An Inquiry into the Nature and Causes of the Wealth of Nations [Complete and Unabridged, Cannan Edition]

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THE WEALTH OF

NATIONS

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AN INQUIRY INTO THE NATURE AND CAUSES OF

THE WEALTH OF NATIONS »»»»»»>»»»»»»»»»»»»»»»»»»»»»»»»»»» BY

ADAM SMITH

*

EDITED, WITH AN INTRODUCTION, NOTES, MARGINAL SUMMARY AND AN ENLARGED INDEX BY

EDWIN CANNAN, PROFESSOR OF POLITIC

M.A.,

LLD.

M FCO^OMY IN THF UNIVERSITY OP LONDON

WITH AN INTRODUCTION BY

MAX lERNFR EDITOR or “the n \tion”

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INTRODUCTION By Max Lerner Like all great books, The Wealth of Nations is the outpouring not only of a great mind, but of a whole epoch. The man who wrote it had learning, wisdom, a talent for words; but equally important was the fact that he stood with these gifts at the dawn of a new science

and the opening

of a

new

What he wrote was

era in Europe.

the expression of forces which were working, at the very time he

wrote

it,

oeconomicus, or the economic

term not

and

to fashion that strange

man

terrible

new

species

homo

modern world. I use that abstraction which economic

of the

in the sense of the lifeless

have invented to slay any proposals and which has in turn slain them. I use it rather theorists

for social change, for the very living

and human businessman, in defense of whom the economists have written and in whose interests they have invented their lifeless abstraction. All the forces which were at work in Europe creating the business man, and the society he was to dominate, were at work also creating the framework of ideas and institutions within which Adam Smith wrote his book. And that book, as though conscious that one good turn deserved another, became in its own way a powerful influence to further the work of those forces. Thus it is in history. A new society, emerging from the shell of the old, creates a framework within which a great thinker or artist is enabled to do his work; and that work, in turn, serves to smash finally the shell of the old society, and to complete and make firmer the outlines of the new. Thus it has been with Machiavelli’s Prince, with Adam Smith’s The Wealth of Nations, with Karl Marx’s Capital. That is why the arguments of all the scholars who have been thrashing about, seeking to determine how original Adam Smith was, are essentially futile. No first-rate mind whose ideas sum up an age and influence masses and movements to come is in any purist sense original. The Wealth of Nations is undoubtedly the foundation-work of modern economic thought. Yet you can pick it to pieces, and find that there is nothing in it that might not have been found somewhere in the literature before, and nothing that comes out of it that has not to a great degree been punctured by the literature that followed.

What

counts

is,

of course, not whether

particular doctrines were once shiny new, or

ravages of time.

What

counts

is

the

work

have since stood the

conception and execution, the spirit that animates it

has had in history.

V

—

as a whole it

its

scope,

and the place

INTRODUCTION

vi

Here, then, is the thing itself: a strange mixture of a book—economics, philosophy, history, political theory, practical program; a book written by a man of vast learning and subtle insights a man

—

a powerful analytic machine for sifting out

with a mind that was the stuff in his notebooks, and a powerful synthetic machine for putting it together again in new and arresting combinations. Smith was sensitive to the various elements on the intellectual horizon of his day. Like

Marx

after him,

from the world; he was

he was no

closet scholar, shut off

antennae, reaching out for and absorb-

all

He wrote at

the end of the break-up of modern world in which the old feudal institutions were still holding on with the tenacity that the vested interests have always shown. It was against these vested interests that he wrote. And the result is that his book has not been merely for library shelves. It has gone through many editions, and has been translated into almost every language. Those who read it were chiefly those who stood to profit from its view of the world ing everything within reach.

feudal Europe, at the beginning of a

the rising class of businessmen, their political executive committees

and their intellectual executive conunittees in the academies. Through them it has had an enormous influence upon the underlying populations of the world, although generally all unknown to them. And through them also it has had an enormous influence upon economic opinion and national policy. It has done as much perhaps as any modern book thus far to shape in the parliaments of the world,

the whole landscape of

Who

life

as

we

live it today.

was the man who could do

all this?

At

first

glance

Adam

Smith appears only as a mild, Scottish professor of moral philosophy, retiring and absent-minded, a gentle sage with dynamite flowing from his pen. His career had nothing extraordinary in it, except that at three he

by a band of gypsies, and only with But whatever other adventure the him was to lie in the dangerous voyage of

was carried

off

difficulty restored to his family.

rest of his life held for

the

mind

rather than in the glories or disasters of

an adventurous boyhood in a frugal family; spent the traditional years at Oxford ^years which served as the basis for the caustic attack on universities which is to be outward

career.

He had the traditional

Scottish

—

found

in these pages; cooled his heels for the traditional period

while he waited for a suitable university appointment; was made professor of logic and then professor of moral philosophy at Glasgow, giving lectures on theology, ethics, jurisprudence and political

economy

to students

who probably

cared more about their

careers in the rising merchant class than they did about moral phi-

losophy; wrote a book called The Theory of Moral Sentiments^ which made something of a splash at the time, and since it ex-

INTRODUCTION

vii

plained the social psychology of human behavior in terms of the sentiment of sympathy, got itself much talked about and read in polite circles throughout the British Isles; gave up his university post to go as traveling tutor to the stepson of the famous colonialbaiter, Charles Townshend the young Duke of Buccleugh, and spent a year and a half at Toulouse and a year at Paris with him;

—

began, while on the

trip, a treatise on economics, completing it ten years after his return to Scotland; finally published his treatise in 1776 under the title of The Wealth of Nations; and spent the rest

of his life as commissioner of customs at Edinburgh, living quietly with his mother and a maiden cousin. That is one version of Adam Smith, and it is true enough for

—

a half-truth. But there is another half-truth needed to complete the picture. Adam Smith was always alive to what was going on in the world. He was heterodox enough to remember with passion the futility of the ordinary university teaching, as he had experienced it at Oxford. In his own teaching, while he had no eloquence, he could

communicate to his students his own fervor for ideas. Of his lectures on jurisprudence, John Rae, his biographer, tells us that the course ^‘taught the young people to think. His opinions became the subjects of general discussion, the branches he lectured upon became fashionable in the town stucco busts of him appeared in the booksellers^ windows, and the very peculiarities of his voice and pronunciation received the homage of imitation.^^ The doctrine that he was teaching was, it must be remembered, new doctrine that of economic liberalism and freedom from governmental interference. To it were attached therefore at once the obstacles and advantages of new doctrine; it met with the hostility of the entrenched and the salvos of those who stood to gain by innovation. Smith himself was by no means a recluse. The tutorship that was offered him was lucrative, and yet there was a gamble in leaving his university chair. That he did so is evidence of his restless desire to explore the bounds of the new European society. He was a friend of Plume, and in P'rance he found in addition Quesnay, Turgot, D^Alembert, Helvetius the physiocrats who were fashioning a new and exciting economic science, and the philosophes who were constructing out of the materials of the rational life instruments for shattering encumbering and irrational institutions. Smith kept his eyes and ears open; he kept his notebooks ready; he kept his wits with him. He started to write up his lectures on political economy, as he had formerly written up his lectures on moral philosophy. But this was a different matter. It wasn't merely the business of going back to first principles, and then spinning the rest out of one's philosophic entrails. Here was something that gave order and meaning to the .

.

.

—

—

INTRODUCTION

viii

newly emerged world of commerce and the newly emerging world of industry. Here was something that could be used in fighting the clumsy and obstructive vestiges of a society governed by a feudal aristocracy. Smith trembled with anticipation, and could not help communicating his excitement to his friends. They too trembled and waited. Smith took ten more years. He could not be hurried in this task. He had to read and observe further. He poked his nose into old books and new factories. He got led off on long excursions into the history of silver coinage, the economics of ecclesiastical institutions, the whole cultural history of Europe. He had to polish his style, but, more important, he had to fashion and carry through consistently a

new way

He

of looking at things

—the hard-bitten

eco-

avoid making his book merely a theoretical construction; it must deal with the burning issues of national and international economic policy of his day.

nomic viewpoint.

When

had, above

all else, to

the book was finished, therefore,

it

was more than a book;

it

was the summary of a new European consciousness. You will find the basic principles that Smith embodied in his book explained in all the histories of economic thought. What you will not find is the skill, the charm, the greatness with which he wove them into the fabric of his chapters. The principles are simple. First, Smith assumes that the prime psychological drive in man as an economic being is the drive of self-interest. Secondly, he assumes the existence of a natural order in the universe which makes all the individual strivings for self-interest add up to the social good. Finally, from these postulates, he concludes that the best program is to leave the economic process severely alone ^what has come to be

—

known

as laissez-faire, economic liberalism, or non-interventionism.

All this is

has made

now

familiar enough. Largely through Smith’s

book

it

a part of the structure of our often unconscious beliefs, and is only now beginning to be dislodged. Of Smith’s first postulate it must be said that while it is largely an abstraction from experience, as the institutional school of economists have delighted to point out, the experience from which it is abstracted does much to verify it. The view which makes of man an economic automaton is obviously oversimplified. But the view which makes out of him a hard-headed and predatory seeker of his own gain is, as we look back at the history of business enterprise, largely justified. What we have learned, of course, is that it is not an inherent or universal trait, but part oit an historical method of organizing economic life. itself

—

As for Smith’s second postulate that there is a ^^natural order,’' whereby the pursuit by each individual of his own self-interest contributes ultimately to the social welfare, that must lie outside the realm of science or of historical verification, and must be set down

INTRODUCTION

ix

as a cardinal principle of the faith of the age. As Carl Becker has pointed out, the ‘^natural order’’ which the eighteenth-century philosophers postulated in order the better to fight the ecclesiastical and the political obscurantism of their day became

institutions

a source of a quasi-theological faith and of obscurantism. conclusion that Smith drew from these postulates was simple enough. Since a natural order exists whereby the enlightened selfishness of all men adds up to the maximum good of society* since there is a ‘‘divine hand” which guides each man in pursuing his own gain to contribute to the social welfare, it must follow that government is superfluous except to preserve order and perform routine functions. The best government is the government that governs least. The best economic policy is that which arises from the spontaneous and unhindered action of individuals. We recognize this, of course, as the unregulated and individualistic capitalist economy ^what Carlyle has unforgettably termed “anarchy plus a constable.” One warning is necessary. We must not conclude, because Smith’s intellectual system can be presented in an orderly sequence itself

The

—

he arrived at it by the samfe sequence. It is much more likely, as with almost all intellectual constructions, that instead of Smith’s program flowing from his principles, it was his principles that flowed from his program. He did not start with truths about human behavior and the natural order, and arrive at economic liberalism. John Maurice Clark suggests that his system can be best understood in terms of what he was reacting against. And it is true that Smith’s system of thought took its shape from his intense reaction against the elaborate apparatus of controls which the surviving feudal and mercantilist institutions were still

from postulates

to conclusion, that

imposing on the individual. The need for removing these controls was Smith’s un4€rlying theme. And it was the response which this

theme met from the mercantile and industrial class of Europe that gave The Wealth of Nation^ its enormous impact upon Western thougjit and Western institutions. Harold Laski has demonstrated, in his Rise of Liberalism,

how

Smith’s arguments fitted in with the

prevailing middle-class temper in Europe. The businessmen Were of delighted. “To have their own longings elevated to the dignity never had that force driving with a them natural law was to provide

maxims before beeniso powerful. . . With Adam Smith the practical of business enterprise achieved the status of a theology.” But there is another side of the shield. Smith was, to be sure, .

an unconscious mercenary in the service of a rising capitalist class and a new in Europe. It is true that he gave a new dignity to greed ration^he that true sanctification to the:predatory impulses. It is power in the economic interests of the class that was coming to f

ized

INTRODUCTION

X

such a way that he fashioned for that class a panoply of ideas behind which they are still protecting themselves against the assaults of government regulation

and the

stirrings for socialization. It is

true that Smith’s economic individualism

is

now

being used to op-

and that now entrenches But it must be said in twisted ways he would not for Smith that his doctrine has been have approved, and used for purposes and causes at which he would press where once

it

the old where once

was used to

it

liberate,

it

blasted a path for the new.

have been horrified. Adam Smith was, in his own day and his own way, something of a revolutionary. His doctrine revolutionized European society as surely as Marx’s in a later epoch. He was, on the economic side, the philosopher of the capitalist revolution, as John Locke was its philosopher on the political side. His own personal sympathies were not entirely with the capitalist. Eli Ginzberg has pointed out, in his House of Adam Smithy how there runs through The Wealth of Na^

and laborers, for the lowly and oppressed everywhere, and a hostility to

tions a strain of partisanship for apprentices

farmers, for

the business corporations, the big-businessmen of the day, the ec-

and the aristocrats. Read the book with an eye for these and it becomes a revealing document showing Smith’s concern for the common man. Far more important, of course, than any of these more or less sentimental expressions of sympathy, is the doctrine of labor value which is at the core of Smith’s ecoclesiasts

passages,

nomics. In enunciating for the

first

time the doctrine that labor

is

the sole source of value in commodities. Smith became the fore-

runner of Bray and Hodgskin and eventually of Marx. As an originator, Smith developed this doctrine clumsily. It remained for to refine it

it,

convert

it

into

an instrument of

from from the

analysis, extract

the revolutionary implications that were inherent in

start.

Marx

This leads us, however, much too far afield.

it

On Smith’s relation

a large and polemical literature. On the validity or confusion of the theory itself there is a literature even larger and more polemical. All that concerns us is to see the curious paradox of Smith’s position in history; to have fashioned his system of thought in order to blast away the institutional obstructions from the past, and bring a greater degree of economic freedom and therefore a greater total wealth for all the people in a nation; and yet to have had his doctrine result in the glorification of economic irresponsibility and the entrenchment of the middle class in power. A reading of Adam Smith’s work and a study of its place in the history of ideas should be one of the best solvents for smugness and intellectual absolutism. to the labor theory of value there

is

m

CONTENTS PACE

iNTRODtfCTION TO THE

MODEEN LiBRAKY EDITION BY MAX

LERNER

V

Preface

xk

Editor’s Introduction

vm'n

Introduction and Plan of the

Work

BOOK

Ivii

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

3

CHAPTER Of the Division

of Labour

3

CHAPTER Of the

I

n

Principle which gives Occasion to the Division of Labour

CHAPTER

III

Thai the Division of Labour is limted by the Extent of the Market

CHAPTER 0/ the Origin and

13

17

IV

Use of Money

22

CHAPTER V Of the real and nominal Price

of Commodities, or of their Price

in Labour, and their Price in Money jd

3®

CONTENTS

xii

PAGE

CHAPTER Of

the

component Parts of the Price of Commodities

CHAPTER Of the

VI 47

VII

natural and market Price of Commodities

CHAPTER Of the Wages

55

VIII

of Labour

64

CHAPTER IX Of the

Profits of Stock

87

CHAPTER X Of Wages and Profit in the different Employments

of Labour

and

Stock

Part

I.

Inequalities arising from the Nature of the

Employ-

ments themselves

Part

II.

100

Inequalities occasioned by the Policy of

Europe

118

CHAPTER XI Of the Rent of Land Part I. Of the Produce of Land which always affords Rent Part II. 0/ the Produce of Land which sometimes does, and

144 146

sometimes does not, afford Rent III. Of the Variations in the Proportion between the respective Values of that Sort of Produce which always affords

161

Part

Rent, and of that which sometimes does not afford Rent

and sometimes does

Digression concerning the Variations in the Value of Silver during^ the Course of the Four last Centuries. First Period Second Period Third Period

1^5 X91 1^2

Variations in the Proportion between the respective Values of

Gold and Silver Grounds of the Suspicion

21 that the

Value of Silver

still

continues

to decrease

216

Different Effects of the Progress of

price of three different

Improvement upon Sorts of rude Produce

the real

217

CONTENTS

xiii

PAGE First Sort

218

Second Sort Third Sort

219 228

Conclusion of the Digression concerning the Variations in the Value of Silver Effects of the Progress of

Improvement upon

237

the real Price of

Manufactures Conclusion of the Chapter

242 247

BOOK

II

Of the Nature, Accumulation, and Employment of Stock Introdtjction

259

CHAPTER Of the Division

I

262

of Stock

CHAPTER Of Money considered

as a particular

II

Branch

of the general Stock

of the Society, or of the Expence of maintaining the National Capital

CHAPTER Of

the

III

Accumulation of Capital, or of productive and unpro^ Labour

ductive

CHAPTER Of Stock

270

314

IV

lent at Interest

333

CHAPTER V Of the

different

Employment

of Capitals

341

CONTENTS PAGE

BOOK Of the

dijfferent

III

Progress of Opulence in different Nations

CHAPTER Of the Natural

Progress of Opulence

356

CHAPTER Of

I

n

the Discouragement of Agriculture in the ancient State of

Europe

after the Fall of the

Roman Empire

CHAPTER

361

III

Of the Rise and Progress of Cities and Towns, after the Fall of the

Roman Empire

373

CHAPTER

IV

How the Commerce of the Towns contributed to the Improvement of the Country

384

BOOK Of Systems of

IV

political

(Economy

Introduction

397

CHAPTER Of the

Principle of the commercial, or mercantile System

CHAPTER Of

I

398

II

upon the Importation from foreign Countries of such Goods as can be produced at Home

Restraints

420

dONTEKTS

XV PAGE

CHAPTER

III

OJ ihe 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

the Principles of the Commercial System Digression, concerning Banks of Deposit, particularly concerning

that of

Part

Amsterdam

Of

440

446

Unreasonableness of those extraordinary Restraints upon other Principles II.

440

Unreasonableness of those Restraints even upon

the

CHAPTER

455

IV

Of Drawbacks

466

CHAPTER V Of Bounties Digression concerning the Corn Trade and Corn

CHAPTER Of

Treaties of

Lrms

VI

Commerce

51

CHAPTER Of Colonies Part I. Of the Motives for

VII 523

establishing

new Colonies

Causes of the Prosperity of New Colonies 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

Part Part

472 490

II.

CHAPTER

523 531

557

VIII

Conclusion of the Mercantile System

607

CHAPTER rX Of

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, or of those

627

CONTENTS

xvi

FAG£

BOOK V Of the Revenue of the Sovereign or Commonwealth

CHAPTER

I

Of the Expences of the Sovereign or Commonwealth Part I. Of the Expence of Defence Part II. Of the Expence of Justice Part III. Of the Expence of Public Works and Public Institutions

Article

681

tating the

For

ist,

Public Works and Institutions for facili-

Of Commerce the

ist.

of Society,

facilitating the general

Commerce

of the

Society 2dly,

For

682

facilitating particular

Branches of Com-

merce

Article

2d.

690

Of the Expence of the Institutions for

the Edu>ca-

Youth

tion of

Article

3d.

716

Of the Expence of the Institutions for the InstrucAges Expence of supporting

tion of People of all

Part

IV.

Of

653 653 669

the

Sovereign

740 the Dignity of the

^

Conclusion of the Chapter

766 767

CHAPTER

II

I

Of

the Sources of the general or public

Part

I.

Of the Funds

Revenue of the Society or Sources of Reverme which may pecu-

769

Commonwealth

769

liarly belong to the Sovereign or

Part

II.

Article

Of Taxes

Taxes upon Rent; Taxes upon the Rent of Land Taxes which are proportioned^ not to the Rent, but to the Produce of

ist.

Land

Taxes upon

the

Rent of Houses Taxes upon Profit, or upon the Revenue arising

Article 2d. from Stock Taxes upon the Profit of particular Employments Appendix to Articles ist and 2d. Taxes upon the Capital Value of Lands, Houses, and Stock Article 3d. Taxes upon the Wages of Labour Article 4th. Taxes which, it is intended, should fall indifferently upon every different Species of Revenue

777

779

ygg jgi

7^8 803 809 815

818

Capitation Taxes

819

Taxes upon consumable Commodities

821

CONTENTS

XVI 1

PAGE

CHAPTER Of public

III

Debts

859

Appendix on the Herring Bounty

901

Index

I.

907

Index

II.

Subjects Authorities

971

[From “Introduction and Plan of the Work” to “Public Debts,” the Contents are printed in the present edition as they appeared in eds. 3-5 Eds. i and 2 neither enumerate the chapter “Conclusion of the Mercantile System,” nor divide Bk. ch 1 , Pt. iii , Art ist into sections, since the chap,

V

and one of the two sections appeared first in ed 3. Eds i and 2 lead “Inequalities in Wages and Profits arising from the Nature of the lerent Employments of both” at Bk. I ch. x., Pt. i ]

ter

,

also dif-

PREFACE The last

text of the present edition

published before

Adam

is

copied from that of the

Smith’s death.

The

fifth,

the

fifth edition

has

been carefully collated with the first, and wherever the two were found to disagree the history of the alteration has been traced through the intermediate editions. With some half-dozen utterly insignificant exceptions such as

a change of “these” to “those,” “towards’’ to “toward,” and several haphazard substitutions ol “conveniences” for “conveniencies,” the results of this collation are all recorded in the footnotes, unless the difference between the editions

is

quite obviously and undoubtedly the consequence of mere

misprints, such as “is” for “it,” “that” for “than,” “becase” for ‘^because,” Even undoubted misprints are recorded if, as often happens, they make a plausible misreading which has been copied in

modern texts, or if they present any other feature of interest. As it does not seem desirable to dress up an eighteenth century

have retained the and steadily refused to attempt to make it consistent with itself. The danger which would be incurred by doing so may be shown by the example of “CromweL” Few modern readers would hesitate to condemn this as a misprint, but it is, as a matter of fact, the spelling affected by Hume in his History and was doubtless adopted from him by Adam Smith, though in the second of the two places where the name is mentioned inadvertence or the obstinacy of the printers allowed the usual “Cromwell” to appear till the fourth edition was reached. I have been equally rigid in following the original in the matter of the use of capitals and italics, except that in deference to modern fashion I have allowed the initial words of paragraphs to appear in small letters instead of capitals, the chapter headings to be printed in capitals instead of italics, and the abbreviation “Chap.” to be replaced by “Chapter” in full. I have also allowed each chapter to begin on a fresh page, as the old practice of beginning a new chapter below the end of the preceding one is inconvenient to a student who desires to use the book for reference. classic entirely in twentieth century costume, I

spelling of the fifth edition

PREFACE

XX

In writing a marginal summary for the text I have felt like an architect commissioned to place a new building alongside some ancient masterpiece: I have endeavoured to avoid on the one hand an impertinent adoption of Smith’s words and style, and on the other an obtrusively modern phraseology which might contrast unpleasantly with the text.

The

original index, with

pography,

is

reprinted as

it

some

slight unavoidable changes of tyappeared in the third, fourth and fifth a large number of new articles and ref-

have added to it have endeavoured by these additions to make it absolutely complete in regard to names of places and persons, except that it seemed useless to include the names of kings and others when used merely to indicate dates, and altogether vain to hope to deal comprehensively with “Asia,” “England,” “Great Britain” and “Europe.” I have inserted a few catchwords which may aid in the editions. I

erences. I

recovery of particularly striking passages, such as “Invisible hand,” “Pots and pans,” “Retaliation,” “Shopkeepers, nation of.” I have not thought it desirable to add to the more general of the headings in the original index, such as “Commerce” and “Labour,” since these might easily be enlarged till they included nearly everything in the book. Authorities expressly referred to either in the text or the Author’s notes are included, but as

it

would have been

inconvenient and confusing to add references to the Editor’s notes, I

have appended a second index

which all the authorities reand in the Editor’s notes hope, be found useful by stuI in

ferred to in the text, in the Author’s notes,

are collected together. This will,

dents of the history of economics.

The Author’s references to his footnotes are placed exactly where he placed them, though their situation selected,

is often somewhat curiously and the footnotes themselves are printed exactly as in the

probably complain of the trivial character which record the result of the collation of the editions, but I would point out that if I had not recorded all the differences, readers would have had to rely entirely on my expression of opinion that the unrecorded differences were of no interest. The evidence having been once collected at the expense of very considerable labour, it was surely better to put it on record, especially as these trivial notes, though numerous, if collected together would not occupy more than three or four pages of the present work. Moreover, as is shown in the Editor’s Introduction, the most trivial of the differences often throw interesting light upon Smith’s way of regarding and treating his work. fifth edition. Critics will

of

many

The

of the notes

other notes consist chiefly of references to sources of

Adam

PREFACE Smith’s information.

Where he quotes

difficulty ordinarily arises.

XXI

his authority

Elsewhere there

by name, no

little doubt about the matter. The search for authorities has been greatly facilitated by the publication of Dr. Bonar’s Catalogue of the Library of Adam Smith in 1894, and of Adam Smith’s Lectures in 1896. The Catalogue tells us what books Smith had in his possesis

often

sion at his death, fourteen years after the Wealth of Nations was published, while the Lectures often enable us to say that a par-

must have been taken from a book published before 1763. As it is known that Smith used the Advocates’ Library, the Catalogue of that library, of which Part II was printed in 1776, has also been of some use. Of course a careful comparison of words and phrases often makes it certain that a particular statement must have come from a particular source. Nevertheless many of the references given must be regarded as indicating merely a possible source of information or inspiration. I have refrained from quoting or referring to parallel passages in other authors when it is impossible or improbable that Smith ever saw them. That many more references might be given by an editor gifted with omniscience I know better than any one. To discover a reference has often taken hours of labour: to fail to discover one has often ticular piece of information

taken days.

When Adam

Smith misquotes or clearly misinterprets his authority, I note the fact, but I do not ordinarily profess to decide whether his authority is right or wrong. It is neither possible nor desirable to rewrite the history of nearly all economic institutions and a great many other institutions in the form of footnotes to the Wealth of Nations, Nor have I thought well to criticise Adam Smith’s theories in the light of modern discussions. I would beseech any one who thinks that this ought to have been done to consider seriously what it would mean. Let him review the numerous portly volumes which modern inquiry has produced upon every one of the immense number of subjects treated by Adam Smith, and ask himself whether he really thinks the order of subjects in the Wealth of Nations a convenient one to adopt in an economic encyclopaedia. The book is surely a classic of great historical interest which should not be overlaid by the opinions and criticisms of any subsequent moment still less

Much

of

any

particular editor.

of the heavier

work involved

in preparing the present edi-

tion, especially the collation of the original editions,

by

my

friend Mrs.

Norman Moor,

without whose

tance the book could not have been produced.

has been done untiring assis-

PREFACE

xxii

Numerous

friends

of particular points,

have given

and

me

mv hearty

the benefit of their knowledge

thanks are due to them.

E.C. London School of Economics, 1904

9

EDITOR^S INTRODUCTION

The first edition of the Wealth of Nations was published on the 9th March, ^ 1776, in two volumes quarto, of which the first, containing Books I., II. and III., has 510 pages of text, and the second, containing Books IV. and V., has 587. The title-page describes the author as “Adam Smith, LL.D. and F.R.S. Formerly Professor of Moral Philosophy in the University of Glasgow.’’ There is no prefof

ace or index.

ning of the

The whole

first

The second

volume.

of the Contents are printed at the begin-

The

price

was £i

ids.^

edition appeared early in 1778, priced at £2 2s.,® but from its predecessor. Its pages very

differing little in appearance

nearly correspond, and the only very obvious difference

that the

is

Contents are now divided between the two volumes. There are, however, a vast number of small differences between the first and second editions. One of the least of these, the alteration of “late” to “present,” ^ draws our attention to the curious fact that writing at

some time before the spring

of 1776

Adam Smith

thought

it

safe to

American troubles as “the late disturbances.” We canwhether he thought the disturbances were actually*over, or only that he might safely assume they would be over before the ®

refer to the

not

tell

book was published. As “present disturbances” also occurs

close to

“late disturbances,” we may perhaps conjecture that when ing his proofs in the winter of 1775-6, he had altered his opinion and only allowed “late” to stand by an oversight. very large proportion of the alterations are merely verbal, and made for the sake ®

correct-

A

of greater elegance or propriety of diction, such as the frequent change from “tear and wear” (which occurs also in Lectures, p. 208) to the

more ordinary “wear and

tear.”

Most of

the footnotes appear

A

few corrections as to matters of fact on silver in Spanish America (p. 169). Figures are corrected on p. 328, and pp. 838, 842. New information is added here and there: an adfirst

in the second edition.

are made, such as that in relation to the percentage of the tax

^

John Rae, Lije

^

Ibid., p. 285.

of

Adam

Smith, 1895, p. 284.

^Ibid., p. 324. '‘•Below, pp. 465, 890. " See p. 544, as well as the passages referred to in the previous note.

"Pp. S4I, 552, 581.

editor's introduction

xxiv

ik

ditional

way

of raising

money by

fictitious bills is

described in the

long note on p. 295; the details from Sandi as to the introduction of the silk manufacture into Venice are added (p. 381) so also are ;

the accounts of the tax on servants in Holland (p. 809), and the mention of an often forgotten but important quality of the landtax, the possibility of reassessment within the parish

(p. 796).

There are some interesting alterations in the theory as to the emergence of profit and rent from primitive conditions, though Smith himself would probably be surprised at the importance which some modern inquirers attach to the points in question (pp. 47-So)* On pp. 97, 98, the fallacious argument to prove that high profits raise prices more than high wages is entirely new, though the doctrine asserted in another passage (p. 565). The insertion in the second edition of certain cross-references on pp. 193, 312, which do not occur in the first edition, perhaps indicates that the Digressions itself is

on the Corn Laws and the Bank of Amsterdam were somewhat late additions to the scheme of the work. Beer is a necessary of life in one place and a luxury in another in the first edition, but is nowhere a necessary in the second (pp. 432, 822). The epigrammatic condemnation of the East India Company on pp. 602-3, a-ppears first

in the second edition.

tuted for

“Roman

On

p. 751,

we

find “Christian” substi-

Catholic,” and the English puritans,

“persecuted” in the

—

first

who were

edition, are only “restrained”

in the

second (p. 555) defections from the ultra-protestant standpoint perhaps due to the posthumous working of the influence of Hume

upon his friend. Between the second edition and the

third, published at the

of 1784,'^ there are considerable differences.

The

end

third edition is in

three volumes, octavo, the first running to the end of

Book

II.,

and the second from that point to the end of the chapter on Colonies, Book IV., chapter viii. The author by this time had overcome the reluctance he felt in 1778 to have his office in the customs added to his other distinctions® and consequently appears on the title-page as “Adam Smith, LL.D. and F.R.S. of London and Edinburgh: one of the commissioners of his Majesty’s Customs in Scotland; and formerly professor of Moral Philosophy in the University of Glasgow.” The imprint is “London: printed for A. Strahan; and T. Cadell, in the Strand.” This edition was sold at one chapter

ii.,

guinea.® Prefixed to

it is

the following “Advertisement to the Third

Edition”: ^

Rae, Life of p. 323.

^

Ibid., p. 362.

Adam

Smith, p. 362.

editor’s introduction

XXV

“The first Edition of the following Work was printed in the end of the year 1775, and in the beginning of the year 1776. Through the greater part of the Book, therefore, whenever the present state of things is mentioned, it is to be understood of the state they were in, either about that time, or at some earlier period, during the time I was employed in writing the Book. To this"® third Edition, however, I have made several additions, particularly to the chapter upon Drawbacks, and to that upon Bounties; likewise a new chapter entitled, The Conclusion of the Mercantile System; and a new article to the chapter upon the expences of the sovereign. In all these additions, the present state of things means always the state in which they were during the year 1783 and the beginning of the present"" year 1784.”

Comparing the second and the

third editions

additions to the third are considerable.

we

find that the

As the Preface

or ^‘Adver-

tisement” just quoted remarks, the chapter entitled “Conclusion of the Mercantile System” (pp. 607-26) is entirely new, and so is the section

“Of the Public Works and

Institutions

which are necessary

for facilitating particular Branches of

Commerce”

Certain passages in Book IV., chapter

iii.,

restrictions

(pp. 690-716).

on the absurdity of the on trade with France (pp. 440-1 and 462-3), the three

pages near the beginning of Book IV., chapter iv., upon the details of various drawbacks (pp. 466-70), the ten paragraphs on the herring fishery bounty (pp. 485-9) with the appendix on the same subject (pp. 901-3), and a portion of the discussion of the effects on the corn bounty (pp. 475-6) also appear first in the third edi-

With

and corrections of smaller size these passages were printed separately in quarto under the title of “Additions and Corrections to the First and Second Editions of Dr. Adami Smith's Inquiry into the Nature and Causes of the Wealth Writing to Cadell in December, 1782, Smith of Nations.” tion.

several other additions

says: “I hope in two or three months to send you up the second edition corrected in many places, with three or four very considerable additions, chiefly to the second volume. Among the rest is a short but, 1

complete history of all the trading companies in Great I mean not only to be inserted at their proper places into the new edition, but to be printed separately and to be sold for a shilling or half a crown to the purchasers of the old edition flatter myself, a

Britain.

These additions

Edition 4 alters “this” to “the.” Edition 4 omits “present.” ^They are frequently found at the end of existing bound copies of the second edition. The statement in Rae, Life of Adam Smith, p 362, that they were published in 1783 is a mistake; cp. the “Advertisement to the Third Edition” above.

editor’s introduction

xxvi

The

price

must depend on the bulk of the additions when they are

all

written out.’’^®

Besides the separately printed additions there are

many minor

combetween the second and placent note on the adoption of the house tax (p. 795), the correction of the estimate of possible receipts from the turnpikes (p. 685, note 37), and the reference to the expense of the American war (p. 876), but none of these is of much consequence. More important is the addition of the lengthy index surmounted by the rather quaint The Roman numerals refer to the Volume, superscription third editions, such as the

alterations

and the

figures to the Page.”

We

should not expect a

man

of

own index, and we may be quite certain that he did not do so when we find the misprint ^Tallie” on p. 787, reappearing in the index (5,^;. Montauban) though 'Taille” has also a place there. But the index is far from

Adam

Smith’s character to

make

his

suggesting the work of an unintelligent hack, and the fact that the ^^Ayr bank” is named in it ($,v. Banks), though nameless in the text,

shows either that the index-maker had a certain knowledge of

Scotch banking history or that Smith corrected his work in places. That Smith received a packet from Strahan '^containing some part

November, 1784, we know from his letter to Cadell, published in the Economic Journal for September, 1898. Strahan had inquired whether the index was to be printed in quarto along with the Additions and Coirections, and Smith reminded him that the numbers of the pages would all have to be altered "to accommodate them to either of the two former editions, of which the pages do not in many places correspond.” There is therefore no reason for not treating the index as an integral part of the book. The fourth edition, published in 1786, is printed in the same style and with exactly the same pagination as the third. It reprints of the index” on 17th

the advertisement to the third edition, altering, however, the phrase

and "the present year 1784” into "the year 1784,” and adds the following "Advertisement to the Fourth Edition”; "this third Edition,” into "the third Edition,”

"In this fourth Edition I have made no alterations of any kind. I now, however, find myself at liberty to acknowledge my very great obligations to

“ Rae,

Mr. Henry Hop

of Amsterdam.

To

that Gentleman I

Life of Adam Smith, p. 362. Corrected to “Hope^^ in edition 5. The celebrated firm of Hope, merchant-bankers in Amsterdam, was founded by a Scotchman in the seventeenth century (see Sir Thomas Hope in the Dictionary of National Biography), Henry Hope was born in Boston, Mass., in 1736, and passed six years in a banking house in England before he joined his relatives in Amsterdam.

editor’s introduction owe the most

distinct, as well as liberal information,

xxvii

concerning a very

and important subject, the Bank of Amsterdam; of which no printed account had ever appeared to me satisfactory, or even intelligible. The name of that Gentleman is so well known in Europe, the information which comes from him must do so much honour to whoever has been favoured with it, and my vanity is so much interested in making this acknowledgment, that I can no longer refuse myinteresting

self the pleasure of prefixing this

of

my

Advertisement to this

new

Edition

Book.”

In spite of his statement that he had made no alterations of any made or permitted a few trifling alterations bethe tween third and fourth editions. The subjunctive is very frequently substituted for the indicative after “if,” the phrase “if it kind, Smith either

was”

On p. 70, note 23, “late disturbances” is substituted for “present disturbin particular being constantly altered to “if it were.”

The

may be misreadings or unauthorised corrections of the printers. The fifth edition, the last published in Smithes lifetime and con-

ances.”

other differences are so trifling that they

sequently the one from which the present edition has been copied, is dated 1789. It is almost identical with the fourth, the only difference being that the misprints of the fourth edition are corrected in the fifth

and a considerable number

of fresh ones introduced,

—or concords regarded as

while several false concords

false

—

are

corrected (see pp. 106, 682, 716).^*'^ It is clear from the passage on p. 643, that Smith regarded the title “An Inquiry into the Nature and Causes of the Wealth of

Nations” as a synonym for “political ceconomy,” and it seems perhaps a little surprising that he did not call his book *^Political

He became a partner with them, and on the death of Adrian Hope the conduct of the whole of the business of the firm devolved upon him. When the French invaded Holland in 1794 he retired to England. He died on 25th February, 1811, leaving £1,160,000 {Gentleman^s Magazine, March, 1811). ^®Most modern editions are copied from the fourth edition. Thorold Rogers’ edition, however, though said in the preface to be copied from the fourth, as a matter of fact follows the third. In one instance, indeed, the omission of “so” before “as long as” on p. 41, line 32 (in the present edition) Rogers’ text agrees with that of the fourth edition rather than the third, but this is an accidental coincidence in error the error is a particularly easy one to make and it is actually corrected in the^ errata to the fourth edition, so that it is not really the reading of that edition. The fifth edition must not be confused with a spurious “fifth edition with additions” in 2 vols., 8vo, published in Dublin in 1793 with the “Advertisement” to the ,

;

third edition deliberately falsified by the substitution of “fifth” for “third” in the sentence “To this third edition however I have made several additions.” It is perhaps the existence of this spurious “fifth edition” which has led several writers (e.g., Rae, Life of Adam Smith, p. 293) to ignore the genuine fifth edition. The sixth edition is dated 1791.

editor’s INTRODUCTION

xxviii

But we must remember that the term was still in 1776 a very new one, and that it had been used in the title of Sir James Steuart's great book, An Inquiry into the Principles of Political (Economy: being an Essay on the Science of Domestic Policy in Free Nations, which was published in 1767. Nowadays, of course, no author has any special (Economy^

or ^Trinciples of Political

claim to exclusive use of the

claiming copyright for the

title.

(Economy

We

should as spon think of

title ^^Arithmetic’^ or

^'Elements of Geol-

Economy.” But in 1776 have refrained from using it simply because

ogy’’ as for ‘Trinciples of Political

Adam

it had Smith may well been used by Steuart nine years before, especially considering the fact that the Wealth of Nations was to be brought out by the pub-

who had brought out Steuart’s book.^® From 1759 at the latest an early draft of what subsequently

lishers

de-

veloped into the Wealth of Nations existed in the portion of Smith’s lectures

on ^^Jurisprudence” which he called “Police, Revenue and

and the “Laws Nations.” Jurisprudence he defined as “that science which in-

Arms,” the of

rest of “Jurisprudence” being “Justice”

quires into the general principles which ought to be the foundation of the laws of

all

nations,” or as “the theory of the general prin-

law and government.” subject he told his students: ciples of

In forecasting his lectures on the

“The four great objects of law are justice, police, revenue and arms. “The object of justice is the security from injury, and it is the foundation of

civil

government.

“The objects of police are the cheapness of commodities, public security, and cleanliness, if the two last were not too minute for a lecture of this kind. Under this head we will consider the opulence of a state.

“It

is

likewise necessary that the magistrate

who bestows

his time

and labour in the business of the state should be compensated for it. For this purpose and for defraying the expenses of government some fund must be raised. Hence the origin of revenue. The subject of consideration under this head will be the proper means of levying revenue, which must come from the people by taxes, duties, &c. In general, whatever revenue can be raised most insensibly from the people ought to be preferred, and in the sequel it is proposed to be shown how far the laws of Britain and other European nations are calculated for this purpose. “Steuart*s Principles was “printed for A. Millar, and T. Cadell, in the Strand.” and the Wealth of Nations “for W. Strahan; and T. Cadell, in the Strand.” Lectures on Justice, Police, Revenue and Arms, delivered in the University of Glasgow by Adam Smith. Reported by a student in 1763, and edited with an Introduction and Notes by Edwin Cannan, 1896, pp. i, 3.

editor’s introduction “As the best police cannot give security unless the government can defend themselves from foreign injuries and attacks, the fourth thing appointed by law is for this purpose; and under this head will be

shown the

different species of

arms with

their advantages

and disad-

vantages, the constitution of standing armies, militias, &c.

“After these will be considered the laws of nations

” .

.

The

connection of revenue and arms with the general principles law and government is obvious enough, and no question arises as to the explanation on these heads given by the forecast. But to ‘^consider the opulence of a state’’ under the head of “police” seems at first sight a little strange. For the explanation we turn to the beof

ginning of the part of the lectures relating to Police. the second general division of jurisprudence. The name is and is originally derived from the Greek xoXirem, which

“Police

French,

is

properly signified the policy of

means the

civil

government, but

now

regulation of the inferior parts of government, viz

liness, security,

and cheapness or plenty.”

only

it :

clean-

“

That this definition of the French word was correct is well shown by the following passage from a book which is known to have been in Smith’s possession at his death,-® Bielfeld’s Institutions poli-

tiques,

1760 (tom.

i.,

p. 99).

“Le premier President du Harlay en recevant M. d’Argenson a la charge de lieutenant general de police de la ville de Paris, lui adressa ces paroles, qui meritent d’etre remarquees: Le Roi, Monsieur, vous

demande

sfiret6, nettete,

bon-marche.

f)rennent toute la police, qui

forme

le

En

effet ces trois articles

com-

troisi^me grand objet de la poli-

tique pour rinterieur de Tfitat.”

When we

pected to provide cheapness as well as security

wonder

was

ex-

cleanliness,

we

find that the chief of the Paris police in 1697

less at the inclusion of

and

“cheapness or plenty” or the “opu-

lence of a state” in “jurisprudence” or “the general principles of is in fact the same thing with plenty” and “the consideration of cheapness or plenty” is “the same thing” as “the most proper way of securing wealth and abun-

law and government.” “Cheapness

Adam

Smith had been an old-fashioned believer in state control of trade and industry he would have described the dance.”

If

pp.

3,

'^Lectures, p.

^

4.

154.

See James Bonar, Catalogue of the Library of Lectures, p. 157.

Adam

Smith, 1894.

EDITOR^S INTRODUCTION

XXX

most proper regulations for securing wealth and abundance, and there would have been nothing strange in this description coming under the “general principles of law and government.’’ The actual strangeness

is

simply the result of Smith’s negative attitude

belief that past

and present regulations were

for the

—

of his

most part

purely mischievous.

The two

and security, he managed to dismiss “the proper method of carrying dirt from the streets,

items, cleanliness

very shortly:

and the execution of

justice, so far as it regards regulations for

preventing crimes or the method of keeping a city guard, though

mean

be considered in a general discourse of this kind.” He only offered the observation that the establishment of arts and commerce brings about independency and so is the best police for preventing crimes. It gives the common people better useful, are too

to

wages, and “in consequence of this a general probity of manners

Nobody will be so mad highway, when he can make better

takes place through the whole country. as to expose himself

upon the

bread in an honest and industrious manner.”

He

came to “cheapness or plenty, or, which is the same most proper way of securing wealth and abundance.” He began this part of the subject by considering the “natural wants of mankind which are to be supplied,” a subject which has since acquired the title of “consumption” in economic treatises. Then he showed th^ opulence arises from division of labour, and why this is so, and how the division of labour “occasions a multiplication of the product, and why it must be proportioned to the extent of commerce. “Thus,” he said, “the division of labour is the great cause of the increase of public opulence, which is always proportioned to the industry of the people, and not to the quantity of gold and silver as is foolishly imagined.” “Having thus shown what gives occasion to public opulence,” he said he would go on to consider: thei;i

thing, the

what circumstances regulate the price of commodities: money in two different views, first as the measure of value and then as the instrument of commerce: “Thirdly, the history of commerce, in which shall be taken notice ‘Tirst,

“Secondly,

of the causes of the slow progress of opulence, both in ancient and modern times, which causes shall be shown either to affect agriculture or arts p. 154.

’^Ibidy p. 156. Lectures, p. 157, ^°Ibid., p. 163.

and manufactures;

editor’s introduction

^

“Lastly, the effects of a commercial spirit, per,

on the government, temand manners of a people, whether good or bad, and the

proper remedies.”®®

Under the first of these heads he treated of natural and market price and of difference of wages, and showed “that whatever police tends to raise the market price above the natural, tends to diminish

Among

public opulence.”

such pernicious regulations he enumer-

ated taxes upon necessaries, monopolies, and exclusive privileges of corporations. Regulations which bring market price below natural price he regarded as equally pernicious,

and therefore he con-

demned the corn bounty, which attracted into agriculture stock which would have been better employed in some other trade. “It is by far the best police to leave things to their natural course.” Under the second head he explained the reasons for the use of money as a common standard and its consequential use as the instrument of commerce. He showed why gold and silver were commonly chosen and why coinage was introduced, and proceeded to explain the evils of tampering with the currency, and the difficulty of keeping gold and silver money in circulation at the same time.

Money

being a dead stock, banks and paper credit, which

money to be dispensed with and sent abroad, are beneficial. The money sent abroad will “bring home materials for food, clothes,

enable

and lodging,” and, “whatever commodities are imported, just so much is added to the opulence of the country.” It is “a bad police

Mun, “a London merchant,” affirmed “that as “Mr, Gee, of its money it must go to ruin.”

to restrain” banks.^®

England

is

drained

“show that England would soon be ruined by trade with foreign countries,” and that “in almost all our commercial dealings with other nations we are Mr. Hume had shown the absurdity of these and other losers.” such doctrines, though even he had not kept quite clear of “the Money is not notion that public opulence consists in money.” consumable, and “the consumptibility, if we may use the word, of

likewise a merchant,” endeavoured to

goods,

is

the great cause of pp. 173-3*

^ Ibid,, ^ Ibid.,

178. p. 182. p.

^Lectures, p. 192. "^Ibid., p. 195. "^^

Ibid

, p. 195. Ibid., p. 196.

^^Ibid., p. 197. “^^Ibid., p. 199.

human

industry.”

editor’s INTRODUCTION

xxxii

The absurd

opinion that riches consist in

to ‘^many prejudicial errors in practice,”

money had given

rise

such as the prohibition

of the exportation of coin and attempts to secure a favourable balance of trade. There will always be plenty of money if things are left to their free course, and no prohibition of exportation will be effectual. The desire to secure a favourable balance of trade has such as the restrictions on led to “most pernicious regulations,”

trade with France.

“The absurdity of these tion. All commerce that is

regulations will appear

on the

least reflec-

carried on betwixt any two countries must

The very intention of commerce own commodities for others which you think will

necessarily be advantageous to both. is

to exchange your

be more convenient for you. When two men trade between themselves The case is exactly it is undoubtedly for the advantage of both. the same betwixt any two nations. The goods which the English merchants want to import from France are certainly more valuable to them than what they give for them.” .

.

.

and prohibitions were most hurtful to the lichest nations, and it would benefit France and England especially, if “all national prejudices were rooted out and a free and uninterrupted commerce established.” No nation was ever ruined by These

this

jealousies

balance of trade. All political writers since the time of Charles

had been prophesying “that in a few years we would be duced to an absolute state of poverty,” but “we find ourselves

II.

re-

far

richer than before.”

The had

erroneous notion that national opulence consists in

also given rise to the absurd opinion that

money

“no home consump-

a country,” Law’s Mississippi scheme, compared to which our own South Sea scheme was a trifle.^^ Interest does not depend on the value of money, but on the quantity of stock. Exchange is a method of dispensing with the trans-

tion can hurt the opulence of It

was

this notion too that led to

mission of

money

Under the

third heading, the history of

of the slow progress of opulence,

natural impediments, ^Ibid., p. 200.

^ Ibid., ^ Ibid.,

p. 204. p. 204.

^Lectures, p. 206.

^ Ibid.,

p. 207. Ibid., p. 209. ^^Ibid., pp. 211-19.

Ibid

pp. 219-22.

Adam

commerce, or the causes Smith dealt with “first,

and secondly, the oppression

of civil govern-

editor’s introduction ment.” He is not recorded to have mentioned any natural impediments except the absence of division of labour in rude and barbarous times owing to the want of stock.^^ But on the oppres-

had much to say. At first governments were so feeble that they could not offer their subjects that security without which no man has any motive to be industrious. Afterwards, when governments became powerful enough to give internal security, they fought among themselves, and their subjects were sion of civil government he

harried

by

foreign enemies. Agriculture

tracts of land being thrown into the

led at

first

to cultivation

was hindered by great

hands of

single persons.

by slaves, who had no motive to

This

industry;

then came tenants by steelbow (metayers) who had no sufficient inducement to improve the land; finally the present method of cultivation by tenants was introduced, but these for a long time were

had

insecure in their holdings, and

them

liable to

to

pay rent

in kind,

which made

be severely affected by bad seasons. Feudal subsidies

discouraged industry, the law of primogeniture, entails, and the mse of transferring land prevented the large estates from being divided. The restrictions on the export of corn helped to stop the

exp

progress of agriculture. Progress in arts and commerce was also hindered by slavery, as well as by the ancient contempt for industry and commerce, by the want of enforcement of contracts, by the various difficulties and dangers of transport, by the establishment of fairs, markets and staple towns, by duties on imports and exports, and by monopolies, corporation privileges, the statute of

apprenticeship and bounties.'^^

Under the

fourth

and

last head, the influence of

commerce on

the manners of a people, Smith pronounced that “whenever commerce is introduced into any country probity and punctuality al-

ways accompany

The

it.''

trader deals so often that he finds hon-

the best policy. “Politicians are not the most remarkable and punctuality. Ambassadors from

esty

is

men

in the world for probity

different nations are

still less

so,"

the reason being that nations

one another much more seldom than merchants. But certain inconveniences arise from a commercial spirit. Men's views are confined, and “when a person's whole attention is bestowed on the seventeenth part of a pin or the eightieth part of a button," he becomes stupid. Education is neglected. In Scotland treat with

***

Ibid,, p. 222.

pp. 222-3.

^Lectures, pp. 223-36. *^lbid,, p. 253. Ibid., p. 254. ^^Ibid,, p. 255.

editor’s introduction

xxxiv

but at Birmingham boys of six or seven can earn threepence or sixpence a day, so that their parents set them to work early and their education is neglected. To the meanest porter can read

and

write,

be able merely to read is good as it “gives people the benefit of religion, which is a great advantage, not only considered in a pious sense, but as it affords them subject for thought and speculation.” There is too “another great loss which attends the put-

boys too soon to work.” The boys throw off parental authority, and betake themselves to drunkenness and riot. The workmen in the commercial parts of England are consequently in a “despicable condition; their work through half the week is sufficient to maintain them, and through want of education they have no amusement for the other but riot and debauchery. So it may very justly be said that the people who clothe the whole world are in rags themting

selves.”

Further, commerce sinks courage and extinguishes martial spirthe defence of the country

it;

is

handed over

to a special class,

and

the bulk of the people grow effeminate and dastardly, as was shown the fact that in 1745 “four or five thousand naked unarmed Highlanders would have overturned the government of Great Bri-

by

tain with

little difficulty if

they had not been opposed by a stand-

ing army.”

“To remedy”

these evils introduced

by commerce “would be an

object worthy of serious attention.”

Revenue, at any rate in the year when the notes of his lectures were made, was treated by Adam Smith before the last head of police just discussed, ostensibly

on the ground that

it

was

in reality

one of the causes of the slow progress of opulence.*''*Originally, he taught, no revenue was necessary; the magistrate was satisfied with the eminence of his station and any presents he might receive. The receipt of presents soon led to corruption. At first

too soldiers were unpaid, but this did not last.

method adopted

The

earliest

was assignment of lands to maintain the British government would require at least a fourth of the whole of the land of the country. “After government becomes expensive, it is the worst possible method to support it by a land rent.” Civilisation and expensive government go together. Taxes may be divided into taxes upon possessions and taxes for supplying revenue

the support of government.

^Uhid., p. 256. pp. 256, 257. Lectures, p. 258. Ibid., p. 236.

^Ibid., p. 239.

To

editor’s introduction upon commodities.

XXXV

easy to tax land, but difficult to tax stock or money the land tax is very cheaply collected and does not raise the price of commodities and thus restrict the number of persons It

is

;

who have

stock sufficient to carry on trade in them. It is hard on the landlords to have to pay both land tax and taxes on consumption,

which fact ^^perhaps occasions the continuance of what

called the

Tory

is

interest.”

Taxes on consumptions are best levied by way of excise. They have the advantage of “being paid imperceptibly,” since “when we buy a pound of tea we do not reflect that the most part of the price is a duty paid to the government, and therefore pay it contentedly, as though it were only the natural price of the commodity.” Such taxes too are less likely to ruin people than a land tax, as they can always reduce their expenditure on dutiable articles.

A fixed land tax like the English is better than one which varies with the rent like the French, and “the English are the best financiers in Europe, and their taxes are levied with more propriety than those of any other country whatever.” Taxes on importation are hurtful because they divert industry into an unnatural channel, but taxes on exportation are worse. The common belief that wealth consists in money has not been so hurtful as might have been expected in regard to taxes on imports, since it has accidentally led to the encouragement of the import of raw material and discouragement of the import of manufactured articles.^® From treating of revenue Adam Smith was very naturally led on to deal with national debts, and this led him into a discussion of the causes of the rise and fall of stocks and the practice of stockjobbing.^^*^

Under Arms he taught that

at first the whole people goes out to go and the meanest stay to cultiupper classes war: then only the vate the ground. But afterwards the introduction of arts and manu-

inconvenient for the rich to leave their business, and the defence of the state falls to the meanest. “This is our presDiscipline now becomes necesent condition in Great Britain.” factures

makes

it

sary and standing armies are introduced. The best sort of army is “a militia commanded by landed gentlemen in possession of the

^ Ibid.f

pp. 241, 242. pp. 242, 243.

Lectures p. 243.

^

Ibid,, p. 245. Ibid,, pp. 246, 247.

Ibid., pp. 247-52. ^Ibid., p. 261.

editor’s introduction

xxxvi

public offices of the nation,” of sacrificing the liberties

have any prospect of the country.” This is the case in which

‘^can never

Sweden.

Now let us compare with this the drift of the Wealth not as it

it is

described in the “Introduction and Plan,” but as

body

in the

of Nations,

we

find

work itself. by showing that the

of the

greatest improvement in the to division of labour. From due productive powers of industry is division of labour it proceeds to money, because money is necessary in order to facilitate division of labour, which depends upon exchange. This naturally leads to a discussion of the terms on which

Book

I.

begins

exchanges are effected, or value and price. Consideration of price reveals the fact that it is divided between wages, profit and rent, and is therefore dependent on the rates of wages, profit and rent, so that it is necessary to discuss in four chapters variations in these rates.

Book II. treats first of the nature and divisions of stock, secondly of a particularly important portion of it, namely money, and the means by which that part may be economised by the operations and thirdly the accumulation of capital, which nected with the employment of productive labour. Fourthly of banking,

siders the rise

and

fall of

is

con-

it

con-

the rate of interest, and fifthly and lastly

the comparative advantage of different methods of employing capital.

Book

III,

shows that the natural progress of opulence

capital, first to agriculture,

is

to direct

then to manufactures, and lastly to

foreign commerce, but that this order has been inverted

by

the

modern European states. Book IV. deals with two different systems of political economy: (i) the system of commerce, and (2) the system of agriculture,

policy of

but the space given to the former, even in the

first edition, is eight times as great as that given to the latter. The first chapter shows the absurdity of the principle of the commercial or mercantile sys-

tem, that wealth

is

dependent on the balance of trade; the next

and show the futility of the various mean and malignant expedients by which the mercantilists endeavoured to secure their absurd object, namely, general protectionist duties, five discuss in detail

and heavy duties directed against the importation of goods from particular countries with which the balance is supposed to be disadvantageous, drawbacks, bounties, and treaties of commerce. The seventh chapter, which is a long one, deals with colonies. According to the forecast at the end of chapter i. this subject prohibitions

Ibid., p. 263.

editor’s introduction

xxxvii

comes here because colonies were established in order to encourage exportation by means of peculiar privileges and monopolies. But in the chapter itself there is no sign of this. The history and progress of colonies is discussed for its own sake, and it is not alleged that important colonies have been founded with the object suggested in chapter

In the

i.

Book, the physiocratic system is described, and judgement is pronounced against it as well as the commercial system. The proper system is that of natural liberty, which discharges the sovereign from ^The duty of superintending the industry of private people and of directing it towards the employments most suitable to the interest of the society.” Book V. deals with the expenses of the sovereign in performing the duties left to him, the revenues necessary to meet those expenses and the results of expenses exceeding revenue. The discuslast chapter of the

sion of expenses of defence includes discussion of different kinds of

military organisation, courts of law,

means of maintaining public

works, education, and ecclesiastical establishments. Putting these two sketches together

book

related the

The

title

is

we can

easily see

how

closely

to the lectures.

^Tolice” being dropped as not sufficiently indicating

no necessity for the mention of cleanliness, and removed to the chapter on the accumulation of capital. The two sections on the natural wants of mankind are omitted, illustrating once more the difficulty which economists have generally felt about consumption. The next four sections, on division of labour, develop into the first three chapters of Book I. of the Wealth of Nations. At this point in the lectures there is an abrupt transition to prices, followed by money, the history of commerce and the effects of a commercial spirit, but in the Wealth of Nations this is avoided by taking money next, as the machinery by the aid of which labour is divided, and then proceeding by a the subject, there

is

the remarks on security are

very natural transition to prices. In the lectures the discussion of money led to a consideration of the notion that wealth consisted in money and of all the pernicious consequences of that delusion in restricting banking and foreign trade. This was evidently overloading the theory of money, and consequently banking is postponed to the Book about capital, on the ground that it dispenses with money, which is a dead stock, and thus economises capital, while the commercial policy is relegated by itself to Book IV. In the lectures, again, wages are only dealt with slightly under prices, and profits and rent not at all; in the Wealth of Nations wages. There

is

a reminiscence of them in the chapter on Rent, pp. 163-4

editor’s INTRODUCTION

xxxviii

and rent are dealt with at length as component parts of price, and the whole produce of the country is said to be distributed into them as three shares. profits

The next part of the lectures, that dealing with the causes of the slow progress of opulence, forms the foundation for Book III, Wealth of Nations, The influence of commerce on manners disappears as an independent heading, but most of the matter dealt with under it is utilised in the discussions of education and of the

military organisation.

Besides consumption, two other subjects, stock-jobbing and the Mississippi scheme, which are treated at some length in the lectures, are altogether omitted in the

description of stock-jobbing

Wealth of Nations. The

was probably

left

out because better

suited to the youthful hearers of the lectures than to the maturer

readers of the book.

The

himself says, because

it

Mississippi

scheme was omitted, Smith

had been adequately discussed by

Du

Verney.

Here and

may be found between the opinand those expressed in the book. The

there discrepancies

ions expressed in the lectures

reasonable and straightforward view of the effects of the corn

bounty

replaced by a more recondite though less satisfactory The remark as to the inconvenience of regulations on commerce having been alleviated by the fact that they enis

doctrine.

foreign

courage trade with countries from which imported raw materials

came and discourage it with those from which manufactured goods came does not reappear in the book. The passage in the Lectures is probably much condensed, and perhaps misrepresents what Adam Smith said. If it does not, it shows him to have been not entirely free

from protectionist

fallacies at the

time the lectures were

delivered.®^

There are some very obvious additions, the most prominent being ’the account of the French physiocratic or agricultural system which occupies the last chapter of Book IV. The article on the reand state (Bk. V., ch. i., pt. iii., art. 3) also appears to be a clear addition, at any rate in so far as the lectures on police and revenue are concerned, but, as we shall see presently, tradition seems to say that Smith did deal with ecclesiastical establishments in this department of his lectures on jurisprudence, so

lations of church

that possibly the lecture notes are deficient at this particular point, or the subject was omitted for the particular year in which the

notes were taken.

^ See

Then

there

is

the long chapter on colonies.

above, p. xxxv. See below, pp. liv, Iv, for a conjecture on this subject.

The

fact of colonies

editor’s introduction having attracted Adam Smith’s attention

xxxix

during the interval between the lectures and the publication of his book is not very surprising when we remember that the interval coincid-

ed almost exactly with the period from the beginning of the tempt to tax the colonies to the Declaration of Independence.

at-

But these additions are of small importance compared with the introduction of the theory of stock or capital and unproductive labour in

Book

II., the slipping of a theory of distribution into the theory of prices towards the end of Book I., chapter vi., and the emphasising of the conception of annual produce. These changes do not make so much real difference to Smith’s own work as might

be supposed; the theory of distribution, though it appears in the title of Book I., is no essential part of the work and could easily be excised by deleting a few paragraphs in Book I., chapter vi., and a few lines elsewhere; if Book II. were altogether omitted the other Books could stand perfectly well by themselves. But to subsequent economics they were of fundamental importance. They settled the form of economic treatises for a century at least. They were of course due to the acquaintance with the French Economistes which Adam Smith made during his visit to France with the Duke of Buccleugh in 1764-6. It has been said that he might have been acquainted with many works of this school before the notes of his lectures were taken, and so he might. But the notes of his lectures are good evidence to show that as a matter of fact he was not, or at any rate that he had not assimilated their main economic theories. When we find that there is no trace of these theories in the Lectures and a great deal in the Wealth of Nations and that in the meantime Adam Smith had been to France and mixed with all the prominent members of the ^^sect,” including their master, Quesnay, it is difficult to understand why we should be asked, without any evidence, to refrain from believing that he came under physiocratic influence after and not before or during his Glasgow period. The confession of faith of the Economistes is embodied in Quesnay’s Tableau Economique, which one of them described as worthy of being ranked, along with writing and money, as one of the three greatest inventions of the

human

race.®’"'*

It is reprinted

below from the facsimile of the edition of 1759, published by the British Economic Association (now the Royal Economic Society) in 1894.

Those who are curious as to the exact meaning of the zigzag lines may study Quesnay’s Explication^ which the British Economic Below, p. 643, note

19.

editor’s introduction

xi

TABLEAU ECONOMIQUE, Ohjets d considSrer, i°. Trois sortes de d6penses^ 2®. leur source; 3°. leurs avances; 4®. leur distribution; 5®. leurs effets^ 6®. leur reproduction; 7®. leurs rapports entr^elleSj 8®. leurs rapports awe la population; 9®. avec V Agriculture; 10®. awe Vindustrie; ii®. avec le commerce; 12®. avec la

masse des richesses d^une Nation, Dispenses dMpensbs

FRODUCTIVES relatives

d

V Agriculture^

b‘c.

du revenu,

defenses

VImpdt pril&oe, se partagtt aux Depenses j^odtictives ei aux Depenses steriles.

STERILES

Avances annudles pour produire un revenu de tooll sont 600II

d

relatives^

Vindustrie, &*c.

Revernt

Avances annuelles

annuel de

pour les Ouvrages des Depenses steriles, sont 300 “

QQO'' prwlnueiti net,..* ****..^ *

"

Prodaefions

Onvragcs,

”

^'300!!

....300^

SOQ^C rejirodutsent net •"

i ’**'*

\5C{^prodnl\ent net

-

....150

‘’3‘.*!::i5o

7 X^rrprod un eul vet

37,

...."..75

37.10

lOT.,rf}>rodtn.\eni net

18. iSijxjmldmseut vet

;7.‘.’V37.

18.15.

vet..

10

14

9...7,..S^

...

4.1.$... ^icproTitueiil net

4.I.$..!.9.

13...9

2...6.I0.

lOuxpwjildseuJ net,

net

l....$...5.

;;.:.’.:::3...3...5

V.:

QA\,.,Z.rrpf^dmsenl net

0.11. ..8.

0.,.,5. IQL.tcpioduiscHt net.

0...5.10-

0 ... 2

0...2.11.

,

tTirprfxlfdscM nej

1

0. .. J ..,S reprdduisent net

..

1

...s

....0...i...5.

b’c,

REFRODUIT TOTAL de 600II restitue.

base

du

et les

600II,

de reomu; de pluSj

intsrits des avances primitives dtt

Ainsi la reproduction calculi

est

de i^ooll compris

abstraction faite de

reproduction annuelle, ^c,

Vimpdt

les

frais annuels

LaboureuTf de 300/Z que la terre le

reoenu de 600IL

qiii est

prilevb, et des avances qu*exige

Voyez V Explication d la page suivante.

la

sa

editor’s introduction Association published along with the table in 1894. For our present purposes it is sufficient to see (i) that it involves a conception of the whole annual produce or reproduction of a country; (2)

that

it

teaches that some labour

is

unproductive, that to maintain

the annual produce certain ^^avances^^ are necessary, and that this

annual produce

is

“distributed.”

Adam

Smith, as his chapter on

agricultural systems shows, did not appreciate the minutiae of the

table very highly, but he certainly took these main ideas and adapted them as well as he could to his Glasgow theories. With those theories the conception of an annual produce was in no way inconsistent, and he had no difficulty in adopting annual produce as the wealth -of a nation, though he very often forgetfully falls back into older ways of speaking. As to unproductive labour, he was not prepared to condemn the whole of Glasgow industry as sterile, but was ready to place the mediaeval retainer and even the modern menial servant in the unproductive class. He would even go a little farther and put along with them all whose labour did not produce particular vendible objects, or who were not employed for the money-gain of their employers. Becoming somewhat con-

fused

among

these distinctions

^^avances^^

he imagined a

of capital.

Hence with the aid

and the physiocratic doctrine

of

between the employment of productive labour and the accumulation and employment close connexion

of the

common

observation that

where a capitalist appears, labourers soon spring up, he arrived at the view that the amount of capital in a country determines the number of “useful and productive” labourers. Finally he slipped into his theory of prices and their component parts the suggestion that as the price of any one commodity is divided between wages, profits and rent, so the whole produce is divided between labourers, capitalists, and landlords. These ideas about capital and unproductive labour are certainly of great irnportance in the history of economic theory, but they were fundamentally unsound, and were never so universally ac\

cepted as is commonly supposed. The conception of the wealth of nations as an annual produce, annually distributed, however, has been of immense value. Like other conceptions of the kind it was

have been evolved direct from Davenant We need not suppose that some one else would not soon have given it its place in English economics if Adam Smith had not done so, but that need not deter us from recording the fact that it was he who introduced it, and that he incertain to cbme. It might

or Petty nearly a century before.

troduced it in consequence of his association with the Economistes. If we attempt to carry the history of the origin of the Wealth of

EDITOR^S INTRODUCTION

xlii

Nations farther back than the date of the lecture notes in 1763 or thereabouts, we can still find a small amount of authentic information. We know that Smith must have been using practically the same divisions in his lectures in 1759, since he promises in the last paragraph of the Moral Sentiments published in that year, ^^another discourse” in which he would “endeavour to give an account of the general principles of law and government, and of the different revolutions they have undergone in the different ages and periods of society, not only in what concerns justice, but in what concerns police, revenue and arms, and whatever else is the object of law.” It seems probable, however, that the economic portion of the lectures was not always headed “police, revenue, and arms,” since Millar, who attended the lectures when they were first delivered in 1751-2, says:

“In the last part of his lectures he examined those political regulawhich are founded not upon the principle of justice^ but that of expediency^ and which are calculated to increase the riches, the power and the prosperity of a state. Under this view, he considered the political institutions relating to commerce, to finances, to ecclesiastical and military establishments. What he delivered on these subjects contained the substance of the work he afterwards published under the title of ‘An Inquiry into the Nature and Causes of the Wealth of Nations

tions’.”®®

Of course

not necessarily inconsistent with the economic lectures having been denominated police, revenue, and arms, even at that early date, but the italicising of “justice” and “expediency,” if due to Millar, rather suggests the contrary, and there is no denying that the arrangement of “cheapness or plenty” under “police” may very well have been an afterthought fallen upon to justify the this

is

introduction of a mass of economic material into lectures on Juris-

why that introduction took place the circumstances of Smith’s first active session at Glasgow suggest another motive besides his love for the subject, which, we may

prudence. As to the reason

notice, did not prevent

him from publishing

his views on Ethics

first.

His

first

appointment at Glasgow,

it

must be remembered, was

to the Professorship of Logic in January, 1751, but his engagements at Edinburgh prevented his performing the duties that session.

Before the beginning of next session he was asked to act as

®®Dugald Stewart, in his “Account of the Life and Writings of Adam read to the Royal Society of Edinburgh in 1795 and published in Adam Smith’s posthumous Essays on Philosophical Subjects, 1795, p. xviii. See Rae, Life of Adam Smith, pp. 53-5. Smith,

editor’s introduction

xliii

deputy for Craigie, the Professor of Moral Philosophy, who was going away for the benefit of his health. He consented, and consequently in the session of 1751-2 he had to begin the work of two

he had very little previous warnEvery teacher in such a position would do his best to utilise any suitable material which he happened to have by him, and most men would even stretch a point to utilise even what was professorships, as to one of which ing.^*’’^

not perfectly suitable.

Now we know that Adam Smith possessed in manuscript in the hand of a clerk employed by him certain lectures which he read at Edinburgh in the winter of 1750-1, and we know that in these lectures he preached the doctrine of the beneficial effects of freedom, and, according to Dugald Stewart, ‘‘many of the most important opinions in the Wealth of Nations*" There existed when Stewart

drawn up by Mr. Smith in the year 1755 and presented by him to a society of which he was then a member.” Stewart says of this paper:

wrote, “a short manuscript

“Many

of the most important opinions in The Wealth of Nations but I shall quote only the following sentences:

are there detailed;

generally considered by statesmen and projectors as the maof a sort of political mechanics. Projectors disturb nature in the course of her operations in human affairs; and it requires no more than to let her alone, and give her fair play in the pursuit of her ends that she may establish her own designs.’ And in another passage: ‘Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course,

‘Man

is

terials

which force things into another channel or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical. ^A great part of the opinions,’ he observes, ‘enumerated in this paper is treated of at length in some lectures which I have still by me, and which were written in the hand of a clerk who left my service six years ago. They have all of them been the constant subjects of my lectures since I first taught Mr. Craigie’s class, the first winter I spent in Glasgow, down to this day, without any considerable variation. They had all of them been the subjects of lectures which I read at Edinburgh the winter before I left it, and I can adduce innumerable witnesses both from that place and from this, who will ascertain them suffici” ently to be mine.’

—

®^Rae, Life of Adam Smith, pp. 42-5. ‘^Stewart, in Smith’s Essays, pp. Ixxx, Ixxxi.

editor’s introduction

xliv

seems then that, when confronted with the two professorial chairs in 1751, Smith had by him some lectures on progress, very likely explaining “the slow progress of opulence,” and that, as anyone in such circumstances would have liked to do, he put them It

into his moral philosophy course.

As it happened, there was no difficulty in doing this. It seems nearly certain that Craigie himself suggested that it should be done. The request that Smith would take Craigie^s work came through Cullen, and in answering Cullen’s letter, which has not been preserved, Smith says, “You mention natural jurisprudence

which it would be most undertake both.” willingly very agreeable for me to teach. I shall Craigie doubtless knew what Smith had been lecturing upon in

and

politics as the parts of his lectures

Edinburgh in the previous winter and called it “politics.” Moreover the traditions of the Chair of Moral Philosophy, as known to Adam Smith, required a certain amount of economics. A dozen years earlier he had himself been a student when Francis Hutcheson was professor. So far as we can judge from Hutcheson’s System of Moral Philosophy, which, as Dr. W. R. Scott has shown,*^® was already in existence when Smith was a student, though not published till 1755, Hutcheson lectured first on Ethics, next upon what might very well be called Natural Jurisprudence, and thirdly upon Civil Polity. Through the two latter parts a considerable quantity of economic doctrine is scattered. In considering “The Necessity of a Social Life,” Hutcheson points out that a man in solitude, however strong and instructed in the arts, “could scarce procure to himself the bare necessaries of life

even in the best

soils

or climates.”

“Nay ’tis well known that the produce of the labours of any given number, twenty for instance, in providing the necessaries or conveniences of life, shall be much greater by assigning to one a certain sort of work of one kind in which he will soon acquire skill and dexterity, and to another assigning work of a different kind, than if each one of the twenty were obliged to employ himself by turns in all the different sorts of labour requisite for his subsistence without sufficient dexIn the former method each procures a great quantity of

terity in any.

goods of one kind, and can exchange a part of it for such goods obtained by the labours of others as he shall stand in need of. One grows expert in tillage, another in pasture and breeding cattle, a third in maRae, Life of

Adam

Smith, pp. 43-4. Hutcheson, 1900, pp. 210, 231. In the Introduction to Moral Philosophy, 1747, Civil Polity is replaced by “CEconomicks and Politicks,” but “CEconomicks” only means domestic law, f.e., the rights of husbands and wives, parents and children, masters and servants.

R.

Scott, Francis

editor’s introduction

xlv

sonry, a fourth in the chase, a fifth in iron-works, a sixth in the arts of the loom, and so on throughout the rest. Thus all are supplied by

means of barter with the works of complete od scarce any one could be dexterous and

artists.

In the other methany one sort of

skilful in

labour.

“Again, some works of the highest use to multitudes can be effecby the joint labours of many, which the separate labours of the same number could never have executed. The joint force tually executed

many

can repel dangers arising from savage beasts or bands of robmany individuals were they separately to encounter them. The joint labours of twenty men will cultivate forests or drain marshes, for farms to each one, and provide houses for habitation and inclosures for their flocks, much sooner than the separate labours of the same number. By concert and alternate relief they can keep a perpetual watch, which without concert they could ” not accomplish.” of

bers which might have been fatal to

In explaining the “Foundation of Property” Hutcheson says when population was scanty, the country fertile and the climate mild, there was not much need for developing the rules of property, but as things are, “universal industry is plainly necessary for the support of mankind” and men must be excited to labour by self-interest and family affection. If the fruits of men’s labours are not secured to them, “one has no other motive to labour than the general affection to his kind, which is commonly much weaker than the narrower affections to our friends and relations, not to mention the opposition which in this case would be given by most of the selfish ones.” Willing industry could not be secured in a communistic society The largest continuous block of economic doctrine in the Sy^tem of Moral Philosophy is to be found in the chapter on “The Values of Goods in Commerce and the Nature of Coin” which occurs in the middle of the discussion of contracts. In this chapter it is pointed out that it is necessary for commerce that goods should be valued. The values of goods depend on the demand for them and the difficulty of acquiring them. Values must be measured by some common standard, and this standard must be something generally desired, so that men may be generally willing to take it in exchange. To secure this it should be something portable, divisible without loss, and durable. Gold and silver best fulfil these requirements. At first they were used by quantity or weight, without coinage, but eventually the state vouched for quantity and quality by its stamp. The stamp being “easy workmanship” adds that

System of Moral Philosophy, System of Moral Philosophy,

vol.

i.,

vol.

i.,

pp. 288, 289. pp. 319-21.

editor’s introduction

xivi

no considerable value. “Coin is ever valued as a commodity in commerce as well as other goods; and that in proportion to the rarity of the metal, for the raise its value artificially

demand

is

universal.''

would be by

The only way

restricting the

to

produce of

the mines.

“We

say indeed commonly, that the rates of labour and goods have risen since these metals grew plenty; and that the rates of labour and goods were low when the metals were scarce; conceiving the value of the metals as invariable, because the legal names of the pieces, the pounds, shillings or pence, cpntinue to them always the same till a law alters them. But a day's digging or ploughing was as uneasy to a man a thousand years ago as it is now, though he could not then get so much silver for it: and a barrel of wheat, or beef, was then of the same use to support the human body, as it is now when it is exchanged for four times as much silver. Properly, the value of labour, grain,

always pretty much the same, as they afford the same where no new inventions of tillage or pasturage cause a greater quantity in proportion to the demand.”

and

cattle are

uses in

life,

Lowering and raising the coins are unjust and pernicious operations. Copious mines abate the value of the precious metals. “The standard

itself is

settle fixed salaries

varying insensibly; and therefore

which in

all

if

we would

events would answer the same pur-

life, or support those entituled to them in the same condition with respect to others, they should neither be fixed in the legal names of coin, nor in a certain number of ounces of gold and silver. A decree of state may change the legal names; and the value of the ounces may alter by the increase or decrease of the quantities of these metals. Nor should such salaries be fixed in any quantities of more ingenious man-

poses of

ufactures, for nice contrivances to facilitate labour may lower the value of such goods. The most invariable salary would be so many days labour of men, or a fixed quantity of goods produced by the plain inartificial labours, such goods as answer the ordinary purposes of life. Quantities of grain come nearest to such a standard.”

Prices of goods depend

upon the

expenses, the interest of

money

employed, and the “labours too, the care, attention, accounts and correspondence about them.” Sometimes we must “take in also the condition of the person so employed,” since “the expense of his

must be defrayed by the price of such labours; and they deserve compensation as much as any other. This additional station of life

price of their labours

is

the just foundation of the ordinary profit

of merchants.” '^System of Moral Philosophy, vol. vol.

ii.,

pp. 62, 63.

ii.,

p. 58.

editor’s introduction

Xlvii

In the next chapter, on “The Principal Contracts in a Social Life,” we find the rent or hire of unfruitful goods, such as houses, justified on the ground that the proprietor might have employed his money or labour on goods naturally fruitful. “If in any way of trade men can make far greater gains by help of a large stock of money than they could have made without it, ’tis but just that he who supplies them with the money, the necessary means of this gain, should have for the use of it some share of the profit, equal at least to the profit he could have made by purchasing things naturally fruitful or yielding a rent. This shows the just foundation of interest upon money lent, though it be not naturally fruitful. Houses yield no fruits or increase, nor will some arable grounds yield any without great labour. Labour employed in managing money in trade or manufactures will make it as fruitful as anything. Were interest prohibited, none would lend except in charity; and many industrious hands who are not objects of charity would be excluded from large gains in a way very advantageous to the public.”

Reasonable interest varies with the state of trade and the quantity of coin. In a newly settled country great profits are made by small sums, and land is worth fewer years^ purchase, so that a higher interest

is

reasonable.

Laws

in settling interest

must

fol-

low “these natural causes,” otherwise they will be evaded.*^® In the chapter “Of the Nature of Civil Laws and their Execution,” we find that after piety the virtues most necessary to a state are sobriety, industry, justice and fortitude. is the natural mine of wealth, the fund of all stores for by the surplus of which beyond the value of what a nation imports, it must increase in wealth and power. Diligent agriculture must furnish the necessaries of life and the materials for all manufactures; and all mechanic arts should be encouraged to prepare them for use and exportation. Goods prepared for export should generally be free from all burdens and taxes, and so should the goods be which are necessarily consumed by the artificers, as much as possible; that

“Industry

exportation

no other country be able to undersell like goods at a foreign market. Where one country alone has certain materials, they may safely impose duties upon them when exported; but such moderate ones as shall not prevent the consumption of them abroad. “If people have not acquired an habit of industry, the cheapness of all

the necessaries of

to raise the

demand

life

for

exporting them, which

is

necessaries; not merely

often useful too;

System of Moral Philosophy, pp. 71-2. Ibid., vol.

ii.,

p. 73.

The best remedy is by premiums upon but by increasing the num-

rather encourages sloth.

all

editor’s INTRODUCTION

xlviii

ber of people who consume them; and when they are dear, more labour and application will be requisite in all trades and arts to procure them. Industrious foreigners should therefore be invited to us, and all men of industry should live with us unmolested and easy. Encouragement should be given to marriage and to those who rear a numerous offspring to industry. The unmarried should pay higher taxes as they are not at the charge of rearing

new

subjects to the state.

Any

foolish

they were unworthy of men of better condition as to birth or fortune engaged to be concerned in such occupations. Sloth should be punished by temporary servitude at least. For-

notions of meanness in mechanic arts, as

if

of better families, should be borne down, and

men

eign materials should be imported and even

premiums

given,

when

necessary, that all our own hands may be employed; and that, by exporting them again manufactured, we may obtain from abroad the price of our labours. Foreign manufactures and products ready for consumption should be made dear to the consumer by high duties, if we cannot altogether prohibit the consumption; that they may never

be used by the lower and more numerous orders of the people whose consumption would be far greater than those of the few who are wealthy. Navigation, or the carriage of goods foreign or domestic, should be encouraged, as a gainful branch of business surpassing often all the profit made by the merchant. This too is a nursery of fit hands for defence at sea. “ ’Tis vain to allege that luxury

and intemperance are necessary to the wealth of a state as they encourage all labour and manufactures by making a great consumption. It is plain there is no necessary vice in the consuming of the finest products or the wearing of the dearest manufactures by persons whose fortunes can allow it consistently with the duties of life. And what if men grew generally more frugal and abstemious in such things? more of these finer goods could be sent abroad; or if they could not, industry and wealth might be equally promoted by the greater consumption of goods less chargeable: as he

who

saves

by abating of

his

own

expensive splendour could

by gener-

and by some wise methods of charity to the poor, enable others to live so much better and make greater consumption than was made formerly by the luxury of one. Unless therefore a nation can be found where all men are already provided with all the necessaries and conveniencies of life abundantly, men may, without any luxury, make the very greatest consumption by plentiful provision for their children, by generosity and liberality to kinsmen and indigent men of worth, and by compassion to the distresses of the ous

ofiSces to his friends,

,

poor

,

.

”

Under “Military

skill and fortitude” Hutcheson discusses what Smith afterwards placed under “Arms,” and decides in favour of a trained militia.'^^

Adam

'^System of Moral Philosophy, vol. vol.

ii.,

pp. 323-5.

ii.,

pp. 318-21.

editor’s introduction In the same chapter he has a section with the marginal

title

‘^what taxes or tributes most eligible/’ which contains a repudiation of the policy of taxation for revenue only:

“As to taxes for defraying the public expenses, these are most convenient which are laid on matters of luxury and splendour rather than the necessaries of life; on foreign products and manufactures rather than domestic; and such as can be easily raised without many expensive offices for collecting them. But above all, a just proportion to the wealth of people should be observed in whatever is raised from them, otherways than by duties upon foreign products and manufactures, for such duties are often necessary to encourage industry at home, ™ though there were no public expenses.”

This proportionment of taxation to wealth he thinks cannot be attained except

by means

of periodical estimation of the wealth of

unduly oppress landlords in debt and let moneyed men go free, while duties and excises are paid by the consumer, so that ‘^hospitable generous men or such as have numerous families supported genteelly bear the chief burden here, and the solitary sordid miser bears little or no share of it.” It is quite clear from all this that Smith was largely influenced by the traditions of his chair in selecting his economic subjects. Dr. Scott draws attention to the curious fact that the very order in which the subjects happen to occur in Hutcheson’s System is almost identical with the order in which the same subjects occur in Smith’s Lectures?^ We are strongly tempted to surmise that when Smith had hurriedly to prepare his lectures for Craigie’s class, he looked through his notes of his old master’s lectures (as hundreds of men in his position have done before and after him) and grouped the economic subjects together as an introduction and sequel to the lectures which he had brought with him from Edinburgh. Hutcheson was an inspiring teacher. His colleague, Leechman, says: families, since land taxes

“As he had occasion every year

in the course of his lectures to ex-

plain the origin of government and compare the different forms of

it,

he took peculiar care, while on that subject, to inculcate the importance of civil and religious liberty to the happiness of mankind: as a warm love of liberty and manly zeal for promoting it were ruling principles in his own breast, he always insisted upon it at great length and with the greatest strength of argument and earnestness of persuasion: and he had such success on this important point, that few, if any, of his pupils, whatever contrary prejudices they might bring Ibid,, pp, 340-1.

^System

of Moral Philosophy, vol. Francis Hutcheson, pp. 232-5.

ii,

pp. 341-2.

editor’s introduction

1

along with them, ever

left

him without favourable notions

of the question which he espoused and defended

of that side

”

Half a century later Adam Smith spoke of the Glasgow Chair of Moral Philosophy as an ‘^office to which the abilities and virtues of the never-to-be-forgotten Dr. Hutcheson had given a superior degree of illustration.”

But while we may well believe that in

Adam

Smith was influenced the general direction of liberalism by Hutcheson, there seems

no reason for attributing to Hutcheson’s influence the belief in the economic beneficence of self-interest which permeates the Wealth of Nations and has afforded a starting ground for economic speculation ever since. Hutcheson, as some of the passages just quoted show, was a mercantilist, and all the economic teaching in his System is very dry hopes compared to Smith’s vigorous lectures on Cheapness or Plenty, with their often repeated denunciation of the ^^absurdity” of current opinions and the “pernicious regulations” to which they gave rise. Twenty years after attending his lectures, Adam Smith criticised Hutcheson expressly on the ground that he thought too little of self-love. In the chapter of the Theory of Moral Sentiments on the systems of philosophy which make virtue consist in benevolence, he says that Hutcheson believed that it was benevolence only which could stamp upon any action the character of virtue: the most benevolent action was that which aimed at the good of the largest number of people, and self-love was a principle which could never be virtuous, though it was innocent when it had no other effect than to make the individual take care of his own happiness. This “amiable system, a system which has a peculiar tendency to nourish and support in the human heart the noblest and the most agreeable of all affections,” Smith considered to have the “defect of not sufficiently explaining from whence our approbation of the inferior virtues of prudence, vigilance, circumspection, temperance, constancy, firmness.” arises

“Regard,” he continues, “to our own private happiness and interest upon many occasions very laudable principles of action. The habits of oeconomy, industry, discretion, attention and application too, appear

of thought, are generally supposed to be cultivated from self-interested motives, and at the same time are apprehended to be very praise-worthy qualities which deserve the esteem and approbation of

every body.

.

.

.

Carelessness and want of oeconomy are universally

®®In the preface to Hutcheson’s System of xxxvi.

^Rae,

Life of

Adam

Smith, p. 411.

Moral Philosophy

pp. xxxv,

editor’s introduction disapproved lence, but interest.’^

^

of, not, however, as proceeding from a want of benevofrom a want of the proper attention to the objects of self-

Adam

Smith clearly believed that Hutcheson’s system did not was not Hutcheson that inspired his remark, “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.” He may have obtained a general love of liberty from Hutcheson, but whence did he obtain the belief that self-interest works for the benefit of the whole economic community? He might possibly of course have evolved it entirely in his own mind without even hearing another lecture or reading another book after he left Hutcheson’s class. But it seems probable ^we cannot safely say more ^that he was assisted by his study of Mandeville, a writer who has had little justice done him in histories of economics, though McCulloch gives a useful hint on the subject in his Literature of Political Economy, In the chapter of the Moral Sentiments which follows the one which contains the criticism of Hutcheson just quoted, Smith deals with “Licentious Systems.” The appearances in human nature, he says, which seem at first sight to favour such systems were “slightly sketched out with the elegance and delicate precision of the duke of Rochefaucault, and afterwards more fully represented with the lively and humorous, though coarse and rustic eloquence of Dr. give a sufficiently high place to self-interest. It

—

—

Mandeville.”

««

all commendable acts to “a love and commendation,” or “vanity,” and not content with

Mandeville, he says, attributes of praise that,

endeavours to point out the imperfection of

many

human

virtue in

other respects.

“Wherever our reserve with regard to pleasure falls short of the most ascetic abstinence, he treats it as gross luxury and sensuality. Every thing according to him, is luxury which exceeds what is absolutely necessary for the support of

human

nature, so that there

is

vice

even in the use of a clean shirt or of a convenient habitation.”

But, Smith thinks, he has fallen into the great fallacy of representing every passion as wholly vicious if it is so in any degree and direction:

Moral Sentiments, Below, vol.

i.,

Moral Sentiments,

^ Ibid.,

1759, PP- 464-6.

p. 16.

1759, P. 4S3.

1759, p. 474.

EDITOR^S INTRODUCTION thus that he treats everything as vanity which has any reference either to what are or to what ought to be the sentiments of others: and it is by means of this sophistry that he establishes his fav‘It

is

ourite conclusion that private vices are public benefits. If the love of magnificence, a taste for the elegant arts and improvements of human life, for whatever is agreeable in dress, furniture, or equipage, for

and music, is to be regarded as luxury, even in those whose situation allows, with-

architecture, statuary, painting

sensuality

and

ostentation,

out any inconveniency, the indulgence of those passions,

it is

certain

that luxury, sensuality and ostentation are public benefits: since, with-

out the qualities upon which he thinks proper to bestow such opprobrious names, the arts of refinement could never find encouragement

and must languish for want of employment.” ‘^Such/’

Smith concludes,

“is the

system of Dr. Mandeville,

which once made so much noise in the world.’’ However destructive it might appear, he thought “it could never have imposed upon so great a number of persons, nor have occasioned so general an alarm among those who are friends of better principles, had it not in

some

respects bordered

upon the

truth.”

Mandeville’s work originally consisted merely of a

poem

of 400

“The Grumbling Hive; or Knaves Turn’d Honest,” which according to his own account was first published as a sixpenny pamphlet about 1705.^® In 1714 he reprinted it, appending a very much larger quantity of prose, under the title of The Fable of the Bees: or Private Vices, Public Benefits; with an Essay oii Charity and Charity Schools and a Search into the Nature of SocU ety. In 1729 he added further a second part, nearly as large as the first, consisting of a dialogue on the subject. The “grumbling hive,’' which is in reality a human society, is described in the poem as prospering greatly so long as it was full of vice: lines called

“The worst of all the multitude Did something for the common good. This was the state’s craft, that maintain’d The whole, of which each part complain’d: This, as in musick harmony, Made jarrings in the main agree Parties directly opposite, Assist each oth’r, as ’twere for spight;

And

temp’rance with sobriety Serve drunkenness and gluttony. The root of evil, avarice, That damn’d ill-natur’d baneful vice, Was slave to prodigality,

^ Ibid., p. 485. ^ Moral Sentiments, ^ Fable of the Bees,

1759, p. 487. 1714, preface.

editor’s introduction

1“

That noble sin whilst luxury Employ’d a million of the poor, ;

And odious pride a million more: Envy itself and vanity Were ministers of industry Their darling folly, fickleness In diet, furniture, and dress, ridic’lous vice, was made The very wheel that turn’d the trade. Their laws and deaths were equally

That strange

Objects of mutability; For what was well done for a time. In half a year became a crime Yet whilst they altered thus their laws, Still finding and correcting flaws. They mended by inconstancy Faults which no prudence could foresee. Thus vice nursed ingenuity, Which join’d with time and industry. Had carry’d life’s conveniencies. It’s real pleasures, comforts, ease, To such a height, the very poor Lived better than the rich before; And nothing could be added more.” ,*

But the bees grumbled till Jove in anger swore he would rid the The hive became virtuous, frugal and honest, and trade was forthwith ruined by the cessation of expenditure. At the end of the “Search into the Nature of Society’’ the author sums up hive of fraud.

his conclusion as follows:

myself to have demonstrated that neither the and kind affections that are natural to man, nor the real virtues he is capable of acquiring by reason and self-denial, are the foundation of society: but that what we call evil in the world, moral as well as natural, is the grand principle that makes us sociable creatures, the solid basis, the life and support of all trades and employments without exception: that there we must look for the true origin of all arts and sciences, and that the moment evil ceases the society must be spoiled, if not totally dissolved.’' “After this I

flatter

friendly qualities

In a letter to the London Journal of loth August, 1723, which he reprinted in the edition of 1724, Mandeville defended this passage vigorously against a hostile critic. If, he said, he had been writing to be understood by the meanest capacities, he would have explained that every want was an evil:

“That on the multiplicity of those wants depended all those mutual which the individual members of a society pay to each other:

services

®^Pp. 11-13 in the ed. of 1705. ®®Pp. 427-8 in 2nd ed., 1723.

editor’s introduction

liv

and that consequently, the greater variety there was of wants, the larger number of individuals might find their private interest in labouring for the good of others, and united together, compose one body.”*®

Hutcheson and Mandeand remember Sentiments, Moral ville in adjoining chapters of the further that he must almost certainly have become acquainted If

we bear

in

mind Smith’s

criticism of

with the Fable of the Bees when attending Hutcheson’s lectures or soon afterwards, we can scarcely fail to suspect that it was Mandeville who first made him realise that “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.” Treating the

word “vice” as a mistake for self-love, Adam Smith could have repeated with cordiality Mandeville’s lines already quoted: “Thus vice nursed ingenuity, Which join’d with time and industry,

Had

carry’d

life’s

It’s real pleasures,

conveniencies. comforts, ease,

To

such a height, the very poor Lived better than the rich before.”

Smith put the doggerel into prose, and added something from when he propounded what is really the text of the polemical portion of the Wealth of Na-

the Hutchesonian love of liberty tions :

*‘The natural effort of every individual to better his

when

own

condition,

freedom 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 impertinent obstructions with which the folly of human laws too often incumbers its operations.” suffered to exert itself with

Experience shows that a general belief in the beneficence of the economic working of self-interest is not always sufficient to make even a person of more than average intelligence a free-trader. Consequently it would be rash to suppose that Smith’s disbelief in the mercantile system was merely the natural outcome of his general belief in economic freedom. Dugald Stewart’s quotations from his paper of 1755 do not contain anything to show that he was pouring contempt on the doctrine before he left Edinburgh and in his early years at Glasgow. It seems very likely that the reference in the lectures to Hume’s “essays showing the absurdity of these and *®P. 465 in ed. of 1724. Below, p. 508.

editor’s introduction other such doctrines”

is to be regarded as an acknowledgment of obligation, and therefore that it was Hume, by his Political Discourses on Money and the Balance of Trade in 1752, who first

opened

Adam

is slightly

Smith’s eyes on this subject.

increased

by

The

probability of this

the fact that in the lectures the mercantile

fallacies as to the balance of trade were discussed in connexion with Money, as in Hume’s Discourses, instead of in the position which they would have occupied if Smith had either followed Hutcheson’s order, or placed them among the causes of the “slow

progress of opulence.” It that while both

Hume

is,

a mere coincidence and Smith in his altogether the aim of securing a

too, perhaps, not

in the Discourses in 1752

lectures ten years later rejected

favourable balance of trade, utility of protection for

home

Hume

still

industries,

clearly believed in the

and Smith

is

at

any

rate

made a considerable concession in its favour.^® would be useless to carry the inquiry into the origin of Adam Smith’s views any further here. Perhaps it has been carried too far already. In the course of the Wealth of Nations Smith actually quotes by their own name or that of their authors almost one hunreported to have It

dred books.

An

attentive study of the notes to the present edition

though a few of these are quoted at second hand the number actually used was far greater. Usually but little, sometimes only a single fact, phrase or opinion, is taken from each, so that few authors are less open than Adam Smith to the reproach of having rifled another man’s work. That charge has indeed never seriously been brought against him, except in regard to Turgot’s Riflexions, and in that case not a particle of evidence has ever been produced to show that he had used or even seen the book in question. The Wealth of Nations was not written hastily with will convince the reader that

the impressions of recent reading

still

vivid

on the author’s

brain.

composition was spread over at least the twenty-seven years from 1749 to 1776. During that period economic ideas crossed and recrossed the Channel many times, and it is as useless as it is invidious to dispute about the relative shares of Great Britain and France in the progress effected. To go further and attempt to apportion the merit between different authors is like standing on some beach and discussing whether this or that particular wave had most to do with the rising tide. One wave may appear to have

Its

Lectures, p. 197. Above pp. XXXV, xxxviii. Moreover, before bringing out the second edition of his Discourses, Hume wrote to Adam Smith asking for suggestions. That Smith made no remark on the protectionist passage in the discourse on the Balance of Trade seems to be indicated by the fact that it remained unaltered (see Hume’s Essays, ed. Green & Grose, vol. i., pp. 59, 343 and 344).

EDITOR^S INTRODUCTION what

credit there

sweeping over a

sand castle and evidently wipe out his second, but both would have been swamped just as effectually, and almost as soon, on a perfectly calm day. another wave

is

may

in

child’s first

AN INQUIRY INTO THE NATURE AND CAUSES OF THE

WEALTH OF NATIONS INTRODUCTION AND PLAN OF THE WORK The

annual

supplies

it

^

labour of every nation

with

all

is

the fund which originally

the necessaries and conveniencies of

life ^

which

annually consumes, and which consist always either in the im-

it

mediate produce of that labour, or in what

is

purchased with that

are to

consume

it,

what

is

purchased with

who

the nation will be better or worse supplied with

the necessaries and conveniencies for which

all

supplies

consump-

this produce, or

bears a greater or smaller proportion to the number of those

it,

duce of annual labour annual

produce from other nations.

According therefore, as

The pro-

it

has occasion.^

tion,

better or

worse according to the

But

this proportion

must

in every nation

different circumstances; first,

with which

its

labour

is

by the skill,

be regulated by two

dexterity,

and judgment

generally applied; ^ and, secondly,

proportion between the number of those

who

by

the

and that of those who are not so employed.^ Whatever

be the

climate, or extent of territory of

the

abundance or scantiness

ticular situation,

any

particular nation,

of its annusd supply must, in that par-

depend upon those two circumstances.

The abundance

or scantiness of this supply too seems to depend

^This word, with “annually” just below, at once marks the transition from the older British economists' ordinary practice of reprding the wealth of a nation as an accumulated fund. Following the physiocrats, Smith sees that the important thing is how much can be produced in a given time. ^Cp. with this phrase Locke, Some Considerations of the Consequences of the Lowering of Interest and Raising the Value of Money, ed. of 1696, p. 66, “the intrinsic natural worth of anything consists in its fitness to sup” ply the necessities or serve the conveniencies of human life ‘‘The implication that the nation's welfare is to be reckoned by the average welfare of its members, not by the aggregate, is to be noticed.

Ed. I reads “with which labour is generally applied^ in it.” This second circumstance may be stretched so as to include the duration and intensity of the labour of those who are usefully employed, but another important circumstance, the quantity and quality of the accumulated *

“

instruments of production,

is

altogether omitted. Ivii

tion of

produce to people,

are employed in use-

ful labour, soil,

propor-

which proportion is

regulated

by the skill, etc.,

of the

PLAN4 OF WORK

Iviii

tion of

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

useful

labour,

labour

and the propor-

and endeavours to provide, as well as he

labourers,

ries

and more by the sWll, etc.,

and conveniences

of

tribe as are either too old, or too young, or too infirm to

ing

and

fishing.

go a hunt-

Such nations, however, are so miserably poor, that

from mere want, they are frequently reduced,

than by the pro-

can, the necessa-

for himself, or ^ such of his family or

life,

or, at least,

think

themselves reduced, to the necessity sometimes of directly destroy-

portion of

and sometimes

useful

ing,

labourers,

and those

as is

shown by the greater pro-

duce of

afflicted

of abandoning their infants, their old people,

with lingering diseases, to perish with hunger,

by wild

or to be devoured

beasts.

Among

civilized

and thriving na-

on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, fretions,

civilised

quently of a hundred times more labour than the greater part of

societies.

those

who work;

ciety

is

so great, that

workman, even veniencies of

The

causes of

improve-

labour,

causes

life

and poorest

order,

if

he

is

frugal

and

enjoy a greater share of the necessaries and con-

than

it is

^ of this

and the

are often abundantly supplied, and a

all

of the lowest

may

industrious,

The

yet the produce of the whole labour of the so-

possible for

any savage

to acquire.

improvement, in the productive powers of

order, according to

which

its

produce

is

naturally

among the different ranks and conditions of men make the subject of the First Book of this Inquiry,

ment and

distributed ®

natural

the society,

in

distribu-

Whatever be the actual

tion are

ment with which labour

the subject of

Book

is

state of the skill, dexterity,

applied in

scantiness of its annual supply

any

nation, the

and judg-

abundance or

must depend, during the continu-

I.

ance of that state, upon the proportion between the number of Capital

those

stock,

who are annually employed in useful labour, and that of who are not so employed. The number of useful and produc-

which

those

regulates

tive ® labourers, it will hereafter appear, is

every where in propor-

the pro-

portion of

tion to the quantity of capital stock

useful

them to work, and

labourers,

The Second Book,

is

to the particular

which

is

employed

way in which

it is

in setting

so employed.

therefore, treats of the nature of capital stock,

treated

of the

of in

Book 11

.

manner

in

which

it is

different quantities of labour

to the different ® ’

ways

in

gradually accumulated, and of the

which

which

it is

it

puts into motion, according

employed.

Ed. I reads “and.”^ Only one cause, the division of labour,

is

actually treated,

®For the physiocratic origin of the technical use of the terms “distribute'’ and “distribution,” see the Editor’s Introduction. ® This word slips in here as an apparently unimportant synonym of “useful,”

way

but subsequently ousts “useful” altogether, and is explained in such a that unproductive labour may be useful; see esp. below p. 315,

PLAN OF WORK Nations tolerably well advanced as to

dexterity,

skill,

and judg-

ment, in the application of labour, have followed very different plans in the general conduct or direction of

have not

The

uce.

all

and those plans

it;

been equally favourable to the greatness of

its

prod-

of others to the in-

dustry of towns. Scarce any nation has dealt equally and impar-

with every sort of industry. Since the downfall 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.

seem

The circumstances which

have introduced and established

to

cumstances

which led Europe to encourage

some nations has given extraordinary encour-

policy of

agement to the industry of the country; that tially

The cir-

the industry of the

towns and discour-

age agriculture

are dealt

with in

Book III.

this policy are explained

Third Book.

in the

Though

those different plans were, perhaps,

first

introduced by

the private interests and prejudices of particular orders of men,

The theories

to

without any regard

to,

or foresight of, their consequences

upon the

general welfare of the society; yet they have given occasion to very different theories of political

ceconomy;

the importance of that industry which ers of that

which

is

learning,

and

is

which some magnify

carried

carried on in the country.

To

in towns, oth-

Those theories have

influence, not only

have endeavoured,

in the

Fourth Book, to explain, as

distinctly as I can, those different theories,

which they have produced

effects

on

upon the opinions of men of but upon the public conduct of princes and sovereign

had a considerable states. I

of

explain

in

what has been the nature ages and nations, have supplied

of the people, or in different

tion, is the object of

these

Four

first

Books.

have given

rise

are ex-

plained in

Book IV.

fully

and nations.

of the great

body

of those funds, which, their

policies

and the principal

in different ages

what has consisted the revenue

which

different

annual consump-

The

Fifth and last

The expenditure,

revenue

and debts of the

sovereign

Book this

treats of the revenue of the sovereign, or

book

I have endeavoured to show;

first,

commonwealth. In

what are the necessary

expences of the sovereign, or commonwealth; which of those expences ought to be defrayed by the general contribution of the

them, by that of some particular part members of it: secondly, what are which the whole society may be made to

whole society; and which only, or of

some

of

particular

the different methods in

contribute towards defraying the expences incumbent on the whole

and what are the principal advantages and inconveniencies

society,

See the index fot the examples of the use of this term. Ed. I does not contain “to explain.” ^“Ed.

I

reads “what

^“Ed.

I

reads “is treated of in.”

^*Ed.

I

reads “of the society.”

is

the nature.”

are

treated of in

V.

Book

PLAN OF WORK

lx

of each of those methods: and, thirdly

and

what are the modern govern-

lastly,

reasons and causes which have induced almost

all

ments 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.^' Read

in conjunction with the

first

two paragraphs,

this sentence

makes

wealth of a nation is to be reckoned by its per capita income. But this view is often temporarily departed from in the course of the work; see the index, sj;o. Wealth. it

clear that the

THE WEALTH OF NATIONS

#

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,

CHAPTER

I

OF THE DIVISION OF LABOUR

The

^

greatest improvement ^ in the productive powers of labour,

and the greater part which

it is

effects of

The

any where

of the skill, dexterity, directed, or applied,

and judgment with

seem to have been the

the division of labour.

effects of the division of labour, in the general business of

^ This phrase, if used at all before this time, was not a familiar one. Its presence here is probably due to a passage in Mandeville, Fable of the Bees,

when once men come to be govpt. ii. (1729) dial, vi., p. 335: “Cleo. erned by written laws, all the rest comes on apace ... No number of men, when once they enjoy quiet, and no man needs to fear his neighbour, will be long without learning to divide and subdivide their labour. Hor. I don’t understand you, Cleo. Man, as I have hinted before, naturally loves to imitate what he sees others do, which is the reason that savage people all do .

.

.

the same thing: this hinders them from meliorating their condition, though they are always wishing for it: but if one will wholly apply himself to the making of bows and arrows, whilst another provides food, a third builds huts, a fourth

makes garments, and a

useful to one another, but the callings

the

same number of

years, receive

fifth utensils,

they not only become

and employments themselves

much

will, in

greater improvements, than

if all

had been promiscuously followed by every one of the five. Hor. I believe you are perfectly right there; and the truth of what you say is in nothing so conspicuous as it is in watch-making, which is come to a higher degree of perfection than it would have been arrived at yet, if the whole had always remained the employment of one person and I am persuaded that even the plenty we have of clocks and watches, as well as the exactness and beauty they may be made of, are chiefly owing to the division that has been made of that art into many branches.” The index contains, “Labour, The usefulness of dividing and subdividing it.” Joseph Harris, Essay upon Money and ;

Coins, 1757, pt.

i.,

§ 12, treats of

the “usefulness of distinct trades,” or “the

advantages accruing to mankind from their betaking themselves severally to different occupations,” but does not use the phrase “division of labour.” *Ed. I reads “improvements.” 3

Division of labour is the great cause of

THE WEALTH OF NATIONS

4 its in-

creased

powers, as may be better understood

from a particular

example,

be more easily understood, by considering in what operates in some particular manufactures. It is com-

society, will

manner

it

monly supposed not perhaps that

it

really is

more importance: but

of

some very

to be carried furthest in

trifling ones;

them than in others manufactures which are

carried further in

in those trifling

number

destined to supply the small wants of but a small

of peo-

whole number of workmen must necessarily be small; and

ple, the

those employed in every different branch of the

work can often be

same workhouse, and placed

at once under the

collected into the

view of the spectator. In those great manufactures, on the con-

which are destined to supply the great wants of the great work employs so

trary,

body

of the people, every different branch of the

great a

number

of

workmen, that

We

same workhouse.

into the

it is

impossible to collect

them

all

can seldom see more, at one time,

than those employed in one single branch. Though in such manufactures,^ therefore, the

greater

number

the division

is

work may

be divided into a much

really

of parts, than in those of

a more

trifling nature,

not near so obvious, and has accordingly been

much

less observed.

such as

pin-mak-

To

take an example, therefore,^ from a very trifling manufac-

one in which the division of labour has been very often

ture; but

ing.

taken notice

trade of the pin-maker;

of, the

a workman not edu-

cated to this business (which the division of labour has rendered a distinct trade),® nor

ployed in

it

acquainted with the use of the machinery em-

(to the invention of

which the same division of labour

has probably given occasion), could scarce, perhaps, with his ut-

most industry, make one pin in a day, and certainly could not make twenty. But in the

way

not only the whole work

number

of branches, of

which

in is

a peculiar trade, but

One man draws out the

cuts

a fourth points

the head; to tions; to

other;

put

it is

make it

now

it is

carried on,

divided into a

which the greater part are likewise peculiar

trades. it,

this business is

it,

a

wire, another straights

fifth

grinds

it

it,

a

third

at the top for receiving

the head requires two or three distinct opera-

on, is

a peculiar business,

even a trade by

the important business of

itself

to put

making a pin

to

whiten the pins

them is,

is

into the paper;

in this

into about eighteen distinct operations, which, in

an-

and

manner, divided

some manufacto-

®

Ed. I reads “Though in them.” Another and perhaps more important reason for taking an example like that which follows is the possibility of exhibiting the advantages of ^vision *

of labour in statistical form.

This parenthesis would alone be sufficient to show that those are wrong believe Smith did not include the separation of employments in “division of labour.”

who

DIVISION OF LABOUR

5

performed by distinct hands, though in others the same sometimes perform two or three of them.® I have seen a small manufactory of this kind where ten men only were employed, ries,

are

man

will

all

and where some tinct

them consequently performed two or three disoperations. But though they were very poor, and therefore but of

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 indifferently

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 making four thousand eight

hundred pins

in

a day. But

if

they had

all

wrought separately and

independently, and without any of them having been educated to this peculiar business, they certainly could not

made

each of them have

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, consequence of a proper division and combination of their

in

dif-

ferent operations.

In every other art and manufacture, the

effects of the division of

labour are similar to what they are in this very

trifling

many of them, the labour can neither be so much subdivided, nor The division of labour,

in

The

effect

one; though^ trades

reduced to so great a simplicity of operation. however, so far as

it

can be introduced, occasions, in every

art,

proportionable increase of the productive powers of labour.

a

The

separation of different trades and employments from one another,

seems to have taken place, in consequence of separation too

is

this advantage.

generally carried furthest in those countries which

enjoy the highest degree of industry and improvement; what

work

of one

several in is

This

man

is

the

in a rude state of society, being generally that of

an improved one. In every improved

society, the farmer

generally nothing but a farmer; the manufacturer, nothing but a

manufacturer.

The labour

one complete manufacture,

number

of hands.

too which is

is

necessary to produce any

almost always divided among a great

How many different trades are employed in each

branch of the linen and woollen manufactures, from the growers of ®

In

Adam

Smith’s Lectures, p. 164, the business is, as here, divided inta number is doubtless taken from the Encyclop&die,

eighteen operations This

tom. V. (published in 1755), s,v. fipingle. The article is ascribed to M. De“qui decrivait la fabrication de P^pingle dans les ateliers meme des ouvriers,” p. 807 In some factories the division was carried further, E. Chambers, Cyclopcedia, vol. ii., 2nd ed., 1738, and 4th ed., 1741, s,v. Pin,

laire,

makes the number of

separate operations twenty-five.

vision of*

employ-

THE WEALTH OF NATIONS

6

the flax and the wool, to the bleachers and smoothers of the linen,

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 manufacor to the dyers

tures. It is impossible to separate so entirely, the business of the

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

grazier

often the same.

The

occasions for those different sorts of labour re-

turning with the different seasons of the year,

it is

impossible that

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

one

the reason

why the improvement of the productive powers ^ways The most opulent nations,

in this art, does not

manufactures.

of labour

keep pace with their improvement in indeed, generally excel

all

their neighbours in agriculture as well as in manufactures; but they

commonly more

are

distinguished

by

their superiority in the latter

than in the former. Their lands are in general better cultivated, and having more labour and expence 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 pro-

portion to the superiority of labour and expence. In agriculture, the

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, there-

labour of the rich country

fore, will

is

not always

not always, in the same degree of goodness, come cheaper

market than that of the poor. The corn of Poland, in the same deis 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. to

gree of goodness,

The

corn-lands of England, however, are better cultivated than

those of France, and the corn-lands

®

of France are said to be

much

But though the poor councan, in some the cheapness and goodness of its corn, it

better cultivated than tnose of Poland. try,

notwithstanding the inferiority of

measure, rival the rich in

can pretend to no such competition in "

^

Ed. Ed.

I I

its cultivation,

its

manufactures; at least

reads “the.” reads “the lands” here and in the line above.

if

DIVISION OF LABOUR those manufactures suit the

country.

The

soil,

climate,

7

and situation

of the rich

France are better and cheaper than those of

silks 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 hard-ware and the coarse woollens of England are beyond to those of France,

all

and much cheaper too

comparison superior

in the

goodness.^^ In Poland there are said to be scarce of

any kind, a few

ed, without

same degree of

any manufactures

of those coarser household manufactures except-

which no country can well

subsist.

This great increase of the quantity of work, which,

in conse-

quence of the division of labour, the same number of people are capable of performing,^^

owing to three different circumstances;

is

to the increase of dexterity in every particular

first,

workman; secondly,

The advantage is

due to three dr.

cumstances,

to the saving of the time

which

is

commonly

one species of work to another; and great

number

enable one

of

machines which

man to do the work

lost in passing

from

lastly, to the invention of a

facilitate

and abridge labour, and

of many.^^

First, the

improvement of the dexterity of the workman necessar-

ily increases

the quantity of the work he can perform; and the divi-

(i) improved dexterity.

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. sion of labour,

A common smith,

who, though accustomed to handle the hammer,

has never been used to

he

is

make nails,

obliged to attempt

it,

if

upon some

will scarce, I

particular occasion

am assured, be able to make

above two or three hundred nails in a day, and those too very bad ®Ed. I reads “because the England”

silk

manufacture does not

^®In Lectures, p. 164, the comparison

is

suit the climate of

between English and French

“toys,” ie., small metal articles.

^^Ed.

I places

“in consequence of the division of labour” here instead of

in the line above,

““Pour

la c616 rit 6

du

travail et la perfection

de I’ouvrage,

elles

depend-

ent enticement de la multitude des ouvriers rassembles. Lorsqu’une manufacture est nombreuse, chaque operation occupe un homme dif£6rent. Tel fait et ne fera de sa vie qu’une seule et unique chose; tel autre une autre chose: d'ou il arrive que chacune s’exCute bien et promptement, et que Touvrage le mieux fait est encore celui qu’on a k meilleur march6. D’ailleurs le goht et la fa^on se perfectionnent necessairement entre un grand nombre d’ouvriers, parce qu’il est difficile qu’il ne s’en rencontre quelquesuns capables de refiChir, de combiner, et de trouver enfin le seul moyen qui puisse les mcttre audessus de leurs semblables; le moyen ou d’epargner la matiCe, ou d’allonger le temps, ou de surfaire lindustrie, soit par une machine nouvelle, soit par une manoeuvre plus conmodp.^^’—Encyclopidie, tom i. (1751), p. 717, s.v. Art. All three advantages mentioned in the text above

ouvrier ne

are included here.

THE WEALTH OF NATIONS

S ones.^^

A smith who has been accustomed to make nails, but whose

sole or principal business has not

with his utmost diligence

nailer,

nails in

age

who had

never exercised any other trade but that of making

and who, when they exerted themselves, could make, each

them, upwards of two thousand three hundred nails in a

making of a nail, however, tions.

there

is

by no means one

The same person blows is

is

and

ton,^® is subdivided, are all of

terity of the person, of

perform them,

is

making

fire

as

of a pin, or of

The

differ-

a metal but-

them much more simple, and the dex-

whose

usually

mends the

forges every part of the nail:

obliged to change his tools.

ent operations into which the

of

The

day.^"^

of the simplest opera-

the bellows, stirs or

occasion, heats the iron,

In forging the head too he

some

can seldom

eight hundred or a thous-

a day. I have seen several boys under twenty years of

and

nails,

been that of a

make more than

life it

much

has been the sole business to

greater.

The

rapidity with which

of the operations of those manufactures are performed, ex-

ceeds what the

human hand

could,

by those who had never seen

them, be supposed capable of acquiring. (2) sav-

i^of time.

Secondly, the advantage which

is

gained by saving the time com-

greater than

from one sort of work to another, is much we should at first view be apt to imagine it. It is impos-

sible to pass

very quickly from one kind of work to another, that

monly

lost in passing

a

carried on in

different place,

country weaver,^®

who

When

the

in turning his

he

first

loom to the

field,

and from the

two trades can be carried on

workhouse, the loss of time case, however,

different tools.

is

in the

field

same

no doubt much less. It is even in this A man commonly saunters a little

very considerable.

hand from one sort of employment to another. When new work he is seldom very keen and hearty; his

begins the

mind, as they say, does not go to it, and for some time he rather fles

than applies to good purpose.

The habit of sauntering and

dolent careless application, which

work and different

is

his tools every half hour,

is

obliged to change his

and to apply his hand

ways almost every day of his lazy, and incapable

ways slothful and

tri-

of in-

naturally, or rather necessarily

by every country workman who

acquired

“In

is

A

a small farm, must lose a good

cultivates

deal of time in passing from his to his loom.

and with quite

life;

of

renders

in

twenty

him almost

al-

any vigorous application

Lectures, p. i66, “a country smith not accustomed to make nails will for three or four hundred a day and those too very bad,”

work very hard

“ In Lectures, p. i66, “a boy used to those incomparably better”

it will easily

make two thousand and

“ In Lectures, p. 255, it is implied that the labour of divided among eighty persons.

“The same

example occurs in Lectures, p. 166.

making a button was

DIVISION OF LABOUR

9

even on the most pressing occasions. Independent, therefore, of his deficiency in point of dexterity, this cause alone

considerably the quantity of work which he

must always reduce capable of perform-

is

ing.

Thirdly, and lastly, every

bour

is facilitated

chinery. It

is

body must be

sensible

inally

is

so

unnecessary to give any example.^^ I shall only ob-

much

facilitated

machines by which

and abridged, seems to have been

owing to the division of labour.

the whole attention of their minds

when

it is

dissipated

is

orig-

when

directed towards that single

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.

some one or other

It is

naturily to be expected, therefore, that

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, wherever

mits of such improvement.

A

which labour

in those manufactures in

of

them employed

it

ad-

made use

most subdivided,

is

common workmen, who, being each

were originally the inventions of of

the nature of

great part of the machines

some very simple operation, naturally turned thoughts towards finding out easier and readier methods of

their

in

Whoever has been much accustomed to visit such manufactures, must frequently have been shewn very pretty maworkmen, in order to chines, which were the inventions of such performing

facilitate

it.

and quicken

first fire-engines,^^

their

own

particular part of the work. In the

a boy was constantly employed to open and shut

alternately the communication between the boiler

and the

according as the piston either ascended or descended. boys,

who loved

cylinder,

One

of those

to play with his companions, observed that,

by

ty-

ing a string from the handle of the valve which opened this com-

munication to another part of the machine, the valve would open

and shut without

his assistance,

himself with his play-fellows. that has been made upon

this

and leave him

One

at liberty to divert

of the greatest improvements

machine, since

it

was

first

invented.

Examples are given in Lectures, p. 167; “Two men and three horses will do more in a day with the plough than twenty men without it. The miller and his servant will do more with the water mill than a dozen with the hand ” mill, though it too be a machine Ed. I reads “I shall, therefore, only observe.” ^ Ed. i reads “of common.” Ed. I reads “machines employed.” I

e.,

steam-engines.

and

(3) applica-

tion of

machinery,

invented

Men are much more likely to

discover easier and readier methods of attaining any object,

object, than

la-

and abridged by the application of proper ma-

serve, therefore,^® that the invention of all those

labour

how much

by workmen,

THE WEALTH OE NATIONS was in

own or by

ma-

chine-

makers

this

manner the discovery

of

a boy who wanted to save his

labour.^^

All the improvements in machinery, however, have

by no means

been the inventions of those who had occasion to use the machines.

and philo-

Many improvements have

sophers.

ers of the machines,

peculiar trade;

phers or

men

been made by the ingenuity of the mak-

make them became the business of a and some by that of those who are called philosowhen

to

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 combining together the powers of the most distant and dissimilar objects.^®

In the progress of

society, philosophy or spec-

ulation 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 dif-

ferent branches, each of which affords occupation to

or class of philosophers; and this subdivision of

a peculiar tribe employment in

philosophy, as well as in every other business, improves 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

^ This

pretty story

is largely,

grown out of a misreading (not

by it.^^

at any rate, mythical. It appears to have necessarily

by Smith) of the following pas-

work with a buoy in the cylinder when the steam was strong, and opened

sage: ‘‘They used before to

enclosed in a

which buoy rose

the injection,

pipe,

and made a stroke; thereby they were capable of only giving ten strokes in a minute,

till

a boy,

Humphry

Potter,

who

six,

eight or

attended the en-

added (what he called scoggan) a catch that the beam Q always opened; and then it would go fifteen or sixteen strokes in a minute. But this being perplexed with catches and strings, Mr. Henry Beighton, in an engine he had built at Newcastle-on-Tyne in 1718, took them all away, the beam itself simply supplying all much better.”—}. T. Desaguliers, Course of Experimental Philosophy, vol. ii., 1744, p. 533. From pp. 469, 471, it appears that hand labour was originally used before the “buoy” was devised. “ In Lectures, p. 167, the invention of the plough is conjecturally attributed to a farmer and that of the hand-mill to a slave, while the invention of the water-wheel and the steam engine is credited to philosophers. MandcviHe is very much less favourable to the claims of the philosophers: “They are veiy seldom the same sort of people, those that invent arts and improvements in them and those that inquire into the reason of things: this latter is most commonly practised by such as are idle and indolent, that are fond of retirement, hate business and take delight in speculation; whereas none succeed oftener in the first than active, stirring and laborious men, such as will put their hand to the plough, try experiments and give all their attention to what they are about.”—Fable of the Bees, pt. ii. (1729), dial, iii., p. 151. He goes on to give as examples the improvements in soap-boiling, grain-dyeing, gine,

etc.

®^The advantage of producing particular commodities wholly or chiefly in the countries most naturally fitted for their production is recognised below, p. 425, but the fact that div^on of labour is necessary for its attainment is not noticed. The fact that division of labour allows different workers to be

DIVISION OF LABOUR It is the great multiplication of the productions of all the differ-

ent arts, in consequei ce of the division of labour, which occasions, in a well-governed society, that universal opulence which extends the lowest ranks of the people. Every

itself to

own work

quantity of his

he

a great quantity

or,

what comes to the same for,

amply with what he has occasion through

all

He

of theirs.

with what they have occasion

itself

governed society,

own

enabled to exchange a great quantity of his

is

opulence of a well-

to dispose of

goods for a great quantity, price of

great

beyond what he himself has and every other workman being exactly in the same

occasion for; situation,

workman has a

Hence the universal

supplies

thing, for the

them abundantly

and they accommodate him as

for,

and a general plenty

diffuses

the different ranks of the society.

or day-

even the

labourer in a civilized and thriving country, and you will perceive

bourer’s

Observe the accommodation of the most common that the

number

of people of

whose industry a

small part, has been employed in procuring tion,

exceeds

all

part, though but

him

this

a

accommoda-

The woollen coat, for example, which as coarse and rough as it may appear, is labour of a great multitude of workmen.

computation.

covers the day-labourer, the produce of the joint

The shepherd,

artificer

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 ^1 join

plete

even

this

riers, besides,

their different arts in order to

homely production.

How many

must have been employed

com-

merchants and car-

in transporting the

mate-

from some of those workmen to others who often live in a very distant part of the country! how much commerce and navigation in rials

particular, ers,

how many

ship-builders, sailors, sail-makers, rope-mak-

must have been employed

ent drugs

made use

of

by the

motest corners of the world!

in order to bring together the differ-

dyer, which often

What a

come from the

variety of labour too

is

re-

neces-

sary in order to produce the tools of the meanest 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,

consider only what a variety of labour

is

let

requisite in order to

us

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 burner of the charcoal to be

made use

in the smelting-house, the brick-maker, the brick-layer, the

men who

of

work-

attend the furnace, the mill-wright, the forger, the smith,

put exclusively to the kind of work for which they are best fitted by qualinot acquired by education and practice, such as age, sex, size and strength, of is in part ignored and in part denied below, pp. 13, 16. The disadvantage division of labour or specialisation is dealt with below, pp. 734-736* ties

day-lacoat being

the pro-

duce of a vast

num-

ber of

workmen.

THE WEALTH OF NATIONS

12

must

all of

Were we

them

join their different arts in order to produce them.

same manner, all the different parts of 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 kitchengrate 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 to examine, in the

his dress

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 prepar-

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 requisite 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 conveniences 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 person 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 lating his bread

;

ter exceeds that of lives

and

many an African king,

liberties of ten

thousand naked

the absolute master of the

savages.^'*^

®This paragraph was probably taken bodily from the MS. of the authIt appears to be founded on Mun, England's Treasure by For-

or^s lectures.

raign Trade, chap, iii., at end; Locke, Civil Government, 43; Mandeville, Fable of the Bees, pt. i., Remark P, 2nd ed., 1723, p. 182, and perhaps Harris, Essay upon Money and Coins, pt. i., § 12. See Lectures, pp. 161-162 and notes.

CHAPTER

II

OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF LABOUR

This

division of labour, from

which so many advantages are de-

rived, is not originally the effect of

any human wisdom, which

and intends that general opulence

sees

It is the necessary,

to which

it

fore-

gives occasion."*-

though very slow and gradual, consequence of a

certain propensity in

human

nature which has in view no such ex-

tensive utility; the propensity to truck, barter,

and exchange one

Whether

this propensity

nature, of which

more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to enquire. It is common to all men, and to be found in no other race which seem to know neither

any other species of contracts. Two greyhounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each this nor

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

same object at that particular time. Nobody fair and deliberate exchange of one bone for another with another dog.^ Nobody ever saw one animal by its gestheir passions in the

ever

saw a dog make a

tures I

and natural

am willing

cries signify to another, this is mine, that yours;

to give this for that.

something either of a

man

When

an animal wants to obtain

or of another animal,

it

has no other

means of persuasion but to gain the favour of those whose service

it

not the effect of any conscious regulation by the state or society, “law of Sesostris,” that every man should follow the employment of

it is

like the

exercising special natural talents

The wisdom recognismg the advantage of comes lower down, p. 15.

what

object there could be in exchanging one bone

his father, referred to in the corresponding passage in Lectures, p. i68.

denial that ®

It is

it is

the effect of individual

by no means

from a propensity in

human

be one of those original principles in hu-

no further account can be given; or whether,

as seems

of animals,

bour arises

nature to exchange.

thing for another.

man

Thedivision of la-

clear

for another.

13

This propensity

Is

found in

man alone.

THE WEALTH^ OF NATIONS

14 requires.

A puppy fawns upon its dam, and a spaniel endeavours 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 en-

gaging them to act according to his inclinations, endeavours every servile and fawning attention to obtain their good will.

by

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 entire-

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 expect 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 requires 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,

ly

^

is

the meaning of every such offer;

manner that we greater part of those good offices

obtain from one another the far

which we stand in need

and

it is

in this

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 of. It is

chuses to depend chiefly upon the benevolence of his fellow-citizens.

Even a beggar does not depend upon

it entirely. The charity of him with the whole fund of principle ultimately provides him

well-disposed people, indeed, supplies his subsistence.

with

all

But though

this

the necessaries of life which he has occasion for,

it

neither

does nor can provide him with them as he has occasion for them. greater part of his occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by pur-

The

chase.

The

With the money which one man

other old cloaths which suit

him

him he purchases food. upon him he exchanges for

gives

old cloaths which another bestows

better, or for lodging, or for food,

money, with which he can buy either food, as he has occasion.^

or for ing,

®

Misprinted

‘‘intirely’^ in

eds. 1-5. “Entirely” occurs

cloaths, or lodg-

a

little

lower

down

in all eds.

*The paragraph

is

repeated from Lectures, p. 169. It is founded on ii. (1729), dial, vi., pp. 421, 422.

viUe, Fable of the Bees, pt.

Mande-

ORIGIN OF DIVISION OF LABOUR As

it is

by

by

treaty,

^5

and by purchase, that we obtain

barter,

from one another the greater part of those mutual good

which we stand

in

need

of, so it is this

same trucking

offices

disposition

which originally gives occasion to the division of labour. In a tribe of hunters or shepherds a particular person

It is en-

couraged

makes bows and arrows,

by

self-in-

terest

and

leads to division of

labour.

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 for example, with

cattle

and venison, than

them.

From a

if

regard to his

he himself went to the

own

bows and arrows grows to be sort of armourer.

his chief business,

making

of

and he becomes a

Another excels in making the frames and covers

of their little huts or moveable houses.

use in this

catch

field to

interest, therefore, the

He

is

accustomed to be of

way to his neighbours, who reward him in

ner with cattle and with venison,

till

at last he finds

his interest to

dedicate himself entirely to this emplo3nnent, and to become of house-carpenter. In the

same manner a

third

man-

the same

it

a

sort

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

all

labour, which

over and above his

is

the certainty of being

that surplus part of the produce of his

able to exchange

own consumption,

own

for such

parts of the produce of other men’s labour as he

may have occasion

man

particular occupa-

for,

encourages every

to apply himself to

a

and

to cultivate

and bring

genius he

may possess

for that particular species of business.®

tion,

to perfection

whatever talent or

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, custom, and education.

and

When they came into the world,

for the first six or eight years of their existence, they were, per-

haps,*^

very

much

alike,

and neither

their parents nor playfellows

could perceive any remarkable difference. About that age, or soon after,

they come to be employed in very different occupations. The

^Lectures, pp. 169-170. ® This is apparently directed against Harris,

and

how

is

in accordance with the

nearly equal

powers and

all

men

view of Hume,

are in their bodily force, and even in their mental

faculties, ere cultivated

tract,” in Essays,

“Perhaps”

is

Money and Coins, pt. i., § ii, who asks readers to “consider

Moral and

by education.”--“Of the Original Con-

Political, 1748, p. 291.

omitted in eds.

2

and

3,

and restored in the errata

to ed. 4.

thus giving rise to differences

of talent

more important than the natural differ-

ences,

XH^;

WEALTH OF NATIONS

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 resemblance. But without the disposition to truck, barter, and exchange, every

man must have

procured to

life which he wanted. must have had the same duties to perform, and the same work to do, and there could have been no such difference of employment as could alone give occasion to any great difference of talents.^

himself every necessary and conveniency of All

aiKi ren-

As

it is

this disposition

which forms that difference of

dering those dif-

remarkable among men of different professions, so

ferences

disposition which renders that difference useful.

useful

imals acknowledged to be ture a

all of

much more remarkable

the

same

talents, so

it is

this

species, derive

from na-

distinction of genius, than what, an-

tecedent to custom and education, appears to take place

men. By nature a philosopher so different from a

Those

is

a mastiff

spaniel, or this last

is

though

all of

the

same

any use to one another. The strength of the

species, are of scarce is

from a greyhound, or

from a shepherd’s dog.

different tribes of animals, however,

mastiff

among

not in genius and disposition half

street porter, as

a greyhound from a

same

Many tribes of an-

by

not in the least supported either

the swiftness of the

greyhound, or by the sagacity of the spaniel, or by the docility of the shepherd’s dog. ents, for

want

The

effects of those different

geniuses and tal-

of the power or disposition to barter

cannot be brought into a

common

stock,

and exchange,

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 advantage

from that variety of fellows.

talents with

Among men,

which nature has distinguished

its

on the contrary, the most dissimilar geniuses

are of use to one another; the different produces of their respective taleiits,

by

the general disposition to truck, barter,

being brought, as

may

it

were, into a

common

stock,

and exchange,

where every man

purchase whatever part of the produce of other men’s talents

he has occasion

for. ^

Lectures pp, 170-171.

«

CHAPTER

III

THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE MARKET As

the power of exchanging that gives occasion to the division

it is

of labour, so the extent of this division

must always be limited by

Division of labour is

the extent of that power, or, in other words,

market.

When

the market

is

by the

by the ex-

very small, no person can have any en-

tent of the

couragement to dedicate himself entirely to one employment, for

want

of the

of his

own

power

to exchange all that surplus part of the produce

labour, which

for such parts of the

is

limited

extent of the

over and above his

power of exchanging.

own consumption,

produce of other men’s labour as he has occa-

sion for.

There are some

sorts of industry,

even of the lowest kind, which

can be carried on no where but in a great town.

A

ample, can find employment and subsistence in no other place. village is

by much

market town tion.

is

too narrow a sphere for him; even

scarce large enough to afford

A

an ordinary

him constant occupa-

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 ter,

we can scarce

expect to find even a smith, a carpen-

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,

a great number of countries, they

little

would

must learn

to perform themselves

pieces of work, for which, in call in

more populous

the assistance of those workmen.

Country workmen are almost every where obliged to apply themselves to all the different branches of industry that affinity to terials.

have so much

one another as to be employed about the same sort of ma-

A country carpenter deals in every sort of work that is made

of wood: a country smith in every sort of

The former

is

work that

is

made

of iron.

not only a carpenter, but a joiner, a cabinet maker,

and even a carver in wood, as well as a wheelwright, a ploughwright, a cart and waggon maker. The employments of the latter are still 17

Various trades

porter, for ex-

cannot be carried

on

except in

towns.

the wealth.of nations

IS

more varioul

It

is

impossible there should be such a trade as even

that of a nailer in the remote

Scotland. Such a

and inland parts

workman at the

of the Highlands of

rate of a thousand nails a day,

three hundred working days in the year, will

make

thousand nails in the year. But in such a situation possible to dispose of one thousand, that

is,

and

three hundred

it

would be im-

of one day’s

work in the

year.

Watercarriage

widens

a more extensive market is opened to every sort of industry than what land-carriage alone can afford

As by means

and along the banks of navigable

riv-

that industry of every kind naturally begins to subdivide

and

so

the mar-

it,

ket,

ers,

of water-carriage

it is

improve

upon the and

itself,

sea-coast,

it is

frequently not

till

a long time

after that

those improvements extend themselves to the inland parts of the country.

A

broad-wheeled waggon, attended by two men, and

drawn by eight

about

horses, in

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

Edinburgh, as

fifty

of goods between

London and

broad-wheeled waggons, attended by a hundred

men, and drawn by four hundred horses^ Upon two hundred tons

by the cheapest land-carriage from Lonmust be charged the maintenance of a

of goods, therefore, carried

don

to Edinburgh, there

hundred men

what

is

for three weeks,

and both the maintenance, and,

nearly equal to the 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 supe-

between land and waterno other communication between those two but by land-carriage, as no goods could be trans-

rior risk, or the difference of the insurance

carriage.

Were

there

places, therefore,

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

^

between

them, and consequently could give but a small part of that encour^

The

by sea is here considerably less than in Leeprobably exaggerated. W. Playfair, ed. of Wealth of Nations, 1805, vol. i., p. 29, says a waggon of the kind described could carry eight tons, but, of course, some allowance must be made for thirty years of road improvement. ® Ed. I reads “which is at present carried on.” superiority of carriage

tures, p. 172,

but

is still

LIMIT OF DIVISION OF LABOUR

19

agement which they at present mutually afford

to each other’s in-

dustry. There could be

any kind between

little

What

the distant parts of the world. of land-carriage between

any

no commerce

or

of

goods could bear the expence

London and Calcutta?

^

Or

if

there were

^

so precious as to be able to support this expence, 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

improvements of art and industry should be

natural that the

first

made where

conveniency opens the whole world for a market to

this

the produce of every sort of labour,

much

and so the

and that they should always be

^ents are on the

later in extending 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

elvers,

round about them, and separates them from the sea-

which

lies

coast,

and the great navigable

therefore,

gable

must

for

rivers.

The

extent of their market,

a long time be in proportion to the riches and

populousness of that country, and consequently thfeirdmproveinent

must always be posterior

improvement

to the

of that country.

our North American colonies the plantations have constantly

lowed either the sea-coast or the banks of navijgable scarce

any where extended themselves

to

rivers,

any considerable

In

fol-

and have distance

from both.

The

nations that, according to the best authenticated history, ap-

pear to have been

first civilized,

coast of the Mediterranean sea.

that

is

known

were those that dwelt round the

That

in the world, having

sea,

no

by

tides,

far the greatest inlet

nor consequently any

waves except such as are caused by the wind smoothness of

its

for ex-

surface, as well as

by

only,^ was,

the multitude of

by

theancient na-

the

its islands,

terranean '

and the proximity

of its neighbouring shores, extremely favourable

to the infant navigation of the world;

the compass,

men were afraid to

when, from their ignorance nf

quit the view of the coast;

and from

the imperfection of the art of ship-building, to abandon themselves to the boisterous

Hercules, that ®

is,

waves of the ocean.

To pass beyond

the pillars of

to sail out of the Streights of Gibraltar, was, in

Playfair, op. dt., p. 30, says that equalising the out

and home voyages

goods were carried from London to Calcutta by sea at the same price (12s per cwt.) as from London to Leeds by land. ^ Ed. I reads “was.” ® Ed. I reads “carry on together a very considerable commerce.” ® This shows a curious belief in the wave-producing capacity of the tides.

the wealth of nations

20

the antient world, long considered as a

most wonderful and danger-

ous exploit of navigation. It was late before even the Phenicians and Carthaginians, the most skilful navigators those old times, attempted nations that did attempt

Improvements first took place in

Egypt,

Of

and they were

it,

and ship-builders

for

it.

the countries on the coast of the Mediterranean sea,

all

seems to have been the

of

a long time the only

first

Egypt

in which either agriculture or manufac-

and improved to any considerable degree. Upper Egypt extends itself nowhere above a few miles from the Nile,

tures were cultivated

and ent

in

Lower Egypt that great

canals,*^

river breaks itself into

which, with the assistance of a

afforded a communication

by

many

seem

little art,

many farm-houses

the Rhine

iii

have

water-carriage, not only between

the great towns, but between all the considerable villages, to

differ-

to

present.

same manner as The extent and

was probably one

of the principal

the country; nearly in the

and the Maese do in Holland at

easiness of this inland navigation

all

and even

causes of the early improvement of Egypt.

The improvements

Bengal

and China;

in agriculture

and manufactures seem

like-

wise 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

ed by any histories of whose authority we, in

is

not authenticat-

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 branches,

a multitude of

and by communicating with one another afford an inland

canals,

navigation

much more

extensive than that either of the Nile or the

Ganges, or perhaps than both of them put together. It

is

remark-

able that neither the antient Egyptians, nor the Indians, nor the

Chinese, encouraged foreign commerce, but seem all to have derived their great opulence while Africa,

Tar-

tary and Siberia,

and also

from

this inland navigation.

and all that part of Asia which lies any considerable way north of the Euxine and Caspian seas, the anAll the inland parts of Africa,

tient Scythia, the

modern Tartary and

the world to have been in the

Siberia,

seem

in all ages of

same barbarous and uncivilized state

Bavaria,

which we find them at present. The sea of Tartary

Austria

in

and Hun-

ocean which admits of no navigation, and though some of the great-

gary are backward.

est rivers in the wcrl-^

^It

is

®

Ed.

®The

I

the frozen

run through that country,^ they are at too

word has become applicable Murray, Oxford English Dictionary s.v.

only in recent times that this

to artificial channels; see

is

reads “break themselves into

real difficulty is that the

especially

^

many

canals.'*

mouths of the

rivers are in the Arctic Sea,

LIMIT OF DIVISION OF LABOUR

21

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 gulphs of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry maritime commerce into the interior parts of that great continent: 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

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; because it is always in the power of the nations who possess that other territory to obstruct besides which

the communication between the upper country and the sea.

navigation of the

Danube

is

The

of very little use to the different states

of Bavaria, Austria

be

if

any

and Hungary, in comparison of what it would of them possessed the whole of its course till it falls into

the Black Sea.^^

One of the objects of the Siberian railway is to connect them. Ed. I reads “any one” here. “ The passage corresponding to this chapter is comprised in one paragraph so that they are separated.

in Lectures, p, 172.

CHAPTER

IV

OF THE ORIGIN AND USE OF Division

MONEY

When the division of labour has been once thoroughly establishea,

of labour

but a very small part of a man’s wants which the produce of his

being es-

it is

tablished,

own labour can

every

exchanging that surplus part of the produce of his

man lives by

exchanging.

which

is

supply.

He supplies the

over and above his

far greater part of

own consumption,

by exchanging,

and the society

itself

or becomes in

grows to be what

is

own

labour,

for such parts of the

produce of other men’s labour as he has occasion thus lives

them by

for.

Every man

some measure a merchant, properly a commercial so-

ciety. Difficulties of

But when the

division of labour first

began to take place,

this

barter

power of exchanging must frequently have been very much clogged

lead to

and embarrassed in

the selection of

one commodity as money,

its

operations.

One man, we

shall suppose, has

more of a certain commodity than he himself has occasion for, while less. The former consequently would be glad to dispose

another has of,

and the

latter to purchase,

latter should

a part of this superfluity. But

if

this

chance to have nothing that the former stands in need

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. of,

But they have nothing to off?r in exchange, except the different productions of their respective trades, and the butcher is already provided with for.

No

all

the bread and beer which he has immediate occasion

exchange can, in this case, be made between them.

not be their merchant, nor they his customers;

them thus mutually

less serviceable to

and they

of labour,

first

all

times

man

in

establishment of the division

must naturally have endeavoured

such a manner, as to have at

can-

one another. In order to

avoid the inconveniency of such situations, every prudent

every period of society, after the

He

are all of

to

by him,

manage

his affairs in

besides the peculiar

produce of his own industry, a ceitain quantity of some one com22

MONEY

ORIGIN AND USE OF modity or

other, such as

23

he imagined few people would be likely

to

refuse in exchange for the produce of their industry.^

Many

different commodities,

probable, were successively

for ex-

both thought of and employed for this purpose. In the rude ages of

ample,

it

is

cattle,

society, cattle are said to

have been the

common instrument

of

com-

merce; and, though they must have been a most inconvenient one, yet in old times

number

the

we

find things

of cattle

were frequently valued according to

which had been given

The armour of Diomede, says Homer,

in

exchange for them.

cost only nine oxen

of Glaucus cost an hundred oxen.^ Salt is said to be the

but that

;

common

salt,

shells,

cod, to-

bacco, sugar, leather

and nails. in-

strument of commerce and exchanges in Abyssinia;^ a species of shells in

some parts

nies; hides or dressed leather in

some other

at this day a village in Scotland where told, for

NewfoundWest India colo-

of the coast of India; dried cod at

land; tobacco in Virginia;^ sugar in some of our

a workman to carry

countries;

and there

is

uncommon, I am money to the baker’s

not

it is

nails instead of

shop or the ale-house.®

In

all

countries, however,

mined by irresistible reasons

men seem

at last to

have been deteremploy-

to give the preference, for this

Metals were eventually

ment, 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 reunited again; a quality which no other equally

^The paragraph has a

close resemblance to Harris,

Money and

Coins, pt.

i.,

§§ I9j 20. ^ Iliad, vi.,

cap.

i.

;

236: quoted with the same object in Pliny, Hist, Nat., lib. xxxiii., De jure naturae et gentium, lib. v., cap. v., § i Martin-

Pufendorf,

;

Leake, Historical Account of English Money, 2nd ed., 1745, p. 4 and elsewhere. Montesquieu, Esprit des lois, liv. xxii., chap i., note. *W. Douglass, A Summary Historical and Political of the First Planting, Progressive Improvements and Present State of the British Settlements in North America, 1760, vol. ii., p. 364. Certain law officers' fees in Washington were still computed in tobacco in 1888.—J’. J. Lalor, Cyclopaedia of Political **

Science, 1888, s.v. ®

Money,

Playfair, ed. of

tion of this

is

p. 879.

Wealth of Nations, 1805,

vol.

p. 36, says the

i.,

explana-

that factors furnish the nailers with materials, and during the

time they are working give them a credit for bread, cheese and chandlery goods, which they pay for in nails when the iron is worked up. The fact that nails are metal is forgotten at the beginning of the next paragraph in the text above. ®

lib.

For ii.,

earlier theories as to these reasons see Grotius,

cap.

xii., §

De

jure belli et pads,

17; Pufendorf, De jure naturae et gentium, lib. v., cap. i., § Considerations, 2nd ed., 1696, p. 31 Law, Money and Trade,

Locke, Some i.; Hutcheson, System of Moral Philosophy, 1755, vol. ii., pp. 55, $6; Montesquieu, Esprit des lois, liv. xxii., ch. ii. Cantillon, Essai sur la Nature du Commerce en giniral, 1755, pp. 153, 3 SS- 3 S 7 Harris, Money and Coins, 13

;

;

1705, ch.

;

;

pt.

i.,

§§ 22-27, and cp. Lectures, pp. 182-185.

preferred

because durable

and ible.

divis-

H

THE WEALTH OF NATIONS

durable commodities possess, and which more than any other quality renders

them

fit

to

be the instruments of commerce and circula-

The man who wanted

tion.

buy

to

salt, for

ing but cattle to give in exchange for

buy

whole

salt to the value of a

buy less than

could seldom

this,

it,

example, and had noth-

must have been obliged

a whole sheep, at a time.

ox, or

to

He

because what he was to give for

could seldom be divided without loss; and

if

it

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,

two or three sheep.

or of

If,

he had metals to give

en,

on the contrary, instead of sheep or ox-

in exchange for

he could

it,

easily propor-

tion the quantity of the metal to the precise quantity of the

modity which he had immediate occasion

and silver,

made use of by different nations for common instrument of commerce among

Different metals have been

Iron, copper, gold

com-

for.

this purpose.

Iron was the

among

the antient Spartans; copper

and were at

silver

among

all rich

Those metals seem

originally to

Romans; and gold

the antient

and commercial

nations.

have been made use of for

this

first

used in un-

purpose in rude bars, without any stamp or coinage. Thus we are

stamped

told

bars,

that,

by Pliny,'^ upon till

the authority of Timaeus, an antient historian,

Romans had no

the time of Servius Tullius, the

coined

money, but made use of unstamped bars of copper, to purchase whatever they had occasion

formed at

The

for.

These rude bars, therefore, per-

this time the function of

money.

was attended with two very

and afterwards stamped to show

and, secondly, with that ® of assaying them. In the precious metals,

quantity

where a small difference in the quantity makes a great difference in

and fineness;

use of metals in this rude state

considerable inconveniencies;

first

with the trouble of weighing;

^

the value, even the business of weighing, with proper exactness, requires at least very accurate weights

gold in particular als,

indeed, where

is

and

scales.

The weighing

a small

error

would be of

little

consequence, less

accuracy would, no doubt, be necessary. Yet we should find cessively troublesome,

to

buy

or sell

the farthing.

more

if

every time a poor

man had

The operation

of assaying

is still

tedious, and, unless a part of the metal

^Plin. Hist. Nat. lib. 33. cap. 3. “Servius rex

I

does not contain the note. I reads “weighing them.”

Ed.

occasion either

is

more

difficult, still

fairly

melted in the

primus signavit aes. Antea of one Remeus, an

Romae Timaeus tradit.” Ed. i reads “authority author,” Remeus being the reading in the edition

library, cp. Bonar’s Catalogue of the Library of ®

ex-

any conclusion that can be drawn

rudi uses

Ed.

it

a farthing’s worth of goods, he was obliged to weigh

crucible, with proper dissolvents,

antient

of

an operation of some nicety. In the coarser met-

®

Ed.

I

Adam

of Pliny in Smith’s Smith, 1894, p- 87.

reads “with the trouble.’

ORIGIN AND USE OF from

is

it,

MONEY

25

extremely uncertain. Before the institution of coined

money, however, unless they went through operation, people

this tedious

must always have been

frauds and impositions, and instead of

and

difficult

liable to the grossest

a pound weight

of pure

sil-

pure copper, might receive in exchange for their goods, an

ver, or

adulterated composition of the coarsest and cheapest materials,

which had, however,

in their

outward appearance, been made to

semble those metals. To prevent such abuses, to

facilitate

re-

ex-

changes, and thereby to encourage aU sorts of industry and comit had 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

merce,

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 stampmasters of woollen and linen cloth.^^ All of them are equally meant to ascertain, by means of a public stamp, the quantity and uniform goodness of those different commodities those countries

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

sterl-

mark which is at present affixed to plate and bars of silver, or the Spanish mark which is sometimes a^ed to ingots of gold, and which being struck only upon one side of the piece, and not cover-

ing

ing 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

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

as ingots of gold

and bars

field of

of silver are at present.

Machpelah.^^

manner

The revenues

of

the antient 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.

Aristotle, Politics, 1257a, 38-41; quoted by Pufendorf, De jure naturae gentium, Hb. v,, cap. i., § 12. “•The aulnager measur^ woollen doth in England under 25 Ed. III., st. 4, c. I. See John Smith, Chronicon Rusticum-Commerciale or Memoirs of Wool, 1747, vol, i., p. 37. The stampmasters of linen cloth in the linen districts of Scotland were appointed under 10 Ann., c. 21, to prevent “divers abuses and

et

late years been used in the manufacturies of linen with respect to the lengths, breadths and unequal sorting of yarn, leads to the great debasing and undervaluing of the said linen cloth both at home and in foreign parts.”—Statutes of the Realm, vol. ix., p. 682. ” Genesis xxiii. 16.

which “have of

deceits”

doth which

.

.

.

stamps to

intro-

duced ’

the wealth of nations

26

William the Conqueror introduced the custom of paying them in

money

This money, however, was, for a long time, received at

by weight and not by tale.^^ The inconveniency and difficulty of weighing those metals with

the exchequer,

and coinage to

show

exactness gave occasion to the institution of coins, of which the

weight

stamp, covering entirely both sides of the piece and sometimes the

later.

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

The names of

of those coins

seem

originally to

have ex-

pressed the weight or quantity of metal contained in them. In the

coins originally

expressed their

weight.

who first coined money at Rome,^” the Roman As or Pondo contained a Roman pound of good copper. It was

time of Servius Tullius,

manner

divided in the same

as our Troyes pound, into twelve

ounces, each of which contained a real ounce of good copper.

The

English pound sterling in the time of Edward L, contained a pound,

Tower

known

weight, of silver of a

fineness.

seems to have been something more than the something

less

last was not introduced Henry VIII. The French

than the Troyes pound. This

into the mint of

England

livre contained in the

of silver of

The Tower pound Roman pound, and

till

the i8th of

time of Charlemagne a pound, Troyes weight,

a known fineness. The

at that time frequented

by

all

fair of

Troyes in Champaign was

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,

a

French, and Scots pennies too, contained

pennyweight of

real

silver, the

all

of

them originally

twentieth part of an ounce, and

The shilling too denomination of a weight. When

the two-hundred-and-fortieth part of a pound.

seems originally

wheat

is at

to

have been the

twelve shillings the quarter, says an antient statute of

Henry III. then wastel bread of a farthing shall weigh eleven ings and four pence}^ The proportion, however, between the “ “King William firmes which

till

shillshill-

the First, for the better pay of his warriors, caused the had for the most part been answered in victuals, to

his time

be converted in peemiam numeratam.^^—tomidcs, Report containing an Essay for the

Amendment

of the Silver Coins, 1695, P* 4-

Hume, whom Adam

Smith often follows, makes no such absurd statement, History, ed. of 1773, vol.

i.,

pp. 225, 226.

“ Lowndes, The ^

giiming,

“ Above, p. 24. Essay, p. 4. Assize of Bread and Ale, 51 Hen. III., contains an elaborate scale be“When a

quarter of wheat

farthing shall weigh vi

is sold

for xii d. then wastel bread of a

and xvi s.” and goes on to the figures quoted in the text above. The statute is quoted at second-hand from Martin Folkes’ Table of English Silver Coins with the same object by Harris, Essay upon Money 1.

ORIGIN AND USE OF

MONEY

27

ing 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. During the first race of the kings of France, the French sou or shilling appears upon different occasions to have contained five, twelve, twenty, and forty pennies.^’^ Among the antient 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 antient 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 uniformly the same as at present, though the value of each has been very different. For in every country 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 reduced 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 to 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 always proved favourable to the debtor, and ruinous to the and Coins, pt. i., § 29, but Harris does not go far enough in the scale to bring in the penny as a weight. As to this scale see below, pp. 178, 182, 183. Ed. I reads “twenty, forty and forty-eight pennies.” Gamier, Recherches sur la nature et les causes de la richesse des nations, par Adam Smith, 1802, tom.

V., p. ss, in

a note on this passage says that the sou was always twelve

deniers.

^®Hume, History of England, ed. of 1773, i., p. 226. Fleetwood, Chronicon Preciosum, 1707, p. 30. These authorities say there were 48 shillings in the pound, so that 240 pence would still make £1. Harris, Money and Coins, pt. i., § 29. “It is thought that soon after the Conquest a pound sterling was divided into twenty shillings.” ^Hume, History of England, ed. of 1773, vol. i., p. 227, Pliny, Hist. Nat., lib. xxxiii., cap. iii.; see below, pp. 883, 884. Harris, Money and Coins, p. i., § 30, note, makes the French livre about one seventieth part of its original value.

—

the wealth of nations

28

and have sometimes produced a greater and more univerrevolution in the fortunes of private persons, than could have

creditor, sal

been occasioned by a very great public calamity

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 anIt is in this

other

The next inquiry

is

what rules determine exchangeable value.

What them

are the rules which

either for

money

men

naturally observe in exchanging

or for one another, I shall

examine. These rules determine what

may be

now proceed

to

called the relative or

exchangeable value of goods.

The word value, it

is

two different meanings, some particular object, and

to be observed, has

and sometimes expresses the

utility of

Value

sometimes the power of purchasing other goods which the posses-

may mean

sion of that object conveys.

either

value in

the other, “value in

The one may be called ‘Value in use;” exchange.” The things which have the greatest or no value in exchange;

and on

use or

value in use have frequently

value in exchange.

the contrary, those which have the greatest value in exchange have

frequently ter:

but

had

in

it

little or

will

little

no value in

use.

Nothing

is

more useful than wa-

purchase scarce any thing; scarce any thing can be

exchange for

it.

A

diamond, on the contrary, has scarce any

value in use; but a very great quantity of other goods

quently be had in exchange for Three questions, (i) where-

in consists

the

real

price of

commodi-

may

fre-

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.

ties,

^The subject of debased and depreciated coinage occurs again below, pp. 35 j i94> 516-522, 882-886. One of the reasons why gold and silver became the most usual forms of money is dealt with below, pp. 171, 172. See Coin and Money

in the index.

®*In Lectures, pp. 182-190, where much of this chapter is to be found, money is considered “first as the measure of value and then as the medium of

Money is said to have had its origin in the fact upon one commodity with which to compare the value of all other commodities. When this commodity was once selected it becafne the medium of exchange. In this chapter money comes into use from the first as a medium of exchange, and its use as a measure of value is not mentioned. The next chapter explains that it is vulgarly used as a measure of value because it is used as an instrument of commerce or medium of exchange. ^Lectures, p. 157. Law, Money and Trade, 1705, ch. i. (followed by Harris, Money and Coins, pt. i., § 3), contrasts the value of water with that of diamonds. The cheapness of water is referred to by Plato, Euthydem, 304 B., quoted by Pufendorf, De jure naturce et gentium, lib. v., cap. i., § 6; cp. Barpermutation or exchange.” that

men

naturally

fell

beyrac’s note on § 4.

MONEY

29

are the different circumstances

which some-

ORIGIN AND USE OF And,

lastly,

what

times raise some or

all of

these different parts of price above,

sometimes sink them below

their natural or ordinary rate; or,

are the causes which sometimes hinder the market price, that

actual price of commodities, from coinciding exactly with

be called their natural I shall

and

what

is,

the

what may

what

(2)

are the different

parts of this price,

(3)

why

the mar-

ket price

price.

endeavour to explain, as fully and distinctly as I can, those

sometimes diverges

three subjects in the three following chapters, for which I

must very

earnestly entreat both the patience and attention of the reader: his

may

patience in order to examine a detail which places appear unnecessarily tedious;

and

understand what may, perhaps, after the

am

capable of giving of

it,

appear

still

in

am

his attention in order to

fullest explication

which I

some degree obscure.

I

am

perspicuous; and after taking the utmost pains that

I can to be perspicuous,

upon a subject

in its

some obscurity may

still

own nature extremely

“ Ed.

I

reads “subject which

appear to remain

abstracted.

is.”

this

perhaps in some

always willing to run some hazard of being tedious in order to be sure that I

from price,

will be answered

in the

next three chapters.

CHAPTER V OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY Labour is the real

measure

Every man

human

change-

taken place,

value,

rich or poor according to the degree in

afford to enjoy the necessaries,

of ex-

able

is

own

But

life.^

it is

which he can

conveniencies; and amusements of

after the division of labour

has once thoroughly

but a very small part of these with which a man’s

The

labour can supply him.

far greater part of

derive from the labour of other people,

them he must

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

or

consume

it

who

possesses

himself, but to exchange

equal to the quantity of labour which

command. Labour, able value of

and the first

price

paid for all things.

all

therefore,

is

and who means not

it,

it

it

to use

for other commodities, is

enables

him

to purchase or

the real measure of the exchange-

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 acquired it, and who wants

to dispose of it or

the toil and trouble which

it

impose upon other people.

exchange

it

for

something

can save to himself, and which

What

purchased by labour, ^ as

is

else, is it

can

bought with money or with

much

as what

we

by the

goods

is

toil of

our

own body. That money or those goods indeed save us this

They

contain the value of a certain quantity of labour which

toil.

we exchange

for

what

is

acquire

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 ex^

“La richesse en elle-meme n’est autre chose que la nourriture, les commodit^s et les agrements de la vie ”#-Cantillon, Essaz, pp. i, 2. ® “Everything in the world is purchased by labour.’'—Hume, “Of Commerce,” in Political Discourses^ 1752, p. 12.

REAL AND NOMINAL PRICE change

it

for

some new productions,

tity of labour

which

it

is

3i

precisely equal to the quan-

can enable them to purchase or command.

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 military. His for-

tune may, perhaps, af ord him the means of acquiring both, but the

Wealth is power of purchasing la-

bour.

mere possession of that fortune does not necessarily convey to him either. The power which that possession immediately and directly conveys to him,

is

the power of purchasing; a certain

the labour, or over

all

market. His fortune

all

command over

the produce of labour which is then in the

is greater or less, precisely in

proportion to the

extent of this power; or to the quantity either of other men’s labour,

what

or,

which

it

is

the same thing, of the produce of other men’s labour,

enables

him

to

purchase or command. The exchangeable

value of every thing must always be precisely equal to the extent of

power which it conveys to its owner But though labour be the real measure

this

of

all

commodities,

estimated. It

two

is

it is

not that

by which

work

their value is

commonly

often difficult to ascertain the proportion between

different quantities of labour.

sorts of

of the exchangeable value

will not

The time spent

in

two

different

always alone determine this proportion.

The

and of ingenuity 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 different degrees of hardship endured,

application to a trade which

it

not

commonly esti-

mated by labour,

because labour is difficult

to

mea-

sure,

cost ten years labour to learn, than in

a month’s industry at an ordinary and obvious employment. But is

But value is

it

not easy to find any accurate measure either of hardship or inge-

nuity. In exchanging indeed the different productions of different sorts of labour for

for both. It

is

one another, some allowance

adjusted, however, not

by the higgling and bargaining

of the

by any

is

commonly made

accurate measure, but

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,

therefore, to estimate its exchangeable value

and commodities

thereby compared with, other commodities than with labour.

more natural

and It is

by the

quantity of some other commodity than by that of the labour which

are more frequently

exchanged for other

can purchase. The greater part of people too understand better

it

commodities,

procureth friends and servants; without liberality not so, because in this case they defend not Leviathan, L, x. but expose men to envy as a *This paragraph appears first in Additions and Corrections and ed. 3 '^“Also riches joined with liberality is

Power, because

it

.

®

The absence

chap. X.

is

of

curious.

any reference to the lengthy discussion of

this subject in

THE WEALTH OF NATIONS

32

what

is

meant by a quantity of a particular commodity, than by a The one is a plain palpable object; the other an

quantity of labour.

abstract notion, which, though

it

gible, is not altogether so natural especially

money, which is therefore

more frequently used in

es-

timating

But when barter

ceases,

can be made sufficiently

intelli-

and obvious.

and money has become the common inis more fre-

strument of commerce, every particular commodity

money than

quently exchanged for

for

any other commodity. The

butcher seldom carries his beef or his mutton to the baker, or the brewer, in order to exchange them for bread or for beer; but he carries

them

to the market,

where he exchanges them for money, and

value.

afterwards exchanges that tity of

money which he

money for bread and

gets for

them

for beer.

regulates too the quantity of

bread and beer which he can afterwards purchase. It al

and obvious

The quan-

is

more natur-

him, therefore, to estimate their value by the

to

quantity of money, the commodity for which he immediately ex-

changes them, than by that of bread and beer, the commodities for

which he can exchange them only by the intervention of another

commodity; and rather

to

say that his butcher’s meat

threepence or fourpence a pound, than that

it is

is

worth

worth three or four

pounds of bread, or three or four quarts of small beer, Hence

it

commodity

is

comes

to pass, that the exchangeable value of every

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. But gold and silver vary in

Gold and

silver,

their value, are

however, like every other commodity, vary in

sometimes cheaper and sometimes dearer, some>

value,

times of easier and sometimes of more difficult purchase.

sometimes

tity of labour

costing

more and sometimes less la-

The quan-

which any particular quantity of them can purchase

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 or

bour,

whereas

made. The discovery of the abundant mines of America reduced,

equal la-

the sixteenth century, the value of gold and silver in Europe to

bour

al-

ways means equal sacrifice

to

the labourer,

about a third of what

it

had been

before.®

As

it

in

cost less labour to

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

bring those metals from the mine to the market, so ^

measure of quantity, such as the natural

which

is

continually varying in its

own

foot,

fathom, or handful,

quantity, can never be

accurate measure of the quantity of other things; so a

*

Below,

p. 191.

^

Ed.

I

reads “there.’

an

commodity

REAL AND NOMINAL PRICE which

is itself

continually varying in

its

33

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

happiness.

ever

liberty,

and

his

The price which he pays must always be the same, what-

may be

Of

it.

he must

dexterity,®

always lay down the same portion of his ease, his

the quantity of goods which he receives in return for

these, indeed, it

may sometimes purchase a greater and some-

times a smaller quantity; but

it is

their value

which

varies, not that

At all times and places that is come at, or which it costs much labour to cheap which is to be had easily, or with very little

of the labour which purchases them.

dear which acquire labour.

;

it is difficult

and that

Labour

to

alone, therefore, never varying in its

own

value, is

alone the ultimate and real standard by which the value of modities can at

com-

times and places be estimated and compared. It

all

is their real price;

all

money is

But though equal

their

nominal price only.

quantities of labour are always of equal value

to the labourer, yet to the person

who employs him they appear

sometimes to be of greater and sometimes of smaller value.

He pur-

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 chases

cheap in the other. In

reality,

however,

although the employer regards la-

bour as varying in value.

the goods which are

it is

cheap in the one case, and dear in the other.

may

So regard-

may be said

ed, labour

In this popular sense, therefore, labour, like commodities,

be said

to

have a real and a nominal

price. Its real price

to consist in the quantity of the necessaries life

which are given for

money. The labourer

it;

is rich

its

nominal

or poor,

is

and conveniencies of

price, in the quantity of

well or

ill

rewarded, in pro-

has a real and a

nominal price.

portion to the real, not to the nominal price of his labour.

The

distinction

between the

modities and labour,

is

and the nominal price

real

of

not a matter of mere speculation, but

com-

The dis-

may

tinction

sometimes be of considerable use in practice. The same real price

between is

always of the same value; but on account of the variations in the value of gold and

silver,

very different values.

a reservation

of

the same nominal price

When

a perpetual rent,

whose favour

it is

if it is it is

reserved, that

it

Ed.

®

The words from “In

first in ed. 2 .

and

useful in is

sold with

intended that this rent

of importance to the fam-

should not consist in a par-

reads ‘Tqual quantities of labour must at all times and places be.” his ordinary state of health” to “dexterity” appear

*

I

sometimes of

a landed estate, therefore,

should always be of the same value, ily in

is

real

nominal is sometimes practice,

THE WEALTH OF NATIONS

34 ticular

sum

riations of

of

money

two

Its value

would

in this case be liable to va-

different kinds; first, to those

different quantities of gold

and

silver

which

arise

from the

which are contained at

differ-

ent 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

since the

amount of metal in

had a temporary

interest to diminish the quantity of pure metal

coins

contained in their coins; but they seldom have fancied that they

tends to

had any to augment

diminish,

it.

The

quantity of metal contained in the

coins, I believe of all nations, has, accordingly,

been almost contin-

ually diminishing, and hardly ever augmenting.^^ Such variations therefore tend almost always to diminish the value of a

money

rent.

and the value of gold and silver to

The

discovery of the mines of America diminished the value of

gold and silver in Europe. This diminution,

commonly sup-

posed, though I apprehend without any certain proof,

on gradually,^- and

fall.

it is

Upon

this supposition, therefore,

diminish, than to it

is likely to continue to

is still

going

do so for a long time.

such variations are more likely to

augment the value of a money

rent,

even though

should be stipulated to be paid, not in such a quantity of coined

money

of such a denomination (in so

ample) but in so ,

many ounces either

many pounds

sterling, for ex-

of pure silver, or of silver of a

certain standard. English rents re-

served in

The rents which have been reserved in corn have preserved their value much better than those which have been reserved in money,

money

even where the denomination of the coin has not been altered.

have

the

fal-

1 8th

of Elizabeth

it

was enacted, That a third

By

of the rent of

len to a all college leases

should be reserved in corn, to be paid, either in

“Be above all things careful how you make any composition or agreement any long space of years to receive a certain price of money for the corn that is due to you, although for the present it may seem a tempting bargain.” —Fleetwood, Chronicon Predosum, p. 174. ^ Above, pp. 26-27. ^ Below, pp. 215-217. “ C. 6, which applies to Oxford, Cambridge, Winchester and Eton, and provides that no college shall make any lease for lives or years of tithes, arable land or pasture without securing that at least one-third of “tholde” (presumably the whole not the old) rent should be paid in coin. The Act was promoted by Sir Thomas Smith to the astonishment, it is said, of his fellow-members of Parliament, who could not see what difference it would make. “But the knight took the advantage of the present cheapness; knowing hereafter grain for

would grow dearer, mankind daily multiplying, and licence being lately given for transportation. So that at this day much emolument redoundeth to the colleges in each university, by the passing of this Act; and though their rents stand

still, their revenues do increase.”—Fuller, HisU of the University of Cambridge, 1655, p. 144, quoted in Strype, Life of the learned Sir Thomas Smith, 1698, p. 192.

REAL AND NOMINAL PRICE

35

kind, or according to the current prices at the nearest public market.

The money

arising

from

this corn rent,

fourth

though originally but a ^

third of the whole,

Doctor

in the present times, according to

is

commonly near double of what arises from the other two-thirds.^^ The old money rents of colleges must, according to Blackstone,

this account,

have sunk almost 'to a fourth part of their ancient

value; or are worth

more than a fourth part of the corn which

little

they were formerly worth. But since the reign of Philip and the denomination of the English coin has undergone

and the same number

teration,

of pounds, shillings

contained very nearly the same quantity of pure

money

dation, therefore, in the value of the

little

Mary

or no

al-

and pence have

silver.

This degra-

rents of colleges, has

arisen altogether from the degradation in the value of silver.

When

the degradation in the value of silver

diminution of the quantity of denomination, the loss

is

it

tions than it ever did in England, still

greater than

it

combined with the

French

greater altera-

rents al-

and in France, where it has under-

nothing,

much

ever did in Scotland,^®

originally of considerable value,

and simi-

contained in the coin of the same

frequently still greater. In Scotland, where

the denomination of the coin has undergone

gone

is

have

in this

some ancient

rents,

manner been reduced

almost to nothing.

Equal quantities of labour

more nearly with equal

will at distant times

bourer, than with equal quantities of gold

and

any other commodity. Equal quantities of distant times, be

be purchased

more nearly

of the

same

silver,

or perhaps of

real value, or enable the

command more nearly other people. They will do this,

the same quantity

of the labour of

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 hereafter,^®

is

very different upon different occasions; more

liberal in

a society advancing to opulence, than in one that

ing

and

still;

in

one that

is

standing

still,

than in one that

is

stand-

is

going

backwards. Every other commodity, however, will at any particular

time purchase a greater or smaller quantity of labour in propor-

tion to the quantity of subsistence

time.

A

which

rent therefore reserved in corn

tions in the quantity of labour

is

it

can purchase at that

liable only to the varia-

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 Commentaries,

“Above,

p. 27.

vol.

ii.,

p. 322.

“ Below,

stable

corn, therefore, will, at

possessor to purchase or

show

Corn

quantities of corn, the subsistence of the la-

pp. 69-73.

^nts7

the wealth of nations

36

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. but to

Though

liable

much

the real value of a corn rent,

ever, varies

larger an-

be observed how-

to

much less from century to century than that of a money much more from year to year. The money price of la-

varies

nual vari-

rent,

ations.

bour, as I shall endeavour to

it

it is

show

hereafter,^^ does not fluctuate

from year to year with the money price of corn, but seems to be every where accommodated, not to the temporary or occasional, but to the average or ordinary price of that necessary of average or ordinary price of corn again

is

by the value

wise endeavour to show hereafter,^®

life.

The

regulated, as I shall likeof silver,

by

the

richness or barrenness of the mines which supply the market with

by the quantity of labour which must be employed, and consequently of corn which must be consumed, in order to from the mine to the marbring any particular quantity of silver that metal, or

ket.

But the value

though

of silver,

century to century, seldom varies

it

sometimes varies greatly from

much from year

to year,

but

fre-

quently continues the same, or very nearly the same, for half a century or a century together. corn, therefore,

The ordinary

or average

money

price of

may, during so long a period, continue the same or

very nearly the same too, and along with

the

it

money

price of la-

bour, provided, at least, the society continues, in other respects, in

the same or nearly in the same condition. In the

porary and occasional price of corn year, of

from is

what

five

it

may

frequently be double, one

had been the year before, or

and twenty to

fifty shillings

mean time the tem-

fluctuate, for example,

the quarter.^® But

when com

at the latter price, not only the nominal, but the real value of a

corn rent will be double of what

command double the

it is

when

at the former, or will

quantity either of labour or of the greater part

of other commodities; the

money

price of labour,

that of most other things, continuing the

and along with

same during

it

all these fluc-

tuations. so that labour is

the only universal

standard.

Labour, therefore,

it

appears evidently,

well as the only accurate

is

the only universal, as

measure of value, or the only standard by

which we can compare the values of different commodities at times and at

all places.

We

cannot estimate,

it is

allowed, the real

value of different commodities from century to century quantities of silver it

which were given

for them.

from year to year by the quantities of com.

labour

we

Below, chap,

“ Ed.

I

xi,

by the

We cannot estimate By the

can, with the greatest accuracy, estimate

Below, pp. 74, 85, 86. I reads “it”

'®Ed.

all

quantities of it

both from

see esp. p. 191.

places the “for example” here.

REAL AND NOMINAL PRICE century to century and from year to year. corn

is

a better measure than

silver,

tury, equal quantities of corn will

37

From century to century,

because from century to cen-

command

the

labour more nearly than equal quantities of

same quantity

silver.

From

of

year to

year, on the contrary, silver is a better measure than corn, because

equal quantities of of labour

will

it

more nearly command the same quantity

,21

But though

in establishing perpetual rents, or

even in letting very

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. long leases,

But in or-

it

At the same time and place the

real

and the nominal price

tions

money is

of all

commodities are exactly in proportion to one another. The more or less

money you

get for

example, the more or

any commodity, in the London market,

less

labour

it will

at that time

you to purchase or command. At the same time and

able

therefore,

value of

money

all

is

for

and place enplace,

the exact measure of the real exchangeable

commodities. It

is so,

fectly ac-

curate at

time and place,

however, at the same time and

place only.

Though

at distant places, there

the real and the

for

money

no regular proportion between

money price of commodities,

yet the merchant

to

price, or the difference between the quantity of silver

which he buys them, and that for which he

Half an ounce of

silver at

Canton in China

is

likely to sell them.

may command a greater

quantity both of labour and of the necessaries and conveniencies of life,

than an ounce at London.

for half

an ounce of

silver at

A

commodity, therefore, which

Canton

sells

may there be really dearer,

of

England and this part of the world, wheat being the constant and most general food, not altering with the fashion, not growing by chance: but as the farmers sow more or less of it, which they endeavour to proportion, as near as can be guessed to the consumption, abstracting the overplus of the precedent year in their provision for the next; and vice versa, it must needs fall out that it keeps the nearest proportion to its consumption (which is more studied and designed in this than other commodities) of anything, if you take it for seven or twenty years together: though perhaps the scarcity of one year, caused by the accidents of the season, may very much vary it from the immediately precedent or following. Wheat, therefore, in this part of the world (and that grain which is the constant general food of any other country) is the fittest measure to judge of the altered value of things in any long tract of time: and therefore wheat here, rice in Turkey, etc., is the fittest thing to reserve a rent in, which is designed to be constantly the same for all future ages. But money is the best measure of the altered value of things in a few years: because its vent is the same and its quantity alters slowly.^ But wheat, or any other grain, cannot serve instead of money: because of its bulkiness and too quick change of its quantity.” ^Locke, Some Considerations of the Consequences of the Lowering of Interest and Raising the Value of Money,

—

ed. of 1696, pp. 74, 75.

and the

who

from the one to the other has nothing to consider but

carries goods their

is

sidered in

transac-

tween^S?tant

the wealth of nations

3S

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 London 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

was London exmuch as if an ounce same value as at Canton. It is of no importance to him that half an ounce of silver at Canton would have given him the at

of silver

the bargain, just as actly of the

command

of more labour and of a greater quantity of the necesand conveniences 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.

saries

So it is no wonder

As

it is

the nominal or

finally determines the

money

price of goods, therefore,

prudence or imprudence of

all

which

purchases and

that

and thereby regulates almost the whole business of common

money

sales,

price has

life in

been more attended

have been so much more attended to than the

prices will

sometimes be used.

is

In such a work as

to.

In this work corn

which price

concerned,

this,

we cannot wonder

however,

it

compare the

different real values of

ferent times

and

so

who possessed

it

should

real price.

a particular commodity at

may, upon

it.

it

sometimes be of use to

places, or the different degrees of

labour of other people which given to those

may

that

have

different occasions,

We must in this

dif-

power over the

case compare, not

much the different quantities of silver for which it was commonly

sold, as the different quantities of

quantities of silver could

labour which those different

have purchased. But the current prices of

labour at distant times and places can scarce ever be

known

any degree of exactness. Those of corn, though they have places been regularly recorded, are in general better

with

in few

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 nearest approximation

commonly be had to Several

metals

have been

to that proportion. I shall hereafter

which can

have occasion

make several comparisons of this kind.^^ In the progress of industry, commercial nations have found

it

convenient to coin several different metals into money; gold for

coined,

larger payments, silver for purchases of

but only one is used as

per, or

the stan-

more peculiarly the measure of value than any of the other two and

tion.

some other coarse metal,

They have

moderate value, and cop-

for those of

still

smaller considera-

always, however, considered one of those metals as ;

“ Ed. I reads “than one which ^ Below, chap. xi. passim.

sells

for an ounce at

London

to.’

REAL AND NOMINAL PRICE this preference

39

seems generally to have been given to the metal

which they happened

first

make use

to

of as

the instrument of com-

merce. Having once begun to use it as their standard, which they must have done when they had no other money, they have generally

within five years before the

Punic

first

war,^’^

to

have been kept, and the value of

ed, either in Asses or in Sestertii,

when they first began

tion of a copper coin. half.

Though

coin, its value

The word

At Rome all accounts appear

all estates to

Sestertius signifies

therefore,

was estimated

in copper.

was

Romans used as the

copper,

have been comput-

The As was always

the Sestertius

used in

till

to coin silver. Copper, therefore, appears to have continued always

the measure of value in that republic.

ally the

merce,

had nothing but copper money

are said to have

first

that usu-

com-

continued to do so even when the necessity was not the same.

The Romans

dard, and

one

the denomina-

two

^45^65

and a

a

silver

originally

At Rome, one who owed a

great deal of money, was said to have a great deal of other people's copper.2®

The northern of the

Roman

nations

who

established themselves

had

silver

first

copper coins for several ages thereafter. There were

England till

ruins

money from the and not to have known either gold or

empire, seem to have

beginning of their settlements,

upon the

silver coins in

and modern

European nations silver

but there was little gold coined any copper till that of James I. of In England, therefore, and for the same reason, I be-

in the time of the Saxons;

the time of

Great Britain. lieve, in all

Edward

III. nor

other modern nations of Europe,

all

accounts are kept,

all goods and of all estates is generally computed and when we mean to express the amount of a person's we seldom mention the number of guineas, but the number

and the value of in silver:

fortune, of

pounds

which we suppose would be given for

sterling

Originally, in all countries, I believe,

could

be made only

a

legal tender of

in the coin of that metal,^^

liarly considered as the

it.

payment

which was pecu-

standard or measure of value. In England,

was gold and

gold was not considered as a legal tender for a long time after

it

The proportion between the values of silver money was not fixed by any public law or proclamation; 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 coined into money.

accept of

it

at such a valuation of the gold as

could agree upon. Copper

is

he and

his debtor

not at present a legal tender, except in

the change of the smaller silver coins. In this state of things the dis-

Pliny,

lib. xxxiii.

c 3 . This note is not in ed.

^ Eds. I and 2 read “always ^Ed. I does not contain “sterling.” ^ Ed. I places the “only” here.

i.

^ Habere aes alienum ^Ed. i places the “originally”

here.

The standard metal originally

was the only legal tender,

THE WEALTH OF NATIONS

40

between the metal which was the standard, and that which

linction

was not the standard, was something more than a nominal

distinc-

tion. later the

In process of time, and as people became gradually more familiar

proportion between the

with the use of the different metals in coin, and consequently better

values of

has in most countries, I believe, been found convenient to ascertain

the two metals

acquainted with the proportion between their respective values,

this proportion,

and to declare by a public law

it

that a guinea, for

is

declared

example, of such a weight and fineness, should exchange for one-

by law, and both

and-twenty

or be a legal tender tor a debt of that

shillings,

and during the continuance of any

are legal

amount.^’- In this state of things,

tender,

one regulated proportion of this kind, the distinction between the

the dis-

metal which

is

the standard, and that which

not the standard, be-

is

tinction

between

them

comes

little

more than a nominal

ceasing to

be of im-

distinction.^^

In consequence of any change, however, in this regulated proportion, this distinction

becomes, or at least seems to become, some-

portance,

thing more than nominal again. If the regulated value of a guinea,

except

twenty

for example,

when a change is

was

either reduced to twenty, or raised to two-and-

accounts being kept and almost

shillings, all

for debt being expressed in silver

all obligations

money, the greater part of pay-

made in

ments could in either case be made with the same quantity of

the regu-

money as before; but would require very different quantities of gold

lated pro-

portion.

money; a greater

in the

silver

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.

depend upon the quantity of

and the value

of silver

of gold which

it

The value which

silver

would seem

would exchange

to

for;

would not seem to depend upon the quantity

would exchange

for.

This difference, however,

would be altogether owing to the custom of expressing the

it

of gold

amount

of keeping accounts,

and small sums rather

of all great

and

in silver

^The

Act, 19 Hen. VII., c. S, ordered that certain gold coins should pass sums for which they were coined, and 5 and 6 Ed. VI, prescribed penalties for giving or taking more than was warranted by proclamation. The value of the guinea was supposed to be fixed by the proclamation of 1717, for which see Economic Journal, March, 1898. Lead tokens were coined by individuaJs in the reign of Elizabeth, James 1 coined copper farthing tokens, but abstdned from proclaiming them as money of that value. In 1672 copper halfpennies were issued, and both halfpennies and farthings were ordered to pass as money of those values in all payments under sixpence.—Harris, Money md Coins, pt. i., § 39; Liverpool, Treatise on the Coins of the Realm, 1803, pp, for the

.

130, 131.

®^Ed,

I if

reads “sum.” 21

pounds

may

eas it does not matter

or I? of a gold guinea.

be paid with 420 silver shillings or with gold guinwhether a “pound” properly signifies 20 silver shillings

REAL AND NOMINAL PRICE

4i

than in gold money. One of Mr. Drummond’s notes for five-andtwenty 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

more invariable

in its value

ure the value of

silver,

of such a note, gold

and

than

silver.

silver

would appear

to

be

Gold would appear to meas-

would not appear

measure the

to

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

would be consid-

silver,

ered as the metal which was peculiarly the standard or measure of value.

In tion,

reality,

during the continuance of any one regulated propor-

between the respective values of the

different metals in coin,

During the con-

tinuance

the value of the most precious metal regulates the value of the

of a regu-

whole

lated pro-

coin.®^

Twelve copper pence contain

half

a pound, avoirdu-

portion,

pois, of copper, of

not the best quality, which, before

seldom worth seven-pence in

silver.

But

as

by

such pence are ordered to exchange for a

it is

coined,

is

the regulation twelve

shilling,

they are in the

the value of the

most precious

market considered as worth a shilling, and a shilling can be had for them. Even before the

late reformation of the gold coin

of Great Britain,^^ the gold, that part of in

London and

its

it

at least

which circulated

less

low its standard weight than the greater part of the shillings,

degraded be-

silver.

One-and-

however, were considered as

equivalent to a guinea, which perhaps, indeed, was worn and de-

faced too, but seldom so

much

so.

The

brought the gold coin as near perhaps to possible to bring the current coin of receive

serve

no gold

it so,

at the public offices

late regulations®®

its

but by weight,

same worn and degraded

have

standard weight as

any nation; and the

as long as that order is enforced.

tinues in the

is

it is

order, to

likely to pre-

The silver coin

still

con-

state as before the reforma-

tion of the gold coin. In the market, however, one-and-twenty shill-

ings of this degraded silver coin are

still

considered as worth a

guinea of this excellent gold coin.

“ This happens to have been usually, though not always, true, but it is so simply because it has usually happened that the most precious metal in use as money has been made or become the standard. Gold was already the standard in England, though the fact was not generally recognised; see Harris, Money and CoinSj pt. ii., §§ 36, 37, and below, pp. 519-522. **In 1774. These regulations, issued in 1774, provided that guineas should not pass when they had lost a certain portion of their weight, varying with their age

—

Liverpool, Coins of the Realm, p. 216, note.

metal regulates

the value of the

neighbourhood, was in general

twenty worn and defaced

any time

at

whole coinage,

as in

Great Britain,

the wealth of nations

42

where the reformation of the

gold coin has raised the value of the silver 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 fortyfour guineas and a half, which, at one-and-twenty shillings the guinea,

is

equal to forty-six pounds fourteen shillings and six-pence.

An ounce of such gold coin, therefore, is worth ^l.ij s.io^d, in silver. In

England no duty or seignorage

he who

carries

is

paid upon the coinage, and

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 ings

and ten-pence halfpenny an ounce,

therefore,

shill-

said to be the

is

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

18

s.

sum,

sometimes 3 L 19 probable, in

it is

taining

more than an ounce

of the gold coin, the

exceeds 3 coin, the

/.

1 7 5.

many years been upwards

of 3 L

and very frequently 4 1 an ounce; that the worn and degraded gold coin, seldom cons.

.

of standard gold. Since the reformation

market price of standard gold bullion seldom

7 d.

an ounce. Before the reformation

market price was always more or

less

of the gold

above the mint

price.

Since that reformation, the market price has been constantly below the mint price.

But that market

in gold or in silver coin. fore,

price

is

the

same whether

The late reformation

it is

paid

of the gold coin, there-

has raised not only the value of the gold coin, but likewise that

of the silver coin in proportion to gold bullion,

proportion to

all

and probably too

in

other commodities; though the price of the greater

part of other commodities being influenced

by

so

many

other

causes, the rise in the value either of 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 ounce, therefore,

silver.

Five shillings and two-pence an

said to be the mint price of silver in England, or

is

the quantity of silver coin which the mint gives in return for stan-

dard silver bullion. Before the reformation of the gold coin, the

market price

of'

standard silver bullion was, upon different occa-

sions, five shillings shillings

and

and four-pence,

five shillings

six-pence, five shillings

often five shillings

and five-pence,

five

and seven-pence, and very

and eight-pence an ounce. Five

seven-pence, however, seems to have been the most

shillings

common

and

price.

Since the reformation of the gold coin, the market price of standard silver bullion

has fallen occasionally to five shillings and three-

REAL AND NOMINAL PRICE pence, five shillings and four-pence,

an ounce, which

last price

market price of

silver bullion

formation of the gold coin,

it

it

and

five shillings

43

and five-pence

has scarce ever exceeded. Though the

has fallen considerably since the re-

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

rated beis

somewhat below it. In the market of Europe, in the French coin and in the Dutch coin, an ounce of fine gold exchanges for

rated

about fourteen ounces of

fine silver.

changes for about fifteen ounces, that

In the English is,

for

more

coin,

silver

it

than

Silver is

low

its

value in

England.

exit 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

not sunk by the low rate of still

preserves

its

silver in

English coin. Silver in bullion

proper proportion to gold; for the same reason

that copper in bars preserves

Upon

is

its

proper proportion to

silver.®^

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 permission of exporting silver bullion,

and to the prohibition

of exporting

Locke’s explanation of the

high price of silver bullion

silver coin.®®

This permission of exporting, he

said,

rendered the

demand for silver bullion greater than the demand for silver coin. But the number of people who want silver coin for the common uses of buying and selling 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 bullion, and a like prohibition of exporting gold coin; and yet the

But

price of gold bullion has fallen below the mint price.

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 reform-

ation of the silver coin did not then reduce the price of silver bul®®Magens, Universal Merchant, ed. Horsley, 1733, pp. 53-53, gives the proDutch, i to i to hi English, i to

portions thus: French coin,

Him

i$imi

®^Full weight silver coins would not remain m circulation, as the bullion in them was worth more reckoned in guineas and in the ordinary old and worn silver coins than the nominal amount stamped on them. Locke, Further Considerations Concerning Raising the Value of Money, 2nd ed., 1695, pp. 58-60. The exportation of foreign coin (misprinted ‘‘kind” in Pickering) or bullion of gold or silver was permitted by 15 Car. II c 7, on the ground that it was “found by experience that” money and bullion were ,

common market) to such places same” and in order “the better to keep increase the current coins” of the kingdom. “carried in greatest abundance (as to a

as give

free liberty for exporting the

in

and

wrong.

is

the wealth of NATIONS

44

mint

lion to the will If the silver coin

were

very probable that a like reformation

price, it is not

do so now.

Were

the silver coin brought back as near to

as the gold, a guinea,

it is

standard weight

its

probable, would, according to the present

re-

formed,

it

would be melted.

proportion, exchange for

The

in bullion.

would in sell

more

than

silver in coin

silver coin containing its full

this case

be a profit in melting

it

it

would purchase

standard weight, there

down,

in order, first, to

the bullion for gold coin, and afterwards to exchange this gold

down

coin for silver coin to be melted

in the

same manner. Some

alteration in the present proportion seems to be the only

method of

preventing this inconveniency. Silver

The inconveniency perhaps would be less if silver was rated in much above its proper proportion to gold as it is at pres-

ought to be rated

the coin as

higher

ent rated below

and

silver

should not be le-

guinea; in the same manner as copper

gal tender

than the change of a

for

more

it;

provided

was at the same time enacted that

it

should not be a legal tender for more than the change of a

No

shilling.

is

not a legal tender for more

creditor could in this case be

cheated in consequence of the high valuation of silver in coin; as no

than a guinea.

creditor can at present be cheated in consequence of the high valu-

ation of copper.

When

The bankers only would

suffer

by

this regulation.

a run comes upon them they sometimes endeavour to gain

time by paying in six-pences, and they would be precluded by

this

method of evading immediate

regulation from this discreditable

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 them,

it

this

might no doubt be a considerable inconveniency to

would at the same time be a considerable security to

their

creditors.^^ If it

were

properly rated,

Three pounds seventeen

shillings

and ten-pence halfpenny (the

mint price of gold) certainly does not contain, even in our present

sil-

ver bul-

excellent gold coin,

lion

may be

would fall below the

lion.

mint price without

more than an ounce

of standard gold,

and

it

thought, therefore, should not purchase more standard bul-

But gold

in coin is

more convenient than gold

though, in England, the coinage ried in bullion to the mint, can

is free,

in bullion,

yet the gold which

is

and car-

seldom be^returned in coin to the

any recoinage.

owner mint,

till

it

after a delay of several weeks.

could not be returned

This delay

is

till

after

In the present hurry of the a delay of several months.

equivalent to a small duty, and renders gold in coin

somewhat more valuable than an equal quantity of gold Harris, writing nearly twenty years earlier,

in bul-

had said, “it would be a riand vain attempt to make a standard integer of gold, whose parts should be silver; or to make a motley standard, part gold and part silver.”— Money and Coins, pt. i., § 36 diculous

.

REAL AND NOMINAL PRICE lion.^^ If in the

45

English coin silver was rated according to

its

proper

proportion to gold, the price of silver bullion would probably

below the mint price even without any reformation of the coin; the value even of the present

ing regulated

by the value

worn and defaced

fall

silver

silver coin be-

of the excellent gold coin for

which

it

can be changed.

A small seignorage or duty upon the coinage of both gold ver would probably increase

still

more the

and

sil-

superiority of those

metals in coin above an equal quantity of either of them in bullion.

The

coinage would in this case increase the value of the metal

A seignorage would prevent melting

and

dis-

coined in proportion to the extent of this small duty; for the same

courage exporta-

reason that the fashion increases the value of plate in proportion to

tion.

the price of that fashion.

would prevent the melting its

exportation. If

The superiority of coin above bullion down of the coin, and would discourage

upon any public exigency

turn again of

its

own

accord.

weight in bullion. At home

There would be a

it

Abroad

profit, therefore, in

and the French

would soon

re-

only for

its

sell

would buy more than that weight. bringing

France a seignorage of about eight per cent, coinage,

it

could

it

should become

it

necessary to export the coin, the greater part of

coin,

home again of its own accord."^^ The occasional fluctuations in

when

is

it

home

again. In

imposed upon the

exported,

is

said to return

the market price of gold and

sil-

ver bullion arise from the same causes as the like fluctuations in that of

all

other commodities.

from various accidents by sea

The frequent loss of those metals and by land, the continual waste of

them in gilding and plating, in lace and embroidery, in the wear require, in all countries and tear of coin, and in that of plate which possess no mines of

their

own, a continual importation, in

Fluctuations in

the market price of gold

and

silver

are due to

ordinary

commercial causes,

order to repair this loss and this waste. like all other merchants,

The merchant

we may believe, endeavour,

importers,

as well as they

can, to suit their occasional importations to what, they judge, likely to

be the immediate demand. With

all their attention,

it.

When

they import more bullion than

incur the risk and trouble of exporting

it

is

how-

wanted, rather than

again, they are some-

an ounce of standard gold would not actually fetch £3 17s. 10 Jd. if down. " This erroneous statement is repeated below, pp. 445, and on p. 518, where the calculations on which it is based are given. See the note on that passage.

sold for cash

The question ter

of seignorage

is

further discussed at

some length

in the chap-

in the tear

and wear of

on Commercial

Ed plate.”

Treaties, pp. 516-522. I reads “m the tear and wear of coin,

and

diver-

gence is

ever, they sometimes over-do the business, and sometimes under-

do

but steady

from mint price

due

is

to the

state of

the coin.

the wealth of nations

46

times willing to

sell

a part of

it for

something

than the ordin-

less

ary or average price. When, on the other hand, they import

than

wanted, they get something more than

is

under

all

less

But when,

this price.

those occasional fluctuations, the market price either of

gold or silver bullion continues for several years together steadily

and constantly, mint

either

more

we may be

price:

or less above, or

more or

either superiority or inferiority of price,

the effect of something

is

a certain quant-

in the state of the coin, which, at that time, renders

more value or

ity of coin either of

quantity of bullion which

below the

less

assured that this steady and constant,

it

of less value than the precise

ought to contain. The constancy and

and

steadiness of the effect, supposes a proportionable constancy steadiness in the cause.

The price of goods is

The money and

place,

adjust-

ed to the actual

contents of the

coinage

any

of

particular country

is,

any

at

particular time

more or less an accurate measure of value according as is more or less exactly agreeable to its standard, or

the current coin contains

pure

more or

silver

less exactly the precise quantity of

which

it

pure gold or

ought to contain. If in England, for example,

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 naforty-four guineas

would admit. But

ture of the thing forty-four guineas

if,

and a half generally

by rubbing and wearing, contain less than a pound

weight of standard gold; the diminution, however, being greater in

some pieces than

same

to the

in others; the

measure of value comes to be

which

sort of uncertainty to

measures are commonly exposed. As

it

all

liable

other weights and

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,

justed, not to the quantity of pure gold or silver

ought to contain, but to that which, upon an average,

by experience it

By

to

be ad-

which the coin it is

found

actually does contain.

the money-price of goods,

it is

always the quantity of pure gold or

to

be observed, I understand

silver for

which they are

sold,

without any regard to the denomination of the coin. Six shillings

and eight-pence, as the

for example, in the time of

same money-price with a pound

times; because

it

quantity of pure

contained, as nearly as silver.

Edward I,

I consider

sterling in the present

we can

judge, the

same

t

CHAPTER

VI

OF THE COMPONENT PARTS 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 propor-

Quantity of labour is

tion

between the quantities of labour necessary for acquiring

ferent objects seems to be the only circumstance

any

rule for exchanging

of hunters, for example,

beaver which

it

does to

them it

kill

for

dif-

which can afford

one another. If among a nation

origin-

ally the

only rule of value,

usually costs twice the labour to kill a

a deer, one beaver should naturally ex-

change 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

some allowance

other,

will naturally

be more severe than the

be made for

this superior

hardship; and the produce of one hour’s labour in the one

way may

Or

if

the one species of labour requires an

ents, will naturally give

for

it.

such

tal-

Such talents can

sel-

acquired buf in consequence of long application, and the

superior value of their produce

may

superior

degree of

a value to their produce, superior to what

would be due to the time employed about

dom be

uncommon

and ingenuity, the esteem which men have

made for hardship,

frequently exchange for that of two hours labour in the other.

dexterity

allowance being

and for uncom-

mon dexterity

and

ingenuity,

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

commonly made

in the

skill,

are

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

acquiring or producing any commodity, ^

Ed.

bourer

I ,

is

commonly employed

produce in

the only circumstance

does not contain “the whole produce of labour belongs to the laThe words, however, occur in all eds. at p. 64 below.

and.”

47

The whole then belongs to

the wealth oe nations

48 the labourer,

but when stock

is

used,

something must be given for

which can regulate the quantity of labour which

it

ought commonly

command, or exchange for. As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work in to purchase,

whom

dustrious people,

sistence, in order to

they will supply with materials and sub-

make a

profit

by

the sale of their work, or by

adds to the value of the materials. In exchanging

the profits

what

of the un-

the complete manufacture either for money, for labour, or for othei

dertaker,

and the value of

work resolves itself into

wages and profits.

their labour

and above what may be sufficient to pay the price of 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

goods, over

the materials,

profits of their emwhich he adand wages ployer upon vanced. 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

which the one pays their wages, the other the the whole stock of materials

to employ a great stock rather than a small one, unless his profits

were to bear some proportion to the extent of his stock. Profits are

The

profits of stock, it

not merely wages

ferent

of inspec-

of inspection

tion

and

name

for the

and

ent, are regulated

may

perhaps be thought, are only a

dif-

wages of a particular sort of labour, the labour

direction.

by

They

are,

however, altogether

quite sufficient principles,

differ-

and bear no pro-

direction.

portion to the quantity, the hardship, or the ingenuity of this sup-

posed 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 extent 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

employed at the rate of

each of which twenty workmen are

fifteen

pounds a year each, or at the ex-

pence of three hundred a year in each manufactory. Let us suppose too, that the coarse materials

annually wrought up in the one cost

only seven hundred pounds, while the finer materials in the other cost seven thousand. will in this case

The

capital annually

amount only

employed

^ in the

one

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 an yearly profit of about one hundred

pounds only; while that ““The

capital annually

of the other will expect

employed”

months, not the capital in the usual

is

about seven hun-

the working expenses for twelve

modem sense.

COMPONENT PARTS OF PRICE

49

dred and thirty pounds. But though their profits are so very ent, their labour of inspection

and

gether or very nearly the same. In

whole labour of

this

kind

is ^

may be

direction

many

differ-

either alto-

great works, almost the

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 commonly, 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 profits should bear a regular proportion to his capital.^

In the price of commodities, therefore, the

constitute

a component part

of labour,

and regulated by quite

In

°

this state of things, the

altogether different

profits of stock

from the wages

different principles.

whole produce of labour does not

al-

ways belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour

commonly employed

in acquiring or

modity, the only circumstance

which

An

it

®

producing any com-

which can regulate the quantity

ought commonly to purchase, command, or exchange

additional quantity,

it is

evident,

must be due

for.

for the profits of

The labourer shares

with the employer,

and labour alone no longer regulates

the stock which advanced the wages and furnished the materials of

value.

that labour.

As soon as

the land of any country has

erty, the landlords, like all

all

never sowed,'^ and demand a rent even for

wood

when land was

in

its

and

natural produce.

The

all

the natural fruits

common,

cost the labourer

of the forest, the grass of the field,

of the earth, which,

become private prop-

other men, love to reap where they

a portion of what tion, or,

He must

give

up

to the landlord

his labour either collects or produces. This por-

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.® *

Eds. i and 2 read “proportion to it.” a source of value.” I reads from the beginning of the paragraph: “In this state of things, therefore, the quantity of labour commonly employed in acquiring or producing any commodity is by no means the only circumstance.” ®

I inserts

®

I reads “profits of stock are

Ed. Ed. ®Ed.

“frequently.”

all become

private property, rent constitutes a

only the trouble of gathering them, come, even to him,® to have an additional price fixed upon them.

When land has

^ Buchanan, ed. Wealth of Nations, 1814, vol. i., p. 80, says: “They do so. But the question is why this apparently unreasonable demand is so generally complied with. Other men love also to reap where they never sowed, but the landlords alone, it would appear, succeed in so desirable an object.” ® Ed. I does not contain “the labourer” and “even to him.” ‘^Ed. I in place of these two sentences reads: “Men must then pay for the licence to gaSier them; and in exchanging them either for money, for labour,

third

component part of the price of

most commodities.

THE WEALTH OF NATIONS

50

The real value of all

three

The

component parts of

real value of all the different

must be observed,

is

measured

price, it

which

the quantity of labour

by

parts is

they can, each of them, purchase or command. Labour measures

measured

the value not only of that part of price which resolves

by labour labour, but of that which resolves itself into rent,

and

itself into

which

of that

resolves itself into profit.

In an improved

In every society the price of every commodity finally resolves self into

society all

some one or

other, or all of those three parts;

more

component

three

improved

parts are

parts, into the price of the far greater part of commodities.

generally present,

society, all the three enter

it-

and in every

or less, as

In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers

employed

producing

and the

for ex-

and labouring

ample, in

pays the profit of the farmer. These three parts seem either im-

corn,

cattle

in

it,

third

mediately or ultimately to make up the whole price of corn. fourth part,

it

may

perhaps be thought,

is

necessary for replacing

the stock of the farmer, or for compensating the wear and tear his labouring cattle,

such as a labouring horse, the rent of the land

of

and other Instruments of husbandry. But

must be considered that the

made up

upon which he

and rearing him, and the

is

of the

tenance of the horse, the whole price

parts;

who advances both labour. Though the

farmer

the rent of this land, and the wages of this

may pay

same three

reared, the labour of tending

profits of the

price of the corn, therefore,

it

any instrument of husbandry,

price of

is itself

A

the price as well as the mainstill

resolves itself either im-

mediately or ultimately into the same three parts of rent, labour,^®

and

profit.

or for other goods, over and above what is due, both for the labour of gathand for the profits of the stock which employs that labour, some allowance must be made for the price of the licence, which constitutes the first ering them,

rent of land. In the price therefore of the greater part of commodities the rent

of land comes in this

manner

to constitute

of things, neither the quantity of labour

a third source of value. In

commonly employed

this state

in acquiring or

producing any commodity, nor the profits of the stock which advanced the wages and furnished the materials of that labour, are the only circumstances which can regulate the quantity of labour which it ought commonly to purchase, command or exchange for. A third circumstance must likewise be taken into consideration the rent of the land and the commodity must commonly purchase, command or exchange for, an additional quantity of labour, in order to enable the person who brings it to market to pay this rent.” ;

^®Ed.

I

is in this

reads “The real value manner measured.”

;

of all the different

component parts of

price

“ Smith overlooks the fact that his inclusion of the maintenance of labouring cattle here as a sort of wages requires him to include it in the national income or “wealth

of the nation,” as part of the nation.

Ed.

I

and

therefore to reckon the cattle themselves

reads “tear and wear.” of “labour” instead of the

The use

more natural “wages” here

is

more

COMPONENT PARTS OF PRICE In the price of

flour or meal,

corn, the profits of the miller,

we must add

and the wages

price of bread, the profits of the baker, ants;

and

5^

to the price of the

of his servants; in the

in flour or

meal.

and the wages of his serv-

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 profits 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

and in flax

the flax-dresser, of the spinner, of the weaver, of the bleacher, &c. together with the profits of their respective employers.

As any

particular

commodity comes

that part of the price which resolves

to

be more manufactured,

wages and

itself into

profit,

foregoing; because the capital from which

it is

is

greater than the

derived

must always

be greater. The capital which employs the weavers, for example,

must be greater than that which employs the spinners; because not oqly replaces that capital with

wages of the weavers; and the

its profits,

profits

smaller

propor-

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

Rent is a

tion in

highly

manufactured

commodities

it

but pays, besides, the

must always bear some pro-

portion to the capital.^^

In the most improved

societies,

however, there are always a few

commodities of which the price resolves

itself into

and a

the wages of labour, and the profits of stock;

number, in which

it

consists altogether in the

two parts only, still

smaller

wages of labour. In

A few commodihave only two ties

or even one of the

the price of sea-fish, for example, one part pays the labour of the

three

fishermen, and the other the profits of the capital employed in the

compo-

fishery.

Rent very seldom makes any part of

it,

though

it

does

nent parts.

sometimes, as I shall shew hereafter.^® It

is

through the greater part of Europe, in river

and

fishery pays

a

rent of land,

makes a part

and

profit.

rent,

otherwise, at least fisheries.

salmon

cannot well be called the

of the price of

a salmon as well as wages

though

In some parts of Scotland a few poor people make a

trade of gathering, along the sea-shore, those stones

A

it

rent,

commonly known by

the

little

variegated

name of Scotch Pebbles. The

price

probably the result of its use five lines higher up than of any feeling of difficulty about the maintenance of cattle. On p. 56 below “rent, labour and profit” and “rent, wages and profit” are both used; see below, p. 316, and note. The fact that the later manufacturer has to replace what is here called the capital, ie., the periodical expenditure of the earlier manufacturer, does not necessarily require him to have a greater capital to deal with the same produce. It need not be greater if he requires less machinery and buildings and a smaller stock of materials.

“ Below, p.

143.

the wealth of nations

52

which

is

paid to them

by

the stone-cutter

But all must have

and the

But the whole price of any commodity must

annual produce

it.

finally resolve

still

other, or all of those three parts; as whatever

some one or

part of

remains after paying the rent of the land, and the price

it

of the

whole labour employed in

ing

to market,

it

As the

raising,

must necessarily be

manufacturing, and bring-

profit to

somebody.^^

commod-

price or exchangeable value of every particular

price of

the whole

altogether the wages of

itself into

at least

one,

is

nor profit make any part of

their labour; neither rent

ity, talcen separately, resolves itself into

those three parts; so that of

some one or

other, or all of

the commodities which compose

all

the whole annual produce of the labour of every country, taken

resolves itself

into

complexly, must resolve

among

the

itself into

same three

parts,

and be

different inhabitants of the country, either as

wages,

parcelled out

profits

the wages of their labour, the profits of their stock, or the rent of

and

rent,

their land.^*^

The whole

of

what

is

annually either collected or pro-

duced by the labour of every society, or what comes to the same thing, the whole price of

among some of

its

it, is

different

in this

manner

originally distributed

members. Wages,

and

profit,

the three original sources of all revenue as well as of able value. All othpr revenue

is

all

rent, are

exchange-

ultimately derived from some

one or other of these. which are the only original

kinds of revenue.

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 derived 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

money.

compensation which the borrower pays to the

It is the

to another,

lender, for the profit

is

called the interest or the use of

which he has an opportunity of making by

the use of the money. Part of that profit naturally belongs to the

borrower, it;

who

and part

runs the risk and t^es the trouble of employing

The

enue, which,

if it is

use of the money,

who

him the opportunity of makmoney is always a derivative revnot paid from the profit which is made by the

to the lender,

ing this profit.

affords

interest of

must be paid from some other source of

enue, unless perhaps the borrower

Only true

if

is

a spendthrift,

“commodity” be understood

who

rev-

contracts

to include solely goods

which

constitute income.

The “whole annual produce” must be taken to mean the income and not the whole mass of goods produced, including those which perish or are used up in the creation of others.

^ Some

parts of this “other revenue,”

in the next paragraph. It

is

viz,, interest and taxes, are mentioned perhaps also intended to include the rent of

houses; see below, pp. 264, 265.

COMPONENT PARTS OF PRICE

53

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 revenue of the farmer is derived partly from his and partly from his stock. To him, land is only the instrument which enables him to earn the wages of this labour, and to

the landlord. labour,

make

the profits of this stock. All taxes, and

founded upon them,

is

all salaries,

kind, are ultimately derived from original sources of revenue,

all

the revenue which

pensions, and annuities of every

some one

or other of those three

and are paid either immediately 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 distinguished; but

the in

same they

common

when they belong

to

are sometimes confounded with one another, at least

They

are

sometimes confounded,

language.

A gentleman who farms a part of his own estate, after paying the expence of cultivation, should gain both the rent of the landlord

for

ex-

ample, a gentle-

and the

He is

profit of the farmer.

whole gain,

common

profit,

language.

West Indian

apt to denominate, however, his

and thus confounds rent with

The own

estates,

the greater

own

They

generally too

work a good deal

hands, as ploughmen, harrowers, &c.

What

remains

of the crop after paying the rent, therefore, should not only replace to them their stock employed in cultivation, together with

nary

profits,

farmer^s rent

is

called profit,

its profit.

farmers seldom employ any overseer to direct the gen-

eral operations of the farm.

with their

They farm,

man

and accordingly we seldom hear of

the rent of a plantation, but frequently of

Common

North American and

greater part of our

planters are in this situation.

part of them, their

profit, at least in

its

a common farmer’s

wages are called profit,

ordi-

but pay them the wages which are due to them, both

as labourers and overseers. Whatever remains, however, after paying the rent

evidently

must

and keeping up the

make a

part of

it.

necessarily gain them.

founded with

An

stock,

The

is

farmer,

But wages by saving these wages,

called profit.

Wages, therefore, are

who has

independent manufacturer,

stock enough both to

purchase materials, and to maintain himself

work

in this case con-

profit.

to market, should gain both the

works under a master, and the

profit

till

he can carry his

wages of a journeyman who

which that master makes by

the sale of the journeyman’s work.^® His whole gains, however, are

commonly with

A

called profit,

and wages

are, in this case too,

and so

are

an independent manufacturer’s

wages,

confounded

profit.^®

gardener

^ Ed.

I

who

cultivates his

reads “sale of his work.”

own garden with “ Below,

his

own

hands,

pp. 111-113.

while the rent and

THE WEALTH OF NATIONS

54 profit of a

gardener cultivat-

unites in his

rent of the

own land

The

his labour.

A great the an-

nual pro-

the profit of the second, and the wages is

commonly considered

Both rent and

him

the

of the third.

as the earnings of

profit are, in this case,

confounded with

wages.

of labour.

part of

first,

whole, however,

are conearnings

the three different characters, of landlord,

farmer, and labourer. His produce, therefore, should pay

ing his

sidered

own person

As

in a civilized country there are but few commodities of

which

the exchangeable value arises from labour only, rent and profit contributing largely to that of the far greater part of them, so the

annual produce of or

its

command a much

labour will always be sufficient to purchase

greater quantity of labour than

what was em-

duce goes to the

the propor-

idle;

tion regu-

ployed in raising, preparing, and bringing that produce to market. If tibe society were

annudly

to

employ

all

the labour which

it

can annually purchase, as the quantity of labour would increase

lates the

greatly every year, so the produce of every succeeding year would

increase

be of vastly greater value than that of the foregoing. But there

or dimi-

nution of the produce.

no country in which the whole annual produce taining the industrious. of

it;

and according

The

idle

is

is

employed in main-

every where consume a great part

to the different proportions in

which

it is

nually divided between those two different orders of people,

anits

ordinary or average value must either annually increase, or diminish, or

continue the same from one year to another.

^ Eds.

t

1-3 read “was.”

CHAPTER

VII

OF THE NATURAL AND MARKET PRICE OF COMMODITIES^

There

is

in every society or

neighbourhood an ordinary or aver-

age rate both of wages and profit in every different employment of

Ordinary or average rates of

labour and stock. This rate hereafter, 2 partly

by

show

wages,

the general circumstances of the society, their

profit,

is

naturally regulated, as I shall

riches or poverty, their advancing, stationary, or declining con-

and partly by the particular nature of each employment. There is likewise in every society or neighbourhood an ordinary

dition;

or average rate of rent, which after,^ partly

by

is

regulated too, as I shall

and rent

show here-

the general circumstances of the society or neigh-

bourhood in which the land

is

and partly by the natural

situated,

or improved fertility of the land.

These ordinary or average of wages, profit,

commonly

When what

is

labour,

and

the price of any commodity

pay the rent

sufficient to

and the

is

employed

may be

be

called

natural

than

wages of the

language what

is

comprehend the

again, yet if he sells

it

at

who

brings

called the

it

the trade; since

commodity

is

it is

worth, or for

price,

to market; for though or for

who

what

person

is

to sell

it

a price which does not allow him the his stock in

is

evidently a loser

some other way he

it

really costs,

which includes profit,

might have made that

profit.

His

profit, besides, is his revenue, the

proper fund of his subsistence. As, while he

is

ing the goods to market, he advances to his or their subsistence; so he

preparing and bring-

workmen

advances to himself, in the

follows Lectures, pp. 173-182, very closely. ® Below, chap. xi. viii. and ix.

^

The chapter

®

Below, chaps,

55

its

natural

prime cost of any commod-

profit of the

by employing

pay which a to

sold at

called its natural price.

ordinary rate of profit in his neighbourhood, he

by

less

in raising, preparing,

then sold precisely for what

really costs the person

common

more nor

to market, according to their natural rates, the

The commodity

ity does not

is

neither

of the land, the

profits of the stock

then sold for what

is

may

rates,

commodity

in

time and place in which they

rent, at the

it

it

be called the natural rates

prevail.

and bringing

what

may

rates

their wages,

same manner,

the wealth of nations

56

own

subsistence,

he

may

reasonably expect from the sale of his goods. Unless they

him

yield

may no

since

one will go on selling without profit.

generally suitable to the profit which

his

which

is

this profit, therefore,

they do not repay him what they

very properly be said to have really cost him.

Though

the price, therefore, which leaves

may

always the lowest at which a dealer it is

the lowest at which he

is likely

time; at least where there

to

sell

him

this profit, is not

sometimes

them

for

sell his

goods,

any considerable

perfect liberty,^ or where he

is

may

change his trade as often as he pleases. Market price

The

actual price at which

market

called its

the same with is

regu-

lated

by

the quan-

price. It

its

The market

any commodity

may

is

commonly

sold

natural price.

commodity

price of every particular

the proportion between the quantity which

is

regulated

is

market, and the demand of those

brought

price of the commodity, or the whole value of the rent, labour,

market and the

profit,^

effectual

may be

to

fectual

which must be paid in order to bring called the effectual demanders,

demand; since

it

A

very poor

is different

quantity

brought falls

short

of the effectual

demand, the market price

demand

their

and

Such people the ef-

man may be

said in

he might

from the absolute de-

some sense to have a have

but his de-

demand

for

mand

not an effectual demand, as the commodity can never be

is

a coach and

six;

brought to market in order to satisfy

When the

and

thither.

the natural

may be sufficient to effectuate the bringing

of the commodity to market. It

mand.

it

by

actually brought to

who are willing to pay

tity

demand.

is

either be above, or below, or exactly

When

like to

it;

it.

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 the quantity of

in order to bring

it

thither,

cannot be supplied with the quantity

which they want. Rather than want be willing to give more.

among them, and

A

it

altogether,

some of them

will

competition will immediately begin

the market price will rise

more or

less

above the

rises

above the natural;

natural price, according as either the greatness of the deficiency, or the wealth and wanton luxury of the competitors, happen to ani-

mate more or

less the eagerness of the competition.

petitors of equal wealth erally occasion

and luxury the same deficiency ®

a more or

acquisition of the

Among com-

less eager competition,

commodity happens to be

of

will gen-

according as the

more

or less im-

portance to them.'^ Hence the exorbitant price of the necessaries of life *

during the blockade of a town or in a famine.

The same phrase occurs below, pp.

® Above, 62, 99. p. 50 and note 13. beginning three lines higher up, reads “according as the greatness of the deficiency increases more or less the eagerness of this competition. The

®Ed.

same ^

I,

deficiency.”

Ed.

I

reads “the competitors.”

NATURAL AND MARKET PRICE When mand,

57

the quantity brought to market exceeds the effectual de-

cannot be

it

whole value of the order to bring willing to

all

sold to those

rent,

it thither.

pay

less,

wages and

who

pay

are willing to

the

which must be paid

profit,

Some part must be

who

sold to those

and the low price which they give

for

it

in

are

must

reduce the price of the whole. The market price will sink more or less

below the natural

cess increases

ing as

it

more or

price, according as the greatness of the exless the

competition of the

happens to be more or

less

sellers,

when it exceeds the effectual de-

mand the market price falls

below the natural;

or accord-

important to them to get im-

mediately rid of the commodity. tion of perishable, will occasion

The same excess in the importaa much greater competition than in

that of durable commodities; in the importation of oranges, for ex-

ample, than in that of old iron.

When

just sufficient to supply

when it is

the market price naturally

just equal to the ef-

the quantity brought to market

demand and no more,

the effectual

comes to be

is

either exactly, or as nearly as can

same with the natural

be judged

of,

the

The whole quantity upon hand can be disposed of for this price, and cannot 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 price.

suits itself to the effectual

who employ

demand. It

is

the interest of

their land, labour, or stock, in bringing

those

all

any commod-

ity to market, that the quantity never should exceed the effectual

fectual

demand the market and natural price coincide.

It naturally suits itself to

the effec-

demand; and should

fall

If at

it is

the interest of all other people that

never

it

any time

it

exceeds the effectual demand, some of the com-

must be paid below

their natural rate. If

it is rent, the interest of the landlords will

immediately prompt

ponent parts of

them

to

its

price

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

or stock from this employment. will

soon be no more than

All the different parts of

the whole price to

its

its

their labour

The quantity brought

sufficient to

to

market

supply the effectual demand.

price will rise to their natural rate,

and

natural price.

interest of all Other landlords will naturally

prompt them to pre-

pare more land for the raising of this commodity;

Ed.

I

reads “fall short of

exceeds that de-

mand, some of the component its price

are

below

their

natural rate;

on the contrary, the quantity brought to market should at any time fall short of the effectual demand, some of the component parts of its price must rise above their natural rate. If it is rent, the

profit, the interest of all other labourers

When it

parts of

If,

®

tual de-

mand.

short of that demand.®

if it is

and dealers it.”

when it falls short,

some of the component

wages or

parts are

soon

above their na-

will

tural rate.

THE WEALTH OF NATIONS

58

prompt them bringing

price is

employ more labour and stock

to market.

it

sufficient to

Natural

to

its

price will soon sink to their natural rate,

its

natural price.

The

tral price

which

actual prices gravitate.

natural price, therefore,

suits itself

to the effectual

thither will soon be

is,

as

it

and the whole price to

were, the central price, to

all

commodities are continually gravitating.

may

sometimes keep them suspended a good

which the prices of Different accidents

it, and sometimes force them down even somewhat beBut whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are con-

deal above

low

it.

stantly tending towards Industry

The

it.

whole quantity of industry annually employed in order to

bring any commodity to market, naturally suits

but the

by a given amount of

man-

may be sufficient to supply, and

that precise quantity thither which

no more than supply, that demand. But in some employments the same quantity

produced

itself in this

ner to the effectual demand. It naturally aims at bringing always

demand,

quantity

and

supply the effectual demand. All the different parts of

the cento

The quantity brought

in preparing

different years

while in others

same.

of industry will in

produce very different quantities of commodities; it will

®

produce always the same, or very nearly the

The same number

of labourers in husbandry will, in differ-

industry

sometimes fluctuates.

ent years, produce very different quantities of corn, wine, &c.

But the same number

of spinners

and weavers

oil,

hops,

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 de-

mand; and frequently

as

actual produce

its

much

less

than

its

is

frequently

much

greater

and

average produce, the quantity of the

commodities brought to market will sometimes exceed 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

times

fall

will

be

liable to great fluctuations, will

a good deal below, and sometimes

their natural price.

rise

some-

a good deal above,

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

That the

price of linen

same with the natural

and woollen cloth

is

price,

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 ®

See below, p. ii6.

NATURAL AND MARKET PRICE

59

commodities varies only with the variations in the demand: That of the other varies not only with the variations in the

much

with the

what

of

The

is

greater

and more frequent variations

demand, but

in the quantity

brought to market in order to supply that demand.

occasional and temporary fluctuations in the market price of

any commodity

fall chiefly

upon those parts of its price which reand profit. That part which resolves

solve themselves into wages itself into

rent

is less

by them. A rent certain in money by them either in its rate or in its value.

affected

not in the least affected

rent which consists either in

a

quantity of the rude produce, value

by

all

market price

them lord

The fluctuations fall on wages and

is

profit

A

more than on rent,

certain proportion or in a certain is

no doubt

affected in its yearly

the occasional and temporary fluctuations in the of that rude produce;

but

it is

seldom affected by

in its yearly rate. In settling the terms of the lease, the land-

and farmer endeavour, according

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 wages or of

profit,

affect

both the value and the rate either of

according as the market happens to be either

over-stocked or under-stocked with commodities or with labour;

with work done, or with work to be done. the price of black cloth

A public mourning

(with which the market

is

raises

almost always

affecting

them in different

proportions ac-

cording to the supply

under-stocked upon such occasions), and augments the profits of

of

who possess any considerable quantity of it. It has upon the wages of the weavers. The market is understocked wilJi commodities, not with labour; with work done, not with work to be done. It raises the wages of journeymen taylors.

modities

the merchants

no

effect

com-

and labour

The market is here under-stocked with labour. There is an effectlabour, for more work to be done than can ual demand for more be had. It sinks the price of coloured reduces the profits of the merchants

silks

and

cloths,

who have any

and thereby considerable

quantity of them upon hand. It sinks too the wages of the work-

men employed in preparing such commodities, for which all demand is stopped for six months, perhaps for a twelvemonth. The market

is

here over-stocked both with commodities and with

labour.

in

But though the market price of every particular commodity is this manner continually gravitating, if one may say so, towards

the natural price, yet sometimes particular accidents, sometimes

natural causes, and sometimes particular regulations of police,

may,

in

many

commodities, keep up the market price, for a long

time together, a good deal above the natural price. Repeated below, p. ii6.

Ed.

i does

not contain “more,”

But market price

maybe kept

above natural for a

long time,

the wealth of nations

6o

When by an

in conse-

quence of

want of general

knowledge of high profits,

increase in the effectual

demand, the market price

commodity happens to rise a good deal above who employ their stocks in supplying that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt so many new rivals of

some

particular

the natural price, those

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

ket it,

is

at a great distance

may

they

If the

mar-

from the residence of those who supply

sometimes be able to keep the secret for several years

and may so long enjoy

together,

out any

it.

new

their extraordinary profits with-

of this kind, however,

rivsds. Secrets

must be

it

ac-

knowledged, can seldom be long kept; and the extraordinary profit

can last very or in con-

sequence of secrets

longer than they are kept.

little

Secrets in manufactures are capable of being longer kept than secrets in trade.

A

dyer

who has found

the means of producing a

in manif-

particular colour with materials which cost only half the price of

factures,

those

commonly made use

of,

may, with good management, enjoy

the advantage of his discovery as long as he lives, it

and even leave

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

on that account, a regular proportion to

it,

amount

bears, up-

they are commonly

considered as extraordinary profits of stock.^^ which

may operate for

long periods,

Such enhancements of the market price are evidently the sometimes

Some

last for

many years

may

together.

natural productions require such a singularity of soil and

situation, that all the land in a great country,

or in consequence

effects

of particular accidents, of which, however, the operation

ducing them,

may

of scarcity

The whole quantity brought

of pecu-

posed of to those

liar soils,

ficient to

which

is fit

for pro-

not be sufficient to supply the effectual demand.

who

pay the rent

to market, therefore,

are willing to give of the land

may

more than what

be

dis-

is

suf-

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

whole centuries together to be sold at

“They

are called profits simply because

may

continue for

this high price;

all

and that

the gains of the master-manu-

They can scarcely be said to have been “considthey had been, they would doubtless have been pronounced to

facturer are called profits.

ered” at

all; if

words of the next paragraph, “the effects of a particular accident,” namely, the possession of peculiar knowledge on the part of the dyer. ^ Ed. I places “for whole centuries together” here instead of where printed. be, in the

NATURAL AND MARKET PRICE part of

it

which resolves

the part which of the land

and

equally

generally paid above its natural rate.

is

some vineyards

in

The

rent

France of a peculiarly happy

no regular proportion

situation, bears

to the rent of other

and equally well-cultivated land

fertile

The wages

hood.

into the rent of land is in this case

which affords such singular and esteemed productions,

like the rent of soil

itself

of the labour

and the

in its neighbour-

profits of the stock

em-

ployed in bringing such commodities to market, on the contrary, are seldom out of their natural proportion to those of the other

employments

and stock

of labour

Such enhancements

of the

in their neighbourhood.

market price are evidently the

effect

may hinder the effectual demand from ever and which may continue, therefore, to operate

which

of natural causes which

being fully supplied,

ever,

for ever.

A

monopoly granted

pany has the same

either to

effect as

by keeping

monopolists,

an individual or to a trading com-

Amono-

The by

fhe^g^me

commodities

trade se-

a secret in trade or manufactures.

the market constantly under-stocked,

never fully supplying the effectual demand,

much above

effect as

a

the natural price, and raise their emoluments, whether

they consist in wages or

The price

sell their

of

can be got. The natural the contrary,

is

profit, greatly

monopoly

is

above their natural

rate.

upon every occasion the highest which

price, or the price of free competition,

on

upon every

oc-

the lowest which can be taken, not

casion indeed, but for any considerable time together.

The one

the price

pQiy thehigh-

is ^

upon every occasion the highest which can be squeezed out buyers, or which,

other

is

it is

supposed, they will consent to give:

the lowest which the sellers

and at the same time continue

The ship,^^

of the

can commonly

The

afford to take,

their business.

exclusive privileges of corporations, statutes of apprentice-

and

all

those laws which restrain, in particular employ-

Corporaleges^Sr,"

ments, the competition to a smaller number than might otherwise

are en-

go into them, have the same tendency, though in a

^^’^sed

They

are a sort of enlarged monopolies,

ages together, and in whole classes

market price

of particular

less degree,

and may frequently,

for

of employments, keep up the

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. See below, pp. 118-130. Playfair, in a note on this passage, ed. Wealth of Nations, 1805, vol. i., p. 97, says: “This observation about corporations and apprenticeships scarcely applies at all to the present day. In London, for example, the freemen only can carry on certain businesses within the city: there is not one of those businesses that may not be carried on elsewhere, and the

produce sold in the city. If Mr. Smith’s principle applied, goods would be dearer in Cheapside than in Bond Street, which is not the case.”

the wealth of nations

62

Such enhancements of the market price

may

last as long as the

regulations of police which give occasion to them.

Market price

is

seldom long be-

The market

any particular commodity, though

price of

continue long above, can seldom continue long below, price.

Whatever part

of

it

its

was paid below the natural

it

may

natural

rate, the

low natu-

persons whose interest

ral price,

and would immediately withdraw either so much land, or so much labour, or so much stock, from being employed about it, that the quantity brought to market would soon be no more than sufficient

affected would immediately

it

feel the loss,

to supply the effectual demand. Its market price, therefore, would

soon there though appren-

rise to

the natural price. This at least would be the case where

was perfect

The same

liberty

statutes of apprenticeship

when a manufacture

indeed, which,

and other corporation laws

is

in prosperity, enable the

ticeship

to raise his wages a good deal above their natural rate,

and cor-

workman

poration

sometimes oblige him, when

laws sometimes reduce wages

much be-

deal below his

it.

As

it

them down a good

decays, to let

many

in the one case they exclude

people from

employment, so in the other they exclude him from

ployments.

The

such regulations, however,

effect of

is

many em-

not near so

low the

durable in sinking the workman’s wages below, as in raising them

natural

above, their natural rate. Their operation in the one

rate for a

dure for

many

centuries,

but in the other

it

way may

en-

can last no longer than

certain

period.

the lives of some of the the time of

who

its

workmen who were bred

prosperity.

When

to the business in

they are gone, the number of those

are afterwards educated to the trade will naturally suit

to the effectual demand.

The

Indostan or ancient Egypt

police

must be as

(where every

itself

violent as that of

man was bound by

principle of religion to follow the occupation of his father,

supposed to commit the most horrid sacrilege

if

a

and was

he changed

it

for

another), which can in any particular employment, 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 con-

cerning the deviations, whether occasional or permanent, of the

market price of commodities from the natural

The

Natural price its

varies

natural price

component

itself

price.

varies with the natural rate of each of

parts, of wages, profit,

and

rent;

and

in every so-

with the

ciety this rate varies according to their circumstances, according

natural

to their riches or poverty, their advancing, stationary, or declining

rate of

wages,

condition. I shall, in the four following chapters, endeavour to ex-

“ Above,

p. 56, and below, p. 99. In Lectures, p. 168, the Egyptian practice

tris.”

is

attributed to “a law of Scsos-

NATURAL AND MARKET PRICE plain, as fully

and

63

distinctly as I can, the causes of those different

profit

and

rent

variations. First, I shall

endeavour to explain what are the circumstances

which naturally determine the rate of wages, and

in

what manner

Wages will be

dealt with

those circumstances are affected

by

the riches or poverty,

by

the

advancing, stationary, or declining state of the society. Secondly, I shall endeavour to

show what

which naturally determine the rate of too those circumstances are affected

by

viii. ,

are the circumstances

profit,

and

in

in chapter

what manner

the like variations in the

profit in

chapter ix. ,

state of the society.

Though pecuniary wages and

dif-

differences

certain proportion

of wages and profit

seems commonly to take place between both the pecuniary wages

in chapter

ferent

employments

in all the different its in all

will

of labour

profit are

very different in the

and stock; yet a

employments of labour, and the pecuniary prof-

the different employments of stock. This proportion,

appear hereafter, depends partly upon the nature of the

ferent employments,

and partly upon the

different laws

of the society in which they are carried on.

spects dependent to be

little

upon the laws and

affected

by

But though

X.,

it

dif-

and policy

in

many

re-

policy, this proportion seems

the riches or poverty of that society;

by

its

advancing, stationary, or declining condition; but to remain the

same

or very nearly the

same

in all those different states. I shall, in

the third place, endeavour to explain

which regulate

all

the different circumstances

this proportion.

In the fourth and last place, I shall endeavour to show what are the circumstances which regulate the rent of land, and which

and rent in chapter xi.

either raise or lower the real price of all the different substances

which

it

produces.

t

CHAPTER VIII OF THE WAGES OF LABOUR

Produced the natural

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

wages

In that original state of things, which precedes both the appro-

of labour.

priation of land

and the accumulation of

Originally

of labour belongs to the labourer.^

the whole

master to share with him.

belonged

Had

to the la-

this state continued, the

mented with

Ifthishad continued,

gradually have become cheaper

which the division

all

things

would have be-

come cheaper,

stock, the

whole produce

has neither landlord nor

wages of labour would have aug-

those improvements in

bourer.

all

He

its

productive powers, to

of labour gives occasion. All things

would

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

though in

appearance many things might have become dearer than before, or

appearance

have been exchanged

many

suppose, for example, that in the greater part of employments the

for

a greater quantity of other goods.^ Let us

things

productive powers of labour had been improved to tenfold, or that

might have be-

a day’s labour could produce ten times the quantity of work which

come

it

dearer.

had been improved only

had done

originally;

but that in a particular employment they 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 employments, for that of a day’s labour in this particular one, ten times the original quantity of work in them would purchase only

The same nine words occur above, p. 47, in ed. 2 and later eds. ^The word “cheaper” is defined by the next sentence as “produced by a

^

smaller quantity of labour.”

®It would be less confusing if the sentence ran: “But though all things would have become cheaper in the^nse just attributed to the word, yet in the sense in which the words cheaper and dearer are ordinarily used many things might have become dearer than before.”

64

WAGES OF LABOUR twice the original quantity in

Any

it.

65

particular quantity in

it,

a pound weight, for example, would appear to be five times dearer than before.'^ In reality,^ however, it would be twice therefore,

Though

as cheap.

to purchase

it,

it

required five times the quantity of other goods

would require only half the quantity of labour

it

either to purchase or to produce

The

it.

acquisition, therefore,

would be twice as easy ® as before.

But

this original state of things, in

own

the whole produce of his

which the labourer enjoyed

labour, could not last

beyond the

introduction of the appropriation of land and the accumulation

first

was

of stock. It

at

an end, therefore, long before the most con-

siderable improvements were

and

labour,

have been

would be

it

to

made

in the productive powers of

no purpose to trace further what might

upon the recompence or wages of labour. As soon as land becomes private property, the landlord demands its effects

a share of almost raise, or collect

the produce

all

from

it.

is

wherewithal to maintain himself

terest to

is

who

till

tills

the ground has

he reaps the harvest. His

generally advanced to

employ him, unless he was to share

labour, or unless his stock

was

appropria-

tion of

land and accumulation of stock,

rent being

the

first

deduction,

deduction from

first

him from the stock of a farmer who employs him, and who would have no in-

maintenance

by the

employed upon land.

seldom happens that the person

master, the

the labourer can either

His rent makes the

the produce of the labour which It

which

This state was ended

and

profit

the second, both in agriculture,

in the produce of his

to be replaced to

him with a

profit.

This profit makes a second deduction from the produce of the labour which

is

The produce

employed upon land. of almost all other labour

duction of profit. In

workmen

the

value which

to the like de-

and manufactures the greater part of

stand in need of a master to advance them the

terials of their

compleated.®

all arts

is liable

work, and their wages and maintenance

He

it

ma-

till it

and other arts and manufactures.

be

shares in the produce of their labour, or in the

adds to the materials upon which

it is

bestowed; and

in this share consists his profit.® It

sometimes happens, indeed, that a single independent work-

man

has stock sufficient both to purchase the materials of his work,

and

to maintain himself

^

I.e,,

“would

till it

be compleated.

in the ordinary sense of the

word be

He

is

both master

five times dearer

than

before.”

”

“in the sense attributed to the word above ® If the amount of labour necessary for the acquisition of a thing measures its value, “twice as cheap” means simply, twice as easy to acquire. ^

l.e,f

reads “of whatever produce.” provision of tools to work with and buildings to work in is forgotten. Cp. with this account that given at the beginning of chap vi., pp. 47, 48

’

Ed.

®

The

®

above.

I

The independent

workman gets pro-

the wealth of NATIONS

66 fits

as well

as wages,

and workman, and enjoys the whole produce of or the whole value which

his

own

labour,

adds to the materials upon which

it

it is

bestowed. It includes what are usually two distinct revenues, belonging to two distinct persons, the profits of stock, and the wages of labour. but this case is in-

frequent.

Such

cases,

however, are not very frequent, and in every part of

Europe, twenty workmen serve under a master for one that

is in-

dependent; and the wages of labour are every where understood to

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 every where up-

be,

Wages depend on contract

on the contract usually made between those two

by no means the same. The workmen

between

interests are

masters

much, the masters

and workmen.

posed to combine in order to

to give as little as possible.

parties,

The former

raise, the latter in

whose

desire to get as

are dis-

order to lower the

wages of labour. The masters

have

\he ad-

vantage.

It is not, however, difficult to foresee

must, upon

all

ordinary occasions, have the advantage in the dis-

and force the other

pute,

which of the two parties

into a compliance with their terms.

much more

masters, being fewer in number, can combine

and the

The

easily;

law, besides, authorises, or at least does not prohibit their

combinations,^® while

it

prohibits those of the workmen.^^

We have

no acts of parliament agamst combining to lower the price of work; but

many

against combining to raise

masters can hold out

much

longer.

it.

In

all

such disputes the

A landlord, a

farmer, a master

manufacturer, or merchant, though they did not employ a single

workman, could generally

live a

they have already acquired.

year or two upon the stocks which

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

master as his master

is

workman may be

as necessary to his

to him, but the necessity

is

not so im-

mediate.

We

though less is

heard of

rarely hear,

it

has been said, of the combinations of masters,

though frequently of those of workmen. But whoever imagines, up-

masters’

on

combinations than of work-

world as of the subject. Masters are always and every where in a

this account, that

sort of tacit,

masters rarely combine,

is

as ignorant of the

but constant and uniform combination, not to raise

men’s.

“The masters being fewer in number can not only combine but the law authorises their combinations, or at least does not prohibit them.” 7 Geo. I., stat. i, c. 13, as to London tailors; 12 Geo. I., c. 34, as to woolcombers and weavers; 12 Geo. L, c. 35, as to brick and tile makers within fifteen miles of London; 22 Geo. II., c. 27, § 12, as to persons employed in the woollen manufacture and many others. Ed.

more

I

reads,

easily,

WAGES OF LABOUR To

the wages of labour above their actual rate.

bination

is

67 violate this

every where a most unpopular action, and a sort -of

proach to a master among his neighbours and equals. indeed, hear of this combination, because

may

comre-

seldom^

the usual, and one

it is

say, the natural state of things which

We

nobody ever hears

of.

Masters too sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always con-

ducted with the utmost silence and secrecy, execution,

and when the workmen

without resistance, though severely

the

till

yield, as they felt

moment

of

sometimes do,

by them, they

are never

heard of by other people. Such combinations, however, are

fre-

quently resisted by a contrary defensive combination of the work-

men; who sometimes combine

of their

own accord

usual pretences

are,

sometimes the great

But whether

without any provocation of this kind,

too,

to raise the price of their labour. Their

sometimes the high price of provisions;

profit

which their masters make by their work.

their combinations

always abundantly heard decision, they

of.

be offensive or defensive, they are

In order to bring the point to a speedy

have always recourse to the loudest clamour, and

sometimes to the most shocking violence and outrage. They are desperate,

and act with the

men, who must either

folly

immediate compliance with

their

occasions are just as clamorous cease

to call

and extravagance

of desperate

starve, or frighten their masters into

an

demands. The masters upon these

upon the other

aloud for the assistance of the

side,

and never

magistrate,

civil

and

the rigorous execution of those laws which have been enacted with so

much

severity against the combinations of servants, labourers,

and journeymen. The workmen, accordingly, very seldom derive

any advantage from the tions, which, partly

violence of those tumultuous combina-

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 sub-

mitting for the sake of present subsistence, generally end in nothing,

but the punishment or ruin of the ring-leaders.

But though

in disputes

with their workmen, masters must gen-

erally

have the advantage, there

which

it

is

however a certain rate below

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

“ The word is used as elsewhere in Adam Smith without the now attached to it: a pretence is simply something put

falsity

“Ed.

I

does not contain “either.”

But mas-

implication of

forward.

duce wages betain ra?e'

THE WEALTH OF NATIONS

68

him

namely,

be somewhat more; otherwise

subsist-

bring up a family, and the race of such workmen could not last beyond the first generation. Mr. Cantillon seems, upon this account, to suppose that the lowest species of common labourers must every

ence for a

man and something over for a family.

where earn at

least

would be impossible

it

own maintenance,

double their

one with another they

may

for

to

in order that

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

But one-half the children born,

herself.

the age of manhood.^^

The

sufficient to

provide for

computed, die before

it is

poorest labourers, therefore, according

to this account, must, one with another, attempt to rear at least

four children, in order that two

But the necessary maintenance

to that age.

supposed,

may have an

may be

an able-bodied

equal chance of living of four children,

slave, the

same author adds,

is

it is

The labour

nearly equal to that of one man.

computed

to

of

be

worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth

Thus

far at least

less

than that of an able-bodied slave.

seems certain, that,

in order to bring

up a family,

the labour of the husband and wife together must, even in the lowest species of

what

is

common labour, be

able to earn something

precisely necessary for their

proportion, whether in that above mentioned, or in shall not take

upon me

more than

own maintenance; but any

in

what

other, I

to determine.^®

There are certain circumstances, however, which sometimes give

Wages

maybe

the labourers an advantage, and enable

them

to raise their

wages

consider-

ably

considerably above this rate; evidently the lowest which

above this

ent with

rate,

When

common humanity. in

any country the demand

for those

who

live

by wages;

labourers, journeymen, servants of every kind, is continually in-

when there is

is consist-

an

increasing

demand for la-

bourers,

when every year furnishes employment number than had been employed the year before, creasing;

for

a greater

workmen have no occasion to combine in order to raise their wages. The scarcity of hands occasions a competition among masters, who bid the

against one another, in order to get workmen,^'^ and thus voluntarily

break through the natural combination of masters not to

raise wages. Essai sur la nature du commerce en giniral, 1755, PP- 42-47. The “seems” not meaningless, as Cantillon is unusually obscure in the passage referred to. It is not clear whether he intends to include the woman’s earnings or not. “ Le before completing their seventeenth year, as stated by Dr. Halley, quoted by Cantillon, Essd, pp. 42, 43.

is

Cantillon himself, p. 44, says: “C’est une matifere qui n’admet pas cul exact, et dans laquelle la prteion n’est pas m^me fort n^cessaire,

qu’on ne s’y eloigne pas beaucoup de la ” Ed. I reads “them.”

r6alit6.”

un il

cal-

suf&t

WAGES OF LABOUR The demand

who

for those

by

live

wages,

69 evident, cannot

it is

increase but in proportion to the increase of the funds which are

destined for the

payment

the revenue which

first,

maintenance;

what

is

of wages.

These funds are of two kinds;

over and above what

is

is

and, secondly, the stock which

necessary for the over and above

is

necessary for the employment of their masters.

When the landlord,

annuitant, or

enue than what he judges

monied man, has a greater

sufficient to

maintain his

employs either the whole or a part of the surplus one or more menial servants.^^ Increase

number

naturally increase the

own

rev-

of his

own work, and

this surplus,

and he

will

he can dispose of

till

payment of wages consist of

surplus

revenue,

to purchase the materials

to maintain himself

destined

for the

in maintaining

of those servants.

is sufficient

crease of

the funds

The funds

family, he

When an independent workman, such as a weaver or shoe-maker, has got more stock than what

which is caused by an in-

and surplus stock

it,

he naturally employs one or more journeymen with the surplus, in

make a

order to

by

profit

their work. Increase this surplus,

will naturally increase the

The demand

for those

number of

who

by wages,

live

and he

his journeymen. therefore, necessarily

and stock

increases with the increase of the revenue

of every coun-

The de-

mand for labourers

and cannot possibly increase without

try,

enue and stock

increase is

increase of rev-

therefore

The demand

increases

the increase of national wealth.^^

live

not the actual greatness of national wealth, but

tinual increase, is

The

by wages, therefore, naturally increases with the of national wealth, and cannot possibly increase without it.

for those

It

who

is

it.

which occasions a

rise in

the wages

not, accordingly, in the richest countries,

ing, or in those

which are growing rich the

labour are highest. England

is

its

con-

with the increase of national wealth.

of labour. It

but in the most thriv-

fastest, that the

wages of

certainly, in the present times, a

High wages

are

occa-

sioned by

the in-

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 province of

New

York,

common

labourers

crease,

not by the actual

greatness

of nation-

There

is

no attempt

and consequently the dinecessary for his maintenance and what

to define “maintenance,”

vision of a man’s revenue into

what

is

over and above is left perfectly vague. ^ It seems to be implied here that keeping a menial servant, even to perform the most necessary offices (e.g., to nurse the infant child of a widower), is not “maintaining” a family. Above, in the Introduction and Plan of the Work, the wealth of a nation was treated as synonymous with its annual produce, and there has been hith-

is

erto

no suggestion that

“^Apparently this

is

a

its

stock

slip for

must be considered. “occasions high wages.” At any rate the next

sentences require this assertion and not that actually made. ““ The method of calculating wealth by the amount of annual produce per head adopted above, in the Introduction and Plan of the Work, is departed from here and below, p. 71, and frequently in later passages, in favour of the

calculation

by amount

of capital wealth.

al wealth.

THE WEALTH OF NATIONS

70

earn

three shillings

sterling,

with a pint of lings

and sixpence currency, equal to two shillings shillings and sixpence currency,

a day; ship carpenters, ten

rum worth

and sixpence

sixpence sterling, equal in

house carpenters and bricklayers, eight

sterling;

shillings currency, equal to four shillings

don

and ten pence

price;

and sixpence

sterling.

These prices are

and wages are said to be as high

all

sterling;

about two

taylors, five shillings currency, equal to

journeymen shillings

to six shil-

all

above the Lon-

in the other colonies as

New York. The price of provisions is every where in North America much lower than in England. A dearth has never been known in

In the worst seasons, they have always had a sufficiency for

there.

themselves, though less for exportation. If the

bour, therefore, be higher than try, its real price, the real

veniences of

a

in

still

life

which

it

it is

any where

command

money

in the

price of la-

mother coun-

of the necessaries

and con-

conveys to the labourer, must be higher

greater proportion.

thiiving

But though North America is not yet so rich as England, it is much more thriving, and advancing with much greater rapidity to the further acquisition of riches. The most decisive mark of the

than Eng-

prosperity of any country

North America is more

land.

is

habitants. In Great Britain,

and most other European

they are not supposed to double in

less

the British colonies in North America,

double in twenty or five-and-twenty times of

is this

new

than it

five

of

its in-

countries,

hundred years. In

has been found, that they

years.^'^

Nor

in the present

increase principally owing to the continual importation

inhabitants, but to the great multiplication of the species.

Those who

live to old age, it is said, frequently see there

to a hundred, and sometimes

own body. Labour is

many

there so well rewarded that a

prosperity to the parents.

The

from

fifty

more, descendants from their

of children, instead of being a burthen

““This

number

the increase of the

is

numerous family

a source of opulence and

labour of each child, before

it

can

in 1773, before the commencement of the late disdoes not contain this note eds. 2 and 3 read “present dis-

was written

turbances. Ed.

I

;

turbances.”

made the period for England 360 Gregory King, quoted by Davenant, Works, ed. Whitworth, 1771, voL p. 176, m^es it 43$ years in the past and probably 600 in the future. In Petty, Political Arithmetic, 1699, P- 18,

years. ii.,

was 60,000, in 1755 it was 300,000, and in 1763 it was $00,000, “by which they appear to have doubled their numbers every twenty years as nigh as may be.”— Present State of Great Britain and North America with regard to Agriculture, Population, Trade and Manu1703 the population of Virginia

factures, 1767, p. 22, note. “The original number of persons who in 1643 had settled in England was 21,200. Ever since, it is reckoned that more have

New

them than have gone to them. In the year 1760 they were increased to half a million They have therefore all along doubled their own number in twenty-five years ” Richard Price, Observations on Reversionary PaymentSf etc., 1771, pp. 204, 205. The statement as to America is repeated below, p. 392. left

—

WAGES OF LABOUR leave their housej

gain to them.

among

computed

is

to

71

be worth a hundred pounds clear

A young widow with four or five young children, who,

the middling or inferior ranks of people in Europe, would

have so

chance for a second husband,

little

courted as a sort of fortune.

The value

of all encouragements to marriage.

We

is

there frequently

of children

is

the greatest

cannot, therefore, wonder

North America should generally marry very

that the people in

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

than

faster

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

the revenue and stock of tent;

but

if

inhabitants,

its

may be

payment

of wages,

of the greatest ex-

they have continued for several centuries of the same,

same

or very nearly of the

number wanted

number of labourers emsupply, and even more than supply,

extent, the

ployed every year could easily the

destined for the

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

in such

to bid against

one another

in order to get

maintain the labourer, and to enable him to bring up a

family, the competition of the labourers

and the

interest of the

masters would soon reduce them to this lowest rate which sistent with

common

richest, that

is,

more than

five

one of the most

hundred years

by

best cultivated, most in-

fertile,

in the

The accounts

of its laws

and

full

we have

in

It seems,

visited

it

which they

had perhaps,

complement

institutions permits

of all travellers, inconsistent in

many

it

of riches

to acquire.

other respects,

method of calculating the riches or wealth of a amount of produce per acre. For other references to

a third

country, namely by the this

same terms

travellers in the present times. It

even long before his time, acquired that

which the nature

con-

ago,^® describes its cultivation, in-

and populousness, almost

are described

is

humanity. China has been long one of the

dustrious, and most populous countries in the world.^^ however, to have been long stationary. Marco Polo, who

""’Here

If

a country the wages of labour had ever been more than suf-

ficient to

dustry,

it.

“wealth” of China see the index,

-‘’The date of his arrival

was

s.v.,

1275.

China.

Wages are sta-

tionary

the wealth of nations

72

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 artificers is, if possible, still worse. Instead of waiting indolently in their workhouses, 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 service,

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

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 of

they find there is so scanty that they are eager to fish up the nastiest 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 exposed 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.^®

^ “Les

artisans courent les villes du matin au soir pour chercher pratique,” Quesnay, Ephimindes du citoyen, Mars, 1767; (Euvres, ed. Oncken, 188S, p. S8i.

^

“Cependant quelque sobre et quelque industrieux que soit le peuple de la Chine, le grand nombre de ses habitants y cause beaucoup de mis^re. On en voit de si pauvres, que ne pouvant fournir a leurs enfants les aliments n^cessaires, ils les exposent dans les rues, surtout lorsque les m6res tombent malades, ou qu’elles manquent de lait pour les nourrir. Ces pctits innocents sont condamnes en quelque mani^re a la mort presque au meme instant quails ont commence de vivre: cela frappe dans les grandes villes, comme Peking, Canton; car dans les autres villes h peine s^en apergoit-on. ‘‘C’est ce qui a porte les missionnaires a entretenir dans ces endroits tr^s peuples, un nombre de cat6chistes, qui en partagent entre eux tous les quarters, et les parcourent tous les matins, pour procurer la grice du baptSme k une multitude d’enfants moribonds. “Dans la meme vue on a quelquefois gagne des sages-femmes infid^les afin qu^elles permissent k des filles chretiennes de ses suivre dans les diff^rentes maisons oh elles sont appelees: car il arrive quelquefois que les Chinois se trouvant hors d’etat de nourrir une nombreuse famille, engagent ces sagesfemmes k etouffer dans un bassin plein d’eau les petits filles aussitdt qu’elles sont nees ces chretiennes ont soin de les baptiser, et par ce moyen ces tristes victimes de I’indigence de leurs parents trouvent la vie eternelle dans ces mSmes eaux, qui leur ravissent une vie courte et perissable.” ^Du Halde, Description giographique, historique, chronologiqtie, politique et physique de Vempire de la Chine et de la Tartarie chinoise, 173$, tom. ii., pp. 73, 74. The statement in the text above that drowning babies is a special business is possibly founded on a mistranslation of “sages-femmes.” ;

—

WAGES OF LABOUR China, however, though to go backwards. Its ants.

The

neglected.

it

73

may perhaps stand still,

does not seem

towns are no-where deserted by their inhabit-

lands which had once been cultivated are no-where

The same it

must

not, consequently,

for

be sensibly diminished. The

lowest class of labourers, therefore, notwithstanding their scanty subsistence,

must some way or another make

race so far as to keep

But

it

up

their usual

demand

classes of

for servants

were sensibly decaying. Every year

than

in all the different

had been the year

it

The lowest

own

business,

class being

classes,

before.

not being able to

would be glad

to seek

not only overstocked with

workmen, but with the overflowings

its

it

in

own

of all the other classes, the

competition for emplo3mient 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 up-

on these hard terms, but would

either starve, or be driven to seek

a

by begging, or by the perpetration perhaps of the enormities. Want, famine, and mortality would immedi-

subsistence either greatest

and from thence extend themselves

ately prevail in that class, all

the superior classes,

till

the

number

and stock which remained

in

it,

to

of inhabitants in the coun-

try was reduced to what could easily be maintained

by the revenue

and which had escaped

tyranny or calamity which had destroyed the

rest.

either the

This perhaps

is

nearly the present state of Bengal, and of some other of the English settlements in

before been

the East Indies. In

much

should not be very

a

fertile

country which had

depopulated, where subsistence, consequently, difficult,

and where, notwithstanding, three or

four hundred thousand people die of hunger in one year,

we may be

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 company which oppresses and domineers in the East Indies, cannot perhaps be better illustrated than

by the

different state of those countries.

The

liberal

fect, so it is

their

In a declining

country this

would

not be the case.

been bred in the superior

find emplo3mient in their

the lowest.

less

up

numbers.

numbers.

and labourers would,

employments, be

Many who had

there keep

continue their

would be otherwise in a country where the funds destined

for the maintenance of labour

the

shift to

wards and labourers

and the funds destined

therefore continue to be performed,

maintaining

same annual labour must

or very nearly the

China is not going back-

reward of labour, therefore, as the natural

The scanty maintenance

symptom

it is

the necessary ef-

of increasing national wealth.

of the labouring poor,

on the other hand.

THE WEALTH OF NATIONS

74 is

the natural

symptom

that things are at a stand, and their starving

condition that they are going fast backwards. In Great Britain

In Great Britain the wages of labour seem, in the present times, to be evidently more than what

is

precisely necessary to enable the

wages are above the

labourer to bring up a family. In order to satisfy ourselves upon

lowest

this point

rate,

it

not be necessary to enter into any tedious or

will

doubtful calculation of what is

possible to

do

this.

may

wages of labour are no-where which

est rate since (i)

there

is

a

First, in

is

be the lowest sum upon which

it

There are many plain symptoms that the in this country regulated

consistent with

by

this low-

common humanity.

almost every part of Great Britain there

is

a

distinction,

even in the lowest species of labour, between summer and winter

difference

Summer wages

are always highest.

But on account

between

wages.

winter

extraordinary expence of fewel, the maintenance of a family

and sum-

mer wages,

expensive in winter. Wages, therefore, being highest

pence

what

is is

lowest,

it

when

of the is

most

this ex-

seems evident that they are not regulated by

necessary for this expence; but by the quantity and sup-

posed value of the work. save part of his

A labourer, it may be said indeed, ought to

summer wages

in order to defray his winter ex-

pence; and that through the whole year they do not exceed what necessary to maintain his family through the whole year.

A

is

slave,

however, or one absolutely dependent on us for immediate subsistence,

would not be treated

in this

would be proportioned to his daily ( 2 ) wages do not

fluctuate

with the price of

provisions,

manner. His daily subsistence

necessities.

Secondly, the wages of labour do not in Great Britain fluctuate

with the price of provisions. These vary every-where from year to

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 year, frequently from

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 extra-

The high price of provisions during these ten 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 ordinary cheapness.

years past has not in

labour than to that of the price of provisions. wages vary more from (3 )

Thirdly, as the price of provisions varies

than the wages of labour,

so,

more from year to year

on the other hand, the wages of

la-

place to

bour vary more from place to place than the price of provisions.

place than

The

the price of provisions,

and butcher’s meat are generally the same or very nearly the same through the greater part of the united kingprices of bread

dom. These and most other things which are sold by retail, the way in which the labouring poor buy all things, are generally fully as

WAGES OF LABOUR

75

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-andtwenty per cent, higher than at a few miles distance. Eighteen

pence a day

don and

may

be reckoned the

common

price of labour in

neighbourhood. At a few miles distance

its

it

Lon-

falls to four-

Ten pence may be reckoned its price in neighbourhood. At a few miles distance it falls

teen and fifteen pence.

Edinburgh and

its

common

to eight pence, the usual price of

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

seems

not always sufficient to transport a

is

man from

it

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 the other, as would soon reduce all

them more nearly

of luggage the

most

to a level. After

and inconstancy of human na-

that has been said of the levity

ture, it appears evidently

to

from experience that a

man

is

of all sorts

to be transported. If the labouring

difficult

poor, therefore, can maintain their families in those parts of the

kingdom where the ence where

price of labour

must be

lowest, they

is

in afflu-

highest.

it is

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

and

(4)

frequently

wages and the price of provisions vary

whence Scotland receives almost every year very large

in England,

supplies.

But English corn must be sold dearer

country to which

which

it

it is

brought, than in England, the country from

comes; and in proportion to

dearer in Scotland than the Scotch

market

in competition with

upon the quantity

it.

of flour or

The

of

its

bulk,

it is

its

quality

com

it

cannot be sold

that comes to the

same

quality of grain depends chiefly

meal which

this respect English grain is so

though often dearer

in Scotland, the

much

it

3delds at the mill,

and

in

superior to the Scotch, that,

in appearance, or in proportion to the

measure

generally cheaper in reality, or in proportion to its

quality, or even to the

on the contrary,

is

measure of

dearer in

its

weight.

England than

The

price of labour,

in Scotland. If the la-

bouring poor, therefore, can maintain their families in the one part Below,

^ The

p. 1 13.

between England and Scotland law of settlement below, p, 140.

difference

to the English

in this respect is attributed

in

oppo-

site direc-

tions, as

grain

is

cheaper

and wages are higher in

Eng-

land than in Scot-

land;

the wealth op nations

76

kingdom, they must be in affluence

of the united

in the other. Oat-

meal indeed supplies the common people in Scotland with the greatest and the best part of their food, which is in general much

same rank

inferior to that of their neighbours of the

in England.®^

This difference, however, in the mode of their subsistence cause, but the

effect, of

strange misapprehension, I have frequently heard the cause. It

bour walks

is

not because one

a-foot, that the

cause the one

is

rich

is

not the

the difference in their wages; though,

man keeps a

one

represented as

coach while his neigh-

and the other poor; but be-

rich

is

it

by a

he keeps a coach, and because the other

is

poor he walks a-foot. and in last century grain was

During the course of the other, grain

last century, taking

dearer

during that of the present. This

and wages were low-

now admit

er

than in

this;

sible, still

of

is

is

kingdom than

a matter of fact which cannot

any reasonable doubt; and the proof

more

to England. It lic fiars,

one year with an-

was dearer in both parts of the united

of

it is, if

pos-

decisive with regard to Scotland than with regard

by

in Scotland supported

annual valuations

made upon

the evidence of the pub-

oath, according to the actual

state of the markets, of all the different sorts of grain in every dif-

ferent county of Scotland. If such direct proof could require collateral evidence to confirm

it,

I

would observe that

this

has

any like-

wise been the case in France, and probably in most other parts of

Europe. With regard to France there

though

it is

is

the clearest proof.®^ But

certain that in both parts of the united

kingdom grain

was somewhat dearer in the last century than in the present, equally certain that labour was poor, therefore, could bring

much more

up

much

cheaper. If the labouring

their families then, they

at their ease now. In the last century, the

common labour through the were sixpence in summer and five-pence in day-wages of

week, the same price very nearly,

still

must be

most usual

greater part of Scotland winter. Three shillings a

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

now eight-pence a day;

it is

common

labour are

ten-pence, sometimes a shilling about Edin-

burgh, in the counties 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, Ayr-shire, &c. In England the improve-

ments of agriculture, manufactures and commerce began much earlier

than in Scotland. The demand for labour, and consequently

its price,

The

must

necessarily have increased with those improvements.

inferiority of oatmeal is again insisted

Authorities are quoted below, pp. 240.

on below, p

160.

WAGES OF LABOUR

77

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

how much.

614, the pay of a foot soldier was the same as in the present times, eight pence a dsyp When it was first ascertain

In

1

would naturally 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. computes the necessary expence of a labourer’s family, consisting of six persons, the father and mother, 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.®^ In 1688, Mr. Gregory King, whose skill in political arithmetic is so much extolled by Doctor 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, His calculation, therefore, though of three and a half persons different in appearance, corresponds very nearly at bottom with that of judge Hales. Both suppose the weekly expence of such families to be about twenty pence a head. Both the pecuniary income and expence 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 represented them to the public. The price of labour, it must be observed, cannot be ascertained very accurately any where, different prices being often paid at the same place and for the same established

it

sort of labour, not only according to the different abilities of the

workmen, 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 ®®Huine, History, ed. of 1773, vol. vi., p. 178, quoting R3aner’s Foedera, tom. xvi., p. 717. This was for service in Germany. Sir

^ See

Matthew

Hale.

scheme for the maintenance of the Poor, in Burn’s History of the Poor-laws. This note appears first in ed. 2. Hale’s Discourse Touching Prohis

vision for the Poor was printed in 1683. It contains no internal evidence of the careful inquiry attributed to it above. Davenant, Essay upon the probable Methods of Making a People Gainers in the Balance of Trade, 1699, pp, 15, 16; in Works, ed. ’^^itworth, vol. ii., p. 175*

D

in Davenant, Balance of Trade, in Scheme 184. See below, p. 196, note.

Works Scheme B,

vol.

ii

,

p

the wealth of nations

78

show that law can never regulate them properly, though often pretended to do so. while

The

other necessaries

saries

recompence of labour, the

real

and conveniencies

of life

which

it

has

it

real quantity of the neces-

can procure to the labourer,

and con-

has, during the course of the present century, increased perhaps in

veniencies

a

have also become cheaper.

greater proportion than

still

its

money

price.

Not only

grain has

become somewhat cheaper, but many other things, from which the industrious poor derive an agreeable and wholesome variety of become a great deal cheaper. Potatoes,

food, have

for example,

do

not at present, through the greater part of the kingdom, cost half

The same

the price which they used to do thirty or forty years ago.

may be

thing

said of turnips, carrots, cabbages; things which were

formerly never raised but

monly

raised

cheaper.

by

The

by

the spade, but which are

now com-

become and even of the onions

the plough. All sort of garden stuff too has

greater part of the apples

consumed

in Great Britain

Flanders.

The

were in the

last

century imported from

great improvements in the coarser manufactures of

both linen and woollen cloth furnish the labourers with cheaper

and better cloathing; and those metals, with cheaper

many

with

Soap,

manufactures of the coarser

and better instruments of

trade, as well as

agreeable and convenient pieces of household furniture.

salt, candles, leather,

become a good deal dearer; laid

in the

and fermented

upon them. The quantity of

ing poor are under

liquors, have, indeed,

from the taxes which have been

chiefly

which the labour-

these, however,

any necessity of consuming,

is

so very small,

that the increase in their price does not compensate the diminution

many

in that of so

ury extends

other things.

The common complaint

the labouring poor will not

now be

contented with the same food,

cloathing and lodging which satisfied

convince us that real ffigh

earnings of labour

it is

not the

money

them

in former limes,

may

price of labour only, but

its

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 answer seems labourers and workmen

are an ad-

the society?

vantage

Servants,

to the society.

that lux-

even to the lowest ranks of the people, and that

itself

far greater part of

at first sight abundantly plain.

of different kinds,

make up

the

every great political society. But what improves

the circumstances of the greater part can never be regarded as an Berkeley, Querist, 5th ed., 1752, qu. 2, asks “whether a people can be poor where the common sort are well fed, clothed and lodged.” Hume, “On Commerce,” says: “The greatness of a state and the happiness of its called

subjects,

however independent they may be supposed

commonly allowed

to

Discourses, 1752, p. 4.

in

some

respects, are

be inseparable with regard to commerce. ’^—Political

WAGES OF LABOUR inconveniency to the whole.

and happy,

which the

No

79

society can surely be flourishing

members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of

of the produce of their

far greater part of the

own labour

as to be themselves tolerably

and lodged.

well fed, cloathed

Poverty, though

it

no doubt discourages, does not always prevent

marriage. It seems even to be favourable to generation.

starved Highland dren, while a

and

is

for

Luxury

half-

frequently bears more than twenty chil-

fine

generally exhausted

among women tion.

woman

pampered

A

of fashion,

lady

Poverty does not prevent births,

often incapable of bearing any,

is

by two or three. Barrenness, so frequent very rare among those of inferior sta-

is

in the fair sex, while

it

inflames perhaps the passion

enjoyment, seems always to weaken, and frequently to destroy

altogether, the powers of generation.

But poverty, though

it

does not prevent the generation,

tremely unfavourable to the rearing of children.

The

is

ex-

tender plant

but is unfavourable to

is

and so severe a climate, soon not uncommon, I have been frequently told,

produced, but in so cold a

withers and dies. It in the

is

soil,

Highlands of Scotland for a mother who has borne twenty

children not to have

two

alive. Several officers of great

have assured me, that so far from recruiting have never been able to supply soldiers’ children that

dren, however, soldiers.

is

all

it

some places one

are four years of age; in

almost

children,

experience

their regiment, they

with drums and it.

ing of

fifes

from

all

the

A greater number of fine chil-

seldom seen any where than about a barrack of

Very few of them,

fourteen. In

it

were born in

the rear-

seems, arrive at the age of thirteen or half the children born die before they

many places

before they are seven; and in

places before they are nine or ten. This great mortality,

however, will every where be found chiefly among the children of the

common

care

who cannot afford to tend them with the same as those of better station. Though their marriages are generally

more

people,

fruitful

than those of people of fashion, a smaller proportion

of their children arrive at maturity. In foundling hospitals,

among is still

the children brought greater than

Every species

among

up by parish

those of the

it.

But

charities, the mortality

common

people.

of animals naturally multiplies in proportion to

the means of their subsistence, and

beyond

and

no

species can ever multiply

in civilized society it is

so in

human

species;

and

it

can do

no other way than by destroying a great part of the children

which

their fruitful marriages produce.

re-

strains

multipli-

only among the inferior

ranks of people that the scantiness of subsistence can set limits to the further multiplication of the

andso

cation,

the wealth of nations The

while the liberal re-

ward of labour encourages

rewatd of labour, by enabling them to provide bet-

liberal

ter for their children,

and consequently to bring up a greater numwiden and extend those

ber, naturally tends to

to be remarked

it,

sible in the proportion

demand

this

is

which the demand

for labour requires.^^ If

continually increasing, the reward of labour must

necessarily encourage in such plication of labourers, as

a manner the marriage and multi-

may enable them

demand by a

ally increasing

limits. It deserves

too, that it necessarily does this as nearly as pos-

to supply that continu-

continually increasing population. If

should at any time be less than what was requisite for

the reward

this purpose, the deficiency of

hands would soon

raise

and

it;

if it

should at any time be more, their excessive multiplication would

soon lower

it

to this necessary rate.

under-stocked with labour in the

The market would be so much one case, and so much over-

stocked in the other, as would soon force back

price to that

its

proper rate which the circunastances of the society required. It

manner

in this

that the

demand

for

men,

like that for

is

any other

commodity, necessarily regulates the production of men; quickens it

when

it

goes on too slowly, and stops

fast. It is this

demand which

propagation in

regulates

it

when

and determines the

state of

the different countries of the world, in North

all

America, in Europe, and in China; which renders gressive in the

advances too

it

first,

it

rapidly pro-

slow and gradual in the second, and altogether

stationary in the last.^^ as the

wear and tear of the free

man

must be paid for

The wear and

of

tear

a

slave, it

has been

said, is at the

expence

own expence. The wear and tear of the latter, however, is, in reality, as much at the expence of his master as that of the former. The wages paid to of his master; but that of

a

free servant is at his

just like

journeymen and Servants of every kind must be such as may enable

that of

them, one with another, to continue the race of journeymen and

the slave,

though

servants, according as the increasing, diminishing, or stationary de-

not so ex-

mand

trava-

and

gantly. it

of the society

may happen

tear of a free servant

him much

generally costs

to require.

less

than that of a slave. The fund

destined for replacing or repairing,

Cantillon, Essai, pt.

i.,

autres qui travaillent dans

qu’on en a.” '®Ed. ireads “If

if

I

may

say

so, the

wear and

“Le nombre de laboureurs,

artisans et

etat se proportionne naturellement

au besoin

ch. ix., title,

un

But though the wear

be equally at the expence of his master,

it.”

Berkeley, Querist, qu. 62, asks “whether a country inhabited by people well fed, clothed and lodged would not become every day more populous? And whether a numerous stock of people in such circumstances would not constitute a flourishing nation?”

^ Ed, phrase

I reads “tear

is

and wear” here and in the three other

used in this paragraph.

cases

where the

WAGES OF LABOUR

commonly managed by a negligent master or overseer. That destined for performing the same office with

tear of the slave, careless

Si

is

regard to the free man,

is

managed by the

free

man

himself.

The

disorders which generally prevail in the oeconomy of the rich,

naturally introduce themselves into the

The

strict frugality

management

naturally establish themselves in that of the latter. ferent

of the former:

and parsimonious attention of the poor as

Under such

management, the same purpose must require very

degrees of expence to execute

experience of

all

it.

It appears, accordingly,

ages and nations, I believe, that the

dif-

different

from the

work done by

freemen comes cheaper in the end than that performed by slaves. It

is

found to do so even at Boston,

where the wages

The

liberal

of

it, is

it

is

and Philadelphia,

labour are so very high.

reward of labour, therefore, as

creasing wealth, so

complain of

common

New York,

it is

the effect of in-

To

the cause of increasing population.

to lament over the necessary effect

and cause

of

be remarked, perhaps, that

state, while the society is

crease

population.

the greatest public prosperity. It deserves to

High wages in-

it is

in the progressive

advancing to the further acqyisition,

The progressive state is

rather than

when

it

has acquired

its full

complement of

riches, th^t

the condition of the labouring poor, of the great body of the people,

seems to be the happiest and the most comfortable. It the stationary, and miserable in the declining state. sive state

is

in reality the cheerful

different orders of the society.

The

and the hearty stationary

is

The

hard in

the best for the la-

bouring poor.

progres-

state to all the

is dull;

the declining

melancholy.

The so

it

liberal

reward of labour, as

increases the industry of the

it

encourages the propagation,

common

people.

The wages

of

labour are the encouragement of industry, which, like every other

human

quality, improves in proportion to the

receives.

encouragement

it

A plentiful subsistence increases the bodily strength of the

labourer,

and the comfortable hope of bettering

of ending his days perhaps in ease

his condition,

and

and plenty, animates him

to

Where wages are high, accordworkmen more active, diligent, and

exert that strength to the utmost. ingly,

we

shall

always find the

expeditious, than where they are low; in England, for example,

than in Scotland; in the neighbourhood of great towns, than in re-

mote 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, greater part.'^^

paid

Workmen, on

by the piece,

"This

is

is

by no means the case with the when they are liberally

the contrary,

are very apt to over-work themselves, and to ruin

a more favourable view than that taken in Lectures, p. 257.

High wages

en-

courage industry.

the wealth of nations

S2

and constitution in a few years. A carpenter some other places, is not supposed to last in

London,

their health

in

and

his

in

utmost

vigour above eight years. Something of the same kind happens in

many

other trades, in which the

workmen

by

are paid

the piece;

as they generally are in manufactures, and even in country labour,

wherever wages are higher than ordinary. Almost every class of

some peculiar infirmity occasioned by

artificers is subject to

ex-

cessive application to their peculiar species of work. Ramiizzini,

an book concern-

eminent Italian physician, has written a particular ing such diseases.^'^

We

trious set of people

do not reckon our soldiers the most indus-

among

Yet when

us.

soldiers

have been em-

ployed 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

sum every

certain

day, according to the rate at which they were

paid. Till this stipulation

was made, mutual emulation and the deprompted them to over-work them-

sire of greater gain, frequently

and to hurt

selves,

their health

by

excessive labour. Excessive

application during four days of the week,

cause of the idleness of the other three, so

plained

is

frequently the real

much and

so loudly com-

Great labour, either of mind or body, continued for

of.

most men naturally followed by a great which, if not restrained by force or by some

several days together, desire of relaxation,

strong necessity,

is

is

in

almost

requires to be relieved

irresistible. It is

by some

the call of nature, which

indulgence, sometimes of ease only,

but sometimes too of dissipation and diversion. with, the consequences are often dangerous,

If it is

not complied

and sometimes

fatal,

and such as almost always, sooner or later, bring on the peculiar would always listen to the dictates of reason and humanity, they have frequently occasion rather to

infirmity of the trade. If masters

moderate, than to animate the application of

men.

It will

who works

be found, I believe,

many

of their work-

in every sort of trade, that the

so moderately, as to be able to

man

work constantly, not only

preserves his health the longest, but, in the course of the year, executes the greatest quantity of work.

In cheap years,

The opinion that

and

in dear ones

cheap

it is

pretended,

courage

quickens their industry. That a

idleness is

may

it

A

more

idle,

plentiful sub-

has been concluded, relaxes, and a scanty one

years en-

it

are generally

more industrious than ordinary.

sistence therefore,

erroneous.

workmen

more plenty than ordinary workmen idle, cannot well be doubted; but that should have this effect upon the greater part, or that men in little

render some

morbis artificum diatriba, 1700, translated into English (A Treatise

on the Diseases of Tradesmen) by R. James, 1746.

WAGES OF LABOUR general should

spirits,

when they

better

when they when they

are well fed,

good

work

are

ill

^3

when they

fed than

are disheartened than

when they are in when they are

are frequently sick than

generally in good health, seems not very probable. Years of dearth, it is

to

be observed, are generally among the

and mortality, which cannot

of sickness

common

people years

diminish the pro-

fail to

duce of their industry. ^

In years of plenty, servants frequently leave their masters, and trust their subsistence to

what they can make by

their

own

high in in-

But the same cheapness of provisions, by increasing the fund which is destined for the maintenance of servants, encourages

dustry.

upon such occasions expect more more labouring

cheap years,

employ a greater number. Farmers

masters, farmers especially, to

taining a few

Wag^are

profit

from

servants, than

by main-

their corn

by

selling it at

a low

The demand for servants increases, while the who offer to supply that demand diminishes. The

price in the market.

number

of those

price of labour, therefore, frequently rises in cheap years.

In years of scarcity, the

difficulty

and uncertainity of

subsist-

and low in dear

ence

make

all

such people eager to return to service. But the high

price of provisions,

by diminishing

years,

the funds destined for the main-

tenance of servants, disposes masters rather to diminish than to

number

increase the

of those they have.

In dear years

dependent workmen frequently consume the

little

too,

poor

in-

stocks with

which they had used to supply themselves with the materials of their work,

and are obliged

to

become journeymen

More people want employment than can willing to take

it

of both servants

Masters of

for subsistence.

easily get

many

it;

are

upon lower terms than ordinary, and the wages

and journeymen frequently sink

all sorts, therefore,

frequently

in dear years.

make

better bargains

with their servants in dear than in cheap years, and find them more

humble and dependent naturally, therefore,

in the

commend

former than in the

latter.

They

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

upon the

and the

profits of the other

price of provisions.

ever, than to imagine that

depend very much

Nothing can be more absurd, how-

men

in general should

work

less

when

they work for themselves, than when they work for other people.

poor independent workman

will generally

A

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 master.

The

one, in his separate independent state,

to the temptations of

bad company, which

it

with his

is less

liable

in large manufactories

so that

masters

commend dear years.

THE WEALTH OF NATIONS

84

SO frequently ruin the morals of the other.

independent workman over those servants

The who

superiority of the

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 work-

men

journeymen and servants

to

diminish Messance shows that in

A

of all kinds,

and dear years to

it.

French author of great knowledge and ingenuity, Mr. Mesin the election of St. Etienne, en-

sance, receiver of the tailles

deavours to show that the poor do more work in cheap than in

some French manufactures

by comparing the quantity and value

upon those

different occasions in three different manufactures;

more is produced in cheap

of

silk,

en.^® It

of the goods

one

on at Elbeuf; one of linen, and another both which extend through the whole generality of Rouappears from his account, which is copied from the registers

of coarse woollens carried

years.

made

dear years,

of the public offices, that the quantity

and value

of the goods

made

in all those three manufactures has generally been greater in cheap

than in dear years; and that cheapest,

and

it

has always been greatest in the

least in the dearest years. All the three

seem

somewhat from year

to year, are

to be

may

stationary manufactures, or which, though their produce

vary

upon the whole neither going back-

wards nor forwards.

No connexion

is

The manufacture

and that

of linen in Scotland,

of coarse wool-

lens in the west riding of Yorkshire, are growing manufactures, of

visible be-

tween

which the produce

dearness

creasing both in quantity

or cheap-

accounts which have been published of their annual produce, I

ness of

is

generally, though with

and

value.

Upon

some

variations, in-

examining, however, the

the years

have not been able to observe that

and the

sensible connection with the dearness or cheapness of the seasons.

variations in Scotch linen

and

Yorkshire woollen

manufactures.

its

variations have

had any

In 1740, a year of great scarcity, both manufactures, indeed, appear to have declined very considerably. But in 1756, another year of great scarcity, the Scotch manufacture made more than ordi-

nary advances. The Yorkshire manufacture, indeed, declined, and produce did not rise to what it had been in 1755 till 1766, after

its

the repeal of the American stamp act. In that and the following

year

it

greatly exceeded

continued to advance

The produce Misprinted

what

it

had ever been

before,

and

it

has

ever since.

of all great manufactures for distant sale

must

“taillies” in eds. 3-5.

^Recherches sur la population des giniralitis d'Auvergne, de Lyon, de Rouen, et de quelques provinces et villes du royaume, avec des rSflexions sur la valeur du bled tant en France giden Angleterre, depuis 1674 jusqu^en 1764, par M. Messance, receveur des taOles de l’ 61 ection de Saint-Etienne, 1766, pp. 287-292, 3o5-'?o8

*^Ed.

I

reads “continued to do so.”

WAGES OF LABOUR much upon

S5

the dearness or cheapness of

The pro-

the seasons in the countries where they are carried on, as upon the

duce depends on

necessarily depend, not so

circumstances which affect the

demand

where they

other

are consumed; upon peace or war, upon the prosperity or declen-

cum-

sion of other rival manufactures, of their principal customers.

work, besides, which

is

A

in the countries

and upon the good

or

bad humour

great part of the extraordinary

probably done in cheap years, never enters

The men servants who leave their masters become independent labourers. The women return to their parents, and commonly spin in order to make cloaths 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 the public registers of manufactures.

labour, therefore, frequently isters of

makes no

cir-

stances,

and more of it escapes being reck-

oned in cheap years.

figure in those public reg-

which the records are sometimes published with so much

parade, and from which our merchants and manufacturers would often vainly pretend to announce the prosperity or declension of

the greatest empires.

Though 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, imagine 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 necessaries and conveniencies of life. The demand for labour, according as it

There is, however, a connexion

between the price of labour

and that of provisions.

happens to be increasing, stationary, or declining, or to require an increasing,

stationary,

declining population,

or

quantity of the necessaries and conveniencies

determines the

of life

which must

be given to the labourer; and the money price of labour termined by what the

money

is

requisite for purchasing this quantity.

price of labour, therefore,

price of provisions

tinuing the same,

is

if

It is because the

low,

it

would be

is

higher, the

demand con-

was high.

for labour increases in years of

sudden

and extraordinary plenty, and diminishes in those of sudden extraordinary scarcity, that the rises in the one,

and sinks

money

de-

sometimes high where the

still

the price of provisions

demand

is

Though

and

price of labour sometimes

in the other.

In a year of sudden and extraordinary plenty, there are funds in

In years of plenty

the hands of

many of

the employers of industry, suflicient to main-

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 tain

workmen, bid against one another,

in order to get them,

which

there

is

a

greater

demand for la-

bour,

the wealth of NATIONS

86

sometimes

The contrary

and in years of scarcity a less

de-

mand,

raises

both the real and the of this

happens

The funds

dinary scarcity.

in

money price

of their labour.

a year of sudden and extraor-

destined for employing industry are less

than they had been the year before.

A considerable number

of peo-

employment, who bid against one another, in which sometimes lowers both the real and the money

ple are thrown out of

order to get

it,

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. price of labour. In 1740,

The

and the effect of

variations in the

by diminishing

scarcity of a dear year,

bour, tends to lower to raise

it.

The plenty

of

demand

the

for la-

as the high price of provisions tends

its price,

a cheap year, on the contrary, by increas-

price of

ing the demand, tends to raise the price of labour, as the cheapness

provisions

of provisions tends to lower

thus counterbalanced.

In the ordinary variations of the

it.

is

price of provisions, those two opposite causes

ance one another; which

manent than the of

wages

The

seem

to counterbal-

why

probably in part the reason

labour are every-where so much more steady and

wages of

Increase

is

the per-

price of provisions.

increase in the wages of labour necessarily increases the

many

price of

commodities,

by

increasing that part of

which

it

re-

increases prices,

solves itself into wages,

but the

tion both at

cause of

raises the

and so

consump-

far tends to diminish their

home and abroad. The same

cause, however, which

wages of labour, the increase of stock, tends to increase

increased

productive powers, and to

wages

its

tends to diminish

produce a greater quantity of

prices.

make a smaller quantity of labour work. The owner of the stock which

employs a great number of labourers, necessarily endeavours, for his

own

advantage, to

make such

of employment, that they

may

a proper division and distribution

be enabled to produce the greatest

quantity of work possible. For the same reason, he endeavours to

supply them with the best machinery which either 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

divide themselves into different classes

more they naturally

and subdivisions

of

employ-

ment. More heads are occupied in inventing the most proper machinery for executing the work of each, and likely to be invented.

it is,

therefore,

more

There are many commodities, therefore,

which, in consequence of these improvements, come to be produced

by is

so

much

less

labour than before, that the increase of

more than compensated by the diminution of Ed.

I

reads “that the increase of

its price

its

its

price

quantity

does not compensate the dim-

The meaning is that the increase in the amount paid for a given quantity of labour is more than counterbalanced by the diminution in the quantity required. The statement is repeated below, p. 242, 243. inution of

its

quantity.”

CHAPTER IX OF THE PROFITS OF STOCK

The

and

rise

in the profits of stock

fall

causes with the rise and

fall in

depend upon the same

the wages of labour, the increasing

Profits de-

pend on increase

or declining state of the wealth of the society; but those causes

one and the other very differently.

affect the

The

When

crease of

increase of stock, which raises wages, tends to lower profit.

many

the stocks of

rich

and dewealth,

merchants are turned into the same falling

trade, their

and when

mutual competition naturally tends to lower

there

is

carried on in the

the

same

effect in

It is not easy,

a like increase of stock in

some

society, the

them

it

all

its profit;

with the

the different trades

increase

same competition must produce

all.^

has already been observed, to ascertain what are

the average wages of labour even in a particular place, and at a particular time.

We

done with regard to the

tell

more

profits of stock. Profit is so

who carries on a

you himself what

is

very fluctuat-

particular trade cannot always

the average of his annual profit. It

is

af-

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 fected, not only

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

carried on in a great kingdom,

judge of what time, with

it

the different trades

must be much more

may have been

any degree

all

difficult;

and to

formerly, or in remote periods of

of precision,

must be altogether

impossible.

'•This statement is somewhat amplified below, p. 336, where the increasing intensity of the competition between the owners of capital is attributed to the gradually increasing difficulty of finding “a profitable method of em-

ploying any

new

The rate is difficult

to ascer-

can, even in this case, seldom determine

than what are the most usual wages. But even this can seldom be

ing, that the person

of wealth.

capital.”

tain,

the wealth^ of NATIONS

88 but may be inferred

from the rate of interest,

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

commonly can be made by

great deal will

ever

little

made by

the use of money, a

be given for the use of it,

less will

it;

and that wher-

commonly be given

for

it.^

According, therefore, as lie usual market rate of interest varies in

any country, we may be assured that the ordinary profits of stock it, fnust sink as it sinks, and rise as it rises. The progress of interest, therefore, may lead us to form some notion

must vary with

of the progress of profit.

which has fallen in

England,

By the

37th of Henry VIII.'*

all interest

seems, had sometimes been taken be-

declared unlawful. More,

it

fore that. In the reign of

Edward VI.

interest.^

kind,

is

above ten per cent, was

religious zeal prohibited all

This prohibition, however, like

said to have produced

no

effect,

all

creased than diminished the evil of usury.

VIII. was revived

was

it

The

interest

till

restricted to eight per cent. It

per cent, soon after the restoration,® and ®

Defined above, p. 52.

®

But that

same

statute of

in-

Henry

the 13th of Elizabeth, cap. 8.® and ten per

be the legal rate of

cent, continued to

when

by

others of the

and probably rather

interest will not

by

the 21st of James

was reduced the 12th of

to six

Queen

always bear the same proportion to profit

is

recognised below, pp. 96, 97, * C. 9, “an act against usury.”

On the ground that previous Acts and laws them all, and prohibits the repurchase of goods sold within three months before, and the obtaining by any device more than 10 per cent, per annum for forbearing payment of money. Its real effect was to legalise interest up to 10 per cent. ® 5 & 6 Ed. VI., c. 20, forbade all interest, and repealed 37 Hen. VIII., c. 9, alleging in its preamble that that Act was not intended to allow usury, as

had been obscure

it

repeals

“divers persons blinded with inordinate love of themselves” imagined, but

was intended against

all

fore that time ®

was

same was by the and inconvenience that be-

usury, “and yet nevertheless the

said act permitted for the avoiding of a

more

ill

used.”

On

the ground that 5 & 6 Ed. VI., c. 20, “hath not done so much good as was hoped it should but rather the said vice of usury and especially by

way of sale of wares and shifts of interest hath much more exceedingly abounded to the utter undoing of many gentlemen, merchants, occupiers and other.” ^ C. 17, which alleges that the fall of prices which had taken place made the maintenance of “so high a rate” as 10 per cent, prejudicial to agriculture

and commerce, and therefore reduces the maximum to 8 per cent, for the fuwith the very empty proviso that “no words in this law contained shall be construed or expounded to allow the practice of usury in

ture. It concludes

point of religion or conscience.” ® It had already been so reduced by a Commonwealth Act of Parliament, passed in August, 1651, which adopts the reasons given by 21 Jac. L, c. 17.

But of course

this, like

other Acts of the Commonwealth, had to be ignored

PROFITS OF STOCK Anne,^ to

seem

to

^9

five per cent. All these different statutory regulations

have been made with great propriety. They seem to have

followed 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 and in many other parts of the kingdom, at three and a four, and four and a half per cent.

capital, half,

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 ac-

while

wealth has been increasing.

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 manufaccelerated than retarded.

tures the profits of stock have been diminishing.

a greater stock

It generally requires

in a great

town than

to carry

in a country village.

ployed in every branch of trade, and

Idle

on any

The

sort of trade

great stocks em-

number

of rich

com-

the Restoration Parliament, which, by 12 Car. IL, c. 13, re-made the reduction on the grounds that the abatement of interest from 10 per cent, “in former times hath been found by notable experience beneficial to the advancement of trade and improvement of lands by good husbandry, with many other considerable advantages to this nation, especially the reducing of it to a nearer proportion with foreign states with whom we traffic,” and

by

because “in fresh

memory

late constant practice

of this nation as

is

the like

fall

hath found the

visible

by

from

eight to six in the

hundred by a

like success to the general

contentment

several improvements,” while “it is the en-

deavour of some at present to reduce

it back again in practice to the allowance of the statute still in force to eight in the hundred to the great discouragement of ingenuity and industry in the husbandry trade and commerce of

this nation.”

®By

Ann.

which speaks of the benefit to trade and agriculwar had laid on landowners, and of the decay of foreign trade owing to the high interest and profit of money at home, which things made it “absolutely necessary to reduce the high rate of interest” to a nearer proportion with the in12

st. 2, c.

16,

ture resulting from the earlier reductions, of the burdens which the

allowed in foreign states. ^®That of 1756-1763. Holders of 4 per cent, annuities

terest

who

stock bearing interest for some years at

were paid

off

by means

of

money

raised

declined to accept in exchange

new

and afterwards at 3 per cent, by a 3 per cent, loan in 1750. See 3-5

History of the Public Revenue, 1785, pt. ii., p. 113. From that time till the beginning of 1755 the 3 per cents, were usually above par. Then they gradually sank to 63 in January, 1762; rose to 96 in March, 1763; fell again to 80 in October, 1764; after that they were seldom above 90 before the publication of the Wealth of Nations (Sinclair, op. cit., pt. iii., 1790, Appendix iii.) The policy of a legal regulation of interest is discussed below, pp. 339, Sinclair,

.

340.

Below, pp. 327, 328.

Profits are

lower in towns,

where

THE WEALTH OF NATIONS

90 there is

much

former below

petitors, generally reduce the rate of profit in the

what

it is

But the wages

in the latter.

of labour are generally high-

stock,

than in the country,

er in a great

there

is

a country

in

village.

In a thriving town the

who have great stocks to employ, frequently cannot get number of workmen they want, and therefore bid against one

people

where

little.

town than

the

many

another in order to get as

wages

of labour,

and lowers the

parts of the country there

ploy

all

to get

the people,

who

is

as they can, which raises the profits of stock.

In the remote

frequently not stock sufficient to em-

therefore bid against one another in order

employment, which lowers the wages of labour, and

raises

the profits of stock. Interest is

higher in

In Scotland, though the legal rate of interest

England, the market rate

is

is

the

same

as in

rather higher. People of the best credit

Scotland,

a poor

there seldom borrow under

country,

Edinburgh give four per

than in England.

which payment either

in

five

is

upon

cent,

their promissory notes, of

whole or in part

pleasure. Private bankers in

which

per cent. Even private bankers in

London

no

give

may be demanded interest for the

at

money

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 somewhat 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.^^ So too in France, a country probably less rich

than England,

The

legal rate of interest in

France has nOt, during the course of

the present century, been always regulated

by the market

In 1720 interest was reduced from the twentieth to the penny, or from

five to

two per

cent. In

1724

it

was

rate.’"'

fiftieth

raised to the

penny, or to 3^ per cent. In 1725 it was again raised to the twentieth penny, or to five per cent. In 1766, during the ad-

thirtieth

ministration of Mr. Laverdy,

it

was reduced to the twenty-fifth

penny, or to four per cent. The Abbe Terray raised to the old rate of five per cent.

it

The supposed purpose

those violent reductions of interest was to prepare the

afterwards

many of way for reof

ducing 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 Above, p. 75.

in

England, the market rate has

“Below,

p. 189.

^®See Denisart, Article Taux des Interets, tom. iii. p, 18. J. B. Denisait, Collection de decisions nouvettes et de notions relatives d la jurisprudence actuelle, 7th ed., 1771, s.v. Interet, subdivision Taux des Interets. This does not

go so far as the reduction of 1766. The note appears

first in ed. 2.

PROFITS OF STOCK

9^

generally been higher; for there, as in other countries, they have

and easy methods of evading the

several very safe

of trade, I have been assured in

by

law.^*^

The profits

who had

British merchants

traded

both countries, are higher in France than in England; and

no doubt upon to

employ

in

one where

this

account that

their capitals in a it is

France than

the difference which you

tenance of the

common

British subjects chuse rather

country where trade

highly respected.

England.

in

many

The wages

is

in disgrace, than

of labour are lower in

When you go from Scotland to England, may remark between the dress and coun-

people in the one country and in the other,

sufficiently indicates the difference in their condition. is still

when you

greater

it is

The

contrast

return from France. France, though no

doubt a richer country than Scotland, seems not to be going forward so fast. It that

it is

is

a common and even a popular opinion

in the country,

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,

and who saw

it

The province extent of

who

sees the country now,

twenty or thirty years ago. of Holland, on the other hand, in proportion to the

its territory

try than England.

and the number of

The government

and private people of good

its

people,

there borrows at two per cent.,

credit at three.

The wages

said to be higher in Holland than in England, well

known, trade upon lower

The

trade of Holland,

decaying, and of

it

are so.

there

is

it

it

a richer coun-

is

profits

of labour are

and the Dutch,

than any people in Europe. is

may perhaps be true that some particular branches

no general decay.

When

sufficiently that

profit diminishes,

merchants are

very apt to complain that trade decays; though the diminution of profits is the natural effect of its prosperity, or of

being employed in

it

a greater stock

than before. During the late war the Dutch

gained the whole carrying trade of France, of which they tain a very large share. in the

The

the latter (in which I suspect, however, there aggeration) Below,

still re-

great property which they possess both

French and English funds, about forty millions, is

it is

said, in

a considerable ex-

the great sums which they lend to private people in

p. 340.

Postlethwayt, Dictionary of Commerce, 2nd ed., 1757, vol. i., p. 877, s.v. Funds, says that the amount of British funds held by foreigners has been estimated by some at one-fifth and by others at one-fourth of the whole debt. But Magens, Universal Merchant (ed. Horsley), 1753, p, 13, thought it “more than probable that foreigners are not concerned in anything like one-fourth.’’ He had been informed “that most of the money which the

Dutch have here is in Bank, East India and South Sea stocks, and that their them might amount to one-third of the whole.” Fairman, Account

interest in

land,

which

is

richer

than Engit is

has been pretended by some people,

But these symptoms seem to indicate

but lower Hol-

in

land.

the wealth of nations

92

countries where the rate of interest

is

higher than in their own, are

circumstances which no doubt demonstrate the redundancy of their stock, or that

it

has increased beyond 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

may

man, though acquired by a particular

increase beyond what he can employ in

continue to increase too; so

may

it,

trade,

and yet that trade

likewise the capital of a great

nation. In the peculiar case

of

new

colonies

high

In our North American and West Indian colonies, not only the

wages of labour, but the

profits of stock, are higher

onies both the legal

wages and high profits

go to-

interest of

eight per cent.

than in England. In the different

and the market

ever, are things, perhaps,

but profits gradu-

ways

ally di-

extent of

minish.

extent of

new

colonies.

its

therefore,

is

colony must

al-

in proportion to the

and more under-peopled

in proportion to the

stock, than the greater part of other countries.

have more land than they have stock to

how-

together, except in

A new

some time be more under-stocked its territory,

col-

six to

profits of stock,

which scarce ever go

the peculiar circumstances of

from

rate of interest run

High wages of labour and high

gether,

for

money, and consequently the

cultivate.

What

applied to the cultivation only of what

is

They

they have,

most

fertile

near the sea shore, and

and most favourably situated, the land

along the banks of navigable rivers. Such land too

purchased at a price below the value even of

its

frequently

is

natural produce.

Stock employed in the purchase and improvement of such lands

must yield a very large very large interest.

Its

profit,

rapid accumulation in so profitable an

ployment enables the planter faster

can

and consequently afford to pay a

to increase the

number

than he can find them in a new settlement. Those

find, therefore, are

em-

hands

whom

very liberally rewarded. As the colony

creases, the profits of stock gradually diminish. fertile

of his

and best situated lands have been

can be made by the cultivation of what

is

all

When

he in-

the most

occupied, less profit

inferior

both in

soil

and

of the Public Funds, 7th ed., 1824, p. 229, quotes “an account drawn up in the year 1762, showing how much of the several funds transferable at the Bank of England then stood in the names of foreigners,” which is also in Sinclair, History of the Public Revenue, pt. iii., 1790, p. 366. From this it

appears that foreigners held £4,627,858 of Bank stock and £10,328,537 in the other funds, which did not include South Sea and East India stock. Fairman had reason to believe that the South Sea holding amounted to £2,500,000 and the East Indian to more than £500,000, which would make in all about £18,000,000. In 1806, he says, the total claiming exemption from income tax (foreigners

were exempt) was £18,500,000, but

stock

“Eds,

1-3 read “lapds.”

this did

not include Bank

PROFITS OF STOCK situation,

and

93

can be afforded for the stock which

less interest

is

so employed. In the greater part of our colonies, accordingly, both the legal and the market rate of interest have been considerably re-

duced during the course of the present century. As

riches,

improve-

ment, and population have increased, interest has declined. The

wages

of labour

do not sink with the profits of slock. The demand

for labour increases with the increase of stock

and

profits;

after these are diminished, stock

tinue to increase, but to increase industrious nations

who

much

A

got a that

the proverb,

The

with

is

than a small stock with great

makes money. When you have

The great

often easy to get more.

little, it is little.

not only con-

than before. It

great stock, though with small

profits, generally increases faster

Money, says

may

its

are advancing in the acquisition of riches,

as with industrious individuals.

profits.

faster

whatever be

difficulty is to get

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

may sometimes raise the profits of stock, of

money, even in a country which

sition of riches.

The stock

of the

is

fast advancing in the acqui-

of business,

different people

among whom

it is

divided,

is

applied to those par-

which afford the greatest

had before been employed

profit.

Part of what

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 less than before. The market comes to be

many less,

less fully

comes to be

supplied with

different sorts of goods. Their price necessarily rises

and

yields a greater profit to those

therefore, afford to

borrow at a higher

who deal

interest.

in them,

more or

who

can,

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, commonly

borrowed at

more than

five

four,

per cent,

who before

that

and four and a half per

had not been used cent.

The

to

pay

great accession

both of territory and trade, by our acquisitions in North America

and the West

Indies, will sufficiently account for this, without sup-

posing 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

Above, pp. 64-68.

Newterri-

may

raise

country not being sufficient for the

which such acquisitions present to the

whole accession

ticular branches only

new branches of trade, and with them the interest

territory, or of

employed

“ Below,

in a great

pp. 314-332.

num-

country^ advancing

THE WEALTH OF NATIONS

94

ber of particular branches, in which the competition being profits

must have been

mention the reasons which dispose

me

the

less,

have occasion

greater. I shall hereafter

to

to believe that the capital

by the enormous

stock of Great Britain was not diminished even

expence of the late war. Diminution of

The diminution

of the capital stock of the society, or of the

funds destined for the maintenance of industry, however, as

it

low-

capital

wages of labour, so

raises the profits of stock,

stock

ers the

raises pro-

sequently the interest of money.

fits.

it

By

and con-

the wages of labour being

lowered, the owners of what stock remains in the society can bring

goods at

their

expence to market than before, and

less

less stock

being employed in supplying the market than before, they can

sell

and they get more

for

them

dearer.-- Their goods cost

them

less,

them. Their profits, therefore, being augmented at both ends, can well

af ord a

large interest.

may

great fortunes so suddenly and so

Bengal and the other British settlements

easily acquired in

East Indies,

The

in the

wages of labour are very

satisfy us that, as the

low, so the profits of stock are very high in those ruined countries.

The

interest of

money

is

proportionably

frequently lent to the farmers at

and the succeeding crop profits

mortgaged

is

In Bengal,

so.

and

forty, fifty,

for the

money

payment. As the

which can afford such an interest must eat up almost the

whole rent of the landlord, so such enormous usury must in

up

eat

its

turn

the greater part of those profits. Before the fall of the

Ro-

man republic, a usury of the same kind seems in the provinces,

try as rich it

have been common

virtuous Brutus lent

per cent, as

forty

as

to

under the ruinous administration of their procon-

money in Cyprus at eight-andwe learn from the letters of Cicero.^"^ In a country which had acquired that full complement of riches The

suls.

In a coun-

is

sixty per cent,

which the nature of

its soil

and

climate,

and

its

situation with re-

pos-

sibly

could be, profits as

well as

spect to other countries, allowed fore,

it

which could, there-

to acquire;

advance no further, and which was not going backwards, both

the wages of labour

and the

profits of stock

would probably be very

what

wages

low. In a country fully peopled in proportion to

would be

ritory could maintain or its stock employ, the competition for

very low,

either its ter-

em-

ployment would necessarily be so great as to reduce the wages of ^ Below, pp. 328, 329, 881. “ Ed. I reads “five and forty,”

Ad

Atticum, VI.,

i.,

s, 6.

Eds.

i

and

2

read ^‘cheaper.”

8 having? probably been misread as 5. Cicero had arranged that a six-year-old debt

should be repaid with interest at the rate of 12 per cent, per annum, the principal being increased by that amount for each of the six years. This would have very nearly doubled the principal, but Brutus, through ^is agent, kept asking for 48 per cent., which would have multiplied it by more

^an

fifteen.

However, Cicero asserted that the 12 per

isfied the cruellest usurers.

cent,

would have

sat-

PROFITS OF STOCK labour to what was barely sufficient to keep

95

up

the

number of lanumber

bourers, and, the country being already fully peopled, that

could never be augmented. In a country fully stocked in proportion to all the business

it

would be employed

had to

transact, as great

in every particular

The

extent of the trade would admit.

a quantity

of stock

branch as the nature and

competition, therefore, would

every-where 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

plement

may

its

laws and institutions. But this com-

of.

A

yet been

any such country.

be much inferior to what, with other laws and

institutions, the nature of its soil, climate,

mit

but there has never

and

situation might ad-

country which neglects or despises foreign commerce, and

which admits the

vessels of foreign nations into one or

two

of its

ports only, cannot transact the same quantity of business which

might do with

and

different laws

institutions.

In a country

it

too,

where, though the rich or the owners of large capitals enjoy a good deal of security, the poor or the owners of small capitals enjoy

scarce any, but are liable, under the pretence of justice, to be pil-

laged and plundered at any time

quantity of stock employed in transacted within

it,

all

by

the inferior mandarines, the

the different branches of business

can never be equal to what the nature and ex-

tent 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 profits. Twelve per cent, accordingly is said to be the common interests 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 con-

siderably above what the condition of the country, as to wealth or

When

poverty, would require.

formance of contracts,

it

puts

the law doe^ not enforce the perall

borrowers nearly upon the same

Interest is

raised

by

defective

enforce-

ment

of

contracts.

footing with bankrupts or people of doubtful credit in better regu-

lated countries.

The uncertainty

lender exact the same usurious interest which

from bankrupts.

Among

the barbarous nations

Roman many ages

western provinces of the tracts

was

left

for

The courts of The high rate

is

the

usually required

who

over-ran the

empire, the performance of conto the faith of the contracting

parties.^'"

justice of their kings

in

of

it.

money makes

of recovering his

interest

seldom intermeddled

which took place

^Lectures, pp. 130-134.

in

those

the wealth of nations

96

ancient times and by prohibi-

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

tion.

consideration for the use of their

what can be made by the use of

money

as

is

suitable, not only to

but to the difficulty and danger

it,

The high rate of interest among all Mahometan accounted for by Mr. Montesquieu, not from their pov-

of evading the law.

nations

is

but partly from

erty,

covering the

The lowest rate of

profit

The

and partly from the

this,^®

money is sufficient

to compensate the occasional losses to

must be more than enough to compen-

which every employment of stock

sate

compensating such extraordinary

losses,

borrower can afford to pay

and so must the

neat or clear profit.

is

hends frequently, not only

The

must always be something

lowest ordinary rate of profit

more than what which

difficulty of re-

is

What

exposed. It is

but what

this surplus,

is

is this

The

losses.

is

retained for

interest

which the

in proportion to the clear profit only.

lowest ordinary rate of interest must, in the

be something more than

surplus only

called gross profit compre-

same manner,

compensate the occasional

sufficient to

lowest rate of in-

losses to

terest.

Were

it

which lending, even with tolerable prudence,

is

exposed.

not more, charity or friendship could be the only motives

for lending.

In a country which had acquired

In a country as rich as

it

pos-

where

in every particular

its full

sibly

could be

of clear profit

would be low

which could be afforded out of

render

that only

upon the

it

it,

as the ordinary rate

would be very small, so the usual market rate of

interest

so

riches,

branch of business there was the greatest

quantity of stock that could be employed in

terest

complement of

impossible for

it,

any but the very wealthiest people to

interest of their

in-

would be so low as to live

money. All people of small or middling

the wealthiest

fortunes would be obliged to superintend themselves the employ-

people

ment

could live

man

on it.

of their

own

should be a

The province

stocks. It

man

would be necessary that almost every

of business, or engage in

of -Holland

unfashionable not to be a

Necessity makes

usual for almost every

every where regulates fashion. As “/.e., the

sort of trade.

seems to be approaching near to

state. It is there it

some

it is

man

this

of business.^®

man to be so, and custom

ridiculous not to dress, so

is

danger of evading the law.

'-^Esprit des lois, liv. xxii., ch. 19,

hometans a proportion de

la severite

“L’usure augmentc dans les pays made la defense: le pr8teur slndemnise du

Dans ces pays d’Orient, la plupart des hommes n’y a presque point de rapport entre la possession acet Tesperance de la ravoir apr^s Tavoir pret^e: I’usure y

peril de la contravention.

n’ont rien d^assur^; tuelle

d’une

somme

il

augmente done k proportion du peril de ^Joshua Gee, Trade and Navigation p. 128, notices the fact of it

l’insolvabilit6,”

of Great Britain Considered, 1729,

the Dutch being

to the deficiency of valuable land.

all

engaged in trade and ascribes

PROFITS OF STOCK it,

some measure, not

in

man and

to

be employed,

of a civil profession seems is

awkward

97

like other people.

in a

camp

As a

or a garrison,

even in some danger of being despised there, so does an

man among men The

idle

of business.

highest ordinary rate of profit

may

of the greater part of commodities, eats

be such

as, in

up the whole

of

the price

what should

The highest rate of

profit

go to the rent of the land, and leaves only what

is sufficient

pay

to

the labour of preparing and bringing them to market, according to

the lowest rate at which labour can any-where be paid, the bare subsistence of the labourer.

some way

The workman must always have been

fed

would eat up all rent and leave only

wages.

was about the work; but the landlord may not always have been paid. The profits of the trade which in

or other while he

Company

the servants of the East India

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

Double

rises or falls.

merchants

call,

interest

in

is

Great Britain reckoned, what the

a good, moderate, reasonable

profit;

terms which I

apprehend mean no more than a common and usual country where the ordinary rate of clear profit

may be

cent., it

reasonable that one half of

wherever business

is

carried on with

at the risk of the borrower, who, as

and four a

or five per cent,

sufficient profit

recompence

may,

it

profit.

it

were, insures

it

profit rises

and

falls

with

the rate of profit.

is

to the lender;

in the greater part of trades,

be both

the risk of this insurance, and a sufficient

upon

for the trouble of

employing the stock. But the pro-

countries where the ordinary rate of profit

lower, or a good deal higher. If it

interest to

should go to interest,

borrowed money. The stock

portion between interest and clear profit might not be the

of

In a

eight or ten per

is

The proportion of

it

was

either a

same

in

good deal

were a good deal lower, one half

perhaps could not be afforded for interest; and more might be

afforded

if it

were a good deal higher.

In countries which are fast advancing to riches, the low rate of

may,

profit

in the price of

many

commodities, compensate the high

wages of labour, and enable those countries to less thriving neighbours,

sell

among whom the wages

as cheap as their of labour

may

be

Countries with low profits

can sell as cheap as those with

lower.

low

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;

and in reality

wages of the

different

working people, the flax-dressers, the spin-

ners, the weavers, &c. should, all of them, be

day; only

it

advanced two pence a

would be necessary to heighten the price of a piece of linen

by a number

of

two pences equal to the number See below, pp. 603-605.

of people that

high profits

tend

to raise prices

more than

the wealth of nations

9^ high wages.

had been employed about

it,

by

multiplied

the

number

of days

during which they had been so employed. That part of the price of the commodity which resolved

itself into

wages would, through

all

the different stages of the manufacture, rise only in arithmetical

proportion to this rise of wages. But

the profits of

if

the differ-

all

ent 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

manufac-

ture, rise in geometrical proportion to this rise of profit.

The em-

ployer of the flax-dressers would in selling his flax require an additional five per cent,

upon the whole value

wages which he advanced

to his

of the materials

workmen. The employer

spinners would require an additional five per cent, both

advanced price of the

flax

and upon the wages

and

of the

upon the

of the spinners.

And

the employer of the weavers would require a like five per cent, both

upon the advanced

price of the linen yarn

and upon the wages of

the weavers. In raising the price of commodities the rise of wages operates in the lation of debt.

same manner as simple

The

interest does in the

rise of profit operates like

compound

accumu-

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

They say nothing They are silent with reown gains. They complain abroad.

concerning the bad effects of high profits.

gard to the pernicious effects of their only of those of other people.^^

According to the view of the subject here set forth, if the three employspend iioo in wages and materials, and profits are at first s per cent, and then rise to lo per cent., the finished commodity must rise from £331 os. 3d. to £364 2S., while if, on the other hand, the wages rise from £100 ers each

to £ios, the

commodity

will only rise to

£347 ns. 3d. It is assumed either on turn-over and not on capital per annum, or else that the employers each have their capital turned over once a year. But even when one or other of these assumptions is granted, it is clear that the “simple interest” may easily be greater than the “compound.” In the examples just given we doubled profits, but only added one-twentieth to wages. If we double wages and leave profits at $ per cent., the commodity should rise from £331 os. 3d. to £662 os. 6d. ^ This paragraph is not in ed. i the epigram at the end, however, did not that profits

mean

profits

;

make less

appearance here for the first time in ed. polished form below, p. 566. its

2,

since it occurs in a slightly

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 neighbour-

hood, be either perfectly equal or continually tending to equality. If in the

same neighbourhood, there was any employment evidently more or

either ^

less

would crowd into the other, that

it

its

advantageous than the

in the one case,

rest, so

many

Advantages and disadvantages tend to equality

people

and so many would desert

where

there

is

in

perfect

advantages would soon return to the level of

liberty.

it

other employments. This at least would be the case in a society

where things were

was perfect to

left to follow their

liberty,^

natural course, where there

and where every man was perfectly

chuse what occupation he thought proper, and

often as he thought proper. Every man’s interest would lo seek the advantageous,

free

change

to

both it

as

prompt him

and to shun the disadvantageous em-

oloyment.

Pecuniary wages and

profit, indeed, are

every-where in Europe

extremely different according to the different employments of

la-

Actual differences

of pecu-

bour and stock. But

this difference arises partly

from certain

cumstances in the employments themselves, which, either at least in the imaginations of

men, make up

cir-

really, or

for a small pecuniary

gain in some, and counter-balance a great one in others; and partly

from the policy of Europe, which no-where leaves things at perfect

niary

wages and profits are

due partly to count-

erbalancing dr-

hberty.

The

cura-

particular consideration of those circumstances

and of that

and partly to want

policy will divide this chapter into two parts.

^The

general design of this chapter, as well as

many

of

its details,

was

and viii. The first of these chapters is headed: “Le travail d’un laboureur vaut moins que celui d’un artisan,” and the second: “Les artisans gagnent les uns plus les autres moins selon les cas et les circonstances differentes.” The second ends thus: “Par ces inductions et cent autres qu’on pourrait tirer de Texperience ordinaire, on peut voir facilement que la difference de prix qu’on paie pour le doubtless suggested

by

Cantillon, Essai, pt.

chaps,

i,

vii.

travail joumalier est fondee sur des raisons naturelles et sensibles.”

“Ed.

I

reads “either evidently.”

®

99

stances

Above

pp. 56, 62.

of perfect liberty.

XHE WEALTH OF NATIONS

100

Parti Nature of the Employments them-

Inequalities arising from the

^

selves

There are

The five

five

have been able to observe, make up for a small pecuniary gain in some employments, and counter-balance a great one in others:

counter-

balancing

circumstances:

following are the principal circumstances which, so far as

I

the agreeableness or disagreeableness of the employments

first,

themselves; secondly, the easiness and cheapness, or the difficulty

and expence

of learning

employment

stancy of

which must be reposed

in

them; thirdly, the constancy or inconthem; fourthly, the small or great trust

in those

who

exercise them;

and

the

fifthly,

probability or improbability of success in them. (i)

Wages

vary with the agree-

First,

The wages

vary with the ease or hardship, the

of labour

cleanliness or dirtiness, the honourableness or dishonourableness of

Thus

most

places, take the year round, a jour-

ableness

the employment.

of the employment

neyman taylor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier. A

in

journeyman blacksmith, though an in twelve hours as a collier,

His work

is

day-light,

ward

who

not quite so dirty,

artificer,

is

is less

seldom earns so

much

only a labourer, does in eight. dangerous, and

is

carried on in

and above ground. Honour makes a great part of the

re-

of all honourable professions. In point of pecuniary gain, all

things considered, they are generally under-recompensed, as I shall

endeavour to show by and by.^ Disgrace has the contrary

The

trade of

a butcher

The most

ecutioner,

is,

paid than any agreeable

employ-

a brutal and an odious business; but

it is

most places more profitable than the greater part of common

in

trades.

Some very

is

effect.

detestable of

all

employments, that of public ex-

in proportion to the quantity of

common

Hunting and

work done,

better

trade whatever.

fishing, the

most important employments of man-

kind in the rude state of society, become in

its

advanced state their

'‘The foregoing introductory paragraphs would lead a logical reader to expect part i of the chapter to be entitled. “Inequalities of pecuniary wages and profit which merely counterbalance inequalities of other advantages and disadvantages.” The rather obscure tide actually chosen is due to the fact that nearly a quarter of the part is occupied by a discussion of three further conditions which must be present in addition to “perfect freedom” in order to bring about the equality of total advantages

and disadvantages. The chapwould have been clearer if this discussion had been placed at the beginning, but it was probably an afterthought. ter

®

Below, pp. 105-107.

INEQUALITIES OF WAGES AND PROFIT most agreeable amusements, and they pursue for pleasure what they once followed from necessity. In the advanced therefore, they are all very poor people

who

state of society,

follow as a trade,

ments are exceedingly

ill

paid.

what

other people pursue as a pastime. Fishermen have been so since the

time of

^

Theocritus.

A poacher

is

every-where 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

them than can

live

much better

condition.

The

makes more people follow

natural taste for those employments

comfortably by them, and the produce of their

labour, in proportion to

quantity, comes always too cheap to

its

market to afford anything but the most scanty subsistence to the labourers.

Disagreeableness and disgrace affect the profits of stock in the

same manner ern,

who

is

wages

as the

The keeper of an inn or tavown house, and who is exposed to

of labour.

never master of his

The same thing is true of profits.

the brutality of every drunkard, exercises neither a very agreeable

nor a very creditable business. 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 cheap-

(2)

Wages

vary with ness, or the difficulty

and expence of learning the business.

"W^en any expensive machine to be performed

by it before

it is

is

the cost of

erected, the extraordinary

worn

work

must be expected,

out, it

will

learning

the business.

replace the capital laid out

upon

it,

with at least the

^

ordinary

A man educated at the expence of much labour and time to

profits.

any

of those

and

skill,

employments which require extraordinary dexterity

may be compared

The work which he learns

to

one of those expensive machines.

to perform, it

must be expected, over and

above the usual wages of common labour,

will replace to

him the

whole expence of his education, with at least the ordinary profits

must do this too in a reasonable had to the very uncertain duration of human the same manner as to the more certain duration of the ma-

of an equally valuable capital. It

time, regard being life,

in

chine.

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,

labourers as

common

as skilled labour;

and that of

so perhaps in

®

some

^

cases; but in the greater part

See Idyllium xxi. This merely describes the

The note appears Ed.

I

first

reads “its.”

of apall

country

labour. It seems to suppose that of the former

be of a more nice and delicate nature than that of the

to

in ed. 2

.

life

of

it is

The cost

latter. It is

quite other-

two poor fishermen,

prentice-

ship ac-

counts for the wages of

manu-

the wealth of nations

102 facturers

being higher

than those of country la-

bourers

wise, as I shall

endeavour to shew by and by.® The laws and cus-

of Europe, therefore, in order to qualify

toms

cising the ticeship,

They

any person

for exer-

one species of labour, impose the necessity of an appren-

though with different degrees of rigour in different places.

leave the other free

and open

to every

body. During the con-

tinuance of the apprenticeship, the whole labour of the apprentice

mean time he must,

belongs to his master. In the

in

many

maintained by his parents or relations, and in almost

give time,

cases

too

years; a consideration which, though to the master,

is

it is

not always advantageous

on account of the usual idleness

ways disadvantageous

contrary, the labourer, while

him through

all

of apprentices, is al-

to the apprentice. In country labour, on the

he

is

employed about the

the more difficult parts of his business, and his

easier, learns

own labour maintains

the different stages of his employment. It

able, therefore, that in

Europe the wages

is

They

labourers.^

make them

in

of

com-

are so accordingly, and their superior gains

most places be considered as a superior rank of

people. This superiority, however,

daily or weekly earnings of of manufactures,

generally very small; the

is

journeymen

in the

more common

sorts

such as those of plain linen and woollen cloth,

computed at an average, the

reason-

of mechanics, artificers,

and manufacturers, should be somewhat higher than those

mon

must

commonly given to the teaching him his trade. They who cannot give money, or become bound for more than the usual number of

money

be cloathed by them. Some master for

all

cases, be

are, in

most places, very

little

more than

day wages of common labourers. Their employment, indeed,

more steady and uniform, and the superiority of taking the whole year together, evidently, however, to be

may

is

their earnings,

be somewhat greater. It seems

no greater than what

is sufficient

to

com-

pensate the superior expence of their education. Education

Education in the ingenious arts and in the

liberal professions, is

for liberal profession'^ is

more cost-

still

more tedious and expensive. The pecuniary recompence,

fore, of painters

to be

and

much more

sculptors, of lawyers

liberal:

and

it is

there-

and physicians, ought

so accordingly.

®

Below, p. 126. This argument seems to be modelled closely on Cantillon, Essai, pp. 23, 24, but probably also owes something to Mandeville, Fable of the Bees, pt. ii., dialogue vi., vol. ii., p. 423. Cp. Lectures, pp. 173-175. ^®The “ought” is equivalent to “it is reasonable they should be” in the previous paragraph, and to ‘‘must” in “must not only maintain him while he idle” on p. 103. Cp, “doivent” in Cantillon, Essai, p. 24: “Ceux done qui emploient des artisans ou gens de metier, doivent necessairement payer leur travail plus haut que celui d’un laboureur ou manoeuvre.” The meaning need not be that it is ethically right that a person on whose education much has been spent should receive a large reward, but only that it is economically

is

desirable, since otherwise there

would be a

deficiency of such persons.

INEQUALITIES OF WAGES AND PROFIT The profits

of stock

seem

to

be very

or difficulty of learning the trade in different

ways

in

which stock

is

little affected

which

it is

by the

easiness

ly

and the

employed. All the

commonly employed

in great

towns

pense

seem, in reality, to be almost equally easy and equally difficult to

One branch either of foreign or domestic trade, cannot well much more intricate business than another. Thirdly, The wages of labour in different occupations vary with

learn.

highe/

be a

Profits are

the constancy or inconstancy of emplo5mient.i^

Employment

is

much more

by this

constant in some trades than in

others. In the greater part of manufactures, a

journeyman may be

employment almost every day in the year that he is work. A mason or bricklayer, on the contrary, can work

pretty sure of able to

neither in hard frost nor in foul weather,

other times depends is liable,

upon the occasional

in consequence, to

earns, therefore, while he

while he

is idle,

is

and

his

employment

calls of his

at all

He What he

customers.

be frequently without any.

employed, must not only maintain him

but make him some compensation for those anxious

and desponding moments which the thought of so precarious a ation

must sometimes

occasion.

Where

situ-

the computed earnings of

upon a masons and

the greater part of manufacturers, accordingly, are nearly level

with the day wages of

common labourers,

those of

more to double those wages. Where common labourers earn four and 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 bricklayers are generally from one half

fromer earn nine and ten, as in London, the latter commonly earn fifteen

and eighteen.

more easy in

No

species of skilled labour, however, seems

to learn than that of

masons and bricklayers. Chairmen

London, during the summer season, are said sometimes to be em-

ployed as bricklayers. are not so

much

The high wages

of those

the recompence of their

skill,

workmen,

therefore,

as the compensation

for the inconstancy of their emplo3mient.

A

house carpenter seems to exercise rather a nicer and more

genious trade than a mason. In most places, however, for universally so, his day-wages are

ment, though

it

^ The treatment

somewhat

it is

in-

not

lower. His employ-

depends much, does not depend so entirely upon

of this head

would have been

drcum-

clearer if

a distinction between “day-wages” (mentioned lower

it

had begun with

down on

the page)

and annual earnings. The first paragraph of the argument claims that annual earnings as well as day-wages will be higher in the inconstant employment so as to counterbalance the disadvantage or repulsive force of having “anxious and desponding moments.” In the subsequent paragraphs, however, this claim is lost sight of, and the discussion proceeds as if the thesis was that annual earnings are equal though day-wages may be unequal.

wages

va^with constancy

THE WEALTH OF NATIONS

104

the occasional calls of his customers; and

it is

not liable to be in-

by the weather. trades which generally afford constant employment, the When happen in a particular place not to do so, the wages of the workterrupted

men always rise a good those of common labour. cers are liable to

deal above their ordinary proportion to

In London almost all journeymen artifiupon and dismissed by their masters

be called

from day to day, and from week to week, day-labourers in other places.

The

in the

same manner

as

lowest order of artificers, jour-

accordingly, earn their half a crown a day,^^ may be reckoned the wages of common lapence though eighteen bour. In small towns and country villages, the wages of journeymen taylors frequently scarce equal those of common labour; but in London they are often many weeks without employment, par-

neymen

taylors,

ticularly during the

When

summer.

employment is combined with the 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 commonly 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 the inconstancy of

hardship, disagreeableness,

commonly earn ought not to seem unreasonable that coal-heavers should sometimes earn four and five times those wages. In the enquiry made into their condition a is

necessarily very inconstant. If colliers, therefore,

double and triple the wages of

few years ago,

it

common labour,

was found that at the

rate at

it

which they were then

paid, they could earn from six to ten shillings a day. Six shillings are about four times the wages of

every particular trade, the lowest

common labour in London, and in common earnings may always be

considered as those of the far greater number. ever those earnings to compensate

all

may

appear,

if

How extravagant so-

they were more than sufficient

the disagreeable circumstances of the business,

would soon be so great a number of competitors as, in a trade which has no exclusive privilege, would quickly reduce them to a there

lower rate. Below, p. 141, 142.

INEQUALITIES OF WAGES AND PROFIT The constancy

or inconstancy of

the ordinary profits of stock in

stock

is

or

is

employment cannot

any particular

affect

Whether the

trade.

not constantly employed depends, not upon the trade,

The wages

great trust which

does not pro-

affect fits.

but the trader.^^ Fourthly,

Constancy

of labour

must be reposed

vary according to the small or in the

(4)

Wages

vary with

workmen.^^

the trust

The

wages of goldsmiths and jewellers are every-where superior

to those of

many

other workmen, not only of equal, but of

much

to

be re-

posed.

superior ingenuity; on account of the precious materials with which

they are intrusted.

We trust our health to the physician; our

life

and reputation

to the lawyer

our fortune and sometimes

and attorney. Such confidence

could not safely be reposed in people of a very tion.

Their reward must be such, therefore, as

mean

may

or low condi-

them that

give

rank in the society which so important a trust requires.

The

long

time and the great expence which must be laid out in their education, still

when combined with

this circumstance, necessarily

enhance

further the price of their labour.

When trust;

a person employs only his own stock in trade, there

and the

credit

which he

may get from

is

no

unaffected

other people, depends,

not upon the nature of his trade, but upon their opinion of ids fortune, probity,

and prudence. The

different rates of profit, therefore,

in the different branches of trade,

Profits are

cannot arise from the different

degrees of trust reposed in the traders.^®

“Misprinted “effect” in ed. 5. “ That “stock” consists of actual objects seems to be overlooked here. The constancy with which such objects can be employed is various* the constancy with which the hearse of a village is employed depends on the number of deaths, which may be said to be “the trade,” and is certainly not “the trader ” There is no difference of profits corresponding to differences of daywages due to unequal constancy of employment, for the simple reason that “profits” are calculated by their amount per annum, but the rural undertaker, liable to long interruption of business in healthy seasons,

may

just as

“some compensation for those anxious and desponding moments which the thought of so precarious a situ” ation must sometimes occasion “ The argument foreshadowed in the introductory paragraphs of the chapter requires an allegation that it is a disadvantage to a person to have trust reposed in him, but no such allegation is made Cantillon, Essai, p. 27, says: “lorsqu’il faut de la capacity et de la confiance, on paie encore le travail plus cher, comme aux jouailliers, teneurs de compte, caissiers, et autres ” Hume, well as the bricklayer be supposed to receive

History, ed. of 1773, vol. viii., p 323, says* “It is a familiar rule in all business that every man should be paid in proportion to the trust reposed in him

and the power which he enjoys.” “ But some trades, e.g that of a banker, may be necessarily confined to persons of more than average trustworthiness, and this may raise the rate of profit above the ordinary level if such persons are not sufficiently plentiful.

by

trust.

the wealth of NATIONS

io6 (5 )

Wages

vary with the pro-

Fifthly,

of labour in different

employments vary

ac-

cording to the probability or improbability of success in them.^'^

The probability

bability of success.

The wages

for the

that

employment

to

any particular person

which he

is

educated,

ferent occupations. In the greater part of is

shall ever

is

be qualified

very different in

dif-

mechanic trades, success

almost certain; but very uncertain in the liberal professions. Put

your son apprentice to a shoemaker, there learning to

make a pair

is little

doubt of his

But send him to study the law,

of shoes:

it

twenty to one if ever he makes such proficiency as will enhim 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 is at least

able

the blanks. In a profession where twenty fail for one that succeeds, all that should have been gained by the unThe 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

that one ought to gain

successful twenty.

counsellors at law

may

sometimes appear, their real retribution

is

Compute in any particular place, what is likeand 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 never equal to

this.^"^

ly to be annually gained,

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 expence, even though you rate the former as high, and the latter as low, as can well be done. lottery of the law, therefore, lottery;

and

that, as well as

fessions, is,^® in point of

is

very far from being a perfectly

The fair

many other liberal and honourable pro-

pecuniary gain, evidently under-recom-

penced.

Law and

Those professions keep

their level, however, with other occupa-

similar

professions are

nevertheless

crowded.

tions, and,

notwithstanding these discouragements,

all

generous and liberal spirits are eager to crowd into them.

the most

Two

dif-

recommend them. First, the desire of the reputation which attends upon superior excellence in any of them; ferent causes contribute to

The argument under this head, which is often misunderstood, is that pecuniary wages are (on the average, setting great gains against small ones) less in trades where there aie high prizes and many blanks. The remote possibility

of obtaining one of the high prizes

“in the imaginations of

men make up

is

one of the circumstances which

for a small pecuniary gain” (p. 99).

Cantillon, Essai, p. 24, is not so subtle, merely

portionate to ri^. ^Lectures, p. 175.

^'^Eds. 1-4

making remuneration proread “are.”

INEQUALITIES OF WAGES AND PROFIT and, secondly, the natural confidence which every

own

not only in his

man has more or

but in his own good fortune. To excel in any profession, in which but few arrive at mediocrity,

less,

is

the most decisive

ents.

The

abilities,

abilities,

mark

what

of

called genius or superior tal-

is

public admiration which attends upon such distinguished

makes always a part

in proportion as

of their reward; a greater or smaller

makes a

higher or lower in degree. It

it is

able part of that reward

in the profession of physic;

er perhaps in that of law; in poetry

a

Public admiration

makes a part of the re-

ward of consider-

still

great-

superior abilities.

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

except in the peculiar case

exercise for the sake of gain

considered, whether from reason or

is

prejudice, as a sort of public prostitution.

pence, therefore, of those

The pecuniary recom-

who exercise them in

this

manner, must be

of players,

operasingers,

&c.

not only to pay for the time, labour, and expence of ac-

sufficient,

quiring the talents, but for the discredit which attends the employ-

ment of them as the means of subsistence. The exorbitant rewards of players, opera-singers, opera-dancers, &c. 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 tliat

we should

ents with the

despise their persons,

most profuse

liberality.

we must of necessity do the

other.

and yet reward

their tal-

While we do the one, however,

Should the public opinion or pre-

judice 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

means so

talents,

rare as

perfection,

who

is

though far from being common, are by no

imagined.

disdain to

Many

make

are capable of acquiring them,

if

people possess them in great

them; and many more any thing could be made honour-

this use of

by them. The over-weening conceit which the greater part of men have of their own abilities, is an ancient evil remarked by the philosophers ably

and moralists of

part of all ages.

good fortune, has been sible, still

more

The greater

less

universal.

own

men have

pos-

an overweening

Their absurd presumption in their taken notice

There

is

no

of. It is,

man

living

however,

if

who, when in

tol-

conceit of

erable health

gain

and

spirits,

has not some share of

it.

The chance

by every man more or less over-valued, and the chance of by most men under-valued, and by scarce any man, who is in

is

loss is

of

tolerable health

and

spirits,

^Ed.

valued more than

I

reads “of

it.’

it is

worth,

their abilities:

the wealth of NATIONS

io8

the

of gain is naturally over-valued,

That the chance

lotteries

show that

from the universal success of a perfectly

lotteries.

The world

fair lottery; or

we may

learn

neither ever saw,

one in which the whole

chance of

nor ever will

gain

gain compensated the whole loss; because the undertaker could

is

overvalued.

see,

make nothing by

it.

In the state lotteries the tickets are really not

worth the price which

paid by the original subscribers, and yet

is

commonly sell in the market for twenty, thirty, and sometimes forty per cent, advance. The vain hope 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

sum

is

know that even

that small

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 fair

one than the

same demand

common

for tickets.

of the great prizes, ers,

state lotteries,

still

to

a perfectly

there would not be the

In order to have a better chance for some

some people purchase

small shares in a

more

approached much nearer

it

several tickets,

greater number. There

is not,

certain proposition in mathematics, than that the

and oth-

however, a

more

tickets

likely you are to be a loser. Advenupon all the tickets in the lottery, and you lose for certain and the greater the number of your tickets the nearer you approach to

you adventure upon, the more ture

;

this certainty.

That the chance

and the moderate profit of

of loss

ever valued more than

it is

insurers

erate profit of insurers.

shows

or sea-risk, a trade at

that the

chance of

to compensate the

is

frequently undervalued, and scarce

worth,

we may learn from

the very mod-

In order to make insurance, either from

all,

the

common

common premium must be

fire

sufficient

pay the expence of manageas might have been drawn from an

losses, to

loss is

ment, and to afford such a profit

under-

equal capital employed in any

common

trade.

The person who pays

valued.

no more than risk, or the it.

this,

evidently pays

no more than the

real value of the

lowest price at which he can reasonably expect to insure

But though many people have made a

little

money by

insurance,

very few have made a great fortune; and from this consideration alone,

and

it

seems evident enough, that the ordinary balance of profit

not more advantageous in this, than in other common by which so many people make fortunes. Moderate, howas the premium of insurance commonly is, many people de-

loss is

trades ever,

spise the risk too

at

much to care to pay it. Taking

an average, nineteen houses

the whole

kingdom

in twenty, or rather, perhaps, ninety-

nine in a hundred, are not insured from

fire.

Sea risk

is

more alarm-

ing to the greater part of people, and the proportion of ships insured to those not insured is

much

greater.

Many sail, however, at all sea-

INEQUALITIES OF WAGES AND PROFIT sons,

and even

in

^^9

may

time of war, without any insurance. This

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 sometimes perhaps be done without any imprudence.

upon them likely to

may more than compensate such losses as they are in the common course of chances. The neglect of

all,

meet with

insurance upon shipping, however, in the same houses, of

in

is,

most

cases, the effect of

no such

manner

upon

as

nice calculation,

mere thoughtless rashness and presumptuous contempt

but

of the

risk.

The contempt in

no period of

of risk

life

and the presumptuous hope

more

of success, are

active than at the age at which

How little the fear of misfortune is then

ple chuse their professions.

capable of balancing the hope of good luck, appears dently in the readiness of the or to

go to

enter into

sea,

what

young peo-

common

more

still

evi-

than in the eagerness of those of better fashion to

chance of gain and

are called the liberal professions. soldier

may lose is

obvious enough. Without re-

the beginning of a

new war; and though they have their

a thousand occasions of acquiring honour and

scarce

youth-

distinc-

which never occur. These romantic hopes make the whole price

of their blood. Their

pay is

common labourers, and

than that of

less

in actual service their fatigues are

The

much

that of the army.

The son

of

a creditable labourer or

frequently go to sea with his father’s consent; but

always without

it.

artificer

he

if

enlists as

other.

The

great admiral

object of public admiration than the great general,

sees

any the

and the highest

success in the sea service promises a less brilliant fortune tation than equal success in the land.

through

all

The same

a captain

in the

and repu-

difference runs

the inferior degrees of preferment in both.

of precedency

By

sailors, therefore,

some fortune and preferment than common of those prizes is

what

principally

their skill

and dexterity are

much

artificers,

and though

whole

their

in the

common estimation. As

the great prizes in the lottery are less, the smaller ones

Common

the rules

navy ranks with a colonel

army: but he does not rank with him in the

more numerous.

a

is less

making something by the one trade: nobody but himself of his

may

Other people see some chance of his

making any thing by the

undervalue the risk of loss.

For this reason soldiers

are poorly paid,

greater.

lottery of the sea is not altogether so disadvantageous as

soldier, it is

prone to over-

any chance of preferment, they figure to themselves, in tion

particularly

value the

garding the danger, however, young volunteers never enlist so read-

ful fancies,

people are

people to enlist as soldiers,

What a common ily as at

Young

must be

more frequently get

soldiers;

recommends the

and the hope

trade.

Though any

superior to that of almost life is

one continual scene of

and sailors not

much better.

the wealth of nations

IIO

hardship and danger, yet for

and

dexterity

all this

skill,

for al

those hardships 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

common

wages are not greater than those of

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 the different ports of Great Britain,

who

from

sail

more nearly upon a

is

all

level

than that of any other workmen in those different places; and the rate of the port to

and from which the greatest number

who

sail

the

workmen are Edinburgh. But the sail

from the port of London seldom earn above three or

four shillings a Leith,

and the

peace,

and

month more than those who difference

merchant

in the

from the port of

sail

frequently not so great. In time of

is

London

service, the

price

is

from a

guinea to about seven-and-twenty shillings the calendar month.

common week,

The

the calendar

sailor, indeed,

month from

forty to five-and-forty

over and above his pay,

with provisions. Their value, however,

may

and though

it

supplied

common labour-

sometimes should, the excess will not be clear

gain to the sailor, because he cannot share

whom

is

not perhaps always ex-

ceed the difference between his pay and that of the

ily,

A

labourer in London, at the rate of nine or ten shillings a

may earn in

shillings.

er;

is

different classes of

about double those of the same classes at ors

that

At London

the port of London, regulates that of all the rest.

wages of the greater part of the

sail,

it

with his wife and fam-

he must maintain out of his wages at home.

Dangers which can be sur-

stead of disheartening young people, seem frequently to recom-

mounted

mend a

attract,

of people, is often afraid to

though mere unwholesemeness

The dangers and

town,

hair-breadth escapes of a

trade to them.

A

among

tender mother,

tures of the sailors should entice

pect of hazards, from which

of adventures, in-

the inferior ranks

send her son to school at a sea-port

the sight of the ships

lest

life

and the conversation and adven-

him

to go to sea.

we can hope

The

distant pros-

to extricate ourselves

by

repels.

courage and address,

is

the wages of labour in in

not disagreeable to us, and does not raise

any employment.

It is otherwise with those

which courage and address can be of no

are

known

to be very

remarkably high. Unwholesomeness ness,

and

its effects

avail.

unwholesome, the wages

upon the wages

is

In trades which

of labour are

always

a species of disagreeable-

of labour are to

be ranked un-

der that general head. '

Profits

vary with

In

all

the different employments of stock, the ordinary rate of

profit varies

more or

less

with the certainty or uncertainty of the

INEQUALITIES OF WAGES AND PROFIT returns.

These are

the foreign trade,

in general less uncertain in the inland

and

others; in the trade to

than in

some branches of foreign trade than North America, for example, than in that in

certainty of return.

in

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 as to

compensate

it

the most hazardous trades. of a smuggler,

The most hazardous

or so

of all trades, that

though when the adventure succeeds

the most profitable,

it,

completely. Bankruptcies are most frequent in

is

likewise

it is

the infallible road to bankruptcy.

The

pre-

sumptuous 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 sufficient to

common

compensate the

risk.

below what

profit

To compensate

is

completely, the

it

returns ought, over and above the ordinary profits of

stock, not only to

make up

for all occasional losses,

surplus profit to the adventurers of the of insurers.

But

if

the

common

but to afford a

same nature with the

returns were sufficient for

profit

all this,

bankruptcies would not be more frequent in these than in other tiades.^^

Of the five circumstances, therefore, which vary the wages of labour, two only affect the profits 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 or no difference in the far greater part of the different

is little

em-

ployments of stock; but a great deal in those of labour; and the ordinary profit of stock, though

seem

to rise in proportion to

in the

same

it rises

it.

with the

risk,

It should follow

does not always

from

society or neighbourhood, the average

rates of profit in the different

all this, that,

and ordinary

employments of stock should be more

nearly upon a level than the pecuniary wages of the different sorts

They are so accordingly. The difference between the 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 apparof labour.

earnings of a

ent 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.^®

^ Eds. 4 and 5 read “their,” doubtless a misprint The fact is overlooked that the numerous bankruptcies may be

counter-

balanced by the instances of great gain. Below, on p. 125, the converse mistake is made of comparing great successes and leaving out of account great failures.

^ Above,

p. 53.

Profits are less

un-

equal than wages,

and

their

inequality

often only due

is

to the in-

cluaon of wages,

XHE WEALTH OE NATIONS

II2 as in the

case of

the profit

Apothecaries profit

uncommonly frequently no

thecary,

of an apothecary

any

that of is

of

artificer

much

in all cases,

whatever; and the trust which

greater importance.

and of the

rich

when

He is

is

reposed in

the physician of the poor

the distress or danger

arises generally from the price at

not very

is

His reward, therefore, ought to be suitable to his

great.

is

more than the reasonable wages of labour. The skill is a much nicer and more delicate matter than

of an apo-

him

become a bye-word, denoting something

is

extravagant. This great apparent profit, however,

skill

and

which he

sells his and it But the whole drugs which the best employed apothecary, in a large market town, will sell in a year, may not perhaps cost him

his trust,

drugs.

above thirty or forty pounds. Though he should fore, for three or four

this

may

sell

them, there-

hundred, or at a thousand per cent,

frequently be no

more than

the reasonable

profit,

wages

of his

way in which he can charge them, upon The greater part of the apparent profit is

labour charged, in the only the price of his drugs. real

try grocer

wages disguised in the garb of

profit.

In a small sea-port town,^^ a little grocer

or coun-

will

make

forty or fifty

per cent, upon a stock of a single hundred pounds, while a considerable wholesale merchant in the

or ten per cent,

may

cer

make eight

upon a stock of ten thousand. The trade of the gro-

may

larger capital in the business.

it

will scarce

be necessary for the conveniency of the inhabitants, and

the narrowness of the market

live

same place

by his

trade, but live

by

it

requires. Besides possessing

read, write,

not admit the employment of a

The man, however, must not only suitably to the qualifications which

a

little capital,

and account, and must be a

he must be able to

tolerable judge too of, per-

haps, fifty or sixty different sorts of goods, their prices, qualities,

and the markets where they are all

the knowledge, in short, that

to be is

had

cheapest.

He must

have

necessary for a great merchant,

which nothing hinders him from becoming but the want of a cient capital. Thirty or forty

suffi-

pounds a year cannot be considered as

too great a recompence for the labour of a person so accomplished.

Deduct

more

this

from the seemingly great

will remain, perhaps,

greater part of the apparent profit

The greater diSer-

ence be-

tween retail

and

The

profits of his capital,

and little

than the ordinary profits of stock. is,

The

in this case too, real wages.

difference between the apparent profit of the retail

and that

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 make of the wholesale trade,

is

wholesale profits in

town than

but a very

trifling

The apparent

addition to the real profits of so great a stock.

profits of the

wealthy

retailer, therefore, are

Doubtless Kirkcaldy was in Smith’s mind

there

INEQUALITIES OF WAGES AND PROFIT

^^3

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

countiyis due to the

and frequently much cheaper

cause

than in small towns and

in the capital

country villages.^^ Grocery goods, for example, are generally cheaper; bread

and

meat frequently as cheap.

same

much

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 butcher’s

It costs

them must be brought from a much greater disThe prime cost of grocery goods, therefore, being the same

the greater part of tance,

in both places, they are cheapest

where the least profit is charged upon them. The prime cost of bread and butcher’s 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 equal-

ly cheap. In such articles as bread cause,

which diminishes apparent

extent of the market,

by

and butcher’s meat, the same prime cost. The

profit, increases

giving emplo3rment to greater stocks, dim-

inishes apparent profit; but

by

requiring supplies from a greater

distance, it increases prime cost. This diminution of the one

crease of the other seem, in

one another; which

and

of corn

is

cattle are

most

and in-

cases, nearly to counter-balance

probably the reason that, though the prices

commonly very different

in different parts of

the kingdom, those of bread and butcher’s meat are generally very

nearly the same through the greater part of

Though

it.

and retail trade small towns and country

the profits of stock both in the wholesale

are generally less in the capital than in

yet great fortunes are frequently acquired from small be-

villages,

ginnings in the former, and scarce ever in the latter. In small towns

The lesser rate of profit in

towns yields

larger for-

and country

villages,

on account

of the narrowness of the market,

trade cannot always be extended as stock extends. In such places, therefore,

sum

or

amount

of

them can never be very

mostly

great, nor

specula

consequently that of his annual accumulation. In great towns, on the contrary, trade can be extended as stock increases, and the credit of

stock.

a frugal and thriving man increases much

His trade

is

of his trade,

amount

long

of his profits is in proportion to the extent

and his annual accumulation in proportion

made even

in great

and well-known branch

life

to the

of his profits. It seldom happens, however, that great for-

tunes are lished,

faster than his

extended in proportion to the amount of both,

and the sum or amount

of industry, frugality,

deed, are sometimes

towns by any one regular, estabof business,

and

but in consequence of a

attention.

Sudden

fortunes, in-

made in such places by what is called “ Above,

p. 75.

these

may be

though the rate of a particular person’s profits

very high, the

tunes, but

the trade

arise

tion.

from

IH

THE WEALTH OF NATIONS

of speculation.

The

speculative merchant exercises no one regular,

known branch

established, or well

He

of business.

is

a corn mer-

chant 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

and he

quits

it

it is likely

when

more than commonly

to be

profitable,

he foresees that its profits are likely to return

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

but

tions;

is

just as likely to lose one

ones. This trade can be carried

only in places of the

five

:ircumstances

thus counter-

The

five

by two

or three unsuccessful

on no where but

in great towns. It is

most extensive commerce and correspondence

that the intelligence requisite for

The

ac-

or three successful specula-

by two

quire a considerable fortune

may sometimes

bold adventurer

can be had.

it

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 disadvantages, real or imaginary, of the different

employments

of either.

The

na-

balance

such, that they

make up

for

a small

difference

ture of those circumstances

of pecuni-

pecuniary gain in some, and counter-balance a great one in others.

ary gains,

but three

is

In order, however, that this equality

may

take place in the whole

of their advantages or disadvantages, three things are requisite

things are

even where there

necessary

ments must be well known and long established in the neighbour-

as well as

the most perfect freedom. First, the employ-

is

perfect

hood; secondly, they must be in their ordinary, or what

freedom:

called their natural state; and, thirdly, they

principal (i) the

employments must be well

known and long Established,

since

new

be

sole or

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 neigh-

bourhood.

Where

all

other circumstances are equal, wages are generally

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

higher in

and a considerable time must pass away before he can venthem to the common level. Manufactures for which

trades

require,

yield

ture to reduce

higher wages,

may

must be the

the

demand

arises altogether

ally changing,

and seldom

from fashion and fancy, are continuenough to be considered as old

last long

established manufactures. Those, on the contrary, for

mand

from use or necessity, are

arises chiefly

and the same form centuries together.

or fabric

The wages

may

which the de-

less liable

continue in

demand

to change, for

whole

of labour, therefore, are likely to be

INEQUALITIES OF WAGES AND PROFIT 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

of

any new manufacture,

of

any new branch

commerce, or of any new practice

in agriculture, is always a from which the projector promises himself extraordinary profits. These profits sometimes are very great, and some-

and higher profits:

speculation,

more frequently, perhaps, they are quite otherwise; but

times,

in

general they bear no regular proportion to those of other old trades

commonly

in the neighbourhood. If the project succeeds, they are 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 dis-

advantages of the different employments of labour and stock, can take place only in the ordinary, or what

may

be called the natural

their

employments.

state of those

(2) the

employments must be in natural

The demand

for almost every different species of labour is

some-

state,

times greater and sometimes less than usual. In the one case the ad-

vantages of the employment the

rise

common level. The demand

above, in the other they

for

country labour

is

fall

below

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

demand

for sailors to

merchant ships necessarily

rises

with their scarcity, and their wages upon such occasions commonly

since the

demand for labour in each

employ-

ment varies

from time to time

from a guinea and seven-and-twenty shillings, to forty shillings and three pounds a month. In a decaying manufacture, on the conrise

trary,

many workmen,

rather than quit their old trade, are content-

ed 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

and profits

employed. As the price of any commodity

fluctu-

above

ate with

the ordinary or average rate, the profits of at least some part of

the price

which

it is

the stock that

proper

level,

is

employed

and as

in bringing

it falls

it

to market, rise

they sink below

it.

rises

above

of the

their

All commodities are

some are much more so than others. In all commodities which are produced by human industry, the quantity of industry annually employed is necessarily

more

or less liable to variations of price, but

regulated

by the annual demand,

in

such a manner that the average

annual produce may, as nearly as possible, be equal to the average

commodity pro-

duced:

XHE WEALTH OF NATIONS

116

annual consumption. In some employments,

it

has already been ob-

served,-^ 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 will annually

woollen cloth.

A

the demand.

hands

from some accidental variation in

public mourning raises the price of black cloth.^^

But as the demand is

of

work up very nearly the same quantity of linen and The variations in the market price of such commod-

therefore, can arise only

ities,

same number

most

for

pretty uniform, so

likewise the price.

is

plo3mients in which the

and woollen cloth But there are other em-

sorts of plain linen

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 quantities of corn, wine, hops, sugar, tobacco, &c.

The price

of such

commodities, therefore, varies not only with the variations of de-

mand, 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

operations of the speculative merchant are

the commodities.

employed about such commodities.

principally

buy them up when he foresees that their price to sell them when it is likely to fall. and (3) the em-

is

He

endeavours to

likely to rise,

Thirdly, This equality in the whole of the advantages

and

and disad-

vantages of the different employments of labour and stock, can

ployments must be

take place only in such as are the sole or principal employments of

the prin-

those

cipal

em-

ployment

iose who oc-

of

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 he

of his leisure

cupy them,

smce people

maintained by

one employment will

work

cheap at another,

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

though they were more frequent some years ago than they are now. They are a sort of out-servants of the called Cotters or Cottagers,

landlords and farmers. their masters is

The

usual reward which they receive from

a house, a small garden for pot herbs, as

as will feed a cow, and, perhaps,

When

their

like the

Scotch

sides,

cotters,

ling.

much grass

an acre or two of bad arable land.

master has occasion for their labour, he gives them, beof oatmeal a week, worth about sixteen pence ster-

two pecks

During a great part of the year he has little or no occasion for and the cultivation of their own little possession is not

their labour, sufficient to

When

occupy the time which

is left

at their

own

disposal.

such occupiers were more numerous than they are at pres-

Above, p.

58.

^ The

illustration

has already been used above, p. 59

^^7

INEQUALITIES OF WAGES AND PROFIT ent, 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 the landlords and farmers could not

number of seasons. The daily

otherwise provide themselves with the extraordinary

hands, which country labour requires at certain

or weekly recompence which such labourers occasionally received

from their masters, was evidently not the whole price of bour. Their small tenement

made a

considerable part of

their lait.

This

daily or weekly recompence, however, seems to have been consid-

ered 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

Shetland knitters,

much cheaper than they can any-where loom. They are the work of servants and la-

parts of Scotland are knit

be wrought upon the bourers,

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 five pence to seven pence a pair. At Learwick, the small capital of

a

the Shetland islands, ten pence a day, I have been assured, is price of common labour. In the same islands they knit

common

worsted stockings 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

Scotch linen spinners,

They earn but a very scanty subsistence, their whole livelihood by either of those

hired for other purposes.

who endeavour trades.

to get

In most parts of Scotland she is a good spinner who can earn

twenty pence a week. In opulent countries the market

one trade

generally so extensive that

any

employ the whole labour and stock of those and Instances of people’s living by one employment,

is sufficient to

who occupy at the

is

it.

same time deriving some

cur chiefly in poor countries.

little

The

advantage from another, oc-

following instance, however, of

be found in the capital of a very in which house-rent rich one. There is no city in Europe, I believe, in which a furcapital know no is dearer than in London, and yet I is not only much nished apartment can be hired so cheap. Lodging than in Edincheaper cheaper in London than in Paris it is much

something of the same kind

is

to

;

extraorburgh of the same degree of goodness j and what may seem of cheapness the of cause the dinary, the dearness of house-rent is

and London lodging house keepers.

the wealth op nations lodging.

The

dearness of house-rent in

those causes which render

it

dear in

London

all

arises,

not only from

great capitals, the dearness

of labour, the dearness of all the materials of building,

generally be brought from a great distance, and above

which must all

the dear-

ness of ground-rent, every landlord acting the part of a monopolist,

and frequently exacting a higher rent

for

a single acre of bad

land in a town, that can be had for a hundred of the best in the country; but

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 it

arises in part

means every thing diat

contained under the same roof. In

is

many

France, Scotland, and

other parts of Europe,

it

frequently

means no more than a single story. A tradesman in London is obliged to hire a whole house in that part of the town where his customers

live.

His shop

is

ily sleep in the garret;

house-rent

by

upon the ground-floor, and he and his famand he endeavours to pay a part of his

letting the

to maintain his family

two middle

by his

trade,

He

expects

his lodgers.

Where-

stories to lodgers.

and not by

and Edinburgh, the people 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 expence of

as, at Paris

the family.

Part Inequalities occasioned

The policy of

Europe occasions

more important

Such

by the Policy

of

Europe

are the inequalities in the whole of the advantages

and

dis-

advantages 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 by not leaving things at perfect liberty, occasions inequalities of much greater importance.

inequali-

policy of Europe,

ties

other

It does this chiefly in the three following

in three

ways:

II

ing the competition in

ways. First, by restrain-

some employments

to a smaller number than would otherwise be disposed to enter into them; secondly, by increasing it in others beyond what it naturally would be; and, third-

by obstructing the free circulation of labour and stock, both froni employment to employment and from place to place. First, The policy of Europe occasions a very important inequal-

ly,

(i)It restricts

competition in

ity in the

whole of the advantages and disadvantages of the

ent employments of labour

and

stock,

by

differ-

restraining the compel!-

INEQUALITIES OF WAGES AND PROFIT some employments

tion in

to a smaller

number than might

^^9 other-

some employ-

wise be disposed to enter into them.

The it

ments,

exclusive privileges of corporations are the principal

makes use

The

means

of for this purpose.

principal-

exclusive privilege of an incorporated trade necessarily re-

ly

by giv-

ing exclu-

strains the competition, in the

who

are free of the trade.

town where

To have

town, under a master properly

ter is allowed to have,

established, to those

served an apprenticeship in the

qualified, is

commonly the necessary

The bye-laws

of the corpora-

number

of apprentices

which any mas-

and almost always the

number

of years

The intention of both much smaller number to a competition regulations is to restrain the than might otherwise be disposed to enter into the trade. The limi-

which each apprentice

number

tation of the

is

obliged to serve.

of apprentices restrains

term of apprenticeship restrains

by

ally,

it

more

it

directly.

but

indirectly,

A

long

apprentice In Sheffield no master cutler can have more than one and Norwich at a time, by a bye-law of the corporation. In Norfolk

pain no master weaver can have more than two apprentices, under hatter master of forfeiting five pounds a month to the king.^® No or in England, in any-where apprentices can have more than two a pounds five the English plantations, under pain of forfeiting court month, half to the king, and half to him who shall sue in any conbeen have they of record.^^ Both these regulations, though

by by a public law of the kingdom, are evidently dictated of Shefthe same corporation spirit which enacted the bye-law been incorporated a field.^^ The silk weavers in London had scarce master from havyear when they enacted a bye-law, restraining any a particular act ing more than two apprentices at a time. It required firmed

of parliament to rescind this bye-law.^^

Under

13

8

and 14 Car.

c. IT, §

II., c. 5, § 18.

8; I Jac. I., c. 17, § 3

Eliz., c. II,

;

5 Geo. II.,

c.

was enacted “at the lamentable

23

,

suit

^

and complmnt

that they were being not of the hatters but of the cap-makers, who alleged of foreign wool, made were which impoverished by the excessive use of hats, the colonies of the restriction on apprentices by 5 doubtless suggested by the English hatters’ jealousy of dictated by quite the the American hatters, so that this regulation was not same spirit as the Sheffield by-law. of silk The preamble of 13 and 14 Car. IL, c. 15, says that the company 01 20 preamble the and throwers in London were incorporated in 1629, because the comobstructed been lately had trade the that Car, IL, c. 6, says by them pany had endeavoured to put into execution a certain by-law made spindles and the as160 to freemen the restricting since, nearly forty years declares this by-law sistants to 240. The act 20 Car. IL, c. 6, accordingly hereafter to be made or made already by-law “no that void. It also enacts

and the extension

Geo.

II., c.

22,

to

was

leges to

corpora-

which

re-

quire long

apprenticeship

and limit the number of apprentices.

as effectu-

increasing the expence of education.

“^8 Eliz.,

sive privi-

tions,

requisite for obtaining this freedom.

tion regulate sometimes the

it is

THE WEALTH OF NATIONS

120 Seven years

Seven years seem anciently to have been,

is

the usual

period of appren-

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

ticeship.

for

is

the proper Latin

any incorporation whatever. The university

versity of taylors, &c. are expressions

established, the

first

now

When

those particular

peculiarly called universities were

term of years which

in order to obtain the degree of

of smiths, the uni-

which we commonly meet

with in the old charters of ancient towns.^^ incorporations which are

name

master of

it

was necessary to study,

arts,

appears evidently to

have been copied from the term of apprenticeship

in

common

which the incorporations were much more ancient. As to

trades, of

have wrought seven years under a master properly qualified, was necessary, in order to entitle

any 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,

S3monimous) in the

(words likewise originally The Sta-

By

Appren-

which required

and to have scholars or apprentices synonimous) to study under him.

commonly called the Statute of Apwas enacted, that no person should for the future

the sth of Elizabeth,

tute of ticeship,

teacher, or doctor (words anciently

liberal arts,

prenticeship,^^ exercise

any

it

trade, craft, or

land, unless he

mystery at that time exercised in Eng-

had previously served

to it

an apprenticeship of

it

every-

seven years at least and what before had been the bye-law of

where in

particular corporations,

England, has been

law of

confined

of the statute are very general,

to market

towns,

;

all

became

in

many

England the general and public

trades carried on in market towns. For though the words

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 several 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.^^ and to

By

a

strict interpretation

trades

by the said company

of the words too the operation of this

shall limit the

number of

apprentices to less than

three.

®'‘Tn Italy a mestiere or company of artisans and tradesmen was sometimes styled an ars or miversitas The company of mercers of Rome are styled nmversitas mercianorum, and the company of bakers there mtiversitas Madox, Fima Burgi, 1726, p 32

®C.

4, § 31.

“It hath been held that this statute doth not restrain a man several trades, so as he had been an apprentice to aU; wherefore

from using it

indemni-

chapmen m httle towns and villages because their masters kept fte same imed todes before.”-Matthew Bacon, New Abridgement of Te Law, 3rd ed., 1768, vol. m,, p. JSS, t-V- Master and servant.

fies all

petty

INEQUALITIES OF WAGES AND PROFIT

121

statute has been limited to those trades which were established in

England before the sth of Elizabeth, and has never been extended to such as have been introduced since that time.^^ This limitation

existing

when it was passed,

has given occasion to several distinctions which, considered as rules of police, appear as foolish as can well be imagined. It has been ad-

judged, 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 exer-

England before the sth of Elizabeth.^^^ But a wheel-wright, though he has never served an apprenticeship to a coach-maker, cised in

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

was made.^® The

it

manufactures of Manchester, Birmingham, and Wolverhampton, are

many

of them,

upon

having been exercised

England before the 5th of Elizabeth.

in

In France, the duration of apprenticeships

towns and in

not

this account, not within the statute;

is

different in different

different trades. In Paris, five years is the

term

re-

The term varies in

France,

quired in a great number; but before any person can be qualified to exercise the trade as a master, he must, in

years

many of

them, serve

more as a journeyman. During this latter term he is

companion

of his master,

and the term

five

called the

itself is called his

com-

panionship.^®

In Scotland there

is

no general law which regulates universally

the duration of apprenticeships. The term corporations.

Where

long, a part of

it is

deemed by paying a small is sufficient

fine.

and hempen

country, as well as

all

may exercise their

are free to sell butcher’s

in*

some very

Europe

fine.

nice trades;

In

all

trades in

any town

meat upon any lawful day

in Scotland a

The property which

common term

and

in general I

every

man has in

know

little

his

all

iii.,

(ihid.j

^ Corapagnon. “ Contrast with

pp. 107-127.

tions are less

op-

pressive.

of

cor-

of the week.

even

no country in

oppressive.

own

labour, as

it is

it is

the

the most sacred

lUd., vol. i , p. 553. 553), however, says (Mstinctly: “A coachmaker within this statute,” on the authority of Ventria’ Reports, p. 346. Ihid.i vol.

regula-

persons

of apprenticeship,

original foundation of all other property,®® so

“Bacon

where the

manufactures of the

towns corporate

which corporation laws are so

in

generally be re-

any corporation. The weav-

cloth, the principal

porate without paying any

is

may

and Scotland,

other artificers subservient to them, wheel-

makers, reel-makers, &c.

Three years

it

In most towns too a very small fine

to purchase the freedom of

ers of linen

is different in different

p. 552. iii.,

is

“ Compagnonnage. this the account of the origin of property in the Lectures,

All such

regula-

XHE WEALTH OF NATIONS

122

The patrimony

of a poor

tions are

and

as imper-

and dexterity of his hands; and to hinder

tinent as

inviolable.

man

lies in

the strength

him from employing

this

oppres-

strength and dexterity in

what manner he thinks proper without

sive.

jury to his neighbour,

a plain violation of this most sacred prop-

is

in-

a manifest encroachment upon the just liberty both of of those who might be disposed to employ him.

erty. It is

the workman, and

As

it

hinders the one from working at what he thinks proper, so

it

whom they think proper. To employed, may surely be trusted to

hinders the others from employing

judge whether he

is fit

to

be

the discretion of the employers whose interest

The

improper person, Long ap-

The

no security against

insufficient sale.

is

evidently as impertinent as

institution of long apprenticeships

prentice-

ships are

it

so

much

concerns.

affected anxiety of the law-giver lest they should employ an

When

it is

oppressive.

can give no security that

workmanship shdl not frequently be exposed to public this is done it is generally the effect of fraud, and not of and the longest apprenticeship can give no security

inability;

bad work, against fraud. Quite different regulations are necessary to prevent this abuse.

ity

The

mark upon

sterling

and woollen

linen

cloth,^^ give the

plate,

than any statute of apprenticeship.

but never thinks

it

and the stamps upon

purchaser

He

much greater

secur-

generally looks at these,

worth while to enquire whether the workmen had

served a seven years apprenticeship. and do not form young

The

institution of long apprenticeships has

young people

to industry.

likely to

industry.

exertion of his industry.

most always

is so,

form

An

apprentice

condition to enjoy the sweets of

and

likely to

be

idle,

and

employments, the sweets of labour consist

together in the recompence of labour.

it,

is

al-

because he has no immediate interest to be other-

wise. In the inferior

man

to

be industrious, because he derives a benefit from every

people to

relish for

no tendency

A journeyman who works by the piece is

it,

They who

al-

are soonest in a

are likely soonest to conceive

to acquire the early

habit of industry.

A

a

young

naturally conceives an aversion to labour,

when for a long time he receives no benefit from it. The boys who are put out apprentices from public charities are generally bound for more than the usual

number

of years,

and they generally turn out very

idle

and worthless. Appren-

Apprenticeships were altogether

ticeships

unknown

to the ancients.

The

and apprentice make a considerable arevery modern code.^^ x'he Roman law is perfectly silent with

were un-

reciprocal duties of master

known to

ticle in

^“Of Scotch manufacture, lo Ann., Eliz., c

20

c.

21; 13 Geo. I,

c. 26.

43 Eliz., c. 10, § 7. The article on apprentices occupies twenty-four pages in Richard Burn’s Jushce of the Peace, 1764.

39

;

INEQUALITIES OF WAGES AND PROFIT regard to them. I

know no Greek

believe, to assert that there

is

or Latin

work

(I

123

might venture, I

none) which expresses the idea we

now

the ancients.

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, up-

on condition that the master

shall teach him that trade. Long apprenticeships are altogether unnecessary. The arts, which are much superior to common trades, such as those of making clocks

Long apprenticeships are

and watches, contain no such mystery as to require a long course of instruction.

The

invention of such beautiful machines, indeed,

first

some of the instruments employed in making them, must, no doubt, have been the work of deep thought and long time, and even that

may

and

man

of

justly

ingenuity.

be considered as among the happiest

But when both have been

well understood, to explain to

any young man,

chines, cannot well require

more than the

perhaps those of a few days might be

hu-

and are

construct the

lessons of

sufficient.

sary.

in the completest

how to apply the instruments and how to

manner,

efforts of

fairly invented

altogether

unneces-

ma-

a few weeks:

In the

common me-

chanic trades, those of a few days might certainly be sufficient.

The

common trades, cannot be acmuch practice and experience. But a young man with much more diligence and attention, if from the

dexterity of hand, indeed, even in

quired without

would practise

beginning he wrought as a journeyman, being paid in proportion to the

work which he could

little

execute, and paying in his turn for

the materials which he might sometimes spoil through awkwardness

and inexperience. His education would generally in effectual,

and always

would be a

loser.

less tedious

He

which he now saves,

would

this

way be more

and expensive. The master, indeed,

lose all the

wages of the apprentice,

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 the teries,^’"^

work

would

be

of all artificers

It is to

and

all

workmen. The

losers.

coming

trades, the crafts, the

But the public would be a in this

way much

mys-

gainer, the

cheaper to market.

prevent this reduction of price, and consequently of wages

profit,

by

restraining that free competition

certainly occasion

it,

that all corporations,

which would most

Corporawere

tions

estab-

and the greater part

of

corporation laws, have been established. In order to erect a cor^®The last two terms seem to be used rather contemptuously. Probably Smith had fresh in his recollection the passage in which Madox ridicules as a derived from “piece of puerility” the use of the English word “misterie “the Gallick word mestera, mistera and misteria,” as if it “signified something fjLvffTTipLwdes, mysterious.”—Ffma B'urgi, 1726, pp. 33 - 35 -

lished to

keep up

THE WEALTH OF NATIONS

124 prices

and

conse-

quently

poration, no other authority in ancient times

was

tablished. In England, indeed,

profit;

necessary.

this

it

was

es^-

a charter from the king was likewise prerogative of the crown seems to have been re-

wages and

But

many

requisite in

parts of Europe, but that of the town corporate in which

served rather for extorting

money from the

subject, than for the de-

liberty against such oppressive monopolies.

fence of the

common

Upon paying

a fine to the king, the charter seems generally to have

been reaily granted; and when any particular class of artificers or traders thought proper to act as a corporation without a charter, such adulterine 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

mediate inspection of

all

privileges.'^^

The im-

corporations, and of the bye-laws which

own government,

they might think proper to enact for their

be-

longed 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.'*^

by means

The government

of

towns corporate was altogether

of which

the towns gained at the ex-

of traders

and

artificers;

and

it

stocked, as they

commonly express

pense of the coun-

species of industry;

try,

stocked.

which

it,

is in reality

market from being over-

own

with their to

keep

it

particular

always under-

Each class was eager to establish regulations proper

purpose, and, provided

it

was allowed

sent that every other class should

to

hands

interest of every

was the manifest

particular class of them, to prevent the

in the

do

so,

was

for this

willing to con-

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.

they were enabled to far

it

sell their

own

just as

But

much

was as broad as long, as they say; and

in recompence,

dearer; so that so

in the dealings of the

town with one another, none of them by these regulations. But in their dealings with the

different classes within the

were losers

country they were sists

bang en-

all

great gainers; and in these latter dealings con-

the whole trade which supports and enriches every town.

Every town draws

its

whole subsistence, and

abled to get the

produce of a larger quan-

its

industry,

first,

from the country.

by sending back

It

all

the materials of

pays for these chiefly in two ways;

to die country a part of those materials

wrought up and manufactured; in which case their price

is

aug-

"See Madox Firma

Burgi, p. 26, &c. This note appears first in ed. 2. ^"“Peradventure from these secular gilds or in imitation of them sprang the method or practice of gildating and embodying whole towns."—

Madox,

Tirma Burgi,

p. 27,

INEQUALITIES OF WAGES AND PROFIT

^^5

mented by the wages

of the workmen, and the profits of their masimmediate employers: secondly, by sending to it a part both of the rude and manufactured produce, either of other countries, or

ters or

of distant parts of the

which case too the wages of the

same country, imported

original price of those goods

carriers or sailors,

who employ them. In what

is

and by the

is

into the town; in

augmented by the

profits of the

gained upon the

first

merchants

of those two

tity of

country labour in exchange for the

produce of a smaller

quan-

tity of

their

branches of commerce, consists the advantage which the town

makes by

its

advantage of

men, and the of

what

is

manufactures; in what its

is

own,

gained upon the second, the

inland and foreign trade.

The wages of the workmake up the whole

profits of their different employers,

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 quahtity of the la-

bour of the country. They give the traders and

artificers in

the town

an advantage over the landlords, farmers, and labourers country, and break

down

that natural equality which

wise take place in the commerce which

The whole annual produce

is

carried

would other-

on between them.

of the labour of the society

divided between those two different sets of people.

is

annually

By means

of

given to the inhabitants of

those regulations a greater share of

it is

the town than would otherwise

to them;

fall

in the

and a

less to those of

the country.

The terials

price which the

town

really

annually imported into

pays for the provisions and ma-

it, is

the quantity of manufactures

The dearer the latter are bought. The industry of the town

and other goods annually exported from sold, the

cheaper the former are

it.

as the ex-

ports of a

town

price of its

becomes more, and that of the country

That the industry which

is

less

advantageous.

carried on in towns

Europe, more advantageous than that which country, without entering into

is

is,

are

the real

im-

ports.

every-where in

carried on in the

any very nice computations, we

may

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 satisfy ourselves

That

town industry

is

better

paid

is

shown by the large

manufactures, the industry which properly belongs to towns, for

fortunes

one who has done so by that which properly belongs to the country,

made in it

by the improvement and cultivation of must be better rewarded, the wages of labour and the profits of stock must evidently be greater in the one But stock and labour naturally seek situation than in the other the raising of rude produce

land. Industry, therefore,

The argument is unsound in the absence of any proof that the more numerous successes are not counterbalanced by equally numerous failures; cp. above p. in, note.

the wealth of nations

126

the most advantageous employment. sort as

Combination

is

easy to the in-

habitants of a town,

The

much

They

naturally, therefore, re-

as they can to the town, and desert the country.

inhabitants of a town, being collected into one place, can

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 coreasily

poration

spirit,

prentices, or to

the jealousy of strangers, the aversion to take ap-

communicate the

secret of their trade, generally

prevail in them, and often teach them, by voluntary associations and agreements, to prevent that free competition which they cannot

prohibit

by bye-laws. The trades which employ but a small number

run most easily into such combinations. Half a dozen wool-combers, perhaps, are necessary to keep a thousand spinners of hands,

and weavers at work. By combining not to take apprentices they can not only engross the employment, but reduce the whole manu-

and

facture into a sort of slavery to themselves, their labour

and

diffi-

cult to

those of

the coun-

who

try.

are dis-

persed

The

above what

raise the price of

due to the nature of their work.

inhabitants of the country, dispersed in distant places, can-

not easily combine

They have not only never been incorporation spirit never has prevailed among

together.'^’^

corporated, but the

them.

is

No apprenticeship has ever been thought necessary to qualify

for husbandry, the great trade of the country. After

what are

called

and not

the fine arts, and the liberal professions, however, there

governed

no trade which requires so great a variety of knowledge and experi-

by the corporation spirit.

No

ap-

ence. all

The innumerable volumes which have been written upon it in may satisfy us, that among the wisest and most

learned nations,

it

has never been regarded as a matter very easily

‘^hip is

understood.

And from

prescribed

collect that

knowledge of

farm-

for

perhaps

languages,

nrentice-

ing,

is

all

those volumes its

we shall

in vain attempt to

various and complicated operations,

which is commonly possessed even by the

common

farmer;

how con-

though a

temptuously soever the very contemptible authors of some of them

difficult

may

sometimes

affect to

speak of him. There

is

scarce

any common

art,

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,

French academy of sciences,

several of

now

publishing by the them are actually ex-

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. plained in this manner.

Below, pp. 619, 620,

^ Descriptions des Arts et Mitiers fcdtes ou approuvees par Messieur!> de VAcademie Royale des Sciences, 1761-88.

INEQUALITIES OE WAGES AND PROFIT

^27

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 opera-

many

tions of husbandry, but

require

chanic

inferior branches of country labour,

much more skill and experience than the greater part of metrades. The man who works upon brass and iron, works with

instruments and upon materials of which the temper

same, or very nearly the same. But the

is

always the

man who ploughs the ground

with a team of horses or oxen, works with instruments of which the health, strength, casions.

The

and temper, are very

different

upon

different oc-

condition of the materials which he works upon too

as variable as that of the instruments which he works with, require to be

managed with much judgment and

common ploughman, though stupidity

and ignorance,

discretion.

He is

the mechanic

less

inferior

branches of country la-

bour,

which

re-

quire

more

skill

than most mechanic trades.

and both

discretion.

The

generally regarded as the pattern of

seldom defective

in this

judgment and

accustomed, indeed, to social intercourse than

who lives

uncouth and more

is

is

or for the

in a town.

difficult to

His voice and language are more

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 is

commonly -occupied

tions.

in

till

night

performing one or two very simple opera-

How much the lower ranks of people in the country are really

superior to those of the town,

is

well

known

to every

either business or curiosity has led to converse

man whom

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

where,

vent

so every-

it.

The in

if

and manufacturers. They would probably be

corporation laws and the corporation spirit did not pre-

superiority which the industry of the towns has every-where

Europe over that

of the country,

is

not altogether owing to cor-

The superiority

of

porations and corporation laws. It lations.

The high

duties

goods imported by alien

is

supported by many other regu-

upon foreign manufactures and upon all merchants, all tend to the same purpose.

Corporation laws enable the inhabitants of towns to raise their prices,

without fearing to be under-sold by the free competition of

their ov^n

countrymen. Those other regulations secure them equally

The enhancement of price occasioned by both is every-where finally paid by the landlords, farmers, and labourers of the country, who have seldom opposed the establishment of such monopolies. They have commonly neither inclination nor against that of foreigners.

Lectures, p. 255.

town

industry is

en-

hanced by other regulations,

such

as high

duties

on

foreign

manufactures.

THE WEALTH OF NATIONS

128

combinations; and the clamour and sophistry

fitness to enter into

and manufacturers easily persuade them that the private interest of a part, and of a subordinate part of the society, is of merchants

the general interest of the whole.

The

su-

periority

In Great Britain the superiority of the industry of the towns over that of the country, seems to have been greater formerly than in P^^sent times.

c^Sin

The wages

of country labour approach nearer to

Great

those of manufacturing labour, and the profits of stock employed in

Britain.

agriculture to those of trading

and manufacturing stock, than they

are said to have done in the last century, or in the beginning of the present. This change

may be regarded as

the necessary, though very

consequence of the extraordinary encouragement given to the industry of the towns. The stock accumulated in them comes in time late

to be so great, that

it

can no longer be employed with the ancient which is peculiar to them. That in-

profit in that species of industry

dustry 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,

a new demand

by

creating

its

wages. It then spreads

land,

for country labour,

itself, if I

it

necessarily raises

may say so, over the

and by being employed in agriculture

is

in part restored to the

had origthe town. That every-where in Europe

country, at the expence of which, in a great measure, inally

been accumulated in

face of the

it

the greatest improvements of the country have been owing to such overflowings of the stock originally accumulated in the towns, I shall

and at the same time to dem-

endeavour to show hereafter;

onstrate, that

though some countries have by

to a considerable degree of opulence,

and

of reason.

The

in every respect contrary to the order of nature interests, prejudices,

given occasion to

it,

and fourth books

diversion, but the conversation ends in

against the public, or in

some contrivance

possible indeed to prevent such meetings, to

such assemblies; registra-

by any law which either and justice,

But though the law cannot hinder people sometimes assembling together,

as by

a conspiracy

to raise prices. It is im-

executed, or would be consistent with liberty

be fa-

dlitated,

of this inquiry.

People of the same trade seldom meet together, even for merri-

ment and same

and

laws and customs which have

I shall endeavour to explain as fully and dis-

tinctly as I can in the third

Meetings

in itself necessarily slow,

and interrupted by innumerable

uncertain, liable to be disturbed accidents,

it is

this course attained

A

much

less to

regulation which obliges

it

of the

same traae from

ought to do nothing to facilitate

render them necessary. all

those of the same trade in a par^

®°Bdow, pp. 384-396.

INEQUALITIES OF WAGES AND PROFIT ticular

town

register,

to enter their

facilitates

names and places

of

abode

^^9

a public

in

such assemblies. It connects individuals

who

tion of traders,

might never otherwise be known to one another, and gives every

man

A

of the trade a direction where to find every other

man

of

it.

same trade to tax thempoor, their sick, their widows and

regulation which enables those of the

selves in order to provide for their

orphans,

by giving them a common

interest to

manage, renders such

ment of funds for the sick,

assemblies necessary.

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 unanimous

An

by the establish-

incorporation not only renders

consent of every single trader,®^ and single trader continues of the

it

cannot

last longer

than every

same mind. The majority

poration can enact a bye-law with proper penalties, which

of

a cor-

widows and orphans,

or by incorporation.

will limit

the competition more effectually and more durably than any voluntary combination whatever.

The

pretence that corporations are necessary for the better gov-

ernment of the trade, fectual discipline

without any foundation.

is

which

is

exercised over a

workman,

his corporation, but that of his customers. It their

restrains his frauds

employment which

is

real

is

and

ef-

unneces-

not that of

the fear of losing

and corrects

Corporations are

his negli-

sary,

and

corrupt

the workmen.

An exclusive corporation necessarily weakens the force of this

gence.

discipline.

A particular

them behave well or

ill.

set of

It is

workmen must then be employed,

upon

incorporated towns no tolerable

some

The

most necessary

of the

tolerably executed,

it

this account, that in

workmen

trades. If

must be done

many

let

large

are to be found, even in

you would have your work

in the suburbs,

where the work-

men, 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.

manner that the policy of Europe, by restraining the competition in some employments to a smaller number than would It is in this

otherwise be disposed to enter into them, occasions a very important inequality in the whole of the advantages and disadvantages of the different

employments of labour and

Secondly,

The

policy of Europe,

stock.

by

increasing the competition

some employments beyond what it naturally would be, occasions another inequality of an opposite kind in the whole of the advanand tages and disadvantages of the different employments of labour in

(2)

The

policy of

Europe increases

competition in

some

stock. It has been considered as of so

number

of

“ Ed.

much importance

young people should be educated I

reads ‘‘single

member

of it” here

that a proper

for certain professions,

and

in the next line.

trades.

THE WEALTH OF NATIONS

130 It cheap-

ens the

sometimes the public, and sometimes the piety of private

that,

founders have established

many pensions,

education of the clergy

and thereby reduces their

bursaries, &c. for this purpose,

scholarships, exhibitions,

which draw many more people into

those trades than could otherwise pretend to follow 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 edu-

cated altogether at their

own

The long, tedious, and exwho are, will not always pro-

expence.

earnings;

pensive education, therefore, of those cure

them a

suitable 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 entitled them poor takes away

to;

and

in this

manner the competition

of the

the reward of the rich. It would be indecent, no

doubt, to compare either

a curate

a journeyman

or a chaplain with

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 middle of the fourteenth century, five

merks, containing about as

much

silver as ten

stipendiary parish priest, as

we

find

several different national councils.*"^^

it

of

a curate or

regulated

by

the decrees of

At the same period four pence

a day, containing the same quantity of present money, was declared to be the

silver as-

pay

of

a

fore,

The wages

of

shilling of our

a master mason, and

three pence a day, equal to nine pence of our present

a journeyman mason.®^

pounds of our

pay

present money, was in England the usual

money, that of

both these labourers, there-

supposing them to have been constantly employed, were

superior to those of the curate.

The wages

of the master

much

mason,

supposing him to have been without employment one third of the year, c.

12,

would have fully equalled them. it is

declared,

^That whereas

By

for

the 12 th of

want

Queen Anne,

of sufficient mainte-

nance and encouragement to curates, the cures have in several places been meanly supplied, the bishop is, therefore, empowered to appoint

by

writing under his

hand and

or allowance, not exceeding fifty

a year.”

seal

a

and not

sufficient certain stipend less

than twenty pounds

Forty pounds a year is reckoned at present very good pay

“ Eds. 4 and

5 erroneously insert “a” here.

“According to Richard Burn’s Ecclesiastical Law, 1763, s,v Curates, six marks was the pay ordered by a constitution of Archbishop Islip till 1378,

when

it was raised to eight. “^See the Statute of labourers, 25 Ed. III. Below, p. 177.

The note

is

not

in ed. i.

“The commas.

quotation

is

not intended to be verbatim, in spite of the inverted

INEQUALITIES OF WAGES AND PROFIT a curate, and notwithstanding

for

many

this act of parliament, there are

curacies under twenty pounds

a year. There are journe3niien

shoemakers in London who earn forty pounds a year, and there

is

an industrious workman of any kind in that metropolis who does not earn more than twenty. This last sum indeed does not ex-

scarce

ceed what

is

try parishes.

workmen,

of

frequently earned

by common

labourers in

Whenever the law has attempted it

many coun-

to regulate the wages

has always been rather to lower them than to raise

them. But the law has upon the wages of curates,

and

many

occasions attempted to raise

for the dignity of the church, to oblige the

them more than the wretched mainte-

rectors of parishes to give

nance which they themselves might be willing to accept both cases the law seems

to

have been equally

of.

And

in

and has

ineffectual,

never either been able to raise the wages of curates, or to sink those of labourers 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

situation

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

some

of its inferior

members. The respect paid

makes some compensation even

to

them

to the profession too

meanness

for the

pecuniary recompence. In England, and in

all

Roman

countries, the lottery of the church is in reality

vantageous than land, of Geneva,

is

necessary.

and

The example

sufficient

Catholic

much more

number

ad-

of the church of Scot-

satisfy us, that in so creditable a profession, in

draw a

of their

of several other protestant churches,

so easily procured, the hopes of

of‘

which education

much more moderate

of learned, decent,

may is

benefices will

so that

it

only the great benis

efices, etc.,

which support the hon-

our of the English

and Ro-

man Catholic

Churches.

and respectable men

into holy orders.

In professions in which there are no benefices, such as law and physic, lic

if

an equal proportion of people were educated at the pub-

expence, 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

ex-

They would be entirely abandoned to such as had been eduby 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 re-

The same cause,

if

present,

would lower the

reward of lawyers

pence.

and phy-

cated

sicians,

spectable professions of law and physic.

That unprosperous race

of

men commonly

as

called

men

of letters,

it

has

done that

THE WEALTH OF NATIONS

132 of

men of

letters,

much

pretty

is

in the situation

which lawyers and physicians prob-

ably 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

commonly

expence, and their numbers are every-where so great as

and that

to reduce the price of their labour to a very paultry recompence.

Before the invention of the art of printing, the only employment

of teachers,

by which a man

make any thing by his talents, was teacher, or by communicating to other

of letters could

that of a public or private

people the curious and useful knowledge which he had acquired

And

himself:

and

this

is still

surely a

general even a more

in

of wTiting for a bookseller, to casion.

The time and

physic.

is

useful,

employment than that other

which the art of printing has given oc-

and application

study, the genius, knowledge,

an eminent teacher of the sciences, are at

requisite to qualify

equal to what

more honourable, a more

profitable

least

necessary for the greatest practitioners in law and

But the usual reward

of the eminent teacher bears

no pro-

portion to that of the lawyer or physician; because the trade of the

one

is

crowded with indigent people who have been brought up to

two are incum-

at the public expence; whereas those of the other

bered with very few

who have not been educated

it

at their own.

The

usual recompence, however, of public and private teachers, small

as

it

may

appear, would undoubtedly be less than

petition of those yet

more indigent men of

it is, if

letters

who

the comwrite for

bread was not taken out of the market. Before the invention of the

and a beggar seem

art of printing, a scholar

nearly synonymous. fore tibat time

The

to

have been terms very

different governors of the universities be-

appear to have often granted licences to their scholars

to beg.®'^

who were much better paid

In ancient times, before any charities of this kind had been established for the education of indigent people to the learned profes-

rewards of eminent teachers appear to have been

in ancient

sions, the

times.

more considerable.

Isocrates, in

what

is

much

called his discourse against

own times with incon^They make the most magnificent promises to their scholhe, and undertake to teach them to be wise, to be happy,

the sophists, reproaches the teachers of his sistency. ars, says

and

to

be

just,

and

late the paultry

in return for so

reward of four or

important a service they stipu-

five minae.

They who

teach wis-

dom, continues he, ought certainly to be wise themselves; but “ Ed,

if

” I does not contain “or private ®^Huine, History, ed. of 1773, vol. iii., p. 403, quotes Hen. VIL, c. 22, which forbids students to beg without permission from the chancellor.

n

INEQUALITIES OF WAGES AND PROFIT

^33

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

than he represents

Four minse were equal to thirteen pounds six shillings and eight pence: five minse to sixteen pounds thirteen shillings and four pence. 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 minse,®® or thirty-three pounds six shillings and eight pence, from each scholar. When he taught at Athens, he is said to have had an 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 thouless

it.

sand minae, or 3,333/. 6 s. Sd. 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 ap-

pear to have acquired great fortunes. Gorgias 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, notwithstand-

resume the teaching of his school. Teachers of the sciences were probably in those times less

ing, to return to Athens, in order to

®®Eds. 1-3 read “was.” 3> 4. A very free but not incorrect translation. Arbuthnot, Tables of Ancient Coins, Weights and Measures, 2nd ed., 1754, p. 198, refers to but does not quote the passage as his authority for stating the reward of a sophist at four or five minae. He treats the mina as equal to £3 4s. 7d., which at the rate of 62s. to the pound troy is considerably too low. Plutarch, Demosthenes, c. v., § 3 Isocrates, § 30. Arbuthnot, Tables of Ancient Coins, p. 198, says, “Isocrates had from his disciples a didactron or reward of 1,000 minse, £3,229 3s. 4d.,” and quotes “Pint, in Isocrate,” which says nothing about a “didactron,” but only that Isocrates charged ten minae and had 100 pupils. §§ 9, 12, 30. ®^This story is from Pliny, H. N., xxxiii., cap. iv., who remarks, “Tantus erat docendae oratoriae quaestus,” but the commentators point out that earlier authorities ascribe the erection of the statue not to Gorgias, but to the whole of Greece. ®®It is difficult to discover on what passage this statement is based. Plutarch, Alexander. ;

—

THE WEALTH OF NATIONS

134

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 emin-

common

ent of them, however, appear always to have enjoyed a degree of

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 consideration

their city

had then declined from

former grandeur,

its

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

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 consideration for

Perhaps this

cheapness of teach-

ing is no

of a public teacher; but the Cheapness of literary education

surely an advantage which greatly over-balances this trifling incon-

disad-

vantage to the public.

is

veniency.

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 Europe.®® (3 )

The

policy of

The policy of Europe, by obstructing

Thirdly, of labour

the free circulation

and stock both from employment to employment, and

Europe obstructs

from place to place, occasions in some cases a very inconvenient

the free

equality in the whole of the advantages

circula-

and disadvantages of

in-

their

employments.

different

tion of labour.

The

statute of apprenticeship ®^ obstructs the free circulation of

labour from one employment to another, even in the Apprenticeship

and

The

exclusive privileges of corporations obstruct

to another,

cor-

poration privileges

same

place.

from one place

even in the same employment.

It frequently

workmen

it

happens that while high wages are given to the

in one manufacture, those in another are obliged to con-

obstruct circula-

from employtion

state,

and

other

is

ment to employment and from

The one is in an advancing demand for new hands: The

tent themselves with bare subsistence. has, therefore, a continual

in a declining state, and the super-abundance of hands

continually increasing. in the

Those two manufactures

same town, and sometimes

in the

same neighbourhood, with-

place to

out being able to lend the least assistance to one another.

place.

ute of apprenticeship

So that the

may

oppose

and an exclusive corporation

it

in the

®This

is

a

slip,

“ Below,

stat-

In many different manumuch alike, that the work-

Carneades was a native of Cyrene, and

who was a Babylonian by

pp. 716-728.

The

one case, and both that

in the other.

factures, however, the operations are so

league Diogenes

is

may sometimes be

birth.

Above,

p. 120.

it

was

his col-

INEQUALITIES OF WAGES AND PROFIT men

could easily change trades with one another,

if

^35

those absurd

laws did not hinder them. The arts of weaving plain linen and plain

example, are almost entirely the same. That of weaving

silk, for

plain woollen

somewhat

is

but the difference

different;

so in-

is

changes of

employ-

ment necessary to equalise

significant, that either

workman

tolerable

a linen or a

weaver might become a

silk

a very few days. If any of those three capital

in

wages

are prevented.

manufactures, therefore, were decaying, the workmen might find a

m

resource in one of the other two which was

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 manu-

facture indeed

in England,

is,

every body; but as

it is

part of the country,

it

men

not

by a

much

particular statute,^® open to

cultivated through the greater

can afford no general resource to the work-

of other decaying manufactures,

who, wherever the statute of

apprenticeship takes place, have no other choice but either to come

upon the

work as common labourers, for which, by much worse qualified than for any sort of bears any resemblance to their own. They gen-

parish, or to

their habits, they are

manufacture that

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 erally, therefore,

What obstructs the circula-

of stock which can be employed in

ing very it.

much upon

any branch

of business depend-

labour which can be employed in

that of the

Corporation laws, however, give

less

obstruction to the free cir-

tion of

labour also obstructs

culation of stock from one place to another than to that of labour. It is

every-where much easier for a wealthy merchant to obtain the

privilege of trading in a

town corporate, than

obtain that of working in

The

a poor

it.

In Eng-

That

land the

is

is

common,

given to

it

I believe, to every part of Europe.

circula-

by the poor laws

is,

so far as I know,’’'^ peculiar

to England. It consists in the difficulty which a poor

man

finds in

obtaining a settlement, or even in being allowed to exercise his

industry in any parish but that to which he belongs. It

bour of tion

is

artificers

and manufacturers only

obstructed

by

corporation laws.

settlements obstructs even that of

while to give some account of the this disorder, the greatest

When by

of

The

common

which the

is

the la-

free circula-

labour. It

rise, progress,

labour is further

obstruct-

ed by the poor law,

may be worth

and present

state of

perhaps of any in the police of England.

the destruction of monasteries the poor had been de-

15 Car. II., c. 15 I places the “is” here.

tion of

difficulty of obtaining

prived of the charity of those religious houses, after

Ed

stock.

artificer to

obstruction which corporation laws give to the free circula-

tion of labour

which

for

that of

Ed

I

some other

does not contain “the.’

in-

Each parish was

THE WEALTH OF NATIONS

136

effectual attempts for their relief,

to sup-

port its

own poor under 43 Eliz., c. 2

Elizabeth,

Car. 11 to .

be such as

had resided forty days,

within

bound

that every parish should be

to provide for

pointed, who, with the church-wardens, should raise,

competent sums

rate,

mined by 13 and 14

was enacted by the 43d of its

poor; and that overseers of the poor should be annually ap-

own

By

these were deter-

c. 2.

it

by a parish

for this purpose.

this statute the necessity of providing for their

indispensably imposed

upon every

parish.

Who

own poor was

were to be con-

sidered as the poor of each parish, became, therefore, a question of

some importance. This question, after some variation, was at last when it was endetermined by the 13th and 14th of Charles acted, that forty days undisturbed residence should gain any person a settlement in any parish; but that within that time

it

should

which

be lawful for two justices of the peace, upon complaint made by

any new

time,

the churchwardens or overseers of the poor, to remove

however, a new in-

habitant to the parish where he was

habitant

a tenement of ten pounds a year, or could give such security for the discharge of the parish where he was then living, as

might be removed.

last legally settled;

in-

unless he

either rented

those justices should judge sufficient.

Some

Notice in writing

was required

from the

new inhabitant

by I James IL

frauds,

it is

said,

statute; parish officers

were committed in consequence of

sometimes bribing their own poor to go

clandestinely to another parish for forty

and by keeping themselves concealed

days to gain a settlement there, to the discharge of that to

which they properly belonged. It was enacted, therefore, by the of

this

James 11

.'^^

ist

that the forty days undisturbed residence of any per-

son 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

seers of the parish

Such notice

But parish

churchwardens or over-

where he came to dwell.

officers, it

seems, were not always more honest with

regard to their own, than they had been with regard to other

^C. 12. ” This account

of the provisions of the Acts regarding settlement, though not incorrect, inverts the order of the ideas which prompted them. The preamble complains that owing to defects in the law “poor people are not restrained from going from one parish to another and therefore do endeavour

to settle themselves in those parishes

where there is the best stock,” and so and the Act therefore gives the justices power, “within forty days after any such person or persons coming so to settle as aforesaid,” to remove them “to such parish where he or they were last legally settled either as a

forth,

native, householder, sojourner, apprentice or servant for the space of forty days at the least.” The use of the term “settlement” seems to have originated with this Act.

C. 17, “An act for reviving and continuance of several acts.” The reason given is that “such poor persons at their first coming to a parish do com-

monly conceal themselves.” Nothing

Law

is said either here or in Burn’s Poor or Justice of the Peace about parish officers bribing their poor to go to

another parish.

INEQUALITIES OF WAGES AND PROFIT and sometimes connived at such

parishes,

and taking no proper steps

notice,

^37

intrusions, receiving the

was to be

As every

published

in consequence of

it.

person in a parish, therefore, was supposed to have an interest to prevent as it

much

by was further enacted by the 3d of William IIL^^ that the forty as possible their being burdened

such intruders,

in church

under 3 W.III.

days residence should be accounted only from the publication of such notice in writing on Sunday in the church, immediately after divine service. ^‘After

all,’^

says Doctor Burn, “this kind of settlement,

tinuing forty days after publication of notice in writing,

dom

obtained; and the design of the acts

of settlements, as for the avoiding of

is

not so

it is

doubtful whether he

if

is

consel-

much for gaining into

a person’s situation

is

such, that

actually removeable or not, he shall

is

by suffering him

a

only putting a force

by

him a

settlement

to continue forty days; or,

by remov-

giving of notice compel the parish either to allow

uncontested,

by

very

them by persons coming

parish clandestinely: for the giving of notice

upon the parish to remove. But

is

ing him, to try the right.”

This statute, therefore, rendered poor

man

to gain a

new

it

almost impracticable for a

settlement in the old way,

by

forty days in-

There were four other

habitancy. But that

common

might not appear to preclude altogether the

ways of

people of one parish from ever establishing themselves

gaining

appointed four other ways by which a

a settlement,

it

with security in another,

it

settlement might be gained without lished.

The

first

;

it

notice delivered or pub-

was, by being taxed to parish rates and paying

them the second, by being serving in

any

a year; the

parish; the fourth,

elected into

third,

by being

by

an annual parish

office,

and

serving an apprenticeship in the

hired into service there for a year,

continuing in the same service during the whole of

and

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

by being introducing settlement by

enacted, that no married servant shall gain any settlement

hired for a year.^^

’*3

W. and ,

§

dren.

The

principal effect of

been to put out in a great measure the old fashion of M.,

c. ii, § 3.

™ Richard Burn, ’^§§ 6 8

of

possible

to

all

poor men,

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

service, has

two

which were im-

Justice oj the Peace, 1764, vol.

ii.,

p. 253.

.

7 confines settlement

by

service to

unmarried persons without

chil-

and the other two to

all

married

men,

THE WEALTH OF NATIONS

138

hiring for a year, which before

that even at this day,

no

if

intends that every servant

is

in

England,

agreed upon, the law

is

hired for a year.

But masters are not by hiring them in

willing to give their servants a settlement

always this

had been so customary

particular term

manner and servants are not always

willing to be so hired, be-

;

cause, as every last settlement discharges all the foregoing, they their original settlement in the places of their

might thereby lose

nativity, the habitation of their parents

and to

all

independ-

No

independent workman,

artificer, is likely to

ent work-

men.

ship or

by

and

new

either

by

apprentice-

such a person, therefore, carried his in-

he was

parish,

relations.

any new settlement

gain

When

service.

dustry to a

and

evident, whether labourer or

it is

liable to

be removed,

how

healthy

any churchwarden or overrented a tenement of ten pounds a year, a

industrious soever, at the caprice of

seer, unless

he either

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

peace should judge

justices of the

shall require, indeed,

cannot well require

is left

less

What

sufficient.

two

security they

altogether to their discretion; but they

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 sufficient

for the discharge of the parish.^^

But

any man who

give;

lives

by labour can

this

is

a security which scarce

and much

greater security

is

frequently demanded. Certifi-

cates were

In order to restore

in

some measure that

free circulation of la-

bour which those different statutes had almost entirely taken

invented to enable

away,”^® the invention of certificates

persons to

9th of William III.®^ 9 Geo. I,

™The

Act, 13

it

was

fallen upon.

was enacted, that

if

By the 8th and

any person should

c. 7.

&

14 Car.

II., c. 12,

giving the justices

power to remove the

immigrant within forty days was certainly obstructive to the free circulation of labour, but the other statutes referred to in the text, by making the attainment of a settlement more difficult, would appear to have made it less necessary for a parish to put in force the power of removal, and therefore to have assisted rather than obstructed the free circulation of labour. The poor law commissioners of 1834, long after the power of removal had been abolished in 1795, found the law of settlement a great obstruction to the free

men were afraid of gaining a new settlement, new settlement was denied them. C. 30, “An act for supplying some defects in the laws for the relief of poor of this kingdom ” The preamble recites, “Forasmuch as many poor

circulation of labour, because

not because a the

persons chargeable to the parish, township or place where they live, merely for want of work, would in any other place when sufficient employment is to be had maintain themselves and families without being burdensome to

any

parish,

township or place.” But

certificates were invented long before 14 Car. II., c. 12, provides for their issue to persons going into another parish for harvest or any other kind of work, and the preamble of 8 & 9 W. III., c. 30, shows that they were commonly given. Only tempo-

to. The Act

13

&

INEQUALITIES OF WAGES AND PROFIT

^39

bring a certificate from the parish where he was last legally settled,

reside in

subscribed by the churchwardens and overseers of the poor, and

a parish

lowed by two

al-

justices of the peace, that every other parish should

be obliged to receive him; that he should not be removeable merely

upon account on

of his being likely to

become chargeable, but only up-

without being immediately

removable and with-

becoming actually chargeable, and that then the parish which

out gain-

granted the certificate should be obliged to pay the expence both of

ing a set-

his

his

maintenance and of his removal

And

tlement.

in order to give the

perfect security to the parish where such certificated

man

most

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

upon

by renting a tenement of ten pounds a year, or by serving own account in an annual parish office for one whole year;

his

and consequently ticeship,

neither by notice, nor

nor by paying parish

stat. I. c, 18. it

rates.

by

service, nor

by appren-

By the 12th of Queen Anne too,

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 la-

bour which the preceding statutes had almost entirely taken away,

we may learn from tor Burn. ^‘It

is

the following very judicious observation of Doc-

obvious,” says he, “that there are divers good rea-

sons for requiring certificates with persons coming to settle in any place; namely, that persons residing under

them can gain no

settle-

ment, neither by apprenticeship, nor by service, nor by giving notice,

nor by paying parish rates; that they can

tices

nor servants; that

known whither

to

if

remove them, and the parish

removal, and for their maintenance in the

they

shall

mean

it is

appren-

certainly

be paid for the

time; and that

if

and cannot be removed, the parish which gave the must maintain them: none of all which can be without

fall sick,

certificate

a

settle neither

they become chargeable,

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 persons again,

and

in

The moral

a worse condition.”

seems to be, that

certificates

parish where any poor

of this observation

ought always to be required by the

man comes

to reside,

and that they ought

very seldom to be granted by that which he proposes to leave. rary employment, however, was contemplated, and, on the expiration of the became removable.

job, the certificated person

Rather by the explanatory Act, 9 & 10

W.

III., c. ii.

All these statutes are conveniently collected in Richard Burn’s History

Poor Laws, 1764, pp. 94-100 ®®Bum, Justice of the Peace, 1764,

of the

vol.

ii.,

p. 274.

Certifi-

cates

were

required

by

the

new parish

but

refused

the old.

by

THE WEALTH OF NATIONS

140

“There

somewhat

is

of hardship 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

however inconvenient

life;

may be

it

for

him

to

continue at that place where he has had the misfortune to acquire what is called a settlement, or whatever advantage he may propose

by living elsewhere.” Though a certificate carries along with

to himself

The courts de-

it

no testimonial of good

nothing but that the person belongs to the

behaviour, and certifies

clined to

altogether discretionary

torce

parish to which he really does belong,

overseers

in the parish officers either to grant or to refuse

to give a certificate.

once moved

and

for,

says Doctor

Bum,

it is

A mandamus was

it.

to compel the churchwardens

overseers to sign a certificate; but the court of King’s

Bench

rejected the motion as a very strange attempt.®^ This law is the cause of

very unequal

the

price of

labour in Englaivi,

The very unequal

price of labour

England in places at no

which we frequently find

great distance from one another,

is

in

prob-

ably owing to the obstruction which the law of settlements gives to

a poor

man who would

carry his industry from one parish to an-

other without a certificate.

may

industrious,

A single man, indeed, who is healthy and

sometimes reside by sufferance without 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

by

lieved

their

hands

one parish, therefore, cannot always be

in

superabundance in another, as

it

is

Scotland, and, I believe, in all other countries where there difficulty of settlement.

times

rise

is

no

may some-

In such countries, though wages

a little in the neighbourhood of a great town, or wherever

an extraordinary demand for labour, and sink gradu-

else there is

ally as the distance

the

re-

constantly in

common

from such places

rate of the country; yet

increases,

till

they

fall

we never meet with

back

to

those sud-

den and unaccountable differences in the wages of neighbouring places which difficult for

we sometimes

a poor

man

find in England,

to pass the artificial

where

it is

often

more

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.

^ Burn,

History of the Poor Laws, 1764, pp. 235, 236, where it is observed was the easy method of obtaining a settlement by a residency of days that brought parishes into a state of war against the poor and

that “it

forty against one another ”

and that

if

birth or of inhabitancy for one or

settlement were reduced to the place of

more

years, certificates would be got rid of. Burn, Justice, vol. ii., p. 209. The date given is 1730. Since the fact of the father having no settlement would not free the parish from the danger of having at some future time to support the children.

“

INEQUALITIES OF WAGES AND PROFIT

^41

To remove a man who has committed no misdemeanour from parish where he chuses to reside,

is

the

an evident violation of natural

andan evident violation

and

liberty

The common people

justice.

jealous of their liberty, but like the

of England, however, so

common

people of most other

countries never rightly understanding wherein

more than a century together

for

it

consists,

have now

suffered themselves to be exposed

to this oppression without a remedy.

Though men

of reflection too

of natural liberty,

though tamely submitted to.

have sometimes 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 practice

undoubtedly, but such a one as was not likely to occasion any

general oppression. There

is

scarce

years of age, I will venture to say, life felt

a poor man in England of forty who has not in some part of his

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

over the whole kingdom, and afterwards justices of

by general laws extending by particular orders of the

peace in every particular county, both these practices

“By the experience of above four Doctor Bum, “it seems time to lay aside all

have now gone entirely into disuse.

hundred years,” says

endeavours to bring under

strict regulations,

seems incapable of minute limitation: for

what

if all

in its

own

Wages were anciently

rated

by

law or by justices of

peace.

nature

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, to regulate

wages

the 8th of George III.®® prohibits

Some evidence Sir Frederic

still

attempt sometimes

and in particular places. Thus under heavy penalties all master

in particular trades

in support of this assertion

M. Eden,

would have been

State of the Poor, 1797, vol.

i.,

acceptable.

pp. 296-298,

may be

consulted on the other side. William Hay’s Remarks on the Laws Relating to the Poor, 1735, which Eden regards as giving a very exaggerated view of

the obstruction caused by the law of settlement, was in the Edinburgh Advocates’ Library in 1776, and Adam Smith may have seen it. ^ History of the Poor Laws, p. 130, loosely quoted. After “limitation” the passage runs, “as thereby it leaves no room for industry or ingenuity ; for if all persons in the same kind of work were to' receive equal wages there would

be no emulation.” ^ Geo. L, stat. 7

i, c.

13,

was

passed, according to its preamble, because

journeymen taylors had lately departed from their service without just cause, and had entered into “combinations to advance their wages to unreasonable prices, and lessen their usual hours of work, which is of evil example, and manifestly tends to the prejudice of trade, to the encouragement of idleness, and to the great increase of the poor.” It prescribed hours, 6 a.m. to 8 P.M., and wages, 2s. a day in the second quarter and is. 8d. for the rest of the year. Quarter sessions might alter these rates. This Act was amended by 8 Geo. III., c. 17, under which the hours were to be 6 a.m. to 7 p.m., and wages a maximum of 2s. 7^ d. a day. Masters inside the area were forHd-

London taylors’

wages are

the wealth of nations

142 still

rated

by law.

taylors in London,

and

five miles

round

it,

from giving, and

their

workmen from accepting, more than two shillings and sevenpence halfpenny a day, except in the case of a general mourning. Whenever the legislature attempts to regulate the diSerences between

masters and their workmen,

When

counsellors are always the masters.

its

the regulation, therefore,

in favour of the

is

workmen,

it is

it is sometimes otherwise when Thus the law which obliges the masters trades to pay their workmen in money and not

always just and equitable; but

in

favour of the masters.

in

several different

goods,

quite just

is

upon the masters.

and

It

no

equitable.^^ It imposes

only obliges them to pay that value in money,

which they pretended to pay, but did not always really pay, goods. This law

is in

in

real hardship

favour of

the workmen; but the 8th

III. is in favour of the masters.

When

in

of George

masters combine together in

order to reduce the wages of their workmen, they

commonly

enter

into a private

b(md or agreement, not to give more than a certain

wage under a

certain penalty.

Were the workmen to enter into a contrary combination of the same kind, not to accept of a certain wage under a certain penalty, the law would punish them very severely;

and

dealt impartially,

if it

the same manner.

But the 8th

it

would treat the masters

of George III. enforces

in

by law that

very regulation which masters sometimes attempt to establish by such combinations. The complaint of the workmen, that it puts the

and most industrious upon the same footing with an ordinary workman, seems perfectly well founded. ablest

Attempts were also

made to regulate profits

by

fixing

In ancient times too ions

and other dealers, by rating the price both of provisand other goods, The assize of bread is, so far as I know, the

only remnant of this ancient usage. Where there

may perhaps be proper

prices,

and the

neassary of

bread

was usual to attempt to regulate the profits

of merchants

poration,

assize of

it

it

regulate it

life.

much

But where there

better than

still

remains.

assize of

any

is

an exclusive

cor-

to regulate the price of the first is

none, the competition will

assize.

The method

bread established by the 31st of George

of fixing the

could not be put in practice in Scotland, on account of a defect in the law; its execution depending upon the office of derk of the market, which does not exist there. This defect was not remedied till the 3d of

dm

to

I

pay more to workers outside the area than was allowed by the Act

Ann.,

cotton

II.®^

stat. 2, c. 18,

md

iron

applied to workmen, in the woollen, linen, fustian,

mmufacture;

13 Geo. II., c. 8, to manufacturers of doves,

and other leather wares. The second of these Acts only prohibits truck payments when made without the request and consent of the workboote, shoes

men.

"C.

29.

INEQUALITIES OF WAGES AND PROFIT George

III.^-

The want

of

an

assize occasioned

^43

no sensible incon-

veniency, 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 of Scotland, however, there ration of bakers

who

is

an incorpo-

claim exclusive privileges, though they are not

very strictly guarded.

The

proportion between the different rates both of wages and

profit in the different emplo3mients of labour

and

stock, seems not

The inequalities

of wages

to

be much

affected, as has already

been observed,^® by the riches

or poverty, the advancing, stationary, or declining state of the society.

Such revolutions

in the public welfare,

though they

affect the

and profits

are

not much affected

them

by the ad-

employments. The proportion between them,

vancing or

general rates both of wages and profit,

must in the end

equally in

all different

therefore,

must remain the same, and cannot

affect

declining

least for

any considerable time, by any such

well be altered, at

revolutions.

state of

the society.

'’^C. 6.

The preamble

relates the defect.

Above, p.

63.

CHAPTER XI OF THE RENT OF LAND as the price paid for the use of land,

naturally

Rent is

Rent, considered

the pro-

the highest which the tenant can afford to pay in the actual

duce

is

cir-

which is

cumstances of the land. In adjusting the terms of the lease, the

over what

landlord endeavours to leave

is

neces-

sary to

pay the farmer ordinary profit.

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 maintains 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 content himself without

and the landlord seldom means to leave him any more. Whatever part of the produce, or, what is the same thing,

being a

loser,

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, indeed, the liberality, more

him accept of 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 frequently the ignorance, of the landlord, makes

somewhat

ordinary profits of farming stock in the neighbourhood. This portion,

however,

may

still

or the rent for which

most part be It is not

merely

The rent

be considered as the natural rent of land,

it is

naturally

meant that land should

of land,

it

may be thought, is

on stock laid out

in

im-

provements,

frequently no

reasonable profit or interest for the stock laid out

interest

upon

its

improvement. This, no doubt,

some occasions;

The

for the

let.

for

it

more than a

by the landlord case upon

may be partly the

can scarce ever be more than partly the case.

landlord demands a rent even for unimproved land, and the

supposed interest or

profit

upon the expence of improvement

is

generally an addition to this original rent. Those improvements, besides, are not always

made 4y

sometimes by that of the tenant.

the stock of the landlord, but

When

144

the lease comes to be re-

INEQUALITIES OF WAGES AND PROFIT

HS

newed, however, the landlord commonly demands the same augmentation of rent, as

He

if

they had been

sometimes demands rent

human improvement. Kelp burnt, yields an alkaline

is

salt,

for

made by his own.

all

what

is

altogether incapable of

a species of sea-weed, which, when

useful for

making

glass, soap,

and

for

several other purposes. It grows in several parts of Great Britain,

upon such rocks only as lie within the high water mark, which are twice every day covered with the sea, and of particularly in Scotland,

which the produce,

The

dustry.

therefore,

was never augmented by human

landlord, however,

whose estate

shore of this kind, demands a rent for

it

as

is

in-

bounded by a kelp

much

as for his corn

and is sometimes obtained for land incapable of im-

provement, such as rocks

where kelp

grows;

fields.

The sea in the neighbourhood of the islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of their inhabitants. But in order to profit by the pro-

and for the op-

portunity to fish.

duce of the water, they must have a habitation upon the neighbour-

The rent of the landlord is in proportion, not to what the make by the land, but to what he can make both by the land and by ^ 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 ing land.

farmer can

commodity,

of that

The

is

to be found in that country.

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 pro-

may have

portioned to what the landlord

a monoplaid out

upon the im-

provement of the land, or to what he can afford to take; but to

what the farmer can Such parts only to

can commonly be brought

is sufficient

to replace the

stock which must be employed in bringing them thither, together its

ordinary profits. If the ordinary price

surplus part of

it

will naturally

no rent

to the landlord.

is

more than

this, the

go to the rent of the land. If

not more, though the commodity afford

may be

brought to market,

Whether the

price

is,

or

is

it

it is

can

not more,

There are some parts

may

of the

is

there are others for which

it

or

former must

them to market; and

may

particular parts

of pro-

duce fetch a price sufficient

to yield a

rent de-

always afford a rent to that landlord.

may

mand.

Some parts are

not be such as to afford this greater price.

times may, and sometimes

The

latter

The

some-

not, according to different circum-

always in sufficient

demand; others

sometimes

stances.

Rent,

Whether

the de-

produce of land for which the de-

always be such as to afford a greater price than what

sufficient to bring

either

price.

pends on

depends upon the demand.

mand must

oly

afford to give.

of the produce of land

market of which the ordinary price

with

It is

therefore

it is

to

be observed, therefore, enters into the composition ^

“By” appears

first in ed. 3*

are and

the wealth of nations

146 sometimes

profit.

High

low wages and

or

price; high or

low rent

Wages and profit

wages and

are causes

modity to market, that

of price; rent

is

an

price

profit

a high

affords

The chapter is di-

vided into

The

is

must be paid, its

it.

It is because high or

in order to bring

rent, or

to

particular consideration,

of land

it is

first,

because

its

more, or no

little

pay those wages and

a low rent, or no rent at

low

a particular com-

But

price is high or low.

is sufficient

high or low

profit, are the causes of

the effect of

high or low; a great deal more, or very

is

more, than what

effect.

way from wages and

of the price of commodities in a different

are not.

profit, that it

all.

of those parts of the produce

which always afford some rent; secondly, of those which

may and sometimes may not afford

three

sometimes

parts.

the variations which, in the different periods of improvement, nat-

rent; and, thirdly, of

urally take place, in the relative value of those two different sorts of rude produce,

when compared both with one another and with

manufactured commodities,

chapter into three

will divide this

parts.

Part the Produce of

Of

I

Land which always awards Rent

Food can

As men,

always purchase

the means of their subsistence, food

as

much

mand.

like all other animals, naturally multiply in proportion to

It can always purchase or

always, more or

is

command a

quantity of labour, and somebody can always be found

maintain.

ing to do something in order to obtain

maintain,

if

it

can purchase,

managed

in the

is

it.

who

The quantity

it

cording to the rate at which that sort of labour tained in the neighbourhood.

duces

more than enough food to

^

But land,

all

in almost

food ffian what bringing is

it

any situation, produces a

is sufficient

The

could

But

it

can

can maintain, ac-

is

commonly main-

greater quantity of

to maintain all the labour necessary for

to market, in the

ever maintained.

it

most (economical manner, on account

always purchase such a quantity of labour as

Almost

is will-

of labour,

not always equal to what

of the high wages which are sometimes given to labour.

Ihnd pro-

de-

greater or smaller

labour as it can

indeed, which

less, in

most

liberal

surplus too

is

way in which

that labour

always more than sufficient

maintain

to replace the stock which employed that labour, together with its

the labour

profits.

and pay

Something, therefore, always remains for a rent to the land-

lord.

the profits,

and

therefore

The most

desart moors in

Norway and Scotland produce some

sort of pasture for cattle, of

which the milk and the increase are

H7

INEQUALITIES OF WAGES AND PROFIT always more than

sufficient,

not only to maintain

all

the labour

necessary for tending them, and to pay the ordinary profit to the

yields rent.

farmer or owner of the herd or flock; but to afford some small rent

The rent mcreases in proportion to the goodness of The same extent of ground not only maintains a great-

to the landlord.

the pasture.

number

er

pass, less

of cattle,

but as they are brought within a smaller com-

labour becomes requisite to tend them, and to collect

The landlord gains both ways; by the increase of the by the diminution of the labour which must be main-

their produce.

produce, and tained out of

The its

it.

rent of land not only varies with

produce, but with

in the

its situation,

its fertility,

whatever be

whatever be

its fertility.^

Land

neighbourhood of a town gives a greater rent than land

Though it may cost other, it must always

equally fertile in a distant part of the country.

no more labour to cultivate the one than the cost

more

to bring the produce of the distant land to market.

The rent varies

with situation as

well as

with fertility.

A

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 greater quantity of labour, therefore,

parts of the country the rate of profits, as has already been shown,

generally higher than in the neighbourhood of a large town.

is

A

smaller proportion of this diminished surplus, therefore, must be-

long to the landlord.

Good

by diminishing

the

Good

expence of carriage, put the remote parts of the country more near-

roads,

roads, canals,

and navigable

rivers,

etc.,

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 ly

most extensive town,

circle of the country.

by breaking down

the

They

monopoly

are advantageous to the

of the country in its neigh-

bourhood. They are advantageous even to that part of the country.

Though they ket, they

introduce some rival commodities into the old mar-

open

many new

markets to

its

produce. Monopoly, be-

a great enemy to good management, which can never be universally established but in consequence of that free and unisides, is

versal competition which forces everybody to for the sake of self-defence. It

some

is

have recourse

to

it

not more than fifty years ago, that

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 ®

its ®

Eds. 1 and 2 read ‘The rent of land varies with its fertility, whatever be produce, and with its situation, whatever be its fertility.”

Above, pp. 89,

90.

di-

minish differ-

ences of rent.

THE WEALTH OF NATIONS

148

cheapness of labour, would be able to

sell their

and corn

grass

cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation. Their rents, however, have risen, and their cultivation has been improved since that time. Corn land a

yields

A

tity of

larger

supply of

food after maintaining labour than pasture.

corn field of moderate fertility produces a

food for man,

cultivation requires

its

much more

remains after replacing the seed likewise

much

much

greater quan-

than the best pasture of equal extent.

greater. If a

labour, yet the surplus which

and maintaining

pound

Though

all

that labour,

of butcher^s-meat, therefore,

is

was

never supposed to be worth more than a pound of bread, this great-

would every-where be of greater value, and constitute a and the rent of the

er surplus

greater fund both for the profit of the farmer

landlord. It seems to have done so universally in the rude begin-

nings of agriculture.

But the

In early times

meat is

relative values of those

two

different species of food,

bread, and butcher^s-meat, are very different in the different periods

unimproved wilds, which

cheaper

of agriculture. In its rude beginnings, the

than

then occupy the far greater part of the country, are

bread,

to cattle. There

is

therefore, is the food for

which there

and which consequently brings the

we

are told

by

all

abandoned

more butcher’s-meat than bread, and bread, is

the greatest competition,

greatest price.

At Buenos Ayres,

Ulloa, four reals, one-and-twenty pence halfpenny

sterling, was, forty or fifty years ago, the

ordinary 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

com can no-where be raised without a great deal a country which lies upon the river Plate, at that road from Europe to the silver mines of Potosi, the

catching him. But of labour,

and

time the direct

in

money price of labour cultivation is

is

could not be very cheap. It

otherwise

when

extended over the greater part of the country. There

then more bread than butcher^s-meat.

its direction,

is

The

competition changes

and the price of butcher's-meat becomes greater than

the price of bread. but later

on it becomes dearer,

By the

extension besides of cultivation the unimproved wilds be-

come

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 * Vol. i., p. 532, in the French translation of Juan and Ulloa’s work, Voyage historique de VAmerique meridionale par don George Juan et don Antoine de Ulloa, 1752. The statement is repeated in almost the same words, substituting “three or four hundred” for “two or three hundred,” below,7 o. tr f

INEQUALITIES OF WAGES AND PROFIT

^49

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. prietors of those

moors

by

profit

and

it,

in proportion to the price of their cattle. It

century ago that in

many

The

not more than a

is

parts of the highlands of Scotland,

butcher’s-meat was as cheap or cheaper than even bread oat-meal. cattle.

The union opened

Their ordinary price

pro-

raise the rent of their land

made

of

the market of England to the highland is

at present about three times greater

than at the beginning of the century, and the rents of

many

high-

land estates have been tripled and quadrupled in the same time.®

In almost every part of Great Britain a pound of the best butcher’s-

meat

is,

in the present times, generally

of the best white bread

;

and

worth more than two pounds

in plentiful years it is

sometimes worth

three or four pounds. It is thus that in the progress of

improvement the rent and

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 profit of

crop which requires four or therefore, will produce

five

years to grow.

As an

the superiority of the price. If

was not compensated, part brought back into corn. it

corn land,

it

must be

was more than

what was

of

in pasture

if

would be

This equality, however, between the rent and profit of grass and those of corn; of the land of which the immediate produce

and

good a

rent as

a much smaller quantity of the one species

compensated, more corn land would be turned into pasture; and

for cattle,

as

acre of land,

of food than of the other, the inferiority of the quantity

compensated by

and pasture yields

of that of

which the immediate produce

is

is

food

and sometimes a greater

food for

one,

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

are

much

Thus and

it is

quite otherwise,

superior to what can be

in the

and the rent and

made by

profit of grass

corn.

neighbourhood of a great town, the demand ^or milk

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

advantage,

it is

its

natural proportion to that of corn. This local

evident, cannot be

communicated to the lands

at a

distance.

Particular circumstances have sometimes rendered ^

See below, pp. 162, 220.

some coun-

as in the

neigh-

bourhood of a great town.

the wealth of nations

ISO or

all

over

a populous coun-

populous, that the whole territory, like the lands in the

tries so

neighbourhood of a great town, has not been

sufficient to

produce

try

both the grass and the corn necessary for the subsistence of their

which im-

inhabitants. Their lands,

ports

ployed in the production of grass, the more bulky commodity, and

corn,

have been principally em-

therefore,

which cannot be so easily brought from a great distance; the corn, the food of the great body of the people, has been chiefly imported such as

from foreign countries. Holland

Holland

and ancient Italy,

considerable part of

by

Cicero,

was the

agement of a private to feed

Italy

and a

To

first

feed well, old

Cato

said, as

we

and most profitable thing in the

are

man-

estate; to feed tolerably well, the second;

and

To plough, he ranked

only in the fourth place

and advantage.® Tillage, indeed,

in that part of ancient

ill,

of profit

at present in this situation,

ancient Italy seems to have been so during the

prosperity of the Romans. told

is

the third.

which lay

in the

neighbourhood of Rome, must have been

much discouraged by the distributions of corn which were frequently made to the people, either gratuitously, or at a very low

very

price.

This corn was brought from the conquered provinces, of

which

several, instead of taxes,

of their produce at public.'^

The low

people,

must

tory of

which

price at

necessarily

brought to the

were obliged to furnish a tenth part

a stated price, about sixpence a peck, to the

was distributed

this corn

re-

to the

have sunk the price of what could be

Roman market from

Latium, or the ancient

Rome, and must have discouraged

its

terri-

cultivation in that

country. and occasionally in

a country where enclosure is

In an open country too, of which the principal produce

is

corn, a

well-enclosed piece of grass will frequently rent higher than

corn field in

its

neighbourhood. It

is

any

convenient for the mainten-

ance of the cattle employed in the cultivation of the corn, and

its

high rent

its

unusual. is,

in this case, not so properly paid

from the value of

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 enclosed.

The

present high rent of enclosed land in

Scotland seems owing to the scarcity of enclosure, and will probably last no longer than that scarcity. is

The advantage

of enclosure

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 dis-

turbed by their keeper or his dog. Ordinarily the rent

But where there profit of corn, or ®

Cicero,

De

is

no

local

whatever

officiis, lib. ii.

^See below, pp. 218, 219.

advantage of

else is the

ad

fin.

this kind, the rent

common

and

vegetable food of the

Quoted in Lectures,

p. 229.

RENT OF LAND FROM HUMAN FOOD people,

ducing

must naturally it,

regulate,

upon the land which

is fit

for pro-

the rent and profit of pasture.

The use

regulates

of the artificial grasses, of turnips, carrots, cabbages,

and the other expedients which have been

fallen

upon

make an than when

to

equal quantity of land feed a greater number of cattle in natural grass, should

somewhat reduce,

of corn land

might be expected, the

it

that of pasture.

Improved methods

superiority which, in an improved country, the price of butcher^s-

of feed-

meat naturally has over that of bread. It seems accordingly 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

ing cattle

price of bread,

is

a good deal lower in the present times than

it

was

lower

meat in proportion to

bread.

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

there said that the four quarters of

is

an ox

weighing six hundred pounds usually cost him nine pounds ten

The price of meat was higher at the

beginning of the

thirty-one shillings and eight

seven-

pence per hundred pounds weight.^ Prince Henry died on the 6th of

teenth

November 1612, in the nineteenth year of his age.® In March 1764, there was a parliamentary inquiry

century

shillings, or thereabouts;

that

is,

causes of the high price of provisions at that time. It

among

into the

was then,

other proof to the same purpose, given in evidence

by a

Vir-

ginia merchant, that in March 1763, he had victualled his ships for twenty-four or twenty-five shillings the hundred weight of beef,

which he considered as the ordinary year, he sort.^®

had paid twenty-seven

This high price

in

1764

price; whereas, in that dear

shillings for the

is,

however,

same weight and

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

by

price paid

prince

Henry amounts

to

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

4^rf. or srf.

the pound.

In the parliamentary inquiry in 1764, the witness stated the

Henry Prince of Wales, by Thomas

®

The Lije

^

Ibid., p. 271.

of

Birch, D.D., 1760, p. 346.

A Report from the Committee who, upon the Uh day of February, 1764, were appointed to inquire into the Causes of the High Price of Provisions with the proceedings of the

House thereupon. Published by order of the House

Commons,

of

1764, paragraph 4, where, however, there is no definite statement to the effect that the Virginia merchant, Mr. Capel Hanbury, considered 24s.

or 25s. as the ordinary price.

than in 1763-4;

the wealth of nations

152

price of the choice pieces of the best beef to be to the

and 4^.

consumer 4^.

the pound; and the coarse pieces in general to be from

seven farthings to

and

2^, and

this

they said was in general

one half-penny 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 tail price to have been in the time of prince Henry. whereas wheat

was cheaper.

During the twelve

first

re-

years of the last century, the average

price of the best wheat at the

Windsor market was

i^.

the

i8j.

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 2I

is.

In the twelve

first

years of the last century, therefore, wheat ap-

pears to have been a good deal cheaper, and butcher’s-meat a good deal dearer, than in the twelve years preceding 1764, including that year.

The rent and profit

In

all

great countries the greater part of the cultivated lands are

employed in producing either food

for

men

or food for cattle.

The

of corn

land and pasture regulate

those of all

other

land.

rent and profit of these regulate the rent tivated land. If

any

and

profit of all other cul-

particular produce afforded less, the land

would soon be turned into corn or pasture; and

any afforded

turned to that produce.

Those productions, indeed, which require

The apparently

inal

expence of improvement,

ox^a,

either

rent or profit of

some

vation, in order to ford, the

fit

a greater orig-

greater annual expence of culti-

greater

the land for them, appear

commonly

kinds is only in-

on

greater

expense,

to

to af-

one a greater rent, the other a greater profit than corn or

pasture. This superiority, however, will seldom be found to

other

terest

if

more, some part of the lands in corn or pasture would soon be

more than a reasonable

interest or

amount

compensation for this superior

expence.

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 a corn or grass as in hop,

and fruit gardens;

dition requires

field. But to bring the ground into this conmore expence. Hence a greater rent becomes due to

the landlord. It requires too a

more

attentive

and

skilful

ment. Hence a greater profit becomes due to the farmer. too, at least in the

hop and

fruit garden, is

manage-

The crop

more precarious.

Its

^Report

from the Committee, paragraph 3 almost verbatim. The Committee resolved that the high price of provisions of late has been occasioned partly by circumstances peculiar to the season and the year, and partly defect of the laws in force for convicting and punishing all

by the persons con-

cerned in forestalling cattle in their passage to market.” “These prices are deduced from the tables at the end of the chapter.

RENT OF LAND FROM HUMAN FOOD price, therefore, besides

compensating

occasional losses, must

all

afford something like the profit of insurance^^

of gardeners, generally mean,

that their great ingenuity delightful art

that

little

is

is

practised

advantage

The circumstances

and always moderate, may

satisfy us

not commonly over-recompenced. Their

by

so

many

rich people for

amusement,

made by those who practise it for who should naturally be their best

to be

is

because the persons

profit;

^53

customers, supply themselves with

all their

most precious produc-

tions.

The advantage which

the landlord derives from such improve-

ments seems at no time to have been greater than what was cient to compensate the original expence of

suffi-

making them. In the an-

cient husbandry, after the vineyard, a well-watered kitchen garden

seems to have been the part of the farm which was supposed to

most valuable produce. But Democritus, who wrote upon husbandry about two thousand years ago, and who was regarded by yield the

the ancients as one of the fathers of the art, thought they did not act wisely

who enclosed a kitchen garden. The profit, he said, would not

compensate the expence 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

ports this judgment of Democritus, does not controvert

but pro-

it,

re-

poses a very frugal method of enclosing with a hedge of brambles

and

briars, which,

lasting

he says, he had found by experience to be both a

and an impenetrable fence;

commonly known

in the

but which,

it

seems, was not

time of Democritus. Palladius adopts the

by VarIn the judgment of those ancient improvers, the produce of a kitchen garden had, it seems, been little more than sufficient to pay opinion of Columella, which had before been recommended

the extraordinary culture and the expence of watering; for in countries so

near the sun,

present, to have the

it

was thought proper,

command

conducted to every bed

better enclosure than that Britain,

be

Through the greater part

of

in the garden.

Europe, a kitchen garden

is

in those times as in the

of a stream of water, which could

not at present supposed to deserve a

recommended by Columella. In Great

and some other northern

countries, the finer fruits cannot

“Only if the extra risk deters people from entering the business, and according to pp. no, III above it would not. Ed. I reads “thorns.” “ Columella, De re rustica, xi., 3, but the recommendation of the fence is “Et haec quidem claudendi horti ratio maxime est antiquis probata.” “ Gesnerus’

edition of Columella in Scriptores rei rusticae in

Adam

Smith’s

commenting on the passage referred to above, quotes the opinions of Varro, De re rustica, i., 14, and Pal-

library (see Sonar’s Catalogue, s.v. Gesnerus),

ladius,

De

re rustica,

i.,

34.

kitchen-

gardens,

THE WEALTH OF NATIONS

154

be brought to perfection but by the assistance of a wall. Their price, therefore, in such countries, must be sufficient to pay the expence of building

and maintaining what they cannot be had without. The

fruit-wall frequently surrounds the kitchen garden, which thus en-

joys the benefit of an enclosure which

pay and vineyards.

its

own produce could seldom

for.

That the vineyard, when properly planted and brought to perf ection, 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 the wine countries.

through

all

plant a

new

Italian

But whether

it

was advantageous

vineyard, was a matter of dispute

among

husbandmen, as we learn from Columella.

to

the ancient

He decides,

like a

and and expence, that it was a most advantageous improvement.^'^ Such comparisons, however, between the profit and expence of new projects, are commonly true lover of all curious cultivation, in favour of the vineyard,

endeavours to show, by a comparison of the profit

very fallacious; and in nothing more so than in agriculture. gain actually

he imagined about

it.

made by such it

plantations been

commonly

Had the

as great as

might have been, there could have been no dispute

The same point

is

frequently at this day a matter of con-

troversy in the wine countries. Their writers on agriculture, indeed,

the lovers and promoters of high cultivation, seem generally dis-

posed to decide with Columella in favour of the vineyard. In France the anxiety of the proprietors of the old vineyards to prevent the

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 profit-

planting of any

able 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 those old ones,

of which the had been interrupted for two years, without a particular permission from the king, to be granted only in consequence of an cultivation

information from the intendant of the province, certifying that he

had examined the

The pretence

land,

and that

it

was incapable of any other

cul-

was the scarcity of corn and pasture, and the super-abundance of wine. But had this super-abundance been real, it would, without any order of council, have effectually ture.

of this order

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 prevented the plantation of

re rmtica,

iu., 3.

RENT OF LAND FROM HUMAN FOOD

^55

occasioned 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 necessarily encourage the other,

market

for its produce.

capable of paying for

To

it, is

by

affording a ready

who

are

a most unpromising expedient

for

diminish the number of those

surely

encouraging the cultivation of corn. It

is

like the policy

which

would promote agriculture by discouraging manufactures. The rent and profit of those productions, therefore, which require either a greater original expence of improvement in order to fit the land for them, or a greater annual expence of cultivation, though

much

and pasture, yet when they do no more than compensate such extraordinary expence, are in reality often

regulated It

by the

rent

and

profit of those

common

crops.

sometimes happens, indeed, that the quantity of land which

can be

some particular produce, is too small to supply the demand. The whole produce can be disposed of to those

Land fit-

fitted for

effectual

who

superior to those of corn

are willing to give somewhat more than what

is sufficient

to

larpro-

ducemay

pay the whole rent, wages and profit necessary for raising and bringing

it

to market, ancording to their natural rates, or according to

oly,

the rates at which they are paid in the greater part of other culti-

vated land.

The

surplus part of the price which remains after de-

fraying the whole expence of improvement and cultivation

commonly,

in this case,

and

in this case only, bear

portion to the like surplus in corn or pasture, but

may

no regular pro-

may

exceed

it

in

almost any degree and the greater part of this excess naturally goes ;

to the rent of the landlord.

,

SUCil

The and

usual and

profit of

natural proportion, for example, between the rent

wine and those of corn and pasture, must be under-

3fS

that

which

stood to take place only with regard to those vineyards which pro-

duce nothing but good common wine, such as can be raised almost any-where, upon any

light, gravelly, or

nothing to recommend

it

but

its

with such vineyards only that

sandy

soil,

and which has

strength and wholesomeness. It

common

brought into competition; for with those of a peculiar qudity evident .that

it

is

land of the country can be it is

cannot.

The vine is more affected by the difference of soils than any other fruit tree. From some it derives 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

district,

extends through the greater part of a small

and sometimes through a considerable part of a

large prov-

particular flavour,

THE WEALTH OF NATIONS

156 ince.

The whole quantity

falls

short of the effectual

is

brought to market

demand, or the demand of those who

pay the whole rent, profit and wages necessary preparing and bringing them thither, according to the ordinary

would be for

of such wines that

rate, or

willing to

according to the rate at which they are paid in

The whole

vineyards.

those

who

are willing to

price above that of

common

quantity, therefore, can be disposed of to

pay more, which necessarily raises the wine. The difference is greater or less,

common

according as the fashionableness and scarcity of the wine render the competition of the buyers more or less eager. Whatever the greater part of

it

it

be,

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

effect,

as the cause of this careful cultivation. In so valuable a produce the loss occasioned

by negligence

careless to attention. sufficient to

on

A

is

so great as to force even the most

small part of this high price, therefore,

is

pay the wages of the extraordinary labour bestowed up-

their cultivation,

and the profits

of the extraordinary stock

which

puts that labour into motion. or the

West In-

The sugar colonies possessed by the European nations Indies,

may be compared

dian sugar colonies,

produce

falls

to those precious vineyards.

short of the effectual

disposed of to those

who

demand

are willing to give

in the

West

Their whole

of Europe, and can be more than what is suf-

pay the whole rent, profit and wages necessary for preparing and bringing it to market, according to the rate at which they ficient to

are

commonly paid by any other produce. In Cochin-china the finest

white sugar commonly thirteen shillings

sells for three piastres the quintal, about and sixpence of our money, as we are told by Mr.

Poivre,^^ 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 reduces 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 muskavada 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

“ Ed.

I

Co-

reads “their.”

“Voyages d’un Philosophe [ou observations sur les moeurs et les arts des ^^fnirique, 1768, pp. 92, 93. The note ap-

first h^ed^2T “ The French original

pears

de nos

says the Cochin-China quintal “equivaut a ii5

4d.

Hen. VI,

c. 2.

since 118 qrs. 2 bushels are reckoned at

From that it

sank

gradually to

2

oz. at

the beginning of the sixteenth century

and remained that

til]

1570.

at

THE WEALTH OF NATIONS

i8o

ported

the price

if

The

quarter.®^

was not above

six shillings

had imagined,

legislature

that

and eight-pence the

when

the price

was

no inconveniency in exportation, but that when it rose higher, it became prudent to allow of importation. Six shillings and eight-pence, therefore, containing about the same so low, there could be

quantity of silver as thirteen shillings and four-pence of our pres-

money (one

ent

third part less than the

tained in the time of

ered as what

is

Edward

called the

III),

had

same nominal sum con-

in those times

been consid-

moderate and reasonable price of wheat.

In 1554, by the ist and 2d of Philip and Mary;

and in 1558, by the ist of Elizabeth,®^ the exportation of wheat was in the same manner prohibited, whenever the price of the quarter should exceed six shillings and eight-pence, 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

together. In 1562, therefore,

tation of

by

it al-

the 5th of Elizabeth,^^ the expor-

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 nominal

This price had at

this time, therefore,

sum does

at present.

been considered as what

is

and reasonable price of wheat. It agrees nearly with the estimation of the Northumberland book in 1512, called the moderate

The same

That

in

France the average price of grain was, in the same man-

much

lower in the end of the fifteenth and beginning of the

has been ob-

ner,

served in

sixteenth century, than in the two centuries preceding, has been

France.

observed both by Mr. Dupre de St. Maur, thor of the Essay on the police of grain.

fall

same

period,

had probably sunk

in the

and by the elegant auIts price,

during the

same manner through the

greater part of Europe. It

may

have been

This either

rise in the

value of silver, in proportion to that of corn,

may

have been owing altogether to the increase of the demand for

“3

Ed. IV„ c. 2. and 2 P and M., nised by the Act. I

c

Suffolk

.

c. 5, § 7.

Licences for exportation, however, are recog-

however, merely partially exempts Norfolk and ^ from regulations intended to prevent exportation from places where

no custom-house existed. “sEHz.,c.5, §17.

Neither his Reckerckes s»r la vakw des Uonnoies el sur les prix des grams avant el aprh k concUe de Francfort, 1762, nor his Essai sur les Monnms. ou riflenons sur h rapport entre Vargent el Us denries, 1746, contain any clear justification for this reference.

“From

“k

1446 to

plus has que dans —Asso! sur lapobce1515 ginirale des grains sur leur pm ble fut

et

culture, I7SS

(by C.

J.

Herbert), pp. 259, 260.

sikles precedents.” sur les egets ^ de I’agriue 0

les

DIGRESSION ON SILVER

iSi

that metal, in consequence of increasing improvement and cultiva-

supply in the mean time continuing the same as before:

tion, the

demand

Or, the

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, be-

much exhausted, and consequently the expence of working them much increased: Or it may have been owing partly to the one

ing

and partly to the other the fifteenth

of those

and beginning

due to the increase

of de-

mand

for

silver or

to a dimi-

nution of supply.

two circumstances. In the end of

of the sixteenth centuries, the greater

part of Europe was approaching towards a more settled form of

government than

it

had enjoyed

for several ages before.

crease of security would naturally increase industry

ment; and the demand

The

in-

and improve-

for the precious metals, as well as for every

other luxury and ornament, would naturally increase with the increase of riches.

A

greater annual produce

quantity of coin to circulate

it;

would require a greater quantity silver. It is

would require a greater

and a greater number of of plate

rich people

and other ornaments

of

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. been the opinion, however, of the greater part of those

It has

who have that,

written upon the prices of commodities in ancient times,

from the Conquest, perhaps from the invasion of Julius

Caesar,

till

the discovery of the mines of America, the value of

sil-

ver was continually diminiiSiing. This opinion they seem to have

by the observations which they had occasion to make upon the prices both of corn and of some other parts of the

been led

into, partly

Most writers,

however, have supposed that the value of silver continually

fell.

rude produce of land; and partly by the popular notion, that as the quantity of silver naturally increases in every country with the increase of v^ealth, so

its

value diminishes as

its

quantity increases.

In their observations upon the prices of corn, three different

cir-

have been

cumstances seem frequently to have misled them. First,

In ancient times almost

certain quantity of corn, cattle,

all

misled in

rents were paid in kind; in a

poultry, &c. It sometimes hap-

pened, however, that the landlord would stipulate,

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 pa)nnent in kind was in this manner exchanged for a certain

sum

of

money,

is

in Scotland called the conversion price.

As the op-

tion is always in the landlord to take either the substance or the

^ Ed.

I

They

reads “with the tenant” here and omits “of the tenant” in next

line.

their ob-

servations

on the price of

corn, (i)

by

confusing

conversion prices

the wealth of nations

182 \irith

mar-

ket prices;

price, it is necessary for the safety of the tenant, that the conver-

sion price should rather be below than above the average price. In

many places,

accordingly,

it is

Through the greater part continues with regard to poultry, and

this price.

much above

not

custom

of Scotland this in

market

one-half of still

some places with regard

to

cattle. It might probably have continued to take place too with re-

gard to corn, had not the institution .of the public to

it.

These are annual valuations, according to the

assize, of the all

average price of

all

fiars

put an end

judgment of an

the different sorts of grain, and of

the different qualities of each, according to the actual market

price in every different county. This institution rendered ciently safe for the tenant, lord, to convert, as

call

it,

it suffi-

for the land-

the corn rent, rather at what should

price of the fiars of each year,®® than at

happen to be the tain fixed price.

they

and much more convenient

But the writers who have

any

cer-

collected the prices of

corn in ancient times, seem frequently to have mistaken what called in Scotland the conversion price for the actual

market

is

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 transcribing this conversion price fifteen times.®® shillings the quarter of

he begins with shillings of

ends with

it,

wheat. This

sum

The

till

after

price is eight

in 1423, the year at

which

contained the same quantity of silver as sixteen

our present money. But in 1562, the year at which he contained no more than the same nominal sum does

it, it

at present. (2)

by the

slovenly

They have been misled by

Secondly,

the slovenly

manner

in

which some ancient statutes of assize had been sometimes tran-

transcrip-

tion of

ancient statutes of assize;

scribed by lazy copiers; and sometimes perhaps 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 price of

wheat and barley were

gradually to determine what

it

at the lowest,

and

to

when

the

have proceeded

ought to be, according as the prices

of those two sorts of grain should gradually rise above this lowest price.

But the

have thought or four

® Ed.

first

transcribers of those statutes

it sufficient,

and lowest

to

seem frequently

copy the regulation as

prices; saving in this

manner

I reads “rent at the price of the fiars of each

to

far as the three their

own

la-

year rather.”

^Ckronicon Predosum, 1707, pp. 121, 122. Fleetwood does not “acknowledge” any “mistake,” but says that thought the price was not the market price it might have been “well agreed upon.” His “particular purpose” was to prove that in order to qualify for a fellowship a swear his income to be much less than it was.

man

might conscientiously

DIGRESSION ON SILVER

1S3

hour, and judging, I suppose, that this was enough to

proportion ought to be observed in

Thus

in the assize of bread

and

all

higher prices.

ale, of

the 51st of

was regulated according

price of bread

show what

Henry

III, the

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

different editions of the statutes, preceding that of

were printed, the copiers had never transcribed

yond the

all

the

Mr. Ruffhead,

this regulation be-

price of twelve shillings.'^® Several writers, therefore, be-

ing misled

by

this faulty transcription,

very naturally concluded

that the middle price, or six shillings the quarter, equal to about

eighteen shillings of our present money,

was the ordinary or aver-

age price of wheat at that time.

In the statute of Tumbrel and Pillory the same time, the price of ale

pence

is

rise in the price of barley,

enacted nearly about

regulated according to every six-

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

proportion which ought to be observed in

higher or lower,

we may

infer

from the

all

last

an example of the

other prices, whether

words of the statute;

“et sic deinceps crescetur vel diminuetur per sex denarios.” pression

is

very slovenly, but the meaning

the price of ale

is

in this

cording to every sixpence

manner

to

is

The

ex-

plain enough; “That

be increased or diminished ac-

rise or fall in

the price of barley.” 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

bread

a statute of

assize, in

which the price of

regulated according to all the different prices of wheat,

is

from ten-pence half

is

to three shillings the Scotch boll, equal to about

an English quarter. Three

this assize is

shillings Scotch, at the

time when

supposed to have been enacted, were equal to about

nine shillings sterling of our present money. Mr. Ruddiman*^^ to conclude from this that three shillings

seems

price to which

a

was the highest

wheat ever rose in those times, and that ten-pence,

shilling, or at

most two

shillings,

were the ordinary

prices.

™The statement is too sweeping. See Statutes of tU Realm, vol. xxiv and 199, notes. Ruifhead’s edition began to be published in 1762. '^’•Judicium Pillorie, temp, incert., ascribed to 51 Hen. III., stat. 6. Eds.

I

and

2

Upon i.,

pp.

read “Rudiman.”

” See his preface to Anderson’s Diplomata Scoriae. [Selectus diplomatum et mmismatum Scotiae thesaurus, 1739, p. 82, and in the translation, An Introduction to Mr, James Anderson’s Diplomata Scotiae, by Thomas Ruddiman, M.A., Edinburgh, 1773, pp. 170, 174, 228. The note appears first in ed. 2.]

or by misunderstandings

of those statutes;

THE WEALTH OE NATIONS

184

consulting the manuscript, however,

down

these prices are only set

it

appears evidently, that

all

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 secun-

dum

habendo respectum ad pretium bladi.’^ “You shall the remaining cases according to what is above written

praescripta

judge of

having a respect to the price of and (3) by attributing

too

much

importance to excessively

low

prices.

They seem

Thirdly,

corn.’’

by

to have been misled too

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

in later times, its ordinary price

must likewise

much lower than have been much

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 lower.

those times, equal to fourteen pounds eight shillings of that of the present; the other

pounds four in the

is six

shillings of

end of the

pounds eight

shillings,

our present money.

equal to nineteen

No price

can be found

fifteenth, or beginning of the sixteenth century,

which approaches to the extravagance of these. The price of corn, though at

all

times liable to variation,^® varies most in those tur-

bulent and disorderly societies, in which the interruption of

commerce and communication hinders the plenty

all

of one part of the

country from relieving the scarcity of another. In the disorderly state of

England under the Plantagenets, who governed

about the middle of the twelfth,

till

it

from

towards the end of the fifteenth

century, one district might be in plenty, while another at no great distance,

by having

its

crop destroyed either

by some accident

of

the seasons, or

by the incursion

be suffering

all

the horrors of a famine; and yet

hostile lord

were interposed between them, the one might not be

of

some neighbouring baron, might if

the lands of

some

Under the vigorous who governed England during the

able to give the least assistance to the other.

administration of the Tudors, latter part of the fifteenth,

and through the whole of the sixteenth

^^The manuscript appears to be the Alexander FouKs MS., now 25. 4. 10. in the Edinburgh Advocates’ Library, No. viii. of the MSS., described in Acts of the Parliaments of Scotland, vol. i. The exact words are “Memoran-

dum quod

reliqua judicabis

secundum praedicta habendo respectum ad prae-

scripta bladi precium duplicando.”

'^^Chronicon Preciosum, p. 78. Fleetwood quotes the author of Antiq. BriPecham as saying that “provisions were so scarce that parents did eat their own children.”

tan. in Vita Joh.

’®Eds. I to 3 read “variations.”

DIGRESSION ON SILVER century,

no baron was powerful enough

185

to dare to disturb the pub-

lic security.

The

reader will find at the end of this chapter

wheat which have been

all

the prices of

by Fleetwood from 1202 to 1597, money of the present times, and di-

collected

both inclusive, reduced to the

gested 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.

The

fig-

ures at

the end of

the chapter con-

firm this account.

In that long period of

time, Fleetwood has been able to collect the prices of no

eighty years, so that four years are wanting to

more than

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 be-

ginning of the thirteenth,

till

after the

middle of the sixteenth cen-

tury, the average price of each twelve years grows gradually lower

and lower; and that towards the end of the sixteenth century gins to rise again. able to collect,

The

prices, indeed,

seem to have been those

any very

certain conclusion can

however, as they prove any thing at

which I have been endeavouring to ever, seems, with all this

chiefly

which were remark-

and

I

do not pretend

be drawn from them. So

far,

all,

they confirm the account

give.

Fleetwood himself, how-

most other writers, to have

period the value of

be-

which Fleetwood has been

able for extraordinary dearness or cheapness;

that

it

silver, in

believed,'^® that

consequence of

its

during

increasing

abundance, was continually diminishing. The prices of corn which he himself has collected, certainly do not agree with this opinion.

They

agree perfectly with that of

Mr. Dupre de

St.

Maur,

and

with that which I have been endeavouring to explain. Bishop Fleet-

wood and Mr. Dupre de have

Maur

St.

are the two authors

collected, with the greatest diligence

of things in ancient times. It

is

and

who seem to

fidelity, the prices

somewhat 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,

that of

however, so

some other parts

much from

the low price of corn, as from

of the rude produce of land, that the

most

Sometimes the

value of

judicious writers have inferred the great value of silver in those

very ancient times. Corn,

it

has been said, being a sort of manufac-

ture, was, in those rude ages,

^ See

much

dearer in proportion than the

the table, pp. 251-255 below. This appears to be merely an inference from the fact that he does not take notice of fluctuations.

Above,

p. 180.

silver has

been measured by

the wealth of nations meant, I suppose, than the

the price

greater part of other commodities;

of cattle,

greater part of unmanufactured commodities

it is

poultry, etc.

But

try,

game

of all kinds, &c.

That

;

such as

in those times of

much

cattle, poul-

poverty and barun-

the low

barism these were proportionably

price of

doubtedly true. But this cheapness was not the effect of the high value of silver, but of the low value of those commodities. It was

these

things

shows

cheaper than corn,

is

not because silver would in such times purchase or represent a

their

cheapness,

greater quantity of labour, but because

not the

purchase or represent a

dearness

more opulence and improvement.

much

smaller quantity than in times of

must certainly be cheaper the country where it is pro-

Silver

of silver,

in Spanish

such commodities would

America than in Europe; in

duced, than in the country to which

it is

a long carriage both by land and by

brought, at the expence of

sea, of

a freight and an insur-

we

ance, One-and-twenty pence halfpenny sterling, however,

by Ulloa, was, not

told of

many years

ago, at

are

Buenos Ayres, the price

an ox chosen from a herd of three or four hundred.®^ Sixteen we are told by Mr. B3T:on, was the price of a good

shillings sterling,

horse in the capital of Chili.^^ In a country naturally

which the far greater part try,

game

of

all

is

is

but of

kinds, &c. as they can be acquired with a very small

quantity of labour, so they will purchase or small quantity.

fertile,

altogether uncultivated, cattle, poul-

The low money

no proof that the

command but a

price for which they

may

real value of silver is there very high,

be

very sold,

but that

the real value of those commodities is very low.

Labour,

for labour is

the real

measure.

both of Cattle,

But

etc.,

are

must always be remembered, and not any

or set of commodities,

silver

and

is

poultry,

game

particular

the real measure of the value

of all other commodities.

in countries almost waste, or

poultry,

produced by very

it

commodity

but thinly inhabited,

cattle,

of all kinds, &c. as they are the spontaneous produc-

tions of nature, so she frequently produces

them

in

much

greater

quantities than the consumption of the inhabitants requires. In

different

quantities

such a state of things the supply commonly exceeds the demand. In

of labour

different states of society, in different stages of

at differ-

fore,

ent times,

improvement, there-

such commodities will represent, or be equivalent

to,

very

different quantities of labour.

whereas

In every state of society, in every stage of improvement, corn

com is

the production of

human

industry.

But the average produce

of

Ed. I reads “that” instead of “because,” here and also two lines above. ^Voyage historiqm de VAmirique mSridionale, vol. i p. 552, where, however, the number of cattle is two or three hundred, as correctly quoted above, ,

p. 148.

Narrative of the Hon, John Byron, containing an account of the Great Distresses suffered by himself and his companions on the Coast of Patagonia from 1740 tq 1746, 1768, pp. 212, 220.

DIGRESSION ON SILVER every sort of industry

is

always suited, more or

187

less exactly, to the

average consumption; the average supply to the average demand.

scarcely

varies at all,

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 to the

same

what comes

thing, the price of nearly equal quantities; the con-

tinual increase of the productive powers of labour in

ing

state of cultivation being

more

an improv-

or less counterbalanced

by

the continually increasing price of cattle, the principal instru-

ments of

agriculture.

Upon

we may

these accounts, therefore,

all

rest assured, that equal quantities of corn wiU, 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

it

has already been observed,®^

of the rude produce of land. Corn, accordingly, 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

we can judge better of the real value of silver, by with corn, than by comparing it with any other com-

stages, therefore,

comparing

it

modity, or set of commodities.

Corn, besides, or whatever else

is

the

common and

favourite

try, the principal part^of the subsistence of the labourer.

In con-

sequence of the extension of agriculture, the land of every country produces a much greater quantity of vegetable than of animal food, and the labourer every-where 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 subsiststill

and game no part of Scotland, where labour is somewhat

smaller part of

In France, and even in

it.

it,

better rewarded than in France, the labouring poor seldom eat

butcher^s-meat, except casions.

The money

upon

holidays,

and other extraordinary

price of labour, therefore, depends

oc-

much

com, the subsistence of the more upon the average money labourer, than upon that of butcher's-meat, or of any other part price of

of the rude produce of land.

The

real value of gold

and

silver,

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,

therefore, the real quantity of labour

or

any other part Such

of the rude

slight observations,

“Misprinted “improved”

produce of land. however, upon the prices either of

in ed. 5.

also

regulates

vegetable food of the people, constitutes, in every civilized coun-

ence; poultry makes a

and

“Above,

p. 38.

the money price of

labour

the wealth of nations

iS8

The authors

were also

corn or of other commodities, would not probably have misled so many intelligent authors, had they not been influenced, at the

by

that as the quantity of silver

the popular notion,

misled by

same

the notion

naturally increases in every country with the increase of wealth, so its value diminishes as its quantity increases. This notion, how-

that silver

in value as falls

its

quan-

ever,

time,

seems to be altogether groundless.

may

of the precious metals

The quantity

increase in

tity increases.

try from

two

different causes:

any coun-

from the increased

either, first,

secondly, from the abundance of the mines which supply increased wealth of the people, from the increased produce of their annual labour. The first of these causes is no doubt necesit;

or,

sarily connected with the diminution of the value of the precious

metals; but the second Increase of quantity aris-

When more abundant

is

not.

mines are discovered, a greater quantity

of the precious metals is brought to market,

and the quantity

of

which they must be

ing from

the necessaries and conveniences of

greater

exchanged being the same as before, equal quantities of the

abundance of the mines is

con-

life for

metals must be exchanged for smaller quantitife of commodities.

So

far, therefore, as

the increase of the quantity of the precious

metals in any country arises from the increased abundance of the

nected

with diminution of value,

but in-

mines,

some diminution

necessarily connected with

it is

of their

value.

When, on the contrary, the wealth of any country increases^ when the annual produce of its labour becomes gradually greater a greater quantity of coin becomes necessary

crease of

and

quantity

to circulate a greater quantity of commodities: and the people, as

resulting

from the

greater,

more commodities to give for it, naturally purchase a greater and a greater quantity of plate.

they can afford

increased

will

wealth of a country

The quantity

is

not.

in order

it,

as they have

of their coin will increase

tity of their plate

from necessity; the quan-

from vanity and ostentation, or from the same

reason that the quantity of fine statues, pictures, and of every other luxury and curiosity, as statuaries

is

likely to increase

and painters are not

among them. But

likely to be worse

rewarded

times of wealth and prosperity, than in times of poverty pression, so gold

Gold and silver are

dearer in

a rich country,

The

and

price of gold

silver are not likely to

and

silver,

when

more abundant mines does not keep

it

in

and de-

be worse paid

for.

the accidental discovery of

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

country. Gold and silver, like

all

other commodities, naturally

seek the market where the best price best price

^ Ed.

is

commonly given

I reads

a rich than in a poor

is

given for them, and the

for every thing in the country

“had they not been agreeable to the popular

which

notion.’^

DIGRESSION ON SILVER can best af ord price which is

is

it.

Labour,

1S9

must be remembered,

it

is

the ultimate

paid for every thing, and in countries where labour

equally well rewarded, the

money

be in pro-

price of labour will

portion to that of the sul3sistence of the labourer.

But gold and

sil-

ver will naturally exchange for a greater quantity of subsistence 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. two countries are at a great distance, the difference may be

If the

very great; because though the metals naturally

worse to the better market, yet

them

may

it

be

fly

from the

difficult to

transport

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

any part

of Europe,

sistence in

much much

a much

is

richer country than

and the difference between the price of sub-

China and

in

Europe

cheaper than wheat

is

is

very great. Rice in China

any-where in Europe. England

is

a

richer country than Scotland; but the difference between

the money-price of corn in those two countries

and

is

is

is

much

smaller,

English; but in proportion to

its

quality,

it is

somewhat

certainly

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 com, therefore, must be dearer in Scotland than in England, and yet in proportion to

and goodness of the

to the quantity

made from

it, it

flour or

its

quality, or

meal which can be

cannot commonly be sold higher there than the

Scotch corn which comes to market in competition with

The

difference

Europe,

between the money

is still

Europe than proving

greater than that between the

in China, the greater part of

state, while

price of labour

is

money

is

advancing much more slowly than

lower; Scotland, though ad-

of emigration

rarity of

it

from England,

sufficiently

labour

very different

in the

two

from Scotland, and the

prove that the demand for

countries.®’^

The

proportion be-

recompence of labour in different countries,

p. 90.

an im-

much

The frequency

Above,

in

The money

is

England.®®

real

still.

price of

higher in

lower in Scotland than in England, because the

vancing to greater wealth,

tween the

is

Europe being

China seems to be standing

recompence of labour

is

it.

price of labour in China and

subsistence; because the real recompence of labour

real

may be

co^r-^ jpg China

with

andSwt^ land with

but just perceptible. In proportion to the quantity or meas-

ure, Scotch corn generally appears to be a good deal cheaper than

in

as

®^This sentence

is

not in ed.

i.

it

must

price 0

/

subsist-

XHE WEALTH OF NATIONS

190

be remembered, or poverty, but

naturally regulated, not

is

by

their actual wealth

their advancing, stationary, or declining con-

by

dition.

Gold and

Gold and silver are

silver, as

they are naturally of the greatest value

the richest, so they are naturally of the least value

among

among

cheapest

Among

among the

the poorest nations.

poorest

they are of scarce any value.

nations.

The fact that corn

In great towns corn

bour

in

towns due to

the country; but

to bring silver to the great

and the

territory of

it is

of silver,

their inhabitants.

and

artificers

this is

in

Hol-

land,

town than

costs a great deal

it

not to the cheapness

true also

the effect, not of the real cheapness

more

to the remote parts of

to bring corn.

In some very rich and commercial countries, such as Holland

dear-

ness there,

is

of silver, but of the real dearness of corn. It does not cost less la-

dearer

its

always dearer than in remote parts of

the country. This, however,

is

is

is

savages, the poorest of all nations,

can

Genoa, corn

dear in great towns.

They

dear for the same reason that

are rich in the industry

and manufacturers;

facilitate

is

They do not produce enough

in shipping,

skill of their

machinery which

in every sort of

and abridge labour;

and

to maintain

and

in all the other

instruments and means of carriage and commerce: but they are it must be brought to them from distant by an addition to its price, pay for the carriage

Genoa,

poor in corn, which, as

etc.

countries, must,

from those countries. It does not cost

less

labour to bring silver

Amsterdam than to Dantzick; but it costs a great deal more to The real cost of silver must be nearly the same in both places; but that of corn must be very different. Diminish the real

to

bring corn.

opulence either of Holland or of the territory of Genoa, while the

number power

of their inhabitants remains the

of supplying themselves

same: diminish their

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 declen-

sion either as its cause or as its effect, will rise to the price of

famine.

When we

superfluities, of

are in

want

of necessaries

which the value, as

and prosperity, so

it

it

we must

part with

a

all

times of opulence

rises in

and

sinks in times of poverty

distress. It is

otherwise with necessaries. Their real price, the quantity of labour

which they can purchase or command,

and

distress,

and

rises in

sinks in times of opulence

times of poverty

and prosperity, which

are always times of great abundance; for they could not other-

wise be times of opulence and prosperity. Corn ver So no

in-

crease of silver

due

to the in-

is

is

a necessary,

sil-

only a superfluity.

Whatever, therefore,

may have been

tity of the precious metals,

the increase in the quan-

which, during the period between the

middle of the fourteenth and that of the sixteenth century, arose

DIGRESSION ON SILVER from the increase of wealth and improvement,

191 it

could have no

crease of

tendency to diminish their value either in Great Britain, or in any

who have

other part of Europe. If those

collected the prices of

things in ancient times, therefore, had, during this period, no rea-

son to infer the diminution of the value of vations which they had

made upon

other commodities, they had

still

silver,

havereducedits

from any obser-

the prices either of corn or of

less

reason to infer

it

from any

supposed increase of wealth and improvement.

Second Period

But how

may have

various soever

been the opinions of the

No doubt

learned concerning the progress of the value of silver during this first

unanimous concerning

period, they are

From about 1570

to about 1640, during

during the second,

second

a period of about sev-

period,

it

enty years, the variation in the proportion between the value of silver its

and that

of corn, held a quite opposite course. Silver

real value, or

would exchange

than before; and corn rose in ing

commonly

about ten

and

sold for about

for

nominal

its

price,

two ounces of

shillings of our present

and instead of be-

silver the quarter,

money, came

to

be sold for

The

six

this

portion to that of corn. It

fact, or

is

accounted for accordingly in the same there never has been

about the cause of

Europe was, during

this period,

provement, and the

demand

it.

The

considerably.

The

any dispute

greater part of

advancing in industry and im-

for silver

This was

covery of

theabun-

Amwican mines,

must consequently have

been increasing. But the increase of the supply had, far exceeded that of the

b^^orth 6oz.or8

diminution in the value of silver in pro-

manner by every body; and about the

com

money.

discovery of abundant mines of America, seems to have

been the sole cause of

either

or

^^^and a quarter

and forty

eight ounces of silver the quarter, or about thirty

shillings of our present

sunk in

a smaller quantity of labour

it

seems, so

demand, that the value of that metal sunk

discovery of the mines of America,

it is

observed, does not seem to have had any very sensible effect

the prices of things in England

till

after 1570;

be upon

to

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

Wheat

quarter of nine bushels of the best wheat at Windsor market, ap-

win^r

pears from the accounts of Eton College,®^ to have been

market.

® In

is

2I, is.

6 d.

1545. Ed. I reads “thirty” instead of “twenty.” In ed. 2 the correction in the errata. See below p. 201, notes 4 and 5. “ See the table at the end of the chapter, p. 256.

the wealth of nations

192

From which sum, ninth, or 4$,

neglecting the fraction, and deducting a

the price of the quarter of eight bushels comes

out to have been iL i6s, lod. likewise the fraction,

And from

this

and deducting a ninth, or

sum, neglecting

4s. id.

•^,

for the

wheat and that of the middle wheat,^® the price of the middle wheat comes out to have been about iL 12s. M. |, or about six ounces and one-third of an difference between the price of the best

ounce of

From

silver.

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

2I. 105.;

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

iL igs. 6d. or about seven ounces and two-thirds of an ounce of silver.

Third Period The effect of the dis-

covery of

Between 1630 and 1640, or about 1636, the effect of the discovery of the mines of America in reducing the value of silver, ap-

the

pears to have been completed, and the value of that metal seems

American mines was com-

never to have sunk lower in proportion to that of corn than

plete

the present century, and

it

about

some time before the end

of the last.

about that time.

It

it

was

seems to have risen somewhat in the course of

had probably begun to do so even

1636.

From 1637

to 1700, both inclusive, being the sixty-four last

From

years of the last century, the average price of the quarter of nine

1637 to 1700 there

bushels of the best wheat at Windsor market, appears, from the

was a

same accounts, dearer than

very slight rise of

wheat at Windsor,

to it

have been 2L iis. od.j; which

had been during the sixteen years

is

only

before.

od.

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 seasons 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. due to the civil

The

war,

of these events was the civil war, which, by discouragand interrupting commerce, must have raised the price corn much above what the course of the seasons would otherfirst

ing tillage of

“The deduction of this ninth is recommended by Charles Smith, T/iree Tracts on the Corn Trade and Corn Laws, 2nd ed., 1766, p. 104, because, “it hath been found that the value of all the wheat fit for bread, if mixed together,

would be eight-ninths of the value

of the best wheat.”

DIGRESSION ON SILVER wise have occasioned. It must have all

had

this effect

^93

more

or less at

the different markets in the kingdom, but particularly at those

in the neighbourhood 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 accounts, to have been 4Z. 55. and in 1649 to have been 4L the quarter of

The

nine bushels.

excess of those two years above

2I.

105. (the

average price of the sixteen years preceding 1637) is 3/. 55.; 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

have been occasioned by the

The second

prices

which seem to

wars.

event was the bounty upon the exportation of corn,

The bounty,

granted in 1688.^^

by encouraging

people,

civil

tillage,

it

many

has been thought by

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. this effect at

any time,

any such

effect

far the

bounty could produce I shall only

between 1688 and 1700, it had not time During this short period its only

observe at present, that to produce

How

I shall examine hereafter

effect.^^

must have been, by encouraging the exportation

of the sur-

plus 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, therefore, extending through a considerable part of Europe, must have been

somewhat enhanced by the bounty. In 1699, accordingly, the ther exportation of corn was prohibited for nine months. ®^By

I

W. & M.,

c.

12,

“An

act for the encouraging the exportation of

corn,” the preamble of which alleges that “it hath been found

that the exportation of thereof

is

at a

low

fur-

com and

grain into foreign parts,

by

experience,

when

the price

rate in this kingdom, hath been a great advantage not only

owners of land but to the trade of this kingdom in general.” It prowhen malt or barley does not exceed 24s. per Winchester quarter, rye 32s. and wheat 48s. in any port, every person exporting such corn on an English ship with a crew at least two-thirds English shall receive from the Customs 2s. 6d. for every quarter of barley or malt, 3s. 6d. for every quarter of rye and 3s. for every quarter of wheat. to the

vides that

“Below, pp. 473-483.

^ In

shall

place, of

“How

examine hereafter: I

simply “But.” For “not” ed.

The Act

i

10 Will.

_

far the

bounty could produce

this effect at

any time

shall only observe at present that,” ed.

i

I

reads

reads “no,” and for “any such” it reads “this.” III., c. 3, prohibits exportation for one year from loth

the

bounty on the exportation of

com.

THE WEALTH OF NATIONS

194

There was a third event which occurred

and the cKpping and wearing of the coin,

same

period,

and which, though

it

in the course of the

could not occasion any scarcity

any augmentation 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 of the silver coin, by clipping and wearthe great debasement of corn, nor, perhaps,

ing.

This evil had begun in the reign of Charles

on continually increasing

Mr. Lowndes,

learn from

at

1695;

till

II.

and had gone

which time, as we

may

the current silver coin was, at

an aver-

standard

value.®'^

below

age, near five-and-twenty per cent,

its

constitutes the market-price of every

But the nominal sum which commodity is necessarily regulated, not

so

much by

of silver, which, according to the standard, in

it,

as

by

tained in

that which,

it.

it is

found by experience, actually

con-

necessarily higher

clipping

and wearing, than

In the course of the present century, the silver coin has not at

which was

much

by

is

is

This nominal sum, therefore,

when the coin is much debased when near to its standard value. then

the quantity

ought to be contained

any time been more below

its

standard weight than

it is

at pres-

greater

than in the present century.

ent.

But though very much defaced,

that of the gold coin for which

its

it is

fore the late re-coinage, the gold coin it

was

value has been kept

up by

exchanged.^^ For though be-

was a good deal defaced

too,

less so than the silver. 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 dipt silver.^^*®

Before the late re-coinage of the gold, the price of silver

February, 1699. The mistake “nine months” is probably due to a misreading of C. Smith, Tracts on the Corn Trade, p. 9, wheat “growing, and continuing dearer till 1698, the exportation was forbid for one year, and then for nme months the bounty was suspended” (cp. pp. 44, 119). As a matter of fact, the

bounty was suspended by ii

&

from 9th February, 1699, seven months and a half. alleges that the Act granting the bounty “was

to 29th September, 1700, or not

12 Will. III.,

c. i,

much more than

The Act II & 12 Will. III., c. i, grounded upon the highest wisdom and prudence and has succeeded to the greatest benefit and advantage to the nation by the greatest encouragement of tillage,” and only suspends it because “it appears that the present stock and quantity of corn in this kingdom may not be sufficient for the use and service of the people at home should there be too great an exportation into parts beyond the seas, which many persons may be prompted to do for their own private advantage and the lucre of the said bounty .”— of the Realm, vol. vii,, p. 544. ®®For “debasement” ed. i reads “degradation.” ^ Lowndes says on p. 107 of his Report Containing an Essay for the Amendment of the Silver Coins, 1695, “the moneys commonly current are diminished near one-half, to wit, in a proportion something greater than that of ten to twenty-two.” But in the text above, the popular estimate, as* indicated by

the price of silver bullion, is accepted, as in the next paragraph. "^Ed. I reads “degraded.” ®®See above, p, 41. ^“Lowndes, Essay, p. 88

DIGRESSION ON SILVER was seldom higher than

bullion

ounce^ which the

common

i9S

and seven-pence an

five shillings

but five-pence above the mint price. But in 1695,

is

price of silver bullion

an ounce/®^ which

was

six shillings

and five-pence

fifteen-pence above the mint price.

is

Even

before the late re-coinage of the gold,^®^ therefore, the coin, gold

and

silver together,

when compared with

silver bullion,

supposed to be more than eight per cent, below

was not

standard value.

its

In 169s, on the contrary, it had been supposed to be near fiveand-twenty per cent, below that value. But in the beginning of the present century, that

is,

immediately after the great re-coin-

age in King William^s time, the greater part of the current coin must have been

nearer to

still

its

standard weight than

silver

it is

present. In the course of the present century too there has been

at

no

great public calamity, such as the civil war, which could either

discourage

tillage,

And though

try.

or interrupt the interior

of the coun-

the bounty which has taken place through the

greater part of this century,

somewhat higher than

must always

raise the price of

com

full

Moreover the

bounty it

otherwise would be in the actual state of

yet as, in the course of this century, the bounty has

tillage;

had

commerce

time to produce

the good effects

all

commonly imputed

to

has been long

enough in existence

it,

to encourage tillage, and thereby to increase the quantity of

corn in the

which I

home market,

shall explain

it

may, upon the

principles of

and examine hereafter,

a system

be supposed to

have done something to lower the price of that commodity the one way, as well as to raise

it

the other. It

is

by many people sup-

posed to have done more.^^® In the sixty-four

nine bushels of the best wheat at Windsor market, appears,

is

2I. o^.

by

whici

6d.

about ten shillings and sixpence, or more than five-and-twenty than

per cent, cheaper

it

had been during the

sixty-four last

years of the last century; and about nine shillings and sixpence

cheaper than

it

had been during the

sixteen years preceding 1636,

Lowndes’s Essay on the Silver Coin, p. 68. This note appears

first

in

ed. 2.

^ Above,

p. 41.

^°®The meaning

bounty

is

“given a certain area and intensity of cultivation, the

will raise the price of corn.”

^“^Ed. I does not contain “upon the principles of a system which I shall The reference is presumably to pp. 473-483.

explain hereafter.”

^ Ed. reads here “a notion which I shall examine hereafter.” ^ Doubtless by a misprint ed. 5 omits The term used the end of the paragraph and also on pp. 197, 198. ^ See the table at the end of the chapter: a mistake for^^. I

“first.”

is

again at

is

“®The 23 per on the £2

IIS.

reckoned on the £2 os. 6j|d. instead of of price is really less than 21 per cent.

cent, is erroneously

ojd.

The

fall

possible effect in

lowering the price of corn.

years of the

first

present century accordingly, the average price of the quarter of

the accounts of Eton College, to have been

to produce any

THE WEALTH OF NATIONS

196

the discovery of the abundant mines of America

when

supposed to have produced cheaper than

it

had been

its full effect;

may

be

and about one shilling

in the twenty-six years preceding 1620,

before that discovery can well be supposed to have produced

its

According to this account, the average price of middle

full effect.

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

Silver has risen

value of silver, therefore, seems to have risen somewhat in

proportion to that of

com

during the course of the present cen-

somewhat since the

tury,

and

it

had probably begun

to

do so even some time before

beginning

the end of the

of the

In 1687, the price of the quarter of nine bushels of the best wheat at Windsor market was il, 5^. 2d, the lowest price at which

century,

and the rise

began

it

before

last.

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 as is

shown by Mr. King’s calculations.

of moderate plenty to be to the grower 35.

and-twenty

The

shillings the quarter.^®^

stand to be the same with what price, or the price at

is

6^f.

the bushel, or eight-

grower’s price I under-

sometimes called the contract

which a farmer contracts

for

a certain num-

ber of years to deliver a certain quantity of corn to a dealer. As a contract of this kind saves the farmer the expence

marketing, the contract price

is

posed to be the average market and-twenty

and trouble

generally lower than price.

shillings the quarter to

what

is

Mr. King had judged

of

sup-

eight-

be at that time the ordinary

contract price in years of moderate plenty. Before the scarcity

occasioned I

by

the late extraordinary course of

have been assured,

bad

seasons,

the ordinary contract price in all

it

was,

common

years.

In 1688 was granted the parliamentary bounty upon the exporta-

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 ex-

tion of corn.^^^

““ The date is taken from the heading of Scheme D in Davenant, Essay upon the Probable Means of Making a People Gainers in the Balance of Trade, 1699, P- 22, Works, ed. Whitworth, 1771, vol. ii., p, 184. Cp. Natural and Political Observations and Conclusions upon the State and Condition of England, by Gregory King, Esq., Lancaster, H., in George Chalmers’ Estimate of the Comparative Strength of Great Britain, 1802, p. 429; in Davenant, Balance of Trade, pp. 7ij 72> Works, vol. ii., p. 217. Davenant says “this value is what the same is worth upon the spot where the corn grew; but this value is increased by the carriage to the place where it is at last spent, at least

i part more.” Ed. I does not contain this parenthesis.

Above, p. 193, note.

DIGRESSION ON SILVER pedient to raise

to the high price at which

it artifically

quently been sold in the times of Charles

1.

and

II. It

wheat was so high as forty-eight

place, therefore,

till

quarter; that

twenty

is

197 it

had

was

fre-

to take

shillings the

fths dearer than Mr. King

shillings, or

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 universally, eight-and-forty

shillings the quarter

was a

price which, without

some such expedi-

ent as the bounty, could not at that time be expected, except in

years of extraordinary scarcity.

But the government

liam was not then fully settled. It

was in no

thing to the country gentlemen, from

time soliciting the

The value

first

of

King Wil-

condition to refuse

whom

it

any

was at that very

establishment of the annual land-tax.

of silver, therefore, in proportion to that of corn,

probably risen somewhat before the end of the

last century;

had

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 would have been

from being so sensible as

rise

it

otherwise

in the actual state of tillage.

In plentiful years the bounty, by occasioning an extraordinary exportation, necessarily raises the price of corn above

what

it

other-

Apart from its effect in

wise would be in those years.

To

encourage

the price of corn even in the most plentiful years,

end of the

by keeping up was the avowed

tillage,

bounty

suspended. It must, however, have had some effect even

which

it

tillage,

the

institution.

In years of great scarcity, indeed, the bounty has generally been

many

prices of

extending

of those years.

By

upon the

raises the

price of

com, both the extraordinary exportation

occasions in years of plenty,

it

must frequently hinder the

plenty of one year from compensating the scarcity of another.

in times

of plenty

and of scarcity.

Both bounty

in years of plenty

and

raises the price of corn

the actual state of

tillage. If,

in years of scarcity, therefore, the

above what

it

naturally would be in

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,

same

have been much more

state of tillage,

so,

had

it

must, in the

it

not been for

this operation of the bounty.

may be said, the state of tillage would What may have been the effects of this

But without the bounty, not have been the same. institution

upon the

agriculture of the country, I shall endeavour

to explain hereafter, ties.

it

when I come

to treat particularly of boun-

I shall only observe at present, that this rise in the value of

^ Ed.

s,

doubtless

by a

Below, pp. 473-483-

misprint, omits “even.’

It is said

to

have

extended tillage

(and so to havere-

THE WEALTH OF NATIONS

198

ducedthe price),

but the rise of

has not been

silver

peculiar

to

Eng-

land.

proportion to that of corn, has not been peculiar to Eng-

silver, in

land. It has been observed to have taken place in France during the

same

period,

and nearly

in the

same proportion

too,

by

three very

and laborious collectors of the prices of corn, Mr. Maur, Mr. Messance, and the author of the Essay on

faithful, diligent,

Dupre de

St.

But in France, till 1764, the exportation of was by law prohibited; and it is somewhat difficult to supthat nearly the same diminution of price which took place in

the police of grain.^’-^ grain pose,

one country, notwithstanding

this prohibition, should in

another be

owing to the extraordinary encouragement given to exportation. The alteration

should be regarded as a rise of silver

rather

It

would be more proper, perhaps, to consider

money price

the average

rise in the real fall in

of

this variation in

com as the effect rather of some gradual

value of silver in the European market, than of any

the real average value of corn. Corn,

it

has already been ob-

more accurate measure of perhaps any other commodity- When,

served,^^^ is at distant periods of time a

than a fall

value than either

of corn.

after the discovery of the

three

silver, or

and four times

its

versally ascribed, not to fall

abundant mines of America, corn rose

former

any

money

rise in

price, this

to

change was uni-

the real value of corn, but to a

in the real value of silver. If during the sixty-four first years of

the present century, therefore, the average

money

price of corn has

had been during the greater part of the last century, we should in the same manner impute this change, not to any fall in the real value of corn, but to some rise in the real fallen

somewhat below what

it

value of silver in the European market.

The recent high price of

corn is merely the effect of unfa-

vourable seasons.

The high

price of corn during these ten or twelve years past, in-

deed, has occasioned a suspicion

continues to

fall in

that the real value of silver

still

the European market. This high price of corn,

however, seems evidently to have been the

effect of the extraordin-

ary 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 un-

favourable through the greater part of Europe; and the disorders of Poland have very

much

increased the scarcity in

tries, which, in dear years, used to be supplied

all

those coun-

from that market.

So long a course of bad seasons, though not a very common event, is by no means a singular one; and whoever has enquired much in“^The

references to

Dupre de

St.

Maur and

the Essay (see above, p. 180,

note), as well as the whole argument of the paragraph, are from Messance. Recherches sur la population des giniralitSs d’Auvergne, etc., p. 281. Messance’s quotations are from Dupre’s Essai sur les Monnoies, 1746, p. 68, and Herbert’s Essai sur la police generate des grains, 1755, PP- i^j lit 189; cp. below, p. 240.

““Above, pp.

35, 36.

““Examined below,

p. 216, 217.

DIGRESSION ON SILVER

^99

to the history of the prices of corn in former times, will be at loss to recollect several other

no examples of the same kind. Ten years

of extraordinary scarcity, besides, are not

years of extraordinary plenty. 1750, both inclusive,

may

The low

more wonderful than ten

price of corn from 1741 to

very well be set in opposition to

price during these last eight or ten years.

From 1741

its

high

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 iL i^s,

which

price of the sixty-four

first

nearly 6s. 3d. below the average

is

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 iL 6s.

Between 1741 and 1750, however, the bounty must have hindered the price of corn from falling so low in the home market as it

The bounty kept up

naturally would have done. During these ten years the quantity of

the price

appears from the custom-house books,

between

all

sorts of grain exported,

amounted to no hundred and

amounted

less

it

than eight millions twenty-nine thousand one

fifty-six quarters

one bushel.

The bounty paid

for this

In 1749 accordingly, Mr.

to 1,514,962^. 17^. 4d.

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

no

to

less

than 324,176^. los. 6d.^^^ It

is

unnecessary to

See the table at the end of the chapter. is obtained, as recommended by Charles Smith {Tracts on the Corn Trade 1766, p. 104), by deducting one-ninth for the greater size of the Windsor measure and one-ninth from the remainder for the difference between best and middling wheat. “Tract 3d,” referred to a few lines farther on, only gives the quantities of each kind of grain exported in each year (pp. no, iii), so that if the figures in the text are taken from it they must have been obtained by some“•®This figure

what laborious

arithmetical operations.

The

particulars are as

Exported. Qr. Bush.

Wheat Rye

.... ....

3,784,524

I

765,056

6

Barley,

malt and oats

3479,575

2

follows:—

Bounty payable. 1946,131

0

133,884 18 434,946 18

7J il

I 8,029,156 £1,514,962 17 4J apparently a mistake for “months.” “There is such a superabundance of corn that incredible quantities have been lately exported. I should be afraid to mention what quantities have been exported if it did not appear upon our custom-house books, but from them it appears that lately there was in three months’ time above £220,000 paid for bounties upon corn

^ “Years”

is

expoxted.^^—Parliamentary History (Hansard), vol. xiv., p 589 See Tracts on the Com Trade Tract 3d. This note appears

^

;

fir§t in ed.

1741 and 1750.

THE WEALTH OF NATIONS

200

observe

how much

price of corn above

this forced exportation

what

it

must have raised the

otherwise would have been in the

home

market.

The sud-

At the end

of the accounts

annexed to

this chapter the reader will

den change at

find the particular account of those ten years separated from the

1750 was

rest.

due to ac-

ten years, of which the average

cidental

He

variation

much

of the

century.

seasons.

city.

will find there too the particular is

account of the preceding

likewise below, though not so

below, the general average of the sixty-four

first

years of the

The year

1740, however, was a year of extraordinary scarThese 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

deal above

it,

two dear years; so the

latter

have been a good

notwithstanding the intervention of one or two cheap

ones, of 1759, for example. If the former have not been as

low the general average, as the probably to impute

it

latter

to the bounty.

have been above

it,

much bewe ought

The change has evidently been

too sudden to be ascribed to any change in the value of silver,

which

always slow and gradual. The suddenness of the

is

can be accounted for only

by a

effect

cause which can operate suddenly,

the accidental variation of the seasons.

The money

The rise in the

price of labour in Great Britain has, indeed, risen

during the course of the present century. This, however, seems to be

price of

much

demand

any diminution in the value of silver in demand for labour in Great Britain, arising from the great, and almost universal prosperity of the country. In France, a country not altogether so pros-

for la-

perous, the

labour has been

due to increase of

bour, not to a dimi-

nution in the value

the effect, not so

of

the European market, as of an increase in the

money

price of labour has, since the middle of the last

century, been observed to sink gradually with the average price of corn.

Both

in the last century

money

and in the present, the day-

wages of common labour are there said to have been pretty uni-

of silver.

formly about the twentieth part of the average price of the septier

a measure which contains a little more than four Win Chester bushels. In Great Britain the real recompence of labour, it of Wheat,

has already been shown,

and conveniences of

life

the real quantities

of the necessaries

which are given to the labourer, has

creased considerably during the course of the present century. rise in its

money

price seems to

have been the

effect,

in-

The

not of any

diminution of the value of silver in the general market of Europe,

but of a 2.

The

rise in the real price of

labour in the particular market of

exports for 1750 are given in C. Smith, op. dt., p, in, as 947,602 qr wheat, 99,049 qr. 3 bush of rye, and 559,538 qr. 5 bush, of barley

I bush, of

malt and oats. The bounty on these quantities would be £324,176, los Above, pp. 76-78. “®Ed. i, perhaps correctly, reads “quantity.”

^

DIGRESSION ON SILVER

201

Great Britain, owing to the peculiarly happy circumstances of the country.

For some time after the continue to

The

at

sell

its

rope, however,

much below

former, or not

mining would

profits of

above their natural

rate.

The de-

discovery of America, silver would

first

some time be very

for

its

crease in

former price.

great,

the rent

and much

and profit of mines

Those who imported that metal into Eu-

would soon

of gold

find that the whole annual importation

and silver

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 or to

what was

rates, the

till it fell

to its natural price;

just sufficient to pay, according to their natural

wages of the labour, the

must be paid

of the land, which

and the rent

profits of the stock,

in order to bring it

from the mine

to the market. In the greater part of the silver mines of Peru, the of the gross pro-

tax of the king of Spain, amounting to a tenth duce, eats up,

it

land. This tax third,

then to a

was

originally

fifth,

and

a

half;

at last to

is all

it

soon afterwards

a tenth, at which

In the greater part of the

tinues.^^®

seems,

has already been observed,^^® the whole rent of the

rate

fell

it still

mines of Peru,

silver

to

a

con-

this, it

that remains, after replacing the stock of the under-

taker of the work, together with to be universally

its

ordinary profits; and

seems

acknowledged that these profits, which were once

now as low as they can well

very high, are

it

be, consistently with car-

rying on the works.

tax of the king of Spain was reduced to a fifth part of the

The

registered silver in 1504/^^ one-and-forty years before iS 4 S/^^

the date of the discovery of the mines of Potosi. In the course of

ninety years,^^® or before 1636, these mines, the most

America, had time

sufficient to

produce their

fertile in all

full effect, or to

reduce

the value of silver in the European market as low as it could well of Spain. Ninety fall, while it continued to pay this tax to the king

years is

is

time

no monopoly, to

while

reduce any commodity, of which there natural price, or to the lowest price at which,

sufficient to its

pays a particular

it

tax,

it

can continue to be sold for any

considerable time together.

Ed. Ed.

I

I

Above, pp. 169, 170. reads “fifth ” reads “fell to a third and then to a fifth, at which rate

^

it still

con-

tinues.”

^Solorzano, lib. V.,

cap.

i.,

vol.

ii.

Solorzano-Pereira,

§§ 22, 23; vol.

ii.,

De Indiarum

p. 883, col. 2.

Ed.

i

Jure, Madrid, i 777 does not contain the

»

note.

.

Ed.

I

reads “one and thirty years before iSSSvol.

p. 882, col

2.

Solorzano, op. ^-’®Ed. I reads “In the course of a century.” Ed. I reads “A hundred years.” cit.,

ii.,

The date

iS 4S

is

.

given

m

THE WEALTH OE NATIONS

202 has been stayed by

The fallen

price of silver in the still

the gra-

dual enlargement of the market,

lower, and

duce the tax upon

it,

it

European market might perhaps have

might have become necessary either to

re-

not only to one tenth, as in 1736, but to one

same manner as that upon gold, or to give up working the greater part of the American mines which are now wrought. The gradual increase of the demand for silver, or the twentieth,^®^ in 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 in the

European market, but has perhaps even raised

higher than Since the

it

was about the middle of the

first

it

silver

somewhat

last century.

discovery of America, the market for the produce

of its silver mines has been growing gradually

more and more

ex-

tensive. (I) in

Europe,

First,

The market

Europe has become gradually more and

of

more extensive. Since the discovery of America, the greater part of Europe has been much improved. England, Holland, France and Germany; even Sweden, Denmark, and Russia, have

all

advanced

considerably both in agriculture and in manufactures. Italy seems

not to have gone backwards. of Peru. Since that time

it

The

fall

of Italy preceded the conquest

seems rather to have recovered a

little.

Spain and Portugal, indeed, are supposed to have gone backwards.

but a very small part of Europe, and the de-

Portugal, however,

is

clension of Spain

not, perhaps, so great as

is

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 Em-

improved since that time. It was the well-known remark of the peror Charles V.

who had

countries, that every thing

travelled so frequently through both

abounded

in France,

but that every

was wanting in Spain. The increasing produce of the agriculture and manufactures of Europe must necessarily have required a thing

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. (2) in

America

Secondly, America

own

silver

is itself

mines; and as

itself,

its

a new market

for the produce of its

advances in agriculture, industry, and

much more rapid than those of the most thriving its demand must increase much more rapidly. colonies are altogether a new market, which partly

population, are

countries in Europe,

The

English

for coin

and partly for

plate, requires

a continually augmenting

Ed. I reads “lower” instead of “reduce,” and does not contain “not only to one-tenth, as in 1736, but to one-twentieth.” See above, p. 169, note

DIGRESSION ON SILVER

203

supply of silver through a great continent where there never was 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 savage 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 con-

any demand

sidered as altogether

new markets,

are certainly

much more

exten-

than they ever were before. After all the wonderful tales which have been published concerning the splendid state of those sive ones

countries in ancient times, whoever reads, with

judgment, the history of their dently discern that, in habitants were

first

any degree

of sober

discovery and conquest, will evi-

arts, agriculture,

and commerce,

their in-

much more

ignorant than the Tartars of the UkEven 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 raine are at present.

sovereign, the nobles,

and the

priests,

and were probably

their serv-

ants 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 every-where 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-cultivated, 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 these 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 contain-

iii

,

Below, p. 335. Raynal, Histoire philosophique, Amsterdam ed, i773j tom. 1 13, 1 16, takes the same view of the Peruvians. Below, pp. S33-S54, passim.

pp

THE WEALTH OF NATIONS

204

and twenty-eight thousand

ing between twenty-five

inhabitants.^^^

who resided in the same country between 1 740 and 1 746, represents it as containing more than fifty thousand.^®® The difference Ulloa,

in their accounts of the populousness of several other principal

towns to be

in Chili

and Peru

is

and as there seems

nearly the same;

no reason to doubt of the good information of

an increase which

is

America, therefore,

marks

either, it

scarce inferior to that of the English colonies. is

a new market for the produce of its own sildemand must increase much more rapidly

ver mines, of which the

than that of the most thriving country in Europe. ^nd

(3)

'nthe East Indies,

The East

Thirdly,

Indies is another market for the produce of

the silver mines of America, the

and a market which, from the time of

discovery of those mines, has been continually taking off a

first

and a greater quantity

greater

of silver. Since that time, the direct

trade between America and the East Indies, which

means

of the Acapulco

and the

indirect intercourse

menting

in

a

still

by

the

way

carried

on by

of

Europe has been aug-

During the sixteenth century,

greater proportion.

the Portuguese were the only

is

has been continually augmenting,

ships,^^*^

European nation who carried on any

regular trade to the East Indies. In the last years of that century the

Dutch began expelled

to encroach

them from

upon

this

monopoly, and in a few years

their principal settlements in India.

greater part of the last century those

During the

two nations divided the most

considerable part of the East India trade between them; the trade of the

Dutch continually 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,

greatly augmented in the course of the present.

trade of the Swedes and century.

Danes began

Even the Muscovites now

sort of caravans

but

it

has been

The East India

in the course of the present

trade regularly with China

by a

which go over land through Siberia and Tartary to

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 consumption of Pekin.

^Voyage

to the

five to thirty

South Sea, p. 218, but the number mentioned

is

twenty-

thousand. histonque,

^Voyage tom i, p. 443, 445: “sixteen to eighteen thousand persons of Spanish extraction, a comparatively small number of Indians and half-breeds, the greater part of the population being negroes and mulattoes ” ^E.g., Santiago and Callao, Frezier, Voyage, pp. 102, 202; Juan and UlVoyage kistorique, vol. i , p. 468; vol ii p. 49. “^Originally one ship, and, after 1720, two ships, were allowed to sail between Acapulco in Mexico and the Philippines. For the regulations applied to the trade see Uztariz, Theory and Practice of Commerce and Maritime loa,

,

Af-

fairs, trans.

by John Kippax,

1751, vol.

i.,

pp. 206-208.

DIGRESSION ON SILVER East India goods in Europe

is, it

205

seems, so great, as to afford a

gradual increase of employment to them

a drug very tury. lish

little

all. Tea, for example, was used in Europe before the middle of the last cen-

At present the value

by the Engown countrymen,

of the tea annually imported

East India Company,

for the use of their

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 Holland, from Gottenburg in Sweden, and from the coast of France too, as long as the French East India Com-

pany was

in prosperity.

The consumption

of the porcelain of China,

of the spiceries of the Moluccas, of the piece goods of Bengal, of innumerable other

employed century,

was

not, perhaps,

Company

much

all

the European shipping

any one time during the

last

greater than that of the English

before the late reduction of their shipping.^®®

in the East Indies, particularly in

value of the precious metals, trade to those countries, was still

has increased very nearly in a like

accordingly of

in the East India trade, at

East India

But

articles,

The tonnage

proportion.

and

when

much

China and Indostan, the

the Europeans

first

began to

higher than in Europe; and

it

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 greater than in

accordingly

corn, the

abundance of food must be much

any corn country of equal

much more

Such countries are

extent.

populous. In them too the rich, having a

greater super-abundance of food to dispose of

beyond what they

themselves can consume, have the means of purchasing a greater quantity of the labour of other people.

grandee in

China or Indostan accordingly

is,

by

The

all

much

retinue of a

accounts,

much

more numerous and splendid than that of the richest subjects in Europe. The same super-abundance of food, of which they have the disposal, enables them to give a greater quantity of it for all those and rare productions which nature furnishes but in very small quantities; such as the precious metals and the precious singular

stones, the great objects of the competition of the rich.

Though

the

which supplied the Indian market had been as abundant as those which supplied the European, such commodities mines, therefore,

would naturally exchange

for a greater quantity of food in India

“In order to prevent the great consumption of timber fit for the construction of large ships of war, the East India Company were prohibited from building, or allowing to be built for their service, any new ships, till the shipping in their employment should be reduced under 45,000 tons, or employing any ships built after i8th March, 1772. But they are at liberty to build any vessel whatever in India or the colonies, or to charter any vessel built in India or the colonies, 12 Geo. III., c. 54.” ^Macpherson, Annals of Commerce,

—

1805, A.D. 1772, vol.

iii.,

pp. 521, S22.

where the value of gold and silver was,

and still is,

higher

than in Europe.

the wealth of NATIONS

2o6

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 supplied 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 somewhat a greater quantity of the precious stones, and for a much than in Europe. The money price of greater quantity of food superfluities, would be somewhat of all greatest diamonds, the lower, and that of food, the first of all necessaries, a great deal lower

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 in the one country than in the other.

money price of labour is 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 industry, China and Indostan, though inferor, seem not to be much inferior to any part

much

lower in India than in Europe, the

there lower

The money

of Europe.

price of the greater part of manufactures,

therefore, will naturally be

much

lower in those great empires than

any-where in Europe. Through the greater part of Europe too 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 market. In China and Indostan the it is

the expence of land-carriage increases very

and variety of inland navigations save the greater part of and consequently of this money, and thereby reduce lower both the real and the nominal price of the greater part of

extent

this labour, still

their manufactures.

Upon all these accounts, the precious metals are

a commodity which

always has been, and still continues to be, extremely advantageous to carry from Europe to India. There is scarce any commodity which brings a better price there; or which, it

in proportion to the quantity of labour

costs in Europe, will purchase or

and commodities which

command a greater

quantity of

it

la-

bour and commodities in India. It is more advantageous too to carry silver thither than gold because in China, and the greater part of the other markets of India, the proportion between fine silver and ;

^ Ed.

I

places “in India” here instead of in the line above.

Above,

p. 73

DIGRESSION ON SILVER fine

gold

Europe

is

it is

but as ten, or at most as twelve,

207

to one; whereas in

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

one of the most valuable

sail

to India, silver has generally been It is the

articles.

most valuable

article

m the Acapulco ships which sail to Manilla. The silver of the new continent seems in this manner to be one of the principal commodities

old one

by which is

the commerce between the two extremities of the

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

sufficient to support that continual increase

plate which

is

required in

all

countries where that metal

is

pro^d^ for waste

used.

wearing, and in plate both by wearing and cleaning,

is

from ever afterwards appearing in the shape of those metals,

is

amount to more than fifty thousand pounds sterling. We may from thence form some notion how great must be the annual con-

said to

the different parts of the world, either in manufac-

all

tures of the

same kind with those

A

of Birmingham, or in laces,

silver stuffs, the gilding of books, furniture,

considerable quantity too must be annually

em&c.

lost in transporting

Ed. I does not contain “or at most as twelve” here and two lines lower down. Newton, in his Representation to the Lords of the Treasury 1717 (reprinted in the Universal Merchant, quoted on the next page), says that in China and Japan the ratio is 9 or 10 to i and in India 12 to i, and this carries away the silver from all Europe. Magens, in a note to this passage (Z7?mversal Merchant, p. 90), says that down to 1732 such quantities of silver went to China to fetch back gold that the price of gold in China rose and it became no longer profitable to send silver there. ^^®Ed. I reads “be the principal commodity.”

^ Ed.

I

and

coin,

very sensible;

and in commodities of which the use is so very widely extended, would alone require a very great annual supply. The consumption 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 disqualified

sumption in

well as l]lCr63S&

of plate

by

continual consumption of the precious metals in coin

and

sil-

thriving countries; but to repair that ^

broideries, gold

0^

both of coin and of

continual waste and consumption of silver which takes place in all *

The

The sup-

brought from the mines must not only be

reads “chiefly.’

able,

208

XHE WEALTH OF NATIONS

those metals from one place to another 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

the concealment, must occasion the loss of a Six millions of

^Id and silver are

imported at Cadiz

and Lis-

The

still

who makes

greater quantity.

quantity of gold and silver imported at both Cadiz and Lis-

bon (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^^® the annual importation

of the

bon,

precious metals into Spain, at an average of six years; viz. from

as shown

1748 to 1753, both inclusive; and into Portugal, at an average of amounted seven years; viz. from 1747 to 1733, both inclusive;

by Magens,

pounds Troy, amounts pound weight. The silver, at sixty-two shillings the to 3,413,431/. 10^.^^® sterling. The gold, at forty-four guineas and a half the pound Troy, amounts to 2,333,446/. 14^. sterling. Both toin silver to 1,101,107

gether

amount to

imported under tail of

pounds weight; and

5,746,878/. 45. sterling.

register,

he assures us

is

in gold to 49^940

The account

He

exact.

of

what was

gives us the de-

the particular places from which the gold and silver were

brought, and of the particular quantity of each metal, which, ac-

cording to the register, each of them afforded.

He makes an

allow-

ance too for the quantity of each metal which he supposes

have been smuggled. The

may

great experience of this judicious mer-

chant renders his opinion of considerable weight. Raynal,

According to the eloquent and, sometimes, well-informed Au-

The same words are used below, p. 412. ^"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. This note appears first in ed. 2, The title of the work referred to is Farther Explanations of some particular subjects relating to Trade, Coin, and Exchanges, contained in the Universal Merchant, by N. M., 1756. On p. i N. M. claims the authorship of the book “published by Mr. Horsley under the too pompous title of The Universal Merchant” In the dedication of The Universal Merchant, 1753, William Horsley, the editor, says the author “though an alien by birth is an Englishman by interest.” Sir James Steuart, who calls him “Mr. Megens,” says he lived long in England and wrote the Universal Merchant in German, from which it had been translated {Inquiry into the Principles of Political Economy, vol. ii., pp. 158, 292). The Gentleman’s Magazine for August, 1764, p. 398, contains in the obituary, under date August 18, 1764, “Nicolas Magens Esq. a merchant worth £100,000.” ^^“^The two periods are really five years, April, 1748, to April, 1753, and six years, January, 1747, to January, 1753, but the averages are correct, being

taken from Magens. The los. here should be be los.

14s.,

and two

lines

lower

down

the 14s. should

DIGRESSION ON SILVER

209

thor of the Philosophical and Political History of the Establishment of the

Europeans

tered gold

and

in the

two Indies, the annual importation of

silver into Spain, at

regis-

an average of eleven years;

viz.

from I7S4 to 1764, both inclusive; amounted to 13,984,185!^^^

On

piastres of ten reals.

may have been

account of what

however, the whole annual importation, he supposes,

amounted to seventeen

smuggled,

may have

millions of piastres; which, at 45. 6 d. the

piastre, is equal to 3 ,82 5,000/. 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 zils

into Lisbon

ugal,

value

which it

it

by the amount

seems

is

from the Bra-

of the tax paid to the king of Port-

one-fifth of the standard metal,

we might

at eighteen millions of cruzadoes, or forty-five millions of

French livres, equal to about two millions sterling. On account of what may have been smuggled, however, we may safely, he says,

add

to this

whole

will

sum an

amount

eighth more, or 250,000/. sterling, so that the to 2,250,000/. sterling.^®^ According to this ac-

count, therefore, the whole annual importation of the precious metals into

both Spain and Portugal, amounts to about 6,075,000/.

sterling.

Several other very well authenticated, though manuscript,^®^

and other authors.

accounts, I have been assured, agree, in

making

this

whole annual

importation amount at an average to about six millions sterling;

sometimes a

little

more, sometimes a

The annual importation Lisbon, indeed,

is

little less.

of the precious metals into Cadiz

and

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 the contraband trade which

the Spanish colonies carry on with those of other European na-

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 insignifitions;

cant,

and some

it is

part,

acknowledged, in comparison with theirs; and the far

greater part of their produce,

it is

likewise acknowledged,

nually imported into Cadiz and Lisbon.

Birmingham

alone, at the rate of fifty

Misprinted 13,984,185! in ed.

2

and

is

an-

But the consumption

thousand pounds a

of

year,^®^

later editions

Ra3aial, Histoire philosophigue et politique de$ itablissemens et du commerce des Europeens dans les deux Indes, Amsterdam ed., i773j tom. iii., p. 310 ,

“^Raynal, Histoire philosophigue Amsterdam ed., Ed. I does not contain “though manuscript.”

i 773 »

tom. p. 385. ^ Above, p. 207. iii.,

This is not tike whole of thean-^ nual supply, but

by far the greater part.

the wealth of nations

210 is

equal to the hundred-and-twentieth part of this annual importa-

The whole annual consump-

tion at the rate of six millions a year. tion of gold

silver, therefore, in all the different countries of

and

the world where those metals are used,

may

perhaps be nearly

may be no more

equal to the whole annual produce. The remainder

than

supply the increasing demand of

sufficient to

countries. It

somewhat

may

even have

thriving

demand

as

the European

raise the price of those metals in

to

all

fallen so far short of this

market.

The quantity

Brass and iron in-

to the

market

is

silver.

We

not, however,

crease,

but we do not expect

them to fall

in

and iron annually brought from the mine out of all proportion greater than that of gold and of brass

do

upon

this account,

imagine that those

coarse metals are likely to multiply beyond the demand, or to be-

come gradually cheaper and cheaper.

Why should we The

imagine that

value.

the precious metals are likely to do so?

Why then

though harder, are put to much harder uses, and, as they are of

gold and silver ?

employed in

value, less care is

coarse metals, indeed,

but are

liable too to

The

their preservation.

metals, however, are not necessarily immortal

less

precious

any more than

they,

be lost, wasted, and consumed in a great variety

of ways. Inconsequence of

The

price of all metals, though liable to slow

tions, varies less

and gradual varia-

from year to year than that of almost any other

their

durability

part of rude produce of land; and the price of the precious metals

the

even

less liable to

metals,

The

durableness of metals

is

sudden variations than that of the coarse ones. is

the foundation of this extraordinary

especially

gold and

steadiness of price.

silver,

will

vary little in value

be

all

The com which was brought to market last year,

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

from year

three hundred years ago,

to year.

of the gold which ago.

The

different

may be still in use, and perhaps some part

was brought from

it

two or three thousand years

masses of corn which in different years must sup-

ply the consumption of the world, will always be nearly in proportion to the respective produce of those different years.

portion between the different masses of iron which in

two

different years, will

be very

little

difference in the produce of the iron

affected

may be

by any

in use

accidental

mines of those two years; and

the proportion between the masses of gold will be

by any such

But the pro-

still less

affected

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

price of the one species of commodities, as

effect

upon that

upon the

of the other.

DIGRESSION ON SILVER

211

Vdridtions in the Proportion between the respective Values of Gold

and

Before

Silver

the discovery of the mines of America, the value of fine

gold to fine silver was regulated in the different mints of Europe,

After the discovery of the

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

American mipes sil-

ounces of fine

ver

silver.

About the middle of the

last

century

to be regulated, between the proportions of one to fourteen to fifteen; that

is,

an ounce of

between fourteen and

fifteen

fine gold

ounces of fine

nominal value, or in the quantity of

Both metals sunk

came

silver

came

it

and one

to be supposed worth

Gold rose in

its

which was given for

it.

silver.

fell

in

proportion to gold.

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 exceeded in those which had ever been

mines had,

it

known

fertility all

before, the fertility of the silver

seems, been proportionably

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

It is high-

er in the

East.

the value of that metal in proportion to gold. In the mint of Calcutta,

an ounce of

fine gold is

of fine silver, in the

supposed to be worth fifteen ounces

same manner as in Europe.

perhaps rated too high

for the value

which

it

It is in the

of Bengal. In China, the proportion of gold to silver as one to ten, or one to twelve.^®^ In Japan,

mint

bears in the market

it is

still

continues

said to be as one

to eight.^®®

The

proportion between the quantities of gold and silver an-

nually imported into Europe, according to Mr. Meggen’s account, is

as one to twenty-two nearly;

there are imported a

The

little

that

is,

for

one ounce of gold

more than twenty-two ounces of

silver.

great quantity of silver sent annually to the East Indies, re-

duces, he supposes, the quantities of those metals which remain in

Europe

to the proportion of one to fourteen or fifteen, the propor-

Magens seems to think the

proportion of

value should be the same as the

propor-

The proportion between their values, he seems be the same as that between their necessarily must

tion of their values.

tion of

to think,^®*^

quantity,

I does not contain “or one to twelve.” Cantillon gives one to ten for China and one to eight for Japan, Essai^ p.

Ed. 36s

Above, pp. 208, 209. The exact figure given by Magens, Farther planations, p. 16,

^ Ibid., p. 17.

is i

to 22 yV*

Ea:-

THE WEALTH OF NATIONS

212 quantities,

and would therefore be as one to twenty-two, were

not

it

for this greater exportation of silver. but this is

absurd.

But the ordinary proportion between the respective values of two is not necessarily the same as that between the quanti-

commodities ties of

ox,

them which are commonly

reckoned at ten guineas,

lamb, reckoned at

35. 6d, It

thence, that there are

one ox: and gold will ver^ that

it

is

in the market.

The

price of

an

about threescore times the price of a

would be absurd, however,

commonly in the market

would be just as absurd

to infer,

to infer

from

threescore lambs for

because an ounce of

commonly purchase from fourteen to fifteen ounces of silthere are commonly in the market only fourteen or fifteen

ounces of silver for one ounce of gold.

The whole of a cheap

commodity is

commonly worth more than the whole of a dear one, and this is the

case 'with silver

gold.

and

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,

monly not only tity of

greater,

is

com-

but of greater value, than the whole quan-

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

more purchases

for the

not only a greater quantity of

be disposed

of.

many

cheap than for the dear commodity, that,

The whole

it,

but a greater value, can commonly

quantity, therefore, of the cheap com-

modity 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 metis with cheap, and gold a dear commodity.

We

one another,

silver is

therefore, that there should always be in the market, not only

greater quantity, but a greater value of silver than of gold. Let

man, who has a plate,

and he

little

will

of both,

probably

compare

his

find, that,

own

silver

a good deal of

which, even with those cases,

who have

silver

it, is

a

any

with his gold

not only the quantity, but

the value of the former greatly exceeds that of the latter. people, besides, have

a

ought naturally to expect,

who have no

Many

gold plate,

generally confined to watch-

and such like trinkets, of which the whole seldom of great value. In the British coin, indeed, the

snuff-boxes,

amount

is

value of the gold preponderates greatly, but

it is not so in that of In the coin of some countries the value of the two nearly equal. In the Scotch coin, before tbe union with

all countries.

metals

is

England, the gold preponderated very

little,

though

it

did some-

DIGRESSION ON SILVER what,^®® as

many

it

appears by the accounts of the mint. In the coin of

countries the silver preponderates. In France, the largest

sums are commonly paid get more gold than what ket.

213

The

in that metal, is

and

there difficult to

it is

necessary to carry about in your poc-

superior value, however, of the silver plate above that of

the gold, which takes place in

all

much more than

countries, will

compensate the preponderancy of the gold coin above the

which takes place only

Though,

in

in

some

silver,

countries.

one sense of the word,

silver

always has been, and

probably always will be, much cheaper than gold; yet in another

may, perhaps,

sense, gold

in the present state of the Spanish

market, be said to be somewhat cheaper than

may be

silver.

A

commodity

said to be dear or cheap, not only according to the abso-

lute greatness or smallness of its usual price, but according as that

price is

more

bring

it

to

price

is

or less above the lowest for which

market

for

it is

possible to

any considerable time together. This lowest

that which barely replaces, with a moderate profit, the

stock which must be employed 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 altogether into wages and profit. But, in the present state of the Spanish market, gold is certainly 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.;

upon

silver

amounts to one-tenth part of

In these taxes

too, it

it,

has already been observed,^®^ consists the

whole rent of the greater part of the gold and ish America; and that upon gold silver.

more

The rarely

is still

silver

mines of Span-

worse paid than that upon

profits of the undertakers of gold

make a

whereas his tax

or to ten per cent.^®^

mines too, as they

fortune, must, in general, be

still

erate than those of the undertakers of silver mines.^®^

Spanish gold, therefore, as must, in the Spanish price for

which

it is

it

affords both less rent

more mod-

The

and

price of

less profit,

market, be somewhat nearer to the lowest possible to bring

it

thither,

than the price of

^“See Ruddiman’s Preface to Anderson’s Diplomata, &c. Scotiae. Selectus diplomatum et numismatum thesaurus (quoted above, p. 183), pp. 84, 85 and in the translation, pp. 175, 176. But the statement that gold preponderated is founded merely on the fact that the value of the gold coined in the periods i6th December, 1602, to 19th July, 1606, and 20th September, 1611, to 14th April, 1613, was greater than that of the silver coined in the same time, which proves nothing about the proportions in the whole stock of coin. The statement is repeated below, p. 281. The note appears first in ed. 2. ^^Ed. i reads “European.” “®Ed. I reads “European.” “^Ed. I reads “one fifth part of it, or to twenty per cent.” “‘Ed. i reads “European.” Above, p. 170. Above, pp. 168, 201. ;

Gold

is

nearer its lowest possible

price than silver.

the wealth of nations

-^4

Spanish

silver.

tity of the

ket,

When

one metal,

expences are computed, the whole quan-

all

would seem, cannot,

it

in the

Spanish mar-

be disposed of so advantageously as the whole quantity of the

other.^®'^

The

tax, indeed, of the

gold of the Brazils, of Spain

upon the

is

King

upon the

of Portugal

the same with the ancient tax

silver of

Mexico and Peru; or

of the

King

one-fifth part of

the standard metal.^®^ It may, therefore, be uncertain whether to the general market of Europe the whole mass of American gold

comes at a price bring

The

Diamonds are nearer

be

thither,

it

nearer to the lowest for which

than the whole mass of American

it is

possible to

silver.

and other precious stones may, perhaps, nearer to the lowest price at which it is possible to bring

price of diamonds

still

still

It

may be

necessary to reduce still

fur-

ther the

tax on

them to market, than even the price of gold.^'^® Though it is not very profitable, 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

sil-

ver in

is

Spanish

in

America

possible to

pay

1736 made

tenth, in the

may

it

it;

yet the same impossibility of paying

necessary to reduce

it

make it necessary to reduce it same manner as it made it necessary to reduce in time

gold to one-twentieth .^'^2 like all other mines,

Ed

That the

silver

it,

which

from one-fifth to onestill

further;

the tax

upon

mines of Spanish America,

becomes gradually more expensive

in the

work-

the “it would seem” after “computed,” omits “in the Spanand puts the whole sentence at the end of the paragraph.

I places

ish market,”

Ed. I places the “indeed” here Ed. i reads “that.” Above, p. 209. Ed. I reads “It must still be true, however, that the whole mass of American gold comes to the European market at a price.” Ed. I contains another paragraph, “Were the king of Spain to give up his tax upon silver, the price of that metal might not, upon that account, sink immediately in the European m^ket As long as the quantity brought thither continued the same as before, it would still continue to sell at the same price. The first and immediate effect of this change, would be to increase the profits of mining, the pdertaker of the mine now gaining all that he had been used to pay to the king These great profits would soon tempt a greater number of people to undertake the working of new mines. Many mines would be wrought which cannot be wrought at present, because they cannot afford to pay this tax, and the quantity of silver brought to market would, in a few years be so much augmented, probably, as to sink its price about one-fifth below its present standaid. This diminution in the value of silver the profits of mining nearly to their present rate ”

would again reduce

Above, pp. 169, 202. I reads from the beginning of the paragraph, “It is not indeed very probable, that any part of a tax which affords so important a revenue, and which IS imposed, too, upon one of the most proper subjects of taxation, will ever be given up as long as it is possible to pay it The impossibility of paying It, however, may in time make it necessary to diminish it, in ^'^Ed

^

as

it

made

the same

it

necessary to diminish the tax

upon gold

”

manner

DIGRESSION ON SILVER on account of the greater depths at which

ingj

215

necessary to

it is

carry on the works, and of the greater expence of drawing out the

water and of supplying them with fresh air at those depths,

knowledged by every body who has enquired into the

is

ac-

state of those

mines.

These causes, which are equivalent to a growing scarcity of silcommodity may be said to grow scarcer when it becomes

ver (for a

more

difficult

and expensive

to collect a certain quantity of it),

must, in time, produce one or other of the three following events.

The

must

increase of the expence

The greater cost of

raising sil-

ver must lead to

an

increase of

either, first,

be compensated

al-

by a proportionable increase in the price of the metal; or, secondly, it must be compensated altogether by a proportionable

together

its price,

or a re-

duction of the tax

diminution of the tax upon sated partly

by

silver; or, thirdly, it must be compenand partly by the other of those two ex-

the one,

pedients. This third event

very possible. As gold rose in

is

in proportion to silver, notwithstanding

tax

upon gold; so

might

silver

its

upon it, or both.

price

a great diminution of the

rise in its price in

proportion to la-

bour and commodities, notwithstanding an equal diminution of the tax

upon

silver.

Such successive reductions

of the tax, however, though they

not prevent altogether, must certainly retard, more or

less,

may

the rise

of the value of silver in the European market. In consequence of

many mines may be wrought which

such reductions,

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

than

less,

otherwise would have been. In conse-

it

quence 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

would have been, had the Court

The

re-

duction of the tax in the past

makes silver at least 10 per cent, lower

than it

would otherwise

have been.

it

of Spain continued to exact the old

tax.1^3

That, notwithstanding

this reduction, the value of silver has,

during the course of the present century, begun to

rise

somewhat

in

Silver has probably risen

the European market, the facts and arguments which have been al-

more properly to suspect and the best opinion which I can form upon this subject

leged above, dispose conjecture; for

me

to believe, or

scarce, perhaps, deserves the

name

of belief.

posing there has been any, has hitherto

This paragraph appears

first

The

rise,

indeed, sup-

been so very small, that

in ed. 2.

reads from the beginning of the paragraph, “That the first of these three events has already begun to take place, or that silver has, during the course of the present century, begun to rise somewhat in its value in the Eu-

Ed

I

somewhat in the

present century.

XHE WEALTH OF NATIONS

216

after all that has

been

said, it

may, perhaps, appear

to

many

peo-

actually taken place; ple uncertain, not only whether this event has but whether the contrary may not have taken place, or whether the

value of silver

The annual con-

sumption must at length

equal the

annual importa-

may not still continue to

fall in

the European market.

must be observed, however, that whatever may be the supposed annual importation of gold and silver, there must be a certain will be period, at which the annual consumption of those metals It

equal to that annual importation. Their consumption must increase proportion. As as their mass increases, or rather in a much greater

mass

their

increases, their value diminishes.

They

are

more used,

and their consumption consequently increases in

and

less cared for, proportion than their mass. After a certain period, theregreater a manner, fore, the annual consumption of those metals must, in this

tion,

become equal to tion

is

their

annual importation, provided that importa-

not continually increasing; which, in the present times,

is

not supposed to be the case. and

will

then ac-

commodate

itself

to changes in the

importation.

when the annual consumption has become equal to the annual

If,

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 their value gradually

and

diminish,

and insensibly

rise, till

the an-

nual 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 Gold and silver are

supposed to be still falling be-

cause they

The

increase of the wealth of Europe,

increase of wealth, so their value diminishes as their quantity increases,

may, perhaps, continues to

dispose fall in

value

creasingin

gradually increasing price of

and some sorts of

rude pro-

that,

as the quantity of the precious metals naturally increases with the

arein-

quantity

and the popular notion

land

still

may

confirm them

That that which

many

still

people to believe that their still

parts of the rude produce of

further in this opinion.

the quantity of the precious metals,

increase in

arises in

many

the European market; and the

any country

from the increase of wealth, has no

ropean market, the facts and arguments which have been alledged above dis” pose me to believe. The rise, indeed, has hitherto The last two paragraphs appear first in Additions and Corrections and ed. 3

Ed. Ed. Ed.

“may

besides”

I

reads

I

reads “That the increase of.”

I

places the

“which

arises” here.

Ed.

i

reads “perhaps” here.

DIGRESSION ON SILVER

217

tendency to diminish their value, I have endeavoured to show ready.^®^

Gold and

same reason that

silver naturally resort to

all sorts of luxuries

and

al-

a rich country, for the

curiosities resort to it;

not because they are cheaper there than in poorer countries, but

because they are dearer, or because a better price It is the superiority of price

is

given for them.

which attracts them, and as soon as

that superiority ceases, they necessarily cease to go thither. If

alto-

by human industry, that all other sorts of rude produce, cattle, poultry, game of all kinds, the useful fossils and minerals of the earth, &c. naturally grow dearer as the society advances in wealth gether

and improvement, I have endeavoured to show already than before,

it

will

not from thence follow that silver less

labour than before,

but that such commodities have become really dearer, or will purchase more labour than before. It

but their real price which rise of their

rises in

nominal price

is

is

not their nominal price only,

the progress of improvement.

the effect, not of

ready been

shown that the

the metals

need not diminish their

value

Though

such commodities, therefore, come to exchange for a greater quantity of silver

It has al-

increase of

you except corn and such other vegetables as are raised

has become really cheaper, or will purchase

duce are rising

The

any degradation

of

and the rise of cattle,

etc, is

due to a rise in

their real price,

not

to a fall of silver

the value of silver, but of the rise in their real price.

Different Effects of the Progress of

Improvement upon three

differ-

ent Sorts of rude Produce

These

different sorts of rude produce

may

be divided into three

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 real

classes.

the efficacy of industry ress of wealth

is

real price of the first

may rise

to any degree of extravagance, and seems not to be limited

by any

That of the second, though it may rise greatly, boundary beyond which it cannot well pass any considerable time together. That of the third, though its

certain boundary.

has, however, a certain for

the fall,

same degree

is

of

to rise in the progress of improvement, yet in

improvement

it

may sometimes happen

sometimes to continue the same, and sometimes to

rise

less, according as different accidents render the efforts of

industry, in multiplying this sort of rude produce,

more

cessful.

Above, p.

i 88 ff.

rudepro-

either limited or uncertain. In the prog-

and improvement, the

natural tendency

sorts of

Above, pp. 174-176.

even to

more

or

human

or less suc-

progress of ini-

THE WEALTH OF NATIONS

2I8

First Sort

(i)

The first sort

The

sort

which

ress of

which the price

of nide produce of

improvement,

that which

is

rises in the

prog-

power of hu-

scarce in the

it is

cannot be

man

multiplied

nature produces only in certain quantities, and which being of a

by human

industry to multiply at

very perishable nature,

it is

It consists in those things

all.

which

impossible to accumulate together the

industry,

such as

produce of

game.

rare

many

most

many different

fishes,

sorts of

game,

wild-fowl, all birds of passage in particular, as well as

all

When

other things. increase, the

no

Such are the greater part of

different seasons.

and singular birds and

effort of

al-

many

wealth and the luxury which accompanies

it

likely to increase with them, and

demand for these is human industry may be

much beyond what

was

it

able to increase the supply

before this increase of the

demand. The

quantity of such commodities, therefore, remaining the same, or

them

nearly the same, while the competition to purchase tinually increasing, their price

may

any degree of extravaby any certain boundary. If

woodcocks should become so fashionable as to

no

high price paid

by

the Romans, in the time of their greatest grand-

eur, for rare birds

and

fishes,

may

in this

These prices were not the

for.

human

real value of silver

manner

easily be ac-

effects of the

low value of rarities

and

industry could not multiply at pleasure.

The

but of the high value of such

silver in those times,

curiosities as

twenty guin-

sell for

human industry could increase the number market, much beyond what it is at present. The

effort of

of those brought to

counted

con-

rise to

gance, and seems not to be limited

eas a-piece,

is

was higher

Rome,

at

for

some time before and

after the fall of the republic, than

it is

Europe at present. Three

equal to about sixpence sterling,

was the tithe

price

sestertii,

which the republic paid

wheat of

Sicily.

This

price,

through the greater part of

for the

modius or peck of the

however, was probably below the

average market price, the obligation to deliver their wheat at this rate being considered as

Romans,

a tax upon the

Sicilian farmers.

When

the

had occasion to order more corn than the tithe of wheat amounted to, they were bound by capitulation to pay for therefore,

the surplus at the rate of four sestertii, or eight-pence sterling, the

and

peck;

this

reasonable, that

times;

it is

is,

had probably been reckoned the moderate and the ordinary or average contract price of those

equal to about one-and-twenty shillings the quarter.

Eight-and-twenty shillings the quarter was, before the late years of As mentioned above, authority.

p. 150. Cicero,

In Verr., Act. IL,

lib.

iii.,

c. 70, is

the

DIGRESSION ON SILVER

219

scarcity, the ordinary contract price of English wheat,

quality

is

inferior to the Sicilian,

and generally

which in

sells for

a lower

European market. The value of silver, therefore, in those ancient times, must have been to its value in the present, as price in the

three to four inversely; that is, three ounces of silver would then have purchased the same quantity of labour and commodities which four ounces will do at present. When we read in Pliny, therefore,

bought a white nightingale, as a present for the em-

that Seius

press Agrippina, at the price of six thousand sestertii, equal to about

pounds of our present money; and that Asinius Celer

fifty

chased a surmullet at the price of eight thousand

sestertii,

purequal to

about sixty-six pounds thirteen shillings and four-pence of our present

money; the extravagance

of those prices,

how much

soever

it

may surprise us,

is

third less than

really was. Their real price, the quantity of labour

it

apt, notwithstanding, to appear to us about one-

and subsistence which was given away third

more than

their

nominal price

for them,

was about one-

apt to express to us in the

is

present times. Seius gave for the nightingale the

command

of

a

quantity of labour and subsistence equal to what 66^. 135.

would purchase in the present times; and Asinius Celer gave for

command of a quantity equal to what 88/. 17^. pd.-l, would purchase. What occasioned the extravagance of those high prices was, not so much the abundance of silver, as the abundance of labour and subsistence, of which those Romans had the disposal, beyond what was necessary for their own use. The the surmullet the

quantity of less

silver, of

which they had the disposal, was a good deal

than what the command of the same quantity of labour and sub-

sistence

would have procured to them in the present

times.

Second Sort

The second

sort of rude produce of

progress of improvement,

is

that which

which the price

human

rises in the

bemulti-

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

^

The

industry can multi-

ply in proportion to the demand. It consists in those useful plants

and

(2)

demand

for

them

is

continually increas-

Lib. X. c. 29. “Scio sestertiis sex candidam alioquin, quod est prope inusitatum, venisse, quae Agrippinae Claudii prindpis conjugi dono daretur.” “Seius” seems to be the result of misreading “Sdo.” ’^Lib. ix. c. 17. This and the previous note appear first in ed. 2 .

^ttie,^ poultry,

XHE WEALTH OF NATIONS

220 ing.

Their real value, therefore, the real quantity of labour which

they will purchase or command, gradually

so high as to render them as profitable a produce as

which human industry can tivated land. did,

When

it

raise

upon the most

has got so high

it

gets

rises, till at last it

any thing

else

and best

cul-

fertile

cannot well go higher.

more land and more industry would soon be employed

If it

to in-

crease their quantity.

When

When it becomes

the price of cattle, for example, rises so high that

it is

as

profitable to cultivate land in order to raise food for them, as in or-

profitable

cannot well go higher. If

to culti-

der to raise food for man,

vate land

corn land would soon be turned into pasture.

to yield

by diminishing

age,

it

The

did,

it

more

extension of

till-

the quantity of wild pasture, diminishes the

food for cattle, the

quantity of butcher’s-meat which the country naturally produces

price of

without labour or cultivation, and by increasing the number of

cattle can-

not go higher.

who have

those

either corn, or,

what comes

price of corn, to give in exchange for price of butcher’s-meat, therefore,

gradually rise

till it

employ the most

them

it,

fertile

same

thing, the

demand. The

and consequently of

gets so high, that

as in raising corn.

to the

increases the

cattle,

must

becomes as profitable to

it

and best cultivated lands

in raising food for

But it must always be late

in the progress of

improvement before tillage can be so far extended as to raise the

and

price of cattle to this height;

country

There tle

is

advancing at

all,

till it

their price

has got to this height,

must be continually

some parts of Europe in which the

are, perhaps,

if

the

rising.

price of cat-

has not yet got to this height. It had not got to this height in any

Had

part of Scotland before the union.^®®

ways confined to the market of Scotland,

the Scotch cattle been alin a country in

which the

quantity of land, which can be applied to no other purpose but the feeding of cattle,

other purposes,

is

so great in proportion to

it is

what can be applied

to

scarce possible, perhaps, that their price could

ever have risen so high as to render for the sake of feeding

it

profitable to cultivate land

them. In England, the price of

cattle, it

already been observed,^®® seems, in the neighbourhood of

has

London,

to have got to this height about the beginning of the last century;

but it was much later probably before

it

got to

it

through the greater

part of the remoter counties; in some of which, perhaps, scarce yet have got to

which compose

this

it.

Of

all

it

may

the different substances, however,

second sort of rude produce, cattle

is,

that of which the price, in the progress of improvement,

perhaps, first rises

to this height. It

must go

to this

Till the price of cattle, indeed,

has got to

this height, it

scarce possible that the greater part, even of those lands

Above, pp. 149, 162.

Above,

p. 151,

and

seems

which are

cp. below, p. 225,

DIGRESSION ON SILVER

221

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 quan-

tity of manure which the farm itself produces; and this again must be in proportion to the stock of cattle which are maintained upon it. The land is manured either by pasturing the cattle upon it, or by feeding 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

much

require too

labour and be too expensive. If the price of the

not sufficient to pay for the produce of improved and cultivated land, when they are allowed to pasture it, cattle, therefore, is

that price will be it

must be

still less sufficient

to

pay

for that

produce when

collected with a good deal of additional labour,

and

brought into the stable to them. In these circumstances, therefore,

no more

cattle can,

necessary for

with

tillage.

But

profit,

be fed in the stable than what are

these can never afford

keeping constantly in good condition, capable of cultivating.

whole farm,

What

will naturally

all

manure enough

for

the lands which they are

they afford being insufficient for the

be reserved for the lands to which

be most advantageously or conveniently applied; the most

it

can

fertile,

or those, perhaps, in the neighbourhood of the farm-yard. These, therefore, will age.

The

be kept constantly in good condition and

rest will, the greater part of them,

fit

be allowed to

for

lie

waste,

producing scarce any thing but some miserable pasture, just cient to

keep

alive

a few

till-

suffi-

straggling, half-starved cattle; the farm,

though much understocked in proportion to what would be necessary for

its

complete cultivation, being very frequently overstocked

in proportion to its actual produce.

A portion

however, after having been pastured in six or

seven years together,

this

of this waste land,

wretched manner for

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 in the

same manner

exhausted and rested again in

its

cordingly was the general system of management

country of Scotland before the union. constantly well

manured and

in

The

turn.

all

up

to

be

Such ac-

over the low

lands which were kept

good condition, seldom exceeded a

height in

complete cultiva-

the wealth of nations

222

third or a fourth part of the whole farm,

amount

a

to a fifth or

sixth part of

it.

but a certain portion of them was in

The

its

and exhausted. Under

larly cultivated

and sometimes did not were never manured,

rest

turn, notwithstanding, reguthis

system of management,

evident, even that part of the lands of Scotland

it is

able of good cultivation, could produce but

what

it

may be

capable of producing. But

ever this system

may

it

how disadvantageous

it

no doubt,

so-

to ignorance

If,

notwith-

continues to prevail

still

through a considerable part of the country,

in

cap-

comparison of

almost unavoidable.

standing a great rise in their price,

places,

is

appear, yet before the union the low price of

seems to have rendered

cattle

little in

which

it is

owing, in

many

and attachment to old customs, but which the natural

to the unavoidable obstructions

most places

course of things opposes to the immediate or speedy establishment of a better system:

first,

to the poverty of the tenants, to their not

having yet had time to acquire a stock of cattle

more completely, the same

vate their lands

would render

sufficient to culti-

which

rise of price

advantageous for them to maintain a greater stock,

it

more

them to acquire

and, secondly, to

rendering

it

their not

having yet had time to put their lands in condition to

difficult for

it;

maintain this greater stock properly, supposing they were capable of acquiring

are

it.

The

increase of stock

two events which must go hand

can no-where

much

and the improvement

in

hand, and

of land

of which the one

out-run 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 con-

improvement of land; because otherwise the land could

siderable

not maintain

it.

These natural obstructions to the establishment of

a better system, cannot be removed but by a long course of fru-

and industry; and half a century or a century more, perhaps, must pass away before the old system, which is wearing out gradugality

ally,

can be completely abolished through

of the country.

Of

all

all

the commercial

the different parts

advantages, however,

which Scotland has derived from the union with England, in the price of cattle

is,

this rise

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. Conse-

In

all

quently

new colonies are

cattle,

poorly

new

many

for

colonies the great quantity of waste land,

which can

years be applied to no other purpose but the feeding of

soon renders them extremely abundant, and in every thing

great cheapness

Though

all

is

the necessary consequence of great abundance.

the cattle of the European colonies in America were Eds. 1-3 read “of

all

commercial’

DIGRESSION ON SILVER

223

from Europe, they soon multiplied so much there, even horses were allowed to run the woods without any owner thinking it worth while to

originally carried

and became wild in

of so little value, that

claim them. It must be a long time after the

such colonies, before

the produce of cultivated land.

want

of manure,

in cultivation,

The same

still

causes, therefore, the

and the disproportion between the stock employed

and the land which

it is

likely to introduce there a system of

which

establishment of

first

can become profitable to feed cattle upon

it

destined to cultivate, are

husbandry not unlike that

many

continues to take place in so

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

They make scarce any but when one piece of ground

the different branches of agriculture.

manure

for their corn fields,

he says;

has been exhausted by continual cropping, they clear and cultivate another piece of fresh land; and when that

a

third.

is

exhausted, proceed to

Their cattle are allowed to wander through the woods and

other uncultivated grounds, where they are half-starved; having

long ago extirpated almost

all

the

annud

grasses

by cropping them

too early in the spring, before they had time to form their flowers, or to shed their seeds.^®®

The annual

grasses were,

it

natural grasses in that part of North America; and

peans

first settled there,

three or four feet high.

seems, the best

when

the Euro-

they used to grow very thick, and to

A

piece of ground which,

when he

rise

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 one generation

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 plentiful methto another.

od of feeding them. Kalm’s Travels, ing

its

vol.

i.

p. 343, 344. Travels into

North America, containits Plantations and Ag-

natural history and a circumstantial account of

and commercial state of the country, the manners of the inhabitants and several curious and important remarks on various subjects, by Peter Kalm, Professor of (Economy in the University of Aobo, in Swedish Finland, and member of the S. Royal Academy of Sciences. Translated by John Reinhold Forster, FA.S., 3 vols. 1770. The

riculture in general, with the civil, ecclesiastical

note appears

first

in ed. 2.

cultivat-

THE WEALTH OF NATIONS

224 Cattle are the first of

Though

therefore, in the progress of

it is late,

improvement be-

fore cattle can bring such a price as to render

it

profitable to culti-

vate land for the sake of feeding them; yet of

all

the different parts

this sec-

ond

sort

of rude

which compose

produce to bring

the

second sort of rude produce, they are perhaps

this

which bring

first

this price;

because

till

they bring

seems

it, it

in the

impossible that improvement can be brought near even to that de-

price ne-

gree of perfection to which

cessary to

secure cultivation,

As

cattle are

among

it

the

first,

so perhaps venison

last parts of this sort of rude produce

price of venison in Great Britain,

and venison

is

appear,

is

park, as

is

which bring

how

of Europe.

among

is

extravagant soever

the

The

this price.

may

it

not near sufficient to compensate the expence of a deer

the

last;

many parts

has arrived in

well

known

to all those

the feeding of deer. If

was

it

common

soon become an article of

who have had any

experience in

farming; in the same manner as

the feeding of those small birds called Turdi was

among the

Romans. Varro and Columella assure us that

was a most

able article.^^®

The

would

otherwise, the feeding of deer

it

ancient profit-

fattening of ortolans, birds of passage which ar-

rive lean in the country, 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

very probably other things are

higher than

rise still

some time past,

it is

its

price

may

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

intermediate,

that which brings to there

is

the price of such a superfluity as venison,

it

a very long interval, in the course of which

sorts of rude

many

other

produce gradually arrive at their highest price, some

sooner and some later, according to different circumstances. such as poultry,

Thus

in every

tain a certain

farm the

number

would otherwise be

offals of the

barn and stables

all

that he gets

is

ill

what

sell

them

for very little.

pure gain, and their price can scarce be so

low as to discourage him from feeding tries

main-

are a mere save-all; and as they cost the

lost,

farmer scarce any thing, so he can afford to

Almost

will

of poultry. These, as they are fed with

this

number. But in coun-

cultivated, and, therefore, but thinly inhabited, the poultry,

which are thus raised without expence, 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 anim^ But the whole quantity of poultry, which the farm in this manner produces without expence, must always be much smaller food.

than the whole quantity of butcher’s-meat which

and

in times of wealth

^ Varro, De re rustica, where Varro

is

quoted.

and luxury what

iii.,

2,

is rare,

and Columella, De

is

reared

upon

it;

with only nearly

re rustica,

viii.,

10,

ad

fin.,

DIGRESSION ON SILVER

225

equal merit, is always preferred to what is common. As wealth and luxury increase, therefore, in consequence of improvement and cultivation, the price of poultry gradually rises

er’s-meat,

till

at last

it

gets so high that

it

becomes profitable to

tivate land for the sake of feeding them.

height, it cannot well

go higher.

If it did,

above that of butch-

When

it

cul-

has got to this

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 (econ-

omy, and

sufficiently profitable to

encourage the farmer to raise a

considerable quantity of Indian corn and buck-wheat for this pur-

A

pose.

middling farmer

will there

sometimes have four hundred

The feeding of poultry seems scarce yet to be genconsidered as a matter of so much importance in England.

fowls in his yard. erally

They

are certainly, however, dearer in England than in France, as England receives considerable supplies from France. In the progress of improvement, the period at which every particular sort of

animal food

is

must naturally be that which immediately

dearest,

precedes the general practice of cultivating land for the sake of raising

eral,

For some time before this practice becomes general, the must necessarily raise the price. After it has become gen-

it.

scarcity

new methods

commonly fallen upon, which enupon the same quantity of ground a much

of feeding are

able the farmer to raise

greater quantity of that particular sort of animal food.

not only obliges

him

to

sell

improvements he can afford to ford

it,

The

sell

cheaper; for

if

he could not af-

the plenty would not be of long continuance. It has been

probably in

this

manner

that the introduction of clover, turnips,

carrots, cabbages, &c. has contributed to sink the

common price

butcher’s-meat in the London market somewhat below what

about the beginning of the

The

many

plenty

cheaper, but in consequence of these

was

last century.

hog, that finds his food

things rejected

it

of

among

ordure,

and greedily devours

by every other useful animal, is, like poultry, As long as the number of such animals,

originally kept as a save-all.

which can thus be reared at little or no expence,

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 quantity can supply, when it becomes necessary to raise food on purpose for feeding and fattening hogs, in the same

manner as

for feeding

sarily rises,

and becomes proportionably either higher or lower than

and fattening other

cattle, the price neces-

that of other butcher’s-meat, according as the nature of the coun-

and the state of its agriculture, happen to render the feeding of hogs more or less expensive than that of other cattle. In France,

try,

hogs,

the wealth of nations

226

according to Mr. Buffon, the price of pork

hteiP^ In most parts

of Great Britain

is

nearly equal to that of

it is

somewhat

at present

higher.

The

great rise in the price both of hogs

and poultry has in Great

Britain been frequently imputed to the diminution of the of cottagers

and

number

other small occupiers of land; an event which has

every part of Europe been the immediate forerunner of improvement and better cultivation, but which at the same time may have in

contributed to raise the price of those articles, both somewhat sooner

and somewhat

faster

than

it

would otherwise have

risen.

poorest family can often maintain a cat or a dog, without pence, so the poorest occupiers of land can

few poultry, or a sow and a few of their

own

table, their

pigs, at

As the

any

ex-

commonly maintain a little. The little offals

very

whey, skimmed milk and butter-milk, sup-

ply those animals with a part of their food, and they find the rest in the neighbouring fields without doing

any body.

By

diminishing the

number

any

damage to

sensible

of those small occupiers,

therefore, the quantity of this sort of provisions

which

is

thus pro-

a good deal 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 duced at

little

or no expence, must certainly have been

diminished, and their price

have

rate

risen to the

utmost height to which

or to the price which pays the labour

it is

capable of rising;

and expence

of cultivating the

land which furnishes them with food as well as these are paid upon the greater part of other cultivated land. milk, butter

and

The business

of the dairy, like the feeding of

originally carried

on as a

save-all.

The

hogs and poultry,

cattle necessarily

is

kept upon

cheese.

the farm, produce

more milk than

either the rearing of their

own

young, or the consumption of the farmer ^s family requires; and they produce most at one particular season. But of tions of land, milk is perhaps the

all

the produc-

most perishable. In the warm

sea-

when it is most abundant, it will scarce keep four-and-twenty hours. The farmer, by making it into fresh butter, 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 sevson,

eral years.

The

Part of

all

these

is

reserved for the use of his

rest goes to market, in order to find the best price

own

family.

which

is

to

be had, and which can scarce be so low as 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

^ Histoire Naturelle,yo\

v (1755), p 122

it

DIGRESSION ON SILVER

227

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, of his own kitchen; as was the case of almost all the farmers dairies in Scotland thirty or forty years ago, and as is the

and nastiness case of

many

them

of

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 expence, raise, in the

same manner, that of the produce naturally connects with that of

which the price

of the dairy, of

butcherWeat,

or with the expence

The increase of price pays for more labour, care, The dairy becomes more worthy of the farmer’s at-

of feeding cattle.

and

cleanliness.

and the quality

tention,

of its produce gradually improves.

price at last gets so high that

some of the most

fertile

it

and best cultivated lands

merely for the purpose of the dairy; and when height,

it

The

becomes worth while to employ

cannot well go higher. If

it

did,

in feeding cattle

it

has got to this

more land would soon be

turned to this purpose. It seems to have got to this height through the greater part of England, where

employed in

this

much good

land

is

commonly

manner. If you except the neighbourhood of a few

considerable towns,

it

seems not yet to have got to

this height

any-

where in Scotland, where common farmers seldom employ much

good land in raising food dairy.

The

for cattle

ably within these few years,

The

merely for the purpose of the

price of the produce, though is

probably

inferiority of the quality, indeed,

produce of English

it

has risen very consider-

still

too low to admit of

compared with that

dairies, is fully equal to that of the price.

this inferiority of quality

is,

But

perhaps, rather the effect of this low-

ness of price than the cause of better, the greater part of

it.

of the

what

it.

is

Though

the quality was

much

brought to market could not, I

apprehend, in the present circumstances of the country, be disposed of at a much better price; and the present price, it is probable, would not pay the expence of the land and labour necessary for pro-

ducing a

much better quality. Through the greater part

notwithstanding the superiority of price, the dairy

is

of England,

not reckoned

a more profitable emplo3mient of land than the raising of corn, or the fattening of cattle, the two great objects

Through the

greater part of Scotland, therefore,

of agriculture. it

cannot yet be

even so profitable.

The lands

of

no country,

tivated and improved,

human pay

industry

is

till

it is

evident, can ever be completely cul-

once the price of every produce, which

upon them, has got so high as to complete improvement and cultivation In

obliged to raise

for the expence of

The rise

^eSg necessary

for

good

XHE WEALTH OF NATIONS

228 cultiva-

order to do

should be regarded with satisfaction.

ficient, first,

to

must be

the price of each particular produce

this,

tion,

pay the rent

good corn land, as

of

it is

suf-

that which

regulates the rent of the greater part of other cultivated land;

and

secondly, to pay the labour and expence of the farmer as well as

they are commonly paid upon good corn-land;

other words,

or, in

to replace with the ordinary profits the stock which he employs

about

This

it.

rise in

the price of each particular produce, must evi-

dently be previous to the improvement and cultivation of the land

which

is

destined for raising

it.

Gain

is

the end of

improvement,

all

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 expence. If the complete 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 and

lamity, ought to be regarded as the necessary forerunner

tendant of the greatest of It is

due

This

rise too in

not to a tall

of

sil-

all

at-

public advantages.

the nominal or money-price of all those different

produce has been the

sorts of rude

ca-

effect,

not of any degradation in

ver but to

the value of silver, but of a rise in their real price.

a rise in the real

come worth, not only a

greater quantity

They have

As

be-

but a greater

of silver,

a greater

price of

quantity of labour and subsistence than before.

the pro-

quantity of labour and subsistence to bring them to market, so

duce.

when they

it

costs

are brought thither, they represent or are equivalent to a

greater quantity.

Third Sort (3)

The

sort in re-

gard to which the ef&cacy of

The

third

and

last sort of

rude produce, of which the price nat-

urally rises in the progress of improvement, ficacy of

human

is

that in which the ef-

industry, in augmenting the quantity,

limited or uncertain.

Though

is

either

the real price of this sort of rude

industry limited

produce, therefore, naturally tends to rise in the progress of im-

or uncer-

provement, yet, according as different accidents happen to render

is

tain,

the efforts of the quantity,

human it

industry

may happen

more or less

successful in

sometimes even to

fall,

augmenting

sometimes to

continue the same in very different periods of improvement, and

sometimes to e. g.

wool

and hides, which are appenddagesto

rise

There are some

more or sorts of

less in the

same

period.

rude produce which nature has rendered

a kind of appendages 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 example,

which any

DIGRESSION ON SILVER country can afford,

and small

is

necessarily limited

cattle that are kept in

and the nature

it.

The

229

by the number of great improvement,

state of its

other sorts of

produce.

of its agriculture, again necessarily determine this

number.

The same

causes, which, in the progress of improvement, grad-

ually raise the price of butcher’s-meat, should have the it

hides in effect,

may be thought, upon the prices of wool and raw hides, and raise

them too nearly if

same

in the

same proportion.

It

probably would be

so,

in the rude beginnings of improvement the market for the latter

commodities was confined within as narrow bounds as that for the former.

But the extent

of their respective markets is

Wool and

commonly ex-

early

times

have a larger

market open to

them than butcher’s-

tremely different.

The market

meat.

for butcher’s-meat is almost every-where confined to

the country which produces

it.

Ireland,

and some part

America indeed, carry on a considerable trade

of British

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 coun-

They can

try which produces them. countries, little:

easily

be transported to distant

wool without any preparation, and raw hides with very

and as they

are the materials of

that of the country which produces ill

price of the wool

manufactures, the in-

may occasion a demand

dustry of other countries

In countries

many

cultivated,

for

them, though

them might not occasion any.

and therefore but thinly inhabited, the

and the hide bears always a much

greater propor-

In thinly inhabited countries

tion to that of the whole beast, than in countries where, improve-

ment 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

was much above the proportion of its present estimation.^®^ In some provinces of Spain, I have been assured, the sheep is frequently killed merely for the sake of the fleece and the sheep,

and that

this

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 tallow.

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

in Spain,

it

the tallow. This too used to happen almost constantly in Hispaniola, while it was infested by the Buccaneers, and before the settleHistory, ed. of 1773, vol.

Juan and Ulloa, Voyage

i.,

p. 226.

historique,

2de

ptie, liv.

i.,

chap,

v., vol.

i.,

p. 552.

the wool

and hide more

are

valuable in propor-

tion to the carcase.

THE WEALTH OF NATIONS

230

improvement, and populousness of the French plantations

merit,

(which now extend round the coast of almost the whole western half of the island)

lathe

had given some value

who

coast,

but the whole inland and mountainous part of the country.

still

Though in

continue to possess, not only the eastern part of the

the progress of improvement

progress

of im-

to the cattle of the Span-

iards,

of the whole beast necessarily rises,

prove-

likely to

ment the wool and

and the

be much more affected by this

The market

hide.

and population, the

than that of the wool

rise

society confined always to the country which produces

should

essarily

rise,

is

for the carcase, being in the rude state of

hide

though

price

yet the price of the carcase

it,

must nec-

be extended in proportion to the improvement and popu-

lation of that country.

But the market

for the

wool and the hides

not so

even of a barbarous country often extending to the whole commer-

much as

cial

the carcase.

world,

The

can very seldom be enlarged in the same proportion.

it

state of the

fected

whole commercial world can seldom be much

by the improvement

ket for such commodities

of

af-

any particular country; and the mar-

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 ex-

tended in consequence of them. If the manufactures, especially, of*

which those commodities are the materials, should ever come to flourish in the country, the

market, though

enlarged, would at least be brought

it

much

might not be 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 expence of transporting

them

to distant countries.

same proportion rise

Butin

Though

it

might not

as that of butcher^s-meat,

somewhat, and

it

ought certainly not to

it

rise therefore in

the

ought naturally to

fall.

In England, however, notwithstanding the flourishing state of

its

England wool has

woollen manufacture, the price of English wool has fallen very con-

fallen

siderably since the time of

since 1339.

records which demonstrate that during the reign of that prince (to-

Edward

III.

There are

many

authentic

wards the middle of the fourteenth century, or about 1339) what was reckoned the moderate and reasonable price of the tod or twenty-eight

the

pounds of English wool was not

money of

less

than ten shillings of

those times,^^^ 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-twen-

ty shillings the tod

English wool.

may be

reckoned a good price for very good

The money-price

of wool, therefore, in the time of

^®See Smith’s Memoirs of Wool, vol. i. c. 5, 6, and 7; also, vol. ii. c. 176. Ed. I does not give the volumes and chapters. The work was Chronicon RusUcum-Commerciale, or Memoirs of Wool, etc., by John Smith, and published 1747; see below, p. 616.

DIGRESSION ON SILVER

231

Edward III, was to its money-price in the present times as ten to The superiority of its real price was still greater. At the rate

seven.

and eight-pence the quarter, ten

of six shillings

was

shillings

those ancient times the price of twelve bushels of wheat.

At the

of twenty-eight shillings the quarter, one-and-twenty shillings

the present times the price of six bushels only.

twelve to

six,

rate is

The proportion

tween the real prices of ancient and modern times, therefore,

as

or as two to one. In those ancient times a tod of wool

the real recompence of labour

if

in

be-

is

would have purchased twice the quantity of subsistence which will purchase at present; and consequently twice the quantity labour,

in

had been the same

it

of

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:

wool from Eng-

First, of the absolute prohibition of exporting

This has been caused by artificial

regulations.

from Spain

land;

Secondly, of the permission of importing

duty

free; Thirdly, of the prohibition of exporting it

to

it

from Ireland

any other country but England. In consequence of these regulamarket for English wool, instead of being somewhat ex-

tions, the

tended in consequence of the improvement of England, has been confined to the tries

is

home market, where

the wool of several other coun-

allowed to come into competition with

of Ireland is forced into competition with

factures too of Ireland are fully as

tent with justice

and

fair dealing,

much

it

and where that

As the woollen manu-

it.

discouraged as

the Irish can work

part of their own wool at home, and

a greater proportion of

it,

is

consis-

up but a small

are, therefore, obliged to

send

to Great Britain, the only market they

are allowed. I

have not been able

ing the price of

to find

raw hides

any such authentic records concernWool was commonly

in ancient times.

paid as a subsidy to the king, and certains, at least in

its

valuation in that subsidy as-

some degree, what was

its

ordinary price. But

seems not to have been the case with raw hides. Fleetwood, however, from an account in 1425, between the prior of Burcester this

Oxford and one of his canons, gives us their stated,

upon

was

cow hides

at seven shillings

and three pence;

thirty-

sheep skins of two years old at nine shillings; sixteen calves

See below, p. 612, and Smih’sMemoirs of Wool, vol. i., pp. i 59 Eds. I and 2 read “importing it from all other countries.” ^®®Eds. I and 2 read “wool of all other countries.”

price of

hides at present

is

somewhat lower than in the

fif-

teenth century,

that particular occasion; viz. five ox hides at twelve

shillings; five six

price, at least as

it

The real

j

182.

the wealth of nations

232

In 1425, twelve

skins at two shillings

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 45.|-ths of our present money. Its nom-

was a good deal lower than

inal price

But

at present.

at the rate of

and eight-pence the quarter, twelve shillings would in those times have purchased fourteen bushels and four-fifths of a bushel of wheat, which, at three and six-pence the bushel, would in

six shillings

An

the present times cost 51^. 4d.

those times have purchased as

pence would shillings

ox hide, therefore, would in

much corn as ten

shillings

purchase at present. Its real value

and

three-

was equal to ten

and three-pence of our present money. In those ancient

the

when the cattle were half starved during the greater part of winter, we cannot suppose that they were of a very large size.

An

ox hide which weighs four stone of sixteen pounds averdupois,

times,

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

crown the stone, which at

half a

common

understand to be the cost only ten shillings.

Though

er in the present than

it

was

moment (February 1773) I such a hide would at present

this

price, its

nominal

in those ancient times, its real price,

the real quantity of subsistence which is

rather

somewhat lower. The price

above account, hides.

That

is

it

of

will

purchase or command,

cow

hides, as stated in the

common

nearly in the

of sheep skins is

price, therefore, is high-

a good

proportion to that of ox

deal above

it.

They had prob-

ably been sold with the wool. That of calves skins, on the contrary, is

greatly below

In countries where the price of cattle

it.

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

but their average price dur-

present

raw hides

is

a good deal lower at present than

and to the blowing,

seal skins,

ing the

of

a few years ago; owing probably to the taking for

a

off

was the duty upon it

limited time, the importation

probably

raw hides from Ireland and from the plantations duty free, which was done in 1769.^^® Take the whole of the present century at an

higher.

average, their real price has probably been

century

of

is

it

was

in those ancient times.

The nature

somewhat higher than commodity renders

of the

Chrordcon predosum, ed. of 1707, p. 100, quoting from Rennet’s Par Ant. Burcester

9 Geo.

Geo.

m

,

is

the

modem

III., c. 39,

c.

29.

Bicester.

for five years; continued

by 14 Geo. Ill,

c 86,

and

ji

DIGRESSION ON SILVER it

233

not quite so proper for being transported to distant markets as

wool. It suffers more by keeping. to a fresh one,

and

sells for

A salted hide is reckoned

inferior

a lower price. This circumstance must

They

are

not so easily

necessarily have

some tendency

raw hides pro-

to sink the price of

duced in a country which does not manufacture them, but is obliged to export them; and comparatively to raise that of those produced 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

wisdom of the nation, that the safety of commonwealth depends upon the prosperity of their particular

clothiers, in convincing the

the

manufacture. They have accordingly been

much less

favoured.

The

exportation of raw hides has, indeed, been prohibited, and declared

but their importation from foreign countries has

a nuisance:

been subjected to a duty; off

from those

of Ireland

and though

this

trans-

ported as wool,

and tanners have

not been so

much

favoured

by

legis-

lation as clothiers.

duty has been taken

and the plantations (for the limited time

of five years only), yet Ireland has not of Great Britain for the sale of

are not manufactured at home.

its

been confined to the market

surplus hides, or of those which

The

but within these few years been put

hides of

among

common

cattle

have

the enumerated com-

modities which the plantations can send no-where but to the mother

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 be, 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 cattle, which are fed on improved and cultivated land, must be sufficient to pay

Regula-

the rent which the landlord, and the profit which the farmer has rea-

an improved

son to expect from improved and cultivated land. If will is

soon cease to feed them. Whatever part of

not paid

The

by

paid for the one,

what manner

parts of the beast,

vided

it is all

not, they

this price, therefore,

must be paid by the carcase. the more must be paid for the to be divided upon the different the landlords and farmers, pro-

the wool and the hide,

less there is

other. In

it is

is

this price is

indifferent to

paid to them. In an improved and cultivated country,

'‘’"By 5 Eliz, c 22; 8 Eliz., c 14; r8 Eliz., c. 9; 13 and 14 Car. II., c. 7, which last uses the words ‘common and public nuisance.” See Blackstone, Commentaries, vol iv, pp. 167-169. ‘“""g

Ann.,

c. ii.

tions

which sink the price of

wool or hides in

country raise the

price of

meat,

THE WEALTH OF NATIONS

234

therefore, their interest as landlords

and farmers cannot be much

affected by such regulations, though their interest as consumers but not in

may, by the

an unimproved

erwise, however, in

country.

the greater part of

rise in the price of provisions.^^^ It

but the feeding of

would be quite oth-

an unimproved and uncultivated country, where the lands could be applied to no other purpose

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 in the price of the

wool and the hide, would not in

little.

The fall

this case raise the

price of the carcase; because the greater part of the lands of the

country being applicable to no other purpose but the feeding of catthe

tle,

tity of

same number would still continue to be fed. The same quanbutcher’s-meat would still come to market. The demand for

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

it

both the rent and the profit of

the principal produce, that

is,

those lands of which cattle was

of the greater part of the lands of the

country.

The

which

commonly, but very

is

all

perpetual prohibition of the exportation of wool, 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 the lands of the

kingdom, but by reducing the price of the most

important species of snrall its

The Union sank the

of.

would not only have reduced the actual value of the greater part

It

would have retarded very much

cattle, it

subsequent improvement.

The wool

of Scotland fell very considerably in its price in conse-

quence of the union with England, by which great market of Europe,

and confined

it

was excluded from

to the

narrow one of

price of

tibe

Scotch wool, while it

Great Britain. The value of the greater part of the lands in the southern counties of Scotland, which are chiefly a sheep country,

raised the

would have been very deeply affected by this event, had not the

price of

in the price of butcher^s-meat fully

Scotch meat.

of wool.

The

either of

As the effi-

cacy of

efficacy of

human

compensated the

fall

rise

in the price

industry, in increasing the quantity

wool or of raw hides,

is

the produce of the country where

limited, so far as it it is

exerted; so

depends upon

it is

uncertain so

industry

depends upon the produce of other countries. It so far de-

in increas-

far as

ing wool

pends, not so

it

much upon

the quantity which they produce, as

upon

^^This passage, from the beginning of the paragraph, is quoted at length below, p. 617. John Smith, Memoirs of Wool, vol. i., p. 25, explains that the words ‘Tt shall be felony to carry away any wool out of the realm until it be otherwise ordained” do not imply a perpetual prohibition.

DIGRESSION ON SILVER that which they do not manufacture;

may

which they

may

or

235

and upon the

restraints

not think proper to impose upon the ex-

and hides is

both

limited

portation of this sort of rude produce. These circumstances, as

and un-

they are altogether independent of domestic industry, so they nec-

certain.

essarily render the efficacy of

its efforts

more

or less uncertain. In

multiplying this sort of rude produce, therefore, the efficacy of hu-

man

industry

not only limited, but uncertain.

is

In multiplying another very important sort of rude produce, the quantity of

fish that is

ited

and uncertain.

try,

by by

sea,

brought to market,

It is limited

by

the proximity or distance of

number

the

of

its

lakes

it is

likewise both lim-

the local situation of the counits

and

different provinces

called the fertility or barrenness of those seas, lakes

to this sort of rude produce.

As population

from the

and by what may be

rivers,

and

rivers, as

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,

same

thing, the price of a greater quantity

buy with. But it will

true of fish,

which naturally rise in

the progress of

improvement.

and those buyers too

have a greater quantity and variety of other goods, goods, to

The same thing is

or,

what

and variety

is

the

of other

generally be impossible to supply the

great and extended market without employing a quantity of labour greater than in proportion to the narrow

and confined one.

what had been

requisite for supplying

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 fish

must

must be employed, and more expensive machinery

made use

The

of.

real price of this

rises in the progress of

believe,

it.

The

generally be sought for at a greater distance, larger vessels

more

Though

of every kind

commodity, therefore, naturally

improvement. It has accordingly done

so, I

or less in every country.

the success of a particular day’s fishing

may be 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

together,

doubt,

it

market, taking the course of a year, or of several years

may

is so.

As

perhaps be thought,

it

certain enough;

upon the

upon

may

it is

it,

no

it

state of its

wealth and industry; as

in different countries

of this sort of uncertainty that I

success in fi«;hingr

with the state of

improve-s

mentis uncertain.

be the same in very in the same

different periods of improvement, and very different period; its connection with the state of improvement

and

and

depends more, however, upon the local situation

of the country, than this account

is

The connexion of

is

uncertain,

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

Inin-

crea^g

the wealth of nations

236

precious ones particularly, the efficacy of

minerals the effi-

to

cacy of industry is not

human industry seems

be limited, but to be altogether uncertain. quantity of the precious metals which

The

country

is

not limited by any

limited fertility or

but un-

abound

certain.

barrenness of

its

to be found in

is

any

thing in its local situation, such as the

own

mines. Those metals frequently

which possess no mines. Their quantity

in countries

every particular country seems to depend upon two different

The

cumstances;

quantity of the precious metals in a country

its

first,

not

upon

its

power

upon the

of purchasing,

in

cir-

state of

upon the annual produce of its land and labour, in conwhich it can afford to employ a greater or a smaller

industry,

sequence of

quantity of labour and subsistence in bringing or purchasing such

and

from

depends

superfluities as gold

on its power of

those of other countries; and, secondly,

silver, either

renness of the mines which

purchas-

may happen

its

own mines

upon the at

or from

fertility or bar-

any particular time to

The quantity

ing and

supply the commercial world with those metals.

the fertil-

those metals in the countries most remote from the mines,

of

must be

ity of the

more

mines.

by

or less affected

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 depends on the former

it

circum-

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 luxuries likely to rise with the

and

superfluities, is

wealth and improvement of the country, and

stance

with

poverty and depression. Countries which have a great

the real

to fall

price

quantity of labour and subsistence to spare, can afford to purchase

is

likely to

its

any particular quantity of those metals at the expence of a greater quantity of labour and subsistence, than countries which have less

with improvement; rise

to spare.

so far as It

depends

So far as

their quantity in

any particular country depends upon

the latter of those two circumstances (the fertility or barrenness of

on the latter cir-

the mines which happen to supply the commercial world) their real

cumstance

price, the real quantity of labour

and subsistence which they

will

the real

purchase or exchange

price will

vary with

portion to the

the fer-

those mines.

tility

for, will,

fertility,

and

no doubt, sink more or

rise in

less in pro-

proportion to the barrenness, of

of

the mines,

The

fertility or

barrenness of the mines, however, which

happen at any particular time which has no con•

nexion

with the state of

circumstance which,

it is

to supply the

evident,

may

commercial world,

may have no

is

a

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

DIGRESSION ON SILVER

237

over a greater and a greater part of the earth, the search for

new

industry.

mines, being extended over a wider surface, better chance for being successful, than

may have somewhat a when confined within nar-

rower 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 ensure. All indi-

acknowledged, are doubtful, and the actual discovery and successful working of a new mine can alone ascertain the recations,

it is

ality of its value, or

to

even of

its

be no certain limits either

sible

In

this search there

seem

disappointment of human industry. In the course of a century

or two, tile

existence.

to the possible success, or to the pos-

it is

possible that

new mines may be discovered more

than any that have ever yet been known; and

it is

fer-

just equally

known may be more barren

possible that the most fertile mine then

than any that was wrought before the discovery of the mines of America. Whether the one or the other of those two events

pen to take place,

is

of very

little

may hap-

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

the real quantity of labour which

would be precisely the same.

A

it

its real

value,

could purchase or command,

shilling

might in the one case rep-

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 resent

;

would be

who has a

just as rich as he

and abundance

of gold

and

silver plate,

shilling

now. The cheapness

would be the

sole

advantage

which the world could derive from the one event, and the dearness

and

scarcity 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 prices of things in ancient times,

price of corn,

and

value of gold and

of

seem to have considered the low money

goods in general,

silver, as

or, in other

words, the high

a proof, not only of the scarcity 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 po-

The high value of the precious

metals is no proof of poverty

THE WEALTH OF NAIIONS

23B

and barbarism,

ceconomy which represents national wealth as consisting in the abundance, and national poverty in the scarcity, of gold and silver; a system which I shall endeavour to explain and examine at litical

great length in the fourth

book of

this enquiry. I shall

only observe

at present, that the high value of the precious metals

proof of the poverty or barbarism of any

when

time

took place. It

it

is

can be no

particular country at the

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

than in the

latter.

any part

richer than

the value of the precious metals

of Europe, in

be higher in the former

much

In China, a country

of

is

much

any part

higher than

Europe. As the wealth of Europe, indeed, has

in-

creased 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 silver in

known

before.

The

ture, are

and

increase of the quantity of gold

Europe, and the increase of

its

manufactures and agricul-

two events which, though they have happened nearly

about the same time, yet have arisen from very different causes, and

have scarce any natural connection with one another. The one has arisen from a either

mere accident, in which neither prudence nor policy

had or could have any share: The other from the

fall of

the

feudal system, and from the establishment of a government which afforded to industry the only encouragement which

it

requires,

tolerable security that it shall enjoy the fruits of its

Poland, where the feudal system this

still

day as beggarly a country as

it

own

some

labour.

continues to take place,

is

at

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

man-

ner as in other parts of Europe. Their quantity, therefore, must

have increased there as

in other places,

portion to the annual produce of

its

and nearly

in the

same pro-

land and labour. This increase

of the quantity of those metals, however, has not,

it

seems, in

creased that annual produce, has neither improved the manufactures

and agriculture of the country, nor mended the circumstances

of

inhabitants. Spain

its

and Portugal, the

countries which possess

the mines, are after Poland, perhaps, the two most beggarly coun-

^The

same words occur above,

p. 189.

DIGRESSION ON SILVER tries in

239

Europe. The value of the precious metals, however, must be

lower in Spain and Portugal 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 expence of smuggling, their exportation being either prohibited, or subjected to a duty. In proportion to the annual produce of the land

and

la-

bour, 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

has been abolished in Spain and Portugal,

it

the feudal system

has not been succeeded

by a much better. As the low value of gold and silver, therefore, is no proof of the wealth and flourishing state of the country where it takes place; so neither

is their

high value, or the low

general, or of corn in particular,

money price either

any proof

of goods in

and bar-

of its poverty

barism.

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 particular

game

as cattle, poultry, corn,

is

sorts of goods, such

in proportion to that of

of all kinds,

a most decisive one. It clearly demonstrates,

great abundance in proportion to that of corn,

first,

their

and consequently the 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 demonstrates that the stock and population of the country did not bear the territory,

same proportion

which they commonly do

to the extent of its

in civilized countries,

and that

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

society

corn in particular,

we can

infer only that the

mjpes which at that

time happened to supply the commercial world with gold and

were

fertile or barren,

tion to that of others,

we can

infer,

its

sorts of

goods in propor-

with a degree of probability that

approaches almost to certainty, that greater part of

silver,

not that the country was rich or poor. But

from the high or low money price of some

it

was

rich or poor, that the

lands were improved or unimproved, and that

was either in a more or less barbarous

state, or in

a more or

it

less civ-

ilized one.

Any rise

in the

money price

of goods

which proceeded altogether

^ Ed. I does not contain “&c.’

low price* of cattle,

poultry,

game, &c., a proof of pover-

is

great extent of the land which they occupied in proportion to what

was occupied by corn; and, secondly, the low value

but the

ty or bar-

barism.

the wealth of nations

240

A rise of price due entirely to

from the degradation of the value of goods equally, or

a

fifth

tion of

or

a

fourth, or

would af-

silver,

would

raise their price universally

a

affect all sorts of

a fourth,

third, or

part higher, according as silver happened to lose a third,

degradasilver

and a

fifth

part of

its

former value.^^^ But the rise in the

price of provisions, which has been the subject of so

much

reasoning

affect all sorts of provisions equally.

fect all

and conversation, does not

goods

Taking the course of the present century at an average, the price of

equally,

but corn has risen

much less than other

corn,

the degradation of the value of of

who account for this rise by much less than that

acknowledged, even by those

it is

some other sorts

silver,

has risen

The rise in the price

of provisions.

of those other

provi-

sorts of provisions, therefore, cannot be owing altogether to the deg-

sions,

radation of the value of silver. into the account,

Some

other causes

must be taken

and those which have been above assigned,

will,

perhaps, without having recourse to the supposed degradation of

the value of

silver, sufficiently

sorts of provisions of

explain this rise in those particular

which the price has actually risen in propor-

tion to that of corn.

and has indeed been

As

to the price of corn

itself, it

has, during the sixty-four first

years of the present century, and before the late extraordinary

was during the

somewhat

course of bad seasons, been somewhat lower than

lower in 1701-64 than in 16371700

sixty-four last years of the preceding century. This fact

it

fiars

of several different markets in France,

with great diligence and

Dupre de

St.

ficult to

As to

while its

fidelity

which have been collected

by Mr. Messance,^^® and by Mr. is more complete than could

a matter which

is

naturally so very dif-

be ascertained. the high price of corn during these last ten or twelve years,

recent

it

high price has been

without supposing any degradation in the value of

due only

bad

seasons.

The distinction

between a rise of

prices

and

attested,

Maur.^®^ The evidence

well have been expected in

to

is

by the public of all the different counties of Scotland, and by the accounts

not only by the accounts of Windsor market,^®® but

can be

The

sufficiently

accounted for from the badness of the seasons, silver.

opinion, therefore, that silver is continually sinking in

upon any good observations, or upon those of other provisions.

value, seems not to be founded

upon the

prices of corn,

The same quantity

of silver, it

may, perhaps, be

its

either

said, will in the

present times, even according to the account which has been here given, purchase visions than it

^The

a much smaller quantity of several sorts of pro-

would have done during some part of the

arithmetic

is slightly

last cen-

at fault. It should be, ^‘happened to lose a

fourth, a fifth, or a sixth part of its former value.’

Below, pp. 257, 258. Above, p. 76, Recherckes sur la Popidation, pp. 293-304. Essai sur les monnoies ou rijiexions sur U rapport entre V argent denrees, 1746, esp. p. 181 of the “Variations dans les prix ”

^

et les

DIGRESSION ON SILVER tury

and

;

to ascertain whether this change be

value of those goods, or to a

fall in

241

owing to a

the value of silver,

is

rise in the

only to es-

a

fall in

the value of silver

and

tablish a vain

man who

vice to the

which can be of no sort of

useless distinction,

has only a certain quantity of

silver to

ser-

go to

is

not

useless:

market with, or a certain fixed revenue in money. I certainly do not pretend that the knowledge of this distinction will enable him to

buy cheaper.

may not,

It

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

it is

affords

an easy

the value

proof of the pros-

owing to a circumstance from which nothing can be

perity of

sorts of provisions be owing altogether to

of silver,

it

inferred but the fertility of the

a

fall in

American mines. The

the country, the annual produce of

its

real wealth of

the country,

land and labour, may, not-

withstanding this circumstance, be either gradually declining, as in Portugal and Poland; or gradually advancing, as in most other

But

parts of Europe. visions

be owing

duces them, to

a

to

its

if

this rise in the price of

rise in

fit

for producing corn;

dicates in the clearest

the real value of the land which pro-

important,

and

may

creasing value of

may

of

some

their

having been renin-

state

most

far the greatest, the

some

use, or, at least,

it

may give

have so decisive a proof of the

far the greatest, the

in-

most important, and the

of its wealth.

some use

some

to the Public in regulating the pecun-

of its inferior servants. If this rise in the price

sorts of provisions be owing to a fall in the value of silver,

pecuniary reward, provided

certainly to be it is

surely be of

by

too be of

iary reward of

by

constitutes

satisfaction to the Public, to

most durable part It

its

owing to a circumstance which

the most durable part of the wealth of every exten-

sive country. It

some

it is

manner the prosperous and advancing

The land

of the country.

sorts of pro-

increased fertility; or, in consequence of more ex-

tended improvement and good cultivation, to dered

some

augmented

it

was not too

large before, ought

But

if

this rise of price is

in consequence of the

improved

much

owing to the increased value,

fertility of

the land which produces

becomes a much nicer matter to judge either in what proportion any pecuniary reward ought to be augmented, or such provisions,

whether

it

ment and

it

ought to be augmented at cultivation, as

be of use in regulating the

wages of the inferi-

in proportion to the extent of this fall. If

not augmented, their real recompence will evidently be so

diminished.

and may

it

all.

The

necessarily raises

extension of improve-

more or

less, in

pro-

portion to the price of com, 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

or servants of the state.

the wealth of nations

242

which produces

it,

being rendered

ford to the landlord

fit

for producing corn,

and farmer the rent and

must

af-

profit of corn land. It

lowers the price of vegetable food; because, by increasing the fertility of

the land,

it

The improvements

increases its abundance.

many

agriculture too introduce

quiring less land and not

more labour than

come much cheapwhat is called Indian

corn,

er to market. Such are potatoes and maize, or corn, the

of

sorts of vegetable food, which, re-

two most important improvements which the agriculture Europe itself, has received from the great

of Europe, perhaps, which

extension of

its

commerce and navigation.

Many

sorts of vegetable

food, besides, which in the rude state of agriculture are confined to

the kitchen-garden, and raised only

proved state to be introduced into

by the plough: such as

by the

common

come

spade, fields,

and

in its im-

to be raised

turnips, carrots, cabbages, &c. If in the prog-

improvement, therefore, the real price of one species of food

ress of

necessarily rises, that of another as necessarily

a matter of more nicety to judge how far the

compensated by the

fall in

er’s-meat has once got to

the other. its

and

falls,

rise in the

When the

it

becomes

may be

one

real price of butch-

height (which, with regard to every

sort, except, perhaps, that of

hogs

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 flesh, it

,

food, cannot

people.

The

much

affect the

circumstances of the inferior ranks of

circumstances of the poor through a great part of Eng-

land cannot surely be so

much distressed by any rise

poultry, fish, wild-fowl, or venison, as they fall in

The poor are more distressed

by the artificial rise

of

some

manufactures than

in the price of

relieved

by the

that of potatoes.

In the present season of scarcity the high price of corn no doubt But in times of moderate plenty, when corn is

distresses the poor.

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

taxes in the price of

by the natural

must be

soap, leather,

which has been occasioned by

some manufactured commodities; as candles, malt, beer, and ale, &c.

of salt,

rise of

rude produce other than corn.

Ejects of the Progress of Improvement upon the real Price of Manufactures

But the

It

natural

gradually the real price of almost

effect of

improve-

ment is to

is

the natural effect of improvement, however, to diminish

all manufactures. That of the manufacturing workmanship diminishes, perhaps, in all of them without exception. In consequence of better machinery, of greater

RENT OF LAND PRICE OF MANUFACTURES and

dexterity, all of

of a

more proper

which are the natural

division

effects of

^43

and distribution of work,

improvement, a

much

smaller

quantity of labour becomes requisite for executing any particular piece of work;

and though,

dimmish the price of

manu-

factures.

in consequence of the flourishing cir-

cumstances of the society, the real price of labour should

rise

very

considerably, yet the great diminution of the quantity will generally

much more than compensate

the greatest rise which can

happen

in the price.^^^

There rise in

a few manufactures,

are, indeed,

in

which the necessary

the real price of the rude materials will more than compen-

sate 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

the advantages which can be derived

all

In a few

manufactures the rise in

the

price of

raw material

counterbalances

improve-

from the best machinery, the greatest dexterity, and the most proper division

But

and

distribution of work.

execution,

which the real price of the rude materials

in all cases in

either does not rise at

all,

ment in

or does not rise very

much, that

of the

but in other casesprice

manufactured commodity sinks very considerably.

falls

This diminution of price has, in the course of the present and

con-

siderably.

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, shillings.

may now

perhaps be had for twenty

In the work of cutlers and locksmiths, in

all

the toys

Since

1600 this has been

most remarkable in

which are made of the coarser metals, and are

commonly known by

name

the

of

in all those goods

Birmingham and

which

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

part of Europe,

who

in

many

workmen

manu-

factures

made of the coarser metals.

of every other

cases acknowledge that they can pro-

duce 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 further, 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 sensible reduction of price.

The

price of superfine

fallen

have been assured, on the contrary, has, within these fiveand-twenty or thirty years, risen somewhat in proportion to its

cloth, I

quality; owing,

^Ubove,

p. 86.

it

was

said, to

a considerable

Clothing has not

rise in the price of the

^Lectures, pp. iS9, 164*

much in the same period,

THE WEALTH OF NATIONS

244

material, which consists altogether of Spanish wool.

Yorkshire cloth, which

made

is

That

of the

altogether 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,

may

have oc-

sensible

and un-

have been some small improvements in both, which casioned some reduction of price. but very consider-

ably since the

fif-

teenth century.

But^^^ the reduction deniable,

appear

we compare the price

much more

of this manufacture in the present

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, times with what

than Fine cloth has fallen

if

will

it is

it

was

in

a

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

to less

than one-

grained, or of other grained cloth of the finest making, above six-

third of

teen shillings, shall forfeit forty shillings for every yard so sold.”

its

price

in 1487,

Sixteen 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

probable,

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

most probably much superior,

is

supposition, the

money

yet,

even upon

this

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

eight-pence was then, and long afterwards, reckoned the average price of a quarter of wheat. Sixteen shillings, therefore, price of

two quarters and more than three bushels

a quarter of wheat ings,

the real price of a yard of

been equal to at present money.

and coarse cloth has

in the present times at

least three

of wheat.

was the Valuing

eight-and-twenty

fine cloth must, in those times,

pounds

six shillings

The man who bought

it

shill-

have

and sixpence of our

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.

^ Ed.

I

does not contain “but.”

^*C.

8.

RENT OF LAND PRICE OF MANUFACTURES In 1463? being the 3d of Edward servant in husbandry, nor tificer

common

was enacted, that

it

labourer, nor servant to

fallen to

any

any

cloth above two shillings the broad yard.” In the

Edward IV two

shillings contained

.

of silver as four of our present

now

is

sold at four shillings the yard,

is

probably

order of

common

Even the money

servants.

it

was

of

its

price in

1463.

much

su-

of the very poorest

price of their clothing,

in proportion to the quality,

in the present than

of

money. But the Yorkshire cloth

any that was then made for the wearing may,

3d

very nearly the same* quantity

perior to

therefore,

than one half

less

ar-

inhabiting out of a city or burgh, shall use or wear in their

clothing

which

^45

be somewhat cheaper

in those ancient times.

The

real price is

good deal cheaper. Ten-pence was then reckoned what is called the moderate and reasonable price of a bushel of wheat. Two certainly a

shillings, therefore,

of wheat,

which

the bushel,

was the

price of

two bushels and near two pecks

in the present times, at three shillings

would be worth eight

shillings

and sixpence

and nine-pence. For a

yard of this cloth the poor servant must have parted with the power of purchasing

a quantity of subsistence equal to what eight

and nine-pence would purchase

sumptuary law

shillings

This

in the present times.

is

a

luxury and extravagance of the had commonly been much more

too, restraining the

poor. Their clothing, therefore,

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 two pecks of wheat; which,

of a bushel

and

six-

and three-pence.

We

in the present times, at three

pence the bushel, would cost

five shillings

and near

Hose have fallen

very considerably since 1463,

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

In the time of ably not

known

them.

Edward IV. in

any part

the art of knitting stockings of Europe. Their hose

was prob-

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 ambassador

C

5.

The quotations from

this

Act and from 4 Hen. VIL,

c. 8,

are not

quite verbatim.

'^“Dr. Howell in his History of the World, vol. ii., p. 222, relates ‘that Queen Elizabeth, in this third year of her reign, was presented with a pair of black knit silk stockings by her silk woman, Mrs. Mountague, and thenceforth she never wore doth ones any more.^ This eminent author adds ‘that King

when they were

made of

common cloth.

the wealth of nations

246

The machinery for mak-

ing cloth

has been much improved.

Both

and

in the coarse

chinery employed was

much more imperfect in those ancient, than

provements, besides, probably,

many

difficult to ascertain either the

three capital improvements are:

first,

it

may

or the importance.

The

smaller ones of which

number

the exchange of the rock

spindle for the spinning-wheel, which, with the

bour, will perform ly,

it

the present times. It has since received three very capital im-

is in

be

manufacture, the ma-

in the fine woollen

same quantity

more than double the quantity

and

of la-

of work. Second-

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

inventions of those machines, must have been extremely tedious and

troublesome. Thirdly,

The employment

ening the cloth, instead of treading

it

of the fulling mill for thickin 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. Italy

which explains the

some time

The

They had been introduced

into

before.

consideration of these circumstances

measure explain to us

why

the fine manufacture,

was so much higher

may, perhaps,

in

some

the real price both of the coarse and of

fall of

price.

is in

in those ancient, than

it

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

The

coarse manufacture probably was, in those ancient times,

carried

on

in

England, in the same manner as

manufacture was

a house-

hold one,

countries where arts

and manufactures are

it

always has been in

in their infancy. It

was

probably a houshold manufacture, in which every different part of the

work was occasionally performed by

of almost every private family; but so as

members to be their work only when all

the different

they had nothing else to do, and not to be the principal business

from which any of them derived the greater part of their subsistHenry

and expensive Prince, wore ordinarily cloth came from Spain, by great chance, a pair of silk stockings; for Spain very early abounded in silk. His son, King Edward VI., was presented with a pair of long Spanish silk stockings by his merchant. Sir Thomas Gresham, and the present was then much taken notice of.’ Thus it is plain that the invention of knit silk stockings originally came from Spain. Others relate that one William Rider, an apprentice on London Bridge, seeing at the house of an Italian merchant a pair of knit worsted stockings from Mantua, made with great skill a pair exactly like them, which he presented in the year 1564 to William Earl of Pembroke, and were the first of that kind worn in England.”—Adam Anderson, Historical and Chronological Deduction of the Origin of Commerce, 1764, a.d. 1561. VIII., that magnificent

hose, except there

RENT OF land: CONCLUSION The work which

ence.

is performed in this manner, it has already comes always much cheaper to market than that

been observed,

which

The

-47

is

the principal or sole fund of the workman’s subsistence.

fine

manufacture, on the other hand, was not in those times

on in England, but

carried

Flanders

;

and

it

in the rich

was probably conducted then,

by people who derived

as now,

their subsistence

and commercial country of

from

it.

in the

same manner

the whole, or the principal part of

was besides a foreign manufacture, and

It

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 foreign manufactures,

to encourage at as easy

it,

in order that merchants

a rate as

possible, the great

but rather

might be enabled to supply,

men

but the fine

was

carried

on

in Flan-

ders

by

people

who

sub-

on and was subsisted

it,

ject to

customs duty,

with the conveniencies

and luxuries which they wanted, and which the industry

of their

own country could not afford them. The consideration of these circumstances may perhaps

in

some

measure explain to us why, in those ancient times, the real price of

which explains

why the

the coarse manufacture was, in proportion to that of the fine, so

coarse

much lower than

was in

in the present times.

those times lower in pro-

Conclusion of the Chapter

portion to the fine.

SHALL conclude this very long chapter with observing every improvement in the circumstances of the society tends

that

I

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

Every improve-

ment in the cir-

the produce of the labour of other people.

The

cum-

extension of improvement and cultivation tends to raise

directly.

The

it

landlord’s share of the produce necessarily increases

with the increase of the produce.

That

rise in

stances of society raises

rent.

the real price of those parts of the rude produce of

the effect of extended improvement and cultiva-

land,

which

tion,

and afterwards the cause

is first

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

the landlord’s share, his real

greater proportion.

The

command of the labour of

real value of

Extension of improve-

ment and cultiva-

tion raises

other people,

it

directly,

not only rises with the real value of the produce, but the proportion of his share to the

the rise in

whole produce

its real price,

requires

Above, pp. ii6, 1 1 7. Towards the end of chapter

x. the

rises

with

it.

That produce,

no more labour

same words

to collect

it

after

and so

than

does the

occur, omitting “very.”

XHE WEALTH OF NATIONS

248 rise in

the price

place, with the ordinary profit, the stock

of cattle,

&c

A smaller proportion of it will, therefore, be sufficient to re-

before.

bour.

A greater

proportion of

it

which employs that

la-

must, consequently, belong to the

landlord.^^®

Improvements which reduce the price of

All those improvements in the productive powers of labour,

which tend directly

indirectly to raise the real rent of land.

part of his rude produce, which

manufactures raise it

indi-

rectly,

to reduce the real price of manufactures, tend

is

The landlord exchanges that own consump-

over and above his

what comes to the same thing, the price of that part of it, manufactured produce. Whatever reduces the real price of the

tion, or

for

former.

latter, raises that of the

An equal quantity of the former be-

comes thereby equivalent to a greater quantity the landlord

is

does every

Every increase

the quantity of useful labour employed within

quantity

urally goes to the land.

ployed in

its

cultivation, the

the stock which

is

for.

it,

tends indirectly to

A A greater number of men and cattle are em-

in the

raise the real rent of land.

of useful

which he has occasion

in the real wealth of the society, every increase in

increase

labour employed.

and

enabled to purchase a greater quantity of the con-

veniencies, ornaments, or luxuries,

and so

of the latter;

certain proportion of this labour nat-

produce increases with the increase of

thus employed in raising

it,

and

the rent increases

with the produce. The contrary cir-

The

contrary circumstances, the neglect of cultivation and im-

provement, the

fall in

the real price of any part of the rude produce

cumstances

of land, the rise in the real price of manufactures from the decay of

lower

manufacturing art and industry, the declension of the real wealth

rent.

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.

There are three

The whole annual produce of the land and labour of every counwhat comes to the same thing, the whole price of that an-

try, or

parts of

produce

nual produce, naturally divides

and three

served,

original

orders of society.

and the

itself,

and constitutes a revenue

to three different

profits of stock;

who live by rent, to those who live by who live by profit. These are the three great,

orders of people; to those

original

and constituent orders of every

whose revenue that of every other order est of the

has already been ob-

wages of labour,

wages, and to those

The inter-

it

into three parts; the rent of land, the

The

is

civilized society,

from

ultimately derived.

interest of the first of those three great orders, it appears

from what has been just now

said, is strictly

and inseparably con-

proprietors of

nected with the general interest of the society. Whatever either pro-

^ The opposite of this

is

stated

on p 318 below

^ Above,

p 52

RENT OF land: CONCLUSION

249

motes or obstructs the one, necessarily promotes or obstructs the

When

other.

commerce or

the public deliberates concerning police, the proprietors of

with a view to promote the interest of their .least, if

any regulation of

land never can mislead

own particular

order; at

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 er labour

nor care, but comes to them, as

and independent lence,

it,

which

is

of

were, of

it

any plan or project of

their

its

them too

that application of

often, not only ignorant,

mind which

general interest

of the society.

them neithown accord,

own. That indo-

the natural effect of the ease and security of their

uation, renders

land is inseparably connected with the

sit-

but incapable of

necessary in order to foresee and

is

understand the consequences of any public regulation.

The interest of the second order, is

who live by wages,

So also

as strictly connected with the interest of the society as that of the

that of

The wages

first.

that of those

those

of the labourer,

it

has already been shewn,^^® are

when the demand for labour is continually rising, when the quantity employed is every year increasing consider-

never so high as or

ably.

When

this real wealth of the society

wages are soon reduced to what bring

up a

is

family, or to continue the race of labourers.

The

may, perhaps, gain more by the prosperity of labourers: but there decline.

But though the

is

no order that

wages.

him

When

to

the

order of proprietors

of the society, than that

suffers so cruelly

from

its

interest of the labourer is strictly connected

with that of the society, he

is

incapable either of comprehending

that interest, or of understanding

condition leaves

who

by

becomes stationary, his

barely enough to enable

society declines, they fall even below this.

live

is

him no time

its

connexion with his own. His

to receive the necessary information,

and habits are commonly such as to render him unfit to judge even though he was fuHy informed. In the public deliberations, therefore, his voice is little heard and less regarded, ex-

and

his education

cept

upon some

set on,

particular occasions,

and supported by

when his clamour

his employers, not for his,

is

animated,

but their own

particular purposes.

His employers constitute the third order, that of those who

live

but the interest of

by

profit. It is the stock that is

employed

which puts into motion the greater part every society. ulate

of the employers of stock reg-

direct all the

rate of profit does not, like rent and wages,

and

fall

of the useful labour of

most important operations of labour, and the end proposed by all those plans and projects. But the

and

profit is

The plans and projects

for the sake of profit,

rise

with the declension, of the society. ^Above, pp 69-71

with the prosperity,

On

the contrary,

it is

those live

who

by

profit has not the

same connexion with the general interest of

the wealth of nations

250

and

the so-

naturally low in rich, and high in poor countries,

ciety.

highest in the countries which are going fastest to ruin.

always

it is

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, Ae two classes of people,

who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share

As during

their

whole

lives

of the public consideration.

they are engaged in plans and projects,

they have frequently more acuteness of understanding than the greater part of country gentlemen.

commonly lar

As

their thoughts, however, are

exercised rather about the interest of their

branch of business, than about that of the

own particu-

society, their judg-

ment, even when given with the greatest candour (which

been upon every occasion) ,

is

it

has not

much more to be depended upon with

regard to the former of those two objects, than with regard to the ter.

Their superiority over the country gentleman

their

knowledge of the public

knowledge of their own

interest, as in their

interest

perior knowledge of their

is,

own

than he has of

having a better

his. It is

interest that they

lat-

much in

not so

by

this su-

have frequently

imposed upon his generosity, and persuaded him to give up both his

own

interest

and that of the

public,

conviction, that their interest, public.

The

from a very simple but honest

and not

his,

was the

any particular

interest of the dealers, however, in

branch of trade or manufactures,

is

always in some respects

ent from, and even opposite to, that of the public.

market and to narrow the competition, dealers.

To widen

the market

may

interest of the

is

To

differ-

widen the

always the interest of the

frequently be agreeable enough

to the interest of the public; but to narrow the competition must al-

ways be against it, and can serve only to enable the dealers, by ing their profits above their

zens.

what they naturally would

rais-

be, to levy, for

own rest of their fellow-citiThe proposal of any new law or regulation of commerce which benefit,

an absurd tax upon the

comes from this order, ought always to be listened to with great precaution,

and

and ought never

to

be adopted

till

carefully examined, not only with the

after

having been long

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,

have generally an lic,

interest to deceive

and even

and who accordingly have, upon many

and oppressed it.

to oppress the

who pub-

occasions, both deceived

JRENT OF land:

CONCLUSION

251

The average Years

XIL

Price of the Quarter of

Wheat each

Price of

ferent Prices of the

each Year in Money of the present

same Year.

Times.^^^

Average of the

Year.^ 2 ^

dif-

1202 1205

1223 1237

1243

1244 1246 1247 1257

1258

1270 1286

Total,

35

9

Average Price,

2

19

3

i|

^

As is explained above, p. 185, the prices from 1202 to 1597 are collected from Fleetwood {Chronicon Pnciosum, 1707, pp. 77-124), and from 1598 to 1601 they are from the Eton College account without any reduction for the size of the Windsor quarter or the quality of the wheat, and consequently 'identical with those given in the table on p. 256 below, as to which see note.

^ In the reduction of the ancient money to the eighteenth century standard

the table in Martin Folkes {Table of English Silver Coins, 1745, p. 142) appears to have been followed. Approximate figures are aimed at {e.g., the factor uniform, 3 does duty both for 2*906 and 2*871), and the error is not always multiplied have been appear to sums of the some and between e,g,, 1464 1497

by the approximate i^and

others

by the

exact 1*55.

THE WEALTH OE NATIONS

252

The Average Years XII.

Price of the Quarter of

Wheat each

£.

ferent Prices of the

£.

d.

3

4

5.

Price of

each Year in Money of the present Times.

dif-

same Year.

Year,

1287

Average of the

£.

d.

d,

—

10

—

-

9

—

.

8 I

I I

1288

1223

0

3

1

4

.

2

3 9 12

6

1289

—

2

10

if

41^24

10

I

10

1290 1294 1302 1309 1315

— — — —

16 16

4

I

— —

I

10

1

12

I

1316

7

2

8

—

28 — — —

— —

12

2

3

6 — —

I

I

I

10

6

4

II

6

I

19

6

5

18

6

— —

6 10

— —

Total,

23

4

1I4

Average Price,

i

18

8

— — 24 — — 2

14

1317

2

4 1336 1338

— 13 — —

I-

6

_8

—

3

4

^

This should be 2s. 7f d. The mistake is evidently due to the 3s. 4d. belonging to the year 1287 having been erroneously added in. Sic in all editions. More convenient to the unpractised eye in adding up

than “i”

“And sometime

xxs. as

—^Fleetwood, Chronicon Preciosum,

H. Knighton.”

p, 82.

^®Miscopied:

it is

£2 13s. 4d. in Fleetwood, op.

cit.j

p. 92.

RENT OF land: CONCLUSION

1 i

Years

Price of the Quarter

XIL

of Wheat each

ferent Prices of the

Year,

same Year.

Average of the

dif-

253

The average Price of each Year in Money of the present

Times. |

d,

— — — 168— —

1339 1349 1359 1361

1 — — — —

9 2

2

1363 r

1369

I I

1

— —

4 4

f—

13

[-

—

16 16

f—

4

1

1379 13S7

2

1390 1401

1407

—/

— —

4]

-1

1 — — — — 12 — — — — — — — — 14

4i\

—

3

16

1434 1435

— — — I

4

d — —

6

8

s

4

8/

j.

8

{:

6

1440

I

4

1444

{=

44 S

— — — —

1447 1448 1449 1451

£.

— — — — I

1439

I

.

4 8 6 5

8

—6 8 — —

— — — — — — —

d,

7

—

S

2

— 322 - 4 —8 I

15

2

9

4^27

— 9 4 — 48 I

13

I

17

4

10

-

8

II

—

I

12

—

Total,

IS

9

4

Average Price,

i

$

9I

—

1—34/ — —

£. 1^23 1425

I

5

1

1416

£.

1 — — — —

7

d — —

— — — —

d — — — —

£.

— — —

S 16

2

13 10

3

4

2

6

8

8

—

s.

.

— — 4

— — — — —

2

.

8

— — — — — —

16

Total,

12

IS

Average Price,

i

i

2

— — — —

Obviously a mistake for £2

%

8

9 13 10

.

4 8

4

— — 4

16

1

iis. 4d.

4 si

THE WEALTH OF NATIONS

254

Years

Price of the Quarter

XIL

of

Wheat each Year.

£.

5.

d.

— — 124 8 — — ~ 8 ~

1453 1455 1457 1459 1460

5

7

5

1463

{-

I

s)

— 6 8 — — 144 8 — 4 — — 3 4 — —

1464 i486

I

1491

1494 T495 1497

I

Average of the

dif-

The average

Price of

each Year in

Money

ferent Prices of the

of the present

same Year.

Times,

^ 1

— — — — — — — — — —

1 — — — —

£.

1 — — —

—

I

10

— — — — —

^ — — — — —

—

d.

— — — — — — — —

=

—

17

5

f

s.

— — — — — — — —

I

1SS3 ISS4 1555 1556

£.

— — —8 — 8 — — — — 88 — — 8 — ~ A8 4

8

2

4 4

15

10 16

— —

3

8

10 — — 1217 — — 6 — — — II — 89 — — 14 5

I

Average Price, £.

10

I

Total,

1499 1504 1521 1551

d.

.r.

— — — — —

i

£.

d.

— — — — — — — —

s.

— — — — — — —

6 8

10

I

2

8

8 8 8

d.

— 6 — — — — —

T-

ISS7 i

1558 IS59 1560

2

— —

5

8 13 8

8 8

:) 4]

—

—

17

— — —

8 8 8

Total,

6

0

Average Price,

—

10

gl228

— — — — — — — — —

®^This should be 17s. 7d. here and in the next column. Eds. i “i2s. 7d.,” a mistake of £i having been made in the addition.

— — —

and

2I

2

read

"“This should obviously be los./^ d. Eds. i and 2 read “£6 5s. id.^^ for the and “los. 5d.” for the average, in consequence of the mistake mentioned

total

in the preceding note.

RENT OF land: CONCLUSION

255

The average Years XII.

Price of the Quarter of

Average of the

Wheat each

ferent Prices of the

Year,

same Year.

1 cti

1 —

1561

1562

^00

8

/

2

16

1

I

4

1587

34

IS 94

2

16

IS 9 S

2

13

1574

1596 IS 97

1S98 IS 99 1600 1601

/

s

1

4

^^Miscopied:

^See

4

1 — — — — —

£.

s.

£.

d.

— —

— — — — — — 1 — — —

2

2

1

1

3 2 2

4 4

M

J

Price of

each Year in Money of the present Times.

— — — — — — — — — — —

1

—230

—

dif-

s.

d.

— 8 — — — 4 — 16 — — 13 — — — 12 8

2

16

8

2

16

8

I

19

2

I

19

2

I

17

8

I

17

8

I

14

I

14

10

Total,

28

9

4

Average Price,

2

7

it is

— — 1

£2 13s, 4d. in Fleetwood, Chronicon Preciosum, p. 123.

p. 251,* note 221.

Eds. I and 2 read £2 4s. 9 Jd-j the 89s. left over after dividing the pounds having been inadvertently divided by 20 instead of by 12,

THE WEALTH OF NATIONS

2S6

Prices of the Quarter of nine Bushels of the best or highest priced

Wheat

at

Windsor

Market, on Lady-Day and Michaelmas, from I5p5 to 1764, both inclusive; the Price of each Year being the Medium between the highest Prices of those

Two

Market-days.^^^

Years IS95,

150

,

1597

,

1598,

1599, 1600, 1601,

1602, 1603, 1604,

1605, 1606,

1607, 1608, 1609, 1610,

1611,

1612, 1614, 1615, 1616, 1617, 1618, 1619,

1620,

— — — — — — — — — — — — — — — — — — — — — — — — —

£. 2

d

.

Years

0 0

1622,

6

1623,

8

1624,

1621,

2

8

2

9 16

I

19

2

1625,

I

17

8

1626,

I

X4

10

1627,

4 4

1629,

I

9

1

IS

I

10

I

15

I

13 16

I

1630,

0

1632,

8

1633,

1634,

2

16

8

10

I

IS 18

0 10 8

2

2

4

2

8

8

I

2

I

I

18

8

2

0

4

2

8 6

8

IS 10

4 4

2 I

I

1628,

8 10

2

2

list

0

3

26)54

The

5.

1631,

163s, 1636,

£.

— — — — — — — — — — — — — — — —

I

5

.

10

2

18

2

12

2

8

2

12

2

9

I

16

I

8

2

2

2

IS

3

8

2

2

13 18

2

16

2

16

2

16

16)40

0

2

10

— —

d

.

4 8

0 0 0 4 0 0 0 8 0

4 0 0 0

— — 8

0

0

8

0^

I

of prices, but not the division into periods,

is

apparently copied

from Charles Smith (Tracts on the Corn Trade, 1766, pp. 97-102, cp. pp. 104), who, however, states that it had been previously published, p. 96.

43,

RENT OF land: CONCLUSION

Wheat per 'ears

— — — — —

1637, 1638,

1639. 1640, 1641, 1642,'!

f

1647, 1648, 1649, 1650,

1651, 1652, i 6S3 j

1654, 1655, 1656, 1657, 1658, 1659, 1660, 1661,

1662, 1663, 1664, :66s, 1666,

1667, 1668, 1669, 1670,

2

— — — — — — — — — — — — — — — — — — — — — — — — —

s

Wheat per quarter.

quarter.

d

.

13

.

0

Years Brought over,

17

4

2

4 4

10

8

1673.

2

8

1674,

0

0

0 0 0 0

2

8

0 0 0 0 0 0

3

13

8

1680,

4 4

S

1681,

0

0 0

3

16

8

1683,

2 2

0

i644.hg^||s| 1646,

£.

0

1671,

1672,

167s, 1676, 1677, 1678, 1679,

1682,

3

13

4

1684,

2

6

1685,

6

1686,

I

9 IS 6

0

1687,

I

13

1688,

2

3 6

4 0 8

1690,

I

2

1689,

3

5

3

6

0 0

1692,

2

16

6

1693,

3

10

1694,

1691,

3

14

2

17

0 0 0

2

0

6

1697,

169s, 1696,

2

9

4

1698,

I

16

1699,

I

16

2

0

0 0 0

2

4

4

2

I

8

14

10

Carry over, 79

257

1700,

— — — — — — — — — — — — — — — — — — — — — — — — — — — — —

£.

s

79

14

10

2

2

2

I

0 0

2

6

8

3

8

8 8

.

3

4

I

18

2

2

2

19

3

0

2

5

2

0 0 0 0 0

6

8

2

4

2

0

0 0 0

2

4

2

6

8

I

14

0

I

S

2

2

6

0 0

I

10

I

14 14 6

I

2

3

7

3

4

2

3

13 II

3

8

0 8 8

0

0 0 0 0

3

8

4

3

4

2

0

0 0

60)153

I

8

2

II

oi

THE WEALTE OF NATIONS

8

[

Wheat per Years 1701,

1702, 1703, 1704,

170S, 1706, 1707, 1708,

1709, 1710,

1711, 1712, 1713,

1714,

1715, 1716,

1717,

1718, 1719, 1720,

1721, 1722, 1723, 1724, 1725, 1726,

1727, 1728,

1729, 1730, 1731,

1732 ; 1733,

— — — — — — — — — — — — — — — — —

— — — — — — — — — — — — — — —

Years Brought over,

£.

s.

I

17

8

I

9 16

6

1734,

I

0

I 73

2

6

6

1736.

I

10

1737,

1738,

d

.

S.

I

6

0 0

I

8

6

1739,

2

I

6

1740,

3

18

6

1741,

3

18

0

1742,

2

14 6

0

1743,

2

4

1744.

2

II

0

I 74S,

2

10

1746,

2

3

2

8

2

5

4 0 0 8

1747 . 1748, 1749,

I

18

10

1730,

I

IS

1751,

I

17

0 0

I

17

6

1753,

I

16

0

I 7 S4,

I

14

8

1755 ,

I

17

0

1756,

2

8

6

1757,

2

6 2

0 0

1758,

2

2

14

6

1760,

2

6

10

1761,

I

16

6

1762,

I

12

10

1763,

I

6

8

1764,

69

8

8

184

Carryover,

Wheat per

quarter.

1752,

1759,

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6

BOOK Of

II

the Nature, Accumulation, and

Employment

of Stock

INTRODUCTION In that rude in

which there is no division of labour,

state of society in

which exchanges are seldom made, and in which every

man pro-

In the rude state of society

vides every thing for himself,

not necessary that any stock

it is

should be accumulated or stored up beforehand, in order to carry

on the business of the his is

own

industry his

society.

own

Every man endeavours to supply by

hungry, he goes to the forest to hunt; when his coat

and when his hut begins to go

to ruin,

first

is

worn

out,

large animal he kills:

he repairs

with the trees and the turf that are nearest

it,

as well as

he can,

it.

division of labour has once been thoroughly intro-

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 mens labour, which he purchases duced, the produce of a man’s

with the produce, or what

produce of his own. But as the produce of his sold.

A

is

this

own

the

same

thing, with the price of the

purchase cannot be

made till such time

labour has not only been completed, but

stock of goods of different kinds, therefore, must be stored

up somewhere the materials

sufficient to

and

unnecessary.

occasional wants as they occur. TOien he

he clothes himself with the skin of the

But when the

stock is

maintain him, and to supply him with

tools of his work,

these events can be brought about.

till

such time, at

least, as

both

A weaver cannot apply himself

entirely to his peculiar business, unless there is beforehand stored

up

somewhere, either in his own possession or in that of some other person, a stock sufficient to maintain him,

the materials and tools of his work,

till

and

to supply

him with

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.^ Lectures, p. i8i.

Division of labour

makes it necessary.

the wealth oe nations

260

Accumulation of

stock and division

of labour

advance together.

As the accumulation

of stoci 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

quantity of materials which the same

more accumulated. The ber of people can work up, comes

to

num-

increases in a great proportion as labour

be more and more subdivided; and as the operations of

each workman are gradually reduced to a greater degree of simplicity,

tating

a variety of new machines come to be invented for

facili-

and abridging those operations. As the division of labour

advances, therefore, in order to give constant employment to an

equal number of workmen, an equal stock of provisions, and a tools

than what would have been

necessary in a ruder state of things,

must be accumulated before-

greater stock of materials

and

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

Accumu-

of stock is previously necessary for carry-

improvement

powers of labour,

lation

ing on this great

causes the

so that accumulation naturally leads to this improvement.

same

in the productive

The

per-

quantity

son who employs his stock in maintaining labour, necessarily wishes

of indus-

to

try to

produce more.

employ

in such

it

a manner as to produce as great a quantity of

as possible. He endeavours, therefore, both to make amgng workmen the most proper distribution of employment, and to furnish them with the best machines which he can either invent or

work his

afford to purchase.

His

abilities in

both these respects are generally

in proportion to the extent of his stock, or to the

whom

it

number

of people

can employ. The quantity of industry, therefore, not only

which emsame quantity of

increases in every country with the increase of the stock

ploys

it,

but, in consequence of that increase, the

industry produces a

much

greater quantity of work.

Such are in general the efects of the increase of stock upon dustry and This

Book

treats of

the nature

of stock, the effects of its accumulation into capitals of different

and the

of stock,

the ef-

This book

its

accu-

in-

productive powers.

In the following book I have endeavoured to explain the nature

kinds,

fects of

its

is

effects of the different

employments

divided into five chapters. In the

of those capitals.

first

chapter, I have

endeavoured to show what are the different parts or branches into

mulation,

which the stock, either of an individual, or

and its

urally divides

itself.

of

a great

society, nat-

In the second, I have endeavoured to explain

different

and operation of money considered as a particular

employ-

the nature

ments.

branch of the general stock of the society. The stock which ^

Eds. I and 2 place the “only” here.

is

ac-

INTRODUCTION cumulated into a

capital,

may

either

261

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

A man

When the stock which a man possesses is no more than sufficient to

does not think of obtaining revenue

maintain him for a few days or a few weeks, he seldom thinks of de-

from a

ply

any revenue from

riving

and endeavours by

small this case, derived

stock,

He

consumes

his labour to acquire

place before

its

it.

it

be consumed

it

as sparingly as he can,

something which

altogether.

from his labour only. This

may sup-

His revenue

is,

in

the state of the

is

greater part of the labouring poor in all countries. but when he has more than

enough for

imme-

diate con-

sumption, he endeavours to derive a revenue from the rest,

But when he possesses stock the greater part of

consumption as

His

in.

it;

reserving only so

may maintain him

to derive

much

capital.

The

other

and which

is

is to

him

two

this revenue, is called his

first,

in that portion of his

from whatever source derived, as

it

gradually comes

and which are not yet

entirely

such as a stock of clothes, household furniture, and the

commonly

lating capital,

reserve for their

so as to yield a revenue or profit to

may

In one,

men

which

own immediate consumption.

There are two different ways in which a capital

First, it

consumed;

like.

or other, or all of these three articles, consists the stock

(i) circu-

whole

such things as had been purchased by either of

these in former years,

it

That

that which supplies his immediate consump-

consists either,

in; or, thirdly, in

using

come

parts.

stock which was originally reserved for this purpose; or, secondly, in his revenue,

either as

immediate

this revenue begins to

till

afford

a revenue from

for his

whole stock, therefore, is distinguished into

part which, he expects,

tion;

maintain him for

sufficient to

months or years, he naturally endeavours

its

may be employed

employer.

be employed in raising, manufacturing, or purchas-

them again with a profit. The capital emmanner yields no revenue or profit to its employer,

ing goods, and selling

ployed in this while

it

shape. till

he

it is

either remains in his possession, or continues in the

The goods

of the

merchant yield him no revenue or

same profit

money, and the money 5delds him as little till again exchanged for goods. His capital is continually going sells

them

for

from him in one shape, and returning to him in another, and 262

it is

DIVISION OF STOCK

263

by means of such circulation, or successive exchanges, that it can yield him any profit. Such capitals, therefore, may very prop-

only

erly be called circulating capitals.

Secondly,

it

may be employed

in the

improvement of land,

in the

purchase of useful machines and instruments of trade, or in such-

or (2) fixed capital.

like things as yield

a revenue or

without changing masters,

profit

may very prop-

or circulating any further. Such capitals, therefore, erly be called fixed capitals.

Different occupations require very different proportions between

Different

propor-

the fixed and circulating capitals employed in them.

tions of

The

capital of a merchant, for example,

He

ing capital.

turer ever,

how-

A master tay-

lor requires no other instruments of trade but a parcel of needles.

Those

of the master shoemaker are

more expensive. Those the shoemaker.

workmen, or it

by the

The

little,

a good deal above those

of

far greater part of the capital of all such

mas-

wages of

their

however,

ter artificers,

a little, though but a very

of the weaver rise

is

circulated, either in the

in the price of their materials,

and repaid with a prof-

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

which cannot be

forge, the slitt-mill, are instruments of trade

erected without a very great expence. In coal-works,

and mines of

every kind, the machinery necessary both for drawing out the

water and for other purposes,

That part

is

frequently

of the capital of the farmer

instruments of agriculture

is

more expensive.

still

which

is

employed

in the

is

employed

in the

a fixed; that which

wages and maintenance of his labouring servants, capital.

He

session,

and

makes a profit of the one by keeping of the other

his labouring cattle is

by parting with

it.

The

it

is

a circulating

in his

own

pos-

price or value of

a fixed capital in the same manner as that of

the instruments of husbandry: Their maintenance

is

a circulating

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 capital in the

profit

by

parting with them.

A

that, in a breeding country, is

flock of sheep or a herd of cattle

bought

and

circulat-

are re-

fixed in the instruments of his trade. This part,

very small in some, and very great in others.

fixed

ing capita]

be considered as such.

part of the capital of every master artificer or manufac-

must be is

altogether a circulat-

has occasion for no machines or instruments of

trade, unless his shop, or warehouse,

Some

is

in, neither for labour,

nor

quired in different

trades.

XHE WEALTH OF NATIONS

264

for sale, but in order to

and by

make

it is

made by

profit

is

and the

The whole value of Though it goes backwards

increase.

properly a fixed capital.

it

never changes

masters, and therefore does not properly circulate.

The

The stock of a so-

his profit, not

by

its sale,

but by

The farmer

its increase.

general stock of any country or society

of all its inhabitants or

is

price of the cattle, in the

and forwards between the ground and the granary,

makes

their milk,

made by The profcomes back with both its own

it; and it upon the whole

price of the wool, the milk,

the seed too

by

a circulating capital.

is

parting with

and the

their wool,

a fixed capital. The profit

their increase, is

keeping them. Their maintenance

profit,

by

a profit

is

the same with that

members, and therefore naturally divides

ciety is

itself into

the same

function or

way into (i)the portion reserved for

imme-

diate con-

sumption,

The

same three

the

divided in

which has a

portions, each of

distinct

office.

First, is that portion

which

is

reserved for immediate con-

sumption, and of which the characteristic

is

that

it

affords

no rev-

enue or profit. It consists in the stock of food, clothes, household

which have been purchased by

furniture, &c., ers,

their proper

consum-

but which are not yet entirely consumed. The whole stock of

mere dwelling houses too subsisting

make a house, that

part of this

if it is

portion.

any one time stock that

in the country,

is laid

out in a

to serve in the function of a capital, or to afford

owner.

its

ing to the revenue of

A its

tremely useful to him,

not of his revenue. If

any

dwelling-house, as such, contributes nothinhabitant; and though

it is

it is,

no doubt, ex-

as his clothes and household furniture

it is

are useful to him, which, however,

itself

at

The

to be the dwelling-house of the proprietor, ceases from

moment

revenue to

first

to

be

make a

let to

part of his expence, and

a tenant for rent, as the house

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. its it

proprietor,

Though a

house, therefore,

and thereby serve

may

yield a revenue to

in the function of

a capital to him,

cannot yield any to the public, nor serve in the function of a cap-

ital to it,

and the revenue of the whole body of the people can never

be in the smallest degree increased by furniture, in the

it.

Clothes,

same manner, sometimes

and household

and

yield a revenue,

thereby serve in the function of a capital to particular persons. In countries where masquerades are

common,

it is

a trade to

let

out

^“Ce n’est pas cette maison qui produit elle-mSme ces mille francs. Le loyer d’une maison n’est point pour la societe une augmentation de revenu, une creation de richesses nouveUes, il n’est au contraire qu’un mouvement, .

qu’un changement de main.”—Mercier de la Riviere, UOrdre naturel sentiel des Sociitis poUtiques,

PhysiocrateSf p. 487.

lamo

ed., 1767) vol.

ii.,

.

.

et es-

p. 123, or in Daire’s

DIVISION OF STOCK masquerade dresses

265

for a night. Upholsterers frequently let furni-

ture by the month or by the funerals by ihe day and by

year. Undertakers let the furniture of

Many

the week.

people

furnished

let

houses, and get a rent, not only for the use of the house, but for

The

that of the furniture.

revenue, however, which

is

derived from

such things, must always be ultimately drawn from some other

Of

source of revenue.

all

parts of the stock, either of an individual,

or of a society, reserved for immediate consumption, what

out in houses

is

A stock of

most slowly consumed.

clothes

is

laid

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

many

however, for

Though

centuries. is

more

immediate

distant,

of,

may

last

the period of their total consumption,

they are

consumption

still

as

as really

a stock reserved household

or

clothes

either

furniture.

The Second

of the three portions into which the general stock of

the society divides

itself, is

teristic is, that it affords

the fixed capital; of which the charac-

a revenue or profit without circulating or

changing masters. It consists chiefly of the four following First, of all useful cilitate

all

consists of

articles:

machines and instruments of trade which

fa-

(a) useful

machines,

and abridge labour:

Secondly, of

(2) the

feed capital, which

those profitable buildings which are the

who

means

of

them

for

them and pays that rent

for

procuring a revenue, not only to their proprietor

lets

(h) profitable

buildings,

a rent, but to the person

who

possesses

them; such as shops, warehouses, workhouses, farmhouses, with

different

from mere dwelling houses. They are a

of trade,

and may be considered

in the

same

all

These are very

their necessary buildings; stables, granaries, &c.

sort of instruments

light:

Thirdly, of the improvements of land, of what has been profit-

ably laid out in clearing, draining, enclosing, manuring, and reducing

it

into the condition

proved farm

may

most proper

for tillage

and

culture.

An

im-

(c)

im-

provements of land,

very justly be regarded in the same light as those

useful

machines which

means

of which,

facilitate

and abridge labour, and by

an equal circulating capital can afford a much

greater revenue to

its

employer.

An

improved farm

equally ad-

is

vantageous and more durable than any of those machines,

fre-

quently requiring no other repairs than the most profitable application of the farmer’s capital employed in cultivating

Fourthly, of the acquired and useful abilities of

members of the society. The by the maintenance of the acquirer during

the inhabi-

his education, study, or

apprenticeship, always costs a real expence, which realized, as

all

acquisition of such talents,

tants or

and

it:

it

is

a

capital fixed

were, in his person. Those talents, as they

make

and (d) acquir^ and useful abilities,

the wealth of nations

266

a part of his fortune, so do they likewise of that of the society to

may

which he belongs. The improved dexterity of a workman considered in the

which

facilitates

same

be

a machine or instrument of trade

light as

and abridges labour, and which, though

it

costs a

certain expence, repays that expence with a profit.^

and

The Third and

(3 )

the circu-

last of the three portions into

stock of the society naturally divides

itself, is

which the general

the circulating capi-

lating capital,

which

of which the characteristic

tal;

is,

that

circulating or changing masters. It

it

is

affords a revenue only

by

composed likewise of four

consists of

parts:

()

the

money,

() the stock of provisions

money by means

First, of the

of

which

all

the other three are

cir-

culated 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

in the pos-

brewer, &c. and from the sale of which they expect to derive a

session of

profit:

the

sellers,

Thirdly, of the materials, whether altogether rude, or more or (c) the

less

manufactured, of clothes, furniture and building, which are not

materials

yet

made up

of clothes, furniture,

into

the timber-merchants, the carpenters

drapers,

ings,

brick-makers, &c. Fourthly, and lastly, of the

(d)

completed

of those three shapes, but

pleted, but

work in

which

in the

is still

and not yet disposed

work which

of the

sumers; such as the finished work which

merchant

made

facturer.

and

joiners, the

made up and com-

is

hands of the merchant or manufac-

the hands

manu-

in

of or distributed to the proper con-

turer,

or

which remain

the hands of the growers, the manufacturers, the mercers, and

and build-

and

any

we

frequently find ready-

in the shops of the smith, the cabinet-maker, the goldsmith,

the jeweller, the china-merchant, &c. sists in this

The

circulating capital con-

manner, of the provisions, materials, and finished work

of all kinds that are in the

hands of

their respective dealers,

and of

money that is necessary for circulating and distributing them those who are finally to use, or to consume them.

the to

The last three parts of

Of these four parts

three, provisions, materials,

work, are, either annually, or in a longer or shorter period, regu-

withdrawn from

the circu-

larly

lating

in the stock reserved for

capital are

regularly

and finished

Every

fixed capital

it,

is

and placed

either in the fixed capital or

immediate consumption.

both originally derived from, and requires

by a

with-

to be continually supported

drawn from it

chines and instruments of trade are originally derived from a cir-

circulating capital All useful

ma-

culating capital, which furnishes the materials of which they are “

But

wages ® Ed.

in

I

bk

i

,

ch x

,

the remuneration of improved dexterity

reads “users and consumers” here

and eleven

lines

is

lower

treated as

DIVISION or STOCK

-^7

made, and the maintenance of the workmen who make them. They require too a capital of the same kind to keep them in constant

Evei> fixed capital is

repair.

No

fixed capital can yield

lating capital.

any revenue but by means of a circuThe most useful machines and instruments of trade

produce nothing without the circulating capital which affords the materials they are employed upon, and the maintenance of the

will

workmen who employ them. Land, however improved,

will yield

revenue without a circulating capital, which maintains the bourers

To

who

cultivate

and

may

and

is the.

circulating capitals. It

and lodges the people. Their

sole

end and purpose both of the stock which feeds, clothes,

is this

abundant or sparing supplies which those two

capitals

by

a cir-

culating capital,

and can-

be reserved for

riches or poverty depends

from and supported

no la-

collect its produce.

maintain and augment the stoi which

immediate consumption, fixed

de-

rived

upon the

can afford to

not yield

any revenue without

it.

The end of both

and

fixed

circulat-

the stock reserved for immediate consumption.

So great a part of the

drawn from

be placed in the other two branches of

in order to

it,

the general stock of the society; ual supplies, without which plies are principally

of mines,

visions

and of

and

ing capi-

circulating capital being continually with-

it

it

must

would soon cease to

drawn from three

fisheries.

in its turn require continexist.

These sup-

sources, the produce of land,

is

and by which are replaced the provisions, materials and finished work continually withdrawn from the circulating capi-

From mines

too

is

drawn what

augmenting that part of

it

is

necessary for maintaining and

which consists in money. For though, in

the ordinary course of business, this part necessarily withdrawn from

two branches

it,

is not, like

in order to

the other three,

be placed

of the general stock of the society,

like all other things,

other part of the

of pro-

afterwards wrought up into

finished work,

tal.

maintain and augment the

stock.

These afford continual supplies

materials, of which part

tal is to

be wasted and worn out at

it

last,

in the other

must, however,

The

cir-

culating capital is

kept up

by the produce of land,

mines,

and fisheries,

and sometimes

too be either lost or sent abroad, and must, therefore, require continual, though,

no doubt, much smaller

Land, mines, and

supplies.

fisheries, require all

lating capital to cultivate them:

and

both a fixed and a circu-

their

produce replaces with a

which both

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 exchange 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

re-

quire fixefl

and circulating capitals to

cultivate

them,

the wealth of nations

268

Other, are directly bartered for one another; because

pens that the farmer

sells his

corn and his

wool, to the very same person of clothes, furniture,

whom

and instruments

seldom hap-

it

cattle, his flax

and

his

he chuses to purchase the

He

which he wants.

of trade

sells, therefore, his rude

produce for money, with which he can pur-

chase, wherever

to

be had, the manufactured produce he has

Land even

replaces, in part at least, the capitals with

occasion for.

which

it is

and mines are

fisheries

which draws the

fish

cultivated. It

from the waters; and

is

the produce of land

the produce of the

it is

surface of the earth which extracts the minerals from its bowels. and,

The produce

when

their fer-

of land, mines,

fertility is equal, is

and

fisheries,

when

their natural

in proportion to the extent and proper applica-

tility is

employed about them.

equal,

tion of the capitals

yield pro-

equal and equally well applied,

it is in

When

the capitals are

proportion to their natural

duce proportion-

fertility.

In

ate to the capital

employed

adl

countries where there is tolerable security, every

man

of

common understanding will endeavour to employ whatever stock he can command, If it is

in procuring either present

in procuring present enjoyment,

employed

Where

it.

there is

reserved for immediate consumption. If

tolerable

future profit,

it

enjoyment or future prof-

must procure

it is

employed

a stock

it is

in procuring

by staying with him,

this profit either

security all is

stock

em-

ployed in one or other of the three

by going from him. In the one case it is a fixed, in the other it A man must be perfectly crazy who, where there is 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. or is

ways Butin

a circulating capital.

ally afraid of the violence of their superiors,

countries

and conceal a great part

where

hand

violence prevails

men

In those unfortunate countries, indeed, where

to carry with

they frequently bury

of their stock, in order to

them to some place

are continu-

have

it

always at

of safety, in case of their

being threatened with any of those disasters to which they con-

much

sider themselves as at all times exposed. This

stock is

mon

is

said to be

practice in Turkey, in Indostan, and, I believe, in

buried

and con-

governments of Asia. It seems to have been a

cealed

among our

a com-

most other

common

practice

ancestors during the violence of the feudal government.

Treasure-trove was in those times considered as no contemptible part of the revenue of the greatest sovereigns in Europe. It consist-

ed

in

such treasure as was found concealed in the earth, and to

which no particular person could prove any

right.

garded in those times as so important an object, that

This was it

re-

was always

considered as belonging to the sovereign, and neither to the finder

nor to the proprietor of the land, unless the right to

conveyed to the

latter

by an

it

had been

express clause in his charter. It was

DIVISION OF STOCK

269

put upon the same footing with gold and silver mines, which, without a special clause in the charter, were never supposed to be com-

prehended in the general grant of the lands, though mines of lead, copper, tin, and coal were, as things of smaller consequence.

CHAPTER OF

Prices are

divided

II

BRANCH OF THE GENERAL STOCK OF THE SOCIETY, OR OF THE EXPENCE OF MAINTAINING THE NATIONAL CAPITAL

MONEY CONSIDERED

AS A PARTICULAR

It has been shewn in the

Book, that the price of the greater

first

part of commodities resolves

itself

into three parts, of which one

into three parts,

pays the wages of the labour, another the

wages,

a third the rent of the land which had been employed

profits,

and rent,

and bringing them

profits of the stock,

in producing

to market: that there are, indeed,

modities of which the price

is

made up

of

and

some com-

two of those parts only,

the wages of labour, and the profits of stock: and a very few in

which

it

consists altogether in one, the

wages of labour: but that

the price of every commodity necessarily resolves one, or other, or all of these three parts

;

itself

every part of

it

into

some

which goes

neither to rent nor to wages, being necessarily profit to somebody.

and the whole annual produce is divided into the same three

Since this

the case,

it

has been observed, with regard to every

particular commodity, taken separately; to all the commodities

it

must be so with regard

which compose the whole annual produce of

the land and labour of every country, taken complexly. price or exchangeable value of that annual produce, itself into

parts;

is

the same three parts, and be parcelled out

different inhabitants of the country, either as the

The whole

must resolve

among

the

wages of their

labour, the profits of their stock, or the rent of their land. but we

may distinguish

But though the whole value and labour of every country

between

a revenue to

gross and

estate

net reve-

nue

we

may we

its different

is

of the annual produce of the land

thus divided

among and

constitutes

inhabitants; yet as in the rent of a private

distinguish between the gross rent

and the neat

rent, so

likewise in the revenue of all the inhabitants of

a great

country. Gross rent

is

the

whole

The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent^what remains free to the landlord,

sum paid

after deducting the expence of

by the

other necessary charges; or what, without hurting his estate, he can

management, of

270

repairs,

and

all

MONEY

271

afford to place in his stock reserved for immediate consumption, or to spend

upon

his table, equipage, the ornaments of his house

furniture, his private enjoyments is

and amusements. His

and

real wealth

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 exfirst,

their fixed; and, secondly, their cir-

culating capital; or what, without encroaching

upon

their capital,

they can place in their stock reserved for immediate consumption, or spend

upon

their subsistence, conveniences,

net rent

what is left free

to the

in proportion, not to his gross, but to his neat rent.

pence of maintaining;

farmer j

and amusements.

landloid.

Gross revenue is the whole annual produce* net reve-

nue what is left free

Their real wealth too

is in

proportion, not to their gross, but to

after de-

ducting

their fieat revenue.

The whole expence

of maintaining the fixed capital,

must

the main-

evi-

tenance

dently be excluded from the neat revenue of the society. Neither

of fixed

the materials necessary for supporting their useful machines and

and

circu-

lating

instruments of trade, their profitable buildings, &c. nor the produce

capital.

of the labour necessary for fashioning those materials into the

proper form, can ever make any part of

The price of that labour workmen so employed may it.

The

place the whole value of their wages in their stock reserved for im-

whole expence of main-

mediate consumption. But in other sorts of labour, both the price

taining

may

indeed

make a

and the produce go

part of

it;

as the

to this stock, the price to that of the

workmen,

capital

the produce to that of other people, whose subsistence, conveniencies,

the fixed

and amusements,

are

augmented by the labour of those

must be excluded,

workmen.

The

intention of the fixed capital is to increase the productive

powers of labour, or to enable the same number of labourers to per-

form a much greater quantity of work. In a farm where

all

the

necessary buildings, fences, drains, communications, &c. are in the

since the

only object of the

fixed capital is

to

increase

most perfect good

order, the

ing cattle will raise a

much

same number

of labourers

and labour-

greater produce, than in one of equal

extent and equally good ground, but not furnished with equal conveniencies. In manufactures the

same number

with the best machinery, will work up a

much

of hands, assisted

greater quantity of

goods than with more imperfect instruments of trade. The expence which is properly laid out upon a fixed capital of any kind, is always repaid with great profit, and increases the annual produce

much

by a

greater value than that of the support which such improve-

ments require. This support, however, tion of that produce.

still

requires a certain por-

A certain quantity of materials, and the labour

a certain number of workmen, bodi of which might have been immediately employed to augment the food, clothing and lodging, of

the pro-

ductive

powers of labour,

the wealth of nations

272

the subsistence and conveniencies of the society, are thus diverted

employment, highly advantageous indeed, but still different from this one. It is upon this account that all such improve-

to another

and any cheapening or

ments

same number of workmen to work with cheaper and simpler ma-

in mechanics, as enable the

simplifica-

perform an equal quantity of

tion is re-

chinery than had been usual before, are always regarded as advan-

garded as a good.

tageous to every society.

A

certain quantity of materials,

and the

number of workmen, which had before been employed in supporting a more complex and expensive machinery, can afterwards be applied to augment the quantity of work which that or any other machinery is useful only for performing. The unlabour of a certain

dertaker of some great manufactory

who employs a thousand

a-year in the maintenance of his machinery,

expence to

five

if

he can reduce

this

hundred, will naturally ^ employ the other five hun-

dred 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

forming, will naturally be augmented,

was useful only

and with

it all

for per-

the advan-

tage and conveniency which the society can derive from that work.

The cost of main-

The expence

may

of maintaining the fixed capital in a great country,

very properly be compared to that of repairs in a private

taining

The expence

of repairs

may frequently be necessary for sup-

the fixed

estate.

capital is

porting the produce of the estate, and consequently both the gross

like the

and the neat rent

cost of

repairs

an

on

estate,

however,

it

of the landlord.

When by a more proper direction,

can be diminished without occasioning any diminution

of produce, the gross rent remains at least the

the neat rent

is

same as before, and

necessarily augmented.

But though the whole expence

but the expenceof maintaining the

not the same case with that of maintaining the circulating capital.

last three

Of the four parts of which

parts of

the circu-

of maintaining the fixed capital is

thus necessarily excluded from the neat revenue of the society,

provisions, materials,

and

this latter capital is

it is

composed, money,

finished work, the three last,

it

has

al-

lating

ready been observed, are regularly withdrawn from

capital is

either in the fixed capital of the society, or in their stock reserved

not to be deducted,

for

it,

and placed

immediate consumption. Whatever portion of those consumable is not employed in maintaining the former, goes all to the

goods

and makes a part of the neat revenue of the society. The maintenance of those three parts of the circulating capital, therelatter,

withdraws no portion of the annual produce from the neat revenue of the society, besides what is necessary for maintaining fore,

the fixed capital. There seems no reason whatever for supposing that “natural’* action.

this is necessarily the

MONEY The

circulating capital of

a society

273 is in this

from that of an individual. That of an individual

respect different is

totally exclud-

ed from making any part of his neat revenue, which must consist

But though the

altogether in his profits.

individual it is

makes a part

circulating capital of every

of that of the society to

whidi he belongs,

not upon that account totally excluded from making a part

likewise of their neat revenue.

Though

the whole goods in a mer-

must by no means be placed

chant’s shop

for immediate consumption, they

may in

in his

own stock

the circulating capital of

the society being different in this

respect

from that of an in-

reserved

dividual.

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 society, of

capital of

which the maintenance can occasion any diminution

a in

their neat revenue.

The

fixed capital,

consists in

The maintenance of the money

and that part of the

money, so

circulating capital

which

alone

must be far as they affect the revenue of the society,

deducted.

bear a very great resemblance to one another. First, as those

certain expence,

machines and instruments of trade, &c. require a

first to

erect them,

and afterwards to support them,

both which expences, though they make a part of the gross, are deductions from the neat revenue of the society; so the stock of

money which pence,

first

circulates in

to collect

it,

expences, though they

any country must require a

and afterwards to support

make a part

it,

quantity of very valuable materials, gold and

society.

silver,

sembles the fixed capital,

since

certain ex-

both which

(i) the

same

maintenance of

A certain

the stock

of the gross, are, in the

manner, deductions from the neat revenue of the

The money re-

and of very

of

money

part of the gross

is

curious labour, instead of augmenting the stock reserved for im-

mediate consumption, the subsistence, conveniencies, and amuse-

ments of individuals,

is

employed in supporting that great but ex-

but not of the net revenue.

pensive instrument of commerce, by means of which every individual in the society has his subsistence, conveniencies, and amuse-

ments, regularly distributed to him in their proper proportion. Secondly, as the machines and instruments of trade, &c. which

compose the

fixed capital either of

an mdividual or of a

society,

make no part either of the gross or of the neat revenue of either; 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 circulation is altogether In this paragraph the capital or stock of goods is confused with the goods The goods of which the stock consists may become revenue, but the stock itself cannot. The maintenance of a stock, even of perishable and consumable goods, does form a charge on the labour of the society ®

themselves.

and

(2)

the

money itself

forms no part of the net revenue.

THE WEALTH OF NATIONS

274 different

from the goods which are circulated by means of

revenue of the society consists altogether in those goods,

it.

The

and not

in the wheel which circulates them. In computing either the gross or

the neat revenue of any society,

we must always, from

their

whole

annual circulation of money and goods, deduct the whole value of the money, of which not a single farthing can ever

make any

part

of either.^ only appears to

It is the

It

do so from the ambiguity of lan-

guage,

sums of money being often used to indi-

cate the

goods purchasable as

well as

the coins

sition

ambiguity of language only which can

appear either doubtful or paradoxical.

plained and understood,

it is

make

When

this

propo-

properly ex-

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 reference 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 computed at eighteen millions, we mean only to express the amount of the metal pieces, which some writers have computed, or rather have supposed to

cir-

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 culate in that country.

them-

the value of the goods which he can annually purchase or consume.

selves.

We mean commonly to living, or the

not add

is

or ought to be his

way

of

which he can with propriety indulge himself.

When, by any particular sum of money, we mean not only to examount of the metal pieces of which it is composed, but

press the

both to-

to include in its signification

gether.

what

quantity and quality of the necessaries and conven-

iencies of life in

We must

ascertain

some obscure reference

to the goods

which can be had in exchange for them, the wealth or revenue which it

in this case denotes, is equal only to

are thus intimated to the latter

one of the two values which

somewhat ambiguously by the same word, and

more properly than

to the former, to the

money’s

worth more properly than to the money. If

a man

Thus

if

a guinea be the weekly pension of a particular person, he

has a guinea a

can in the course of the week purchase with

week he

subsistence, conveniencies,

enjoys a

quantity

guinea’s

revenue. His weekly revenue

worth

is

subast-

and

a certain quantity of this

great or small, so are his real riches, his real weekly

of

guinea,

it

and amusements. In proportion as

to

is

certainly not equal both to the

what can be purchased with

it,

but only to one or

*If it were not for the use of the old-fashioned term “circulation” instead of the newer “produce,” the explanation which follows would be unnecessary.

No

one could be suspected of a desire to add

produce.

all

the

money

to the annual

MONEY

275

Other of those two equal values; and to the latter more properly

ence, &c.

than to the former, to the guinea’s worth rather than to the guinea.

was paid

If the pension of such a person in

a weekly

bill for

to him, not in gold, but

a guinea, his revenue surely would not so prop-

erly consist in the piece of paper, as in

what he could get

for

it.

A

saries

may be considered as a bill for a certain quantity of necesand conveniences upon all the tradesmen in the neighbour-

hood.

The revenue

guinea

of the person to

whom

it is

what he can exchange

ing, it

would, like a

bill

it for.

If it could

nue is that subsistence,

&c.

paid, does not so

properly consist in the piece of gold, as in what he can get for or in

and his real reve-

it,

be exchanged for noth-

upon a bankrupt, be

of

no more value than

all

the different inhab-

the most useless piece of paper.

Though

the weekly or yearly revenue of

any country,

itants of

in the

same manner, may

be,

and

in reality

The same is

true of

all

frequently real

is

paid to them in money, their real riches, however, the

weekly or yearly revenue

always be great or small

of all of

them taken

together,

in proportion to the quantity of

able goods which they can

all of

them purchase with

must

consum-

this

the in-

habitants of a country.

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

the metal pieces which are annually paid to him,

amount

it is

of those pieces regulates the extent of his

by

because the

power of pur-

chasing, 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,

But vidual,

if this is sufficiently it is still

and not

in the pieces

which convey

more so with regard to a

society.

and best expression

of its value. society,

annually paid to an

is

often

individual

upon that account the shortest But the amount of the metal pieces

precisely equal to his revenue, and

is

can never be equal to the revenue of

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 all its

which annually less

But the power

any country, must always be of much pensions annually paid with them. money whole

circulate in

value than the

of purchasing, or

the goods which can successively

be bought with the whole of those money pensions as they are successively paid, must always be precisely of the same value with *

Ed.

I

does not contain

“or.’

The coins

of

The amount

the metal pieces which are annually paid to an individual,

which circulate in a

it.

evident even with regard to an indi-

often

equal his revenue,

but the stock of coin in a society

is

never equal to its

whole

revenue.

the wealth of nations

276

those pensions; as

sons to sist in

to

its

whom

must likewise be the revenue

of the different per-

they are paid. That revenue, therefore, cannot con-

those metal pieces, of which the

value, but in the

power

successively be bought with

amount

is

so

much

of purchasing, in the goods

them as they

circulate

inferior

which can

from hand to

hand.

Money is

Money,

therefore, the great wheel of circulation, the great in-

therefore

no part of the reve-

nue of the

strument of commerce, like it

all

other instruments of trade, though

makes a part and a very valuable part

makes no belongs; and though

of the capital,

part of the revenue of the society to which

it

society.

the metal pieces of which

it is

composed, in the course of their an-

nual circulation, distribute to every ly belongs to him, they

Every the cost

of main-

part of that revenue.

Thirdly, and lastly, the machines and instruments of trade, &c.

(3 )

saving in

man the revenue which proper-

make themselves no

which compose the fixed

capital,

bear this further resemblance to

that part of the circulating capital which consists in money; that

as every saving in the expence of erecting and supporting those

taining

the stock of is

money

an im-

provement.

machines, which does not diminish the productive powers of labour,

an improvement of the neat revenue of the society; so every saving in the expence of collecting and supporting that part of the ciris

culating capital which consists in

exactly the

and

it

an improvement of

has partly too been explained

what manner every saving

the fixed capital ciety.

is

same kind.

It is sufficiently obvious,

already, in

money,

in the expence of supporting

an improvement of the neat revenue of the soThe whole capital of the undertaker of every work is neces-

sarily divided

is

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 in-

dustry into motion. Every saving, therefore, in the expence of maintaining the fixed capital, which does not diminish the productive powers of labour, must increase the fund which puts industry into motion, and consequently the annual produce of land and labour, the real revenue of every society.

The sub-

The

substitution of paper in the

room

stitution

of paper

replaces a very expensive instrument of

for gold

less costly,

money is an improvement.

and

money, commerce with one much of gold

silver

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,

may therefore

require

some further

explication.

and

MONEY

277

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

When

for this purpose.

notes are the best sort of

the people of any particular country have such confidence

in the fortune, probity,

Bank

paper

money.

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 promis-

sory notes, to the extent, we shall suppose, of a hundred thousand

pounds.

As those notes

pay him the same This interest

all

the purposes of money, his debtors

interesj: as if

he had lent them so much money.

serve

Though some of those notes are continually coming back upon him for payment, part of them continue to circulate for months and years together. Though he has is

the source of his gain.

generally in circulation, therefore, notes to the extent of a hundred

thousand pounds, twenty thousand pounds frequently, be

mands.

By

a

sufficient provision for

this operation, therefore,

in gold

and

silver

may,

answering occasional de-

twenty thousand pounds in

When a banker lends out

£100,000 in notes and keeps in

£20,000 in gold

and silver. £80,000 in gold

and silver is

gold and silver perform

all

the functions which a hundred thousand

could otherwise have performed. the

same quantity

The same exchanges may be made,

of consumable goods

tributed to their proper consumers, notes, to the value of a

may be

by means

circulated

and

hand

only

spared

from the circula-

tion:

dis-

of his promissory

hundred thousand pounds, as by an equal

value of gold and silver money. Eighty thousand pounds of gold

and

silver, therefore, can, in this

culation of the country; and

if

manner, be spared from the different operations of the

kind should, at the same time, be carried on by

banks and bankers, the whole circulation with a

fifth

have been

some

different

part only of the gold and silver which would otherwise

and if

for example, that the

whole circulating money

sum

whole annual produce of

some time

being then sufficient for circulating the

their land

thereafter, different

and

many bankers

particular country amounted, at a particular time, to one

million sterling, that

that

many

thus be conducted

requisite.

Let us suppose, of

may

cir-

same

labour. Let us suppose too,

banks and bankers issued prom-

issory notes, payable to the bearer, to the extent of one million, re-

do the same, fourfifths of

the gold

and

silver

previous-

serving in their different coffers two hundred thousand pounds for

ly circu-

answering occasional demands. There would remain, therefore,

lating

circulation, eight hundred thousand pounds

in gold

and

silver,

in

and

a million of bank notes, or eighteen hundred thousand pounds

maybe sent

of

abroad,

the wealth of nations

27S

paper and money together. But the annual produce of the land and labour of the country had before required only one million to culate

and distribute

it

to its proper consumers,

cir-

and that annual

produce cannot be immediately augmented by those operations of

One million, therefore, will be sufficient to circulate it after them. The goods to be bought and sold being precisely the same as before, the same quantity of money will be sufficient for buying and banking.

The channel

them.

selling

an expression,

sufficient to

poured into

overflow.

One

I

may be

allowed such

it

beyond

million eight

that channel. Whatever, there-

fill

this

sum, cannot run

in

it,

but must

hundred thousand pounds are poured

Eight hundred thousand pounds, therefore, must overflow,

into

it.

that

sum

being over and above what can be employed in the

culation of the country.

home,

if

remain precisely the same as before. One million

will

we have supposed fore, is

of circulation,

it is

But though

this

cir-

sum cannot be employed at

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

which payment of in

it

can be exacted by law,

common payments. Gold and

eight hundred thousand nel of

home

and from the country in

it,

pounds

circulation will

it will

will

remain

changed for goods,

that will

its

we must not imagine that it is proprietors make a present of

exchange

it

for foreign

amount of

with a million of paper,

But though so great a quantity of gold and abroad,

the

be sent abroad, and the chanfilled

instead of the million of those metals which filled

and ex-

not be received

silver, therefore, to

it

before.

silver is thus sent

sent abroad for nothing, or it

to foreign nations.

They

goods of some kind or another, in order

to supply the consumption either of

some other foreign country, or

of their own. either to

they employ

If

in purchasing goods in one foreign country in

it

supply the

consump-

order to supply the consumption of another, or in what is called the

tion of

carrying trade, whatever profit they

another

neat revenue of their

own country.

country, in which

carrying on a

case the

by

dition to

trade; domestic business being

this

new

If

transacted

trade.

they employ

it

in purchasing foreign goods for

the net re-

tion,

venue of the coun-

consumed by

try,

wines, foreign silks, &c.; or, secondly, they

they

may

either, first, idle

people

tain

home consump-

purchase such goods as are likely to be

who produce

tional stock of materials, tools, or to sup-

now

paper, and the gold and silver being converted into a fund for

profit will

be an ad-

new

make will be an addition to the It is like a new fund, created for

nothing, such as foreign

may

purchase an addi-

and provisions, in order to main-

and employ an additional number

of industrious people,

who

HONEY

279

re-produce, with a profit, the value of their annual consumption.

So

far as

it is

employed

in the first way,

it

promotes prodigality,

and consumption without increasing production, establishing any permanent fund for supporting that expence,

ply

home

consumption (i)

increases expence

of lux-

or

uries, (2)

and

is

So

far as

employed

it is

and though

try;

of materi-

in every respect hurtful to the society. in the

als,

second way,

it

promotes indus-

increases the consumption of the society,

it

it

pro-

vides a permanent fund for supporting that consumption, the people

who consume

their

re-producing, with a profit, the whole value of

annual consumption. The gross revenue of the society, the

annual produce of their land and labour,

is

value which the labour of those

workmen adds

upon which they

and

are employed;

by

increased

the whole

to the materials

their neat revenue

remains of this value, after deducting what

is

by what

necessary for sup-

porting the tools and instruments of their trade.

That the greater part

of the gold

abroad by those operations foreign goods for

and

silver

of banking, is

home consumption,

is

which, being forced in

purchasing

and must be employed

in

purchasing those of this second kind, seems not only probable but

men may sometimes

increase their expence very considerably though their revenue does

not increase at

all,

we may be assured

that no class or order of

ever does so; because, though the principles of

men

common prudence

do not always govern the conduct of every individual, they always influence that of the majority of every class or order.

enue of

But the rev-

idle people, considered as a class or order, cannot, in the

smallest degree, be increased

by

visions

wherewith industrious

people are

maintained

and employed If to supply luxuries,

employed

almost unavoidable. Though some particular

tools

and pro-

those operations of banking. Their

pro-

digality

and consumption are increased; to supply mate-

if

rials, &c.,

a permanent fund for supporting con-

sumption provided is

expence in general, therefore, cannot be much increased by them,

though that of a few individuals among them may, and sometimes

The demand

is.

in reality

The

of idle people, therefore, for foreign

the gold

goods, being the same, or very nearly the same, as before, a very

and

small part of the money, which being forced abroad by those opera-

sent

tions of banking,

consumption,

is

great-

er part of

silver

abroad

employed in purchasing foreign goods for home

purchases

be employed in purchasing those for their

materials,

is likely to

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

&c.

use.

which consist in provisions, materials, and finished work: the other, which consists in money, and which serves only to circulate those three, must always be deducted. In order to those parts of

it

only,

put industry into motion, three things are requisite; materials to

work upon,

tools to

work

with,

and the wages or recompence

for the

The quantity of in-

dustry

which the circulat-

ing capital

can employ is deter-

XHE WEALTH OF NATIONS

280

mined by the provisions,

ma-

terials,

and finished

work, and not at all

by the quantity of money.

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 work-

man are commonly paid to him in money, his real revenue, like of all other

men,

consists, not in the

money, but

in the

that

money’s

worth; not in the metal pieces, but in what can be got for them.

which any capital can employ, must, number of workmen whom it can supply with materials, tools, and a maintenance suitable to the nature 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

evidently, be equal to the

the quantity of industry which the whole capital can employ, is certainly not equal both to the

materials, tools,

money which

purchases,

and

and maintenance, which are purchased with

to the

but

it;

only to one or other of those two values, and to the latter more properly than to the former.

The substitution

of paper

^en paper is substituted in the room of gold and silver money, the quantity of the materials, tools,

and maintenance, which the

may be increased by the whole

for gold

whole circulating capital can supply,

and silver

value of gold and silver which used to be employed in purchasing

increases

the matetools,

them.

The whole

tribution, is

rials,

and

value of the great wheel of circulation and dis-

added to the goods which are circulated and

uted by means of

it.

distrib-

The operation, in some measure, resembles that

maintenance at

of the undertaker of

the ex-

improvement in mechanics, takes down his old machinery, and adds

pence of the gold

and silver money.

The

some great work, who,

the difference between

its

price

and that

in consequence of

new

of the

some

to his circulat-

ing capital, to the fund from which he furnishes materials

and

wages to his workmen.®

What is

the proportion which the circulating

money of any coun-

quantity of money

try bears to the whole value of the annual produce circulated

bears a

means

small pro-

portion to

of

it, it is,

computed by

different authors at a fifth, at

the whole

and at a thirtieth part

produce,

portion which the circulating

but a

the annual produce, as but a part,

large

one

by

perhaps, impossible to determine. It has been

of that value.®

a tenth, at a twentieth,

But how small soever the pro-

money may bear to the whole value and frequently but a small

to that

of that produce, is ever destined for the maintenance of industry,

part des-

must always bear a very considerable proportion

tined to

maintain industry.

therefore,

by

® ®

quantity,

it

When,

the substitution of paper, the gold and silver neces-

sary for circulation

mer

to that part.

of

part,

if

is

reduced

to,

perhaps, a fifth part of the for-

the value of only the greater part of the other four-

Above, pp. 271, 272.

Petty’s estimate in Verbum Sapienti is £40,000,000 for the income and £6,000,000 for the coin. Gregory King’s estimate is £43,500,000 for the income and no less than £11,500,000 for the coin, in Geo. Chalmers, Estimate, 1802, pp. 423, 427.

MONEY fifths

281

be added to the funds which are destined for the maintenance it must make a very considerable addition to the quan-

of industry,

tity of that industry, and, consequently, 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

An operation of

kind has been

this

banking companies in

in almost every considerable town,

some country villages.'^ The

effects of it

have been precisely those

by means

carried

is

almost entirely car-

out in Scotland

of the paper of those different

banking companies,

with ex-

above described. The business of the country ried on

and even

with which purchases and payments of

all

kinds are commonly

made. Silver very seldom appears except in the change of a twenty shillings bank note, and gold still seldomer. But though the cdnduct of all those different companies has not been unexceptionable,

has accordingly required an act of parliament to regulate

it;

cellent effects.

and the

country,^ notwithstanding, has evidently derived great benefit from their trade. I

have heard

it

Glasgow, doubled in about

asserted, that the trade of the city of 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

burgh, of which the one, called

by Bank, by

lished

two public banks at Edin-

The Bank

royal charter in 1727.®

was estab-

of Scotland,

act of parliament in 1695; the other, called

Whether the

The Royal

trade, either of Scot-

land in general, or of the city of Glasgow in particular, has really increased in so great a proportion, during so short a period, I do not

pretend to know. If either of them has increased in it

seems

to be

an

effect too great to

be accounted

this proportion,

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, can-

not be doubted.

The

value of the silver

fore the union, in

money which

circulated in Scotland be-

1707, and which, immediately after

it,

was

brought into the bank of Scotland in order to be re-coined, amounted to 411,117/. los. gd. gold coin; but

it

sterling.

No

account has been got of the

appears from the ancient accounts of the mint of

Scotland, that the value of the gold annually coined somewhat ex-

ceeded that of the this occasion,

silver

There were a good many people too upon

who, from a diffidence of repayment, did not bring

’'Below, p. 292.

®

Misprinted “contrary” in ed.

"^Adam Anderson, Commerce^ a.d. 1695. See Ruddiman’s Preface to Anderson’s Diplomata, &c. See above, p. 213, note.

5.

Scotiae.

Pp. 84, 85

There was at the

Union at least a million sterling of

gold and silver

money, and now there

is

the wealth of nations

282 not half a million.

their silver into the

bank of Scotland: and there was,

English coin, which was not called

and silver,

therefore,

in.^^

besides,

The whole value

some

of the gold

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

bank of Scotland, which had then no rival, was seems to have made but a very small part of the

the circulation of the considerable,

it

whole. In the present times the whole circulation of Scotland can-

not be estimated at less than two millions, of which that part which consists in gold

a

million.

and

silver,

But though the

most probably, does not amount to half circulating gold

and

silver of

have suffered so great a diminution during this period,

Scotland

its real rich-

and prosperity do not appear to have suffered any. Its agriculture, manufactures, and trade, on the contrary, the annual produce es

of its land

Notes are ordinarily

issued

by

discounting

bills,

and labour, have evidently been augmented.

by discounting bills of exchange, that is, by admoney 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 payment of the bill, when it becomes due, replaces to the bank the value of what had been advanced, together with a clear profit of the interest. The banker who advances It

is

chiefly

vancing

to the merchant

whose

own promissory

notes, has the advantage of being able to discount

to

bill

he discounts, not gold and

silver,

but his

a greater amount by the whole value of his promissory notes,

which he finds by experience, are commonly in circulation. thereby enabled to larger but the Scotch banks invented the system of cadi accounts,

make

his clear gain of interest

He

is

on so much a

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 trade,

had they confined

little

their business to the discounting of bills of

They invented, therefore, another method of issuing their promissory notes; by granting, what they called, cash accounts, that is by giving credit to the extent of a certain sum (two or three exchange.

thousand pounds, for example), to any individual who could procure two persons of undoubted credit and good landed estate to

become surety to

for him, that whatever money should be advanced him, within the sum for which the credit had been given, should

“The folly of a few misers or the fear that people might have of losing money, or various other dangers and accidents, prevented very many of the old Scots coins from being brought in,” op. cit., p. 175. Ruddiman in a note, op. cit., p. 231, says: “The English coin was also ordained to be called their

in,”

but does not include

it

in his estimate of not less than £900,000, p. 176.

MONEY

283

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 re-pa5mient are, so far as I

know, peculiar to them, and have, perhaps, been the principal cause, both of the great trade of those companies, fit

which the country has received from

Whoever has a

and of the bene-

it.

credit of this kind with one of those companies,

and borrows a thousand pounds upon

it, for example, may repay 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

this

in, till

which enable them to issue

notes readily,

the whole be in this manner repaid. All merchants, 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

payments, and by encouraging influence to do the same. to

them

for

readily receiving their notes in all all

those with

The banks, when

money, generally advance

it

whom they have any

their

to

customers apply

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 landlords 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 may 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

burgh,

two merchants, one

who employ

in

London, and the other in Edin-

equal stocks in the same branch of trade, the

Edinburgh merchant can, without imprudence, carry on a greater

employment to a greater number of people than the merchant. The London merchant must always keep by him London a considerable sum of money, either in his own coffers, or in those trade,

and

give

of his banker,

who

gives

him no

interest for

the demands continually coming upon

which he purchases upon

credit.

it,

in order to

answer

him for payment of the goods

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 suppose that he generally disposes of his whole stock

and make it

posable

for every

merchant to carry

on a greater

trade than

he otherwise could.

the wealth of nations

284

upon hand,

upon hand,

or of goods to the value of his whole stock

once in the year. ployed, he must

By

sell

sum unem-

being obliged to keep so great a

in a year five

hundred pounds worth

than he might otherwise have done. His annual

profits

less

goods

must be

less

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 merchant in Edinburgh, on the other hand, keeps no money unemployed for answering such occasional demands. When they actually come upon by

that he could have

all

him, h^

satisfies

them from

gradually replaces the

his cash account with the bank,

sum borrowed with

which comes in from the occasional

same

stock, therefore,

in his

money

the

sales of his goods.

he can, without imprudence, have

and

or paper

With

the

at all times

warehouse a larger quantity of goods than the London mer-

and can thereby both make a greater profit himself, and 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. chant;

give constant

The

The

Scotch

banks

exchange,

facility of discounting bills of

it

may

be thought

indeed, gives the English merchants a conveniency equivalent to

can of

the cash accounts of the Scotch merchants. But die Scotch mer-

course

chants,

must be remembered, can discount

it

their bills of

exchange

discount bills

when

required.

as easily as the English merchants;

The whole paper money

The whole of the

and have,

besides, the addi-

tional conveniency of their cash accounts.

in

of every kind

which can easily circulate

any country never can exceed the value

of the gold

and

silver, of

paper

money

which

can never exceed the gold

posed the same) would circulate there,

and silver which would have been

current in Scotland, the whole of that currency which can easily

required in its ab-

If

it

commerce being supif there was no paper money.

supplies the place, or which (the

twenty

shilling notes, for

example, are the lowest paper

circulate there cannot exceed the

would be necessary

sum

for transacting the

of gold

and

silver

money which

annual exchanges of twenty

and upwards usually transacted within that counShould the circulating paper at any time exceed that sum, as

shillings value try.

sence.

the excess could neither be sent abroad nor be employed in the cir-

must immediately return upon the banks gold and silver. Many people would immediate-

culation of the country, to

be exchanged

for

ly perceive that they

it

had more

for transacting their business at

of this paper than

was necessary

home, and as they could not send

abroad, they would immediately

it

demand payment of 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

MONEY they could find none while

would immediately, whole extent of

285

remained in the shape of paper. There

it

therefore, be

a run upon the banks to the

this superfluous paper, and, if

they shewed any backwardness in payment, to a much greater extent; the alarm, which this would occasion, necessarily increasing the run.

difficulty or

Over and above the expences which are common of trade

to every branch

such as the expence of house-rent, the wages of servants,

;

clerks, accountants, &c.; the expences peculiar to a

two

chiefly in

articles: First, in the

in its coffers, for

of its notes,

in the

as they are emptied

A banking

expence of keeping at

consist

all

times

answering the occasional demands of the holders

a large sum

And, secondly,

bank

of

money, of which

it

loses the interest:

expence of replenishing those coffers as fast

by answering such

company, which

The peculiar ex-

penses of

a bank are (i) the keeping

and

(2)

the replenishing of a stock

occasional demands.

of

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 increase issues

money

with

which to repay notes.

the quantity of gold and silver, which they keep at all times in their coffers, not only in proportion to this excessive increase of

their circulation, but in

turning upon them their quantity.

a much greater proportion;

much

faster

their notes re-

than in proportion to the excess of

Such a company, therefore, ought to increase the

A bank which issues too

much paper will

much inexpence, not only in proportion to this forced

first article of their

increase of their business, but in a

much

The 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 uncoffers of such

interrupted exertion of expence in order to replenish them. too,

which

is

comes

in the circulation of the country.

which

is

over and above what can be

and is therefore over and above what But as that coin will not be allowed to

in that circulation,

can be employed in lie idle, it

employed

in place of a paper

employed

coin

thus continually drawn in such large quantities from

their coffers, cannot be It

The

it

too.

must, in one shape or another, be sent abroad, in order to

find that profitable

employment which

this continual exportation of gold

and

it

cannot find at home; and

silver,

by enhancing

the dif-

must necessarily enhance still further the expence of the bank, in finding new gold and silver in order to replenish those coffers, which empty themselves so very rapidly. Such a company, ficulty,

therefore, must, in proportion to this forced increase of their business, increase the second article of their expence

still

more than the

first.

Let us suppose that

all

crease

both the

greater proportion.

the paper of a particular bank, which the

first

and the second expense,

XHE WEALTH OF NATIONS

286 as

may be

shown by an example.

circulation of the country can easily absorb

and employ, amounts

exactly to forty thousand pounds; and that for answering occasional

demands, this bank

obliged to keep at

is

thousand pounds in gold and

fers ten

silver.

all

times in

Should

this

cof-

its

bank

at-

tempt to circulate forty-four thousand pounds, the four thousand pounds which are over and above what the circulation can easily absorb and employ, will return upon

it

almost as fast as they are

issued. For answering occasional demands, therefore, this bank

ought to keep at

times in

all

its coffers,

not ten thousand pounds

only, but fourteen thousand pounds. It will thus gain nothing interest of the four will lose the

whole expence of continually collecting four thousand

pounds in gold and coffers as fast as

Banks have

Had

thousand pounds excessive circulation;

by the and it

silver,

which

will

be continually going out of

its

they are brought into them.

every particular banking company always understood and

attended to

its

own

particular interest, the circulation never could

sometimes not un-

have been overstocked with paper money. But every particular

derstood

banking company has not always understood or attended to

this,

particular interest,

and the

its

own

been over-

circulation has frequently

stocked with paper money. eg., the

Bank of England,

By issuing too

great a quantity of paper, of which the excess was

continually returning, in order to be exchanged for gold

the

bank

of

England was

for

many

and

gold to the extent of between eight hundred thousand pounds

a year; or

million

silver,

years together obliged to coin

at an average, about eight

and a

hundred and

fifty

thousand pounds.^^ For this great coinage the bank (in consequence of the worn and degraded state into which the gold coin had fallen

a few years ago) was frequently obliged to purchase gold bul-

lion at the high price of four

issued in coin at 3/. i^s.

io|

pounds an ounce, which d.

an ounce, losing in

it

this

soon after

manner be-

tween 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 expence of the coinage, this liberality of

government did not prevent altogether the expence of

the bank.

and the Scotch

The Scotch banks, were

all

for

^From

an excess of the same kind, employ constantly agents at London to collect them, at an expence which was seldom below one and a

obliged to

banks.

money

in consequence of

1766 to 1772 inclusive the coinage averaged about £810,000 per an-

num. The amount for “ten years together” is stated below, pp 516, 521, to have been upwards of £800,000 a year, though the average for the ten years 1763-1772 was only £760,000. But the inclusion of the large coinage of i 773 ^^22, £1,317,645, would raise these averages considerably. See the figures at the end of each year in Macpherson, Anmls of Commerce. >

MONEY half or

insured

287

two per

by

cent. This money was sent down by the waggon, and the carriers at an additional expence 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 corres-

pondents afterwards drew upon them for the payment of this sum, together with the interest and a 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 journies: the debtor bank, paying always the interest

and commission upon the whole accumulated 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 or by the Scotch banks, in exchange for that part of which was over and above what could be employed in

of England, their

paper

the circula-

and above what could be 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 in the shape of coin, down. At home, and while they remained 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 England, 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 extion of the country, being likewise over

employed

in that circulation,

“ Misprinted “remain”

in ed. 5.

the wealth oe nations

288

pence of

The bank

greater.

own

this great

annual coinage became every year greater and

of England,

it is

to be observed,

by supplying

its

whole king-

with coin,

is

indirectly obliged to supply the

dom, into which coin

is

continually flowing from those coffers in a

coffers

Whatever coin therefore was wanted to supexcessive circulation both of Scotch and English papei

great variety of ways.

port this

money, whatever vacuities

this excessive circulation occasioned in

bank o£ 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 the necessary coin of the kingdom, the

bank

of

England paid very dearly, not only

much

ence, but for the

own imprud-

for its

greater imprudence of almost all the Scotch

banks.

The

The excessive circu-

lation was

caused by overtrading.

over-trading of

ought not to advance more than the

both parts of the

money.

of paper

What a bank can

with propriety advance to a merchant or un-

dertaker of any kind,

of

it

is

not either the whole capital with which he capital; but that part

any considerable part of that

only, which

he would otherwise be obliged to keep by him un-

employed, 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

amount

would necessarily

which merchants

money;

would

the country can easily absorb

otherwise

in

united kingdom, was the original cause of this excessive circulation

trades, or even

A bank

some bold projectors

it

circulate in the country if there

silver,

which

was no paper

can never exceed the quantity which the circulation of

When a bank

and employ.

discounts to a merchant a real

bill

of exchange

have to keep by

drawn by a real

creditor upon a real debtor,

them in

becomes due,

really paid

cash.

a part of the value which he would otherwise be obliged to keep by

This limit is observed

when only real bills

of ex-

change are dis-

is

by that

stream ning

is

near equally

equal to that which runs out; so that, without any

full.

A

pond keeps always equally, or very

no expence can ever be necessary of such a bank.

Little or

plenishing the coffers

should be

only advances to him

continually running out, yet another is continually run-

in, fully

further care or attention, the

Cash ac-

it

it

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

counted.

counts

debtor;

and which, as soon as

merchant, without over-trading,

sion for a

count.

sum

When

of ready

may

for re-

frequently have occa-

money, even when he has no

a bank, besides discounting his

bills,

bills to dis-

advances him

MONEY upon such

likewise

2S9

sums upon

occasions, such

and

carefully

occasional sale of his goods,

the same

companies of Scotland;

money comes in from the upon the easy terms of the banking dispenses him entirely from the necessity

®^^d,

his cash account,

accepts of a piece meal repa)mient as the

of keeping

money

any part

it

of his stock

by him unemployed and

in

ready

demands. When such demands come upon him, he can answer them sufficiently from his cash account. The bank, however, in dealing with such customers, for answering occasional

actually

ought to observe with great attention, whether in the course of

some short period the is,

sum

(of four, five, six, or eight

of the repayments which

it

months, for example)

commonly

receives

or is not, fully equal to that of the advances which

makes

fully equal to that of the advances,

it

upon most

is,

may

tinually running out from

its coffers

any

may be

them must be

continually running into

that without

sum

occasions,

safely continue to deal

with such customers. Though the stream which

is

in this case con-

very large, that which

at least equally large; so

further care or attention those coffers are likely to

be always equally or very near equally quire

commonly

to them. If, within the course of such short periods, the

of the repayments from certain customers

is

from them,

it

any extraordinary expence

full;

and scarce ever

to re-

to replenish them. If, on the con-

sum of the repayments from certain other customers falls commonly very much short of the advances which it makes to them,

trary, the

it

cannot with any safety continue to deal with such customers, at

least if they continue to deal with it in this

which

manner. The stream

is in this case continually running out from its coffers is

necessarily

much

larger than that

which

so that, unless they are replenished effort of expence, those coffers

The banking companies

is

continually running in;

by some

great

and continual

must soon be exhausted altogether. were for a long

of Scotland, accordingly,

as they

time very careful to require frequent and regular repayments from all their

customers, and did not care to deal with any person, what-

ever might be

his fortune or credit,

called, frequent

who

and regular operations with them. By

tion, besides saving

time by

did not make, what they this atten-

almost entirely the extraordinary expence of re-

Xch required

plenishing their coffers, they gained two other very considerable

advantages. First,

by

lar opera-

this attention

they were enabled to make some toler-

tions,

able judgment concerning the thriving or declining circumstances of their debtors, without being obliged to look out for any other

evidence besides what their for the

most

own books

afforded them;

part either regular or irregular in their

men

being

repa^ents,

according as their circumstances are either thriving or declining.

A

able to

judge of ^

®

THE WEALTH OE NATIONS

290 turnstances of

private

man who

money to perhaps half a dozen or a by himself or his agents, observe and

lends out his

dozen of debtors, may, either

their

debtors,

enquire both constantly and carefully into the conduct and situa-

But a banking company, which lends money hundred different people, and of which the atten-

tion of each of them. to perhaps five tion

continually occupied

is

by

objects of a very different kind, can

have no regular information concerning the conduct and circumstances of the greater part of its debtors afford

this

were se-

own books all

banking companies of Scotland had probably

advantage in view.

by

Secondly,

(2)

its

In requiring frequent and regular repayments from

it.^^

their customers, the

and

beyond what

this attention

possibility of issuing

they secured themselves from the

more paper money than what the

cured

and employ.

circulation

When

they ob-

against

of the country could easily absorb

issuing

served, that within moderate periods of time the repayments of

too

much

paper.

particular customer were

upon most occasions

a

fully equal to the

advances which they had made to him, they might be assured 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

mands; and circulated of gold

there been of his

by

and

by him

that, consequently, the

his

for

answering occasional de-

paper money, which they hacP

means, had not at any time exceeded the quantity'

silver

which would have circulated in the country, had

no paper money. The frequency,

repayments would

of their advances

had

at

sufficiently

regularity

and amounts

demonstrate that the amount

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

ployment. It

is

periods of time, of

keeping the rest of his capital in constant em-

this part of his capital is

continually returning to every dealer in the shape

money, whether paper or

in the

only which, within moderate

same shape.

If the

coin,

and continually going from him

advances of the bank had commonly ex-

ceeded this part of his capital, the ordinary amount of his repay-

ments could not, within moderate periods of time, have equalled the ordinary amount of

its

advances.

The stream which, by means

of

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

his dealings,

bank paper, by exceeding the quantity of gold and

silver

which, had

^^But as Playfair (ed. of Wealth of Nations, vol. i., p. 472) points out, the more customers a bank has the more it is likely to know the transactions of each of them

MONEY there been

291

no such advances, he would have been obliged

to keep demands, might soon come to exceed the whole quantity of gold and silver which (the commerce

by him

for answering occasional

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

This second advantage, though equally red, was not perhaps so well understood by all the different banking companies of silver.

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 reasonably expect no farther assistance from

banks and bankers, who, when they have gone thus consistently with their

far,

cannot,

own interest and safety, go farther. A bank its own interest, advance to a trader the

cannot, consistently with

whole or even the greater part of the circulating capital with which

he trades; because, though that capital

him in

its

continudly returning to

the shape of money, and going from

yet the whole of the returns goings,

is

and the sum

is

him

in the

same shape,

too distant from the whole of the out-

of his repa3mients could not equal the

sum

of

advances within such moderate periods of time as suit the con-

veniency of a bank.

Still less

could

any considerable part of his fixed

a bank

afford to advance

capital; of the capital

him

which the

undertaker of an iron forge, for example, employs in erecting his forge

and smelting-house,

and warehouses, the

his work-houses

dwelling-houses of his workmen, &c.; of the capital which the un-

dertaker of a mine employs in sinking his shafts, in erecting engines for drawing out the water, in

making roads and waggon-ways,

&c.; of the capital which the person

who undertakes

to improve

land employs in clearing, draining, enclosing, manuring and ploughing waste and uncultivated their necessary

appendages

fields, in

building farm-houses, with

of stables, granaries, &c.

the fixed capital are in almost

all cases

much

The

all

returns of

slower than those of

the circulating capital; and such expences, even

when

laid out

with

the greatest prudence and judgment, very seldom return to the un-

many years, a

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 considdertaker

till

after

a period

of

period

erable part of their projects with borrowed money. In justice to

Bankers’ loans

ought to be only for

mode-

rate peri-

ods of time.

THE WEALTH OF NATIONS

292

their creditors, however, their sufficient to ensure, if I

or to render

cur any

much

it

loss,

may

own

say

capital ought, in this case, to be

so, the capital of those creditors;

extremely improbable that those creditors should in-

even though the success of the project should

short of the expectation of the projectors.

money which

caution too, the

should not be repaid

till

after

is

a

Even with

borrowed, and which

mortgage, of such private people as propose

who

capital to such people of

eral years.

this pre-

A bank,

meant

it is

to live

upon bond or

upon the

money, without taking the trouble themselves

ploy the capital; and

very

period of several years, ought not

to be borrowed of a bank, but ought to be borrowed

est of their

fall

inter-

to

em-

are upon that account willing to lend that

good

its

keep

it

for sev-

money without

the ex-

credit as are likely to

indeed, which lends

pence of stampt paper, or of attornies fees for drawing bonds and mortgages, and which accepts of repayment upon the easy terms of

no doubt, be a very

the banking companies of Scotland; would,

convenient creditor to such traders and undertakers. But such traders

and undertakers would,

surely,

be most inconvenient debtors to

such a bank.

More

It

is

now more than five-and-twenty years

than twenty-

issued

five years

equal, or rather

ago the proper

amount

by the

different

since the paper

banking companies of Scotland was fully

was somewhat more than

fully equal, to

circulation of the country could easily absorb of

paper

money had been reached in Scotland,

companies, therefore, had so long ago given traders

and other undertakers

their

the assistance to the

own

They had even done somewhat more. They had and had brought upon themselves that which in

loss,

what the

and employ.^® Those

all

of Scotland which

banks and bankers, consistently with

tion of profit,

money

it is

possible for

interest, to give.

over-traded a

little,

or at least that diminu-

this particular business

never

fails to

attend

but the

the smallest degree of over-trading. Those traders and other under-

traders

much assistance 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 expence besides that of a few reams of paper. They complained of the contracted views and dastardly

were not content,

takers, having got so

spirit of the directors of those

banks, which did not, they said, ex

tend their credits in proportion to the extension of the trade of the country; meaning, no doubt, tension of their either with their

row

own own

of private people

by

projects

the extension of that trade the ex-

beyond what they could carry on, with what they had credit to bor-

capital, or

m the usual way of bond

or mortgage. The banks, they seem to have thought, were in honour bound to supply

“Above,

p. 281.

MONEY and

the deficiency,

wanted traders

them with all the The banks, however, were

to provide

to trade with.

and upon

ion,

293 capital

of

a

their refusing to extend their credits,

had recourse

purpose, though at a

which they

different opin-

some

of those

to an expedient which, for a time, served their

much greater expence, yet as effectually

as the

utmost extension of bank credits could have done. This expedient was no other than the well-known shift of drawing and re-drawing

and some of them

the shift to which unfortunate traders have sometimes recourse

to

when they

ing and

ing

money

are in

upon the brink of bankruptcy. The practice of raisthis manner had been long known in England, and

resorted

draw-

redrawing,

during the course of the late war, when the high profits of trade afforded a great temptation to over-trading, carried on to

a very great

extent.

is

said to have

been

From England it was brought into

Scotland, where, in proportion to the very limited commerce, to the

very moderate capital of the country,

it

was soon

and on

carried

a much greater extent than it ever had been in England. The practice of drawing and re-drawing is so well known to all men of business, that it may perhaps be thought unnecessary to to

give

any account

of

it.

But

as this

which shall be explained

book may come into the hands of

many people who practice

are not men of business, and as the effects of this upon the banking trade are not perhaps generally under-

stood even plain

it

by men

of business themselves, I shall endeavour to ex-

as distinctly as I can.

The customs

of merchants,

which were established when the bar-

barous laws of Europe did not enforce the performance of their con-

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 tracts,

period as two or three months after their date.

If,

when

comes due, the acceptor does not pay it as soon as it becomes from that moment a bankrupt. The returns

upon the drawer, who,

if

is

the

bill

be-

presented, he

bill is protested,

and

he does not immediately pay

it,

came to the person who becomes likewise a bankrupt. 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 If,

before

it

express that each of them had in his turn received those contents,

had all of them in their order endorsed, that is, written their names upon the back of the bill; each endorser 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,

Bills of

exchange

have extraordi-

nary legal privileges.

THE WEALTH OF NATIONS

294

acceptor, and endorsers of the

doubtful credit; yet ity to the

to

still

a time. The house

it is

a chance

The

So two

is

stand very long; but

one in

B

A

trader

in

it is

don owes nothing to

and one

A’s

burgh,

would draw bills on each other.

bill,

securlikely

they

if

all

it

A

in

become so in so short

if it falls

to-night,

A

after date.

In reality

B

upon Lon-

in

payment he

of

shall

same sum, together with the

for the

two

accordingly, before the expiration of the first

months, re-draws

this bill

upon A

in Edinburgh;

who again,

the expiration of the second two months, draws a second

before

bill

upon

London, payable likewise two months after date; and before

in

the expiration of the third two months,

A

bill

B

and a commission, another bill payable likewise two months

after date.

B

I

he agrees to accept of

in Edinburgh; but

Edinburgh

and

to-night.

upon condition that before the term

redraw upon interest

some

them may be very

Edinburgh, we shall suppose, draws a

London in Edin-

all of

a chance

London, payable two months

in

of them, be persons of

cra2y, says a weary traveller to himself, and

will venture, therefore, to sleep in

persons,

all

the shortness of the date gives

owner of the bill Though

become bankrupts;

will not

should,

bill

Edinburgh another

in

bill,

B

London re-draws upon two months after date.

in

payable also

This practice has sometimes gone on, not only for several months, but for several years together, the

bill

always returning upon

A in

Edinburgh, with the accumulated interest and commission of the former

bills.

The

interest

commission was never

less

was

five

all

per cent, in the year, and the

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

must necessarily

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

terest tice

Much

to rise, or

upon the

was

interest

called raising

when he was

obliged to

and commission

money by

pay compound

of former bills.

in-

This prac-

circulation.

In a country where the ordinary

profits of stock in the greater

money was

part of mercantile projects are supposed to run between six and ten

raised in

per cent.,

this ex-

pensive

way.

it

must have been a very fortunate speculation of which

the returns could not only repay the enormous expence at which the

money was

thus borrowed for carrying

good surplus jects,

profit to the projector.

it

on; but afford, besides, a

Many vast and

extensive pro-

however, were undertaken, and for several years carried on

without any other fund to support them besides what was raised at this

enormous expence. The projectors, no doubt, had

in their gold-

en dreams the most distinct vision of this great profit.

awaking, however, either at the end of their projects, or

Upon their when they

MONEY

=95

were no longer able to carry them on, they very seldom, I believe, had the good fortune to find it.^®

The

bills

which A

in

Edinburgh drew upon

B

in

London, he

reg-

The bill

ularly discounted two months before they were due with or banker in Edinburgh;

upon

A

bank

of England, or with

in Edinburgh,

and the

bills

which

B

in

some bank London redrew

he as regularly discounted either with the

some other bankers

in

circulating bills, was, in Edinburgh, 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.

the bills upon which this paper had been advanced, were

really returned to the bill

all

banks which advanced

became due, another

bill

first bill, it;

was never

was always drawn to somewhat a

The method

described in the text was by no means either the most comor the most expensive one in which those adventurers sometimes raised money by circulation. It frequently happened that A in Edinburgh would en-

B

London to pay the first bill of exchange by drawing, a few days 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 contents purchased bills upon London payable at sight to the order of B, to whom he sent them by the post. Towards the end of the late war, the exchange between Edinburg and London was frequently three per cent, against Edinburgh, and those bfils 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 B to discharge the first biU 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 days before it became due, a third bill, likewise at two months date, sometimes upon his first correspondent B, and sometimes 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 interest 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 between Edinburgh and able

in

it

;

;

was less expensive than that mentioned in the foregoing part of 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. This note appears first in ed. 2. Playfair observes that the calculation of the loss of 14 per cent, by the first method is wrong, since “if A at Edinburgh negotiated his bills on London at 3 per cent, loss, he would gain as much in purchasing biUs on London with the money.” Ed. of Wsaltk

London

Edinhurgb

it

this note;

—

of Nations, vol.

i.,

p. 483, note.

London,

because, before

mon

before

burgh,

re-paid in their turn as soon as they became due; yet the

value which had been really advanced upon the

each

disrount-

London. Whatever

was advanced upon such

Though of them

would be

and each was al-

XHE WEALTH OE NATIONS

296

ways

re-

placed by

greater

amount than the

counting of this other

which was soon to be paid and the

bill

bill

;

dis-

essentially necessary towards the

was

another.

payment fore,

of that which

was altogether

was soon

fictitious.

to be due.

This payment, there-

The stream, which, by means

of those

had once been made to run out from the banks, was never replaced by any stream which

circulating bills of exchange,

the coffers of really

The amount thus ad-

vanced by the banks

was in

ex-

cess of the

limit laid

down above,

but this was not perceived at

first.

run into them.

The paper which was issued upon those circulating bills of exupon many occasions, to the whole fund des-

change, amounted,

tined for carrying on

some vast and extensive project

of agriculture,

commerce, or manufactures; and not merely to that part of

it

which,

had there been no paper money, the projector would have been

by him, unemployed and in ready money for anThe 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 obliged to keep

swering occasional demands.

immediately returned upon the banks in order to be exchanged for gold and ital

silver,

which they were to find as they could. It was a cap-

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

tant suspicion that they

When the

When two

had

who

really

advanced

dis-

it.

out they

and re-drawing upon one another, discount their bills always with the same banker, he must immediately discover what they are about, and see clearly

made dif-

that they are trading, not with

banks found it

ficulties

about discounting,

people,

are continually drawing

any

capital of their own, but with

the capital which he advances to them. altogether so easy

when they discount

But

this discovery is not

their bills

sometimes with

one banker, and sometimes with another, and when the same two persons do not constantly draw and re-draw

upon one another, but

occasionally run the round of a great circle of projectors, it

for their interest to assist one another in this

money, and

to render

it,

upon that account, as

to distinguish between a real

tween a for

bill

drawn by a

and a

of the

it;

money.

When

ready discounted the

by

real creditor

find

exchange; be-

real debtor,

and a

bill

but the bank which

nor any real debtor but the projector

who made

use

a banker had even made this discovery, he

might sometimes make

that,

upon a

who

of raising

difficult as possible

fictitious bill of

real creditor

which there was properly no

discounted

method

it

too late, and might find that he had al-

bills of

those projectors to so great an extent,

refusing to discount

any more, he would necessarily make

MONEY them

all

himself.

297

bankrupts, and thus, by ruining them, might perhaps ruin

For

his

own

interest

and

safety, therefore,

he might find

necessary, in this very perilous situation, to go on for

some

it

time,

endeavouring, however, to withdraw gradually, and upon that account making every day greater and greater difficulties about discounting, in order to force those projectors

by degrees

to

have

re-

course, either to other bankers, or to other methods of raising

money; so as that he himself might, as soon the

circle.

The

difficulties,

as possible, get out of

accordingly, which the

which the principal bankers

in

bank

of England,

London, and which even the more

prudent Scotch banks began, after a certain time, and when

them had already gone

too far, to

make about

all of

discounting, not only

alarmed, but enraged in the highest degree those projectors. Their

own

distress, of

which

this

prudent and necessary reserve of the

banks was, no doubt, the immediate occasion, they called the tress of the country;

and

this distress of the country,

dis-

they said, was

altogether owing to the ignorance, pusillanimity, and

which alarmed

and enraged the projectors;

bad conduct

of the banks, which did not give a sufficiently liberal aid to the spiritual undertakings of those

who

exerted themselves in order to

and enrich the country.

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 beautify, improve,

by which

it

was now

It

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 express purpose of relieving the dis-

” Its head office was s.v. Bank gives the name, “the Ayr bank had branches at Edinburgh and Dumfries. A detailed history of it is to be found in The Precipitation and Fall of Messrs. Douglas, Heron and Company, late Bankers in Air with the Cateses of their Distress and Ruin investigated and considered by a Committee of Inquiry appointed by the Pro-

The index

at Ayr, but

it

Edinburgh, 1778. From this

it appears that Smith’s account of the extremely accurate, a fact which is doubtless due to his old pupil, the Duke of Buccleuch, having been one of the principal shareholders. Writing to Pulteney on 5th September, 1772, Smith says, “though I have had no concern myself in die public calamities, some of the friends in

prietors,

proceedings of the bank

is

whom I interest myself the most have been deeply concerned in them and my attention has been a good deal occupied about the most proper method ;

of extricating them.”

The

extrication

was

effected chiefly

by the

sale of re-

deemable annuities. See Rae, Life of Adam Smith, 1895, pp. 253-255; David Macpherson, Annals of Commerce, vol. iii., pp. 52S) 5535 House of Commons^ Journals, vol. xxxiv., pp. 493-495) and the Act of Parliament, 14 Geo. III., c. 21. The East India Company opposed the bill on the ground that the bonds to be issued would compete with theirs, but thdr opposition was defeated by a vote of 176 to 36 in the House of Commons, Journals, vol. xxxiv., p. 601.

then the

Ayr bank

XHE WEALTH OE NATIONS

298

was estab-

tress of the country.

and advanced

was imprudent, and the nature and causes

money

meant

very

was more

lished

freely,

to relieve,

The

design was generous; but the execution

real

the

it

bills of

exchange.

With regard

to

seems to have made scarce any distinction between

it

and circulating

avowed

which

than any other had ever been, both in granting

liberal

cash accounts, and in discounting the latter,

of the distress

were not, perhaps, well understood. This bank

bills,

but to have discounted

principle of this

bank

all

equally. It

was

to advance, upon any reasonable

whole capital which was to be employed in those

security, the

improvements of which the returns are the most slow and distant, such as the improvements of land.

which

was

it

To promote

instituted.

By its

liberality in granting cash accounts, it,

no doubt, issued great quan-

But those bank

notes being, the greater part

and in discounting bills of exchange, tities

of

its

bank

of them, over

such improvements

to be the chief of the public spirited purposes for

was even said

notes.

and above what the

easily absorb

circulation of the country could

and employ, returned upon

it,

be ex-

in order to

as fast as they were issued. Its coffers

but soon

changed for gold and

got into

were never well filled. The capital which had been subscribed to

silver,

this

difficulties,

bank at two

different subscriptions,

sixty thousand pounds, of

amounted

hundred and

to one

which eighty per cent, only was paid up.

This sum ought to have been paid in at several different

A great part of the proprietors, when they paid in their first

ments.

instalment, opened a cash account with the bank; ors, thinking

themselves obliged to treat their

the same liberality with which they treated

many upon

instal-

of

them

all their

to

borrow upon

this

own

all

and the

direct-

proprietors with

other

men, allowed

cash account what they paid in

subsequent instalments. Such payments, therefore,

only put into one

coffer,

what had the moment before been taken

out of another. But had the coffers of this well, its excessive circulation

bank been

filled

must have emptied them

ever so

faster

than

they could have been replenished by any other expedient but the ruinous one of drawing upon London, and due, paying

it,

when

the

bill

together with interest and commission,

draught upon the same place. Its coffers having been

by another

filled

said to have been driven to this resource within

ill, it is

became so very

a very few

months

of the proprietors

of this

their subscription

after it began to do business. The estates bank were worth several millions, and by

to the original

bond or contract

for answering all

^ Ed.

I does

its

of the

engagements.^®

bank, were really pledged

By means

of the great credit

not contain “those.”

“Macpherson, op. cit., p. 525, says the partners were the Dukes of Bucdeuch and Queensberry, the Earl of Dumfries, Mr. Douglas and many other gentlemen.

m

MONEY which so great a pledge necessarily gave its

it, it

was, notwithstanding

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,

in the practice of drawing bills of exchange

it

and was obliged to stop in

two years.

had been constantly

upon London, of which

number and value were continually increasing, and, when it stopt, amounted to upwards of six hundred thousand pounds. This the

bank, therefore, had, in

advanced to

pounds which

at five per cent.

it

circulated in

be considered as

more than

little

different people

Upon

bank

the course of

two

years,

upwards of eight hundred thousand the two hundred thousand pounds

notes, this five per cent, might, perhaps,

clear gain, without

any other deduction besides

the expence of management. But upon upwards of six hundred

thousand pounds, for which

change upon London,

upwards of more than three per

mission,

it

was continually drawing

it

was paying,

in the

way

bills of ex-

and com-

of interest

and was consequently upon more than three-fourths of

eight per cent.,

losing

cent,

all its

dealings.

The

operations of this bank seem to have produced effects quite

opposite to those which were intended

by

ihe particular persons

Its action

and

fail-

ure in-

who planned and

They seem

have intended

to sup-

creased

port the spirited undertakings, for as such they considered them,

the dis-

directed

it.

which were at that time carrying on try;

and at the same

time,

to themselves, to supplant

to

in different parts of the coun-

by drawing the whole banking business all

the other Scotch banks; particularly

tress of

projectors

and the country generally.

those established at Edinburgh, whose backwardness in discounting bills of

exchange had given some offence. This bank, no doubt, gave

some temporary

relief to

them

those projectors, and enabled

to

carry on their projects for about two years longer than they could otherwise have done. But

much

it

thereby only enabled them to get so

deeper into debt, so that when ruin came,

heavier both

upon them and upon

it fell

their creditors.

so

The

much

the

operations

of this bank, therefore, instead of relieving, in reality aggravated in

the long-run the distress which those projectors had brought both

upon themselves and upon

their country. It

better for themselves, their creditors

greater part of

them been obliged

they actually did. The temporary

and

to stop

relief,

would have been much their country,

had the

two years sooner than

however, which this bank

afforded to those projectors, proved a real and permanent relief to

the other Scotch banks. All the dealers in circulating

bills of ex-

change, which those other banks had become so backward in dis-

but relieved the other

Scotch banks.

the wealth of nations

300

had recourse to this new bank, where they were received with open arms. Those other banks, therefore, were enabled to get counting,

very easily out of that fatal

circle,

from which they could not other-

wise have disengaged themselves without incurring loss,

and perhaps too even some degree of

a considerable

discredit.

In the long-run, therefore, the operations of this bank increased the real distress of the country which

from a very great

fectually relieved

meant

first

people, that

would have been

easily replenish

to raise

to

the securities

pledged by borrowers:

and

to relieve;

ef-

whom

distress those rivals

setting out of this bank,

plan

money on

meant

it

to supplant.

At the

Another

it

whom

it

how

fast soever its coffers

it

was the opinion of some

might be emptied,

them by raising money upon the

had advanced

it

might

securities of those

paper. Experience, I believe, soon

its

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,

plenished

and which emptied themselves so very

by no

fast,

could be re-

other expedient but the ruinous one of drawing bills

upon London, and when they became due, paying them by other draughts upon the same place with accumulated interest and com-

But though they had been able by

mission,

money

as fast as they

wanted

it;

method

this

to raise

making a

yet, instead of

profit,

they must have suffered a loss by every such operation; so that in

must have ruined themselves as a mercantile

this would

the long-run they

have been a losing

company, though, perhaps, not so soon as by the more expensive

business,

practice of drawing

nothing

by

what the

and re-drawing. They could

still

the interest of the paper, which, being over

have made

and above

and employ,

circulation of the country could absorb

turned upon them, in order to be exchanged for gold and fast as

they issued

it;

and

for the

payment

of

themselves continually obliged to borrow money.

silver,

re-

as

which they were

On

the contrary,

the whole expence of this borrowing, of employing agents to look

out for people people, fallen

and

who had money

to lend, of negociating with those

of drawing the proper

bond

or assignment,

upon them, and have been so much

ance of their accounts.

The

clear loss

must have

upon the

bal-

project of replenishing their coffers in

manner may be compared to that of a man who had a waterpond from which a stream was continually running out, and into which no stream was continually running, but who proposed to keep this

it

always equally

full

by employing a number some miles

tinually with buckets to a well at

bring water to replenish and even

But though

profitable to the

go con-

distance in order to

it.

this operation

if profit-

of people to

had proved, not only

practicable, but

bank as a mercantile company; yet the country

MONEY could have derived no benefit from

have suffered a very considerable

it;

loss

301 but, on the contrary,

by

must

This operation could

it.

not augment in the smallest degree the quantity of money to be lent. It could only have erected this bank into a sort of general loan office for

the whole country. Those

have applied to sons

who had

this

lent

it

who wanted

to

borrow, must

directors can

would have been hurtful to the

country.

bank, instead of applying to the private per-

money. But a bank which lends money,

their

perhaps, to five hundred different people, the greater part of its

able

know very

little

about,

is

whom

not likely to be more

its debtors, than a private person who money among a few people whom he knows, and in

judicious in the choice of

lends out his

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 re-drawers of circulating bills of

exchange,

who would employ

dertakings, which, with

all

the

money

in extravagant un-

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 expence 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

and which, undertakings which were 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 whi(i would proportioned to their capitals,

thus af ord a fund capable of maintaining a of labour than that which

much

greater quantity

had been employed about them. The

suc-

cess 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 un-

profitable undertakings.

That the industry

of Scotland languished for

want

of

money

to

was the opinion of the famous Mr. Law. By establishing a bank of a particular kind, which he seems to have imagined might issue paper to the amount of the whole value of all the lands in the

employ

it,

country, he proposed to remedy this want of money.

The parliament

when he first proposed his project, did not think proper adopt it.^^ It was afterwards adopted, with some variations, by

of Scotland, to

^Lectures, p. 211. The bookseller^s preface to the 2nd ed. of Money and Trade (below, p. 302, note 23) says the work consists of “some heads of a scheme which Mr. Law proposed to the Parliament of Scotland in the year

1705”

Law’s scheme has been sufficient-

ly ex-

plained by

Du Verney and

Du Tot.

the wealth of nations

302

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 dis-

by Mr. Du Verney, in his Examination of the Political 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 tinctness,

Reflections

first

proposed his project.^^ The splendid, but visionary ideas which

are set forth in that still

continue to

and some other works upon the same

make an impression upon many

people,

principles,

and have,

perhaps, in part, contributed to that excess of banking, which has

and in other places. bank of circulation in Eupursuance of an act of parliament, by

of late been complained of both in Scotland

The bank of England was

The bank rope. It

of

England

is

was incorporated,

the greatest

in

dated the 27th of July, 1694. It at

estab-

a charter under the great

lished in

that time advanced to government the

1694,

dred thousand pounds, for an annuity of one hundred thousand

seal,

sum

of one million

two hun-

pounds: or for g 6 pooL a year interest, at the rate of eight per cent., and 4,oooL a year for the expence of management. The credit of the

new government,

must have been very low, an enlarged its

stock

by the Revolution, we may believe, when it was obliged to borrow at so high

established

interest.

In 1697 the bank,was allowed to enlarge

its

capital stock

by an

ingraftment of 1,001,171/. 105. Its whole capital stock, therefore,

in 1697,

amounted

at this time to 2,201,171/ loj. This engraftment is said

to have been for the support of public credit. In 1696, tallies

been at

forty,

and

fifty,

at twenty per cent.^^

and sixty per

cent, discount,

During the great recoinage

had

and bank notes

of the silver,

which

^ These two books

are in Bonar, Catalogue of Adam SmitWs Library, pp Tot’s is Rifiexions polUiques sur les Finances et le Commerce, oil examine quelles ont iti sur les revenus, les denries, le change itranger et

35, 36.

Du

Von consequemment sur notre commerce,

les influences des augmentations et des diminutions des valeurs numiraires des monnoyes. La Haye, 1754. Verney’s is Examen du livre intituU *‘Riflexions poUtiques sur les Finances et le

Commerce,” La Haye, 1740 “In Lectures there is an account, apparently derived from Du Verney, which extends over eight pages, 211-218. ^ Money and Trade Considered, with a Proposal for Supplying the Nation with Money, 1705. “ James Postlethwayt’s History of the Public Revenue, page 301 History of the Public Revenue from 1688 to 1753, an Appendix to 1758, by James Postlethwayt, F.R.S., 1759 ; see also below, p. 864.

MONEY was going on

bank had thought proper

at this time, the

payment

tinue the

303 to discon-

of its notes, which necessarily occasioned their

discredit.

In pursuance of the 7th Anne,

sum

into the exchequer, the

1,600,000/. which 000/. interest

it

and

legal

the

it

the bank advanced and paid

of 400, ooo^.;

had advanced upon

making

its

4,000/. for expence of

therefore, thet credit of

persons, since

c. vii.

management. In 1708,

government was as good

as that of private

rate of those times. In pursuance of the

bank cancelled exchequer

bills to

of

original annuity of 96,-

could borrow at six per cent, interest, the

and market

sum

in all the

in 1708,

common

same

act,

the amount of 1,775,027/. 17J.

lo^d. at six per cent, interest, and was at the same time allowed to take in subscriptions for doubling its capital. In 1708, therefore,

the capital of the bank amounted to 4,402,343/.; and

it

had ad-

vanced to government the sum of 3,375,027/. 17^. io\d. By a call of fifteen per cent, in 1709, there was paid in and made stock 656,204/. u.

()d,\

501,448/. 12^. lid.

and by another of ten per

In consequence of those two

cent, in 1710,

calls, therefore,

the bank capital amounted to S,SS9,99S/. 14^. 8c/. In pursuance of the 3d George I. c, 8. the bank delivered millions of exchequer bills to be cancelled. It

up two

had at this time,

there-

advanced to government 5,375,027/. l^s, lodP In pursuance of the 8th George L c. 21. the bank purchased of the South

fore,

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

make this purchase, its capital stock was increased by 3,400,000/. At this time, therefore, the bank had advanced to the public it

to

9,375,027/. i^s, 10^ d,\ and 8,959,995/. 14s, Sd, It

its

was upon

capital stock

amounted only to sum which

this occasion that the

the bank had advanced to the public, and for which terest, it

began

first

to exceed

its

capital stock, or the

paid a dividend to the proprietors of bank

it

received in-

sum

for

which

stock; or, in other

words, that the bank began to have an undivided capital, over and divided one. It has continued to have an undivided capi-

above

its

tal of

the same kind ever since. In 1746, the bank had, upon dif-

ferent occasions, advanced to the public 11,686,800/.

and

its di-

calls and subscriptions to two sums has continued to be the

vided capital had been raised by different 10,780,000/.^®

same ever

The

since.

state of those

In pursuance of the 4th of George III.

c.

25. the

“ These three lines are not in ed. i. “ From, “it was incorporated,” on p. 302, to this point is an abstract “Historical State of the Bank of England,” in Postlethwayt’s History Public Revenue, pp. 301-3 10. thwayt’s pages.

The

totals are

in 1709

and 1710

of the

of the

taken from the bottom of Postle-

in 1717,

and later

the wealth of nations

304

bank agreed

to

pay

for the renewal of its charter

government

to

110,000/. without interest or repayment. This sum, therefore, did

not increase either of those two other sums.

The dividend

The rate of interest

bank has

of the

in the rate of the interest

which

varied according to the variations it

has, at different times, received

received

by it from the public

has been reduced from 8 to 3 per cent,

for the

money it had advanced

other circumstances. This rate of interest has gradually been re-

duced from eight to three per dividend has been at five and

The stability of

the

bank

and its dividend has lately been 5^4

to the public, as well as according to

ish government. All that

before

its

it

cent.

For some years past the bank

a half per England

of

cent. is

equal to that of the Brit-

has advanced to the public must be lost

creditors can sustain

any loss.

in

England can be established by act

of

more than

No other banking company

of parliament, or

can consist

per cent.

It acts as

but as a

members.

six

It acts,

not only as an ordinary bank,

great engine of state. It receives

which are due

a great

of the annuities

engine of

culates exchequer bills,

and

it

and pays the greater part

to the creditors of the public,

it cir-

advances to government the annual

state.

amount of the land and malt taxes, which are frequently not paid up till some years thereafter. In those different operations, its duty to the public may sometimes have obliged it, without any fault of its directors,

to overstock the circulation with paper money. It like-

wise discounts merchants

bills,

and has, upon several

different oc-

casions, supported the credit of the principal houses, not only of

England, but of 1763,

it is

Hamburgh and Holland. Upon one

occasion, in

said to have advanced for this purpose, in one week,

about 1,6000,000/.; 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

duced to the necessity of paying in The operations

of bank-

It is not

by augmenting the

ren-

that the most judicious operations of bank-

dead

ing can increase the industry of the country.

stock into

tal,

by

dering a greater part of that capital active and productive than

ing turn

produc-

re-

sixpences.^’^

capital of the country, but

would otherwise be

tive capi-

company has been

tal

That part

of*

his capi-

by him unemployed, and in answering occasional demands, is so much dead

which a dealer

ready money for

so,

is

obliged to keep

stock, which, so long as

it

remains in this situation, produces noth-

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 ing either to

In 1743. Magens, Universal Merchant, p. 31, suggests that there may have been suspicions that the money was being drawn out for the support of the rebellion.

MONEY produces something both to himself

and

silver

money which

which the produce of

circulates in

its

money

and

to his country.

The gold

any country, and by means

land and labour

distributed to the proper consumers,

ready

305

is

of

annually circulated and

in the

same manner as the

of the dealer, all dead stock. It is

a very valuable part

is,

of the capital of the country, which produces nothing to the country.

the

The judicious operations of banking, by substituting paper in room of a great part of this gold and silver, enables the country

to convert a great part of this dead stock into active

and productive

The

stock; into stock which produces something to the country.

money which

gold and silver

any country may very

circulates in

properly be compared to a highway, which, while carries to

market

all

it

circulates

and

the grass and corn of the country, produces

it-

self 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

cornfields,

and thereby to increase very considerably the annual produce of

its

industry of the country, how-

but make

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

commerce and in-

land and labour. ever,

The commerce and

it

dustry

somewhat less

secure.

above the accidents to which they are exposed from the unskilfulness 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 possesand consequently of that treasure which supported the credt of the paper money, would occasion a much greater confusion in a country where the whole circulation was carried on sion of the capital,

by paper, than

in

gold and silver. value,

one where the greater part of

The

no exchanges could be made but

credit. All taxes

it

was

carried

on by

usual instrument of commerce having losUts either

by

barter or

upon

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

more

irretrievable than

sisted in gold

and

if

silver.

the greater part of

A

its

circulation

much

had con-

prince, anxious to maintain his domin-

ions 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 “Eds.

I

and

2 read

“him.”

Precautions

shouldbe taken to prevent the greater part of the circulation being jBUed with paper.

the wealth of nations

306

issue it; but even against that multiplication of

which

ables them to

with Circulation

may

be divided into that be-

which en-

the greater part of the circulation of the country

fill

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,

tween dealers

employed

other, yet as both are constantly going on at the

sometimes in the one circulation

requires a certain stock of

may

and sometimes

and that between

it,

money of one kind

be

in the

same time, each

or another, to carry

it

dealers

The

value of the goods circulated between the different dealers,

and con-

on.

sumers

never can exceed the value of those circulated between the dealers

and the consumers; whatever tween the dealers, as ly a pretty large

sum

it is

is

bought by the dealers, being

to the consumers.

mately destined to be sold

carried on

by

The

wholesale, requires general-

for every particular transaction.

the dealers and the consumers, on the contrary, as

by

carried on shilling, or

circulate

retail,

faster

That between it is

generally

frequently requires but very small ones, a

even a halfpenny, being often

much

ulti-

circulation be-

than large ones.

A

sufficient.

But small sums

changes masters

shilling

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 generally be transacted with a

money; the same the instrument of

much

smaller quantity of

by a more rapid circulation, serving as many more purchases of the one kind than of the pieces,

other.

The circulation of

paper

maybe corded to the

former by not allowing notes

Paper money may be so regulated, as either to confine

much itself

to the circulation

likewise to

between the

different dealers, or to extend

notes are circulated under ten pounds

value, as in London,^^ paper circulation

very

a great part of that between the dealers and the

Where no bank

consumers.

itself

money confines

itself

very

much

to the

between the dealers. When a ten pound bank note comes

into the

hands of a consumer, he

the

shop where he has occasion to purchase

is

generally obliged to change

it

at

for small

sums.

first

of goods; so that

it

five shillings

often returns into the hands of

a

dealer, before

the consumer has spent the fortieth part of the money. notes are issued for so small land, paper

money extends

sums as twenty

itself to

worth

Where bank

shillings, as in Scot-

a considerable part of the

cir-

culation between dealers

and consumers. Before the act of parliament, which put a stop to the circulation of ten and five shilling ^ The Bank notes were

of England issued none under £20 till 1759, when £15 and £10 mtroduced.—Anderson, Commerce, ad. 1739

MONEY notes,

it

filled

a

307

greater part of that circulation. In the cur-

still

North America, paper was commonly issued for so small shilling, and filled almost the whole of that circulation. sum a a as In some paper currencies of Yorkshire, it was issued even for so rencies of

sum as a sixpence. Where the issuing of bank

small a

notes for such very small

lowed and commonly practised,

many mean

A

abled and encouraged to become bankers.

sums

is al-

people are both en-

it is

by every body, will get it to be received without scruple when sum as a sixpence. But the frequent bank-

issued for so small a

ruptcies to which such beggarly baiiers

must be

liable,

may

many poor

people

who had

ables

mean people to

become bankers.

oc-

casion a very considerable inconveniency, and sometimes even

very great calamity, to

of such

notes en-

person whose promis-

sory note for five pounds, or even for twenty shillings, would be rejected

The issue

a

received their

notes in pa5mient.

part of the

no bank notes were issued

any kingdom for a smaller sum than five pounds. Paper mon-

It were better, perhaps, that

ey would then, probably, confine

itself,

dom, to the circulation between the

in

in every part of the king-

different dealers, as

much

as

None for less

than

£5 should be issued.

it

does at present in London, where no bank notes are issued under ten pounds value; five pounds being, in most parts of the kingdom,

a

sum which, though

it

the quantity of goods, all at

is

as

much

considered,

and

is

more than half

as seldom spent

once, as ten pounds are amidst the profuse expence of London.

Where paper money, to the circulation is

will purchase, perhaps, little

to be observed, is pretty

it is

silver.

Where

it

extends

siderable part of the circulation between dealers

silver

and

paper.

still

more

North America,

in

it

The

its

a con-

banishes gold and all

the ordinary

This

would secure the circula-

tion of plenty of

gold and silver,

commerce being thus carried on by ten and five shilling bank notes, someof gold and silver in Scotland; and the

interior

suppression of

what relieved the

itself to

and consumers, as

almost entirely from the country; almost

transactions of

confined

between dealers and dealers, as at London, there

always plenty of gold and

in Scotland,

much

scarcity

suppression of twenty shilling notes, would 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 culation between dealers

and

pretty

dealers, yet

much

confined to the cir-

banks and bankers might

and be able to give nearly the same commerce of the country, as they had done when paper money filled assistance to the industry

still

^^^Geo.IIL,

c.

49.

and would not prevent

banks

from giv-

the wealth of nations

308 ing sufficient as-

almost the whole circulation. The ready obliged to keep

sistance to traders.

money which a

whom he buys goods. He

for the circulation

is

for answering occasional demands, is des-

by him,

tined altogether for the circulation between himself ers, of

dealer

and other

has no occasion to keep any

deal-

by him

between himself and the consumers, who are his

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 customers, and

and dealers; yet, partly by discounting and partly by lending upon cash accounts,

circulation between dealers real bills of exchange,

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 answerThey might still be able to give the utmost

ing occasional demands.

and bankers can, with propriety, give

assistance which banks

to

traders of every kind.

To restrain private people,

A law against

ment the promissory notes

small

of

may be said, from receiving in paya banker, for any sum whether great

it

are willing to receive them; or, to

when they themselves

notes

or small,

would be

restrain a banker

a viola-

are willing to accept of them,

from issuing such notes, when is

all

his neighbours

a manifest violation

of that natural

tion of

which it

the proper business of law, not to infringe, but to

natural

liberty

liberty

support. Such regulations

necessary for the se-

is

respect a violation

may, no doubt, be considered as in some of natural liberty. But those exertions of the

curity of

natural liberty of a few individuals, which might endanger the se-

the so-

curity of the whole society, are,

and ought to

by

be, restrained

the

ciety.

laws of

all

despotical.

governments; of the most

The

vent the communication of actly of the

free, as well

as of the most

obligation of building party walls, in order to prefire, is

a violation of natural

same kind with the regulations

liberty, ex-

of the banking trade

which are here proposed.

A paper money consisting in bank notes,

Paper

issued

by people

money

doubted

payable on de-

in fact always readily paid as soon as presented,

mand is

equal in value to gold and silver money; since gold and silver

equal to

gold and silver,

credit,

payable upon demand without any condition, and

can at any time be had for

have been for gold and not raise prices;

it.

Whatever

is

is,

either

in every respect,

The

money

bought or sold

such paper, must necessarily be bought or sold as cheap as

and does

of un-

it

for

could

silver.

increase of paper

money,

it

has been said, by augmenting the

quantity, and consequently diminishing the value of the whole currency, necessarily augments the

as the quantity of gold and is

money

silver,

which

price of commodities. is

But

taken from the currency,

always equal to the quantity of paper which

is

added

to

it,

paper

MONEY

309

money does not necessarily increase the quantity rency. From the beginning of the last century to

of the whole cur-

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. tion between the price of provisions in Scotland

The propor-

and that in Eng-

same now as before the great multiplication of banking companies in Scotland. Corn is, upon most occasions, fully as cheap in England as in France; though there is a great deal of paper land, is the

money in England, and scarce any in France. In 1751 and in 1752, when Mr. Hume published his Political Discourses,®^ and soon after the great multiplication of paper

was a very

money

in Scotland, there

sensible rise in the price of provisions, owing, probably,

to the badness of the seasons,

and not

to the multiplication of paper

money.

would be otherwise, indeed, with a paper money

It

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 it in his power to fulfil; or of which the payment was not exi-

have

gible

till

after

time bore no

a

certain

number

of years,

and which

in the

mean

Such a paper money would, no doubt,

interest.

but paper not repayable

on

demand would fall below gold and silver,

fall

more or less below the value of gold and silver, according as the difficulty or uncertainty of obtaining immediate payment was supposed to be greater or

less; or

according to the greater or less dis-

tance 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.

banks sometimes took advantage of

The directors

of

some

this optional clause,

of those

and some-

who demanded gold and silver in exchange number of their notes, that they would take ad-

times threatened those for

a considerable

vantage of

it,

unless such demanders would content themselves with

a part of what they demanded. The promissory notes of those banking companies constituted at that time the far greater part of the

currency of Scotland, which this uncertainty of payment neces^^The reference is probably to the passages in the “Discourse of Money,” and the “Discourse of the Balance of Trade,” where Hume censures paper

money

as the cause of a rise of prices.—Political Discourses, 1752, pp. 43-45

89-91

cp. Lectures, p. 197.

;

as happened in

Scotland during the prevalence of

the

Op-

tional

Clause,

XHE WEALTH OF NATIONS

310

sarily degraded

below the value of gold and

the continuance of this

silver

1763, and 1764), while the exchange between

was

at par, that

London and

silver;

from

Carlisle

between London and Dumfries would sometimes be

four per cent, against Dumfries, though this town distant

money. During

abuse (which prevailed chiefly in 1762,

Carlisle.

But

not thirty miles

Scotch bank

whereas at Dumfries they were paid in

and the uncertainty

is

at Carlisle, bills were paid in gold

of getting those

bank notes exchanged

and

notes,

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

bank and thereby restored the exchange between England and Scotland to its natural rate, or to what the course of trade and renotes, suppressed likewise this optional

ten and five shilling clause,^^

mittances might happen to have happened in regard to the Yorkshire cur-

make it.

In the paper currencies of Yorkshire, the payment of so small a

and must

sum

depended upon the condition that the

as a sixpence sometimes

holder of the note should bring the change of a guinea to the person

who

issued

a condition, which the holders

it;

frequently find

it

rencies

very

difficult to fulfil,

of such notes

might

and which must have de-

money. An

when

graded this currency below the value of gold and

small

act of parliament, accordingly, declared all such clauses unlawful,

sums were repayable in

and suppressed,

in the

same manner

notes, payable to the bearer,

guineas.

The paper

currencies of

silver

as in Scotland, all promissory

under twenty

shillings value.^®

North America

consisted, not in

bank

notes payable to the bearer on demand, but in a government paper,

The North American paper

of

which the payment was not exigible

issued:

And though

till

several years after

it

was

the colony governments paid no interest to the

holders of this paper, they declared

it

to be,

and

in fact rendered

it,

currencies

payment

consisted

a

of gov-

But allowing the colony security

ernment notes re-

payable at a dis-

legal tender of

for the full value for

which

it

was issued. hundred

to be perfectly good, a

pounds payable fifteen years hence, for example, in a country where interest is at six per cent, is

ready money.

To

worth

little

more than forty pounds

oblige a creditor, therefore, to accept of this as

tant date, full

payment

for

a debt of a hundred pounds actually paid down in

ready money, was an act of such violent injustice, as has scarce, perhaps, been attempted

which pretended to be

by the government

free. It

of

any other country

bears the evident marks of having

what the honest and downright Doctor Douglas aswas, a scheme of fraudulent debtors to cheat their cred-

originally been,

sures us itors.^^

it

The government

5 Geo. HI.,

of Pennsylvania, indeed, pretended,

upon

**15 Geo. III., c. 51. c. 49 ; referred to above, p. 306. knavish device of fraudulent debtors of the loan money to pay off their loans at a very depreciated value ” William Douglass, M.D., Summary,

MONEY their first emission of paper

equal value with, gold and those

for a colony paper,

in 1722, to render their paper of

by enacting

silver,

who made any difference in

them

sold

money,

311

penalties against all

the price of their goods

and when they

them

when they

and a regulation equally tyrannical, but much less effectual than that which it was meant to support. A positive law may render a sold

for gold

silver;

shilling

a legal tender

law can oblige a person

positive

erty to

sell

or not to

it may direct the courts who has made that tender. But no who sells goods, and who is at lib-

for a guinea; because

of justice to discharge the debtor

sell,

as he pleases, to accept of a shilling as

equivalent to a guinea in the price of them. Notwithstanding any regulation of this kind,

appeared by the course of exchange with

it

Great Britain, that a hundred pounds sterling was occasionally con-

and depreciated

the cur-

rency to

sidered as equivalent, in some of the colonies, to a hundred and

a great

a sum as eleven hundred

degree.

thirty pounds,

and

pounds currency;

in others to so great

this difference in the value arising

from the

dif-

ference in the quantity of paper emitted in the different colonies,

and

in the distance

and probability of the term of

its final

discharge

and redemption.

No law, therefore, could be more equitable than the act of parliament, so unjustly complained of in the colonies, which declared that

They were therefore justly

no paper currency

to be emitted there in time coming, should be

a

Pennsylvania was always more moderate in

money than any ingly

is

its

emissions of paper

other of our colonies. Its paper currency accord-

said never to have sunk below the value of the gold

ver which was current in the colony before the

first

and

sil-

emission of

its

paper money. Before that emission, the colony had raised the de-

and had, by act of assembly, ordered five shillings sterling to pass in the colony for six and three-pence, and afterwards for six and eight-pence. A pound colony currency, therenomination of

fore,

its coin,

was more than and when that was seldom much more than

even when that currency was gold and

thirty per cent, below the value of a

pound

currency was turned into paper,

it

thirty per cent, below that value.

The

nomination of the

sums

coin,

by making equal

silver,

was

to

silver,

sterling,

pretence for raising the de-

prevent the exportation of gold and

quantities of those metals pass for greater

in the colony than they did in the

mother country.

It

was

and Political, of the First Planting, Progressive Improvements,^ and vol. ii., p. Present State of the British Settlements in North America, 107. The author uses strong language in many places about what he calls “this accursed affair of plantation paper currencies,” vol. ii., p. 13, note is);

Historical

cp. vol.

i.,

4 Geo.

pp. 310, 359; vol. III., c. 34.

ii.,

prohibited.

legal tender of payment.^®

pp. 254-255, 334-335-

Pennsylvania

was moderate in its issues,

audits currency never

went below the real par.

the wealth of nations

312

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

The colonial

pa-

per was

and

silver

were exported as

The

provincial taxes, for the full value for which

from

this use

somewhat

necessarily derived

supported by being

above what

received

of the term of its final discharge

in pay-

value was greater or

ment

of

taxes.

A requirement that certain

it

had been

issued,

it

real or

supposed distance

and redemption. This additional

according as the quantity of paper issued

less,

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 employed in this manner.

was more

or less above

A prince, who should enact

that a certain proportion of his taxes

money

should be paid in a paper

give a certain value to this paper

should be paid in

its final

particular

the will of the prince. If the

paper

ful to

money

it

some additional value, over and

would have had, from the

taxes

might

fast as ever.

paper of each colony being received in the payment of the

of

a certain kind, might thereby

money; even though the term

discharge and redemption should depend altogether

keep the quantity of

easily be

employed

make

in this

bank which issued this paper was careit always somewhat below what could

manner, the demand for

even bear a premium, or

it

might be such

somewhat more

give that

as to

paper a

market than the quantity of gold or silver currency for which

it

of

upon

sell for

in the it

was

certain

value

even if it

was irredeemable.

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 di-

issued.

keep the whole quanbank money always below what this use occasions a demand for. It is upon this account, they say, that bank money sells for a premium, or bears an agio of four or five per cent, above the same rectors of the bank, they allege, are careful to tity of

nominal sum of the gold and

silver

currency of the country. This

account of the bank of Amsterdam, however, after,®^ is in

A paper

A

it

will

appear here-

a great measure chimerical.®^

paper currency which

falls

below the value of gold and

silver

currency depreci-

ated below the

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

Below, pp. 446-455. See also the “Advertisement” or preface to the 4th ed.,

above.

Ed. I reads “This account of the Bank of Amsterdam, however, I have reason to believe,

is altogether chimerical.” reads “sink the value of gold and silver, or occasion equal quantities of those metals.”

Ed.

I

MONEY and

and that of goods

silver

not upon the nature

which

of

313

any other kind, depends

in all cases,

any particular paper money,

or quantity of

may be current in any particular country,

value of the coin

does not

but upon the rich-

sink the

ness or poverty of the mines, which happen at any particular time

value of

to supply the great

market of the commercial world with those met-

als. It

depends upon the proportion between the quantity of labour

which

is

necessary in order to bring a certain quantity of gold and

silver to market,

and that which is necessary

er a certain quantity of If

gold and Slver.

any other

in order to bring thith-

sort of goods.

bankers are restrained from issuing any circulating bank notes

or notes payable to the bearer, for less than a certain sum; and

The only restric-

if

tions

they are subjected to the obligation of an immediate and unconditional

payment

of such

bank notes as soon as presented,

may, with safety to the perfectly free.

The

their trade

public, be rendered in all other respects

late multiplication of

banking companies in

both parts of the united kingdom, an event by which

many

people

on

banking which are necessary are the

prohibition of

small

have been much alarmed, instead of diminishing, increases the curity of the public. It obliges in their conduct, and,

due proportion

all

of

them

by not extending

to their cash, to

particular

to bring

upon them.

many

competitors

It restrains the circulation of

company within a narrower circle, and reduces

tion into a greater

number

By dividing

of parts, the failure of

less

if

any branch

is al-

each

their cir-

any one com-

must sometimes

be more

liberal in their dealings

their customers, lest their rivals should carry

general,

the re-

consequence to the public. This free com-

petition too obliges all bankers to

of trade, or

any division

them away. In

of labour, be advan-

tageous to the public, the freer and more general the competition, it

will

always be the more

so.

t

bank notes and

its

the whole circula-

accident which, in the course of things,

happen, becomes of

with

beyond

guard themselves against those

culating notes to a smaller number.

pany, an

more circumspect

their currency

malicious runs, which the rivalship of so

ways ready

to be

se-

quirement that

all

notes shall

be repaid

on demand.

m

CHAPTER

III

OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE AND UN-

PRODUCTIVE LABOUR

There are

There

two

upon which

sorts

of labour,

productive

and

unpro-

is

The

fect.

one sort of labour which adds to the value of the subject it is

bestowed: there

former, as

it

is

another which has no such

produces a value,

the latter, unproductive

^

Thus

labour.

may

ef-

be called productive;

the labour of a manufac-

turer adds, generally, to the value of the materials

which he works

ductive.

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.

by

Though the manufacturer has his wages advanced to him him no expence, the value of

his master, he, in reality, costs

those wages being generally restored, together with a profit, in the

improved value of the subject upon which his labour

But the maintenance

of a menial servant never

is

is

bestowed.

restored.

A man

grows rich by employing a multitude of manufacturers: he grows poor,

by maintaining a multitude

of menial servants.^

The labour

and deserves its reward as well 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 of the latter, however, has its value,

as that of the former.

necessary, put into motion

a quantity of labour equal

had

The labour

originally

produced

it.

to that

which

of the menial servant, on the

^Some French authors

of great learning and ingenuity have used those In the last chapter of the fourth book I shall endeavour to show that their sense is an improper one.

words

in a different sense.

® is

In the argument which follows in the text the fact is overlooked that this only true when the manufacturers are employed to produce commodities

for sale

and when the menial

servj^nts are

A man may

employed merely for the comfort

and often does grow poor by employing people to make “particular subjects or vendible commodities” for his own consumption, and an innkeeper may and often does grow rich by employing menial of the employer.

servants.

314

ACCUMULATION OF CAPITAL

3^5

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 or value be-

hind them, for which an equal quantity of service could afterwards be procured.

The labour

of

like that of

menial servants, unproductive of any value, and does

is,

not

some

of the

fix or realize itself in

most respectable orders

any permanent

modity, which endures after that labour

in the society

and

for

equal quantity of labour could afterwards be procured. eign, for

example, with

all

They

which an

The

army and navy,

kinds of labour besides

menial service

sover-

the officers both of justice and war

serve under him, the whole bourers.

com-

subject, or vendible is past,

Many

who

are unproductive la-

are unproductive.

are the servants of the public, and are maintained

by a part of the annual produce of the industry of other people.

how

Their service, ever,

honourable,

how

useful,® or

how

necessary so-

produces nothing for which an equal quantity of service can

The

afterwards be procured.

protection, security,

and defence of

the commonwealth, the effect of their labour this year, will not pur-

and defence for the year to come. In must be ranked, some both of the gravest and most important, and some of the most frivolous professions: churchmen,

chase the

its

same

protection, security, class

lawyers, physicians,

men

of letters of all kinds; players, buffoons,

The labour of the regulated by the very same

musicians, opera-singers, opera-dancers, &c.

meanest of these has a certain value, principles

which regulate that of every other

sort of labour;

and

that of the noblest and most useful, 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

equally maintained

by the annual produce

The proportion of the

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

produce employed in main-

employed in maintaining unproductive hands, the more in the one case and the less in the other will remain for the productive, and

productive hands

the next year’s produce will be greater or smaller accordingly; the

mines the

of the land

whole annual produce,

if

we except

the spontaneous productions of

of the land

next produce.

and labour

” But in the “Introduction and Plan of the Work “useful” “productive,” and used as equivalent to it. ®

deter-

year’s

the earth, being the effect of productive labour.

Though the whole annual produce

taining

is

of ev-

coupled with

the wealth of nations

316 Part of the pro-

duce re-

is,

sumption of

its

capital,

part constitutes

and

rent.

no doubt, ultimately destined

for supplying the con-

inhabitants, and for procuring a revenue to them;

comes either from the ground, or from the hands of the productive labourers, it naturally divides itself into two parts. One of them, and frequently the largest, is, in the first place,

when

yet

places

profit

ery country,

it first

destined for replacing a capital, or for renewing the provisions, terials,

ma-

and finished work, which had been withdrawn from a capi-

the other for constituting a revenue either to the owner of this

tal;

some other person,

capital, as the profit of his stock; or to

as the

rent of his land. Thus, of the produce of land, one part replaces the

and the rent

capital of the farmer; the other pays his profit

of the

landlord; and thus constitutes a revenue both to the owner of this capital, as the profits of his stock;

rent of his land.

Of the produce

and to some other person, as the

of a great manufactory, in the

manner, one part, and that always the

of the undertaker of the work; the other pays his profit, constitutes a revenue to the

That which

That part re-

places capital

employs none but

owner of

and thus

this capital.^

of the annual produce of the land

country which replaces a capital, never

same

largest, replaces the capital

is

and labour

of

any

immediately employed to

maintain any but productive hands. It pays the wages of productive labour only.

That which

immediately destined for consti-

is

tuting a revenue either as profit or as rent,

may

maintain indiffer-

produc-

ently either productive or unproductive hands.

tive

hands,

Whatever part expects fore,

is

to

of his stock a

man employs as a capital, he always

be replaced to him with a

in maintaining productive

hands only; and

served in the function of a capital to him, to them.

Whenever he employs any part

it

of

productive hands of any kind, that part

withdrawn from his

capital,

He employs it, there-

profit.

and placed

after having

constitutes a revenue it in

is,

maintaining un-

from that moment,

in his stock reserved for

immediate consumption. while unproductive

hands

and those

Unproductive labourers, and those all

maintained by revenue; either,

produce which

is

who do not

first,

by

labour at

all,

are

that part of the annual

originally destined for constituting a revenue to

who do

some particular persons,

not labour are supported

of stock; or, secondly,

tined for replacing a capital

by reve-

ers only, yet

nue.

over and above their necessary subsistence,

when

it

either as the rent of land or as the profits

by

that part which, though originally des-

and

comes into

for maintaining productive labourtheir hands,

whatever part of

may

it is

be employed in

maintaining indifferently either productive or unproductive hands. ^ It must be observed that in this paragraph produce is not used in the ordinary economic sense of income or net produce, but as including all products,

e,g.,

lie

oil

used in weaving machinery as well as the cloth.

ACCUMULATION OF CAPITAL

3i7

Thus, not only the great landlord or the rich merchant, but even the

common workman,

a menial servant; or he

wages are considerable,

his

if

may

may

maintain

sometimes go to a play or a puppet-

show, and so contribute his share towards maintaining one set of unproductive labourers; or he may pay some taxes, and thus help to maintain another set,

equally unproductive.

which had been

more honourable and

No

useful, indeed, but

part of the annual produce, however,

originally destined to replace a capital,

is

ever di-

rected towards maintaining unproductive hands,

till after it has put complement of productive labour, or all that it could put into motion in the way in which it was employed. The

into motion its full

workman must have earned employ any part

of

but a small one. It

them

his

wages by work done, before he can

in this

is his

manner. That part too

ber

may

in the

generally

spare revenue only, of which productive

labourers have seldom a great deal.

however; and

is

payment

They

generally have some,

of taxes the greatness of their

num-

compensate, in some measure, the smallness of their con-

tribution.

The rent

of land

and the

therefore, the principal sources

profits of stock are every-where,

from which unproductive hands

derive their subsistence. These are the two sorts of revenue of

which the owners have generally most

They might both

to spare.

maintain indifferently either productive or unproductive hands.

They seem, however,

to

have some predilection

expence of a great lord feeds generally more people.

The

rich merchant,

for the latter.

idle

The

than industrious

though with his capital he maintains

by his expence, that is, by the employrevenue, he feeds commonly the very same sort as the

industrious people only, yet

ment

of his

great lord.

The

proportion, therefore, between the productive and unpro-

ductive hands, depends very

much

in

every country upon the pro-

portion between that part of the annual produce, which, as soon as

from the ground or from the hands of the productive labourers, is destined for replacing a capital, and that which is

it

comes

either

destined for constituting a revenue, either as rent, or as profit. This

proportion

is

very different in rich from what

in poor countries.

it is

frequently the largest portion of the produce of the land,

is

destined

and independent farmer; the and the rent of the landlord. But an-

for replacing the capital of the rich

ciently, during the prevalency of the feudal government, a very

small portion of the produce was sufficient to replace the capital

employed cattle,

in cultivation. It consisted

commonly

in a

few wretched

maintained altogether by the spontaneous produce of uncul-

'

tion of

productive hands depends

on the proportion be-

tween

Thus, at present, in the opulent countries of Europe, a very large,

other for paying his profits,

Sothe propor-

profit

with rent

and the part of

produce

which

re-

places capital.

the wealth of nations and which might,

be considered as a part

Rent an-

tivated land,

ciently

of that spontaneous produce. It generally too belonged to the land-

formed a

and was by him advanced

therefore,

to the occupiers of the land. All the

larger

lord,

propor-

rest of the produce properly belonged to him too, either as rent for

tion of the

produce

his land, or as profit

upon

this paultry capital.

The

occupiers of

of agri-

land were generally bondmen, whose persons and effects were

culture

equally his property. Those

than

now

who were

not

bondmen were tenants

at

and though the rent which they paid was often nominally little more than a quit-rent, it really amounted to the whole produce of will,

the land. Their lord could at peace,

and

all

their service in war.

times

command

Though they

their labour in

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, all

those

whom

who can

dispose of the labour and service of

maintains. In the present state of Europe, the

it

share of the landlord seldom exceeds a third, sometimes not a fourth

part of the whole produce of the land. all

The

rent of land, however, in

the improved parts of the country, has been tripled

rupled since those ancient times; and the annual produce

is, it

and quad-

this third or fourth part of

seems, three or four times greater than the

whole had been before. In the progress of improvement, though

it

rent,

increases in proportion to the extent, diminishes in pro-

portion to the produce of the land. Profits

were an-

In the opulent countries of Europe, great capitals are at present

employed in trade and manufactures. In the ancient

ciently a

larger

share of the produce of

tle

trade that

was

stirring,

state, the lit-

and the few homely and coarse manu-

factures that were carried on, required but very small capitals.

These, however, must have yielded very large profits.

was no-where

manufac-

interest

tures,

have been

less

improved parts of Europe,

At present the is

and two per

the inhabitants which

is

cent.

Though

it is

proportion of

produce

That part

so low as

that part of the revenue of

derived from the profits of stock

much greater in rich than in poor countries, it is because is much greater: in proportion to the stock the profits are much less.^ so the

rate

no-where higher

than six per cent, and in some of the most improved four, three,

rate of

than ten per cent, and their profits must

sufficient to afford this great interest.

of interest, in the

The

always

is

the stock generally

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

® The question first propounded whether profits form a larger proportion of the produce, is wholly lost sight of. With a stock larger in proportion to the

produce, a lower rate of profit

may

give a larger proportion of the produce.

ACCUMULATION OF CAPITAL greater in rich than in poor countries, but bears a

proportion to that which

is

3i9

much

greater

immediately destined for constituting

required for re-

placing

a revenue either as rent or as

The funds

destined for the

capital

maintenance of productive labour, are not only much greater in the former than in the latter, but bear a much greater proportion

greater

to those which, though they

profit.

may be employed

than

is

it

was

maintain either

to

productive or unproductive hands, have generally a predilection for the latter.

The

proportion between those different funds necessarily deter-

mines in every country the general character of the inhabitants as to industry or idleness.

We are more industrious than our forefath-

ers; because in the present times the funds destined for the

tenance of industry, are

much

main-

greater in proportion to those which

The proportion

between the funds deter-

mines whether

are likely to be employed in the maintenance of idleness, than they

the in-

were two or three centuries ago. Our ancestors were

habitants

of a sufficient encouragement to industry. It

idle for

want

of the

better, says the

is

proverb, to play for nothing, than to work for nothing. In mercantile

and manufacturing towns, where the

ranks of people

inferior

country be

shall

industri-

ous or

are chiefly maintained

by

the employment of capital, they are in

general industrious, sober, and thriving; as in in

many

English, and

most Dutch towns. In those towns which are principally support-

ed by the constant or occasional residence of a court, and in which the inferior ranks of people are chiefly maintained of revenue, they are in general idle, dissolute,

by the spending

and poor; as

at

Rome, Versailles, Compiegne, and Fontainbleau. If you except Rouen and Bourdeaux, there is little trade or industry in any of the parliament towns of France;

®

and the

inferior ranks of people,

being chiefly maintained by the expence of the members of the courts of justice, in general idle

and

of those

who come

to plead before them, are

and poor. The great trade of Rouen and Bourdeaux

seems to be altogether the

effect of their situation.

sarily the entrepot of almost all the goods

Rouen

is

neces-

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 Garonne, est

and

wine countries

wine

fittest for

nations. capital

of the wines

of the rivers

in the world,

it,

one of the rich-

and which seems to produce the

exportation, or best suited to the taste of foreign

Such advantageous

by

which grow upon the banks

which run into

situations necessarily attract a great

the great employment which they afford

it;

and the em-

^Viz., Paris, Toulouse, Grenoble, Bordeaux, Dijon, Rouen, Aix, Rennes, Pau, Metz, Besangon and J>Q\m.--Encyclopedief tom. xii., 1765, s.v. Parlement.

idle.

the wealth of nations

320

ployment

cities. In the other parliament towns of France, very little

employed than what

capital seems to be

own

their

consumption; that

is, little

is

Paris, Madrid, and Vienna. Of those three

most industrious: but Paris

itself is

cities,

may

Paris

is

its

principal object of all the trade which

it

far the all

the

is

the

own consumption carries on.

capi-

be said of

by

the principal market of

manufactures established at Paris, and

more

necessary for supplying

more than the smallest

which can be employed in them. The same thing

tal

two

of this capital is the cause of the industry of those

London, Lis-

bon, and Copenhagen, are, perhaps, the only three cities in Europe,

which are both the constant residence of a court, and can at the same time be considered as trading cities, or as cities which trade not only for their countries.

The

and naturally

own consumption, but

situation of all the three fits

them

for that of other cities is

and

extremely advantageous,

to be the entrepots of

a great part

of the

goods destined for the consumption of distant places. In a city

where a great revenue

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

who

part of the people corrupts,

tained

it is

capital.

are maintained

The

probable, the industry of those

by the employment

of capital,

idleness of the greater

by the expence

of revenue,

who ought to be main-

and renders

it less

advanta-

geous to employ a capital there than in other places. There was tle trade or

industry in Edinburgh before the union.

Scotch parliament was no longer to be assembled in

When it,

lit-

the

when

it

ceased to be the necessary residence of the principal nobility and

gentry of Scotland, still

it

became a

city of

some trade and industry.

of justice in Scotland, of the boards of customs

considerable revenue, therefore, trade

and industry

much

and

excise, &c.

continues to be spent in

inferior to Glasgow, of

by the employment of it

inhabitants of

up

idle

made

a

large village,

it.

which the

The

come

ordimi-

it is

still

habitants are chiefly maintained

after having

Increase

It

continues, however, to be the residence of the principal courts

A In

in-

capital.'^

has sometimes been observed,

considerable progress in manufactures, have be-

and poor,

in

consequence of a great lord’s having taken

his residence in their neighbourhood.

The

proportion between capital and revenue, therefore, seems everywhere to regulate the proportion between industry and idle^

In Lectures, pp. 154-156, the idleness of Edinburgh and such like places is attributed simply to the want of independence in the inhabitants The introduction of revenue and capital is the fruit of study

compared with Glasgow

of the physiocratic doctrines

ACCUMULATION OF CAPITAL ness.

Wherever

32 i

capital predominates, industry prevails: wherever

revenue, idleness. Every increase or diminution of capital, therefore, naturally tends to increase or diminish the real

number

dustry, the

of productive hands,

quantity of in-

and consequently the

ex-

changeable value of the annual produce of the land and labour of the country, the real wealth and revenue of

Capitals are increased

all its inhabitants.

by parsimony, and diminished by

prodi-

nution of the capita of a country con-

sequently increases

or diminishes its

annual produce.

and misconduct. Whatever a person saves from his revenue he adds to his capital, and either employs it himself in maintaining an additional gality

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

Capitals

are increased

by parsi-

mony or saving.

saves from his annual revenue or his annual gains, so the capital of

a society, which

compose

it,

is

the

same with tbat of

all

the individuals

who

can be increased only in the same manner.

Parsimony, and not industry,

is

the immediate cause of the in-

crease of capital. Industry, indeed, provides the subject which par-

simony accumulates. But whatever industry might acquire,

if

par-

simony did not save and store up, the capital would never be the greater.

Parsimony, by increasing the fund which

is

destined for the

number of the subject upon

maintenance of productive hands, tends to increase the those hands whose labour adds to the value of

which

it is

bestowed. It tends therefore to increase the exchange-

able value of the annual produce of the land and labour of the

country. It puts into motion an additional quantity of industry,

which gives an additional value to the annual produce.

What

is

annually saved

is

as regularly consumed as what

nually spent, and nearly in the same time too;

^

but

it is

an-

What is

consumed

saved is

is

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

by a

different set of people.

artificers,

who

re-produce with a profit the value of their annual

consumption. His revenue, we shall suppose,

Had he ®

is

paid him in money.

spent the whole, the food, clothing, and lodging, which the

This paradox

themselves.

is

arrived at through a confusion between the remuneration capital and the additions

who produce the additions to the What is really saved is the additions to

of the labourers

not consumed.

the capital, and these are

consumed by productive

hands.

the wealth of nations

322

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 immediately employed as a capital either by

himself or

by some

other person, the food, clothing, and lodging,

which

may be

latter.

The consumption

purchased with

it,

are necessarily reserved for the

the same, but the consumers are differ-

is

ent.

The frugal

man es-

By what a

frugal

man

annually saves, he not only affords main-

tenance to an additional number of productive hands, for that or

tablishes

a perpetual

fund for the employment of pro-

ductive

hands.

the ensuing year, but, like the founder of establishes as

it

equal number in

times to come.

all

destination of this fund, indeed, itive law,

a public workhouse, he

were a perpetual fund for the maintenance of an

by any

is

The

perpetual allotment and

not always guarded

trust-right or deed of

mortmain. It

always

belong.

No part of

whom any

share of

who The

thus perverts

it

shall ever

can ever afterwards be employed to maintain

it

any but productive hands, without an evident

prodigal

is

pos-

guarded, however, by a very powerful principle, the plain and evident interest of every individual to

The

by any

from

it

prodigal perverts

it

its

loss to the

person

proper destination.

in this manner.

By not

confining his ex-

pence within his income, he encroaches upon his capital. Like him

perverts

such

who

funds to

purposes, he pays the wages of idleness with those funds which the

other

perverts the revenues of

some pious foundation

frugality of his forefathers had, as

it

to profane

were, consecrated to the

uses.

By

maintenance of industry. the

diminishing the funds destined for

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

bestowed, and, conse-

quently, the value of the annual produce of the land

the whole country, the real wealth and revenue of If the prodigality of others, the

and labour

its

inhabitants.

some was not compensated by the frugality

conduct of every prodigal, by feeding the

of

idle

of

with the

bread of the industrious, tends not only to beggar himself, but to impoverish his country. Whether

Though the expence

of the prodigal should be altogether in

he spends on home

home-made, and no part of

or foreign

on the productive funds of the society would

commodities makes no

differ-

ence.

ery year there would

it

in foreign commodities, its effect still

up-

be the same. Ev-

be a certain quantity of food and cloth-

still

which ought to have maintained productive, employed in maintaining unproductive hands. Every year, therefore, there ing,

would

still

be some diminution in what would otherwise have been ^

Ed.

I

does not contain

“it.’

ACCUMULATION OF CAPITAL

3^3

the value of the annual produce of the land and labour of the country.

This expence,

it

may

be said indeed, not being in foreign goods,

and not occasioning any exportation of gold and

money would remain

quantity of

silver, the

in the country as before.

same

But

the quantity of food and clothing, which were thus consumed

unproductive, had been distributed

b^

among productive hands, they

would have re-produced, together with a their consumption.

if

The same quantity

profit,

the

value of

full

money would

of

in this

If

he had

not spent there

would have been just as

much money in the country

and

case equally have remained in the country, and there would besides

the goods

have been a reproduction of an equal value

produced

consumable goods.

of

by pro-

There would have been two values instead of one.

The same

ductive

quantity of money, besides, cannot long remain in any

country in which the value of the annual produce diminishes. The

money

sole use of

is to circulate

provisions, materials,

consumable goods.

The quantity

distributed to their proper consumers. therefore,

By means

and finished work, are bought and

and

of money,

determined by the value of the consumable goods annually circuit.

These must consist either

and labour of the country

of the land

had been purchased with some part therefore,

it

circulating them.

of produce

is

or in something which

money go abroad; will

money which can be employed in money which by this annual diminution

the quantity of

But the

lie idle.

will, in spite of all

The interest

of

whoever possesses

it,

requires

at home. Its annual exportation will in this

some time

to

add something

country beyond the value of

may

to the annual

its

be of some use

manner continue consumption

for

of the

own annual produce. What

in the

its

prosperity had been saved from that annual produce,

and employed little

it

laws and prohibitions, be sent abroad, and em-

ployed in purchasing consumable goods which

some

ishes,

of that produce. Their value,

should be employed. But having no employment at home,

days of

annual produce dimin-

annually thrown out of domestic circulation, will not

be allowed to it

itself,

immediate produce

Besides,

when the

must diminish as the value of that produce diminishes,

and along with

that

in the

well.

of it,

sold,

which can be annually employed in any country, must be

lated within

hands as

in purchasing gold

time to support

portation of gold and silver effect of its declension,

its is,

and

silver, will

contribute for

consumption in adversity. The exin this case, not the cause,

and may even,

for

some

but the

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

and on the other

hand of the consumable goods annually circulated within the

THE WEALTH OF NATIONS

324

money will come in when

society being greater, will require a greater quantity of

the an-

urally be

nual pro-

ditional quantity of gold

circulate them.

duce increases.

rest.

The

A part of the increased produce,

employed

in purchasing,

and

wherever

money

to

therefore, will nat-

it is

to be had, the ad-

silver necessary for circulating the

increase of those metals will in this case be the effect, not

tie cause, of the public prosperity. Gold and silver are purchased

every-where in the same manner. the revenue

employed

and maintenance

in bringing

them

price paid for

which has

food, clothing,

of all those

to the market,

in Peru as well as in England.

this price to pay, will

of those metals which

it

Whatever, therefore, we

for;

the

The country

and no country

has no occasion

may

is

is

never be long without the quantity

has occasion it

and lodging,

whose labour or stock

them from the mine

long retain a quantity which So even if

The

will ever

for.

imagine the real wealth and reve-

the real

nue of a country to consist

wealth of a country

produce of

consisted

in the quantity of the precious metals

of its

vulgar prejudices suppose; in either view of the matter, every

money, the prodigal

would

be a pubenemy.

its

cious

em-

of capital

which circulate within

prodigal appears to be a public enemy,

The

effects of

misconduct are often the same as those of prodi-

Every injudicious and unsuccessful project

labour. In every such project, though the capital

same ef-

they are employed, they do not reproduce the

prodigal-

Frugality

and prudence predominate.

in agriculture,

mines, fisheries, trade, or manufactures, tends in the same manner to diminish the funds destined for the maintenance of productive

productive hands only, yet, as

ity.

as

and every frugal man a

has the fect as

it,

public benefactor.

gality.

ployment

whether in the value of the annual

land and labour, as plain reason seems to dictate; or

lic

Injudi-

in,

by the

injudicious

is

consumed by

manner

in

which

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

by the prodigality or misconduct of individuals; the profusion or imprudence of some, being always more than compensated by the frugality and affected either

good conduct

of others. Prodigality is

more intermittent

than the desire to

better our

condition.

With regard

to profusion, the principle

which prompts to exthe passion for present enjoyment; which, though sometimes violent and very difficult to be restrained, is in general only

pence,

is

momentary and

occasional. But the principle which prompts to 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 save,

is

a single

ACCUMULATION OF CAPITAL in

instant

which any

man is

so perfectly

325

and completely

satisfied

with his situation, as to be without any wish of alteration or im-

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 provement of any kind.

accumulate some part of what they acquire, either regularly and annually, or

upon some extraordinary

Though the prinmen upon some

occasions.

ciple of expence, therefore, prevails in almost all

occasions,

and

some men upon almost

in

all

occasions, yet in the

greater part of men, taking the whole course of their

life

at

an av-

erage, the principle of frugality seems not only to predominate, but to

predominate very greatly.

With regard ful

to misconduct, the

undertakings

is

every-where

number

much

of prudent

and success-

greater than that of injudi-

Imprudent undertakings

cious and unsuccessful ones. After all our complaints of the fre-

are

quency of bankruptcies, the unhappy men who

in

fortune

make but a very

in trade,

and

all

fall

into this mis-

number engaged not much more perhaps

small part of the whole

other sorts of business;

than one in a thousand. Bankruptcy

smaK number

compared to pru-

dent ones.

perhaps the greatest and

is

most humiliating calamity which can befal an innocent man. The greater part of men, therefore, are sufficiently careful to avoid

Some, indeed, do not avoid

it;

it.

as some do not avoid the gallows.

by

Great nations are never impoverished

private,

though they

sometimes are by public prodigality and misconduct. The whole,

Public prodigal-

and impruity

most countries employed

or almost the whole public revenue,

is

in maintaining unproductive hands.

Such are the people who com-

in

pose 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 expence of maintaining them, even while the war

lasts.

Such

people, as they themselves produce nothing, are all maintained

the produce of other men’s labour.

When

may m

an unnecessary number, they

by

multiplied, therefore, to

a particular year consume so

great a share of this produce, as not'to leave a sufficiency for maintaining the productive labourers, year.

The

who should reproduce

it

next

next year’s produce, therefore, will be less than that of the same disorder should continue, that of the

the foregoing, and

if

third year will be

still

ductive hands,

who

less

than that of the second. Those unpro-

should be maintained

by a

part only of the

Misprinted “instance” in ed. 5 and consequently in some modern editions. is here equivalent to “made poor,” i.e., ruined, not mere-

^ “Impoverished” ly to

“made

poorer,”

,

dence are

more to be feared than private,

XHE WEALTH OF NATIONS

326

spare revenue of the people,

may consume

so great a share of their

whole revenue, and therefore oblige so great a number to encroach upon their capitals, upon the funds destined for the maintenance of productive labour, that all the frugality

dividuals

by

acted by

this violent

sions,

it

appears from experience,

and misconduct of individuals, but the The uniform, constant, and un-

private

frugaHty and pru-

public extravagance of government. interrupted effort of every

upon most occa-

is

compensate, not on-

sufficient to

ly the private prodigality

dence.

and forced encroachment.

This frugality and good conduct, however,

but are

in-

may not be able to compensate the waste and degradation

of produce occasioned counter-

and good conduct of

man

to better his condition, the princi-

ple from which public and national, as well as private opulence originally derived,

is

is

frequently powerful enough to maintain the

natural progress of things toward improvement, in spite both of the

extravagance of government, and of the greatest errors of administration.

Like the unknown principle of animal

restores health

and vigour to the

life, it

frequently

constitution, in spite, not only of

the disease, but of the absurd prescriptions of the doctor.

To

in-

crease

the pro-

duce of a nation an increase of

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 labourers, it is evident, can never be much increased,

capital is

necessary.

but in consequence of an increase of capital, or of the funds destined for maintaining them. The productive powers of the same number of labourers cannot be increased, but in consequence either of some addition and improvement to those machines and instru-

ments which vision

and abridge labour; or of a more proper

facilitate

and distribution

capital is almost

of

employment. In either case an additional

always required. It

capital only, that the undertaker of his

workmen with

If,

there-

by means

occasionally

we compare,

an additional

of

any work can

either provide

make a more proper distriamong them. When the work to be done con-

a number of parts, to keep every

in one way, requires a is

is

better machinery, or

bution of employment sists of

much

employed

man

constantly employed

produce has increased,

we may

and

in every different part of the work.

therefore, the state of a nation at

better cultivated, its manufactures

two

the capi-

ital

has

its

different pe-

land and labour its

is

ev-

lands are

more numerous and more flour-

and trade more extensive, we may be assured that its capmust have increased during the interval between those two pe-

be sure

riods, increased.

annual produce of

idently greater at the latter than at the former, that

ishing,

tal

find, that the

man When

greater capital than where every

fore the

riods,

di-

its

and that more must have been added to

it

by the good con-

ACCUMULATION OF CAPITAL duct of some, than had been taken from

it

either

327

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

and peaceful times, even

all

nations,

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 in all tolerably quiet

progress

is

provement

of those

This has been the case of al-

most

all

nations in

peaceable times.

frequently so gradual, that, at near periods, the imis

not only not sensible, but from the declension either

of certain branches of industry, or of certain districts of the country, things

be

which sometimes happen though the country

in general

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, is certainly much greater than it was, a little more

ample,

for ex-

England

than a

for ex-

ample

century ago, at the restoration of Charles II. Though, at present,

few people, I believe, doubt of years have seldom passed

this,

away

yet during this period, five

which some book or pamphlet

in

has not been published, written too with such

abilities as to gain

some authority with the public, and pretending that the wealth of the nation

was

from 1660 to 1776,

to

demonstrate

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 believed

it.

The annual produce of the land and labour of England again, was certainly much greater at the restoration, than we can suppose it

or from

1558 to 1660,

to have been about an hundred years before, at the accession of

Elizabeth.

At

this period too,

we have

country was much more advanced

in

all

reason to believe, the

improvement, than

it

had

been about a century before, towards the close of the dissensions

between the houses of York and Lancaster. Even then ably, in a better condition than

it

it

was, prob-

had been at the Norman con-

and at the Norman conquest, than during the confusion of the Saxon Heptarchy. Even at this early period, it was certainly a quest,

more improved country than its

at the invasion of Julius Caesar,

when

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.

“Ed.

I

reads “is.”

though there

was

the wealth of nations

328

much public and private profusion,

and many other disorders

great perversion of the annual produce from maintaining produc-

but sometimes, in the confu-

tive to maintain unproductive hands;

sion of civil discord, such absolute waste

and destruction

as might be supposed, not only to retard, as

it

certainly did, the

natural accumulation of riches, but to have left the country, at the

and mis-

end of the period, poorer than at the beginning. Thus,

fortunes

est

occurred.

of stock,

and most fortunate period

of

how many

them

all,

in the happi-

that which has passed

and misfortunes have occurred, which, could they have been foreseen, not only the impoverishment, but the total ruin of the country would have been exsince the restoration,

pected from them?

Dutch wars,

The

disorders

and the plague

fire

of

the disorders of the revolution, the

London, the two

war

in Ireland, the

four expensive French wars of 1688, 1702,^® 1742, and 1756, to-

gether with the two rebellions of 1715 and 1745. In the course of the four French wars, the nation has contracted

more than a hun-

dred and forty-five millions of debt, over and above

the other

all

extraordinary annual expence which they occasioned, so that the

whole cannot be computed at

less

than two hundred millions. 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 tive hands.

But had not those wars given

to so large a capital, the greater part of

been employed

The

it

would naturally have

profit, the

whole value of their con-

value of the annual produce of the land and labour

of the country, would have been considerably increased year,

unproduc-

of

maintaining productive hands, whose labour

in

would have replaced, with a sumption.

number

this particular direction

by

and every year’s increase would have augmented

that of the following year.^^

every

it

still

more

More houses would have been

built,

more lands would have been improved, and those which had been improved before would have been better cultivated, more manufactures would have been established,

established before would have been

and those which had been more extended; and to what

height the real wealth and revenue of the country might, time, have been raised, Private frugality

and prudence

have si-

it is

by

this

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

lently

was

and labour

is,

undoubtedly,

much greater

at present than

either at the restoration or at the revolution.

counter-

it

acted

therefore, annually

employed

taining this labour,

must likewise be much

in cultivating this land,

The and

capital, in

main-

these cir-

cumstances.

“Ed.

I

reads “1701.”

“Ed.

i

greater.

In the midst of

reads “the next year”

ACCUMULATION OF CAPITAL

3^9

all the exactions of government, this capital has been silently and gradually accumulated by the private frugality and good conduct

of individuals,

by

fort to better their

and allowed by

their universal, continual,

own

and uninterrupted

condition. It is this effort, protected

liberty to exert itself in the

manner that

is

ef-

by law

most ad-

vantageous, which has maintained the progress of England towards opulence and improvement in almost all former times, and which, to be hoped, will do so in all future times. England, however,

it is

has never been blessed with a very parsimonious government, so parsimony has at no time been the characteristical virtue of its as

it

inhabitants. It fore, in

is

the highest impertinence and presumption, there-

kings and ministers, to pretend to watch over the ceconomy

of private people, and to restrain their expence, either

by sumptu-

ary laws, or by prohibiting the importation of foreign luxuries.

They

are themselves always, and without any exception, the great-

est spendthrifts in the society.

may

safely trust private people with theirs. If

own extravagance

does not ruin the state, that of their sub-

expence, and they their

Let them look well after their own

jects never will.

As ital,

frugality increases,

and prodigality diminishes the public cap-

so the conduct of those

whose expence just equals

their reve-

it.

Some modes

of expence, however,

seem to con-

more to the growth of public opulence than others. The revenue of an individual may be spent, either in

may be

spent in things more durable, which can therefore be accumulated,

and

in

which every day’s expence may, as he chuses, either

tion of different

things

which are consumed immediately, and in which one day’s expence it

diminucapital

tribute

can neither alleviate nor support that of another; or

from increase or

nue, without either accumulating or encroaching, neither increases

nor diminishes

Apart

kinds of expense

maybe distin-

guished.

alleviate

or support and heighten the effect of that of the following day.

A

An individual

man of fortune,

for example,

may either spend his revenue

in

a pro-

and sumptuous table, and in maintaining a great number of menial servants, and a multitude of dogs and horses; or contenting fuse

himself with a frugal table and few attendants, he greater part of

it

in adorning his

may lay

house or his country

out the

villa, in

use-

ful or ornamental buildings, in useful or ornamental furniture, in

collecting books, statues, pictures; or in things

more

frivolous, jew-

els, baubles, ingenious trinkets of different kinds; or,

what

is

most

who spends on durable

commodiwiU

ties

be richer than one

who spends on perish-

able ones. trifling of all, in

favourite

^ As

amassing a great wardrobe of fine clothes, like the

and minister

of a great prince

who

died a few years ago.^®

suggested by Germain Garnier’s note on tMs passage (Recherches sur et les Causes de la Richesse des Nations, 1802, tom. ii., p. 346), this was doubtless the Count of Bruhl, Minister and Great Chamberlain to the King of Poland, who left at his death 365 suits of clothes, all very rich. Jonas

la

Nature

the wealth OF NATIONS

330

Were two men

of equal fortune to

chiefly in the one

way, the other

the person whose expence

spend their revenue, the one

in the other, the magnificence of

had been

chiefly in durable commodities,

would be continually increasing, every day’s expence contributing something to support and heighten the ing day: that of the other,

effect of that of the follow-

on the contrary, would be no greater

the end of the period than at the beginning.

The former

at

too would,

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 at the end of the period, be the richer

trace or vestige of the expence of the latter would remain, effects of ten or

nihilated as

The same

As

they had never existed.

mode

of expence is

more favourable than the other to

opulence of an individual, so

tr^oU nation.

if

the one

The

and the

twenty years profusion would be as completely an-

likewise to that of a nation.

is it

houses, the furniture, the clothing of the rich, in

become useful

a

little

time,

and middling ranks of people. They

to the inferior

are able to purchase then when their superiors grow weary of them, and the general accommodation of the whole people is thus gradually improved,

among men

when

this

mode

of fortune. In countries

will frequently find the inferior

of houses

of expence

becomes universal

which have long been

and furniture perfectly good and

now an

is

What was

but of which nei-

entire,

have been made

formerly a seat of the family of Seymour,

inn upon the Bath road.^®

the First of Great Britain, which his

Denmark, as a present

you

ranks of people in possession both

ther the one could have been built, nor the other for their use.

rich,

fit

The marriage-bed

of James Queen brought with her from

for a sovereign to

make

to

a sovereign,

was, a few years ago, the ornament of an ale-house at Dunfermline.^^

In some ancient

ary, or have gone find

which either have been long station-

cities,

somewhat

to decay,

you

a single house which could have been

will

sometimes scarce

built for its present in-

Hanway

(Historical Account of the British Trade over the Caspian Sea, with a Journal of Travels from London through Russia into Persia, and back through Russia, Germany and Holland, 1753, voL ii, p. 230) says this count had 300 or 400 suits of rich clothes, and had “collected all the finest colours of all the ^^est cloths, velvets, and silks of all the manufactures, not to mention the different kinds of lace and embroideries of Europe,” and also pictures and books, at Dresden. He died in 1764.

This was the Castle Inn at Marlborough, which ceased to be an inn and became Marlborough College in 1843, thus undergoing another

The mnkeeper, Mrs. Walker, a

vicissitude

zealous Jacobite, refused an offer of fifty guineas for the bed, but presented it about 1764 to the Earl of Elgin (John Fernie, History of the Town and Parish of Dunfermline, 1815, P* 7i)) and its ^ mantel-piece in the dining-room at Broomhall, ^

f^Xe"°^

near

Dun-

ACCUMULATION OF CAPITAL

33^

habitants. If you go into those houses too, you will frequently find

many still

excellent,

very

fit

for

though antiquated pieces of furniture, which are use, and which could as little have been made for

them. Noble palaces, magnificent

of books,

villas, great collections

and other curiosities, are frequently both an ornament and an honour, not only to the neighbourhood, but to the statues, pictures,

whole country

which they belong. Versailles

is an ornament and an honour to France, Stowe and Wilton to England. Italy still con-

tinues to

to

command some

by

sort of veneration

the

number

of

mon-

uments of this kind which it possesses, though the wealth which produced them has decayed, and though^® the genius which planned them seems to be extinguished, perhaps from not having the same emplo3rment.

The expence

too,

which

is

laid out in durable commodities, is fav-

The

for-

ourable, not only to accumulation, but to frugality. If a person

should at any time exceed in

he can easily reform without ex-

it,

To

posing himself to the censure of the public. the

number

reduce very

much

of his servants, to reform his table from great profusion

down his equipage

to great frugality, to lay

after

he has once set

eSSto bring to

^

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

been so unfortunate as to launch out too

pence, have afterwards the courage to reform,

ruptcy oblige them. But

if

who have once

far into this sort of extill

ruin and bank-

a person has, at any time, been at too

great an expence in building, in furniture, in books or pictures,

imprudence can be inferred from

his

no

changing his conduct. These

are things in which further expence is frequently rendered unnec-

essary

by former expence; and when a person

pears to do

so,

stops short, he ap-

not because he has exceeded his fortune, but be-

cause he has satisfied his fancy.

The

expence, besides, that

is

laid out in durable commodities,

gives maintenance, commonly, to a greater

that which

is

employed

in the

three hundred weight of provisions, which

up

number

most profuse

hospitality.

may

Of two or

some’times be served

at a great festival, one-half, perhaps, is thrown to the dunghill,

and there pence of

is

always a great deal wasted and abused. But

this entertainment

had been employed

if

the ex-

in setting to

work

masons, carpenters, upholsterers, mechanics, &c.^® a quantity of

would have been distributed among a still greater number of people, who would have bought them in penny-worths and pound weights, and not have lost or thrown

provisions, of equal value,

^ Ed

I

does not contain “though.’

Ed.

I does

and gives

of people, than

not contain “&c.’

j^ore people,

THE WEALTH OF NATIONS

332

away a

single

ounce of them. In the one way, besides,

this

expence

maintains productive, in the other unproductive hands. In the one

way, therefore,

it

increases, in the other,

it

does not increase, the

exchangeable value of the annual produce of the land and labour of the country. It does

not fol-

low that it

beto-

kens a

more gen-

I would not, however,

by

all this

be understood to mean, that

the one species of expence always betokens a

ous spirit than the other

When

a

man

more

liberal or gener-

of fortune spends his rev-

enue chiefly in hospitality, he shares the greater part of

and companions, but when he employs

it

m purchasing

erous

his friends

spint

such durable commodities, he often spends the whole upon his person, and gives nothing to

any body without an

latter species of expence, therefore, especially

wards frivolous jewels, trinkets,

but a base and

objects, the little

it

equivalent.

when

own The

directed to-

ornaments of dress and furniture,

gewgaws, frequently indicates, not only a selfish disposition. All that I

sort of expence, as

with

mean

is,

trifling,

that the one

always occasions some accumulation of valu-

it

able 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 grovrth of public opulence.

CHAPTER IV OF STOCK LENT AT INTEREST

The

stock which

lent at interest is always considered as

is

by the lender. He expects that in due time it him, and that in the mean time the borrower

ital

to

certain annual rent for the use of

it.

he uses

it

as a capital, he employs

who reproduce

productive labourers,

Stock lent

is

to be restored

at interest

is

to

is

pay him a

The borrower may

either as a capital, or as a stock reserved for tion. If

a cap-

maintenance of

the value with a profit.

can, in this case, both restore the capital

it

immediate consump-

in the

it

use

and pay the

He

interest

a capi-

tal to

the

lender,

but may or may not be so to the

borrower

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,

He est,

what was destined

for the support of the industrious.

can, in this case, neither restore the capital nor

pay the

inter-

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 quently than in the will

The man who borrows in order to spend and he who lends to him will generally have

latter.

soon be ruined,

occasion to repent of his

purpose, therefore,

fre-

is

folly.

To borrow

in all cases,

or to lend for such a

where gross usury

question, contrary to the interest of both parties;

out of the

is

and though

it

no doubt happens sometimes that people do both the one and the other; yet, from the regard that all est,

as

we may

we

be assured, that

it

men have

own

for their

inter-

cannot happen so very frequently

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 profitably, or to those

you

who

will

for proposing the question.

spend

it idly,

Even among

and he

employ

it

will, laugh at

borrowers, therefore,

not the people in the world most famous for frugality, the

num-

ber of the frugal and industrious surpasses considerably that of the prodigal

and

idle.

333

Generally so to the borrower,

it is

THE WEALTH OF NATIONS

334 except in case of

mortgages effected

by coun-

The only people to whom stdtk 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

may

they borrow, one

say,

is

com-

try gentle-

men.

monly spent before they borrow

it.

They have generally consumed them upon credit by

so great a quantity of goods, advanced to

shopkeepers and tradesmen, that they find at interest in order to

pay the

debt.

The

it

necessary to borrow

capital

borrowed replaces

the capitals of those shopkeepers 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

Loans are

made in

all

or of gold

loans at interest are

and

silver.

made

money, but what

what the lender

the bor-

the money^s worth, or the goods which

rower wants and

it

gets is

which he can place

in that stock. If

goods.

employing industry,

it is

as

a stock

really supplies

for

in

money, either of paper,

But what the borrower

him

with, it

is

really wants,

and

not the money, but

can purchase. If he wants

immediate consumption,

it

those goods only

is

he wants

it

as a capital for

from those goods only that the industri-

ous can be furnished with the tools, materials, and maintenance, necessary for carrying on their work. lender, as

it

By means

of the loan, the

were, assigns to the borrower his right to a certain

portion of the annual produce of the land and labour of the country, to

So the quantity of stock

which can be lent is

be employed as the borrower pleases.^

The

or, as it is commonly exmoney which can be lent at interest in any country, is not regulated by the value of the money, whether paper or coin,

quantity of stock, therefore,

pressed, of

which serves as the instrument of the different loans made in that

deter-

mined by

country, but

by the value of that part of the annual produce

the value

which, as soon as

of that

hands of the productive labourers,

it

comes either from the ground, or from the is

part of the pro-

duce which replaces

such capital

as the

owner does not himgplf

employ.

destined not only for replac-

ing a capital, but such a capital as the

the trouble of employing himself.

owner does not care to be at

As such

capitals are

commonly

and paid back in money, they constitute what is called the monied interest. It is distinct, not only from the landed, but lent out

from the trading and manufacturing owners themselves employ their interest,

however, the

money

is,

interests, as in these last the

own

capitals.

as

were, but the deed of assign-

it

Even

in the

monied

ment, which conveys from one hand to another those capitals which the owners do not care to employ themselves. Those capitals

may

be greater in almost any proportion, than the amount of ^Lectures, p. 220.

STOCK LENT AT INTEREST

serves as the instrument of their conveyance;

money which

the

money

the same pieces of

W

chases of

B

which

X

W

money

different

immediately pur-

B

a thousand pounds worth of goods.

having no oc-

himself, lends the identical pieces to

immediately purchases of

C

This be

different purchases. A, for example,

a thousand pounds, with which

casion for the

many

successively serving for

many

loans, as well as for

lends to

335

may

much

greater

than the actual

money employed.

X, with

another thousand pounds

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

worth of goods.

C

same manner, and

in the

for 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.

men

What

the three monied

A, B, and C, assign to the three borrowers,

power of making those purchases. In value and the use of the loans.

The

this

power

stock lent

W, X, Y,

is

the

consist both the

by the

three

monied

men, is equal to the value of the goods which can be purchased with with it, and is three times greater than that of the money all be may which the purchases are made. Those loans, however, perfectly well secured, the goods purchased

by

the different debt-

with a profit, ors being so employed, as, in due time, to bring back, pieces an equal value either of coin or of paper. And as the same to loans different thus serve as the instrument of

money can

of

three, or for the

may

A

same

they reason, to thirty times their value, so

repa)mient. likewise successively serve as the instrument of considered as capital lent at interest may, in this manner, be certain conof a from the lender to the borrower

an assignment

siderable portion of the annual produce;

borrower in return

shall,

upon condition that the

during the continuance of the loan, an-

called the interest nually assign to the lender a smaller portion, with that considerable and at the end of it, a portion equally

the repayment. which had originally been assigned to him, called as the deed generally Though money, either coin or paper, serves to the more considerable of assignment both to the smaller, and portion,

it is itself

altogether different

from what

is

assigned

by

The money

is

altogether different

from what is actually

assigned either as

principal

or interest.

it.

produce which, as In proportion as that share of the annual from the hands of the soon as it comes either from the ground, or

The stock

capital, increases

naturally

productive labourers, in

any country, what

creases with

it.

The

is

destined for replacing

is

called the

monied

a

interest naturally in-

increase of those particular capitals

which the owners wish

from

at the to derive a revenue, without being

naturally accompanies the trouble of employing them themselves,

to be lent at interest

grows as the whole quantity of stock increases.

the wealth oe nations

336

general increase of capitals; or, in other words, as stock increases,

the quantity of stock to be lent at interest grows gradually greater

and falls

as

the quan-

greater.

of stock to be lent at interest increases, the in-

As the quantity

Interest

terest, or the price

which must be paid

for the use of that stock,

tity of

necessarily diminishes, not only from those general causes which

stock to

make

the market price of things

be lent increases

tity increases,

profits di-

minish as it becomes

more

any country, the

profits

As

capitals increase in

which can be made by employing them necessarily diminish.

becomes gradually more and more try a profitable

dif-

ficult to

as their quanto this

particular case. because

commonly diminish

but from other causes which are peculiar

in

method

difficult to find

of employing

any new

It

within the coun-

capital.

There

arises

consequence a competition between different capitals, the owner

employment which

find a

of one endeavouring to get possession of that

profitable

But upon most occasions he can hope to 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

method of employing

new capital.

is

occupied

by

another.

justle that other out of this

labour,

by the

taining

it,

find

increase of the funds which are destined for main-

grows every day greater and greater. Labourers easily

employment, but the owners of capitals find

it difficult

to get

labourers to employ. Their competition raises the wages of labour,

and sinks the

made by

profits of stock.

But when the

the use of a capital are in this

profits

which can be

manner diminished,

as

were, at both ends, the price which can be paid for the use of that

is,

it it,

the rate of interest, must necessarily be diminished with

them. The notion that it

was the

Mr. Locke, Mr. Law, and Mr. Montesquieu,

as well as

many

other writers,^ seem to have imagined that the increase of the

discovery

quantity of gold and

of the

Spanish West Indies, was tie real cause of the lowering of the rate

West Indies

which lowered interest

has been

silver, in

consequence of the discovery of the

of interest through the greater part of Europe.

say, having

become

ticular portion of

Those metals, they

of less value themselves, the use of

them necessarily became

any par-

of less value too,

consequently the price which could be paid for

it.

and

This notion,

® Locke, Some ConsiderationSf ed. of 1696, pp. 6, 10, ii, 81; Law, Money and Trade, 2nd ed., 1720, p. 17 Montesquieu, Esprit des Lois, liv. xxii., ch. vi Locke and Law suppose that the rate rises and falls with the quantity of money, and Montesquieu specifically attributes the historical fall to the discovery of the American mines. Cantillon disapproves of the common and re;

ceived idea that an increase of effective money diminishes the rate of interest. -—Essai, pp. 282-285; see Lectures, pp. 219, 220.

STOCK LENT AT INTEREST which at

first

337

sight seems so plausible, has been so fully exposed

by Mr. Hume,^ that it is, perhaps, unnecessary to say anything more about it. The following very short and plain argument, however,

to

may

serve to explain

more distinctly the have misled those gentlemen.

fallacy

which seems

Before the discovery of the Spanish West Indies, ten per cent,

seems to have been the common rate of

interest

through the great-

er part of Europe. It has since that time in different countries

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

to five per cent., the same quantity of silver can just half the quantity of goods

which

it

from ten

now purchase

could have purchased

before. This supposition will not, I believe, be found any-where

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

refuted

by Hume.

utterly impossible that the lowering of the value of silver

could have the smallest tendency to lower the rate of interest. If

If

iioo

are now required to pur-

chase

whati^o would have purchased then,iio

must now be required to purchase

what £$ would have purchased then.

a hundred pounds are in those countries

than

pounds were then, ten

fifty

now of no more value pounds must now be of no more

value than five pounds were then. Whatever were the causes which

lowered the value of the

lowered that of the

The

must have remained the same, though the

altered.

By

altering the rate,

between those two values

is

now can be worth no more

By

rate

had never

on the contrary, the proportion

necessarily altered. If a

pounds now are worth no more than then.

same must necessarily have

and exactly in the same proportion.

proportion between the value of the capital and that of the

interest,

been

capital, the

interest,

fifty

were then,

than two pounds

hundred

five

pounds were

ten shillings

reducing the rate of interest, therefore, from ten to five

we

per cent.,

give for the use of a capital, which

is

supposed to

former value, an interest which

is

equal

increase in the quantity of silver, while that of the

com-

be equal to one-half of

its

to one-fourth only of the value of the former interest.

Any

modities circulated by means of

no other

effect

remained the same, could have

than to diminish the value of that metal.

nominal value of real value

it

all sorts

of

The

goods would be greater, but their

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 employ, would be precisely

In his essay, “Of Interest,” in Political Discourses, 1752.

An increase in

the quantity of silver

could only diminish its value.

THE WEALTH OF NATIONS

338

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 another. The deeds of asthe same.

signment, like the conveyances of a verbose attorney, would be

more cumbersome, 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 deNominal wages would be greater,

but real

wages the same; profits

would be the same nominally

mand

for

would be the same.

it

wages, therefore,

Its price or

though nominally greater, would really be the same. They would be paid in a greater number of pieces of silver; but they would

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 purchase only the same quantity of goods.

When that is increased, therefore, his wages appear to be increased, though they may sometimes be no greater than be-

to the labourer.

But the

profits of stock are not

and

fore.

really

pieces of silver with

computed by the number of

which they are paid, but by the proportion

which those pieces bear to the whole capital employed. Thus in a particular country five shillings

wages of labour, and ten per

a week are said

cent, the

common

to

be 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

was divided would likewise be the same. They would the same advantages and disadvantages.

between capital and sequently the

profit, therefore,

common

interest of

all

The common

which

it

trade with

proportion

would be the same, and con-

money; what can commonly be

money being necessarily regulated by what can commonly be made by the use of it.

given for the use of

An increase in

Any

increase in the quantity of commodities annually circulated

within the country, while that of the

money which

the goods

annually

remained the same, would, on the contrary, produce

circulated

portant

would

effects, besides

capital of the country,

cause a

though

would

profits

the same quantity of money, but

many other imThe

it

might nominally be the same,

be augmented. It might continue to be expressed by

and consequently

them

that of raising the value of the money.

faUof

really

circulated

tity of labour.

The quantity

it

would command a greater quan-

of productive labour

which

it

could

of inter-

maintain and employ would be increased, and consequently the de-

est

mand

wages would naturally rise with the demand, and yet might appear to sink. They might be paid with a for that labour. Its

smaller quantity of money, but that smaller quantity might pur-

chase

The

a

greater quantity of goods than a greater

profits of stock

ance.

The whole

would be diminished both

capital of the country being

had done

really

and

before.

in appear-

augmented, the com-

STOCK LENT AT INTEREST

339

petition between the different capitals of which

it was composed, would naturally be augmented along with it. The owners of those particular capitals would be obliged to content 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

But as something can every-where be made by the use of money, something ought every-where to be paid for the use of it. law.

The prohibition

of interest is

wrong,

and in-

This regulation, instead of preventing, has been found from experience to increase the evil of usury; the debtor being obliged to pay,

creases the

not only for the use of the money, but for the risk which his creditor

usury.

runs

by

accepting a compensation for that use.

may say so,

to insure his creditor

In countries where interest

is

He is obliged, if one

from the penalties of usury.

permitted, the law, in order to pre-

vent the extortion of usury, generally ixes the highest rate which

can be taken without incurring a pendty. This rate ought always to be somewhat above the lowest market price, or the price which

commonly paid undoubted est

market

for the use of

evil of

is

money by those who can give the most

security. If this legal rate should rate, the effects of this fixation

be fixed below the low-

must be nearly the same

The creditor will not lend 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 as those of a total prohibition of interest.

Where k

maximum rate

is

fixed, this

should be

somewhat above the market rate on

good security,

his

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

to

who cannot give the very best security, and obliges them

have recourse to exorbitant usurers. In a country, such as Great

Britain,

where money

to private people

the present

The

lent to

is

upon good

legal rate, five

legal rate, it is to

what above, ought not

government at three per cent, and

security at four,

per cent.,

is

be observed, though

to be

and four and a

half,

perhaps, as proper as any.

much above

it

ought to be some-

the lowest market rate. If

the legal rate of interest in Great Britain, for example,

was

fixed so

money which was to be lent, would be lent to prodigals and projectors, who alone would be willing to give this high interest. Sober people, 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. high as eight or ten per

cent., the greater

part of the

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 advan-

but not

much above, or the greater part of

loans

would be to prodigals

and

projectors

340

the wealth of nations

tageous use of

it,

and thrown

waste and destroy trary,

is

it.

Where

into those

which were most

likely to

the legal rate of interest, on the con-

fixed but a very little

above the lowest market

rate, sober

people are universally preferred, as borrowers, to prodigals and projectors.

The person who

money

lends

from the former as he dares to take from the is

much

latter,

and

interest

his

money

safer in the hands of the one set of people, than in those of

A great part

the other. into the

much

gets nearly as

of the capital of the country

hands in which

it is

most

thus thrown

is

be employed with ad-

likely to

vantage.

No law can reduce

No

law can reduce the common rate of

ordinary market rate at the time

interest

below the market rate.

standing the edict of 1766,

when

by which

below the lowest

interest

that law

made. Notwith-

is

the French king attempted to

reduce the rate of interest from five to four per

money

cent.,

con-

tinued to be lent in France at five per cent., the law being evaded in several different ways.^

The num-

The ordinary market

price of land,

it is

to be observed,

ber of years’

purchase

commonly

every-where upon the ordinary market rate of

interest.®

depends

The person

who has a capital from which he wishes to derive a revenue, without taking the trouble to employ

it

himself, deliberates whether

he

paid for land de-

pends on the rate of interest.

should buy land with

it,

or lend

curity of land, together with

it

The

out at interest.

superior se-

some other advantages which almost

every-where attend upon this species of property, will generally dis-

pose him to content himself with a smaller revenue from land, than

what he might have by lending out

his

money at interest. These ad-

vantages are sufficient to compensate a certain difference of revenue; but they will compensate a certain difference only; and rent of land should fall short of the interest of difference,

nobody would buy

ordinary price.

On

the contrary,

more than compensate the which again would soon at ten per cent., land

purchase.

As

interest

if

the advantages should

difference, every

six, five,

is

When

for ten

price of land is lower. In

France at twenty years purchase.

Above, p. 91. This seems obvious, but

erations, pp. 83, 84.

it

was

was

cent., the price

thirty years purchase.

and the common

®

interest

higher in France than in England;

sells at thirty; in ^

much

and twelve years

and four per

and twenty, and

rate of interest

its

body would buy land,

raise its ordinary price.

sunk to

the

if

greater

which would §oon reduce

was commonly sold

of land rose to twenty, five

The market

land,

money by a

England

distinctly denied

it

commonly

by Locke, Some Consid-

CHAPTER V OF THE DIFFERENT EMPLOYMENT OF CAPITALS

Though

all capitals

are destined for the maintenance of productive

labour only, yet the quantity of that labour, which equal capitals are capable of putting into motion, varies extremely according to

the diversity of their employment; as does likewise the value which that

employment adds

produce of the land and labour

to the annual

of the country.

The quantity of labour put in motion

and the value

added to

A capital may be employed in four different ways:

either, first, in

procuring the rude produce annually required for the use and con-

sumption of the society;

manufacturing and pre-

or, secondly, in

paring that rude produce for immediate use and consumption; thirdly, in transporting either the rude or

the an-

nual produce by capitals

vary with or,

manufactured produce

their

em-

ployment.

from the places where they abound to those where they are wanted or, lastly, in dividing particular portions of either into

parcels as suit the occasional

the

first

way

demands

such small

who want them. In those who undertake

of those

are employed the capitals of

all

the improvement or cultivation of lands, mines, or fisheries; in the

There are four different

ways of employing capital,

master manufacturers; in the

third, those of all

wholesale merchants; and in the fourth, those of

all retailers. It is

second, those of

difficult

which

all

to conceive that a capital should be employed in

may

not be classed under

Each of those four methods

some one

any way

or other of those four.

of employing

a capital

is

essentially

necessary either to the existence or extension of the other three, or

all

of

which are necessary;

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

(1) pro-

curing

rude pro-

kind could

exist.

duce,

Unless a capital was employed in manufacturing that part of the

rude produce which requires a good deal of preparation before

can be

fit

for use

and consumption,

it

either

add

(2)

it

would be of

was prono value in exchange, and could

noiliing to the wealth of the society. 341

it;

or

if it

man-

ufacturing,

duced, because there could be no demand for

duced spontaneously,

it

would never be pro-

the wealjh of nations

342 (3)

trans-

portation,

Unless a capital was employed in transporting, either the rude or

manufactured produce, from the places where

where

it is

it

abounds

to those

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 increases the en-

joyments of both. and

Unless a capital was employed in breaking and dividing certain

(4)

distribu-

portions either of the rude or manufactured produce, into such small

tion

parcels as suit the occasional

every

man would

demands of those who want them,

be obliged to purchase a greater quantity of the

goods he wanted, than his immediate occasions required.

was no such trade

as a butcher, for example, every

If there

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 six

workman was

months provisions

obliged to purchase a month’s or

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

consumption, 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

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 it.

profit,

which he makes by

sates the additional price

it

in this

way, much more than compen-

which the

profit of the retailer

imposes

upon the goods. The prejudices of some political writers against shopkeepers and tradesmen, are altogether without 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 publick, though they may so as to hurt one another. The quantity of

grocery goods, for example, which can be sold in a particular town, is limited by the demand of that town and its ^ neighbourhood. The capital, therefore,

not exceed what

which can be employed

is sufficient to

in the grocery trade can-

purchase that quantity. If this capi-

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 tal is divided

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

^

Ed.

I

does not contain

“its.’

EMPLOYMENT OF CAPITALS

343

competition might perhaps ruin some of themselves; but to take care of this

is

the business of the parties concerned, and

it

may

safe-

ly be trusted to their discretion. It can never hurt either the con-

sumer, 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 customer to buy what he has no occa-

sion for. This

evil,

however,

is of

publick attention, nor would ing their numbers. It

is

it

too

little

importance to deserve the

necessarily be prevented

by

restrict-

not the multitude of de-houses, to give the

most suspicious example, that occasions a general

disposition to

drunkenness among the common people; but that disposition

aris-

ing from other causes necessarily gives employment to a multitude

of ale-houses.

The

persons whose capitals are employed in any of those four

ways are themselves productive labourers. Their labour, when propitself in the subject or vendible com-

erly directed, fixes and realizes

modity upon which

it is

bestowed, and generally adds to

the value at least of their

its

own maintenance and consumption. The

profits of the farmer, of the manufacturer, of the merchant, tailer,

are all

drawn from the

sell.

and

which the two

price of the goods

produce, and the two last buy and

employed

price

Equal

capitals,

augment too

such capitals are

productive la-

bourers:

re-

first

however,

in each of those four different ways, will immediately

put into motion very

The employers of

different quantities of productive labour,

in very different proportions the value of the

^

and

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

the capital of the retailer

him

to continue his business.

ductive labourer sists

The

retailer himself is the

whom it immediately employs.

the whole value which its employment adds

In his

only pro-

profits,

con-

em-

ploys only himself

annual pro-

to the

duce of the land and labour of the society.

The

capital of the wholesale

merchant replaces, together with

and manufacturers of whom he purchases the rude and manufactured produce which he deals in,

their profits, the capitals of the farmers

and thereby enables them

by

this service chiefly that

to continue their respective trades. It is

annual produce. His capital employs too the

and

sailors

transport his goods from one place to another, and

it

its

carriers

augments

the price of those goods by the value, not only of his profits, but of

-

Ed.

I

merchant employs sailors

and car-

he contributes indirectly to support the

productive labour of the society, and to increase the value of

who

the capital of the

does not contain “immediately” here or seven lines lower down.

riers;

THE WEALTH OF NATIONS

344

which

their wages. This is all the productive labour

puts into motion, and

all

the value which

Its operation in

annual produce.

it

immediately

it

immediately adds to the

both these respects

a good deal

is

superior to that of the capital of the retailer.

Part of the capital of the master manufacturer

the capital of the

fixed capital in the instruments of his trade,

manufacturer

em-

ploys his

workmen

with

some other

that of

its profits,

artificer of

them. Part of his circulating capital terials,

is

is

employed as a

replaces, together

whom

he purchases

employed in purchasing ma-

replaces, with their profits, the capitals of the farmers

and

and miners of

whom

he purchases them. But a great part of

always, either annually, or in a

among

and

the different

much

it is

shorter period, distributed

workmen whom he employs. It augments the by their wages, and by their masters profits

value of those materials

upon the whole stock

of wages, materials,

employed in the business.

It puts

and instruments of trade

immediately

^

into motion, there-

fore, 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

^he capital of the

farmer employs his ser-

vants and his cattle,

and adds a

much

tive labour

capital put^into

than that of the farmer.

but his labouring

cattle,

sive

its

produce has

Not only his

labouring servants,

are productive labourers. In agriculture too

nature labours along with pence,

motion a greater quantity of produc-

its

man; and though her labour value, as well as that of the

costs

no ex-

most expen-

workmen. The most important operations of agriculture seem

intended, not so

much

to increase, though they

do that

too, as to

greater

value to the an-

direct the fertility of nature

most profitable

imal produce than other

may

capital.

ly regulate

to

man.

towards the production of the plants

A field overgrown with briars and brambles

frequently produce as great a quantity of vegetables as the

best cultivated vineyard or corn field. Planting

and to

more than they animate the

and

tillage frequent-

active fertility of nature;

after all their labour, a great part of the

work always remains

be done by her. The labourers and labouring

employed in agriculture, not only occasion,

cattle, therefore,

like the

workmen in own con-

manufactures, the reproduction of a value equal to their

sumption, or to the capital which employs them, together with

owners

profits;

but of a

capital of the farmer

and

much

its

greater value. Over and above the

all its profits,

they regularly occasion the

reproduction of the rent of the landlord. This rent

may

be consid-

ered as the produce of those powers of nature, the use of which the landlord lends to the farmer. It

®

Ed.

1

is

greater or smaller according to

does not contain “immediately.’

EMPLOYMENT OF CAPITALS

345

the supposed extent of those powers, or in other words, according to the supposed natural 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 man-

ufactures can ever occasion so great a reproduction. In them nature

man does all; and the reproduction must always be proportion in to the strength of the agents that occasion it. The does nothing;

employed

capital

in agriculture, therefore, not only puts into

tion a greater quantity of productive labour than

employed

any equal capital

in manufactures, but in proportion too to the quantity of

productive labour which

it

employs,

to the annual produce of the land

wealth and revenue of

real

mo-

a capital can be employed,

its

it

adds a

and labour

much

greater value

of the country, to the

Of all the ways in which by far the most advantageous to the

inhabitants.

it is

society.

of

The

capitals

employed

any

society,

must always

ployment

is

and

in the retail trade

Their em-

reside within that society.

confined almost to a precise spot, to the farm, and to

the shop of the retailer.

some exceptions

The

in the agriculture

They must

generally too, though there are

members of the

to this, belong to resident

capital of a wholesale merchant,

in agri-

culture

and

retail

trade

society.

on the contrary, seems

have no fixed or necessary residence anywhere, but

Capitals

employed

to

may wander

must

re-

side within the

country;

about from place to place, according as sell

can either buy cheap or

it

dear.

The

the capital

capital of the manufacturer

manufacture

is

must no doubt

may

where the

merchant

frequently be at a great distance

anywhere;

be

is

both from the place where the materials grow, and from that where the complete manufacture

from the places which

is

consumed. Lyons

is

own

their

made

in other countries,

and

in Sicily are

from the materials which

produces. Part of the wool of Spain

Great Britain, and some part of that cloth

is

is

manufactured in

afterwards sent back

Whether the merchant whose If

any he

capital exports the surplus produce

society be a native or a foreigner,

is

re-

side

the capital of the

manufacturer

must be where the manufacture is,

to Spain.

of

may

very distant both

afford the materials of its manufactures,

from those which consume them. The people of fashion cloathed in silks

of the

not always

carried on; but where this shall

necessarily determined. It

reside

is

of very little importance.

a foreigner, the number of their productive labourers is if he had been a native by one man only; and

but that is not necessarily deter-

mined.

necessarily less than

the value of their annual produce,

The

sailors or carriers

whom

by the

he employs

profits of that

may

still

one man.

belong

indiffer-

Whether the mer-

the wealth of nations

346 chant who exports

belongs to the country or not

makes little

dif-

ference.

ently either to his country, or to their country, or to

some third

The

capital he had been a native. 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

country, in the

same manner as

a demand at home. son

who produces

if

It as effectually replaces the capital of the per-

that surplus, and as effectually enables

continue his business

;

the service

him to

the capital of a whole-

by which

sale merchant chiefly contributes to support the productive labour,

and

augment the value of the annual produce

to

of the society to

which he belongs. The capital of

the

manufac-

It

of

is

more consequence

that the capital of the manufacturer

should reside within the country.

It necessarily

puts into motion a

and adds a greater value to

turer will

greater quantity of productive labour,

put into motion more na-

the annual produce of the land and labour of the society. It may,

however, be very useful to the country, though

tive la-

within

bour

if it

it

should not reside

The capitals of the British manufacturers who work up and hemp annually imported from the coasts of the Baltic,

it.

the flax

resides

within the

are surely very useful to the countries which produce them. Those

country,

materials are a part of the surplus produce of those countries which,

but may be useful even if outside it.

was annually exchanged

for

something which

unless

it

there,

would be of no value, and would soon cease

The merchants who export it, replace produce

it,

to

is

in

demand

be produced.

mer-

British manufacturers replace the capitals of those

and the

who

the capitals of the people

and thereby encourage them to continue the production

chants. Particular

coun-

tries often

A particular country, in the same manner as a particular person, may frequently not have capital sufficient both to improve and

cul-

manufacture and prepare their whole rude

have not

tivate all its lands, to

enough

produce for immediate use and consumption, and to transport the

capital for cultiva-

surplus part either of the rude or manufactured produce to those

tion,

distant markets where

manufactures, and

there

is

trans-

of Great Britain

portation.

all their

lands.

great part of

can be exchanged for something for which

The inhabitants

have not capital

The wool

it,

manufactured

of

sufficient to

many different parts

improve and cultivate

of the southern counties of Scotland

after a long land carriage through very

in Yorkshire, for

at home. There are ain, of

it

a demand at home.

many little

want

of

own

a

bad roads,

a capital to manufacture

it

manufacturing towns in Great Brit-

which the inhabitants have not capital

the produce of their

is,

sufficient to transport

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 greater commercial cities.

When

the capital of any country

is

not sufficient for

all

those

EMPLOYMENT OF CAPITALS three purposes, in proportion as a greater share of

347

it is

employed

in

In such cases the

agriculture, the greater will be the quantity of productive labour

larger the

which

propor-

puts into motion within the country; as will likewise be the

it

value which

employment adds to the annual produce of the land and labour of the society. After agriculture, the capital employed in its

tion

em-

ployed in agricul-

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 exportation, has the least effect

ture, the

of any of the three.

duce.

The

country, indeed, which has not capital sufficient for

all

those

three purposes, has not arrived at that degree of opulence for which it

seems naturally destined.

with an insufficient

way

shortest

for a society,

ual, to acquire

a

nation, has

dividual,

and

a

To

capital, to

all

the three,

in the

The

is

it

would be

for an individ-

capital of all the individuals of

same manner

as that of

a

single in-

The

capable of executing only certain purposes.

is

and

certainly not the

capital of all the individuals of a nation is increased in the

same

manner as that of a single individual, by their continually accumulating and adding to it whatever they save out of their income. It is likely to increase the fastest, therefore,

way

when

that affords the greatest revenue to

country, as they will thus be enabled to

But the revenue

nual pro-

The quickest

way to make the capital sufficient

no more than

sufficient one.

its limits

attempt, however, prematurely

do

larger will

be the an-

all

it is

employed

for all these pur-

poses is to

begin with the

most profitable.

in the

the inhabitants of the

make

the greatest savings.

of all the inhabitants of the country is necessarily

in proportion to the value of the annual produce of their land

and

labour.

been the principal cause of the rapid progress of our American colonies towards wealth and greatness, that almost their whole It has

capitals

have hitherto been employed in

agriculture.'^

They have no

manufactures, those houshold and coarser manufactures excepted

which necessarily accompany the progress of agriculture, and which are the

The

work

of the

women and

children in every private family.

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 warehouses from which goods are retailed in some provinces, particularly in Virginia and

Mary-

land, 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

by the capitals of those who are not resiWere the Americans, either by combination or

society being carried on

dent members of

by any other

it.

sort of violence, to stop the importation of

European

manufactures, and, by thus giving a monopoly to such of their ^

Below, p. 392.

own

That they have done so

is

the

principal

cause of the progress of the

American colonies.

the wealth of nations

348

countrymen as could manufacture the siderable part of their capital into this

any conemployment, they would relike goods, divert

tard instead of accelerating the further increase in the value of their

annual produce, and would obstruct instead of promoting the prog-

towards real wealth and greatness. This would

ress of their country

be

still

more the

case,

were they to attempt, in the same manner, to

monopolize to themselves their whole exportation trade.

The Great countries

have

course of

human

prosperity, indeed, seems scarce ever to

have been of so long continuance as acquire capital sufficient for

we

all

to enable

any great country to

those three purposes; unless, per-

haps,

ever ac-

cultivation of China, of those of antient Egypt,

quired sufficient

capital for all

those

state of Indostan.

cording to

nowned

and

give credit to the wonderful accounts of the wealth

scarcely

all

Even those

and

of the antient

three countries, the wealthiest, ac-

accounts, that ever were in the world, are chiefly re-

for their superiority in agriculture

and manufactures. They

purposes.

do not appear to have been eminent

for foreign trade.

Egyptians had a superstitious antipathy to the sea; nearly of the same kind prevails

among

all

antient

the Indians; and the Chi-

nese have never excelled in foreign commerce. the surplus produce of

The

a superstition

®

The

greater part of

those three countries seems to have been

always exported by foreigners,

who gave in exchange for it somedemand there, frequently gold

thing else for which they found a

and

silver.

It is thus that the

same

capital will in

any country put

Different

tion a greater or smaller quantity of productive labour,

kinds of wholesale

greater or smaller value to the annual produce of

trade

em-

ploy dif-

in agriculture, manufactures,

and wholesale

trade.

ferent quantities

of pro-

ductive

labour

its

bour, according to the different proportions in which

The

la-

employed difference

very great, according to the different sorts of wholesale trade in which any part of it is employed. too

is

All wholesale trade, all buying in order to

sell

again

by wholesale,

may be reduced to three different sorts. The home trade,

different

trade of consumption, and the carrying trade.

to the an-

mo-

land and

it is

and add amounts

into

and add a

employed in purchasing in one part

of the

the foreign

The home

trade

same country, and

is

sell-

nual pro-

ing in another, the produce of the industry of that country. It com-

duce.

prehends both the inland and the coasting trade. The foreign trade of consumption is employed in purchasing foreign goods for home

There are three dif-

consumption.

The

carrying trade

is

employed

in transacting the

"Possibly the supposed authority for this statement

m

is Montesquieu, Esprit “L’Egypte ^loignee par la religion et par les mceurs de toute communication avec les Strangers, ne faisait guere de commerce audehors. Les Egyptiens furent si peu jaloux du commerce du dehors qu’ils de la mer rouge a toutes les petites nations qui eurent

LoiSf liv. xxi., ch. vi.:

.

que^port

.

y

quel-

EMPLOYMENT OF CAPITALS commerce of

349

foreign countries, or in carr5dng the surplus produce

The

capital

country

which

is

employed in purchasing

in order to sell in

tinct capitals that

in

one part of the

another the produce of the industry of

that country, generally replaces

by every such

had both been employed

operation two dis-

merchant a certain value of commodities,

it

home, foreign

and carrying.

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 in return at least

ferent

kinds of trade

of one to another.

generally brings back

an equal value of other commodities.

When

both

Capital

employed in buying in one

every such operation two distinct capitals, which had both been em-

part of the country to sell in another

ployed in supporting productive labour, and thereby enables them

replaces

are the produce of domestick industry,

to continue that support.

tures to London,

The

necessarily replaces

it

by

which sends Scotch manufac-

capital

and brings back English corn and manufactures

to Edinburgh, necessarily replaces,

British capitals which

by every such

had both been employed

operation,

two domestic capitals

two

in the agriculture

or manufactures of Great Britain.

The

capital

employed

purchasing foreign goods for home-con-

in

is made with the produce of domesby every such operation, two distinct

sumption, when this purchase tick industry, replaces too,

capitals

;

industry.

but one of them only

The

capital

is

employed

in supporting domestick

which sends British goods to Portugal, and

The

one.

Though the returns,

other

is

it

will give

places one

domestic

and one foreign

a Portuguese

capital.

therefore, of the foreign trade of

consump-

tion should be as quick as those of the home-trade, the capital

ployed in

tatioji re-

by every

brings back Portuguese goods to Great Britain, replaces

such operation only one British capital.

Capital

employed in impor-

em-

but one-half the encouragement to the indus-

try or productive labour of the country.

But the returns

dom

of the foreign trade of consumption are very sel-

so quick as those of the home-trade.

trade generally

come

in before the

three or four times in the year.

consumption seldom come times not

till

after

returns of the home-

end of the year, and sometimes

The

two or three years.

end of the year, and some-

trade.

A capital, therefore, employed

make

the foreign trade of consumption has

twelve operations, or be

made

equal, therefore, the one will give four

one. If the capitals are

and twenty times more en-

couragement and support to the industry of the country than the other.^ ®

If this doctrine as to the

superiorit} of agriculture

quick as those of

home

sent out and returned twelve times, before a capital employed in

earlier in the chapter, it

are not so

returns of the foreign trade of

in before the

in the home-trade will sometimes

The

Its returns

advantage of quick returns had been applied of the argument as to the

would have made havoc

XHE WEALTH OF NATIONS

350

trade has

home-consumption may sometimes be purchased, not with the produce of domestick industry, but with some other foreign goods. These last, however, must have been purchased

the same

either immediately with the

Roundabout foreign

effect

as

direct.

The foreign goods

for

produce of domestick 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-

The

different exchanges.

more

mediately, or after two or

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 em-

ployed in the most direct trade of the same kind, except that the final returns are likely to

upon

be

still

more

must depend

distant, as they

the returns of two or three distinct foreign trades. If the flax

and hemp

of Riga are purchased with the tobacco of Virginia, which

had been purchased with

British manufactures, the

merchant must

wait for the returns of two distinct foreign trades before he can em-

ploy the same capital in re-purchasing a like quantity of British manufactures. 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

should happen to be carried on by of

whom

distinct foreign trades

two or three distinct merchants,

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 indeed will in this case receive the returns of his

own

capital

capital

more quickly; but the

employed in the trade

will

final Teturns of the

whole

be just as slow as ever. Whether

the whole capital employed 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 ex-

changed for one another. The whole capital employed, therefore, in

such a round-about foreign trade of consumption, will generally

give less encouragement

the country, than of the Foreign trade carried on by means of gold and

and support

an equal

capital

to the productive labour of

employed

in

a more

direct trade

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

and support which

it

encouragement

can give to the productive labour of the coun-

EMPLOYMENT OF CAPITALS

35^

try from which

it is carried on. If they are purchased with the gold of Brpii, 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 industiy of the country, or that had been purchased with something else that was so. So

silver is in

no way different

from the rest

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 inconveniences

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 foreign 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

and no goods,

their insurance not greater;

besides, are less liable to suffer

of foreign goods, therefore,

by the

may

carriage.''

An

equal quantity

frequently be purchased with a

smaller quantity of the produce of domestick industry, tervention of gold and silver, than

goods.

The demand

of the country

be supplied more completely and other.

that of any other foreign

may frequently,

at

the in-

in this

manner,

a smaller expence than in any

Whether, by the continual exportation of those metals, a

trade of this kind is

by

by

carried on, in

is

from which

likely to impoverish the country

any other way,

I shall

it

have occasion to examine at

great length hereafter.®

That part

of the capital of

carr3dng trade,

any country which

is

employed

in the

altogether withdrawn from supporting the pro-

is

ductive labour of that particular country, to support that of some

Though

foreign countries.

it

may

replace

by every

operation two

Capital

employed in the

carrying

trade replaces

distinct capitals, yet neither of

country.

The

capital of the

them belongs ®

to that particular

Dutch merchant, which

of Poland to Portugal, and brings

back the

carries the corn

and wines

fruits

of

two foreign capitals.

Portugal to Poland, replaces 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 When, indeed, the carrying trade of any particular councarried on with the ships and sailors of that country, that part

country. try

is

^

The second part

“

Ed.

I

of this sentence

reads “belong.”

is

not in

Ed

i

®

Bk

iv

It

may

employ

XHE WEALTH OF NATIONS

352 ships

and

sailors

belonging to the countiy, but this is not always the case.

of the capital

employed

in

it

which pays the

freight, is distributed

among, and puts into motion, a certain number of productive bourers of that country. Almost

all

had any con-

nations that have

siderable share of the carrying trade have, in fact, carried this it,

manner. The trade

has probably derived

its

it

on in

name from

the people of such countries being the carriers to other countries.

It does not, it

itself

la-

however, seem essential to the nature of the trade that

should be so.

A Dutch

merchant may,

capital in transacting the

commerce

for example,

employ

his

Poland and Portugal, by

of

carrying part of the surplus produce of the one to the other, not in

Dutch, but in British bottoms.

It

may be

upon some particular

presumed, that he ac-

upon

and equal

tually does so

capital

count, however, that the carrying trade has been supposed peculiar-

occasions. It

in

employed impor-

ly advantageous to such

tation or

defence and security depend upon the

coasting

trade may

shipping.

But the same

is

this ac-

a country as Great Britain, of which the

capital

number

may employ

as

of its sailors

and

many

and

sailors

employ as

shipping, either in the foreign trade of consumption, or even in the

many

home-trade, when carried on by coasting vessels, as

ships and

men

The number

it

could in the

and shipping 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 carrying trade.

value,

of sailors

and partly upon the distance

of the ports

between which they

upon the former of those two circumfrom Newcastle to London, for example, employs more shipping than all the carrying trade of England, are to be carried; chiefly

stances.

The

coal-trade

though the ports are at no great distance.

To

force, therefore,

by

extraordinary encouragements, a larger share of the capital of any

country into the carrying trade, than what would naturally go to will not Capital in

home trade therefore

supports

more productive

The

capital, therefore,

employed

in the

try will generally give encouragement

home-trade of any counand 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

consumption: and the capital employed in

labour

this latter trade

than capi-

over an equal capital employed in the carr5dng trade.

tal

em-

ployed in foreign trade,

which,

and so try,

far as

has in both these respects a

power depends upon

must always be

all

riches, the

greater advantage

power

The

riches,

of every coun-

annual produce,

must ultimately be paid. But the (economy of every country, is to in-

taxes

great object of the political

supports

crease the riches

capital in

still

in proportion to the value of its

the fund from which

however,

more than

it,

always necessarily increase the shipping of that country.

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

EMPLOYMENT OF CAPITALS above either of the other two.

It

353

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

ought

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 introduces it.

When

the produce of any particular branch of industry exceeds

what the demand

of the country requires, the surplus

must be sent

abroad, and exchanged for something for which there

is a demand home. Without such exportation, a part of the productive labour of the country must cease,^® and the value of its annual produce

at

diminish.

The

land and labour of Great Britain produce generally

corn, woollens,

market

requires.

and hard ware, than the demand of the home-

The

surplus part of them, therefore,

abroad, and exchanged for something for which there at home. It

is

pence of producing

banks of

all

must be sent is

a demand

only by means of such exportation, that this surplus

can acquire a value

try,

Political

economy

accord.

more

the carrying trade.

sufficient to

it.

compensate the labour and ex-

The neighbourhood

of the sea coast,

facilitate the exportation

such surplus produce for something

else

which

is

and exchange

more

in

not to allure capital into

the foreign or

the carrying trade,

though each is advantageous when naturally

intro-

duced.

and the

navigable rivers are advantageous situations for indus-

only because they

consequentl>

of

demand

The surplus of

the pro-

duce of particulai

there.

branches

When

the foreign goods which are thus purchased with the sur-

plus produce of domestic industry exceed the

demand

of the

home-

market, the surplus part of them must be sent abroad again, and

exchanged six

for

and Maryland, with a part

industry.

be sent abroad-

something more in demand at home. About ninety-

thousand hogsheads of tobacco are annually purchased in Vir-

ginia

of industry must

But the demand

of the surplus produce of British

of Great Britain does not require, per-

haps, more than fourteen thousand.^^ If the remaining eighty-two

Foreign goods obtained in exchange

must often be

thousand, therefore, could not be sent abroad and exchanged for

re-export

something more in demand at home, the importation of them must

ed

cease immediately, and with

habitants of Great Britain,

it

the productive labour of all those in-

who

are at present employed in prepar-

ing the goods with which these eighty-two thousand hogsheads are

annually purchased. Those goods, which are part of the produce of

“ But why may not

the labour be diverted to the production of “some-

a demand at home”? The “corn, woollens and hardware” immediately below perhaps suggest that it is supposed the country has certain physical characteristics which compel its inhabitants to produce particular commodities ^ Below, p. 467 The figures 96,000 and 13,500 are given in the continuation of Anderson’s Commerce, a.d 1775, ed. of 1801, vol iv., p 187 thing for which there

is

THE WEALTH OF NATIONS

354

the land and labour of Great Britain, having no market at home,

and being deprived 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 other

em-

When

the capital stock of any country

gree, that

cannot be

it

all

employed

is

increased to such a de-

consumption,

in supplying the

ployments are

full,

the surplus capi-

and supporting the productive labour of that particular country, the surplus part of trade,

tal dis-

and

The

is

it

tries.

self into

national wealth; but

it

is

which

lar encouragements,

tom

symptom

of great

does not seem to be the natural cause of

ing trade, is

other coun-

offices to

the natural effect and

Those statesmen who have been disposed

a symp-

the carr3dng

itself into

employed in performing the same

carrying trade

gorges itthe carry-

naturally disgorges

to favour

seem to have mistaken the

it

effect

and symptom

for the cause. Holland, in proportion to the extent of the land

number

by

it.

with particu-

and

rather

the

than a

has, accordingly, the greatest share of the carrying trade of Europe.

cause of great na-

of

its

inhabitants,

far the richest country in

England, perhaps the second richest country of Europe,

is

Europe,

likewise

tional

supposed to have a considerable share of

wealth.

passes for the carr)dng trade of England, will frequently, perhaps,

it;

though what commonly

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 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

turns of those trades are generally used or ain.

The

trade which

is

consumed

final re-

in Great Brit-

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 pos-

The

tent of 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 pro-

carrying

duce of

trade

sion to exchange their respective productions with one another. That of the foreign trade of consumption, by the value of the sur-

sible ex-

is

much the greatest.

all

those distant places within the country which have occa-

plus produce of the whole countr)^

with

it.

duce of

That all

is

of

what can be purchased

by the value of the surplus prothe different countries in the world. Its possible extent,

therefore, is in a

two, and

and

of the carrying trade,

manner

infinite in

comparison of that of the other

capable of absorbing the greatest capitals.

EMPLOYMENT OP CAPITALS The

own

consideration of his

private profit,

which determines the owner of any capital agriculture, in manufactures, or in

wholesale or retail trade.

bour which it

may add

ciety,

may

it

The

some

to

the sole motive

employ

it

either in

particular branch of the

different quantities of productive la-

put into motion, and the different values which

to the annual produce of the land

according as

is

355

it is

and labour of the

employed in one or other of those

so-

different

Agriculture does

not yield sufficient

profit to

attract all

the capital

which it might absorb.

ways, never enter into his thoughts. In countries, therefore, where agriculture

is

the most profitable of

and improving the most

all

direct roads to

tals of individuals will naturally

employments, and farming a splendid fortune, the capi-

be employed

in the

manner most

advantageous to the whole society. The profits of agriculture, however, in

seem

to

any part

have no superiority over those of other employments

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 im-

provement of land. Without entering into any particular discussion of their calculations, a very simple observation

the result of

them must be

false.

may satisfy us

that

We see every day the most splen-

did fortunes that have been acquired in the course of a single

by

trade and manufactures, frequently from a very small capital,

sometimes from no quired

capital.

by agriculture in

the

not, perhaps, occurred in

century. In

land

still

tivated,

all

A

same time, and from such a

What

capital,

far

the great countries of Europe, however,

much good

from being improved to the degree of which

much

is

has

of the present

remains uncultivated, and the greater part of what

is

sorbing a

single instance of such a fortune ac-

Europe during the course

able. Agriculture, therefore,

it.

life

is

it is

cul-

cap-

almost every-where capable of ab-

greater capital than has ever yet been

employed in

circumstances in the policy of Europe have given the

trades which are carried on in towns so great an advantage over

that which

is

quently find

it

carried on in the country, that private persons fre-

more

for their

advantage to employ their capitals in

The reason will be explained in

the next

two books.

the most distant carrying trades of Asia and America, than in the

improvement and cultivation

of the

most

fertile fields in their

own

neighbourhood, I shall endeavour to explain at full length in the

two following books.

BOOK Of

III

the different Progress of Opulence in different Nations

CHAPTER

I

OF THE NATURAL PROGRESS OF OPULENCE

on

The great

The

commerce

between the inhabitants of the town and those of the country. It

is

great

commerce of every

civilized society, is that carried

that be-

tween town and country,

which IS obviously advanta-

consists in the exchange of rude for

manufactured produce, either

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 manufacture. The

town repays

this

supply by sending back a part of the manufac-

geous to both.

tured produce to the inhabitants of the country. there neither

is

very properly be said to gain

We

the country.

The town,

must

is

upon

this account,

imagine

The

gains of

the loss of the country.

both are mutual and reciprocal, and the division of labour all

which

whole wealth and subsistence from

its

not, however,

that the gain of the town

as in

in

nor can be any reproduction of substances,^ maj^

is

in this,

other cases, advantageous to all the different persons

ployed in the various occupations into which

it is

subdivided.

em-

The

inhabitants of the country purchase of the town a greater quantity

manufactured goods, with the produce of a much smaller quan-

of

tity 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

the maintenance of the cultivators, tants of the country exchange

mand among

them.

The

it

for

and

it is

is

over and above

there that the inhabi-

something

else

which

is

in de-

number and revenue of the inmore extensive is the market which it the country; and the more extensive that margreater the

habitants of the town, the affords to those of ^

ters

The error that agriculture produces substances and manufacture only althem IS doubtless at the bottom of much of the support gained by the

theory of productive and unproductive labour

356

NATURAL PROGRESS OF OPULENCE ket,

357

always the more advantageous to a great number.

it is

corn which grows within a mile of the town,

sells

there for the

price with that which comes from twenty miles distance.

price of the latter

ing and bringing

must

it

generally, not only

The same

But the

pay the expence of

rais-

to market, but afford too the ordinary profits of

agriculture to the farmer.

The

proprietors and cultivators 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

what they buy. Compare

this carriage in the price of

the cultivation of the lands in the neighbourhood of any considerable town, with that of those which

and you fited

by

lie

some distance from

at

it,

how much the country is benetown. Among all the absurd specula-

will easily satisfy yourself

the

tions that

commerce

of the

have been propagated concerning the balance of trade,

has never been pretended that either the country loses by

its

it

com-

merce 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

and improvement of the country,

latter.

The

cultivation

which affords subsist-

therefore,

ence, must, necessarily, be prior to the increase of the town,

furnishes only the

means

conveniency and luxury. It

of

plus produce of the country only, or

maintenance of the

what

is

is

which

the sur-

The

culti-

vation of the country must be prior to the increase of the town,

over and above the

cultivators, that constitutes the subsistence of

the town, which can therefore increase only with the increase of

The town,

this surplus produce.

indeed,

whole subsistence from the country in

from the tries;

territory to

and

this,

which

though

it

it

may

its

not always derive

its

neighbourhood, or even

belongs, but from very distant coun-

forms no exception from the general rule,

has occasioned considerable variations in the progress of opulence in different ages

That order

and

nations.

of things which necessity imposes in general, though

though the

town

may sometimes be distant from the country

from which it derives its

not in every particular country,

is,

moted by the natural inclinations

in every particular country, pro-

of

man.

If

human institutions had

subsist-

ence.

never thwarted those natural inclinations, the towns could no-where

have increased beyond what the improvement and cultivation of the territory in which they were situated could support; till such

men

will chuse to

Upon

employ

of things is

fa-

was completely

culti-

voured by

equal, or nearly equal profits,

most

the natu-

time, at least, as the whole of that territory

vated and improved.

This order

their capitals rather in the

ral prefer-

improvement

the wealth of nations

35S

cultivation of land, than either in manufactures or in foreign

ence of

and

man

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 uncer-

for

agriculture.

trade.

tain elements of

by giving great credits men, with whose character and situation he

human

in distant countries to

folly

and

injustice,

can seldom be thoroughly acquainted.

on the contrary, which

is

The

fixed in the

capital of the landlord,

improvement of

affairs

can ad-

beauty of the country besides, the pleasures of

a coun-

seems to be as well secured as the nature of

The

mit

of.

try

life,

the tranquillity of mind which

the injustice of

which

it

human

his land,

human

really affords,

it

promises,

laws does not disturb

and wherever

the independency

it,

have charms that more or

less attract

every

body; and as to cultivate the ground was the original destination of

man,

so in every stage of his existence

tion for this primitive Cultivat-

ors re-

he seems to retain a predilec-

employment.

Without the assistance of some

artificers, indeed,

the cultivation

of land cannot be carried on, but with great inconveniency

quire the assistance

of artificers,

who

tinual interruption. Smiths, carpenters, wheel-wrights,

wrights, masons,

and con-

and plough-

and bricklayers, tanners, shoemakers, and

taylors,

are people, whose service the farmer has frequent occasion for. Such

settle to-

gether and

artificers too stand, occasionally, in

forma

another; and as their residence

village,

and their

sarily tied

down

to

is

need of the assistance of one

not, like that of the farmer, neces-

a precise spot, they naturally settle in the neigh-

employ-

bourhood of one another, and thus form a small town or

ment augments

The

with the improve-

ment

of

the country.

butcher, the brewer,

and the baker, soon

village.

join them, together

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 country are mutually the servants of one another. The town is a with

continual fair or market, to which the inhabitants of the country resort, in order to

It is this

exchange their rude for manufactured produce.^

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 sistence, therefore,

their

employment nor sub-

can augment, but in proportion to the augment-

demand from the country for finished work; and this demand can augment only in proportion to the extension of imation of the

® This passage, from the beginnmg of the paragraph, suggested by Cantillon, Essai, pp, 11-22.

may

well have been

NATURAL PROGRESS OF OPULENCE provement and

Had human

cultivation.

359 therefore,

institutions,

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 or country. In the

In our North American colonies, where uncultivated land is still to be had upon easy terms, no manufactures for distant sale have

colonies

ever yet been established in any of their towns.

an

has acquired a

own

his

little

more stock than

is

When an

necessary for carrying on

business in supplying the neighbouring country, he does

North America, attempt to more distant sale, but employs

not, in

establish with

for

it

ment

artificer

of uncultivated land.

From

it

a manufacture

in the purchase

artificer

and improve-

he becomes planter, and

neither the large wages nor the easy subsistence which that country

American arti-

ficer

who

has acquired sufficient

stock be-

comes a planter instead of

manufacaffords to artificers, can bribe

him

work

rather to

for other people

He feels that an artificer is the servant of his cuswhom he derives his subsistence; but that a planter

turing for

than for himself.

distant

tomers, from

sale,

who

cultivates his

from the labour of dent of

all

own land, and derives his necessary subsistence his own family, is really a master, and indepen-

the world.

In countries, on the contrary, where there

is

either

no unculti-

vated land, or none that can be had upon easy terms, every artificer

who has

acquired more stock than he can employ in the occasional

jobs of the neighbourhood, endeavours to prepare distant sale.

The smith

erects

some

work

sort of iron, the

sort of linen or woollen manufactory.

Those

different

for

more

weaver some

as in

countries

where no unculti-

vated land can be procured.

manufactures

come, in process of time, to be gradually subdivided, and thereby

improved and refined

in

be conceived, and which

a great variety of ways, which it is

may easily

therefore unnecessary to explain

any

further.

In seeking for employment to a equal or nearly equal

capital,

profits, naturally

manufactures

are,

preferred to foreign

upon com-

Manufactures are

naturally

merce, for the same reason that agriculture

is

naturally preferred to

manufactures. As the capital of the landlord or farmer

is

more

se-

cure 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,

and manufacno demand at home, must

of every society, the surplus part both of the rude

tured produce, or that for which there

is

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

of

very

little

produce abroad, be a foreign or a domestic one,

is

importance. If the society has not acquired sufficient

preferred to foreign

commerce.

the wealth of nations

360

and

capital both to cultivate all its lands,

completest manner the whole of

its ®

to manufacture in the

rude produce, there

considerable advantage that that rude produce should

by a foreign

capital, in order that the

be employed

in

that of China

may attain of

its

more

even a

is

be exported

whole stock of the society may

useful purposes.

and Indostan,

^

The wealth

of ancient Egypt,

demonstrate that a nation

sufficiently

a very high degree of opulence, though the greater part

exportation trade be carried on

by

foreigners.

The

progress of

our North American and West Indian colonies would have been

much

had not

less rapid,

capital but

what belonged

to themselves

been employed in exporting their surplus produce. According

So the natural

to the natural course of things, therefore, the greater

part of the capital of every growing society

is,

first,

directed to

course of things is agri-

first

culture,

then

manufacand

tures,

agriculture, afterwards to manufactures,

commerce. This order of things ciety that

had any

and

last of all to foreign

so very natural, that in every so-

has always, I believe, been in some

must have been cultivated beany considerable towns could be established, and some sort of

degree observed. fore

territory, it

Some

is

of their lands

finally

foreign

commerce But

this

order has

coarse industry of the manufacturing kind must have been carried

on

But though some degree

commerce.

this natural order of things

in every

been in

many re-

of Europe, been, in

spects in-

commerce

verted.

them-

in those towns, before they could well think of ejnploying

selves in foreign

of

some of

factures, or such as

foreign

commerce

such society,

many

it

must have taken place

has, in all the

modern

respects, entirely inverted.

The

their cities has introduced all their finer

were

fit

together,

for distant sale;

in

states

foreign

manu-

and manufactures and

have given birth

to the principal im-

provements of agriculture. The manners and customs which the nature of their original government introduced, after that

government was greatly

into this unnatural

and retrograde

order.

*Ed. I reads “their ” ^Ed. I reads “considerable advantage that

i

and which remained

altered, necessarily forced

it

should.”

them

CHAPTER

II

OF THE DISCOURAGEMENT OF AGRICULTURE IN THE ANCIENT STATE OF EUROPE AFTER THE FALL OF THE ROMAN EMPIRE

When the German and Sc5rthian nations over-ran 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 commerce between the towns and the country. The

After the fall

of the

Roman Empire all the land of

towns were deserted, and the country was left uncultivated, and the

Western Europe

western provinces of Europe, which had enjoyed a considerable de-

was en-

gree of opulence under the state of poverty

Roman

empire, sunk into the lowest

and barbarism. During the continuance

of those

confusions, the chiefs and principal leaders of those nations, ac-

grossed, chiefly

by

large proprietors.

quired or usurped to themselves the greater part of the lands of those countries.

A great part of them was uncultivated;

but no part

was left without a prothem were engrossed, and the greater part by a few

of them, whether cultivated or uncultivated, prietor. All of

great proprietors.

This original engrossing of uncultivated lands, though a great,

might have been but a transitory

evil.

They might soon have been by succession or

divided again, and broke into small parcels either

by

alienation.

The law

of primogeniture hindered

them from being

Primogeniture

and entails

pre-

vented the great

by

divided

succession: the introduction of entails prevented their

being broke into small parcels by alienation.^

When

land, like moveables,

is

being

considered as the means only of

subsistence and enjoyment, the natural law of succession divides like

them, among

subsistence

all

the children of the family; of all of

it,

whom the

and enjoyment may be supposed equally dear

father. This natural

to the

law of succession accordingly took place

Romans, who made no more distinction between elder and younger, between male and female, in the inheritance of lands, than we do in the distribution of moveables. But when land was

among

^

the

Primogeniture and entails are censured as inimical to agriculture in Lecpp 120, 124, 228

tures,

361

estates

divided.

Primogeniture

was introduced because

every great

landlord

was a

the wealth of nations

362 pettj ^>rince.

considered as the means, not|,of subsistence merely, but of power and protection, it was thought better that it should descend undi-

vided to one. In those disorderly times, every great landlord was a sort of petty prince.

and

judge,

in

some

His tenants were ‘his subjects.

their

and

their

respects their legislator in peace,

He made

leader in war.

He was

war according to his

own

discretion, fre-

quently against his neighbours, and sometimes against his sovereign. The security of a landed estate, therefore, the protection

which

upon

owner could afford to those who dwelt on it, depended greatness. To divide it was to ruin it, and to expose every

its

its

part of

it

to be oppressed

neighbours.

its

The law

and swallowed up by the incursions of

of primogeniture, therefore,

came

to take

place, not immediately, indeed, but in process of time, in the suc-

cession 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, tire to

may

not be weakened by division,

one of the -children.

To

it

must descend en-

which of them so important a pre-

must be determined by some general

ference shall be given,

rule,

founded not upon the doubtful distinctions of personal merit, but

upon some

plain

Among

pute.

and evident difference which can admit of no

disputable difference but that of sex, and that of age. sex

is

dis-

the children of the same family, there can be no in-

universally preferred to the female;

and when

The male all

other

things are equal, the elder every-where takes place of the younger.

Hence the

origin of the right of primogeniture,

and

of

what

is

called lineal succession.^ It is now

unreasonable,

but

Laws which

frequently continue in force long after the circumstances,

first

gave occasion to them, and which could alone render

supports

them

the pride

proprietor of a single acre of land

of family distinc-

tions

reasonable, are

no more. In the present

session as the proprietor of

ogeniture, however, institutions

it is

still

is

respect, nothing can

a hundred thousand. The right of prim-

continues to be respected, and as of

endure for

have the same origin,

many

be more contrary

merous family, than a right which all

Europe, the

as perfectly secure of his pos-

all

the fittest to support the pride of family distinc-

tions, it is still likely to

Entails

state of

centuries.

In every other

to the real interest of

a nu-

in order to enrich one, beggars

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 ^

Lectures,

117-118.

DISCOURAGEMENT OP AGRICULTURE proposed folly, or

line either

by

by

gift,

3^3

or devise, or alienation ; either

the misfortune of any of

by the They

successive owners.

its

were altogether unknown to the Romans. Neither their substitutions nor fideicommisses bear any resemblance to entails, though

some French lawyers have thought proper institution in the language

When

and garb

^ of

to dress the

modern

those antient ones.*^

great landed estates were a sort of principalities, entails

and are

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.

upon the most absurd

every successive generation of earth,

and

to all that

They are founded

of all suppositions, the supposition that

men have

not an equal right to the

possesses; but that the property of the

it

present generation should be restrained and regulated according to the fancy of those

who

died perhaps five hundred years ago.®

Entails, however, are

still

respected

trough

the greater part of

Europe, in those countries particularly in which noble birth necessary qualification for the enjoyment either of

civil or

is

a

military

honours. Entails are thought necessary for maintaining this exclusive privilege of the nobility to the great offices their country;

and

age over the rest of their fellow-citizens, render

it

another.

ridiculous,

and honours of

that order having usurped one unjust advant-

it is

lest their

poverty should

thought reasonable that they should have

The common law

of England, indeed, is said to

abhor

and they are accordingly more restricted there than 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 of the country, are

perpetuities,

in

at present supposed to be

®

under

strict entail.

Great tracts of uncultivated land were,

in this

manner, not only

Great

engrossed by particular families, but the possibility of their being divided again was as

much

as possible precluded for ever. It

seldom happens, however, that a great proprietor prover. In the disorderly times which gave institutions, the great proprietor

fending his ®

Ed.

own

territories, or in

was

is

a great im-

birth to those barbarous

sufficiently

employed in de-

extending his jurisdiction and au-

I reads “form.” In Lectures, p 123, the Roman origin of entails appears to be accepted ® This passage follows Lectures, p 124, rather closely, reproducing even the ” repetition of “absurd ” ® Ed I does not contain “supposed to be ^

seldom^ great im-

Plovers,

THE WEALTH OF NATIONS

364

He had no leisure When the and improvement

thority over those of his neighbours. to the cultivation

ment

of

of land.

law and order afforded him

he often wanted

this leisure,

the inclination, and almost always the requisite

to attend

establish-

the ex-

abilities. If

pence of his house and person either equalled or exceeded his revenue, as

it

manner. If able to

did very frequently, he

had no stock

to

employ

in this

more

profit-

he was an ceconomist, he generally found

employ

it

new purchases, than in the To improve land with profit, like

his annual savings in

improvement of his old

estate.

other commercial projects, requires an exact attention to small

all

savings and small gains, of which a

even though naturally frugal,

is

man

born to a great fortune,

him

ornament which pleases his fancy, than to so

little

occasion.

The

very seldom capable.

ation of such a person naturally disposes

situ-

to attend rather to

profit for

which he has

elegance of his dress, of his equipage, of his

The

house, and household furniture, are objects which from his in-

The when

fancy he has been accustomed to have some anxiety about. turn of mind which this habit naturally forms, follows him

he comes to think of the improvement of land. haps four or

five

hundred acres

in the

if

embellishes per-

neighbourhood of his house,

at ten times the expence which the land

provements; and finds that

He

is

worth after

all

his im-

he was to improve his whole estate

m 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

remain in both parts of the united kingdom some great estates

still

which have continued without interruption in the hands of the

same family

since the times of feudal anarchy.

Compare the

pres-

ent condition of those estates with the possessions of the small

and you will require no other you how unfavourable such extensive prop-

proprietors in their neighbourhood,

argument erty

Ine occupiers

were

is

to convince

to improvement.'^

If little

improvement was to be expected from such great pro-

prietors, still less

was

to

be hoped

for

from those who occupied the

not likely to

im-

prove, as they were slaves at-

tached to the land

and incapable of acquir-

ing

property

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 masters. 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

^This remark follows Lectures, p. 228. Cp. below, pp. 384, 385, 392.

or

DISCOURAGEMENT OF AGRICULTURE

3^5

murdered any erally but to

of them, he was liable to some penalty, though gena small one. They were not, however, capable of ac-

quiring property. Whatever they acquired was acquired to their master, and he could take it from them at pleasure. Whatever culslaves,

and improvement could be carried on by means of such was properly carried on by their master. It was at his ex-

pence.

The

tivation

were

seed, the cattle,

all his. It

was

and the instruments

for his benefit.

of

husbandry

Such slaves could acquire noth-

ing but their daily maintenance. It was properly the proprietor himself, therefore, that, in this case, occupied his own lands, and

them by

cultivated

own bondmen. This

his

subsists in Russia, Poland,

parts of Germany. It

is

species of slavery

still

Hungary, Bohemia, Moravia, and other only in the western and south-western

provinces of Europe, that

has gradually been abolished alto-

it

gether.®

But

if

great improvements are seldom to be expected from great

proprietors, they are least of all to be expected

when they employ

workmen. The experience of all ages and nations, I demonstrates that the work done by slaves, though it ap-

slaves for their believe,

pears to cost only their maintenance, any.

A person who

terest

is in

Slave la-

bour is the dearest of all

the end the dearest of

can acquire no property, can have no other in-

but to eat as much, and to labour as

ever work he does beyond what

little

is sufficient

to

Whatpurchase his own

as possible.

maintenance, can be squeezed out of him by violence only, and not

by any

interest of his

own. In ancient Italy,

how

vation of corn degenerated,

master when

it fell

by both Pliny and

how much

unprofitable

it

the culti-

became to the is remarked

under the management of slaves,

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 five thousand idle (the

number

of warriors supposed necessary for

gether with their

women and

territory of boundless extent

servants,

and

would

fertility, like

its

men

defence) to-

require,

he says, a

the plains of Baby-

lon.^®

The

pride of

mortifies

man makes him

him so much as

love to domineer, and nothing

to be obliged to condescend to persuade

his inferiors. WTierever the law allows

can afford

it,

therefore,

to that of freemen. ®

“A

The

small part of the

from slavery,” “and

where

it still

Pliny,

H.

prevails.”— N.j

lib. xviii.,

Politics, 1265a.

and the nature of the work

will generally prefer the service of slaves

planting of sugar and tobacco can afford

West of Europe

is free

®

he

it,

is

the only portion of the globe that nothing in comparison with the vast continents is

p. 96.

cap. iv.; Columella,

De

re rusiica,

lib.

i.,

praefatio

At present sugar and

tobacco

can afford slave cultivation,

com cannot.

the wealth of nations

366

The

the expence of slave cultivation. the present times, cannot. In principal produce

is

raising of corn,

seems, in

it

the English colonies, of

which the

work

corn, the far greater part of the

done

is

late resolution of the Quakers in Pennsylvania to

by freemen. The

may

set at liberty all their negro slaves,

satisfy us that their

they made any considerable

Had

number cannot be very great.

part of their property, such a resolution could never have been

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

agreed

to.

colonies are generally tivation that

is

known

much

greater than those of

either in

any other

Europe or America: And the

cul-

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 expence of slave cultivation, but sugar can afford

better than tobacco.

number of negroes accordingly

The

it still

much

is

greater, in proportion to that of whites, in our sugar than in our

tobacco colonies.

To

The slaves were succeeded by metayers,

the slave cultivators of ancient times, gradually succeeded a

species of farmers

metayers.

They

been so long lish

name

cattle,

known

by the name

at present in France

of

They have know no Eng-

are called in Latin, Coloni Partiarii.

England that

in disuse in

for them.

The

at present I

proprietor furnished

them with the

and instruments of husbandry, the whole stock, in

necessary for cultivating the farm.

The produce was

seed, short,

divided

equally between the proprietor and the farmer, after setting aside

what was judged necessary

when

restored to the proprietor

up the

for keeping

stock,

which was

the farmer either quitted, or

was

turned out of the farm.^^

who '

Land occupied by such

are

ery dif-

tenants

pence of the proprietor, as

much

is

properly cultivated at the ex-

as that occupied

lerentin that they

can acquire

property.

is,

by

slaves.

ants, being freemen, are capable of acquiring property,

a

There

however, one very essential difference between them. Such ten-

certain proportion of the produce of the land, they

and having

have a plain

interest that the

whole produce should be as great as possible, in

order that their

own proportion may be

trary,

own

who can

ease

so.

A

slave,

on the con-

acquire nothing but his maintenance, consults his

by making the land produce

above that maintenance.

as

little

It is probable that

as possible over it

and

was partly upon

account of this advantage, and partly upon account of the encroachments which the sovereign, always jealous of the great lords, ^Raynal, Histoire philosophique (Amsterdam “Above, p. 158; Lectures, p. 225.

ed.),

tom.

vi.,

pp. 368-388.

Ibid., pp. 100, loi.

DISCOURAGEMENT OF AGRICULTURE gradually encouraged their villains to

and which seem at servitude

of

last to

altogether

make upon

3^7

their authority,

have been such as rendered

inconvenient, that tenure

this species

in

villanage

gradually wore out through the greater part of Europe.

The time

and manner, however, brought about, tory.

is

The church

in

which so important a revolution was

one of the most obscure points in modern hisof

Rome

claims great merit in

it;

and

tain that so early as the twelfth century, Alexander

it is

cer-

pub-

III.^*^

lished a bull for the general emancipation of slaves. It seems,

howhave been rather a pious exhortation, than a law to which exact obedience was required from the faithful. Slavery continued ever, to

to take place almost universally for several centuries afterwards, till it

was gradually abolished by the

terests

joint operation of the

two

in-

above mentioned, 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

what the landlord advanced to him, and must, what the French call a metayer.

only

by means

therefore,

of

have been

It could never, however, be the interest even of this last species of cultivators to lay out, in the further

improvement of the land,

But they could

have no

any part of the

stock which they might save from their

little

who produced. The

share of the produce, because the lord, to get one-half of whatever

tenth of the produce, proveiilent.

A

have been an

is

it

laid out nothing, tithe,

which

is

own was

but a

found to be a very great hindrance to im-

tax, therefore,

effectual bar to

which amounted to one-half, must it.

It

might be the

interest of

a me-

make the land produce as much as could be brought out by means of the stock furnished by the proprietor; but it -^ould never be his interest to mix any part of his own with it. In tayer to of

it

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 the master’s cattle rather in carriage than in cultivation; because in the

one case they get the whole profits

other they share still

subsists in

them with

some

to themselves, in the

their landlord. This species of tenants

parts of Scotland.

They

are called steel-bow^®

^*Raynal, Histoire pMlosopJngtie (Amsterdam ed.), tom. i., p. 12. In LecInnocent III. appears in error for Alexander III. “Probably Quesnay’s estimate; cp. his article on “Fermiers” in the Encyclopidie, reprinted in his (Euvres, ed. Oncken, 1888, pp. 160, 171. “ (iarnier is certainly wrong in suggesting in his note, “ce nom vient probablement de la maniere dont ils etaient autrefois armes en guerre.”—Rec^ertures, pp. loi, 102,

ches, etc.,

tom.

ii.,

p. 428.

“Bow”

dicate the nature of the contract,

is

the farming stock; “steel” is said to ineisern vieh and bestia ferri are quoted

and

interest to

employ stock in

improvement.

the wealth of nations

sts

Those ancient English tenants, who are said by Chief Baron Gilbert and Doctor Blackstone to have been rather bailiffs tenants.

of the landlord than farmers properly so called, were probably of the

same

kind.^"^

farmers,

tenancy 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

who

farmers have a lease for a term of years, they

Metayers were followed by

To

sometimes find

it

to

their interest to

it

this species of

may sometimes

find

for their interest to lay out part of their capital in the further

improvement of the farm; because they may sometimes expect recover

improve

it,

to

with a large profit, before the expiration of the lease.

possession even of such farmers, however, was long extremely

when they

The

have a lease, but

precarious,

and

so in

still is

many

parts of Europe.

They

could be-

by

fore the expiration of their term be legally outed of their lease,

leases

were long

a new purchaser;

insecure.

common

in

England, even by the

fictitious action of

a

tremely imperfect. It did

by by which they obtained redress was exnot always re-instate them in the posses-

sion of the land, but gave

them damages which never amounted to

the violence

recovery. If they were turned out illegally

of their master, the action

the real

loss.

Even

in

England, the country perhaps of Europe

where the yeomanry has always been most respected, till

was

by which the tenant

invented,^®

but possession, and in which his claim

by

it

was not

about the 14th of Henry the Vllth that the action of ejectment recovers, not is

damages only

not necessarily concluded

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 sel-

dom makes

use of the actions which properly belong to him as

landlord, the writ of right or the writ of entry,

name

of his tenant,

by

but sues in the

the writ of ejectment. In England, there-

fore, the security of the tenant is equal to that of the proprietor.

The

In England besides a lease for

forty-

a

freehold,

and

life of

forty shillings a year value

entitles the lessee to vote for

a

member

is

of parlia-

shilling

free

ment; and as a great part of the yeomanry have freeholds of this

holder

kind, the whole order becomes respectable to their landlords on ac-

vote in

England centri-

count of the political consideration which this gives them.^® There is,

I believe, no-where in Europe, except in England,

as parallels

by Cosmo

Innes, Lectures

on Scotch Legal

any instance

Antiquities, 1872, pp.

24S> 266. Gilbert, Treatise of Tenures, 3rd ed., i 757 > PP- 34 and 54; Blackstone, ii., pp. 141, 142. The whole paragraph follows Lectures,

Commentaries, vol,

p. 226, rather closely.

“M. Bacon, New Abridgment of the Law, 3rd ed., 1768, vol ii., p. 160, Ejectment, cp Lectures, p. 227. “ Blackstone, Commentaries, iii., 197. ^Lectures, pp. 227-228

s.v.

DISCOURAGEMENT OF AGRICULTURE

3^9

upon the land of which he had no lease, and honour of his landlord would take no advantage of so important an improvement. Those laws and customs so faof the tenant building

butes to

trusting that the

the se-

vourable 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 every kind

leases against successors of

so far as I know, peculiar to Great Britain. It

is,

was

introduced into Scotland so early as 1449, a law of James the Ild.^^ Its beneficial influence, however, has been much obstructed

by

entails; the heirs of entail being generally restrained

ting leases for

any long term

of years, frequently for

A late act of parliament

one year.

has, in this respect,

slackened their fetters, though they are

still

by

their landlords

yeomanry are upon

let-

member

still

after

was found convenient

it

The

to se-

all

Europe.

calculated for

of the proprietor. It

In the rest of Europe the farmer is less se-

cure.

was

make

the most im-

proprietors of land were anciently the

legislators of every part of

were

able.

been lately extended to twenty-seven,

too short to encourage the tenant to

portant improvements.

therefore,

quite so

favour-

this account less respectable to

limited to a very short period; in France, for

in that country, indeed, still

of Scotland is not

of

example, to nine years from the commencement of the lease. It has

period

The law

more than somewhat

cure tenants both against heirs and purchasers, the term of their

was

farmer.

than in England.

In other parts of Europe, security

the

muA too strait. In

Scotland, besides, as no leasehold gives a vote for a

parliament, the

from

curity of

The

laws relating to land,

what they supposed the interest had imagined, that

for his interest, they

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 shortsighted, and they did not

how much

foresee

this regulation

must obstruct improvement, and

thereby hurt in the long-run the real interest of the landlord.^^

The

farmers too, besides paying the rent, were anciently,

it

was

supposed, bound to perform a great number of services to the land-

Customser-

vices were

lord,

which were seldom

by any

either specified in the lease, or regulated

precise rule, but

barony. These

by

the use

and wont

of the

manor or

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

Acts of 1449, c. 6, “ordained for the safety and favour of the poor people ” that labours the ground 10 Geo.

III., c. SI.

^ Lectures,

pp. 226, 327.

“ Below, p. 643 “ 20 Geo. II., c. 50,

§ 21.

vexatious to the

farmer,

the wealth of nations

370

course of a few years very tion of the

and so also were compul-

The not

yeomanry

much

altered for the better the condi-

of that country.

public services to which the

less arbitrary

yeomanry were bound, were To make and maintain the

than the private ones.

sory la-

high roads, a servitude which

bour on

though with different degrees of oppression

the roadsj

purveyance

When

was not the only one. or his officers of

the

still

subsists, I believe, every-where,

in different countries,

the king’s troops,

when

any kind passed through any part

yeomanry were bound to provide them with

his household

of the country,

horses, carriages,

and provisions, at a price regulated by the purveyor. Great ain

is,

I believe, the only

monarchy

in

Brit-

Europe where the oppres-

sion of purveyance has been entirely abolished. It

subsists in

still

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 sove-

and tallages.

reign, easily allowed

ants,^®

must

in the

sists in

It is

him

end

France,

affect their

may

own

to foresee

revenue.

The

it,

their ten-

how much as

taille,

it still

this

sub-

serve as an example of those ancient tallages.

a tax upon the supposed profits of the farmer, which they

estimate

by

the stock that he has

therefore, to appear to

employ as

to

to tallage, as they called

and had not knowledge enough

have as

upon the farm.

little

as possible,

It

is

his interest,

and consequently

as possible 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 little

supposed to dishonour whoever

is

subject to

it,

and

to degrade

him below, not only her,

No

the rank of a gentleman, but that of a burgand whoever rents the lands of another becomes subject to it.

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 provement, but drives away

all

other stock from

it.

The

its

im-

ancient

tenths and fifteenths,^® so usual in England in former times, so far as they

ture with the

Even under the best laws

Under

all

seem afected the land, to have been taxes of the same na-

taille.

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 improve

^Lectures, p. 227. «Ed. i reads “that.” Origmally tenths and fifteenths of movable goods; subsequently fixed ^ms levied from the parishes, and raised by them like other local rates; see Cannan, History of Local Rates, 1896, pp. 13-14, 18-20, 22 note, 23 note.

•

DISCOURAGEMENT OP AGRICULTURE

37 i

under great disadvantages. The farmer compared with the proa merchant who trades with borrowed money com-

prietor, is as

pared 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 interest of

The

the farmer is at a

disad-

vantage

inimprovinc,

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 the loan.

lands cultivated

share of the produce which

had the farmer been further is,

improvement

is

consumed

of the land.^®

from the nature of

in the rent,

and which,

he might have employed

proprietor,

The

in the

a farmer besides

station of

things, inferior to that of a proprietor.

Through the greater part

Europe the yeomanry are regarded as

of

an inferior rank of people, even to the better sort of tradesmen and mechanics, and in

all

master manufacturers. It

man to

of

Europe to the great merchants and can seldom happen, therefore, that a

parts of

any considerable stock should quit the superior, in order place himself in an inferior station. Even in the present state Europe, therefore, little stock is likely to go from any other of

profession to the improvement of land in the

More does perhaps

in Great Britain than in

though even there the great stocks which

way

of farming.

any other country,

are, in

some

places,

em-

ployed in farming, have generally been acquired by farming, the trade, perhaps, in

which of

all

others stock

is

commonly acquired

slowly. After small proprietors, however, rich

and great farm-

ers are, in every country, the principal improvers.

There are more

most

but large farmers are the

such perhaps in England than in any other European monarchy.

principal

In the republican governments of Holland and of Berne in Switzer-

improvers

land, the farmers are said to be not inferior to those of England.®^

The

ancient policy of Europe was, over and above

all this,

un-

after

small proprietors

favourable to the improvement and cultivation of land, whether carried

on by the proprietor or by the farmer;

prohibition of the exportation of

com

first,

by

the general

without a special licence,

which seems to have been a very universal regulation; and secondly, by the restraints which were laid upon the inland com-

The com-

mon prohibition

of the ex-

port of

corn and

merce, not only of corn but of almost every other part of the pro-

the re-

duce of the farm, by the absurd laws against engrossers, regraters,

straints

and

forestallers,

and by the

privileges of fairs

and markets.^^

It

has already been observed in what manner the prohibition of the

^ Lectures

p. 226.

^Essays on Husbandry (by Walter Harte),

^ Below,

pp. 490-500.

on internal trade

1764? PP* 69-80.

372 in agri-

cultural

produce were further dis-

courage-

mentsto agriculture.

THE WEALTH OF NATIONS

exportation of com, together with some encouragement given to

the importation of foreign com, obstructed the cultivation of ancient 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 commodity,

joined to the general prohibition of exportation, must have

discouraged the cultivation of countries

vourably circumstanced,

it is

^ Above,

less fertile,

and

less fa-

not perhaps very easy to imagine.

p. 150; Lectures, p. 229,

CHAPTER

III

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

OF

The

inhabitants of cities and towns were, after the

man

empire, not more favoured than those of the country.

consisted, indeed, of a very different order of people

inhabitants of the ancient republics of Greece last

They

from the

and

Italy.

Rofirst

These

were composed chiefly of the proprietors of lands, among

whom it

of the

fall

the public territory was originally divided, and

who found

convenient to build their houses in the neighbourhood of one

and to surround them with a

another,

mon

defence. After the

fall

wall, for the sake of

Roman

of the

The towns-

men were not at first

favoured more than the countrymen.

com-

empire, on the contrary,

the proprietors of land seem generally to have lived in fortified castles

on their own

and

estates,

own tenants by tradesmen

in the midst of their

and dependants. The towns were

chiefly inhabited

and mechanics, who seem in those days to have been of very nearly of servile condition. granted cipal

by

servile, or

The privfleges which we find

ancient charters to the inhabitants of some of the prin-

towns in Europe,

those grants.

The

sufficiently

people to

whom

shew what they were before

it is

granted as a privilege, that

they might give away their own daughters in marriage 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 used 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

manner as

in several of the Tartar

taxes used to

be levied

Europe then, in the same

governments of Asia at present,

upon the persons and goods of ^Lectures, p. 233.

373

travellers.

They were ver3i nearly of servile

condition.

THE WEAL^gH OF NATIONS

374

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, some-

times a great lord,

who

had,

would grant

thority to do this,

ticularly as lived in their

seems, upon some occasions, au-

it

to particular traders, to such par-

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 seldom granted

without a valuable consideration, and this tax might, perhaps, be considered as compensation for what their patrons might lose

from other taxes. At

their exemption

and those exemptions seem

first,

by

both those poll-taxes

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 ac-

counts which have been published from Domesday-book, of several of the

towns of England, mention

times of the tax

either to the king, or to

tection;

frequently

is

made some-

which particular burghers paid, each of them,

some other great

lord, for this sort of pro-

and sometimes of the general amount only of

all

those

taxes.^ but arrived at

But how

may have been

servile soever

of the inhabitants of the

^

towns,

it

liberty

originally the condition

appears evidently, that they

and independency much

than the occu-

much

arrived at liberty

earlier

piers of land in the country.

than the country

arose from such poll-taxes

people,

to be let in farm, during a term of years for a rent certain, some-

acquiring the farm

earlier

That part of the king’s revenue which in any particular town, used commonly

times to the sheriff of the county, and sometimes to other persons.

of their

The burghers themselves

town,

mitted to farm the revenues of this sort which arose out of their

own town, they becoming whole

rent."^

To

let

frequently got credit enough to be ad-

jointly

and

severally answerable for the

a farm in this manner was quite agreeable to

^See Brady’s historical treatise of Cities and Burroughs, p. 3, &c. Robert Brady, Historical Treatise of Cities and Burghs or Boroughs, 2nd ed., 1711. See, for the statements as to the position of townsmen and traders contained in these two paragraphs, esp. pp. 16, 18, and Appendix, p. 8. Cp. Hume, History, ed. of 1773, vol. i., p. 205, where Domesday and Brady are both mentioned. The note appears first in ed. 2. ^ Ed. I does not contain “the.” *See Madox Firma Burgi, 1726, p. 18. also Madox, History and Antiquities of the Exchequer, chap. 10. sect. v. p. 223, first edition 1711. But the statement in the text above that the farm was in place of poll taxes is not sup-

RISE OF

TOWNS

375

the usual oeconomy of, I believe, the sovereigns of countries of Europe; all

who used

all

the different

frequently to let whole manors to

the tenants of those manors, they becoming jointly and sever-

ally

answerable for the whole rent;

to collect

it

in their

^

own way, and own

but in return being allowed

pay

to

chequer by the hands of their

bailiff,

it

into the king’s ex-

and being thus

alto-

gether freed from the insolence of the kings officers; a circum-

stance in those days regarded as of the greatest importance.

At

first,

in the

the farm of the town w^as probably let to the burghers,

same manner

as

it

had been

to other farmers, for

of years only. In process of time, however,

it

a term

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 return for which

it

Those exemptions,

was made, naturally became perpetual

therefore, ceased to

first

for a

term of years and after-

wards in perpetuity,

too.

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

tioned, that they

might give away their own daughters in marriage,

that their children should succeed to them,

dispose of their

own

effects

by

the burghers of the town to privileges

will,

and that they might

were generally bestowed upon

whom

it

was

given.

Whether such

any

it

know

direct evidence of

it.

But however

this

of reducing all their inhabitants under

aldermanries, tolls

and wharfage.

It

that a direct contribution from the first

An

freedom,

may have

been, the

and slavery being thus taken

a sort of military

disci-

ported by Firma Burgi, p. 251, where Madox says the “yearly ferme of towns arose out of certain locata or demised things that yielded issues or profit,” e.g.f assised rents, pleas, perquisites, custom of goods, fairs, markets, stallage,

®

equivalent to

not. I

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 corporation, 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,

pears

other privileges

not improbable that they were, though I cannot produce

principal attributes of villanage

and

as well as

had before been usually granted along with the freedom

of trade, to particular burghers, as individuals, I

reckon

men-

grant, the important privileges above

in ed.

instance

is

was only if these fell short of the farm, townsmen would be levied. The note ap-

2.

given in Firma Burgh P* 21.

and a govern-

ment of their

own.

the wealth of nations

376

by obliging them to watch and ward; that is, as anciently understood, to guard and defend those walls against all attacks and surprises by night as well as by day. In England they were pline,

generally exempted from suit to the hundred and county courts;

and

all

such pleas as should arise

crown excepted, were

among them,

left to the decision of their

the pleas of the

own

magistrates.

In other countries much greater and more extensive jurisdictions

were frequently granted to them.® It

It might, probably,

seems

strange

that sovereigns

jurisdiction to oblige

should

disorderly times

have abandoned the prospect

revenue

and have

own revenues, some sort of compulsive their own citizens to make payment. In those

left it

them

might have been extremely inconvenient to have

it

to seek this sort of justice

from any other tribunal. But

must seem extraordinary that the sovereigns of

countries of Europe, should have exchanged in

of in-

creased

be necessary to grant to such towns as were

admitted to farm their

rent certain, never

more

to

all

this

the different

manner

for a

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 expence

erected

indepen-

or attention of their own:

dent re-

this

publics,

but the

and that they should,

manner voluntarily erected a

the heart of their

besides,

sort of independent republics in

In order to understand

this, it

must be remembered, that

those days the sovereign of perhaps no country in Europe

natural

to protect, through the whole extent of his dominions, the

of

the sovereign

in

own dominions.

towns were the allies

have

was

in

able

weaker

part of his subjects from the oppression of the great lords. Those

whom

the law could not protect, and

against

to defend themselves,

the lords.

protection of

who were

were obliged either to have recourse to the

some great

lord,

and

in order to obtain it to

either his slaves or vassals; or to enter into

fence for the of cities

common

not strong enough

protection of one another.

and burghs, considered

to defend themselves; but

by

The

The

as single individuals,

inhabitants

had no power

entering into a league of mutual de-

fence with their neighbours, they were capable of

temptible resistance.

become

a league of mutual de-

making no con-

lords despised the burghers,

whom

they

considered not only as of a different order, but as a parcel of

emancipated slaves, almost of a different species from themselves.

®See

Madox Pinna

Frederic in ed. 2.

Burgi: See also Pfeffel in the remarkable events under house of Suabia. This note appears first In Pfeffel's Nouvel Abrege chronologique de Vhistom et du droit

II.

and

his successors of the

public d^AUemagnOy

“Ev&iements remarquables sous Frederic II.” is a chapter heading, and subsequent chapters are headed in the same way. For the references to the power of the towns, see the index, s.v, Villes at the end of

tom.

i.

’^Lectures, p. 40.

TOWNS

RISE OF The wealth

377

of the burghers never failed to provoke their

envy and and they plundered them upon every occasion without

indignation,

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 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 grantking,

them magistrates

ing

and that

defence,

of their

own, the privilege of making bye-

own government,

laws for their

that of building walls for their

of reducing all their inhabitants

them

military discipline, he gave

all

dependency of the barons w^hich

Without the establishment

under a sort of

the means of security and in-

was in his power to bestow. some regular government of this

of

some authority

kind, without

own

it

to compel their inhabitants to act

according to some certain plan or system, no voluntary league of

mutual defence could either have afforded them any permanent

have enabled them to give the king any considerable

security, or

By

support.

away from one

may

that he

granting them the farm of their town in

those

say

whom he

so, for his allies, all

was ever afterwards princes

who

lived

he took if

ground of jealousy and suspicion

to oppress them, either

farm rent of their towns, or by granting

The

fee,

wished to have for his friends, and,

it

to

by

raising the

some other farmer.

upon the worst terms with

their barons,

seem accordingly to have been the most liberal in grants of

The sovereigns

this

who

kind to their burghs. King John of England, for example, appears

quarrelled

have been a most munificent benefactor to his towns.® Philip

most with

to

the First of France lost

end

all

authority over his barons. Towards the

of his reign, his son Lewis,

known afterwards by

the

name

of

Lewis the Fat, consulted, according to Father Daniel, with the

the barons were the

most liberal to

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

See Madox Firma Bufii, pp. 35, 130. The note is not in ed. i. “L’excommunication de Philippe I. et son inapplication aux affaires avaiLes plus puissants vasent presque mine toute son autorite en France. saux de France etaient devenus plus que jamais indociles a Fegard du souverain. . Louis le Gros, a qui Philippe son pfere avait abandonnd la conduite de Fetat sur les dernieres annees de sa vie, delibera avec les ^veques du domaine royal, des moyens de remedier a ces maux, et imagina avec eux une nouvelle police pour la levee des troupes, et une nouvelle forme de justice dans les ^les pour empecher Fimpunite des crimes.”--G. Daniel, Histoire de ®

.

.

.

.

.

France, 1755, vol. lows, pp. 513-514.

iii.,

pp. 512-513.

A

description of the

new

institutions fol-

the towns.

the wealth of nations

37S

by

jurisdiction

town council

establishing magistrates and a

The

every considerable town of his demesnes.

new militia, by making command of their own

in

other was to form a

the inhabitants of those towns, under the

march out upon proper

magistrates,

oc-

casions to the assistance of the king. It is from this period, accord-

ing to the French antiquarians,’ tion of the magistrates

that

we

and councils of

are to date the institu-

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

league

The

The

city

militia

grants of their privileges, and that the famous Hanseatic

first

became formidable.”

militia of the cities seems, in those times, not to

inferior to that of the country,

was often

have been

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 coun-

ableio over-

power the

tries,

neigh-

such as Italy and Switzerland, in which, on account either of

from the principal seat of government, of the nat-

bouring

their distance

lords, as

ural strength of the country

in Italy

sovereign

and Swit-

erally

zerland.

came

to lose the

became independent

bility in their

itself,

or of

some other reason, the

whole of his authority, the

and conquered

republics,

cities all

gen-

the no-

neighbourhood; obliging them to pull down their

castles in the country,

ants, in the city.

This

is

and

to live, like other peaceable inhabit-

the short history of the republic of Berne,

as well as of several other cities in Switzerland. If Venice, for of that city the history

is

somewhat

you except

different, it is the

history of

all

a number

arose and perished, between the end of the twelfth

the considerable Italian republics, of which so great

and

the begmning of the sixteenth century.

In countries such as France or England, where the authority of

In France

and England the

altogether, the cities

cities

could not

be taxed without their

the sovereign, though frequently very low, never

own

consent.

had no opportunity

of

was destroyed

becoming entirely

in-

They became, however, so considerable, that the sovereign could impose no tax upon them, besides the stated farmrent of the town, without their own consent. They were, therefore, dependent.

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 called

aid to the king. Being generally too their deputies seem, sometimes, to

more favourable

to his power,

have been employed by him as

“Possibly Du Cange (who is referred to in the margin of Daniel, p 514, and by Hume, History, ed. 1773, vol, ii., p. 118), Ghssarium, s.v. Commune, commuma, etc., Primus vero ejus modi Communias in Francia Ludov VII ‘

[

VI] ^See

?

rex multiplicavit et auxit.” Pfeffel. Reference above, p. 376 note.

The note

is

not in ed.

i.

TOWNS

RISE OF

379

a counter-balance in those assemblies to the authority of the great lords.^"

Hence the

origin of the representation of burghs in the

states general of all the great

monarchies in Europe. Order and good government, and along with them the liberty

and security of individuals, were, in

this

manner, established in

In consequence of this great-

cities,

at

a time when

the occupiers of land in the country were ex-

posed to every sort of violence. But

men

in this defenceless state

naturally content themselves with their necessary subsistence; be-

more might only tempt the injustice of their opOn the contrary, when they are secure of enjoying the

cause to acquire pressors.

fruits of their industry,

and

dition cies

they naturally exert

of

life.

That industry,

of the

towns industry flouri^ed and stock

accumuit

to better their con-

to acquire not only the necessaries, but the convenien-

and elegancies

er security

therefore,

which aims at

lated

there earlier

than

in the

something more than necessary subsistence, was established in cities

long before

it

country.

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 late,

he would naturally conceal

whom

to

it

it

little

stock should accumu-

with great care from his master,

would otherwise have belonged, and take the

portunity of running

away

to a town.

The law was and so

indulgent to the inhabitants of towns,

first

op-

at that time so

desirous of dimin-

ishing the authority of the lords over those of the country, that if

he could conceal himself there from the pursuit of his lord for year,

he was

lated in the

free for

everP Whatever

stock, therefore,

a

accumu-

hands of the industrious part of the inhabitants of

the country, naturally took refuge in cities, as the only sanctuaries in

The

which

it

could be secure to the person that acquired

inhabitants of a city,

rive their subsistence,

industry,

it is

true,

it.

must always ultimately de-

and the whole materials and means of

from the country. But those of a

city, situated

their

near

banks of a navigable river, are not necesthem 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 exchanging the produce of one for that of another. A city might in this manner either the seacoast or the

sarily confined to derive

grow up to great wealth and splendor, while not only the country in neighbourhood, but all those to which it traded, were in poverty

its

and wretchedness. Each “Ed.

I places

of those countries, perhaps, taken singly,

“in those assemblies” here instead of in the line above; see

Lectures, p. 41.

^Lectures, p. 40.

Cities

on

the seacoast or on navigable rivers

are not

dependent

on the neigh-

bouring country.

XHE WEALTH OF NATIONS

380 could afford

it

but a small part, either of

employment; but

all

of

its

subsistence, or of

them taken together could

afford

it

its

both a

great subsistence and a great emplo3mient. There were, however,

within the narrow circle of the commerce of those times, some countries that were opulent

and

industrious.

Such was the Greek

and that of the Saracens during the 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. empire as long as

it

subsisted,

reigns of the Abassides.

The cities of Italy

were the first

to

grow opulent,

being

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 destruction of inhabitants which they occas-

The

cities of Italy

must necessarily have retarded the progress

centrally

ioned, they

stuated and bene-

greater part of Europe, were extremely favourable to that of

fited

by

the crusades.

Thedties imported manufactures and luxuries

from richer coun-

Italian cities.

The

great armies which

marched from

Holy Land, gave extraordinary encouragement 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, acto the shipping of Venice, Genoa,

own rude, for Thus the wool France, and the

cordingly, consisted chiefly in the exchange of their

whidi were paid

the manufactured produce of

by

rude produce.

of

for such

manufac-

more

England used to be exchanged

civilized nations.

for the wines of

same manner as the corn of Poland and brandies of France, and and velvets of France and Italy.

fine cloths of Flanders, in the is

at this

day exchanged

for the silks

Demand

A this

for the wines

and more improved manufactures, was in manner introduced by foreign commerce into countries where taste for the finer

tured ar-

no such works were carried on. But when

tides hav-

eral as to occasion

ing be-

come con-

some

parts to

the conquest of the

tries,

for

all

of the

this taste

became so gen-

a considerable demand, the merchants, in order

to save the expence of carriage, naturally

endeavoured to establish

^*‘‘The most signal and most durable monument of human folly that has yet appeared in any age or nation,” Hume, History^ ed. of 1773, vol. i., p. 292 ,*

“this universal frenzy,” ibid., p. 298, of ed. 1770, vol. ed. Hume wrote “universal madness.”

“ Misprinted

“in” in ed. 5.

i.,

p. 327,

but in his

ist

TOWNS

RISE OF

some manufactures of the same kind

3^1

in their

own

Hence that seem to

country.

the origin of the first manufactures for distant sale

have been established in the western provinces of Europe, after the of the

fall

No

Roman empire.

large country,

it

said of

their

manufacture

must be observed, ever did or could subsist

any such country that

it

it;

and when

has no manufactures,

it

lished in

the cities

must

always be understood of the finer and more improved, or of such as

All countries

are

fit

for distant sale. In every large country, both the clothing

and

houshold furniture of the far greater part of the people, are the

produce of their

own

was

estab-

without some sort of manufactures being carried on in it is

siderablc,

industry. This

even more universally the

is

case in those poor countries which are

commonly

said to have

have

some manufaC' tures.

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

houshold furniture of the lowest rank of people, a

much greater pro-

portion of foreign productions than in the former.

Those manufactures which are

fit

for distant sale,

seem

to

have

been introduced into different countries in two different ways.

Sometimes they have been introduced, in the manner above mentioned,

by the violent

operation,

one

may say so,

of the stocks of

and undertakers, who established them

particular merchants

imitation of some

if

foreign manufactures of the

in

manufactures, therefore, are the offspring of foreign commerce, and

and brocades, which flourished century.

in Lucca, during

They were banished from

thence

by

duced in

the tyranny of one of

was accepted; many privileges were conferred upon them, and fine cloths that anciently

and which were introduced into England in

the beginning of the reign of Elizabeth; and such are the present silk

manufactures of Lyons and

duced in this manner ials,

being

Spital-fields.

are generally employed

Manufactures intro-

upon

imitations of foreign manufactures.

sale are

intro-

imitation

they began the manufacture with three hundred workmen. Such too

flourished in Flanders,

distant

the thirteenth

Venice, and offered to introduce there the silk manufacture.^^ Their

seem to have been the manufactures of

tures for

silks, velvets,

MachiaveFs heroes, Castruccio Castracani. In 1310, nine hundred families were driven out of Lucca, of whom thirty-one retired to

offer

times

manufac

same kind. Such

such seem to have been the ancient manufactures of

Some-

foreign mater-

When

the Vene-

Ed. I reads “that were introduced into Venice in the beginning of.” See Sandi Istoria Civile de Vinezia, Part 2 vol. i. page 247, and 256. Vettor Sandi, Prmcipj di storia civile delta RepubUca di Venezia, Venice, 1755. The pages should be 257, 258 This note and the three sentences in the text which the reference covers, from “They were banished” to “three hundred workmen,” appear first in ed. 2. Ed. I reads “being in.”

of foreign

manufactures.

the wealth of nations

382

manufacture was

tian

first

the materials were

established,

brought from Sicily and the Levant.

The more ancient manufacture

Lucca was likewise carried on with foreign materials. The vation of mulberry trees, and the breeding of silkworms, seem of

to have been

common

all

culti-

not

in the northern parts of Italy before the six-

teenth century. Those arts were not introduced into France reign of Charles IX.-^

The manufactures

of Flanders

till

the

were carried

on chiefly with Spanish and English wool. Spanish wool was the material, not of the first woollen manufacture of England, but of

More than one

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 the

first

was

that

for distant sale.

fit

part of the materials of the Spital-fields manufacture to be the produce of England.

The

half the

ever likely

is

seat of such manufactures, as

they are generally introduced by the scheme and project of a few individuals,

sometimes established in a maritime

is

city,

and some-

times in an inland town, according as their interest, judgment or

grown up

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 houshold and coarser manufactures which must at aU times

out of the

be carried on even

caprice

Sometimes they have

coarser

home manufactures.

in the poorest

factures are generally

and rudest countries. Such manu-

employed upon the materials which the coun-

try produces,

and they seem frequently

and improved

in

have been

first

refined

such inland countries as were, not indeed at a very

but at a considerable distance from the sea coast, and some-

great,

times even from tile

to

and easily

yond what

is

all

water carriage.

cultivated, produces

An inland country naturally

fer-

a great surplus of provisions be-

necessary for maintaining the cultivators, and on ac-

count of the expence of land carriage, and inconveniency of river navigation,

it

may

frequently be difficult to send this surplus

abroad. Abundance, therefore, renders provisions cheap, and en-

courages a great

hood,

who

number

of

workmen

to settle in the neighbour-

find that their industry can there procure

the necessaries

and conveniencies

them more of

of life than in other places.

They

work up the materials of manufacture which the land produces, and exchange their finished work, or what is the same thing the price of “ Ed.

I reads “seems.”

®®Ed.

I

(beginning six lines higher up), “When the Venetian manufacture was not a mulberry tree, nor consequently a silkworm, in all

flourished, there

Lombardy. They brought the materials from

Sicily and from the Levant, the manufacture itself being in imitation of those carried on in the Greek empire. Mulberry trees were first planted in Lombardy in the beginning of the six-

teenth century,

by the encouragement of Ludovico

Sforza,

Duke

of Milan.”

RISE OF it,

for

more materials and

provisions.

surplus part of the rude produce, it

TOWNS

383

They give a new value

by saving

to the

the expence of carrying

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

agreeable to them, it

upon

easier terms than they could

have obtained

The cultivators get a better price for their surplus prodand can purchase cheaper other conveniencies which they have

before.

uce,

They

occasion for.

are thus both encouraged and enabled to in-

crease this surplus produce

by a

and better cultivation of the land; and as the fertility of the land had given birth to the manufacture, so the progress of the manufacture reacts upon the land, and increases still further its fertility. The manfurther improvement

ufacturers first supply the neighbourhood, and afterwards, as their

work improves and er the

refines,

more distant markets. For though

neith-

rude produce, nor even the coarse manufacture, could, with-

out the greatest difficulty, support the expence of a considerable

land carriage, the refined and improved manufacture easily may. In

a small bulk

it

rude produce.

frequently contains the price of

a

great quantity of

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 working people,

and

of their im-

The com, which could with difficulty have been carried abroad in its own shape, is in this manner virtually exported mediate employers.

complete manufacture, and may easily be sent to the comers of the world. In this manner have grown up natremotest urally, 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 modem hisin that of the

tory of Europe, their extension and improvement have generally

been posterior to those which were the offspring of foreign com-

was noted for the manufacture of fine cloths made of Spanish wool, more than a century before any of those which now merce. England

flourish in the places

above mentioned were

fit

for foreign sale.

The

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 extension

to explain.

CHAPTER

IV

OF THE TOWNS CONTRIBUTED TO THE IM-

HOW THE COMMERCE

provem:ent of the country

The rise of

towns

The

increase

and

riches of commercial

and manufacturing towns,

contributed to the improvement and cultivation of the countries to

benefited

the coun-

which they belonged, in three

try,

because

First,

different ways.

by affording a great and ready market

for the rude produce

of the country, they gave encouragement to its cultivation

was not even confined more or

they af-

further improvement. This benefit

forded

countries in which they were situated, but extended

(i)a

those with which they had

any

dealings.

To

and

to the less to

them they

all of

af-

ready

all

market

forded a market for some part either of their rude or manufactured

for its

produce,

produce, and consequently gave some encouragement to the industry

and improvement

count of

from

it

pay the growers a

better price for

as cheap to the consumers as that of

more

it,

and yet

af-

distant countries.

by the inhabitants

Secondly, the wealth acquired

(2) be-

country, however, on ac-

market. Its rude produce being charged with less carriage,

the traders could ford

own

neighbourhood, necessarily derived the greatest benefit

its

this

of all. Their

of cities

was

cause

frequently employed in purchasing such lands as were to be sold, of

merchants bought

which a great part would frequently be uncultivated. Merchants

land in the coun-

and improved

are

commonly ambitious

of

becoming country gentlemen, and when

they do, they are generally the best of

all

improvers.

try

it,

A merchant

is

accustomed to employ his money chiefly in profitable projects; whereas a mere country gentleman ly in expence. to

The one

him again with a

is

accustomed

profit: the

very seldom expects to see any more of naturally affect their temper ness.

and

undertaker.

The one

is

of raising the value of

he has any

capital,

employ it

chief-

it.

Those

different habits

disposition in every sort of busi-

A merchant is commonly a bold;

upon the improvement

to

money go from him and return other, when once he parts with it,

often sees his

a country gentleman, a timid

not afraid to lay out at once a large capital

when he has a probable prospect in proportion to the expence. The other, if

of his land, it

which

is

not always the case, seldom ventures to 384

TOWNS IMPROVED THE COUNTRY employ

it

in this manner. If

he improves at

all, it is

3^5

commonly not

with a capital, but with what he can save out of 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

than those of der,

mere country gentlemen.^ The

were in this way,

habits, besides, of or-

(Economy and attention, to which mercantile business naturally

forms a merchant, render him

much

fitter

to execute, with profit

and success, any project of improvement. Thirdly, and lastly, commerce and manufactures gradually in-

troduced order and good government, and with them, the liberty

and security of individuals, among the inhabitants of the country,

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,

of all their effects.

Mr.

Hume ^

is

is

by

far the

and

(3)

because order and

good government were introduced.

most important

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 hospitality at home. If this surplus produce

is

suf-

maintain a hundred or a thousand men, he can make use no other way than by maintaining a hundred or a thousand

ficient to

of

it

men.

in

He

retainers

Before foreign

commerce and fine manufactures are intro-

duced great pro-

pnetors is

at all times, therefore, surrounded with a multitude of

and dependants, who having no equivalent to give

in re-

turn for their maintenance, but being fed entirely

by

must obey him, for the same reason that

must obey the

his bounty,

are sur-

rounded by bands of retain-

prince

who pays them.

soldiers

Before the extension of commerce and man-

ufactures in Europe, the hospitality of the rich the sovereign

down

and the great, from

to the smallest baron, exceeded every thing

which in the present times we can easily form a notion

of.

West-

minster hall was the dining-room of William Rufus, and might frequently, perhaps, not be too large for his company. It

a piece of magnificence in

Thomas

was reckoned

Becket, that he strowed the floor

dean hay or rushes in the season, 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 of his hall with

^

Above, p. 364.

^“Of Commerce” and “Of Luxury” tory ^ ed. of 1773, vol. ®

Evidently from

iii.,

in Pohtical Disccmrses, 1752,

p. 400.

Hume,

History, ed. of 1773, vol.

i.,

p. 384.

and His-

ers,

THE WEALTH OF NATIONS

3S6

and though the num-

his different manors, thirty thousand people;

ber here

may have been

exaggerated,

it

must, however, have been

very great to admit of such exaggeration.*^ the

A

hospitality nearly of

same kind was exercised not many years ago

parts of the highlands of Scotland. It seems to be tions to

whom commerce and manufactures are little known. I have

seen, says

Doctor Pocock, an Arabian chief dine

town where he had come even

in many difiFerent common in all na-

common

to sell his cattle,

beggars, to

sit

and

in the streets of

a

invite all passengers,

down with him and partake

of his

banquet.^

The

and tenants at will

were

just as de-

upon them as were not

who

paid a rent in no

Even such

a state of villanage, were tenants at

in

of

occupiers of land were in every respect as dependent

the great proprietor as his retainers.

will,

pendent

respect equivalent to the subsistence which the land afforded them.

as retain-

A crown, half a crown, a sheep,

ers.

highlands of Scotland a family. In

some places

a lamb, was some years ago in the

common

it is

rent for lands which maintained

so at this day; nor will

a

money at present

purchase a greater quantity of commodities there than in other

where the surplus produce of a large estate

places. In a country

must be consumed upon the

estate itself,

it

convenient for the proprietor, that part of tance from his

will frequently it

be more

be consumed at a

own house, provided they who consume it are

dis-

as de-

pendent upon him as either his retainers or his menial servants.

He

thereby saved from the embarrassment of either too large a com-

is

pany 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 feeds his servants

ants at their houses.

bounty, and

The

reserve.

at his

Such a proprietor, as he

own house, so he feeds his ten-

subsistence of both

is

derived from his

continuance depends upon his good pleasure.

Upon the authority which the great proprietors necessarily had in

The power of the

its

little

and retainers

such a state of things over their tenants and retainers, was founded

ancient

barons

the

power of the ancient barons. They necessarily became the

*

“No less than 30,000 persons are said to have daily lived at his board in the different manors and castles which he possessed in England.”—Hume, History, ed. of 1773, vol iii., p. 182. In Lectures, p. 42, it had been “40,000 people, besides tenants.” ®

“An Arab prince will often dine in the street, before his door, and call to that pass, even beggars, in the usual expression, Bismillah, that is, In the name of God; who come and sit down, and when they have done, give their

all

Hamdellilah, that is, God be praised. For the Arabs are great levellers, put everybody on a footing with them; and it is by such generosity and hospitality that they maintain their interest.”—Richard Pococke, Description of the East, 1743, vol.

i.,

p. 183.

TOWNS IMPROVED THE COUNTRY judges in peace,

and the leaders

in war, of all

who

387

dwelt upon their

They could maintain order and execute the law 'within

estates.

respective demesnes, because each of

them could

their

was founded on thi^

there turn the

whole force of all the inhabitants against the injustice of

any

one.

No other person had sufficient authority to do this. The king in parhad

not. In those ancient times

he was

little

greatest proprietor in his dominions, to

whom,

for the sake of

ticular

more than the com-

common enemies, the other great procertain respects. To have enforced payment of a small

mon defence

against their

prietors paid

debt within the lands of a great proprietor, where

the inhabitants

ail

were armed and accustomed to stand by one another, would have cost the king,

same to

had he attempted

effort as to extinguish

a

same reason

the

those

whom

It is

both

war.

civil

He

authority, almost the

was, therefore, obliged

capable of administering

command

it;

and

of the country militia

for t‘o

that militia would obey.

a mistake to imagine that those

their origin

own

his

of justice through the greater part of

who were

to leave the

by

civil

abandon the administration

the country, to those

it

took

territorial jurisdictions

from the feudal law. Not only the highest jurisdictions

and

criminal, but the

power of levying

were

all rights

was an-

and indetroops, of coining

money, and even that of making bye-laws for the government of their o-wn people,

It

terior to

possessed allodially

by

the great

pendent of the

feudal

law.

proprietors'of land several centuries before even the

feudal the

of the

law was kno'wn in Europe. The authority and jurisdiction of

Saxon lords

in

England, appear

the conquest, as that of feudal law

land

name

till

is

to have been as great before

any of the Norman

lords after

not supposed to have become the

after the conquest.'^

jurisdictions

^

it.

common law

But the of

Eng-

That the most extensive authority and

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

manners just now

described.

from the state of property and

Without remounting to the remote an-

tiquities of either

the French or English monarchies,

much

many

later times

from such causes. It Lochiel,

is

proofs that such effects

we may find in

must always flow

not thirty years ago since Mr.

Cameron of

a gentleman of Lochabar 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 Argyle, and

without being so

much

as a justice of peace, used, notwithstanding,

to exercise the highest criminal jurisdiction over his

®Eds.

I

and

2

read “appears.’

"^Hume, History,

own people. He

ed. of i773j

U

224

*

THE WEALTH OF NATIONS

3S8 is

said to have done so with great equity, though without

formalities of justice;

and

it is

any

of the

not improbable that the state of that

part of the country at that time

made

it

necessary for

him to assume That gentle-

this authority in order to maintain the public peace.

man, whose rent never exceeded five hundred pounds a year, carried, in 1745, eight hundred of his own people into the rebellion with him.® It

moderated by the

may

introduction of the feudal law, so far from extending,

The

was

feudal

be regarded as an attempt to moderate the authority of the great allodial lords.® It established a regular subordination, accompanied

law,

with a long train of services and duties, from the king smallest proprietor.

together with the his

During the minority

management

to the

of the proprietor, the rent,

of his lands, fell into the

immediate superior, and, consequently, those of

prietors into the

down

all

hands

of

great pro-

hands of the king, who was charged with the main-

tenance and education of the pupil, and who, from his authority as guardian, riage,

was supposed

provided

though

it

was

to

in a

have a right of disposing of him in mar-

manner not unsuitable

this institution necessarily

ority of the king,

to his rank.

But

tended to strengthen the auth-

and to weaken that

of the great proprietors,

it

could not do either sufficiently for establishing order and good gov-

ernment among the inhabitants of the country; because it could not alter sufficiently that state of property

disorders arose.

The

and manners from which the

authority of government

still

continued to be,

as before, too weak in the head and too strong in the inferior

and the excessive strength of the

bers,

inferior

mem-

members was

the

cause of the weakness of the head. After the institution of feudal subordination, the king

was as incapable

of the great lords as before.

cording to their other, still

They

still

continued to

discretion, almost continually

make war

ac-

upon one an-

and very frequently upon the king; and the open country

continued to be a scene of violence, rapine, and disorder.

But what

and un-

own

of restraining the violence

all the violence of

the feudal institutions could never

dermined

have

by foreign com-

merce and manufactures gradually brought about. These gradually

merce.

effected, the silent

and

insensible operation of foreign

com-

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 retainers. All for ourselves, ®

and nothing

it

either with tenants or

for other people, seems, in

“The Highlands of Scotland have long been entitled by law to every privbut it was not till very lately that the common

ilege of British subjects;

people could in fact enjoy those privileges.”—Hume, History, vol. ed. of 1773. •

Cp. Lectures, p. 116.

Lectures, pp. 38, 39.

i.,

p. 214,

TOWNS IMPROVED THE COUNTRY every age of the world, to have been the vile

maxim

3^9

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 dia-

mond

buckles perhaps, or for something as frivolous and useless,

they exchanged the maintenance, or what price of the

maintenance of a thousand

the whole weight

men

and authority which

it

the

is

same

for a year,

thing, the

and with

buckles, however, were to be

all their own, and no other have any share of them; whereas in the more anmethod of expence they must have shared with at least a thou-

creature cient

it

The human

could give them.

was

to

sand people. With the judges that were to determine the preference, this difference

tion of the vanities,

was

most

perfectly decisive;

thus, for the gratifica-

meanest and the most sordid of

childish, the

all

they gradually bartered their whole power and authority.^®

In a country where there finer

and

manufactures, a

man

is

ploy his revenue in any other

thousand families,

no foreign commerce, nor any of the

of ten thousand

who are all

way

than in maintaining, perhaps, a

them

of

In the present state of Europe, a

a year cannot well em-

man

necessarily at his

command.

of ten thousand a year can

spend his whole revenue, and he generally does maintaining twenty people, or being able to

so,

without directly

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 expence. For though the quan-

which he exchanges his whole rev-

tity of precious productions for

enue be very small, the number of workmen employed in collecting

and preparing

it,

must

necessarily have been very great. Its great

price generally arises from the wages of their labour, of all their

pays

all

and the profits

By paying that price he indirectly

immediate employers.

those wages and profits, and thus indirectly contributes to

workmen and their employers. He gena very small proportion to that of to very few perhaps a tenth, to many not a hundredth, and to

the maintenance of

all

the

erally contributes, however, but

each,

some not a thousandth, nor 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

When

be maintained without him.

the great proprietors of land spend their rents in maintain-

ing their tenants

own

all

and

retainers,

each of them maintains entirely

all

But when they spend them in maintaining tradesmen and artificers, they may, all of them

his

tenants and

“Hume,

all his

own

retainers.

History ed. of 1773, vol.

iii,

p. 400; vol. v., p. 488.

At present a rich

man maintains in alias

many persons as an ancient

baron, but

he contributes

only a small portion of the

maintenance of each person.

THE WEALTH OF NATIONS

390

taken together, perhaps, maintain as great, waste which

attends rustic hospitality,

or,

on account of the

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 artificer derives his subsistence

from the employment, not of one, but of different customers.

therefore,

To meet cheir new expenses the great proprietors dis-

missed

he

is

Though

in

a hundred or a thousand

some measure obliged

to

them

all,

not absolutely dependent upon any one of them. of the great proprietors having in this

The personal expence

man-

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

ner gradually increased,

it

the unnecessary part of their tenants.

Farms were enlarged, and the

their re-

occupiers of land, notwithstanding the complaints of depopulation,

tainers

reduced to the number necessary for cultivating

and their

it,

according to the

unneces-

imperfect state of cultivation and improvement in those times.

sary

the removal of the unnecessary mouths,

tenants,

and gave

By

value of

and by exacting from the the farm, a greater surplus, or what is the

thing, the price of

a greater surplus, was obtained for the pro-

farmer the

full

the re-

same

maining

prietor,

tenants

him with a method of spending upon his own person in the same manner as he had done the rest. The same cause continuing to operate, he was desirous to raise his rents above what his lands, in the

long leases,

which the merchants and manufacturers soon furnished

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 out in the further im-

provement of the land. The expensive vanity of the landlord made

him willing

to accept of this condition;

and hence the

origin of long

leases.

thus making

them

inde-

pendent.

Even a tenant

at will,

altogether dependent

who pays

the full value of the land,

is

not

upon the landlord. The pecuniary advantages

whidi 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.

he

is

But

if

he has a lease for a long term of years,

altogether independent; and his landlord must not expect from

him even the most

trifling service

beyond what

is

either expressly

upon him by the common and known law of the country. The tenants having in this manner become independent, and the stipulated in the lease, or imposed

The ^eat proprietors thus

became

retainers being dismissed, the great proprietors were

no longer cap-

able of interrupting the regular execution of justice, or of disturbing the peace of the country.

Having

sold their birth-right, not like

TOWNS IMPROVED THE COUNTRY Esau for a mess of pottage the

wantonness of plenty,

in time of

39 i

hunger and necessity, but in

and baubles,

for trinkets

be the

fitter to

insignifi-

cant.

play-things of children than the serious pursuits of men, they be-

came as

A

city.

any substantial burgher or tradesman in a regular government was established in the country as well as insignificant as

in the city,

in the one,

nobody having sufficient power to any more than in the other.

disturb its operations

It does not, perhaps, relate to the present subject,

help remarking

it,

some considerable

but I cannot

that very old families, such as have possessed estate

from father to son

many

for

successive

Old families

are

rare in

commercoun-

generations, are very rare in commercial countries. In countries

cial

which have

tries.

little

commerce, on the contrary, such as Wales or the

highlands of Scotland, they are very common. tories

ten

seem

to be all full of genealogies,

The Arabian

and there

by a Tartar Khan, which has been translated

is

into several Euro-

pean languages, and which contains scarce any thing that ancient families are very countries

than

common among

where a rich man can spend

by maintaining

as

many

apt to run out, and his benevolence to

attempt to maintain more than he can

a proof

no other way

can maintain, he

it

seems

it

else;

those nations. In

his revenue in

people as

is

his-

a history writ-

is

not

seldom so violent as

afford.

But where he can

spend the greatest revenue upon his own person, he frequently has

no bounds to his expence, because he frequently has no bounds to his vanity, or to his affection for his

own

countries, therefore, riches, in spite of the of

law to prevent

their dissipation, very

person. In commercial

most violent regulations

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 shep-

herds, 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 tiie public happiness, was

in this

manner brought about by two

who had not

different orders of people,

the least intention to serve the public.

most childish vanity was the

The merchants and from a view to

their

sole

artificers,

much

less ridiculous,

gratify the

acted merely

of their

own pedlar

penny wherever a penny was

to be got.

Neither of them had either knowledge or foresight of that great ^Histoire genealogique des Tatars traduite du manuscript Tartare D^Abulgasi-Bayadur-‘Chan et enrichie d^un grand nombre de remarques authentiques et trh curieuses sur le viritable estat present de VAsie septentrionale avec les cartes geographiques necessaires, par D., Leyden, 1726. *^6 preface says some Swedish officers imprisoned in Siberia had it translated into Russian and then retranslated

it

themselves into various other languages.

tion

was

thus in-

motive of the great proprietors.

own interest, and in pursuit

principle of turning a

To

A revolusensibly

brought about,

THE WEALTH OF NATIONS

392

revolution which the folly of the one,

and the industry

of the other,

was gradually bringing about. and commerce and manufactures be-

came the

It is 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 cultivation of the country.

cause of

the im-

prove-

ment of the country.

to the natural course of

This order, however, being contrary things,

is

necessarily both slow

and uncertain. Compare the slow

progress of those European countries of which the wealth depends

much upon

very

their

commerce and manufactures, with the rapid

advances of our North American colonies, of which the wealth This order of things is

both slow

and un-

is

founded altogether in agriculture. Through the greater part of Eurnumber of inhabitants is not supposed to double in less

ope, the

than five hundred years. In several of our North American colonies, it is

found to double

twenty or five-and-twenty years.^^ In Eur-

in

certain

compared

ope the law of primogeniture, and perpetuities of different kinds,

with the

prevent the division of great estates, and thereby hinder the mul-

natural

A

tiplication of small proprietors.

order, as

small proprietor, however,

who

views

who

with

maybe

knows every part

shown by

the affection which property, especially small property, naturally

the rapid progress of the

North American colonies,

inspires,

of his little territory,

it all

and who upon that account takes pleasure not only in culit, is generally of all improvers the most in-

tivating but in adorning

and the most successful.^^ The same 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 dustrious, the

most

intelligent,

regulations, besides, keep so

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

every-where in Europe a

most unprofitable employment of a small the superior security, indeed, a

when he

retires

little capital in

from business,

man

will

For the sake of

sometimes chuse to lay out his

A man of profession

land.

capital.

of moderate circumstances,

too,

whose revenue

is

de-

rived from another source, often loves to secure his savings in the

same way. But a young man, who, instead

some

employ a

profession, should

pounds

in the purchase

might indeed expect to

and

live

of applying to trade or to

capital of

two or three thousand

cultivation of a small piece of land,

very happily, and very independently,

but must bid adieu, forever, to

all

hope of either great fortune or

by a different employment of his stock he same chance of acquiring with other people.

great illustration, which

might have had the

“ Above, p

“ Ed

70, note.

^^Eds 2-5 read “with

all,”

5 omits

“who” by a misprint

doubtless a corruption.

“Cp. above, p

364.

TOWNS IMPROVED THE COUNTRY Such a person

too,

393

though he cannot aspire at being proprietor, will

often disdain to be a farmer.

The

small quantity of land, therefore,

brought to market, and the high price of what is brought thither,^® prevents a great number of capitals from being employed

which

is

and improvement which would otherwise have

in its cultivation

taken that direction. In North America, on the contrary, sixty

pounds

is

fifty or

often found a sufficient stock to begin a plantation

The purchase and improvement of uncultivated land, is there most profitable employment of the smallest as well as of the the with.

and the most

greatest capitals,

direct road to all the fortune

and

which can be acquired in that country. Such land, inin North America to be had almost for nothing, or at a price

illustration

deed,

is

much below the Europe,

value of the natural produce; a thing impossible in

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 monop-

oly price.

The

terest of the

free rent of the land

would go nearer to pay the

in-

purchase-money, and a small capital might be em-

ployed in purchasing land as profitably as in any other way.

England, on account of the natural fertility of the soil, of the great sea-coast in proportion to that of the whole coun-

extent of the try,

and

of the

many navigable rivers which

run through

it,

and

af-

ford the conveniency of water carriage to some of the most inland

parts of

it, is

perhaps as well

fitted

in Europe, to be the seat of foreign

and

for distant sale,

casion.

From

of all the

any large country commerce, and manufactures

by nature

as

improvements which these can oc-

the beginning of the reign of Elizabeth too, the Eng-

lish legislature

has been peculiarly attentive to the interests of

commerce and manufactures, and Europe, Holland

itself

in reality there

is

no country in

upon the Commerce and

not excepted, of which the law

whole, more favourable to this sort of industry.

is,

manufactures Save 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

fol-

lowed slowly, and at a distance, the more rapid progress of com-

merce 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

of the far greater part,

remains uncultivated, and the cultivation

much

inferior to

what

it

might be. The law

of England, however, favours agriculture not only indirectly

“ Ed.

I

does not contain “thither.’

Ed.

I

by the

does not contain “the.”

and the slow progress of

Eng-

land in agricul-

ture in spite of

favours accorded to it

THE WEALTH OF NATIONS

394

protection of commerce, but

by

Ex-

several direct encouragements.

cept in times of scarcity, the exportation of corn

is

not only

but

free,

encouraged by a bounty. In times of moderate plenty, the importation of foreign corn tion.

is

The importation

hibited at thence.^^

all

times,^®

Those who

loaded with duties that amount to a prohibiof live cattle, except from Ireland,

and it

is

cultivate the land,

is

pro-

was permitted from therefore, have a monopoly

but of late that

it

against their countrymen for the two greatest and most important articles of land produce,

bread and butcher’s meat. These encour-

agements, though at bottom, perhaps, as I shall endeavour to show hereafter,^® altogether illusory, sufficiently demonstrate at least the

good intention 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, in which the right of

primogeniture takes place, which pays

tithes,

and where perpet-

uities, though contrary to the spirit of the law, are admitted in

some

cases,

can give more encouragement to agriculture than Eng-

land. Such, however, notwithstanding,

What would ment of

it

is

the state of

its cultivation.

have been, had the law given no direct encourage-

to agriculture besides

what

arises indirectly

from the progress

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

and the still

slow-

er progress of

France,

human prosperity usually endures.

France seems to have had a considerable share of foreign com-

merce near a century before England was distinguished as a commercial country.

The marine of France was

considerable, according

to the notions of the times, before the expedition of Charles the

Vlllth to Naples.^^ The cultivation and improvement of France,

“i8 Car.IL, c. 2. “32 Geo. n., c. II, § i; 5 Geo. III., c. 10, 12 Geo. III., c, ^ Below, pp. 426-429, 490-510. ^ It seems likely that Charles VIII. is here (though not on

2.

the next page) confused with Charles of Anjou, brother of St. Louis. At any rate Henault (who is quoted below, p. 588) says “Notre marine aussitot d6truite que creee sous Philippe Auguste, s’etait bien retablie sous S. Louis si, comme le dit un

embarqua soixante-mille hommes a Aigues-mortes quant a la premiere expedition, Joinville dit qu’au depart de Chypre pour la conquete de Damiette, il y avait dix-huit cents vaisseaux tant grands que petits. S. Louis avait aussi mis en mer une flotte considerable pour defendre les cotes de Poitou contre la flotte de Henri III., et son frere Charles d’Anjou en avait une de quatre-vingts voiles, composee de galores et de vaisseaux, lors de son expedition de Naples ” Nouvel Abrege chronologique de Vhistoire de France^ 1768, tom. i., p. 201, ad. 1299. This puts the French marine 200 years historien, ce prince

.

—

earlier.

.

,

TOWNS IMPROVED THE COUNTRY however,

is,

upon the whole,

inferior to that of England.

395

The law of

the country has never given the same direct encouragement to agriculture.

The

commerce of Spain and Portugal to the other parts of Europe, though chiefly carried on in foreign ships, is very considerable. That to their colonies is carried on in their own, and is much foreign

greater,

But

on account

of the great riches

tant sale into either of those countries, still

and extent

of those colonies.

has never introduced any considerable manufactures for

it

dis-

and the greater part of both

remains uncultivated. The foreign commerce of Portugal

older standing than that of

Spain and Portugal,

any great country

in

is

of

Europe, except

Italy,

Italy

is

the only great country of Europe which seems to have

Italy

been cultivated and improved in every part, by means of foreign

commerce and manufactures

for distant sale. Before the invasion of

Charles the Vlllth, Italy, according to Guicciardin,-^ was culti-

vated not less in the most mountainous and barren parts of the country, than in the plainest and most situation of the country, states little

fertile.

The advantageous

throu^^^-

out by

commerce and ex-

and the great number of independent

which at that time subsisted

in

to this general cultivation. It

it,

is

probably contributed not a

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

The

is

at present.

capital, however, that is acquired to

merce and manufactures,

is all

any country by com-

some part of it has been secured and realised in the cultivation and improvement of its lands. A merchant, it has been said very properly, is not necessarily the citizen of any particular possession,

till

country. It

is

in

a great measure

indifferent to

he carries on his trade and a very ;

move ports,

his capital,

to another.

long to any particular country,

him from what place make him re-

trifling disgust will

and together with

from one country

it all

the industry which

No part of it can be said

till it

has been spread as

it

it

No

vestige

said to have been possessed

now remains

by the

Hans towns,

except in the obscure histories of the thirteenth and fourteenth centuries. It is

even uncertain where some of them were situated, or to

“ “Perchfe

ridotta tutta in somma pace e tranquillita, coltivata non meno ne’ luoghi pin montuosi, e piu steriH, che nelle pianure, e regioni sue piu

ne sottoposta ad altro Imperio, che de^ suoi medesimi, non solo era abbondantissima d’ abitatori, e di richezze.” Guicciardini, Della htoria fertili,

Italia, Venice, 1738, vol.

—

i.,

p. 2.

tures

is

an

uncert^

isedinthe “

were over

of the great wealth,

greater part of the

quired by commerce

sup-

to be-

the face of that country, either in buildings, or in the lasting im-

provement of lands.

The na-

a very precarious and uncertain

i^nd.

396

the wealth of NATIONS

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 Tuscany, 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 richest, best cultivated,

provinces of Europe.

and most populous

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 Of Systems

IV

of political

(Economy

INTRODUCTION Political oeconomy, considered as a branch of the science of a statesman or

legislator,

proposes two distinct objects:

first,

to pro-

The first object of political

vide a plentiful revenue or subsistence for the people, or more properly to enable

them

to provide such

a revenue

or subsistence for

themselves and secondly, to supply the state or commonwealth with ;

a revenue

sufficient for the public services. It proposes to enrich

different progress of opulence in different ages

has given occasion to two different systems of with regard to enriching the people. The one

tem

and

the system of commerce. It

stood in our ^

and nations,

political

oeconomy,

may be called the sys-

of commerce, the other that of agriculture. I shall endeavour

to explain both as fully

For other

distinctly as I can, is

the

own country and in

and

shall begin with

modern system, and

our

397

is

best under-

own times.

definitions of the purpose or nature of poKtical

index, s,v.

pro-

vide subsistence

for the people.

both the people and the sovereign.^

The

(Economy is to

oeconomy see the

Two different

systems proposed for this

end will be explained.

CHAPTER

I

OF THE PRESrCIPLE OF THE COMMERCIAL OR MERCANTILE SYSTEM

Wealth and

money in

That

wealth consists in money, or in gold and

a popular

silver, is

notion which naturally arises from the double function of money,

common

as the instrument of commerce, and as the measure of value. In

language

consequence of

are con-

money we can more

its

when we have we have occasion commodity. The great affair, we

being the instrument of commerce, readily obtain whatever else

sidered

synonymous.

for,

than by means of any other

always

find, is to get

ficulty in

money.

When

that

is

obtained, there

is

no

dif-

making any subsequent purchase. In consequence of

its

we estimate that of all other commodities by the quantity of money which they will exchange for. We say being the measure of value,

a

of

he

rich

is

man

that he

worth very

little

rich, is said to love

man,

is

is

worth a great deal, and of a poor

money.

A

frugal

money; and a

it.

that

man, or a man eager to be

careless,

said to be indifferent about

and wealth and money, in

man

a generous, or a profuse

To grow rich is to get money common language, consid-

short, are, in

ered as in every respect S3monymous.

A rich country, in the same manner as a rich man, is supposed to

Similarly

the Tartars

thought wealth

be a country abounding in money; and to heap up gold and silver

any country

in

some time

consisted

of cattle.

is

supposed to be the readiest

way

to enrich

it.

For

after the discovery of America, the first enquiry of the

when they arrived upon any unknown coast, used to be, was any gold or silver to be found in the neighbourhood?

Spaniards, if

there

By the information which they received, they judged whether it was worth while to make a settlement there, or the conquering. Plano Carpino, a

monk

if

the country

was worth

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 enquiry had the ^

There seems

to be a confusion

between Plano-Carpini, a Franciscan sent and Guillaume de Rubruquis, another Frandscan sent as ambassador by Louis IX. in 1253. As is pointed out by Rogers in a note on this passap, the reference appears to be to Rubruquis, Voyage en Tartarie et d la Chine, chap, xxxiii. The great Khan’s secretaries,

as legate

by Pope Innocent IV.

in 1246,

398

PRINCIPLE OF THE MERCANTILE SYSTEM

399

same object with that of the Spaniards. They wanted to know if the country was rich enough to be worth the conquering. Among the

among

Tartars, as

all

who are generally

other nations of shepherds,

ignorant of the use of money, cattle are the instruments of com-

merce and the measures of value. Wealth, them, consisted in

and

in gold

cattle, as

silver.

therefore, according to

according to the Spaniards

Of the two, the Tartar

it

consisted

notion, perhaps,

was the

nearest to the truth.

Mr. Locke remarks a distinction between money and other moveable goods. All other moveable goods, he says, are of so consumable

a nature that the wealth which consists in them cannot be much de-

pended on, and a nation which abounds in them one year may, without any exportation, but merely by their own waste and extravagance, be in great want of them the next. Money, on the con-

a steady

trary, is

hand

to hand, yet

friend, which, if it

though

it

may

travel

can be kept from going out of the country,

not very liable to be wasted and consumed. Gold and fore, are,

about from

Locke thought gold and silver

the

most substantial

part of the

wealth of a nation.

is

silver, there-

according to him, the most solid and substantial part of

the moveable wealth of a nation, and to multiply those metals

ought, he thinks, upon that account, to be the great object of

its

political ceconomy.^

Others admit that world,

it

a nation could be separated from

if

the

all

would be of no consequence how much, or how little money

Others say that necessary to

it is

circulated in

means

it.

of this

by or a

circulated

money, would only be exchanged for a greater

number

smaller

The consumable goods which were

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

have

much money in order to maintain fleets

think, with countries which have connections with foreign nations,

and which are obliged fleets

to carry on foreign wars,

and to maintain

and armies in distant countries. This, they say, cannot be

done, but

by sending abroad money to pay them with; and a nation much money abroad, unless it has a good deal at home.

cannot send

Every such nation, therefore, must endeavour in time of peace to accumulate gold and silver, that, when occasion requires, it may have wherewithal Rubruquis querant

states,

s’il

y

to carry

on foreign wars.

on one occasion displayed

curiosity

about France: “s’en-

avait force boeufs, moutons, et chevaux,

comme

s’ils

eussent

deja et6 tons prets d’y venir et emmener tout.” Plano-Carpini and Rubruquis mi.t are both in Bergeron’s Voyages faits principalement en Asie dans Us

m,

xiv. et XV. sikUs,

There

is

very

La Haye, little

1735.

foundation for any part of this paragraph. It perhaps

originated in an inaccurate recollection of pp. 17, 18 and 77-79 of Some Considerations (1696 ed.), and §§ 46-50 of CivU Government. It was probably transferred bodily from the Lectures without verification. See Lectures, p. 198.

and

armies abroad.

the wealth of nations

400

So all European nations

In consequence of these popular notions,

Europe have studied, though to

of

and

little

all

the different nations

purpose, every possible

silver in their respective countries.

have tried

means

to accu-

Spain and Portugal, the proprietors of the principal mines which

mulate gold and silver.

At first by a prohibition

of accumulating gold

supply Europe with those metals, have either prohibited their exportation under the severest penalties, or subjected erable duty.^

The

part of the policy of most other European nations. It found, where

to a consid-

it

like prohibition seems anciently to have

we should

least of all expect

to find

is

it,

made a

even to be

in

some old

of exportation,

Scotch acts of parliament, which forbid under heavy penalties the carrying gold or silver jorth of the ciently took place both in France

but merchants

found this

When

kingdom? The

like policy an-

and England.

those countries became commercial, the merchants found

this prohibition,

upon many

occasions, extremely inconvenient.

buy more advantageously with gold and

incon-

They could

venient,

ver than with any other commodity, the foreign goods which they

frequently

sil-

wanted, either to import into their own, or to carry to some other foreign country.

They

remonstrated, therefore, against this prohi-

bition as hurtful to trade.

and therefore

argued that ex-

portation

They represented,

tity of those metals in the

kingdom. That, on the contrary,

frequently increase that quantity; foreign goods

silver in

diminish

might be re-exported a large

profit,

®

because,

if

it

might

the consumption of

was not thereby increased in the country, those goods

the stock

to foreign countries, and, being there sold for

might bring back much more treasure than was orig-

in the

country,

and

order to purchase foreign goods, did not always diminish the quan-

did not

always

that the exportation of gold

first,

inally sent out to purchase

them. Mr.

Mun compares this operation

of foreign trade to the seed-time and harvest of agriculture. ^Tf

we

only behold,” says he, “the actions of the husbandman in the seedtime, shall

we

when he

away much good corn into the ground, we account him rather a madman than a husbandman. But when

consider his labours in the harvest, which

deavours, actions.”

and that the metals

could be

casteth

They

we

shall find the

is

the end of his en-

worth and plentiful increase of his

^

represented, secondly, that this prohibition could not hin-

der the exportation of gold and silver, which, on account of the ®

^ Ed See below, p. 478, note. i reads “expect least of all.’^ “forth of the realm” occur in (January) 1487, c. ii. Other acts

®The words are 1436,

13 ; 14S1, c 15; 1482, c 8. reads “increase it.” England's Treasure by Forraign Trade, or the BaUance of our Forraign Trade is the Rule of our Treasure, 1664, chap, iv., ad fin,, which reads, however, “we will rather accompt him a mad man ”

Ed.

I

c.

PRINCIPLE OF THE MERCANTILE SYSTEM

40 i

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 quan-

tity of those metals in the kingdom. But that

greater value than

it

exported,

foreign nations, which

when it imported to a a contrary balance became due to

was necessarily paid to them

in the

manner, and thereby diminished that quantity. That in

same

this case to

metis could not prevent it, but more dangerous, render it more expensive. That

prohibit the exportation of those

only

by making

it

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

who sold it, not only for the natural risk, trouble and exsending the money tMther, but for the extraordinary risk

the banker

pence of arising

from the prohibition. But that the more the exchange was

against

any country, the more the balance of trade became necesit; the money of that country becoming necessarily of

sarily against

much less

so

value, in comparison with that of the country to which

the balance was due. That

Holland, for example, was

if

the exchange between England

five

per cent, against England,

it

and

would

require a hundred and five ounces of silver in England to purchase

a

bill for

five

a hundred ounces of

ounces of

silver in

hundred ounces

silver in

Holland: that a hundred and

England, therefore, would be worth only a

of silver in Holland,

and would purchase only a

proportionable quantity of Dutch goods: but that a hundred ounces of silver in Holland, on the contrary, five

would be worth a hundred and

ounces in England, and would purchase a proportionable quan-

tity 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 to England,

and the other

as this difference ® ^

so

amounted

draw so much

less

Dutch money

much more English money to Holland,

to:

and that the balance of trade, there-

Mun, England*s Treasure, chap. vi. “Among other things relating to trade

there hath been

much

discourse of

the balance of trade; the right understanding whereof may be of singular use.”~Josiah Child, New Discourse of Trade, 1694, p. 152, chap, ix., introducing an explanation. The term was used before Mun’s work was written. See Palgrave’s Dictionary of Political the theory

Economy,

Balance of Trade, History of

retained

only by attention to the

balance of trade.

XHE WEALTH OF NATIONS

402

would necessarily be so much more against England, and would require a greater balance of gold and silver to be exported to fore,

Holland. Thdir argu-

ments were partly sophistical^

Those arguments were partly

and partly

solid

sophistical.

They

were solid so far as they asserted that the exportation of gold and silver in trade

They

might frequently be advantageous

to the country.

were solid too, in asserting that no prohibition could prevent

their exportation,

porting them.

when private people found any advantage

But they were

in ex-

sophistical in supposing, that either to

preserve or to augment the quantity of those metals required

more

the attention of government, than to preserve or to augment the quantity of any other useful commodities, which the freedom of

any such

attention, never fails to supply in the prop-

They were

sophistical too, perhaps, in asserting that

trade, without er quantity.

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

who had any money much dearer for the bills

extremely disadvantageous to the merchants to

pay

in foreign countries.

They paid

so

which their bankers granted them upon those countries. But though the risk arising from the prohibition might occasion some extraor-

dinary expence to the bankers,

more money out all laid

it

would not necessarily carry any

of the country. This expence

out in the country, in smuggling the

would generally be

money out

could seldom occasion the exportation of a single the precise

sum drawn

for.

The high

and six-pence beyond of

it,

price of exchange too

naturally dispose the merchants to endeavour to

make

would

their exports

nearly balance their imports, in order that they might have this

high exchange to pay upon as small a price of exchange, besides,

must

sum

as possible.

The high

necessarily have operated as

in raising the price of foreign goods,

a tax, 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 but they convinced parlia-

silver.

Such as they were, however, those arguments convinced the people to whom they were addressed. They were addressed by mer-

ments and

chants to parliaments, and to the councils of princes, to nobles,

councils.

to country gentlemen;

trade, to those

by

who were

those

who were supposed

and

to understand

conscious to themselves that they

knew

nothing about the matter. That foreign trade enriched the country, experience demonstrated to the nobles and country gentlemen, as sentence appears first in ed. 2. Ed. i begins the next sentence, “The high price of exchange therefore would tend ”

PRINCIPLE OF THE MERCANTILE SYSTEM

4^3

well as to the merchants; but how, or in

what manner, none of them knew. The merchants knew perfectly in what manner it enriched themselves. It was their business to know it. But to know in well

what manner

enriched the country, w^as no part of their business.

it

This subject never came into their consideration, but when they had occasion to apply to their country for some change in the laws re-

became necessary to say something and the manner in

lating to foreign trade. It then

about the beneficial

which those

To

effects

the judges

who

effects of foreign trade,

were obstructed by the laws as they then stood. were to decide the business, it appeared a most

when they were told that foreign 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 prohibisatisfactory account of the matter,

trade brought

tion of exporting gold

and

was

silver

in France

fined to the coin of those respective countries.

foreign coin

and of bullion was made

free.

and England con-

The

exportation of

In Holland, and in some

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 other places, this liberty

The exportation of foreign coin and bullion

was permitted by France

and Engand

land,

of trade, as the only cause which could occasion

any augmentation

From one fruitless care it was turned away to another care much more intricate, much more embnirassing, and just equally fruitless. The title of Mun’s book, Efigland^s Treasure in Foreign Trade, became a fundamental maxim in the or diminution of those metals.

political

oeconomy, not of England only, but of

all

other commercial

the exportation of

Dutch by

coin

Holland.

That treasure

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

considered as subsidiary only to foreign trade. It neither brought

money into

the country,

it

was

said,

country therefore could never become either richer or

means of

it,

except so far as

its

The poorer by

nor carried any out of

it.

was obtained by foreign

trade be-

came a received

maxim.

prosperity or decay might indirectly

influence the state of foreign trade.

A country that has no mines its

own must undoubtedly draw

Gold and

gold and silver from foreign countries, in the same manner as

silver will

one that has no vineyards of

of its

its

own must draw

its

wines. It does

not seem necessary, however, that the attention of government should be more turned towards the one than towards the other object.

A

country that has wherewithal to buy wine,

the wine which

withal to

it

has occasion for; and

buy gold and

silver, will

“In”

is

will

always get

a country that has where-

never be in want of those metals.

a mistake for “by.”

be imported without

any attention of

government.

THE WEALTH OF NATIONS

404

They are

be bought for a certain price like

to

and as they are the price of

all

all

other commodities,

other commodities, so

modities are the price of those metals.

We

all

other com-

trust with perfect se-

any attention of governalways supply us with the wine which we have occasion

curity that the freedom of trade, without

ment, will for:

and we may

us with

all

it will

trust with equal security that

the gold and silver which

we can

always supply

afford to purchase or

to employ, either in circulating our commodities, or in other uses.

They can be imported

more easily

than

other

commodities

when

there is

an effectual de-

mand.

The

human

quantity of every commodity which

industry can

either purchase or produce, naturally regulates itself in every coun-

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 try according to the effectual

no commodities

regulate themselves

according to this effectual

more

easily or

demand than gold and

more exactly

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 an-

from the places where they are cheap, to those where they are dear, from the places where they exceed, to those where they fall other,

short of this effectual demand. If there were in England, for ex-

ample, an effectual demand for an additional quantity of gold, a else

to be had, fifty tuns of gold, which could be coined into

more than

five millions of guineas.

But if

there were

grain to the same value, to import tun,

a million

tuns each.

When their

quantity

was

paiet-boat could bring from Lisbon, or from wherever

it

of tuns of shipping, or

would

an effectual demand for require, at five guineas

a

a thousand ships of a thousand

The navy of England would not be

When the

it

sufficient.

quantity of gold and silver imported into any country

exceeds the effectual demand, no vigilance of government can pre-

exceeds

vent their exportation. All the sanguinary laws of Spain and Portu-

the de-

gal are not able to keep their gold

mand it is impossible to

prevent

those countries,

and sink the

in the neighbouring countries. If,

country their quantity raise their price

and it would be equally

impossiMe to prevent their im-

silver at

home. The continual

fell

demand

of

price of those metals there below that

their ex-

portation,

and

importations from Peru and Brazil exceed the effectual

on the contrary, in any particular

short of the effectual

above that of

demand, so as to

the neighbouring 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 tans

had got wherewithal

barriers

it.

Those metals, when the Spar-

to purchase them, broke through all the

which the laws of Lycurgus opposed to

“Here and four lines “ Ed. I reads “in.”

their entrance into

higher eds. 1-3 read “if there was.” “ Eds. 1-3 read “if it was.”

PRINCIPLE OF THE MERCANTILE SYSTEM

4^5

Lacedemon. All the san^inary laws of the customs are not able to prevent the importation of the teas of the Dutch and Gottenburgh East India companies; because somewhat cheaper than those

of the British

company.

A pound

of tea, however,

is

about a hun-

dred times the bulk of one of the highest prices, sixteen that

commonly paid

is

for

it

times more

difficult

fell

the effectual de-

shillings,

mand.

and more than two thousand gold, and consequently just so

to smuggle.

partly owing to the easy transportation of gold and silver

It is

ply

short of

in silver,

times the bulk of the same price in

many

portation the sup-

if

from the places where they abound to those where they are wanted, that the price of those ihetals does not fluctuate continually like

that of the greater part of other commodities, which are hindered

It is this

ease of

transportation

which makes the

bulk from shifting their situation, when the market happens to be either over or under-stocked with them. The price of

value of gold and

those metals, indeed,

silver so

by

their

is

the changes to which

not altogether exempted from variation, but

uniform. it is

liable are generally slow, gradual,

uniform. In Europe, for example,

much

supposed, without

it is

and

foundation, perhaps, that, during the course of the present and pre-

ceding century, they have been constantly, but gradually, sinking

on account of the continual importations from the

in their value,

Spanish West Indies.^^ But to make any sudden change in the price of gold

and

silver, so as to raise or

markably, the money price of

all

lower at once, sensibly and re-

other commodities, requires such a

commerce as that occasioned by the discovery of

revolution in

America. If, fall

notwithstanding

all this,

gold and silver should at any time

short in a country which has wherewithal to purchase them,

If

they

didfaU short,

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

though with a good deal credit,

and the

A

wanted, barter will supply

of inconveniency.

different dealers

another, once a

veniency.

is

month

or once a year, will supply

well-regulated paper

Upon every account,

place,

selling

upon

compensating their credits with one

money

without any inconveniency, but, in some tages.^®

Buying and

its

will

it

with

supply

cases,

less incon-

it,

not only

with some advan-

therefore, the attention of

government

never was so unnecessarily employed, as when directed to watch

The absence

of any reference to the long Digression in bk. i., chap xi., was written before the Digression was incorpora-

suggests that this passage

ted in the work. Contrast the reference below,

p

474.

^*Ed. I reads “not only without any inconveniency but with very great advantages.”

their

place

could be supplied

by paper

XHE WEALTH OF NATIONS

406

over the preservation or increase of the quantity of

money

in

any

country.

No

The com-

mon com-

of

complaint, however,

money.

is

j\Ioney, like wine,

plaint of scarcity

of

money

only

means difficulty

in bor-

have neither wherewithal to

who have

either, will

more common than that

of a scarcity

must always be scarce with those who buy it, nor credit to borrow it. Those

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, thrifts. It is

is

not always confined to improvident spend-

sometimes general through a whole mercantile town,

rowing.

and the country cause of

it.

in its neighbourhood. Over-trading is the

their capitals, are as likely to

money, nor

common

Sober men, whose projects have been disproportioned to

credit to

have neither wherewithal

buy

to

borrow it, as prodigals whose expence has been

disproportioned to their revenue. Before their projects can be

brought to bear, their stock

is

gone, and their credit with

run about everywhere to borrow money, and every body

Even such money do not always prove

it.

tells

They them

that they have none to lend.

general complaints of the

scarcity of

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, overamong great and small dealThey do not always send more money abroad than usual, but they buy upon credit both at home and abroad, an unusual quantrading becomes a general error both

ers.

tity of goods,

which they send to some distant market,

the returns will

mand comes

come

in before the

demand

for

in

hopes that

payment. The de-

before the returns, and they have nothing at hand,

with which they can either purdiase 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 credipayment, that occasions the general complaint

tors find in getting

of the scarcity of money.

Money makes but a small part of the national capital.

It is easier

to

buy

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

makes always a part of the national capital; but ready been shown that it generally makes but a small doubt,

it

has

part,

al-

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

pis

probably refers to p. 280, though the object there is rather to insist effected by dispensing with money, and pp.

on the largeness of the saving 270-276.

PRINCIPLE OF THE MERCANTILE SYSTEM goods with money, than to buy

money

is

the

known and

money with

4^7

goods; but because

established instrument of commerce, for

which every thing

is readily given in exchange, but which is not alequal with readiness ways to be got in exchange for every thing. The greater part of goods besides are more perishable than money,

may frequently sustain a much greater loss by keeping them. When his goods are upon hand too, he is more liable to such demands for money as he may not be able to answer, than when he and he

has got their price in his arises

more

coffers.

from

directly

selling

Over and above

all this,

than to simply because

sell

money is the in-

strument of com-

merce.

his profit

than from buying, and he

is

upon

much more anxious to exchange his money for goods. But though a particu-

these accounts generally

all

goods for money, than his lar

merchant, with abundance of goods in his warehouse,

mined by not being

times be

country

able to

sell

them

in time,

may somea nation or

not liable to the same accident. The whole capital of a

is

merchant frequently consists chasing money. But

it is

in perishable goods destined for pur-

but a very small part of the annual prod-

uce of the land and labour of a country which can ever be destined for purchasing gold

and

er part is circulated

the surplus which

is

silver

from their neighbours. The far great-

and consumed among themselves; and even of sent abroad, the greater part

tined for the purchase of other foreign goods. ver, therefore, could not

to

generally des-

is

Though gold and

sil-

be had in exchange for the goods destined

purchase them, the nation would not be mined. 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 readily as

it.

And

though goods do not always draw money so

money draws

necessarily than even

it

goods, in the long-run they

purposes besides purchasing money, but

money can

it

more

many

other

draw

draws them. Goods can serve

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

frequently to use or to consume: whereas he

means

to

buy again. The one may

to sell again, but

who

sells,

always

frequently have done the whole,

but the other can never have done more than the one-half of his business. It

the sake of

is

not for

its

own sake

that

what they can purchase with

Consumable commodities,

it is said,

men

desire

money, but

for

it.

are soon destroyed; whereas

gold and silver are of a more durable nature, and, were

it

not for

The dura bilityof

a

the wealth of nations

408

commodity is

no

reason for

accumulating

this continual exportation, to the incredible

might be accumulated for ages together,

augmentation of the real wealth of the country.

Nothing, therefore,

it is

pretended, can be more disadvantageous to

any country, than the trade which

than IS wanted.

m the exchange of such

consists

more of it lasting for such perishable commodities.

We do not,

however, reck-

on that trade disadvantageous which consists in the exchange of the hard-ware of England for the wines of France;

ware

is

a very durable commodity, and were

tinual exportation,

it

and yet hard-

not

for this con-

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 it

would be absurd

is

them; that

for

have more pots and pans than were necessary

to

for cooking the victuals usually

consumed there; and that

the

if

quantity of victuals were to increase, the number of pots and pans

would readily increase along with tity of victuals being

ing an additional

make them. silver is in

it,

a part of the increased quan-

employed in purchasing them, or

number

of

workmen whose

It should as readily occur that the

in maintain-

business

was

it

to

quantity of gold and

every country limited by the use which there

is

for those

metals; that their use consists in circulating commodities as coin,

and

in affording

a species of houshold furniture as plate; that the

quantity of coin in every country

is

regulated

commodities which are to be circulated by

it:

by

the value of the

increase that value,

and immediately a part of it will be sent abroad to purchase, whereever

it is

to

be had, the additional quantity of coin requisite for

culating them: that the quantity of plate is regulated

ber and wealth of those private families

who chuse

selves in that sort of magnificence: increase the

cir-

by the num-

to indulge

them-

number and wealth

of such families, and a part of this increased wealth will most prob-

ably 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

necessary quantity of gold and

by detaining

silver, is as

absurd as

it

in it

an un-

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 ex-

pence of purchasing those unnecessary utensils would diminish instead of increasing either the quantity or goodness of the family provisions; so the expence of purchasing an unnecessary of gold

and

silver

quantity must, in every country, as necessarily diminish

the wealth which feeds, clothes, and lodges, which maintains and employs the people. Gold and silver, whether in the shape of coin or Eds. 1-3 read “was

it

not

W

PRINCIPLE OF THE MERCANTILE SYSTEM

it must be remembered, as much as the furniture the kitchen. Increase of the use for them, increase the consumable

plate, are utensils,

commodities which are to be circulated, managed, and prepared by of them, and you will infallibly increase the quantity; but if

means

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

Were they ever transportation

is

can never be greater than what the use requires. to be accumulated beyond this quantity, their so easy,

and unemployed so

and the

loss

which attends

no law could prevent

great, that

their lying idle their being

im-

mediately 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

and armies are maintained,

in distant countries. Fleets

not with gold and

silver,

but with consumable goods. The nation

which, from the annual produce of

its

annual revenue arising out of

lands, labour,

its

domestic industry, from the

and consumable

stock, has wherewithal to purchase those consumable goods in dis-

Accumulation of

gold and silver is

not necessary for carrying

on

distant

wars,

tant countries, can maintain foreign wars there.

A nation may

purchase the pay and provisions of an army in a

distant country three different ways; first,

some part

some part

by sending abroad

of its accumulated gold

and

either,

silver; or secondly,

of the annual produce of its manufactures; or last of

all,

parts;

•first,

up

in

any country,

may

be distinguished into three

the circulating money; secondly, the plate of private

money which may have been collected by many years parsimony, 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; because in that there can seldom be much redundancy. The value of goods annually bought and sold in any country requires a certain quantity of money to circulate and families;

and

distribute

a sum

manufactures, or

(3) rude produce

last of all, the

them

to their proper consumers,

sufficient to

fill it,

thing, however, is generally

and can give employ-

of circulation necessarily draws to

ment to no more. The channel self

ing. (i)

silver, (2)

gold and silver which can properly be considered as accumu-

lated or stored

paid for by exportgold and

some part of its annual rude produce.

The

which ma> be

The gold and Slver consists of

money in circulation,

plate,

and

money in thetreas-

it-

ury.

and never admits any more. Some-

withdrawn from

this channel in the

Little can

are main-

be spared from the

tained abroad, fewer are maintained at home. Fewer goods are cir-

money in

case of foreign war.

By

culated there, and less

the great

money

number

of people

who

becomes necessary to circulate them.

circula-

tion;

An too, is

extraordinary quantity of paper money, of some sort or other

such as exchequer notes, navy

bills,

and bank

generally issued upon such occasions, and

bills in

England,

by supplying the

place

THE WEALTH OF NATIONS

410

of sending

a

abroad. All this, however, could afford but

a

of circulating gold

and

greater quantity of

it

silver, gives

an opportunity

poor resource for maintaining a foreign war, of great expence and several years duration. plate has

never

The melting down the occasion been found a

more

insignificant one.

yielded

m ich;

the beginning of the last war, did not derive so

from accumulation in the

treasury

has been abandoned.

this expedient as to

compensate the

loss of the fashion.

The accumulated treasures of the prince have, in former times, afforded a much greater and more lasting resource. In the present times,

if

you except the king

of Prussia, to accumulate treasure

seems to be no part of the policy of European princes.

The funds which maintained The

upon every The French, in much advantage

plate of private families, has

still

the foreign wars of the present cen-

tury, the

most expensive perhaps which history records, seem to

wars of

have had

little

the century have

culating money, or of the plate of private families, or of the treas-

foreign

evidently

not been paid for

from the

dependency upon the exportation either of the

ure of the prince.

The

last

French war cost Great Britain upwards

of ninety millions, including not only the seventy-five millions of

new debt

that

was

contracted,^® but the additional two shillings in

money in

the pound land tax, and what

circula-

ing fund.

tion.

cir-

More than

distant countries; in

was annually borrowed

Germany, Portugal, America,

the Mediterranean, in the East and

West

land had no accumulated treasure.

We

Indies.

silver of the

in the ports of

The kings of Eng-

never heard of any extra-

ordinary quantity of plate being melted down.

and

of the sink-

two-thirds of this expence were®® laid out in

The

circulating gold

country had not been supposed to exceed eighteen

millions. Since the late recoinage of the gold, however,

*it

is

be-

lieved to have been fore,

a good deal under-rated. Let us suppose, thereaccording to the most exaggerated computation which I re-

member

to have either seen or heard of,®^ that, gold

and silver toamounted to thirty millions.®® Had the war been carried on, by means of our money, the whole of it must, even according to

gether,

it

this computation,

twice,

have been sent out and returned again at least in a period of between six and seven years. Should this be

supposed,

would afford the most decisive argument to demonhow unnecessary it is for government to watch over the preservation of money, since upon this supposition the whole money of it

strate

the country must have gone from different times in so short

any thing

of the matter.

it and returned to it again, two a period, without any body’s knowing

The (iannel

of circulation, however, never

^Present State of the Nation (see next page and note), >> p. h 28o.

Eds. 1-3 read “was.” I reads “according to the exaggerated computation of Mr. Horsely.” ^ Lectures,

^Ed.

p, igg,

PRINCIPLE OF THE MERCANTILE SYSTEM

4^1

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 scarcity of

wanted

row

it,

and because the debtors found

it;

creditors ever,

money, which always follows over-trading. jMany people who had neither wherewithal to buy it, nor credit to bor-

found

it difficult

it difficult

to borrow, the

to get payment. Gold and silver,

were generally to be had for

their value,

how-

by those who had

that value to give for them.

The enormous expence

of the late war, therefore, must have been by the exportation of gold and silver, but by commodities of some kind or other. When the gov-

chiefly defrayed, not

that of British

ernment, or those

who

but by

commodi

•

ties.

acted under them, contracted with a mer-

chant for a remittance to some foreign country, he would naturally

endeavour to pay his foreign correspondent, upon

wbom

he had

by sending abroad rather commodities than gold and demand in that country, he would endeavour to send them to some other coun-

granted a silver. If

try, in

bill,

the commodities of Great Britain were not in

which he could purchase a bill upon that country. The trans-

portation of commodities,

when properly

always attended with a considerable

and

silver is scarce ever attended

suited to the market,

profit;

with any.

is

whereas that of gold

When

those metals are

sent abroad in order to purchase foreign commodities, the merchant’s profit arises, not from the purchase, but from the sale of the

But when they are sent abroad merely to pay a debt, he gets no returns, and consequently no profit. He naturally, therefore, returns.

exerts his invention to find out

rather silver.

a way

of paying his foreign debts,

by the exportation of commodities than by that of gold and The great quantity of British goods exported during the

course of the late war, without bringing back any returns,

cordingly remarked

by

the author of

The

is

Present State of the

ac-

Na-

tion.^^

Besides the three sorts of gold and silver above mentioned, there is

in all great commercial countries

a good deal of bullion alternate-

and exported for the purposes of foreign trade. This bullion, as it circulates among different commercial countries in the same manner as the national coin circulates in every particular ly imported

^The

Present State of the Nation, particularly with respect to its Trade, etc., etc., addressed to the King and both Houses of Parliament, 1768 (written under the direction of George Grenville by William Knox), pp. 7 8

Finances,

,

.

Part of the bullion

which

cir-

culates

from country to

THE WEALTH OF NATIONS

4 ^^ country

may have been employed,

but

it

must have been purchased with

country,

may

republic.

The

money of the great mercantile receives its movement and direction

be considered as the national coin

from the commodities circulated within the precincts of each particular country: the money of the mercantile republic, from those circulated between different countries.

in facili-

tating exchanges, the one between different individuals of the same,

the other between those of different nations. Part of this

commodities.

Both are employed

the great mercantile republic

may

money

of

have been, and probably was,

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

employed

in carrying

peace; that

it

should circulate more about the seat of the war, and

be more employed countries, the

purchasing there, and in the neighbouring

in

pay and provisions

ever part of this

money

of the Afferent armies.

But what-

of the mercantile republic, Great Britain

may have annually employed in this manner,

it

must have been an-

nuity 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

expence must have been defrayed from a great annual produce.

The

expence of 1761, for example, amounted to more than nineteen millions.

No

accumulation could have supported so great an annual

profusion. There is no annual produce even of gold

could have supported

The whole

it.

and

silver

which

gold and silver annually im-

ported into both Spain and Portugal, according to the best accounts, does not

commonly much exceed

six millions sterling,

which, in some years, would scarce have paid four months expence of the late war.

The finer manufac-

The commodities most proper

for being transported to distant

countries, in order to purchase there, either the

pay and provisions

tures are

the most

of an army, or

conve-

to be

nient

commodi-

employed

of the

money

in purchasing them,

of the mercantile republic

seem to be the

finer

and more

improved manufactures; such as contain a great value in a small

and

ties for

bulk,

the pur-

expence.

pose.

some part

can, therefore, be exported to

a great distance at

little

A country whose industry produces a great annual surplus

of such manufactures, which are usually exported to foreign countries,

may

carry on for

many

years a very expensive foreign war,

without either exporting any considerable quantity of gold and ver, or

even having any such quantity to export. Above, pp. 208, 209,

A

sil-

considerable

PRINCIPLE OF THE MERCANTILE SYSTEM part of the annual surplus of

its

manufactures must, indeed,

case be exported, without bringing back

though

any returns

4^3

in this

to the country,

does to the merchant; the government purchasing of the

it

mercjiant his bills upon foreign countries, in order to purchase there the

pay and provisions

however,

may still

of

an army. Some part of

continue to bring back a return.^^

this surplus,

The manufac-

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

turers,

the bills

drawn upon

foreign countries for the

army; and, secondly,

pay and provisions

common returns

work up such as are necessary for that had usually been consumed in

the country. In the midst of the

most destructive foreign war, there-

of the

purchasing the

fore,

to

the greater part of manufactures

greatly; and,

the peace.

many

flourish

amidst the ruin of their country, and its

prosperity.

The

different state

different branches of the British manufactures during the

late war,

tration of

No

frequently flourish

on the contrary, they may decline on the return of

They may

begin to decay upon the return of of

may

and

for

some time

what has been

foreign

after the peace,

just

now

may

serve as an illus-

said.

war of great expence or duration could conveniently

be carried on by the exportation of the rude produce of the

The expence

of sending such a quantity of

it

soil,

to a foreign country

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 as might purchase the

send abroad any great quantity of

it,

would be to send

therefore,

abroad a part of the necessary subsistence of the people. It wise with the exportation of manufactures.

people employed in them of their

work

is

exported.

is

terruption,

foreign

otherof the

kept at home, and only the surplus part

Mr.

Hume

inability of the ancient kings of

any

is

The maintenance

war

frequently takes notice of the

England

to carry on, without in-

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 produce, the transportation

was too expensive. This

inability did not arise

from the want of

^ In place of these two sentences ed. i reads “A considerable part of the annual surplus of its manufactures must indeed in this case be exported without bringing back any returns. Some part of it, however, may still continue to bring back a return.” ^History, chaps, xix. and xx., vol. iii., pp. 103, 104, 165 in ed. of 1773.

venient.

THE WEALTH OF NATIONS

414

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 which shall be explained hereafter.^'^ It is in such countries, therefore, that he generally endeavours to accumulate a treasure, as the only resource against such emergencies. Independent of this necessity, he is in such a situation naturally disposed to the parsimony requisite for accumulation. In that simple subjects, for reasons

state, the

expence even of a sovereign

is

not directed

by

the vanity

employed in which delights in the gaudy bounty to his tenants, and hospitdity 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 the Xllth, are said to have been very great. The French kings of the Merovingian race had all treasures. When they divided their kingdom among their different children, they divided their treasure too. The Saxon princes, and the first kings after the conquest, seem likewise to have accumulated treasures. The first exploit of every new reign was commonly to seize the treasure of the preceding king, as the most essential measure for securing the succession. The sovereigns of improved and commercial countries are not under the same necessity of accumulating treasures, because they can generally draw from their subjects extraordinary aids upon extraordinary occasions. They are likewise less disposed to do so. They naturally, perhaps necessarily, follow the mode of the times, and their expence comes to be regulated by the same extravagant vanity which directs that of all the other finery of a court, but is

great proprietors in their dominions.

becomes every day more

The

insignificant

pageantry of

and the expence of it not only prevents accumulation, but frequently encroaches upon the funds destined for more necessary expences. What Dercyllidas said of the court of Persia, may be applied to that of several Eurotheir court

brilliant,

^ Below, p. S63. “ This sentence and the nine words before it are repeated below, 860. p.

PRINCIPLE OF THE MERCANTILE SYSTEM pean princes, that he saw there

and many servants but few

The importation

tween whatever places foreign trade distinct benefits

from

of the produce of their land

mand among them, and which there

for

is

strength,

little

not the principal,

silver is

which a nation derives from

the sole benefit

derive two

splendor but

soldiers.-^

and

of gold

much

4^5

it.

much

less

foreign trade. Be-

its

them

foreign

It carries out that surplus part

trade 1 not th^

is

carried on, they all of

and labour

for

which there

brings back in return for

is

no de-

something

it

a demand. It gives a value to their

home market

cipal

benefit of

else

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

The prin-

does not hinder the division of

la-

bour in any particular branch of art or manufacture from being

By opening a more extensive marwhatever part of the produce of their labour may exceed the

importation of

gold and Slver, but

the carrying out of surplus

produce for which

carried to the highest perfection.

there

ket for

no demand and

home consumption,

it

encourages them to improve

powers, and to augment

thereby to increase

its

annual produce to the utmost, and

These great and important services foreign trade

carried on.

They all

all

is

derive great benefit from

more employed

continually oc-

bringing

back something for which there

is.

the different countries between which it,

which the merchant resides generally derives the generally

productive

the real revenue and wealth of the society.

cupied in performing, to it is

its

is

though that in

greatest, as

in supplying the wants,

he

is

and carrying out

the superfluities of his own, than of any other particular country.

To import tries

the gold and silver which

which have no mines,

foreign commerce. It

is,

is,

may be wanted,

into the coun-

no doubt, a part of the business of

however, a most insignificant part of

it.

A

country which carried on foreign trade merely upon this account, could scarce have occasion to freight It of

a

ship in a century.

not by the importation of gold and

is

America has enriched Europe.

By

silver, that

the discovery

the abundance of the Ameri-

can mines, those metals have become cheaper. A service of plate can

now be purchased of the labour,

for about a third part of the corn, or

which

it

would have cost in the

With the same annual expence

of labour

a

third part

fifteenth century.

and commodities, Europe

can annually purchase about three times the quantity of plate could have purchased at that time. But

which

it

comes

to be sold for a third part of

not only those

who

purchased

their former quantity, but

it is

it

when a commodity

what had been

its

usual price,

before can purchase three times

brought down to the level of a much

“Dercyllidas” appears to be a mistake for Antiochus See Xenophon, Hellenica, vii.,

^ Ed.

I

i.,

§ 38.

reads “thereby increase.”

The

dis-

covery of

America has benefited

Europe not by the cheapening of

gold and silver,

the wealth of nations

416 greater

number of purchasers, perhaps

to

more than

ten,

perhaps

to more than twenty times the former number. So that there

may

be in Europe at present not only more than three times, but

more

than twenty or thirty times the quantity of plate which 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 fit

of gold

for the purposes of

make

and

silver renders those metals rather les"^

money than they were before. In order t^ we must load ourselves with a greater

the same purchases,

quantity of them, and carry about a shilling in our pocket where a groat would have done before. It trifling,

is difficult

to say which

is

most

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 but by opening

up of a

new market which

improved the pro-

By

opening a

made a most

essential one.

market to

the commodities of Europe,

all

divisions of labour

and improvements of

circle of the ancient

new and it

inexhaustible

gave occasion to new which, in the narrow

art,

commerce, could never have taken place for

want of a market to take

off

the greater part of their produce.

The

ductive

productive powers of labour were improved, and

powers of

creased in all the different countries of Europe,

labour.

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

its

produce

in-

and together with

it

the real revenue and wealth of the inhabitants.

to take place

which had never been thought of before, and which

should naturally have proved as advantageous to the new, as certainly did to the old continent.

The savage

injustice of the

it

Euro-

peans rendered an event, which ought to have been beneficial to

all,

ruinous and destructive to several of those unfortunate countries.

The discovery of the sea passage to the East

The discovery of a passage to the East Good Hope, which happened much about perhaps, a

still

more extensive range

Indies,

to foreign

by

same

the

the

Cape

of

time, opened,

commerce than even

that of America, notwithstanding the greater distance.

There were

Indies

would have been still

more

advantageous if the trade to the

but two nations in America, in any respect superior to savages, and these were destroyed almost as soon as discovered. The rest were mere savages. But the empires of China, Indostan, Japan, as well as several others in the East Indies, without having richer

gold or

silver,

were in every other respect much

mines of

richer, better culti-

Indies

and more advanced in all arts and manufactures than either Mexico or Peru, even though we should credit, what plainly de-

had been

serves

East

vated,

no

credit, the

exaggerated accounts of the Spanish writers,

free.

concerning the ancient state of those empires. But rich and civilized

PRINCIPLE OP THE MERCANTILE SYSTEM

4i7

nations can always exchange to a

much greater value with one anthan with savages and barbarians. Europe, however, has hitherto derived much less advantage from its commerce with the other,

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 nations of Europe could either send out or receive any goods from that country.

When

the Dutch, in the beginning of the last century, began

to encroach upon them, they vested their whole East India commerce in an exclusive company. The English, French, Swedes, and

Danes, have

all

followed their example, so that no great nation in

Europe has ever yet had the benefit of a Indies.

No

free

other reason need be assigned

commerce

why

it

to the East

has never been so

advantageous as the trade to America, which, between almost every nation of Europe and

The

its

own

colonies, is free to all its subjects.

exclusive privileges of those East India companies, their great

riches, the great favour

them from

and protection which these have procured

their respective governments,

have excited much envy

against them. This envy has frequently represented their trade as

The ex-

altogether pernicious, on account of the great quantities of silver,

portation

which

it

ried on.

every year exports from the countries from which

The parties concerned have replied,

it is

that their trade,

car-

by this

continual exportation of silver, might, indeed, tend to impoverish

Europe in

general, but not the particular country from

carried on; because,

by

which

it

was

the exportation of a part of the returns to

other European countries,

it

quantity of that metal than

annually brought

home a much greater

carried out. Both the objection

it

and

the reply are founded in the popular notion which I have been just

now examining.

It

ther about either.

is,

By

therefore, unnecessary to say

any thing

fur-

the annual exportation of silver to the East

Indies, plate is probably

somewhat dearer

in

Europe than

it

other-

wise might have been; and coined silver probably purchases a larger quantity both of labour

these

two

effects is

a very small

and commodities. The former loss,

the latter a very small advan-

tage; both too insignificant to deserve tention.

The

trade to

to the gold

and

silver

any part of the public

at-

the East Indies, by opening a market

to the

same

thing,

commodities of Europe,

must necessarily tend

of

or,

which

what comes nearly is

to the

purchased with those commodities,

to increase the

annual production of Euro-

pean commodities, and consequently the real wealth and revenue of Europe. .That

it

has hitherto increased them so

owing to the restraints which I thought

it

it

little, is

probably

every-where labours under.

necessary, though at the hazard of being tedious, to

of silver to the

East Indies

is

not harmful.

the wealth of nations

41S Writers

who

begin

by includ-

examine at

money, or

length this popular notion that wealth consists in

full

in gold

and

iloney

silver,

in

common

language, as I have

ing lands,

already observed, frequently signifies wealth; and this ambiguity

houses

of expression has rendered this popular notion so familiar to us,

and consumable

that even they, w^ho are convinced of its absurdity, are very apt to

goods in wealth

forget their

take

it

own

principles,

for granted as

and in the course of

their reasonings to

a certain and undeniable truth. Some of the

often forget

them

upon commerce

best English writers

set out

with observing, that

the wealth of a country consists, not in its gold

later.

and consumable goods

in its lands, houses,

and

silver only,

but

of all different kinds. In

the course of their reasonings, however, the lands, houses, and con-

sumable goods seem to their

and

slip

out of their memory, and the strain of

argument frequently supposes that

silver,

and that

all

wealth consists in gold

to multiply those metals is the great object of

national industry and commerce.

Wealth being sup-

The two

and silver, and that those metals could be brought a country which had no mines only by the balance of trade, or

sisted in gold

posed to consist in

gold and silver,

po-

principles being established, however, that wealth con-

into

by exporting

to

came the great

a greater value than

it

imported;

litical

economy endeavoured to diminish imports and encourage

possible the importation of foreign goods for

and

to increase as

much

of domestic industry. Its try, therefore,

ments

it

necessarily be-

object of political (economy to diminish as

much

as

home consumption,

as possible the exportation of the produce

two great engines for enriching the coun-

were restraints upon importation, and encourage-

to exportation.

The

restraints

upon importation were

of

two kinds.

exports,

First, Restraints

by

res-

traints

upon importation

home consumption

upon the importation

of such foreign goods for

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. and encourage-

Exportation was encouraged sometimes by drawbacks, sometimes

by

bounties, sometimes

by advantageous

treaties of

ments to exporta-

merce with foreign

tion,

colonies in distant countries.

states,

Drawbacks were given upon two

different occasions.

home-manufactures were subject to any duty or whole or a part of tion;

it

com-

and sometimes by the establishment

liable to

the

excise, either the

was frequently drawn back upon

and when foreign goods

When

of

their exporta-

a duty were imported in

PRINCIPLE OF THE MERCANTILE SYSTEM

4^9

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

go^s and merchants

of

the country, beyond what were granted to those of other countries.

By

the establishment of colonies in distant countries, not only

monopoly was frequently procured

particular privileges, but a the goods

and merchants

The two

of the country

sorts of restraints

for

which established them.

upon importation above-mentioned,

together with these four encouragements to exportation, constitute

which

re-

straints

and enthe six principal means

by which

to increase the quantity of gold

ing the balance of trade in in

its

the commercial system proposes

and

silver in

any country by turn-

favour. I ^all consider each of

them

considered

a particular chapter, and without taking much further notice of

their supposed tendency to bring money into the country, I shall

examine chiefly what are

likely to

on the annual produce of

its

be the effects of each of them up-

industry. According as they tend either

to increase or diminish the value of this annual produce, they must

evidently tend either to increase or dimmish the real wealth and

revenue of the country.

courage-

ments will be in the

next six chapters.

f

CHAPTER

II

OF RESTRAINTS UPON THE IMPORTATION FROM FOREIGN COUNTRIES

HOME

OF SUCH GOODS AS CAN BE PRODUCED AT

By

High duties

and

prohibi-

by high

restraining, either

duties, or

by absolute

prohibitions,

the importation of such goods from foreign countries as can be pro-

more

tions

duced at home, the monopoly of the home market

giving a

secured to the domestic industry employed in producing them.

monopoly to

a par-

the prohibition of importing either live cattle

^

is

or less

Thus

or salt provisions

ticular

from foreign countries secures to the graziers of Great Britain the

home in-

monopoly of the home market

dustry are very

upon the importation

common.

amount

to

silk

is

which

of corn,^

a prohibition, give a

that commodity.

woollens

for butcher’s meat.

The

like

in times of

The high

duties

moderate plenty

advantage to the growers of

prohibition of the importation of foreign

equally favourable to the woollen manufacturers.^

The

manufacture, though altogether employed upon foreign mate-

rials,

has lately obtained the same advantage.^ The linen manufac-

ture has not yet obtained

it,

but

is

making great

Many other sorts of manufacturers ® have, in

strides

towards

tained in Great Britain, either altogether, or very nearly

The

opoly against their countrymen. importation into Great Britain

is

it.^

the same manner, ob-

a mon-

variety of goods of which the

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

They en-

this

monopoly

of the

home-market frequently gives great

courage the par-

encouragement to that particular species of industry which enjoys

ticular in-

it,

dustry,

of both the labour

and frequently turns towards that employment a greater share and stock of the society than would otherwise

have gone to

it,

cannot be doubted. But whether

^

See above, p. 394.

*

II

®

By

and 12 Ed.

III., c.

^

it

tends either to

See below, pp, 502, 503. ^6 Geo. III., c. 7.

3; 4 Ed#iV.,

the additional duties, 7 Geo. III.,

c.

^Misprinted “manufactures” in ed. 5. ^ This sentence appears first in Additions and Corrections and ed.

420

28.

c. 28.

3.

RESTRAINTS ON PARTICULAR IMPORTS increase the general industry of the society, or to give

advantageous direction,

The

it

4^^

the most

crease

general industry of the society never can exceed what the

capital of the society

can employ. As the number of workmen that

can be kept in employment by any particular person must bear a certain proportion to his capital, so the number of those that can

be continually employed by all the members of a great

society,

No

regulation of

commerce can

increase the quantity of industry in any society beyond capital can maintain. It can only divert

into which

it

certam that

a part of

might not otherwise have gone; and

this artificial direction is likely to

ous to the society than that into which

it

it

into

it is

what

its

a direction

by no means

be more advantage-

would have gone of

its

own

is

direction.

The number of

persons

emplo} ed cannot exceed a certain

proportion to the capital of

continually exerting himself to find out the

most advantageous employment It is his

own advantage,

for

whatever capital he can com-

or rather necessarily leads

most advantageous

and every man’s in-

indeed,

and not that

of the society,

which he has in view. But the study of his own advantage naturally,

home

nor give the best

it

ciety,

Every individual

First,

industry

the so-

accord.

mand.

general

must

bear a certain proportion to the whole capital of that society, and never can exceed that proportion.

but neither in-

not, perhaps, altogether so evident.*^

is

him to

prefer that

employment which

is

to the society.

terest

leads him to seek that em-

ployment

every individual endeavours to employ his capital as near

as he can, and consequently as

much

as he can in the support

of domestic industry; provided always that he can thereby obtain

the ordinary, or not a great deal less than the ordinary profits of stock.

of capital

which is most advantageous to the society.

Thus, upon equal or nearly equal

profits,

every wholesale mer(I)

He

chant naturally prefers the home-trade to the foreign trade of con-

tries to

sumption, and the foreign trade of consumption to the carrying

employ it

trade. In the home-trade his capital

as

it

frequently

is

if

never so long out of his sight

He can know whom he trusts,

in the foreign trade of consumption.

better the character

and

is

and

he should happen

situation of the persons

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,

eign countries, and no part of

as

it is

it

were, divided between two for-

ever necessarily brought home, or

own immediate view and command. The capital which an Amsterdam nierchant employs in carrying corn from Konnigsberg to Lisbon, and fruit and wine from Lisbon to Konplaced under his

nigsberg,

must generally be the one-half

the other half at Lisbon.

dam. The

No

part of

it

of

it

at Konnigsberg

and

need ever come to Amster-

natural residence of such a merchant should either be at ®

Ed,

I

reads “certam.”

as near

home as posable.

THE WEAXTH OF NATIONS

422

Konnigsberg 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 Konnigsberg goods which he destines for the market of Lisbon, and of the Lisbon goods which he destines for that of nigsberg, to

Amsterdam: and

and unloading,

to a double charge of loading

Konhim

though this necessarily subjects

as well as to the pay-

ment 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

in this

it is

manner that every country which has any considerable share of the carrying trade, becomes always the emporium, or general market, for the goods of all the different countries whose trade it carries on.

The merchant,

loading, endeavours always to sell in the

the goods of far as

and unhome-market as much of

in order to save a second loading

those different countries as he can, and thus, so

all

he can, to convert his carrying trade into a foreign trade of

consumption.

A merchant,

same manner, who

in the

engaged in

is

the foreign trade of consumption,

when he

eign markets, will always be glad,

upon equal or nearly equal pro-

to sell as great

fits,

a part

of

them

at

collects

home

goods for for-

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 hometrade.

Home

is in this

manner the

center, 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,

may

though by particular causes they repelled

from

employed

it

in the home-trade,

sarily puts into

gives revenue

sometimes be driven

off

and

towards more distant employments. But a capital

has already been shown, ^ neces-

it

motion a greater quantity of domestic industry, and

and employment

to

a greater number of the inhabit-

ants 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. fits,

Upon

equal, or only nearly equal pro-

therefore, every individual naturally inclines to

capital in the

manner

in

which

it is

employ

his

likely to afford the greatest

support to domestic industry, and to give revenue and employ-

ment

to the greatest

number of

Secondly, every individual

people of his

who employs

own

country.

his capital in the sup-

port of domestic industry, necessarily endeavours so to direct that ®

Above, pp. 349-353-

Ed

I

reads “the” here

RESTRAINTS ON PARTICULAR IMPORTS industry, that

its

The produce ials

of industry

upon which

produce ployer.

is

may be

of the greatest possible value.

what

is

adds to the subject or mater-

it

employed. In proportion as the value of this

it is

great or small, so will likewise be the profits of the em-

But

a capital

produce

4-’3

it is

only for the sake of profit that any

in the support of industry;

endeavour to employ the produce

is likely

it

and he

man employs

the greatest

pos-

sible

value.

will always, therefore,

in the support of that industry of

which

to be of the greatest value, or to exchange for

money

the greatest quantity either of

But the annual revenue

or of other goods.

of every society

always precisely

is

equal to the exchangeable value of the whole annual produce of industry, or rather

voursto produce

is

precisely the

its

same thing with that exchange-

As every

individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic indus-

able value.

try,

and

so to direct that industry that

produce

its

may be

of the

greatest value; every individual necessarily labours to render the

annual revenue of the society as great as he can.

He

generally, in-

deed, neither intends to promote the public interest, nor

how much he

is

promoting

By

it.

estic to that of foreign industry,

directing that industry in such a

may be

of the greatest value,

in this, as in

many

the worse for the society that interest he frequently

manner

as

produce

its

he intends only his own gain, and he

other cases, led

mote an end which was no part

own

dom-

he intends only his own security;

and by

is

knows

preferring the support of

it

by an

invisible

of his intention.

was no part

of

it.

hand

Nor

is it

to pro-

always

By pursuing his

promotes that of the society more

effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them

from

it.

What

is

the species of domestic industry which his capital can

employ, and of which the produce value, every individual,

it

is

is

likely to

much better than any statesman him. The statesman, who should attempt what manner they ought

to

only load himself with a most

employ

He can judge of this

evident, can, in his local situation,

judge

in

be of the greatest

or lawgiver can

do

for

much

better

than the states-

to direct private people

their capitals,

would not

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 no-

where 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

man.

THE WEALTH OF NATIONS

424

domestic industry, in any particular art or manufacture,

High

and

duties

measure to direct private people

in

prohibitions direct

employ

some

in

what manner they ought to emall cases, be either a use-

ploy their capitals, and must, in almost less or

people to

is

a hurtful regulation. If the produce of domestic can be

brought there as cheap as that of foreign industry, the regulation evidently useless. If

it

cannot,

must generally be

hurtful. It

is

capital in

is

producing

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 taylor 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 taylor. The farmer attempts to make

at

home

what they could buy cheaper

from abroad.

it

the

neither the one nor the other, but employs those different arti-

them

ficers. All of

find

for their interest to

it

employ

whole

their

industry in a w’ay in which they have some advantage over their neighbours, and to purchase with a part of is

the

same

thing, with the price of a part of

have occasion

What

It is as

foolish

fora nation as for

an

individual to

make

conduct of every private family, can

in the

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

them with some part of the produce of our own

of

industry, employed in a

way

what can

The

be bought

the capital which employs

cheaper.

produce, or what

whatever else they

for.

prudence

is

its it,

in

which we have some advantage.

general industry of the country, being always in proportion to

more than that

it,

will

not thereby be diminished, no

of the above-mentioned artificers; but only left to

find out the

way in which

vantage. It

is

when

thus directed towards an object which

it

is

cheaper than tainly

it

certainly not

it

more or

can make.

can be employed with the greatest ad-

employed

The

less diminished,

to the greatest advantage,

value of

when

its

it is

it

can buy

annual produce

thus turned

is

cer-

away from

producing commodities evidently of more value than the com-

modity which

it is

directed to produce. According to the supposi-

commodity could be purchased from foreign countries cheaper than it can be made at home. It could, therefore, have been tion, that

purchased with a part only of the commodities, thing, with

or,

what

is

the

same

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

the country, therefore,

to follow is

its

The industry of away from a more, to a less

natural course.

thus turned

advantageous employment, and the exchangeable value of its annual produce, instead of being increased, according to the intention of the lawgiver, lation.

must necessarily be diminished by every such regu-

RESTRAINTS ON PARTICULAR IMPORTS By means of may sometimes and

wise,

4^5

such regulations, indeed, a particular manufacture

be acquired sooner than

a certain time

after

it

could have been other-

may be made

at

home

as cheap or

cheaper than in the foreign country. But though the industry of the society

may be

thus carried with advantage into a particular chan-

nel sooner than

follow that the

it

could have been otherwise,

sum

it

will

by no means

total, either of its industry, or of its

revenue,

can ever be augmented by any such regulation. The industry of the society can its

augment only

capital can

ally

enue

is

is

its

revenue.

in proportion to what can be graduBut the immediate effect of every such

to diminish its revenue,

certainly not very likely to

would have augmented of dustry been

Though

left to find

for

want

its

augment

own

accord,

its

rev-

its

capital faster than

had both

capital

and

duration

its

it

in-

its

duration. In every

whole capitd and industry might

still

have

been employed, though upon different objects, in the manner that

was most advantageous at the time. In every period might have been the greatest which its capital could

a manufac-

lations

may

ture

be established earlier

than

it

would otherwise

have been but this

would

make accumulate slower,

would not, upon that account,

any one period of

such regu-

capital it

of such regulations the society should never ac-

necessarily be the poorer in its

and what diminishes

out their natural employments.

quire the proposed manufacture,

period of

and

augment only

saved out of

regulation

in proportion as its capital augments,

Sometimes by

its

revenue

afford,

both capital and revenue might have been augmented

and

with the

and

the

country

might always be just as

rich

if it

never acquired the

manufacture.

greatest possible rapidity.

The

natural advantages which one country has over another in

producing particular commodities are sometimes so great, that

acknowledged by

By means

all

it is

the world to be in vain to struggle with them.

of glasses, hotbeds,

and hotwalls, very good grapes can

be raised in Scotland, and very good wine too can be made of them at about thirty times the expence for which at least equally good can be brought from foreign countries. Would

law to prohibit the importation of

all

it

be a reasonable

foreign wines, merely to en-

courage the making of claret and burgundy in Scotland? But there

would be a manifest absurdity

in turning towards

if

any em-

No one proposes that a country should strive

against

great

natural

advantages, but it is also

absurd to strive

ployment, thirty times more of the capital and industry of the

against

country, than would be necessary to purchase from foreign coun-

smaller

tries

an equal quantity

of the commodities wanted, th.ere

an absurdity, though not altogether so

must be

glaring, yet exactly of the

any such employment a thirtieth, or even a three hundredth part more of either. Whether the advan-

same kind,

in turning towards

tages which one country has over another, be natural or acquired, is

in this respect of

“ Ed.

no consequence. As long as the one country has

I reads

“augmenting,” which seems more correct.

advantages

whether natural or acquired.

the wealth of nations

426

those advantages, and the other wants them,

advantageous for the

make.

It is

it

who exercises

chants

and manufac-

will

always be more

has

artificer

another trade; and yet they both of one another, than to

more advantageous to buy

what does not belong Mer-

it

of the former than to

buy

an acquired advantage only, which one

over his neighbour, find

latter, rather to

make

to their particular 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,

with the high duties upon

and

of salt provi-

foreign corn, which in

turers get

sions, together

the most

times of moderate plenty amount to a prohibition,^- are not near

benefit

from high duties and prohibi-

so advantageous to the graziers and farmers of Great Britain, as

other regulations of the same kind are to

its

merchants and manu-

facturers. Manufactures, those of the finer kind especially, are

tions.

more

easily transported

from one country to another than corn or

cattle. It is in the fetching

ingly, that foreign trade

is

and carrying manufactures, accordemployed. In manufactures, a

chiefly

very small advantage will enable foreigners to undersell our

workmen, even

them

to enable

in the

home

own

market. It will require a very great one

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,

some other employment. But the

find out

rude produce of the

soil

would be forced

to

freest importation of the

could have no such effect upon the agri-

culture of the country.

The free importation of foreign

If the importation of foreign cattle, for example,

so free, so few could be imported, that the grazing trade of Great Britain could be little affected

by

it.

Live cattle are, perhaps, the

cattle

only commodity of which the transportation

would make no

sea than

great dif-

sea, not

ference to

by

land.

By

is

more expensive by

land they carry themselves to market.

By

only the cattle, but their food and their water too, must be

carried at

British graziers

were made ever

no small expence and inconveniency. The short sea be-

tween Ireland and Great Britain, indeed, renders the importation of Irish cattle

more

easy.

But though the

free importation of them,

which was lately permitted only for a limited time, were rendered perpetual,

it

could have no considerable effect upon the interest of

the graziers of Great Britain. Those parts of Great Britain which

border upon the Irish sea are

all

grazing countries. Irish cattle

could never be imported for their use, but must be drove through

“ Above, p. 420, and below, pp. 502, “ Eds. 1-3 read “was” here and six

503. lines

lower down

RESTRAINTS ON PARTICULAR IMPORTS

4^7

those very extensive countries, at no small expence and inconveniency, before they could arrive at their proper market.

could not be drove so ported,

far.

Lean

cattle, therefore,

and such importation could

interfere,

it

cattle

not with the interest

of the feeding or fattening countries, to which, price of lean cattle,

Fat

only could be im-

by reducing

the

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 countries of Great Britain are

much affected by the The common people of Ireland,

never likely to be

free importation of Irish

cattle.

indeed, are said to have

sometimes opposed with violence the exportation of their

But

if

cattle.

the exporters had found any great advantage in continuing

when

the trade, they could easily,

conquered

this

the law was on their side, have

mobbish opposition.

Feeding and fattening countries, besides, must always be highly

It

might

improved, whereas breeding countries are generally uncultivated,

The

by augmenting the value of uncultivated land, is like a bounty against improvement. To any country which was highly improved 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, high price of lean

The mountains

cattle,

of Scotland,

are countries not capable of

by nature

the culti-

vated

penseof therug-

Wales and Northumberland, indeed,

much improvement, and seem destined The freest

to be the breeding countries of Great Britain.

tainous districts,

importation of foreign cattle could have no other effect than to hinder those breeding countries from takmg advantage of the increasing population and improvement of the rest of the kingdom,

from raising a

real tax

their price to

upon

all

an exorbitant height, and from laying

more improved and

the

cultivated parts of the

country.

The

freest importation of salt provisions, in the

could have as

little effect

upon the

same manner,

interest of the graziers of

The free

Great

Britain as that of live cattle. Salt provisions are not only a very

saltpio-

bulky commodity, but when compared with fresh meat, they are

visions

a commodity both of worse quality, and as they cost more labour

and expence, of higher

price.

They

could never, therefore,

come

make

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

any

considerable part of the food of the people.

tity of salt provisions

The

make

small quan-

imported from Ireland since their importa-

^he graziers,

the wealth of nations

428

was rendered

tion

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

and even the free

importa-

Even the

tion of

bulky commodity than butcher’s-meat.

corn

penny

as dear as a

would not

much

af-

fect the

farmers.

it.

free importation of foreign corn could very little affect

the interest of the farmers of Great Britain. Corn

is

by

pound

A pound

is

a much more wheat at a

of

of butcher’s-meat at fourpence.

The

small quantity of foreign corn imported even in times of the greatest scarcity,

may

from the

fear

satisfy our farmers that they can

have nothing to

The average quantity imported

freest importation.

one year with another, amounts only, according to the very well informed author of the tracts upon the corn trade,

to twenty-three

thousand seven hundred and twenty-eight quarters of grain,

and does not exceed the

five

of

all sorts

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

means

of

it,

would otherwise take

tillage^^

city of another,

augmented by

and as the average quantity exported

it,

so

must

By

is

necessarily

likewise, in the actual state of tillage, the

no bounty, as

average quantity imported. If there were

would be exported, so less

place.

the plenty of one year does not compensate the scar-

it is

less corn

probable that, one year with another,

would be imported than at present. The corn merchants, the

fetchers

and

countries,

carriers of corn

would have much

between Great Britain and foreign less

employment, and might

suffer

and farmers could

suffer

considerably; but the country gentlemen

very

little.

It is in the

corn merchants accordingly, rather than in

the country gentlemen and farmers, that I have observed the greatest anxiety for the renewal

Country gentlemen and farm-

all

ers are

The undertaker

subject to

another work of the same kind

less

the spirit

of

mon-

opoly than mer-

and continuation of the bounty.

Country gentlemen and farmers

are, to their great

people, the least subject to the wretched spirit of monopoly.

of him.

of

a great manufactory is

The Dutch undertaker

Abbeville^’^ stipulated, that

is

sometimes alarmed

established within twenty miles

no work of the same kind should be

^‘Charles Smith, Three Tracts on the Corn-Trade

The same

“ Ed.

figure is

quoted below,

if

of the woollen manufacture at

tablished within thirty leagues of that city. Farmers

145.

honour, of

es-

and country

and Corn-Laws^ pp. 144-

p. 501.

I does not contain the words “in the actual state of tillage.” Eds. 1-3 read “was.” Joseph Van Robais in 1669.—John Smith, Memoirs of Wool, vol. ii., pp. 426, 427, but neither John Smith nor Charles King, British Merchant, 1721,

vol.

ii.,

pp. 93, 94, gives the particular stipulation mentioned.

RESTRAINTS ON PARTICULAR IMPORTS

429

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

chants

and manufacturers.

of the greater part of manufacturers, but are generally rather fond

communicating to

of

any new

possible

their neighbours,

and

of extending as far as

practice which they have found to be advanta-

geous. Pius QuestuSj says old Cato, stabilissimusquej

mmimeque

minimeque male cogitantes sunt, qui in eo studio oc~ cupati sunt}^ Country gentlemen and farmers, dispersed in differ-

invidiosusj

ent 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 endeavour to obtain against

same exclusive

privilege

their countr5mien, the

all

which they generally possess against the

inhabitants of their respective towns.

They

have been the original inventors of those

accordingly seem to

upon the imthem the monopoly of

restraints

portation of foreign goods, which secure to

the home-market. It was probably in imitation of them, and to put

themselves upon a level with those who, they found, were disposed to oppress

them, that the country gentlemen and farmers of Great

Britain so far forgot the generosity which as

tion,

demand

to

is

natural to their sta-

the exclusive privilege of supplying their

countrymen with corn and butcher’s-meat. They did not perhaps take time to consider,

by

fected

how much

the freedom of trade,

less their interest could

be af-

than that of the people whose ex-

ample they followed.

To

prohibit

by a perpetual law

the importation of foreign

com

The prohibition

and

cattle, is in reality to enact, that the

of the country shall at its

own

soil

population and industry

no time exceed what the rude produce of

strains the

be two cases

to

in

be advantageous to lay some burden upon

agement

The

which

it

will generally

foreign, for the encour-

first is,

when some

example, depends very shipping.

particular sort of industry

The

The defence

much upon

the

is

necessary

of Great Britain, for

number

of its sailors

nopoly of the trade of their own country, in some prohibitions,

and

De

Car.

and

in others

i8,

cases,

by heavy burdens upon

by

mo-

absolute

the shipping

ad irdt., but “Questu^^ should of course be “qu of

Am-

sterdam

carried away, as

it

always

is

The merchants, with plenty of currency, a sufficient quantity of good money to pay

in such circumstances.

could not always find

Before

was

9 per cent, be-

low the standard

their bills of exchange;

eral regulations

and the value

of those bills, in spite of sev-

which were made to prevent

became

it,

in

a great

measure uncertain. In order to remedy these inconveniencies, a bank was established in

1609 under the guarantee of the

foreign coin,

and the

intrinsic value in the

ing only so

much

as

light

city.

This bank received both

estab-

and worn coin of the country at

its real

good standard money of the country, deduct-

was necessary

for defraying the expence of

coinage, and the other necessary expence of management. For the

value which remained, after this small deduction was made,

a credit it

in its books. This credit

represented

money

was

called

it

gave

bank money, which, as

exactly according to the standard of the mint,

and intrinsically worth more than current money. It was at the same time enacted, that all bills drawn upon or negotiated at Amsterdam of the value of six hundred was always

of the

same

real value,

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 acguilders

and upwards should be paid

in

count with the bank in order to pay his foreign

which necessarily occasioned a certain

Bank money,

over and above both

The bank was then

demand

bills

for

its intrinsic

of exchange,

bank money.

superiority to cur-

lished to

receive

and pay coin at

its

intrinsic

value in

good standard

money.

XHE WEALTH OF NATIONS

448

Money

demand

rency, and the additional value which this

in the

bank was not only

up to the standard,

but also

has likewise some other advantages. It

itj

bery,

and other accidents; the city

can be paid away by a

it

of

is

Amsterdam

counting, or the risk of transporting

and

ginning to have borne an agio, and

ferred, so

that

it

bore an agio.

for

it;

from one place to another. it seems from the be-

it

secure easily

bound

is

rob-

fire,

simple transfer, without the trouble of

In consequence of those different advantages,

trans-

necessarily gives

secure from

it is

generally believed that all

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 the

money

originally deposited in the

bank, the owner of a bank credit would lose this premium. As a

from the mint

shilling fresh

than one of our

will

buy no more goods

common worn shillings,

which might be brought from the

market

in the

money

so the good and true

coffers

of the bank

into those of

a private person, being mixed and confounded with the common currency of the country, would be of no more value than that currency, from which

While

it

known and person,

could no longer be readily distinguished.

it

remained in the coffers of the bank,

its

ascertained.

When

it

tages of its it

coffers of the

bank money;

had come into those of a private

more

use in paying foreign

was worth. By being brought

bank, besides,

it

bills

advan-

lost all the other

security, its easy

its

was

superiority

superiority could not well be ascertained without

trouble than perhaps the difference

from the

its

and

safe transferability,

of exchange. Over

could not be brought from those coffers, as

it

and above will

all this,

appear by and

by, without previously paying for the keeping.

The bank

Those deposits of

coin, or those deposits

which

the

bank was

receives

bound

bullion as

wen as

coin, giv-

ing in ex-

to restore in coin, constituted the original capital of the

bank, or the whole value of what was represented by what

bank money. At present they are supposed In order to

change a

small part of

credit in

has been for these

bank

money

to

it.

many years in

books upon deposits of gold and

silver bullion.

cent, of

bank grants at the same time what intitling the

person

bank

the practice of giving credit in

erally about five per cent,

value.

a very

facilitate the trade in bullion, the

95 per

the

is called

to constitute but

This credit

is

its

gen-

below the mint price of such bullion. The

who makes

is

called a recipice or receipt,

the deposit, or the bearer, to take

out the bullion again at any time within six months, upon retransIt also

gives a re-

which entitles

ferring to the

bank a quantity of bank money equal

which credit had been given in

ceipt

recover

deposit at the

was

in silver;

same time ^Ed.

and one-half per

cent,

for the keeping, if it

was

declaring, that in default of such I

to that for

books when the deposit was

made, and upon paying one-fourth per cent,

the

bearer to

its

if

the

in gold; but

payment, and

reads “Those deposits of coin, or which.”

DIGRESSION ON THE BANK OF AMSTERDAM upon the expiration of

449

this term, the deposit should belong to the

bank at the price at which it had been received, or for which credit had been given in the transfer books. What is thus paid for the

may be considered as a sort of warehouse warehouse rent should be so much dearer for

keeping of the deposit rent;

and why

this

gold than for silver, several different reasons have been assigned.

The

fineness of gold,

it

has been said,

tained than that of silver. Frauds are

is

more

to be ascer-

difficult

more easily practised, and

oc-

the bullion

on

repaying the sum

advanced and pay-

ing! per cent, for silver

and

! per cent, for gold.

casion a greater loss in the more precious metal. Silver, besides, being the standard metal, the state,

it

has been said, wishes to en-

courage more the making of deposits of silver than those of gold.^^

Deposits of bullion are most commonly made

when

the price

is

somewhat lower than ordinary; and they are taken out again when

The

re-

ceipts are

generally it

happens to

ally

rise.

In Holland the market price of bullion

above the mint

same reason that

price, for the

land before the late reformation of the gold coin. said to

be commonly from about

mark, or eight ounces of loy.

The bank

it

gener-

so in

Eng-

difference is

six to sixteen stivers

upon the

and one part

which the bank gives

al-

for deposits

of such silver (when made in foreign coin, of which the fineness well

known and ascertained, such

guilders the

as Mexico dollars),

mark; the mint price

and the market price

is

is

is

is

twenty-two

about twenty-three guilders,

from twenty-three guilders

six,

to twenty-

three guilders sixteen stivers, or from two to three per cent, above

the mint price.^^

The

proportions between the bank price, the mint

Eds. 1-3 have the more correct but

awkward

reading “than of those of

gold.”

The following are the prices at which the bank of Amsterdam at present (September 1775) receives bullion and coin of different kinds:

SILVER. Mexico dollars French crowns

Guilders.

B

English silver coin

— 22 per mark.

Mexico dollars new coin Ducatoons Rix dollars

Bar

silver

21

10

3 2

8

containing ^^fine silver 21 per mark, and in this proportion

down

to i fine, on which 5 guilders are given. Fine bars, 23 per mark.

GOLD. Portugal coin 310 per mark. Guineas \ Louis d’ors new J 300 • Ditto old New ducats 4 19 8 per ducat. Bar or ingot gold is received in proportion to its fineness compared with mark. In the above foreign gold coin. Upon fine bars the bank gives 340 general, however, something more is given upon coin of a known fineness, than upon gold and silver bars, of which the fineness cannot be ascertained |

.

.

.

.

.

B—

but by a process of melting and assaying.

worth something,

The

silver of eleven parts fine,

price, or the credit

was

is

and

are re-

newed at the end of each six

months.

THE WEALTH OF NATIONS

450

and the market price of gold

price,

bullion, are nearly the same.

mint price of bullion and the market almost always worth something, and fore, that

any body

lion to fall to the

either

obtain a it

it

at the price at

happens seldom,

receipt for bullion

is

which

it

had been received,

out before the end of the six months, or by or one-half per cent, in order to

pay the one-fourth

new receipt

A

very seldom happens, there-

suffers his receipt to expire, or allows his bul-

bank

by not taking

neglecting to

price.

it

A

between the

person can generally sell his receipt for the difference

for another six months. This, however,

is

though

happen sometimes, and more frequent-

said to

ly 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

The depositor

bank

credit

and a

receipt,

deposit of bullion obtains both a

pays his

bills of

exchange as they become

usually

either sells or keeps his receipt ac-

parts with

due with his bank

his re-

cording as he judges that the price of bullion

note 12.

the wealth of nations

456

Nothing, however, can be more absurd than this whole doctrine

The whole doctrine

upon which, not only these restraints, but commerce are founded. When

of the balance of trade,

the other regulations of

of the

almost

balance of trade is

two places trade with one another,

absurd

all

this doctrine

supposes that,

balance be even, neither of them either loses or gains; but in

any degree

ties

A

are false.

and monopolies,

trade which

may

be,

the country in whose favour

if it

leans

the other gains

from the exact equilibrium. Both

in proportion to its declension

suppositions

them loses, and

to one side, that one of

the

if

is

forced

and commonly

it is

meant

is

by means

of boun-

disadvantageous to

be established, as I shall

to

endeavour to shew hereafter.^^ But that trade which, without force or constraint, is naturally

two places,

is

and regularly carried on between any

always advantageous, though not always equally

so,

to both.

By advantage tity of gold

and

or gain, I understand, not the increase of the quan-

but that of the exchangeable value of the

silver,

annual produce of the land and labour of the country, or the crease of the annual revenue of

Where there is

If the balance

an

be even, and

its

if

inhabitants.

the trade between the two places

exchange of their native commodities, they

consist altogether in the

even balance and

will,

the ex-

equally, or very near equally: each will in this case afford a

upon most

occasions, not only both gain, but they will gain

change consists

wholly of

for a part of the surplus

capital

in-

produce of the other: each

market

will replace

native

market

commodities two

had been distributed among, and given revenue and maintenance

countries

a certain number of

trading

a

which had been employed in raising and preparing for the this part of the surplus

produce of the other, and which

its inhabitants.

Some

to

part of the inhabitants

of each, therefore, will indirectly derive their revenue

and mainte-

will gain

nearly

nance from the other. As the commodities exchanged too are sup-

equafly.

posed 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 maintenance which

will afford to the inhabitants of each will

equal. This revenue

their distribution

be equal, or very nearly

and maintenance, thus mutually

afforded, will

be greater or smaller in proportion to the extent of their dealings. If these should annually

amount

to an

hundred thousand pounds,

for

example, or to a million on each side, each of them would afford an

annual revenue in the one case of an hundred thousand pounds, in the other, of a million, to the inhabitants of the other. If their trade should

^

be of such a nature that one

Below, pp. 472,473. Ed I does not contain “and preparing for the market.”

of

them export-

RESTRAINTS ON PARTICULAR IMPORTS

457

ed to the other nothing but native commodities, while the returns of that other consisted altogether in foreign goods; the balance, in this case,

would

still

with commodities.

be supposed even, commodities being paid

They would,

for

in this case too, both gain, but they

would not gain equally; and the inhabitants of the country w'hich 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 commodities 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 quan-

tity of foreign goods, tobacco,

goods; this trade, though tants of both countries,

those of England. it

we

shall suppose,

and East India

would give some revenue to the inhabiwould give more to those of France than to it

The whole French

capital annually

would annually be distributed among the people

that part of the English capital only which

employed

of France.

was employed

If

one ex-

ported nothing but native

commodi ties,

and

the other

nothing but foreign,

both

would gain, but

the

first

would gain most

in

But

in pro-

ducing the English commodities with which those foreign goods

were purchased, would be annually distributed among the people of England. The greater part of

had been employed

it

would replace the

in Virginia, Indostan,

capitals

which

and China, and which

had given revenue and maintenance to the inhabitants of those

dis-

tant 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 capital

would the revenue

in this case carry

of the English

of the people of England. France

would

on a direct foreign trade of consumption with Eng-

on a round-about trade of the same kind with France. The different effects of a capital employed land; whereas England would carry

in the direct,

and of one employed

of consumption,

in the round-about foreign trade

have already been

fully explained.^^

There is not, probably, between any two

countries,

a trade which

consists altogether in the exchange either of native commodities on

both

sides, or of native

commodities on one side and of foreign

goods on the other. Almost

all

countries exchange with one another

Mixed cases con-

form to the principle.

partly native and partly foreign goods. That country, however, in

whose cargoes there

is

the greatest proportion of native,

least of foreign goods, will always

and the

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 im-

ported 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

Above, p. 350

.

It

would

be no worse for England to pay in gold and

silver

458

the wealth OF NATIONS

foregoing, give

some revenue to the inhabitants

of both countries,

France than to those of England. tobacco °

some revenue

It

would give

England. The capital which had been em-

to those of

ployed in producing the English goods that purchased this gold and the capital which

silver,

revenue placed,

to,

distributed among,

had been

and given

certain inhabitants of England, would thereby be re-

and enabled

to continue that

employment. The whole capi-

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. tal of

No goods are

demand

sent abroad but those for which the

is

sup-

posed to be greater abroad than at home, and of which the returns consequently, it is expected, will be of more value at home than the commodities exported. If the tobacco which, in England,

is

worth

only a hundred thousand pounds, when sent to France will purchase wine which is, in England, worth a hundred and ten thousand pounds, the exchange will augment the capital of England by ten

thousand pounds. If a hundred thousand pounds of English gold, in the same manner, purchase French wine, which, in England,

worth a hundred and ten thousand,

ment the chant

who has a hundred and is

exchange

will equally

a richer

man

ten thousand pounds worth of wine

than he who has only a hundred thou-

sand pounds worth of tobacco in his warehouse, so richer

is

he likewise a

man than he who has only a hundred thousand pounds worth

He

of gold in his coffers.

can put into motion a greater quantity of

and give revenue, maintenance, and employment, number of people than either of the other two. But the

industry, greater tal of

tants,

the country

is

equal to the capitals of

all its different

to

a

capi-

inhabi-

and the quantity of industry which can be annually main-

tained in tain.

aug-

England by ten thousand pounds. As a mer-

capital of

in his cellar,

this

is

it,

is

Both the

equal to what

all

those different capitals can main-

and the quantity of must generally be would, indeed, be more advantage-

capital of the country, therefore,

industry which can be annually maintained in

augmented by

this

exchange. It

ous for England that

it

it,

could purchase the wines of France with

its

own hard-ware and

broad-cloth, than with either the tobacco of

Virginia, or the gold

and

trade of consumption

is

silver of Brazil

and Peru.

A direct foreign

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 try which has no mines, silver

by

this

more

likely to

is

a coun-

be exhausted of gold and

annual exportation of those metals, than one which

RESTRAINTS ON PARTICULAR IMPORTS does not grow tobacco

by the

459

annual exportation of that plant.

like

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

The arguments against

naturally carry on with

trade of the is

same

a wine country, may be considered as a

nature. I answer, that the trade with the alehouse

not necessarily a losing trade. In

its

own

nature

it is

just as ad-

vantageous as any other, though, perhaps, somewhat more

liable to

be abused. The employment of a brewer, and even that of a

retailer

of fermented liquors, are as necessary divisions of labour as

any 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 other. It will generally

be more advantageous

a large quantity of the brewer.

he

either, as

butcher,

among

if

may

he

is

He may no

any other dealers

of

a glutton, or

his companions. It

ly to

be

sides,

so, perhaps, in

some than

Though

in

Though individuals, beby an excessive consumpseems to be no risk that a nation in others.

every country there are

spend upon such liquors more

many more who spend we

these trades should be free,

all

ruin their fortunes

tion of fermented liquors, there so.

he afects to be a beau

may be abused in all of them, and is more lilce-

may sometimes

should do

in his neighbourhood, of the

advantageous to the great body of

workmen, notwithstanding, that though this freedom

doubt buy too much of

of the draper, if

is

for

less. It

many

people

who

than they can afford, there are always deserves to be remarked too, that,

if

consult experience, the cheapness of wine seems to be a cause,

not of drunkenness, but of sobriety.

The

inhabitants of the wine

countries are in general the soberest people in Europe; witness the

Spaniards, the Italians, and the inhabitants of the southern prov-

what

inces of France. People are seldom guilty of excess in

daily fare.

lowship, beer.

On

Nobody

affects the character of liberality

by being profuse

a liquor which

is

dear and a

rarity,

all

fel-

exces-

no grapes, and where wine consequently

drunkenness

northern nations, and

their

as cheap as small

the contrary, in the countries which, either from

sive heat or cold, produce is

of

is

and good

those

a common

is

who

live

vice,

as

between the

negroes, for example, on the coast of Guinea.

When a

among

the

tropics, the

French

regi-

ment comes from some of the northern provinces of France, where wine is somewhat dear, to be quartered in the southern, where it is ^^Eds. I and 2 read

“make

”

®®Ed. i reads “from either

”

the

French wine trade are

faUadous.

XHE WEALTH OF NATIONS

460

very cheap, the soldiers, I have frequently heard first

after

it

observed, are at

debauched by the cheapness and novelty of good wine; but

a few months residence, the greater part of them become as

sober as the rest of the inhabitants.

Were

the duties

upon

foreign

upon malt, beer, and ale, to be taken away might, in the same manner, occasion in Great Britain

wines, and the excises all at

once,

it

a pretty general and temporary drunkenness among the middling and inferior ranks of people, which would probably be soon followed by a permanent and almost universal sobriety. At present drunk-

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 calenness

is

culated to hinder the people from going,

liquor.

if

I

buy

house, as from going where they can

may say

so, to

the ale-

the best and cheapest

They favour the wine trade of Portugal, and discourage that The Portuguese, it is said, indeed, are better customers

of France.

for our manufactures than the French,

and should therefore be en-

couraged in preference to them. As they give us their custom,

we should

them

The

pretended,

sneaking

ling tradesmen are thus erected into

arts of

underling

give

duct of a great empire; for

it is

the most underling tradesmen only

tradesmen

who make

have been

trader purchases his goods always where they are cheapest

it

it is

The sneaking arts of underpolitical maxims for the con-

ours.

a rule to employ chiefly their

own

customers.

A great

and

best,

erected into political

maxims and commerce has become a source of

discord

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.

tion has

been made to look with an invidious eye upon the pros-

perity of all the nations with which

gain as

Each na-

its

trades,

it

and

to consider their

own loss. Commerce, which ought naturally to be, among among individuals, a bond of union and friendship, has

instead of

nations, as

unity.

become the most

fertile

cious ambition of kings

source of discord and animosity.

and ministers has

and the preceding century, been more

The

capri-

not, during the present

fatal to the repose of

Europe,

than the impertinent jealousy of merchants and manufacturers.

The

violence and injustice of the rulers of

evil,

mankind

is

an ancient

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 any body but themselves. Lectures p. 179.

RESTRAINTS ON PARTICULAR IMPORTS That

was the

it

monopoly which

spirit of

4^1

originally both invent-

ed and propagated

this doctrine, cannot be doubted; and they who 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

first

taught

it

body of the people cheapest.

The

buy whatever they want

to

proposition

any pains

lous to take in question,

is

so very manifest, that

to prove

had not the

it;

is,

nor could

it

it

sell it

seems ridicu-

ever have been called

As

common

and

sense of mankind. Their

body

mon-sense of

man-

kind.

from employing any workmen

the interest of the merchants

it is

turers of every country to secure to themselves the

home market. Hence

monopoly has confounded

the interest of the freemen of a corporation

it is

to hinder the rest of the inhabitants

but themselves, so

by the

the com-

in this respect, directly opposite to that of the great

of the people.

merchants inspired spirit of

who

interested sophistry of merchants

manufacturers confounded the interest

of those

The sophistry of

and manufac-

monopoly

of the

countries, the extraordinary duties

and in most other European upon almost all goods imported

by alien merchants. Hence the high

duties

in Great Britain,

those foreign manufactures which can

and prohibitions upon all

come

into competition with

our own. Hence too the extraordinary restraints upon the importation of almost all sorts of goods

the balance of trade

from those against

is

from those countries with which

supposed to be disadvantageous; that

whom

is,

national animosity happens to be most

violently inflamed.

The wealth war and

in

hostility it

of a neighbouring nation, however, though dangerous

politics, is certainly

may

advantageous in trade. In a state of

enable our enemies to maintain fleets and armies

superior to our own; but in a state of peace likewise enable to afford

own a

them

a better market,

either for the

industry, or for whatever

rich

man

is likely to

man, indeed, who

gerous neighbour to

is

a

it

must

greater value,

and

immediate produce of our

purchased with that produce. As

be a better customer to the industrious peo-

ple in his neighbourhood, than

A rich

and commerce

to exchange with us to

all

is

a poor, so

is

likewise

himself a manufacturer,

those

who

a is

rich nation.

a

very, dan-

deal in the same way. All the

rest of the neighbourhood, however,

by

far the greatesti

number,

by the good market which his expence affords them. They even profit by his underselling the poorer workmen who deal in the

profit

same way with him. The manufacturers

of

a rich nation, in the

same manner, may no doubt be very dangerous

rivals to those of

their neighbours. This very competition, however, to the great

body

of the people,

who

is

advantageous

profit greatly besides

by the

good market which the great expence of such a nation affords them in

every other way. Private people

who want

to

make a

fortune,

Wealthy neigh-

bours are an advantage to a nation as well as

an individual.

XHE WEALTH OF NATIONS

462

never think of retiring to the remote and poor provinces of the

some

country, but resort either to the capital, or to

commercial towns. They know, that, where there is

little

some share

of the great

wealth circulates,

to be got, but that where a great deal

is in

motion,

may f^

to them.

The same maxims which would

direct the

common

sense of one, or ten, or twenty

of it

manner

in this

little

judgment of one, or ten, or twenty and should make a whole nation regard the riches of its neighbours, as a probable cause and occasion for itself to acquire individuals, should regulate the

millions,

A

riches.

nation that would enrich

most

tainly

likely to

do so when

and commercial

trious,

its

A

nations.

itself

by

foreign trade, is cer-

neighbours are

all rich,

great nation surrounded

indus-

on

all

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 sides

acquired their great wealth. lected foreign commerce,®®

hold

it

in the

The and

it is

modern Chinese,

said, neg-

it is

known,

utmost contempt,®® and scarce deign to afford

decent protection of the laws. merce,

ancient Egyptians, the

by aiming

The modern maxims

it

of foreign

the

com-

at the impoverishment of all our neighbours, so

far as they are capable of producing their intended effect, tend to

render that very commerce insignificant and contemptible. It is in consequence of these

The French tradeoff

not re-

many

strained,

ever,

would be

much more advantageous to Great Britain

than the American.

maxims

that the

commerce between

France and England has in both countries been subjected to so discouragements and restraints. If those two countries, how-

were to consider their real

interest,

without either mercantile

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

jealousy or national animosity, the

is

die nearest neighbour to Great Britain. In the trade between the

southern coast of England and the northern and north-western coasts of France, the returns might be expected, in the

ner as in the inland trade, four, capital, therefore,

employed

five,

same man-

or six times in the year.

in this trade, could in each of the

The two

countries keep in motion four, five, or six times the quantity of in-

dustry,

and afford employment and subsistence to four, five, or six number of people, which an equal capital could do in the

times the

greater part of the other branches of foreign trade.

parts of France

Between the 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

Above, p 348

far

be at least equally advantageous as the Below, p. 644

RESTRAINTS ON PARTICULAR IMPORTS

4^3

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 less

than four or

made

in less than three years, frequently not in

five years.

France, besides,

is

supposed to contain

twenty-four millions of inhabitants.^'^ Our North American colonies

were never supposed France

a

is

much

to contain

more than three

richer country than

And

millions:

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 extensive, and,

on account

more

least eight times

of the superior frequency of the returns,

and twenty times more advantageous, than that which our North American colonies ever afforded. The trade of Great Britain four

would be just as advantageous to France, and, in proportion to the wealth, population and proximity of the respective countries, would

have the same superiority over that which France carries on with her

own

Such wisdom

colonies.

trade which the

courage, and that which

But

is

the very great difference between that

of both nations has thought proper to disit

has favoured the most.

the very same circumstances which would have rendered an

open and free commerce between the two countries so advantage-

But the traders of

France

ous to both, have occasioned the principal obstructions to that com-

and Eng-

merce. Being neighbours, they are necessarily enemies, and the

land are

wealth and power of each becomes, upon that account, more for-

jealous of

midable to the other; and what would increase the advantage of

each other.

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

cited,

activity of those of the other. Mercantile jealousy

and both

inflames,

national animosity:

nounced, with

all

And

and

is itself

inflamed,

by the

is

ex-

violence of

the traders of both countries have an-

the passionate confidence of interested falsehood,

the certain ruin of each, in consequence of that unfavourable bal-

ance 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 ap-

No coun-

proaching ruin has not frequently been foretold by the pretended

try has

doctors of this system, from an unfavourable balance of trade.

impov-

After

all

the anxiety, however, which they have excited about

^ See below, p ^ This and the tions

and

ed. 3.

this,

See below, p 889. 856 preceding paragraph appear first in Additions and Correc-

ever been erished

by

the wealth of nations

464 an unfavourable balance,

and those which have the freest

after all the vain attempts of almost all trading nations to turn that

own

balance in their

favour and against their neighbours,

it

does not

appear that any one nation in Europe has been in any respect impoverished

by

this cause.

in proportion as they

by

Every town and country, on the contrary,

have opened

their ports to all nations, instead

of being ruined

mercial system would lead us to expect, have been enriched

enriched

Though

by foreign

respects deserve the

trade.

name

of free ports, there

There

Prosperity

produce and consumption,

no country which

still

very remote from its

and Holland,

it;

it

ac-

is

whole wealth, but a great part of

necessary subsistence, from foreign trade.

its

the balance of

is

does so. Holland, perhaps, approaches the nearest to this character

knowledged, not only derives

depend on

by it. a few towns which in some

there are in Europe, indeed,

of any, though

and decay

com-

this free trade, as the principles of the

trade

have been the most

another balance, indeed, which has already been ex-

is

from the balance of trade, and which, ac-

plained,^® very different

happens to be either favourable or unfavourable, necessarily occasions the prosperity or decay of every nation. This cording as

is

it

the balance of the annual produce and consumption. If the ex-

changeable value of the annual produce,

it

has already been ob-

served, exceeds that of the annual consumption, the capital of the society

must annually increase

in proportion to this excess.

society in this case lives within its revenue,

saved out of

revenue,

its

ployed so as to increase

is

and what

naturally added to

still

is

its capital,

of the annual consumption, the capital of the society

ly decay in proportion to this deficiency.

short

must annual-

The expence

and must

fall

of the so-

ciety in this case exceeds its revenue,

necessarily encroaches

upon

necessarily decay, and,

its capital.

together with its

quite dif-

and em-

further the annual produce. If the ex-

changeable value of the annual produce, on the contrary,

which is

The

annually

Its capital, therefore,

it,

the exchangeable value of the annual produce of

industry.

This balance of produce and consumption from, what

is

called, the

is entirely different

balance of trade. It might take place in a

ferent

from the balance of trade,

nation which had no foreign trade, but which was entirely separated

from

all

the world. It

may

take place in the whole globe of the

earth, of which the wealth, population,

and improvement may be

either gradually increasing or gradually decaying.

The balance and may be con-

of produce

generally against

it.

stantly in

favour of a nation

and consumption may be constantly

favour of a nation, though what

is

called the balance of trade

in

be

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

"Above,

may be all immediately sent

p. 321; Lectures, p. 207.

RESTRAINTS ON PARTICULAR IMPORTS out of of

it;

its circulating coin

may

gradually decay, different sorts

paper money being substituted in

too

which

may

it

its place,

and even the debts

contracts in the principal nations with

be gradually increasing; and yet

its

changeable value of the annual produce of

whom

The

state of our

it

deals,

real wealth, the exits

lands and labour,

may, during the same period, have been increasing in a er proportion.

4^5

North American

much great-

colonies,

and of

the trade which they carried on with Great Britain, before the

commencement of the present disturbances,^^ may that this is by no means an impossible supposition. ^This paragraph was written

in the year 1775.

serve as

But not exactly

a proof

as it stands, ”

since ed. i reads “the late disturbances” instead of “the present disturbances

We

can only conjecture that Smith thought that the disturbances were past when he was writing or when he returned the proof to the printers, or that they would be past by the time his book was published. The alteration of “late” to “present” was made in ed. 2, and the footnote added in ed. 3. All eds. read “present disturbances” on pp. 540, 552 and 580 and “late disturbances” on p. 544- The two expressions could scarcdy have been used at the same time, so we must suppose that “late” was corrected into “present” on pp. 540, 552 and 580, or that “present” was corrected into “late” on p, 544, but we cannot tell for certain which of the two things happened. either

when the balance of trade

is

against

it

BOOK

IV

CHAPTER

IV

OF DRAWBACKS Merchants

demand encouragements to exportation.

contented with the monop-

Merchants and manufacturers are not oly of the

home market, but

desire likewise the

most extensive

for-

eign sale for their goods. Their country has np jurisdiction in foreign nations, and therefore can seldom procure

They

there.

them any monopoly

are generally obliged, therefore, to content themselves

with petitioning for certain encouragements to exportation.

Drawbacks of duty paid

on domestic

pro-

duce are reasonable, as

they preserve the natural

Of

these encouragements

the most reasonable.

To

what are

called

duty

allow the merchant to draw back upon ex-

imposed upon domestic industry, can never occasion the

is

exportation of a greater quantity of goods than

what would have

been exported had no duty been imposed. Such encouragements do not tend to turn towards any particular employment a greater share

what would go to that employown accord, but only to hinder the duty from driving

of the capital of the country, than

distribu-

ment ^

away any part

of its

to overturn that balance all

They tend not establishes itself among

of that share to other employments.

labour.

which naturally

the various employments of the society; but to hinder

preserve,

what

ural division

from

it is

and distribution of labour

The same

it

by the duty. They tend not to destroy, but to in most cases advantageous to preserve, the nat-

being overturned

backs of duty paid on goods imported.

to be

portation, either the whole or a part of whatever excise or inland

tion of

So are also draw-

Drawbacks seem

thing

may be

in the society.

said of the drawbacks

upon the

re-

exportation of foreign goods imported; which in Great Britain generally

amount

By

tation.^

to

by much

the largest part of the duty

the second of the rules, annexed to the act of parlia-

ment,^ which imposed, what

is

merchant, whether English or ^

Eds.

*

The next

®

12 Car. IL,

I

upon impor-

and

2

read

‘‘go

to

now

alien,

was allowed

to

i

4.

466

and

2

;

every

draw back half

it.’'

three pages are not in eds. c.

called, the old subsidy,

see below, p. 470, note.

DRAWBACKS that

467

duty upon exportation; the English merchant, provided the

exportation took place within twelve months; the alien, provided

old subit

sidy

took place within nine months. Wines, currants, and wrought silks

were the only goods which did not

and more advantageous

other

fall

within this rule, having

allowances.

The

duties imposed

Under the

by

a

drawback of onehalf is al-

lowed.

this act of parliament were, at that time, the only duties

upon the importation of foreign goods. The term within which this, and all other drawbacks, could be claimed, was afterwards (by 7 Geo. 1 .

chap. 21. sect. 10.) extended to three years.^

The

duties which have been imposed since the old subsidy, are,

drawn back upon exportation.

the greater part of them, wholly

Of more recent duties the

This general tions,

rule,

however,

and the doctrine

ple matter, than

Upon

it

liable to

a great number of excep-

drawbacks has become a much

of

was at

is

less sim-

their first institution. it

was

expected that the importation would greatly exceed what was

home consumption,

the whole duties are drawn

back, without retaining even half the old subsidy. Before the revolt of our

North American

colonies,

tobacco of Maryland and Virginia.

we had

We

generally

allowed,

the exportation of some foreign goods, of which

necessary for the

whole is

the

monopoly of the

and in some cases the whole even of the old

subsidy is allowed.

imported about ninety-six

thousand hogsheads, and the home consumption was not supposed exceed fourteen thousand.®

to

which was necessary,

To

facilitate the great exportation

in order to rid

us of the

rest,

the whole duties

were drawn back, provide^ 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

within a year, therefore, back*^

and

if

all

islands. If sugars are exported

the duties

upon importation are drawn

exported within three years,

half the old subsidy, which

still

all

the duties, except

continues to be retained

upon the

exportation of the greater part of goods. Though the importation of sugar exceeds, a good deal, what is necessary for the home consumption, the excess is inconsiderable, in comparison of what it

used to be in tobacco.*

Some

goods, the particular objects of the jealousy of our

manufacturers, are prohibited to be imported for tion.

They may, however, upon paying

own

home consump-

certain duties,

be imported

and warehoused for exportation. But upon such exportation, no part of these duties are drawn back.

^

Our manufacturers

®

®

Saxby, British Customs, p.

12.

Ibid., p. ii.

case of

some prohibited

goods there is

are unwill-

British Customs, containing an Historical and PracAccount of each branch of that part of the Revenue, 1757, pp. 10, 308. These figures are also quoted above, p. 353, and below, pp. 568, 5^9.

Henry Saxby, The

tical

In the

XHE WEALTH OF NATIONS

468 no drawback.

ing,

it

seems, that even this restricted importation should be en-

couraged, and are afraid lest some part of these goods should be

and thus come

stolen out of the warehouse,

own. It

their

wrought

is

silks,®

into competition with

under these regulations only that we can import

French cambrics and lawns,®

callicoes painted,

printed, stained, or dyed, &c.

We

French imports generally

are al-

lowed a smaller

drawback on re-exportation.

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 is

half the old subsidy, but the second twenty-five per cent,

retained

By

upon the exportation

of all

the fourth of the rules annexed to the old subsidy, the draw-

back allowed upon the exportation of deal

French goods.^®

more than

half the duties

all

wines amounted to a great

which were, at that time, paid upon

Wines

and

seems, at that time, to have been the ob-

have been

their importation;

peculiar-

ject of the legislature to give

ly fa-

voured,

it

somewhat more than ordinary en-

couragement to the carrying trade in wine. Several of the other duties too, which were imposed, either at the

quent to

new

the old subsidy; what

subsidy, the one-third

is

same time, or subse-

called the additional duty, the

and two-thirds

subsidies, the

impost

1692, the coinage on wine, were allowed to be wholly drawn back

upon

exportation.^^ All those duties, however, except the additional

duty and impost 1692,^^ being paid down in ready money, upon importation, the interest of so large a

which made

it

in this article.

sum

occasioned an expence,

unreasonable to expect any profitable carrying trade

Only a

part, therefore, of the

duty called the impost

on wine,^® and no part of the twenty-five pounds the tun upon French wines,^^ or of the duties Imposed in 1745,^® in 1763,^® and in 1778,^^

were allowed to be drawn back upon exportation. The

two imposts of

five

per cent., imposed in 1779 and 1781, upon

all

®6 Geo. III., c. 28; II Geo. III., c. 49. Above, p. 440. 7 and 8 W. HI., c. 20; i Geo. I., c. 12, § 3 Saxby, British Customs, p. 45 above p. 440. The first 25 per cent, was imposed in 11592, the second in i6g6. ^ Saxby, British Customs, pp. 13, 22, 39> 46. “The additional duty” was imposed in 1703. For the “impost 1692” and the subsidies see above, pp. 440, 441, and below, pp. 830, 831. “The coinage on wine” was the duty levied under 18 Car. II., c. $, for defraying the expenses of the mint. “ Saxby, British Customs, pp. 13, 38. “ I Jac. II,, c. 3, and continuing Acts: £8 a tun on French and £12 on **

;

other wine. ^^7

and 8 W. HI.,

c. 20, § 3; I Geo. L, st. 2, c. 12, § 3. Geo. H., c. 9; Saxby, British Customs, p. 64: £8 a tun on French and £4 on other wine. “ ? 1762. 3 Geo. III., c. 12: £8 a tun on French and £4 on other wine. 18 Geo. III., c. 27: £8 8s. on French and £4 4s. on other wine.

“ 18

DRAWBACKS the former duties of customs,

back upon the exportation

4^9

being allowed to be wholly drawn

of all other goods,

were likewise allowed be drawn back upon that of wine. The last duty that has been particularly imposed upon wine, that of 1780,1® is allowed to be to

wholly drawn back, an indulgence, which, when so many heavy duties are retained, most probably could never occasion the expor-

a

tation of

single tun of wine. These rules take place with regard to

places of lawful exportation, except the British colonies in

all

America.

The isth Charles ment of

trade,^®

II. chap. 7. called an act for the encouragehad given Great Britain the monopoly of supply-

ing 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

enumerated commodities, wards, to

all

own ships,

at first, to all parts of Europe,

parts of Europe South of

Cape

Finisterre,^^

very probable that this monopoly could ever be

and they probably,

at all times,

their non-

and

much

after-

it is

not

respected;

found means of bringing back some

cargo from the countries to which they were allowed to carry out one.

ing

They seem, however,

have found some

to

European wines from the

difficulty in

places of their growth,

import-

and they could

not well import them from Great Britain, where they were loaded

with

many heavy

drawn back upon pean commodity the

West

Indies,

duties, of

which a considerable part was not

exportation.

Madeira wine, not being a Euro-

could be imported directly into America and 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

Ma-

deira wine, which our officers found established in all our colonies at the

commencement

of the

war which began

in 1755,

and which

they brought back with them to the mother-country, where that

wine had not been much

in fashion before.

Upon

the conclusion of

of the 5 per cent., not on the value of the goods, but on the amount previously existing duties; 19 Geo. Ill,, c. 25, and 22 Geo. III., c. 66. 20 Geo. Ill,, c. 30: £8 a tun on French and £4 on other wine. "‘The colonial part of the Act is said in its particular preamble (§ 5) to be for the purpose of “maintaining a greater correspondence and kindness be-

tween” the colonies and mother country, and for keeping the colonies “in a firmer dependence.”

^ All this is

dealt with in greater detail below, pp. 543-546. framers of the Act were not so sure about Madeira being nonEuropean. They excepted wine of the Madeiras and Azores by special pro-

“The

vision, § 7 of IS Car. II.,

c. 7, §

13.

especially

the

Amer-

icancolo-

the wealth of nations

470

that war, in 1763 (by the 4th Geo. Ill, Chap. 15. Sect. 12.), all the

were allowed to be drawn back, upon the exportation to the colonies of all wines, except French wines, to the commerce and consumption of which national prejudice would alduties, except

low no sort

3L

lo^.

encouragement. The period between the granting

of

and the

of this indulgence

North American colonies

revolt of our

was probably too short to admit

of

any considerable change in the

customs of those countries.

The same

though the export

which, in the drawback upon

act,

wines, except

all

French wines, thus favoured the colonies so much more than other

of other foreign

countries; in those,

commodi-

favoured them

ties to

of

those col-

upon

much

less.

the greater part of other commodities,

Upon

the exportation of the greater part

commodities to other countries, half the old subsidy was drawn

onies was

back. But this law enacted, that no part of that duty should be

discour-

drawn back upon the exportation

aged. ties, of

to the colonies of

the growth or manufacture either of Europe or the East

Indies, except wines, white callicoes

and

muslins.^^

Drawbacks were, perhaps, originally granted for the encourage-

Drawbacks were

any commodi-

ment of the carrying

trade, which, as the freight of the ships is fre-

originally

quently paid by foreigners in money, was supposed to be peculiarly

granted to

fitted for bringing gold

encourage

carrying

trade

and

certainly

silver into the country.

deserves

But though the

no peculiar encouragement,

the carrying trade,

though the motive of the institution was, perhaps, abundantly

which was

ish,

absurd,

but they

the institution

cannot force into

itself

this trade

a greater share of the capital of the

own

are rea-

country than what would have gone to

sonable

there been no duties

upon importation. They only prevent

excluded altogether

by

enough.

fool-

seems reasonable enough. Such drawbacks

those duties.

of

it

The

its

accord, its

had

being

carrying trade, though

deserves no preference, ought not to be precluded, but to be

it

left

free like all other trades. It is a necessary resource for 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 gains by their

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

®®From the words “duty upon importation”

at the end of the first sentence

of the third paragraph of the chapter to this point is

new

Additions and Corrections and ed. simply, “Half the duties imposed by what

i

pears of

it

first in

matter, which ap-

and

3.

Eds.

is

called the old subsidy, arc

2

read in place

drawn back universally, except upon goods exported to the British plantations; and frequently the whole, almost always a part of those imposed by later subsidies and imposts.” The provision of 4 Geo. III., c. 15, taking away drawbacks,

is

quoted below, p. 550.

DRAWBACKS

47i

are paid, could seldom have been exported, nor consequently imported, for want of a market. is

retained,

These reasons seem justify

The

duties, therefore, of

which a part

would never have been paid. drawbacks, and would

them, though the whole duties, whether upon the produce of

domestic industry, or upon foreign goods, were

dways drawn back

upon exportation. The revenue

in this case, indeed,

suffer

a

little,

would

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

would be more nearly

less disturbed

re-established

These reasons, however,

by such a

will justify

by such

duties,

drawbacks only upon ex-

independent, not to those in which our merchants and manufac-

a monopoly.

A

the whole of the

duty paid.

They would be justified

even

if

they

al-

ways did amount to

regulation.

porting goods to those countries which are altogether foreign and

turers enjoy

do not

amount to

sufi&ciently to justify

of excise

existence

when they

drawback, for example, upon the ex-

portation of European goods to our American colonies, will not al-

the whole

duty paid,

but only to inde-

pendent countries,

ways occasion a greater exportation than what would have taken place without

it.

By means

of the

monopoly which our merchants

not to those in respect of

and manufacturers enjoy ly,

there, the

same quantity might frequent-

perhaps, be sent thither, though the whole duties were retained.

The drawbackj therefore, may

frequently be pure loss to the reve-

which there

is

a

monopoV of trade.

nue of excise and customs, without altering the or rendering

backs can be

it

in

any

respect

justified, as

of our colonies, or

more

extensive.

state of the trade,

How

far such

draw-

a proper encouragement to the industry

how far it is advantageous to the mother-country,

that they should be exempted from taxes which are paid rest of their fellow-subjects, will

appear hereafter

by

all

the

when I come to

treat of colonies.

Drawbacks, however,

it

must always be understood, are useful

They give rise

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. ticularly those

That some drawbacks, par-

upon tobacco, have frequently been abused

in this

manner, and have given occasion to many frauds equally hurtful both to the revenue and to the

fair trader, is well

Below, pp. 549-SSi-

known.

to

frauds.

CHAPTER V OF BOUNTIES

Foreigners cannot

be forced to

buy

our goods, so

it is

proposed

pay them to do so. to

Bounties upon exportation

are, in

Great Britain, frequently peti-

tioned for, and sometimes granted to

branches of domestic industry.

and manufacturers,

it is

tlie

By means

produce of particular

of

them our merchants

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 bal-

ance of trade consequently turned more in favour of our

own coun-

We cannot give our workmen a monopoly in the foreign, as we have done in the home market. We cannot force foreigners to buy try.

their goods, as

expedient,

ing. It is in this

rich the

means Bounties are not

demanded for any but losing

we have done our own countrymen. The next best is to pay them for buy-

has been thought, therefore,

it

manner that the mercantile system proposes

whole country, and to put money into

all

to en-

our pockets by

of the balance of trade.

Bounties,

it is

allowed, ought to be given to those branches of

trade only which cannot be carried on without them.

branch of trade in which the merchant can

sell his

which replaces to him, with the ordinary

But every goods for a price

profits of stock, the

trades,

whole capital employed in preparing and sending them to market, can be carried on without a bounty. Every such branch is evidently

upon a

level with all the other branches of trade which are carried on without bounties, and cannot therefore require one more than they. Those trades only require bounties in which the merchant is obliged to sell his goods for a price which does not replace to him

his capital, together

obliged to sell

market.

them

with the ordinary

for less than

The bounty

is

it

which he

is

him to send them make up this loss, and

to

profit; or in

really costs

given in order to

to

encourage him to continue, or perhaps to begin, a trade of which the expence is supposed to be greater than the returns, of which every operation eats

up a part

of such a nature, that,

soon be no capital

of the capital

if all

employed

in

other trades resembled

left in the

country. 472

it, it,

and which there

is

would

BOUNTIES

473

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 manner as them

that one of

shall

always and regularly

or

lose,

sell its

goods

for less than it really costs to send them to market. But if the bounty did not repay to the merchant what he would otherwise lose

him

profit, the capital

force

trade into

disadvantageous channels

to him, with the ordin-

employed in sending them to market. The

effect of bounties, like that of all the other expedients of the

cantile system, can only

channel ally

effect is to

upon the price of his goods, his own interest would soon oblige to employ his stock in another way, or to find out a trade in

which the price of the goods would replace ary

and their

mer-

be to force the trade of a country into a

much less advantageous than that in which its own accord.

it

would natur-

run of

The

ingenious and well-informed author of the tracts upon the

corn-trade

^

has shown very

exportation of corn was

clearly, that since the

bounty upon the

established, the price of the corn ex-

first

ported, valued moderately enough, has exceeded that of the corn

by a much

imported, valued very high,

amount

of the whole bounties

period. This, he imagines,

greater

forgets

the cost of raising

the corn

sum than

the

which have been paid during that

upon the true

Charles

Smith

principles of the mercan-

upon which the bounty is paid

tile

system,

is

a clear proof that

this forced corn trade is beneficial

to the nation; the value of the exportation exceeding that of the im-

portation

by a much

greater

sum than

the whole extraordinary ex-

pence which the public has been at in order to get

it

exported.

He

does not consider that this extraordinary expence, or the bounty,

is

the smallest part of the expence which the exportation of corn really costs the society. raising

it,

must

of the corn

The

capital

which the farmer employed

in

likewise be taken into the account. Unless the price

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

difference, or the national stock is so

much diminished. But the very reason for which it has been thought necessary to grant a bounty, price to

do

is

the supposed insufficiency of the

this.

The average

price of corn,

it

has been said, has fallen consider-

ably since the establishment of the bounty. That the average price of corn

began to

fall

and has continued

somewhat towards the end

of the last century,

to do so during the course of the sixty-four

first

years of the present, I have already endeavoured to show. But this Charles Smith (already described as “very well-informed” above, p. 428), Thne Tracts on the Corn Trade and Corn Laws, and ed 1766, pp. 132-138. ^

,

The fall in the price of corn since the establish-

ment of

THE WEALTH OF NATIONS

474

event, supposing

the

bounty due to

is

happened

it

to

be as

real as I believe it to be,

in spite of the bounty,

must have

and cannot possibly have hap-

has happened in France, as well as in

other

pened in consequence of

causes.

England, though in France there was, not only no bounty, but,

it.

It

till

1764, the exportation of corn was subjected to a general prohibition .2 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 general market of Europe, during the course of the present century.^ It seems to be

altogether impossible that the bounty could ever contribute to

lower the price of grain.^

In years of plenty,

The

it

has already been observed,® the bounty, by

bounty keeps up

occasioning an extraordinary exportation, necessarily keeps

the price

price of corn in the

both in

fall to.

years of

home market above what

To do so was the avowed purpose

of scarcity, though the

bounty

is

it

up the

would naturally

of the institution. In years

frequently suspended, yet the

plenty

and

of

scarcity

great exportation which it occasions in years of plenty,

must

fre-

quently hinder more or less the plenty of one year from relieving lie scarcity of another. Both in years of plenty, and in years of scarcity, therefore, the

price of

bounty necessarily tends to

corn somewhat higher than

it

raise the

money

otherwise would be in the

home market. has been supposed to encourage

That, in the actual state of

It

cultiva-

tion

ard

so to

lower pnce.

have

this tendency, will not, I

sonable person.

But

it

tillage,

the bounty must necessarily

apprehend, be disputed by any rea-

has been thought by

tends to encourage tillage,

and that

in

two

many

different

people that

ways;

first,

it

by

opening a more extensive foreign market to the corn of the farmer, it

tends, they imagine, to increase the

demand

for,

and consequently

the production of that commodity; and secondly,

him a better price than he could otherwise expect of tillage,

it

by securing

to

in the actual state

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 price in the

home market, much more than

in the actual state

pen to be

which

tillage

may,

at the

may

lower

the bounty can raise

its it,

end of that period, hap-

in.®

®

Above, vol. i., pp. 195-198. Above, vol. i., pp. 197-210, and cp. p. 405. ^ These three sentences beginning with “It has happened in France,” appear “

first "

and Corrections and

in Additions

Above, vol. ®Eds. I and

i.,

2

ed. 3.

p. 197.

read (beginning at the third line of the paragraph) “But

it

BOUNTIES I answer, that

occasioned

by

475

whatever extension of the foreign market can be

the bounty, must, in every particular year, be alto-

gether at the expence of the

home market;

as every bushel of corn

Theaddi^

^ce

corn at

exported by means of the bounty, and which would not have been exported without the bounty, would have remained in

which

the

is

home market

to increase the consumption,

price of that commodity.

and to lower the

The corn bounty, it is to be observed, as upon exportation, imposes two different

well as every other bounty

upon the people;

taxes

first,

the tax which they are obliged to con-

pay the bounty; and secondly, the tax which price of the commodity in the home marand which, as the whole body of the people are purchasers of

bounty is ^ heavy ^ people,^

which re-

tribute, in order to

arises

ket,

from the advanced

corn, must, in this particular commodity, be paid

body

by the whole

of the people. In this particular commodity, therefore, this

second tax

is

by much

tion

and

industry

thelSig run tends

the heaviest of the two. Let us suppose that,

taking one year with another, the bounty of five shillings upon the

consump-

exportation of the quarter of wheat, raises the price of that com-

tion of

modity in the home market only sixpence the bushel, or four ings the quarter, higher than

actual state of the crop.

the great

body

it

Even upon

this

of the people, over

which pays the bounty of

shill-

otherways would have been in the

very moderate supposition,^

and above contributing the tax

upon every quarter of wheat four shillings upon every quarter

five shillings

exported, must pay another of

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 consumed at home,

more than that of one fore,

to thirty-one.® For every

which they contribute

must contribute

six

to the

pounds four

payment first

payment

some augmentation

to that in the

it

life, must must occa-

in their pecuniary wages, proportionable

pecuniary price of their subsistence. So far as

ates in the one way,

has been thought by

it

must reduce the

many

of the

necessary of

either reduce the subsistence of the labouring poor, or

sion

not

of the first tax, they

shillings to the

second. So very heavy a tax upon the

is

five shillings, there-

people, that

by

it

oper-

ability of the labouring

poor

securing to the farmer a better

it tends to encourage tillage; and that the consequent increase of corn may, in a long period of years, lower its price more than the bounty can raise it in the actual state which tillage may at the end of that period happen to be in.” The alteration is given in Additions and Corrections. The next two paragraphs appear first in Additions and Corrections and ed. 3. ’ It is really anything but a moderate supposition. It is not at all Hkely that the increase of demand caused by the offer of a bounty on exportation would raise the price of a commodity to the extent of four-fifths of the bounty.

price than he could otherwise expect in the actual state of tillage,

®

C. Smith, Three Tracts on the Corn Trade^ 2nd

ed., p. 144.

THE WEALTH OF NATIONS

476

and bring up

to educate

and must, so

their children,

restrain the population of the country.

So

far as

it

far,

tend to

operates in the

reduce the ability of the employers of the poor, to

other, it must employ so great a number as they otherwise might do, and must, so far,

tend to restrain the industry of the country.

exportation of corn, therefore, occasioned in every particular year, diminishes the

The

extraordinary

by the bounty, not

home, just as

only,

much

as

it

extends the foreign market and consumption, but, by restraining the population and industry of the country,

its final

tendency

is

to

home market; and

stunt and restrain the gradual extension of the

thereby, in the long run, rather to diminish, than to augment, the

whole market and consumption of corn. The enhance-

ment

of

price

would encourage

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.®

might be the case

I answer, that this

was

if

to raise the real price of corn, or to enable the farmer, with

production

if it

was an enhance-

ment

equal quantity of

it,

to maintain a greater

number

an

of labourers in

the same manner, whether liberal, moderate, or scanty, that other

labourers are

in his neighbourhood.

commonly maintained

But

of

real price,

neither the bounty,

but it is

can have any such

not;

And though

the whole

only a degradation of

it is

the value of silver,

it is

body

evident, nor

effect. It is

of corn, which can in

bounty.^®

regulates

any other human

institution,

not the real, but the nominal price

any considerable degree be

affected

by the upon

the tax which that institution imposes

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 exchange for a smaller quantity, not only of corn, but

quantity of

it

of all other

home-made commodities:

regulates that of all other for corn

the

the effect of the bounty

It regulates the

money

home-made

for the

money

price of corn

commodities.

price of labour, which

must always be

such as to enable the labourer to purchase a quantity of corn suf-

money

price of

ficient to

labour,

erate, or

maintain him and his family either in the

liberal,

mod-

scanty manner in which the advancing, stationary or de-

®This and the preceding paragraph are not in eds.

i

and

2.

See above, p.

474, note 6.

See above, pp. 30-38. [ft does not occur to Smith that the additional corn might require greater labour to produce it than an equal quantity of the old. In place of this and the preceding sentence eds. i and 2 read only “It is not the real but the nominal price of corn only which can be at all affected by the bounty.” The alteration is given in Additions and Corrections. “ “Home-made” here and in the line above is not in eds. i and 2.

BOUNTIES

477

dining 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 ferent in different periods. It regulates, for example, the price of grass

and hay,

of butcher’s meat, of horses,

of

all

rude

produce,

is dif-

money

and the main-

tenance ot horses, of land carriage consequently, or of the greater part of the inland commerce of the country.

By

money

regulating the

produce of land, manufactures.

it

price of all the other parts of the rude

regulates that of the materials of almost

all

By regulating the money price of labour, it regulates And by regulating both, it

and of almost

all

manufactures.

that of manufacturing art and industry.

regulates that of the complete manufacture.

labour,

and

labour,

must

of every thing that

is

The money

price of

the produce either of land or

necessarily either rise or fall in proportion to the

money price of corn. Though in consequence should be enabled to

of the bounty, therefore, the farmer

sell his

corn for four shillings the bushel in-

stead of three and sixpence, and to

proportionable to this

rise in

the

pay

his landlord

money price

a money rent

of his produce; yet

if,

in consequence of this rise in the price of corn, four shillings will

purchase no more home-made three

goods of any other kind than

and sixpence would have done

before, neither the circum-

So farmers and landlords are not benefited

by the increased price

due

to the

bounty,

stances of the farmer, nor those of the landlord, will be

much

mended by this change. The farmer will not be able to cultivate much better: the landlord will not be able to live much^® better. In the purchase of foreign commodities this enhancement in the price of corn

may

give

home-made commodities

them some it

little

advantage. In that of

can give them none at

all.

And

almost

the whole expence of the farmer, and the far greater part even of that of the landlord,

That

is

in

home-made

commodities.^'^

degradation in the value of silver which

fertility of the

is

the effect of the

mines, and which operates equally, or very near

equally, through the greater part of the commercial world,

matter of very

little

consequence to any particular country.

is

a

The

is not in eds. i and 2 ” and 2 do not contain “home-made Eds. I and 2 read “in the smallest degree.” Neither “much” is in eds. i and 2. This and the two preceding sentences from “in the purchase” appear first in Additions and Corrections (which reads “of even” instead of “even of”) and ed. 3

“Almost”

Eds.

I

A worldwide degradation of the

value of

THE WEALTH OF NATIONS

47S silver is

of

little

conse-

quence,

consequent

who

A

money

rise of all

prices,

receive them really richer, does not

service of plate

discour-

ages the

it

does not

make them

really cheaper,

becomes

remains precisely of the same but degradation confined to one country

though

make

those

really poorer.

and every thing

else

real value as before.

in the value of silver which, being the effect

But that degradation

either of the peculiar situation, or of the political institutions of

particular country, takes place only in that country,

is

a

a matter of

make any body poorer. The rise in

very great consequence, which, far from tending to really richer, tends to

money

make every body

really

price of all commodities, which

is

in this case peculiar

industry

the

of that

to that country, tends to discourage more or less every sort of industry which is carried on within it, and to enable foreign nations,

country.

by

furnishing almost

silver

than

its

all sorts

of goods for a smaller quantity of

own workmen can afford to do, to undersell them, not home market.

only in the foreign, but even in the In Spain and Por-

It is the peculiar situation of

Spain and Portugal as proprietors

of the mines, to be the distributors of gold

and

silver to all the

ugal gold

and silver

other countries of Europe. Those metals ought naturally, there-

are natur-

fore, to

ally

cheaper

than in the rest of

Europe,

be somewhat cheaper in Spain and Portugal than in any

other part of Europe.

The

difference,

however, should be no more

than the amount of the freight and insurance; and, on account of the great value and small bulk of those metals, their freight great matter,

and

their insurance is the

same

as that of

is

no

any other

goods of equal value. Spain and Portugal, therefore, could suffer very

from

little

by

disadvantages but by the hind-

their peculiar situation, if they did not aggravate its

their political institutions.

by

Spain by taxing, and Portugal gold and

silver,

prohibiting the exportation of

load that exportation with the expence of smug-

rances to

and

raise the value of those metals in other countries so

exporta-

gling,

tion they

much more above what

are made

this expence.^®

it is

in their own,

When you dam up

by

the whole

amount

of

a stream of water, as soon as the

still

cheaper.

dam is

much water must run over the dam-head as if there was no dam at all. The prohibition of exportation cannot detain a full,

as

and

greater quantity of gold

what they can their land gilding,

silver in

afford to employ, than

and labour

will allow

Spain and Portugal than

what the annual produce of

them

to

and other ornaments of gold and

got this quantity the in afterwards

“ Spain’s

dam

must run

is full,

over.

employ, in coin, plate, silver.

When

they have

and the whole stream which flows

The annual

exportation of gold and

and silver had only been abolwas 3 per cent, till 1768, then 4 per cent. See Raynal, Histoire pklosophique, Amsterdam ed 1773, tom iii pp. 290, 291. As to the export of gold from Portugal, see below, p. 513, note 3. prohibition of exportation of gold

ished at a recent period.

The

tax

,

BOUNTIES

479

from Spain and Portugal accordingly

silver

is,

by

accounts, not-

all

withstanding these restraints, very near equal to the whole annual

As the water, however, must always be deeper behind the dam-head than before it, so the quantity of gold and silver importation.

which these

restraints detain in Spain

and Portugal must, in proportion to the annual produce of their land and labour, be greater than what

to be found in other countries.

is

The

stronger the dam-head, the greater

must be the

depth of water behind and before

The

it.

the penalties with which the prohibition

and severe the

ilant

higher the tax, the higher is

guarded, the more vig-

which looks after the execution of the

must be the

law, the greater silver to the

police

higher and

difference in the

difference in the proportion of gold

and

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

thing, the dearness of all commodities,

silver,

which

is

or what

the

is

same

the necessary effect

redundancy of the precious metals, discourages both the agriculture and manufactures of Spain and Portugal, and enables of this

foreign nations to supply

almost

all sorts of

them with many

and with

sorts of rude,

manufactured produce, for a smaller quantity of

gold and silver than what they themselves can either raise or

them ways.

for at

home. The tax and prohibition operate in two

They not only

much but by

lower very

metals in Spain and Portugal,

make

different

the value of the precious detaining there

a

certain

quantity of those metals which would otherwise flow over other countries, they

keep up

what above what

it

their value in those other countries

otherwise would be, and thereby give those

countries a double advantage in their

Portugal.

Open

some-

commerce with Spain and

the flood-gates, and there will presently be less

dam -head, and

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 coun-

water above, and more below, the

tries,

and the value

a

level, in all.

will soon

of those metals, their proportion to the annual

produce of land and labour, to

it

The

loss

will

soon come to a

level, or

very near

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 expressed or represented

by a

fall,

and would be

smaller quantity of silver than be-

and

agri-

manufactures are

discour-

aged,

XHE wealth OF NATIONS

48o

would be the same as before, and would be sufficient to maintain, command, and employ, the same quantity of labour. As the nominal value of their goods would fall, the fore: but their real value

real value of

what remained of

their gold

and

silver

would

rise,

and

a smaller quantity of those metals would answer all the same purposes of commerce and circulation which had employed a greater quantity before. The gold and silver which would go abroad would not go abroad for nothing, but would bring back an equal value of goods of some kind or another. Those goods too would not be all matters of mere luxury and expence, to be consumed

by

idle

people

who produce nothing in return for their consumption. As the real wealtih and revenue of idle people would not be augmented by this extraordinary exportation of gold and silver, so neither would their consumption be much augmented by

it.

Those goods would, prob-

and certainly some part of them, and provisions, for the employment and

ably, the greater part of them, consist in materials, tools,

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

immediately be augmented a ably, be

augmented a great deal;

of their land

and

little,

in a

and labour would

few years would, prob-

their industry being thus relieved

from one of the most oppressive burdens which

it

at present labours

under.

The bounty upon

The corn

the exportation of corn necessarily operates

absurd policy of Spain and Portuacte fo^the

game way;

gab TOatever be the actual state of

somewhat dearer that state, and

age

money

Dutch

it

tillage, it

home market than

somewhat cheaper

more

it

a

little

and as the aver-

or less that of all other

in the other. It enables foreigners, the

in particular, not only to eat our corn cheaper

own people can do upon

the

own workmen from

tity of silver as

it

than they

cheaper than even our

same occasions; as we are assured by

excellent authority, that of Sir

our

renders our corn

otherwise would be in

lowers the value of silver considerably in the one,

to raise

otherwise could do, but sometimes to eat

an

it

in the foreign;

price of corn regulates

commodities,

and tends

in the

Matthew Decker.^®

It hinders

furnishing their goods for so small a quan-

they otherwise might do; and enables the Dutch to

furnish their^s for a smaller. It tends to render our manufactures

^ Essay on

the Carnes of the Decline of the Foreign Trade, consequentl Lands of Britain, and on the means to restore both, 2nd

the Value of the

1750, pp. 55 , 171

of

d

BOUNTIES

48x

somewhat dearer

in every market, and their’s somewhat cheaper than they otherwise would be, and consequently to give their industry a double advantage over our own.

The bounty,

as

it

raises in the

home market,

not so

much

the

it

discour

real, as the nominal price of our corn, as it augments, not the quantity of labour which a certain quantity of corn can maintain

ages

and employ, but only the quantity

without

for, it

which

it will

exchange

discourages our manufactures, without rendering

any con-

siderable service

of silver

either to our farmers or country gentlemen. It

more money into the pockets of both, and it will perhaps be somewhat difficult to persuade the greater part of them that this is not rendering them a very considerable service.^^ But if this money sinks in its value, in the quantity of labour, proputs, indeed,

visions, it is

a

little

and home-made

commodities of

capable of purchasing, as

be

service will

There

as

whom

all different

it rises

more than nominal

tures

much benefiting

farmers

and coun try gentle-

men

kinds which

in its quantity, the

and imaginary.

men

perhaps, but one set of

is,

wealth to

little

much

manufac-

in the

whole common-

the bounty either was or could be essentially ser-

It is es-

sentially

service-

viceable.^'’

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 another,

it

of one year

from

able only to the

com merchants.

relieving the scarcity of

occasioned in years of scarcity a greater importation

than would otherwise have been necessary. It increased the business of the corn merchant in both;

only enabled better price,

him

and consequently with a

otherwise have made, or less set of

and

in years of scarcity, it not

to import a greater quantity, but to sell

if

it

the plenty of one year had not been

hindered from relieving the scarcity of another. It

men, accordingly, that

I

for

a

greater profit than he could

is

more

in this

have observed the greatest zeal

for

the continuance or renewal of the bounty.

Our country gentlemen, when they imposed the high

duties

upon

the importation of foreign corn, which in times of moderate plenty

The country gentle-

amount

to

a prohibition, and when they established the bounty,

seem to have imitated the conduct of our manufacturers. By the one institution, they secured to themselves the monopoly of the home market, and by the other they endeavoured to prevent that market from ever being overstocked with their commodity. By both they

^ Eds. ^ Eds.

^

read “not the real but only the nominal price.” read “the smallest real service.” ” 2 read “a very real service Eds I 2. and i in not eds is “Home-made” Eds. I and 2 read “will be merely nominal.”

Eds.

and and and

2

I

I

and

2

I

2

read “could be really serviceable.”

men established the

duties

on

the importation

the wealth of nations

482

the same

manner as our

of corn,

endeavoured to raise

and the imitation

manufacturers had, by the like institutions, raised the real value of many different sorts of manufactured goods. They did not perhaps

of the

attend to the great and essential difference which nature has es-

bounty, in

manufacturers,

the monopoly of the

by

exportation,

sential

difference

between

their

home

goods for

you

those goods.

You

raise,

When,

linen manufacturers to sell

better price than they otherwise could

somewhat a

get for them,

sort of goods.

market, or by a bounty upon

you enable our woollen or

attending to the es-

and almost every other

tablished between corn either

without

its real value, in

not only the nominal, but the real price of

render them equivalent to a greater quantity of

com and

labour and subsistence, you increase not only the nominal, but the

other

real profit, the real wealth

goods.

you enable them

either

and revenue of those manufacturers, and to live better themselves, or to employ a

greater quantity of labour in those particular manufactures.

You

really encourage those manufactures, and direct towards them a

greater quantity of the industry of the country, than

probably go to them of

you

tutions

raise the

its

own

what would

But when by the

like insti-

nominal or money-price* of corn, you do not

You do

raise its real value.

accord.

not increase the real wealth, the real

revenue either of our farmers or country gentlemen.

You do

not

encourage the growth of com, because you do not enable them to

maintain and employ more labourers in raising

upon corn a

things has stamped

no monopoly of

which cannot be altered

its

competition cannot lower

it.

Through the world

equal to the quantity of labour which

is

it

in general that

can maintain, and

in every particular place it is equal to the quantity of labour it

can maintain in the way, whether

which labour

is

all

in that place.

ly measured

money

is.

The

real value of every other

and determined by the proportion which

price bears to the average

money

price,

pedients

its

price of corn.

is final-

average

The

its

real

average

which sometimes occur from one century to another.

It is the real value of silver All the ex-

and de-

commodity

value of corn does not vary with those variations in

money

Woollen or

by which the real

other commodities must be finally measured

termined; corn

which

moderate, or scanty, in

liberal,

commonly maintained

linen cloth are not the regulating commodities

value of

of

money price.^® No bounty upon exportation, the home market, can raise that value,^^ The freest

by merely altering

value

real value

The nature

it.

which varies with them.

Bounties upon the exportation of any home-made commodity are liable, first, to that

^ Eds. Cp.

I

and

2

general objection which

read

real value

p. 476.

^ Ed.

I

reads “raise

it.”

may be made

which no human

to all the

institution can alter.”

BOUNTIES

4S3

different expedients of the mercantile system; the objection of forc-

ing

some part

of the industry of the country into a channel less ad-

of the

mercantile

vantageous than that in which

would run

it

of its

secondly, to the particular objection of forcing

channel that

of

;

it,

accord: and,

not only into a

advantageous, but into one that

is less

advantageous

own

necessarily a losing trade.

actually dis-

by means The bounty upon the

is liable to this further objection, that it can in promote the raising of that particular commodity of no respect which it was meant to encourage the production. When our country

gentlemen, therefore, demanded the establishment of the bounty,

ers,

in imitation of our

merchants and manufactur-

they did not act with that complete comprehension of their

own interest which commonly directs the conduct of those two other orders of people. They loaded the public revenue with a very considerable expence; they imposed

a very heavy tax upon the whole

body of the people; but they did the real value of their

crease

somewhat the

advantageous channels:

bounties

exportation of corn

though they acted

industry into less

is

the trade which cannot be carried on but

a bounty being

sys-

tem force

not, in

any

sensible degree, in-

own commodity; and by lowering

real value of silver, they discouraged, in

on exports force it into actually dis-

advantageous channels:

the

bounty on corn does not encourage its production.

some de-

gree, the general industry of the country, and, instead of advancing,

more

retarded

or less the improvement of their

necessarily depends

To

upon the general industry

own

lands,

which

of the country.

encourage the production of any commodity, a bounty upon

production, one should imagine, would have a more direct operation,

tax

than one upon exportation. It would, besides, impose only one

upon the people, that which they must contribute in order to raising, it would tend to lower the price

pay the bounty. Instead of

commodity in the home market; and thereby, instead of imposing a second tax upon the people, it might, at least in part, repay them for what they had contributed to the first. Bounties upon production, however, have been very rarely granted.^^ The prejudices of the

established

by

the commercial system have taught us to believe,

that national wealth arises more immediately from exportation than

from production.

It has

more immediate means

of bringing

money

into the country.

Boun-

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 I

and

2

read “They loaded the public revenue with a very consid-

erable expence, but they did not in

any

respect increase.”

The

alteration

is

given in Additions and Corrections. ®In place of this and the two preceding sentences (beginning “It would besides”) eds. i and 2 read only “It has, however, been more rarely granted.”

The

alteration

is

duction

would be more effectual

than one

on exportation

and

would lower the price of

the

com-

modity,

been more favoured accordingly, as the

ties

® Eds.

A bounty on pro-

given in Additions and Corrections.

but such bounties have been rare,

owing to the inter-

484

the wealth of HATION£j

been abused to

many

merchants

and manufacturers.

is

very well known. But

not the interest of merchants and manufacturers, the great in-

it is

est of

fraudulent purposes,

home market should be overstocked with their goods, an event which a bounty upon production might sometimes occasion. A bounty upon exportation, by enabling them to send abroad the surplus part, and to keep up the price of what remains in the home market, effectually prevents this. Of all the expedients of the mercantile system, accordingly, it is the one of which they are the fondest. 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 exportaventors of

all

these expedients, that the

tion of a certain proportion of the goods which they dealt in. This

expedient succeeded so well, that

it

more than doubled the price of

goods in the home market, notwithstanding a very consider-

their

able increase in the produce.

The

operation of the bounty upon

corn must have been wonderfully different,

money The herring

and

whale fishery

bounties are in part given on

production.

price of that

Something

like

has lowered the

a bounty upon production, however, has been

granted upon some particular occasions. given

if it

commodity.

The tonnage

bounties

and whale-fisheries may, perhaps, be

to the white-herring

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

em-

ployed in bringing goods to market, of which the price does not re-

pay the They

are

supposed to aug-

ment the number of sailors

and ships.

cost, together

with the ordinary profits of stock.

But though the tonnage

bounties to those fisheries do not con-

tribute to the opulence of the nation, it

that they contribute to its defence,^^ its sailors

and shipping. This,

it

may

may

perhaps be thought

by augmenting be alleged,

the

may

number

of

sometimes be

by means of such bounties at a much smaller expence, than by keeping up a great standing navy, if I may use such an expression,^® in the same way as a standing army.®^

done

^ Eds.

I and 2 read “The encouragements given.” ®^The whale fisheiy bounty under ii Geo III c. 38, was 40s. per ton for , the first five years, 30s. for the second five years, and 20s. for the third. ^ “It may be supposed” is not in eds. i and 2 Eds. I and 2 read “would be in the actual state of production.” “It must be acknowledged” is not in eds i and 2. “Tonnage” is not in eds. i and 2 Eds. I and 2 read “they may perhaps be defended as conducing to its de-

fence

”

Eds.

Eds

The

read “This may frequently be done.” read “in time of peace” here. next four pages, to page 489 line 17? are not in eds. I

I

and and

2

2

i

and

2,

which read

BOUNTIES Notwithstanding these favourable

me

lowing considerations dispose

4^5

allegations, however, the fol-

to believe, that in granting at

one of these bounties, the legislature has been very grossly imposed upon. least

First, the herring buss

From

the

bounty seems too

commencement

end

of the winter fishing 1781, the tonnage bounty

buss fishery has been at thirty shillings the ton.

upon the herring During these eleven

years the whole number of barrels caught

the herring buss fish-

ery of Scotland amounted to

herrings caught

by 373 347 The -

cured at sea, are called sea sticks

In order

are called merchantable herrings,

with an additional quantity of

it is

salt;

and

to render

and

them what

necessary to repack them 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 merchant-

able herrings, therefore, caught during these eleven years, will

amount

only, according to this account, to 252,2311.

During these

eleven years the tonnage bounties paid amounted to 155,463/. ii^.

upon every

or to 8^.

upon every

The Scotch,

and to

with which these herrings are cured,

and sometimes

of all excise salt is at

barrel of sea sticks,

12^. 3fc?.

barrel of merchantable herrings.

salt

duty

present

is

sometimes

foreign salt; both which are delivered free

to the fish-curers.

6 d. that

is.

upon

The

excise duty

upon Scotch

foreign salt lo^. the bushel,

barrel of herrings is supposed to require about one bushel

fourth of a bushel foreign

age of Scotch

salt. If

part of this duty

is

salt.

Two

and one-

bushels are the supposed aver-

if

entered for

home consumption,

whether the herrings were cured with foreign or with Scotch only one shilling the barrel

upon a bushel

been supposed necessary curing of

fish.

is

is

very

for curing little

salt,

paid up. It was the old Scotch duty

of salt, the quantity which, at

land, foreign salt

A

the herrings are entered for exportation, no

paid up;

a low estimation, had

a barrel of herrings. In Scot-

used for any other purpose but the

But from the 5th April 1771, to the 5th April 1782,

them: “Some other bounties may be vindicated perhaps upon the importance that the kingdom should depend as little as possible upon its neighbours for the manufactures necessary for its defence ; and if these cannot otherwise be maintained at home, it is reasonable that all other branches of industry should be taxed in order to support them. The bounties upon the importation of naval stores from America, upon British made sail-cloth, and upon British made gunpowder, may perhaps all three be vindicated upon this principle. The first is a bounty upon the production of America, for the use of Great Britain, The two others are bounties upon exportation.” The new paragraphs, with the two preceding paragraphs as in place of

same

bounties Parlia-

ment has large.

of the winter fishing 1771 to the

,

In granting the herring

principle. It is of

amended, are given in Additions and Corrections. In Additions and Corrections the term is “seasteeks,”

as in the

Appendix.

been imposed on, since (i)

the herring buss

bounty is too large,

the wealth oe nations

486

the quantity of foreign salt imported at eighty-four livered

pounds the bushel: the quantity of Scotch salt defish-curers, to no more than 168,226,

pounds the bushel only.

principally foreign salt that

barrel of herrings exported there

more than two-thirds all

to 936,974 bushels,

from the works to the

at fifty-six it is

amounted

is

It

would appear,

used in the

is,

besides,

therefore, that

fisheries.

Upon every

a bounty of

2s.

M. and

of the buss caught herrings are exported.

Put

these things together, and you will find that, during these eleven

years, every barrel of buss caught herrings, cured with Scotch salt

and when entered when exported, has cost government 17L for home consumption 145. 3fc?.: and that every barrel cured with foreign salt, when exported, has cost government iL js. 5|d.; and The price of a barwhen entered for home consumption iL rel of good merchantable herrings runs from seventeen and eighteen to four

and

five

and twenty

about a guinea at an av-

shillings;

erage."*^

Secondly, the bounty to the white herring fishery

(2) the

bounty is

bounty; and

not proportioned

diligence or success in the fishery;

to the fish

caught,

too

common

not the

fish,

is

a tonnage

proportioned to the burden of the ship, not to her

is

for vessels to

fit

and

it

am

has, I

afraid,

been

out for the sole purpose of catching,

but the bounty. In the year

1 7 59,

when the bounty was

at fifty shillings the ton, the whole buss fishery of Scotland brought in only four barrels of sea sticks. In that year each barrel of sea sticks cost

government

in bounties alone 113^. 15^.; each barrel of

merchantable herrings 159/. Thirdly, the

(3) the

bounty

is

given to

mode

75.

6 d.

of fishing for

which this tonnage bounty in the

white herring fishery has been given (by busses or decked vessels

busses,

from twenty to eighty tons burthen), seems not so well adapted to

whereas

the situation of Scotland as to that of Holland; from the practice of

the fishery

which country

it

appears to have been borrowed. Holland

ought to be carried

great distance from the seas to which herrings are

on by

ly to resort;

and can,

therefore, carry

lies at

a

known principal-

on that fishery only in decked

boats,

vessels,

which can carry water and provisions

sufficient for

a voy-

age to a distant sea. But the Hebrides or western islands, the islands

and the northern and north-western coasts of Scotland, the countries in whose neighbourhood the herring fishery is of Shetland,

principally carried on, are everywhere intersected sea,

which run up a considerable way into

by arms of the the land, and which, in

the language of the country, are called sea-lochs. It

is

to these sea-

lochs that the herrings principally resort during the seasons in

which they

visit

those seas; for the visits of this, and, I

am assured,

^ See the accounts at the end of the volume In Additions and Corrections they are printed in the text.

BOUNTIES

4S7

of many other sorts of fish, are not quite regular and constant. A boat fishery, therefore, seems to be the mode of fishing best adapt-

ed to the peculiar situation of Scotland: the

fishers carrying the

herrings on shore, as fast as they are taken, to be either cured or

consumed

But the great encouragement which a bounty

fresh.

thirty shillings the ton gives to the buss fishery,

couragement to the boat cannot bring buss

its

fishery; which,

necessarily a dis-

having no such bounty,

cured fish to market upon the same terms as the

The boat fishery,

fishery.

is

of

accordingly, which, before the estab-

lishment 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 ery, I

must acknowledge,

now ruined and abandoned fishmuch

that I cannot pretend to speak with

As no bounty was paid upon the outfit of the boat-fishery, no account was talcen of it by the officers of the customs or salt

precision.

duties.

Fourthly, in

many

parts of Scotland, during certain seasons of

the year, herrings malce 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.

good purpose.

But the herring buss bounty contributes It

best adapted for tional

bounty of

greater part,

to

no such

by far, the the supply of the home market, and the addi2^. M. the barrel upon exportation, carries the

has ruined the boat fishery, which

more than two

thirds, of the

is,

produce of the buss

fish-

ery abroad. Between thirty and forty years ago, before the estab-

lishment of the buss bounty, sixteen shillings the barrel, I have been assured,

was the common

price of white herrings.

Between ten and

fifteen years ago, before the boat fishery was entirely ruined, the

price is said to have run from seventeen to twenty shillings the bar-

an average, been at twentyfive 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 rel.

For these

last five years, it has, at

sold with the herrings,

and

of

foregoing prices, has, since

war, risen to about double shillings to

about

which the price

is

included in

the commencement its

of the

all

the

American

former price, or from about three

six shillings. I

must

likewise observe, that the

accounts I have received of the prices of former times, have been

by

no means quite uniform and consistent; and an old man of great accuracy and experience has assured me, that more than fifty years

(4) the

bounty has raised, or at any rate not

lowered,

the price of herrings.

XHE WEALTH OP NATIONS

488 agOj a guinea

was the usual

and

herrings;

imagine,

this, I

good merchantable

price of a barrel of

may still be looked upon as

the aver-

age price. All accounts, however, I think, agree, that the price has not been lowered in the home market, in consequence of the buss bounty.

When

Profits in

the busi-

ness have

not been high.

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

not improbable that those of some individuals

it is

been

so.

may have

every reason to believe,

In general, however, I have

have been quite otherwise. The usual

effect of

such bounties

they is

to

encourage rash undertakers to adventure in a business which they

do not understand, and what they lose by their own negligence and ignorance,

most

more than compensates

liberality of

all

that they can gain

by the

government. In 1750, by the same act which

ut-

first

gave the bounty of thirty shillings the ton for the encouragement of the white herring fishery (the 23 Geo. II. chap. 24.), a joint stock

company was

erected, with

a capital of

hundred thousand

five

pounds, to which the subscribers (over and above agements, the tonnage bounty just

bounty of two

and eight pence the

shillings

all

now mentioned,

other encour-

the exportation

barrel, the delivery of

both British and foreign salt duty free) were, during the space of fourteen years, for every hundred pounds which they subscribed into the stock of the society, entitled to three

pounds a

be paid by the receiver-general of the customs

in equal

and paid year, to

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 outports of the kingdom, provided a

sum

not less than ten thousand

pounds was subscribed into the capital of each,

own

its

the

risk,

and

for its

own profit and

same encouragements

be managed at

The same

annuity,

and

of all kinds, were given to the trade of

those inferior chambers, scription of the great

loss.

to

to that of the great

company was soon

filled

company. The subup, and several dif-

ferent fishing-chambers were erected in the different out-ports of

the kingdom. In spite of different companies,

all

these encouragements, almost all those

both great and small, lost either the whole, or

the greater part of their capitals; scarce a vestige

any of them, and the white herring entirely, carried

Bounties

bimanu-

If

any

fishery

is

now remains

now entirely,

of

or almost

on by private adventurers.

particular manufacture

defence of the society,

it

was necessary, indeed,

for the

might not always be prudent to depend

BOUNTIES upon our neighbours

for the supply;

and

not otherwise be supported at home,

it

489 if

such manufacture could

might not be unreasonable

that all the other branches of industry should be taxed in order to

support cloth,

The bounties upon

it.

the exportation of British-made

sail-

and British-made gun-powder, may, perhaps, both be upon this principle.

of the great

it

vin-

of the people, in order to support that of

some

particular class of manufacturers; yet in the wantonness of great prosperity,

well

the public enjoys a greater revenue than

it

defence of the

are not

knows

able

It is less

absurd to give bounties

what

tures,

when

for the

unreason-

can very seldom be reasonable to tax the industry

body

necessary

country

dicated

But though

factures

to

do with, to give such bounties

may, perhaps, be as natural, as

manufac-

to favourite

to incur

any other

idle ex-

pence. In public, as well as in private expences, great wealth may,

perhaps, frequently be admitted as an apology for great there must surely be something

folly.

But

more than ordinary absurdity,

in

in times

of prosperity

than in times of distress

continuing such profusion in times of general difficulty and distress.'^^

What

is

bounty

called a

and consequently

is

is

sometimes no more than a drawback,

not liable to the same objections as what

Some allowances

is

called

properly a bounty. exported,

may

The bounty,

for example,

upon

refined sugar

be considered as a drawback of the duties

upon

the

brown and muscovado sugars from which it is made. The bounty silk exported, a drawback of the duties upon raw and

bounties are,

prop-

erly

speaking,

upon wrought

draw-

thrown

backs.

silk

imported.

drawback of the

The bounty upon gunpowder upon brimstone and

duties

exported, a

saltpetre imported. In

the language of the customs those allowances only are called draw-

backs, 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

excel in their particular occupations, are not liable to the

objections as bounties.

who

same

up

the emulation of the

workmen

actually employed in those respective occupations, and are not considerable enough to turn towards

any one

of the capital of the country than

accord. Their tendency

is

of

what would go

The

greater share

to it of its

own

ten paragraphs ending here are not in eds.

I and 2 read “When that form has been any kind, they are called bounties.”

and manufacturers do not divert industry to less

advantageous

not to overturn the natural balance of

employments, but to render the work which

note 39, Eds.

them a

successful artists

By encouraging extraordinary dexterity and

ingenuity, they serve to keep

Prizesto

is

i

done in each as per-

and

altered

2.

See above, p. 484,

by manufacture of

channels,

but en-

the wealth of NATIONS

490

The expence

courage

feet

perfec-

very trifling; that of bounties very great.

and complete as

possible.

of premiums, besides,

is

The bounty upon corn

tion.

alone has sometimes cost the public in one year more than three

hundred thousand pounds.^^ Bounties are sometimes called premiums, as drawbacks are sometimes called bounties. But of the thing, without

we must

in all cases attend to the nature

paying any regard to the word.

Laws

Digression concerning the Corn Trade and Corn

CANNOT conclude

The com

I

bounty and corn laws are

serving that the praises which have been bestowed

undeserving of praise

without ob-

this chapter concerning bounties,

upon the law

which establishes the bounty upon the exportation of corn, and upon that system of regulations which is connected with it, are altogether unmerited.

A particular examination of the nature of the

corn trade, and of the principal British laws which relate to sufficiently demonstrate the truth of this assertion.

The

will

it,

great im-

portance of this subject must justify the length of the digression. four

trade of the corn merchant

The

There are

branches, which, though they

branches of the corn trade:

same person, are

the

These

trades.

in their

may

own

composed of four

sometimes be

different

carried on

all

by

nature four separate and distinct

are, first, the trade of the inland dealer; secondly,

that of the merchant importer for of the

is

home consumption;

thirdly, that

merchant exporter of home produce for foreign consumption;

and, fourthly, that of the merchant carrier, or of the importer of

corn in order to export

I The Inland Dealer,

The

again.

interest of the inland dealer,

of the people,

how

and that

opposite soever they

may

body

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

same

are,

of the great

at first sight appear,

whose

interest is

I.

it

as

that of

the season requires, and

By raising

er.

people,

every body more or

^;iz.,that

the con-

ple,

upon

it

can never be his interest to raise

the price he discourages the consumption,

the

thrift

less,

it

high-

and puts

but particularly the inferior ranks of peo-

and good management.

If,

by

raising

it

too high,

sumption should be propor-

he discourages the consumption so much that the supply of the

tioned to

last for

the supply

hazard, not only of losing a considerable part of his corn

available.

season

is

likely to

some time

go beyond the consumption of the season, and to after the next crop begins to

causes, but of being obliged to sell

than what he might have had for

come

what remains it

several

of

he runs the

in,

it

by natural

for

much

months before.

If

less

by

not raising the price high enough he discourages the consumption "Above,

vol.

i

,

p. 199.

^®This heading

is

not in ed

i.

DIGRESSION ON THE CORN TRADE SO

that the supply of the season

little,

consumption

is

49i

likely to fall short of the

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

the interest of the

is

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

knowledge of the state of the crop, and of his daily, weekly, and monthly sales, enable him to judge, with more or less accurhis

acy,

how

far they really are supplied in this manner.

tending the interest of the people, he to his

own

much

in the

interest, to treat

necessarily led,

is

in-

by a regard

them, even in years of scarcity, pretty

same manner as the prudent master

times obliged to treat his crew. likely to

Without

of

a vessel

is

some-

When he foresees that provisions are

run short, he puts them upon short allowance. Though

from excess of caution he should sometimes do real necessity, yet all the inconveniencies

this

without any

which his crew can

thereby suffer are inconsiderable, in comparison of the danger, misery,

and

ruin, to

which they might sometimes be exposed by a

less

provident conduct. Though from excess of avarice, in the same

manner, the inland corn merchant should sometimes of his

corn somewhat higher than the

quires, yet all the inconveniencies this conduct,

which

most by it

it.

to

by a more liberal way

The corn merchant

himself

this excess of avarice; not only

from

in the

what they

of dealing in the

likely to suffer the

is

from the indignation which

generally excites against him, but, though he should escape the

effects of this indignation,

sarily leaves if

suffer

them from a famine

inconsiderable, in comparison of

might have been exposed beginning of

scarcity of the season re-

which the people can

effectually secures

end of the season, are

raise the price

upon

his

from the quantity of corn which

hands

in the

end

it

neces-

and which,

of the season,

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

possess themselves of the whole crop of an extensive country,

might, perhaps, be their interest to deal with

it

as the

to

Dutch are

said to do with the spicferies of the Moluccas, to destroy or throw

away a

considerable part of

Not a misprint of the crop

it,

in order to keep

for “enables ” There are

and the other of the

daily sales.

up the

price of the

two knowledges, one

Theinter-

it

of the state

poiy

might

the wealth of nations

492 destroy a portion of the crop,

but corn cannot be

monopolised

rest.^'^

But

it

is

by

scarce possible, even

the violence of law, to

establish such an extensive monopoly with regard to corn; and,

commodities the

free, it is of all

wherever the law leaves the trade

be engrossed or monopolized by the force of a few large capitals, which buy up the greater part of it. Not only its least liable to

men

where the

value far exceeds what the capitals of a few private

trade is

able of purchasing, but supposing they were capable of purchasing it, the manner in which it is produced renders this purchase alto-

free.

gether impracticable.

As

in every civilized country

it is

are cap-

the com-

modity 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. the ground too,

necessarily divided

it is

When

among a

it first

comes from

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

the country. These

first

all

the different corners of

owners either immediately supply the con-

sumers in their own neighbourhood, or they supply other inland

who supply

dealers

more numerous than the dealers dispersed situation renders

any

of

it

in

them should

hand than,

inland dealers in corn,

and the baker, are necessarily

any other commodity, and

altogether impossible for

any general combination.

ter into

The

those consumers.

therefore, including both the farmer

If in

a year

had a good

find that he

more corn upon

deal

he could hope to dispose of before

at the current price

own loss, and

to the sole benefit of his rivals

but would immediately lower fore the

it,

this price

in.

The same

motives, the

same

which would thus regulate the conduct of any one dealer,

would regulate that of every other, and oblige them sell their

up

and competitors,

in order to get rid of his corn be-

new crop began to come

interests,

their

to en-

of scarcity therefore,

the end of the season, he would never think of keeping to his

them

all in

general to

corn at a price which, according to the best of their judg-

ment, was most suitable to the scarcity or plenty of the season. Dearths are never

Whoever examines, with famines which have

attention, lie history of the dearths

afflicted

any part

and

of Europe, during either the

occa-

sioned by

combination, but always by

course of the present or that of the two preceding centuries, of several of

which we have pretty exact accounts,

that a dearth never has arisen from

will find, I believe,

any combination among the

any other cause but a

scarcity,

inland dealers in corn, nor from

and fa-

occasioned sometimes, perhaps, and in some particular places,

mines are always

the waste of war, but in

caused by

fault of the seasons;

by

far the greatest

number

real scarcity,

of cases,

by

by the

and that a famine has never arisen from any Above, p. 158; below, p. 600.

DIGRESSION ON THE CORN TRADE other cause but the violence of government attempting,

remedy the inconveniencies

er means, to

of

In an extensive corn country, between

which there casioned

by

by improp-

remedies

the different parts of

all

a free commerce and communication, the scarcity oc-

is

the most unfavourable seasons can never be so great as if

managed with

and oeconomy, will maintain, through the number of people that are commonly fed in a more

gality

of moderate plenty.

The

the sup-

posed

a dearth.

to produce a famine; and the scantiest crop,

by one

493

fru-

same manner

for

dearths applied

by

govern-

ment

year, the affluent

seasons most unfavourable to the

crop are those of excessive drought or excessive rain. But, as corn

Scarcities

are never great

enough to cause

grows equally upon high and low lands, upon grounds that are disposed to be too wet, and upon those that are disposed to be too dry, either the drought or the rain

country

is

which

hurtful to one part of the

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 prop-

erly tempered, yet in both what in

is

is lost

in one part of the country

some measure compensated by what

rice countries,

but where

in

is

countries, however, the drought

growing

its

The drought

must be

dismal.

laid

Even

soil,

under

in such

perhaps, scarce ever so univerif

the government would

in Bengal,

a few years ago, might

necessarily to occasion a famine,

allow a free trade.

it

much more

is,

is

gained in the other. In

where the crop not only requires a very moist

a certain period of

water, the effects of a drought are

sal, as

famine

probably have occasioned a very great dearth. Some improper regulations,

some

injudicious restraints imposed

East India Company upon the

by the

servants of the

rice trade, contributed, perhaps, to

turn that dearth into a famine.

When the government, dearth, orders

a reasonable ket,

the dealers to

all

price,

which may

it

remedy the inconveniencies

in order to

corn at what them from bringing

sell their

either hinders

it

of

supposes

cause it

to mar-

sometimes produce a famine even in the beginning

of the season; or

if

they bring

it

thither, it enables the people,

thereby encourages them to consume

it

Governments

and

so fast, as must necessarily

produce a famine before the end of the season. The unlimited, un-

famines

by ordering corn to be sold at a rea-

sonable price.

restrained freedom of the corn trade, as

it is

ventative of the miseries of a famine, so

the only effectual pre-

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.

deserves more the it

so

full

No

trade

protection of the law, and no trade requires

much because no

trade

is

so

much exposed

to popular odium.

;

In years of

scarcity, the inferior ranks of people

distress to the avarice of the corn merchant,

impute their

who becomes

the ob-

The corn merchant is

ject of their hatred

and

indignation. Instead of

making

profit

upon

odious

THE WEALTH OF NATIONS

494 to the

populace,

such occasions, therefore, he

is

often in danger of 'being utterly

and of having his magazines plundered and destroyed by

ruined,

their violence. It is in years of scarcity, however,

high, that the corn

He

merchant expects to make

generally in contract with

is

certain price.

number

some farmers

when

prices are

his principal profit.

to furnish

him

for

a

of years with a certain quantity of corn at a certain

This contract price

is settled

according to what

be the moderate and reasonable, that

is,

is

supposed to

the ordinary or average

price, which, before the late years of scarcity,

was commonly about

eight-and-twenty shillings for the quarter of wheat, and for that of other grain in proportion. In years of scarcity, therefore, the corn

merchant buys a great part of his corn sells it for

a much higher. That

no more than trades,

sufficient to

put his trade upon a

and to compensate the many

losses

is

with other

which he sustains upon

commodity

itself,

and from the frequent and unforeseen fluctuations of

price,

seems evident enough, from this single circumstance, that

and this

made in this as The popular odium, however, which attends it

deters re-

the only years in which

great fortunes are as seldom

people

however,

fair level

other occasions, both from the perishable nature of the

spectable

and

for the ordinary price,

this extraordinary profit,

it

can be very

from entering the

tors,

together with

and

it.

millers, bakers,

a number

any other

trade.

in years of scarcity,

profitable, renders people of

character and fortune averse to enter into inferior set of dealers;

in

its

It is

abandoned to an

mealmen, and meal fac-

of wretched hucksters, are almost the

trade.

only middle people that, in the

home market, come between

the

grower and the consumer. This popular

odium was encouraged

by legislation.

The

ancient policy of Europe, instead of discountenancing this

popular odium against a trade so beneficial to the public, seems, the contrary, to have authorised

By the

5th and 6th of

and encouraged

Edward VI.

cap. 14.

whoever should buy any corn or grain

it

was enacted. That

with intent to

sell it

again,

should be reputed an unlawful engrosser, and should, for the fault suffer

two months imprisonment, and

corn; for the second, suffer six

or*

it.

forfeit the

first

value of the

months imprisonment, and

forfeit

double the value; and for the third, be set in the pillory, suffer im-

prisonment during the king^s pleasure, and chattels.

The

forfeit all his

goods and

ancient policy of most other parts of Europe

was no

better than that of England.

Many restraints

Our their

ancestors seem to have imagined that the people

com

^ “Any fish

would buy

cheaper of the farmer than of the corn merchant, who,

corn growing in the fields, or any other corn or grain, butter, cheese, or other dead victuals whatsoever.” But grain was exempted when below

certain prices, e.g., wheat, 6s. 8d. the quarter.

DIGRESSION ON THE CORN TRADE

495

they were afraid, would require, over and above the price which he paid to the farmer, an exorbitant profit to himself. ed, therefore, to annihilate his trade altogether.

oured to hinder as

much

the trade of those

whom

They endeavourThey even endeav-

were imposed on traders.

any middle man of any kind from coming in between the grower and the consumer; and this was the 'meaning of the many restraints which they imposed upon as possible

they called kidders or carriers of corn, a

nobody was allowed to

trade which

certaining his qualifications as a

exercise without

man

of probity

and

a

licence as-

fair dealing.^^

The authority of three justices of the peace was, by the statute of Edward VI. necesspy, in order to grant this licence. But even this restraint was afterwards thought insufficient, and by a statute of Elizabeth,^^ the privilege of granting

was confined

it

to the quarter-

sessions.

The

ancient policy of Europe endeavoured in this manner to reg-

ulate agriculture, the great trade of the country, different

from those which

it

by maxims

quite

established with regard to manufac-

tures, the great trade of the towns.

By leaving the

farmer no other

customers but either the consumers or their immediate factors,®^

and

the kidders

carriers of corn,

ercise the trade, not only of

corn retailer.

it

endeavoured to force him to ex-

a farmer, but

of a corn

merchant or

On the contrary, it in many cases prohibited

own goods by

retail. It

man-

meant by the one law to promote the

general interest of the country, or to render corn cheap, without,

perhaps, other

it

its

being well understood

meant

shopkeepers, turer, it

was

allowed to

how

this

was

to be done.

By the

to promote that of a particular order of men, the

who would be

so

much

undersold by the manufac-

supposed, that their trade would be ruined

if

he was

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 manu-

This and the preceding sentence are misleading. The effect of the proviwould have been to “annihilate altogether” the trade of the corn merchant if they had been left unqualified. To avoid this consequence S and 6 Ed. VI., c. 14, § 7, provides that badgers, laders, kidders or carriers may be licensed to buy corn with the intent to sell it again in certain circumstances. So that the licensing of kidders was a considerable alleviation, not, as the text suggests, an aggravation. sions quoted in the preceding paragraph

Eliz., c. 12, § 4.

I reads “the consumer or his immediate factors.” It should be noticed that under 5 and 6 Edward VI., c. 14, § 7, the kidder might sell in “open fair or market” as well as to consumers privately.

“Ed.

made to force the

farmers to

be retailers,

though manufacturers

the

ufacturer from exercising the trade of a shopkeeper, or from selling his

Endeavours were

were forbidden to

be so.

THE WEALTH OE NATIONS

496

facture. In order to carry

on

on a

his business

with that of

level

must have had the profit of a manufacturer on he must have had that of a shopkeeper upon the

other people, as he

the one

part, so

other. Let us suppose, for example, that in the particular

where he

per cent, was the ordinary profit both of

lived, ten

town

manu-

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 facturing

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. profit of his

he valued them lower, he

If

manufacturing capital.

his shop, unless he got the

have sold them, he tal.

profit of his

part of two distinct capitals, he

loser, or did

same advantage

What

made but a

he made

less

upon the than

this

not employ his whole capital with the

was prohibited

to do, the farmer

to do; to divide his capital between

keep one part of

ferent employments; to

employ the other

it

was

two

in his granaries

demands

stack yard, for supplying the occasional to

if

single profit

as the greater part of his neighbours.

the manufacturer

some measure enjoined

and

shopkeeping capi-

make a double profit upgoods made successively a

whole capital employed about them; and he was a

would

appear, therefore, to

on the same piece of goods, yet as these

profit,

a part of the

lost

again he sold them from

price at which a shopkeeper

a part of the

lost

Though he might

same

When

in

dif-

and

of the market:

in the cultivation of his land.

But as he

could not afford to employ the latter for less than the ordinary profits of

farming stock, so he could as

little

afford to

employ the

former for less than the ordinary profits of mercantile stock.

Whether the stock which

really carried

on the business of the corn

merchant belonged to the person who was called a farmer, or to the person

who was

called

a corn merchant, an equal

cases requisite, in order to indemnify its this

manner; in order to put

trades, it

and

owner

profit

for

was

in both

employing

it

in

upon a level with other him from having an interest to change some other. The farmer, therefore, who his business

in order to hinder

as soon as possible for

was thus forced

to exercise the trade of

a corn merchant, could not

any other corn merchant would the case of a free competition.

afford to sell his corn cheaper than

have been obliged to do The dealer con-

fined to

one branch of business

The

dealer

in

who can employ

his

whole stock in one single branch

of business has an advantage of the

who can employ latter

same kind with the workman

whole labour in one single operation. As the acquires a dexterity which enables him, with the same two his

hands, to perform a

much

greater quantity of work; so the former

DIGRESSION ON THE CORN TRADE acquires so easy and ready a

method

497

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 commonly

can

sell

cheaper

work a good deal cheaper, so the other can afford his goods somewhat cheaper than if his stock and attention were both employed about a greater variety of objects. afford his

The greater part of manufacturers could not afford to retail their own goods so cheap as a vigilant and active shopkeeper, whose sole business it was to buy them by wholesale, and to retail them again. The greater part of farmers could still less afford to retail their own corn, 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

Laws pre-

trade of a shopkeeper, endeavoured to force this division in the em-

venting the manu-

ployment of stock to go on done.

The law which

might otherwise have

faster than it

obliged the farmer to exercise the trade of a

corn merchant, endeavoured to hinder

Both laws were evident

from going on so

it

fast.

and therefore

violations of natural liberty,

unjust; and they were both too as impolitic as they were unjust. It is

the interest of every society, that things of this kind should never

either

be forced or obstructed. The

bour or his stock

man who employs

either his la-

a greater variety of ways than his situation ren-

in

ders necessary, can never hurt his neighbour by underselling him.

He may

hurt himself, and he generally does

will never

be

rich, says the proverb.

trust people with the care of their

so.

Jack of

trades

But the law ought always

own

to

interest, as in their local sit-

uations they must generally be able to judge better of legislator

all

it

than the

can do. The law, however, which obliged the farmer to ex-

ercise the trade of a corn merchant,

was by

far the

facturer

from being a shopkeeper

and

compelling the

farmer to be a corn

merchant were both impolitic

and unjust,

but

the latter

was the most pernicioub,

most pernicious

of the two. It obstructed not only that division in the

which

is

so advantageous to every society, but

the improvement and cultivation of the land. to carry on two trades instead of one, capital into cultivation.

two

But

parts, of if

it

employment it

of stock

obstructed likewise

By obliging the farmer

forced

him

to divide his

which one only could be employed in

he had been at liberty to

sell

his whole crop to

he could thresh it out, his whole capital to the land, and have been emimmediately might have returned

a corn merchant as

fast as

ployed in buying more

improve and cultivate

cattle,

it

and hiring more servants,

better.

But by being obliged

in order to

to sell his corn

by obstructing

the improve-

ment of land.

XHE WEALTH OF NATIONS

498

by

retail,

he was obliged to keep a great part of his capital

granaries

in his

and stack yard through the year, and could not, thereso well as with the same capital he might otherwise

fore, cultivate

have done. This law, therefore, necessarily obstructed the improvement of the land, and, instead of tending to render corn cheaper,

must have tended to render it

and therefore dearer, than

would otherwise have been. After the business of the farmer, that of the corn merchant

Corn merchants

scarcer,

it

reality the trade which, if properly protected

is

in

and encouraged,

support che farmers just

as

whole-

sale deal-

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

ers sup-

port the

manufacturers.

Wholesale dealers

by

wholesale dealer,

affording a ready market to the

manu-

by taking his goods off his hands 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 somefacturer,

times even more than his whole capital, constantly employed in

allow

manufacturing, and consequently to manufacture a

manufac-

quantity of goods than

turers to

to the immediate consumers, or even to the retailers.

if

much

greater

he was obliged to dispose of them himself

As the

capital

devote their

of the wholesale

whole

of

many manufacturers,

capital

to

manu-

facturing.

merchant too

terests the

number

owner

of

generally sufficient to replace that

this intercourse

a large

of small ones,

is

and

between him and them

capital to support the owners of

to assist

them

in-

a great

and mis-

in those losses

fortunes which might otherwise prove ruinous to them.

So corn merchants should al-

low farm-

An intercourse of

the farmers and the corn merchants, would be attended with effects

equally beneficial to the farmers.

They would be enabled

to keep

whole capitals, and even more than their whole capitals, con-

ers to de-

their

vote their

stantly

employed

in cultivation.

whole capital to

the same kind universally established between

to which no trade

is

In case

of

any

of those accidents,

more liable than theirs, they would

com

cultiva-

ordinary customer, the wealthy

tion.

both an interest to support them, and the ability to do

find in their

who had

merchant, a person it,

and they

would not, as at present, be entirely dependent upon the forbearance of their landlord, or the mercy of his steward. Were as perhaps

it is

at once, were of the

it

kingdom

drawing

may be

it

it

possible,

not, to establish this intercourse universally,

and

all

possible to turn all at once the whole farming stock

to

its

proper business, the cultivation of land, with-

from every other employment into which any part of

at present diverted,^ and

were

it

it

possible, in order to sup-

port and assist upon occasion the operations of this great stock, to

provide

all at

once another stock almost equally great,

haps very easy to imagine

how

great,

it is

not per-

how extensive, and how

sud-

DIGRESSION ON THE CORN TRADE

499

den would be the improvement which this change of circumstances would alone produce upon the whole face of the country.

The

Edward VI.j therefore, by prohibiting as much as any middle man from coming in between the grower and

statute of

possible

the consumer, endeavoured to annihilate a trade, of which the free

not only the best palliative of the inconveniencies of a dearth, but the best preventative of that calamity: after the trade

exercise

is

of the farmer,

no trade contributing so much

to the

growing of corn

rigour of this law was afterwards softened

by

Edward VI. en-

deavoured to annihilate a

which is several subse-

quent statutes, which successively permitted the engrossing of corn

when

statute of

trade

as that of the corn merchant.

The

Accordingly the

the price of wheat should not exceed twenty, twenty-four,

the best palliative

and preventative

thirty-two,

and forty

Charles 11.

c. 7 .

shillings the quarter .^2

by

i-bg

j^th of

the engrossing or buying of corn in order to

sell it

of a dearth.

again, as long as the price of wheat did not exceed forty-eight shillIts pro-

ings the quarter,

lawful to in the

all

and that of other grain in proportion, was declared

persons not being forestallers, that

same market within

is,

not selling again

three months.®^ All the freedom which

the trade of the inland corn dealer has ever yet enjoyed,

stowed upon it by this

statute.

ent king, which repeals almost grossers

and

forestallers,

ticular statute,

was be-

The statute of the twelfth of the pres-

visions

were moderated by later stat-

utes

down to all

the other ancient laws against en-

does not repeal the restrictions of this par-

which therefore

still

IS Car. II, j c. 7)

continue in force.^^

This statute, however, authorises in some measure two very ab-

which is absurd, as

surd popular prejudices.

it

First,

it

supposes that when the price of wheat has risen so high

sup-

poses,

as forty-eight shillings the quarter, and that of other grain in proportion, corn

is

from what has been already

said, it

can at no price be so engrossed

by

be considered as a very high

seems evident enough that corn

it

of the

may

price, yet in years of scarcity it

price which frequently takes place immediately after harvest,

any part

But

the inland dealers as to hurt the

people: and forty eight shillings the quarter besides, though

scarce

(i) that

IMy to be so engrossed as to hurt the people.

new crop can be

sold

off,

and when

is

a

when

it is

im-

'^^DiKgent search has hitherto failed to discover these* statutes. selling the § 4 incorrectly qiloled. The words are “not forestalling nor

same in the same market within three months.” Under 5 and 6 Ed. VI., c. 14, a person buying and selling again “in any fair or market holden or kept in the same place or in any other fair or market within four miles” was a regrator, while a forestaller was one who bought or contracted to buy things on their way to market, or made any motion for enhancing the price of such things or preventing them going to market. 12 Geo. III., c. 71, repeals 5 and 6 Ed. VI., c. 14, but does not mention 15 which is purely permissive If 15 Car. II., c. 7, remained of any Car. II., c. 7,

it must have been merely in consequence of the common law being unfavourable to forestalling.

force in this respect

engrossing

isHkely to be

hurtful after

a

certain

price

has

been reached,

XHE WEALTH OF NATIONS

500

possible even for ignorance to suppose that

any part of

can be so

it

engrossed as to hurt the people. Secondly,

(2) that forestall-

ing

IS

likely to

be hurtful after a

certain

price has

been

supposes that there

it

is

a certain price at which corn

bought up

in order to

is

be sold again

likely to be forestalled, that 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 is,

in a particular market, in order to sell

same market,

again soon after in the

it

must be because he judges that the market cannot supplied through the whole season as upon that par-

it

be so liberally

reached.

and that the

ticular occasion,

judges wrong in

this,

and

if

price, therefore,

the price does not

must soon rise,

rise. If

he

he not only loses

the whole profit of the stock which he employs in this manner, but

a part of the stock attend fore,

the storing

much more

by the expence and

itself,

and keeping of

essentially than

corn.

loss

He

which necessarily

hurts himself, there-

he can hurt even the particular

he may hinder from supplying themselves upon that market day, because they may afterwards supply themselves just as cheap upon any other market day. If he judges right, instead of hurting the great body of the people, he renders them a

people

whom

particular

most important of a dearth

service.

somewhat

vents their feeling

earlier

feel the inconveniencies

than they otherwise might do, he preso severely as they certainly

them afterwards

the cheapness of price encouraged

them

than suited the real scarcity of the season.

When

would do, faster

By making them

is real,

if

the best thing that can be done for the people

the inconveniencies of

it

as equally as possible through

to

consume

the scarcity is to

all

divide

the dif-

and weeks, and days of the year. The interest of the corn merchant makes him study to do this as exactly as he can and as no other person can have either the same interest, or thferent months,

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

the supply of the

The fear of en-

The popular

words, the corn trade, so far at least as concerns

home market, ought to be

fear of engrossing

to the popular terrors

and

and suspicions

left perfectly free.

forestalling

may be compared

of witchcraft.

The unfortunate

grossing

and forestalling is

as

wretches accused of this latter crime were not more innocent of the misfortunes imputed to them, than those of the former.

groundless as

witchcraft,

that of

malice

witchcraft.

who have been accused

The law which put an end to all prosecutions against it out of any man’s power to gratify his own

which put

by accusing his neighbour of that imaginary crime, seems effectually to have put an end to those fears and suspicions, by taking away the great cause which encouraged and supported them. “ Eds,

I

and

2

read “attends.’

DIGRESSION ON THE CORN TRADE The law which should corn,

restore entire freedom to the inland trade of

would probably prove

fears of engrossing

The 15th

and

of Charles

50 i

as effectual to

put an end to the popular

forestalling.

IL

c. 7.

however, with

all its

imperfections,

has perhaps contributed more both to the plentiful supply of the home market, and to the increase of tillage, than any other law in the statute book. It is from this law that the inland corn trade has derived

all

the liberty and protection which

has ever yet enjoyed;

home market, and the interest of tillage, much more effectually promoted by the inland, than either by

and both the supply are

it

of the

the

Still,

IS

Car

II

7, is

the

c

,

best of

the corn laws, as

it

gives the

inland

corn trade the

the importation or exportation trade.

all

The proportion

of the average quantity of all sorts of grain im-

ported 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 plying the trade

home

must be

five

hundred and seventy. For sup-

market, therefore, the importance of the inland

to that of the importation trade as five

hundred and

seventy to one.^®

The average quantity

of all sorts of grain exported from Great

freedom

it

possesses

The inland trade

is

much more important than the foreign

Britain does not, according to the same author, exceed the one-andthirtieth part of the annual produce.^’^

For the encouragement of

by providing a market for the home produce, the the inland trade must be to that of the exportation

tillage, therefore,

importance of

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 in the years

is

than the home trade.

The

immediately preceding the establishment of the bounty,

may perhaps, with ation of this

reason, be ascribed in

A

some measure

to the oper-

statute of Charles IL, which had been enacted about

five-and twenty years before, and which

produce

great cheapness of corn

had

therefore full time to

its effect.

very few words

will sufficiently explain all that I

have to say

concerning the other three branches of the corn trade.

IL The

trade of the merchant importer of foreign corn for

home

consumption, evidently contributes to the immediate supply of the home market, and must so far be immediately beneficial to the Charles Smith, Three Tracts on the Corn Trade and Corn Laws, 2nd ed., p 145. The figures have been already quoted above, p 428 ®"“The export is bare one thirty-second part of the consumption, one thirty-third part of the growth exclusive of seed, one thirty-sixth part of the 1766,

growth including the seed.”—

p. 144

»

quoted above,

p. 475.

ILThe Importer,

whose

the wealth of nations

502 trade ben-

body

great

of the people. It tends, indeed, to lower

the people

average money

and does

the quantity of labour which

not really hurt the farm-

tation was

efits

ers

and

country

capable of maintaining. If impor-

and country gentlemen

than they do at present, when importation

value,

more

money

is at

for their

most times in

but the money which they got would be of more

effect prohibited;

gentle-

men.

it is

at all times free, our farmers

would, probably, one year with another, get less

com

somewhat the

price of corn, but not to diminish its real value, or

would buy more goods of

labour. Their

all

other kinds, and would employ

would

real wealth, their real revenue, therefore,

be the same as at present, though

might be expressed by a smaller

it

and they would neither be disabled nor discourquantity aged from cultivating corn as much as they do at present. On the of silver;

contrary, as the rise in the real value of silver, in consequence of

lowering the

money price

other commodities,

of

all

it

takes place,

of corn, lowers it

somewhat the money price where

gives the industry of the country,

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

number

of the country where

it

duce something

and therefore have something

comes

to the

else,

same

grows, or to the

of those

who

else, or

thing, the price of something else, to give in ex-

change for com. But in every country the home market, as nearest and most convenient, so

is it

important market for corn. That therefore,

which

is

likewise the greatest

rise in

it is

the

and most

the real value of silver,

the effect of lowering the average

of corn, tends to enlarge the greatest for corn,

pro-

what

money

price

and most important market

and thereby to encourage, instead of discouraging,

its

growth.

The Act of 22 Car.

By the 2 2d

of Charles 11 . c. 13. the importation of wheat,

ever the price in the

home market

when-

did not exceed fifty-three

shill-

n,c.i3, imposed very high duties on

ings

and four pence the quarter, was subjected to a duty of sixteen

shillings the quarter;

importation

and

to a

duty of eight

price did not exceed four pounds.^®

has,

shillings

The former

whenever the

of these

for more than a century past, taken place only

two prices

in times of very

“This was not the first law of its kind. 3 Ed. IV., c. 2, was enacted because “the labourers and occupiers of husbandry within this realm of England be daily grievously endamaged by bringing of corn out of other lands and parts England when corn of the growing of this realm is at a low and forbids importation of wheat when not over 6s. 8d., rye when not over 4s. and barley when not over 3s, the quarter. This Act was repealed by 21 Jac. I., c. 28, and 15 Car. II., c. 7, imposed a duty of ss. 4d on imported wheat, 4s. on rye, 2s. 8d. on barley, 2s. on buckwheat, is. 4d. on oats and 4s. on pease and beans, when the prices at the port of importation did not exceed for wheat, 48s.; barley and buckwheat, 28s.; oats, 13s. 4d.; rye, pease and into this realm of price,”

beans, 32s. per quarter.

DIGRESSION ON THE CORN TRADE

503

great scarcity; and the latter has, so far as I know, not taken place at all. Yet, till wheat had risen above this latter price, it was by this statute subjected to a very high duty; and,

till it

had

risen

above

the former, to a duty which amounted to a prohibition. The importation of other sorts of grain was restrained at rates, and by duties, in proportion to the value of the grain, almost equally®® high.®® Subsequent laws still further increased those duties. Ed. I reads “restrained by duties proportionably.” Before the 13th of the present king, the following were the duties payable

upon the importation Gyaifi,

Beans to

28s. per qr. 19s. lod. after

Barley to 28s.

Malt

is

of the different sorts of grain: Duties. 19s.

till

lod.

prohibited by the annual Malt-tax

Oats to 1 6s. Pease to 40s.

Rye to Wheat to

5s.

i6s.

40s.

.

32s.

.

Duties. Duties. i6s. 8d. then i2d. i6s. i2d.

Bill.

lod. after od. after

9|d. qfd.

till 19s. lod. . 40s. i6s. 8d. then i2d. 44s. till . then 8s. 21s. gd. 17s. 535. 4d. till 4I. and after that about is. 4d. Buck wheat to 32s. per qr. to pay i6s. These different duties were imposed, partly by the 22d of Charles II. in

36s.

place of the Old Subsidy, partly by the New Subsidy, by the One-third and Two-thirds Subsidy, and by the Subsidy 1747. The table of duties in this note is an exact copy of that in Charles Smith, Three Tracts on the Corn Trade, 2nd ed., 1766. p, 83. That author professes to have taken the figures from “Mr. Saxby, in his Book of Rates” {i.e., Henry Saxby, The British C«5toms, containing an Historical and Practical Account of each branch of that Revenue, 1757, pp. 111-114), but besides rounding off Saxby’s fractions of a penny in an inaccurate and inconsistent manner, he has miscopied the second duty on barley, the first on pease and the third on wheat. The “Old Subsidy” consisted of the $ per cent, or is. poundage imposed by 12 Car. II., c. 4, on the values attributed to the various goods by the “Book of Rates” annexed to the Act. According to this, imported beans, barley and malt were to be rated at 26s. 8d. the quarter when the actual price at the place of importation did not exceed 28s. When the actual price was higher than that they were to be rated at 5s. the quarter. Oats and pease were to be rated at 4s, the quarter. Rye when not over 36s. was to be rated at 26s. 8d., and when over that price at 5s. Wheat when not over 44s. was to be rated at 40s., and when over that price at 6s. 8d. So under the Old Subsidy: Beans, barley and malt at prices up to 28s. were to pay is. 4d., and when above that price 3d. Oats and pease to pay 2-4d. Rye up to 36s. to pay is. 4d., and when above, 3d. Wheat up to 44s. to pay 2s., and when above, 4d. The Act 22 Car. II., c. 13, took off these duties and substituted the follow-

ing scheme:

Beans to 40s. to pay i6s., and above that price, 3d. Barley and malt to 32s. to pay i6s., and above, 3d. Oats 1 6s. to pay 55. 4d., and above, 2-4d. Pease and rye the same as beans. Wheat to S3S. 4d. to pay i6s., then to 80s. to pay 8s., and above that price, 4d.

Buckwheat to 32s. to pay i6s. But 9 and 10 Will. III., c. 23, imposed a “New Subsidy” the Old, so that duties equal to those of 12 Car.

II., c. 4,

exactly equal to

were superimposed

THE WEALTH OF NATIONS

504 but its operation was gen-

The

distress which, in years of scarcity, the strict execution of

upon the people, would probably

those laws might have brought

erally

have been very great. But, upon such occasions,

suspended

generally suspended

in years

by temporary

statutes,®^

its

execution was

which permitted, for

of

a limited time, the importation of foreign corn. The necessity of

scarcity.

these temporary statutes sufficiently demonstrates the impropriety of this general one.

Restraint

was

neces-

sary on account of the

bounty.

These restraints upon importation, though prior to the establish-

ment

were dictated by the same

of the bounty,

by the same

spirit,

which afterwards enacted that regulation.

principles,

How

hurtful

upon importabecame necessary in consequence of that regulation. If, when wheat was either below forty-eight shillings the quarter, or not soever in themselves, these or some other restraints tion

much above free, or

it,

foreign corn could have been imported either duty

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

and to the entire perversion of the institution, of which the was to extend the market for the home growth, not that for

revenue, object

the growth of foreign countries. III.

The

Exporter,

whose trade indirectly

contri-

butes to

III.

The

trade of the merchant exporter of corn for foreign con-

sumption, certainly does not contribute directly to the plentiful

supply of the home market. It does

whatever source this supply

home growth or from

however, indirectly.

so,

may be

usually drawn, whether from

foreign importation, unless

more corn is either

the plen-

usually grown, or usually imported into the country, than

tiful

usually consumed in

it,

the supply of the

supply of the

home

From

what

is

home market can never be

very plentiful. But unless the surplus can, in

all

ordinary cases, be

market.

on those of 22 Car. IL, c. 13. By 2 and 3 Ann., c. 9, an additional third, and by 3 and 4 Ann., c. 5, an additional two-thirds of the Old Subsidy were imposed, and by 21 Geo. II., c. 2, another amount equal to the Old Subsidy (“the impost 1747”) was further imposed. So between 1747 and 1773 the duties were those of 22 Car. II., c. 13, plus three times those of 12 Car. II., c. 4. This gives the following scheme:—

Beans

to 28s.

pay

20s.

and

after

till

40s.

pay

i6s. gd.

Barley to 28s. pays 20s. and after till 32s. pays Oats to i6s. pay 5s. ii*2d. and then pay 9*6d. Pease to 40s. pay i6s. 7* 2d. and then pay 9*6d.

Rye to Wheat 80s.,

36s.

pays

20s.

and

to 44s. pays 22s.

and

after

and

till

after

40s. till

pays

then

i6s. gd.

i6s. gd.

533. 4d.

pays

is.

then

then 17s.

is.

is.

then

gs. till

after that is. 4d.

Saxby’s figures are slightly less, as they take into account a 5 per cent, discount obtainable on all the subsidies except one. The note appears first in ed. 2. Eds. I and 2 do not contain “subsequent laws still further increased those duties, and read “the distress which in years of scarcity the strict execution of this statute might have brought.” “ These do not seem to have been numerous. There were cases in 1737 and 1766. See the table in Charles Smith, Three Tracts upon the Corn Trade and Corn Laws, 2nd ed., pp. 44, 45. ’

DIGRESSION ON THE CORN TRADE

50$

exported, the growers will be careful never to grow more, and the importers never to import more, than what the bare consumption of

home market

the

stocked; but business

it

to supply

it is

should be

upon

left

That market

requires.

will generally it,

will

very seldom be over-

be understocked, the people, whose

being generally afraid

The prohibition

their hands.

lest their

goods

of exportation lim-

the improvement and cultivation of the country to what the sup-

its

ply of ables

By

its

own

inhabitants requires.

to extend cultivation

it

The freedom

of exportation en-

for the supply of foreign nations.

the 12th of Charles II.

c. 4. the exportation of corn was perwhenever mitted the price of wheat did not exceed forty shillings the quarter, and that of other grain in proportion.®^ By the 15th of

same

the

prince,®® this liberty

was extended

till

the price of wheat

exceeded forty-eight shillings the quarter; and by the higher prices.

oats to four pence,

all

grain was rated so low in the

by

and upon

book

of rates,

nth

the

The

upon

other grain to six pence the quar-

all

was

virtually taken off

wheat did not exceed forty-eight

off at all

complete

the ist of William and Mary,®® the act which established

the bounty, this small duty price of

^

A poundage, indeed, was to be paid to the king upon

such exportation. But

By

of ox-

2 2d,®® to all

that this poundage amounted only upon wheat to a shilling,

ter.®"^

Liberty

and 12th of William III.

20. it

c.

whenever the

shillings the quarter;

and

was expressly taken

higher prices.

trade of the merchant exporter was, in this manner, not only

encouraged by a bounty, but rendered much more free than that of the inland dealer.

By

the last of these statutes, corn could be en-

grossed at any price for exportation; but

it

could not be engrossed

when the price did not exceed forty-eight The interest of the inland dealer, however, it

for inland sale, except shillings the quarter.®®

has already been shown, can never be opposite to that of the great Eds.

I

and

2

read “extend

its

cultivation,”

Earlier statutes are 15 Hen. VI.,

c.

2; 20

Hen.

VI., c. 6; 23

Hen. VI,

c.

P. and M., c. 5 5 Eliz., c. S, § 26; 13 Eliz., c. 13 and i Jac., c. 25, §§ 26, 27. The preamble of the first of these says “by the law it was ordained that no man might carry nor bring com out of the realm of England without the King's licence, for cause whereof fpmers and other men which use manurement of their land may not sell their com but of a bare price to the great damage of all the realm.” Exportation was therefore legalised wthout licence 6

;

I

and

2

;

;

when grain was above certain prices. "C. 7. The “Book of Rates” (see above,

"C.

13.

wheat for export at and other grain at los. the quarter, and the duty was a shilling in the pound on these values. I W. and M., c. 12. The bounty was to be given “without taking or re20s.,

p, 503, note) rated

oats at 6s. 8d.,

quiring anything for custom.” Because as to inland sale 15 Car. II, force.

c.

7

(above, p 499), remained

h

though thein-

the wealth of NATIONS

So6 terest of

the ex-

body of the people. That sometimes

porter

is. If,

merchant exporter may, and in fact

of the

while his

labours under a dearth, a

own country

with a famine,

might be

sometimes

neighbouring country should be

differs

his interest to carry corn to the latter country in such quantities as

from that

might very much aggravate the calamities of the dearth The plen-

of the

supply of the

people of

tiful

his coun-

statutes; but,

money much

casion, as

By

it

the direct object of those

home market was not

of encouraging agriculture, to

under the pretence

try.

raise the

afflicted

price of corn as high as possible, and thereby to ocas possible, a constant dearth in the home market.

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

when

exportation,

the price

was so

high as forty-eight shillings the quarter, that market was not, even in times of considerable scarcity, allowed to enjoy the whole of that growth.

The temporary laws,

prohibiting for a limited time the ex-

portation 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 parting from it. The bad policy of

some

Were and

all

to the necessity of de-

nations to follow the liberal system of free exportation

free importation, the different states into

which a great contin-

great

ent was divided would so far resemble the different provinces of a

countries

great empire.

may sometimes render

it

necessary for

smaU

As among

a great empire

the different provinces of

the freedom of the inland trade appears, both from reason and experience, not only the best palliative of a dearth, but the fectual preventative of

most

ef-

a famine; so would the freedom of the ex-

among

countries

portation and importation trade be

to restrain

which a great continent was divided. The larger the continent, the

exporta-

easier the

communication through

all

the different states into

the different parts of

it,

both

tion.

by land and by

water, the less would any one particular part of

it

any one plenty of some

ever be exposed to either of these calamities, the scarcity of

country being more likely to be relieved other.

tem.

by

the

But very few countries have entirely adopted

The freedom

this liberal sys-

where more or by such absurd

of the corn trade is almost every

less restrained, and, in

many

countries,

is

confined

a a famine. The demand of such corn may frequently become so great and so urgent,

regulations, as frequently aggravate the unavoidable misfortune of

dearth, into the dreadful calamity of

countries for

™ The Acts

prohibiting exportation were

others. See above, p, 504, note 62, ferred to.

and the

much more numerous than table in Charles

the

Smith there re-

DIGRESSION ON THE CORN TRADE

So?

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

The very bad policy

calamity.

of one country

may thus render it

in

some measure dangerous and imprudent to establish what would otherwise be the best policy in another. The unlimited freedom of

much less dangerous in great states, much greater, the supply could seldom be

exportation, however, would be in which the growth being

much

by any quantity

affected

was

of corn that

ported. In a Swiss canton, or in some of the

likely to

little states

be ex-

of Italy,

it

may, perhaps, sometimes be necessary to restrain the exportation of corn. In such great countries as France or England

To

can.

times to the best market,

an idea

of justice to

an act

is

evidently to sacrifice the ordinary laws

of public utility, to

of legislative authority

which can be pardoned only

The to

scarce ever

it

hinder, besides, the farmer from sending his goods at all

a

in cases of the

which the exportation of corn

price at

sort of reasons of state;

which ought to be exercised only,

most urgent

is

prohibited,

be prohibited, ought always to be a very high

The laws

concerning corn

laws concerning

what

ested in

religion.

may

necessity.

if it is

ever

price.

every where be compared to the

The people

feel

themselves so

much

relates either to their subsistence in this life, or to

their happiness in

a

life

to come, that government

The corn

inter-

must yield to

jawson religion,

their prejudices, and, in order to preserve the public tranquillity, is upon this account, a reasonable system established

establish that system which they approve of. It

perhaps, that

we

so seldom find

with regard to either of those two capital objects.

The

IV.

trade of the merchant carrier, or of the importer of for-

eign corn in order to export

ply of the trade to

home

sell his

and even

for a

eign market

;

market. It

is

not indeed the direct purpose of his

money than he might expect

less

in

a

and insurance. The inhabitants of the country which, by means of the carrying trade, becomes the maga-

zine

of freight

and storehouse

dom be

in

for the supply of other countries,

raise

money

would not thereby lower

somewhat the

The upon

it

plentiful

supply of ^

Market

sel-

want themselves. Though the carrying trade might thus

contribute to reduce the average

market,

can very

trade con.

for-

because he saves in this manner the expence of loading

and unloading,

The

again, contributes to the plentiful sup-

it

corn there. But he will generally be willing to do so,

good deal

iv.

real value

price of corn in the

its real

value. It

home

would only

of silver.

carr3dng trade was in effect prohibited in Great Britain,

upon the importathe greater part of which there was no draw-

all ordinary occasions,

tion of foreign corn, of

by the high

duties

British

lawin

ef-

XHE WEALTH OF NATIONS

S08 hibited

ing trade in corn.

and upon extraordinary occasions, when a scarcity made necessary to suspend those duties by temporary statutes, expor-

back;

the carryit

tation

was always prohibited. By

carrying trade

The prosperity of

was

That system

is

not due

to the

bounty, but to the

of laws, therefore,

which has been bestowed upon of Great Britain,

fruits of

labour.

which

all occasions.

connected with the es-

is

it.

The improvement and

prosperity

which has been so often ascribed to those laws,

very easily be accounted for by other causes. That security

man

which the laws in Great Britain give to every joy the fruits of his

own labour, is

try flourish, notwithstanding these lations of

commerce; and

that he shall en-

alone sufficient to

security

of enjoying the

upon

tablishment of the bounty, seems to deserve no part of the praise

may

corn

system of laws, therefore, the

in effect prohibited

Great Britain

this

make any coun-

and twenty other absurd regu-

this security

was perfected by the revolu-

tion, much about the same time that the bounty was established. The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful

a principle, that

it is

alone,

and without any assistance, not only

capable of carrying on the society to wealth and prosperity, but of

surmounting a hundred impertinent obstructions with which the

human laws

folly of

too often incumbers

effect of these obstructions is

upon

its

dustry

is

free, it is as free or freer

Though the period

That the greatest

pros-

less either to

its security.

and though

it is

far

encroach

In Great Britain

than in any other part of Europe.

and improvement of

Great Britain, has been posterior to that system of laws which

to those laws. It has

we must not upon

been posterior likewise to the national debt.

it

subse-

But the national debt has most assuredly not been the cause

nothing.

Though

the system of laws which

is

of

try where

it

somewhat the value

takes place;

of the precious metals in the coun-

yet Great Britain

richest countries in Europe, while Spain

among

is

certainly one of the

and Portugal are perhaps

the most beggarly. This difference of situation, however,

Britain

may

because

tax in Spain, the prohibition in Portugal of exporting gold and

their

bad

policy

it.

connected with the bounty,

has exactly the same tendency with the police of Spain and Portugal; to lower

Spain and Portugal are poorer than Great

is

that account impute

has been

quent proves

in-

from being perfectly

of the greatest prosperity

connected with the bounty,

perity

operations; though the

always more or

freedom, or to diminish perfectly secure;

its

easily

ver,^^

be accounted for from two

and the

vigilant police

is

different causes. First, the

more ef-

those laws, must, in two very poor countries, which between

fectual,

import annually upwards of six millions

^ Ed.

I

sil-

which watches over the execution of

sterling,’^^

them

operate, not only

does not contain “of the greater part of which there was no draw-

back.”

According to the argument above, p. 480, Above, vol. i pp. 207-209. ,

” See above,

p. 478.

DIGRESSION ON THE CORN TRADE

Sog

directly, but much more forcibly in reducing the value of those metals there, than the corn laws can do in Great Britain. And, sec-

more

ondly, this bad policy

is

not in those countries counter-balanced

the general liberty and security of the people. Industry neither free nor secure, of

and the

civil

and

is

both Spain and Portugal, are such as would alone be

counteracted bj

by

general

there

liberty

governments

ecclesiastical

and not

and

se-

curity.

sufficient to

perpetuate their present state of poverty, even though their regula-

commerce were as wise

tions of

as the greater part of

them are ab-

surd 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

The Geo

13 III..

C.43,

than the ancient one, but in one or two respects

perhaps not quite

so good.

By

this statute the high duties

sumption are taken

off

upon importation

for

home

con-

so soon as the price of middling wheat rises

opens the

home

to forty-eight shillings the quarter; that of middling rye, pease or

market at lower

beans, to thirty-two shillings; that of barley to twenty-four

prices

ings;

and

shill-

of them a imposed of only six-pence upon the quarter of wheat,

that of oats to sixteen shillings; and instead

small duty

is

and upon that of other grain different sorts of grain,

home market

is

ably lower than

By the same

in proportion.

With regard

to all these

but particularly with regard to wheat, the

thus opened to foreign supplies at prices considerbefore.*^^

statute the old

bounty of

five shillings

upon the ex-

portation of wheat ceases so soon as the price rises to forty-four

stops the

bounty earlier,

shillings the quarter, instead of forty-eight, the price at

which

it

ceased before; that of two shillings and six-pence upon the exportation of barley ceases so soon as the price rises to twenty-two shillings, instead of twenty-four, the price at

that of

two

shillings

which

it

ceased before;

and six-pence upon the exportation

of oatmeal

ceases so soon as the price rises to fourteen shillings, instead of teen, the price at

which

duced from three

it

ceased before.

shillings

The bounty upon

and six-pence

ceases so soon as the price rises to twenty-eight thirty-two, the price at which

it

ceased

rye

to three shillings,

fif-

is re-

and

it

shillings, instead of

before.'^'® If

bounties are as

Ed. 1 reads “in one respect.” Ed. I reads only “By this statute the high duties upon importation for home consumption are taken off as soon as tiie price of wheat is so high as forty-eight shillings the quarter, and instead.” In place of this sentence ed. i reads “The home market is in this manner not so totally excluded from foreign supplies as it was before. ’®Ed. I reads (from the beginning of the paragraph) “By the same statute the old bounty of five shillings upon the quarter of wheat ceases when the price rises so high as forty-four shillings, and upon that of other grain in proportion. The bounties too upon the coarser sorts of grain are reduced

THE WEALTH OF NATIONS

510

improper as I have endeavoured to prove them to be, the sooner they cease, and the lower they are, so and ad-

The same statute permits,

much

the better.

at the lowest prices, the importation of

mits corn lor re-

export

dutyfree;

corn, in order to be exported again,

duty

free,

provided

it is

in the

meantime lodged in a warehouse under the joint locks of the king and the importer.'^® This liberty, indeed, extends to no more than

They are, howand there may not, perhaps, be warehouses

twenty-five of the different ports of Great Britain. ever, the principal ones,

proper for this purpose in the greater part of the others.®^ which are improvements,

but

it

So

far this

law seems evidently an improvement upon the ancient

system.

But by the same law a bounty

gives a

bounty on the export of oats,

and prohibits ex-

portation

teen shillings.

By

the

shillings the quarter is given

no more than for that same law too, the exportation

of peas or beans.®^ 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

of grain

soon as they

much too

two

ation of this grain,

at prices

low.

of

whenever the price does not exceed fourNo bounty had ever been given before for the export-

for the exportation of oats

it rises

to

twenty-two

shillings;

and that

of oats so soon as

Those several prices seem all of them a good deal too low, and there seems to be an impropriety, besides, rise to fourteen shillings.

in prohibiting exportation altogether at those precise prices at

which that bounty, which was given in order

to force

it,

is

with-

The bounty ought certainly either to have been withdrawn at a much lower price, or exportation ought to have been allowed at a much higher. drawn.®^

It is as

So

far, therefore, this

good a law as can

tem. With

be expect-

what was said

ed at

itself, it is

all its

law seems

to

be inferior

imperfections, however,

to the ancient sys-

we may perhaps say

of the laws of Solon, that,

the best which the interests, prejudices,

present.

the times would admit of. It

way

may

of

it

though not the best in

and temper

of

perhaps in due time prepare the

for a better.®®

somewhat lower than they were

before, even at the prices at

which they take

place.”

™ Ed.

com

I

reads

“The same

statute permits at all prices the importation of duty free; provided it is in the meantime

in order to be exported again,

lodged in the king’s warehouse.”

®®Ed I contains an additional sentence, the establishment of the carrying trade.”

“Some provision

is

thus

made

for

This paragraph

is not in ed. i. reads (from the beginning of the paragraph) “But by the same law exportation is prohibited as soon as the price of wheat rises to forty-four shillings the quarter, and that of other grain in proportion. The price seems to be a good deal too low, and there seems to be an impropriety besides in stopping exportation altogether at the very same price at which that

®®Ed.

I

bounty

which was given in order to force it is withdrawn. These two sentences are not in ed. i.

m

CHAPTER VI OF TREATIES OF COMMERCE

When

a nation binds

itself

by

treaty either to permit the entry of

from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which certain goods

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

Treaties of

com-

merce are advantageous to the favoured,

extensive, because the goods of other nations being either excluded

or subjected to heavier duties,

it

takes

off

a great 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 manufacturers of the favoured, are necessarily advantageous to those of the favouring country.

A

thus granted against them to a foreign nation; and they must

quently buy the foreign goods they have occasion if

dis-

monopoly

for,

is

fre-

dearer than

the free competition of other nations was admitted. That part of

its

own produce with which such a

must consequently be

nation purchases foreign goods,

sold cheaper, because

exchanged for one another, the cheapness of consequence, or rather

is

the

when two things are the one is a necessary

same thing with the dearness

of the

The exchangeable value of its annual produce, therefore, is likely to be diminished by every such treaty. This diminution, howother.

ever,

can scarce amount

to

any

positive loss, but only to

might otherwise make. Though

ing of the gain which

it

goods cheaper than

otherwise might do,

it

it

will not

a

lessen-

it sells its

probably

sell

them

for less than they cost; nor, as in the case of bounties, for

price

which

will not replace the capital 511

employed

in bringing

a

them

but disad vantageousto the fa-

vouring country.

THE WEALTH OF NATIONS

5x^

with the ^rdinary profits of stock.

to market, together

could not go on long fore,

may

still

gain

if it

by

did.

The

Even the favouring country,

the trade, though less than

if

there

trade there-

was a

free competition.

Some

Treaties

have been concluded with the object of

cial

commerce, however, have been supposed advan-

country has sometimes granted a monopoly of this kind against

itself to

obtaining

a favour-

treaties of

tageous upon principles very different from these; and a commer-

in the

certain goods of

a foreign nation, because

whole commerce between them,

would buy, and that a balance

able bal-

than

ance of

annually returned to

it

it.

It is

upon

it

it

expected that

would annually

in gold

and

silver

sell

more

would be

this principle that the treaty of

trade,

e g.,

the

Methuen

commerce between England and Portugal, concluded in 1703, by Mr. Methuen, has been so much commended.^ The following is a literal translation ^ of

that treaty, which consists of three articles

treaty,

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 manufac-

was accustomed,

tures of the British, as

the law; nevertheless

upon

is

shall, in

they were prohibited by

this condition:

ART. That

till

II

to say, that her sacred royal majesty of Great Britain

her

own name, and

that of her successors, be obliged, for

ever hereafter, to admit the wines of the growth of Portugal into Britain: so that at

no time, whether there

shall

be peace or war

between the kingdoms of Britain and France, 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 Eg., in the British Merchant, 1721, Dedication to vol.

iii.

®With three small exceptions, “British” for “Britons” and “law” for “laws” in art. i, and “for” instead of “from” before “the like quantity or measure of French wine,” the translation

is identical with that given in A Collection of the Treaties of Peace, Alliance and Commerce between Great Britain and other Powers from the Revolution in 1688 to the Present Time, 1772, vol. i.,

all

pp. 61, 62.

TREATIES OF COMMERCE duty.

which

But is

if

at any time this deduction or abatement of customs,

be made as aforesaid,

to

5^3

shall in

any manner be attempted

and prejudiced, it shall be just and lawful for his sacred royal majesty of Portugd, again to prohibit the woollen cloths, and the rest of the British woollen manufactures.

ART. Ill 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

ratifications shall

be

exchanged.

By

this treaty the

which

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. ter

But

it

does not become bound to admit them upon any bet-

The crown

of Great Britain,

bound to admit the wines

and dis-

of Portugal,

come

advantageous to Great

on the contrary, becomes

upon paying only two-thirds

Britain.

of the duty, which is paid for those of France, the wines

to

advantageous to Portugal

terms than those of any other nation, of France or Holland for

example.

is

evidently

most

likely

into competition with them. So far this treaty, therefore,

is

evidently advantageous to Portugal, and disadvantageous to Great Britain.

has been celebrated, however, as a masterpiece of the commerpolicy of England. Portugal receives annually from the Brazils

Portugal

It cial

sends

much

a greater quantity of gold than can be employed in its domestic commerce, whether in the shape of coin or of plate. The surplus is too valuable to be allowed to lie idle and locked up in coffers, and

gold to

England

can find no advantageous market at home, it must, notwithstanding any prohibition, be sent abroad, and exchanged for some-

as

it

thing for which there

is

a more advantageous market at home.

A

comes annually to England, in return either for receive English goods, or for those of other European nations that that the their returns through England. Mr. Baretti was informed

large share of

it

weekly packet-boat from Lisbon brings, one week with another, more than fifty thousand pounds in gold to England.^ The sum had two milprobably been exaggerated. It would amount to more than through England, PortuJoseph Baretti, Journey from London to Genoa, vol. i., pp. 95 > ?6, gal, Spain and Prance, 3rd ed., 1170, “often from thirty to fifty and is not so large as in the text above: it is but almost even sixty thousand pounds,” and not “one week with another a war vesse it, every week.” The gold all came in the packet boat because Amsterdam ed., was exempt from search. ^Raynal, Histoire pkilosophique, iii., tom. 414* pp. 413^ 1773, ’

—

p

,

THE WEALTH OP NATIONS

514 lions six

hundred thousand pounds a year, which

Brazils are supposed at one

time nearly

the free grace of that crown, at the solicita-

not by treaty, but

of this

tion, indeed, it is probable,

said to

be on account of

more than the

Our merchants were some years ago out of humour with the crown of Portugal. Some privileges which had been granted them,

the whole gold was

is

to afford.^

by

and in return

greater favours,

had been

of Great Britain,

defence and protection, from the crown

people, therefore, usually most in-

The

either infringed or revoked.

much

for

terested in celebrating the Portugal trade, were then rather disposed

other

European nations,

to represent

The

agined.

it

as less advantageous than

had commonly been im-

it

far greater part, almost the whole, they pretended, of

this

annual importation of gold, was not on account of Great Brit-

ain,

but of other European nations; the

and wines of Portu-

fruits

gal annually imported into Great Britain nearly compensating the

value of the British goods sent thither. but even if it were not so,

Let us suppose, however, that the whole was on account of Great Britain,

and that

it

amounted

seems to imagine: this

a

to

still

trade would

greater not,

the trade

etti

would not be more

more advantageous than any other in which, out,

valuable

than another of equal

magnitude.

we

It is

sum than Mr. Bar-

upon that account, be for the

same value sent

received an equal value of consumable goods in return.

but a very small part of this importation which,

supposed,

is

employed as an annual addition

to the coin of the

kingdom. The

rest

must

it

can be

either to the plate or

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 EngMost of the gold

lish industry, it

would be more

for the advantage of England, than

to purchase with that produce the gold of Portugal,

and

after-

A

direct

must be

first

sent

wards to purchase with that gold those consumable goods.

abroad again and

exchanged for goods,

foreign trade of consumption

round-about one; the

home market,

^

is

always more advantageous than a

and to bring the same value of foreign goods to

requires a

much

smaller capital in the one

and it would be

than in the other. If a smaller share of

better to

been employed in producing goods

buy the goods direct

with

home

a greater in producing those

fit

it

industry, therefore,

had

for the Portugal

market, and

for the other markets,

where those

consumable goods for which there to be had,

its

way ^

fit

is,

a demand in Great Britain are

would have been more for the advantage of England.

produce

To

instead

consumable goods, would, in this way, employ a much smaller capi-

ofbuymg

tal

gold in Portugal.

procure both the gold, which

it

wants for

its

own

use,

and the

than at present. There would be a spare capital, therefore, to be

employed for other purposes, in exciting en additional quantity of industry, and in raising a greater annual produce. * ®

Above, vol. i., pp. 208, 209. Ed. I does not contain “way,”

®

Above,

p. 350.

TREATIES OF COMMERCE Though it

Britain were entirely excluded from the Portugal trade,

could find very

plies of

little difficulty

gold which

it

in procuring all the annual sup-

wants, either for the purposes of plate, or of

coin, or of foreign trade. Gold, like

ways somewhere or another have that value to give for

would

gal, besides,

away by Great tion,

still

Britain,

every other commodity,

to be got for its value

The annual

it.

is al-

by those who

surplus of gold in Portu-

be sent abroad, and though not carried

would be carried away by some other na-

which would be glad to

manner

5^5

sell it

again for

its price,

in the

same

as Great Britain does at present. In buying gold of Portu-

gal, indeed,

we buy

it

at the first

other nation, except Spain,

hand; whereas in buying

we should buy

might pay somewhat dearer. This

difference,

it

it

of

at the second,

Britain

would find little difficulty

in pro-

curing

pld even if

ex-

cluded

from trade

with Portugal.

any and

however, would surely

be too insignificant to deserve the public attention.

Almost

our gold,

all

it is said,

nations the balance of trade

is

comes from Portugal. With other

much in our more gold we import

either against us, or not

But we should remember, that the less we must necessarily import from all others. The effectual demand for gold, like that for every other comfavour.

from one country, the

modity,

is

in every country limited to

a

certain quantity. If nine-

tenths of this quantity are imported from one country, there re-

mains a tenth only to be imported from besides that

is

all others.

The more

gold

annually imported from some particular countries,

over and above what

is

requisite for plate

and

for coin, the

more

must necessarily be exported to some others; and the more that most insignificant object of modern policy, the balance of trade, 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 war,"^

end of the late

France and Spain, without pretending either offence or provo-

cation, required the king of Portugal to exclude all British ships

from his

ports,

and

for the security of this exclusion, to receive into

them French or Spanish

garrisons.

Had

the king of Portugal sub-

mitted to those ignominious terms which his brother-in-law the king of Spain proposed to him, Britain

much greater

would have been freed from a

inconveniency than the loss of the Portugal trade, the

It is said

that

all

our gold

comes from Portugal,

but

if It

did not

come from Portugal

would come

it

from other countries.

If the at-

tempt of France

and Spain to exclude British

ships

from Portuguese ports had

been successful, it

burden of supporting a very weak ally, so unprovided of every thing for his own defence, that the whole power of England, had it

would have been an advan-

been directed to that single purpose, could scarce perhaps have de-

tage to

fended him for another campaign.

The

loss of the

Portugal trade

would, no doubt, have occasioned a considerable embarrassment to ^In 1762.

England.

the wealth of nations

516

the merchants at that time engaged in

who might

it,

not, perhaps,

have found out, for a year or two, any other equally advantageous

method

employing their capitals; and

of

have consisted suffered

The

The great importa-

from

all

in this

this notable piece of

commercial policy.

great annual importation of gold and silver

the purpose of plate nor of coin, but of foreign trade.

tion of

gold and

foreign trade of consumption can be carried

silver is

ly

for

foreign trade.

would probably

the inconvieniency which England could have

by means

neither for

is

A round-about

on more advantageous-

any other goods. As they commerce, they -are more readily

of these metals than of almost

are the universal instruments of

received in return for

all

commodities than any other goods; and on

account of their small bulk and great value,

it

costs less to transport

them backward and forward from one place to another than almost any other sort of 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

some other goods

or exchanged again for

so convenient as gold and

In

silver.

in another, there are

none

facilitating all the different

round-about foreign trades of consumption which are carried on

in

Great Britain, consists the principal advantage of the Portugal trade;

and though

it is

not a capital advantage,

it is,

no doubt, a

considerable one.

That any annual addition which,

Very little is re-

quired for plate

made either

is

and

can reasonably be supposed,

kingdom, could

quire but a very small annual importation of gold and

evident enough; and though

coin.

it

to the plate or to the coin of the

we had no

this small quantity could always,

silver,

re-

seems

direct trade with Portugal,

somewhere

or another,

be very

easily got.

New

Though the

gold

plate is

mostly

goldsmiths’ trade be very considerable in Great Brit-

new plate which they annually sell, made from other old plate melted down; so that the addition annually made to the whole plate of the kingdom cannot be very great,

ain, the far greater part of the is

made from old.

and could require but a very small annual importation. It is the

New coin is

mostly

made from

old,

same case with the

coin.

Nobody

imagines, I believe,

that even the greater part of the annual coinage, amounting, for ten

years together, before the late reformation of the gold coin,® to up-

as there is

wards of eight hundred thousand pounds a year

a profit

nual addition to the

money

on melting good

country where the expence of the coinage

coin.

ernment, the value of the coin, even when

ard weight of gold and of ®

in gold,^

silver,

is it

can never be

defrayed by the gov-

contains

much

its full

®

stand-

greater than that

an equal quantity of those metals uncoined; because See above, p. 42.

was an an-

before current in the kingdom. In a

Above, p. 286, note.

it

requires

TREATIES OF COMMERCE

5i7

only the trouble of going to the mint, and the delay perhaps of a few weeks, to procure for any quantity of uncoined gold and silver

an equal quantity of those metals in coin. But, in every country, the greater part of the current coin or otherwise degenerated from

is

almost always more or

before the late reformation, a good deal so, the gold being

two per

cent,

and the

standard weight. But

silver

more than eight per

forty-four guineas

if

less

standard. In Great Britain

its

and a

cent,

worn,

it

was,

more than below

its

half, containing

standard weight, a pound weight of gold, could purchase very little more than a pound weight of uncoined gold, forty-four their full

guineas and a half wanting a part of their weight could not purchase

a pound weight, and something was to be added in order to

The

the deficiency. fore, instead of

being the same with the mint price, or 46Z.

was then about

47/. 14^,

When

make up

current price of gold bullion at market, there14.5.

6d.

and sometimes about forty-eight pounds.

the greater part of the coin, however, was in this degenerate

condition, forty-four guineas

and a half, fresh from the mint, would

purchase no more goods in the market than any other ordinary guineas, because

when they came

into the coffers of the merchant,

being confounded with other money, they could not afterwards be distinguished without

more

trouble than the difference

Like other guineas they were worth no more than

was worth.

46/. 14^. 6 d. If

thrown into the melting pot, however, they produced, without any sensible loss,

a pound weight of standard

at

any time

fit

for all the purposes of coin as that

between

for

There was an evident

money, and

it

47^. 14J.

and 48^.

which could be sold

either in gold or silver, as

which had been melted down.

profit, therefore, in

was done

gold,

melting

down new coined

so instantaneously, that no precaution of

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, government could prevent

not so

much

in

making

the very best part of

Were

it

it.

daily additions to the coin, as in replacing

which was daily melted down.

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

Aseignoi-

vdue of coin

bullion of

bullion the whole value of the duty; because, the government hav-

equal

ing every where the exclusive privilege of coining, no coin can come to market cheaper than they think proper to afford it. If the duty

weight,

was exorbitant indeed, that is, if it was very much above the real value of the labour and expence requisite for coinage, false coiners,

the wealth of nations

si8

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

ol

the government money. In France, however, though the seignorage is eight per cent, no sensible inconveniency of this kind is found to arise

from

it.

he

The dangers

lives in the

to which a false coiner

is

every where ex-

country of which he counterfeits the coin,

posed,

if

and

which his agents or correspondents are exposed

to

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

as in

France.

seignorage in France raises the value of the coin higher than

in proportion to the quantity of pure gold

by

which

mint price of

the edict of January 1726, the

contains.

Thus

fine gold of

twen-

it

ty-four carats was fixed at seven hundred and forty iivres nine sous and one denier one-eleventh, the mark of eight Paris ounces. The gold coin of France, making an allowance for the remedy of the mint, contains twenty-one carats and three-fourths of fine gold, and

two carats one-fourth of fore, is

alloy.

The mark

worth no more than about

Iivres ten deniers.

But

in

six

of standard gold, there-

hundred and seventy-one

France this mark of standard gold

is

coined into thirty Louis-d^ors of twenty-four Iivres each, or into

seven hundred and twenty the value of a

mark

Iivres.

The

of standard gold bullion,

tween six hundred and seventy-one

hundred and twenty

and two It

Iivres; or

by

by the

difference be-

Iivres ten deniers,

and seven

forty-eight Iivres nineteen sous

deniers.

A seignorage will, in many cases, take away altogether, and will,

dimin-

ishes or

coinage, therefore, increases

in all cases, diminish the profit of melting

down

the

new

coin. This

destroys

the profit

profit

obtained by melt-

lion

ing coin.

it

always arises from the difference between the quantity of bul-

which the common currency ought to contain, and that which

actually does contain. If this difference

there will be loss instead of profit. If

is less

it is

there will neither be profit nor loss. If See Dictionaire des Monnoies,

tom

ii.

than the seignorage,

equal to the seignorage, it

is

greater than the

article Seigneurage, p. 489.

par

M.

Abot de Bazinghen, Conseiller-Commissaire en la Cour des Monnoies a Paris. Ed. I reads erroneously “tom. i.” The book is Traiti des Monnoies et de la jurisdiction de la Cour des Monnoies en forme de dictionnaire, par M. Abot de Bazinghen, Conseiller-Commissaire en la Cour des Monnoies de Paris, 1764, and the page is not 489, but 589. Gamier, in his edition of the Wealth of Nations, vol. V., p. 234, says the book “n’est gufere qu’une compilation faite sans soin et sans discernement,” and explains that the mint price mentioned above remained

a very short time. It having failed to bring bullion to the higher prices were successively offered, and when the Wealth of Nations was published the seignorage only amounted to about 3 per cent. On the silver coin it was then about 2 per cent., in place of the 6 per cent, stated

mint,

in force

much

by Bazinghen,

p. 590.

TREATIES OE COMMERCE seignorage, there will indeed be

was no seignorage. for

If,

some

melting

down

less

would have been a

there

per cent, upon the

five

upon the had been two per

would have been neither profit nor loss.

cent, there

if

loss of three per cent,

of the gold coin. If the seignorage

had been one per

than

before the late reformation of the gold coin,

example, there had been a seignorage of

coinage, there

but

profit,

5^9

If the seignorage

would have been a

profit,

but of one

per cent, only instead of two per cent. Wherever

money

is

by

cent, there

tale, therefore,

and not by weight, a seignorage

down

fectual preventative of the melting

same reason, of its that are commonly

upon such that the

The law

exportation. It either melted

is

the most ef-

of the coin, and, for the

the best and heaviest pieces

down

largest profits are

is

received

or exported; because

it is

made.

encouragement of the coinage, by rendering

for the

it

was first enacted, during the reign of Charles II.^^ for a limited time; and afterwards continued, by different prolongations, till 1769, when it was rendered perpetual.^^ The bank of England, duty-free,

in order to replenish their coffers with

obliged to carry bullion to the mint; and terest,

money, are frequently it

was more

for their in-

they probably imagined, that the coinage should be at the ex-

The abolition of

seignor-

age in

England

was probably

due to the bank of England,

pence of the government, than at their own. It was, probably, out of complaisance to this great to render this

company

law perpetual. Should the custom of weighing gold,

however, come to be disused, as its

that the government agreed

it is

very likely to be on account of

inconveniency; should the gold coin of England come to be re-

by

tale, as it

was before the

late recoinage, this great

pany may, perhaps,

find that they

have upon

this, as

interest not

a little.

ceived

other occasions, mistaken their

own

com-

upon some

Before the late recoinage, when the gold currency of England was

two per it

cent,

below its standard weight, as there was no seignorage,

was two per

cent,

gold bullion which

it

below the value of that quantity of standard ought to have contained,

l^en this great com-

pany, therefore, bought gold bullion in order to have

were obliged to pay the coinage.

But

if

for

it

there

two per cent, more than

had been a seignorage

of

it

it

coined, they

was worth

two per

cent,

but the

bank would have lost nothing

by a seignor-

after

age

upon

whether it equalled

the coinage, the

common gold

currency, though two per cent, below

act for encouraging of coinage,” 18 Car. II., _c. 5. The preamble says, “Whereas it is obvious that the plenty of current coins of gold and silver of this Ungdom is of great advantap to trade and commerce; for the increase

whereof, your Majesty in your princely wisdom and care hath been graciously pleased to bear out of your revenue half the charge of the coinage of silver

money.”

^ Originally

the depreciation.

^ “An

enacted for five years, it was renewed by 25 Car. II., c. 8 for seven years, revived for seven years by i Jac. IL, c, 7 j and continued by various Acts till made perpetual by 9 Geo. III., c. 25. ,

XHE WEALTH OE NATIONS

520 its

standard weight, would notwithstanding have been equal in

value to the quantity of standard gold which

it

ought to have con-

tained; the value of the fashion compensating in this case the dim-

They would indeed have had

inution of the weight.

which being two per cent,

to pay,

tion

than exceeded it,

upon the whole

their loss

cent, exactly the same,

would have been two per it

the seignorage transac-

but no greater

actually was.

If the seignorage

had been

only two per cent, below

and the gold currency

five per cent,

standard weight, the bank would in this

its

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. or

If the seignorage

fell

short of

had been only one per

rency two per cent, below

its

cent,

and the gold

cur-

standard weight, the bank would in

it.

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

Nor

cent, in the

If there

would it

same manner

as in all other cases.

was a reasonable seignorage, while

coin contained

its full

standard weight, as

it

at the

same time the

has done very nearly

lose if

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 since the late re-coinage, whatever the

there

were no depredation.

the seignorage.

They would

the whole transaction, cases,

age

is

paid

by no

one,

a commodity

age smuggling, the merchant

who

is

upon

in this, as in all the foregoing

be exactly in the same situation as

When the tax upon

A seignor-

neither lose nor gain, therefore,

and they would

if

there

was no seignorage.

so moderate as not to encour-

deals in

does not properly pay the tax, as he gets

it

it,

though he advances,

back in the price of the

commodity. The tax

is finally paid by the last purchaser or conmoney is a commodity with regard to which every man is a merchant. Nobody buys it but in order to sell it again; and with

sumer. But

regard to

When

it

there

the tax

is

in ordinary cases

upon coinage,

no

therefore,

last is

purchaser or consumer.

so moderate as not to en-

courage 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.

and could not have augment-

A moderate seignorage, therefore, would not in any case augment the expence of the bank, or of any other private persons

ed the expense of the bank.

moderate seignorage does not in any case diminish is

or

is

who

carry

mint in order to be coined, and the want of a

their bullion to the

not a seignorage,

if

it.

Whether there

the currency contains its full standard

TREATIES OF COMMERCE weight, the coinage costs nothing to

any body, and

S2i 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

which actually

is

contained in

The government, it

and that

when

it

defrays the expence of coin-

some small revmight get by a proper duty; and neither the bank nor

age, not only incurs

enue which

therefore,

it,

it.

some small expence, but

any other private persons

loses

are in the smallest degree benefited

by

this useless piece of public generosity.

The govern-

ment loses and nobody gains by the ab-

would probably be unwilling

sence of

to agree to the imposition of a seignorage upon the authority of a

seignor-

The

directors of the bank, however,

age.

speculation which promises them no gain, but only pretends to in-

them from any

sure

as long as

it

loss.

In the present state of the gold coin, and

continues to be received

by

weight, they certainly

coin

would gain nothing by such a change. But if the custom the gold coin should ever go into disuse, as

and

if

the gold coin should ever

tion in

which

it

fall into

it is

of weighing

very likely to do,

the same state of degrada-

was before the late recoinage, the gain, or

more

properly the savings of the bank, in consequence of the imposition

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 of

of the coin, it could seldom exceed fifty thousand wear and tear or at most a hundred thousand pounds. But when the coin is de-

standard weight, the annual coinage must, besides up the large vacuities which exportation and the melting

graded below this,

fill

its

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

an average to more than eight hundred and fifty thousand per cent, pounds.^^ But if there had been a seignorage of four or five upon the gold coin, it would probably, even in the state in which at

both of things then were, have put an effectual stop to the business losing exportation and of the melting pot. The bank, instead of

which every year about two and a half per cent, upon the bullion was to be coined into more than eight hundred and fifty thousand thoupounds, or incurring an annual loss of more than twenty-one sand two hundred and

fifty

pounds, would not probably have in-

curred the tenth part of that loss. of The revenue allotted by parliament for defraying the expence ^®Ed.

I

reads “tear and wear.”

Supposing the

Above, p.

should again become depreciated,

a seignorage would preserve

bank from con-

the

siderable loss.

the wealth of nations

522

The saving to the

govern-

the coinage

is

expence which

but fourteen thousand pounds a year/^ and the real costs the government, or the fees of the officers of

it

upon ordinary

ment may

the mint, do not

be regarded as too

half of that sum.

The

occasions, I

trifling,

but that

too inconsiderable,

of the

tion of government.

may be

But the saving

considei-

has frequently happened before, and which is

surely

larger, are objects

of eighteen or

pounds a year in case of an event which again,

much

thought, to deserve the serious atten-

bank is worth ation.

exceed the

saving of so very small a sum, or even the

gaining of another which could not well be it

am assured,

an object which

is

twenty thousand

not improbable, which is

very likely to happen

well deserves the serious attention

even of so great a company as the bank of England.

Some

of the foregoing reasonings

and observations might per-

haps have been more properly placed in those chapters of the

book which

treat of the origin

and use of money, and of the

first

differ-

ence between the real and the nominal price of commodities. But as

from

the law for the encouragement of coinage derives

its

origin

those vulgar prejudices which have been introduced

by

the mercan-

more proper to reserve them

tile

system; I judged

ter.

Nothing could be more agreeable to the

it

for this chap-

spirit of that

system

than a sort of bounty upon the production of money, the very thing which, of its

it

supposes, constitutes the wealth of every nation. It

many admirable expedients

“ Under

19 Geo. IL,

c.

14, § 2,

a

is

for enriching the country.

maximum

of £15,000

is

prescribed.

one

CHAPTER

VII

OF COLONIES

Part First Of the Motives

The

interest

European

for establishing

which occasioned the

first

new Colonies

settlement of the different

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

any one of them

in

multiplied beyond what that territory could easily maintain, a part of them were sent in quest of a new habitation in some remote and distant part of the world; the warlike neighbours

them on

all sides,

very much

rendering

its territory at

ed chiefly to Italy and dation of

it difficult

for

who surrounded

any of them

to enlarge

home. The colonies of the Dorians

Sicily,

resort-

Greek colonies

were sent out

when

the population

grew too great at

home

which, in the times preceding the foun-

Rome, were inhabited by barbarous and

uncivilized na-

and Eolians, the two other great tribes of the Greeks, to Asia Minor and the islands of the Egean Sea, of which tions: those of the lonians

the inhabitants seem at that time to have been pretty

same state

as those of Sicily

and Italy. The mother

much

city,

considered the colony as a child, at

all

and

much gratitude and

assistance,

considered

it

and owing

in return

times entitled to great favour

as an emancipated child, over

claim no direct authority or jurisdiction.

form of government, enacted trates, state,

its

own

and made peace or war with

of the mother city. Nothing can be interest

respect, yet

whom she pretended

The colony

laws, elected

settled its its

to

own

own magis-

The mother city

neighbours as an independent

claimed no au-

for the approbation or consent

thority.

its

which had no occasion to wait

in the

though she

more plain and

distinct than the

which directed every such establishment.

Rome, like most of the founded upon an Agrarian

other ancient republics, was originally

Roman

law, which divided the public territory

colonies

523

THE WEALTH OF ^AllOhS

524 were sent out to

in

a certain proportion among the different

the state.

satisfy th-»

The course

of

human

affairs,

demand

and by

for lands

frequently threw the lands, which

and to establish

citizens

who composed

by marriage, by

succession,

and

alienation, necessarily deranged this original division,

tenance of

many

had been

allotted for the

main*

a

single

different families into the possession of

To remedy

territo-

was supposed to be, a such law was made, restricting the quantity of land which any citizen could possess to five hundred jugera, about three hundred and fifty

ries;

English acres. This law, however, though

garrisons in con-

quered

person.

this disorder, for

it

we read

of its having

been

executed upon one or two occasions, was either neglected or evaded,

and the inequality

of fortunes

greater part of the citizens

and customs

went on continually increasing. The

had no

land,

and without

it

the manners

a freeman to

of those times rendered it difficult for

man may either farm

maintain his independency. In the present times, though a poor

has no land of his own,

if

he

has a little stock,

he

may carry on some little retail trade; may find employment either as a country

the lands of another, or he

and

if

he has no stock, he

labourer, or as

an

artificer.

lands of the rich were

an

overseer,

little

who was

all

But,

among the ancient Romans, the by slaves, who wrought under

cultivated

likewise

a

slave; so that

a poor freeman had

chance of being employed either as a farmer or as a labourer.

All trades

and manufactures too, even the

on by the slaves

retail trade,

were carried

of the rich for the benefit of their masters,

wealth, authority, and protection

made

it difficult

man

to maintain the competition against them.

fore,

who had no

land,

for

The

had scarce any other means

whose

a poor free-

citizens, there-

of subsistence

but the bounties of the candidates at the annual elections.

The

when they had a mind to animate the people against the rich and the great, put them in mind of the ancient division of lands, and represented that law which restricted this sort of private proptribunes,

erty as the fundamental law of the republic.

The people became we may believe,

clamorous to get land, and the rich and the great,

were perfectly determined not to give them any part

of theirs.

To

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 citizens to satisfy

them

in

seek their fortune,

if

one

may say so,

out knowing where they were to

through the wide world, with-

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 inde-

they were entirely

pendent 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

MOTIVES FOR

NEW

COLONIES

5^5

legislative authority of the

subject to

this kind, not

the

mother city. The sending out a colony of only gave some satisfaction to the people, but often

established a sort of garrison too in a newly conquered province, of

mother city.

which the obedience might otherwise have been doubtful. A Roman colony, therefore, whether we consider the nature of the establish-

ment

or the motives for making

it, was altogether different from a Greek one. The words accordingly, which in the original lan-

itself,

guages denote those different establishments, have very different meanings. The Latin word (Colonia) signifies simply a plantation.

The Greek word (axoata), on

the contrary, signifies a separation

of dwelling,

a departure from home, a going out

though the

Roman

colonies were in

many

of the house. But,

respects different

from

the Greek ones, the interest which prompted to establish them was equally plain and distinct. Both institutions derived their origin either

from

irresistible necessity, or

from

and evident

clear

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, clear

and evident.

It

it is

was not understood at their

The utility of

the

Amer-

not altogether so

ican colo-

establishment,

nies is not

first

and was not the motive either of that establishment or of the discoveries which gave occasion to it; and the nature, extent, and lim-

so evi-

dent.

of that utility are not, perhaps, well understood at this day.

its

The

Venetians, during the fourteenth and fifteenth centuries,

carried

on a very advantageous commerce in

spiceries,

and other

East India goods, which they distributed among the other nations

They purchased them chiefly ^ in Egypt, at that time dominion of the Mammeluks, the enemies of the Turks,

The Venetians

had a profitable

of Europe.

trade in

under the

East

of

whom the Venetians were the enemies; and this union of interest,

assisted

by the money of

India goods,

Venice, formed such a connection as gave

the Venetians almost a monopoly of the trade.

The

great profits of the Venetians tempted the avidity of the

Portuguese.

They had been

endeavouring, during the course of the

fifteenth century, to find out

by

sea a

way

to the countries from

which the Moors brought them ivory and gold dust across the Desart.

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

fleet of ^

Gama

sailed

from the port of Lisbon with a

four ships, and, after a navigation of eleven months, ar-

“Chiefly”

is

not in ed.

i.

which

was envied by the Portuguese

and led them to discover the Cape

of Good Hope passage,

XHE WEALTH OF NATIONS

526

upon the coast of Indostan, and thus completed a course of discoveries which had been pursued with great steadiness, and with

rived

very Columbus endeavvoured to reach

the East Indies

years before this, while the expectations of Europe were in

Some

while

by

sailing

west-

interruption, for near a century together.

little

suspense about the projects of the Portuguese, of which the success

appeared yet to be doubtful, a Genoese

pilot

formed the yet more

The situation of those countries was at that time very imperfectly known in Europe. The few European travellers who had been there had magdaring project of sailing to the East Indies

by

the West.

perhaps through simplicity and ignorance,

nified the distance;

wards.

what was

really very great, appearing almost infinite to those

could not measure

it;

or, perhaps, in order to increase

more the marvellous of

their

own adventures

who

somewhat

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

and the

shortest

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 expedi-

Vasco de

tion of

of between two

Bahama

Gama

Lucayan

or

set out

from Portugal, and, after a voyage

and three months, discovered islands,

first

some

of the small

and afterwards the great island of

St.

Domingo. Columbus

But the in any of

countries which

Columbus

mistook the countries he found for

which he had gone in quest

the

mingo, and in all the other parts of the

his subsequent voyages,

and populousness

of

of.

discovered, either in this or

had no

reseifiblance to those

Instead of the wealth, cultivation in St. Donew world which he ever vis-

China and Indostan, he found,

Indies,

ited,

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

semblance, such as that which he found between the

a mountain

Marco

name

slight re-

of Cibao,

Domingo, and that of Cipango, mentioned by was frequently sufficient to make him return to this

in St.

Polo,

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 *

P. F.

X. de Charlevoix, Histoire de

1730, tom.

i.,

p. 99.

VIsle

had been described by

Espagnole ou de S. Domingue,

MOTIVES FOR Marco

NEW

COLONIES

52 ?

Polo, and that they were not very distant from the Ganges,

or from the countries which

Even when

had been conquered by Alexander.

at last convinced that they were different, he

still flat-

tered himself that those rich countries were at no great distance, and in a subsequent voyage, accordingly, went in quest of them along the coast of Terra Firma, and towards the isthmus of Darien.

In consequence

of this mistake of Columbus, the name of the Indies has stuck to those unfortunate countries ever since; and

when

it

was

different

at last clearly discovered that the

from the old

new were

altogether

Indies, the former were called the

West,

in

Hence the

E^^and ^ west Indies,

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 repre-

The coun-

sented to the court of Spain as of very great consequence;

were not

what

an^

constitutes the real riches of every country, the animal

vegetable productions of the

soil,

which could well

a representation of them.

justify such

there

was

in

and

at that time nothing

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.

^ich

in animals

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 as well as

some other

tribes of

a

still

it,

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

was not altogether so scanty.

of industry not very abundant,

orvege-

It

consisted in Indian corn, yams, potatoes, bananes, &c. plants which

were then altogether unknown since been very

much esteemed

tenance equal to what pulse,

is

in

in

Europe, and which have never it,

or supposed to yield

drawn from the common

which have been cultivated

a sus-

sorts of grain

and

in this part of the world time out

of mind.

The

cotton plant indeed afforded the material of a very impor-

tant manufacture, and was at that time to Europeans undoubtedly

the most valuable of

But though

in the

all

end

sidered of

and

great con-

of the fifteenth century the muslins

part of Europe, the cotton manufacture

’*

‘

much esteemed

itself

was not

Histoire Naturelle, tom. xv. (1750), pp. 160, 162. Charlevoix, Btstoire de Vlsle Espagnok, tom. i., pp. 35, 36. Ibid.,

then con-

the vegetable productions of those islands,

other cotton goods of the East Indies were

^

pttonbe-

in every

cultivated in

XHE WEALTH OF NATIONS

528

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. So Columbus relied on the minerals.

Finding nothing either in the animals or vegetables of the newly discovered countries, which could justify a very advantageous representation of them, erals;

and

Columbus turned

his

view towards

their

in the richness of the productions of this third

he flattered himself, he had found a

which the inhabitants ornamented

kingdom,

compensation for the

full

significancy of those of the other two.

min-

The

little bits

their dress,

in-

of gold with

and which, he was

informed, they frequently found in the rivulets and torrents that fell

from the mountains, were

sufficient to satisfy

him

mountains abounded with the richest gold mines. therefore,

St.

was represented as a country abounding with

that those

Domingo, and

gold,

upon that account (according to the prejudices not only of the present times, but of those times), an inexhaustible source of real

When Columbus,

wealth to the crown and kingdom of Spain.

upon

his return

from his

first

voyage, was introduced with a sort of

triumphal honours to the sovereigns of Castile and Arragon, the

he had discovered

principal productions of the countries which

were carried in solemn procession before him. The only valuable part of them consisted in some

little fillets, bracelets,

ornaments of gold, and in some bales of cotton. The objects of vulgar

dinary

size,

wonder and

curiosity;

some

rest

and other were mere

reeds of an extraor-

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

The Council of Castile

added greatly to the novelty

of the shew.

In consequence of the representations of Columbus, the council of Castile determined to take possession of countries of

which the

The

was at-

inhabitants were plainly incapable of defending themselves.

tracted

pious purpose of converting them to Christianity sanctified the in-

by the Columbus gold,

proposing

justice of the project.

there,

was the

sole

But the hope

of finding treasures of gold

motive which prompted to undertake

give this motive the greater weight,

it

it;

and

to

was proposed by Columbus

that the

the gold and silver that should be found there

govern-

that the half of

ment

should belong to the crown. This proposal was approved of

should

have half the gold

and silver dis-

covered.

all

by

the

council.

As long as the whole or the the

first

far greater part of the gold,

adventurers imported into Europe, was got

by

so very

easy a method as the plundering of the defenceless natives,

not perhaps very

difficult to

pay even

this

heavy

tax.

which

it

was

But when the

natives were once fairly stript of all that they had, which, in St.

NEW

MOTIVES FOR Domingo, and

COLONIES

in all the other countries discovered

by Columbus,

This was

was done completely

in six or eight years, and when in order to find had become necessary to dig for it in the mines, there was no longer any possibility of paying this tax. The rigorous exaction

more

it

of

accordingly,

it,

first

occasioned,

it is

said, the total

since.

It

after-

Domingo, which have never been wrought was soon reduced therefore to a third; then to a fifth; ;

uce of the gold time to be a

at last to

mines,"^

The

a twentieth part of the gross prod-

tax upon silver continued for a long

fifth of the gross

produce. It was reduced to a tenth

only in the course of the present century.® But the ers

do not appear

to

soonre-

abandoning

of the mines of St.

wards to a tenth and

LaVS

first

have been much interested about

adventur-

silver.

Noth-

ing less precious than gold seemed worthy of their attention.

new world, subColumbus, seem to have been prompted by the

All the other enterprises of the Spaniards in the

sequent to those of

same motive. It was the sacred thirst of gold that carried Oieda, Nicuessa, and Vasco Nugnes de Balboa, to the isthmus of Darien, that carried Cortez to Mexico, and Almagro and Pizzarro to Chile

When

and Peru.

upon any unknown

those adventurers arrived

coast, their first enquiry

was always

found there; and according

if

was any gold

there

to the information

to

be

The subg eS:er-

pnses

prompted by the same

which they received

concerning this particular, they determined either to quit the country or to settle in

Of

all

it.

those expensive and uncertain projects, however, which

bring bankruptcy upon the greater part of the people

them, there after

new

is

who engage in

none perhaps more perfectly ruinous than the search

silver

and gold mines.

It is

A prudent

perhaps the most disadvan-

^gh to encourage

tageous 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

ployed in them, together with the ordinary profits of stock,

monly absorb both fore, to

which of

capital

all

and

profit.

They

em-

com-

are the projects, there-

others a prudent law-giver,

who

desired to in-

crease the capital of his nation, would least chuse to give any extra-

ordinary encouragement, or to turn towards them a greater share of that capital than what would go to them of reality is

its

the absurd confidence which almost

own

all

accord.

Such in

men have

in their

Above, p. 170. Ed. I (in place of these two sentences) reads, “The tax upon deed, still continues to be a fifth of the gross produce.” Cp. above, p. ^

®

silver, in-

169.

mining,

the wealth of nations

530

own good

fortune, that wherever there

have

al-

the least probability of

a share of it is apt to go to them of

success, too great

but people

is

But though the judgment

of sober reason

its

own accord.

and experience con-

cerning such projects has always been extremely unfavourable, that

human

avidity has

commonly been

ways be-

of

lieved in

passion which has suggested to so

The same

quite otherwise.

many

people the absurd idea of

an Eldorado.

the philosopher’s stone, has suggested to others the equally absurd

one of immense rich mines of gold and

silver.

They

that the value of those metals has, in all ages chiefly

from

their scarcity,

and that

did not consider

and nations, arisen

their scarcity has arisen

from

the very small quantities of them which nature has any where deposited in one place, from the hard and intractable substances with

which she has almost every where surrounded those small quantities,

and consequently from the labour and expence which are

every where necessary in order to penetrate to 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 Walter Raleigh concerning the golden city and country of Eldorado,^

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 to say, with great

how happy he a people who could so

sincerity,

should be to carry the light of the gospel to

well reward the pious labours of their missionary

In the countries

In this case ex-

pectations

were to

first

ver mines are at present

working.

The

by the Spaniards, no gold or silknown which are supposed to be worth the

discovered

quantities of those metals

are said to have found there,

which the

first

adventurers

had probably been very much mag-

®

“That mighty, rich and beautiful empire of Guiana, and that great and golden city which the Spaniards call El Dorado.”—Raleigh^s Works^ ed. Thomas Birch, 1751, voL ii., p. 141. .

.

Jos. Gumilla, Histoite naturelle civile et $iographique de etc.,

traduite par

.

VOrinoquef

M.

Eidous, 1758, tom. ii., pp. 46, 117, 131, 132, 137, 138, apparently attributed to the author who is described on

but the sentiment is the title page as “de la compagnie de Jesus, superieur des missions de rOr4 noque,” on the strength of a mistranslation of the French or possibly the original Spanish. If “Dieu permit” were mistranslated “God permit,” the following passage from pp. 137, 138 would bear out the text “On cherchait une vallee

ou un

territoire

dont

les rochers et les pierres etaient d^or, et les Indiens des Espagnols, et les 61 oigner en mSme temps de chez eux, leur peignaient avec les couleurs les plus vives Tor dont ce pays abondait

pour pour

flatter la cupidity

se d^barrasser plut6t de ces h6tes incommodes, et Dieu permit que les Espagnols ajoutassent foi k ces rapports, pour quils d^couvrissent un plus grand nombre de provinces, et que la lumi^re de FEvangile pht sV r6pandre avec plus de facility.”

PROSPERITY OF

NEW

nified, as well as the fertility of the

mediately after the

first

discovery.

COLONIES

S3i

mines which were wrought im-

What those adventurers were re-

ported to have found, however, was sufficient to inflame the avidity of all their countrymen.

Every Spaniard who

sailed to

America ex-

pected to find an Eldorado. 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 con-

some extent realised, so

far as the

Spaniards were concerned,

quest of Mexico and Peru (of which the one happened about thirty, the other about forty years after the

expedition of Columbus)

first

she presented them with something not very unlike that profusion

which they sought

of the precious metals

A

for.

project of commerce to the East Indies, therefore, gave occa-

sion to the first discovery of the West.

occasion to

all

A

project of conquest gave

the establishments of the Spaniards in those newly

discovered countries.

The motive which

excited

them to

this con-

quest was a project of gold and silver mines; and a course of accidents, which no

much more

human wisdom

could foresee, rendered this project

successful than the undertakers

had any reasonable

grounds for expecting.

The

first

adventures of

the other nations of Europe,

all

tempted to make settlements

in

America, were animated

who

at-

by the like

but the other nations

were

chimerical views; but they were not equally successful. It was more

not so

than a hundred years after the

successful.

any

silver, gold, or

first

settlement of the Brazils, before

diamond mines were discovered

there. In the

English, French, Dutch, and Danish colonies, none have ever yet

been discovered; at

least

first

English settlers in North America,

fifth of all

the gold and silver which should be

worth the working. The however, offered a

none that are at present supposed to be

found there to the king, as a motive In the patents to

Sir

for granting

them

their patents.

Walter Raleigh, to the London and Plymouth

companies, to the council of Plymouth, &c. ingly reserved to the crown.

To

this fifth

was accord-

the expectation of finding gold and

silver mines, those first settlers too joined that of discovering

north-west passage to the East Indies.

They have

a

hitherto been dis-

appointed in both.

Part Second Causes 0} 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

THE WEALTH OF NATIONS

532

new settlers, advances more rapidly to wealth and greatness than any other human society. The colonists carry out with them a knowledge of agriculture and of other useful arts, superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nagive place to the

Colonists

takeout knowledge and regular

tions.

government,

some notion

own

They

carry out with them too the habit of subordination,

government which takes place in

of the regular

country, of the system of laws which supports

regular administration of justice;

it,

and

their

of a

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 govern-

ment

is still

slower than the natural progress of arts, after law and

government have been so land

is

plentiful

protection. tivate.

He

and cheap,

Every

colonist gets

him

in its produce,

commonly but a

trifle.

He

possible a produce, which

and with

commonly so

all

from

all

liberal

landlord is

thus to be almost entirely his own. But

whom

own

industry,

he can get to em-

it

produce the tenth part of what

is

eager, therefore, to collect labourers

and to reward them with the most

quarters,

cul-

of the sovereign

extensive, that with all his

He

No

has every motive to render as great as

is

make

capable of producing.

But those

and the share

the industry of other people

ploy, he can seldom

wages are

more land than he can possibly

has no rent, and scarce any taxes to pay.

shares with

his land is

far established, as is necessary for their

it is

liberal wages.

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 and propand when they are grown up, the value of their

and chil-

children, during the tender years of infancy, are well fed

dren are

erly taken care of,

taken care of and are

labour greatly overpays their maintenance.

profit-

turity, the

able.

them

When

arrived at

ma-

high price of labour, and the low price of land, enable

to establish themselves in the

same manner as

their fathers

did before them. Population

and

improvement, which

mean wealth

In other countries, rent and profit eat up wages, and the two superior orders of people oppress the inferior one. onies, the interest of the

But

in

new

col-

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

and

greatest natural fertility, are to be

greatness,

revenue which the proprietor,

had

who

is

for a trifle.

The

increase of

always the undertaker, ex-

^^Eds. 1-4 reads “support.”

NEW

PROSPERITY OE

COLONIES

533

pects from their improvement constitutes his profit; which in these

are en-

circumstances

couraged

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

monly takes place this labour.

in

new

He does not,

number

colonies,

of the people,

makes

it difficult

which com-

for

him to

get

therefore, dispute about wages, but is will-

ing to employ labour at any price.

The high wages

of labour en-

courage population. The cheapness and plenty of good land encour-

age 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

are low, considered as the price of what

is

wages of labour, they

so very valuable.

What

encourages the progress of population and improvement, encourages that of real wealth and greatness.

The

progress of

many

Greek colonies towards

of the ancient

The pro-

wealth and greatness, seems accordingly to have been very rapid.

In the course of a century or two, several of them appear to have rivalled,

and even

and Agrigentum and Miletus

to

have surpassed

in Sicily,

any

mother

Tarentum and Locri

by

in Lesser Asia, appear

least equal to

their

all

Syracuse

cities.

in Italy,

colonies

was very

Ephesus

accounts to have been at

of the cities of ancient Greece.

Though

posterior

in their establishment, yet all the arts of refinement, philosophy,

poetry, to

and eloquence, seem to have been

cultivated as early,

and

have been improved as highly in them, as in any part of the mo-

ther country.

The

schools of the

two

oldest

Greek philosophers,

those of Thales and Pythagoras, were established,

it is

remarkable,

not in ancient Greece, but the one in an Asiatic, the other in an Italian colony

All those colonies

had

established themselves in

countries inhabited by savage and barbarous nations, who easily gave place to the new settlers. They had plenty of good land, and

as they were altogether independent of the mother

own affairs in their own interest.

at libel ty to manage their

was most

suitable to

the

way

city,

they were

that they judged

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 aty, grown up to be consider-

That of

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

less so.

able states.

“ Miletus and Crotona.

njeg

the wealth OF NATIONS

534 as the colony

manage

to

was not independent, they were not always at

their

suitable to their

The American colonies

own affairs in own interest.

the

way

that they judged

America and the West Indies resemble, and even greatly surpass, those of ancient Greece. In their dependency

plenty of land and

state,

more or less the efdependency. Their situation has placed them less in the

fects of this

terference

view and

from their mother

their interest their sions,

of

them

alleviated

less in the

power of

their

mother country. In pursuing

all

own way,

their conduct has,

submitted

to,

Even the

it.

many

upon many occa-

been overlooked, either because not known or not understood

Europe; and upon some occasions

in

upon the mother

they resemble those of ancient Rome; but their great dis-

tance from Europe has in

much in-

countries.

was most

In the plenty of good land, the European colonies established in

have had

not very

liberty

has been fairly suffered and

it

because their distance rendered

violent

it difficult

and arbitrary government

to restrain

of Spain has,

occasions, been obliged to recall or soften the orders

had been given

for the

general insurrection.

government of her

The

progress of

all

upon

which

colonies, for fear of a

the European colonies in

wealth, population, and improvement, has accordingly been very great.

The progress of the

Spanish colonies,

Mexico and Peru, has been very considerable.

The crown

of Spain,

some revenue from tablishment. It

by

its

share of the gold and silver, derived

its colonies,

was a revenue

from the moment of their

too, of

a nature to excite in

avidity the most extravagant expectations of

The Spanish

colonies, therefore,

tablishment, attracted very

still

human

greater riches.

from the moment of

much

first es-

their first es-

the attention of their mother

country; while those of the other European nations were for a long time in a great measure neglected.

The former

did not, per-

haps, 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

Spanish colonies are considered as

populous and thriving than

less

those of almost any other European nation.

The

possess, the

progress even of

the Spanish colonies, however, in population and improvement, has certainly been very rapid since the conquest,

is

and very great. The

represented

by Ulloa, as

city of

Lima, founded

containing fifty thou-

sand inhabitants near thirty years ago.^^ Quito, which had been

but a miserable hamlet of Indians,

is represented by the same author as in his time equally populous.^® Gemelli Carreri, a pretended

traveller, it is said, indeed,

ten

but

who seems

every where to have writ-

upon extreme good information, represents the

“ Ed.

I

reads “its.”

Juan and

Ulloa,

city of

See above, pp. 203, 204.

Voyage Ustonque^ tom.

i

,

p. 229.

Mexico

PROSPERITY OF

NEW

COLONIES

as containing a hundred thousand inhabitants; in spite of all the exaggerations of the

535

a number which,

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 catdraught either in Mexico or Peru. The lama was their only beast of burden, and its strength seems to have been a good tle fit for

a common

deal inferior to that of

among them. They were

ass.

The plough was unknown They had no

ignorant of the use of iron.

coined money, nor any established instrument of commerce of any kind. Their commerce was carried on by barter. A sort of wooden

spade was their principal instrument of agriculture. Sharp stones served them for knives and hatchets to cut with; fish bones and the

hard sinews

of certain animals served

and these seem

to

them

for needles to

sew with;

have been their principal instruments of

In this state of things,

trade.^’’^

seems impossible, that either of those em-

it

have been so much improved or so well cultivated as

pires could

at

when they are plentifully furnished with all sorts of European cattle, and when the use of iron, of the plough, and of many of the arts of Europe, has been introduced among them. But the present,

populousness of every country must be in proportion to the degree of its

improvement and

cultivation.

In spite of the cruel destruc-

two great emmore populous now than they ever were be-

tion of the natives which followed the conquest, these pires are, probably, fore:

and the people

are surely very different; for

knowledge, I apprehend, the the Spanish creoles are

we must in

many

acre-

spects superior to the ancient Indians.

After the settlements' of the Spaniards, that of the Portugueze in Brazil

is

the oldest of any European nation in America. But

as for

after the first discovery, neither gold nor silver

mines

a long time were found

in

it,

and as

revenue to the crown, neglected;

and during

it

it

upon that account, little or no a long time in a great measure

afforded,

was

for

this state of neglect, it

grew up to be a great

and powerful colony. While Portugal was under the dominion of Spain, Brazil was attacked by the Dutch, who got possession of seven of the fourteen provinces into which it is divided. They expected soon to conquer the other seven, when Portugal recovered

independency by throne.

^®In

The Dutch

then, as enemies to the Spaniards,

Awnsham and John

1704, vol.

iv., p.

its

the elevation of the family of Braganza to the

508.

Cp. above, pp. 202, 203.

Churchill’s Collection of

became

Voyages and Travels,

The Por-

Brazilis

very

the wealth OF NATIONS

536

friends to the Portugueze,

Spaniards.

They

who were

likewise the enemies of the

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 Portugueze

colonists,

who,

instead of amusing themselves with complaints, took arms against

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 themtheir

new

selves,

masters, and

by

their

were contented that

own

valour

should be entirely restored to the

it

of Portugal.^® In this colony there are said to be more than hundred thousand people,^^ either Portugueze or descended

crown six

from Portugueze,

creoles, mulattoes,

Portugueze and Brazilians.

No

and a mixed race between

one colony in America

supposed

is

iVhen

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

various

powers upon the ocean: for though the commerce

countries

tended to every part of Europe,

to contain so great

Mediterranean.

a^ooting

inAmer-

covery, claimed

all

The

its fleets

Venice ex-

of

had scarce ever

sailed be-

Spaniards, in virtue of the

America as

their

first dis-

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

greater part of the other nations of

name, that the

Europe were afraid to establish

themselves in any other part of that great continent.

who attempted Spaniards.^^

The French, by the

to settle in Florida, were all murdered

But the declension

of the naval

power of

this latter

nation, in consequence of the defeat or miscarriage of,

what they Armada, which happened towards the end the sixteenth century, put it out of their power to obstruct any

called, their Invincible

of

longer the settlements of the other European nations. In the course of the seventeenth century, therefore, the English, French,

The Swedish

New

Dutch,

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 numDanes, and Swedes,

^

Jersey

all

ber of Swedish families strates, that this

tected

by

the great nations

still

to

be found

there, sufficiently

colony was very likely to prosper, had

the mother country.

“Raynal, Histoire philosophique, Amsterdam tom,

iii.,

p. 424.

been pro-

But being neglected by Sweden ed.,

1773, tom.

352. ^^Ihid.j

it

demon-

^ Ibid., tom

vi

,

p. 8

iii.,

pp. 347-.

PROSPERITY OF it

NEW

COLONIES

was soon swallowed up by the Dutch colony

again, in 1674,21

The

fell

New York, which

Thomas and Santa Cruz

St.

new world

when

are the only

that have ever been possessed

was prospering

under the dominion of the English.

small islands of

countries in the

of

537

by

the

swal-

lowed up

by New

Danes. These little settlements too were under the government of an exclusive company, which had the sole right, both of purchasing

York.

the surplus produce of the colonists, and of supplying them with

The

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

an exclusive company

perhaps, the worst of

governments

for

of merchants

is,

any country whatever.

It

was

of

it

ren-

more slow and languid. The late king of Denmark dissolved this company, and since that time the prosperity of these dered

it

colonies has been very great.

The Dutch

colonies

of St.

Thomas and Santa

all

not, however, able

to stop altogether* the progress of these colonies, though

Danish

Cruz have been very prosper-

ous since the exclu-

company was sive

dissolved.

settlements in the West, as well as those in the East

Indies, were originally put under the government of

company. The progress been considerable,

in

of

some of them,

therefore,

an exclusive

though

it

has

comparison with that of almost any country

The Dutch colony of

Surinam is pros-

that has been long peopled and established, has been languid and

slow in comparison with that of the greater part of new colonies.

The colony of Surinam, though very considerable,

is still

inferior to

the greater part of the sugar colonies of the other European nations.

The colony of Nova Belgia, now divided into the two provinces of New York and New Jersey, would probably have soon become conhad 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 siderable too, even though

it

capable of checking altogether the efficacy of their operation.

The

great distance too from the mother country would enable the col-

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 licence; and only reserves onists to evade

to

itself

more or

less,

exclusively the direct trade from Africa to America, which

consists almost entirely in the slave trade. This relaxation in the ex-

clusive privileges of the

company,

is

probably the principal cause

of that degree of prosperity which that colony at present enjoys. Curagoa 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

^A

mistake for 1664.

perous

though still under an exclusive

com-

pany.

the wealth of nations

S3S

of one nation only, has been the great cause of the prosperity of

those two barren islands*

The French colony of

Canada has shown

The French colony last century,

greater part of the

and some part of the present, under the government so unfavourable an administration

an exclusive company. Under

of

progress was necessarily very slow in comparison with that of

its

rapid progress

Canada was, during the

of

new

other

since the

pany was

dissolu-

scheme.

became much more rapid when

colonies; but it

dissolved after the

When

fall

of

what

this

com-

called the Mississippi

is

the English got possession of this country, they

tion of

the exclusive

company.

found

in

near double the number of inhabitants which father

it

Charlevoix had assigned to fore.^^

That Jesuit had

it

between twenty and thirty years be-

travelled over the

whole country, and had no

inclination to represent it as less considerable than

The French colony

St.BomingOj in

it

really was.

established

by

pirates

and free-booters, who, for a long time, neither required the pro-

spite of

various

tection,

obstacles,

that

and the

Domingo was

of St.

nor acknowledged the authority of France; and when race of banditti

this authority,

it

Other

was

became so

far citizens as to

acknowledge

for a long time necessary to exercise

it

with

French

very great gentleness. During this period the population and im-

sugar

provement of

this colony increased

colonies,

are very thriving.

with

tarded,

had not been able

of

its

West

is

Indies,

now and

produce

its

in general all

Even the oppression for some time subit

no doubt

it

re-

The course

was relieved from that opbe greater than that of

is said to

The

all

other sugar colonies of

very thriving.

But there are no colonies

But the progress

was

the most important of the sugar colonies of the

the English sugar colonies put together.

France are

fast.

to stop its progress altogether.

prosperity returned as soon as

pression. It

it

the other colonies of France, though

jected,

all

very

company, to which

of the exclusive

of

which the progress has been more

rapid than that of the English in North America.

of the

Plenty of good land, and liberty to manage their

English colonies

has been the most

own way, seem new colonies.

their all

ica,

have not so

much

good land

affairs

In the plenty of good land the English colonies of North Amer-

rapid.

They

own

to be the two great causes of the prosperity of

though, no doubt, very abundantly provided, are, however, in-

ferior to those of the

to

some

Spaniards and Portugueze, and not superior

of those possessed

by

the French before the late war.

But

the political institutions of the English colonies have been more faF. X. de Charlevoix, Eistoire ei description ginirale de la Nouvelle le journal historique d^un voyage dans VAmirique Septentrion-

France, avec nale, 1744,

tom.

ii.,

p. 390,

speaks of a population of 20,000 to 25,000 in 1713.

Raynal says in 1753 and 1758 the population, excluding troops and Indians, was gipoo—Histoire philosophique, Amsterdam ed., 1773, tom. vi., p. 137.

^ Ed.

I

reads “the.”

NEW

PROSPERITY OF

COLONIES

539

vourable to the improvement and cultivation of this land, than

as the

those of any of the other three nations.

Spanish and Por-

First, the engrossing of uncultivated land,

means been prevented

English colonies than in any other.

upon every

though

more

altogether, has been

has by no

it

restrained in the

The colony law which imposes

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

other person; though cuted, has, however,

it

institu-

tions are

more

fa-

vourable prove-

ment.

effect.

Secondly, in Pennsylvania there

and

but their

to its im-

any

has not, perhaps, been very strictly exe-

had some

tuguese,

is

no

(1)

right of primogeniture,

among

lands, like moveables, are divided equally

dren of the family. In three of the provinces of

the chil-

all

New

England the

Though

oldest has only a double share, as in the Mosaical law.

in

those provinces, therefore, too great a quantity of land should

The

engross-

ing of uncultivated

land has been morere-

strained.

sometimes be engrossed by a particular individual,

it is

likely, in

the course of a generation or two, to be sufficiently divided again.

(2) Pri-

In the other English colonies, indeed, the right of primogeniture

mogeni-

takes place, as in the law of England. But in onies the tenure of the facilitates alienation,

lands,

which are

all

the English col-

all

held

by

and the grantee of any extensive

free socage,

tract of land,

ture

and

entails are less

pre-

valent

and

generally finds

it

greater part of

it,

and Portugueze

for his interest to alienate, as fast as

reserving only a small quit-rent. In the Spanish

colonies,

what

takes place in the succession of title

of honour

he can, the

called the right of

is

all

annexed. Such estates go

is

Majorazzo

those great estates to which any

are in effect entailed and unalienable.

all

to one person,

The French

and

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,

by

if

any part

the noble tenure of chivalry and homage,

is

of

an

estate, held

alienated,

it is,

for

by

the

a limited time, subject to the right of redemption, either heir of the superior or

by the

heir of the family;

and

all

the largest

by such noble tenures, which necessarily embarrass alienation. But, in a new colony, a great uncultivated estate is likely to be much more speedily divided by alienation than by succession. The plenty and cheapness of good land, it

estates of the country are held

has already been observed,-® are the principal causes of the rapid prosperity of

Eds.

I

and

new 2

colonies.

The

engrossing of land, in effect, de-

read “their.”

® Jus Majoratus. Ed.

i

reads “mayorazzo” in the text and “mayoratus” in

the note. Above, pp. 532, 533, and

cp. p. 92.

alienation

more

fre-

quent.

XHE WEALTH OF NATIONS

540

stroys this plenty land, besides,

is

and cheapness.^^ The engrossing

the greatest obstruction to

of uncultivated

improvement. But

its

the labour that is employed in the improvement and cultivation of land affords the greatest and most viuable produce to the society.

The produce

of labour, in this case,^® pays not only

wages, and the profit of the stock which employs of the land too

upon which

colonists, therefore,

it is

it,

its

own

but the rent

employed. The labour of the English

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, engrossing of land, is

more or

less diverted

by

the

towards other employ-

ments. (3)

are

Thirdly, the labour of the English colonists

Taxes

more

afford a greater

is

and more valuable produce, but,

not only likely to in

consequence of

moderate.

the moderation of their taxes, a greater proportion of this produce

belongs to themselves, which they ting into motion

a

still

may store up and employ in

greater quantity of labour.

The English

putcol-

onists have never yet contributed any thing towards the defence

of the mother country, or towards the support of

its civil

govern-

ment. They themselves, on the contrary, have hitherto been defended almost entirely at the expence of the mother country. But the expence of

fleets

and armies

the necessary expence of

own

civil

erally

is

out of

all

proportion greater than

government. The expence of their

civil

government has always been very moderate.

It

has gen-

been confined to what was necessary for paying competent

salaries to the governor, to the judges, police,

and

for maintaining

The expence of the civil fore the commencement

a few

and to some other

of the

offices of

most useful public works.

establishment of Massachusett^s Bay, beof the present

but about i8,ooo^. a year. That of

disturbances, used to be

New

Hampshire and Rhode Island 3,sooZ. each. That of Connecticut 4,000^. That of New York and Pennsylvania 4,500^. each. That of New Jersey 1,200^. That of Virginia of

Nova

and South Carolina Scotia

8,ooo^. each.

The

civil

establishments

and Georgia are partly supported by an annual

grant of parliament.

But Nova

Scotia pays, besides, about 7,000/.

a year towards the public expence of the colony; and Georgia about 2,500/.

a year. All the different

civil

establishments in North

Amer-

^This and the preceding sentence, beginning “The plenty ” are not in ed. i. ®®Ed. I reads “The engrossing, however, of uncultivated land, it has already been observed, is the greatest obstruction to its improvement and cultivation, and the labour.”

^ Ed.

I

reads “Its produce in this case.”

All eds. read “present” here p. 465, note,

and below,

p. 890.

and on

p. 532, but “late”

on

p. 544. See above,

PROSPERITY OF ica, in short, exclusive of

of which

NEW

54 ^

those of Maryland and North Carolina,

no exact account has been

mencement

COLONIES

com-

got, did not, before the

of the present disturbances, cost the inhabitants

above

an ever-memorable example at how small an expence three millions of people may not only be governed, but well governed. The most important part of the expence of government, 64,700/. a year;

indeed, that of defence and protection, has constantly fallen

the mother country. the colonies, ing of a

The ceremonial too

upon

of the civil government in

upon the reception of a new governor, upon the open-

new assembly,

&c. though sufficiently decent,

companied with any expensive pomp or parade. Their

is

not ac-

ecclesiastical

conducted upon a plan equally frugal. Tithes are unknown among them; and their clergy, who are far from being

government

is

numerous, are maintained either by moderate stipends, or by the voluntary contributions of the people. The power of Spain and Portugal, on the contrary, derives some support from the taxes levied

upon

their colonies. France, indeed, has never

considerable revenue from

its

colonies, the taxes

which

drawn any it

levies

up-

on them being generally spent among them. But the colony government of all these three nations is conducted upon a much more exaccompanied 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 cerepensive plan, and

is

monials are not only real taxes paid by the rich colonists upon those

among them the occasions. They are not

particular occasions, but they serve to introduce

habit of vanity and expence upon

all

other

only very grievous occasional taxes, but they contribute to estabgrievous; the ruinlish perpetual taxes of the same kind still more colonies of ous taxes of private luxury and extravagance. In the

exthose three nations too, the ecclesiastical government is levied tremely oppressive. Tithes take place in all of them, and are

all

with the utmost rigour

in those of

Spain and Portugal. All of them

friars, besides are oppressed with a numerous race of mendicant religion, by consecrated but whose beggary being not only licensed,

most carefully a most grievous tax upon the poor people, who are refuse them taught that it is a duty to give, and a very great sin to all of them, in Over and above all this, the clergy are, is

their charity.

the greatest engrossers of land. or of what is Fourthly, in the disposal of their surplus produce, English colonies have over and above their own consumption, the

The

figures are evidently

from the “very exact account” quoted below,

Ulloa, Voyage histonque, tom. of the ceremonial. magnificence the count of

Juan and

i.,

p.

acpp. 437-44I5 give a lurid

(4)

The^

ra e

m

the wealth of nations

542 nopoly of

been more favoured, and have been allowed a more extensive mar-

the

mother country has been less

ket,

than those of any other European nation. Every European na-

endeavoured more or

tion has

merce of

its

less to monopolize to itself the comupon that account, has prohibited the nations from trading to them, and has prohibited

colonies, and,

op-

pressive,

ships of foreign

them from importing European goods from any foreign nation. But the manner in which this monopoly has been exercised in different nations has been very different.

Some

since

there has

been no

nations have given up the whole commerce of their col-

onies to an exclusive

buy

exclusive

company

were obliged to

all

company, of

whom

the colonies were obliged

such European goods as they wanted, and to

to

own

the whole of their

sell

whom

surplus produce. It

they

was

with its interest to

the interest of the company, therefore, not only to

buy the

as dear,

produce

more

and

to

buy the

latter as

sell

the former

cheap as possible, but to buy no

of the latter, even at this low price, than

what they could

dis-

of the colonies as

pose of for a very high price in Europe. It was their interest, not

cheap as

only to degrade in

possible,

all

cases the value of the surplus produce of the

colony, but in

many

increase of

quantity.

its

cases to discourage

Of

all

and keep down the natural

the expedients that can well be con-

a new colony, that of an exundoubtedly the most effectual. This, however,

trived to stunt the natural growth of clusive

company

is

has been the policy of Holland, though their company, in the course of the present century, has given

up

in

till

many

respects the exertion

was the policy of Denmark

of their exclusive privilege. This too

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 Brazil,

nor any restriction

of com-

two Pernambuco and Marannon.®®

of the principal provinces of

Other nations, without establishing an exclusive company, have confined the whole commerce of their colonies to a particular port

and to

mother country, from whence no ship was allowed to sail, but either in a fleet and at a particular season, or, if single, in consequence of a particular licence, which in most cases was very well

particular

paid

merce to a particular port

licensed ships,

of the

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 concert, the trade sarily

it

for their interest to act in

which was carried on in

this manner would necesbe conducted very nearly upon the same principles as that of

®®Maranon in 1755 and Pernambuco four years later.—Raynal, Histoire pklosophique, Amsterdam ed., 1773, tom. iii., p. 403.

PROSPERITY OF

NEW

COLONIES

543

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,

ways been the policy accordingly,

till

within these few years, had

and the price of

of Spain,

have been

said to

all

al-

European goods,

Spanish West At Quito, we are told by Ulloa, a pound of iron sold for about four and six-pence, and a pound of steel for about six and is

enormous

in the

Indies.

nine-pence sterling.^® But

pean goods, that the

it is

chiefly in order to purchase

colonies part with their

more, therefore, they pay for the one, the the other,

and the dearness

cheapness of the other.

same

of the one

The policy

less

the

is

own

Euro-

they really get for

same thing with the

of Portugal is in this respect the

as the ancient policy of Spain,

with regard to

all its colonies,

except Pernambuco and Marannon, and with regard to these lately adopted

a

still

who may

carry

common

all

the different ports of the

competition

no other

licence than

is

to enter into

sell their

Under

it

any general combination, and

im-

their

them from making very

sufficient to hinder

orbitant profits.

both to

num-

dispatches of the customhouse. In this case the

them

ex-

so liberal a policy the colonies are enabled

own produce and

to

but free

dom for every

for

ber and dispersed situation of the different traders renders possible for

has

their colonies free to all their

on from

it

mother country, and who have occasion the

it

worse.

Other nations leave the trade of subjects,

The

produce.

buy the goods

of

subject tc

trade

with every port in the

mother country,

Europe at a

reasonable price. But since the dissolution of the Plymouth com-

pany, when our colonies were but in their infancy,

been the policy of England.

and has been uniformly land,

is

commonly

It

this

has always

has generally too been that of France,

so since the dissolution of what, in

called their Mississippi

company. The

Eng-

profits of

the trade, therefore, which France and England carry on with their colonies,

though no doubt somewhat higher than

if

the competition

was free to all other nations, are, however, by no means exorbitant; and the price of European goods accordingly is not extravagantly high in the greater part of the colonies of either of those nations.

In the exportation of

their

own

surplus produce too,

it is

only

with regard to certain commodities that the colonies of Great Britain are confined to the market of the mother country. These com-

modities having been enumerated in the act of navigation and in

®®Ed. i reads “said to be.” Ed. I reads “This, however, has.” ®®Iron sometimes at loo ecus the quintal and steel at 150. Juan and Ulloa, Voyage historique, tom. i., p. 252. ” Ed. I reads “the same as that of Spain

—

and

free-

dom to export

everything but

THE WEALTH OF NATIONS

544

have upon that account been called

the enu-

some other subsequent

merated

enumerated commodities?^ The rest are called non-enumerated; and may be exported directly to other countries, provided it is in

commodito other

ties

places besides the

acts,

which the owners and three-fourths

British or Plantation ships, of

of the mariners are British subjects.

the non-enumerated commodities are some of the most

Among

mother country.

important productions of America and the West Indies; grain of

Some

sorts,

most im-

and principal object of the culture of Grain is all new colonies. By allowing them a very extensive market for it, the law encourages them to extend this culture much beyond the

portant

productions are

not enumerated, as grain,

lumber, salt provisions, naturally the

fish,

all

sugar, and rum.

first

consumption of a thinly inhabited country, and thus to provide beforehand an ample subsistence for a continually increasing population.

In a country quite covered with wood, where timber consetimber,

quently is

is

of little or

no value, the expence

By

the principal obstacle to improvement.

a very extensive market facilitate

of clearing the

allowing the colonies

for their lumber, the

improvement by raising the price

ground

of

law endeavours to

a commodity which

and thereby enabling them

would otherwise be

of little value,

make some

what would otherwise be mere expence.

profit of

to

In a country neither half-peopled nor half cultivated, cattle

cattle,

naturally multiply beyond the consumption of the inhabitants, are often it

upon that account

no value. But it

of little or

is

and

necessary,

has already been shewn,^^ 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. cattle, in all shapes,

law endeavours to price

is

dead and

alive,

raise the value of

By

allowing to American

a very extensive market, the

a commodity of which the high

The good effects of this by the 4th of and skins among the enum-

so very essential to improvement.

liberty,

however, must be somewhat diminished

George

III. c. 15.

which puts hides

erated commodities, and thereby tends to reduce the value of

Amer-

ican cattle. fish,

To

increase the shipping and naval

power of Great Britain, by is an object which the

the extension of the fisheries of our colonies, legislature

seems to have had almost constantly in view. Those

upon

this account, have had all the encouragement which freedom can give them, and they have flourished accordingly. The

fisheries,

New

England

fishery in particular was, before the late

disturb-

®®The commodities originally enumerated in 12 Car. II., c. 18, § 18, were sugar, tobacco-cotton-wool, indigo, ginger, fustic and other dyeing woods. Above, pp. 148, 149, 219-221.

" See above,

p. 540,

note 30.

PROSPERITY OF

NEW

COLONIES

545

ances, one of the most important, perhaps, in the world.

The whale-

fishery which, notwithstanding

Britain carried on to so

little

an extravagant bounty,

in

Great

purpose, that in the opinion of

many

is

people (which I do not, however, pretend to warrant) the whole produce does not much exceed the value of the bounties which are

annually paid for it, is in New England carried on without any bounty to a very great extent. Fish is one of the principal articles with which the North Americans trade to Spain, Portugal, and the

Mediterranean.

Sugar was originally an enumerated commodity which could be exported only to Great Britain. But in 1731, upon a representation of the sugar-planters, its exportation was permitted to all parts of

sugar,

the world.*^^ The restrictions,^^ however, with which this liberty was granted, joined to the high price of sugar in Great Britain, have rendered it, in a great measure, ineffectual. Great Britain and

her colonies

still

continue to be almost the sole market for

all

the

sugar produced in the British plantations. Their consumption increases so fast, that, though in consequence of the increasing im-

provement of Jamaica, as well as of the Ceded

Islands,^^ the im-

portation 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 Ameri-

and rum.

cans carry on to the coast of Africa, from which they bring back negroe slaves in return. If the

whole surplus produce of America

salt provisions,

and

in grain of all sorts, in

had been put into the enumeration, and

in fish,

Grain,

meat and fish

thereby forced into the market of Great Britain, interfered too

people. It

much with

it

would have

the produce of the industry of our

was probably not so much from any regard

terest of America, as

from a jealousy of

own

to the in-

this interference, that those

important commodities have not only been kept out of the enumeration, but that the importation into Great Britain of all grain,

except

rice,

and

of salt provisions, has, in the ordinary state of the

law, been prohibited.

would have competed too strongly

with British pro-

duce if forced into the British

The non-enumerated commodities could originally be exported to all parts of the world. Lumber and rice, having been once put There seems to be some mistake here. The true date is apparently 1739, under the Act 12 Geo. IL, c. 30. Ships not going to places south of Cape Finisterre were compelled to call at some port in Great Britain. Gamier, in his note to this passage, tom. iii., p. 323, points out that the islands ceded by the peace of Paris in 1763 were only Grenada and the Grenadines, but that the term here includes the other islands won during the war, St. Vincent, Dominica and Tobago, which are mentioned below, p. 895.

market.

the wealth of nations

546 Originally

when they were afterwards taken out

into the enumeration,

of

it,

non-enumerated

were confined, as to the European market, to the countries that

commodi-

lie

ties

could

be exported to any part of the world

Recently they have

By

the 6th of George III.

The

Cape

parts of Europe which lie south of

manufacturing countries, and we ships carrying

52. all

c.

subjected to the like restriction.

non-enumerated commodities were

Finisterre, are not

were less jealous of the colony

home from them any manufactures which could

interfere with our

own.

The enumerated commodities

been confined to

south of Cape Finisterre.*^^

are of two sorts:

such as are

first,

either the peculiar produce of America, or as cannot

be produced,

countries

mother country. Of

south of

or at least are not produced, in the

Cape

are, molasses, coffee, cacao-nuts, tobacco,

Finisterre.

fins,

The enumerated

commodities

(i)

are

com-

modities

not pro-

duced at all in

the

mother

raw

silk,

kind

this

pimento, ginger, whale-

cotton-wool, beaver, and other peltry of America,

and other dying woods: secondly, such as are not the peculiar produce of America, but which are and may be produced indigo, fustic,

in the

mother country, though not

such quantities as to supply

in

the greater part of her demand, which foreign countries.

and bowsprits, ore, hides

and

Of

this

tar, pitch,

skins, pot

kind are

is

all

principally supplied from

naval stores, masts, yards,

and turpentine, pig and bar

and pearl

ashes.

The

iron,

copper

largest importation

of commodities of the first kind could not discourage the

growth

country,

and (2) commodities

or interfere with the sale of

country.

of it

which

By

confining

any part

mother

them to the home market, our merchants,

was expected, would not only be enabled to buy them cheaper

only a

the Plantations, and consequently to

small part

at

sell

them with a better

in

profit

home, but to establish between the Plantations and foreign coun-

of the

supply

of the produce of the

tries is

an advantageous carrying trade, of which Great Britain was

produced

necessarily to be the center or

in the

into

emporium, as the European country be imported.

The im-

portation of commodities of the second kind might be so

managed

which those commodities were

first to

mother country.

too, it

the

was supposed, as to

interfere, not

same kind which were produced

at

with the sale of those of

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 confining such commodities to the

home market,

By

latter.

therefore,

it

was

proposed to discourage the produce, not of Great Britain, but of

some foreign countries with which the balance of trade was believed to

On

the

importa-

be unfavourable to Great Britain.

The

prohibition of exporting from the colonies, to

cpuntry but Great Britain, masts, yards, and bowsprits,

any other tar, pitch,

I

Rice was put in by 3 and 4 Ann, c. 5, and taken out by 3 Geo. II timber was taken out by 3 Geo. III., c. 45.

,

c.

28

NEW

PROSPERITY OF

COLONIES

547

and turpentine, naturally tended to lower the price of timber in the colonies, and consequently to increase the expence of clearing their

tion of

naval stores to

lands, the principal obstacle to their improvement.

But about the

beginning of the present century, in 1703, the pitch and tar company of Sweden endeavoured to raise the price of their commodi-

bounty

was given.

Great Britain, by prohibiting their exportation, except in

ties to

their

Great Britain a

own

ships, at their

thought proper cantile policy,

own

price,

and

in such quantities as they

In order to counteract this notable piece of mer-

and

ent, not only of

to render herself as

Sweden, but of

much

as possible independ-

the other northern powers,

all

Great Britain gave a bounty upon the importation of naval stores

from America^® and the

home market at the

same

could lower

bounty was

effect of this

price of timber in America,

to raise the

much more than the confinement

it;

and

to the

as both regulations were enacted

time, their joint effect

was rather

to encourage than to

discourage the clearing of land in America.

Though

among the enumerwhen imported from America, they are exempted from considerable duties to which they are subject when

American

imported from any other country,

duty.

pig and bar iron too have been put

ated commodities, yet as,

contributes

more

the one part of the regulation

than the other to discourage

it.

There

no manufacture which

is

wood

as

a

oc-

furnace, or which can

much to the clearing of a country over-grown with The tendency of some of these regulations to raise the value

contribute so

it.

of

timber in America, and thereby to faciliate the clearing of the land, neither, perhaps, intended nor understood

Though

is

exempt from

to encourage the erection of furnaces in America,

casions so great a consumption of

was

pig iron

their beneficial effects, however,

accidental, they have not

by the

have been in

upon that account been

The most perfect freedom

of trade

is

legislature. this respect

less real.

permitted between the Brit-

ish colonies of America and the West Indies, both in the enumer-

These regulations have raised the

value of timber

and thus helped to clear the country.

ated and in the non-enumerated commodities. Those colonies are

now become

so populous

and

thriving, that each of

them

finds in

Freedom of trade

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

prevails

market

the Brit-

The

for the produce of one another. liberality of England, however, towards the trade of her col-

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 reonies has been confined chiefly to

^ Anderson, Commerce,

a.d. 1703 Details arc given below, pp. 609, 610, in a chapter not contained in eds.

I

and

2.

23 Geo. IL,

c.

29.

between ish

Amer-

ican colonies

and

the British

West

Indies.

the wealth of nations

54S

and

British

fined manufactures even of the colony produce, the merchants

liberality

manufactures of Great Britain chuse to reserve to themselves, and

does not

extend to refined

have prevailed upon the legislature to prevent their establishment in the colonies, sometimes by high duties, and sometimes by abso-

manufactures.

lute prohibitions.

While, for example, Muskovado sugars from the British plantaManufactured sugar is subject to

tions,

pay upon importation only 6 s.

sugars

pay

When

4^. 2^. 5^^.

and

id.\

il. is.

duty.

sole,

hundred weight; white

double or

single, in loaves

those high duties were imposed. Great Britain

heavy

was the

^d. the

refined, either

and she

still

continues to be the principal market to

which the sugars of the British colonies could be exported. They amounted, therefore, to a prohibition, at

first of

claying or refining

sugar for any foreign market, and at present of claying or refining it

which takes

for the market,

gar accordingly, though

of France, has been

off,

perhaps, more than nine-tenths

The manufacture

of the whole produce.

it

little

of claying or refining su-

has flourished in cultivated in

all

the sugar colonies

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

those of the English, almost

plantation. Since

works of

all

two or three remaining in the

island.

At

am assured, not above

,

present, however,

indulgence of the custom-house, clayed or refined sugar,

from loaves into powder, pig and bar iron,

slit-mills

may not be erected in the

commonly imported

if

by an

reduced

as Muskovado.

While Great Britain encourages in America the manufactures

Steel fur-

naces and

is

into

fell

kind have been given

this

up, and there are at present, October 1773

it

commodities are

of

by exempting them from duties to which the like subject when imported from any other country,

she imposes an absolute prohibition

naces and slit-mills in

any

of her

upon the

erection of steel fur-

American plantations.^^ She

will

colonies.

not suffer her colonists to work in those more refined manufactures

even for their own consumption; but of her merchants

and manufacturers

they have occasion

in

Amer-

ica

may

not be

all

upon

goods of

their purchasing this

kind which

for.

She prohibits the exportation from one province to another by

Hats,

wools and woollen goods produced

insists

and even the carriage by land upon horseback hats, of wools and woollen goods, of the produce

water,

or in

of

of America;

a

cart,

a regulation which effectually prevents the establishment of any

manufacture of such commodities for distant industry of her colonists in this

^

way

sale,

Anderson, Commerce j a.d. 1750. wools under 10 and ii Anderson, Commerce^ a.d. 1732 and 1699. 23 Geo.

and confines the

to such coarse

and household

II,, c. 29.

“Hats under

5 Geo. IL, c. 22;

W.

III., c. 10.

See

PROSPERITY OF

NEW

COLONIES

549

manufactures, as a private family commonly makes for use, or for that of

some

of its neighbours in the

own

its

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 to themselves,

is

way that they judge most advantageous a manifest violation of the most sacred rights of

mankind. Unjust, however, as such prohibitions not hitherto been very hurtful to the colonies. and, consequently, labour so dear

may be,

Land is

among them,

port from the mother country, almost

they have

bulk from province to province.

Such prohibitions,

though a violation

still

so cheap,

that they can im-

the more refined or

more advanced manufactures cheaper than they could make them for themselves. Though they had not, therefore, been prohibited from all

carried in

of sacred rights,

have not as yet

been very hurtful.

establishing such manufactures, yet in their present state of im-

provement, a regard to their own interest would, probably, have prevented them from doing

so.

In their present state of improve-

ment, those prohibitions, perhaps, without cramping their industry, or restraining of

own

its

it

from any employment to which

it

would have gone

accord, are only impertinent badges of slavery imposed

upon them, without any

sufficient reason,

by

the groundless jeal-

ousy of the merchants and manufacturers of the mother country. In a more advanced state they might be really oppressive and

in-

supportable.

Great Britain too, as she confines to her own market some of the

most important productions 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 countries, and sometimes by giving bounties upon importation from the colonies. In the

first

way

colonies,

and

in the second to their

raw

flax, to their indigo, to their naval-stores,

silk,

their

she gives an ad-

and

to their

hemp and

to their building-tim-

ber.^^ This second way of encouraging the colony produce by boun-

upon importation,

ties

liar to

is,

Great Britain. The

so far as I have been able to learn, pecufirst is not.

Portugal does not content her-

with imposing higher duties upon the importation of tobacco

self

from any other country, but prohibits

it

into

'

Great Britain of

various

vantage in the home-market to the sugar, tobacco, and iron of her

own

The importation

colonial

productions is

encour-

aged either

by

abate-

ment of duties or

by bounties.

under the severest penal-

ties.

With regard

to the importation of goods from Europe, England

has likewise dealt more liberally with her colonies than any other nation.

Great Britain allows a part, almost always the half, generally a Details are given below, pp. 609-612, in I

and

2.

a chapter which was not

in eds.

In regard to im-

ports

from Europe

550

THE WEALTH OF NATIONS

the Brit-

larger portion,

and sometimes the whole

ish colo-

upon the importation of foreign goods, to be drawn back upon

have had more nies

liberal

their exportation to

country,

any

was easy

it

of the duty which

foreign country.®^

to foresee,

No

is

paid

independent foreign

would receive them

they came to

if

treatment than

it

those of

are subjected on their importation into Great Britain. Unless,

other

therefore,

loaded with the heavy duties to which almost

some part

of those duties

all

foreign goods

was drawn back upon exporta-

countries,

was an end of the carrying

tion, there

voured by drawbacks being al-

lowed,

trade; a trade so

much

fa-

the mercantile system.

by no means independent foreign 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 Our

colonies, however, are

countries;

their colonies) to receive such goods, loaded with all the

same du-

which they paid in the mother country. But, on the contrary,

ties

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.

till

1763, the

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 Eu-

rope or the East Indies, which should be exported from this king-

dom

to

any

callicoes

British colony or plantation in America; wines, white

and muslins excepted.”

sorts of foreign goods might

tations than in the

owing to the advice

Of

different

mother country; and some

may still.

the greater part of the regulations concerning the colony

trade, the

merchants

who

carry

of interested

many

Before this law,

have been bought cheaper in the plan-

been the principal advisers.

We

it

on,

it

must be observed, have

must not wonder,

therefore,

if,

in

mer-

the greater part of them, their interest has been

chants.

than either that of the colonies or that of the mother country. In

more considered

their exclusive privilege of supplying the colonies with all the

which they wanted from Europe, and of purchasing

all

of their surplus produce as could not interfere with

goods

such parts

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 their re-exportation to

any independent country, the

mother country was sacrificed to

it,

however, see note.

interest of the

even according to the mercan-

“ Above, pp. 466-470 The quotation is not quite verbatim. The provision p. 470, where,

upon

is

referred to above,

NEW

PROSPERITY OF ideas of that interest. It

tile

pay

to

as

little

was

COLONIES

for the interest of the

55i

merchants

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

They might thereby be enabled

Britain.

either the

same quantity

quantity with the same thing either in the one

to

profit,

way

and, consequently, to gain some-

or the other. It was, likewise, for the

cheap and in as

interest of the colonies to get all such goods as

great abundance as possible. interest of the

her revenue,

in the colonies,

sell

of goods with a greater profit, or a greater

But

this

might not always be for the

mother country. She might frequently

by

both in

giving back a great part of the duties which

been paid upon the importation of such goods; and tures,

suffer

by being undersold

had

m her manufac-

in the colony market, in consequence of

the easy terms upon which foreign manufactures could be carried

deal

The progress of the linen commonly said, has been a good retarded by the drawbacks upon the re-exportation of Ger-

man

linen to the American colonies.

thither

by means

of those drawbacks.

manufacture of Great Britain,

But though the policy

it is

of Great Britain with regard to the trade

of her colonies has been dictated

that of other nations,

it

by the same mercantile spirit as upon the whole, been less

has, however,

and oppressive than that

illiberal

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

com-

plete. It is in

every respect equal to that of their fellow-citizens at secured in the same manner,

representatives of the people,

who

by an assembly

est

of the

claim the sole right of imposing

taxes for the support of the colony government. this

assembly over-awes the executive power, and

The

authority of

neither the

mean-

nor the most obnoxious 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 people, yet they

approach more nearly

power

to that character;

either has not the

the support which

it

means

receives

and^® as the executive

to corrupt them, or, on account of

from the mother country,

is

not under

the necessity of doing so, they are perhaps in general more influenced by the inclinations of their constituents. The councils, which, in the colony legislatures, correspond to the house of lords in ®*Ed.

I

does not contain the words “they approach more nearly to that

character; and.”

regard to foreign

home, and

is

Except in

trade the

English colonies

have complete liberty.

THE WEALTH OF NATIONS

552

Great Britain, are not composed of an hereditary nobility. In some of the colonies, as in three of the governments of

those councils are not appointed

any hereditary

nobility.

In

England,

by the rep-

king, but chosen

of the English colonies

there

is

of them, indeed, as in all other free

all

countries, the descendant of

by the

none

resentatives of the people. In

New

an old colony family

is

more respected

than an upstart of equal merit and fortune: but he respected,

some

is only more by which he can be troubleneighbours. Before the commencement of the present

and he has no

to his

privileges

disturbances, the colony assemblies had not only the legislative,

but a part of the executive power. In Connecticut and Rhode

Is-

land, they elected the governor.^^ In the other colonies they ap-

pointed the revenue

who

officers

those respective assemblies, to ately responsible. There

English colonists than try.

is

whom

more

among

hitherto been

The absoernments of Spain,

of Portugal,

imposed by

those officers were immedi-

equality, therefore,

among

the

the inhabitants of the mother coun-

Their manners are more republican, and their governments,

those of three of the provinces of

lute gov-

collected the taxes

The

more republican

New England in particular,

have

too.

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 jEerior officers are,

all

their in-

on account of the great distance, naturally exer-

and

in a less

cised there with

more than ordinary

degree of

governments there

France,

part of the country.

are even

more vio-

The

violence.

Under

all

liberty in the capital than in

absolute

any other

sovereign himself can never have either

interest or inclination to pervert the order of justice, or to oppress

lent in the

the great

colonies

more

than at home.

more

is

body

of the people. In the capital his presence over-awes

or less all his inferior officers,

who

in the remoter provinces,

from whence the complaints of the people are him, can exercise their tyranny with

European colonies

in

The government

reach

But the most dis-

safety.

America are more remote than the

tant provinces of the greatest empires which before.

less likely to

much more

had ever been known

of the English colonies

is

perhaps the only

one which, sincelhe world began, could give perfect security to the inhabitants of so very distant a province.

The

administration of

the French colonies, however, has always been conducted with gentleness

and moderation than that

guese. This superiority of conduct

“The Board mons

is

of the Spanish

more

and Portu-

suitable both to the character

of Trade and Plantations, in a report to the House of Comon this democratic character of the government of some

in 1732, insisted

of the colonies,

Rhode

and mentioned the

Island: the report

is

election of governor by Connecticut and quoted in Anderson, Commerce, a.d. 1732.

NEW

PROSPERITY OF of the French nation,

and

tion, the nature of their

to

COLONIES

what forms the character

553

of every na-

government, which, though arbitrary and

violent in comparison with that of Great Britain, is legal in comparison with those of Spain It is in the progress of the

and

free

and Portugal.

North American

colonies, however,

that the superiority of the English policy chiefly appears.

The

The sugar colonies of

France

progress of the sugar colonies of France has been at least equal,

are

perhaps superior, to that of the greater part of those of England;

prosper-

and yet the sugar colonies of England enjoy a free government nearly of the same kind with that which takes place in her colonies of North America. But the sugar colonies of France are not discouraged, like those of England, from refining their

and, what

ment

is

of

own

sugar;

greater importance, the genius of their govern-

still

naturally introduces

a

better

management

of their negro

slaves.

In

more

ous than the

Eng-

lish

be-

cause they are not discour-

aged from refining,

and slaves are better

European

all

on by negro

colonies the culture of the sugar-cane is carried

The

slaves.

constitution of those

managed,

who have been born absolute

in the temperate climate of

Europe could

not,

it is

supposed, sup-

port the labour of digging the ground under the burning sun of the

West

and the culture

Indies;

present,

is all

hand

of the sugar-cane, as it is

labour, though, in the opinion of

plough might be introduced into

it

of cattle,

is

carried

is

and

slaves;

in the

planters, I think

The law,

good management of

it is

so far as

on by

it

their slaves the

by

of those

French

generally allowed, are superior to the English.

gives

the violence of his master,

where the government it is

drill

carried on

must depend equally upon the good management

some weak protection is

is in

likely to

a

to the slave against

be better executed in a colony

great measure arbitrary, than in one

altogether free. In every country where the unfortunate

law of slavery

when he protects the the management of the

established, the magistrate,

is

slave, intermeddles in

some measure

in

private property of the master; and, in a free country, where the

master

is

perhaps either a member of the colony assembly, or an

member, he dare not do this but with the greatest caution and circumspection. The respect which he is obliged to pay to the master, renders it more difficult for him to protect the slave. But in a country where the government is in a great measure arbielector of such a

trary,

where

it is

usual for the magistrate to intermeddle even in

the management

of the private property of individuals,

them, perhaps, a

lettre

de cachet

if

they do not manage

and to send it

ing

more

favour-

depend very much upon the good management of

those cattle; so the profit and-success of that which slaves,

where

many, the

at

with great advantage. But, as

the profit and success of the cultivation which

means

managed

government be-

according

able to

the slaves

than republican,

THE WEALTH OF NATIONS

554

much easier for him to give some protection to the and common humanity naturally disposes him to do so. The

to his liking, slave;

it is

protection of the magistrate renders the slave less contemptible in

the eyes of his master,

more regard, and to

thereby induced to consider him with

who is

treat

him with more

gentleness. Gentle usage

renders the slave not only more faithful, but more intelligent, and

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 fretherefore,

quently belong to free servants, but which never can belong to a slave,

who

master as

Roman history.

perfectly free

That the condition

may be

seen in

is

treated as slaves

is

and

better under

is

I believe,

is,

ages and nations. In the

countries where the

secure.

a slave

of

under a free government, all

commonly are in

Roman

an arbitrary than

supported by the history of

history, the first time

we read

of the magistrate interposing to protect the slave from the violence of his master,

is

under the emperors.

When

Vedius

presence of Augustus, ordered one of his slaves,

Pollio, in the

who had commit-

ted 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 indig-

nation, to emancipate immediately, not only that slave, but all the

others that belonged to

him.^'’^

Under the republic no magistrate

could have had authority enough to protect the slave,

much

less to

punish the master.

The

The superiority

stock,

it is

to be observed,

which has improved the sugar

colonies of France, particularly the great colony of St.

Domingo,

of the

French sugar colonies is

the

more

has been raised almost entirely from the gradual improvement and cultivation of those colonies. It has been almost altogether the pro-

duce of the

soil

and

of the industry

of the colonists, or,

remark-

comes to the same thing, the price

able inas-

mulated by good management, and employed

much as they have

accumulated their

own stock.

greater produce.

what

of that produce gradually accuin raising

a

still

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 Eng-

“ The

story

is

told in the

same way in Lectures,

^

lib. iii.,

cap. 40,

and Dio

Cassius, Hist., lib.

p. 97,

but Seneca,

De

ira,

cap. 23, say, not that Augustus ordered all the slaves to be emancipated, but that he ordered all the goblets on the table to be broken. Seneca says the offending slave was emancipated. liv.,

Dio does not mention emancipation. “ Ed. I reads “and ihdustry.” “’^The West India merchants and planters asserted, in 1775, that there was capital worth £60,000,000 in the sugar colonies and that half of this belonged to residents in Great Britain.—See the Continuation of Anderson’s Commerce, A.D. 1775.

NEW

PROSPERITY OF lish sugar colonies

COLONIES

has been, in a great measure, owing to the great

riches of England, of which a part has overflowed,

upon those

555

if

one

may

say

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 so,

colonies.

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 European nations with regard to their colonies.

The

policy of Europe, therefore, has very

little

different

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.

sided over and directed the

project of establishing those col-

first

and

onies; the folly of hunting after gold justice of coveting the possession of

silver mines,

and the

adventurers with every

first

in-

a country whose harmless na-

from having ever injured the people of Europe, had

ceived the

Europe has done nothing for the

prosperity of the

Folly and injustice seem to have been the principles which pre-

tives, far

The policy of

mark

of kindness

colonies.

Folly

directed

the re-

and

injustice

first

project.

and hos-

pitality.

The

adventurers, indeed,

who formed some

of the latter estab-

lishments, joined, to the chimerical project of finding gold

and

respectsil-

able ad-

ver mines, other motives more reasonable and more laudable; but

even these motives do very

The English

little

honour to the policy of Europe. at home, fled for freedom to

puritans, restrained

America, and established there the four governments of land.

The

English catholics, treated with

much

New Eng-

greater injustice,®®

established that of Maryland; the Quakers, that of Pennsylvania.

The Portugueze fortunes,

some

Jews, persecuted

and banished

sort of order

strumpets,

by

the inquisition, stript of their

to Brazil, introduced,

by

their example,

that colony

was

originally peopled,

Upon

felons

were sent out by the disorder and injustice

of European gov-

and taught

these different oc-

culture of the sugar-cane.®^

casions

was, not the wisdom and policy, but the disorder and in-

justice of the

times

and

them the it

venturers of later

ernments.

and industry among the transported

by whom

The more

all

European governments, which peopled and cultivated

America.

In effectuating some of the most important of these establishments, the different governments of Europe had as little merit as in projecting them.

^ Eds.

The conquest

of

Mexico was the

project, not of

I and 2 do not contain the words “so far as concerns their internal government.” ” “ Ed. I reads “persecuted.” Ed. i reads “with equal injustice iii., tom. ed., Amsterdam 323, pp. philosophique, 1773, “^Raynal, Histoire ii., p. 442. vol. trans., English Justamond’s 327. 324, 326,

To the actual establish-

ment

of

XHE WEALTH OF NATIONS

556 the colonies the

govern-

ments of Europe

and

the council of Spain, but of a governor of Cuba; fectuated

by the

spirit of the

bold adventurer

to

it

was

whom it was en-

which that governor, who soon

trusted, in spite of every thing

ef-

pented of having trusted such a person, could do to thwart

it.

re-

The

contribut-

ed little,

conquerors of Chili and Peru, and of almost

upon the continent

settlements

the other Spanish

all

of America, carried out with

no other public encouragement, but a general permission

and conquests

settlements

adventures were

all

The government

ers.

That

of them.

of

in the

name

at the private risk

some

of

its

Those

of the adventur-

any thing

of Spain contributed scarce

England contributed

the establishment of

of the king of Spain.

and expence

them

make

to

to

any

as little towards effectuating

most important colonies

in

North

America.

When

and discouraged

those establishments were effectuated, and

had become

so

considerable as to attract the attention of the mother country, the

rather

than encouraged

them

first

regulations which she

made with regard

to

them had always

market, and to enlarge her

fine their

own

at their expence, and,

after they

damp and

were

consequently, rather to

estab-

forward the course of their prosperity. In the different ways

lished.

in

view to secure to herself the monopoly of their commerce; to con-

which

this

monopoly has been

discourage, than to quicken and

exercised, consists

in

one of the most

essential differences in the policy of the different

with regard to their colonies. is

only somewhat less

The

illiberal

best of

European nations them all, that of England,

and oppressive than that

of

any

of

the rest. Europe

In what way, therefore, has the policy of Europe contributed

has done nothing

either to the first establishment, or to the present grandeur of the

America? In one way, and

except

colonies of

provide

tributed a good deal.

the men who

the

founded

laying the foundation of so great

the colo-

quarter of the world of which the policy

men who were

in

one way only,

Magna virum Mater!

It

it

has con-

bred and formed

capable of atchieving such great actions, and of

an empire; and there is

is

no other

capable of forming, or

nies.

has ever actually and in fact formed such men. to the policy of tive

The

colonies

Europe the education and great views

owe

of their ac-

and enterprising founders; and some of the greatest and most

important of them, so far as concerns their internal government,^^

owe

to

it

scarce

“Velasquez. "'“Salve ii.,

any thing

else.

“Cortez.

magna parens frugum, Saturnia

tellus,

Magna

virum.”--VirgiI,

173-174.

® Eds. I and 2 do not contain the words “so far as concerns their internal government.” Cp. above, p. 555, note 58.

AMERICA AND EAST INDIES

557

Part Third Of the Advantages which Europe has derived from the Discovery of

America and from that of a Passage f

the Cape of

Such

East Indies by

to the

Good Hope

are the advantages which the colonies of America have de-

The advantages

rived from the policy of Europe,

What are those which Europe has derived from the

derived

discovery and

colonization of America?

Those advantages may be divided,

first,

into the general ad-

by Europe from America

vantages which Europe, considered as one great country, has de-

are (i)

rived from those great events; and, secondly, into the particular

the ad-

vantages

advantages which each colonizing country has derived from the colonies which particularly belong to

thority or dominion which

it

it,

in consequence of the au-

of Europe in general,

and

exercises over them.

( 2)

the ad-

The

general advantages which Europe, considered as one great

country, has derived from the discovery and colonization of ica, consists, first, in

the increase of its enjoyments;

Amer-

and secondly,

in the augmentation of its industry.

The

surplus produce of America, imported into Europe, furn-

ishes the inhabitants of this great continent with

a variety of com-

vantages of the particular

countries

which have colonies.

modities which they could not otherwise have possessed, some for

(i)

conveniency and use, some for pleasure, and some for ornament,

general

The

advan-

and thereby contributes

The

to increase their enjoyments.

discovery and colonization of America,

it

will readily

lowed, have contributed to augment the industry, countries which trade to

it

directly;

tages to

first,

be

al-

of all the

such as Spain, Portugal,

France, and England; and, secondly, of all those which, without trading to

goods to

it

it

directly, send,

through the

of other countries,

of

own produce; such

as Austrian Flanders,

Germany, which, through the medium

countries before mentioned, send to

and other goods.

more extensive market

it

of the

All such countries

have evidently gained a

for their surplus produce, its

and must con-

quantity.

But, that those great events should likewise have contributed to

Hungary and Poland, a single commodity of their

encourage the industry of countries, such as

may

(a)

an in-

crease of

enjoy-

and

a considerable quantity of

sequently have been encouraged to increase

which

are,

ments,

of their

some provinces linen

medium

Europe

never, perhaps, have sent

own produce to America, is not, perhaps, altogether so evident. That those events have doiH^ so, however, cannot be doubted.

(&) an augmentation

of indus-

try not

only in the countries

which trade

with America directly,

THE WEALTH OF NATIONS

5S8

part of the produce of America

but also

Some

in other

Poland, and there

countries

which do

and tobacco,

not send their produce to America,

ties

some demand

is

of that

new

consumed

is

Hungary and

there for the sugar, chocolate,

quarter of the world. But those commodi-

must be purchased with something which

of the industry of

in

Hungary and Poland,

either the produce

is

or with something which

had been pur(±ased with some part of that produce. Those commodities of America are new values, new equivalents, introduced into

to be exchanged there for the surplus

Hungary and Poland

produce of those countries.

By

being carried thither they create a

new and more

extensive market for that surplus produce.

raise its value,

and thereby contribute to encourage

Though no part

of

it

may

which purchase

carried to other countries

share of the surplus produce of America;

by means into

it

and

increase.

its

ever be carried to America,

They

may

it

be

with a part of their it

of the circulation of that trade which

may

find

was

originally

a market put

motion by the surplus produce of America.

or even

Those great events may even have contributed to increase the

receive

enjoyments, and to augment the industry of countries which, not

any produce from America.

only never sent any commodities to America, but never received

any from

Even such

it.

countries

may have

received a greater

abundance of other commodities from countries of which the surplus produce

had been augmented by means

This greater abundance, as enjoyments, so

number

greater

it

new equivalents of some kind them to be exchanged for the

age

American

trade.

their

their industry.

or other

A

must have

surplus produce of

A more extensive market must have been created for

that surplus produce, so as to raise its increase.

great circle of

of the

must necessarily have increased

must likewise have augmented

of

been presented to that industry.

it

The mass

its

value,

and thereby encour-

of commodities annually thrown into the

European commerce, and by

its

various revolutions

among all the different nations comprehended must have been augmented by the whole surplus produce

annually distributed within

it,

of America. to

have

A greater share of this greater mass, therefore,

fallen to

is

likely

each of those nations, to have increased their en-

joyments, and augmented their industry.

The exclusive

The

exclusive trade of the mother countries tends to diminish,

or, at least, to

keep down below what they would otherwise

rise to,

trade of the

both the enjoymei^ts and industry of

mother

and of the American colonies in

countries

reduces

all

is a dead weight upon the action of one of the great springs which puts into motion a

the en-

great part of the business of mankind.

joyments

produce dearer in

and in-

those nations in general,

particular. It

all

other countries,

By

it

and thereby cramps the industry of the

rendering the colony

lessens its consumption,

colonies,

and both the en-

AMERICA AND EAST INDIES jo3nnents and the industry of

all

559

other countries, which both enjoy

dustry of

when they pay more for what they enjoy, and produce less when they get less for what they produce. By rendering the prod-

aU Europe and

uce of

America,

less

all

other countries dearer in the colonies,

same manner, the industry joyments and the industry

it

of all other countries,

cramps, in the

and both the en-

especially

the latter.

of the colonies. It is a clog which, for

the supposed benefit of some particular countries, embarrasses the pleasures,

and encumbers the industry of

of the colonies

more than

of

any

other. It not

much

as possible, all other countries

but

confines, as

it

much

is

very great between being excluded

from one particular market, when

all

confined to one particular market,

of all that increase of enjoyments

and being

others are open,

when

others are shut up.

all

surplus produce of the colonies, however,

rives

only excludes, as

from one particular market;

as possible, the colonies to one particular

market: and the difference

The

other countries; but

all

is

the original source

and industry which Europe de-

from the discovery and colonization of America; and the ex-

clusive 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 rives

from the colonies which particularly belong

different kinds; first, those

common

to

it,

de-

are of two

(3)

The

particular

advan-

advantages which every em-

pire derives from the provinces subject to its dominion; and, sec-

ondly, those peculiar advantages which are supposed to result from

tages of

the colonising

countries

provinces of so very peculiar a nature as the European colonies of

are (a)

America.

the common advantages derived

The common advantages which every empire provinces subject to force

its

which they furnish

dominion, consist,

derives from the

first,

in the military

for its defence; and, secondly, in the rev-

from provinces,

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

(h) the peculiar

advantages

derived

from provinces

her

allies in

war, but very seldom her subjects in peace.

The European

colonies of

America have never yet furnished any

in

America:

military force for the defence of the mother country. Their military force has never yet been sufficient for their different

wars

in

own

defence; and in the

which the mother countries have been engaged,

“Not” appeals first in ed. 3 and seems to have been inserted in error The other countries are only excluded from a particular market, but the colonies are confined to one

There V., 7, 10.

is

an example of revenue being furnished in Xenophon, Anahit V.,

(a) the

common advan-

XHE WEALTH OF NATIONS

560 tagesare

the defence of their colonies has generally occasioned a very con-

contribu-

siderable distraction of the military force of those countries. In

tions of

military forces

and

this respect, therefore, all the

ception, been a cause rather of weakness than of strength to their

revenue,

respective but none of the colonies

have ever furnished military

European colonies have, without ex-

mother countries.

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

The

colonies of Spain

upon those

those of other European nations, ticular,

of

have seldom been equal to the expence

England

in par-

upon them

laid out

force,

and never

in time of peace,

defray that which they oc-

sufficient to

and the

casioned in time of war. Such colonies, therefore, have been a

colonies

source of expence and not of revenue to their respective mother

of Spain

and Por-

countries.

The advantages

tugal

alone

have contributed

tries, consist

of such colonies to their respective mother coun-

altogether in those peculiar advantages which are sup-

posed to result from provinces of so very peculiar a nature as the

revenue.

European colonies of America; and the exclusive

(6) the exclusive

knowledged,

trade

is

the sole source of

In consequence of

trade,

it is

ac-

those peculiar advantages.

all

this exclusive trade, all that part of the surplus

is

the sole

produce of the English colonies, for example, which consists in what

peculiar

are called enumerated commodities,®® can be sent to

advantage.

try but England, Other countries

must be cheaper therefore in England than The exclusive

trade of

each country is

country, and must contribute

more

it

own

more to encourage her industry. For

It

it

of her. It

can be in any other

to increase the

England than those of any other country. tribute

no other coun-

must afterwards buy

enjoyments of

must likewise con-

all

those parts of her

surplus produce which England exchanges for those enumer-

a disad-

vantage to the other

ated commodities, she must get a better price than any other countries

can get for the like parts of

same commodities.

for the

theirs,

when they exchange them

The manufactures

of England, for ex-

countries,

ample, 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 tobacco. So

far, therefore, as

the

manu-

England and those of other countries are both to be exchanged for the sugar and tobacco of the English colonies, this sufactures of

periority of price gives an encouragement to the former,

what the

latter

can in these circumstances enjoy. The exclusive

trade of the colonies, therefore, as

diminishes, or, at least, keeps

it

down below what they would otherwise and the industry

Above,

p. 541.

beyond

of the countries

rise to,

both the enjoyments

which do not possess

Above, p. 544.

it;

so

it

gives

AMERICA AND EAST INDIES an evident advantage

to the countries

56 i

which do possess

it

over those

other countries.

This advantage, however,

what may be

called

a

will,

relative

perhaps, be found to be rather

than an absolute advantage; and to

give a superiority to the country which enjoys

it,

by depressthan by raising

rather

ing the industry and produce of other countries,

rather

advantage to that

country,

those of that particular country above what they would naturally rise to in

a free trade. Maryland and Virginia,

the case of

The tobacco of

the monopoly which England enjoys of

for example,

it,

certainly

by means

of

whom England commonly 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 counto England than

sells

it

can do to France, to

a considerable part of

e,i,,

Eng-

comes cheaper

it.

cheaper

than but n^t cheaper ^

tries,

but likewise to England. The produce of tobacco, in conse-

quence of a market so much more Extensive than any which hitherto enjoyed, might,

been so

and probably would, by

much increased as to

this time,

it

has

have

reduce the profits of a tobacco planta-

tion to their natural level with those of a corn plantation, which, is

supposed, they are

still

were no

somewhat ahoveP The price

it

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 pur-

chased in Maryland and Virginia a greater quantity of tobacco than it

can do at present, and, consequently, have been sold there for so

cheapness and abundance, increase the enjoyments or

by its augment the

industry either of England or of any other country,

would, prob-

much a

better price. So far as that weed, therefore, can,

it

ably, 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 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 countries.

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 exeluding as

much as possible other nations from any share in it, EngAbove, p. 157.

To

sub-

to this

the wealth of nations

562

land, there are very probable reasons for believing, has not only sac-

disad-

vantage

England has

made

two sac-

rificed

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

rifices.

every other branch of trade.

The withdrawal of foreign

When, by the monopoly

act of navigation,^^ England assumed to herself the

of the colony trade, the foreign capitals

been employed in

capital

from the

lish capital,

which had before carried on but a part of

colony

carry on the whole.

trade raised profits in

and drew

which had before

were necessarily withdrawn from

it

The

capital

The Engwas now to

it.

it,

which had before supplied the

col-

onies with but a part of the goods which they wanted from Europe, was now all that was employed to supply them with the whole. But

it

capital

fiom

,

other

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

British

colonies,

trades

could not

was now

buy

all

and

whatever

was employed to buy the whole. But

that

the whole at

did

buy

any thing near the old

it

price, and, there-

necessarily bought very cheap.

But

in

thereby

fore,

raised

an employment of capital in which the merchant sold very dear and

profits in

bought very cheap, the

them,

it

above the ordinary

it

profit

must have been very great, and much

level of profit in other branches of trade.

superiority of profit in the colony trade could not fail to

other branches of trade a part of the capital which

employed

in them.

But

This

draw from

had before been

this revulsion of capital, as

must have

it

gradually increased the competition of capitals in the colony trade, so

it

must have gradually diminished that competition

its of till

the one, so

the profits of

it

all

in all those

must have gradually lowered the profmust have gradually raised those of the other,

other branches of trade

;

as

it

came to a new

level, different

from and some-

what higher than that at which they had been before. This double

and continues to

effect, of

drawing capital from

of raising the rate of profit

all

somewhat higher than

other trades, and

it

otherwise would

do so

have been in

upon

its first

all trades,

was not only produced by

this

monopoly

establishment, but has continued to be produced

by

it

ever since.

The colony trade has increased faster

than the

whole

monopoly has been continually drawing other trades to be employed in that of the colonies.

First, this all

Though

the wealth of Great Britain has increased very

since the establishment of the act of navigation,

increased in the

same proportion

it

from

capital

much

certainly has not

as that of the colonies.

But the

for-

British

eign trade of every country naturally increases in proportion to

capital,

wealth, its surplus produce in proportion to its whole produce; Above, pp. 429-431

its

and

AMERICA AND EAST INDIES

563

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 employed in them, as well as withholding from them a great deal more which would otherwise have gone to them. Since the establishment of the act of navigation, accordingly, the colony trade

has been continually increasing, while

many

other branches of for-

eign 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 the

market

in

still

more

distant one of the colonies, to

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, other writers, have been sought for in the excess and improper

and

mode

of taxation, in the high price of labour, in the increase of luxury,

&c.

may

all

be found in the over-growth of the colony trade. The

mercantile capital of Great Britain, though very great, yet not being infinite; tion, yet

and though greatly increased since the act of naviga-

not being increased in the same proportion as the colony

trade, that trade could not possibly

ing

some part

of that capital

be carried on without withdraw-

from other branches of trade, nor con-

sequently without some decay of those other branches.

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 esEngland,

it

monopoly of the colony trade, but before that trade was very considerable. In the Dutch war, during the government of Cromwel, her navy was superior to that of Holland; and in that tablished the

which broke out in the beginning of the reign of Charles IL it was at least equal, perhaps superior, to the united navies of France and Holland. Its superiority, perhaps, would scarce appear greater in the present times; at least

if

the

Dutch navy was

proportion to the Dutch commerce great naval power

now which

it

did then.

could not, in either of those wars,

act of navigation. During the first of

same But this

to bear the

them the plan

be owing to the of that act

had

Essay on the Causes of the Decline of the Foreign Trade, consequently of Lands of Britain and on the means to restore both, 2nd ed,,

the Value of the

1750, pp. 28-36, et passim.

and the colonial

monopoly has merely changed the direction of British trade.

THE WEALTH OF NATIONS

564

been but just formed; and though before the breaking out of the second it

of

it

had been

by

fully enacted

effect,

and

least

that part which established the exclusive trade to the colonies.

all

their trade were inconsiderable then in

Both the colonies and

The

parison of what they are now.

wholesome and

no part of

legal authority; yet

could have had time to produce any considerable

New

desert, little inhabited,

island of Jamaica

and

com-

was an un-

less cultivated.

New York

Jersey were in the possession of the Dutch: the half of St.

Christopher’s in that of the French.

ed. Virginia,

Maryland, and

The

island of Antigua, the

and Nova

Carolinas, Pensylvania, Georgia,

New

Scotia,

two

were not plant-

England were planted; and

though they were very thriving colonies, yet there was not, perhaps, at that time, either in

single person

Europe or America, a

who

fore-

saw or even suspected the rapid progress which they have since made and improvement. The island of Barbadoes, in short, was the only British colony of any consequence of which the condition at that time bore any resemblance to what it is at presin wealth, population

The trade

ent.

some lime

of the colonies, of which England, even for

after the act of navigation, enjoyed but a part (for the act of navi-

gation 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

er was the trade of Europe, and of the countries which

Mediterranean

lie

But the share which Great Britain

sea.

pow-

round the 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,

might have

fallen to Great Britain,

and a very

considerable share would probably have fallen to her,

must have

whatever share of

been

all

it

an addition to

which she was before in

this great trade of

possession. In consequence of the monopoly, the increase of the col-

The mo-

ony trade has not so much occasioned an addition

to the trade

Great Britain had before, as a total change in

direction.

which

Secondly, this monopoly has necessarily contributed to keep

nopoly has kept

the rate of profit in

the rate

than

of profit

free trade to the* British colonies.

in British

its

it

all

naturally would have been, had

The monopoly of

up

the different branches of British trade higher

the colony trade, as

nations been allowed a

all

it

necessarily

drew towards

trade higher

that trade a greater proportion of the capital of Great Britain than

than it

what would have gone

to it of its

own accord

;

so

by the expulsion

of

naturally

foreign capitals

necessarily reduced the whole quantity of

would have

all

been,

been in the case of a free trade. But, by lessening the competition of

capital

it

employed in that trade below what

it

naturally would have

AMERICA AND EAST INDIES capitals in that branch of trade, profit

in that branch.

it

By lessening

necessarily raised the rate of

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.

been, at

any

S^S

Whatever

may

have

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,

higher than

otherwise would have been both in that and in

it

have raised the ordinary rate of British

other branches of British trade.

If, since

profit all

the

the establishment of the

act of navigation, the ordinary rate of British profit has fallen considerably, as

it

certainly has,

it

must have fallen

lower,

still

had not

monopoly established by that act contributed to keep it up. But whatever raises in any country the ordinary rate of profit

the

and this

both to an absolute and to a relative disadvantage in every branch

puts the country at a dis-

of trade of which she has not the monopoly.

advantage

higher than

it

otherwise would be, necessarily subjects that country

It subjects her to

an absolute disadvantage: because in such

in the

trades of

branches of trade her merchants cannot get this greater profit, with-

which she

out selling dearer than they otherwise would do both the goods of

has no

and the goods

foreign countries which they import into their own,

of their

own country which they

own country must both buy less

and

sell less;

dearer and

must both enjoy

less

sell

dearer;

must both buy

and produce

less,

than she

sell less,

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 he. 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

otherwise would be.

it

and enabling

other countries

to undersell

her in

foreign

markets.

enables the merchants of other countries to

undersell her in foreign markets, all

it

By raising the price of her produce above what

otherwise would be,

most

making her buy less and

her to a relative disadvantage; because in such

branches of trade

it

oly,

export to foreign countries. Their

otherwise would do. It subjects

monop-

and thereby to justle her out

of al-

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

High profits raise

the price of

manu-

factures

complain of the extravagant gain of other people; but they say nothing of their own. The high profits of British stock, however,

high

may contribute towards raising the price of British manufactures in

wages.

^®Ed.

I

reads “rate of the profit.’

more than

XHE WEALTH OF NATIONS

S66

So British capital

has been taken

from European and Mediter-

ranean

many

cases as

wages

of British labour.'^^

much, and

in

some perhaps more, than the high

manner that the

It is in this

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

and from

the monopoly; from the trade of Europe in particular, that of the countries which It

has partly been

lie

round the Mediterranean

drawn from those branches

sea.

of trade;

by

the at-

traction of superior profit in the colony trade in consequence of the

trade,

continual increase of that trade, and of the continual insufficiency partly attracted

by high

which had carried

of the capital

it

on one year to carry

it

on the

next. It

has partly been driven from them; by the advantage which the

profit in

high rate of profit, established in Great Britain, gives to other coun-

the

colony trade,

partly

driven

out by

tries, 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

foreign

compe-

capitals which would never have gone to them, had they not been

tition.

expelled from the colony trade. In those other branches of trade

Whfie raising

raised the rate of British profit higher than

British

been.

On

profit, the

monopoly

it

has diminished the competition of British capitals, and thereby

capitals,

the contrary,

it

it

otherwise would have

has increased the competition of foreign

and thereby sunk the rate of foreign

profit

lower than

one way and in

has low-

otherwise would have been. Both

ered

must evidently have subjected Great Britain

in the

to

a

the other

it it

relative disadvan-

foreign profits.

tage in

all

those other branches of trade.

The colony

trade, however, it

may

perhaps be said,

is

more ad-

The colony trade

is

supposed

vantageous 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

to be

an employment more advantageous

more ad-

capital into

vanta-

any other which

geous

than others,

it

it

than

could have found.

The most advantageous emplo3nnent try to which

to the country

belongs,

is

of

any

capital to the coun-

that which maintains there the greatest

quantity of productive labour, and increases the most the annual but trade with a

produce of the land and labour of that country. But the quantity of

neigh-

productive labour which any capital employed in the foreign trade

bouring

of consumption can maintain, ^*This passage

is

much

is

exactly in proportion,

it

has been

the same as that which appears above, p. 98; but

this is the original, as the other

was not

in ed. i.

AMERICA AND EAST INDIES shewn tal of

5^7

in the second book,'^® to the frequency of its returns.

a thousand pounds,

for

A capi-

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 or thrice in the year,

it

for

a year. If the returns are made twice

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 car-

on with a neighbouring,*^® is, upon this account, in general, more advantageous than one carried on with a distant country; and for

ried

the same reason a direct foreign trade of consumption, as

wise been shewn in the second book,^*^

is

in general

it

has

country is

more advantageous than with a distant one,

and

a direct trade is

more advantageous than a roundabout,

like-

more advan-

tageous than a round-about one.

But the monopoly

of the colony trade, so far as

upon the employment

it

has operated

of the capital of Great Britain, has in all

while the

monopoly has

cases forced some part of carried

from a foreign trade of consumption

it

on with a neighbouring,^®

tant country, and in

many

cases

to one carried

on with a more

dis-

from a direct foreign trade of con-

forced capital

into (i)

a

distant

sumption to a round-about one. First, the

some part

monopoly

and

of the colony trade has in all cases forced

of the capital of Great Britain

from a foreign trade of

(2) a

roundabout trade.

consumption carried on with a neighbouring, to one carried on with

a more distant country.

(i)

It has, in all cases, forced

some part of that

with Europe, and with the countries which

capital

lie

from the trade

round the Mediter-

ranean sea, to that with the more distant regions of America and the

West

Indies,

from which the returns are necessarily

less fre-

quent, 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

The

trade

with America

and the West Indiesis distant

and the returns peculiarly

is

always

much

and advantage

less

than what they could employ with great profit

in the

improvement and cultivation of

They have a constant demand, therefore,

for

more

their land.

capital than they

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

have of

their

common way

in

which the colonists contract

this debt, is not

by

borrowing upon bond of the rich people of the mother country, though they sometimes do this too, but by running as much in arrear to their correspondents,

™ Above,

vol.

i,,

p. 349.

Above, vol

i.,

p. 350.

who supply them with goods from Eur-

” Ed. ™ Ed.

i i

reads “with a neighbouring country.” reads “with a neighbouring country.”

infre-

quent.

XHE WEALTH OF NATIONS

568

ope, as those correspondents will allow them. Their annual returns

amount

frequently do not

to

more than a

third,

and sometimes not

what they owe. The whole correspondents advance to them

to so great a proportion of fore,

which their

turned to Britain in four or five years.

example, which

is

less

capital, thereis

seldom

than three, and sometimes not in

But a

British capital of

less

re-

than

a thousand pounds,

for

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 constant 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

by the commission upon the renewal of those which he grants at near dates, makes up, and probably more than makes up, all the loss which his correspondent can sustain by this delay. But, though he may make up the loss of his correspondent, he cannot make up that of Great Britain. In a trade of which grants at distant dates, and

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 the returns of the trade to America, and the

West

still

Indies, are, in general, not only

and more uncertain

irregular,

much less. That

more those

more

distant,

of that to

but more

too, than those of the trade to

part of Europe, or even of the countries which

lie

any

round the Medi-

terranean sea, will readily be allowed, I imagine, by every body

who

has any experience of those different branches of trade. Secondly, the monopoly of the colony trade has, in (2) It is

some part of the

capital of Great Britain

forced

eign trade of consumption, into a round-about one.

trade.

Among

cases,

from a direct

also large*-

lya roundabout

many

for-^

the enumerated commodities which can be sent to no

other market but Great Britain, there are several of which the quantity exceeds

which a this

very

much

part, therefore,

the consumption of Great Britain, and of

must be exported

to other countries.

But

cannot be done without forcing some part of the capital of

Great Britain into a round-about foreign trade of consumption.

Maryland and upwards

Virginia, for example, send annually to Great Britain

of ninety-six thousand hogsheads of tobacco,

sumption of Great Britain

is

and the con-

said not to exceed fourteen thou-

AMERICA AND EAST INDIES

5^9

JandJ^ Upwards of eighty-two thousand hogsheads, therefore, must oe exported to other countries, to France, to Holland, and to the countries which lie round the Baltic and Mediterranean seas. But, that part of the capital of Great Britain which brings those eightytwo 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 com-

monly given

to those foreign correspondents to

whom

they export

At the port of London, indeed, it is commonly sold money. The rule is, Weigh and fay. At the port of London, therefore, the final returns of the whole round-about trade are more distant than the returns from America by the time only which the goods may lie unsold in the warehouse; where, however, they may sometimes lie long enough.®^ But, had not the colonies been confined to the market of Great Britain for the sale of their tobacco, very little more of it would probably have come to us than what was necessary for the home consumption. 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

their tobacco.

for ready

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 These figures are given above, pp. 353, 467. These four sentences beginning with “At some of the outports” are not in ed. I.

THE WEALTH OF NATIONS

570

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 direct ones,

sufficient to carry

on

all

those small

might have kept in constant employment an equal

quantity of British industry, and have equally supported the annual produce of the land and labour of Great Britain. All the pur-

much

poses of this trade being, in this manner, answered by a

smaller capital, there would have been a large spare capital to ap-

ply to other purposes; to improve the lands, to increase the manufactures,

and to extend the commerce

all

those different ways, to reduce the rate of profit in

thereby to give to Great Britain, in other countries

The mo-

still

The monopoly

greater than

what she

employed

them

and

at present enjoys.^^

of the colony trade too has forced

some part of

nopoly

the capital of Great Britain from

has also forced

to a carrying trade; and, consequently, from supporting

part of

less the industry of

the capi-

all,

in

them, a superiority over

all of

all

come

of Great Britain; to

into competition at least with the other British capitals

foreign trade of consumption

more or

Great Britain, to be employed altogether in

supporting partly that of the colonies, and partly that of some

tal of

Great Britain into a

carrying trade,

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

ample,

is

returned to

&e

consumed

in

Great

from Germany and Holland, for ex-

Britain. Part of them, linen

colonies for their particular consumption.

But, that part of the capital of Great Britain which buys the to-

bacco 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 co with the produce of their and makes her whole industry

own

for this tobac-

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-

and com-

gether that natural balance which would otherwise have taken

merce

place

among

all

the different branches of British industry.

The

in-

less secure

owing to its

being

driven into one

channel

dustry 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

^ Ed.

I reads “possesses.”

AMERICA AND EAST INDIES channel.

But the whole system

thereby been rendered itic less healthful,

condition,

of her industry

57i

and commerce has

the whole state of her body pol-

less secure;

than it otherwise would have been. In her present

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 tioned.

more properly propor-

A small stop in that great blood-vessel, which has been arti-

ficially swelled

beyond

its

an unnatural proportion

natural dimensions, and through which

and commerce of the coun-

of the industry

try has been forced to circulate,

is

very likely to bring on the most

dangerous disorders upon the whole body

The

politic.

expectation

of a rupture with the colonies, accordingly, has struck the people of

Great Britain with more terror than they ever

felt for

armada, or a French invasion. It was

whether well or

this terror,

grounded, which rendered the repeal of the stamp act,®^

merchants at

least,

a Spanish

among

ill

the

a popular measure. In the total exclusion from

the colony market, was

to last only for a

it

few years, the greater

part of our merchants used to fancy that they foresaw an entire stop to their trade; the greater part of our master manufacturers,

the entire ruin of their business; and the greater part of our work-

men, an end of

their

employment.

A rupture with any of our neigh-

bours upon the continent, though likely too to occasion some stop

some

or interruption in the employments of

orders of people,

emotion.

The

is

of all these different

any such general stopt in some of the

foreseen, however, without

blood, of which the circulation

is

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 im-

mediate and unavoidable consequences.

grown manufactures, which by means

monopoly raised

of the

but one of those over-

home and colony markets, have been

up to an unnatural

tion in its

If

either of bounties or of the

employment,

height, finds

it

artificially

some small stop or interrup-

frequently occasions a mutiny and dis-

order alarming to government, and embarrassing even to the deliberations of the legislature.

disorder

and confusion,

it

How

great, therefore,

was thought, which must

would be the 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, in

till it is

rendered

a great measure free, seems to be the only expedient which can, in Ed.

I

places “a popular measure” here

The

the wealth oe nations

572

which can enable

monopoly

all

is desir-

her or even force her to withdraw some part of her capital from this

deliver her

future times,

from

this danger,

able.

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 can by degrees restore ral, healthful,

the different branches of

it

and proper proportion which perfect

sarily establishes,

and which perfect

open the colony trade casion

all

all

all

the rest,

to that natu-

liberty neces-

liberty can alone preserve.

at once to all

some transitory inconveniency, but a great permanent

to the greater part of those

To

nations, might not only oc-

whose industry or capital

is

loss

at present

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

engaged in

be

felt

very sensibly. Such are the unfortunate effects of

ulations of the mercantile system!

They

all

the reg-

not only introduce very

dangerous disorders into the state of the body politic, but disorders

which

it is

at least,

often difficult to remedy, without occasioning, for greater disorders. In

still

what manner,

a time

therefore, the col-

ony 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 justice

in

what manner the natural system

of perfect liberty

and

ought gradually to be restored, we must leave to the wisdom

and legislators to determine. events, unforeseen and unthought

of future statesmen

The present ex-

Five different

of,

have very

fortunately concurred to hinder Great Britain from feeling, so sen-

clusion

from the

sibly as

it

was generally expected she would, the

total exclusion

trade

which has now taken place for more than a year (from the

with the twelve

December, 1774)

provinces

trade, that of the twelve associated provinces of

would

First, those colonies, in

have been

more

first of

from a very important branch of the colon}

North America

preparing themselves for their non-impor

tation agreement, drained Great Britain completely of all the

com

se-

verely felt

modities which were

but for

dinary

five tran-

sitory

demand

many and

fit

for their market: secondly, the extraor

of the Spanish Flota

the North of

many

has, this year, drained Ger-

commodities, linen in particular

does not contain “in all future limes.” at which the non-importation agreement began to operate. ^ “For the greater security of the valuable cargoes sent to America, as weL as for the more easy prevention of fraud, the commerce of Spain with its

Ed.

I

The date

on by fleets which sail under strong convoys. These fleets, two squadrons, one distinguished by the name of the ‘Galeons,’

colonies is carried

consisting of

the other by that of the ‘Flota, ^ are equipped annually. Formerly they took from Seville; but as the port of Cadiz has been found more

their departure

commodious, they have sailed from it since the year i72o.”~-W. Robertson, History of America, bk. viii.; in Works, 1825, vol. vii., p. 372.

AMERICA AND EAST INDIES

573

which used

to come into competition, even in the Dritish market, with the manufactures of Great Britain: thirdly, the peace between

circun.stances.

Russia and Turkey,^® has occasioned an extraordinary demand from the Turkey market, which, during the distress of the country, and while a Russian fleet was cruizing in the Archipelago, had been very poorly supplied: fourthly, the demand of the North of Europe for the manufactures of Great Britain, has

year to year for some time past: and,

and consequential

been increasing from

fifthly,

pacification of Poland,

the late partition

by opening the market of demand

that great country, have this year added an extraordinary

from thence to the increasing demand of the North. These events are

all,

except the fourth, in their nature transitory and accidental,

and the exclusion from so important a branch unfortunately

some degree

should continue

it

much

of the colony trade,

longer,

may

if

occasion

still

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 of distress. This distress, however, as

may find a new employment and direction,

country

from ever

this distress

The monopoly

rising to

any considerable

it

will

so as to prevent height.

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 cases turned

it,

it,

has in

The monopoly

is

bad,

all

from a foreign trade of consumption with a neigh-

bouring, 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

foreign trade of consumption, into

all

trade. It has in all cases, therefore, turned

it,

a carrying

from a direction

in

would have maintained a greater quantity of productive it can maintain a much smaller quantity. suiting, besides, to one particular market only, so great a part of

which

it

labour, into one, in which

By

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 trade and those

distinguish between the effects of the colony

of the

monopoly

of that trade.

The former

are al-

but the trade it^ self is

ways 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. '’“By the treaty of Kainardji, 1774.

Ed.

I

reads “prevent

it.*’

In 1773.

good.

THE WEALTH OF NATIONS

574

The trade In its

natural

The open

colony trade in

effect of the

a great,

though distant market

its

natural and free state,

for such parts of the

British industry as

creases

home, of those of Europe, and of the countries which

the pro-

Mediterranean

In

sea.

to

exceed the demand of the markets nearer

may

state in-

ductive

is

produce of

its

and

natural

round the

lie

free state, the colony trade,

labour of

without drawing from those markets any part of the produce which

Great

had ever been sent

to

them, encourages Great Britain to increase the

Britain.

surplus continually,

by

be exchanged for

In

it.

continually presenting its

natural and

new

free state,

equivalents to

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

rising above the common level either in the new new employment. The new market, without draw-

from

market, or in the ing

The monopoly diminishes

it.

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 nations, and thereby raising the rate of

both in the new market and in the new employment, draws

profit

produce from the old market and capital from the old employment.

To augment our

share of the colony trade beyond what

would be,

avowed purpose

is

the

that trade were to be

it

otherwise

of the monopoly. If our share of

no greater with, than

it

would have been with-

out the monopoly, there could have been no reason for establishing the monopoly.

But whatever

which the returns are slower

forces into a branch of trade of

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 an-

nually 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

would naturally

rise to,

and thereby diminishes

cumulation. It not only hinders, at

all

their

power

times, their capital

maintaining so great a quantity of productive labour as otherwise maintain, but

would otherwise

it

increase,

hinders

it

what

from increasing so

it

it

of ac-

from

would

fast as it

and consequently from maintaining a still

greater quantity of productive labour.

The

nat-

ural

good

The

natural good effects of the colony trade, however,

more than

counterbalance to Great Britain the bad effects of the monopoly, so

AMERICA AND EAST INDIES that,

monopoly and

at present,

is

together, that trade, even as

all

575 it is

on

carried

not only advantageous, but greatly advantageous.

The new market and

new employment^® which are opened by much greater extent than that portion of the

the

the colony trade, are of

old market and of the old

employment which

is

lost

by

the

monop-

The new produce and the new capital which has been created, one may say so, by the colony trade, maintain in Great Britain a

effects of

the trade

more than counter-

balance the bad effects of

oly.

the

if

nopoly.

mo-

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

however, even as Great Britain,

it is

more frequent.

If the colony trade,

carried on at present, is advantageous to

it is

not

by means

of the

monopoly, but in spite of

the monopoly.

manufactured than for the rude produce of

It is rather for the

Europe, that the colony trade opens a new market. Agriculture

new

the proper business of

all

ness of land renders

more advantageous than any

colonies;

is

a business which the cheapother.

They

abound, therefore, in the rude produce of land, and instead of importing

it

to export.

from other countries, they have generally a large surplus In

new

colonies, agriculture either

other employments, or keeps

them from going

draws hands from to

The colonies offer

all

any other employ-

a market for the

manufac^ tured rather

than the rude produce of Europe,

ment. There are few hands to spare for the necessary, and none for the ornamental manufactures. of both kinds, they find

it

The greater part of

the manufactures

cheaper to purchase of other countries

than to make for themselves. It

is

chiefly

by encouraging the manu-

factures of Europe, that the colony trade indirectly encourages

its

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 manu-

agriculture.

but the

monopoly has not

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 factures in

the richest

be

and most

fertile in

the world, they have both ceased to

the

manufactures of

Spain and

so.

In Spain and Portugal, the bad

effects

of the monopoly, aggra-

vated by other causes, have, perhaps, nearly overbalanced

the

natural good effects of the colony trade. These causes seem to be,

Eds

Ed

maintained

I I

and 2 read “and employment.” reads “have entirely conquered.”

Portugal,

where the bad effects of

XHE WEALTH OF NATIONS

576

mo-

the

Other monopolies of different kinds; the degradation of the value of

nopoly have

gold and silver below what

nearly

sion from foreign markets

overbalanced the good effects of

the trade.

it is

most other countries; the exclu-

in

by improper taxes upon exportation, and the narrowing of the home market, by still more improper taxes upon the transportation another; but above justice,

of goods

from one part of the country

to

that irregular and partial administration of

all,

which often protects the rich and powerful debtor from the

makes the industrious

pursuit of his injured creditor, and which

part of the nation afraid to prepare goods for the consumption of those haughty and great men, to

upon

and from

credit,

whom

whom they dare not refuse

to sell

they are altogether uncertain of

re-

payment. In England the

good effects of

the trade

have

In England, on the contrary, the natural good

ony

trade, assisted

quered the bad

by

monopoly. These causes seem to be,

effects of the

the general liberty of trade, which, notwithstanding is

at least equal, perhaps superior, to

greatly

counter-

acted the

bad

ef-

the

mo-

duty

try; the liberty of exporting,

what

free,

it is

almost

in

some restraints, any other coun-

all sorts of

goods

which are the produce of domestic industry, to almost any foreign country; and what, perhaps,

fects of

nopoly.

effects of the col-

other causes, have in a great measure con-

bounded

country to any other,

any public

still

greater importance, the un-

them from any one part of our own without being obliged to give any account to

without being liable to question or examination of

office,

any kind; but above justice

of

is

liberty of transporting

all,

that equal

which renders the

and impartial administration of

rights of the

meanest British subject

re-

man

the

spectable to the greatest, and which, by securing to every fruits of his

own

industry, gives the greatest

and most

effectual en-

couragement to every sort of industry. The trade has benefited Brit-

ish

If the manufactures of Great Britain, however,

vanced, as they certainly have,

by means

manufac-

oly.

tures in

tity,

The

of the

monopoly

effect of the

by the colony

trade,

have been adit

has not been

of that trade, but in spite of the

monop-

monopoly has been, not to augment the quan-

but to alter the quality and shape of a part of the manufactures

spite of

the

mo-

nopoly,

not in

returns are slow

commodated

conse-

quence of it.

and to accommodate to a market, from which the

of Great Britain,

Its effect

and

distant,

what would otherwise have been ac-

to one from which the returns are frequent

and

near.

has consequently been to turn a part of the capital of

Great Britain from an employment in which

it

would have main-

tained a greater quantity of manufacturing industry, to one in

which

it

maintains a

much

smaller,

and thereby

to diminish, in-

stead of increasing, the whole quantity of manufacturing industry

maintained in Great Britain.

The monopoly

of the colony trade, therefore, like all the other

AMERICA AND EAST INDIES mean and malignant the industry of

577

expedients of the mercantile system, depresses

other countries, but chiefly that of the colonies,

all

without in the least increasing, but on the contrary diminishing, that of the country in whose favour

The monopoly hinders

it is

established.

the capital of that country, whatever

may

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 at

inhabitants as

creased only it

it

by

would otherwise

afford.

capital can be in-

savings from revenue, the monopoly,

from affording so great a revenue as

necessarily hinders increase,

But as

it

from increasing so

it

by

reduces

wages in the

mother country,

hindering

would otherwise

fast as it

The monopoly

afford,

would otherwise

and consequently from maintaining a still greater quantity

and

of productive labour,

affording

a still

greater revenue to the in-

One

dustrious inhabitants of that country.

great original source of

revenue, therefore, the wages of labour, the monopoly must necessarily

have rendered at

all

times

abundant than

less

otherwise

it

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,

by the

application of

a

this difference affords

an equal capital

certain capital,

a greater

profit

it

and what,

can be made to produce. If

than what can be drawn from

any mercantile employment, the improvement

in

land will draw capital from profit is less, mercantile

all

of

raises profits,

and thereby tends to lower

rents

and

the price of land.

mercantile emplo3mients. If the

employments

will

improvement of land. Whatever therefore

draw

capital

from the

raises the rate of

mer-

cantile profit, either lessens the superiority or increases the inferiority of the profit of

improvement; and in the one case hinders capital

from going to improvement, and in the other draws But by discouraging improvement, the monopoly

capital

from

it.

necessarily re-

tards the natural increase of another great original source of rev-

enue, the rent of land.

By raising the

rate of profit too, the

monop-

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 oly necessarily keeps

The monopoly, therefore, hurts the landlord two different ways, by retarding the

the rate of interest of

falls.

the interest

natural in-

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 crease, first, of his rent,

thereby augments somewhat the gain of our merchants. But as

it

It re-

duces the

the wealth of nations

578 absolute

amount

obstructs the natural increase of capital,

sum

than to increase the

total of the

it

tends rather to diminish

revenue which the inhabitants

of profit,

of the country derive from the profits of stock; a small profit

upon

a great capital generally affording a greater revenue than a great

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

profit

do.

All the original sources of revenue, the wages of labour, the rent

thus rendering

all

of land,

and the

monopoly renders much

profits of stock, the

less

the original

abundant than they otherwise would

sources of

terest of

revenue

abundant

one

little

be.

To promote

the

little in-

men in one country, it hurts the interest men in that country, and of all men in all other

order of

of all other orders of

less

countries. It is solely

More fatal It

still,

de-

stroys

by

raising the ordinary rate of profit that the

monop-

oly either has proved or could prove advantageous to any one particular order of

parsi-

in general,

mony.

sulting

than

men. But besides

from a high rate of

all

all

the

profit; there is

effects to the

country

one more

fatal,

perhaps,

if

seems every where to destroy that parsimony which in other cumstances its

re-

we may judge from exinseparably connected with it. The high rate of profit

these put together, but which,

perience, is

bad

which have already been mentioned as necessarily

is

natural to the character of the merchant.

are high, that sober virtue seems to be superfluous,

cir-

When prof-

and expensive

luxury to suit better the affluence of his situation. But the owners of the great mercantile capitals are necessarily the leaders

and con-

ductors of the whole industry of every nation, and their example

has a

much

greater influence

trious part of is

attentive

it

upon the manners

of the

whole indus-

than that of any other order of men. If his employer

and parsimonious, the workman

too; but if the master is dissolute

and

is

very likely to be so

disorderly, the servant

who

shapes his work according to the pattern which his master prescribes to him, will shape his life too according to the

he

sets

who

him. Accumulation

is

example which

thus prevented in the hands of

are naturally the most disposed to accumulate;

all

those

and the funds

destined for the maintenance of productive labour receive no aug-

mentation from the revenue of those

ment them the most. The ing, gradually

who ought

naturally to aug-

capital of the country, instead of increas-

dwindles away, and the quantity of productive

bour maintained in

it

grows every day

less

and

less.

Have

la-

the exor-

bitant profits of the merchants of Cadiz capital of Spain

and Lisbon augmented the and Portugal? Have they alleviated the poverty,

have they promoted the industry of those two beggarly countries? Such has been the tone of mercantile expence in those two trading

AMERICA AND EAST INDIES cities,

579

that those exorbitant profits, far from augmenting the general

seem scarce to have been sufficient to keep up the capitals upon which they were made. Foreign capitals are every

capital of the country,

day intruding themselves, if I may say so, more and more into the trade of Cadiz and Lisbon. It is to expel those foreign capitals from a trade which their own grows every day more and more insufficient for carrying on, that the

Spaniards and Portuguese endeav-

our 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 ferently the conduct

will

be sensible how

dif-

and character of merchants are affected by the

high and by the low profits of stock. deed, have not yet generally

The merchants of London, inbecome such magnificent lords as those

of Cadiz and Lisbon; but neither are they in general such attentive and parsimonious burghers as those of Amsterdam. They are sup-

posed, however,

many

of them, to

be a good deal richer than the

many of the latlower than that much commonly

greater part of the former, and not quite so rich as ter.

But the

rate of their profit is

of the former,

come

and a good deal higher than that of the

light go, says the proverb;

latter.

and the ordinary tone

Light

of expence

seems every where 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 peopie of customers, may at first sight appear a project fit only for a nation of shopkeepers. It

is,

however, a project altogether unfit for

xhe policy of

^p“y'jg

whose gov-

a policy

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 fellowsuch an empire. Say to a shopcitizens, to found and maintain keeper, 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

of siiop-

a nation of shopkeepers; but extremely

ernment

is

fit

for a nation

influenced

you such an

estate, the

shopkeeper would be ”

much

obliged to your

®^Ed 1 reads “own capital ®®Ed I reads “extremely fit for a nation that is governed by shopkeepers. ” Such sovereigns and such sovereigns only ” ®®Ed. I leads “their subjects, to found and to maintain

XHE WEALTH OF NATIONS

580

benefactor

if

he would enjoin you to buy

England purchased for some

all

your clothes at his shop.

who found themselves country. The price, in-

of her subjects,

uneasy at home, a great estate in a distant

deed, was very small, and instead of thirty years purchase, the or-

dinary price of land in the present times,

it

amounted to

little

more

than the expence of the different equipments which made the discovery, reconnoitred the coast,

the country.

and took a

The land was good and

some time at

came

liberty to sell

in the course of little

fictitious possession of

of great extent,

vators having plenty of good ground to

first

and the

culti-

work upon, and being

for

their produce where they pleased, be-

more than

1620 and 1660) so numerous and

thirty or forty years (between

thriving a people, that the shop-

keepers and other traders of England wished to secure to themselves the

monopoly

of their custom.

Without pretending,

therefore, that

they had paid any part, either of the original purchase-money, or of the subsequent expence of improvement, they petitioned the parlia-

ment

that the cultivators of America might for the future be con-

fined to their shop;

first,

for

buying

all

the goods which they want-

ed from Europe; and, secondly, for selling

own produce

as those traders might find

they did not find of

it

it

convenient to

it

all

such parts of their

convenient to buy. For

buy every part

of

it.

Some

parts

imported into England might have interfered with some of the

trades which they themselves carried on at home.

parts of

it,

Those particular

therefore, 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 proposal into a law.

The

ex-

penditure

The maintenance pal, or

of this

monopoly has hitherto been the

more properly perhaps the

sole

princi-

end and purpose of the do-

of Great

Britain

minion which Great Britain assumes over her colonies. In the ex-

on the

clusive trade,

colonies

has

inces,

it is

supposed, consists the great advantage of prov-

which have never yet afforded either revenue or military force

all

mother

been laid

for the support of the civil government, or the defence of the

out to

country.

The monopoly

and

the sole fruit which has hitherto been gathered from that

siq>port

the

mo-

nopoly,

and is

it is

is

the principal badge of their dependency,

dependency. Whatever expence Great Britain has hitherto laid out in maintaining this dependency, has really

enormous.

support this monopoly.

The expence

been laid out in order to

of the ordinary peace estab-

lishment of the colonies amounted, before the commencement of the present disturbances, to the pay of twenty regiments of foot; to the

expence of the

artillery, stores,

and extraordinary provisions with

AMERICA AND EAST INDIES which

it

was

58i

necessary to supply them; and to the expence of a

very considerable naval force which was constantly kept up, in order to guard, from the smuggling vessels of other nations, the im-

mense coast

of

North America, and that of our West Indian

The whole expence

Of this peace establishment

islands.

was a charge upon

the revenue of Great Britain, and was, at the same time, the smallest part of

what the dominion

country. If

we would know

of the colonies has cost the

the

amount

of the whole,

mother

we must add

to the annual expence of this peace establishment the interest of the

sums which,

in consequence of her considering her colonies as prov-

inces subject to her dominion, Great Britain has

casions laid out

upon

the whole expence of the late war,

war which preceded rel,

it,

and a great part

different ocin particular,

of that of the

The late war was altogether a colony quar-

and the whole expence

may have

upon

We must add to

their defence.

of

it,

in whatever part of the world

been laid out, whether

in

Germany

it

or the East Indies,

ought justly to be stated to the account of the colonies. It amounted to

more than ninety

millions sterling, including not only the

debt which was contracted, but the two tional land tax,

shillings in the

new

pound addi-

and the sums which were every year borrowed from

The Spanish war which began in 1739, was prinquarrel. colony Its principal object was to prevent the a

the sinking fund. cipally

search of the colony ships which carried on a contraband trade with the Spanish main. This whole expence

is,

in reality,

a bounty which

has been given in order to support a monopoly. The pretended purpose of

it

commerce

was

to encourage the manufactures,

of Great Britain.

But

its

and to increase the

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

which

if

would have done; two events

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 Brit-

ain derives nothing but loss from the dominion which she assumes

over her colonies.

To

propose that Great Britain should voluntarily give up

all

au-

own magismake peace and war as they

A volun-

thority over her colonies, and leave them to elect their trates, to enact their

own

laws,

and to

might think proper, would be to propose such a measure as never Ed. Ed.

I I

reads “is” here and in the next line. reads “and a great part of that which preceded

it.”

be

veryad-

the wealth of nations

5S2 vantageous.

was, and never will be adopted, by any nation in the world.

No

na-

tion ever voluntarily

gave up the dominion of any province, how

troublesome soever

might be

the revenue which

which

it

it

to

govern

it,

and how small soever

afforded might be in proportion to the expence

occasioned. Such sacrifices, though they might frequently

it

be agreeable to the

always mortifying to the pride of

interest, are

every nation, and what

is

perhaps of

still

greater consequence, they

are always contrary to the private interest of the governing part of

who would thereby be deprived of the disposal of many places of trust and profit, of many opportunities of acquiring wealth and disit,

which the possession of the most turbulent, and,

tinction,

body

great

fails to afford.

The most

to the

most unprofitable province seldom

of the people, the

visionary enthusiast would scarce be cap-

able 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 expence of the peace establishment of the colonies, but might settle with

them such a treaty free trade,

though

of

commerce as would

more advantageous

less so to the

present enjoys.

By

effectually secure to her a

to the great

body

of the people,

merchants, than the monopoly which she at

thus parting good friends, the natural affection

of the colonies to the mother country, which, perhaps, our late dis-

sensions have well nigh extinguished, would quickly revive. It might

dispose

them not only to respect, for whole centuries together, that commerce which they had concluded with us at parting,

treaty of

but to favour us in war as well as in trade, and, instead of turbulent

and

factious subjects, to

generous side,

allies;

and

Britain

filial

and her

cient Greece

The colonies do not fur-

nish near-

become our most

and the same respect

on the

colonies,

faithful, affectionate,

sort of parental affection

other,

and

on the one

might revive between Great

which used to subsist between those of an-

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

afford, in

time of peace, a revenue to

the public sufficient not only for defraying the whole expence of

its

ly suffi-

own peace

cient re-

support of the general government of the empire. Every province

establishment, but for contributing

its

proportion to the

venue to

make them advantageous.

necessarily contributes,

more or

less, to

increase the expence of that

general government. If any particular province, therefore, does not contribute

its

share towards defraying this expence, an unequal bur-

den 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

or-

AMERICA AND EAST INDIES dinary 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 pire, will readily

by

indeed, Britain,

whole revenue of the British em-

be allowed. The monopoly,

it

has been supposed,

increasing the private revenue of the people of Great

and thereby enabling them

to

pay greater

taxes,

compen-

But

sates the deficiency of the public revenue of the colonies.

this

monopoly, I have endeavoured to show, though a very grievous tax

upon the

colonies,

ticular order of

and though

men in

ing that of the great

it

may increase the revenue

of

a par-

Great Britain, diminishes instead of increas-

body

of the people;

and consequently dimin-

body of the people The men too whose revenue the monopoly increases,

ishes instead of increasing the ability of the great to

pay

taxes.

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 en-

deavour to shew in the following book.^® therefore, can be

The

colonies

drawn from

may be taxed

No

particular resource,

this particular order.

either

by

their

own

assemblies, or

by

the parliament of Great Britain.

That the colony assemblies can ever be so managed as upon

their constituents

tain at all times their

to levy

own

civil

and military establishment, but

to

pay their proper proportion of the expence 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 management, 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

members

of parliament, a great part either of the offices,

or of the disposal of the

from this civil and military management could be estabthe parliament of England. But the dis-

offices arising

establishment, that such a system of lished even with regard to

tance of the colony assemblies from the eye of the sovereign, their

number,

their dispersed situation,

would render

it

very

difficult to

and

their various constitutions,

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 colo-

a public revenue sufficient, not only to main-

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 Below, p. 800.

will never

vote

THE WEALTH OF NATIONS

S84

them

to give

up

their popularity at

home, and

to tax their constit-

uents for the support of that general government, of which almost the whole emoluments were to be divided strangers to them.

among people who were

The unavoidable ignorance

of administration,

mem-

besides, concerning the relative importance of the different

bers of those different assemblies, the offences which must frequently be given, the blunders which

tempting to manage them in

must constantly be committed

this

manner, seems

in at-

to render such

a

system of management altogether impracticable with regard to them. and have no knowl-

The colony judges of what

edge of

empire.

what is

them. It

required.

The is

assemblies, besides, cannot be supposed the proper is

necessary for the defence and support of the whole

care of that defence and support

formation concerning of a parish,

own

is

not entrusted to

not their business, and they have no regular means of in-

may

it.

The assembly

of

a province,

like the vestry

judge very properly concerning the

affairs of its

no proper means of judging

particular district; but can have

concerning those of the whole empire. It cannot even judge properly concerning the proportion which

its

own province bears

to the

wealth and

whole empire; or concerning the relative degree of

its

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 contribute, can be judged of only by that assembly which inspects and superintends the has been proposed It

that parliament

should tax the colonies

by requisition,

It

affairs of the

whole empire.

has been proposed, accordingly, that the colonies should be

taxed by requisition, the parliament of Great Britain determining the

sum which each colony ought

bly assessing and levying

to pay,

in the

it

way

and the provincial assem-

that suited best the circum-

What concerned the whole empire would way be determined by the assembly which inspects and su-

stances of the province. in this

perintends the affairs of the whole empire; and the provincial affairs of

Though

each colony might

still

be regulated by

its

own assembly.

the colonies should in this case have no representatives in

the British parliament, yet,

if

we may judge by

experience, there

is

no probability that the parliamentary requisition would be unreasonable.

The parliament

shown the smallest pire

of

England has not upon any occasion

disposition to overburden those parts of the

which are not represented

in parliament.

The

islands of

em-

Guern-

sey and Jersey, without any means of resisting the authority of parliament, are more lightly taxed than any part of Great Britain. Ed.

I reads

“seem

AMERICA AND EAST INDIES Parliament in attempting to exercise well or

ill

manded tion to

its

supposed

right,

whether

grounded, of taxing the colonies, has never hitherto de-

them any thing which even approached to a just proporwhat was paid by their fellow-subjects at home. If the conof

tribution of the colonies, besides,

the rise or

out taxing at the same time

might in

was

to rise or fall in proportion to

of the land tax, parliament could not tax

fall

its

own

constituents,

them with-

and the colonies

be considered as virtually represented in parlia-

this case

ment.

Examples are not wanting provinces are not taxed,

if

I

of empires in

may be

which

all

the different

allowed the expression, in one

mass; but in which the sovereign regulates the sum which each pro-

some provinces

vince ought to pay, and in

and

assesses

he thinks proper; while in others, he leaves

levies

it

to be assessed

it

as

and

as the

King of France taxes

some of his provinces,

levied as the respective states of each province shall determine. In

some provinces

of France, the king not only imposes

them

what taxes he

way he

thinks and levies 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 thinks proper, but assesses

in the

proper. According to the scheme of taxing

by

requisition, the

parliament of Great Britain would stand nearly in the same situation towards the colony assemblies, as the king of France does to-

wards 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 would amount

just reason to fear that

to that proper proportion.

The parliament

it

never

of Great

Britain has not for

some time past had the same

ity in the colonies,

which the French king has in those provinces of

France which

The colony

still

established author-

enjoy the privilege of having states of their own.

assemblies,

if

they were not very favourably disposed

(and unless more skilfully managed than they ever have been hitherto, they are not very likely to

be so), might

still

find

many

pretences for evading or rejecting the most reasonable requisitions of parliament.

millions

A

French war breaks out, we

must immediately be

the empire. This

shall suppose; ten

raised, in order to defend the seat of

sum must be borrowed upon

the credit of

some

parliamentary fund mortgaged for pa5n[ng 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

hut parliament has not sufficient

authority,

the wealth of NATIONS

$86

assemblies of America and the

West

Indies.

Would

people readily

advance their money upon the credit of a fund, which partly de-

pended upon the good humour

of all those assemblies, far distant

from the seat of the war, and sometimes, perhaps, thinking themselves not much concerned in the event of it? Upon such a fund no

more money would probably be advanced than what the tax to be The whole war the would in this burden of the debt contracted on account of levied in Great Britain might be supposed to answer for.

manner

fall,

upon a part Britain it

is,

as

always has done hitherto, upon Great Britain;

it

and not upon the whole empire. Great

of the empire,

perhaps, since the world began, the only state which, as

has extended

its

once augmenting

empire, has only increased

its

resources. Other states

dened themselves upon

their subjett

its

expence without

have generally disbur-

and subordinate provinces

of

the most considerable part of the expence of defending the empire.

Great Britain has hitherto suffered her subject and subordinate provinces to disburden themselves upon her of almost this whole

expence. 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,

seems necessary, upon the scheme

it

taxing them

by parliamentary have some means of rendering

its requisitions

ual, in case the colony assemblies should

them; and what those means

and and resistance

breaks out.

it

of

requisition, that parliament should

immediately

effect-

attempt to evade or reject

are, it is not

very easy to conceive,

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 inde-

pendent of the consent of their own assemblies, the importance of those assemblies would from that that of

the leading

all

some share

in the

of the importance

men

management which

it

moment be

at

of British America.

an end, and with

Men

desire to

it,

have

of public affairs chiefly on account

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

government. In the attacks which those leading ually

making upon the importance

system of

men

of one another,

free

are contin-

and

in the de-

fence 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

imagine, that

which they are fond of calling

if

their assemblies,

importance.

They

feel,

or

parliaments, and of considering as equal in authority to the parlia-

ment

of Great Britain, should

be so far degraded as to become the

AMERICA AND EAST INDIES humble ministers and executive

parliament, the

officers of that

own importance would be

greater part of their

5^7

at

an end. They have

rejected, therefore, the proposal of being taxed

by parliamentary

requisition,

and

rather chosen to

like other ambitious

draw the sword

and high-spirited men, have

own importance.

in defence of their

Towards the declension of the Roman republic, the Rome, who had borne the principal burden of defending and extending the empire, demanded to be admitted ileges of

out.

Roman

citizens.

During the course

Upon being by

to the greater part of them, one

one,

and

of Great Britain insists to

upon taxing the

be taxed by a parliament

in

itself

acy, Great Britain should allow such a

what

propor-

privileges

The parliament

colonies;

it

with

and

its

to be

offered,

If to

from the general confeder-

number

of representatives as

contributed to the public revenue

of the empire, in consequence of its being subjected to the taxes,

should be

and they refuse

which they are not represented.

each colony, which should detach

suited the proportion of

men^in

war broke

in proportion as they

detached themselves from the general confederacy.

Repre?entation

to all the priv-

refused, the social

war Rome granted those

of that

allies of

the state

same

compensation admitted to the same freedom of trade

in

fellow-subjects at

home; the number of

augmented as the proportion of

its

its

representatives

contribution might after-

wards augment; a new method of acquiring importance, a new and

more dazzling object

men

of ambition

would be presented

to the leading

of each colony. Instead of piddling for the little prizes

are to be found in faction; they

what may be

which

called the paltry raffle of colony

might then hope, from the presumption which men

and good fortune, to draw some 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 naturally have in their

own

ability

of the great prizes which sometimes

'

than

this, of

preserving the importance and of gratifying the ambi-

tion of the leading

men of America,

will ever voluntarily

it is

not very probable that they

submit to us; and we ought to consider that

the blood which must be shed in forcing them to do so,

drop of

it,

wish to have for

ter themselves that, in the state to

onies will be easily conquered

themselves at this

by

force alone.

The

and

in

col-

who now

degree of importance which, feel.

From

shop-

become statesmen and contriving a new form of gov-

attornies, they are

and are employed

persons

call their continental congress,

moment a

perhaps the greatest subjects in Europe scarce keepers, tradesmen, legislators,

every

which things have come, our

govern the resolutions of what they feel in

is,

who are, or of those whom we our fellow-citizens. They are very weak who flat-

the blood either of those

Otherwise

to expect

submis’

XHE WEALTH OF NATIONS

S8S

eminent will

for

an extensive empire, which, they

flatter themselves,

become, and which, indeed, seems very likely to become, one of

the greatest and most formidable that ever

hundred

who

different people, perhaps,

who

in the world. Five

in different

and

diately under the continental congress;

perhaps,

was five

ways

own

fancy, a station superior, not only to

if

fill;

of ambition is presented either to

he has the ordinary

spirit of

at present

fills,

what he had ever

but to what he had ever expected to

some new object leaders,

same

own importance. Almost

rise in their

every individual of the governing party in America,

filled before,

imme-

act under those five hundred, all feel in the

manner a proportionable in his

act

hundred thousand,

and unless

him

or to his

a man, he will die in defence

of that station. It is a

and resistance will

remark of the president Henaut, that we now read with

pleasure the account of

many little transactions of

the Ligue, which

be as

obstinate as that of Paris.

when they happened were not perhaps considered as very important pieces of news. But every man then, says he, fancied himself of some importance; and the innumerable memoirs which have come down to us from those times were, the greater part of them, written by people who took pleasure

in recording

and magnifying events

in

which, they flattered themselves, they had been considerable actors.^®

fended

How

obstinately the city of Paris

what a dreadful famine

itself,

mit to the best and afterwards kings, is well

it

upon that occasion

supported rather than sub-

the most beloved of

known. The greater part

de-

all

the French

of the citizens, or those

who

governed the greater part of them, fought in defence of their own importance, which they foresaw was to be at an end whenever the ancient government should be re-established.

Our

colonies, unless

they can be induced to consent to a union, are very likely to defend themselves against the best of

all

mother countries, as obstinately

as the city of Paris did against one of the best of kings.

The

The discovery of

idea of representation

was unknown

in ancient times.

When

the people of one state were admitted to the right of citizenship in

representation

another, they

had no other means

of exercising that right but

by

®®“Aucun des regnes precedents n’a fourni plus de volumes, plus d’anecde pikes fugitives, etc. II y a dans tout cela bien des choses inutiles; mais comme Henri III, vivait au milieu dc son peuple, aucun detail des actions de sa vie n’a echappe a la curiosit6; et comme Paris etait le th6S,tre des principaux evenements de la ligue, les bourgeois qui y avaient la plus grande part, conservaient soigneusement les moindres faits qui dotes, plus d’estampes, plus

se passaient sous leurs yeux; tout ce qu’ils voyaient leur paraissait grand, parce qu’ils y participaient, et nous sommes curieux, sur parole, de faits dont la plupart ne faisaient peut-etre pas alors une grande nouvelle dans le monde.” C. J. F. Hkault, Nouvel Abrigi chronologique de Vhistoire de France, nouv.

—

ed., 1768, p. 473, A.D. 1589.

“ Eds.

4 and 5 erroneously insert “to” here.

AMERICA AND EAST INDIES coming

in a

other state.

body

5^9

to vote

and deliberate with the people of that

The admission

of the greater part of the inhabitants of

makes the case different

Italy to the privileges of

Roman

Roman

citizens,

completely ruined the

was no longer possible to distinguish between who was and who was not a Roman citizen. No tribe could know its own members. A rabble of any kind could be introduced into the republic. It

from that of

Rome

and Italy.

assemblies of the people, could drive out the real citizens, and decide

upon the

such.

affairs of the republic as if

But though America were^^®

they themselves had been

new representatives commons could between who was and

to send fifty

to parliament, the door-keeper of the house of

not find any great difficulty in distinguishing

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 constitu-

would be hurt by the union of Great Britain with her colonies. That constitution, on the contrary, would be completed by it, and tion

seems to be imperfect without

and decides concerning the

it.

The assembly which

affairs of

deliberates

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

ily effectuated, or that difficulties

and great

difficulties

be eas-

might not

occur in the execution, I do not pretend. I have yet heard of none,

however, which appear insurmountable. arise,

The

principal perhaps

not from the nature of things, but from tie 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

Ameri-

can representatives should overturn the balance of the constitution,

and increase too much hand, or the force of

The American repre-

either the influence of the

of the

democracy on the

American representatives were

to

be

other.

crown on the one

But

if

the

number

in proportion to the pro-

sentatives

could be

managed.

duce 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 ative force with regard to one another as they

The people on

same degree

had done

of rel-

before.

the other side of the water are afraid lest their

distance from the seat of government might expose them to many oppressions. But their representatives in parliament, of which the

number ought from the first to be considerable, would easily be able to protect them from all oppression. The distance could not ^°®Eds. 1-3 read “was.”

^“^Eds. 1-3 read “was.”

The Americans

would not be oppressed.

THE WEALTH OF NATIONS

590

much weaken

the dependency of the representatives upon the conand the former would still feel that he owed his seat in parliament, and all the consequence which he derived from it, to stituent,

the good-will of the latter. It would be the interest of the former, therefore, to cultivate that good-will

authority of a

any

member

all

the

or military officer might be guilty of in those remote parts

civil

of the empire.

The

distance of America from the seat of govern-

ment, besides, the natives selves,

by complaining, with

of the legislature, of every outrage which

of that country might flatter them-

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 little more than a century, perhaps, the produce of American might exceed that of British taxation. The seat of the empire would

of

then naturally remove

itself

to that part of the empire which con-

tributed most to the general defence and support of the whole.

The discovery of America, and that of a passage to the East Inby the Cape of Good Hope, are the two greatest and most im-

The discovery of

dies

America and the

portant events recorded in the history of mankind.^^^ Their conse-

Cape pas-

quences have already been very great: but, in the short period of

sage are

between two and three centuries which has elapsed since these discoveries were made, it is impossible that the whole extent of their

the greatest events

in his-

tory: the

misfortunes of

the natives of

What benefits, or what misformay hereafter result from those great events, no human wisdom can foresee. By uniting, in some measure, the most consequences can have been seen. tunes to mankind

distant parts of the world,

by enabling them to relieve one another’s

the East

wants, to increase one another’s enjoyments, and to encourage one

and West

another’s industry, their general tendency would seem to be bene-

Indies

ficial.

maybe

To

the natives, however, both of the East and

West

Indies,

the commercial benefits which can have resulted from those

tempo-

all

rary, so

events have been sunk and lost in the dreadful misfortunes which they have occasioned. These misfortunes, however, seem to have

the results

may

be beneficial all.

to

arisen rather

from accident than from any thing

those events themselves. At the particular time

in the nature of

when

these dis-

coveries were made, the superiority of force

on the side

of

happened to be so great the Europeans, that they were enabled to commit

with impunity every sort of injustice in those remote countries.

^ Ed.

I

reads “nations.”

“®Raynal begins Im

ffistoire pUlosophique with the words “II n^y a point eu d’ev6neinent aussi interessant pour I’espece humaine en general et pour les peuples de I’Europe en particulier, que la decouverte du nouveau monde et le passage aux Indes par le Cap de Bonne-Esperance. Alors a commence une revolution dans le commerce, dans la puissance des nations, dans les

mceurs, Tindustrie et le gouvernement de tous les peuples ”

AMERICA AND EAST INDIES Hereafter, perhaps, the natives of those countries er, or

those of Europe

59^

may grow strong-

may grow weaker, and the inhabitants of all may arrive at that equality of

the different quarters of the world

courage and force which, by inspiring mutual

fear,

awe the

some

injustice of independent nations into

for the rights of one another.

commerce from

all sorts

all

sort of respect

But nothing seems more

tablish this equality of force than that

knowledge and of

can alone over-

improvements which an extensive

of

countries to

necessarily, carries along with

likely to es-

mutual communication of

countries naturally, or rather

all

it.

In the mean time one of the principal

effects of those discoveries

Mean-

has been to raise the mercantile system to a degree of splendour

time the discovery

and glory which

has ex-

it

could never otherwise have attained

object of that system to enrich a great nation rather

to. It is

the

by trade and

manufactures than by the improvement and cultivation of land,

alted the

mercantile

rather

by the industry

of the towns than

by

that of the country.

sys-

tem.

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

by

the Atlantic ocean, and the countries which

and Mediterranean the

seas),

in

cultivators of America,

some respects the manufacturers

ferent nations of Asia, Africa,

round the Baltic

and the

Two new worlds

greater

have

much greater and more

extensive than the old one, and the market of one of

The

carriers,

too, for almost all the dif-

and America.

been opened to their industry, each of them

still

washed

have now become the manufacturers for

numerous and thriving

and

lie

is

them growing

and greater every day.

countries which possess the colonies of America, and which

trade directly to the East Indies,

enjoy, indeed, the whole shew and

The countries

which

splendour of this great commerce. Other countries, however, not-

withstanding

all

the invidious restraints

by which

it is

meant

to ex-

clude them, frequently enjoy a greater share of the real benefit of it.

The

colonies of Spain and Portugal, for example, give

more

real

encouragement to the industry of other countries that to that of Spain and Portugal. In the single

article of linen alone the con-

sumption of those colonies amounts, to warrant the quantity, to

But

this great

it is

said,

but I do not pretend

more than three millions

consumption

is

sterling

a year.

almost entirely supplied by France,

Flanders, Holland, and Germany. Spain and Portugal furnish but

a small part of

it.

The

capital

great quantity of linen

is

which supplies the colonies with

annually distributed among, and fur-

nishes a revenue to the inhabitants of those other countries. profits of

it

this

The

only are spent in Spain and Portugal, where they help

possess

America and trade to the

East Indies

appear to get all the

advantage, but this is not

the case.

592

the wealth of nations

to support the

sumptuous profusion

of the

merchants of Cadiz and

Lisbon.

Even the

The monopoly

by which each nation endeavours to secure trade of its own colonies, are frequently more

regulations

to itself the exclusive

regulations

hurtful to the countries in favour of which they are established

sometimes

than to those against which they are established. The unjust op-

harm the country

which establish-

them more than es

others.

pression of the industry of other countries

falls

back,

if I

may

say

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 Hamburgh must send the linen so,

which he destines

for the

American market

to

London, and he must

bring back from thence the tobacco which he destines for the Ger-

man

market; because he can neither send the one directly to

Am-

By

this

nor bring back the other directly from thence.

erica,

restraint

and

to

he

is

buy the

probably

obliged to sell the

one somewhat cheaper,

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 Hamburgh and London, he

tainly receives the returns of his capital

much more

cer-

quickly than

he could possibly have done in the direct trade to America, even though we should suppose, what

payments

of

Hamburgh,

his capital can keep in constant

German industry than

done in the trade from which he ployment, therefore, it

of

case, that the

London. In the

which those regulations confine the merchant

greater quantity of

the other,

by no means the

America were as punctual as those

trade, therefore, to

of

is

may

cannot be

less

to

is

it

excluded.

him perhaps be

employment a much possibly could have

Though the one emless profitable

advantageous to his country.

than

It is quite

otherwise with the emplo5mient 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,

The mother

After

all

it

cannot be more advantageous to his country.

the unjust attempts, therefore, of every country in

Europe to engross to

itself

the whole advantage of the trade of

its

countries

have en-

own

grossed

thing but the expence of supporting in time of peace and of de-

colonies,

no country has yet been able

to engross to itself

only the expense

fending in time of war the oppressive authority which

andin-

over them.

conve-

colonies, every country

niencies

of possessing colonies.

The

At

many

assumes

inconveniencies resulting from the possession of

has engrossed to

vantages resulting from their trade

with

it

any

it

itself

completely.

The

its

ad-

has been obliged to share

other countries.

first sight,

no doubt, the monopoly of the great commerce of

AMERICA AND EAST INDIES

593

America, naturally seems to be an acquisition of the highest value.

The mo-

To

nopoly of American

the undiscerning eye of giddy ambition,

amidst the confused scramble of

self

dazzling object to fight for.

The

naturally presents

it

politics

dazzling splendour of the object,

however, the immense greatness of the commerce, ity

which renders the monopoly of

emplo3mient, in

own nature

its

it-

and war, as a very

it

hurtful, or

trade is a

darling object.

is

the very qual-

which makes one

necessarily less advantageous to the

country than the greater part of other employments, absorb a much greater proportion of the capital of the country than what would

otherwise have gone to

The

it.

mercantile stock of every country,

second book,^®^ naturally seeks,

ment most advantageous

if

carries on.

may

one

to that country. If

carrying trade, the country to which

porium of the goods

it

say

the employ-

so,

employed

naturally seeks the

whose trade that stock

of that stock necessarily wishes to dispose

He

thereby

saves himself the trouble, risk, and expence of exportation, and he

upon that account be glad

much

smaller price, but with

to sell

them

at home, not only for a

somewhat a smaller

might expect to make by sending them abroad. fore,

of a country

belongs becomes the em-

it is

of as great a part of those goods as he can at home.

will

The stock

in the

of all the countries

But the owner

has been shewn in the

it

He

profit

employ-

ment most ad' vantageous to the country,

than he

naturally, there-

endeavours as much as he can to turn his carrying trade into a

foreign trade of consumption. If his stock again is employed in a foreign trade of consumption, he will, for the to dispose of at

which he

home

as great

same reason, be glad

home

goods,

foreign market,

and he

a part as he can of the

collects in order to export to

some

much as he can, a home trade. The

will thus endeavour, as

to turn his foreign trade of

consumption into

mercantile stock of every

country naturally courts in this manner the near, and shuns the distant employment; naturally courts the employment in which the

preferring

the near to the

more disem-

returns are frequent, and shuns that in which they are distant and

tant

slow; naturally courts the employment in which

ployments,

it

can maintain the

greatest quantity of productive labour in the country to which

it

belongs, or in which its owner resides, and shuns that in which

it

can maintain there the smallest quantity.

employment which

in ordinary cases is

shuns that which in ordinary cases

is

It naturally courts the

most advantageous, and

least

advantageous to that

country.

But

if in

any of those distant employments, which

in ordinary

cases are less advantageous to the country, the profit should hap-

pen to

rise

somewhat higher than what

natural preference which

is

is sufficient

to balance the

given to nearer employments, this

Above, pp. 34I-3SS-

unless profits are

higher in the

more

distant,

THE WEALTH OF NATIONS

594 which indicates

that the

more distant employment is

neces-

sary.

superiority of profit will

ments,

till

draw stock from those nearer employ-

the profits of all return to their proper level. This super-

iority of profit, however, is

a proof that, in the actual circumstances

somewhat under-

of the society, those distant emplo5anents are

stocked in proportion to other employments, and that the stock of the society different is

is

not distributed in the properest manner

employments carried on

in

it.

It is

among

either bought cheaper or sold dearer than it ought to be,

some

particular class of citizens

paying more or by getting ity,

less

is

more or

than what

less

is

all

the

a proof that something

and that

oppressed either by

suitable to that equal-

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 may be

as necessary for the welfare of the society as a near one; the goods

which the distant employment deals in being necessary, perhaps, for carrying

on many of the nearer employments. But

who

of those

if

the profits

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,

ments

will

and

be more or

all

less

those engaged in the nearer employ-

oppressed by this high price. Their in-

some stock should be withdrawn from those nearer employments, and turned towards terest, therefore, in this case requires that

that distant one, level,

price.

in order to reduce its profits to their proper

and the price of the goods which it deals in to their natural In this extraordinary case, the public interest requires that

some stock should be withdrawn from those employments which more advantageous, and turned towards one which in ordinary cases is less advantageous to the public: and in in ordinary cases are

this extraordinary case, the natural interests

men

and inclinations

coincide as exactly with the public interest as in

all

of

other or-

dinary cases, and lead them to withdraw stock from the near, and it towards the distant employment.

to turn If too

any em-

It is thus that the private interests and passions of individuals naturally dispose them to turn their stock towards the employnients which in ordinary cases are most advantageous to the

ployment,

ciety.

But

if

much

of

towards those employments, the

much goes to

profit falls in

that

em-

so-

and the

it

from

this natural preference

rise of it in all others

ployment and the

this faulty distribution.

proper

fore, the private interests

distribu-

to divide

and

they should turn too fall

of profit in

Without any intervention of law, thereand passions of men naturally lead them

distribute the stock of every society,

Ed.

them

immediately dispose them to alter

I reads “distant

employment.”

among

all

the

AMERICA AND EAST INDIES

595

employments carried on in it, as nearly as possible in the proportion which is most agreeable to the interest of the whole different

tion is

soon

re-

stored.

society.

All the different regulations of the mercantile system, necessar-

derange more or less this natural and most advantageous dis-

ily

But those which concern the trade to America and the East Indies derange it perhaps more than any other; betribution of stock.

The mercantile

system disturbs this dis-

tribution,

cause the trade to those two great continents absorbs a greater

quantity of stock than any two other branches of trade. lations,

however, by which this derangement

The

regu-

effected in those

is

especially in regard

to

Amerand

ican

two different branches of trade are not altogether the same. Monopoly

is

opoly.

the great engine of both; but

Monopoly

it is

a different sort of mon-

Indian trade.

of one kind or another, indeed, seems to be the

engine of the mercantile system.

sole

In the trade to America every nation endeavours to engross as

much

as possible the whole market of

its

own

colonies,

by

fairly

The Portuguese

attempted

excluding

all

other nations from any direct trade to them. During

at first to

the greater part of the sixteenth century, the Portugueze endeav-

exclude

oured to manage the trade to the East Indies in the same manner,

all other nations

by claiming the

from

sole right of sailing in the Indian seas,

on account of

the merit of having first found out the road to them.

continue to exclude

still

all

other European nations from

rect trade to their spice islands.

dently established against

The Dutch

all

Monopolies of

this

any

the In-

di-

kind are evi-

other European nations,

who

trading in

are

dian Seas,

and the Dutch still

thereby not only excluded from a trade to which

it

might be con-

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

venient for

ex-

clude

all

other nations

from trade *

with the

which produce them.

But

since the fall of the

power of Portugal, no European nation

Spice Islands.

has claimed the exclusive right of sailing in the Indian seas, of

which the principal ports are now open to the ships of

all

Euro-

Now the principal

pean nations. Except few years in France,^

in Portugal,’^^’’

however, and within these

the trade to the East Indies has in every

European country been subjected to an exclusive company. Monopolies of this kind are properly established against the very na-

tion

which erects them. The greater part of that nation are thereby

ports arc

open, but

each

country has established

an

exclusive

not only excluded from a trade to which for

them

to turn

some part

might be convenient

of their stock, but are obliged to

the goods which that trade deals in,

See below, p. 598. monopoly of the French East India

'^^’’The

—See

it

the Continuation of Anderson’s

somewhat dearer than

Company was

Commerce,

1801, vol.

buy if it

abolished in 1769. iv., p.

128.

company.

the wealth of nations

596

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

must have paid

and above being excluded from the trade, East India goods which they

in the price of the

have consumed, not only for

all

the extraordinary profits which the

company may have made upon those goods monopoly, but

in

consequence of their

for all the extraordinary waste

which the fraud and

management

abuse, inseparable from the

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

Monopolies

of the

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

American kind al-

stock of the society than what would go to that trade of its

ways at-

accord.

but

tract,

Monopolies of the second kind

monopolies

of ex-

clusive

companies

may sometimes

own

attract stock to-

wards the particular trade in which they are established, and sometimes repel

it

from that trade according to different circumstances.

In poor countries they naturally attract towards that trade more

some-

stock than would otherwise go to

times at-

rally repel

from

it

it.

In rich countries they natu-

a good deal of stock which would otherwise go

tract,

sometimes repel

to

it.

Such poor countries as Sweden and Denmark,

would probably have never sent a

for example,

single ship to the East Indies,

stock.

to an exclusive company. The escompany necessarily encourages adventurers. Their monopoly secures them against all competitors in the home market, and they have the same chance for foreign markets

had not the trade been subjected

In poor countries

they at-

tablishment of such a

tract,

with the traders of other nations. Their monopoly shows them the certainty of a great profit

and the chance

of

upon a considerable quantity

a considerable

profit

of goods,

upon a great quantity.

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. in rich

they

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

repel.

Indies than

it

actually does.

The

limited stock of the

Dutch East

AMERICA AND EAST INDIES India

company

probably repels from that trade

597

many great mer-

which would otherwise go to it. The mercantile capital of Holland is so great that it is, as it were, continually overcantile capitals

flowing, sometimes into the public funds of foreign countries,

some-

times into loans to private traders and adventurers of foreign countries,

sometimes into the most roundabout foreign trades of con-

sumption, and sometimes into the carrying trade. All near employ-

ments being completely

up,

filled

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 dis-

The

tant employments.

trade to the East Indies,

if it

were

alto-

gether free, would probably absorb the greater part of this re-

dundant

The East

capital.

Indies offer a market both for the

manufactures of Europe and for the gold and

silver as well as for

several other productions of America, greater

and more extensive

than both Europe and America put together.

Every derangement

of the natural distribution of stock is neces-

sarily hurtful to the society in

which

it

takes place; whether

it

be

Both

ef-

fects are

hurtful,

by

repelling

from a particular trade the stock which would other-

by attracting towards a particular trade that which would not otherwise come to it. If, without any exclusive company, the trade of Holland to the East Indies would be greater than it actually is, that country must suffer a considerable loss by part of its capital being excluded from the employment most convenient wise go to

it,

or

for that part.

And

in the

same manner,

if,

without an exclusive

company, the trade of Sweden and Denmark would be

less

would not

than

it

actually

exist at all, those

considerable loss

by part

is,

or,

to the

what perhaps

is

East Indies

more probable,

two countries must likewise

of their capital being

ployment which must be more or

drawn

suffer

into

a

an em-

less unsuitable to their present

circumstances. Better for them, perhaps, in their present circum-

buy East India goods of other nations, even though they should pay somewhat dearer, than to turn so great a part of their stances, to

small capital to so very distant a trade, in which the returns are so

very slow, in which that capital can maintain so small a quantity of productive labour at home, where productive labour

wanted, where so

little is

Though without an

done, and where so

exclusive

company,

much

is

is

so

much

to do.

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

’^^Raynal, Histoire philoi^ophique, ed. Amsterdam, 1773, tom. gives the original capital as 6,459,840 florins.

Eds. 1-3 read

*‘if it

was.”

p.

203,

A country which cannot trade to

THE WEALTH OF NATIONS

59S the East Indies

without an exclu-

company sive

should not trade

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 Portu-

together without

No

there.

The idea that the large capital of

a com-

pany is necessary is falla-

cious.

who enjoyed

gueze,

almost the whole of

it

for

more than a century

any exclusive company.

private merchant,

it

has been

said, could well

have capital

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, sufficient to

the

finding a cargo might frequently

difificulty of

make

his ships

and the expence 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 lose the season for returning,

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 sufficient, for

in

which the capital of any one private merchant

carrying on

all

is

the subordinate branches which must

be carried on, in order to carry on the principal one.^^^ But when a nation

is

ripe for

some merchants natutowards the principal, and some towards

any great branch

rally turn their capitals

the subordinate branches

branches of

it

are in this

happens that they are

all

of

it;

manner

of trade,

and though

carried on

merchant. If a nation, therefore,

is

all

carried on, yet

by the

it

the different

very seldom

capital of one private

ripe for the East India trade, a

certain portion of its capital will naturally divide itself

the different branches of that trade.

Some

find it for their interest to reside in the their capitals there in providing

of

its

among

merchants

if

will

East Indies, and to employ

goods for the ships which are to

be sent out by other merchants who reside in Europe. The

settle-

European nations have obtained in the East they were taken from the exclusive companies to which

ments which Indies,

all

different

they at present belong, and put under the immediate protection of the sovereign, would render this residence both safe and easy, at least to the

merchants of the particular nations to

whom

those set-

tlements belong. If at any particular time that part of the capital of

any country which

may

say

so,

carrying on

of its

own accord tended and

all

those different branches of

that, at that particular time, that

trade,

inclined,

if

I

towards the East India trade, was not sufficient for

and that

it

would do better to buy Ed.

I

it, it

would be a proof

country was not ripe for that for

some time, even at a

reads “the principal branch.’^

AMERICA AND EAST INDIES

599

higher price, from other European nations, the East India goods

had occasion Indies.

for,

What

it

than to import them

might lose by the high price of those goods could

seldom be equal to the loss which

it

tion of a large portion of its capital

necessary, or situation,

it

from the East

itself directly

more useful,

or

more

would sustain by the distracfrom other employments more

suitable to its circumstances

and

than a direct trade to the East Indies.

Though both upon

the Europeans possess

many

considerable settlements

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 ica. Africa,

and continent

of

Amer-

however, as well as several of the countries compre-

There are not numerous and thriving colonies in

Africa

hended under the general name of the East Indies, are inhabited

and the

by barbarous nations. But those nations were by no means so weak and defenceless as the miserable and helpless Americans; and in

East

proportion to the natural fertility of the countries which they in-

America.

habited, they were besides

much more

The most

populous.

bar-

barous 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

very great between the number of shepherds and

is

that of hunters

whom

the same extent of equally fertile territory

can maintain. In Africa and the East Indies, therefore, difficult to displace

it

was more

the natives, and to extend the European plan-

tations over the greater part of the lands of the original inhabitants. it

The

genius of exclusive companies, besides,

has already been observed,^

to the

is

unfavourable,

growth of new colonies, and

has probably been the principal cause of the

little

progress which

The Portugueze

carried on the

trade both to Africa and the East Indies without

any exclusive

they have made- in the East Indies.

companies, and their settlements at Congo, Angola, and Benguela

on the coast of Africa, and at Goa in the East Indies, though much depressed by superstition and every sort of bad government, yet bear some faint resemblance to the colonies of America, and are partly inhabited

by Portugueze who have been established there

for several generations.

Good Hope and colonies

The Dutch

settlements at the

Cape

of

at Batavia, are at present the most considerable

which the Europeans have established

in the East Indies,

and both these

either in Africa or

settlements are peculiarly

fortunate in their situation. The Cape of Good Hope was inhabited by a race of people almost as barbarous and quite as incapable of “^Raynal, Hhtoire philosophique, ijjir tom. i., p. jyS. Above, pp. 541, 542. “*Ed. i reads “those.’

Indies,

as in

XHE WEALTH OF NATIONS

600

defending themselves as the natives of America. It

if one may say so, which almost every European ship makes some stay both

half-way house, Indies, at

besides the

is

between Europe and the East

and returning. The supplying of those ships with every fresh provisions, with fruit and sometimes with wine, af-

in going sort of

fords alone a very extensive market for the surplus produce of the colonists.

What

Cape

the

Good Hope

of

every part of the East Indies, Batavia

China and Japan, and

to

upon that road. Almost and China touch

all

the ships too that

and

at Batavia;

center and principal mart of

what

it is,

is

ropeans, but of that which

is

sail

between Europe

over and above

all this,

the

called the country trade of the

East Indies; not only of that part of

vessels navigated

between Europe and

between the principal

upon the most frequented road is nearly about mid-way

countries of the East Indies. It lies

from Indostan

is

is

it

carried on

by Eu-

which

is

by the

native Indians; and

carried on

by the inhabitants of China and Japan, of Tonand the island of Celebes, are fre-

quin, Malacca, Cochin-China,

quently to be seen in

its port.

Such advantageous situations have

enabled those two colonies to surmount oppressive genius of an exclusive

all

the obstacles which the

company may have

occasionally

opposed to their growth. They have enabled Batavia to surmount the additional disadvantage of perhaps the most

mate The Dutch ex-

unwholesome

cli-

in the world.

The English and Dutch companies, though they have no considerable

colonies, except the

established

two above mentioned, have

clusive

company

both made considerable conquests in the East Indies. But in the

destroys

manner

and nutmeg

genius of an exclusive

trees,

In the spice islands

spices

in

their new subjects, the natural company has shown itself most distinctly. the Dutch are said to^^^ burn all the spiceries

which they both govern

which a

fertile season produces beyond what they expect to dispose Europe with such a profit as they think sufficient. In the islands where they have no settlements, they give a premium to

of in

those

who

and nutmeg age

young blossoms and green leaves of the clove which naturally grow there, but which this sav-

collect the

trees

policy has now,

Even

in the islands

much

reduced,

even of their

it is

own

it is

said, almost completely extirpated.

where they have settlements they have very

number of those trees. If the produce was much greater than what suited their

said, the

islands

market, the natives, they suspect, might find means to convey some part of it to other nations; and the best way, they imagine, ^^^Ed. I does not contain “are said to.” twice made, pp. 158, 491, ^^®Ed. I reads “barbarous.”

The statement has already been

AMERICA AND EAST INDIES own monopoly,

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 to secure their

is

to take care that

Moluccas nearly to the number which fresh provisions

garrisons,

is sufficient to

supply with

reduced the popu-

own

insignificant

lation of

and other necessaries of

and such of

and has

life their

their ships as occasionally

come

there for a

cargo of spices. Under the government even of the Portugueze,

the

Mo-

luccas

however, those islands are said to have been tolerably well inhab-

The

ited.

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

am

been uncommon, I

well assured, for the chief, that

the

is,

a factory, to order a peasant to plough up a rich

clerk of

poppies,

and sow

first

The English company has the same

tendency

field of

with rice or some other grain. The pretence

it

was, to prevent a scarcity of provisions; but the real reason, to give the chief tity

an opportunity

of selling at a better price a large quan-

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

for

has been ploughed up, in order to make room

a plantation of poppies; when the chief foresaw that extra-

ordinary profit was likely to be

made by opium. The

servants of the

company have upon several occasions attempted to establish in their own favour the monopoly of some of the most important branches, not only of the foreign, but of the inland trade of the country.

Had

they been allowed to go on,

it is

impossible that they

should not at some time or another have attempted to restrain the

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 expect to

such a profit as they might think

sufficient.

company would

tury or two, the policy of the English

sell

with

In the course of a cenin this

man-

ner have probably proved as completely destructive as that of the

Dutch. Nothing, however, can be more directly contrary to the real

in-

companies, considered as the sovereigns of the coun-

terest of those

This destructive system

tries

which they have conquered, than

almost

all

this destructive plan. In

The

con-

drawn from

trary to

greater the revenue of the people, there-

their in-

countries the revenue of the sovereign

that of the people.

is

is

terest as

fore, the greater the

more they can to increase as

annual produce of their land and labour, the

afford to the sovereign. It

much

is

his interest, therefore,

as possible that annual produce. But

the interest of every sovereign,

it is

if this is

peculiarly so of one

whose

revenue, like that of the sovereign of Bengal, arises chiefly from

a

sovereigns,

XHE WEALTH OF NATIONS

602

That rent must necessarily be in proportion to the quantity and value of the produce, and both the one and the other must depend upon the extent of the market. The quantity will always be land-rent.

suited with

more

or less exactness to the consumption of those

can afford to pay for

it,

and the price which they

will

pay

will al-

ways be in proportion to the eagerness of their competition. It interest of such a sovereign, therefore, to

who

is

the

open the most extensive

market for the produce of his country, to allow the most perfect to increase as

freedom of commerce, in order

number and

much as

abolish, not only all monopolies, but all restraints

portation of the other,

upon

its

home produce from one any kind

manner most

for which

it

upon the

trans-

part of the country to an-

upon the impor-

exportation to foreign countries, or

tation of goods of this

possible the

the competition of buyers; and upon this account to

can be exchanged.

He

is in

both the quantity and value of

likely to increase

that produce, and consequently of his

own

share of

or of his

it,

own

revenue. but they prefer the

But a company of merchants

are, it seems, incapable of consider-

ing themselves as sovereigns, even after they have

become such.

transitory profits of

the

mono-

polist

Trade, or buying in order to principal business,

their

again, they

sell

consider as

character of the sovereign as but an appendix to that of the mer-

merchant to the

chant, as something which ought to be

perma-

means

nent revenue of the sover-

this

eign.

still

and by a strange absurdity, regard the

of which they

thereby to

sell

may be enabled

with a better profit in

purpose to keep out as

much

made subservient to it, or by buy cheaper in India, and Europe. They endeavour for to

as possible

all

competitors from

the market of the countries which are subject to their government,

and consequently to reduce, at uce of those countries to what

own demand,

or to

least,

is

some part

of the surplus prod-

barely sufficient for supplying their

what they can expect

to sell in

Europe with such

a profit as they may think reasonable. Their mercantile habits draw

them

in this

to prefer

manner, almost necessarily, though perhaps insensibly,

upon

all

ordinary occasions the

of the monopolist to the great eign,

ions,

profit

to treat the countries subject

government nearly as the Dutch treat the Moluccas.

company considered

the interest of the East India that the

and transitory

and permanent revenue of the sover-

and would gradually lead them

to their

little

European goods which are carried

It is

as sovereigns,

to their Indian

domin-

should be sold there as cheap as possible; and that the Indian

goods which are brought from thence should bring there as good a price, or should be sold there as dear as possible. But the reverse of this is their interest as

merchants. As sovereigns, their interest “®Ed.

I

reads “the.”

is

AMERICA AND EAST INDIES same with that

exactly the

merchants, their interest

But

if

is

^^3

which they govern. As

of the country

directly opposite to that interest,^^'^

the genius of such a government, even as to what concerns

its direction in Europe,

curably faulty, that of

That administration

is

manner essentially and perhaps inits administration in India is still more so. necessarily composed of a council of mer-

is

in this

chants, a profession no doubt extremely respectable, but which in

no country

world carries along with

in the

it

that sort of authority

which naturally over-awes the people, and without force commands their willing obedience.

by

Such a council can command obedience only

the military force with which they are accompanied,

government

is

therefore necessarily military

and

is

their masters’ account, the

European goods consigned

buy

that of merchants. It

in return Indian goods for the

the one as dear and to

quently to exclude as

market where they keep

their shop.

The

of the direction. It tends to

vient to the interest of monopoly,

natural growth of

country to what

some parts

is

India thinks

only of

buying cheap and selling

dear,

their

upon them, and

to sell, to

as possible,

It is to sell

and conse-

possible all rivals from the particular

genius of the administra-

tion, therefore, so far as concerns the trade of the

same as that

is

European market.

buy the other as cheap

much as

ministration in

despotical. Their

proper business, however,

to

and

The ad-

company,

make government

and consequently

is

the

subser-

to stunt the

at least of the surplus produce of the

barely suf&cient for answering the

demand

of

the company. All the

upon

members

their

own

more or less them from do-

of the administration, besides, trade

account, and

it is

in vain to prohibit

more completely

foolish than to expect that

the clerks of a great counting-house at ten thousand miles distance,

and consequently almost quite out of order from their masters, give their

fortune, of

own

sight, should,

upon a simple

up at once doing any sort

account, abandon for ever

which they have the means

of business

all

hopes of malcing a

in their

hands, and content

themselves with the moderate salaries which those masters allow

them, and which, moderate as they are, can seldom be augmented, being

commonly

as large as the real profits of the

company trade

can afford. In such circumstances, to prohibit the servants of the

company from

trading upon their

own

account, can have scarce any

other effect than to enable the superior servants, under pretence of

executing their masters order, to oppress such of the inferior ones as

have had the misfortune to

fall

under

their displeasure.

The

vants naturally endeavour to establish the same monopoly

ser-

in fa-

vour of their own private trade as of the public trade of the comEd.

I

mem-

bers trade

on their

ing so. Nothing can be

upon

its

does not contain these four sentences beginning “It

is

the interest.”

own account ami cannot b(‘ prevented from doing

so,

the wealth of nations

604

pany. 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 chuse to deal;

and

tablishing

this, it.

from doing

and least oppressive way of esby an order from Europe they are prohibited

perhaps,

But

this,

if

they

is

will,

the best

notwithstanding, endeavour to establish

a monopoly of the same kind, secretly and indirectly, in a is

much more

destructive to the country.

They

will

way that

employ the

whole authority of government, and pervert the administration of

and ruin those who interfere with them in any branch of commerce which, by means of agents, either con-

justice, in order to harass

cealed, or at least not publicly

But the private trade

avowed, they may chuse to carry on.

of the servants will naturally extend to a

much

greater variety of articles than the public trade of the com-

pany.

The

public trade of the

company extends no

further than

the trade with Europe, and comprehends a part only of the foreign

and this private trade

trade of the country. But the private trade of the servants

tend to

is

more extensive

and

trade.

all

the different branches both of

The monopoly

of the

its

may ex-

inland and foreign

company can tend only

to stunt the

natural growth of that part of the surplus produce which, in the case of a free trade, would be exported to Europe.

That

of the ser-

harmful than the

vants tends to stunt the natural growth of every part of the produce

public

in which they chuse to deal, of

trade of the com-

tion, as well as of

pany,

ly to degrade the cultivation of the whole country, the

number

what

is

what

is

destined for

destined for exportation;

home consumpand consequentand

to reduce

of its inhabitants. It tends to reduce the quantity of

every sort of produce, even that of the necessaries of

life,

whenever

company chuse to deal in them, to what those can both afford to buy and expect to sell with such a profit

the servants of the servants

as pleases them.^^®

The interest of

From the nature

of their situation too the servants

disposed to support with rigorous severity their

must be more

own

interest

the ser-

vants is

against that of the country which they govern, than their masters

not, like

can be to support theirs.

the real

cannot avoid having some regard for the interest of what belongs

The country belongs

to their masters,

who

interest

of the

to them.

But

it

does not belong to the servants.

The

real interest of

Smith had in his library (see Bonar’s Catalogue, p. 15) William Bolts, Considerations on India Affdrs, particularly respecting the present Uate of Bengal and its Dependencies, ed. 1772. Pt, i., ch. xiv,, of this is “On the general modern trade of the English in Bengal; on the oppressions and monopolies which have been the causes of the decline of trade, the decrease of the rev-

and the present ruinous condition of affairs in Bengal.” At p. 215 we find “the servants of the Company . . directly or indirectly monopolise whatever branches they please of the internal trade of those countries,”

enues,

.

AMERICA AND EAST INDIES their masters,

if

they were capable of understanding

with that of the country,

and

it is

from ignorance

it, is

the same

and

chiefly,

the meanness of mercantile prejudice, that they ever oppress

it.

But

by no means the same with that information would not necescountry, perfect the and the most of sarily put an end to their oppressions. The regulations accordingly

the real interest of the servants

company,

is

which have been sent out from Europe, though they have been

of the

county,

fre-

quently weak, have upon most occasions been well-meaning.^^^

More

and perhaps

intelligence

appeared

in those established

less

by

good-meaning has sometimes

the servants in India. It

singular government in which every

member

is

a very

of the administration

wishes to get out of the country, and consequently to have done

with the government, as soon as he can, and to whose interest, the

day

after he has left

it

and carried his whole fortune with him,

perfectly indifferent though

the whole country

it is

was swallowed

up by an earthquake.

mean

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 much less upon that of any I

not, however,

particular persons. It

is

the system of government, the situation in

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 vole gives him some

Book V. Chap.

i. Pait 3d. This note appears first in “This would be exactly true if those masbut that which belongs to them as Proprietors of India stock. But they frequently have another of much greater importance. Frequently a man of great, sometimes even a man of moderate lortune, is willing to give thirteen or fourteen hundred pounds (the present price of a thousand pounds share in India stock) merely for the influence which he expects to acquire 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 Directors, though they make those appointments, being necessarily more or less under the influence of the Court of Proprietors, which not only elects them, but sometimes over-rules their appointments A man of great or even a man of moderate fortune, provided he can enfoy this influence for a few years, and thereby get a certain number of his friends appointed to employments in India, frequently cares little about the dividend which he can expect from so small a capital, or even about the improvement or loss of the capital itself upon which his vote is founded. About the prosperity or ruin of the great empire, in the government of which that vote gives him a share, he seldom cures 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 matter with some slight alterations reappears in the portion of hi v chap, i., part iii art. ist, which was added in ed 3 b{ low, p 7)0 Ed. I reads “ignorance only.” Ed. j reads “have commonly been well meaning.”

influence. See

ed. 3 ed. 2 has the following note: ters never had any other interest ;

,

'"Ed.

T

reads “if.”

,

The evils

system,

the wealth of nations

606 the character of

the men who administer

which they are ter of those

placed, that I

who have

acted in

urally directed, and they

them

mean They

to censure; not the charac-

acted as their situation nat-

who have clamoured

the loudest against

would, probably, not have acted better themselves. In

it.

and

it.

war

Madras and Calcutta have upon conducted themselves with a resolution and de-

negociation, the councils of

several occasions

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

cisive

war and

politics.

But

their situation alone, without education, ex-

perience, or even example, seems to have formed in

the great qualities which

both with well

know

abilities

it

required,

and

to

them

all

at once

have inspired them

and virtues which they themselves could not

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 others

it

if

upon

has prompted them to exploits of somewhat a different

nature. Exclusive

com-

Such exclusive companies, spect; always

more or

less

therefore, are nuisances in every re-

inconvenient to the countries in which

panies are nuisances.

they are established, and destructive to those which have the misfortune to

fall

under their government.

^Eds.

I

and

2

read “were.”

CHAPTER

VIII

CONCLUSION OF THE MERCANTILE SYSTEM

Though ment

the encouragement of exportation, and the discourage-

of importation, are the

two great engines by which the mer-

system proposes to enrich every country, yet with regard to

cantile

some particular commodities, to discourage exportation

mate

^

object, however,

it

it

and

seems to follow an opposite plan:

The mercantile

system discoui-

ages the

exportar

to encourage importation. Its ulti-

pretends,

is

always the same, to enrich the

country by an advantageous balance of trade. It discourages the

tion of

materials of

manu-

facture

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

and by

kets:

restraining, in this

commodities, of no great price, greater

all

foreign mar-

it

others. It encourages the

own

work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufacto

tured commodities. I do not observe, at least in our Statute Book,

any encouragement given to the importation

When

trade.

of the instruments of

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. give

any

To

particular encouragement to the importation of such in-

struments, would interfere too

much with the

interest of those

man-

ufactures. Such importation, therefore, instead of being encour-

aged, has frequently been prohibited. cards, except

Thus the importation

from Ireland, or when brought

goods, was prohibited

by the 3d

of

Edward

-

which prohibi-

IV.;

4

contin-

importation of the materials of manufacture has sometimes

^This chapter appears

C

wool

wreck or prize

was renewed by the 39th of Elizabeth,'"* and has been ued and rendered perpetual by subsequent laws.'^

^

of

in as

tion

The

“

C

14

first

of trade.

much

proposes to occasion a

and more valuable exportation of

may be enabled

struments

manner, the exportation of a few

importation of the materials of manufacture, in order that our people

and in-

in Additions

^3 Car.

and Corrections and ed. I., c. 4; 13 and 14 Car.

3.

11

,

c. 19.

It encour-

ages the

importation ol

materials

though not of instruments of trade.

XHE WEALTH OF NATIONS

608

been encouraged by an exemption from the duties to which other goods are subject, and sometimes by bounties. materials are ex-

empt from customs duties.

of sheep’s wool

The importation

Various

from several

different coun-

tries,^ of cotton wool from dl countries,® of undressed flax,'^ of the greater part of d3dng drugs,® of the greater part of undressed hides

colonies,® of seal skins

from Ireland or the British Greenland

and bar

fishery,^® of pig

iron

from the British

from the British colonies,

as well as of several other materials of manufacture, has been en-

couraged by an exemption from

The

the customhouse. factures

all duties, if

properly entered at

private interest of our merchants and

may, perhaps, have extorted from the

manu-

legislature these ex-

emptions, as well as the greater part of our other commercial regu-

They

lations.

are,

however, perfectly just and reasonable, and

if,

consistently with the necessities of the state, they could be extend-

ed to

all

the other materials of manufacture, the public would cer-

tainly be a gainer. Yarn, though a manufactured article is

free

from

The

avidity of our great manufacturers, however, has in

cases extended these exemptions a good deal

beyond what can

ly be considered as the rude materials of their work.

By

some just-

the 24

Geo. 11 chap. 46. a small duty of only one penny the pound was .

imposed upon the importation of foreign brown linen yarn, instead

duty,

of

much

higher duties to which

sixpence the pound all

upon

sail

it

had been subjected

before, viz. of

yarn, of one shilling the pound upon

French and Dutch yarn, and of two pounds thirteen shillings

and fourpence upon the hundred weight yarn.^^

of all spruce or

But our manufacturers were not long

duction.

By

the 29th of the

satisfied

same king, chap.

Muscovia

with this re-

15. the

same law

which gave a bounty upon the exportation of British and Irish linen of

even

which the price did not exceed eighteen pence the yard, duty upon the importation of brown linen yarn was

this small

taken away. In the different operations, however, which are necessary for the preparation of linen yarn, a good deal try

is

linen cloth

from linen yarn.

flax-growers

and

Geo. IIL, 8 Geo.

Geo.

I., c.

To

say nothing of the industry of the

flax-dressers, three or four spinners, at least, are

°Froni Ireland, 12 Geo. ing and Spanish ®

more indus-

employed, than in the subsequent operation of preparing

II., c.

21; 26 Geo.

II., c. 8.

Spanish wool for cloth-

wool.—Saxby, British Customs, p. 263. ^4 Geo. II., c. 27. 32, § 20.

felt

c.

15, § 10

;

see below, p. 621.

III., c. 39, § I,

continued by 14 Geo.

III., c. 86, § ii,

and 21 Geo.

III., c. 29, § 3.

Geo.

III., c. 31, § 10.

“ Smith has

“Above,

p. 547.

here inadvertently given the rates at which the articles were valued in the “Book of Rates,” 12 Car. II., c. 4, instead of the duties, which would be 20 per cent, on the rates. See below, pp. 830-831.

CONCLUSION OF MERCANTILE SYSTEM

^^9

necessary, in order to keep one weaver in constant employment;

and more than

four-fifths of the

whole quantity of labour, neces-

sary for the preparation of linen cloth,

employed

is

women commonly,

yarn; but our spinners are poor people, tered about in

all different

protection. It

is

in that of linen

scat-

parts of the country, without support or

not by the sale of their work, but by that of the

complete work of the weavers, that our great master manufacturers

make

ners are poor, un-

protected people,

their profits.

manufacture as dear, so

As

it is

their interest to sell the complete

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

because the spin-

French

linen,^^

dear as possible.

By

it is

they endeavour to

sell their

own goods

and the master weavers are rich

and powerful.

as

encouraging the importation of foreign linen

yarn, and thereby bringing

made by our own

to

it

into competition with that

people, they endeavour to

poor spinners as cheap as possible.

They

buy

the

which

work

is

of the

down

are as intent to keep

own weavers, as the earnings of the poor spinby no means for the benefit of the workman, that

the wages of their ners,

and

it is

they endeavour either to raise the price of the complete work, or to lower that of the rude materials. It

is

the industry which

on for the benefit of the rich and the powerful, that encouraged by our mercantile system. That which the benefit of the poor and the indigent,

is

is

is

is

carried

principally

carried

on

for

too often, either neg-

lected, or oppressed.

Both the bounty upon the exportation

of linen,

and the exemp-

from duty upon the importation of foreign yarn, which were

tion

granted only for fifteen years, but continued by two different prolongations,’'-^ expire

shall

with the end of the session of parliament which

bounty on portation

The encouragement given to the importation of the materials manufacture by bounties, has been principally confined to such

of

as

of linen

are given

by a tem-

were imported from our American plantations. first

and also the the ex-

immediately follow the 24th of June 1786.

The

This exemption

porary

bounties of this kind were those granted, about the be-

law.

ginning of the present century, upon the importation of naval stores

from America.'"' Under

hended timber

fit

this

for masts, yards,

denomination were compre-

and bowsprits; hemp;

Bounties

on imtar,

and turpentine. The bounty, however, of one pound the ton upon masting-timber, and that of six pounds the ton upon hemp,

pitch,

ported materials

have been chiefly

were extended to such as should be imported into England from Above,

p. 440. 10 Geo. Ill, c. 38, and 19 Geo.

”3 and

4 Ann,

c.

III., c. 27.

10.—Anderson, Commerce^

a.d. 1703.

the wealth of NATIONS

6io given to

American

at the

produce,

such as naval stores,

Both these bounties continued without any variation,

Scotland.^®

same

rate,

they were severally allowed to expire; that

till

January 1741, and that upon mastingtimber at the end of the session of parliament immediately follow-

upon hemp on the ing the 24th

The

ist of

June 1781.

bounties upon the importation of tar, pitch, and turpentine

underwent, during their continuance, several alterations. Origi-

was four pounds the ton; that upon pitch the same; and that upon turpentine, three pounds the ton. The bounty

upon

nally that

tar

was afterwards confined to such as had been prepared in a particular manner; that upon other good, clean, and merchantable tar was reduced to two pounds four shillings the ton. The bounty upon pitch was likewise reduced to one pound; and that upon turpentine to one pound ten shillings the of four pounds the ton

upon

tar

ton.^'^

The second bounty upon

colonial

indigo,

the importation of

any

of the mate-

manufacture, according to the order of time, was that grant-

rials of

ed by the

Geo.

21

II.

chap. 30. upon the importation of indigo from

When

the British plantations.

the plantation indigo

three-fourths of the price of the best French

indigo,

it

was worth

was by

this

act entitled to a bounty of sixpence the pound. This bounty, which, like

most

others,

was granted only

for a limited time,

was contin-

ued by several prolongations, but was reduced to four pence the pound.^® It was allowed to expire with the end of the session of

March 1781. was that granted (much about we were beginning sometimes to court and sometimes

parliament which followed the 25th

The

colonial

hemp or

third bounty of this kind

the time that

undressed flax,

to quarrel with our

American

upon the importation plantations. This

of

by the 4 Geo.

colonies)

hemp, or undressed

bounty was granted

flax,

III. chap. 26.

from the British

for twenty-one years,

the 24th June 1764, to the 24th June 1785. For the years

it

ond at

was

six

to be at the rate of eight

pounds the

first

from seven

ton, for the sec-

pounds, and for the third at four pounds. It was not ex-

tended to Scotland, of which the climate (although

hemp

is

some-

times raised there, in small quantities and of an inferior quality) is

not very

fit

for that produce.

tion of Scotch flax into

Such a bounty upon the importa-

England would have been too great a

dis-

couragement to the native produce of the southern part of the united kingdom.

“ Masting-timber (and also tar, pitch and rosin), under 12 Ann, st i, c. and masting-timber only under 2 Geo. II c. 35, § 12. The encouragement the growth of hemp in Scotland is mentioned in the preamble of 8 Geo. I 12, and is presumably to be read into the enacting portion. ,

,

"8

Geo.

I., c.

12

;

2

Geo.

H

,

c.

35 , §§

3,

n-

“3

Geo. IH.,

e. 25.

9,

of c.

CONCLUSION OF MERCANTILE SYSTEM The

was that granted by the importation of wood from America.

fourth bounty of this kind,

III. chap. 45.

upon the

Geo.

5

was

It

American wood,

granted for nine years, from the ist January 1766, to the ist Jan-

uary 1775. During the

three years,

first

it

was

to

be for every hun-

dred and twenty good deals, at the rate of one pound; and for every load containing

cubic feet of other squared timber at

fifty

the rate of twelve shillings. For the second three years, deals to be at the rate of fifteen shillings,

and

it

was

for

for other squared

timber, at the rate of eight shillings; and for the third three years,

was

it

for deals, to

be at the rate of ten

squared timber, at the rate of

The fifth bounty of this

shillings,

and

for other

five shillings.

was that granted by the 9 Geo. III. chap. 38. upon the importation of raw silk from the British plantations. It was granted for twenty-one years, from the ist January kind,

1770, to the ist January 1791. For the at the rate of twenty-five

silk,

seven years

it

was

to

silk,

be

pounds for every hundred pounds value;

twenty pounds; and for the third at fifteen

for the second, at

pounds.

first

colonial

law

The management of the silk-worm, and the preparation much hand labour; and labour is so very dear

requires so

of in

America, that even this great bounty, I have been informed, was not likely to produce any considerable

The

sixth

bounty of

this kind,

effect.

was that granted by

ii Geo. III.

chap. so. for the importation of pipe, hogshead, and barrel staves

colonial

barrel staves,

and heading from the British plantations. years, first

from

ist

three years,

was granted for nine

It

January 1772, to the ist January 1781. For the it was for a certain quantity of each, to be at the

rate of six pounds; for the second three years, at four pounds; for the third three years, at

The seventh and

last

bounty of

the 19 Geo. III. chap, 37. land. It of

was granted

in the

hemp and undressed

and

two pounds. this kind,

same manner as that

flax

granted by

was that

upon the importation from America,

of

hemp from

Ire-

for the importation

for twenty-one years,

from the,24th June 1779, to the 24th June 1800. This term

is di-

and in each same with that

vided, likewise, into three periods of seven years each; of those periods, the rate of the Irish

bounty

is

of the American. It docs not, however, like the

extend to the importation of undressed

flax. It

the

American bounty,

would have been too

great a discouragement to the cultivation of that plant in Great Britain.

When

were not

legislatures

the British

this last

in

bounty was granted, the British and Irish

much

better

humour with one

another, than

and American had been before. But this boon

^‘‘Additions

and Corrections omits “that

to Ireland,

-’“The third bounty

Irish

hemp

THE WEALTH OF NATIONS

6I2 it is

to be hoped, has

than These

commodities

were

subject to duties

when coming from foreign countries. It

was

alleged

that the

all

been granted under more fortunate auspices,

those to America.

The same commodities upon which we

thus gave bounties,

imported from any other country. The interest of our American col-

was regarded as the same with that

onies

of the

mother country.

Their wealth was considered as our wealth. Whatever sent out to them,

it

was

said,

came

all

money was

back to us by the balance of

and we could never become a farthing the poorer, by any expence which we could lay out upon them. They were our own in trade,

every respect, and of our

own

it

was an expence laid out upon the improvement

property, and for the profitable employment of our

interest of

the colonies

and

of the

mother

when

imported from America, were subjected to considerable duties when

people. It is unnecessary, I apprehend, at present to say further, in order to expose the folly of a system,

ence has

which

now sufficiently exposed. Had our American

any

own

thing

fatal experi-

colonies really

country

been a part of Great Britain, those bounties might have been con-

was

sidered as bounties

the

upon production, and would

still

have been

same. liable to all the objections to

which such bounties are

liable,

but to

no other.

The

exportation of the materials of manufacture

is

sometimes

discouraged by absolute prohibitions, and sometimes by high duties.

The

ex-

portation of wool and live

sheep

is

forbidden

under heavy penalties,

Our woollen manufacturers have been more

successful than any workmen, in persuading the legislature that the prosthe nation depended upon the success and extension of

other class of perity of

They have not only obtained a monopoly by an absolute prohibition of importing

their particular business.

against the consumers

woollen cloths from any foreign country; but they have likewise obtained another monopoly against the sheep farmers and growers of

by a similar prohibition of the exportation of live sheep and wool. The severity of many of the laws which have been enacted for wool,

the security of the revenue

very justly complained of, as imposing heavy penalties upon actions which, antecedent to the statutes that declared them to be crimes, had always been understood tojbe innocent.

But the

is

cruellest of our

revenue laws, I will venture to affirm,

are mild and gentle, in comparison of

some of those which the clamour of our merchants and manufacturers has extorted from the legislature, for the support of their own absurd and oppressive monopolies. Like the laws of Draco, these laws

may be

said to be all

written in blood. atone time

mu-

tilation

and death,

By

the 8th of Elizabeth, chap. 3. the exporter of sheep, lambs or first offence to forfeit all his goods for ever, to suf-

rams, was for the

fer 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

CONCLUSION OF MERCANTILE SYSTEM

^^3

second offence to be adjudged a felon, and to suffer death accord-

To prevent

ingly.

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 11 chap. 18. the exportation of wool was .

made

felony,

forfeitures as

and the exporter subjected to the same penalties and a

felon.

For the honour of the national humanity,

to be

it is

The

neither of these statutes were ever executed.

hoped that

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

but now twenty shillings

for every sheep with for-

however, perhaps, be considered as virtually repealed by the 12 th

feiture of

of Charles II. chap. 32. sect. 3, which, without expressly taking

the sheep

away

the penalties imposed

penalty, viz.

That

by former

imposes a new

statutes,

of twenty shillings for every sheep exported, or

attempted to be exported, together with the forfeiture of the sheep

and of the owner’s share of the pressly repealed

By which

4.

by

it is

ship.

The second

of

them was

and the owner’s share in the ship.

ex-

the 7th and 8th of William III. chap. 28. sect.

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 offenders hath not been so effectually put in execution: Be it, therefore, enacted by the authority foresaid, that so much of the said act,

which

repealed and

The

relates to the

made

making the said

which are either imposed by

er statute, or which, though imposed

by

be

void.”

penalties, however,

repealed

offence felony,

this one, are

still

by former

this mild-

statutes, are not

sufficiently severe. Besides the for-

feiture of the goods, the exporter incurs the penalty of three shill-

ings for every to

pound weight

be exported, that

is

of wool either exported or attempted

about four or five times the value.

chant or other person convicted of this offence

is

Any mer-

disabled from re-

and three shillings for

every

pound

of

wool, with other

pains and penalties.

quiring

any debt

or account belonging to

other person.^*'^ Let his fortune be

what

him from any

it will,

factor or

whether he

is,

not able to pay those heavy penalties, the law means to ruin completely.

But as the morals

of the great

or is

him

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

^ William Hawkins,

Treatise of the Pleas of the

Crown, 4th

pay the pened., 1762,

bk.

i.,

chap. 52.

^ So

far from doing so, it expressly provides that any greater penalties already prescribed shall remain in force.

“ 12

Car. 11

,

c.

32.

THE WEALTH OF NATIONS

614

within three months after judgment, he

alties

is

to be transported

he returns before the expiration of that

for seven years,

and

term, he

to the pains of felony, without benefit of clergy

is liable

The owner

of the ship

in the ship

and

if

knowing

furniture.

The master and

offence forfeit all their goods

By a

imprisonment.

this offence forfeits all his interest

and

chattels,

mariners knowing this

and

suffer three

months

subsequent statute the master suffers

six

months imprisonment.^^ In order to prevent exportation, the whole inland commerce of

To prevent clandestine

wool

is laid

under very burdensome and oppressive

restrictions. It

exporta-

cannot be packed in any box, barrel, cask, case, chest, or any other

tion the

package, but only in packs of leather or pack-cloth, on which must

inland

be marked on the outside the words wool or yarn, in large

commerce of wool is

much hampered by restrictions.

letters

not less than three inches long, on pain of forfeiting the same and

pound weight, to be paid cannot be loaden on any horse or cart,

the package, and three shillings for every

by the owner or packer by land within

or carried

and

rising

and

five miles of the coast,

but between sun-

on pain of

forfeiting the same, the horses

The hundred next

adjoining to the sea coast, out

sun-setting,

carriages.^^

It

of or through which the wool is carried or exported, forfeits twenty

pounds,

if

the wool

is

under the value of ten pounds; and

of

if

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

ment on the other

the sessions

must reimburse, by an

inhabitants, as in the cases of robbery.

any person compounds with the hundred he

is

to be imprisoned for five years;

assess-

And

if

for less than this penalty,

and any other person may

prosecute. These regulations take place through the whole king-

dom.^® especially

Kent and Sus-

in

sex,

But

Kent and Sussex the restrictions more troublesome. Every owner of wool within ten miles of the sea-coast must give an account in writing, three days after

are

in the particular counties of

still

shearing, to the next officer of the customs, of the fleeces,

and

Geo. I,

of the places c. II,

number

of his

where they are lodged. And before he

re-

§ 6.

Presumably the reference is to 10 and ii W. III., c 10, § 18, but this applies to the commander of a king’s ship conniving at the offence, not to the master of the offending vessel. 12 Geo. IL, c. 21, 1 10.

^ 13 and 14 Car. II., c. 18, § 9, forbade removal of wool in any part of the country between 8 p.m. and 4 a.m. from March to September, and s p.m. and 7 A.M. from October to February. 7 and 8 W. Ill, c. 28, § 8, taking no notice of this, enacted the provision quoted in the text. The provision of 13 and 14 Car.

II., c.

18,

was repealed by 20 Geo.

notice of 7 and 8 W. III., All these provisions are

III., c. 55,

c. 28.

from

7

and 8 W.

III., c. 28.

which takes no

CONCLUSION OF MERCANTILE SYSTEM moves 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

No

tended they should be carried.

the sea, in the said counties, can into

bond

buy

shall

to the king, that

person within fifteen miles of

buy any

no part

of the

wool, before he enters

wool which he shall so

be sold by him to any other person within fifteen miles

of the sea. If

any wool

said counties, unless aforesaid,

is it

forfeited,

it is

found carrying towards the sea-side in the has been entered and security given as

and the offender also

pound weight.

ings for every

If

any person

forfeits three shill-

lays

tered as aforesaid, within fifteen miles of the sea,

and

and

forfeited;

if,

after such seizure,

any wool, not enit must be seized

any person

same, he must give security to the Exchequer, that

on

trial

he shall pay treble costs, besides

When

it is in-

all

shall claim the

he

if

is

cast up-

other penalties.-^

such restrictions are imposed upon the inland trade, the

we may believe, cannot be left very free. Every owner of wool who carrieth or causeth to be carried any wool to any coasting trade,

and so also is

the coasting trade.

port or place on the sea-coast, in order to be from thence trans-

by

any other place or port on the coast, must cause an entry thereof to be made at the port from whence ported

sea to

intended to be conveyed, containing the weight, marks, and ber of the packages before he brings the that port: on pain of forfeiting the same,

and other carriages; and

first it is

num-

same within five miles of and also the horses, carts,

also of suffering

and

forfeiting, as

by the

other laws in force against the exportation of wool. This law,

how-

ever, (i Will. III. chap. 32.) is so very indulgent as to declare, that

“this shall not hinder

any person from carrying

the place of shearing, though

it

be within

his

wool home from

five miles of the sea, pro-

vided that in ten days after shearing, and before he remove the wool, he do under his hand certify to the next officer of the cus-

toms, the true number of fleeces, and where

it is

not remove the same, without certifying to such

hand, his intention so to do, three days

it is

it is

wool

is

to be landed at the

entered outwards; and

landed without the presence of an

feiture of the

is

under his

Bond must be

before.^’

given that the wool to be carried coastways particular port for which

housed; and do

officer,

officer,

if

any part of

not only the for-

incurred as in other goods, but the usual ad-

ditional penalty of three shillings for every

pound weight

is like-

wise incurred.

Our woollen manufacturers,

in order to justify their

demand

of

such extraordinary restrictions and regulations, confidently as9 and 10

W.

Ill,

c.

40.

The quotation

is

not verbatim.

The manufac-

XHE WEALTH OE NATIONS

6i6

wool was of a peculiar quality, superior

to that

turers

serted, that English

alleged

of any other country; that the wool of other countries could not, without some mixture of it, be wrought up into any tolerable manu-

Engwool

that lish

was superior to all

others,

made without

facture; that fine cloth could not be land, therefore,

if

the exportation of

it

that Eng-

it;

could be totally prevented,

which is

could monopolize to herself almost the whole woollen trade of the

entirely

world; and thus, having no rivals, could

false.

pleased,

and

sell

at

what

price she

in a short time acquire the most incredible degree of

wealth by the most advantageous balance of trade. This doctrine,

most other doctrines which are confidently asserted by any considerable number of people, was, and still continues to be, most like

implicitly believed

who

greater

number; by almost

particular enquiries. It

that English wool fine cloth, that

it is

is

in

is,

those

all

who have

are either unacquainted with the woollen trade, or

made

not

by a much

however, so perfectly

any respect necessary

altogether unfit for

it.

Fine cloth

false,

making

for the

made

is

of

alto-

gether 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.®^ regulations

been shown in the foregoing part of this work,®^ that the

It has

These

effect of these regulations

have

depressed

wool, not only below times, but very

of wool,

Edward

as was desired,

naturally would be in the present

became subject to the same

union

it

fallen

about one

telligent

it

much below what it actually was in the time of The price of Scots wool, when in consequence of the

the price

III,

has been to depress the price of English

what

half. It is

regulations,

author of the Memoirs of Wool, the Reverend Mr. John

Smith, that the price of the best English wool in England erally

have

said to

is

observed by the very accurate and in-

is

gen-

below what wool of a very inferior quality commonly

sells

for in the

market of Amsterdam.®^

modity below what

may be

Tb depress the

called its natural

the avowed purpose of those regulations;

doubt of their having produced the

price of this

and proper

com-

price,

was

and there seems to be no was expected from

effect that

them. but this has not

much reduced the quantity of wool

grown.

This reduction of price,

it

may

perhaps be thought, by discour-

aging the growing of wool, must have reduced very

much

nual produce of that commodity, though not below what erly was, yet

below what, in the present state of things,

would have been, had “It

is

well

known

entirely of Spanish

it,

in consequence of

p

418, note.

free

mar-

that the real very superfine cloth everywhere must be

wool.”—Anderson, Commerce, a

d.

1669.

Above,^pp 230, 231. ^Chronkon Rusticnm-Commerciale; or Memoirs of Wool, ii.,

form-

probably

it

an open and

the anit

etc.,

1767, vol.

CONCLUSION OF MERCANTILE SYSTEM been allowed to

ket,

rise to

617

the natural and proper price. I am,

however, disposed to believe, that the quantity of the annual produce cannot have been much, though little,

may

it

perhaps have been a

by these regulations. The growing of wool is not the which the sheep farmer employs his industry and

affected

chief purpose for

He

stock.

expects his profit, not so

much from

the price of the

from that of the carcase; and the average or ordinary

fleece, as

price of the latter,

must even,

ever deficiency there

may

in

many cases, make up to him what-

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

what it naturally would be, must, in an imand cultivated country, have some tendency to raise the proved price of butchers meat. The price both of the great and small cattle which are fed on improved and cultivated land, must be sufficient to pay the rent which the landlord, and the profit which the farmer has reason to expect from improved and cultivated land. If it is not,

raw

of

hides, below

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

The

carcase.

less there is

paid for the one, the more must be paid

In what manner this price

for the other.

is

to be divided

different parts of the beast, is indifferent to the landlords

provided

ers,

it is all

upon the

and farm-

paid to them. In an improved and cultivated

country, therefore, their interest as landlords and farmers cannot

much

be

affected

by such

sumers may, by the

regulations,

rise in

though their interest as con-

the price of provisions.’’

this reasoning, therefore, this

According to

degradation in the price of wool

is

not likely, in an improved and cultivated country, to occasion any

diminution in the annual produce of that commodity; except so

by raising the price of mutton, it may somewhat diminish demand for, and consequently the production of, that particu-

far as,

the

lar species of it

is

butchers meat. Its

probable,

But though

is

effect,

however, even in this way,

not very considerable.

its effect

upon the quantity

of the annual produce

may not have been very considerable, its effect upon the quality, it may perhaps be thought, must necessarily have been very great. The degradation it

was

in

in the quality of English wool,

former times, yet below what

in the present state of

been,

it

may perhaps

it

if

not below what

naturally would have been

improvement and

cultivation,

be supposed, very nearly

in

must have

proportion to the

degradation of price. As the quality depends upon the breed, upon the pasture, and upon the “

management and

Above, p 23 V

cleanliness of the

nor

its

THE WEALTH OF NATIONS sheep, during the whole progress of the growth of the fleece, the attention to these circumstances,

it

may

naturally enough be im-

agined, can never be greater than in proportion to the recompence

which the price of the

make

fleece is likely to

pence which that attention requires.

for the labour

and ex-

happens, however, that the

It

goodness of the fleece depends, in a great measure, upon the health, growth, and bulk of the animal; the same attention which essary for the improvement of the carcase, sufficient for that of the fleece.

price, English

wool

is

some

in

is

nec-

respects,

Notwithstanding the degradation of

said to have been improved considerably dur-

ing the course even of the present century.

perhaps have been greater

though

lowness of price,

is,

if

the price

may have

it

The improvement might

had been

better; but the

obstructed, yet certainly

it

has not altogether prevented that improvement.

The

so that

the grow-

violence of these regulations, therefore, seems to have af-

fected neither the quantity nor the quality of the annual produce of

ers of

wool have been less

hurt

than might have been

wool so much as it

prohibition of

not be justified,

it

it

;

might have been expected

may have and the

to

do (though I think

affected the latter

a good deal more

interest of the growers of wool,

though

must have been hurt in some degree, seems, upon the whole, to

have been much

less

hurt than could well have been imagined.

These considerations, however,

will not justify the absolute pro-

hibition of the exportation of wool.®^

But they

will fully justify the

imposition of a considerable tax upon that exportation.

To

exportation can-

probable that

than the former)

expected.

Though

it

for

hurt in any degree the interest of any one order of citizens,

no other purpose but to promote that of some

other, is evi-

dently contrary to that justice and equality of treatment which the

a duty on

sovereign owes to

the ex-

prohibition certainly hurts, in

all

the different orders of his subjects. But the

some degree, the

interest of the

portation of

wool

might

growers of wool, for no other purpose but to promote that of the manufacturers.

furnish

Every

different order of citizens is

bound to contribute

to the

revenue with little

support of the sovereign or commonwealth.

incon-

ten shillings upon the exportation of every tod of wool, would pro-

venience.

A tax of five, or even of

duce a very considerable revenue to the sovereign.

It

would hurt

the interest of the growers somewhat less than the prohibition, be-

cause It

it

would not probably lower the price of wool quite so much.

would afford a

sufficient

cause, though he might not

advantage to the manufacturer, be-

buy

under the prohibition, he would shillings cheaper

his still

wool altogether so cheap as

buy

it,

at least, five or ten

than any foreign manufacturer could buy

sides saving the freight

it,

be-

and insurance, which the other would be

“ Additions and

Corrections reads “the wool.”

CONCLUSION OF MERCANTILE SYSTEM obliged to pay. It

is

^^9

scarce possible to devise a tax which could pro-

duce any considerable revenue to the sovereign, and at the same time occasion so

The it,

little

inconveniency to any body.

prohibition, notwithstanding all the penalties which guard

does not prevent the exportation of wool. It

known,

well

price in the

in great quantities.

home and

This

it.

smuggler.

illegal

exported,

it is

great difference between the

that in the foreign market, presents such a

temptation to smuggling, that vent

The

is

all

exportation

A legal exportation

the rigour of the law cannot pre-

is

advantageous to nobody but the

subject to a tax,

by

affording a rev-

and thereby saving the imposition of some more burdensome and inconvenient taxes, might

enue to the sovereign, other, perhaps,

prove advantageous to

The

the different subjects of the state.

all

exportation of fuller’s earth, or fuller’s clay, supposed to be

necessary for preparing and cleansing the woollen manufactures,

has been subjected to nearly the same penalties as the exportation of wool.’^^'

ferent

from

because clay,

By

Even tobacco-pipe

clay,

fuller’s clay, yet,

fuller’s clay

though acknowledged

to

be

dif-

on account of their resemblance, and

might sometimes be exported as tobacco-pipe

has been laid under the same prohibitions and penalties.®'

The

ex-

portation of fuller’s

earth has

been subjected to

the same penalties

as the ex-

portation

the 13th and 14th of Charles II. chap.

the exportation, not

7.

of wool.

only of raw hides, but of tanned leather, except in the shape of boots, shoes, or slippers,

monopoly

was prohibited;

to our boot-makers

and the law gave a

and shoe-makers, not only against

The exportation of

our graziers, but against our tanners.

By

subsequent statutes, our

tanners have got themselves exempted from this monopoly,

upon

paying a small tax of only one shilling on the 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

duty

free;

and the exporter

is

may

be exported

besides entitled to the drawback of

*“12 Car. IL, €.32; 13 and 14 Car. II., c. 18. 13 and 14 Car. II., c. 18, § 8. The preamble to the clause alleges that

“great quantities of fuller’s earth or fulling clay are daily carried and exported

under the colour of tobacco-pipe clay.” ^ The preamble says that “nowithstanding the many good laws before this time made and still in force, prohibiting the exportation of leather ... by the cunning and subtlety of some persons and the neglect of others to take care thereof; there are such quantities of leather daily exported to foreign parts that the price of leather

is

grown to those

excessive rates that

many

working leather cannot furnish themselves with sufficient store thereof for the carrying on of their trades, and the poor sort of people are not able to buy those things made of leather which of necessity they must artificers

make

use of.”

20 Car. IL,

c.

s

;

9 Ann.,

c. 6, § 4,

raw

hides is

forbid-

den,

the wealth of nations

620

the whole duties of excise.^^ Our graziers

continue subject to

still

the old monopoly. Graziers separated from one another,

persed through

without great

all

and

dis-

the different corners of the country, cannot,

difficulty,

combine together

for the purpose either of

imposing monopolies upon their fellow-citizens, or of exempting themselves from such as

have been imposed upon them by

may

other people.*^^ Manufacturers of horns,

numerous bodies in

all

great

kinds, collected together in

all

and comb-maker enjoy,

trades of the horner

by prohibitions

tion of goods

cloths,

any thing remains to be done,

cases, etc.,

also

the horns of

in this respect, a

against the graziers.

woollen yarn and worsted, white

watch

Even

and the two insignificant

cattle are prohibited to be exported;

monopoly

can.

cities, easily

Restraints, either

which are

partially,

or

by

taxes,

upon the exporta-

but not completely manufac-

tured, are not peculiar to the manufacture of leather. in order to

fit

As long

any commodity

as for

immediate use and consumption, our manufacturers think that they themselves ought to have the doing of

it.

are prohibited to be exported under the

Even white

cloths are subject to a

Woollen yarn and worsted

same penalties as

wool.'^'^

duty upon exportation,

and

our dyers have so far obtained a monopoly against our clothiers.

Our

clothiers

against

would probably have been able

but

it,

to

defend themselves

happens that the greater part of our principal

it

clothiers are themselves likewise dyers. Watch-cases, clock-cases,

and watches, have been prohibited to be 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 the exportation of all metals was prohibited. Lead and tin VI., and

dial-plates for clocks

exported.^®

some metals.

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 encour-

agement of the mining trade, the sth 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 cop-

"9

Ann.,

c. II, §

39, explained

by 10 Ann.,

c.

26, § 6,

and

12 Ann.,

Above, p. 126. Except under certain conditions by 4 Ed. IV., c. 8; wholly by

c. 9, §

st. 2,

64.

7 Jac.

I.,

c. 14, § 4.

Under

13

and 14 Car.

II., c. 18,

and

7

and 8 W.

III., c.

28

;

above, pp. 612,

613. ^*(See

below, next page.

and 10 W.

III., c. 28, professedly to prevent frauds. preamble to the Act next quoted in the text mentions 28 Ed. III., 5 (iron) 33 Hen. VIII., c. 7 (brass, copper, etc.), and 2 and 3 Ed. VI., c.

9

“The c.

;

37 (bell-metal,

etc.).

CONCLUSION OF MERCANTILE SYSTEM pc:r

bars, foreign as well as British,

was afterwards permitted by the

9th and loth of William III. chap.

manufactured brass, of what shroff-metal, of all sorts

The

still

may be

621

26.*^'^

The

exportation of un-

called gun-metal, bell-metal,

is

and

continues to be prohibited. Brass manufactures

exported duty free.^^

exportation of the materials of manufacture, where

altogether prohibited,

many

is in

not

it is

cases subjected to considerable

On various other materials

duties.

By

of

the 8th George

I.

chap. 15., the exportation of all goods, the

produce or manufacture of Great Britain, upon which any duties

was rendered duty free. The following goods, however, were excepted: Alum, lead, lead ore, tin,

had been imposed by former tanned

statutes,

leather, copperas, coals,

wool cards, white woollen

lapis calaminaris, skins of all sorts, glue,

wool, hair of

all sorts, horses,

and

cloths,

you except

horses, all these are either materials of manufacture, or incomplete

manufactures (which

may

be considered as materials for

still

fur-

ther 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

use, are

exempted from

however,

is

all

number of foreign drugs for dyers’ upon importation. Each of them,

duties

afterwards subjected to a certain duty, not indeed a

very heavy one, upon exportation.®^ Our dyers, thought drugs,

it

The

while they

for their interest to encourage the importation of those

by an exemption from

all duties,

thought

it

likewise for their

throw some small discouragement upon

interest to tion.

it sisems,

their exporta-

avidity however, which suggested this notable piece of

mercantile ingenuity, most probably disappointed ject, It necessarily

itself of its

ob-

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 was

at all times likely to be

the commodities were at

all

home market. The

more scantily supplied;

times likely to be somewhat dearer

there than they would have been,

had the exportation been render-

ed as free as the importation. This Act ferred to

is

is

not printed in the ordinary collections, but the provision re-

in Pickering’s index, s.v. Copper,

renewing Act, 12 Ann.,

Under the general

st.

i, c.

and the

clause is recited in a

18.

mentioned immediately below. 35. The 1 per cent was due on goods exported to ports in the Mediterranean beyond Malaga, unless the ship had sixteen guns and other warlike equipment. See Saxby, British Cus-

^

12 Car.

Act, 8 Geo. L,

II., c. 4, § 2,

and 14 Car.

considerable ex-

port duties are

imposed.

coney hair or wool, hare’s

litharge of lead. If

manu-

facture

c. 15,

II., c. ii, §

toms, pp. 48, 51. Sixpence in the pound on the values at which they arc rated in the Act.

THE WEALTH OF NATIONS

622

Gum

By

the above-mentioned statute,

gum

senega, or

gum

arabic,

being among the enumerated dying drugs, might be imported duty

poundage duty,

subjected, indeed, to a small

They were

pecdiar

free.

li7';tory

amounting only to three pence in the hundred weight

subject to

a large export

^

upon

their re-

exportation. France enjoyed, at that time, an exclusive trade to the

country most productive of those drugs, that which

lies in

the

neighbourhood of the Senegal; and the British market could not be easily supplied by the immediate importation of them from the

By

place of growth.

the 25th Geo.

gum

therefore,

senega was

allowed to be imported (contrary to the general dispositions of the act of navigation), from

did not

any part

of Europe.

As the

law, however,

to encourage this species of trade, so contrary to the

mean

general principles of the mercantile policy of England,

duty of ten

shillings the

it

imposed a

hundred weight upon such importation,

duty was to be afterwards drawn back upon its exportation. The successful war which began in 1755 gave Great Britain the same exclusive trade to those countries which France

and no part

of this

had enjoyed

before.®^

Our manufacturers,

as soon as the peace

made, endeavoured to avail themselves of in their

own

and against the importers of

this

establish

a monopoly

commodity.

gum

By

the Sth Geo. III.

senega from his maj-

dominions in Africa was confined to Great Britain, and was

subjected to

all

the

same

penalties, as that of the

colonies in

restrictions, regulations, forfeitures

to

re-exportation

and

enumerated commodities of the British

America and the West Indies.

was subjected its

advantage, and to

favour, both against the growers,

therefore, chap. 37. the exportation of esty’s

this

was

Its importation, indeed,

a small duty of six-pence the hundred weight, but

was subjected

to the

ten shillings the hundred weight. It

enormous duty of one pound

was the

intention of our

man-

ufacturers that the whole produce of those countries should be im-

ported 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 expence as would sufficiently dis

courage that exportation. Their avidity, however, upon well as ject.

upon many other occasions, disappointed

this, as

itself of its

ob-

This enormous duty presented such a temptation to smug-

gling, that great quantities of this

commodity were clandestinely

exported, probably to all the manufacturing countries of Europe,

but particularly to Holland, not only from Great Britain but from Africa. Upon this account,®^ by the 14 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 lev33

.

Anderson, Commerce,

a.d. 1758. ‘’'*As is stated in

the preamble.

CONCLUSION OF MERCANTILE SYSTEM ied,

623

beaver skins were estimated at six shillings and eight-pence

and the

a-piece,

different subsidies

and imposts, which before the

year 1722 had been laid upon their importation, amounted to onefifth

part of the rate, or to sixteen-pence upon each skin;

all of

which, except half the old subsidy, amounting only to two-pence,

was drawn back upon

exportation.®^ This duty

tion of so important a material of

and

six-pence, which reduced the

six-pence,

and

of this only one half

The same

portation.®®

successful

skins ex-

ported are charged seven pence.

upon the importa-

manufacture had been thought

too high, and, in the year 1722, the rate ings

beaver

was

was reduced

to

two

shill-

duty upon importation to to be

drawn back upon ex-

war put the country most pro-

ductive of beaver under the dominion of Great Britain, and beaver skins being

among

the enumerated commodities, their exportation

from America was consequently confined to the market of Great

Our manufacturers

Britain.

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 re-

duced to one penny, but the duty upon exportation was raised to seven-pence each skin, without any drawback of the duty upon

By the same law, a duty of eighteen pence the pound was imposed upon the exportation of beaver-wool or wombs, withimportation.

out making any alteration in the duty upon the importation of that

commodity, which when imported by British and in British shipping,

amounted

at that time to between four-pence

and five-pence

the piece.

Coals as

may

be considered both as a material of manufacture and

an instrument of

trade.

Heavy

duties, accordingly,

have been

and coals five shil-

lings

imposed upon

more than

their exportation,

amounting at present (1783)

five shillings the ton, or to

more than

to

a

ton.

fifteen shillings the

is in most cases more than the commodity at the coal pit, or even at the ship-

chaldron, Newcastle measure; which original value of the

ping port for exportation.

The

exportation, however, of the instruments of trade, properly

so called,

is

commonly restrained, not by high duties, but by abThus by the 7th and 8th of William III. chap.

The exportation of the in-

solute prohibitions.

struments

20. sect. 8. the exportation of frames or engines for knitting gloves

of trade

or stockings

is

prohibited under the penalty, not only of the for-

feiture of such frames or engines, so exported, or

attempted to be

exported, but of forty pounds, one half to the king, the other to the preamble to 8 Geo, L, c. 15, § 13. The old subnew, the one-third and the two-third subsidies account for is., and the additional impost for ^d. “ See above, p. 467. Geo. L, c. 13. The year should be 1721. ®*4 Geo. III., c. 9. the hatters.

®‘Thc

sidy, the

facts are given in the

is

commonly prohibited.

THE WEALTH OF NATIONS

624

who

person

shall

inform or sue for the same. In the same manner by

any

the 14th Geo. III. chap. 71. the exportation to foreign parts, of utensils

use of in the cotton, linen, woollen and silk

made

factures, is

manu-

prohibited under the penalty, not only of the forfeiture

of such utensils,

but of two hundred pounds, to be paid by the per-

manner, and likewise of two hundred pounds to be paid by the master of the ship who shall knowingly son

who

such utensils to be loaded on board his ship.

suffer Similarly it is

a

grave offence to entice

an

shall offend in this

such heavy penalties were imposed upon the exportation of the dead instruments of trade, it could not well be expected that

When

the living instrument, the artificer, should be allowed to go free.

Accordingly, by the 5 Geo.

artificer

abroad,

victed of enticing

any

I.

chap. 27. the person

artificer of, or in

any

who shall be

con-

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

any sum

to be fined in

not exceeding one hundred pounds, and to three months imprison-

ment, and until the fine shall be paid; and for the second offence, to

be fined in any

onment

sum

for twelve

at the discretion of the court,

months, and until the

23 Geo. II. chap. 13. this penalty

hundred pounds for every

to five

months imprisonment, and

is

fine shall

and to impris-

be paid.

increased for the

artificer so enticed,

first

and

until the fine shall be paid;

By

the

offence

to twelve

and

for the

second offence, to one thousand pounds, and to two years imprison-

ment, and until the fine shall be paid.

By

the former of those two statutes,

has been enticing any

artificer,

upon proof that any person

any

or that

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 com-

mitted to prison until he give such security. and the artificer

who exercises

or

teaches

If

any

artificer

to

him by any

maybe ordered to

seas, and is exercising or any foreign country, upon warning being given

of his majesty’s ministers or consuls abroad, or

one of his majesty’s secretaries of state for the time being,

his trade

abroad

has gone beyond the

teaching his trade in

not, within six

months

if

by

he does

after such warning, return into this realm,

and from thenceforth abide and inhabit continually within the same, he is from thenceforth declared incapable of taking any leg-

return.

acy 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.

king, all his lands, goods respect,

and

is

and

He likewise

chattels, is declared

an alien

put out of the king’s protection.^® Under the same

statute, 5

Geo. I,

c.

forfeits to the

27.

in

every

CONCLUSION OF MERCANTILE SYSTEM It is unnecessary, I imagine, to observe,

how contrary

lations are to the boasted liberty of the subject, of

to be so very jealous; but which, in this case, to the futile interests of our

The laudable motive

is

toms, 1757, which give the duties, etc., at earlier periods as well as reference^ ship of

to the Acts of Parliament regulating them.

CHAPTER IX OF

THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLITICAL OECONOMY, 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

oeconomy

will not require so

long an explanation as that which I have thought

it

necessary to

will re-

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

men

of great learning

cultural

systems

bestow upon the mercantile or commercial system.

only in the speculations of a few

The agri'

and ingenu-

quire less

lengthy explanation than the mercantile

ity in France.^ It

would

not, surely, be

worth while to examine at

system.

great length the errors of a system which never has done, and prob-

ably never will do any harm in any part of the world.

deavour to explain, however, as distinctly as

I

I shall

en-

can, the great out-

lines 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

the mer-

order into the collection and expenditure of the public revenue.

and favoured

That minister had unfortunately embraced all the prejudices of the mercantile system, in its nature and essence a system of restraint

town in-

and regulation, and such as could scarce laborious

and plodding man

of business,

fail - to

be agreeable to a

who had been accustomed

to regulate the different departments of public offices, tablish the necessary checks

The

and controuls

and

to es-

for confining each to its

commerce of a great country he endeavoured to regulate upon the same model as the departments of a public office; and instead of allowing every man to pursue his proper sphere.

industry and

^Thc ^Iconomistcs or

Physiocrats. Quesnay,

Mirabeau and Mercicr de

la

Riviere are mentioned below, pp. 637, 643. “ Ed. I places a full stop at “mercantile system” and continues “That sys-

tem, in

its

nature and essence a system of restraint and regulation, could

scarce fail.”

627

Colbert

adopted cantile

system

dustry,

XHE WEALTH OF NATIOKS

628

own

interest his

the liberal plan of equality, liberty

own way, upon

he bestowed upon certain branches of industry extraordinary privileges, while he laid others under as extraordinary re-

and

justice,

He was

straints.

to encourage

not only disposed, like other European ministers,

more the industry

of the

towns than that of the coun-

try; but, in order to support the industry of the towns, he was will-

ing even to depress and keep

down

that of the country. In order to

render provisions cheap to the inhabitants of the towns, and there-

by

to

encourage manufactures and foreign commerce, he prohibited

altogether the exportation of corn, tants of the country from

and thus excluded the inhabi-

every foreign

market

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 anand to the arbitrary and degrading taxes which are levied up-

other,

on the cultivators

down

in

almost

all

the provinces, discouraged and kept

the agriculture of that country very

which

would naturally have

it

much below

risen in so very fertile

a

the state to soil

and so

very happy a climate. This state of discouragement and depression

was

many it.

more

felt

different inquiries

One

and

or less in every different part of the country,

were set on foot concerning the causes of

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. with the

If the rod

result

that the

French philoso-

phers who

support the agricultural

system under-

to

it

straight

who have proposed

riculture as the sole source of the revenue

and wealth of every

maxim; and as

in

the plan of Mr. Colbert the industry of the towns was certainly

over-valued in comparison with that of the country; so in their

system

The

it

seems to be as certainly under-valued.

different orders of people

contribute in

dustry.

and labour

who have

ever been supposed to

any respect towards the annual produce of the land

of the country, they divide into three classes.

the class of the proprietors of land.

There are

is

three

cultivators, of farmers

classes in

the system which represents ag-

country, seem to have adopted this proverbial

value

town in-

make

philosophers,

much one way, says the proverb, in order you must bend it as much the other. The French

be bent too

and country

The second

labourers,

with the peculiar appellation of the productive

is

whom class.

their sys-

tem: (i)

the class of artificers, manufacturers and merchants,

proprie-

deavour to degrade by the humiliating appellation

The

first

the class of the

they honour

The

whom ^

third

is

they en-

of the barren

or unproductive class. “But, see below, p. 633, where the usefulness of the class is said to be admitted. In his exposition of physiocratic doctrine, Smith docs not appear to

AGRICULTURAL SYSTEMS The class

of proprietors contributes to the annual produce

expence which they

ment

may

occasionally lay out

upon the

of the land,

and by means

of

capital, to raise

er rent. This

due

make

and other

or maintain

upon

it,

which the cultivators are enabled, with the same

a greater produce, and consequently to pay a great-

advanced rent

may

be considered as the interest or

upon the expence or capital which he the improvement of his land. Such expences are in

system called ground expences (depenses foncieres).

The

tors, (2)

cultiva-

(3) artificers,

manufacturers and merchants.

Proprietors con-

tribute to

cultivators or farmers contribute to the annual produce

by

produc-

by

tion

what are

in this

system called the original and annual expences (de-

penses primitives et depenses annuelles) which they lay out upon the cultivation of the land.

The

original expences consist in the in-

struments of husbandry, in the stock of

cattle, in

the maintenance of the farmer’s family, servants

the seed, and in

and

cattle,

at least a great part of the first year of his occupancy, or

till

he can

some return from the land. The annual expences consist in the seed, in the wear and tear^ of the instruments of husbandry,

and

in the

and

of his family too, so far as

annual maintenance of the farmer’s servants and

as servants

employed

land which remains to

cattle,

any part of them can be considered

in cultivation.

That part

of the produce of the

him after paying the rent, ought to be suffihim within a reasonable time, at least dur-

cient, first, to replace to

ing the term of his occupancy, the whole of his original expences,

together with the ordinary profits of stock; and, secondly, to re-

him annually

the whole of his annual expences, together

likewise with the ordinary profits of stock.

Those two

sorts of ex-

pences are two capitals which the farmer employs in cultivation;

and unless they are regularly restored

to him, together with a rea-

sonable profit, he cannot carry on his employment upon a level with other employments; but, from a regard to his desert

it

as soon as possible, and seek

produce of the land which

is

own

some other

interest,

must

That part of the

thus necessary for enabling the farmer

to continue his business, ought to be considered as a fund sacred to cultivation,

which

if

expenses

on improve-

ment of land,

during

receive

place to

and

tors,

to the proprietor

thus employs in this

either

by the

upon the improve-

buildings, drains, enclosures

may

ameliorations, which they

profit

629

the landlord violates, he necessarily reduces

”

follow any particular book closely. His library contained Du Font’s PhysiO’ cratie, ou coiistitukon mturelle du gouvernement le plus amntageux au

genre kumain, 1768 (see Bonar, Catalogue^ p. 92), and he refers lower down to La Riviere, Vordre naturel et essentiel des sociiUs politiques, 1767, but he

probably relied largely on his recollection of conversations in Paris; see Rae, Life of Adam Smith, pp. 215-222. '^Ed. I reads “tear and wear.” ® Ed. ® Ed. I reads “some other employment.” i reads “degrades.”

cultivators,

by

original

and annual expenses of cultivation.

THE WEALTH OF NATIONS

630

the produce of his

own

a few years not only disables racked rent, but from paying the rea-

land, and in

the farmer from paying this

The

sonable rent which he might otherwise have got for his land. rent which properly belongs to the landlord,

is

no more than the

neat produce which remains after paying in the completest manner all

the necessary expences which

must be previously

der to raise the gross, or the whole produce. It of the cultivators,

is

laid out in or-

because the labour

over and above paying completely

all

those nec-

essary expences, affords a neat produce of this kind, that this class

by the honour-

of people are in this system peculiarly distinguished

able appellation of the productive class. Their original

and annual

expences are for the same reason called, in this system, productive expences, because, over and above replacing their

own

value, they

occasion the annual reproduction of this neat produce. These expenses

The ground lays out

what the landlord

expences, as they are called, or

upon the improvement of

his land, are in this

system too

should be

from

free all

taxa-

tion.

honoured with the appellation of productive expences.

Till the

whole of those expences, 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

by

cred and inviolable, both

the church

be regarded as sa-

to

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 discourages the

own

future increase of her of his

own

taxes.

As

in

tithes,

those ground expences, over est

manner

their

own

and the king the future increase

a well-ordered stale of things, therefore,

and above reproducing

in the complet-

value, occasion likewise after a certain time a

reproduction of a neat produce, they are in this system considered as productive expences. All other

expenses

and orders of

The ground expences of the original

landlord, however, together with the

and the annual expences

sorts of expences

which in

people

All other e,xpences

are un-

the

common

and

all

this

of the farmer, are the only three

system are considered as productive.

other orders of people, even those

apprehensions of

men

who

in

are regarded as the most pro-

productive,

ductive, are in this account of things represented as altogether bar-

ren and unproductive. artificers

and manufacturers in

particular,

and

the expense of

employing them:

Artificers

the

common

and manufacturers,

in particular,

apprehensions of men, increases so

whose industry,

much

in

the value of

the rude produce of land, are in this system represented as a class of people altogether barren

and unproductive. Their labour,

said, replaces only the stock

which employs them, together with

it

is

its

ordinary profits. That stock consists in the materials, tools, and wages, advanced to them by their employer; and is the fund des-

AGRICULTURAL SYSTEMS tined for their

employment and maintenance.

^31

Its profits are the

fund destined for the maintenance of their employer. Their em-

them the stock of materials, tools and wages necessary for their employment, so he advances to himself what is necessary for his own maintenance, and this maintenance he generally proportions to the profit which he expects to make by the price of their work. Unless its price repays to him the maintenance which he advances to himself, as well as the materials, tools ployer, as he advances to

and wages which he advances repay to him

workmen,

to his

it

evidently does not

manufacturing stock, therefore, are not,

profits of

upon

the whole expence which he lays out

it.

The

like the rent of

which remains after completely repaying the

land, a neat produce

whole expence which must be laid out in order to obtain them. The stock of the farmer yields

manufacturer; and

it

him a profit

as well as that of the master

yields a rent likewise to another person,

which that of the master manufacturer does not. The expence, therefore, laid out in

employing and maintaining

manufacturers, does no more than continue, existence of is

its

own

value,

if

one

artificers

may

so,

the

and does not produce any new value.

therefore altogether a barren

and unproductive expence. The

pence, on the contrary, laid out in employing farmers labourers, over

say

and

and above continuing the existence of

produces a new value, the rent of the landlord. It

is

It

ex-

and country

its

own

value,

therefore a pro-

ductive expence.

Mercantile stock

is

equally barren and unproductive with

manu-

own

value,

facturing stock. It only continues the existence of

its

mercan^

without producing any new value. Its profits are only the repay-

ment

of the maintenance which its employer advances to himself

during the time that he employs it.

They

must be

it,

or

are only the repayment of laid out in

The labour of

employing

he receives the returns of

a part

The lahour of

But the consumption which

in the

so that the value of the whole

some

particular parts of

mean time it

parts, is precisely equal to the value

time, in the least

which

and manufacturers never adds any thing

land. It adds indeed greatly to the value of it.

of the expence

it.

whole annual amount of the rude produce of the

artificers

to the value of the

till

which

it

occasions of other

adds

is not, at any one moment of The person who works the lace

amount

augmented by

it.

manufac-

to those parts;

nothing to the

of a pair of fine ruffles, for example, will sometimes raise the value of perhaps a

though at

pennyworth of

first

flax to thirty

pounds

sterling.

But

sight he appears thereby to multiply the value of a

part of the rude produce about seven thousand two hundred times, '^Ed.

I

reads ‘‘repay him.”

nualproduce.

the wealth of nations

632

he in reality adds nothing to the value of the whole annual amount of the rude produce. The working of that lace costs him perhaps

two years labour. The thirty pounds which he gets for it when it is finished, is no more than the repayment of the subsistence which he advances to himself during the two years that he is employed about

it.

The

value which, by every day’s, month’s, or year’s la-

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 bour, he adds to the flax, does no

whole annual amount of the rude produce of the land: the portion of that produce which he is continually consuming, being always equal to the value which he

is

continually producing.

The extreme

poverty of the greater part of the persons employed in this expensive,

though

their

work does not

manufacture,

trifling

cases,

The

it is

satisfy us that the price of

in ordinary cases exceed the value of their sub-

with the work of farmers and country

sistence. It is otherwise

bourers.

may

rent of the landlord

is

la-

a value, which, in ordinary

continually producing, over

and above

replacing, in the

most complete manner, the whole consumption, the whole expence

upon the employment and maintenance both of the workmen and of their employer. Artificers, manufacturers and merchants, can augment the reve-

laid out

Artificers,

manufacturers and mer-

pressed in this system,

chants

selves of

can aug-

They annually reproduce nothing but

ment revenue only

by

privation.

nue and wealth

fore,

of their society,

by

by parsimony

privation, that

is,

only; or, as

it is

ex-

by depriving them-

a part of the funds destined for their own subsistence. those funds. Unless, there-

they annually save some part of them, unless they annually

deprive themselves of the enjoyment of some part of them, the rev-

enue and wealth of their society can never be in the smallest degree

augmented by means of

their industry.

bourers, on the contrary,

destined for their

own

may

Farmers and country

la-

enjoy completely the whole funds

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 af-

fords a neat produce, of which the augmentation necessarily aug-

ments the revenue and wealth of their

society. Nations, therefore,

which, like France or England, consist in a great measure of proprietors

and

cultivators,

can be enriched by industry and enjoy-

ment. Nations, on the contrary, which, like Holland and

Ham-

burgh, are composed chiefly of merchants, artificers and manufacturers,

can grow rich only through parsimony and privation. As ®Ed.

I

reads “above the funds destined.”

AGRICULTURAL SYSTEMS

^33

the interest of nations so differently circumstanced,

common

ent, so is likewise the

and good

the former kind, liberality, frankness,

make a

ally

part of that

meanness, and a

ness,

is

very

differ-

character of the people. In those of

common

fellowship, natur-

character. In the latter, narrow-

averse to all social pleas-

selfish disposition,

ure and enjoyment.

The unproductive

class, that of

facturers, is maintained

the

They

classes, of that of proprietors,

furnish

the fund of

The unproductive class

two other

tors.

merchants, artificers and manu-

and employed altogether at the expence of

its

it

and of that

both with the materials of

subsistence, with the corn

and

its

of cultiva-

work and^with

cattle

which

con-

it

is

main-

tained at

the ex-

pense of

sumes while '

it is

employed about that work. The proprietors and

cultivators finally

unproductive

class,

workmen and

their

prietors

and

workmen

of the

profits of all their employers.

Those

pay both the wages and the

of all the

cultivators.

They

are only servants

work

within.

who work

The labour

same

of both is equally unproductive. It adds noth-

ing to the value of the

sum

total of the

Instead of increasing the value of that

expence which must be paid out of

The unproductive

with-

Both the one and the

other, however, are equally maintained at the expence of the

useful to the other

two,

employers are properly the servants of the pro-

out doors, as menial servants

masters.

the other

class,

two

total, it is

a charge and

it.

however,

classes.

rude produce of the land.

sum

is

not only useful, but greatly

By means

of the industry of mer-

but is ful to

them,

chants, artificers tors

and manufacturers, the proprietors and

cultiva-

can purchase both the foreign goods and the manufactured

produce of their own country which they have occasion the produce of a

much

smaller quantity of their

what they would be obliged

to

employ,

if

own

for,

with

labour, than

they were to attempt, in

an awkward and unskilful manner, either to import the one, or to

make

the other for their

own

use.

class, the cultivators are delivered

By means

of the unproductive

from many cares which would

otherwise distract their attention from the cultivation of land.

The

superiority of produce, which, in consequence of this undivided attention, they are enabled to raise, is fully sufficient to

pay the

whole expence which the maintenance and employment of the un-

The

in-

dustry of merchants, artificers and manufacturers, though in

its

productive class costs either the proprietors, or themselves.

own nature

altogether unproductive, yet contributes in this

manner

indirectly to increase the produce of the land. It increases the pro-

ductive powers of productive labour, fine itself to its

by leaving

it

at liberty to con-

proper employment, the cultivation of land; and

use-,

THE WEALTH OF NATIONS

634

by means

the plough goes frequently the easier and the better the labour of the

man whose

business

of

most remote from the

is

plough. and it

It

is

not their

can never be the interest of the proprietors and cultivators to

restrain or to discourage in

interest

to dis-

courage its

indus-

try;

artificers

any respect the industry

and manufacturers. The

of merchants,

greater the liberty

which

this

unproductive class enjoys, the greater will be the competition in all

the different trades which compose

and the cheaper

it,

will the

other two classes be supplied, both with foreign goods and with the

manufactured produce of their own country. nor is it ever the interest of

the un-

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,

produc-

and afterwards,

tive class

unproductive

first,

of the cultivators,

of the proprietors, that maintains

class.

The

and employs the

greater this surplus, the greater

to oppress

the

wise be the maintenance and employment of that class.^

others.

lishment of perfect justice, of perfect liberty, ity, is

tile states

The merchants, states which, like

artificers

are main-

the ex-

unproductive

all

the three classes.

and manufacturers

of those mercantile

Holland and Hamburgh, consist chiefly of

similarly

tained at

estab-

of perfect equal-

the very simple secret which most effectually secures the

highest degree of prosperity to Mercan-

and

must like-

The

class, are in the

this

same manner maintained and em-

ployed altogether at the expence of the proprietors and cultivators of land.

The only

difference

is,

that those proprietors

and

cultiva-

pense of

a most inconvenient

landed

tors are, the greater part of them, placed at

states,

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 sub-

jects of other governments.

but are greatly useful to

them,

Such mercantile

however, are not only useful, but greatly

states,

useful to the inhabitants of those other countries.

fill

up, in of the

whom

merchants, artificers and manufacturers, those countries ought to find at home, but in their policy, they do not find at

and it is not the

They

some measure, a very important void, and supply the place

It

the inhabitants of

whom, from some

home.

can never be the interest of those landed nations,

them

so, to

defect

if

I

may

call

discourage or distress the industry of such mercantile

interest of

by imposing high

upon

landed

states,

nations to

modities which they furnish. Such duties,

discour-

age their industry

duties

upon the comby rendering those com-

their trade, or

modities dearer, could serve only to sink the real value of the surplus produce of their ®Ed. ment.”

I

own

reads “the greater

land, with which, or,

must likewise be

its

what comes

to the

maintenance and employ-

AGRICULTURAL SYSTEMS same

^35

thing, with the price of which, those commodities are pur-

chased. Such duties could serve only to discourage the increase of that surplus produce, and consequently the improvement

own

tivation of their

The most

land.

and

effectual expedient,

by high duties.

cul-

on the

contrary, for raising the value of that surplus produce, for encour-

aging

and consequently the improvement and

its increase,

tion of their

own

land,

would be

to allow the

cultiva-

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

manufacturers and merchants, filling

up

in the properest

whom

the artificers,

all

of trade

would in

they wanted at home, and for

and most advantageous manner that very

important void which they

Freedom

due time supply artificers,

felt there.

etc.,

The

continual increase of the surplus produce of their land,

at

home,

would, in due lime, create a greater capital than what could be emin conse-

ployed with the ordinary rate of profit in the improvement and cultivation of land; itself to

and the surplus part of

would naturally turn

the employment of artificers and manufacturers at home.

But those

and manufacturers, finding

artificers

materials of their

work and

immediately, even with

cheap as the like states,

it

much

fund of

and

less art

at

home both

the

their

subsistence, might

skill,

be able to work as

and manufacturers of such mercantile

artificers

who had both

tlie

to bring from

a great

distance.

Even though,

quence of the increase of their capital,

which would first employ

manufacturers,

from want of art and

work as cheap, to sell their

skill,

they might not for some time be able to

yet, finding

work

a market at home, they might be able

there as cheap as that of the artificers

facturers of such mercantile states,

that market but from so great a distance;

improved, they would soon be able to

and manufacturers

and manu-

which could not be brought to

and as

sell it

their art

and skill

The

artificers

cheaper.

of such mercantile states, therefore,

would im-

mediately 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 their sale

skill,

would, in due time, extend

beyond the home market, and carry them

eign markets, from which they would be in the ually justle out

many

to

many

for-

same manner grad-

of the manufactures of such mercantile na-

tions.

This continual increase both of the rude and manufactured produce of those landed nations would in due time create a greater capi-

and afterwards overflow

tal

than could, with the ordinary rate of

in agriculture or in manufactures.

The

profit,

be employed either

surplus of this capital would

into

foreign trade.

Misprinted “greater” in cd.

5-

the wealth of nations

636

naturally turn itself to foreign trade, and be employed in exporting, to foreign countries,

produce of

its

own

such parts of the rude and manufactured

demand of the home own country,

country, as exceeded the

market. In the exportation of the produce of their

the merchants of a landed nation would have an advantage of the

same kind over those

which

of mercantile nations,

manufacturers had over the

and manufacturers of such

artificers

home

nations; the advantage of finding at

and

its artificers

and those

that cargo,

stores and provisions, which the others were obliged to seek for at

a distance. With inferior art and

navigation, therefore, they

skill in

would be able to sell that cargo as cheap in foreign markets as the merchants of such mercantile nations; and with equal art and they would be able to

sell it

They would

cheaper.

rival those mercantile nations in this

and

due time would

justle

them out

branch of foreign trade, of

it

altogether.

According to this liberal and generous system, therefore, the

Freedom of trade

in

skill

soon, therefore,

most advantageous method

in

which a landed nation can

raise

up

therefore is best for

introducing

manufacturers and merchants of

artificers,

most perfect freedom of trade to the merchants of

all

its

own,

artificers,

is

to grant the

manufacturers and

other nations. It thereby raises the value of the

tures

manufacand

surplus produce of

foreign

gradually establishes a fund, which in due time necessarily raises

trade.

up

its

own

land, of

and merchants

the artificers, manufacturers

all

which the continual increase

whom

it

has oc-

casion for.

When a landed

High duties

and

duties or

prohibitions sink

the value of agricultural

produce, raise

mer-

hurts

its

nation,

on the contrary, oppresses

price of all foreign goods

and of

all sorts of

sarily sinks the real value of the surplus

with which, which,

it

either

by prohibitions the trade of foreign nations, it own interest in two different ways. First, by

or,

what comes

to the

same

raising the

manufactures,

produce of

its

by high

necessarily

it

neces-

own

land,

thing, with the price of

purchases those foreign goods and manufactures. Second-

cantile

and manufacturing

ly,

by giving a

sort of

monopoly

of the

merchants, artificers and manufacturers, cantile

and manufacturing

[profit,

tural profit,

home market it

to its

raises the rate of

own mer-

profit in proportion to that of agricul-

and consequently either draws from agriculture a part which had before been employed in it, or hinders

of the capital

from going to it a part of what would otherwise have gone to it. This policy, therefore, discourages agriculture in two different ways; first, by sinking the real value of its produce, and thereby lowering the rate of profit in all other

its profit;

and, secondly,

by

raising the rate of

employments. Agriculture

is rendered less advantageous, and trade and manufactures more advantageous than

“ Ed.

I

reads “of their foreign trade.”

AGRICULTURAL SYSTEMS they otherwise would be; and every terest to turn, as

much

from the former to the

Though, by able to raise

up

is

tempted by his own

in-

as he can, both his capital and his industry

artificers,

however, which

is

latter emplo3niients.

this oppressive policy,

somewhat sooner than ter,

man

637

it

a landed nation should be

manufacturers and merchants of could do

not a

little

by the freedom

doubtful; yet

of trade;

would

it

its

own,

if

facturers

them

and mei -

one

too hastily

employs

a species

it,

of industry

its profit,

It

chants pre-

maturely.

which only replaces the stock which

together with the ordinary profit,

species of industry which, over

only raise

up manu-

a mat-

raise

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 up,

and could

would depress a

it

and above replacing that stock with

affords likewise a neat produce,

a

free rent to the landlord.

would depress productive labour, by encouraging too hastily that

labour which

is

and unproductive.

altogether barren

In what manner, according to this system, the annual produce of the land

is

distributed

sum

among the

total of the

three classes

The

dis-

tribution

of the

above mentioned, and in what manner the labour of the unproductive class does tion,

no more than replace the value of

its

without increasing in any respect the value of

own consumpthat sum total,

by Mr. Quesnai, the very ingenious and profound author of this system, in some arithmetical formularies. The first of these formularies, which by way of eminence he peculiarly distinrepresents the guishes by the name of the (Economical Table, manner in which he supposes this distribution takes place, in a state represented

is

of the in

most perfect

liberty,

and therefore of the highest prosperity;

a state where the annual produce

possible neat produce, of the

is

and where each

such as to afford the greatest class enjoys its proper share

whole annual produce. Some subsequent formularies repre-

sent the manner, in which, he supposes, this distribution

and regulation;

different states of restraint class of proprietors, or the

is

made

in

in which, either 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 encroach-

ment, every violation of that natural distribution, which the most perfect liberty

would

necessarily degrade

value and

sum

establish,

more or

total of the

must, according to this system,

less,

from one year to another, the

annual produce, and must necessarily

occasion a gradual declension in the real wealth and revenue of the ^®See Francois Quesnay, Tableau CEconomique, 1758, reproduced in facsimile for the British

Economic Association, 1894.

produce of land

is

represent-

ed in the Economical Table.

THE WEALTH OF NATIONS

638

which the progress must be quicker or slow-

society; a declension of er,

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

different degrees of declension, which, according to this system, cor-

respond to the different degrees in which of things Nations can pros-

Some

violated.

speculative physicians seem to have imagined that the

health of the

per in spite of

is

this natural distribution

human body could be

preserved only

by a

certain pre-

regimen of diet and exercise, of which every, the smallest,

cise

some degree

of disease or disorder

hurtful

violation necessarily occasioned

regula-

proportioned to the degree of the violation. Experience, however,

tions.

would seem to show, that the human body frequently preserves, all

appearance at

least,^^

some which are gen-

vast variety of different regimens; even under erally believed to be very far

the healthful state of the

some unknown

itself

to

the most perfect state of health under a

from being perfectly wholesome. But

human

body,

it

would seem, contains

in

principle of preservation, capable either of

preventing or of correcting, in

many

respects, the

bad

effects

even

a very faulty regimen. Mr. Quesnai, who was himself a physi-

of

and a very speculative physician, seems

cian,

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 pre-

cise regimen, the exact tice.

regimen of perfect liberty and perfect jus-

He seems not to have considered that in the political body, the man is continually making to better his

natural effort which every

own

condition,

and

correcting, in

is

a principle of preservation capable of preventing

many

respects, the

bad

effects of

a

political

(economy, in some degree both partial and oppressive. Such a poceconomy, though

litical

ways capable

it

no doubt retards more or

less, is

not

of stopping altogether the natural progress of

tion towards wealth

and prosperity, and

still

less of

making

al-

a nait

go

backwards. If a nation could not prosper without the enjoyment of perfect liberty and perfect justice, there tion which could ever

is

not in the world a na-

have prospered. In the

political body, howwisdom of nature has fortunately made ample provision remedying many of the bad effects of the folly and injustice of

ever, the for

man;

in the

same manner as

remedying those The system is

The

of his sloth

it

has done in the natural body, for

and intemperance.

capital error of this system, however,

seems to

representing the class of artificers, manufacturers Ed.

I

reads “at least to

all

lie

in its

and merchants, as

appearance,”

AGRICULTURAL SYSTEMS

and unproductive. The following observations

altogether barren

may

show the impropriety

serve to

First, this class, it is

value of

ing arti-

acknowledged, reproduces annually the continues, at least, the

which maintains and employs

But upon

denomination of barren or unpro-

ductive should seem to be very improperly applied to

not call a marriage barren or unproductive, though

it

it.

it.

We should

produced only

a son and a daughter, to replace the father and mother, and though it

did not increase the

tinued

it

as

it

was

number

since,

(i)

they

reproduce at least their an-

but only con-

nual con-

and country labourers, indeed,

sumption and con-

of the

before. Farmers

human

ficers, etc

as unproductive,

existence of the stock or capital this account alone the

wrong in represent-

of this representation.

own annual consumption, and

its

^39

species,

over and above the stock which maintains and employs them, re-

tinue the

produce annually a neat produce, a free rent to the landlord. As a

capital

marriage which affords three children

which employs

is

certainly

more productive

than one which affords only two; so the labour of farmers and country labourers chants, artificers

one

is

certainly

more productive than that

and manufacturers. The

them,

mer-

of

superior produce of the

however, does not render the other barren or unpro-

class,

ductive.

Secondly,

it

seems, upon this account, altogether improper to

consider artificers, manufacturers

The labour

as menial servants.

and merchants,

in the

same

light like

of menial servants does not continue

the existence of the fund which maintains and employs them. Their

maintenance and employment masters,

is

is

of their

vants,

not of a nature to re-

consists in services

erally in the very instant of their performance, realize itself in

me-

nial ser-

altogether at the expence of their

and the work which they perform

pay that expence. That work

(2) they

are not

which perish gen-

and does not

fix

or

any vendible commodity which can replace the value

wages and maintenance. The labour, on the contrary, of

artificers,

manufacturers and merchants, naturally does

realize itself in

some such vendible commodity.

It is

upon

fix

and

this ac-

count that, in the chapter in which I treat of productive and unproductive labour,

merchants,

among

among

I have classed artificers, manufacturers

and

the productive labourers, and menial servants

the barren or unproductive.

Thirdly,

it

seems, upon every supposition, improper to say, that

the labour of artificers,

manufacturers and merchants, does not in-

crease the real revenue of the society. for example, as

it

Though we should

seems to be supposed in

to that of its daily, ^^Bk.

ii.,

ch.

iii.,

creases

suppose,

the real

this system, that the

revenue

value of the daily, monthly, and yearly consumption of this class

was exactly equal

(3) their

labour in-

monthly, and yearly produc-

pp. 314-332.

of the society,

the wealth OF NATIONS

640 tion ; yet

would not from thence follow that

it

its

labour added noth-

ing to the real revenue, to the leal value of the annual produce of the land and labour of the society. in the first six

months

An

artificer, for

after harvest, executes ten

example, who,

pounds worth of

work, though he should in the same time consume ten pounds worth

pounds

necessaries, yet really adds the value of ten

and other

of corn

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

work capable

of

person, an equal half yearly revenue.

The

value, therefore, of

has been consumed and produced during these not to ten, but to twenty pounds. It

than ten pounds worth of

one moment of time. But necessaries,

sumed by a

some other

of purchasing, either to himself or to

is

this value, if

by

months

possible, indeed, that

what

equal,

is

no more

may ever have existed

at any

the ten pounds worth of corn and other

which were consumed by the soldier or

six

artificer,

had been con-

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

of the labour of the artificer. ficer

than

it

Though

actually

is in

the value of

produces, therefore, should not at any one

consequence

what the

moment

arti-

of time be

supposed greater than the value he consumes, yet at every moment of time the actually existing value of goods in the

consequence of what

he produces, greater than

it

market

is,

in

otherwise would

be.

When

the patrons of this system assert, that the consumption of

artificers,

manufacturers and merchants,

is

equal to the value of

what they produce, they probably mean no more than that revenue, or the fund destined for their consumption,

But

if

equal to

it.

they had expressed themselves more accurately, and only

asserted, that the revenue of this class

what they produced, that

is

their

it

was equal

what would naturally be saved out of

sarily increase

therefore, to

more

make

to the value of

might readily have occurred to the reader, this revenue,

must neces-

or less the real wealth of the society. In order,

out something like an argument,

it

was neces-

sary that they should express themselves as they have done; and

argument, even supposing things actually were as it seems to presume them to be, turns out to be a very inconclusive one. this

u)

for

Fourthly, farmers and country labourers can no more augment,

without parsimony, the real revenue, the annual produce of the nual pro

duceparsimonyis

labour of their society, than

merchants.

The annual produce

manufacturers and and labour of any so-

artificers,

of the land

augmented only in two ways;

either, first,

by some

AGRICULTURAL SYSTEMS improvement

in the productive

maintained within

powers of the useful labour actually

secondly,

it; or,

^41

by some

increase in the quan-

tity of that labour.

much

re-

quired

from

The improvement

in the productive

powers of useful labour de-

upon the improvement in the ability of the workman and, secondly, upon that of the machinery with which he works. But the labour of artificers and manufacturers, as it is capable of being more subdivided, and the labour of each workman reduced to

pends,

just as

first,

farmers as

from

them,

a greater simplicity of operation, than that of farmers and country labourers, so

ment

in

it is

likewise capable of both these sorts of improve-

a much higher degree.^^ In

of cultivators can

this respect, therefore, the class

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 depend altogether upon the increase of the capital which employs

and the increase of that capital again amount of the savings from the revethe particular persons who manage and direct the

must be exactly equal nue, either of

employment of that

it;

to the

capital, or of

to them. If merchants, artificers

some other persons who lend

and manufacturers

it

are, as this

system seems to suppose, naturally more inclined to parsimony and

more

like-

employed within

their

saving than proprietors and cultivators, they are, so

augment the quantity

ly to

society,

and consequently

of useful labour

far,

to increase its real revenue, the annual

its land and labour. and lastly, though the revenue

produce of Fifthly

of the inhabitants of every

country was supposed to consist altogether, as this system seems to

and ( 5 ) trade and manufac-

suppose, in the quantity of subsistence which their industry could

tures can

procure to them; yet even upon this supposition, the revenue of a

procure that sub-

trading and manufacturing country must, other things being equal,

always be tures.

much greater than

By means

of trade

that of one without trade or manufac-

and manufactures, a greater quantity

of

subsistence can be annually imported into a particular country than

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 what

its

a quantity plies

of the rude produce of the lands of other people as sup-

them, not only with the materials of their work, but with the

fund of their subsistence. country in

its

What a town always is with regard

to the

neighbourhood, one independent state or country

may

frequently be with regard to other independent states or countries. It is thus that

Holland draws a great part of “ See Book

I.

Chap

I

pp

5, 6

its

subsistence from

sistence

which the system regards as the only revenue.

the wealth of nations

642

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 contrary,

a country without trade and manufactures purchase, at the expence of a great part

is

generally obliged to

of its

rude produce, a very

small part of the manufactured produce of other countries.

The

on6 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 cultivation, could afford.

much errors

’^ne sys-

tem has

inhabitants of the other

must always enjoy a

smaller quantity.

This system, however, with

In spite of its

The

all its

imperfections,

is,

perhaps, the

nearest approximation to the truth that has yet been published

upon the subject of

political

oeconomy, and

is

man who

upon that account wishes to examine

been

well worth the consideration of every

valuable.

with attention the principles of that very important science. Though

which

in representing the labour

is

employed upon land as the only

productive labour, the notions which

narrow and confined; yet consisting, not in the

it

inculcates are perhaps too

in representing the wealth of nations as

unconsumable riches of money, but

in the

consumable goods annually reproduced by the labour of the society;

and in representing perfect liberty as the only

effectual ex-

pedient for rendering this annual reproduction the greatest possible, its

doctrine seems to be in every respect as just as

liberal. Its followers

are very numerous; and as

it is

generous and

men

are fond of

paradoxes, and of appearing to understand what surpasses the com-

prehension of ordinary people, the paradox which

it

maintains,

concerning the unproductive nature of manufacturing labour, has

not perhaps contributed a mirers.

They have

increase the

number

of its ad-

some years past made a pretty considerable the French republic of letters by the name of.

for

sect, distinguished in

The

little to

(Economists. Their works have certainly been of some service

to their country; not only

by bringing into general

discussion,

many

had never been well examined before, but by insome measure the public administration in favour of

subjects which

fluencing in

agriculture. It has

been in consequence of their representations,

accordingly, that the agriculture of France has been delivered from

AGRICULTURAL SYSTEMS

643

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 pro^ longed from nine to twenty-seven years.^® The ancient provincial restraints upon the transportation of corn from one province of the kingdom to another, have been entirely taken away, and the liberty of exporting it to all foreign countries, has been established as the common law of the kingdom in all ordinary cases.^'^ This sect, in their works, which are very numerous, and which treat not only of what is properly called Political (Economy, or of the nature and causes of the wealth of nations, but of every other branch of the system of civil government, all follow implicitly, and without any sensible variation, the doctrine of Mr. Quesnai. There is upon this account little variety in the greater part of their works. The most distinct and best connected account of this doctrine is to be found in a little book written by Mr. Mercier de la Riviere, sometime Intendant of Martinico, intitled. 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 prinseveral of the oppressions

cipally given stability to political societies, independent of

other inventions which have enriched and adorned them. is

the invention of writing, which alone gives

human

many

The

first,

nature the

power of transmitting, without alteration, its laws, its contracts, its annals, and its discoveries. The second, is the invention of money, which binds together all the relations between civilized societies.

The

third, is the

GEconomical 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.”

“Above, p. 369. Uordre naturel

Above, pp. 198, 474. des societes pohtiques, 1767, a quarto of 511 pages, seems, as G. Schelle {Du Pont de Nemours et recole physiocratiquCf 1888, p. 46, note) remarks, not entitled to be called a “little book,” but Smith may have been thinking of the edition in two vols., lamo, 1767, nominally printed “a Londres chez Jean Nourse, libraire.” i9 «Trois grandes inventions principales ont fonde stablement les societes, ind^pendamment de tant d’autres qui les ont ensuite dotees et d6corees. Ces trois sont, i® L’invention de Tecriture, qui seule donne a Thumanite le pouvoir de transmettre, sans alteration, ses lois, ses pactes, ses annales et ses decouvertes. 2® Celle de la monnaie, qui lie tous les rapports entre les societes policies. La troisieme enfin, qui est due a notre age, et dont nos neveux profitgront, est un derive des deux autre^ et les complette egalement en perfecet essentiel

THE WEALTH OF NATIONS

644

Some nations

have

favoured agriculture.

the political ceconomy of the nations of

As

modern Europe, has

been more favourable to manufactures and foreign trade, the

in-

dustry of the towns, than to agriculture, the industry of the country; so that of other nations has followed a different plan, and has

been more favourable to agriculture than to manufactures and

for-

eign trade. China, for example.

The

policy of China favours agriculture

ployments.

much

2°

more than

In China, the condition of a labourer

is

all

other em-

said to be as

superior to that of an artificer; as in most parts of Europe,

that of an artificer bition of every

to that of a labourer. In China, the great

is

man

is

to get possession of

either in property or in lease ;

some

am-

of land,

little bit

and leases are there said to be granted

upon very moderate terms, and to be sufficiently secured to the lessees. The Chinese have little respect for foreign trade. Your beggarly commerce! was the language in which the Mandarins of Pe-

kin used to talk to Mr. de Lange,^^ the Russian envoy, concerning

Except with Japan, the Chinese carry on, themselves, and in their own bottoms, little or no foreign trade; and it is only into one

it.22

or two ports of their

kingdom

that they even admit the ships of for-

eign nations. Foreign trade, therefore, fined within a

much narrower

naturally extend their

China is Itself

of

own

itself, if

circle

is,

in China, every

way

than that to which

more freedom was allowed

to

it

it,

con-

would

either in

ships, or in those of foreign nations.

Manufactures, as in a small bulk they frequently contain a great value,

and can upon that account be transported at

less

expence

very great extent,

from one country to another than most parts

but more

are, in almost all countries, the principal support of foreign trade.

foreign

trade

In countries, besides,

less extensive

and

less

of rude produce,

favourably circum-

would be

stanced for interior commerce than China, they generally require

advantageous to

the support of foreign trade. Without

it.

an extensive foreign market,

they could not well flourish, either in countries so moderately extensive as to afford but a

narrow home market; or in countries

tionnant leur objet: c^est la d^couverte du Tableau economique, qui devenant desormais le truchement universel, embrasse, et accorde toutes les portions ou quotites correlatives, qui doivent entrer dans tous les calculs g6neraux de Tordre konQmqxLQ”^Philosophie Rurale ou iconomie ginirale et

Vagriculture) pour dam, 1766, tom. L, pp. 52, S3. politique de

servir de suite

“ Du Halde, Description Giographique, ^ Ed. I reads “Mr. Langlet.”

etc,,

d VAmi des Hommes, Amsterde la Chine, tom.

ii.,

p. 64.

®*See the Journal of Mr. De Lange in Bell’s Travels, vol. ii. p. 258, 276 293. Travels from St. Petersburg in Russia to Diverse Parts of Asia, by John Bell of Antermony, Glasgow, 1763. The mandarins requested the Russians to cease “from importuning the council about their beggarly commerce,” p. 293. Smith was a subscriber to this book. The note is not in ed. i. “Ed. I reads “sorts.”

and

AGRICULTURAL SYSTEMS

^45

where the communication between one province and another was so difficult,

as to render

it

impossible for the goods of any particular

home market which

place to enjoy the whole of that

could afford.

The

the country

perfection of manufacturing industry,

it

must be

remembered, depends altogether upon the division of labour; and the degree to which the division of labour can be introduced into

any manufacture, shown,

by

is necessarily regulated, it

empire of China, the vast multitude of of climate, inces,

and consequently

has already been

But the great extent

the extent of the market.

its

of the

inhabitants, the variety

of productions in

and the easy communication by means

different prov-

its

of water carriage be-

tween 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

The home market

of labour.

much

inferior to the

is,

perhaps, in extent, not

the different countries of Europe

A

the world; especially ried

China

all

more extensive foreign trade, however, which great home market added the foreign market of all the rest

put together.^® this

of

market of

on

if

any considerable part

of this trade

in Chinese ships; could scarce fail to increase

was

to of

car-

very much the

manufactures of China, and to improve very much the productive

powers of tion, the

its

manufacturing industry.

By a more

structing themselves all the different machines

other countries, as well as the other

dustry which are practised in

Upon

extensive naviga-

Chinese would naturally learn the art of using and con-

their present plan they

themselves

by

all

made use

of in

unorovements of art and

in-

the different parts of the world.

have

little

opportunity of improving

the example of any other nation; 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

Egypt and the

other employments.

govern-

Gentoo

Both in ancient Eg)rpt 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

employments. The son of a priest was necessarily a

class of

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 taylor, a taylor; &c. In both countries,

the cast of the priests held the highest rank,

and

that of the

Above, pp. 17-23.

^Quesnay went

further than this: “L’historien dit que le

commerce qui

grand que celui de TEurope ne peut pas lui etre compare.”— Oewvrej, ed. Oncken, 1888, p. 603. ^ Ed. i reads “and in ” Ed. I reads “as well as all the other.”

se

fit

dans

I’int^rieur

de

la

Chine

est si

ment of Indostan favoured agriculture.

The people

were di-

the wealth of nations

646

and

both countries, the cast of the farmers and

vided into

soldiers the next;

castes in

labourers was superior to the casts of merchants and manufacturers.

in

these

The government

countries.

of both countries

the interest of agriculture. Irrigation

was at-

was particularly attentive

The works

constructed

to

by the ancient

sovereigns of Eg5T)t for the proper distribution of the waters of the

tended to

Nile were famous in antiquity; and the ruined remains of some of

there.

them are

still

the admiration of travellers. Those of the

which were constructed by

same kind

the ancient sovereigns 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

ject occasionally to dearths,

Though both were extremely populous,

tility.

though sub-

countries, accordingly,

have been famous for

their great ferin years

yet,

of

moderate plenty, they were both able to export great quantities of grain to their neighbours.

Egypt and India were dependent on other

The

ancient Egyptians had a superstitious aversion to the sea;

and as the Gentoo fire,

religion does not permit its followers to light a

nor consequently to dress any victuals upon the water,

it

in

them from all distant sea voyages. Both the Egypand Indians must have depended almost altogether upon the

effect prohibits

nations for

tians

foreign

navigation of other nations for the exportation of their surplus pro-

trade

duce; and this dependency, as it

it

must have confined the market, so

must have discouraged the increase

of this surplus produce. It

must have discouraged too the increase

of the

manufactured pro-

duce 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

three hundred pairs of shoes in the year;

not perhaps wear

he has the custom he cannot dispose of the

whole produce of his own labour. The most numerous seldom, in a large country,

or one in a hundred of the whole

But

will

out six pairs. Unless therefore

of at least fifty such families as his own,

ficers will

than

and his own family

in such large countries as

class of arti-

make more than one

number

in fifty

of families contained in

it.

France and England, the number of

people employed in agriculture has at a half, less

by

than a

others at

fifth of

a

third,

by some authors been computed and by no author that I know of, at

the whole inhabitants of the country.

produce of the agriculture of both France and England greater part of

it,

But as the is,

the far

consumed at home, each person employed

must, according to these computations, require the custom of one, two, or, at most, of

little

in

it

more than

four such families as

hL

own, in order to dispose of the whole produce of his own labour. “ Ed

I

does not contain “of ”

AGRICULTURAL SYSTEMS

^47

Agriculture, therefore, can support itself under the discouragement of a confined market,

much

better than manufactures. In both an-

Egypt and Indostan, indeed, the confinement of the foreign market was in some measure compensated by the conveniency of cient

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 exhome market

tent of Indostan too rendered the

of that country

very great, and sufficient to support a great variety of manufactures.

But the small extent

to England, must at

all

of ancient Egypt, which

times have rendered the

that country too narrow for supporting

any

was never equal

home market of manu-

great variety of

factures. Bengal, accordingly, the province of Indostan

monly exports the

greatest quantity of

rice,*

which com-

has always been more

remarkable for the exportation of a great variety of manufactures, than for that of

its

grain. Ancient Egypt,

on the contrary, though

it

exported some manufactures, fine linen in particular, as well as

some other goods, was always most distinguished

for its great ex-

portation 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 Indostan has at

different times

been divided,

The land tax gave eastern

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

sovereigns

a particular interest in

proportion, a

fifth, it is said,

of the produce of the land,

either delivered in kind, or paid in

and which

valuation,

which was

money, according to a certain

agricul-

ture

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

own revenue.^® The policy of the ancient

their

though

it

trade, yet

and that of Rome, more than manufactures or foreign

republics of Greece,

honoured agriculture

seems rather to have discouraged the

latter

employ-

ments, than to have given any direct or intentional encouragement to the former. In several of the ancient states of Greece, foreign

Ancient Greece

and

Rome

discour-

aged manufactures

trade

was prohibited

ments of

artificers

to the strength

and

altogether;

and manufacturers were considered as hurtful agility of the

capable of those habits which cises

and in several others the employ-

endeavoured to form in

it,

human body,

th^ir military

as rendering

it

in-

and gymnastic exer-

and as thereby disqu^ifying it more

^ Below,

p. 789

and

foreign

and on manufac-

trade,

carried

tures only

by

slave

M labour,

which is expensive.

the wealth of nations undergoing the fatigues and encountering the dangers

or less for

of war. Such occupations were considered as

the free citizens of the state

Even

in those states

Rome and

fit

only for slaves, and

were prohibited from exercising them.^^

where no such prohibition took place, as

in

Athens, the great body of the people were in effect ex-

cluded 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, cised

them

all

occupied

by the

who

slaves of the rich,

for the benefit of their masters,

exer-

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

which

in the^^ arrangement -and distribution of work,

and abridge labour, have slave propose

facilitate

been the discoveries of freemen. Should

any improvement

of this kind, his

a

master would be

very apt to consider the proposal as the suggestion of laziness, and of a desire to save his

own labour

slave, instead of reward,

at the master’s expence.

The poor

would probably meet with much abuse,

perhaps with some punishment. In the manufactures carried on by slaves, therefore,

to execute the

freemen.

more labour must generally have been employed

same quantity

The work

on by upon that account, generalthe latter. The Hungarian mines,

of work, than in those carried

of the former must,

ly have been dearer than that of

it is remarked by Mr. Montesquieu, though not richer,^® have always been wrought with less expence, 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 ap-

pear that those of the finer sort were excessively dear. Silk sold for its

weight in gold. It was not, indeed, in those times a European

manufacture; and as

it

distance of the carriage

ness of the price.

was

all

brought from the East Indies, the

may in some measure account for the great-

The price, however, which a lady,

sometimes pay for a piece of very

fine linen,

it is

said,

would

seems to have been

equally extravagant; and as linen was always either a European,

“ Ed. “ Ed.

I

reads “from.”

I

reads “that.”

Lectures p.

Montesquieu, Esprit des lois, liv. iv., chap. " Ed. i reads “more rich.” 231; Montesquieu, Esprit des lois, liv. xv., chap. 8.

8.

AGRICULTURAL SYSTEMS an Egyptian manufacture,

or, at farthest,

this

649

high price can be

accounted for only by the great expence of the labour which must

have been employed about

it,

and the expence of

this labour again

could arise from nothing but the awkwardness of the machinery

which

it

made

use

of.

The

price of fine woollens too, though not

quite so extravagant, seems however to have been of the present times.

Some

cloths,

we

are told

by

much above

that

Pliny, dyed in

a

particular manner, cost a hundred denarii, or three pounds six shil-

and eight pence the pound weight.®^ Others dyed in another manner cost a thousand denarii the pound weight, or thirty-three pounds six shillings and eight pence. The Roman pound, it must be

lings

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 which are made

cloths themselves been

in the present times, so

much

any

dearer than

very expensive a dye would

not probably have been bestowed upon them. The disproportion would have been too great between tie value of the accessory and that of the principal. The price mentioned by the same author of

some

made use

Triclinaria, a sort of woollen pillows or cushions

to lean

of

upon as they reclined upon &eir couches at table, passes all some of them being said to have cost more than thirty

credibility;

thousand, others more than three hundred thousand pounds. This

high price too

is

not said to have arisen from the dye. In the dress

of the people of fashion of both sexes, there seems to have

much

less variety, it is

modern

in

times;

observed

by Dr. Arbuthnot,

and the very

little

this,

in ancient than

variety which

that of the ancient statues confirms his observation.

been

He

we

find in

infers

from

that their dress must upon the whole have been cheaper than

ours: but the conclusion does not of fashionable dress

is

seem to

follow.

When the expence

very great, the variety must be very small.

But when, by the improvements

in the productive

powers of manu-

facturing art and industry, the expence 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 expence of

any

one dress, will naturally endeavour to do so by the multitude and variety of their dresses.

The

greatest

every nation,

it

and most important branch

of the

has already been observed,®®

is

on between the inhabitants of the town and those

ried

«*Plin. [R.iV'.l ®®Plin. [B'.iV.]

1. 1.

1754 PP- 142-145,

Above,

p. 356.

is

Every-

car-

of the coun-

ix. c. 39. viii. c. 48.

John Arbuthnot, Tables ed.,

commerce of

that which

Neither this nor the preceding notes is in ed. i. of Ancient Coins, Weights and Measures, 2nd

raises the

the wealth of nations

650

The

draw from the country the rude

inhabitants of the town

price of

try.

manufaccourages

produce which constitutes both the materials of their work and the fund of their subsistence; and they pay for this rude produce

agricul-

by sending back

tures dis-

ture,

and prepared

to the country a certain portion of

it

immediate use. The trade which

is

for

tween those two

manufactured carried

on be-

different sets of people, consists ultimately in

a

certain quantity of rude produce exchanged for a certain quantity

The

of manufactured produce.

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, which comes to the same thing, which the price of any given quantity of rude produce

rude produce; the smaller the encouragement which either

the landlord has to increase er

by

capable of pur-

of that given quan-

chasing, the smaller the exchangeable value tity of

is

its

quantity

by improving,

or the farm-

cultivating the land. Whatever, besides, tends to diminish in

any country the number diminish the

of artificers

home market,

and manufacturers, tends to

the most important of

the rude produce of the land, and thereby

still

all

markets for

further to discourage

agriculture.

and

this is

done by systems

Those systems, therefore, which preferring agriculture other employments, in order to promote

it,

to all

impose restraints upon

which

manufactures and foreign trade, act contrary to the very end which

restrain

they propose, and indirectly discourage that very species of indus-

manufactures and

try which they

foreign

inconsistent than even the mercantile system.

trade.

couraging manufactures and foreign trade

mean

to promote.

They

more That system, by enmore than agriculture,

are so far, perhaps,

turns a certain portion of the capital of the society from supporting

a more advantageous, to support a less advantageous species of industry.

But

still it

industry which

it

really

and

means

to promote.

in the

end encourages that species of

Those

agricultural systems,

on the contrary, really and in the end discourage So all systems of encour-

ite species of

their

own

favour-

industry.

It is thus that

every system which endeavours, either, by extra-

agements

ordinary encouragements, to draw towards a particular species of

and

industry a greater share of the capital of the society than what

re-

straints

would naturally go to

it; or,

retard the

progress of society.

by extraordinary

restraints, to force

from a particular species of industry some share of the capital which would otherwise be employed in it; is in reality subversive of ^

Ed.

I

reads “real value.”

AGRICULTUIiAL SYSTEMS the great purpose which

it

means

to promote. It retards, instead of

and

accelerating, the progress of the society towards real wealth

greatness;

and diminishes, instead of increasing, the

the annual produce of

real value of

land and labour.

its

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.

as he does not violate the laws of justice,

pursue his own interest his

is

Every man, as long

left perfectly free to

men. The sovereign

is

temof natural liberty

leaves the

sovereign

own way, and

to bring both his industry

and capital into competition with those of any other man, or order of

Thes>s-

completely discharged from a duty, in the

only three duties: (i) the

defence of

attempting to perform which he must always be exposed to innu-

the coun-

merable delusions, and

tr>’; (2)

human wisdom

proper performance of which no

for the

or knowledge could ever be sufficient; the duty of

superintending the industry of private people, and of directing

the ad-

ministra-

it

tion of

towards the employments most suitable to the interest of the so-

justice,

ciety.

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,

and

(3)

the

maintenance of certain

and invasion of

public

other independent societies; secondly, the duty of protecting, as far

works.

the duty of protecting the society from the violence

as possible, every

member of the society from the member of it, or the duty of

oppression of every other

an exact administration ing

and maintaining

tutions,

small

which

it

number

can never be

number

The

for the interest of

it

to

any

insti-

individual, or

and maintain; because the

repay the expence to any individual or small

of individuals, though

than repay

works and certain public

of individuals, to erect

profit could never

duty of erect-

of justice; and, thirdly, the

certain public

injustice or

establishing

it

may

frequently do

much more

a great society.

The next

proper performance of those several duties of the sovereign

book

will

treat of

necessarily supposes a certain expence;

and

expence again

this

necessarily requires a certain revenue to support

it.

ing book, therefore, I shall endeavour to explain;

In the followfirst,

what are

the neces-

sary expenses of

the sove-

the necessary expences of the sovereign or commonwealth; and

which

of those

expences ought to be defrayed by the general con-

tribution of the whole society;

particular part only, or of

secondly,

what are the

may be made

and which

of them,

by

some particular members

different

that of

some

of the society:

methods in which the whole society

reign, the

methods of contribution

towards the expenses of

to contribute towards defraying the expences incum-

the whole

bent on the whole society, and what are the principal advantages

society,

methods: and, thirdly, what

and the

and inconveniences

of each of those

THE WEALTH OF NATIONS

652 causes

and

ef-

fects of

are the reasons and causes which have induced almost

governments to mortgage some part of

and what have been the

all

modern

this revenue, or to contract

effects of those

debts upon the real

public

debts,

debts.

wealth, the annual produce of the land and labour of the society.

The

following book, therefore, will naturally be divided into three

chapters.

BOOK V Of the Revenue

of the Sovereign or

CHAPTER

Commonwealth

I

OF THE EXPENCES OF THE SOVEREIGN OR COMMONWEALTH

Part Of

The

first

the

I

Expence of Defence

duty of the sovereign, that of protecting the society from

the violence and invasion of other independent societies, can be

The

ex-

pense of a military

performed only by means of a military

force.

But the expence both

and

of preparing this military force in time of peace, it

of

employing

in time of war, is very different in the different states of society,

in the different periods .of

Among nations such as we find

man

is

it

improvement.

of hunters, the lowest

among

different

at differ-

ent periods.

and rudest state of society, North America, every

the native tribes of

a warrior as well as a hunter.

force is

When he goes to war,

either to

Among hunters it costs

nothing.

defend his society, or to revenge the injuries which have been done to it

the

by

other societies, he maintains himself

same manner as when he

state of things there

wealth,

is

at

no

or to maintain

is

lives at

by

home. His

his

own

labour, in

society, for in this

properly neither sovereign nor

sort of expence, either to prepare

him while he

is

in

him

common-

for the field,

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

When shepherds

go to war the whole

waggons

nation

which are easily transported from place to place. The whole tribe

moves

habitation, but live, either in tents, or in

a

sort of covered

or nation changes its situation according to the different seasons of Lectures^ p. 14.

653

with its property

THE WEALTH OF NATIONS

6S4

the year, as well as according to other accidents.

When its herds and

have consumed the forage of one part of the country,

flocks

moves

and from that to a

to another,

comes down to the banks of the to the upper country.

rivers, in the

it

re-

dry season,

wet season

it

it

retires

such a nation goes to war, the war-

not trust their herds and flocks to the feeble defence of

riors will

their old

When

third. In the

men,

women and

women and

their

their old

men, their

children, will not be left behind without defence

The whole

without subsistence. to a wandering

it

by

the object proposed

way

it

of

nearly the same, though

life is

be^ very

different.

and every one does as

women have been

the Tartars, even the

field in

marches as an army, or moves about as a

of herdsmen, the

together, therefore,

and

nation, besides, being accustomed

even in time of peace, easily takes the

life,

time of war Whether

company

and

children,

They

all

go to war

Among

well as he can.

frequently

known

to en-

gage 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

dren,

become the booty

those

who

and

and dispersed sovereign is at

no

expense

The

ing,

throwing the javelin, drawing the bow, &g. are the

in the

who

When

open

live in the

same manner all

is

flocks

which he

chiefs or sovereigns, is at

the only

and are

all

of

common them the

pay which he

when he

is

carries with him,

His chief or sovereign,

as in peace.

preparing him for the field; and

plunder

air,

a Tartar or Arab actually goes to war, he

by his own herds and

nations have

for those

no sort of expence in is

in

it,

the chance of

either expects or requires.

An army of hunters can seldom exceed two or three hundred men. The precarious subsistence which the chace affords could sel-

formid-

dom

able than

time.

hunters

him for the commonly dissipated

The ordinary life, the ordinary exercises of a Tartar or Arab, him sufficiently for war. Running, wrestling, cudgel-play-

maintained,

more

rest are

prepare

images of war.

Shepherds

chil-

greater part of

in the desart.

pastimes of those

are far

women and

Even the

survive the action are obliged to submit to

sake of immediate subsistence. and the

but their

flocks,

of the conqueror.

allow a greater

An army

number

to keep together for

of shepherds,

any considerable

on the contrary,

may sometimes 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 amount to two or

three

;

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.

^Ed

I

A

nation of shepherds may.

reads “is”

EXPENSE OF DEFENCE

^55

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

The

the

resist

Scythians united, has been verified by the experience of

all ages.

inhabitants of the extensive, but defenceless plains of Scythia

or Tartary, have been frequently united under the dominion of the

some conquering horde or clan, and the havoc and devastaof Asia have always signalized their union. The inhabitants of

chief of

tion

the inhospitable deserts of Arabia, the other great nation of shep-

Mahomet and

herds, have never been united but once; under

immediate s uccessors.^ Their union, which was more the religious enthusiasm than of conquest,

was

his

effect of

signalized in the

same

manner. If the hunting nations of America should ever become shepherds, their neighbourhood would be

^European

colonies than

it is

much more dangerous

to

at present.

In a yet more advanced state of society, among those nations of

husbandmen who have

foreign commerce,

little

and no other man-

Husband-

men with little

ufactures but those coarse and houshold ones which almost every private family prepares for

manner, either

by

is

its

own

ordinary

all

day

the inclemencies of the seasons.

life

in the

same

a warrior, or easily becomes such. They who

agriculture generally pass the whole

posed to

man,

use, every

in the

The

open

air,

live

hardiness of their

which their necessary occupations bear a great ^ analogy. The

trenches,

and to

fortify

a camp

him

to

as well as to enclose

work a

in the

field.

only

household

manufacex-

prepares them for the fatigues of war, to some of

necessary occupation of a ditcher prepares

com-

merce and

The

tures are easily

conveited into soldiers,

and it

sel-

dom costs the sover-

ordinary pastimes of such husbandmen are the same as those of

eign any-

shepherds, and are in the same manner the images of war. But as

thing to

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 expence

^to prepare f

them

for the field.

Agriculture, even in

^tlement;

some

without great

its

rudest

When wh

loss.

®What Thucydides resist

state,

supposes a set-

which cannot be abandoned

a nation o f mere hu^bg^ilhnen, tbetefoye,

^^ men^ the.women^^^anachiM^^

could

and lowest

sort of fixed habitation

g oes to war, th e old

prepare them for the field,

i

take the at least,

field together.

Xh^

must remain at home

to

says (ii, 97) is that no European or Asiatic nation if they were united Ed i reads here and on

the Scythians

next page ^‘Thuadides” ^Lectures, pp 20, 21

®Ed

i reads

“a good deal of”

01 to

maintain

them when they have taken the field

the wealth of nations

656

take care of the habitation. All the ever,

may

take the

men

how-

of the military age,

and, in small nations of this kind, have

field,

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, cipal

and end before harvest, both the husbandman and his prinlabourers can be spared from the farm without much loss. He

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 trusts that the

campaign, and as

it

frequently costs the sovereign or commonwealth

to maintain

little

citizens of all

him

in the field as to prepare

served in this manner

people of Peloponesus

till

and returned home

till

after the Peloponesian war.

it.

The

It

was not

and the

first

till

The Pelopon-

left the field in the

summer,

The Roman people under

to reap the harvest.®

and during the

their kings,

same manner.^

for

after the second Persian war;

Thucydides observes, generally

esians,

him

the different states of ancient Greece seem to have

ages of the republic, served in the

the siege of Veii, that they,

who

staid

at home, began to contribute something towards maintaining those

who went

to war.^^ In the

founded upon the ruins of the

some time

European monarchies, which were

Roman

after the establishment of

feudal law, the great lords, with

used to serve the crown at their

empire, both before and for

what

all their

own

is

properly called the

immediate dependents,

expence. In the

the

field, in

same manner as at home, they maintained themselves by

their

own

by any stipend or pay which they received from upon that particular occasion. In a more advanced state of society, two different causes con-

revenue, and not

the king Later it

becomes

tribute to render

necessary

to pay

field,

it

altogether impossible that they,

who

take the

should maintain themselves at their own expence. Those two

those who

causes are, the progress of manufactures, and the improvement in

take the

the art of war.

field,

Though a husbandman should be employed

in

an expedition, pro-

since arti-

vided

and manufac-

ruption of his business will not always occasion

turers

diminution of his revenue. Without the intervention of his labour,

it

begins after seed-time and ends before harvest, the inter-

ficers

must be

mam-

any considerable

nature does herself the greater part of the work which remains to

tainedby

be done. But the moment that an

the public

weaver, for example, quits his workhouse, the sole source of his

when

revenue ®

Ed

®

Livy,

I

is

artificer,

a smith, a carpenter, or a

completely dried up. Nature does nothing

reads “or fifth ” V., 2.

Ed

^ Livy,

iv

,

”

a 59 ad fin

i reads “so short

®

for^hinqi,

VII

,

27

he

EXPENSE OF DEFENCE does

all for himself.

When he

takes the

field, therefore, in

away

defence

from

no revenue to maintain himself, he must

of the public, as he has

necessarily be maintained

by the

public.

a greater part of the inhabitants are

who go

great part of the people

to

But

in

artificers

their

a country of which

work,

and manufacturers, a

war must be drawn from those

and must therefore be maintained by the public as long as

classes,

they are employed in

its service.

When the art of war too has gradually grown up tricate

^57

and complicated

science,

when

to be

a very

in-

and the

the event of war ceases to be

greater

length of

determined, as in the

mish or

battle,

first

by a single

ages of society,

but when the contest

is

irregular skir-

campaigns

generally spun out through

makes

several different campaigns, each of which lasts during the greater

part of the year;

it

service

becomes universally necessary that the public

should maintain those

who

without

pay too heavy a burden

serve the public in war, at least while

they are employed in that service. Whatever in time of peace might

be the ordinary occupation of those

who go

to war, so very tedious

and expensive a service would otherwise be by

far too

even for husband-

heavy a bur-

men

den upon them. After the second Persian war, accordingly, the armies of Athens seem to have been generally composed of mer-

cenary troops; consisting, indeed, partly of citizens, but partly too

and all

of foreigners; of the state.

received

From

pay

of

them equally hired and paid at the expence

the time of the siege of Veii, the armies of

for their service during the time

in the field.^^

Rome

which they remained

Under the feudal governments the military

service

both of the great lords and of their immediate dependents was, after a certain period, universally

money, which was employed

exchanged for a payment in

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 civ-

The possible

pro-

portion ilized,

than in a rude state of society. In a civilized society, as the

soldiers are maintained altogether

not soldiers, the latter

number

by

of the former

the labour of those

£a|mq^

can maintain, over and above maintaining, in a manner

officers of

government, and law,

lu the

little

whom

would sometimes,

it is

take the

field.

Among

the

commonly computed, that

not more than one hundredth part of the inhabitants of any coun^ Above,

p. 656.

“ Ed.

i

population is

much smaller in

they are obliged to main-^

it is said,

modern Europe,

of the

suit-

agrarian states of ancient Greece^, a fqurth or a

civilized nations of

to the rest

^

and the other

fiftlUiartof the whole^body g£ the people considered themselves as soldiers^

of soldiers

are^

exceed what the

able to their respective stations, both themselves

tain,

who

reads “never can

”

civilised htifnes.

the wealth of nations

658

try can be-employed as soldiers, without ruin to the country which

pays the expence of their

The expence

The expense of preparing the

service.^®

of preparing the

have become considerable maintaining

in the field

it

army

for the field

any nation,

in

had devolved

seems not to

long after that of

till

entirely

upon the sovereign

f

commonwealth. In

ir

all

the different republics of ancient Greece,

f0 learn his military exercises, was a necessary part of education

imposed by the state upon every

seems

have been a public

to

free citizen.

field, in

In every city there

which, under the protection of

the public magistrate, the young people were taught their different

by

exercises

In this very simple institution, con-

different masters.

sisted the

whole expence which any Grecian state seems ever to

have been

at, in

preparing

its citizens for

war. In ancient

Rome the

Campus Martius answered the same purpose with Gymnasium in ancient Greece. Under the feudal gov-

exercises of the

those of the

many

ernments, the

public ordinances that the citizens of every

should practise archery as well as several other military

district

were intended for promoting the same purpose, but do

exercises,

not seem to have promoted

it

so well. Either from

want

of interest

in the officers entrusted with the execution of those ordinances, or

from some other cause, they appear to have been universally neglected;

and

exercises

seem

body

in the progress of all those governments, military to

have gone gradually into disuse among the great

of the people.

In the republics of ancient Greece and Rome, during the whole

Soldiers

were not

period of their existence, and under the feudal governments for a

a distinct class in

considerable time after their

Greece

soldier

and

Rome,

ject

norat first

was not a separate,

or principal occupation of

in

establishment, the trade of a

first

distinct trade,

a particular

o^^state, whatever might be

^tion by which he gained

which constituted the sole

class of citizens,

j^ery sub-

the ordinary trade or occu-

his livelihood, fonsid^redjiims^lf,

feudal all

times.

ordinar y^ occasions, as

soldier,

But as war becomes more

The

^ y

fit

likewise to exerc ise*Se trade

art of war, however, as

it is

certainly the noblest of all arts,

so in the progress of improvement the most complicated

some other

necessarily

it

among them. The with which

cated,

determines the degree of perfection to which

division

carried at

any particular time. But

gree of perfection,

Ed

I

arts,

reads

‘‘at

batim belowp4j^ 729

it is

becomes one of

state of the mechanical, as

well as of

of labour

ofT

and upon many extraordinary occasions as bound t Q"exer-

compli-

becomes

ugon

it is

necessarily connected, it is

capable of being

in order to carry

necessary that

it

it

should become the sole or

whose expence they are employed ” Repeated “

to this de-

^

all

but ver-

E^XPENSE OF DEFENCE

^59

principal occupation of a particular class of citizens, sion of labour

every other

mote

as necessary for the

improvement of

Into other arts the division of labour

art.

by

introduced

is

and the

the prudence of individuals,

who

this,

is

divi-

as of

naturally

find that they pro-

necessary to carry

the art to perfection

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 their private interest better

particular trade separate

and

distinct

from

all others.

A

private

who, in time of profound peace, and without any particular

citizen

encouragement from the public, should spend the greater part of his time in military exercises, might, self

very

tainly

much

would not promote

state only

no doubt, both improve him-

and amuse himself very well; but he

in them,

own

his

which can render

it

interest. It is the

for his interest to give

wisdom

cer-

of the

up the greater

part of his time to this peculiar occupation: and states have not

always had this wisdom, even when their circumstances had be-

come such, that the preservation they should have

A

of their existence required that

it.

shepherd has a great deal of leisure; a husbandman, in the

rude state of husbandry, has some; an artificer or manufacturer has

none at

The

all.

first

employ a great deal of the second may employ some part of

may, without any

his time in martial exercises;

loss,

As society advances the people

become unwarlike

it;

but the

loss,

and

neglect

last

cannot employ a single hour in them without some

his attention to his

them

altogether.

which the progress of

own

interest naturally leads

him

Those improvements in husbandry

arts

and manufactures necessarily

to

too,

intro-

husbandman as little leisure as the artificer. Military exercises come to be as much neglected by the inhabitants of the country as by those of the town, and the great body of the people becomes altogether unwarlike. That wealth, at the same t^e, which always follows the improvements of agriculture and manufactures, and which in reality is no more than the accumuduces, leave the

l^d produce

of those improvements, provokes the invasion of all

their neijgljibours.

J^^.'^^^Ithy

to be attacked; and unless ijationJ^of^ jpy^iopT^eJnos^^ the state takes some new measures for the public defence, the nat-

ural habits of the people render

them altogether incapable

of de-

fending themselves.

In these circumstances, there seem to be but two methods, by

which the state can make any tolerable provision for the public defence. It

may

either, first,

spite of the

by means

whole bent of the

of

a very rigorous

interest, genius

police,

and

in

and inclinations of

There are only

two

methods of providing for defence,

the wealth of nations

660 (i) to en-

the people, enforce the practice of military exercises, and oblige

force

either all the citizens of the military age, or a certain

military exercises

and ser-

.

Or

make

the

trade of

the soldier

of

may happen to carry on. by maintaining and employing a certain number

other trade or profession they

vice,

or (2^ to

number

them, to join in some measure the trade of a soldier to whatever

secondly,

may

citizens in the constant practice of military exercises, it

of

ren-

der the trade of a soldier a particular trade, separate and distinct

from

a separate

all

others.

If the state has recourse to the first of those

two expedients,

its

one

military force is said to consist in a militia; if to the second, it is in other

said to consist in a standing army.

The

practice of miltary exer-

words the the sole or principal occupation of the soldiers of

establish-

cises

ment of a

ing army, and the maintenance or

militia or

a standing army.

is

is

pay which the

is

them

state affords

the principal and ordinary fund of their subsistence.

of military exercises

a stand-

The practice

only the occasional occupation of the

sol-

and they derive the principal and ordinary fund subsistence from some other occupation. In a militia, the

diers of a militia,

of their

character of the labourer, artificer, or tradesman, predominates

over that of the soldier: in a standing army, that of the soldier pre-

dominates over every other character; and in this distinction seems to consist the essential difference between those

two

different species

of military force. Militias

were an-

Militias have been of several different kinds. In

the citizens destined for defending the state, seem to have been

ciently

only exercised

and

not regimented.

some countries

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

permanent each

officers.

citizen, as

its exercises

of his equals as he liked best;

any particular body cised,

field.

its

own proper and

long as he remained at home, seems to have prac-

tised his exercises either separately

take the

under

In the republics of ancient Greece and Rome,

of troops

and independently,

and not till

to

or with such

have been attached to

he was actually called upon to

In other countries, the militia has not only been exer-

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 militia-man

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

Fire-arms brought about the change by

which the soldiers had, each individually, the greatest

making

were of the highest consequence, and commonly determined the

dexterity in the use of their arms. Strength

and

skill

agility of

and

body

EXPENSE OF DEFENCE fate of battles.

But

this skill

and dexterity

66i

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

dexterity less

im-

portant.

separately,

own

in a particular school, under a particular master, or with his

and companions. Since the invention of fire-arms, strength and agility of body, or even extraordinary dexterity and

particular equals

skill in

the use of arms, though they are far from being of no con-

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 sequence, are, however, of less consequence.

the dexterity it,

and

supposed, which are necessary for using

skill, it is

can be well enough acquired by practising in great bodies. Regularity, .jQr der, and prompt obedience to command, are qualij

which, in modern armies, are of more importance towards de-

ties

termining the fate of battles, than the dexterity and soldiers in the use of their arms.

But the

skill of

the

and discipline

much more

so

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 en-

gaged, 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

what arose from the human

voice; there was no smoke, 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

noise but

there

was no

invisible cause of

preserve some degree of regularity and order, not only in the beginning, but through the whole progress of an ancient battle, till

and

one of the two armies was fairly defeated. But the habits of reg-

ularity, order,

and prompt obedience to command, can be acquired

only by troops which are exercised in great bodies.

A

militia,

however, in whatever manner

ciplined or exercised,

it

must always be much

may be

either dis-

inferior to

a

well-

A militia is

always,

inferior t^

disciplined

and well-exercised standing army.

a standing

a

army,

month, can never be so expert in the use of their arms, as those

being

The who

soldiers,

who

are exercised only once a week, or once

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,

“ Ed.

very

much

to their superior expertness

I reads “is acquired.”

less

expert,

the wealth of nations

662

may

in their exercise,

satisfy us that

it is,

this day, of

even at

very

considerable consequence.

The

and less well disciplined.

week

who

soldiers,

are

own

their

obey

to

and who

or once a month,

manage

bound

their officer only

own way, without being

affairs their

once a

are at all other times at liberty to in

any

re-

spect accountable to him, can never be under the same awe in his presence, can never have the same disposition to ready obedience,

with those whose whole

life

and conduct are every day directed by

him, and who every day even

rise

and go

or in the habit of ready obedience,

more what

inferior to is

ience

But

is

are those

which go to

war

under the chieftains

who

Those

best

militias

rule

m time of peace.

it

may

still

sometimes be in

management and use ready and instant obed-

exercise, or in the

modern war the habit

of

of much greater consequence than a considerable super-

iority in the

The

in

manual

called discipline,

is

a militia must always be

a standing army, than

called the

of its arms.

to bed, or at least retire to

In what

their quarters, according to his orders.

management of arms.

militias which, like the

whom

under the same chieftains peace, are

by

far the best.

Tartar or Arab militia, go to war they are accustomed to obey in

In respect for

their officers, in the habit

of ready obedience, they approach nearest to standing armies.

highland militia, when

it

served under

its

own

chieftains,

The

had some

advantage of the same kind. As the highlanders, however, were not wandering, but stationary shepherds, as they had

and were

tion,

all

a fixed habita-

not, in peaceable times,'*accustomed to follow their

in time of war they were less willhim 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

chieftain

from place to place; so

ing to follow

to detain them. ferior to

what

In point of obedience they were always much

is

reported of the Tartars and Arabs.

landers too, from their stationary

life,

spend

As

in-

the high-

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

A militia kept long

lough in the field

becomes a landing

militia of

any kind,

served for several

must be observed, however, which has successive campaigns in the field, becomes in it

every respect a standing army.

The

soldiers are every

in the use of their arms, and, being constantly

of their officers, are habituated to the

rmy.

takes place in standing armies. the

field, is

respect in

it.

of little importance.

a standing army,

under the command

same prompt obedience which

What They

after they

day exercised

they were before they took necessarily

become

in every

have passed a few campaigns

Should the war in America drag out through another cam-

EXPENSE OF DEFENCE paign,^" the

American

for that standing

militia

may become

663

in every respect

a match

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

be found, bears testimony to the

will

well-regulated standing

One

which a

army has over a militia. which we have any

distinct

of the first standing armies of

of the

Greek

cities in

standing

that of Philip of Illyrians,

Thessa-

the neighbourhood of

militia, to the exact discipline of

shows the superiority of the

Mace-

don, gradually formed his troops, which in the beginning were

probably

History

army is

Macedon. His frequent wars with the Thracians,

and some

it

irresistible superiority

account, in any well authenticated history,

lians,

ages,

all

a standing army.

When

That of

Macedon defeated the Greek militias.

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 van-

quished and subdued, after a long and violent struggle, indeed, the

and well exercised

gallant

ancient Greece;

militias of the principal republics of

and afterwards, with very

little

struggle,

the

effeminate and ill-exercised militia of the great Persian empire.

The

of the Greek republics

fall

and of the Persian empire, was the

effect of the irresistible superiority

which a standing army has over

every sort of militia. It

great revolution in the affairs of

is

the

first

mankind, of which history has preserved any

distinct or circum-

stantial account.

The

fall

and the consequent elevation of Rome,

of Carthage,

is

the second. All the varieties of the fortune of those two famous republics

From

may very

well be accounted for from the

the end of the

first

same

cause.

field,

and employed under three great generals, who succeeded one another in the command; Amilcar, his son-in-law Asdrubal, and his son Annibal;

wards

in

first in

chastising their

own

conquering the great kingdom of Spain. led

rebellious slaves, after-

subduing the revolted nations of Africa, and,

lastly, in

The army which Annibal

from Spain into Italy must necessarily,

Carthage

and Rome

to the beginning of the second Cartha-

ginian war, the armies of Carthage were continually in the

In the wars of

in those different wars,

have been gradually formed to the exact discipline of a standing

standing armies defeated militias.

The Carthaginian

standing

army

Roman militia in

Italy

army. The Romans, in the mean time, though they had not been altogether at peace, yet they

had

not, during this period, been en-

gaged in any war of very great consequence; and their military

“As

ed. I

been written

was published less

at the beginning of

than a year

after the

March, 1776,

this

must have

outbreak of the war, which lasted eight

years.

“The

Seven Years’ War, 1756-1763. Ed.

the valour appeared.”

i

reads “of which in the last

war

de-

feated the

THE WEALTH OF NATIONS

664

discipline, it is generally said,

was a good deal

The Roman

relaxed.

aimies which Annibal encountered at Trebia, Thrasymenus and Cannae, were militia opposed to a standing army. This circumstance,

it is

mine the

probable, contributed

more than any other to

The standing army which Annibal

and

Spam

deter-

fate of those battles. left

behind him in Spain, had

the like superiority over the militia which the

Romans

sent to op-

and in a few years, under the command of his brother, the younger Asdrubal, expelled them almost entirely from that country. pose

When the Roman

it,

Annibal was

militias

became a

disciplined

standing

of

army they defeated the Carthaginian

standing

army

m

Italy

ill

Annibal grew every day

less

and

less.

Asdrubal judged

and both standmg army and

neces-

it

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 surprized and

at-

tacked by another standing army, in every respect equal or su-

and was entirely defeated.

When Asdrubal had left Spam,

the great Scipio found nothing to

oppose him but a militia inferior to his own.

He

ginian Spain,

being

field, became in the progress of the war a well and well exercised standing army; and the superiority

perior to his own,

militia in

militia,

sary to lead the whole, or almost the whole of the standing

and the Cartha-

The Roman

supplied from home.

continually in the

subdued that

militia,

conquered and

and, in the course of the war, his

own

militia

became a well-disciplined and well-exercised standing army. That standing army was afterwards carried to Africa, where necessarily

it

found nothing but a militia to oppose

militia in

thage

Africa.

The

it

became necessary

it.

In order to defend Car-

to recall the standing

army

of Annibal.

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.

Thenceforward the

Roman

From the end of the second Carthaginian war till the fall of the Roman republic, the armies of Rome were in every respect standing armies.

The standing army

of

Macedon made some resistance to it cost them two great

In the height of their grandeur,

republic

their arms.

had

wars, and three great battles, to subdue that

standing armies,

which found little re-

sistance

except

from the standmg

army of Macedon

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

made but a feeble resistance to the standing armies of Rome. The militias of some barbarous nations defended themselves much better. The Scythian or Tartar militia, which Mithridates of Egypt,

drew from the countries north ''“This”

is

of the

Euxine and Caspian

probably a misprint for “his,” the reading of eds 1-3

seas,

EXPENSE OF DEFENCE were the most formidable enemies

whom^^

counter after the second Carthaginian war.

man

665

Romans had

the

to en-

The Parthian and Ger-

were always respectable, and, upon several occagained very considerable advantages over the Roman armies.

militias too

sions,

In general, however, and when the

manded, they appear

to

Roman

armies were well com-

have been very much superior; and

if

the

Romans

did not pursue the final conquest either of Parthia or Ger-

many,

was probably because they judged, that it was not worth add those two barbarous countries to an empire which was

it

while to

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.

Germans were, shepherds,

like the Scythians or Tartars,

who went

to

war under the same

The

ancient

a nation of wandering

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

Under the

In the days of their grandeur, when no enemy appeared

armies degenerated

causes.

capable of opposing them, their heavy armour was laid aside as unnecessarily burdensome, their laborious exercises were neglected as unnecessarily toilsome.

Under the Roman emperors

besides, the

standing armies of Rome, those particularly which guarded the

German and Pannonian ters,

against

erals.

whom

frontiers,

became dangerous

they used frequently to set

In order to render them

less formidable,

up

to their mas-

their

own gen-

according to some

authors, Dioclesian, according to others, Constantine,

first

with-

drew them from the frontier, where they had always before been encamped in great bodies, generally of two or three legions each, and

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 redispersed

moved from ficers,

became themselves tradesmen,

those quarters,

and manufacturers. The

civil

came

arti-

to predominate over the

military character; and the standing armies of

Rome

gradually de-

generated into a corrupt, neglected, and undisciplined militia, incapable of resisting the attack of the German and Scythian militias,

which soon afterwards invaded the western empire. It was only by hiring the militia of some of those nations to oppose to that of others, that the emperors

were for some time able to defend them-

'®Ed

I

reads

“which”

emperors these

into

mihtias

XHE WEALTH OF NATIONS

666 selves.

The

fall of

is

the third great revolution

mankind, of which ancient history has preserved

in the affairs of

any

the western empire

by

distinct or circumstantial account. It was brought about

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 husbandmen, artificers, and

manufacturers.

The

victories

which have been gained by

militias

have generally been, not over standing armies, but over other militias in exercise

and

discipline inferior to themselves.

Such were the

victories which the Greek militia gained over that of the Persian

empire; and such too were those which in later times the Swiss militia gained over that of the Austrians

The

Militias

were gradually super-

seded by standing

military force of the

German and Scythian

upon the

established themselves

and Burgundians.

tinued for some time to be of the same kind in their

ments, as

it

had been

in their original country. It

new

was a

settle-

militia of

shepherds and husbandmen, which, in time of war, took the

armies in

Western Europe.

under the command of the same chieftains to

obey in peace.

As

arts

and

and the great

body of the people had less time to spare for military Both the discipline and the exercise of the feudal militia,

exercises.

therefore,

went gradually to ruin, and standing armies were gradually it.

tol-

and industry advanced, however,

the authority of the chieftains gradually decayed,

duced to supply the place of

field

whom it was accustomed

It was, therefore, tolerably well exercised,

erably well disciplined.

who

nations

ruins of the western empire, con-

When

the expedient of

intro-

a standing

army, besides, had once been adopted by one civilized nation,

became necessary that

all its

it

neighbours should follow the example.

They soon found that their safety depended upon and that their own militia was altogether incapable

their doing so,

of resisting the

attack of such an army.

A standing

army

does not lose its

valour in time of peace,

The

soldiers of

a standing army, though they may never have

seen an enemy, yet have frequently appeared to possess all the

courage of veteran troops, and the very field to

have been

fit

moment

that they took the

to face the hardiest and most experienced vet-

In 1756, when the Russian army marched into Poland, the valour of the Russian soldiers did not appear inferior to that of erans.

the Prussians, at that time supposed to be the hardiest and most

experienced veterans in Europe.

The Russian empire, however, had

enjoyed a profound peace for near twenty years before, and could at that time have very few soldiers

who had

ever seen an enemy.

When

the Spanish war broke out in 1739, England had enjoyed a profound peace for about eight and twenty years. The valour of

her soldiers, however, far from being corrupted

by

that long peace,

EXPENSE OE DEFENCE was never more distinguished than the

attempt upon Carthagena,

unfortunate exploit of that unfortunate war. In a long

first

may

peace the generals, perhaps,

seem never

When

sometimes forget their

army has been kept

where a well-regulated standing diers

in the

667

but,

skill;

up, the sol-

to forget their valour.

a civilized nation depends for

its

defence upon a militia,

it

at all times exposed to be conquered

by any barbarous nation which happens to be in its neighbourhood. The frequent conquests of all the civilized countries in Asia by the Tartars, sufficiently demis

and is the only safe-

guard of a civilised

nation,

onstrates^® the natural superiority, which the militia of a barbarous,

has over that of a

army

is

civilized nation.

A

well-regulated standing

superior to every militia. Such an army, as

maintained by an opulent and civilized nation, so

it

it

can best be

can alone de-

fend such a nation against the invasion of a poor and barbarous

neighbour. It

is

only

by means

of

a standing army,

therefore, that

any country can be perpetuated, or even preany considerable time. only by means of a well-regulated standing army that a

the civilization of

served for

As

it is

country can be defended; so

civilized

it is

only by means of

a barbarous country can be suddenly and tolerably standing

army

establishes, with

an

it,

that

A

civilized.

irresistible force, the

law

of the

sovereign through the remotest provinces of the empire, and maintains

some degree

of regular

not otherwise admit of any.

also the

only

means

of

civilising

a barbarous one.

government in countries which could

Whoever examines, with

attention, the

improvements which Peter the Great introduced into the Russian empire, will find that they almost aU resolve themselves into the

establishment of a well-regulated standing army. It

is

the instru-

ment which executes and maintains all his other regulations. That degree of order and internal peace, which that empire has ever since enjoyed,

Men army

altogether owing to the influence of that army.

is

of republican principles

have been jealous of a standing

as dangerous to liberty. It certainly

is so,

wherever the

in-

not unfavour-

It is

able to

terest of the general

sarily connected

and that

of the principal officers are not neces-

with the support of the constitution of the

state.

The standing army of Caesar destroyed the Roman republic. The army of Cromwel turned the long parliament out of

standing doors.^®

But where the sovereign

principal nobility

and gentry

the army; where the military force those

who have

is

himself the general, and the

of the country the chief officers of is

placed under the

command of

the greatest interest in the support of the civil au-

Almost certainly a misprint for “demonstrate,” the reading of ed. i. ^Lectures, p. 29. “Cromwel,” which is Hume^s spelling, appears first in ed. 4 here, but above, p. 563, it is so spelt in all editions.

liberty.

THE WEALTH OF NATIONS

668

have themselves the greatest share of that

thority, because they

authority,

a standing army can never be dangerous to

the contrary,

it

security which

may it

in

liberty.

On

The

cases be favourable to liberty

some

gives to the sovereign renders unnecessary that

troublesome jealousy, which, in some modern republics, seems to

watch over the minutest actions, and disturb the peace of every citizen.

be at

to

Where

all

times ready to

the security of the magis-

the principal people of the country,

is

endangered by every popular discontent; where a small tumult

is

trate,

though supported by

capable of bringing about in a few hours a great revolution, the

whole authority of government must be employed

to suppress

and

murmur and complaint against it. To a sovereign, on contrary, who feels himself supported, not only by the natural

punish every the

aristocracy of the country, but

by a

well-regulated standing army,

the rudest, the most groundless, and the most strances can give

disturbance.

little

He can

licentious

safely

remon-

pardon or neglect

them, and his consciousness of his own superiority naturally disposes him to do so. That degree of liberty which approaches to licentiousness can be tolerated only in countries is

secured

by a well-regulated standing army.

where the sovereign

It is in

such countries

only, that the public safety does not require, that the sovereign

should be trusted with any discretionary power, for suppressing

even the impertinent wantonness of this licentious liberty. Defence thus

grows

The

first

duty of the sovereign, therefore, that of defending the

society from the violence

and

injustice of other independent socie-

grows gradually more and more expensive, as the society ad-

more ex-

ties,

pensive.

vances in civilization.

The

military force of the society, which

no expence

originally cost the sovereign

either in time of peace or

in time of war, must, in the progress of improvement, first be main-

tained Fire-arms enhance the expense,

The

by him in time

of war,

and afterwards even

great change introduced into the art of

tion of fire-arms, has enhanced

and

still

in time of peace.

war by the inven-

further both the expence of

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 musquet is a more expensive machine than a javelin or a bow and exercising

disciplining

any

particular

arrows; a cannon or a mortar than a balista or a catapulta.

powder, which

is

spent in a

modem

review,

is lost

The

irrecoverably,

and occasions a very considerable expence. The

javelins and arrows which were thrown or shot in an ancient one, could easily be picked up again, and were besides of very little value. The cannon and

the mortar are, not only

much

dearer, but

^Lectures, p. 263.

much

heavier machines

EXPENSE OF JUSTICE

669

than the balista or catapulta, and require a greater expence, not only to prepare them for the superiority of the

very great;

much more

it

modern

field,

but to carry them to

As the

has become

much more

difficult,

and consequently

expensive, to fortify a town so as to resist even for a

few weeks the attack of that superior

many

it.

artillery too, over that of the ancients is

artillery.

In modern times

different causes contribute to render the defence of the so-

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 ciety

accident, the invention of gunpowder, seems to have given occasion.

In modern war the great expence of fire-arms gives an evident

advantage to the nation which can best afford that expence; and

and so give an advan-

consequently, to an opulent and civilized, over a poor and barbar-

tage to

ous nation. In ancient times the opulent and

rich

ficult to

civilized

found

it dif-

defend themselves against the poor and barbarous nations.

In modern times the poor and barbarous find themselves against the opulent and civilized.

it difficult

The

to defend

invention of

fire-

nations,

which is favourable to civilisa-

arms, an invention which at

first

sight appears to be so pernicious,

certainly favourable both to the

is

permanency and

tion.

to the extension

of civilization.^^

Part II Of the Expence

The

second duty of the sovereign, that of protecting, as far as pos-

member of the society from the injustice or oppression every other member of it, or the duty of establishing an exact

sible,

of

of Justice

every

administration of justice requires two very different degrees of ex-

The expense of justice is

different

at differ-

ent

pence in the different periods of society.

periods.

Among

nations of hunters, as there

is

scarce

any property, or at

least

none that exceeds the value of two or three days labour; so

there

is

seldom any established magistrate or any regular adminis-

tration of justice.

Men who

have no property can injure one an-

other only in their persons or reputations. But

when one man kills,

wounds, beats, or defames another, though he to

“Hume,

History, ed. of 1773, vol.

ii.,

whom

the injury

p. 432, says the “furious engine,” ar-

“though it seemed contrived for the destruction of mankind and the overthrow of empires, has in the issue rendered battles less bloody, and has given greater stability to civil societies,” but his reasons are somewhat different from those in the text above. This part of the chapter is evidently adapted from Part iv. “Of Arms” in the Lectures, pp. 260-264, and the dissertation on the rise, progress and fall of militarism in Part i., pp. 26-34. tillery,

Civil gov-

ernment

was first rendered necessary by the introduc-

THE WEALTH OF NATIONS

670 tion of

property

is

done

suffers,

he

who

does

it

the injury

him who

often equal to the loss of

is

benefit. It is otherwise

who does

benefit of the person

The

with the injuries to property.

no

receives

suffers

Envy,

it.

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 passions

;

and the very worst men are so only

gratification too,

how

acters, is not attended

agreeable soever

As

occasionally.

may be

it

of those their

to certain char-

with any real or permanent advantage,

it is

men commonly restrained by prudential conMen may live together in society with some tolerable

in the greater part of

siderations.

degree of security, though there

them from the

is

no

civil

magistrate to protect

But avarice and ambition

injustice of those passions.

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

universal in their influence. is

is

hundred poor, and the

digence of the many. tion of the poor,

by envy,

who

to invade

The

affluence of the

must be at

least

few supposes the

in-

affluence of the rich excites the indigna-

are often both driven

his possessions. It is

the civil magistrate that the

by want, and prompted

only under the shelter of

owner of that valuable property, which

many

acquired by the labour of

cessive generations, can sleep

times surrounded

and much more

great property, there

great inequality. For one very rich man, there

five

is

their operation,

Wherever there

years, or perhaps of

a single night in security.

many sucHe is at all

by unknown enemies, whom, though he never

provoked, he can never appease, and from whose injustice he can

be protected only by the powerful arm of the tinually held

up

to chastise

it.

The

civil

magistrate con-

acquisition of valuable

and

extensive property, therefore, necessarily requires the establish-

ment

of civil government.

Where

there

is

no property, or at

none that exceeds the value of two or three days labour,

ernment Property strength-

Civil

is

civil

least

gov-

not so necessary.

government supposed a certain subordination. But as the

necessity of civil government gradually grows

up with

the acquisi-

ens the causes of

tion of valuable property, so the principal causes

subordi-

introduce subordination gradually grow

nation.

valuable property.

There are four causes of

subordination,

The

which naturally

up with the growth

of that

causes or circumstances which naturally introduce subordin-

ation, or

which naturally, and antecedent to any

civil institution,

some men some superiority over the greater part brethren, seem to be four in number. give

^ Ed

I

reads “or.”

of theit

EXPENSE OF JUSTICE The

of those causes or circumstances

first

is

the superiority of

(i) supe>

personal qualifications, of strength, beauty, and agility of body; of

wisdom, and virtue, of prudence,

and moderation

justice, fortitude,

qualifica-

mind. The qualifications of the body, unless supported by those of the mind, can give little authority in any period of society. He is of

a very strong man, who, by mere strength of body, can force two

weak ones

obey him. The qualifications of the mind can alone

to

give very great authority.

They

are,

however, invisible qualities;

always disputable, and generally disputed. barous or civilized, has ever found of precedency of visible qualities;

it

No society, whether bar-

convenient to settle the rules

rank and subordination, according to those

but according to something that

in-

more plain and

is

palpable.

The second age. An

of those causes or circumstances is the superiority of

old man, provided his age

suspicion of dotage,

man ers,

is

is

not so far advanced as to give

every where more respected than

of equal rank, fortune,

and

Among

abilities.

Among

is

the sole

them, father

appellation of a superior; brother, of an equal;

In the most opulent and

a young

nations of hunt-

such as the native tribes of North America, age

foundation of rank and precedency.

inferior.

(2) supe-

and

civilized nations,

the

is

son, of

an

age regulates

rank among those who are in every other respect equ^l, and among whom, therefore, there is nothing else to regulate it. Among brothers and among sisters, the eldest always take place; and in the succession of the paternal estate every thing

which cannot be divided,

but must go entire to one person, such as a

most cases given to the

eldest.

Age

is

title of

honour,

is

in

a plain and palpable quality

which admits of no dispute.

The

third of those causes or circumstances

fortune.

The

is

the superiority of

authority of riches, however, though great in every

age of society,

is

perhaps greatest in the rudest age of society which

admits of any considerable inequality of fortune. the increase of whose herds and flocks

A

is sufficient

Tartar

chief,

to maintain

thousand men, cannot well employ that increase in any other than in maintaining a thousand men.

The rude

a

way

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

thousand

him

is

over and above his

men whom he

own consumption. The

thus maintains, depending entirely upon

for their subsistence,

must both obey

submit to his jurisdiction in peace.

He

is

his orders in war,

necessarily both their

general and their judge, and his chieftainship of the superiority of his fortune.

and

is

the necessary effect

In an opulent and civilized so-

(3) supe-

THE WEALTH OF NATIONS

672

a man may possess a much greater fortune, and yet not be able command a dozen of people. Though the produce of his estate may be sufficient to maintain, and may perhaps actually maintain, ciety

to

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 exchange for an equivalent, there is scarce any body

who

upon him, and

considers himself as entirely dependent

authority extends only over a few menial servants. of fortune, however,

That

society.

is

authority

very great even in an opulent and civilized

much

it is

The

his

greater than that, either of age, or of per-

sonal qualities, has been the constant complaint of every period of society which admitted of

The

first

any considerable inequality

period of society, that of hunters, admits of no such in-

equality. Universal poverty establishes there

and the

universal equality,

superiority, either of age, or of personal qualities, are the

but the sole foundations of authority and subordination.

feeble,

There

is

therefore

period of society.

little

or

no authority or subordination

The second

in this

period of society, that of shepherds,

admits of very great inequalities of fortune, and there in

of fortune.

is

no period

which the superiority of fortune gives so great authority to those possess it. There is no period accordingly in which authority

who

and subordination are more perfectly established. The authority of an Arabian scherif is very great; that of a Tartar khan altogether despotical.

and

(4)

superior-

The

fourth of those causes or circumstances

birth. Superiority of birth

ity of

birth.

tune in

ffie

is

the superiority of

supposes an ancient superiority of for-

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 every where the antiquity either of wealth, or of that greatness

which

upon wealth, or accompanied with where ers,

is

it.

commonly

either

Upstart greatness

founded is

every

than ancient greatness.^® The hatred of usurpthe love of the family of an ancient monarch, are, in a great less respected

measure, founded upon the contempt which the former, and

upon

men

naturally have for

their veneration for the latter.

As a

military

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 famofficer

ily to

whom

they and their ancestors have always submitted; but

are fired with indignation

when another

Misprinted “their” in eds. 4 and

5.

family, in

whom

Lectures, p. 10.

they had

EXPENSE OF JUSTICE

673

never acknowledged any such superiority, assumes

a dominion over

them.

The

distinction of birth, being subsequent to the inequality of

fortune, can

have no place

in nations of hunters,

among whom

man

of equal merit

has the misfortune to be the son of a fool or a coward. ence, however, will not be very great; lieve,

a great family in the world whose

iived from the inheritance of

The

and there never was, illustration

wisdom and

was

all

who

gers to every sort of luxury,

nations

not

present

among hunters,

I be-

entirely de-

virtue.

and great wealth can scarce ever be

among them by improvident accordingly who abound more in

of birth is

differ-

The distinction of birth not only may, but always does take place among nations of shepherds. Such nations are always strandissipated

dis-

tinction

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

The

profusion. There are no families revered

but

al-

ways among shep-

herds

and hon-

oured on account of their descent from a long race of great and illustrious ancestors;

wealth

is

because there are no nations

likely to continue longer in the

same

among whom

families.

Birth and fortune are evidently the two circumstances which principally set one

man

above another. They are the two great

Distinctions of

birth

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

The

full force.

great shepherd or herdsman, respected on

account of his great wealth, and of the great number of those

depend upon him

for subsistence,

who

and revered on account of the

nobleness of his birth, and of the immemorial antiquity of his illustrious family,

has a natural authority over

herds or herdsmen of his horde or clan. force of

a greater number

all

the inferior shep-

He can command the united

of people than

any

of them.

His military

is greater than that of any of them. In time of war they are naturally disposed to muster themselves under his banthem of ner, ratheij 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

power all

may have

injured another to compensate the wrong.

son, therefore, to

whom all

selves naturally look ally

up

those

who

is

the per-

weak to defend themis to him that they natur-

are too

for protection. It

complain of the injuries which they imagine have been done to

them, and his interposition in such cases to,

He

even by the person complained

of,

is

more

easily submitted

than that of any other person

and

fortune are both

most powerful

among shepherds.

the wealth of NATIONS

6/4

would

be.

His birth and fortune thus naturally procure him some

sort of judicial authority.

Among

It

is

in the age of shepherds, in the second period of society, that

shep-

herds inequality

of fortune arises

first

begins to take place, and introduces

and subordination which could thereby introduces some degree of that

degree of authority

not possibly exist before. It

and civil

intro-

duces

the inequality of fortune

among men a

civil

government,

government which

ervation:

and

is

indispensably necessary for

seems to do

it

this naturally,

of the consideration of that necessity. cessity

The

its

own

pres-

and even independent

consideration of that ne-

comes no doubt afterwards to contribute very much

maintain and secure that authority and subordination.

The

to

rich, in

particular, are necessarily interested to support that order of things,

which can alone secure them in the possession of their own advan-

Men

tages.

combine to defend those of superior

of inferior wealth

wealth in the possession of their property, in order that perior wealth

may combine

theirs. All the inferior

to defend

them

shepherds and herdsmen

own herds and

men

of su-

in the possession of feel that

the secu-

depends upon the security of those of the great shepherd or herdsman; that the maintenance of rity of their

their lesser authority

and that upon

flocks

depends upon that of

his greater authority,

him depends his power of subordination to them. They constitute a

their subordination to

keeping their inferiors in sort of little nobility,

who

feel

themselves interested to defend the

property and to support the authority of their in order that

he

own

little

sovereign,

may

be able to defend their property and to support their authority. Civil government, so far as it is instituted for the security of property,

is in reality

instituted for the defence of

the rich against the poor, or of those against those but the judicial

authority

was long

The

who have none

at

all.^®

such a sovereign, however, far from being a cause of expence, was for a long time a source of revenue to judicial authority of

him. The persons

pay

who

applied to

him

and a present never

for justice

a source

ing to

of reve-

After the authority of the sovereign too

nue

who have some property

for

it,

were always

will-

accompany a petition. was thoroughly established,

failed to

rather

the person found guilty, over and above the satisfaction which he

than ex-

was obliged to make

pense,

to the party, was likewise forced to pay an amercement to the sovereign. He had given trouble, he had disturb-

he had broke the peace of his lord the king, and for those offences an amercement was thought due. In the Tartar governments ed,

^Lectures, p. 15 “Till there be property there can be no government, the very end of which is to secure wealth and to defend the rich from the poor” Cp Locke, Civil Government, § 94, “government has no other end but the ” preservation of property

EXPENSE OF JUSTICE of Asia, in the

675

governments of Europe which were founded by the

German and Scythian

who

nations

overturned the

Roman

the administration of justice

was a considerable source

both to the sovereign, and to

all

cised

under him any particular

Originally both the sovereign cise this jurisdiction in their

sally

found

it

the lesser chiefs or lords

who

jurisdiction, either over

some par-

some particular

ticular tribe or clan, or over

and the

own

territory or district.

inferior chiefs used to exer-

it

was

to

still

some

substitute, bailiff, or

obliged to account to his

principal or constituent for the profits of the jurisdiction.

cuit in the

exer-

persons. Afterwards they univer-

convenient to delegate

judge. This substitute, however,

reads the

empire,

of revenue,

Whoever

instructions which were given to the judges of the cir-

time of Henry IL 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 principal advantages

seems to have been one of the

which he proposed to obtain by the adminis-

tration 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,

large present in his hand, tice;

while he,

something

who

was likely

applied for

less. Justice

that this present might

who

applied for justice with a

to get

something more than jus-

which Produced abuses,

with a small one, was likely to get

it

too might frequently be delayed, in order

be repeated. The amercement, besides,

of

the person complained of, might frequently suggest a very strong

him in the wrong, even when he had not really That such abuses were far from being uncommon, the an-

reason for finding

been

so.

cient history of every country in

Europe bears witness.

When the sovereign or chief exercised his judicial authority in his own person, how much soever he might abuse any

it, it

must have been

whether thesover-

redress; because there could seldom be

excised

him to account. When he exercised it by a bailiff, indeed, redress might sometimes be had. If it was for his own benefit only, that the bailiff had been guilty of any act of

the judi-

scarce possible to get

any body powerful enough to

call

injustice, the sovereign himself

might not always be unwilling to

punish him, or to oblige him to repair the wrong. But the benefit of his sovereign,

person

if it

was in order to

who appointed him and who might

make

if it

was

for

court to the

prefer him, that he

had

^ They are to be found in Tyrrell’s History of England General History of England, both Ecclesiastical and Ctvil, by James Tyrrell, vol. ii 1700, pp 576-579 The king is Richard I not Henry II ,

,

thori^ty in

person or

by

the wealth of nations

676

committed any act

of oppression, redress

sions be as impossible as

In

all

if

would upon most occa^

the sovereign had committed

barbarous governments, accordingly, in

all

it

himself.

those ancient gov-

ernments of Europe in particular, which were founded upon the ruins of the

Roman

empire, the administration of justice appears

have been extremely corrupt; far from being and impartial even under the best monarchs, and alto-

for a long time to

quite equal

gether profligate under the worst. These abuses

could not

Among nations

of shepherds,

the greatest shepherd or herdsman tained in the same

died so

increase of his

the

of the horde or clan, he

is

is

only

main-

manner as any of his vassals or subjects, by the own herds or flocks. Among those nations of husbandmen who are but just come out of the shepherd state, and who

be remelong as

where the sovereign or chief

much advanced beyond that

such as the Greek tribes

sovereign

are not

depended only on

appear to have been about the time of the Trojan war, and our

land re-

German and Scythian

ancestors

state;

when they

venue and court

manner, only the greatest landlord of the country, and

fees,

upon the

first settled

ruins of the western empire; the sovereign or chief

is,

same

in the is

maintain-

same manner as any other landlord, by a revenue derived own private estate, or from what, in modern Europe, was

ed, in the

from his

called the

demesne of the crown. His

sions, contribute

protect

subjects,

upon ordinary occa-

nothing to his support, except when, in order to

them from the oppression

of

some

of their fellow-subjects,

they stand in need of his authority.^® The presents which they

him upon such

make

occasions, constitute the whole ordinary revenue, the

whole of the emoluments which, except perhaps upon some very extraordinary emergencies, he derives from his dominion over them.

When Agamemnon,

in

Homer,

offers to Achilles for his friendship

the sovereignty of seven Greek

cities,

mentions as likely to be derived from

the sole advantage which he

it,

was, that the people would

honour him with presents.^® As long as such presents, as long as the

may be

emoluments of

justice, or

stituted in this

manner the whole ordinary revenue which the sover-

what

eign derived from his sovereignty,

it

called the fees of court, con-

could not well be expected,

could not even decently be proposed, that he should give them altogether. It might,

and

it

frequently was proposed, that he should

regulate and ascertain them.

and

ascertained,

how

it

up

But

to hinder

had been so regulated a person who was all-powerful from after they

extending them beyond those regulations, was

still

very

difficult,

Ed. I reads ^‘except when they stand in need of the interposition of his authority in order to protect them from the oppression of some of their fellow subjects.”

^ Iliad, tioned.

ix.,

149-156, but the presents are not the “sole advantage”

men-

EXPENSE OF JUSTICE

677

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 ad-

mitted of any effectual remedy.

But when from

different causes, chiefly

from the continually

in-

creasing expence of defending the nation against the invasion of

but when taxes be-

came ne-

other nations, the private estate of the sovereign had become alto-

cessary,

gether insufficient for defraying the expence of the sovereignty; and

the

when

had become necessary that the people should,

it

security, contribute towards this it

for their

own

expence by taxes of different kinds,

seems to have been very commonly stipulated, that no present for

the administration of justice should, under

ed either

the sovereign, or

Those

judges. easily

by

presents,

it

by

any pretence, be accept-

his bailiffs

and

substitutes, the

people stipulated

that no presents

should be taken by judges.

seems to have been supposed, could more

be abolished altogether, than

effectually regulated

tained. Fixed salaries were appointed to the judges,

and

ascer-

which were sup-

posed to compensate to them the loss of whatever might have been their share of the ancient

emoluments of

justice; as the taxes

than compensated to the sovereign the loss of

his. Justice

more

was then

said to be administered gratis. Justice, however, never

was

in reality administered gratis in

any by

country. Lawyers and attornies, at least, must always be paid

Justice

is

never adminis-

the parties; and, still

if

they were not, they would perform their duty

worse than they actually perform

it.

The

fees annually

paid to

tered gratis.

much greater The circumstance of those salaries being paid by the crown, can no-where much diminish the necessary expence of a law-suit. But it was not so much to diminish

lawyers and attornies amount, in every court, to a

sum than

the salaries of the judges.

the expence, as to prevent the corruption of justice, that the judges

were prohibited from receiving any present or fee from the

The

judge

office of

willing to accept of

ments.

The

it,

is

in itself so very honourable, that

parties.

men

are

though accompanied with very small emolu-

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 gen-

The

sala-

ries of

judges are a small

part of the ex-

pense of

The

tlemen.

salaries of all the different judges,

high and low, to-

gether with the whole expence of the administration and execution of justice, even

makes,

in

any

where

it is

not

managed with very good ceconomy,

civilized country,

civilised

government,

but a very inconsiderable part of

the whole expence of government.

be defrayed by the

and might be de-

fees of court; and, without exposing the administration of justice to

frayed by

The whole expence any

real

of justice too

might

easily

hazard of corruption, the public revenue might thus be en-

fees of

court.

the wealth of nations

67S

from a

tirely discharged

certain, though, perhaps,

but a small

in-

cumbrance. 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 ereign respect

and

it.

ascertained,

it

Where

might not always be able to make the sovthe fees of court are precisely regulated

where they are paid

all at once,

at a certain period

of every process, into the hands of a cashier or receiver, to be

him

distributed in certain

judges after the process

is

known

proportions

decided,

and not

among

till it is

by

the different

decided, there

seems to be no more danger of corruption than where such fees are prohibited altogether. Those fees, without occasioning any considerable increase in the expence of a law-suit, might be rendered fully sufficient for defraying the whole expence of justice. By 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 de-

In courts which consisted of a considerable number of 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 ciding

it.

judges,

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 Toulouse, in rank and dignity the second parliament of the kingdom, amounts only to a hundred and fifty livres, about six pounds eleven shillings sterling a year. About seven years ago that sum was in the same place the ordinary yearly wages of a common footman. The distribution of those Epices too is according to the diligence of the judges. A diligent judge gains a comfortable, though moderate, revenue by his office: An idle one gets little more than his salary. Those parliaments are perhaps, in many respects, not very convenient courts of justice; but they have never been accused; they seem never even to have been suspected of corruption. their

The extraordinary

accent here

and seven

lines

lower

down

appears

first

in

ed. 2.

was in Toulouse from February or March, 1764, to August, —"•Smith ^Rae, Life of Adam Smithy pp. 174, 175, 188.

1765.

EXPENSE OE JUSTICE The

679

seem originally to have been the principal sup-

fees of court

port of the different courts of justice in England.

Each court en-

deavoured to draw to

could,

upon that account,

itself

as

much

business as

it

many

willing to take cognizance of

were not originally intended to

under

fall

courts

were

orig-

and was,

inally

which

main-

suits

its jurisdiction.

The English

The

by and

tained

court

fees,

of king’s bench, instituted for the trial of criminal causes only, took

this led to

cognizance of

their en-

civil suits;

ant, in not doing

the plaintiff pretending that the defend-

croach-

him

justice,

had been

misdemeanor. The court of exchequer, instituted the king’s revenue, and for enforcing the

debts; the plaintiff alleging that he could not

it

came, in

fore

many

ments.

all

of such debts

other contract

pay the

pay him. In consequence

cases, to

trespass or

for the levying of

payment

only as were due to the king, took cognizance of

the defendant would not

some

guilty of

king, because

of such fictions

depend altogether upon the parties be-

what court they would chuse

to

have

their cause tried;

and

each court endeavoured, by superior dispatch and impartiality, to

draw to

itself

as

many

causes as

it

constitution of the courts of justice in

nally in a great measure, formed

by

The

could.

present admirable

England was, perhaps,

this emulation,

origi-

which anciently

took place between their respective judges; each judge endeavouring to give, in his

own

court, the speediest

and most

effectual

rem-

edy, 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,

to enforce the specific performance of agreements. of contract consisted in the non-pa3mient of

first

took upon

When

money, the damage

way than by

sustained could be compensated in no other

it

the breach

ordering

pa3nnent, 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

him of his lease, the damages which he recovered were by no means equivalent to the possession of the land. Such causes, therefore, for some time, went all to the

his lord for having unjustly outed

court of chancery, to the no small loss of the courts of law. It was

draw back such causes to themselves that the courts of law are said to have invented the artificial and fictitious writ of ejectment, to

the most effectual remedy for an unjust outer or dispossession of land.®^

A stamp-duty upon the law proceedings of each particular

court,

and applied towards the maintenance of belonging to it, might, in the same officers the judges and other to

be levied by that

court,

manner, afford a revenue

sufficient for defraying the

Lectures, p, 49.

Above,

p. 368.

expence of the

Courts might be maintained by

a stamp

XHE WEALTH OF NATIONS

bbo duty on proceedings before them, but this

would

administration of justice, without bringing any burden upon the general revenue of the society.

The judges indeed

might, in this

case, be under the temptation of multiplying unnecessarily the pro-

upon every cause,

ceedings

much

in order to increase, as

as possible,

mod-

tempt

the produce of such a stamp-duty. It has been the custom in

them to

ern Europe to regulate, upon most occasions, the payment of the

multiply

attornies

and

number

clerks of court, according to the

of pages

such proceedings.

which they had occasion to write; the court, however, requiring that each page should contain so

words. In

many lines, and each

have contrived to multiply words beyond ruption of the law language

Europe, in the

Another

way of

line so

order to increase their payment, the attornies all

many

and clerks

necessity, to the cor-

of, I believe, every court of justice in

A like temptation might perhaps occasion a like corruption

form of law proceedings.

But whether the administration of defray

its

own

justice

be so contrived as to

expence, or whether the judges be maintained

by

securing

independence would be to

endow

the courts

with a revenue

from property.

fixed salaries paid to

them from some other fund,

it

does not seem

necessary that the person or persons entrusted with the executive

power should be charged with the management

of that fund, or

That fund might arise from 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 with the payment of those

salaries.

rent of landed estates, the

to the court which

was to be maintained by

it.

A

part,

though

in-

deed but a small part, of the salary of the judges of the court of session in Scotland, arises

from the

interest of

a sum of money. The

necessary instability of such a fund seems, however, to render

it

an

improper one for the maintenance of an institution which ought to last for ever.

The separation of the judicial

from

The

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 admnistration

became so laborious and so complicated a duty as to

the execu-

of justice

tive

quire the undivided attention of the persons to

power is due to the

trusted.

The person

whom

it

entrusted with the executive power, not having

increase

leisure to attend to the decision of private causes himself,

of execu-

was appointed

tive business.

Roman

re-

was en-

to decide

a deputy

them in his stead. In the progress of the was too much occupied with the poli-

greatness, the consul

tical affairs of

A prsetor,

the state, to attend to the administration of justice.

therefore,

was appointed to administer

it

in his stead.

In

the progress of the European monarchies which were founded upon the ruins of the Roman empire, the sovereigns and the great lords

EXPENSE OP PUBLIC WORKS came universally

681

to consider the administration of justice as

both too laborious and too ignoble for them to execute

fice,

own persons. They universally, therefore, discharged it by appointing a deputy, bailiff, or judge.

When

the judicial

it is

possible that justice should not frequently be sacrificed to,

vulgarly called, politics.

it

scarce

what

cial

entrusted with the great in-

necessary to sacrifice to those interests the rights of a

private man. But

upon the impartial administration of

justice de-

pends the liberty of every individual, the sense which he has of his

own

security.

In order to make every individual

fectly secure in the possession of every right

should be not only separate

but independent of the

executive

power. feel himself per-

which belongs to him,

not only necessary that the judicial should be separated from

it is

the executive power, but that

it

should be rendered as

much as

pos-

independent of that power. The judge should not be liable to

sible

be removed from his

The

regular

office

payment

good-will, or even

according to the caprice of that power.

of his salary should not

Of the Expence

The

third

of erecting

and

depend upon the

upon the good oeconomy of that power.

Part

lic

The judi-

is

may, even without any corrupt views, sometimes

terests of the state

imagine

The persons

of-

themselves of

united to the executive power,

is

an

in their

last

of public

III

Works and

public Institutions

that

The third

and those pub-

duty of the sover-

duty of the sovereign or commonwealth

and maintaining those public

works, which, though they

may be

institutions

is

in the highest degree advan-

tageous to a great society, are, however, of such a nature, that the profit could never

number

repay the expence to any individual or small

of individuals,

and which

that any individual or small

it

therefore cannot be expected

number

of individuals should erect or

eign is

the erection

and

maintenance of those

public

maintain.

The performance

of this

duty requires too very

different

degrees of expence in the different periods of society.

After the public institutions and public works necessary for the

defence of the society, and for the administration of justice, both

works and institutions

which are useful but

which have already been mentioned, the other works and institutions of this kind are chiefly those for facilitating the commerce of

not cap-

the society, and those for promoting the instruction of the people.

in a profit

of

The

institutions for instruction are of

two kinds; those

for the edu-

able of

bringing

to individuals.

cation of the youth, and those for the instruction of people of ages.

The

consideration of the

manner

in

which the expence

those different sorts of public works and institutions

may

all

of

be most

the wealth of nations

682 These are chiefly in-

properly defrayed, will divide this third part of the present chapter into three different articles.

stitutions

for facOi-

Article I

tating

commerce and promoting

Of the public Works and

Institutions for facilitating the

instruc-

Commerce

of the Society

tion.

And,

first,

of those which are necessary for facilitating

Commerce

in general

The expense of

such institutions increases.

That

the erection and maintenance of the public works which

commerce of any country, such as good roads, bridges, navigable canals, harbours, &c. must require very different degrees facilitate the

of expence in the different periods of society,

any

proof.

is

evident without

The expence of making and maintaining the public roads

any country must evidently increase with the annual produce

of

of

the land and labour of that country, or with the quantity and 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

weight of the goods which

be proportioned to the number and tunnage of the are likely to carry goods upon

number The expense

called, of tries lic

which the collection and application are

assigned to the executive power.

The

it.

of those public

should be defrayed from that public revenue, as

frayed

from the

seem necessary that the expence

It does not

which

the extent of a harbour to the

of the shipping which are likely to take shelter in

need not be de-

genera]

it;

lighters,

it is

in

works

commonly most coun-

greater part of such pub-

works may easily be so managed, as to afford a particular rev-

own

public

enue

revenue,

any burden upon the general revenue of the society. A highway, a bridge, a navigable canal, for example, may in most cases be both made and maintained by a small toll upon the

but may be raised by toUs

and other

sufficient for defraying their

carriages which

make use

expence, without bringing

of them: a harbour,

by a moderate

port-

particular

duty upon the tunnage of the shippmg which load or unload in

charges.

The

coinage, another institution for facilitating commerce, in

countries, not only defrays its

own

expence, but affords a small rev-

enue or seignorage to the sovereign. The tion for the

post-office,

another institu-

same purpose, over and above defraying

pence, affords in almost

all

its

These two

own

ex-

countries a very considerable revenue

to the sovereign.

“ Eds.

it.

many

lines are not in eds. i and 2. See below, p. 690, note 45. 1-4 read “is”; cp. below, p. 716, note no.

COMMERCIAL INSTITUTIONS When

the carriages which pass over a highway or a bridge, and

the lighters which sail

upon a navigable

pay

canal,

tion to their weight or their tunnage, they

pay

propor-

toll in

for the

maintenance

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,

whom

must always be charged

cording to weight of car-

nages and

of those public works exactly in proportion to the wear and tear

which they occasion of them.

Tolls ac-

capacity of boats

are very equitable.

As the expence of carriage, however, is very much reduced by means of such public works, the goods, notwithstanding the toll, come to

it

in the price of the goods.

cheaper to the consumer than they could otherwise have done; their price not being so

much

raised

by

the

toll,

as

who

cheapness of the carriage. The person

lowered by the

it is

pays

finally

this tax,

by the application, more than he loses by the payHis payment is exactly in proportion to his gain. It is in

therefore, gains

ment

of

reality

up

it.

no more than a part

of that gain

in order to get the rest. It

equitable

When

method the

chaises, &c.

is

obliged to give

of raising a tax.

upon

toll

is

which he

seems impossible to imagine a more

made

carriages of luxury,

upon coaches,

post-

somewhat higher in proportion to their weight,

than upon carriages of necessary use, such as easy manner to the

relief of

the

transportation of heavy goods to

carts,

waggons, &c.

made to contribute in a very poor, by rendering cheaper the

the indolence and vanity of the rich

all

is

the different parts of the coun-

try.

When

high roads, bridges, canals, &c. are in this manner

made

and supported by the commerce which is carried on by means of them, they can be made only where that commerce requires them,

it is

is little

or no commerce, or

happens to lead to the country

villa of the in-

tendant of the province, or to that of some great lord to intendant finds

it

convenient to

make his

court.

whom the

A great bridge can-

not be thrown over a river at a place where nobody passes, or merely to embellish the view from the

windows

of a neighbouring pal-

ace: things which sometimes happen, in countries this

contri-

bute in an easy manner to the relief of

the poor.

canals,

through a desart country where there it

of luxury,

the rich

and magnificence, must be suited to what that

proper to

afford to pay.

merely because

carriages

Roads and

it is

They must be made consequently as proper to make them. A magnificent high road cannot be made

commerce can

tolls are higher on

make them. Their expence

and consequently where too, their grandeur

If the

where works

of

kind are carried on by any other revenue than that which they

themselves are capable of affording.

In several different parts of Europe the

® Ed.

I reads “tear

toll or

and wear.”

lock-duty upon a

etc., thus paid for cannot be

made except

where they are wanted.

THE WEALTH OF NATIONS

6S4 Canals are better

canal

is

obliges

in the

hands of private

persons

than of

the property of private persons, whose private interest

them to keep up the

canal. If

it is

not kept in tolerable order,

the navigation necessarily ceases altogether, and along with

whole

profit

which they can make by the

put under the management of commissioners, them, they might be

it

the

those tolls were

tolls. If

who had

themselves

less attentive to the

mainte-

commis-

no interest in

sioners.

nance of the works which produced them. The canal of Languedoc cost the king of lions of livres,

which

value of French

upwards great

France and the province upwards of thirteen mil-

of nine

work was

mark

(at twenty-eight livres the

money in

of silver, the

the end of the last century) amounted to

hundred thousand pounds

finished, the

most

likely

sterling.

method,

it

When

that

was found,

of

keeping it in constant repair was to make a present of the tolls to Riquet the engineer, who planned and conducted the work. Those constitute at present a very large estate to the different

tolls

who

branches of the family of that gentleman, great interest to keep the

work

have, therefore, a

in constant repair.

But had those

been put under the management of commissioners, who had no

tolls

such

they might perhaps have been dissipated in orna-

interest,

mental and unnecessary expences, while the most essential parts of the work were allowed to go to ruin.

But tolls on a high road cannot safely be made private

The

safety be

mitted to trustees.

made

the property of private persons.

any

A high road, though

become altogether impassable, though The proprietors of the tolls upon a high road, there-

entirely neglected, does not

a canal does. fore,

property

and must be com-

the maintenance of a high road, cannot with

tolls for

might neglect altogether the repair of the road, and yet con-

same tolls. It is proper, therefore, that the tolls for the maintenance of such work should be put under the management of commissioners or trustees. tinue to levy very nearly the

In Great Britain, the abuses which the trustees have committed The prevalence of

com-

plaints

in the

management

justly complained

money

levied

is

of those tolls,

At many

of.

have in many cases been very

turnpikes,

more than double

of

what

has been said, the

it

is

necessary for execut-

against

manner, the work which

British

ing, in the completest

turnpike

very slovenly manner, and sometimes not executed at

tolls is

tem

not remarkable.

of repairing the high roads

served,

by

tolls of this

not of very long standing.

is

fore, if it

is

often executed in

kind,

We should

it

all.

The

a

sys-

must be ob-

not wonder, there-

has not yet been brought to that degree of perfection

seems capable.^® If mean and improper persons are frequently appointed trustees; and if proper courts of inspection and account have not yet been established for controlling their conduct, of which

and

it

for reducing the tolls to

Ed.

I

what

is

barely sufficent for executing

reads “seems to be capable.”

COMMERCIAL INSTITUTIONS

685

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

supposed to exceed so much what

is

is

necessary for repairing the

roads, that the savings, which, with proper ceconomy, might be

made from

has been proposed It

that the

have been considered, even by some ministers, as a very great resource which might at some time or another be applied

ment

to the exigencies of the state. Government,

manage

ing the

it,

management

employing the

has been said, by tak-

it

of the turnpikes into its

soldiers,

who would work

own hands, and by

for a very small addition

governshould the turnpikes and

make a

to their pay, could keep the roads in good order at a

revenue

pence than

from

it

can be done by trustees,

much less exwho have no other workmen

to employ, but such as derive their whole subsistence from their

wages.

A

great revenue, half a million, perhaps,®*^

it

them.

has been pre-

tended, 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 expence of the state, in the

same manner

as the post-office does at present.

That a considerable revenue might be gained in this manner, I have no doubt, though probably not near so much, as the projec-

This plan is

open to

the fol-

tors of this plan

have supposed The plan

itself,

however, seems

liable to several very important objections. First, if the tolls

lowing objec-

which are levied at the turnpikes should ever be

tions,

considered as one of the resources for supplying the exigencies of

(i) the

the state, they would certainly be augmented as those exigencies

tolls

were supposed to therefore, they

require.

According to the policy of Great Britain,

would probably be augmented very

fast.

The

facil-

with which a great revenue could be drawn from them, would probably encourage administration to recur very frequently to this ity

Though

may, perhaps, be more than doubtful, whether half a million could by any ceconomy be saved out of the present resource.

it

can scarce be doubted but that a million might be saved out of them, if they were doubled; and perhaps two millions, if they tolls, it

were

tripled.^®

This great revenue too

appointment of a single new

migM

officer to collect

be levied without the

and receive

it.

But the

^ 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

Government, would not be sufficient to keep in repair five of the principal roads in the kingdom. This and the next note appear first in ed. 3. I have now good reasons to believe that all these conjectural sums are by

much

of

too large.

would be raised and become a great en-

cumbrance to

com-

merce,

the wealth OF NATIONS

686

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 expence

heavy goods from one part of the country

of transporting all

other would soon be so

much

increased, the

goods, consequently, would soon be so

market

to

an

for all such

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. (2) a tax

on car>

Secondly, a tax upon carriages in proportion to their weight,

though a very equal tax when applied to the sole purpose of repair-

riagesin

propor-

ing the roads,

is

a very unequal one, when applied to any other pur-

common

exigencies of the state.

When

tion to

pose, or to supply the

weight

applied to the sole purpose above mentioned, each carriage

falls

is

it is

sup-

prin-

cipally

posed to pay exactly for the wear and tear

on the

occasions of the roads.

poor,

each carriage

is

But when

it is

which that carriage

applied to any other purpose

supposed to pay for more than that wear and

and contributes to the supply of some other exigency of the

But as the turnpike

toll raises

tear,

state.

the price of goods in proportion to

by the consumers of coarse and bulky, not by those of precious and light comtheir weight,

modities.

and not to their value,

Whatever exigency of the

it is

chiefly paid

state therefore this tax might

be intended to supply, that exigency would be chiefly supplied at the expence of the poor, not of the rich; at the expence of those

who and

(3)

the roads

are least able to supply

Thirdly,

if

it,

not of those

who

are most able.

government should at any time neglect the reparation

of the high roads,

it

would be

still

more

difficult,

than

it is

at pres-

would be neglecter'

compel the proper application of any part of the turnpike

ent, to tolls.

A

large revenue might thus be levied

out any part of

enue levied

it

upon the people, with-

being applied to the only purpose to which a rev-

in this

manner ought ever

to

be applied.

If the

ness and poverty of the trustees of turnpike roads render

times

difficult

at present to oblige

them to

wealth and greatness would render

which High roads are

under the

is

it

it

meansome-

repair their wrong; their

ten times

more so

in the case

here supposed.

In France, the funds destined for the reparation of the high roads are under the immediate direction of the executive power. Those

executive

funds consist, partly in a certain number of days’ labour

in France,

the country people are in most parts of Europe obliged to give to the

which

reparation of the highways; and partly in such a portion of the

“ Ed. " Ed.

I reads here

and two

lines

lower

down

I reads “partly in the six days* labour.”

“tear

and wear.”

COMMERCIAL INSTITUTIONS

687

general revenue of the state as the king chuses to spare from his

other expences.

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

and great post roads are gen-

direction of a local or provincial magistracy, which

ate dependency tice

upon the

had no immedi-

But by the present prac-

king’s council.

both the labour of the country people, and whatever other fund

the king

may

rest en-

chuse to assign for the reparation of the high roads

any particular province or generality, are entirely under the management of the intendant; an officer who is appointed and rein

moved by

erally

good, but all the

the king’s council,

who

in constant correspondence with

receives his orders

it.

from

it,

and

tirely

neglected.

is

In the progress of despotism the

authority of the executive power gradually absorbs that of every other power in the state, and assumes to

every branch of revenue which

itself

destined for

is

the

management

of

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

even dangerous to travel on horseback, and mules

it is

are the only conveyance which can safely be trusted.

minister of

an

ostentatious court

may

The proud

frequently take pleasure in

executing a work of splendour and magnificence, such as a great

highway, which

is

applauses not only

frequently seen

his interest at court. in

by the principal

flatter his vanity,

But

to execute

nobility,

whose

but even contribute to support a great number of

little

works,

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 ex-

treme

utility, is

and paultry

a business whidi appears

m every respect too mean

to merit the attention of so great a magistrate.

Under

such an administration, therefore, such works are almost always entirely neglected.

In China, and tive

in several other

power charges

itself

ecutive in

of the navigable canals. In the instruc-

China and other

which are given to the governor of each province, those ob-

Here and in the next sentence for “the labour I

The ex-

both with the reparation of the high roads,

and with the maintenance tions

governments of Asia, the execu-

reads “the six days’ labour.”

of the country people,” ed.

parts of

XHE WEALTH OE NATIONS

688 Asia maintains both high roads and canals, it is said,

in

good

jects, it is said, are

constantly recommended to him, and the judg-

ment 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 branch of public police accordingly

instructions. This

much attended

very

is

said to be

to in all those countries, but particularly in

more the navigable

condition,

China, where the high roads, and

but this would not

is

pretended, exceed very

be the

is

known

casein

have been transmitted to Europe, have generally been drawn up by

Europe.

weak and wondering

in Europe.

sionaries. If they if

The accounts

would

canals,

it

thing of the same kind which

of those works, however,

travellers; frequently

intelligent eyes,

them had been reported by more not, perhaps, appear to

which

by stupid and lying mis-

had been examined by more

the accounts of

nesses, they

still

much every

and

faithful wit-

be so wonderful. The ac-

count which Bernier gives of some works of this kind in Indostan, falls

very

much

travellers,

short of

more disposed

too, perhaps,

what had been reported

of

them by other

to the marvellous than he was.^^ It

be in those countries, as

it is

in France,

may

where the

great roads, the great communications which are likely to be the subjects of conversation at the court

tended stan,

to,

and

and in

all

and

in the capital, are at-

the rest neglected. In China, besides, in Indo-

several other governments of Asia, the revenue of the

sovereign arises almost altogether from a land-tax or land-rent,

which

rises or falls

The

of the land.

enue,

is in

with the

rise

and

fall

of the annual produce

great interest of the sovereign, therefore, his rev-

such countries necessarily and immediately connected

with the cultivation of the land, with the greatness of

and with the value

of its produce.

But

duce both as great and as valuable as possible, procure to

it

its

produce,

in order to render that pro-

necessary to

it is

as extensive a market as possible, and consequently to

establish the freest, the easiest,

and the

least expensive

communica-

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 Eution

rope, arise chiefly

from a land-tax or land-rent. In

kingdoms of Europe, perhaps, the greater part

of it

all

the great

may ultimately

depend upon the produce of the land: But that dependency

is nei-

ther so immediate, nor so evident. In Europe, therefore, the sover*

Voyages de Frangois Bernier Amsterdam, 1710, can scarcely be said te and canals by an account of any particular works, but it does so by not mentioning them in places where it would be natural to do so if they had existed or been remarkable. See tom. ii., p. 249, “les grandes rivieres qui en ces quartiers n’ont ordinairement point de discredit the ordinary eulogy of Indian roads

ponts.”

'®Ed.

I

reads “or.”

COMMERCIAL INSTITUTIONS

^^9

eign 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 market for that produce. Though it should be true, therefore, what I apprehend is not a little doubtful, that in some parts of Asia this

department of the public police

the executive power, there

is

the present state of things,

power

in

any part

very properly managed by

is

not the least probability that, during could be tolerably managed

it

by

that

of Europe.

Even those public works which are

of such a nature that they

Public

cannot afford any revenue for maintaining themselves, but of which the conveniency

enue, under the

nearly confined to some particular place or dis-

management

by a

of a local

local or provincial rev-

and provincial administra-

than by the general revenue of the

tion,

tive

is

are always better maintained

trict,

state, of

which the execu-

power must always have the management. Were the

streets of

nature should be

^^g^by local

revenue.

London to be lighted and paved at the expence 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 expence? The expence, besides, instead of being raised by a local tax upon the inhabitants of each particular street, parish, or district in London,

would, in this case, be defrayed out of the general revenue of the state,

and would consequently be raised by a tax upon

habitants of the kingdom, of of benefit from the lighting

The

whom

all

the in-

the greater part derive no sort

and paving

of the streets of

London.

abuses which sometimes creep into the local and provincial

administration of a local and provincial revenue, ever they

may

trifling, in

how enormous

appear, are in reality, however, almost always very

comparison of those which commonly take place in the

administration and expenditure of the revenue of a great empire,

They

are, besides,

much more

easily corrected.

Under

the- local or

provincial administration of the justices of the peace in Great Britain, the six days labour

which the country people are obliged to

give to the reparation of the highways, is not always perhaps very judiciously applied, but

it is

tion of the intendants, the application is

is

not always more judicious,

frequently the most cruel and oppressive. Such

Corvees, as they are called,

ministration are

g^^pared with those of uunfetration of

scarce ever exacted with any circum-

stance of cruelty or oppression. In France, under the administra-

and the exaction

The

so-

make one

of the principal instruments

by which those officers chastise any parish or communeaute which has had the misfortune to fall under their disof tyranny

pleasure.**^ I reads “tyranny by which the intendant chastises any parish or communaute which has had the misfortune to fall under his displeasure.”

venue."

xhe wealth of nations

690

Of the Public Works and Institutions which tating particular Branches of

The

Some particular

is

are necessary for facili-

Commerce

object of the {)ublic works and institutions above mentioned

to facilitate

commerce in

general.

But

in order to facilitate

some

institu-

particular institutions are necessary,

tions are

particular branches of

required

which again require a particular and extraordinary expence.

to facili-

tate par-

Some

it,

particular branches of commerce,

which are carried on

ticular

with barbarous and uncivilized nations, require extraordinary pro-

branches

tection.

of

An

com-

merce, as

goods of the merchants

ity to the

Africa.

trade

ordinary store or counting-house could give

To

who

it is

with barbarous

that the place where they are deposited, should be, in

nations

ure, fortified.

requires

been supposed to render a

forts,

and

trade

secur-

trade to the western coast of

defend them from the barbarous natives,

The

little

necessary

some meas-

disorders in the government of Indostan have like precaution necessary

that mild and gentle people;

and

it

even among

was under pretence

of securing

with

their persons and property from violence, that both the English and

other na-

French East India Companies were allowed to erect the

tions re-

quires

which they possessed in that country.

Among

first forts

other nations, whose

ambassa-

vigorous government will suffer no strangers to possess any forti-

dors.

fied place within their territory,

it

may

be necessary to maintain

who may both decide, according to their own customs, the differences arising among his own countrymen; and, in their disputes with the natives, may, by means some ambassador,

minister, or consul,

of his public character, interfere with

them a more powerful private

man. The

more authority, and afford

protection, than they could expect from

interests of

any

commerce have frequently made

it

necessary to maintain ministers in foreign countries, where the purposes, either of

commerce

ment

of

war or

of the

alliance,

would not have required any. The

Turkey Company

first

occasioned the establish-

an ordinary ambassador at Constantinople.^® The

first

English embassies to Russia arose altogether from commercial interests.^'^

The

constant interference which those interests neces-

sarily occasioned

between the subjects of the different states of Eu-

rope, has probably introduced the custom of keeping, in all neigh-

bouring 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

This section (ending on p. 716) appears

and

first

in Additions

first

and Corrections

ed. 3.

Anderson, Commerce,

a.d. 1606.

" lUd.,

a.d. 1620,

and

cp. a.d. 1623.

PARTICULAR BRANCHES OF COMMERCE began to extend

and when they It

the greater part of the nations of Europe,

itself to

first

691

began to attend to

its interests.

seems not unreasonable, that the extraordinary expence, which

may

the protection of any particular branch of commerce

occa-

should be defrayed by a moderate tax upon that particular

sion,

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

ried on.

The

booters,

is

with which

car-

it is

Branches of

com-

merce which require extraordi-

nary expense for their pro-

tection

protection of trade in general, from pirates

and

free-

said to have given occasion to the first institution of the

duties of customs. But,

if it

was thought reasonable

to lay a gen-

may reasonably bear a particular

upon

eral tax

trade, in order to defray the expence of protecting

trade in general,

upon a

lar tax

it

tax.

should seem equally reasonable to lay a particu-

particular branch of trade, in order to defray the

extraordinary expence 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 ac-

The

count, a necessary part of the duty of the executive power.

and application

lection

have always been ticular

left to that

branch of trade

col-

of the general duties of customs, therefore,

is

power. But the protection of any par-

a part of the general protection of trade;

a part, therefore, of the duty of that power; and

nations always

if

The proceeds of

such taxes should

be at the disposal

of the

executive,

but

have

acted consistently, the particular duties levied for the purposes of

often

such particular protection, should always have been

been

its

disposal.

But

in this respect, as well as in

many

left

equally to

others, nations

given to

com-

have not always acted consistently; and in the greater part of the

panies of

commercial states of Europe, particular companies of merchants

mer-

have had the address to persuade the

legislature to entrust to

them

chants,

the performance of this part of the duty of the sovereign, together

with

the powers which are necessarily connected with

all

it.

These companies, though they may, perhaps, have been useful for the first introduction of

some branches

of

commerce, by making,

which have al-

ways

own

at their

think either

it

expence, an experiment which the state might not

prudent to make, have in the long-run proved, universally,

burdensome

or useless,

and have

either

mismanaged or con-

upon a

joint stock,

obliged to admit any person, properly qualified, certain fine,

risk,

but are

upon paying a

and agreeing to submit to the regulations of the com-

member

long run

some or

those companies do not trade

pany, each

in the

burden-

fined the trade.

When

proved

trading

upon

his

own

they are called regulated companies.

stock,

When

and

own upon a

at his

they trade

useless.

They

are

either

regulated or joint

stock

the wealth of nations

692

companies.

member

joint stock, each

sharing in the

common

profit or loss in

proportion to his share in this stock, they are called joint stock companies.^® Such companies, whether regulated or joint stock,

sometimes have, and sometimes have not, exclusive Regulat-

ed companies

priviliges.

Regulated companies resemble, in every respect, the corporations of trades, so

common in

are like

ent countries of Europe; and

corpora-

the same kind.

the cities and towns of

all

the differ-

are a sort of enlarged monopolies of

As no inhabitant

of a

town can exercise an incorpo-

tions of

trades

rated trade, without

and act

so in most cases

like

them,

first

obtaining his freedom in the corporation,

no subject of the

state can lawfully carry

branch of foreign trade, for which a regulated without

lished,

monopoly are

more to

less strict

or less difficult;

pany have more or power

becoming a member

first

more or

is

manage

of that

is

on any estab-

company. The

according as the terms of admission

and according as the

less authority, or

in such

company

have

directors of the

more or

it

com-

less in their

a manner as to confine the greater part of

the trade to themselves and their particular friends. In the most ancient regulated companies the privileges of apprenticeship

same

as in other corporations;

and

entitled the person

were the

who had

member of the company, to become himself a papng any fine, or upon paying a much what was exacted of other people. The usual corone than

served his time to a

member, smaller

poration

either without

spirit,

wherever the law does not restrain

regulated companies.

When

it,

prevails in all

they have been allowed to act accord-

ing to their natural genius, they have always, in order to confine the

competition to as small a number of persons as possible, endeav-

oured to subject the trade to the law has restrained

many burdensome

them from doing

this,

regulations.

When

they have become

al-

together useless and insignificant. There are

The

regulated companies for foreign commerce, which at present

five exist-

ing regulated

com-

subsist in Great Britain, are, the ancient

company

now commonly

called the

merchant adventurers

Hamburgh Company,

the

Company, the Eastland Company, the Turkey Company,

Russia

panies,

and the African Company. of

which

the Ham-

The terms

of admission into the

burg,

said to be quite easy;

Russian

power

and the

to subject the trade to

Hamburgh Company,

directors either

any burdensome

have

it

are

now

not in their

restraint

or regu-

“Sir Josiah Child, New Discourse of Trade, etc., chap, iii., divides companies into those in joint stock and those “who trade not by a joint stock, but only are under a government and regulation.”

^ The company

or society of the Merchant Adventurers of England. “Additions and Corrections reads “Russian,” probably a misprint, though “Russian,” which is incorrect, appears on the next page.

“ Eds.

1-3 read “restraints.”

PARTICULAR BRANCHES OF COMMERCE lations, or, at least,

not always been

so.

was

for admission

^93

have not of late exercised that power. It has

and East-

About the middle of the

land

fifty,

last century, the fine

and at one time one hundred pounds,®^ and

company was said to be extremely oppressive. In and in 1661, the clothiers and free traders of the

the conduct of the

1643,

^^645,

Companies are

merely useless.

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

them

been no complaints against them.

have

William

III. c. 6.^® the fine for

pany was reduced to 7.

far,

as to oblige

to reform their conduct. Since that time, at least, there

five

same

loth and

nth

admission into the Russian

pounds; and by the

that for admission into the Eastland

while, at the

By the

Com-

2Sth. of Charles 11. c.

Company,

to forty shillings,

Denmark and Norway,

time, Sweden,

of

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. Before that time, Sir Josiah Child

Company

had represented both these and the Hamburgh

as extremely oppressive,

agement the low

state of the trade,

and imputed

to their

bad man-

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. less,

indeed,

is

To be merely use-

perhaps the highest eulogy which can every justly be

bestowed upon a regulated company; and

above mentioned seem,

in

all

the three companies

their present state,

to deserve this

eulogy.

The

fine for admission into the

twenty-five pounds for

and

fifty

pounds

all

Turkey Company, was formerly

persons under twenty-six years of age,

for all persons

above that age. Nobody but mere

merchants could be admitted; a

restriction

which excluded

all

The Turkey Company is an oppressive

mo-

nopoly.

Anderson, Commerce,

a.d. 1643:

the fine

was doubled

in that year, being

and £50 for others. “Anderson, Commerce, a.d. 1661, under which the other two years are

raised to £ioo for Londoners

also

mentioned. Additions and Corrections and eds. 3 and 4 read “has.” Smith very probably wrote “there has been no complaint.” “ The preamble recites the history of the company.

“Anderson, Commerce,

New

a.d. 1672.

Discourse of Trade, chap, iii., quoted by Anderson, Commerce, a.d. 1672. This part of the book was not published till long after 1672, but seems to have been written before the closing of the Exchequer in that year.

the wealth of NATIONS

^94

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 neighbour-

hood.

By

another bye-law, no person living within twenty miles of free of the city, could be admitted a member; an-

London, and not

other restriction, which, joined to the foregoing, necessarily excluded all but the freemen of London.^® As the time for the loading

and

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 respect 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 freemfen 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; and of importing from thence all Turkish goods, of which the importation was not prohibited, upon paying both the general duties of customs, and the sailing of those general ships

particular duties assessed for defraying the necessary expences of the company; and submitting, at the same time, to the lawful au-

thority of the British

ambassador and consuls resident in Turkey, company duly enacted. To prevent any oppression by those bye-laws, it was by the same act ordained, that if any seven members of the company conceived themselves aggrieved by any bye-law which should be enacted after the passing of this act, they might appeal to the Board of Trade and Plantations (to the authority of which, a committee of the privy council has now succeeded), provided such appeal was brought within twelve months after the bye-law was enacted and that if any seven members conceived themselves aggrieved by any bye-law which had been enacted before the passing of this act, they might 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

to the bye-laws of the

;

® Anderson, Commerce,

a.d. 1605, 1643, 1753.

Additions and Corrections reads “extensive.” ®°See the preamble to 26 Geo. IL, c. 18.—-Anderson, Commerce, a.d. 1753.

PARTICULAR BRANCHES OF COMMERCE and

so

The

much

to oppress those

who

many

but by

other corporations,

all

not

is

are already members, as to discour-

age others from becoming so; which fine,

them any

object, besides, of the greater part of the bye-laws of

regulated companies, as well as of

high

neither the

it,

of Trade, nor the committee of council, can afford

redress. all

them should afterwards discover

several of

if

Board

695

may be

done, not only

The

other contrivances.

by a

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

and for those which they import, as much understocked as they can: which can be done only by restraining the competition,

export,

or

by discouraging new adventurers from

fine

entering into the trade.

even of twenty pounds, besides, though

sufficient to discourage

trade, with

A

may not, perhaps, be

it

any man from entering into the Turkey

an intention to continue in

it,

may

be enough to

dis-

courage a speculative merchant from hazarding a single adventure in

it.

In

all trades,

the regular established traders, even though not

incorporated, naturally combine to raise profits, which are no-way so likely to be kept, at

all

times,

down to

by The Turkey

their proper level, as

the occasional competition of speculative adventurers. trade,

though in some measure laid open by

is still

considered

free.

by many people

The Turkey Company

and two or three

consuls,

from being altogether

contribute to maintain an ambassador

who, like other public ministers, ought to

be maintained altogether by the

The

state,

and the trade

laid

open to

all

different taxes levied

by the company,

and other corporation purposes, might

afford a revenue

his majesty’s subjects. for this

this act of parliament,

as very far

much more than sufficient

to enable the state to maintain such min-

isters.

Regulated companies,

it

was observed by

Child,

Sir Josiah

though they had frequently supported public ministers, had never maintained any

forts or garrisons in the countries to

which they

traded; whereas joint stock companies frequently had.®^ reality the former

seem to be much more unfit for

vice than the latter. First, the directors of

And

in

this sort of ser-

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

contribute to the advantage of their

own

may

private trade; as

minishing the number of their competitors,

both to buy cheaper, and to

sell

dearer.

even frequently

it

The

may

Discourse of Trader chap.

di-

directors of a joint

stock company, on the contrary, having only their share

^ New

by

enable them

iii.

m

the

Regulat-

ed companies are

more

unfit to

maintain forts than joint

stock

companies,

XHE WEALTH OF NATIONS

696

which are made upon the common stock committed to their management, have no private trade of their own, of which the inprofits

can be separated from that of the general trade of the com-

terest

pany. 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

more

likely, therefore, to

which

for its defence.

They

are

have that continual and careful attention

The direccompany have always the management of a

that maintenance necessarily requires. Secondly,

tors of a joint stock

large capital, the joint stock of the company, a part of which they

may

frequently employ, with propriety, in building, repairing, and

maintaining such necessary forts and garrisons. But the directors

company, having the management of no common capital, have no other fund to employ in this way, but the casual revenue arising from the admission fines, and from the corporation of a regulated

imposed upon the trade of the company. Though they had

duties,

the same interest, therefore, to attend to the maintenance of such forts

and

garrisons, they

can seldom have the same ability to ren-

der that attention effectual.

The maintenance

of a public minister

requiring scarce any attention, and but a moderate and limited ex-

pence,

a business much more suitable both

is

Long

African

regulated

company was charged with this

temper and

a regulated company.

abilities of

but the

to the

after the time of Sir Josiah Child, however, in 1750, a

company was

established, the present

company

chants trading to Africa, which was expressly charged at

of mer-

first

the maintenance of all the British forts and garrisons that

with

lie

be-

tween Cape Blanc and the Cape of Good Hope, and afterwards

duty.

with that of those only which lie between Cape Rouge and the Cape of

Good Hope. The act which

George first,

II. c. 31.)

establishes this

seems to have had two

to restrain effectually the oppressive

which

is

is

(the 23d of

distinct objects in view;

and monopolizing

spirit

natural to the directors of a regulated company; and sec-

ondly, to force them, as

which

company

much

as possible, to give

an attention,

not natural to them, towards the maintenance of forts and

garrisons.®^

The statute

For the

first

of these purposes, the fine for admission

establish-

ing the

corporate

company

upon common

endeavvoured

which

ineffectu-

being British subjects, and paying the

ally to re-

is

limited

The company is prohibited from trading in their capacity, or upon a joint stock; from borrowing money

to forty shillings.

may

seal, or

from laying any

be carried on freely from

restraints

all places,

upon the trade

and by

all

persons

The government is in a committee of nine persons who meet at London, but who are fine.

Below, p. 701.

PARTICULAR BRANCHES OF COMMERCE

697

chosen annually by the freemen of the company at London, Bristol

and Liverpool; three from each continued in

place.

No

committee-man can be

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 office for

The committee

defence.

or to import

strain the

poly,

are forbid to export negroes from Africa,

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

Out

of different kinds.

of the

monies which they

the company, they are allowed a

pounds

sum

for the salaries of their clerks

and Liverpool, the house-rent of

from

not exceeding eight hundred

and agents at London, Bristol

their office at

London, and

all

expences of management, commission and agency in Eng-

other land.

shall receive

What

remains of this sum, after defra5dng these different ex-

pences, they

may

their trouble, in

divide

among

themselves, as compensation for

what manner they think proper.

By

this constitu-

tion, it might have been expected, that the spirit of monopoly would have been effectually restrained, and the first of these pur-

poses sufficiently answered. It would seem, however, that not.

with

Though by all its

the 4th of George III.

c.

had

it

20. the fort of Senegal,

dependencies, had been vested in the

company

of mer-

chants trading to Africa, yet in the year following (by the sth of

George

III. c. 44.), not

only Senegal and

its

dependencies, but the

whole coast from the port of SaUee, in south Barbary, to Cape

Rouge, was exempted from the jurisdiction of that company, was vested in the crown, and the trade to

it

declared free to

all

his

The company had been suspected of restraining establishing some sort of improper monopoly. It

majesty’s subjects.

the trade, and of 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, have been accused of this. The mem-

I observe, however, that they

bers of the committee of nine being

all

merchants, and the gover-

nors and factors in their different forts and settlements being all de-

pendent upon them,

it is

not unlikely that the latter might have

given peculiar attention to the consignments and commissions of the former, which would establish a real monopoly.

For the second

of these purposes, the

maintenance of the

an annual sum has been allotted to them by and ment, generally about 13,000^. For the proper application garrisons,

sum, the committee

is

forts

parliaof this

obliged to account annually to the Cursitor

Additions and Corrections reads “all the other.”

and Parliament £13^3^00 a

year to

XHE WEALTH OF NATIONS

698 the com-

tos

of Exchequer; which account is afterwards to be laid before

Baron

But parliament, which

parliament.

gives so

which

application of millions, is not likely to give

sum they

a-year;

and the Cursitor Baron

misapply.

education,

is

little

much

of Exchequer,

attention to the

to that of 13,000/.

from

his profession

not likely to be profoundly skilled in the proper

expence of forts and garrisons. The captains of his majesty’s navy,

any other commissioned

indeed, or

of Admiralty,

may

and report

risons,

seems to have no

officers,

appointed by the Board

enquire into the condition of the forts and gar-

their observations to that board.

But that board

direct jurisdiction over the committee, nor

authority to correct those whose conduct

and the captains of

it

may

thus enquire into;

his majesty’s navy, besides, are not supposed

to be always deeply learned in the science of fortification.

from an years,

office,

and

of

any

which can be enjoyed only

Removal

term of three

for the

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,

or embezzlement, either of the public

except direct malversation,

money, or

of that of the

com-

pany; and the fear of that punishment can never be a motive of sufficient

weight to force a continual and careful attention to a

business, to which he has tee are accused of

no other

interest to attend.

The commit-

having sent out bricks and stones from England

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 for the reparation of

the walls which had been repaired with them. risons

which

lie

The

forts

and gar-

north of Cape Rouge, are not only maintained at

the expence of the state, but are under the immediate government of the executive power;

Cape, and which too pence of the

state,

and why those which

are, in part at least,

lie

south of that

maintained at the ex-

should be under a different government,

not very easy even to imagine a good reason.

The

it

seems

protection of the

Mediterranean trade was the original purpose or pretence of the garrisons of Gibraltar

and Minorca, and the maintenance and gov-

ernment of those garrisons has always been, very properly, committed, not to the

the extent of

and dignity tion to

its

Turkey Company, but to the executive power. In dominion

of that power;

what

is

consists, in

and

it is

a great measure, the pride

not very likely to

fail in

atten-

necessary for the defence of that dominion.

The

and Minorca, accordingly, have never been neglected; though Minorca has been twice taken, and is now prob-

garrisons at Gibraltar

PARTICULAR BRANCHES OF COMMERCE

^99

ably lost for ever, that disaster was never even imputed to any neglect in the executive power. I

would not, however, be understood

to insinuate, that either of those 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 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

and more permanent ever have united them. stricter

much

alliance than the ties of blood could

Joint stock companies, established either

by

by

Joint

act of parliament, differ in several respects, not only from regu-

stock

royal charter or

comlated companies, but from private copartneries. First,

panies

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, up-

on proper warning, withdraw from the copartnery, and demand

payment from them of his share of the common stock. In a joint stock company, on the contrary, no member can demand payment of his share

from the company; but each member can, without

consent, transfer his share to another person,

a new member. price

which

it

The value

of a share in

will bring in the

greater or less, in

their

differ

from

pri-

vate partnerships: (i) withdrawals

are

by

sale

of

shares;

and thereby introduce

a joint stock

market; and this

is

always the

may

any proportion, than the sum which

be either

owner

its

stands credited for in the stock of the company.

Secondly, In a private copartnery, each partner debts contracted tune. In a joint

bound only

The

bound

for the

( 2 ) lia-

company to the whole extent of his forstock company, on the contrary, each partner is

bility is

by

is

the

to the extent of his share.®^

trade of a joint stock

company

court of directors. This court, indeed,

is

the share held.

is

always managed by a

frequently subject, in

many

But the understand any

respects, to the controul of a general court of proprietors.

greater part of those proprietors seldom pretend to

thing of the business of the company;

limited to

and when the

spirit of fac-

Such companies are

managed by directors,

who

are negli-

tion

happens not to prevail among them, give themselves no trouble

about

it,

but receive contentedly such half yearly or yearly

dend, as the directors think proper to

emption from trouble and from

make

risk,

divi-

to them. This total ex-

beyond a limited sum, en-

many people to become adventurers in joint stock comwho would, upon no account, hazard their fortunes in any

courages panies,

private copartnery. Such companies, therefore,

A joint-stock company here is an incorporated or common

application of the term to other companies

commonly draw

chartered company.

is later.

to

The

gent and profuse

XHE WEALTH OF NATIONS

700

much greater stocks than any private copartnery can The trading stock of the South Sea Company, at one time,

themselves

boast

of.

of thirty-three millions eight

amounted to upwards

hundred thou-

sand pounds.®'^ The dividend 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

man, they are apt to consider attention to small matters as not their master’s honour, and very easily give themselves a dispen-

rich for

sation from having

Negligence and profusion, therefore, must

it.

always prevail, more or

less, in

upon

the

management

It is

for foreign trade

have seldom been able

tion against private adventurers.

dom succeeded

of the affairs of

this account that joint stock

such a company.

They

companies

to maintain the competi-

have, accordingly, very

sel-

without an exclusive privilege; and frequently have

not succeeded with one. Without an exclusive privilege they have

have and some have not

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 exclusive privilege by charter; but as that charter had not been confirmed by act of parliament, the

exclusive

trade, in consequence of the declaration of rights, was, soon after

Some

privileges.

the revolution, laid open to son’s

Bay Company

tion as the Royal African

not been confirmed

all

his majesty’s subjects.®^

are, as to their legal rights, in the

by

The Hud-

same

situa-

Company.^® Their exclusive charter has

act of parliament.

The South Sea Company,

as long as they continued to be a trading

company, had an exclu-

by act of parliament; as have likewise United Company of Merchants trading to the East

sive privilege confirmed

the

present

In-

dies.

The Royal African

The Royal African Company soon found

that they could not

maintain the competition against private adventurers, whom, not-

Company,

withstanding the declaration of rights, they continued for some

having

time to

lost exclu-

call interlopers,

and

to persecute as such. In 1698, however,

the private adventurers were subjected to a duty of ten per cent. Anderson, Commerce, ®®It stood at this

creased

by a

ajd. 1723.

amount from 1746

call of

to the end of 1781, but was then in8 per cent.—Anderson, Commerce, a.d. 1746, and (Con-

tinuation) A.D. 1781.

Anderson, Commerce,

a.d.

1672 and

a.d.

1698.

^Ihid., a.d. 1670.

PARTICULAR BRANCHES OF COMMERCE upon almost

70i

the different branches of their trade, to be em-

all

ployed by the company in the maintenance of their forts and gar-

sive privileges,

failed.

risons. But, notwithstanding this still

heavy

company were

tax, the

unable to maintain the competition,^^ Their stock and credit

gradually declined. In 1712, their debts had become so great, that

a particular act of parliament was thought necessary, both for their security

and

for that of their creditors. It

olution of two-thirds of these creditors in

bind the

rest,

was enacted, that the

res-

number and value, should

both with regard to the time which should be allowed

company for the payment of their debts; and with regard to any other agreement which it might be thought proper to make to the

with them concerning those

debts.*^^

In 1730, their

affairs

were in

so great disorder, that they were altogether incapable of maintain-

ing their forts and garrisons, the sole purpose and pretext of their

From

institution.

ment judged pounds

it

that year,

their final dissolution, the parlia-

necessary to allow the annual

for that purpose.*^^

years losers

till

by

sum

of ten thousand

In 1732, after having been for

the trade of carrying negroes to the

they at last resolved to give

it

up

West

and

to

employ

Indies,

altogether; to sell to the private

traders to America the negroes which they purchased coast;

many

upon the

their servants in a trade to the inland parts of

Africa for gold dust, elephants teeth, dying drugs, &c. But their success in this

more confined trade was not greater than

former extensive decline,

till

one.*^^

Their

affairs

in their

continued to go gradually to

at last, being in every respect a bankrupt

company,

they were dissolved by act of parliament, and their forts and garrisons vested in the present regulated

company

of merchants trad-

ing to

Africa.’’^^

Before the erection of the Royal African Company,

there

had been

three other joint stock companies successively es-

tablished, one after another, for the African trade.*^^

equally unsuccessful.

They

all,

They were

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 expence is much smaller. The whole number of people

whom

they maintain in their different settlements and

^Ibid., A.D. 1698. A.D.

1730.

™io Ann., The annual

^"Anderson, Commerce,

”23 Geo.

II., c.

a.d.

31; 25 Geo.

1752; above, p. 696, Anderson, Commerce,

c.

27.

Anderson, Commerce^

grant continued

till

a.d.

1712.

1746.

1733. II., c.

a.d. 1618,

40; Anderson, Commerce, a.d. 1750,

1631 and 1662.

The Hudson’s Bay

Company have been moderate-

XHE WEALTH OF NATIONS

702 ly suc-

habitations, which they have honoured with the

cessful,

said not to exceed a hundred and twenty persons

having in fact

an

exclusive

however,

a very

number of proprietors.

of forts,

is

This number,

to prepare beforehand the cargo of furs

and

other goods necessary for loading their ships, which, on account of

trade and small

is sufficient

name

the

ice,

can seldom remain above

weeks

six or eight

in those seas.

This advantage of having a cargo ready prepared, could not for several years

be acquired by private adventurers, and without

it

there

seems to be no possibility of trading to Hudson’s Bay. The moderate capital of the

company, which,

it is

does not exceed one

said,

hundred and ten thousand pounds,^® may besides be

sufficient to

enable them to engross the whole, or almost the whole, trade and surplus produce of the miserable, though extensive country, com-

prehended within ingly,

their charter.

No

private adventurers, accord-

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.

the moderate capital of this company is among a very small number of proprietors.^^ But company, consisting of a small number of proprietors,

Over and above

all this,

said to be divided

a joint stock

with a moderate capital, approaches very nearly to the nature of a private copartnery, and

may be

capable of nearly the same degree

not to be wondered

at, therefore, if

in consequence of these different advantages, the

Hudson’s Bay

of vigilance

Company

and

attention. It

is

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

Mr. Dobbs imagined

approached to what the late

A much

more sober and judicious 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 them.'^®

together, of their exports

and imports, and upon making proper

lowances for their extraordinary risk and expence,

it

al-

does not ap-

pear that their profits deserve to be envied, or that they can much, if

at

all,

exceed the ordinary profits of

A.D.

1743, quoting

™ Anderson, Commerce:

trade.'^^

Captam Christopher Middleton.

a.d. 1670.

"“Eight or nine private merchants do engross nine-tenth parts of the company’s stock.” Anderson, Commerce: ad. 1743, quoting from An Account of the Countries Adjoining to Hudson's Bay with an Abstract of Captain Middleton's Journal and Observations upon his Behaviour: by Arthur Dobbs, Esq., 1744, p. 58. “^^In his Account: PP* 3 and 58, he talks of 2,000 per cent., but this, of course, only refers to the difference between buying and selling prices. ’^Commerce: a.d. 1743, but the examination is not nearly so comprehensive, nor the expression of opinion so ample as is suggested by the text. .

^

.

.

PARTICULAR BRANCHES OF COMMERCE The South Sea Company never had any

703

forts or garrisons to

maintain, and therefore were entirely exempted from one great ex-

The South Sea

Company

pence, to which other joint stock companies for foreign trade are

failed to

But they had an immense capital dividend among an immense number of proprietors. It was naturally to be expected,

profit

subject.

and profusion should prevail

therefore, that folly, negligence,

the whole management of their

The knavery and

affairs.

gance of their stock-jobbing projects are

sufficiently

in

extrava-

known, and

the explication of them would be foreign to the present subject.

much

Their mercantile projects were not first

trade which they engaged in

West Indies with

was that

better conducted.

make any by

their an-

nual ship to the Spanish

West Indies,

The

of supplying the Spanish

what was them by the treaty of Utrecht) they had the exclusive privilege. But as it was not expected that much profit could be made by this trade, both the Portugueze and negroes, of which (in consequence of

called the Assiento contract granted

French companies, who had enjoyed them, having been ruined by tion, to

it,

it

upon the same terms before

they were allowed, as compensa-

send annually a ship of a certain burden to trade directly

to the Spanish

West

Indies.®*^

Of the ten voyages which

this an-

nual ship was allowed to make, they are said to have gained considerably

been

by

losers,

one, that of the

more or

was imputed, by

less,

Royal Caroline

by almost

their factors

all

in 1731,

and to have

the rest. Their

success

ill

and agents, to the extortion and op-

pression of the Spanish government; but was, perhaps, principally

owing to the prolusion and depredations agents;

some

of

of those very factors

whom are said to have acquired great

in one year. In 1734, the

company

fortunes even

petitioned the king, that they

might be allowed to dispose of the trade and tunnage of nual ship, on account of the

and

little profit

their an-

which they made by

it,

and

to accept of such equivalent as they could obtain from the king pf

Spain.^^

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 In 1724,

voyage,

this

when they had

found that their whole included,

amounted

to

sold their ships, stores, loss,

upon

and

utensils,

this branch, capital

and

they

interest

upwards of two hundred and thirty-seven

thousand pounds.®^ ^Ibid., a.d. 1731, 1732 and 1734 Anderson, Commerce, a.d. 1713 ^Ibid., A.D. 1724 and 1732. But there was no successful voyage; the company were “considerable losers in every one” of the eight years.

lost

£237,000 in their

whale fishery,

THE WEALTH OF NATIONS

704

and finally ceased

to

be a

In 1722,

petitioned the parliament to be allowed

company

this

to divide their

immense

capital of

more than

thirty-three millions

hundred thousand pounds, the whole of which had been

lent

trading

eight

company.

to government, into two equal pants: The one half, or upwards of sixteen millions nine

hundred thousand pounds,

same footing with other government

to

be put upon the

and not

annuities,

ject to the debts contracted, or losses incurred,

by

to

be sub-

the directors of

the company, in the prosecution of their mercantile projects; the

other half to remain, as before, a trading stock,

those debts

and

losses.

The

petition

and

to

be subject to

was too reasonable not

to

be

granted.®® In 1733, they again petitioned the parliament, that three-fourths of their trading stock might be turned into annuity

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 restock,

duced more than two millions each, by several

from government; so that 8^. 6rf.®®

In 1748,

all

the

this fourth

demands

of

different

payments

amounted only to 3,662,784/. the company upon the king of

Spain, in consequence of the Assiento contract, were,

by

the treaty

what was supposed an equivalent. An end was put to their trade with the Spanish West Indies, the remainder of their trading stock was turned into an annuity stock, and the company ceased in every respect to be a trading comof Aix-la-Chapelle, given

up

for

pany.®® It ought to be observed, that in the trade

They had competitors in

the trade

Company by which

which the South Sea

by means of their annual ship, the only trade was expected that they could make any consider-

carried on it

ever

of the

able profit, they were not without competitors, either in the foreign

annual

or in the

home

market. At Carthagena, Porto Bello, and

La Vera

ship.

Cruz, they had to encounter the competition of the Spanish mer-

who brought from

chants,

Cadiz, to those markets, European

goods, of the same kind with the outward cargo of their ship; and in

England they had to encounter that of the English merchants,

who imported from Cadiz goods same kind with the inward

of the Spanish

cargo.

West

The goods both

Indies, of the

of the Spanish

and English merchants, indeed, were, perhaps, subject to higher duties. But the loss occasioned by the negligence, profusion, and malversation of the servants of the company,

much

heavier than

all

had probably been a tax

those duties. That a joint stock

company

should be able to carry on successfully any branch of foreign trade, 9 Geo. L,

®*This

^ lhid,j

c.

6.

was done by A.D.

Anderson, Commerce^

6 Geo. II.,

1732 and a.d. 1.733.

a.d.

c. 28. Ihid., a.d.

a.d.

1723. 1733.

1748 and a.d. 1750.

PARTICULAR BRANCHES OF COMMERCE when

private adventurers can

come

into

any

competition with them, seems contrary to

sort of

fitted out for India,

open and

fair

all experience.

The old English East India Company was by a charter from Queen Elizabeth. In the which they

70S

established in 1600,

The old

twelve voyages

first

they appear to have traded as a

(^orn-

regulated company, with separate stocks, though only in the gen-

pany, un-

company. In 1612, they united into a joint stock.®"^ Their charter was exclusive, and though not confirmed by act of

support competi-

eral ships of the

parliament, privilege.

by

was

in those days supposed to

For many years,

therefore, they

interlopers. Their capital

convey a

real exclusive

were not much disturbed

which never exceeded seven hundred

and forty-four thousand pounds,^^ and of which fifty pounds was a share,®® was not so exorbitant, nor their dealings so extensive, as to afford either

a pretext

for gross negligence

and profusion, or a

cover to gross malversation. Notwithstanding some extraordinary losses,

occasioned partly

Company, and partly by

by the malice

of the

Dutch East India

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 convey an exclusive privilege.

Upon this

question

the decisions of the courts of justice were not uniform, but varied

with the authority of government and the humours of the times. Interlopers multiplied

upon them; and towards the end of the reign whole of that of James II. and during

of Charles 11 . through the

a part of that of William III. reduced them to great 1698, a proposal lions to

was made

distress.®®

to parliament of advancing

government at eight per

In

two mil-

cent, provided the subscribers

were

new East India Company with exclusive privileges. Company offered seven hundred thousand pounds, nearly the amount of their capital, at four per cent, upon

erected into a

The the

old East India

same

But such was

conditions.

credit, that it

at that time the state of public

was more convenient

for

millions at eight per cent, than seven four.

The

proposal of the

East India

Company

new

government to borrow two

hundred thousand pounds at

subscribers

was accepted, and a new

established in consequence.

The

Company, however, had a right to continue 1701. They had, at the same time, in the name of

dia

subscribed, very artfully,

three

hundred and

old East In-

their trade

their treasurer,

fifteen

was

till

thousand

the present

com-

pany,

^ “Until

this time the English East India trade was carried on by several separate stocks, making particular running-voyages; but in this year they

united

all

into one general joint-capital stock,” Anderson,

Commerce,

a.d.

1612.

^Ibid., A.D. 1693.

^Ibid., a.d. 1676.

^Ibid,, A.D. 1681 and a.d. 1685.

XHE wealth OF NATIONS

7o6

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 it did not appear evident

subscribers to this loan of two millions,

that they were

all

obliged to unite into a joint stock.^^

A

few

pri-

vate traders, whose subscriptions amounted only to seven thousand two hundred pounds, insisted upon the privilege of trading separately

upon

their

own

stocks

and

at their

own

risk.®^

The

old

East India Company had a right to a separate trade upon their old stock till 1701; and they had likewise, both before and after that period, a right, like that of other private traders, to a separate trade upon the three hundred and fifteen thousand pounds, which

they ‘had subscribed into the stock of the new company. The competition of the two companies with the private traders, and with one another, is said to have well nigh ruined both. Upon a subsequent occasion, in 1730, when a proposal was made to parliament for putting the trade under the management of a regulated company, and thereby laying it in some measure open, the East India Company, in opposition to this proposal, represented in very strong terms,

what had been,

at this time, the miserable

thought them, of this competition. In India, they

effeicts,

as they

said, it raised the

and 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

price of goods so high, that they were not worth the buying; in England,

must have reduced, very much, the price of India goods in the Engmarket, cannot well be doubted; but that it should have raised

lish

very

much

their price in the India market,

as all the extraordinary

demand which

seems not very probable,

that competition could oc-

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 production, and thereby increases the competition of the producers, who, in order to undersell one another, have recourse to new divisions of labour and new improvements of art, which might never otherwise have been thought of. The miserable effects of which the company complained, were the cheapness of consumption and the encouragement given to production, precisely the two effects which it is the great business of political oeconomy 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 casion,

®^The whole of this history is in Anderson, Commerce^ a.d. 1698. Anderson, Commerce^ a.d. 1701. a.d. 1730.

PARTICULAR BRANCHES OF COMMERCE

7^7

some measure, united by an indenture

tripartite, to

queen was the third party;

by act of parcompany by their pres-

and

in 1708, they were,

liament, perfectly consolidated into one

ent

name

Company

of the United

Indies. Into this act

it

of

Merchants trading to the East

was thought worth while

1

a clause,

to insert

allowing the separate traders to continue their trade

mas

which the

till

Michael-

71 1, but at the same time empowering the directors,

three years notice, to redeem their

two hundred pounds, and thereby

company

into a joint stock.

company,

By

little capital of

upon

seven thousand

whole stock of the

to convert the

the same act, the capital of the

consequence of a new loan to government, was aug-

in

mented from two millions

to three millions

two hundred thousand

company advanced another million to govBut ernment. this million being raised, not by a call upon the proprietors, but by selling annuities and contracting bond-debts, it did not augment the stock upon which the proprietors could claim pounds.®^ In 1743, the

a dividend. It augmented, however, their trading stock,

it

being

equally liable with the other three millions two hundred thousand

pounds to the

losses sustained,

and debts contracted, by the com-

pany

in prosecution of their mercantile projects.

least

from 1711,

tors,

and

this

From

company, being delivered from

1708, or at

competi-

all

which with exclusive

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 proprie-

privileges

has traded successfully,

tors.

During the French war which began

in 1741, the ambition of

Mr. Dupleix, the French governor of Pondicherry, involved them

in

the wars of the Carnatic, and in the politics of the Indian princes.

After lost

many

Madras, at that time

restored to

them by the

and equally signal

they at

last

their principal settlement in India. It

was

and about

this

signal successes,

losses,

treaty of Aix-la-Chapelle;

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, said, to

upwards

of three millions a-year.

was then

They remained

eral years in quiet possession of this revenue:

But

tration laid claim to their territorial acquisitions,

for sev-

in 1767, adminis-

and the revenue

made on the 22nd of July, 1702, by an indenture between the Queen and the said two companies.’ “Anderson,

®^“This coalition was tripartite

it

Commerce^ Ann.,

a.d. c.

1702.

17.

Anderson, Commerce^

a.d. 1708.

but has conquered large territories,

7o8

the wealth OF NATIONS

from them, as of right belonging to the crown; and the company, in compensation for this claim, agreed to pay to government four hundred thousand pounds a-year. They had before this gradually augmented their dividend from about six to ten per cent.; that is, upon their capital of three millions two hundred thousand pounds, they had increased it by a hundred and twentyeight thousand pounds, or had raised it from one hundred and ninety-two thousand, to three hundred and twenty thousand pounds a-year. They were attempting about this time to raise it still further, to twelve and a half per cent, which would have made their annual payments to their proprietors equal to what they had agreed to pay annually to government, or to four hundred thousand pounds a-year. But during the two years in which their agreement with government was to take place, they were restrained from any further increase of dividend by two successive acts of parliament,®® of which the object was to enable them to make a speedier progress in the payment of their debts, which were at this time estimated at upwards of six or seven millions sterling. In 1769, they renewed their agreement with government for five years more, and stipulated, that during the course of that period they should be allowed gradually to increase their dividend to twelve and a half per cent.; never increasing it, however, more than one per cent, in one year. This increase of dividend, therefore, when it had risen to its utmost height, could augment their annual payments, to their proprietors and government together, but by six hundred and eight thousand pounds, beyond what they had been before their late terarising

ritorial acquisitions.

What the

gross revenue of those territorial ac-

was supposed to amount to, has already been mentioned; and by an account brought by the Cruttenden East Indiaman in 1768, the nett 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 established at their different settlements, amounting to four hundred and thirty-nine thousand pounds. The profits of their trade too, according to the evidence of their chairman before the House of Commons, amounted at this time to at least four hundred thousand pounds a-year; according to that of their accomptant, to at least five hundred thousand; according to the lowest account, at least equal to the highest dividend that was to be paid to their proprietors. So great a revenue might certainly have afforded an augmentation of six hundred and eight thousand pounds in their anquisitions

7

Geo.

III., c. 49,

and 8 Geo.

III., c. ii.

PARTICULAR BRANCHES OF COMMERCE

709

nual payments; and at the same time have a large sinking fund suf-

speedy reduction of their debts. In 1773, however, their debts, instead of being reduced, were augmented by an arrear ficient for the

to the treasury in the pa5mient of the four

and mismanaged them,

hundred thousand

pounds, by another to the custom-house for duties unpaid, by a

bank for money borrowed, and by a fourth for 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 large debt to the bills

them not only

to reduce all at once their dividend to six per cent,

but to throw themselves upon the mercy of government, and to supplicate,

a release from the further pa5nnent of the stipu-

first,

lated four hundred thousand of fourteen

ruptcy.

pounds a-year; and, secondly, a loan

hundred thousand, to save them from immediate bank-

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

came the subject

of

a parliamentary

and

in Europe, be-

in consequence of

inquiry;

which several very important alterations were made in the constitution of their government, both at

principal settlements of Madras,

home and

Bombay, and

liament assuming to council

who were

itself

the

by a

first

Calcutta, which

had

council of four assessors, par-

nomination of

this

governor and

to reside at Calcutta; that city having

now

be-

come, what Madras was before, the most important of the English settlements in India.

The

instituted for the trial

court of the

mayor

of Calcutta, originally

of mercantile causes, which arose in the city

and neighbourhood, had gradually extended its jurisdiction with the extension of the empire. It was now reduced and confined to the original purpose of its institution. Instead of it a new supreme court of judicature was established, consisting of a chief justice and three judges to be appointed

by the crown. In Europe, the qualifica-

tion necessary to entitle a proprietor to vote at their general courts

was

raised,

from

five

hundred pounds, the

original price of

a share

company, to a thousand pounds. In order to qualification too, it was declared necessary that he

in the stock of the

vote

upon

this

should have possessed

by

it, if

acquired

by his own

purchase,

and not

inheritance, for at least one year, instead of six months, the

requisite before.

The court of twenty-four

Parlia-

ment has been obliged to

abroad. In India their

before been altogether independent of one another, were subjected to a governor-general, assisted

so that

directors

term

had before been

In 1772-3. Additions and Corrections and ed. 3 read “subjects.”

make

alterations,

XHE WEALTH OF NATIONS

710

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

by

office

rotation every year,

ing re-chosen at the election of the six

and not

new

to

be capable of be-

directors for the ensu-

ing year.®® In consequence of these alterations, the courts, both of

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 alwa3?’s 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 acquire by a vote in the court the proprietors and directors,

of proprietors. It gives

him a

it

share, though not in the plunder, yet

appointment of the plunderers of India; the court of directhough they make that appointment, being necessarily more or less under the influence of the proprietors, who not only elect those directors, but sometimes overrule the appointments of their servants in India. Provided he can enjoy this influence for a few years, and thereby provide for a certain number of his friends, he frequently cares little about the dividend; or even about the value of the stock upon which his vote is founded. About the prosperity of the great empire, in the government of which that vote gives him a share, he seldom cares at all. No other sovereigns ever were, or, from the nature of things, ever could be, so 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 in the

tors,

of

Commons,

for

example,

it

was declared, that when the fourteen

hundred thousand pounds lent to the company by government should be paid, and their bond-debts be reduced to fifteen hundred thousand pounds, they might then, and not till then, divide eight per cent, upon their capital

and that whatever remained of their revenues and neat profits at home, should be divided into four parts; three of them to be paid into the exchequer for the use of the public, and the fourth to be reserved as a fund, either for the further *^^13

;

Geo.

III., c. 63.

PARTICULAR BRANCHES OF COMMERCE

7 ir

reduction of their bond-debts, or for the discharge of other contin-

gent exigencies, which the company might labour under.®® But the

company were bad

stewards, and

bad

sovereigns,

when

if

the

which are not likely to be of

whole of their nett

and were at better,

when

their

revenue and profits belonged to themselves,

own

disposal,

three-fourths of

and the other company, yet

them were

fourth, though to to be so,

service.

they were surely not likely to be

be

to belong to other people,

laid out for the benefit of the

under the inspection, and with the approba-

tion, of other people.

It

might be more agreeable to the company that their own

ser-

vants and dependants should have either the pleasure of wasting, or

They tend to en-

courage

the profit of embezzling whatever surplus might remain, after paying the proposed dividend of eight per cent., than that

come

into the

could scarce

hands

fail

whom

of a set of people with

to set them, in

terest of those servants

some measure,

and dependants might so

should

it

those resolutions

at variance. far

the court of proprietors, as sometimes to dispose

waste,

it

The

in-

predominate in to support the

authors of depredations which had been committed in direct violation of its

own

authority.

With

the majority of proprietors, the sup-

port even of the authority of their

matter of

less

own

court might sometimes be a

consequence, than the support of those

who had

set

that authority at defiance.

The

regulations of 1773, accordingly, did not put

an end

to the

disorders of the company’s government in India. Notwithstanding that, during

a momentary

fit

of good conduct, they had at one time

collected, into the treasury of Calcutta,

more than three

millions

sterling; notwithstanding that they had afterwards extended, either

their dominion, or their depredations over

of the richest

and most

a vast accession of some

fertile countries in

India; all

was wasted

and destroyed. They found themselves altogether unprepared to Hyder Ali; and, in consequence of

stop or resist the incursion of

those disorders, the

company

is

now (1784)

in greater distress

ever; and, in order to prevent immediate bankruptcy,

is

than

once more

reduced to supplicate the assistance of government. Different plans

have been proposed by the

And all those plans seem to agree management supposing, what was indeed always abundantly evident, that it altogether unfit to govern its territorial possessions. Even the

better in is

different parties in parliament, for the

of its affairs.

company

itself

seems to be convinced of

its

own

incapacity so far,

House of Commons Journals, April 27, 1773. ^°®The spelling in other parts of the work is “neat.” The Additions and Corrections read “nett” both here and five lines above. The discrepancy was obviously noticed in one case and not in the other.

and the

company is

now in

greater distress

than ever.

the wealth of nations

712

and seems, upon that account,

willing to give

them up

to govern-

ment.

With the

Companies

right of possessing forts

barbarous countries,

and garrisons

and making

in distant

necessarily connected the right of

is

misuse the

peace and war in those countries. The joint stock companies which

right of

making peace and war.

have had the one

have frequently had

how

ly, is

of a tem-

porary

known

too well

How unjust-

expressly conferred upon them.

it

how

capriciously,

commonly

cruelly they have

exercised

merchants undertake, at their own risk and

of

a new trade with some remote and barbarous

expence, to establish

may not be unreasonable to incorporate them

into

a

joint

monopoly

nation,

to a

stock company, and to grant them, in case of their success, a

joint

it

nopoly of the trade for a certain number of years.

stock

company may

it,

from recent experience.

When a company

The grant

have constantly exercised the other, and

right,

and most natural way

mo-

It is the easiest

which the state can recompense them for

in

hazarding a dangerous and expensive experiment, of which the pub-

sometimes be rea-

lic is

afterwards to reap the benefit.

sonable,

kind

may be vindicated upon the same principles upon which a like

but a per-

monopoly

of

a new machine

is

A temporary monopoly of this

granted to

its

inventor,

and that of a

petual

monopoly creates

an

new book to its monopoly ought

absurd tax.

it

But upon

author.

the expiration of the term, the

certainly to determine; the forts

was found necessary to

of government, their value to be paid to the to be laid

nopoly, in

open to

all

all

garrisons,

case of a free trade,

company, and the trade

the subjects of the state.

By

a perpetual mo-

by the high price of goods, which, in the they could buy much cheaper; and, secondly, first,

their total exclusion

from a branch of business, which

it

might

be both convenient and profitable for many of them to carry on. is

for the

this

if

hands

the other subjects of the state are taxed very absurdly

two different ways;

by

and

establish any, to be taken into the

most worthless

manner. It

is

It

of all purposes too that they are taxed in

merely to enable the company to support the neg-

ligence, profusion,

and malversation of

their

own

servants,

disorderly conduct seldom allows the dividend of the

whose

company

to

exceed the ordinary rate of profit in trades which are altogether free,

and very frequently makes

it fall

even a good deal short of that

Without a monopoly, however, a

joint stock company, it would appear from experience, cannot long carry on any branch of foreign trade. To buy in one market, in order to sell, with profit, in rate.

another,

when

there are

many

competitors in both; to watch over,

not only the occasional variations in the demand, but the

much

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 greater

PARTICULAR BRANCHES OF COMMERCE each assortment of goods to

all

these circumstances,

is

7i3

a species of

warfare of which the operations are continually changing, and which can scarce ever be conducted successfully, without such an unremitting exertion of vigilance and attention, as cannot long be

expected from the directors of a joint stock company. dia

Company, upon

tion of their exclusive privilege, to continue

have a

right,

by

their fellow-subjects.

and attention

But

common with

in their

the rest of

in this situation, the superior vigilance

of private adventurers would, in all probability, soon

make them weary

An eminent

In-

act of parliament,

a corporation with a joint stock, and to trade

corporate capacity to the East Indies in

litical

The East

the redemption of their funds, and the expira-

of the trade.

French author, of great knowledge in matters of po-

(economy, the Abbe Morellet, gives a

list

of fifty-five joint

stock companies for foreign trade, which have been established in different parts of

to him,

have

Europe

all failed

since the year 1600,

and which, according

from mismanagement, notwithstanding they

had exclusive privileges.^^^ He has been misinformed with regard to the history of two or three of them, which were not joint stock com-

A list of fifty-five

companies

with e\clusive

privileges

for

foreign

trade

panies and have not failed. But, in compensation, there have been several joint stock companies which

have

failed,

and which he has

failed has been col-

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 (derations are capable of being reduced to what

called a routine, or to such little

or

no

variation.

Of

a uniformity of method

this

kind

is, first,

ondly, the trade of insurance from

fire,

as admits of

and capmaking and maintaining a risk

city.

rules than

any private copartnery. Such companies,

extremely

well fitted for this trade.

^^^Examen de

The

therefore,

principal banking

seem

compa-

[Necker] an Memoire de M, VAhhe de M* Compagnie des Indes: par Vauteur du Mimoire, 1769) PP*

la reponse

Only four trades

can be well Gai-

ned on by a company with no exclu-

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 consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it. But the constitution of joint stock companies renders them in general more tenacious of established

Morellet, sur la

by

Morellet

navigable cut or canal; and, fourthly, the similar trade of bringing

water for the supply of a great

lected

Abbe

is

the banking trade; sec-

and from sea

ture in time of war; thirdly, the trade of

35-38.

which have

sive privilege,

namely, banking,

THE WEALTH OF NATIONS

714

many

nies in Europe, accordingly, are joint stock companies,

which manage privilege.

their trade

The Bank

of

very successfully without any exclusive

of England has no other exclusive

privilege, ex-

company in England shall consist of The two banks of Edinburgh are joint

cept that no other banking

more than

six persons.^®-

any exclusive

stock companies without

The

insurance,

value of the risk,

capture, though

either from

a gross estimation as renders

by

sea, or

by

carried

some de-

in

it,

and method. The trade of insurance,

gree, reducible to strict rule

may be

or from loss

cannot, perhaps, be calculated very exactly, ad-

it

mits, however, of such

therefore,

privilege.

fire,

on successfully by a

company,

joint stock

without any exclusive privilege. Neither the London Assurance, nor the Royal Exchange Assurance companies, have any such privilege.^®^ canal

When

and

a navigable cut or canal has been once made, the manage-

aqueduct

ment

management and

strict rule

construc-

contracted for with undertakers at so

tion.

lock.

of

it

becomes quite simple and easy, and

and method. Even the making of

The same thing may be said

of a canal,

pipe for bringing water to supply a great therefore,

stock

To ing,

joint stock

estab-

it

may

it

be

and so much a

an aqueduct, or a great

city.

Such undertakings,

companies wthout any exclusive privilege.

establish a joint stock

company, however, for any undertak-

merely because such a company might be capable of managing

company ought not to be

mile,

as

may be, and accordingly frequently are, very successfully

managed by

A joint

it is so,

much a

reducible to

is

successfully; or to

of the general laws

exempt a particular

set of dealers

which take place with regard to

all

from some

their neigh-

bours, merely because they might be capable of thriving

if

they had

lished

except for

some purpose of

remark-

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 circum-

able util-

stances ought to concur. First,

it

ought to appear with the clearest

ity, re-

evidence, that the undertaking

is

of greater

quiring a larger

ity

than the greater part of

common

and more general

trades;

capital

requires a greater capital than can easily be collected into

than can be pro-

copartnery. If a moderate capital were

vided by

ity of the undertaking

a private

partner-

lishing for

sufficient,

sufficient

a joint stock company; because,

what

it

was

to produce,

ship.

Ann.,

^^At

would not be a

c.

util-

and secondly, that

it

a private

the great util-

reason for estab-

in this case, the

demand

would readily and easily be supplied by

22.

least as against private persons,

Anderson, Commerce, Eds. 4 and 5 insert “it” here, by a misprint. Additions and Corrections and ed. 3 read “was.”

aj). 1720.

PARTICULAR BRANCHES OF COMMERCE

7^5

private adventurers. In the four trades above mentioned, both those

circumstances concur.

The

great and general utility of the banking trade

when pru-

These

dently managed, has been fully explained in the second book of this are

But a public bank which

inquiry

upon

is

and

to support public credit,

particular emergencies to advance to government the whole

fulfilled

by bank-

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 pri-

vate people, and

would ruin an

by

among a

dividing

individual,

makes

whole society. In order to give

great

many

it fall light

this security,

insurance,

that loss which

and easy upon the

however,

it is

necessary

that the insurers should have a very large capital. Before the estab-

lishment of the two joint stock companies for insurance in London,

a

list, it is

and

said,

was

laid before the attorney-general, of

fifty private insurers

who had

one hundred

failed in the course of

a few

years.

That navigable cuts and

and the works which are some-

canals,

canals

times necessary for supplying a great city with water, are of great

and general

utility; while at the

a greater expence than

same time they frequently require

suits the fortunes of private people, is suf-

ficiently 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 com-

pany, 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 pur-

any

ex-

many private men. Whether

the

seem

sue; nor does the pursuit of that object

pence unsuitable to the fortunes of

trade which those companies carry on, rule

and method as to render

it fit

is

for the

to require

reducible to such strict

management

of

a

joint

stock company, or whether they have any reason to boast of their

extraordinary profits, I do not pretend to know. turers

company has been long ago

of the British Linen

much below

Company

of

bankrupt.^®’'

Edinburgh

par, though less so than

joint stock companies,

it

The mine-adven-

A share in the stock

sells,

at present, very

did some years ago.

The

which are established for the public-spirited

purpose of promoting some particular manufacture, over and above Above, pp. 277-284. Anderson, Commerce,

a.d.

1690, 1704, 1710, 1711.

but not

THE WEALTH OF NATIONS

71G

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,

a real discouragement to the

is

more or

less,

lish itself

between judicious industry and

general industry of the country,

and the most

est

and necessarily breaks,

rest,

that natural proportion which would otherwise estab-

is

of all

profit,

and which, to the

encouragements the great-

effectual.^®®

Article II

Of the Expence

of the Institutions for the Education of

Institu-

The

tions for

manner, furnish a revenue

education

may also be made

own

expense, or

may

be endowed.

The

pence.

fee or

youth may, in the same

sufficient for defraying their

own

ex-

honorary which the scholar pays to the master

naturally constitutes a revenue of this kind.

Even where the reward

to furnish their

institutions for the education of the

Youth

from

of the master does not arise altogether

this natural revenue, it still is not necessary that it should

be

derived from that general revenue of the society, of which the col-

and application

lection

executive power.

are,^^® in

most countries, assigned

Through the greater part

to the

of Europe, accordingly,

the endowment of schools and colleges makes either no charge upon that general revenue, or but a very small one. It every where arises

from some local or provincial revenue, from the rent of

chiefly

some landed lotted

estate, or from the interest of some sum of money aland put under the management of trustees for this particular

purpose, sometimes

by the sovereign

himself,

and sometimes by

endowments contributed

in general to pro-

Have they

contributed to en-

some private donor. Have endowments

Have

those public

really

mote the end

promoted

courage the diligence, and to improve the

useful

Have they

education?

of their institution?

directed the course of education towards objects

useful, both to the individual it

and to the public, than those

would naturally have gone of

very

abilities of the teachers?

difficult to

its

own accord?

It

to

more

which

should not seem

give at least a probable answer to each of those

questions. ^°®

This section, beginning on p. 690, appears

rections

To SI*

and

first

in Additions

ed. 3.

^

'“Eds. 1-4 read

in the first line of the text. “is.”

and Cor-

EDUCATION OF YOUTH

71 ?

In every profession, the exertion of the greater part of those exercise

it, is

making that

of

whom

who

always in proportion to the necessity they are under exertion.

This necessity

is

greatest with those to

the emoluments of their profession are the only source from

which they expect their fortune, or even

their ordinary revenue

and

Exertion is

always

in pro-

portion to its necessity.

subsistence. In order to acquire this fortune, or even to get this subsistence, they must, in the course of a year,^^^ execute

quantity of work of a

who

are

all

work with a

tion of

by

endeavour

The

great-

success in

some

may, no doubt, sometimes animate the exer-

a few men of extraordinary

spirit

and ambition. Great ob-

however, are evidently not necessary in order to occasion the

jects,

greatest exertions. Rivalship in

man to

certain degree of exactness.

ness of the objects which are to be acquired particular professions

is

endeavouring to jus-

one another out of employment, obliges every

to execute his

a certain

value; and, where the competition

the rivalship of competitors,

free, tie

known

mean

professions,

and emulation render excellency, even

an object of ambition, and frequently occa-

sion the very greatest exertions. Great objects, on the contrary,

alone and unsupported by the necessity of application, have seldom

been

sufficient to occasion

any considerable

exertion. In England,

success in the profession of the law leads to jects of ambition;

have ever in

this

some very great ob-

and yet how few men, born

to easy fortunes,

country been eminent in that profession?

The endowments

of schools and colleges have necessarily dimin-

ished more or less the necessity of application in the teachers. Their

Endowments diminiRh

subsistence, so far as

arises

it

from

their salaries, is evidently de-

the neces-

rived from a fund altogether independent of their success and rep-

sity of

utation in their particular professions.

application,

.

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. necessity of application,

though always more or

The

less diminished, is

not in this case entirely taken away.^^^ Reputation in his profession

which is not entirely re-

moved where the teacher

some importance to him, and he still has some dependency upon the affection, gratitude, and favourable report of those who have attended upon his instructions; and these favourable sentiments he is likely to gain in no way so well as by deserving them, is still

that

of

is,

by the

abilities

and diligence with which he discharges ev-

ery part of his duty. prohibited from receiving

any

reads “the year.” Adam Smithy p. 48, thinks Smith’s salary at Glasgow have been about £70 with a house, and his fees near £100.

may

In other universities the teacher

^Ed.

^Rae,

is

I

Life of

receives

part of his

emoluments from fees,

THE WEALTH OF NATIONS

718 but

is

en-

tirely

ab-

sent his

when

whole

revenue arises

from endowments.

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

duty as

this case, set as directly in opposition to his set

it.

It is the interest of

he can; and

if

his

man

every

emoluments are

to

to live as

it is

much

neglect

it

altogether, or,

will not suffer

him

do

to

he

if

is

this, to

tive in

and a lover of labour,

perform

it

his interest to

derive

and

in as careless

slov-

naturally ac-

is

employ that

activity

some advantage, rather than

performance of his duty, from which he can derive none.

in the

Members

it is

any way, from which he can

certain-

some authority which

subject to

is

it is

vulgarly understood, either to

enly a manner as that authority will permit. If he

of a col-

at his ease as

be precisely the same, whether

he does, or does not perform some very laborious duty, ly his interest, at least as interest

possible to

which he

If the authority to

is

subject resides in the

porate, the college, or university, of which he himself

is

body

cor-

a member,

lege or

university

and

are in-

self,

dulgent to their

to

in

which the greater part of the other members

persons who make a common

are, like

him-

either are, or ought to be teachers; they are likely

fellow

and every man

members.

provided he himself

cause, to be all very indulgent to one another,

to consent that his neighbour is

may neglect

his duty,

allowed to neglect his own. In the university

of Oxford, the greater part of the public professors have, for these

many control is

years, given

up

If the authority to

External

body

altogether even the pretence of teaching.

which he

corporate of which he

is

is

subject resides, not so

a member, as

in

much

in the

some other extrane-

ignorant

and capri-

ous persons, in the bishop of the diocese for example; in the gov-

cious.

ernor 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 is,

upon

to give a certain

What

his pupils

number

those lectures shall be,

of the teacher;

must

and that diligence

is

liable to

it.

An

who

exercise

it,

or in the year.

be proportioned to the

extraneous jurisdiction of

be exercised both ignorantly and ca-

priciously. In its nature it is arbitrary

persons

week

depend upon the diligence

still

is likely to

motives which he has for exerting this kind, besides,

a certain number of hours, th^t

of lectures in the

and discretionary, and the

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

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 judgment.

person subject to such jurisdiction

is

necessarily degraded

and, instead of being one of the most respectable,

is

by

it,

rendered one of

EDUCATION OF YOUTH

719

the meanest and most contemptible persons in the society. It

is

by

powerful protection only that he can effectually guard himself against the bad usage to which he

protection he

is

his profession,

most

by

this

ability or diligence in

but by obsequiousness to the will of his superiors,

and by being ready, the interest,

and

at all times exposed;

is

likely to gain, not

at all times, to sacrifice to that will the rights,

and the honour of the

member. Whoever has attended

body corporate of which he is a any considerable time to the

for

administration of a French university, must have had occasion to

remark the

effects

which naturally

result

from an arbitrary and ex-

traneous 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

number

To compel

young

men to attend a university has a

bad effect on the teachers.

of students to such universities, independent of the merit or repu-

tation of the teachers.

The

privileges of graduates are a sort of

The privileges of

statutes of apprenticeship,

ment of education,

which have contributed

to the

improve-

just as the^^^ other statutes of apprenticeship

ries,

appren-

charitable foundations of scholarships, exhibitions, bursa-

&c. necessarily attach a certain

number

of students to certain

colleges,

independent altogether of the merit of those particular

colleges.

Were

free to chuse

the students

what

upon such

ticeship.

Scholarships,

charitable foundations left

college they liked best, such liberty

haps contribute to excite some emulation among

A regulation,

ates are

thus like

have to that of arts and manufactures.

The

gradu-

might per-

different colleges.

on the contrary, which prohibited even the independ-

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 ent

regulations

against

migration,

emulation. If in each college the tutor or teacher,

student in

all arts

and

who was

sciences, should not

to instruct each

be voluntarily chosen by

and assignment of stu-

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 the student, but appointed

obtained; such a regulation would not only tend very tinguish all lege,

much

in all of

read “in physic.”

^‘Ed.

but to diminish very

“®Eds.

I

much

to ex-

emulation among the different tutors of the same

and

2

them the i

necessity of

coldili-

does not contain “the.”

dents to particular

tutors are

equally pernicious.

the wealth of nations

720

gence 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

who

or

all,

have no other recompence but their salary. Where such

If the teacher

pleasant thing to

happens to be a man of sense, it must be an unhim to be conscious, while he is lecturing his stu-

regulations pre-

dents, that

vail a

very

teacher

may

little

he

either speaking or reading nonsense, or

is

better than nonsense. It

upon them with plain enough marks

or perhaps attend

suppress

contempt, and derision. If he

signs of

dikpprobation on

is

him

to

to observe that the greater part of his students desert his lectures;

avoid or all visible

what

must too be unpleasant

of lectures, these motives alone, without

number est,

of neglect,

obliged, therefore, to give a certain

is

any other

inter-

might dispose him to take some pains to give tolerably good

which

pupils.

igence.

will effectually blunt the

The

may be

however

ones. Several different expedients,

the part of his

edge of

all

fallen upon,

those incitements to dil-

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 he

self that

giving a lecture.

is

and application self to ish,

will enable

him

it,

he

may enable him

The

may flatter

slightest degree of

him-

knowledge

to do this, without exposing him-

contempt or derision, or saying any thing

absurd, or ridiculous.

time,

The

th^-t is really fool-

discipline of the college, at the

to force all his pupils to the

same

most regular

at-

tendance upon this sham-lecture, and to maintain the most decent

and respectful behaviour during the whole time

of the perform-

ance.

The discipline

University

and

of colleges

and universities

is

in general contrived,

not for the benefit of the students, but for the interest, or more

college discipline is

con-

trived for

properly speaking, for the ease of the masters. Its object cases, to lects or

performs his duty, to oblige the students in

the ease of the

have to him as

teachers,

ability. It

and quite unnecessary if the teachers

are toler-

ably gent.

dili-

order,

is,

in all

maintain the authority of the master, and whether he neg-

if

he performed

it

all

cases to be-

with the greatest diligence and

seems to presume perfect wisdom and virtue in the one

and the

greatest weakness

and

folly in the other.

Where

the

masters, however, really perform their duty, there are no examples, I believe, that the greater part of the students ever neglect theirs.

No

discipline

which are

any such in

is

really

ever requisite to force attendance upon lectures

worth the attending, as

lectures are given. Force

some degree

and

is

well

restraint

known wherever

may, no doubt, be

requisite in order to oblige children, or very

young

EDUCATION OF YOUTH boys, to attend to those parts of education which

721 it is

thought nec-

essary 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

part of education. Such

young men,

that, so far

any

the generosity of the greater part of

is

from being disposed to neglect or despise

the instructions of their master, provided he shows some serious intention of being of use to them, they are generally inclined to

pardon a great deal of incorrectness

in the

performance of his duty,

and sometimes even to conceal from the public a good deal of gross negligence.

Those parts

of education,

which there are no public

When

a young

man

it is

to be observed, for the teaching of

institutions, are generally the best taught.

goes to a fencing or a dancing school, he does

not indeed always learn to fence or to dance very well; but he

dom

fails of

school

is

The good effects commonly so evident. The expence of a

learning to fence or to dance.

riding school are not

so great, that in most places

it is

sel-

I he parts of education that

are not

conducted

by public of the

riding

a public institution.

The

institu-

tions are

better

taught.

three most essential parts of literary education, to read, write, and

account,

it still

continues to be

than in public schools; and fails of

acquiring

them

it

more common to acquire

in private

very seldom happens that any body

to the degree

m which

it is

necessary to ac-

quire them.

In England the public schools are universities.

much

less

corrupted than the

In the schools the youth are taught, or at least

may be

English public schools,

taught, Greek and

Latm;

pretend to teach, or which, universities the

that it is

is,

every thing which the masters

expected they should teach. In the

youth neither are taught, nor always can find any

proper means of being taught, the sciences, which of those incorporated bodies to teach.

it is

The reward

the business

of the school-

master 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

where the teachers

depend

more upon

fees,

are less

corrupt

than the universities.

not necessary that a person should bring a certificate of his

having studied a certain number of years at a public school. If up-

on examination he appears to understand what questions are asked about the place where

The ties, it

parts of education which are

is

taught there, no

he learnt

it.

commonly taught

in universi-

may, perhaps, be said are not very well taught. But had

universiit

not been for those institutions they would not have been commonly

taught at

all,

What the

and both the individual and the public would have

ties

teach

badly

would not be

suffered a

ucation.

good deal from the want of those important parts of ed-

commonly taught

the wealth of nations

722 at all but

for them.

The

present universities of Europe were originally, the greater

part of them, ecclesiastical corporations; instituted for the educa-

They were founded by

the authority of the

They

tion of churchmen.

were

pope, and were so entirely under his immediate protection, that

originally

members, whether masters or students, had all of them what called the benefit of clergy, that is, were exempted from

instituted

their

for the

was then

education of

the civil jurisdiction of the countries in which their respective uni-

were situated, and were amenable only

church-

versities

men in

tribunals.

What was

to the ecclesiastical

taught in the greater part of those universities

theology

was

suitable to the end of their institution, either theology, or

something that was merely preparatory to theology. for this

Latin

was necessary,

When Christianity was first established by law, a corrupted had become the common language rope.

The

service of the church accordingly,

the Bible which Latin; that

is,

was read

in the

common

pire, Latin gradually ceased to

But the reverence

Eu-

and the translation of

in churches, were both in that corrupted

language of the country. After the

irruption of the barbarous nations

rope.

Latin

of all the western parts of

who overturned

the

Roman em-

be the language of any part of Eu-

of the people naturally preserves the es-

tablished forms and ceremonies of religion, long after the circum-

stances which

first

introduced and rendered them reasonable are no

more. Though Latin, therefore, was no longer understood any

where by the great body of the people, the whole service of the church

still

continued to be performed in that language.

ferent languages were thus established in Europe, in the

Two

dif-

same man-

ner as in ancient Egypt; a language of the priests, and a language

and a profane; a learned and an unlearned was necessary that the priests should understand

of the people; a sacred

language. But

it

something of that sacred and learned language to officiate;

and the study

in

which they were

of the Latin language therefore

made,

from the beginning, an essential part of university education. but not Greek or

Hebrew, which were introduced

It

was not

language.

so with that either of the Greek, or of the

The

infallible decrees of the

Hebrew

church had pronounced the

Latin translation of the Bible, commonly called the Latin Vulgate, to have been equally dictated

by

divine inspiration,

of equal authority with the Greek

and Hebrew

and therefore originals.

The

by the Reforma-

knowledge of those two languages, therefore, not being indispen-

tion.

sably requisite to a churchman, the study of them did not for a long

time

make

a necessary part of the

common

course of university ed-

ucation. There are

some Spanish universities, I am assured, in which the study of the Greek language has never yet made any part of that course. The first reformers found the Greek text of the new testament, and even the

Hebrew

text of the old,

more favourable

EDUCATION OF YOUTH

7^3

than the vulgate translation, which, as might

to their opinions,

naturally be supposed, had been gradually

accommodated

port the doctrines of the catholic church.

many

therefore, to expose the

They

to sup-

set themselves,

errors of that translation, which the

Roman catholic clergy were thus put under the necessity of defending or explaining.

knowledge of the

But

not well be done without some

this could

original languages, of

which the study was there-

fore gradually 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

by catholics and Italians, happened to come much about the same time that the doctrines of the

cultivated

were set on

foot.

In the greater part of

principally into fashion

reformation

universities, therefore, that

language was taught previous to the study of philosophy, and as soon as the student had

made some

The He-

progress in the Latin.

brew 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

when

that of philosophy, and

commonly commence

the student had entered

till

after

upon the

study of theology. Originally the

first

rudiments both of the Greek and Latin lan-

guages were taught in universities, and in some universities they still

continue to be

In others

so.^^^

it is

expected that the student

should have previously acquired at least the rudiments of one or

both of those languages, of which the study continues to make every where a very considerable part of university education.

The

ancient Greek philosophy

was divided

logic.

into three great

This general division seems perfectly agreeable to

great

to be

a

considerable part

of uni-

education.

There are three

branches

the nature of things.

The

continue

versity

branches; physics, or natural philosophy; ethics, or moral philos-

ophy; and

Greek and Latin

phenomena

of Greek

of nature, the revolutions of the heavenly

bodies, eclipses, comets; thunder, lightning,

nary meteors; the generation, the

life,

and other

extraordi-

growth, and dissolution of

plants and animals; are objects which, as they necessarily excite

the wonder, so they naturally

call forth the curiosity, of

man-

philoso-

phy,

(i)physicsor

natural philoso-

kind to enquire into their causes. Superstition satisfy this curiosity, to the

by

first

attempted to

referring all those wonderful appearances

immediate agency of the gods. Philosophy afterwards en-

deavoured to account for them, from more familiar causes, or from such as mankind were better acquainted with, than the agency of reads “and they still continue to be so in some univer'^itie^ “Necessarily” and “naturally” are transposed in ed. i.

Ed.

I

”

phy,

THE WEALTH OF NATIONS

724

As those great phenomena are the

the gods.

first

objects of

human

curiosity, so the science which pretends to explain them must nat-

urally have been the first branch of philosophy that

The (2) ethics

or moral philoso-

phy,

philosophers, accordingly, of

first

whom

was

cultivated.

history has preserved

any account, appear to have been natural philosophers. In every age and country of the world men must have attended 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 to the characters, designs,

as writing

came

into fashion, wise men, or those

who

fancied them-

number of express their own

selves such, would naturally endeavour to increase the

those established and respected maxims, and to

sense of what was either proper or improper conduct, sometimes in

what are called the

the more artificial form of apologues, like of uEsop;

or wise sayings, like

fables

more simple one of apophthegms, the Proverbs of Solomon, the verses of Theog-

and sometimes

in the

and Phocyllides, and some part of the works of Hesiod. They

nis

might continue the

number

in this

of those

manner

maxims

for a long

time merely to multiply

of prudence

and morality, without

even attempting to arrange them in any very distinct or methodical order,

much

eral principles,

from

connect them together by one or more gen-

from which they were

their natural causes.

ment of ples,

less to

The beauty

all

of a systematical arrange-

different observations connected

was

first

deducible, like effects

by a few common

princi-

seen in the rude essays of those ancient times towards

a system of natural philosophy. Something of the same kind was afterwards attempted in morals.

The maxims

of

common

life

were

arranged in some methodical order, and connected together by a

few common to

same manner as they had attempted arrange and connect the phenomena of nature. The science which principles, in the

pretends to investigate and explain those connecting principles,

what and

properly called moral philosophy.

Different authors gave different systems both of natural

(3)

logic.

is

is

and

moral philosophy. But the arguments by which they supported those different systems, far from being always demonstrations,

were frequently at best but very slender probabilities, and sometimes mere sophisms, which had no other foundation but the inac-

curacy and ambiguity of

have in to

all

common

language. Speculative systems

ages of the world been adopted for reasons too frivolous

have determined the judgment of any

man

of

common

sense, in

a matter of the smallest pecuniary interest. Gross sophistry has scarce ever

had any

influence

cept in matters of philosophy

upon the opinions

of mankind, exand speculation; and in these it has

EDUCATION OE YOUTH

7-5

frequently had the greatest. The patrons of each system of natural and moral philosophy naturally endeavoured to expose the weak-

ness 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

demonstrative argument, between a fallacious and a conclusive one; and Logic, or the science of the general principles of good and

bad reasoning, necessarily arose out of the observations which a scrutiny of this kind gave occasion to.

both to physics and to

rior

deed in

all,

ethics, it

Though

in-

but in the greater part of the ancient schools of philos-

ophy, previously to either of those sciences. to

in its origin, poste-

was commonly taught, not

The

student,

it

seems

have been thought, ought to understand well the difference be-

tween 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

Philoso-

phy was after-

five.

wards

In the ancient philosophy, whatever was taught concerning the

human mind

nature either of the

or of the Deity,

made a

part of

di-

vided into five

branches,

the system of physics. Those beings, in whatever their essence

might be supposed to universe,

consist,

were parts of the great system

and parts too productive of the most important

Whatever human reason could cerning them, made, as

effects.

either conclude, or conjecture, con-

were, two chapters, though

it

of the

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

was natural to dwell two chapters than upon any other of the sci-

taught only as subservient to theology, longer

upon these

They were divided into many

gradually more and more extended, and were

ence.

its,

of

in the

which so

it

inferior chapters,

little

till

at last the doctrine of spir-

can be known, came to take up as much room

system of philosophy as the doctrine of bodies, of which so

much can be known. The

doctrines concerning those two subjects

were considered as making two

distinct sciences.

Metaphysics or Pneumatics were

What

are called

set in opposition to Physics,

and

not only as the more sublime, but, for the pur-

were cultivated

poses of a particular profession, as the more useful science of the two.

The proper

Ed. Ed.

subject of experiment and observation, a subject

I

reads “those.”

I

reads,

^ Ed.

“What was

opposition to Physics,

i

called

and was

reads “Those two chapters were.” Metaphysics or Pneumatics was set

cultivated.”

in

Metaphysics

or pneumatics

were added to physics,

the wealth of nations

726 in

which a careful attention

discoveries,

after a

was almost

ful attention

was greatly rise to

The

useful

subject in which,

few very simple and almost obvious truths, the most care-

can discover nothing but obscurity and uncertainty,

and can consequently produce nothing but

When

and gave

many

capable of making so

is

entirely neglected.

third, to

and sophisms,

cultivated.

those two sciences had thus been set in opposition to one

them naturally gave birth to a

another, the comparison between

Ontology’.

subtleties

what was

called Ontology, or the science

common

the qualities and attributes which were jects of the other

two

sciences.

But

if

subtleties

which treated of to both the sub-

and sophisms com-

posed the greater part of the Metaphysics or Pneumatics of the schools, they

composed the whole

of this

cobweb science

of Ontol-

ogy, which was likewise sometimes called Metaphysics.

Wherein consisted the happiness and perfection

Moral philoso-

phy de-

ered not only as an individual, but as the

and

of the great society of

member

of a of

man, consid-

a

family, of a mankind, was the object which the

generated

state,

into casu-

ancient moral philosophy proposed to investigate. In that philos-

istry

and

an ascetic morality,

ophy the

duties of

human

life

happiness and perfection of

came

natural philosophy,

were treated of as subservient to the

human

life.

But when moral, as

well as

be taught only as subservient to theology, the duties of human life were treated of as chiefly subservient to

to the happiness of a life to come. In the ancient philosophy the

was represented

perfection of virtue

the person life.

who

possessed

it,

In the modern philosophy

erally, or rather as

happiness in this

as necessarily productive, to

most perfect happiness in this was frequently represented as gen-

of the it

almost always inconsistent with any degree of

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 life

;

By

far the

most important of

the different branches of philosophy,

became

in this

the moral philosophy of the schools. all

far the the order

being (i) logic, (2)

ontology, (3) Pneumatology, (4) a debased

moral philoso-

manner by

most corrupted.

Such, therefore, was the

common

course of philosophical educa-

tion in the greater part of the universities in

Europe. Logic was Ontology came in the second place: Pneumatology, comprehending the doctrine concerning the nature of the human taught

first:

soul and of the Deity, in the third: In the fourth followed a debased system of moral philosophy, which was considered as immediately

connected with the doctrines of Pneumatology, with the immortality of the human soul, and with the rewards and punishments which,

^Ed.

I

reads “of.”

m

EDUCATION OF YOUTH

were to be expected in a life to come: system of Physics usually concluded the

from the

justice of the Deity,

A

and

short

superficial

phy, (5) physics.

course.

The

alterations

which the universities of Europe thus introduced

into the ancient course of philosophy, were

all

meant

for the educa-

Univeiedu-

sity

cation

tion of ecclesiastics,

and

to render

it

a more proper introduction to

the study of theology. But the additional quantity of subtlety and sophistry; the casuistry

ations introduced into for the education of

either to

and the

ascetic morality

which those

certainly did not render

it,

gentlemen or

men

it

likely to

alter-

more proper

of the world, or

more

likely

is

what

still

produce

men of the

world.

improve the understanding, or to mend the heart.

This course of philosophy

was thus made less

continues to be taught in

the greater part of the universities of Europe; with more or less

dili-

This course

is

still

gence, according as the constitution of each particular university

happens to render diligence more or

less necessary to the teachers.

In some of the richest and best endowed universities, the tutors content themselves with teaching a few unconnected shreds of this corrupted course;

negligently

and

and even these they commonly teach very

most universities

with more or less diligence.

superficially.

The improvements

which, in modern times, have been

several different branches of philosophy,

of them, been

and parcels

taught in

made

The greater part

in universities;

of universities

have

made

in

not, the greater part

though some no doubt have.

have not even been very forward to

Few improvements

in

philoso-

phy havfr been

adopt those improvements, after they were made; and several of

made by

those learned societies have chosen to remain, for a long time, the

univer-

sanctuaries in which exploded systems and obsolete prejudices

sities,

and

fewest by

found shelter and protection, after they had been hunted out of every other corner of the world. In general, the richest and best en-

dowed universities have been tl;e slowest in adopting those improvements, and the most averse to permit any considerable change in the established plan of education. Those improvements were more easily introduced into some of the poorer universities, in which the teachers, depending their subsistence,

upon

the richest uni-

versities

their reputation for the greater part of

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 profes-

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 sion, that of

themselves the education of almost

almost

all

gentlemen and

men

all

other people, particularly of

of fortune.

“^Above^ p.

717.

No

better method,

it

In spite of all this

the universities

drew to themselves the

education of gentle-

the wealth of nations

728

men and men of fortune,

any advantage,

seems, could be fallen upon of spending, with

long interval between infancy and that period of

life at

the

which men

begin to apply in good earnest to the real business of the world, the

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 business which

to

is

that business. but in

England be-

it is

coming

more usual to

send

young

men to

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. In England,

it

Our young people, it is said, generally return home much improved by their travels. A young man who goes abroad at seventeen or and returns home at one and twenty, returns three or four years older than he was when he went abroad; and at that age it is eighteen,

travel

abroad, plan so absurd that nothing but the

ds-

credit of

the universities

very

difficult

not to improve a good deal in three or four years. In

one or two foreign languages; a knowledge, however, which

dom

sufficient to enable

him

priety. In other respects,

could

well have

travelling so very young,

into

repute.

either to speak or write

of

is sel-

them with pro-

he commonly returns home more con-

ceited, more unprincipled, more dissipated, and more incapable of any serious application either to study or to business, than he could

have brought it

some knowledge

the course of his travels, he generally acquires

tion the

become

a

in so short

time,

by spending

most precious years

had he

in the

of his life, at

lived at

home.

most frivolous

By

dissipa-

a distance from the in-

spection and controul of his parents and relations, every useful habit,

which the

earlier parts of his

dency to form

in

education might have had some ten-

him, instead of being rivetted and confirmed,

almost necessarily either weakened or effaced. Nothing but the credit into

which the universities are allowing themselves to

is

disfall,

could ever have brought into repute so very absurd a practice as that of travelling at this early period of

life.

By

sending his son

abroad, a father delivers himself, at least for some time, from so disagreeable an object as that of a son unemployed, neglected, and

going to ruin before his eyes.

Such have been the

effects of

some

of the

modern

institutions for

education. Different plans and different institutions for education

have taken place In Greece the state

in other ages

in

gym-

nastics

seem to

nations.

In the republics of ancient Greece, every free citizen was instructed, under the direction of the public magistrate, in gymnastic

directed

education

and

exercises

and

in music.

By

gymnastic exercises

it

was intended to

harden his body, to sharpen his courage, and to prepare him for the fatigues and dangers of war; and as the Greek militia was, by all

EDUCATION OF YOUTH

729

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

at least

it

by

and music.

was intended. By the other part, music, it was proposed, the philosophers and historians 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 both of public

Rome

In ancient

and private

life.

Campus Martius answered

the exercises of the

same purpose as those of the Gymnazium in ancient Greece,^-and they seem to have answered it equally well. But among the

The Romans had the Campus

Romans

Martius,

the

there

was nothing which corresponded

cation of the Greeks.

The morals

to the musical edu-

Romans, however, both

of the

in

resemlingthe

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

gymna-

were superior in private life, we have the express testimony of Polyand of Dionysius of Halicarnassus, two authors well ac-

They

private

bius

quainted with both nations; and the whole tenor of the Greek and

Roman history bears witness to the superiority of the public morals of the tions als of

ways

Romans. The good temper and moderation

seems to be the most

of contending fac-

essential circumstance in the public

mor-

a free people. But the factions of the Greeks were almost violent

and sanguinary; whereas,

Roman faction; and from the may be considered as in

no blood had ever been shed in any time of the Gracchi the

Roman

al-

the time of the Gracchi,

till

republic

reality dissolved. Notwithstanding, therefore, the very respectable

and notwith-

authority of Plato,^^® Aristotle,

and Polybius,

standing the very ingenious reasons

by which Mr. Montesquieu

deavours to support that authority,

it

en-

seems probable that the

musical education of the Greeks had no great effect in mending their morals, since, without any such education, those of the

Romans

were upon the whole superior. The respect of those ancient sages for the institutions of their ancestors, had probably disposed them to find

much political wisdom in what was, perhaps, merely an

custom, continued, without interruption,

from the

ancient

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 amuse-

ments of almost

all

barbarous nations, and the great accomplish-

ments which are supposed to fit any man for entertaining his society. It is so at this day among the negroes on the coast of Africa.

^ Repeated

all

but verbatim from above, p. 658.

$6; xviii., 34. Repub., iii., 400-401. vi.,

^Esprit des are quoted.

lots, liv. iv.,

Ant. Rom., Politics,

chap,

viii,

ii,,

1340

xxiv. to xxvii., esp. xxvi. a.

^ Hist,

iv., 20.

where Plato, Aristotle and Polybius

sium, but no music.

were none the worse for its

absence.

THE WEALTH OF NATIONS

730 It

among the ancient Celtes, among the ancient Scandinavand, as we may learn from Homer, among the ancient Greeks

was

ians,

so

in the times preceding the

Trojan war.^-^

had formed themselves into

little

When

republics,

it

the Greek tribes

was natural that the

study of those accomplishments should, for a long time, make a part

common education of the people. who instructed the young people either

of the public and

The masters

The teachers of military exercises

and

music were not paid or appointed

by the

in military exercises,

do not seem

pointed by the state, either in

Rome

republic of whose laws and customs

in war,

it

ercises.

find,

But

and

it

Greek

The

are the best informed. fit

himself for defend-

and should, upon that account, learn

it left

music or

or even in Athens, the

we

state required that every free citizen should

ing

in

have been paid, or even ap-

to

his military ex-

him to learn them of such masters as he could for this purpose,

seems to have advanced nothing

but a

state.

public field or place of exercise, in which he should practise and

perform them. Reading, writing

In the early ages both of the Greek and

Roman

republics, the

other parts of education seem to have consisted in learning to read,

and arith-

and account according

to the arithmetic of the times.

These

metic

write,

were taught

accomplishments the richer citizens seem frequently to have acquired at home, by the assistance of some domestic pedagogue,

who

and the poorer

citi-

privately.

was

generally, either a slave, or a freed-man;

zens, in the schools of such masters as hire.

made a trade

of teaching for

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

By a law of Solon, indeed, the children were acquitted from

of them.

maintaining those parents in their old age,^®^ instruct Philosophical

them

in

some

who had

neglected to

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

education

was

independent of the state.

the schools of philosophers and rhetoricians, in order to be instructed in these fashionable sciences.

But those schools were not

supported by the public.

a long time barely tolerated

by

it.

The demand

They were

for philosophy

for

and rhetoric was for a long time

so small, that the first professed teachers of either could not find

constant employment in any one city, but were obliged to travel

about from place to place. In this manner lived Zeno of Elea, Protagoras, Gorgias, Hippias, Iliad,

xiii.,

and many

others.

137; xviii, 494, 594; Odyssey,

i.,

As

the

demand

152; viiL, 265;

xviii.,

in-

304;

xxiii, 134.

Ed.

I places “those parents” here. Plutarch, Life of Solon, quoted by Montesquieu, Esprit des Lois, xxvi., ch. V.

liv.,

EDUCATION OF YOUTH creased, the schools both of philosophy

tionary;

73^

and rhetoric became

Athens, and afterwards in several other

first in

cities.

sta-

The

however, seems never to have encouraged them further than

state,

by assigning to some of them a particular place to teach in, which was sometimes done too by private donors. The state seems to have assigned the Academy to Plato, the Lyceum to Aristotle, and the Portico to Zeno of Citta, the founder of the Stoics. But Epicurus be-

queathed his gardens to his own school.

Till

about the time of Mar-

cus 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 honoraries or fees of his scholars.

that philosophical emperor, as

upon one er

we

The bounty which

learn from Lucian, bestowed

the teachers of philosophy, probably lasted no long-

of

than his own

of graduation,

life.

and

There was nothing equivalent to the privileges

to

have attended any of those schools was not

necessary, in order to be permitted to practise

own

or profession. If the opinion of their scholars to them, the law neither forced

any particular trade

utility

any body

to

could not draw

go to them, nor

rewarded any body for having gone to them. The teachers had no jurisdiction over their pupils, nor

any other authority besides that

natural authority, which superior virtue and abilities never

procure from young people towards those

any part of their education. At Rome, the study of the

civil

not of the greater part of the ilies.

in of

The young

fail

to

are entrusted with

law made a part of the education,

citizens,

people, however,

who

but of some particular fam-

who wished

to acquire

knowledge

had no other method the law, had studying it, than by frequenting the company of such of their reno public school to go to, and

lations

and

friends, as

were supposed to understand

it.

It is perhaps

worth while to remark, that though the laws of the twelve tables were,

many

publics, yet

of them, copied from those of

law never seems

to

republic of ancient Greece. In

some ancient Greek

have grown up to be a science

Rome it became a science very

and gave a considerable degree

in

had the reputation of understanding

it.

any

who

In the republics of ancient

Greece, particularly in Athens, the ordinary courts of justice consisted of

numerous, and therefore disorderly, bodies of people, who

frequently decided alfnost at random, or as clamour, faction and

party

spirit

cision,

happened

when

it

to determine.

The ignominy

was to be divided among

five

of

an unjust de-

hundred, a thousand,

^'^^The words “one of” do not occur in eds. i and 2 They are perhaps a misprint for “some of” or a misreading suggested by a failure to understand that “his own life” is that of Marcus Antoninus. See Lucian, Emuchus, iii. .

tions for

teaching

law

exist-

ed at

Rome, where law

was first developed

re-

early,

of illustration to those citizens

No public institu-

into

an

orderly

system.

THE WEALTH OF NATIONS

732

or fifteen hundred people (for son^e of their courts were so very nu-

merous), could not

fall

very heavy upon any individual. At Rome,

on the contrary, the principal courts of

justice consisted either of

a

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 single judge, or of

cases, such courts,

from

their anxiety to avoid blame,

would nat-

urally endeavour to shelter themselves under the example, or precedent, of the judges in

some other

essarily

in

it

and precedent, nec-

Roman law into that regular and orderly system

has been delivered

like effects

down to us; and the like attention has

upon the laws

attention has taken place.

mans over

before them, either in the same, or

court. This attention to practice

formed the

which

had the

who had sat

The

of every other country

where such

superiority of character in the

that of the Greeks, so

Ro-

much remarked by Polybius and

Dionysius of Halicarnassus,^^^ was probably more owing to the better constitution of their courts of justice,

stances to which those authors ascribe

have been particularly distinguished

than to any of the circum-

it.

The Romans

are said to

for their superior respect to

an

But the people who were accustomed to make oath only before some diligent and well-informed court of justice, would naturally be much more attentive to what they swore, than they who were accustomed to do the same thing before mobbish and disorderly asoath.

semblies.

The ancient

system

was more successful

than the modern,

The

abilities,

both

civil

and military, of the Greeks and Romans,

will readily be allowed to have been, at least, equal to those of any modern nation. Our prejudice is perhaps rather to overrate them. But except in what related to military exercises, the state seems to

have been at no pains to form those great

abilities: for I

cannot be

which

induced to believe, that the musical education of the Greeks could

corrupts

be of much consequence in forming them. Masters, however, had

public

teaching

been found,

it

seems, for mstructing the better sort of people

among

and

those nations in every art and science in which the circumstances of

stifles

their society rendered it necessary or convenient for

private.

structed.

them

The demand for such instruction produced, what

produces, the talent for giving

it;

to be init

always

and the emulation which an un-

restrained competition never fails to excite, appears to have brought

that talent to a very high degree of perfection. In the attention

which the ancient philosophers excited,

in the

empire which they

acquired over the opinions and principles of their auditors, in the faculty which they possessed of giving a certain tone to the conduct

and character and conversation of those auditors; they appear to Above,

p. 729.

EDUCATION OF YOUTH have been much superior

lo

any modern

the diligence of public teachers

is

733

modern

teachers. In

more or

less

corrupted

by

times,

the cir-

cumstances, which render them more or less independent of their success

and reputation

in their particular professions.

too put the private teacher, petition with them, in the

who would pretend

same

state with

to

cannot have the same

sells his

profit,

them much

dearer, he

circumstances will not be

is

com-

who trade with

goods at nearly the same price, he

and poverty and beggary at

not bankruptcy and ruin will infallibly be his sell

into

a merchant who attempts

to trade without a bounty, in competition with those

a considerable one. If he

Their salaries

come

likely to

lot. If

least, if

he attempts to

have so few customers that

much mended. The

his

privileges of gradua-

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 tion, besides, are in

those privileges can be obtained only

the public teachers. instructions of

demand them.

The most

any private

teacher, cannot always give

from these

It is

by attending the lectures of upon the ablest

careful attendance

any

title

to

different causes that the private

commonly taught in unimodern times generally considered as in the very low-

teacher of any of the sciences which are versities, is in

est order of

men

of letters.

A man

of real abilities can scarce find

out a more humiliating or a more unprofitable employment to turn

The endowments

colleges have, in this

man-

ner, not only corrupted the diligence of public teachers, but

have

them

to.

rendered

Were

it

and

of schools

almost impossible to have any good private ones.

no S5^tem, no was not some demand; or

there no public institutions for education,

science would be taught for which there

which the circumstances of the times did not render

it

either nec-

essary, or convenient, or at least fashionable, to learn.

A

private

if there

were no

stitutos for educa-

teacher could never find his account in teaching, either an exploded

and antiquated system

of a science

science universally believed to be a of sophistry sist

acknowledged to be useful, or a

mere

and pedantic heap

useless

and nonsense. Such systems, such

no where, but

sciences,

can sub-

in those incorporated societies for education

whose prosperity and revenue are in a great measure independent of their reputation,

Were

and altogether independent

of their industry.

there no public institutions for education, a gentleman, after

going through, with application and

abilities,

the most complete

course of education which the circumstances of the times were sup-

posed to afford, could not come into the world completely ignorant

common

of every thing

which

gentlemen and

men of the world.

is

the

except

what was

subject of conversation

among

taught,

THE WEALTH OF NATIONS

734

Women’s education

There are no public there

institutions for the education of

women, and

accordingly nothing useless, absurd, or fantastical in the

is

is e'^cel-

knt

common

in

conse-

course of* their education.

parents or guardians judge

quence of the ab-

it

They

are taught

and they are taught nothing

Every part of

else.

what

them

necessary or useful for

their

to learn;

their education

sence of

tends evidently to some useful purpose; either to improve the natu-

public in-

ral attractions of their person, or to

stitutions

form

mind

their

to reserve, to

modesty, to chastity, and to (economy; to render them both likely to

become the mistresses of a family, and

to behave properly

when

woman

feels

they have become such. In every part of her

of her education.

some conveniency or advantage from every part It

seldom happens that a man, in an^ part of his

conveniency or advantage from some

a

life

life,

derives

any

of the

most laborious and

no

it

troublesome parts of his education.

Ought the

Ought the state

public, therefore, to give

asked, to the education of the people?

Or

to give

what are the

no attention to

educa-

it

to attend to

and

in

may be

ought to give any,

if it

which

different parts of education

to in the different orders of the people?

attention,

ought to attend

it

what manner ought

them?

tion?

In some cases the state of the society necessarily places the greatIn some cases

er part of individuals in

such situations as naturally form in them,

it

ought, in

without any attention of government, almost

others

virtues

it

need not

which that

state requires, or

all

the abilities ancl

perhaps can admit

of.

In other

cases the state of the society does not place the greater part of individuals in such situations, and

some attention of government

is

necessary in order to prevent the almost entire corruption and de-

generacy of the great body of the people. Division

In the progress of the division of labour, the employment of the

who

by labour, that

of labour

far greater part of those

destroys

body of the people, comes to be confined to a few very simple operations, frequently to one or two. But the understandings of the

intellec-

tual, social

and

live

is,

of the great

men are necessarily formed by their ordinary emThe man whose whole life is spent in performing a few

greater part of

martial

ployments.

virtues

unless

simple operations, of which the effects too are, perhaps, always the

govern-

same, or very nearly the same, has no occasion to exert his under-

ment takes

standing, or to exercise his invention in finding out expedients for

pains to

removing

prevent

it,

fore, the

difficulties

which never occur.

He

naturally loses, there-

habit of such exertion, and generally becomes as stupid

and ignorant as torpor of his

it is

possible for a

human

creature to become.

mind renders him, not only incapable

The

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

EDUCATION OF YOUTH private is

life.

Of the great and extensive

altogether incapable of judging;

have been taken

to render

life

he

interests of his country

and unless very particular pains

him otherwise, he

of defending his country in war.

735

equally incapable

is

The uniformity

of his stationary

naturally corrupts the courage of his mind, and

makes him

re-

gard with abhorrence the irregular, uncertain, and adventurous life of

ders

a

soldier. It corrupts

him incapable

severance, in

even the activity of his body, and renwith vigour and per-

of exerting his strength

any oiher employment than that

bred. His dexterity at his

own

to which he has been

particular trade seems, in this

manand

ner, to be acquired at the expence of his intellectual, social,

martial virtues. But in every improved and civilized society this

the people, must necessarily

pains to prevent

fall,

is

body of unless government takes some

the state into which the labouring poor, that

the great

is,

it.

commonly called, of hunters, of shepherds, and even of husbandmen in that rude state of husbandry which precedes the improvement of manuIt is otherwise in the barbarous societies, as they are

factures,

and the extension

of foreign

commerce. In such

societies

whereas in bar-

barous societies

those virtues

the varied occupations of every capacity,

and

man

not

removing

to invent expedients for

are continually occurring. Invention suffered to fall into that

benumb

ized society, seems to

man

oblige every

kept

is

drowsy

to exert his

difficulties

which

and the mind

alive,

all

called,

every man,

has already been observed,

it

is

the

a warrior. Every

some measure a statesman, and can form a tolerable judgment concerning the interest of the society, and the conduct of those who govern it. How far their chiefs are good judges in peace, too is in

or good leaders in war, single

man among

is

obvious to the observation of almost every

them. In such a society indeed, no

man

can well

acquire that improved and refined understanding, which a few

sometimes possess in a more civilized ciety there

is

state.

Though

in

men

a rude so-

a good deal of variety in the occupations of every

in-

dividual, there is not a great deal in those of the whole society.

Every man

does, or is capable of doing, almost every thing

any other man

does, or

is

capable of doing. Every

man

which

has a con-

siderable degree of knowledge, ingenuity, and invention; but scarce

any man has a great degree. The degree, however, which is commonly possessed, is generally sufficient for conducting the whole simple business of the society. In a civilized state, on the contrary,

though there

is little

^ Ed.

I

variety in the occupations of the greater part reads “the mind:> ot

men

are not

”

by

constant

inferior ranks of people. In those barbarous societies, as they are

man

alive

is

stupidity, which, in a civil-

the understanding of almost

are kept

necessity

the wealth of nations

736

of individuals, there

whole

society.

an almost

is

infinite variety in those of the

These varied occupations present an almost

infinite

variety of objects to the contemplation of those few, who, being

attached to no particular occupation themselves, have leisure and

The

inclination to examine the occupations of other people.

con-

templation of so great a variety of objects necessarily exercises their

minds

comparisons and combinations, and renders

in endless

their understandings, in

an extraordinary degree, both acute and

comprehensive. Unless those few, however, happen to be placed in

some very particular

situations, their great abilities,

ourable to themselves,

may

contribute very

ernment or happiness of their

society.

little

cation of

the com-

mon people requires

may

be, in a great measure, obliterated

great

body

human

character

and extinguished

in the

of the people.

The education ilized

good gov-

Notwithstanding the great

abilities of those few, all the nobler parts of the

The edu-

though hon-

to the

of the

and commercial

common

people requires, perhaps, in a civ-

society, 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

attention

from the state

more than that of

which they propose

have before that

to distinguish themselves in the world.

full

time to acquire, or at least to

for afterwards acquiring, every

fit

They

themselves

accomplishment which can recom-

people of

mend them

rank and

parents or guardians are generally sufficiently anxious that they

fortune,

whose parents

can look

to the public esteem, or render

them worthy

of

it.

Their

should be so accomplished, and are, in most cases, willing enough to lay out the expence which is necessary for that purpose. If they

interests,

are not always properly educated, it is seldom from the want of expence laid out upon their education; but from the improper appli-

and who

cation of that expence. It is seldom from the

spend tidr lives

from the negligence and incapacity of the masters who are to be had, and from the difficulty, or rather from the impossibility which

after their

in varied

occupa-

there

tions

employments too

is,

want of masters; but

in the present state of things, of finding in

chiefly

any better. The which people of some rank or fortune spend the

intellec-

greater part of their lives, are not, like those of the

tual,

simple and uniform.

They

common people,

are almost all of

them extremely comhead 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 plicated,

and such as

exercise the

people of some rank and fortune, besides, are seldom such as harass

them from morning leisure,

They

to night.

during which they

generally have a good deal of

may perfect

Ed

I

themselves in every branch

reads “from.”

EDUCATION OE YOUTH either of useful or ornamental laid the foundation, or for

taste in the earlier part of It is otherwise with the

737

may

knowledge of which they

which they

may

have

have acquired some

life.

common

They have

people.

little

time to

unlike the

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

cise to the understanding; while, at the

both so constant and so severe, that less inclination to

apply

to,

it

same

or even to think of

But though the common people cannot,

exer-

time, their labour

them

leaves

little

any

in

little leisure

any thing

poor,

is

and

else.

civilized society,

The

ne so well instructed as people of some rank and fortune, the most essential parts of education, however, to read, write,

can be acquired at so early a period of

and account,

that the greater part

life,

even of those who are to be bred to the lowest occupations, have

or

on the

fgquirL

time to acquire them before they can be employed in those occupa-

ment

For a very small expence the public can facilitate, can encourage, and can even impose upon almost the whole body of the

reading,

people, the necessity of acquiring those most essential parts of ed-

metic,

tions.

of

and^^fth-

ucation.

The

public can facilitate this acquisition

parish or district a

little

school,

by establishing

in

every

may be taught for a may aford it;

where children

reward so moderate, that even a common labourer

the master being partly, but not wholly paid by the public; because,

he was wholly, or even principally paid by

if

it,

he would

soon learn to neglect his business. In Scotland the establishment of such parish schools has taught almost the whole

common

people to

and a very great proportion of them to write and account. In England the establishment of charity schools has had an effect of read,

the same kind, though not so universally, because the establish-

ment

is

not so universal. If in those

which the children are taught

little

to read,

schools the books,

were a

little

more

by

instruc-

tive than they

commonly

tering of Latin,

which the children of the common people are some-

are;

and

if,

instead of a

little

smat-

times taught there, and which can scarce ever be of any use to

them; they were instructed

and mechanics, the

in the

elementary parts of geometry

literary education of this

perhaps be as complete as

it

can

rank of people would

There

is

scarce a

common

trade which does not afford some opportunities of applying to the principles of

therefore gradually exercise Ed.

I

it

geometry and mechanics, and which would not

reads “the.”

and improve the common people

^ Ed.

i

reads “as

it is

capable of being.”

in

by estab-

schools

the wealth of nations

738

those principles, the necessary introduction to the most sublime as well as to the most useful sciences.

public can encourage the acquisition of those most essential

The

giving prizes,

parts of education

by giving small premiums, and

distinction, to the children of the

common

little

badges of

who

people

excel in

them.

The public can impose upon almost

and requiring

men to pass an

examination before set-

ting

up

in trade.

In this way the Greeks and

Romans maintained a

martial spirit.

the whole

body of the people

the necessity of acquiring those most essential parts of education,

by obliging every man to undergo an examination or probation in them before he can obtain the freedom in any corporation, or be allowed to set up 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 ac-

by appointing a certain place for learning and practising them, and by granting to certain masters the privilege of teaching in that place. Those masters do not appear to have had either salaries or exclusive privileges of any kind. Their quisition of those exercises

reward consisted altogether in what they got from their scholars;

and a

citizen

had no

who had

learnt his exercises in the public Gymnasia,

sort of legal advantage over

vately, provided the latter

one who had learnt them

pri-

had learnt them equally well Those

re-

by bestowing upon those who excelled

publics encouraged the acquisition of those exercises,

premiums and badges

little

in

them.

aean

of distinction

To have gained a prize

games gave

illustration,

Nemwho gained it,

in the Olympic, Isthmian or

not only to the person

but to his whole family and kindred. The obligation which every citizen

was under to serve a certain number

in the armies of the republic, sufficiently

of years,

if

called upon,

imposed the necessity of

learning those exercises without which he could not be

fit

for that

service.

Martial spirit in

That

in the progress of

ercises, unless

improvement the practice of military ex-

government takes proper pains to support

it,

goes

the people

would

gradually to decay, and, together with

diminish

great

both the necessary size

and

the danger of a

body

of the people, the

ly demonstrates.

pend, more or

But the security

less,

it,

the martial spirit of the

example of modern Europe of

upon the martial

sufficient-

every society must always despirit of the great

body

of the

people. In the present times, indeed, that martial spirit alone,

and

standing

unsupported by a well-disciplined standing army, would not, per-

army.

haps, be sufficient for the defence and security of

where every

citizen

had the

spirit of

a

soldier,

any

society.

But

a smaller standing

EDUCATION OF YOUTH army would

surely be requisite.

That

739

spirit, besides,

would neces-

much the dangers to liberty, whether real or imaginary, which are commonly apprehended from a standing army. As it would very much facilitate the operations of that army against a foreign invader, so it would obstruct them as much if un-

sarily diminish very

fortunately 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

The

body of the

Roman

militias of

people, than the establishment of

modern

times.

what are

They were much more

simple.

were once established, they executed themselves, and little

or no attention from government to maintain

perfect vigour.

Whereas to maintain, even

the complex regulations of any

and painful

tinual

modern

they

required

it

in the

most

them the whole body

structed in the use of arms.

them who can ever be so

The

influence, be-

was much more

of the people

Whereas

instructed

it is

by the

universal.

was completely

By in-

but a very small part of regulations of

either of defending or of revenging himself, evident-

ly wants one of the

He his

most

essential parts of the character of

a man.

much mutilated and deformed in his mind as another is in body, who is either deprived of some of its most essential memis

as

bers, or

has

lost the

use of them.^^®

He is evidently the more wretch-

ed 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 of the people were of

no use towards the defence of the

to prevent that sort of mental mutilation, deformity, ness,

which cowardice necessarily involves in

it,

spirit

society, yet

and wretched-

from spreading

themselves through the great body of the people, would

still

de-

serve the most serious attention of government; in the same man-

ner as

it

would deserve

its

most serious attention to prevent a lep-

rosy or any other loathsome and offensive disease, though neither

mortal nor dangerous, from spreading

itself

among them; though,

perhaps, no other public good might result from such attention besides the prevention of so great a public evil.

The same

thing

may be said

^ Ed.

I

tions were

more

ef-

fectual

than

of the gross ignorance

reads “the use of those members.’

and

militias,

which only include a small portion of

the people.

any mod-

ern militia; except, perhaps, that of Switzerland. But a coward, a

man incapable

institu-

modern militia, requires the con-

attention of government, without which they are

sides, of the ancient institutions

of

When

in tolerable execution,

constantly falling into total neglect and disuse.

means

them

called the

Greek

and

stupidity

It is the

duty of govern-

ment to prevent the

growth of

cowardice,

THE WEALTH OF NATIONS

740 gross ig-

norance

and stupidity.

which, in a civilized society, seem so frequently to

benumb

the un-

derstandings of all the inferior ranks of people.

A man without the

proper use of the intellectual faculties of a man,

is, if

possible,

more

contemptible than even a coward, and seems to be mutilated and

deformed in a nature.

more

still

Though the

essential part of the character of

human

was to derive no advantage from the ranks of people, it would still deserve

state

struction of the inferior

attention that they should not be altogether uninstructed. state,

The more they

among

igno-

rant nations, frequently occasion the most dreadful disorders.

and

in-

are instructed, the less liable they are to

the delusions of enthusiasm and superstition, which,

instructed

its

The

however; derives no inconsiderable advantage from their

struction.

in-

intelligent people besides, are

An

always more decent

and orderly than an ignorant and stupid one. They feel themselves, each individually more respectable, and more likely to obtain the respect of their lawful superiors, and they are therefore more disposed to respect those superiors. They are more disposed to examine,

and more capable of seeing through, the interested complaints

of faction

and

sedition,

and they

are,

upon that account,

less

apt to

be misled into any wanton or unnecessary opposition to the measures of government. In free countries, where the safety of govern-

ment depends very much upon the favourable judgment which the people may form of its conduct, it must surely be of the highest importance that they should not be disposed to judge rashly or capriciously concerning

it.

Article III Of the Expence

of the Institutions for the Instruction of People of all

These institu-

tions are

The

Ages

institutions for the instruction of people of all ages are chiefly

those for religious instruction. This

much

is

a species of instruction of

chiefly

which the object

for reli-

them for another and a better world in 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

gious instruction.

Religious like

other

teachers

are

more

vigorous

ifun-

is

not so

to render the people good citizens

in this world, as to prepare

a

life

to come.

their hearers; or they

may derive it from some other fund to which may entitle them; such as a landed estate,

the law of their country

a tythe or land their zeal

tax,

an established salary or stipend. Their exertion,

and industry, are likely

to

be much greater in the former

RELIGIOUS INSTRUCTION

74i

situation than in the latter. In this respect the teachers of ligions

new

re-

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

fer-

vour of faith and devotion in the great body of the people; and having given themselves up to indolence, were become altogether incapable of making any vigorous exertion in defence even of their

own

establishment.

religion frequently

The

clergy of an established

become men

of learning

sess all the virtues of gentlemen, or

and

and well-endowed elegance,

who

pos-

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 in-

fluence with the inferior ranks of people,

been the original causes of religion.

Such a

clergy,

and which had perhaps the success and establishment of their

when attacked by a set of popular and

though perhaps stupid and ignorant enthusiasts,

feel

perfectly defenceless as the indolent, effeminate, tions of the southern parts of Asia, active, hardy,

bold,

themselves as

and

full-fed na-

when they were invaded by

and hungry Tartars of the North. Such a

clergy,

the

up-

on such an emergency, have commonly no other resource than to

upon the

call

civil

magistrate to persecute, destroy, or drive out

their adversaries, as disturbers of the public peace. It

the

was thus that

Roman catholic clergy called upon the civil magistrate to perse-

cute the protestants; and the church of England, to persecute the dissenters;

and that

in general every religious sect,

when

it

has

once enjoyed for a century or two the security of a legal establish-

ment, has found against

itself

incapable of making

any new sect which chose to attack its

Upon such writing

But the

any vigorous defence doctrine or discipline.

occasions the advantage in point of learning

may

and good

sometimes be on the side of the established church.

arts of popularity, all the arts of gaining proselytes, are

constantly on the side of

its

adversaries. In

England those

arts

have

been long neglected by the well-endowed clergy of the established

by the dissenters and provisions, however, which in independent The by the methodists. many places have been made for dissenting teachers, by means of church, and are at present chiefly cultivated

voluntary subscriptions, of trust rights, and other evasions of the law,

seem very much

teachers.

to

have abated the zeal and activity of those

They have many

of

them become very

and respectable men; but they have dissenters, are

in general ceased to

The methodists, without half much more in vogue.

popular preachers.

learned, ingenious,

be very

the learning of the

In the church of Rome, the industry and zeal of the inferior

estab-

kshedand dowed.

THE WEALTH OF NATIONS

742

The in-

clergy are

ferior

than perhaps in any established protestant church.

est,

clergy of

chial clergy derive,

the

Church

of

Rome are more stimulated

by

self-interest

kept more alive by the powerful motive of

than

those of

any

many of

self-inter-

The

paro-

them, a very considerable part of their

subsistence from the voluntary oblations of the people; a source of

revenue which confession gives them many opportunities of improv-

The mendicant orders derive

ing.

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 fee or honoraries which they get from their pupils;

established

Protest-

ant

Church.

and these must always depend more or

upon

less

their industry

and reputation. The mendicant orders are like those teachers whose subsistence depends altogether upon their industry. They are obliged, therefore, to use

common

the

people.

every art which can animate the devotion of

The

establishment of the two great mendicant

orders of St. Dominic and St. Francis, avel,^^^ revived, in the thirteenth

guishing faith and

devotion

is

all

The

enough to maintain the necessary

cath-

great dignitaries of

the accomplishments of gentlemen and

the world, and sometimes with those of ful

Roman

supported altogether by the

the poorer parochial clergy.

the church, with

centuries, the lan-

devotion of the catholic church. In

olic countries the spirit of

monks and by

observed by Machi-

it is

and fourteenth

men

men

of

of learning, are care-

discipline over their inferiors,

but seldom give themselves any trouble about the instruction of the people.

^‘Most of the arts and professions in a state,” says

Hume says the state

may

leave the

most

illustrious philosopher

and

by

far the

historian of the present age, ‘‘are

of such a nature, that, while they

promote the

interests of the so-

they are also useful or agreeable to some individuals; and in

promo-

ciety,

tion of

that case, the constant rule of the magistrate, except, perhaps, on

some arts to indi-

the

viduals

and

who

of

first

introduction of

trust its

it.

any

art,

is,

to leave the profession to itself,

encouragement to the individuals who reap the benefit

The artizans,

finding their profits to rise

benefit

by them,

customers, increase, as

much

by the favour

as possible, their skill

of their

and industry;

and as matters are not disturbed by any injudicious tampering, the commodity is always sure to be at all times nearly proportioned to the demand. others

“But there are

also

some

callings,

which, though useful and even

must be promoted by the

necessary in a state, bring no advantage or pleasure to any individ-

state

gard to the retainers of those professions. It must give them public

ual,

and the supreme power

Eds. 1-3 read

is

obliged to alter

its

conduct with

re-

“is.”

In “Discourses on the First Decade of Titus Livius

book

iii.,

chap.

i.

RELIGIOUS INSTRUCTION encouragement

in order to their subsistence;

and

743 it

must provide

against that negligence to which they will naturally be subject, either

by annexing

lishing

particular honours to the profession,

by

estab

a long subordination of ranks and a strict dependance, 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

belong to the

thought, at

first class,

and that

that of lawyers and physicians, erality of individuals,

who

first sight,

that the ecclesiastics

encouragement, as well as

their

may safely

be entrusted to the

are attached to their doctrines,

find benefit or consolation from their spiritual ministry

lib-

and who

and

assis-

might be thought

it

that the

teaching of religion

belonged

tance. Their industry

and

be whetted by

vigilance wiU, no doubt,

such an additional motive; and their as their address in governing the

skill in

the profession, as well

if

we

consider the matter

more

closely,

this interested diligence of the clergy is

will is

the true,

and

we

and

attention.

shall find, that

what every wise

legislator

study to prevent; because, in every religion except the true,

highly pernicious, and

by

it

infusing into

delusion.

the inter-

has even a natural tendency to pervert

ested 2 eai

a strong mixture

of the

of superstition, folly,

practitioner, in order to render himself

more precious and sacred in the eyes of his retainers, will inspire them with the most violent abhorrence of all other sects, and continually endeavour,

by some

tion of his audience.

No

novelty, to excite the languid devo-

regard will be paid to truth, morals, or de-

cency in the doctrines inculcated. Every tenet will be adopted that

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 best suits the disorderly affections of the

end, the civil magistrate will find, that he has dearly paid for his

pretended frugality, in saving a fixed establishment for the priests;

and that

in reality the

most decent and advantageous composition,

which he can make with the dolence,

ing

it

by

spiritual guides, is to bribe their in-

assigning stated salaries to their profession,

and render-

superfluous for them to be farther active, than merely to pre-

new pastures. And in this though commonly they arose

vent their flock from straying in quest of

manner at

first

ecclesiastical establishments,

from

religious views, prove in the

end advantageous to the

political interests of society.”

But whatever may have been the good The original reads “finances, ^^Hume, History, chap, xxix., differs verbally

both from

but it does not, because

it

it

Each ghostly

first class,

minds of the people, must receive

daily increase, from their increasing practice, study,

“But

to the

earlier

or

bad

effects of the in-

armies, fleets.” vol. iv., pp.

and from

30

,

in ed. of i773,

later editions.

which

clergj’

should be discouraged.

the wealth OF NATIONS

744 EstabKsh-

ments and public

dependent provision of the clergy;

it

has, perhaps, been very sel-

dom bestowed upon them from any view

Times

to those effects.

of

endowments have not been due

violent religious controversy have generally been times of equally

to reason-

with some one or other of the contending religious

ing like

could be done only by adopting, or at least

this,

Upon such

violent political faction.

has either found

it,

or imagined

it,

occasions, each political party for its interest, to league itself

by

sects.

But

this

favouring, the tenets

but

The

which had the good fortune

be

to the

of that particular sect.

needs of

leagued with the conquering party, necessarily shared in the vic-

political

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

faction.

tory of

sect

to

its ally,

the conquering party, and were therefore the enemies of that party.

The

clergy of this particular sect having thus

masters of the

body

great

field,

and

become complete

and authority with the

their influence

of the people being in its highest vigour, they were

powerful enough to over-awe the chiefs and leaders of their own party,

and

and to

oblige the civil magistrate to respect their opinions

inclinations. Their first

silence

and subdue

all their

demand was

generally, that

adversaries;

and

he should

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 depending

upon

their caprice for

a subsistence. In making

fore they consulted their

own ease and

themselves about the effect which

it

demand

this

there-

comfort, without troubling

might have in future times up-

The civil magistrate, demand only who by giving them something which he would have chosen much rather to take, or to keep on the

influence

and authority of

their order.

could comply with this

was seldom very forward to grant

to himself,

If politics

had never

ever,

always forced him to submit at

after

many

But

if

politics

had never

last,

though frequently not

called in the aid of religion,

those of another,

when

it

had gained the

victory,

ably have dealt equally and impartially with

sects

and have allowed every

have been so

nume-

rous that they

would have

till

affected excuses.

religion,

would

Necessity, how-

had the

conquering party never adopted the tenets of one sect more than

cdledin the aid of

and

delays, evasions,

it.

religion as

man

to chuse his

all

own

he thought proper. There would in

have been a great multitude of religious ent congregation might probably have or have entertained

some peculiar

would no doubt have

felt

sects.

it

would prob-

the different sects, priest

and

this case,

his

Almost every

made a

tenets of its

own

no doubt, differ-

by itself, own. Each teacher

little

sect

himself under the necessity of making

RELIGIOUS INSTRUCTION

745

the utmost exertion, and of using every art both to preserve

number

and to

But as every other teacher would have felt himself under the same necessity, the success of no one teacher, or sect of teachers, could have been very great. The interested and active zeal of religious teachers can be dangerous increase the

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.

ed on

The

all sides

teachers of each sect, seeing themselves surround-

with more adversaries than friends, would be obliged

and moderation which

to learn that candour

found among the teachers supported by the all

civil

of those great sects,

is

so seldom to be

whose

tenets, being

magistrate, are held in veneration

the inhabitants of extensive kingdoms and empires,

them but humble admirers. The teachers of each therefore see nothing round

by almost and who and

followers, disciples, little sect,

finding them-

would be obliged to respect those of almost and the concessions which they would mutually

selves almost alone,

every other find

it

sect,

both convenient and agreeable to make to one another,

might in time probably reduce the doctrine of the greater part of

them to that pure and

rational religion, free

from every mixture

of absurdity, imposture, or fanaticism, such as wise all

men have

in

ages of the world wished to see established; but such as positive

law has perhaps never yet established, and probably never establish in

any country: because, with regard

will

to religion, positive

will be, more or less and enthusiasm. This plan of

law always has been, and probably always

by popular

fluenced

clesiastical

superstition

in-

ec-

government, or more properly of no ecclesiastical gov-

ernment, was what the sect called Independents, a sect no doubt of very wild enthusiasts, proposed to establish in

had been

England towards

established, though of a very

the end of the civil war. If

it

unphilosophical origin, it

would probably by

this

time

hpe

been

productive of the most philosophical good temper and moderation

with regard to every sort of religious principle. It has been established in Pennsylvania, where, though the Quakers

the most numerous,

than another, and

it is

I

happen

the law in reality favours no one sect

to

be

more

there said to have been productive of this

philosophical good temper ^‘®Ed.

learnt to

of his disciples.

and moderation.

reads “of each sect.”

^"Ed.

i

reads “the most numerous sect”

other,

THE WEALTH OE NATIONS

74^ and if they did not, their zeal could

do no harm.

But though

this equality of

of this good temper

treatment should not be productive

and moderation

in

all,

or even in the greater

part of the religious sects of a particular country; yet provided those sects were sufficiently numerous, and each of

them conse-

quently too small to disturb the public tranquillity, the excessive for its particular tenets could not well

zeal of each

of

any very hurtful

ones: and

if

the government

and

was

be productive

on the contrary, of several good

effects, but,

perfectly decided both to let

them

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. all alone,

Of the two systems of morality,

the strict or austere

and the

to oblige

In every civilized society, in every society where the distinction of ranks has once been completely established, there have been al-

ways 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

by the

by the common people: the latter commonly more esteemed and adopted by what are called people of fashion. The degree of disapprobation with which we ought to mark the vices of levity, the vices which are apt to arise from great

common

prosperity,

liberal or loose, the first is

favoured

people,

the sec-

generally admired and revered is

and from the excess

of gaiety

and good humour, seems

to constitute the principal distinction between those two opposite

ond by

schemes or systems. In the liberal or loose system, luxury, wanton

people of

and even

disorderly mirth, the pursuit of pleasure to

some degree

fashion.

of intemperance, the breach of chastity, at least in one of the two sexes, &c. provided they are not

and do not lead a good

accompanied with gross indecency,

to falshood or injustice, are generally treated with

deal of indulgence,

and are

easily either excused or

altogether. In the austere system,

pardoned

on the contrary, those excesses

are regarded with the utmost abhorrence and detestation. vices of levity are always ruinous to the single week’s thoughtlessness

and

common

dissipation

is

people,

The

and a

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 ab-

horrence and detestation of such excesses, which their experience tells

them are so immediately fatal

disorder

to people of their condition.

and extravagance of several

not always ruin a

man of

fashion,

The

years, on the contrary, will

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 I

reads “of each sect.”

RELIGIOUS INSTRUCTION

747

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

Almost

all.

common

have begun among the

all religious sects

people,

Religious

from whom they have generally drawn their earliest, as well as their most numerous proselytes. The austere system of morality has, ac-

sects

cordingly, been adopted

with the

by those sects almost constantly, or with very few exceptions; for there have been some. It was the system

by which they people to

recommend themselves

'could best

whom

they

begin austere

system,

to that order of

proposed their plan of reformation upon

first

what had been before

usually

Many

established.

of them, perhaps the

greater part of them, have even endeavoured to gain credit

by reupon 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 fining

common

veneration of the

A man

people.

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

of rank

and fortune

He

him.

this society bears to

dare not do any thing which

and in small religious sects

morals are regular

would disgrace or

which the general consent of

tere,

of his rank far

and fortune.

A man

in

a country

and he may be obliged

and

it,

and he

obliged to a very

is

this society prescribes to persons

of

low condition, on the contrary,

from being a distinguished member of any great

While he remains to,

in

observation of that species of morals, whether liberal or aus-

strict

is

him

discredit

village his conduct

to attend to it himself.

in this situation only,

he

may have what

to lose.

But

scurity

and darkness. His conduct

as soon as

nobody, and he

is

he comes into a great is

is

may

be attended

In this situation,

he

a character sunk in ob-

is

observed and attended to by

therefore very likely to neglect

it

himself,

abandon himself to every sort of low profligacy and vice. emerges so effectually from

this obscurity, his

and

He

to

never

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 ac-

quires a degree of consideration which he never

had

before. All his

brother sectaries are, for the credit of the sect, interested to observe his conduct,

very

and

much from

if

he gives occasion to any scandal,

if

he deviates

those austere morals which they almost always re-

quire of one another, to punish

punishment, even where no

communication from the

him by what

is

always a very severe

civil effects attend

sect.

In

it,

expulsion or ex-

little religious sects,

and even disagree-

ably rig-

orous

and unsocial.

called

city,

society.

and

orderly

accordingly,

the wealth of nations

74S

common people have been almost always remarkably regular and orderly; generally much more so than in the estabthe morals of the

The morals

lished church.

of those

little sects,

indeed, have fre

quently been rather disagreeably rigorous and unsocial. There are

two pos-

There are two very easy and

whose

effectual remedies, however,

by

joint operation the state might, without violence, correct

sible

remedies,

whatever was unsocial or disagreeably rigorous in the morals of the

(i) the

require-

ment of a

first of

those remedies

is

ophy, which the state might render almost universal

giving salaries to teachers in order to

didates for professions

and

philos-

among all peo

more than middling rank and fortune; not by make them negligent and idle,

pie of middling or

edge of

and philosophy from can-

and

the study of science

knowlscience

was

into which the country

little sects

The

all

divided.

but by instituting some sort of probation, even in the higher and

more

difficult sciences, to

was permitted

to exercise

be undergone by every person before he

any liberal

profession, or before he could

be received as a candidate for any honourable profit.

If the state imposed upon

learning,

it

would have no occasion to give

office of trust

men

this order of

itself

or

the necessity of

any trouble about

offices;

providing them with proper teachers. teachers for themselves than

them. Science superstition;

cured from and (2) the en-

courage-

ment of public diver-

is

They would soon

any whom the

state could provide for

the great antidote to the poison of enthusiasm and

and where aU the superior ranks

it,

The second

find better

the inferior ranks could not be

of people were se-

much exposed

to

it.

and gaiety of pubby encouraging, that is by giving entire liberty to all those who for their own interest would attempt, without scandal or indecency, to amuse and divert the people by painting, poetry, music, dancing; by all sorts of dramatic representations lic diversions.

of those remedies is the frequency

The

state,

sions.

and

exhibitions,

would

that melancholy and

easily dissipate, in the greater part of them,

gloomy humour which

is

almost always the

nurse of popular superstition and enthusiasm. Public diversions

have always been the objects of dread and ical

xiatred, to all the fanat-

promoters of those popular frenzies. The gaiety and good hum-

our which those diversions inspire were altogether inconsistent

with that temper of mind, which was

fittest for their

purpose, c

which they could best work upon. Dramatic representations besides, frequently exposing their artifices to public ridicule, and sometimes

even to public execration, were upon that account, more than

all

other diversions, the objects of their peculiar abhorrence.

Where no

In a country where the law favoured the teachers of no one re-

one rdigion was

ligion

more than those of another, it would not be necessary that them should have any particular or immediate dependency

favoured

any

the sove-

upon the sovereign

of

or executive power; or that

he should have any

RELIGIOUS INSTRUCTION thing to do, either in appointing, or in dismissing

749

them from

their

have no occasion to give him-

In such a situation he would 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,

offices.

self

reign

would not require to influ-

ence the teachers

them from

to hinder other.

But

it is

persecuting, abusing, or oppressing one an-

quite otherwise in countries where there

lished or governing religion.

is

an estab-

of religion,

sovereign can in this case never

The

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

poration.

They can

act in concert,

one plan and with one

spirit, as

and pursue

much

as

if

a great

incor-

their interest

upon

they were under the di-

man; and they are frequently too under such direcTheir interest as an incorporated body is never the same with

rection of one tion.

that of the sovereign,

great interest

is

and

is

sometimes directly opposite to

it.

Their

to maintain their authority with the people;

and

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,

this authority

in order to avoid eternal misery.

Should the sovereign have the im-

prudence to appear either to deride or doubt himself of the most trifling part of their doctrine, or from humanity attempt to protect those

did either the one or the other, the punctilious honour

who

of a clergy

who have no

sort of

ately provoked to proscribe

dependency upon him,

him as a

profane person,

is

immedi-

and

to

em-

the terrors of religion in order to oblige the people to transfer their allegiance to some more orthodox and obedient prince.

ploy

all

Should he oppose any of their pretensions or usurpations, the danger is equally great. The princes who have dared in this manner to rebel against the church, over

and above

this

crime of rebellion,

have generally been charged too with the additional crime of heresy, notwithstanding their solemn protestations of their faith and humble submission to every tenet which she thought proper to prescribe other auto them. But the authority of religion is superior to every When thority. The fears which it suggests conquer all other fears. great the authorised teachers of religion propagate through the sovthe body of the people doctrines subversive of the authority of ereign, it

is

by

violence only, or

by

the force of a standing army,

army cannot that he can maintain his authority. Even a standing the soldiers in this case give him any lasting security; because if are not foreigners, which can seldom be the case, but

the great

body

of the people,

drawn from

which must almost always be the case, by those very doctrines. The

they are likely to be soon corrupted

he must where

as

there is

an established

church,

THE WEALTH OF NATIONS

750

revolutions which the turbulence of the Greek clergy

was continu-

ally 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 occa-

sioning in every part of Europe, sufficiently demonstrate

carious

and insecure must always be the

how

pre-

situation of the sovereign

who has no proper means of influencing the clergy of the established and governing he cannot

religion of his country.

Articles of faith, as well as all other spiritual matters,

since

evi-

it is

dent enough, are not within the proper department of a temporal

directly

oppose the doctrines of

the clergy.

sovereign, who, though he ing, is

may

seldom supposed to be so

be very well qualified for protectfor instructing the people.

With

gard to such matters, therefore, his authority can seldom be

re-

suffi-

cient to counterbalance the united authority of the clergy of the

The

established church. security,

may frequently depend upon the doctrines which they may

think proper to propagate concerning such matters.

dom

own

public tranquillity, however, and his

As he can

sel-

directly oppose their decision, therefore, with proper weight

and authority,

it is

necessary that he should be able to influence

and he can influence

it

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

The clergy

hold their benefices for

life,

and vio-

all

Christian churches the benefices of the clergy are a sort of

freeholds which they enjoy, not during pleasure, but during

and were

liable to

them would be

be turned out upon every

either of the sovereign or of his ministers,

lence used

against

life,

or

good behaviour. If they held them by a more precarious tenure,

possible for

them

to

it

slight disobligation

would perhaps be im-

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

ineffec-

tual; so

management must be

confidence.

But should the sovereign attempt

violence, to deprive

any number of clergymen

irregularly,

and by

of their freeholds,

on

account, perhaps, of their having propagated, with more than or-

resorted

dinary zeal, some factious or seditious doctrine, he would only ren-

to.

der,

by such

persecution, both

them and

their doctrine ten times

more popular, and therefore ten times more troublesome and dangerous than they had been before. Fear is in almost all cases a wretched instrument of government, and ought in particular never to

be employed against any order of men who have the smallest

pretensions to independency.

To

attempt to terrify them, serves

only to irritate their bad humour, and to confirm them in an opposition

which more gentle usage perhaps might easily induce them.

RELIGIOUS INSTRUCTION either to softeiij or to lay aside altogether.

French government usually employed

The

7Si

violence which the

in order to oblige all their

parliaments, or sovereign courts of justice, to enregister ular edict, very seldom succeeded.

however, the imprisonment of

would think were

any unpop-

The means commonly employed, the refractory members, one

all

The princes of the house of Stewart sometimes employed the like means in order to influence some

forcible enough.

members of the parliament of England; and they genthem equally intractable. The parliament of England now managed in another manner; and a very small experiment, of the

erally found is

which the duke of Choiseul made about twelve years ago upon the parliament of Paris, demonstrated sufficiently that

the parlia-

all

ments of France might have been managed still more easily in the same manner. That experiment was not pursued. For though man-

agement and persuasion are always the

and the

easiest

safest in-

struments 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

appears, I believe, from the experience of all ages,

of

men,

upon whom

it

it is

employ force and any established church.

so dangerous, or rather so perfectly ruinous, to violence, as

The

upon the respected clergy

of

rights, the privileges, the personal liberty of

ecclesiastic,

in the

who

is

upon good terms with

his

every individual

own

order, are, even

most despotic governments, more respected than those of any

other person of nearly equal rank and fortune. It

is

so in every

gradation of despotism, from that of the gentle and mild govern-

ment

of Paris, to that of the violent

and furious government of

Constantinople. But though this order of forced, they

may be managed

as easily as

men

can scarce ever be

any other; and the

ity of the sovereign, as well as the public tranquillity,

pend very much upon the means which he has and those means seem

to consist altogether in

secur-

seems to de-

managing them; the preferment which of

he has to bestow upon them. In the ancient constitution of the Christian church,^^® the bish-

op of each diocese

was

elected

by the

people did not long retain

and while they did retain

their right of election;

influence of the clergy,

matters appeared to be their natural guides. ^‘®Ed.

and

Bishops

were originally

The

of the people of the episcopal city.

ways acted under the

joint votes of the clergy

r

reads

“Roman

it,

who The

they almost

in

al-

such spiritual

elected

and people,

clergy, however.

catholic church.’

by

the clergy

after-

the wealth of nations

752

soon grew weary of the trouble of managing them, and found

wards

by the

own bishops

easier to elect their

clergy

themselves.

The

manner, was elected by the monks of the monastery, at

alone,

it

abbot, in the same least in the

greater part of abbacies. All the inferior ecclesiastical benefices

comprehended within the diocese were collated by the bishop, who bestowed them upon such

ecclesiastics as

he thought proper. All

church preferments were in this manner in the disposal of the church.

sovereign, though he might have

The

ence in those elections, and though

both his consent to

had no

elect,

direct or sufficient

and

it

indirect influ-

was sometimes usual

to ask

his approbation of the election, yet

means

of

managing the

tion of every clergyman naturally led

much

some

to his sovereign, as to his

own

him

to

order,

clergy.

pay

The ambi-

court, not so

from which only he

could expect preferment. still

Through the

later

to a large

extent

by

the Pope.

himself of

first

greater part of

the collation of almost

what were

and pretences,

authority with his of the sovereign all

own

was

still

By

this

worse than

the different countries of

and abbacies, or

of the greater part of inferior

was barely necessary clergy.

to

and afterwards, by va-

comprehended within each diocese;

to the bishop than what

of

bishoprics

all

called Consistorial benefices,

rious machinations

benefices

Europe the Pope gradually drew

it

little

more being

to give

left

him a decent

arrangement the condition

had been

before.

Europe were thus formed

The

clergy

into

a sort

of spiritual army, dispersed in different quarters, indeed, but of

which

all

the

movements and operations could now be

directed

by

one head, and conducted upon one uniform plan. The clergy of each particular country might be considered as a particular detach-

ment

of that army, of

ported and seconded different countries

by

which the operations could easily be supall

the other detachments quartered in the

round about. Each detachment was not only

dependent of the sovereign of the country in which tered,

and by which

eign sovereign,

was maintained, but dependent upon a forwho could at any time turn its arms against the sovit

ereign of that particular country, all This,

it

in-

was quar-

and support them by the arms

of

the other detachments.

with the

Those arms were the most formidable that can well be imagined. In the ancient state of Europe, before the establishment of arts and

great

manufactures, the wealth of the clergy gave them the same sort of

wealth of

influence over the

joined

common

people, which that of the great barons

the clergy,

rendered

them exceedingly

formidable.

gave them over their respective vassals, tenants, and retainers. In the great landed estates, which the mistaken piety both of princes

and private persons had bestowed upon the church, jurisdictions were established of the same kind with those of the great barons;

RELIGIOUS INSTRUCTION and

for the

753

same

reason. In those great landed estates, the clergy, could easily keep the peace without the support or assistance either of the king or of any other person; and neither the

or their

bailiffs,

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 equally exclusive of the authority of the king’s courts, as those of the great temporal lords.

The tenants of the clergy were, like those of the great barons, almost all tenants at will, entirely dependent upon their immediate lords, and therefore liable to be called out at pleasure, in order to fight in any quarrel in which the clergy might think proper to engage them. Over and above the rents of those estates, the clergy possessed, in the tythes, a very large portion of the rents of all the other estates in every

kingdom

of Europe.

The revenues

arising

from both those species

of rents were, the greater part of them, paid in kind, in corn, wine,

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.

cattle, poultry, &c.

The

immense surplus in no other way than by employing it, as the great barons employed the like surplus of their revenues, in the most profuse hospitality, and in the most extensive charity. Both the hospitality and the charity clergy could derive advantage from this

of the ancient clergy, accordingly, are said to have been very great,

They not only maintained almost

the whole poor of every kingdom,

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

but

of the clergy.

The

retainers of

some

particular prelates were often

as numerous as those of the greatest lay-lords; and the retainers of all

the clergy taken together were, perhaps, more numerous than

those of

among

all

the lay-lords. There

the clergy than

among

was always much more union

The former were under the papal authority. The

the lay-lords.

a regular discipline and subordination to 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

latter

have rendered them more formidable. The hospitality and charity of the clergy too, not only gave them the command of a great temp-

much

the weight of their spiritual weapons. Those virtues procured them the highest respect and venoral force, but increased very

THE WEALTH OF NATIONS

754 eration

among

the inferior ranks of people, of

all

constantly, and almost all occasionally, fed

belonging or related to so popular an order, ileges, its doctrines, necessarily

common

whom many were

by them. Every thing

its

possessions,

and every violation of them, whether

people,

its

priv-

appeared sacred in the eyes of the real or pre-

tended, the highest act of sacrilegious wickedness and profaneness.

In

wonder that he should of all

der

and

find it

still

of the great nobility,

more

it difficult

we cannot

so to resist the united force

that of the clergy

the neighbouring dominions. In such circumstances the won-

is,

not that he was sometimes obliged to yield, but that he ever

was able clergy

a few

own dominions, supported by

of the clergy of his

Benefit of

found

this state of things, if the sovereign frequently

to resist the confederacy of

to resist.

The privileges of the clergy in those ancient times (which who live in the present times appear the most absurd), their

other privileges

exemption from the secular

were the

England was

natural

jurisdiction, for example, or

to us total

what

in

were the natural or rather

called the benefit of clergy;

the necessary consequences of this state of things.

How

dangerous

result.

must

it

man

for

have been

for the sovereign to

any crime whatever,

if

his

attempt to punish a clergy-

own

order were disposed to pro-

and to represent either the proof as

tect him,

victing so holy a

insufficient for con-

man, or the punishment as too severe to be

in-

upon one whose person had been rendered sacred by religion? The sovereign could, in such circumstances, do no better

flicted

by the ecclesiastical courts, who, for the own order, were interested to restrain, as much as every member of it from committing enormous crimes, or

than leave him to be tried

honour of possible,

their

even from giving occasion to such gross scandal as might disgust the minds of the people.

The Church of

In the state in which things were through the greater part of

Europe during the tenth, eleventh,

Rome in ries,

the

and

for

some time both before and

Middle Ages was the most

stitution of the church of

formid-

ity

able

com-

Rome may

and thirteenth centu-

after that period, the con-

be considered as the most

formidable combination that ever was formed against the author-

and security

reason,

bination civil

against

twelfth,

of civil government, as well as against the liberty,

and happiness of mankind, which can

government

is

flourish only

where

able to protect them. In that constitution the

liberty,

grossest delusions of superstition were supported in such

a manner

reason

by the private

put them

and happiness.

out of

though

all

interests of so great

danger from any assault of

human

of people as

human

reason:

because

reason might perhaps have been able to unveil, even

to the eyes of the stition; it

a number

common

people,

some of the delusions of super-

could never have dissolved the ties of private interest.

RELIGIOUS INSTRUCTION Had

this constitution

feeble efforts of

that

man

tue of

was by wards

been attacked by no other enemies but the

human

immense and

755

reason,

it

must have endured which

well-built fabric,

could never have shaken,

the natural course of things,

in part destroyed,

and

is

much

first

now

all

the

less

for ever.

But

wisdom and

vir-

have overturned,

weakened, and

after-

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 destroyed the power of the great barons, destroyed in the same manner, through the greater part of Europe, the whole temporal power of the clergy. In the produce of arts, manufactures, and commerce, the clergy, like the great barons, found something for which they could exchange their rude produce, and thereby discovered the means of spending their whole

revenues upon their

own

persons, without giving

any considerable

share of them to other people. Their charity became gradually less extensive, their hospitality less liberal or less profuse. Their retain-

became consequently less numerous, and by degrees dwindled away altogether. The clergy too, like the great barons, wished to

ers

get a better rent from their landed estates, in order to spend

the same manner, upon the gratification of their ity

and

folly.

But

this increase of rent could

ing leases to their tenants,

independent of them. The

in

private van-

be got only by grant-

who thereby became ties of interest,

own

it,

in

a great measure

which bound the

inferior

ranks of people to the clergy, were in this manner gradually broken

and

dissolved.

They were even broken and

dissolved sooner than

those which bound the same ranks of people to the great barons:

because the benefices of the church being, the greater part of them,

much

smaller than the estates of the great barons, the possessor of

each benefice was much sooner able to spend the whole of

its rev-

enue upon his own person. During the greater part of the fourteenth and fifteenth centuries the power of the great barons was,

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 her spiritual authority; and even that spiritual authority was much weakened through the greater part of Europe, in

when

it

clergy.

ceased to be supported

The

and the

by the charity and

inferior ranks of people

order, as they

had done

hospitality of the

no longer looked upon that

before, as the comforters of their distress,

relievers of their indigence.

Ed.

full vigour.

I

On the contrary, they were pro-

does not contsun “and.”

Itspow was de-

r

stroyed

by the improvement of arts,

manufactures and commerce.

the wealth of nations

756

yoked and disgusted by the vanity, luxury, and expence of the

who appeared

richer clergy,

to spend

what had always before been regarded The sove-

deprive the

Pope

their

own

pleasures

In this situation of things, the sovereigns in the different states

reigns

endeavoured to

upon

as the patrimony of the poor.

of

Europe endeavoured

to recover 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

monks

of the

of their ancient right of electing the bishop, and to the

disposal

each abbacy that of electing the abbot. The re-establishing of this

of the

ancient order was the object of several statutes enacted in England

of

great benefices,

during the course of the fourteenth century, particularly of what

and suc-

called the statute of provisors;

ceeded, especially in

France

and England.

and

is

of the Pragmatic sanction

established in France in the fifteenth century. In order to render

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, however, all the indirect means which his situation necessarily afforded him, of influencing the clergy in his own dominions.

the election valid,

it

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, before the reformation, to have

been nowhere so effectually and so universally restrained as in France and England. The Concordat afterwards,

in the sixteenth

century, gave to the kings of France the absolute right of presenting to all the great, or

what are

called the consistorial

benefices

of the Galilean church.^^®

Since the establishment of the Pragmatic sanction and of the

Ever since the

Concordat, the clergy of France have in general shown less respect

French clergy

have been less

de-

voted to the Pope.

to the decrees of the papal court lic

country. In

all

than the clergy of any other catho-

the disputes which their sovereign has

had with

the pope, they have almost constantly taken party 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

those of

have been as much devoted to the pope as

any other country.

When

Robert, the second prince of the

Capetian race, was most unjustly excommunicated by the court of his own servants, it is said, threw the victuals 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

Rome,

These nine words are not in ed. i. Ed. I reads “great and consistorial.” Daniel, Histoire de France, 1755, tom.

vii.,

pp. 158, 159; tom.

ix.,

p. 40.

RELIGIOUS INSTRUCTION

757

They were taught to do so, it may very safely be presumed, by the clergy of his own dominions. situation.^'*^

The claim

of collating to the great benefices of the church,

claim in defence of which the court of

Rome had

a

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 clergy.

The

clergy therefore

had more influence over the had both less power and less inclina-

So even before the

Reformation the clergy

had less power and inclination to disturb

the state.

tion to disturb the state.

The

authority of the church of

clension,

when

Rome was

in this state of de-

the disputes which gave birth to the reformation,

began in Germany, and soon spread themselves through every part of Europe. The new doctrines were every where received with a

They were propagated with all that enthusiastic zeal which commonly animates the spirit of party, when it attacks established authority. The teachers of those dochigh degree of popular favour.

though perhaps in other respects not more learned than

trines,

many

of the divines

who defended

the established church, seem in

general to have been better acquainted with ecclesiastical history,

and with the

origin

which the authority

formation doctrines

were

re-

commended to the

common people by the zeal of

their

teachers,

and progress of that system of opinions upon of the

church was established, and they had

The

thereby some advantage in almost every dispute. their

The Re-

austerity of

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

a

much

larity

own

clergy.

They

higher degree than their adversaries,

and

of gaining proselytes, arts

all

possessed too in

the arts of popu-

which the lofty and dignified

them in a great the new doctrines recommended

sons of the church had long neglected, as being to

measure

them

useless.

The

reason of

to some, their novelty to

the established clergy to a passionate,

and

fanatical,

many; the hatred and contempt of

still

greater

number; but the zealous,

though frequently coarse and

rustic, elo-

quence with which they were almost every where inculcated, rec-

ommended them to by far the greatest number. The success of the new doctrines was almost every where so great, that the princes who at that time happened to be on bad “II ne lui resta que deux domestiques pour le servir et lui preparer a manger, encore faisaient-ils passer par le feu les plats ou il mangeait, et les vases oil il buvait pour les purifier, comme ayant ete fouilles par un homme retranche de la communion des fiddles.”—/hzW., tom. iii., pp. 305, 306. Renault’s account is similar, Nouvel Ahrigi ckronologiquey 1768, tom. i., p. 114, A.D. 996.

and enabled

THE WEALTH OF NATIONS

758 sovereigns

on bad terms

terms with the court of Rome, were by means of them easily enabled, in their

with

Rome to

could

overturn the

make

to overturn the church, which, hav-

own dominions,

ing lost the respect

scarce

of the inferior ranks of people,

and veneration any

resistance.

The

court of

Rome had

dis-

obliged some of the smaller princes in the northern parts of Ger-

whom

insignificant to be

Church

many,

with

worth the managing. They universally, therefore, established the reformation in their own dominions. The tyranny of Christiern II.

ease,

and

had probably considered as too

it

of Troll, archbishop of Upsal, enabled Gustavus

Vasa

to expel

them both from Sweden. The pope favoured the t 3n:ant and the archbishop, and Gustavus Vasa found no difficulty in establishing the reformation in Sweden. Christiern 11. was afterwards deposed from the throne of Denmark, where his conduct had rendered him as odious as in Sweden.

The

favour him, and Frederic of

pope, however, was

The

disposed to

by following the example of Guswho had no par-

in his stead, revenged himself

tavus Vasa.

still

Holstein, who had mounted the throne

magistrates of Berne and Zurich,

ticular quarrel with the pope, established

with great ease the

re-

formation 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

while in countries

papal court was at

critical situation of its affairs, the

sufficient pains to cultivate the friendship of the

powerful sover-

the sovereigns of

which were friendly to

Rome

the Re-

formation was suppressed or ob-

whom

eigns of France and Spain, of

emperor of Germany, With their assistance altogether, or to obstruct

much very much

tion in their dominions. It

was

not without great difficulty and

it

it

bloodshed, either to suppress the progress of the reforma-

well enough inclined too to be

plaisant to the king of England. times,

was at that time was enabled, though

the latter

But from the circumstances

could not be so without giving offence to a

sovereign, Charles V, king of Spain

still

com-

of the

greater

and emperor of Germany.

structed.

Henry VIII.

accordingly, though he did not embrace himself the

greater part of the doctrines of the reformation,

by

their general prevalence,

to suppress all the monasteries,

to abolish the authority of the

That he should go so

far,

was yet enabled,

church of

Rome

and

in his dominions.

though he went no further, gave some

satisfaction to the patrons of the reformation,

who having

session of the government in the reign of his son

pleted without any difficulty the

got pos-

and successor, com-

work which Henry VIII. had

begun. In some countries

In some countries, as in Scotland, where the government was weak, unpopular, and not very firmly established, the reformation "®Ed.

I

reads “by the general prevalence of those doctrines.”

RELIGIOUS INSTRUCTION

759

was strong enough to overturn, not only the church, but the

state

Among

over-

the followers of the reformation, dispersed in

ferent countries of Europe, there

the Re-

formation

likewise for attempting to support the church. all

the dif-

was no general tribunal, which,

like that of the court of

Rome, or an oecumenical council, could among them, and with irresistible authority prethem the precise limits of orthodoxy. When the fol-

turned both church

and state.

settle all disputes

scribe to all of

lowers of the reformation in one country, therefore, happened to differ

from

their brethren in another, as they

had no common judge and many such

to appeal to, the dispute could never be decided;

among them. Those concerning

disputes arose

the government of

The followers of the Re-

formation

had no

common authority

the church, and the right of conferring ecclesiastical benefices, were

like the

perhaps the most interesting to the peace and welfare of

court of

ciety.

sects

They gave among the

birth accordingly to the

discipline

two principal parties or

and

followers of the reformation, the Lutheran

among them,

Calvinistic sects, the only sects

and

civil so-

of which the doctrine

have ever yet been established by law

in

any part

of

Rome, and

di-

vided into Lutherans

and Calvinists.

Europe.

The

followers of Luther, together with

of England, preserved

more

established subordination

among

disposal of all the bishoprics, his dominions,

what

called the church

is

or less of the episcopal government,

the clergy, gave the sovereign the

and other consistorial benefices within

and thereby rendered him the

real

head of the

The Lutherans and the

Church of England preferred

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

episco-

pacy, and gave the disposal

both in the sovereign and in

other lay patrons. This system of

all

church government was from the beginning favourable to peace

and good

order,

and

to submission to the civil sovereign. It

never, accordingly, been the occasion of

motion in any country

in

which

it

any tumult

or civil

has

com-

has once been established. The

church of England in particular has always valued

herself,

with

great reason, upon the unexceptionable loyalty of her principles.

Under such a government the clergy naturally endeavour to recommend themselves to the sovereign, to the court, and to the nobility and gentry of the country, by whose influence they chiefly expect to obtain preferment.

sometimes, no doubt, by frequently too

and

by

They pay

court to those patrons,

the vilest flattery

cultivating all those arts

which are therefore most likely to gain

people of rank and fortune;

by

their

and

assentation, but

which best deserve,

them the esteem

knowledge in

all

of

the different

branches of useful and ornamental learning, by the decent liberality of their

manners, by the social good humour of their conversa-

of benefices to

the sovereign

and

other lay patrons.

THE WEALTH OF NATIONS

760

and by their avowed contempt of those absurd and hypo-

tion,

critical austerities

which fanatics inculcate and pretend

draw upon

in order to

greater part of

men of rank and

to practise,

and upon the

themselves the veneration,

who avow that they do not common people. Such a clergy,

fortune,

practise them, the abhorrence of the

however, while they pay their court in this manner to the higher

ranks of

life,

tened

to,

means

are very apt to neglect altogether the

taining their influence

of main-

and authority with the lower. They are

lis-

esteemed and respected by their superiors; but before

their inferiors they are frequently incapable of defending, effectu-

ally

and

own sober and

to the conviction of such hearers, their

moderate doctrines against the most ignorant enthusiast who chuses to attack

Zwinglians and Calvinists

gave the right of

The

them.

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

election

The former

to the

the clergy.

people,

mained in vigour, seems to have been productive of nothing but

and estab-

disorder and confusion,

part of this institution, as long as

and

it

re-

to have tended equally to corrupt the

The

lished

morals both of the clergy and of the people.

equality

never to have had any effects but what were perfectly agreeable.

among

As long

the clergy.

ing their Election

by the people

seems

as the people of each parish preserved the right of elect-

own

of the clergy,

the order.

latter part

pastors, they acted almost always

and generally of the most

The

under the influence

factious

and

fanatical of

clergy, in order to preserve their influence in those

gave rise

popular elections, became, or affected to become,

to great

fanatics themselves, encouraged fanaticism

many

among the

of them,

people, and

disorders,

gave the preference almost always to the most fanatical candidate. So small a matter as the appointment of a parish priest occasioned almost always a violent contest, not only in one parish, but in the neighbouring parishes,

quarrel it

When

divided

all

who seldom failed to take

part

all

in the

the parish happened to be situated in a great city,

the inhabitants into two parties; and

happened either to constitute itself a head and capital of a little republic, as

little

when

that city

republic, or to be the

is the case with many of the considerable cities in Switzerland and Holland, every paltry dis-

pute 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.

republics, therefore, the magistrate very soon

found

for the sake of preserving the public peace, to Eds.

I

and

2

In those small

read “take party.”

it

necessary,

assume to himself

76i

RELIGIOUS INSTRUCTION the right of presenting to

all

vacant benefices. In Scotland, the most

and after trial

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

That act

beginning of the reign of William

at least put

was

abolished in Scot-

land,

though

in

the con-

the power of certain classes of people in each parish, to pur-

currence

chase, for a very small price, the right of electing their

The for

constitution which this act established

own

it

pastor.

was allowed to subsist

about two and twenty years, but was abolished by the loth of

this

still

^

is

re-

quired.

on account of the confusions and disorders more popular mode of election had almost every where

queen Anne, ch.

which

of the people

12.

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 the rights of patronage. benefice without

The loth

state.

But though

Anne

of queen

in Scotland the

to the person presented

any exception

restored

law gives the

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 till this concurrence can

peace of the parish, delays the settlement

be procured. The private tampering of some of the neighbouring clergy, sometimes to procure, but

more frequently

to prevent this

concurrence, and the popular arts which they cultivate in order to

enable them upon such occasions to tamper more effectually, are perhaps the causes which principally keep up whatever remains of the old fanatical

spirit, either

in the clergy or in the people of

Scotland.

The equality which the ment establishes among the

presbyterian form of church govern-

The

clergy, consists, first, in the equality of

equality

authority or ecclesiastical jurisdiction; and, secondly, in lie equality of benefice. In all presbyterian churches the equality of authority is perfect: that of benefice

is

not

so.

The

difference, however,

between one benefice and another, is seldom so considerable as to pay commonly to tempt tie possessor even of the small one of the second session of the meant, but this is a ^padoubtless is Mary, and William of parliament first settling Presrate Act from the “Act ratifying the Confession of Faith and byterian Church Government,” Acts of the Parliaments of Scotland, 1822,

“*The “Act concerning Patronages” sard

vol ix

,

pp.

I 33 j 196-

The preamble

,

,

.

of the Act mentions “the great hardship

as well as the “great heats and divisions” ““Ed I reads “small benefice”

o

„ upon the patrons .

of the

Presbyterian

clergy

makes them independent

the wealth oe nations

762

and respectable.

court to his patron,

the vile arts of flattery and assentation, in

by

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 irre-

proachable regularity of their

and by the

life,

and

faithful

diligent

discharge of their duty. Their patrons even frequently complain of the independency of their

which they are apt to construe

spirit,

which at worst, perhaps,

into ingratitude for past favours, but

is

seldom any more than that indifference which naturally arises from the consciousness that no further favours of the kind are ever to be expected. There

is

any where

scarce perhaps to be found

Eu-

in

rope a more learned, decent, independent, and respectable set of men, than the greater part of the presbyterian clergy of Holland,

Geneva, Switzerland, and Scotland. The mediocrity of their

benefices

Where

the church benefices are

can be very great, and

this mediocrity of benefice,

no doubt be carried too

gives

fects.

them in-

man

nearly equal, none of them

all

far, has,

though

may

it

however, some very agreeable ef-

Nothing but the most exemplary morals can give dignity to a of small fortune.

The

and vanity necessarily

vices of levity

fluence

him ridiculous, and

are, besides, almost as ruinous to

with the

render

common

they are to the

people.

obliged to follow that system of morals which the

common people. In

respect the most.

He

of life which his

own

low.

The common

his

own conduct,

gains their esteem interest

and

and

therefore,

common

affection

by

condition, but who,

and

as is

people

that plan fol-

people look upon him with that kindness with

we

think, ought to be in

kindness naturally provokes his kindness. instruct them,

he

would lead him to

situation

which we naturally regard one who approaches somewhat

own

him

attentive to assist

and

even despise the prejudices of people

our

a higher. Their

He becomes

careful to

He does

relieve them.

who

to

not

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 digni-

and well-endowed churches. The presbyterian accordingly, have more influence over the minds of the

taries of opulent

clergy,

common

people than perhaps the clergy of any other established

church. It

is

ever find the

accordingly in presbyterian countries only that

common

we

people converted, without persecution, com-

and almost to a man, to the established church. In countries where church benefices are the greater part of them very moderate, a chair in a university is generally a better estab-

pletely, It also en-

ables the universities to

lishment than a church benefice. the picking

and chusing of

their

The universities have, members from

all

the

in this case,

churchmen

RELIGIOUS INSTRUCTION of the country, who, in every country, constitute

numerous

by

far the

most

men of letters. Where church benefices, on the many of them very considerable, the church natu-

draws from the

universities the greater part of their

we

are likely to find the universities

eminent men of

letters that are to

filled

with the most

be found in the country. In the

we are likely to find few eminent men among them, and those few among the youngest members of the society, who are likely too

latter

to be drained

away from

before they can have acquired ex-

it,

perience and knowledge enough to be of

served

by Mr. de

much

use to

it.

It is ob-

a jesuit of no great was the only professor they had

Voltaire, that father Porree,

eminence in the republic of

letters,

ever had in France whose works were worth the reading.^^^ In a

country which has produced so

many eminent men

of letters,

it

must appear somewhat singular, that scarce one of them should have been a professor in a university. The famous Gassendi was, in the beginning of his

Upon that quiet

the

first

by going

dawning

life,

a professor in the university of Aix.

of his genius, it

into the church

and comfortable

was represented

to him,

he could easily find a much more

subsistence, as well as a better situation for

pursuing his studies; and he immediately followed the advice.

The

may be applied, I believe, not only but to all other Roman catholic countries. We very in any of them, an eminent man of letters who is a pro-

observation of Mr. de Voltaire to France,

rarely find,

fessor 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 all their

continually draining the universities of

best and ablest members; and an old college tutor who

known and is

is

distinguished in

Europe as an eminent man

as rarely to be found there as in

In Geneva, on the contrary,

whom

is

of letters,

catholic countr}.

in the protestant cantons of Switzer-

land, in the protestant countries of

land, in Sweden,

any Roman Germany,

in Holland, in Scot-

and Denmark, the most eminent men

of letters

those countries have produced, have, not all indeed, but the

“^Voltaire’s expression is not quite so strong as in the catalogue of writers in the

it is

represented.

Sikk de Louis XIV. “Poree

sors,

who

men

of

eminent

men of letters; who generally find some patron who does himself honour by procuring them church preferment. In the former situation

draw on

class of

contrary, are rally

7^3

He

says

(Charles)

ne en Normandie en 1675, Jesuite, du petit nombre des professeurs qui ont eu de la celebrite chez les gens du monde. Eloquent dans le gout de Seneque, poete et tres bel esprit. Son plus grand merite fut de faire aimer les lettres et la vertu a ses disciples. Mort en 1741.”

the wealth of nations

764

far greater part of

them, been professors in universities. In those

countries the universities are continually draining the church of all

most eminent men of

its

Eminent

men of letters in

Greece

letters.

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 It

and Rome

to

were mostly

philosophy or of rhetoric. This remark will be found to hold true

teachers.

have been either public or private teachers; generally either of

from the days of Lysias and Isocrates, of Plato and

Aristotle,

down

to those of Plutarch and Epictetus, of Suetonius and Quintilian.^^®

To impose upon any man

the necessity of teaching, year after

any particular branch of science, seems, in reality, to be the most effectual method of rendering him completely master of it himself. By being obliged to go every year over the same ground, if year,

good for any thing, he necessarily becomes, in a few years, well acquainted with every part of it: and if upon any particular he

is

when he comes subject the year same the

point he should form too hasty an opinion one year, in the course of his lectures to re-consider

he

thereafter,

science

is

is

very likely to correct

certainly the natural

ters; so is it likewise,

to render

him a man

men

at the

in

same

to be a teacher of

perhaps, the education which

is

most

let-

likely

and knowledge. The medinaturally tends to draw the greater part

of letters, in the country

ployment

As

of solid learning

ocrity of church benefices of

it.^®^

employment of a mere man of

which they can be

time, to give

where

it

takes place, to the

em-

the most useful to the public, and,

them the best education, perhaps, they are

capable of receiving. It tends to render their learning both as solid as possible,

The revenue of the

and as useful as

The revenue cepted as

may

possible.

of every established church, such parts of arise

from particular lands or manors,

is

it

ex-

a branch,

church

it

ought to be observed, of the general revenue of the state, which

except

is

thus diverted to a purpose very different from the defence of the

that part

which

state.

The

tythe, for example,

power

is

a

real land-tax,

which puts

it

out

of the proprietors of land to contribute so largely to-

arises

of the

from endowments

wards the defence of the state as they otherwise might be able to

a branch of

is

that of

do.

The

rent of land, however,

and according to

is,

according to some, the sole fund,

others, the principal fund,

from which, in

all

great

monarchies, the exigencies of the state must be ultimately supQuaere as to Suetonius. Ed.

i continues

here “Several of those

whom

we do not know with certamty to have been public teachers appear to have been private tutors. Polybius, we know, was private tutor to Scipio ^mili^us; Dionysius of Hahcamassus, there are some probable reasons for bewas so to the children of Marcus and Quintus Cicero.” The Lectures leave little doubt that this is a fragment of autobiography

lieving,

RELIGIOUS INSTRUCTION The more

plied. is

of this fund that is given to the church, the less,

evident, can be spared to the state. It

tain

maxim,

7^5

may be

laid

down

it

as a cer-

the state

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 able must the state be to defend particularly in

tries,

all

itself.

all cases,

the less

In several protestant coun-

the protestant cantons of Switzerland, the

revenue which anciently belonged to the

Roman

In some cantons of Swit-

catholic church,

the tythes and church lands, has been found a fund sufficient, not

only to afford competent salaries to the established clergy, but to

zerland the old

revenue of the

defray, with state.

The

ticular,

no

or

little

addition, all the other expences of the

magistrates of the powerful canton of Berne, in par-

have accumulated out of the savings from

this

fund a very

large sum, supposed to

amount to several millions, part of 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.

the

church

now maintains both church

and

state.

What may be

amount of the whole expence which the church, either of Berne, any other protestant canton, costs the state, I do not pretend

or of

to know.

By

a very exact account

it

appears, that, in 1755, the

whole revenue of the clergy of the church of Scotland, including church lands, and the rent of their manses or dwell-

their glebe or

ing-houses, estimated according to

ed only to 68,514?.

sd.3;^.

a reasonable valuation, amount-

This very moderate revenue affords

The whole revenue of the

Church is

a decent subsistence to nine hundred and forty-four ministers.

The whole expence

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

oi

Scotland

a

tri-

fling

amount, but that church produces all

pos-

sible

good

effects.

fervour of devotion, the spirit of order, regularity, and austere

morals in the great body of the people, than this very poorly en-

dowed church ligious,

of Scotland, All the good effects, both civil and re-

which an established church can be supposed to produce,

are produced

by

it

as completely as

by any

of the protestant churches of Switzerland,

better in

a

endowed than the church

still

other.

The

greater part

which in general are not

of Scotland, produce those effects

This is also true

in a

still

higher

higher degree. In the greater part of the protestant can-

degree of

be found who does not profess

the Swiss

tons, there is not a single person to

Protes-

himself to be of the established church. If he professes himself to

tant

be of any other, indeed, the law obliges him to leave the canton.

churches.

But so severe, or rather indeed so oppressive a law, could never have been executed

in

such free countries, had not the diligence of

XHE WEALTH OF NATIONS

766

the clergy before-hand converted to the established church the

whole body of the people, with the exception dividuals only. In

some parts

perhaps, a few in-

of,

of Switzerland, accordingly, where,

Roman

from the accidental union of a protestant and

catholic

country, the conversion has not been so complete, both religions are

not only tolerated but established

The proper performance

Large revenue is

pay or recompence should

by

law.

of every service seems to require that

unsuit-

able to

the

office

of

to the nature of the service. If it is

its

be, as exactly as possible, proportioned

any

service is very

much under-paid,

very apt to suffer by the meanness and incapacity of the greater

part of those

who

are employed in

it.

If

very

it is

much

over-paid,

clergy-

men.

apt to suffer, perhaps,

it is

A man

ness.

still

more by

of a large revenue, whatever

thinks he ought to live like other

spend a great part of his time tion.

But

their negligence

in a

men

may be

of large revenues;

in festivity, in vanity,

clergyman this train of

and

life

idle-

his profession,

and

and

to

in dissipa-

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 almost entirely that sanc-

tity of character

which can alone enable him

ties

with proper weight and

perform those du-

to

authority.

Part IV

Of

the Expence of supporting the Dignity of the Sovereign

The ex-

Over and above

pense of supporting the

eign to perform his several duties, a certain expence

dignity

ent periods of improvement, and with the different forms of govern-

of the

sovereign

ment.

In an opulent and improved society, where of people are growing every

in their houses, in in their equipage;

cannot well be expected that the sovereign should alone hold out

people

it

against the fashion.

He

naturally, therefore, or rather necessarily

becomes more expensive

in all those different articles too.

nity even seems to require that he should

and is

amon-

the different orders

and

their furniture, in their tables, in their dress,

increases,

greater in

all

day more expensive

penditure of the

is requisite for

the support of his dignity. This expence varies both with the differ-

increases

as the ex-

necessary for enabling the sover-

the expence

As

in point of dignity,

a monarch

jects than the chief magistrate of

is

become

more

raised above his sub-

any republic

is

ever supposed to

be above his fellow-citizens; so a greater expence Ed. suggested

s reads

by the

“expences

but

this

His dig-

so.

is

necessary for

seems to be a misprint or misreading have been mentioned.

fact that several expenses

767 CONCLUSION supporting that higher dignity. We naturally expect more splendor in the court of a king, than in the mansion-house of

a doge

arch>

or burgo-

^

master.

CONCLUSION

The

expence of defending the society, and that of supporting the

dignity of the chief magistrate, are both laid out for the general benefit of the whole society. It

reasonable, therefore, that they

is

should be defrayed by the general contribution of the whole society, all

the different

members

contributing, as nearly as possible, in pro-

portion to their respective

The expence

for the benefit of the

no impropriety, therefore,

may, no doubt,

sovereign

whole society. There

should be paid by

in its being defrayed

contribution of the whole society.

The

dignity of the

of the administration of justice too,

be considered as laid out is

abilities.

The expense of defence and of maintaining the

by

the general

who

give

their injustice in

one

persons, however,

general

contribu^ tion.

occasion to this expence are those who,

way

or another,

make

from the courts of

by

benefited

it

by

necessary to seek redress or protection

But the

The persons again most immediately

expense

justice.

this expence, are those

whom

of justice

the courts of justice

either restore to their rights, or maintain in their rights.

pence of the administration of

justice, therefore,

The

ex-

may very properly

may be defrayed

by

fees of

court,

be defrayed by the particular contribution of one or other, or both of those two different sets of persons, according as different occasions

may

require, that

is,

by

the fees of court. It cannot be neces-

sary to have recourse to the general contribution of the whole society, except for the conviction of those criminals

who have

not

themselves any estate or fund sufficient for paying those fees.

Those

local or provincial expences of

or provincial (what

is

which the benefit

laid out, for example,

upon the

is

local

police of

a

and expenses of local

particular

town or

vincial revenue,

district)

and ought

enue of the society. It tribute towards

is

ought to be defrayed by a local or proto be

no burden upon the general rev-

unjust that the whole society should con-

an expence of which the benefit

is

confined to a

ought to be defrayed by local

revenue.

part of the society.

expence of maintaining good roads and communications

The

benefit

is,

The

ex-

whole society, and may, therefore, with-

pense of

out any injustice, be defrayed by the general contribution of the

may not

no doubt, whole

beneficial to the

society.

This expence, however,

is

most immediately and

di-

who travel or carry goods from one place those who consume such goods. The turnpike

rectly beneficial to those to another,

to

England, and the duties called peages in other countries, lay altogether upon those two different sets of people, and thereby

tolls in it

and

roads unjustly

be defrayed hy general contribution,

but

XHE WEALTH OF NATIONS

768 better

by

tolls.

The

discharge the general revenue of the society from a very considerable burden.

ex-

The expence

of the institutions for education

pense of education

struction, is likewise,

and

may,

reli-

gious instruction

may also be defrayed by

no doubt,

therefore, without

beneficial to the

and

religious in-

whole society, and

be defrayed by the general con-

injustice,

tribution of the whole society. This expence, however, might per-

haps with equal propriety, and even with some advantage, be defrayed altogether

by

such education and

those

who

receive the immediate benefit of

instruction, or

by

the voluntary contribution of

general

contribution,

but

better fees

by

and

those

who

think they have occasion for either the one or the other.

When the institutions or public works which are beneficial whole

society, either

cannot be maintained altogether, or are not

voluntary

maintained altogether by the contribution of such particular

contribu-

bers of the society as are most immediately benefited

tion.

deficiency

must

in

The

tion of the whole society.

and above defraying the expence

supporting the dignity of the chief magistrate,

many particular

the deficiency of

tions

of this general or public revenue, I shall

beneficial

be

must

made

up by general

contribution.

the following chapter.

and of must make up for

branches of revenue.

institu-

ciety

the

of defending the society,

the re-

whole so-

by them,

general revenue of the society, over

Any defi-

to the

mem-

most cases be made up by the general contribu-

ciencies in

venue of

to the

The

sources

endeavour to explain in

CHAPTER

II

OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE

OF THE SOCIETY

The revenue which must defray, not only the expence of defending the society and of supporting the dignity of the chief magistrate,

but

the other necessary expences of government, for which the

all

constitution of the state has not provided

may be

drawn,

either, first,

any

particular revenue,

from some fund which peculiarly be-

longs to the sovereign or commonwealth, and which of the revenue of the people; or, secondly,

independent

is

from the revenue of the

All rev-

enue comes from one of

two

sources: (i) property belonging to

the sover-

people.

eign; {%)

the rev-

enue of

Part

people.

Revenue which muy peculiarly belong the Sovereign or Commonwealth

0/ the Funds or Sources to

The

the

I

of

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

enue from revenue

is

it,

either

in the

The revenue

one case

of

arises principally flocks, of

any other owner of

by employing profit, in

a Tartar

it

stock,

himself, or

derive a rev-

by lending

it.

Revenue from

or Arabian chief consists in profit. It

from the milk and increase of his own herds and

which he himself superintends the management, and

own horde

however, in this earliest and rudest state of that profit has ever

a monarchical

made

civil

or tribe. It

is

is

stock

may

be profit or interest.

is,

government only

the principal part of the public revenue

Tartar

and Arabian chiefs

state.

Small republics have sometimes derived a considerable revenue

from the

land.

His

the other interest.

the principal shepherd or herdsman of his

of

may

The property may be in stock or

profit of mercantile projects.

The

republic of

said to do so from the profits of a public wine cellar 769

Hamburgh

and apothe-

make profit

from

herds and flocks,

the WEALTjp OF NATIONS

7/0

Hamburg from a wine cellar and apothecary’s

shop,

and

many states

from banks

be very great of which the sovereign to carry on the trade of a wine merchant or apothecary. of a public bank has been a source of revenue to more

Gary’s shop.^

has leisure

The

profit

The

state cannot

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 considerable states. It has been so not only to

as that of Great Britain. Reckoning the ordinary dividend of the

and a half per cent, and its capital at ten millions seven hundred and eighty thousand pounds, the neat annual profit, after paying the expence of management, must amount, bank

England

of

at 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 said, to five

it is

into its

own

lant,

make a clear profit of two hundred and hundred pounds a year. The orderly, vigi-

hands, might

sixty-nine thousand five

and parsimonious administration

of Venice

perience,

of such aristocracies as those

and Amsterdam, is extremely proper, it appears from exfor the management of a mercantile project of this kind.

But whether such a government as that of England; which, whatever may be its virtues, has never been famous for good ceconomy; which, in time of peace, has generally conducted slothful and negligent profusion that

is

war has constantly acted with

ies;

and

less

extravagance that democracies are apt to

in time of

safely trusted with the

management

itself

with the

perhaps natural to monarchall

the thought-

fall into;

could be

a project, must at

of such

least

be a good deal more doubtful. and post offices.

The post

office is

properly a mercantile project.

The government

advances the expence of establishing the different

offices,

buying or hiring the necessary horses or carriages, and with a large profit

by

the duties

upon what

is carried.

The

is

of

repaid

It is perhaps

the only mercantile project which has been successfully by, I believe, every sort of government.

and

capital to be

managed advanced

^See Memoires concernant les Droits & 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 account 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 informations 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.

The book is by Moreau de Beaumont, Paris, 1768-9, 4 title of voL i. is Memoires concernant ks Impositions vols. ii.-iv. are Mimoires concernant Us Impositions Impositions

vols. 4to.

The

coirect

et

Droits en Europe;

et

Droits^ 2de. Ptie.,

Droits en France. Smith obtained his copy through Turgot, and attached great value to it, believing it to be very rare. See Bonar, Cata^ logue, p. 10.

et

FUNDS OF THE SOVEREIGN is

not very considerable. There

is

no mystery

77 i

in the business.

The

returns are not only certain, but immediate. Princes, however, have frequently engaged in

many

other mer-

and have been willing, like private persons, to fortunes by becoming adventurers in the common

cantile projects,

mend

their

branches of trade. They have scarce ever succeeded. The profusion

with which the

affairs of princes are

aways managed, renders

But generally

princes

are unsuccessful

as traders. it

al-

most impossible that they should. The agents of a prince regard the wealth of their master as inexhaustible; are careless at which price

they buy; are eyeless at what price they

sell;

are careless at

what

expence they transport his goods from one place to another. Those agents frequently live with the profusion of princes, and sometimes too, in spite of that profusion,

and by a proper method of making up

was thus, as we 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, accordingly, to give up the business of merchant, the business to which his family had originally owed their fortune, and in the latter part of his life to employ both what remained of that fortune, and the revenue of the state of which he had the disposal, in projects and expences 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 their accounts, acquire the fortunes of princes. It

are told

The

t\vo

characters are

inconsistent.

been obliged to beg the extraordinary assistance of government in order to avoid immediate bankruptcy.^ In their former situation, their servants in India considered themselves as the clerks of

mer-

chants: in their present situation, those servants consider themselves as the ministers of sovereigns.

A

state

from the

may

sometimes derive some part of

interest of

money, as well as from the

has amassed a treasure,

it

to foreign states, or to its

®

may

in ed. 3.

public revenue it

Treasure

maybe lent to

lend a part of that treasure, either

own subjects.

Hist, of Florence^ bk. viii., ad fin. Details are given above, p. 709, but that

first

its

profits of stock. If

is

in a passage which appears

subjects

the wealth of nations

772

The canton

or foreign states:

Berne lends to foreign states,

a part of

Berne derives a considerable revenue by lending

of

treasure to foreign states; that

its

is,

by placing

in the

it

public funds of the different indebted nations of Europe, chiefly in

The

those of France and England.^

depend,

upon

first,

upon the security

security of this revenue

of the funds in

which it

the good faith of the government which has the

placed, or

management

or probability of the

upon the certainty

of them; and, secondly,

is

must

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

money

to foreign states

is,

its creditor.

This policy of lending

so far as I know, peculiar to the canton

of Berne.

shop,

pawnshop,

Hamburgh ® has established a sort of public pawnwhich lends money to the subjects of the state upon pledges

The

Hamburg has a

city of

at six per cent, interest.

affords a revenue,

it is

This pawn-shop or Lombard, as

it is

called,

pretended, to the state of a hundred and fifty

thousand crowns, which, at four-and-sixpence the crown, amounts fo 33;7So^' sterling. Pennsylvania lent paper

The government of Pennsylvania, without amassing any treasure, invented a method of lending, not money indeed, but what is equiv-

By

alent to

money, to

land se-

interest,

and upon land security

curity.

credit to

money on

its

subjects.

advancing to private people, at

to double the value,

paper

bills of

be redeemed fifteen years after their date, and in the mean made transferrable from hand to hand like bank notes, and declared by act of assembly to be a legal tender in all payments from

time

one inhabitant of the province to another, enue, which went a considerable

it

raised

way towards

a moderate rev-

defraying an annual

expence of about 4,500^. the whole ordinary expence of that frugal

and orderly government. The success

must have depended upon three the

demand

and

silver

for

an expedient of

this

kind

different circumstances; first,

upon

of

some other instrument

money; or upon the demand

of commerce, besides gold for such

a quantity of con-

sumable stock, as could not be had without sending abroad the

and

greater part of their gold

secondly,

upon the good

silver

money, in order to purchase

credit of the

it;

government which made use

upon the moderation with which it was used, the whole value of the paper bills of credit never exceedof this expedient; and, thirdly,

money which would have been neceson their circulation, had there been no paper bills

ing that of the gold and silver

sary for carrying of credit.

The same

expedient was upon different occasions adopted

Above, p. 765. ®See Memoires concemant

*

P. 73.

les

Droits

&

Impositions en Europe; tome

i.

FUNDS OF THE SOVEREIGN by several tion, it

773

other American colonies: but, from want of this modera-

much more

produced, in the greater part of them,

disorder

than conveniency.

The unstable and perishable nature render them unfit to be trusted

to,

of stock

and

credit,

however,

as the principal funds of that

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 desure, steady

rived the greater part of

Land

its

revenue can be derived

from such a source.

public revenue from such sources.

a fund of a more stable and permanent nature; and the

is

No great

rent of public lands, accordingly, has been the principal source of

Revenue from land is

the public revenue of

beyond the shepherd

many a great nation that was much advanced state. From the produce or rent of the public

lands, the ancient republics of Greece

and

Italy derived, for

much

more important,

a long

time, the greater part of that revenue which defrayed the necessary

expences of the commonwealth. stituted for

The

rent of the crown lands con-

a long time the greater part of the revenue

of the an-

cient sovereigns of Europe.

War and

the preparation for war, are the two circumstances

which in modern times occasion the greater part of the necessary ex-

especially

when war cost

pence of

all

great states.

Italy every citizen

But

was a

himself for service at his

in the ancient republics of

soldier,

The

served and prepared

own expence. Neither of

stances, therefore, could occasion

the state.

who both

Greece and

those two circum-

little,

as in

ancient

Greece

and Italy,

any very considerable expence to

rent of a very moderate landed estate might be fully

sufficient for defraying all the other necessary

expences of govern-

ment.

In the ancient monarchies of Europe, the manners and customs of the times sufficiently prepared the great

war; and when they took the

field,

body

of the people for

they were, by the condition of

own expence, or at that of their immediate lords, without bringing any new charge upon the sovereign. The other expences of government were, the greater part of them, very moderate. The administration of justice, their feudal tenures, to be maintained, either at their

it

has been shown, instead of being a cause of expence, was a source

of revenue.

The labour

of the country people, for three

days before

was thought a fund sufficient for and for three days making and maintaining all the bridges, highways, and other public works which the commerce of the country was supposed to require. after harvest,

In those days the principal expence of the sovereign seems to have consisted in the maintenance of his own family and houshold. The officers of his

state.

The

houshold, accordingly were then the great officers of

lord treasurer received his rents.

The

lord steward

and

and in feudal times,

when all expenses

were small.

THE WEALTH OF NATIONS

774

lord chamberlain looked after the expence of his family.

The

care

of his stables 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

might be considered as a sort of military have been the only military officers whom was necessary to maintain in time of peace. In these circum-

of those houses or castles

governors. it

They seem

to

upon ordinary occa-

stances the rent of a great landed estate might,

very well defray

sions,

The pres-

In the present state of the greater part of the

ent rent of all the

of Europe, the rent of

land in the coun-

probably would be

try

would

not suffice

for

the ordi-

nary expenditure

all

the necessary expences of government.

scarce perhaps

all

they

if

civilized

monarchies

managed as they one proprietor, would

the lands in the country, all

belonged to

amount to the ordinary revenue which they levy

upon the people even

in peaceable times.

The ordinary revenue

Great Britain, for example, including not only what

is

of

necessary for

defraying the current expence of the year, but for paying the inter-

and

est of the public debts,

debts,

amounts

for sinking a part of the capital of those

upwards of ten millions a year. But the land

to

at four shillings in the pound, falls short of

This land tax, as

it is called,

not only of the rent of

all

however,

tax,

two millions a year.

supposed to be one-fifth,

is

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

A

farming stock in the cultivation of land. of the produce of this tax arises terest of capital stock.

The

employed as

verv considerable part

from the rent

and the

of houses,

ample, at four shillings in the pound, amounts to 123,399/!.

That

of the city of Westminster, to 63,092^.

aces of Whitehall

and

$d.

That

St. James’s, to 30,754^. 6^. 3^.®

portion of the land-tax

is in

in-

land-tax of the city of London, for ex-

the

6^. yrf.

of the pal-

A certain pro-

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

to be the interest of trading

timation, therefore,

and

is

supposed

capital stock. According to the es-

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,

stock, that part of

it

and from the

only excepted which

interest of all the capital

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. Britain

dom

at

The

estimation

by which Great

is, no doubt, taking the whole kingan average, very much below the real value; though in sev-

is

rated to the land-tax

®

The

figures are those of the

Land Tax

Acts.

FUNDS OF THE SOVEREIGN eral particular counties

that value.

The

and

districts it is said to

775

be nearly equal to

rent of the lands alone, exclusive of that of houses,

and

of the interest of stock, has by many people been estimated at twenty millions, an estimation made in a great measure at random,

and which,

But

I apprehend,

as likely to be above as below the truth.'^

is

the lands of Great Britain, in the present state of their culti-

if

vation, do not afford a rent of

more than

tw^enty millions

a year,

but

if

the

whole of the land

they could not well afford the half, most probably not the fourth

of the

part of that rent,

country

if

they

belonged to a single proprietor, and

all

were put under the negligent, expensive, and oppressive manage-

were under the

ment

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

extrava-

persons. If the crown lands were

state,

would be

still

is in

extensive,

it is

probable they

body

of the people derives from

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

body

of the people, or exchanged for something else that

is

either annually

consumed by the great is

con-

sumed by them. Whatever keeps down the produce of the land below what it would otherwise rise to, keeps down the revenue of the

body

great

of the people,

still

of the

the

would be

the great

reserved jor seed,

agement

rent

worse managed.

The revenue which land

more

gant man-

more than

it

does that of the pro-

much reduced,

and the revenue of the

people

would be reduced by a still greater

prietors of land.

The rent of land,

belongs to the proprietors,

is

that portion of the produce which

amount.

scarce an3rwhere in Great Britain sup-

posed to be more lian a third part of the whole produce. If the land,

which in one ling

a

state of cultivation affords

year, would in another afford

rent being, in both cases, supposed

a

a

revenue of the proprietors would be

a rent of ten millions

ster-

rent of twenty millions; the

third part of the produce; the less

than

it

otherwise might

be by ten millions a year only; but the revenue of the great body of the people would be less than lions

it

otherwise might be

by

a year, deducting only what would be necessary

population of the country would be less

by

the

thirty mil-

for seed.

number

The

of people

which thirty millions a year, deducting always the seed, could maintain, according to the particular mode of living and expence which might take place in the

different ranks of

men among whom

the re-

mainder 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 ^

See on these estimates Sir Robert Giffen, Growth of Capital, 1889, pp.

89, 90.

The sale of crown

lands

would

the wealth of nations

776 benefit

both sovereign

great monarchies of Europe, there are

which belong to the crown. They

still

many large tracts

are generally forest;

of land

and some-

and

times forest where, after travelling several miles, you will scarce

people.

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,

applied to the

if

payment

would deliver

of the public debts,

from mortgage a much greater revenue than any which those lands have ever afforded to the crown. In countries where lands, improved

and cultivated very highly, and yielding at the time of sale as great a rent as can easily be got from them, commonly sell at thirty years purchase;

the unimproved, uncultivated, and low-rented crown

lands might well be expected to

purchase.

it

at forty, fifty, or sixty years

The crown might immediately enjoy

this great price

years

sell

the revenue which

would redeem from mortgage. In the course of a few

would probably enjoy another revenue.

When

the crown

lands had become private property, they would, in the course of a

few years, become well-improved and well-cultivated. The increase of their produce would increase the population of the country,

by

augmenting the revenue and consumption of the people. But the revenue which the crown derives from the duties of customs and excise,

would necessarily increase with the revenue and consumption

of the people.

The

rev-

enue from

The revenue which,

crown lands

in

any

from the crown lands, though

h

uals,

reality costs

more

civilized it

monarchy, the crown derives

appears to cost nothing to individ-

to the society than perhaps

any other

costs the

equal revenue which the crown enjoys. It would, in

people more than

by some other equal revenue, and to divide the lands among the people, which could not well be done better, perhaps, than by exposing

any

other.

parks, etc.,

are

be for

the Interest of the society to replace this revenue to the crown

them Public

all cases,

to public sale.

Lands, for the purposes of pleasure and magnificence, parks, gardens, public walks, &c. possessions which are every

where consid-

ered as causes of expence, not as sources of revenue, seem to be the

the only

lands

only lands which, in a great and civilized monarchy, ought to belong

which

to the crown.

should belong to the sover-

enue which

eign.

wealth, being both improper

The

Public stock and public lands, therefore, the two sources of rev-

may

peculiarly belong to the sovereign or

and insufficient funds

necessary expence of any great and civilized state;

expence must, the greater part of

common-

for defraying the it

remains that

be defrayed by taxes of

greater

this

part of

one kind or another; the people contributing a part of their own

it,

TAXES

777

make up a

private revenue in order to

public revenue to the sover-

the sovereign’s ex-

eign or commonwealth.

pense

must be

Part

defrayed

II

by

taxes.

Of Taxes

The

private revenue of individuals,

book of

it

this Inquiry, arises ultimately

has been shewn in the

from three

first

different sources;

Taxes

may be intended

Rent, Profit, and Wages. Every tax must finally be paid from some

to fall

one or other of those three different sorts of revenue, or from

rent, pro-

indifferently. I shall

first,

of those taxes which,

ondly, of those which, those which,

ly, of

of

all

endeavour to give the best account I can, it is

it is

it is

fourthly, of those which,

upon

all

fit,

them

intended, should

intended, should

intended, should it is

fall fall

upon

or

wages, or

rent; sec-

upon

upon profit; thirdupon wages; and,

three

fall

intended, should

on

all

sorts of

revenue.

fall indifferently

The

those three different sources of private revenue.

par-

ticular 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, hlany of

those taxes,

it

will

appear from the following review, are not finally

paid from the fund, or source of revenue, upon which

ed they should

it

was intend-

fall.

Before I enter upon the examination of particular taxes, essary to premise the four following

maxims with regard

it is

nec-

to taxes in

general. 1.

The

subjects of every state ought to contribute towards the

There are four

maxims with regard to taxes in

support of the government, as nearly as possible, in proportion to their respective abilities; that

is,

in proportion to the revenue

they respectively enjoy under the protection of the state.

general,

which

The

ex-

(i) equality,

pence of government to the individuals of a great nation, expence of management to the joint tenants of a great are

all

what

tax, it

estate,

the

who

obliged to contribute in proportion to their respective inter-

ests in the estate. sists,

is like

is

In the observation or neglect of this maxim con-

called the equality or inequality of taxation.

must be observed once

for all,

which

falls finally

only of the three sorts of revenue above mentioned,

unequal, in so far as

it

notice of this sort of inequality, but

shall, in

most

unequally even upon that is

affected

by it.

much

further

cases, confine

observations to that inequality which is occasioned

tax falling

upon one

necessarily

does not affect the other two. In the follow-

ing examination of different taxes I shall seldom take

enue which

is

Every

by a

my

particular

particular sort of private rev-

THE WEALTH OF NATIONS

77S (2) cer-

tainty.

The

II.

tax which each individual

is

pay ought to be payment, the manner of

bound

to

certain, and not arbitrary. The time of pa5nnent, 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 ob-

noxious 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 in-

The

solent nor corrupt.

certainty of

what each individual ought to

in taxation, a matter of so great importance, that a very con-

pay is,

siderable degree of inequality,

ence of

all nations, is

it

appears, I believe, from the experi-

not near so great an evil as a very small degree

of uncertainty. (3) convenience

III.

in

of pay-

ment,

it.

Every tax ought to be levied

which

A

it is

most

likely to

upon the

tax

at the time, or in the

rent of land or of houses, payable at the

term at which such rents are usually paid, it is

most

when he

is

likely to

is

levied at the time

to

articles of luxury, are all finally

He pays them by little and little,

pleases,

it

As he is must be

or,

have wherewithal to pay. Taxes upon such

consumable goods as are

the goods.

same

when

be convenient for the contributor to pay;

most likely

the consumer, and generally in a manner that for him.

manner,

be convenient for the contributor to pay

is

paid by

very convenient

as he has occasion to

buy

at liberty too, either to buy, or not to buy, as

his

own

fault

if

he ever

suffers

he

any considerable

inconveniency from such taxes. and (4) economy in collection,

IV. Every tax ought to be so contrived as both to take out and to

keep out of the pockets of the people as above what

either take out or

more than

it

little

as possible, over

brings into the public treasury of the state.

it

and

A tax may

keep out of the pockets of the people a great deal

brings into the public treasury, in the four following

ways. First, the levying of

it

may require a great number

of officers,

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 whose

salaries

discourage them from applying to certain branches of business

which might give maintenance and employment to great multitudes.

While

it

destroy,

do

so.

obliges the people to pay,

some

of the funds

Thirdly,

by

it

may

may thus

diminish, or perhaps

which might enable them more easily to

the forfeitures and other penalties which those

unfortunate individuals incur the tax,

it

who attempt

unsuccessfully to evade

frequently ruin them, and thereby put an end to the

TAXES ON THE RENT OF LAND benefit

ment

which the community might have received from the employ-

An

of their capitals.

to smuggling.

injudicious tax offers a great temptation

But the penalties

The

tion to the temptation.

of smuggling

must

who

yield to

it;

and

rise in

propor-

law, contrary to all the ordinary prin-

ciples of justice, first creates the temptation,

those

779

and then punishes

commonly enhances

it

the punishment

too in proportion to the very circumstance which ought certainly to alleviate

it,

commit the

crime.^ Fourthly, by suband the odious examination may expose them to much unnecessary

the temptation to

jecting the people to the frequent visits

of the tax-gatherers, trouble, vexation,

it

and oppression; and though vexation

strictly speaking, expence, it is certainly equivalent to the

at which every in

some one

not,

is

expence

man would be willing to redeem himself from it. It is

or other of these four different

ways that taxes are

fre-

quently 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 conven-

ient to the contributor, both in the time

and

in the

mode

of

pay-

which have recom-

mended themselves to all

ment, and in proportion to the revenue which they brought to the

burdensome to the people.^ The following short

prince, as little

view of some of the principal taxes which have taken place in ferent ages tions

and

have not

re-

dif-

countries will show, that the endeavours of all na-

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

See Sketches of the History of Man 1774, by Henry Home, Lord Karnes, “general i. page 474 & seq. This author at the place quoted gives six

vol.

taxation:— “That wherever there

rules” as to 1.

is

an opportunity of smuggling taxes ought to be

moderate.”

“That taxes expensive in the levying ought to be avoided.” “To avoid arbitrary taxes.” the 4. “To remedy” inequality of riches “as much as posable, by relieving poor and burdening the rich.” ought to be re5. “That every tax which tends to impoverish the nation 2.

3.

_

jected with indignation,” 6. ^

taxes that require the oath of party.” “as they could contrive” comes here instead of three lines earlier.

“To avoid

In ed.

I

na-

tions.

XHE WEALTH OF NATIONS

780

A tax on the rent of land

certain canon, every district being valued at

valuation

is

not afterwards to be altered; or

a certain it

may

which

rent,

be imposed in

may be on

such a manner as to vary with every variation in the real rent of the

a constant

land,

and

to rise or fall

with the improvement or declension of

its

or variable valu-

cultivation.

A

ation. If

on a

constant valuation it

be-

land-tax which, like that of Great Britain,

is

assessed

upon

each district according to^^ a certain invariable canon, though should be equal at the time of

comes unequal

it

establishment, necessarily be-

its first

in process of time, according to the

improvement or neglect in the cultivation of the

unequal degrees different parts of

comes un-

of

equal, like

the country. In England, the valuation according to which the dif-

the British

land

tax.

ferent counties

and parishes were assessed to the land-tax by the

4th of William and

Mary was

very unequal even at

its first

lishment. This tax, therefore, so far offends against the

four

maxims above-mentioned.

three. It

is

the same

perfectly certain.

as that for the rent,

It

is

estab-

first of

the

perfectly agreeable to the other

The time of payment

for the tax, being

as convenient as

can be to the con-

is

it

Though the landlord is in all cases the real contributor, commonly advanced by the tenant, to whom the landlord is obliged to allow it in the payment of the rent. This tax is levied by a much smaller number of officers than any other which affords nearly the same revenue. As the tax upon each district does not rise tributor.

the tax

is

with the

rise of

the rent, the sovereign does not share in the profits

of the landlord’s improvements.

contribute,

Those improvements sometimes

indeed, to the discharge of the other landlords of the

But the aggravation of the tax, which this may sometimes occasion upon a particular estate, is always so very small, that it district.

never can discourage those improvements,^^ nor keep

produce of the land below what

no tendency

it

would otherwise

to diminish the quantity,

it

down

the

As

has

rise to.

it

can have none to raise the

price of that produce. It does not obstruct the industry of the people. It subjects the

landlord to no other inconveniency besides the

unavoidable one of paying the tax. Circumstances

have

made the

The advantage, however, which the landlord has derived from the by which all the lands of

invariable constancy of the valuation

Great Britain are rated to the land-tax, has been principally owing

“ Ed. I reads “is imposed according to.” For the origin of the stereotyped assessment of the land tax, see Cannan, Hist, of Local Rates in England^ 1896, pp. 114-119. Ed. 2 reads “They contribute.” “Ed. I, beginning after “the same revenue,” six lines higher up, reads “As the tax does not rise with the rise of the rent, the sovereign does not share in the profits of the landlord’s improvements. discourage those improvements.”

The

tax therefore does not

TAXES ON THE RENT OF LAND some circumstances

to

78l

altogether extraneous to the nature of the

constant valuation

tax.

favour-

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 Brit-

ain having, since the time w^hen this valuation

been continually

rising,

and scarce any

of

was

established,

first

them having

The

fallen.

the tax which they would have paid, according to the present rent

and that which they actually pay according to the

Had

ancient valuation.

the British land-

landlords, therefore, have almost all gained the difference between

of their estates,

able to

lords, the

country having prospered

and rents risen,

had

the state of the country been different,

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 valuation has been advantageous to the

landlord and hurtful to the sovereign. In a different state of things it

might have been advantageous to the sovereign and hurtful to the

landlord.

As the tax is made payable is

in

money, so the valuation of the land

expressed in money. Since the establishment of this valuation the

and the value of

money

value of silver has been pretty uniform, and there has been no al-

and silver

teration in the standard of the coin either as to weight or fineness.

remained

Had

uniform. silver risen considerably in its value, as it

in the course of

seems to have done

two centuries which preceded the discovery of

the mines of America, the constancy of the valuation might have

proved very oppressive to the landlord. ably in

its

value, as

it

after the discovery of those mines, the

would have reduced very much sovereign.

Had any

Had

silver fallen consider-

certainly did for about

this

a century at

same constancy

of valuation

branch of the revenue of the

considerable alteration been

made

in the stand-

ard of the money, either by sinking the same quantity of lower denomination, or by raising silver, for

it

least

silver to

a

to a higher; had an ounce of

example, instead of being coined into five shillings and

twopence, been coined, either into pieces which bore so low a de-

nomination as two

shillings

and seven-pence, or

into pieces

which

would

in the

bore so high a one as ten shillings and four-pence,

it

one case have hurt the revenue of the proprietor, in the other that of the sovereign.

In circumstances, therefore, somewhat different from those which this constancy of valuation mighty have

have actually taken place,

all

some time or

stancy of valuation

been a very great inconveniency, either to the contributors, or to the commonwealth. In the course of ages such circumstances, however, must, at

The con-

other, happen.

the other works of men, have

But though empires,

all hitherto

like

proved mortal, jet

might have been very inconvenient to

the wealth of nations

782 one or other of

every empire aims at immortality. Every constitution, therefore, which it is meant should be as permanent as the empire itself, ought

the parties.

to be convenient, not in certain circumstances only, but in

all cir-

cumstances; or ought to be suited, not to those circumstances which are transitory, occasional, or accidental, but to those which are nec-

essary and therefore always the same.

A tax upon the rent of land which varies with every variation

The French

the rent, or which rises and

economists re-

neglect of cultivation,

commend

in France,

a tax varying with the

able of

rent.

who

call

recommended by that sect

is

of

men of letters

themselves the (economists, as the most equit-

upon the be imposed equally upon the

All taxes, they pretend, fall ultimately

all taxes.

rent of land, and ought therefore to

fund which must

finally

pay them. That

all

taxes ought to fall as

equally as possible upon the fund which must finally

certaidy true. But

it

what are those which Venetian territory

rented

by which they support

fall finally

fall finally

In the Venetian territory

all

lease to farmers are taxed at

upon the rent

of the land,

and

the arable lands which are given in

a tenth

corded in a public register which

of the rent.^^

kept by the

is

When

The leases are

officers of

lands, they are valued according to

and lands

is

cultivated

he pays only eight instead of ten per

re-

revenue

the proprietor cultivates his

in each province or district.

taxed 10 per cent,

proprie-

their very in-

upon some other fund.

lands are

by the

is

will sufficiently appear, from the following review,

what are the taxes which

In the

pay them,

without entering into the disagreeable discussion

of the metaphysical arguments

genious theory,

of

according to the improvement or

falls

own

an equitable estimation, and he

allowed a deduction of one-fifth of the tax, so that for such lands

A land-tax of this kind is

cent, of the

supposed

rent.

certainly more equal than the land-tax

and

tor 8 per

of England. It might not, perhaps, be altogether so certain,

cent.

assessment of the tax might frequently occasion a good deal more

Such a

trouble to the landlord. It might too be

land tax

in the levying.

is

more

equal but is not so certain,

and is more trouble-

some and expensive

Such a system

the

a good deal more expensive

of administration, however,

might perhaps be con-

trived as would, in a great measure, both prevent this uncertainty

and moderate

this expence.

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 condi-

and

part of those penalties were to be paid to either of the

than the

tions;

British.

two parties who informed against and convicted the other of such concealment or misrepresentation, it would effectually deter them

The uncertainty

if

from combining together in order “Memoires concemant

les

to

defraud the public revenue. All

Droits tom.

i.

p. 240, 241.

TAXES ON THE RENT OF LAND the conditions of the lease might be sufficiently

7^3

known from such a

and

ex-

pense

record.

could be

Some

landlords, instead of raising the rent, take a fine for the re-

newal of the

who

spendthrift,

much

This practice

lease.

for a

sum

greater value. It

landlord. It

is

is

is in

money sells a

of ready

most

in

most cases the expedient of a future revenue of

cases, therefore, hurtful to the

frequently hurtful to the tenant, and

it is

diminished

Leases should be registered

always fines

hurtful to the community. It frequently takes from the tenant so

great a part of his capital, and thereby diminishes so ability to cultivate the land, that

he finds

it

more

much

difficult to

his

pay a

taxed higher

than rent,

small rent than it would otherwise have been to pay a great one. Whatever diminishes his ability to cultivate, necessarily keeps

down, below what

would otherwise have been, the most impor-

it

By

tant part of the revenue of the community.

upon such

good deal heavier than upon the ordinary rent,

fines a

this hurtful practice

vantage of

all

rendering the tax

might be discouraged, to the no small ad-

the different parties concerned, of the landlord, of

the tenant, of the sovereign, and of the whole community.

Some tion,

leases prescribe to the tenant

and a

a certain mode of cultiva-

certain succession of crops during the whole continu-

conditions of cultiva-

ance of the

This condition, which

lease.

the landlord’s conceit of his

most cases very

an additional

ill

own

is

generally the effect of

superior knowledge (a conceit in

founded), ought always to be considered as

rent; as a rent in service instead of

In order to discourage the practice, which

is

a rent in money.

generally a foolish

one, this species of rent might be valued rather high,

quently taxed somewhat higher than

Some

common money

landlords, instead of a rent in

kind, in corn, cattle, poultry, wine,

oil,

should be discour-

apd by high valuation,

and conse-

rents.

money, require a rent in &c. others again require a

more hurtful to the tenant They either take more or keep more

rent in service. Such rents are always

than beneficial to the landlord.

tion

rents pay-

able in

kind should be valued high,

out of the pocket of the former, than they put into that of the latter.

In every country where they take place, the tenants are poor

and beggarly, pretty much according to the degree take place.

By valuing,

in the

same manner, such

in

which they

rents rather high,

and consequently taxing them somewhat higher than common rents, a practice which is hurtful to the whole community

money

might perhaps be

When

sufficiently discouraged.

the landlord chose to occupy himself a part of his

lands, the rent might be valued according to tion of the farmers

and landlords

an equitable arbitra-

in the neighbourhood,

and a mod-

erate abatement of the tax might be granted to him, in the

manner as

own

same

in the Venetian territory; provided the rent of the lands

and an abate-

ment given to landlords cultivat-

the wealth of nations

784 ing a certain ex-

which he occupied did not exceed a certain sum. It is of importance that the landlord should be encouraged to cultivate a part

tent of their land.

of his

own

tenant,

land.

His capital

is

generally greater than that of the

and with less skill he can frequently raise a greater produce.

landlord can afford to try experiments, and

The

posed to do

so.

is

generally dis-

His unsuccessful experiments occasion only a mod-

erate loss to himself. His successful ones contribute to the improve-

ment and better

cultivation of the whole country. It might be of

importance, however, that the abatement of the tax should en-

courage him to cultivate to a certain extent only. If the landlords should, the greater part of them, be tempted to farm the whole of

own lands, the country (instead of sober and industrious tenants, who are bound by their own interest to cultivate as well as their

their capital

and

and

skill will

profligate bailiffs,

allow them) would be

filled

with idle

whose abusive management would soon de-

grade 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 9. system

Such a system of administration might, perhaps, free a tax of this

would free the

ta^ from

inconvenient uncertainty

and encourage

kind from any degree of uncertainty which could occasion

either oppression or inconveniency to the contributor;

at the

same

time serve to introduce into the

of land such a plan or policy, as might contribute a good deal to

the general improvement and good cultivation of the country.

The expence

levying one which

The extra

Some

expense of

a land-tax, which varied with every varino doubt be somewhat greater than that of

of levying

ation of the rent, would

improvement.

levying

and might

common management

was always rated according to a fixed valuation. would necessarily be incurred both by

additional expence

the different register offices which

it

would be proper

in the different districts of the country,

and by the

to establish

different valua-

the tax

which might occasionally be made of the lands which the

would be

tions

incon-

proprietor chose to occupy himself.

siderable.

ever,

The expence

of all this,

might be very moderate, and much below what

the levying of

many

is

how-

incurred in

other taxes, which afford a very inconsiderable

revenue in comparison of what might easily be drawn from a tax of this kind.

The value of im-

prove-

The discouragement which a

variable land-tax of this kind might

give to the improvement of land, seems to be the most important

ments

objection which can be

should be for a fixed

less disposed to

term exempt from tax-

nothing to the expence, was to share in the profit of the improvement. Even this objection might perhaps be obviated by allowing

ation,

the landlord, before he began his improvement, to ascertain, in con-

made to

it.

The

landlord would certainly be

improve, when the sovereign,

who

contributed

TAXES ON THE RENT OF LAND

7S5

junction with the officers of revenue, the actual value of his lands,

according to the equitable arbitration of a certain number of landlords

and farmers

by both

in the neighbourhood, equally chosen

parties;

and by rating him according

number

of years, as might be fully sufficient for his complete in-

demnification.

To draw

to this valuation for such a

the attention of the sovereign towards the

improvement of the land, from a regard to the increase of revenue,

is

his

own

one of the principal advantages proposed by this spe-

cies of land-tax.

Xhe

term, therefore, allowed for the indemnifica-

tion of the landlord, ought not to be a great deal longer than

was necessary

what

for that purpose; lest the remoteness of the interest

should discourage too

much

had

this attention. It

better, however,

be somewhat too long than in any respect too short.

No

incitement

to the attention of the sovereign can ever counterbalance the smallest discouragement to that of the landlord.

The

attention of the

sovereign can be at best but a very general and vague consideration of

what

is

likely to contribute to the better cultivation of the

greater part of his dominions. particular

The

attention of the landlord

and minute consideration of what is

likely to

advantageous application of every inch of ground upon his

The principal attention of the sovereign ought to be courage, by every means in his power, the attention both tate.

landlord and of the farmer; interest in their

by allowing both

is

a

be the most es-

to en-

of the

to pursue their

own

own way, and according to their own judgment; by

giving to both the most perfect security that they shall enjoy the full

recompence of

own

their

industry; and

by procuring

to both

the most extensive market for every part of their produce, in con-

sequence of establishing the easiest and safest communications

both by land and by water, through every part of his own dominions, as well as the

dominions of

all

most unbounded freedom of exportation to the

other princes.

by such a system of administration a tax of this kind could be so managed as to give, not only no discouragement, but, on the contrary, some encouragement to the improvement of land, it does If

not appear likely to occasion any other inconveniency to the landlord, except

and the

jittie

m-

conveni-

always the unavoidable one of being obliged to pay the

tax.

In

all

the variations of the state of the society, in the improve-

ment and

in the declension of agriculture; in all the variations in

the value of silver, and in tax of this kind would, of

and would be equally

all

its

just

those in the standard of the coin, a

own accord and without any and equitable

attention

in all those different

of government, readily suit itself to the actual situation of things,

it

would

adjust it-

changef^

XHE WEALTH OF NATIONS

786

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

make a

Some

states, instead of the simple

register of leases,

have had

and obvious expedient

recourse to the laborious

survey

one of an actual survey and valuation of

and

try.

valu-

ation for

the land tax,

They have

of a

and expensive

the lands in the coun-

all

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

re-

sult of a very accurate survey of this kind.

In the ancient dominions of the king of Prussia, the land-tax

for ex-

ample,

assessed according to an actual survey and valuation, which

is

is

re-

Prussia,

viewed and altered from time to time.^^ According to that valuation, the lay proprietors Silesia,

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;

said with great accuracy. According to that valuation,

it is

the lands belonging to the bishop of Breslaw are taxed at twentyfive

per cent, of their rent. The other revenues of the ecclesiastics

of both religions, at fifty per cent. tonic order,

noble tenure, at thirty-eight

a base tenure, at thirty-five

The survey and valuation

and Bohemia.

work

of

more than a hundred

the peace of 1748,

The survey

The commanderies

of the TeuLands held by a and one-third per cent. Lands held by and one-third per cent.^^

and of that of Malta,

of

at forty per cent.

Bohemia

years. It

by the orders

is

was not perfected

till

after

of the present empress queen.^®

of the dutchy of Milan, which

of Charles VI., was not perfected

said to have been the

till

was begun

after 1760. It

is

in the time

esteemed one

most accurate that has ever been made. The survey of Savoy and Piedmont was executed under the orders of the late king of of the

Sardinia.^’'

the

In the dominions of the king of Prussia the revenue of the church 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.

church

It seldom

Under the Prussian land tax

lands are

taxed higher

than the rest; in

is

happens that any part of

provement

of land; or is so

applied towards the im-

it is

employed as to contribute

in

any

re-

spect towards increasing the revenue of the great body of the people. His Prussian majesty had probably, upon that account,

thought

it

reasonable, that

^^Memoires concernant

it

should contribute a good deal more to-

les Droits, &c. tome pp. 117-119. ^®Memoires concernant les Droits, &c. tome p. 280, &c. also p. 287, &c. to 316.

i.

i.

p. 114, 115, 116, &c.

p. 83,

^ As

84 and

79.

stated just above.

TAXES ON THE RENT OF LAND wards relieving the exigencies of the

state.

lands of the church are exempted from

1^7

In some countries the

all taxes.

In others they are

taxed more lightly than other lands. In the dutchy of Milan, the lands which the church possessed before 1575, are rated to the tax at a third only of their value.^*^

In

by a noble tenure are taxed three per higher than those held by a base tenure. The honours and Silesia,

lands held

cent,

priv-

annexed to the former, his Prussian majesty

ileges of different kinds

had probably imagined, would

sufficiently

compensate to the pro-

prietor a small aggravation of the tax; while at the

same time the

humiliating inferiority of the latter would be in some measure alleviated

by being taxed somewhat more

In other countries,

lightly.

some states

they are taxed

lower than the rest.

Differ-

ences are often

made between land held by noble and base tenures.

the system of taxation, instead of alleviating, aggravates this inequality. In the dominions of the king of Sardinia,

provinces of France which are subject to what taille,

tenure.

Those held by a noble one are exempted.

falls

altogether

in those

upon the lands held by a base

predial

the tax

and

called the real or

is

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

and produce

becoming

of every different

farm in the country. The governments of Prussia, of Bohemia, of Sardinia,

and

an attention

this kind;

that

it is

of the dutchy of Milan, actually exert

an attention of

so unsuitable to the nature of government,

not likely to be of long continuance, and which,

continued, will probably in the long-run occasion trouble and vexation than

it

can possibly bring

tax assessed ac-

its

so would require the continual and painful attention of government to all the variations in the state

Aland

cording to

a general survey

and valuation soon

becomes unequal,

if it is

much more

relief to the

con-

tributors.

In 1666, the generality of Montauban was assessed to the Real according,

or predial taille valuation.^^

By

it is

said, to

a very exact survey and

1727, this assessment had become altogether un-

equal. In order to

remedy

this inconveniency,

government has

found no better expedient than to impose upon the whole generality

an additional tax of a hundred and twenty thousand additional tax taille

is

rated

upon

all

livres.

This

the different districts subject to the

according to the old assessment. But

it is

levied only

upon

by that assessment unthose which by the same

those which in the actual state of things are der-taxed,

and

it is

applied to the relief of

assessment are over-taxed. Mimoiresy tom.

Two

districts, for

example, one of which

i, p. 282.

^ Misprinted “tallie” here and six lines lower down in eds. 2-5. ^ Memoires concernant les Droits &c, tome ii. p. 139, &c. pp.

145-147*

as in

Montauban.

XHE WEALTH OF NATIONS

788

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

by the additional tax

districts are

rated at eleven hundred livres each. But this additional tax

only upon the district under-charged, and

it is

is

levied

applied altogether to

the relief of that over-charged, which consequently pays only nine

hundred

livres.

ditional tax,

The government

which

is

neither gains nor loses

applied altogether to remedy

arising from the old assessment.

The

application

by the ad-

the inequalities

pretty

is

much

regulated according to the discretion of the intendant of the gener-

and must,

ality,

therefore,

be in a great measure arbitrary.

Taxes which are proportioned, not oj

Taxes on the pro-

Taxes upon

and though they may be

originally

finally-

paid by the land-

is to

paid by the landlord.

Produce

upon the

the produce of land are in reality taxes

duce are finally

to the Rent, but to the

Land

When

rent;

advanced by the farmer, are

a certain portion of the produce

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

lord,

amount to, and he makes a proportionable abatement in the rent which he agrees to pay to the landlord. There

is

no farmer who does

not compute beforehand what the church tythe, which of this kind,

The

and are very unequal

is,

tythe,

is

one year with another, likely to amount

and every other land-tax of

liis kind,

a land-tax to.

under the ap-

pearance of perfect equality, are very unequal taxes; a certain portion of the produce being, in different situations, equivalent to a

taxes,

very different portion of the rent. In some very rich lands the produce

is

so great, that the one half of

fully sufficient to replace to

it is

the farmer his capital employed in cultivation, together with the

ordinary profits of farming stock in the neighbourhood. half, or,

what comes

he could afford

But

if

to

The

other

to the same thing, the value of the other half,

pay as

there

was no

tythe.

taken from him in the

way of

tythe,

rent to the landlord,

a tenth of the produce

is

he must require an abatement of the

fifth

if

part of his rent, other-

wise 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

of

it.

amount only to four-tenths

In poorer lands, on the contrary, the produce

small,

and the expence of cultivation so

fifths of

is

sometimes so

great, that it requires four-

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-

TAXES ON THE PRODUCE OF LAND tenths of the whole produce.

way

the produce in the

ment

But

of tythe,

of the rent of the landlord,

tythe

may

the farmer pays one-tenth of

if

he must require an equal abate-

which

tenth only of the whole produce.

may sometimes be a so

it is

will thus

Upon

be reduced to one-

the rent of rich lands, the

sometimes be a tax of no more than one-fifth part, or

four shillings in the pound; whereas

The

7^9

tythe, as

upon that

of poorer lands,

it

tax of one-half, or of ten shillings in the pound.

it is

frequently a very unequal tax upon the rent,

always a great discouragement both to the improvements of

the landlord and to the cultivation of the farmer.

make

venture to

The one cannot

the most important, which are generally the most

expensive improvements; nor the other to raise the most valuable,

which

dis-

courage

both improve-

ment and good cultivation.

which are generally too the most expensive crops; when the church, which lays out no part of the expence,

The

the profit.

by the tythe

is to

madder was

cultivation of

share so very largely in

for a long time confined

to the United Provinces, which, being presbyterian

and upon that account exempted from

countries,

this destructive

enjoyed a sort of monopoly of that useful dying drug against

tax,

The

the rest of Europe. this plant into

attempts to introduce the culture of

late

England, have been made only in consequence of

the statute which enacted that five shillings an acre should be re-

ceived in lieu of

all

As through the

manner

of tythe

upon madder.^^

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

tenth part of the produce of part, however,

is

uce.

The

the lands of the empire. This tenth

all

estimated so very moderately, that, in

inces, it is said not to exceed

a

thirtieth part of the ordinary prod-

to about a fifth part of the produce.

said likewise to have

amounted

In Asia, this sort of land-tax

is

The

is

land-tax of

countries,

amounted ancient Egypt

The sovereigns of Mahometan government,

interest

have been ex-

much

as possible, both

the quantity and value of every part of the produce of the land, by 12,

Asiatic

and are

navigable canals, in order to increase, as

II., c.

many

said to interest the sovereign in

of ancient Egypt, are said accordingly to

xlvii. 26.

of the state in

said to have

tremely attentive to the making and maintaining of good roads and

Genesis

revenue

to a fifth part.^^

China, those of Bengal while under the

“^31 Geo.

principal

Ma-

the improvement and cultivation of land.-^

and those

form the

of Bengal, before that country fell into the

hands of the English East India company,

is

many prov-

land-tax or land-rent which used to be paid to the

hometan government

a

They

continued by $ Geo.

III., c. 18.

Above,

p. 647.

said to

the sovereign in

the im-

prove-

ment and cultiva-

THE WEALTH OF NATIONS

790 tion of

land there.

procuring to every part of

own dominions

the most extensive maiket which their

it

The

could afford.

tythe of the church

such small portions, that no one of terest of this

is

divided into

proprietors can have

its

any

in-

kind. The parson of a parish could never find his ac-

count in making a road or canal to a distant part of the country, in order to extend the market for the produce of his parish.

Such

taxes,

when

own

particular

destined for the maintenance of the state,

may serve in some measure to balWhen destined for the maintenance of

have some advantages which ance their inconveniency.

the church, they are attended with nothing but inconveniency.

They may be in kind or in

Collection quite un-

in kind; or,

according to a certain valuation, in money.

a parish, or a gentleman of small fortune who upon his estate, may sometimes, perhaps, find some advantage

The parson

money

in kind is

may be levied, either

Taxes upon the produce of land

lives

of

in receiving, the one his tythe,

and the other

his rent, in kind.

quantity to be collected, and the district within which

to be

it is

suitable

for public

collected, are so small, that they

revenue.

eyes, the collection

them.

both can oversee, with their

and disposal of every part of what

A gentleman of great fortune,

who

The own

due

is

lived in the capital,

to

would

be in danger of suffering much by the neglect, and more by the fraud of his factors and agents,

if

the rents of an estate in a distant

province were to be paid to him in this manner. ereign,

The

loss of the sov-

from the abuse and depredation of his tax-gatherers, would

much

necessarily be

greater.

The

servants of the most careless pri-

vate person are, perhaps, more under the eye of their master than those of the most careful prince; and a public revenue, which

paid in kind, would suffer so collectors, that

much from

the

mismanagement

the public revenue of China, however,

their

so

A money tax on

produce

of the

a very small part of what was levied upon the peo-

ple would ever arrive at the treasury of the prince.

ner.

was

The Mandarins and

is

Some

part of

said to be paid in this

man-

other tax-gatherers will, no doubt, find

advantage in continuing the practice of a payment which

much more

liable to

is

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 va-

market price; or according

a

maybe

riations of the

always

bushel of wheat, for example, being always valued at one and the

the same or

may

vary with the mar-

ket price

same money

price,

whatever

may

to

fixed valuation,

be the state of the market.

produce of a tax levied in the former way,

will

a

The

vary only according

to the variations in the real produce of the land according to the

of pro-

improvement or neglect of

duce.

in the latter

way

will vary,

cultivation.

The produce

of a tax levied

not only according to the variations in

the produce of the land, but according to both those in the value

TAXES ON THE KENT OF HOUSES

79 ^

of the precious metals, and those in the quantity of those metals

which tion.

is

at different times contained in coin of the

The produce

same denomina-

of the former will always bear the

tion to the value of the real produce of the land.

same propor-

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

paid in

full

compensation for

this case, exactly of the

sum

of

money

is

to be

tax or tythe; the tax becomes, in

all

same nature with the land-tax

of England.

It neither rises nor falls with the rent of the land. It neither en-

The

courages nor discourages improvement. part of those parishes which pay what all other tythe, is

a tax of

this kind.

tythe in the greater

a modus in lieu of

is called

During the Mahometan gov-

ernment of Bengal, instead of the payment in kind of the part of the produce, a modus, and,

it is said,

Wben a certain

sum of money is to be paid in

com-

pensation for the

tax

it

be-

comes exactly like the

fifth

a very moderate one,

English

land tax.

was established the country.

in the greater part of the districts or zemindaries of

Some

of the servants of the East India

under pretence of restoring the public revenue to

its

company,

proper value,

modus for a payment in management this change is likely both to discourand to give new opportunities for abuse in the col-

have, in some provinces, exchanged this kind.

Under

their

age cultivation,

lection of the public revenue,

which has

what

it

when

ment

of the company.

was

said to have been,

have profited by

The

fallen

it first fell

much below

under the manage-

company may, perhaps,

servants of the

this change,

very

but at the expence,

it is

probable,

both of their masters and of the country.

Taxes upon the Rent of Bouses

The

rent of a house

the one

may

may be

distinguished into two parts, of which

very properly be called the Building rent; the other

is

House rent consists

commonly called the Ground rent. The building rent is the interest in building the house. In order to level

with other trades,

ficient, first, to

pay him

for his capital if to

it is

the

same it

keep the house in constant

put the trade of a builder upon a

interest

which he would have got

upon good repair, or,

thing, to replace, within a certain

had been employed

or profit of the capital expended

necessary that this rent should be suf-

he had lent

in building

it.

of

two parts,

security; and, secondly,

what comes

to the

term of years, the capital

The

“Eds, 1-4 read “a

same which

building rent, or the ordi-

fifth

building rent,

the wealth of nations

792

where regulated by the

profit of building, is, therefore, every

nary

money. Where

ordinary interest of

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

may

expence of building,

Where

builder.

and a half per

perhaps afford a

the market rale of interest

perhaps require seven or seven and a

cent,

upon the whole

sufficient profit to the

is five

per cent.,

it

may

half per cent. If, in propor-

money, the trade of the builder affords at any time a much greater profit than this, it will soon draw so much caption to the interest of

from other trades as

ital it

and ground rent.

any time much

affords at

draw

much

so

from

capital

Whatever part what

will reduce the profit to its proper level. If

of ‘the

is sufficient for

less

it

than

this,

other trades will soon

as will again raise that profit.

whole rent of a house

is

over and above

affording this reasonable profit, naturally goes

and where the owner of the ground and the owner of the building are two different persons, is, in most cases, completely paid to the former. This surplus rent is the price which to the ground-rent;

the inhabitant of the house pays for

some

real or

supposed advan-

tage of the situation. In country houses, at a distance from

great town, where there

ground rent

is

is

any

scarce

thing, or

no more than what the ground

which the house stands upon would pay In country

villas in the

any

plenty of ground to chuse upon, the

if

employed

in agriculture.

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.

rents are generally highest in the capital,

parts of

it

Ground

in those particular

where there happens to be the greatest demand for

houses, whatever be the reason of

and

and

business, for pleasure

and

tha.t

demand, whether

society, or for

for trade

mere vanity and

fashion.

A taxon

A

tax upon house-rent, payable

by the tenant and proportioned

house rent paid by the tenant falls

reasonable profit, he would be obliged to quit the trade; which,

partly on

raising the

to the whole rent of each house, could not, for

time at

least, affect

demand

any considerable

the building rent. If the builder did not get his

for building,

by

would in a short time bring back

the inhabitant

his profit to its proper level with that of other trades. Neither

and partly on the owner of

would such a tax

the

of the house,

ground,

Let us suppose, for example, that a particular person judges that he can afford for house-rent an expence of sixty pounds a year; and

as

may be

shown by an example

fall

altogether

upon the ground-rent; but

it

would

manner as to fall, partly upon the inhabitant and partly upon the owner of the ground.

divide itself in such a

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

TAXES ON THE RENT OF HOUSES house of sixty pounds rent

pounds a year, which

He

afford.

house of

pounds

him seventy-two

twelve pounds more than he thinks he can

is

content himself with a worse house, or a

will, therefore,

fifty

will in this case cost

793

rent,

which, with the additional ten pounds

that he must pay for the tax, will make lip the sum of sixty pounds a year, the expence 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.

for

He will

he

will

give up, I say, a part of this additional conveniency;

seldom be obliged to give up the whole, but

con-

will, in

sequence of the tax, get a better house for

he could have got

by taking away

if

there

fifty pounds a year, than had been no tax. For as a tax of this kind,

must diminish the com-

this particular competitor,

petition for houses of sixty

pounds

pounds

ish it for those of fifty

rent, so

and

rent,

it

must likewise dimin-

in the

same manner

for

all other rents, except the lowest rent, for which it would some time increase the competition. But the rents of every class of houses for which the competition was diminished, would neces-

those of for

sarily

be more or

ever, could, for rent; the

less reduced.

any

whole of

ground-rent.

The

it

As no part

considerable time at least, affect the building

must

final

in the long-run necessarily fall

payment of

this tax, therefore,

upon th^

would

partly upon the inhabitant of the house, who, in order to share,

how-

of this reduction,

would be obliged

to give

fall,

pay

his

part of his conveniency; and

up a

pay his share, up a part of his revenue. In what proportion this final payment would be divided between them, it is not perhaps very easy to ascertain. The division would probably be

partly

upon the owner

would be obliged

of the ground, who, in order to

to give

very different in different circumstances, and a tax of this kind might, according to those different circumstances, affect very un-

equally 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

not only from

this,

different houses

would

arise,

On the

would be an un-

but from another cause. The proportion of the

expence of house-rent to the whole expence of

living, is different in

Ming’

the different degrees of fortune. It is perhaps highest in the highest ^

degree,

and

it

diminishes gradually through the inferior degrees,

The necessaries They find it difficult

so as in general to be lowest in the lowest degree.

of

life

occasion the great expence of the poor.

to get food,

and the greater part of

their little revenue is spent in

THE WEALTH OE NATIONS

794 getting

it.

The

expence of the rich

A

they possess. fall

and a magnificent house embellishes and sets

;

advantage

off to the best

vanities of life occasion the principal

and

luxuries

the other luxuries

all

and

vanities

which

tax upon .house-rents, therefore, would in general

heaviest upon the rich; and in this sort of inequality there

would

any thing very unreasonable.

not, perhaps, be

It is

not very

unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion. It

The

would

be like a

rent of houses, though

of land,

tax on

any other consumable commodity,

land

is

pays

it

is

it

some respects resembles the rent

in

one respect essentially different from

in

paid for the use of a productive subject.

produces it. The rent of houses

would be

stands upon produce any thing.

very

therefore,

propor-

must draw

it

from and independent of

men’s whole ex-

the same source as the rent

produce consider-

able re-

venue.

The land which

paid for the use of an un-

The person who pays the

it falls

A

this subject.^®

upon the

tion to

and it would

rent of

from some other source of revenue,

houses, so far as

pense,

The

productive subject. Neither the house nor the ground which

it

much in

is

it.

distinct

tax upon the rent of

inhabitants,

itself,

it

rent,

must be drawn from

and must be paid from

their rev-

enue, whether derived from the wages of labour, the profits of stock, or the rent of land. is

So

one of those taxes which

upon

all

far as

fall,

it falls

upon the inhabitants,

the three different sources of revenue;

and

same nature as a tax upon any other

spect of the

able commodities. In general there

is

by which

of expence or consumption

is

in every re-

consumany one article

sort of

not, perhaps,

the liberality or narrowness

of a man’s whole expence can be better judged of, than house-rent.

A

it

not upon one only, but indifferently

by

his

proportional tax upon this particular article of ex-

pence might, perhaps, produce a more considerable revenue than

any which has

hitherto been

If the tax indeed

was very

endeavour to evade

it,

as

drawn from

much

selves with smaller houses,

it

in

any part of Europe.

high, the greater part of people

as they could,

would

by contenting them-

and by turning the greater part of their

expence into some other channel. The rent could be easily

ascer-

tained.

Empty houses should be exempt,

and

The

rent of houses might easily be ascertained with sufficient ac-

by a

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

curacy,

afforded

policy of the

him

neither conveniency nor revenue. Houses inhabited

by the proprietor ought

to

be rated, not according

which they might have cost

to the

expence

in building, but according to the rent

“Above,

p. 264.

TAXES ON THE RENT OF HOUSES which an equitable arbitration might judge them

795

likely to bring,

if

leased to a tenant. If rated according to the expence which they

may have

cost in building, a tax of three or four shillings in the

pound, joined with other taxes, would ruin almost

the rich and

all

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

houses occupied

by

their

proprietor should be as-

sessed at their let-

ting

value.

country, will find that, at the rate of only six and a half, or seven per cent, upon the original expence of building, their house-rent nearly equal to the whole neat rent of their estates. It

mulated expence of several successive generations,

is

is

the accu-

laid out

upon

objects of great beauty and magnificence, indeed; but, in proportion to

what they

cost, of

Ground-rents are a rent of houses.

A

who

more proper subject

value.^'^

of taxation than the

tax upon ground-rents would not raise the rents

of houses. It would rent,

still

very small exchangeable

fall

upon the owner of the groundand exacts the greatest rent

altogether

acts always as a monopolist,

which can be got

for the use of his ground.

for it according as the competitors

happen

More

to

or less can be got

be richer or poorer, or

can afford to gratify their fancy for a particular spot of ground at

Ground a

rent

is

still

more

proper subject of

taxation

than building rent,

a greater or smaller expence. 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

ground-rents, they would not probably be disposed to

tax

upon

pay more

for

Whether the tax was to be advanced by the by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the groundrent. The ground-rents of uninhabited houses ought to pay no tax. Both ground-rents and the ordinary rent of land are a species of the use of the ground. inhabitant, or

revenue which the owner, in or attention of his own.

many

cases, enjoys without

Though a part

will thereby

as

no

dis-

courage-

ment is of this revenue should be

taken from him in order to defray the expences of the

couragement

any care

state,

no

dis-

be given to any sort of industry. The an-

nual produce of the land and labour of the society, the real wealth

^ Since the first publication of this book, a tax nearly upon the abovementioned principles has been imposed. This note appears first in ed. 3. The tax was first imposed by 18 Geo. III., c. 26, and was at the rate of 6d. in the pound on houses of £$ and under £50 annual value, and is. in the pound on houses of higher value, but by 19 Geo. Ill,, c. 59, the rates were altered to 6d. in the pound on houses of £s and under £20 annual value, 9d. on those of £20 and under £40, and is. on those of £40 and upwards.

given to industry

by

the

taxation of the

the wealth of nations

796

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

rent of land.

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 pe-

Ground rents are

even the ordinary rent of land. The ordinary

culiar taxation than

even a

rent of land

more

in

is,

many cases, owing partly at

proper

and good management

subject of

courage too

*

much

of the landlord.

this attention

least to the attention

A very heavy tax might dis-

and good management. Ground-

taxation

they exceed the ordinary rent of land, are altogether

than or-

rents, so far as

dinary land

owing to the good government of the sovereign, which, by protecting the industry either of the whole people, or of the inhabitants of

rents.

some

particular place, enables

real value for the

make

to its

them

to

pay so much more than

ground which they build

their

owner so much more than compensation

which he might sustain by

this use of

sonable than that a fund which owes

ernment of the

state,

its

houses upon; or to for the loss

it.

Nothing can be more rea-

its

existence to the good gov-

should be taxed peculiarly, or should contrib-

ute something more than the greater part of other funds, towards the support of that government.

Ground rents are

Though,

in

many

different countries of Europe, taxes

have been

imposed upon the rent of houses, I do not know of any in which

nowhere separately

ground-rents have been considered as a separate subject of taxa-

taxed, but

tion.

might be.

The

contrivers of taxes have, probably, found

in ascertaining

what part of the rent ought

to

some

difficulty

be considered as

ground-rent, and what part ought to be considered as buildingrent. It should not,

however, seem very

difficult to distinguish

those

two parts of the rent from one another. House rent is

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 an-

legally liable to

nual land-tax.

the

ish

British

land tax.

and

The valuation, according to which each

district is assessed to this tax, is

originally extremely unequal,

and

it

different par-

always the same. It was continues to be so.

still

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

of the real rent of houses.^® ject to the tax, are, in

most

vour of the assessors; and

some little

said to

amount

to

an equal proportion

Untenanted houses, though by law subdistricts,

this

exempted from

it

by the

fa-

exemption sometimes occasions

variation in the rate of particular houses, though that of

^Ed.

1 reads “the houses.”

TAXES ON THE RENT OF HOUSES the district

797

always the same. Improvements of rent, by new

is

buildings, repairs, &c.; go to the discharge of the district,

occasions

still

In the province of Holland

every house

half per cent, of its value, without

which

it

which

further variations in the rate of particular houses.^^ is

taxed at two and a

any regard

either to the rent

actually pays, or to the circumstance of its being tenanted

There seems to be a hardship in obliging the propay a tax for an untenanted house, from which he can

or untenanted. prietor to

In Holland there is a tax on the capital value of houses.

derive no revenue, especially so very heavy a tax. In Holland,

where the market rate of interest does not exceed three per cent, two and a half per cent, upon the whole value of the house, must, in most cases, amount to more than a third of the building-rent, perhaps of the whole

which the houses are

ways below the enlarged, there

The

The

rent.

rated,

real value.

valuation, indeed, according to

though very unequal,

When a

house

is

is rebuilt,

a new valuation, and the tax

said to be al-

improved or

is

rated accordingly.

contrivers of the several taxes which in

England have, at

different times,

is

been imposed upon houses, seem to have imagined

was some great difficulty in ascertaining, with tolerable exactness, what was the real rent of every house. They have regulated their taxes, therefore, according to some more obvious circumstance, such as they had probably imagined would, in most cases, bear some proportion to the rent. The first tax of this kind was hearth-money; or a tax of two that there

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 revolution, therefore, it was abolished as a shillings

House taxes in

England have not been proportioned to the rent,

but first to the

number of hearths,

badge of slavery.

The next

tax of this kind was, a tax of two shillings

dv/elling

house inhabited.

shillings

more.

A

A

upon every

house with ten windows to pay four

house with twenty windows and upwards to pay

was afterwards so far altered, that houses with twenty windows, and with less than thirty, were ordered to pay ten shillings, and those with thirty windows and upwards to pay twenty shillings. The number of windows can, in most cases, be eight shillings. This tax

counted from the outside, and, in

room

in the house.

The

visit of

all cases,

and later to the

number of

windows.

without entering every

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

es-

tablished the window-tax, which has undergone too several altera-

^Ed. I does not contain this sentence. “Memoires concernant les Droits, &c. tom.

i.,

p. 223.

The present win-

THE WEALTH OF NATIONS

79S

dow tax gradually

and augmentations. The window-tax, as it stands at present (January, 1775), over and above the duty of three shillings upon

from

2 d.

every house in England, and of one shilling upon every house in

per win-

Scotland, lays a duty upon every window, which, in England, aug-

augments

dow to

2S.

tions

ments gradually from two-pence, the lowest

rate,

upon houses with

not more than seven windows; to two shillings, the highest upon houses with twenty-five windows and upwards.

The

Window taxes are

principal objection to all such taxes

A

heavier upon the poor than upon the rich.

chiefly

on

the

ground

rent in a country town

house of

may

in

house of ten pounds

London and though ;

much

of in-

habitant of the former

equality.

of the latter, yet so far as his contribution

is

much

sometimes have more windows than a

hundred pounds rent

five

an

their inequality,

is

inequality of the worst kind, as they must frequently fall

objectionable,

rate,

likely to be a

man

poorer

regulated

is

the in-

than that

by the win-

dow-tax, he must contribute more to the support of the state. Such taxes are, therefore, directly contrary to the

first

of the four

max-

ims above mentioned. They do not seem to offend much against any of the other three. Taxes on houses lower rents.

The

natural tendency of the window-tax, and of

all

other taxes

The more a man pays

for the tax,

upon houses,

is to

the

evident, he can afford to

less, it is

lower rents.

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

lage of Great Britain, with which I

am

town and

vil-

acquainted. Such has been

almost every where the increase of the demand for houses, that

it

has raised the rents more than the window-tax could sink them;

one of the

many proofs

of the great prosperity of the country, and

of the increasing revenue of

its

inhabitants.

would probably have

the tax, rents

risen

still

Had

it

not been for

higher.

Article II Taxes upon prop, or upon the Revenue arising from Stock Profit is

divided into interest

and

surplus

over interest.

The revenue or profit arising from to

two parts; that which pays the

the owner of the stock;

above what This

is

stock naturally divides itself ininterest,

and which belongs

and that surplus part which

is

to

over and

necessary for paying the interest.

latter part of profit is evidently

a subject not taxable

di-

The sur-

rectly. It is the

plus is

a very moderate compensation, for the risk and trouble of employ-

not taxable.

ing the stock.

compensation, and in most cases

The employer must have

it is

no more than

this compensation, other-

TAXES ON PROFITS IN GENERAL wise he cannot, consistently with his

employment.

If he

was taxed

own

interest,

799

continue the

directly, therefore, in proportion to

the whole profit, he would be obliged either to raise the rate of his orofit, or to

pay

charge the tax upon the interest of money; that

he raised the rate of his

less interest. If

the tax, the whole tax, though

be

finally paid

by one

it

is,

to

profit in proportion to

might be advanced by him, would

or other of

two

different sets of people, ac-

cording to the different ways in which he might employ the stock of

which he had the management.

If

he employed

it

as a farming

stock in the cultivation of land, he could raise the rate of his profit

only by retaining a greater portion,

what comes

or,

same and

to the

thing, the price of a greater portion of the produce of the land;

as this could be done only of the tax would

fall

by a reduction

upon the landlord.

of rent, the final

If

he employed

payment as a mer-

it

cantile or manufacturing stock, he could raise the rate of his profit

only by raising the price of his goods; in which case the

ment

would

final

pay-

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

of the tax

fall

ultimately

fall

altogether

upon the

interest of

money. So

far as

he could

not relieve himself from the tax in the one way, he would be obliged to relieve himself in the other.

The

interest of

money seems

at first sight a subject equally cap-

Interest

able of being taxed directly as the rent of land. Like the rent of land,

it is

a neat produce which remains after completely compen-

sating 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, together with his reasonable profit, cannot be greater after the tax than before so, for the

same

reason, a tax

upon the

interest of

it:

money could not money in the

raise the rate of interest; the quantity of stock or

country, like the quantity of land, being supposed to remain the

same

after the tax as before

been shewn in the

first

it.

book,^^

The is

ordinary rate of profit,

it

has

every where regulated by the

quantity of stock to be employed in proportion to the quantity of

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 employment, or of the business which must be done by

it.

the interest of money. If the quantity of the stock to be employed therefore,

was neither increased nor diminished by ®^Chap

ix.

it,

the ordinary

seems as fit to be

the wealth of nations

800 rate of profit of this profit

would necessarily remain the same. But the portion necessary for compensating the risk and trouble of

the employer, would likewise remain the same; that risk and trouble being in

no respect

altered.

The

residue, therefore, that portion

which belongs to the owner of the stock, and which pays the interest of money, would necessarily remain the same too. At first sight, therefore, the interest of

money seems

to be a subject as

to

fit

be

taxed directly as the rent of land. but

There

it is

not, since,

however, two different circumstances which render

are,

money a much

the interest of

less

proper subject of direct taxation

than the rent of land. quantity and value of the land which any

First, the

(i) the

amount

can never be a

sesses

received

by an in-

secret,

man

pos-

and can always be ascertained with

But the whole amount of the capital stock which almost always a secret, and can scarce ever be ascer-

great exactness.

dividual

he possesses

cannot be

tained with tolerable exactness. It

is

readily

A

besides, to almost con-

is liable,

year seldom passes away, frequently not a

and

tinual variations.

exactly

month, sometimes scarce a single day, in which

ascer-

fall

more or

An

less.

it

does not

rise or

inquisition into every man’s private circum-

tained,

stances, to them,

and an

inquisition which, in order to

watched over

all

accommodate the tax

the fluctuations of his fortune, would be

a source of such continual and endless vexation as no people could support.

and (2) stock may be re-

moved

Secondly, land

a subject which cannot be removed, whereas

is

The

stock easily may.

proprietor of land

stock

country imposing

tached to any particular country.

is

lies.

properly a citizen of the world, and

from the

the tax.

necessarily a citizen of

is

the particular country in which his estate

He would

is

The

proprietor of

not necessarily at-

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

or enjoy his fortune

would put an end to country which he

A tax which try,

more

all

left.

at his ease.

By

the industry which

his business,

removing his stock he

it

had maintained

in the

Stock cultivates land; stock employs labour.

tended to drive away stock from any particular coun-

would so

the sovereign

far tend to

and to the

the rent of land

dry up every source of revenue, both to

society.

Not only

the profits of stock, but

and the wages of labour, would necessarily be more by its removal.

or less diminished Wliere

such a tax exists it is

levied

on a loose

The

nations, accordingly,

who have attempted

to tax the revenue

from stock, instead of any severe inquisition of this kind, have been obliged to content themselves with some very loose, and, arising

therefore,

more or

less arbitrary estimation.

The

extr’eme inequality

TAXES ON PROFITS IN GENERAL and uncertainty

by

sated only

every

its

man finds

a tax assessed in

of

this

Soi

manner, can be compen-

extreme moderation, in consequence of which

much below his

himself rated so very

that he gives himself

little

and very low valuation,

real revenue,

disturbance though his neighbour should

be rated somewhat lower.

By what

called the land-tax in England,

is

was intended that

it

stock should be taxed in the same proportion as land.

When

the tax

as under

the England

lish

upon land was

at four shillings in the pound, or at one-fifth of the

supposed rent,

it

fifth of the

was intended that stock should be taxed

supposed

interest.

When

tax.

at one-

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

hundred

rate of interest has been reduced to five per cent.®^ every

pounds stock

sum

is

supposed

to be raised,

to

by what

be taxed at twenty

is

shillings only.

called the land-tax,

The

was divided be-

tween the country and the principal towns. The greater part of

was

laid

upon the country; and of what was

laid

the greater part was assessed upon the houses.

it

upon the towns,

What remained

to

be assessed upon the stock or trade of the towns (for the stock up-

on 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

Every parish and houses, and

its

little

disturbance.

be rated for

district still continues to

its

stock, according to the original assessment;

land, its

and the

almost universal prosperity of the country, which in most places

has raised very much the value of equalities of

still less

all these,

The

importance now.

has rendered those in-

rate too

upon each

dis-

trict

continuing always the same, the uncertainty of this tax, so far

as

might be assessed upon the stock of any individual, has been

it

very

much

diminished, as well as rendered of

much

less conse-

quence. If the greater part of the lands of England are not rated to the land-tax at half their actual value, the greater part of the stock of England

is,

perhaps, scarce rated at the fiftieth part of

some towns the whole land-tax

value. In

as in Westminster, where stock

is

assessed

and trade are

its

actual

upon houses;

free. It is

otherwise

in London.

In

all

countries a severe inquisition into the circumstances of

Inquisi-

tion is

private persons has been carefully avoided.

At Hamburgh

one-fourth per cent, of

“ Above,

all

At Ham-

that he possesses; and as the wealth of

burg each

is

obliged to

pp. 88, 89.

®®Memoires concemant

avoided.

pay

to the state,

every inhabitant

les Droits,

tome

i.

p. 74.

the wealth of nations

802

Hamburgh

consists principally in stock, this tax

may

man assesses himself,

and,

inhabi-

the people of

tant pri-

be considered as a tax upon stock. Every

vately assesses

in the presence of the magistrate, puts annually into the public cof-

himself

fer

on oath.

sum

a certain

of money, which he declares

fourth per cent, of it

amounts

ject.®^

all

upon oath

to

be one-

that he possesses, but without declaring

what

or being liable to any examination upon that sub-

to,

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 conscientious and voluntary

sometimes be expected. It

payment may

Ham-

not peculiar to the people of

is

burgh. In some Swiss cantons

each

man

assesses

himself

The canton of Underwald in Switzerland is frequently ravaged by storms and inundations, and is thereby exposed to extraordinary expences. Upon such occasions the people assemble, and every one

said to declare with the greatest frankness

is

in order to be taxed accordingly.

what he

At Zurich the law

is

worth,

orders, that, in

publicly,

cases of necessity, every one should be taxed in proportion to his

revenue; the amount of which, he

They have no will deceive

suspicion,

it is

is

obliged to declare

said, that

any

upon

oath.

of their fellow-citizens

them. At Basil the principal revenue of the state arises

from a small custom upon goods exported. All the oath that they

will

pay

every three

the law. All merchants and even

months

all

all

citizens

make by

the taxes imposed

inn-keepers are trusted with

keeping themselves the account of the goods which they

sell either

within or without the territory. At the end of every three months

they send

computed suffers

which would be

To

by

this

account to the treasurer, with the amount of the tax

at the

bottom of

it.

It is not suspected that the

revenue

this confidence.®'^

oblige every citizen to declare publicly

of his fortune,

must

upon oath the amount

not, it seems, in those Swiss cantons,

be reck-

^ The Memoires only say “La taille consiste dans le quart pour cent que tout habitant, sans exception, est oblige de payer de tout ce qu’il possede en meubles et immeubles. II ne se fait aucune repartition de cette tailie. Chaque bourgeois se cottise lui-m6me et porte son imposition a la maison de ville, et on n’exige autre chose de lui, sinon le serment qu’il est oblige de faire que

paye forme v^ritablement ce qu’il doit acquitter.” But Lord Karnes, Sketches of the History of Mariy vol. i., p. 476, says, “Every merchant puts privately into the public chest, the sum that, in his own opinion, he ought ce qu’il

to contribute.”

^ Ed.

I

reads “Underwold.”

Ed.

5

adds “it” here, doubtless a misprint.

Memoires concernant les Droits, tome i. p. 163, 166, 171. The statements p to the confidence felt in these self-assessments are not taken from the Memoires.

TAXES ON PARTICULAR PROFITS oned a hardship. At Hamburgh

Merchants engaged

in the

it

S03

would be reckoned the

hazardous projects of trade,

greatest.

all

tremble

a hardship at

Hamburg.

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,

do not

projects,

feel that

who

are strangers to

all

such

they have occasion for any such conceal-

ment.

In Holland, soon after the exaltation of the late prince of Orange

two per

to the stadtholdership, a tax of

as

was

it

citizen.

called,

Every

manner as

cent, or the fiftieth penny,

was imposed upon the whole substance of every

citizen assessed himself

Hamburgh; and

and paid

his tax in the

same

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

at

the

Ham-

burg practice.

it

in order to relieve the state in

;

Holland once adopted

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., cent,

amounts to

and fourpence in the pound upis commonly drawn from stock.

thirteen shillings

on the highest neat revenue which It is

a tax of two per

a tax which very few people could pay without encroaching

more or

less

upon

their capitals. In

may, from great public

zeal,

a particular exigency the people

make a

great effort,

and give up even

a part of their capital, in order to relieve the state. But sible that they should continue to

and

if

do so

for

it is

impos-

any considerable time;

they did, the tax would soon ruin them so completely as to

render them altogether incapable of supporting the state.

The though

tax upon stock imposed it is

by the land-tax

proportioned to the capital,

is

bill in

England,

not intended to diminish

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 Hamor take

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 burgh, and the

still

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

On that occasion the tax

was meant

to

be a tax

on the capital.

the wealth of nations

804 Taxes are sometimes imposed on

trade,

particular

pedlars, that

sometimes when employed in particular branches of

of stock;

and sometimes when employed

Of the former kind are

in

in agriculture.

England the tax upon hawkers and

upon hackney coaches and

chairs,

and that which the

profits,

keepers of ale-houses pay for a licence to retail ale and spirituous such as those on

hawkers, *

During the

liquors.

same kind was proThe war having been undertaken, it was said,

late war, another tax of the

posed upon shops.^®

pedlars,

in defence of the trade of the country, the merchants,

etc.

profit

These fall not on the dealers

but on the

A

by

it,

ought to contribute towards the support of

upon the

tax, however,

ticular

must

who were

branch of trade, can

in all ordinary cases

profits of stock

never fall finally

have

to

it.

employed

in

any par-

upon the dealers (who

their reasonable profit, and,

can seldom have more than that

where

consum-

the competition

ers of the

but always upon the consumers, who must be obliged to pay in the

goods,

is

free,

price of the goods the tax which the dealer advances;

and gener-

some overcharge.

ally with

A

profit),

to the

when it is proportioned to the trade of the dealer, is finally paid by the consumer, and occasions no oppression to the dealer. When it is not so proportioned, but is the same upon

trade of

all dealers,

but when not proportioned

the dealer

they op-

er,

tax of this kind

yet

though in this case too

press the

small dealer.

small and

coach,

dealer.

The tax

and that

favour the great

it is

finally

paid by the consum-

favours the great, and occasions some oppression to the

it

far as it is

week upon every hackney a year upon every hackney chair, so

of five shillings a

of ten shillings

advanced by the different keepers of such coaches and

chairs, is exactly

enough proportioned to the extent of

their re-

spective dealings. It neither favours the great, nor oppresses the

The tax

smaller dealer. sell ale;

of twenty shillings a year for a licence to

of forty shillings for a licence to

and of forty shillings more

for

a licence to

sell

sell

spirituous liquors;

wine, being the same

must necessarily give some advantage

upon

all retailers,

great,

and occasion some oppression to the small

mer must

find

it

goods than the

more easy to get back the tax

The moderation

latter.

this inequality of less importance,

and

dealers.

to the

The

for-

in the price of their

of the tax, however, renders it

may

to

many

people ap-

pear not improper to give some discouragement to the multiplication of little ale-houses.

be the same upon It

all

The tax upon

shops,

it

was intended, should

shops. It could not well have been otherwise.

would have been impossible to proportion with tolerable exact-

ness 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

‘^Proposed by Legge in 1759. See Do^vell, History of Taxation and Taxes in England

1884,

voL

ii.,

p. 137.

TAXES ON PARTICULAR PROFITS would have oppressed the

small,

2^5

and forced almost the whole

trade into the hands of the great dealers.

The

retail

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

the payment of the tax.

The

much beyond what was

necessary for

final pa3nnent, instead of falling

upon

the shopkeeper, would have fallen upon the consumer, with a considerable over-charge to the profit of the shopkeeper. For these reasons, the project of

of

a tax upon shops was laid

aside,

and

in the

room

was substituted the subsidy 1759.

it

What

in

France

is

called the personal taille

is,

perhaps, the most

important tax upon the profits of stock employed in agriculture that

is

levied in

any part

taille

of Europe.

in France

In the disorderly state of Europe during the prevalence of the

was obliged to content himself 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 feudal government, the sovereign

with taxing those

who were

too

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 estates 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

pendency which

this inferior order of

men had

and inde-

thus come to enjoy,

malignant and contemptuous indignation, and willingly

with a

consented that the sovereign should tax them.^^ In some countries this tax

was confined

to the lands

an ignoble tenure; and,

which were held

in this case, the taille

The land-tax established by in the provinces of

in property

was said

the late king of Sardinia,

by

to be real.

and the

taille

Languedoc, Provence, Dauphine, and Brit-

tany; 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 ignorble 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 ^Ed.

I

"Above,

does not contain “a.” p. 787*

The personal

"Above,

p. 370.

this

on the profits of

agricul-

ture

is

arbitrary

and uncertain.

the wealth of nations

806 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

The

kind.

taille is of this

real taille, as

a part of the lands of the country, is

is

The

personal

as

taille,

it is

imposed only upon

necessarily an unequal, but

not always an arbitrary tax, though

its

it is

it is

so

upon some

it

occasions.

intended to be proportioned to the prof-

of a certain class of people, which can only be guessed at,

is

nec-

essarily both arbitrary and unequal.

The authority

which assesses it is

always

In France the personal

taille

at present (1775) annually imposed

upon the twenty generalities, called the Countries of Elections, amounts to 40,107,239 livres, 16 sous."^^ The proportion in which this sum is assessed upon those different provinces, varies from year

ignorant of the real

to year, according to the reports

abilities

council concerning the goodness or badness of the crops, as well as

of the

other circumstances, which

contributors

and

often misled

by

may

which are made to the king’s

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

friendship,

elections, varies likewise

party

ports

animosity

and private re-

sentment.

made

from year to year, according to the

re-

to the council concerning their respective abilities. It

seems impossible that the council, with the best intentions, can ever proportion with tolerable exactness, either of those two as-

sessments to the real abilities of the province or district upon which

they are respectively ways, more or tion

laid.

Ignorance and misinformation must

mislead the most upright council.

less,

which each parish ought to support of what

is

al-

The propor-

assessed

upon

the whole election, and that which each individual ought to support of

what

manner

is

assessed

varied,

upon

his particular parish, are both in the

supposed to require. These circumstances are judged case, ish;

same

from year to year, according as circumstances are of, in

the one

by the officers of the election; in the other by those of the parand both the one and the other are, more or less, under the

direction

and influence of the intendant. Not only ignorance and

misinformation, but friendship, party animosity, and private re-

sentment, are said frequently to mislead such assessors. subject to such a tax, assessed, of

what he

it is

is

No man

evident, can ever be certain, before he

to pay.

He

is

cannot even be certain after he

any person has been taxed who ought to have been exempted; or if any person has been taxed beyond his proportion, is assessed. If

though both must pay in the mean time, yet

make good

their complaints, the

if

they complain, and

whole parish

is

reimposed next

year in order to reimburse them. If any of the contributors become ^^Memoires concemant

les Droits, &c.

tome

ii.

p. 17.

TAXES ON PARTICULAR PROFITS bankrupt or insolvent, the collector

and the whole parish

is

is

S07

obliged to advance his tax,

reimposed next year in order to reimburse

the collector. If the collector himself should become bankrupt, the

parish which elects

him must answer

er-general of the election. But, as

it

for his conduct to the receiv-

might be troublesome

for the

receiver to prosecute the whole parish, he takes at his choice five or six of the richest contributors,

had been

by

lost

and obliges them to make good what

the insolvency of the collector.

erwards reimposed in order to reimburse those impositions are always over and above the

The

parish

five or six.

is

aft-

Such

re-

the particular

taille of

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 to

market than what they can

them

for advancing the tax.

all

sell

Some

careful to bring

of

them withdraw a part

stocks from the trade, and the market

than before. The price of the goods the tax

falls

no more goods

at a price sufficient to reimburse

more sparingly supplied

is

rises,

of their

and the

payment of imposed upon

final

upon the consumer. But when a tax

is

Taxes on the profits of agriculture

do not, like those

on profits of other trades,

on the consumer, but on the fall

the profits of stock employed in agriculture, the farmers to withdraw

any part

it is

not the interest of

of their stock from that employ-

ment. Each farmer occupies a certain quantity of land, for which

landlord.

he pays rent. For the proper cultivation of this land a certain quantity of stock is necessary;

and by withdrawing any part

essary quantity, the farmer

is

not likely to be

either the rent or the tax. In order to

pay the

of this nec-

pay can never be his

more able

tax, it

to

interest to diminish the quantity of his produce, nor consequently

to supply the fore, will

market more sparingly than before. The

tax, there-

never enable him to raise the price of his produce, so as

reimburse himself by throwing the final pa3mient upon the

to

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 reason-

by paying less rent to the landlord. The more he pay in the way of tax, the less he can afford to pay in

able profit only is

obliged to

the

way

of rent.

A tax of this kind imposed during the currency of

a lease may, no doubt, distress or ruin the farmer.

newal of the lease

it

must always

fall

In the countries where the personal is

commonly

to

employ in

upon the taille

Upon

landlord.

takes place, the farmer

assessed in proportion to the stock which cultivation.

to have a good

team

the re-

he appears

He is, upon this account, frequently afraid

of horses or oxen,

but endeavours to cultivate

with the meanest and most wretched instruments of husbandry that

^Ed.

I

reads “nor to

The

dis-

courage-

ment to good cultivation

caused by

XHE WEALTH OF NATIONS

808 the personal

he can. Such

his distrust in the justice of his assessors, that

is

counterfeits poverty,

and wishes

taille in-

to appear scarce able to

this miserable

own

interest in the

jures the public,

policy he does not, perhaps, always consult his

er

and the

landlord.

most

more by the diminuof his tax. Though, in that produce than he saves by

effectual

tion of his

manner; and he probably

consequence of

this

loses

wretched cultivation the market

somewhat worse supplied; yet the small

may

occasion, as

it is still less

The

rent to the landlord.

lord, all suffer

no doubt,

is,

rise of price

which

more or

less

personal taille tends, in

by

many

this

likely to enable

him

to

public, the farmer, the land-

degraded cultivation. That the

different

ways, to discourage

and consequently to dry up the principal source

vation,

this

not likely even to indemnify the farmer for

it is

the diminution of his produce,

pay more

pay any

pay too much. By

thing for fear of being obliged to

the farm-

he

culti-

of the

wealth of every good country, I have already had occasion to observe in the third book of this Inquiry Ter capita taxes

on

What

are called poll-taxes in the southern provinces of North

America, and in the West Indian

islands,

annual taxes of so

much

negro slaves fall

on the landlords.

a head upon every negroe, are properly taxes upon the profits of a certain species of stock employed in agriculture. As the planters are, the greater part of

payment

them, both farmers and landlords, the

of the tax falls

upon them

final

in their quality of landlords

without any retribution. Poll taxes

have been repre-

sented as

Taxes of so much a head upon the bondmen employed in vation,

seem anciently to have been common

culti-

over Europe. There

subsists at present a tax of this kind in the empire of Russia. It is

badges of

probably upon

slavery,

been represented as badges of

but, to

the tax-

all

the person

this

account that poll-taxes of

who pays

it

slavery.*^®

all

Every

kinds have often

tax,

however,

a badge, not of slavery, but of

is

to

liberty. It

payer

denotes that he

every tax

has some property, he cannot himself be the property of a master.

is

a badge

of liberty.

A poll-tax upon freemen.

The

is

subject to government, indeed, but that, as he

slaves is altogether different from a poll-tax

latter is

posed; the former

by a

paid by the persons upon different set of persons.

whom

The

altogether arbitrary or altogether unequal, and in

upon

it is

im-

latter is either

most cases

is

both the one and the other; tie former, though in some respects unequal, different slaves being of different values,

is in no respect Every master who knows the number of his own slaves, knows exactly what he has to pay. Those different taxes, however,

arbitrary.

being called

by

the same name, have been considered as of the

same nature. Above, p. 370. "®Ed. ^ "E.g., by Montesquieu, Esprit des loisj

i

reads “West India.”

liv., xiii.,

chap. xiv.

TAXES ON CAPITAL VALUE The

taxes which in Holland are imposed

^09

upon men and maid

servants, are taxes, not

upon stock, but upon expence and so far resemble the taxes upon consumable commodities. The tax of a guinea a head for every man servant, which has lately been im;

posed in Great

Britain,^' is of the

man

servant.

same kind.

It falls heaviest

upon

A man of two hundred a year may keep a single

the middling rank.

A man

of ten

thousand a year

will not

keep

Taxes on menial servants are like

taxes on consumable com-

modities

fifty. It

does not affect the poor.^®

Taxes upon the

profits of stock in particular

^

never affect the interest of money. less interest to those

who

Nobody will

employments can

lend his

exercise the taxed, than to

money for those who

Taxes on particular profits

cannot

exercise the untaxed emplo3mients.

affect in-

from stock

terest.

in all

Taxes upon the revenue arising employments, where the government attempts to

levy them with any degree of exactness,

will, in

many cases,

fall

up-

on the interest of money. The Vingtieme, or twentieth penny, in France, is a tax of the same kind with what is called the lanitax

and is assessed, in the same manner, upon the revenue from land, houses, and stock. So far as it affects stock it is assessed, though not with great rigour, yet with much more exactin England,

arising

ness than that part of the land-tax of England which

upon the same fund. terest of

It, in

money. Money

many cases,

is

falls altogether

ual annuities redeemable at any time

is

imposed

upon the inupon what

frequently sunk in France

are called Contracts for the constitution of a rent; that

ment

is

by

is,

perpet-

the debtor upon repay-

sum originally advanced, but of which this redemption not exigible by the creditor except in particular cases. The Vingof the

tieme seems not to have raised the rate of those annuities, though it is

exactly levied

upon them

all.

Appendix to Articles

I

and II

Taxes upon the capital Value of Land, Houses, and Stock

While

property remains in the possession of the same person,

whatever permanent taxes

may have been imposed upon

it,

have never been intended to diminish or take away any part capital value, but only

some part of the revenue

arising

they

mission of

of its

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

away some

part of

^^17 Geo. Ill,

c.

39

its capital

upon

it

as necessarily take

property often necessarily

take a part of

the capital value.

value.

^This paragraph

Taxes on the trans-

is

not in ed.

i.

the wealth of nations

sio Transfers

The

transference of all sorts of property from the dead to the

from the dead to

living,

the living

the living to the living, are transactions which are in their nature

and all

and that

immoveable property, of lands and houses, from

of

of immovable

and notorious, or such as cannot be long concealed. Such transactions, therefore, may be taxed directly. The transference of stock or moveable property, from the living to the living, by

property can be taxed di-

always be made

rectly

has been taxed indirectly in two different ways;

transfers

;

transfers

by way of loan of

money have been taxed by

either public

the lending of money,

penalty of invalidity, that secret register, tion.

on

tion.

easily, therefore,

may

be taxed directly. It first,

by

requiring

upon paper or parchment which had paid a certain stamp-duty, otherwise not to be valid; secondly, by requiring, under the like

duties or

duties

frequently a secret transaction, and

is

cannot

that the deed, containing the obligation to repay, should be written

stamp

registra-

so. It

it

should be recorded either in a public or

and by imposing certain duties upon such

registra-

Stamp-duties and duties of registration have frequently been

imposed likewise upon the deeds transferring property

from the dead

to the living,

of all kinds

and upon those transferring immove-

able property from the living to the living, transactions which might easily Transfers

from the

have been taxed

directly.

The Vicesima Hereditatum, the twentieth penny of inheritances, imposed by Augustus upon the ancient Romans, was a tax upon the

dead to the living

transference of property from the dead to the living.

were

the author

taxed by

that

it

the Vice-

who

writes concerning

was imposed upon

sima He-

case of death, except

redita-

the poor.

tum,

and the Dutch tax on successions.

Of the same kind

is

it

Cassius,^®

the least indistinctly, says,

all successions, legacies,

upon those

Dion

and donations,

to the nearest relations,

the Dutch tax upon

and

in

to

successions.'^'® Collateral

successions are taxed, according to the degree of relation, from five to thirty per cent,

upon the whole value

mentary donations, or legacies to duties.

Those from husband to

the fifteenth

penny.

of the succession. Testa-

collaterals, are subject to the like

wife, or

The Luctuosa

from wife to husband, to

Hereditas, the mournful suc-

cession of ascendents to descendents, to the twentieth

penny

only.

Direct successions, or those of descendents to ascendents, pay no tax.

The death

of a father, to such of his children as live in the

house with him,

is

same

seldom attended with any increase, and

^Lib. S 5 (25) quoted by Vectigalibus Pop. Rom. cap.

Burman and Bouchaud. xi.

See also

fre-

Burman de

in Utriusque thesauri antiquitatum

roman-

arum graecarumque nova supplementa

congesta ab Joanne Poleno, Venice, 1737, vol i., p. 1032B and Bouchaud de I’impdt du vingtieme sur les successions et de IHmpdt sur les marchandises chez les Romains; nouv. ed., 1772, pp. 10 sqq. ®®See Memoires concernant les Droits, &c. tome i. p. 225. ®^A11 eds read “fiftieth,” but the Memoires say “quinzieme” and the “only” in the next sentence shows that Smith intended to write “fifteenth.”

TAXES ON CAPITAL VALUE

Sii

quently with a considerable diminution of revenue; by the loss of his industry, or his office, or of

may have

some life-rent estate, of which he been in possession. That tax would be cruel and oppres-

sive which aggravated their loss

by taking from them any part of may, however, sometimes be otherwise with those

his succession. It

children who, in the language of the

Roman

law, are said to be

emancipated; in that of the Scotch law, to be forisfamiliated; that

who have

is,

received their portion, have got families of their own,

and are supported by funds separate and independent of those of their father. Whatever part of his succession might come to such would be a

children,

real addition to their fortune,

some

duties of this kind, be liable to

The

casualties of the feudal

tax.

law were taxes upon the transference

of land, both from the dead to the living, living.

and might there-

without more inconveniency than what attends aU

fore, perhaps,

and from the

living to the

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

was a minor, the whole

feudal

law taxed the transference of

crown paid a certain

duty, generally a year’s rent, upon receiving the investiture of the estate. If the heir

The

rents of the estate, dur-

ing the continuance of the minority, devolved to the superior with-

land,

by wardships and reliefs,

out any other charge, besides the maintenance of the minor, and the

payment

of the widow’s dower,

upon the

ger

called Relief,

land.

was

When

still

when there happened to be a dowacame to be of age, another tax,

the minor

due to the superior, which generally amount-

ed likewise to a year’s

rent.

A long minority,

times so frequently disburdens a great estate of

which in the present

and

all its

incumbrances,

restores the family to their ancient splendour, could in those

times have no such of the estate,

By the

The waste, and not the disincumbrance common effect of a long minority.

effect.

was the

feudal law the vassal could not alienate without the con-

sent of his superior, for granting

it.

This

who fine,

generally extorted a fine or composition

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 alienation of land still

continues to

make

considerable branch of the revenue

a very

of the sovereign. In the canton of Berne

it is

so high as

a

sixth part

and fines on alienation,

which last still form a considerable

branch of revenue in

many

countries.

of the price of

all

noble

fiefs;

and a tenth part

ones.®^ In the canton of Lucerne the tax

not universal, and takes place only in certain Ed.

I

of that of all ignoble

upon the

districts.

does not contain “very.”

“Memoires concernant

les Droits,

&c.

tome

i.

sale of lands is

p. 154.

But

if

any

THE WEALTH OF NATIONS

8I2

person

sells his land, in

ten per cent,

order to remove out of the territory, he pays

upon the whole

kind upon the sale either of tenures, take place in

taxes

Such transactions on

of land

either

may

may be

which

is

levied

by on

registration.

Britain

the duties are not

proportioned to

other countries, and

same

of the

by

certain

make a more

or

by means either of upon registration; and those duties

be taxed

may

indirectly,

not be proportioned to the value of the subject

transferred.

much

according to the value of the property transferred (an eight-

een penny or half crown stamp being sufficient upon a bond for

sum

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 rethe largest

In Great

or

Taxes

In Great Britain the stamp-duties are higher or lower, not so

stamps or duties

may

stamp-duties, or of duties

the sale

sale.^*^

or of lands held

branch of the revenue of the sovereign.

less considerable

These

many

price of the all lands,

of

gard 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

the value

who keep

more than a their labour. The crown derives no reve-

the register; and these are seldom

of the

officers

property.

reasonable recompence for

nue from them. In Holland some are pro-

there are both stamp-duties

In Holland

which

tration;

in

some cases

are,

and

in

and duties upon

some are not proportioned

portioned

to the value of the property transferred. All testaments

and

written

others not.

regis-

upon stamped paper of which the

price

is

must be

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

stamp

made

of

is

use

all their

an

pounds ten

inferior price to

of, his

succession

is

our money. If the

shillings of

what the

testator ought to

confiscated. This

is

other taxes on succession. Except bills of exchange,

some other mercantile

bills, all

have

over and above

other deeds, bonds,

and

and

contracts,

are subject to a stamp-duty. This duty, however, does not rise in

proportion to the value of the subject. All sales of land and of houses, and all mortgages

upon cent, is

registration,

upon

pay a duty

upon the amount

either,

must be

to the state of

two and a half per

of the price or of the mortgage.^® This duty

extended to the sale of

all

ships

and

vessels of

more than two tons

burthen, whether decked or undecked. These, sidered as a sort of houses

“Id.

upon the water. The

it

seems, are con-

sale of moveables,

p. 157.

“Memoires concernant

“ Ed.

registered, and,

I

les Droits, &c.

reads “or the mortgage.”

tome

i.

p. 223, 224, 225.

TAXES ON CAPITAL VALUE

S13

when of

it is ordered by a court of justice, is subject to the like duty two and a half per cent. In France there are both stamp-duties and duties upon registra-

tion.

and

The former

are considered as a branch of the aides or excise,

officers.

The

a branch of the do-

latter are considered as

main of the crown, and are levied by a different set of officers. Those modes of taxation, by stamp-duties and by duties upon

modern

registration, are of very

invention. In the course of

little

more than a centur}^, however, stamp-duties have, in Europe, become almost universal, and duties upon registration extremely common. There is no art which one government sooner learns of another, than that of draining

money from

the pockets of the people.

Taxes upon the transference of property from the dead living, fall finally as well as

immediately upon the person to

the property

Taxes upon the

transferred.

is

gether upon the

The buyer

is

The

seller.

the land will cost

in the

pay

way

whom

sale of land fall alto-

almost always under the neces-

scarce ever under the necessity of buying,

such a price as he

therefore, only give

obliged to

seller is

to the

and must, therefore, take such a price as he can

sity of selling,

him

in the

in tax

way

and price

of tax, the less

He

likes.

together.

he

will

and

considers

is

Such

of price.

what

The more he

is

almost always upon

taxes, therefore, fall

upon the buyer,

trade. If he advances the tax, therefore, the

same reason seller; sell.

is

it

to him.

as those

whom in is

Taxes upon the

upon the

buyer

sale of old houses,

sale of land, fall generally

most cases either conveniency or necessity

The number

brought to market,

demand

more

of new-built houses that are annually less regulated

by the demand. Unless

such as to afford the builder his profit, after paying

more houses. The number of old time to come to market is regulated by houses which happen at any accidents of which the greater part have no relation to the demand. expences, he will build no

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 seller; for the

duties,

duties.

Both stamps

and

regis-

tration duties are

modern methods of taxation.

transfers

be disposed to give

sold without the ground, fall generally

must generally repay

obliges to

tration

from the dead to the living fall

on the

person

must give up the

upon the

and

duties

the regis-

Taxes on

because the builder must generally have his profit; otherwise he

for the

stamp

will,

and oppressive. Taxes upon the sale of new-built houses, where the building

officers

collect the

get.

a necessitous person, and must, therefore, be frequently very cruel

all

different sets of

where those duties take place, are levied by

in the provinces

the excise

the

In France

fall

®^Ed.

registration of I

acquires

the property; taxes

on

sales of

land fall on the seller;

taxes

on

the sale of

new

buildings fall

on

the

buyer; taxes on

the sale of old houses fall

on

the

seller

upon the taxes on

same reason as those upon the

and duties upon the

altogether

who

sale of land.

Stamp-

bonds and contracts

reads ^‘give only.”

for

the sale of

ground

THE WEALTH OF NATIONS

S14 rents fall

on the

borrowed money,

fall

upon the borrower, and, in fact, are the same kind upon law proceedings

altogether

always paid by him. Duties of

seller;

They reduce to both the capital value of subject in dispute. The more it costs to acquire any property, value of it when acquired. less must be the neat fall

taxes

on

loans

on the borrowfall

upon the

upon the transference

All taxes

the

suitors.

the

of property of every kind, so far

er;

as they diminish the capital value of that property, tend to dimintaxes

on

law pro-

ish the funds destined for the

ceedings

They

fall

on the

are all

more or

of the sovereign,

maintenance of productive labour.

less unthrifty taxes that increase the

revenue

which seldom maintains any but unproductive

suitors.

labourers; at the expence of the capital of the people, which mainAll taxes

on trans-

tains

none but productive.

Such

fers, so

even when they are proportioned to the value of the

taxes,

far as

property transferred, are

they diminish

ence not being always equal in property of equal value.

the capi-

are not proportioned to this value, which

tal value,

er part of the stamp-duties,

are unthrifty.

more

so.

They

portioned to the

levied at very

perty

to

unequal,

because the fre-

little

and

transfer

They are

is

they

the case with the great-

duties of registration, they are

may

still

be in

all

certain.

expence, and in general subject the contributors

no other inconveniency besides always the unavoidable one of

paying the

tax.

In France the stamp-duties are not much complained of registration, which they call the Controle, are.

quency of varies.

and

When

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 money to pay. They are

value of the pro-

they are

unequal; the frequency of transfer-

are in no respect arbitrary, but are or

cases perfectly clear

Even when pro-

still

sion, it is pretended, to

general

who

They

of.

much extortion in the officers of the

collect the tax,

which

and uncertain. In the greater part

is

in

Those

give occa-

farmers-

a great measure arbitrary

of the libels

which have been

certain,

convenient and

inexpensive.

written against the present system of finances in France, the abuses of the Controle

make a principal article.

Uncertainty, however, does

not seem to be necessarily inherent in the nature of such taxes. If the popular complaints are well founded, the abuse must arise, no*

French stamp-

so

duties on

and

transfers

much from

the nature of the tax, as from the

distinctness in the

The

want

of precision

words of the edicts or laws which impose

registration of mortgages,

and

in general of all rights

it.

upon

are not

much

immoveable property, as

com-

and purchasers,

plained

is

it

gives great security both to creditors

extremely advantageous to the public. That of

the greater part of deeds of other kinds

is

frequently inconvenient

Ed. I does not contain “neat.” ®*The word is used in its older sense, equivalent to the modern “pamphlets.” See Murray Oxford English Dictionary, s.v.

TAXES ON WAGES and even dangerous

to individuals, without

public. All registers which, secret,

it is

ought certainly never to

SiS

any advantage

to the

acknowledged, ought to be kept exist.

The

credit of individuals

ought certainly never to depend upon so very slender a security as the probity and religion of the inferior officers of revenue.

where the

fees of registration

But

have been made a source of revenue

to the sovereign, register offices

have commonly been multiplied

without end, both for the deeds which ought to be registered, and for those

which ought

but

tration duties (or

Controle) are said to

be arbitrary

and

uncertain.

Public registra-

not.

In France there are several different

sorts of secret registers. This abuse, it

of,

the regis-

must be acknowledged,

is

though not perhaps a necessary,

a very natural

effect of

tion of

mortgages

and all

such taxes.

rights to

Such stamp-duties

upon news-papers and periodical pamphlets, &c. are properly taxes upon consumption; the final payment falls upon the persons who use or consume such commodities. Such stamp-duties as those upon as those in

licences to retail ale, wine,

perhaps, to

fall

upon the

England upon cards and

and spirituous

liquors,

dice,

though intended,

immovable

property is

advan-

tageous,

but secret registers

profits of the retailers, are likewise finally

ought not

paid by the consumers of those liquors. Such taxes, though called

to exist.

by the same name, and

same

Many

trans-

stamp-

levied

by

the

same

officers

and

in the

manner with the stamp-duties above mentioned upon the

ference of property, are however of a quite different nature, fall

upon quite

and

different funds.

duties are duties on consumption.

Article III Taxes upon the Wages oj Labour

The wages to

show

two

of the inferior classes of

workmen,

I have endeavoured

in the first book, are every where necessarily regulated

by

demand for labour, and the The demand for labour,

ac-

different circumstances; the

dinary or average price of provisions.

or-

A taxon wages must raise wages by rather

more than cording as

it

happens to be either increasing, stationary, or declin-

ing; or to require

an increasing, stationary, or declining population,

regulates the subsistence of the labourer,

degree

it

and determines in what

shall be, either liberal, moderate, or scanty.

The

ordinary

or average price of provisions determines the quantity of

money

which must be paid to the workman in order to enable him, one year with another, to purchase this subsistence.

While the demand

sions, therefore,

liberal,

for labour

moderate, or scanty

and the price

of provi-

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

the

amount of the tax.

the wealth of nations demand

place the

for labour

and the price

of provisions were such,

week the ordinary wages

as to render ten shillings a

of labour;

and

that a tax of one-fifth, or four shillings in the pound, was imposed

upon wages.

demand

If the

remained the same,

it

and the price of provisions

for labour

would

still

be necessary that the labourer

should in that place earn such a subsistence as could be bought only for ten shillings a week, or that after paying the tax he should

have ten

shillings

a week

free wages.

wages after paying such a

free

place soon

But

him such labour must in that

in order to leave

tax, the price of

not to twelve shillings a week only, but to twelve

rise,

and sixpence; that is, in order to enable him to pay a tax of onewages must necessarily soon rise, not one-fifth part only, but one-fourth. Whatever was the proportion of the tax, the wages

fifth, his

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

must necessarily soon

of labour

not one-tenth part only, but

rise,

one-eighth.

A direct tax upon the wages of labour,

the rise in the

wages of manufacturing

bourer might perhaps pay said to be even advanced

and the average

it

therefore,

though the

la-

out of his hand, could not properly be

by him; at

least

if

demand

the

price of provisions remained the

same

for labour

after the tax

labour

In

such cases, not only the tax, but something more

would be

as before

advanced

than the tax, would in reality be advanced by the person

by the employers and paid

by the consumers, and the

rise

in agricul-

it.

all

mediately employed him. cases fall

upon

The

final

different persons.

The

payment would rise

paid by the land-

im-

which such a tax might

occasion in the wages of manufacturing labour would be advanced

by

the master manufacturer,

obliged to charge

payment

final

it,

with a

who would both be

profit,

upon the

entitled

and

price of his goods.

The

of this rise of wages, therefore, together with the

cultural

wages advanced by the farmers and

who

in different

additional profit of the master manufacturer,

consumer.

The

rise

would

fall

upon the

which such a tax might occasion in the wages of

country labour would be advanced by the farmer, who, in order to

maintain the same number of labourers as before, would be obliged to

employ a greater

lords.

capital.

In order to get back

together with the ordinary profits of stock,

ital,

it

this greater cap-

would be neces-

sary that he should retain a larger portion, or what comes to the

same thing, the price of a larger portion, of the produce of the land, and consequently that he should pay less rent to the landlord. The final fall

payment

upon the

of this rise of wages, therefore,

would

in this case

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 in the rent of land,

and a greater

a greater reduction

rise in the price of

manufactured

TAXES ON WAGES

S17

goods, than would have followed from the proper assessment of a

sum equal

to the produce of the tax, partly

upon the

rent of land,

and partly upon consumable commodities. If direct taxes

upon the wages of labour have not always occa-

sioned a proportionable rise in those wages,

because they have

it is

The

effect

of the tax in raising

generally occasioned a considerable fall in the

The

demand

for labour.

declension of industry, the decrease of employment for the

poor, the diminution of the annual produce of the land

and labour

wages is generally disguised

by the fall

of the country, have generally been the effects of such taxes. In con-

in the de-

sequence of them, however, the price of labour must always be high-

mand for

er than

it

otherwise would have been in the actual state of the de-

mand: and those

this

enhancement of

who advance

it,

price, together

must always be

with the profit of

finally paid

by

labour

which it occasions.

the landlords

and consumers.

A

tax upon the wages of country labour does not raise the price

of the rude produce of land in proportion to the tax;

same reason

that

for the

place in

a tax upon the farmer’s profit does not

raise that

countries.

wages raises

destructive as such taxes are, however, they take

many

agricul-

tural

price in that proportion.^^

Absurd and

A tax on

In France that part of the

which

taille

is

charged upon the industry of workmen and day-labourers in coun-

no more than prices

one on farmers’ profits.

try villages,

properly a tax of this kind. Their wages are com-

is

puted according to the common rate of the reside,

and

charge, their

may be as

district in

which they

any overyearly gains are estimated at no more than two hun-

that they

little liable

as possible to

dred working days in the year.®^ The tax of each individual varied from year

which the

is

to year according to different circumstances, of

collector or the

commissary,

whom

Many countries

have such taxes, e.g.,

France

and Bohemia.

the intendant ap-

points to assist him, are the judges. In Bohemia, in consequence of the alteration in the system of finances which

very heavy tax

is

to 9/. 7^. 6J. fifty;

and the

a They are

in 1748,

artificers.

pay a hundred florins a two-and-twenty-pence halfpenny a florin, amounts

divided into four classes. year; which, at

was begun

imposed upon the industry of

The second fourth,

The highest class are

class

taxed at seventy; the third at

comprehending

artificers in villages,

and the

lowest class of those in towns, at twenty-five florins.®®

The recompence

of ingenious artists

have endeavoured

sions, I

to

keeps a certain proportion to

and

of

men of liberal profes-

show in the first book,®^ necessarily the emoluments of inferior trades. A

does not contain “in proportion to the tax.” ” does not contain “in that proportion ii. p. 108. Memoires concernant les Droits, &c. tom

Ed.

I

®^Ed.

I

®®Id.

tom.

iii.

really

i.

p. 87.

Above, pp. loo-iio.

A tax on the re-

compense of the

THE WEALTH OF NATIONS

8i8 liberal

professions, etc.,

tax

upon

to raise

this

it

recompence, therefore, could have no other effect than

somewhat higher than

in proportion to the tax. If

it

did

would

not rise in this manner, the ingenious arts and the liberal profes-

also raise

sions, being

that re-

compense,

but a tax on government

no longer upon a

level

with other trades, would be so

much deserted that they would soon return to that level. The emoluments of officers are not, like those of trades and professions, regulated by the free competition of the market, and do always bear a just proportion to what the nature of

not, therefore,

offices

employment

would not

the

raise sal-

higher than

it

requires.

They

are, perhaps, in

requires; the persons

who have

most

countries,

the administration of

aries.

government being generally disposed to reward both themselves and their immediate dependents rather more than enough. The

emoluments

of officers, therefore, can in

to be taxed.

The

cially the

more

persons, besides,

most cases very well bear

who enjoy

public

offices,

espe-

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 shillings in the five shillings

pound,

it

and sixpence

was very popular in the

assessed at four

to lay

a

real tax of

pound upon the sdaries

of offices

which exceeded a hundred pounds a year; the pensions of the younger branches of the royaJ 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 jail indifferently upon every different Species of

These are

The

taxes which,

it is

Revenue

intended, should fall indifferently

capitation

different species of revenue, are capitation taxes,

^“Was

upon every

and taxes upon

supposed to be” is equivalent to “was nominally but not really.” and 2 read “a real tax of five shillings in the pound upon the salaries of offices which exceeded a hundred pounds a year; those of the judges and a few others less obnoxious to envy excepted.” Under 31 Geo. IL, c. 22, a tax of IS. in the pound was imposed on all offices worth more than £100 a year, naval and military offices excepted. The judges were not excepted, but their salaries were raised soon afterwards. See Dowell, History of Taxation and Taxes, vol. ii., pp. 135-136. The 6d. seems a mistake: the 5^ IS arrived at by adding the 4s. land tax (which was “real” in the case of Eds.

offices)

I

and the

is.

CAPITATION TAXES

S19

consumable commodities. These must be paid indifferently from whatever revenue the contributors may possess; from the rent of their land,

from the

profits of their stock, or

from the wages of

taxes

and

taxes on

consumable commodities.

their labour.

Capitation Taxes Capitation taxes,

if it is

attempted to proportion them to the

for-

tune or revenue of each contributor, become altogether arbitrary.

The

state of

a man’s fortune varies from day

an inquisition more

intolerable than

once every year, can only be guessed

must

m

to day,

and without

Capitation taxes

ostensibly

propor-

least

tioned to

His assessment, therefore,

are alto-

any

tax,

and renewed at

revenue at.

most cases depend upon the good or bad humour of his and must, therefore, be altogether arbitrary and uncer-

assessors,

gether arbitrary.

tain.

Capitation taxes,

they are proportioned not to the supposed

if

fortune, but to the rank of each contributor,

become

altogether un-

equal; the degree of fortune being frequently unequal in the

same

If

propor-

tioned to

rank they are un-

degree of rank.

equal.

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 unequal.

first

Let the tax be light or heavy, uncertainty

is

always a great griev-

ance. In a light tax a considerable degree of inequ^ity

ported; in a heavy one

it is

may be

sup-

altogether intolerable.

In the different poll-taxes which took place in England during the reign of William

the contributors were, the greater part

III.®'^

of them, assessed according to the degree of their rank; as dukes,

In the case

they are always grievous and in the second they are intoler-

able unless

they

are light.

marquisses, earls, viscounts, barons, esquires, gentlemen, the eldest

and youngest sons

of peers, &c. All shopkeepers

worth more than three hundred pounds, that them, were subject to the same assessment;

is,

and tradesmen

the better sort of

how great soever might

In the poll taxes

of Wil-

liam III. assess-

be the

different in their fortunes.®^

Their rank was more consid-

ered than their fortune. Several of those

who

in the first poll-tax

were rated according to their supposed fortune, were afterwards rated according to their rank. Serjeants, attornies, and proctors at law,

who

pound

in the first poll-tax were assessed at three shillings in the

of their supposed income, were afterwards assessed as gen-

tlemen.®® In the assessment of ®^The

first

of these

is

W. and M., sess. 2, Under i W. and M., I

under c. 7,

i

§

I

W. and

M.,

W. and M.,

sess. 2, c. 7, §

sess. i, c. 13.

2,

c. 13, § 4,

as certain other classes, were to

a tax which was not very heavy, a

2,

serjeants, attorneys

and

proctors, as well

the pound on their receipts. Under attorneys and proctors and others were to

pay

3s. in

ment was chiefly

according to rank.

XHE WEALTH OF NATIONS

820

considerable degree of inequality had been found less insupportable than any degree of uncertainty. In France

In the capitation which has been levied in France without any

the assess-

interruption since the beginning of the present century, the high-

ment is by rank

est orders of people are rated according to their rank,

the lower orders of people, according to

by an invariwhat is sup-

in the

able

higher

posed to be their fortune, by an assessment which varies from year

and by

tariff;

The

the king’s court, the judges

and other

offi-

supposed

to year.

fortune in the lower

cers in the superior courts of justice, the officers of the troops, &c.

orders of people.

officers of

are assessed in the

first

manner. The

inferior

ranks of people in the

provinces are assessed in the second. In France the great easily sub-

mit 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.

The French tax

In England the different poll-taxes never produced the sum which

had been expected from them, or which,

it

was supposed, they

is

more rigorously

exacted

than the

might have produced, had

they been exactly levied. In France the

sum expected from

capitation always produces the

government of England, when

it

English

people to the poll-tax, contented

taxes

happened

were.

to produce;

it.

The mild

assessed the different ranks of itself

with what that assessment

and required no compensation for the

loss

which the state might sustain either by those who could not pay, or

by by

those

who would not pay

(for there

were many such), and who,

the indulgent execution of the law, were not forced to pay.

more severe government

of France assesses

must

certain sum, which the intendant

find as he can. If

province complains of being assessed too high,

ment

of next year, obtain

it

may,

any

in the assess-

an abatement proportioned to the over-

charge of the year before. But

it

must pay

intendant, in order to be sure of finding the generality,

The

upon each generality a

was impowered to

assess

it

in

in the

sum

mean

time.

assessed

The

upon

a larger sum, that die

his

fail-

ure or inability of some of the contributors might be compensated

by

the over-charge of the rest;

surplus assessment

was

and

till

1765, the fixation of this

left altogether to his discretion.

In that year

f

pay

sums already charged. Under 2 W. and M., sess. I, c. 2, § 5, serjeants-at-law were to pay £15, apparently in addition to the 3s. in the pound. Under 3 W. and M., c. 6, the poundage charge does not appear at all. The alterations were doubtless made in order to secure certainty, but purely in the interest of the government, which desired to be certain of getting a fixed amount. Under the Land Tax Act of 8 and 9 W. III., c. 6, § 5, Serjeants, attorneys, proctors, etc., are again charged to an income tax. 20s. in addition to the

TAXES UPON CONSUMABLE COMMODITIES indeed the council assumed this power to of the provinces,

it is

S21

In the capitation

itself.

observed by the perfectly well-informed au-

Memoirs upon the impositions in France, the proporfalls upon the nobility, and upon those whose privileges exempt them from the taille, is the least considerable. The largest falls upon those subject to the taille, who are assessed to thor of the

which

tion

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

tended with

all

upon the wages

of labour,

and are

at-

little

lower

expence; and, where they are

rigorously exacted, afford a very sure revenue to the state. It

upon

on the

the inconveniencies of such taxes.

Capitation taxes are levied at

this account that in countries

where the

security of the inferior ranks of people are tation taxes are very

common.

ease, comfort,

little

Capitation taxes

attended

It is in general, however,

orders of

people are is

and

like taxes

on wages.

to, capi-

but a small

They

are

inexpen-

part of the public revenue, which, in a great empire, has ever been

sive

drawn from such

afford a

afforded,

taxes;

and the greatest sum which they have ever

might always have been found in some other way much

more convenient

and

sure re-

venue.

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

The impossibility

of taxa-

invention of taxes upon consumable commodities.

knowing how to

tax, directly

its subjects, endeavours to tax

which,

it is

The

state not

and proportionably, the revenue of it

by

indirectly

taxing their expence,

supposed, will in most cases be nearly in proportion to

taxed

their revenue. Their expence

is

commodities upon which

laid out.

by

taxing the consumable

tion ac-

cording to

revenue has given rise

to

taxation

according it is

Consumable commodities are

By

to ex-

either necessaries or luxuries.

necessaries I understand, not only the commodities which

are indispensably necessary for the support of

the custom of the country renders

it

even of the lowest order, to be without. is,

A linen

strictly speaking, not a necessary of life.

lived, I suppose,

life,

but whatever

indecent for creditable people, shirt, for

example,

The Greeks and Romans

very comfortably, though they had no linen.^^ But

'^Memoires, tom. ii., p. 421. “portion” Dr, John Arbuthnot, in his Tables of Ancient Coins, Weights and Measures, 2nd ed., 1754, p. 142, says that linen was not used among the Romans, '^®Ed. I reads

at least

by men,

till

about the time of Alexander Severus.

penditure

on consumable commodities,

either

necessaries or

luxuries,

the wealth of nations

S22 neces-

in the present times, through the greater part of Europe, a credit-

saries in-

able day-labourer would be ashamed to appear in public without a

cluding all

that

credit-

able

people of the lowest order

cannot decently

go without.

which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, no body can well fall into without extreme bad conduct. Custom, in the same

want

linen shirt, the

of

manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them. In Scotland, custom has rendered them a necessary of life to the lowest order of men; but not to the

same order

women, who may, without any

of

bare-footed. In

women;

walk about

discredit,

men

France, they are necessaries neither to

nor to

the lowest rank of both sexes appearing there publicly,

without any discredit, sometimes in wooden shoes, and sometimes bare-footed.

Under

necessaries therefore, I comprehend, not only

those things which nature, but those things which the established rules of decency

have rendered necessary to the lowest rank of

people. All other things I call luxuries; without

meaning by

upon the tem-

appellation, to throw the smallest degree of reproach

perate use of them. Beer and

and wine, even

ale, for

wine countries, I

in the

this

example, in Great Britain, call luxuries."^®

A man of any

rank may, without any reproach, abstain totally from tasting such liquors. life;

What raises the

Nature does not render them necessary

and custom nowhere renders

indecent to live without them.

As the wages of labour are every where regulated, partly by the demand for it, and partly by the average price of the necessary

price of subsist-

it

for the support of

whatever raises this average price must

articles of subsistence;

may

ence must

necessarily raise those wages, so that the labourer

raise

to purchase that quantity of those necessary articles which the state

still

be able

wages.

of the

demand

for labour,

clining, requires that

whether increasing, stationary, or de-

he should

necessarily raises their price

the tax, because the dealer get

it

in the

So that a taxon necessaries,

like

a tax

on wages, raises

wages.

back with a

A

who advances

Such a tax must,

wages of labour proportionable to

It is thus that

in the

profit.

have.*^^

tax upon those articles

somewhat higher than the amount

the tax, must generally therefore, occasion

labourer, though he

as

a

direct tax

may pay

it

life,

in the long-run

rise

operates exactly

upon the wages

The

of labour.

out of his hand, cannot, for any

considerable time at least, be properly said even to advance

must always

a

this rise of price.

a tax upon the necessaries of

same manner

of

be advanced to him by

his

it.

It

immediate

employer in the advanced rate of his wages. His employer,

if

he

is

a

”In Lectures, p 179, above in ed. i. p 432 note, beer seems to be regarded as a necessary of life rather than a luxury See Book I Chap. 8 ,

TAXES UPON CONSUMABLE COMMODITIES manufacturer, will charge upon the price of his goods this

S23

rise of

wages, together with a profit; so that the final payment of the tax, together with this over-charge, will

employer

is

charge, will

a farmer, the fall

rise in

will not necessarily occasion

upon tobacco,

for example,

If his

with a like over-

of the landlord.

upon which I

It is otherwise with taxes

The

upon the consumer.

final pa5mient, together

upon the rent

those of the poor.

fail

call luxuries;

even upon

the price of the taxed commodities,

any

wages of labour.

rise in the

A tax

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.

Taxes on luxuries

even if

consumed by the poor have no such effect,

The

same thing may be said of the taxes upon tea and sugar; which in England and Holland have become luxuries of the lowest ranks of people; and of those upon chocolate, which in Spain is said to have become so. The different taxes which in Great Britain have in the

upon

course of the present century been imposed are not supposed to have

The

had any

rise in the price of porter,

three shillings

wages

of

upon the

common

effect

spirituous liquors,

upon the wages of labour. by an additional tax of

occasioned

barrel of strong beer,"^^ has not raised the

labour in London. These were about eighteen

pence and twenty-pence a day before the tax, and they are not

more now.

The high

price of such commodities does not necessarily dimin-

as they

up families. upon such commodities

act like

ish the ability of the inferior ranks of people to bring

Upon

the sober and industrious poor, taxes

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

quence of this forced

up

families, in conse-

frugality, instead of being diminished, is fre-

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 indeed are not sober and industrious, and the dissolute and quently, perhaps, increased

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.

up numerous neglect,

Such disorderly persons, however, seldom rear

families;

their children generally perishing

from

mismanagement, and the scantiness or unwholesomeness of

their food. If

by

the strength of their constitution they survive the

hardships to which the bad conduct of their parents exposes them; Geo

III

c

7

sumptuary laws,

and so do not diminish the ability of

the poor to bring

up

useful

families,

THE WEALTH OF NATIONS

^24

commonly to society by

yet the example of that bad conduct

corrupts their

morals; so that, instead of being useful

their industry,

they become public nuisances by their vices and disorders. Though the advanced price of the luxuries of the poor, therefore, might in-

somewhat the

crease

such disorderly families, and

distress of

thereby diminish somewhat their ability to bring up children;

it

would not probably diminish much the useful population of the country. whereas a rise in the

Any

rise in the

average price of necessaries, unless

by a proportionable

sated

rise in

price of

neces-

sarily diminish

saries di-

numerous

more or

it is

compen-

the wages of labour, must neces-

poor to bring up

less the ability of the

of the

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 increas-

poor to

ing, stationary, or declining population.

minishes the ability

bring up useful

families,

Taxes upon luxuries have no tendency to

raise the price of

any

families

other commodities except that of the commodities taxed. Taxes

and supply the

upon

demand

necessaries,

by raising

the wages of labour, necessarily tend to

raise the price of all manufactures,

and consequently to diminish

for

the extent of their sale and consumption. Taxes

labour.

finally paid

Taxes on

any

by

retribution.

upon

luxuries are

the consumers of the commodities taxed, without

They

fall indifferently

upon every

species of reve-

neces-

nue, the wages of labour, the profits of stock, and the rent of land.

saries are

Taxes upon

necessaries, so far as they affect the labouring poor,

contrary to the in-

are finally paid, partly

terest of

lands,

the

middle

and superior ranks

af people.

and partly by

by landlords

rich consumers,

in the diminished rent of their

whether landlords or others,

in

the advanced price of manufactured goods; and always with a considerable over-charge.

The advanced

are real necessaries of

life,

price of such manufactures as

and are destined

for the

consumption of

the poor, of coarse woollens, for example, must be compensated to

the poor

by a farther advancement

superior ranks of people,

ought always to oppose well as all direct taxes of both the

all

of their wages.

upon the

taxes

upon the wages

one and the other

falls

lords,

by

of labour.

The

by the reduction

of their rent;

and

The

final

life,

as

payment

upon themselves, and

altogether

heaviest

fall

who always pay in a double capacity;

the increase of their expence.

interest,

necessaries of

always with a considerable over-charge. They the landlords,

The middling and

they understood their own

if

upon

in that of land-

in that of rich consumers,

observation of Sir

Matthew

Decker, that certain taxes are, in the price of certain goods, sometimes repeated and accumulated four or five times,

is

with regard to taxes upon the necessaries of

In the price of

leather, for example,

you must pay, not only

life.

perfectly just

for the tax

upon the

TAXES UPON CONSUMABLE COMMODITIES leather of your

own

shoes,

but for a part of that upon those of the

shoe-maker and the tanner. You must pay too for the tax upon the

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 salt-maker, the soap-maker, and the candlemaker consume while employed in their serviced® salt,

In Great Britain, the principal taxes upon the necessaries of

upon the four commodities soap, and candles.

are those leather,

now

just

mentioned,

life

salt,

taxeUn neces-

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

body,

it

may

be purchased so gradually, that no-

seems to have been thought, could

a pretty heavy tax upon

it.

It is in

’

feel

a

real necessary of life.

very sensibly even

England taxed at three

and fourpence a bushel; about three times the commodity. In some other countries the tax is is

leather,

The use

shillings

original price of the still

higher. Leather

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;

the original price of leather,

may amount to

cent.;

upon that and upon

cent.;

taxes which, though lighter than that

cent.;

very heavy. As

taxes which,

upon

about eight or ten per

of soap to about twenty or five

and twenty per

that of candles to about fourteen or fifteen per

all

upon

are

salt,

still

those four commodities are real necessaries of

such heavy taxes upon them must increase somewhat the ex-

life,

pence 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

who work

many different sorts

within doors; and coals are the cheapest of

price of fuel has so important an influence

upon that

of all

workmen fuel. The

of labour, that

over Great Britain manufactures have confined themselves prin-

all

cipally to the coal countries; other parts of the country,

on account

of the high price of this necessary article, not being able to

cheap. In some manufactures, besides, coal

-

is

ed., 1750,

”See 330

a necessary

instru-

Decker’s example, Essay on the Decline of the Foreign Trade, pp. 29, 30. See also p. 10. Dowell, History of Taxation and Taxes, 1884, vol. iv, pp. 318, 322,

Leather

2nd

is

work so

and, also

THE WEALTH OF NATIONS

826

ment

of trade; as in those of glass, iron, and

bounty could

in

any case be reasonable,

it

all

other metals. If a

might perhaps be so upon

the transportation of coals from those parts of the country in which

they abound, to those in which they are wanted. But the legislature, instead of a bounty, has imposed a tax of three shillings

pence a ton upon coal carried coastways; of coal pit.

is

more than

free:

Where they

which upon most sorts

sixty per cent, of the original price at the coal-

Coals carried either

duty.

and three-

by land

or

by inland navigation pay no consumed duty

are naturally cheap, they are

where they are naturally dear, they are loaded with a heavy

duty. Such

Such

taxes at

any

rate

though they raise the price of subsistence, and con-

taxes,

sequently the wages of labour, yet they afford a considerable reve-

bring in

nue to government, which

revenue,

way. There may, therefore, be good reasons for continuing them.

which

is

it

might not be easy

to find in

any other

more than

The bounty upon

can be

actual state of tillage to raise the price of that necessary article,

said of

produces

all

the exportation of corn, so far as

the like

bad

effects;

the regu-

it

tends in the

and instead of affording any reve-

lations of

nue, frequently occasions a very great expence to government.

the corn

high duties upon the importation of foreign corn, which in years of

trade, etc.,

which produce equally

bad effects.

The

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,

account of the scarcity,

is at

and which, on

present suspended for a limited time

with regard to Ireland and the British plantations,"^^ have

bad

effects of taxes

all

the

upon the

necessaries of life, and produce no revenue to government. Nothing seems necessary for the repeal of such regulations, but to convince the public of the futility of that system in consequence of which they have been established.

Much higher taxes

on

necessaries pre-

vail in

many

Taxes upon the necessaries of ground at the

In

taxes.

on

upon

flour

other

and meal when

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

pay every year

taxes

much higher in many

mill,

other

bread,

are

countries than in Great Britain. Duties

countries.

There are

life

lieu of

a part of them, the people

who live in the country much a head, according to the sort of bread they consume. Those who consume wheaten bread, pay

so

are supposed to

three guilders fifteen stivers; about six shillings

and ninepence halfpenny, These, and some other taxes of the same kind, by raising the price of labour, are said to have ruined the greater part of the ™Saxby, British Customs,

™ Above,

vol. i, p. 392.

p. 307. 8 Ann., c. 4; 9 Ann.,

c, 6.

TAXES UPON CONSUMABLE COMMODITIES

^^7

manufactures of Holland.®^^ Similar taxes, though, not quite so heavy, take place in the Milanese, in the states of Genoa, in the

dutchy of Modena,

and

talla,

Parma, Placentia, and Guas-

in the dutchies of

A

in the ecclesiastical state.

French

author of some

note has proposed to reform the finances of his country,

room

stituting in the

ruinous of

all taxes.

by submost

of the greater part of other taxes, this

There

is

nothing so absurd, says Cicero, which

has not sometimes been asserted by some philosophers.^^

Taxes upon butchers meat are

upon bread.

It

may

any where a necessary

of

life.

it is

known from most

afford the

oil,

where butter

experience, can, without

plentiful, the

and meat.

is

Grain and other vegetables, with the

help of milk, cheese, and butter, or had,

more common than those

still

indeed be doubted whether butchers meat

is

not to be

any butchers meat,

most wholesome, the most nourish-

and the most invigorating diet. Decency no where requires that any man should eat butchers meat, as it in most places requires that he should wear a linen shirt or a pair of leather shoes. ing,

Consumable commodities, whether be taxed in two

different ways.

necessaries or luxuries,

The consumer may

either

may

pay an

annual sum on account of his using or consuming goods of a certain kind; or the goods the dealer,

may be taxed while they remain

and before they are delivered

in the

to the consumer.

A tax on a consumable

com-

modity

hands of

maybe

The

levied

con-

either

sumable goods which

last

sumed

most properly taxed in the one way. Those of

altogether, are

which the consumption

The

other.

method

a considerable time before they are con-

either

is

immediate or more speedy, in the

coach-tax and plate-tax are examples of the former

of imposing: the greater part of the other duties of excise

and customs,

periodically

from

the con-

sumer or once for all

from

the dealer

of the latter.

when the

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

consumer acquires it.

the coach-maker. But

it is

to

pay f gur pounds a year

to

pay

all

certainly

more convenient

for the privilege of keeping

for the

buyer

a coach, than

at once forty or forty-eight pounds additional price to the

The first method is best

coach-maker; or a sum equivalent to what the tax

him during the time he ^Memoires concemant

uses the

les

same coach.

likely to cost

A service of

Droits, &c. p. 210, 211

857.

is

plate, in

and 233. See below,

p.

m

his note on this passage, Reformateur. Amsterdam, 1756. Garmer etc., tom. iv., p. 387, attributes this work to Clicquot de Blervache, French Inspector-general of Manufactures and Commerce, 1766-90, but later authorities doubt or deny Clicquot’s authorship. See Jules de Vroil,

Recherchesy

itude sur Clicquot-Blervache, 1870, pp. potest

xxxi-xxxiii.

quomodo quod non dicatur ab aliquo philosophorum.” Divinationey

ii.,

$8, *‘Sed nescio

nihil tarn

absurde did

when the com-

the wealth of nations

S28 modity is durable.

may

the same manner, easier for the

last

more than a century.

consumer to pay

It is certainly

a year for every hun-

five shillings

dred ounces of plate, near one per cent, of the value, than to re-

deem

this long

annuity at five and twenty or thirty years purchase,

which would enhance the price at per cent.

The

different taxes

conveniently paid

Decker proposed to adapt it

also to

other

commodities by issuing

least five

and twenty or thirty

affect houses are certainly

more

by moderate annual payments, than by a heavy

tax of equal value upon the SirM.

which

first

building or sale of the house.

It was the well-known proposal of Sir Matthew Decker, that

commodities, even those of which the consumption

is

all

either im-

mediate or very speedy, should be taxed in this manner; the dealer advancing nothing, but the consumer paying a certain annual sum

consume certain

for the licence to

was

to

promote

all

The

goods.®^

object of his scheme

the different branches of foreign trade, particu-

by taking away

larly the carrying trade,

all

duties

upon importa-

annual licences to

tion

consume

his

them, but

and exportation, and

thereby enabling th^ merchant to employ

whole capital and credit in the purchase of goods and the

no part of either being diverted towards the ad-

freight of ships,

this

The

project, however, of taxing, in this manner,

would be

vancing of taxes.

liable to

goods of immediate or speedy consumption, seems liable to the four

greater

objections

than the second

and usual method.

following very important objections. First, the tax would be

more

unequal, or not so well proportioned to the expence and consumption of the different contributors, as in the

way

in

which

it is

com-

monly imposed. The taxes upon ale, wine, and spirituous liquors, which are advanced by the dealers, are finally paid by the different consumers exactly in proportion to their respective 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 ly than one

who

of taxation, licence to

entertained fewer guests. Secondly, this

by paying

for

an annual,

light-

mode

half-yearly, or quarterly

consume certain goods, would diminish very much one

of the principal conveniences of taxes

upon goods of speedy con-

sumption; the piece-meal payment. In the price of three-pence half-

penny, which

is

at present paid for a pot of porter, the different

taxes

upon malt, hops, and

profit

which the brewer charges for having advanced them,

beer, together with the extraordinary

may

perhaps amount to about three halfpence. If a workman can conveniently spare those three halfpence, he buys a pot of porter. If Essay on the Causes of the Decline of the Foreign Trade, 2nd pp. 78-163. Eds. 1-3 read “wa^.”

Eds.

I

and

2

read “which.’

ed., 1750,

'

TAXES UPON CONSUMABLE COMMODITIES

S29

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 afford to

pay

it;

and every act of payment

is

it,

and when he can

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 purchaser drunk tax would be the same. Fourthly, once,

by

if

a

much or drunk little, his workman were to pay all at

yearly, half-yearly or quarterly pa5mients, 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

This mode of taxation, therefore,

it

him very much.

seems evident, could never,

without the most grievous oppression, produce a revenue nearly equal to what

is

derived from the present

mode without any

pression. In several countries, however, commodities of

op-

an im-

mediate or very speedy consumption are taxed in this manner. In Holland, people pay so

much a head

for a licence to drink tea. I

have already mentioned a tax upon bread, which, so

sumed in farm-houses and country same manner.

The

far as

it is

con-

villages, is there levied in the

duties of excise are imposed chiefly

upon goods

of

home pro-

duce destined for home consumption. They are imposed only upon

a few sorts of goods of the most general use. There can never be any doubt either concerning the goods which are subject to those

duties,

or concerning the particular duty which each species of goods subject to.

They

fall

almost altogether upon what I

upon green glass. much more ancient than those

The duties of customs are They seem to have been called customs,

payments which had been

in use

above, excise

duties fall

chiefly or*

leather, candles, and, perhaps, that

cise.

men

is

soap,

salt,

four

tioned British

call luxuries,

excepting always the four duties above mentioned, upon

Excepting the

luxuries.

of ex-

as denoting customary

from time immemorial. They ap-

pear to have been originally considered as taxes upon the profits of

Customs were originally

regarded as taxes

merchants. During the barbarous times of feudal anarchy, mer-

little

chants’

better than emancipated bondmen, whose persons were de-

profits^

spised,

all

and whose gains were envied. The great

nobility,

consented that the king should tallage the profits of their ants,

on mer-

the other inhabitants of burghs, were considered as

chants, like

who had own ten-

were not unwilling that he should tallage likewise those of an men whom it was much less their interest to protect. In

order of

those ignorant times,

it

was not understood, that the

profits of

mer-

chants are a subject not taxable directly; or that the final payment ®®Eds. 1-3 read “was.”

THE WEALTH OF NATIONS

S30 of

all

such taxes must

fall,

with a considerable over-charge, upon

the consumers. those of aliens be-

The

upon more unfavour-

gains of alien merchants were looked

ably than those of English merchants. It was natural, therefore,

ing taxed

more heavily than those upon aliens and

more

that those of the former should be taxed

heavily.

of the latter.®^ This distinction between the duties

those upon English merchants, which was begun from ignorance,

has been continued from the

spirit of

monopoly, or in order to give

our own merchants an advantage both in the home and in the

for-

eign market. So originally cus-

toms were imposed equally

on

all

sorts of

goods,

and on exports

With

customs were imposed

this distinction, the ancient duties of

equally upon

all sorts

of goods, necessaries as well as luxuries,

Why

goods exported as well as goods imported. in one sort of goods,

it

seems to have been thought, be more

voured than those in another? or

why should

be more favoured than the merchant importer?

The

ancient customs were divided into three branches.

as well as

and perhaps the most ancient

wool and leather. It seems to have been chiefly

The first was that on wool

portation duty.

and and the second tonnage (on wine)

and poundage (on

all

fa-

the merchant exporter

imports.

leather,

should the dealers

When

of all

The

first,

was that upon or altogether an ex-

those duties,

the woollen manufacture

came

any part

lished in England, lest the king should lose

to be estab-

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 pence in the pound was imposed upon

all

six-

goods exported and im-

other

ported, except wools, wool-fells, leather, and wines, which were

goods).

subject to particular duties. In the fourteenth of Richard II. this

Subsidies

were ad-

duty was raised to one

ditions to

wards,

poundage.

it

shilling in the

was again reduced

pound; but three years

to sixpence. It

was raised to

after-

eight-

pence in the second year of Henry IV.; and in the fourth year of the same prince, to one shilling.

William III.

this

duties of tonnage

From this

duty continued at one

time to the ninth year of

shilling in the

and poundage were generally granted

pound. The to the king

by one and the same act cf 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

now

called the

Old Subsidy,

still

is

continues to be levied according

Above, pp. 431, 461.

TAXES UPON CONSUMABLE COMMODITIES to the

book of

method

rates established in the twelfth of Charles

of ascertaining,

ject to this duty,

is

by a book

an additional

five

the ninth

IL The

of rates, the value of goods sub-

said to be older than the time of

new subsidy imposed by

^3 ^

and tenth

of

The

James

William IIL,®^ was

per cent, upon the greater part of goods.

one-third and the two-third subsidy

The

made up between them anThe

other five per cent, of which they were proportionable parts.

subsidy of 1747 made a fourth five per cent, upon the greater part of goods and that of 1 7 59,"^- a fifth upon som.e particular sorts ;

of goods. Besides those five subsidies, a great variety of other du-

have occasionally been imposed upon particular sorts of goods, order sometimes to relieve the exigencies of the state, and some-

ties

in

times 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

upon importation. The

a few exceptions, been laid altogether

greater part of the ancient duties which

had

been imposed upon the exportation of the goods of home produce

and manufacture, have

either

been lightened or taken away alto-

most cases they have been taken away. Bounties have even been given upon the exportation of some of them. Drawbacks gether. In

The prevalence of

the principles of

the mercantile

system has led to the re-

moval of nearly the ex-

port duties,

too,

sometimes of the whole, and, in most cases, of a part of the

duties which are paid

upon the importation

of foreign goods,

have

been granted upon their exportation. Only half the duties imposed

by the tion:

old subsidy

upon importation are drawn back upon exportalatter subsidies and upon the greater part of goods, drawn back in

but the whole of those imposed by the

other imposts are,

the same manner.®^ This growing favour of exportation, and dis-

couragement of importation, have suffered only a few exceptions,

which

chiefly concern the materials of

our merchants and manufacturers are

some manufactures. These,

willing should

come as cheap

^Gilbert, Treatise on the Court of Exchequer^ 1758, p. 224, mentions a of Rates printed in 1586 Dowell, History of Taxation and Taxes, 1884, vol 1, pp 146, 165, places the begmning of the system soon after 1558. 2 and 3 Ann. c. 9; 3 and 4 Ann., c 5 C. 23.

Book

21 Geo II c. 2. ®^32 Geo. IL, c. 10, on tobacco, linen, sugar ,

currants, East India goods (except coffee

and other grocery, except and raw silk), brandy and other

rum), and paper. ®*Ed. I reads, more intelligibly, “later.” Another example of this unfortunate change occurs below, p. 884. Above, pp. 466, 467, written after the present passage. spirits (except colonial

all

the wealth of nations

S32

as possible to themselves,

and

and

as dear as possible to their rivals

competitors in other countries. Foreign materials are, upon this account, sometimes allowed to be imported duty free for example, flax, terials of

home

and raw linen yarn. The

;

Spanish wool,

ma-

exportation of the

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,

Great

has been subjected to higher duties;

by the conquest of Canada and Senegal, having got almost the monopoly of those commodities. That the mercantile system has not been very favourable to the revenue of the great body of the people, to the annual produce of the land and labour of the country, I have endeavoured to shew in the fourth book of this Inquiry. It seems not to have been more Britain,

and has been unfavourable to

the re-

venue of

favourable to the revenue of the sovereign; so far at least as that

the state,

revenue depends upon the duties of customs.

In consequence of that system, the importation of several sorts

annihil-

ating

of goods has been prohibited altogether. This prohibition has in

parts of

it

and

has very

by pro-

some

hibitions

ished the importation of those commodities,

of importation,

cases entirely prevented,

in others

much

dimin-

by reducing the im-

porters to the necessity of smuggling. It has entirely prevented the

importation of foreign woollens; and

it

has very

that of foreign silks and velvets. In both cases

it

much

diminished

has entirely anni-

hilated the revenue of customs which might have been levied

upon

such importation.

The high

and reducing

of

many

duties which have been imposed

different sorts of foreign goods, in order to discourage

other parts

by

their

consumption in Great Britain, have in

high

to encourage smuggling;

duties.

of the customs below forded.

upon the importation

The saying

and

in all cases

many cases served

only

have reduced the revenue

what more moderate duties would have

af-

of Dr. Swift, that in the arithmetic of the cus-

toms two and two, instead of making

four,

make sometimes only

one,®® holds perfectly true with regard to such

heavy

duties,

which

®®Eds. 1-3 read “peculiar,” and “particular” is perhaps a misprint. Above, pp. 612-616. Above, pp. 622, 623

Swift attributes the saying to an

unnamed commissioner

of customs. “I

which I learned many years ago from the commissioners of the customs in London, they said when any commodity appeared to be taxed above a moderate rate, the consequence was to lessen that branch of the revenue by one-half; and one of these gentlemen pleasantly told me that the mistake of parliaments on such occasions was owing to an error of computing two and two make four; whereas in the business of laying impositions, two and two never made more than one; which happens by lessening the import, and the strong temptation of running such goods as paid high duties, at least in this kingdom.”—“Answer to a Paper Called a will tell

you a

secret,

TAXES UPON CONSUMABLE COMMODITIES

^33

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 manufactures, and the drawbacks which are paid upon the re-exportation of the greater part of foreign goods, have given occasion to many frauds, and to a species of smuggling more

Bounties

and dravv-

backs (great

part of

destructive of the public revenue than

the bounty or drawback, the goods,

any

it is

other. In order to obtain

known, are sometimes

well

shipped and sent to sea; but soon afterwards clandestinely reland-

ed 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 pro-

duce 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

amounted

to 167,800/.

bentures and gether,

to 2,324,600/.

is

obtained

by fraud) and expenses of

management

make a large

deduction

from the corn,

The drawbacks which were paid upon

certificates, to 2,156,800/.

amounted

was no bounty upon

which

de-

customs revenue.

Bounties and drawbacks to-

In consequence of these deduc-

amounted only to 2,743,400/.: for the expence of management in

tions the revenue of the customs

from which, deducting 287,900/. salaries

and other

incidents, the neat revenue of the customs for

that year comes out to be 2,455,500/,

amounts

in this

manner

The expence

to between five

and

of

management upon the

six per cent,

and to something more than ten per that revenue, after deducting what is

gross revenue of the customs, cent,

upon what remains

of

paid away in bounties and drawbacks.

Heavy

duties being imposed

upon almost

all

our merchant importers smuggle as much, and little

as they can.

Our merchant

exporters,

goods imported,

make entry

of as

In the customs returns

on the contrary, mahe

entry of more than they export; sometimes out of vanity, and to

pay no duty; and sometimes to gain a bounty or a drawback. Our exports, in consequence of these different frauds, appear upon the customhouse books greatly pass for great dealers in goods which

the imports are

minimised

and the exports exaggerated.

to overbalance our imports; to the unspeakable comfort of those politicians

who measure

the national prosperity

by what they

call

and such

ex-

the balance of trade. All goods imported, unless particularly exempted,

emptions are not very numerous, are liable to some duties of cusMemorial of the Poor Inhabitants, Tradesmen and Labourers of the Kingdom of Ireland” (in Works, ed. Scott, 2nd ed., 1883, vol. vii., pp. 165-166. The saying is quoted from Swift by Hume in his Essay on the Balance of Trade, and by Lord Karnes in his Sketches of the History of Man, 1774, vol. i., p. 474 )-

The

cus-

toms are

the wealth of NATIONS

^34

toms. If any goods are imported not mentioned in the book of rates,

very nu-

twenty

Sd much less

cording to the oath of the importer, that

per-

spicuous

or five

tbct^an

ii^iisive,

poundage

duties.

The book

is,

of rates

and enumerates a great variety

shillings value,

ac-

nearly at five subsidies, is

extremely compre-

of articles,

used, and therefore not well known. It

many

upon

of

them

account

this

the excise

little

duties.

frequently uncertain under what article a particular sort of goods

is

ought to be classed, and consequently what duty they ought to pay.

Mistakes with regard to this sometimes ruin the customhouse cer,

and frequently occasion much

trouble, expence,

to the importer. In point of perspicuity, precision, therefore, the duties of customs are

much

offi-

and vexation

and

distinctness,

inferior to those of excise.

In order that the greater part of the members of any society

They ^ight

should contribute to the public revenue in proportion to their respective expence,

great ad-

vantage

cle of that

it

does not seem necessary that every single arti-

The

expence should be taxed.

duties of excise,

is

supposed to

which

is

levied

fined^o a

few ar-

tributors as that

tides.

duties of excise are imposed

by

fall

revenue, which as equally

is

the duties of customs;

upon a few

levied

upon the con-

and the

articles only of the

many

general use and consumption. It has been the opinion of

by proper management, the

people, that,

likewise, without

any

most

duties of customs might

loss to the public revenue,

and with great

advantage to foreign trade, be confined to a few articles only.

The

Foreign

foreign articles, of the

most general use and consumption

in

Great Britain, seem at present to consist chiefly in foreign wines and East ^d West products at present

and brandies in some of the productions of America and the West Indies, sugar, rum, tobacco, cocoanuts, &c. and in some of those of ;

,

Indies, tea, coffee, china-ware, spiceries of all kinds, several sorts of piece-goods, &c.

These

different articles afford, per-

haps, at present, the greater part of the revenue which customs revenue.

duties of customs.

foreign manufactures,

if

is

drawn

The taxes which at present subsist upon

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 work-

men 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. Saxby, British Customs^ p. 266.

TAXES UPON CONSUMABLE COMMODITIES High

taxes,

^35

sometimes by diminishing the consumption of the

taxed commodities, and sometimes

by encouraging smuggling,

The yield of high

fre-

duties

IS

quently afford a smaller revenue to government than what might be

often les-

drawn from more moderate

sened b>

When

taxes.

the diminution of revenue is the effect of the diminution

of consumption, there can be but one

remedy, and that

is

the lower-

tion

the diminution of the revenue

is

the effect of the encour-

agement given to smuggling, it may perhaps be remedied in two ways; either by diminishing the temptation to smuggle, or by increasing the difficulty of smuggling.

The temptation

to

smuggle can difficulty of

smuggling can be increased only by establishing that system of administration which

is

most proper for preventing

it

appears, I believe,

first

case

remed}to

i

lower

the duty,

it.

For excise laws,

from experience, obstruct

and embarrass the operations of the smuggler much more ly

In the the only

be diminished only by the lowering of the tax, and the

The

or di-

minished

consump-

ing of the tax.

When

smuggling

than those of the customs.

By

effectual-

introducing into the customs a

smugglini

the re-

medy is to lowei

system of administration as similar to that of the excise as the na-

the tax 01

ture of the different duties will admit, the difficulty of smuggling

increase

might be very much increased. This posed by

the

alteration,

it

many people, might very easily be brought

The importer

of commodities liable to

any

has been supabout.

smug-

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

vided either at his

own expence

them

in

diffi-

culty of

a warehouse pro-

or at that of the public, but under

gling

Excise

laws are

more embarrassing

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 the key of the customhouse

officer,

to the smuggler than the customs

be drawn back; and that warehouse to be at all times subject to the If cus-

visit

and examination

tain

how

for

of the customhouse officer, in order to ascer-

far the quantity contained in it corresponded with that

which the duty had been paid.

warehouse, no duty to be paid

If

till

he carried them to the public

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. dealers in those particular commodities, either tail,

to

be at

all

by

The

wholesale or re-

times subject to the visit and examination of the

toms were confined to a few articles, a system of

excise

supervision of stores

could be insti-

customhouse

officer;

and

to be obliged to justify

by proper

certifi-

upon the whole quantity contained are called the excise-duties upon What warehouses. in their shops or rum imported are at present levied in this manner, and the same

cates the pa)mient of the duty

system of administration might perhaps be extended to all duties upon goods imported; provided always that those duties were, like

tuted

the wealth of nations the duties of excise, confined to a few sorts of goods of the most general use

and consumption.

If

they were extended to almost

all

sorts of goods, as at present, public warehouses of sufficient extent

could not easily be provided, and goods of very delicate nature, or

which the preservation required much care and attention, could not safely be trusted by the merchant in any warehouse but his own. of

Great simplifi-

by such a system

If

cation

according as

secured,

consid-

every duty was occasionally either heightened or lowered

and

loss of

would then be

any

erable extent, could be prevented even under pretty high duties;

without revenue

of administration smuggling, to

if

it

was most

likely, either the

one

way

or the other, to

afford the greatest revenue to the state; taxation being always

em-

ployed as an instrument of revenue and never of monopoly;

seems not improbable that a

it

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 excise.

What

of simplicity, certainty,

and

the revenue at present loses,

precision, as those

by drawbacks upon

the re-exportation of foreign goods which are afterwards relanded

and consumed

at

home, would under

gether. If to this saving, which

added the abolition of

were

of home-produce; in

all

this

system be saved alto-

would alone be very considerable, all bounties upon the exportation

cases in which those bounties were not in

drawbacks of some duties of excise which had before been

reality

advanced;

cannot well be doubted but that the neat revenue of

it

customs might, after an alteration of

this kind,

be fully equal to

it had ever been before. by such a change of system the public revenue

what while the

If

and manufac-

the trade and

tures of

very considerable advantage.

the coun-

taxed,

trade

try

would

gain greatly.

by

manufactures of the country

The

might be carried on to and from

hended ture.

all

their average

money

and

parts of the world with every

life,

and

all

the materials of manufac-

price in the

home market,

it

life

would reduce the

but without reducing in any respect

The value of money is in proportion

the necessaries of

free,

free importation of the necessaries of life reduced

price of labour,

recompence.

all

loss,

those commodities would be compre-

the necessaries of

So far as the

money

Among

no

trade in the commodities not

number, would be perfectly

far the greatest

possible advantage.

suffered

would certainly gain a

which

it

will purchase.

That of the

of life is altogether independent of the quantity of

can be had for them.

The

reduction in the

money

necessaries

money which

price of labour

would necessarily be attended with a proportionable one ^®®Eds. 1-3 read “was.”

its real

to the quantity of

in that of

TAXES UPON CONSUMABLE COMMODITIES all

^37

home-manufactureSj which would thereby gain some advantage

The

in all foreign markets.

reduced in a

raw

still

price of

greater proportion

materials. If

raw

dostan duty-free, the

the free importation of the

could be imported from China

silk silk

some manufactures would be

by

and In-

manufacturers in England could greatly

undersell those of both France

and

Italy.

There would be no occa-

sion to prohibit the importation of foreign silks

and

velvets.

The

cheapness of their goods would secure to our own workmen, not only the possession of the home, but a very great foreign market.

Even

on with much more advantage than

carried

command

the trade in the commodities taxed

of the

would be

at present. If those

commodities were delivered out of the public warehouse for foreign exportation, being in this case exempted from all taxes, the trade in

them would be

The

perfectly free.

goods would under

this

carrying trade in

all sorts of

system enjoy every possible advantage. If

those commodities were delivered out for home-consumption, the

importer not being obliged to advance the tax

till

he had an oppor-

tunity of selling his goods, either to some dealer, or to some con-

sumer, he could always afford to

been obliged to advance the

same

sell

at the

it

them cheaper than

moment

taxes, the foreign trade of

It

it

he had

of importation.

Under

consumption even in the taxed

commodities, might in this manner be carried on with

advantage than

if

much more

can at present.

was the object

of the famous excise

scheme

of Sir

Robert Wal-

Sir

pole to establish, with regard to wine and tobacco, a system not

very unlike that which

was then brought modities only;

it

is

into parliament,

But though the

which

pole's

comprehended those two com-

excise

here proposed.

bill

was generally supposed to be meant as an

duction to a more extensive scheme of the same

intro-

kind. Faction, com-

bined with the interest of smuggling merchants, raised so violent,

though so unjust, a clamour against that thought proper to drop of the

same kind, none

it;

bill,

tion,

and from a dread of exciting a clamour have dared to resume the

of his successors

upon

foreign luxuries imported for

though they sometimes

tobacco

fall

upon the

home-consump-

poor, fall principally

more than middling fortune. Such are, upon foreign wines, upon coffee, chocolate,

of middling or

for example, the duties tea, sugar, &c.

The

wme and

cerned.

duties

upon people

^kis

that the minister

project.

The

something

duties on

forei^

chiefly

duties upon the cheaper luxuries of home-produce destined

upon people of all ranks expence. The poor pay the duties

the

for home-consumption, fall pretty equally

in proportion to their respective

upon malt, hops,

beer,

and

ale,

upon their own consumption: The

ranks,

on

the wealth of nations

S38 Those on

rich,

the of

home

fall

on

people of all

ranks.

Taxes on the con-

own consumption and that of their

their

The whole consumption

luxuries

produce

upon both

of the inferior ranks of people, or of

those below the middling rank,

much

country

servants.

must be observed,

it

is

in every

greater, not only in quantity, but in value, than that

of the middling

and of those above the middling rank. The whole

much

greater than that of the superior

expence of the inferior

is

ranks. In the

almost the whole capital of every country

first place,

annually distributed among

is

the inferior ranks of people, as the

of productive labour. Secondly, a great part of the revenue

sumption

wages

of the in-

arising

the rent of land and

from both

ferior

among

the profits of stock,

is

the same rank, in the wages and main-

ranks are

annually distributed

much

tenance of menial servants, and other unproductive labourers.

more pro-

Thirdly, some part of the profits of stock belongs to the same rank,

ductive

as a revenue arising from the

than those

on

the con-

sumption

The amount

employment

made by

of the profits annually

tradesmen, and retailers of

all

kinds,

of their small capitals.

is

small shopkeepers,

every where very consider-

and makes a very considerable portion

of the annual produce.

of the

able,

rich.

and lastly, some part even of the rent of land belongs to 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 Fourthly, the

of land.

Though

therefore, taking

mass of

it,

the expence of those inferior ranks of people,

them

individually,

is

very small, yet the whole

taking them collectively, amounts always to

by much

the largest portion of the whole expence of the society; what re-

mains, of the annual produce of the land and labour of the country for the

consumption of the superior ranks, being always much

not only in quantity but in value.

which

fore,

fall chiefly

upon that

The

taxes

upon expence,

of the superior ranks of people,

upon the smaller portion of the annual produce, are

much

less productive

the expence of

all

less,

there-

than either those which

ranks, or even those which

of the inferior ranks ; than either those

which

likely to be

fall indifferently fall chiefly fall

upon

upon ^at

indifferently

upon

the whole annual produce, or those which larger portion of

it.

The

excise

fall chiefly upon the upon the materials and manufacture

home-made fermented and spirituous liquors is accordingly, of all the different taxes upon expence, by far the most productive; and this branch of the excise falls very much, perhaps principally, of

upon the expence 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^.

^“Ed,

I

reads “both upon.”

I

reads “and from.”

95.

^“Ed. i reads “both from.” “*Ed. i reads “£3,314,223 i8s. io|d.”

TAXES UPON CONSUMABLE COMMODITIES must always be remembered, however, that

It

and not the necessary expence of the

the luxurious

final

necessary expence would

altogether

payment

of

any tax upon

their

upon the superior ranks

upon the smaller portion of the annual produce, and not upon the greater. Such a tax must in all cases either raise the wages

demand

for

it.

of labour, without throwing the final

never be

of

people;

of labour, or lessen the

But such

inferior ranks of people that

ought ever to be taxed. The fall

it is

^39

wages upon the

co^sm^. tion of

It could not raise the

payment

superior ranks of people. It could not lessen the

of the tax

demand

ranks,

for labour,

without lessening the annual produce of the land and labour of the country, the fund from which

all

taxes must be finally paid.

What-

ever might be the state to which a tax of this kind reduced the de-

mand for labour,

it

must always

raise

wages higher than they other-

wise would be in that state; and the final payment of this enhance-

ment

of wages

must

in all cases fall

upon the superior ranks of

people.

Fermented for sale,

liquors brewed,

and spirituous liquors

distilled,

not

Liquors

but for private use, are not in Great Britain liable to any

duties of excise. This exemption, of which the object

vate families from

the odious visit

is

and examination

to save pri-

for pri-

of the tax-

vateuse

gatherer, occasions the burden of those duties to fall frequently

eSmpt

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

from

other expence which he advances. Such families, therefore, must

drink their beer at least nine or ten shillings a barrel cheaper than

any

liquor of the

ple, to

by

whom it

little

and

is

same quality can be drunk by the common peoevery where more convenient to buy their beer, from the brewery or the alehouse. Malt, in the

little,

same manner, that liable to the

visit

is

made

for the use of

a private family,

is

not

or examination of the tax-gatherer; but in this

compound at seven shillings and sixpence a 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, case the family must

head

for the tax. Seven shillings

where country hospitality

sumed by the members

is

much

practised, the malt liquors con-

of the family

make but a

small part of the

consumption of the house. Either on account of this composition, Ed.

I

reads “is not to expose private famOies to.”

composition

ing.

must

THE WEALTH OF NATIONS

840

however, or for other reasons,

why

son

those

be subject

A

It is said

that a tax

on malt smaller

than the present taxes

on

a composition of the same kind. what is at present drawn from might be raised,

ale,

it

all

the

has

fre-

much lighter tax upon malt; the opportunibeing much greater in a brewery than the revenue ties of defrauding in a malt-house; and those who brew for private use being exemptwith those

taken to-

all

duties or composition for duties, which

who malt for private

is

not the case

use.

In the porter brewery of London, a quarter of malt

gether

revenue,

rea-

quently been said, by a

ed from

more

any equitable

or distil for private use, should not

heavy taxes upon malt, beer, and

and ale

bring in

to

who either brew

to malt as

greater revenue than

malt, beer

would

common

for private use. It is difficult to imagine

brew

to

not near so

it is

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 a quarter; those upon strong beer and ale to eight shillings

shillings

a barrel. In the porter brewery, therefore, the different taxes upon and

malt, beer, and ale,

amount

to

between twenty-six and thirty

shil-

figures are

quoted to prove it.

lings

upon the produce of a quarter

common

for less

country

of malt. In the country

a quarter

sale,

of malt

is

brewery

seldom brewed into

than two barrels of strong and one barrel of small beer;

quently into two barrels and a half of strong beer. taxes

upon small beer amount to one

shilling

The

fre-

different

and four-pence a bar-

In the country brewery, therefore, the different taxes upon

rel.

amount

malt, beer, and ale, seldom lings

and four-pence, frequently

to less than twenty-three shil-

to twenty-six shillings,

upon the

produce of a quarter of malt. Taking the whole kingdom at an average, therefore, the whole

and

ale,

shillings all

less

of the duties

upon the produce of a quarter

by

raising it

from

Under the

cyder and

is

upon the quarter

drawn from

old malt tax, indeed,

mum included in

upon the

barrel of

the old

3083/. 6 s Sd. It probably

mum. In

might be raised by

it is said,

upon the hogshead

is

of cyder,

all

comprehended a tax of four

and another

of ten shillings

1774, the tax upon cyder produced only

fell

somewhat short of

upon cyder having, that

are

all

counter-

than ordinary. The tax upon

its

usual amount;

year, produced less

mum, though much heavier, is still less

productive, on account of the smaller consumption of that liquor.

‘country

But'to balance whatever

excise’

taxes; there is

duty on

this single

those heavier taxes.

malt tax

balanced

off

six to eighteen shillings

shillings

by the

But by taking

of malt.

tripling the malt-

at present

tie different taxes

beer,

by

of malt, a greater revenue,

tax than what

upon malt,

than twenty-four or twenty-five

the different duties upon beer and ale, and

tax, or

Taxes on

amount

cannot be estimated at

may be

the ordinary

comprehended under what

excise, first, the old excise of six shillings

is

amount of those two called

The country

and eight-pence upon the

TAXES UPON CONSUMABLE COMMODITIES

841 cyder,

In 1772, the old malt-tax produced

The

additional

In 1773, the old tax produced

The

additional

In 1774, the old tax produced

The

additional

In 1775, the old tax produced

The

additional

tripling the

ri

7

pf

3 15

624,614

17

310,745 657,357

—

71 3! 5I 8J SJ

2

6i

—i

vinegar

and mead.

—jV

958,895

3

1,243,128

5

408,260

7

2f

1,245,808

3

3

405,406

17

3 lof

1,246,373 320,601

14 iS

—5I -J

1,214,583

6

463,670

7

4)6,547,832

19

i

— H

1,636,958

4

958,895

3

2,595,853

7

9i|

2,876,685

9

—-3^

280,832

i

—9§

comes out

malt tax, or by raising it from

six tol

eighteen shillings upon the quarter of malt, that singlet

tax would produce

A sum

ii

356,776 561,627 278,650

12

to be

But by

722,023

verjuice,

12

tax, or

of these different taxes

d.

323,785

Average of these four years

The whole amount

s.

4)3335^580

In 1772, the country excise produced The London brewery In 1773, the country excise The London brewery In 1774, the country excise The London brewery In 1775, the country excise The London brewery

Average of these four years To which adding the average malt

1.

J

which exceeds the foregoing by

hogshead of cyder; secondly, a

like tax of six shillings

and

2JI

eight-

pence upon the hogshead of verjuice; thirdly, another of eight shillings

and nine-pence upon the hogshead of vinegar; and,

a fourth tax

of eleven-pence

lastly,

mead or metheglin: much more than imposed, by what is called The

upon the gallon

of

the produce of those different taxes will probably

counterbalance that of the duties

annual malt tax upon cyder and

Malt

is

mum.

consumed not only in the brewery of beer and ale, but in

the manufacture of low wines and spirits. If the malt tax were

be raised to eighteen sary to

shillings

make some abatement

upon the

quarter,

it

might be neces-

in the different excises

posed upon those particular sorts of low wines and

to

which are im-

spirits of

which

makes commonly but a othet two-thirds being either raw

third part of the materials; the

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 ^°*Eds. r-3 read “was.’

malt tax were raised, it

would be proper to reduce the

malt makes any part of the materials. In what are called Malt spirits, it

If the

excises

on

wines and spirits

contain-

ingmalt.

the wealth of nations

S42

temptation, on account of the superior height of the duties, which

upon the gallon of spirits. By increasing the duties upon malt, and reducing those upon the distillery, both the opportunities and the temptation to smuggle would be diminished, which might occasion a still further augmentation of revenue.

amount

but not so as to re-

duce the

to 3^.

some time past been the policy

It has for

of

Great Britain to

courage the consumption of spirituous liquors,

on account of

dis-

their

price of

supposed tendency to ruin the health and to corrupt the morals of

spirits.

the

common

taxes

people. According to this policy, the abatement of the

upon the

distillery

ought not to be so great as to reduce,

respect, the price of those liquors. Spirituous liquors

any

main as dear as

ever; while at the

invigorating liquors of beer

and

ale

The people might

in their price.

of the burdens of

might

in re-

same time the wholesome and might be considerably reduced

thus be in part relieved from one

which they at present complain the most; while

same time the revenue might be considerably augmented. objections of Dr. Davenant to this alteration in the present system of excise duties, seem to be without foundation. Those obat the

Dr. Davenant objects that

The

the malt-

jections are, that the tax, instead of dividing itself as at present

ster’s

pretty equally upon the

profiit

of the maltster,

upon that of the

profits

would be unfairly taxed,

and

brewer, and profit, fall

upon

that of the retailer, would, so far as

it

affected

upon that of the maltster; that the maltster get back the amount of the tax in the advanced

altogether

could not so easily

the rent

and profit

price of his malt, as the brewer

and

retailer in the

advanced price

and that so heavy a tax upon malt might reduce

of barley

of their liquor;

land reduced,

the rent and profit of barley land.^®^ imposed upon proof spirits amount only to added to the duties upon the low wines, from which they are distilled, amount to 3s. lofd. Both low wines and proof spirits are, to prevent frauds, now rated according to what they gauge in the wash.

Though the

2S.

duties directly

6d. per gallon, these

This note appears “ 3 S.IO id.”

first

in ed. 3

;

ed. i reads “2s. 6d.” in file text instead of

^Political and Commercial Works, ed. Sir Charles Whitworth, 1771, vol. pp. 222, 223. But Davenant does not confine the effect of the existing tax to the maltster, the brewer and the retailer. The tax, he says, “which seems to be upon malt, does not lie all upon that commodity, as is vulgarly thought. For a great many different persons contribute to the payment of this duty, before it comes into the Exchequer. First, the landlord, because

i.,

of the excise,

same

is

forced to let his barley land at a lower rate

score, the tenant

must

sell his

;

and, upon the

barley at a less price; then the maltster

bears his share, for because of the duty, he must abate something in the price of his malt, or keep it; in a proportion it likewise affects the hop

merchant, the cooper, the

commodity. The

retailers

gains of necessity will be

collier, and all trades that have relation to the and brewers bear likewise a great share, whose less,

because of that imposition; and, lastly,

it

comes heaviest of all upon the consumers.” If the duty were put upon the maltster, it would be “difficult for him to raise the price of a dear commodity a full id at once: so that he must bear the greatest part of the

TAXES UPON CONSUMABLE COMMODITIES No

tax can ever reduce, for any considerable time, the rate of

profit in

any particular

trade,

which must always keep

other trades in the neighbourhood.

and

beer,

^43

modities,

ale,

do not

who

all

it is

its level

present duties

with

upon malt,

affect the profits of the dealers in those

com-

get back the tax with an additional profit, in the

enhanced price of their goods.

upon which

The

A tax

indeed

may

render the goods

imposed so dear as to diminish the consumption of

them. But the consumption of malt

would

make malt liquors

cheaper,

and so be likely to

increase is

upon the quarter

eighteen shillings

but the change

in malt liquors;

and a tax

of

of malt could not well render

the con-

sumption.

those liquors dearer than the different taxes, amounting to twentyfour or twenty-five shillings, do at present. Those liquors, on the contrary, would probably

them would be more It is not

become cheaper, and the consumption of

it is

why

back eighteen

for the maltster to get

of his malt, than

than to diminish.

likely to increase

very easy to understand

it

should be more

shillings in the

at present for the

difficult

advanced price

brewer to get back twenty-

four or twenty-five, sometimes thirty shillings, in that of his liquor.

The

and the maltster

could recover eighteen shillings

maltster, indeed, instead of a tax of six shillings,

obliged to advance one of eighteen shillings malt.

But the brewer

is

would be

upon every quarter

at present obliged to

of

advance a tax of

as easily

as the

brewer at present

twenty-four or twenty-five, sometimes thirty shillings upon every

recovers

quarter of malt which he brews. It could not be more inconvenient

twenty-

for the maltster to

advance a lighter tax, than

the brewer to advance a heavier one.

The

of,

at present for

maltster doth not always

keep in his granaries a stock of malt which time to dispose

it is

it

will require

a longer

than the stock of beer and ale which the brewer

four or thirty

and

might be given longer credit.

The former, therefore, may fremoney as soon as the latter. But

frequently keeps in his cellars.

quently get the returns of his

whatever inconveniency might arise to the maltster from being obliged to advance a heavier tax,

it

could easily be remedied

by

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

granting

from twenty-four and twenty-five shillings to eighteen shillings, would be more likely to increase than diminish that demand. The rent

and profit

of barley land, besides,

must always be nearly equal

and equally well cultivated land. If the barley land would soon be turned

to those of other equally fertile

they were

less,

some part

of

burden himself, or throw it upon the farmer, by giving brings the tax directly upon the land of England.” ^'^^Ed. I

does not contain

“it.”

less for barley,

which

The consumption of barley not being

reduced, the rent

and profit of barley

land could not

THE WEALTH OE NATIONS

S44

some other purpose, and

they were greater, more land would

be re-

to

duced, as

soon be turned to the raising of barley.

there is no

if

monop-

any particular produce of land

oly

price,

a tax upon

land which grows

it it.

is

at

A tax upon

its

price

ordinary price of

monopoly

called a

necessarily reduces the rent

and

profit of the

the produce of those precious vine-

yards, of which the wine falls so

mand, that

When the

what may be

much

short of the effectual de-

always above the natural proportion to that

is

and equally well cultivated

of the produce of other equally fertile

land, would necessaiOy reduce the rent and profit of those vine-

yards.

The

price of the wines being already the highest that could

be got for the quantity commonly sent to market, raised higher without diminishing that quantity;

could not be diminished without

still

it

could not be

and the quantity

greater loss, because the lands

could not be turned to any other equally valuable produce.

whole weight of the tax, therefore, would profit; properly

fall

upon

When

upon the rent of the vineyard.

The

the rent and it

has been

proposed to lay any new tax upon sugar, our sugar planters have frequently complained that the whole weight of such taxes

not

fell,

upon the consumer, but upon the producer; they never having been able to raise the price of their sugar after the tax, higher than

The

before.

price had,

was

it

seems, before the tax been a monopoly

it

and the argument adduced to shew that sugar was an im-

price;

proper subject of taxation, demonstrated, perhaps, that

it

was a

proper one; the gains of monopolists, whenever they can be come at,

being certainly of

all

subjects the

price of barley has never been a

and

profit of barley land

most proper. But the ordinary

monopoly

have never been above

portion to those of other equally fertile land.

and

The

ale,

different taxes

price;

and the

rent

their natural pro-

and equally well cultivated

which have been imposed upon malt, beer,

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

and those ale,

taxes, together with the different duties

have constantly either raised the

same

The

final

payment

the consumer, and not

sufferers

would be those

who

brew for private use

upon beer and

what comes

to the

thing, reduced the quality of those commodities to the con-

sumer.

The only

price, or

it;

of those taxes has fallen constantly

upon

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,

TAXES UPON CONSUMABLE COMMODITIES even though

this

^45

change was never to take place. It has probably

been the interest of this superior order of people, however, which has hitherto prevented a change of system that could not well

fail

both to increase the revenue and to relieve the people. Besides such duties as those of customs and excise above-mentioned, there are several others

which

affect the price of

Tolls

on

goods more

unequally and more indirectly. Of this kind are the duties which in

from

French are called Peages, which in old Saxon times were called

place to

Duties of Passage, and which seem to have been originally established for the

same purpose as our turnpike

our canals and navigable of the navigation.

Those

rivers, for the

duties,

tolls,

or the tolls

upon

to such purposes, are

or weight of the goods.

As they were originally local and provincial duties, applicable local and provincial purposes, the administration of them was

to in

to the particular town, parish, or lordship, in

suA

which they were levied;

communities being in some way or

other supposed to be accountable for the application.

who is

unequal-

maintenance of the road or

when applied

most properly imposed according to the bulk

most cases entrusted

feet prices

altogether unaccountable, has in

The sovereign,

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 neglected the application. If the turnpike

tolls

should ever become one of the resources of government, learn,

by the example

of

many

be the consequence. Such

tolls

sumer; but the consumer

is

entirely

of Great Britain

we may

other nations, what would probably

are no doubt finally paid

by the con-

not taxed in proportion to his expence

when he pays, not according to the value, but according to the bulk or weight of what he consumes.

When such

duties are imposed, not

according to the bulk or weight, but according to the supposed value of the goods, they become properly a sort of inland customs or excises,

es of

which obstruct very much the most important of all branch-

commerce, the

In some small

interior

commerce of the country.

states duties similar to those passage duties are

imposed upon goods carried across the

by

territory, either

water, from one foreign country to another.

Some of Po, and the

countries called transit-duties.

the

which are situated upon the

rivers

by land

or

These are in some

little

Italian states,

which run into

it,

derive some revenue from duties of this kind, which are paid alto-

gether

by

foreigners,

and which, perhaps, are

obstructing in

the only duties

upon the subjects of another, without any respect the industry or commerce of its own.

that one state can impose

^ Ed,

I

reads “are perhaps.”

Some countries

’duties

on

XHE WEALTH OF NATIONS

846

The most important transit-duty in the world is that levied by the king of Denmark upon all merchant ships which pass through the Sound. Taxes on luxuries

do not

Such taxes upon luxuries as the greater part

toms and

excise,

though they

reach ab-

different species of revenue,

sentees,

retribution,

but the fact that

and are paid

by whoever consumes

they are

tionably

mour

upon

without any

the commodities

upon which

fall

the revenue of every individual.

equally or propor-

As every man^s hu-

regulates the degree of his consumption, every

untarily

humour than

utes rather according to his

enue; the profuse contribute more, the parsimonious

proper proportion. During the minority of a

he contributes commonly very

little,

man

contrib-

in proportion to his rev-

recom-

mends them.

upon every

finally, or

they are imposed, yet they do not always

paid vol-

of the duties of cus-

fall indifferently

all

man

less,

than their

of great fortune,

by his consumption, towards

the support of that state from whose protection he derives

Those who

revenue.

their consumption, towards the support of the

country, in which latter

a

great

live in another country contribute nothing,

is

by

government of that

situated the source of their revenue. If in this

country there should be no land-tax, nor any considerable

duty upon the transference either of moveable or of immoveable property, as in the case in Ireland, such absentees

may

derive a

great revenue from the protection of a government to the support

do not contribute a single shilling. This inequality is be greatest in a country of which the government is in some subordinate and dependent upon that of some other. The

of which they likely to

respects

who

people

possess the most extensive property in the dependent,

will in this case generally chuse to live in the governing country.

and we cannot therefore wonder that the proposal of a tax upon absentees should be so very popular in that country. It might, perhaps, be a little difficult to ascertain either what sort, or what degree of absence would subIreland

ject a

is

precisely in this situation,

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, uals,

which can

any inequality

arise

from such

in the contribution of individ-

taxes, is

much more than compen-

sated by the very circumstance which occasions that inequality;

the circumstance that every man’s contribution

untary

it ;

is

altogether vol-

being altogether in his power either to consume or not to

consume the commodity taxed. Where such taxes, therefore, are properly assessed and upon proper commodities, they are paid with less grumbling than any other. When they are advanced by the merchant or manufacturer, the consumer, who “^Ed.

I

does not contain

“all.”

^ Ed.

I

finally

pays them,

reads “should

TA.XES soon com^s

and almost

to

UPON CONSUMABLE COMMODITIES

S47

confound them with the price of the commodities, he pays any tax.

forgets that

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

They are also cer-

tain ;

concerning either the quantity or the time

of payment. T^Tiatever uncertainty there

may

sometimes be, either

in the duties of customs in Great Britain, or in other duties of the

same kind

in other countries, it cannot arise

from the nature of

those duties, but from the inaccurate or unskilful manner in which the law that imposes them

Taxes upon

expressed.

is

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

may

of payment they are, or

Upon

venient.

be, of all taxes the

and payable at

convenient times

most con-

the whole, such taxes, therefore, are, perhaps, as

agreeable to the three

first

taxation, as any other.

of the four general

They

maxims concerning

offend in every respect against the

fourth.

Such

taxes, in proportion to

what they bring into the public

treasury of the state, always tate out or keep out of the pockets of the people more than almost in all the four different

ways

any other taxes. They seem to do in

which

and

possible to

do

even when imposed

First, the levying of such taxes,

judicious manner, requires a great excise officers, whose salaries

it is

number

a

much more from the people

it.

most

in the

of customhouse

perquisites are

this

but take

real tax

and

upon

than they yield to

the state, since

the people, which brings nothing into the treasury of the state. This

must be acknowledged, is more moderate in Great Britain than in most other countries. In the year which end-

expence, however,

ed on the duties,

fifth

it

of July 1775, the gross produce of the different

under the management of the commissioners

England, amounted to

an expence

of little

gross produce, however, there *

which was levied at

185.

more than

five

of excise in

and a half per

cent.

From

this

must be deducted what was paid

away in bounties and drawbacks upon the exportation of exciseable goods, which will reduce the neat produce below five millions,^^^

The

levying of the salt duty,

management,

is

much more

an

excise duty, but

expensive.

The

under a

neat revenue of the

customs does not amount to two millions and a half, which at

an expence

and other

of

more

incidents.

different

is

levied

than ten per cent, in the salaries of officers,

But the

perquisites of customhouse officers are

reads “f 5 479 j 695 7 s. lod.” neat produce of that year, after deducting all expences and allowances, amounted to 4,975,652/, 19s. 6 d, This note appears first in ed. 2.

Ed.

The

I

)

(r) the salaries

and perquisites of

customs

and excise of-

take a large proporficers

tion of

what is collected;

the wealth of nations

848

every where miich greater than their salaries than double

some ports more

at

;

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 expence of levying that

revenue

may amount,

and perquisites together, to more officers of excise receive few or

in salaries

The

than twenty or thirty per cent.

no perquisites: and the administration of that branch of the revenue being of more recent establishment,

is

in general less corrupted than

that of the customs, into which length of time has introduced and

authorised

which

is

liquors,

many

abuses.

By charging upon

at present levied by

a saving,

it is

malt the whole revenue

the different duties

upon malt and malt

supposed, of more than fifty thousand pounds

might be made in the annual expence of the excise. duties of customs to

a few

and by levying those

sorts of goods,

duties according to the excise laws, a

By confining the

much

greater saving might

probably be made in the annual expence of the customs. (2) particuhr branches

of industry are discour-

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

consumption, and consequently of

home growth

its

so far discourage its

production. If

it is

a commodity

or manufacture, less labour comes to be employed

aged;

in raising and producing

the tax increases in this

it.

If

it is

a

manner the

same kind which are made

at

foreign

commodity

price, the

of which

commodities of the

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

industry in one particular branch, industry in almost every other. facturer

it

may

The dearer the Birmingham manu-

buys his foreign wine, the cheaper he necessarily

part of his hardware with which,

with the price of which he buys

or,

it.

work

at

it.

The

That part

same

own less

that

thing,

of his hardware, thereless

encouragement to

dearer the consumers in one country

pay

surplus produce of another, the cheaper they necessarily

part of their

sells

what comes to the same

becomes of less value to him, and he has

fore,

encourage domestic

necessarily discourages that

for the

sell

that

own surplus produce with which, or, what comes to the which they buy it. That part of their

thing, with the price of

surplus produce becomes of less value to them,

encouragement to increase

its

quantity. All taxes

and they have

upon consum-

able commodities, therefore, tend to reduce the quantity of produc-

below what

it

otherwise would be, either in preparing

the commodities taxed,

if

they are home commodities; or in pre-

tive labour

paring those with which they are purchased,

if

they are foreign

TAXES UPON CONSUMABLE COMMODITIES commodities. Such taxes too always direction of national industry, different from, it

and generally

would have run of

its

own

alter,

and turn

less

more or into

it

less,

^49

the natural

a channel always

advantageous than that in which

accord.

Thirdly, the hope of evading such taxes

by smuggling

gives fre-

quent occasion to forfeitures and other penalties, which entirely ruin the smuggler a person who, though no doubt highly blameable ;

(3)

smug-

^gis encouraged;

for violating the laws of his country, is frequently incapable of

violating those of natural justice,

an excellent

and would have been,

in every

had not the laws of his country made that a crime which nature never meant to be so. In those corrupted respect,

citizen,

governments where there

a general suspicion of much un-

at least

is

necessary expence, 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

any easy and

safe opportunity of doing so.

To

pretend to have any

a manifest encourageand to the perjury which

scruple about buying smuggled goods, though

ment to the

violation of the revenue laws,

almost slwaYS attends

it,

would in most countries be regarded as

one of those pedantic pieces of hypocrisy which, instead of gaining credit with

any body, serve only to expose the person who

affects

a greater knave than indulgence of the public, the smug-

to practise them, to the suspicion of being

most of his neighbours.

By

this

to consider as in

a trade which he is thus taught some measure innocent; and when the severity of

the revenue laws

is

gler is often encouraged to continue

ready to

to defend with violence, his just property.

From

than criminal, he at

most determined

fall

upon him, he

is

frequently disposed

what he has been accustomed to regard as being at

last too often

first,

perhaps, rather imprudent

becomes one of the hardiest and

violators of the laws of society.

By the ruin of the

smuggler, his capital, which had before been employed in maintaining productive labour,

is

absorbed either in the revenue of the state

or in that of the revenue-officer,

and is employed

in maintaining

un-

productive, to the diminution of the general capital of the society,

and

of the useful industry

which

it

might otherwise have main-

tained.

Fourthly, such taxes, by subjecting at least the dealers in the

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

taxed commodities to the frequent

visits

though vexation, as has already been ing expence,

it is

said,^^^ is

not strictly speak-

certainly equivalent to the expence at which every

Above, p 779

and

(4)

vexation equivalent to ex-

pense

is

caused by the taxgatherers’

the wealth of nations

850 examinations

and

visits.

man would be willing to redeem himself from it. The laws

of excise,

though more effectual for the purpose for which they were

more vexatious than those

tuted, are, in this respect,

When

insti-

of the customs.

a merchant has imported goods subject to certain duties of when he has paid those duties, and lodged the goods in his

customs,

warehouse, he

is

not in most cases liable to any further trouble or

vexation from the customhouse

officer. It is

otherwise with goods

The dealers have no respite from the conand examination of the excise officers. The duties of ex-

subject to duties of excise. tinual visits

upon

more unpopular than those of the cusofficers who levy them. Those officers, it is pretended, though in general, perhaps, they do their duty fully as well as those of the customs; yet, as that duty obliges them to be frequently very troublesome to some of their neighbours, commonly contract a certain hardness of character which the others frequently cise are,

this account,

toms and so are the ;

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

Great Britain

are, perhaps, in some degree upon consumable commodities, fall as light Great Britain as upon those of any other coun-

inseparable from taxes

suffers less

than

upon the people

other countries

try of which the government is nearly as expensive.

from

perfect,

of

and might be mended; but

it is

Our

state is not

as good or better than that

most of our neighbours.

these in-

of

conveni-

In consequence of the notion that duties upon consumable goods were taxes upon the profits of merchants, those duties have, in some

encies.

Duties on commodities are

sometimes repeated on each sale,

by the Spanish as

Alcavala,

countries, been repeated

upon every

successive sale of the goods.

merchant importer or merchant manufacturer were taxed, equality seemed to require that those of all the middle If the profits of the

buyers,

who

intervened between either of them and the consumer,

should likewise be taxed. The famous Alcavala of Spain seems to have been established upon this principle. It was at first a tax of ten per cent., afterwards of fourteen per cent., and six per cent,

upon the

able or immoveable; sold.^i®

The

is at

present of only

sale of every sort of property,

whether move-

and

it is

repeated every time the property

levying of this tax requires

a multitude

is

of revenue-offi-

“^Memoires concemant les Droits, &c. tom. i. p. 455. “La premiere branche, connue sous la denomination de Alcavala y Cientos, consiste dans un droit qui se pergoit sur toutes les choses mobiliaires et immobiliaires qui sont vendues, echangees et negocfe: ce droit qui dans le principe avoit tti fixe a quatorze pour cent a etk depuis reduit a six pour cent.” The rest of the information is probably from Uztariz, Theory and Practice of Com’merce and Maritime Agairs, trans. by John Kippax, 1751, chap. 96, ad init., yol. u., p. 236. “It is so very oppressive as to lay 10 per cent, for the primitive Alcavala, and the four i per cents, annexed to it, a duty not only

TAXES UPON CONSUMABLE COMMODITIES

^5^

cers 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 shop-keeper, to

the continual visits and examination of the tax-gatherers.

Through the is

greater part of

a country

which a tax of

this

kind

established, nothing can be produced for distant sale.

The

pro-

in

duce of every part of the country must be proportioned to the consumption of the neighbourhood. It is to the Alcavala, accordingly, that Ustaritz imputes the ruin of the manufactures of Spain.^^^

might have imputed to

it

He

likewise the declension of agriculture,

it

being imposed not only upon manufactures, but upon the rude pro-

duce of the land. In the kingdom of Naples there

upon the value

is

a similar tax

of three per cent,

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 of all contracts,

and the 3 per cent, tax at Naples.

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 in lieu of

it.

ruinous as the Spanish one.

The uniform system

of taxation, which,

no great consequence, takes place in

all

with a few exceptions of

the different parts of the

united kingdom of Great Britain, leaves the interior commerce of

and

the country, the inland

The

inland trade

goods

may be

is

coasting trade, almost entirely free.

almost perfectly

carried from one

and the greater part of the kingdom to the other,

free,

end of

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 intenuption to any important branch of the inland commerce of the country.

Goods carried ets. If

coastwise, indeed, require certificates or coast cock-

you except

This freedom of

coals,

however, the rest are almost

interior

the system of taxation,

is

commerce, the

effect of the

all duty-free.

uniformity of

perhaps one of the principal causes of the

prosperity of Great Britain; every great country being necessarily

the best and most extensive market for the greater part of the productions of

its

own

industry. If the

same freedom,

in consequence

chargeable on the first sale, but on every future sale of goods, I am jealous, it is one of the principal engines, that contributed to the ruin of most of our manufactures and trade. For though these duties are not charged to the places, a heavy tax is paid.” the preceding note. Uztariz’ opinion is quoted by Lord Karnes, Sketches oj the History of Man^ 1774, vol. i, p. 516. full in

some

“•'^See

Great advantage is obtained

by the uniformity of

taxation in Great Britain.

the wealth of nations

852

same uniformity, could be extended to Ireland and the plantations, both the grandeur of the state and the prosperity of every of the

part of the empire, would probably be In France the diver-

still

greater than at present.

In France, the different revenue laws which take place in the

dif-

taxes in

a multitude of revenue-officers to surround, not only the frontiers of the kingdom, but those of almost

different

each particular province, in order either to prevent the importation

sity of

provinces occasions

ferent provinces, require

of certain goods, or to subject

many

to the

hindrances to

try.

internal trade,

no small interruption of the

Some provinces

exempted from the exclusive

payment

interior

it

of certain duties,

commerce

compound

are allowed to

Others are exempted from

tax.

to the

it

of the coun-

for the gabelle or salt-

Some

altogether.

sale of tobacco,

provinces are

which the tarmers-

general enjoy through the greater part of the kingdom.

which correspond to the excise in England, are very ferent provinces.

The

aids,

different in dif-

Some provinces are exempted from them, and pay

a composition or equivalent. In those in which they take place and

many local duties which do not extend beyond

are in farm, there are

a particular town or

district.

The

Traites,

which correspond to our

customs, divide the kingdom into three great parts; inces subject to the tarif of 1664,

first,

the prov-

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

which are

called the provinces reckoned foreign,

tarif of

1667,

and under which

are comprehended the greater part of the frontier provinces; and, thirdly, those provinces

which are said to be treated as foreign, or

which, because they are allowed a free commerce with foreign countries, are in their

commerce with the other provinces

of France

subjected to the same duties as other foreign countries. These are Alsace, the three bishopricks of Metz, Toul,

three cities of Dunkirk, Bayonne, inces of the five great

and

and Verdun, and the

Marseilles.

Both

in the prov-

farms {called so on account of an ancient

division of the duties of customs into five great branches, each of

which was originally the subject of a particular farm, though they are

now

all

united into one), and in those which are said to be

reckoned foreign, there are

many

beyond a particular town or

local duties

district.

which do not extend

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 are subject to such different systems of taxation.

districts,

which

TAXES UPON CONSUMABLE COMMODITIES

^53

Over and above the general restraints arising from this complicated system of revenue laws, the commerce of wine, after corn

and the commerce in wine is

perhaps the most important production of France,

in the greater

subject to

part of the provinces subject to particular restraints, arising from

particular

the favour which has been shewn to the vineyards of particular

restraints.

provinces and

famous for

their wines,

The

this kind.

above those of others. The provinces most

districts,

which the trade

is

it

will

be found, I believe, are those in

in that article is subject to the fewest restraints of

extensive market which such provinces enjoy, en-

courages good management both in the cultivation of their vineyards, and in the subsequent preparation of their wines.

Such various and complicated revenue laws are not peculiar to The little dutchy of Milan is divided into six provinces, in

France.

each of which there

is

a different system of taxation with regard to

several different sorts of consumable goods. tories of the

duke

of

Parma

The

still

smaller terri-

are divided into three or four, each of

Milan and

Parma are

still

more absurdly

managed

same manner, a system of its own. Under such absurd management, nothing, but the great fertility of the soil and

which has,

in the

happiness of the climate, could preserve such countries from soon relapsing into the lowest state of poverty

and barbarism.

Taxes upon consumable commodities may

either

be levied by an

The

administration of which the officers are appointed

by government

lection of

col-

taxes

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 appoint his

own

officers,

rected

by

who, though obliged to levy the tax

in the

the law, are under his immediate inspection,

mediately accountable

to

levying a tax can never be

him.

The

best

manner

di-

and are im-

and most frugal way of

by farm. Over and above what

is

neces-

and administration, the farmer must always draw

sary for paying the stipulated rent, the salaries of the officers, the whole expense of

of the tax a certain profit proportioned at least

from the produce

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

re-

quires to manage so very complicated a concern. Government, by establishing an administration under their own immediate inspec-

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 tion, of the

great capital or a great credit; circumstances which would alone restrain the competition for such an undertaking to a very small

number of

people.

Of the few who have

this capital or credit,

a

still

by

govern-

ment

offi-

cers is

much superior to letting the

taxes to

farm.

THE WEALTH OF NATIONS

S54

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 together; to become co-partners smaller

and when the farm

instead of competitors,

no

offer

rent,

but what

is

is set

up

to auction, to

below the real value. In countries

much

in farm, the farmers are generally

where the public revenues are

the most opulent people. Their wealth would alone excite the public

and the vanity which almost always accompanies

indignation,

such upstart fortunes, the foolish ostentation with which they com-

monly display

The farmers

Farmers of taxes

that wealth, excites that indignation

more.

which punish any attempt to evade the payment of a

require

sanguin-

still

of the public revenue never find the laws too severe,

have no bowels

for the contributors,

ary reve-

whose universal bankruptcy,

nue laws.

farm

expired,

is

if it

would not much

est exigencies of the state,

when

exact payment of his revenue

dom

fail to

who

tax.

They

are not their subjects,

should happen the day affect their interest.

and

after their

In the great-

the anxiety of the sovereign for the

is

necessarily the greatest, they sel-

complain that without laws more rigorous than those

which actually take place, even the usual

rent.

mands cannot be

it

will

be impossible for them to pay

In those moments of public distress their de-

disputed.

The revenue laws, therefore, become The most sanguinary are always

gradually more and more severe. to

be found

enue

in countries

where the greater part of the public rev-

The

where

in farm.

is

mildest, in countries

the immediate inspection of the sovereign. feels

more compassion

for his people

from the farmers of his revenue.

it is

levied under

Even a bad sovereign

than can ever be expected

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

ers of his revenue,

own. It

whose grandeur

is

may

otherwise with the farm-

frequently be the effect of

the ruin, and not of the prosperity of his people. Taxation

by mo-

A tax is sometimes, not only farmed for a certain rent,^^^ but the farmer has, besides, the monopoly of the commodity taxed. In

nopolies let to

farm is even

France, the duties ner,

upon tobacco and

salt are levied in this

man-

In such cases the farmer, instead of one, levies two exorbitant

profits

upon the people; the

profit of the farmer,

worse.

and the

still

more

exorbitant one of the monopolist. Tobacco being a luxury, every

man

is

allowed to buy or not to buy as he chuses. But salt being a

necessary, every

quantity of ^^Ed.

I

it;

man

is

because,

if

obliged to

buy

he did not buy

reads ‘‘rent certain.”

^“Ed.

of the farmer a certain this i

quantity of the farm-

reads “the taxes.”

TAXES UPON CONSUMABLE COMMODITIES er,

he would,

it is

presumed, buy

upon both commodities are gle consequently

is

of

some smuggler. The taxes

The temptation

exorbitant.

many

to

it

people

^55

irresistible,

to

smug-

while at the same

time the rigour of the law, and the vigilance of the farmer’s officers, render the 3delding to that temptation almost certainly ruinous.

The smuggling

of salt

dred people to the

and tobacco sends every year several hun-

gallies, 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 fortyone thousand two hundred and seventy-eight livres a year. That of salt, for thirty-six millions four hundred and ninety-two thou-

sand four hundred and four

commence

in 1768,

and to

livres.

The farm

last for six years.

in

both cases was to

Those who consider

the blood of the people as nothing in comparison with the revenue of the prince,

may perhaps approve of this method

of levying taxes.

Similar taxes and monopolies of salt and tobacco have been established in

many other

countries; particularly in the Austrian

and

Prussian dominions, and in the greater part of the states of Italy.

In France, the greater part of the actual revenue of the crown derived from eight different sources; the

two vingtiemes, the

the capitation, the

gabelles, the aides, the traites, the

domaine,

The five last are, in the greater part of the under farm. The three first are every where levied by an

and the farm provinces,

taille,

is

of tobacco.

administration under the immediate inspection and direction of

government, and to

universally acknowledged that, in proportion

it is

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 ad-

ministration

The

is

In France the three branches of reve-

nue which are levied

by government officers

are

much

more economical.

much more wasteful and expensive.

finances of France seem, in their present state, to admit of

by abolishing the taille and the capitation, and by encreasing the number of vingtiemes, so as to produce an additional revenue equal to the amount of those

three very obvious reformations. First,

The taille and capitations

should be abolished,

other taxes, the revenue of the crown might be preserved; the ex-

the vingtiemes in-

pence of collection might be much diminished; the vexation of the

creased,

inferior ranks of people,

which the

taille

and capitation occasion,

might be entirely prevented; and the superior ranks might not be

more burdened than

the greater part of

vingtieme, I have already observed,

same kind with what

is

them are

is

at present.

The

a tax very nearly of the

called the land-tax of England.

The burden

upon the proprietors of the taille, it is acknowledged, of land; and as the greater part of the capitation is assessed upon falls finally

^ Above, p. 809.

the taxes

on commodities

made uni^ form, and farming aboUshed

the wealth of nations

ss6

those

who

are subject to the taille at so

tax, the final

payment

upon the same

of that other

it must number

of the ving*

of the greater part of

Though

order of people.

was increased so

tiemes, therefore,

much a pound the

as to produce

likewise

fall

an additional rev-

enue equal to the amount of both those taxes, the superior ranks of people might not be more burdened than they are at present. Many

on account of the great inequalities with which the taille is commonly assessed upon the estates and tenants of different individuals. The interest and opposition of individuals no doubt would,

such favoured subjects are the obstacles most likely to prevent this or

any other reformation

of the

same kind. Secondly, by rendering

the gabelle, the aides, the traites,^^^ the taxes upon tobacco,

and

different customs

excises,

uniform

interior

commerce

of the

free as that of England. Thirdly,

the

in all the different parts

of the kingdom, those taxes might be levied at

and the

all

much

less expence,

kingdom might be rendered as

and

lastly,

by subjecting

all

those

taxes to an administration under the immediate inspection and

di-

rection of government, the exorbitant profits of the farmers general

might be added to the revenue of the

from the private

state.

The

opposition arising

interest of individuals, is likely to

for preventing the

two

last

be as effectual

as the first mentioned

scheme

of

reformation.

The French system

The French system is in every

respect inferior

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

possible to say that collections of the

any particular order

Abbe

Expilly,^^^

is

oppressed.

and the observations

its

being

From

the

of the au-

to the British.

thor 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

The

soil

France are better than those of Great Brit-

ain.

The country has been much

^ Ed.

and climate

I

of

in Great Britain.

longer in a state of improvement

does not contain “the traites.”

These estimates seem to have been quoted in England at the time, since the Continuation of Anderson’s Commerce, under the year 1773, mentions “the calculations of the Abbe D’Expilly published about this time in Paris,” which gave 8,661,381 births and 6,664,161 deaths as the number taking place in the nine years, 1754 to 1763, in France, inclusive of Lorraine and Bar. In his Dictionnaire giographique, historique et politique des Gaules et de

France, tom. v. (1768), sv. Population, Expilly estimated the population at 22,014,337. See Levasseur, La Population Jrangaise, tom. i., 1889, PPt- 215 la

and 216 note '^Sur la Ugislation

et le commerce des grains (by Necker), 1775, ch viii, estimates the population at 24,181,333 by the method of multiplying the

deaths by 31.

TAXES UPON CONSUMABLE COMMODITIES and

cultivation,

and

those things which late,

is,

it

^57

upon that account, better stocked with

requires a long time to raise

all

up and accumu-

such as great towns, and convenient and well-built houses,

both in town and country. With these advantages, it might be expected that in France a revenue of thirty millions might be levied for the support of the state, with as little inconveniency as

enue of ten millions

whole revenue paid

is

in Great Britain.

In 1765 and 1766, the

into the treasury of France, according to the

best, though, I acknowledge, very imperfect, accounts

could get of that

is, it

it,

a rev-

which

I

usually run between 308 and 325 millions of livres;

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 Brit-

ain. 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

after that of Great Britain, enjoys the mildest

Europe which,

and most indulgent

government.

In Holland the heavy taxes upon the necessaries of ruined,

it is

said, their principal

manufactures,

life

and are

have

likely to

discourage gradually even their fisheries and their trade in shipbuilding.

The

taxes

in Great Britain,

upon the necessaries of

and no

life

are inconsiderable

manufacture has hitherto been ruined

by

them. The British taxes which bear hardest on manufactures are

some duties upon the importation of raw materials, particularly upon that of raw silk. The revenue of the states general and of the different cities, however, is said to amount to more than five millions two hundred and fifty thousand pounds sterling; and as the

In Holland

heavy on

taxes

necessaries

have ruined

manufactures.

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 After

all

much more

heavily taxed.

the proper subjects of taxation have been exhausted,

the exigencies of the state

still

continue to require

new

if

taxes, they

must be imposed upon improper onesP^ The taxes upon the necessaries of life, therefore, may be no impeachment of the wisdom of that republic, which, in order to acquire

pendency, has, in spite of

its

to maintain

its

inde-

great frugality, been involved in such

expensive wars as have obliged gular countries of Holland

and

it

to contract great debts.

The

sin-

and Zealand, besides, require a consider-

able expence even to preserve their existence, or to prevent their being swallowed up by the sea, which must have contributed to increase considerably the load of taxes in those

Above, pp. 826, 827.

^ Below, p.

881.

two provinces. The

But perhaps Holland has done the best possible.

the wealth OF NATIONS

858

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 share, or

some

some

direct

indirect influence, in the administration of that gov-

ernment. For the sake of the respect and authority which they derive from this situation, they are willing to live in a country where their capital,

if

they employ

it

themselves, will bring

them

less pro-

fit, 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 conveniencies 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 com-

merce and the improvement of manufactures, when those expen-

When

ex-

pensive luxuries

which commerce and manufactures can alone

sive luxuries

duce, are altogether unknown, the person

revenue, I have endeavoured to

show

enue

may

at

many

people as

it

quantity of the necessaries of

commonly paid

in

life.

book

large

of this In-

no other way than by

can maintain.

times be said to consist in the

all

a

possesses

in the third

quiry,^ can spend or enjoy that revenue in

maintaining nearly as

who

intro-

A large rev-

command

In that rude

of

a large

state of things

it is

a large quantity of those necessaries, in the ma-

terials of plain

food and coarse clothing, in corn and cattle, in wool

and raw

When

hides.

any thing

for

neither

commerce nor manufactures furnish

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 people as

it will

feed and clothe.

A hospitality in which

luxury, and a liberality in which there

is

But

these, I

is

no

no ostentation, occasion,

in this situation of things, the principal expences of the rich great.

many

there

and the

have likewise endeavoured to show in the same

book, 2 are expences 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 lux-

ury and the

liberality of ostentation

have ruined many. Among our

feudal ancestors, the long time during which estates used to continue in the

same family,

sufficiently

demonstrates the general dis-

position of people to live within their income. hospitality, constantly exercised

^

by ®

Above, pp. 38s, 386, 859

Though

the rustic

the great land-holders,

Above, p. 391

may

are un-

known, persons

with large revenue are likely to hoard

savings

THE WEALTH OF NATIONS

86o

not, to us in the present time#,

which we are apt

seem consistent with that

to consider as inseparably

(economy, yet we must certainly allow them

commonly

so far frugal as not

order,

connected with good to

have been at

least

to have spent their whole income.

A

part of their wool and raw hides they had generally an opportunity of selling for

money. Some part of

this

money, perhaps, they spent

few objects of vanity and luxury, with which the circumstances of the times could furnish them; but some part of it

in purchasing the

they seem commonly to have hoarded. They could not well indeed

do an3d;hing

else

but hoard whatever money they saved. To trade

disgraceful to a gentleman, and to lend money at interest, which at that time was considered as usury and prohibited by law, would have been still more so. In those times of violence and dis-

was

order, besides,

it

was convenient

to

have a hoard of money at hand,

own home, they might

that in case they should be driven from their

have something

of

known value

to carry with

which made

them to some place

safety.

The same

made

equally convenient to conceal the hoard.

it

violence,

it

of

convenient to 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.*"^ kingdom would scarce perhaps in the

All the treasure-trove of the

present times

make an important branch

of the revenue of a pri-

vate gentleman of a good estate. So the ancient

The same disposition to save and to hoard prevailed in the eign, as well as in the subjects.

sover-

Among nations

eigns of

and manufactures are

Europe amassed

been observed in the fourth book,^

treasures.

disposes

little

to

whom commerce

known, the sovereign,

him to the parsimony

is

in a situation

situation the expence even of a sovereign cannot

sists.

it

has already

which naturally

requisite for accumulation. In that

be directed by that

vanity which delights in the gaudy finery of a court. of the times affords

sover-

but few of the trinkets

in

The ignorance

which that finery con-

Standing armies are not then necessary, so that the expence

even of a sovereign, like that of any other great lord, can be employed 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 ancient sovereigns of

served,

had

Europe accordingly,

treasures.

Every Tartar

it

has already been ob-

chief in the present times

said to have one.

®Cp. pp. 268, 269. " Repeated verbatim from p. 414.

^

Above,

p. 414.

is

PUBLIC DEBTS In a commercial country abounding with every sort of expensive

same manner as almost

luxury, the sovereign, in the

the great

all

a great part of his His own and the neighbour-

When luxuries

are intro-

proprietors in his dominions, naturally spends

duced, the

revenue in purchasing those luxuries.

sover-

him abundantly with

ing countries supply

eign’s ex-

the costly trinkets

penditure

which compose the splendid, but insignificant pageantry of a court.

equals his

For the sake of an

inferior

all

pageantry of the same kind, his nobles

revenue in time of

dismiss their retainers,

make

come gradually themselves

to do, spend

The same

their conduct, influence his.

man

that he should be the only rich sible to pleasures of this

it

which

How can it be supposed dominions

in his

kind? If he does not, what he

much

the defensive

power

is

over and above what

is

who is

is

insen-

very likely

his revenue as

of the state,

upon them

well be expected that he should not spend

of

frivolous passions,

upon those pleasures so great a part of

to debilitate very

peace,

as insignificant as the greater part of

the wealthy burghers in his dominions.

which influence

and be-

their tenants independent,

all

it

cannot

that part

necessary for supporting that

defensive power. His ordinary expence becomes equal to his ordi-

nary revenue, and

it is

well

if it

does not frequently exceed

it.

The

amassing of treasure can no longer be expected, and when extraordinary exigencies require extraordinary expences, he must necessarily call

and the

upon

his subjects for

an extraordinary

The

late king of Prussia are the only great princes of

who, since the death of Henry IV. of France to

aid.

have amassed any considerable

leads to accumulation has

treasure.®

present

Europe,

i6io, are supposed

in

The parsimony which

become almost as rare

in

republican as in

monarchical governments. The Italian republics, the United Provinces of the Netherlands, are single republic in ure.^

The

all

in debt.

The canton The

other Swiss republics have not.

of pageantry, for splendid buildings, at least,

ments, frequently prevails as

house of a

of

Berne

Europe which has amassed any considerable

little republic,

much

in the

taste for

is

the

treas-

some

sort

and other public orna-

apparently sober senate-

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. in the treasury

but what

is

When war

comes, there

is

no money

necessary for carrying on the ordinary

expence of the peace establishment. In war an establishment of three or four times that expence 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 ”

Above,

p. 410.

has, the immediate

means

’Above,

of

p. 772.

augmenting

his

and in time of

war he contracts debts.

THE WEALTH OE NATIONS

862

revenue in proportion to the augmentation of his expence, yet

still

the produce of the taxes, from which this increase of revenue must

be drawn, will not begin to come into the treasury

months

or twelve

after they are imposed.

war begins, or rather the moment gin, the

army must be augmented,

perhaps ten

But the moment in which

which

in

till

appears likely to be-

it

the fleet must be fitted out, the

garrisoned towns must be put into a posture of defence; that army, that

amexpence must be

those garrisoned towns must be furnished with arms,

fleet,

munition, and provisions. incurred in that

moment

An immediate and great

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 causes

The same commercial

moral causes, brings government

in this

which

make bor-

of borrowing, produces in the subjects

rowing

clination to lend. If

necessary

make it possible

Mer-

of borrowing,

it

it

by the operation of manner into the necessity

state of society which,

commonly

both an ability and an

brings along with ®

likewise brings along

with

it

the necessity

the facility of doing

it

so.

A

country abounding with merchants and manufacturers, neces-

chants

sarily

and manufac-

their

turers are

money, or trust them with goods, pass as frequently, or more

able to

in-

abounds with a

own

capitals,

set of people

through whose hands not only

but the capitals of

all

quently, than the revenue of a private

those

who either lend them fre-

man, who, without trade or

lend,

The

business, lives

upon

his income, passes through his hands.

enue of such a

man

can regularly pass through his hands only once

But the whole amount of the

in a year.

chant,

may

who

deals in a trade of

and

credit of a

mer-

which the returns are very quick,

sometimes pass through his hands two, three, or four times in

a year.

A

country abounding with merchants and manufacturers,

therefore, necessarily all

capital

rev-

abounds with a

times in their power to advance,

set of people

if

who have

they chuse to do

so,

it

at

a very

sum of money to government. Hence the ability in the subjects

large

of a commercial state to lend.

and also wilKng.

Commerce and manufactures can seldom which the people do not their property, in

law,

flourish long in

which does not enjoy a regular administration of

state

and

in

regularly

those

who

feel

themselves secure in the possession of

which the faith of contracts

which the authority of the state

employed

is

is

by

payment of debts from all Commerce and manufactures, in short,

can seldom flourish in any state in which there

is

gree of confidence in the justice of government.

Ed

not supported

not supposed to be

in enforcing the

are able to pay.

®

any

justice, in

5 omits “along,” doubtless

not a certain de-

The same

by a misprint

confi-

PUBLIC DEBTS

^^3

dence which disposes great merchants and manufacturers, upon ordinary occasions, to trust their property to the protection of a particular

government; disposes them, upon extraordinary occasions,

to trust that

money

government with the use of

on

their ability to carry trary,

their property.

to government, they do not even for a

der government

and manufactures.

their trade

they commonly augment

The

it.

upon most occasions

to the original creditor,

made

is

On

the con-

necessities of the state ren-

willing to

extremely advantageous to the lender.

By lending

moment diminish

The

borrow upon terms

security which

transferable to

any other

it

grants

creditor,

and, from, the universal confidence in the justice of the state, generally sells in the

market for more than was originally paid

The merchant

monied

or

man makes money by

lending

for

it.

money

to

government, and instead of diminishing, increases his trading capital.

He

generally considers

him

ministration admits

new

loan.

Hence the

as

it

a favour,

therefore,

when

the ad-

to a share in the first subscription for a

inclination or willingness in the subjects of a

commercial state to lend.

The government this ability

a

of such

and willingness

state is

very apt to repose

of its subjects to lend

it

itself

their

upon

money on

A government

dis-

penses it-

extraordinary occasions. It foresees the facility of borrowing, and

self

therefore dispenses itself from the duty of saving.

saving

In a rude state of society there are no great mercantile or manu-

The individuals, who hoard whatever money they can save, and who conceal their hoard, do so from a distrust of the justice of government, from a fear that if it was known that they

facturing capitals.

had a hoard, and where that hoard was

to be found, they

would

it

from if

knows

can borrow,

it

whereas if there is no possibility

of bor-

quickly be plundered. In such a state of things few people would be able,

and no body would be

ment on extraordinary

willing, to lend their

exigencies.

The

money

to govern-

sovereign feels that he must

rowing,

it

feels it

must save.

provide for such exigencies

by

saving, because he foresees the abso-

lute impossibility of borrowing.

This foresight increases

still

fur-

ther his natural disposition to save.

The progress

of the

will in the long-run

enormous debts which at present oppress, and

probably ruin,

all

the great nations of Europe,

has been pretty uniform. Nations, like private men, have generally

begun to borrow upon what may be called personal

credit,

without

Nations

have begun to borrow without special

assigning or mortgaging

debt; and

when

any particular fund

this resource

for the

payment

of the

has failed them, they have gone on to

is

called the

unfunded debt of Great Britain,

in the former of those

bears, or

is

two ways.

supposed to bear, no

is

wards

contracted

It consists partly in a debt interest,

and have after-

borrow upon assignments or mortgages of particular funds.

What

security

which

and which resembles the

mortgaged particular

funds.

THE WEALTH OF NATIONS

S64

man

The unfunded debt of Great

debts that a private

Britain

either for extraordinary services, or for services either not provided

is

debt which bears interest,

the

first

way.

upon

contracts

contracted in

upon account; and partly in a and which resembles what a private man

contracts

for, or

his bill or promissory note.

not paid at the time

when they

The

debts which are due

are performed; part of the

extraordinaries of the army, navy,

and ordnance, the arrears

sidies to foreign princes, tiose of

seamen’s wages, &c. usually con-

stitute

a debt of the

kind.

first

are issued sometimes in

Navy and Exchequer

payment

a part

of

of sub-

which

bills,

of such debts

and some-

times for other purposes, constitute a debt of the second kind; Ex-

chequer

bills

and navy

bearing interest from the day on which they are issued,

bills six

months

after they are issued.

value, or

by by agreeing with government

circulate

Exchequer

The bank

of

Eng-

voluntarily discounting those bills at their current

land, either

that

bills,

for certain considerations to

to receive

is,

them at par, paying

upon them, keeps up

the interest which happens to be due

their

value and facilitates their circulation, and thereby frequently enables

government to contract a very large debt of

France, where there

no bank, the state

is

In

this kind.

(billets d’etat

bills

have sometimes sold at sixty and seventy per cent, discount. During the great re-coinage in

King William’s

England thought proper to put a stop to chequer

bills

and

tallies are said to

owing

sixty per cent, discount; instability of the

its

when

bank

the

of

usual transactions, Ex-

have sold from twenty-five to

no doubt, to the supposed

partly,

new government

time,

established

by the Revolution,

but partly too to the want of the support of the bank of England.

TOen

Mortgages of particular

branches

this resource* is exhausted,

the public revenue for the

of reve-

on

nue are

has made

either for

a term of

and

it

der to raise money, to assign or mortgage

different occasions this

payment

done

this in

becomes necessary, in

of the debt,

two

Sometimes

only, a year, or

a few

years, for example;

and sometimes

was supposed

for per-

when money is

within the limited time, both principal and interest of the

by

borrowed. In the other, est only, or

it

assignment or mortgage for a short period of time

petuity. In the one case, the fund

said to be

of

government has up-

different ways.

years,

raised

or-

some particular branch

it

was supposed

sufficient to

sufficient to

a perpetual annuity equivalent to the

money

pay the

interest,

pay,

inter-

govern-

®See Examen des Reflexions politiques sur les Finances. P. J. Duverney, Examen du Uvre intitide Reflexions politiques sur les finances et le com-

merce (by

Du

Tot), tom.

i.,

p. 225.

James Postlethwayt, History of the Public Revenue, 1759, PP i5 mentions discounts of 25 and 55 per cent. The discount varied with the priority of the tallies and did not measure the national credit in general, but the probability of particular taxes bringing in enough to pay the amounts charged upon them. See also above, p. 302. j

PUBLIC DEBTS any time

merit being at liberty to redeem at ing back the principal

the one way, other,

it

865

upon pay-

this annuity,

sum borrowed. When money was raised in to be raised by anticipation; when in the

was said

by perpetual funding,

or,

more

shortly,

by funding.

In Great Britain the annual land and malt taxes are regularly anticipated every year, inserted into the acts erally

by

a borrowing clause constantly which impose them. The bank of England genvirtue of

advances at an interest, which since the Revolution has varied cent, the sums for which those taxes are payment as their produce gradually comes in.

from eight to three per granted,

and

If there is

a

receives

deficiency,

which there always

the supplies of the ensuing year.

The only

the public revenue which yet remains ly spent before

comes

it

whose pressing occasions

payment

in.

provided for in

is, it is

considerable branch of

unmortgaged

is

him

perpetuity,

when

it is

said

to

be

raised

by

funding.

The annual land and malt taxes are always anticipated.

thus regular-

Like an improvident

will not allow

anticipation, or in

spendthrift,

to wait for the regular

of his revenue, the state is in the constant practice of bor-

rowing of the use of

its its

own factors and own money.

and

agents,

of paying interest for

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

were imposed but

for

a short period of time

new

III.

taxes

(for four, five, six, or

seven years only), and a great part of the grants of every year con-

upon

sisted in loans

Under William

anticipations of the produce of those taxes.

The

and

Anne anticipa-

tions gave rise to

de-

ficiencies,

produce being frequently insufficient for paying within the limited

term the principal and interest of the money borrowed, deficiencies arose, to mal^e

good which

became necessary

it

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 gust, 1706, of several different taxes,

first of

Au-

which would have expired

within a shorter term, and of which the produce was accumulated

and the term of the mortgage taxes was prolonged in 1697,

Into one general fund.

The deficiencies charged upon

Term amounted to S;i6o,459/.

145.

In 1701, those duties, with some others, were longed for the like purposes called the second general

charged upon

it

amounted

till

In 1707, those duties were

new

the

first

2,055,999^ still

still

further pro-

of August, 1710,

mortgage or to

this prolonged

fund.’’® 7^.

The

deficiencies

ii\d.

further prolonged, as

loans, to the first of August, 1712,

in 1701,

and were

and were

a fund

for

called the third

^^Ed. I reads “unprovident/’ as do all editions below, p. 867. Postlelhwayt, op. cit., p. 38. Ed. 5 misprints “9§d.” “ Postlethwayt, op. p. 40.

in 1707,

THE WEALTH OF NATIONS

866

general mortgage or fund.

The sum borrowed upon

it

was 983,254/.

us. g^d. in 1708,

In 1708, those duties were all (except the old subsidy of tonnage of which one moiety only was made a part of this

and poundage,

of Scotch linen,

and a duty upon the importation

fund,

by new loans,

been taken fund for

the articles of union)

off

still

to the first of August, 1714,

fourth general mortgage or fund.^^

which had

further continued, as a

and were

called the

The sum borrowed upon

it

was

925,176/. 9^. in 1709,

In 1709, those duties were

all

(except the old subsidy of tonnage

and poundage, which was now left out of further continued for the

and were called the rowed upon

it

was

fifth

1710.

still

general mortgage or fund.^^

The sum bor-

922,029/. 6^. od.

sum borrowed upon In 1711 the taxes

were continued for

ever and

made into

it

1,296,552/. gs. iifrf.

to four different anticipations), together with several others, were

continued for ever, and capital of the

made a fund

for

paying the interest of the

South Sea company, which had that year advanced

to government, for paying debts

sum

the inter-

had ever been made.

i9,-

was

In 1711, the same duties (which at this time were thus subject

a fund for paying

on

fund altogether)

In 1710, those duties were again prolonged to the first of August, 1720, and were called the sixth general mortgage or fund.^^ The

and in

est

this

to the first of August, 1716

same purpose

of 9,177,967/. 1 5^. 4^.;

and making good

deficiencies, the

the greatest loan which at that time

Before this period, the principal, so far as I have been able to

177,968.

observe, the only taxes which in order to

The only

had been imposed

for perpetuity,

pay the

interest of

were those for paying the

a debt

interest

earlier

money which had been advanced to government by the Bank

taxes im-

of the

posed in perpetu-

and East India Company, and of what

ity to

pay

it

was expected would be

advanced, ‘but which was never advanced, by a projected land

interest

bank. The bank fund at this time amounted to 3,375,027/. 175.

on debt were

lo^d. for which

those for

paying interest

on the advances of the

5^.^^

was paid an annuity or

The East India fund amounted

to 3,200,000/. for

paid an annuity or interest of 160,000/.; six

interest of 206,501/. 13^.

which was

the bank fund being at

per cent.,^^ the East India fund at five per cent, interest.

In 1715, by the first of George I. c. 12. the different taxes which had been mortgaged for paying the bank annuity, together with sev^Ibid., pp. 63, 64. ^Ibid.f p. 311. ^^Ibid., pp. 301-303, and see above, p. 303. ^Ibid.y pp. 319, 320. p. 59.

^"^Ibid., p. 68.

^'^Ibid.^ p. 71.

®^The odd £4,000 of the £206,501 13s. sd. was for expenses of management. See above, p. 303.

PUBLIC DEBTS eral others

which by

this act

accumulated into one

867

were likewise rendered perpetual, were

common fund

The Aggregate Fund,

called

which was charged, not only with the pa5nnents nuity, but with several other annuities

kinds. This fund

bank andifferent

was afterwards augmented by the

and by the

1. c. 8.

of the

and burdens of

fifth of

which were then added to

George

it

L

c. 3.

third of George

and the

different duties

I. c. 7.^^ several

other taxes were

rendered perpetual, and accumulated into another called

The General Fund,

fund,

for the pa5mient of certain annuities,

amounting in the whole to 724,849^. In consequence of those different taxes which before

common

io|d.

6s.

Company. In 1715 several

taxes were

accumu-

were likewise rendered perpetual.^^

In 1717, by the third of George

Bank and East India

lated into

the

Ag-

gregate

Fund,

and in

acts, the greater part of the

had been anticipated only

for

a short term

of

1717 several

others

years, tal,

were rendered perpetual as a fund for paying, not the capi-

but the interest only, of the

upon them by

money which had been borrowed

never been raised but

by

General

Fund,

different successive anticipations.

Had money

into the

anticipation, the course of

a few 3/ears would have liberated the public revenue, without

any

other attention of government besides that of not overloading the

Thus most of the anticipated

fund by charging limited term,

and

it

with more debt than

could pay within the

it

a second time before the exBut the greater part of European

of not anticipating

piration of the first anticipation.

governments have been incapable of those attentions. They have frequently overloaded the fund even

and when

this

upon the

happened not to be the

case,

first

anticipation;

they have generally

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 taken care to overload

charge

it

interest,

to the

it,

with the interest only, or a perpetual annuity equal to the

and such unprovident

more ruinous practice

anticipations necessarily gave birth

of perpetual funding.

a fixed period to one so indefinite that

But though

this

it is

not very likely ever to

a greater sum can in all cases be raised by this new by the old one of anticipations, the former, when men have once become familiar with it, has in the great exigencies of the arrive; yet as

practice than

been universally preferred to the

exigency

“^Ed.

1

is

latter.

To

relieve the present

always the object which principally interests those im-

reads “payment,” perhaps correctly,

^ Postlethwayt, History

were

made into a fund for paying interest

only.

When once be-

come

fa-

miliar,

perpetual

funding

is

preferred

practice necessarily puts off the liberation of the public revenue from

state

taxes

of the Public Revenue, p. 305

®*This Act belongs to 1716, not 1717.

to antici-

pation.

the wealth OF NATIONS

868

mediately concerned in the administration of public

affairs.

The

future liberation of the public revenue, they leave to the care of posterity.

A fall in the miarket rate of interest

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 lawSoon be taken for money borrowed upon private security temporary taxes of Great Britain had

led to a

fully

saving,

after the greater part of the

which gave rise

been rendered perpetual, and distributed into the Aggregate, South

to the

Sea,

Sinking

private persons, were induced to accept of five per cent, for the in-

Fund.

and General Funds, the

terest of their

upon the

creditors of the public, like those of

money,^® which occasioned a saving of one per cent,

capital of the greater part of the debts

which had been

thus funded for perpetuity, or of one-sixth of the greater part of the annuities which were paid out of the three great funds above

mentioned. This saving

left

the different taxes which

a considerable surplus in the produce of

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

323,-

7^,^^ In 1727, the interest of the greater part of the and in public debts was still further reduced to four per cent.; 434^. 75.

and 1757, to three and a half and three per still further augmented the sinking fund.

1733

cent.;

which

reductions

A sinking fund

faci-

litates

the

contraction of

new debt.

A

payment

of old, facili-

debts. It is

a subsidiary

sinking fund, though instituted for the

tates very

much

the contracting of

new

fund always at hand to be mortgaged in aid of any other doubtful fund,

upon which money

of the state.

is

proposed to be raised in any exigency

Whether the sinking fund

of Great Britain has been

more frequently applied to the one or to the other poses, will sufficiently appear

Money is also bor-

rowed by terminable life

and

an-

by and

of those

two pur-

by.

Besides those two methods of borrowing,

by

anticipations

and by

perpetual funding, there are two other methods, which hold a sort of middle place between them.

are, that of

annuities for terms of years,

of borrowing

These and that

borrowing upon

upon

annuities

for lives.

nuities.

Under William III.

and

During the reigns of king William and queen Anne, large sums were frequently borrowed upon annuities for terms of years, which

were sometimes longer and sometimes shorter. In 1693, ® Above, pp

2,ct

was

88, 89.

“In

1717, under the provisions of 3 Geo. of the Public Revenue, pp. 120, 145.

Anderson, Commerce,

“This should be

I.,

a.d. 1717.

1750. Anderson,

c. 7.

Postlethwayt, History a.d. 1727.

Commerce^

a.d. 1749.

PUBLIC DEBTS passed for borrowing one million upon an annuity of fourteen per

a year, for sixteen years. In 1691, an act was passed for borrowing a million upon annuities for lives, upon cent.,^^ or of 140,000^.

terms which in the present times would appear very advantageous.

But the subscription was not

Anne large

sums were borrowed on annuities

filled

up. In the following year

the

was made good by borrowing upon annuities for lives at little more than seven years purchase. In the persons who had purchased those annuities were allowed 169s, to exchange them for others of ninety-six years, upon pa3H[ng into deficiency

for

terms of years.

fourteen per cent., or at

the Exchequer sixty-three pounds in the hundred; that ference between fourteen per cent, for

was sold

for ninety-six years,

life,

is,

the dif-

and fourteen per

cent,

for sixty-three pounds, or for four

and

a half years purchase. Such was the supposed instability of govern-

ment, that even these terms procured few purchasers. In the reign of

queen Anne, money was upon

upon annuities

for lives,

different occasions

and upon

of eighty-nine, of ninety-eight,

borrowed both

annuities for terms of thirty-two,

and of ninety-nine

years. In 1719,

the proprietors of the annuities for thirty-two years were induced to accept in lieu of

them South Sea stock to the amount

and a half years purchase of the

annuities, together with

tional quantity of stock equal to the arrears to

of eleven

an addi-

which happened then

be due upon them.^^ In 1720, the greater part of the other anand short were subscribed into

nuities for terms of years both long

the same fund. 82 iZ. 8 j.

The long

3^. a

year.^^

annuities at that time

On

amounted

to 666,-

the 5th of January, 1775, the remain-

der of them, or what was not subscribed at that time, amounted

only to 136,453?. 12^. 8^.

During the two wars which begun

1739 and in 1755, little money was borrowed either upon annuities for terms of years, or

upon those

for lives.

years, however,

is

An

in

annuity for ninety-eight or ninety-nine

worth nearly as much money as a perpetuity, and

But little

money was so borrowed in the

wars of

should, therefore, one might think, be a fund for borrowing nearly

as much.

But those who,

in order to

to provide for remote futurity,

buy

make

family settlements, and

into the public stocks,

would

the

middle of the eighteenth

not care to purchase into one of which the value was continually

and such people make a very considerable proportion the proprietors and purchasers of stock. An annuity for a

diminishing;

both of

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

who mean

of purchasers.

generally to

sell their

5 and 6 W. and M., c. 7. Anderson, Commerce, a.d. 1719.

The

subscribers to a

new

W. and M.,

c. 3.

^Ibid., a.d. 1720.

people preferring

a perpetual annuity,

loan,

subscription as soon as possible, 4

century,

most

the wealth of nations

S70

prefer greatly a perpetual annuity redeemable

by parliament,

to

an

irredeemable annuity for a long term of years of only equal amount.

The

value of the former

nearly the same; and

and annuities for

it

than the

ferable stock

During the two

may be supposed

always the same, or very

makes, therefore, a more conyenient trans-

latter.

last

mentioned wars, annuities, either

terms and

a new upon the

for terms

premiums to the

of years or for lives, were seldom granted but as

and above the redeemable annuity

for lives

subscribers to

loan, over

were only

or interest

credit of

given as

made. They were granted, not as the proper fund upon which the

pre-

miums.

which the loan was supposed to be

money was borrowed; but as an

additional encouragement to the

lender. Tontines are preferred to

Annuities for lives have occasionally been granted in two dif-

upon separate

ferent ways; either

lives,

or

upon

from the name of

annuities

in French are called Tontines,

on separ-

When annuities are granted upon separate lives,

ate lives,

though they do not liber-

which

lots of lives,

their inventor.

the death of every

individual annuitant disburthens the public revenue so far as affected

by

his annuity.

When

annuities are granted

the liberation of the public revenue does not

upon

it

commence

public

revenue so quick-

the annuitants comprehended in one

all

sometimes consist of twenty or thirty persons, of vivors succeed to the annuities of all those

who

lot,

which

whom

the

till

ate the

death of

was

tontines,

may

the sur-

die before them;

ly.

the last survivor succeeding to the annuities of the whole

more money can always be

the same revenue

than by annuities for separate lives. vivorship,

is

really

raised

lot.

by

Upon

tontines

An annuity, with a right

of sur-

worth more than an equal annuity for a sepa-

and from the confidence which every man naturally has 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 govrate

life,

in his

own good

ernment to this

money by

raise

granting annuities, tontines are upon

account generally preferred to annuities for separate

expedient which will raise most money, to that In France a

much

greater

propor-

which

is

likely to bring

is

In France, a

much greater proportion

in annuities for lives

sented

of the public debts consists

than in England. According to a memoir pre-

by the parliament

of

Bourdeaux to the king

in 1764, the estimated at twenty-four hundred

whole public debt of France

debt

millions of livres; of which the capital for

is

in

land,

almost always preferred

about in the speediest manner the

the whole

annuities than in Eng-

The

liberation of the public revenue.

tion of

life

lives.

had been granted,

is

is

the eighth part of the whole public debt. are

which annuities

for lives

supposed to amount to three hundred millions,

The

annuities themselves

computed to amount to thirty millions a year, the fourth part

PUBLIC DEBTS of one

hundred and twenty

871

supposed interest of that

millions, the

whole debt. These estimations, I know very

well, are not exact,

but

having been presented by so very respectable a body as approximations to the truth, they

may, I apprehend, be considered as such.

It

not the different degrees of anxiety in the two governments of

is

France and England for the liberation of the public revenue, which occasions this difference in their respective arises altogether

from the

modes of borrowing. and

different views

It

interests of the

lenders.

In England, the seat of government being cantile city in the world, the

in the greatest

mer-

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 mercanand unless they expected

tile capitals;

share in the subscription for a scribe.

But

if

by advancing

thedffer-

their

to sell with

some

fact that in

Eng-

profit their

new loan, they never would submoney they were to purchase, in-

are merchants,

stead of perpetual annuities, annuities for lives only, whether their

own sell

them with a

always the

sell

life

his

with

profit. loss;

of another,

same with on

would not always be so

or those of other people, they

because no

An

own

man will give

whose age and

his own, the

own.

Annuities upon their

life

value begins to diminish from the tinues to

of

an annuity upon

for

so convenient

for

one up-

a third person, indeed,

moment

do so more and more as long as

make

would

state of health are nearly the

no doubt, of equal value to the buyer and the

therefore,

lives they

same price which he would give

annuity upon the

likely to

it

it is

seller;

but

granted,

subsists. It

is,

its real

and con-

can never,

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 concerned

finances, the farmers general, the receivers of the taxes

in the

which are

whereas France

person^ engaged

not in farm, the court bankers, &c. make the greater part of those

who advanced their money in all public exigencies. 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,

own, nor much regard

and having neither any

for those of their relations,

families of their

whom

they are

not always very fond of acknowledging, they desire only to live in splendour during their

own

time,

and are not unwilling that

fortune should end with themselves.

The number

their

of rich people, be-

lection of

chiefly

bachelors,

the wealth of nations

S72 sides,

ders

who are either either

it

averse to marry, or whose condition of

improper or inconvenient for them to do

greater in France than in England.

no care

or

To such

for posterity, nothing can

funding prevents the people

enue,

to last just as long,®^

of the greater part of

modern governments

burden of

it

to do.

when war comes, they

are both unwilling and unable to in-

crease their revenue in proportion to the increase of their expence.

They

from feeling distinctly the

little

peace being equal or nearly equal to their ordinary rev-

in time of

perpetual

much

is

and no longer than they wish The system of

so, is

who have

be more convenient than to

exchange their capital for a revenue, which

The ordinary expence

people,

ren-

life

great

are unwilling, for fear of offending the people,

and

so sudden

an increase of

taxes,

who by

so

would soon be disgusted

with the war; and they are unable, from not well knowing what

The

taxes would be sufficient to produce the revenue wanted.

facil-

war. ity

of borrowing delivers them from the embarrassment which

and

fear

inability

would otherwise occasion.

By means

this

of borrow-

ing they are enabled, with a very moderate increase of taxes, to raise,

from year to year, money

and by the

on the war,

sufficient for carrying

practice of perpetual funding they are enabled, with the

smallest possible increase of taxes, to raise annually the largest pos-

sum

sible

capital,

many

of

and

money. In great empires the people who

in the provinces

live in the

remote from the scene of action,

feel,

at their ease,

any inconveniency from the war; but enjoy, the amusement of reading in the newspapers the ex-

ploits of their

own

of them, scarce

fleets

and armies. To them

this

amusement compay on

pensates the small difference between the taxes which they

account of the war, and those which they had been accustomed to

pay

in

time of peace.

They

are

commonly

dissatisfied

with the

re-

turn of peace, which puts an end to their amusement, and to a thou-

sand visionary hopes of conquest and national glory, from a longer continuance of the war. Their burdens are not reduced

The return

of peace, indeed, seldom relieves

er part of the taxes

them from the

great-

imposed during the war. These are mortgaged

for the interest of the debt contracted in order to carry

it

on. If,

on the

over and above paying the interest of this debt, and defraying the

conclu-

ordinary expence of government, the old revenue, together with the

sion of peace.

new

taxes,

produce some surplus revenue,

it

may

perhaps be con-

verted into a sinking fund for paying off the debt. But, in the place, this sinking fund, even supposing

other purpose,

is

it

first

should be applied to no

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 Ed.

I

reads “just as long

as.’’

PUBLIC DEBTS war; and, in the second place, this fund

is

^73

almost always applied

to other purposes.

The new

taxes were imposed for the sole purpose of paying the

interest of the

money borrowed upon them.

If they

produce more,

it is

generally something which was neither intended nor expected,

and

is

therefore seldom very considerable. Sinking funds have gen-

erally arisen, not so

much from any

surplus of the taxes which was

Any new taxes im-

posed are larely sufficient

to

do

more than

over and above what was necessary for paying the interest or an-

pay the

nuity originally charged upon them, as from a subsequent reduc-

new interest.

clesiastical

That

Holland in 1655, and that of the ecstate in 1685, were both formed in this manner.®^ Hence

tion of that interest.

of

the usual insufficiency of such funds.

Sinking funds arise generally

During the most profound peace, various events occur which quire an extraordinary expence,

more convenient to defray

this

and government

finds

it

re-

from re-

always

ductions

expence by misapplying the sinking

of interest,

fund than by imposing a new tax. Every new tax

is

immediately

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 taxation; the more loudly the people complain of every new tax, the more difficult it becomes too either to find out felt

more or

new

less

subjects of taxation, or to raise

imposed upon the debt

is

old.

complaint.

felt

by

To borrow

the public debts

necessary

it

may

mis-

applied.

payment

of the

of

the people, and occasions neither of the sinking fund

is

always an

obvious and easy expedient for getting out of the present

The more

constantly

higher the taxes already

A momentary suspension

not immediately

murmur nor

much

and are

may have

difficulty.

been accumulated, the more

have become to study to reduce them, the more

dangerous, the more ruinous sinking fund; the less likely

may be

it

is

to misapply

any part

of the

the public debt to be reduced to any

considerable degree, the more likely, the

more

ing fund to be misapplied towards defraying

expences which occur in time of peace.

certainly all

When

is

the sink-

the extraordinary

a nation

is

already

overburdened with taxes, nothing but the necessities of a new war, nothing but either the animosity of national vengeance, or the anxiety for national security, can induce the people to submit, with

tolerable patience, to

a new

tax.

Hence the usual misapplication

of

the sinking fund.

In Great Britain, from the time that

we had

first

recourse to the

ruinous expedient of perpetual funding, the reduction of the public

debt in time of peace, has never borne any proportion to

“ Anderson, Commerce^ mentions recalls

them

ish debt

had its its

ac-

these reductions under their dates, and

in reference to the British reduction in 1717.

The Brit-

origin in

the wealth of nations

874 the

war of

1688-97,

cumulation in time of war. It was in the war which began in 1688,

and was concluded by the treaty

of

Ryswick

in 1697, that the foun-

dation of the present enormous debt of Great Britain

On the 3 ist of December

was

which left a debt of twentyone and a

funded and unfunded, amounted to 21,515,742^. 135.

half mil-

tions,

great part of those debts

This was reduced

by

five

had been contracted upon short

and some part upon annuities

lions.

31st of

first laid.

1697, the public debts of Great Britain,

A anticipa-

for lives; so that before the

December 1701, in less than four years, there had partly off, and partly reverted to the public, the sum of 5,121,-

been paid

041^. I2S. ofd.;

a greater reduction of the public debt than has

millions in 1697-

ever since been brought about in so short a period of time.

The

1701.

maining debt, therefore, amounted only to 16,394,701^.

is.

From

In the war which began in 1702, and which was concluded by the treaty of Utrecht, the public debts were still more accumulated.

1702 to 1722 the

re-

7}d.

increase

On

was

6-^d. The subscription into the South Sea fund of the short

the 31st of

December 1714, they amounted

to 53,681,076/. ss.

thirty-

nine millions,

and

from 1723 to 1739 the re-

duction

and long

annuities increased the capital of the public debts, so

that on the 31st of

The

IS.

amounted to 55,282,978/. the debt began in 1723, and went on

December 1722,

reduction of

on the 31st of December 1739, during seventeen years of profound peace, the whole sum paid off was no more than so slowly that,

was only eight and

8,328,354/.

one-third

time amounting to 46,954,623/. $s.

millions.

From 1739 to 1748 the increase

17s.

ii-^d. the capital of the public debt at that

The Spanish war, which began which soon followed which, on the 31st of

by

cluded

was thirty-

it

15

lofd.

.

it,

4^d. in 1739,

and the French war

occasioned a further increase of the debt,

December 1748,

after the

the treaty of Aix la Chapelle,

The most profound peace

war had been con-

amounted

to 78,293,313/.

of seventeen years continu-

one and

ance had taken no more than 8,328,354/. 175. ii-^d. from

one-third

A

war

of less

than nine years continuance added 31,338,689/.

it.

185.

millions.

6^.

of 1748SS the re-

duction

was six millions,

it.^'^

During the administration of Mr. Pelham, the

During the peace

to

interest of the

pub-

lic

debt was reduced, or at least measures were taken for reducing

it,

from four to three per

cent.;

the sinking fund was increased,

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

On

and the

amounted to 72,289,673/.^^

seven

conclusion of the peace, the funded debt amounted to 122,603,-

the 5th of January 1763, at the

I reads “long and short.” James Postlethwayfs history of the public revenue. Pp. 42, 143147, 224, 300. The reference covers the three paragraphs in the text

Ed. ®^See 145,

above.

Above,

p. 868.

® Present State

of the Nation (above, p. 411), p. 28.

PUBLIC DEBTS

^75

The unfunded debt has been stated at 13,927,589/. But the expence occasioned by the war did not end with

336/. 8^. 2^. 2d,

the conclusion of the peace;

so that though, on the 5th of Janu-

by a new

ary 1764, the funded debt was increased (partly

and partly by funding a part of the unfunded debt) there

789/. 10^.

still

loan,

war

years’

seventyfive,

to 129,586,-

remained (according to the very well

informed author of the Considerations on the trade and finances of

an unfunded debt which was brought

Great Britain) in that

and the following

to account

2^d, In

year, of 9,975,017/. 12^.

therefore, the public debt of Great Britain, funded

1764,

and unfunded

amounted, according to this author, to 139,561,807/.

together,

The miums to 4^.^^

annuities for lives too, which

the subscribers to the

new

had been granted

2^.

as pre-

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 27^ years purchase, were valued at 6,826,875/.^® During a peace of about seven years continuance, the prudent and truly patriot administration of Mr. Pelham, was not able to

pay

off

an old debt of

six millions.

same continuance, a new debt

of

During a war of nearly the

more than

seventy-five millions

was contracted.

On

the sth of January 1775, the funded debt of Great Britain

amounted to 124,996,086/. large civil

list

i^.

6^d.

The unfunded,

debt, to 4,150,236/. 35. iiftf.

In the

exclusive of a

Both together, to

129,-

146,322/. 5^. td. According to this account the whole debt paid off

peace before

during eleven years profound peace amounted only to 10,415,474/.

Even this small reduction of debt, however, has not been made from the savings out of the ordinary revenue of the state.

i6j. 9jd. all

reduction

Several extraneous sums, altogether independent of that ordinary

Amongst the pound land tax

revenue, have contributed towards

reckon an additional shilling in

it.

these

we may

its

operations.”—

p. 5.

The account 1764, vol.

is

and

for three years;

the two millions received from the East India company, as indemAnderson, CommercBj postscript ad init. the expenses of the war did not cease with siderations (see a few lines below), p. 4.

lions,

given in the Continuation of Anderson’s Commerce, ” of 1801. The ‘‘Jd.” should be “Jd

a.t>.

iv., p. 58, in ed.

Considerations on the Trade and Finances of this Kingdom and on the measures of administration with respect to those great national objects since the conclusion of the peace, by Thomas Whately, 1766 (often ascribed to George Grenville), p. 22. ““This is the amount obtained by adding the two items mentioned, and is the reading of ed. i. Eds. 2-5 all read “ii39,5i6,8o7 2s. 4d.,” which is doubtless a misprint. The total is not given in Considerations, Considerations, p. 4. Ed. i reads “Among.”

due to

the wealth oe nations

S76 reductions of

nification for their territorial acquisitions;

and the one hundred and

ten thousand pounds received from the

bank

for the renewal of

interest.

must be added several other sums which, as they arose out of the late war, ought perhaps to be considered as their charter.

To

these

deductions from the expences of

The

it.

principal are,

j.

/.

The produce

of French prizes

Composition

for

What has been

received from the sale of the ceded

0

9 0

9S,Soo

0

0

1 , 455,949

18

9

1

J

Total,

we add

d,

670,000

....

French prisoners

islands

If

690,449 18

to this

sum the balance of the earl of Chatham’s and Mr. and other army savings of the same kind, to-

Calcraft’s accounts,

gether with what has been received from the bank, the East India

company, and the additional

shilling in the

whole must be a good deal more than fore,

pound land

five millions.

The

tax; the

debt, there-

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 has been paid

off,

by the reduction of the redeemable four per and by the annuities for lives which have

to three per cents., in,

and,

if

peace were

to continue, a million, perhaps,

be annually spared out of other million, accordingly, at the

now

same

it

was paid list

new war which,

might now

in the course of last year; but,

debt was

left

unpaid, and

in its progress,

pensive as any of our former wars.^^

may prove

The new debt which

ably be contracted before the end of the next campaign,

haps be nearly equal to

from the savings out

all

fallen

towards the discharge of the debt. An-

time, a large civil

involved in a

cents,

we

are

as ex-

will prob-

may

per-

the old debt which has been paid

of the ordinary revenue of the state. It

off

would

be altogether chimerical, therefore, to expect that the public debt should ever be completely discharged by any savings which are likely to

be made from that ordinary revenue as

Above,

p. 54S, note 43.

it

stands at present.

Eds. 1-3 read “was.”

“It has proved more expensive than any of our former wars; and has involved us in an additional debt of more than one hundred millions. During a profound 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. This note appears

first in ed.

3

PUBLIC DEBTS The

877

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 cap-

by means

of

which

manufactures multiplied, and

its

lands cultivated and improved

of the country,

ital

much beyond what they

He

capital only.®^

ment

in

its

could have been

trade

extended,

is

by means

its

of that other

does not consider that the capital which the

creditors of the public

Theopin-

first

tional

debt

is

an

capitalis^

altogether

erroneous,

advanced to government, was, from the mo-

which they advanced

it,

a certain portion of the annual

produce turned away from serving in the function of a

capital, to

a revenue; from maintaining productive labourers

serve in that of

to maintain unproductive ones,

and

to

be spent and wasted, gen-

erally in the course of the year, without

even the hope of any fu-

ture reproduction. In return for the capital which they advanced

they obtained, indeed, an annuity in the public funds in most cases

more than equal value. This annuity, no doubt, replaced to them and enabled them to carry on their trade and business

of

their capital,

to the

same

or pethaps to a greater extent than before; that

is,

they

were enabled either to borrow of other people a new capital upon the credit of this annuity, or

new

it

to get

from other people a

capital of their own, equal or superior to that

advanced

to

manner

this

by selling

which they had

government. This new capital, however, which they in either bought or

existed in the country before,

borrowed of other people, must have

and must have been employed as

capitals are, in maintaining productive labour.

When

it

came

all

into

who had advanced their money to government, some respects a new capital to them, it was not so

the hands of those

though

it

was

in

to the country;

but was only a capital withdrawn from certain em-

ployments in order to be turned towards others. Though placed to them what they had advanced to government, replace

it

to the country.

Had

it

it

re-

did not

they not advanced this capital to

government, there would have been in the country two capitals,

two portions

employed

in

government a revenue

is

of the annual produce, instead of one,

maintaining productive labour.

When

for defraying the expence of

raised within the year from the produce of free or

unmortgaged

When iiecessary '

taxes, a certain portion of the revenue of private people is only

turned away from maintaining one species of unproductive labour, “Garnier’s note, Recherches etc,, tom. iv., p. 501, is “Pinto: Traiti de la et du Cridit,^’ a work published in 1771 (“Amsterdam”), “par Tauteur de Tessai sur le luxe,” of which sec esp. pp. 44, 45, 209-2 ii. But an English essay of 1731 to the same effect is quoted by Melon, Essai Politique Circulation

sur

le

Commerce, chap,

xxiii., ed.

of 1761, p. 296,

referred to below, p. 879. Cp. Lectures, p. 210,

and Melon seems

to be

met by

the wealth of nations

878 taxes, it

only diverts un-

towards maintaining another. Some part of what they pay in those taxes might no doubt have been accumulated into capital, and con-

produc-

sequently employed in maintaining productive labour; but the

tive

greater part

labour

ployed in maintaining unproductive labour. The public expence,

from one

would probably have been spent and consequently em-

unpro-

however, when defrayed in this manner, no doubt hinders more or

ductive

less the further

accumulation of new capital; but

employ-

ment to

sarily occasion the destruction of

When

another.

When it is

the public expence

by the annual

destruction of

by

is

any actually

it

does not neces-

existing capital.

defrayed by funding,

some

it is

defrayed

which had before existed

capital

the perversion of some portion of the annual

met by

in the country;

borrow-

produce which had before been destined for the maintenance of

ing, it di-

productive labour, towards that of unproductive labour.

verts

labour from productive to

unpro-

ductive

employment, and the only advantage is

case, however, the taxes are lighter

a revenue

less

tinue to

save more

than they would have been, had

is

necessarily

burdened, and consequently their ability to save and accumu-

some part of that revenue into capital is a good deal less immore old capital, it at paired. If the method of funding destroy late

new

the same time hinders less the accumulation or acquisition of capital,

than that of defra3dng the public expence by a revenue

Under the system of funding, the frugality private people can more easily repair the breaches

raised within the year.

and industry

of

during

which the waste and extravagance of government

the war,

make tem

may

occasionally

in the general capital of the society.

It is only during the continuance of war,

which advantage

in this

defraying the same expence been raised

within the year; the private revenue of individuals

that

people can con-

sufficient for

As

however, that the sys-

of funding has this advantage over the other system.

Were

the

disap-

pears im-

expence of war to be defrayed always by a revenue raised within

mediately

the year, the taxes from which that extraordinary revenue

peace

is

conclud-

drawn would

last

no longer than the year. The

was

ability of private

ed.

people to accumulate, though less during the war, would have been

Under the

greater during the peace than under the system of funding.

other

system, too,

wars

would be

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

shorter

and

in general

be more speedily con-

wantonly undertaken. The people

and peri-

cluded,

ods of peace

the continuance of the war, the complete burden of

less

grow weary of

it,

and government,

not be under the necessity of carrying

The

it,

during

would soon

humour them, would on longer than it was

in order to

longer.

necessary to do so.

feeling,

it

heavy and unavoidable burdens of war would hinder the people from wantonly calling for it

when

there

was no

foresight of the

real or solid interest to fight for.

Eds. 1-3 read the, indicative, “destroys.”

The

seasons

PUBLIC DEBTS

^79

during which the ability of private people to accumulate was some-

what 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

which

plication of taxes

as

much

it

made a

certain progress, the multi-

brings along with

it

sometimes impairs

Moreover funding at length

the ability of private people to accumulate even in time of

The peace revenue

peace, as the other system would in time of war. of Great Britain

amounts

at present to

more than ten

millions a

burdens the reve-

nue so greatly

and unmortgaged it might be sufficient, with proper management and without contracting a shilling of new debt, to

year. If free

that the

carry on the most vigorous war.

ordinary peace expenditure exceeds

The

private revenue of the inhab-

itants of Great Britain is at present as

peace, their ability to accumulate

much encumbered in time of much impaired as it would

as

is

that

which

have been

in the

time of the most expensive war, had the pernicious

under the

system of funding never been adopted. In the pa3nnent of the interest of the public debt, said, it is the right

hand which pays the

go out of the country. It the inhabitants which

is

left.®^

sophistry of the mercantile system,

is

does not

and

and the nation

be unnecessary to say any thing further about

whole public debt

is

it.

may

been sufficient in

is

after the long examination it

other sys-

tem have

war.

founded altogether in the

which I have already bestowed upon that system, sides, that the

has been

The money

transferred to another;

is

it

only a part of the revenue of one set of

not a farthing the poorer. This apology

would

perhaps

It supposes, be-

owing to the inhabitants of the

The fact of part or

the whole of the debt being held at

home

country, which happens not to be true; the Dutch, as well as sev-

makes no

having a very considerable share in our

difference

eral other foreign nations,

But though the whole debt were owing to the inhabthe country, it would not upon that account be less per-

public funds. itants of nicious.

Land and

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, manufactures, or

commerce. The management of those two original sources of revenue belongs to two different sets of people; the proprietors of land,

and the owners or employers of

The

proprietor of land

is

capital stock.

interested for the sake of his

own

rev-

capital,

the

two

original

sources of all

reve-

nue, are

managed by landlords

and

owners ol

enue to keep his estate in as good condition as he can, by building Misprinted “it” in ed. 5. Dcttes d’un fitat sent des dettes de la main droite a la main gauche, dont le corps ne se trouvera point affaibli, s’il a la quantite d’aliments n6ces-

“ “Les

saires, et s’il sait les

chap,

xxiii.,

distribuer.”—Melon, Essai politique sur

ed. of 1761, p. 296.

le

Commerce,

capital.

XHE WEALTH OF NATIONS'

880

and repairing

by making and maintaining the

his tenants' houses,

those other expensive im-

Taxation

necessary drains and enclosures, and

may di-

provements which

it

maintain. But

different land-taxes the revenue of the landlord

minish or destroy the landlord’s

may

by

improve his land,

make and

be so much diminished; and by different duties upon the

necessaries and conveniences of

ability to

all

properly belongs to the landlord to

be rendered of so gether unable to

When

little real

make

life,

that diminished revenue

may

value, that he

may

find himself alto-

or maintain those expensive improvements.

the landlord, however, ceases to do his part,

impossible that the tenant should continue to do

it is

his.

As

altogether

the distress

of the landlord increases, the agriculture of the country

must

necessarily decline.

When, by

and induce the

owner

of

capital to

remove it from the

of

life,

different taxes

upon the

necessaries

and conveniences

the owners and employers of capital stock find, that what-

ever revenue they derive from

will not, in

it,

a particular country,

purchase the same quantity of those necessaries and conveniences

which an equal revenue would in almost any other, they

country.

disposed to remove to some other. taxes, all or the greater part of is, all

And when, in

will

be

order to raise those

merchants and manufacturers, that

or the greater part of the employers of great capitals,

come

to

be continually exposed to the mortifying and vexatious visits of the tax-gatherers, this disposition to

remove

will

soon be changed into

an actual removal. The industry of the country

will necessarily fall

with the removal of the capital which supported

it,

and the ruin of

trade and manufactures will follow the declension of agriculture.

The transfer-

To

transfer from the owners of those

two great sources

of rev-

enue, land and capital stock, from the persons immediately in-

ence of

good condition of every particular portion of land,

the

terested in the

sources of

and

revenue from the

stock, to another set of persons (the creditors of the public,

owners of

have no such particular interest), the greater part of the revenue

particu-

arising

in the

good management of every particular portion of capital

from

lar por-

tions of

lect of land,

either,

who

must, in the long-run, occasion both the neg-

and the waste or removal of capital stock.

no doubt a general

them to

of the public has

the cred-

agriculture, manufactures,

A

creditor

interest in the prosperity of the

and commerce

of the country;

and con-

itors of

the public

sequently in the good condition of

must oc-

agement of

casion

its capital stock.

declension in

any

of these things, the

neglect of

land and waste or removal of capital.

might no longer be

which

is

its

lands,

and

in the

good man-

Should there be any general failure or

sufficient to

produce of the different taxes

pay him the annuity or

interest

due to him. But a creditor of the public, considered merely

as such, has no interest in the good condition of tion of land, or in the of capital stock.

As a

good management

of

creditor of the public

any particular por-

any particular portion

he has no knowledge of

88i

PUBLIC DEBTS

He has no inspection of it. He can ruin may in some cases be unknown to

any such particular portion. have no care about

it.

Its

him, and cannot directly affect him.

The

practice of funding has gradually enfeebled every state

it. The Italian republics seem to have begun it. Genoa and Venice, the only two remaining which can pretend to an

Theprac-

which has adopted

independent existence, have both been enfeebled by to

Spain seems

it.

have learned the practice from the Italian republics, and

taxes being probably less judicious than theirs) tion to its natural strength, been

owed a

shilling.

more enfeebled. The debts of was deeply in debt before the end

about a hundred years before England

France, notwithstanding

United Provinces

Genoa or Venice.

Is

it

gtatel^

has, in propor-

natural resources,

all its

The

languishes under an oppressive load of the same kind. of the

al-

ways en-

still

Spain are of very old standing. It of the sixteenth century,

it

(its

has

is

as

much

likely that in

enfeebled

by

republic

debts as either

its

Great Britain alone a practice,

which has brought either weakness or desolation into every other country, should prove altogether innocent?

The system

of taxation established in those different countries,

it

may be

it

ought to be remembered, that when the wisest government has

exhausted

said, is inferior to that of

all

England. I believe

the proper subjects of taxation,

it

so.

The su-

But

must, in cases of

The wise

re-

upon some occasions been obliged to have

re-

urgent necessity, have recourse to improper ones.^® public of Holland has

it is

course to taxes as inconvenient as the greater part of those of Spain.

British

system of

enable Britain to

Another war begun before any considerable liberation of the public revenue had been brought about, and growing in

its

progress as ex-

pensive as the last war, may, from irresistible necessity, render the British system of taxation as oppressive as that of Holland, or even

as that of Spain. indeed,

it

To

the honour of our present system of taxation,

has hitherto given so

that, during the course ality

little

embarrassment to industry,

even of the most expensive wars, the frug-

and good conduct of individuals seem

saving and accumulation, to repair

all

have been able, by

to

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

that Great Britain ever waged, her agriculture

most expensive

was as

flourishing,

her manufacturers as numerous and as fully employed, and her

commerce as therefore,

extensive, as they

which supported

all

must have been equal to what peace, agriculture has been ‘^Ed.

I

reads “most.”

had ever been

before.

The

capital,

those different branches of industry, it

still

had ever been

before. Since the

further improved, the rents of

Above, p. 667.

®^Eds.

I

and

2

read “seems.’

limited

burden.

THE WEALTH OF NATIONS

882

houses have risen in every town and village of the country, a proof of the increasing wealth

amount

and revenue

of the people;

and the annual

of the greater part of the old taxes, of the principal

branches of the excise and customs in particular, has been continually increasing, tion,

an equally clear

proojf of

an increasing consump-

and consequently of an increasing produce, which could alone

support that consumption. Great Britain seems to support with

a burden which, half a century ago, nobody believed her cap-

ease,

able of supporting. Let us not, however, upon this account rashly

conclude that she

is

capable of supporting any burden; nor even be

too confident that she could support, without great distress, a bur-

den a

When

Bankruptcy

little greater*

is

national debts have once been accumulated to a certain

degree, there

always the end of

been

than what has already been laid upon her.

is

scarce, I believe, a single instance of their having

and completely paid. The

fairly

liberation of the public rev-

great ac-

enue,

cumula-

brought about by a bankruptcy; sometimes by an avowed one, but

tion of

debt.

if

it

has ever been brought about at

all,

has always been

always by a real one, though frequently by a pretended payment.®^

The

Raising

raising of the

denomination of the coin has been the most

by which a

the coin

usual expedient

has been the usual

guised under the appearance of a pretended payment. If a six-

real public

by

bankruptcy has been

dis-

method of

pence, for example, should either

disguising

proclamation be raised to the denomination of a shilling, and

bankruptcy

twenty sixpences to that of a pound

act of parliament or royal

sterling; the

person

who under

though

the old denomination had borrowed twenty shillings, or near four

this ex-

ounces of

pedient has

much

worse conse-

quences than open bankruptcy.

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, nearly the capital of the funded and unfunded debt of Great Britain, might in this manner be paid

with about sixty-four millions of our present money. It would indeed be a pretended payment only, and the creditors of the public

would

really

be defrauded of ten

shillings in the

pound

of

what was

due to them. The calamity too would extend much further than to the creditors of the public, and those of every private person would a proportionable loss; and this without any advantage, but most cases with a great additional loss, to the creditors of the

suffer

in

public. If the creditors of the public indeed were generally

in debt to other people, they their loss

by paying

might

much

some measure compensate the same coin in which *the

in

their creditors in

“Raynal says “L’evidence autorise seulement a dire que les gouvernements qui pour le malheur des peuples out adopte le detestable systeme des emprunts doivent t6t ou tard Tabjurer: et que Pabus qu’ils en ont fait les torcera vraisemblablement a etre infideles

sterdam, 1773, tom.

iv.,

p. 274.

philosophigue,

Am-

PUBLIC DEBTS public

had paid them. But

most countries the creditors

in

public are, the greater part of

more

S83

them, wealthy people,

in the relation of creditors

the rest of their fellow-citizens.

lic,

A pretended payment of this kind, most cases the

loss of

and without any advantage to the pub-

extends the calamity to a great

ple. It

who stand

than in that of debtors towards

therefore, instead of alleviating, aggravates in

the creditors of the public;

of the

number

of other innocent peo-

occasions a general and most pernicious subversion of the

fortunes of private people; enriching in most cases the idle

and

profuse debtor at the expence of the industrious and frugal creditor,

and transporting a great part hands which were

of the national capital

likely to increase

are likely to dissipate and destroy for it

a state to declare

becomes necessary

avowed bankruptcy

itself

for

is

and improve it.

When

it

it,

from the

to those which

becomes necessary

bankrupt, in the same manner as

an individual to do

so,

always the measure which

a is

fair,

when

open, and

both least

dis-

honourable to the debtor, and least hurtful to the creditor. The

honour of a state

is

surely very poorly provided for, when, in order

to cover the disgrace of

a

real

bankruptcy,

it

has recourse to a jug-

gling 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

re-

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 duced to

It

has

this necessity, have,

the value of

all their

other coins, from containing twelve ounces of

copper to contain only two ounces: that

they raised two ounces

a denomination which had always before expressed the

of copper to

value of twelve ounces.

The

to

pay the great debts which

of

what

it

is,

really owed.

republic was, in this manner, enabled it

had contracted with the

sixth part

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. sioned any.

It does not

The law which enacted

ing to the coin, introduced

it

appear to have occa-

was, like

all

other laws relat-

and carried through the assembly

of the

people

by a

Rome,

as in all the other ancient republics, the poor people were

tribune,

and was probably a very popular law. In

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 ex-

orbitant 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

obliged, without

debtor, for fear of

any further

a very severe execution, was

gratuity, to vote for the candidate

many states, in-

and^t Rome,

THE WEALTH OF NATIONS

884

whom

the creditor recommended. In spite of

all

the laws against

bribery and corruption, the bounty of the candidates, together with the occasional distributions of corn, which were ordered

were the principal funds from which, during the

ate,

of the

To

by the

sen-

times

latter

Roman republic, the poorer citizens derived their subsistence.

deliver themselves

from

this subjection to their creditors, the

poorer citizens were continually calling out either for an entire abolition of debts, or for

law which should

what they

entitle

called

New Tables;

that

ing only a certain proportion of their accumulated debts.

which reduced the coin of former value, as

what they

of

new

it

is,

for a

them to a complete acquittance, upon payall

The law

denominations to a sixth part of

its

enabled them to pay their debts with a sixth part

really owed,

was equivalent

to the

most advantageous

tables.

In order to satisfy the people, the rich and the great

upon

several different occasions, obliged to consent to laws

were,

both for abolishing debts, and for introducing new tables; and they

probably were induced to consent to reason,

and partly

that,

by

this law, partly for the

same

liberating the public revenue, they

might restore vigour to that government of which they themselves

had the

principal direction.

An

operation of this kind would at

once reduce a debt of a hundred and twenty-eight millions to twenty-one millions three hundred and thirty-three thousand three

hundred and thirty-three pounds the course of the second Punic

six shillings

war the As was

and eight-pence. In still

further reduced,

from two ounces of copper to one ounce; and afterwards from one ounce to half an ounce; that is, to the twenty-fourth part of

first,

its original

value.®^

By

combining the three

Roman

operations into

one, a debt of a hundred

money, might

in this

and twenty-eight millions of our present manner be reduced all at once to a debt of five

hundred and thirty-three thousand three hundred and thirty-three pounds six shillings and eight-pence. Even the enormous debt of Great Britain might in this manner soon be paid. millions three

and has led to the

By means

of such expedients the coin of, I believe, all nations

reduction

has been gradually reduced more and more below its original value, and the same nominal sum has been gradually brought to contain a

of the

smaller and a smaller quantity of silver.

universal

value of the coin.

Nations have sometimes, for the same purpose, adulterated the standard of their coin that is, have mixed a greater quantity of al;

loy in

it.

If in the

pound weight

of our silver coin, for example, in-

Eds. I and 2 read “later”; cp. above, p. 831. This chapter of Roman history is based on a few sentences in Pliny, H,N., lih. xxxiii., cap. iii. Modem criticism has discovered the facts to be not nearly so simple as they are represented in the text.

PUBLIC DEBTS

885

stead of eighteen penny-weight, according to the present standard,

was mixed

there

shillings of

pound sterling, or twenty would be worth little more than six shillings

eight ounces of alloy; a

such coin,

and eight-pence

of our present

money. The quantity of

silver con-

Another expedient is

to

adulterate

the coin,

tained in six shillings and eight-pence 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 de-

nomination of the coin.

An coin,

augmentation, or a direct raising of the denomination of the

always

operation. called

and from of

it

nature must be, an open and avowed

its

pieces of a smaller weight

and bulk are

name which had before been given to pieces of a weight and bulk. The adulteration of the standard, on the

by

greater

is,

By means

the same

contrary, has generally been a concealed operation. pieces were issued from the mint of the

as nearly as could be contrived, of the

By means

When

same weight, bulk, and ap-

is

This

has been discovered, and

long, has always excited

The

coin after

that

it

usually fails.

much

adulterations

it

much

is

an

in-

latter operation, therefore, as it

could never be concealed very

greater indignation than the former.

any considerable augmentation has very seldom

been brought back to

fineness. It

casions

such indignation

the officers of his mint were sworn

all

justice of treacherous fraud. it

fraud

which oc-

Both operations are unjust. But a simple augmentation

an injustice of open violence; whereas an adulteration

soon as

this is

king John of France/^ in order to pay his

debts, adulterated his coin,

to secrecy.

it

same denominations, and,

pearance, with pieces which had been current before of greater value.

of

but

a treacherous

its

former weight; but after the greatest

has almost always been brought back to

its

former

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 English coin

was not only raised

in its de-

in

nomination, but adulterated in

its

standard.

practised in Scotland during the minority of

The

like frauds

were

James VI. They have

of

pletely liberated, or even that

Great Britain can ever

® Misprinted

Commerce, chap,

any considerable progress can ever

xiii.,

“never” in eds. 2-5.

ed. of 1761, p. 177.

Scotland other

be com-

®^See du Cange Glossary, voce Moneta; the Benedictine edition. This gives a taWe of the alterations made in the coin and refers to Le Blanc, Trdti historique des Monnoyes de France, 1792, in which the fact that the officers were adjured by their oaths to keep the matter secret is mentioned on p. 218, but the adjuration is also quoted in the more accessible Melon, Essai politique sur le

Eng-

land,

and most

occasionally been practised in most other countries.

That the public revenue

It has been tried

countries.

THE WEALTH OF NATIONS

886

be made towards that

For the paying off or reduction of the

or

debt a very considerable

That

is

so very small,

liberation,

it is

it

in vain to

seems altogether

evident, can never be brought about

revenue, or some equally considerable reduction of the public expence.

A more equal land tax, a more equal tax upon the rent of houses,

of reve-

and such

diminu-

over and above defraying the annual expence of the

without either some very considerable augmentation of the public

increase*

nue or

is

peace establishment, expect.

British

alterations in the present system of customs

and excise as

those which have been mentioned in the foregoing chapter, might,

tion of

expense

what

liberation, while the surplus of that revenue,

is

perhaps, without increasing the burden of the greater part of the

more equally upon the

necessary.

people, but only distributing the weight of

Altera-

whole, produce a considerable augmentation of revenue.

tions in

sanguine projector, however, could

taxation

might increase the revenue

augmentation of

it

scarce flatter

The most

himself that any

kind would be such as could give any reason-

this

able hopes, either of liberating the public revenue altogether, or

even of making such progress towards that liberation in time of

consider-

ably but

peace, as either to prevent or to compensate the further accumula-

not suf-

tion of the public debt in the next war.

ficiently.

An extension of

By

extending the British system of taxation to

by people

provinces of the empire inhabited

the different

of either

British or

a much greater augmentation of revenue

taxation

European

to Ireland

might be expected. This, however, could

extraction,

all

scarce, perhaps,

be done,

and the colonies

consistently with the principles of the British constitution, with-

would

out admitting into the British parliament, or

afford a

a

states-general of the British empire,

fair

if

you

will into the

and equal representation

larger increase.

of all those different provinces, that of each province bearing the

same proportion

to the produce of

its

taxes, as the representation of

Great Britain might bear to the produce of the taxes levied upon

Great Britain. The private interest of

many

powerful individuals,

the confirmed prejudices of great bodies of people seem, indeed, at present, to oppose to so great

very

difficult,

a change such

obstacles as

it

may be

perhaps altogether impossible, to surmount. Without,

however, pretending to determine whether such a union be practicable or impracticable, ulative

work

it

may not,

perhaps, be improper, in a spec-

of this kind, to consider

taxation might be applicable to

all

how

far the British

empire; what revenue might be expected from in

what manner a general union of

fect the happiness

hended within

it.

system of

the different provinces of the

this

it if

so applied, and

kind might be likely to af-

and prosperity of the

different provinces compreSuch a speculation can at worst be regarded but

^

Ed.

I reads “neither of.”

PUBLIC DEBTS as a

new

^^7

Utopia, less amusing certainly, but not more useless and

chimerical than the old one.

The

land-tax, the stamp-duties,

toms and

and the

different duties of cus-

excise, constitute the four principal

branches of the Brit-

ish taxes.

Ireland

certainly as able,

is

plantations

more

able to

and our American and West Indian

pay a land-tax than Great

Britain.

Where

The landtax could

well be

the landlord tainly be

is

more able

to

pay such a

both those other burdens. The

where

must

subject neither to tithe nor poors rate, he tax, than

tithe,

where he

where there

cer-

subject to

is

no modus, and

is

more what would otherwise be the rent of the landlord, than a land-tax which really amounted to five shillings in the pound. Such a tithe will be found in most cases to

it is

amount

or of

levied in kind, diminishes

to

more than a fourth part of the

what remains

extended to Ireland,

America and the

West Indies.

real rent of the land,

after replacing completely the capital of the

farmer, together with his reasonable profit. If

moduses and

all

all

impropriations were taken away, the complete church tithe of

Great Britain and Ireland could not well be estimated at less than six or

seven millions. If there was no tithe either in Great Britain

or Ireland, the landlords could afford to

additional land-tax, without being

part of

them are

at present.

therefore very well afford to

and the West

any

rent-roll.

in the 4th of

seven millions

six or

more burdened than a very great

America pays no

pay a

land-tax.

The

tithe,

and could

lands in America

Indies, indeed, are in general not tenanted nor

leased out to farmers. ing to

pay

They could not

therefore be assessed accord-

But neither were the lands of Great

William and Mary, assessed according to any

Britain,

rent-roll,

but according to a very loose and inaccurate estimation. The lands in

America might be assessed

either in the

same manner, or accord-

ing to an equitable valuation in consequence of an accurate survey, like that

which was

lately

made

in tie Milanese,

and

in the do-

minions of Austria, Prussia, and Sardinia.®^ Stamp-duties, in all countries

it is

evident, might be levied without

any variation

where the forms of law process, and the deeds by

Stamp duties

could

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 Ireit

was accompanied, as

in justice

ought to be, with an extension of the freedom of trade, would be

in the highest degree

Ed.

advantageous to both. All the invidious

which at present oppress the trade of Ireland, the

straints I

reads “or.”

be

extended.

land and the plantations, provided it

easily

“Above, pp.

780, 786, 787.

re-

distinc-

The

ex-

tension of the

customs would be of great

the wealth OF NATIONS

888

enumerated and non-enumerated commodities

advan-

tion between the

tage to

America, would be entirely at an end.^®

all,

as it

would be accompanied by an exten-

Cape

Finisterre

The

of

countries north of

to every part of the produce of

would be as open

America, as those south of that Cape are to some parts of that pro-

duce at present. The trade between

all

the different parts of the

would, in consequence of this uniformity in the cus-

sion of

British empire

free trade.

tom-house laws, be as free as the coasting trade of Great Britain at present.

immense

The

British empire

internal

would thus

afford within itself

is

an

market for every part of the produce of all its difan extension of market would soon com-

ferent provinces. So great

pensate both to Ireland and the plantations,

The

Excise duties

would

all

that they could suf-

from the increase of the duties of customs.

fer

excise

is

the only part of the British system of taxation,

which would require to be varied in any respect according as

it

was

re-

quire

applied to the different provinces of the empire. It

some

plied to Ireland without

variation,

might be ap-

any variation; the produce and consumpkingdom being exactly of the same nature with those of Great Britain. In its application to America and the West Indies, of which the produce and consumption are so very different

tion of that

from those of Great Britain, some modification might be necessary, in the

same manner as in its application to the cyder and beer coun-

ties of

A fermented liquor, for example, which is called beer, but which,

as for

example in the

England.

as

it is

made

of melasses, bears very little resemblance to our beer,

case of

makes a considerable part

American

America. This liquor, as

beer.

like our beer,

it

of the

common

drink of the people in

can be kept only for a few days, cannot,

be prepared and stored up for sale in great breweries

but every private family must brew

manner as they cook

it

their victuals.

for their

But

own use,

in the

same

to subject every private

family to the odious visits and examination of the tax-gatherers, in

same manner as we subject the keepers of alehouses and the brewers for public sale, would be altogether inconsistent with libthe

erty. If for the sake of equality it

tax upon this liquor,

which

it is

it

was thought necessary to lay a

might be taxed by taxing the material of

made, either at the place of manufacture,

or, if

cumstances of the trade rendered such an excise improper, ing a duty

upon

its

importation into the colony in which

the cir-

by

it

lay-

was

to

be consumed. Besides the duty of one penny a gallon imposed by the British parliament ica; there is

upon the importation

a provincial tax of

this

of melasses into

to Massachusets Bay, in ships belonging to

eight-pence the hogshead;

Amer-

kind upon their importation in-

any other colony, of and another upon their importation,

Above, pp. 543, 544.

PUBLIC DEBTS from the northern gallon.

Or

if

colonies, into

neither of these

family might compound for

889

South Carolina, of five-pence the

methods was found convenient, each its

consumption of

according to the number of persons of which

same manner as private

families

compound

this liquor, either

it

consisted, in the

for the malt-tax in

Eng-

and sexes of those persons, same manner as several different taxes are levied in Holland; or nearly as Sir Matthew Decker proposes that all taxes upon conland; or according to the different ages in the

sumable commodities should be levied in England,®^ This mode of taxation,

it

has already been observed, when applied to objects of

a speedy consumption,

is

not a very convenient one. It might be

adopted, however, in cases where no better could be done. Sugar, rum, and tobacco, are commodities which are no where necessaries of

life,

which are become objects of almost universal

consumption, and which are therefore extremely proper subjects of taxation. If a union with the colonies were

to take place, those

commodities might be taxed either before they go out of the hands

Sugar,

rum and tobacco could be made subject to excise.

of the manufacturer or grower; or

if

this

suit the circumstances of those persons,

mode

of taxation did not

they might be deposited in

public warehouses both at the place of manufacture, and at different ports of the

all

the

empire to which they might afterwards be

transported, to remain there, under the joint custody of the owner

and the revenue

officer, till

such time as they should be delivered

out either to the consumer, to the merchant retailer for home-con-

sumption, or to the merchant exporter, the tax not to be advanced till

When

such delivery.

free;

delivered out for exportation, to go duty

security being given that they should really be

upon proper

exported out of the empire. These are perhaps the principal commodities with regard to which a 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. levied in Great Britain,

more than ten

By means upon

less

of this system there

and according

annually

than eight millions of people,

millions of revenue. Ireland contains

millions of people,

is

more than two

to the accounts laid before the

The increase of

revenue thus obtained, if

proportionate to

the increased

populacongress,^'®

more than

the twelve associated provinces of America contain three.

Those accounts, however,

may have

been exag-

Above, p. 828. ®Eds. 1-3 read “was.” Given in the Continuation of Anderson’s Commerce, a.d. 1774, p, 178, in ed. of 1801.

vol. iv.,

tion taxed,

XHE WEALTH OF NATIONS

890

would yield six millions

and a quarter to

gerated, in order, perhaps, either to encourage their to intimidate those of this country,

that our

reduction of debt,

pire, in

would of course be

agrowing one.

suppose therefore

colonies taken together

Europe and America, contains no more than thirteen mil-

lions of inhabitants. If this

and this

sum

shall

people, or

contain no more than three millions; or that the whole British em-

be applied in

and we

North American and West Indian

own

upon

less

than eight millions of inhabitants

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

sand pounds

sterling.

tem could produce in Ireland

it,

From

fifty

thou-

this revenue, supposing that this sys-

must be deducted, the revenue usually raised

and the plantations

respective civil governments.

for defraying the

The expence

expence of their

and military

of the civil

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

By a

pounds a year.

very exact account’’'^ of the revenue of the

and the West Indies, it amounted, becommencement of the present disturbances, to a hundred

principal colonies of America fore the

and forty-one thousand eight hundred pounds. In

this account,

however, the revenue of Maryland, of North Carolina, and of our late acquisitions both

may

omitted, which

upon

perhaps

make a

suppose that the revenue necessary for supporting the of Ireland

and the plantations,

may amount

There would remain consequently a revenue of

hundred and

fifty

debt.

But

if

civil

to

a

let

us

governmillion.

fifteen millions

two

thousand pounds, to be applied towards defray-

ing the general expence of the empire, lic

is

difference of thirty or forty

thousand pounds. For the sake of even numbers therefore,

ment

all

the continent and in the islands,

and towards pa3dng the pub-

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 before, and might in this

manner

increase so very rapidly, as to

to discharge the

be

sufficient in

a few years

whole debt, and thus to restore completely the at

and languishing vigour of the empire. In the mean time the people might be relieved from some of the most

present debilitated

burdensome taxes; from those which are imposed either upon the necessaries of

life,

or

upon the

materials of manufacture.

The

la-

bouring poor would thus be enabled to live better, to work cheaper, Above,

p. 540.

^ Ed.

i reads “late”; cp. above, p. 465.

^9i

PUBLIC DEBTS 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

mand

for labour,

who produced them. This

increase in the de-

would both increase the numbers and improve the

circumstances of the labouring poor. Their consumption would increase,

and together with

cles of their

the revenue arising from

it

all

those arti-

consumption upon which the taxes might be allowed

to remain.

The revenue

arising

from this system of taxation, however, might

Some

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 bur-

thens to which they had not before been accustomed, and even

numbers

froin this

when

same taxes came to be levied every where as exactly as possible, they would not every where produce a revenue proportioned to the

the

of the people. In a poor country the consumption of the

principal commodities subject to the duties of customs

tions

and excise

is

be counter-

tio4 resuiting

very small; and in a thinly inhabited country the opportunities of

smuggling are very great. The consumption of malt liquors among

simple al-

very small, and the excise

terations.

the inferior ranks of people in Scotland

upon malt,

and

beer,

ale,

produces

is

less there

than in England in

proportion to the numbers of the people and the rate of the duties,

which upon malt

on account of a supposed difference

is different

of quality. In these particular branches of the excise, there

apprehend, other.

The

much more smuggling duties

upon the

is

not, I

in the one country than in the

distillery,

and the greater part

duties of customs, in proportion to the

numbers

of the

of people 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

inferior ranks of people are

facility of smuggling.

still

In Ireland, the

poorer than in Scotland, and

many

parts of the country are almost as thinly inhabited. In Ireland, therefore, the consumption of the taxed commodities might, in pro-

portion to the

and the

number

facility of

of the people,

be

West Indies the white people even their

consumption of is

less

than in Scotland,

of the lowest rank are in

better circumstances than those of the

themselves

still

smuggling nearly the same. In America and the

all

same rank

in

much

England, and

the luxuries in which they usually indulge

probably much greater. The blacks, indeed, who make

the greater part of the inhabitants both of the southern colonies up-

on the continent and of the West India state of slavery, are,

no doubt,

”Eds.

r

and

2

in

islands, as they are in

a

a worse condition than the poor-

read “West Indian.’

THE WEALTH OE NATIONS est people either in Scotland or Ireland. We must not, however, upS92

on the account, imagine that they are worse sumption of

fed, or that their con-

which might be subjected

articles

moderate

to

duties,

less than that even of the lower ranks of people in England. In

is

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 rum and

accordingly have almost every where their allowance of of melasses or spruce beer, in the

and

vants;

though those

same manner

as the white ser-

allowance would not probably be withdrawn,

this

should be subjected to moderate duties.

articles

The

consumption of the taxed commodities, therefore, in proportion to the

number

of inhabitants,

would probably be as great in America

any part of the British empire. The opportunities of smuggling indeed, would be much greater; America, in proportion to the extent of the country, being much more thinly and the West Indies as

in

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

toms, instead of being imposed upon almost of importation, were confined to

consumption, and

a few

all

of the

if

the duties of cus-

the different articles

most general use and

the levying of those duties were subjected to

if

the excise laws, the opportunity of smuggling, though not so entirely

taken away, would be very

much

of those two, apparently, very simple ties of

diminished. In consequence

and easy

alterations, the du-

customs and excise might probably produce a revenue as

great in proportion to the consumption of the most thinly inhabited

province, as they do at present in proportion to that of the

most

populous.

The

The Americans,

Americans have little

gold

and silver,

money; the

all

the effect

of choice,

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 receive from us. But without gold and silver, it is

but this is

has been siid, indeed, have no gold or silver

it

interior

added, there

the gold

and

is

no

silver

possibility of paying taxes.

which they have.

We

already get

How is it possible

to

draw

from them what they have not?

The

present scarcity of gold and silver

money

in

America

is

not

not neces-

the effect of the poverty of that country, or of the inability of the

sity.

people there to purchase those metals. In a country where the ’®Eds. 1-3 read ‘Vas” here and five lines below.

PUBLIC DEBTS

893

wages of labour are so much higher, and the price of provisions so

much

lower than in England, the greater part of the people must

surely have wherewithal to purchase a greater quantity,

them

either necessary or convenient for

do

to

The

so.

those metals therefore, must be the effect of choice,

if it

were

scarcity of

and not

of

necessity. It is for transacting either

and

silver

money

The domestic

is

domestic or foreign business, that gold

either necessary or convenient.

business of every country,

it

has been shewn in the

second book of this Inquiry,'^" may, at least in peaceable times, be

by means

transacted

of a paper currency, with nearly the

gree of conveniency as for the Americans,

improvement of to save as

of

by gold and

who

money.

It is

convenient

could always employ with profit in the

their lands a greater stock

much

than they can easily

as possible the expence of so costly

commerce as gold and

their surplus

silver

same de-

and rather

silver,

to

get,

an instrument

employ that part of

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

the

people with such a quantity of paper-money as

cient

and generally more than

Some

mestic business.

find

is

fully suffi-

sufficient for transacting their do-

from lending

paper-money to

this

an interest of so much per cent. Others, like that

their subjects at

of Massachusett’s Bay, advance

afterv/ards,

for their interest to supply

of those governments, that of Pennsylvania

particularly, derive a revenue

paper-money

it

upon extraordinary emergencies a and

of this kind for defraying the public expence,

when

it

suits the

conveniency of the colony, redeem

at the depreciated value to which

colony paid, in

this

gradually

it

falls.

manner, the greater part of

with the tenth part of the

money

for

which

In 1747

its

its bills

it

that

public debts,

had been grant-

ed. It suits the conveniency of the planters to save the expence of

employing gold and it

suits the

silver

money in

their domestic transaction;

and

conveniency of the colony governments to supply them

with a medium, which, though attended with some very considerable disadvantages, enables

them

to save that expence.

dundancy of paper-money necessarily banishes gold and ^*Eds. 1-3 read “was” ™ Ed. I omits “the.”

The

silver

re-

from

Above, pp. 276-281.

See Hutchinson’s Hist, of Massachusett’s Bay, Vol. II., page 436 History of the Colony of Massachusetts Bay^ 2nd ed., 1765-8.

&

seq.

Paper 3S

more convenient to

the

Amer-

icans for

home trade,

THE WEALTH OF NATIONS

S94

same reason that

the domestic transactions of the colonies, for the it

has banished those metals from the greater part of the domestic Scotland; and in both countries

transactions in erty,

but the enterprizing and projecting

desire of employing all the stock

it is

spirit of

not the pov-

the people, their

which they can get as active and

productive stock, which has occasioned this redundancy of paper-

money. while for their ex-

In the exterior commerce which the different colonies carry on with Great Britain, gold and silver are more or

less

employed, ex-

ternal

trade they

actly in proportion as they are more or less necessary.

use as

metals are not necessary, they seldom appear.

much gold and

Where they

those

are nec-

essary, they are generally found.

In the commerce between Great Britain and the tobacco colonies,

silver as is

Where

neces-

the British goods are generally advanced to the colonists at

a pretty

sary.

long credit, and are afterwards paid for in tobacco, rated at a cer-

tween Great

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 tain price. It

In the trade be-

is

goods which he might happen to deal

Britain

him

and Virginia and Maryland

any part

tobacco

answering occasional demands.

a

is

more

conveni-

in

some other

sort of

in,

than in money. Such a merchant would have no occasion to keep

by him unemployed, and

of his stock

He

in ready

could have, at

money,

all times,

for

a larger

quantity of goods in his shop or warehouse, and he could deal to a

But

seldom happens to be convenient for

the

ent cur-

greater extent.

rency

correspondents of a merchant to receive payment for the goods

it

than gold

and silver.

which they

sell

pens to deal

in.

sell

some otier kind which he hapmerchants who trade to Virginia and

to him, in goods of

The

Maryland happen it is

to

British

be a particular set of correspondents, to

more convenient

to receive

payment

for the

to those colonies in tobacco than in gold

pect to

make a

all

profit

by

silver.

Gold and

goods which they

They exThey could make

and

the sale of the tobacco.

none by that of the gold and

whom

silver.

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.

are said, accordingly, to have less gold and silver other colonies in America. ing,

The northern colonies

and consequently as

They

rich,

as any of their neighbours.

New England,

New York, New Jersey,

&c. the value of their

generally

produce which they export to Great Britain

find the

of the manufactures which they import for their

™Ed.

money than any

are reckoned, however, as thriv-

In the northern colonies, Pennsylvania, the four governments of

They

I reads “of.”

is

own

not equal to that

own

use,

and

for

PUBLIC DEBTS some

that of

A

of the other colonies to

895

which they are the

carriers.

balance, therefore, must be paid to the mother country in gold

and

and

silver,

this balance

they generally

find.

from thence.

much

is

greater than that of

all

the goods imported

and rum annually sent to the mother

If the sugar

cessary to

pay the

In the sugar colonies the value of the produce annually exported to Great Britain

gold and silver ne-

country were paid for in those colonies. Great Britain would be

balance

on

theii

trade

with Great Britain

obliged to send out every year a very large balance in money,

West

the trade to the cians,

Indies would,

by a

certain species of politi-

be considered as extremely disadvantageous. But

many

pens, that

and

it

so hap-

generally

of the principal proprietors of the sugar planta-

them in The sugar and rum those colonies upon

tions reside in Great Britain. Their rents are remitted to

sugar and rum, the produce of their estates.

which the West India merchants purchase in their

own

annually to

them

account, are not equal in value to the goods which they

sell there.

in gold

The sugar colonies

A balance therefore must necessarily

and

The difficulty and

silver,

and

be paid

this balance too is generally found.

irregularity of

payment from the

different col-

onies 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

find the

gold and silver necessary to

pay the balance to Great

Britain

which arises

from the sugar planters

being absentees.

northern than from the tobacco colonies, though the former have generally paid a pretty large balance in money, while the latter

no balance, or a much smaller

have either paid

payment from our

of getting

one.

The

different sugar colonies

greater or less in proportion, not so

much

difficulty

has been

to the extent of the bal-

ances respectively due from them, as to the quantity of uncultivated

land which they contained; that tation

is,

to the greater or smaller temp-

which the planters have been under of over-trading, or of

undertaking the settlement and plantation of greater quantities of

The returns from much uncultivated

waste land than suited the extent of their capitals. the great island of Jamaica, where there land, have,

upon

this account,

is still

been in general more irregular and

uncertain, than those from the smaller islands of Barbadoes, tigua,

and

St. Christophers,

which have for these

many

An-

years been

completely cultivated, and have, upon that account, afforded less field for

the speculations of the planter.

Grenada, Tobago,

new

St.

The new

Vincents, and Dominica,

field for speculations of this

acquisitions of

have opened a

kind; and the returns from those

islands have of late been as irregular

and uncertain as those from

the great island of Jamaica. I

Above,

reads “must generally.” p. 54S, note 43.

^’Ed.

i

reads “paid either.”

Any

dif-

ficulties

have not been proportionate to the size of the

balance due,

THE WEALTH OF NATIONS

896

and have arisen

from unnecessary

and excessive

enterprise.

It is not, therefore, the

poverty of the colonies which occasions,

them, the present scarcity of gold and silver

in the greater part of

money. Their great demand for active and productive stock makes it convenient for them to have as little dead stock as possible; and

them upon that account to content themselves with a cheaper, though less commodious instrument of commerce than disposes

gold and silver. that gold and

They

are thereby enabled to convert the value of

silver into the

instruments of trade, into the mate-

household furniture, and into the iron work

rials of clothing, into

necessary for building and. extending their settlements and planta-

In those branches of business which cannot be transacted without gold and silver money, it appears, that they can always tions.

find the necessary quantity of those metals;

do not find

it,

and

if

they frequently

their failure is generally the effect, not of their neces-

and excessive enterprize. It is not because they are poor that their payments are irregular and uncertain; but because they are too eager to become excessively sary poverty, but of their unnecessary

Though

rich.

all that

part of the produce of the colony taxes, which

was over and above what was necessary

and military establishments, were to be remitted Great Britain in gold and silver, the colonies have abundantly

of their to

own

for defraying the expence

civil

wherewithal to purchase the requisite quantity of those metals.

They would

in this case

their surplus produce,

be obliged, indeed, to exchange a part of

with which they

now purchase

active

and

productive stock, for dead stock. In transacting their domestic business they would be obliged to

employ a

costly instead of

a cheap

instrument of commerce; and the expence of purchasing this costly instrument might

damp somewhat

excessive enterprize in the ever,

the vivacity and ardour of their

improvement of land.

It

might not, how-

be necessary to remit any part of the American revenue in

gold and silver. It might be remitted in bills drawn

cepted

by

upon and ac-

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 treasury the

AmerLan revenue

after having themselves received the value of

it

in

in goods;

money,

and the

whole business might frequently be transacted without exporting a single ounce of gold or silver

justice

That

from America.

It is not contrary to justice that

It is

both Ireland and America should

contribute towards the discharge of the public debt of Great Brit-

Ire-

That debt has been contracted

in support of the

government

land and

ain.

America

established

should

tants of Ireland owe, not only the whole authority which they at

by the Revolution, a government

Ed.

I

to

reads “gold and silver.”

which the protes-

PUBLIC DEBTS present enjoy in their

own

^97

country, but every security which they

possess for their liberty, their property,

and

their religion;

ernment to which several of the colonies of America owe

a gov-

their pres-

ent charters, and consequently their present constitution, and to

which

the colonies of America owe the liberty, security, and

all

contri-

bute to the dis-

charge of the British debt.

property which they have ever since enjoyed. That public debt has

been contracted in the defence, not of Great Britain alone, but of the different provinces of the empire; the

all

war

tracted in the late tracted in the

war

in particular,

immense debt con-

and a great part of that con-

before, were both properly contracted in defence

of America.

By a

union with Great Britain, Ireland would gain, besides the

freedom of trade, other advantages much more important, and

which would

much more than compensate any

increase

of

Union would deliver

Ireland

accompany that union. By the union with Engthe middling and inferior ranks of people in Scotland gained

oppres-

a complete deliverance from the power of an aristocracy which had

tocracy

taxes that might land,

always before oppressed them.

By an union with

greater part of the people of

all

Great Britain, the

ranks in Ireland would gain an

equally complete deliverance from a

much more

oppressive aris-

tocracy; an aristocracy not founded, like that of Scotland, in the

from an sive aris-

founded on religious and political

prejudices.

natural and respectable distinctions of birth and fortune; but in the

most odious of

all distinctions,

udices; distinctions which,

insolence of the oppressors

oppressed,

those of religious

and

political prej-

more than any other, animate both the and the hatred and indignation of the

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 Even

oppressive aristocracy has ever prevailed in the colonies. they, however, would, in point of happiness

and

tranquillity,

by a union with Great Britain. It would, at least, deliver them from those rancorous and virulent factions which are inseparable from small democracies, and which have so frequently divided the affections of their people, and disturbed the tranquillity gain considerably

of their governments, in their form so nearly democratical. In the

case of

a

total separation

vented by a union of

from Great Britain, which, unless pre-

this kind,

seems very

likely to take place,

those factions would be ten times more virulent than ever. Before the

commencement

of the present disturbances, the coercive power

of the mother-country tions

had always been able

to restrain those fac-

from breaking out into any thing worse than gross brutality

The

colo-

nies

would be delivered

from rancoroib factions

which are likely to

lead to

bloodshed in case of

separation

from

Great Britain.

the wealth of nations

89S

and

insult. If that coercive

entirely taken away, they

power were

would probably soon break out into open violence and bloodshed. In all great countries which are united under one uniform government, the

spirit of

party commonly prevails

vinces than in the centre of the empire.

less in

The

the remote pro-

distance of those pro-

vinces 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

The

all.

spirit of

prevails less in Scotland than in England. In the case of

would probably prevail

less in Ireland

party

a union

it

than in Scotland, and the

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 colonies

any which they at present pay. In consequence, howa diligent and faithful application of the public revenue

taxes than ever, of

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 moderate peace establishment.

The

East India

with fighter

taxes

and

cor-

iess

the East India company, the un-

territorial acquisitions of

doubted right of the crown, that Britain,

is,

of the state

and people

of Great

might be rendered another source of revenue more abun-

dant, perhaps, than are represented as

all

more

those already mentioned. fertile,

more

Those countries

extensive; and, in proportion

rupt ad-

much richer and more populous than Great

ministra-

to their extent,

tion

In order to draw a great revenue from them,

might yield an

be necessary, to introduce any new system of taxation into coun-

wen

tries

larger ad-

It might, perhaps,

it

Britain.

would not probably

which are already sufficiently and more than

sufficiently taxed.

be more proper to lighten, than to aggravate, the

dition of

revenue.

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

no such

augmentation of reve-

nue can be ob-

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 diminution of her expence. In the of expending the public revenue;

mode

is

a

of collecting,

and

in that

though in both there

may

be

tained

still

Great

room

Britain

nomical as any of her neighbours. The military establishment which

should re-

for

improvement; Great Britain seems to be at

she maintains for her

own

defence in time of peace,

®®Eds. 1-5 read “was.”

is

least as ceco-

more moder-

PUBLIC DEBTS any European

^99

her

duce her

None of those articles, therefore, seem any considerable reduction of expence. The expence of the peace establishment of the colonies was, before the commencement of the present disturbances, very considerable, and is an expence which may, and if no revenue can be drawn from them, ought

expenses

ate than that of

state

which can pretend to

rival

either in wealth or in power.

to admit of

certainly to be saved altogether. This constant expence in time of

peace, though very great,

insignificant in

is

comparison with what

the defence of the colonies has cost us in time of war.

The last

which was undertaken altogether on account of the

colonies, cost

Great Britain, lions.®^

it

has already been observed, upwards of ninety mil-

The Spanish war

was

of 1739

and

their account; in which,

quence of

war,

in ihe

principally undertaken on

French war that was the conse-

Great Britain spent upwards of forty millions, a great

it.

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

ment

the national debt

of the first of them.

Had

amounted to before the commence-

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 taken. It

latter certainly

was because the

colonies

would not have been under-

were supposed to be provinces of

the British empire, that this expence 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

considered as appendages, as a sort of splen-

did and showy equipage of the empire. But longer support the expence of keeping certainly to lay

portion to

pence to

its

its

it

down; and

expence,

it

if it

up

if

the empire can no

this equipage, it

cannot raise

ought, at least, to

its

ought

revenue in pro-

accommodate

its

ex-

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

Great Britain as great an expence as war.

The

past,

amused

it

may

cost

ever has done in any former

rulers of Great Britain have, for

more than a century

the people with the imagination that they possessed a

great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only. It has hitherto been,

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,

hitherto, is likely to cost,

pursued in the same

way

it

has been

immense expence, without being ^ Above, 410.

likely to

if

p.

as

by

rid-

ding herself of the cost of

the colonies in

peace and war.

XHE WEALTH OF NATIONS

900

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

people. If the project cannot be completed, If

any

of the provinces of the British

it

awaken the

ought to be given up.

empire cannot be

contribute towards the support of the whole empire,

made

it is

to

surely

time that Great Britain should free herself from the expence of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace,

and en-

deavour to accommodate her future views and designs to the real mediocrity of her circumstances. “Above, pp. SS7-S96.

APPENDIX^ The

two following Accounts are subjoined in order to illustrate and confirm what is said in the Fifth Chapter of the Fourth Book,^ concerning the Tonnage bounty to the White Herring Fishery. The Reader, I believe, may depend upon the accuracy of both Accounts.

An Account

of Busses fitted out in Scotland for Eleven Years with the Number of Barrels carried out, and the Number of Barrels of Herrings co/ught; also the Bounty at a Medium on each Barrel of Seasteeks, and on each Barrel when fully packed. ^

Empty

Years.

Empty

Barrels of

Barrels carried out.

Herrings caught.

2832 22237

135

S948 41316 42333 S9303 69144 76329 62679 36390 SS194 48313 33992

2186

SS0943

Number of Busses.

Bounty paid on the Busses.

£. 1771 1772 1773 1774 177s 1776 1777 1778 1779 1780 1781 Total,

Seasteeks

29 168

190 248 275 294 240 220 206 181

37S347

4203s 56363 32879 31863 43313 40938 29367 19883 16393

2085 11033 12510 16952 193 13 21290 17392 16316 13287 1 3443 9613

378347

155463

Bounty at a medium

d.

0

0

7 2

6 6 6

IS

0

7 2

8

2

6 6 6

0

0

12

12

6 6

II

0

each barrel of seaaj £. o 8 But a barrel of seasteeks being only reckoned twothirds of a barrel fully packed, one-third is deducted, which brings the bounty to £. o 12 3-! for

steeks,

I deducted

126115!

Barrels full \ packed, /

^52231-4-

See above, p. 486. In Additions and Corrections this matter sequently the reading here is “confirm what ^

“

901

is is

printed in the text, and consaid above.”

THE WEALTH OF NATIONS

902

—

Brought over

And if mium of

the herrings are exported, there

is

o

12

o

2

o

14

nf

o

12

6

£.

i

7

5I

£,

o

14

ii-J

o

3

o

o

17

^£.

3$

besides a pre-

8

So that the bounty paid by Government in money for each barrel, is

But

^

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 10 s. a if

bushel, be added, viz

The bounty on each If the herrings are

Bounty

— at

barrel

would amount

cured with British

to

salt, it will

stand thus,

viz.

as before

bounty the duty on two bushels of Scots salt per bushel, supposed to be the quantity at a

^but if to this I 5.

6 d.

medium used

in curing each barrel is added, to wit,

The bounty on each

barrel will

amount

£.

to

iij

And,

When

buss herrings are entered for home consumption in Scotland, and shilling a barrel of duty, the bounty stands thus, to wit as before £. 0 12 3f From which the i a barrel is to be deducted 0 i 0

pay the

But

to that there is to be

added again, the duty

0

II

3-i

0

12

6

£.1

3

gf

0

12

3I

0

i

o

o

3

0

o

14

of the

foreign salt used in curing a barrel of herrings, viz

So that the premium allowed for each barrel of herrings entered for home consumption is

If the herrings are cured with British salt, it will stand as follows, viz.

Bounty on each barrel brought in by the From which deduct the i a barrel paid are entered for home consumption

But at I

S.

busses as above. at the time they

£.

to the bounty the duty on two bushels of Scots salt 6d. per bushel, supposed to be the quantity at a

if

medium used

in curing each barrel, is added, to wit,

The premium

for each barrel entered for

^

home consump-

tion will be

Though

£.

upon herrings exported cannot, perupon herrings enhome consumption certainly may. the loss of duties

haps, properly be considered as bounty; that tered for

3f

APPENDIX An

903

Account of the Quantity of Foreign Salt imported into Scotland, and of Scots Salt delivered Duty free from the Works therefor the Fishery, from the $th of April 1771 to the ^th of April 1782, with a Medium of both for one Year.

PERIOD.

From

the 5th of April 1771, to the 5th of April 1782.

1

Scots Salt delivered from the Works.

Bushels.

Bushels.

936974

168226

j

Medium for one Year

It is to

Foreign Salt imported.

8 si 79 tV

15293*

be observed that the Bushel of Foreign Salt weighs 84

that of British Salt 56

lb.

only.

lb.

INDEX

m

INDEX

I

SUBJECTS [This index is the original index, uhich appeared first in edition 3, with {in square brackets) additions by the present editor It covers only the text and the author's notes. For books quoted in the editor's notes, readers should consult Index II.] [Abassides, opulence of Saracen empire under, 380.] [Abbeville, woollen monopoly, 428.] [Abraham, weighed shekels, 25.] Absentee tax, the propriety of, considered, with reference to Ireland, 846. [Abyssinia, salt money, 23.] [Academy, the, assigned to Plato, 731.] [Academy of Sciences, Description des Arts et MHiers Jaites ou approuvies par Messieurs de Vacad^mie royale des sciences, 1761, 126.] [Acapulco ships, sailing between America and East Indies, 204, 207, 209.] Accounts of money, in modern Europe, all kept, and the value of goods computed, in silver, 39. [Accumulation, early state preceding, 47, 64; title of Bk ii., 259; previous and 'necessary to division of labour, 260.) [Achilles,

Agamemnon’s

offer to, 676.]

Actors, public, paid for the contempt attending their profession, 107. Adriatic, favourable to commerce, 21 Adulteration of coin, worse than augmentation, 885.]

Adulterine ^ilds, 124.] iEgean sea, islands of, 523.] .-Eolian colonies, 523.]

yEsop’s Fables, apologues, 724.] Africa, [powerful king much worse off than European peasant, 12,] cause assigned for the barbarous state of the interior parts of that continent, 20, 21.

[Trade to America consists of slave trade, 537; receives rum in exchange for slaves, 545; manufactures from European towns, 591; no thriving colonics, 599; natives being shepherds could not be displaced, ibr, gum senega export, 622; necessity of forts for commerce, 690; music and dancing, 729-30.]

company [one of five regulated companies, 692;] establishment and constitution of, 696-8; receive an annual allowance from r)arliament for forts and garrisons, 697-8; the company not under sufficient controul, 698; history of the Royal African company, 700-1; decline of, ib.; rise of the

African

present company, 701. [Agamemnon’s recommendation of his cities, 676.] Age, the foundation of rank and precedency in rude

as well as civilized societies, 671. [Agen, land tax in, 805.] Aggregate fund, in the British finances, explained, 867. Agio of the bank of Amsterdam [how accounted for by some people, 312;] explained, 445; of the bank of Hamburgh, 447; the agio at Amsterdam, how kept at a medium rate, 453.

907

9o8

index #

[Agrarian law, the foundation of Rome, 524.] [Agricultural Systems, 627-51.] Agriculture, the labour of, does not admit of such subdivisions as manufactures, 6; this impossibility of separation, prevents agriculture from improving equally with manufactures, 6; natural state of, in a new colony, 92; requires more knowledge and experience than most mechanical professions, and yet is carried on without any restrictions, 127; the terms of rent, how adjusted between landlord and tenant, 144; is extended by good roads and navigable canals, 147; under what circumstances pasture land is more valuable than arable, 149; gardening not a very gainful employment, 152-3; vines the most profitable article of culture, 154; estimates of profit from projects, very fallacious, [not to be promoted by discouraging manufactures, 155;] cattle and tillage mutually improve each other, 220; remarks on that of Scotland, 221-2; remarks on that of North America, 223; poultry a profitable article in husbandry, 224; hogs, 225-6; dairy, 226; evidences of land being completely improved, 228; the extension of cultivation as it raises the price of animal food, reduces that of vegetables, 241-2; by whom and how practised under feudal government, 317-18; its operations not so much intended, to increase, as to direct, the fertility of nature, 344; has been the cause of the prosperity of the British colonies in America, 347; the profits of, exaggerated by projectors, 355; [capable of absorbing more capital than has been applied to it, 2*5.;] on equal terms, is naturally preferred to trade, 357-8; artificers necessary to the carrying it on, 2*5.; was not attended to by the Northern destroyers of the Roman empire, 361; the ancient policy of Europe unfavourable to, 371; was promoted by the commerce and manufactures of towns, 392; [favoured by law of England, 393-4;] the wealth arising from, more solid and durable, than that which proceeds from commerce, 396. Is not encouraged by the bounty on the exportation of corn, 476; why the proper business of new companies [? colonies], 575; the present agricultural system of political oeconomy adopted in France, described, 627; is dis-

couraged by restrictions and prohibitions in trade, 636; is favoured beyond manufactures in China, 644; and in Indostan, 646; does not require so extensive a market as manufactures, 647; to check manufactures, in order to promote agriculture, false policy, 650-1; [supposes a settlement, 655;] landlords ought to be encouraged to cultivate part of their own land, 784, Agrigentum, rivalled mother city, 533.] Agrippina, her white nightingale, 219 ] Aides, the French, farmed, 855 ] Aix la Chapelle, treaty of, 704, 707, 874; university of, 763.] Alcavala, the tax in Spain so called, explained and considered, 850-1; the ruin of the Spanish manufactures attributed to this tax, ib. [Ale, licences to sell, 804; incidence of taxes on, 828 ] Alehouses, the number of, not the efiScient cause of drunkenness, 343, 459. Alexander the Great, private pupil of Aristotle, 133; conquests, 527.] Alexander III., Pope, bull for emancipation, 367 ] |Alien merchants taxed, 830.] 'Alienation, fines on, 81 1.] Allodial rights, mistaken for feudal rights, 387; the introduction of the feudal law tended to moderate the authority of the allodial lords, 388. [Almagro went in search of gold, 529.] [Alsace treated as foreign, 852.] Ambassadors, the first motive of their appointment, 690. America, [colonisation has followed coast and rivers, 19; mines diminished value of gold and silver, 34, 191-2, 198, 236, 241, 415-6; planters are farmers as well as proprietors, 53;] why labour is dearer in North America than in England, 69, 70; [not so rich as England, 70;] great increase of population there, 70, 71; [people marry early yet there is a scarcity of hands, 71; British colonies illustrate genius of British constitution, 73; rapid propagation, 80; stamp act, 84;] common rate of interest there, 92; [acquisitions of territory

INDEX

909

raised interest in Britain, 93; rate of profit in trade with, lower than in Jamaican trade, in; com could not be cultivated by factors like sugar, 157; skins thrown away by natives of, 162; landlords would like trees removed, 163;] is a new market for the produce of its own silver mines, 202; the first accounts of the two empires of Peru and Mexico, greatly exaggerated, 203, 416; improving state of the Spanish colonies, ih.\ [East Indies takes the silver of, 204; the tax forms the whole rent of Spanish gold and silver mines, 213; slovenly husbandry in British colonies, 222-3; cattle killed for hide and taUow, 229; paper currency for small sums, 306-7; interior commerce completely carried on by paper, 307;] account of the paper currency of the British colonies, 310, 31 1; [state of savages, like that of England in time of Julius Caesar, 327;] cause of the rapid prosperity of the British colonies there, 347; [carrying trade of goods to Europe, 354, 355;] why manufactures for distant sale have never been established there, 359; [artificers employ savings in purchase and cultivation of land, ih,)[ its speedy improvement owing to assistance from foreign capitals, 360; [no produce returns such profits as sugar, 366; rapid advance founded on agriculture, 392;] the purchase and improvement of uncultivated lands, the most profitable emplo5rmcnt of capitals, 393; [first inquiry of Spaniards always for gold and silver, 398; discovery caused a revolution in commerce, 405; great part of expense of last French war laid out there, 410;] commercial alterations produced by the discovery of, 415, 416; but two civilized nations found on the

whole continent, 416; [European commerce with, more advantageous than East India trade, 417; returns to trade with, infrequent, 462-3; not more than three million people in British North American colonies, ih.; poorer than France, i6.;] the wealth of the North American colonies increased, though the balance of trade continued against them, 464-5. 467, 470; long coastline and slender British authority, 469;] there, ih.\ [drawback on exports to, 471; the war, 487; settled by different motives from Greek and Roman colonies, 523; no necessity for, 525;] historical review of the European settlements in, 526-31; of Spain, 534; of Holland, 535-7; of France, 538; of Britain, 538; ecclesiastical government in the several European colonies, 541; fish a principal article of trade from North America to Spain, Portugal, and the Mediterranean, 545; naval stores to Britain, 546; [slave labour, 553;] little credit due to the policy of Europe from the success of the colonies, 555; [folly and injustice presided over original settlement, 555; Europe magna virum mater, 556;] the discovery and colonization of, how far advantageous to Europe, 557-96, and to America, 590; [augmented European industry, 557; an advantage to countries which never sent exports there, 557-8; surplus produce the source of advantage to Europe, 559; contributes no military force to mother countries, tb.) and little revenue, ib.‘, exclusive trade supposed the peculiar advantage, 560; rapid progress unforeseen, 564; monopoly attracted capital, 567; uncertain, remote and irregular returns of trade to, 568; effects of stoppage of trade, 572-3; European market for bread and meat extended, 575; shop-keeping policy adopted towards, 579-80; taxation by requisition, 585; ambition of leading men, 586; possible removal of seat of government to, 590; discovery of, one of the two greatest events in history, 590; mother countries have the show but not all the advantages, 591-5;] the colonies in, governed by a spirit of monopoly, 595-6; [more thriving than colonies in Africa, 599; bounty on naval stores from, 609; Britain sometimes courts and sometimes quarrels with, 610; bounties, 610-1;] the interest of the consumer in Britain sacrificed to that of the producer, by the system of colonization, 626; [natives of, were hunters, 653; and contemptible opponents, 655; colonial militia becoming a standing army, 662; natives of, regarded age as the sole foundation of rank, 671; poll taxes, 808; productions of, articles of common use in Great Britain, 834;] plan for extending the British system of taxation over all the provinces of, 887; the question how the Americans could pay taxes without [Revolt,

ii.

Madeira wine, how introduced

INDEX

910

specie considered, 892; ought in justice to contribute to discharge the public debt of Great Britain, 896; expediency of their union with Britain, 897; the British empire there, a mere project, 899. Amsterdam, [190, 421, 445, 579, 616, 770;] agio of the bank of, [how accounted for by some people, 312;] explained, 445; occasion of its establishment, 446, 447; advantages attending payments there, 448; rate demanded for keeping money there, 448-9; prices at which bullion and coin are received, ih., note; this bank, the great warehouse of Europe for bullion, 451; demands upon, how made and answered, 451-2; the agio of, how kept at a medium rate, 453; the treasure of, whether all preserved in its repositories, ib ; the amount of its treasure only to be conjectured, 454; fees paid to the bank for trans.

acting business, ib. ^Anderson, Adam, quoted, 702,] ^Anderson, James, quoted, 183, 213, 281.] ‘Angola, 525, 599.]

Annuities for terms of years, and for account of, 868-869.

lives, in

the British finances, historical

^Antigua, 564, 895.]

Antoninus, Marcus, 731.] Antwerp, 396, 44 Sj 446.] .Aperea of Brazil, 527 UAiroiKtaj 525.]

Apothecaries, the profit on their drugs imjustly stigmatized as exorbitant, 112. shop a source of profit to Hamburg, 769-70.] [ Apothecary [Apples imported from Flaiiders in seventeenth century, 7^] {Apprenticeship statutes raise wages more permanently than they lower them, 61.]

Apprenticeship, the nature and intention of this bond servitude explained, ior-2; the limitations imposed on various trades, as to the number of apprentices, statute of apprenticeship in England, 120; apprenticeships in 118-9; France and Scotland, 121; general remarks on the tendency and operation of long apprenticeships, 122-3; [obstructs free circulation of labour from one employment to another, 134; means of gaining a settlement, 137-8;] the statute of, ought to be repealed, 437. [Relation to privileges of graduates, 719.] [Arabia, hospitality of chiefs, 386; histories full of genealogies, 391; riches long in the same family, ib.] [Victorious when united, 655; militia, 662; despotic authority of scherifs, 672; revenue of chiefs consists of profit, 769.] [Arabia, Gulf of, favourable to commerce, 21.] Arabs,, their manner of supporting war, 653-4. ;Aragon, 528.]

Arbuthnot, Dr. John, quoted, 649.] ’Archipelago, 573.]

Ar^le, the Duke of, 387.] ^Aristotle, munificently rewarded

by Philip and Alexander, 133; Lyceum assigned to, 731; a teacher, 764; quoted, 365, 729.] [Arithmetic, political, untrustworthy, 501; of the customs, two and two make one, 83 2. [Armada, the defeat of, stopped Spanish obstruction of colonisation, 536; less alarming than the rupture with the colonies, 571.] Army, [a disadvantageous lottery, 109;] three different ways by which a nation may maintain one in a distant country, 409; standing, distinction between aid a militia, 660; historical reivew of, 663; the Macedonian army, ib.; Carthaginian army,^ 663-4; Roman army, 664-5; [courageous without active service, 666;] is alone able to perpetuate the civilization of a country, 667; is the speediest engine for civilizing a barbarous country, ib.; under what circumstances dangerous to, and under what, favourable to liberty,

INDEX

911

667-8; [small, would be suficient if martial spirit prevailed, 73S-9; no security to the sovereign against a disaffected clergy, 749.] Artificers, prohibited by law from going to foreign countries, 624; icsiding abroad, and not returning on notice, exposed to outlawry, ih,\ [serving In an army must be maintained by the public, 656-7;] see Manufactures. [Aj, originally a pound of copper, 26; reduced to /j, 27; always a copper coin, 39; reduced at end of ist Punic war, 883-4.] [Ascetic morality taught as moral philosophy, 726.] Asdrubal, his army greatly improved by discipline, 663-4; [the younger], how defeated, 664, [Asinius Celer gave large price for a surmullet, 219.] Assembly, houses of, in the British colonies, the constitutional freedom of, shewn, 551-2. Assiento contract, 703. [Assize of bread, 142.] Assize of bread and ale, remarks on that statute, 178, 183. [Athens, large fees of teachers at, 133; artisans were slaves, 648; paid soldiers of, 657.] [Atlantic, 589, 591.] [Augmentation of coin defined, 885.]

Augustus, emperor, emancipates the slaves of Vedius Pollio, for his cruelty, 554. 'Aulnagers, 25.]

Austere morality favoured by the Austria,

assisted

little

common

by the Danube,

people, 746.] 21; noilitia defeated

by the

Swiss, 666;

survey for land tax, 887.] [Ayr Bank, history [Ayrshire, rise of

of, 297-8.]

demand

for labour in, 76.]

[Azores, 525.]

[Babylon, 365.]

[Bahamas,

526.]

[Bakers, incorporation of, in Scotland, 143.] [Balance of employments, 489,] Balance of annual produce and consumption explained, 464; may be in favour of a nation, when the balance of trade is against it, 464-5. Balance of trade, [absurd speculations concerning, 357;] no certain criterion to determine on which side it turns between two countries, 442; the current doctrine of, on which most regulations of trade are founded, absurd, 456; if even, by the exchange of their native commodities, both sides may be gainers, i}),\ how the balance would stand, if native commodities on one side, were paid with foreign commodities on the other, 456-7; how the balance stands when commodities are purchased with gold and silver, 457-8; the ruin of countries often predicted from the doctrine of an unfavourable balance of trade, 463. [Balboa, Nugnes de, 529.] [Baltic, 21; wood from, 163; flax for, 591.]

and hemp, 346; tobacco

to, 569;

manufactures

Banks [sometimes pay in sixpences to gain time, 44, 304; private, in London allow no interest but in Edinburgh give 4 per cent, on notes, 90; Scotch banking, 281-302;] great increase of trade in Scotland, since the establishof them in the principal towns, 281; their usual course of business, 282; consequences of their issuing too much paper, 285; necessary caution for some time observed by them with regard to giving credit to their customers, 289; limits of the advances they may prudently make to traders, 291; how injured by the practice of drawing and redrawing bills, 295; history of the Ayr bank, 297-9; history of the bank of England, 302-3; the nature and public advantage of banks considered, 304, 305; bankers might carry on their business with less paper, 307, 308; effects of the optional

ment

INDEX

912

clauses in the Scots notes, 309; origin of their establishment, 447; bank money explained, ih. Of England, the conduct of, in regard to the coinage, 519; [those of Edinburgh have no exclusive privilege, 714;] joint stock companies why well adapted to the trade of banking, 714, 715; a doubtful question whether the government of Great Britain is equal to the management of the bank to profit, 770.

Bankers, the credit of their notes how established, 277; the nature of the banking business explained, 277, 282; the multiplication and competition of bankers under proper regulation, of service to public credit, 313.

[Bank of Amsterdam, see Amsterdam.] [Bank of England, had to coin much gold, 286, 287; discounts, 295; history, 302-4.]

[Large capital, 700; enables government to contract unfunded debt, 863-4; stopped usual business during the recoinage, ^*6.; advances the proceeds of taxes, 865; taxes first mortgaged in perpetuity for its advance, 866; advances at January 1775, 875.] of Scotland, 281.] Bank, the Royal, 281.] Bank-money, of greater value than currency, 445; explained, 447.] Bank notes, not below £10 in London, 306, 307; should not be for less than £5,

Bank

307*]

[Bankruptcy most frequent in hazardous trades, in; greatest and most humiliating misfortune, 325.] [Bar, 856.]

[Barbadoes, early prosperity, 564; all cultivated, 895.] [Barbary, 380; 697.] Baretti, Mr., ids account of the quantity of Portugal gold sent weekly to England, 513-4.

Barons, feudal, their power contracted, by the grant of municipal privileges, 376; their extensive authority, 386, 387; how they lost their authority over their vassals, 388-9; and the power to disturb their country, 390-1; [influence of, 752-3; revenue spent on luxuries, 755.] Barter, the exchange of one commodity for another, the propensity to, of extensive operation, and peculiar to man, 13; is not sufiQcient to carry on the mutual intercourse of mankind, 22; [ceases on the introduction of money, 32;] see [Basel, chief

Commerce. revenue from export duty,

802.]

Batavia, causes of the prosperity of the Dutch settlement there, 599-600. Bath Road inn, fallen fortune of, 330.] Bavaria, Danube no use to, 21,] Bayonne treated as foreign to France, 852.] Bazinghen, Abot de, quoted, 518.] Beaumont, J. L. Moreau de, see M6moires.] Beaver skins, review of the policy used in the trade for, 623; [subject to export duty, 832.] [Becket used clean hay, 385.] Beef, cheaj>er now in London, than in the reign of James I., 151; compared with the prices of wheat at the corresponding times, 15 1, 152; [compared with

pork in France and England, 225-6.] [Beggar, alone depends on benevolence, 14; once synonymous with scholar, 132.] Benefices, ecclesiastical, the tenure of, why rendered secure, 750; the power of collating to, how taken from the Pope, in England and France, 756; general equality of, among the Presbyterians, 761; good effects of this equality, 762. [Benefit of clergy, 754.] [Benevolence, does not give us our dinner, 14,] Bengal, to what circumstance its early improvement in agriculture and manufactures was owing, 20; present miserable state of the country, 73; remarks on the high rates of interest there, 94; [profits eat up rent and leave only

INDEX

913

subsistence for wages, 94, 97; piece goods exports, 205; ratio of gold to silver, 210-1.]

[Improper regulations turned dearth into famine, 493;] oppressive con* duct of the English there to suit their trade in opium, 601; [revenue from land rent, 601-2;] why more remarkable for the exportation of manufactures than of grain, 647; [ancient land tax, 789, 791; good roads, 789.] [Bengal, Gulf of, favourable to commerce, 21.] [Benguela, 525, 599.] Berne, [farmers equal to the English, 371;] brief history of the republick of, 37S. Establishment of the reformation there, 758; application of the revenue of the Catholic clergy, 765; derives a revenue from the interest of its treasure, 772; [tax on alienation, 811; only state which has a treasure, 861.] Bernier, Francois, quoted, 688.] Bettering one’s condition, universal desire of, 324, 326, 329, 508, 632.] Bible commonly read in Latin, 721-2.] Bills of exchange, [discounting of, chief means of issuing bdnk notes, 282;] punctuality in the payment of, how secured, 293-4; the pernicious practice of drawing and redrawing explained, 294; the arts made use of to disguise this mutual traffic in bills, 296. [Billets d^Uat^ sometimes at 60 or 70 per cent, discount, 864.] [Birch, Dr. Thomas, quoted, 151.] [Birmingham produces articles of fashion and fancy, 115; manufactures not within the statute of apprenticeship, 120-1; uses £50,000 in gold and silver annually, 207, 209; reduction in price of goods, 243; manufactures grew up naturally, 383; hardware exchanged for wine, 848.] Birth, superiority of, how it confers respect and authority, 672. Bishops, the ancient mode of electing them, and how altered, 751-2, 756. [Blackstone, William, quoted, 35, 366.] [Blanc, Cape, 696.] Body, natural, and political, analogy between, 638. Bohemia, [serfs still exist in, 365; survey and valuation, 786, 787;] account of the tax there on the industry of artificers, 817.

Bombay,

709.]

Bordeaux, see Bourdeaux.] Borlase, quoted, 168.]

Born, Ralph de, his feast, Borough, see Burghs.]

178.]

Boston, high-paid free labour cheaper than slave, 81; less populous than Mexico or Lima, 535.] [Bouchaud, quoted, 810.] [Bounder, proprietor of Cornish tin mine, Bounties, why given in commerce, 418-9.

170.] ^

On exportation, the policy of granting them, considered, 472; on the exportation of corn, 473; this bounty imposes two taxes on the people, 475; evil tendency of this bounty, 480; the bounty only beneficial to the exporter and importer, 481; motives of the country gentlemen in granting the bounty, ih ; a trade which requires a bounty, necessarily a losing trade, 483 [bounties on production, 483;] tonnage bounties to the fisheries considered, 484; account of the white-herring fishery, 488; remarks on other bounties, ih.\ a review of the principles on which they are generally granted, 609; those granted on American produce founded on mistaken policy, 612; how they affect the consumer, 625-6; [public teachers receive a sort of, 733; bounty on corn worse than a tax on necessaries, 826; on articles formerly charged with export duties, 831; give rise to frauds, 833; abolition of, proposed, 836; deducted from customs revenue, 847.] Bounty on the exportation of corn, the tendency of this measure examined, 193; [196-9; and see Bounties.] [Bourbon, the house of, united by British acquisition of Gibraltar and Minorca, .

699.]

INDEX

914

Bourdeaux, why a town of great trade, 319; [memoir of the parliament French debt, 870.] [Brady, Robert, quoted, 374-1 [Braganza, family

of,

Brazil [aborigines

had neither

^

535

of,

as to

]

arts nor agriculture, 203; gold of, 351, 404, 458,

to be a powerful colony under neglect, 535; the Dutch invaders by the Portugueze colonists, 536; computed number of inhabitants there, 536; [Portuguese settled in, ib.)[ the trade of the principal provinces oppressed by the Portu^eze, 542; [Portuguese Jews banished thither, 555.] Bread, its relative value with butcher's meat compared, 149, 151; [tax on, in

Grew

expelled

Holland, 826; levied by licence, 829.] on the Bishop's land, 786.] Brewery, reasons for transferring the taxes on, to the malt, 839-40; [for private use, untaxed, 84^.] Bridges, how to be erected and maintained, 682; [originally maintained by six days' labour, 773.] [Bristol and the African Company, 697.] Britain, Great, evidences that labour is sufficiently paid for there, 74; the price of provisions nearly the same in most places, 74; great variations in the price of labour, 74, 75; vegetables imported from Flanders in the last century, 78; historical account of the alterations interest of money has undergone, 88, 89; double interest deemed a reasonable mercantile profit, 97; in what respects the carrying trade is advantageous to, 352; appears to enjoy more of the carrying trade of Europe, than it really has, 354; is the only country of Europe in which the obligation of purveyance is abolished, 370; its funds for the support of foreign wars inquired into, 410; why never likely to be much affected by the free importation of Irish cattle, 426-7; nor salt provisions, 427; could be little affected by the importation of foreign corn, ih.; the policy of the commercial restraints on the trade with France examined, 441; the trade with France might be more advantageous to each country than that with any other, 462. Why one of the richest countries in Europe, while Spain and Portugal are among the poorest, 508-9; review of her American colonies, 538-42 ; the trade of her colonies, how regulated, 543-4; distinction between enumerated and non-enumerated commodities, explained, restrains manufactures in America, 547-8; indulgences granted to the colonies, 549; constitutional freedom of her colony government, 551; the sugar colonies of, worse governed than those of France, 553; disadvantages resulting from retaining the exclusive trade of tobacco with Maryland and Virginia, 560-1; the navigation act has increased the colony trade, at the expence of many other branches of foreign trade, 562; the advantage of the colony trade estimated, 566; a gradual relaxation of the exclusive trade, recommended, 571-2; events which have concurred to prevent the ill' effects of the loss of the colony trade, 572-3; the natural good effects of the colony trade, more than counterbalance the bad effects of the monopoly, 574; to maintain a monopoly, the principal end of the dominion assumed over the colonies, 5^; has derived nothing but loss from this dominion, 581; is perhaps the only state which has only increased its expences by extending its empire, 586; the constitution of, would have been completed by admitting of American representation, 589; review of the admmistration of the East India Company, 602-6; the interest of the consumer sacrificed to that of the producer in raising an empire in America, 626; the annual revenue of, compared with its annual rents and interest of capital stock, 774; the land-tax of, considered, 7^; tythes, 788; window tax, 797-8; stamp duties, 812, 815; poll taxes in the reign of William III., 819; the uniformity of taxation in, favourable to internal trade, 851; the system of taxation in, compared with that in France, 856; account of the unfunded debt of, 863-4; funded debt, 864; aggregate, and general funds, 867; sinking fund, 868; annuities for terms of years and [Breslau, tax

INDEX

915

for lives, ih.] perpetual annuities the best transferrable stock, 87 1; the reduction of the publick debts during peace, bears no proportion to their accumulation during war, 874; the trade with the tobacco colonies, how carried on, without the intervention of specie, 894; the trade with the sugar colonies explained, ihr, Ireland and America ought in justice to contribute toward the discharge of her public debts, 896; how the territorial acquisitions of the East India company might be rendered a source of revenue, 898; if no such assistance can be obtained, her only resource pointed out, ib, British Empire, Statcs-general of the, 886, 887; colonies provinces of, 899.]

British Linen

Company,

’Brittany, taille

715.]

on lands held by ignoble tenure,

805.]

Bruges, commerce of, 396,] Brutus, lent money at 48 per cent., 94.] Buenos Ayres, price of oxen at, 14^ 186, 229.] Buffon, G, L. L., quoted, 226, 527.] Bullion, the money of the great mercantile republic, 41 1-2; see Gold and

Silver.

[Burcester (now Bicester), price of hides at, 231.] Burghs, free, the origin of, 375; to what circumstances they owed their corporate jurisdictions, 375-6; why admitted to send representatives to parliament, 378-9; are allowed to protect refugees from the country, 379. [Burgundy, vineyards, 155; militia defeated by the Swiss, 666.] [Burman, quoted, 810.] Burn, Dr., his observations on the laws relating to the settlements of the poor [quoted, 77], I39j Butcher, brutal and odious business, 100. Butcher’s meat [progress of price of, 149; an insignificant part of the labourer’s subsistence, 187;] no where a necessary of life, 827. [Buttons, division of labour in making, 8.] [Byelaw, to limit competition, can be enacted by a corporation, 129; of boroughs, 375. 377-] I

Byron, Hon. John, quoted,

1S6.]

[Cabbages, half the price they were forty years ago, 78.] [Cadiz, imports of bullion to, 208; exorbitant profits and profusion at, 578, 592; competition with South Sea Company, 704.] [Caesar’s army destroyed the republic, 667.] [Calcraft’s account, 876.] [Calcutta, land carriage to, 19; ratio of gold and silver at, 21 1; council, 606, 709.] Calvinists, origin of that sect, 759; their principles of church government, 760. Cameron, Mr., of Lochiel, exercised within thirty years since, a criminal jurisdiction over his own tenants, 387. [Campus Martius, 658, 729.] Canada, the French colony there, long under the government of an exclusive company, 538; but improved speedily after the dissolution of the company, 538. Canals, navigable, the advantages of, 147; how to be made and maintained, 682, that of Languedoc, the support of, how secured, 684; may be successfully managed by joint stock companies, 714.

Canary

islands, 525.]

Candles, taxes on, 78; an instrument of trade, 825.] Cannae, battle of, 664.] Cantillon, Mr. [Richard,] remarks on his account of the earnings of the labouring poor, 68. [Canton, silver will buy more commodities at, than in London, 37; poverty in the

neighbourhood of, 72.] of Good Hope, [discovery of passage by, 416, 525, 557, 590;] causes of the

Cape

prosperity of the

Dutch settlement

[Cape Coast Castle, 698.] [Capet, Robert, 756.]

there, 599; [mentioned, 696.]

index

9i6

Capital, [manufacturer’s, 48, 49, 51; society’s, 94; in a trade, 108; of a grocer, 112; of merchants, 158; employed in a mine, 165;] in trade, explained, and how employed, 262; distinguished into circulating and fixed capitals, 262-3; characteristic of fixed capitals, 265; the several kinds of fixed capitals specified, 265-6; characteristic of circulating capitals, and the several kinds of, 266; fixed capitals supported by those which are circulating, ib.; circulating capitals how supported, 267; intention of a fixed capital, 271; the expence of maintaining the fixed and circulating capitals illustrated, 272; money, as an article of circulating capital, considered, 273; money, no measure of capital, 276; what quantity of industry any capital can employ,

279-80; capitals, how far they may be extended by paper credit, 290-1 ; must alwa)^ be replaced with profit by the annual produce of land and labour, 316; the proportion between capital and revenue, regulates the proportion

between industry and idleness, 320; how it is increased or diminished, 321; national evidences of the increase of, 326-7; in what instances private expences contribute to enlarge the national capital, 329-30; the increase of, reduces profits by competition, 336; the difeerent ways of employing a capital, 341; how replaced to the different classes of traders, 343; that employed in agriculture puts into motion a greater quantity of productive labour, than any equal capital employed in manufactures, 345; that of a manufacturer should reside within tihie country, 346; the operation of capitals employed in agriculture, manufactures, and foreign trade, compared, 346-7; the prosperity of a country depends on the due proportion of its capital applied to these three grand objects, 348; different returns of capitals employed in foreign trade, 350; is rather employed on agriculture than in trade and manufactures, on equal terms, 357-8; is rather employed in manufactures than in foreign trade, 359; the natural progress of the emplo3^ent of, 360; acquired by trade, is very precarious until realized by the cultivation and improvement of land, 395; the employment of, in the different species of trade, how determined, 421; [industry proportioned to, 424.] [Distributed among inferior ranks annually, 838; and land, the two original sources of revenue, 879.] [Capital values, taxes on, 809-15.] Capitation taxes, the nature of, considered, 818-9; in England, 819; in France, 820; [and see Poll taxes.] Carlisle, exchange between London and, 310.] 'Carnatic, 707.]

'Carneades, 134.] Carolina, planters both fanners and landlords, 159; plantation of, 564.] €arreri, Gemelli, see under Gemelli.] Carriage, land and water, compared, 18; water carriage contributes to improve arts and industry, in all countries where it can be used, 19, 147, 206; [absence of cheap, causes settlement of finer manufactures, 382.] Carriage, Land, how facilitated and reduced in price, by public works, 683. [Carriage tax, 686.] [Carron, 76.] [Carrots reduced in price, 78,] Carrying trade, [defined, i. 278;] the nature and operation of, examined, 351; is the symptom, but not the cause, of national wealth, and hence points out the two richest countries in Europe, 354; trades may appear to be carrying trades, which are not so, ih.\ the disadvantages of, to individuals, 421; the Dutch, how excluded from being the carriers to Great Britain, 430; drawbacks of duties originally granted for the encouragement of, 470. [Carthage, mariners sailed beyond Gibraltar, 19-20; the fate of, great historical revolution, 663.] [Carthagena, 667, 704.]

Carthaginian army, its superiority over the Roman army, accounted [Cash account at Scotch banks explained, 282-3.] [Castile, 528.]

for, 664.

INDEX

917

'Castracani, Castruccio, drove out manufactures from Lucca, 381.] 'Casuistry taught as moral philosophy, 727.] ^Catholics established Maryland, 555.] Cato, advised good feeding of cattle, 150; on communication of agricultural

knowledge, 429.] Cattle, [at one time used as money, 23;] and corn, their value compared, in the different stages of agriculture, 148; the price of, reduced by artificial grasses, 15 1 ; to what height the price of cattle may rise in an improving country, 220; the raising a stock of, necessary for the supply of manure to farms, 221; cattle must bear a good price to be well fed, ih ; the price of, rises in Scotland in consequence of the union with England, 222; great multiplication of European cattle in America, ih.\ are killed in some countries, merely for the sake of the hides and tallow, 229; the market for these articles more extensive than for the carcase, ib,; this market sometimes brought nearer home by the establishment of manufactures, ih.\ how the extension of cultivation raises the price of animal food, 241; [labouring, are a fixed capital, 263; importation prohibited, 394;] is perhaps the only commodity more expensive to transport by sea than by land, 426; Great Britain never likely to be much affected by the free importation of Irish cattle, ih. ‘Ceded Islands, 545, 876, 895.] .

'Celebes, 600.] 'Celtes cultivated

music and dancing, 730.] laws relating to, with observations on them, 138-9.

Certificates, parish, the

[Chance of gain overvalued, 107.] [Charles V., remark on the abundance of France and poverty of Spain, 202; befriended the Pope, 758.] Charles VI, surveyed Milan, 786.] Charles VIII., expedition to Naples, 394, 395.] Charles XII. of Sweden, 414.] Charlevoix, Francois, quoted, 538.] Chastity, in the liberal morality, 746.] 'Chatham, Lord, his account, 876.] Child, Sir Josiah, [quoted, 693;] his observation on trading companies, 695-6. Children [value of, in North America, 70, 532;] riches unfavourable to the production, and extreme poverty to the raising, of them, 79; the mortality still greater among those maintained by charity, 79. [Chili, takes Spanish iron, 167; rent of gold mines, 171; price of horses in, 186; growth of towns of, 204; cattle killed for sake of hide and tallow, 229; conquest of, 529, 556.] China, to what the early improvement in arts and industry there was owing, 20; concurrent testimonies of the misery of the lower ranks of the Chinese, 71, 72; [one of the richest countries in the world, 71;] is not however a declining country, 73; [stationap?- population, 80; long stationary and as rich as possible, 95;] high rate of interest of money there, 95; [country labourers higher paid than artificers, etc., 127; price of silver affected by price in Peru, 168; much richer than any part of Europe, 189, 238;] the price of labour there, lower than in the greater part of Europe, [189,] 206; [trade with, 204, 205;] great state assumed by the grandees, 205; [not much inferior to Europe in manufacturing, 206;] silver the most profitable article to send thither, ih.; the proportional value of gold to silver, how rated there, 211; [quantity of precious metals affected by the abundance of American mines, 236;] the value of gold and silver much higher there than in any part of Europe, 238; [wonderful accounts of wealth and cultivation, 348; never excelled in foreign commerce, ih,; wealthy without carrying on its own foreign trade 360; without mines richer and better off than Mexico or Peru, 416; replacement of capital employed, 457; acquired wealth by agriculture and interior

commerce,

462.]

[Importance of the Cape and Batavia to the trade with Europe, 600;] agriculture favoured there, beyond manufactures, 644; foreign trade not

INDEX favoured there, 6445 extension of the home-market, ib,) great attention paid to the roads there, 687; [land tax the principal source of revenue, 688;] in what the principal revenue of the sovereign consists, *7895 [consequent goodness of roads and canals, tb,;] the revenue of, partly raised in kind, 790; [silk, 837.]

*

'Chocolate, a luxury of the poorest Spaniards, 823; duty on, 837.] 'Choiseul, Duke of, managed the parliament of Paris, 751 ] Christianity established by law, 722 ] [Christiern II., Reformation in Sweden assisted by his tyranny, 758 ] Church, [of England not successful in resisting enthusiasts, 741; loyal, 759; drains the universities, 763;] the richer the church, the poorer the state, 765; amount of the revenue of the church of Scotland, 765; the revenue of the church heavier taxed in Prussia, than lay proprietors, 786; the nature and effect of tythes considered, 7S8

Cibao, 526.] Cicero, quoted, 94, 150, 827.]

Cipango,

526.]

_

Circulation, the dangerous practice of raising money by, explamed, 294; in traffic, the two different branches of, considered, 306. Cities, circumstances which contributed to their opulence, 379; those of Italy the first that rose to consequence, 380; the commerce and manufactures of, have occasioned the improvement and cultivation of the country, 392. Clergy, a supply of, provided for, by public and private foundations for their education, 130,* curates worse paid than many mechanics, 13 1. [Of North American colonies, not numerous, and maintained by voluntary contributions, 541; greatest engrossers of land in colonies of Spain, Portugal and France, ^6.]; of an established religion, why unsuccessful against the teachers of a new religion, 741; why they persecute their adversaries, id.; the zeal of the inferior clergy of the church o£ Rome, how kept alive, ib.; utility of ecclesiastical establishments, 743; how connected with the civil magistrate, 744; unsafe for the civil magistrate to differ with them, 749 j must be managed without violence, 750; of the church of Rome, one great army cantoned over Europe, 752; their power similar to that of the temporal barons, during the feudal monkish ages, ib.; how the power of the Romish clergy declined, 755; evils attending allowing parishes to elect their

own

ministers, 760.

Cloathing, more plentiful than food, in uncultivated countries, 16 1; the materials for, the first articles rude nations have to offer, 162. Coach, a man not rich because he keeps a, 76.]

Coach and six not effectually demanded by a very poor man, 56.] ^Coach-tax better levied as an annuity than as a lump sum, 827.] Coal, must generally be cheaper than wood to gain the preference for fuel, 165; the price of, how reduced, 166-7; fhe exportation of, subjected to a duty higher than the prime cost of, at the pit, 623; the cheapest of all fuel, 825; [manufactures confined to coal countries in Great Britain, tb.;] the tax on [seaborne], absurdly regulated, tb. Coal mines, their different degrees of fertility, 165; when fertile, are sometimes unprofitable by situation, 165, 167; the proportion of rent generally paid for, 167; the machinery necessary to, expensive, 263. Coal trade from Newcastle to London, employs more shipping than all the othei carryi^ trade of England, 352. Cochin China, remarks on the principal articles of cultivation there, 156-7. [Cockfighting has ruined many, 859.] [Cod used as money, 23.] Coin, stamped, the origin, and peculiar advantages of, in commerce, 25; the different species of, in different ages and countries, 26; causes of the alterations in the value of, 27, 32, 34; how the standard coin of different nations came to be of different metals, 38-9; a reform in the English coinage suggested, 44-s; [gold and silver had the qualities which gave them value before

INDEX

919

they were coined, 172;] silver, consequences attending the debasement of, 194; [amount of Scotch, 212-3; amount of British, 410;] coinage of France and Britain, examined, 444. Why coin is privately melted down, 516, 517; the mint chiefly employed to keep up the quantity thus diminished, 517; a duty to pay the coinage would preserve money from being melted or counterfeited, 517, 518; standard of the gold coin in France, 518; how a seignorage on coin would operate, ib.', a tax upon coinage is advanced by every body, and :^ally paid by nobody, 520, 521; a revenue lost, by government defraying the expence of coinage, 521; amount of the annual coinage before the late reformation of the gold coin, ib.; the law for the encouragement of, founded on prejudice, 522; consequences of raising the denomination of, as an expedient to facilitate pa)nnent of public debts, 882; adulteration of, 883. Colbert, M., the policy of his commercial regulations disputed, 434, 628; his character, 627-8. Colleges, cause of the depreciation of their

endowments

money

rents inquired into, 35; the

from whence they generally arise, 716; whether they have in general answered the puiposes of their institution, ib.; these endowments have diminished the necessity of application in the teachers, 717; the privileges of graduates by residence, and charitable foundation of scholarships, of,

injurious to collegiate education, 719; discipline of, 720. and coal-heavers, their high earnings accounted for, 104. [Coloni Partiarii or Metayers, 366.] [Colonia signifies a plantation, 525.] Colonies, new, the natural progress of, 92; [restrictions on hatters’ apprentices in the English, 119; planters in British, usually farmers as well as landlords, X59; paper currency of British, 311; slave cultivation in British, 365-6;] Colliers

modern, the commercial advantages derived from them, 419. Ancient, on what principles founded, 523; ancient Grecian colonies not retained under subjection to the parent states, ih.; [Roman colonies, 524-5;] distinction between the Roman and Greek colonies, ib,\ circumstances that led to the establishment of European colonies in the East Indies and America, 525; the East Indies discovered by Vasco de Gama, 526; the West Indies discovered by Columbus, ih,) gold the object of the first Spanish enterprises there, 529; and of those of all other European nations, 531; causes of the prosperity of new colonies, 531 [-56]; rapid progress of the ancient Greek colonies, 533; the Roman colonies slow in improvement, ib.; the remoteness of America and the West Indies, greatly in favour of the European colonies there, 533; review of the British American colonies, 538; expence of the civil establishments in British America, 540; ecclesiastical government, 541; general view of the restraints laid upon the trade of the European colonies, 541; the trade of the British colonies, how regulated, 543-4; the different kinds of non-enumcrated commodities specified, ib.; enumerated commodities, 546; restraints upon their manufactures, 547-8; indulgences granted them by Britam, 550; were free in every other respect except as to their foreign trade, 551; little credit due to the policy of Europe from the success of the colonies, 555; throve by the disorder and injustice of the European governments, 555; have contributed to augment the industry of all the countries of Europe, 557; exclusive privileges of trade, a dead weight upon all these exertions both in Europe and America, 558; have in general been a source of expence instead of revenue to their mother countries, 560; have only benefited their mother countries by the exclusive trade carried on with them, 560; consequences of the navigation act, 562; the advantage of the colony trade to Britain estimated, 566; a gradual relaxation of the exclusive commerce recommended, 571-2; events which have prevented Britain from sensibly feeling the loss of the colony trade, 572-3; the effects of the colony trade, and the monopoly of that trade, distinguished, 574; to maintain a monopoly, the principal end of the dominion Great Britain assumes over the colonies, 580; amount of the ordinary peace estab

INDEX

920

of, ih.; the two late wars Britain sustained, colony wars, to support a monopoly, 581; two modes by which they might be taxed, 583; their assemblies not likely to tax them, ib.; taxes by parhamentary requisition, as little likely to be raised, 584; representatives of, might be admitted into the British parliament with good effect, 586; answer to objections against

lishment

American representation, 589; the

interest of the

cons^er

in Britain,

sacrificed to that of the producer, in raising an empire in America, 626; [should contribute to the revenue or be cut off, 900.] Coliunbus, the motive that led to his discovery of America, 526; why he gave the names of Indies to the islands he discovered, 526-7; his triumphal exhibition

of their productions, 528.

Columela,his instruction for fencing a kitchen-garden, 153; advises the planting of vineyards, 154; [quoted, 224, 365.] easier than

Combination among masters

by

among workmen and not

prohibited

law, 66.] Commerce, the different common standards or mediums made use of to facilitate the exchange of commodities, in the early stages of, 23; origin of money, ib.; definition of the term valuej 28. Treaties of, though advantageous to the merchants and manufacturers of the favoured country, necessarily disadvantageous to those of the favouring country, 5rr; translation of the commercial treaty between England and Portugal concluded in 1703 by Mr. Methuen, 512-3; restraints laid upon the European colonies in America, 541; the present splendor of the mercantile system, owing to the discovery and colonization of America, 590; review of the plan by which it proposes to enrich a country, 6o7[-626]; the interest of the consumer constantly sacrificed to that of the producer, 625; see Agriculture, Banks, Capital, Manufactures, Merchant, Money, Stock, Trade, &c. Commodities, the barter of, insufEcient for the mutual supply of the wants of mankind, 22; metals found to be the best medium to facilitate the exchange of, 23; labour an invariable standard for the value of, 33; real and nominal prices of, distinguished, ib.; the component parts of the prices of, explained and illustrated, 49-50; the natural, and market prices of, distmguished, and how regiilated, 55; the ordinary proportion between the value of any two commodities, not necessarily the same as between the quantities of them commonly in the market, 212; the price of rude produce, how affected by the advance of wealth and improvement, 217; foreign, are primarily purchased with the produce of domestic industry, 349; when advantageously exported in a rude state, even by a foreign capital, 359-60; the quantity of, in every country, naturally regulated by the demand, 404; wealth in goods, and in money, compared, 406; exportation of, to a proper market, always attended with more profit, than that of gold and silver, 41 1; the natural advantages of countries in particular productions, sometimes not possible to struggle against, 425. [Commons, the House of, not a very equal representation of the people, 551; untrustworthy reports of debates in, 697.] Company, [government of an exclusive, the worst of all governments, 537; most effectual expedient for stopping growth of a colony, 542;] mercantile, incapable of consulting their true interests when they become sovereigns, 601-2; an exclusive company, a public nuisance, 606; trading, how first formed, 691; regidated, and joint stock companies, distinguished, 691-2; regulated companies in Great Britain, specified, 692; are useless, 693; the constant view of such companies, 695; forts and garrisons, why never maintained by regulated companies, ib.; the nature of joint stock companies explained, 699, 712; [seldom successful without an exclusive privilege, 700; account of several companies, 700-11;] a monopoly necessary to enable a joint stock company to carry on a foreign trade, 712; [Morellet's list of fifty-five failures, 713;] what kind of joint stock companies need no exclusive privileges, ib.; joint stock companies, why well adapted to the trade of ^

INDEX

921

banking, ib.; the trade of insurance may be carried on successfully by a [joint] stock company, 714; also inland navigations, and the supply of water to a great city, ib.; ill success of joint stock companies in other undertakings, 715 Competition, the effect -

of, in the purchase of commodities, 56; among the venders, 57, 87; [restraint of, causes inequalities of wages and profits, 118, 129; the only cause of good management, 147; of shopkeepers, cannot hurt the producer or the consumer, 343.]

[Compi^gne, 319.] [Conceit, men’s overweening, often noticed, 107.] Concordat, in France, its object, 756.

[Condom,

805.]

[Congo, 525, 599 -] Congress, American, its strength owing to the important characters it confers on the members of it, 587. Connecticut, esspense of, 540; governor elected by the assembly, 852.] Considerations on the Trade and Finances of Great Britain^ quoted, 875.] Constantine, 665.] Constantinople, 750.] 'Consumable goods, taxes on, finally paid by the consumer at convenient time, 778; paid indifferently from the three kinds of revenue, 810; incidence of, &c., 821-58.]

[Consumption the sole end of production, 625.] [Contrdle, the, French stamp duties on registration, 814.] Conversion price, in the payment of rents in Scotland, explained, 181. [Copartnery, difference between it and a joint-stock company, 699.] [Copenhagen, 320.] Copper, [Romans used unstamped bars of, as money, 24;] the standard measure of value among the ancient Romans, 39; is no legal tender in England, ib.; [rated above its value in the English coinage, 43; not legal tender for more than a shilling, 44.] [Copyholders, 805.] [Copyright, a monopoly granted to an author, 712.] Cori, the largest quadruped on the island of St. Domingo, described, 527. Corn, the raising of, in different countries, not subject to the same degree of rivalship as manufactures, 6 ; is the best standard for reserved rents, 34; the price of, how regulated [varies more from year to year than silver], 36; the price of, the best standard for comparing the different values of particular commodities at different times and places, 38; the three component parts in the price of, 50; is dearer in Scotland than in England, 75; [corn-field produces more food than pasture of equal extent, 148;] its value compared with that of butchers meat, in the different periods of agriculture, 148, 152; compared with silver, 176-8; circumstances in a historical view of the prices of corn, that have misled writers in treating of the value of silver at different periods, 181; [at all stages of improvement costs the price of nearly equal quantities of labour, 186-7;] is always a more accurate measure of value, than any other commodity, ib.; why dearer in great towns than in the country, 190; why dearer in some rich commercial countries, as Holland and Genoa, ib.; rose in its nominal price on the discovery of the American mines, 191 ; and in consequence of the civil war under king Charles I., 192-3; and in consequence of the bounty on the exportation of, ib.; tendency of the bounty examined, 196-7; [recent high price due to bad seasons, 198;] chronological table of the prices of, 251-8; the least profitable article of growth in the British West Indian colonies, 366; the restraints formerly laid upon the trade of, unfavourable to the cultivation of land, 371-2; [bounty on exportation and duties on importation, 394;] the free importation of, could little affect the farmers of Great Britain, 428. The policy of the bounty on the exportation of, examined, 473; the reduction in the price of corn, not produced by the bounty, 474; tillage not en-

922

INDEX

couraged by the bounty, 474-6; the money price of, regulates that of all other home-made commodities, 477; illustration, 478; ill effects of the bounty, 480-1; motives of the country gentlemen in granting the bounty, 481; the natural value of corn not to be altered by altering the money price, 482; the four several branches of the corn trade specified, 490; the inland dealer, for his own interest will not raise the price of corn higher than the scarcity of the season requires, ih.\ corn a commodity the least liable to be monopolized, 492; the inland dealers in corn too numerous and dispersed to form a general combination, 492; dearths never artificial, but when government interferes improperly to prevent them, ih.' the freedom of the corn trade, the best security against a famine, 493; old English statute to prohibit the com trade, 494; consequences of farmers being forced to become corn dealers, 495; the use of corn dealers to the farmers, 498; the prohibitory statute against the corn trade softened, 499; but still under the influence of popular prejudices, ih.\ the average quantity of corn imported and exported, compared with the consumption and annual produce, 501; tendency of a free importation of corn, 501-2; the home market the most important one for com, 502; duties payable on the importation of grain, before 13 Geo. III., 503, note‘j the impropriety of the statute 22 Car. II. for regulating the importation of wheat, confessed by the suspension of its execution, by temporary statutes, 504; the home-market indirectly supplied by the exportation of com, ih.] how a liberal system of free exportation and importation, among all nations, would operate, 506; the laws concerning corn, similar to those relating to religion, 507; the home-market supplied by the cariying trade, ih.\ the system of laws connected with the establishment of the bounty, undeserving of praise, ih,\ remarks on the statute 13 Geo. III., 509; [restrictions on French com trade removed, 642-3; bounty on corn worse than a tax on necessaries, 826.] [Com, Essay on the Legislation and Commerce ofy quoted, 856.] [Cornwall, 168-70.] Corporations, tendency of the exclusive privileges of, on trade, 61, 1 19; by what authority erected, 123-4; the advantages corporations derive from the surrounding country, 124; check the operations of competition, 127; their internal regulations, combinations against the public, 128; are injurious, even to the members of them, 129; the laws of, obstmet the free circulation of labour, from one employment to another, 135; the origin of, 375; are exempted by their privileges from the power of the feudal barons, 376; the European East India Companies disadvantageous to the eastern commerce, 417; the exclusive privileges of corporations ought to be destroyed, 437. Cortez, 529.] Corv6e, a principal instrument of tyranny, 689.] Cossacks, treasures of their chief, 414.] Cost, real, defined, 55.] Cottagers, in Scotland, their situation described, 116; arc cheap manufacturers of stockings, 117; the diminution of, in England, considered, 226. [Cotton, most valuable vegetable production of the West Indies, 527; bales of, exhibited by Columbus, 528.] Gotten manufacture not practised in Europe in 1492, 527-8.] Country, the charms of, attract capital, 358.] Country gentlemen, imposed on by the arguments of merchants, 402; imitated manufacturers, 429.] [Courts, see Justice.] Coward, character of, 739. Credit, [of a person does not depend on his trade, 105; might supply the place of

money, 405;] see Paper-money. Creoles, 535, 536.] Cromwell, 563, 667.] Crown lands should be sold, 776.] Crusades to the Holy Land, favourable to the revival of commerce, 380.

INDEX Cruttenden East Indiaman, 708 Cuba, 168, 556.] Cura^oa, 537.]

923

]

Curate, 130.]

Currency of states, remarks on, 446. [Custom-house books untrustworthy, 442.] Customs, the motives and tendency of drawbacks from the duties of, 466; the revenue of the^ customs increased, by drawbacks, 470; occasion of first imposing the duties of, 69 r; origin of those duties, 829; three ancient branches of, 830; drawbacks of, 831; are regulated according to the mercantile system, 832; frauds practised to obtain drawbacks and bounties, the duties of, in many instances, uncertain, 834; improvement of, suggested, 834; computation of the expence of collecting them, 847. [Cyder, tax on, 840.] [Cyprus, 94.] [Daedalian wings of paper money, 305.] Dairy, the business of, generally carried on as a save-all, 226; circumstances which impede or promote the attention to it, 226-7; English and Scotch dairies, ib. [Daniel, Gabriel, quoted, 377.] [Dantzig, 190, 443.] ^ Danube, the navigation of that river why of little use to the interior parts of the

country from whence

it flows, 21.

[Darien, 527.]

[Dauphin6, 805.]

Davenant, Dr., [quoted,

77;] his objections to the transferring the duties on beer to the malt, considered, 842. [Dear years enable masters to make better bargains with servants, 83.] Dearths, never caused by combinations among the dealers in corn, but by some general calamity, 492; the free exercise of the corn trade the best palliative against the inconveniences of a dearth, 499; com dealers the best friends to * the people at such seasons, 500. [Debasement of coinage practised ever3rwhere, 27.] Debts, public, [efltect of, on annual produce, to be treated in fi[fth book, lx; paid by debasing the coin, 27 ] [Not the cause of British prosperity, 508; interest on, not subject to the land tax, 774;] the origin of, traced, 861; are accelerated by the expences attending war, 861; account of the unfunded debt of Great Britain, 864; the funded debt, 864-5; aggregate and general funds, 867; sinking fund, 868, 873; annuities for terms of years, and for lives, 868; the reduction of, during peace, bears no proportion to its accumulation during war, 873-4; the plea of the interest being no burden to the nation, considered, 879; are seldom fairly paid when accumulated to a certain degree, 882; might easily be discharged, by extending the British system of taxation over all the provinces of the empire, 886; Ireland and America ought to contribute to discharge the public debts of Britain, 896. Decker, Sir Matthew, [quoted, 480, 563;] his observation on the accumulation of taxes, 824; his proposal for transferring all taxes to the consumer, by annual payments, considered, 828; [quoted, 889.] [Defence much more important than opulence, 431.]

|De Lange, quoted,

644.]

Demand,

between absolute and effective, 56; regulates multiplication 80;] though the increase of, may at first raise the price of

of

[difference

human species,

goods, it never fails to reduce it afterward, 706. [Democritus, quoted, 153.] [Denisart, quoted, 90.] Denmark [has advanced considerably in agriculture and manufactures, 202;East India trade began in i8th century, 204; James I.’s bed came from, 330; East India trade under an exclusive company, 417.]

INDEX

924

gold, silver or diamond mines in colonies of, 531; attempts at settlein America in 17th century, 536;] account of the settlements of, in the Indies, 537; [stunted colonies with rule of exclusive company, 542; without an exclusive company would never have sent a ship to East Indies,

[No

ment West

596; would have lost nothing thereby, 597; excluded from Eastland Company’s monopoly, 693; Reformation in, 758; levies transit duty on the Sound, 846.] [^Dlpenses annuelles,’ ‘foncites’ and 'primitives’ distinguished, 629.] [Dercyllidas, quoted, 414.]

[Desert (Sahara), 525.]

Diamonds, the mines of, not always worth working India than in Europe, 205-6.] Didactron of Isocrates, 133.] Dignity of the sovereign, expense of, 766.]

for, 172-3;

power in price in

Diocletian, 665.] Diogenes sent on

Diomede,

his

an embassy, 134.] armour cost nine oxen,

23.]

Dion

Cassius, quoted, 810.] Dionysius of Halicarnassus, quoted, 732.] Directors of companies inefficient managers, 700.] ^ Discipline, the great importance of, in war, 661-2; instances, 663 &c. Diseases, peculiar, of different trades, 82.] Dissenters, learned but not so popular as methodists, 741.] Distribution, subject of part of first book, Iviii, 3; prices and produce distributed between wages, profit and rent, 52, 248; of wealth more unequal in France

than America,

463.]

Diversions, public, their political use, 748. [Division of labour, 3-22; gives occasion to exchange and money, 22, 28; in the original state of things would have augmented wages, 64; is promoted by the interest of owners of stock, 86; in metal and woollen manufactures, 243-4; relation to exchange, 259; advantageous to all the persons employed, 356; promoted by foreign trade, 415, 416; in the trade of war must be introduced by the state, 659; encouraged by increase of demand, 706.] Dobbs, Mr., quoted, 702,] Dog never exchanges, 13.] Domaine, source of French revenue, 855,] Donaingo, St. [mines of, 168;] mistaken by Columbus for a part of the East Indies, 526; its principal productions, ib.; the natives soon stripped of all their gold, 528-9; historical view of the French colony there, 538. [Dominica a new field for speculation, 895.] [Dominicans revived languishing faith, 742.] Doomsday book, [mentions annual poll taxes paid by towns, 374;] the intention of that compilation, 786. Dorians, ancient, where the colonies of, settled, 523. [Douglass, Dr., quoted, 158, 310.] [Draco, 612.] Dramatic exhibitions, the political use of, 748. Drawbacks, in commerce, explained, 418-9. The motives to, and tendency of, explained, 466; on wines, currants, and wrought silks, 467; on tobacco and sugar, ih., on wines, particularly considered, 468; were originally granted to encourage the carrying trade, 470; the revenue of the customs increased by them, 470; drawbacks allowed in favour of the colonies, 550; [given on certain articles formerly subject to export duties, 831; give rise to fraud, 833; which might be prevented, 836; deductions from customs revenue, 847.] Drugs, regulations of their importation and exportation, 622. [Drummond, Mr., his notes for guineas, 41.] Drunkenness, the motive to this vice inquired into, 459-60; [condoned by liberal morality, 746.]

INDEX

92s

Du

Cange, quoted, 885.] Dumfries, 310.] Dunfermline, 330.]

Dunkirk treated as foreign by France,

852.]

Dupleix, 707.] Dutch, their settlements in America slow in improvement because under the government of an exclusive company, 537; their East India trade checked by monopoly, 596; measures taken by, to secure the monopoly of the spice trade, 600; see Holland. [Du Tot, quoted, 302.] [Du Verney, quoted, 302, 864.]

East India, [native governments did not encourage foreign commerce, but derived opulence from inland navigation, 20; shells used as money, 23;] representation of the miserable state of the provinces of, under the English government there, 73; [great fortunes easily acquired there, 94; market for American silver, 204;] historical view of the European trade with those countries, ihr, rice countries more populous and rich than corn countries, 205 the real price of labour lower in China and Indostan, than in the greater part of Europe, 206; gold and silver the most profitable commodities to ;

ih.\ the proportional value of gold to silver, how rated there, [trade of, to Europe, a roundabout trade of consumption, 354; expense of last French war laid out there, 410, 581 ; richer and better cultivated than Mexico and Peru, 416; commerce with, less advantage to Europe than that with America, 417;] great extension of foreign commerce by the discovery of a passage to, round the cape of (rood Hope, 416; historical review of the intercourse with, ^17; effect of the annual exportation of silver to, from Europe, ib.'j [re-exportation of goods from, brings back gold and silver, 442;

carry thither, 21 1

;

goods mentioned, 457, 525, 527.] [Drawbacks on exportation of goods from, to America, 470, 550; Columbus tried to find a western passage to, 526, 531; origin of the name, 327; northwest passage to, 531; Dutch settlements under an exclusive company, 537; advantages to Europe of the Cape passage, 557, 595-606; its discovery one of the two most important events in history, 590; countries which trade directly with, enjoy the show, 591; mercantile regulations concerning trade with, derange the natural distribution of stock more than others, 595;] the trade with, chiefly carried on by exclusive companies, ih.] tendency of their monopolies, 596; [poor countries should not trade with, 596-9; no colonies there thriving like the American, 599; the Cape the halfway house, 600; see Indostan, and East India Company.] East India Company, [oppresses and domineers, 73; servants' profits eat up rent, 97; import tea worth £1,500,000, 205; tea dearer than that of Dutch and Gottenburg companies, 405; envy of its privileges and consequent argu-

ments as

to the trade carried on, 417.] [Restraints on the rice trade imposed by, caused a famine, 493;] a monopoly against the very nation in which it is erected, 595; the operation of such a company in a poor, and in a rich country, compared, 596; that country whose capital is not large enough to tend to such a distant trade ought not to engage in it, 598-9; the mercantile habits of trading companies render them incapable of consulting their true interests when they become sovereigns, 601-2; [their interest as sovereigns that European imports should be sold cheap and Indian exports dear, and the reverse as merchants, 603;] the genius of the administration of the English company, ^6.; subordinate practices of their agents and clerks, 603-4; the bad conduct of agents^ in India owing to their situation, 605; such an exclusive company a nuisance in every respect, ih,\ [originally established to maintain forts, 690; exclusive privilege, 700;] brief review of their history, 704-[ii]; their privileges in^ vaded, 705; a rival company formed, ih.] the two companies united, 706-7; are infected by the spirit of war and conquest, 707; agreements between the

INDEX

926

707-8; interference of government in their terriand in the direction at home, ib.\ why unfit to govern a great empire, 710; [may trade after expiration of exclusive privilege, 713;] their sovereign and commercial characters, incompatible, 771, [Bengal land tax before their domination, 789, 791; a modus converted into a payment in kind, 791; its advance to government, 866, 873-6;] how the territorial acquisitions of, might be rendered a source of revenue, 898. [East India Company, the Dutch, its tea cheaper than that of the English Company, 405; maliciously injures the English, 705.]^ [East India Company, the French, established to maintain forts, 690 ] [East India Company, the Gottenburg, its tea cheaper than that of the English

company and government,

torial administration, 709;

Company,

405.]

[Eastland Company, history [Ecclesiastical State, taxes

of,

692, 693.]

on bread, 826; sinking fund created from savings

in

interest, 873.]

[Economists, the French. See Oeconomists.j Edinburgh [land and water traffic from to London, 18; tenpence a day the price of labour, 75; bankers pay 4 per cent., 90; wages only half what they are in London, no; lodgings much dearer than in London, 117, 118; new town contains no Scotch timber, 166; two public banks founded, 281; owing to cash accounts, merchants have an advantage over those of London, 283; Rawing and redrawing on London, 294;] its present share of trade owing to the removal of the court and parliament, 320; [trade with England, 349 ] Education, the principal cause of the various talents observable in different men, 15; [for a particular employment much be replaced from earnings, loi.] [Institutions for, 681, 716-40;] those parts of, for which there are no public institutions, generally the best taught, 721; in universities, a view of, 727; of travelling for, 728; course of, in the republics of ancient Greece, 728; in ancient Rome, 729; the ancient teachers superior to those in modern times, 732; public institutions injurious to good education, 733; inquiry how far the public ought to attend to the education of the people, 734; the different opportunities of education in the different ranks of the people, 736; the advantages of a proper attention in the state to the education of the people, 739-40; [beneficial to the whole society and therefore not unjustly defrayed by general contribution, 768.] [Edward VI., coin adulterated under, 885.] Egypt, the first country in which apiculture and manufactures appear to have been cultivated [owing to the Nile], 20; [religion bound every man to follow the occupation of his father, 62; wealth of ancient, 348, 360, 380; disliked the sea, 348; neglected foreign commerce, 462.] Agriculture was greatly favoured there, 645; [caste system, ib.; great works on the Nile, / 5 .;] was long the granary of the Roman empire, 647; [ancient revenue chiefly land-tax, ih,) two languages, 722; land-tax anciently 20 per cent., 789; good roads, ih.] Ejectment, action of, in England, when invented, and its operation, 368. 'Elboeuf, 84.]

Eldorado, 530.] Elections, Countries of, in France, 806.] Elizabeth, Queen, first to wear stockings in England, 245.]

Empires all mortal, but aim at immortality, 781-2.] Employments, the advantages and disadvantages of the different kinds of, in the same neighbourhood, continually tend to equality, 99; the differences or inequalities among, specified, 100; the constancy or precariousness of, influences the rate of wages, 103. [Emulation, pod effects of, even in competition, 732.]

mean

professions, 717; always excited

where scarce, may be specially profitable, [Endowments, bad effect of, on education, 716-33.]

[Enclosure,

150.]

by

INDEX

927

England, the dates of its several species of coinage, silver, gold, and copper, 39; why labour is cheaper there, than in North America, 69; the rate of population in both countries compared, 70; the produce and labour of, have gradually increased from the earliest accounts in history, while writers are representing the country as rapidly declining, 327; enumeration of obstructions and calamities which the prosperity of the country has surmounted, 328; circumstances that favour commerce and manufactures, 393; laws in favour of agriculture, 393-4; why formerly unable to carry on foreign wars of long duration, 413; why the commerce with France has been subjected to so many discouragements, 462; foundation of the enmity between these countries, 463.

Translation of the commercial treaty concluded in 1703, with Portugal, 512-3; inquity into the value of the trade with Portugal, 513-4; might procure gold without the Portugal trade, 515; consequences of securing the

colony trade by the navigation act, 5:62. [English Copper Company of London, 715.] Engrossing, see Forestalling. [Engrossing of land in ancient times, 361; in colonies, 539.] Entails, the law of, prevents the division of land by alienation, 361; intention 362.

Enumerated commodities, 470,

of,

543-4.]

Ephesus, 533.]

Ephron,

25,]

Epices, the chief part of French judges^ emolument, 678; distributed in proportion to their diligence, ib] Epictetus, a teacher, 764.] Epicurus possessed gardens, 731,] Equality of taxation defined, 777.] Equipage, 164, 331; American colonies a showy, of the British Empire, 899.] Equity demands that labourers should be tolerably well fed, &c., 79.]

Esau, 391.]

Eton

College prices of corn, 185, 191-2, 199.]

Europe, general review of the several nations of, as to their improvement since the discovery of America, 202; the two richest countries in, enjoy the greatest shares of the carrying trade, 354. Inquiry into the advantages derived by, from the discovery and colonization of America, 557; the particular advantages derived by each colonizing country, 559; and by others which have no colonies, 591. (Eustatia Island, 537.] (Euxine, 20.] Exchange, the operation of, in the commercial intercourse of different countries, 401; the course of, an uncertain criterion of the balance of trade between two countries, 442; [explanation of ‘at par,^ ‘in favour of' and ‘against,' 442-4;] is generally in favour of those countries which pay in bank money, against those which pay in common currency, 455. [Exchequer bills a part of the unfunded debt, 864 Excise, the principal objects of, 829; the duties of, more clear and distinct than the customs, 834; affects only a few articles of the most general consiunption, 834; [embarrasses the smuggler more than customs, 835;] the excise scheme of Sir Robert Walpole defended, 837; the excise upon home made fermented and spirituous liquors, the most productive, 838; expence of levying excise duties computed, 847; the laws of, more vexatious than those of the customs, 849-50; [would require alteration if extended to the colonies,

888 .] all common trades, 100.] Exercise, military, alteration in, produced by the invention of fire arms, 660. Expences, private, how they influence the national capital, 329; the advantage of bestowing them on durable commodities, 329-31.

[Executioner best paid of

INDEX

928

[Expilly, Jean Joseph, quoted, 856.] Export trade, the principles of, explained, 353; when rude produce may be advantageously exported, even by a foreign capital, 360; why encouraged by European nations, 417; by what means promoted, 418. The motives to, and tendency of, drawbacks of duties, 466; the grant of bounties on, considered, 472; exportation of the materials of manufactures,

review of the restraints and prohibitions

of, 612.

Faith, articles of, how regulated by the civil magistrate, 749. Families, seldom remain on large estates for many generations in commercial countries, 391. Famine, see Dearth. Farmers of land, the several articles that compose their gain, distinguished, 53; require more knowledge and experience than the generality of manufacturers, 127; in what their capitals consist, 263; the great quantity of productive labour put into motion by their capitals, 344; artificers necessary to them, 358; their situation better in England than in any other part of Europe, 368; labour under great disadvantages every where, 370; origin of long leases of farms, 390; are a class of men least subject to the wretched spirit of mono-

poly, 428. Were forced,

by old statutes, to become the only dealers in com, 495; could not sell corn cheaper than any other corn merchant, 496; could seldom sell it so cheap, 497"8,* the culture of land obstructed by this division of their capitals, 497; the use of corn dealers to the farmers, 498; how they contribute to the annual production of the land, according to the French agricultural system of political oeconomy, 628. Farmers of the publick revenue, their character, 853-4, 871-2. Farm-rent paid by boroughs, 374-5, 378 ] Ferdinand and Isabella, Pernambuco, 542, 543.]

526.J

Fertile lands cultivated first, 92.] Fertility, rent of land varies with, 147.] Feudal government, miserable state of the occupiers of land under, 318; trade and interest of money under, ib.; feudal chiefs, their power, 362; slaves, their situation, 364-5; tenures of land, 366; taxation, 370; original poverty and servile state of the tradesmen in towns, 373; immunities seldom granted but for valuable considerations, 374; origin of free burghs, 375; the power of the barons reduced by municipal privileges, 376-7; the cause and effect of ancient hospitality, 385; extensive power of the ancient barons, 386-7; was not established in England until the Norman conquest, ib.; was silently sub-

by manufactures and commerce, 388. Feudal wars, how supported, 656; military exercises not well attended to, under, 659; standing armies gradually introduced to supply the place of the feudal militia, 666; account of the casualties or taxes under, 81 1; [merchants despised and envied, 829;] revenues under, how enjoyed by the great landverted

holders, 859. Fiars, public, in Scotland, [supply evidence of the fall in the price of grain, 76, 240;] the nature of the institution explained, 182. [Fidei commissa, 363.] [Fifteenths and tenths resembled the taillej 370.] Fines for the renewal of leases, the motive for exacting them, and their tendency, 783-

Cape, 469, 546, 580, 888.] Fire arms, alteration in the art of war, effected by the invention of, 660, 669; the invention of, favourable to the extension of civilization, 668-9. [Fire (i.e. steam) engine, 9.] [Fire insurance, 108.] Fish, the component parts of the price of, explained, 51; [case in which rent forms, a part of their price, 145;] the multiplication of, at market, by human in [Finisterre,

INDEX

929

dustry, both limited and uncertain, 235; how an increase of demand raises the price of fish, 235. Fisheries, observations on the tonnage bounties granted to, 484; to the herring fishery, 485; the boat fishery ruined by this bounty, 487. Flanders, [onions imported from, 78; wool exported to, 162; fine manufacture of wool, 247; English wool exc^nged for fine cloths of, 380; ancient manufacture of fine cloth, 381; carried on chiefly with English and Spanish wool, 382;] the ancient pmmercial prosperity of, perpetuated by the solid improvements of agriculture, 396; [importation of bone lace from, prohibited 434.]

[Industry augmented by colonisation of America, 557; supplies linen to America, 591.] Flax, the component parts of the price of, explained, 51. Fleetwood, bishop, remarks on his Chronicon Preciosum, 182, 184; [quoted, 184, 185, 232.] [Florence, a Roman colony, 533; paid Lorenzo’s trading debts, 771.] [Florida, French settlers in, murdered by Spaniards, 536.] [Flota, the Spanish, 572.] Flour, the component parts of the price of, explained, 51; [duties on,

common,

826.]

[Fontainebleau, 319.]

Food, will always purchase as much labour as it can maintain on the spot, 146; bread and butchers’ meat compared, 148, 151; is the original source of every other production, 164; the abundance of, constitutes the principal pait of the riches of the world, and gives the principal value to many other kinds of riches, 174.

Forestalling and engrossing, the popular fear of, like the suspicions of witchcraft, 500. Forts, when necessary for the protection of commerce, 690.

[Foundling hospitals, high mortality in, 79.] France [quality and price of corn, silks, hardware and woollens compared with Poland and England, 6; debasement of coin, 35; ratio of gold to silver, 43; seignorage of 8 per cent., 45, 518; high rented vineyards, 61; fall in price of grain since seventeenth century, 76, 198, 240, 474;] fluctuations in the legal rate of interest for money there, during the course of the present century, 90; remarks on the trade and riches of, 91; [market rate of interest

higher than in England, wages lower, richer than Scotland but not progressing so fast, ih,\ carrying trade taken by the Dutch, 91;] the nature of apprenticeships there, 1 21; the propriety of restraining the planting of vineyards, examined, 154, 158; [corn carefully cultivated in the wine provinces, 154-5; vineyards need not be envied by Britain, 159;] variations in the price of grain there, 180; [labouring poor seldom eat butchers’ meat, 187; fall in price of corn, though exportation of grain was prohibited till 1764, 198, 474;] the money price of labour has sunk gradually with the money price of corn, 200; [improved since the colonisation of America, 202; silver preponderates in the coinage of, 213; exports poultry to England, 225; price of pork nearly equal to that of beef, 225-6;] foundation of the Mississippi scheme, 302; [corn as cheap as in England though there is little paper money, 309;] little trade or industry to be found in the parliament towns of, 319-20; [futile attempt to reduce the rate of interest, 340; lawyers have dressed entails in the garb of substitutions and fidci commisses, 363;] description of the class of farmers called metayers, 366; laws relating to the tenure of land, [shortness of leases], 369; services formerly exacted beside rent, ih.\ the taille, what, and its operation in checking the cultivation of land, 370; origin of the magistrates and councils of cities, 377-8; [wine exchanged for English wool, 380; wine and brandy for Polish corn, ih.^ breeding of silk worms introduced in reign of Charles IX., 382; allodial ownership preceded the feudal system, 387; cultivation and improvement inferior to that of England, 394-5;] no direct legal encouragement given to agriculture, 395;

930

INDEX [prohibition of exporting coin, 403; exchange of wine for English hardware not supposed disadvantageous to England, 408; last war with, cost ninety millions, 410; Merovingian Kings had treasures, 414; established exclusive company for East India trade, 417;] ill policy of M, Colbert’s commercial regulations, 434; French goods heavily taxed in Great Britain, 440; the commercial intercourse between France and England now chiefly carried on by smugglers, 441; the policy of the commercial restraints between France and Britain, considered, 441-2; [par of exchange, 442-3, 446;] state of the coinage there, 445; [invasion of Holland, 452, 453; advantages of trade with, 457; cheap wine does not cause drunkenness, 459-60; wine discouraged by English in favour of Portugal, 460;] why the commerce with England has been subjected to discouragements, 462-3; [much more populous and rich than the American colonies and therefore a better market, 463;] foundation of the enmity between these countries [France and England], ib. [England unwilling to carry French goods, 468; no drawback allowed by England on exportation of French wines to America, 470; scarce ever

necessary to restrain exportation of corn, 507; provisions of Methuen treaty as to wine and wool, 512, 513; required Portugal to exclude British ships, 515;] remarks concerning the seignorage on coin, 5x8; standard of the gold coin there, ib,\ [no gold or silver mines in the American colonies, 531; settlements in America, 536-8; plenty of good land there, 538; subject to custom of Paris, 539; no revenue from colonies, 541 ; policy of establishing exclusive companies, 542;] the trade of the French colonies, how regulated, 543; [refining sugar flourishes in colonies, 548;] the government of the colonies conducted with moderation, 552; the sugar colonies of, better governed, than those of Britain, 553; [slaves better managed there, ih.; capital accumulated there, 554; industry augmented by colonisation of America, 557; tobacco dearer than in England, 561; navy, 563; tobacco imports, 569; invasion of England, 571;] the kingdom of, how taxed, 585; the members of the lea^e, fought more in defence of their own importance, than for any other cause, 588; [supplies linen to America, 591; East Indian trade now open, 59 5 ; English import duty on yam, 608; English prohibition of linen imports, 609; indigo, 610; exclusive trade in gum senega, &c., taken by England, 622;] the present agricultural system of political oeconomy adopted by philosophers there, described, 627[-43; type of agricultural country, 632; agriculture and corn trade relieved from restraint owing to the (economists, 642-3; half or one-third of the population agricultural, 646; veterans defeated by English standing army, 663; fees in parliaments, 678; cost of Languedoc canal, 684;] under what direction the funds for the repair of the roads are placed, 686; general state of the roads, 687; [great roads only attended to, 688; tyranny of the coro^^ 689; South Sea Company ruined by the slave trade, 703;] the universities bacily governed, 719; remarks on the management of the parliaments of, 751; measures taken in, to reduce the power of the clergy, 756; [Reformation, 758; only one professor whose works are worth reading, 763; treasure of Berne invested in the funds, 765, 772; the oeconomists, 782; the predial taille, 787, 805;] account of the mode of rectifying the inequalities of the predial taille in the generality of Montauban, 787; the personal taille e:^lained, 805; the inequalities in, how remedied, 806; how the personal taille discourages cultivation, 807-8; the Vingtieme, 809; stamp duties and the contrdle, 812-4; [taille charged on worL men a direct tax on wages, 817;] the capitation tax, how rated, 819; [leather shoes not necessaries, 822; tobacco taxed fifteen times its value, 823; silk manufactures could be undersold by English, 837; p6ages, 845;] restraints upon the interior trade of the country by the local variety of the revenue laws, 852; the duties on tobacco and salt, how levied, 854; the different sources of revenue in, 855; how the finances of, might be reformed, ib.; the French system of taxation compared with that in Britain, 856; [might levy three times the British revenue, ih.\ billets d*itat at a discount, 864;] the nature of tontines explained, 870; estimate of the whole national debt of,

INDEX ib.]

93 X

[reason for more of the debt being in annuities than in England, 871; bachelors, ih,\ oppressive public debt, 881; augmentation of

more wealthy coin, 885.]

[Franciscans revived languishing faith, 742.] [Frederick of Holstein, 758 ] [Freedom defined 375.] [Freedom of trade would supply gold and silver as well as wine, 404; would sup-

ply an agricultural country with [Fr6zier, quoted, 168-9,

artificers

and merchants,

635.]

203-4.]

Frugality, generally a predominating principle in human nature, 324. [Fruit yields greater profit and rent than corn, 152.] Fuller’s earth, the exportation of, why prohibited, 619. Funds, British, [Dutch holding in, 91; Bernese treasure partly invested in, 772;] brief historical view of, 863-4; operation of, politically considered, 876; the practice of funding, has gradually enfeebled every state that has adopted it, 881. Fur trade, the first principles of, 162.

compounded for, 852; one of the great sources of French revenue, 855.] Gama, Vasco de, the first European who discovered a naval track to the East

[Gabelle,

Indies, 526.

[Ganges, 20, 327, 646.] Gardening, the gains from, distinguished into the component parts, 53; not a profitable

employment,

153.

[Garonne, 319.] [Gassendi, a professor who entered the church, 763.] Gemelli-Carreri, quoted, 534. Gems, see Stones. General fund, in the British finances, explained, 867. [Geneva, respectable clergy of, 762; eminent men of letters are professors, 763.] [Gengis Khan, 398.] Genoa, why corn is dear in the territory of, 190; [shipping encouraged by the Crusades, 380; small state obliged to use foreign coin, 446; bank of, 447; Columbus belonged to, 526; tax on bread, 827; enfeebled by debt, 881.] [Gentlemen, English university education not proper for forming, 727; would be better educated in the absence of public educational institutions, 733.] [Gentoo, government of India, 645; religion, 646,] [Geometry should be taught in parish schools, 737.] [Georgia, cost of civil establishment, 540; not planted at time of Navigation Act,

[Germany, improved since the discovery of America, 202; nation of, overran Roman Empire, 361; species of slavery still exists in, 365; purveyance still exists in, 370; free towns of, 378; expense of last war laid out in, 410, 581; foreign trade, 441.] [Linen exported from England to the colonies receives a drawback, 551; linen eiq^orted to America, 557, 570, 591; drained by the Spanish Flota, 572; trade with America, 591, 592; could have been conquered by Rome, 665; justice a source of revenue, 675; just beyond the shepherd stage when Rome fell 676; Reformation in, 758; eminent men of letters often professors, 763-4*1

[Ghent, 396.] [Gibraltar, straits of, 19; acquisition of, served to unite the house of Bourbon, 698-9.] [Gilbert, Baron, quoted, 368.] Glasgow, [recent rise in the demand for labour, 76;] the trade of, doubled in fifteen years, by erecting banks there, 281; why a city of greater trade than

Edinburgh, 320, [Glass grinding company, 715.] [Glaucus’ armour cost 100 oxen, 23.]

INDEX

932

[Goa, 599.] [Golconda, 172.] Gold, not the standard of value in England, 39; its value measured by silver, 40: reformation of the gold coin, 41, 42; mint price of gold in England, 42; the working the mines of, in Peru, very unprofitable, 1 70-1; qualities for which this metal is valued, 172; the proportional value of, to silver, how rated before and after the discovery of the American mines, 211; is cheaper in the

Spanish market than silver, 213. Great quantities of, remitted annually from Portugal to England, 513; why little of it remains in England, 514; is always to be had for its value, 515silver, the prices of, how affected by the increase of the quantity of the metals, 188; are commodities that naturally seek the best market, 188; are metals of the least value among the poorest nations, 190; the increase in the quantity of, by means of wealth and improvement, has no tendency to diminish their value, 190- 1; the annual consumption of these metals very considerable, 207; annual importation of, into Spain and Portugal, 208; are not likely to multiply beyond the demand, 210; the durability of, the cause of the steadiness of their price, 210; on what circumstances the quantity^ of, in every particular country, depends, 236; the low value of these metals in a country, no evidence of its wealth, nor their high value of its poverty, 239; if not employed at home, will be sent abroad notwithstanding all prohibitions, 323; the reason why European nations have studied to accumulate these metals, 399; commercial arguments in favour of their e^qportation, 400; these, and all other commodities, are mutually the prices of each other, 404; the quantity of, in every country, regulated by the effectual demand, 404; why the prices of these metals do not fluctuate so much as those of other commodities, 405; to preserve a due quantity of, in a country, no proper object of attention for the government, ib.; the accumulated gold and silver in a country distinguished into three parts, 409; a great quantity of buUion alternately exported and imported for the purposes of foreign trade, 41 1-2; annual amount of these metals imported into Spain and Portugal, 412; the importation of, not the principal benefit derived from foreign trade, 415; the value of, how affected by the discovery of the American mines, ih.\ and by the passage round the Cape of Good Hope to the East Indies, 416; effect of the annual exportation of silver to the East Indies, 417; the commercial means pursued to increase the quantity of these metals in a country, 418, 440; bullion how received and paid at the bank of Amsterdam, 448; at what prices, *449, note) a trading country without mines, not likely to be exhausted by an annual exportation of these metals, 459. The value of, in Spain and Portugal, depreciated by restraining the exportation of them, 478; are not imported for the purposes of plate or coin but for foreign trade, 516; the search after mines of, the most ruinous of all projects, 529; are valuable, because scarce, and difficult to be procured,

Gold and

530

-

Gorgias, evidence of the wealth he acquired by teaching, 133. [Gottenburg, tea smuggled from, 205; company, 405,] Government, civil, indispensably necessary for the security of private property, 670; subordination in society, by what means introduced, ih.) inequality of fortune introduces civil government for its preservation, 674; the administration of justice, a source of revenue in early times, ih,) why government ought not to have the management of turnpikes, 685; nor of other public works, 689 j [expense of, like that of a great estate, 777; soon learns the art of draining its subjects’ pockets, 813;] want of parsimony during peace, imposes a necessity of contracting debts to carry on a war, 861; must support a regular administration of justice to cause manufactures and commerce to flourish, 862; origin of a national debt, 863; progression of public debts, ih.) war, why generally agreeable to the people, 872. Governors, political, the greatest spendthrifts in society, 329.

INDEX

933

[Gracchi, 729.]

[Grapes might be grown in Scotland at sufficient expense, 425.] Grasses, artificial, tend to reduce the price of butcher^s meat, 151. Graziers, subject to monopolies obtained by manufacturers to their prejudice, 619. Greece, [ancient, had no word for apprentice, 123; slavery harsher than in the middle ages, 364; cultivation of com degenerated, 365; citizens consisted of landed proprietors, 373; opulent and industrious, 380.] Foreign trade promoted [prohibited] in several of the antient states of, 647; [trade and manufactures carried on by slaves, 648; citizens long served in war without pay, 656;] militaiy exercises, a part of general education, 658; soldiers not a distinct profession in, 658; [individual military exercises, 660; militias defeated by Macedonian and Roman standing armies, 663-4; but had defeated Persian militia, 666; just beyond the shepherd stage at the Trojan war, 676;] course of education in the republics of, 728; the morals of the Greeks inferior to those of the Romans, [732; sanguinary factions, 729; exercises and elementary education, 730;] schools of the philosophers and rhetoricians, 730; law no science among the Greeks, 731; courts of justice, ih.) [abilities of people equal to those of modem nations, 732;] the martial spirit of the people, how supported, 739; [great men of letters were teachers, 764; public revenue largely obtained from state lands, 773.] [Greek clergy turbulent, 750.] Greek colonies, [reasons for sending them out, 523;] how distinguished from Roman colonies, 524-5; rapid progress of these colonies, 533; [plenty of good land, 534; sometimes contributed military force but seldom revenue, 559; England and America might imitate the tie between mother country and colony, ih] Greek language, how introduced as apart of university education, 722-3; philosophy, the three great branches of, 723. Green glass, tax on, 829.]

Greenland seal

fishery, 608;

South Sea Company’s whale

fisheiy, 703.]

refinery, 548; new field for speculation, 895.] profits of, explained, 112.]

Grenada sugar Grocer, high

Ground

rents, great variations of, according to situation, 792; are a subject of taxation than houses, 795; [tax on the sale of, 813.] Guastalla, 827.]

more proper

Guernsey, 584.] Guicciardini, quoted, 395

]

Guienne, 155.] Guilds, adulterine, 124.]

Guinea

coast, 459, 525, 698.]

Guineas, not used in computations, 39; Drummond’s notes for, 41 Gum senega, review of the regulations imposed on the trade for, 622,

[832].

[Gumilla, 530.] Gunpowder, great revolution effected in the art of war by the invention of, 661, 668; this invention favourable to the extension of civilization, 669. Gustavus Vasa, how enabled to establish the reformation in Sweden, 758.

[G3annazium, 658, 729,

738.]

[Hackney coaches and chairs, taxes on, [Hale, Lord Chief Justice, quoted, 77.]

804.]

[Halifax, 383.]

[houses of, supported by Bank of England, 304; goods imported from, paid for by bills on Holland, 443; exchange with, formerly unfavourable, 445-6; a small state which must use foreign coin, 446;] agio of the bank

Hamburgh,

of,

explained, 447*

monopoly hampers the merchants, 592; type of mercansources of the revenue of that city, 769-70, 772; the inhabitaxed to the state, 801.

[British colonial tile state, 632;]

tants, of,

how

934

INDEX

Hamburgh Company, some account

of, 692 Hamilcai, 663.] Hannibal, 664.] Hanseatic league, causes that rendered it formidable, 378; why no vestige remains of the wealth of the Hans towns, 395 ] Harbours, cost of, should be defrayed by a port duty on tonnage of ships, 682.] Hardware, 408, 458; Birmingham manufacturers buy wine with, 848 ] Hasdrubal, see Asdrubal.] Hawkers, tax on, 804 ] Hawkins, Serjeant, quoted, 613.] Hazard, capitalist paid for incurring, 48.] Hearth money, why abolished in England, 797. Hebrew language not a part of common university education, 722.] Hebrides, wages in, 76; herring fishery, 486 ] Hinault, President, quoted, 588.] Henry VIII. of England, prepares the way for the reformation by shutting out the authority of the Pope, 758; [adulterated the coin, 885.] Henry IV. of France, siege of Paris, 588; had a treasure, 861.] Henry, Prince, 151.] Heptarchy, 327.] Herbert, quoted, 180, 198.] Herring buss bounty, remarks on, 485; fraudulent claims of the bounty, 486;^ the boat fishery the most natural and profitable, ih.\ account of the British white-herring fishery, 488; account of the busses fitted out in Scotland, the amount of their cargoes, and the bounties on them, 901 [-2]. [Hesiod, quoted, 724.] Hides, the produce of rude countries, commonly carried to a distant market, 228;

price of, in England three centuries ago, 231-2; salted hides inferior to fresh ones, 233; the price of, how affected by circumstances, in cultivated and in uncultivated countries, 233. [Higgling of the market, 31.] Highlands of Scotland, [could not support a nailer, 18; wages in, 76;] interesting remarks on the population of, 79; [high mortality of children, ih.\ cattle of, admitted to England by the Union, 149, 220-2; old families common in, 391;] military character of the Highlanders, 662. Highways origmally maintained by sk days’ labour, 773.] [Hippias, lived in splendour, 133; peripatetic, 730.] [Hispaniola, 229.]

Hobbes, Mr., remarks on his definition of wealth, 31. Hogs, circumstances which render their flesh cheap or dear, 225. Holland, [water carriage afforded by the Maese, 20; ratio of silver to gold, 14 to I, 43;] observations on the riches and trade of the republic of, 91; [richer than England, wages high, profits low, gained carrying trade of France, holds large amount in French and English funds, not decaying, ^6.;] not to follow some business, unfashionable there, 96; [corn chiefly imported, 150; spices burnt to keep up the price, 158, 491, 600;] cause of the dearness of corn there, 190; [improved since the discovery of America, 202; expelled the Portuguese from India, 204, 417; tea smuggled from, 205; houses supported by Bank of England, 304; operation of carrying trade, 351, 352;] enjoys the greatest share in the canyng trade of Europe, 354; [farmers not inferior to those of England, 371; legislature attentive to commerce and manufactures, 393; exchange with, 401; East India Company’s tea smuggled into England, 405; imports lean cattle, 427; Dutch imdertaker of woollen manufacture at Abbeville, 428;] how the Dutch were excluded from being the carriers to Great Britain, 430; [supplied other nations with fish, ih.\ bad terms with England, i6.;] is a country that prospers under the heaviest taxation, 433; [French wme smuggled, 442; computation of state of credit and debit, 443-4;] account of the bank of Amsterdam, 447; [market price of bullion

INDEX

93S

above the mint price, 449;] this republic derives even its subsistence from foreign trade, 464. [Buys English corn cheaper and can sell manufactures cheaper in consequence of the British corn bounty, 480; must carry on herring fishery in decked vessels, 486; position in regard to the Methuen treaty, 513; no gold, silver or diamonds in the American colonies, 531; attack on Brazil, 535; settlements in 17th century, 536; Cura^oa and Eustatia free ports, 537; exclusive company for colonial commerce, 542; naval power in 1660, 563; possessed New York and New Jersey, ih,\ tobacco imports, 569; linen exported to America, 570, 591; maintains monopoly of trade to the spice islands, 595; would send more ships to the East Indies if the trade were free, 596; settlements at the Cape and Batavia the most considerable in Africa and the East Indies, 599; destructive policy in East Indies, 601, 602; English duty on yarn, 608; gum senega clandestinely exported from England, 622; t3^e of mercantile state, 632; subsistence drawn from other countries, 641-2; great cities the capitals of little republics, 760; respectable clergy, 762; eminent men of letters often professors, 763-4; monopoly of madder owing to existence of tithe elsewhere, 789;] tax paid on houses there, 797; [rate of interest, ih ; 2 per cent, tax on capital paid voluntarily, 803; a tax intended to fall on capital, 803; servants' tax, 809;] account of the tax upon successions, 810; stamp duties, 812; [tea and sugar luxuries of the poorest, 823; amount of taxes on bread and necessaries ruined manufactures, 826-7;] taxes in, ih.^ 857; [tea taxed by licence to drink, 829; expense of preserving from the sea, 857;] its prosperity depends on the republican form of government,

ih.

Holstein, cattle of, exported to Holland, 642

]

Holy Land, 380.] Homer, quoted, 23, 676.] Honoraries from pupils to teachers in colleges, tendency of,

to quicken their

dili-

gence, 717.

[Hop-garden, high profit of, 152.] Hose, in the time of Edward IV. how made, 245. Hospitality, ancient, the cause and effect of, 385, 859. [Hottentots, 599,]

House, different acceptations of the term in England, and some other countries, 1 1 8, [163]; houses considered as part of the national stock, 264; houses produce no revenue, 264, 265.

The rent of, distinguished into two parts, 791; operation of a tax upon house rent, payable by the tenant, 792; house rent the best test of the tenant’s circumstances, 794; proper regulation of a tax on ih.\ how taxed in Holland, 797; hearth money, ih.; window tax, ih.; [tax on sale of, 813.] Hudson’s bay company, the nature of their establishment and trade, 701; their profits not so high as has been reported, 702. [Hume, quoted,

229, 309, 337, 385, 413, 742-3 ] little use to, 21; serfs still exist in, 365; industry encouraged colonisation of America, 557; mines worked by free men, 648.]

[Hungary, Danube

by

Hunters, war

how supported by a nation of,

653; cannot be very numerous, 654;

no established administration of justice needful among them, 669; age the sole foundation of rank and precedency among, 671; no considerable inequality of fortune, or subordination to be found among them, 672; no hereditary honours in such a society, 673; [minds kept alive by absence of division of labour, 735.]

Husbandmen, war how supported by a nation

of,

655.

Husbandry, see Agriculture. [Hutchinson, quoted, 893.]

[Hyder

Ali, 711.]

Idleness, unfashionable in Holland, 96; [why greater prevails where revenue predominates, 321.]

among our

ancestors, 319;

INDEX

936

[Iguana or Ivana, principal animal of St. Domingo, 527.] Importation, why restraints have been imposed on, with the two kinds of, 418; how restrained to secure a monopoly of the home market to domestic industry, 420; the true policy of these restraints doubtful, 420-1; the free importation of foreign manufactures more dangerous than that of raw materials, 426; how far it may be proper to continue the free importation of certain foreign goods, 434; how far it may be proper to restore the free importation of goods, after it has been interrupted, 435; of the materials of manufacture, review of the legal encouragements given to, 607; [statistics of, untrustworthy, 833.] Independents, the principles of that sect explained, 745. India, Gulf of, 21 India stock, 605, note 119.] Indian com, 527.]

Indian

seas, 595.]

Indies, see East and West. Indostan [violent police compels every man to follow the occupation of his father, 62; country labourers better paid than most artificers, 127; labourers’ real wages less than in Europe, 206; quantity of gold and silver affected by American mines, 236; treasure commonly buried in, 268; wonderful accounts of its ancient wealth and cultivation, 348; its wealth obtained through exportation was in foreign hands, 360; more advanced than Mexico and Peru, 416; operation of foreign commerce, 437.] [Vasco de Gama arrived by the Cape in 1497, 526;] the several classes of people there kept distinct, 645; the natives of, how prevented from undertaking long sea voyages, 646; [revenue chiefly from land tax, 647; silk exports to Rome, 648; roads and canals, 688; land tax revenue stimulates the sovereign’s interest in such works, ib,\ supposed necessity for forts to protect commerce, 690; silk should be admitted free to Britain, 837; see East

Indies and East India Company.] Industry, the different kinds of, seldom dealt impartially with by any nation, lix; the species of, frequently local, 17; naturally suited to the demand, 58; is increased by the liberal reward of labour, 81; how affected by seasons of plenty and scarcity, 82; is more advantageously exerted in towns than in the country, 125; the average produce of, always suited to the average consumption, 186-7; is promoted by the circulation of paper money, 278; three requisites to putting industry in motion, 279-80; how the general character of nations is estimated by, 319; and idleness, the proportion between, how regulated, 320; is employed for subsistence, before it extends to conveniences and luxury, 357; whether the general industry of a society, is promoted by commercial restraints on importation, 420-1; private interest naturally points to that employinent most advantageous to the society, 42 1 but without intending or knowing it, 423; legal regulations of private industry, dangerous assumptions of power, ib.\ domestic industry ought not to be employed on what can be purchased cheaper from abroad, 424; of the society, can augment only in proportion as its capital augments, 425; when it may be necessary to impose some burden upon foreign industry, to favour that at home, 429-30; the free exercise of industry ought to be allowed to all, 437* The natural effort of every individual to better his condition, will, if unrestrained, result in the prosperity of the society, 508. [Infanticide, Iviii; in China, 72.] Insurance, from fire, and sea risks, the nature and profits of, examined, 108; the trade of insurance may be successfully carried on by a joint stock company, 714. Interest, landed, monied,

and trading, distinguished, 334; [public, promoted by private, 423, 594.] Interest for the use of money, the foundation of that allowance explained, 52; [varies with the rate of profit, 88;] historical view of the alterations of, in

INDEX

937

England, and other countries, 88[-98]; remarks on the high rates of, in Bengal, 94; and in China, 95; may be raised by defective laws, independent on the influence of wealth or poverty, ihr, the lowest ordinary rate of, must somewhat more than compensate occasional losses, ih.) the common relative proportion between interest and mercantile profits inquired into, 97; [stock lent at, 333-40;] was not lowered in consequence of the discovery of the American mines, 337; how the legal rate of, ought to be fixed, 339; consequences of its being fixed too high or too low, 339-40; the market rate of, regulates the price of land, 340. [As a source of public revenue, 771; nominally subject to British land tax, 774;] whether a proper object of taxation, 800; [fall in the rate of, 801,

868 .] hand, 423.]

[Invisible

[lonians colonised Asia Minor and the .assage to the East round the Cape of Good Hope, 525-6; [settlement of Brazil, 535-6; exclusive companies recently established for Pernambuco and Marannon, 542; prohibition of import of tobacco except from the colonies, 549; banished Jews to Brazil, 555;] lost its manufactures by acquiring rich and fertile colonies, 575; [trade with East Indies open, 595; and none the less prosperous, 598, 599; African colonies resemble the American, though there is no exclusive company, 599; summary of effect of Methuen treaty, 625-6; slave trade unprofitable, 703; see Spain and Portugal.] [Postlethwayt, quoted, 302, note 24; 874.] Post-office, [affords a revenue to the state, 682;] a mercantile project well calculated for being managed by a government, 770. Potatoes, remarks on, as an article of food, 160; culture, and great produce of, ih.\ the difficulty of preserving them the great obstacle to cultivating them for general diet, 161. [Potosi,

mines

of, 148, 191, 201,]

[Pots and pans, 408.] Poultry, the cause of their cheapness, 224; is a oeconomy in France than in England, 225. [Pounds, various, 26-7; accounts kept in, 39.]

more important

article of rural

INDEX

952

Poverty sometimes urges nations to inhuman customs, Iviii; is no check to the production of chhdren, 79; but very unfavourable to raising them, 79. Pragmatic sanction in France, the object of, 756; is followed by the concordat, ib.

Preferments, ecclesiastical, the means by which a national clergy ought to be managed by the civil magistrate, 750; alterations in the mode of electing to

them, 751-2, 756. of, described, 761; character of the clergy of, 762, 765; [countries exempt from tithe, 789.] [Present State of the Nation, quoted, 4ri.] [Press-gang, 115.] Prices, [natural, real, market, and nominal, 28, 30-46, 55-63;] real and nonainal, of commodities distinguished, 33-4; [of labour, 35, 146, 200;] money price of for land enters into goods explained, 46; [component parts of, 47-54;] the price of the greater part of all commodities, 49; the component parts of the prices of goods explained, 50; natural and market prices distinguished,

Presbyterian church government, the nature

and how governed,

55-6, [62,] 86.

Though raised at first by an increase of demand, are always reduced by it in the result, 706; [of necessaries and labour, 815-6, 836,] Primogeniture, origin and motive of the law of succession by, under the feudal government, 361-2; is contrary to the real interests of families, 362; [obstructs improvement in Europe, 392; none in Pennsylvania, and restricted in New England, 539.] Princes, why not well calculated to

manage mercantile projects for the sake of a revenue, 771. Prodigality, the natural tendency of, both to the individual and to the public, 322; prodigal men enemies to their country, 324. Produce of land and labour, the source of all revenue, 315-6; the value of, how to be increased, 326. [Production, consumption the sole object of, 625.] [Productive, and useful labourers proportioned to stock,

Iviii;

and tmproduc-

tive, 314-32.]

Professors in universities, circumstances which determine their merit, 762-3. Profit, [must be obtained by the undertaker who hazards his stock, 48; not merely a different name for wages of direction, ih.\ one of three original sources of revenue, 52;] the various articles of gain that pass under the common idea of, 53; [sometimes included in wages, «&.;] an average rate of, in all countries, 55; [how affected by fluctuations of prices, 59; name usually given to gains resulting from possession of secrets in trade, 60; raised by monopolies and corporation laws, 61; depends on price of provisions, 83; general theory of, 87-98;] averages of, extremely difficult to ascertain, 87; interest of money the best standard of, 88; the diminution of, a natural consequence of prosperity, gi; clear and gross profit, distin^ished, 96; the nature of the highest ordinary rate of, defined, ib.; double interest, deemed in Great Britain a reasonable mercantile profit, 97; in thriving countries, low profit may compensate the high wages of labour, ib.; the operation of high profits and high wages, compared, ib.; [inequalities of, between different occupations, 99143;] compensates inconveniencies and disgrace, loi; of stock, how affected, [by the five circumstances which cause differences of wages,] ib.; large profits must be made from small capitals, 1 12; why goods are cheaper in the metropolis than in country villages, ib.; great fortunes more frequently made by trade in large towns than in small ones, 113; [high, a cause of high prices, 146; a charge which comes before rent, 146; lower in remote country than in great towns, 147;] is naturally low in rich, and high in poor countries, 249-50; how that of the different classes of traders is raised, 343; private, the sole motive of employing capitals in any branch of business,

355 [Kept up in British trade by the colonial monopoly, 564; high, subjects a country to a disadvantage in trade, ib.; and discourages improvement of .

INDEX

953

land, 577;] when raised by monopolies, encourages luxury, [high rate everywhere destroys parsimony,] 578; small republics derive considerable revenue from, 769; one of three sources of private revenue, 777; surplus over interest not taxable, 798; taxes on, 798-803; taxes on particular, 803-9; custom duties originally intended as a tax on, 829.] [Progressive state best for the body of the people, 81.] Projects, unsuccessful, in arts, injurious to a country, 324. Property, [of a man in his own labour, the foundation of all other, 121; sacred rights of, 170;] passions which prompt mankind to the invasion of, 670; civil government necessary for the protection of, ih.\ wealth a source of authority, 671, 673. Proprietor, a great, seldom a great improver, 363.] Prosperity, does not usually last more than 200 years, 394.] Prostitutes, Irish, in London, 161.] Protagoras, lived in splendour, 133; went from place to place, 730.]

Provence, taille in, 805.] Proverbs of Solomon, 724.] Provisions, how far the variations in the price of, affect labour and industry, 74, 83, 85; whether cheaper in the metropolis, or in country villages, 1 13; the prices of, better regulated by competition than by law, 142; [parliamentary inquiry into the causes of the high price of, 151;] a rise in the prices of, must be uniform, to shew that it proceeds from a depreciation of the value of silver, 240; [price of, and wages, 815-6, 836.] Provisors, object of the statute of, in England, 756. Prussia, [king of, accumulates treasure, 410, 861; acknowledged superiority of troops, 661; troops veteran, 666;] mode of assessing the land-tax there, 786; [survey and valuation, 786-7, 887.] [Public good, not much good done by those who affect to trade for the, 423.] [Public schools, the English, less corrupted than the universities, 721.] Public works and institutions, how to be maintained, 681; equity of tolls for passage over roads, bridges, and canals, 683; why government ought not to have the management of turnpikes, 685; nor of other public works, 689; [deficiencies in the receipts from, must be made good from taxes, 768; six days’ labour originally sufficient for all, 773.] [Puritans founded New England, 555.] Purveyance, a service still exacted in most parts of Europe, 370. [Pythagoras, school of, established in a colony, 533.]

Quakers of Pennsylvania, inference from their resolution to emancipate

all their

negro slaves, 366; [established the colony, 555; in a majority there, 745.] Quesnai, M., view of his agricultural system of political oeconomy, 637; his doctrine generally subscribed to, 643 [Quintilian, a teacher, 764.] Quito, populousness of that city, 534.

Racked rent takes part of the farmer’s share, 630.] Raleigh, his dream of an Eldorado, 530.] Ramazzini, his book on the diseases of workmen, 82.] Rates, the Book of, 505, 623, 831, 834.] Raynal, quoted, 209.] Recoinage, of gold, 41; of silver, under William III., 195, 864.] Recovery, common, 368.] Reformateur, Lc, quoted, 827.] Reformation, rapid progress of the doctrines of, in Gerniany, 757; in Sweden and Switzerland, 758; in England and Scotland, ih.) origin of the Lutheran and Calvinistic sects, 759.

[Reformers found Greek and Hebrew versions more favourable than the Latin, 722 - 3 -]

INDEX

954 [Regiam majestatem, quoted,

183.]

[Registration, duties on, 810, 813, 814.] Regulated companies, see Companies. [Relief, a feudal casualty once a source of public revenue, 81 1.] Religion, [corn laws resemble laws respecting, 507,* instruction in, 740-66;] the object of instruction in, 740; advantage the teachers of a new religion enjoy over those of one that is established, ib.\ origin of persecution for heretical opinions, 741; how the zeal of the inferior clergy of the church of Rome is kept alive, ib.) utility of ecclesiastical establishments, 743; how united with the civil power, 744; [instruction in, may be paid from taxes without in-

justice, 768.]

Rent, reserved, ought not to consist of money, 34; but of corn, 35; of land, constitutes a third part of the price of most lands of goods, 49; [sometimes confounded with profit, 53;] an average rate of, in all countries, and how regulated, 55; [less affected by fluctuations of prices than wages and profit, 59; of particular vineyards, 61; causes which regulate, 63;] makes the first deduction from the produce of labour employed upon land, 65; [depends on price of provisions, 83; highest rate of profit eats up, 97;] the terms of, how adjusted between landlord and tenant, 144; is sometimes demanded for what is altogether incapable of human improvement, 145; is paid for, and produced by, land in almost all situations, 146; [varies with fertility, 147; of rice lands, 159;] the general proportion paid for coal mines, 167; and metal mines, 168; mines of precious stones frequently yield no rent, 172; [rent of mines in proportion to relative, but land rent in proportion to absolute fertility, 173;] how paid in ancient times, 181; is raised, either directly or indirectly, by every mprovement in the circumstances of society, 247; gross and neat rent distinguished, 270; how raised and paid under feudal government, 318; present average proportion of, compared with the produce of the land, w. [In Great Britain, estimate of the amount of, 775; one third of the produce, ih.; revenue of the people not proportioned to, i6.;] of houses distinguished into two parts, 791; difference between rent of houses, and rent of land, 794; rent of a house the best estimate of a tenant’s circumstances, ih,} [house-rent taxable under the land-tax, 796.] Rents (French rentes), 809.] Representation unknown in ancient times, 588.] Republican government supports the grandeur of Holland, 857-8.] Retainers, under the feudal system of government, described, 385[-9i]; how the connexion between them and their lords was broken, 388. ^

[Retaliation,

Revenue,

whm expedient, 434.]

original sources of, pointed out, 52; [777, 879;] of a country, of 270; the neat revenue of a society diminished by supporting a circulating stock of money, 273; money no part of revenue, 274; is not to be computed in money, but in what money will purchase, how proiJbe

what it consists,

275;

duced, and how appropriated, in the first instance, 316; produce of land, ih.; produce of manufactures, ih,} must always replace capital, ih,} the proportion between revenue and capital, regulates the proportion between idleness and industry, 320-1; both the savings and the spendings of, annually consumed, 321; of every society, equal to the exchangeable value of the whole

produce of

its

industry, 423.

Of the customs, increased by drawbacks, 470; [severity of the laws for the security of the, 612;] why government ought not to take the management of turnpikes, to derive a revenue from them, 685; public works of a local nature, always better maintained by provincial revenues, than by the general revenue of the state, 689; the abuses in provincial revenues trifling, when compared with those in the revenue of a great empire, ih.} the greater the revenue of the church, the smaller must be that of the state, 765; the revenue of the state ought to be raised proportionably from the whole society, 767; local expences ought to be defrayed by a local revenue, ih •

INDEX

955

inquiry into the sources of public revenue, 769; of the republic of Hamburgh, 769-70, 772; whether the government of Britain could undertake the management of the Bank, to derive a revenue from it, 770; the Post-offi.ce a mercantile project well calculated for being managed by government, ih princes not well qualified to improve their fortunes by trade, 771; the English East India Company good traders before they became sovereigns, but each character now spoils the other, 771; expedient of the government of Pennsylvania to raise money, 772; rent of land, the most permanent fund, 773; feudal revenues, ih.; Great Britain, 774; revenue from land proportioned, not to the rent, but to the produce, 775; reasons for selling the crown lands, 775-6; an improved land-tax suggested, 782; the nature and effect of tythes explained, 788; why a revenue cannot be raised in kind, 790; when raised in money, how affected by different modes of valuation, ih.; a proportionable tax on houses, the best source of revenue, 794; remedies for the diminution of, according to their causes, 835; bad effects of farming out public revenues, 853; the different sources of revenue in France, 855; how expended, in the rude state of society, 859. Revolution, the, of 1688, 864.] Rhine, 20.] Rhode Island expense of civil establishment, 540; representatives elected the governor, 552.] Rice, a very productive article of cultivation, 159; requires a soil unfit for raising any other kind of food, ih.; rice countries more populous than corn coun.

tries, 205.

Riches, [measured by the necessaries, conveniences and amusements which can be enjoyed, 30;] the chief enjoyment of, consists in the parade of, 172. Rich man consumes no more food than the poor, 164.] Riding school ineflficient because generally a public institution, 721.] Riga. 35 °, 443J Riquet, Languedoc Canal entmsted to, 684 ] Risk, instances of the inattention mankind pay to it, 108. [Rivers, earliest improvements of industry on the banks of, 18; benefit remote parts of the country, 147.] Roads, good, the public advantages of, 147; [anciently maintained by compulsoiy labour, 370,] How to be made and maintained, 682[-9;] the maintenance of, why improper to be trusted to private interest, 684; general state of, in France, 687; in China, 687-8; [may not unjustly be paid for from taxes, 767; anciently maintained by six days’ labour, 773; good in ancient Bengal and Egypt, 7S9-]

[Robert Capet, 756.]

[Roman Catholic, see Rome, modern.] [Roman law developed with respect to precedent,

732; position of emancipated

children, 81 1.]

[had no coined money till the time of Servius Tullius, 24, 26;] why copper became the standard of value among them, 39; [incorporated trades, 1 19; no apprentices, 122-3; Athenian philosophers, ambassadors to, 134; corn chiefly imported, 150; cultivation discouraged by low price of corn, ih.; silver mines worked by, 181;] the extravagant prices paid by them for certain luxuries for the table, accounted for, 218; the value of silver higher among them than at the present time, ib.; [fall of Western empire, 361; no right of primogeniture, ih.; entails unknown among, 363; slavery harsher than in mediaeval Europe, 364.] [Colonisation by, 523-5;] the republic of, founded on a division of land among the citizens, 523-4; the agrarian law only executed upon one or two

Romans

occasions, ih.; [cultivation by slaves, ih.i\ how the citizens who had no land, subsisted, ih.; distinction between the Roman and Greek colonies, 525; the improvement of the former slower than that of the latter, 533; [dependency of the former on the mother state, 534; slaves more protected under the

INDEX

956

emperors, 554; colonies furnished both men and money, 559;] origin of the social war, 587; the republic ruined by extending the privilege of Roman citizens to the greater part of the inhabitants of Italy, [587,] 589; [wisdom of the senate, 606; discouraged manufactures and foreign trade, 647; used slave labour in manufactures, 648; the pound, 649;] when contributions were first raised to maintain those who went to the wars, 656; [Campus Martius, 658;] soldiers not a distinct profession there, ib.; [elevation of, the second great historical revolution, 66$) Carthaginian wars, 663-4;] improve-

of the Roman armies by discipline, 664; how that discipline was lost, 665; the fall of the Western empire, how effected, 666; [abandonment of personal administration of justice by the consul, 680;] remarks on the education of the ancient Romans, 729; their morals superior to those of the Greeks, 729; [teachers of militaiy exercises not paid by the state, ib., 738;] state of law and forms of justice, 731; [equal to any modern people in ability, 732;] the martial spirit of the people, how supported, 738; [eminent men of letters were teachers, 764; comfortable without linen, 821;] great reductions of the coin practised by, at particular exigencies, 883-4; [poor people in debt to the rich and demanded new tables, 884.] Rome, modern [i.e. church of, pay of priests in England, 130; claims merit as to

ment

the emancipation of serfs, 367.] [Clergy obliged to study Greek and Hebrew, 722-3; demanded persecution of Protestants, 741;] how the zeal of the inferior clergy of, is kept alive, ib.; [turbulent, 750;] the clergy of, one great spiritual army dispersed in different quarters over Europe, 752; their power during the feudal monkish ages similar to that of the temporal barons, 753; [most formidable combination against civil government, 754;] their power how reduced, 755; [richest church in Christendom, 763.] [Rome, modern city of, residence of a court and consequently idle, 319.] Rouen, [statistics of silk and linen manufacture in the generality of, 84;] why a town of great trade [though the seat of a parliament], 319. Rouge, Cape, 696, 697, 698.]

Royal Caroline, 703.] Royal Exchange Assurance Company, 714-5.] Ruddiman, Mr., remarks on his account of the ancient

price of wheat in Scotland, 183; [quoted, 213, 281.] [Ruffhead, his edition of the statutes, 183.] [Rum, and molasses expected to defray cost of sugar cultivation, 157; foreign article of common use, 834; excise duties, 835; proper subject of taxation,

889, 892,] Russia, [improvement since the discovery of America, 202; serfs still exist in, 365; peace with Turkey, 573; fleet in the Archipelago, ib,; soldiers not inferior to the Prussian, 666;] was civilized under Peter I. by a standing army, 667; [early embassies to, 690.] [Russian Company, 692-3.]

why no sensible inconvenience felt by the great numbers disbanded at the close of a war, 436. [Saint Christopher island, half in possession of the French in 1660, 564; com-

Sailors,

pletely cultivated, 895.] [Saint Domingo, mines abandoned, 168; Columbus in, 526, 528; stock lated in, 554.] ^Saint Jameses Palace, land-tax on, 774.] Saint-Maur, Dupr6 de, quoted, 180, 185, 198, 240.] 5aint Thomas island, Danish settlement, 537.] Saint Vincent, new field for speculation, 895.]

accumu-

Sallee, 697.]

Salmon

fishery pays a rent, 51.] Salt [currency in Abyssinia, 23; dearer on account of the tax, 78;] account of foreign salt imported into Scotland, and of Scots salt delivered duty free,

INDEX

957

for the fishery, [485;] Append., 903; is an object of heavy taxation everywhere, 825; the collection of the duty on, expensive, 847; [the French tax on, 852, 854.]

Sandi, quoted, 381.] San Domingo, see Saint Domingo.] Santa Cruz island, Danish settlement, 537,] Saracens, 380.] Sardinia, the land-tax how assessed there, 787, [805, 887.] [Savoy surveyed, 786.] Saxon lords, their authority and jurisdiction as great before conquest, as those of the Normans were afterward, 387. [Scandinavians, the ancient, practised music and dancing, 730.] [Scarcity, effect of years of, on industry and wages, 82-3, 85-6 ] [Scholarships, effect of, on earnings of labour, 129, 132.] Schools, [English public, 721;] parochial, observations on, 737; [charity, ih] Science, is the great antidote to the poison of enthusiasm and superstition, 748. Scipio, his Spanish militia, rendered superior to the Carthaginian militia by discipline

and

service, 664.

Scotland, [in the Highlands every farmer a butcher, etc., 17; village in, where nails are currency, 23; reduction of value of the coin, 27, 35; wages in low country vary less than in England, 75;] compared with England, as to the prices of labour and provisions, 75-6; [grain dearer in 17th century, 76; wages in 17th century sd. to 6d., ih.-, wages in different parts, ib.'] remarks on the population of the Highlands, 79; [workmen less diligent than in England, 81; linen manufacture, 84;] the market rate of interest, higher than the legal rate, 90; [wages lower than in England, ih.', much poorer and advancing less rapidly than England, ib., 189; wages of colliers and common labourers compared, 104;] the situation of cottagers there, described, 116; [knitted stockings in many places cheaper than woven, 117; wages of spinners, i6.;] apprenticeships and corporations, 12 1; [church, respectable though poorly paid, 13 1; easy migration of labour, 140; assize of bread could not be fixed there, 142; incorporation of bakers in, ih.', rent for kelp shores, 145; desert moors yield rent, 146; union with, opened English market to cattle of, 149, 220-2; high rent of enclosed land, 150; land could not be cultivated by factors, 157; oatmeal said to be better food than wheat flour, 160;] the common people of, why neither so strong nor so handsome as the same class in England, ih.', [stone quarry affords no rent in some parts, 163; bark the only part of wood sent to market in parts of the Highlands, 163; rent for quarries of London paving stones, ih.', many coal mines yield no rent, 165; sixth part a common rent of fertile lead mines, 168; conversion prices, 181; wages higher than in France, 187; price of corn in England and Scotland compared, 189;] cause of the frequent emigrations from, 189; [proportion of gold and silver in the coinage, 212-3; price of cattle affected by the union, 220-2;] progress of agriculture there before the union with England, 222; present obstructions to better husbandry, ih.', [dairy farming, 227; calves formerly killed young, 232;] the price of wool reduced by the union, 234, 616; operation of the several banking companies established there, 281 [-301;] amount of the circulating money there before the union, 281; amount of the present circulating cash, 282; course of dealings in the Scots bank, ib.', [cash accounts do not exclude bill discounting, 284; twentyshilling notes lowest paper money current, ih.'^ difficulties occasioned by these banks issuing too much paper, 286-7; necessary caution for some time observed by the banks in giving credit to their customers, with the good effects of it, 289; [limit of paper money reached twenty-five years ago, 292;] the scheme of drawing and redrawing adopted by traders, 293; its pernicious tendency explained, 294; history of the Ayr bank, 297; Mr. Law*s scheme to improve the country, 301; [issue of small notes extends the paper circulation to retail trade, 306; and banishes gold and silver, 307;] the prices of goods in, not altered by paper currency, 308-9; effect of the optional clauses in their ^

INDEX

958

notes, 309; [union caused nobility to cease residing in Edinburgh, 320; wool manufactured in Yorkshire, 346; trade with London, 349; one fifth or one third of the land entailed, 363; steel bow tenants, 367; long leases, 369; no leasehold carries a parliamentary vote, ih.\ hospitality in the Highlands, 386; small rent for Highland farms, ihr, territorial jurisdictions in the Highlands, 387; prohibition of ejsport of gold and silver, 400; manufacturing wine in, 425; mountains destined for breeding grounds, 427 ]

[Herring fishery, 485-8, and Appendix; salt duty, 485; herrings an important part of food of common people, 487; English bounty on hemp imported from, 609-10; judges’ salary from interest of money, 680; parish schools, 737;] cause of the speedy establishment of the reformation there, 758; the disorders attending popular elections of the clergy there, occasion the right of patronage to be established, 761; [respectable clergy, 762; eminent men of letters professors, 763-4;] amount of the whole revenue of the foris-familiated children, clergy, 765; [excellent character of church, 81 1 ; shoes not a necessary of life to women in, 822; linen subject to duty on importation into England, 866; little malt liquor consumed, 891; more smuggling than in England, ib.; redundant paper money the consequence of enterprising spirit, 894; has banished gold and silver in, ib.; less spirit of party than in England, 898.] [Scythia, barbarous because inland, 20; overran Western Empire, 361; if united could conquer Europe and Asia, 655; militia of Mithridates, 664-5; military organisation preserved after fall of Western Empire, 666; administration of justice a source of revenue, 675; not much beyond shepherd stage at fall of Western Empire, 676.] [Sea-coast, earlier civilisation of, 18.]

Sea service and military service by land, compared, 109. [Secrets in trade, 60.] Sects in religion, the more numerous, the better for society, 745; why they generally profess the austere system of morality, 746. [Seignorage, none in England, 42, 286, 445; but some delay equivalent to one, 44; would increase the superiority of coin above bullion, 45; 8 per cent, in France, 45, 445, 518; diminishes or removes the profit on melting new coin, 518-22.] [Seius, 219.]

human society, 14. [Senegal, 622, 697, 83 2. Servants, menial, distinguished from hired workmen, 314; the various orders of men, who rank in the former class, in reference to their labours, 315; their Self-love the governing principle in the intercourse of

labour unproductive, 639; [see Menservants and Maidservants.] [Servius Tullius, 24, 26.] [Sestertius, silver coin estimated in copper, 39.] Settlements of the poor, brief review of the English laws relating to, i35[-4i;] the removals of the poor, a violation of natural liberty, 141; the law of, ought to be repealed, 437.

(Seymour, 330.] Sheep, frequently killed in Spain, for the sake of the fleece and the tallow, 229; severe laws against the exportation of them and their wool, 612-3. [Sheffield produces necessary articles, 115; master cutlers only allowed one apprentice, 119; reduction in price of goods, 243* manufactures grown up naturally, 383 ] [Shells, currency on coast of India, 23.] Shepherds, war how supported by a nation of, 653-4; [much leisure among, 659;] inequality of fortune among, the source of great authority, 672; birth and family highly honoured in nations of shepherds, 673; inequality of fortune first began to take place in the age of shepherds, 674; and introduced civil government, tb,; [every man exerts his capacity among, 735 ] Shetland, [wages and price of stockings, 117;] how rents are estimated and i)aid there, 145; [herring fishery, 4S6.]

INDEX

959

[Shilling, 26.]

[Shopkeepers, prejudice against, unfounded, 342; nation of, 579; navigation act inspired by, 580; proposed tax on, 804.] ^Shropshire, 168,]

Siam, Gulf

of, 21.]

Siberia barbarous because inland, 20; caravans through, 204.) Sicily, price of wheat in ancient, 218; silk manufactures imported, 345; Venice originally imported silk from, 381-2; colonised by Dorians, 523; greatness of Greek colonies in, 533.] [Silesia,

lawns

of,

440; land-tax, 786.]

apprentices, 119;] manufacture, how transferred from Lucca to Venice, 381 ; [ejqpensive in Greece and Rome, 648; English manufacturers could undersell French and Italians if duty free, 837.] Silver, [varies greatly from century to century but not from year to year, 36; used for purchases of moderate value, 38;] the first standard coinage of the northern subverters of the Roman empire, 39; its proportional value to gold regulated by law, 40; is the measure of the value of gold, ih.; mint price of silver in England, 42; inquiry into the difference between the mint and market prices of bullion, 16.; how to preserve the silver coin from being melted down for profit, 44; the mines of, in Europe, why generally abandoned, 168; evidences of the small profit they 3deld to proprietors in Peru, ih.\ [seldom found virgin like gold, and consequences thereof, 171;] qualities for which this metal is valued, ib.; the most abundant mines of, would add little to the wealth of the world, 173; but the increase in the quantity of, would depreciate its own value, 176; circumstances that might counteract this effect, ib.; historical view of the variations in the value of, during the four last centuries, 176; remarks on its rise in value compared with corn, 180-1; circumstances that have misled writers in reviewing the value of silver, 181; corn the best standard for judging of the real value of silver, 187; the price of, how affected by the increase of quantity, 188; the value of, sunk by the discovery of the American mines, 19 1; when the reduction of its value from this cause appears to have been completed, 192; tax paid from the Peruvian mines to the king of Spain, 201 ; the value of silver kept up by an extension of the market, 202; is the most profitable commodity that can be sent to China, 206; the value of, how proportioned to that of gold, before and after the discovery of the American mines, 21 1; the quantity commonly in the market in proportion to that of gold, probably greater than their relative values indicate, 212; [a proper subject of taxation, 214;] the value of, probably rising, and why, ibr, the opinion of a depreciation of its value, not well

Silk,

[weavers in

London allowed only two

founded, 240. The real value of, degraded by the bounty on the exportation of corn, 476; [tax on, in America, 529; has not varied since the imposition of the English land-tax, 781; not necessary to the Americans, 892-3; see Gold and Silver.] Sinking fund in the British finances, explained, 868; is inadequate to the discharge of former debts, and almost wholly applied to other purposes, 872-3; motives to the misapplication of it, 873. Slaves, the labour of, dearer to the masters than that of free men, 80; under feudal lords, circumstances of their situation, 364; countries where this order of men still remains, 365; why the service of slaves is preferred to that of free men, ib.\ their labour why unprofitable, 366; causes of the abolishing of slavery throughout the greater part of Europe, 366-7, [Cultivation under the Romans by, 524;] receive more protection from the magistrate in an arbitrary government, than in one that is free, 553; why employed in manufactures by the ancient Grecians, 647-8; why no improvements are to be expected from them, 648; [domestic pedagogues usually slaves in Greece and Rome, 730.] [Smith, Charles, Tracts on the Corn TradCf quoted, 199, 428, 473, 475.] [Smith, John, Memoirs of Wool, quoted, 2^0, 616.J Smuggling, a tempting, but generally a ruinous emplojnnent, in; [of lea, 203;

index

96o

moderate tax does not encourage, 520; encouraged by

Hgh

duties, [779,]

832; remedies against, 835; [excise laws obstruct more than those of the customs, 837;] the crime of, morally considered, 849; [more opportunities for, in thinly peopled countries, 891.] [Soap, dearer in consequence of taxes, 78; rendered necessary by the use of linen, 825.] [Society, human, the first principles of, 14.] Soldiers, remarks on their motives for engaging in the military line, 109; comparison between the land and sea service, ih.\ why no sensible inconvenience felt by the disbanding of great numbers after a war is over, 436; reason of their first serving for pay, 656; [possible proportion of, in civilised society,

657;]

how they became a distinct class of the people,

from the

militia, ih.\ alteration in their exercise

660;

how distinguished

produced by the invention

of fire-arms, 660-1.

Solomon, Proverbs of, 724 Solon, laws of, 510, 730.] Solorzano, quoted, 201J Sou,

]

27.]

Sound, the, transit duty, 846.] South Carolina, expenst of civil establishment, 540; duty on molasses, 888-9.] South Sea company, amazing capital once enjoyed by, 700, [703;] mercantile and stock-j'obbing proj'ects of, 703; assiento contract, ib.\ whale fishery, ib.; the capital of, turned into annuity stock, 704, 866, [868.] Sovereign and trader, inconsistent characters, 771. Sovereign, three duties only, necessary for him to attend to, for supporting a system of natural liberty, 651; how he is to protect the society from external violence, 653, 668; and the members of it, from the injustice and oppression of each other, 669; and to maintain public works and institutions, 681. Spain [mark on ingots of gold, 25; tax of one fifth on Peruvian mines, 169, 201; avidity for gold in St. Domingo, 174; declension not so great as is commonly imagined, 202; saying of Charles V. that everything was wanting, ib.; colonies, 203; sheep killed for fleece and tallow, 229;] one of the poorest countries in Europe, notwithstanding its rich mines, 238-9; [wool, 244, 345, 382, 383, 616; ambassador gave Queen Elizabeth stockings, 245;] its commerce has produced no considerable manufactures for distant sale, and the greater part of the countiy remains uncultivated, 395; Spanish mode of estimating their American discoveries, 399; [wealth according to the Spaniards consisted in gold and silver, ib.; prohibition of English woollens in Flanders, 434; sober, though wine is cheap, 459.] The value of gold and silver there, depreciated by laying a tax on the exportation of them, 478; agriculture and manufactures there, discouraged by the redundancy of gold and silver, 479; natural consequences that would result from taking away this tax, ib.; [attempt to deprive Britain of Portugal trade, 515; representations of Columbus to the court, 527;] the real and pretended motives of the court of Castile for taking possession of the countries discovered by Columbus, 528; the tax on gold and silver, how reduced, 529; gold, the object of all the enterprises to the new world, 529[-3i; Crown derived some revenue from colonies, 534;] the colonies of, less populous than those of any other European nation, ib.; asserted an exclusive claim to all America, until the miscarriage of their invincible armada, 536; policy of the trade with the colonies, 543; the American establishments of, effected by private adventurers, who received little beyond permission from the government, 556; [Flota drained Germany of many commodities, 572;] lost its manufactures by acquiring rich and fertile colonies, 575; [veterans equalled by the American militia, 663; united with France by the British acquisition of Gibraltar and Minorca, 698-9; transaction with South Sea Company, 703-4; Greek not taught in universities, 722;] the Alcavala tax there explained, 850; the ruin of the Spanish manufactures attributed to it, ib.; [large national debt, 881; see Spain and Portugal]

INDEX

9O1

[Spain and Portugal, supposed to have gone backwards, 202; beggarly and misgoverned countries though the value of gold and silver is low, 238-9; ineffectual attempts to restrict exportation of gold and silver, 400, 404, 508; quantity of gold and silver annually imported, 412.] [Gold and silver naturally a little cheaper there than elsewhere, 478; exports of gold and silver nearly equal to the imports thereof, ih.) agriculture discouraged by the cheapness of gold and silver, 479; would gain by abandoning the restrictions, 479-80; history of the American colonies, 534-6; colonies have more good land than the British, 538; right of majorazao in the colonies hinders improvement, 539; some revenue drawn from the colonies, 541, 560; colonial commerce confined to one port and to licensed ships, 543; American fish trade, 545; absolute government in colonies, 552; benefited by colonisation of America, 557; colonial monopoly has not maintained manufactures, 575; and its bad effects have nearly overbalanced the good effects of the trade, ih.) capital not augmented by the exorbitant profits of Cadi^ and Lisbon, 578; the colonies give greater encouragement to the industry of other countries, 591; only the profits of the linen trade with America spent in, ih.] [Sparta, iron money at, 24.] Speculation, a distinct employment in improved society, 10; speculative merchants described, 114. [Spices, Dutch are said to burn, in plentiful years, 158, 491, 600; imported into

Great Britain, 834.] [Spirits, licence to retail, 804;

wages not affected by taxes on, 823; taxes on, paid by consumers, 828; policy of Great Britain to discourage consumption of, 842.]

[Spitalfields, silk

manufacture, 381-2.]

Stage, public performers on, paid for the contempt attending their profession, 107; the political use of dramatic representations, 748. [Stallage, 374.]

[Stamp Act, the American, 84,

571.] duties, [on proceedings in law courts might maintain the judges, 679-80; loans taxed by, 810;] in England and Holland, remarks on, 812; [on wills in Holland, ihr, in France, 813, 814; have become almost universal in Europe

Stamp

a century, 813; often taxes on consumption, 815; one of three principal branches of British taxes, 887- extension to the colonies

in the course of 887.]

[Stamps on linen and woollen cloth, 25, 122 ] [Standard money, 39, 40.] [Statesman or politician, who attempts to direct the employment of private capital, 423; insidious and crafty animal, 435; in barbarous societies every

man

a, 735.J

Stecl-bow tenants in Scotland, what, 367, [Stewart, House of, 751.] Stock, [early state preceding accumulation of, 47;] the profits raised on, in manufactures, explained, 48; in trade, an increase of, raises wages, and diminishes profit, 87; [profits of, 87-143;] must be larger in a great town than in a country village, 89; natural consequences of a deficiency of stock in new colonies, 92; the profits on, little affected by the easiness or difficulty of learning a trade, 103; but by the risk, or disagreeablencss of the business, iio-i; [circulation of, obstructed, 135;] stock employed for profit, sets into motion the greater part of useful labour, 249; no accumulation of, necessary in the rude state of society, 2^9; the accumulation of, necessary to the division of labour, ih.) stock distinguished into two parts, 260-1; the general stock of a countty or society, explained, 263; houses, ih.; improved land, raw materials and 26s; personal abilities, ib.; money and provisions, 266; manufactured goods, ib.; stock of individuals, how employed, 268; is frequently buried or concealed, in arbitrary countries, ib.; the profits on, de^

INDEX

962

crease, in proportion as the quantity increases, 318; on what principles is lent and borrowed at interest, 333. That of every society divided among different employments, in the proportion most agreeable to the public interest, by the private views of indivi-

Stock '

duals, 594; the natural distribution of, deranged by monopolizing systems, 596; every derangement of, injurious to the society, 597; mercantile, is barren and unproductive, according to the French agricultural system of political oeconomy, 631; how far the revenue from, is an object of taxation,

798; [easily removed, 800;] a tax on, intended under the land tax, 801. Stockings, why cheaply manufactured in Scotland, 117; when first introduced into England, 245. [Stomach, desire of food bounded by narrow capacity of the, 164.] Stone quarries, their value depends on situation, 163, 175. Stones, precious, of no use but for ornament, and how the price of, is regulated, 172; the most abundant mines of, would add little to the wealth of the

world, 173. [Stowe, 331.] [Suabia, house of, 378.] Subordination, how introduced into society, 670; personal qualifications, 671; age and fortune, il.; birth, 672; birth and fortune two great sources of personal distinction, 673. Subsidy, old, in the English customs, the drawbacks upon, 466-7; origin and import of the term, 830. [Succession, laws of, 361.] [Successions, tax on, in Holland, 810.] Sugar, [currency in some West India Colonies, 23;] a very profitable article of cultivation, 156, [157], 366.

Drawbacks on the exportation of, from England, 467; might be cultivated by the drill plough, instead of all hand labour by slaves, 553; [tax on, does not affect wages, 823; yields considerable customs revenue, 834; duty on, on middle and upper ranks, 837; planters say the duty falls on the producer, 844;] a proper subject for taxation, as an article sold at a monopoly price, ibr, [nowhere a necessary of life, 889.] Sumptuary laws superfluous restraints on the common people, 329; [resemblance falls chiefly

of taxes

on luxuries

to, 827.]

Surinam, present state of the Dutch colony there, 537. Surmullet, high price paid for, 219.J Sussex, restrictions

on transport

of wool, 614.]

Sweden, improved since the discovery of .^erica, 202; tea smuggled from, 205; established exclusive company for East Indian trade, 417; settlements in New, World, 536; pitch and tar company of, 547; without an exclusive company would never have sent a ship to East Indies, 596; and would have suffered no loss, 597; exempted from Eastland Company's exclusive privilege, 693; Reformation in, 758; eminent men of letters professors, 763-4.) [Swift, quoted, 832.]

Switzerland [farmers not inferior to the British, 371; cities became independent, 378; sometimes may be necessary to restrain export of corn, 507; militia regimented, 660; militia defeated Austrian and Burgundian militia, 666; whole people exercised in use of arms, 739;] establishment of the reformation in Berne and Zurich, 758; [many cities capitals of little republics, 760; respectable clergy, 762; eminent men of letters professors in Protestant cantons, 763;] the clergy there zealous and industrious, 765-6; [both religions established in some cantons, j&.;] taxes how paid there, 802, 81 r. [S3nracuse a great colony, 533.] [Syria, 664,]

Taille, in France, the nature of that tax, and its operation, explained, 370, 805; [real or predial, 787; real and personal, 805; on the industry of workmen and

INDEX

963

day labourers a tax on wages, 817; not farmed, 855; should be abolished and replaced by an increase of vingtUmeSj ih,] [Tailors, the lowest order of artificers, wages in London, 104; wages in London regulated by statute, 141-2.] Talents, natural, not so various in different men as is supposed, 15, Tallage, 370.] Tallies, exchequer, 864.] Tarentum a great colony, 533.] Tartar Khan, history written by a, 391.] Tartars, [barbarous because inland, 20; ignorant, 203; caravans passing through 204; taxes on travellera, 373; ancient families common among, 391; shepherds, with no regulations of law as to transmission of property, ih.\ wealth considered to consist in cattle, 399; chiefs have treasures, 414.] Their manner of conducting war, 653-4; their invasions dreadful, 655; [militia serves under ordinary chieftains, 662; obedience in the field superior to the Highlanders, ib.'; most formidable enemies to the Romans, 664-5; conquests of civilised Asiatic countries, 667, 741; chiefs can only use surplus revenue in maintaining more men, 671; Khans despotic, 672; justice a fall of Western empire, 674-5; hungry, 741; chiefs revenue profit, 769.] Tavernier, his account of the diamond mines of Golconda and Visiapour, 172. Taxes, [derivative revenue, 53; on gold and silver very proper, 214;] the origin of, under the feudal government, 373-4. [Moderation of, a cause of the prosperity of British American colonies, 540; ruinous, of private luxury and extravagance, 541; American, generally insufficient to defray the cost of the colonies, 560; on exportation of wool would cause little inconvenience, 618; imposed by means of a monopoly, 712; general discussion of, 777-852;] the sources from whence they must arise, 777; unequal taxes, ih.\ ought to be clear and certain, ih.\ ought to be levied at the times most convenient for payment, 778; ought to take as little as possible out of the pockets of the people, more than is brought into the public treasury, ih.\ how they may be made more burdensome to the people than beneficial to the sovereign, 779; the land-tax of Great Britain, 780; land-tax at Venice, 782; improvements suggested for a land-tax, ib.^ mode of assessing the land-tax in Prussia, 787; tythes a very unequal tax, and a discouragement to improvement, 789; operation of tax on house rent, payable by the tenant, 792; a proportionable tax on houses, the best source of revenue, 794; how far the revenue from stock is a proper object of taxation, 798; whether interest of money is proper for taxation, 799; how taxes are paid at Hamburgh, 801; in Switzerland, 802; taxes upon particular employments, 803; poll taxes, 808; taxes, badges of liberty, ib.'; taxes upon the transfer of property, 810; stamp duties, 812; on whom the several kinds of taxes principally fall, 813; taxes upon the wages of labour, 815; capitations, 819; taxes upon consumable commodities, 821; upon necessaries, 822; upon source of revenue after

luxuries, 823; principal necessaries taxed, 824; absurdities in taxation, 825-6; different parts of Europe very highly taxed, 826; two different

methods of taxing consumable commodities, 827; Sir Matthew Deckeris scheme of taxation considered, 828; excise and customs, 829; taxation sometimes not an instrument of revenue, but of monopoly, 833; improvements of the customs suggested, 834; taxes paid in the price of a commodity little adverted to, 846-7; on luxuries, the good and bad properties of, ib.; bad effects of farming them out, 853; how the finances of France might be reformed, 855; French and English S3rstems of taxation compared, 856; new taxes always generate discontent, 873; how far the British system of taxation might be applicable to all the different provinces of the empire, 886; such a plan might speedily discharge the national debt, 890, Tea, great importation and consumption of that drug in Britain, 205; [quantities smuggle^ 405; tax on, does not affect wages, 823; Dutch licences to drink,

INDEX

964

829; affords large part of customs revenue, 834; duty falls on middle and upper ranks, 837.] Teachers [earnings of, 132-4;] in universities, tendency of endowments to diminish their application, 717; the jurisdictions to which they are subject, little calculated to quicken their diligence, 718;^ are frequently obliged to gain protection by servility, 719; defects in their establishments, 719; teachers among the ancient Greeks and Romans, superior to those of modern times, 732; circumstances which draw good ones to, or drain them from, the universities, 762-3; their employment naturally renders them eminent in letters, 764.

[Tenths and jBfteenths, 370.] Tenures, feudal, general observations on, 318; described, 362. Terra Firma, 527.] Terray, Abb6, laised rate of interest in France, 90.] Teutonic order, land-tax of, in Silesia, 786.] Thales, school established in a colony, 533.] Theocritus, quoted, 10 1.] Theognis, 724.] Theology, monkish, the complexion of, 726. Thorn, William, quoted, 178.]

Thrasymenus, battle

of, 664.]

Thucydides, quoted, 655, 656.] Timaeus, quoted, 24.] Timber, rent for land producing, 163.] Tin, average rent of the mines of, in Cornwall, 168; yield a greater profit to the proprietors than the silver mines of Peru, 169; regulations imder which tinmines are worked, 170. Tobacco, [currency in Virginia, 23;] the culture of, why restrained in Europe, 157; not so profitable an article of cultivation in the West Indies as sugar, ih.\ the amount and course of the British trade with, explained, 353; [profits of, can afford slave cultivation, 366; trade in, 458-9.] The whole duty upon, drawn back on exportation, 467; consequences of the exclusive trade Britain enjoys with Maryland and Virginia in this article, 561; [tax on, does not raise wages, 823; contributes large amount to customs revenue, 834; Walpole's scheme for lev^ng the tax on, 837; monopoly in France, 854-5; nowhere a necessary of life, but a proper subject of taxation, 889.]

[Tobago, a new field for speculation, 895.] Tolls, for passage over roads, bridges, and navigable canals, the equity of, shewn, 683; upon carriages of luxury, ought to be higher than upon carriages of utility, il).\ the management of turnpikes often an object of just complaint, 684; why government ought not to have the management of turnpikes, 685, 845; [on carriages an unequal general tax, 686; lay expense of maintaining roads on those who benefit, 767-8.] Tonnage and poundage, origin of those duties, 830. [Tonquin vessels at Batavia, 600.] Tontine in the French finances, what, with the derivation of the name, 870. [Toul treated as foreign by France, 852.] Toulouse, salary paid to a counsellor or judge in the parliament of, 678. Towns, the places where industry is most profitably exerted, i25[-8;] the spirit of combination prevalent among manufacturers, 126, 128; according to what circumstances the general character of the inhabitants, as to industry, is formed, 319; the reciprocal nature of the trade between them and the country, explained, 356; subsist on the surplus produce of the country, 357; how first formed, 358; are continual fairs, ihr, [rise and progress of, 373-83;] the original poverty and servile state of the inhabitants of, 373; their early exemptions and privileges, how obtained, 374; the inhabitants of, obtained liberty much earlier than the occupiers of land in the country, ih.\ origin of free burghs, 375; origin of coiporations, ib.] why allowed to form imlitia,

INDEX

96s

378; how the increase and riches of commercial towns contributed to the improvement of the countries to which they belonged, 384[-96; favoured by

Colbert at the expense of the country, 628.] on the Com Trade quoted, 199, 428, 473, 475.] Trade, double interest deemed a reasonable mercantile profit in, 97; four general classes of, equally necessary to, and dependent on, each other, 341; wholesale, three different sorts of, 348; the different returns of home and foreign trade, 34^; the nature and operation of the carrying trade examined, 351; the principles of foreign trade examined, 353; the trade between town and country explained, 356; original poverty and servile state of the inhabitants of towns, under feudal government, 373; exemptions and privileges granted to them, 374; extension of commerce by rude nations selling their own raw produce for the manufactures of more civilized countries, 380; its salutary effects on the government and manners of a country, 385; subverted the feudal authority, 388; the independence of tradesmen and artisans, explained, 390; the capitals acquired by, very precarious, until some part has been realized by the cultivation and improvement of land, 395; over trading, the cause of complaints of the scarcity of money, 406; the importation of gold and silver not the principal benefit derived from foreign trade, 41 5 ; effect produced in trade and manufactures by the discovery of America, 416; and by the discovery of a passage to the East Indies round the Cape of Good Hope, ih.] error of commercial writers in estimating national wealth by gold and silver, 418; inquiry into the cause and effect of restraints upon trade, 418; individuals, by pursuing their own interest, unknowingly promote that of the public, 423; legal regulations of trade, unsafe, retaliatory regulations between nations, 434; measures for la3dng trade open, ought to be carried into execution slowly, 438; policy of the restraints on trade between France and Britain considered, 441; no certain criterion to determine on which side the balance of trade between two countries turns, 442; most of the regulations of, founded on a mistaken doctrine of the balance of trade, 456; is generally founded on narrow principles of policy,

^Tracts

460. of duties, 466; the dealer who employs his whole stock in one branch of business, has an advantage of the same kind with the workman who employs his whole labour on a single operation, 496; consequences of drawing it from a number of small channels into one great channel, 570-1

Drawbacks

single

colony trade, and the monopoly of that trade, distinguished, 573; the interconsumer constantly sacrificed to that of the producer, 625; advantages attending a perfect freedom of, to landed nations, according to the present agricultural system of political oeconomy in France, 635; origin of foreign trade, 635; consequences of high duties and prohibitions, in landed nations, 636, 637; how trade augments the revenue of a country, 641; [foreign, gives opportunity for improvement by example, 645;] nature of the trading intercourse between the inhabitants of towns and those of the country, 649-50. [Trade, Board of, 695.] Trades, cause and effect of the separation of, 5; origin of, 14, 15. [Traites in France, divide the country into three parts, 852; are farmed, 855.] [Transfer of property, taxes on, 810.] Transit duties explained, 845. Travelling for education, summary view of the effects of, 728. Treasures, [of princes formerly a resource in war, 410; no longer accumulated except by king of Prussia, i5 .;] why formerly accumulated by princes, 414. Treasure trove, the term explained, 268; why an important branch of revenqe under the ancient feudal governments, 860. Treaties of commerce, 511-16.] Trebia, battle of, 664.] Triclinaria, high price of, 649.] Troll, Archbishop of Upsal, 758 ] est of the

'

INDEX

966 Troyes fair and weight, Truck, 13, 14.] Trust remunerated, 49.]

26.]

Tumbrel and Pillory, statute of, 183 J by the Romans, 224.] Turkey, treeisure buried and concealed, ’Turdi fed

268; conquest of Egypt, 380, 525;

peace with Russia, 573.]

Turkey company, [commerce

of,

required an ambassador at Constantinople,

690;] short Idstorical view of, 693. [Turnips reduced in price, 78.]

Turnpikes, [counties near London petitioned against, 147;] see Tolls. Tuscany, commerce and manufactures diminished, 396.] Tutors, private, lowest order of men of letters, 733.] Twelve Tables, 731,] Two and two in the arithmetic of the customs make one, 832.] Tyrrell, quoted, 675.] Tythes, [great hindrance to improvement, 367; none in British American colonies, 541;] why an unequal tax, 788; the levying of, a great discouragement to improvements, 789; [confined the cultivation of madder to Holland, i6.;] the fijnng a modus for, a relief to the farmer, 791. Ukraine, 203, 414.] quoted, 148, 168, 169, 170, 186, 204, 534, 543.] Undertakers let the furniture of funerals, 265.] ;Ulloa,

Unfunded debt, 863.] Universities, [seven years’ apprenticeship at, 120; proper poration,

name

for

any

incor-

ih.]

The emoluments

of the teachers in,

how

far calculated to

promote

their

diligence, 717; the professors at Oxford have mostly given up teaching, 718; those in France subject to incompetent jurisdictions, ih,] the privileges of

graduates improperly obtained, 719; abuse of lectureships, 719-20; the discipline of, seldom calculated for the benefit of the students, 720; arc, in England, more corrupted than the public schools, 721; original foundation of, ih,\ how Latin became an essential article in academical education, 722; how the study of the Greek language was introduced, ib.] the three great branches of the Greek philosophy, 723; are now divided into five branches, 725; the monkish course of education in, 726; have not been very ready to adopt improvements, 727; [improvements more easily introduced into the poorer, ih.]\ are not well calculated to prepare men for the world, ih,] how filled with good professors, or drained of them, 763; where the worst and best professors are generally to be met with, ih,] see Colleges and Teachers. Unproductive, see Productive.] Unterwald, taxes publicly assessed by the contributor, 802; moderate tax, 803.] Ustaritz, quoted, 850.]

Usury

prohibited, 860; see Interest.]

Utopia, 437, 887.] Utrecht, 453.] Utrecht, Treaty of, 703, 874.] [Vacations, French fees of court, 678.] Value, the term defined, 28; [rules which determine the relative or exchangeable value of goods, 28-62,] [VaiTO quoted, 153, 224.] Vedius PoUio, his cruelty to his slaves checked by the Roman emperor Augustus, which could not have been done under the republican form of government, ,

554

-

[Veil, siege of, 656, 657.]

[Velvet, prohibition of importation of, free from duty, 837.]

would be unnecessary

if

raw

silk

were

INDEX

967

Venice, [history different from that of the other Italian republics, 378; shipping encouraged by the crusades, 380;] origin of the silk manufacture in that city, 381; [exchange with London, 445; bank of, 447.] Traded in East India goods before the sea track round the Cape of Good Hope was discovered, 525; [envied by the Portuguese, ib.] fleets kept within the Mediterranean, 536; draws profit from a bank, 770;] nature of the landtax in that republic, 782, [783; enfeebled by public debt, 881.] Venison, the price of, in Britain, does not compensate the expence of a deer park, 224. yera Cruz, South Sea Company’s trade at, 704.]

Verd, Cape de, islands, 525.] yerdun treated as foreign by France,

852.] Versailles, idle because the residence of a court, 319; 33I-]

an ornament to France,

Vicesima haereditatum among the ancient Romans, the nature

of,

explained,

810.

[Vienna, small capital employed in, 320.] how first formed, 358. Villenage, probable cause of the wearing out of that tenure in Europe, 367; [freedom obtained by a villain who resided a year in a town, 379; dependence on proprietors, 386.] Vineyard, [high rent of some land peculiarly suitable for, 61;] the most profitable part of agriculture, both among the ancients and modems, 154; great adVillages,

vantages derived from peculiarities of soil in, 155. [Vingti^me resembles English land-tax, 809; not farmed, 855; should be increased in place of the taille and capitation, i&J [Virginia, tobacco currency, 23; evidence of a merchant trading with, 15 1; tobacco more profitable than corn, 157; with Maryland, the chief source of tobacco, ih.; stores and warehouses belong to residents in England, 347; trade with, 350-1, 457; tobacco trade, 353, 467, 560-1, 568.] [Expense of civil establishment, 540; progress unforeseen in 1660, 564; no necessity for gold and silver money, 894.] [Visiapour diamond mines, 172,] [Voltaire, quoted, 763.] [Vulgate, 722.]

Wages of labour [allowance made for hardship and ingenuity, 31; money, accommodated to the average price of com, 36; value which workmen add to materials pays their wages, 48; of inspection and direction, 48-9; one of three original sources of revenue, 52, 777; sometimes confounded with profit and rent, 53; ordinary, average or natural rate of, 55; how affected by state of society, 63; general discussion of, 64-86;] how settled between masters and workmen, 66; the workmen generally obliged to comply with the terms of their employers, ib.\ the opposition of workmen outrageous, and seldom successful, 67; circumstances which operate to raise wages, 68; the extent of wages limited by the funds from which they arise, 68-9; why higher in North America, than in England, 69-70; are low in countries that are stationary, 71; not oppressively low in Great Britain, 74;^ a distinction made here between the wages in summer and in winter, 74; if sufl&cient in dear years, they must be ample in seasons of plenty, ib.\ different rates of, in different places, 74-5; liberal wages encourage industry and propagation, 81; an advance of, necessarily raises the price of many commodities, 86; an average of, not easily ascertained, 87; [continually increasing since the time of Henry VIII., 89; higher in North American and West Indian colonies than in England, 92; do not sink with profits there, ib.\ very low in a county which could advance no further, 94;] the operation of high wages and high profits compared, 97; causes of the variations of, in different employments, 99[-i43]; are generally higher in new, than in old trades, 114, 134;

INDEX

968

legal regulations of, destroy industry and ingenuity, 14 1; [high, a cause of high prices, 146.] [Merchants complain of high, but say nothing about profits, 565; reduced by the colonial monopoly, 576;] natural effect of a direct tax upon, 81 $[-8, 822; connexion of, with price of provisions, 815.] [Wales, stone quarries afford no rent, 163; old families common, 391; mountains destined to be breeding ground of Great Britain, 427.] Walpole, Sir Robert, his excise scheme defended, 837. Wants of mankind, how supplied through the operation of labour, 22; how extended, in proportion to their supply, 163-4; the far greater part of them supplied from the produce of other men’s labour, 259. Wars, foreign, the funds for the maintenance of, in the present century, have little dependence on the quantity of gold and silver in a nation, 409-10; [expences abroad defrayed by export of commodities, 410-4.] How supported by a nation of hunters, 653; by a nation of shepherds, ih.\ by a nation of husbandmen, 655; men of military age, what proportion they causes which bear to the whole society, 656; feudal wars, how supported, in 'ie advanced state of society, rendered it impossible for those who took the field, to maintain themselves, 656-7; how the art of war became a distinct profession, 658; distinction between the militia and regular forces, 660; sdteration in the art of war produced by the invention of fire-arms, 660-1, 668; importance of discipline, 662; Macedonian army, 663; Carthaginian army, 663-4; Roman army, 664; feudal armies, 666; a well-regulated standing army, the only defence of a civilized country, and the only means for speedily civilizing a barbarous county, 667; the want of parsimony during peace, imposes on states the necessity of, contracting debts to carry

on war, 861, 872; why war is agreeable to those who live secure from the immediate calamities of it, 872; advantages of raising the supplies for, within the year, 878; [popularity of, and how it might be removed, ih] [Warwick, the Earl of, his hospitality, 385-6.] Watch movements, great reduction in the prices of, owing to mechanical improvements, 243. [Waterworks a business suitable for a joint-stock company, 713, 714, 715.] Wealth, [real, the annual produce, lx, 238, 241, 321, 329-30, 419; national, represented by one system of poUtical ceconomy as consisting in the abimdance of gold and silver, 237-8; land the most important and durable part of, 241; real, 247, 248; that of England much increased since 1660, 327;] and money, synonymous terms, in popular language, 398, 418J Spanish and Tartarian estimate of, compared, 398; [wealth of a neighbouring nation advantageous in trade, 461; accumulated produce, 659; makes a nation obnoxious to attack,

ib.][

the great authority conferred

by the

possession

of,

671.

Weavers, the profits of, why necessarily greater than those of spinners, [Weigh and pay, maxim of the port of London, 569.] [Western Islands, wages in, 76.]

51.

Indies, [sugar currency, 23; planters farm their own estates, 53; wages higher than in England, 92; British acquisitions in, raised profits, 93; sugar colonies resemble esteemed vineyards, r56; interest fallen since the discovery of, 337; carmng trade between, and Europe, 354; would have progressed less rapidly if no capital but their own had been employed in the export trade, 360; slavery harsher than in mediaeval Europe, 364; high profits of sugar and consequent greater number of slaves in sugar colonies, 366; importation of gold and silver from the Spanish, 405; expense of last

West

war l^gely laid out in, 410.] [British monopoly in sugar of, 464; Madeira wine imported directly, 469; interest which caused settlements in, 523; no necessity for settlements, 525; discovered by Columbus, 526; how tbey obtained this name, 527; the original native productions of, ih.*, the thirst of gold the object of all the Spanish enterprises there, 529; and of those of every other European nation, 533;; [plenty of good land, 533, 538;] the remoteness of, greatly in favour of the

INDEX European colonies

there, 534;

969

[Dutch originally under an exclusive com-

pany, 537; St. Domingo the most important of the sugar colonies, 538; price of European goods enormous in Spanish, 542; some most important productions non-enumerated, 544; freedom of trade with British American colonies, 547;] the sugar colonies of France better governed than those of Britain, 552-3; [effects of colonial monopoly, 567; returns of trade with, more irregular and uncertain than with any part of Europe, 568; expense of preventing smuggling, 580; proposal for obtaining war contributions from, 585; natives not benefited by the European discovery of, 590; gum senega treated like an enumerated commodity from, 622; colonial system sacrifices consumer to producer, 625; slave trade a loss to the African Company, 701; French and Portuguese companies ruined by slave trade, 703; South Sea Company's trade to the Spanish, some productions of, yield large portion of British customs revenue, 834; more able to pay land-tax than Great Britain, 887.]

[Westminster lanitax, 774, 801.] [Westminster Hall, Rufus’ dining-room, 385.] [Westmorland, price of coal in, 168.] Wheat, see Corn. [Whitehall, palace of, land-tax, 774.] [William Rufus dined in Westminster Hall, 385.] [William III. unable to refuse anything to the country gentlemen, 197.] [Wilton, ornament to England, 331.] Window tax in Britain, how rated, 797; tends to reduce house-rent, 798. Windsor market, chronological table of the prices of corn at, 256-8. Wine, the cheapness of, would be a cause of sobriety, 459; the carrying trade in, encouraged by English statutes, 468; [cellar, a public, a source of revenue to Hamburg, 769; licences to sell, 804; tax on, paid by consumers, 828; tonnage on, 830; forei^ article commonly used in Great Britain, 834; Walpole’s scheme for levying the tax on, 837; duty on, falls on middle and upper ranks, ib.] [Witchcraft, fear of,

compared to that of engrossing and forestalling, 500.] [Wolverhampton, manufactures of, not within the statute of apprenticeship, 1 21; manufactures grown up naturally, 383.] [Women’s education contains nothing fantastical, 734.] Wood, the price of, rises in proportion as a country is cultivated, 165; the growth of young trees prevented by cattle, ^'6.; when the planting of trees becomes a profitable employment, 166. [Woodcocks could not be much increased, 218.] Wool, the produce of rude countries, commonly carried to a distant market, 229; the price of, in England, has fallen considerably since the time of Edward IIL, 230; causes of this diminution in price, ib.\ the price of, considerably reduced in Scotland, by the union with England, 234. Severity of the laws against the exportation of, 612-3; restraints upon the inland commerce of, 614; restraints upon the coasting trade of, 615; pleas on which these restraints are founded, 615-6; the price of wool depressed by these regulations, 616; the exportation of, ought to be allowed, subject to a duty, 618. Woollen cloth, the present prices of, compared with those at the close of the fifteenth century, 244; three mechanical improvements introduced in the manufacture of, 246; [in ancient Rome much higher in price than now, 649,]

[Yeomanry, superior position of the English, 368,

371.]

[Yorkshire, woollen manufacture, 84; cloth fallen in price, 244, 245; small paper currencies, 307, 310; Scotch wool manufactured there, 346.] [Young men’s generosity to their teachers, 721, 731.]

[Yucatan, 203.]

[Zama, battle

of, 664.]

INDEX

970

[Zealand, French wine smuggled from, 442; expense of protecting

from the

sea,

857.]

Zemindaries, 791.] of Citta, the Portico assigned to, 731.] of Elea, travelled from place to place, 730.] Zurich, the reformation in, 758; tax on revenue assessed

Zeno Zeno

802; moderate tax, 803.] [Zwinglius, 760.]

by the

contributor,

INDEX

II

AUTHORITIES This index contains the names of aidhorities referred as in the author^ s notes and the text,

to

in the editor^ s notes as well

Abulgasi, Histoire ginMogique des Tatars^ traduite du manuscript Tartare D^Abidgasi Bayadur-chan, etc.^ par D., Leyden, 1726, 391. Acts of the Parliaments of Scotland, 1822, 183, 761. America, The Present State of Great Britain and North America with regard to Agriculture, Population, Trade and Manufactures, 1767, 70. Anderson, Adam, Historical and Chronological Deduction of the Origin of Cown merce, 1764, 246, 281, 306, 431, 442, 454, 547, 548, 552, 609, 616, 622, 690, 693, 694, 700, 701, 702, 703, 704, 705, 706, 707, 714, 715, 868, 869, 873, 875.

Anderson, James, Selectus diplomatum et numismatum Scotiae thesaurus, ed. Thos. Ruddiman, 1739, 183, 213, 281, 282. Arbuthnot, Dr. John, Tables of Ancient Coins, Weights and Measures, 2nd ed., 1754, i33» 649, 321. Aristotle, Politics, 25, 365, 729. Arts et MStiers, Description des,faites ou Royale des Sciences, 1761-88, 126.

Ayr Bank,

see Douglas,

approuv 6es par Messieurs de VAcadSmie

Heron and Co.

Bacon, Matthew, New Abridgement of the Law, 1768, 120, 368. Journey from London to Genoa, through England, Portugal, Spain

Baretti, Joseph,

and France, 1770, 513. Bazinghen, M. Abot de, Traiti des Monnoies et de la jurisdiction de la Cour des Monnoies en forme de dictionnaire, 1764, 518. Beaumont, Moreau de, ^moires concernant les Impositions et Droits en Europe,

M

1768, 770, 772, 782, 786, 787, 797, 801, 802, 806, 810, 811, 812, 817, 82^1, 827, 850. Bell, John, of Antermony, Travels from St. Petersburg in Russia to Diverse Parts of Asia, Glasgow, 1763, 644. Bergeron, N., Voyages faits principalement en Asie dans les xU., xiii., xiv., et xv. siicles, 173s, 399. Berkeley, Dr. George, Bishop of Cloyne, Querist, 1752, 78, 80. Bernier, Francois, Voyages, 1710, 688.

Bible, 25, 789.

Birch, Thos., D.D., The Life of Henry, Prince of Wales, 1760, 131. Blackstone, William, Commentaries on the Laws of England, 1765-9, 35, 233, 368. airs, particularly respecting the present Bolts, William, Consideratio'ns on India

Af

Bengal and its Dependencies, 1772, 604. Borlase, William, Natural History of Cornwall, 1758, 168, 169, 170. Bouchaud, Mathieu Antoine, De Vimpdt du Vingtieme sur les successions et dc Vimpdt sur les marchandises chez les Romains; recherckes historiques, etc.y stale of

1772, 8to.

Brady, Robert, Historical Treatise of Cities and Burghs or Boroughs, 1711, 374. British Merchant, 1721, see King, Charles, Buffon, Histoire Naturelle, 1755, 226, 527.

971

INDEX

972

Burman, De

II

RomafS dissertatio (in Utriusque thesauri antiRomanarum graecarumque nom supplemental congesta ab J. Po-

vectigalibus populi

quitatum

leno, 1737), 810. Richard, Ecclesiastical

Bum,

Law, 1763, 130. Justice of the Peace, 1764, 122, 136, 139. History of the Poor-laws, 1764, 77, 139, 140, 141. Byron, Hon. John, Narrative of the Hon. John Byron, containing an Account of the Great Distresses suffered by himself and his companions on the Coast of Patagonia from 1740 to 1746, 1768, 186. Cantillon, Richard, Essai sur la Nature

du Commerce en ginM,

68, 80, 99, 102, 105, 106, 211, 336, 358. Cato, De re rustica, 429. Chambers, E., Cyclopaedia, 1738, 5. Charlevoix, F. X. de, Histoire de VIsle Espagnole

1755, 23, 30

ou de S. Domingue, 1730, 526,

527Histoire

et description g&ntrale de la nouvelle France, avec d^un voyage dans VAmirique Septentrionnale, 17^, 538.

le journal historique

Child, Sir Josiah, New Discourse of Trade, 401, 692, 693, 695. Churchill, Awnsham and John, Voyages and Travels, 1704, 535. Cicero, Ad Atticum, 94. De Divinatione, 827.

De

Officiis, 150.

In Verrem, Columella,

Commons,

218.

De

re rustica, 153, 154, 224, 365. Journals of the House of, 297, 711.

Considerations on the Trade and Finances of this Kingdom and on the measures of administralion with respect to those great national objects since the conclusion of the peace (attributed to Thos. Whately), 1766, 875.

Daniel, Gabriel, Histoire de France, 1755, 377, 378, 756. Davenant, Dr. Charles, Works, 1771, 70, 77, 196, 842. Decker, Sir Matthew, Essay on the Causes of the Decline of the Foreign Trade, consequently of the Value of the Lands of Britain, and on the means to restore both,

De

2nd

Lange, see

ed., 1750, 480, 563, 825, 828. Bell.

Denisart, J.-B., Collection de decisions nouvelles

prudence

et

de notions relatives d la juris-

actuelle, 1771, 90.

Desaguliers, J. T., Course of Experimental Philosophy, 1744, 10. Dion Cassius, History, 810. Dion3rsius of Halicarnassus, Roman Antiquities, 729, 732. Dobbs, Arthur, An Account of the Countries Adjoining to Ihidson^s Bay with an Abstract of Captain Middleton^ s Journal, and Observations upon his Behaviour, 1744, 701, 702. Douglas, Heron and Co., The Precipitation and Fall of Messrs. Douglas, Heron and Company, late Bankers in Air, with the Ca^uses of their Distress and Ruin investigated and considered by a Committee of Inquiry appointed by the .

,

,

Proprietors, Edinburgh, 1778, 297. Summary, Historical and Political, of the First Planting, Progressive Improvements and Present State of the British Settlements in

Douglass, Dr. William,

A

North America, 1760, 23, 158, 310. Cange, Glossarium, 378, 885. Halde, J.-B., Description g^ographique, historique, chronologique, politique et physique de V empire de la Chine et de la Tartarie chinoise, 1735, 7^, 644. Du Pont de Nemours, P.-S-, Physiocratie, ou constitulion naturelle du gouvernement le plus avantageux cm genre humain, 1768, 629. Dupr6 de St. Maur, N,-F., Essai sur les Monnoies, ou riflexions sur le rapport

Du Du

entre Vargent et les denries, 1746, 180, 198, 240.

INDEX Du

Du

973

II

Recherches sur la udeur des Monnoies et sur les prix des grains avant et apris le concile de Francfortj 1762, 180. Tot, Rijlexions politiques sur les Finances et le Commerce^ ou Von examine qudles ont iti sur les reoenuSy les denrees^ le change stranger et consiquemment sur notre commerce^ les influences des augmentations et des diminutions des valeurs numeraires des monnoyes, 1754, 302, 864. Verney, J. Paris, Examen du livre intiUde ^Rejlexions politiqim sur les Finances et le Commerce^ 1740, 302, 864.

Encyclopedic, 1755, S> 367* Expilly, Jean Joseph, Dictionnaire geographique, historique et de la France, 1768, 856.

et

politique des Gaules

Fleetwood, William, Bishop of Ely, Chronicon Freciosum, 1707, 27, 34, 177, 178, 182, 184, 232, 251, 252, 255.

Folkes, Martin, Table of English Silver Coins, 1745, 26, 177, 251. Frewin, R., see Sims and Frewin. Fr6zier, Am6d^e-F., Voyage to the South Sea and along the Coasts of Chili and Peru in the years 1712, 1713 and 1714, with a Postscript by Dr. Edmund Halley, 1717, 169, 170, 204. Fuller, Dr. Thomas, History of the University of Cambridge, 1655, 34.

Gee, Joshua, Trade and Navigation of Great Britain considered, 1729, 96. Gentleman^ s Magazine, Aug., 1764, 208. Gilbert, Sir Geoffrey, Chief Baron of the Exchequer, Treatise of Tenures, 1757, 368. Treatise on the Court of Exchequer, 1758, 831. Grotius, Dejure belli et pads, 1624, 23. Guicciardini, F., Della Jstoria dPtalia, 1738, 395. Gumilla, P. Jos6, Histoire naturelle civile et gtographique de VOrinoque, trans. (from the Spanish) by M. Eidous, 1758, 530.

etc.

Hale, Sir Matthew, Discourse touching Provision for the Poor, 1683, 77. Hansard, Parliamentary History, 199. Hanway, Jonas, Historical Account of the British Trade over the Caspian Sea, with a Journal of Travels from London through Russia into Persia, and back through Russia, Germany and Holland, 1753, 330. Harris, Joseph, Essay upon Money and Coins, 1757, 3, 12, 15, 23, 26, 27, 28, 40, 4X, 44-

Harte, Walter, Essays on Husbandry, 1764, 371. Hawkins, William, Treatise of the Pleas of the Crown, 1762, 613. Hay, William, Remarks on Laws relating to the Poor, 1735, 141. Hinault, C. J. F., Nouvd AbrSgd chromlogique de V histoire de France, 1768, 394-S, s88, 7S 7

-

Herbert, C. J., Essai sur la police genirale des grains, sur leur effetsdeV agriculture, 1755, 180, 198.

Hobbes, Thomas, Leviathan, 1651,

Homer,

Iliad, 23, 676, 730.

pnx

et

sur les

31.

^

Odyssey, 730. Horsley, William, see Magens. Hume, David, Essays, Moral and Political, 1748, 15, 833. History of England, 1773, 26, 27, 77, 105, 132, 229, 374, 378, 380, 385, 386, 3877 388, 389, 4 i 3 669, 743. Political Discourses, 1752, 30, 78, 309, 337, 385. Hutcheson, Francis, System of Moral Philosophy, 1755, 23. Hutchinson, Col., History of the Colony of MassachusetVs Bay, 1765, 893. »

James,

R

,

see Ramazzini.

INDEX

974

II

Don G., and Don Ant, UUoa, Voyage historique de VAmirique wiridionalef 1752, 148, 169, 170, 186, 203, 204, 229, 534, 541, 543-

Juan,

Travels into North America, containing its natural history and a circumstantial account of Us Plantations and Agriculture in general, etc,, 1770, 223. Karnes, Henry Home, Lord, Sketches of the History of Man, 1774, 779, 802, 833 j 851. Eling, Charles, British Merchant, 1721, 428, 512. King, Gregory, Natural and Political Observations and Conclusions upon the

Kalm, Peter,

Stale

La

and Condition of England, 1688,

Riviere, Mercier de,

VOrdre

196, 280.

nalurel et essentid des SocieUs politiques, 1767,

264, 629, 643.

Law, John, Money and Trade, Considered with a Proposal for Supplying Nation with Money, 1705, 23, 28, 301, 302, 336.

the

Livy, History, 656. Locke, John, Civil Government, 12, 399, 674. Some Considerations of the Consequences of the Lowering of Interest and Raising the Value of Money, 1696, Ivii, 23, 37, 336, 340, 399. Further Considerations Concerning Raising the Value of Money, 1695, 43. Lowndes, William, Report containing an Essay for the Amendment of the Silver Coins, 1695, 26, 194.

Lucian, Eunuchus, 731. Machiavelli, Niccold, History of Florence, 771. Discourses on the First Decade of Titus Livius, 742. Madox, Thomas, Firma Burgi, 1720, 120, 123, 124, 374, 375, 376, 377. History and Antiquities of the Exchequer, 1711, 374. Magens, N,, Universal Merchant, ed. Horsley, 1753, 43, 91, 207, 208, 304, 454. contained in the Universal Merchant, Farther Explanations of subjects .

.

.

1756, 208, 211.

Mandeville, Bernard de, Fahle of the Bees, 1723, 3, 10, 12, 14, 102. Martin-Leake, Stephen, Historical Account of English Money, 1745, INleggens, see

23.

Magens.

Melon, J. F., Essai Politique sur le Commerce, 1761, 877, 879, 885. Mtmoires concernant les Droits, etc., see Beaumont, Moreau de. Messance, Recherches sur la poptdation des g^n^aliUs d^ Auvergne, de Lyon, de Rouen et de quelques provinces et villes du royaume, avec des reflexions sur la valeur du bled tant en France qvden Angleterre depuis 1674 jusquden 1764, 1766, 84, 198, 240.

Mirabeau,^ Viet. Riquetti, Marquis de, Philosophic rurale, ou economic ginerale et politique de V agriculture, pour servir de suite d V Ami des Hommes, 1766, 644.

Montesquieu, Esprit des Loix, 1748, 23, 96, 336, 348, 648, 729, 730, 808. Morellet, Abb6 Andr^, Examen de la rSponse de M. N** [Necker] au Mimoire de M, VAbbe Morellet, sur la Compagnie des Indes, 1769, 713.

Mun, Thomas,

England's Treasure by Forraign Trade, or the Ballance of our Forraign Trade is the Rule of our Treasure, 1664, 400, 401.

Necker, Jacques, Sur la legislation

Newton,

commerce des Grains, 1775, 856. Lords of the Treasury, 1717 (in Universed

et le

Sir Isaac, Representation to the

Merchant, see Magens), 207. Palladius, De re rustica, 153. Percy, Henry Algernon, the fifth Earl of Northumberland, The Regulations and Establishment of the Household of, at his castles of Wresill and Lekinfield in Yorkshire, begun anno domini MDXII., 1770, 179. Petty, Sir William, Political Arithmetic, 1699, 70.

INDEX

975

II

Verhum Sapienti^ 1691, 280. von Kriegelstein, C. F., Notcod Abrig^ chronologique de

Pfeffel

Vhistoire

et

du

droi-puUique d^Alkmagne, 1776, 376, 378. Philosophical and Political History of the Establishment of the Europeans in the two Indies see Raynal. Pinto, Isaac de, TraiU de la Circulation et du Cridit, 1771, 877. Plato y Euthydemus, 28. Republic, 729. Pliny, Natural History, 23, 24, 27, 39, 133, 219, 365, 649. Plutarch, Alexander, 133.

Demosthenes, 133. Isocrates, 133.

Solon, 730.

Pococke, Dr. Richard, Bishop of Meath, Description of the East, 1743, 386. Poivre, Pierre, Voyages d^un Philosophe, on observations sur les mceurs et les arts des peuples de VAfrique, de VAsie, et de VAmirique, 176S, 156. Police of Grain, see Herbert. Polybius, History, 729, 732. Postlethwayt, James, History of the Public Revenue from 1688 to 1753, with an

Appendix

to

1758, 1759, 302, 303, 864, 86$, 866, 867, 868, 874.

Postlethwayt, Malachi, Dictionary of Commerce, 1757, 91. Present State of Great Britain and North America with regard to Agriculture, Population, Trade and Manufactures, 1767, see America. Present State of the Nation, particularly with respect to its Trade, Finances, etc, (attributed to William Knox), 1768, 410, 411, 874. on Reversionary Payments, etc., 1771, 70. Provisions, A Report from the Committee who, upon the Sth day of February, 1764, were appointed to inquire into the Causes of the High Price of, with the Proceedings of the House thereupon, 1764, 151, 152. Pufendorf, Dejure naturae et gentium, 23, 25, 28. Price, Richard, Observations

Quesnay, Francois, (Euvres, ed. Oncken, 1888,

72, 367, 637, 645.

Ralegh, Sir Walter, Works, ed. by Thos. Birch, 1751, 530. Ramazzini, Bernard, De morbis artificum diatriba, trans. by R. James, 1746, 82. Raynal, G. T. F., Histoire philosophique et politique des dablissemens et du com^ merce des EuropSens dans les deux Indes, Amsterdam ed., 1773, 203, 208, 209, 366, 367, 478, 5^3, 536, 542, 555, 590Reformateur, Le, 1756 827. Ruddiman, Thomas, An Introduction to Mr. James Anderson^ s Diplomata Scotiae, see Anderson, James.

Rymer, Thomas, Foedera,

77.

Sandi, Vettor, Principj di storia civile della Repubblica di Venezia, 1755, 381. Saxby, Henry, The British Customs, containing an Historical and Practical Ac-

count of each branch of that part of the Revenue, 1757, 467, 468, 504, 608, 621, 626, 826, 834, Seneca, De Ira, 554. Sims, W., and R. Frewin, Rates of Merchandise, 1782, 626. Smith, Adam, Lectures on Justice, Police, Revenue and Arms, 1896, 5, 7, 8, 9, 10, 12, 13, 14, 15, 16, 18, 21, 23, 28, 55, 62, 81, 95, ro2, 106, 121, 127, 164, 243, 259, 301, 302, 309, 320, 334, 336, 361, 362, 363, 364, 365, 367, 368, 369, 370, 371, 372, 373, 376, 379, 386, 388, 399, 410, 454, 464, 554, 648, 653, 655, 667, 668, 669, 672, 674, 679, 764, 822, 877. Smith, Charles, Three Tracts on the Corn Trade and Corn Laws, 1766, 192,

199, 256, 428, 473, 475 , 501, 503, 504, 506.

150, 366, 460, 194,

^

Smith, John, Chronicon Rusticum-Commerciale, or Memoirs of Wool, 1747, 25, 231, 234, 428, 616. Solorzano-Pereira, De Indiarum Jure, 1777, 201.

INDEX

976

II

Steuart, Sir James, Inquiry into the Principles of Political Economy Strype, John, Life of the learned Sir Thomas Smithy 1698, 34.

1767, 208.

Answer to a Paper Called a Memorid of the Poor InhabiTradesmen and Labourers of the Kingdom of Ireland, 832.

Swift, Dr. Jonathan, tants,

Tavernier, John Baptista, Six Voyages through Turkey into Persia and the East Indies, 1678, 173.

Theocritus, Idylls, loi.

Thucydides, History, 655, 656. Tracts upon the Corn Trade, see Smith, Charles. Treaties of Peace, Alliance and Commerce between Great Britain and other Powers from the Revolution in 1688 to the Present Time, 1772, 512. Tyrrell, James, General History of England both Ecclesiastical and Civil, 1700, 675*

UUoa, Voyage historique de VAmirique

rnSridionale, see Juan.

Uztariz, J6r6me, Theory and Practice of by John Kippax, 1751, 204, 851.

Varro,

De

re rustica, 153, 224.

Virgil, Georgies, 173-4, 556.

Voltaire, Sikle de Louis

Xenophon, Anabasis, Hdlenica, 415.

XIV., 454,

559.

763.

Commerce and Maritime

Ajfairs, trans.