets nearly as much interest from the former as he dares to take from the latter, and his
money is much safer in the hands of the one set of people than in those of the other. A great
part of the capital of the country is thus thrown into the hands in which it is most likely to be
employed with advantage. No law can reduce the common rate of interest below the lowest
ordinary market rate at the time when that law is made. Notwithstanding the edict of 1766, by
which the French king at- tempted to reduce the rate of interest from five to four per cent.
money continued to be lent in France at five per cent. the law being evaded in several different
ways. The ordinary market price of land, it is to be observed, depends everywhere upon the
ordi- nary market rate of interest. The person who has a capital from which he wishes to derive
a rev- enue, without taking the trouble to employ it himself, deliberates whether he should buy
land with it, or lend it out at interest. The superior security of land, together with some other
advan- tages which almost everywhere attend upon this species of property, will generally
dispose him to content himself with a smaller revenue from land, than what he might have by
lending out his money at interest. These advantages are sufficient to compensate a certain
difference of revenue; but they will compensate a certain difference only; and if the rent of
land should fall short of the interest of money by a greater difference, nobody would buy land,
which would soon reduce its ordinary price. On the contrary, if the advantages should much
more than compensate the differ- ence, everybody would buy land, which again would soon
raise its ordinary price. When interest was at ten per cent. land was commonly sold for ten or
twelve years purchase. As interest sunk to six, five, and four per cent. the price of land rose to
twenty, five-and-twenty, and thirty years pur- chase. The market rate of interest is higher in
France than in England, and the common price of land is lower. In England it commonly sells
at thirty, in France at twenty years purchase. 

CHAPTER V. OF THE DIFFERENT EMPLOYMENTS OF CAPITALS.  Though all capitals

are destined for the maintenance of productive labour only, yet the quan- tity of that labour
which equal capitals are capable of putting into motion, varies extremely accord- ing to the
diversity of their employment; as does likewise the value which that employment adds to the
annual produce of the land and labour of the country. A capital may be employed in four
different ways; either, first, in procuring the rude produce annually required for the use and
consumption of the society; or, secondly, in manufacturing and preparing that rude produce for
immediate use and consumption; or, thirdly in transporting ei- ther the rude or manufactured
produce from the places where they abound to those where they are wanted; or, lastly, in
dividing particular portions of either into such small parcels as suit the occasional demands of
those who want them. In the first way are employed the capitals of all those who undertake
improvement or cultivation of lands, mines, or fisheries; in the second, those of all master
manufacturers; in the third, those of all wholesale merchants; and in the fourth, those of all
retailers. It is difficult to conceive that a capital should be employed in any way which may not
be classed under some one or other of those four. Each of those four methods of employing a
capital is essentially necessary, either to the exis- tence or extension of the other three, or to the
general conveniency of the society. Unless a capital was employed in furnishing rude produce
to a certain degree of abundance, neither manufactures nor trade of any kind could
exist. Unless a capital was employed in manufacturing that part of the rude produce which
requires a good deal of preparation before it can be fit for use and consumption, it either would
never be produced, because there could be no demand for it; or if it was produced
spontaneously, it would be of no value in exchange, and could add nothing to the wealth of the
society. Unless a capital was employed in transporting either the rude or manufactured produce
from the places where it abounds to those where it is wanted, no more of either could be
produced than was necessary for the consumption of the neighbourhood. The capital of the
merchant exchanges the surplus produce of one place for that of another, and thus encourages
the industry, and in- creases the enjoyments of both. Unless a capital was employed in
breaking and dividing certain portions either of the rude or manufactured produce into such
small parcels as suit the occasional demands of those who want them, every man would be
obliged to purchase a greater quantity of the goods he wanted than his immediate occasions
required. If there was no such trade as a butcher, for example, every man would be obliged to
purchase a whole ox or a whole sheep at a time. This would generally be inconvenient to the
rich, and much more so to the poor. If a poor workman was obliged to pur- chase a month's or
six months' provisions at a time, a great part of the stock which he employs as a capital in the
instruments of his trade, or in the furniture of his shop, and which yields him a revenue, he
would be forced to place in that part of his stock which is reserved for immediate
con- sumption, and which yields him no revenue. Nothing can be more convenient for such a
person than to be able to purchase his subsistence from day to day, or even from hour to hour,
as he wants it. He is thereby enabled to employ almost his whole stock as a capital. He is thus
enabled to furnish work to a greater value; and the profit which he makes by it in this way
much more than compensates the additional price which the profit of the retailer imposes upon
the goods. The prejudices of some political writers against shopkeepers and tradesmen are
altogether with- out foundation. So far is it from being necessary either to tax them, or to
restrict their numbers, that they can never be multiplied so as to hurt the public, though they
may so as to hurt one an- other. The quantity of grocery goods, for example, which can be sold
in a particular town, is lim- ited by the demand of that town and its neighbourhood. The
capital, therefore, which can be em- ployed in the grocery trade, cannot exceed what is
sufficient to purchase that quantity. If this cap- ital is divided between two different grocers,
their competition will tend to make both of them sell cheaper than if it were in the hands of one
only; and if it were divided among twenty, their competition would be just so much the greater,
and the chance of their combining together, in order to raise the price, just so much the less.
Their competition might, perhaps, ruin some of themselves; but to take care of this, is the
business of the parties concerned, and it may safely be trusted to their discretion. It can never
hurt either the consumer or the producer; on the contrary, it must tend to make the retailers
both sell cheaper and buy dearer, than if the whole trade was monopolized by one or two
persons. Some of them, perhaps, may sometimes decoy a weak cus- tomer to buy what he has
no occasion for. This evil, however, is of too little importance to deserve the public attention,
nor would it necessarily be prevented by restricting their numbers. It is not  the multitude of
alehouses, to give the must suspicious example, that occasions a general dispo- sition to
drunkenness among the common people; but that disposition, arising from other
causes, necessarily gives employment to a multitude of alehouses. The persons whose capitals
are employed in any of those four ways, are themselves produc- tive labourers. Their labour,
when properly directed, fixes and realizes itself in the subject or vendible commodity upon
which it is bestowed, and generally adds to its price the value at least of their own maintenance
and consumption. The profits of the farmer, of the manufacturer, of the merchant, and retailer,
are all drawn from the price of the goods which the two first produce, and the two last buy and
sell. Equal capitals, however, employed in each of those four different ways, will immediately
put into motion very different quantities of productive labour; and augment, too, in very
different proportions, the value of the annual produce of the land and labour of the society to
which they belong. The capital of the retailer replaces, together with its profits, that of the
merchant of whom he purchases goods, and thereby enables him to continue his business. The
retailer himself is the only productive labourer whom it immediately employs. In his profit
consists the whole value which its employment adds to the annual produce of the land and
labour of the society. The capital of the wholesale merchant replaces, together with their
profits, the capital's of the farmers and manufacturers of whom he purchases the rude and
manufactured produce which he deals in, and thereby enables them to continue their respective
trades. It is by this service chiefly that he contributes indirectly to support the productive
labour of the society, and to increase the value of its annual produce. His capital employs, too,
the sailors and carriers who transport his goods from one place to another; and it augments the
price of those goods by the value, not only of his profits, but of their wages. This is all the
productive labour which it immediately puts into motion, and all the value which it
immediately adds to the annual produce. Its operation in both these respects is a good deal
superior to that of the capital of the retailer. Part of the capital of the master manufacturer is
employed as a fixed capital in the instru- ments of his trade, and replaces, together with its
profits, that of some other artificer of whom he purchases them. Part of his circulating capital
is employed in purchasing materials, and replaces, with their profits, the capitals of the farmers
and miners of whom he purchases them. But a great part of it is always, either annually, or in a
much shorter period, distributed among the different workmen whom he employs. It augments
the value of those materials by their wages, and by their masters' profits upon the whole stock
of wages, materials, and instruments of trade employed in the business. It puts immediately
into motion, therefore, a much greater quantity of productive labour, and adds a much greater
value to the annual produce of the land and labour of the society, than an equal capital in the
hands of any wholesale merchant. No equal capital puts into motion a greater quantity of
productive labour than that of the farmer. Not only his labouring servants, but his labouring
cattle, are productive labourers. In agri- culture, too, Nature labours along with man; and
though her labour costs no expense, its produce has its value, as well as that of the most
expensive workmen. The most important operations of agriculture seem intended, not so much
to increase, though they do that too, as to direct the fer- tility of Nature towards the production
of the plants most profitable to man. A field overgrown with briars and brambles, may
frequently produce as great a quantity of vegetables as the best cultivated vineyard or corn
field. Planting and tillage frequently regulate more than they animate the active fertility of
Nature; and after all their labour, a great part of the work always remains to be done by her.
The labourers and labouring cattle, therefore, employed in agriculture, not only occasion, like
the workmen in manufactures, the reproduction of a value equal to their own con-  sumption, or
to the capital which employs them, together with its owner's profits, but of a much greater
value. Over and above the capital of the farmer, and all its profits, they regularly occasion  the
reproduction of the rent of the landlord. This rent may be considered as the produce of
those powers of Nature, the use of which the landlord lends to the farmer. It is greater or
smaller, ac- cording to the supposed extent of those powers, or, in other words, according to
the supposed nat- ural or improved fertility of the land. It is the work of Nature which remains,
after deducting or compensating every thing which can be regarded as the work of man. It is
seldom less than a fourth, and frequently more than a third, of the whole produce. No equal
quantity of productive labour employed in manufactures, can ever occasion so great
reproduction. In them Nature does nothing; man does all; and the reproduction must always be
in proportion to the strength of the agents that occasion it. The capital employed in agriculture,
therefore, not only puts into motion a greater quantity of productive labour than any equal
capital employed in manufactures; but in proportion, too, to the quantity of productive labour
which it employs, it adds a much greater value to the annual produce of the land and labour of
the country, to the real wealth and revenue of its inhabitants. Of all the ways in which a capital
can be employed, it is by far the most advan- tageous to society. The capitals employed in the
agriculture and in the retail trade of any society, must always re- side within that society. Their
employment is confined almost to a precise spot, to the farm, and to the shop of the retailer.
They must generally, too, though there are some exceptions to this, be- long to resident
members of the society. The capital of a wholesale merchant, on the contrary, seems to have no
fixed or necessary resi- dence anywhere, but may wander about from place to place, according
as it can either buy cheap or sell dear. The capital of the manufacturer must, no doubt, reside
where the manufacture is carried on; but where this shall be, is not always necessarily
determined. It may frequently be at a great dis- tance, both from the place where the materials
grow, and from that where the complete manu- facture is consumed. Lyons is very distant,
both from the places which afford the materials of its manufactures, and from those which
consume them. The people of fashion in Sicily are clothed in silks made in other countries,
from the materials which their own produces. Part of the wool of Spain is manufactured in
Great Britain, and some part of that cloth is afterwards sent back to Spain. Whether the
merchant whose capital exports the surplus produce of any society, be a native or a foreigner,
is of very little importance. If he is a foreigner, the number of their productive  labourers is
necessarily less than if he had been a native, by one man only; and the value of their annual
produce, by the profits of that one man. The sailors or carriers whom he employs, may still
belong indifferently either to his country, or to their country, or to some third country, in
the same manner as if he had been a native. The capital of a foreigner gives a value to their
surplus produce equally with that of a native, by exchanging it for something for which there is
a demand at home. It as effectually replaces the capital of the person who produces that
surplus, and as effectually enables him to continue his business, the service by which the
capital of a wholesale merchant chiefly contributes to support the productive labour, and to
augment the value of the annual produce of the society to which he belongs. It is of more
consequence that the capital of the manufacturer should reside within the coun- try. It
necessarily puts into motion a greater quantity of productive labour, and adds a greater value to
the annual produce of the land and labour of the society. It may, however, be very useful to the
country, though it should not reside within it. The capitals of the British manufacturers who
work up the flax and hemp annually imported from the coasts of the Baltic, are surely
very useful to the countries which produce them. Those materials are a part of the surplus
produce of those countries, which, unless it was annually exchanged for something which is in
demand here, would be of no value, and would soon cease to be produced. The merchants who
export it, replace the capitals of the people who produce it, and thereby encourage them to
continue the production; and the British manufacturers replace the capitals of those
merchants. A particular country, in the same manner as a particular person, may frequently not
have cap- ital sufficient both to improve and cultivate all its lands, to manufacture and prepare
their whole rude produce for immediate use and consumption, and to transport the surplus part
either of the rude or manufactured produce to those distant markets, where it can be exchanged
for something for which there is a demand at home. The inhabitants of many different parts of
Great Britain have not capital sufficient to improve and cultivate all their lands. The wool of
the southern coun- ties of Scotland is, a great part of it, after a long land carriage through very
bad roads, manufac- tured in Yorkshire, for want of a capital to manufacture it at home. There
are many little manufac- turing towns in Great Britain, of which the inhabitants have not
capital sufficient to transport the produce of their own industry to those distant markets where
there is demand and consumption for it. If there are any merchants among them, they are,
properly, only the agents of wealthier merchants who reside in some of the great commercial
cities. When the capital of any country is not sufficient for all those three purposes, in
proportion as a greater share of it is employed in agriculture, the greater will be the quantity of
productive labour which it puts into motion within the country; as will likewise be the value
which its em- ployment adds to the annual produce of the land and labour of the society. After
agriculture, the capital employed in manufactures puts into motion the greatest quantity of
productive labour, and adds the greatest value to the annual produce. That which is employed
in the trade of expor- tation has the least effect of any of the three. The country, indeed, which
has not capital sufficient for all those three purposes, has not ar- rived at that degree of
opulence for which it seems naturally destined. To attempt, however, prematurely, and with an
insufficient capital, to do all the three, is certainly not the shortest way for a society, no more
than it would be for an individual, to acquire a sufficient one. The capital of all the individuals
of a nation has its limits, in the same manner as that of a single individual, and is capable of
executing only certain purposes. The capital of all the individuals of a nation is in- creased in
the same manner as that of a single individual, by their continually accumulating and adding to
it whatever they save out of their revenue. It is likely to increase the fastest, therefore, when it
is employed in the way that affords the greatest revenue to all the inhabitants or the coun- try,
as they will thus be enabled to make the greatest savings. But the revenue of all the
inhab- itants of the country is necessarily in proportion to the value of the annual produce of
their land and labour. It has been the principal cause of the rapid progress of our American
colonies towards wealth and greatness, that almost their whole capitals have hitherto been
employed in agriculture. They have no manufactures, those household and coarser
manufactures excepted, which necessarily accompany the progress of agriculture, and which
are the work of the women and children in every private family. The greater part, both of the
exportation and coasting trade of America, is carried on by the capitals of merchants who
reside in Great Britain. Even the stores and ware- houses from which goods are retailed in
some provinces, particularly in Virginia and Maryland, belong many of them to merchants who
reside in the mother country, and afford one of the few instances of the retail trade of a society
being carried on by the capitals of those who are not resi- dent members of it. Were the
Americans, either by combination, or by any other sort of violence, to stop the importation of
European manufactures, and, by thus giving a monopoly to such of their own countrymen as
could manufacture the like goods, divert any considerable part of their capital into this
employment, they would retard, instead of accelerating, the further increase in the value of
their annual produce, and would obstruct, instead of promoting, the progress of their country
towards real wealth and greatness. This would be still more the case, were they to attempt, in
the same manner, to monopolize to themselves their whole exportation trade. The course of
human prosperity, indeed, seems scarce ever to have been of so long contin- uance as to unable
any great country to acquire capital sufficient for all those three purposes; un- less, perhaps, we
give credit to the wonderful accounts of the wealth and cultivation of China, of those of ancient
Egypt, and of the ancient state of Indostan. Even those three countries, the wealthiest,
according to all accounts, that ever were in the world, are chiefly renowned for
their superiority in agriculture and manufactures. They do not appear to have been eminent for
foreign trade. The ancient Egyptians had a superstitious antipathy to the sea; a superstition
nearly of the same kind prevails among the Indians; and the Chinese have never excelled in
foreign commerce. 

The greater part of the surplus produce of all those three countries seems to have been always
ex- ported by foreigners, who gave in exchange for it something else, for which they found a
demand there, frequently gold and silver. It is thus that the same capital will in any country put
into motion a greater or smaller quan- tity of productive labour, and add a greater or smaller
value to the annual produce of its land and labour, according to the different proportions in
which it is employed in agriculture, manufac- tures, and wholesale trade. The difference, too, is
very great, according to the different sorts of wholesale trade in which any part of it is
employed. All wholesale trade, all buying in order to sell again by wholesale, maybe reduced
to three dif- ferent sorts: the home trade, the foreign trade of consumption, and the carrying
trade. The home trade is employed in purchasing in one part of the same country, and selling in
another, the pro- duce of the industry of that country. It comprehends both the inland and the
coasting trade. The foreign trade of consumption is employed in purchasing foreign goods for
home consumption. The carrying trade is employed in transacting the commerce of foreign
countries, or in carrying the surplus produce of one to another. The capital which is employed
in purchasing in one part of the country, in order to sell in an- other, the produce of the
industry of that country, generally replaces, by every such operation, two distinct capitals, that
had both been employed in the agriculture or manufactures of that country, and thereby enables
them to continue that employment. When it sends out from the residence of the merchant a
certain value of commodities, it generally brings hack in return at least an equal value of other
commodities. When both are the produce of domestic industry, it necessarily re- places, by
every such operation, two distinct capitals, which had both been employed in sup- porting
productive labour, and thereby enables them to continue that support. The capital which sends
Scotch manufactures to London, and brings back English corn and manufactures to
Edin- burgh, necessarily replaces, by every such operation, two British capitals, which had
both been employed in the agriculture or manufactures of Great Britain. The capital employed
in purchasing foreign goods for home consumption, when this pur- chase is made with the
produce of domestic industry, replaces, too, by every such operation, two distinct capitals; but
one of them only is employed in supporting domestic industry. The capital which sends British
goods to Portugal, and brings back Portuguese goods to Great Britain, re- places, by every such
operation, only one British capital. The other is a Portuguese one. Though the returns,
therefore, of the foreign trade of consumption, should be as quick as those of the  home trade,
the capital employed in it will give but one half of the encouragement to the industry or
productive labour of the country. But the returns of the foreign trade of consumption are very
seldom so quick as those of the home trade. The returns of the home trade generally come in
before the end of the year, and sometimes three or four times in the year. The returns of the
foreign trade of consumption sel- dom come in before the end of the year, and sometimes not
till after two or three years. A capital, therefore, employed in the home trade, will sometimes
make twelve operations, or be sent out and returned twelve times, before a capital employed in
the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will
give four-and-twenty times more encour- agement and support to the industry of the country
than the other. The foreign goods for home consumption may sometimes be purchased, not
with the pro- duce of domestic industry but with some other foreign goods. These last,
however, must have been purchased, either immediately with the produce of domestic industry,
or with something else that had been purchased with it; for, the case of war and conquest
excepted, foreign goods can never be acquired, but in exchange for something that had been
produced at home, either im- mediately, or after two or more different exchanges. The effects,
therefore, of a capital employed in such a round-about foreign trade of consumption, are, in
every respect, the same as those of one employed in the most direct trade of the same kind,
except that the final returns are likely to be still more distant, as they must depend upon the
returns of two or three distinct foreign trades. If the hemp and flax of Riga are purchased with
the tobacco of Virginia, which had been pur- chased with British manufactures, the merchant
must wait for the returns of two distinct foreign trades, before he can employ the same capital
in repurchasing a like quantity of British manufac- tures. If the tobacco of Virginia had been
purchased, not with British manufactures, but with the sugar and rum of Jamaica, which had
been purchased with those manufactures, he must wait for the returns of three. If those two or
three distinct foreign trades should happen to be carried on by two or three distinct merchants,
of whom the second buys the goods imported by the first, and the third buys those imported by
the second, in order to export them again, each merchant, in- deed, will, in this case, receive
the returns of his own capital more quickly; but the final returns of the whole capital employed
in the trade will be just as slow as ever. Whether the whole capital em- ployed in such a round
about trade belong to one merchant or to three, can make no difference with regard to the
country, though it may with regard to the particular merchants. Three times a greater capital
must in both cases be employed, in order to exchange a certain value of British manufactures
for a certain quantity of flax and hemp, than would have been necessary, had the manufactures
and the flax and hemp been directly exchanged for one another. The whole capital employed,
therefore, in such a round-about foreign trade of consumption, will generally give
less encouragement and support to the productive labour of the country, than an equal capital
em- ployed in a more direct trade of the same kind. Whatever be the foreign commodity with
which the foreign goods for home consumption are purchased, it can occasion no essential
difference, either in the nature of the trade, or in the en- couragement and support which it can
give to the productive labour of the country from which it is carried on. If they are purchased
with the gold of Brazil, for example, or with the silver of Peru, this gold and silver, like the
tobacco of Virginia, must have been purchased with something that either was the produce of
the industry of the country, or that had been purchased with something else that was so. So far,
therefore, as the productive labour of the country is concerned, the foreign trade of
consumption, which is carried on by means of gold and silver, has all the advantages and all
the inconveniencies of any other equally round-about foreign trade of consumption; and
will replace, just as fast, or just as slow, the capital which is immediately employed in
supporting that productive labour. It seems even to have one advantage over any other equally
round-about for- eign trade. The transportation of those metals from one place to another, on
account of their small bulk and great value, is less expensive than that of almost any other
foreign goods of equal value. Their freight is much less, and their insurance not greater; and no
goods, besides, are less liable to suffer by the carriage. An equal quantity of foreign goods,
therefore, may frequently be pur- chased with a smaller quantity of the produce of domestic
industry, by the intervention of gold and silver, than by that of any other foreign goods. The
demand of the country may frequently, in this manner, be supplied more completely, and at a
smaller expense, than in any other. Whether, by the continual exportation of those metals, a
trade of this kind is likely to impoverish the coun- try from which it is carried on in any other
way, I shall have occasion to examine at great length hereafter. That part of the capital of any
country which is employed in the carrying trade, is altogether withdrawn from supporting the
productive labour of that particular country, to support that of some foreign countries. Though
it may replace, by every operation, two distinct capitals, yet nei- ther of them belongs to that
particular country. The capital of the Dutch merchant, which carries the corn of Poland to
Portugal, and brings back the fruits and wines of Portugal to Poland, re- places by every such
operation two capitals, neither of which had been employed in supporting the productive
labour of Holland; but one of them in supporting that of Poland, and the other that of Portugal.
The profits only return regularly to Holland, and constitute the whole addition which this trade
necessarily makes to the annual produce of the land and labour of that country. When, indeed,
the carrying trade of any particular country is carried on with the ships and sailors of
that country, that part of the capital employed in it which pays the freight is distributed among,
and puts into motion, a certain number of productive labourers of that country. Almost all
nations that have had any considerable share of the carrying trade have, in fact, carried it on in
this manner. The trade itself has probably derived its name from it, the people of such
countries being the car- riers to other countries. It does not, however, seem essential to the
nature of the trade that it should be so. A Dutch merchant may, for example, employ his capital
in transacting the commerce of Poland and Portugal, by carrying part of the surplus produce of
the one to the other, not in Dutch, but in British bottoms. It maybe presumed, that he actually
does so upon some par- ticular occasions. It is upon this account, however, that the carrying
trade has been supposed peculiarly advantageous to such a country as Great Britain, of which
the defence and security de- pend upon the number of its sailors and shipping. But the same
capital may employ as many sailors and shipping, either in the foreign trade of consumption, or
even in the home trade, when carried on by coasting vessels, as it could in the carrying trade.
The number of sailors and ship- ping which any particular capital can employ, does not depend
upon the nature of the trade, but partly upon the bulk of the goods, in proportion to their value,
and partly upon the distance of the ports between which they are to be carried; chiefly upon the
former of those two circumstances. The coal trade from Newcastle to London, for example,
employs more shipping than all the car- rying trade of England, though the ports are at no great
distance. To force, therefore, by extraor- dinary encouragements, a larger share of the capital
of any country into the carrying trade, than what would naturally go to it, will not always
necessarily increase the shipping of that country. The capital, therefore, employed in the home
trade of any country, will generally give encour- agement and support to a greater quantity of
productive labour in that country, and increase the value of its annual produce, more than an
equal capital employed in the foreign trade of con- sumption; and the capital employed in this
latter trade has, in both these respects, a still greater advantage over an equal capital employed
in the carrying trade. The riches, and so far as power depends upon riches, the power of every
country must always be in proportion to the value of its annual produce, the fund from which
all taxes must ultimately be paid. But the great object of the political economy of every
country, is to increase the riches and power of that country. It ought, therefore, to give no
preference nor superior encouragement to the foreign trade of consumption above the home
trade, nor to the carrying trade above either of the other two. It ought neither to force nor to
allure into either of those two channels a greater share of the capital of the country, than what
would naturally flow into them of its own accord. Each of those different branches of trade,
however, is not only advantageous, but necessary and unavoidable, when the course of things,
without any constraint or violence, naturally intro- duces it. When the produce of any
particular branch of industry exceeds what the demand of the coun- try requires, the surplus
must be sent abroad, and exchanged for something for which there is a demand at home.
Without such exportation, a part of the productive labour of the country must cease, and the
value of its annual produce diminish. The land and labour of Great Britain produce generally
more corn, woollens, and hardware, than the demand of the home market requires. The surplus
part of them, therefore, must be sent abroad, and exchanged for something for which  there is a
demand at home. It is only by means of such exportation, that this surplus can acquired  value
sufficient to compensate the labour and expense of producing it. The neighbourhood of the sea-
coast, and the banks of all navigable rivers, are advantageous situations for industry, only
be- cause they facilitate the exportation and exchange of such surplus produce for something
else which is more in demand there. When the foreign goods which are thus purchased with the
surplus produce of domestic industry exceed the demand of the home market, the surplus part
of them must be sent abroad again, and exchanged for something more in demand at home.
About 96,000 hogsheads of to- bacco are annually purchased in Virginia and Maryland with a
part of the surplus produce of British industry. But the demand of Great Britain does not
require, perhaps, more than 14,000. If the remaining 82,000, therefore, could not be sent
abroad, and exchanged for something more in demand at home, the importation of them must
cease immediately, and with it the productive labour of all those inhabitants of Great Britain
who are at present employed in preparing the goods with which these 82,000 hogsheads are
annually purchased. Those goods, which are part of the produce of the land and labour of Great
Britain, having no market at home, and being de- prived of that which they had abroad, must
cease to be produced. The most round-about foreign trade of consumption, therefore, may,
upon some occasions, be as necessary for supporting the productive labour of the country, and
the value of its annual produce, as the most direct. 

When the capital stock of any country is increased to such a degree that it cannot be all
em- ployed in supplying the consumption, and supporting the productive labour of that
particular country, the surplus part of it naturally disgorges itself into the carrying trade, and is
employed in performing the same offices to other countries. The carrying trade is the natural
effect and symp- tom of great national wealth; but it does not seem to be the natural cause of it.
Those statesmen who have been disposed to favour it with particular encouragement, seem to
have mistaken the effect and symptom for the cause. Holland, in proportion to the extent of the
land and the num- ber of it's inhabitants, by far the richest country in Europe, has accordingly
the greatest share of the carrying trade of Europe. England, perhaps the second richest country
of Europe, is likewise supposed to have a considerable share in it; though what commonly
passes for the carrying trade of England will frequently, perhaps, be found to be no more than a
round-about foreign trade of consumption. Such are, in a great measure, the trades which carry
the goods of the East and West Indies and of America to the different European markets. Those
goods are generally purchased, either immediately with the produce of British industry, or with
something else which had been purchased with that produce, and the final returns of those
trades are generally used or consumed in Great Britain. The trade which is carried on in British
bottoms between the different ports of the Mediterranean, and some trade of the same kind
carried on by British merchants between the different ports of India, make, perhaps, the
principal branches of what is properly the carrying trade of Great Britain. The extent of the
home trade, and of the capital which can be employed in it, is necessarily limited by the value
of the surplus produce of all those distant places within the country which have occasion to
exchange their respective productions with one another; that of the foreign trade of
consumption, by the value of the surplus produce of the whole country, and of what can
be purchased with it; that of the carrying trade, by the value of the surplus produce of all the
dif- ferent countries in the world. Its possible extent, therefore, is in a manner infinite in
comparison of that of the other two, and is capable of absorbing the greatest capitals.  The
consideration of his own private profit is the sole motive which determines the owner of any
capital to employ it either in agriculture, in manufactures, or in some particular branch of
the wholesale or retail trade. The different quantities of productive labour which it may put
into mo- tion, and the different values which it may add to the annual produce of the land and
labour of the society, according as it is employed in one or other of those different ways, never
enter into his thoughts. In countries, therefore, where agriculture is the most profitable of all
employments, and farming and improving the most direct roads to a splendid fortune, the
capitals of individuals will naturally be employed in the manner most advantageous to the
whole society. The profits of agriculture, however, seem to have no superiority over those of
other employments in any part of Europe. Projectors, indeed, in every corner of it, have, within
these few years, amused the public with most magnificent accounts of the profits to be made
by the cultivation and improvement of land. Without entering into any particular discussion of
their calculations, a very simple obser- vation may satisfy us that the result of them must be
false. We see, every day, the most splendid fortunes, that have been acquired in the course of a
single life, by trade and manufactures, fre- quently from a very small capital, sometimes from
no capital. A single instance of such a fortune, acquired by agriculture in the same time, and
from such a capital, has not, perhaps, occurred in Europe, during the course of the present
century. In all the great countries of Europe, however, much good land still remains
uncultivated; and the greater part of what is cultivated, is far from being improved to the
degree of which it is capable. Agriculture, therefore, is almost everywhere  capable of
absorbing a much greater capital than has ever yet been employed in it. What circum- stances
in the policy of Europe have given the trades which are carried on in towns so great
an advantage over that which is carried on in the country, that private persons frequently find
it more for their advantage to employ their capitals in the most distant carrying trades of Asia
and America than in the improvement and cultivation of the most fertile fields in their own
neigh- bourhood, I shall endeavour to explain at full length in the two following books. 

BOOK III. OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS 

CHAPTER I. OF THE NATURAL PROGRESS OF OPULENCE.  The great commerce of

every civilized society is that carried on between the inhabitants of the town and those of the
country. It consists in the exchange of rude for manufactured produce, ei- ther immediately, or
by the intervention of money, or of some sort of paper which represents money. The country
supplies the town with the means of subsistence and the materials of manu- facture. The town
repays this supply, by sending back a part of the manufactured produce to the inhabitants of the
country. The town, in which there neither is nor can be any reproduction of substances, may
very properly be said to gain its whole wealth and subsistence from the country. We must not,
however, upon this account, imagine that the gain of the town is the loss of the country. The
gains of both are mutual and reciprocal, and the division of labour is in this, as in all  other
cases, advantageous to all the different persons employed in the various occupations
into which it is subdivided. The inhabitants of the country purchase of the town a greater
quantity of manufactured goods with the produce of a much smaller quantity of their own
labour, than they must have employed had they attempted to prepare them themselves. The
town affords a market for the surplus produce of the country, or what is over and above the
maintenance of the culti- vators; and it is there that the inhabitants of the country exchange it
for something else which is in demand among them. The greater the number and revenue of the
inhabitants of the town, the more extensive is the market which it affords to those of the
country; and the more extensive that market, it is always the more advantageous to a great
number. The corn which grows within a mile of the town, sells there for the same price with
that which comes from twenty miles distance. But the price of the latter must, generally, not
only pay the expense of raising it and bringing it to market, but afford, too, the ordinary profits
of agriculture to the farmer. The proprietors and culti- vators of the country, therefore, which
lies in the neighbourhood of the town, over and above the ordinary profits of agriculture, gain,
in the price of what they sell, the whole value of the carriage of the like produce that is brought
from more distant parts; and they save, besides, the whole value of this carriage in the price of
what they buy. Compare the cultivation of the lands in the neighbourhood of any considerable
town, with that of those which lie at some distance from it, and you will easily satisfy yourself
bow much the country is benefited by the commerce of the town. Among all the absurd
speculations that have been propagated concerning the balance of trade, it has never been
pretended that either the country loses by its commerce with the town, or the town by that with
the country which maintains it. As subsistence is, in the nature of things, prior to conveniency
and luxury, so the industry which procures the former, must necessarily be prior to that which
ministers to the latter. The cultivation and improvement of the country, therefore, which
affords subsistence, must, neces- sarily, be prior to the increase of the town, which furnishes
only the means of conveniency and luxury. It is the surplus produce of the country only, or
what is over and above the maintenance of the cultivators, that constitutes the subsistence of
the town, which can therefore increase only with the increase of the surplus produce. The
town, indeed, may not always derive its whole sub- sistence from the country in its
neighbourhood, or even from the territory to which it belongs, but from very distant countries;
and this, though it forms no exception from the general rule, has occasioned considerable
variations in the progress of opulence in different ages and nations. That order of things which
necessity imposes, in general, though not in every particular country, is in every particular
country promoted by the natural inclinations of man. If human institutions had never thwarted
those natural inclinations, the towns could nowhere have in- creased beyond what the
improvement and cultivation of the territory in which they were situated could support; till
such time, at least, as the whole of that territory was completely cultivated and  improved.
Upon equal, or nearly equal profits, most men will choose to employ their capitals, rather in
the improvement and cultivation of land, than either in manufactures or in foreign trade. The
man who employs his capital in land, has it more under his view and command; and his fortune
is much less liable to accidents than that of the trader, who is obliged frequently to  commit it,
not only to the winds and the waves, but to the more uncertain elements of human folly and
injustice, by giving great credits, in distant countries, to men with whose character
and situation he can seldom be thoroughly acquainted. The capital of the landlord, on the
contrary, which is fixed in the improvement of his land, seems to be as well secured as the
nature of human affairs can admit of. The beauty of the country, besides, the pleasure of a
country life, the tranquillity of mind which it promises, and, wherever the injustice of human
laws does not dis- turb it, the independency which it really affords, have charms that, more or
less, attract everybody; and as to cultivate the ground was the original destination of man, so,
in every stage of his exis- tence, he seems to retain a predilection for this primitive
employment. Without the assistance of some artificers, indeed, the cultivation of land cannot
be carried on, but with great inconveniency and continual interruption. Smiths, carpenters,
wheelwrights and ploughwrights, masons and bricklayers, tanners, shoemakers, and tailors, are
people whose ser- vice the farmer has frequent occasion for. Such artificers, too, stand
occasionally in need of the assistance of one another; and as their residence is not, like that of
the farmer, necessarily tied down to a precise spot, they naturally settle in the neighbourhood
of one another, and thus form a small town or village. The butcher, the brewer, and the baker,
soon join them, together with many other artificers and retailers, necessary or useful for
supplying their occasional wants, and who contribute still further to augment the town. The
inhabitants of the town, and those of the coun- try, are mutually the servants of one another.
The town is a continual fair or market, to which the inhabitants of the country resort, in order
to exchange their rude for manufactured produce. It is this commerce which supplies the
inhabitants of the town, both with the materials of their work, and the means of their
subsistence. The quantity of the finished work which they sell to the inhabitants of the country,
necessarily regulates the quantity of the materials and provisions which they buy. Neither their
employment nor subsistence, therefore, can augment, but in pro- portion to the augmentation
of the demand from the country for finished work; and this demand can augment only in
proportion to the extension of improvement and cultivation. Had human institutions, therefore,
never disturbed the natural course of things, the progressive wealth and increase of the towns
would, in every political society, be consequential, and in proportion to the improvement and
cultivation of the territory of country. In our North American colonies, where uncultivated land
is still to be had upon easy terms, no manufactures for distant sale have ever yet been
established in any of their towns. When an artificer has acquired a little more stock than is
necessary for carrying on his own business in supplying the neighbouring country, he does not,
in North America, attempt to establish with it a manufacture for more distant sale, but employs
it in the purchase and improvement of uncul- tivated land. From artificer he becomes planter;
and neither the large wages nor the easy subsis- tence which that country affords to artificers,
can bribe him rather to work for other people than for himself. He feels that an artificer is the
servant of his customers, from whom he derives his subsistence; but that a planter who
cultivates his own land, and derives his necessary subsistence from the labour of his own
family, is really a master, and independent of all the world. In countries, on the contrary, where
there is either no uncultivated land, or none that can be had upon easy terms, every artificer
who has acquired more stock than he can employ in the occa- sional jobs of the
neighbourhood, endeavours to prepare work for more distant sale. The smith erects some sort
of iron, the weaver some sort of linen or woollen manufactory. Those different manufactures
come, in process of time, to be gradually subdivided, and thereby improved and re- fined in a
great variety of ways, which may easily be conceived, and which it is therefore unnec- essary
to explain any farther. In seeking for employment to a capital, manufactures are, upon equal or
nearly equal profits, naturally preferred to foreign commerce, for the same reason that
agriculture is naturally pre- ferred to manufactures. As the capital of the landlord or farmer is
more secure than that of the manufacturer, so the capital of the manufacturer, being at all times
more within his view and command, is more secure than that of the foreign merchant. In every
period, indeed, of every society, the surplus part both of the rude and manufactured produce, or
that for which there is no demand at home, must be sent abroad, in order to be exchanged for
something for which there is some demand at home. But whether the capital which carries this
surplus produce abroad be a foreign or a domestic one, is of very little importance. If the
society has not acquired sufficient capital, both to cultivate all its lands, and to manufacture in
the completest manner the whole of its rude produce, there is even a considerable advantage
that the rude produce should be exported by a foreign capital, in order that the whole stock of
the society may be employed in more useful purposes. The wealth of ancient Egypt, that of
China and Indostan, sufficiently demonstrate that a nation may attain a very high degree of
opulence, though the greater part of its exportation trade be carried on by foreigners. The
progress of our North American and West Indian colonies, would have been much less rapid,
had no capital but what belonged to themselves been employed in exporting their surplus
produce. According to the natural course of things, therefore, the greater part of the capital of
every growing society is, first, directed to agriculture, afterwards to manufactures, and, last of
all, to for- eign commerce. This order of things is so very natural, that in every society that had
any territory, it has always, I believe, been in some degree observed. Some of their lands must
have been culti- vated before any considerable towns could be established, and some sort of
coarse industry of the manufacturing kind must have been carried on in those towns, before
they could well think of employing themselves in foreign commerce. But though this natural
order of things must have taken place in some degree in every such society, it has, in all the
modern states of Europe, been in many respects entirely inverted. The foreign commerce of
some of their cities has introduced all their finer manufactures, or such as were fit for distant
sale; and manufactures and foreign commerce together have given birth to the principal
improvements of agriculture. The manners and customs which the nature of their orig- inal
government introduced, and which remained after that government was greatly
altered, necessarily forced them into this unnatural and retrograde order. 

CHAPTER II. OF THE DISCOURAGEMENT OF AGRICULTURE IN THE

ANCIENT STATE OF EUROPE, AFTER THE FALL OF THE ROMAN EMPIRE.  When
the German and Scythian nations overran the western provinces of the Roman empire, the
confusions which followed so great a revolution lasted for several centuries. The rapine
and violence which the barbarians exercised against the ancient inhabitants, interrupted the
com- merce between the towns and the country. The towns were deserted, and the country was
left uncultivated; and the western provinces of Europe, which had enjoyed a considerable
degree of opulence under the Roman empire, sunk into the lowest state of poverty and
barbarism. During the continuance of those confusions, the chiefs and principal leaders of
those nations acquired, or usurped to themselves, the greater part of the lands of those
countries. A great part of them was uncultivated; but no part of them, whether cultivated or
uncultivated, was left without a propri- etor. All of them were engrossed, and the greater part
by a few great proprietors. This original engrossing of uncultivated lands, though a great,
might have been but a tran- sitory evil. They might soon have been divided again, and broke
into small parcels, either by suc- cession or by alienation. The law of primogeniture hindered
them from being divided by succes- sion; the introduction of entails prevented their being
broke into small parcels by alienation. When land, like moveables, is considered as the means
only of subsistence and enjoyment, the natural law of succession divides it, like them, among
all the children of the family; of all of whom the subsistence and enjoyment may be supposed
equally dear to the father. This natural law of succession, accordingly, took place among the
Romans who made no more distinction be- tween elder and younger, between male and
female, in the inheritance of lands, than we do in the distribution of moveables. But when land
was considered as the means, not of subsistence mere- ly, but of power and protection, it was
thought better that it should descend undivided to one. In those disorderly times, every great
landlord was a sort of petty prince. His tenants were his sub- jects. He was their judge, and in
some respects their legislator in peace and their leader in war. He made war according to his
own discretion, frequently against his neighbours, and sometimes against his sovereign. The
security of a landed estate, therefore, the protection which its owner could afford to those who
dwelt on it, depended upon its greatness. To divide it was to ruin it, and to expose every part of
it to be oppressed and swallowed up by the incursions of its neighbours. The law of
primogeniture, therefore, came to take place, not immediately indeed, but in process of time, in
the succession of landed estates, for the same reason that it has generally taken place in  that of
monarchies, though not always at their first institution. That the power, and consequently the
security of the monarchy, may not be weakened by division, it must descend entire to one
of the children. To which of them so important a preference shall be given, must be determined
by some general rule, founded not upon the doubtful distinctions of personal merit, but upon
some plain and evident difference which can admit of no dispute. Among the children of the
same fam- ily there can be no indisputable difference but that of sex, and that of age. The male
sex is univer- sally preferred to the female; and when all other things are equal, the elder
everywhere takes place of the younger. Hence the origin of the right of primogeniture, and of
what is called lineal succes- sion. Laws frequently continue in force long after the
circumstances which first gave occasion to them, and which could alone render them
reasonable, are no more. In the present state of Eu- rope, the proprietor of a single acre of land
is as perfectly secure in his possession as the propri- etor of 100,000. The right of
primogeniture, however, still continues to be respected; and as of all institutions it is the fittest
to support the pride of family distinctions, it is still likely to endure for many centuries. In
every other respect, nothing can be more contrary to the real interest of a numerous family,
than a right which, in order to enrich one, beggars all the rest of the children.  Entails are the
natural consequences of the law of primogeniture. They were introduced to preserve a certain
lineal succession, of which the law of primogeniture first gave the idea, and to hinder any part
of the original estate from being carried out of the proposed line, either by gift, or device, or
alienation; either by the folly, or by the misfortune of any of its successive owners. They were
altogether unknown to the Romans. Neither their substitutions, nor fidei commisses, bear any
resemblance to entails, though some French lawyers have thought proper to dress the mod- ern
institution in the language and garb of those ancient ones. When great landed estates were a
sort of principalities, entails might not be unreasonable. Like what are called the fundamental
laws of some monarchies, they might frequently hinder the security of thousands from being
endangered by the caprice or extravagance of one man. But in the present state of Europe,
when small as well as great estates derive their security from the laws of their country, nothing
can be more completely absurd. They are founded upon the most absurd of all suppositions, the
supposition that every successive generation of men have not an equal right to the earth, and to
all that it possesses; but that the property of the present generation should be restrained and
regulated according to the fancy of those who died, perhaps five hun- dred years ago. Entails,
however, are still respected, through the greater part of Europe; In those countries, particularly,
in which noble birth is a necessary qualification for the enjoyment either of civil or military
honours. Entails are thought necessary for maintaining this exclusive privilege of the nobility
to the great offices and honours of their country; and that order having usurped one unjust
advantage over the rest of their fellow-citizens, lest their poverty should render it ridiculous, it
is thought reasonable that they should have another. The common law of England, indeed, is
said to abhor perpetuities, and they are accordingly more restricted there than in any other
European monarchy; though even England is not altogether without them. In Scotland, more
than one fifth, perhaps more than one third part of the whole lands in the country, are at present
supposed to be under strict entail. Great tracts of uncultivated land were in this manner not
only engrossed by particular fami- lies, but the possibility of their being divided again was as
much as possible precluded for ever. It seldom happens, however, that a great proprietor is a
great improver. In the disorderly times which gave birth to those barbarous institutions, the
great proprietor was sufficiently employed in defending his own territories, or in extending his
jurisdiction and authority over those of his neighbours. He had no leisure to attend to the
cultivation and improvement of land. When the establishment of law and order afforded him
this leisure, he often wanted the inclination, and al- most always the requisite abilities. If the
expense of his house and person either equalled or ex- ceeded his revenue, as it did very
frequently, he had no stock to employ in this manner. If he was an economist, he generally
found it more profitable to employ his annual savings in new pur- chases than in the
improvement of his old estate. To improve land with profit, like all other com- mercial
projects, requires an exact attention to small savings and small gains, of which a man  born to a
great fortune, even though naturally frugal, is very seldom capable. The situation of such a
person naturally disposes him to attend rather to ornament, which pleases his fancy, than to
profit, for which he has so little occasion. The elegance of his dress, of his equipage, of
his house and household furniture, are objects which, from his infancy, he has been
accustomed to have some anxiety about. The turn of mind which this habit naturally forms,
follows him when he comes to think of the improvement of land. He embellishes, perhaps, four
or five hundred acres in the neighbourhood of his house, at ten times the expense which the
land is worth after all his improvements; and finds, that if he was to improve his whole estate
in the same manner, and he has little taste for any other, he would be a bankrupt before he had
finished the tenth part of it. There still remain, in both parts of the united kingdom, some great
estates which have continued, without interruption, in the hands of the same family since the
times of feudal anarchy. Compare the present condition of those estates with the possessions of
the small proprietors in their neigh- bourhood, and you will require no other argument to
convince you how unfavourable such exten- sive property is to improvement. If little
improvement was to be expected from such great proprietors, still less was to be hoped for
from those who occupied the land under them. In the ancient state of Europe, the occupiers
of land were all tenants at will. They were all, or almost all, slaves, but their slavery was of a
milder kind than that known among the ancient Greeks and Romans, or even in our West
Indian colonies. They were supposed to belong more directly to the land than to their master.
They could, therefore, be sold with it, but not separately. They could marry, provided it was
with the consent of their master; and he could not afterwards dissolve the marriage by selling
the man and wife to different persons. If he maimed or murdered any of them, he was liable to
some penalty, though generally but to a small one. They were not, however, capable of
acquiring property. Whatever they acquired was acquired to their master, and he could take it
from them at pleasure. Whatever cultivation and improvement could be carried on by means of
such slaves, was properly carried on by their master. It was at his expense. The seed, the cattle,
and the instruments of husbandry, were all his. It was for his benefit. Such slaves could acquire
nothing but their daily maintenance. It was properly the proprietor himself, therefore, that in
this case occupied his own lands, and cultivated them by his own bondmen. This species of
slavery still subsists in Russia, Poland, Hungary, Bohemia, Moravia, and other parts of
Germany. It is only in the western and south- western provinces of Europe that it has gradually
been abolished altogether. But if great improvements are seldom to be expected from great
proprietors, they are least of all to be expected when they employ slaves for their workmen.
The experience of all ages and na- tions, I believe, demonstrates that the work done by slaves,
though it appears to cost only their maintenance, is in the end the dearest of any. A person who
can acquire no property can have no other interest but to eat as much and to labour as little as
possible. Whatever work he does beyond what is sufficient to purchase his own maintenance,
can be squeezed out of him by violence only, and not by any interest of his own. In ancient
Italy, how much the cultivation of corn degen- erated, how unprofitable it became to the
master, when it fell under the management of slaves, is remarked both by Pliny and Columella.
In the time of Aristotle, it had not been much better in ancient Greece. Speaking of the ideal
republic described in the laws of Plato, to maintain 5000 idle men (the number of warriors
supposed necessary for its defence), together with their women and servants, would require, he
says, a territory of boundless extent and fertility, like the plains of Babylon. The pride of man
makes him love to domineer, and nothing mortifies him so much as to be obliged to
condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work
can afford it, therefore, he will generally prefer the service of slaves to that of freemen.
The planting of sugar and tobacco can afford the expense of slave cultivation. The raising of
corn, it seems, in the present times, cannot. In the English colonies, of which the principal
produce is corn, the far greater part of the work is done by freemen. The late resolution of the
Quakers in Pennsylvania, to set at liberty all their negro slaves, may satisfy us that their
number cannot be very great. Had they made any considerable part of their property, such a
resolution could never have been agreed to. In our sugar colonies., on the contrary, the whole
work is done by slaves, and in our tobacco colonies a very great part of it. The profits of a
sugar plantation in any of our West Indian colonies, are generally much greater than those of
any other cultivation that is known ei- ther in Europe or America; and the profits of a tobacco
plantation, though inferior to those of sugar, are superior to those of corn, as has already been
observed. Both can afford the expense of slave cultivation but sugar can afford it still better
than tobacco. The number of negroes, accord- ingly, is much greater, in proportion to that of
whites, in our sugar than in our tobacco colonies. To the slave cultivators of ancient times
gradually succeeded a species of farmers, known at present in France by the name of metayers.
They are called in Latin Coloni Partiarii. They have been so long in disuse in England, that at
present I know no English name for them. The propri- etor furnished them with the seed, cattle,
and instruments of husbandry, the whole stock, in short, necessary for cultivating the farm. The
produce was divided equally between the proprietor and the farmer, after setting aside what
was judged necessary for keeping up the stock, which was restored to the proprietor, when the
farmer either quitted or was turned out of the farm. Land occupied by such tenants is properly
cultivated at the expense of the proprietors, as much as that occupied by slaves. There is,
however, one very essential difference between them. Such tenants, being freemen, are capable
of acquiring property; and having a certain proportion of the produce of the land, they have a
plain interest that the whole produce should be as great as possible, in order that their own
proportion may be so. A slave, on the contrary, who can acquire nothing but his maintenance,
consults his own ease, by making the land produce as little as pos- sible over and above that
maintenance. It is probable that it was partly upon account of this advantage, and partly upon
account of the encroachments which the sovereigns, always jealous of the great lords,
gradually encouraged their villains to make upon their authority, and which seem, at least, to
have been such as rendered this species of servitude altogether inconvenient, that ten-  ure in
villanage gradually wore out through the greater part of Europe. The time and
manner, however, in which so important a revolution was brought about, is one of the most
obscure points in modern history. The church of Rome claims great merit in it; and it is certain,
that so early as the twelfth century, Alexander III. published a bull for the general
emancipation of slaves. It seems, however, to have been rather a pious exhortation, than a law
to which exact obedience was required from the faithful. Slavery continued to take place
almost universally for several centuries afterwards, till it was gradually abolished by the joint
operation of the two interests above men- tioned; that of the proprietor on the one hand, and
that of the sovereign on the other. A villain, enfranchised, and at the same time allowed to
continue in possession of the land, having no stock of his own, could cultivate it only by means
of what the landlord advanced to him, and must therefore have been what the French call a
metayer. It could never, however, be the interest even of this last species of cultivators, to lay
out, in the further improvement of the land, any part of the little stock which they might save
from their own share of the produce; because the landlord, who laid out nothing, was to get one
half of whatever it produced. The tithe, which is but a tenth of the produce, is found to be a
very great hindrance to improvement. A tax, therefore, which amounted to one half, must have
been an effectual bar to it. It might be the interest of a metayer to make the land produce as
much as could be brought out of it by means of the stock furnished by the proprietor; but it
could never be his interest to mix any part of his own with it. In France, where five parts out of
six of the whole kingdom are said to be still occupied by this species of cultivators, the
proprietors complain, that their metayers take every opportunity of employing their master's
cattle rather in carriage than in cultivation; be- cause, in the one case, they get the whole profits
to themselves, in the other they share them with their landlord. This species of tenants still
subsists in some parts of Scotland. They are called steel-bow tenants. Those ancient English
tenants, who are said by Chief-Baron Gilbert and Dr Blackstone to have been rather bailiffs of
the landlord than farmers, properly so called, were prob- ably of the same kind. To this species
of tenantry succeeded, though by very slow degrees, farmers, properly so called, who
cultivated the land with their own stock, paying a rent certain to the landlord. When such
farmers have a lease for a term of years, they may sometimes find it for their interest to lay out
part of their capital in the further improvement of the farm; because they may sometimes
ex- pect to recover it, with a large profit, before the expiration of the lease. The possession,
even of such farmers, however, was long extremely precarious, and still is so in many parts of
Europe. They could, before the expiration of their term, be legally ousted of their leases by a
new pur- chaser; in England, even, by the fictitious action of a common recovery. If they were
turned out illegally by the violence of their master, the action by which they obtained redress
was extremely imperfect. It did not always reinstate them in the possession of the land, but
gave them damages, which never amounted to a real loss. Even in England, the country,
perhaps of Europe, where the yeomanry has always been most respected, it was not till about
the 14th of Henry VII. that the ac- tion of ejectment was invented, by which the tenant
recovers, not damages only, but possession, and in which his claim is not necessarily
concluded by the uncertain decision of a single assize. This action has been found so effectual
a remedy, that, in the modern practice, when the landlord has occasion to sue for the
possession of the land, he seldom makes use of the actions which properly belong to him as a
landlord, the writ of right or the writ of entry, but sues in the name of his tenant, by the writ of
ejectment. In England, therefore the security of the tenant is equal to that of the proprietor. In
England, besides, a lease for life of forty shillings a-year value is a free- hold, and entitles the
lessee to a vote for a member of parliament; and as a great part of the yeo-  manry have
freeholds of this kind, the whole order becomes respectable to their landlords, on ac- count of
the political consideration which this gives them. There is, I believe, nowhere in
Europe, except in England, any instance of the tenant building upon the land of which he had
no lease, and trusting that the honour of his landlord would take no advantage of so important
an improve- ment. Those laws and customs, so favourable to the yeomanry, have perhaps
contributed more to the present grandeur of England, than all their boasted regulations of
commerce taken together. The law which secures the longest leases against successors of every
kind, is, so far as I know, peculiar to Great Britain. It was introduced into Scotland so early as
1449, by a law of James II. Its beneficial influence, however, has been much obstructed by
entails; the heirs of entail being generally restrained from letting leases for any long term of
years, frequently for more than one year. A late act of parliament has, in this respect,
somewhat slackened their fetters, though they are still by much too strait. In Scotland, besides,
as no leasehold gives a vote for a member of par- liament, the yeomanry are upon this account
less respectable to their landlords than in England. In other parts of Europe, after it was found
convenient to secure tenants both against heirs and purchasers, the term of their security was
still limited to a very short period; in France, for example, to nine years from the
commencement of the lease. It has in that country, indeed, been lately extended to
twentyseven, a period still too short to encourage the tenant to make the most  important
improvements. The proprietors of land were anciently the legislators of every part of Europe.
The laws relating to land, therefore, were all calculated for what they supposed the inter- est of
the proprietor. It was for his interest, they had imagined, that no lease granted by any of
his predecessors should hinder him from enjoying, during a long term of years, the full value
of his land. Avarice and injustice are always short-sighted, and they did not foresee how much
this regu- lation must obstruct improvement, and thereby hurt, in the long-run, the real interest
of the land- lord. The farmers, too, besides paying the rent, were anciently, it was supposed,
bound to perform a great number of services to the landlord, which were seldom either
specified in the lease, or regulated by any precise rule, but by the use and wont of the manor or
barony. These services, therefore, being almost entirely arbitrary, subjected the tenant to many
vexations. In Scotland the abolition of all services not precisely stipulated in the lease, has, in
the course of a few years, very much altered for the better the condition of the yeomanry of
that country. The public services to which the yeomanry were bound, were not less arbitrary
than the pri- vate ones. To make and maintain the high roads, a servitude which still subsists, I
believe, every- where, though with different degrees of oppression in different countries, was
not the only one. When the king's troops, when his household, or his officers of any kind,
passed through any part of the country, the yeomanry were bound to provide them with horses,
carriages, and provisions, at a price regulated by the purveyor. Great Britain is, I believe, the
only monarchy in Europe where the oppression of purveyance has been entirely abolished. It
still subsists in France and Germany. The public taxes, to which they were subject, were as
irregular and oppressive as the services. The ancient lords, though extremely unwilling to
grant, themselves, any pecuniary aid to their sovereign, easily allowed him to tallage, as they
called it, their tenants, and had not knowledge enough to foresee how much this must, in the
end, affect their own revenue. The taille, as it still subsists in France may serve as an example
of those ancient tallages. It is a tax upon the supposed profits of the farmer, which they
estimate by the stock that he has upon the farm. It is his inter- est, therefore, to appear to have
as little as possible, and consequently to employ as little as pos- sible in its cultivation, and
none in its improvement. Should any stock happen to accumulate in the hands of a French
farmer, the taille is almost equal to a prohibition of its ever being employed upon the land. This
tax, besides, is supposed to dishonour whoever is subject to it, and to degrade him below, not
only the rank of a gentleman, but that of a burgher; and whoever rents the lands of another
becomes subject to it. No gentleman, nor even any burgher, who has stock, will submit to this
degradation. This tax, therefore, not only hinders the stock which accumulates upon the land
from being employed in its improvement, but drives away all other stock from it. The
ancient tenths and fifteenths, so usual in England in former times, seem, so far as they affected
the land, to have been taxes of the same nature with the taille. Under all these discouragements,
little improvement could be expected from the occupiers of land. That order of people, with all
the liberty and security which law can give, must always im- prove under great disadvantage.
The farmer, compared with the proprietor, is as a merchant who trades with burrowed money,
compared with one who trades with his own. The stock of both may improve; but that of the
one, with only equal good conduct, must always improve more slowly than that of the other, on
account of the large share of the profits which is consumed by the inter- est of the loan. The
lands cultivated by the farmer must, in the same manner, with only equal good conduct, be
improved more slowly than those cultivated by the proprietor, on account of the large share of
the produce which is consumed in the rent, and which, had the farmer been propri- etor, he
might have employed in the further improvement of the land. The station of a farmer, be- sides,
is, from the nature of things, inferior to that of a proprietor. Through the greater part of
Eu- rope, the yeomanry are regarded as an inferior rank of people, even to the better sort of
tradesmen and mechanics, and in all parts of Europe to the great merchants and master
manufacturers. It can seldom happen, therefore, that a man of any considerable stock should
quit the superior, in order to place himself in an inferior station. Even in the present state of
Europe, therefore, little stock is likely to go from any other profession to the improvement of
land in the way of farming. More does, perhaps, in Great Britain than in any other country,
though even there the great stocks which are in some places employed in farming, have
generally been acquired by fanning, the trade, perhaps, in which, of all others, stock is
commonly acquired most slowly. After small proprietors, however, rich and great farmers are
in every country the principal improvers. There are more such, perhaps, in England than in any
other European monarchy. In the republican gov- ernments of Holland, and of Berne in
Switzerland, the farmers are said to be not inferior to those of England. The ancient policy of
Europe was, over and above all this, unfavourable to the improvement and cultivation of land,
whether carried on by the proprietor or by the farmer; first, by the general prohibition of the
exportation of corn, without a special licence, which seems to have been a very universal
regulation; and, secondly, by the restraints which were laid upon the inland commerce, not
only of corn, but of almost every other part of the produce of the farm, by the absurd
laws against engrossers, regraters, and forestallers, and by the privileges of fairs and markets.
It has al- ready been observed in what manner the prohibition of the exportation of corn,
together with some encouragement given to the importation of foreign corn, obstructed the
cultivation of an- cient Italy, naturally the most fertile country in Europe, and at that time the
seat of the greatest empire in the world. To what degree such restraints upon the inland
commerce of this com- modity, joined to the general prohibition of exportation, must have
discouraged the cultivation of countries less fertile, and less favourably circumstanced, it is
not, perhaps, very easy to imagine. 

CHAPTER III. OF THE RISE AND PROGRESS OF CITIES AND TOWNS, AFTER
THE FALL OF THE ROMAN EMPIRE.  The inhabitants of cities and towns were, after the
fall of the Roman empire, not more favoured than those of the country. They consisted, indeed,
of a very different order of people from the first inhabitants of the ancient republics of Greece
and Italy. These last were composed chiefly of the proprietors of lands, among whom the
public territory was originally divided, and who found it convenient to build their houses in the
neighbourhood of one another, and to sur- round them with a wall, for the sake of common
defence. After the fall of the Roman empire, on the contrary, the proprietors of land seem
generally to have lived in fortified castles on their own estates, and in the midst of their own
tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, who
seem, in those days, to have been of servile, or very nearly of servile condition. The privileges
which we find granted by ancient charters to the inhabitants of some of the principal towns in
Europe, sufficiently show what they were before those grants. The people to whom it is
granted as a privilege, that they might give away their own daughters in mar- riage without the
consent of their lord, that upon their death their own children, and not their lord, should
succeed to their goods, and that they might dispose of their own effects by will, must, before
those grants, have been either altogether, or very nearly, in the same state of villanage with the
occupiers of land in the country. They seem, indeed, to have been a very poor, mean set of
people, who seemed to travel about with their goods from place to place, and from fair to fair,
like the hawkers and pedlars of the present times. In all the different countries of Europe then,
in the same manner as in several of the Tartar governments of Asia at present, taxes used to be
levied upon the persons and goods of travellers, when they passed through certain manors,
when they went over certain bridges, when they carried about their goods from place to place
in a fair, when they erected in it a booth or stall to sell them in. These different taxes were
known in England by the names of passage, pontage, lastage, and stallage. Sometimes the king,
sometimes a great lord, who had, it seems, upon some occasions, authority to do this, would
grant to particular traders, to such particularly as lived in their own demesnes, a general
exemption from such taxes. Such traders, though in other respects of servile, or very nearly of
servile condition, were upon this account called free traders. They, in return, usually paid to
their protector a sort of annual poll-tax. In those days protection was sel- dom granted without
a valuable consideration, and this tax might perhaps be considered as com- pensation for what
their patrons might lose by their exemption from other taxes. At first, both those poll-taxes and
those exemptions seem to have been altogether personal, and to have affected only particular
individuals, during either their lives, or the pleasure of their protectors. In the very imperfect
accounts which have been published from Doomsday-book, of several of the towns
of England, mention is frequently made, sometimes of the tax which particular burghers paid,
each of them, either to the king, or to some other great lord, for this sort of protection, and
sometimes of the general amount only of all those taxes. {see Brady's Historical Treatise of
Cities and Bor- oughs, p. 3. etc.} But how servile soever may have been originally the
condition of the inhabitants of the towns, it appears evidently, that they arrived at liberty and
independency much earlier than the occupiers of land in the country. That part of the king's
revenue which arose from such poll-taxes in any particular town, used commonly to be let in
farm, during a term of years, for a rent certain, some- times to the sheriff of the county, and
sometimes to other persons. The burghers themselves fre- quently got credit enough to be
admitted to farm the revenues of this sort winch arose out of their own town, they becoming
jointly and severally answerable for the whole rent. {See Madox, Firma Burgi, p. 18; also
History of the Exchequer, chap. 10, sect. v, p. 223, first edition.} To let a farm in this manner,
was quite agreeable to the usual economy of, I believe, the sovereigns of all the dif-  ferent
countries of Europe, who used frequently to let whole manors to all the tenants of
those manors, they becoming jointly and severally answerable for the whole rent; but in return
being al- lowed to collect it in their own way, and to pay it into the king's exchequer by the
hands of their own bailiff, and being thus altogether freed from the insolence of the king's
officers; a circumstance in those days regarded as of the greatest importance. At first, the farm
of the town was probably let to the burghers, in the same manner as it had been to other
farmers, for a term of years only. In process of time, however, it seems to have be-  come the
general practice to grant it to them in fee, that is for ever, reserving a rent certain,
never afterwards to be augmented. The payment having thus become perpetual, the
exemptions, in re- turn, for which it was made, naturally became perpetual too. Those
exemptions, therefore, ceased to be personal, and could not afterwards be considered as
belonging to individuals, as individuals, but as burghers of a particular burgh, which, upon this
account, was called a free burgh, for the same reason that they had been called free burghers or
free traders. Along with this grant, the important privileges, above mentioned, that they might
give away their own daughters in marriage, that their children should succeed to them, and that
they might dispose of their own effects by will, were generally bestowed upon the burghers of
the town to whom it was given. Whether such privileges had before been usually granted,
along with the free- dom of trade, to particular burghers, as individuals, I know not. I reckon it
not improbable that they were, though I cannot produce any direct evidence of it. But however
this may have been, the principal attributes of villanage and slavery being thus taken away
from them, they now at least became really free, in our present sense of the word freedom. Nor
was this all. They were generally at the same time erected into a commonalty or corpo- ration,
with the privilege of having magistrates and a town-council of their own, of making bye- laws
for their own government, of building walls for their own defence, and of reducing all
their inhabitants under a sort of military discipline, by obliging them to watch and ward; that
is, as an- ciently understood, to guard and defend those walls against all attacks and surprises,
by night as well as by day. In England they were generally exempted from suit to the hundred
and county courts: and all such pleas as should arise among them, the pleas of the crown
excepted, were left to the decision of their own magistrates. In other countries, much greater
and more extensive jurisdictions were frequently granted to them. {See Madox, Firma Burgi.
See also Pfeffel in the Remarkable events under Frederick II. and his Successors of the House
of Suabia.} It might, probably, be necessary to grant to such towns as were admitted to farm
their own revenues, some sort of compulsive jurisdiction to oblige their own citizens to make
payment. In those disorderly times, it might have been extremely inconvenient to have left
them to seek this sort of justice from any other tribunal. But it must seem extraordinary, that
the sovereigns of all the different countries of Europe should have exchanged in this manner
for a rent certain, never more to be augmented, that branch of their revenue, which was,
perhaps, of all others, the most likely to be improved by the natural course of things, without
either expense or attention of their own; and that they should, besides, have in this manner
voluntarily erected a sort of independent republics in the heart of their own dominions. In order
to understand this, it must be remembered, that, in those days, the sovereign of per-  haps no
country in Europe was able to protect, through the whole extent of his dominions, the weaker
part of his subjects from the oppression of the great lords. Those whom the law could
not protect, and who were not strong enough to defend themselves, were obliged either to have
re- course to the protection of some great lord, and in order to obtain it, to become either his
slaves or vassals; or to enter into a league of mutual defence for the common protection of one
another. The inhabitants of cities and burghs, considered as single individuals, had no power to
defend themselves; but by entering into a league of mutual defence with their neighbours, they
were capable of making no contemptible resistance. The lords despised the burghers, whom
they con- sidered not only as a different order, but as a parcel of emancipated slaves, almost of
a different species from themselves. The wealth of the burghers never failed to provoke their
envy and indig- nation, and they plundered them upon every occasion without mercy or
remorse. The burghers naturally hated and feared the lords. The king hated and feared them
too; but though, perhaps, he might despise, he had no reason either to hate or fear the burghers.
Mutual interest, therefore, disposed them to support the king, and the king to support them
against the lords. They were the enemies of his enemies, and it was his interest to render them
as secure and independent of those enemies as he could. By granting them magistrates of their
own, the privilege of making bye-laws for their own government, that of building walls for
their own defence, and that of reducing all their inhabitants under a sort of military discipline,
he gave them all the means of security and independency of the barons which it was in his
power to bestow. Without the estab- lishment of some regular government of this kind, without
some authority to compel their inhab- itants to act according to some certain plan or system, no
voluntary league of mutual defence could either have afforded them any permanent security, or
have enabled them to give the king any considerable support. By granting them the farm of
their own town in fee, he took away from those whom he wished to have for his friends, and, if
one may say so, for his allies, all ground of jealousy and suspicion, that he was ever afterwards
to oppress them, either by raising the farm- rent of their town, or by granting it to some other
farmer. The princes who lived upon the worst terms with their barons, seem accordingly to
have been the most liberal in grants of this kind to their burghs. King John of England, for
example, appears to have been a most munificent benefactor to his towns. {See Madox.} Philip
I. of France lost all authority over his barons. Towards the end of his reign, his son Lewis,
known afterwards by the name of Lewis the Fat, consulted, according to Father Daniel, with
the bishops of the royal demesnes, concerning the most proper means of restraining the
violence of the great lords. Their advice consisted of two different proposals. One was to erect
a new order of jurisdiction, by estab- lishing magistrates and a town-council in every
considerable town of his demesnes. The other was to form a new militia, by making the
inhabitants of those towns, under the command of their own magistrates, march out upon
proper occasions to the assistance of the king. It is from this pe- riod, according to the French
antiquarians, that we are to date the institution of the magistrates and councils of cities in
France. It was during the unprosperous reigns of the princes of the house of Suabia, that the
greater part of the free towns of Germany received the first grants of their privileges, and that
the famous Hanseatic league first became formidable. {See Pfeffel.} The militia of the cities
seems, in those times, not to have been inferior to that of the country; and as they could be
more readily assembled upon any sudden occasion, they frequently had the advantage in their
disputes with the neighbouring lords. In countries such as Italy or Switzerland, in which, on
account either of their distance from the principal seat of government, of the natural  strength of
the country itself, or of some other reason, the sovereign came to lose the whole of
his authority; the cities generally became independent republics, and conquered all the nobility
in their neighbourhood; obliging them to pull down their castles in the country, and to live,
like other peaceable inhabitants, in the city. This is the short history of the republic of Berne,
as well as of several other cities in Switzerland. If you except Venice, for of that city the
history is some- what different, it is the history of all the considerable Italian republics, of
which so great a num- ber arose and perished between the end of the twelfth and the beginning
of the sixteenth century. In countries such as France and England, where the authority of the
sovereign, though fre- quently very low, never was destroyed altogether, the cities had no
opportunity of becoming en- tirely independent. They became, however, so considerable, that
the sovereign could impose no tax upon them, besides the stated farm-rent of the town, without
their own consent. They were, therefore, called upon to send deputies to the general assembly
of the states of the kingdom, where they might join with the clergy and the barons in granting,
upon urgent occasions, some extraordinary aid to the king. Being generally, too, more
favourable to his power, their deputies seem sometimes to have been employed by him as a
counterbalance in those assemblies to the authority of the great lords. Hence the origin of the
representation of burghs in the states-general of all great monarchies in Europe. Order and
good government, and along with them the liberty and security of individuals, were in this
manner established in cities, at a time when the occupiers of land in the country, were exposed
to every sort of violence. But men in this defenceless state naturally content them- selves with
their necessary subsistence; because, to acquire more, might only tempt the injustice of their
oppressors. On the contrary, when they are secure of enjoying the fruits of their industry, they
naturally exert it to better their condition, and to acquire not only the necessaries, but
the conveniencies and elegancies of life. That industry, therefore, which aims at something
more than necessary subsistence, was established in cities long before it was commonly
practised by the occupiers of land in the country. If, in the hands of a poor cultivator,
oppressed with the servitude of villanage, some little stock should accumulate, he would
naturally conceal it with great care from his master, to whom it would otherwise have
belonged, and take the first opportunity of running away to a town. The law was at that time so
indulgent to the inhabitants of towns, and so desirous of diminishing the authority of the lords
over those of the country, that if he could con- ceal himself there from the pursuit of his lord
for a year, he was free for ever. Whatever stock, therefore, accumulated in the hands of the
industrious part of the inhabitants of the country, naturally took refuge in cities, as the only
sanctuaries in which it could be secure to the person that acquired it. The inhabitants of a city,
it is true, must always ultimately derive their subsistence, and the whole materials and means
of their industry, from the country. But those of a city, situated near either the sea-coast or the
banks of a navigable river, are not necessarily confined to derive them from the country in their
neighbourhood. They have a much wider range, and may draw them from the most remote
corners of the world, either in exchange for the manufactured produce of their own industry, or
by performing the office of carriers between distant countries, and ex- changing the produce of
one for that of another. A city might, in this manner, grow up to great wealth and splendour,
while not only the country in its neighbourhood, but all those to which it traded, were in
poverty and wretchedness. Each of those countries, perhaps, taken singly, could afford it but a
small part, either of its subsistence or of its employment; but all of them taken to-  gether, could
afford it both a great subsistence and a great employment. There were, however, within the
narrow circle of the commerce of those times, some countries that were opulent
and industrious. Such was the Greek empire as long as it subsisted, and that of the Saracens
during the reigns of the Abassides. Such, too, was Egypt till it was conquered by the Turks,
some part of the coast of Barbary, and all those provinces of Spain which were under the
government of the Moors. The cities of Italy seem to have been the first in Europe which were
raised by commerce to any considerable degree of opulence. Italy lay in the centre of what was
at that time the improved and civilized part of the world. The crusades, too, though, by the
great waste of stock and destruc- tion of inhabitants which they occasioned, they must
necessarily have retarded the progress of the greater part of Europe, were extremely favourable
to that of some Italian cities. The great armies which marched from all parts to the conquest of
the Holy Land, gave extraordinary encour- agement to the shipping of Venice, Genoa, and
Pisa, sometimes in transporting them thither, and always in supplying them with provisions.
They were the commissaries, if one may say so, of those armies; and the most destructive
frenzy that ever befel the European nations, was a source of opulence to those republics. The
inhabitants of trading cities, by importing the improved manufactures and expensive luxuries
of richer countries, afforded some food to the vanity of the great proprietors, who
eagerly purchased them with great quantities of the rude produce of their own lands. The
commerce of a great part of Europe in those times, accordingly, consisted chiefly in the
exchange of their own rude, for the manufactured produce of more civilized nations. Thus the
wool of England used to be exchanged for the wines of France, and the fine cloths of Flanders,
in the same manner as the corn in Poland is at this day, exchanged for the wines and brandies
of France, and for the silks and velvets of France and Italy. A taste for the finer and more
improved manufactures was, in this manner, introduced by foreign commerce into countries
where no such works were carried on. But when this taste be- came so general as to occasion a
considerable demand, the merchants, in order to save the ex- pense of carriage, naturally
endeavoured to establish some manufactures of the same kind in their own country. Hence the
origin of the first manufactures for distant sale, that seem to have been established in the
western provinces of Europe, after the fall of the Roman empire. No large country, it must be
observed, ever did or could subsist without some sort of man- ufactures being carried on in it;
and when it is said of any such country that it has no manufac- tures, it must always be
understood of the finer and more improved, or of such as are fit for dis- tant sale. In every large
country both the clothing and household furniture or the far greater part of the people, are the
produce of their own industry. This is even more universally the case in those poor countries
which are commonly said to have no manufactures, than in those rich ones that are said to
abound in them. In the latter you will generally find, both in the clothes and household
furniture of the lowest rank of people, a much greater proportion of foreign produc- tions than
in the former. Those manufactures which are fit for distant sale, seem to have been introduced
into dif- ferent countries in two different ways. Sometimes they have been introduced in the
manner above mentioned, by the violent oper- ation, if one may say so, of the stocks of
particular merchants and undertakers, who established them in imitation of some foreign
manufactures of the same kind. Such manufactures, therefore, are the offspring of foreign
commerce; and such seem to have been the ancient manufactures of silks, velvets, and
brocades, which flourished in Lucca during the thirteenth century. They were banished from
thence by the tyranny of one of Machiavel's heroes, Castruccio Castracani. In 1310, nine
hundred families were driven out of Lucca, of whom thirty-one retired to Venice, and of-  fered
to introduce there the silk manufacture. {See Sandi Istoria civile de Vinezia, part 2 vol. i,  page
247 and 256.} Their offer was accepted, many privileges were conferred upon them, and they
began the manufacture with three hundred workmen. Such, too, seem to have been
the manufactures of fine cloths that anciently flourished in Flanders, and which were
introduced into England in the beginning of the reign of Elizabeth, and such are the present silk
manufactures of Lyons and Spitalfields. Manufactures introduced in this manner are generally
employed upon for- eign materials, being imitations of foreign manufactures. When the
Venetian manufacture was first established, the materials were all brought from Sicily and the
Levant. The more ancient manufacture of Lucca was likewise carried on with foreign
materials. The cultivation of mulberry trees, and the breeding of silk-worms, seem not to have
been common in the northern parts of Italy before the sixteenth century. Those arts were not
introduced into France till the reign of Charles IX. The manufactures of Flanders were carried
on chiefly with Spanish and English wool. Spanish wool was the material, not of the first
woollen manufacture of England, but of the first that was fit for distant sale. More than one
half the materials of the Lyons manufacture is at this day foreign silk; when it was first
established, the whole, or very nearly the whole, was so. No part of the materials of the
Spitalfields manufacture is ever likely to be the produce of England. The seat of such
manufactures, as they are generally introduced by the scheme and project of a few individuals,
is sometimes established in a maritime city, and sometimes in an inland town, ac- cording as
their interest, judgment, or caprice, happen to determine. At other times, manufactures for
distant sale grow up naturally, and as it were of their own accord, by the gradual refinement of
those household and coarser manufactures which must at all times be carried on even in the
poorest and rudest countries. Such manufactures are generally employed upon the materials
which the country produces, and they seem frequently to have been first refined and improved
in such inland countries as were not, indeed, at a very great, but at a considerable distance from
the sea-coast, and sometimes even from all water carriage. An inland country, naturally fertile
and easily cultivated, produces a great surplus of provisions beyond what is necessary for
maintaining the cultivators; and on account of the expense of land carriage, and inconveniency
of river navigation, it may frequently be difficult to send this surplus abroad. Abundance,
therefore, renders provisions cheap, and encourages a great number of workmen to settle in the
neighbourhood, who find that their industry can there procure them more of the necessaries
and conveniencies of life than in other places. They work up the materials of manu- facture
which the land produces, and exchange their finished work, or, what is the same thing,  the
price of it, for more materials and provisions. They give a new value to the surplus part of
the rude produce, by saving the expense of carrying it to the water-side, or to some distant
market; and they furnish the cultivators with something in exchange for it that is either useful
or agree- able to them, upon easier terms than they could have obtained it before. The
cultivators get a bet- ter price for their surplus produce, and can purchase cheaper other
conveniencies which they have occasion for. They are thus both encouraged and enabled to
increase this surplus produce by a further improvement and better cultivation of the land; and
as the fertility of she land had given birth to the manufacture, so the progress of the
manufacture reacts upon the land, and increases still further it's fertility. The manufacturers
first supply the neighbourhood, and afterwards, as their work improves and refines, more
distant markets. For though neither the rude produce, nor even the coarse manufacture, could,
without the greatest difficulty, support the expense of a con- siderable land-carriage, the
refined and improved manufacture easily may. In a small bulk it fre- quently contains the price
of a great quantity of rude produce. A piece of fine cloth, for example which weighs only
eighty pounds, contains in it the price, not only of eighty pounds weight of wool, but
sometimes of several thousand weight of corn, the maintenance of the different work- ing
people, and of their immediate employers. The corn which could with difficulty have
been carried abroad in its own shape, is in this manner virtually exported in that of the
complete manu- facture, and may easily be sent to the remotest corners of the world. In this
manner have grown up naturally, and, as it were, of their own accord, the manufactures of
Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Such manufactures are the
offspring of agriculture. In the modern history of Europe, their extension and improvement
have generally been posterior to those which were the offspring of foreign commerce. England
was noted for the manufacture of fine cloths made of Spanish wool, more than a century before
any of those which now flourish in the places above mentioned were fit for foreign sale. The
extension and improvement of these last could not take place but in consequence of the
extension and improvement of agriculture, the last and greatest effect of foreign commerce,
and of the manufactures immediately introduced by it, and which I shall now proceed to
explain. 

CHAPTER IV. HOW THE COMMERCE OF TOWNS CONTRIBUTED TO

THE IMPROVEMENT OF THE COUNTRY.  The increase and riches of commercial and
manufacturing towns contributed to the improvement and cultivation of the countries to which
they belonged, in three different ways:  First, by affording a great and ready market for the
rude produce of the country, they gave en- couragement to its cultivation and further
improvement. This benefit was not even confined to the countries in which they were situated,
but extended more or less to all those with which they had any dealings. To all of them they
afforded a market for some part either of their rude or man- ufactured produce, and,
consequently, gave some encouragement to the industry and improve- ment of all. Their own
country, however, on account of its neighbourhood, necessarily derived the greatest benefit
from this market. Its rude produce being charged with less carriage, the traders could pay the
growers a better price for it, and yet afford it as cheap to the consumers as that of  more distant
countries. Secondly, the wealth acquired by the inhabitants of cities was frequently employed
in pur- chasing such lands as were to be sold, of which a great part would frequently be
uncultivated. Merchants are commonly ambitious of becoming country gentlemen, and, when
they do, they are generally the best of all improvers. A merchant is accustomed to employ his
money chiefly in profitable projects; whereas a mere country gentleman is accustomed to
employ it chiefly in ex- pense. The one often sees his money go from him, and return to him
again with a profit; the other, when once he parts with it, very seldom expects to see any more
of it. Those different habits naturally affect their temper and disposition in every sort of
business. The merchant is commonly a bold, a country gentleman a timid undertaker. The one
is not afraid to lay out at once a large capital upon the improvement of his land, when he has a
probable prospect of raising the value of it in proportion to the expense; the other, if he has any
capital, which is not always the case, sel- dom ventures to employ it in this manner. If he
improves at all, it is commonly not with a capital, but with what he can save out or his annual
revenue. Whoever has had the fortune to live in a mercantile town, situated in an unimproved
country, must have frequently observed how much more spirited the operations of merchants
were in this way, than those of mere country gen- tlemen. The habits, besides, of order,
economy, and attention, to which mercantile business natu- rally forms a merchant, render him
much fitter to execute, with profit and success, any project of improvement. Thirdly, and lastly,
commerce and manufactures gradually introduced order and good govern- ment, and with them
the liberty and security of individuals, among the inhabitants of the coun- try, who had before
lived almost in a continual state of war with their neighbours, and of servile dependency upon
their superiors. This, though it has been the least observed, is by far the most important of all
their effects. Mr Hume is the only writer who, so far as I know, has hitherto taken notice of
it. In a country which has neither foreign commerce nor any of the finer manufactures, a
great proprietor, having nothing for which he can exchange the greater part of the produce of
his lands which is over and above the maintenance of the cultivators, consumes the whole in
rustic hospi- tality at home. If this surplus produce is sufficient to maintain a hundred or a
thousand men, he can make use of it in no other way than by maintaining a hundred or a
thousand men. He is at all times, therefore, surrounded with a multitude of retainers and
dependants, who, having no equivalent to give in return for their maintenance, but being fed
entirely by his bounty, must obey him, for the same reason that soldiers must obey the prince
who pays them. Before the extension of commerce and manufactures in Europe, the hospitality
of the rich and the great, from the sovereign down to the smallest baron, exceeded every thing
which, in the present times, we can easily form a notion of Westminster-hall was the dining-
room of William Rufus, and might frequently, perhaps, not be too large for his company. It
was reckoned a piece of magnif- icence in Thomas Becket, that he strewed the floor of his hall
with clean hay or rushes in the sea- son, in order that the knights and squires, who could not
get seats, might not spoil their fine clothes when they sat down on the floor to eat their dinner.
The great Earl of Warwick is said to have entertained every day, at his different manors,
30,000 people; and though the number here may have been exaggerated, it must, however,
have been very great to admit of such exaggeration. A hospitality nearly of the same kind was
exercised not many years ago in many different parts of the Highlands of Scotland. It seems to
be common in all nations to whom commerce and man- ufactures are little known. I have seen,
says Doctor Pocock, an Arabian chief dine in the streets of a town where he had come to sell
his cattle, and invite all passengers, even common beggars, to sit down with him and partake of
his banquet. The occupiers of land were in every respect as dependent upon the great
proprietor as his re- tainers. Even such of them as were not in a state of villanage, were tenants
at will, who paid a rent in no respect equivalent to the subsistence which the land afforded
them. A crown, half a crown, a sheep, a lamb, was some years ago, in the Highlands of
Scotland, a common rent for lands which maintained a family. In some places it is so at this
day; nor will money at present purchase a greater quantity of commodities there than in other
places. In a country where the surplus pro- duce of a large estate must be consumed upon the
estate itself, it will frequently be more conve- nient for the proprietor, that part of it be
consumed at a distance from his own house, provided they who consume it are as dependent
upon him as either his retainers or his menial servants. He is thereby saved from the
embarrassment of either too large a company, or too large a family. A tenant at will, who
possesses land sufficient to maintain his family for little more than a quit- rent, is as dependent
upon the proprietor as any servant or retainer whatever, and must obey him with as little
reserve. Such a proprietor, as he feeds his servants and retainers at his own house, so he feeds
his tenants at their houses. The subsistence of both is derived from his bounty, and
its continuance depends upon his good pleasure. Upon the authority which the great proprietors
necessarily had, in such a state of things, over their tenants and retainers, was founded the
power of the ancient barons. They necessarily be- came the judges in peace, and the leaders in
war, of all who dwelt upon their estates. They could maintain order, and execute the law,
within their respective demesnes, because each of them could there turn the whole force of all
the inhabitants against the injustice of anyone. No other person had sufficient authority to do
this. The king, in particular, had not. In those ancient times, he was little more than the greatest
proprietor in his dominions, to whom, for the sake of com- mon defence against their common
enemies, the other great proprietors paid certain respects. To have enforced payment of a small
debt within the lands of a great proprietor, where all the inhab- itants were armed, and
accustomed to stand by one another, would have cost the king, had he at- tempted it by his own
authority, almost the same effort as to extinguish a civil war. He was, there-  fore, obliged to
abandon the administration of justice, through the greater part of the country, to those who
were capable of administering it; and, for the same reason, to leave the command of the
country militia to those whom that militia would obey. It is a mistake to imagine that those
territorial jurisdictions took their origin from the feudal law. Not only the highest jurisdictions,
both civil and criminal, but the power of levying troops, of coining money, and even that of
making bye-laws for the government of their own people, were all rights possessed allodially
by the great proprietors of land, several centuries before even the name of the feudal law was
known in Europe. The authority and jurisdiction of the Saxon lords in England appear to have
been as great before the Conquest as that of any of the Norman lords after  it. But the feudal
law is not supposed to have become the common law of England till after the Conquest. That
the most extensive authority and jurisdictions were possessed by the great lords in France
allodially, long before the feudal law was introduced into that country, is a matter of fact that
admits of no doubt. That authority, and those jurisdictions, all necessarily flowed from the state
of property and manners just now described. Without remounting to the remote antiquities of
either the French or English monarchies, we may find, in much later times, many proofs
that such effects must always flow from such causes. It is not thirty years ago since Mr
Cameron of Lochiel, a gentleman of Lochaber in Scotland, without any legal warrant
whatever, not being what was then called a lord of regality, nor even a tenant in chief, but a
vassal of the Duke of Argyll, and with out being so much as a justice of peace, used,
notwithstanding, to exercise the highest criminal jurisdictions over his own people. He is said
to have done so with great equity, though without any of the formalities of justice; and it is not
improbable that the state of that part of the country at that time made it necessary for him to
assume this authority, in order to maintain the public peace. That gentleman, whose rent never
exceeded £500 a-year, carried, in 1745, 800 of his own people into the rebellion with him. The
introduction of the feudal law, so far from extending, may be regarded as an attempt
to moderate, the authority of the great allodial lords. It established a regular subordination,
accom- panied with a long train of services and duties, from the king down to the smallest
proprietor. During the minority of the proprietor, the rent, together with the management of his
lands, fell into the hands of his immediate superior; and, consequently, those of all great
proprietors into the hands of the king, who was charged with the maintenance and education of
the pupil, and who, from his authority as guardian, was supposed to have a right of disposing
of him in mar- riage, provided it was in a manner not unsuitable to his rank. But though this
institution neces- sarily tended to strengthen the authority of the king, and to weaken that of the
great proprietors, it could not do either sufficiently for establishing order and good government
among the inhab- itants of the country; because it could not alter sufficiently that state of
property and manners from which the disorders arose. The authority of government still
continued to be, as before, too weak in the head, and too strong in the inferior members; and
the excessive strength of the infe- rior members was the cause of the weakness of the head.
After the institution of feudal subordi- nation, the king was as incapable of restraining the
violence of the great lords as before. They still continued to make war according to their own
discretion, almost continually upon one another, and very frequently upon the king; and the
open country still continued to be a scene of violence, rapine, and disorder. But what all the
violence of the feudal institutions could never have effected, the silent and insensible operation
of foreign commerce and manufactures gradually brought about. These gradually furnished the
great proprietors with something for which they could exchange the whole surplus produce of
their lands, and which they could consume themselves, without sharing it either with tenants or
retainers. All for ourselves, and nothing for other people, seems, in every age of the world, to
have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a
method of consuming the whole value of their rents themselves, they had no disposition to
share them with any other persons. For a pair of diamond buckles, perhaps, or for  something as
frivolous and useless, they exchanged the maintenance, or, what is the same thing, the price of
the maintenance of 1000 men for a year, and with it the whole weight and authority which it
could give them. The buckles, however, were to be all their own, and no other human creature
was to have any share of them; whereas, in the more ancient method of expense, they  must
have shared with at least 1000 people. With the judges that were to determine the pref- erence,
this difference was perfectly decisive; and thus, for the gratification of the most childish, the
meanest, and the most sordid of all vanities they gradually bartered their whole power and
au- thority. In a country where there is no foreign commerce, nor any of the finer
manufactures, a man of £10,000 a-year cannot well employ his revenue in any other way than
in maintaining, perhaps, 1000 families, who are all of them necessarily at his command. In the
present state of Europe, a man of £10,000 a-year can spend his whole revenue, and he
generally does so, without directly maintaining twenty people, or being able to command more
than ten footmen, not worth the commanding. Indirectly, perhaps, he maintains as great, or
even a greater number of people, than he could have done by the ancient method of expense.
For though the quantity of precious pro- ductions for which he exchanges his whole revenue be
very small, the number of workmen em- ployed in collecting and preparing it must necessarily
have been very great. Its great price gener- ally arises from the wages of their labour, and the
profits of all their immediate employers. By paying that price, he indirectly pays all those
wages and profits, and thus indirectly contributes to the maintenance of all the workmen and
their employers. He generally contributes, however, but a very small proportion to that of each;
to a very few, perhaps, not a tenth, to many not a hun- dredth, and to some not a thousandth, or
even a ten thousandth part of their whole annual maintenance. Though he contributes,
therefore, to the maintenance of them all, they are all more or less independent of him, because
generally they can all be maintained without him. When the great proprietors of land spend
their rents in maintaining their tenants and retain- ers, each of them maintains entirely all his
own tenants and all his own retainers. But when they spend them in maintaining tradesmen and
artificers, they may, all of them taken together, per- haps maintain as great, or, on account of
the waste which attends rustic hospitality, a greater number of people than before. Each of
them, however, taken singly, contributes often but a very small share to the maintenance of any
individual of this greater number. Each tradesman or arti- ficer derives his subsistence from the
employment, not of one, but of a hundred or a thousand different customers. Though in some
measure obliged to them all, therefore, he is not absolutely dependent upon any one of
them. The personal expense of the great proprietors having in this manner gradually increased,
it was impossible that the number of their retainers should not as gradually diminish, till they
were at last dismissed altogether. The same cause gradually led them to dismiss the
unnecessary part of their tenants. Farms were enlarged, and the occupiers of land,
notwithstanding the complaints of depopulation, reduced to the number necessary for
cultivating it, according to the imperfect state of cultivation and improvement in those times.
By the removal of the unnecessary mouths, and by exacting from the farmer the full value of
the farm, a greater surplus, or, what is the same thing, the price of a greater surplus, was
obtained for the proprietor, which the merchants and manufacturers soon furnished him with a
method of spending upon his own person, in the same manner as he had done the rest. The
cause continuing to operate, he was desirous to raise his rents above what his lands, in the
actual state of their improvement, could afford. His tenants could agree to this upon one
condition only, that they should be secured in their possession for such a term of years as
might give them time to recover, with profit, whatever they should lay not in the further
improvement of the land. The expensive vanity of the landlord made him willing to accept of
this condition; and hence the origin of long leases. Even a tenant at will, who pays the full
value of the land, is not altogether dependent upon the landlord. The pecuniary advantages
which they receive from one another are mutual and equal, and such a tenant will expose
neither his life nor his fortune in the service of the proprietor. But if he has a lease for along
term of years, he is altogether independent; and his landlord must not ex- pect from him even
the most trifling service, beyond what is either expressly stipulated in the lease, or imposed
upon him by the common and known law of the country. The tenants having in this manner
become independent, and the retainers being dismissed, the great proprietors were no longer
capable of interrupting the regular execution of justice, or of disturbing the peace of the
country. Having sold their birth-right, not like Esau, for a mess of pot- tage in time of hunger
and necessity, but, in the wantonness of plenty, for trinkets and baubles, fitter to be the
playthings of children than the serious pursuits of men, they became as insignif- icant as any
substantial burgher or tradesmen in a city. A regular government was established in the country
as well as in the city, nobody having sufficient power to disturb its operations in the one, any
more than in the other. It does not, perhaps, relate to the present subject, but I cannot help
remarking it, that very old families, such as have possessed some considerable estate from
father to son for many successive generations, are very rare in commercial countries. In
countries which have little commerce, on the contrary, such as Wales, or the Highlands of
Scotland, they are very common. The Arabian histories seem to be all full of genealogies; and
there is a history written by a Tartar Khan, which has been translated into several European
languages, and which contains scarce any thing else; a proof that ancient families are very
common among those nations. In countries where a rich man can spend his revenue in no other
way than by maintaining as many people as it can maintain, he is apt to run out, and his
benevolence, it seems, is seldom so violent as to attempt to maintain more than he can afford.
But where he can spend the greatest revenue upon his own person, he frequently has no bounds
to his expense, because he frequently has no bounds to his vanity, or to  his affection for his
own person. In commercial countries, therefore, riches, in spite of the most violent regulations
of law to prevent their dissipation, very seldom remain long in the same family. Among simple
nations, on the contrary, they frequently do, without any regulations of law; for among nations
of shepherds, such as the Tartars and Arabs, the consumable nature of  their property
necessarily renders all such regulations impossible. A revolution of the greatest importance to
the public happiness, was in this manner brought about by two different orders of people, who
had not the least intention to serve the public. To gratify the most childish vanity was the sole
motive of the great proprietors. The merchants and artificers, much less ridiculous, acted
merely from a view to their own interest, and in pursuit of their own pedlar principle of turning
a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of
that great revolution which the folly of the one, and the industry of the other, was gradually
bringing about. It was thus, that, through the greater part of Europe, the commerce and
manufactures of cities, instead of being the effect, have been the cause and occasion of the
improvement and culti- vation of the country. This order, however, being contrary to the
natural course of things, is necessarily both slow and uncertain. Compare the slow progress of
those European countries of which the wealth de- pends very much upon their commerce and
manufactures, with the rapid advances of our North American colonies, of which the wealth is
founded altogether in agriculture. Through the greater part of Europe, the number of
inhabitants is not supposed to double in less than five hundred years. In several of our North
American colonies, it is found to double in twenty or five-and- twenty years. In Europe, the
law of primogeniture, and perpetuities of different kinds, prevent the division of great estates,
and thereby hinder the multiplication of small proprietors. A small pro- prietor, however, who
knows every part of his little territory, views it with all the affection which property, especially
small property, naturally inspires, and who upon that account takes pleasure, not only in
cultivating, but in adorning it, is generally of all improvers the most industrious, the most
intelligent, and the most successful. The same regulations, besides, keep so much land out  of
the market, that there are always more capitals to buy than there is land to sell, so that what
is sold always sells at a monopoly price. The rent never pays the interest of the purchase-
money, and is, besides, burdened with repairs and other occasional charges, to which the
interest of money is not liable. To purchase land, is, everywhere in Europe, a most unprofitable
employment of a small capital. For the sake of the superior security, indeed, a man of moderate
circumstances, when he retires from business, will sometimes choose to lay out his little capital
in land. A man of profes- sion, too whose revenue is derived from another source often loves to
secure his savings in the same way. But a young man, who, instead of applying to trade or to
some profession, should em- ploy a capital of two or three thousand pounds in the purchase
and cultivation of a small piece of land, might indeed expect to live very happily and very
independently, but must bid adieu for ever to all hope of either great fortune or great
illustration, which, by a different employment of his stock, he might have had the same chance
of acquiring with other people. Such a person, too, though he cannot aspire at being a
proprietor, will often disdain to be a farmer. The small quan- tity of land, therefore, which is
brought to market, and the high price of what is brought thither, prevents a great number of
capitals from being employed in its cultivation and improvement, which would otherwise have
taken that direction. In North America, on the contrary, fifty or sixty pounds is often found a
sufficient stock to begin a plantation with. The purchase and improve- ment of uncultivated
land is there the most profitable employment of the smallest as well as of the greatest capitals,
and the most direct road to all the fortune and illustration which can be required in that
country. Such land, indeed, is in North America to be had almost for nothing, or at a
price much below the value of the natural produce; a thing impossible in Europe, or indeed in
any country where all lands have long been private property. If landed estates, however, were
divided equally among all the children, upon the death of any proprietor who left a numerous
family, the estate would generally be sold. So much land would come to market, that it could
no longer sell at a monopoly price. The free rent of the land would go no nearer to pay the
interest of the purchase- money, and a small capital might be employed in purchasing land as
profitable as in any other way. England, on account of the natural fertility of the soil, of the
great extent of the sea-coast in proportion to that of the whole country, and of the many
navigable rivers which run through it, and afford the conveniency of water carriage to some of
the most inland parts of it, is perhaps as well fitted by nature as any large country in Europe to
be the seat of foreign commerce, of man- ufactures for distant sale, and of all the
improvements which these can occasion. From the begin- ning of the reign of Elizabeth, too,
the English legislature has been peculiarly attentive to the interest of commerce and
manufactures, and in reality there is no country in Europe, Holland it- self not excepted, of
which the law is, upon the whole, more favourable to this sort of industry. Commerce and
manufactures have accordingly been continually advancing during all this period. The
cultivation and improvement of the country has, no doubt, been gradually advancing too; but it
seems to have followed slowly, and at a distance, the more rapid progress of commerce
and manufactures. The greater part of the country must probably have been cultivated before
the reign of Elizabeth; and a very great part of it still remains uncultivated, and the cultivation
of the far greater part much inferior to what it might be, The law of England, however, favours
agri- culture, not only indirectly, by the protection of commerce, but by several direct
encouragements. Except in times of scarcity, the exportation of corn is not only free, but
encouraged by a bounty. In times of moderate plenty, the importation of foreign corn is loaded
with duties that amount to a prohibition. The importation of live cattle, except from Ireland, is
prohibited at all times; and it is but of late that it was permitted from thence. Those who
cultivate the land, therefore, have a monopoly against their countrymen for the two greatest
and most important articles of land pro- duce, bread and butcher's meat. These
encouragements, although at bottom, perhaps, as I shall endeavour to show hereafter,
altogether illusory, sufficiently demonstrate at least the good inten- tion of the legislature to
favour agriculture. But what is of much more importance than all of them, the yeomanry of
England are rendered as secure, as independent, and as respectable, as law can make them. No
country, therefore, which the right of primogeniture takes place, which pays tithes, and where
perpetuities, though contrary to the spirit of the law, are admitted in some cases, can give more
encouragement to agriculture than England. Such, however, notwith- standing, is the state of
its cultivation. What would it have been, had the law given no direct en- couragement to
agriculture besides what arises indirectly from the progress of commerce, and had left the
yeomanry in the same condition as in most other countries of Europe? It is now more than two
hundred years since the beginning of the reign of Elizabeth, a period as long as the  course of
human prosperity usually endures. France seems to have had a considerable share of foreign
commerce, near a century before England was distinguished as a commercial country. The
marine of France was considerable, ac- cording to the notions of the times, before the
expedition of Charles VIII. to Naples. The culti- vation and improvement of France, however,
is, upon the whole, inferior to that of England. The law of the country has never given the same
direct encouragement to agriculture. The foreign commerce of Spain and Portual to the other
parts of Europe, though chiefly car- ried on in foreign ships, is very considerable. That to their
colonies is carried on in their own, and is much greater, on account of the great riches and
extent of those colonies. But it has never intro- duced any considerable manufactures for
distant sale into either of those countries, and the greater part of both still remains uncultivated.
The foreign commerce of Portugal is of older stand- ing than that of any great country in
Europe, except Italy. Italy is the only great country of Europe which seems to have been
cultivated and improved in every part, by means of foreign commerce and manufactures for
distant sale. Before the invasion of Charles VIII., Italy, according to Guicciardini, was
cultivated not less in the most mountainous and barren parts of the country, than in the plainest
and most fertile. The advantageous situation of the country, and the great number of
independent status which at that time subsisted in it, probably contributed not a little to this
general cultivation. It is not impossible, too, notwith- standing this general expression of one of
the most judicious and reserved of modern historians, that Italy was not at that time better
cultivated than England is at present. The capital, however, that is acquired to any country by
commerce and manufactures, is al- ways a very precarious and uncertain possession, till some
part of it has been secured and realized in the cultivation and improvement of its lands. A
merchant, it has been said very properly, is not necessarily the citizen of any particular
country. It is in a great measure indifferent to him from what place he carries on his trade; and
a very trifling disgust will make him remove his capital, and, together with it, all the industry
which it supports, from one country to another. No part of it can be said to belong to any
particular country, till it has been spread, as it were, over the face of that country, either in
buildings, or in the lasting improvement of lands. No vestige now remains of the great wealth
said to have been possessed by the greater part of the Hanse Towns, except in  the obscure
histories of the thirteenth and fourteenth centuries. It is even uncertain where some of them
were situated, or to what towns in Europe the Latin names given to some of them belong. But
though the misfortunes of Italy, in the end of the fifteenth and beginning of the
sixteenth centuries, greatly diminished the commerce and manufactures of the cities of
Lombardy and Tus- cany, those countries still continue to be among the most populous and
best cultivated in Europe. The civil wars of Flanders, and the Spanish government which
succeeded them, chased away the great commerce of Antwerp, Ghent, and Bruges. But
Flanders still continues to be one of the rich- est, best cultivated, and most populous provinces
of Europe. The ordinary revolutions of war and government easily dry up the sources of that
wealth which arises from commerce only. That which arises from the more solid
improvements of agriculture is much more durable, and cannot be destroyed but by those more
violent convulsions occasioned by the depredations of hostile and barbarous nations continued
for a century or two together; such as those that happened for some time before and after the
fall of the Roman empire in the western provinces of Europe. 

BOOK IV. OF SYSTEMS OF POLITICAL ECONOMY.  Political economy, considered as a

branch of the science of a statesman or legislator, proposes two distinct objects; first, to
provide a plentiful revenue or subsistence for the people, or, more properly, to en- able 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. 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
endeavour 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 aris- es from the double function of money, as the instrument of commerce, and as
the measure of 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 obtained,
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 careless, a generous, or a pro- fuse 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 ar- rived upon any unknown coast, used to be, if
there was any gold or silver to be found in the neighbourhood? 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. Plano Carpino, 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 was 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, per- haps, was the
nearest to the truth. Mr Locke remarks a distinction between money and other moveable goods.
All other move- able goods, he says, are of so consumable a nature, that the wealth which
consists in them cannot be much depended on; and a nation which abounds in them one year
may, without any expor- tation, 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 must 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 ob- ject of its political economy. Others admit, that if
a nation could be separated from all the world, it would be of no conse- quence 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 endeavour, 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 those 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 considerable 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. 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 the quantity; because, if the consumption 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 har- vest of
agriculture. "If we only behold," says he, "the actions of the husbandman in the seed
time, when he casteth away much good corn into the ground, we shall account him rather a
madman than a husbandman. But when we consider his labours in the harvest, which is the end
of his en- deavours, we shall find the worth and plentiful increase of his actions." They
represented, secondly, that this prohibition could not hinder the exportation of gold and silver,
which, on account of the smallness 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 necessarily paid to it in
gold and silver, and thereby increased the quantity 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 neces- sarily 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 dan- gerous, 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 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 necessarily 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 ex- change between England and Holland,
for example, was five per cent. against England, it would require 105 ounces of silver in
England to purchase a bill for 100 ounces of silver in Holland: that 105 ounces of silver in
England, therefore, would be worth only 100 ounces of silver in Holland, and would purchase
only a proportionable quantity of Dutch goods; but that 100 ounces of silver in Holland, on the
contrary, would be worth 105 ounces in England, and would purchase a pro- portionable
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, therefore, 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 as- serted 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 sup- posing, that either to preserve or to augment the quantity of those metals
required more the atten- tion 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 quan- tity. 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 high price, indeed, was
extremely disadvantageous to the merchants 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 dis- pose 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 ex- change, 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 ad- dressed.
They were addressed by merchants to parliaments and to the councils of princes, to no- bles,
and to country gentlemen; by those who were supposed to understand trade, to those who were
conscious to them selves that they knew nothing about the matter. That foreign trade en- riched
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
per- fectly 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. The subject never came
into their consideration, but when they had occasion to apply to their country for some change
in the laws relating to foreign trade. It then became necessary to say something about the
beneficial ef- fects 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, 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 commercial 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, was consid- ered 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 for- eign 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 government should be more turned to- wards the one
than towards the other object. A country that has wherewithal to buy wine, will al- ways 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 commodities, so all other commodities
are the price of those metals. We trust, with perfect security, that the freedom of trade, without
any atten- tion 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 we can af- ford 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 according 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 commodities 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 were 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 were 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. When the quantity of gold and silver
imported into any country exceeds the effectual de- mand, no vigilance of government can
prevent 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 demand, so as to raise their price above that of the neigh- bouring countries, the
government would have no occasion to take any pains to import them. If it were even to take
pains to prevent their importation, it would not be able to effectuate it. Those metals, when the
Spartans had got wherewithal to purchase them, broke through all the barriers which the laws
of Lycurgus opposed to their entrance into Lacedaemon. All the sanguinary laws of the
customs are not able to prevent the importation of the teas of the Dutch and Gottenburg 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 contin- ually,
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 under-stocked 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, perhaps, 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, not withstanding all this, gold and 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 dif- ferent 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 any inconveniency, but, in some cases, with some
advantages. Upon every account, therefore, the attention of government never was so
unnecessarily employed, as when directed to watch over the preservation 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 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 mercantile town and the coun- try in its neighbourhood. Over-trading
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 rev- enue. 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 difficulty which such people
find in borrowing, and which their creditor find in getting payment, that occasions the general
complaint of the scarcity of money. 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 which every thing is readily given in exchange, but which is not always with equal
readiness to be got in exchange for every thing. 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 li- able to such demands 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
sometimes 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 purchasing money. But it is but a very small part of the annual pro- duce of the
land and labour of a country, which can ever be destined for purchasing gold and sil- ver 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 destined for the pur-  chase 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. 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, might 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 were it not for this continual expor- tation, 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 afford- ing a species of household furniture, as plate; that the
quantity of coin in every country is regu- lated by the value of the commodities which are to be
circulated by it; increase that value, and im- mediately a part of it will be sent abroad to
purchase, wherever it is to be had, the additional quan- tity 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 magnif- icence; 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 unnecessary number of kitchen utensils. As the
expense of purchasing those unnecessary utensils would diminish, instead of in- creasing,
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 sil- ver, 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 of 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 trans- portation 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 an- nual produce of its domestic industry, from the annual revenue arising out of its
lands, and 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 accumulated, 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
parsi- mony, and laid up in the treasury of the prince. It can seldom happen that much can be
spared from the circulating money of the country; be- cause 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 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,
fewer 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 gener- ally 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
of 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 trea- sure 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 per- haps 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 £90,000,000, including not
only the £75,000,000 of new debt that was contracted, but the additional 2s. in the pound land-
tax, and what was annually borrowed of the sinking fund. More than two-thirds of this expense
were laid out in distant coun- tries; in Germany, Portugal, America, in the ports of the
Mediterranean, in the East and West In- dies. The kings of England had no accumulated
treasure. We never heard of any extraordinary quantity of plate being melted down. The
circulating gold and silver of the country had not been supposed to exceed £18,000,000. Since
the late recoinage of the gold, however, it is believed to have been a good deal under-rated. Let
us suppose, therefore, according to the most exaggerated computation which I remember to
have either seen or heard of, that, gold and silver together, it amounted to £30,000,000. Had
the war been carried on by means of our money, the whole of it must, even according 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 deci- sive argument, to
demonstrate how unnecessary it is for government to watch over the preser- vation 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 any body's  knowing any
thing 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
over- trading in all the ports of Great Britain; and this again occasioned the usual complaint of
the scar- city of money, which always follows over-trading. Many people wanted it, who had
neither where- withal 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 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 com- modities, when properly suited to the market, is always
attended with a considerable profit; whereas that of gold and silver is scarce ever attended with
any. When those metals are sent abroad in order to purchase foreign commodities, the
merchant's profit arises, not from the pur- chase, 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. 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 country, may be considered as the money of the great mer- cantile republic.
The national coin receives its movement and direction from the commodities circulated within
the precincts of each particular country; the money in 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 probably 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 neighbouring 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 annual produce. The expense
of 1761, for example, amounted to more than £19,000,000. No accumulation could have
supported 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 £6,000,000
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 manufac- tures; such as contain a great value in a small bulk, and can therefore be
exported to a great dis- tance at little expense. A country whose industry produces a great
annual surplus of such man- ufactures, 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 manufac- tures 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 for- eign countries, in order to purchase
there the pay and provisions of an army. Some part of this surplus, 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 usu- ally been consumed in the
country. In the midst of the most destructive foreign war, therefore, the greater part of
manufactures may frequently flourish greatly; and, on the contrary, they may decline on the
return of 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
manufactures during the late war, and for some time after the peace, may serve as an
illus- tration of what has been just now said. No foreign war, of great expense or duration,
could conveniently be carried on by the expor- tation of the rude produce of the soil. The
expense of sending such a quantity of it into a foreign country 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 otherwise 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 provisions 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
pro- duce, 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 proportion, because there was then no paper, which now occupies a great part
of the employment of gold and silver. Among nations to whom commerce and manufactures
are little known, the sovereign, upon extraordinary occasions, can seldom draw any
considerable aid from his subjects, for rea- sons which shall be explained hereafter. It is in
such countries, therefore, that he generally en- deavours 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 ac- cumulation. 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 hospi- tality to his retainers. But bounty
and hospitality very seldom lead to extravagance; though vanity almost always does. Every
Tartar chief, accordingly, has a treasure. The treasures of Mazepa, 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 treasures too. The Saxon princes, and the first kings after the
Conquest, seem likewise to have accumulated treasures. The first exploit of every new reign
was commonly to seize the treasure of the preceding king, as the most essential mea- sure 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 insignificant pageantry of their court becomes every day
more brilliant; and the expense of it not only prevents accumulation, but frequently encroaches
upon the funds des- tined 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 na- tion 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 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 something 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
con- sumption, it encourages them to improve its productive power, and to augment its annual
pro- duce to the utmost, and thereby to increase the real revenue and wealth of the society.
These great and important services foreign trade is continually 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 insignif- icant 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 discovery of America has enriched Eu- rope. 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 com- modities,
Europe can annually purchase about three times the quantity of plate which it could have
purchased at that time. But when a commodity comes to be sold for a third part of what
bad been its usual price, not only those who purchased it before can purchase three times their
for- mer quantity, but it is brought down to the level of a much greater number of purchasers,
per- haps 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 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 ourselves 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 nor
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 the savages, and these were destroyed
almost as soon as dis- covered. The rest were mere savages. But the empires of China,
Indostan, Japan, as well as several others in the East Indies, without having richer mines of
gold or silver, were, in every other re- spect, much richer, better cultivated, and more advanced
in all arts and manufactures, than either Mexico or Peru, even though we should credit, what
plainly deserves no credit, the exaggerated ac- counts of the Spanish writers concerning the
ancient state of those empires. But rich and civilized nations can always exchange to a much
greater value with one another, than with savages and bar- barians. Europe, however, has
hitherto derived much less advantage from its commerce with the East Indies, than from that
with America. The Portuguese monopolized the East India trade to themselves for about a
century; and it was only indirectly, and through them, that the other na- tions 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 fol- lowed their
example; so that no great nation of Europe has ever yet had the benefit of a free com- merce to
the East Indies. No other reason need be assigned why it has never been so advan-  tageous 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 respec-  tive
governments, have excited much envy against them. This envy has frequently represented their
trade as altogether pernicious, on account of the great quantities 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 gen- eral, 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 quan- tity 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
unnecessary to say any thing further about either. By the annual exportation 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 commodities. 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 commodities, must neces- sarily 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 ambiguity of expression has ren- dered 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
consumable 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 consisted 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 impor- tation, and encouragement 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. Exportation was encouraged sometimes by drawbacks,
sometimes by bounties, sometimes by advantageous treaties of commerce with foreign 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 exportation; 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 exportation. Bounties were given for
the encouragement, either of some beginning 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 en- couragements 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 far- ther 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. Accord- ing as they tend either to increase or diminish the value
of this annual produce, they must evi- dently tend either to increase or diminish the real wealth
and revenue of the country. 

CHAPTER II. OF RESTRAINTS UPON 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 woollen is equally favourable to the woollen manufacturers. The silk manufacture,
though alto- gether employed upon foreign materials, has lately obtained the same advantage.
The linen manufacture has not yet obtained it, but is making great strides towards it. Many
other sorts of manufactures have, in the same manner obtained in Great Britain, either
altogether, or very near- ly, 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 partic- ular 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 can never exceed what
the capital of the society can em- ploy. As the number of workmen that can be kept in
employment by any particular person must bear 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 the society, and never can exceed that
proportion. No regulation of commerce can increase the quan- tity 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
employ- ment for whatever capital he can command. 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
conse- quently as much as he can in the support of domestic industry, provided always that he
can there- by 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 consumption, and the foreign trade of consumption to the
car- rying trade. 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 Koningsberg to Lisbon, and fruit and
wine from Lisbon to Kon- ingsberg, must generally be the one half of it at Koningsberg, and
the other half at Lisbon. No part of it need ever come to Amsterdam. The natural residence of
such a merchant should either be at Koningsberg or Lisbon; and it can only be some very
particular circumstances 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 Koningsberg goods which he destines for the market
of Lisbon, and of the Lisbon goods which he destines for that of Koningsberg, 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 consid- erable 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 sec- ond 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 for-  eign
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 al- ready been shown, necessarily puts into motion a greater quantity 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 advantage over an equal capital
employed in the carrying trade. Upon equal, or only nearly equal profits, therefore, every
individual naturally inclines to employ his cap- ital in the manner in which 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 materials 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 ei- ther 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 cap- ital in the support of domestic industry, and so to direct that industry that its
produce maybe of the greatest value; every individual necessarily labours to render the annual
revenue of the society as great as he can. He generally, 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 al- ways 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 affec- tation, indeed, not very common among
merchants, and very few words need be employed in dis- suading them from it. What is the
species of domestic industry which his capital can employ, and of which the pro- duce is likely
to be of the greatest 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 at-  tempt 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 partic- ular 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 occasion 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 pro- portion to the capital which employs it,
will not thereby be diminished, no more than that of the abovementioned 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 annual produce is certainly more or less
diminished, when it is thus turned away from producing commodities evi- dently of more value
than the commodity which it is directed to produce. According to the suppo- sition, that
commodity 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 advantageous
em- ployment; 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
regulation. 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 car- ried 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 aug- mented 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 manu- facture, it would not upon that account
necessarily be the poorer in anyone 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. The natural advantages which one country has
over another, in producing particular com- modities, 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 Scot- land, 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 employment 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 absurdity, though not
altogether so glaring, yet exactly of the same kind, in turning towards any such em- ployment 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 par- ticular trades. Merchants and manufacturers are the people who derive the
greatest advantage from this monopoly of the home market. The prohibition of the importation
of foreign cattle and of salt provisions, 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 manufacturers. Manufac- tures, 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 were 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 agriculture of the country. If the importation of foreign
cattle, for example, were made ever so free, so few could be im- ported, 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 im- ported for their use, but must be drove through those very extensive countries, at no
small ex- pense and inconveniency, before they could arrive at their proper market. Fat cattle
could not be drove so far. Lean cattle, therefore, could only 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 still continue to sell, seem to demonstrate, that even the
breeding coun- tries of Great Britain are never likely to be much affected by the free
importation of Irish 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 uncultivated land, is like a bounty against improvement. To
any country which was highly im- proved throughout, it would be more advantageous 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 qual- ity, 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 im- ported 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 small quantity of foreign corn imported even in
times of the greatest scarcity, may satisfy our farmers that they can have noth- ing 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 23,728
quarters of all sorts of grain, and does not exceed the five hundredth and seventy-one part of
the annual consumption. 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 were no bounty, as less corn would be exported, suit 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 consid- erably; but the country gentlemen and farmers
could suffer very little. It is in the corn-merchants, accordingly, rather than the country
gentlemen and farmers, that I have observed the greatest anx- iety for the renewal and
continuation of the bounty. Country gentlemen and farmers are, to their great honour, of all
people, the least subject to the wretched spirit of monopoly. The undertaker of a great
manufactory is sometimes alarmed if another work of the same kind is established within
twenty miles of him; the Dutch undertaker of the woollen manufacture at Abbeville, stipulated
that no work of the same kind should be estab- lished within thirty leagues of that city. Farmers
and country gentlemen, on the contrary, are generally disposed rather to promote, 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 manufac- turers, but are generally rather fond of
communicating to their neighbours, and of extending as far as possible any new practice which
they may have found to be advantageous. "Pius quaestus", says old Cato, "stabilissimusque,
minimeque invidiosus; minimeque male cogitantes sunt, qui in eo studio occupati sunt."
Country gentlemen and farmers, dispersed in different parts of the country, cannot so easily
combine as merchants and manufacturers, 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 gen- tlemen 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, 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 pro- duce 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
encouragement 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 shipping. The act of navigation, therefore, very
properly endeavours to give the sailors and ship- ping of Great Britain the monopoly of the
trade of their own country, in some cases, by absolute prohibitions, and in others, by heavy
burdens upon the shipping of foreign countries. The fol- lowing 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 intended 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, whalebone, oil, and blubber, not caught by and  cured on
board British vessels, when imported into Great Britain, are subject to double aliens  duty. The
Dutch, as they are still the principal, were then the only fishers in Europe that at- tempted 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 Holland
were not actually at war, the most violent animosity subsisted between the two nations. It had
begun during the govern- ment 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 II. It is not
impossible, therefore, 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. 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 pur- chase; 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 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 the 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 pro- duce 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 borne 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 domes- tic industry, it
is usual, at the same time, in order to stop the clamorous complaints of our mer-  chants 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 most occasions, be extended much farther than
to the precise foreign commodities which could come into competition 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 any thing that is the
produce of domestic industry. Subsistence, they say, becomes neces- sarily 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, be-  cause
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, it becomes necessary, they think, to lay
some duty upon every foreign commodity, equal to this enhancement of the price of the home
com- modities 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, etc. necessarily raise the
price of labour, and consequently that of all other com- modities, I shall consider hereafter,
when I come to treat of taxes. Supposing, however, in the mean time, that they have this effect,
and they have it undoubtedly, this general enhancement of the price of all commodities, in
consequence of that labour, is a case which differs in the two fol- lowing respects from that of
a particular commodity, of which the price was enhanced by a partic- ular 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 of every foreign, to the
enhancement of the price of every home com- modity. Secondly, Taxes upon the necessaries of
life have nearly the same effect upon the circum- stances 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 nat- ural 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 accommodate, 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 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 reg- imen, 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 impor- tation 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 con- tinue 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. Re- venge, 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, accord- ingly, seldom fail to retaliate in this manner. The
French have been particularly forward to favour their own manufactures, 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 Mr Colbert, who, notwith- standing his great abilities, seems in this
case to have been imposed upon by the sophistry of merchants and manufacturers, who are
always demanding 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 man- ufactures of France. The war
of 1672 seems to have been in part occasioned by this commercial dispute. 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 Ehglish prohibited the importation of bone lace, the
manufacture of Flanders. The government of that country, at that time under the domin- ion of
Spain, prohibited, in return, the importation of English woollens. In 1700, the prohibition of
importing bone lace into England was taken oft; 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 for- eign
market will generally more than compensate the transitory inconveniency of paying
dearer during a short time for some sorts of goods. To judge whether such retaliations are
likely to pro- duce such an effect, does not, perhaps, belong so much to the science of a
legislator, whose de- liberations ought to be governed by general principles, which are always
the same, as to the skill of that insidious and crafty animal vulgarly called a statesman or
politician, whose councils are di- rected 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 bene- fited 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 tax upon the
whole country, not in favour of that particular class of workmen who were injured by our
neighbours prohibitions, 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 importation of
foreign goods, after it has been for some time inter- rupted, is when particular manufactures,
by means of high duties or prohibitions upon all foreign goods which can come into
competition with them, have been so far extended as to employ a great  multitude of hands.
Humanity may in this case require that the freedom of trade should be re- stored 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 exported 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 poss- ession of the home market; and
though a capricious man of fashion might sometimes prefer for- eign 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 man- ufactures
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, though the latter much less than
the former. Secondly, Though a great number of people should, by thus restoring 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 subsis- tence. By the reduction of the army and navy at the end of the late war,
more than 100,000 sol- diers 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
subsistence. The greater part of the seamen, it is probable, gradually betook themselves to the
merchant service as they could find occasion, and in the mean time 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 sen- sible disorder, arose from so great a change in the
situation of more than 100,000 men, all accus- tomed 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 manufacturer, 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 industry 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, besides, it has already been observed,
there are other collateral manufactures of so similar a nature, that a work-  man can easily
transfer his industry from one of them to another. The greater part of such work- men, too, are
occasionally employed in country labour. The stock which employed them in a par- ticular
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 of Great Britain or Ireland.
Let the same natural liberty of exercising what species of industry they please, be restored to
all his Majesty's subjects, in the same manner as to soldiers and seamen; that is, break down
the exclu- sive privileges of corporations, and repeal the statute of apprenticeship, both which
are really en- croachments upon natural Liberty, and add to those the repeal of the law of
settlements, 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 disbanding some particular classes of manufacturers, than from that of the
soldiers. 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 entirely restored in Great
Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. 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 reduction in the number of forces, with which master
manufacturers set them- selves against every law that is likely to increase the number of their
rivals in the home market; were the former to animate their soldiers. In the same manner as the
latter inflame their work- men, to attack with violence and outrage the proposers of any such
regulation; to attempt to re- duce 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 ser- vices, 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 considerably.
That part of his capital which had usually been employed in purchasing mate-  rials, and in
paying his workmen, might, without much difficulty, perhaps, find another employ- ment; but
that part of it which was fixed in workhouses, and in the instruments of trade, could scarce be
disposed of without considerable loss. The equitable regard, therefore, to his interest, re- quires
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
di- rected, not by the clamorous importunity of partial interests, but by an extensive view of the
gen- eral 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 afterwards to cure without occasioning another
disorder. 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 impor- tation, 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 sec- ond expedient by which the commercial system proposes to increase the quantity of
gold and sil- ver. 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 warehoused 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 ex- cepted; these commodities being subjected to other heavy
duties, either by other laws, or by par- ticular 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; to- gether with a new duty of five-and-twenty
pounds upon the ton of French wine, and another of fifteen pounds upon the ton 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 equiv- alent to a prohibition. The
French, in their turn, have, I believe, treated our goods and manufac- tures 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 principles 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 te examine in this, from national prejudice and animosity. They are,
accord- ingly, 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 than 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 Ger- many. Though the value of the
annual importations from France would thereby be greatly aug- mented, the value of the whole
annual importations would be diminished, in proportion as the French goods of the same
quality were cheaper than those of the other two countries. This would be the case, even upon
the supposition that the whole French goods imported were to be con- sumed 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 sil- ver, 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 countries. Some part even of the French wine
drank in Great Britain, is clandes- tinely 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 acknowledged, are a very uncertain criterion, on account of the
inaccuracy of the valu- ation at which the greater part of goods are rated in them. The course of
exchange is, perhaps, al- most 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 Lon- don. 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 exporting 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 from other to a greater amount than it exports to
that other, the debts and credits of each may compen- sate 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 indication 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 shall 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, etc. 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 another, but will be influenced by that of the dealings
in 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 sufficient 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 concerning that of the
former. When for a sum or money paid in England, containing, according to the standard of the
Eng- lish 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. When 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. But the value
of the current coin of England, as we learn from Mr Lowndes, 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 computed exchange was
so much against it; a smaller number or ounces of pure silver, actually paid in Eng- land, may
have purchased a bill for a greater number of ounces of pure silver to be paid in Hol-  land, 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 wore 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
con- stantly 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 defrayed by the government; and if you carry a pound weight of
standard silver to the mint, you get back sixty-two shillings, containing a pound weight of the
like standard silver. 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 government. 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, there- fore,
containing an equal weight of pure silver, is more valuable than a sum of 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 stan- dards of their respective mints, a sum of English money could not well
purchase a sum of French money containing an equal number of ounces of pure silver, nor,
consequently, 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 be- tween the two countries; their debts and credits might mutually
compensate one another, while the computed exchange 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, etc. foreign bills of exchange are paid in what they call bank money; while in others,
as at London, Lisbon, Antwerp, Leghorn, etc. 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 cur- rency, 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 ex- change 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. It will 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, Leghorn, and, if you except France, I believe with most other
parts of Europe that pay in common currency; and it is not improbable that the real ex- change
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, clipt, or
otherwise degraded below its standard value, the state, by a reformation of its coin, can
effectually re-establish its cur- rency. 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 neigh- bouring 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 exchange 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 disadvantageous 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,
estab- lished upon the credit, and under the protection of the state, this bank being always
obliged to pay, in good and true money, exactly according to the standard of the state. The
banks of Venice, Genoa, Amsterdam, Hamburg, and Nuremberg, seem to have been all
originally established with this view, though some of them may have afterwards been made
subservient to other purposes. The money of 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 per
cent. is the supposed difference between the good standard money of the state, and the clipt,
worn, and diminished currency, poured into it from all the neighbouring states. Before 1609,
the great quantity of clipt 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 inconveniencies, a
bank was established in 1609, under the guar- antee 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 manage- ment. 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 600 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
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 com- mon currency of the country, would be of no more value than that
currency, from which it could no longer be readily distinguished. 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 ascertained 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 transferability, its
use in paying foreign bills of exchange. Over and above all this, it could not be brought from
those coffers, as will appear by and by, without previ- ously paying for the keeping. Those
deposits of coin, or those deposits which the bank was bound to restore in coin, consti- tuted
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 bul- lion again at any time within six months, upon transferring 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 at the same time declaring, that in default of
such payment, and upon the expi- ration of this term, the deposit should belong to the bank, at
the price at which it had been re- ceived, 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 fine- ness of gold, it has been said, is more
difficult to be ascertained than that of silver. Frauds are more easily practised, and occasion a
greater loss in the most precious metal. Silver, besides, being the standard metal, the state, it
has been said, wishes to encourage more the making of de- posits of silver than those of
gold. Deposits of bullion are most commonly made when the price is somewhat lower than
ordi- nary, 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 of fine and one part
alloy. The bank price, or the credit which the bank gives for the deposits of such silver (when
made in for- eign 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 following are the prices at which the bank of
Amsterdam at present {September 1775} re- ceives bullion and coin of different kinds: 

SILVER      Mexico dollars .................  22  Guilders / mark 

 French crowns ..................  22     

English silver coin.............  22      Mexico dollars, new coin........  21  10     
Ducatoons.......................   3   0      Rix-dollars.....................   2   8  

Bar silver, containing 11-12ths fine silver, 21 Guilders / mark, and in this proportion down
to 1-4th fine, on which 5 guilders are given. Fine bars,................. 28
Guilders / mark.  

GOLD      Portugal coin.................  310  Guilders / mark      Guineas.......................  310     

Louis d'ors, new..............  310     

Ditto        old..............  300      New ducats....................    4  19  8  per ducat  

Bar or ingot gold is received in proportion to its fineness, 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 can- not be ascertained but by a process of melting and assaying. The proportions
between the bank price, the mint price, and the market price of gold bullion, are 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 receipts 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 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 keeping 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 cred- itors 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, 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 grant 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 re- ceipt 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 be- fore 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
re- ceipts 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, maybe 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 Ams- terdam 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 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 contin- ually 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 no 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 corresponds 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 exor- bitant 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 re- ceived
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,
ei- ther with money or bullion, the full value of what the owners of bank money, who could get
no re- ceipts, were credited for in its books; paying, at the same time, two or three per cent. to
such hold- ers 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. 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 sometimes
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 conse-  quence 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 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 some- times 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 ap- pear 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 treasures of the bank. The city is guarantee that it
should be so. The bank is under the direction of the four reigning burgomasters 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. 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 gener- ally reckoned, that
there are about 2000 people who keep accounts with the bank; and allowing them to have, one
with another, the value of £1500 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 £3,000,000 sterling, or, at eleven guilders the pound sterling, 33,000,000 of
guilders; a great sum, and sufficient 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 guilder's three stivers; for every transfer, two
stivers; and if the transfer is for less than 300 guilders, six stivers, in order to dis- courage 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 an- nual revenue of between 150,000 and 200,000 guilders.
Public utility, however, and not revenue, was the original object of this institution. Its object
was to relieve the merchants from the in- convenience of a disadvantageous exchange. The
revenue which has arisen from it was unfore- seen, and may be considered as accidental. But it
is now time to return from this long digression, 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 is 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 unnecessary it is to lay extraordinary restraints upon the importation 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, nei- ther 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 equilibrium. Both suppositions are false. A trade, which is forced by means of bounties
and monopolies, may be, and commonly is, disadvantageous to the country in whose favour it
is meant to be established, as I shall endeav- our 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. 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 ex- change of their native commodities, they will, upon most
occasions, not only both gain, but they will gain equally, or very nearly 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 dis- tributed among, and given revenue and
maintenance to, a certain number of its inhabitants. Some part of the inhabitants of each,
therefore, will directly derive their revenue and maintenance from the other. As the
commodities exchanged, too, are supposed to be of equal value, so the two capitals employed
in the 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 mainte- nance 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 pro-  portion to
the extent of their dealings. If these should annually amount to £100,000, for example,  or to
£1,000,000, on each side, each of them will afford an annual revenue, in the one case,
of £100,000, and, in the other, of £1,000,000, to the inhabitants of the other. If their trade
should be of such a nature, that one of them exported to the other nothing but  native
commodities, while the returns of that other consisted altogether in foreign goods; the
bal- ance, in this case, would still be supposed even, commodities being paid for with
commodities. They would, in this case 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, Indostan, 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. 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
ex- plained. There is not, probably, between any two countries, a trade which consists
altogether in the ex- change, 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 foreign goods. That country, however, in whose
cargoes there is the greatest proportion of native, 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 foregoing, 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 pur- chased this gold and silver, the capital which had been
distributed among, and given revenue to, certain inhabitants of England, would thereby be
replaced, and enabled to continue that employ- ment. 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 £100,000, when sent to
France, will purchase wine which is in England worth £110,000, the exchange will augment
the capital of England by £10,000. If £100,000 of English gold, in the same manner, purchase
French wine, which in England is worth £110,000, this exchange will equally augment the
capital of England by £10,000. As a merchant, who has £110,000 worth of wine in his cellar, is
a richer man than he who has only £100,000 worth of tobacco in his ware-  house, so is he
likewise a richer man than he who has only £100,000 worth of gold in his coffers. He can put
into motion a greater quantity of industry, and give revenue, maintenance, and em- ployment,
to a greater number of people, than either of the other two. But the capital of the coun-  try is
equal to the capital 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
cap- ital 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 Eng- land that it could purchase the wines of France with its own hardware
and broad cloth, 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 advan- tageous 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
alehouse 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 division's of labour as any other. It
will generally be more advantageous for a workman 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 buy too much of either, as he may of any other dealers in his
neighbourhood; 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 work- men, 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, be- sides, 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 peo- ple 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 of Europe; witness the Spaniards, the Italians, and
the inhab- itants 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, occa- sion in Great Britain a pretty general and temporary
drunkenness among the middling and infe- rior 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 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 dis- courage that of France. The
Portuguese, it is said, indeed, are better customers for our manufac- tures 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 under- ling tradesmen
only who make it a rule to employ chiefly their own customers. A great trader pur- chases 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. Com- merce, 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 animosity. 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 vio- lence 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 doc- trine, 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 merchants and manufacturers confounded the common sense  of
mankind. Their interest is, in this respect, directly opposite to that of the great body of the
peo- ple. As it is the interest of the freemen of a corporation to hinder the rest of the inhabitants
from employing 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 im- ported by alien merchants. Hence the high duties and prohibitions upon
all those foreign man- ufactures which can come into competition with our own. Hence, too,
the extraordinary restraints upon the importation of almost all sorts of goods from those
countries with which the balance of trade is supposed to be disadvantageous; that is, from
those against whom national animosity happens ta be most violently inflamed. The wealth of
neighbouring nations, however, though dangerous in war and politics, is cer- tainly
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 imme-  diate
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 manufac- turers 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 maxim which would in this manner direct the common sense of
one, or ten, or twenty individuals, should regu- late 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 enrich 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 impoverishment of all our neighbours,
so far as they are capable of producing their intended effect, tend to render that very commerce
insignif- icant 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 coun- tries, however, 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 coast 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 industry, and afford
employment and subsistence to four, five, or six times the number of people, which all 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 re- turns were seldom made in less than three years, frequently not in less than four or five
years. France, besides, is supposed to contain 24,000,000 of inhabitants. Our North American
colonies were never supposed to contain more than 3,000,000; 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 re- turns, 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 propor- tion to the wealth, population, and proximity of the respective
countries, would have the same su- periority over that which France carries on with her own
colonies. Such is the very great differ- ence between that trade which the wisdom of both
nations has thought proper to discourage, and that which it has favoured the most. But the very
same circumstances which would have rendered an open and free commerce be- tween the two
countries so advantageous to both, have occasioned the principal obstructions to that
commerce. Being neighbours, they are necessarily enemies, and the wealth and power of each
becomes, upon that account, more formidable 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 excited,
and both inflames, and is itself inflamed, by the violence of national animosity, and the traders
of both countries have announced, 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 approaching ruin has not frequently been foretold
by the pretended doctors of this system, from all unfavourably balance of trade. After all the
anxiety, however, which they have excited about this, after all the vain attempts of al-  most all
trading nations to turn that balance in their own favour, and against their neighbours, it does
not appear that any one nation in Europe has been, in any respect, impoverished by this cause.
Every town and country, on the contrary, 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 same 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 acknowledged, 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 been explained, very different from the balance of trade, and which, according as it
happens to be either favourable or unfavourable, necessarily occasions the prosperity or decay
of every nation. This is the balance of the annual produce and consumption. If the
exchangeable value of the annual produce, it has already been observed, exceeds that of the
annual consumption, the capital of the society must annually in- crease 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 proportion to this
deficiency. The expense of the society, in this case, exceeds its revenue, and necessarily
en- croaches 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 sepa- rated 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 which comes into it during all this
time, may be all immediately sent out of it; its circulating coin may gradually decay, dif- ferent
sorts of paper money being substituted in its place, and even the debts, too, which it con- tracts
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
Amer- ican colonies, and of the trade which they carried on with Great Britain, before the
commence- ment of the present disturbances, {This paragraph was written in the year 1775.}
may serve as a proof that this is by no means an impossible supposition. 

CHAPTER IV. OF DRAWBACKS.  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 jurisdiction in foreign nations, and therefore can seldom procure
them any monopoly there. They are gener- ally 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 exportation of a greater quantity of goods than what
would have been exported had no duty been imposed. Such encour- agements do not tend to
turn towards any particular employment a greater share of the capital of the country, than what
would go to that employment of its own accord, but 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 division and distribution of labour in the
soci- ety. The same thing may be said of the drawbacks upon the re-exportation of foreign
goods im- ported, 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, provided 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 draw- backs could be claimed, was afterwards (by 7 Geo. I.
chap. 21. sect. 10.) extended to three years. The duties which have been imposed since the old
subsidy, are, 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
necessary 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 nine- ty-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 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 impor- tation 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 im- ported and warehoused for exportation. But
upon such exportation no part of these duties is 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, etc. 

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
drawback allowed upon the expor- tation 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 encouragement to the
carrying trade in wine. Several of the other duties, too which were imposed either at the same
time or subsequent to the old subsidy, what is called the additional duty, the new subsidy, the
one-third and two-thirds subsidies, the impost 1692, the tonnage on wine, were allowed to be
wholly drawn back upon exportation. All those du- ties, however, except the additional duty
and impost 1692, being paid down in ready money upon importation, 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 im- post on wine, and no part
of the twenty-five pounds the ton 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 du- ties
are retained, most probably could never occasion the exportation of a single ton of wine. These
rules took place with regard to all places of lawful exportation, except the British colonies
in America. The 15th 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 manu- facture 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 probably 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 import 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 an
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 commence- ment 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. III,
chap. 15, sect. 12), all the duties except £3, 10s. were allowed to be drawn back upon the
exportation to the colonies of all wines, except French wines, to the com- merce and
consumption of which national prejudice would allow no sort of encouragement. The period
between the granting of this indulgence and the revolt of our North American colonies,  was
probably too short to admit of any considerable change in the customs of those countries. The
same act which, in the drawbacks 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 coun- tries, 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 manu- facture either of Europe or the East Indies, except wines,
white calicoes, and muslins. Drawbacks were, perhaps, originally granted for the
encouragement of the carrying trade, which, as the freight of the ship 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 cer- tainly deserves no peculiar encouragement, though
the motive of the institution was, perhaps, abundantly foolish, the institution itself seems
reasonable enough. Such drawbacks 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 alto- gether by those duties. The carrying
trade, though it deserves no preference, ought not to be pre- cluded, but to be left free, like all
other trades. It is a necessary resource to those capitals which cannot find employment, either
in the agriculture or in the manufactures of the country, either in its home trade, or in its
foreign 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 imported, 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
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 distribution of labour, which is always more or less disturbed
by such duties, would be more nearly re-established by such a regulation. These reasons,
however, will justify drawbacks only upon exporting 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. 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 re- tained. The drawback, therefore, may frequently be pure loss to the revenue of
excise and cus- toms, 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 to- bacco, 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. 

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 mer- chants 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 for- eigners 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 bal- ance of trade. Bounties, it
is allowed, ought to be given to those branches of trade only which cannot be car- ried 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
pre- paring and sending them to market, can be carried on without a bounty. Every such branch
is evi- dently 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 cost 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 re- turns, 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 nations for any
considerable time together, in such a man- ner as that one of them shall alway's and regularly
lose, or sell its goods for less than it really cost to send them to market. But if the bounty 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 ordinary 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 has shown 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 dur- ing
that period. This, he imagines, upon the true principles of the mercantile 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 ex- pense, 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 raising it
must likewise be taken into the account. Unless the price of the corn, when sold in the foreign
markets, replaces not only the bounty, but this capital, together with the ordinary profits of
stock, the society is a loser by the dif- ference, 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
insufficiency 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 cen- tury, 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 real, as I believe it to be, must have happened in spite of the bounty, and
cannot possibly have happened 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 regulation 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 gen- eral market of Europe
during the course of the present century. It seems to be altogether impos- sible that the bounty
could ever contribute to lower the price of grain. 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 natu- rally 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 for- eign
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 altogether 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 contribute, in order to pay the bounty; and,
secondly, the tax which arises from the ad- vanced 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 peo- ple. In this particular commodity, therefore,
this second tax is by much the heaviest of the two. Let us suppose that, taking one year with
another, the bounty of 5s. upon the exportation of the quarter of wheat raises the price of that
commodity in the home market only 6d. the bushel, or 4s. the quarter higher than it otherwise
would have been in the actual state of the crop. Even upon this very moderate supposition, the
great body of the people, over and above contributing the tax which pays the bounty of 5s.
upon every quarter of wheat exported, must pay another of 4s. upon every quarter which they
themselves consume. But according to the very well informed author of the Tracts upon the
Corn Trade, the average proportion of the corn exported to that con- sumed at home, is not
more than that of one to thirty-one. For every 5s. therefore, which they con-  tribute to the
payment of the first tax, they must contribute £6:4s. to the payment of the second. So very
heavy a tax upon the first necessary 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 re-  duce
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 operate's in the other, it must reduce
the ability of the employers 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 occasioned by the bounty, not only in every particular year diminishes the
home, just as much as it extends the foreign market and consumption, but, by restraining the
population and industry of the country, its final tendency is to stint 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 labour- ers in the same manner, whether liberal, moderate, or
scanty, than 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 im- poses 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 sufficient to
maintain him and his family, either in the liberal, mod- erate, 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 maintenance of horses, of land carriage
consequently, or of the greater part of the inland commerce of the country. 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 com- plete
manufacture. The money price of labour, and of every thing that is the produce, either of  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 4s.
the bushel, instead of 3s:6d. 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, 4s. will
purchase no more home made goods of any other kind than 3s. 6d. would have done be- fore,
neither the circumstances 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 nearly 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 every thing 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 situ-  ation 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 anybody really richer, tends to  make
every body 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
car- ried on within it, and to enable foreign nations, by furnishing almost all sorts of goods for
a small- er quantity of silver than its own workmen can afford to do, to undersell them, not
only in the for- eign, but even in the home market. 

It is the peculiar situation of Spain and Portugal, as proprietors of the mines, to be the
dis- tributers 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 ac- count 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
smuggling, 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 pro- duce of their land
and labour will allow them to employ, in coin, plate, gilding, and other orna- ments 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, notwithstanding 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 proportion 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 greater must be the difference in the proportion of gold
and silver to the annual produce of the land and labour of Spain and Portugal, and to that of
other countries. 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 necessary 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 man- ufactured produce, for a smaller quantity of gold and silver than
what they themselves can either raise or make them for at home. 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; but
their real value would be the same as before, and would be sufficient to main- tain, 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 quan- tity 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 other.
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 peo- ple 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 probably, the
greater part of them, and certainly some part of them, consist in materials, tools, and
provisions, for the employ- ment 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
present 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. 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 somewhat cheaper, than they other- wise 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 manufac- tures, without rendering any
considerable 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 diffi- cult to persuade the
greater part of them that this is not rendering them a very considerable ser-  vice. 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 commonwealth to whom the bounty either was or could be essentially serviceable.
These were the corn merchants, the exporters and im- porters of corn. In years of plenty, the
bounty necessarily occasioned a greater exportation than would otherwise have taken place;
and by hindering the plenty of the one year from relieving the scarcity of another, it occasioned
in years of scarcity a greater importation than would otherwise have been necessary. It
increased the business of the corn merchant in both; and in the 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. Our country gentlemen, when they imposed the high duties upon the exportation 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 se- cured to themselves the monopoly of the home market, and by the other
they endeavoured to pre- vent that market from ever being overstocked with their commodity.
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 expor- tation, 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 manufac- turers; and you enable them, either to live better
themselves, or to employ a greater quantity of labour in those particular manufactures. You
really encourage those manufactures, and direct to- wards them a greater quantity of the
industry of the country than what would properly go to them of its own accord. But when, by
the like institutions, you raise the nominal or money 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
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 com- monly
maintained in that place. Woollen or linen cloth are not the regulating 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. Bounties upon the exportation of any homemade commodity are liable, first, to that
general objection which may be made to all the different expedients of the mercantile system;
the objec- tion 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
objection, that it can in no respect pro- mote 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 com- prehension 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 dis-  couraged,
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 depend upon the
general industry of the country. To encourage the production of any commodity, a bounty upon
production, one should imag- ine, 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, in- stead 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. The prejudices established by the
commercial system have taught us to believe, that national wealth arises more immediately
from exportation than from production. It has been more favoured, accordingly, as the more
immediate means of bringing money into the country. Boun- ties 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
overstocked with their goods; an event which a bounty upon production might some- times
occasion. A bounty upon exportation, by enabling them to send abroad their 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. I 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, notwithstanding a very considerable
increase in the produce. The operation 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 contribute to the opulence of the nation, it may, perhaps, be thought that they contribute
to its defence, by augmenting the num- ber 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 expression, in the same way as a standing
army. Notwithstanding these favourable allegations, however, the following 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
years, the whole number of barrels caught by the herring-buss fishery of Scotland amount- ed
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 252,231¼. Dur- ing these eleven years, the tonnage bounties paid amounted to
£155,463:11s. or 8s:2¼d. upon every barrel of sea-sticks, and to 12s:3¾d. 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 1s:6d., that upon foreign salt 10s. the bushel. A barrel
of herrings is sup- posed 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 her- rings. 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:8d. 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 17s:11¾d.;
and, when entered for home consumption, 14s:3¾d.; and that every barrel cured with foreign
salt, when exported, has cost government £1:7:5¾d.; and, when entered for home
consumption, £1:3:9¾d. 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. {See the accounts at the end of this Book.} 

Secondly, The bounty to the white-herring fishery is a tonnage bounty, and is proportioned
to the burden of the ship, not to her diligence or success in the fishery; and it has, I am afraid,
been too common for the 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, £113:15s.; each barrel of merchantable herrings
£159:7:6. 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 principally 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 every- where 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 princi- pally resort during the seasons in which they
visit these seas; for the visits of this, and, I am as- sured, 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 car- rying the herrings on shore as fast
as they are taken, to be either cured or consumed fresh. But the great encouragement which a
bounty of 30s. the ton gives to the buss-fishery, is necessarily a discouragement 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 establishment of the
buss-bounty, was very considerable, and is said to 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 acknowl- edge
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-bus
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, car- ries 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, 16s. 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 was 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 commence- ment of the American war, risen to about double its
former price, or from about 3s. to about 6s. 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 mer- chantable herrings; and this, I
imagine, may still be looked upon as the average price. All ac- counts, however, I think, agree
that the price has not been lowered in the home market in conse- quence of the buss-
bounty. When the undertakers of fisheries, after such liberal bounties have been bestowed
upon them, continue to sell 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 encour- age rash undertakers to adventure in a business which they do not understand;
and what they lose by their own negligence and ignorance, 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 30s. the ton for the encouragement of the white herring fishery (the 23d Geo. II.
chap. 24), a joint stock company was erected, with a capital of £500,000, to which the
subscribers (over and above all other encouragements, the tonnage bounty just now mentioned,
the exportation bounty of 2s:8d. the barrel, the delivery of both British and foreign salt duty
free) were, during the space of four- teen years, for every hundred pounds which they
subscribed and paid into the stock of the soci- ety, entitled to three pounds a-year, to be paid by
the receiver-general of the customs in equal half- yearly payments. Besides this great company,
the residence of whose governor and directors was to be in London, it was declared lawful to
erect different fishing chambers in all the different out- ports of the kingdom, provided a sum
not less than £10,000 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 encouragements 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 dif- ferent fishing chambers
were erected in the different out-ports 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. 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
otherwise be supported at home, it might not be unreasonable that all the other branch-  es 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 prin- ciple. But though it can very seldom be reasonable to tax the industry of the great
body of the peo- ple, 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 manufactures, 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 li- able 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 du- ties 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 oc- cupations, are not liable to the same objections as bounties. By encouraging
extraordinary dex- terity and ingenuity, they serve to keep up the emulation of the workmen
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 ten- dency is not to overturn the natural balance of employments, but
to render the work which is done in each as perfect and complete as possible. The expense of
premiums, besides, is very tri- fling, that of bounties very great. The bounty upon corn alone
has sometimes cost the public, in one year, more than £300,000. Bounties are sometimes called
premiums, as drawbacks are sometimes 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 re- late 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 for- eign 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 so- ever they may at first
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 every
body more or less, but particularly the inferior ranks of 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 discour- ages the consumption so little, that the supply of the season is likely to fall
short of the consump- tion 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, enables him to judge, with more or less accuracy, how far they
really are supplied in this manner. With- out 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 inconveniencies which his crew can thereby suffer are inconsiderable, in
comparison of the danger, misery, and ruin, to which they might some- times be exposed by a
less provident conduct. Though, from excess of avarice, in the same man- ner, the inland corn
merchant should sometimes raise the price of his corn somewhat higher than the scarcity of the
season requires, yet all the inconveniencies 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 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. 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 monopolized by the forced 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 civilized 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 alto- gether impossible for them to enter into any general combination. If, in a year of
scarcity, there- fore, 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 im- mediately 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, ac- cording 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 af- flicted any part of Europe during either the course of the
present or that of the two preceding cen- turies, 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 inconveniencies of a
dearth. In an extensive corn country, between all the different parts of which there is a free
com- merce and communication, the scarcity occasioned by the most unfavourable seasons can
never be so great as to produce a famine; and the scantiest crop, if managed with frugality and
econ- omy, will maintain, through the year, the same number of people that are commonly fed
in a more affluent manner by one of moderate plenty. The seasons most unfavourable to the
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, ei- ther 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 com- pensated 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 government 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,
contributed, perhaps, to turn that dearth into a famine. When the government, in order to
remedy the inconveniencies of a dearth, orders all the dealers to sell their corn at what it
supposes a reasonable price, it either hinders them from bring- ing 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 preventive of the miseries of a famine, so it is  the best palliative
of the inconveniencies of a dearth; for the inconveniencies 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 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 maga- zines 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 28s. 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 extraordinary
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 sus- tains upon other occasions, both from the
perishable nature of the commodity itself, and from the frequent and unforeseen fluctuations of
its price, seems evident enough, from this single circum- stance, 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, meal-men, 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 of Edward VI cap. 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, suf- fer six months imprisonment, and forfeit double the value; and, for the third,
be set in the pillory, suffer imprisonment during the king's pleasure, and forfeit all his goods
and chattels. The an- cient 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 anni- hilate 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 mean- ing 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. necessary in order to
grant this licence. But even this restraint was afterwards thought insufficient, and, by a statute
of Elizabeth, 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 a 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, prohibited the manufacturer from exercising
the trade of a shop- keeper, 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 shop- keepers, 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 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 man- ufacturer on the
one part, so he must have had that of a shopkeeper upon the other. Let us sup-  pose, 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 val- ued
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 shop-keeping capital. Though he might appear, therefore, 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 his profit, he was a loser, and 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 ordi- nary 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 a 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 on 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. The dealer who can employ his whole stock in one single
branch of business, has an advan- tage of the same kind with the workman who can employ his
whole labour in one single oper- ation. 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 cheap- er, 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 busi- ness 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, 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,
en- deavoured to force this division in the employment of stock to go on faster than it might
other- wise have done. The law which obliged the farmer to exercise the trade of a corn
merchant, en- deavoured 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 he forced
or obstructed. The man who employs either his labour or his stock in a greater variety of ways
than his situation renders neces- sary, 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 legislature 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
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 ser- vants, 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 otherwise have done. This law, therefore, necessarily obstructed
the improvement of the land, and, instead of tending to ren- der corn cheaper, must have
tended to render it scarcer, and therefore dearer, than it would other- wise 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
manufacturer, 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 imme- diate consumers, or even to the retailers.
As the capital of the wholesale merchant, too, is gener- ally 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 en- abled to keep their whole capitals,
and even more than their whole capitals constantly employed in cultivation. In case of any of
those 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 universally, 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 di- verted; 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 inconveniencies of a dearth, but the best
preventive 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 subsequent statutes, which succes- sively permitted the engrossing of corn
when the price of wheat should not exceed 20s. and 24s. 32s. and 40s. the quarter. At last, by
the 15th 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 48s. the quarter, and that of other grain in proportion, was
declared lawful to all persons not being forestallers, that is, not sell- ing again in the same
market within three months. All the freedom which the trade of the inland corn dealer has ever
yet enjoyed was bestowed upon it by this statute. The statute of the twelfth of  the present king,
which repeals almost all the other ancient laws against engrossers and fore- stallers, 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. First, It
supposes, that when the price of wheat has risen so high as 48s. 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 48s. 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 immediately 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, bought 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, in- stead of hurting the great body of the people, he
renders them a most important service. By mak- ing them feel the inconveniencies 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 inconvenience of it as equally as possible, through
all the different months and weeks and days of the year. The inter- est 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 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 and forestalling may be compared to the popular terrors
and suspicions of witchcraft. The unfortunate 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 prosecutions 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 effec- tually to have put an end to those fears and suspicions, by taking away the great
cause which en- couraged and supported them. The law which would 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 fore- stalling. The 15th 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 lib- erty 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 impor- tation 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 hun-  dred 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 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, he 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 bene- ficial 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 main- taining. 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, therefore, 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 consequence of lowering the money price of corn,
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 something else, to give in exchange for corn. But in every 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 greatest and most important mar- ket for corn, and
thereby to encourage, instead of discouraging its growth. By the 22d of Charles II. c. 13, the
importation of wheat, whenever the price in the home mar- ket did not exceed 53s:4d. the
quarter, was subjected to a duty of 16s. the quarter; and to a duty of 8s. whenever the price did
not exceed £4. The former of these two prices has, for more than a cen- tury 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 has 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 prohi-  bition. 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. Before the 13th of the present king, the following were
the duties payable upon the importation of the different sorts of grain:  
Grain.                     Duties.          Duties       Duties. Beans to 28s. per qr.  19s:10d. after till 40s.
16s:8d. then 12d. Barley to 28s.   -     19s:10d.         -  32s. 16s.     -   12d. Malt is prohibited by
the annual malt-tax bill. Oats   to 16s.   -      5s:10d. after   -                    9½d. Pease   to 40s. 
-     16s: 0d. after   -                    9¾d. Rye     to 36s.  -     19s:10d. till 40s.       16s:8d   -  
12d. Wheat to 44s.    -     21s: 9d. till 53s:4d.    17s.     -    8s.                           till £4, and after
that about       1s:4d. Buck-wheat to 32s. per qr.     to pay 16s.  

These different duties were imposed, partly by the 22d of Charles II. in place of the old
sub- sidy, partly by the new subsidy, by the one-third and two-thirds subsidy, and by the
subsidy 1747. 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 impor- tation 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
establishment of the bounty, were dic- tated 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
wheat was either below 48s. 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 maybe
usually drawn, whether from home growth, or from for- eign 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 consumption 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 exportation limits the improvement and culti- vation of the
country to what the supply of its own inhabitants require. The freedom of expor- tation enables
it to extend cultivation for the supply of foreign nations. By the 12th of Charles II. c.4, the
exportation of corn was permitted whenever the price of wheat did not exceed 40s. the quarter,
and that of other grain in proportion. By the 15th of the same prince, this liberty was extended
till the price of wheat exceeded 48s. the quarter; and by the 22d, 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 the book of rates, that this poundage amounted only, upon wheat  to 1s., upon oats to
4d., and upon all other grain to 6d. the quarter. By the 1st of William and Mary, the act which
established this bounty, this small duty was virtually taken off whenever the price of wheat did
not exceed 48s. the quarter; and by the 11th and 12th of William III. c. 20, it  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 engrossed at any price for exportation; but it could not be
engrossed for inland sale, ex- cept when the price did not exceed 48s. 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 encouraging agriculture, to
raise the money price of corn as high as pos- sible, 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 48s. 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 expor- tation 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 dif- ferent states into which a great continent was divided, would so
far resemble the different prov- inces of a great empire. As among the different provinces of a
great empire, the freedom of the in- land trade appears, both from reason and experience, not
only the best palliative of a dearth, but the most effectual preventive of a famine; so would the
freedom of the exportation and impor- tation 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 everywhere more or less restrained, and
in many countries is confined by such absurd regula- tions, 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, dan- gerous 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  or corn
that was likely to be exported. In a Swiss canton, or in some of the little states in 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
pub- lic utility, to a sort of reasons of state; an act or legislative authority which ought to be
exercised only, which can be pardoned only, in cases of the most urgent necessity. The price at
which expor- tation 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 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 ac- count, perhaps, that we so seldom find a reasonable system
established 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 ex- pense 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 must thus con- tribute 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. 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 prosperity of Great Britain, which has been so often
ascribed to those laws, may very easily be ac- counted for by other causes. That security which
the laws in Great Britain give to every man, that he 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 established. The nat- ural effort of every individual to better his
own condition, when suffered to exert itself with free- dom and security, is so powerful a
principle, that it is alone, and without any assistance, not only capable of carrying on the
society to wealth and prosperity, but of surmounting a hundred imper- tinent obstructions, with
which the folly of human laws too often encumbers its operations: though the effect of those
obstructions is always, more or less, either to encroach upon its free- dom, 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 na- tional 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 ten- dency with the practice of Spain and Portugal, 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 Eu- rope, while Spain and Portugal are perhaps amongst the most beggarly.
This difference of situ- ation, however, 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 reduc- ing 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
counterbalanced by the general liberty and security of the peo- ple. Industry is there neither
free nor secure; and the civil and ecclesiastical governments of both Spain and Portugal are
such as would alone be sufficient to perpetuate their present state of poverty, even though their
regulations of commerce were as wise as the greatest part of them are absurd and foolish. The
13th of the present king, 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 consumption are taken off,
so soon as the price of middling wheat rises to 48s. the quarter; that of middling rye, pease,
or beans, to 32s.; that of barley to 24s.; and that of oats to 16s.; and instead of them, a small
duty is imposed of only 6d upon the quarter of wheat, and upon that or other grain in
proportion. With regard to all those different sorts of grain, but particularly with regard to
wheat, the home market is thus opened to foreign supplies, at prices considerably lower than
before. By the same statute, the old bounty of 5s. upon the exportation of wheat, ceases so soon
as the price rises to 44s. the quarter, instead of 48s. the price at which it ceased before; that of
2s:6d. upon the exportation of barley, ceases so soon as the price rises to 22s. instead of 24s.
the price at which it ceased before; that of 2s:6d. upon the exportation of oatmeal, ceases so
soon as the price rises to 14s. instead of 15s. the price at which it ceased before. The bounty
upon rye is reduced from 3s:6d. to 3s. and it ceases so soon as the price rises to 28s. instead of
32s. the price at which it ceased before. If bounties are as improper as I have endeavoured to
prove them to be, the soon- er 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 mean time 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 dif- ferent
ports of Great Britain. They are, however, the principal ones; and there may not, perhaps, 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 2s. 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 expor- tation 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. Those 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 withdrawn.
The bounty ought certainly either to have been with- drawn 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 imper- fections, 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
interest, prejudices, and temper of the times, would admit of. It may perhaps in due time
prepare the way for a better. 

CHAPTER VI. OF TREATIES OF COMMERCE.  When a nation binds itself by treaty, either

to permit the entry of certain goods from one for- eign 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
commerce 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 advantageous for their
goods: more extensive, because the goods of other nations being either excluded or sub- jected
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. Such
treaties, however, though they may be advantageous to the merchants and manufac- turers of
the favoured, are necessarily disadvantageous to those of the favouring country. A monopoly is
thus granted against them to a foreign nation; and they must frequently buy the for-  eign goods
they have occasion for, dearer than if the free competition of other nations was admit-  ted. That
part of its own produce with which such a nation purchases foreign goods, must conse- quently
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 probably 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
favouring country, therefore, may still gain by the trade, though less than if there was a free
competition. Some treaties of commerce, however, have been supposed advantageous, upon
principles very different from these; and a commercial country 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 com- merce between England and Portugal, concluded in 1703 by Mr Methuen,
has been so much com- mended. The following is a literal translation of that treaty, which
consists of three articles only. ART. I. His sacred royal majesty of Portugal promises, both in
his own name and that of his successors, to admit for ever hereafter, into Portugal, the woollen
cloths, and the rest of the woollen manufactures of the British, as was accustomed, till they
were prohibited by the law; nevertheless upon this condition: ART. II. That is to say, that her
sacred royal majesty of Great Britain shall, in her own name, and that of her successors, be
obliged, for ever hereafter, to admit the wines of the growth of Por- tugal into Britain; so that
at no time, whether there shall be peace or war between the kingdoms of Britain and France,
any thing 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 man- ner be attempted and prejudiced, it shall be just and lawful for his sacred royal
majesty of Por- tugal, 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 rat- ification 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, be- comes 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 commercial policy of England. Por- tugal 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 al-  lowed to lie idle
and locked up in coffers; and as it can find no advantageous market at home, it  must,
notwithstanding; any prohibition, be sent abroad, and exchanged for something 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 Barretti was informed, that the weekly packet-boat from Lisbon
brings, one week with another, more than £50,000 in gold to England. The sum had probably
been exag- gerated. It would amount to more than £2,600,000 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 privi- leges which had been granted them, not by treaty, but by the
free grace of that crown, at the solici- tation, 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 amount- ed to a still greater sum than Mr Barretti seems to imagine; this trade would
not, upon that ac- count, 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 an- nual 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 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 ether. If a smaller
share of its industry, therefore, had been employed in producing goods fit for the Portugal
market, and a greater in producing those lit 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 additional
quantity of industry, and in raising a greater annual produce. Though Britain were entirely
excluded from the Portugal trade, it could find very little diffi- culty in procuring all the annual
supplies 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 Portugal, 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 as, or not much in our favour. But we should remember, that the more gold we
im- port 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 im- ported from all others. The more gold, besides, that is annually imported from
some particular countries, over and above what is requisite for plate and for coin, the more
must necessarily be ex- ported to some others: and the more that most insignificant object of
modern policy, the balance of trade, 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 provocation,
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
submitted to those ignominious terms which his brother-in-law the king of Spain pro- posed 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 defended 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 inconve- niency which England could have suffered from this notable piece of
commercial policy. 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 instru- ments 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 back- ward and forward from one place to another than almost any
other sort of merchandize, and they lose less of their value by being so transported. Of all the
commodities, therefore, 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 dif- ferent 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 upwards of
£800,000 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 requires only
the trou- ble of going to the mint, and the delay, perhaps, of a few weeks, to procure for any
quantity of un- coined 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 pur- chase very little more than a pound weight of uncoined gold;
forty-four guineas and a-half, want- ing a part of their weight, could not purchase a pound
weight, and something was to be 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 £46:14:6,
was then about £47:14s., 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 con- founded 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 £46:14:6. If thrown into the melting pot, however, they
produced, without any sensible loss, a pound weight of stan- dard gold, which could be sold at
any time for between £47:14s. and £48, either in gold or silver, as fit for all the purposes of
coin as that which had been melted down. There was an evident profit, therefore, in melting
down new-coined money; and it was done so instantaneously, that no pre- caution 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 uncoined. 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 govern- ment money. In France, however,
though the seignorage is eight per cent., no sensible inconve- niency of this kind is found to
arise from it. The dangers to which a false coiner is everywhere ex- posed, if he lives in the
country of which he counterfeits the coin, and to which his agents or correspondents are
exposed, if he lives in 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 quan- tity 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. {See Dictionnaire
des Monnoies, tom. ii. article Seigneurage, p. 439, par 81. Abbot de Bazinghen, Conseiller-
Commissaire en la Cour des Mon- noies à Paris.} 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 de- niers. 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 between six hundred and seventy-one livres ten deniers and seven
hundred and twenty livres, or by forty-eight livres nineteen sous and two de- niers. 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 melting
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, in- stead of two per cent. Wherever money is received by tale, therefore,
and not by weight, a seignor- age is the most effectual preventive of the melting down of the
coin, and, for the same reason, of its exportation. It is the best and heaviest pieces that are
commonly either melted down or ex- ported, 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 prolon- gations, 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 govern- ment than at their own. It was probably out of complaisance to this
great company, that the gov- ernment 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 recoinage this great company may, perhaps, find that they have, upon this, as upon
some other occasions, mistaken their own inter- est not a little. Before the late recoinage, when
the gold currency of England was two per cent. below its stan- dard 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. 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 stan- dard weight, as it has done very nearly since the late recoinage,
whatever the bank might lose by the seignorage, they would gain upon the price of the bullion;
and whatever 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 ex- actly 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 com- modity, 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
coining, though every body advances the tax, nobody finally pays it; because every body 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, r 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 public generosity. 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 recoinage, the gain, or
more properly the savings, of the bank, inconsequence of the imposition of a
seignorage, would probably be very considerable. The bank of England is the only company
which sends any considerable 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 £850,000. 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 los- ing 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 £21,250 pounds, would not
probably have incurred the tenth part of that loss. The revenue allotted by parliament for
defraying the expense of 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 gov- ernment. But the
saving of eighteen or twenty thousand 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 encour- agement of coinage derives its origin from those vulgar prejudices
which have been introduced by the mercantile 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 anyone of
them multiplied beyond what that territory could easily main- tain, 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 bar- barous and uncivilized
nations; those of the Ionians and Aeolians, the two other great tribes of the Greeks, to Asia
Minor and the islands of the Aegean sea, of which the inhabitants sewn 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
con- sent of the mother city. Nothing can be more plain and distinct than the interest which
directed every such establishment. Rome, like most of the other ancient republics, was
originally founded upon an agrarian law, which divided the public territory, in a certain
proportion, among the different citizens who com- posed the state. The course of human
affairs, by marriage, by succession, and by alienation, necessarily deranged this original
division, and frequently threw the lands which had been allot- ted 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 350 English acres. This law, however, though we read of
its having been executed upon one or two occasions, was either ne- glected or evaded, and the
inequality of fortunes went on continually increasing. The greater part of the citizens had no
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 coun- try labourer, or
as an artificer. But among the ancient Romans, the lands of the rich were all culti-  vated 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
manufac- tures, 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 divisions of lands, and represented that law which
restricted this sort of private prop- erty 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 proposed to send out a new colony. But conquering Rome was, even upon such
occasions, under no necessity of turning out her citi- zens to seek their fortune, if one may 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, which in the original languages denote those different
estab- lishments, have very different meanings. The Latin word (colonia) signifies simply a
plantation. The Greek word (apoixia), 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 dis- tinct. 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 alto- gether so clear and evident. It was not understood
at their first establishment, and was not the motive, either of that establishment, or of the
discoveries which gave occasion to it; and the na- ture, 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 na- tions 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 connexion as gave the Venetians al- most a monopoly of the trade. The great
profits of the Venetians tempted the avidity of the Portuguese. They had been en- deavouring,
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 Gamo sailed from the port of Lisbon with a
fleet of four ships, and, after a navigation of eleven months, arrived upon the coast of Indostan;
and thus com- pleted a course of discoveries which had been pursued with great 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 in- crease somewhat
more the marvellous of their own 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
expedition of Vasco de Gamo set out from Portugal; and, after a voyage of between two and
three months, dis- covered first some of the small Bahama or Lucyan islands, and afterwards
the great island of St. Domingo. But the countries which Columbus discovered, either in this or
in any of his subsequent voy- ages, had no resemblance to those which he had gone in quest of.
Instead of the wealth, culti- vation, and populousness of China and Indostan, 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
resemblance, such as that which he found between the name of Cibao, a mountain in St.
Domingo, and that of Cipange, 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 had discovered the Indies.
He entertained no doubt but that they were the extremity of those which had been described by
Marco Polo, and that they were not very distant from the Ganges, 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 to- wards 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 alto- gether 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 Mr Buffon 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 abun- dant, was not altogether so scanty. It consisted in Indian
corn, yams, potatoes, bananas, etc., plants which were then altogether unknown in Europe, and
which have never since been very much esteemed in it, or supposed to yield a sustenance 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 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 representation of them, Columbus turned his
view towards their minerals; and in the richness of their productions of this third kingdom, he
flattered himself he had found a full compensation for 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 fre- quently found in the rivulets and torrents which fell from the
mountains, were sufficient to sat- isfy 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 intro- duced 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 the countries of which the inhabitants were plainly incapable of defending
them- selves. 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, that
the half of all the gold and silver that should be found there, should belong to the crown. This
pro- posal was approved of by the council. As long as the whole, or the 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 stript 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 exac- tion of it, accordingly, first
occasioned, it is said, the total abandoning of the mines of St. Domin- go, 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 adventurers do not appear to have been much
interested about silver. Nothing less precious than gold seemed worthy of their atten- tion. All
the other enterprizes of the Spaniards in the New World, subsequent to those of Colum- bus,
seem to have been prompted by the same motive. It was the sacred thirst of gold that
carried Ovieda, Nicuessa, and Vasco Nugnes de Balboa, to the Isthmus of Darien; that carried
Cortes to Mexico, Almagro and Pizarro to Chili and Peru. When those adventurers arrived
upon any un- known 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 disadvantageous 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 very rich man. Projects of mining, instead of replacing the capital employed
in them, together with the ordinary profits of stock, commonly ab- sorb both capital and profit.
They are the projects, therefore, to which, of all others, a prudent law- giver, who desired to
increase the capital of his nation, would least choose to give any extraor- dinary
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 concerning such projects has al- ways 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
surrounded those small quantities, and consequently from the labour and expense which are
everywhere necessary in order to penetrate, and get at them. They flattered themselves that
veins of those 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 Waiter Raleigh,
concerning the golden city and country of El Dorado, may satisfy us, that even wise men  are
not always exempt from such strange delusions. More than a hundred years after the death
of that great man, the Jesuit Gumila was still convinced of the reality of that wonderful
country, and expressed, with great warmth, and, I dare say, with great sincerity, how happy he
should be to carry the light of the gospel to a people who could so well reward the pious
labours of their mis- sionary. In the countries first discovered by the Spaniards, no gold and
silver mines are at present known which are supposed to be worth the working. The quantities
of those metals which the first adventurers 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 El Dorado. Fortune, too, did upon this what she has done upon very few
other occasions. She realized in some measure the extravagant hopes of her votaries; and in the
discovery and conquest of Mexico and Peru (of which the one happened about thirty, and 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 occasion 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 conquest was a
project of gold and silver mines; and a course of accidents which no human wisdom could
foresee, rendered this project much more successful than the undertakers had any reasonable
grounds for expecting. 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 dia- mond 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 America,
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 of Sir Waiter Raleigh, to the London and
Plymouth companies, to the council of Ply- mouth, etc. this fifth was accordingly reserved to
the crown. To the expectation of finding gold and silver mines, those first settlers, too, joined
that of discovering 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
civilized 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 colonies 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 bar- barous nations. They carry out with them,
too, the habit of subordination, some notion of the reg- ular government which takes place in
their own country, 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 government have been so far established as is
necessary for their protection. 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 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 producing. He is eager, therefore, to collect labourers from all quarters, 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 overpays their maintenance. When arrived at maturity, the
high price of labour, and the low price of land, enable them to establish themselves in the same
manner as their fa- thers did before them. In other countries, rent and profit eat up wages, and
the two superior orders of people op- press 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 in- crease of revenue which the
proprietor, who is always the undertaker, expects from their improve- ment, 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 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 popu- lation and improvement, encourages that of real wealth and
greatness. The progress of many of the ancient Greek colonies towards wealth and greatness
seems ac- cordingly 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 na- tions, 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 considerable states. But the progress of no one of them seems
ever to have been very rapid. They were all established in conquered provinces, which in most
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. In the plenty of good land, the European colonies established in America and the West
Indies resemble, and even greatly surpass, those of ancient Greece. In their dependency upon
the moth- er 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, be- cause 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
establishment. It was a revenue, too, of a nature to excite in human avidity the most
extravagant expectation 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 mea-  sure 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 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. Gemel i Carreri, a
pretended traveller, it is said, indeed, but who seems everywhere to have written upon extreme
good infor- mation, represents the city of 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 lama 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 com- merce was carried on by barter. A
sort of wooden spade was their principal instrument of agri- culture. Sharp stones served them
for knives and hatchets to cut with; fish bones, and the hard sinews of certain animals, served
them with 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 present, 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, have been introduced among them. But the populousness 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 at- tacked by the Dutch, who got possession of seven of the fourteen provinces into
which it is di- vided. They expected soon to conquer the other seven, when Portugal recovered
its independency by the elevation of the family 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 Por- tuguese colonists, who, instead of amusing themselves with
complaints, 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 hun- dred 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 people 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 fleet 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, 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. 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 purchasing the surplus produce of
the colonies, 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 Den- mark 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 peo- pled 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 probably 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 to trade to Surinam, upon paying two and a-
half per cent. upon the value of their cargo for a license; 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 exclusive privileges of the company, is probably the principal cause of that
degree of prosperity which that colony at present enjoys. Curacoa 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
government of an exclusive company. Under so unfavourable an admi- nistration, 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 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 inconsiderable than it really was. The French colony of St. Domingo was
established by pirates and freebooters, who, for a long time, neither required the protection, 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 im- provement of this colony increased very
fast. Even the oppression of the exclusive company, to which it was for some time subjected
with all the other colonies of France, though it no doubt re- tarded, 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. 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 insti- tutions of the English colonies have been more favourable
to the improvement and cultivation of this land, than those of the other three nations. First, The
engrossing of uncultivated land, though it has by no means been prevented alto- gether, 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 grantable 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 primogeniture takes place, as in the
law of England: But in all the English colonies, the tenure of the lands, which are all held by
free soccage, facilitates alienation; and the grantee of an 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, 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 uncul- tivated 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 cheap-  ness. The
engrossing of uncultivated land, besides, is the greatest obstruction 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 the rent of the land too upon which it  is
employed. The labour of the English colonies, 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 to- wards 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 any thing towards the defence of the mother
country, or towards the support of its civil government. They them- selves, 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 ex-  pense of
civil government. The expense of their own civil government has always been very mod- erate.
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,
before the commencement of the present disturbances, used to be but about £18;000 a-year;
that of New Hampshire and Rhode Island, £3500 each; that of Connecticut, £4000; that of New
York and Pennsylvania, £4500 each; that of New Jersey, £1200; that of Virginia and South
Carolina, £8000 each. The civil establishments of Nova Scotia and Georgia are partly
supported by an annual grant of parliament; but Nova Scotia pays, besides, about £7000 a-year
towards the public expenses of the colony, and Georgia about £2500 a-year. All the different
civil establishments in North Amer- ica, 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 about £64,700 a-year; an ever memorable example, at
how small an expense three millions of peo- ple may not only be governed but well governed.
The most important part of the expense of gov- ernment, 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 gov- ernor, upon the opening of a new
assembly, etc. though sufficiently 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 numer- ous, 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 govern- ment of
all these three nations is conducted upon a much more extensive plan, and is accom- panied
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 those 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 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 op- pressed with a numerous race of mendicant friars, whose beggary being
not only 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
con- sumption, the English colonies have been more favoured, and have been allowed a more
exten- sive market, than those of any other European nation. Every European nation has
endeavoured, more or less, to monopolize 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 im- porting 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 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 Hol- land, 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, Pernambucco, and Marannon. Other nations, without
establishing an exclusive company, have confined the whole com- merce of their colonies to a
particular port of the mother country, from whence no ship was al- lowed to sail, but either in a
fleet and at a particular season, or, if single, in consequence of a par- ticular license, 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 enor- mous in the Spanish West Indies. At Quito, we are told by Ulloa, a
pound of iron sold for about 4s:6d., and a pound of steel for about 6s:9d. sterling. But it is
chiefly in order to purchase Euro- pean 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
Pernambucco and Marannon; 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 country, and who have occasion for no other license than the
common despatches of the custom-house. In this case the number and dispersed situ- ation of
the different traders renders it impossible for them to enter into any general combi- nation, and
their competition is sufficient to hinder them from making very exorbitant profits. Under so
liberal a policy, the colonies are 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 were 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 past of the
colonies of either of those nations. In the exportation of their own surplus produce, too, it is
only with regard to certain com- modities that the colonies of Great Britain are confined to the
market of the mother country. These commodities having been enumerated in the act of
navigation, and in some other subse- quent 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 subsis- tence for a continually increasing population. 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 con- sumption of the inhabitants, and are often, upon that
account, of little or no value. But it is neces- sary, it has already been shown, that the price of
cattle should bear a certain proportion to that of corn, before the greater part of the lands of any
country can be improved. By allowing to Amer- ican 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 ef- fects of this liberty, however,
must be somewhat diminished by the 4th of Geo. 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
disturbances, 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 only be exported
to Great Britain; but in 1751, 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
sugar produced in the British plantations. Their consumption increases so fast, that, though in
consequence of the increasing improvement of Jamaica, as well as 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. 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 impor- tation into Great Britain of all grain, except rice, and of all
salt provisions, has, in the ordinary state of the law, been prohibited. The non-enumerated
commodities could originally be exported to all parts of the world. Lum- ber 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 restric- tion. The
parts of Europe which lie south of Cape Finisterre are not manufacturing countries, and we are
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,
whalefins, raw silk, cotton, wool, beaver, and other peltry of America, indigo, fustick, 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 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 man- aged 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 somewhat dearer than the former, and  yet a
good deal cheaper than the latter. By confining such commodities to the home market,
there- fore, it was proposed to discourage the produce, not of Great Britain, but of some
foreign coun- tries 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 obsta- cle 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 ren- der 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 enumerated commodities, yet as, when imported from America, they are exempted
from considerable duties to which they are sub- ject when imported front any other country,
the one part of the regulation contributes more to en- courage the erection of furnaces in
America than the other to discourage it. There is no manu- facture which 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 there- by to facilitate the clearing of the land, was neither, perhaps,
intended nor understood by the legislature. 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 chuse to reserve to themselves, and have
prevailed upon the legislature to prevent their establishment in the colonies, sometimes by high
duties, and sometimes by absolute prohibitions. While, for example, Muscovado sugars from
the British plantations pay, upon importation, only 6s:4d. the hundred weight, white sugars pay
£1:1:1; and refined, either double or single, in loaves, £4:2:5 8/20ths. When those high duties
were imposed, Great Britain was the sole, and 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 for- eign 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 themselves. While Grenada was in the hands of
the French, there was a refinery of sugar, by claying, at least upon almost every plan- tation.
Since it fell into those of the English, almost all works of this kind have been given up;
and there are at present (October 1773), 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 manufacturing of pig and bar iron, by ex- empting 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 colonies to work in those more refined
manufactures, 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
commodi- ties 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 advan- tageous to themselves, is a manifest violation
of the most sacred rights of mankind. Unjust, how- ever, 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 estab- lishing such manufactures, yet, in
their present state of improvement, a regard to their own inter- est would probably have
prevented them from doing so. In their present state of improvement, those prohibitions,
perhaps, without cramping their industry, or restraining it from any employ- ment to which it
would have 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 most important produc- tions of the colonies, so, in compensation, she gives to some of
them an advantage in that market, sometimes by imposing higher duties upon the like
productions when imported from other coun- tries, and sometimes by giving bounties upon
their importation from the colonies. In the first way, she gives an advantage in the home
market to the sugar, tobacco, and iron of her own colonies; and, in the second, to 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
liber- ally 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
mercantile system. Our colonies, however, are by no means independent foreign countries; and
Great Britain having assumed to herself the exclusive 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 re- ceive such goods loaded with all the same duties which they paid in the mother
country. But, on the contrary, till 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. III. 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
a great 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 allowing 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 interest 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 manufactures, by
being undersold in the colony market, in conse- quence 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 Amer- ican colonies. But though the
policy of Great Britain, with regard to the trade of her colonies, has been dic- tated 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 every thing except their foreign trade, the liberty of
the English colonists to manage their own affairs their own way, is complete. 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 author- ity of this assembly overawes the executive
power; and neither the meanest nor the most obnox- ious colonist, as long as he obeys the law,
has any thing 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 peo- ple, 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 support which it receives from the mother country, is not under the
necessity of doing so, they are, perhaps, in general more influenced by the incli- nations of
their constituents. The councils, which, in the colony legislatures, correspond to the house of
lords in Great Britain, are not composed of a 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 representatives of the people. In none of the English colonies is there any
hered- itary 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 re- spected, and he has no privileges by which he can be troublesome to his neighbours.
Before the commencement of the present disturbances, the 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 the revenue officers, who collected the
taxes imposed by those respective assemblies, to whom those officers were immediately
responsible. There is more equal- ity, therefore, among the English colonists than among the
inhabitants of the mother country. Their manners are more re publican; 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 governments, 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 inhab- itants of so very distant a province. The administration
of the French colonies, however, has al- ways been conducted with much 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 Eng- lish 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 Eng- land
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 discouraged, like those of
England, from refining their own sugar; and what is still of 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
con- stitution of those who have been born in the temperate climate of Europe could not, it is
sup- posed, support 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
opin- ion 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 management 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 ever 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 dares 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 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 be- long
to a slave, who is treated as slaves commonly are in countries where the master is
perfectly free and secure. 

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 Vidius Pollio, 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 fish-pond, in
order to feed his fishes, the emperor commanded him, with indignation, to emancipate
immediately, not only that slave, but all the others that belonged to him. Under 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 ac- cumulated by good management, and employed in raising a still greater
produce. 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 these 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 remarked in nothing so much
as in the good management of their slaves. Such have been the general outlines of the policy of
the different European nations with re- gard 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 presided 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 in- jured the
people of Europe, had received the first adventurers with every mark of kindness
and hospitality. The adventurers, indeed, who formed some of the latter establishments, joined
to the chimerical project of finding gold and silver mines, 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
injustice, established that of Maryland; the quakers, that of Pennsylvania. The Portuguese
Jews, persecuted by the inquisition, stript 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 dif- ferent occasions, it was not the wisdom and policy, but the disorder and
injustice of the European governments, which peopled and cultivated America. In effectuation
some of the most important of these establishments, the different govern- ments 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 every thing 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 settlements and con- quests
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
important 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, consequently, rather to damp and
discourage, than to quicken and forward the course of their prosperity. In the different ways in
which this monop- oly 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 enterprizing founders; and some of the greatest and most
important of them, so far as concerns their internal government, owe to it scarce anything else. 
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 colonization of America? Those
advantages may be divided, first, into the general advantages which Europe, consid- ered as
one great country, has derived from those great events; and, secondly, into the
particular advantages which each colonizing country has derived from the colonies which
particularly be- long 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 colonization of America, consist, first, in the increase of its
enjoyments; and, sec- ondly, 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 conveniency and
use, some for pleasure, and some for ornament; and thereby contributes to in- crease their
enjoyments. The discovery and colonization of America, it will readily be allowed, have
contributed to aug- ment 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 Flan- ders, and some provinces of Germany, which, through the medium of the
countries before men- tioned, send to it a considerable quantity of linen and other goods. All
such countries have evi- dently 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, 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 Hun- gary 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
ei- ther the produce of the industry of Hungary and Poland, or with something which had been
pur- chased with some part of that produce. Those commodities of America are new values,
new equivalents, introduced into Hungary and Poland, to be exchanged there for the surplus
produce of these 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 re- ceived any from it. Even such countries may have
received a greater abundance of other com- modities 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 at least to keep down below what they would
otherwise rise to, both the enjoyments and industry of all those nations in gen- eral, 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 countries dearer in the
colonies, it cramps in the same manner the industry of all other colonies, and both the
enjoyments and the industry of the colonies. It is a clog which, for the supposed benefit of
some particular countries, embarrasses the pleasures and encumbers 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 par- ticular 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 pro- duce of the colonies, however, is the
original source of all that increase of enjoyments and indus- try which Europe derives from the
discovery and colonization 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 colonizing country derives from the colonies which particularly belong to it, are of
two different kinds; first, those common advantages which every empire derives from the
provinces subject to its dominion; and, secondly, those peculiar advan- tages which are
supposed to result from provinces 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 domin- ion consist, first, in the military force which they furnish for its defence; and,
secondly, in the rev- enue which they furnish for the support of its civil government. The
Roman colonies furnished occasionally both the one and the other. The Greek colonies
sometimes furnished a military force, but seldom 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. The 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
considerable distraction of the military force of those countries. In this respect, therefore, all
the European colonies have, without exception, 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 particular, have seldom been equal to the expense laid out upon them in
time of peace, and never sufficient to defray that which they occasioned 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 countries, consist
altogether in those peculiar advantages which are supposed to result from provinces of so very
peculiar a na- ture 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 country, and must contribute more to increase the
enjoyments of England than those of any other country. It must likewise contribute 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 manufac- tures 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 of that sugar and to- bacco. 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 colonies, 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 pos- sess it, so it gives an evident
advantage to the countries which do possess it over those other coun- tries. 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 a free trade. The tobacco of Maryland and
Virginia, for example, by means of the monopoly which Eng- land 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 European 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
in- creased as to reduce the profits of a tobacco plantation 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 other countries, might have
purchased in Mary- land 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 probably, in the case of a free
trade, have produced both these effects in somewhat a greater degree than it can do at present.
England, 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 want- ed 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 produce of the colonies, was now all that was employed to buy the whole.
But it could not buy the whole at any thing near the old price; and therefore, whatever it did
buy, it necessarily bought very cheap. But in an em- ployment 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 revulsion 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 low- ered the
profits of the one, so it must have 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
be- fore. 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 produced by it ever
since. First, This monopoly has been continually drawing capital from all other trades, to be
em- ployed 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 or the colonies. But the foreign trade of every country naturally increases in
proportion to its wealth, its surplus pro- duce in proportion to its whole produce; 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 before been em- ployed 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 neighbouring market of Europe, or to the more
distant one of the countries 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, have been sought for in the excess and improper mode of taxation, in the high price of
labour, in the increase of luxury, etc. may all be found in the overgrowth of the colony trade.
The mercantile cap- ital of Great Britain, though very great, 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 branch- es 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 corn 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, per- haps 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 were 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. 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 en- acted 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 how. The island of Ja- maica 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 improve- ment. 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 Eu- rope, 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 propor- tion 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
contin- uance of that state, have raised the ordinary rate of British profit higher than it
otherwise would have been, both in that and in all the other branches of British trade. If, since
the establishment 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
mer- chants 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 mar- kets, 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 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
in- sufficiency 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 estab-  lished 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 capi- tals, 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 evi- dently 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 employ- ment, 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 an- nual 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 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 employment 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 that 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
consump- tion 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 Amer- ica and the West Indies; from which the returns are necessarily 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
understocked. 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, therefore, always in debt. The most common way in which the colonies contract this
debt, is not by borrowing upon bond of the rich people of the mother country, though they
sometimes do this too, but by running as much in arrear to their correspondents, who supply
them with goods from Europe, as those correspondents will allow them. Their annual returns
frequently do not amount to more than a third, and sometimes not to so great a proportion of
what they owe. The whole capital, therefore, which their correspondents 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 returned to Great Britain only
once in five years, can keep in constant 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 con-  stant
employment the quantity only which two hundred pounds can maintain for a year. The planter,
no doubt, by the high price which he pays 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 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 everybody 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 cap- ital of Great Britain from a direct foreign trade of
consumption, into a round-about one. Among the enumerated 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 upwards of ninety-six thou- sand hogsheads of tobacco, and the
consumption of Great Britain is said not to exceed fourteen thousand. Upwards of eighty-two
thousand hogsheads, therefore, must be exported to other coun- tries, 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 consumption; 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
correspondents to whom they export them tobacco. At the port of London, indeed, it is
commonly sold for ready money: the rule is Weigh and pay. At the port of London, therefore,
the 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 to- bacco, very little more of it would probably have come to
us than what was necessary for the home consumption. The goods which Great Britain
purchases 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 inconstant 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 manufactures, 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
re- duce the rate of profit in them all, and thereby to give to Great Britain, in all of them, a
superiority 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 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 invasion. 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 en- tire stop to their trade; the greater
part of our master manufacturers, the entire ruin of their busi- ness; and the greater part of our
workmen, an end of their employment. A rupture with any of our neighbours 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 stopt in some of the smaller vessels,  easily
disgorges itself into the greater, without occasioning any dangerous disorder; but, when it is
stopt in any of the greater vessels, convulsions, apoplexy, or death, are the immediate and
un- avoidable 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 any unnatural height, finds some small stop or interruption in its employment, it
frequently occa- sions a mutiny and disorder alarming to government, and embarrassing even
to the deliberations of the legislature. How great, therefore, 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 manufacturers? 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
branch- es of it to that natural, healthful, and proper proportion, which perfect liberty
necessarily estab- lishes, and which perfect liberty can alone preserve. To open the colony
trade all at once to all na- tions, might not only occasion some transitory inconveniency, 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 mercantile 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 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. Five different events, unforeseen and unthought of, have very fortunately concurred
to hin- der Great Britain from feeling, so sensibly as it was generally expected she would, the
total exclu- sion which has now taken place for more than a year (from the first of December
1774) from a very important branch of the colony trade, that of the twelve associated provinces
of North Amer- ica. 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 extra ordinary demand 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 manufactures 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 sup- plied; 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 consequential pacification of Poland, by opening the market
of that great country, have, this year, added an ex- traordinary demand from thence to the
increasing demand of the north. These events are all, ex- cept 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 mean time, 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. 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. It 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 suit- ing, 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 precarious 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 mar- kets 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 em- ployment. The new
market, without drawing any thing from the old one, would create, if one may say so, a new
produce for its own supply; and that new produce would constitute a new capital for carrying
on the new employment, which, in the same manner, would draw nothing from the
old one. The monopoly of the colony trade, on the contrary, by excluding the competition of
other na- tions, 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 otherwise 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 natu- rally 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, conse- quently, from
maintaining 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 altogether, 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 por- tion of the old market and
of the old employment which is lost by the monopoly. The new pro- duce 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 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 surplus 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
en- couraging the manufactures of Europe, that the colony trade indirectly encourages 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, aggravated by other causes, have, per- haps, 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 expor- tation, and the narrowing of
the home market, by still more improper taxes upon the trans- portation 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 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, per- haps, is of still greater
importance, the unbounded liberty of transporting them from one part of our own country to
any other, without being obliged to give any account to any public office, with-  out 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. The monopoly
hinders the capital of that country, whatever may, at any particular time, be the extent of that
capital, from maintaining 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
monop- oly, 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 main- taining 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 necessarily have rendered, at all times, less
abundant than it other- wise 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 af- fords a greater profit than what can be
drawn from an equal capital in any mercantile employ- ment, the improvement 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, there- fore, raises the rate of
mercantile 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 neces- sarily retards the
natural increase of another great original source of revenue, the rent of land. By raising the rate
of profit, too, the monopoly necessarily 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 land- lord 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. 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 de- rive from the profits of stock; a small profit upon a great capital generally
affording a greater rev- enue 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 abundant than they otherwise would be. To promote the little
interest of one little order of men in one country, it hurts the interest of all other orders of  men
in that country, and of all the men in all other countries. It is solely by raising the ordinary rate
of profit, that the monopoly either has proved, or could prove, advantageous to any one
particular order of men. But besides all the bad effects to the country in general, which have
already been mentioned as necessarily resulting from a higher 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 mer- chant. 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 neces-  sarily
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 attentive and parsimonious, the workman is very likely to be
so too; but if the master is dissolute and disorderly, the servant, who shapes his work
accord- ing 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 pro- ductive labour, receive no augmentation from the revenue of those who ought naturally
to aug- ment them the most. The capital of the country, instead of increasing, gradually
dwindles away, and the quantity of productive 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 Por- tugal? Have they alleviated 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 insuf- ficient 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 Amsterdam,
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 Lis- bon; but neither are they in
general such attetitive and parsimonious burghers as those of Ams- terdam. They are supposed,
however, many of them, to be a good deal richer than the greater part of the former, and not
quire 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 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 main- tain 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 forward to embrace your proposal. But
should any other person buy you such an estate, the shopkeeper will 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 purchase, 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 dis- covery, reconnoitered 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 peo- ple, that the shopkeepers and other traders of
England wished to secure to themselves the monop- oly 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 par- liament, that the cultivators of
America might for the future be confined 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 conve- nient 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, there- fore, they
were willing that the colonists 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 pro- posal
into a law. The maintenance of this monopoly has hitherto been the principal, or more
properly, per- haps, 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 de- fence 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 establishment of the colonies amount- ed, 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 the smuggling vessels of other nations, the immense coast of North Amer- ica, 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 their considering her colonies as provinces subject to her dominion, Great
Britain has, upon different occasions, laid out upon their defence. We must add to it,
in particular, 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 might have been laid out, whether in Germany or the East Indies,
ought justly to be stat- ed to the account of the colonies. It amounted to more than ninety
millions sterling, 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 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. This whole expense is, in reality, a bounty which has been given
in order to support a monopoly. The pretended 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 merchants 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 prov- ince, 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. 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 consequence, 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 acquiring wealth and distinction,
which the possession of the most turbulent, and, to the great body of the people, the most
unprofitable province, seldom fails to afford. The most visionary enthusiasts 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 mer- chants, 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, would quickly
revive. It might dispose them not only to respect, for whole cen- turies 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 side, 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. In order to
render any province advantageous to the empire to which it belongs, it ought to af- ford, 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 ex- pense 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 proportion
to the extraordinary revenue of the whole empire, which 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, in- stead 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 never be
so managed as to levy upon their constituents a pub- lic revenue, sufficient, not only to
maintain at all times their own civil and military establishment, but to pay their proper
proportion of the expense of the general government 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 manage-  ment, or
could be rendered sufficiently liberal in their grants for supporting the civil and
military establishments even of their own country. It was only by distributing among the
particular mem- bers 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 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 importance of the
different members of those different assem- blies, the offences which must frequently be given,
the blunders which must constantly be com- mitted, in attempting to manage them in this
manner, seems to render such a system of manage- ment altogether impracticable with 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
con- cerning it. The assembly of a province, like the vestry of a parish, may judge very
properly con- cerning the affairs of its own particular district, but can have no proper means of
judging con- cerning 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; because those other
provinces are not under the inspection and superintendency 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 con- tribute, can be judged of only by that assembly which
inspects and super-intends the affairs of the whole empire. It has been proposed, accordingly,
that the colonies should be taxed by requisition, the parlia- ment 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 in- spects and superintends the
affairs of the whole empire; and the provincial affairs of each colony might still be regulated
by its own assembly. Though the colonies should, in this case, have no representatives in the
British parliament, yet, if we may judge by experience, there is no proba- bility that the
parliamentary requisition would be unreasonable. The parliament of England has not, upon any
occasion, shewn 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. Par-  liament,
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
propor- tion to what was paid by their fellow subjects at home. If the contribution of the
colonies, besides, was to rise or fall in proportion 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. Ac- cording 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 Britain has not, for some time past, had the
same established authority 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 hith- erto, 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 mil- lions must immediately be raised, in order to defend the seat of the
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 hu- mour of all those assemblies, far distant from the seat of the war,
and sometimes, perhaps, think- ing 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 provinces, of the most considerable part of the
expense of defending the empire. Great Britain has hitherto suf- fered her subject and
subordinate 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 supposed to be subject and subordinate, it seems necessary, upon the scheme of taxing
them by parliamentary requisition, that parliament should have some means of rendering its
requisitions immediately 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 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 parliament 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 importance. Towards the declension of the
Roman republic, the allies of Rome, who had borne the prin- cipal 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 repre- sented. 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 subjected to the
same taxes, and in compensation admitted to the same freedom of trade with its fellow-subjects
at home; the num- ber of its representatives to be augmented as the proportion of its
contribution 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 lead- ing 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, trades men, and attor- neys, 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, in- deed, 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
ob- ject 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 Heynaut, that we now
read with 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 everyman then,
says he, fancied himself of some importance; and the innumerable memoirs which have come
down to us from those times, were the greater part of them written by people who took
pleasure in recording and magnifying events, in which they flat- tered 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 citi-  zens, 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 de-  fend
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 ru- ined 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 intro- duced into the assemblies of the
people, could drive out the real citizens, and decide upon the af- fairs of the republic, as if they
themselves had been such. But though America were to send fifty or sixty new representatives
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 con- cerning the
affairs of 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 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 are afraid lest the multitude of
American representatives should overturn the balance of the constitution, 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 rep- resentatives were 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 democratical 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 govern- ment 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 constituent, and the former would still feel that he owed his seat in
parliament, and all the conse- quence which he derived from it, to the good-will of the latter. It
would be the interest of the for- mer, therefore, to cultivate that good-will, by complaining,
with all the authority of a member of the legislature, of every outrage which any civil or
military officer might be guilty of in those re- mote parts of the empire. The distance of
America from the seat of government, besides, the na- tives 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 pro- duce of the American might
exceed that of the British taxation. The seat of the 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
conse- quences have already been 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 mea- sure the most distant parts of the world, by enabling them to relieve one
another's wants, to in- crease 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 com- munication of knowledge,
and of all sorts of improvements, which an extensive commerce from all countries to all
countries naturally, or rather necessarily, carries along with it. In the mean time, one of the
principal effects of those discoveries has been, to raise the mer- cantile 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 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 Mediter- ranean
seas), have now become the manufacturers 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 growing still greater and greater every day. The countries which possess the
colonies of America, and which trade directly to the East In- dies, 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, fre- quently 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 Ger- many. Spain
and Portugal furnish but a small part of it. The capital which supplies 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. 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 estab- lished, 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 Lon- don, 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 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 re- ceives 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 pay- ments 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 he possibly
could have done in the trade from which he is excluded. Though the one employment,
therefore, may to him perhaps be less prof- itable 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 advan- tageous 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 any thing but the
expense of supporting in time of peace, and of defending in time of war, the op-  pressive
authority which it assumes over them. The inconveniencies resulting from the posses- sion of
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. 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 advantageous to the country than the greater part of other employ- ments,
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,
naturally seeks, if one may say so, the employment most advantageous to that country. If it is
employed in the car- rying trade, the country to which it belongs becomes the emporium of the
goods of all the coun- tries 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 exportation; 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 con- sumption, 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 en- deavour, as much as he can, to
turn his foreign trade of consumption into a home trade. The mer- cantile stock of every
country naturally courts in this manner the near, and shuns the distant em- ployment: naturally
courts the employment in which the returns are frequent, and shuns that in which they are
distant and slow; naturally courts 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
re- sides, and shuns that in which it can maintain there the smallest quantity. It naturally courts
the employment which in ordinary cases is most advantageous, and shuns that which in
ordinary cases is least advantageous to that country. But if, in any one of those distant
employments, which in ordinary cases are less advan- tageous 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
employments, till the profits of all return to their proper level. This superiority of profit,
however, is a proof that, in the actual circumstances of the society, those distant employments
are somewhat understocked in proportion to other employments, and that the stock of the
society is not distributed in the properest manner among all the different employ- ments 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
employment, yet a distant employment maybe 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 ex- traordinary case, the public interest requires that
some stock should be withdrawn from those employments 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 interests as in all other ordi- nary cases, and lead them to withdraw
stock from the near, and to turn it towards the distant em- ployments. It is thus that the private
interests and passions of individuals naturally dispose them to turn their stock towards the
employments which in ordinary cases, are most advantageous to the soci- ety. But if from this
natural preference they should turn too much of it towards those employ- ments, 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, therefore, the private interests and pas- sions 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
distribution of stock. But those which concern the trade to Amer- ica 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 reg-  ulations,
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
endeavoured 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 ex- clude all other European nations from any direct trade to
their spice islands. Monopolies of this kind are evidently established against all other European
nations, who are thereby not only ex- cluded 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 produced 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. Monop- olies 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. 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 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 other- wise go
to it. In rich countries, they naturally repel from it a good deal of stock which would
other- wise 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 establishment 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 mar- kets 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 quan- tity. Without such extraordinary 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 other- wise go to it. The mercantile capital of Holland is
so great, that it is, as it were, continually over- flowing, sometimes into the public funds of
foreign countries, sometimes into loans to private traders and adventurers of foreign countries,
sometimes 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 with any tolerable profit being already placed in them, the capital of Holland
necessarily flows towards the most distant employments. The trade to the East Indies, if it were
altogether free, would probably absorb the greater part of this redundant capital. The East
Indies offer a market both for the manufactures of Europe, and for the gold and silver, as well
as for the 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 ex- cluded from the employment most convenient for that port. 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 like- wise 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 the 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 pro- ductive 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 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
en- joyed 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
frequently occasion a very considerable loss. This argument, however, if it proved any thing 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 sufficient 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 naturally 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 dif- ferent 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 sover- eign, would render this
residence both safe and easy, at least to the merchants 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 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
occa- sion 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, is inhabited by barbarous nations. But those nations were by no means so weak and
defenceless as the miserable and helpless Americans; and in proportion to the natural fertility
of the countries which they inhabited, 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 plantations over the
greater part of the lands of the original inhab- itants. The genius of exclusive companies,
besides, is unfavourable, it has already been observed, to the growth of new colonies, and has
probably 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 super- stition and every sort of
bad government, yet bear some 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 Hope and at Batavia, are at present the most consid-  erable
colonies which the Europeans have established, either in Africa or in the East Indies; and both
those settlements an 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
them- selves, as the natives of America. It is, besides, the half-way house, if one may say so,
between Eu- rope 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 colonies. 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 Indostan to China and Japan, and is nearly about mid-way 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 principal 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 navigated 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 ge- nius 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 shewn 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 nutmeg trees, which naturally
grow there, but which this savage policy 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 much 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 suffi- cient to supply with fresh provisions, and other necessaries of life, their own
insignificant gar- risons, and such of their ships as occasionally come there for a cargo of
spices. Under the govern- ment even of the Portuguese, however, those islands are said to have
been tolerably well inhab- ited. 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 or a factory, to order a peasant to plough up a rich field of poppies, and sow it
with rice, or some other grain. The pre- tence 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 ex- traordinary profit was likely to be
made by opium. The servants of the company have, upon sev- eral 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
production 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 ex- pect 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 de- structive
as that of the Dutch. Nothing, however, can be more directly contrary to the real interest of
those companies, con- sidered 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, therefore, the greater the annual
produce of their land and labour, the more they can afford to the sovereign. It is his interest,
therefore, to increase as much as possible that annual produce. But if this is the interest of
every sovereign, it is peculiarly so of one whose revenue, like that of the sovereign of Bengal,
arises chiefly from a land-rent. That rent must neces- sarily 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 afford to pay for it; and the price which they will  pay will always be in
proportion to the eagerness of their competition. 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  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 mother, 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 pro- duce, and consequently of his own share of it, or of his own revenue. But a company
of merchants, are, it seems, incapable of considering themselves as sover- eigns, 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 of which they may be enabled to buy cheaper in India, and thereby to sell with a bet-  ter
profit in Europe. They endeavour, for this purpose, to keep out as much as possible all
com- petitors from the market of the countries which are subject to their government, and
conse- quently 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 tran- sitory profit of the monopolist to the great and 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, considered
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 mer- chants. As sovereigns, their interest is exactly the same with that
of the country which they gov- ern. As merchants, their interest is directly opposite to that
interest. 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 merchants, 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 obedi- ence. 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. Their prop- er 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 company, is the same as that of the direction. It tends to make government subservient to
the interest of monopoly, and consequently 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 clerk of a great counting-house, at ten thousand miles distance,
and consequently almost quite out of sight, should, upon a simple order from their master, 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 circum- stances, to prohibit the servants of the company from trading upon their
own account, can have scarce any other effect than to enable its superior servants, under
pretence of executing their mas- ter's order, to oppress such of the inferior ones as have had the
misfortune to fall under their dis- pleasure. 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 oppres- sive way of establishing it. But if, by an
order from Europe, they are prohibited from doing this, they will, notwithstanding, endeavour
to establish a monopoly of the same kind secretly and indi- rectly, in a way that is much more
destructive to the country. They will employ the whole author- ity of government, 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. But 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 further than the trade with Europe, and compre- hends a part
only of the foreign trade of the country. But the private trade of the servants may ex- tend to all
the different branches both of its inland and foreign trade. The monopoly of the com- pany 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 culti- vation 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 country 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 rigourous 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; {The interest of every proprietor of India stock, however, is by no
means the same with that of the country in the government of which his vote gives him some
influence.—See book v, chap. 1, part ii.}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
necessarily put an end to their oppressions. The regulations, accordingly, which have been sent
out from Europe, though they have been fre- quently weak, have upon most occasions been
well meaning. 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 coun- try, 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 any thing which I have here said, to
throw any odious imputation upon the general character of the servants of the East India
company, and touch less upon that of any particular persons. It is the system of government,
the situation in which they are placed, that I mean to censure, not the character of those who
have acted in it. They acted as their situation 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 abil- ities and virtues which
they themselves could not well know that they possessed. If upon some occasions, therefore, 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. Such exclusive companies, therefore, are nuisances in every respect; always
more or less inconvenient to the countries in which they are established, and destructive to
those which have the misfortune to fall under their government. 
CHAPTER VIII. CONCLUSION OF THE MERCANTILE SYSTEM.  Though the
encouragement of exportation, and the discouragement of importation, are the two great
engines by which the mercantile system proposes to enrich every country, yet, with re- gard to
some particular commodities, it seems to follow an opposite plan: to discourage expor- tation,
and to encourage importation. 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
importation 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 importation of such instruments, would interfere too much
with the interest of those manufactures. Such impor- tation, therefore, instead of being
encouraged, has frequently been prohibited. Thus the impor- tation of wool cards, except from
Ireland, or when brought in as wreck or prize goods, was prohib- ited by the 3rd of Edward
IV.; which prohibition was renewed by the 39th of Elizabeth, and has been continued and
rendered perpetual by subsequent 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. 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 Greenland 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 legis- lature these exemptions, as well as the greater part
of our other commercial regulations. They are, however, perfectly just and reasonable; and if,
consistently with the necessities of the state, they could be extended to all the other materials
of manufacture, the public would certainly be a gain- er. The avidity of our great
manufacturers, however, has in some cases extended these exemp- tions a good deal beyond
what can justly be considered as the rude materials of their work. By the 24th Geo. II. chap. 46,
a small duty of only 1d. the pound was imposed upon the importation of foreign brown linen
yarn, instead of much higher duties, to which it had been subjected before, viz. of 6d. the
pound upon sail yarn, of 1s. the pound upon all French and Dutch yarn, and of £2:13:4 upon
the hundred weight of all spruce or Muscovia yarn. But our manufacturers were not long
satisfied with this reduction: by the 29th 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
18d. 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 flaxdressers, 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 commonly
scattered about in all dif- ferent parts of the country, without support or protection. It is not by
the sale of their work, but by 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 it is 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 pos- sible. By encouraging the importation of
foreign linen yarn, and thereby bringing it into compe- tition 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 workmen 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 indigent
is too often either neglected or oppressed. Both the bounty upon the exportation of linen, and
the exemption from the duty upon the importation of foreign yarn, which were granted only for
fifteen years, but continued by two dif- ferent prolongations, 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 compre- hended timber fit for masts, yards, and
bowsprits; hemp, tar, pitch, and turpentine. The bounty, however, of £1 the ton upon masting-
timber, and that of £6 the ton upon hemp, were extended to such as should be imported into
England from Scotland. 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 immedi- ately following the 24th
June 1781. The bounties upon the importation of tar, pitch, and turpentine, underwent, during
their continuance, several alterations. Originally, that upon tar was £4 the ton; that upon pitch
the same; and that upon turpentine £3 the ton. The bounty of £4 the ton upon tar was
afterwards con- fined to such as had been prepared in a particular manner; that upon other
good, clean, and mer- chantable tar was reduced to £2:4s. the ton. The bounty upon pitch was
likewise reduced to £1, and that upon turpentine to £1:10s. 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 21st Geo. 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 6d. the pound. This bounty, which, like most
others, was granted only for a limited time, was continued by several prolon- gations, but was
reduced to 4d. 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. Geo. 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 £8 the ton;
for the second at £6; and for the third at £4. It was not extended to Scotland, of which the
climate (although hemp is sometimes 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 in
England would have been too great a discouragement to the na- tive produce of the southern
part of the united kingdom. The fourth bounty of this kind was that granted by the 5th Geo. III.
chap. 45, upon the impor- tation of wood from America. It was granted for nine years from the
1st January 1766 to the 1st January 1775. During the first three years, it was to be for every
hundred-and-twenty good deals, at the rate of £1, and for every load containing fifty cubic feet
of other square timber, at the rate of 12s. For the second three years, it was for deals, to be at
the rate of 15s., and for other squared tim- ber at the rate of 8s.; and for the third three years, it
was for deals, to be at the rate of 10s.; and for every other squared timber at the rate of 5s. 

The fifth bounty of this kind was that granted by the 9th Geo. III. chap. 38, upon the
impor- tation 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 £25 for every hundred pounds value; for the second, at £20; and for the third, at £15. 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 informed, was not
likely to produce any considerable effect. The sixth Bounty of this kind was that granted by
11th Geo. III. chap. 50, for the importation of pipe, hogshead, and barrelstaves and leading
from the British plantations. It was granted for nine years, from 1st January 1772 to the 1st
January 1781. For the first three years, it was, for a cer- tain quantity of each, to be at the rate
of £6; for the second three years at £4; and for the third three years at £2. The seventh and last
bounty of this kind was that granted by the 19th Geo. III 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. The 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. When 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
com- modities, upon which we thus gave bounties, when imported from America, were
subjected to considerable duties when 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
us by the bal- ance of trade, and we could never become a farthing the poorer by any expense
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 sys- tem which fatal experience 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 prohi- bitions, 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 exten- sion of their particular business. They have not only obtained a monopoly
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 al- ways been understood to be innocent. But the
cruellest of our revenue laws, I will venture to af- firm, are mild and gentle, in comparison to
some of those which the clamour of our merchants and manufacturers has extorted from the
legislature, for the support of their own absurd and op- pressive monopolies. Like the laws of
Draco, these laws may be said to be all written in blood. By the 8th of Elizabeth, chap. 3, the
exporter of sheep, lambs, or rams, was for the first of- fence, to forfeit all his goods for ever, to
suffer a year's imprisonment, and then to have his left hand cut off in a market town, upon a
market day, to be there nailed up; and for the second of- fence, to be adjudged a felon, and to
suffer death accordingly. To prevent the breed of our sheep from being propagated in foreign
countries, seems to have been the object of this law. By the 13th and 14th of Charles II. chap.
18, the exportation of wool was made felony, and the exporter sub- jected 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 was ever executed. The first of them, however, so far as I know, has never
been directly repealed, and serjeant Hawkins seems to consider it as still in force. It may,
however, perhaps be considered as virtually repealed by the 12th of Charles II. chap. 32, sect.
3, which, without expressly taking away the penalties imposed by former statutes, imposes a
new penalty, viz. that of 20s. for every sheep exported, or attempted to be exported, together
with the forfeiture of the sheep, and of the owner's share of the sheep. The second of them was
expressly repealed by the 7th and 8th of William III. chap. 28, sect. 4, by which it is declared
that "Whereas the statute of the 13th and 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 of- fenders hath not been so
effectually put in execution; be it therefore enacted, by the authority aforesaid, that so much of
the said act, which relates to the making the said offence felony, be re- pealed 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 forfeiture of the goods, the exporter incurs the penalty of 3s. for every pound
weight of wool, ei- ther exported or attempted to be exported, that is, about four or five times
the value. Any mer- chant, 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 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 penalties within three
months after judgment, he is to be trans- ported 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 bur-  densome
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 for- feiting the same and the package, and 8s. for every pound weight, to be paid by the
owner or packer. It cannot be loaden on any horse or cart, or carried by land within five miles
of the coast, but between sun-rising, and sun-setting, on pain of forfeiting the same, the horses
and carriages. The hundred next adjoining to the sea coast, out of, or through which the wool is
carried or ex- ported, forfeits £20, if the wool is under the value of £10; 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 inhab- itants, 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 reg- ulations take place through the whole kingdom. But in the particular
counties of Kent and Sussex, the restrictions 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 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 fif- teen
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
for- feits 3s. for every pound weight, if any person lay any wool, not entered as aforesaid,
within fif- teen 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 be- lieve, 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 forfeiting, as by the other laws in force against the
exportation of wool. This law, however (1st of William III. chap. 32), is so very indulgent as to
declare, that this shall not hinder any person from carrying his wool home from the place of
shearing, 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  certifying
to such officer, under his hand, his intention so to do, three days before. Bond must be given
that the wool to be carried coast-ways is to be landed at the particular port for which it is
en- tered outwards; and if my part of it is landed without the presence of an officer, not only
the for- feiture of the wool is incurred, as in other goods, but the usual additional penalty of 3s.
for every pound weight is likewise incurred. Our woollen manufacturers, in order to justify
their demand of such extraordinary restric- tions 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, therefore, 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 advan- tageous
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 unacquainted 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 altogether 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 of the Mem- oirs of Wool, the Reverend 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 Ams- terdam. 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 hav- ing produced the effect that was
expected from them. This reduction of price, it may perhaps be thought, by discouraging the
growing of wool, must have reduced very much the annual produce of that commodity, though
not below what it formerly was, yet below what, in the present state of things, it would
probably 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 ex- pects his profit, not so much from the price of the fleece, as from
that of the carcase; and the aver- age or ordinary price of the latter must even, in many cases,
make up to him whatever deficiency there may be in the average or ordinary price of the
former. It has been observed, in the foregoing part of this work, 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 ten- dency to raise the price of butcher's 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 improved 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 provisions.' According to this
reasoning, therefore, this degradation in the price of wool is not likely, in an im- proved and
cultivated country, to occasion any diminution in the annual produce of that com- modity;
except so far as, by raising the price of mutton, it may somewhat diminish the demand for, and
consequently the production of, that particular species of butcher's meat, Its effect, how- ever,
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 consid- erable, its effect upon the
quality, it may perhaps be thought, must necessarily have been very great. 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 degradation 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 propor- tion
to the recompence which the price of the fleece is likely to make for the labour and
expense which that attention requires. It happens, however, that the goodness of the fleece
depends, in a great measure, upon the health, growth, and bulk of the animal: the same
attention which is necessary for the improvement of the carcase is, in some respect, sufficient
for that of the fleece. Notwithstanding the degradation of price, English wool is said to have
been improved consid- erably 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 prohibition 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 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, besides 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. The prohibition, notwithstanding all the penalties which guard it, does not prevent
the expor- tation 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 prevent it. This illegal
exportation is advantageous to nobody but the smuggler. A legal exportation, subject to a tax,
by affording a revenue 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 expor- tation of wool. Even tobacco-pipe clay, though acknowledged
to be different from fuller's clay, yet, on account of their resemblance, and because fuller's clay
might sometimes be exported as to- bacco-pipe clay, has been laid under the same prohibitions
and penalties. By the 13th and 14th of Charles II. chap, 7, the exportation, not only of raw
hides, but of tanned leather, except in the shape of boots, shoes, or slippers, was prohibited;
and the law gave a monopoly to our boot-makers and shoe-makers, not only against our
graziers, but against our tan- ners. By subsequent statutes, our tanners have got themselves
exempted from this monopoly, upon paying a small tax of only one shilling on the hundred
weight 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 coun- try, cannot, without great difficulty,
combine together for the purpose either of imposing monop- olies 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 in- significant trades of the
horner and comb-maker enjoy, in this respect, a monopoly against the graziers. Restraints,
either by prohibitions, or by taxes, upon the exportation of goods which are par- tially, but not
completely manufactured, are not peculiar to the manufacture of leather. As long as  anything
remains to be done, in order to fit any commodity for immediate use and consumption, our
manufacturers think that they themselves 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
we sub- ject to a duty upon exportation; and our dyers have so far obtained a monopoly against
our cloth- iers. 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 clock- makers and watch-makers are, it seems, unwilling that the price of this
sort of workmanship should be raised upon them by the competition of foreigners. By some
old statutes of Edward III, Henry VIII. and Edward VI. the exportation of all metals was
prohibited. Lead and tin were alone excepted, probably on account of the great abundance
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 10th 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 Geo. I. chap.15, the exportation of
all goods, the produce of 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, hares 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 du- ties upon importation. Each of them, however, is afterwards subjected to a certain
duty, not in- deed a very heavy one, upon exportation. Our dyers, it seems, while they thought
it for their inter- est to encourage the importation of those drugs, by an exemption from all
duties, thought it like- wise for their own interest to throw some small discouragement upon
their exportation. The avid- ity, however, which suggested this notable piece of mercantile
ingenuity, most probably disap- pointed 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 supplied; 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 hundred weight, upon their re-exportation.
France en- joyed, 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 be easily
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 hundred weight upon such importation, and no part of this
duty was to be after- wards 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 man- ufactures, 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 of Geo. III. therefore, chap.
37, the exportation of gum senega, from his majesty'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 hundred
weight; but its re-exportation was subjected to the enormous duty of one pound ten shillings
the hundred weight. 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 enormous duty
presented such a temptation to smuggling, that great quantities of this com- modity 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  14th Geo.
III. chap.10, this duty upon exportation was reduced to five shillings the hundred weight. In the
book of rates, according to which the old subsidy was levied, beaver skins were esti- mated at
six shillings and eight pence a piece; and the different subsidies and imposts which, be-  fore
the year 1722, had been laid upon their importation, amounted to one-fifth part of the rate,
or to sixteen pence 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, the exportation from America was
consequently confined to the market of Great Britain. Our manufacturers 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, without any drawback of the duty upon
importation. By the same law, a duty of eigh- teen pence the pound was imposed upon the
exportation of beaver wool or woumbs, without making any alteration in the duty upon the
importation of that commodity, which, when im- ported 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 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 re- strained, not by high duties, but by absolute prohibitions. Thus, by
the 7th and 8th of William III chap.20, sect.8, the exportation of frames or engines for knitting
gloves or stockings, is prohib- ited, under the penalty, not only of the forfeiture of such frames
or engines, so exported, or at- tempted to be exported, but of forty pounds, one half to the king,
the other to the person who shall inform or sue for the same. In the same manner, by the 14th
Geo. III. chap. 71, the exportation to foreign parts, of any utensils made 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 two hundred pounds, to be paid by the person who shall offend in this
manner; and likewise of two hundred pounds, to be paid by the master of the ship, who shall
knowingly suffer such utensils to be load- ed 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 one hundred
pounds, 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 23d Geo. II. chap. 13, this penalty is
in- creased, for the first offence, to five hundred pounds for every artificer so enticed, and to
twelve months imprisonment, and until the fine shall be paid; and for the second offence, to
one thou- sand pounds, and to two years imprisonment, and until the fine shall be paid. By the
former of these two statutes, upon proof that any person has been enticing any arti- ficer, 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 for- eign 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 he does not, within six months after such
warning, return into this realm, and from henceforth abide and inhabit contin- ually 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 protec- tion. It is
unnecessary, I imagine, to observe how contrary such regulations are to the boasted lib-  erty 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 reasonable that they themselves should have the monopoly
of the ingenuity of all their countrymen. Though by restraining, in some trades, the number of
appren- tices 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 employ- ments 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 consumer is almost constantly sacrificed to that of the producer; and it seems to
consider production, and not consumption, as the ultimate end and ob- ject 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 for- mer is obliged to pay that enhancement of price which this monopoly almost
always occasions. 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 en- hancement of the price of the commodity in the home market. By the
famous treaty of commerce with Portugal, the consumer is prevented by 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 inconvenience, in order that the producer may import into
the distant country some of his productions, upon more advantageous terms than he otherwise
would have been allowed to do. The consumer, too, is obliged to pay whatever enhancement in
the price of those very productions this forced exportation 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 producers, 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 never 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 contrivers 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 regula- tions 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. 
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 ingenuity in
France. It would not, surely, be worth while to examine at great length the errors of a system
which never has 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. Mr. Colbert, the famous minister of Lewis 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 preju- dices 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 com- merce 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 ex- traordinary privileges, while he laid others
under as extraordinary restraints. He was not only dis- posed, 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 mar- ket, for by far the most
important part of the produce of their industry. This prohibition, 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 given, by the
institutions of Mr. 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 Mr. 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 under-valued. The different orders of people, who have ever been supposed to
contribute in any respect to- wards 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 farm- ers and country labourers, whom they honour with the peculiar
appellation 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. 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, inclosures, 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 conse- quently to pay a greater rent. This advanced rent may be considered as the
interest 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
(depenses foncieres). The cultivators or farmers contribute to the annual produce, by what are
in this system called the original and annual expenses (depenses primitives, et depenses
annuelles), 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 the maintenance of the
farmer's family, servants, and cat- tle, 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 instruments of husbandry, and in the annual maintenance of the
farmer's servants and cattle, and of his family too, so far as any part of them can be considered
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
expenses, 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 em- ployment upon a level with
other employments; but, from a regard to his own interest, 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 pay-  ing 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 neat 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 neat produce of this
kind, that this class of people are in this system peculiarly distinguished by the honourable
appellation of the productive class. Their original and annual expenses are for the same reason
called, In this system, productive ex- penses, because, over and above replacing their own
value, they occasion the annual reproduction of this neat 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, 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 from 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 discouraging the improvement of land, the church
discour- ages 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 completest manner their own value, occasion likewise, after a certain time, a
reproduction of a neat produce, they are in this system considered as productive expenses. The
ground expenses of the landlord, however, together with the original and the annual ex- penses
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 productive, are, in this account of
things, repre- sented 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 em- ployment, so he advances to himself what is necessary for his own maintenance; and
this mainte- nance 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 mate- rials, 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 neat produce which remains after completely
repaying 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 main- taining 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 manufacturing
stock. It only con- tinues the existence of its own value, without producing any new value. Its
profits are only the repayment 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 ex- pense which must be laid out in employing it. The labour of
artificers and manufacturers never adds any thing to the value of the whole an- nual amount of
the rude produce of the land. It adds, indeed, greatly to the value of some partic- ular parts of
it. But the consumption which, in the mean time, it occasions of other parts, is pre-  cisely 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
£30 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 £30 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 any thing 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 per- sons employed in this expensive, though trifling
manufacture, may satisfy us that the price of their work does not, in ordinary cases, exceed the
value of their subsistence. It is otherwise with the work of farmers and country labourers. The
rent of the landlord is a 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 employment and maintenance both of the workmen and of their
employer. Artificers, manufacturers, and merchants, can augment the revenue and wealth of
their soci- ety by parsimony only; or, as it is expressed in this system, by privation, that is, by
depriving themselves of a part of the funds destined for their own subsistence. They annually
reproduce nothing but those funds. Unless, therefore, 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 neat produce, of which the augmentation necessarily augments the
revenue and wealth of their soci- ety. 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 Hamburgh, are composed chiefly of
merchants, artificers, and manufacturers, can grow rich only through parsimony and privation.
As the interest of nations so differently circum- 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 their 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 manufacturers, is maintained
and employed altogether at the expense of the two other classes, of that of proprietors, and of
that of cultivators. They furnish it both with the materials of its work, and with the fund of its
subsis- tence, with the corn and cattle which it consumes while it is employed about that work.
The pro- prietors 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 ser- vants 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 class- es. By means of the industry of merchants, artificers, and manufacturers, the
proprietors and cultivators can purchase both the foreign goods and the manufactured produce
of their own coun- try, 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 otherwise dis- tract their attention from the cultivation of land. The
superiority of produce, which in conse- quence 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 pro- prietors 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 pro- duce of the land. It increases the 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 culti- vators, 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 Hamburgh,
consist chiefly of this unproductive class, are in the same manner maintained and employed
altogether at the expense of the proprietors and cultivators of land. The only differ- ence is,
that those proprietors and cultivators are, the greater part of them, placed at a most
incon- venient 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 dis- tress the industry of such mercantile
states, by imposing high duties upon their trade, or upon the commodities 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 only serve to discourage
the increase of that surplus produce, and consequently the im- provement and cultivation of
their own land. The most effectual expedient, on the contrary, for raising the value of that
surplus produce, for encouraging its increase, and consequently the im- provement 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 would
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 these 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 little artificers and manufacturers of
such mercantile states, who had both to bring from a greater 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 them to many foreign markets, from which they would, in the same manner,
gradually justle out many of the manufacturers 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 em- ployed either
in agriculture or in manufactures. The surplus of this capital would naturally turn it- self to
foreign trade and be employed 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
manufac- turers had over the artificers and manufacturers 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 such mercantile nations; and
with equal art and skill they would be able to sell it cheaper. They would soon, therefore, rival
those mercantile na- tions 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. 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 agricultural 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, there- fore, discourages
agriculture in two different ways; first, by sinking the real value of its produce, and thereby
lowering the rate of its profits; and, secondly, by raising the rate of profit in all
other employments. Agriculture is rendered less advantageous, and trade and 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 employ- ments. Though, by this oppressive policy, a landed nation should be able to raise
up artificers, man- ufacturers, 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 duly 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 neat 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, and in what
manner the labour of the unproductive class does no more than replace the value of its own
consumption, without increas- ing in any respect the value of that sum total, is represented by
Mr Quesnai, the very ingenious and profound author of this system, in some arithmetical
formularies. The first of these formu- laries, 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
possible neat produce, and where each class enjoys its proper share of the whole annual
produce. Some subsequent formularies represent the manner in which he supposes this
distribution is made in different states of restraint and regulation; in which, ei- ther the class of
proprietors, 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 violation 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 rev- enue of the society; a declension, of which the progress must be quicker or
slower, according to the degree of this encroachment, according as that natural distribution,
which the most perfect liberty would establish, is more or less violated. Those subsequent
formularies represent the dif- ferent 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 precise regimen of diet and exercise, of which every, the
smallest violation, necessarily occasioned some degree of disease or disorder proportionate to
the degree of the violation. Experience, however, would seem to shew, that the human body
frequently pre- serves, 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 un- known principle of preservation, capable either of preventing or of
correcting, in many respects, the bad effects even of a very faulty regimen. Mr 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 regimen, 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 condition, is a principle of preservation
capable of preventing and correcting, in many re- spects, 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 alto- gether, the natural progress
of a nation towards wealth and prosperity, and still less of making it go backwards. 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; it 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 arti- ficers, manufacturers, and merchants, as
altogether barren and unproductive. The following observations may serve to shew the
impropriety of this representation:— First, this class, it is acknowledged, reproduces annually
the value of its own annual consm- nption, 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 in- crease the number of the human species, but only
continued it as it was before. Farmers and country labourers, indeed, over and above the stock
which maintains and employs them, repro- duce annually a neat produce, a free rent to the
landlord. As a marriage which affords three chil- dren 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 manufac- turers. The superior produce of the
one class, however, does not, render the other barren or unproductive. Secondly, it seems, on
this account, altogether improper to 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 em- ployment is
altogether at the expense of 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 realize 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 realize itself in some such
vendible com- modity. It is upon this account that, in the chapter in which I treat of productive
and unpro- ductive labour, 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, man- ufacturers, 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
production; 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 pro- duced 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 arti- ficer, 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 actu- ally is in consequence of the labour of
the artificer. Though the value of what the artificer pro- duces, therefore, should not, at any one
moment of time, be supposed greater than the value he consumes, yet, at every moment of
time, the actually existing value of goods in the market is, in consequence of what he produces,
greater than it otherwise would be. When the patrons of this system assert, that the
consumption of artificers, manufacturer's, 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 natu- rally 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, manufac- turers, and merchants. The annual produce of
the land and labour of any society can be aug- mented only in two ways; either, first, by some
improvement in the productive powers of the use- ful labour actually maintained within it; or,
secondly, by some increase in the quantity of that labour. The improvement in the productive
powers of useful labour depends, first, upon the im- provement 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 subdi- vided, and the labour of each workman
reduced to a greater simplicity of operation, than that of farmers and country labourers; so it is
likewise capable of both these sorts of improvement in a much higher degree {See book i chap.
1.} In this respect, therefore, the class of cultivators can have no sort of advantage over that of
artificers and manufacturers. The increase in the quantity of useful labour actually employed
within any society must de- pend 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 partic- ular 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 sup- pose, 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 manufactures. By means of
trade and manufactures, a greater quantity of subsis- tence 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 pro- duce 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 neigh-  bourhood, 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 pro- duce. A
trading and manufacturing country, therefore, naturally purchases, with a small part of its
manufactured produce, a great part of the rude produce of other countries; while, on the
con- trary, 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 subsistence 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 culti- vation, 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 repre- senting perfect liberty as the
only effectual expedient for rendering this annual reproduction the greatest possible, its
doctrine 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 comprehensions 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 influencing, in
some measure, the public administration in favour of agriculture. It has been in consequence of
their represen- tations, accordingly, that the agriculture of France has been delivered from
several of the oppres- sions which it before laboured under. The term, during which such a
lease can be granted, as will be valid against every future purchaser or proprietor of the land,
has been prolonged 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 or the wealth of nations, but of every other branch of the system of civil
government, all follow implicitly, and without any sen- sible variation, the doctrine of Mr.
Qttesnai. There is, upon this account, little variety in the greater part of their works. The most
distinct and best connected account of this doctrine is to be found in a little book written by
Mr. Mercier de la Riviere, some time intendant of Martinico, enti- tled, The natural and
essential Order of Political Societies. The admiration of this whole sect for their master, who
was himself a man of the greatest modesty and simplicity, 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,  '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 writ- ing,
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
to- gether all the relations between civilized 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 man- ufactures and foreign trade,
the industry of the towns, than to agriculture, the industry of the country; 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 a 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 man- darins of Pekin used to talk to Mr. De Lange,
the Russian envoy, concerning it {See the Journal of Mr. De Lange, in Bell's Travels, vol. ii. p.
258, 276, 293.}. Except with Japan, the Chinese carry on, themselves, and in their own
bottoms, little or no foreign trade; and 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 ex-  tend itself, if
more freedom was allowed to it, either in their own ships, or in those of foreign
na- tions. Manufactures, as in a small bulk they frequently contain a great value, and can upon
that ac- count be transported at less expense from one country to another than most parts of
rude pro- duce, are, in almost all countries, the principal support of foreign trade. In countries,
besides, less extensive, and less favourably circumstanced for inferior commerce than China,
they generally re- quire the support of foreign trade. Without an extensive foreign market, they
could not well flour- ish, either in countries so moderately extensive as to afford but a narrow
home market, or in countries where the communication between one province and another was
so difficult, as to ren- der 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 remem- bered, depends altogether upon the division of labour; and the degree to
which the division of labour can be introduced into any manufacture, is necessarily regulated,
it has already been shewn, 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 prov- inces, and the easy 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 manufacturing industry. By a more extensive
navigation, the Chinese would naturally learn the art of using and constructing, them- selves,
all the different machines made use of in other countries, as well as the other improve- ments
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
na- tion, except that of the Japanese. The policy of ancient Egypt, too, and that of the Gentoo
government of Indostan, seem to have favoured agriculture more than all other
employments. Both in ancient Egypt and Indostan, the whole body of the people was divided
into different casts 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, etc. In both countries, the cast of the priests holds the highest rank, and that of
the soldiers the next; and in both countries the cast 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 sover- eigns of Indostan, for the proper distribution of
the waters of the Ganges, as well as of many other rivers, though they have been less
celebrated, seem to have been equally great. Both coun- tries, accordingly, though subject
occasionally to dearths, have been famous for their great fer- tility. Though both were
extremely populous, yet, in years of moderate 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 de- pended 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 manufac- tured produce, more than
that of the rude produce. Manufactures require a much more extensive market than the most
important parts of the rude produce of the land. A single shoemaker will make more than 300
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, 50 such families as his own, he cannot dis- pose of the
whole product of his own labour. The most numerous class of artificers will seldom, in a large
country, make more than one in 50, or one in a 100, of the whole number of families contained
in it. But in such large countries, as France and England, the number of people em- ployed 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 that a fifth of the whole inhabitants of the country. But as the pro- duce
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
discour- agement of a confined market much better than manufactures. In both ancient Egypt
and In- dostan, indeed, the confinement of the foreign market was in some measure
compensated by the conveniency of many inland navigations, which opened, in the most
advantageous manner, the whole extent of the home market to every part of the produce of
every different district of those countries. The great extent of Indostan, 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 Indostan which commonly exports the
greatest quantity of rice, has always been more remarkable for the exportation of a great
variety of manufactures, than for that of its grain. An- cient 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
In- dostan 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
particularly 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 agri- culture more than
manufactures or foreign trade, yet seems rather to have discouraged the latter employments,
than to have given any direct or intentional encouragement to the former. In sev- eral of the
ancient states of Greece, foreign trade was prohibited altogether; and in several others, the
employments 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 exercises 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 slaves, and the free citizens of the states 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
commonly 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 distribution of work, which facilitate and abridge
labour have been the discoveries of freemen. Should a slave propose any improvement of this
kind, his master would be very apt to consider the proposal as the suggestion of laziness, and
of a desire to save his own labour at the master's expense. The poor slave, instead of reward
would probably meet with much abuse, per- haps 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 farmer must, upon
that account, generally have been dearer than that of the latter. The Hungarian mines, it is
remarked by Mr. Montesquieu, 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 manufactures in the times of the
Greeks and Romans, it would appear that those of the finer sort were exces- sively dear. Silk
sold for its weight in gold. It was not, indeed, in those times an European manu- facture; 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 an European, or at farthest, an Egyptian manufacture, this high
price can be ac- counted 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 is 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 {Plin. 1. ix.c.39.}, dyed in a particular manner, cost a
hundred denarii, or £3:6s:8d. the pound weight. Others, dyed in another manner, cost a
thousand denarii the pound weight, or £33:6s:8d. The Roman pound, it must be remembered,
contained only twelve of our avoirdupois ounces. This high price, indeed, seems to have been
principally owing to the dye. But had not the cloths themselves 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 {Plin. 1.
viii.c.48.}, of some triclinaria, a sort of woollen pillows or cushions made 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 £30,000, others more than £300,000. 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 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 ex- pense 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
coun- try. 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 purchasing,
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 manufactures 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. They are so far, perhaps, more inconsistent than even the mercantile
system. That sys- tem, by encouraging manufactures and foreign trade more than agriculture,
turns a certain por- tion of the capital of the society, from supporting a more advantageous, to
support a less advan- tageous species of industry. But still it really, and in the end, encourages
that species of industry which it means to promote. Those agricultural systems, on the contrary,
really, and in the end, discourage their own favourite species of industry. It is thus that every
system which endeavours, either, by extraordinary encouragements to draw towards a
particular 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 indus- try
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 per- form which he must
always be exposed to innumerable delusions, and for the proper perfor- mance of which, no
human wisdom or knowledge could ever be sufficient; the duty of superin- tending the industry
of private people, and of directing it towards the employments most suitable to the interests of
the society. According to the system of natural liberty, the sovereign has only three duties to
attend to; three duties of great importance, indeed, but plain and intelligible to common
understandings: first, the duty of protecting the society from the violence and invasion of other
independent societies; secondly, the duty of protecting, as far as possible, every member of the
society from the injustice or oppression of every other member of it, or the duty of
estab- lishing an exact administration of justice; and, thirdly, the duty of erecting and
maintaining cer- tain 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 cer- tain expense; and this expense
again necessarily requires a certain revenue to support it. In the following 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 contribution
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 incumbent on the
whole society; and what are the principal advantages and inconveniencies 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 fol- lowing book, therefore, will naturally be divided into three chapters. 

APPENDIX TO BOOK IV  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 Whit-herring Fishery. The reader, I believe, may depend upon the accuracy of
both accounts. An account of Busses fitted out in Scotland for eleven Years, with the Number
of empty Bar- rels carried out, and the Number of Barrels of Herrings caught; also the Bounty,
at a Medium, on each Barrel of Sea-sricks, and on each Barrel when fully packed.  Years  
Number of  Empty Barrels  Barrels of Her-  Bounty paid on            Busses     carried out   
rings caught      the Busses                                                           £.  s.  d.   1771          29       
5,948        2,832          2,885   0   0   1772         168       41,316       22,237         11,055   7   6  
1773         190       42,333       42,055         12,510   8   6   1774         240       59,303      
56,365         26,932   2   6   1775         275       69,144       52,879         19,315  15   0  
1776         294       76,329       51,863         21,290   7   6   1777         240       62,679      
43,313         17,592   2   6   1778         220       56,390       40,958         16,316   2   6   1779        
206       55,194       29,367         15,287   0   0   1780         181       48,315       19,885        
13,445  12   6   1781         135       33,992       16,593          9,613  15   6        Totals 2,186     
550,943      378,347       £165,463  14   0    Sea-sticks     378,347  Bounty, at a medium, for
each                           barrel of sea-sticks,         £ 0   8   2¼                           But a barrel of sea-
sticks                           being only reckoned two thirds                           of a barrel fully packed,
one                           third to be deducted, which   ¹/³deducted    126,115  brings the bounty
to          £ 0  12   3¾   Barrels fully   packed         252,231    And if the herrings are exported,
there is besides a                                            premium of   £ 0   2   8   So the bounty paid by
government in money for each                                            barrel is    £ 0  14  11¾    But if to
this, the duty of the salt usually taken   credit for as expended in curing each barrel, which   at a
medium, is, of foreign, one bushel and one- fourth of a bushel, at 10s. a-bushel, be added,
viz     0  12   6   the bounty on each barrel would amount to             £ 1   7   5¾    If the herrings
are cured with British salt, it will   stand thus, viz.   Bounty as before                                      £
0  14  11¾   But if to this bounty, the duty on two bushels of   Scotch salt, at 1s.6d. per bushel,
supposed to be   the quantity, at a medium, used in curing each   barrel is added,
viz.                                   0   3   0   The bounty on each barrel will amount to              £ 0  17 
11¾    And when buss herrings are entered for home   consumption in Scotland, and pay the
shilling a   barrel of duty, the bounty stands thus, to wit,                                            as before   
£ 0  12   3¾   From which the shilling a barrel is to be deducted      0   1  
0                                                         £ 0  11   3¾    But to that there is to be added again, the
duty of   the foreign salt used curing a barrel of herring viz    0  12   6   So that the premium
allowed for each barrel of her-   rings entered for home consumption is                 £ 1   3  
9¾  If the herrings are cured in British salt, it will   stand as follows viz.   Bounty on each
barrel brought in by the busses, as   above                                                 £ 0  12   3¾   From
which deduct 1s. a-barrel, paid at the time   they are entered for home consumption                  
0   1   0                                                         £ 0  11   3¾    But if to the bounty, the the duty on
two bushel   of Scotch salt, at 1s.6d. per bushel supposed to   be the quantity, at a medium,
used in curing each   barrel, is added, viz                                   0   3   0   the premium for each
barrel entered for home   consumption will be                                   £ 1  14   3¾  Though the
loss of duties upon herrings exported cannot, perhaps, properly be considered as bounty, that
upon herrings entered for home consumption certainly may. An account of the Quantity of
Foreign Salt imported into Scotland, and of Scotch Salt deliv- ered Duty-free from the Works
there, for the Fishery, from the 5th. of April 1771 to the 5th. of April 1782 with the Medium of
both for one Year.  Foreign Salt      Scotch Salt delivered            PERIOD                
imported        from the Works                                   Bushels              Bushels    From 5th. April
1771 to       5th. April 1782             936,974              168,226   Medium for one year             
85,159½              15,293¼ 
It is to be observed, that the bushel of foreign salt weighs 48lbs., that of British weighs
56lbs. only. 

BOOK V.  OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH 

CHAPTER I. OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH.  PART

I. Of the Expense of Defence.  

The first duty of the sovereign, that of protecting the society from 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 society, 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 society (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 trans- ported from place to place. The whole tribe, or nation, changes its
situation according to the dif- ferent seasons of the year, as well as according to other
accidents. When 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 different. They all go to war together, therefore, and
everyone 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 recompence 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 exercise of a Tartar or Arab, prepares him sufficiently for war. Running,
wrestling, cudgel-playing, throwing the javelin, drawing the bow, etc. 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; 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 subsis- tence
which the chace affords, could seldom allow a greater number to keep together for any
con- siderable 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, of which they have consumed the forage, to another, which is yet entire; there
seems to be scarce any limit to the number who can march on together. A nation of hunters can
never be formidable to the civilized nations in their neighbourhood; a nation of shepherds 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, that both Europe and Asia could not resist the Scythians united, has
been verified by the expe- rience 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 havock and devastation of Asia have always signalized
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
signalized in the same manner. If the hunting na- tions of America should ever become
shepherds, their neighbourhood would be much more dan- gerous 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 al- most every private family prepares for its own use, every man,
in the same manner, either is a warrior, or easily becomes such. Those 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 pre- pares them for the fatigues of war, to some of which
their necessary occupations bear a great anal- ogy. The necessary occupation of a ditcher
prepares him to work in the trenches, and to fortify a camp, as well as to inclose 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. Agriculture, even in its rudest and
lowest state, supposes a settlement, some sort of fixed habitation, which cannot be abandoned
without 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 mili- tary 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 seedtime, 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 mean time, 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 common- wealth
as little to maintain him in the field as to prepare him for it. The citizens of all the dif- ferent
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,
Thucy- dides 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 seige of Veii, that they who staid at home began to
contribute some- thing towards maintaining 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 estab- lishment of what is properly called the feudal law, the great lords,
with all their immediate depen- dents, used to serve the crown at their own expense. In the
field, in the same manner as at home, they maintained themselves by their own revenue, and
not by any stipend or pay which they re- ceived from the king upon that particular occasion. In
a more advanced state of society, two different causes contribute to render it
altogether impossible that they who take the field should maintain themselves at their own
expense. Those two 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 com- pletely 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 arti- ficers and manufacturers, 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 sci- ence; 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 neces- sary that the public should maintain those who
serve the public in war, at least while they are em- ployed 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 re- mained in the field.
Under the feudal governments, the military service, both of the great lords, and of their
immediate dependents, was, after a certain period, universally exchanged for a pay- ment 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 whole number of the people, is necessarily much
smaller in a civilized than in a rude state of society. In a civilized 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 maintain. In the little agrarian states of ancient Greece, a fourth or a fifth
part of the whole body of the people considered the themselves as soldiers, and
would sometimes, it is said, take the field. Among the civilized nations of modern Europe, it is
com- monly computed, that not more than the 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 sover- eign or commonwealth. In all the different republics of ancient
Greece, to learn his military exer- cises, 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 consisted the whole expense which any
Grecian state seems ever to have been at, in preparing its citizens for war. In ancient Rome, the
exercises of the Campus Martius answered the same purpose with those of the Gymnasium in
ancient Greece. Under the feudal govern- ments, 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 ne- glected; and in the progress of all
those governments, military exercises seem to have gone grad- ually 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 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 occupation 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 exercise it. The art of war,
however, as it is certainly the noblest of all arts, so, in the progress of improve-  ment, it
necessarily becomes one of the most complicated among them. The state of the mechan-  ical,
as well as 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 promote their private interest
better by confining themselves to a particular trade, than by exercising a great number. But it is
the wisdom of the state only, which can render the trade of a soldier 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 pub- lic, should spend the greater part of his time in
military exercises, might, no doubt, both improve 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. Those improvements in husbandry,
too, which the progress of arts and manufactures necessarily introduces, leave the husbandman
as little leisure as the arti- ficer. 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 manufactures, and which, in reality, is no more than the accumulated
produce of those improvements, provokes the invasion of all their neighbours. 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 measure for the public defence, the natural habits of the people
render them altogether incapable of defending them- selves. 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 mea- sure 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 exer- cises 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 prac- tice of military exercises is only the
occasional occupation of the soldiers of a militia, and they de- rive 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 military force. Militias have
been of several different kinds. In some countries, the citizens destined for de- fending the state
seem to have been exercised only, without being, if I may say so, regimented;  that is, without
being divided into separate and distinct bodies of troops, each of which performed its exercises
under its own proper and permanent officers. In the republics of ancient Greece and  Rome,
each citizen, as long as he remained at home, seems to have practised his exercises,
either separately and independently, or with such of his equals as he liked best; and not to have
been at- tached 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 particular 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 consequence, 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 neces- sary for using it, can be well enough acquired by
practising in great bodies. Regularity, order, and prompt obedience to command, are qualities
which, in modern armies, are of more importance towards determining the 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 actually
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 disciplined 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 ex- pertness in
their exercise, may satisfy us that it is, even at this day, of very considerable
conse- quence. The soldiers, who are bound to obey their officer only once a-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 di- rected by him, and who every day even rise and go to bed, or at
least retire to their quarters, ac- cording to his orders. In what is called discipline, 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 superiority in the management of arms. Those militias which,
like the Tartar 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, how- ever,
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 continue for any
long time in the field. When they had acquired any booty, they were eager to return home, and
his authority was seldom sufficient to detain them. In point of obedience, they were always
much inferior to what is reported of the Tartars and Arabs. As the Highlanders, too, from their
sta- tionary 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 exer- cised 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 stand- ing army, after they have passed a few campaigns in 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 France and Spain. This
distinction being well understood, the history of all ages, it will be found, hears testi- mony 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 authen- ticated history,
is that of Philip of Macedon. His frequent wars with the Thracians, Illyrians, Thes-  salians, 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, in- deed,
the gallant and well exercised militias of the principal republics of ancient Greece; and
after- wards, 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 superi- ority which a standing arm has over every other sort of militia. It is the first
great revolution in the affairs of mankind of which history has preserved any distinct and
circumstantial 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
Carthaginian war, the armies of Carthage were continually in the field, and employed under
three great generals, who succeeded one another in the command; Amilcar, his son-in-law
Asdrubal, and his son Annibal: 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 Annibal 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 war of very great consequence; and their military discipline, it is
generally said, was a good deal relaxed. The Roman armies which Annibal encountered at
Trebi, Thrasymenus, and Cannae, were militia opposed to a standing army. This circumstance,
it is probable, contributed more than any other to determine the fate of those battles. The
standing army which Annibal 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 broth- er,
the younger Asdrubal, expelled them almost entirely from that country. Annibal was ill
supplied from home. The Roman militia, being continually in the field, be- came, in the
progress of the war, a well disciplined and well exercised standing army; and the su- periority
of Annibal grew every day less and less. Asdrubal 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 this 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 Asdrubal 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 recal the standing army of Annibal. The disheartened and frequently
defeated African militia joined it, and, at the battle of Zama, composed the greater part of the
troops of Annibal. 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 resis-  tance
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 all the
civilized nations of the ancient world, of Greece, of Syria, and of Egypt, made but a feeble
resistance to the stand- ing armies of Rome. The militias of some barbarous nations defended
themselves much better. The Scythian or Tartar militia, which Mithridates 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 gen- eral, 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 Ger- many, 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 ap- peared capable of opposing them, their heavy armour was laid
aside as unnecessarily burden- some, 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, Dioclesian, 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 dis- persed them in small bodies through the
different provincial towns, from whence they were scarce ever removed, but when it became
necessary to repel an invasion. Small bodies of soldiers, quartered in trading and
manufacturing towns, and seldom removed from those quarters, be- came themselves trades
men, artificers, and manufacturers. The civil came to predominate over the military character;
and the standing armies of Rome gradually degenerated into a corrupt, ne- glected, 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. 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 civilized nation; which the militia of a nation of shepherds has over that of a nation of
hus- bandmen, 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 infe- rior 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 ruins of the western empire, continued for
some time to be of the same kind in their new settle- ments, 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 same chieftains whom it was accustomed to obey in peace. It was,
therefore, tolerably well exercised, and tolerably well disci- plined. As arts 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 exercises. Both the discipline and the exercise of the
feudal militia, therefore, went gradually to ruin, and standing armies were gradually introduced
to supply the place of it. When the expedient of a standing army, besides,  had once been
adopted by one civilized 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 fre- quently 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 be- fore,
and could at that time have very few soldiers who had ever seen an enemy. When the Span-  ish
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 civilized 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 con- quests of all the civilized countries in Asia by the Tartars,
sufficiently demonstrates the natural superiority which the militia of a barbarous has over that
of a civilized nation. A well regulated standing army is superior to every militia. Such an army,
as it can best be maintained by an opu- lent and civilized nation, so it can alone defend such a
nation against the invasion of a poor and barbarous neighbour. It is only by means of a
standing army, therefore, that the civilization 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 civilized country can be de- fended, so it is only by means of it that a barbarous country
can be suddenly and tolerably civi- lized. A standing army establishes, with an irresistible
force, the law of the sovereign through the remotest provinces of the empire, and maintains
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
regulations. That degree of order and internal peace, which that empire has ever since enjoyed,
is altogether owing to the influence of that army. 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 Cae- sar 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 com- mand 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 re- publics, 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 bring- ing about
in a few hours a great revolution, the whole authority of government must be employed  to
suppress 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 regu- lated 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 licen- tiousness, 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 sover- eign should be trusted with any discretionary power, for
suppressing even the impertinent wan- tonness of this licentious liberty. The first duty of the
sovereign, therefore, that of defending the society from the violence and injustice of other
independent societies, grows gradually more and more expensive, as the society advances in
civilization. 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 mod- ern
review is lost irrecoverably, and occasions a very considerable expense. The javelins and
ar- rows which were thrown or shot in an ancient one, could easily be picked up again, and
were, be- sides, 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. As the superiority of the modern artillery,
too, over that of the an- cients, is very great; it has 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 mod- ern 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 revolution 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 firearms gives an evident advantage to the
nation which can best afford that expense; and, consequently, to an opulent and civilized, over
a poor and bar- barous nation. In ancient times, the opulent and civilized 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 civilized. 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 civilization. 

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 oppression of every other
member of it, or the duty of establishing an exact administration of justice, requires two 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 administration of justice. Men
who have no property, can injure one another only in their per- sons 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 in-  juries 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 a
great property, there is great in- equality. 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 ac- quired 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 pow- erful 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 gov-  ernment is not so
necessary. Civil government supposes a certain subordination. But as the necessity of civil
government gradually grows up with the acquisition of valuable property; so the principal
causes, which natu- rally introduce subordination, gradually grow up with the growth of that
valuable property. The causes or circumstances which naturally introduce subordination, or
which naturally and antecedent to any civil institution, 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 civilized, 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 foundation 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 civilized 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 takes place; and in the
succession of the paternal estate, every thing which can- not 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 ages of society, which admits of any considerable inequality
of fortune. A Tartar chief, the increase of whose flocks and herds is sufficient to maintain a
thousand men, cannot well employ that in- crease 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 thou- sand 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 for- tune. In an opulent and
civilized 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 every
thing which they get from him, as he gives scarce any thing to any body but in ex- change for
an equivalent, there is scarce anybody who considers himself as entirely dependent upon him,
and his authority extends only over a few menial servants. The authority of fortune, however,
is very great, even in an opulent and civilized 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 their universal equality; and the
superiority, either of age or of personal qualities, are the feeble, but the sole foundations
of authority and subordination. There is, therefore, little or no authority or subordination in this
pe- riod of society. The second period of society, that of shepherds, 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 fortune 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 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
everywhere 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 submits,
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 acknowledged any such su- periority, 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 difference, however will not be very great; and there
never was, I believe, a great fam- ily 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, accordingly, 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 con- tinue 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,
re- spected 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 or his illustrious family, has a natural authority over all the inferior
shepherds or herds- men 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 commanding, 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 independent of the consideration of that necessity. The consideration of
that necessity comes, 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 possession
of theirs. All the inferior shep- herds and herdsmen feel, that the security of their own herds
and flocks depends upon the secu- rity of those of the great shepherd or herdsman; that the
maintenance of their lesser authority de- pends 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, in order that he may be
able to defend their property, and to support their author- ity. 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 al- ways
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
satis- faction which he was obliged to make to the party, was like-wise 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 rev- enue, both to the sovereign, and to all the lesser chiefs or lords who
exercised under him any par- ticular 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 substi- tute, bailiff, or judge. This substitute, however, was
still obliged to account to his principal or con- stituent for the profits of the jurisdiction.
Whoever reads the instructions (They are to be found in Tyrol's History of England) 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
certain 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 something more than justice; while he who ap- plied for it
with a small one was likely to get something less. Justice, too, might frequently be de- layed, in
order that this present might be repeated. The amercement, besides, of the person com- plained
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 history of
every country in Europe bears witness. When the sovereign or chief exercises his judicial
authority in his own person, how much so- ever he might abuse it, it must have been scarce
possible to get any redress; because there could seldom be any body powerful enough to call
him to account. When he exercised it by a bailiff, in- deed, redress might sometimes be had. If
it was for his own benefit only, that the bailiff had been guilty of an 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 com- mitted any act of
oppression; redress would, upon most occasions, be as impossible as if the sovereign had
committed it himself. In all barbarous governments, accordingly, in all those an- cient
governments of Europe in particular, which were founded upon the ruins of the Roman
em- pire, 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 maintained in the same manner as
any of his vassals or sub- jects, by the increase of his own herds or flocks. Among those
nations of husbandmen, 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 occa- sions, contribute nothing to his support, except when,
in order to protect them from the oppres- sion 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 emolu- ments 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. 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 defend- ing the nation
against the invasion of other nations, the private estate of the sovereign had be-  come
altogether insufficient for defraying the expense of the sovereignty; and when it had be- come
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 present 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 country. Lawyers and
attor- neys, 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 my 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 emoluments. 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 gentlemen. 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 civilized
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 re- spect it. Where the fees of court are precisely regulated and ascertained where
they are paid all at once, at a certain period of every process, into the hands of a cashier or
receiver, to be by him dis- tributed 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 when such fees are pro- hibited 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. But not being paid to the judges till the process was
determined, they might 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 particular judge. Public services are never better
performed, than when their reward comes only in consequence of their being performed, 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 neat salary paid by the crown to a
counsellor or judge in the parliament of Thoulouse, in rank and dignity the sec- ond parliament
of the kingdom, amounts only to 150 livres, about £6:11s. sterling a-year. About seven years
ago, that sum was in the same place the ordinary yearly wages of a common footman.  The
distribution of these 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 very 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 support 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 cognizance of many suits which were not
originally in- tended to fall under its jurisdiction. The court of king's bench, instituted for the
trial of criminal causes only, took cognizance 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 cognizance of all other contract
debts; the planitiff alleging that he could not pay the king, because the defendant would not
pay him. In consequence of such fic- tions, 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 dispatch and impar- tiality, to draw to itself as many causes as it
could. The present admirable constitution of the courts of justice in England was, perhaps,
originally, in a great measure, formed by this emula- tion, 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  outed him
of his lease, the damages which he recovered were by no means equivalent to the poss- ession
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 ejectment, the most effectual
rem- edy for an unjust outer or dispossession of land. 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 proceedings upon every cause, in order
to increase, as much as possible, the produce of such a stamp-duty. It has been the custom in
modern Europe to regulate, upon most occasions, the payment of the attor- neys and clerks of
court according 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 corruption of the law language of, I believe, every court of jus- tice in Europe.
A like temptation might, perhaps, occasion a like corruption 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 seen 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 neces- sary 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 admi- nistration of justice
became so laborious and so complicated a duty, as to require the undivided attention of the
person 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 occu- pied
with the political 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
monar- chies, which were founded upon the ruins of the Roman empire, the sovereigns and the
great 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 themselves of it, by appointing a deputy, bailiff or judge. When the judicial is
united to the executive power, it is scarce possible that justice should not frequently be
sacrificed to what is vulgarly called politics. The persons entrusted with the great interests of
the state may even without any corrupt views, sometimes 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 reg- ular 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 main- taining those public institutions
and those public works, which though they may be in the high- est 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, there- fore, 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 dif- ferent 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 which have already been mentioned, the other
works and institutions of this kind are chiefly for facilitating the commerce of the society, and
those for pro- moting 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 arti- cles. ARTICLE I.—Of the public Works and Institutions for
facilitating the Commerce of the Soci- ety. 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, etc. 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 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 shipping 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 commonly called, of which the collection and
application are 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
add 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 insti- tution for facilitating commerce, in many countries, not only defrays its own
expense, but affords a small revenue or a 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 consid- erable 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
proportion to their weight or their tonnage, they pay for the mainte- nance 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
re- duced 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 pro- portion to his gain. 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,
etc. is made somewhat higher in proportion to their weight, than upon carriages of necessary
use, such as carts, waggons, etc. 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 different parts of the country. When high-roads, bridges, canals, etc. are in this
manner made and supported by the com- merce which is carried on by means of them, they can
be made only where that commerce re- quires 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 neigh- bouring palace; things which sometimes
happen in countries, where works of this kind are car- ried 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 pri- vate 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 themselves no interest in them,
they might be less attentive to the maintenance of the works which produced them. The canal
of Languedoc 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 keeping it in constant repair, was
to make a present of the tolls to Riquet, the engineer who planned and con- ducted 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 ornamental and unnecessary expenses, while the
most essential parts of the works were allowed to go to ruin. The tolls for the maintenance of a
highroad 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 alto- gether the repair of the
road, and yet continue to levy very nearly the same tolls. It is proper, there- fore, 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. 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 control- ling 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 apologizes 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 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 sol- diers, 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
subsistence from their wages. A great revenue, half a million, per- haps {Since publishing the
two first editions of this book, I have got good reasons to believe that all the turnpike tolls
levied in Great Britain do not produce a neat revenue that amounts to half a  million; a sum
which, under the management of government, would not be sufficient to keep, in repair five of
the principal roads in the kingdom}, 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 prob- ably 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 re- sources for supplying the
exigencies of the state, they would certainly be augmented as those exi- gencies were supposed
to require. According to the policy of Great Britain, therefore, they would probably he
augmented very fast. The facility with which a great revenue could be drawn from them, would
probably encourage administration to recur very frequently te 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 scarcely be doubted, but that a million might be saved out of them,
if they were doubled; and perhaps two millions, if they were tripled {I have now good reason
to be- lieve that all these conjectural sums are by much too large.}. 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 incumbrance upon it.
The expense of transporting all heavy goods from one part of the country to another, would
soon be so much in- creased, the market for all such goods, consequently, would soon be so
much narrowed, that their production would be in a great measure discouraged, 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 car- riage
occasions of the roads. But when it is applied to any other purpose, each carriage is sup-  posed
to pay for more than that wear and tear, and contributes to the supply of some other exi- gency
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
pre- cious 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 labour, which the country people are in
most parts of Europe obliged to give to the reparation of the high- ways; and partly in such a
portion of the general revenue of the state as the king chooses to spare from his other
expenses. By the ancient law of France, as well as by that of most other parts of Europe, the
labour of the country people was under the direction of a local or provincial magistracy, which
had no immediate 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
despotism, the authority of the executive power gradually absorbs that of every other power in
the state, and assumes to itself the management 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
frequently 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 admi-  nistration 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 con- stantly recommended to him, and the judgment
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 every thing of the same
kind which is known in Europe. The ac- counts 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 gives of some works of this
kind in Indostan, falls very short of what had been reported of them by other travellers, more
disposed to the marvellous than he was. It may too, perhaps, be 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 Indostan, and in several other governments of Asia, the rev- enue 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 the 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 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 mar- ket 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 district, 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 Lon- don, would, in this case, be defrayed out of the general
revenue of the state, and would conse- quently be raised by a tax upon all the inhabitants of the
kingdom, of whom the greater part de- rive no sort of benefit 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 expen- diture 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, per- haps, very judiciously applied, but
it is scarce ever exacted with any circumstance of cruelty or op- pression. In France, under the
administration of the intendants, the application is not always more judicious, and the exaction
is frequently the most cruel and oppressive. Such corvees, as they are called, make one of the
principal instruments of tyranny by which those officers chastise any parish or communeaute,
which has had the misfortune to fall under their displeasure. Of the public Works and
Institution which are necessary for facilitating particular Branches of Commerce. The object of
the public works and institutions above mentioned, is to facilitate commerce in general. But in
order to facilitate some particular branches of it, particular institutions are neces-  sary, which
again require a particular and extraordinary expense. Some particular branches of commerce
which are carried on with barbarous and uncivilized 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 Indostan have been supposed to ren- der a like precaution
necessary, even among that mild and gentle people; and it was under pre-  tence 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 maintain some ambassador,
minister, or consul, who may both decide, according to their own customs, the differences
arising among his own coun- trymen, 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 ambas- sador at Constantinople. The first English embassies
to Russia arose altogether from commercial interests. The constant interference with those
interests, necessarily occasioned between the sub- jects of the different states of Europe, has
probably introduced the custom of keeping, in all neighbouring countries, ambassadors or
ministers constantly resident, even in the time of peace. This custom, unknown to ancient
times, seems not to be older than the end of the fifteenth, or beginning of the sixteenth century;
that is, than the time when commerce first began to extend it- self to the greater part of the
nations of Europe, and when they first began to attend to its inter- ests. It seems not
unreasonable, that the extraordinary expense which the protection of any partic- ular 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
insti- tution 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
extraordinary expense of protecting that branch. The protection of trade, in general, has always
been considered as essential to the defence of the commonwealth, and, upon that account, a
necessary part of the duty of the executive power. The collection and application of the general
duties of customs, therefore, 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
purposes 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 compa- nies of merchants have had
the address to persuade the legislature to entrust to them the perfor- mance 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 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 company,
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 compa- nies, whether regulated or joint-stock, sometimes have, and sometimes have not,
exclusive privi- leges. Regulated companies resemble, in every respect, the corporation 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 obtain- ing his freedom in the incorporation, 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 regu- lated 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 ex- acted 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. The regulated companies for foreign commerce which at present subsist in Great
Britain, are the ancient merchant-adventurers company, now commonly called the Hamburgh
company, the Russia company, the Eastland company, the Turkey company, and the African
company. The terms of admission into the Hamburgh company are now said to be quite easy;
and the directors either have it not in their power to subject the trade to any troublesome
restraint or reg- ulations, 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 have been no com- plaints against them. By the 10th and 11th of William III. c.6,
the fine for admission into the Rus- sia company was reduced to five pounds; and by the 25th
of Charles II. c.7, that for admission into the Eastland company to forty shillings; while, at the
same time, Sweden, Denmark, and Nor- way, all the countries on the north side of the Baltic,
were exempted from their exclusive charter. The conduct of those companies had probably
given occasion to those two acts of parliament. Be- fore that time, Sir Josiah Child had
represented both these and the Hamburgh company as ex- tremely 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 be- stowed 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 per- sons under twenty-six years of age, and fifty pounds for all persons
above that age. Nobody but mere merchants could be admitted; a restriction which excluded all
shop-keepers and retailers. By a bye-law, no British manufactures 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 neigh- bourhood. 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, neces- sarily excluded all but the freemen of
London. As the time for the loading and sailing of those general ships depended altogether
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 re- spect, a
strict and oppressive monopoly. Those abuses gave occasion to the act of the 26th of George
II. c. 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 the ports of Great
Britain, to any port in Turkey, all British goods, of which the exportation 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 ambas- sador and consuls resident in Turkey, and to the bye-laws of the
company duly enacted. To pre- vent any oppression by those bye-laws, it was by the same act
ordained, that if any seven mem- bers 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 plantations (to the author- ity 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 con- ceived themselves aggrieved by any bye-law
which had been enacted before the passing of this act, they might bring a like appeal, provided
it was within twelve months after the day on which this act 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 dis- courage
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 noway so likely to be kept, at all times, down to their proper level, as
by the occa- sional 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 maintain 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 corpo- ration purposes, might afford a revenue much more than sufficient to
enable a state to maintain such ministers. Regulated companies, it was observed by Sir Josiah
Child, though they had frequently sup- ported public ministers, had never maintained any forts
or garrisons in the countries to which they 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 company have no particular interest in the prosperity of
the general trade of the company, for the sake of which such forts and garrisons are
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 prosperity of the general trade of the company, and with the maintenance of  the forts
and garrisons which are necessary for its defence. They are more likely, therefore, to have 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, re- pairing, and maintaining such necessary forts and garrisons. But the directors of a
regulated com- pany, 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 im- posed upon the trade of the company. Though they had the same
interest, therefore, to attend to the maintenance of such forts and garrisons, they can seldom
have the same ability to render that attention effectual. The maintenance of a public minister,
requiring scarce any attention, and but a moderate and limited expense, is a business much
more suitable both to the temper and abil- ities of a regulated company. Long after the time of
Sir Josiah Child, however, in 1750, a regulated company was estab- lished, the present
company of merchants 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 afterwards with that of those only which lie between Cape Rouge and the
Cape of Good Hope. The act which establishes this company (the 23rd of George II.
c.51 ), 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 com- pany 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 commit- teeman 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 garrisons, they may,
for that purpose export from Great Britain to Africa goods and stores of dif- ferent 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 offices at London, and all other expenses of
manage- ment, commission, and agency, in England. What remains of this sum, after defraying
these dif- ferent 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 an- swered. It would seem, however, that it had not. Though by the 4th of
George III. c.20, the fort of Senegal, with all its dependencies, had been invested in the
company of merchants trading to Africa, yet, in the year following (by the 5th of George III.
c.44), not only Senegal and its depen- dencies, but the whole coast, from the port of Sallee, in
South Barbary, to Cape Rouge, was ex- empted from the jurisdiction of that company, was
vested in the crown, and the trade to it de- clared 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 23d
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 commis- sions 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 parliament, 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 condition 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 very small,
seems to be the utmost punishment to which any committee-man is liable, for any fault, except
direct malversation, or embezzlement, either of the public money, or of that of the company;
and the fear of the punishment can never be a motive of sufficient weight to force a continual
and careful attention to a business to which he has no other interest to attend. The com- mittee
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
extraordinary 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 foundation, the walls which had been repaired with them. The forts and garrisons
which lie north of Cape Rouge, are not only maintained 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 have always
been, very properly, committed, not to the Turkey company, but to the executive power. 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, ac- cordingly, have never been neglected. Though Minorca
has been twice taken, and is now probably lost for ever, that disaster has never been imputed to
any neglect in the executive power. I would not, however, be understood to insinuate, that
either of those expensive 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. Joint-stock companies, established either by royal charter, or by act of parliament,
are dif- ferent 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 de- mand 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 com- pany, 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. The
trade of a joint-stock company is always managed by a court of directors. This court, in- deed,
is frequently subject, in many respects, to the control of a general court of proprietors. But the
greater part of these proprietors seldom pretend to understand any thing of the business of the
company; and when the spirit of faction happens not to prevail among them, give
themselves no trouble about it, but receive contentedly such halfyearly or yearly dividend as
the directors think proper to make to them. This total exemption front trouble and front risk,
beyond a limited 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, com- monly 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, however, 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 profusion, therefore, must always pre- vail, more or less, in the management 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 exclusive privilege, they have commonly mismanaged the
trade. With an exclusive privilege, they have both mismanaged and confined it. The Royal
African company, the predecessors of the present African company, had an exclu-  sive
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
situ- ation as the Royal African company. Their exclusive charter has not been confirmed by
act of par- liament. The South Sea company, as long as they continued to be a trading
company, had an exclusive privilege 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,
notwithstanding the declaration of rights, they continued for some time to call interlopers, and
to persecute as such. In 1698, however, the private adventurers were subjected to a duty of ten
per cent. upon almost all the different branches of their trade, to be em- ployed 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 grad- ually
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 rust, both
with re- gard 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 £10,000 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; awl to employ their servants in a trade to the inland parts of Africa for gold dust,
elephants teeth, dyeing drugs, etc. But their success in this more confined trade was not greater
than in their former extensive one. Their af- fairs 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 regu- lated company of merchants trading to
Africa. Before the erection of the Royal African company, there had been three other joint-
stock companies successively established, one after another, for the African trade. They were
all 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  exclusive
privilege. The Hudson's Bay company, before their misfortunes in the late war, had been much
more fortunate than the Royal African company. 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 ac- quired by private adventurers; and without it there seems to be no
possibility of trading to Hud- son'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 al- most the whole trade and surplus produce, of the miserable
though extensive country compre- hended within their charter. No private adventurers,
accordingly, 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. 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, ap- proaches 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 advantages, the
Hudson's Bay company had, before the late war, been able to carry on their trade with a
considerable degree of success. It does not seem probable, however, that their profits ever
approached to what the late Mr Dobbs imagined them. A much more sober and judi- cious
writer, Mr Anderson, 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. The South Sea company
never had any forts or garrisons to maintain, and therefore were en- tirely 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 priv- ilege. But as it was not expected that much profit could be made by this trade,
both the Por- tuguese 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 bur- den, 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, per- haps, principally owing to the profusion and depredations
of those very factors and agents; some of whom are said to have acquired great fortunes, even
in one year. In 1734, the company peti- tioned 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 carried 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 uten- sils,
they found that their whole loss upon this branch, capital and interest included, amounted
to upwards of £237,000. 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 £16,900,000, to be put upon the same footing with other government annuities, and not to be
subject 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 parlia- ment, 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
payments from government; so that this fourth amounted only to £3,662,784:8:6. In 1748, all
the demands of the company upon the king of Spain, in consequence of the assiento contract,
were, by the treaty of Aix-la-Chapelle, given up for what was supposed an equivalent. An end
was put to their trade with the Spanish West Indies; the remain- der of their trading stock was
turned into an annuity stock; and the company ceased, in every re- spect, to be a trading
company. 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 con- siderable 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 Span- ish merchants, 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 mer- chants, who imported from Cadiz goods of the Spanish
West Indies, of the same kind with the in- ward cargo. The goods, both of the Spanish and
English merchants, indeed, were, perhaps, sub- ject to higher duties. But the loss occasioned by
the negligence, profusion, and malversation 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 pri- vate adventurers can come into any sort of
open and fair competition with them, seems contrary to all experience. The old English East
India company was established in 1600, by a charter from Queen Eliz- abeth. 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 £744,000, and of which £50 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
parliament, could con- vey an exclusive privilege. Upon this question the decisions of the
courts of justice were not uni- form, but varied with the authority of government, and the
humours of the times. 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. pro- vided the subscribers were erected into a new
East India company, with exclusive privileges. The old East India company offered seven
hundred thousand pounds, nearly the amount of their cap- ital, at four per cent. upon the same
conditions. But such was at that time the state of public cred- it, 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 parliament, 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 thou- sand two
hundred pounds, insisted upon the privilege of trading separately upon their own stocks, and at
their own risks. The old East India company had a right to a separate trade upon  their own
stock till 1701; and they had likewise, both before and after that period, a right, like that  or
other private traders, to a separate trade upon the £315,000, 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
1750, when a proposal was made to parliament for putting the trade under the management of a
regu- lated company, and thereby laying it in some measure open, the East India company, in
oppo- sition to this proposal, represented, in very strong terms, what had been, at this time, the
miser- able effects, as they thought them, of this competition. 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 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 increase 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 produc- tion, and thereby increases the competition of the producers, who,
in order to undersell one an- other, have recourse to new divisions or 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 consumption, and the
encouragement given to production; precisely the two ef- fects which it is the great business of
political economy to promote. The competition, however, of which they gave this doleful
account, had not been allowed to be 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 com- pany, by their
present name of the United Company of Merchants 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 con- vert
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 divi- dend. It augmented, however, their trading stock, it being equally liable
with the other three mil- lions two hundred thousand pounds, to the losses sustained, and debts
contracted by the com- pany in prosecution of their mercantile projects. From 1708, or at least
from 1711, this company, being delivered from all competitors, and fully established in the
monopoly of the English com- merce to the East Indies, carried on a successful trade, and from
their profits, made annually a moderate dividend to their proprietors. During the French war,
which began in 1741, the ambi- tion of Mr. Dupleix, the French governor of Pondicherry,
involved them in the wars of the Car- natic, 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 settlement 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 1755, their
arms partook of the general good fortune of those of Great Britain. They defended Madras,
took Pondicherry, recovered Calcutta, 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 belong- ing to the crown;
and the company, in compensation for this claim, agreed to pay to government £400,000 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 in-  creased
it by £128,000, or had raised it from one hundred and ninety-two thousand to three hun- dred
and twenty thousand pounds a-year. They were attempting about this time to raise it still
fur- ther, to twelve and a-half per cent., which would have made their annual payments to their
propri- etors equal to what they had agreed to pay annually to government, or to £400,000 a-
year. But during the two years in which their agreement with government was to take place,
they were re- strained 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 stipulated, that
during the course of that pe- riod, 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.
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 £680,000, beyond what
they had been before their late territorial acquisitions. What the gross revenue of those
territorial acquisitions was supposed to amount to, has already been mentioned; and by an
account brought by the Cruttenden East Indiaman in 1769, the neat 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 lands, but chiefly from the customs estab- lished at their different settlements,
amounting to £439,000. The profits of their trade, too, ac- cording to the evidence of their
chairman before the house of commons, amounted, at this time, to at least £400,000 a-year;
according to that of their accountant, to at least £500,000; according to the lowest account, at
least equal to the highest dividend that was to be paid to their proprietors.  So great a revenue
might certainly have afforded an augmentation of £680,000 in their annual payments; and, at
the same time, have left a large sinking fund, sufficient for the speedy reduc- tion of their debt.
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
them- selves upon the mercy of govermnent, and to supplicate, first, a release from the further
payment of the stipulated £400,000 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, became the subject of
a parliamentary inquiry: in consequence of which, several very important alterations were
made in the consti- tution of their government, both at home and abroad. In India, their
principal settlements or Madras, Bombay, and Calcutta, which had before been altogether
independent of one another, were subjected 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, originally
instituted for the trial of mercantile causes, which arose in the city and neighbourhood, had
gradually extended its jurisdiction with the exten- sion of the empire. It was now reduced and
confined to the original purpose of its institution. In- stead 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 pro- prietor 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 be capable of being re-chosen at the election of the six
new direc- tors 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 influence which he expects to aquire by a vote in the court
of proprietors. It gives him a share, though not in the plunder, yet in the appointment of the
plunderers of India; the court of direc- tors, though they make that appointment, being
necessarily more or less under the influence of the proprietors, who not only elect those
directors, but sometimes over-rule 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 perfectly 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 £1,400,000 lent to the company by government, should be paid, and
their bond- debts be reduced to £1,500,000, they might then, and not till then, divide eight per
cent. upon their capital; and that whatever remained of their revenues and neat profits at home
should be di- vided 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 dis- charge of other contingent exigencies which the company might
labour under. But if the com- pany were bad stewards and bad sovereigns, when the whole of
their neat revenue and profits be- longed 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. 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 vari- ance. The interest of those
servants and dependants might so far predominate in the court of pro- prietors, as sometimes to
dispose it to support the authors of depredations which had been com- mitted in direct violation
of its own authority. With the majority of proprietors, the support even of the authority of their
own court might sometimes 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
disorder of the company's gov- ernment in India. Notwithstanding that, during a momentary fit
of good conduct, they had at one time collected into the treasury of Calcutta more than
£3,000,000 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 unprepared to stop or
resist the incursion of Hyder Ali; and in consequence of those disorders, the company is now
(1784) in greater distress than ever; and, in order to pre- vent 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 manage- ment of its affairs; and all those
plans seem to agree in supposing, what was indeed always abun- dantly evident, that it is
altogether unfit to govern its territorial possessions. Even the company it- self 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 neces- sarily 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 ex- pressly conferred upon them. How unjustly, how capriciously, how
cruelly, they have commonly exercised it, is too well known from recent experience. 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
recom- pense them for hazarding a dangerous and expensive experiment, of which the public is
after- wards 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 of 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 profitable for many of them
to carry on. It is for the most worthless of all purposes, too, that they are taxed in this manner.
It is merely to enable the com- pany to support the negligence, profusion, and malversation of
their own servants, whose disor- derly 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 a fall even a good deal short of that rate. Without a monopoly, however, a joint-stock
company, it would appear from experience, can- not 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 varia- tions 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 can- not long be 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 a private adventurer 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, gives a list of fifty-five joint-stock companies for foreign trade, which have
been estab- lished 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 misin- formed 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 maintaining a navigable cut or canal; and, fourthly, the similar
trade of bringing water for the supply of a great city. Though the principles of the banking
trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To
depart upon any occasion from those rules, in conse- quence 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 copart- nery. 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
priv- ilege, except that no other banking company in England shall consist of more than six
persons. The two banks of Edinburgh are joint-stock companies, 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 car- ried 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. 

When a navigable cut or canal has been once made, the management of it becomes
quite simple and easy, and it is reducible to strict rule and method. Even the making of it is so,
as it may be contracted for with undertakers, at so much a mile, and so much a lock. The same
thing may be said of a canal, an aqueduct, or a great pipe for bringing water to supply a great
city. Such under-takings, 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 neighbours, merely be- cause they might be
capable of thriving, if they had such an exemption, would certainly not be reasonable. To
render such an establishment perfectly reasonable, with the circumstance of being reducible to
strict rule and method, two other circumstances ought to concur. First, it ought to ap- pear 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 were 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 mentioned, both those circumstances
concur. The great and general utility of the banking trade, when prudently 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 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 usurers,
who had failed in the course of a few years. That navigable cuts and canals, and the works
which are sometimes necessary for supplying a great city with water, are of great and general
utility, while, at the same time, they frequently re- quire 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-smelting 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 for- tunes 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-adventurers
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 pro- moting
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 necessarily 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 encouragements the greatest
and the most effectual. ART. II.—Of the Expense of the Institution for the Education of
Youth. The institutions for the education of the youth may, in the same manner, furnish a
revenue sufficient for defraying their own expense. The fee 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 are,
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 purpose, some- times by
the sovereign himself, and sometimes by some private donor. Have those public endowments
contributed in general, to promote the end of their insti- tution? 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 pro- portion to the necessity
they are under of making that exertion. This necessity is greatest with those to 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
en- deavouring to justle 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
exertions of a few men of extraordinary spirit and ambition. Great objects, however, are
evidently not necessary, in order to occasion the greatest exertions. 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 sel- dom been sufficient to occasion any considerable exertion.
In England, success in the profession of the law leads to some very great objects of ambition;
and yet how few men, born to easy for- tunes, have ever in this country been eminent in that
profession? The endowments of schools and colleges have necessarily diminished, more or
less, the necessity of application in the teachers. 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 at- tended upon his instructions; and these favourable
sentiments 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 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 pre- cisely 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 corporate, the college, or university, of which he himself is a
member, and in which the greater part of the other members are, like himself, 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 pre- tence of
teaching. 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 superiors, however, can force him to do, is to attend upon his pupils a certain number of
hours, that is, to give a cer- tain 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 jurisdiction of
this kind, besides, is liable to be exer- cised both ignorantly and capriciously. In its nature, it is
arbitrary and discretionary; and the per- sons 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 soci- ety. 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 admi- nistration of a
French university, must have had occasion to remark the effects which naturally re- sult from
an arbitrary and extraneous jurisdiction of this kind. 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 num- ber 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 im- provement
of education just as the other statutes of apprenticeship have to that of arts and
man- ufactures. The charitable foundations of scholarships, exhibitions, bursaries, etc.
necessarily attach a certain number of students to certain colleges, independent altogether of
the merit of those partic- ular colleges. Were the students upon such charitable foundations left
free to choose what college they liked best, such liberty might perhaps contribute to excite
some emulation among different colleges. A regulation, on the contrary, which prohibited even
the independent 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. If in each college, the tutor or teacher, who was to instruct
each student in all arts and sci- ences, 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 unpleasant thing to him to be con- scious, while he is lecturing to 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, that the greater part of his students
desert his lectures; or perhaps, attend upon them with plain enough marks of neglect, contempt,
and derision. If he is obliged, therefore, to give a certain number of lectures, these motives
alone, without any other interest, might dispose him to take some pains to give tolerably good
ones. Several 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 interpreting 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 lec- ture. The
slightest degree of knowledge and application will enable him to do this, without expos- ing
himself to contempt or derision, by saying any thing that is really foolish, absurd, or
ridicu- lous. The discipline of the college, at the same time, may enable him to force all his
pupils to the most regular attendance upon his 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
disci- pline 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 educa- tion, 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 shews 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, and sometimes even to con- ceal 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
institution. 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 necessary 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 graduation, it is not neces- sary 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 universities, it may perhaps be said, are not
very well taught. But had it not been for those institutions, they would not have been
com- monly 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. 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 members, whether mas- ters 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 trans- lation of the Bible which were 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 rever- ence of the people naturally preserves the
established forms and ceremonies of religion long after the circumstances which first
introduced and rendered them reasonable, are no more. Though Latin, therefore, was no longer
understood anywhere 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 lan- guage. But it was necessary
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 therefore made, from the beginning, an
essential part of university education. It was not so with that either of the Greek or of the
Hebrew language. The infallible decrees of the church had pronounced the Latin translation of
the Bible, commonly called the Latin Vul- gate, to have been equally dictated by divine
inspiration, and therefore of equal authority with the Greek and Hebrew originals. The
knowledge of those two languages, therefore, not being indis- pensably requisite to a
churchman, the study of them did not for along time make a necessary part of the common
course of university education. There are some Spanish universities, I am as- sured, 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 Testament, and even the Hebrew text of the Old, more
favourable to their opinions than the vulgate translation, which, as might naturally be
sup- posed, had been gradually accommodated to support the doctrines of the Catholic Church.
They set themselves, therefore, to expose the many errors of that translation, which the Roman
catholic clergy were thus put under the necessity of defending or explaining. But this could not
well be done without some knowledge of the original languages, of which the study was
therefore grad- ually introduced into the greater part of universities; both of those which
embraced, and of those which rejected, the doctrines of the reformation. 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. 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, except the Holy Scriptures, being the language of not a single book in
any esteem the study of it did not commonly com- mence 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 univer- sities; and in some universities they
still continue to be so. In others, it is expected that the stu- dent 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. The ancient
Greek philosophy was divided into three great branches; physics, or natural philosophy; ethics,
or moral philosophy; and logic. This general division seems perfectly agreeable to the nature of
things. The great phenomena of nature, the revolutions of the heavenly bodies, eclipses,
comets; thunder and lightning, and other extraordinary 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 at- tempted to 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 cuitivated. 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 reputable 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 themselves 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 Aesop; and sometimes in the more simple one of apophthegms 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 gen- eral
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 prin- ciples, was first seen in the rude essays of those ancient times towards a system
of natural philos- ophy. 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 prin- ciples, in the same manner as they had attempted to arrange and connect the
phenomena of na- ture. 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 argu- ments 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 judg- ment 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
demon- strative argument, between a fallacious and a conclusive one; and logic, or the science
of the gen- eral principles of good and bad reasoning, necessarily arose out of the observations
which a scru- tiny 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 philos- ophy, previously 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 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 concerning 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 sci- ences. What are called metaphysics, 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 ne- glected. The subject in
which, after a very few simple and almost obvious truths, the most careful attention can
discover nothing but obscurity and uncertainty, and can consequently produce noth- ing but
subtleties and sophisms, was greatly cultivated. When those two sciences had thus been set in
opposition to one another, the comparison be- tween them naturally gave birth to a third, to
what was called ontology, or the science which treat- ed of the qualities and attributes which
were common to both the subjects of the other two sci- ences. 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, considered not only as
an indi- vidual, but as the member of a family, of a state, and of the great society of mankind,
was the ob- ject 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 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 philos- ophy 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 im- mediately 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 casu- istry and ascetic morality which those alterations introduced
into it, certainly did not render it more 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 univer- sities of Europe,
with more or less diligence, according as the constitution of each particular univ- ersity
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. 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 im- provements 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
slowest in adopting those improvements, and the most averse to permit any considerable
change in the established plan of education. Those im- provements were more easily
introduced into some of the poorer universities, in which the teach- ers, 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 supposed necessary for that profession; yet they gradually drew to themselves the
education of almost all other people, partic- ularly 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 preparation 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, re- turns three or four years older
than he was when he went abroad; and at that age it is very diffi- cult not to improve a good
deal in three or four years. In the course of his travels, he generally ac- quires some 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 com- monly returns
home more conceited, more unprincipled, more dissipated, and more incapable of my 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
dissi- pation the most previous years of his life, at a distance from the inspection and control of
his par- ents 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 ei- ther weakened or effaced. Nothing but the discredit into which the universities
are allowing themselves to fall, could ever have brought into repute so very absurd a practice
as that of trav- elling 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. 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
instructed, under the direction of the public magistrate, in gymnastic exercises and in music.
By gymnastic exercises, it was in- tended to harden his body, to sharpen his courage, and to
prepare him for the fatigues and dan- gers 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 histo- rians, who have given us an account of
those institutions, to humanize the mind, to soften the temper, and to dispose it for performing
all the social and moral duties of public and private life. In ancient Rome, the exercises of the
Campus Martius 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, 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 moder- ation of
contending factions seem to be the most essential circumstances 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.
Notwithstanding, therefore, the very respectable authority of Plato, Aristotle, and Polybius, and
notwithstanding the very ingenious reasons by which Mr. 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 re- spect 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 enter- taining his society. It is so at this day among the negroes on
the coast of Africa. It was so among the ancient Celtes, among the ancient Scandinavians, and,
as we may learn from Homer, among the ancient Greeks, in the times preceding the Trojan
war. When the Greek tribes had formed 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
Rome or even at 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 acquired at home, by
the assistance of some domestic pedagogue, who was, generally, either a slave or a freedman;
and the poorer citizens in the schools of such masters as made a trade of teaching for hire. Such
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, indeed, the children were acquitted from maintaining those parents
who had ne- glected 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 instructed 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 employ- ment
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 school,
both of philosophy and rhetoric, became stationary, first in Athens, and afterwards in sev-  eral
other cities. The state, however, seems never to have encouraged them further, than by
as- signing 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 Antoninus, however, no teacher
appears to have had any salary from the public, or to have had any other emoluments, but what
arose from the hono- rarius or fees of his scholars. The bounty which that philosophical
emperor, as we learn from Lu- cian, bestowed 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 profes- sion. 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 juris- diction 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 education, 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 under- stand 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 under- standing it. In the republics of ancient Greece, particularly in
Athens, the ordinary courts of jus- tice consisted of numerous, and therefore disorderly, bodies
of people, who frequently decided al- most 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
five hundred, a thousand, or fifteen hun- dred 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 themselves 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
Poly- bius 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 particularly distinguished for their superior respect to an oath.
But the peo- ple who were accustomed to make oath only before some diligent and well
informed court of jus- tice, 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 over- rate 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 in- structed. The demand for such instruction produced,
what it always produces, the talent for giv- ing it; and the emulation which an unrestrained
competition never fails to excite, appears to have brought that talent to a very high degree of
perfection. In the attention which the ancient philoso- phers excited, in the empire which they
acquired over the opinions and principles of their audi- tors, 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 compe- tition 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. 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,
be- sides, 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,
generally 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 al- most impossible to have any good private ones. Were
there no public institutions for education, no system, no science, would be taught, for which
there was not some demand, or which the circumstances of the times did not render it ei-  ther
necessary 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 subsist nowhere but in those incorporated
societies for education, whose prosperity and revenue are in a great measure independent of
their indus- try. Were there no public institutions for education, a gentleman, after going
through, with appli- cation 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 noth- ing 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 became 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 education. 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 peo- ple? 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
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 other cases, the state of the soci- ety does not place the
greater part of individuals in such situations; and some attention of govern- ment 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 operations; frequently to one or two. But the understandings of the greater part of men
are neces- sarily formed by their ordinary employments. 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 understanding, or to exercise his invention,
in finding out expedients for removing difficulties which never occur. He naturally loses,
therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is
possible for a human creature to become. 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 forming any just judgment
concerning many even of the ordinary duties of pri- vate 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 ac-  quired at the expense of
his intellectual, social, and martial virtues. But in every improved and civilized society, this is
the state into which the labouring poor, that is, the great body of the peo- ple, 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 shep- herds, and even of husbandmen in
that rude state of husbandry which precedes the improvement of manufactures, and the
extension of foreign commerce. In such societies, the varied occupa- tions 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 civilized society, seems to benumb the under- standing of almost
all the inferior ranks of people. 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 states- man, 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
obvi- ous 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 civilized state. Though in a rude society there is a good deal of variety in the
occupa- tions of every individual, there is not a great deal in those of the whole society. Every
man does, or is capable of doing, almost every thing which any other man does, or is capable
of being. Every man 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 con- ducting the whole simple business of the society. In a civilized
state, on the contrary, though there is little variety in the occupations of the greater part of
individuals, there is an almost infi- nite variety in those of the whole society. These varied
occupations present an almost infinite vari- ety of objects to the contemplation of those few,
who, being attached to no particular occupation themselves, have leisure and inclination to
examine the occupations of other people. The contem- plation of so great a variety of objects
necessarily exercises their minds in endless comparisons and combinations, and renders their
understandings, in an extraordinary degree, both acute anti comprehensive. Unless those few,
however, happen to be placed in some very particular situa- tions, their great abilities, though
honourable to themselves, may contribute very little to the good government or happiness of
their society. Notwithstanding 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 civilized and commercial
soci- ety, the attention of 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 ac- quiring, 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 the 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
employments, too, in which people of some rank or fortune spend the greater part of their lives,
are not, like those of the common people, simple and uniform. They are almost all of them
extremely complicated, and such as exercise the head more than the hands. The 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 ha- rass
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 maintain them, even in infancy. As soon as
they are able to work, they must apply to some trade, by which they can earn their subsistence.
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 to think of any thing else. But
though the common people cannot, in any civilized society, be so well instructed as peo- ple 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 occupations. 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. The public can facilitate this acquisition, by
establishing in every parish or district a little school, where children maybe 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 to neglect his business. In Scotland, the estab- lishment 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 lit- tle more instructive than
they commonly are; and if, instead of a little smattering in 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 lit-  erary
education of this rank of people would, perhaps, be as complete as can be. There is scarce
a common trade, which does not afford some opportunities of applying to it the principles of
geom- etry and mechanics, and which would not, therefore, gradually exercise and improve the
common people in those principles, the necessary introduction to the most sublime, as well as
to the 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 the most essential parts of education, by obliging every
man to undergo an examination or proba- tion in them, before he can obtain the freedom in any
corporation, or be allowed to set up any trade, either in a village or town corporate. It was in
this manner, by facilitating the acquisition of their military and gymnastic exercises, by
encouraging it, and even by imposing upon the whole body of the people the necessity
of learning those exercises, that the Greek and Roman republics maintained the martial spirit
of their respective citizens. They facilitated the acquisition of those exercises, by appointing a
certain place for learning and practising them, and by granting to certain masters the privilege
of teach- ing 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, provided the latter had learned them equally
well. Those republics en- couraged the acquisition of those exercises, by bestowing little
premiums and badges of distinc- tion upon those who excelled in them. To have gained a prize
in the Olympic, Isthmian, or Ne- maean 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 lib- erty, 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 ob- struct them as much, if unfortunately they
should ever be directed against the constitution of the state. 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 estab- lished, they executed
themselves, and it required little or no attention from government to main- tain them in the
most perfect vigour. Whereas to maintain, even in tolerable execution, the com- plex
regulations of any modern militia, requires the continual and painful attention of govern- ment,
without which they are constantly falling into total neglect and disuse. The influence, be- sides,
of the ancient institutions, was much more universal. By means of them, the whole body of the
people was completely instructed in the use of arms; 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,
evi- dently 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 de- fence of the society, yet, to prevent that sort of mental mutilation, deformity,
and wretchedness, which cowardice necessarily involves in it, from spreading themselves
through the great body of the people, would still deserve the most serious attention of
government; in the same manner as it would deserve its most serious attention to prevent a
leprosy, or any other loathsome and offen- sive 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 civilized society, seem so frequently to benumb
the understandings of all the inferior ranks of people. A man with- out the proper use of the
intellectual faculties of a man, is, if possible, more contemptible than even a coward, and
seems to be mutilated and deformed in a still more essential part of the char- acter 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 unin- structed.
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 re- spect of their lawful superiors, and they are, therefore, more disposed 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 wan- ton 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. 

Art. 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 instruc- tion.
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 the 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 contributions of
their hear- ers; 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 tythe 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, the teachers of a new religion 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 peo- ple; 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 ac- tive, hardy, and
hungry Tartars of the north. Such a clergy, upon such an emergency, have com-  monly 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 perse- cute
the dissenters; and that in general every religious sect, when it has once enjoyed, for a cen- tury
or two, the security of a legal establishment, has found itself incapable of making any
vig- orous defence against any new sect which chose to attack its doctrine or discipline. Upon
such occasions, the advantage, 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 en- dowed clergy of the established church, and are at present chiefly cultivated by the
dissenters and by the methodists. The independent provisions, however, which in many places
have been made for dissenting teachers, by means of voluntary subscriptions, of trust rights,
and other evasions of the law, seem very 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 dissenters, are much more in vogue. In the church of Rome the industry and
zeal of the inferior clergy are 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 subsistence from the voluntary obla- tions 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 subsis- tence
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 altogether 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
to maintain the necessary discipline over their inferiors, but seldom give themselves any
trouble about the in- struction 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, "are of such a nature,
that, while they promote the interests of the society, they are also useful or agreeable to some
individuals; and, 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 artizans, find- ing 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 al- ways 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 individual; 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
profession, by establishing a long subordi- nation 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 whet- ted by such an additional motive; and their skill in the profession, as
well as their address in gov- erning 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 truth, 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 vio- lent abhorrence of all other sects,
and continually endeavour, by some novelty, to excite the lan- guid devotion of his audience.
No regard will be paid to truth, morals, or decency, in the doctrines inculcated. Every tenet will
be adopted that 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 intended frugality, in saving a fixed establishment for the priests; and that, in reality, the
most decent and advantageous composition, 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 pastors. 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 soci- ety." But whatever may have been the good or bad effects of the independent provision
of the cler- gy, 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 his interest, to league it- self 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 adversaries had generally leagued
themselves with the enemies of the con- quering party, and were, therefore the enemies of that
party. The clergy of this particular sect hav- ing 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 adver- saries; and their second, that he should bestow an
independent provision on themselves. As they had generally contributed a good deal to the
victory, it seemed not unreasonable that they should have some share in the spoil. They were
weary, besides, of humouring the people, and of depend- ing upon their caprice for a
subsistence. In making this demand, therefore, they consulted their own ease and comfort,
without troubling themselves about the effect which it might have, in fu- ture times, upon the
influence and authority of their order. The civil magistrate, who could com- ply with their
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
prob- ably 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,
and, in this case, no doubt, have been, a great multitude of religious sects. Almost every
different congregation might probably have had 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 exer- tion, 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 teach- er, or sect of teachers, could have been very great. The
interested and active zeal of religious teach- ers 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 are so sel- dom 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 admir- ers. The teachers
of each little sect, finding themselves almost alone, would be obliged to respect those of almost
every other sect; and the concessions which they would mutually find in both convenient and
agreeable to make one to 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 fanaticism, such as wise men have, in all ages of the world, wished to see estab-  lished; but
such as positive law has, perhaps, never yet established, and probably never will estab- lish 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 ec- clesiastical 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 ori- gin, it would probably, by this time, have been productive of the
most philosophical good temper and moderation with regard to every sort of religious
principle. It has been established in Penn- sylvania, 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. 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, pro- vided those sects
were sufficiently numerous, and each of them consequently 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 gov- ernment 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 themselves
fast enough, so as soon to become sufficiently numerous. In every civilized society, in every
society where the distinction of ranks has once been com- pletely established, there have been
always two different schemes or systems of morality current at the 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 the 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 consti-  tute 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, etc. provided they are
not accompanied with gross indecency, and do not lead to falsehood and injustice, are
generally treat- ed 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 ex- cesses, 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 excep- tions; for there have
been some. It was the system by which they could best recommend them- selves to that order
of people, to whom they first proposed their plan of reformation upon what had been before
established. Many of them, perhaps the greater part of them, have even endeav-  oured 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 any
thing 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 dares 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 condi- tion, on the
contrary, is far from being a distinguished member of any great society. While he re-  mains 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 ob- served 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 con- sideration which he never had before. All his brother
sectaries are, for the credit of the sect, inter- ested 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 evil effects attend it, expulsion or ex- communication from the sect. In little religious
sects, accordingly, the morals of the common peo- ple 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 disagree- ably rigorous and
unsocial. There are two very easy and effectual remedies, however, by whose joint operation
the state might, without violence, correct 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 science and philosophy, which the state might ren- der 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, from
their own interest, would at- tempt, without scandal or indecency, to amuse and divert the
people by painting, poetry, music, dancing; by all sorts of dramatic representations 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 inconsistent with that temper of mind which was fittest for their purpose, or which
they could best work upon. Dramatic representations, besides, fre- quently 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 an- other, it would not be
necessary that any of them should have any particular or immediate depen- dency upon the
sovereign or executive power; or that he should have anything to do either in ap- pointing 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 incorporation. They can act
in con- cert, 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 importance of the whole doctrine which
they inculcate, and upon the supposed 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 em- ploy all the terrors of religion, in order to oblige the people
to transfer their allegiance to some more 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 addi- tional crime of heresy, notwithstanding their solemn
protestations of their faith, and humble sub- mission to every tenet which she thought proper to
prescribe to them. But the authority of reli- gion is superior to every other authority. The fears
which it suggests conquer all other fears. When the authorized teachers of religion propagate
through the great body of the people, doc- trines subversive of the authority of the sovereign, it
is by violence only, or by the force of a stand- ing 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, sufficiently demonstrate how precarious and insecure
must always be the situation of the sovereign, who has no proper means of influencing 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 pro- tecting, 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 fre- quently 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 au- thority, 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 deprivation 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 of his ministers, it would perhaps be impossible for
them to maintain their authority with the people, who would then consider them as mercenary
dependents upon the court, in the sincerity of whose instructions they could no longer have any
confidence. But should the sovereign attempt irregularly, and 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 doc- trine, 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 govermnent, and ought in particular never to be employed against any order of
men who have the smallest pretensions to independency. To at- tempt to terrify them, serves
only to irritate their bad humour, and to confirm them in an oppo- sition, 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 Stuart
sometimes employed the like means in order to influence some of the members of the
parliament of Eng- land, and they generally found them equally intractable. The parliament of
England is now man- aged 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. That experiment was not pursued. For though management and persuasion are always
the easiest and safest instru- ments 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 therefore disdained to use management and
persuasion. But there is no 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 an 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 grada- tion 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 pub- lic 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, how- ever, 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
with- in 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 ex- pect 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 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 uni- form plan. The clergy of each
particular country might be considered as a particular detachment of that army, of which the
operations could easily be supported and seconded by all the other de- tachments quartered in
the different countries round about. Each detachment was not only inde- pendent of the
sovereign of the country in which it was quartered, and by which it was main- tained, 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 Eu-  rope,
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
estab- lished, 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
independent, and equal- ly 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 large
portion of the rents of all the other es- tates 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, etc. 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 sur- plus 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 re- tainers 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 char- ity 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 posses- sions, 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 his own dominions, supported by that of the clergy of all the neighbouring
dominions. In such circumstances, the wonder is, not that 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, conse- quences of this state of things. How dangerous must it
have been for the sovereign to attempt to punish a clergyman for any crime whatever, if his
order were disposed to protect 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 religion? The sover- eign 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 government 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 dan- ger 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; and is now
likely, in the course of a few centuries more, perhaps, to crumble into ruins altogether. The
gradual improvements of arts, manufactures, and commerce, the same causes which
de- stroyed the power of the great barons, destroyed, in the same manner, through the greater
part of Europe, the whole temporal 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 charity became gradually less extensive,
their hospitality less lib- eral, or less profuse. Their retainers became consequently less
numerous, and, by degrees, dwin- dled 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 pri- vate 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 small- er 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 had 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 their 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 provoked and disgusted by the vanity, luxury, and
expense of the richer clergy, who appeared to spend upon their own pleasures what had always
before been regarded as the patrimony of the poor. In this situation of things, the sovereigns in
the different states of Europe endeavoured to re- cover the influence which they had once had
in the disposal of the great benefices of the church; by procuring 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- establishing 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, established in France in
the fifteenth century. In order to render the election valid, it was necessary that the sovereign
should both consent to it before hand, 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 regulations, 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, be- fore 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 shewn 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 pragmatic 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, the second
prince of the Capetian race, was most unjustly excommunicated by the court of Rome, his own
servants, it is said, threw the vict- uals which came from his table to the dogs, and refused to
taste any thing themselves which had been 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 reformation 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
doctrines, 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 the 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 de- gree 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
frequently 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 vener- ation 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 Swe- den. Christiern II.
was afterwards 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 Frederic 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
quar- rel 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 sufficient 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 reformation 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., accord- ingly,
though he did not embrace himself the greater part of the doctrines of the reformation, was  yet
enabled, by their general prevalence, to suppress all the monasteries, and to abolish the
au- thority of the church of Rome in his dominions. That he should go so far, though he went
no further, 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, hap- pened 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 government 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
reformation, the Lutheran and Calvinistic sects, the only sects among them, of which the
doctrine and discipline have ever yet been estab- lished 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 sover- eign
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
pa- trons. This system of church government was, from the beginning, favourable to peace and
good order, and to submission to the civil sovereign. It has never, accordingly, been the
occasion of any 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 loy- alty 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 veneration, and upon the greater part of men of rank and fortune, who
avow that they do not practise them, the abhorrence of the com- mon 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 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 mat- ter 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 par- ties; and when that city happened, either to
constitute itself a little republic, or to be the head and capital of a little republic, as in 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, therefore, 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 extensive country in which this presbyterian form of church gov- ernment 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 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 10th of queen Anne, ch.12, on account of the
confusions and disorders which this more popular mode of election had almost
everywhere 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 10th of
queen Anne restored the rights of patronage. But though, in Scotland, the law gives the
benefice, without any exception to the person presented by the patron; yet the church requires
sometimes (for she has not in this respect been very uniform in her decisions) a certain
concurrence of the people, before she will confer upon the presentee what is called the cure of
souls, or the ecclesiastical jurisdiction in the parish. She sometimes, at least, from an affected
concern for the peace of the parish, delays the settlement till this concurrence can be procured.
The private tampering of some of the neigh- bouring 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. The equality which the presbyterian form of church government
establishes among the cler- gy, 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 con- siderable, as commonly 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 independency of their spirit, which they are apt to construe
into ingratitude for past favours, but which, at worse, perhaps, is seldom anymore 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 be, no doubt, carried too far, has, however, some very agreeable effects. Nothing
but exemplary morals can give dignity to a man of small fortune. The vices of levity and vanity
necessarily render him ridiculous, and are, besides, almost as ruinous to him as they are to the
common people. In his own conduct, therefore, he is obliged to follow that system of morals
which the common people respect the most. He gains their esteem and affec- tion, by that plan
of life which his own interest and situation would lead him to follow. The com- mon 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 kind-  ness
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
persecution 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 establishment than a church benefice. The universities have, in  this case, the
picking and chusing 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, be- fore they can have acquired experience and knowledge enough to be of much use
to it. It is ob- served by Mr. de Voltaire, that father Porée, a jesuit of no great eminence in the
republic of let- ters, 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 sin- gular, that scarce one of them should have been a professor in a
university. The famous Cassendi 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
Mr. 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 emi- nent 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 countries of Germany, in Holland, in Scotland, in
Sweden, and Denmark, 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 Aris- totle, down to those of Plutarch and Epictetus, Suetonius, and Quintilian. To
impose upon any man the necessity of teaching, year after year, in any particular branch of
science seems in reality to be the most 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 any
thing, 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 cer- tainly 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 mediocrity 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 the 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 ren- der their learning both as solid as
possible, and as useful as possible. The revenue of every established church, such parts of it
excepted as may arise from partic- ular 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 sovereign on the one hand, or the people on the other; and, in all cases, the less able must
the state be to defend itself. In several protestant 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 established 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 fund, a very large sum, supposed to amount to several millions;
part or which is deposited in a public treasure, 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, ei-  ther 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
Scot- land, including their glebe or church lands, and the rent of their manses or dwelling-
houses, esti- mated according to a reasonable valuation, amounted only to £68,514:1:5 1/12d.
This very mod- erate 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 ef- fects, both civil and religious, which an
established church can be supposed to produce, are pro- duced by it as completely as by any
other. The greater part of the protestant churches of Switzer- land, which, in general, are not
better endowed than the church of Scotland, produce 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 established 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 recompence
should be, as exactly as possible, proportioned to the nature of the service. If any service is
very much underpaid, 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 negli- gence 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
consumes the time which ought to be employed in the duties of his function, but in the eyes of
the common people, destroys al- most 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
expenses necessary for enabling the sovereign to perform his several du- ties, 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 government. 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 dif- ferent 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
burgo-master.  

CONCLUSION.  The expense of defending the society, and that of supporting the dignity of
the chief magis- trate, are both laid out for the general benefit of the whole society. It is
reasonable, therefore, that they should be defrayed by the general contribution of the whole
society; all the different mem- bers 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 ex- pense, are those who, by their injustice in one way or another,
make it necessary to seek redress or protection from the courts of justice. The persons, again,
most immediately 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, accord- ing 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 crim- inals who have not themselves any
estate or fund sufficient for paying those fees. 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 un- just that the whole society should contribute
towards an expense, of which the benefit is confined to a part of the society. The expense of
maintaining good roads and communications is, no doubt, beneficial to the whole society, and
may, therefore, without any injustice, be defrayed by the general contributions 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 turnpike 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 instruction, is likewise, no doubt, beneficial to the whole society, and may, therefore,
without injustice, be defrayed by the general contribution 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 ben- efit 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
can- not be maintained altogether, or are not maintained altogether, by the contribution of such
partic- ular members of the society as are most immediately benefited by them; the deficiency
must, in most cases, be made up by the general contribution 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 fol- lowing chapter. 

CHAPTER II. OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE OF

THE SOCIETY.  The revenue which must defray, not only the expense of defending the
society and of sup- porting the dignity of the chief magistrate, but all the other necessary
expenses of government, 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 employ- ing 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 ear-  liest and rudest state
of civil government only, that 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 Hamburgh is said to do so from the profits of a
public wine-cellar and apothecary's shop. {See Memoires concernant les Droits et Impositions
en Europe, tome i. page 73. This work was compiled by the order of the court, for the use of a
commission employed for some years past in considering the proper means for reforming the
finances of France. The ac- count of the French taxes, which takes up three volumes in quarto,
may be regarded as perfectly authentic. That of those of other European nations was compiled
from such information as the French ministers at the different courts could procure. It is much
shorter, and probably not quite so exact as that of the French taxes.} That state cannot be very
great, of which the sovereign has leisure to carry on the trade of a wine-merchant or an
apothecary. The profit of a public bank has been a source of revenue to more considerable
states. It has been so, not only to Hamburgh, 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 divi- dend of the bank of England at five and a-
half per cent., and its capital at ten millions seven hun- dred and eighty thousand pounds, the
neat annual profit, after paying the expense of manage- ment, 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 admi- nistration 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 government us 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 negli- gent
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. Princes, however, have frequently
engaged in many other mercantile 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 an- other. 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, 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 convenient, accord- ingly 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
ordinary assistance of government, in order to avoid immediate bankruptcy. In their former
situation, their servants in India considered themselves as the clerks of merchants; in their
present situation, those ser- vants 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, ei-  ther
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 secu- rity of the funds in which it is placed, or upon
the good faith of the government which has the management 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 credit. This policy of lending money to foreign states is, so far as I know peculiar to the
canton of Berne. The city of Hamburgh {See Memoire concernant les Droites et Impositions
en Europe tome i p. 73.}has established a sort of public pawn-shop, which lends money to the
subjects of the state, upon pledges, at six per cent. interest. This pawn-shop, or lombard, as it is
called, affords a rev- enue, it is pretended, to the state, of a hundred and fifty thousand crowns,
which, at four and six- pence the crown, amounts to £33,750 sterling. The government of
Pennsylvania, without amassing any treasure, invented a method of lend- ing, 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 re-  deemed
fifteen years after their date; and, in the mean time, made transferable from hand to  hand, like
banknotes, 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 consid- erable
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 circumstances: first, upon the demand for some other instrument
of com- merce, 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 government 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. 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, renders 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 more stable and
permanent nature; and the rent of public lands, accord- ingly, 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 re- publics of Greece and Italy
derived for a long the the greater part of that revenue which defrayed the necessary expenses of
the commonwealth. The rent of the crown lands constituted 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 which, in modern times, occa- sion the greater part of the necessary expense or
all great states. But in the ancient republics of Greece and Italy, every citizen was a soldier,
and both served, and prepared himself for service, at his own expense. Neither of those two
circumstances, therefore, could occasion any very consid- erable expense 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
time sufficiently pre- pared the great body of the people for war; and when they took the field,
they were, by the condi- tion of their feudal tenures, to be maintained either at their own
expense, or at that of their imme- diate lords, without bringing any new charge upon the
sovereign. The other expenses of govern- ment were, the greater part of them, very moderate.
The administration of justice, it has been shewn, 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 household. 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 sta- bles was
committed to the lord constable 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 considered as a sort of military governors. They seem to
have been the only military officers whom it was necessary to maintain in time of peace. In
these cir- cumstances, the rent of a great landed estate might, upon ordinary occasions, very
well defray all the necessary expenses of government. In the present state of the greater part of
the civilized monarchies of Europe, the rent of all the lands in the country, managed as they
probably would be, if they all belonged to one propri- etor, 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 mil- lions 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. 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 £123,399: 6: 7; that of the city of Westminster to £63,092: 1: 5; that of the palaces
of Whitehall and St. James's, to £30,754: 6: 3. A certain proportion of the land tax is, in
the 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 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 king- dom at an average, very much below the real value; though
in several particular counties and dis- tricts 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 esti- mation 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 prob- ably 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 land 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 revenue 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 otherwise might be, by ten
millions a-year only; but the revenue of the great hotly 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 num- ber of people which thirty
millions a-year, deducting always 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 civilized 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 forests 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 even 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 unim- proved, uncultivated, and low-rented
crown lands, might well be expected to sell at forty, fifty, or sixty years purchase. The crown
might immediately enjoy the revenue which this great price would redeem from mortgage. In
the course of a few years, it would probably enjoy another rev- enue. 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 or custom and excise, would necessarily increase with the
revenue and consumption of the people. The revenue which, in any civilized monarchy, the
crown derives from the crown lands, though it appears to cost nothing to individuals, 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. Lands, for the purposes of pleasure
and magnificence, parks, gardens, public walks, etc. poss- essions which are everywhere
considered as causes of expense, not as sources of revenue, seem to be the only lands which, in
a great and civilized monarchy, ought to belong to the crown. Public stock and public lands,
therefore, the two sources of revenue which may peculiarly be- long to the sovereign or
commonwealth, being both improper and insufficient funds for defray- ing the necessary
expense of any great and civilized 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 common- wealth.  

PART II. Of Taxes.  The private revenue of individuals, it has been shown in the first book of
this Inquiry, arises, ultimately from three different sources; rent, profit, and wages. Every tax
must finally be paid from some one or other of those three different sources of revenue, or
from all of them indif- ferently. 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 indifferently 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 these taxes, it will appear from the following review, are
not finally paid from the fund, or source of revenue, upon which it is intended they should
fall. Before I enter upon the examination of particular taxes, it is necessary to premise the four
fol- lowing maximis with regard to taxes in general. 1. The subjects of every state ought to
contribute towards the support of the government, as nearly as possible, in proportion to their
respective abilities; that is, in proportion to the revenue 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 es- tate, who are all obliged to
contribute in proportion to their respective interests in the estate. In the observation or neglect
of this maxim, consists what is called the equality or inequality of taxa- tion. 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. In the following
examination of different taxes, I shall seldom take much farther notice of this sort of
inequality; but shall, in most cases, confine my observations to that inequality which is
occa- sioned by a particular tax falling unequally upon that particular sort of private revenue
which is affected by it. 2. 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 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. 3. 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 wherewithall 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. 4. 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 than it brings into the public treasury, in the four following ways.
First, the levying of it may require a great number 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. Secondly, it may obstruct the industry of the people, and discourage them
from applying to certain 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 eas- ily 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 community might have received from the employment of their capitals. An
injudicious tax offers a great temptation to smuggling. But the penalties of smuggling must
arise in proportion to the temptation. The law, contrary to all the ordinary principles of
jus- tice, first creates the temptation, and then punishes those who yield to it; and it commonly
en- hances the punishment, too, in proportion to the very circumstance which ought certainly
to alle- viate it, the temptation to commit the crime. {See Sketches of the History of Man page
474, and Seq.} 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, vexation,
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 dif- ferent ways, that taxes are frequently so much more burdensome
to the people than they are beneficial to the sovereign. The evident 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 the time and 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 curtain
rent, which valuation is not afterwards to be altered; or it may be im- posed 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 cer- tain invariable canon, though it should be equal
at the time of its first establishment, necessarily becomes unequal in process of time, according
to the unequal degrees of improvement or neglect in the cultivation of the different parts of the
country. In England, the valuation, according to which the different counties and parishes were
assessed to the land tax by the 4th of William and Mary, was very unequal even at its first
establishment. 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 per- fectly certain. The time of
payment for the tax, being the same as that for the rent, is as conve- nient 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 pay-  ment of the rent.
This tax is levied by a much smaller number of officers than any other which af- fords nearly
the same revenue. As the tax upon each district does not rise with the rise of the rent,  the
sovereign does not share in the profits of the landlord's improvements. Those
improvements 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 sub- jects the landlord to no other inconveniency besides the
unavoidable one of paying the tax. The advantage, however, which the land-lord has derived
from the invariable constancy of the valu- ation, 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 difference 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 valu- ation. Had the state of the country been different, had rents been
gradually falling in consequence 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 valu- ation 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 valuation, 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 pre- ceded the discovery of the mines of America, the constancy of the
valuation might have proved very oppressive to the landlord. 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 constancy of valuation would have reduced very much this branch of the revenue of the
sovereign. Had any considerable alter- ation 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 two pence, 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 four pence, 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 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 empires, like all the other works of men, have
all hitherto proved mortal, yet every empire aims at immortality. Every constitution, 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 tran- sitory, 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. That all taxes ought to fall as equally as pos- sible upon the fund which must finally pay
them, is certainly true. But without entering into the disagreeable discussion of the
metaphysical arguments by which they support their very inge- nious 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. {Memoires
concernant les Droits, p. 240, 241.} The leases are recorded in a pub- lic register, which is kept
by the officers of revenue in each province or district. When the propri- etor cultivates his own
lands, they are valued according to an equitable estimation, and he is al- lowed a deduction of
one-fifth of the tax; so that for such land he pays only eight instead of ten  per cent. of the
supposed rent. A land-tax of this kind is certainly more equal than the land-tax of England. It
might not, per- haps, 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 uncertainty, 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 conditions; and if part of those penalties were 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. This prac-  tice 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 fre- quently
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 diminishes 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 cultivate, necessarily keeps down, below
what it would otherwise have been, the most important part of the revenue of the community.
By ren- dering the tax upon such fines a good deal heavier than upon the ordinary rent, this
hurtful prac- tice might be discouraged, to the no small advantage of all the different parties
concerned, of the landlord, of the tenant, of the sovereign, and of the whole community. 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
landlord's conceit of his own superior knowledge (a conceit in most cases very ill-
founded), ought always to be considered as an additional rent, as a rent in service, instead of a
rent in money. In order to discourage the practice, which is generally a foolish one, this species
of rent might be valued rather high, and consequently 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, etc.; 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 ten- ants are poor and beggarly, pretty much according to the degree in which they
take place. By valu- ing, 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 arbitration
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 con- tribute 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 industrious 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 of 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 com- parison 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 cer- tainly be less disposed to improve,
when the sovereign, who contributed nothing to the expense, was to share in the profit of the
improvement. Even this objection might, perhaps, be obviated, by allowing 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
complete 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 or the principal advantages
pro- posed by this species of land-tax. The term, therefore, allowed, for the indemnification of
the land- lord, ought not to be a great deal longer than what was necessary for that purpose, lest
the remote- ness of the interest should discourage too much this attention. It had better,
however, be some- what 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 par- ticular 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 giv- ing to both the most perfect security that they
shall enjoy the full recompence of their own indus- try; and by procuring to both the most
extensive market for every part of their produce, in conse- quence 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 or land, it does not appear likely to occasion any other inconveniency to the
landlord, except always the un- avoidable one of being obliged to pay the tax. In all the
variations of the state of the society, in the improvement 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 established 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 re- course 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. Doomsday-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 ac- tual survey and valuation, which is reviewed and altered
from time to time. {Memoires concurent les Droits, etc. tom, i. p. 114, 115, 116, etc.}
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 accu- racy. According to
that valuation, the lands belonging to the bishop of Breslaw 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. {Id. tom i. p.85, 84.} The survey of the duchy of Milan, which was
begun in the time of Charles VI., was not perfected till after 1760 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 Sar- dinia. {Id. p. 280, etc.; also p, 287. etc. to 316.} 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 contribute, 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
coun- tries, 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 or their value. In Silesia, lands held by a noble tenure
are taxed three per cent. higher than those held by a base tenure. The honours and privileges of
different kinds annexed to the former, his Prussian majesty had probably imagined, would
sufficiently compensate to the proprietor a small aggra- vation 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 countries, the system of taxation, instead of alleviating,
aggravates this inequality. In the dominions of the king of Sar- dinia, and in those provinces of
France which are subject to what is called the real or predial taille, the tax falls altogether upon
the lands held by a base tenure. Those held by a noble one are ex- empted. 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
Sardinia, and of the duchy of Milan, actually exert an attention of this kind; an atten-  tion so
unsuitable to the nature of government, that it is not likely to be of long continuance,
and which, if it is continued, 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 taille, according, it is said, to a very exact survey
and valuation. {Memoires concernant les Droits, etc. tom. ii p. 139, etc.} By 1727, this
assessment had become altogether unequal. In order to remedy this inconveniency, government
has found no better expedient, than to impose upon the whole gener- ality an additional tax of a
hundred and twenty thousand livres. This additional tax is rated upon all the different districts
subject to the taille according to the old assessment. But it is levied only upon those which, in
the actual state of things, are by that assessment under-taxed; and it is ap- plied to the relief of
those which, by the same assessment, are over-taxed. Two districts, for exam- ple, 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 assessment, both taxed at a thousand livres. Both these dis- tricts
are, by the additional tax, rated at eleven hundred livres each. But this additional tax is
levied only upon the district under-charged, and it is applied altogether to the relief of that
overcharged, which consequently 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 as- sessment. 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 in the Rent, 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. When a certain portion of the 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 be- forehand
what the church tythe, which is a land tax of this kind, is, one year with another, likely  to
amount to. The tythe, 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 differrent 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 tythe. But if a tenth of the produce is taken from him in the
way of tythe, 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 tythe, 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 tythe, 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 tythe may sometimes be a tax of no more than one-fifth part, or
four shillings in the pound; whereas upon that of poorer lands, it may sometimes be a tax of
one half, or of ten shillings in the pound. The tythe, as it is frequently a very unequal tax upon
the rent, so it is always a great discour- agement, 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 improve- ments; nor the other to raise the most valuable, 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 tythe to the United Prov- inces, 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 at- tempts 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 tythe 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 culti- vation of land. The sovereigns of China, those of Bengal while under
the Mahometan gov- ermnent, and those of ancient Egypt, are said, accordingly, to have been
extremely attentive to the making and maintaining of good roads and navigable canals, in order
to increase, as much as pos- sible, both the quantity and value of every part of the produce of
the land, by procuring to every part of it the most extensive market which their own dominions
could afford. The tythe 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 dis- tant 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 maintenance of the church, they are attended with
nothing but inconveniency. Taxes upon the produce of land may be levied, either in kind, or,
according to a certain valu- ation in money. The parson of a parish, or a gentleman of small
fortune who lives upon his estate, may some- times, perhaps find some advantage in receiving,
the one his tythe, and the other his rent, in kind. The quantity to be collected, and the district
within which it is to be collected, 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 suf- fering much by the neglect, and more by
the fraud, of his factors and agents, if the rents of an es- tate 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 necessarily 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 collectors, that a very small part of what was levied upon the peo- ple would ever arrive
at the treasury of the prince. Some part of the public revenue of China, how- ever, 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 valu- ation, 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 both to 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 may, at different times, bear very different proportions to that
value. 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 tythe;
the tax be- comes, 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 tythe in the greater part of those parishes which pay what is called a modus,
in lieu of all other tythe is a tax of this kind. During the Mahometan government of Bengal,
instead of the payment in kind of the 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 prov- inces, exchanged this modus for a payment in kind.
Under their management, this change is like- ly both to discourage 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 management of the company.
The servants of the company may, perhaps, have prof- ited by the 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 ordinary profit of building, is, therefore, every- where 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 builders affords at any
time 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 for-  mer. This
surplus rent is the price which the inhabitant of the house pays for some real or sup- posed
advantage of the situation. In country houses, at a distance from any great town, where there is
plenty of ground to chuse upon, the ground-rent is scarce anything, or no more than what the
ground 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 very well paid for. Ground-rents
are gener- ally 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. 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 all
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 that 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
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, neces- sarily fall upon the ground-rent. The
final payment of this tax, therefore, 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 conveniency; and partly upon
the owner of the ground, who, in order to pay his share, would be obliged to give up a part of
his revenue. In what proportion this final payment would be di- vided 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 cir- cumstances, 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 liv- ing, is
different in the different degrees of fortune. It is, perhaps, highest in the highest degree, and it
diminishes gradually through the inferior degrees, so as in general to be lowest in the low-  est
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, therefore, would in general fall heaviest upon the rich; and in this sort of
inequality there would not, perhaps, be any thing very unreasonable. It is not very
unreasonable that the rich should contribute to the public expense, not only in proportion to
their revenue, but some- thing 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. Nei- ther 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 de- rived 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 indifferently 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
consumable 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 endeav- our to evade it as much as they could, by contenting themselves with
smaller houses, and by turn- ing 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
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
might 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
civilized 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 neat rent of their es- tates. 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. {Since the first publication of
this book, a tax nearly upon the above-mentioned principles has been imposed.} Ground-rents
are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents
would not raise the rent of houses; it would fall altogether upon the owner of the ground-rent,
who acts always as a monopolist, and exacts the greatest rent which can be got for the use of
his 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
prob- ably be disposed to pay more for the use of the ground. Whether the tax was to be
advanced by the inhabitant or by the owner of the ground, would be of little importance. The
more the inhab- itant 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. 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 atten- tion of his own. Though a part of this revenue should be taken from
him in order to defray the ex- penses 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
ordinary 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 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
proportion 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 vari- ation in the rate of particular houses, though that of the
district is always the same. Improve- ments of rent, by new buildings, repairs, etc. go to the
discharge of the district, which occasions still further variations in the rate of particular
houses. In the province of Holland, {Memoires concernant les Droits, etc. p. 223.} every house
is taxed at two and a-half per cent. of its value, without any regard, either to the rent which it
actually pays, or to 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 rev- enue, 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, in- deed, according to which the houses are rated, though very
unequal, is said to be 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, there- fore, 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
necessary that the tax-gatherer should enter every room in it. This odious visit rendered the tax
odious. Soon after the Revo- lution, 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
up- wards 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 two 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 aug- ments 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 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 coun- try, and of the increasing revenue of
its inhabitants. Had it not been for the tax, rents would prob- ably have risen still
higher. ARTICLE II.—Taxes upon Profit, or upon the Revenue arising from Stock. The
revenue or profit arising from stock naturally divides itself 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 em- ploying 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 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 culti- vation 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 land- lord. 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 alto-  gether 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 him- self
from the tax in the one way, he would be obliged to relieve himself in the other. 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 neat 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 neat produce which remains, after replacing the stock of the farmer,
to- gether with his reasonable profit, cannot be greater after the tax than before it, so, for the
same reason, a tax upon the interest of money could not raise the rate of interest; the quantity
of stock or money in the country, like the quantity of land, being supposed to remain the same
after the tax as before it. The ordinary rate of profit, it has been shewn, in the first book, is
everywhere regulated by the quantity of stock to be employed, in proportion to the quantity of
the employ- ment, 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 the 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 por- tion of this profit, necessary for compensating the risk and trouble of the
employer, would like- wise 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 sub- ject 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 possesses, 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 ascertained 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 inqui- sition into every
man's private circumstances, 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 con-  tinual
and endless vexation as no person could support. Secondly, land is a subject which cannot be
removed; whereas stock easily may. The propri- etor of land is necessarily a citizen of the
particular country in which his estate lies. The proprietor of 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 maintained 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. 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 compensated only by its extreme moderation; in conse- quence
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 the 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, the greater part was as- sessed 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 he assessed upon the stock of any individual, has been very much diminished,
as well as rendered of much less consequence. 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 care- fully avoided. At Hamburg, {Memoires concernant les Droits, tom. i, p.74} 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 maybe considered as a
tax upon stock. Every man assesses himself, and, in the presence of the magistrate, puts
annually into the public coffer a cer- tain sum of money, which he declares upon oath, to be
one fourth per cent. of all that he pos- sesses, 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 confidence in their
magistrates, are convinced of the necessity of the tax for the support of the state, and believe
that it will be faithfully applied to that purpose, such consci- entious 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 it is thereby
exposed to extraordinary 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 pro-  portion
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 Basil, the
principal rev- enue 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 law. All
merchants, and even all inn- keepers, are trusted with keeping themselves the account of the
goods which they sell, either with- in or without the territory. At the end of every three months,
they send this account to the trea- surer, with the amount of the tax computed at the bottom of
it. It is not suspected that the rev- enue suffers by this confidence. {Memoires concernant les
Droits, tom. i p. 163, 167,171.} 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 occa- sion 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 assesed 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
four pence in the pound, upon the highest neat revenue which is commonly drawn from stock.
It is a tax which very few people could pay, without encroaching more or less upon their
capitals. In a particular exigency, 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 ren- der them altogether incapable of supporting 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 neat 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 spiritous 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 mer- chants, 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 ad- vances; and generally with some overcharge. A tax of this kind, when it is
proportioned to the trade of the dealer, is finally paid by the con- sumer, 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
ad- vanced 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 spir- itous liquors; and of forty shillings more for a licence to sell wine, being the same
upon all retail- ers, 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
discouragement 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 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
necessary for the payment of the tax. The final payment, instead of falling upon the shop-
keeper, would have fallen upon the consumer, with a considerable over- charge to the profit of
the shop-keeper. 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 prof- its of stock employed in agriculture, that is
levied in any part of Europe. In the disorderly state of Europe, during the prevalence of the
feudal government, the sover- eign 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
bond-men. Through the greater part of Europe, they were gradually emancipated. Some of
them acquired the property of landed es- tates, which they held by some base or ignoble tenure,
sometimes under the king, and sometimes under some other great lord, like the ancient copy-
holders of England. Others, without acquiring the property, obtained leases for terms of years,
of the lands 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 indignation,
and willingly consented that the sovereign should tax them. 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, Provence, Dauphine, and Britanny; 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, 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
arbi- trary tax, though it is so upon some occasions. The personal taille, as it is intended to be
propor- tioned to the profits of a certain class of people, which 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. {Memoires concernant les Droits, etc tom. ii, p.17.} the proportion in which
this sum is assessed upon those different prov- inces, varies from year to year, according to the
reports which are made to the king's council con- cerning 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 these two assess- ments to the real abilities of the
province or district upon which they are respectively laid. Igno- rance and misinformation
must always, more or less, mislead the most upright council. The pro- portion 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
ani- mosity, 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 ex- empted, or if any person has been taxed 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 trou- blesome for the receiver to prosecute the whole parish, he
takes at his choice five or six of the richest contributors, and obliges them to make good what
had been lost by the insolvency of the collector. The parish is afterwards reimposed, in order to
reimburse those five or six. Such reim- positions 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 reim- burse them from 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. But 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, there- fore, will never
enable him to raise the price of his produce, so as to reimburse himself, by throw- ing 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 this
kind, imposed during the currency of a lease, may, no doubt, distress or ruin the farmer. Upon
the re- newal 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, fre- quently 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 indemnify 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 degraded cultivation. That the personal
taille tends, in many dif- ferent 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 In- quiry. What are called poll-taxes in the southern provinces of North
America, and the West India is- lands, 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 cultivation, 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. Every
tax, however, is, to 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 imposed; the former, by a dif- ferent
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
sin- gle man-servant. A man of ten thousand a-year will not keep fifty. It does not affect the
poor. 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 untaxed employments. Taxes upon the revenue arising from stock in all
employ- ments, 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 upon land, houses, and stock. So far as it affects
stock, it is assessed, though not with great rigour, yet with much more exactness than that part
of the land tax in 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 payment of the sum originally advanced, but of which this redemption
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 Lands, Houses, and
Stock.  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 land and houses from the living to the living, are
transactions which are in their na- ture either public and notorious, or such as cannot be long
concealed. Such transactions, there- fore, may be taxed directly. The transference 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 registration. Stamp duties, and duties of registration, have frequently been imposed
likewise upon the deeds transferring property of all kinds 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, or 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, { Lib. 55. See also Burman. de
Vectigalibus Pop. Rom. cap. xi. and Bouchaud de l'impot du vingtieme sur les successions.}
the author who writes concerning it the least indis- tinctly, says, that it was imposed upon all
successions, legacies and donations, in case of death, ex- cept upon those to the nearest
relations, and to the poor. Of the same kind is the Dutch tax upon successions. {See Memoires
concernant les Droits, etc. tom i, p. 225.} Collateral successions are taxed according to the
degree of relation, from five to thirty per cent. upon the whole value of the succession.
Testamentary donations, or legacies to col- laterals, 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 succession 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 at- tended 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 oppressive, 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 lan- guage 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 sup- ported by
funds separate and independent of those of their father. Whatever part of his succes-  sion 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.
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 be- sides the
maintenance of the minor, and the payment of the widow's dower, when there hap- pened to be
a dowager upon the land. When the minor came to de of age, another tax, called re-  lief, 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 incum- brances,
and restores the family to their ancient splendour, could in those times have no such ef-  fect.
The waste, and not the disincumbrance of the estate, was the common effect of a long
minor- ity. By a feudal law, the vassal could not alienate without the consent of his superior,
who gener- ally extorted a fine or composition on 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.
In some countries, where the greater part of the other feudal customs have gone into disuse,
this tax upon the alien- ation 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. {Memoires concernant les Droits, etc,
tom.i p.154} In the canton of Lucern, the tax upon the sale of land 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. {id. p.157.} 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 consid- erable 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 recom- pence for their labour. The crown
derives no revenue from them. In Holland {Memoires concernant les Droits, etc. tom. i. p 223,
224, 225.} there are both stamp duties and duties upon registration; which in some cases are,
and in some are not, propor- tioned 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 three pence or three stivers a-sheet, to
three hundred florins, equal to about twenty-seven pounds ten shillings 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 pro- portion 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 ves-  sels of more than two
tons burden, whether decked or undecked. These, it seems, are considered 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
registration. The former are consid- ered as a branch of the aids of 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, be- come almost
universal, and duties upon registration extremely common. There is no art which one
government sooner learns of another, than that 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 im- mediately, upon the persons 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, where the building is sold without the
ground, fall generally upon the buyer, because the builder must generally have his profit;
otherwise he must give up the trade. If he advances the tax, therefore, the buyer must generally
repay it to him. Taxes upon the sale of old houses, for the same reason as those upon the sale
of land, fall generally upon the seller; whom, in most cases, ei- ther conveniency or necessity
obliges to sell. The number of new-built houses that are annually brought to market, is more or
less regulated by the demand. Unless the demand is such as to af- ford 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 lands.
Stamp duties, and duties upon the registration of bonds and contracts for borrowed money, fall
altogether 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 neat value of
it when ac- quired. 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 but 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 becomes due, he must, in most cases, have the more to pay. They are levied at
very little expense, and in general subject the contributors 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 occasion, it
is pretended, to much extortion in the officers of the farmers-general who collect the tax, which
is in a great mea- sure 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. Uncer- tainty, however, does not seem to be necessarily inherent in the nature
of such taxes. If the pop- ular complaints are well founded, the abuse must arise, not so much
from the nature of the tax as from the want of precision 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 de- pend upon so very slender a security, as the
probity and religion of the inferior officers of rev- enue. But where the fees of registration have
been made a source of revenue to the sovereign, reg- ister-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, etc. 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 spiritous 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 manner with the stamp
duties above men- tioned upon the transference 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 work men, I have endeavoured to show in the first
book are everywhere necessarily regulated by two different circumstances; the demand for
labour, and the ordinary 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 determines in what
degree it shall be ei- ther liberal, moderate, or scanty. The ordinary 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 the 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 particular 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 subsis- tence as could be bought only for ten
shillings a-week; so 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 neces- sarily 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
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 something more than the tax, would
in reality be advanced by the per- son who immediately employed him. The final payment
would, in different cases, fall upon dif- ferent persons. The rise which such a tax might
occasion in the wages of manufacturing labour would be advanced by the master manufacturer,
who would both be entitled and obliged to charge it, with a profit, upon the price of his goods.
The final payment of this rise of wages, there- fore, together with the additional profit of the
master manufacturer would fall upon the con- sumer. The rise which such a tax might occasion
in the wages of country labour would be ad- vanced 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, conse- quently, 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 man-  ufactured goods than would have
followed from the proper assessment of a sum equal to the pro- duce 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 occasioned a proportionable rise in those wages, it is because they have
generally occasioned a considerable fall in the demand of 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 consequence of them,
however, the price of labour must always be higher than it other- wise would have been in the
actual state of the demand; and this enhancement of price, together with the profit of those who
advance it, must always be finally paid by the landlords and con- sumers. 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 com- mon 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. {Memoires concernant les Droits, etc. tom. ii. p. 108.} The
tax of each individual is varied from year to year, according to different circumstances, of
which the collector or the commissary, whom intendant appoints to assist him, are the judges.
In Bohemia, in consequence of the alter- ation 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 half
penny a-florin, amounts to £9:7:6. 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. {Memoires concemant les Droits, etc. tom. iii. p. 87.} The recompence of
ingenious artists, and of men of liberal professions, I have endeavoured to show in the first
book, necessarily keeps a certain proportion to the emoluments of inferior trades. A tax upon
this recompence, therefore, could have no other effect than to raise it some- what 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, would be so much de- serted, that
they would soon return to that level. The emoluments of offices are not, like those of trades
and professions, regulated by the free competition of the market, and do not, therefore, always
bear a just proportion to what the nature of the employment requires. They are, perhaps, in
most countries, higher than it requires; the persons who have the administration of government
being generally disposed to regard both themselves and their immediate dependents, rather
more than enough. The emoluments of of- fices, 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 pop- ular 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 rev- enue, are capitation taxes, and
taxes upon consumable commodities. Those must be paid indif- ferently, 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 each con- tributor, become altogether arbitrary.
The state of a man's fortune varies from day to day; and, without an inquisition, more
intolerable than any tax, and renewed at least once every year, can only be guessed at. His
assessment, therefore, must, in 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 arbitrary
and uncertain; and if it is attempted to render them certain and not arbitrary, become altogether
un- equal. Let the tax be light or heavy, uncertainty is always a great grievance. In a light tax, a
consid- erable 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, marquises, earls, viscounts, barons, esquires, gentlemen, the eldest and
youngest sons of peers, etc. All shop-keepers 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 differ- ence 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 accord- ing 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 gentlemen. 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 begin- ning 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 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, etc 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 Eng- land, 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 indulgent
execution of the law, were not forced to pay. The more se- vere government of France assesses
upon each generality a certain sum, which the intendant must find as he can. If any province
complains of being assessed too high, it may, in the assess- ment of next year, obtain an
abatement proportioned to the overcharge of the year before; but it must pay in the mean time.
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 as-  sumed 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, the proportion which falls upon the
nobility, and upon those whose privileges exempt them from the taille, is the least
con- siderable. The largest falls upon those subject to the taille, who are assessed to the
capitation at so much a-pound of what they pay to that other tax. 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 inconveniencies 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 case, comfort, and security of the inferior ranks
of people are little attended to, capitation 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 propor- tion 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
indispensibly necessary for the support of life, but whatever the custom of the country renders
it indecent for creditable peo- ple, even of the lowest order, to be without. A linen shirt, for
example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose,
very comfortably, though they had no linen. 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 sup- posed to denote that disgraceful degree of poverty,
which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the
same manner, has rendered leather shoes a neces- sary 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 barefooted. 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 some- times barefooted.
Under necessaries, therefore, I comprehend, not only those things which na- ture, but those
things which the established rules of decency have rendered necessary to the low- est 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,
with- out any reproach, abstain totally from tasting such liquors. Nature does not render them
neces- sary 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 declining, requires that he should have. {See book i.chap. 8} A tax
upon those articles neces- sarily raises their price somewhat higher than the amount of the tax,
because the dealer, who ad- vances 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 di- rect tax
upon the wages of labour. The labourer, though he may pay it out of his hand, cannot, for any
considerable time at least, be properly said even to advance it. It must always, in the long-
run, be advanced to him by his immediate employer, in the advanced state of wages. His
employer, if he is a manufacturer, will charge upon the price of his goods the rise of wages,
together with a profit, so that the final payment of the tax, together with this overcharge, will
fall upon the con- sumer. If his employer is a farmer, the final payment, together with a like
overcharge, will fall upon the rent of the landlord. 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 maybe 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 spiritous
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 or 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 com- modities 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 consequence of
this forced frugality, instead of being diminished, is frequently, per- haps, increased by the tax.
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, in- deed, are not sober and
industrious; and the dissolute and disorderly 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 disor- derly 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 par- ents
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. Through 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 be compensated by a
proportionable rise in the wages of labour, must necessarily 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, stationary, or declining;
or such as requires an in- creasing, 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 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 considerable 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 farther advancement of
their wages. The mid- dling 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 taxes upon the
wages of labour. The final pay- ment of both the one and the other falls altogether upon
themselves, and always with a consid- erable 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 consumers, 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 soap-maker, and the candle-maker consume, while employed in their service. In
Great Britain, the principal taxes upon the necessaries of life, are those upon the four
com- modities 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  shillings and fourpence
a bushel; about three times the original price of the commodity. 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
four- teen or fifteen per cent.; taxes which, though lighter than that upon salt, are still very
heavy. As all those four commodities are real necessaries 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,
manufactures have confined themselves principally to the coal counties; 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 instrument 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 im- posed a tax of three
shillings and threepence a-ton upon coals carried coastways; which, upon most sorts of coal, is
more than sixty per cent. of the original price at the coal pit. Coals carried, ei- ther by land or
by inland navigation, pay no duty. Where they are naturally cheap, they are con- sumed duty
free; where they are naturally dear, they are loaded with a heavy duty. Such taxes, though they
raise the price of subsistence, and consequently 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 us it tends, in the actual state of tillage, to raise the price of that neces-  sary
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 provisions, 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 re- gard to Ireland and the British plantations, have all had the bad effects
of taxes upon the neces- saries 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 guilders fifteen stivers; about six shillings and ninepence
halfpenny. Those, 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 {Mem- oires concernant les
Droits, etc. p. 210, 211.}. 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, Pla- centia, and
Guastalla, and the Ecclesiastical state. A French author {Le Reformateur} of some note, has
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,  which
has not sometimes been asserted by some philosophers. Taxes upon butcher's meat are still
more common than those upon bread. It may indeed be doubted, whether butcher's meat is any
where a necessary 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
be- fore they are delivered to the consumer. The consumable goods which last a considerable
time be- fore 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 cus- toms, 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 coach-maker. 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
coach-maker; 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 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 immediate or speedy, should be taxed in this manner; the
dealer advancing nothing, but the consumer paying a certain annual sum for the licence to
consume cer- tain goods. The object of his scheme was to promote all the different branches of
foreign trade, particularly the carrying trade, by taking away all duties upon importation 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 li- able 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 spiritous liquors, which are ad- vanced by the dealers, are finally paid by the
different consumers, exactly in proportion to their re- spective consumption. But if the tax
were to be paid by purchasing a licence to drink those liquors, the sober would, in proportion
to his consumption, 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 than, may perhaps amount to about three halfpence. If a workman
can conve- niently 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 temperance. He pays the tax piece-meal, as he can afford to pay it, and when he can afford
to pay it, and every act of payment is perfectly voluntary, and what he can avoid if he chuses to
do so. Thirdly, such taxes would operate less as sumptuary laws. When the licence was once
purchased, whether the pur- chaser drunk much or drunk little, his tax would be the same.
Fourthly, if a workman were to pay all at once, by yearly, half-yearly, or quarterly payments, a
tax equal to what he at present pays, 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 taxa- tion, 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 men- tioned a tax upon bread, which, so
far as it is consumed in farm houses and country villages, is there levied in the same
manner. The duties of excise are imposed chiefly upon goods of home produce, destined for
home consumption. They are imposed only upon a few 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
con- cerning 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 mentioned, 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
customary payments, which had been in use for 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 con- sidered as little
better than emancipated bondmen, whose persons 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 understood,  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 unfavourably 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 mer- chants,
which was begun from ignorance, has been continued front 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 imposed equally upon all sorts of goods,
necessaries as well its 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
an- other? or why should the merchant exporter be more favoured than the merchant
importer? The ancient customs were divided into three branches. The first, and, perhaps, the
most an- cient of all those duties, was that upon wool and leather. It seems to have been chiefly
or alto- gether 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 ex- ported and imported, except wools, wool-felts, 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 eightpence in the second year of Henry IV.; and, in the fourth 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 by 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 fifth 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 exigencie's 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 du- ties which had been imposed upon the exportation of the goods of home
produce and manu- facture, 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 im- posed by the old subsidy upon importation, are drawn
back upon exportation; but the whole of those imposed by the latter subsidies and other
imposts are, upon the greater parts of the goods, drawn back in the same manner. This growing
favour of exportation, and discouragement of importation, have suffered only a few exceptions,
which chiefly concern the materials of some manufactures. These our merchants and
manufacturers are willing should come as cheap as pos- sible to themselves, and as dear as
possible to their rivals and competitors in other countries. For- eign materials 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
particular produce of our colonies, has sometimes been prohibited, and sometimes subjected to
higher duties. The exportation 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
conquests of Canada and Senegal, having got almost the monopoly of those
com- modities. 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 customs. 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 prevented the importation of foreign
wollens; 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 revenues of the
customs below what more moderate duties would have afforded. The saying of Dr. Swift, that
in the arith- metic of the customs, two and two, instead of making four, make sometimes only
one, holds per- fectly true with regard to such heavy duties, which never could have been
imposed, had not the mercantile system taught us, in many cases, to employ taxation as an
instrument, not of revenue, but of monopoly. The bounties which are sometimes given upon
the exportation of home produce and man- ufactures, 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 clandestinely 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
£167,806. 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 neat 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 smug- gle 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 gain a bounty back. Our exports, in
consequence of these different frauds, appear upon the custom-house books greatly to
overbalance our imports, to the unspeak- able comfort of those politicians, who measure the
national prosperity by what they call the bal- ance of trade. All goods imported, unless
particularly exempted, and such exemptions are not very numer- ous, are liable to some duties
of customs. If any goods are imported, not mentioned in the book of rates, they are taxed at
4s:9¾d. for every twenty shillings value, according to the oath of the im- porter, that is, nearly
at five subsidies, or five poundage duties. The book of rates is extremely comprehensive, and
enumerates a great variety of articles, many of them little used, and, there-  fore, 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, there- fore, 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 sup-  posed
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 used and
consump- tion. 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, etc. and in some of those of the East Indies, tea, coffee, china-ware, spiceries of all
kinds, several sorts of piece-goods, etc. These different arti- cles afford, the greater part of the
perhaps, at present, 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 contained 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 manufactures to such moderate taxes,
as it was found from experience, 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 others 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 revenue is the effect of the encouragement 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 temp- tation to smuggle can be diminished only by the lowering
of the tax; and the difficulty of smug- gling can be increased only by establishing that system
of administration which is most proper 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 cus- toms a system of administration as
similar to that of the excise as the nature of the different du-  ties will admit, the difficulty of
smuggling might be very much increased. This alteration, it has been supposed by many
people, might very easily be brought about. The importer of commodities liable to any duties
of customs, it has been said, might, at his option, be allowed either to carry them to his own
private warehouse; or to lodge them in a ware- house, provided either at his own expense or at
that of the public, but under the key of the cus- tom-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-free; proper security being always given
that they should be so exported. The dealers in those particular com- modities, 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 con- sumption. If they were extended to almost all sorts of goods, as at present,
public warehouses 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 considerable extent could be pre- vented, 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 rev- enue 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 neat 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. What the revenue at present loses by
drawbacks 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 considerable, were added the abolition of all bounties upon the
exportation of home produce; in all cases in which those bounties were not in reality
drawbacks of some duties of ex- cise which had before been advanced; it cannot well be
doubted, but that the neat revenue of cus- toms 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 loss, the trade and manufac- tures of the country would certainly gain a very
considerable advantage. The trade in the com- modities 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 comprehended 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 recom- pence. The value of money is in
proportion 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 reduction 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 Indostan, 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 a 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 com- modities were delivered out of the public warehouse for foreign
exportation, being in this case ex- empted 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 these commodities were deliv- ered 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 af- ford 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 than it is at present. It was the object of the famous excise scheme of Sir
Robert Walpole, to establish, with regard to wine and tobacco, a system not very 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 excit- ing 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, etc. 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 titan 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 ser- vants, 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 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 con- sumption of the superior
ranks, being always much less, not only in quantity, but in value. The taxes upon expense,
therefore, 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 all ranks, or even those which fall chiefly upon that of the
inferior ranks, than either those which fall indifferently upon the whole annual produce,
or those which fall chiefly upon the larger portion of it. The excise upon the materials and
manu- facture 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
£3,341,837:9:9. It must always be remembered, however, that it is the luxuries, 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 upon 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 spiritous 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 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 drank 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 prac- tised, the malt liquors consumed by the
members of the family make but a small part of the consmnption 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 frequently been said, by a much lighter tax upon malt; the opportu- nities 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 ale
and beer to eight shillings a-barrel. In the porter brewery, therefore, the different 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 coun- try 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 dif- ferent 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 trebling the malt tax, or by raising it from
six to eighteen shilling's 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.........  £722,023: 11: 11                              The additional...
£356,776:  7:  9¾   In 1775, the old tax produced............... £561,627:  3:  7½                             
The additional... £278,650: 15:  3¾   In 1774, the old tax  produced ............ £624,614: 17: 
5¾                              The additional....£310,745:  2:  8½   In 1775, the old tax produced  ..........
..£657,357:  0:  8¼                              The additional....£323,785: 12: 
6¼                                              £5,855,580: 12:  0¾   Average of these four years .............. 
£958,895:  3:  0    In 1772, the country excise produced.......£1,243,120:  5:  3                     The
London brewery          408,260:  7:  2¾   In 1773, the country excise................£1,245,808:  3: 
3                     The London brewery          405,406: 17: 10½   In 1774, the country
excise................£1,246,373: 14:  5½                     The London brewery          320,601: 18:  0¼  
In 1775, the country excise................£1,214,583:  6:  1¼                     The London
brewery          463,670:  7:  0¼                                            4)£6,547,832: 19:  2¼ 
Under the old malt tax, indeed, is comprehended a tax of four shillings upon the hogshead
of cyder, and another of ten shillings upon the barrel of mum. In 1774, the tax upon cyder
produced only £3,083:6:8. It probably fell somewhat short of its usual amount; all the different
taxes upon cyder, 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 what- ever 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 cyder; 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 eleven- pence upon the gallon of mead 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 cyder 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 were to be raised to eighteen shillings upon the quarter, it might be necessary to make
some abatement in the different excises which are imposed upon those par- ticular 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
amounted to 3s. 10 2/3d. upon the gallon of spirits. {Though the duties directly imposed upon
proof spirits amount only to 2s. 6d per gallon, these, added to the duties upon the low wines,
from which they are dis- tilled, amount to 3s 10 2/3d. Both low wines and proof spirits are, to
prevent frauds, now rated ac- cording to what they gauge in the wash.} By increasing the
duties upon malt, and reducing those upon the distillery, both the opportu- nities and the
temptation to smuggle would be diminished, which might occasion a still further augmentation
of revenue. It has for some time past been the policy of Great Britain to discourage the
consumption of spiritous liquors, on account of their 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 dis- tillery ought not to be so great as to reduce, in any respect, the price of
those liquors. Spiritous liquors 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. Those objections are, that the tax, instead of dividing
itself, 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 consumption 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
shilling upon every quarter of 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 ad- vance a heavier one. The maltster does not always keep in his
granaries a stock of malt, which it will require a longer time to dispose of than the stock of
beer and ale which the brewer frequently keeps in his cellars. The former, therefore, may
frequently 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 commonly 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 twentyfour 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 re- duces 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 proportion to that of the
produce of other equally fertile and equally well culti- vated 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 pro- duce. 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 taxes fell not upon the con- sumer, 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, been a monopoly price; and
the arguments adduced to show that sugar was an improper subject of taxation, demon-  strated
perhaps that it was a proper one; the gains of 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 propor- tion to those of other equally fertile and equally well cultivated 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 imposed 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. 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 custom and excise above
mentioned, 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 the duties of passage, and which seem to have been originally established 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 navi- gation. Those duties, when applied to such purposes,
are most properly imposed according to the bulk or weight of the goods. As they were
originally local and provincial duties, applicable to local and provincial purposes, the
administration of them was, in most cases, entrusted to the partic- ular town, parish, or
lordship, 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 unac- countable, has in
many countries assumed to himself the administration of those duties; and though he has in
most cases enhanced very much the duty, he has in many entirely neglected the application. If
the turnpike tolls of Great Britain should ever become one of the resources of gov-  ernment,
we may learn, by the example of many other nations, what would probably be the
conse- quence. Such tolls, no doubt, are 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 excise, 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-duties. 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 altogether by foreigners, and which,
perhaps, are the only duties that one state can impose upon the subjects of another, without
obstruction 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 mer- chant ships which pass
through the Sound. Such taxes upon luxuries, as the greater part of the duties of customs and
excise, though they all fall indifferently upon every different 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 proportionally upon the revenue of every
individual. As every man's hu- mour regulates the degree of his consumption, every man
contributes rather according to his hu- mour, than proportion to his revenue: the profuse
contribute 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 consumption to- wards the support of the
government of that country, in which is situated the source of their rev- enue. 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 dependant upon that of some other. The people who possess
the most extensive property in the dependant, will, in this case, generally chuse to live in the
governing country. Ireland is precisely in this situation; and we cannot therefore won- der, 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 except, 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 manufac- turer, 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.
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. What ever 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 inac- curate 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 convenient. 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 £5,507,308:18:8¼, 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 expor- tation of exciseable goods, which will reduce the neat
produce below five millions. {The neat pro- duce of that year, after deducting all expenses and
allowances, amounted to £4,975,652:19:6.} The levying of the salt duty, and excise duty, but
under a different management, is much more expen- sive. The neat 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 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 neat revenue of the customs, the whole ex- pense of levying that
revenue may amount, in salaries and perquisites together, to more than twenty or thirty per
cent. The officers of excise receive few or no perquisites; and the adminis-  tration of that
branch of the revenue being of more recent establishment, is in general less cor-  rupted 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 du- ties upon
malt and malt liquors, a saving, it is supposed, of more than £50,000, 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 discouragement to certain branches of industry. As they always raise the price of
the commodity taxed, they so far dis- courage its consumption, and consequently its
production. If it is a commodity of home growth or manufacture, less labour comes to be
employed in raising and producing it. If it is a foreign com- modity 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
discourages 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, 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 otherwise 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 advantageous,
than that in which it would have run of its own accord. Thirdly, the hope of evading such taxes
by smuggling, gives frequent 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 nat- ural 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 encouragement to the
violation of the revenue laws, and to the perjury which almost always attends it, would, in most
countries, be regarded 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 smug- gler is often encouraged to continue a trade, which he is thus taught to
consider as in some mea- sure innocent; and when the severity of the revenue laws is ready to
fall upon him, he is fre- quently disposed to defend with violence, what he has been
accustomed to regard as his just prop- erty. 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 smug- gler, 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 officer; and is employed in main- taining unproductive, to the diminution of the
general capital of the society, and of the useful industry which it might otherwise have
maintained. Fourthly, such taxes, by subjecting at least the dealers in the taxed commodities, to
the fre- quent 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 instituted, 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 gen- eral, 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
inconveniencies, however, which are, perhaps, in some degree inseparable from taxes upon
consumable communities, 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-manufacturer were taxed,
equality seemed to require that those of all the middle buyers, who intervened between either
of them and the consumer, should likewise be taxed. The famous alcavala of Spain seems to
have been estab- lished upon this principle. It was at first a tax of ten per cent. afterwards of
fourteen per cent. and it is at present only six per cent. upon the sale of every sort of property
whether moveable or im- moveable; and it is repeated every time the property is sold.
{Memoires concernant les Droits, etc. tom. i, p. 15} The levying of this tax requires a
multitude of revenue officers, sufficient to guard the transportation 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 manufacturer, every merchant and
shopkeeper, to the continual visit and examination of the tax- gatherers. Through the greater
part of the country in which a tax of this kind is established, noth- ing can be produced for
distant sale. The produce of every part of the country must be propor- tioned to the
consumption of the neighbourhood. It is to the alcavala, accordingly, that Ustaritz imputes the
ruin of the manufactures of Spain. He might have imputed to it, likewise, the declen- sion 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
con- tracts, 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, therefore, is not near so
ruinous as the Span- ish one. The uniform system of taxation, which, with a few exception 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 al- most perfectly free; and the greater part of goods may be
carried from one end of the kingdom 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 give no interruption to any important branch of inland
commerce of the country. Goods carried coast- wise, 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 produc- tions 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 surround, not only
the frontiers of the kingdom, but those of al- most each particular province, in order either to
prevent the importation 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 ex- empted 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 1664, 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 tariff of 1667, which are called the
prov- inces reckoned foreign, and under which are comprehended the greater part of the
frontier prov- inces; 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 prov- inces of France, subjected to the same duties as other foreign
countries. These are Alsace, the three bishoprics of Mentz, Toul, and Verdun, and the three
cities of Dunkirk, Bayonne, and Mar- seilles. 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 partic- ular 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 Marseilles. 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 complicated 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 prov- inces 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 subse- quent 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 he levied by an
administration, of which the officers are appointed by govermnent, and are immediately
accountable to government, of which the revenue must, in this case, vary from year to year,
according 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 ap- point his own officers, who, though obliged to
levy the tax in the manner directed by the law, are under his immediate inspection, and are
immediately accountable to him. The best and most fru- gal 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
administration 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 considerable branch of the public revenue requires either a great capital, or a great
credit; circum- stances which would alone restrain the competition for such an undertaking to a
very small num- ber of people. Of the few who have this capital or credit, a still smaller
number have the necessary knowledge or experience; another circumstance which restrains the
competition still further. The very few who are in condition to become competitors, find it
more for their interest to combine to- gether; to become copartners, instead of competitors;
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 pub- lic indignation; and the vanity which almost
always accompanies such upstart fortunes, the fool- ish ostentation with which they commonly
display that wealth, excite 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 sub- jects, and whose universal bankruptcy, if
it should happen the day after the 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
rigorous than those which actually took place, it will be impos- sible for them to pay even the
usual rent. In those moments of public distress, their commands 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 lux- ury, every
man is allowed to buy or not to buy as he chuses; 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 temptation 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 the temptation almost certainly 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 compar- ison with the revenue of the prince,
may, perhaps, approve of this method of levying taxes. Sim- ilar taxes and monopolies of salt
and tobacco have been established in many other countries, par- ticularly 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 do- maine, and the farm
of tobacco. The live 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 proportion 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 refor- mations. First, by abolishing the
taille and the capitation, and by increasing the number of the 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 en- tirely 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 fi- nally upon the
proprietors 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 oppo- sition of such favoured subjects, are the obstacles most likely to prevent this,
or any other refor- mation of the same kind. Secondly, by rendering 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 subjecting all those taxes to an administration under the immediate inspection and
direction or government, the exorbitant prof- its 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
Abbé 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 improvement 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 advan- tages, it might be expected, that in France a revenue of
thirty millions might be levied for the sup- port of the state, with as little inconvenience 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 gov- ernment. In
Holland, the heavy taxes upon the necessaries of life have ruined, it is said, their
principal manufacturers, and are likely to discourage, gradually, even their fisheries and their
trade in ship- building. The taxes upon the necessaries of life are inconsiderable in Great
Britain, and no manu- facture 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 rev- enue 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 necessaries of life, therefore, may be no impeachment of the wisdom of that
republic, which, in order to acquire and to maintain its independency, has, in spite of its meat
frugality, been in- volved in such expensive wars as have obliged it to contract great debts. The
singular countries of Holland and Zealand, besides, require a considerable expense even to
preserve their existence, or to prevent their being swallowed up by the sea, which must have
contributed to increase consid- erably 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 them- selves, 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
purchase less of the necessaries and conve- niencies of life than in any other part of Europe.
The residence of such wealthy people necessarily 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 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 endeav- oured 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 man- ufactures furnish any thing for
which the owner can exchange the greater part of those materials which are over and above his
own consumption, 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 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 gen- eral 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 connected with
good economy; yet we must cer- tainly allow them to have been at least so far frugal, as not
commonly to have spent their whole in- come. 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 any thing 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 bylaw, 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 gen-  tleman
of a good estate. The same disposition, to save and to hoard, prevailed in the sovereign, as well
as in the sub- jects. Among nations, to whom commerce and manufacture 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 accumulation. In that situation, the expense, even
of a sovereign, cannot be directed by that vanity which delights in the gaudy 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 em- ployed in scarce any thing 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 an- cient sovereigns of Europe, accordingly, 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 neighbouring 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
his 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 ex- pense 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 ex- traordinary 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 parsi- mony which leads to
accumulation has become almost as rare in republican 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. 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 establishment 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 sovereign should have, what he scarce ever has, the
immediate means of augmenting his revenue in proportion to the augmen- tation 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 garrisoned 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 govern- ment 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 with it the facility of doing so. A country abounding with
merchants and manufacturers, necessarily abounds with a set of people through whose hands,
not only their own capitals, but the capitals of all those who either lend them money, or trust
them with goods, pass as frequently, or more frequently, than the rev- enue 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 a merchant, who deals in a trade of which the re-  turns are very
quick, may sometimes pass through his hands two, three, or four times in a year. A  country
abounding with merchants and manufacturers, therefore, necessarily abounds with a set of
people, who have it at all times in their power to advance, if they chuse 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 flourish long in any state which does not enjoy
a regular administration of justice; in which the people do not feel themselves secure in the
posses- sion 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 flourish 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 extraor- dinary 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 commonly
augment it. The necessities of the state render government, upon most occasions willing to
borrow upon terms extremely advantageous to the lender. The security which it grants to the
original creditor, is made transferable to any other cred- itor; 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 monied 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 sub- scription 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 manufacturing capitals. The indi- viduals, who hoard whatever money they can save, and
who conceal their hoard, do so from a dis- trust 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 extraor- dinary 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 nat- ural disposition to
save. The progress of the enormous debts which at present oppress, and will in the long-run
prob- ably 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 mort- gaging 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
particular funds. What is called the unfunded debt of Great Britain, is contracted 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, etc. usually consti- tute 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 a very large
debt of this kind. In France, where there is no bank, the state bills (billets  d'etat {See Examen
des Reflections Politiques sur les Finances.}) have sometimes sold at sixty and seventy per
cent. discount. During the great recoinage 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, govern- ment has, upon different occasions,
done this in two different ways. Sometimes 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 bor- rowed. 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 of 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 unmort- gaged, 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 con- stant practice of borrowing of its
own factors and agents, and of paying interest for the use of its own money. 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 consisted 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 first general mortgage or fund, consisting of a
prolongation to the first of August 1706, of several different taxes, which would have expired
within a shorter term, and of which the produce was accumulated into one general fund. The
deficiencies charged upon this prolonged term amounted to £5,160,459: 14: 9½. In 1701, those
duties, with some others, were still further prolonged, for the like purposes, till the first of
August 1710, and were called the second general mortgage or fund. The deficiencies charged
upon it amounted to £2,055,999: 7: 11½. In 1707, those duties were still further prolonged, as a
fund for new loans, to the first of Au- gust 1712, and were called the third general mortgage or
fund. The sum borrowed upon it was £983,254:11:9¼. In 1708, 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 first of August 1714, and were
called the fourth general mortgage or fund. The sum borrowed upon it was £925,176:9:2¼. In
1709, 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 first
of August 1716, and were called the fifth general mortgage or fund. The sum borrowed upon it
was £922,029:6s. In 1710, those duties were again prolonged to the first of August 1720, and
were called the sixth general mortgage or fund. The sum borrowed upon it was
£1,296,552:9:11¾. 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 capital of the South-sea company, which had that year advanced
to government, for paying debts, and making good deficiencies, the sum of £9,177,967:15:4d,
the greatest loan which at that time had ever been made. Before this period, the principal, so
far as I have been able 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 com- pany, and of what it was
expected would be advanced, but which was never advanced, by a pro- jected land bank. The
bank fund at this time amounted to £3,375,027:17:10½, for which was paid an annuity or
interest of £206,501:15:5d. The East-India fund amounted to £3,200,000, for which was paid
an annuity or interest of £160,000; 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 pay- ing the bank annuity, together with several others, which, by this act,
were likewise rendered per- petual, were accumulated into one common fund, called the
aggregate fund, which was charged not only with the payment 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 1717, by the third of George I., c. 7,
several other taxes were rendered perpetual, and ac- cumulated into another common fund,
called the general fund, for the payment of certain annu- ities, amounting in the whole to
£724,849:6:10½. In consequence of those different acts, the greater part of the taxes, which
before had been anticipated only for a short term of years 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 suc- cessive anticipations. Had money never been raised but by anticipation,
the course of a few years would have liber- ated the public revenue, without any other attention
of government besides that of not over- loading the fund, by charging it with more debt than it
could pay within the limited term, and not of anticipating a second time before the expiration
of the first anticipation. But the greater part of European governments have been incapable of
those attentions. They have frequently overloaded the fund, even upon the first anticipation;
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 improvident 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 anticipation, 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 principally interests those immediately concerned in the
administration of public affairs. The future liberation of the public revenue they leave to  the
care of posterity. 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 lawfully 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 aggre- gate, 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 or 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 saving left a
considerable surplus in the produce of the dif- ferent taxes which had been accumulated into
those funds, over and above what was necessary for paying the annuities which were now
charged upon them, and laid the foundation of what has since been called the sinking fund. In
1717, it amounted to £523,454:7:7½. In 1727, the interest of the greater part of the public debts
was still further reduced to four per cent.; and, in 1753 and 1757, to 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 con- tracting of new debts. It is a
subsidiary 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 other of those two purposes, will
sufficiently appear by and by. Besides those two methods of borrowing, by anticipations and
by a perpetual funding, there are two other methods, which hold a sort of middle place between
them; these are, that of bor- rowing 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 1695, an act was passed for borrowing one million upon an annuity of
fourteen per cent., or £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 subscrip- tion was not filled up. In the following year, the
deficiency was made good, by borrowing upon annuities for lives, at fourteen per cent. or a
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 differ- ence 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,
borrowed both upon annuities for lives, and upon annuities for terms of thirty-two, of eighty-
nine, of ninety-eight, and of ninety-nine years. In 1719, the propri- etors 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 £666,821: 8:3½ a-year. On the 5th of January 1775,
the remainder of them, or what was not subscribed at that time, amounted only to
£136,453:12:8d. During the two wars which began in 1739 and in 1755, little money was
borrowed, either upon annuities for terms of years, or upon those for lives. An annuity for
ninety-eight or ninety- nine years, however, is worth nearly as much 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 consid- erable 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 subscribers to a new loan, who mean generally to sell their subscription as
soon as possible, prefer greatly a perpetual annuity, re- deemable 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 sel- dom granted, but as premiums to the subscribers
of 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 grant- ed, not as the proper fund upon which the
money was borrowed, but as an additional encour- agement to the lender. Annuities for lives
have occasionally been granted in two different ways; either upon separate lives, or upon lots
of lives, which, in French, are called tontines, from the name of their inventor. When annuities
are granted upon separate lives, the death of every individual annuitant disbur- dens 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 survivors 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
survivorship, 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, generally 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 liber- ation 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 had been granted, is supposed to amount to three hundred millions,
the eighth part of the whole public debt. The annuities themselves are com- puted 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 hav-  ing been
presented by so very respectable a body as approximations to the truth, they may, I apprehend,
be considered as such. It is not the different degrees of anxiety in the two govern-  ments of
France and England for the liberation of the public revenue, which occasions this differ- ence
in their respective modes of borrowing; it arises altogether from the different views
and interests of the lenders. In England, the seat of government being in the greatest mercantile
city in the world, the merchants are generally the people 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 subscribe. But if, by advancing their money,
they were to purchase, instead of perpetual annu- ities, 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 the 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
perpetual 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 mercantile city, merchants do
not make so great a proportion of the people who advance money to government. The people
con- cerned in the finances, the farmers-general, the receivers of the taxes which are not in
farm, the court-bankers, etc. make the greater part of those who advance their money in all
public exigen- cies. Such people are commonly 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 acknowl- edging, 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, in time of peace,
being 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 unwill- ing, 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 facility of
borrowing delivers them from the embarrassment which this fear and inability would otherwise
occasion. By means of borrowing, they are enabled, with a very moderate increase of taxes, to
raise, from year to year, money suffi- cient for carrying on the war; and by the practice of
perpetual 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 amuse- ment of reading in the
newspapers 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 vi-  sionary 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 this debt, and defraying the ordinary expense of govern-  ment, the old
revenue, together with the new taxes, produce some surplus revenue, it may, per- haps, 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 reasonably be expected that
peace should continue, the whole debt contracted 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 bor- rowed upon them. If they produce more, 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 pay- ing the interest or annuity originally
charged upon them, as from a subsequent reduction 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 ex- pense; 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 different subject of taxa- tion; the more loudly the people complain of every
new tax, the more difficult it becomes, too, ei- ther 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 an obvi- ous and easy expedient for getting
out of the present difficulty. The more the public debts may have been accumulated, the more
necessary it may have become to 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 cer- tainly, 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 per- petual funding, the reduction of the public debt, in time of peace,
has never borne any proportion to its accumulation in time of war. It was in the war which
began in 1668, and was concluded by the treaty of Ryswick, in 1697, that the foundation of the
present enormous debt of Great Britain was first laid. On the 31st of December 1697, the
public debts of Great Britain, funded and unfunded, amounted to £21,515,742:13:8½. A great
part of those debts had been contracted upon short antici- pations, and some part upon
annuities for lives; so that, before the 31st of December 1701, in less than four years, there had
partly been paid off; and partly reverted to the public, the sum of £5,121,041:12:0¾d; 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 £16,394,701:1:7¼d. 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 31st of December 1714, they amounted to £53,681,076:5:6½. The
subscription into the South-sea fund, of the short and long annuities, in- creased the capital of
the public debt; so that, on the 31st of December 1722, it amounted to £55,282,978:1:3 5/6.
The reduction of the debt began in 1723, and went on so slowly, that, on the 31st of December
1739, during seventeen years-of profound peace, the whole sum paid off was no  more than
£8,328,554:17:11 3/12, the capital of the public debt, at that time, amounting
to £46,954,623:3:4 7/12. The Spanish war, which began in 1739, and the French war which
soon followed it, occa- sioned a further increase of the debt, which, on the 31st of December
1748, after the war had been concluded by the treaty of Aix-la-Chapelle, amounted to
£78,293,313:1:10¾. The most profound peace, of 17 years continuance, had taken no more
than £8,328,354, 17:11¼ from it. A war, of less than nine years continuance, added
£31,338,689:18: 6 1/6 to it. {See James Postlethwaite's History of the Public Revenue.} During
the administration of Mr. Pelham, the interest of the public debt was reduced, or at least
measures were taken for reducing it, from four to three per cent.; the sinking fund was
in- creased, and some part of the public debt was paid off. In 1755, before the breaking out of
the late war, the funded debt of Great Britain amounted to £72,289,675. On the 5th of January
1763, at the conclusion of the peace, the funded debt amounted debt to £122,603,336:8:2¼.
The unfunded debt has been stated at £13,927,589:2:2. But the expense occasioned by the war
did not end with the conclusion of the peace; so that, though on the 5th of January 1764, the
funded debt was in- creased (partly by a new loan, and partly by funding a part of the unfunded
debt) to £129,586,- 789:10:1¾, there still remained (according to the very well informed author
of 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: 12:2 15/44d. In 1764,
therefore, the public debt of Great Britain, funded and unfunded together, amounted, according
to this author, to £139,561,807:2:4. The annuities for lives, too, which had been granted as
premiums to the subscribers to the new loans in 1757, estimated at fourteen years purchase,
were valued at £472,500; and the annuities for long terms of years, granted as premiums
likewise, in 1761 and 1762, estimated at twenty- seven and a-half years purchase, were valued
at £6,826,875. During a peace of about seven years continuance, the prudent and truly patriotic
administration of Mr. Pelham was not able to pay off an old debt of six millions. 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
£124,996,086, 1:6¼d. The unfunded, exclusive of a large civil-list debt, to £4,150,236:3:11
7/8. Both together, to £129,146,322:5:6. According to this account, the whole debt paid off,
during eleven years of pro- found peace, amounted only to £10,415,476:16:9 7/8. Even this
small reduction of debt, however, has not been all made from the savings out of the ordinary
revenue of the state. Several extra- neous sums, altogether independent 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 acqui- sitions; 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 perhaps to be considered as
deductions from the expenses of it. The principal are,  
 The
produce of French prizes..............    £690,449: 18: 9    Composition for French
prisoners.........      670,000:  0: 0    

What has been received from the sale    of the ceded islands.........................   95,500:  0: 0    

Total, .....................................£1,455,949: 18: 9 

 If 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 considerably
augmented since the peace, by the debt which had 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 were 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; but at the same time, a large civil-list debt was left unpaid, and we are now involved in a
new war, which, in its progress, may prove as expensive as any of our former wars. {It has
proved more expensive than any one of our former wars, and has involved us in an additional
debt of more than one hundred millions. During a pro- found peace of eleven years, little more
than ten millions of debt was paid; during a war of seven years, more than one hundred
millions was contracted.} 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 would be altogether chimerical,
therefore, to expect that the public debt should ever be completely dis- charged, 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, its manufactures are multi-  plied, and its
lands cultivated and improved, 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 pub- lic
advanced to government, was, from the moment in which he 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 rev- enue; from maintaining productive 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
of 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 cap- ital, 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, how- ever, 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 respects, 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 re- placed 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 produce, 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
unproductive labour, towards maintaining another. Some part of what they pay in those taxes,
might, no doubt, have been accumulated into capital, and consequently employed in
maintaining productive labour; but the greater part would prob- ably have been spent, and
consequently employed in maintaining unproductive labour. The pub- lic expense, 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 an- nual produce which had before been destined for the maintenance of
productive 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 acqui- sition 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 re- pair the breaches which the waste and
extravagance of government may occasionally make in the general capital of the society. It is
only during the continuance of war, however, that the system of funding has this advan-  tage
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 funding. 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
concluded, and less wantonly undertaken. The people feeling, during continuance of war, the
complete burden of it, would soon grow weary of it; and government, in order to humour them,
would not be under the neces- sity of carrying it on longer than it was necessary to do so. The
foresight of the heavy and un- avoidable 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 accu- mulate was somewhat impaired, would occur more
rarely, and be of shorter continuance. 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. When funding, besides, has made a certain progress, the multiplication 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 suffi- cient, 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 incumbered 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, 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 for- eign 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 productive
labour, whether employed in agriculture, manufac- tures, or commerce. The management of
those two original sources of revenue belongs to two dif- ferent 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 inclosures,
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 conveniencies 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 con- tinue to do his. As
the distress of the landlord increases, the agriculture of the country must necessarily
decline. When, by different taxes upon the necessaries and conveniencies of life, the owners
and em- ployers 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 conveniencies which an
equal rev- enue 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 removing. The industry of the country will necessarily fall with the
removal of the capital which supported it, and the ruin of trade and manufactures will follow
the declension of agri- culture. 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 re- moval 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 condi- tion of its land, and in the good
management of its capital stock. Should there be any general fail- ure 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, con- sidered 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 prac- tice 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 be- fore 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 dissolution into every other
country, should prove altogether inno- cent? 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 govern- ment 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 sys- tem 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
individuals 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 flour- ishing, her manufacturers as numerous and as fully employed, and
her commerce as extensive, as they had ever been before. The capital, therefore, which
supported all those different branches of industry, must have been equal to what it had ever
been before. Since the peace, agriculture has been still further improved; the rents of houses
have risen in every town and village of the coun- try, 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 continually increasing, an
equally clear proof of an increasing consumption, and conse- quently 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 account, rashly conclude that she is capable of sup- porting 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 degree, there is scarce, I be- lieve, 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, 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 disguised under the
appearance of a pretended payment. If a six- pence, for example, should, either by act of
parliament or royal proclamation, be raised to the de- nomination 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. A national debt of about a hundred
and twenty-eight millions, near 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
de- frauded 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, there- fore, 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 part of the
national capital from the hands which were likely to increase and improve it, to those who 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 re- course 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 had
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 probably a very popular law. In Rome, as in all 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 any body 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 coin which were ordered by the sen- ate, were the principal funds from which,
during the latter times of the Roman republic, the poor- er citizens derived their subsistence.
To deliver themselves 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 sat- isfy 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
themselves had the principal direc- tion. An operation of this kind would at once reduce a debt
of £128,000,000 to £21,333,333:6:8. In the course of the second Punic war, the As was still
further reduced, first, from two ounces of cop- per to one ounce, and afterwards 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 £5,333,333:6:8. 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 example, instead of eighteen penny-weight, according to the
present standard, there were 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 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
raising of the denomination of the coin. An augmentation, or a direct raising of the
denomination of the coin, always is, and from its nature must be, an open and avowed
operation. 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 are
issued from the mint, of the same denomination, 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, {See Du Cange Glossary, voce Moneta;  the Benedictine
Edition.} 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 augmentation 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. In the end of the reign of Henry VIII., and in the beginning of that of Edward VI.,
the Eng- lish 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 occasionally
been prac- tised in most other countries. 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 equal- ly 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 chap- ter, might, perhaps, without increasing the burden of the greater part of the
people, but only dis- tributing 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 augmen- tation of this kind would be such as could give any reasonable
hopes, either of liberating the pub- lic 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, inhab- ited by people either of 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 prov- inces; that of each province
bearing the same proportion to the produce of its taxes, as the rep- resentation 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 practicable 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 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 differrent provinces comprehended within it. Such a speculation, can, at
worst, be regarded but as a new Utopia, less amusing, certainly, but no 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 India plantations more able, to pay a land tax, than Great
Britain. Where the landlord is subject neither to tythe nor poor's rate, he must certainly be more
able to pay such a tax, than where he is subject to both those other bur- dens. The tythe, 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 tythe 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
tythe of Great Britain and Ireland could not well be estimated at less than six or seven millions.
If there was no tythe 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 tythe, and could, therefore, very well af- ford to pay a land tax.
The lands in America and the West Indies, indeed, are, in general, not ten- anted 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
Aus- tria, 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 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, pro- vided it was
accompanied, as in justice it ought to be, with an extension of the freedom of trade,  would be
in the highest 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 in- crease 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 ap- plied to
Ireland without any variation; the produce and consumption of that kingdom being ex- actly of
the same nature with those of Great Britain. In its application to America and the West In- dies,
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 cyder 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 pre- pared 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 ale-houses and the brewers for public sale, would be
altogether inconsistent with liberty. If, for the sake of equality, it was thought necessary to lay
a tax upon this liquor, it might be taxed by tax- ing the material of which it is made, either at
the place of manufacture, or, if the circumstances 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 five-pence 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 per- sons
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 consumable 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 sub- jects
of taxation. If a union with the colonies were to take place, those commodities might be  taxed,
either before they go out of the hands of the manufacturer or grower; or, if this mode
of taxation did not suit the circumstances of those persons, they might be deposited in public
ware- houses, 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 consumption, 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 commodities, with regard to which the union with the colonies might
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 con-  tains more
than two millions of people, and, according to the accounts laid before the congress, the twelve
associated provinces of America contain more than three. Those accounts, however, may have
been exaggerated, in order, perhaps, either to encourage their own people, or to intim- idate
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 inhabitants, 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 the 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 distur- bances, 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 conti- nent, and in the islands, is omitted; which may,
perhaps, make a difference of thirty or forty thou- sand 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 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 interest of the debt which had been discharged the year be- fore; and might, in this
manner, increase so very rapidly, as to be sufficient in a few years to dis- charge the whole
debt, and thus to restore completely the at-present debilitated and languishing vigour of the
empire. In the meantime, the people might be relieved from some of the most bur-  densome
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 cheap- er,
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
circumstances 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 burdens 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 opportunities of smug- gling are very great. The consumption of malt
liquors among the inferior ranks of people in Scot- land 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 part of the duties of customs, in proportion to the numbers of peo- ple in the respective
countries, produce less in Scotland than in England, 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 Scotland, and many parts of
the country are almost as thinly inhabited. In Ireland, therefore, the consumption of the taxed
com- modities might, in proportion to the number of the people, be still less than in Scotland,
and the facility of smuggling nearly the same. 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 mo- lasses 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 con- sumption 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 empire. The op- portunities 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, were to be levied by a
single duty upon malt, the opportunity of smuggling in the most important branch of the excise
would be almost entirely taken away; and if the duties of customs, instead of being im- posed
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 were subjected to the excise laws,  the
opportunity of smuggling, though not so entirely taken away, would be very much
dimin- ished. In consequence of those two apparently very simple and easy alterations, the
duties of cus- toms 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 popu- lous. 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
commodities which they re- ceive 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 Eng- land, the greater part of the people must surely have wherewithal to purchase a greater
quantity, if it were 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 or silver money is either necessary or convenient. The
domestic business of every country, it has been shewn in the second book of this In- quiry,
may, at least in peaceable times, be transacted by means of a paper currency, with nearly the
same degree of conveniency as by gold and silver money. It is convenient for the
Americans, who could always employ with profit, in the improvement 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 clothing, several parts of household furniture, and the iron work
necessary for building and extending their settlements and plantations; 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, particularly, 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 de- fraying 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, {See Hutchinson's History of Massa- chusetts Bay vol. ii.
page 436 et seq.} 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 conve- niency 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 governments, to supply them
with a medi- um, 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 pover- ty, but the enterprizing 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 redundancy 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 gener- ally 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 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, accord- ingly, to have less gold and silver money than any other
colonies in America. They are reckoned, however, 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, etc. 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 imported 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
prin- cipal proprietors of the sugar plantations 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
mer- chants purchase in those colonies upon 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 uncultivated land which they con- tained; 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's, 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 Do- minica, have opened a new field for speculations of this kind; and the
returns front those islands have of late been as irregular and uncertain 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 com- merce, 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 transacted
without gold and silver money, it appears, that they can 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 uncer- tain, 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 domes- tic 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, how- ever, be necessary to
remit any part of the American revenue in gold and silver. It might be remit- ted in bills drawn
upon, and accepted by, particular merchants or companies in Great Britain, to whom a part of
the surplus produce of America had been consigned, who would pay into the trea- sury 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 dis- charge 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 sev- eral of the colonies of America owe their present
charters, and consequently their present consti- tution; 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 debt contracted in the late war in particular, and a great part of
that contracted in the war before, were both properly con- tracted in defence of America. By a
union with Great Britain, Ireland would gain, besides the freedom of trade, other advan- tages
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 al- ways before oppressed them. By a union with Great Britain, the greater part of 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 preju- dices; 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 rancourous 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 prevented by a union of this kind, seems
very likely to take place, those factions would be ten times more virulent than ever. Before the
commence- ment of the present disturbances, the coercive power of the mother-country had
always been able to restrain those factions from breaking out into any thing worse than gross
brutality and insult. If that coercive power were entirely taken away, they would probably soon
break out into open vio- lence and bloodshed. In all great countries which are united under one
uniform government, the spirit of party commonly prevails 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 application
of the public revenue towards the discharge of the national debt, the greater part of those taxes
might not be of long continuance, and the public revenue of Great Britain might soon be
reduced to what was necessary for maintaining a mod- erate peace-establishment. The
territorial acquisitions of the East India Company, the undoubted 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 countries are represented as more
fertile, more extensive, and, in proportion 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 neces-  sary
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 endeavour 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
moderate than that of any European state, which can pretend to rival her either in wealth or in
power. None of these 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 expense in time of peace, though very great, is insignificant in comparison 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, upwards of ninety millions. The Spanish war of 1739 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 mil- lions; 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 to- wards the support of the empire, cannot be
considered as provinces. They may, perhaps, be con- sidered as appendages, as a sort of
splendid and shewy equipage of the empire. But if the empire can no longer support the
expense 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 pos- sessed a great empire on the west side of the Atlantic. This empire, however, has
hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an
empire; not a gold mine, but the project of a gold mine; a project which has cost, which
continues 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 shewn, 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 prov- inces of the British empire cannot be
made to contribute towards the support of the whole em- pire, it is surely time that Great
Britain should free herself from the expense of defending those provinces in time of war, and
of supporting any part of their civil or military establishment in time of peace; and endeavour
to accommodate her future views and designs to the real mediocrity of her circumstances.